SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ___________.
Commission File No.: 0-23038
CORRECTIONAL SERVICES CORPORATION
(Exact name of small business issuer in its charter)
Delaware 11-2872782
------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1819 Main Street, Suite 1000, Sarasota, Florida 34236
(Address of principal executive offices)
Issuer's telephone number: (941) 953-9199
Check whether the issuer (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 [
]
The number of shares outstanding of the issuer's Common Stock, par value
$.01 per share, as of May 13, 1996, was 4,956,584
<PAGE>
CORRECTIONAL SERVICES CORPORATION
INDEX
Page No
---
Part I. Financial Information
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C> <C>
Balance Sheet - December 31, 1995
and March 31, 1996...........................................3
Condensed Consolidated Statements
of Income - Three Months
Ended March 31, 1996 and 1995 ...............................4
Condensed Consolidated Statement
of Cash Flows - Three Months
Ended March 31, 1996 and 1995 ...............................5
Notes to Financial Statements .............................6-9
Item 2. Management's Discussion and Analysis
or Plan of Operation.................................10-16
Part II. Other Information ..............................................17
Signature ..................................................18
</TABLE>
2
<PAGE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
(FORMERLY ESMOR CORRECTIONAL SERVICES, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
<S> <C> <C>
1996 1995
CURRENT ASSETS
Cash and cash equivalents $451,080 $3,756,748
Restricted cash $750,000 $750,000
Accounts receivable 3,058,240 3,374,229
Prepaid expenses and other current assets 697,794 1,415,305
Total current assets 4,957,114 9,296,283
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS AT COST, NET 10,887,193 7,226,323
RECEIVABLE FROM SALE OF
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS 3,357,882 3,207,882
OTHER ASSETS
Deferred development and start-up costs, net 2,262,679 1,729,270
Deferred income taxes 1,120,000 1,120,000
Other 722,702 760,769
$23,307,570 $23,340,527
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $3,542,133 $3,535,165
Current portion of long-term debt 1,227,545 1,221,022
Total current liabilities 4,769,678 4,756,187
LONG-TERM LIABILITIES
Long-term debt, less current maturities 3,921,151 4,000,000
Subordinated notes payable 5,318,227 5,362,295
9,239,378 9,362,295
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 1,000,000 shares
authorized, none issued and outstanding -- --
Common Stock, $.01 par value, 10,000,000 shares
authorized 4,922,468 and 4,911,688 shares issued 49,224 49,117
Additional paid-in capital 9,545,076 9,479,436
Deficit (295,786) (306,508)
Total stockholders' equity 9,298,514 9,222,045
$23,307,570 $23,340,527
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
(FORMERLY ESMOR CORRECTIONAL SERVICES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Resident fees $6,948,544 $7,878,123
Other income 219,208 244,881
7,167,752 8,123,004
Expenses:
Operating 4,897,231 4,920,017
General and administrative 2,038,660 2,315,030
Interest 213,139 97,974
7,149,030 7,333,021
Income before income taxes 18,722 789,983
Income tax provision 8,000 325,000
Net Income $10,722 $464,983
Net Income per common share $0.00 $0.10
Weighted average shares outstanding 4,914,176 4,638,920
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
CORRECTIONAL SERVICES CORPORATION
AND SUBSIDIARIES
(FORMERLY ESMOR CORRECTIONAL SERVICES, INC.)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
<S> <C> <C>
1996 1995
Cash flows from operating activities:
Net income $10,722 $464,983
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 155,756 479,896
Amortization of subordinated
promissory note discount 22,306 --
Amortization of deferred loan costs 63,729 --
Deferred income tax benefit 0 (85,000)
Changes in operating assets and liabilities:
Accounts receivable 315,989 1,004,074
Prepaid expenses and other current assets 717,512 (311,861)
Accounts payable and accrued liabilities 6,964 1,022,354
Reserve for New Jersey facility
carrying costs (150,000) --
Net cash provided by operating activities: 142,978 2,574,446
Cash flows from investing activities:
Capital Expenditures (3,763,144) (1,623,728
Development and start-up costs (584,889) (350,906)
Other assets 0 0
Net cash used in investing activities: (4,348,033) (1,974,634)
Cash flows from financing activities:
Proceeds from long-term borrowing 17,421 925,000
Payment on long-term borrowings (65,500) (202,177)
Proceeds (payments) on short-term debt (89,746) (950,000)
Proceeds from exercise of stock options 64,874 --
Other assets (27,662) (41,173)
Net cash used in financing activities (100,613) (268,350)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (3,305,668) 331,462
Cash and cash equivalents at beginning of 3,756,748 308,446
Cash and cash equivalents at end of period $451,080 $639,908
Supplemental disclosures of cash flows information: Cash paid during the
period for:
Interest $218,740 $83,246
Income taxes $23,385 $67,489
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
CORRECTIONAL SERVICES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
NOTE 1 - In August 1996, the Company changed its name from Esmor
Correctional Services, Inc. to Correctional Services Corporation. In the opinion
of management of Correctional Services Corporation and subsidiaries (the
"Company"), the accompanying unaudited condensed consolidated financial
statements as of March 31, 1996 and for the three months then ended include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation. These statements should be read in conjunction with the
consolidated financial statements and the related notes included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1995 and
do not include all the information and footnote disclosure required by generally
accepted accounting principles for complete financial statements.
NOTE 2 - The results of operations for the three months ended March 31,
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE 3 - The computation of net loss per common share is based upon the
weighted average number of common shares outstanding during the periods. Common
stock equivalents were not included for the period ended March 31, 1996 as their
effect would be anti-dilutive.
NOTE 4 - Effective December 31, 1995, the Company entered into an
$11,000,000 Revolving Credit and Term Loan Agreement (the "Loan Agreement") with
NationsBank, N.A. ("NationsBank"). Pursuant to the terms of the Loan Agreement
as amended, NationsBank will make revolving credit loans to the Company, from
time to time, in amounts not to exceed, in the aggregate, the lesser of
$6,000,000 or the Borrowing Base (defined in the Loan Agreement to be
eighty-five (85%) percent of the Company's and its subsidiaries' eligible
accounts receivable). Proceeds of revolving credit loans are to be used for
working capital purposes (including, without limitation, deferred development
and start-up costs in connection with the Company's new or existing facilities).
Interest on the revolving credit loans is computed at the Company's option, at
either NationsBank's prime rate plus 0.75% or the London International Bank Rate
plus 3.35%. As part of the Loan Agreement, NationsBank also made a term loan to
the Company in the principal amount of $5,000,000. Proceeds of the term loan
were used to repay the Company's existing indebtedness to its former lender.
($5,002,689 at December 31, 1995). The Term Loan bears interest at a fixed rate
of 8.92% and is repayable in monthly installments of $83,333 until January 15,
1998, at which time the Loan Agreement terminates and the remaining unpaid
balances are due and payable. After September 30, 1996, the interest rate
charged under the revolving credit and the term loan will be based on the
Company's financial performance as set forth in the Loan Agreement. The Company
may prepay any borrowings without interest or penalty. The Company's
subsidiaries have guaranteed the Company's obligations under the Loan Agreement
and the Company has granted NationsBank a first priority
6
<PAGE>
security interest in all of its assets, including a first real estate mortgage
on the land and building used for the Arizona DWI prison. The Company is
required to pay NationsBank one-quarter of one percent of the average unused
portion of the facility. The Loan Agreement contains certain financial covenants
including a debt service coverage ratio (as amended effective for June 30, 1996
and for subsequent periods), and a senior liabilities to tangible net worth and
subordinated debt ratio. The Company was not in compliance with its debt service
coverage ratio as of March 31, 1996. NationsBank agreed to waive this covenant
for March 31, 1996 and has amended the debt service coverage ratio covenant
under the Agreement. The Loan Agreement precludes the payment of dividends and
stock repurchases or redemption's prior to December 31, 1996. Thereafter, such
dividends, repurchases or redemption's are limited to 10% of the Company's net
earnings after taxes provided that the Company is in compliance with the
above-noted financial covenants.
NOTE 5 - Due to a disturbance at the Company's Elizabeth, New Jersey
facility on June 18, 1995, the facility was closed and all detainees located
therein were moved by the INS to other facilities. On December 15, 1995, the
Company and a publicly-traded company (the "Buyer") which also operates and
manages detention and correctional facilities, entered into an asset purchase
agreement pursuant to which Buyer purchased the equipment, inventory and of
supplies, contact rights and records, leasehold and land improvements of the
Company's New Jersey facility for $6,223,000. The purchase price is payable in
monthly non-interest bearing installments of $123,000 through August 1999
beginning in the month the Buyer commences operations of the facility. If the
INS re-awards the contract to the Buyer, the unpaid balance is payable in
monthly non-interest bearing installments of $123,000 beginning in the first
month of the re-award term and the Company will record as income the unpaid
balance. On June 13, 1996 the Company, the Buyer and the INS executed a Novation
Agreement whereby the Buyer became the Company's successor in interest to the
contract with the INS. In addition, the Company's lease agreement for the New
Jersey facility was assigned to the Buyer. The Company has no continuing
obligation at the Elizabeth, New Jersey facility.
The receivable from Sale of the Equipment and Leasehold Improvements
reflected in the balance sheet at December 31, 1995 and March 31, 1996
represents the present value of the consideration to be received through August
31, 1999, of $3,207,882 and $3,357,882 (unaudited), respectively ($4,428,000
discounted using an interest rate of 11.5% per annum) reduced by the estimated
closing costs (legal and consulting) and the facility's estimated carrying costs
through July 1, 1996. The statement of operations for 1995 reflects a provision,
"New Jersey facility closure costs," of $3,909,700 which represents $416,201
from the write-off of deferred development costs related to the facility and
$3,493,429 resulting from the adjustment of the carrying value of the related
assets discussed above. During the three months ended March 31, 1996 the reserve
for carrying and closing costs were reduced by approximately $150,000 of cash
payments for rent and other carrying and closing costs.
NOTE 6 - On March 6, 1996 former inmates at one of the Company's facilities
filed an action in the Supreme Court of the State of New York, County of Bronx.
Plaintiffs claim on behalf of themselves and other similarly situated, personal
injuries and property damage purportedly
7
<PAGE>
caused by negligence and intentional acts of the Company. The lawsuit claims
$500,000,000 each for compensatory and punitive damages. The Company intends to
vigorously defend itself in this action. The Company has notified its insurance
carrier and has requested indemnity and defense. The ultimate outcome of the
lawsuit cannot be determined at this time, and accordingly, no adjustment has
been made to the consolidated financial statements.
In July 1996, a lawsuit was filed with the Superior Court for the State of
New Jersey by nine plaintiffs who were detainees at the Company's former
Elizabeth, New Jersey facility (or their spouses). The detainees allege that
they were mistreated at the hands of local law enforcement authorities while
they were detainees at a facility formerly operated by the Company. No specific
damage amounts are set forth in the complaint. However, in claim forms submitted
to the Company prior to the commencement of the litigation, individual damages
of $10,000,000 per plaintiff were demanded. The action has been moved to the
United States District Court for the District of New Jersey, Newark Division.
The Company intends to vigorously defend itself in this action. The ultimate
outcome of the lawsuit cannot be determined at this time, and accordingly, no
adjustment has been made to the consolidated financial statements.
NOTE 7 - In January, 1996 the Company entered into three year employment
agreements with the Chief Operating Officer and the Executive Vice President -
Finance. Pursuant to the terms of the employment agreements, each executive was
granted an option to purchase 100,000 shares of Common Stock and is entitled to
receive a 3% bonus (not to exceed $50,000 and $75,000, respectively) based on
profits in excess of $1,000,000 as defined in the agreements.
NOTE 8 - On April 11, 1996, the Company opened a 400 bed DWI facility
located in Phoenix, Arizona.
In October 1995 the Company signed contracts with the State of Florida to
operate two 350 bed facilities for juvenile offenders. Operations at these
facilities are scheduled to begin in the first quarter of 1997.
NOTE 9 - In July 1996 the Company's Certificate of Incorporation was
amended which changed the name of the Company to Correctional Services
Corporation and increased the number of authorized shares of Common Stock from
10,000,000 shares to 30,000,000 shares.
NOTE 10 - The Company acts as a fiduciary disbursing agent on behalf of a
governmental entity whereby certain governmental entity funds are maintained in
a separate bank account. These funds are for payments to the general contractor
which is constructing a government owned facility. The Company is responsible
for managing the construction process. Once completed, operations at these
facilities will be managed by the Company. The Company has no legal rights to
the funds and accordingly, such funds do not appear in the accompanying
financial statements.
NOTE 11 - Proposed Public Offering of Securities - The Company has filed a
registration statement for a proposed sale of 2,450,000 shares of common stock.
Of the 2,450,000 shares of
8
<PAGE>
common stock offered, 2,000,000 shares are being sold by the Company and 450,000
shares by certain stockholders. The Company will not receive any proceeds from
the shares being sold by stockholders. The Company intends to retire bank
indebtedness with a portion of the net proceeds of the proposed offering.
9
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operation
The Company had revenues of $8,123,003 and $7,167,752 for the three months
ended March 31, 1995 and 1996, respectively, a decrease of $955,252 or 11.8%.
The net decrease in revenues for the 1996 periods as compared to the 1995
periods resulted principally from the discontinuance of the Company's operations
at its Elizabeth, New Jersey INS facility on June 18, 1995 and lower occupancy
rates at the Company's Fort Worth and Houston, Texas facilities. This decrease
was offset in part by revenues generated by the Canadian, Texas facility which
began operations in April 1995, the Bartow, Florida facility which began
operations in July 1995 and the Phoenix, Arizona facility which began operations
in April 1996.
Operating expenses decreased from $4,920,017 for the three months ended
March 31, 1995 to $4,897,231 for the three months ended March 31, 1996, a
decrease of $22,786 or .5%. As a percentage of revenues, operating expenses
increased from 60.6% for the three months ended March 31, 1995 to 68.3% for the
three months ended March 31, 1996. These changes resulted primarily from the
opening of the facilities noted above, the addition of management personnel in
the corporate office, and the discontinuance of operations at the Company's
Elizabeth, New Jersey INS facility.
10
<PAGE>
General and administrative expenses for the three months ended March 31,
1995 and 1996 were $2,315,030 and $2,038,660, respectively, a decrease of
$276,370 or 11.9%. The decline in general and administrative expenses was
attributable primarily to the closure of the New Jersey facility in June 1995.
As a percentage of revenues general and administrative expenses were 28.5% and
28.4% for the three months ended March 31, 1996 and 1995, respectively.
Interest expense increased 117.5% from $97,974 for the three months ended
March 31, 1995 to $213,139 for the six months ended June 30, 1996. This increase
resulted primarily from indebtedness attributable to the placement of $5.6
million of subordinated debt at a 10% interest rate in the third quarter of
1995, proceeds of which were used to fund the purchase and renovation of the
Phoenix, Arizona facility.
As a result of the foregoing factors, the Company had net income of $10,722
or ($0.00) per share for the three months ended March 31, 1996 compared to net
income of $464,983 or $0.10 per share for the three months ended March 31, 1995.
Due to a disturbance at the Company's Elizabeth, New Jersey INS facility on
June 18, 1995, the facility was closed and all detainees located therein were
moved by the INS to other facilities.
11
<PAGE>
On December 15, 1995, the Company and a publicly-traded company (the
"Buyer") which also operates and manages detention and correctional facilities,
entered into an asset purchase agreement pursuant to which the Buyer purchased
the equipment, inventory and supplies, contract rights and records, and
leasehold and land improvements of the Company's New Jersey facility for
$6,223,000. The purchase price will be payable in non-interest bearing monthly
installments of $123,000 through August 31, 1999, following the month the Buyer
commences operations of the facility. The unpaid balance is due after August 31,
1999 if the INS re-awards the contract to the Buyer, payable in non-interest
bearing monthly installments of $123,000 until the $6,223,000 is paid. On June
13, 1996 the Company, the Buyer and the INS executed a Novation Agreement
whereby the Buyer became the Company's successor in interest to the contract
with the INS. In addition, the Company's lease agreement to the New Jersey
facility was assigned to the Buyer. The Company has no continuing obligation at
the Elizabeth, New Jersey INS facility.
The receivable from the sale of the equipment and leasehold improvements
reflected on the balance sheet at December 31, 1995 and March 31, 1996
represents the present value of the consideration to be received through August
31, 1999, of $3,207,882 and $3,357,882 (unaudited), respectively ($4,428,000
discounted using an interest rate of 11.5% per annum) reduced by the estimated
closing costs (legal and consulting) and the facility's estimated carrying costs
through July 1, 1996, the estimated transfer dates. The statement of operations
for 1995 reflects a provision for closure costs of
12
<PAGE>
$3,909,700, which represents $416,201 from the write-off of deferred development
costs related to the facility and $3,493,499 resulting from the adjustment of
the carrying value of the related assets discussed above. During the three
months ended March 31, 1996 the reserve for carrying and closing costs were
reduced by approximately $150,000 of cash payments for rent and other carrying
and closing costs.
The Company has revised the present value up to and including the
receivable from the sale of equipment and leasehold improvements described above
and reduced to zero the portion of the receivable contingent upon re-award of
the related management contract and increased the provision for closure costs
for a like amount of $1,300,000 for the year ended December 31, 1995. The effect
of the adjustments on the accompanying financial statements at December 31, 1995
is as follows:
<TABLE>
<CAPTION>
As Previously
Reported As Restated
------------ -------------
<S> <C> <C>
Receivable from sale of equipment and leasehold
improvements...................................................$4,507,882 $3,207,882
Deferred income taxes.......................................... 600,000 1,120,000
Retained earnings (deficit).................................... 473,492 (306,438)
</TABLE>
If the INS contract is re-awarded to the Buyer in August 1999, the Company
will record as income the unpaid balance.
13
<PAGE>
Liquidity and Capital Resources
The Company has historically financed its operations through private
placements and public sales of its securities, cash generated from operations
and borrowings from banks.
The Company had working capital at March 31, 1996 of $189,436, a decline of
$4,352,660 from the Company's working capital at December 31, 1995, principally
attributable to funds used for construction of the Company's Phoenix, Arizona
facility, which opened April 11, 1996. The Company's current ratio declined to
1.04 to 1 at March 31, 1996 from 1.95 to 1 at December 31, 1995. At March 31,
1996, the projected start-up costs for the two 350-bed detention facilities in
Florida, scheduled to become operational in the first quarter of 1997, were
estimated at $3.0 million, which will be funded by the public offering scheduled
for September 1996.
Net cash provided by operating activities was $1,142,978 for the three
months ended March 31, 1996 as compared to $2,574,446 for the three months ended
March 31, 1995. The decrease was attributable primarily to the reduction in
depreciation and amortization resulting from the closure of the Elizabeth, New
Jersey INS facility and changes in working capital. Net cash of $4,348,033 was
used in investing activities for the three months ended March 31, 1996 as a
result of fixed asset acquisition costs of $3,763,144, the majority of which
related to the Company's Phoenix, Arizona
14
<PAGE>
facility and $584,889 in additional deferred development and start-up costs. Net
cash of $100,613 was used in financing activities in the three months ended
March 31, 1996 as compared to $268,350 in the three months ended March 31, 1995.
The principal use of such funds in both periods was payment of bank borrowings.
Financing
Effective December 31, 1995, the Company entered into an $11,000,000
Revolving Credit and Term Loan Agreement (the "Loan Agreement") with
NationsBank, N.A. ("NationsBank"). Pursuant to the terms of the Loan Agreement,
the Company, from time to time, may borrow up to the lesser of $6,000,000 or
85.0% of the Company's eligible accounts receivable. Loan proceeds are to be
used for working capital, including deferred development and start-up costs in
connection with new or existing facilities. Interest on the revolving credit
loan is computed, at the Company's option, at either NationsBank prime rate plus
0.75% or the London International Bank Rate plus 3.35%. Under the Loan
Agreement, Nationsbank also made a term loan to the Company in the principal
amount of $5,000,000, which was applied to repay the Company's indebtedness of
$5,002,869 to another bank. The term loan bears interest at 8.92% and is
repayable in monthly installments of $83,333 until January 15, 1998, at which
time the Loan Agreement terminates and any remaining unpaid balances are due and
payable. After September 30, 1996, the interest rate payable under the revolving
credit loan will be based on the Company's financial performances set forth
15
<PAGE>
in the Loan Agreement. The Company may prepay any borrowings without interest or
penalty. The Company has granted NationsBank a first priority security interest
in all of its assets, including a first real estate mortgage on the land and
building of the Phoenix, Arizona facility. The Company is required to pay
NationsBank 0.25% of the average unused portion of the revolving credit loan.
The Company was not in compliance with a cash flow-based debt service coverage
ratio at March 31, 1996 and renegotiated such ratio.
During the year ended December 31, 1995, the Company completed a private
placement of 5,676.6 units at $1,000 per unit, each unit consisting of (i) a ten
percent (10.0%) subordination promissory note due July 1, 1998 in the principal
amount of $1,000; and (ii) four year warrants to purchase 154 shares of Common
Stock at $7.75 per share. The Company received gross proceeds of $5,676,600 from
the sale of the units of which $365,000 was attributed to the value of the
warrants. During such period, the Company also completed the private placement
of 496,807 shares of Common Stock at $7.75 per share, receiving gross proceeds
of $3,850,254. Approximately $8,500,000 of the proceeds of the two placements
was used to finance costs associated with the Company's Phoenix, Arizona
facility and the balance for expenses related to the private placements and for
working capital.
16
<PAGE>
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
17
<PAGE>
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.
CORRECTIONAL SERVICES CORPORATION
Registrant
By: \s\ Aaron Speisman
Aaron Speisman, Secretary
By: \s\ Lee Levinson
Lee Levinson
Chief Financial Officer
Dated: September 12, 1996
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000914670
<NAME> Correctional Services Corporation
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,201,080
<SECURITIES> 0
<RECEIVABLES> 3,058,240
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,957,114
<PP&E> 11,653,766
<DEPRECIATION> 766,573
<TOTAL-ASSETS> 23,307,570
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 49,224
<OTHER-SE> 9,249,290
<TOTAL-LIABILITY-AND-EQUITY> 23,307,570
<SALES> 6,948,544
<TOTAL-REVENUES> 7,167,752
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,935,891
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 213,139
<INCOME-PRETAX> 18,222
<INCOME-TAX> 8,000
<INCOME-CONTINUING> 10,722
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
