<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
Commission file number 0-19600
-------
CORE, INC.
----------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2828817
-------------------------------- ----------------------
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
18881 Von Karman Avenue, Suite 1750, Irvine, California 92715
-------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (714) 442-2100
--------------
Indicate by check "X" 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 file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
On April 30, 1996, there were 4,838,753 shares of the Registrant's Common Stock
outstanding.
<PAGE>
CORE, INC.
FORM 10-Q
for the quarter ended March 31, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
PART I. FINANCIAL INFORMATION
---------------------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets............................ 3
Consolidated Condensed Statements of Operations.................. 5
Consolidated Condensed Statements of Cash Flows.................. 6
Notes to Consolidated Condensed Financial Statements............. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 10
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings................................................ N/A
Item 2. Changes in Securities............................................ N/A
Item 3. Defaults Upon Senior Securities.................................. N/A
Item 4. Submission of Matters to a Vote of Security
Holders.......................................................... N/A
Item 5. Other Information................................................ N/A
Item 6. Exhibits and Reports on Form 8-K................................. 15
Signatures ................................................................. 17
</TABLE>
2
<PAGE>
CORE, INC.
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ -----------
<S> <C>(Note 1) <C>(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,005,807 $ 18,332
Cash pledged as collateral 106,000 45,500
Customer advances 286,550 286,550
Investments available-for-sale 1,531,610 437,009
Accounts receivable, net of allowance for
doubtful accounts of $170,337 in 1995 and
$170,337 at March 31, 1996 2,987,356 4,301,040
Notes receivable from officers 35,507 36,169
Claims receivable 44,845 44,851
Notes receivable - related party 1,041,450
Prepaid expenses and other current assets 445,076 450,892
----------- -----------
Total current assets 6,452,751 6,661,793
Property and equipment, net 3,155,234 3,527,849
Cash pledged as collateral 192,000 192,000
Deposits and other assets 178,402 298,479
Goodwill, net of accumulated amortization of
$27,000 in 1995 and $34,600 at March 31, 1996 1,929,885 1,918,780
Intangibles, net 286,927 266,781
Total assets $12,195,199 $12,865,682
=========== ===========
</TABLE>
3
<PAGE>
CORE, INC.
Consolidated Condensed Balance Sheets - Continued
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
----------- -----------
(Note 1) (Unaudited)
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 846,156 $ 1,252,284
Accrued expenses and vacation 1,199,255 1,140,131
Accrued payroll 184,795 455,343
Accrued vacation 376,561 438,811
Accrued restructuring costs 130,498 59,698
Deferred income taxes 68,316 68,316
Claims payable 326,368 326,368
Current portion of notes payable 155,994 91,995
Current portion of contractual obligations to
former shareholders 298,509 334,484
Current portion of capital lease payments 91,159 82,894
----------- -----------
Total current liabilities 3,301,050 3,811,513
Contractual obligations to former shareholders,
net of current portion 645,106 316,824
Amounts due to former shareholders under non-
compete agreements 100,000 50,000
Capital lease obligations, net of current portion 71,969 59,889
Deferred rent, net of current portion 279,317 264,622
Deferred income taxes 149,500 149,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value, authorized
500,000 shares; no shares issued and outstanding
Common stock, $0.10 par value per share;
authorized 10,000,000 shares; issued and
outstanding 4,794,403 and 4,815,781 shares at
December 31, 1995 and March 31, 1996,
respectively 479,440 481,573
Additional paid-in capital 18,052,547 18,104,713
Deferred compensation (51,120) (51,520)
Cumulative unrealized gain on investments
available-for-sale 30,975 6,778
Accumulated deficit (10,863,585) (10,328,620)
----------- -----------
Total stockholders' equity 7,648,257 8,213,334
----------- -----------
Total liabilities and stockholders' equity $12,195,199 $12,865,682
=========== ===========
</TABLE>
See accompanying notes
4
<PAGE>
CORE, INC.
Consolidated Consensed Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
------------------------------
<S> <C> <C>
Revenues $ 4,728,653 $6,583,562
Cost of services 3,116,938 3,938,910
------------- --------------
Gross profit 1,611,715 2,644,652
Operating expenses:
General and administrative 1,190,608 1,403,074
Sales and marketing 382,033 470,234
Restructuring costs 557,515
Merger costs and expenses 427,950
Depreciation and amortization 232,562 277,911
------------- --------------
Total operating expenses 2,790,668 2,151,219
Income (loss) from operations (1,178,953) 493,433
Other income (expense):
Interest income 77,483 45,366
Interest expense (51,339) (18,451)
Realized gain (loss) on sale of investments
available-for-sale (1,663) 14,617
Other income 2,760
------------- --------------
27,241 41,532
------------- --------------
Net income (loss) $(1,151,712) $534,965
============= ===============
Net income (loss) per common share $(0.24) $0.10
============= ===============
Weighted average number of common shares
outstanding 4,739,930 5,532,000
============= ===============
</TABLE>
See accompanying notes.
5
<PAGE>
CORE, INC.
Consolidated Consensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
--------------------------------
<S> <C> <C>
Operating activities
Net income (loss) $(1,151,712) $534,965
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 250,963 300,006
Provision for doubtful accounts 15,000
Loss on sale/disposal of equipment 1,144
Realized gain on sale of investments
available-for-sale (14,617)
Decrease in contractual obligation to
former shareholders (134,000)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (187,085) (1,313,684)
Decrease in prepaid expenses and other
current assets 145,679 4,184
Increase in customer advances (6)
(Decrease) in cash overdraft (301,367)
Decrease in accounts payable and accrued
expenses 581,843 482,057
--------------- --------------
Net cash used in operating activities (646,679) (139,951)
Investing activities
Additions to property and equipment (186,719) (636,019)
Additions to goodwill (6,495)
Decrease (increase) in cash pledged as collateral (167,098) 60,500
Increase to notes receivable from officers (662)
Note receivable - AmHealth (1,041,450)
Increase in deposits and other assets (120,077)
Purchase of investments available-for-sale (3,989,302)
Sales of investments available-for-sale 7,879,679 1,085,021
--------------- --------------
Net cash provided by (used in) investing activities 3,536,560 (659,182)
</TABLE>
See accompanying notes
6
<PAGE>
CORE, INC.
Consolidated Consensed Statements of Cash Flows - Continued (unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
--------------------------------
<S> <C> <C>
Financing activities
Net (repayments) borrowings under revolving line of
credit (1,200,000)
Proceeds from issuance of officer's notes
Payments on officer's notes 200,000
Payments on notes payable (92,454) (63,999)
Payments on capital lease obligations (21,175) (20,345)
Payments on contractual obligation to former
shareholders (158,307)
Issuance of common stock upon exercise of stock
options and warrants 54,309
--------------- -------------
Net cash used in financing activities (1,513,629) (188,342)
--------------- -------------
Net increase (decrease) in cash and cash equivalents 1,376,252 (987,475)
Cash and cash equivalents at beginning of year -- 1,005,807
--------------- -------------
Cash and cash equivalents at end of year $1,376,252 $18,322
=============== =============
Supplemental disclosure of cash flow information
Interest paid $54,354
=============== =============
Income taxes paid
</TABLE>
See accompanying notes.
7
<PAGE>
CORE, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 1996
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission, but do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The balance sheet at December 31, 1995 has been derived
from the audited financial statements of CORE, INC. (the "Company") at that
date.
In the opinion of management, all adjustments, (consisting of only normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March 31, 1996 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the consolidated
financial statements for the year ended December 31, 1995 contained in the
Company's annual report filed on Form 10-K (File #0-19600) with the Securities
and Exchange Commission on April 1, 1996.
Note 2 - Investments
At March 31, 1996, the Company had no securities that qualified as trading or
held-to-maturity. The following is a summary of available-for-sale securities
at March 31, 1996:
<TABLE>
<CAPTION>
Amortized Unrealized Estimated
Cost Gain Fair Value
---------------------------------
<S> <C> <C> <C>
U.S. Treasury Securities $430,231 $6,778 $437,009
</TABLE>
For the three months ended March 31, 1996, the Company sold available-for-sale
securities with a fair value on the date of sale of $1,085,021. A realized gain
of $14,617 on these sales was recognized in the three months ended March 31,
1996. The net unrealized gain of $6,778 on these securities has been included
as a separate component of stockholders' equity as of March 31, 1996.
At March 31, 1996, investments consisted of U.S. Treasury securities.
8
<PAGE>
Note 3 - Impairment of Long-Lived Assets
In accordance with FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets to be Disposed Of, the Company records impairment losses on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
During the quarter ended March 31, 1996, events and circumstances indicated that
approximately $120,000 of intangible assets related to the Integrated Behavioral
Health division might be impaired. However, the Company's estimate of
undiscounted cash flows indicated that such carrying amounts were expected to be
recovered. Nonetheless, it is reasonably possible that the estimate of
undiscounted cash flows may change in the near term resulting in the need to
write-down those assets to fair value.
9
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
CORE, INC. ("CORE" or "the Company") is a national provider of managed
disability and health care benefits management services to Fortune 500 companies
and other self-insured employers, third-party administrators and insurance
carriers. The Company's services include managed disability services using
CORE's proprietary Workability(R) disability management software, specialty
physician and behavioral health review services and health care benefits
utilization review and case management services. The Company's services are
designed to assist its clients monitor and control disability and health care
benefits costs without compromising the quality of health care services provided
to the patient. The Company is typically compensated for these services on a per
review, (i.e. per case), hourly or to a lesser extent per employee per month
fee. In a limited number of cases, the Company's compensation varies with cost
savings realized by the client as a result of the Company's services. With the
AmHealth acquisition discussed below, CORE will also manage a network of nine
occupational health clinics and on-site medical facilities, which render
occupational and industrial medical services.
The Company was incorporated in Massachusetts in April 1984 under the name Peer
Review Analysis, Inc. ("PRA") and became publicly-held entity in December 1991
with the completion of an initial public offering. In March 1995, PRA completed
its merger (the "CMI/PRA Merger") involving Core Management, Inc., a Delaware
corporation ("CMI"). CMI offers a broad range of disability management, health
care utilization review, case management and analysis and consulting services.
The CMI/PRA Merger was accounted for as a pooling of interests for accounting
purposes. The description herein of the business of the Company includes the
operations of both PRA and CMI from the inception of both companies. In July
1995 the Company changed its name from Peer Review Analysis, Inc., to CORE, INC.
On October 2, 1995, CORE acquired all the capital stock of Cost Review Services,
Inc. ("CRS"), a workers' compensation bill audit firm.
CORE intends to expand its position as a leading provider of managed disability
benefits services by utilizing its Workability(R) program and related services
to reduce the direct costs of group disability and workers' compensation
benefits and to improve employee productivity. The Company believes that the
combination of its health care and workplace management tools and its strong
information technology foundation provide an effective management platform that
can be tailored to meet the needs of employers and managed care organizations.
10
<PAGE>
Recent Developments
On May 13, 1996, the Company filed with the Securities and Exchange Commission a
registration statement with respect to a public stock offering by CORE of
2,500,000 shares of its Common Stock. The closing of the offering is contingent
upon the closing of the acquisition by CORE, pursuant to an Asset Purchase
Agreement executed on May 10, 1996, of certain assets and operations of
AmHealth, Inc. AmHealth is a management services organization ("MSO") that
manages occupational health clinics and on-site industrial medical facilities in
California. The assets and operations to be acquired by the Company relate to
nine occupational health clinics and a medical services division that provides
on-site occupational health and industrial medical services to approximately 11
employers. These clinics and the on-site medical services operation provide
initial diagnosis and treatment of work-related injuries and illnesses. The
purchase price for AmHealth's assets is $15.7 million payable in cash.
Consummation of the transaction is subject to the successful completion of the
public stock offering, satisfactory completion of a due diligence investigation,
and satisfaction of certain other conditions.
Additionally, CORE has provided or guaranteed lines of credit to AmHealth of up
to $1.0 million to meet working capital requirements and up to $500,000 for
capital purchases. AmHealth's use of funds, under these lines of credit, is
subject to CORE's approval. CORE has provided $1.0 million to AmHealth under
these lines of credit as of March 31, 1996.
On April 8, 1996, CORE announced that it had been selected (subject to
negotiation of a definitive service agreement) by Bell Atlantic Corporation to
provide managed disability services, including utilization of CORE's WorkAbility
program, for approximately 57,000 employees beginning August 1, 1996. The
Company and Bell Atlantic are currently negotiating the agreement.
On April 29, 1996, in connection with the Company's hiring of Peter P. Greaney,
M.D. as the Company's Chief Medical Officer, CORE entered into an agreement with
Dr. Greaney, pursuant to which the Company has the option, exercisable through
December 31, 1996, to purchase the Greaney Medical Group. GMG Workcare, a
division of Greaney Medical Group, is a national consulting organization
specializing in all aspects of occupational medicine, including managed
occupational health care and outsourcing of occupational health programs for
national employers. The purchase price for the business is approximately $8.1
million.
On April 30, 1996, the Company announced its negotiations with respect to the
Company's providing long-term administrative and managerial service to
Continental FirstCare, a MSO affiliated with an independent physician
association ("IPA") of approximately 75 occupational health facilities in
California.
11
<PAGE>
Results of Operations
The following table sets forth certain statement of operations data expressed
as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1995 1996
------------------------
<S> <C> <C>
Revenue 100.0% 100.0%
Cost of services 65.9 59.8
Gross profit 34.1 40.2
General and administrative expense 25.2 21.3
Sales and marketing expense 8.1 7.1
Net income (loss) (24.4%) 8.1%
</TABLE>
The following table characterizes the Company's revenue by similar or related
service for the three months ended March 31:
<TABLE>
<CAPTION>
1995 1996
---------------------------------
Amount Percent Amount Percent
---------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Specialty physician and behavioral
health review $2,259 47.8% $2,325 35.3%
Utilization review and case management 1,568 33.1 1,909 29.0
Managed disability (including WorkAbility(R),
analytic and bill audit) 902 19.1 2,350 35.7
-----------------------------------
$4,729 100.0% $6,584 100.0%
===================================
</TABLE>
Three Months Ended March 31, 1996 and 1995
Revenues. Revenues increased by $1,855,000 (39%) from $4,729,000 in 1995 to
- ---------
$6,584,000 in 1996. This increase can be attributed to continued growth in the
volume of reviews being processed by the Company from existing clients in each
of these principal service lines as well as the addition of new clients.
Approximately $1,448,000 (78%) of the Company's increase in revenues during the
first quarter of 1996 came from managed disability services. The majority of
this increase resulted from the addition in 1995 of Hughes Electronics
Corporation and Champion International as key WorkAbility clients, increased
services to smaller corporate clients under the Company's distribution
relationship with CIGNA Insurance and the acquisition of CRS in October 1995
giving CORE the ability to service the workers' compensation market with bill
audit services.
During the first quarter of 1996, the Company's top five clients represented 31%
of revenues compared to 33% during the first quarter of 1995. No single client
represented more than 10% of total revenues in the quarter ended March 31, 1996.
12
<PAGE>
Cost of services. Cost of services for the Company include direct expenses
- -----------------
associated with the delivery of its review and managed care services, including
salaries for professional, clerical and license support staff, the cost of
physician reviewer consultants and telephone expense. Cost of services increased
by $822,000 (26%) from $3,117,000 for the three months ended March 31, 1995 to
$3,939,000 for the three months ended March 31, 1996. The increase is primarily
the result of additional payroll associated with processing a higher volume of
referrals and increased staffing levels required to service new and growing
WorkAbility clients. Gross profit performance improved from 34% for the quarter
ended March 31, 1995 to 40% for the quarter ended March 31, 1996 due primarily
to the efficiencies obtained from the restructuring of operations following the
CMI/PRA Merger (March 1995), including a consolidation of management staff and
the companies' benefit plans, and greater economies of scale related to higher
revenues.
General and administrative expenses. General and administrative expenses
- ------------------------------------
include the cost of executive, administrative and information services
personnel, rent and other overhead items. General and administrative expenses
increased $212,000 (18%) from $1,191,000 or 25% of revenues for the quarter
ended March 31, 1995 to $1,403,000 or 21% of revenues for the quarter ended
March 31, 1996. Expenses increased due to additional staffing in the accounting
and information services areas to support the growth of the Company's sales.
Additionally, rent and other general and administrative expenses have increased
due to the purchase of CRS. The improvement as a percentage of revenue is
generally due to efficiencies obtained as a result of the CMI/PRA Merger and
the greater economies of scale related to higher revenues.
Sales and marketing expenses. Sales and marketing expenses includes salaries
- -----------------------------
for sales and account management and travel expense. Sales and marketing
expenses also include costs designed to increase revenues, such as participation
in and attendance at industry trade shows and conferences. Sales and marketing
expenses increased $88,000 (23%) from $382,000 for the quarter ended March 31,
1995 to $470,000 for the quarter ended March 31, 1996. The increase is primarily
due to increased travel expenses. The Company's sales and marketing strategy
focuses the efforts of an industry known senior management team and a smaller
sales and marketing staff on fewer but significantly larger sales prospects.
Financial Condition, Liquidity and Capital Resources
For the three months ended March 31, 1996, the Company's cash and cash
equivalents decreased by $987,000. For this period, operating activities used
$141,000 due primarily to an increase of $1,314,000 in accounts receivable,
offset by income for the quarter of $535,000 and an increase in accounts payable
and accrued expenses of $482,000. The increase in accounts receivable can be
attributed to continued revenue growth while the increase in accounts payable
and accrued expenses relates to the timing of payments. The net cash used in
13
<PAGE>
investing activities of $658,000 is essentially related to the use of $635,000
of cash to fund software development and leasehold improvements at the Company's
Burlington office. In addition, the Company issued notes receivable to
affiliates in the amount of $1,041,000, using cash provided from the sale of
investments available-for-sale of $1,085,000. The Company's financing activities
used $188,000 for payments due on contractual obligations, notes payable and
capital leases.
During the first quarter of 1996, the Company increased its available line of
credit by $1,000,000 up to $2,500,000. This line of credit will be utilized to
meet short-term demands for cash that fluctuate based on the timing of
collections on accounts receivable and may also be utilized in connection with
the Company's proposed acquisition of AmHealth. There was no principal or
interest outstanding on the line at March 31, 1996.
During the first quarter of 1996, in conjunction with CORE's proposed
acquisition of AmHealth, the Company loaned $1,000,000 to AmHealth, under lines
of credit agreements. See AmHealth discussion under "Current Developments."
The Company plans to finance its operations and working capital requirements
with investments on hand, earnings from operations and other sources of
available funds. The Company believes that these resources will be sufficient to
meet its liquidity and funding requirements through at least the years 1996 and
1997.
14
<PAGE>
PART II.
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits. The following exhibits are included:
Exhibit No. Exhibit
- ----------- -------
2.1 Registrant's January 9, 1995 letter to AmHealth, Inc. concerning a
proposed acquisition of assets. Filed as exhibit no. 2.3 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
2.2 Asset Purchase Agreement, dated May 10, 1996, by and among
Registrant, AmHealth Clinics Corp. and AmHealth, Inc. (without
Exhibits and Schedules). Filed as exhibit no. 2.4 to the
Registrant's Registration Statement on Form S-1, filed May 13,
1996, and incorporated herein by reference.
2.3 Option to Purchase Business Agreement, dated April, 1996, between
Registrant and Peter P. Greaney, M.D. Filed as exhibit no. 2.5 to
the Registrant's Registration Statement on Form S-1, filed May 13,
1996, and incorporated herein by reference.
10.1 Form of Stock Option Agreement, granted March 29, 1996, to
officers, including schedule of officer optionees. Filed as exhibit
no. 10.31 to the Registrant's Registration Statement on Form S-1,
filed May 13, 1996, and incorporated herein by reference.
10.2 Form of Stock Option Agreement, granted March 29, 1996, for
consulting services, including schedule of optionees. Filed as
exhibit no. 10.32 to the Registrant's Registration Statement on
Form S-1, filed May 13, 1996, and incorporated herein by reference.
10.3 Employment Agreement, dated April, 1996, between Registrant and
Peter P. Greaney, M.D. Filed as exhibit no. 10.45 to the
Registrant's Registration Statement on Form S-1, filed May 13,
1996, and incorporated herein by reference.
10.4 Amendment to Loan Agreement, dated March 25, 1996, by and among
Registrant, Core Management, Inc., a Delaware corporation, and Cost
Review Services, Inc., as borrowers, and Silicon Valley Bank. Filed
as exhibit no. 10.56
15
<PAGE>
to the Registrant's Registration Statement on Form S-1, filed May
13, 1996, and incorporated herein by reference.
11 * Statement re: Computation of Per Share Earnings for the three
months ended March 31, 1996.
__________________________________
* Filed herewith
(b) Reports on Form 8-K.
The Company did not file any Reports on Form 8-K during the three months
ended March 31, 1996.
16
<PAGE>
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.
CORE, INC.
By: /s/ William E. Nixon
--------------------------------------------------
William E. Nixon
Chief Financial Officer, Treasurer and Executive
Vice President (Duly authorized officer and
Principal Financial Officer)
Dated: May 15, 1996
17
<PAGE>
FORM 10Q
PART II
Item 6.
Exhibit 11.1
- ------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31,
CORE, INC.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Primary
Average shares outstanding 5,532,000 4,739,930
Shares issuable on assumed exercise of
dilutive options - based on treasury
stock method using average market
price
Shares issuable on assumed exercise of
dilutive warrants
--------------- --------------
Total 5,532,000 4,739,930
=============== ==============
Net Income (loss) 534,965 (1,151,712)
=============== ==============
Income (loss) per share 0.10 (0.24)
=============== ==============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 1,005,807<F2> 18,332<F2>
<SECURITIES> 1,531,610 437,009
<RECEIVABLES> 3,157,693 4,471,377
<ALLOWANCES> 170,337 170,337
<INVENTORY> 0 0
<CURRENT-ASSETS> 6,452,751 6,661,793
<PP&E> 3,155,234<F1> 3,527,849<F1>
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 12,195,199 12,865,682
<CURRENT-LIABILITIES> 3,301,050 3,811,513
<BONDS> 0 0
0 0
0 0
<COMMON> 479,440 481,473
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 12,195,199 12,865,682
<SALES> 4,728,653<F3> 6,583,562<F3>
<TOTAL-REVENUES> 4,728,653 6,583,562
<CGS> 3,116,938 3,938,910
<TOTAL-COSTS> 3,116,938 3,938,910
<OTHER-EXPENSES> 2,790,668 2,151,219
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (26,147) (26,915)
<INCOME-PRETAX> (1,151,712) 534,965
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,151,712) 534,965
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,151,712) 534,965
<EPS-PRIMARY> (0.24) 0.10
<EPS-DILUTED> (0.24) 0.10
<FN>
<F1>PP&E is net of depreciation
<F2>Balance sheet is Dec. 31, 1995 and March 31,1996
<F3>Statement of operations is three months ended 3/31/95 and 3/31/96
</FN>
</TABLE>
