<PAGE>
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 December 31, 1997
/ / 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: 9,165,487 shares
of common stock, no par value per share, as of February 3, 1998.
Transitional Small Business Disclosure Format (check one):
Yes ( ) No (X)
<PAGE>
RomTech, Inc.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet as of December 31, 1997............................ 3
Consolidated Statements of Operations for the three and six months ended
December 31, 1997 and 1996.................................................... 4
Consolidated Statements of Cash Flows for the six months ended
December 31, 1997 and 1996 ................................................... 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 ............................................................................. 15
</TABLE>
Page 2
<PAGE>
RomTech, Inc.
Item 1. Financial Statements
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
December 31,
1997
----
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 407,881
Restricted cash 14,788
Accounts receivable, net of allowances of $76,187 2,509,428
Inventory 762,132
Prepaid expenses 151,884
----------
Total current assets 3,846,113
Furniture and equipment, net 232,870
Intangibles and other assets 323,697
----------
Total assets $4,402,680
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 41,895
Accounts payable 1,432,199
Accrued expenses 388,871
Capital lease obligations 25,131
----------
Total current liabilities 1,888,096
Capital lease obligations net of current portion 34,533
Note payable-long term portion 248,290
Convertible subordinated debt 150,000
----------
Total liabilities 2,320,919
Stockholders' equity:
Preferred stock, no par value, 10,000,000 shares authorized:
Class Two Convertible Preferred Stock, 260,000 shares issued
and outstanding 192,512
Accretion of beneficial conversion feature on Preferred Stock 67,488
Common stock, no par value (40,000,000 shares authorized: 9,165,487
issued and outstanding) 7,876,826
Additional paid in capital 1,148,550
Accumulated deficit (7,203,615)
----------
Total stockholders' equity 2,081,761
----------
Total liabilities and stockholders' equity $4,402,680
==========
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 3
<PAGE>
RomTech, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
---------------------------- -------------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ----- ---- ----
Net sales $2,855,626 $1,058,466 $4,391,184 $2,129,483
Cost of sales 1,022,828 365,039 1,636,624 682,496
---------- ---------- ---------- ----------
Gross profit 1,832,798 693,427 2,754,560 1,446,987
Operating expenses:
Product development 52,967 57,287 139,538 179,279
Selling, general and administrative 1,153,823 1,270,139 1,810,108 2,295,772
---------- ---------- ---------- ----------
Total operating expenses 1,206,790 1,327,426 1,949,646 2,475,051
Operating income (loss) 626,008 (633,999) 804,914 (1,028,064)
Interest expense, net 12,584 14,967 24,010 28,480
---------- ---------- ---------- ----------
Income (loss) before taxes 613,424 (648,966) 780,904 (1,056,544)
Provision for income tax - 0 - - 0 - 1,165 - 0 -
---------- ---------- ---------- ----------
Net income (loss) 613,424 (648,966) 779,739 (1,056,544)
Accretion of beneficial conversion
feature on preferred stock 12,550 86,858 117,991 86,858
---------- ---------- ---------- ----------
Net income (loss) attributable
to common stock $ 600,874 $(735,824) $ 661,748 $(1,143,402)
=========== ========= =========== ===========
Net income (loss) per common share:
- Basic $ 0.07 $ (0.12) $ 0.08 $ (0.18)
- Diluted $ 0.06 $ (0.12) $ 0.07 $ (0.18)
Weighted average common shares outstanding:
- Basic 8,965,224 6,285,128 8,106,082 6,285,128
- Diluted 9,623,407 6,285,128 9,507,834 6,285,128
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 4
<PAGE>
RomTech, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
December 31,
----------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 779,739 $ (1,056,544)
Adjustment to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization 93,500 114,845
Loss on disposal of equipment -- 3,921
Changes in items affecting operations:
Restricted cash 10,000 (14,788)
Accounts receivable (1,475,956) (377,355)
Prepaid expenses 73,633 (173,777)
Inventory (392,550) (132,086)
Accounts payable 794,757 397,476
Accrued expenses 95,816 (221,332)
----------- -----------
Net cash used in operating activities (21,061) (1,459,640)
Cash flows from investing activities:
Sales and maturities of short term investments -- 398,952
Purchase of furniture and equipment (86,864) (47,238)
Purchase of software rights and other assets (130,560) (89,606)
Loan to related party 1,500 1,250
----------- -----------
Net cash provided by (used in) investing activities (215,924) 263,358
Cash flows from financing activities:
Net proceeds from issuance of convertible
preferred stock -- 1,100,340
Proceeds from exercise of warrants 234,200 --
Repayment of note payable (18,949) (18,036)
Repayment of lease obligations (15,859) (19,725)
----------- -----------
Net cash provided by financing activities 199,392 1,062,579
Net decrease in cash and cash equivalents (37,593) (133,703)
Cash and cash equivalents:
Beginning of period 445,474 954,663
----------- -----------
End of period $ 407,881 $ 820,960
============ ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 5
<PAGE>
RomTech, Inc.
Consolidated Statements of Cash Flows (continued)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
December 31,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
Supplemental cash flow information:
Cash paid for interest $ 27,898 $ 43,101
========= ========
Non-cash investing and financing activities:
Capital lease additions $ - 0 - $ 73,388
======== ========
Conversion of debt for common stock $ - 0 - $ 20,000
======== ========
See accompanying notes to the consolidated financial statements.
</TABLE>
Page 6
<PAGE>
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) and Galaxy Deluxe(TM) brand names
(the "Galaxy 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 intercompany 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 quarter ended
December 31, 1997. 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
<PAGE>
RomTech, Inc.
Notes to Consolidated Financial Statements (Continued)
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 December 31,
1997, 1,011,340 shares of the Company's Class Two Convertible Preferred Stock
(the "Class Two Preferred") have been converted into 722,235 shares of Common
Stock and all of the 1,250,000 shares of the Company's Class Three Convertible
Preferred Stock have been converted into 1,487,508 shares of Common Stock. The
remaining 260,000 shares of the Class Two Preferred are convertible into
185,714 shares of Common Stock at the conversion price of $1.40 upon notice of
conversion to the Company by the remaining holders of Class Two Preferred.
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 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.
Page 8
<PAGE>
RomTech, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The accompanying consolidated financial statements as of December 31,
1997 include the accounts of RomTech, Inc., ("RomTech"), and its wholly owned
subsidiary, Virtual Reality Laboratories, Inc. ("VRLI").
Results of Operations
Three Months Ended December 31, 1997 and 1996
Net sales for the three months ended December 31, 1997 were
$2,856,000 compared to $1,058,000 for the three months ended December 31,
1996, representing an increase of $1,798,000 or 170%. This increase resulted
primarily from increases in the sales of the Company's Galaxy of Games, Galaxy
of Home Office Help and Galaxy Deluxe brand products (the "Galaxy Series"
products) which were partially offset by decreases in sales of certain
discontinued products.
Cost of sales for the three months ended December 31, 1997 were
$1,023,000 compared to $365,000 for the three months ended December 31, 1996,
representing an increase of $658,000 or 180%. This increase resulted primarily
from the increase in sales of the Galaxy Series Products. The discontinuance
of direct mail sales in the quarter ended December 31, 1997 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. The Company's gross profit
margin decreased to 64.2% in the three months ended December 31, 1997 from
65.5% for the three months ended December 31, 1996. The primary cause of this
decrease was the discontinuance of the direct mail marketing efforts and
certain express delivery charges incurred due to greater than expected demand
for the Galaxy Series Products during the second fiscal quarter.
Product development expenses for the three months ended December 31,
1997 were $53,000 compared to $57,000 for the three months ended December 31,
1996, a decrease of $4,000 or 7.0%. However, product development expenses at
December 31, 1996 were reduced by a $100,000 development reimbursement fee and
would have otherwise been $157,000, which would have resulted in a comparative
decrease at December 31, 1997 of $104,000. The $104,000 decrease was due to
reductions in headcount and related costs of $89,000 and decreases in outside
contractor costs of $13,000 and supplies expense of $2,000. The above cost
reductions reflect the change in the Company's strategic focus on developing
products for the value line segment (under $20) 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 a year or more) 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 December 31, 1997 were $1,154,000 compared to $1,270,000 for the three
months ended December 31, 1996, representing a decrease of $116,000 or 9.1%.
The decrease was primarily due to decreases in direct mail marketing costs of
$381,000 and in advertising costs of $58,000, which decreases were reduced by
increases in marketing promotional costs of $203,000, bad debt expense of
$69,000 and in legal costs of $62,000.
Net interest expense for the three months ended December 31, 1997 was
$13,000 compared to $15,000 for the three months ended December 31, 1996, a
decrease of $2,000 or 13.3% due to the reduction in principal balances of the
Company's debt.
Page 9
<PAGE>
RomTech, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations
Six Months Ended December 31, 1997 and 1996
Net sales for the six months ended December 31, 1997 were $4,391,000
compared to $2,130,000 for the six months ended December 31, 1996,
representing an increase of $2,261,000 or 106%. This increase resulted
primarily from increases in the sales of the Company's Galaxy of Games, Galaxy
of Home Office Help and Galaxy Deluxe brand products (the "Galaxy Series"
products) which were partially offset by decreases in sales of certain
discontinued products.
Cost of sales for the six months ended December 31, 1997 were
$1,637,000 compared to $683,000 for the six months ended December 31, 1996,
representing an increase of $954,000 or 139%. This increase resulted primarily
from the increase in sales of the Galaxy Series products. The discontinuance
of direct mail sales in the quarter ended December 31, 1997 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. The Company's gross profit
margin decreased to 62.7% in the six months ended December 31, 1997 from 68.0%
for the six months ended December 31, 1996. The decrease was primarily due to
the discontinuance of the direct mail marketing efforts.
Product development expenses for the six months ended December 31,
1997 were $140,000 compared to $179,000 for the six months ended December 31,
1996, a decrease of $39,000 or 21.8%. However, product development expenses at
December 31, 1996 were reduced by a $100,000 development reimbursement fee and
would have otherwise been $279,000, which would have resulted in a comparative
decrease at December 31, 1997 of $139,000. The decrease was primarily due to
reductions in headcount and related costs of $71,000 and outside contractor
costs of $60,000. The above cost reductions reflect the change in the
Company's strategic focus on developing products for the value line segment
(under $20) 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 a year or more)
development cycles characterize enterprise software products that require more
demanding technical specifications, networking solutions and testing.
Selling, general and administrative expenses for the six months ended
December 31, 1997 were $1,810,000 compared to $2,296,000 for the six months
ended December 31, 1996, representing a decrease of $486,000 or 21.2%. The
decrease was primarily due to decreases in direct mail marketing costs of
$557,000 and in advertising costs of $191,000, which decreases were partially
reduced by increases in marketing promotion costs of $209,000 and in legal
costs of $82,000.
Net interest expense for the six months ended December 31, 1997 was
$24,000 compared to $28,000 for the six months ended December 31, 1996, a
decrease of $4,000 or 14.3% due to the reduction in principal balances of the
Company's debt.
Page 10
<PAGE>
RomTech, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources
The financial information presented reflects the Company's financial position
at December 31, 1997.
The quarter ended December 31, 1997 was the Company's second
consecutive profitable quarter since its initial public offering in October
1995. As of December 31, 1997, the Company's cash and working capital balances
were $407,881 and $1,958,017, 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 quarter, 117,100
such warrants were exercised and the Company received $234,200 in net
proceeds. The proceeds from the exercise of these warrants and the net income
of $661,748 earned during the first half of fiscal 1998, enabled the Company
to comply with the Nasdaq SmallCap Market's new minimum net tangible assets
requirement of $2,000,000 as of December 31, 1997.
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 December 31,
1997, 1,011,340 shares of the Company's Class Two Convertible Preferred Stock
(the "Class Two Preferred") have been converted into 722,235 shares of Common
Stock and all of the 1,250,000 shares of the Company's Class Three Convertible
Preferred Stock have been converted into 1,487,508 shares of Common Stock. The
remaining 260,000 shares of the Class Two Preferred are convertible into
185,714 shares of Common Stock at the conversion price of $1.40 upon notice of
conversion to the Company by the remaining holders of Class Two Preferred.
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. At December 31,
1997 the Company satisfied the Nasdaq SmallCap continued listing requirement
of $2,000,000 in minimum net tangible assets in advance of the February 23,
1998 deadline. At December 31, 1997 the Company's net tangible assets were
$2,081,761.
Forward-looking Statements
This quarterly report on Form 10-QSB contains forward-looking
statements regarding future events and the future financial performance of the
Company that 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
<PAGE>
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 October 15, 1997, the Company filed a report on Form 8-K regarding
a press release commenting on the Company's estimated earnings for the quarter
ended September 30, 1997.
On October 20, 1997, the Company filed a report on Form 8-K regarding
a press release stating the Company's sales and earnings for the quarter ended
September 30, 1997.
On December 8, 1997, the Company filed a report on Form 8-K regarding
a press release announcing a strategic partnership with a developer of
internet-based interactive games and the Company's expected sales for the
quarter ended December 31, 1997.
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 was replacing 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.
Page 12
<PAGE>
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: February 11, 1998 /s/ Joseph A. Falsetti
----------------- -----------------------
Joseph A. Falsetti
Chief Executive Officer
Principal Financial Officer
Date: February 11, 1998 /s/ Gerald W. Klein
----------------- --------------------
Gerald W. Klein
Vice President and
Chief Financial Officer
Page 13
<PAGE>
RomTech, Inc.
Exhibit Index
Exhibit No. Description of Exhibit Page Number
- ----------- ---------------------- -----------
27.1 Financial Data Schedule 15
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 407,881
<SECURITIES> 0
<RECEIVABLES> 2,509,428
<ALLOWANCES> 76,187
<INVENTORY> 762,132
<CURRENT-ASSETS> 3,846,113
<PP&E> 232,870
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,402,680
<CURRENT-LIABILITIES> 1,888,096
<BONDS> 0
0
260,000
<COMMON> 7,876,826
<OTHER-SE> 1,148,550
<TOTAL-LIABILITY-AND-EQUITY> 4,402,680
<SALES> 4,391,184
<TOTAL-REVENUES> 4,391,184
<CGS> 1,636,624
<TOTAL-COSTS> 1,636,624
<OTHER-EXPENSES> 1,949,646
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,010
<INCOME-PRETAX> 780,904
<INCOME-TAX> 1,165
<INCOME-CONTINUING> 779,739
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 779,739
<EPS-PRIMARY> .08
<EPS-DILUTED> .07
</TABLE>
