UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1997
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: 0-27520
SDC International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2583767
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2065 Montgomery Street, Fort Worth, Texas 76107
(Address of principal executive offices) (Zip Code)
(817) 738-9881
(Registrant's telephone number, including area code)
(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 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 [xx] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.001 per share: 2,204,265 shares outstanding as of
February 28, 1997.
<PAGE>
SDC INTERNATIONAL, INC.
INDEX
PART 1 - FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS
Balance Sheets February 28, 1997 (Unaudited)
and August 31, 1996 F-1
Statements of Operations (Unaudited)
for the three months ended February 28, 1997
and February 29, 1996 F-2
Statements of Operations (Unaudited)
for the six months ended February 28, 1997
and February 29, 1996 F-3
Statement of Stockholders' Equity (Unaudited)
for the six months ended February 28, 1997 F-4
Statements of Cash Flows (Unaudited)
for the six months ended February 28, 1997
and February 29, 1996 F-5
Notes to Financial Statements F-6 - F-9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS F-10 - F-12
PART II - OTHER INFORMATION F-13
<PAGE>
SDC INTERNATIONAL, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
February 28, August 31,
1997 1996
<S> <C> <C>
ASSETS
Current assets:
Cash $ 7,689 $ -
Cash - restricted 82,440 80,932
Accounts receivable 1,323,382 -
Inventory 31,310 31,310
Prepaid expenses 6,584 6,584
Notes receivables - stockholder and
related parties - 62,985
Total current assets 1,451,405 181,811
Machinery and equipment, net 4,049,894 4,204,581
Exclusive agency rights, net 144,781 166,237
Customer list, net 196,875 253,125
Other assets 9,555 29,464
Total assets $ 5,852,510 $ 4,835,218
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ - $ 3,711
Accounts payable - related party 1,278,726 -
Accrued expenses 105,139 79,467
Note payable - short term 30,000 -
Due to stockholder 93,802 111,302
Total current liabilities 1,507,667 194,480
Commitments and contingencies (Note 4) - -
Stockholders' equity:
Common stock $.001 par value, authorized
10,000,000 shares, issued and outstanding
2,204,265 and 2,198,265 shares, respectively 2,204 2,198
Additional paid-in capital 5,860,010 5,845,016
Accumulated deficit (1,517,371) (1,206,476)
Total stockholders' equity 4,344,843 4,640,738
Total liabilities and stockholders' equity $ 5,852,510 $ 4,835,218
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SDC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(UNAUDITED)
<TABLE>
<CAPTION>
February 28, February 29,
1997 1996
<S> <C> <C>
Sales $ 1,308,507 $ -
Cost of goods sold 1,262,211 -
Gross profit 46,296 -
Expenses:
Selling, general and administrative 55,997 63,994
Depreciation and amortization 117,151 114,390
Management fees 18,000 18,000
Total expenses 191,148 196,384
Loss from operations before other
income and provision for income taxes (144,852) (196,384)
Other income (expense):
Interest income 754 225
Interest expense (376) -
Loss before provision for income taxes (144,474) (196,159)
Provision for income taxes - -
Net loss $ (144,474) $ (196,159)
Primary loss per share:
Loss from operations before other
income and provision for income taxes $ (.07) $ (.10)
Provision for income taxes $ - $ -
Net loss $ (.07) $ (.10)
Weighted average number of shares outstanding 2,204,265 1,956,769
</TABLE>
See accompanying notes to financial statements
<PAGE>
SDC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED
(UNAUDITED)
<TABLE>
<CAPTION>
February 28, February 29,
1997 1996
<S> <C> <C>
Sales $ 1,335,579 $ 12,089
Cost of goods sold 1,279,548 4,725
Gross profit 56,031 7,364
Expenses:
Selling, general and administrative 97,755 202,130
Depreciation and amortization 234,303 193,155
Management fees 36,000 36,000
Total expenses 368,058 431,285
Loss from operations before other
income and provision for income taxes (312,027) (423,921)
Other income (expense):
Interest income 1,508 2,660
Interest expense (376) -
Loss before provision for income taxes (310,895) (421,261)
Provision for income taxes - -
Net loss $ (310,895) $ (421,261)
Primary loss per share:
Loss from operations before other
income and provision for income taxes $ (.14) $ (.22)
Provision for income taxes $ - $ -
Net loss $ (.14) $ (.22)
Weighted average number of shares
outstanding 2,204,265 1,956,700
</TABLE>
See accompanying notes to financial statements
<PAGE>
SDC INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Total
Common Stock paid-in Accumulated Stockholders'
Shares Amount capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balances at September 1, 1996 2,198,265 $ 2,198 $5,845,016 $ (1,206,476) $ 4,640,738
Sale of common stock 6,000 6 14,994 - 15,000
Net loss for the six months ended
February 28, 1997 - - - (310,895) (310,895)
Balances at February 28, 1997 2,204,265 $ 2,204 $5,860,010 $ (1,517,371) $ 4,344,843
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SDC INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
(UNAUDITED)
<TABLE>
<CAPTION>
February 28, February 29,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (310,895) $ (421,261)
Adjustments to reconcile net loss to net
cash used for operating activities:
Amortization and depreciation 234,303 193,155
Decrease (increase) in:
Accounts receivable (1,323,382) 537,280
Inventory - (35,068)
Restricted cash (1,508) -
Other assets 17,999 -
Prepaid expenses - 6,400
Increase (decrease) in:
Accounts payable (3,711) -
Accounts payable - related party 1,278,726 (372,175)
Accrued expenses 25,672 5,761
Net cash (used for) provided by
operating activities (82,796) (85,908)
Cash flows from investing activities:
Acquisition of exclusive agency rights - (150,000)
Proceeds from collection of notes
receivable - related parties
Acquisition of customer list 62,985 (150,000)
Purchase of machinery and equipment - (1,947)
Other assets acquired - (4,400)
Net cash provided (used for) by
investing activities 62,985 (290,579)
Cash flows from financing activities:
Proceeds from issuance of note payable 30,000 -
Proceeds from stockholder 32,500 -
Proceeds from sale of common stock 15,000 569,350
Costs associated with sale of common stock - (143,946)
Repayment of loans from stockholder (50,000) (36,196)
Net cash provided by financing activities 27,500 389,208
Net increase in cash 7,689 12,721
Cash at beginning of period - 49,677
Cash at end of period $ 7,689 $ 62,398
Supplemental disclosures:
Interest paid $ - $ -
Income taxes paid $ - $ -
Supplemental disclosure of non-cash
investing activities:
Issuance of 150,000 shares of common
stock for acquisition of customer list $ - $ 187,500
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTE 1 - GENERAL
SDC International, Inc. ("the Company") was incorporated in the state
of Delaware on June 30, 1994 for the purpose of developing and
marketing an exclusive license acquired from Skoda Diesel a.s.
("Skoda") to sell a broad range of Skoda's products which are
primarily comprised of piston combustion diesel engines whose
applications include locomotive and stationary engines for the
generation and co-generation of electric power.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management the
interim financial statements include all adjustments necessary in
order to make the financial statements not misleading. The results
of operations for the three months ended are not necessarily
indicative of the results to be expected for the full year. For
further information, refer to the Company's audited financial
statements and footnotes thereto at August 31, 1996, included in the
Company's Form 10-KSB, filed with the Securities and Exchange
Commission.
NOTE 2 - EXCLUSIVE AGENCY RIGHTS, NET
On April 21, 1994, one of the founding shareholders executed an
exclusive agency representation letter agreement as agent of the
Company with Skoda pursuant to which the Company was appointed as
Skoda's exclusive sales agent in North, South and Central
America with the exception of the country of Peru. In connection
with this agreement, the Company is obligated to furnish Skoda
with all inquiries from potential purchasers and may not execute
any contracts or other agreements on Skoda's behalf without its
written consent. Skoda must provide the Company with all
information and materials normally associated with the sales
effort, including catalogues, product literature and descriptions,
price lists and the technical expertise and consultation of its
staff, if necessary.
In order for the Company to maintain its exclusivity, it must
generate annual gross sales within the territory of at least
$15,000,000 at the close of the fifth year (April, 1999) after
the execution of the agreement. As consideration for the purchase
of these exclusive agency rights, the Company has issued 51,650
shares of it's common stock to Skoda. Such stock has been assigned
a value of 50% of the private offering per share price of $2.50.
Accordingly, the Company has valued such exclusive agency rights at
$64,563 (51,650 x $1.25) which will be amortized on a monthly basis
over five (5) years. For the three months ended February 29, 1997
and February 29, 1996, the Company has recorded amortization expense
of $3,228 and $3,228, respectively.
In October 1995 the Company purchased the exclusive rights to market
and sell Skoda Diesel products into the countries of China and South
Korea The Company paid Skoda a one-time fee of $50,000 for the
acquisition of such exclusive rights in South Korea and a one-time
fee of $100,000 for the acquisition of such exclusive rights in
China.
The newly acquired agency rights from China and Korea are being
amortized on a monthly basis over (5) five years. For the three
months ended February 28, 1997 and February 29, 1996, the Company
recorded $7,500 and $7,500, respectively, of amortization expense.
<PAGE>
NOTE 3 - NOTES PAYABLE
Pursuant to two promissory notes dated October 24, 1996 and
January 27, 1997, the Company borrowed $10,000 and $20,000,
respectively. The notes bear interest at the prime rate and are
payable ninety days from date of issuance.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
a) Lease agreement
The Company leases its administrative office pursuant to signed lease
agreement commencing July 1, 1995 and expiring on June 30, 1997.
Such lease requires monthly payments of $3,500. Effective December
1996, the Company terminated this lease. Prior to July 1, 1995
the Company maintained its administrative office on a month to month
basis, free of charge at the office of Worth. Worth is an entity
which the President of the Company is also a 50% shareholder.
Effective January 1, 1997, the Company entered into a new lease for
a one year term. Such lease requires monthly payments of $3,000.
Included in general and administrative expenses is rent expense which
amounted to $9,500 and $10,500 for the three months ended February
28, 1997 and February 29, 1996, respectively.
b) Management agreement
On December 15, 1995 the Company and Worth entered into a management
agreement with an individual for a period of three years. Pursuant
to such agreement, the individual shall devote such time, attention
and efforts to management services as may be reasonably required
by the Company and Worth. The Company and Worth will pay such
individual an amount equal to twenty-five percent (25%) of the
gross profit from sales made by the Company. Such payments are
payable monthly after the collection of receivables from said sales.
For the three months ended February 28, 1997 and February 29, 1996,
no payments were made or are due to such individual.
c) Significant customers and vendors
i) For the three months ended February 28, 1997, the Company had two
sale to unrelated customers which accounted for 98% of the total
sales. No sales were made during the three months ended February
29, 1996.
ii) For the six months ended February 28, 1997 and February 29, 1996,
the Company purchased 100% of its cost of goods sold from Skoda,
one of its founding shareholders.
<PAGE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Cont'd)
d) Concentration of credit risk
Due to its current limited sales, the Company has a high
concentration of credit risk until such transactions are completed.
The Company is actively seeking sales outside of the United
States. If such sales occur, the revenue and subsequent
collections will be subject to the fluctuations such sales
generate, both from currency and political changes. The Company's
machinery and equipment is located in the Czech Republic. The
Company's primary source of inventory is currently Skoda and as
such, it is subject to Skoda's risks of business and its
continued financial health, as well as the risks associated with
foreign businesses, both from currency and political changes.
e) Finder's fee agreement
On May 20, 1996, the Company entered into a finder's fee
agreement with Prime Charter, Ltd ("Prime") for a period of ten
years, renewable for additional five year periods. Pursuant
to such agreement, any sales to entities introduced to the
Company by Prime shall result in a finder's fee to Prime of
two percent (2%) of the gross sales price or ten percent (10%) of
the adjusted gross profit resulting from the sales. Such
payments are due 45 days after each quarter-annual calendar period.
f) Dependence on Skoda
The Company's operations are dependent on Skoda since Skoda is
responsible for the manufacturing of all of the Company's products.
The Company faces risks of the inability to obtain products in the
event of production problems of Skoda due to labor problems,
governmental regulations, working capital deficiencies, political
unrest and other problems which may result in the inability of
Skoda to fulfill orders of the Company.
NOTE 5 - RELATED PARTY TRANSACTION
a) Accounts payable
At February 28, 1997, the Company had accounts payable totalling
$1,278,726 which was due to Skoda, one of its founding shareholders.
b) Notes receivables - Stockholder and related parties
From February 1995 to August 1995, the Company made loans at various
terms . As of August 31, 1996 the balance amounted to $62,985,
inclusive of accrued interest, from a shareholder and to entities
which such shareholder is also an officer. Said shareholder is not
an officer or director of the Company. These amounts were repaid
during October 1996.
c) Accrued expenses
Included in accrued expenses at February 28, 1997 and August 31, 1996
is $59,682 and $35,354, respectively of management services which are
owed to an affiliate of the Company's President and Secretary.
<PAGE>
NOTE 5 - RELATED PARTY TRANSACTION (Cont'd)
d) Due to stockholder
Included in due to stockholder at February 28, 1997 and August 31,
1996 is $18,252 and $18,252, respectively which represents the
balance due an affiliate for the purchase of its customer list and
$75,550 and $93,050, respectively due the Company's President and
Secretary for funds advanced to the Company.
e) Management fees
For the three months ended February 28, 1997 and February 29, 1996,
the Company recorded $18,000 and $18,000 respectively for management
fees and travel allowance to Worth, a founding stockholder. The
Company's President and Secretary is a 50% shareholder of Worth.
<PAGE>
NOTE 6 - SUBSEQUENT EVENTS
a) Letter's of intent
(i) The Company entered into a Letter of Intent dated August 23,
1996 with Krizik, a.s. ("Krizik"), a Company organized and
registered in the Slovak Republic, to form a subsidiary to
market, finance and sell Krizik's products (meters and
related products) effective January 1, 1997. As of February
28, 1997, the Company is continuing its negotiations with
Krizik.
(ii) The Company has entered in to a Letter of Intent dated
December 3, 1996 with Golden Grove Business, Inc. ("GGB") to
merge GGB, and its operations as the authorized agent
for Tantra, a.s. in Central and South America, and the
Caribbean, into the Company. As of February 28, 1997,
the Company is continuing its negotiations with GGB.
<PAGE>
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MANAGEMENT PLANS
Negotiations and discussions with Krizik, a.s., the Slovak
manufacturer of electric meters, continues. Logistics and
value-added-tax matters inherent in the Slovak republic have been
worked out between SDC and Krizik. It is proposed that SDC will
establish a US subsidiary, Krizik, Inc., and that all export orders
of Krizik will go through this new company. This SDC subsidiary
will finance the inventory needed for these orders, estimated to
be $18,000,000 in revenue for SDC during 1997 and 1998 fiscal year.
Draft contracts will be prepared and exchanged during the next
quarter.
Contracts providing for the acquisition by merger of GGB into SDC
have been executed by both parties. Generally, the agreements
call for SDC's acquisition of GGB and its Columbian operating
subsidiary, Apus, for the exchange of 48,000 shares of SDC common
stock plus a capital infusion by SDC of approximately $180,000 into
the operations of GGB and Apus, which would then be SDC
subsidiaries. Additionally, the President of both Companies will
become a member of the Board of Directors of SDC and will serve
as SDC's Executive Vice President. It is anticipated that the
merger will close no later than May, 1997.
SDC will establish a wholly-owned subsidiary, SDC PowerGen in
Prague, Czech Republic, during April, 1997. The Managing Director
will be Milan Netrh, former director ofInternational Sales for
Skoda Diesel. The subsidiary will market and sell electrical
generating and co-generating equipment using the components
(engine, alternator, and electrical control system) of East
European manufacturers. By establishing this company, the SDC
product range of such equipment is expanded four-fold and the
reliance on a single manufacturer, Skoda Diesel, is minimized. It
is expected that the staffed office of SDC PowerGen will open
in April, 1997 in Prague.
Due to the above described corporate developments, the Company
plans to sell up to 500,000 new shares of its common stock under
SEC Rule 505, with the use of proceeds from such sale to be for
working capital, to close the GGB acquisition, and to prepare for
a secondary stock offering before the end of this fiscal year. The
Company is preparing a Five Year Strategic Growth Plan and plans to
have a secondary stock issuance to provide funding in order to
capitalize on these developments.
There can be no assurances that any of the matters discussed above
will result in positive results for the Company.
RESULTS OF OPERATIONS
Three months ended February 28, 1997 as compared to three months
ended February 29, 1996
For the three month period ended February 28, 1997, the Company
reported revenues of $1,308,495. The Company has posted $80,000 of
performance bonds for orders received and expects release of said
bonds during June, 1997.
Costs of goods sold for the three month period ended February 28,
1997 was approximately 96.4% of sales. Management believes that
costs of goods sold in the future may be a lower percentage if the
Company is able to attain a more stable and favorable product mix.
Orders shipped during this quarter were in conjunction with Skoda
Diesel, which caused a high cost of goods.
<PAGE>
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd)
RESULTS OF OPERATIONS (Cont'd)
Three months ended February 28, 1997 as compared to three months
ended February 29, 1996 (Cont'd)
Operating expenses for the three month period ended February 28,
1997 were approximately $191,148. Operating expenses in the
quarter ended February 28, 1997, without including amortization
and depreciation, decreased approximately 10% compared to the same
operating expenses during the quarter ending February 29, 1996.
Management expects operating expenses (non-depreciation and non-
mortization), remain at this approximate level for the near
future. Operating expense categories which exceeded $5,000, for
the three month period ending February 28, 1997 were; Amortization
& Depreciation $117,151; Office rent $10,000; Compensation & Salary
$18,000; Travel & Lodging $9,904; and Telephone $5,425. Operating
expense categories which exceeded $5,000 for the three month
period ending February 29, 1996 were: Amortization & Depreciation
$114,390: Freight $5,792; Office rent $11,695; Compensation &
Salary $18,000; Travel & lodging $20,500; and Telephone &
Facsimile $6,188.
Six months ended February 28, 1997 as compared to six months ended
February 29, 1996
For the six month period ended February 28, 1997, the Company
reported revenues of $1,335,579. The Company has posted $80,000
of performance bonds for orders received. Discussions have been
made and are continuing with sources for export and sales
financing which could help the Company develop its markets and
customers.
Costs of goods sold for the six month period ended February 28,
1997 was approximately 96% of sales. Management believes that
costs of goods sold in the future may be a lower percentage if the
company is able to attain a more stable and favorable product mix.
Orders shipped during this period were in conjunction with Skoda
Diesel, resulting in costs of goods which are higher than for
sales without participation of Skoda Diesel.
Operating expenses for the six month period ended February 28,
1997 were approximately $368,058. Operating expenses in the six
months period ended February 28, 1997, without including
amortization and depreciation, decreased approximately 51%
compared to the same operating expenses during the prior year's
two quarters ending November 30, 1995 and February 29, 1996.
Management expects operating expenses (non-depreciation and non-
amortization) to remain at this approximate level. Operating
expense categories which exceeded $10,000, for the six month
period ending February 28, 1997 were; Amortization & Depreciation
$234,303; Office rent $21,000; Compensation & Salary $36,000; and
Travel & Lodging $20,732.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used for the Company's operating activities for the six
month period ended February 28, 1997 was approximately $82,796.
Net cash provided by the Company's investing activities for the
six month period ended February 28, 1997 was approximately
$62,985. Management is evaluating its current and projected cash
needs to determine if its current financial situation will be
sufficient to meet such needs. If the Company continues according
to its present plans, the company will be required to obtain
additional financing or equity capital. There is no assurance
that such financing or equity capital will be available.
<PAGE>
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd)
LIQUIDITY AND CAPITAL RESOURCES (Cont'd)
Negative cash flows from the company's operating activities are
anticipated to continue until the Company has established its
distributors within its sales territories, has received and
shipped orders, and has collected payment for such orders. The
Company may encounter difficulties in financing the purchases of
inventory necessary to complete orders. The company acknowledges
that there can be no assurance that it will be able to obtain
capital or financing until the time of such payment is received
o+r that such capital or financing will be available. In the
event the Company is unable to provide needed revenues to
finance its ongoing operations or if the Company does not
receive additional capital, there could be a severe adverse
impact on the Company's future operations.
Net cash provided by financing activities for the six months
ended February 28, 1997 was approximately $27,500. This
increase in net cash amounting to $27,500 was attributable to
proceeds on loans from unrelated parties of $30,000 and proceeds
from sale of common stock amounting to $15,000, net of repayment
of loans from stockholders amounting to $17,500.
The Company's products are sold in US dollars and the Company
does not believe currency exchange rates or current inflation
rates will have a significant effect on sales or profitability.
<PAGE>
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 Information:
None
ITEM 6 - Exhibits and Reports on Form 8-K:
None
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SDC INTERNATIONAL, INC.
May 13, 1997 BY:/s/Ronald A. Adams
Ronald A. Adams, President
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/Ronald A. Adams May 13, 1997
Ronald A. Adams, Director
and President (Principal
Executive Officer and
Principal Financial
Officer)
/s/Henry S. Green, Jr. May 13, 1997
Henry S. Green, Jr.,
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statement of Cash Flows and Notes thereto
incorporated in Part I, Item 1 of this Form 10-QSB and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-28-1997
<CASH> 90,129
<SECURITIES> 0
<RECEIVABLES> 1,323,382
<ALLOWANCES> 0
<INVENTORY> 31,310
<CURRENT-ASSETS> 6,584
<PP&E> 4,049,894
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,852,510
<CURRENT-LIABILITIES> 1,507,667
<BONDS> 0
2,204
0
<COMMON> 0
<OTHER-SE> 4,342,639
<TOTAL-LIABILITY-AND-EQUITY> 5,852,510
<SALES> 1,308,507
<TOTAL-REVENUES> 0
<CGS> 1,262,211
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 190,770
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (144,474)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
