FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended 09-30-98
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-26868
LEXINGTON GLOBAL ASSET MANAGERS, INC.
DELAWARE 22-3395036
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
PARK 80 WEST PLAZA TWO
SADDLE BROOK, NJ 07663
201-845-7300
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 ____
APPLICABLE ONLY TO REGISTRANTS 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 Section 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 REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of September 30, 1998.
Common Stock-$.01 Par Value Per Share
Authorized 15,000,000 Shares
4,678,537 Shares Outstanding
TABLE OF CONTENTS
Part I. Financial Information
Condensed Consolidated Statements of Financial Condition
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II. Other Information
Legal Proceedings and Exhibits
Part I. Financial Information
Item I. Financial Statements
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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
9/30/1998 12/31/1997
(Unaudited)
Assets:
Cash and cash equivalents:
Cash $ 856,152 $ 193,383
Money market accounts 6,751,282 8,511,915
------------ ------------
7,607,434 8,705,298
------------ ------------
Receivables:
Investment advisory and management fees 920,159 1,233,377
Due from funds and other 749,483 596,333
------------ ------------
1,669,642 1,829,710
------------ ------------
Marketable securities 1,893,557 1,524,788
Prepaid expenses 1,724,312 1,708,122
Prepaid taxes 11,780 6,203
Fixed assets (net of accumulated depreciation
and amortization) 1,211,487 1,384,772
Intangible assets (net of accumulated amortization) 182,526 194,676
Deferred income taxes 1,802,467 1,938,213
Other assets 8,606 141,491
------------ ------------
Total assets $16,111,811 $ 17,433,273
============ ============
Liabilities:
Accounts payable and other accrued expenses $ 3,528,148 $ 4,437,585
Deferred income 1,841,984 1,626,123
Deferred compensation 756,416 -
Federal income taxes payable 889,972 863,667
Other liabilities 16,970 10,579
------------ ------------
Total liabilities 7,033,490 6,937,954
------------ ------------
Minority interest 409,581 405,058
Stockholders' Equity:
Common stock, $.01 par value; 15,000,000
authorized shares; 5,487,887 issued 54,879 54,879
Additional paid-in capital 21,571,328 21,708,142
Accumulated deficit (8,849,869) (9,345,918)
Deferred compensation (1,276,679) (1,654,342)
Treasury stock at cost (2,830,919) (672,500)
------------ ------------
Total stockholders' equity 8,668,740 10,090,261
------------ ------------
Total liabilities and stockholders' equity $16,111,811 $ 17,433,273
============ ============
See accompanying notes to the condensed consolidated financial statements
(Unaudited).
</TABLE>
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
1998 1997 1998 1997
Revenues:
Investment advisory:
Mutual fund management fees (including approx.
$92,000, $178,000, $278,000, and $465,000
respectively from related parties) $ 2,369,093 $ 3,401,795 $ 7,903,443 $ 9,328,513
Mutual fund commissions 11,304 9,406 60,252 38,481
Other management fees (including approximately
$761,000, $694,000, $2,245,000, and
$1,969,000 respectively from related parties) 2,045,178 1,788,396 5,955,961 5,129,896
Commissions income 28,604 51,670 80,580 121,141
Other income/(loss) (114,693) 221,931 16,033 658,412
----------- ----------- ----------- -----------
Total revenues 4,339,486 5,473,198 14,016,269 15,276,443
----------- ----------- ----------- -----------
Expenses:
Salaries and other compensation 2,131,241 2,197,855 6,887,635 6,568,937
Selling and promotional 264,573 232,277 760,205 797,402
Administrative and general 1,729,678 1,853,768 5,400,263 4,291,135
----------- ----------- ----------- -----------
Total expenses 4,125,492 4,283,900 13,048,103 11,657,474
----------- ----------- ----------- -----------
Income before income taxes and minority interest 213,994 1,189,298 968,166 3,618,969
Provision for income taxes
Current 199,553 293,036 319,597 237,530
Deferred (83,279) 250,429 135,745 1,040,125
----------- ----------- ----------- -----------
Total provision 116,274 543,465 455,342 1,277,655
----------- ----------- ----------- -----------
Income before minority interest 97,720 645,833 512,824 2,341,314
Minority interest 8,703 17,009 16,773 41,744
----------- ----------- ----------- -----------
Net income $ 89,017 $ 628,824 $ 496,051 $2,299,570
=========== =========== =========== ===========
Earnings per share:
Basic earnings per share $0.02 $0.12 $0.10 $0.43
=========== =========== =========== ===========
Diluted earnings per share $0.02 $0.12 $0.10 $0.43
=========== =========== =========== ===========
Average shares outstanding during the period 4,982,511 5,231,409 5,088,603 5,371,806
=========== =========== =========== ===========
See accompanying notes to the condensed consolidated financial statements
(Unaudited).
</TABLE>
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended Sept. 30,
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 496,051 $ 2,299,570
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 249,450 243,802
Deferred income taxes 135,746 1,040,125
Minority interest 16,773 41,744
Compensation expense - stock options 466,351 -
Change in assets and liabilities
Receivables 160,068 13,707
Marketable securities (368,769) (547,824)
Prepaid expenses (16,190) (1,134,393)
Prepaid taxes (5,577) 5,697
Accounts payable and accrued expenses (909,437) 112,257
Federal income taxes payable 26,305 (164,326)
Deferred income 215,861 280,141
Deferred compensation 756,416 -
Other, net 139,276 27,902
--------------- ---------------
Net cash provided by operating activities 1,362,324 2,218,402
Cash flows from investing activities:
Purchases of furniture, equipment and leasehold
improvements (64,015) (298,529)
Cash flows from financing activities:
Dividends and other (147,000) -
Purchase of treasury stock (2,249,173) (2,280,375)
--------------- ---------------
Net cash used in financing activities (2,396,173) (2,280,375)
Net decrease in cash and cash equivalents (1,097,864) (360,502)
Cash and cash equivalents, beginning of period 8,705,298 7,529,824
--------------- ---------------
Cash and cash equivalents, end of period $ 7,607,434 $ 7,169,322
=============== ===============
See accompanying notes to the condensed consolidated financial statements
(Unaudited).
</TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Basis of Presentation:
The interim financial information presented is unaudited. In the opinion of
Company management, all adjustments, (consisting only of normal recurring
accruals), necessary to present fairly the condensed consolidated financial
position and the results of operations for the interim period have been made.
The financial statements should be read in conjunction with the financial
statements and related notes in the Company's 1997 Annual Report on Form 10-K.
The results of operations for the interim period presented are not necessarily
indicative of the results to be expected for the full year.
2. Common Stock Buy-Back Program
On March 7, 1997 and September 17, 1998 the Board of Directors of the Company
authorized share repurchase programs of up to 750,000 shares for a total program
of up to 1,500,000 shares. Repurchases have been and will be made from time to
time in the open market or through privately negotiated transactions at market
price. The stock repurchase plans have terms of three years. During 1997, the
Company repurchased 313,000 shares of stock for a total of $2,280,375. Also
during 1997, 233,000 treasury shares were awarded under the Company's Restricted
Stock Award Plan. In the first nine months of 1998, the Company purchased
507,350 shares of its stock for a total of $2,249,173. During the nine months
ended, 11,000 treasury shares were awarded under the Company's Restricted Stock
Award Plan. To date, 11,000 shares have been issued under the plan.
3. New Accounting Pronouncements
In June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 establishes standards for the
way a public enterprise reports information about operating segments in its
annual and interim financial statements. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. Generally, financial information will be required to be reported on
the basis used by management for evaluating segment performance and for deciding
how to allocate resources to segments. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997 and need not be applied to interim
reporting in the initial year of adoption. The Company intends to adopt the
provisions of SFAS No. 131 in its December 31, 1998 annual consolidated
financial statements, however, management of the Company has not yet determined
what additional information, if any, will need to be reported.
In July 1998, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board reached a consensus on EITF Issue 97-14, "Accounting
for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi
Trust and Invested" ("EITF 97-14"). Under EITF 97-14, assets of the trust are to
be consolidated with those of the employer and the value of the investments held
in the rabbi trust should be classified as a liability. The Company has adopted
EITF 97-14 as of September 30, 1998. The investments held in the rabbi trust are
diversified into other investments, and at September 30, 1998, the value of
these investments was $756,416.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Management's Discussion and Analysis contained in the Company's Annual Report on
Form 10-K for December 31, 1997 is incorporated herein by reference and should
be read in conjunction with the following.
Nine Months Ended September 30, 1998 and 1997
The consolidated net income for the nine months ended September 30, 1998 was
$0.5 million, or $0.10 per share, compared to $2.3 million, or $0.43 per share
for the first nine months of 1997.
Total assets under management at September 30, 1998 were $3.2 billion compared
to $3.8 billion at September 30, 1997. Mutual fund assets under management
decreased $0.5 billion from the year earlier period from $2.2 billion to $1.7
billion.
Total revenues of $14.0 million are down $1.3 million from $15.3 million in the
first nine months of 1997. Mutual fund management fees, the Company's largest
revenue source, decreased $1.4 million to $7.9 million in the first nine months
of 1998 compared to $9.3 million in the first nine months of 1997. The decrease
is mainly attributable to corrections in securities markets around the world.
These corrections began in the emerging markets of the Far East in the fourth
quarter of 1997 and immediately spread to other emerging markets around the
world through the end of 1997 and into 1998. With the "Asian Flu" showing no
signs of abatement in 1998, capital markets around the world began to question
the prospects for continued economic growth; consequently, the more developed
capital markets of the world have experienced corrections. The Company's assets
under management are invested in capital markets around the world and these
investments were adversely impacted by the broad downturn in capital markets.
Other management fees of $6.0 million increased $0.9 million from $5.1 million
in the first nine months of 1997. The Company's private account business
accounted for $0.7 million of the increase due to continued increases in assets
under management associated with the continuing strength of the U.S. equity
markets. Institutional asset management fees contributed $0.1 million of the
increase despite a $0.1 billion decline in assets under management during the
quarter. This reflects the fact that these accounts are billed quarterly based
on the assets under management as of the end of the immediately preceding
quarter. Other income decreased $0.6 million from the first nine months of 1997.
This decrease is a result of unrealized depreciation of marketable securities of
$0.3 million for nine months ended September 30, 1998 versus unrealized
appreciation of marketable securities of $0.3 million for the first nine months
of 1997. The unrealized appreciation/depreciation stems from investments in a
number of the products managed by the Company.
Total expenses of $13.0 million are $1.3 million above total expenses of $11.7
million in the first nine months of 1997. The total expense increase was
primarily due to administrative and general expenses of $5.4 million which are
$1.1 million above $4.3 million for the first nine months of 1997. This increase
is almost entirely attributable to the Company's administrative contract with
Select Advisors ("Select") for the Company's private account operations. This
contract was part of the reorganization of this business, which occurred in
1996. Under this contract the Company pays fees to Select for administrative and
support services for the Company's private account clients. Because these
clients are billed annually in advance, the expenses incurred for the
administrative contract are deferred and amortized evenly over a twelve-month
period. Expenses in the first nine months of 1998 include amortization of the
contract expense across the entire client base. Prior to September 30, 1996, the
date of the West Coast reorganization, a subsidiary of the Company was
performing all administrative services and therefore did not incur a fee to
Select. In 1997 the Company benefited from the fact that no administrative fees
were charged for those accounts which entered into or renewed advisory
agreements prior to the West Coast reorganization on September 30, 1996.
Partially offsetting this increase was a decrease in sub-advisory fees
associated with mutual fund revenue, which decreased $0.1 million from last
year, primarily due to the decrease in average net assets in the funds which
have shared revenue arrangements.
Total personnel costs of $6.9 million are $0.3 million higher than the $6.6
million recorded in the first nine months of 1997. Of this increase, $0.5
million is due to the amortization of restricted stock issued to certain key
executive employees in 1997 and 1998. In addition, salaries increased
approximately $0.3 million due to annual salary increases. Partially offsetting
these increases was a reduction in bonus expense of $0.6 million due to the
Company's lower earnings.
Selling and promotional costs of $0.8 million in 1998 were consistent with the
first nine months of 1997.
Pre-tax income of $1.0 million decreased $2.6 million from $3.6 million recorded
in the first nine months of 1997. The provision for state and federal taxes
decreased $0.8 million due to the decrease in taxable income. The Company used
$1.6 million in net operating loss carryforwards ("NOLs") in the first nine
months of 1998, and the Company has remaining approximately $0.4 million which
are available to offset future taxable income and which expire over the period
2003 through 2010.
Three Months Ended September 30, 1998 and 1997
The consolidated net income for the three months ended September 30, 1998 was
$89,017, compared to $628,824 for the third quarter of 1997.
Total revenues of $4.3 million are 21% below the third quarter of 1997 when the
Company recorded revenues of $5.5 million. Mutual fund management fees of $2.4
million were $1.0 million below the third quarter of 1997 due to lower assets
under management and a change in the product mix of assets under management.
Mutual fund assets under management of $1.7 billion are $0.5 billion lower at
September 30, 1998 than at September 30, 1997. The most significant declines
occurred in the Lexington Troika Dialog Russia Fund which dropped $181 million
from the September 30, 1997 figure of $200 million, and in the Lexington
Worldwide Emerging Markets Fund which dropped $138 million from the September
30, 1997 figure of $204 million. Other income of negative $0.1 million is $0.3
million below the third quarter of 1997 and reflects unrealized depreciation in
the Company's investment accounts. For the three months ended September 30,
1998, unrealized depreciation totaled $0.2 million compared to unrealized
appreciation of $0.1 million for the third quarter of 1997. The unrealized
appreciation/depreciation stems from investments in a number of the products
managed by the Company. Other management fees of $2.0 million are up $0.2
million from $1.8 million in the prior year period. The private account business
accounts for the increase, due to an increase in assets under management in this
segment.
Total expenses of $4.1 million decreased $0.2 million from $4.3 million in the
third quarter of 1997. Of this decrease, $0.1 million is due to administrative
and general expenses, and $0.1 million is due to salaries and other
compensation. Despite a $0.3 million increase in administrative fees to Select,
administrative and general expenses declined from the prior year period due to a
$0.3 million decrease in sub-advisory fees. These fees declined with the decline
in assets under management. Also contributing to the decline was a $0.1 million
decrease in professional fees, due to a decline in tax services and employee
recruiting fees. Salaries and other compensation decreased $0.1 million as a
result of a $0.4 million decrease in bonus expense, due to the Company's lower
profits. Partially offsetting this decline is a $0.2 million increase in the
amortization of restricted stock associated with the granting of restricted
stock in 1997 and 1998, as well as a $0.1 million increase in salaries.
Profit before tax amounted to $0.2 million, down $1.0 million from the $1.2
million recorded in the third quarter of 1997. The provision for state and
federal taxes decreased $0.4 million to $0.1 million in the third quarter due to
lower taxable income.
Year 2000
The Company, like most commercial and financial institutions, is working to
ensure that its operating and processing systems will, along with those of its
service providers, continue to function when the Year 2000 arrives. The Company
has developed and implemented a comprehensive plan to prepare the Company's
computer systems and applications for the Year 2000, as well as to identify and
address any other Year 2000 operational issues which may affect the Company.
Progress reports on the Company's Year 2000 program are presented regularly to
the Company's Board of Directors and senior management.
The Company's Year 2000 program, which was commenced in June 1997 and is
administered by internal staff, consists of the following three components
relating to the Company's operations: (i) information technology ("IT") computer
systems and applications which may be impacted by the Year 2000 problem, (ii)
non-IT systems and equipment which include embedded technology which may be
impacted by the Year 2000 problem and (iii) third party vendors with which the
Company has significant relationships which could adversely affect the Company
if such parties fail to be Year 2000 compliant.
The general phases common to all three components of the Company's Year 2000
program are: (1) Awareness (the identification of the Year 2000 issues facing
the Company); (2) Assessment (the prioritization of the issues and the actions
to be taken); (3) Renovation (implementation of the specific actions determined
upon assessment, including repair, modification or replacement of items that are
determined not to be Year 2000 compliant); (4) Validation (testing of the new or
modified information systems, other systems, and equipment to verify the Year
2000 readiness); (5) Implementation (actual operation of such systems and
equipment and, if necessary, the actual implementation of any contingency plans
in the event Year 2000 problems occur, notwithstanding the Company's renovation
program).
The Company has completed an assessment of its Year 2000 readiness and is
undergoing a renovation of its internal systems which are not currently Year
2000 compliant. This phase involves the replacement of certain systems with
purchased software, the renovation of other systems, and the purchase of certain
hardware and other devices, all of which are Year 2000 compliant. The Company
anticipates that the renovation phase related to these applications should be
completed by the end of December 1998, and that the validation phase should be
completed by the end of March 1999. The implementation phase should begin in
April 1999. Excluding normal system upgrades, the Company estimates that total
costs for conversion and testing of new or modified IT systems and applications
will aggregate approximately $50,000, of which an aggregate of $26,000 has been
incurred to date.
The Company is keeping apprised of the progress of outside vendors' plans to
become Year 2000 compliant. All outside vendors are in the validation phase.
The Company expects to be Year 2000 compliant by the first quarter of 1999 and
has not yet prepared a contingency plan. However, in the first quarter of 1999,
the Company will begin to prepare a contingency plan, which the Company expects
to be completed by the second quarter of 1999.
Although the Company believes it is adequately addressing its Year 2000 issues,
the failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failure could materially affect the Company's results of
operations, liquidity and financial condition.
Effects of Inflation
The Company does not believe that inflation has had a significant impact on the
operations of the Company to date. The Company's assets consist primarily of
cash and investments which are monetary in nature. However, to the extent
inflation results in rising interest rates with the attendant adverse effects on
the securities markets and on the values of investments held in the Company's
accounts, inflation may adversely affect the Company's financial position and
results of operations. Inflation also may result in increased operating expenses
(primarily personnel-related costs) that may not be readily recoverable in the
fees charged by the Company.
Liquidity and Financial Condition
The Company's business typically does not require substantial capital
expenditures. The most significant investments are in technology, including
computer equipment and telephones.
Historically, the Company has been cash self-sufficient. Cash flows from
operations have ranged between inflows of $3.7 million and $1.5 million over the
past three years. In the first nine months of 1998 the Company had cash inflows
from operations of $1.4 million. The major source of this cash inflow was net
income.
Net cash from investing activities has ranged between inflows of $0.5 million
and outflows of $0.5 million over the past three years. Outflows of cash from
investing activities were just marginally negative in the first nine months of
1998 reflecting the purchase of computer equipment.
Cash flows from financing activities consistently have been negative over the
past three years. On March 7, 1997 and September 17, 1998, the Company announced
share repurchase programs under which the Company may repurchase up to 1,500,000
shares of its stock from time to time in the open market or through privately
negotiated transactions at market prices. The stock repurchase plans have three
year terms. During 1997, the Company repurchased 313,000 shares of its stock for
a total of $2,280,375. In the first nine months of 1998, the Company purchased
507,350 shares of its stock for a total of $2,249,173. The Company may in the
future issue debt securities or preferred stock or enter into loan or other
agreements that restrict the payment of dividends on and repurchase of the
Company's capital stock.
Historically, the Company has maintained a substantial amount of liquidity for
purposes of meeting regulatory requirements and potential business demands. At
September 30, 1998 the Company had $7.6 million of cash and cash equivalents.
Management believes the Company's cash resources, plus cash provided by
operations, are sufficient to meet the Company's foreseeable capital and
liquidity requirements. As a result of the holding company structure, the
Company's cash flows will depend primarily on dividends or other permissible
payments from its subsidiaries. The Company has no standby lines-of-credit or
other similar arrangements.
LFD, as a registered broker-dealer, had federal and state net capital
requirements at September 30, 1998 of $25,000. The aggregate net capital of LFD
was $0.3 million at September 30,1998. LMC, MSR, and MSRI, as registered
investment advisors, must meet net capital requirements imposed at the Federal
and state levels.
Stockholders' equity on September 30, 1998 decreased to $8.7 million from $10.1
million at December 31, 1997 primarily as a result of the purchase of $2.2
million of treasury shares offset partially by the Company's $0.5 million in net
income and amortization of $0.5 million of deferred compensation.
Management believes that the Company's liquid assets and its net cash provided
by operations will enable it to meet any foreseeable cash requirements.
Forward Looking Statements
Some of the statements included within Management's Discussion and Analysis may
be considered to be forward looking statements which are subject to certain
risks and uncertainties. Factors which could cause the actual results to differ
materially from those suggested by such statements are described from time to
time in the Company's Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission.
Part II. Other Information
Item 1. Legal Proceedings
None
Item 5. Other Information
During the third quarter of 1998, the Company received verbal notification that
its advisory relationship with one of its larger accounts will be terminated in
the fourth quarter of 1998. Assets under management in this account amount to
approximately $332 million as of September 30, 1998 and annualized revenues from
this account are approximately $1.3 million.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
No. 27 Financial Data Schedule (filed with the Securities and Exchange
Commission)
Other Items under Part II have been omitted since they are either not required
or are not applicable.
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.
LEXINGTON GLOBAL ASSET MANAGERS, INC.
By: /s/Richard M. Hisey
_____________________________
RICHARD M. HISEY
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
Date: 11-16-98
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from SEC Form 10-Q and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001001540
<NAME> Lexington Global Asset Managers, Inc.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 7,607,434
<SECURITIES> 1,893,557
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<CURRENT-ASSETS> 11,001,388
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<DEPRECIATION> 237,300
<TOTAL-ASSETS> 16,111,811
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<COMMON> 54,879
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<TOTAL-REVENUES> 14,016,269
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