<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-QSB
---------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
COMMISSION FILE NUMBER 1-12312
INTERSCIENCE COMPUTER CORPORATION
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 95-3880130
(State of incorporation) (I.R.S. Employer Identification No.)
5171 CLARETON DRIVE
AGOURA HILLS, CALIFORNIA 91301
(Address of principal executive offices) (Zip Code)
(818) 707-2000
(Issuer's telephone number, including area code)
Indicate by check mark whether the issuer (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 [ ]
Number of shares outstanding of each of the issuer's classes of common
stock, as of May 2, 1996: 2,541,666 shares of common stock, no par value.
Transitional Small Business Disclosure Format:
YES [ ] NO [X]
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This report contains 12 sequentially numbered pages.
<PAGE> 2
INTERSCIENCE COMPUTER CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of March 31, 1997
and September 30, 1996.............................................. 3
Condensed Consolidated Statement of Operations for the Three
Months Ended March 31, 1997 and 1996................................. 5
Condensed Consolidated Statement of Operations for the Six
Months Ended March 31, 1997 and 1996................................. 6
Condensed Consolidated Statement of Cash Flows for the Six
Months Ended March 31, 1997 and 1996................................. 7
Notes to the Condensed Financial Statements........................... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................... 9
PART II - OTHER INFORMATION........................................... 12
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INTERSCIENCE COMPUTER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, March 31,
1996 1997
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ....................... $ 336,355 $ 605,565
Accounts receivable, net of allowance ........... 2,020,399 1,978,774
Inventories ..................................... 3,555,318 3,744,848
Prepaid expenses and other receivables .......... 60,525 43,607
Due from officers, net of allowance of $104,134 . 30,000 30,000
Current portion of net investment in equipment
contracts receivables .......................... 55,146
Deferred income taxes ......................... 424,000 206,000
----------- -----------
TOTAL CURRENT ASSETS ...................... 6,481,743 6,608,794
REPLACEMENT PARTS INVENTORY ....................... 5,648,261 5,516,394
PROPERTY AND EQUIPMENT, net ....................... 434,086 484,517
OTHER ASSETS
Net investment in equipment contracts receivable,
less current portion
Notes receivable ................................ 135,486
Patent, net of accumulated amortization ......... 378,357 344,366
Goodwill, net of accumulated amortization ....... 1,191,862 1,461,078
Deferred income taxes ........................... 218,000
Deposits and other .............................. 96,272 34,955
----------- -----------
TOTAL OTHER ASSETS ........................ 1,666,491 2,193,885
----------- -----------
$14,230,581 $14,803,590
=========== ===========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
3
<PAGE> 4
INTERSCIENCE COMPUTER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, March 31,
1996 1997
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt ...................... $ 2,645,056 $ 3,304,807
Accounts Payable ....................................... 1,486,000 2,294,641
Accrued Liabilities .................................. 480,068 855,262
Deferred revenue ..................................... 325,677 351,193
Income taxes payable ................................. 497,178 392,455
----------- ------------
TOTAL CURRENT LIABILITIES ........................ 5,433,979 7,198,358
LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL
LEASE, net of current portion .......................... 469,686 54,174
----------- ------------
TOTAL LIABILITIES .................................. 5,903,665 7,252,532
----------- ------------
SHAREHOLDERS' EQUITY
Series A cumulative convertible preferred stock,
$100 stated value; 36,000
authorized, issued
and outstanding ................................... 3,200,000 3,200,000
Series B cumulative convertible preferred stock,
$100 stated value; 4,000 authorized, issued
and outstanding ................................... 390,000 390,000
Common stock, no par value; authorized 10,000,000 shares;
issued and outstanding 2,541,666 shares .............. 4,241,748 4,241,748
Retained earnings .................................... 495,168 (280,690)
TOTAL SHAREHOLDERS' EQUITY ....................... 8,326,916 7,551,058
----------- ------------
$14,230,581 $ 14,803,590
=========== ============
</TABLE>
See accompanying Notes to Condensed Financial Statements.
4
<PAGE> 5
INTERSCIENCE COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1997
---------- -----------
<S> <C> <C>
SALES ............................. $3,013,947 $ 3,260,136
COST OF SALES ..................... 1,930,265 2,516,531
---------- -----------
GROSS PROFIT ...................... 1,083,682 743,605
---------- -----------
OPERATING EXPENSES AND OTHER
Sales and administrative ....... 626,404 1,264,505
Development .................... 56,299 3,262
---------- -----------
TOTAL OPERATING EXPENSES .......... 682,703 1,267,767
OPERATING INCOME .................. 400,979 (524,162)
---------- -----------
OTHER INCOME
Interest income, net ........... 15,751 (16,361)
---------- -----------
INCOME BEFORE TAX ................. 416,730 (540,523)
INCOME TAX ........................ 125,000 149,382
---------- -----------
NET INCOME ........................ $ 291,730 $ (689,905)
========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING ............. 2,541,666 2,541,666
========== ===========
EARNINGS PER COMMON SHARE
INCOME BEFORE PREFERRED DIVIDEND $ 0.11 $ (0.27)
PREFERRED DIVIDEND ............. .03 .03
---------- -----------
NET INCOME ........................ $ 0.08 $ (0.30)
========== ===========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
5
<PAGE> 6
INTERSCIENCE COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------
1996 1997
---------- -----------
<S> <C> <C>
SALES ............................ $5,912,150 $ 6,431,546
COST OF SALES .................... 3,454,001 4,769,841
---------- -----------
GROSS PROFIT ..................... 2,458,149 1,661,705
---------- -----------
OPERATING EXPENSES AND OTHER
Sales and administrative ....... 1,574,998 2,284,322
Development .................... 66,598 7,496
---------- -----------
TOTAL OPERATING EXPENSES ... 1,641,596 2,291,818
---------- -----------
OPERATING INCOME ................. 816,553 (630,113)
---------- -----------
OTHER INCOME
Interest income ................ 31,570 (67,724)
---------- -----------
INCOME BEFORE TAX ................ 848,123 (697,837)
INCOME TAX ....................... 284,000 5,667
---------- -----------
NET INCOME ....................... $ 564,123 $ (703,504)
========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING ............. 2,541,666 2,541,666
========== ===========
EARNINGS PER COMMON SHARE
INCOME BEFORE PREFERRED DIVIDEND $ 0.22 $ (0.28)
PREFERRED DIVIDEND ............. .06 .06
---------- -----------
NET INCOME ....................... $ 0.16 $ (0.34)
========== ===========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
6
<PAGE> 7
INTERSCIENCE COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------
1996 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .................................... $ 564,123 $ (703,504)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization ................. 140,639 97,366
Changes in operating assets and liabilities:
Accounts receivable ......................... (328,279) 158,504
Inventory ................................... (715,859) 111,915
Prepaid expenses ............................ 86,950 55,841
Deposits and other .......................... 63,897 (9,789)
Deferred income tax
Accounts payable and accrued expenses ....... 24,383 1,044,003
Deferred revenue ............................ 44,586 25,516
Income taxes payable ........................ (206,156) (104,723)
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES ...................... (325,716) 675,129
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary ...................... (214,951) (189,289)
Sale of assets ................................ 7,499 (57,872)
Investment in equipment contracts receivable .. 487,290 55,146
Patent acquisition costs ...................... (65,766)
Purchase of property and equipment ............ (60,848)
-----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES ........................ 153,224 (192,015)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal reductions of short-term
and long-term obligations .................... (1,008,941) (485,339)
Proceeds from bank loan ....................... 400,000 346,435
Proceeds from preferred offering .............. 400,000
Preferred stock dividends paid ................ (135,000) (75,000)
----------- -----------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES ........................ (343,941) (213,904)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS .............................. (516,433) 269,210
CASH AND CASH EQUIVALENTS, Beginning of period ..... 2,046,017 336,355
----------- -----------
CASH AND CASH EQUIVALENTS, End of period ........... $ 1,529,584 $ 605,565
=========== ===========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
7
<PAGE> 8
INTERSCIENCE COMPUTER CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Introduction
The accompanying condensed consolidated financial statements of
Interscience Computer Corporation (the "Company") have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the consolidated financial
statements and related footnotes included in the Company's latest Annual Report
on Form 10-KSB. In the opinion of management, all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the financial
position of the Company as of March 31, 1997, and the statements of its
operations and its cash flows for the six month periods ended March 31, 1997 and
1996 have been included. The results of operations for interim periods are not
necessarily indicative of the results which may be realized for the full year.
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto in this Quarterly Report.
Overview
Since its organization, the principal business of Interscience Computer
Corporation (the "Company") has been providing maintenance services for
computers and for a wide range of related peripheral equipment including
high-speed printers. During the past few years, the Company's maintenance
activities were directed primarily at the Model 2200 Siemens Printer market. In
1992, the Company developed and commenced commercially marketing a fusing agent
for use in specific printers manufactured by Siemens. The Company applied for a
usage patent for the fusing agent and such patent was issued in 1994. Since
February 1993, the Company has been selling the Fusing Agent directly to end
users and to unaffiliated distributors. Revenues realized by the Company from
the sale of the Fusing Agent constituted 40% and 31% of the Company's total
revenues for the fiscal quarters ended March 31, 1996 and 1997, respectively.
During the past 24 months, the Company has been expanding its
maintenance business to include maintenance services for the Xerox line of
high-speed production printers and, to a lesser extent, other non- Siemens
printers. In this connection, between June 1995 and January 1997 the Company
made a number of acquisitions for the purpose of acquiring the parts and
inventory, the technical expertise, and the maintenance contracts that are
required to effectively compete in these other printer maintenance markets.
These acquisitions have consisted of the purchase of Laser Support &
Engineering, Inc. ("LSE"), the Page Printing Division of Miltope Business
Products, Inc., Laser Printing Services, Inc. ("LPS") and certain of the assets
of BancTec, Inc. (Collectively, the "Acquired Operations"). To date, the Company
has paid a total of $2,308,000 in cash for the purchase of these assets and
businesses, and has incurred over $2,000,000 of additional indebtedness to the
sellers and creditors of these assets and businesses. In addition, the Company
incurred other additional on-going expenses related to these acquisitions,
including the general and administrative expenses of the acquired operations and
the additional labor costs of employees of such operations. On March 6, 1997 the
Company filed for protection under Chapter 11 of the US Bankruptcy Code. The
filing was made to allow the Company time to reorganize its operations and to
conserve its cash position in view of the negative cash flow from the Acquired
Operations (See - "Liquidity and Capital Resources").
Results of Operations
Six Months Ended March 31, 1997 and March 31, 1996.
The Company's revenues, for the six-month period ended March 31, 1997
increased by $519,000, or 9 percent when compared with revenues for the
six-month period ended March 31, 1996 primarily as a result of an increase in
maintenance revenue from annual contracted service contracts. Other sources of
revenue were down from the comparable six month period in 1996 as consumable
sales decreased by 20% due to some of the older machines being replaced.
Revenues from annual maintenance contracts of $3,659,000 for the
six-month period ended March 31, 1997, increased by $1,491,000 from $2,168,000
for the comparable six-month period ended March 31, 1996. The Company's growth
in maintenance revenues was achieved by expanding the capability to maintain a
wider variety of high speed production printers. During the comparable period
ended March 31, 1996, the Company's high speed laser printer maintenance
capability was augmented with the acquisition of LSE. This added Xerox laser
printer service capability to the Company's service division. The Company's
service capability was more recently expanded with the acquisitions of certain
assets of BancTec in June of 1996 and LPS in October of 1996. These acquisitions
substantially increased the Xerox contracted maintenance revenue. The Company's
maintenance revenue for this six-month reporting period was 57 percent of total
revenue, as compared with 37 percent for the prior period.
9
<PAGE> 10
Revenues from the sales of consumable products during the six-month
period ended March 31, 1997 was $2,368,000, which included $2,122,000 of the
Company's patented fusing agent for certain Siemens printers, and the balance of
$246,000, consisting of toners for Siemens and Xerox printers. The Company's
consumable product revenue during the current six month reporting period was 37
percent of total revenue, as compared with 49 percent for the prior period.
Gross profits for the six-month period ended March 31, 1997 decreased to
$1,662,000 from $2,458,000, or 32 percent, from the corresponding prior year's
period. Gross profit as a percentage of revenues decreased from 43 percent to 26
percent. The decrease in the Company's gross profits was due to the Company's
increased emphasis on Xerox maintenance revenues which require increased
replacement parts and labor expense and decreased sales of consumable products
which have higher gross profits.
Sales and administrative expenses for the six-month period ended March
31, 1997 increased by $709,000, or 45 percent from the prior year's six month
period. The increased G&A expense was primarily due to the increased
administrative costs associated with managing the Company's expanded business
that relates to the BancTec acquisition and LPS purchase. Management is
undertaking to reduce G&A expenses by consolidating operations and eliminating
redundant facilities and personnel. The total G & A expenses included $609,000
in consulting, legal and accounting fees which doubled from the comparable
period last year. The increased revenues from maintenance as compared to
consumables resulted in higher selling and administrative expenses. The enlarged
maintenance operation covers 11 states and requires more supervision and sales
costs. The net loss is due to significantly higher expenses as detailed above.
Comparison of the Three Months Ended March 31, 1997 and March 31, 1996:
Revenues for the three-month period ended March 31, 1997 increased by
$246,000, or 8% over revenues for the three-month period ended March 31, 1996.
The growth in revenues was attributable to increased maintenance revenue from
the Acquired Operations. Revenue from contracted maintenance for the three-month
period was $1,698,000 or 52 percent of total revenue. Sale of consumables for
the period was $1,212,000 or 37 percent of total revenue.
Gross profits for the three-month period ended March 31, 1997 decreased
by $340,000, from $1,084,000 to $744,000, or 31 percent, from the corresponding
prior year's period. Gross profit as a percentage of revenues decreased to 23
percent from 36 percent during the comparable period. The decrease in the
Company's gross profits was due to the expenses related to providing continued
cross- training for the Company's field engineering staff on certain Xerox and
Siemens production printers, as maintenance capabilities for Xerox and Siemens
printers are required in all eleven states that the Company currently serves.
The decrease in the percentage of higher gross profit consumable sales during
this quarter has also resulted in lower gross profits.
Sales and administrative expenses increased for the three-month period
ended March 31, 1997, by $638,000 or 102 percent from the prior year's three
month period. The increased G&A expense, as previously discussed, is a current
target by the Company's management for reduction and is primarily due to the
increased administrative costs associated with managing the Company's expanded
business that relates to the Acquired Operations. The total operating expenses
for the three-month period include $432,000 in consulting, legal and accounting
fees. The increase also includes $143,000 in sales and administrative expense
from the Company's UK and Germany subsidiaries which was an increase of $83,000
or 138 percent from the same period last year. This is due to the increased
expense from the start up of the Company's German subsidiary Interscience GmbH
10
<PAGE> 11
Liquidity and Capital Resources:
Prior to filing for Chapter 11 protection the Company was unable to fund
its monthly cash outlays from cash receipts. This negative cash flow had been
reported for the past two years and the Company no longer had any cash reserves
to make up this shortage.
During the past two years, the Company purchased the Acquired Operations
with the expectation that it would be able to reduce certain of the redundant
expenses (such as duplicative personnel and unneeded facilities) that it
inherited as part of the acquisitions. In addition, the Company expected that
the synergies created by combining the operations and abilities of the Acquired
Operations with those of the Company would increase the Company's cash flow and
profitability. At a minimum, the Company expected that the combined operations
of the Company and the Acquired Operations would produce sufficient cash flow to
enable the Company to make the monthly payments on the additional indebtedness
that the Company incurred in order to pay the purchase price of the Acquired
Operations. Although some of the synergistic benefits of the Acquired Operations
are being recognized, the benefits have not been of the magnitude that the
Company expected and the Company has, to date, not been able to materially
reduce the expenses associated with its new operations. Accordingly, the
combination of the lower than expected benefits from the Acquired Operations and
the increase debt service obligations of the Company resulted in continued
negative cash flow. The monthly cash outlays have significantly exceeded the
cash it generates from operations. The Company expects to substantially address
these problems while operating under protection of Chapter 11.
On July 30, 1996, the Company entered into a credit agreement (the
"Credit Agreement") with Sanwa Bank of California (the "Bank") pursuant to which
the Bank agreed to make a revolving credit facility and a term loan facility
available to the Company. Under the revolving credit facility, the Company is
entitled to borrow, from time to time as requested by the Company, an amount not
to exceed an aggregate of $1,000,000 at any time. The rate of interest on all
borrowings under the line of credit facility is, at the Company's option, either
a variable rate equal to the Bank's reference rate plus 1/2%, or a fixed rate
equal to 2 3/4% over the Bank's cost of acquiring funds on the date that the
fixed rate is set. The revolving credit facility expires on February 28, 1998.
As of the date of this Quarterly Report, the Company had used approximately
$997,000 of the amount available under the revolving credit facility. Of this
amount, approximately $45,000 represented cash advances made to the Company and
the balance, $952,000, represented a letter of credit that the Company obtained
in order to secure the surety bond obtained by the Company in connection with
the litigation with the former shareholders of LSE. The letter of credit will
expire on September 5, 1997 and the amount used under the revolving credit
facility will be $45,000 as of that time. All loans extended under the Credit
Agreement are secured by a blanket lien on the Company's assets and by
guarantees executed by Interscience PLC and by LSE.
The Credit Agreement also provides the Company with a term loan facility
pursuant to which, until August 30, 1996, the Company could borrow an amount up
to $2,000,000 for the purposes of funding its corporate acquisitions. The
Company initially borrowed a total of $800,000 under the term loan facility in
connection with the Company's acquisition of certain assets from BancTec, Inc.
In June 1996 and $800,000 to pay part of the purchase price of LSE. As of March
6, 1997, the outstanding principal balance of the term loan made pursuant to the
Credit Agreement was $1,466,662, and the interest rate on the term loan was 9%.
The Company currently is required to make monthly payments of principal in the
amount of $33,334, plus interest, under the term loan credit facility. The
entire outstanding balance of the term loan is due and payable on February 28,
1998.
The Company is attempting to reorganize its business and restructure its
indebtedness while under protection of Chapter 11. There can be no assurance
that the Company will be successful in this effort.
Cash and cash equivalents of the Company on March 31, 1997 increased by
approximately $269,000 or 80 percent over September 30, 1996. This increase
relates to the initial success during the first three weeks of reorganization
under Chapter 11. Although Company is paying COD or in advance for parts and
services, a concerted effort to collect receivables and a reduction in overhead
and outside services as part of the reorganization has made the cash increase
possible.
11
<PAGE> 12
The Company has been granted the use of cash collateral on an interim
basis through September 30, 1997. A final cash collateral hearing will be held
on September 26, 1997 to determine further use of cash collateral.
The Company plans to sell or dispose of assets not essential to the
business, eliminate areas of operations that are unprofitable, and compromise or
restructure its present payment obligations while under Chapter 11 to correct
the negative cash flow. By consolidating efforts in profitable areas and
rescheduling debts, the Company's plan is to emerge from Chapter 11 as a
profitable enterprise with a positive cash flow.
PART II
OTHER INFORMATION
ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K
(a) Financial Data Schedule
(b) Form 8-K Filed March 10, 1997, Announcement of filing Chapter 11.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERSCIENCE COMPUTER CORPORATION
Date: June 23, 1997 /s/ Frank J. LaChapelle
----------------------
Frank J. LaChapelle,
Chief Executive Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 605,565
<SECURITIES> 0
<RECEIVABLES> 1,978,774
<ALLOWANCES> 0
<INVENTORY> 3,744,848
<CURRENT-ASSETS> 6,608,794
<PP&E> 1,252,788
<DEPRECIATION> 768,271
<TOTAL-ASSETS> 14,803,590
<CURRENT-LIABILITIES> 7,198,358
<BONDS> 0
0
3,590,000
<COMMON> 4,241,748
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,803,590
<SALES> 0
<TOTAL-REVENUES> 3,260,136
<CGS> 0
<TOTAL-COSTS> 2,516,531
<OTHER-EXPENSES> 1,267,767
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (540,523)
<INCOME-TAX> 149,382
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (689,905)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> 0
</TABLE>
