UNITED STATES
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 30,1996
Commission File Number: 0-24768
INTERNATIONAL NURSING SERVICES INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1123311
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
360 South Garfield St. Suite 400, Denver, CO 80209
(Address of principal executive offices) (Zip Code)
(303) 393-1515
(Registrant's telephone number, including area code)
Indicate by 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 file such reports), and (2) has been subject
to such filing requirements for the
past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of November 11, 1996.
Common Stock, $0.001 par value 5,190,181
Class Number of Shares
<TABLE>
<CAPTION>
INTERNATIONAL NURSING SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
<S> <C> <C>
Current Assets
Cash $ 128,000 $ 19,000
Accounts receivable, net 3,872,000 2,098,000
Subscriptions receivable - 300,000
Other current assets 28,000 20,000
Total current assets 4,028,000 2,437,000
Property and equipment, net 342,000 282,000
Other Assets
Intangible assets, net 4,211,000 1,553,000
Total assets $ 8,581,000 $4,272,000
Current liabilities
Checks written in excess
of book balance $ - $ 244,000
Accounts payable 640,000 520,000
Accrued expenses 604,000 613,000
Current portion of debt 120,000 651,000
Current portion of capital
lease obligation 49,000 30,000
Advances under financing
agreement 2,656,000 1,178,000
Total current liabilities 4,113,000 3,236,000
Long-term debt
Long-term portion of capital
lease 63,000 60,000
Long-term portion of debt - 200,000
Stockholders' equity
Preferred stock, 12% cumulative
convertible, $1.00 par value,
2,500,000 shares authorized,
469,900 issued and outstanding - 470,000
Preferred stock, 10% cumulative
convertible, $10,000 par value,
488 shares authorized, 244
issued and outstanding 2,440,000 -
Common stock, $.001 par value;
15,000,000 shares authorized,
4,629,411 and 2,894,773 issued
and outstanding at September 30,
1996 and December 31, 1995,
respectively 5,000 3,000
Dividends payable with common
stock - 441,000
Additional paid-in capital 7,697,000 5,879,000
Accumulated deficit (5,737,000) (6,017,000)
Total stockholders' equity 4,405,000 776,000
Total liabilities and
stockholders' equity $ 8,581,000 $ 4,272,000
</TABLE>
INTERNATIONAL NURSING SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
Net revenues $3,819,000 $2,929,000 $10,399,000 $10,052,000
Direct costs of
services 2,906,000 2,228,000 7,751,000 8,013,000
Gross Margin 913,000 701,000 2,648,000 2,039,000
Selling, general and
administrative
expenses 901,000 738,000 2,374,000 2,720,000
Net income (loss)
from operations 12,000 (37,000) 274,000 (681,000)
Interest expense, net (134,000) (116,000) (391,000) (441,000)
Net income (loss) (122,000) (153,000) (117,000) (1,122,000)
Preferred stock
dividends (44,000) (147,000) 397,000 (578,000)
Net income (loss)
applicable to
to common
shareholders $(166,000) $(300,000) $280,000 $(1,700,000)
Net income (loss)
per common share $ (0.02) $ (0.22) $ 0.04 $ (1.25)
Weighted average
shares outstanding 8,395,951 1,363,779 7,146,959 1,363,779
</TABLE>
The accompanying notes to financial statements
are an integral part of these consolidated statements
INTERNATIONAL NURSING SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> For the Nine Months Ended September 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM (USED IN)
OPERATING ACTIVITIES:
Net loss $(161,000) $(1,122,000)
Adjustments to reconcile net loss
to net cash flows from (used in)
operating activities-
Depreciation and amortization 276,000 173,000
Net changes in current assets
and current liabilities (841,000) 1,269,000
Net cash flows from (used in)
operating activities (726,000) 320,000
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment (90,000) (24,000)
Cash paid for acquisitions (2,254,000) (4,000)
Increase in acquisition costs (173,000) -
Net cash flows used in
investing activities (2,344,000) (28,000)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Advances, net 1,478,000 305,000
Net proceeds from issuance of stock 2,349,000 -
Payments on debt and notes payable (648,000) (187,000)
Net cash flows from (used in)
financing activities (195,000) (292,000)
Net (decrease) increase in cash
and cash equivalents 109,000 -
CASH AND CASH EQUIVALENTS,
at beginning of period 19,000 -
CASH AND CASH EQUIVALENTS,
at end of period $ 128,000 $ -
Non-cash investing and financing activities:
Preferred stock converted to 1,174,380 shares of common stock during
1996.
Acquisition of accounts receivable and the business of Ellis Home
Health Services, Inc. for 256,250 shares of
common stock.
Acquisition of approximately $56,000 of property under capital leases
during 1996.
Satisfaction of a note payable totaling $47,957 (including $22,957 of
accrued interest expense) by issuing
17,300 shares of common stock.
Acquisition of the business of STAT Health Care Services, Inc. for
200,000 shares of common stock and cash.
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements
</TABLE>
INTERNATIONAL NURSING SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are unaudited and reflect
all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for
the interim periods. The consolidated financial statements as of
December 31, 1995 have been derived from audited financial
statements, the report on which included an explanatory paragraph
describing uncertainties concerning the Company's ability to
continue as a going concern. The consolidated financial
statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Form 10-
KSB for the fiscal year ended December 31, 1995. The results of
operations for the nine months ended September 30, 1996 are not
necessarily indicative of the results for the entire fiscal year
ending December 31, 1996.
2. EQUITY TRANSACTIONS
On July 17, 1996 the Registrant completed the acquisition of
certain assets of STAT Health Care Services, Inc. ("STAT")
through the issuance of 200,000 shares of International Nursing
Services, Inc. ("NURS" or the "Company") common stock valued at
$1.88 per share, $1,550,000 cash and the issuance of a warrant
to purchase 125,000 shares of the Company's common stock at
$1.88 per share.
The assets acquired consisted of approximately $10,000 of
property and equipment. The remainder of the purchase price is
allocated to the current value of the future cash flow of the
operations of STAT. STAT is a home health care provider and
NURS intends to continue the business of STAT and to use the
assets accordingly. The funding for the cash portion of the
acquisition price was provided by funds received from the
private placement described below.
Concurrent with the acquisition of STAT, the Company also
closed a private placement of 189 units at $10,000 per unit,
each unit consisting of one share of a new class of convertible
preferred stock which is convertible prior to the third
anniversary of the issuance date into the number of shares of
the Company's common stock determined by dividing $10,000, plus
the amount of any accrued but unpaid dividends by a conversion
price equal to the lesser of $1.25 per share or 75% of the then
prior five day average closing sales price and a warrant to
purchase 8,000 shares of the Company's common stock at $2.50 per
share. The new class of convertible preferred stock carries a
10% dividend payable quarterly (which may increase to 18% in
certain circumstances) and a liquidation preference of $10,000
per share. In September 1996, an additional 55 units were sold
in a private placement on identical terms.
Investors in the private placement also received an option to
purchase an equivalent number of units until December 31, 1997
on equivalent terms. The private placement raised net proceeds
to the Company of approximately $2,322,000.
In connection with the Company's acquisition of Ellis Home Health
Services, Inc. ("Ellis") in April 1996, the Company issued
256,250 shares of its common stock to the former owner of Ellis.
The Company guaranteed that the seller of Ellis would receive at
least $4.00 per share on the sale of these shares, and if the
shares were sold for less than the $4.00 per share, the Company
agreed to either issue additional shares or pay the shortfall in
cash. Through the quarter ended September 30, 1996, the former
owner of Ellis has sold approximately 216,000 shares at below the
$4.00 guaranteed price and therefore the Company has paid $60,000
in cash to the former owner of Ellis and recorded a liability of
approximately $200,000. This was recorded as an adjustment to
the previous recorded stock value issued for the acquisition.
3. STOCK OPTIONS
In July 1996, the Company granted options to purchase 250,000
shares of common stock to employees of the Company, 200,000 of
which were issued to officers of the Company, under an employee
stock option plan at an exercise price of $1.88, which was the
fair market value at the date of the grant. In addition, the
Company canceled an option to purchase 50,000 shares at $3.06
which was issued to an officer of the Company in March 1996 and
replaced the canceled option with an option to purchase the same
number of shares at $1.88, which was the fair market value at the
time of the issuance.
4. LITIGATION SETTLEMENTS
The Company was named as a defendant in a wrongful termination
lawsuit filed in District Court, in Denver, Colorado. The
plaintiff, Dick Jensen, alleged damages of $47,000. The
plaintiff claimed that the Company wrongfully terminated him in
violation of his employment contract. The Company settled this
claim in September 1996 by paying the former employee $17,000,
and the lawsuit has been withdrawn.
The Company was named as a defendant in a breach of contract
lawsuit filed in District Court, in Denver, Colorado. The
plaintiff, Lumiere Securities, Inc. ("LSI") formerly known as LIK
Securities, alleged that the Company owed LSI approximately
$50,000 as a merger and acquisition consulting fee.
The Company settled this claim in October 1996 by issuing 20,133
shares of common stock valued at $2.63 pursuant to the terms
of the settlement agreement which represented the
prior four day average sales price prior to settlement.
The Company was named as a defendant in a collection proceeding
lawsuit filed in the U.S. District Court, Eastern District of
Tennessee, Southern Division. The plaintiff, Brentwood Services
Group ("Brentwood"), claims that the Company owed Brentwood
approximately $130,000. The Company settled this claim in
October 1996 by agreeing to pay Brentwood $50,000 by November 30,
1996 and an additional $25,000 by December 31, 1996.
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
This filing contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 and the Company intends
that such forward-looking statements be subject to the safe harbors
created thereby. These forward-looking statements include the plans
and objectives of the management for future operations, including
plans and objectives relating to services offered by and future
economic performance of the Company.
The forward-looking statements included herein are based on
current expectations that involve a number of risks and uncertainties.
These forward-looking statements are based on assumptions that the
Company will continue to be able to provide on a cost-effective and
competitive basis quality home health care and interim staffing
services, that the regulatory environment governing the Company's
industry will not change in ways that are materially adverse to the
Company and its operations, that the Company will be able to continue
to fund operations, that the Company will be able to raise additional
equity capital if required to fund operations and acquisitions, that
the Company will be able to achieve operating efficiencies resulting
in cost reductions, that a sufficient supply of qualified health care
personnel will be available to the Company for deployment in the
health care industry on a competitive and cost-effective basis and
that there will be no material adverse change in the demand for the
Company's services or in the Company's operations or business.
Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market
conditions, and future business decisions, all of which are difficult
or impossible to predict accurately and many of which are beyond the
control of the Company. Although the Company believes the assumptions
underlying the forward-looking statements are reasonable, any of the
assumptions could prove inaccurate, and therefore, there can be no
assurance that the results contemplated in the forward-looking
statements will be realized. In addition, the business and operations
of the Company are subject to substantial risks which increase the
uncertainty inherent in such forward-looking statements.
Important factors to be considered in connection with forward-
looking statements include, without limitation, (a) the fact that the
Company reported net losses in fiscal 1994 and fiscal 1995 and had an
accumulated deficit and a working capital deficit at December 31,
1995; (b) the Company's lack of working capital may require the
Company to raise additional equity or debt financing in order to fund
operations and the cash portion of purchase prices payable in
connection with acquisitions and the Company may be unable to raise
such debt or equity financing; (c) the current uncertainty in the
health care industry and government health care reform proposals
considered from time to time may adversely affect the regulatory
environment in which the Company operates and specifically affect the
reimbursement rate payable under government programs such as Medicare
and Medicaid, potentially resulting in decreased revenues from home
care services; (d) the Company's dependence on customer relationships
makes the Company vulnerable to consolidation in the health care
industry, changes in customer personnel and other factors that may
impact customer relationships; (e) the Company's ability to obtain
needed licenses, permits and governmental approvals will directly
affect the Company's economic performance and operation; (f) the
Company's ability to compete in the highly competitive interim
staffing and home care services market will directly impact the
Company's profitability and operations; (g) the Company depends on key-
management personnel, especially John P. Yeros, to manage and direct
the business and operations of the Company; (h) hospital budgetary
cycles, increased competition for qualified medical personnel, patient
admission fluctuations and seasonality will also impact the
profitability of the Company and cash flow may fluctuate due to the
adoption by hospitals and third party payors of new or revised
reimbursement policies; (j) the Company's operations would be
adversely affected by the extension of more favorable credit terms in
order to keep existing customers; (k) Company's ability to manage
growth, particularly through acquisitions, will directly impact the
Company's profitability and operations; (l) uninsured risks associated
with providing home care and interim staffing services will also
impact the Company's profitability and operations; and (m) various
other factors may cause actual results to vary materially from the
results contemplated in any forward-looking statements included in
this filing. No assurances can be given that the foregoing factors
will not result in a material adverse effect on the Company and its
operations.
Any of these important factors discussed above or elsewhere in
this filing could cause the Company's revenues or net income, or
growth in revenues or net income, to differ materially from prior
results. In addition, growth in absolute amounts of selling, general
and administrative expenses or the occurrence of extraordinary events
could cause actual results to vary materially from the results
contemplated by the forward-looking statements. Budgeting and other
management decisions are subjective in many respects and thus
susceptible to interpretations and periodic revisions based on actual
experience and business developments, the impact of which may cause
the Company to alter its marketing, capital expenditures or other
budgets, which may, in turn, affect the Company's results of
operation.
In light of the significant uncertainties inherent in the forward-
looking information included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved.
Results of Operations
Comparison of three months ended September 30, 1996 and 1995
The Company generated approximately $3,819,000 in revenues from
operations for the quarter ended September 30, 1996, compared to
approximately $2,929,000 in revenue for the third quarter of 1995, a
30% increase. The increase in sales for the quarter was due to the
acquisition of STAT and Ellis which provided additional third quarter
1996 revenues of approximately $1,134,000 and $296,000, respectively,
offset by an approximately $540,000 decrease in revenues due to an
increase of competition in the Texas and Colorado markets resulting
from consolidating health care providers which caused employee
turnover in administration and field staff.
The Company's gross margin percentage remained constant at 24%
for the quarter ended September 30, 1995 and for the quarter ended
September 30, 1996. The addition of higher-margin business in Colorado
and New York partially offset by the decreased revenue in Texas and
Colorado provided the Company with approximately $212,000 of increased
gross margin in the quarter ended September 30, 1996 versus the
quarter ended September 30, 1995.
Selling, general and administrative expenses increased for the
quarter ended September 30, 1996 by approximately $163,000 or 22% as
compared to the $738,000 in the quarter ended September 30, 1995. The
increase was primarily attributable to additional SG&A related to the
STAT and Ellis acquisitions.
Net loss applicable to common shareholders improved from a
$300,000 loss in the quarter ended September 30, 1995 to a net loss of
$166,000 in the quarter ended September 30, 1996. The decreased loss
was attributable to the factors discussed above.
Comparison of nine months ended September 30, 1996 and 1995
The Company generated approximately $10,399,000 in revenues from
operations for the nine months ended September 30, 1996, compared to
approximately $10,052,000 in revenue for 1995, a 3% increase. The
increase in sales for the period was due to the acquisition of STAT
and Ellis which provided additional 1996 revenues of approximately
$1,134,000 and $874,000, respectively, partially offset by a loss of
revenues in Colorado and Texas of approximately $1,661,000 due to an
increase of competition in the Colorado and Texas markets from
consolidating health care providers which resulted in employee
turnover in administration and field staff.
The Company has implemented a sales and marketing program in
Texas and Colorado which is intended to recapture some of the business
lost to the competition and intends to offset the lost low-margin
business in Colorado with higher margin sales from its new
rehabilitation consulting division. There can be no assurance given
that these initiatives will be successful in increasing its revenue.
The Company's gross margin percentage increased from 20% for the
nine months ended September 30, 1995 to 25% for the nine months ended
September 30, 1996. The increase was due to approximately 32% gross
margins achieved by its newly acquired Ellis Home Care division, a 26%
gross margin from STAT and a new rehabilitation consulting division
which provided gross margins of over 50%.
Selling, general and administrative expenses decreased for the
nine months ended September 30, 1996 by approximately $346,000 or 13%
as compared to the nine months ended September 30, 1995. The decrease
was primarily attributable to the effort by management to reduce
corporate overhead during late 1995 by installing a new computer
system which was fully implemented in 1996, reducing employee
headcount and terminating certain highly paid management personnel.
Selling, general and administrative expenses as a percentage of
revenue decreased from 27% for the nine months ended September 30,
1995 to 23% for the nine months ended September 30, 1996. In
addition, the Company reduced its bad debt reserve by approximately
$129,000 in the nine months ended September 30, 1996 from December 31,
1995. Management anticipates that this trend of selling, general and
administrative expenses as a percentage of sales decreasing will
continue throughout the remainder of 1996 as the Company sees
economies of scale result from its acquisition activity and its
integration strategy of centralizing the general and administrative
functions of each branch in Colorado.
Net income (loss) applicable to common shareholders improved from
a $1,700,000 loss in the nine months ended September 30, 1995 to net
income of $280,000 in the nine months ended September 30, 1996. The
improvement was attributable to the factors discussed above. In
addition, all of the Company's then outstanding preferred stock
automatically converted to common stock in the first quarter of 1996
which resulted in the Company recapturing approximately $441,000 of
accrued but undeclared dividends which were outstanding at December
31, 1995.
Liquidity and Capital Resources
The Company's current liabilities at September 30, 1996
aggregated approximately $4,113,000 and current assets at September
30, 1996 aggregated approximately $4,028,000. The Company
successfully reduced its working capital deficiency from approximately
$799,000 at December 31, 1995 to $85,000 at September 30, 1996 and
reduced its checks written in excess of bank balances by $244,000 to
zero. The Company benefited from its acquisition of Ellis in April
1996 which increased its receivables by approximately $407,000 while
only increasing its advances under financing agreement by
approximately $300,000. In addition, the Company converted a note
payable due the former owners of Paxxon to common stock which reduced
its current liabilities by approximately $500,000.
The Company is currently in default in payment of a note payable
with a principal balance of $120,000 and will continue to be in
default unless and until the Company is able to raise additional debt
or equity funds. The note is personally guaranteed by a stockholder,
officer and director of the Company and the note is collateralized by
certain intangibles. In addition, the note may be converted to common
stock of the Company at $3.00 per share. On July 26, 1996, the note
holder filed a lawsuit against the Company demanding payment of the
entire outstanding principal and accrued interest totaling
approximately $156,000. The Company intends to make payment as funds
are available and has adequately accrued for the amounts owing in the
accompanying financial statements. See Part II, Item 1. Legal
Proceedings
In order to continue the Company's stated goal of growth via
acquisition, management believes that it will be necessary for the
Company to raise additional equity or debt capital.
Until August 1996, the Company utilized an accounts receivable
factoring arrangement whereby approximately 85% of its billings were
advanced to the Company on a weekly basis. The financing agency then
collected the accounts receivable on behalf of the Company and charged
back to the Company any receivables which exceed 90 days outstanding
(120 days in New York). This arrangement has allowed the company to
receive approximately 68% of its receivables in cash as they are
billed. This arrangement has resulted in an effective interest cost
to the Company of approximately 25%.
In August 1996, the Company renegotiated its arrangement with its
financing agency whereby the effective interest rate was reduced to
approximately 12% (with the exception of STAT which will continue to
have an additional 2% purchase discount until December 31, 1996) and
the availability of advances outstanding under the arrangement was
increased to $5,000,000. With its acquisition of STAT, the Company
expects to use approximately $3,000,000 of the line of credit. The
additional credit limit is available to be used for future
acquisitions or internal sales growth.
Management of the Company believes that it generates sufficient
cash from operations to continue the business as a going concern.
However, the Company's ability to pay the note payable which is in
default, discussed above, and to pursue further acquisitions is
dependent upon the raising of additional debt or equity capital. There
can be no assurance given that the Company will be successful in
raising debt or equity capital on terms which are satisfactory to the
Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Item 3 - "Legal Proceedings" in the Company's Form 10-
KSB as of December 31, 1995 and for the year then ended.
On July 26, 1996, Staff Builders, Inc. filed a civil action
against the Company in the U.S. District Court for the Southern
District of New York demanding payment of an outstanding note
payable. The plaintiff alleges that the principal balance due
under the note is $145,000 plus accrued interest outstanding of
$11,606.48. The Company has referred this litigation to its
outside counsel for review. The Company has adequately accrued
for the amounts in the accompanying financial statements. The
second paragraph under "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources" is hereby incorporated by this reference.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
See Index to Exhibits
b. Reports on Form 8-K
During the quarter for which this report is filed, the Company
filed the following reports on Form 8-K:
Form 8-K dated July 17, 1996 (reporting items 2, 5 and 7)
Form 8-K/A dated July 17, 1996 (reporting items 2 and 7)
INDEX TO EXHIBITS
3.1 Certificate of Designation of 1996 Convertible Preferred
Stock. *
3.2 Articles of Amendment to Articles of Incorporation. *
4.1 Form of Unit Warrant. *
10.1 Form of Registration Rights/Purchase Agreement relating to
Unit Offering. *
27 Financial Data Schedule.
* Incorporated by reference to the same exhibit number of
the Company's Registration Statement on Form S-3 (Reg.
No. 333-12241)
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.
Dated: November 14, 1996
INTERNATIONAL NURSING SERVICES, INC.
(Registrant)
/s/ John P. Yeros
John P. Yeros
Chairman and Chief Executive Officer
(Principal Executive Officer)
Robin M. Bradbury
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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.
Dated: November 14, 1996
INTERNATIONAL NURSING SERVICES, INC.
(Registrant)
/s/ John P. Yeros
John P. Yeros
Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Robin M. Bradbury
Robin M. Bradbury
Chief Financial Officer
(Principal Financial and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 128,000 128,000
<SECURITIES> 0 0
<RECEIVABLES> 3,872,000 3,872,000
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,028,000 4,028,000
<PP&E> 342,000 342,000
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 8,581,000 8,581,000
<CURRENT-LIABILITIES> 4,113,000 4,113,000
<BONDS> 0 0
0 0
2,440,000 2,440,000
<COMMON> 5,000 5,000
<OTHER-SE> 1,960,000 1,960,000
<TOTAL-LIABILITY-AND-EQUITY> 8,581,000 8,581,000
<SALES> 3,819,000 10,399,000
<TOTAL-REVENUES> 3,819,000 10,399,000
<CGS> 2,906,000 7,751,000
<TOTAL-COSTS> 2,906,000 7,751,000
<OTHER-EXPENSES> 945,000 1,977,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 134,000 391,000
<INCOME-PRETAX> (166,000) 280,000
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (166,000) 280,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (166,000) 280,000
<EPS-PRIMARY> (.02) .04
<EPS-DILUTED> 0 0
</TABLE>
