-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J1Ucc5wARIMJ6RBJy9L5Ih6LzvXZE52F4ChR73K8vMnpwdzLSkbTLxBtxkoCzhsI KdL638T9XGTPowMttBBqdQ== 0000890566-97-001752.txt : 19970811 0000890566-97-001752.hdr.sgml : 19970811 ACCESSION NUMBER: 0000890566-97-001752 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOCUCON INCORPORATED CENTRAL INDEX KEY: 0000843006 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 742418590 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10185 FILM NUMBER: 97654674 BUSINESS ADDRESS: STREET 1: 7461 CALLAGHAN RD CITY: SAN ANTONIO STATE: TX ZIP: 78229 BUSINESS PHONE: 2105259221 MAIL ADDRESS: STREET 1: 7461 CALLAGHAN ROAD CITY: SAN ANTONIO STATE: TX ZIP: 78229 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended JUNE 30, 1997 OR [ ] Transition Report Under Section 13 or 15(d) of the Exchange Act For the Transition Period From ______ to _______ Commission File Number 1-10185 DOCUCON, INCORPORATED (Exact name of small business issuer as specified in its charter) Delaware 74-2418590 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 7461 Callaghan Road San Antonio, Texas 78229 (Address of principal executive offices) (210) 525-9221 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of July 31, 1997. 12,443,222 DOCUCON, INCORPORATED INDEX Page PART I. FINANCIAL INFORMATION (UNAUDITED) Item 1: Balance Sheets - June 30, 1997, and December 31, 1996 3 Statements of Operations - For the Three and Six Months Ended June 30, 1997 and 1996 5 Statements of Cash Flows - For the Six Months Ended June 30, 1997 and 1996 6 Notes to Financial Statements 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION 11 SIGNATURES 12 -2- DOCUCON, INCORPORATED BALANCE SHEETS June 30, 1997 December 31, ASSETS (UNAUDITED) 1996 ----------- ------------ CURRENT ASSETS: Cash and temporary cash investments ................ $ 38,961 $ 198,152 Accounts receivable-trade, net of allowance for doubtful accounts of $4,444- U.S. Government ................................. 469,639 1,492,509 Commercial ...................................... 990,907 1,054,288 Unbilled revenues ............................... 2,064,463 1,655,428 Other receivables ............................... 13,728 6,834 Prepaid expenses and other ...................... 101,897 185,302 ----------- ----------- Total current assets ................ 3,679,595 4,592,513 ----------- ----------- PROPERTY AND EQUIPMENT: Conversion systems ............... 5,294,574 5,252,834 Building and improvements ........ 1,764,164 1,736,666 Land ............................. 230,000 230,000 Furniture and fixtures ........... 331,506 275,279 ----------- ----------- Total property and equipment ........ 7,620,244 7,494,779 Less- Accumulated depreciation ................. (5,097,314) (4,798,200) ----------- ----------- Net property and equipment .......... 2,522,930 2,696,579 ----------- ----------- SOFTWARE DEVELOPMENT COSTS AND OTHER, net ......... 584,896 527,926 ----------- ----------- GOODWILL, net ..................................... 310,910 320,214 ----------- ----------- Total assets ........................ $ 7,098,331 $ 8,137,232 =========== =========== See Notes to Financial Statements. -3- DOCUCON, INCORPORATED BALANCE SHEETS (Continued) June 30, 1997 December 31, LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) 1996 ----------- ----------- CURRENT LIABILITIES: Accounts payable ..................................... $ 624,049 $ 1,403,419 Accrued liabilities .................................. 693,876 885,659 Line of credit ....................................... 609,500 750,000 Current maturities of capital lease obligations ...... 15,076 11,820 Deferred revenues .................................... 618,077 561,355 Current maturities of long-term debt ................. 29,303 27,729 ----------- ----------- Total current liabilities .................. 2,589,881 3,639,982 ----------- ----------- LONG-TERM DEBT ....................................... 1,502,676 1,517,970 ----------- ----------- CAPITAL LEASE OBLIGATIONS ............................ 55,448 51,211 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $1.00 par value, 10,000,000 shares authorized- Series A, 60 shares authorized, 17 and 19 shares outstanding as of June 30, 1997, and December 31, 1996, respectively 17 19 Common Stock, $.01 par value, 25,000,000 shares authorized; 12,443,222 and 12,032,559 shares outstanding as of June 30, 1997, and December 31, 1996, respectively ............................... 124,432 120,326 Additional paid-in capital ........................... 9,640,190 9,640,036 Accumulated deficit ................................. (6,814,313) (6,832,312) =========== =========== Total stockholders' equity ................. 2,950,326 2,928,069 =========== =========== Total liabilities and stockholders' equity . $ 7,098,331 $ 8,137,232 =========== =========== See Notes to Financial Statements. -4- DOCUCON, INCORPORATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Six Months ENDED JUNE 30 Ended June 30 --------------------------- --------------------------- 1997 1996 1997 1996 ------------ ------------ ------------ ------------ OPERATING REVENUES $ 2,688,577 $ 3,351,968 $ 5,885,611 $ 5,685,621 ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Production 1,392,224 1,845,870 3,369,337 3,121,663 Research and development 144,679 210,981 324,519 320,882 General and administrative 269,247 305,663 501,079 557,817 Marketing 595,379 562,387 1,206,575 1,007,066 Depreciation and amortization 185,105 176,523 384,184 374,510 ------------ ------------ ------------ ------------ 2,586,634 3,101,424 5,785,694 5,381,938 ------------ ------------ ------------ ------------ OPERATING INCOME 101,943 250,544 99,917 303,683 OTHER INCOME (EXPENSE): Interest expense (51,284) (37,477) (99,196) (77,316) Other, net 20,440 336 29,278 6,298 ------------ ------------ ------------ ------------ INCOME BEFORE INCOME TAXES 71,099 213,403 29,999 232,665 INCOME TAX EXPENSE 9,000 -- 12,000 -- ------------ ------------ ------------ ------------ NET INCOME 62,099 213,403 17,999 232,665 PREFERRED STOCK DIVIDEND REQUIREMENTS 11,688 14,438 24,751 28,876 ------------ ------------ ------------ ------------ NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ 50,411 $ 198,965 $ (6,752) $ 203,789 ============ ============ ============ ============ PRIMARY INCOME (LOSS) PER COMMON SHARE AND COMMON SHARE EQUIVALENTS $ -- $ .02 $ -- $ .02 ============ ============ ============ ============ WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS 12,819,024 12,599,885 12,381,009 12,471,998 ============ ============ ============ ============
See Notes to Financial Statements. -5- DOCUCON, INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 ----------------------- 1997 1996 ----------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 17,999 $ 232,665 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 384,184 374,510 Other noncash expenses -- 7,787 Changes in current assets and current liabilities- (Increase) decrease in receivables and unbilled revenues 670,322 (262,932) (Increase) decrease in prepaid expenses and other 83,405 (191,151) Increase (decrease) in accounts payable and accrued liabiliies (971,153) 562,177 Increase in deferred revenues 56,722 82,022 ----------- --------- Net cash provided by operating activities 241,479 805,078 ----------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (116,024) (432,406) Capitalized software development costs (125,938) (120,532) ----------- --------- Net cash used in investing activities (241,962) (552,938) ----------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Advances under line of credit 1,344,500 -- Payments under line of credit (1,485,000) (175,000) Principal payments under capital lease obligations (8,747) (2,577) Net proceeds from exercise of stock options 4,259 12,669 Proceeds from issuing note payable -- 87,054 Principal payments on notes payable (13,720) (37,976) ----------- --------- Net cash used in financing activities (158,708) (115,830) ----------- --------- NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS (159,191) 136,310 CASH AND TEMPORARY CASH INVESTMENTS, beginning of period 198,152 139,167 ----------- --------- CASH AND TEMPORARY CASH INVESTMENTS, end of period $ 38,961 $ 275,477 =========== ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for- Interest $ 100,118 $ 47,329 =========== ========= Income taxes 19,868 -- =========== =========
See Notes to Financial Statements. -6- DOCUCON, INCORPORATED NOTES TO FINANCIAL STATEMENTS NOTE 1 The financial statements included herein have been prepared by Docucon, Incorporated (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. However, all adjustments have been made which are, in the opinion of the Company, necessary for a fair presentation of the results of operations for the periods covered. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is recommended that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996. Since its inception, the Company has incurred cumulative net losses of approximately $6.8 million. The cumulative net losses have been funded primarily through the Company's public offering of common stock, issuances of preferred stock, the exercise of warrants and debt financing. The Company has taken steps to improve its operating results including exiting the litigation support services market and focusing on the Company's core higher margined businesses. In October 1996, the Company also refinanced its $1.5 million note payable which was originally due in December 1996. The Company's management believes that it is likely that the Company's operating results for the remainder of 1997 will continue to improve and will generate sufficient working capital to sustain its operations throughout the year. However, if improved operating results are not sustained, the Company will be unable to ensure its continuing operations independent of additional capital infusions. NOTE 2 Organization and description of the Company- Docucon, Incorporated, was incorporated in June 1986 to engage in the business of providing technical services to its customers for the conversion of paper and microform documents to computer-accessible media. Paper or microform documents are scanned by sophisticated computer equipment and stored and indexed on optical disks or magnetic media. The Company also sells software products to the legal market. Substantially all of the Company's customers are located in the U.S. NOTE 3 Summary of significant accounting policies- Property and equipment- Property and equipment are recorded at original cost or the present value of the capital lease payments for assets under capital lease arrangements. Maintenance and repairs are charged to expense as incurred and betterments which increase the value or extend the useful life of the property are capitalized. Gains or losses on sales or other dispositions of property and equipment are credited or charged to income. -7- Depreciation is provided using the straight-line method over the lesser of the capital lease term or estimated useful lives of the related assets. The Company's fixed assets are currently depreciated over periods ranging from two to five years beginning in the month the property is placed in service. The Company's building is being depreciated over 40 years. Revenue recognition- Revenues from conversion service contracts are recognized at the time services are provided and are based upon the number of documents converted and the conversion rates established in the contracts. Revenues from software licensing fees are recognized upon delivery of the software. Revenues from maintenance and telephone support contracts are recognized ratably over the term of the contract, typically one year. Software development costs- Included in software development costs is $250,000 for advanced litigation support software (Litigator's Notebook(TM)) which was acquired during March 1994. Also included in software development costs is approximately $438,000 of costs which were incurred during 1995, 1996 and 1997 to develop software which will support and complement Litigator's Notebook(TM). These costs are being amortized over periods ranging from three to five years. Goodwill- In connection with an acquisition in March 1994, the Company recognized goodwill of approximately $372,000. This goodwill is being amortized on a straight-line basis over 20 years. Use of estimates- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Statements of cash flows- During the six months ended June 30, 1997, the Company had noncash investing and financing activities consisting of a capital lease entered into for $16,240 and two shares of preferred stock and accrued dividends that were converted into 66,666 shares and 51,280 shares of common stock, respectively. NOTE 4 Common stock and preferred stock- Each share of the Company's preferred stock ($25,000 stated value) is convertible into 33,333 shares of common stock and earns cash dividends of 11 percent per annum. As of June 30, 1997, cumulative undeclared dividends on the preferred stock approximated $333,000. As these dividends are undeclared, they have not been recorded as a reduction of the Company's equity. On March 28, 1997, two shares of preferred stock were converted into 66,666 shares of common stock. Dividends related to the converted preferred stock were paid in the form of 51,280 shares of common stock in the second quarter. -8- DOCUCON, INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's operations during the quarter ended June 30, 1997, resulted in net income applicable to common shareholders of $50,411 compared to net income applicable to common shareholders of $198,965 for the same quarter in 1996. The Company incurred a net loss applicable to common shareholders of $6,752 for the six months ended June 30, 1997, as compared to net income of $203,789 for the same period in 1996. Revenues decreased 20 percent to $2,688,577 for the quarter ended June 30, 1997, as compared to the same quarter in 1996. Conversion service revenues earned under commercial contracts and a contract with the Department of Defense (DOD) (see "Liquidity and Capital Resources") decreased 12 percent, or approximately $290,000, as compared to the 1996 quarter. The decrease is due to what management believes to be a temporary discontinuation of funding for a specific project on which the Company has been performing under the DOD contract. In addition, revenues earned from sales of the Company's software products decreased 36 percent during the 1997 quarter compared to the 1996 quarter, when the Company had its largest single order ever. Total revenues increased slightly for the six-month period ended June 30, 1997, as compared to the 1996 six-month period due to increased conversion service revenues on the aforementioned project in the first quarter of 1997 as compared to 1996. Production costs decreased 25 percent for the quarter ended June 30, 1997, as compared to the 1996 quarter due to the decreased revenue levels. Production costs increased 8 percent for the six months ended June 30, 1997, over the comparable 1996 six-month period. The increase in costs for the six-month period is related to the higher level of conversion service revenues, particularly on the aforementioned project which has a higher than historical level of labor costs. Research and development costs decreased 31 percent for the quarter ended June 30, 1997, compared to the same period in 1996 due to a temporary decrease in personnel expense. Research and development costs increased slightly for the 1997 six-month period as the Company continued to devote resources to development of new conversion applications and capabilities and to the expansion of the capabilities of its JFS Litigator's Notebook(TM). Marketing expenses increased only slightly for the quarter ended June 30, 1997, as compared to the same period in 1996. Although the Company increased marketing efforts for the JFS Litigator's Notebook(TM) product line, the increased expenses were offset by lower sales commissions paid on the decreased revenues (in late 1996, the Company established a corporate marketing department to oversee and coordinate the total marketing strategy of the JFS division). The 20 percent increase in the marketing expenses for the six months ended June 30, 1997, as compared to the same period in 1996 reflects those increased marketing efforts. LIQUIDITY AND CAPITAL RESOURCES Since its inception, the Company's operations have been supplemented through bank borrowings, capital contributions, borrowings from affiliated and unaffiliated lenders, capital lease agreements, an initial public offering of the Company's common stock in 1989, the conversion of warrants into common stock and preferred stock placements. -9- DOCUCON, INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) From 1991 to mid 1996, the Company has performed conversion services under contracts from the Defense Printing Services Office (DPS) to provide services for the DOD totaling $16.8 million. In 1995, DPS awarded additional contracts totaling approximately $2.0 million to the Company. In February of 1996, DPS awarded a contract to the Company. This contract allows the Company to provide up to $14.8 million of document services to DOD agencies. The Company has recently submitted a bid to the DOD along with several other competitors for a contract for services similar to those already being provided by the Company. The size of this contract is believed to be substantially larger than those previously awarded. The Company believes that it is in good position to win all or part of this new contract but to date has received no word from the DOD. With the addition of J. Feuerstein Systems (JFS) in 1994, the Company made significant investments in the marketing and development areas of its litigation support products and services. These investments resulted in substantially increased revenues in both the services and products areas. It is the strategic intent of management to expand its software revenue base. Such investment has enabled the Company to offer enhanced versions of Litigator's Notebook and the Optical Notebook and a recently announced product, JFSNet to the marketplace. Additional complementary products are also now available and another major product is anticipated to be released by the end of 1997. In October 1996, the Company refinanced the mortgage on its office building. The new note bears interest at a fixed rate of 9.5 percent, payable monthly to a commercial bank, and is being amortized over a 20-year term with a 5-year maturity. The note is secured by the Company's building, other fixed assets, accounts receivable and inventory. Approximately $68,000 of debt issuance costs were incurred and will be amortized over a five-year period. The Company utilizes the building for office and production space and believes that the building will fulfill its needs for the foreseeable future. Accounts receivable and unbilled revenues decreased approximately $670,000 from December 31, 1996, to June 30, 1997, due to the decrease in revenues discussed above and upon the completion of a large scale, low margin production project for the DOD early in 1997. Accounts payable and accrued liabilities decreased approximately $970,000 for the comparable period as a result of the decrease in operations. The Company expects to fund its operations and marketing activities through utilization of cash on hand and cash generated from operations. At June 30, 1997, $609,500 was outstanding under the Company's $750,000 revolving term note which has a current maturity date of October 31, 1997. Management of the Company believes that it will be able to obtain a renewal of this revolving term note. These funds are expected to be adequate for the Company's needs for at least the next 12 months. While the Company may consider and evaluate, from time to time, acquisitions and opportunities for future growth, the Company has not entered into any agreements with respect to future acquisitions. Should the Company enter into any such agreements, the Company would, in all likelihood, be required to raise outside capital to consummate such transactions. -10- 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 Matters - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K - None -11- 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. DOCUCON, INCORPORATED (Registrant) By /s EDWARD P. GISTARO Edward P. Gistaro, Chairman of the Board and Chief Executive Officer By/s LORI TURNER Lori Turner, Vice President of Finance and Treasurer Dated: August 7, 1997 -12- EX-11 2 EXHIBIT 11 DOCUCON, INCORPORATED COMPUTATION OF EARNINGS PER SHARE (Unaudited)
THREE MONTHS SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 ---------------------------- ------------------------------- 1997 1996 1997 1996 ------------ ------------ ------------ ------------ COMPUTATION OF PRIMARY EARNINGS (LOSS) PER SHARE: Net income ................................... $ 62,099 $ 213,403 $ 17,999 $ 232,665 Less- Preferred stock dividend requirements (11,688) (14,438) (24,751) (28,876) ------------ ------------ ------------ ------------ Net income (loss) applicable to common stockholders used for computation ...... $ 50,411 $ 198,965 $ (6,752) $ 203,789 ========== ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING ...................... 12,437,587 11,893,168 12,381,009 11,885,102 WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON ASSUMED CONVERSION OF OPTIONS AND WARRANTS ....................... 381,437 706,717 -- 586,896 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS USED FOR COMPUTATION ............................... 12,819,024 12,599,885 12,381,009 12,471,998 ========== ========== ========== ========== PRIMARY INCOME (LOSS) PER COMMON SHARE AND COMMON SHARE EQUIVALENT ............. $ -- $ .02 $ -- $ .02 ========== ========== ========== ========== COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE: Net income ................................... $ 62,099 $ 213,403 $ 17,999 $ 232,665 Preferred stock dividend requirements ........ (11,688) (14,438) (24,751) (28,876) Decrease in net income applicable to common stock for- Preferred stock dividends not incurred upon assumed conversion of preferred stock .................................. 11,688 14,438 24,751 28,876 ------------ ------------ ------------ ------------ Net income available to common stockholders used for computation ...... $ 62,099 $ 213,403 $ 17,999 $ 232,665 ========== ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING ...................... 12,437,587 11,893,168 12,381,009 11,885,102 WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON ASSUMED CONVERSION OF OPTIONS AND WARRANTS ....................... 381,437 706,717 498,069 586,896 WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON ASSUMED CONVERSION OF THE PREFERRED STOCK ........................ 566,661 699,993 598,529 699,993 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE SHARES USED FOR COMPUTATION ................................... 13,385,685 13,299,878 13,477,607 13,171,991 ========== ========== ========== ========== INCOME PER COMMON SHARE AND COMMON SHARE EQUIVALENT ASSUMING FULL DILUTION ....... $ --(a) $ .02(a) $ --(a) $ .02(a) ========== ========== ========== ==========
(a) This calculation is submitted in accordance with Item 601(b)(11) of Regulation S-K although it is not required by APB Opinion No. 15 because it results in dilution of less than 3 percent or is antidilutive. EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DOCUCON, INCORPORATED'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997, AND ITS CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JUN-30-1997 38,961 0 3,543,181 4,444 29,078 3,679,595 7,620,244 (5,097,314) 7,098,331 2,589,881 1,602,503 0 17 124,432 2,825,877 7,098,331 5,885,611 5,885,611 3,369,337 5,785,694 (29,278) 0 99,196 29,999 12,000 17,999 0 0 0 17,999 0 0
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