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 March 31, 2000
Commission file number 0-22136
MENLO ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0332937
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 Misty Lane
Parsippany, NJ 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 560-1400
Indicate by check mark whether the registrant (1) has filed all reports required
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
At May 8, 2000 the registrant had issued and outstanding an aggregate of
5,263,348 shares of its common stock.
<PAGE>
INDEX
MENLO ACQUISITION CORPORATION
AND SUBSIDIARIES
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Accountants' Review Report...................F-3
Condensed Consolidated Balance Sheets -
March 31, 2000 (Unaudited) and
December 31, 1999........................................F-4
Condensed Consolidated Statements
of Income and Comprehensive Income -
Three Months Ended March 31, 2000
and 1999 (Unaudited).................................... F-5
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2000
and 1999 (Unaudited)......................................F-6
Notes to Condensed Consolidated Financial Statements
March 31, 2000 (Unaudited).........................F-7 - F-10
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations
PART II. OTHER INFORMATION
Item 1. Not Applicable
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Not Applicable
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
F-2
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Menlo Acquisition Corporation
We have reviewed the accompanying condensed consolidated
balance sheet of Menlo Acquisition Corporation and
subsidiaries as of March 31, 2000 and the related condensed
consolidated statements of income and comprehensive income and
cash flows for the three-month period then ended.
These financial statements are the responsibility of the
company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
financial statements for them to be in conformity with
generally accepted accounting principles.
J.H. Cohn LLP
Roseland, New Jersey
May 1, 2000
F-3
<PAGE>
MENLO ACQUISITION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
March December
31, 2000 31, 1999
-------- ----------
(Unaudited)
(In thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents 1,690 $ 1,182
Investments in marketable securities 1,216 722
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $552 and $614 3,281 3,880
Unbilled receivables 50 65
Affiliates 110 110
Prepaid expenses and other current assets 52 100
Deferred tax assets 35 34
-------- ---------
Total current assets 6,434 6,093
Equipment and furnishings, net of accumulated
depreciation of $ 1,063 and $965 1,386 1,088
Other assets, net of accumulated amortization
$5 and $0 62 67
------- ---------
Totals $7,882 $7,248
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 106 $ 106
Accounts payable 1,032 942
Customer deposits 450 445
Accrued expenses and other liabilities 450 444
Income taxes payable 255 -
----- -----
Total current liabilities 2,293 1,937
Long-term debt, net of current portion 142 168
----- -----
Total liabilities 2,435 2,105
----- -----
Stockholders' equity:
Preferred stock, $.0001 par value; 2,000,000 shares
authorized; none issued. - -
Common stock, $.0001 par value; 40,000,000 shares
authorized; 5,263,348 issued and outstanding 1 1
Additional paid-in capital 4,313 4,313
Retained earnings 1,107 803
Accumulated other comprehensive income -
Unrealized holding gains on marketable
securities 26 26
----- -----
Total stockholders' equity 5,447 5,143
------- -------
Totals $7,882 $7,248
====== ======
See Notes to Condensed Consolidated Financial Statements.
F-4
<PAGE>
MENLO ACQUISITION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
Income
------
2000 1999
------ ------
(In thousands of dollars,
except share data)
Gross revenue $3,567 $3,247
Direct project costs and other costs of operations 1,197 1,303
------- -------
Net revenue 2,370 1,944
------- -------
Expenses:
Labor and related expenses 577 498
Selling, general and administrative 1,340 1,144
----- -----
Totals 1,917 1,642
----- ------
Income from operations 453 302
Other income (expense) 54 (2)
-------- -------
Income before income taxes 507 300
Provision for income taxes (See Note 5) 203 -
-------- -------
Net income $304 $300
===== ====
Basic net income per share (See Note 5) $ .06 $.06
===== =====
Basic weighted average common shares outstanding 5,263,348 5,263,348
========= =========
Comprehensive Income
--------------------
Net income $304 $300
Other comprehensive income, net of taxes
Unrealized holding gains on marketable
securities arising during the period: - -
----- -----
Comprehensive income $304 $300
===== ====
See Notes to Condensed Consolidated Financial Statements.
F-5
<PAGE>
MENLO ACQUISITION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
(In thousands of dollars)
Operating activities:
Net income $304 $300
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 98 86
Amortization 5 -
Deferred income taxes (1) -
Changes in operating assets and liabilities:
Accounts receivable - trade 599 33
Unbilled receivables 15 (92)
Accounts receivable - affiliates - 11
Prepaid expenses and other current assets 48 9
Due from affiliate - 27
Other assets - 20
Accounts payable 90 204
Customer deposits 5 (39)
Accrued expenses and other liabilities 6 59
Income taxes payable 255 -
--- ----
Net cash provided by operating activities 1,424 618
----- ----
Investing activities:
Purchase of equipment and furnishings (396) (53)
Purchase of marketable securities (494) -
------ -----
Net cash used in investing activities (890) (53)
------ -----
Financing activities:
Repayment of notes payable - bank - (400)
Repayment of long-term debt - bank (26) (27)
Repayment of advances from stockholder - (10)
----- -----
Net cash used in financing activities (26) (437)
----- -----
Net increase in cash and cash equivalents 508 128
Cash and cash equivalents, beginning of period 1,182 25
------ -----
Cash and cash equivalents, end of period $1,690 $ 153
====== =====
Supplemental disclosure of cash flow data:
Interest paid $ 5 $ 14
==== =====
Income taxes paid $ 0 $ 1
===== ===
See Notes to Condensed Consolidated Financial Statements
F-6
<PAGE>
MENLO ACQUISTION CORPORATION
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
without audit by Menlo Acquisition Corporation, ("Menlo") in accordance with
generally accepted accounting principles for interim financial statements and
pursuant to the rules of the Securities and Exchange Commission (the "SEC") for
Form 10-QSB. As used herein, "Company" refers to Menlo and its operating
subsidiaries. Certain information and footnotes required by generally accepted
accounting principles for complete financial statements have been omitted. It is
the opinion of management that all adjustments considered necessary for a fair
presentation have been included, and that all such adjustments are of a normal
and recurring nature.
Certain amounts in the 1999 Financial Statements have been reclassified to
conform with the current presentation.
The consolidated results of operations for the three months ended March 31, 2000
are not necessarily indicative of the results to be expected for the full year.
The Company has two operating subsidiaries. One provides environmental
consulting, remedial and disposal services with offices in Parsippany and West
Windsor, New Jersey and in Englewood, Colorado (Consulting). The other conducts
testing of soil and water for environmental hazards with an office in Randolph,
New Jersey (Lab). The subsidiaries operate primarily throughout New Jersey, New
York, Connecticut, Pennsylvania and Colorado.
NOTE 2: EARNINGS PER SHARE
The Company presents "basic" and, if appropriate, "diluted" earnings (loss) per
common share pursuant to the provisions of Statement of Financial Accounting
Standards No. 128, Earnings per Share ("FAS 128").
Basic earnings (loss) per common share is calculated by dividing net income or
loss by the weighted average number of common shares outstanding during the
period. The calculation of diluted earnings (loss) per common share is similar
to that of basic earnings (loss) per common share, except that the denominator
is increased to include the number of additional common shares that would have
been outstanding if all potentially dilutive common shares, principally those
issuable upon the exercise of stock options, were issued during the period.
Diluted earnings per share have not been presented for the quarter ended March
31, 2000 because the difference to basic earnings per share was not material.
For the quarter ended March 31, 1999, the Company had no potentially dilutive
common shares.
NOTE 3: COMMITMENTS AND CONTINGENCIES
The Company is currently subject to certain claims and lawsuits arising in the
ordinary course of its business. In the opinion of management, adequate
provision has been made for all known liabilities that are currently expected to
result from these claims and lawsuits, and in the aggregate such claims are not
expected to have a material effect on the financial position of the Company. The
estimates used in establishing these provisions could differ from actual
results. Should these provisions change significantly, the effect on operations
for any quarterly or annual reporting period could be material.
F-7
<PAGE>
As of March 31, 2000, the Company had a $750,000 revolving line-of-credit
facility utilized by its consulting segment. The facility expired on April 30,
2000. Outstanding borrowings were secured by substantially all of the Company's
assets. The line of credit contained certain covenants, the most restrictive of
which included the maintenance of a maximum capital funds ratio, as defined. As
of March 31, 2000, the Company was in compliance with all covenants and there
were no amounts outstanding under the line of credit.
The Company has received a commitment from another financial institution to
replace its expired line-of-credit. The commitment is for a $1,000,000 revolving
line-of-credit to be used by its operating segments and a $750,000 line to be
utilized by the Company's Lab segment for either the purchase or re-finance of
equipment. The Company anticipates the completion of this refinancing will occur
during the second quarter of 2000.
In addition, the Company has entered into a contract to purchase the facility in
which the Lab segment operates from the current unaffiliated lessor for the
amount of $1,850,000. The Company intends to finance this purchase, in part,
with a mortgage in the amount of $1,200,000. Purchase of the facility is
anticipated to be completed by June 15, 2000 and will support anticipated future
growth of the Lab segment for at least the next five years.
NOTE 4: BUSINESS SEGMENTS
The Company is reporting segment revenue and income from operations in the same
format reviewed by the Company's management (the "management approach"). The
Company has two reportable segments as described previously in Note 1.
Additionally, revenue and expenses (primarily legal and accounting) related
directly to Menlo Acquisition Corporation are reported under the heading of
"Holding".
Revenue, income from operations and other related segment information for the
three months ended March 31, 2000 and 1999 follows:
2000 1999
---- ----
(In Thousands of Dollars)
Gross revenue:
Consulting - Third Party $2,362 $2,413
Lab - Third Party 1,205 834
Lab - Inter-segment 243 251
Holding - Inter-segment 533 -
Inter-segment (776) (251)
------ ------
Totals $3,567 $3,247
====== ======
Direct project costs and other costs of operations:
Consulting $ 739 $1,023
Lab 701 531
Inter-segment (243) (251)
-------- ------
Totals $ 1,197 $1,303
======== ======
Other operating expenses
Consulting $ 1,471 $1,296
Lab 574 467
Holding 29 -
Inter-segment (157) (121)
--------- -------
Totals $ 1,917 $1,642
========= =======
F-8
<PAGE>
NOTE 4: BUSINESS SEGMENTS (CONTINUED):
Income from operations:
Consulting $152 $ 94
Lab 173 87
Holding 504 -
Inter-segment (376) 121
--------- -------
Totals $ 453 $ 302
========= =====
Other income (expense):
Consulting $ 209 $ 125
Lab (1) (6)
Holding 3 -
Inter-segment (157) (121)
---------- --------
Totals $ 54 $ (2)
======= ======
Income before taxes:
Consulting $ 361 $ 219
Lab 172 81
Holding 507 -
Inter-segment (533) -
--------- ------
Totals $ 507 $ 300
========= =======
Provision for income taxes:
Consulting $ - $ -
Lab - -
Holding 203 -
--- ---
Totals $ 203 $ -
========= =====
Net Income:
Consulting $ 361 $ 219
Lab 172 81
Holding 304 -
Inter-segment (533) -
--------- -----
Totals $ 304 $ 300
========= =======
Assets by segment as of March 31, 2000 and 1999 follow:
2000 1999
----- ----
(In Thousands of Dollars)
Cash and investments in marketable securities:
Consulting $ 1,038 $ 75
Lab 1,135 78
Holding 733 -
--- ---
Totals $ 2,906 $ 153
======== ======
Accounts receivable, net:
Consulting $ 2,533 $4,248
Lab 926 1,696
Inter-segment (18) (671)
-------- ------
Totals $ 3,441 $5,273
======== ======
F-9
<PAGE>
NOTE 4: BUSINESS SEGMENTS (CONCLUDED):
Equipment and furnishings, net:
Consulting $ 414 $ 425
Lab 972 562
-------- ----
Totals $ 1,386 $ 987
======== =======
Other assets:
Consulting $ 63 $ 74
Lab 6 17
Holding 80 -
-- ---
Totals $ 149 $ 91
======== ======
Total assets $ 7,882 $ 6,504
======= =======
NOTE 5: INCOME TAXES:
Prior to the acquisition of the two operating subsidiaries by the Company on
March 10, 1999, the subsidiaries were Limited Liability Companies and, as such,
were treated as partnerships for Federal and State income tax purposes. A
partnership is not a tax paying entity for Federal or State income tax purposes.
Income or loss of a limited liability company is reported in the individual
member's income tax returns and accordingly, no provision for income tax had
been recorded in the accompanying condensed consolidated statements of income
and comprehensive income attributable to these limited liability companies for
the quarter ended March 31, 1999. The unaudited Proforma net income and basic
net income per share data shown below is computed as if the Company acquired the
subsidiaries effective January 1, 1999 and was subject to Corporate Income Tax:
2000 1999
---- ----
Proforma
(In thousands of dollars,
except share data)
Historical income before income taxes $507 $300
Proforma:
Provision for income taxes 203 120
--- ---
Net Income $304 $180
=== ===
Basic net income per share $.06 $.03
==== ====
Basic weighted average
common shares outstanding 5,263,348 5,263,348
========= =========
F-10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward Looking Statements
The statements in this report that are forward-looking are based on current
expectations, and actual results may differ materially. The forward-looking
statements include those regarding the level of future purchases of fixed
assets, the possible impact of current and future claims against the Company
based upon negligence and other theories of liability and the possibility of the
Company making acquisitions during the next 12 to 18 months. Forward-looking
statements involve numerous risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, the possibilities
that the demand for the Company's services may decline as a result of possible
changes in general and industry specific economic conditions and the effects of
competitive services and pricing; one or more current or future claims made
against the Company may result in substantial liabilities; and such other risks
and uncertainties as are described in reports and other documents filed by the
Company from time to time with the Securities and Exchange Commission.
Results of Operations
(In thousands of dollars, except share data)
The following table sets forth, for the periods indicated: i) the percentage
that certain items in the condensed consolidated statements of income and
comprehensive income of the Company bear to gross revenues, and ii) the
percentage increase (decrease) in dollar amounts of such items from period to
period.
Three Month Comparison for Years 2000 and 1999
Percentage
Increase
(Decrease)
Three
Months
Percentage Ended
of Gross Revenue 3/31/00
Three Months Ended vs.
------------------ --
3/31/00 3/31/99 3/31/99
------- ------- -------
Gross revenue 100.0% 100.0% 9.9%
Direct project costs and other costs
of operations 33.6 40.1 (8.1)%
------ ------ ------
Net revenue 66.4 59.9 21.9%
------ ------ ------
Expenses:
Labor and related expenses 16.2 15.4 15.9%
Selling, general and administrative 37.6 35.2 17.1%
---- ---- -----
Totals 53.8 50.6 16.7%
------ ------ -------
Income from operations 12.6 9.3 50.0%
Other income (expense) 1.5 (0.1) 2800.0%
------ ----- -------
Income before income taxes 14.1 9.2 69.0%
==== ==== ======
<PAGE>
Gross revenues for the three months ended March 31, 2000 were $3,567
versus $3,247 for the first three months of 1999, an increase of 9.9%. The
increase occurred in the Lab segment. Lab revenues increased $371 (net of
inter-segment billing) while Consulting revenues decreased slightly by $51. The
significant increase in the revenue of the Lab segment was a result of effective
direct sales efforts, a strong demand for analytical services from the
environmental sector, higher utilization of equipment used in performing Lab
services and broadening of the customer base into the pharmaceutical industry.
Consulting revenue is composed of both hours billed by the professional staff
(the more profitable component) and pass-through billing of sub-contractor costs
associated with client projects. While overall consulting revenue was down, the
hours billed component increased by $225. A decrease of $276 occurred in the
pass-through component due to less reliance on sub-contractors in performing
client services.
Income from operations was $453 in the first three months of 2000 as
opposed to $302 for the same period in 1999. This represents an increase of
50.0%. Operating margins rose to 12.6% for the current period from 9.3% for the
first three months of 1999. The increase in operating income and margin was due
to a significant reduction in the direct project costs incurred in the
Consulting segment as discussed above. This resulted in a significantly higher
percentage of net revenue. A larger portion of revenues was generated from
professional services in 2000 as compared to more pass-through billing of
reimbursable expenses in 1999. Additionally, Lab segment operating income rose
due to the increased sales volume and the relatively low marginal costs
associated with analytical testing.
Labor and related expenses increased 15.9% compared to the
corresponding period in the prior year primarily due to increases in the number
of technical staff in the Consulting segment and increases in compensation
rates.
Selling, general and administrative expenses increased 17.1% compared
to the corresponding period in the prior year primarily due to additional costs
associated with the Colorado office, which was opened in January 2000, and
increased administrative staffing costs in the Lab segment needed to handle the
volume growth.
Other income (expense) increased 2800.0% in the first three months of
2000 as compared to the first three months of 1999. This was due to increased
interest income from invested cash and a corresponding decrease in interest
expense due to having little or no debt.
Income before taxes for the period was $507 compared with $300 in the
first three months of 1999, an increase of 69.0%. This increase was due to the
factors discussed above. Tax provisions were recorded at an effective rate of
40% for the first quarter 2000 and the Basic net income per share was $.06.
Although no tax provision was recorded in the first quarter of 1999 (see Note 5
in the Notes to Condensed Consolidated Financial Statements), the Proforma
provision was also calculated using an effective rate of 40% and the Proforma
Basic net income per share was $.03 for the first quarter 1999. The Company had
5,263,348 shares outstanding at March 31, 2000 and diluted earnings per share
would also be $.06 for the quarter then ended as noted in Note 2 in the Notes to
Condensed Consolidated Financial Statements. For the quarter ended March 31,
1999, the Company had no potentially dilutive common shares.
<PAGE>
Liquidity and Capital Resources
Net cash provided by operations for the three months ended March 31,
2000 was $1,424 as compared to $618 for the first three months of the prior
year. The increase in cash provided by operations was due primarily to increased
monitoring of accounts receivable and quicker conversion to cash in both
operating segments. Additionally, more stringent cash management policies have
been implemented and practiced.
The Company made capital expenditures on equipment and furnishings of
$396 in the first three months of 2000 compared to capital expenditures of $53
in the first three months of the prior year. The increased expenditures were
made primarily to maintain the technology within the Lab segment. The Company
anticipates that its capital expenditures, excluding acquisitions, for the
current year will be higher by approximately $200 to those incurred in the prior
year. Additionally, the Company purchased $494 of marketable securities in the
first three months of 2000 whereas no such investments were made in the first
three months of 1999.
The Company, in the normal course of business, encounters potential
liability, including claims for errors and omissions, resulting from the
performance of its services. The Company is party to lawsuits and is aware of
potential exposure related to certain claims. In the opinion of management,
adequate provision has been made for all known liabilities that are currently
expected to result from these matters, and in the aggregate, such claims are not
expected to have a material impact on the financial position and liquidity of
the Company. Currently, the Company is provided a $5 million per occurrence, $10
million aggregate professional services insurance policy through an unrelated,
rated carrier. The Company also maintains a general liability insurance policy
with an unrelated, rated carrier.
At March 31, 2000, the Company had cash and cash equivalents on hand of
$1,690 and working capital of $4,141. The Company has a commitment for a $1,000
revolving line-of-credit facility to be utilized by its operating segments.
Additionally, the Company has a commitment for a $750 line that can be utilized
for purchase or re-finance of equipment used by its Lab segment. Any portion of
the $750 equipment line, if utilized, will convert into a term loan with a
maximum five-year amortization. These commitments replaced the previous $750
revolving credit line agreement that expired on April 30, 2000. In conjunction
with this expiration, the Company paid off, in full, its long-term debt in the
amount of $248. This transaction left the Company with no remaining bank debt.
At March 31, 2000, borrowings under all lines were $0 leaving the full amounts
of both the revolving line-of-credit and the equipment line available to the
Company. At March 31, 1999, there were no amounts outstanding on the credit line
then available. The Company is in compliance with all covenants pertaining to
all credit line agreements.
The Company believes that its available cash, as well as cash generated
from operations and its committed credit lines, will be sufficient to meet the
Company's cash requirements for the balance of the fiscal year. The Company will
use approximately $650 of its available cash as a down payment on the building
in which the Lab segment currently operates. The remaining balance of the
purchase price (approximately $1,200) will be financed with an unaffiliated
lending institution for a period not to exceed 20 years. Additionally, the
Company intends to continue to actively search for acquisitions to expand its
geographical representation and enhance its technical capabilities. The Company
expects to utilize a portion of its liquidity over the next 12 to 18 months for
capital expenditures, including acquisitions and investments in aligned
businesses. Other than previously disclosed, there is no present agreement,
understanding or other arrangement with respect to any acquisition or
investment. However, future agreements concerning acquisitions may require the
Company to obtain additional financing.
Inflation has not had a material effect on the revenues or the income
from operations of the Company for the past two years. Inflation is not expected
to have a material future effect.
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following exhibits are furnished along with this Form 10-QSB
Quarterly Report for the period ended March 31, 2000:
Exhibit No. 27 - Financial Data Schedule
b. Reports on Form 8-K
During the quarter ended March 31, 2000, the Company did not file any
Current Reports on Form 8-K.
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.
MENLO ACQUISITION CORPORATION
/ss/Frank Russomanno
Date: May 8, 2000 -----------------------------
Frank Russomanno
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<CASH> 1690
<SECURITIES> 1216
<RECEIVABLES> 3833
<ALLOWANCES> 552
<INVENTORY> 0
<CURRENT-ASSETS> 6434
<PP&E> 2449
<DEPRECIATION> 1063
<TOTAL-ASSETS> 7882
<CURRENT-LIABILITIES> 2293
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 5446
<TOTAL-LIABILITY-AND-EQUITY> 7882
<SALES> 3567
<TOTAL-REVENUES> 3567
<CGS> 1197
<TOTAL-COSTS> 1197
<OTHER-EXPENSES> 1858
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 507
<INCOME-TAX> 203
<INCOME-CONTINUING> 304
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 304
<EPS-BASIC> .06
<EPS-DILUTED> .06
</TABLE>
