<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 0-22994
GUNTHER INTERNATIONAL, LTD.
(Exact name of small business issuer as specified in its charter)
DELAWARE 51-0223195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE WINNENDEN ROAD, NORWICH, CONNECTICUT 06360
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: 860-823-1427
Indicate by check whether the registrant (1) has 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
--- ---
The number of shares of the Registrant's Common Stock outstanding as of November
12, 1997 was 4,288,602. The number of shares of the Registrant's Series B
Common Stock outstanding as of November 12, 1997 was 500.
Transitional Small Business Disclosure Format (check one):
YES NO X
--- ---
Exhibit Index is located at Page 13
<PAGE> 2
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
INDEX
<TABLE>
<CAPTION>
Page
No.
PART I - FINANCIAL INFORMATION
<S> <C>
ITEM 1. CONDENSED FINANCIAL STATEMENTS
BALANCE SHEETS
SEPTEMBER 30, 1997 (UNAUDITED)
AND MARCH 31, 1997...........................................................3,4
UNAUDITED STATEMENTS
OF INCOME - THREE MONTHS AND
SIX MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996....................................................5
UNAUDITED STATEMENTS
OF CASH FLOWS - THREE MONTHS AND
SIX MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996....................................................6
NOTES TO CONDENSED FINANCIAL
STATEMENTS.....................................................................7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................................8 - 10
PART II - OTHER INFORMATION:
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS..................................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................................................11
SIGNATURES...............................................................................................12
EXHIBIT INDEX............................................................................................13
EXHIBITS............................................................................................14 - 15
</TABLE>
2
<PAGE> 3
FORM 10-QSB
SEPTEMBER 30, 1997
PART I - FINANCIAL INFORMATION
ITEM 1 - CONDENSED FINANCIAL STATEMENTS
GUNTHER INTERNATIONAL, LTD.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
---- ----
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
CASH $ 169,913 $ 261,700
ACCOUNTS RECEIVABLE 2,160,614 1,298,765
COSTS AND ESTIMATED EARNINGS
IN EXCESS OF BILLINGS
ON UNCOMPLETED CONTRACTS 1,968,533 1,403,715
INVENTORIES 969,514 1,262,435
PREPAID EXPENSES 65,592 90,531
----------- ----------
TOTAL CURRENT ASSETS 5,334,166 4,317,146
----------- ----------
PROPERTY AND EQUIPMENT:
MACHINERY AND EQUIPMENT 1,205,348 1,099,208
FURNITURE AND FIXTURES 212,950 187,294
LEASEHOLD IMPROVEMENTS 239,477 229,804
----------- ----------
1,657,775 1,516,306
LESS - ACCUMULATED DEPRECIATION
AND AMORTIZATION 609,873 483,069
----------- ----------
NET PROPERTY AND EQUIPMENT 1,047,902 1,033,237
----------- ----------
OTHER ASSETS:
EXCESS OF COST OVER FAIR VALUE OF
NET ASSETS ACQUIRED, NET 3,333,553 3,445,293
DEFERRED PREPRODUCTION COSTS 483,351 457,189
NOTES RECEIVABLE
FROM STOCKHOLDER 40,000 40,000
INVESTMENT, AT LOWER OF COST
OR MARKET 30,000 30,000
OTHER 56,749 40,828
----------- ----------
TOTAL OTHER ASSETS 3,943,653 4,013,310
----------- ----------
TOTAL LONG-TERM ASSETS 4,991,555 5,046,547
----------- ----------
TOTAL ASSETS $10,325,721 $9,363,693
=========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS
3
<PAGE> 4
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
---- ----
(UNAUDITED)
<S> <C> <C>
ACCOUNTS PAYABLE $ 1,956,551 $ 2,059,506
ACCRUED EXPENSES 464,603 479,043
NOTE PAYABLE AND CURRENT MATURITIES
OF LONG-TERM DEBT 587,407 401,866
BILLINGS IN EXCESS OF COSTS AND ESTIMATED
EARNINGS ON UNCOMPLETED CONTRACTS 892,653 771,016
DEFERRED SERVICE CONTRACT REVENUE 2,045,464 1,057,443
------------ ------------
TOTAL CURRENT LIABILITIES 5,946,678 4,768,874
------------ ------------
LONG-TERM DEBT, LESS CURRENT MATURITIES 2,171,644 2,213,618
TOTAL LIABILITIES 8,118,322 6,982,492
------------ ------------
STOCKHOLDERS' EQUITY:
COMMON STOCK, $.001 PAR VALUE;
AUTHORIZED 16,000,000 SHARES IN 1997;
ISSUED AND OUTSTANDING 4,288,602 SHARES
AT SEPTEMBER 30, 1997 AND 4,283,269 SHARES
AT MARCH 31, 1997 4,289 4,283
SERIES B COMMON STOCK, $.001 PAR VALUE;
500 SHARES AUTHORIZED, ISSUED AND
OUTSTANDING AT SEPTEMBER 30
AND MARCH 31, 1997 1 1
ADDITIONAL PAID-IN CAPITAL 11,385,820 11,375,826
ACCUMULATED DEFICIT (9,182,711) (8,998,909)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,207,399 2,381,201
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,325,721 $ 9,363,693
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS
4
<PAGE> 5
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
UNAUDITED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES:
SYSTEMS $ 2,493,264 $ 2,485,457 $ 4,207,442 $ 4,765,913
SERVICE 1,576,307 1,575,146 3,089,391 2,940,328
----------- ----------- ----------- -----------
TOTAL SALES 4,069,571 4,060,603 7,296,833 7,706,241
----------- ----------- ----------- -----------
COST OF SALES:
SYSTEMS 1,374,249 1,379,646 2,333,197 2,580,692
SERVICE 970,368 1,003,121 1,892,201 1,838,654
----------- ----------- ----------- -----------
TOTAL COST OF SALES 2,344,617 2,382,767 4,225,398 4,419,346
----------- ----------- ----------- -----------
GROSS PROFIT 1,724,954 1,677,836 3,071,435 3,286,895
----------- ----------- ----------- -----------
OPERATING EXPENSES:
SELLING AND ADMINISTRATIVE 1,553,172 1,504,926 3,024,766 2,986,312
RESEARCH AND DEVELOPMENT 74,706 61,183 125,897 114,213
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 1,627,878 1,566,109 3,150,663 3,100,525
----------- ----------- ----------- -----------
OPERATING INCOME, (LOSS) 97,076 111,727 (79,228) 186,370
----------- ----------- ----------- -----------
INTEREST EXPENSE, NET (53,298) (70,858) (104,574) (118,599)
----------- ----------- ----------- -----------
NET INCOME, (LOSS) $ 43,778 $ 40,869 $ (183,802) $ 67,771
----------- ----------- ----------- -----------
INCOME (LOSS) PER SHARE $ 0.01 $ 0.01 $ (0.04) $ 0.02
FULLY DILUTED WEIGHTED
AVERAGE SHARES OUTSTANDING 4,850,271 4,344,543 4,847,580 4,319,543
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS
5
<PAGE> 6
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME, (LOSS) $ 43,778 $ 40,869 $(183,802) $ 67,771
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED BY OPERATING ACTIVITIES
DEPRECIATION AND AMORTIZATION 156,392 146,064 309,434 295,376
(INCREASE) IN ACCOUNTS RECEIVABLE (694,630) (203,465) (861,849) (101,344)
DECREASE IN INVENTORIES 798,641 516,660 292,921 705,264
DECREASE (INCREASE) IN PREPAID EXPENSES
AND OTHER ASSETS 22,228 (98,699) 9,018 (189,709)
(DECREASE) INCREASE IN ACCOUNTS
PAYABLE (831,697) 707,282 (102,955) 200,736
INCREASE (DECREASE) IN ACCRUED EXPENSES 70,504 6,357 (14,440) 91,074
INCREASE IN DEFERRED SERVICE
CONTRACT REVENUE 834,319 121,199 988,021 116,976
(DECREASE) IN BILLINGS IN EXCESS
OF COSTS AND ESTIMATED EARNINGS ON
UNCOMPLETED CONTRACTS, NET (493,379) (1,229,857) (443,181) (1,035,768)
--------- ----------- --------- -----------
NET CASH (USED), PROVIDED BY
OPERATING ACTIVITIES (93,844) 6,410 (6,833) 150,376
--------- ----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF PROPERTY AND EQUIPMENT (100,144) (193,017) (238,521) (201,422)
--------- ----------- --------- -----------
NET CASH USED BY INVESTING ACTIVITIES (100,144) (193,017) (238,521) (201,422)
--------- ----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM NOTES PAYABLE AND
LONG-TERM DEBT 185,541 36,556 185,541 28,456
REPAYMENT OF NOTES PAYABLE AND
LONG-TERM DEBT (15,318) (300,000) (41,974) (300,000)
INCREASE IN NOTES RECEIVABLE 0 (40,000) 0 (40,000)
DECREASE IN RESTRICTED CASH 0 328,316 0 325,834
ISSUANCE OF COMMON STOCK 10,000 525,002 10,000 525,002
--------- ----------- --------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES: 180,223 549,874 153,567 539,292
--------- ----------- --------- -----------
NET INCREASE (DECREASE) IN UNRESTRICTED
CASH AND SHORT-TERM INVESTMENTS (13,765) 363,267 (91,787) 488,246
UNRESTRICTED CASH AND SHORT-TERM
INVESTMENTS AT BEGINNING OF PERIOD 183,678 252,038 261,700 127,059
--------- ----------- --------- -----------
UNRESTRICTED CASH AND SHORT-TERM
INVESTMENTS AT END OF PERIOD $ 169,913 $ 615,305 $ 169,913 $ 615,305
--------- ----------- --------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS
6
<PAGE> 7
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) MANAGEMENT REPRESENTATION: In the opinion of management, the accompanying
unaudited interim financial statements have been prepared in accordance with
generally accepted accounting principles and contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the financial
position and the results of operations for the interim periods. These financial
statements should be read in conjunction with the financial statements and
related notes included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 1997. The results of operations for the interim
period are not necessarily indicative of results to be expected for the full
year.
(2) PER SHARE DATA: Earnings per common share are based on the fully diluted
weighted average number of shares of common stock outstanding during each
period.
7
<PAGE> 8
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
TOTAL SALES: Sales for the three month period ended September 30, 1997 increased
.2% compared to the same period in 1996. System sales for the three month period
ended September 30, 1997 increased .3% from the same period in 1996. Service
sales increased .1% over the same three month period. Sales for the six month
period ended September 30, 1997 decreased 5.3% from the same period in 1996.
Systems sales decreased 11.7% in the six month period ended September 30, 1997
compared to the same period in 1996. The decrease in systems sales for the six
month period ended September 30, 1997 is primarily attributable to the
previously disclosed delays associated with the Company's new inserter assembly.
These delays were resolved by the end of the first month of the quarter ended
September 30, 1997. Service sales rose 5.1% in the same six month period. The
increase in service sales was due primarily to the increased number of systems
under maintenance contract in the field. The systems order backlog, consisting
of total order price less revenue recognized to date for all signed orders on
hand at September 30, 1997 was $3,864,000 compared to $2,928,000 at September
30, 1996.
GROSS PROFIT: Gross profit as a percentage of sales for the three month
period ended September 30, 1997 increased to 42.4% from 41.3% for the same
period last year. Gross profit as a percentage of systems sales increased to
44.9% from 44.5% for the same three month period last year. Gross profit as a
percentage of service sales increased to 38.4% in the three month period ended
September 30, 1997 compared to 36.3% in the same period last year. For the six
month period ended September 30, 1997, gross profit as a percentage of sales
decreased to 42.1% compared to 42.7% in the same period last year. Gross profit
as a percentage of systems sales decreased to 44.5% from 45.9% for the same six
month period last year. Gross profit as a percentage of service sales increased
to 38.8% in the six month period ended September 30, 1997 compared to 37.5% in
the same period last year. The decrease in gross profit percentage for system
sales in the six month period was primarily due to increased costs associated
with the inserter assembly. The increase in gross margin for service sales is
primarily due to an increase in the number of installations that the Company is
servicing directly, rather than using a third party service provider.
8
<PAGE> 9
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
OPERATING EXPENSES: Operating expenses include Selling, Administrative and
Research and Development expenses.
Selling and administrative expenses increased to 38.2% from 37.1% as a
percentage of sales for the three month period ended September 30, 1997 compared
to the same period one year ago. Selling and administrative expenses increased
to 41.5% from 38.8% as a percentage of sales for the six month period ended
September 30, 1997 compared to the same period one year ago. The increase as a
percentage of sales was due primarily to increased selling and marketing
expenses in the period ended September 30, 1997, compared to the same period
last year. Management expects that the additional expenditures for selling and
marketing will lead to higher levels of sales activity in future quarters.
Research and Development (R&D) expenses increased as a percentage of
net sales to 1.8% in the three month period ended September 30, 1997 from 1.5%
for the same three month period in 1996. R&D expenses increased as a percentage
of net sales to 1.7% in the six month period ended September 30, 1997 from 1.5%
for the same six month period in 1996. In absolute dollars, spending for R&D
remains fairly constant.
OTHER EXPENSES: Net interest expense decreased to $53,298 for the three month
period ended September 30, 1997 from $70,858 for the same period last year. Net
interest expense decreased to $104,574 for the six month period ended September
30, 1997 from $118,599 for the same period last year. This was due to some
non-recurring interest payments in the first six months of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary need for liquidity is to fund operations while
increasing sales and improving gross margins. The Company derives liquidity
through systems and service sales (including customer deposits), bank
borrowings, financing arrangements with third parties and, from time to time,
sales of its equity securities. During the three month period ended September
30, 1997, the Company had a negative cash flow from operating activities of
$93,844 compared to a positive cash flow of $6,410, for the same three month
period in 1996. A significant reason for the negative cash flow in the three
month period ended September 30, 1997 was the decrease in accounts payable.
During the first six months of this fiscal year, operating activities used
$6,833 in cash compared to providing cash of $150,376 in the first six months of
last fiscal year.
9
<PAGE> 10
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
The Company has a $2,250,000 revolving credit agreement with a bank of
which $1,700,000 of an available $1,750,000 is outstanding under Facility A, and
$500,000 of an available $500,000 is outstanding under Facility B at September
30, 1997. In order to induce the bank to enter into the credit facility, Mr.
Harold S. Geneen a director and stockholder of the Company, agreed to provide
the bank with sufficient cash collateral to secure all borrowings under Facility
A. The borrowings under Facility B are secured by the assets of the Company.
Except for the revolving credit facility described above, the Company
does not have any commitments for outside funding of any kind. It must depend,
therefore, upon the generation of sufficient internally generated funds and the
remaining funds available under its revolving line of credit to fund its
operations during fiscal 1998. Based on current projections, management believes
that the Company will be able to generate sufficient funds to meet the Company's
needs for liquidity during the balance of the year. It is possible that the
Company's business may require larger amounts of capital than the Company
currently anticipates. There can be no assurance that the Company will be able
to obtain such capital.
At September 30, 1997, total Stockholders' Equity was $2,207,399
compared to Stockholders' Equity of $2,381,201 at March 31, 1997.
FACTORS THAT MAY AFFECT FUTURE PERFORMANCE
This report contains forward looking statements based on current
expectations that involve a number of risks and uncertainties. The factors that
could cause actual results to differ materially include the following: general
economic conditions and growth rates in the finishing and related industries,
competitive factors and pricing pressures, changes in the Company's product mix,
technological obsolescence of existing products and the timely development and
acceptance of new products, inventory risks due to shifts in market demands,
component constraints and shortages, and the ramp-up and expansion of
manufacturing capacity.
10
<PAGE> 11
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 14, 1997, the Registrant issued and sold 5,333 shares of its
common stock, par value $.001 per share, to one accredited investor upon the
exercise of a stock purchase warrant issued to such investor on September 4,
1992. The aggregate proceeds to the Registrant were $9,999.38. There were no
underwriting discounts, commissions or other transaction costs to the
Registrant. The transaction was exempt from the registration provisions of the
Securities Act of 1933, as amended, by virtue of Section 4(2) of such Act.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The 1997 Annual Meeting of Stockholders of the Company was convened on
August 26, 1997. The following persons were elected directors of the Company by
the holders of the Company's Common Stock, par value $.001 per share, with each
person having received the votes indicated:
<TABLE>
<CAPTION>
Nominee For Against
------- --- -------
<S> <C> <C>
James H. Whitney 2,150,201 0
Frederick W. Kolling III 2,150,201 0
Allan W. Morton 2,150,201 0
</TABLE>
At the meeting, the holders of the Company's Common Stock also ratified
and approved the appointment of Arthur Andersen LLP as the Company's independent
public accountants for the current fiscal year. The holders of 2,150,201 shares
voted for and no shares voted against the appointment.
Immediately prior to the meeting, the holders of the Company's Series B
Common Stock, par value $.001 per share, took action by unanimous written
consent of such holders to elect Messrs. Harold S. Geneen, Gerald H. Newman, Guy
W. Fiske and J. Kenneth Hickman directors of the Company.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27. FINANCIAL DATA SHEET
(B) REPORTS ON FORM 8-K
NO REPORT ON FORM 8-K WAS FILED BY GUNTHER INTERNATIONAL, LTD. DURING THE
QUARTER ENDED SEPTEMBER 30, 1997.
11
<PAGE> 12
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE EXCHANGE ACT, THE REGISTRANT
HAS CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED.
GUNTHER INTERNATIONAL, LTD
(REGISTRANT)
/s/ Frederick W. Kolling III Date: November 14, 1997
-------------------------------------
FREDERICK W. KOLLING III
VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND TREASURER
(ON BEHALF OF THE REGISTRANT AND AS
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
12
<PAGE> 13
FORM 10-QSB
SEPTEMBER 30, 1997
GUNTHER INTERNATIONAL, LTD.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Pages in
Sequentially
Exhibit Numbered
Number Description Copy
- ------ ----------- ----
<S> <C> <C>
27 -- Financial Data Schedule 14
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 169,913
<SECURITIES> 0
<RECEIVABLES> 2,160,614
<ALLOWANCES> 0
<INVENTORY> 969,514
<CURRENT-ASSETS> 5,334,166
<PP&E> 1,657,775
<DEPRECIATION> 609,873
<TOTAL-ASSETS> 9,876,988
<CURRENT-LIABILITIES> 5,946,678
<BONDS> 2,171,644
0
0
<COMMON> 4,289
<OTHER-SE> 11,385,820
<TOTAL-LIABILITY-AND-EQUITY> 10,325,721
<SALES> 2,493,264
<TOTAL-REVENUES> 4,069,571
<CGS> 1,374,249
<TOTAL-COSTS> 3,972,495
<OTHER-EXPENSES> 53,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,298
<INCOME-PRETAX> 43,778
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,778
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,778
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
