<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(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, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-27102
ROMTECH, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2694937
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2000 Cabot Boulevard West, Suite 110
Langhorne, PA 19047-1833
(address of Principal executive offices)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: 215-750-6606
NOT APPLICABLE
(Former name, former address and former
fiscal year, if changed since last report.)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 9,371,200 shares of
common stock, no par value per share, as of May 12, 1998. Transitional Small
Business Disclosure Format (check one):
YES [ ] NO [X]
<PAGE> 2
ROMTECH, INC.
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet as of March 31, 1998 ............ 3
Consolidated Statements of Operations for the three
and nine months ended March 31, 1998 and 1997 ........... 4
Consolidated Statements of Cash Flows for the nine
months ended March 31, 1998 and 1997 .................... 5-6
Notes to Consolidated Financial Statements.................. 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 9-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K ........................... 12
Signatures ............................................................ 13
Exhibit Index ............................................................ 14
Financial Data Schedule...................................................
Page 2
<PAGE> 3
ROMTECH, INC.
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1998
----
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 513,042
Restricted cash 14,788
Accounts receivable, net of allowances of $192,216 2,825,328
Inventory 815,715
Prepaid expenses 156,602
-----------
Total current assets 4,325,475
Furniture and equipment, net 238,934
Intangibles and other assets 286,910
-----------
Total assets $ 4,851,319
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 43,084
Accounts payable 1,428,632
Accrued expenses 211,300
Capital lease obligations 24,069
-----------
Total current liabilities 1,707,085
Capital lease obligations, net of current portion 28,088
Note payable-long term portion 237,066
Convertible subordinated debt 150,000
-----------
Total liabilities 2,122,239
Stockholders' equity:
Common stock, no par value (40,000,000 shares
authorized: 9,371,200 issued and outstanding) 8,176,826
Additional paid in capital 1,148,550
Accumulated deficit (6,596,296)
-----------
Total stockholders' equity 2,729,080
-----------
Total liabilities and stockholders' equity $ 4,851,319
===========
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 3
<PAGE> 4
ROMTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 2,953,543 $ 746,235 $ 7,344,727 $ 2,875,718
Cost of sales 1,115,977 308,210 2,752,600 990,706
----------- ----------- ----------- -----------
Gross profit 1,837,566 438,025 4,592,127 1,885,012
Operating expenses:
Product development 99,553 126,162 239,833 305,441
Selling, general and administrative 1,115,183 924,915 2,924,550 3,220,687
----------- ----------- ----------- -----------
Total operating expenses 1,214,736 1,051,077 3,164,383 3,526,128
Operating income (loss) 622,830 (613,052) 1,427,744 (1,641,116)
Interest expense, net 13,608 16,304 37,617 44,784
----------- ----------- ----------- -----------
Income (loss) before taxes 609,222 (629,356) 1,390,127 (1,685,900)
Provision for income tax 1,904 1,730 3,069 1,730
----------- ----------- ----------- -----------
Net income (loss) 607,318 (631,086) 1,387,058 (1,687,630)
Accretion of beneficial
conversion feature on preferred stock - 0 - (141,429) (117,991) (228,287)
----------- ----------- ----------- -----------
Net income (loss)
attributable to common stock $ 607,318 $ (772,515) $ 1,269,067 $(1,915,917)
=========== =========== =========== ===========
Net income (loss) per common share:
- Basic $ 0.07 $ (0.12) $ 0.15 $ (0.30)
- Diluted $ 0.06 $ (0.12) $ 0.13 $ (0.30)
Weighted average common shares outstanding:
- Basic 9,283,659 6,416,863 8,498,607 6,329,040
- Diluted 9,833,939 6,416,863 9,618,552 6,329,040
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 4
<PAGE> 5
ROMTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,387,058 $(1,687,630)
Adjustment to reconcile net income
(loss) to net cash from operating
activities:
Depreciation and amortization 189,239 160,815
Loss on disposal of equipment - 0 - 3,921
Changes in items affecting operations:
Restricted cash 10,000 (14,788)
Accounts receivable (1,791,856) (254,479)
Prepaid expenses 68,915 (202,147)
Inventory (446,133) (236,112)
Accounts payable 791,190 520,446
Accrued expenses (81,755) (314,933)
----------- -----------
Net cash provided by (used in) operating
activities 126,658 (2,024,907)
Cash flows from investing activities:
Sales and maturities of short term
investments - 0 - 398,952
Purchase of furniture and equipment (139,040) (53,136)
Purchase of software rights and other
assets (143,900) (216,857)
Loan to related party 2,000 2,000
----------- -----------
Net cash provided by (used in) investing
activities (280,940) 130,959
Cash flows from financing activities:
Net proceeds from issuance of convertible
preferred stock - 0 - 1,105,812
Proceeds from exercise of options and
warrants 274,200 - 0 -
Repayment of note payable (28,984) (27,368)
Repayment of lease obligations (23,366) (27,826)
----------- -----------
Net cash provided by financing activities 221,850 1,050,618
Net increase (decrease) in cash and cash
equivalents 67,568 (843,330)
Cash and cash equivalents:
Beginning of period 445,474 954,663
----------- -----------
End of period $ 513,042 $ 111,333
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 5
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ROMTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
March 31,
-------------------
1998 1997
---- ----
<S> <C> <C>
Supplemental cash flow information:
Cash paid for interest $ 42,651 $ 65,051
========== ========
Non-cash investing and financing activities:
Capital lease additions $ - 0 - $ 81,643
========== ========
Conversion of debt for common stock $ - 0 - $200,000
========== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 6
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ROMTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements were
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. The Notes to Consolidated Financial Statements included in
the Form 10-KSB for the fiscal year ended June 30, 1997 should be read in
conjunction with the accompanying statements. These statements include all
adjustments the Company believes are necessary for a fair presentation of the
statements. The interim operating results are not necessarily indicative of the
results for a full year.
DESCRIPTION OF BUSINESS
RomTech, Inc. (the "Company") develops, publishes, markets and resells a
diversified line of personal computer ("PC") software primarily for consumer and
business applications. The Company promotes the Galaxy of Games(TM), Galaxy of
Home Office Help(TM), Game Master(TM) and Fun and Learning(TM) brand names under
the "Galaxy Software" series in order to generate customer loyalty, encourage
repeat purchases and differentiate the Galaxy Series products to retailers and
consumers. The Company targets the market of home and small business personal
computer users. The Company's sales are primarily made through a large national
distributor that sells to large national retail chain stores. The Company also
sells it products via the Internet and at computer trade shows.
The Company is a Pennsylvania Corporation which was incorporated in July
1992 and completed its initial public offering in 1995. The Company's common
stock trades on The Nasdaq SmallCap Market under the symbol ROMT.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Virtual Reality Laboratories, Inc. All
inter-company balances and transactions have been eliminated.
2. NEW ACCOUNTING PRONOUNCEMENTS
The Company has adopted Statement of Financial Accounting Standards No.
128, "Earnings Per Share", which became effective in the first nine months of
fiscal 1998. Adoption of this statement did not have a material impact on the
reported earnings per share of the Company.
The Company will be required to adopt Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income", which will become effective
for fiscal year 1999. The Company believes that the adoption of this statement
will not have a material financial impact on the Company.
The Company will be required to adopt Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information", which will become effective for fiscal year 1999. The Company
believes that the adoption of this statement will not have a material impact on
the Company's footnote disclosure.
Page 7
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ROMTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. PREFERRED STOCK
On October 18, 1997, 1,000,000 shares of the Company's Class One
Convertible Preferred Stock were converted into 303,030 shares of Common Stock
at the conversion price of $3.60 per share of Common Stock. As of March 31,
1998, all of the 1,271,340 shares of the Company's Class Two Convertible
Preferred Stock (the "Class Two Preferred") have been converted into 907,948
shares of Common Stock and all of the 1,250,000 shares of the Company's Class
Three Convertible Preferred Stock (the "Class Three Preferred") have been
converted into 1,487,508 shares of Common Stock. As of March 31, 1998, there
were no preferred stock shares outstanding.
4. TERMINATED ACQUISITION
The Company has terminated an Asset Acquisition Agreement (the
"Agreement") entered into with FileABC(TM) L.P. ("FileABC") in October 1996, and
will not consummate the acquisition of certain assets of FileABC pursuant to the
Agreement. The completion of the transaction had been subject to certain
conditions, including the condition that FileABC continue to have a distribution
relationship with Franklin Covey Company ("Franklin Covey") for the distribution
of software products. Franklin Covey terminated its distribution relationship
with FileABC, which was among the reasons for the Company's termination of the
Agreement.
The Company had advanced FileABC $175,000 in connection with the terms of
the Agreement. This amount is recorded in prepaid expenses as an advance
payment. Although management currently believes this amount is recoverable and
is actively pursuing recovery, there can be no assurance collection will
ultimately occur, in which case the advances would be written off.
5. WARRANT AND OPTION EXERCISES
On October 1, 1997, the Company adjusted the exercise price of 332,988
warrants for the Company's Common Stock to $2.00 per share, the fair market
value of the Company's Common Stock on October 1, 1997, until December 12, 1997.
Of the 332,988 warrants, 155,000 were originally issued at $3.60 per share and
177,988 were issued at $6.00 per share. During the second quarter ended December
31,1997, 117,100 such warrants were exercised and the Company received net
proceeds of $234,200. During the quarter ended March 31, 1998, 20,000 stock
options were exercised and the Company received net proceeds of $40,000.
Page 8
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ROMTECH, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The accompanying consolidated financial statements as of March 31, 1998
include the accounts of RomTech, Inc., ("RomTech"), and its wholly owned
subsidiary, Virtual Reality Laboratories, Inc. ("VRLI").
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Net sales for the three months ended March 31, 1998 were $2,954,000
compared to $746,000 for the three months ended March 31, 1997, representing an
increase of $2,208,000 or 296%. This increase resulted primarily from increases
in the sales of the Company's Galaxy Software brands of products, including
Galaxy of Games, Galaxy of Home Office Help, Game Master and, Fun and Learning
products (the "Galaxy Software"), which were partially offset by decreases in
sales of certain discontinued products.
Cost of sales for the three months ended March 31, 1998 were $1,116,000
compared to $308,000 for the three months ended March 31, 1997, representing an
increase of $808,000 or 262%. This increase resulted primarily from the increase
in product cost, freight, supplies, packaging and labor costs associated with
the increase in sales of the Galaxy Software. The Company's gross profit margin
increased to 62.2% in the three months ended March 31, 1998 from 58.7% for the
three months ended March 31, 1997. The primary cause for this increase in gross
profit margin was the cost reductions achieved through volume efficiencies with
the Company's replication and assembly vendors.
Product development expenses for the three months ended March 31, 1998
were $100,000 compared to $126,000 for the three months ended March 31, 1997, a
decrease of $26,000 or 20.6%. The primary cause for this decrease were
reductions in in-house development staff and related costs of $47,000, which
were partially offset by a $17,000 increase in outside contractor costs. The
above cost reductions reflect the change in the Company's business strategy on
developing products for the value line (under $20) segment of the consumer
software market versus business enterprise software products. Short development
cycles (typically ninety days) and time-to-market are critical success factors
in serving the value line segment of the consumer software market. Much longer
(typically twelve months or longer) development cycles characterize enterprise
software products that require more demanding technical specifications,
networking solutions and testing.
Selling, general and administrative expenses for the three months ended
March 31, 1998 were $1,115,000 compared to $925,000 for the three months ended
March 31, 1997, representing an increase of $190,000 or 20.5%. The increase was
primarily due to increases in salary and related expenses of $130,000 and in
marketing promotional costs of $197,000, which were partially offset by
decreases in outside labor and advertising costs of $61,000 and $76,000,
respectively.
Net interest expense for the three months ended March 31, 1998 was $14,000
compared to $16,000 for the three months ended March 31, 1997, a decrease of
$2,000 or 12.5% due to the reduction in principal balances of the Company's
debt.
Page 9
<PAGE> 10
ROMTECH, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 1998 AND 1997
Net sales for the nine months ended March 31, 1998 were $7,345,000
compared to $2,876,000 for the nine months ended March 31, 1997, representing an
increase of $4,469,000 or 155%. This increase resulted primarily from increases
in the sales of the Company's Galaxy Software brands of products including,
Galaxy of Games, Galaxy of Home Office Help, Game Master and, Fun and Learning
products (the "Galaxy Software"), which were partially offset by decreases in
sales of certain discontinued products.
Cost of sales for the nine months ended March 31, 1998 were $2,753,000
compared to $991,000 for the nine months ended March 31, 1997, representing an
increase of $1,762,000 or 178%. This increase resulted primarily from the
increase in product cost, freight, supplies, packaging and labor costs
associated with the increase in sales of the Galaxy Software products. The
discontinuance of direct mail sales in the period ended March 31, 1998 also
increased cost of sales because direct mail sales had yielded a higher gross
profit but incurred significantly higher marketing expenses which are included
in selling, general and administrative expenses. Also, the product mix for the
nine months ended March 31, 1998 was weighted more with the lower margin box
products than the higher margin jewel case products that dominated the product
mix for the nine months ended March 31, 1997. The Company's gross profit margin
decreased to 62.5% in the nine months ended March 31, 1998 from 65.5% for the
nine months ended March 31, 1997. This decrease was due to the discontinuance of
the direct mail marketing efforts and the shift in product mix towards the lower
margin box products being offered in retail promotions during the nine months
ended March 31, 1998.
Product development expenses for the nine months ended March 31, 1998 were
$240,000 compared to $305,000 for the nine months ended March 31, 1997, a
decrease of $65,000 or 21.3%. However, product development expenses at March 31,
1997 were reduced by a $100,000 development reimbursement fee and would have
otherwise been $405,000, which would have resulted in a comparative decrease at
March 31, 1998 of $165,000. The decrease was primarily due to reductions in
in-house development staff and related costs of $110,000 and outside contractor
costs of $43,000. The above cost reductions reflect the change in the Company's
business strategy on developing products for the value line (under $20) segment
of the consumer software market versus business enterprise software products.
Short development cycles (typically ninety days) and time-to-market are critical
success factors in serving the value line segment of the consumer software
market. Much longer (typically twelve months or longer) development cycles
characterize enterprise software products that require more demanding technical
specifications, networking solutions and testing.
Selling, general and administrative expenses for the nine months ended
March 31, 1998 were $2,925,000 compared to $3,221,000 for the nine months ended
March 31, 1997, representing a decrease of $296,000 or 9.2%. The decrease was
primarily due to decreases in direct mail marketing, advertising, and occupancy
costs of $588,000, $267,000 and $22,000, respectively. These decreases
were partially reduced by increases in marketing promotion costs, bad debt
expense and legal costs of $414,000, $80,000 and $106,000, respectively.
Net interest expense for the nine months ended March 31, 1998 was $38,000
compared to $45,000 for the nine months ended March 31, 1997, a decrease of
$7,000 or 15.6% due to the reduction in principal balances of the Company's
debt.
Page 10
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ROMTECH, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The financial information presented reflects the Company's financial position at
March 31, 1998.
The quarter ended March 31, 1998 was the Company's third consecutive
profitable quarter since its initial public offering in October 1995. As of
March 31, 1998, the Company's cash and working capital balances were $513,042
and $2,618,390, respectively.
On October 1, 1997, the Company adjusted the exercise price of 332,988
warrants for the Company's Common Stock to $2.00 per share, the fair market
value of the Company's Common Stock on October 1, 1997, until December 12, 1997.
Of the 332,988 warrants, 155,000 were originally issued at $3.60 per share and
177,988 were issued at $6.00 per share. During the first nine months of fiscal
1998, 117,100 such warrants were exercised and the Company received $234,200 in
net proceeds. The Company also received $40,000 in net proceeds from the
exercise of 20,000 stock options during the quarter ended March 31, 1998. The
proceeds from the exercise of these warrants and stock options, along with the
net income of $1,387,058 earned during the first nine months of fiscal 1998, has
increased the Company's net tangible assets to $2,729,080, permitting the
Company to continue to comply with the Nasdaq SmallCap Market's net tangible
assets requirement of $2,000,000.
On October 18, 1997, 1,000,000 shares of the Company's Class One
Convertible Preferred Stock were converted into 303,030 shares of Common Stock
at the conversion price of $3.60 per share of Common Stock. As of March 31,
1998, all of the 1,271,340 shares of the Company's Class Two Convertible
Preferred Stock (the "Class Two Preferred") have been converted into 907,948
shares of Common Stock and all of the 1,250,000 shares of the Company's Class
Three Convertible Preferred Stock (the "Class Three Preferred") have been
converted into 1,487,508 shares of Common Stock. As of March 31, 1998, there
were no preferred stock shares outstanding.
The Company's ability to sustain continued revenue growth, profitability
and a positive cash flow depends upon a variety of factors, including: the
timeliness and success of developing and selling its products; the costs of
developing, producing and marketing such products; consumers' continuing demand
for value priced software; competition; and various other factors, many of which
may be beyond the Company's control. In the future, the Company's capital
requirements will be affected by each of these factors. The Company believes
that its cash and working capital balances will be sufficient to fund the
Company's operations for the foreseeable future.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-QSB contains forward-looking statements
regarding the Company's ability to fund its operations for the foreseeable
future, and the impact of certain accounting standards on the Company's
financial position, all of which involve certain risks and uncertainties. Actual
events and the actual future results of the Company may differ materially from
the results discussed in the forward-looking statements due to various factors,
including, but not limited to, the allocation of adequate shelf space for the
company's products in major chain retail stores; successful sell-through results
for the Company's products at retail stores; the inability to obtain and/or
develop content for its products in a cost effective manner; the continued
expansion of the computer in homes in North America; the ability to deliver
products in response to orders within a commercially acceptable time frame;
downward pricing pressure; the timeliness and success of developing and selling
products; the acceptance by the market of the company's Galaxy Online games
series; the costs of developing, producing and marketing such products; access
to distribution channels; consumers' continuing demand for value-priced
software; the renewal of licenses for key software products; competition; and
various other factors, many of which are beyond the Company's control.
Page 11
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ROMTECH, INC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
------------ ----------------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On January 15, 1998, the Company filed a report on Form 8-K regarding a
press release announcing the appointment of Robert M. Aiken, Jr. to the board
of directors, who replaced John P. Kirwin, III who resigned as of December
31, 1997.
On January 16, 1998 the Company filed a report on Form 8-K regarding a
press release stating the Company's sales and earnings for the quarter ended
December 31, 1997.
On April 29, 1998 the Company filed a report on From 8-K regarding a press
release stating the Company's sales and earnings for the quarter ended March 31,
1998.
Page 12
<PAGE> 13
ROMTECH, INC.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ROMTECH, INC.
(Registrant)
Date: May 13, 1998 /s/ Joseph A. Falsetti
------------ ------------------------------
Joseph A. Falsetti
Chief Executive Officer
Principal Financial
Officer
Date: May 13, 1998 /s/ Gerald W. Klein
------------ ------------------------------
Gerald W. Klein
Vice President and
Chief Financial Officer
Page 13
<PAGE> 14
ROMTECH, INC.
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page Number
----------- ---------------------- -----------
27 Financial Data Schedule
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 513,042
<SECURITIES> 0
<RECEIVABLES> 2,825,328
<ALLOWANCES> 192,216
<INVENTORY> 815,715
<CURRENT-ASSETS> 4,325,475
<PP&E> 238,934
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,851,319
<CURRENT-LIABILITIES> 1,707,085
<BONDS> 0
0
0
<COMMON> 8,176,826
<OTHER-SE> 1,148,550
<TOTAL-LIABILITY-AND-EQUITY> 4,851,319
<SALES> 7,344,727
<TOTAL-REVENUES> 7,344,727
<CGS> 2,752,600
<TOTAL-COSTS> 2,752,600
<OTHER-EXPENSES> 3,164,383
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,617
<INCOME-PRETAX> 1,390,127
<INCOME-TAX> 3,069
<INCOME-CONTINUING> 1,387,058
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,387,058
<EPS-PRIMARY> .15
<EPS-DILUTED> .13
</TABLE>
