<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
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 December 31, 1996
-----------------
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: 0-26170
EAGLE POINT SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 42-1204819
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
4131 WESTMARK DRIVE, DUBUQUE, IA 52002-2627
(address of principal executive offices)
(319) 556-8392
(Registrant's telephone number, including area code)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest applicable date.
Common Stock, par value $.01 per share, outstanding as of February 11, 1997:
4,941,730 shares
- ----------------
- --------------------------------------------------------------------------------
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1996
INDEX
PART I. FINANCIAL INFORMATION
-----------------------------
PAGE
----
Item 1. Financial Statements (Unaudited)
Balance Sheets -
December 31, 1996 and June 30, 1996 3
Statements of Operations -
for the three months ended December 31, 1996 and 1995
and the six months ended December 31, 1996 and 1995 5
Statements of Cash Flows -
for the six months ended December 31, 1996 and 1995 6
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
EAGLE POINT SOFTWARE CORPORATION
BALANCE SHEETS
- --------------------------------------------------------------------
DECEMBER 31, JUNE 30,
------------ ----------
1996 1996
ASSETS (Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,980,489 $ 3,106,704
Short-term investments 4,973,576 7,508,561
Accounts receivable (net of
allowances of $349,832 and $251,344,
respectively) 2,235,110 3,857,170
Income tax receivable 570,370
Interest receivable 255,290
Inventories 483,556 369,172
Prepaid expenses 262,457 150,081
Other assets 15,915 22,933
----------- -----------
Total current assets 14,521,473 15,269,911
INVESTMENTS 2,466,032
PROPERTY & EQUIPMENT (net of accumulated
depreciation of $2,666,030 and
$2,178,552, respectively) 7,618,856 5,945,320
SOFTWARE DEVELOPMENT COSTS (net of
accumulated amortization of
$195,554 and $242,753, respectively) 392,911 213,417
GOODWILL (net of accumulated amortization
of $80,183 and $52,600, respectively) 199,654 203,174
DEFERRED INCOME TAXES 497,946 497,945
----------- -----------
TOTAL ASSETS $23,230,840 $24,595,799
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 283,180 $ 288,523
Accounts payable 264,529 252,768
Accrued expenses 1,023,914 966,754
Income taxes payable 3,051
Deferred revenues 683,239 1,540,998
Deferred income taxes 2,590 2,590
----------- -----------
Total current liabilities 2,257,452 3,054,684
LONG-TERM DEBT 343,453 502,187
CEBA FORGIVABLE LOAN 0 110,000
----------- -----------
Total liabilities $ 2,600,905 $ 3,666,871
----------- -----------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EAGLE POINT SOFTWARE CORPORATION
BALANCE SHEETS (CONTINUED)
- --------------------------------------------------------------------
DECEMBER 31, JUNE 30,
------------ ---------
1996 1996
STOCKHOLDERS' EQUITY: (Unaudited) (Audited)
<S> <C> <C>
Preferred stock, $.01 par value;
1,000,000 shares authorized; none
issued at December 31, 1996 and
June 30, 1996
Common stock, $.01 par value;
20,000,000 shares authorized;
4,941,730 shares issued and
outstanding at December 31, 1996
and June 30, 1996 49,417 49,417
Additional paid-in capital 17,535,942 17,535,942
Retained earnings 3,044,576 3,343,569
----------- -----------
Total stockholders' equity 20,629,935 20,928,928
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' $23,230,840 $24,595,799
EQUITY =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
EAGLE POINT SOFTWARE CORPORATION
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------- -----------------------
1996 1995 1996 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net revenues:
Product sales $3,193,667 $3,877,831 $6,265,415 $7,649,336
Training and support 925,427 1,153,559 2,006,114 2,188,272
---------- ---------- ---------- ----------
Total net revenues 4,119,094 5,031,390 8,271,529 9,837,608
---------- ---------- ---------- ----------
Cost of revenues:
Product sales 1,071,915 1,087,197 2,148,263 2,186,551
Training and support 224,539 179,720 395,738 342,764
---------- ---------- ---------- ----------
Total cost of revenues 1,296,454 1,266,917 2,544,001 2,529,315
---------- ---------- ---------- ----------
Gross profit 2,822,640 3,764,473 5,727,528 7,308,293
---------- ---------- ---------- ----------
Operating expenses:
Selling and marketing 1,588,445 1,627,066 3,010,260 3,159,448
Research and development 888,849 836,457 1,800,753 1,674,173
General and administrative 665,012 413,010 1,174,260 780,461
Charge for purchased research
and development and other
acquisition related expenses 40,342 475,393 40,342
Charge for claims, settlements
and contingencies 234,794 234,794
---------- ---------- -----------------------
Total operating expenses 3,377,100 2,916,875 6,695,460 5,654,424
---------- ---------- -----------------------
Operating income (loss) (554,460) 847,598 (967,932) 1,653,869
Other income (expense):
Interest income, net of interest
expense 153,041 181,336 311,741 385,504
Other income (expense), net (118) 14,440 119,544 16,777
---------- ---------- ---------- ----------
Income (loss) before income taxes (401,537) 1,043,374 (536,647) 2,056,150
Income tax expense (benefit) (175,272) 357,681 (237,653) 688,317
---------- ---------- ---------- ----------
Net income (loss) ($226,265) $ 685,693 ($298,994) $1,367,833
========== ========== ========== ==========
Weighted average common and common
equivalent shares outstanding 4,941,730 4,971,559 4,941,730 4,970,183
========== ========== ========== ==========
Net income (loss) per common and common
equivalent share ($0.05) $0.14 ($0.06) $0.28
========== ========== ========== ==========
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
EAGLE POINT SOFTWARE CORPORATION
STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31,
-----------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($298,994) $ 1,367,833
Adjustments to reconcile net income
(loss) to net
cash provided by (used in) operating
activities:
Depreciation and amortization 515,061 334,359
Amortization of software 95,727 157,562
development costs
Charge for purchased research and 475,393
development
Forgiveness of CEBA Loan (110,000)
Changes in assets and liabilities:
Accounts receivable 1,622,060 (1,319,217)
Interest receivable 255,290
Income tax receivable (570,370)
Inventories (114,384) (85,430)
Prepaid expenses (112,376) (60,235)
Accounts payable 11,761 (386,071)
Income taxes payable (3,051) (406,552)
Deferred revenues (857,759) (172,065)
Accrued expenses 57,160 91,798
Other 7,018 (21,113)
----------- -----------
Net cash provided by (used
in) operating activities 972,536 (499,131)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in short-term bills 5,001,017
Purchases of property and equipment,
net (2,141,015) (912,294)
Purchases of software (243,000) (129,500)
Payments to acquire companies, net of
cash acquired (551,676)
----------- -----------
Net cash provided by (used
in) in investing activities 2,065,326 (1,041,794)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (164,077) (62,331)
----------- -----------
Net cash used in financing
activities (164,077) (62,331)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,873,785 (1,603,256)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 3,106,704 15,742,926
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 5,980,489 $14,139,670
=========== ===========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
EAGLE POINT SOFTWARE CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
- --------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31,
------------------------------
1996 1995
(Unaudited) (Unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) for:
<S> <C> <C>
Interest expense $ 19,787 ($386,737)
=============== ============
Income taxes $337,104 $1,094,869
=============== ============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. INTERIM FINANCIAL STATEMENTS
The accompanying financial statements of Eagle Point Software Corporation (the
"Company") are unaudited. In the opinion of the Company's management, the
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary to state fairly the financial position of the
Company as of December 31, 1996 and June 30, 1996, and the results of operations
and cash flows for the three-month and six-month periods ended December 31, 1996
and 1995.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this quarterly report on Form 10-Q.
Accordingly, these financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the year ended June 30, 1996.
2. INCOME TAXES
Income taxes differ from statutory rates principally due to research and
development tax credits. The research and development tax credits expired and
were not available for the period July 1, 1995 to June 30, 1996. Effective July
1, 1996 through June 30, 1997, the federal government has reinstated the
research and development tax credits. No assurance can be given that this tax
credit will continue beyond June 30, 1997.
3. BUSINESS COMBINATION
On July 29, 1996, the Company purchased substantially all of the assets of
Computer Integrated Building Corporation, a California Corporation ("CIBC"). The
purchase price was $551,676 cash. Additionally, the Company is obligated to make
a contingent cash payment equal to (1) 75% of the revenues between $550,000 and
$743,400 received by the Company in connection with the sale of CIBC's products
during the 12 month period ending July 29, 1997, plus (2) 50% of such revenues
exceeding $743,400 during the 12 month period ending July 29, 1997. As part of
the acquisition, a three year non-compete agreement was entered into between the
Company and the former owners of CIBC. CIBC, located in Sebastopol, California,
is a software developer for the home builder marketplace.
4. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
During October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ('FAS123'). FAS123 encourages companies to adopt a fair value
method of accounting for employee stock-based compensation and requires fair
value accounting for equity instrument issued to non-employees. FAS123, which is
effective for fiscal years beginning after December 15, 1995, also requires
certain disclosures regarding the fair value of stock-based arrangements.
Management
8
<PAGE>
has decided not to adopt the fair value method of accounting for employee stock-
based compensation.
5. CEBA FORGIVABLE LOAN
The Company entered into an agreement with the Iowa Department of Economic
Development, and the City of Dubuque, Iowa for the purpose of securing a
forgivable loan in support of economic development. The proceeds from the loan
were designated to purchase machinery, equipment, and furniture and fixtures.
As the Company has met all the necessary requirements outlined in the agreement
for waiver of the principal and interest as of September 30, 1996, the Company
has recognized the $110,000 principal as other income.
6. OTHER ITEMS
Other charges of $710,000 were incurred during the six months ended December 31,
1996. The Company incurred non-recurring charges in the quarter ended September
30, 1996, $475,000 related to purchased research and development in connection
with the CIBC acquisition. The remaining charge of $235,000 incurred in the
quarter ended December 31, 1996, reflected claims, settlements and contingencies
relating to issues asserted by former employees and the U.S. Department of Labor
based on the 1938 Fair Labor Standards Act.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING INFORMATION
This quarterly report on Form 10-Q contains forward looking statements,
including without limitation, the results of any litigation brought against the
Company. These forward looking statements involve risks and uncertainties,
which could cause actual results to differ from those projected. These as well
as other risks and uncertainties are detailed from time to time in reports filed
by the Company with the Securities and Exchange Commission, including this
report on Form 10-Q for the quarter ended December 31, 1996 and the Company's
report on Form 10-K for the year ended June 30, 1996.
RESULTS OF OPERATIONS
Net revenues decreased by $1.5 million, or 15.9%, to $8.3 million for the
six months ended December 31, 1996 (the "1996 Period"), from $9.8 million for
the six months ended December 31, 1995 (the "1995 Period"). The Company
experienced a decrease in product sales, primarily attributable to a soft
AutoCAD and AutoCAD-related market, the negative impact from customers delaying
purchases of Eagle Point products as they invest in upgrading their hardware and
software as they move from DOS to Windows, as well as portions of some of the
Company's markets slowing their purchasing decisions as they assimilate the
effects of the proposed merger between Autodesk, Inc. and Softdesk, Inc. These
market conditions have negatively effected the Company's results of operations
over the past five quarters and there can be no assurance that such conditions
will not continue to adversely effect the Company's net revenues or results of
operations. Training and support revenues decreased by $182,000, or 8.3%, to
$2.0 million in the 1996 Period from $2.2 million for the 1995 Period.
Gross profit decreased $1.6 million, or 21.6%, to $5.7 million for the 1996
Period from $7.3 million for the 1995 Period as a result of the decrease in net
revenues. Gross profit as a percentage of net revenues decreased to 69.2% in
the 1996 Period from 74.3% in the 1995 Period. Gross profit as a percentage of
corresponding net revenues relating to product sales decreased to 65.7% in the
1996 Period from 71.4% in the 1995 Period primarily due to a reduced percentage
of sales of Eagle Point's software products and an increased percentage of
resales of AutoCAD in the sales mix. The sales of Eagle Point products, which
carry with them a higher gross profit margin, decreased to 78.9% of product
sales in the 1996 Period from 82.6% in the 1995 Period. The resales of AutoCAD,
which carry with them a lower gross profit margin, increased to 21.1% of product
sales in the 1996 Period from 17.4% in the 1995 Period. Gross profit as a
percentage of corresponding net revenues relating to training and support in the
1996 Period decreased to 80.3% from 84.3% in the 1995 Period due to increased
costs associated with providing training to our clients.
Selling and marketing expense decreased $149,000, or 4.7%, to $3.0 million
in the 1996 Period from $3.2 million in the 1995 Period. As a percentage of net
revenues, selling and marketing expenses increased to 36.4% in the 1996 Period
from 32.1% in the 1995 Period. The decrease in expenses was primarily
attributable to lower personnel costs associated with a reduced selling and
marketing staff size.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Research and development expense increased $127,000, or 7.6%, to $1.8
million in the 1996 Period from $1.67 million in the 1995 Period. As a
percentage of net revenues, research and development expenses increased to 21.8%
in the 1996 Period from 17.0% in the 1995 Period. The increase is primarily
attributable to higher personnel costs associated with an expanded research and
development staff.
General and administrative expense increased $394,000, or 50.5%, to $1.2
million in the 1996 Period from $781,000 in the 1995 Period. As a percentage of
net revenues, general and administrative expense increased to 14.2% in the 1996
Period from 7.9% in the 1995 Period. This increase is due to increased costs
relating to the Company's expansion of the facilities, risk management costs,
and higher personnel costs associated with increased general and administrative
staff.
Other charges of $710,000 were incurred in the 1996 Period. The Company
incurred non-recurring charges $475,000 related to purchased research and
development in connection with the CIBC acquisition. The remaining $235,000
reflected claims, settlements and contingencies relating to issues asserted by
former employees and the U.S. Department of Labor based on the 1938 Fair Labor
Standards Act.
Operating income from continuing operations decreased to a net loss of
$960,000 in the 1996 Period from net income of $1.65 million in the 1995 Period.
Excluding other charges, operating income from continuing operations decreased
$1.95 million to a net loss of $258,000 in the 1996 Period from net income of
$1.65 million in the 1995 Period, and as a percentage of revenues decreased to
3.1% in the 1996 Period from 17.2% in the 1995 Period, all as a result of the
factors described above.
Interest expense increased $9,000 to $21,000 in the 1996 Period from
$12,000 in the 1995 Period. Interest income decreased $65,000 to $333,000 in the
1996 Period from $398,000 in the 1995 Period. The decrease in interest income
was due to a reduction in the Company's cash and cash investment primarily
relating to the funding of the expansion of the Company's headquarters and
principal operating facilities located in Dubuque, Iowa.
The Company received a non-recurring one-time gain of $110,000 in other
income in the 1996 Period. The gain resulted from the scheduled forgiveness of
debt relating to an economic development loan the Company received from the
State of Iowa (See Note 5 of "Notes to Financial Statements"). None of the
Company's current indebtedness are forgivable loans nor does the company expect
to receive any additional forgivable loans in the future.
LIQUIDITY AND CAPITAL RESOURCES
Since November 1995, the Company has been in the process of expanding the
Dubuque Facility. The Company estimates the cost of the expansion project
including related data systems, furniture and equipment to be between $3.5
million and $4.0 million. As of December 31, 1996, the Company had expended $3.1
million toward this expansion project.
11
<PAGE>
On July 29, 1996, the Company completed the CIBC acquisition. The purchase
price was $551,676 cash. Additionally, the Company is obligated to make a
contingent cash payment equal to (1) 75% of the revenues between $550,000 and
$743,400 received by the Company in connection with the sale of CIBC's products
during the 12 month period ending July 29, 1997, plus (2) 50% of such revenues
exceeding $743,400 during the 12 month period ending July 29, 1997.
The Company's financial position remains strong, with working capital of
$12.3 million and long-term debt of only $343,000. Cash, short-term, and long-
term investments aggregated approximately $10.9 million at December 31, 1996.
The Company also has available a $2.0 million unsecured line of credit from its
principal commercial bank, which currently has no outstanding balance. The
Company believes that existing cash balances, together with funds generated from
operations and borrowings available under its line of credit, will be sufficient
to fund its operations through fiscal 1997.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
An action against the Company has been brought by a group of former employees
asserting improper overtime pay practices under the 1938 Fair Labor Standards
Act. The Company has been working with the Department of Labor regarding these
assertions. The Company and the Department of Labor have reached a settlement
agreement which has been accepted by approximately 85% of potential plaintiffs.
The company has taken a $235,000 charge in the quarter ending December 31, 1996,
which the Company currently estimates to be sufficient to cover the settlement
negotiated with the Department of Labor as well as future costs and necessary
expenses relating to the ongoing litigation.
ITEM 5. OTHER INFORMATION
On July 29, 1996, the Company purchased substantially all of the assets of
Computer Integrated Building Corporation, a California Corporation ("CIBC"). The
purchase price was $551,676 cash. Additionally, the Company is obligated to make
a contingent cash payment equal to (1) 75% of the revenues between $550,000 and
$743,400 received by the Company in connection with the sale of CIBC's products
during the 12 month period ending July 29, 1997, plus (2) 50% of such revenues
exceeding $743,400 during the 12 month period ending July 29, 1997. As part of
the acquisition, a three year non-compete agreement was entered into between the
Company and the former owners of CIBC. CIBC, located in Sebastopol, California,
is a software developer for the home builder marketplace.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 Statement Regarding Computation of Net Earnings Per Share
27 Financial Data Schedule
(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 by the undersigned,
thereunto duly authorized.
EAGLE POINT SOFTWARE CORPORATION
--------------------------------
(Registrant)
Date: February 14, 1997 BY: /s/ Rodney L. Blum
- ------------------------ ------------------------------
Rodney L. Blum
Chairman, President and Chief
Executive Officer
Date: February 14, 1997 BY: /s/ Dennis J. George
- ------------------------ ------------------------------
Dennis J. George
Vice President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial and Accounting
Officer)
14
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ------------- ----------- --------
<S> <C> <C>
11 --- Statement re: computation of net earnings per share
27 --- Financial Data Schedule
</TABLE>
15
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
EAGLE POINT SOFTWARE CORPORATION
STATEMENT REGARDING COMPUTATION OF NET EARNINGS PER SHARE
- ---------------------------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31,
-----------------------------
1996 1995
<S> <C> <C>
SHARES USED IN DETERMINING PRIMARY EARNINGS
PER SHARE:
Weighted average common shares outstanding 4,941,730 4,920,564
Net effect of stock options based on the treasury stock
method using the average market price during the
period 0 49,619
----------- -----------
Total weighted average common and common equivalent
shares outstanding 4,941,730 4,970,183
=========== ===========
SHARES USED IN DETERMINING FULLY DILUTED
EARNINGS PER SHARE:
Weighted average common shares outstanding 4,941,730 4,920,564
Net effect of stock options based on the treasury stock
method using the average market price or market price
at the end of the period, whichever is higher 0 59,851
----------- -----------
Total weighted average common and common equivalent
shares outstanding 4,941,730 4,980,415
=========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 5,980,489
<SECURITIES> 4,973,576
<RECEIVABLES> 2,235,110
<ALLOWANCES> 349,832
<INVENTORY> 483,556
<CURRENT-ASSETS> 14,521,473
<PP&E> 10,284,886
<DEPRECIATION> 2,666,030
<TOTAL-ASSETS> 23,230,840
<CURRENT-LIABILITIES> 2,257,452
<BONDS> 626,633
<COMMON> 49,417
0
0
<OTHER-SE> 20,580,518
<TOTAL-LIABILITY-AND-EQUITY> 23,230,840
<SALES> 8,271,529
<TOTAL-REVENUES> 8,271,529
<CGS> 2,544,001
<TOTAL-COSTS> 2,544,001
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 256,389
<INTEREST-EXPENSE> 21,016
<INCOME-PRETAX> (536,647)
<INCOME-TAX> (237,653)
<INCOME-CONTINUING> (298,994)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (298,994)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
