<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 April 1, 2000 or
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period _____________ to
________________
Commission File Number: 0-8588
TECHNICAL COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2295040
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 DOMINO DRIVE, CONCORD, MA 01742-2892
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (978) 287-5100
N/A
(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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Number of shares of Common
Stock, $.10 par value, outstanding as of May 12, 2000: 1,312,513.
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets,
as of April 1, 2000 (unaudited) and October 2, 1999 1
Condensed Consolidated Statements of Operations:
Three (3) months ended April 1, 2000 and April 3, 1999
(unaudited), 2
Six (6) months ended April 1, 2000 and April 3,
1999 (unaudited), 3
Condensed Consolidated Statements of Cash Flows,
Six (6) months ended April 1, 2000 and April 3, 1999 (unaudited) 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II Other Information 9
Signatures 10
</TABLE>
<PAGE>
PART I. Financial Information - Item 1. Financial Statements
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
APRIL 1, 2000 OCTOBER 2, 1999
------------- ---------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,904,341 $ 2,338,935
Accounts receivable - trade, less allowance for doubtful
accounts of $70,000 1,228,146 2,603,401
Inventories 2,807,036 3,035,937
Deferred income taxes 692,085 809,555
Other current assets 135,594 361,025
------------- -------------
Total current assets 8,767,202 9,148,853
Equipment and leasehold improvements 4,771,568 4,640,222
Less: accumulated depreciation and amortization 4,185,733 3,960,614
------------- -------------
585,835 679,608
Goodwill 1,614,131 1,614,131
Less: accumulated amortization 1,038,807 931,352
------------- -------------
575,324 682,779
Other assets 60,314 149,675
$ 9,988,675 $ 10,660,915
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 185,352 $ 258,067
Accrued liabilities
Compensation and related expenses 320,273 230,654
Other 427,410 870,936
------------- -------------
Total current liabilities 933,035 1,359,657
------------- -------------
Other long-term liabilities 359,578 365,721
Commitments and contingencies
Stockholders' Equity:
Common stock, par value $.10 per share; authorized
3,500,000 shares; issued and outstanding 1,312,153
and 1,294,541 shares 131,215 129,454
Treasury stock at cost, 19,468 and 27,063 shares (160,106) (213,375)
Additional paid-in capital 1,341,742 1,305,870
Retained earnings 7,383,211 7,713,588
------------- -------------
Total stockholders' equity 8,696,062 8,935,537
------------- -------------
$ 9,988,675 $ 10,660,915
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
Page 1
<PAGE>
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
APRIL 1, 2000 APRIL 3, 1999
------------- -------------
<S> <C> <C>
Net sales $ 1,381,050 $ 1,247,336
Cost of sales 702,144 532,922
------------- -------------
Gross profit 678,906 714,414
Operating expenses:
Selling, general and
administrative expenses 1,102,528 1,058,640
Product development costs 266,972 552,606
-------------- --------------
Total operating expenses 1,369,500 1,611,246
-------------- --------------
Operating income (loss) (690,594) (896,832)
-------------- --------------
Other income (expense):
Gain on sale of investment - 1,056,638
Interest income 82,063 41,477
Interest expense (426) (442)
Other 11,658 (4,708)
-------------- --------------
Total other income (expense): 93,295 1,092,965
-------------- --------------
Income (loss) before income taxes (597,299) 196,133
Provision (benefit) for income taxes (179,190) 49,033
-------------- --------------
Net income (loss) $ (418,109) $ 147,100
============== ==============
Net income (loss) per common share:
Basic $(0.32) $ 0.11
Diluted $(0.32) $ 0.11
Weighted average common shares outstanding used in computation:
Basic 1,291,300 1,368,046
Diluted 1,291,300 1,371,235
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
Page 2
<PAGE>
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
APRIL 1,2000 APRIL 3, 1999
------------ -------------
<S> <C> <C>
Net sales $ 3,634,453 $ 2,318,693
Cost of sales 1,512,480 940,234
------------ -------------
Gross profit 2,121,973 1,378,459
Operating expenses:
Selling, general and
administrative expenses 2,055,361 2,528,551
Product development costs 628,316 1,092,268
------------ -------------
Total operating expenses 2,683,677 3,620,819
------------ -------------
Operating income (loss) (561,704) (2,242,360)
------------ -------------
Other income (expense):
Gain on sale of investment - 1,056,638
Interest income 105,141 76,142
Interest expense (709) (3,648)
Other 12,382 (8,489)
------------ -------------
Total other income (expense): 116,814 1,120,643
------------ -------------
Income (loss) before income taxes (444,890) (1,121,717)
Provision (benefit) for income taxes (133,467) (280,429)
------------ -------------
Net income (loss) $ (311,423) $ (841,288)
============ =============
Net income (loss) per common share:
Basic $ (0.24) $ (0.63)
Diluted $ (0.24) $ (.063)
Weighted average common shares outstanding used in computation:
Basic 1,284,950 1,327,953
Diluted 1,284,950 1,327,953
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
<PAGE>
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
APRIL 1, 2000 APRIL 3, 1999
------------- -------------
<S> <C> <C>
Operating Activities:
Net income (loss) $ (311,423) $ (841,288)
Adjustments to reconcile net loss to net cash provided (used) by operating
activities:
Depreciation and amortization 421,935 409,789
Non-cash compensation 34,309 14,678
Deferred income taxes 117,121 -
Gain on sale of investment - (1,056,638)
Changes in assets and liabilities:
Accounts receivable 1,375,255 7,477,215
Inventories 228,901 (1,087,655)
Refundable income taxes 276,960 61,555
Other current assets ( 51,529) ( 80,018)
Accounts payable and other accrued liabilities (432,410) (853,070)
------------- -------------
Net cash (used) provided by operating activities 1,659,119 4,044,568
------------- -------------
Investing Activities:
Additions to equipment and leasehold improvements (131,346) (22,878)
Other - 2,230
------------ -------------
Net cash used by investing activities (131,346) (20,648)
------------ -------------
Financing Activities:
Proceeds from stock issuance 37,633 40,803
Payment of line of credit - (2,250,000)
------------ -------------
Net cash provided (used) by financing activities 37,633 (2,209,197)
Net increase (decrease) in cash and cash equivalents 1,565,406 1,814,723
Cash and cash equivalents at beginning of the period 2,338,935 740,049
------------ -------------
Cash and cash equivalents at the end of the period $ 3,904,341 $ 2,554,772
============ =============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 142 $ 19,814
Income taxes paid (refunds received), net (394,430) 78,336
NON-CASH TRANSACTIONS:
During the six months ended April 3, 1999, the Company sold its investment in
common stock of Visual Networks, Inc. and received proceeds from the sale in the
amount of $1,288,633.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 4
<PAGE>
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS
NOTE: THE DISCUSSIONS IN THIS FORM 10-Q, INCLUDING ANY DISCUSSION OF OR IMPACT,
EXPRESSED OR IMPLIED, ON TECHNICAL COMMUNICATIONS CORPORATION'S (THE COMPANY)
ANTICIPATED OPERATING RESULTS AND FUTURE EARNINGS, INCLUDING STATEMENTS ABOUT
THE COMPANY'S ABILITY TO ACHIEVE GROWTH AND PROFITABILITY, CONTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED. THE COMPANY'S OPERATING RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY'S OPERATING RESULTS MAY BE AFFECTED BY MANY FACTORS, INCLUDING BUT NOT
LIMITED TO FUTURE CHANGES IN EXPORT LAWS OR REGULATIONS, CHANGES IN TECHNOLOGY,
THE EFFECT OF FOREIGN POLITICAL UNREST, THE ABILITY TO HIRE, RETAIN AND MOTIVATE
TECHNICAL, MANAGEMENT AND SALES PERSONNEL, THE RISKS ASSOCIATED WITH THE
TECHNICAL FEASIBILITY AND MARKET ACCEPTANCE OF NEW PRODUCTS, CHANGES IN
TELECOMMUNICATIONS PROTOCOLS, THE EFFECTS OF CHANGING COSTS, EXCHANGE RATES AND
INTEREST RATES AND THE COMPANY'S ABILITY TO NEGOTIATE A LINE OF CREDIT WITH ITS
BANKS. THESE AND OTHER RISKS ARE DETAILED FROM TIME TO TIME IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FORM 10-K FOR
THE FISCAL YEAR ENDED OCTOBER 2, 1999, THE FORM 10-Q FOR THE QUARTER ENDED
JANUARY 1, 2000 AND THIS FORM 10-Q FOR THE QUARTER ENDED APRIL 1, 2000.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STATEMENT OF FAIR PRESENTATION
INTERIM FINANCIAL STATEMENTS. The accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal
recurring accruals) which are, in the opinion of management, necessary for fair
presentation of the results of operations for the periods presented. Interim
results are not necessarily indicative of the results to be expected for a full
year.
Certain disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted as allowed by Form 10-Q. The accompanying unaudited consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements for the year ending October 2, 1999 as filed
with the Securities and Exchange Commission on Form 10-K.
NOTE 1. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
APRIL 1, 2000 OCTOBER 2, 1999
------------- ---------------
<S> <C> <C>
Finished Goods $ 373,447 $ 655,167
Work in Process 351,785 216,072
Raw Materials 2,081,800 2,164,698
-------------- -------------
$ 2,807,036 $ 3,035,937
============ ============
</TABLE>
Page 5
<PAGE>
NOTE 2. LONG-TERM DEBT
At April 1, 2000, the Company had a $5,000,000 revolving line of credit at an
interest rate of the banks base rate plus 1/2 of 1% (9.75% at April 1, 2000)
with Wainwright Bank and Trust Company. This line of credit was secured by a
pledge of substantially all the assets of the Company and required no
compensating balances. This line matured on May 1, 2000 and was not renewed. As
of April 1, 2000, the Company has outstanding standby letters of credit, which
were supported by the line of credit amounting to $88,355. Wainwright bank has
agreed to honor these standby letters of credit until they mature at various
dates through October 31, 2000. There were no borrowings outstanding against the
line.
The Company is currently negotiating a new credit facility with a financial
institution. This revolving line of credit has received approval from the
financial institution's credit committee and although no assurances can be
given with respect to the timing, a formal closing is expected shortly. The
Company believes this new credit facility will meet its current credit needs
and its need for the foreseeable future.
NOTE 3. COMMITMENTS AND CONTINGENCIES
The Company was the defendant in GERARD v. TECHNICAL COMMUNICATIONS CORPORATION,
ET AL., filed in the Superior Court of the Commonwealth of Massachusetts in
1999. This case arose from disputes concerning the hiring and termination of
Roland Gerard, former president of the Company. The Complaint alleges state law
claims for breach of contract, wrongful termination, and civil conspiracy.
During the quarter the Company settled this lawsuit. An earlier complaint
brought by Mr. Gerard in the Federal court, which included the state claims, and
a federal securities claim was dismissed in July 1999; the securities claims
were dismissed with prejudice.
PART I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
The Company is in the business of designing, manufacturing and marketing
communications security equipment. The Company receives orders for equipment
from customers, which may take several months or longer to manufacture and ship.
With the exception of long-term contracts where revenue is recognized under the
percentage of completion method, the Company generally recognizes income on a
unit-of-delivery basis. This latter method can cause revenues to vary widely
from quarter to quarter and therefore quarterly comparisons of revenue may not
be indicative of any trend.
THREE MONTHS ENDED APRIL 1, 2000 AS COMPARED TO THE THREE MONTHS
ENDED APRIL 3, 1999
Net sales for the quarters ended April 1, 2000 and April 3, 1999, were
$1,381,050 and $1,247,336 respectively. This increase of 11% is attributed to
variability in revenue recognition as a result of the timing of shipments and
the receipt of anticipated orders.
Gross profit for the second quarter of fiscal 2000 was $678,906 as compared to
gross profit of $714,414 for the same period of fiscal year 1999. This
represented a 5% decrease in gross profit for the quarter, primarily
attributable to the mix of products sold. Gross profit expressed as a percentage
of sales was 49% in 2000 as compared to 57% for the same period in fiscal year
1999.
Selling, general and administrative expenses for the second quarter of fiscal
2000 and 1999 were $1,102,528 and $1,058,640, respectively. This increase of 4%
was primarily attributable to the costs and
Page 6
<PAGE>
expenses associated with the settlement of the litigation discussed in Note 3 to
the financial statements. This increase was partially offset by a decrease of
approximately $56,000 in sales commissions.
Product development costs for the quarter ended April 1, 2000 were $266,972
compared to $552,606 for the same period in fiscal 1999. This decrease of 52%
was attributable to a shift in development work from internal product
development to billable product development.
The Company incurred a net loss of $418,109 for the second quarter of fiscal
2000 as compared to net income of $147,100 for the same period in fiscal 1999.
Included in the net loss for the second quarter of fiscal 2000 is a loss from
operations of $690,594 as compared to an operating loss of $896,832 in 1999.
Included in the net income for the second quarter of fiscal 1999 is a one-time
gain on the sale of an investment of $1,056,638. The increase in operating
profitability is primarily attributable to the decrease in operating expenses as
described above.
SIX MONTHS ENDED APRIL 1, 2000 AS COMPARED TO THE SIX MONTHS
ENDED APRIL 3, 1999
Net sales for the six months ended April 1, 2000 and April 3, 1999, were
$3,634,453 and $2,318,693, respectively. This increase of 57% is attributed to
variability in revenue recognition as a result of the timing of shipments and
the receipt of anticipated orders. The strengthening of economic conditions in
many countries contributed to an increased order flow from our traditional
international government markets.
Gross profit for the first six months of fiscal 2000 was $2,121,973 as compared
to gross profit of $1,378,459 for the same period of fiscal year 1999. This
represented a 54% increase in gross profit for the quarter. Gross profit
expressed as a percentage of sales decreased to 58% in 2000 from 59% as compared
to the same period in fiscal year 1999.
Selling, general and administrative expenses for the first six months of fiscal
2000 and 1999 were $2,055,361 and $2,528,551, respectively. This decrease of 19%
was primarily attributable to approximately $475,000 in costs associated with
the settlement of litigation in fiscal 1999 and was offset by $147,000 in costs
associated with the settlement of litigation discussed in Note 3 to the
financial statements. In addition, a reduction in marketing costs associated
with new product development resulted in a decrease of approximately $70,000.
Product development costs for the six months ended April 1, 2000 were $628,316
compared to $1,092,268 for the same period in fiscal 1999. This decrease of 42%
was attributable to a shift in development work from internal product
development to billable product development.
The Company showed a net loss of $311,423 for the first six months of fiscal
2000 as compared to a net loss of $841,288 for the same period in fiscal 1999.
The improvement in profitability is primarily attributable to the increased
sales, the increase in gross profit and the decrease in operating spending as
described above.
YEAR 2000 UPDATE
Technical Communications Corporation has been actively addressing the Year 2000
(Y2K) problem since April 1998. Generally speaking, the Y2K problem results from
the use of two-digit, rather than four-digit, date years in computer systems and
software applications.
The Company divided its Y2K efforts into three major areas: (i) products and
customers, (ii) enterprise business systems and information technology and (iii)
external systems and suppliers. The review of each area consisted of an
inventory of potentially affected systems, an assessment of Y2K readiness and
corrective action deployment. As of the date of this report, the Company has
completed these year 2000 initiatives.
As a result of completing these initiatives, the Company believes that all of
its material information technology systems and critical non-information
technology systems are year 2000 compliant. The
page 7
<PAGE>
Company believes that all of the material products that it currently
manufactures and sells are year 2000 compliant and not date sensitive. In
addition, the Company is not aware of any significant vendor that has
experienced material disruption due to year 2000 issues. As of the date of this
report, the Company has incurred expenses related to the year 2000 problem,
since April 1998, of approximately $63,000. The main portion of these costs
relates to the evaluation and testing of products for Y2K compliance. We will
continue to monitor our systems and vendors to ensure that issues do not arise
in the coming months. Although we do not anticipate any future significant
business interruption, we can give no assurance that such interruption will not
occur.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. In
June 1999, FASB issued Statement of Financial Accounting Standards No. 137 (SFAS
137), "Accounting for Derivative Instruments and Hedging Activities--Deferral of
the Effective Date of FASB Statement No. 133--an amendment of FASB Statement No.
133". This Statement has delayed the effective date of SFAS 133 until fiscal
years beginning after June 15, 2000. Management does not expect the adoption of
this statement to have a material impact on its financial position or results of
operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments increased by $1,565,406 or 67% to $3,904,341 as
of April 1, 2000, from a balance of $2,338,935 at October 2, 1999. This increase
was primarily due to the reduction of accounts receivable and inventory. The
current ratio increased to 9.4:1 at April 1, 2000 compared to 6.7:1 as of
October 2, 1999, primarily as a result of the cash received on accounts
receivable during the quarter.
At April 1, 2000, the Company had a $5,000,000 revolving line of credit at an
interest rate of the banks base rate plus 1/2 of 1% (9.75% at April 1, 2000)
with Wainwright Bank and Trust Company. This line of credit was secured by a
pledge of substantially all the assets of the Company and required no
compensating balances. This line matured on May 1, 2000 and was not renewed. As
of April 1, 2000, the Company has outstanding standby letters of credit, which
were supported by the line of credit amounting to $88,355. Wainwright bank has
agreed to honor these standby letters of credit until they mature at various
dates through October 31, 2000. There were no borrowings outstanding against the
line.
The Company is currently negotiating a new credit facility with a financial
institution. This revolving line of credit has received approval from the
financial institution's credit committee and although no assurances can be
given with respect to the timing, a formal closing is expected shortly. The
Company believes this new facility will meet its current credit needs and its
needs for the foreseeable future.
Management anticipates no unusual capital expenditures during the remainder of
fiscal 2000. Management is currently working to renew its existing line of
credit, if it is unable to do so, its operations may be substantially adversely
affected.
Page 8
<PAGE>
PART II. Other Information
ITEM 1. LEGAL PROCEEDINGS:
The Company was the defendant in GERARD v. TECHNICAL COMMUNICATIONS CORPORATION,
ET AL., filed in the Superior Court of the Commonwealth of Massachusetts in
1999. This case arose from disputes concerning the hiring and termination of
Roland Gerard, former president of the Company. The Complaint alleges state law
claims for breach of contract, wrongful termination, and civil conspiracy.
During the quarter the Company settled this lawsuit. An earlier complaint
brought by Mr. Gerard in the Federal court, which included the state claims, and
a federal securities claim was dismissed in July 1999; the securities claims
were dismissed with prejudice.
Item 2. Changes in Securities and Use of Proceeds:
Not applicable.
Item 3. Defaults Upon Senior Securities:
Not applicable.
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:
Exhibit 27: Financial Data Schedule
b. Reports on Form 8-K:
None.
Page 9
<PAGE>
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.
TECHNICAL COMMUNICATIONS CORPORATION
(Registrant)
MAY 15, 2000 By: /S/ CARL H. GUILD, JR.
Date ----------------------------
Carl H. Guild, Jr.,
President and Chief
Executive Officer
MAY 15, 2000 By: /S/ MICHAEL P. MALONE
Date ----------------------------
Michael P. Malone, Chief
Financial Officer
Page 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-03-1999
<PERIOD-END> APR-01-2000
<CASH> 3,904,341
<SECURITIES> 0
<RECEIVABLES> 1,298,146
<ALLOWANCES> 70,000
<INVENTORY> 2,807,036
<CURRENT-ASSETS> 8,767,202
<PP&E> 4,771,568
<DEPRECIATION> 4,185,733
<TOTAL-ASSETS> 9,988,675
<CURRENT-LIABILITIES> 933,035
<BONDS> 0
0
0
<COMMON> 131,215
<OTHER-SE> 8,564,847
<TOTAL-LIABILITY-AND-EQUITY> 9,988,675
<SALES> 3,634,453
<TOTAL-REVENUES> 3,634,453
<CGS> 1,512,480
<TOTAL-COSTS> 2,683,677
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 709
<INCOME-PRETAX> (444,890)
<INCOME-TAX> (133,467)
<INCOME-CONTINUING> (311,423)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (311,423)
<EPS-BASIC> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
