FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 0-24928
THE SOLOMON-PAGE GROUP LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0353012
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1140 AVENUE OF THE AMERICAS, NEW YORK, NY 10036
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 764-9200
------------------------------
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has 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 X No
---- ----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: At August 11, 1997, there were
outstanding 5,129,285 shares of the Registrant's Common Stock, $.001 par value.
Transitional Small Business Disclosure Format:
Yes No X
----- ------
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
- --------------------------------------------------------------------------------
FORM 10-QSB
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
PART I: FINANCIAL INFORMATION
ITEM 1: Financial Statements PAGE NUMBER
Consolidated Balance Sheet as of June 30, 1997 [Unaudited]....................1
Consolidated Statements of Operations for the three months and nine months
ended June 30, 1997 and 1996 [Unaudited]......................................3
Consolidated Statements of Cash Flows for the three months and nine months
ended June 30, 1997 and 1996 [Unaudited]......................................4
Notes to Consolidated Financial Statements [Unaudited] .......................6
ITEM 2: Management's Discussion and Analysis or
Plan of Operation..........................................7
PART II: OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K...........................10
SIGNATURES...................................................................11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997 [UNAUDITED]
ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $832,611
Short-Term Investments 2,093,949
Accounts Receivable - [Net of Allowance for
Doubtful Accounts of $106,900] 6,480,416
Other Current Assets 427,791
------------
TOTAL CURRENT ASSETS 9,834,767
------------
PROPERTY AND EQUIPMENT [NET OF ACCUMULATED
DEPRECIATION AND AMORTIZATION OF $600,576] 981,048
------------
OTHER ASSETS:
Intangible Assets - [Net of Accumulated
Amortization of $94,495] 505,106
Due from Related Parties 166,283
Security Deposits 100,119
Restricted Investment 34,466
Other Assets 116,236
------------
TOTAL OTHER ASSETS 922,210
------------
TOTAL ASSETS $11,738,025
============
See Notes to Consolidated Financial Statements.
1
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997[UNAUDITED]
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accrued Payroll and Commissions $2,218,735
Accounts Payable and Accrued Expenses 598,987
Income Taxes Payable 204,577
Current Portion of Obligations Under Capital Leases 75,841
Other Current Liabilities 142,325
-------------
TOTAL CURRENT LIABILITIES 3,240,465
-------------
LONG-TERM LIABILITIES:
Obligations Under Capital Leases 53,166
Deferred Credit 337,409
-------------
TOTAL LONG-TERM LIABILITIES 390,575
-------------
STOCKHOLDERS' EQUITY:
Preferred Stock - Par Value $.001 Per Share; Authorized
2,000,000 Shares. None Issued or Outstanding --
Common Stock - Par Value $.001 Per Share;
Authorized 20,000,000 Shares, 5,139,285 Shares
Issued and 5,129,285 Shares Outstanding 5,139
Additional Paid-in Capital 8,488,247
Treasury Stock; 10,000 Shares at Cost (16,250)
Accumulated Deficit (370,151)
-------------
TOTAL STOCKHOLDERS' EQUITY 8,106,985
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,738,025
=============
See Notes to Consolidated Financial Statements.
2
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE $7,825,054 $5,070,172 $19,577,335 $11,542,554
----------- -------------- ------------- --------------
SELLING EXPENSES 6,034,364 3,753,760 14,978,475 8,511,410
GENERAL AND ADMINISTRATIVE 1,161,855 932,672 3,112,216 2,740,098
DEPRECIATION AND AMORTIZATION 84,727 59,662 238,835 172,558
----------- -------------- ------------- --------------
TOTAL OPERATING EXPENSES 7,280,946 4,746,094 18,329,526 11,424,066
----------- -------------- ------------- --------------
INCOME FROM OPERATIONS 544,108 324,078 1,247,809 118,488
----------- -------------- ------------- --------------
OTHER INCOME [EXPENSES]
Interest and Dividend Income 31,060 29,895 98,114 105,520
Interest Expense (6,281) (11,590) (28,450) (38,677)
Net Realized and Unrealized Gain on Investments 14,207 30,971 28,885 134,010
----------- -------------- ------------- --------------
TOTAL OTHER INCOME 38,986 49,276 98,549 200,853
----------- -------------- ------------- --------------
INCOME BEFORE INCOME TAX EXPENSE 583,094 373,354 1,346,358 319,341
INCOME TAX EXPENSE 122,261 -- 288,473 --
----------- -------------- ------------- --------------
NET INCOME $460,833 $373,354 $1,057,885 $319,341
=========== ============== ============= ==============
PRIMARY NET INCOME PER COMMON SHARE $0.07 $0.07 $0.17 $0.06
=========== ============== ============= ==============
FULLY DILUTED NET INCOME PER COMMON SHARE $0.07 $0.07 $0.17 $0.06
=========== ============== ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
--------
1997 1996
---- ----
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $1,057,885 $319,341
--------------- ------------------
Adjustments to Reconcile Net Income
to Net Cash [Used for] Operating Activities:
Depreciation and Amortization 238,835 172,558
Provision for losses on Accounts Receivable 42,000 39,000
Deferred Credit 71,417 2,169
Net Realized and Unrealized Gain on Investments (28,885) (134,010)
Change in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable (2,362,326) (2,686,969)
Other Assets (302,998) (110,471)
Security Deposits (14,841) (8,637)
Increase [Decrease] in:
Accounts Payable and Accrued Expenses 847,574 1,009,737
Income Tax Payable 204,577 --
Other Liabilities 49,763 115,703
--------------- ------------------
Total Adjustments ($1,254,884) ($1,600,920)
--------------- ------------------
NET CASH - OPERATING ACTIVITIES-
FORWARD ($196,999) ($1,281,579)
--------------- ------------------
INVESTING ACTIVITIES:
Capital Expenditures (232,843) (157,607)
Purchase of Investments (2,696,650) (4,152,434)
Proceeds from Sales of Investments 1,941,911 1,577,322
Purchase of Treasury Stock (16,250) --
Advances to Related Parties -- (28,487)
Transfer to Restricted Investment -- 90,043
--------------- ------------------
NET CASH - INVESTING ACTIVITIES -
FORWARD ($1,003,832) ($2,671,163)
--------------- ------------------
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
[UNAUDITED]
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1997 1996
---- ----
NET CASH - OPERATING ACTIVITIES -
<S> <C> <C>
FORWARD ($196,999) ($1,281,579)
------------- -----------------
NET CASH - INVESTING ACTIVITIES -
FORWARD ($1,003,832) ($2,671,163)
------------- -----------------
FINANCING ACTIVITIES:
Principal Payments Under Capital
Lease Obligations (90,114) (83,538)
Payments from Related Parties 10,000 5,000
------------- -----------------
NET CASH - FINANCING ACTIVITIES ($80,114) ($78,538)
------------- -----------------
NET [DECREASE] INCREASE IN CASH (1,280,945) (4,031,280)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS 2,113,556 4,445,161
------------- -----------------
CASH AND CASH EQUIVALENTS - END OF PERIODS $832,611 $413,881
============= =================
SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest $28,450 $38,677
Income Taxes $136,335 --
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
- --------------------------------------------------------------------------------
[1] BASIS OF REPORTING
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, such statements include all adjustments
[consisting only of normal recurring items] which are considered necessary for a
fair presentation of the financial position of the Company at June 30, 1997 and
the results of its operations for the three and nine months ended June 30, 1997
and 1996 and cash flows for the nine months ended June 30, 1997 and 1996. The
results of operations for the periods presented are not necessarily indicative
of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements include the
accounts of The Solomon-Page Group Ltd. and its wholly-owned subsidiary. All
significant intercompany balances and transactions have been eliminated in
consolidation.
It is suggested that these financial statements be read in conjunction with the
audited financial statements and notes for the fiscal year ended September 30,
1996 included in The Solomon-Page Group Ltd. Form 10-KSB.
[2] NET INCOME PER SHARE
Net Income per share of common stock is computed based on the weighted average
number of common shares outstanding for each period presented, utilizing the
modified treasury stock method. Common Stock equivalents are included if their
effect is dilutive. The number of weighted average common shares outstanding
utilized to compute primary income per share was 9,076,225 and 5,139,285 and to
compute fully diluted income per share was 9,076,225 and 5,228,525 for the three
and nine months ended June 30, 1997 and 1996, respectively. [See Exhibit 11]
In February 1997, the Financial Accounting Standards Board issued Statement No.
128 "Earnings per Share" which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and restate all prior periods. The impact is
expected to result in an increase in primary and fully diluted earnings for the
three and nine months ended June 30, 1997 of $.01 and $.02 per share,
respectively.
[3] RECLASSIFICATION
Certain prior period amounts have been reclassified to conform with the current
period presentation.
6
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- --------------------------------------------------------------------------------
OVERVIEW
The Company's business is organized into two primary operating
divisions: executive search and full time contingency recruitment as well as
flexible staffing and consulting. The executive search and full time contingency
recruitment division has eight lines of business including four industry
(capital markets, publishing and new media, healthcare and fashion services),
and four functional (information technology, accounting, human resources and
legal). The executive search and full time contingency recruitment division
generated approximately 49% of the Company's revenue for the nine months ended
June 30, 1997. The flexible staffing and consulting division, which provides
services to all companies seeking personnel in the information technology,
accounting and human resources areas, generated approximately 51% of the
Company's revenue for the nine months ended June 30, 1997. The accounting and
human resources flexible staffing businesses commenced operations during fiscal
1997.
The following is a summary of the Company's consolidated financial
and operating data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
STATEMENT OF OPERATIONS DATA: 1997 1996 1997 1996
- ----------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $7,825,054 $5,070,172 $19,577,335 $11,542,554
Income from Operations 544,108 324,078 1,247,809 118,488
Income Before Income Tax Expense 583,094 373,354 1,346,358 319,341
Income Tax Expense 122,261 0 288,473 0
Net Income 460,833 373,354 1,057,885 319,341
Primary Income Per Common Share $0.07 $0.07 $0.17 $0.06
BALANCE SHEET DATA: JUNE 30, 1997
- ------------------- -------------
Working Capital $6,594,302
Total Assets 11,738,025
Long-term Debt, Net of Current Maturities 53,166
Stockholders' Equity 8,106,985
</TABLE>
RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this document.
Revenue increased to approximately $7,825,000 for the three months
ended June 30, 1997 from approximately $5,070,000 for the three months ended
June 30, 1996, an increase of approximately $2,755,000 or 54%. Revenues from the
Company's executive search and full time contingency recruitment division
experienced an increase of 22% to approximately $3,606,000 for the three months
ended June 30, 1997 compared to approximately $2,960,000 for the same period in
1996. Revenues from the Company's flexible staffing and consulting division were
approximately $4,219,000 for the three months ended June 30, 1997 compared to
approximately $2,110,000 for the same period in 1996, an increase of
approximately $2,109,000 or 100%. Revenue increased to approximately $19,577,000
for the nine months ended June 30, 1997 from approximately $11,543,000 for the
nine months ended June 30, 1996, an increase of approximately $8,034,000 or 70%.
Revenues from the Company's executive search and full time contingency
recruitment division increased 28% to approximately $9,628,000 for the nine
months ended June 30, 1997 compared to approximately $7,545,000 for the same
period in 1996. Revenues from the Company's flexible staffing and consulting
division were approximately $9,949,000 for the nine months ended June 30, 1997
compared to approximately $3,998,000 for the same period in 1996, an increase of
approximately $5,951,000 or 149%.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION [CONTINUED]
- ----------------------------------------------------------------------
The increase in revenues for the three and nine months ended June
30, 1997 compared to the three and nine months ended June 30, 1996 for the
Company's executive search and full time contingency recruitment division is
primarily attributable to the expansion of its client base and strong demand for
personnel from existing clients. Also, the addition of experienced counselors
contributed to the increase in revenues. The Company's information technology
flexible staffing and consulting business experienced significant increases in
revenues for three and nine months ended June 30, 1997 compared to the same
periods in 1996. The increases were attributable to the hiring of experienced
sales and recruiting personnel as well as the establishment and penetration of
customer relationships.
Selling expenses for the three months ended June 30, 1997 totaled
approximately $6,034,000 (77% of revenues) compared with approximately
$3,754,000 (74% of revenues) for the three months ended June 30, 1996. Selling
expenses for the nine months ended June 30, 1997 totaled approximately
$14,978,000 (77% of revenues) compared to approximately $8,511,000 (74% of
revenues) for the nine months ended June 30, 1997. The increase in selling
expenses as a percentage of revenues is directly related to the Company's
flexible staffing and consulting division, which incurred startup costs during
fiscal 1997 associated with the commencement of operations in the accounting and
human resources flexible staffing and consulting business. In addition, the
Company has incurred costs due to the hiring of senior level counselors within
various segments of the executive search and full time contingency recruitment
division. Such costs consist primarily of payroll relating to flexible staffing
requirements, salaries and commissions of sales and recruiting personnel,
employee benefits, telephone and advertising.
General and Administrative expenses increased to approximately
$1,162,000 (15% of revenues) and $3,112,000 (16% of revenues), respectively, for
the three and nine months ended June 30, 1997 compared to approximately $933,000
(18% of revenues) and $2,740,000 (24% of revenues), respectively, for the three
and nine months ended June 30, 1996. The improvements as a percentage of
revenues relates to operating efficiencies and economies of scale associated
with increased revenues.
Depreciation and Amortization expense for the three and nine months
ended June 30, 1997 totaled approximately $85,000 and $239,000 compared to
approximately $60,000 and $173,000 for same periods in 1996. The increase is due
to amortization of intangible assets related to the acquisition of trade names
and the acquisition of furniture and equipment.
Income from operations was approximately $544,000 and $1,248,000
for the three and nine months ended June 30, 1997, respectively, compared to
approximately $324,000 and $118,000 for the three and nine months ended June 30,
1996. The Company's operating results for the three and nine months ended June
30, 1997 include charges of approximately $85,000 and $250,000, respectively,
relating to the startup of its accounting and human resource flexible staffing
and consulting business.
Income Tax Expense for the three and nine months ended June 30,
1997 were approximately $122,000 and $288,000, respectively, compared with $0
for the three and nine months ended June 30, 1996. At September 30, 1996, the
Company had net operating loss carryforwards of approximately $1,300,000, of
which $1,200,000 can be applied to fiscal 1997 taxable income. The Company's
effective tax rate for the nine months ended June 30, 1997 was approximately
21%, due to the application of net operating loss carryforwards.
Net income was approximately $461,000 and $1,058,000 for the three
and nine months ended June 30, 1997 respectively, compared to approximately
$373,000 and $319,000 for the three and nine months ended June 30, 1996.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION [CONTINUED]
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company's sources of liquidity included
approximately $2,927,000 in cash and cash equivalents and short-term
investments. The Company's working capital was approximately $6,594,000 at June
30, 1997.
In February 1997, the Company entered into a one year $4,000,000
demand line of credit facility agreement with The Dime Savings Bank which is
collateralized by all the Company's assets. The agreement provides for
borrowings at the Dime Reference Rate + 1% (currently 9.50%) in amounts not
exceeding 80% of eligible accounts receivable (as defined therein) and expires
on February 28, 1998, on which date the outstanding principal amount is required
to be repaid. To date, the Company has not made any borrowings under this
facility.
During the first nine months of fiscal 1997, the Company used cash
from operations of approximately $197,000, resulting primarily from an increase
in accounts receivable. Cash used in investing activities for the nine months
ended June 30, 1997 totaled approximately $1,004,000, most of which was used for
the purchase of short-term investments and capital expenditures.
In April 1997, the Company leased approximately 9,400 square feet
of additional office space at its current headquarters. The minimum annual
rental and utility obligations for the additional office space through July 14,
1999 is approximately $190,000, approximately $300,000 from July 15, 1999
through December 31, 2001 and is approximately $345,000 from January 1, 2002
through September 30, 2006. The Company occupied this space in August 1997.
Capital expenditures for the remainder of fiscal 1997 are expected
to be approximately $200,000, which will primarily relate to the additional
rental space.
The Company believes that its current cash position and investment
balances, together with financing available under its working capital facility
will be sufficient to support current working capital requirements for the next
twelve to eighteen months.
NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board [FASB] has issued Statement
of Financial Accounting Standards [SFAS] No. 123, "Accounting for Stock-Based
Compensation," in October of 1995. SFAS No. 123 uses a fair value based method
of accounting for stock options and similar equity instruments as contrasted to
the intrinsic value based method of accounting prescribed by Accounting
Principles Board [APB] Opinion No. 25, Accounting for Stock Issued to Employees.
The accounting requirements of SFAS No. 123 are effective for transactions
entered into in fiscal years that begin after December 15, 1995; the disclosure
requirements of SFAS No. 123 are effective for financial statements for fiscal
years beginning after December 15, 1995. The Company anticipates continuing to
account for stock-based compensation using the intrinsic value method. SFAS No.
123 will not have an impact on the Company's results of operations or financial
position.
The FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" in June 1996.
SFAS No. 125 provides accounting and reporting standards which are based on
consistent application of a "financial-components approach" that focuses on
control. Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been surrendered,
and derecognizes liabilities when extinguished. SFAS No. 125 is effective for
transfers and servicing of financial assets and extinguishment of liabilities
occurring after December 31, 1996. Adoption of SFAS No. 125 is not expected to
have an impact on the Company's financial statements.
The FASB issued SFAS No. 128, "Earnings Per Share" in February 1997.
SFAS No. 128 specifies the computation, presentation and disclosure requirements
for earnings per share (EPS) for entities with publicly held common stock or
potential common stock. SFAS No. 128 is effective for financial statements for
both interim and annual periods ending after December 15, 1997. The Company is
currently studying the future impact on its financial statements upon the
adoption of SFAS No. 128.
9
<PAGE>
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
11 Schedule of Computation of Income Per Common Share
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K: NONE
10
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
THE SOLOMON-PAGE GROUP LTD.
---------------------------
(Registrant)
Date: August 11, 1997 /s/ LLOYD B. SOLOMON
--------------------------
Lloyd B. Solomon, Chief Executive Officer
Date: August 11, 1997 /S/ ERIC M. DAVIS
-----------------------------------
Eric M. Davis, Chief Financial Officer
Vice President - Finance
11
THE SOLOMON-PAGE GROUP, LTD. EXHIBIT 11
SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
JUNE 30, 1997 [UNAUDITED]
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
PRIMARY JUNE 30, 1997 JUNE 30, 1997
------- ------------- -------------
<S> <C> <C>
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $460,833 $1,057,885
ASSUMED INTEREST OF 5.15% ON GOVERNMENT SECURITIES AND THE
REDUCTION OF INTEREST EXPENSE, NET OF TAX EFFECT . . . . . $161,205 $491,206
------------- -------------
NET INCOME USED FOR PRIMARY PER SHARE AMOUNTS . . . . . . . . . $622,038 $1,549,091
============= =============
AVERAGE SHARES OUTSTANDING . . . . . . . . . . . . . . . . . . 5,132,582 5,132,582
ADD - COMMON EQUIVALENT SHARES, DETERMINED USING THE
"MODIFIED TREASURY STOCK METHOD" . . . . . . . . . . . . . 3,943,643 3,943,643
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF ------------ -------------
PRIMARY INCOME PER SHARE . . . . . . . . . . . . . . . . . 9,076,225 9,076,225
============= =============
PRIMARY NET INCOME PER COMMON SHARE . . . . . . . . . . . . . . $0.07 $0.17
============= =============
FULLY DILUTED
-------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $460,833 $1,057,885
ASSUMED INTEREST OF 5.15% ON GOVERNMENT SECURITIES AND THE
REDUCTION OF INTEREST EXPENSE, NET OF TAX EFFECT . . . . . $157,672 $452,154
------------- -------------
NET INCOME USED FOR FULLY DILUTED PER SHARE AMOUNTS . . . . . . $618,505 $1,510,039
============= =============
AVERAGE SHARES OUTSTANDING . . . . . . . . . . . . . . . . . . 5,132,582 5,132,582
ADD - COMMON EQUIVALENT SHARES, DETERMINED USING THE
"MODIFIED TREASURY STOCK METHOD" . . . . . . . . . . . . . 3,943,643 3,943,643
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF ------------- -------------
FULLY DILUTED PER SHARE . . . . . . . . . . . . . . . . . . 9,076,225 9,076,225
============= =============
FULLY DILUTED NET INCOME PER COMMON SHARE . . . . . . . . . . . $0.07 $0.17
============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-QSB for the nine months ended June 30, 1997 and is qualified
in its entirety by reference to such FInancial Statements and Notes, thereto.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 832,611
<SECURITIES> 2,093,949
<RECEIVABLES> 6,587,316
<ALLOWANCES> 106,900
<INVENTORY> 0
<CURRENT-ASSETS> 9,834,767
<PP&E> 981,048
<DEPRECIATION> 238,835
<TOTAL-ASSETS> 11,738,025
<CURRENT-LIABILITIES> 3,240,465
<BONDS> 0
0
0
<COMMON> 5,139
<OTHER-SE> 8,101,846
<TOTAL-LIABILITY-AND-EQUITY> 11,738,025
<SALES> 19,577,335
<TOTAL-REVENUES> 19,577,335
<CGS> 14,978,475
<TOTAL-COSTS> 18,329,526
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,450
<INCOME-PRETAX> 1,346,358
<INCOME-TAX> 288,473
<INCOME-CONTINUING> 1,057,885
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,057,885
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
