SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 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: 000-25590
DATASTREAM SYSTEMS, INC.
Incorporated pursuant to the laws of the State of Delaware
-------------------------------------------
Internal Revenue Service -- Employer Identification No. 57-0813674
50 DATASTREAM PLAZA, GREENVILLE, SC 29605
(864) 422-5001
-------------------------------------------
NOT APPLICABLE
(Former Name, Former Address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of the issuer's common stock as of the latest practicable
date: SEPTEMBER 30, 1997 9,270,810 shares, $0.01 par value.
<PAGE>
Datastream Systems, Inc.
FORM 10-Q
Quarter ended September 30, 1997
Index
Page No.
Part I. Consolidated Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets - December 31, 1996 and
September 30, 1997
Assets 3
Liabilities and Stockholders' Equity 4
Consolidated Statements of Income -
for the Three Months ended
September 30,1996 and 1997 5
Consolidated Statements of Income -
for the Nine Months ended
September 30,1996 and 1997 6
Consolidated Statement of Changes in
Stockholders' Equity - for the Nine Months
ended September 30, 1997 7
Consolidated Statement of Cash Flows -
for the Nine Months ended
September 30, 1996 and 1997 8
Notes to the Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About 14
Market Risk
Part II. Other Information 15
Signature 17
<PAGE>
PART I. CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Datastream Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
Assets
December 31, September 30,
1996 1997
(unaudited)
Current assets:
Cash and cash equivalents $6,315,719 $1,149,670
Accounts receivable, net of allowance for
doubtful accounts of $835,000 and
$835,000, respectively 11,725,928 18,474,729
Investments held to maturity 13,011,856 10,292,437
Accrued interest receivable 221,827 95,487
Prepaid expenses 586,647 820,020
Inventories 324,018 308,453
Deferred income taxes 395,000 395,000
Other assets 1,961,496 3,909,439
--------- ---------
Total current assets 34,542,491 35,445,235
Investments held to maturity 4,547,220 5,911,737
Property and equipment
Land 465,981 500,981
Building 4,371,113 4,603,447
Computer equipment 4,719,340 7,148,080
Furniture and fixtures 930,226 1,172,521
------- ---------
10,486,660 13,425,029
Less accumulated depreciation 1,794,337 3,252,188
--------- ---------
Net property and equipment 8,692,323 10,172,841
Goodwill 7,636,748 6,818,760
Capitalized software development costs, net of
accumulated amortization of $1,197,177 and
$2,239,941, respectively 2,158,436 2,709,530
--------- ---------
Total assets $57,577,218 $61,058,103
=========== ===========
See notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Balance Sheets (Continued)
Liabilities and Stockholder' Equity
December 31, September 30,
1996 1997
(unaudited)
Current liabilities:
Accounts payable $4,403,205 $3,278,351
Other accrued liabilities 9,139,078 4,539,232
Income taxes payable 743,707 1,585,105
Current portion of long-term debt 1,507,274 668,718
Unearned revenue 5,116,007 6,692,200
--------- ---------
Total current liabilities 20,909,271 16,763,606
Long-term debt, less current portion 2,892,743 849,171
Deferred income taxes 650,000 650,000
------- -------
Total liabilities 24,452,014 18,262,777
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized; - -
none outstanding
Common stock, $.01 par value, 15,000,000 shares 91,268 92,707
authorized; 9,126,789 share issued and
outstanding at December 31, 1996, 9,270,810 shares
issued and outstanding at September 30, 1997
Additional paid-in capital 55,832,034 57,585,733
Foreign currency translation adjustment - 452,149
Retained earnings (22,798,098) (15,335,263)
----------- -----------
Total stockholders' equity 33,125,204 42,795,326
---------- ----------
Total liabilities and stockholders' equity $57,577,218 $61,058,103
=========== ===========
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)
Three months ended September 30, 1996 and 1997
September 30, September 30,
1996 1997
Revenues:
Product $ 3,651,553 $ 8,194,800
Professional service 3,069,642 6,187,778
Support 1,542,707 3,017,597
--------- ---------
Total revenues 8,263,902 17,400,175
Cost of revenues:
Cost of product revenues 472,718 745,550
Cost of professional service revenues 1,715,819 3,738,612
Cost of support revenues 258,314 1,134,280
------- ---------
Total cost of revenues 2,446,851 5,618,442
--------- ---------
Gross profit 5,817,051 11,781,733
Operating expenses:
Sales and marketing 2,268,547 4,604,504
Product development 357,707 1,180,355
General and administrative 805,640 1,522,411
------- ---------
Total operating expenses 3,431,894 7,307,270
Operating income 2,385,157 4,474,463
Other income (expense):
Interest income 579,903 198,571
Interest expense (923) (48,792)
Other 11,425 99,658
------ ------
Net other income 590,405 249,437
------- -------
Income before income taxes 2,975,562 4,723,900
Income taxes 1,145,500 1,748,000
--------- ---------
Net income $ 1,830,062 $ 2,975,900
=========== ===========
Per share data:
Net income $ .21 $ .31
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 8,919,505 9,717,080
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)
Nine months ended September 30, 1996 and 1997
September 30, September 30,
1996 1997
Revenues:
Product $ 9,983,265 $ 21,194,296
Professional service 8,371,707 18,878,489
Support 4,514,793 8,823,343
--------- ---------
Total revenues 22,869,765 48,896,128
Cost of revenues:
Cost of product revenues 1,327,546 2,284,532
Cost of professional service revenues 4,333,540 10,980,210
Cost of support revenues 784,087 2,911,807
------- ---------
Total cost of revenues 6,445,173 16,176,549
--------- ----------
Gross profit 16,424,592 32,719,579
Operating expenses:
Sales and marketing 6,630,284 13,571,866
Product development 1,076,112 3,050,566
General and administrative 2,300,326 5,530,108
--------- ---------
Total operating expenses 10,006,722 22,152,540
Operating income 6,417,870 10,567,039
Other income (expense):
Interest income 1,727,158 707,431
Interest expense (3,678) (186,954)
Other 23,499 218,281
------ -------
Net other income 1,746,979 738,758
--------- -------
Income before income taxes 8,164,849 11,305,797
Income taxes 3,145,000 3,750,812
--------- ---------
Net income $ 5,019,849 $ 7,554,985
=========== ===========
Per share data:
Net income $ .57 $ .80
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 8,850,754 9,492,652
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity
(unaudited)
For the nine months ended September 30, 1997
Foreign
Additional Currency Total
Common Paid-In Retained Translations Stockholders'
Stock Capital Earnings Adjustment Equity
Balance at
December 31, 1996 $ 91,268 $55,832,034 $(22,798,098)$ - $33,125,204
Net income - - 7,554,985 - 7,554,985
Stock options
exercised 1,344 1,616,016 - - 1,617,360
Shares issued for
Employee Stock
Purchase Plan 95 137,683 - - 137,778
Foreign currency
translations - - (92,150) 452,149 359,999
Balance at
June 30, 1997 $ 92,707 $57,585,733 $(15,335,263) $452,149 $42,795,326
======== =========== ============ ======== ===========
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Nine months ended September 30, 1996 and September 30, 1997
September 30, September 30,
1996 1997
Cash flows from operating activities:
Net income $ 5,019,848 $ 7,554,985
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 613,123 1,590,698
Amortization of capitalized software
development costs 350,519 988,544
Amortization of goodwill - 818,251
Foreign currency translation adjustment - 334,538
Loss on disposal of fixed assets (213) 45,037
Provision for doubtful accounts 135,525 -
Changes in operating assets and liabilities:
Accounts receivable (2,082,302) (6,748,801)
Accrued interest receivable 493,070 126,340
Prepaid expenses (118,812) (233,374)
Inventories (10,408) 15,565
Other assets (84,392) (1,947,944)
Accounts payable 365,366 (1,124,848)
Other accrued liabilities (80,999) (4,619,847)
Income taxes payable 284,918 841,397
Unearned revenue 660,708 1,576,194
------- ---------
Net cash provided by (used in)
operating activities 5,545,951 (783,265)
Cash flows from investing activities:
Net proceeds from investments 220,252 1,370,801
Additions to property and equipment (2,974,781) (3,111,340)
Proceeds from the sale of equipment 9,000 58,644
Capitalized software development costs (1,632,414) (1,593,909)
---------- ----------
Net cash used in investing activities (4,377,943) (3,275,804)
Cash flows from financing activities:
Proceeds from exercise of stock options 838,574 1,755,148
Proceeds from line of credit - 400,000
Principal payments on long-term debt (15,000) (3,262,128)
------- ----------
Net cash provided by (used in)
financing activities 823,574 (1,106,980)
Net increase (decrease) in
cash and cash equivalents 1,991,582 (5,166,049)
Cash and cash equivalents at
beginning of period 1,184,092 6,315,719
--------- ---------
Cash and cash equivalents at end of period $ 3,175,674 $ 1,149,670
============ ============
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1) Summary of significant Accounting Policies
A. Organization and Basis of Presentation
Datastream Systems, Inc. (the "Company" or "Datastream") develops, markets,
sells and supports Microsoft and Oracle based software products for the
industrial automation market. These products serve the desktop, file server,
client-server and enterprise-wide networking environments. Datastream's software
enables users to schedule preventive maintenance, record equipment maintenance
histories, organize and control spare parts inventories, schedule equipment and
parts inventory purchases and deploy maintenance personnel. In addition to its
U.S. operations, the Company has direct sales or distribution offices in the
Canada, United Kingdom, The Netherlands, France, Mexico, Brazil, Argentina,
Venezuela, Peru, Malaysia, Korea, Australia and South Africa.
On December 31, 1996, the Company acquired SQL Group, B.V. ("SQL"). The
acquisition has been accounted for using the purchase method. The purchase price
has been allocated to the tangible and intangible assets purchased and the
liabilities assumed based on the fair values on the date of acquisition.
The interim financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC), although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
contained in the Company's Form 10-K filed with the SEC on April 15, 1997 and
the Company's Form 10-Q filed with the SEC on August 15, 1997. Other than as
indicated herein, there have been no significant changes from the financial data
published in those reports. In the opinion of management, such unaudited
information reflects all adjustments, consisting only of normal recurring
accruals and other adjustments as disclosed herein, necessary for a fair
presentation of the unaudited information.
Results for interim periods are not necessarily indicative of results expected
for the full year.
B. Accounting Policies
Net income per share
Net income per share is computed by dividing net income by the weighted average
number of common and common equivalent shares outstanding. Weighted average
common and common equivalent shares include common shares, stock options using
the treasury stock method, and the assumed exercise price of the outstanding
warrants to purchase common stock.
C. Public Offering of Common Stock
On April 5, 1995, the Company closed its initial public offering of 1,633,000
shares of common stock (633,000 of which were sold by existing shareholders) for
$15.00 per share before giving effect to the two for one stock split referred to
in the following paragraph. The Company invested the net proceeds of
approximately $13.95 million from the offering in U.S. Government securities.
Effective September 12, 1995, the Company completed a two for one stock split
effected in the form of a stock dividend. All references in the accompanying
consolidated financial statements to the number of shares have been presented to
reflect this stock split.
On October 3, 1995, the Company closed a second public offering of 2,000,000
shares of common stock for $22.25 per share (1,085,670 of such shares were sold
by existing shareholders). The Company invested the net proceeds of
approximately $19.12 million from the offering in U.S. Government securities. In
conjunction with the second offering, on October 17, 1995, the Company closed on
the over-allotment option of 300,000 shares of common stock. The Company
invested the net proceeds of approximately $6.28 million from the over-allotment
option in U.S. Government securities.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This report contains certain forward-looking statements with respect to the
Company's operations, industry, financial condition and liquidity. These
statements reflect the Company's assessment of a number of risks and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth in this report.
Overview
The Company offers a family of "computerized maintenance management systems"
("CMMS") to the maintenance, repair and operations ("MRO") industry, including
MP2 Pro, MP2 Enterprise, Maintainit, Maintainit Pro and R5 CAMMS. These products
serve the desktop, client-server and enterprise-wide networking environments.
Datastream supports its software products through professional services,
including installation, consulting, integration, custom programming and
training. Ongoing technical support services are supplied pursuant to renewable
annual technical support contracts.
Financial information for 1997 includes the operations of Datastream and its
European subsidiary, SQL Group, B. V. ("SQL"), which was acquired December 31,
1996. SQL's financial results from 1996 are not included. The acquisition of SQL
has resulted in the mix of products and costs of providing professional and
support services to change. These changes are most evident in product and
services gross profit margins.
Results of Operations
Total Revenues. The Company reported higher revenues for the third quarter
of 1997. Total revenues increased 111% to $17,400,175 in the third quarter of
1997 from $8,263,902 in the third quarter of 1996, due principally to the
acquisition of SQL, the continued acceptance of the Company's products in the
industrial automation market and the expansion of the Company's sales,
professional service and technical support service organizations. Total revenues
increased 114% to $48,896,128 during the first nine months of 1997 from
$22,869,765 in the first nine months of 1996.
Product revenues increased 124% to $8,194,800 (47% of total revenues) in the
third quarter of 1997 from $3,651,553 (44% of total revenues) in the third
quarter of 1996, as a result of the growth in new product sales including MP2
Enterprise and Maintainit Pro, the growth in international sales and the impact
of the SQL acquisition. Product revenues increased 112% to $21,194,296 (43% of
total revenues) in the first nine months of 1997 from $9,983,265 (44% of total
revenues) in the first nine months of 1996.
Professional service revenues increased 102% to $6,187,778 (36% of total
revenues) in the third quarter of 1997 from $3,069,642 (37% of total revenues)
in the third quarter 1996. The increase resulted from the addition of
professional service personnel to service expansion of the Company's installed
base of systems and the acquisition of SQL. Professional service revenues
increased 126% to $18,878,489 (39% of total revenues) in the first nine months
of 1997 from $8,371,707 (37% of total revenues) in the first nine months of
1996.
Technical support services revenues for the third quarter 1997 increased 96%
to $3,017,597 (17% of total revenues) from $1,542,707 (19% of total revenues) in
the third quarter of 1996, primarily due to the expansion of the Company's
installed base of systems and the acquisition of SQL. Technical support services
revenues increased 95% to $8,823,343 (18% of total revenues) in the first nine
months of 1997 from $4,514,793 (20% of total revenues) in the first nine months
of 1996.
Cost of Revenues. Cost of revenues increased 130% to $5,618,442 (32% of
total revenues) in the third quarter of 1997, as compared to $2,446,851 (30% of
total revenues) in the comparable quarter of 1996. The increase in cost of
revenues as a percentage of sales is attributed to the shipment of updates for
MP2 Pro and increased expenses incurred in the Applications Engineering and
Support Departments related to salaries and customer reimbursed travel.
Cost of revenues increased 151% to $16,176,549 (33% of total revenues)
during the first nine months of 1997 from $6,445,173 (28% of total revenues) in
the first nine months of 1996.
Cost of product revenues was 4% of total revenues in the third quarter of
1997, and 6% of total revenues during the same period of 1996. The decrease was
due to decreased costs of shipping and packaging related items.
Cost of professional service revenues was 22% of total revenues during the
third quarter of 1997, and 21% of total revenues during the same period in 1996.
The increase as a percentage of total revenues was due to increased personnel
and customer reimbursed travel costs.
Cost of technical support service revenues was 6% of total revenues during
the third quarter of 1997 and 3% of total revenues during the same period in
1996. The increase as percentage of total revenue was due to increases in
support personnel to support the company's expanded installed base, salaries,
the cost of updates provided to MP2 Pro customers under the terms of technical
support agreements and the acquisition of SQL.
Sales and Marketing Expenses. Sales and marketing expenses increased 103% to
$4,604,504 (26% of total revenues) during the third quarter of 1997 from
$2,268,547 (27% of total revenues) during the third quarter in 1996, as a result
of an increased number of sales personnel and commissions associated with the
increase in sales revenue, increased marketing expenses associated with new
product introductions and the acquisition of SQL. Sales and marketing expenses
increased 105% to $13,571,866 (28% of total revenues) in the first nine months
of 1997 from $6,630,284 (29% of total revenues) in the first nine months of
1996.
Product Development Expenses. Total product development expenditures
increased 77% to $1,932,207 (11% of total revenues) during the third quarter of
1997 from $1,089,505 (13% of total revenues) during the same period in 1996. The
capitalized portion of these amounts were $751,852 and $731,798, respectively.
Giving effect to amounts capitalized, product development expense increased 230%
to $1,180,355 (7% of total revenues) in the third quarter of 1997 from $357,707
(4% of total revenues) during the same period in 1996. The increase in total
product development expense resulted from increasing the number of development
personnel to support continued development of R5 CAMMS, foreign language
development and other new products.
Total product development expenditures increased 72% to $4,644,473 (9% of
total revenues) during the first nine months of 1997 from $2,708,516 (12% of
total revenues) during the same period in 1996. The capitalized portion of these
amounts were $1,593,908 and $1,632,404, respectively. Giving effect to amounts
capitalized, product development expense increased 184% to $3,050,566 (6% of
total revenues) in the first nine months of 1997 from $1,076,112 (5% of total
revenues) during the same period in 1996.
General and Administrative Expenses. General and administrative expenses
increased 89% to $1,522,411 (9% of total revenues) during the third quarter of
1997 from $805,640 (10% of total revenues) in the third quarter of 1996,
primarily due to increased salaries and related costs attributable to the
acquisition of SQL. General and administrative expenses increased 140% to
$5,530,108 (11% of total revenues) during the first nine months of 1997 from
$2,300,326 (10% of total revenues) in the first nine months of 1996.
Miscellaneous Income. Miscellaneous income increased to $99,658 in the third
quarter of 1997 from $11,425 in the third quarter of 1996. The increase was due
to rental income generated from leasing a portion of the Company's building in
Greenville, South Carolina in the third quarter of 1997. Miscellaneous income
increased to $218,281 in the first nine months of 1997 from $23,499 in the first
nine months of 1996.
Interest Income/(Expense). Interest income decreased to $198,571 in the
third quarter of 1997 from $579,903 in the third quarter of 1996, due to lower
investment balances realized upon completion of the SQL acquisition in December
1996. Interest expense increased to $48,792 in the third quarter of 1997 from
$923 in the third quarter of 1996, due to debt assumed in the SQL acquisition.
Interest income decreased to $707,431 in the first nine months of 1997 from
$1,727,158 in the first nine months of 1996. Interest expense increased to
$186,954 in the first nine months of 1997 from $3,678 in the first nine months
of 1996.
Tax Rate. The Company's effective tax rate was 37% for the third quarter of
1997 as compared to 38.5% for the third quarter of 1996. The Company's effective
tax rate was 33% in the first nine months of 1997 as compared to 38.5% in the
first nine months of 1996.
Net Income. Net income increased 63% to $2,975,900 (17% of total revenues)
in the third quarter of 1997 from $1,830,062 (22% of total revenues) in the
third quarter of 1996. Net income increased 51% to $7,554,985 (15% of total
revenues) in the first nine months of 1997 from $5,019,849 (22% of total
revenues) in the first nine months of 1996.
Liquidity and Capital Resources
The Company has funded its activities entirely from cash generated from
operations. The Company ended its third quarter of 1997 with $ 1,149,670 in cash
and cash equivalents defined as securities maturing in less than 90 days. The
Company intends to re-invest the proceeds of maturing U.S. Government securities
in similar U.S. Government securities.
The Company completed renovating and assumed occupancy of its new offices at
50 Datastream Plaza, Greenville, SC 29605 during April 1996.
The acquisition of SQL was completed for $31 million, $17 million in cash
and $14 million in stock issued pursuant to Regulation S. In connection with the
acquisition, the Company also deposited into escrow an additional $3 million in
stock, and assumed certain of SQL's outstanding liabilities. Following the
acquisition, SQL's long-term debt totaling approximately $2.7 million was repaid
by the Company and additional working capital infusions of approximately $2.5
million were required to sustain SQL's operations and pay current liabilities.
Approximately $1.7 million of SQL's long-term debt remains, of which
approximately $800,000 is scheduled to be repaid by the end of 1997.
In July 1997, the Company made a $2 million investment in Distinction
Software, Inc. ("Distinction") This investment represents less than 20% of the
outstanding equity interests of Distinction and is included in long term
investments on the balance
sheet.
The Company's principal commitments as of September 30, 1997, consisted
primarily of long term debt assumed in the acquisition of SQL, and there were no
material commitments for capital expenditures. The Company completed its initial
public offering in April 1995, raising proceeds, net of underwriting discounts
and commission (but before payment of other expenses of $389,787) of
$13,950,000. Proceeds from the offering were invested in U.S. Government
securities. The Company completed its second public offering in October 1995,
raising proceeds, net of underwriting discounts and commission (but before
payment of other expenses of $255,064) of $25,400,000. Proceeds from the
offering were invested in U.S. Government securities. The Company believes that
its current cash balances, availability under its line of credit, cash flow from
operations and the proceeds of the Company's most recent public offering will be
sufficient to meet its working capital and capital expenditure needs for at
least the next 12 months.
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Stockholders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter of
1997.
<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.
Datastream Systems, Inc.
/s/ Daniel H. Christie
Date: 11/06/97 ______________________
Daniel H. Christie
Chief Financial Officer (principal
financial and accounting officer)
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,149,670
<SECURITIES> 10,292,437
<RECEIVABLES> 18,474,729
<ALLOWANCES> 835,000
<INVENTORY> 308,453
<CURRENT-ASSETS> 35,445,235
<PP&E> 13,425,029
<DEPRECIATION> 3,252,188
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<CURRENT-LIABILITIES> 16,763,606
<BONDS> 849,171
0
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