<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- ----
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: August 31, 1999
----------------------------
or
- ----
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to:
------------------- ----------------------
Commission File Number: 0-23996
-----------------------------------------------------
SCHMITT INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oregon 93-1151989
------------------------ -----------------------
(Place of Incorporation) (IRS Employer ID Number)
2765 NW Nicolai Street, Portland, Oregon 97210
----------------------------------------------------------------------
(Address of registrant's principal executive office)
(503) 227-7908
----------------------------------------------------------------------
(Registrant's telephone number)
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 of 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 XX No
------ ------
The number of shares of each class of common stock outstanding as of August 31,
1999 Common stock, no par value 8,184,889
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SCHMITT INDUSTRIES, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
-----------
<S> <C> <C>
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements:
Consolidated Balance Sheets:
- August 31, 1999 and May 31, 1999... 3
Consolidated Statements of Income:
- For the Three Months Ended August 31, 1999 and 1998 4
Consolidated Statements of Cash Flows:
- For the Three Months Ended August 31, 1999 and 1998 5
Supplemental Schedule of Non-Cash Investing and Financing Activities 5
Notes to Interim Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of
Operations 8
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 10
Part II - OTHER INFORMATION 11
Signatures - 11
Exhibits - 12
</TABLE>
Page 2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SCHMITT INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
August 31,
1999
Unaudited May 31, 1999
------------------- ------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 676,252 $ 268,888
Accounts receivable 1,268,060 1,423,611
Inventories 4,583,079 4,444,012
Prepaid expenses 106,279 75,454
Income taxes receivable 215,302 295,964
------------------- ------------------
TOTAL CURRENT ASSETS 6,848,972 6,507,929
------------------- ------------------
PROPERTY AND EQUIPMENT
Land 299,000 299,000
Buildings and improvements 1,194,764 1,194,664
Furniture and equipment 1,099,565 1,086,840
------------------- ------------------
2,593,329 2,580,504
Less accumulated depreciation and amortization 953,128 926,314
------------------- ------------------
TOTAL PROPERTY AND EQUIPMENT 1,640,201 1,654,190
------------------- ------------------
OTHER ASSETS
Long-term investment 2,579,000 2,135,000
Long-term deferred tax asset 898,628 898,628
Other assets 81,666 86,667
------------------- ------------------
TOTAL OTHER ASSETS 3,559,294 3,120,295
------------------- ------------------
TOTAL ASSETS $ 12,048,467 $ 11,282,414
=================== ==================
LIABILTIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 610,972 $ 392,287
Accrued liabilities 310,954 303,567
------------------- ------------------
TOTAL CURRENT LIABILITIES 921,926 695,854
------------------- ------------------
LONG-TERM DEFERRED TAX LIABILITY 133,000 --
------------------- ------------------
STOCKHOLDERS' EQUITY
Common stock, no par value, 20,000,000 shares
authorized, 8,184,889 shares issued and outstanding at 7,284,445 7,284,445
August 31, 1999 and May 31, 1999 respectively
Accumulated other comprehensive income (loss) 120,658 (201,781)
Retained earnings 3,588,438 3,503,896
------------------- ------------------
TOTAL STOCKHOLDERS' EQUITY 10,993,541 10,586,560
------------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,048,467 $ 11,282,414
=================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 3
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SCHMITT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED AUGUST 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------
August 31, 1999 August 31, 1998
------------------- ------------------
<S> <C> <C>
Sales $ 2,012,797 $ 1,984,671
Cost of sales 957,271 1,023,168
------------------- ------------------
Gross profit 1,055,526 961,503
------------------- ------------------
Operating expenses:
General, administrative and sales expenses 833,070 853,456
Research and development 129,925 176,829
------------------- ------------------
962,995 1,030,285
------------------- ------------------
Operating income (loss) 92,531 (68,782)
------------------- ------------------
Other income 26,011 28,825
------------------- ------------------
Income (loss) before provision for income taxes 118,542 (39,957)
Provision for income taxes 34,000 11,500
------------------- ------------------
Net income (loss) $ 84,542 $ (51,457)
=================== ==================
Net income (loss) per common share:
Basic $ .01 $ (.01)
=================== ==================
Diluted $ .01 $ (.01)
=================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 4
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SCHMITT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------
August 31, 1999 August 31, 1998
------------------- ------------------
<S> <C> <C>
CASH FLOWS RELATING TO OPERATING ACTIVITIES
Net income (loss) $ 84,542 $ (51,457)
Adjustments to reconcile net income (loss) to net cash
Provided by (used in) operating activities:
Depreciation 70,457 76,305
Amortization 5,001 0
(Increase) decrease in:
Accounts receivable 155,551 (67,235)
Inventories (139,067) (505,848)
Prepaid expenses (30,825) 31,498
Income taxes receivable 80,662 (10,509)
Increase (decrease) in:
Accounts payable 218,685 (99,026)
Accrued liabilities 7,387 33,807
------------------- ------------------
Net cash provided by (used in) operating activities 452,393 (592,465)
------------------- ------------------
CASH FLOWS RELATING TO INVESTING ACTIVITIES
Purchase of property and equipment (59,166) (61,624)
Disposals of property and equipment 2,698 1,628
------------------- ------------------
Net cash (used in) investing activities (56,468) (59,996)
------------------- ------------------
CASH FLOWS RELATING TO FINANCING ACTIVITIES
Repurchase of company stock 0 (47,258)
------------------- ------------------
Net cash (used in) financing activities 0 (47,258)
------------------- ------------------
EFFECT OF FOREIGN EXCHANGE TRANSLATION ON CASH 11,439 146,190
------------------- ------------------
INCREASE (DECREASE) IN CASH 407,364 (553,529)
CASH, BEGINNING OF PERIOD 268,888 1,127,076
------------------- ------------------
CASH, END OF PERIOD $ 676,252 $ 573,547
=================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 673 $ 0
Cash paid during the period for income taxes $ 0 $ 1,928
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Increase in market value of long-term investment $ 444,000 $ --
Increase in long-term deferred tax liability $ 133,000 $ --
Increase in other comprehensive income $ 322,439 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 5
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SCHMITT INDUSTRIES, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 1999 AND 1998
(UNAUDITED)
NOTE 1:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
and all adjustments considered necessary for a fair presentation have been
included. Operating results for the three-month period ended August 31, 1999 are
not necessarily indicative of the results that may be experienced for the fiscal
year ending May 31, 2000.
These financial statements are those of the Company and its wholly owned
subsidiaries. All significant inter-company accounts and transactions have been
eliminated in the preparation of the consolidated financial statements.
NOTE 2: EPS Reconciliation
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------
August 31, 1999 August 31, 1998
-------------------- --------------------
<S> <C> <C>
Weighted average shares (basic) 8,184,889 7,098,378
Effect of dilutive stock options 451,750 --
-------------------- --------------------
Weighted average shares (diluted) 8,536,639 7,098,378
==================== ====================
</TABLE>
NOTE 3: Comprehensive Income
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------
August 31, 1999 August 31, 1998
-------------------- --------------------
<S> <C> <C>
Net income (loss) $ 84,542 $ (51,457)
Other comprehensive income (loss):
Increase in fair market value of long-term investment,
net of taxes 311,000 --
Foreign currency translation adjustment 11,439 146,190
-------------------- --------------------
Total comprehensive income $ 406,981 $ 94,733
==================== ====================
</TABLE>
The long-term investment is considered an "Available-for-sale security". As
required under Statement of Financial Accounting Standards No. 115, all
unrealized gains and losses, net of tax benefits, are included in Accumulated
Other Comprehensive Income (Loss) and reported as a separate component of Other
Comprehensive Income (Loss) in Stockholders' Equity until realized. The
cumulative translation adjustment consists of unrealized gains/losses from
translation adjustments on intercompany foreign currency transactions that are
of a long-term investment nature.
NOTE 4: Segments of Business
The Company operates principally in two segments of business: the manufacturing
of mechanical components for the machine tool industries, and the manufacturing
of laser measurement systems for the computer disk, silicon wafer and
dimensional sizing industries. The segment that manufactures mechanical
components reported gross sales of $1,972,378 for the three months ended August
31, 1999, including inter-company sales of $189,136. This segment reported gross
sales of 2,082,701 for the three months ended August 31, 1998, including
inter-company sales of $265,697. The segment, which manufactures laser
measurement systems, reported gross sales of $234,651 for the three months ended
August 31, 1999, including inter-company sales of $5,096. For the three months
ended August 31, 1998, the measurement products segment reported gross sales of
$167,667 with no inter-
Page 6
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SCHMITT INDUSTRIES, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
THREE MONTHS ENDED AUGUST 31, 1999 AND 1998
(UNAUDITED)
company sales. Geographically, US sales were $1,514,678 and $1,251,768 for three
months ended August 31, 1999 and 1998 respectively. Foreign sales were $692,351
and $998,600 for the same three-month period, respectively. This includes
inter-company sales of $194,232 for the three months ended August 31, 1999 and
$265,697 for the three months ended August 31, 1998. For the three months ended
August 31, 1999 and 1998, respectively, export sales by the US segment totaled
$347,358 and $327,665.
Income from operations for the three months ended August 31, 1999 and 1998 for
the mechanical components segment was $54,055 and $19,591, respectively. Income
(loss) from operations for the three months ended August 31, 1999 and 1998 of
the laser measurement segment was $38,476, and $(88,373), respectively.
Consolidated income (loss) from operations includes an adjustment of $7,500 for
the elimination of inter-company rent for the three months ended August 31, 1999
and 1998. Income (loss) from operations for the US segment was $143,155 and
$(79,165) respectively, for the three months ended August 31, 1999 and 1998 and
for the foreign segment, (loss) income of $(50,624) and $10,383 respectively for
the same three months.
Long-term assets at August 31, 1999 were $4,539,689 and $659,806 respectively
for the mechanical components and laser measurement segments. At May 31, 1999,
long-term assets for the mechanical components and laser measurement segments
were $4,097,803 and 676,682 respectively. Long-term assets at August 31, 1999
were $5,084,108 and $115,387 for the US and foreign segments respectively. At
May 31, 1999, long-term assets for the US and foreign segments were $4,654,796
and $119,689 respectively.
Depreciation expense incurred during the three months ended August 31, 1999 and
1998 by the mechanical components segment was $51,011 and $50,408, respectively.
The laser measurement segment incurred depreciation expense of $19,446 and
$25,897 for the three months ended August 31, 1999 and 1998, respectively.
Amortization expense incurred during the three months ended August 31, 1999 and
1998 by the mechanical components segment was $5,001 and $-0-. The laser
measurement segment did not incur amortization expense for the three months
ended May 31, 1999 and 1998. The US segment incurred depreciation expense of
$48,985 and $59,080 during the three months ended August 31, 1999 and 1998,
respectively. The foreign segment incurred depreciation expense of $21,472 and
$17,225 respectively, for these same three-month periods. The US segment
incurred amortization expense of $5,001 and $-0- in the three months ended
August 31, 1999 and 1998. The foreign segment has not incurred amortization
expense. Capital expenditures for the three months ended August 31, 1999 and
1998, were $56,596 and $61,624 by the mechanical components segment and $2,570
and -0- by the laser measurement segment, respectively. Capital expenditures for
the three months ended August 31, 1999 and 1998, were $41,996 and $20,227 by the
US segment and $17,170 and $41,397 by the foreign segment, respectively.
Income from operations represents sales less costs and operating expenses. In
computing income from operations, all overhead expenses have been allocated to
both industry segments, as they are an integral part of profit recognition for
each segment. Identifiable assets by segment of business are those assets used
in the Company's operations in each segment. There are no unallocated Company
assets.
NOTE 5: Subsequent event
Subsequent to August 31, 1999, the Company renewed its unsecured short-term line
of credit with its commercial bank. Terms were revised to reduce the interest
rate to the bank's prime rate less 0.25% or LIBOR plus 2.00%. Prior to the
renewal, interest rates were either at the bank's prime rate or LIBOR plus
2.50%. In addition, the new agreement calls for certain covenants regarding
earnings and current ratio. If this agreement had been in effect at August 31,
1999, the Company would have been in compliance with the loan covenants.
Page 7
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SCHMITT INDUSTRIES, INC.
FORM 10-Q
FIRST QUARTER FISCAL YEAR 1999
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
The following information contains certain forward-looking statements that
anticipate future trends or events. These statements are based on certain
assumptions that may prove to be erroneous and are subject to certain risks
including but not limited to the uncertainties of the Company's new product
introductions and the risks of increased competition and technological change in
the Company's industry. Accordingly, actual results may differ, possibly
materially, from the predictions contained herein.
Company operations improved during the first quarter of fiscal 2000, ended
August 31, 1999, as evidenced by an increase in sales and a return to profitable
operations. In comparison to the same period last year, Balancer product sales
have grown in the United States while softness in the industry in the United
Kingdom and Germany has resulted in a decline in sales in those markets. The
overall result is that Balancer sales are flat when compared to year-ago levels.
Sales of Schmitt Measurement Systems, Inc. ("SMS") products were at expected
levels for the quarter and up slightly from the prior year. The increase
occurred as the worldwide computer industry has begun to improve after several
months of a decline in activity. The overall result was a net income of $84,542
for the first quarter of fiscal 2000.
Results of Operations:
Sales in the first quarter of fiscal 2000 increased to $2,012,797 versus
$1,984,671 in the same period last year. This increase occurred in the
measurement segment of the business. SMS sales totaled $229,555 in the first
quarter of fiscal 2000 compared to $167,667 in the first quarter of fiscal 1999.
The Company expects continued improvement in measurement sales throughout fiscal
2000 as the computer industry continues to rebound and sales of the new Dynamic
Roll Monitor begin to be realized. Worldwide sales of balancer products were
$1,783,242 for the three months ended August 31, 1999 compared to sales of
$1,817,004 for the same period last year. Once again, domestic sales were higher
while sales into the European markets declined slightly. The upward trend in
sales in the United States is expected to continue while the decline in Europe
is believed to be short-term as revenues in those markets are expected to
improve over the remainder of fiscal 2000.
First quarter cost-of-sales decreased to 48% of sales versus 52% in the same
period last year. Cost-of-sales of SMS products was 43% for the first quarter
2000 versus 62% in the same period last year and the cost of sales percentage of
Balancer products was 48% compared to 51% for the same period last year.
Management expects cost-of-sales of Balancer and Measurement products to
approximate these levels for the remainder of fiscal 1999.
First quarter general and administrative and R&D expenses totaled $962,995
versus $1,030,285 for the same period last year. This decrease is attributable
primarily to a slight decline in research and development expenditures over the
same period last year. These expenses were skewed heavily to the first quarter
of fiscal 1999 as 38% of research and development expenses for that year were
incurred in the first fiscal quarter. Expenses of $129,925 in the first quarter
of fiscal 2000 were in line with budgeted amounts. As a percentage of revenues,
operating expenses (including R&D) during the first three months of fiscal 1999
were 48% compared to 52% for the same period last year. Both general and
administrative and research and development expenses declined as a percentage of
revenues compared to year ago levels. Management estimates if revenue
projections are reached these costs will stabilize at approximately 45% for
fiscal 2000.
Sales by the foreign subsidiaries totaled $498,119 for the quarter versus
$732,903 for the same quarter last year. There was some softness in the market
during the first quarter but these changes are expected to be only short term as
management anticipates revenues for the remainder of the fiscal year to
approximate year ago levels.
Page 8
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SCHMITT INDUSTRIES, INC.
FORM 10-Q
FIRST QUARTER FISCAL YEAR 1999
In the three-month period ended August 31, 1999, pretax earnings amounted to
$118,542 compared to a pretax loss of ($39,957) for the same period last year.
Taxes were accrued at approximately 29% of domestic pretax income, compared with
23% in the same period last year. Management anticipates that the tax rate for
fiscal 2000 will approximate 30%. Three-month net earnings were $84,542 compared
to a net loss of $51,457 for the same period last year. Three-month earnings per
share, basic and diluted, were $0.01 versus a net loss per share, basic and
diluted, of $(0.01) last year.
Liquidity and Capital Resources:
The Company's working capital position improved to $5,927,046 at August 31, 1999
compared to $5,812,075 at May 31, 1999. Cash stood at $676,252 at August 31,
1999 compared to $268,888 at May 31, 1999.
During the three-month period ended August 31, 1999, net cash provided by
operating activities totaled $452,393, including net operating income of
$84,542. Included in cash flow from operating activities were a $155,551
decrease in accounts receivable, a $139,067 increase in inventories and a
$218,685 increase in accounts payable. The decrease in the Company's accounts
receivable was due to the sales mix during the three-month period ended August
31, 1999 compared with the immediately preceding quarter. As a result of its
high-quality customer base, the Company has experienced nearly 100% collection
and no reserve for uncollectable accounts, returns or allowances has been
established. The increase in the inventories and accounts payable occurred as
the Company assumed the assembly operations for its SBS control units from a
vendor that had been performing those operations. The amounts due for the items
purchased will be paid as the items are used in production. This assembly
process was assumed as a management study disclosed the units could be assembled
more cost effectively at Schmitt with no loss in quality.
Net cash used by investing activities was $56,468 (consisting primarily of
additions to property and equipment). There was no cash used by financing
activities.
Management believes that cash from operations, available credit resources and
its working capital position will provide adequate funds on a short-term basis
to cover currently foreseeable payments, commitments and payments under existing
and anticipated supplier agreements. Management believes that such cash flow is
also sufficient to finance current short-term operations, projected capital
expenditures, anticipated short-term sales agreements and other contingencies
during at least the next six months.
Management is currently reviewing long-range capital requirements as they relate
to expansion of products and markets. This analysis may or may not result in
future decisions to seek additional funding for the Company via debt or equity
to service the Company's future growth requirements.
Impact of the year 2000 issue:
The Company has completed an assessment of the impact of the Year 2000 issue on
its internal systems and equipment, on it products and on the systems of its
significant vendors. Based on this assessment, the Company believes that its
internal systems have been updated to address the Year 2000 issue, its products
will properly recognize calendar dates beginning in the Year 2000, and its
significant vendors are appropriately addressing the Year 2000 issue.
Accordingly, the Company believes it is year 2000 ready and does not expect that
the Year 2000 will have a material impact on the Company's business, results of
operations or financial condition. However, there can be no assurance that the
systems of other companies on which the Company relies will not have an adverse
effect on the Company's systems.
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SCHMITT INDUSTRIES, INC.
FORM 10-Q
FIRST QUARTER FISCAL YEAR 1999
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:
Interest Rate Risk
The Company does not have any derivative financial instruments as of August 31,
1999. However, the Company is exposed to interest rate risk. The Company employs
established policies and procedures to manage its exposure to changes in the
market risk of its marketable securities.
The Company's interest income and expense are most sensitive to changes in the
general level of U.S. and European interest rates. In this regard, changes in
U.S. and European interest rates affect the interest earned on the Company's
cash equivalents and marketable securities as well as interest paid on debt.
The Company has a line of credit whose interest rate is based on various
published prime rates that may fluctuate over time based on economic changes in
the environment. The Company is subject to interest rate risk and could be
subject to increased interest payments if market interest rates fluctuate. The
Company does not expect any change in the interest rates to have a material
adverse effect on the Company's results from operations.
Foreign Currency Risk
The Company operates subsidiaries in the United Kingdom and Germany. The
Company's business and financial condition is, therefore, sensitive to currency
exchange rates or any other restrictions imposed on their currencies. To date,
the foreign currency exchange rates have not significantly impacted the
Company's profitability.
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SCHMITT INDUSTRIES, INC.
FORM 10-Q
Part II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders:
-- None --
Item 5. Other Information - None
Item 6.(a) Exhibit 27 - Financial Data Schedule
Item 6.(b) Reports on Form 8-K - None
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.
SCHMITT INDUSTRIES, INC.
(Registrant)
Date: 10/14/99 /s/ Wayne A. Case
-------- ---------------------------------------------
Wayne A. Case, President/CEO/Director
Date: 10/14/99 /s/ Robert C. Thompson
-------- ---------------------------------------------
Robert C. Thompson, Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10Q OF
AUGUST 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> AUG-31-1999
<CASH> 676,252
<SECURITIES> 0
<RECEIVABLES> 1,268,060
<ALLOWANCES> 0
<INVENTORY> 4,583,079
<CURRENT-ASSETS> 6,848,972
<PP&E> 2,593,329
<DEPRECIATION> 953,128
<TOTAL-ASSETS> 12,048,467
<CURRENT-LIABILITIES> 921,926
<BONDS> 0
0
0
<COMMON> 7,284,445
<OTHER-SE> 3,588,438
<TOTAL-LIABILITY-AND-EQUITY> 12,048,467
<SALES> 2,012,797
<TOTAL-REVENUES> 2,012,797
<CGS> 957,271
<TOTAL-COSTS> 1,920,266
<OTHER-EXPENSES> 26,011
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 673
<INCOME-PRETAX> 118,542
<INCOME-TAX> 34,000
<INCOME-CONTINUING> 84,542
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,542
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
