U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -----------------
Commission file number 33-36120
--------------------------------------
BRADLEY PHARMACEUTICALS, INC.
------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Jersey 22-2581418
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
383 Route 46 W., Fairfield, NJ
-----------------------------------------------------------------
(Address of principal executive offices)
201-882-1505
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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 Number of Shares Outstanding
of Common Stock as of June 16, 1997
------------------- ----------------------------
Class A, No Par Value 7,692,267
Class B, No Par Value 431,552
Transitional Small Business Disclosure Format (check one):
Yes No X
---- -----
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
INDEX TO FORM 10-QSB
March 31, 1997
Page
Number
------
PART I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet -
March 31, 1997 3
Condensed Consolidated Statements of
Operations - three months ended March 31,
1997 and 1996 4
Condensed Consolidated Statements of Cash
Flows - three months ended March 31, 1997
and 1996 5
Condensed Notes to Consolidated Financial
Statements 7
Management's Discussion and Analysis 8
PART II - Other Information
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
ASSETS
Current assets
--------------
Cash and cash equivalents $ 9,381
Accounts receivable net 3,984,343
Finished goods inventory 814,685
Prepaid samples and materials 1,676,809
Prepaid expenses and other 25,870
-------------
Total current assets 6,511,088
Property and equipment - net 299,830
Intangibles - net 14,490,315
-------------
Total Assets $ 21,301,233
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
-------------------
Current maturities of long-term debt $ 3,064,359
Accounts payable and accrued expenses 5,486,482
Accrued income taxes 290,826
Due to affiliate 29,098
--------------
Total current liabilities 8,870,765
Long-term debt, less current maturities 431,847
Commitments & contingencies
Stockholders' equity
---------------------
Preferred stock, no par value;
authorized, 2,000,000 shares; issued,
none -
Common, Class A, no par value,
authorized 26,400,000; issued and
outstanding, 7,692,267 shares at March
31, 1997 13,970,240
Common, Class B, no par value,
authorized 900,000 shares, issued and
outstanding, 431,552 shares at March
31, 1997 845,448
Treasury Stock, at cost (21,500 shares
at March 31, 1997) (29,014)
Accumulated deficit (2,788,053)
-------------
11,998,621
-------------
Total Liabilities & Stockholders' Equity $ 21,301,233
=============
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
-------------------------
1997 1996
----------- ------------
Net Sales $ 3,671,649 $ 3,391,543
Cost of Sales 854,517 809,343
----------- -----------
2,817,132 2,582,200
----------- -----------
Selling, general and administrative 1,946,149 1,844,476
expenses
Depreciation and amortization 405,688 461,854
Interest expense - net 111,862 172,292
----------- -----------
2,463,699 2,478,622
----------- -----------
Income before income taxes 353,433 103,578
Income tax expense 141,000 -
----------- -----------
Net income $ 212,433 $ 103,578
=========== ===========
Net income per common share (1) $ 0.03 $ 0.01
=========== ===========
Weighted average number of common
shares 8,106,380 7,215,329
=========== ===========
See Notes to Condensed Consolidated Financial Statements
(1) Computation of net income per common share for the three
months ended March 31, 1997 and 1996 do not include the
effect of the stock equivalents because the inclusion of
such stock equivalents would be antidilutive.
4
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $ 212,433 $ 103,578
Depreciation & amortization 405,688 461,854
Effects on cash from changes
in operating assets &
liabilities
Decrease (increase) in assets:
Accounts receivable (1,248,306) 164,198
Inventory and prepaid
samples and materials 247,690 297,141
Prepaid expenses and other 27,113 1,875
(Decrease) increase in
liabilities:
Income taxes payable/
refundable 97,550 1,810,383
Accounts payable and
accrued expenses 767,325 (2,104,942)
Due to affiliate 29,098 3,333
---------- ----------
Net cash provided by operating
activities 538,591 737,420
---------- ----------
Cash flows from investing
activities:
Acquisition of trademarks,
patents and other assets (20,334) (24,798)
Redemption of temporary
investments - 1,950
Purchase of property &
equipment - net (536) 7,241
---------- ----------
Net cash used in investing
activities (20,870) (15,607)
---------- ----------
Cash flows from financing
activities:
Repayment of notes payable (479,326) (819,047)
Purchase of treasury shares (29,014) -
---------- ----------
Net cash used in financing
activities (508,340) (819,047)
---------- ----------
Increase (decrease) in cash and
cash equivalents 9,381 (97,234)
Cash and cash equivalents at
beginning of period - 554,114
---------- ----------
Cash and cash equivalents at end
of period $ 9,381 $ 456,880
========== ==========
(Continued)
5
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------
1997 1996
---------- ----------
Supplemental disclosures of cash
flow information:
Cash paid during the period for:
Interest $ 43,108 $ 109,000
========== ==========
Income taxes $ - $ -
========== ==========
See Notes to Condensed Consolidated Financial Statements
6
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - Summary of Accounting Policies
-----------------------------
The unaudited interim financial statements of Bradley
Pharmaceuticals, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principals of complete financial statements.
In the opinion of the Company, the accompanying unaudited
financial statements contain all adjustments (consisting of
normal recurring entries) necessary to present fairly the
financial position as of March 31, 1997 and the results of
operations and cash flows for the three month periods ended March
31, 1997 and 1996, respectively.
The accounting policies followed by the Company are set
forth in Note A of the Company's financial statements as
contained in the Form 10-KSB for the year ended December 31, 1996
filed with the Securities and Exchange Commission. The Form 10-
KSB contains additional data and information with respect to
long-term debt, intangible assets, stock agreements, stock option
plans, private placement of securities and reserved shares,
escrow shares, chargebacks and rebates, related party
transactions, income taxes, commitments, economic dependency and
other items and is incorporated by reference.
The results reported for the three month period ended March
31, 1997 are not necessarily indicative of the results of
operations which may be expected for a full year.
7
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
On March 31, 1997, the Company had negative working capital
of ($2,359,677), a positive increase of $469,123 over December
31, 1996 negative working capital of ($2,828,800). Improvement
in the Company's working capital position at March 31, 1997 was
primarily due to an operating profit and positive cash flow from
operations during the three months ended March 31, 1997 ("First
Quarter 1997"). In an effort to improve the Company's financial
position, the Company has, and will continue to, implement steps
to reduce its expenses and maintain cost controls (including
reducing payroll, advertising and promotions as well as
curtailing research and development efforts) and its reliance on
managed care sales.
Subsequent to the end of First Quarter 1997, the Company
announced the final restructuring of its obligations to Berlex
Laboratories, Inc. ("Berlex") resulting from the Company's 1993
acquisition of the DECONAMINE(R) brand of cough and cold
products. Subject to the execution of a definitive restructuring
agreement, Berlex and the Company have agreed that the Company's
remaining approximate $2.5 million obligation to Berlex will be
satisfied by the Company's (i) paying to Berlex, on or before
July 15, 1997, $1.15 million plus accrued interest, (ii) issuing
to Berlex 500,000 shares of the Company's Class A Common Stock
(which, when added with other shares of Class A Common Stock
previously issued to Berlex, will provide Berlex with an
approximate 19% interest in the Company) and (iii) issuing to
Berlex warrants to purchase up to 700,000 additional shares of
Class A Common Stock of the Company at an exercise price of $1.25
per share, exercisable upon conditions, between May 1, 1999
through April 30, 2001.
While the Company is in the process of seeking third party
financing to raise the funds necessary to satisfy the remaining
cash obligation to Berlex, there can be no assurance that the
Company can successfully obtain this financing prior to the
scheduled payment date. Due to the uncertainties surrounding the
Company's ability to satisfy its remaining cash obligation to
Berlex and the resulting impact such failure would have on the
Company's future financial condition, if the Company cannot
satisfy its obligation to Berlex, there can be no assurance that
the Company can continue as a going concern. The financial
statements of the Company included elsewhere in this Quarterly
Report on Form 10-QSB have been prepared assuming that the
Company will continue as a going concern and do not include any
adjustments that might result from the Company's failure to
satisfy its remaining cash obligation to Berlex.
8
<PAGE>
To secure its obligations to Berlex, the Company has
warranted to Berlex that until such time as all obligations to
Berlex have been satisfied, the Company, generally , without
Berlex's consent, will not grant any person a security interest
in, or create a lien upon, any of the Company's assets. In
addition, the Company has granted Berlex a security interest
covering all of the Company's accounts receivables.
Working capital for First Quarter 1997 included an increase
in accounts receivable balances over December 31, 1996 of
approximately $1,200,000 due, principally, to high sales in March
1997, and a decrease in the Company's inventory and prepaid
samples and materials of approximately $250,000.
The United States Food and Drug Administration (the "FDA")
is currently reviewing cough and cold products for its Over-the-
Counter ("OTC") monograph, and could designate the formula that
is in DECONAMINE(R) as an OTC formulation. It is not currently
possible for the Company to predict how its operations and
financial condition will be affected if the DECONAMINE product
line is converted from prescription status to over-the-counter
status.
The Company's DECONAMINE(R) SR product requires the Company
to file an Abbreviated New Drug Application ("ANDA") with the FDA
to be in compliance with the regulation that all controlled
release products require an ANDA. To date, this law has not been
enforced on grandfathered (pre-1962) products with established
safety and efficacy profile. The cost of this application is
approximately $900,000. The Company has entered into an
agreement to complete the first phase of these studies at a cost
of approximately $100,000, of which $48,000 was paid through
Fiscal 1996. This project is expected to be completed and
submitted to the FDA during 1998. Completion of the research and
development project is subject, however, to the Company's either
generating sufficient cash flow from operations to fund the same
or obtaining requisite financing from outside sources, of which
there can be no assurance. Therefore, the Company cannot at this
time reasonably anticipate the timing of the expenditure of funds
for these purposes. The inability of the Company to further
develop and/or file the necessary ANDA for DECONAMINE(R) SR would
have a material adverse effect on the Company's business.
Provided the Company can successfully raise the capital
necessary to satisfy its remaining cash obligation to Berlex and
to continue research and development projects with respect to
DECONAMINE SR, the Company believes that it has sufficient cash
flow from operations to support its working capital requirements
over the next twelve months.
9
<PAGE>
RESULTS OF OPERATIONS
---------------------
Chargebacks and rebates are the difference between prices at
which the Company sells its products (principally DECONAMINE SR)
to wholesalers and the sales price ultimately paid by the end-
user (often governmental agencies and managed care buying groups)
pursuant to fixed price contracts. The Company records an
estimate of the amount either to be charged-back to the Company
or rebated to the end-user at the time of sale to the wholesaler.
GROSS SALES (sales prior to chargebacks, rebates and
discounts for First Quarter 1997 were $6,040,533, representing an
increase of $781,667, or approximately 15%, from gross sales for
the quarter ended March 31, 1996 ("First Quarter 1996"). This
increase was primarily due to a substantial "buy in" of
DECONAMINE(R) SR prior to an announced price increase.
Additionally,significant gains were recorded in the Doak
Dermatologic products Carmol and Acid Mantle.
NET SALES (net of all adjustments to sales) for First
Quarter 1997 were $3,671,649, representing an increase of
$280,106, or approximately 8%, over net sales for First Quarter
1996. This increase primarily reflects gains resulting from
increases in Carmol and Acid Mantle sales and Kenwood
Laboratories' product Tyzine.
COST OF SALES for First Quarter 1997 was $854,517,
representing an increase of $45,174, or approximately 6%, over
First Quarter 1996 cost of sales. This increase reflects higher
sales volumes. The Company's gross profit margin improved
slightly, from 76% during First Quarter 1996 to 77% during First
Quarter 1997, reflecting improvements in Doak Dermatologics'
margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES were $1,946,149
for First Quarter 1997, representing an increase of $101,673, or
approximately 6%, over selling, general and administrative
expenses for First Quarter 1996. This increase reflects,
primarily, savings in advertising offset by increased investment
in other areas of marketing, and increased legal/professional
fees due to the Company's negotiations with Berlex. The Company
has and will continue to institute cost saving programs during
1997.
DEPRECIATION AND AMORTIZATION EXPENSES for First Quarter
1997 were $405,688, or $56,166 below First Quarter 1996 expenses.
This decrease reflects lower amortization expenses on product
acquisitions, principally on reduced intangibles associated with
the restructuring of the Company's obligations to Berlex.
10
<PAGE>
INTEREST EXPENSE - NET for First Quarter 1997 was $111,862,
or $60,430 lower than First Quarter 1996. This decrease was
principally due to debt reduction associated with the DECONAMINE
product acquisition.
NET INCOME for First Quarter 1997 was $212,433, as compared
to $103,578 for First Quarter 1996, an increase of over 100%.
This increase in net income gives effect to $141,000 of income
taxes for First Quarter 1997. No income taxes were due in First
Quarter 1996 because of tax loss carryforwards from prior years.
NET INCOME PER COMMON SHARE for the First Quarter 1997 was
$.03 per common share, representing a $.02 increase over First
Quarter 1996 results. Computations of Net Income per common
share for both First Quarter 1997 and First Quarter 1996 do not
include the effect of stock equivalents because the inclusion of
such stock equivalents would be antidilutive.
Item 5. Other Information
--------------------------
Recent Developments
-------------------
On June 2, 1997, the Board of Directors of the Company
authorized the issuance of 254,311 shares of Class B Common Stock
(the "New Class B Stock") to Daniel Glassman, the Company's
President and Chief Executive Officer. The New Class B Stock was
issued to Mr. Glassman in consideration for, among other things,
Mr. Glassman's delivery to the Company, for cancellation, of
254,311 shares of Class A Common Stock of the Company. The
issuance of the New Class B Stock to Mr. Glassman was the result
of the Board of Directors' decision to restore management status
quo following the Board's recently learning that Mr. Glassman had
pledged (the "Pledge"), in April 1995, 254,311 shares of Class B
Common Stock then owned by Mr. Glassman (the "Pledged Shares") to
secure certain obligations of Mr. Glassman to an unaffiliated
third party lender. Mr. Glassman has delivered to the Company a
letter in which he states that the Pledge was an inadvertent
error on his part and that had he been aware of the potential
ramifications of the Pledge, he would have pledged other
collateral to secure the obligations in question.
11
<PAGE>
Pursuant to the Company's Certificate of Incorporation, as
amended (the "Charter"), the Pledged Shares automatically
converted into shares of Class A Common Stock upon the Pledge by
Mr. Glassman. Consequently, the number of outstanding shares of
Class B Common Stock following the Pledge was reduced from
431,552 shares to 177,241 shares. Pursuant to the Charter,
holders of the Company's Class B Common Stock are entitled to
elect a majority of the Company's directors so long as there are
at least 325,000 shares of Class B Common Stock issued and
outstanding; otherwise, all holders of Class A and Class B Common
Stock, voting as a single class, are entitled to elect all of the
Company's directors. In light of the Company's being unaware of
the Pledge, holders of the Company's Class A and Class B Common
Stock, voting as separate classes, elected two directors and
three directors, respectively, at the Company's Annual
Stockholders' Meetings held in June 1995 (the "1995 Annual
Meeting") and May 1996 (the "1996 Annual Meeting"), rather than
voting together as a single class to elect all of the Company's
directors. Accordingly, since the 1995 Annual Meeting, only the
two directors of the Company elected by the holders of the Class
A Common Stock (the "Class A Directors") have been duly and
validly elected. The Company's By-Laws state that the Company
shall have three directors. Since their election by stockholders
at the 1995 and 1996 Annual Meetings, the two Class A Directors,
each of whom was an independent director, voted in favor of all
matters approved by the Board of Directors. Prior to the
authorization of the issuance of the New Class B Stock to Mr.
Glassman, the Company's then existing two Class A Directors
appointed David Hillman, Secretary of the Company, as the third
director of the Company.
Since the issuance of the New Class B Stock to Mr. Glassman
caused the number of issued and outstanding shares of Class B
Common Stock to increase to 431,552 shares (above the 325,000
share threshold set forth in the Company's Charter), the holders
of Class B Common Stock became entitled to elect a majority
(consisting of three) of the Company's directors. Following the
issuance to Mr. Glassman of the New Class B Stock, the holders of
the outstanding Class B Common Stock, acting separately as a
class in accordance with the Company's Charter, elected, by
majority written consent in lieu of a meeting, Daniel Glassman
and Iris Glassman as directors of the Company and David Hillman
was designated as a director elected by the holders of the Class
B Common Stock.
12
<PAGE>
At a Special Meeting of Stockholders held in August 1996, it
was reported that an amendment (the "Option Plan Amendment") to
the Company's 1990 Stock Option Plan, as amended (the "Plan"),
had been approved by stockholders increasing, from 1,500,000
shares to 2,600,000 shares, the number of shares of Class A
Common Stock authorized for issuance under the Plan. Given the
ramifications of the Pledge, and in particular, that the 254,311
Class B shares voted in favor of the Option Plan Amendment by Mr.
Glassman were counted as 1,271,555 votes (giving effect to the
5:1 voting power attributable to Class B shares) but should have
been counted as only 254,311 shares of Class A Common Stock
voting in favor of the Option Plan Amendment, there was an
insufficient number of shares of Common Stock of the Company
voting to approve the Option Plan Amendment. Accordingly, the
Board of Directors has determined to treat the Option Plan
Amendment as having been rejected by the Company's stockholders.
Options under the Plan to acquire an aggregate of 140,000 shares
of Class A Common Stock granted by the Company in reliance upon
the Option Plan Amendment having been approved by stockholders
have been returned voluntarily to the Company by the relevant
optionees for cancellation. As a consequence of believing, in
good faith, that the Option Plan Amendment had been approved by
stockholders, between August 15, 1996 and December 31, 1996,
there were outstanding options to acquire under the Plan in
excess of 1,500,000 shares of Class A Common Stock. As a result
of options to acquire an aggregate of 423,354 shares of Class A
Common Stock under the Plan being cancelled during 1996 due to
optionees leaving the employ of the Company, there are outstanding,
as of the date of this report, options to acquire an aggregate of
1,485,365 shares of Class A Common Stock under the Plan.
On April 8, 1994, the Company was apprised by the New York
State Department of Environmental Conservation ("NYSDEC") that
Doak's current leased manufacturing facility located on adjoining
parcels at 67 Sylvester Street and at 62 Kinkel Street, Westbury,
New York are located in the New Cassel Industrial Area, which had
been designated by the NYSDEC on the Registry of Inactive
Hazardous Waste Sites (the "Registry"). The real property on
which Doak's current manufacturing facility is situated is owned
by and leased to the Company by Dermkraft, Inc., an entity owned
by the former controlling shareholders and officers of Doak. On
February 7, 1995, the Company was apprised by the NYSDEC that the
current manufacturing facility will be excluded from the
Registry. By letter dated April 21, 1995, the NYSDEC notified
the Company that it intended to investigate the Company's current
manufacturing facility to determine if hazardous substances had
previously been deposited on that property. By letter dated
October 24, 1995, NYSDEC notified Dermkraft, Inc. that the
current manufacturing facility is included in or near an inactive
hazardous waste site described as "Kinkel and Sylvester Streets"
and that NYSDEC intends to conduct a Preliminary Site Assessment
to study the site and immediate vicinity. The Company has been
advised that NYSDEC has made a preliminary determination to
include the 62 Kinkel Street portion of the current manufacturing
facility on the Registry and that the Sylvester Street portion of
the facility will not be included, but those determinations could
be changed before they are finalized.
13
<PAGE>
Thereafter, by letter dated May 3, 1996 addressed to
Dermkraft, Inc., the NYSDEC notified Dermkraft that the site at
62 Kinkel Street has been listed on the Registry due to the
presence of trichloroethylene ("TCE") in soils and groundwater
due to the use of TCE by LAKA Tools and Stamping and LAKA
Industries, a former tenant from 1971 through 1984. The Company
cannot at this time determine whether the cost associated with
the investigation and required remediation, if any, of the
current manufacturing facility will be material. With respect to
the former manufacturing facility on Magnolia Avenue, which
remains designated by the NYSDEC as part of the Registry,
management believes that Doak will not be obligated to contribute
to any remediation costs, if any are required.
Item 6. Exhibits and Reports on Form 8-K
----------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURES
In accordance with the requirement of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRADLEY PHARMACEUTICALS, INC.
-----------------------------
(REGISTRANT)
Date: June 17, 1997 /s/ Daniel Glassman
------------------------------------
Daniel Glassman
Chairman of The Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: June 17, 1997 /s/ Lawrence R. Lenz
------------------------------------
Lawrence R. Lenz
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
15
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Cash Flow and Statement of Operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,381
<SECURITIES> 0
<RECEIVABLES> 4,049,995
<ALLOWANCES> 65,652
<INVENTORY> 814,685
<CURRENT-ASSETS> 6,511,088
<PP&E> 1,244,087
<DEPRECIATION> 944,257
<TOTAL-ASSETS> 21,301,233
<CURRENT-LIABILITIES> 8,870,765
<BONDS> 431,847
0
0
<COMMON> 14,815,688
<OTHER-SE> (2,817,067)
<TOTAL-LIABILITY-AND-EQUITY> 21,301,233
<SALES> 3,671,649
<TOTAL-REVENUES> 3,671,649
<CGS> 854,517
<TOTAL-COSTS> 854,517
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111,862
<INCOME-PRETAX> 353,433
<INCOME-TAX> 141,000
<INCOME-CONTINUING> 212,433
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 212,433
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
