May 15, 1997
US Securities & Exchange Commission,
450 Fifth Street, NW
Washington, DC 20549
RE: The Quigley Corporation ("Registrant")
Form 10-QSB - Period Ended March 31, 1997
Dear Sir:
Enclosed herewith is original and 2 copies of above Registrant's Form 10-QSB,
together with 5 additional conformed copies of such 10-QSB.
Kindly acknowledge receipt of the enclosed by signing and returning the
enclosed self address post card.
Sincerely,
George J. Longo
Vice President
Chief Financial Officer
cc: William Reilly Esq.
Cooper & Lybrand, L.L.P.
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 1997
--------------
or
[ ] 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: 01-21617
THE QUIGLEY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 23-2577138
--------------- ----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
(MAILING ADDRESS: PO Box 1349, Doylestown, PA 18901.)
Landmark Building, 10 South Clinton Street,
Doylestown, PA 18901
(Address of principle executive offices) (Zip Code)
(215) 345-0919
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by the check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to filed such reports), and (2) has been subject to
such filing requirements for the past 90 days. [XX] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's class of common stock, as of the latest practicable
date. The number of shares outstanding of each of the registrant's classes of
common stock, as of April 21, 1997 11,691,268, all of one class of $.0005 par
value common stock.
<PAGE>
TABLE OF CONTENTS
Page No. PART I - Financial information Page No
-------
Item 1. Financial Statements 3-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
PART II - Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a
Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
EDGAR Exhibit 27 13
-2-
<PAGE>
<TABLE>
<CAPTION>
THE QUIGLEY CORPORATION
BALANCE SHEET
(Unaudited)
March 31, 1997
ASSETS
<S> <C>
Current Assets:
Cash .................................................. $ 9,042,356
Accounts receivable, net .............................. 12,334,453
Inventory ............................................. 844,427
Other current assets ............................... 107,721
-----------
TOTAL CURRENT ASSETS ........................... 22,328,957
-----------
EQUIPMENT - Less accumulated depreciation ................ 118,485
-----------
OTHER ASSETS:
Patent rights - Less accumulated amortization....... 445,510
Deferred income taxes (Note 4)...................... 967,975
Other assets ....................................... 378,841
-----------
TOTAL OTHER ASSETS ............................ 1,792,326
-----------
TOTAL ASSETS ............................................. $24,239,768
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable .................................... $ 903,396
Accrued payroll and payroll taxes ................... 663,429
Accrued royalties and sales commissions.............. 3,581,070
Accrued expenses .................................... 1,324,447
Accrued income taxes ................................ 5,292,149
----------
TOTAL CURRENT LIABILITIES ...................... 11,764,491
----------
OTHER NON-CURRENT LIABILITIES ............................. 884,000
----------
STOCKHOLDERS' EQUITY:
Common Stock, $.0005 par value; authorized
50,000,000; issued 12,178,130;
outstanding 11,691,268 shares (Note 2)............. 6,089
Additional paid-in capital .......................... 7,440,119
Retained earnings ................................... 5,638,057
Less: Treasury stock, 486,862 shares
at cost (Notes 2 & 3).............................. (1,145,358)
Stock subscription receivable (Note 2)............. (347,630)
----------
TOTAL STOCKHOLDERS' EQUITY ..................... 11,591,277
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................. $ 24,239,768
==========
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
<TABLE>
<CAPTION>
THE QUIGLEY CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31, 1997 March 31, 1996
<S> <C> <C>
NET SALES ...................................... $ 22,182,007 $ 105,432
------------ -----------
COST OF SALES .................................. 6,888,823 32,899
------------ -----------
GROSS PROFIT ................................... 15,293,184 72,533
------------ -----------
OPERATING EXPENSES:
Sales and marketing ...................... 2,486,124 42,137
Administration ........................... 1,899,564 108,314
------------ -----------
TOTAL OPERATING EXPENSES ............ 4,385,688 150,451
------------ -----------
INCOME BEFORE TAXES ............................ 10,907,496 (77,918)
------------ -----------
INCOME TAXES (Note 4)........................... 4,417,681 (628)
------------ -----------
NET INCOME ..................................... $ 6,489,815 ($ 77,290)
============ ===========
Earnings per common share:
Primary (Notes 2 and 3)................... $ .40 ($ .01)
============ ===========
Fully diluted (Notes 2 and 3)............. $ .40 ($ .01)
============ ===========
Weighted average common shares outstanding:
Primary (Notes 2 and 3)................... 16,368,844 8,416,568
Fully diluted (Notes 2 and 3)............. 16,368,844 8,416,568
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
<TABLE>
<CAPTION>
THE QUIGLEY CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,1997 March 31,1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) .............................. $ 6,489,815 ($77,290)
------------ --------
Adjustments to reconcile net income
(loss) to net cash used by operating activities:
Depreciation and amortization .............. 48,991 --
Deferred income taxes ...................... (252,150) --
(Increase) decrease in assets:
Accounts receivable .................... (10,133,629) 61,065
Inventory .............................. (543,695) 7,419
Other current assets ................... (97,864) 253
Increase (decrease) in liabilities:
Accounts payable ....................... 771,599 (7,757)
Accrued payroll and payroll taxes ...... 663,429 --
Accrued royalties and sales commissions. 2,950,425 --
Accrued expenses ....................... 1,205,096 (1,442)
Accrued income taxes ................... 4,669,831 --
Other non-current liabilities .......... 884,000 --
------------ --------
Total adjustments .................. 166,033 59,538
------------ --------
NET CASH PROVIDED BY OPERATING ACTIVITIES .......... 6,655,848 (17,752)
------------ --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................ (50,435) (697)
Patent rights and other assets .................. (390,515) (11)
------------ --------
NET CASH FLOWS FROM INVESTING ACTIVITIES .......... (440,950) (708)
------------ --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued from exercise of options and
warrants .................................... 27,500 --
Common stock issued from sale of stock .......... 76,007 28,575
Due from attorney's escrow account .............. 260,000 --
Stock subscription receivable ................... 7,978 (1,098)
------------ --------
NET CASH FLOWS FROM FINANCING ACTIVITIES .......... 371,485 27,477
------------ --------
NET INCREASE (DECREASE) IN CASH ................... 6,586,383 9,017
CASH AT BEGINNING OF PERIOD ....................... 2,455,973 79,612
------------ --------
CASH AT END OF PERIOD ............................. $ 9,042,356 $ 88,629
============ ========
</TABLE>
See accompanying notes to financial statements
-5-
<PAGE>
<TABLE>
<CAPTION>
THE QUIGLEY CORPORATION
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
Three months ended
March 31,1997 March 31,1996
<S> <C> <C>
Supplemental disclosure of cash flow information
Non cash investing and financing activities:
Capital expenditures ($7,905) -----
Patent rights (205,000) -----
Common stock issued for services performed 1,358,263 -----
Treasury stock cost (1,145,358) -----
</TABLE>
See accompanying notes to financial statements
-6-
<PAGE>
THE QUIGLEY CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND GENERAL
The Quigley Corporation (the "Company"), organized under the laws of the state
of Nevada, is primarily engaged in the development, manufacturing, and
marketing of homeopathic cold remedies. The products developed are being
offered to the general public through distributors, brokers, mail order, and is
regularly featured on the QVC Cable TV shopping network. For the fiscal periods
presented, and for the immediate future, the Company plans to continue
concentrating its efforts in the promotion of its major proprietary
"Cold-Eeze(TM)" and Cold-Eezer Plus products. These products are based upon a
proprietary zinc gluconate glycine formula which in a clinical study conducted
by The Cleveland Clinic, has been shown to reduce the severity and duration of
the common cold. This product is covered by patents registered in the United
States, United Kingdom, Sweden, France, Italy, Canada, Germany and pending in
Japan. Research is continuing on this product in order to maximize its full
potential use for the general public.
On July 15, 1996, results of this study were published in the Annals of
Internal Medicine - Vol. 125 No 2, of a new randomized double-blind
placebo-controlled study of the common cold, which had commenced at the
Cleveland Clinic Foundation, on October 3, 1994. This study had results that
indicated a 42% reduction in the duration and severity of the common cold.
The Company has exclusive worldwide use, manufacturing, marketing and
distribution rights for the zinc gluconate glycine lozenge formulation, known
as "Cold-Eeze(TM)". The goal of the Company is to have consumers worldwide make
"Cold-Eeze(TM)" their preferred choice for relief from the common cold.
The business of the Company is subject to federal and state laws and
regulations adopted for the health and safety of users of the Company's
products. Cold-Eeze(TM) is a homeopathic remedy which is subject to regulations
by various federal, state and local agencies, including the FDA and the
Homeopathic Pharmacopoeia of the United States.
The Company competes with a various range and size of suppliers in the cold
remedy products arena. Cold-Eeze(TM) has been clinically proven to reduce the
duration and severity of the common cold, whereas the competition's products
only relieve the symptoms of the cold. The management of the Company believes
there should be no future impediment on our ability to compete in the
marketplace now, or in the immediate future, since factors concerning the
product, such as, price, product quality, availability, reliability, credit
terms, name recognition, delivery and support are all properly positioned.
The Balance Sheet as of March 31, 1997, the Statements of Operations, and the
Statements of Cash Flows for the three month periods ended March 31, 1997 and
1996, have been prepared without audit. In the opinion of management, all
adjustments necessary to present fairly the financial position, results of
operations and cash flows, for the periods indicated, have been made. All
adjustments made were of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements and
accompanying notes for the fiscal year ended September 30, 1996, in the
Company's Form 10-KSB/A, and the transition quarter ended December 31, 1996, in
the Company's Form 10-QSB. The transition quarter reflects the Company's change
from a fiscal year end of September 30, to a calendar year end, and is
reflective of the first quarter results since the release of The Cleveland
Clinic Study in July 1996.
-7-
<PAGE>
NOTE 2 - TRANSACTIONS AFFECTING STOCKHOLDER'S EQUITY
On January 15, 1997, the Company split its common stock on a two-for-one basis.
Therefore, all share data such as, par value, earnings per share, options and
warrants exercised, cash received or to be received for outstanding options and
warrants are all on a post-split basis.
From January 1, 1997 to March 31, 1997, there were 40,000 shares issued through
the exercise of stock options and warrants of the Company, shares numbering
17,884 were issued for cash payment, 264,120 were issued for services rendered
to the Company, and 729,928 shares were returned to the Company to be placed in
treasury. The difference between the option payment price, cash received, or
fair market value for services rendered, resulted in an increase to the
additional paid-in-capital of the Company.
At March 31, 1997, there were a total of 4,940,000 (of which 4,640,000 are
currently exerciseable) of unexercised issued options and warrants of the
Company's stock.
Of the shares issued through the exercise of stock options and warrants, monies
in the amount of $347,630 still owing to the Company, are classified as a
contra account in stockholder's equity.
In addition, the contract, as modified in November 1996, with Sands Brothers &
Co., Ltd., the Company's investment banker, for the purpose of raising
additional capital needed for expansion, stipulates that "Sands" has the
conditional right to purchase, at $10 per share, 200,000 shares of the
Company's stock, for every million dollars they identify for the Company in a
private placement of the Company's stock pursuant to Regulation D. The Company
desired that the private placement was not to exceed $10 million.
During the period ended March 31, 1997, the Company decided not to pursue a
private placement offering. Therefore, the aforementioned possible additional
warrants for "Sands" will not materialize. However, in order to cancel this
arrangement with "Sands", which was subsequent to March 31, 1997, the Company
issued to "Sands" 350,000 additional warrants to purchase the Company's stock
at $10 per share. Accordingly, a provision for loss of $700,000 ($417,000 net
of taxes) for a total of 1,150,000 warrants issued to "Sands", and other
expenses expected to be incurred, was charged against earnings for the period
ended March 31, 1997. Also, the Company canceled a contract with a consulting
firm that was previously issued 350,000 options to purchase the Company's
stock. A provision of $91,000 ($54,000 net of taxes), was charged against
earnings during this period ended March 31, 1997. The provision for loss for
these canceled agreements, which is based upon the current information
available, may be adjusted, as a further valuation is made for these warrants.
On March 27, 1997, the Company received a net return to treasury 486,862 shares
of its stock because of a favorable ruling from litigation commenced against
Nutritional Foods, Ltd. ("NFL"). The total shares recovered was 729,928. As
payment for legal services, 243,066 restricted shares were issued on March 27,
1997 with a discounted market value for these shares of $1,145,358. This
discounted value then became the cost of the net treasury stock ($2.35 per
share) returned to the Company.
NOTE 3 - EARNINGS PER SHARE
Earnings and net loss per share is based on the weighted average number of
common shares outstanding during the three months ended March 31, 1997 and
1996. Using the modified treasury stock method, increased the weighted average
number of common shares outstanding for the period ended March 31, 1997 by
4,305,014 shares, or a total number of weighted shares outstanding of
16,368,844. During the period ended March 31, 1996, no effect has been given to
unexercised stock options or warrants because the effect would be antidilutive.
-8-
<PAGE>
NOTE 3 - EARNINGS PER SHARE (continued)
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share", which simplifies
the calculation of basic EPS and diluted EPS. The effective date is for
accounting periods ending after December 15, 1997, with restatement for prior
periods presented after December 15, 1997.
NOTE 4 - INCOME TAXES
Income taxes includes both deferred and currently payable taxes. Deferred
income taxes result from temporary differences which consist of a different tax
base for assets and liabilities than their reported amounts in the financial
statements. The deferred tax asset of $967,975 consists principally of future
tax deductions from the issuance of options, warrants and restricted stock. For
the period ended March 31, 1997 an effective tax rate is provided for deferred
and currently payable taxes at 40.5%. Since the Company was in a Net Operating
Loss position at March 31, 1996, only $628 was provided as the amount that was
expected to be realized.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company maintains certain royalty agreements with the founders and
developers, licensors, and consultants for the Cold-Eeze(TM) product. The gross
royalty is 13% of sales collected before certain deductions. Representative
Agreements are in place for several Brokers and Distributors, both Nationally
and Internationally. These agreements are sales performance based. In addition
the Company has also issued incentive common stock purchase options to its
Brokers, Distributors and Representatives. Additionally, there are employment
agreements in place with certain officers of the Company that expire in 2005 or
earlier, and provide for among other things, a minimum annual base
compensation.
During the period ended March 31, 1997, an agreement with the manufacturer of
the Cold-Eeze(TM) product for the Company was entered for a period of three
years. Also, the Company has contractual commitments for advertising amounting
to approximately $2,700,000.
Included in the results of operations for the period ended March 31, 1997, are
provisions for estimated costs to litigate the settlement of certain agreements
and infringements of the Company's proprietary Cold-Eeze(TM) product by certain
competitors.
NOTE 6 - OTHER MATTERS
On January 2, 1997, the Board of Directors approved the change of the Company's
fiscal year from September 30 to December 31 to reflect the fiscal year which
has been generally adopted by the pharmaceutical industry. The audited
statements for the transition period October 1, 1996 to December 31, 1996, will
be audited by Nachum Blumenfrucht, CPA, and filed by the Company within Form
10-KSB for the calendar year ended December 31, 1997.
On January 29, 1997, the Company engaged the independent accounting firm of
Coopers & Lybrand L.L.P. to audit the Company's financial statements for the
calendar year 1997. The replacement of the previous certifying accountant,
Nachum Blumenfrucht, CPA, was made by approval of the Board of Directors of the
Company and with agreement of Mr. Blumenfrucht. This change was due to the
dramatic expansion of business operations undertaken by the Company since the
close of the prior fiscal year. There have been no disagreements with the
former accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure, nor any
reportable event required to be disclosed.
-9-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
After extensive research and development, coupled with consumer test marketing,
the Company launched its products into the marketplace on a limited basis on
October 1, 1994. The Company's major product,"Cold-Eeze(TM)", is designed for
the commercial marketplace of Health Food Stores, Drug and Chain Stores and
Supermarkets. Upon completion of a second double-blind placebo-controlled study
at the Cleveland Clinic Foundation, which proved that Cold-Eeze, utilizing
13.3mg of zinc gluconate glycine, reduced the duration and severity of the
common cold by 42%. These results were then peer-published in The Annals Of
Internal Medicine. This study also confirmed a previous Cold-Eeze study
conducted at the Dartmouth College Cold Clinic which was peer-published in the
Journal Of International Medical Research. The Dartmouth study, using a 23mg
zinc gluconate glycine lozenge, also resulted in a 42% reduction in the
duration and severity of the common cold.
In keeping with Homeopathy "less is more" was achieved in foregoing a reduction
of dosage and under the previously reported direction of David Riley MD, a
known authority on homeopathy and the only physician authorized by HPUS, the
company has completed the process of a homeopathic proving on zinc gluconate
(the active ingredient of our cold therapy).
At our Company's sole expense, zinc gluconate now has a homeopathic drug
proving and a clinical trial demonstrating its effectiveness. A monograph has
been filed with HPCUS (Homeopathic Pharmacopoeia Convention of the United
States) and has been approved by the HPUS preliminary committee, the Pharmacy
committee and the HPUS Board of Directors. Zinc gluconate, the active
ingredient of Cold-Eeze(TM), will now be included in the HPUS pharmacopoeia.
Cold-Eeze is currently distributed, but not limited to the following
distribution outlets, Chain Stores and/or Distributors Including: McKesson, Zee
Medical, Foxmeyer, F. Dohman Company, Bergen Brunswick, Amerisource, US Health
Distributors, Cardinal Health, Walgreen's, Eckerd, Revco, RiteAid, Thrift Drug
, CVS, Albertsons, Kmart, Osco/Savon , American Stores, H.E. Butt and other
smaller chains and independent outlets. Cold-Eezer Plus, continues to be sold
successfully in the alternative marketplace of Doctor's Offices and the home
shopping channel QVC.
For those with access to the Internet, the Company has created an information
web site, which can be visited by using the following address:
http://www.quigleyco.com - The Company can also be E-mailed at:
[email protected].
RESULTS OF OPERATIONS
Prior to the release of the Cleveland Clinic Trial Study, financial information
previously reported does not really compare to the financial relationships that
are present in the three months period ended March 31, 1997. Also, it is
expected that the Company will experience significant continued overall growth
for the calendar year 1997. However, it is anticipated that there will be
significant revenue reductions in the upcoming second and third quarters, but
with substantial increases for the fourth quarter of this year. This presently
occurs because the primary cold season is from September to March.
For the three months ended March 31, 1997, the Company reported revenues of
$22,182,007 and a net income of $6,489,815, as compared with revenues of
$105,432 and a net loss of ($77,290) for the comparable period ended March 31,
1996. This substantial increase in revenue and profits is primarily due to the
publication of a recent clinical trial study in a medical journal, proving the
effectiveness of Cold-Eeze as a remedy for the common cold. Also, contributing
to this substantial increase was the Company's national marketing program,
national exposure in the media, such as the ABC network news program, "20/20",
in January 1997, and the substantial increase in the manufacturing availability
for the product during this period, which is also planned for the remainder of
1997.
-10-
<PAGE>
ITEM 2: RESULTS OF OPERATIONS (continued)
The current gross profit rate of 68.9% for the period ended March 31, 1997,
should remain as a relative constant going forward, especially for the
immediate future. This is comparable to the 68.8% gross profit rate for the
period ended March 31, 1996.
Operating expenses, such as delivery, brokerage commissions, promotion, and
advertising costs, increased significantly over the prior comparable period due
to the national marketing efforts and the relationship of revenue dollar volume
increases of the Cold-Eeze product. These expenses accounted for approximately
$3,262,695 of the total operating costs of $4,385,688 for the three months
ended March 31, 1997 as compared to total operating costs of $150,501 for the
prior comparable period. Accordingly, until other income tax strategies
currently being reviewed are implemented in the future, an effective tax rate
for the Company should approximate 40.5%.
Although the Company expects that sales levels will be highest during the peak
cold season from September through March, new marketing plans are under way as
well as negotiating sales distribution agreements for the Southern Hemisphere,
which has a cold season that is opposite of North America to help counteract
the current seasonality for the product.
Total assets of $24,239,768, working capital of $10,564,466 and shareholder's
equity of $11,591,277 for the period ended March 31, 1997, increased
dramatically from the prior comparable period. This occurred primarily from
significant sales and net income volume increases which thereby increased
accounts receivable by $10,133,629 and inventories by $543,695. The occurrence
of common stock related transactions, as compared to the comparable reporting
period, totaling $584,390 also contributed to the balance sheet increases.
The management of the Company currently believes that the expected significant
increases in revenues, and related profits generated, for the remainder of
1997, should provide an internal source of capital to fund the Company's
business operations, and as needed, short term funding with commercial banks.
Also, management is not aware of any trend, events or uncertainties that have,
or are reasonably likely, or expected to have, a material negative impact upon
the Company's short term or long term liquidity.
-11-
<PAGE>
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) Form 8-K was filed on February 4,
1997 covering all items specified in Note 6 to the Company's financial
statements
SIGNATURES
Pursuant to the requirements of the be signed Securities Exchange Act of 1934,
the registrant has duly caused this report to on its behalf by the undersigned
thereunto duly authorized.
THE QUIGLEY CORPORATION
By: /s/ George J. Longo
-------------------
George J. Longo
Vice President, Chief Financial Officer
Date: May 15, 1997
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000868278
<NAME> E.H.Kaytes
<MULTIPLIER> 1
<CURRENCY> US.Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<EXCHANGE-RATE> 1
<CASH> 9,042,356
<SECURITIES> 0
<RECEIVABLES> 14,709,328
<ALLOWANCES> 2,374,875
<INVENTORY> 844,427
<CURRENT-ASSETS> 22,328,957
<PP&E> 118,485
<DEPRECIATION> 6,454
<TOTAL-ASSETS> 24,239,768
<CURRENT-LIABILITIES> 11,764,491
<BONDS> 0
0
0
<COMMON> 6,089
<OTHER-SE> 11,585,188
<TOTAL-LIABILITY-AND-EQUITY> 24,239,768
<SALES> 22,182,007
<TOTAL-REVENUES> 22,182,007
<CGS> 6,888,823
<TOTAL-COSTS> 11,274,511
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,907,496
<INCOME-TAX> 4,417,681
<INCOME-CONTINUING> 6,489,815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,489,815
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
