SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 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: 0-26464
CSI Computer Specialists, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 52-1599610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
904 Wind River Lane Suite 100
Gaithersburg, Maryland 20878
(Address of principal executive offices) (Zip code)
301-921-8860
(Registrant's telephone number including area code)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 ____
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title Outstanding
Common Stock, par value $0.001 per share 3,715,888 shares at August 31, 1999
Transitional Small Business Disclosure Format (check one);
Yes___ No X
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1999 1998
---------------- ---------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 147,519 $ 49,035
Accounts receivable 4,151,106 3,647,632
Net investment in sales-type leases - current 106,993 118,502
Inventory for resale 562,229 513,179
Parts and supplies 943,533 926,044
Prepaid income taxes 345,863 343,662
Prepaid expenses 82,040 104,427
---------------- ---------------
Total current assets 6,339,283 5,702,481
---------------- ---------------
PROPERTY AND EQUIPMENT - AT COST 1,710,225 1,836,732
Less accumulated depreciation 1,159,068 1,131,490
---------------- ---------------
551,157 705,242
---------------- ---------------
OTHER ASSETS
Goodwill (Net of accumulated amortization) 481,931 500,890
Net investment in sales-type leases - non-current - 72,360
Deferred tax asset 145,000 145,000
Cash - restricted - 443,846
Other assets 97,663 96,403
---------------- ---------------
724,594 1,258,499
---------------- ---------------
$ 7,615,034 $ 7,666,222
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 3,150,423 2,713,031
Accrued expenses 223,960 262,246
Revolving line of credit 2,184,656 2,308,656
Current maturities of long term debt - 7,700
Deferred income taxes payable - -
---------------- ---------------
Total current liabilities 5,559,039 5,291,633
---------------- ---------------
LONG-TERM DEBT, less current maturities - 4,474
---------------- ---------------
COMMITMENTS
REDEEMABLE COMMON STOCK - 313,726 SHARES - 400,000
STOCKHOLDERS' EQUITY
Preferred stock - authorized, 10,000,000
shares of $.001 par value $ - $ -
Common stock - authorized, 25,000,000
shares of $.001 par value; issued and
outstanding, 3,715,988 shares 3,716 3,716
Paid-in capital 5,073,593 5,117,439
Retained earnings (3,021,314) (3,151,040)
---------------- ---------------
Total stockholders' equity 2,055,995 1,970,115
---------------- ---------------
$ 7,615,034 $ 7,666,222
================ ===============
See accompanying notes to condensed financial statements.
<PAGE>
CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
June 30,
1999 1998
----------------- -----------------
Revenues
Maintenance services $ 3,365,475 $ 3,236,354
Parts and equipment sales 4,248,428 5,059,028
----------------- -----------------
$ 7,613,903 $ 8,295,382
Costs and expenses
Cost of maintenance services 2,354,877 2,274,510
Cost of parts and equipment sales 3,890,316 4,437,664
Selling, general and administrative 1,321,544 1,666,021
----------------- -----------------
7,566,737 8,378,195
----------------- -----------------
Operating profit 47,166 (82,813)
Other income (deductions)
Gain on sale of assets 68,519 -
Net interest income (expense) (32,600) (30,874)
----------------- -----------------
35,919 (30,874)
----------------- -----------------
Earnings before income taxes 83,085 (113,687)
Income taxes
Currently payable 29,200 (57,401)
Deferred - 24,788
----------------- -----------------
29,200 (32,613)
Less: Adjustment of valuation allowance
of benefit of tax loss carryforward (29,200) -
----------------- -----------------
- (32,613)
NET EARNINGS $ 83,085 $ (81,074)
================= =================
Per share amounts
Net earnings per share $ 0.02 $ (0.02)
================= =================
Weighted average number of shares
outstanding 3,715,988 4,029,212
================= =================
See accompanying notes to condensed financial statements.
<PAGE>
CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended
June 30,
1999 1998
----------------- -----------------
Revenues
Maintenance services $ 6,767,324 $ 6,333,911
Parts and equipment sales 8,552,790 8,574,603
----------------- -----------------
$ 15,320,114 $ 14,908,514
Costs and expenses
Cost of maintenance services 4,813,612 4,488,616
Cost of parts and equipment sales 7,741,567 7,488,424
Selling, general and administrative 2,647,617 3,209,720
----------------- -----------------
15,202,796 15,186,760
----------------- -----------------
Operating profit 117,318 (278,246)
Other income (deductions)
Gain on sale of assets 66,551 -
Net interest income (expense) (54,143) (43,627)
----------------- -----------------
12,408 (43,627)
----------------- -----------------
Earnings before income taxes 129,726 (321,873)
Income taxes
Currently payable 45,600 (138,409)
Deferred - 24,788
----------------- -----------------
45,600 (113,621)
Less: Adjustment of valuation allowance
of benefit of tax loss carryforward (45,600) -
----------------- -----------------
- (113,621)
NET EARNINGS $ 129,726 $ (208,252)
================= =================
Per share amounts
Net earnings per share $ 0.03 $ (0.05)
================= =================
Weighted average number of shares
outstanding 3,768,176 4,029,212
================= =================
See accompanying notes to condensed financial statements.
<PAGE>
CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1999 1998
--------------- --------------
Net cash flows from operating activities $ 248,552 $ (812,058)
--------------- --------------
Cash flows used in investing activities
(Increase) decrease in restricted cash 443,846 -
Acquisition of property and equipment (20,651) (127,245)
--------------- --------------
Net cash used in investing activities 423,195 (127,245)
--------------- --------------
Cash flows used in financing activities
Payments on long-term debts (5,417) (5,061)
Acquisition of treasury stock (443,846) (110,000)
Increase in revolving line of credit (124,000) 1,025,620
--------------- --------------
Net cash used in financing activities (573,263) 910,559
--------------- --------------
NET INCREASE (DECREASE) IN CASH 94,484 (28,744)
Cash at beginning of period 49,035 193,056
--------------- --------------
Cash at end of period $ 147,519 $ 164,312
=============== ==============
Supplemental disclosure of cash flow information
Cash paid through June 30, 1999 and 1998 for:
Interest 94,869 85,582
Income taxes 2,201 -
Supplemental Disclosure of Noncash Investing and Financing Activities:
On June 30, 1999, the Company sold certain of the assets, principally the book
of business, of one of its wholly owned subsidiaries, Cintronix, Inc., for
$200,000, which amount was received in July, 1999.
See accompanying notes to condensed financial statements.
<PAGE>
CSI COMPUTER SPECIALISTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The condensed financial statements at June 30, 1999 and for the three
month periods ended June 30, 1999 and 1998 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The condensed financial
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission, and therefore omit certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles. The Company believes
that the disclosures contained in the condensed financial statements are
adequate to make the information presented therein not misleading. The financial
statements should be read in conjunction with the financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Annual Report on
Form 10-KSB for the fiscal year ending December 31, 1998.
The results of operations for the three months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the entire
fiscal year ending December 31, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results, performance, or
achievements of the Company to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, the
Company's actual results could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
include, but are not limited to, the timing of revenues, rapid technological
change, the demand for services for computer hardware systems and computer
equipment, the timing and amount of capital expenditures and other risks
detailed herein.
GENERAL
The Company provides a full range of computer hardware services,
including sales and maintenance of mainframe and mid-range computer equipment
and parts, network design and installation, computer upgrades, and installation
and de-installation of equipment. These services are provided to commercial
customers, agencies of federal, state and local governments, universities,
associations and hospitals primarily in the Mid-Atlantic region of the United
States, including West Virginia, Virginia, Maryland, the District of Columbia,
New Jersey, New York, Connecticut and Pennsylvania, and also in Illinois and
California.
The Company's principal business is providing computer maintenance and
repair services, which are provided under both fixed fee and time and materials
arrangements. Under the fixed fee arrangement, which is the primary method of
service, a customer pays a fixed monthly fee for the term of the agreement,
generally one to two years, for which the Company provides the parts and labor
for both scheduled preventative maintenance and emergency repairs. The Company
records the revenue from fixed fee contracts ratably over the term of the
contract, while the costs the Company incurs to provide the maintenance and
emergency repairs are charged to expense as incurred. Accordingly, the
profitability of the Company's maintenance and repair services can and will be
affected by period to period fluctuations in the number and severity of the
emergency repairs required by its customers, which the Company cannot predict or
control. Additionally, in certain circumstances the Company will choose to
provide the contracted-for services by subcontracting with others, particularly
when the equipment covered by the agreement cannot be serviced in a cost
effective manner, is difficult to repair or replace, or requires unique
engineering expertise that is not applicable to equipment utilized by a
significant number of Company's other customers. The Company obtains such
subcontracting services through short-term agreements, and its profit margin
will generally be lower than if the work were not subcontracted. Accordingly,
operating results may fluctuate from period to period as a result of changes in
the level and nature of subcontracted services.
The sale of computer equipment expanded rapidly in 1997 and leveled out
in 1998, but, due to increased competition, decreases in profit margins and
changes in purchasers' buying patterns, revenues therefrom have shown some
fluctuation from period to period. The expansion of these sales was fueled
primarily by the acquisition of Cintronix, Inc., in 1997, which sold mid-range
and personal computer equipment, primarily to the federal government. The
continued decrease in the margins in these equipment sales over the last twelve
months resulted in management's decision to sell off the book of business of
Cintronix on June 30, 1999. This sale will result in a significant decrease in
revenues for the Company, but it is expected to result in an increase in net
income, due to the concurrent decrease in sales and support staff, and general
and administrative charges. Mainframe equipment sales are entered into more
commonly to secure contracts for the maintenance thereof than for the profit on
the equipment sale itself, and the margins on these sales of equipment are
subject to market conditions. Consequently, operating profits as a percentage of
gross sales are subject to fluctuation due to the volume and the makeup of
equipment sales. Other areas of expansion are in the areas of servicing laser
printers, providing help desk support services, and expanding the Company's
technical capabilities to maintain the more current mainframe technology.
RESULTS OF OPERATIONS
The Company's second quarter revenues of $7,613,903 was a decrease of 8
% over the second quarter revenues of the prior year of $8,295,382, and the
first six months' revenue of 1999 of $15,320,114 showed a net increase of 3%
over the first six months of 1998's revenues of $14,908,514. The decrease in net
revenues for the quarter was a direct result of the decrease in sales for
mid-range and personal computer equipment. Maintenance revenues for the second
quarter and first six months of 1999 increased approximately 4% and 7%,
respectively, over the second quarter and first six months of 1998, primarily
from expansion of the Company's book of business. Equipment sales for the second
quarter and first six months of 1999 decreased 16% and 0.3%, respectively, from
the same periods of 1998. Management intends to increase marketing efforts to
promote continued growth primarily in the maintenance revenue area. Management
does not intend to aggressively pursue growth in the equipment sales area, due
to the decreased margins available, and also due to the sale of the book of
business of Cintronix, Inc., which was the main source of revenue in this area.
Maintenance revenues accounted for approximately 44% for the second quarter and
the first six months of 1999, and 39% and 42%, respectively, of the Company's
consolidated revenues for the same periods of 1998.
The Company's cost of sales as a percentage of revenues was 82%in the
second quarter and first six months of 1999 compared to 81% and 80%,
respectively, for the same periods in 1998. This increase is primarily a result
of the decreased margins available on equipment sales. The costs of maintenance
services has remained basically steady, with an increase in subcontract costs
offset by a current decrease in the need for emergency replacement parts.
Subcontractor costs could decrease as the necessary expertise is further
developed in-house to service newer technology; however, as the Company enters
into contracts on even more recent technology, the services of subcontractors
may still be required. Gross margins on equipment sales dropped primarily due to
the increased competition, especially from manufacturers, and the changes in the
buying patterns of the federal government. As sales of personal computer and
mid-range network computers decrease, the margins on equipment sales will show
some fluctuation based on the mix between the mid-range and personal computer
sales and the mainframe computer sales, which usually carry higher margins.
Selling, general and administrative expenses as a percentage of net
revenues were 17% and 20% respectively, for the second quarters of 1999 and
1998, and 17% and 22%, respectively, for the first six months of 1999 and 1998.
The decrease in the percentage is primarily due to the elimination of some
duplicate efforts in the consolidation of the administrative functions of the
combined companies. The Company expects short-term fluctuations in this
percentage in the future as it adds to its technical support, marketing staff
and other administrative personnel in order to expand its customer base and
increase sales. The selling, general and administrative expenses decreased 20%
to $1,321,544 for the second three months of 1999 compared to $1,666,021for the
same period of 1998, and showed a decrease of 17% for the first six months of
1999 from the first six months of 1998.
The Company showed operating income of $47,166 for the second quarter
of 1999 compared to an operating loss of $82,813 for the same period of 1998.
The first six months of 1999 also showed operating income of $117,318 compared
to an operating loss of $278,246 for the first six months of 1998. This increase
in operating profit was primarily attributable to the decrease in the selling,
general and administrative costs related to integrating the administrative
operations of the Company and each of its subsidiaries.
Net interest expense increased 24% to $54,143 for the six months ended
June 30, 1999, from $43,627 for the same period of the prior year. The interest
expense for the second quarter of both years is nearly identical, with $30,632
and $30,874 for 1999 and 1998, respectively. The Company expects that net
interest expense will increase until the continued positive cash flows from
operations can be used to decrease the Company's outstanding debt.
Net income increased from losses of $81,074 and $208,252, respectively,
for the second quarter and first six months of 1998 to net profits of $83,085
and $129,726 for the same periods of 1999. This is primarily the result of the
savings from greater efficiencies in the selling and administrative costs,
combined with the profit from the sale of the book of business of Cintronix,
Inc. This was also increased by an adjustment to the valuation of the tax
benefit from the carryforward of net operating losses, which eliminated the
income taxes attributed to the current period net income. The Company expects
that its performance will continue to improve, as the increased selling efforts
increase the book of business and with the elimination of the negative cash
flows resulting from the mid-range and personal computer sales.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $780,244 at June 30,1999 compared to $410,848 at
December 31, 1998. Cash flows provided from operations for the first six months
of 1999 totaled $248,552, resulting primarily from operations, and increased by
an increase in accounts receivable and offset by an increase in accounts
payable. The ratio of current assets to current liabilities has remained steady
at 1.1:1 at both June 30, 1999 and December 31, 1998.
The Company has a $2.5 million revolving line of credit with Crestar
Bank which expired in October, 1998 and continued under a forbearance agreement
until May, 1999, at which time the financial operations of the Company could be
reevaluated by the bank. The bank has since rejected extending this line for
another year, but is currently negotiating with management of the Company to
extend the line until alternative financing has been acquired. Management is
vigorously exploring other options to obtain the required financing. At June 30,
1999, the balance owed on this line of credit was $2,184,656.
The Company's principal commitments at June 30, 1999 consisted of
obligations under operating leases for facilities.
The Company believes that its existing cash, as supplemented by
expected cash flow from operations and existing credit facility, is sufficient
to satisfy its currently anticipated working capital needs. Management
acknowledges that failure to acquire alternative financing could significantly
affect the ability of the Company to meet short-term working capital
requirements, but feel confident that, with the continued cooperation of Crestar
on extending the revolving line of credit, this financing will be secured in the
near future.
Year 2000 Issues
Year 2000 Compliance means the ability of software and other processing
capabilities to interpret and manipulate correctly all data that includes the
Year 2000 and dates thereafter. The Company principally sells and services
computer hardware and, to date, has not been confronted with Year 2000 issues in
providing such services. Further, the Company has surveyed all of its internal
business systems and software applications and determined that they are Year
2000 compliant. Consequently, the Company does not expect its business to be
adversely affected in any material respect because of Year 2000 issues.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The Company sold certain of the assets, primarily the book of business,
of one of its wholly-owned subsidiaries, Cintronix, Inc. on June 30,
1999 for $200,000. Continued disappointing results from the sales of
mid-range and personal computer equipment has caused negative cash
flows for the subsidiary, and projected cash deficits predicated the
reduction of the Company's operations in this area. This sale will
result in a significant decrease in revenues, but the Company expects
an increase in net income due to the concurrent decrease in sales and
support staff, and general and administrative charges. The sale was
made to Interactive Systems, Inc., ("ISI"). Donald C. Weymer, the Chief
Executive Officer and Chairman of the Board of Directors of the
Company, is also the primary shareholder, and a director and officer of
ISI.
Mr. Herbert H. Derian resigned as president of the subsidiary
Cintronix, Inc. and as a director of the Company effective June 23,
1999. This resignation was effectively accepted at the June 29, 1999,
meeting of the Board of Directors.
Mr. C. A. Miller III submitted his resignation from the Board of
Directors, and this resignation was accepted at the June 29, 1999
meeting of the Board of Directors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Title of Exhibit
3.4 ** Agreement and Plan of Merger between CSI Computer Specialists, Inc.
(Delaware) and Computer Specialists, Inc. (Maryland) filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement filed on July 19, 1995 (the "Registration Statement") and
incorporated herein by reference.
3.5 ** Bylaws of CSI Computer Specialists, Inc. (Registrant) filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement and incorporated herein by reference.
3.7 ** Certificate of Amendment of Certificate of Incorporation of CSI Computer
Specialists, Inc. (Delaware) as filed with the Secretary of State of the
State of Delaware on August 5, 1994, filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement and incorporated
herein by reference.
4.1 ** Specimen Common Stock Certificate, filed with the Securities and
Exchange Commission as an exhibit to the Registration Statement and
incorporated herein by reference.
4.2 ** Specimen Warrant Certificate, filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement and incorporated
herein by reference.
4.3 ** Form of Underwriter's Unit Purchase Option, filed with the Securities
and Exchange Commission as an exhibit to the Registration Statement and
incorporated herein by reference.
4.4 ** Form of Warrant Agreement by and among the Company, Biltmore Securities,
Inc. and Continental Stock Transfer & Trust Company, amended from that
which was filed with the Securities and Exchange Commission as an exhibit
to the Registration Statement and incorporated herein by reference.
10.1 ** Form of Maintenance Agreement filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement and incorporated
herein by reference.
10.2 ** Form of Subcontracting (Microcomputer Service) Agreement filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement and incorporated herein by reference.
10.3 ** Form of Equipment Sales Agreement filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement and incorporated
herein by reference.
10.6 ** Employment Agreement, dated April 7, 1994, by and between the Company
and Donald C. Weymer filed with the Securities and Exchange Commission as
an exhibit to the Registration Statement and incorporated herein by
reference.
10.7 ** Employment Agreement, dated April 7, 1994, by and between the Company
and William Pershin filed with the Securities and Exchange Commission as an
exhibit to the Registration Statement and incorporated herein by reference.
10.8 ** CSI Computer Specialists, Inc. 1994 Stock Option Plan filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement and incorporated herein by reference.
10.9 ** Plan for Incentive Compensation of Donald C. Weymer filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement and incorporated herein by reference.
10.10** Revolving Commercial Loan Note, dated May 27, 1994, in favor of
Citizens Bank of Maryland in the principal amount of $750,000 filed with
the Securities and Exchange Commission as an exhibit to the Registration
Statement and incorporated herein by reference.
10.11** Security Agreement, dated May 27, 1994, in favor of Citizens Bank of
Maryland and corresponding Financing Statement filed with the Securities
and Exchange Commission as an exhibit to the Registration Statement and
incorporated herein by reference.
11. Computation of Net Income per Common Share (included in the Financial
Statements in Item 7).
21. Subsidiaries of the Company
27. Financial Data Schedule.
** Previously filed as noted.
(b) Reports on Form 8-K
None.
<PAGE>
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.
CSI Computer Specialists, Inc.
September 27, 1999 By: /s/ William F. Pershin
- --------------- -----------------------
Date William F. Pershin
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 147,519
<SECURITIES> 0
<RECEIVABLES> 4,665,890
<ALLOWANCES> 407,791
<INVENTORY> 1,505,762
<CURRENT-ASSETS> 6,339,283
<PP&E> 1,710,225
<DEPRECIATION> 1,159,068
<TOTAL-ASSETS> 7,615,034
<CURRENT-LIABILITIES> 5,559,039
<BONDS> 0
0
0
<COMMON> 3,716
<OTHER-SE> 2,052,279
<TOTAL-LIABILITY-AND-EQUITY> 7,615,034
<SALES> 7,613,903
<TOTAL-REVENUES> 7,695,074
<CGS> 6,245,193
<TOTAL-COSTS> 6,245,193
<OTHER-EXPENSES> 1,321,544
<LOSS-PROVISION> 9,000
<INTEREST-EXPENSE> 45,250
<INCOME-PRETAX> 83,085
<INCOME-TAX> 0
<INCOME-CONTINUING> 83,085
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,085
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
