<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[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 0-26924
AMX CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-1815822
(State of Incorporation) (I.R.S. Employer Identification No.)
11995 FORESTGATE DRIVE
DALLAS, TEXAS 75243
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 644-3048
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 [ ]
COMMON STOCK, $0.01 PAR VALUE 7,830,226
(Title of Each Class) (Number of Shares Outstanding at July 31, 1997)
<PAGE>
AMX CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets at June 30, 1997 and March 31, 1997. . . 2
Consolidated Statements of Operations for the Three Months Ended
June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Three Months ended
June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 9
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
<PAGE>
AMX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share amounts)
June 30, 1997 March 31, 1997
------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 658 $ 2,092
Receivables - trade and other; less allowance
for doubtful accounts of $103 at June 30,
1997 and $94 at March 31, 1997 6,763 6,670
Inventories 6,865 4,960
Prepaid expenses 475 472
Deferred income tax 98 98
Income taxes recoverable 351 42
--------- ---------
Total current assets 15,210 14,334
Property and equipment, at cost, net 3,941 4,030
Capitalized software 318 376
Deposits and other 731 802
Deferred income tax 6 6
Goodwill, net 187 193
--------- ---------
Total assets $ 20,393 $ 19,741
--------- ---------
--------- ---------
See accompanying notes.
<PAGE>
AMX CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except for share and per share amounts)
June 30, 1997 March 31, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,955 $ 3,259
Accrued compensation 986 1,035
Accrued sales commission 601 437
Reserve for litigation - 750
Accrued dealer incentives 266 284
Other accrued expenses 208 199
Line of credit and notes payable 1,007 188
--------- ---------
Total current liabilities 7,023 6,152
Long-term debt 83 92
Minority interest in subsidiary 1,501 1,501
Shareholders' equity:
Common stock, $.01 par value:
Authorized shares - 40,000,000
Issued shares - 7,832,791 at June 30, 1997
and at March 31, 1997 78 78
Additional paid-in capital 1,827 1,827
Retained earnings 9,928 10,138
Less common treasury stock of 5,208 shares (47) (47)
--------- ---------
Total shareholders' equity 11,786 11,996
--------- ---------
Total liabilities and shareholders' equity $ 20,393 $ 19,741
--------- ---------
--------- ---------
See accompanying notes.
<PAGE>
AMX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share amounts)
Three Months Ended
June 30,
------------------------
1997 1996
--------- ---------
System sales $ 12,049 $ 7,625
OEM and custom product sales 985 586
--------- ---------
Net sales 13,034 8,211
Cost of sales 5,777 3,417
--------- ---------
Gross profit 7,257 4,794
Selling and marketing expenses 5,548 3,312
Acquired research and development -- 1,230
Research and development expenses 1,037 754
General and administrative expenses 1,043 692
--------- ---------
Operating loss (371) (1,194)
Interest expense 10 5
Other income 29 72
--------- ---------
Loss before income taxes (352) (1,127)
Income tax benefit (142) (582)
--------- ---------
Net loss $ (210) $ (545)
--------- ---------
--------- ---------
Loss per common share $ (0.03) $ (0.07)
--------- ---------
--------- ---------
Common and common equivalent
shares outstanding 7,827,583 7,656,359
--------- ---------
--------- ---------
See accompanying notes.
<PAGE>
AMX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
June 30,
------------------------
1997 1996
--------- ---------
OPERATING ACTIVITIES
Net loss $ (210) $ (545)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 516 184
Acquired research and development -- 980
Provision for losses on receivables 9 (34)
Provision for inventory obsolescence 3 9
Changes in operating assets and liabilities:
Receivables (102) (108)
Inventories (1,907) 338
Prepaid expenses (3) 68
Other current assets -- 10
Accounts payable 696 (21)
Accrued expenses (644) (408)
Income taxes recoverable/payable (309) (700)
--------- ---------
Net cash used in operating activities (1,951) (227)
INVESTING ACTIVITIES
Purchases of property and equipment (293) (525)
Investment in capitalized software -- (8)
Payment to former owner of AudioEase -- (180)
Increase in other assets -- (190)
--------- ---------
Net cash used in investing activities (293) (903)
FINANCING ACTIVITIES
Exercise of stock options -- 64
Purchase of treasury stock -- (47)
Disqualifying disposition of stock options -- 44
Net increase in line of credit 850 --
Proceeds from long-term debt -- 125
Repayments on long-term debt (39) (105)
--------- ---------
Net cash provided by financing activities 811 81
Effect of exchange rate changes on cash (1) 2
--------- ---------
Net decrease in cash and cash equivalents (1,434) (1,047)
Cash and cash equivalents at beginning of period 2,092 4,859
--------- ---------
Cash and cash equivalents at end of period $ 658 $ 3,812
--------- ---------
--------- ---------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of AMX common stock in connection with
AudioEase acquisition $ -- $ 1,500
--------- ---------
--------- ---------
See accompanying notes.
<PAGE>
AMX CORPORATION
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying condensed consolidated financial statements, which should be
read in conjunction with the consolidated financial statements and footnotes
included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1997, are unaudited (except for the March 31, 1997
consolidated balance sheet, which was derived from the Company's audited
financial statements), but have been prepared in accordance with generally
accepted accounting principles for interim financial information.
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, all adjustments (consisting only
of normal recurring adjustments) considered necessary for a fair presentation
have been included.
Operating results for the three months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the entire
year ending March 31, 1998.
2. Earnings Per Share
Earnings per share is based on the weighted average number of common and
common equivalent shares outstanding including the effect, if any, of options
and warrants.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 (FAS 128), "Earnings Per Share," which is effective for financial
statements for periods after December 15, 1997. Early adoption of the new
standard is not permitted. The new standard eliminates primary and fully
diluted earnings per share and requires presentation of basic and diluted
earnings per share together with disclosure of how the per share amounts were
computed. The impact of this change is expected to be immaterial.
3. Inventories
The components of inventories are as follows:
June 30, 1997 March 31, 1997
------------- --------------
Raw materials $2,753,305 $2,512,648
Work in progress 908,590 446,976
Finished goods 3,272,147 2,060,869
Less reserve for obsolescence (69,302) (60,302)
------------- --------------
Total $6,864,740 $4,960,191
------------- --------------
------------- --------------
<PAGE>
Subsequent Event
On July 7, 1997, the Company acquired 7,322 shares, representing 29% of the
common stock, of its subsidiary PHAST Corporation from the Company's
chairman, Scott D. Miller for $25,000 in a cash transaction. The Company had
held 51% of the stock of PHAST prior to the purchase. In August 1996, Mr.
Miller acquired 14,750 shares of preferred stock of PHAST for an aggregate
purchase price of $1,475,000 and acquired 7,322 shares of the common stock of
PHAST for an aggregate purchase price of $25,000. In connection therewith,
in March 1997, Mr. Miller granted an option to the Company, commencing on
April 1, 1997, and expiring on March 31, 1998, to acquire all of Mr. Miller's
preferred and common stock in PHAST for an aggregate price of $2.5 million,
subject to an independent appraisal of at least an equal value.
The Company also granted Mr. Miller the right to require the Company to
purchase his 14,750 shares of preferred stock in PHAST for a per share
purchase price of $100 (which is the liquidation preference of the preferred
stock), or an aggregate purchase price of $1,475,000, plus accrued but unpaid
dividends, at any time from April 1, 1998 through March 31, 1999. In
connection therewith, the option granted to the Company in March 1997 to
purchase such preferred stock from Mr. Miller was terminated.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and Notes thereto included in the
Company's 1997 Annual Report on Form 10-K. The Company believes that all
necessary adjustments (consisting only of normal recurring adjustments) have
been included in the amounts stated below to present fairly the following
quarterly information. Quarterly operating results have varied significantly
in the past and can be expected to vary in the future. Results of operations
for any particular quarter are not necessarily indicative of results of
operations for a full year.
OVERVIEW
AMX designs, develops, manufactures and markets integrated control systems
that enable end users to operate as a single system a broad range of
electronic and programmable equipment in a variety of corporate, educational,
industrial, entertainment, governmental, and residential settings. The
Company's hardware and software products provide the operating system,
machine control, and user interface necessary to operate, as an integrated
network, electronic devices from different manufacturers through easy-to-use
control panels. The Company's systems are available in a variety of
configurations and provide centralized control of a wide range of video
systems, audio systems, teleconferencing equipment, educational media,
lighting equipment, environmental control systems, security systems, and
other electronic devices. The Company has introduced several
Windows-Registered Trademark--based software applications that handle design
functions, permit scheduling control, and enable a personal computer to
operate on the Company's AXlink bus as a control panel.
The Company's quarterly operating results have varied significantly in
the past, and can be expected to vary in the future. These quarterly
fluctuations have been the result of a number of factors, including the
seasonal purchasing of its dealers and distributors, particularly from
international distributors, OEMs, and other large customers; sales and
marketing expenses related to entering new markets; the Company's reliance
upon dealers and distributors; the timing of new product introductions by the
Company and its competitors; fluctuations in commercial and residential
construction and remodeling activity; and changes in product or distribution
channel mix. In addition, the Company generally experiences higher selling
and marketing expenses during the first fiscal quarter of each year due to
costs associated with the Company's largest trade show (occurring in June)
and experiences higher sales in the education market during the second fiscal
quarter of each year due to the buying cycles of educational institutions.
The Company's system sales are made through dealers and distributors.
The Company principally relies on over 1,600 specialized third-party dealers
of electronic and audiovisual equipment to sell, install, support and service
its products in the United States. Internationally, the Company relies on a
network of 19 exclusive distributors serving 23 countries and over 93 dealers
serving an additional 23 countries to distribute its products.
<PAGE>
OEM and Custom Product Sales have been made only to a few customers and
have generally been large and sporadic transactions. During fiscal 1995,
1996, 1997, and the three months ended June 30, 1997, 45%, 56%, 39%, and 60%
respectively, of the Company's OEM and Custom Product Sales have been with
one customer whose orders have fluctuated significantly based on their own
sales volumes. While the Company's OEM customers typically place orders for
products several months before the scheduled shipment date, these orders are
subject to rescheduling and cancellation. Also, OEM customers can redesign
their products without the AMX equipment in them resulting in reduced or
eliminated sales to such customers. One of the Company's strategies for
growth is to increase OEM and Custom Product Sales to large customers that
typically carry lower gross margins, but also have lower selling expenses.
The Company's U. S. dealers pursue a wide variety of projects that can
range from small conference rooms/boardrooms to very large projects in a
university, government facility, amusement park, or corporate training
facility. The Company's international distributors tend to order in large
quantities to take advantage of volume discounts the Company offers and to
economize on shipping costs. These international orders are not received at
the same time each year. Notwithstanding the difficulty in forecasting future
sales and the relatively small level of backlog at any given time, the
Company generally must plan production, order components, and undertake its
development, selling and marketing activities, and other commitments months
in advance. Accordingly, any shortfall in revenues in a given quarter may
impact the Company's results of operations because the Company generally does
not plan to adjust expenditure levels in response to fluctuations in
quarterly revenues.
The Company purchases components that comprise approximately 28% to 32%
of its cost of sales from foreign vendors. The primary components purchased
are standard power supplies and displays for touch panels. Historically, the
Company has not had any significant cost issues related to price changes due
to purchasing from foreign vendors. However, there can be no assurance that
this will be the case in the future. The Company has experienced delays of up
to three weeks in receiving materials from foreign vendors. However, the
Company takes this issue into consideration when orders are placed and,
therefore, this concern has not, in the past, significantly impacted the
Company's ability to meet production and customer delivery deadlines.
However, a significant shortage of or interruption in the supply of foreign
components could have a material adverse affect on the Company's results of
operations.
The Company's selling and marketing expenses category also includes
customer service and support and engineering. The engineering department of
the Company is involved in research and development as well as customer
support and service. Additionally, the Company has created sales support
teams, which are focused on specific geographic regions or customer
categories. These teams include sales personnel, system designers, and
technical support personnel, all of whom indirectly participate in research
and development activities by establishing close relationships with the
Company's customers and by individually responding to customer-expressed
needs.
<PAGE>
The Company intends to commit resources to develop new software for
specific vertical markets to expand system sales and provide value-add to its
hardware products. An example of this is the Synergy Electronic Classroom
System ("Synergy"). A similar commitment is the Company's investment in
PHAST Corporation which commenced in August 1995. This subsidiary designed
and has recently begun shipments of control systems and products for home
automation. The Company has advanced $4,039,000 to PHAST as of June 30, 1997,
and has recorded losses of $898,720, $2,311,000 and $445,000 for the three
months ended June 30, 1997 and the years ending March 31, 1997 and March 31,
1996, respectively. Although management believes that significant investments
such as these are appropriate, such investments can and have had a negative
impact on the Company's results of operations.
<PAGE>
Results of Operations
The following table contains certain amounts, expressed as a percentage
of net sales, reflected in the Company's consolidated statements of income
for the three month periods ended June 30, 1997 and 1996:
THREE MONTHS
------------
ENDED JUNE 30
-------------
1997 1996
------- -------
System sales 92.4% 92.9%
OEM and custom product sales 7.6 7.1
------- -------
Net sales 100.0 100.0
Cost of sales 44.3 41.6
------- -------
Gross profit 55.7 58.4
Selling and marketing expenses 42.6 40.3
Acquired research and development - 15.0
Research and development expenses 8.0 9.2
General and administrative expenses 8.0 8.4
------- -------
Operating loss (2.9) (14.5)
Interest expense 0.1 0.1
Other income (expense), net 0.2 0.9
------- -------
Loss before income taxes (2.8) (13.7)
Income taxes (1.1) (7.1)
------- -------
Net loss (1.7)% (6.6)%
------- -------
------- -------
THREE MONTHS ENDED JUNE 30, 1997 RESULTS COMPARED TO THREE MONTHS ENDED
JUNE 30, 1996
SYSTEM SALES were $12.0 million for the three months ended June 30,
1997, up 58% over the same period last year and OEM AND CUSTOM PRODUCT SALES
were $1.0 million for the three months ended June 30, 1997, up 68.1% from the
same period last year. NET SALES for the three months ended June 30, 1997,
were $13.0 million, up 58.8% from $8.2 million recorded for the comparable
period of the prior year. The increase in System sales in the three months
ended June 30, 1997 over the prior year represented the Company's continued
growth in all of its markets.
The largest increase has occurred in the residential market. This increase
is fueled by shipments from AMX's subsidiary, PHAST Corporation. PHAST began
shipping its
<PAGE>
Landmark System in the fourth quarter of fiscal 1997. Therefore, the quarter
ending June 30, 1997 represents the first full quarter of shipments for this
products. Additionally, Audio Ease, another of AMX's subsidiaries which
sells its products into the residential market, was acquired midway through
the first quarter of fiscal year 1997. Therefore, in addition to their
revenue growth from the prior year, shipments were made for the entire
quarter this year.
AMX also experienced growth in its international sales. This is a result in
part of the addition of distributors and dealers to the Company's
international distribution channel. The Company has also experienced an
increase in sales from its subsidiary, AXCESS, which distributes not only AMX
products but also other audio visual products as well. The Company has
targeted growth in its international sales as a part of its long-term
strategy.
COST OF SALES consists of material, labor, and manufacturing overhead,
and was $5.8 million or 44.3% of net sales in the three months ended June 30,
1997, as compared to $3.4 million or 41.6% of net sales in the comparable
period of the prior year. The increase for the three months ended June 30,
1997 is due to the increase in residential sales, the increase in OEM sales,
and the increase in sales of AXCESS, all of which experience higher cost of
sales than the corporate market
SELLING AND MARKETING EXPENSES increased from $3.3 million, or 40.3% of
net sales for the three months ended June 30, 1997, to $5.5 million or 42.6%
of net sales for the same period of the current year. This increase reflects
the investment the Company is making in expanding its presence in Asia and
the Pacific Rim by the expansion of its Singapore office which began in
January of 1997, as well as the increase in spending on customer service and
support in its Dallas headquarters. The Company also increased its spending
on trade shows during the quarter ending June 30, 1997 compared to last year.
ACQUIRED RESEARCH AND DEVELOPMENT was recorded during the period last
year due to the acquisition of AudioEase. There were no such charges during
the quarter ended June 30, 1997.
RESEARCH AND DEVELOPMENT EXPENSES increased from $.8 million, or 9.2% of
net sales for the three months ended June 30, 1997, to $1.0 million or 8.0%
of net sales for the same period of the current year.
GENERAL AND ADMINISTRATIVE EXPENSES increased from $.7 million in the
three months ended June 30, 1996, or 8.4% of net sales to $1.0 million or
8.0% of net sales in the three months ended June 30, 1997.
The Company's EFFECTIVE TAX RATE was 40.3% during the three months ended
June 30, 1997 compared to 51.6% in the same period last year. The estimated
effective annual tax rate decreased from the previous year because the
Company will be able to deduct the losses incurred by PHAST after July 1,
1997, on its current consolidated tax return. This is because the Company
increased its stock ownership in PHAST to 80% at July 1,
<PAGE>
1997. Additionally, last year the Company was not able to deduct the
acquired research and development costs which had the effect of increasing
the estimated annual effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
For the past three years, the Company has satisfied its operating cash
requirements principally through cash flow from operations. In the three
months ended June 30, 1997, the Company used $2 million of cash in
operations. The Company spent $300,000 primarily for the purchase of computer
equipment.
Additionally, the Company has a revolving loan agreement for $5.0
million which expires on July 15, 1998, which provides for interest at the
bank's contract rate which is expected to approximate prime. At June 30,
1997, $850,000 was outstanding under the revolving loan agreement.
The Company expects to spend approximately $1.4 million for capital
expenditures in fiscal 1998.
In May 1996, the Company acquired 100% of SPS International, Inc. dba
AudioEase. AudioEase designs, manufactures, and markets hardware and software
products for upscale home theater systems, whole-home audio/video control and
distribution systems, as well as other electronic home systems. The
acquisition was completed at a purchase price of $1.5 million paid in 181,818
shares of AMX Corporation common stock. The Company engaged an independent
appraisal company to assist in allocating the purchase price of AudioEase.
The majority of the purchase price was allocated to in-process research and
development projects. In accordance with generally accepted accounting
principles, the purchase price allocated to in-process research and
development projects was expensed in a one-time charge to the Company's
consolidated earnings as of the date of the consummation of the combination.
In June 1996, the Company acquired 100% of the assets of Camrobotics,
Inc. a designer and developer of pan and tilt cameras for a purchase price of
$250,000. Payment was made with $125,000 in cash and the delivery of a
$125,000 note payable due in November 1997. The majority of the purchase
price was allocated to in-process research and development projects. In
accordance with generally accepted accounting principles, the purchase price
allocated to in-process research and development projects was expensed in a
one-time charge to the Company's consolidated earnings as of the date of the
consummation of the combination
The Company believes that cash flow from operations, the Company's
existing cash resources and funds available under its revolving loan facility
will be adequate to fund its working capital and capital expenditure
requirements for at least the next 12 months. An important element of the
Company's business strategy has been, and continues to be, the acquisition of
similar businesses and complementary products and technology and the
integration of such businesses and products and technology into the
<PAGE>
Company's existing operations. Such future acquisitions, if they occur, may
require that the Company seek additional funds.
CONTINGENCIES
The Company is party to ordinary litigation incidental to its business,
none of which is expected to have a material adverse effect on the results of
operations, financial position or liquidity of the Company.
<PAGE>
AMX CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information pertaining to this item is incorporated herein from Part 1.
Financial Information (Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations - Contingencies).
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Amended and Restated Articles of Incorporation of the Company.
(Incorporated by reference from Exhibit 4.1 to the Company's Form S-8
filed March 11, 1996, File No. 333-2202).
3.2 Amended and Restated Bylaws of the Company, as amended.
(Incorporated by reference from Exhibit 3.4 to the Company's
Registration Statement on Form S-1 filed September 13, 1995, as
amended, File No. 33-96886).
3.3 Amendment to Amended and Restated Bylaws of the Company.
(Incorporated by reference from Exhibit 3.5 to the Company's
Registration Statement on Form S-1 filed September 13, 1995, as
amended, File No. 33-96886).
4.1 Specimen certificate for the Common Stock of the Company
(Incorporated by reference from Exhibit 4.1 to the Company's
Registration Statement on Form S-1 filed September 13, 1995, as
amended, File No. 33-96886).
+27.1 Financial Data Schedule.
b. Reports on Form 8-K
None
- --------------------------
Filed herewith.
<PAGE>
AMX CORPORATION
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.
AMX Corporation
Date: August 13, 1997 By: /s/ David E. Chisum
--------------------------------
David E. Chisum
Chief Financial Officer (Duly Authorized
Officer and Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 657,854
<SECURITIES> 0
<RECEIVABLES> 6,712,339
<ALLOWANCES> (103,223)
<INVENTORY> 6,864,740
<CURRENT-ASSETS> 14,859,009
<PP&E> 4,363,400
<DEPRECIATION> 3,240,226
<TOTAL-ASSETS> 20,393,109
<CURRENT-LIABILITIES> 7,022,603
<BONDS> 83,814
0
1,500,000
<COMMON> 78,328
<OTHER-SE> 11,707,877
<TOTAL-LIABILITY-AND-EQUITY> 20,393,109
<SALES> 13,034,286
<TOTAL-REVENUES> 13,034,286
<CGS> 5,777,140
<TOTAL-COSTS> 13,404,921
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,768
<INCOME-PRETAX> (352,081)
<INCOME-TAX> (142,382)
<INCOME-CONTINUING> (209,699)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (209,699)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
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