U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Act of
1934
For the quarterly period ended September 30, 1998
___ 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 0-25336
KIRLIN HOLDING CORP.
---------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 11-3229358
- -------------------------------- ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6901 Jericho Turnpike, Syosset, New York 11791
-----------------------------------------------
(Address of Principal Executive Offices)
(800) 899-9400
--------------------------------------------
(Issuer's Telephone Number Including Area Code)
---------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 November 12, 1998, Issuer had
outstanding 2,802,764 shares of Common Stock, par value $.0001 per share.
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
KIRLIN HOLDING CORP. and SUBSIDIARY
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------------ ------------------
(Unaudited)
ASSETS:
<S> <C> <C>
Cash $ 170,693 $ 316,219
Securities Owned, at market value:
U.S. government and agency obligations 3,513,641 2,949,723
State and municipal obligations 1,677,394 1,618,284
Corporate bonds and other securities 7,726,156 10,063,391
Furniture, Fixtures and Leasehold Improvements, at cost, net of
accumulated depreciation of $898,397 and $713,626 for
September 30, 1998 and December 31, 1997, respectively 696,886 836,832
Other Assets 1,401,990 1,109,559
------------------ ------------------
Total assets $ 15,186,760 $ 16,894,008
================== ==================
LIABILITIES and STOCKHOLDERS' EQUITY:
Liabilities:
Securities sold, not yet purchased, at market value $ 2,174,198 $ 1,599,279
Payable to clearing broker 1,490,709 2,828,519
Accrued compensation 496,941 2,194,143
Accounts payable and accrued expenses 599,090 509,649
Deferred taxes payable 1,188,531 1,197,696
------------------ ------------------
Total liabilities 5,949,469 8,329,286
------------------ ------------------
Commitments
Stockholders' Equity (Note 2):
Common stock, $.0001 par value; authorized 15,000,000 shares,
issued and outstanding 2,802,764 and 2,720,264 shares, respectively 280 272
Additional paid-in capital 6,354,187 5,869,508
Retained earnings 2,882,824 2,694,942
------------------ ------------------
Total stockholders' equity 9,237,291 8,564,722
------------------ ------------------
Total liabilities and stockholders' equity $ 15,186,760 $ 16,894,008
================== ==================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
KIRLIN HOLDING CORP. and SUBSIDIARY
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three-Months Ended Nine-Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
---------------- ------------- --------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Principal transactions, net $ (116,383) $ 5,452,833 $ 5,981,017 $ 11,994,578
Commissions 1,364,755 1,157,605 4,268,030 3,519,476
Other income 542,990 98,436 958,584 294,344
---------------- -------------- --------------- ---------------
1,791,362 6,708,874 11,207,631 15,808,398
---------------- -------------- --------------- ---------------
Expenses:
Employee compensation and benefits 1,764,074 4,441,795 7,357,155 10,512,874
Promotion and advertising 158,851 88,827 464,377 233,932
Clearance and execution charges 173,442 233,934 568,926 671,363
Occupancy and communications 453,155 463,744 1,293,485 1,301,885
Professional fees 189,603 70,765 473,677 195,922
Interest 102,093 64,934 292,162 190,179
Other 78,528 112,726 418,346 374,644
---------------- -------------- --------------- ---------------
2,919,746 5,476,725 10,868,128 13,480,799
---------------- -------------- --------------- ---------------
(Loss) income before (benefit) provision
for income taxes (1,128,384) 1,232,149 339,503 2,327,599
(Benefit) provision for income taxes (Note 3) (504,843) 543,128 151,621 1,038,900
---------------- -------------- --------------- ---------------
Net (loss) income $ (623,541) $ 689,021 $ 187,882 $ 1,288,699
================ ============== =============== ===============
Basic (loss) earnings per common share (Note 4) $ (0.22) $ 0.26 $ 0.07 $ 0.49
================ ============== =============== ===============
Diluted (loss) earnings per common share (Note 4) $ (0.22) $ 0.25 $ 0.07 $ 0.45
================ ============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
KIRLIN HOLDING CORP. and SUBSIDIARY
Consolidated Statement of Changes in Stockholders' Equity
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
---------------------------- Paid-in Retained
Shares Par Value Capital Earnings Total
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Stockholders' equity,
January 1, 1998 2,720,264 $ 272 $ 5,869,508 $ 2,694,942 $ 8,564,722
Issuance of common stock 82,500 8 484,679 484,687
Net income 187,882 187,882
------------- ------------- ------------- ------------- ------------
Stockholders' equity,
September 30, 1998 2,802,764 $ 280 $ 6,354,187 $ 2,882,824 $ 9,237,291
============= ============= ============= ============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
KIRLIN HOLDING CORP. and SUBSIDIARY
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------
1998 1997
------------------ -----------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 187,882 $ 1,288,699
------------------ -----------------
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization 184,771 136,529
Deferred income taxes (9,165) 219,029
Noncash compensation 138,614
Decrease in securities owned, at market value 1,714,207 1,803,445
(Increase) in other assets (406,062) (145,223)
Decrease (increase) in income taxes receivable 113,631 (80,818)
Increase in securities sold, not yet purchased, at market value 574,919 309,092
(Decrease) in payable to clearing broker (1,337,810) (3,877,067)
(Decrease) increase in accrued compensation (1,697,202) 909,193
Increase (decrease) in accounts payable, taxes payable
and accrued expenses 89,441 (533,456)
------------------ -----------------
Total adjustments (773,270) (1,120,662)
------------------ -----------------
Net cash (used in) provided by operating activities (585,388) 168,037
------------------ -----------------
Cash flows from investing activities:
Purchase of furniture, fixtures and leasehold improvements (44,825) (183,022)
------------------ -----------------
Net cash used in investing activities (44,825) (183,022)
------------------ -----------------
Cash flows from financing activities:
Issuance of common stock 484,687 209,000
------------------ -----------------
Net cash provided by financing activities 484,687 209,000
------------------ -----------------
Net (decrease) increase in cash (145,526) 194,015
Cash, beginning of period 316,219 75,304
------------------ -----------------
Cash, end of period $ 170,693 $ 269,319
================== =================
Supplemental information:
Interest paid $ 292,162 $ 190,179
Income taxes paid $ 47,205 $ 1,568,920
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
KIRLIN HOLDING CORP. and SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of Kirlin
Holding Corp. and its wholly owned subsidiary, Kirlin Securities, Inc.
(collectively the "Company"). The Company, through Kirlin Securities,
Inc. ("Kirlin"), is a full-service, retail-oriented brokerage firm
specializing in the trading and sale of fixed income securities,
including collateralized mortgage obligations, corporate and municipal
bonds, and government and government agency securities and, to a lesser
extent, mutual funds and equity securities. Primarily all activity of
the Company has been through Kirlin. All material intercompany
transactions and balances have been eliminated in consolidation. Kirlin
has offices in New York, New Jersey and California.
The accompanying 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.
Accordingly, they do not include all of the information and footnotes
as required by generally accepted accounting principles for annual
financial statements. In the opinion of management of the Company, all
adjustments (consisting only of normal recurring adjustments) necessary
in order to make the financial statements not misleading have been
included. The operations for the three and nine-month periods ended
September 30, 1998 are not necessarily indicative of the results that
may be expected for the full year ending December 31, 1998. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997.
2. Stockholders' Equity
On January 5, 1998, the Company's Board of Directors authorized the
issuance of 82,500 shares of common stock (valued at the closing price
on that date) to officers of the Company in connection with their
bonuses related to the year ended December 31, 1997. Following this
action, the Company had 2,802,764 shares of Common Stock outstanding.
3. Income Taxes
The Company files consolidated federal income tax returns and separate
Company state income tax returns. The (benefit) provision for income
taxes differs from the amount of income taxes determined by applying
the federal statutory rates principally because of the effect of state
taxes.
4. Earnings Per Share
Net (loss) income per common share is calculated by dividing net(loss)
income (loss) by the weighted average number of shares of common stock
outstanding. The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations:
6
<TABLE>
<CAPTION>
<PAGE>
KIRLIN HOLDING CORP. and SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(Loss)
Income Shares Per-Share
(Numerator) (Denominator) Amount
------------- -------------- -----------
<S> <C> <C> <C>
Three months ended September 30, 1998:
Basic EPS:
Loss available to
Common stockholders $ (623,541) 2,802,764 $ (0.22)
Effect of Dilutive
Securities - options 11,813
-- ---------- -------------- -- --------
Diluted EPS:
Loss available to common
Stockholders and assumed
Exercise $ (623,541) 2,814,577 $ (0.22)
== ========== ============== == ========
Three months ended September 30, 1997:
Basic EPS:
Income available to
common stockholders $ 689,021 2,692,189 $ 0.26
Effect of Dilutive
Securities - options 78,010
-- ---------- -------------- -- --------
Diluted EPS:
Income available to common
stockholders and assumed
exercise $ 689,021 2,770,199 $ 0.25
== ========== ============== == ========
</TABLE>
7
<PAGE>
KIRLIN HOLDING CORP. and SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
-------------- -------------- -----------
<S> <C> <C> <C>
Nine months ended September 30, 1998:
Basic EPS:
Income available to
common stockholders $ 187,882 2,801,555 $ 0.07
Effect of Dilutive
Securities - options 34,575
-- ----------- -------------- -- --------
Diluted EPS:
Income available to common
stockholders and assumed
exercise $ 187,882 2,836,130 $ 0.07
== =========== ============== == ========
Nine months ended September 30, 1997:
Basic EPS:
Income available to
common stockholders $ 1,288,699 2,634,156 $ 0.49
Effect of Dilutive
Securities - options 210,427
-- ----------- -------------- -- --------
Diluted EPS:
Income available to common
stockholders and assumed
exercise $ 1,288,699 2,844,583 $ 0.45
== =========== ============== == ========
</TABLE>
In 1997, the Company adopted SFAS No. 128, "Earnings per Share."
Accordingly, the above amounts for 1997 have been restated.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Forward-Looking Statements
When used in this Form 10-QSB and in future filings by the Company with
the Commission, the words or phrases "will likely result," "management expects"
or "the Company expects," "will continue," "is anticipated," "estimated" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking statements,
each of which speak only as of the date made. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company has no obligation to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
Results of Operations
Total revenues for the three and nine-month periods ended September 30,
1998 decreased 73.3% and 29.1%, respectively, to $1,791,362 and $11,207,631 from
the comparable periods in 1997. The decrease is primarily attributable to a
reduction in the value of the firm's investment account and a decrease in income
generated from the Company's proprietary trading and retail brokerage
activities, which is reflective of sluggish investor interest.
Employee compensation and benefits for the three and nine-month periods
ended September 30, 1998 decreased 60.3% and 30.0%, respectively, to $1,764,074
and $7,357,155 from the comparable periods in 1997. Since employee compensation
to the Company's traders and registered representatives is directly related to
revenue, a portion of employee compensation follows the change in the Company's
revenues.
Promotion and advertising for the three and nine-month periods ended
September 30, 1998 increased 78.8% and 98.5%, respectively, to $158,851 and
$464,377 from the comparable periods in 1997 primarily as a result of the
Company's planned increase in advertising expenditures to attract new customers.
Clearance and execution charges for the three and nine-month periods
ended September 30, 1998 decreased 25.9% and 15.3%, respectively, to $173,442
and $568,926 from the comparable periods in 1997 as a result of lower ticket
volume and a shift towards commission products carrying lower ticket charges.
Occupancy and communications costs for the three and nine-month periods
ended September 30, 1998 and 1997 were comparable.
Professional fees for the three and nine-month periods ended September
30, 1998 increased 167.9% and 141.8% to $189,603 and $473,677 from the
comparable periods in 1997 as a result of an increase in external consultation
with outside professionals related to litigation commenced by the Company.
Interest expense for the three and nine-month periods ended September
30, 1998 increased 57.2% and 53.6%, respectively, to $102,093 and $292,162 from
the comparable periods in 1997 as a result of inventory positions purchased on
margin and securities sold short, which are held at the clearing broker and
charged interest. The Company seeks to minimize its cash balances and withdraws
cash for operations from its trading accounts as needed. To the extent
necessary, inventory positions are utilized as collateral for such withdrawals.
9
<PAGE>
Other expenses for the three and nine-month periods ended September 30,
1998 decreased and increased 30.3% and 11.7%, respectively, to $78,528 and
$418,346 from the comparable periods in 1997. The decrease in the three-month
period is a result of a reduction of general office expenses related to the
closing of a branch office during the past quarter, while the nine-month period
is reflective of the write-off of a receivable related to computer equipment
purchased by one of the Company's ventures, which arose since this venture has
been discontinued.
Income tax benefit and provision for the three and nine-month periods
ended September 30, 1998 were $504,843 and $151,621, respectively, which was
consistent with the decrease and increase in loss and income before this income
tax benefit and provision.
Net loss and income of $623,541 and $187,882, respectively, for the
three and nine-month periods ended September 30, 1998 compares to net income of
$689,021 and $1,288,699, respectively, for the three and nine-month periods
ended September 30, 1997 primarily as a result of a reduction in revenues during
the past quarter as a result of sluggish investor interest.
Liquidity and Capital Resources
Securities owned, at market value, at September 30, 1998 were
$12,917,191 as compared to $14,631,398 at December 31, 1997. This 11.7% decrease
is primarily attributable to a decrease in the value of securities held in
inventory for resale to its customers. Approximately 58% of the Company's assets
at September 30, 1998 were comprised of cash and highly liquid securities.
Furniture, fixtures and leasehold improvements, net, at September 30,
1998, decreased to $696,886 as compared to $836,832 at December 31, 1997. This
16.7% decrease primarily results from the depreciation of the Company's
furniture, fixtures and leasehold improvements.
Other assets increased to $1,401,990 at September 30, 1998, from
$1,109,559 at December 31, 1997, a 26.4% increase. This increase is primarily
attributable to advances to registered representatives.
Securities sold short amounted to $2,174,198 at September 30, 1998 as
compared to $1,599,279 at December 31, 1997. Management monitors these positions
on a daily basis and covers short positions when deemed appropriate. A portion
of the short position at September 30, 1998 was covered during the subsequent
month.
Payable to clearing broker amounted to $1,490,709 at September 30, 1998
as compared to $2,828,519 at December 31, 1997. This 47.3% decrease is a result
of decreased inventory purchases on margin.
Accrued compensation was $496,941 at September 30, 1998 as compared to
$2,194,143 at December 31, 1997, a 77.4% decrease attributable to the payment of
bonuses, which were accrued at December 31, 1997.
Accounts payable and accrued expenses were $599,090 at September 30,
1998 as compared to $509,649 at December 31, 1997, a 17.5% increase primarily
attributable to accrued promotion.
Deferred Income Taxes Payable were $1,188,531 at September 30, 1998 as
compared to $1,197,696 at December 31, 1997.
10
<PAGE>
The Company, as guarantor of its customer accounts to its clearing
broker, is exposed to off-balance-sheet risk in the event that its customers do
not fulfill their obligations with the clearing broker. In addition, to the
extent the Company maintains a short position in certain securities, it is
exposed to further off-balance-sheet market risk, since the Company's ultimate
obligation may exceed the amount recognized in the financial statements.
The Company believes its financial resources will be sufficient to fund
the Company's operations and capital requirements for the foreseeable future.
Year 2000 Issue
The Company has been evaluating the potential impact of the situation
commonly referred to as the "Year 2000 Issue" ("Y2K"). The Y2K issue is the
result of computer systems and applications that currently use two digits rather
than four to recognize a particular year (e.g., "98" for "1998"). The Y2K issue
affects the Company's information technology systems (i.e., computer systems,
network elements and software applications) as well as other business systems
that might have time-sensitive programs or microprocessors that may not properly
reflect or recognize the year 2000 ("non-IT systems"). The failure to reflect or
recognize dates after 1999 could cause the Company's information technology and
non-IT systems to fail or cause errors which could lead to disruptions in
operations or increased costs. The Company, similar to most securities
institutions, is significantly subject to the potential impact of the Y2K issue
due to the nature of the industry. Potential impacts to the Company may arise
from software, computer hardware, and other equipment both within the Company's
direct control and outside the Company's ownership, yet with which the Company
interfaces either electronically or operationally. The Company has commenced a
review of its internal systems and programs to determine the extent to which its
information technology systems are Y2K compliant. The Company has not yet
commenced a review of whether its non-IT systems are Y2K compliant, but intends
to start such review in the near future. Since much of the Company's internal
information technology has been developed fairly recently, the Company does not
anticipate that its internal information technology systems will face
significant issues of non-compliance. The Company has completed an evaluation of
its mission critical systems and remediation of certain systems will be
necessary. It is expected that such remediation will be completed by the second
quarter of 1999 and that testing will be completed by the third quarter of 1999.
Based on current information, the Company believes it will spend approximately
$50,000 to $100,000 in each of 1998, 1999 and 2000, although there can be no
assurance that such amounts will be sufficient due to unforeseen difficulties,
to complete the review and address the Y2K issue with respect to its internal
information technology systems and non-IT systems.
However, even if the Company's internal systems are Y2K compliant, the
Company remains at risk from Y2K failure caused by third parties. The Company
has commenced to contact third parties with which it interacts to determine the
state of their assessment and remediation of any Y2K issues they face. To date,
the Company has not received sufficient information from such third parties to
complete its assessment of their Y2K readiness. Some of the third parties with
which the Company has significant interaction include, most significantly, its
clearing broker, Correspondence Services Corporation ("CSC"), and vendors
providing phone service, payroll services and banking services. The Company has
not yet determined whether CSC is Y2K compliant. If the Company's major
third-party vendors do not confirm to the Company that they are Y2K compliant by
the second quarter of 1999 or provide assurances of subsequent, but timely,
compliance, the Company will determine whether it is necessary to retain the
services of other third-party vendors who are Y2K compliant in order to prevent
a disruption in the Company's business. The Company has not yet developed a
contingency plan for those areas where plans to achieve Y2K compliance fail,
although it intends to develop such a plan.
11
<PAGE>
The failure to correct a material Y2K problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Y2K problem, resulting in part from the uncertainty
of the Y2K readiness of third-party vendors, the Company is unable to determine
at this time whether the consequences of Y2K failures will have a material
impact on the Company's results of operations, liquidity or financial condition.
Although the Company expects that its mission critical systems will be compliant
and tested by the third quarter of 1999, there is no guarantee that these
results will be achieved. Specific factors that give rise to this uncertainty
include a possible loss of technical resources to perform the work, failure to
identify all susceptible systems, non-compliance by third parties whose systems
and operations impact the Company, and other similar uncertainties. A reasonably
possible worst case scenario might include one or more of the Company's or a
third-party vendor's significant systems being non-compliant. Such an event
could result in a material disruption to the Company's operations, which would
adversely affect the Company's results of operations, liquidity and financial
condition.
12
<PAGE>
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule (9/30/98)
27.2 Restated Financial Data Schedule (9/30/97)
(b) Reports on Form 8-K
None
13
<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.
Kirlin Holding Corp.
(Registrant)
Dated: November 12, 1998 By: /s/ Anthony J. Kirincic
--------------------------------
Anthony J. Kirincic
President and Chief Financial Officer
14
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- -------- -----------------------------------
27.1 Financial Data Schedule (9/30/98)
27.2 Restated Financial Data Schedule (9/30/97)
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 170,693
<SECURITIES> 12,917,191
<RECEIVABLES> 1,401,990
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,489,874
<PP&E> 1,595,283
<DEPRECIATION> (898,397)
<TOTAL-ASSETS> 15,186,760
<CURRENT-LIABILITIES> 5,949,469
<BONDS> 0
<COMMON> 280
0
0
<OTHER-SE> 9,237,011
<TOTAL-LIABILITY-AND-EQUITY> 15,186,760
<SALES> 11,207,631
<TOTAL-REVENUES> 11,207,631
<CGS> 8,390,458
<TOTAL-COSTS> 8,390,458
<OTHER-EXPENSES> 2,185,508
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292,162
<INCOME-PRETAX> 339,503
<INCOME-TAX> 151,621
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187,882
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 269,319
<SECURITIES> 11,830,903
<RECEIVABLES> 863,107
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,963,329
<PP&E> 1,385,242
<DEPRECIATION> (647,625)
<TOTAL-ASSETS> 13,700,946
<CURRENT-LIABILITIES> 6,039,948
<BONDS> 0
<COMMON> 136
0
0
<OTHER-SE> 7,660,862
<TOTAL-LIABILITY-AND-EQUITY> 13,700,946
<SALES> 15,808,398
<TOTAL-REVENUES> 15,808,398
<CGS> 11,418,169
<TOTAL-COSTS> 11,418,169
<OTHER-EXPENSES> 1,872,451
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 190,179
<INCOME-PRETAX> 2,327,599
<INCOME-TAX> 1,038,900
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,288,699
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.45
</TABLE>
