U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: July 31, 1997
Commission file number: 0-20824
COMPUTER OUTSOURCING SERVICES, INC.
(Exact name of small business issuer as specified in its charter)
New York 13-3252333
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
360 West 31st Street New York, New York 10001
(Address of principal executive offices)
(212) 564-3730
(Issuer's telephone number)
Check whether the registrant (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 [ ]
There were 3,789,850 shares of the registrant's Common Stock, $0.01 par value,
outstanding as of September 12, 1997.
Transitional Small Business Disclosure Form (check one); Yes [ ] No [X]
Page 1 of 14
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July October
31, 1997 31, 1996
------------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................... $ 394,651 $ 1,083,545
Trade accounts receivable, net of allowance
for doubtful accounts of $364,545 and
$305,874 .................................. 4,424,040 3,716,343
Refundable income taxes ..................... 90,928 62,988
Prepaid expenses ............................ 822,894 699,005
Other current assets ........................ 304,548 125,850
---------- ----------
6,037,061 5,687,731
---------- ----------
PROPERTY and EQUIPMENT, net ................... 3,021,177 3,132,847
---------- ----------
OTHER ASSETS:
Deferred software costs, net ................ 2,321,603 1,912,505
Intangibles, net ............................ 7,644,195 7,764,535
Due from related parties, net ............... 135,843 106,472
Security deposits and other non-current
assets .................................... 646,870 705,307
---------- ----------
10,748,511 10,488,819
---------- ----------
TOTAL ASSETS .................................. $ 19,806,749 $ 19,309,397
========== ==========
See Notes to Consolidated Interim Financial Statements
Page 2 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
July October
31, 1997 31, 1996
------------- -------------
(Unaudited)
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................ $ 1,545,412 $ 1,535,816
Revolving line of credit (Note 2) ........... 500,000 -
Current portion of long-term debt ........... 819,004 1,054,352
Current portion of capitalized lease
obligations ............................... 197,075 195,979
Accrued expenses and taxes .................. 1,632,114 1,757,355
Customer deposits and other current
liabilities ............................... 207,729 282,075
---------- ----------
4,901,334 4,825,577
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt .............................. 1,190,513 1,629,234
Capitalized lease obligations ............... 226,012 284,775
Deferred income taxes ....................... 1,014,495 837,219
Deferred rental credit ...................... 142,413 -
Stock option obligation ..................... - 133,146
---------- ----------
2,573,433 2,884,374
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 1,000,000
shares authorized, none issued ............ - -
Common stock, $0.01 par value; 7,000,000
shares authorized; shares issued and out-
standing, 3,789,850 and 3,734,848.......... 37,898 37,348
Additional paid-in capital .................. 9,445,683 9,233,952
Retained earnings ........................... 2,857,184 2,363,278
Deferred costs arising from a financing
and consulting agreement .................. (8,783) (35,132)
----------- -----------
12,331,982 11,599,446
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .... $ 19,806,749 $ 19,309,397
========== ==========
See Notes to Consolidated Interim Financial Statements
Page 3 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
July 31, July 31,
-------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
REVENUES ........... $ 24,289,530 $ 21,576,396 $ 8,118,468 $ 7,259,305
---------- ---------- ---------- ----------
COSTS and EXPENSES:
Data processing
costs .......... 16,211,149 13,456,003 5,461,668 4,536,229
Selling and
promotion costs 1,937,622 1,887,842 609,063 531,248
General and
administrative
expenses ....... 5,074,895 5,493,559 1,673,923 1,944,477
Interest expense,
net of interest
income ......... 209,964 257,207 67,915 75,962
---------- ---------- ---------- ----------
23,433,630 21,094,611 7,812,569 7,087,916
---------- ---------- ---------- ----------
INCOME BEFORE
PROVISION FOR
INCOME TAXES ..... 855,900 481,785 305,899 171,389
PROVISION FOR INCOME
TAXES ............ 342,400 235,000 122,000 81,015
---------- ---------- ---------- ----------
NET INCOME ......... $ 513,500 $ 246,785 $ 183,899 $ 90,374
========== ========== ========== ==========
INCOME PER COMMON
SHARE AND SHARE
EQUIVALENTS ...... $ 0.13 $ 0.06 $ 0.05 $ 0.02
========== ========== ========== ==========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES AND SHARE
EQUIVALENTS
OUTSTANDING ...... 3,929,188 3,799,739 3,980,807 3,869,360
========== ========== ========== ==========
See Notes to Consolidated Interim Financial Statements
Page 4 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended July 31,
------------------------------
1997 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income..................................... $ 513,500 $ 246,785
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization ............... 1,726,280 1,452,940
Deferred income taxes ....................... 177,276 158,804
Decrease/(increase) in:
Trade accounts receivable ................. (732,892) 228,282
Refundable taxes .......................... (27,940) 285,674
Prepaid expenses .......................... (123,889) (170,590)
Other current assets ...................... (178,698) 82,384
Security deposits and other noncurrent
assets .................................. (179,263) 8,677
Increase/(decrease) in:
Accounts payable .......................... (994) 197,731
Accrued expenses and taxes ................ (101,846) (427,577)
Customer deposits and other current
liabilities ............................. (74,346) 59,619
---------- ----------
Net cash provided by operating activities ... 997,188 2,122,729
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .......... (440,574) (465,047)
Disposal of equipment ....................... 2,074 60,992
Settlement of contingencies relating to
acquisitions ............................. (36,762) (111,607)
Increase in deferred software costs ......... (744,920) (804,764)
----------- -----------
Net cash used in investing activities ....... $ (1,220,182) $ (1,320,426)
----------- -----------
Continued on Next Page
See Notes to Consolidated Interim Financial Statements
Page 5 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Continued)
Nine Months Ended July 31,
------------------------------
1997 1996
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt ................. $ (814,872) $ (1,314,516)
Proceeds from borrowings under the revolving
line of credit ............................ 500,000 -
Proceeds from issuance of long-term debt .... - 268,173
Repayments of amounts by related
parties, net .............................. 22,733 50,391
Repayments of capital leases ................ (173,761) (151,229)
----------- -----------
Net cash used in financing activities ....... (465,900) (1,147,181)
----------- -----------
Net decrease in cash and cash equivalents ... (688,894) (344,878)
Cash and cash equivalents at the beginning
of the period.............................. 1,083,545 1,406,016
---------- ----------
Cash and cash equivalents at the end of the
period..................................... $ 394,651 $ 1,061,138
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest .................................. $ 236,903 $ 293,549
========== ==========
Income taxes .............................. $ 91,958 $ 49,747
========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
New capitalized leases for data processing
equipment ................................. $ 122,300 $ 135,202
========== ==========
For the nine months ended July 31, 1997 and 1996, $19,594 and $35,109 (net
of tax benefits), respectively, were accreted through a charge to retained
earnings in connection with a stock option.
See Notes to Consolidated Interim Financial Statements
Page 6 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JULY 31, 1997
(Unaudited)
Deferred
Costs in
Connection
with a
Financing/
Common Par Paid in Retained Consulting
Shares Value Capital Earnings Agreement Total
------------------------------------------------------------------
Balances,
October 31,
1996 ..... 3,734,848 $37,348 $9,233,952 $2,363,278 $(35,132) $11,599,446
Common Stock
issued in
connection
with a
covenant
not to
compete .. 15,000 150 54,225 54,375
Exercises
of stock
option ... 40,002 400 157,506 157,906
Amortization
of
deferred
costs in
connection
with a
financing
and
consulting
agreement 26,349 26,349
Accretion in
connection
with stock
option
obligation,
net ...... (19,594) (19,594)
Net income . 513,500 513,500
------------------------------------------------------------------
Balances,
July 31,
1997 ..... 3,789,850 $37,898 $9,445,683 $2,857,184 $ (8,783) $12,331,982
==================================================================
See Notes to Consolidated Interim Financial Statements
Page 7 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Consolidated Balance Sheet as of July 31, 1997, and the Consolidated
Statements of Income and the Consolidated Statements of Cash Flows for the nine
month periods ended July 31, 1997 and 1996, have been prepared by the Company
without audit. In the opinion of management, all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows for the periods indicated have
been made.
The results of operations for the periods ended July 31, 1997 and 1996 are
not necessarily indicative of the operating results for the full fiscal years.
Certain reclassifications have been made to the prior periods to conform to the
current presentation.
Certain disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. These consolidated interim financial statements should be read in
conjunction with the Company's Annual Report on Form 10-KSB for the fiscal year
ended October 31, 1996.
The consolidated financial statements include the accounts of Computer
Outsourcing Services, Inc. and its wholly-owned subsidiaries (collectively,
the "Company"). All significant intercompany balances and transactions have
been eliminated.
2. DEBT
At July 31, 1997, the Company was indebted to a bank for three term loans
under a Term Loan Agreement ("Agreement") originally aggregating $2,620,000.
The proceeds of these loans were used for acquisitions. The Agreement
provides for monthly principal and interest payments in varying amounts
through May 2000, with interest computed at the bank's prime rate. As last
amended on March 20, 1997, the term loans bear interest, at the Company's
option, at either the Adjusted Eurodollar Rate (as defined) plus 2.25%, or
the bank's prime rate. An aggregate of $1,062,500 was outstanding at
July 31, 1997 under this facility. Substantially all of the assets of the
Company are pledged as collateral for this indebtedness.
In March 1997, the Company and the bank entered into an additional agreement
for a revolving line of credit whereby the Company may borrow up to an
additional $1,500,000. Interest on these borrowings, when made, may be at
either of the rates discussed above. $500,000 was outstanding on this line at
July 31, 1997. The line of credit expires on April 30, 1998.
Page 8 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Continued)
3. STOCK OPTIONS
The Company applies the provisions of APB Opinion 25 and related
Interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for stock options granted. The excess,
if any, of the fair market value of shares on the measurement date over the
exercise price is charged to operations each year as the options become
exercisable. Had compensation cost for these options been determined using
the Black-Scholes option-pricing model described in FASB Statement 123 (which
permits, but does not require, companies to recognize as expense over the
vesting period the fair value of all stock-based awards, measured as of the
date of grant), the Company would record aggregate compensation expense of
approximately $155,331 which would be expensed over the options' vesting period
as follows:
Fiscal Years Ended
October 31,
------------------
1997 $74,409
1998 31,334
1999 31,335
2000 9,126
2001 9,127
--------
$155,331
========
The assumptions used in the option-pricing model include a risk-free interest
rate of 6.5%, expected lives of three to five years, and expected volatility of
45%. The pro forma impact of following the provisions of FASB Statement 123 on
the Company's net income and net income per share would be as follows:
Nine Months Ended
July 31, 1997
-----------------
Net income - as reported $513,500
========
- pro forma $468,111
========
Net income per common share - as reported $0.13
=====
- pro forma $0.11
=====
Net income per common share has been calculated using the weighted average
number of shares of common stock outstanding during the period.
Page 9 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
RESULTS OF OPERATIONS, NINE MONTH PERIODS ENDED JULY 31, 1997 AND 1996
During the period ended July 31, 1997, revenues increased $2,713,000 to
$24,290,000, an increase of 13% over the period ended July 31, 1996. The
Company's Information Processing Division recorded a revenue increase of
$2,278,000 and the Pay USA Division recorded an increase of $435,000.
Data processing costs increased $2,755,000 to $16,211,000 (66.7% of revenues)
during the current period compared to $13,456,000 (62.4% of revenues) in the
prior year's period. The Information Processing Division's data processing
costs increased $2,296,000 to $12,332,000, compared to $10,036,000 in the prior
period. The increase as a percentage of revenues is attributable to the mix of
services provided in the current period compared to the prior year's period.
The Pay USA Division's data processing costs increased $459,000 to $3,879,000.
The Company continued the process of standardizing the Pay USA Division into
one processing system and consolidating the computer operations of the
Information Processing Division. Until the total integration of operations is
completed, including payroll system standardization, the Company will continue
to experience higher costs due to the cost of the conversion effort and the
duplication of facilities and personnel.
Selling and promotion costs decreased $50,000 to $1,938,000, but decreased 0.7%
as a percentage of revenues. An increase of $255,000 in the Pay USA Division
was partially offset by a decrease of $205,000 in the Information Processing
Division. The decrease as a percentage of revenues resulted from the
consolidation of the sales and marketing efforts in the Information Processing
Division.
General and administrative expenses decreased $419,000 to $5,075,000 in the
current period, a decrease of 4.6% as a percentage of revenues, as the Company
continues to be successful in holding down administrative costs while growing
revenue. Net interest expense decreased $47,000 to $210,000 in the current
period primarily as a result of a decreased level of outstanding debt.
For the period ended July 31, 1997, the provision for income taxes was
$342,000 at an effective tax rate of 40%. For the comparable period of the
prior year, the provision for income taxes was $235,000, a 49% effective tax
rate. The decrease in the effective tax rate is the result of the amortization
of nondeductible goodwill having less of an impact on a higher level of
earnings, coupled with the increased investment in high quality, low risk
tax exempt securities.
The Company recorded a profit of $514,000 ($0.13 per share) for the period
ended July 31, 1997 compared to a profit of $247,000 ($0.06 per share)
for the period ended July 31, 1996.
Page 10 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS, QUARTERS ENDED July 31, 1997 AND 1996
During the quarter ended July 31, 1997, revenues increased $859,000 to
$8,118,000, an increase of 12% over the quarter ended July 31, 1996. The
Company's Information Processing Division recorded a revenue increase of
$706,000, and the Pay USA Division recorded an increase of $153,000.
Data processing costs increased $925,000 to $5,462,000 (67.3% of revenues)
during the current quarter compared to $4,536,000 (62.5% of revenues) in the
prior year's quarter. The Information Processing Division's data processing
costs increased $766,000 and the Pay USA division's data processing costs
increased $159,000. The increases in revenues and data processing costs were
as a result of factors noted in the nine month discussion above.
Selling and promotion costs increased $78,000 to $609,000, an increase of 0.2%
as a percentage of revenues. An increase of $102,000 in the Pay USA Division
was partially offset by a decrease of $24,000 in the Information Processing
Division, as that division undergoes a consolidation of its marketing efforts.
General and administrative expenses decreased $271,000 to $1,674,000 in the
current quarter, a decrease of 6.2% as a percentage of revenues. Net interest
expense decreased $8,000 to $68,000 in the current quarter.
For the quarter ended July 31, 1997, the provision for income taxes was
$122,000, an effective tax rate of 39.9%. For the comparable quarter of the
prior year, the provision for income taxes was $81,000, a 47.3% effective tax
rate. The decreases in general and administrative expenses, net interest
expense, and the tax provision resulted from the same factors noted in the nine
month discussion above.
The Company recorded a profit of $184,000 ($0.05 per share) for the quarter
ended July 31, 1997 compared to a profit of $90,000 ($0.02 per share) for the
quarter ended July 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended July 31, 1997, the Company generated approximately
$997,000 from operating activities. This amount includes depreciation and
amortization of $1,727,000 and deferred income taxes of $177,000 offset by,
among other things, an increase in accounts receivable of $733,000 and various
other operating uses of cash.
The Company used cash in investing activities of approximately $1,220,000
during the period ended July 31, 1997, principally by investing $441,000 for
the purchase of equipment and $745,000 for product enhancements.
For the period, the Company used cash of approximately $466,000 in financing
activities, primarily by using $815,000 in repayments of long-term debt and
$174,000 in repayments of capital leases, partially offset by $500,000 in
proceeds from a revolving line of credit.
Page 11 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (Continued)
As of July 31 1997, the Company had cash and cash equivalents of $395,000 and
working capital of $1,136,000. Its current ratio (i.e., the ratio of current
assets to current liabilities) was 1.23 to 1, and the ratio of total
liabilities to equity was 0.61 to 1.
At July 31, 1997, the Company was indebted to a bank for three term loans
under a Term Loan Agreement ("Agreement") originally aggregating $2,620,000.
The proceeds of these loans were used for acquisitions. The Agreement provides
for monthly principal and interest payments in varying amounts through
May 2000, with interest computed at the bank's prime rate. As last amended on
March 20, 1997, the term loans bear interest, at the Company's option, at
either the Adjusted Eurodollar Rate (as defined) plus 2.25%, or the bank's
prime rate. An aggregate of $1,062,500 was outstanding at July 31, 1997
under this facility. Substantially all of the assets of the Company are
pledged as collateral for this indebtedness.
In March 1997, the Company and the bank entered into an additional agreement
for a revolving line of credit whereby the Company may borrow up to an
additional $1,500,000. Interest on these borrowings, when made, may be at
either of the rates discussed above. $500,000 was outstanding on this line
at July 31, 1997. The line of credit expires on April 30, 1998.
Management believes that its cash flow from operations and its available line
of credit will be sufficient to fund the Company's operations for at least the
next twelve months. The Company continues to seek acquisition opportunities
that fit the Company's long-term strategy. Any material acquisitions may
require funding in excess of the level of current and projected operating cash
flows, and would require additional debt and/or equity funding.
Page 12 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on May 5,
1997, at which the following actions were taken:
(1) Eight directors of the Company were elected for terms of one
year, or until their respective successors are duly elected and
qualified. The following table lists the name of each candidate for
director, and the number of shares voted for or withheld from each
candidate:
Shares Voted Shares
Nominee For Election Withheld
------- ------------ --------
Zach Lonstein 3,246,594 128,300
Jeffrey Millman 3,246,594 128,300
Anton P. Donde 3,246,594 128,300
Robert B. Wallach 3,246,594 128,300
Eugene Monosson 3,246,594 128,300
James D. Gerson 3,246,594 128,300
Howard Waltman 3,246,594 128,300
John C. Platt 3,246,594 128,300
(2) The Company's 1992 Stock Option and Stock Appreciation Rights
Plan (the "Plan") was amended to increase the number of shares which
may be granted under the Plan from 700,000 to 1,200,000. There were
2,447,983 shares voted in favor of the amendment, 209,270 shares voted
against the amendment, and 717,641 abstentions and broker nonvotes.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
Page 13 of 14
<PAGE>
COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
COMPUTER OUTSOURCING SERVICES, INC.
/s/
-----------------------------------
September 12, 1997 Zach Lonstein
Principal Executive Officer
/s/
-----------------------------------
September 12, 1997 Laurence L. Carpenter
Acting Principal Accounting Officer
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED JULY 31, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 394,651
<SECURITIES> 0
<RECEIVABLES> 4,788,585
<ALLOWANCES> 364,545
<INVENTORY> 0
<CURRENT-ASSETS> 6,037,061
<PP&E> 8,085,918
<DEPRECIATION> 5,064,741
<TOTAL-ASSETS> 19,806,749
<CURRENT-LIABILITIES> 4,901,334<F1>
<BONDS> 2,932,604<F1>
0
0
<COMMON> 37,898
<OTHER-SE> 12,294,084
<TOTAL-LIABILITY-AND-EQUITY> 19,806,749
<SALES> 0
<TOTAL-REVENUES> 24,289,530
<CGS> 0
<TOTAL-COSTS> 16,211,149
<OTHER-EXPENSES> 7,012,517
<LOSS-PROVISION> 129,000
<INTEREST-EXPENSE> 238,813
<INCOME-PRETAX> 855,900
<INCOME-TAX> 342,400
<INCOME-CONTINUING> 513,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 513,500
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
<FN>
<F1>INCLUDES REVOLVING CREDIT LINE AND CURRENT PORTION OF DEBT AND LEASES EQUAL TO
$1,516,079
</FN>
</TABLE>
