<PAGE>
UNITED STATES
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 March 31, 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 0-26206
----------------------------------------------------------
NORLAND MEDICAL SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1387931
------------------------------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
106 Corporate Park Drive, Suite 106
White Plains, New York 10604
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(914) 694-2285
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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
----- ------
As of April 30, 1997, 7,148,531 shares of the registrant's Common Stock,
$0.0005 par value, were outstanding.
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NORLAND MEDICAL SYSTEMS, INC.
TABLE OF CONTENTS FOR FORM 10-Q
PAGE
Title Page.....................................................................1
Document Table of Contents.....................................................2
PART I FINANCIAL INFORMATION................................................3
Item 1. Condensed Consolidated Financial Statements..........................3
Condensed Consolidated Balance Sheets................................3
Condensed Consolidated Statements of Income..........................4
Condensed Consolidated Statements of Changes in
Stockholders' Equity...............................................5
Condensed Consolidated Statement of Cash Flows.......................6
Notes to Condensed Consolidated Financial Statements.................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................10
PART II OTHER INFORMATION...................................................13
Item 1. Legal Proceedings...................................................13
Item 2. Changes in Securities...............................................13
Item 3. Defaults Upon Senior Securities.....................................13
Item 4. Submission of Matters to a Vote of Security Holders.................13
Item 5. Other Information...................................................13
Item 6. Exhibits and Reports on Form 8-K....................................13
Signatures....................................................................14
Exhibit Index.................................................................15
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<PAGE>
PART I FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Balance Sheets
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,561,392 $ 8,133,468
Investment 1,977,599 1,949,039
Accounts receivable - trade, less
allowance for doubtful accounts
of $221,000 at March 31, 1997
and December 31, 1996 9,921,516 9,182,488
Income taxes recoverable 559,873 794,285
Inventories, net 2,546,935 1,851,713
Officers' loans receivable 590,285 581,704
Current portion of product
development loan receivable
- affiliate 31,436 38,685
Prepaid expenses and other
current assets 551,352 361,902
-------------- --------------
Total current assets 22,740,388 22,893,284
-------------- --------------
Investment in Vitel, Inc 260,000 260,000
Property and equipment, net 446,372 406,375
Product development loan receivable
- affiliate 475,000 251,100
Goodwill, net 3,142,607 3,183,961
Other intangible assets, net 3,201,791 3,248,658
-------------- --------------
Total assets $ 30,266,158 $ 30,243,378
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Norland $ 1,547,318 $ 2,220,816
Accounts payable - Stratec 323,311 714,127
Accounts payable - trade 652,046 81,416
Accrued expenses 708,879 658,304
Customer deposits 40,500 47,850
-------------- --------------
Total current liabilities 3,272,054 3,722,513
-------------- --------------
Stockholders' equity:
Common stock, par value of $0.0005
per share, 10,000,000 shares
authorized, 7,148,531 shares issued
at March 31, 1997 3,574 3,452
Additional paid-in capital 22,158,189 22,158,170
Retained earnings 4,832,341 4,359,243
-------------- --------------
Total stockholders' equity 26,994,104 26,520,865
-------------- --------------
Total liabilities and
stockholders' equity $ 30,266,158 $ 30,243,378
-------------- --------------
-------------- --------------
See accompanying notes to condensed consolidated financial statements.
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NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Statements of Income
(Unaudited)
THREE MONTHS ENDED
----------------------------------------
MARCH 31, 1997 MARCH 31, 1996
-------------- ---------------
Revenue $ 5,946,285 $ 5,218,290
Cost of revenue 3,384,872 3,415,911
------------ ------------
Gross profit 2,561,413 1,802,379
Sales and marketing expense 1,186,742 575,348
General and administrative expense 714,467 305,716
------------ ------------
Operating income 660,204 921,315
Other income 136,894 242,941
------------ ------------
Income before income taxes 797,098 1,164,256
Provision for income taxes 324,000 473,000
------------ ------------
Net income $ 473,098 $ 691,256
------------ ------------
------------ ------------
Net income per common share $ 0.07 $ 0.10
------------ ------------
------------ ------------
Weighted average number of common
and common equivalent shares 7,166,878 7,057,010
------------ ------------
------------ ------------
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Statement of Changes in Stockholders' Equity
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Paid-In Retained
Total Shares Stock Capital Earnings
----------- ------------ ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Balance as of
December 31, 1996 $ 26,520,865 6,904,781 $ 3,452 $ 22,158,170 $ 4,359,243
Issuance of shares for
stock options exercised 141 243,750 122 19 --
Net income 473,098 -- -- -- 473,098
------------ --------- -------- ------------ ------------
Balance as of
March 31, 1997 $ 26,994,104 7,148,531 $ 3,574 $ 22,158,189 $ 4,832,341
------------ --------- -------- ------------ ------------
------------ --------- -------- ------------ ------------
Balance as of
December 31, 1995 $ 20,520,846 6,000,000 $ 3,000 $ 18,349,813 $ 2,168,033
Issuance of shares for
stock options exercised 270 698,250 349 (79) --
Cost and expenses
directly related to the
stock offering (3,002) -- -- (3,002) --
Net income 691,256 -- -- -- 691,256
------------ --------- -------- ------------ ------------
Balance as of
March 31, 1996 $ 21,209,370 6,698,250 $ 3,349 $ 18,346,732 $ 2,859,289
------------ --------- -------- ------------ ------------
------------ --------- -------- ------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 473,098 $ 691,256
Adjustments to reconcile net income to net cash
used in operating activities:
Inventory obsolescence expense -- 15,000
Amortization expense 96,544 12,933
Depreciation expense 28,182 --
Changes in:
Accounts receivable (739,028) (1,099,552)
Inventories (732,105) (108,581)
Prepaid expenses and other current assets (189,450) (88,426)
Accounts payable (493,684) (86,754)
Accrued expenses 50,575 13,153
Income taxes 234,412 (819,200)
Customer deposits (7,350) 5,408
-------------- --------------
Total adjustments (1,751,904) (2,156,019)
-------------- --------------
Net cash used in
operating activities (1,278,806) (1,464,763)
-------------- --------------
Cash flows from investing activities:
Purchases of property and equipment (68,179) (84,013)
Loans to officers (8,581) --
Product development loan to affiliate (229,761) (27,387)
Repayment of product development loan
to affiliate 13,110 --
-------------- --------------
Net cash used in investing activities (293,411) (111,400)
-------------- --------------
Cash flows from financing activities:
Proceeds from stock options exercised 141 270
Cost and expenses of issuance of common stock -- (3,002)
-------------- --------------
Net cash used in (provided by)
financing activities 141 (2,732)
-------------- --------------
Net decrease in cash (1,572,076) (1,578,895)
Cash at beginning of period 8,133,468 19,218,865
-------------- --------------
Cash at end of period $ 6,561,392 $ 17,639,970
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements of Norland Medical Systems, Inc.
(the "Company") presented herein, have been prepared pursuant to the rules of
the Securities and Exchange Commission for quarterly reports on Form 10-Q and do
not include all of the information and footnote disclosures required by
generally accepted accounting principles. These statements should be read in
conjunction with the financial statements and notes thereto for the year ended
December 31, 1996, which were audited by Coopers & Lybrand L.L.P., and included
in the Company's Form 10-K as filed with the Securities and Exchange Commission
on March 31, 1997. The figures in these statements have been restated to
reflect the 3 for 2 stock split which was effective June 14, 1996.
The condensed consolidated balance sheet as of March 31, 1997 and the condensed
consolidated statements of income, changes in stockholders' equity and cash
flows for the three months then ended are unaudited but, in the opinion of
management, include all adjustments (consisting of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending December 31, 1997.
(2) INVENTORIES
As of March 31, 1997, inventories consist of the following:
Raw materials, product kits
spare parts and sub-assemblies $ 492,253
Work in progress 47,456
Demonstration systems, net of
accumulated amortization of $102,368 1,056,536
Rental systems, net of accumulated
amortization of $11,907 218,667
Finished goods 773,918
Obsolescence reserve (41,895)
-------------
$ 2,546,935
-------------
-------------
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<PAGE>
Notes to Condensed Consolidated Financial Statements, continued:
(2) INVENTORIES, continued:
Inventories are stated at the lower of cost or market; cost is determined
principally by the first-in, first-out method.
The Company maintains an inventory of demonstration systems used for marketing
and customer service purposes. Such systems are carried in inventory at the
lower of cost or net realizable value until the time of sale. From time to
time, the Company may judge it desirable for marketing purposes to provide a
device to a prominent scientist or research institution specializing in the
study of bone disease. In such cases, the Company will carry the device in
demonstration system inventory at cost less amortization expense calculated on a
straight-line basis over thirty-six months.
Systems used in the Company's short-term rental program are carried in inventory
at cost less amortization expense calculated on a straight-line basis over
thirty-six months.
(3) ACQUISITION OF DOVE MEDICAL SYSTEMS
On April 2, 1996, the Company acquired all of the outstanding shares of Dove
Medical Systems (Dove) and a certain patent and other intangible assets owned by
the Dove majority shareholder and certain other investors. The Company paid
consideration of $6,911,529, consisting of $3,600,000 in cash and 161,538 shares
of the Company Common Stock valued at $3,311,529. The acquisition has been
accounted for using the purchase method of accounting, and, accordingly, the
purchase price has been allocated to the assets purchased and the liabilities
assumed based on the fair values at the date of acquisition. The excess
purchase price over the fair values of the net assets was $3,308,011 and has
been recorded as goodwill. The goodwill and other intangible assets are being
amortized using the straight-line method over twenty years. The patent is being
amortized using the straight-line method over the remaining patent period which
is ten years as of the date of its acquisition.
(4) ACQUISITION OF NORLAND CORPORATION
On February 26, 1997, the Company signed an agreement to acquire all of the
issued and outstanding stock of Norland Corporation for $17.5 million with a
possible additional purchase price of up to $2.5 million based on the level of
the Company's 1997 revenues. For each full $1,000,000 of 1997 revenues above
$32,000,000, the purchase price will be increased by $312,500 (up to the maximum
increase of $2.5 million). The $17.5 million will be payable at closing as
follows: $1,250,000 in cash and a $16,250,000 Purchase Note which will bear
interest at the rate of 7% per annum. A $1,250,000 portion of the principal
will be payable six months after closing, and the remaining principal will be
due and payable on the fifth anniversary of the closing. The Company may prepay
the Purchase Note at any time. The amount of any additional purchase price will
be determined following the completion of the audit of the Company's financial
statements for the year ending December 31, 1997. This amount will be paid by
an Additional
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<PAGE>
Note which will bear interest at 7% per annum and which will be due five years
after the closing. The transaction is subject to approval by the Company's
stockholders at its 1997 Annual Meeting.
(5) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Primary income per share is calculated by dividing net income by the average
shares of common stock and common stock equivalents outstanding during the
period. Common stock equivalents are stock options which have been included
using the treasury stock method only when their effect is dilutive.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128), which
is effective for the Company's year ending December 31, 1997. The Company does
not expect a material impact on its net income per share resulting from the
implementation of this Statement.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
----------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE
RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES, SOME OF WHICH ARE DESCRIBED IN THE INTRODUCTION TO THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996. SUCH
INTRODUCTION IS INCORPORATED HEREIN BY REFERENCE. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS.
RESULTS OF OPERATIONS
Revenue for the three months ended March 31, 1997 increased $727,995 (14.0%) to
$5,946,285 from $5,218,290 for the comparable period of 1996. The increases
were largely a result of increases in sales in the United States, Europe and
Latin America, offset by a decrease in sales to the Pacific Rim and to Japan in
particular. In addition, sales by Dove (which was acquired by the Company on
April 2, 1996) contributed to the increase. Sales in Japan declined due in part
to increased competition, reductions in reimbursement for certain densitometry
tests in Japan and the effects of operational difficulties experienced with
pDEXA units during part of 1996. The Company believes that these operational
difficulties have been addressed. Sales in the United States and Japan
represented 79.2% and 1.5%, respectively, of total revenue for the three months
ended March 31, 1997 and 28.5% and 50.9% respectively, of total revenue for the
three months ended March 31, 1996. Sales of complete bone densitometry systems
represented 92.1% and 92.9% of total revenue for the three months ended March
31, 1997 and 1996, respectively. Sales of parts and services and rental income
comprised the balance of revenues for such periods. Revenues for the first
quarter of 1997 were affected by the reduction in the Medicare reimbursement
rate for peripheral bone densitometry tests announced in November 1996 and by
the reduction in the U.S. price of pDEXA systems implemented by the Company in
December 1996 in response thereto.
Cost of revenue as a percentage of revenue was 56.9% and 65.5% for the three
months ended March 31, 1997 and 1996 respectively, resulting in a gross margin
of 43.1% for the three months ended March 31, 1997 compared to 34.5% for the
comparable period of 1996. The increase in gross margin is primarily attributed
to the impact of price reductions under the Distribution Agreement with Norland
Corporation and Stratec Medizintechnik GmbH which became effective during the
fourth quarter of 1996. Sales of OsteoAnalyzer systems manufactured by Dove,
for which the Company receives the entire margin between the manufacturer's cost
and the Company's sale price, also contributed to the increase in the Company's
gross margin. A portion of such margins on the Company's other products is
retained by Norland Corporation and Stratec Medizintechnik GmbH.
Sales and marketing expense increased $611,394 (106.3%) to $1,186,742 for the
three months ended March 31, 1997 from $575,348 for the three months ended March
31, 1996, and increased as a percentage of revenue to 20.0% from 11.0%. The
increases were primarily due to increased expenses of new sales and marketing
personnel, the cost of expanded marketing efforts, increased
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expenses related to customer service and inclusion of the sales expenses of
Dove.
General and administrative expense increased $408,751 (133.7%) to $714,467 for
the three months ended March 31, 1997 from $305,716 for the three months ended
March 31, 1996 and increased as a percentage of revenue to 12.0% from 5.9%.
These increases were primarily due to expenses of new personnel and increased
expenses of existing personnel, and other expenses attributed to increased
levels of business, and to the inclusion of Dove's operations, including $88,221
of amortization expense related to the acquisition.
Other income in the three month periods ended March 31, 1997 and 1996 consisted
primarily of interest earned on the proceeds of the Company's initial public
offering and on other cash balances, reduced by other expenses consisting
primarily of bank charges and other fees related to bank transfers. The
decrease in other income in the three month period ended March 31, 1997 as
compared to March 31, 1996 reflects reduced interest income resulting from
utilization of such offering proceeds.
The provision for taxes for the three months ended March 31, 1997 decreased by
$149,000 (31.5%) to $324,000 from $473,000 for the three months ended March 31,
1996. The Company has provided for income taxes at its current effective tax
rate of 40.6% for the three months ended March 31, 1997 and 1996. The decrease
in the provision for taxes was entirely due to the relative change in income
before taxes.
The Company had net income of $473,098 for the three months ended March 31, 1997
compared to net income of $691,256 for the three months ended March 31, 1996, a
decrease of $218,158 (31.6%). The decrease was due primarily to the factors
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased $1,572,076 to $6,561,392 in the three months ended March 31,
1997. The decrease in cash was primarily the result of increased accounts
receivable, increased pDEXA and OsteoAnalyzer inventories, and decreased
accounts payable and to a lesser extent cash loaned to Norland Corporation under
the product development loan. At March 31, 1997, the Company had a $1.9 million
investment in a U. S. Treasury bill which matures June 19, 1997.
The Company's accounts receivable increased 8.0% to $9,921,516 at March 31, 1997
from $9,182,488 at December 31, 1996 which reflects higher sales volume. At
March 31, 1997, the two largest balances, 19.8% and 12.0% of total outstanding
trade receivables, were owed by a U. S. distributor and by Nissho Iwai, the
Company's distributor in Japan, respectively.
Property and equipment as of March 31, 1997 consisted of computer and telephone
equipment, a management information system, office furniture and improvements to
leased facilities. At the present time, no significant expenditures for
additional equipment or systems are planned for 1997.
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<PAGE>
Should the proposed acquisition of Norland Corporation be approved by the
Company's stockholders, the Company's cash requirements with respect to the
transaction will consist of a $1,250,000 cash payment at close, a second
$1,250,000 cash payment six months thereafter, plus interest payments on the
Purchase Note and the Additional Note which will range from approximately
$250,000 to $300,000 per quarter, depending upon the final amount of the
purchase price. Following the acquisition, the Company will receive the entire
margin on systems manufactured by Norland Corporation and will become
responsible for financing manufacturing and research and development on the
Norland Corporation product line. Any sales growth of the OsteoAnalyzer product
line will also be financed by the Company.
The Company believes that its current cash position, together with cash flow
from operations, will be adequate to fund the Company's operations, including
the proposed acquisition of Norland Corporation, for at least the next twelve
months. However, the nature of the Company's business is such that it is
subject to changes in technology, government approval and regulation, and
changes in third-party reimbursement in the United States and numerous foreign
markets. Significant changes in one or more of these factors in a major market
for the Company's products could significantly affect the Company's ability to
meet its cash needs through internal sources.
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<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
-----------------
None
Item 2. CHANGES IN SECURITIES
---------------------
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None
Item 5. OTHER INFORMATION
-----------------
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits furnished:
(11) Statements Regarding Computation of Earnings for Share
(27) Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K on March 7, 1997 reporting the
execution of the agreement to acquire the stock of Norland
Corporation.
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<PAGE>
NORLAND MEDICAL SYSTEMS, INC.
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.
NORLAND MEDICAL SYSTEMS, INC.
(Registrant)
Date: May 13, 1997 /s/ Reynald G. Bonmati
-------------------------------------
Reynald G. Bonmati
President
Date: May 13, 1997 /s/ Kurt W. Streams
-------------------------------------
Kurt W. Streams
Vice President, Finance
(Principal Financial and Accounting Officer)
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NORLAND MEDICAL SYSTEMS, INC.
EXHIBIT INDEX
- -------------
Number Description
- ------ -----------
11 Statement Regarding Computation of Earnings Per Share
27 Financial Data Schedule
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<PAGE>
Exhibit 11
NORLAND MEDICAL SYSTEMS, INC.
Statement Regarding Computation of Earnings Per Share
(Unaudited)
<TABLE>
<CAPTION>
PRIMARY BASIS
Three Months Ended
----------------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Net income $ 473,098 $ 691,256
Weighted average shares
outstanding 7,115,831 6,345,288
Stock options 51,047 711,722
Weighted average number of
common and common equivalent
shares outstanding 7,166,878 7,057,010
Earnings per share $ 0.07 $ 0.10
FULLY DILUTED BASIS
Three Months Ended
----------------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
Net income $ 473,098 $ 691,256
Weighted average shares
outstanding 7,115,831 6,345,288
Stock options 51,047 726,072
Weighted average number of
common and common equivalent
shares outstanding 7,166,878 7,071,360
Earnings per share $ 0.07 $ 0.10
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Financial Statements and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,561,392
<SECURITIES> 1,977,599
<RECEIVABLES> 11,292,674
<ALLOWANCES> 221,000
<INVENTORY> 2,546,935
<CURRENT-ASSETS> 22,740,388
<PP&E> 549,600
<DEPRECIATION> 103,228
<TOTAL-ASSETS> 30,266,158
<CURRENT-LIABILITIES> 3,272,054
<BONDS> 0
0
0
<COMMON> 3,574
<OTHER-SE> 26,990,530
<TOTAL-LIABILITY-AND-EQUITY> 30,266,158
<SALES> 5,712,965
<TOTAL-REVENUES> 5,946,285
<CGS> 3,384,872
<TOTAL-COSTS> 3,384,872
<OTHER-EXPENSES> 1,901,209
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 797,098
<INCOME-TAX> 324,000
<INCOME-CONTINUING> 473,098
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 473,098
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
