UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Quarterly Period Ended March 31, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Transition Period From __________ To __________
Commission File Number 1-6802
Liberte Investors Inc.
(Exact name of Registrant as specified in its Charter)
Delaware 75-1328153
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
200 Crescent Court, Suite 1365 75201
Dallas, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (214) 871-5935
- --------------------------------------------------------------------------------
(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 _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by 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 _X*_ NO _____
* The registrant's confirmed plan of reorganization under Chapter 11 of the
Bankruptcy code did not provide for the distribution of securities.
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of registrant's common stock, $.01 par value,
as of the close of business on May 14, 1998: 20,256,097 shares.
1
<PAGE>
LIBERTE INVESTORS INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
March 31, 1998 and June 30, 1997........................... 3
Consolidated Statements of Operations
Nine Months Ended March 31, 1998 and 1997.................... 4
Consolidated Statements of Operations
Three Months Ended March 31, 1998 and 1997................... 5
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1998 and 1997.................... 6
Notes to Consolidated Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk........................................... 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................ 13
Item 2. Changes in Securities and Use of Proceeds..................... 13
Item 3. Defaults upon Senior Securities............................... 13
Item 4. Submission of Matters to a Vote of Security Holders........... 13
Item 5. Other Information............................................. 13
Item 6. Exhibits and Reports on Form 8-K.............................. 13
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LIBERTE INVESTORS INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, June 30,
1998 1997
------------- -------------
Assets
Unrestricted cash $ 54,033,855 $ 52,474,290
Restricted cash and cash equivalents 63,544 61,237
------------- -------------
Total cash and cash equivalents 54,097,399 52,535,527
Foreclosed real estate held for sale 3,435,621 3,435,621
Notes receivable, net -- 1,693
Accrued interest and other receivables 4,631 4,507
Other assets 372,306 467,876
------------- -------------
Total assets $ 57,909,957 $ 56,445,224
============= =============
Liabilities and Stockholders' Equity
Liabilities-accrued and other liabilities $ 323,843 $ 239,545
Stockholders' Equity
Common stock, $.01 par value,
50,000,000 shares authorized,
20,256,097 shares issued and outstanding 202,561 202,561
Additional paid-in capital 309,392,399 309,392,399
Accumulated deficit (252,008,846) (253,389,281)
------------- -------------
Total stockholders' equity 57,586,114 56,205,679
------------- -------------
Commitments and contingencies
Total liabilities and stockholders' equity $ 57,909,957 $ 56,445,224
============= =============
See notes to consolidated financial statements.
3
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LIBERTE INVESTORS INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
March 31,
---------------------------
1998 1997
----------- -----------
Income
Interest-bearing deposits in banks $ 2,040,959 $ 1,715,108
Interest income on notes receivable 41 97,064
Gains on sales of foreclosed real estate -- 11,310
Other 38,287 34,146
----------- -----------
Total income 2,079,287 1,857,628
----------- -----------
Expenses
Insurance 116,652 238,677
Compensation and employee benefits 63,504 111,405
Legal, audit and advisory fees 54,847 144,645
Franchise taxes 72,742 113,934
Foreclosed real estate operations 148,292 176,901
General and administrative 242,815 221,697
----------- -----------
Total expenses 698,852 1,007,259
----------- -----------
Net Income $ 1,380,435 $ 850,369
=========== ===========
Net income per share of common stock $ 0.07 $ 0.05
=========== ===========
Weighted average number of shares of
common stock 20,256,097 18,895,834
=========== ===========
See notes to consolidated financial statements.
4
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LIBERTE INVESTORS INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
---------------------------
1998 1997
----------- -----------
Income
Interest-bearing deposits in banks $ 676,882 $ 625,386
Interest income on notes receivable -- 27,325
Gains on sales of foreclosed real estate -- --
Other 9,148 14,250
----------- -----------
Total income 686,030 666,961
----------- -----------
Expenses
Insurance 37,750 78,938
Compensation and employee benefits 26,171 22,597
Legal, audit and advisory fees 18,114 79,487
Franchise taxes 43,985 113,934
Foreclosed real estate operations 75,298 51,692
General and administrative 94,634 84,060
----------- -----------
Total expenses 295,952 430,708
----------- -----------
Net Income $ 390,078 $ 236,253
=========== ===========
Net income per share of common stock $ 0.02 $ 0.01
=========== ===========
Weighted average number of shares of
common stock 20,256,097 20,256,097
=========== ===========
See notes to consolidated financial statements.
5
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LIBERTE INVESTORS INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------------
1998 1997
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,380,435 $ 850,369
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization of discount on notes receivable (93) (13,166)
(Increase) decrease in accrued interest and other receivable (124) 36,019
Decrease in other assets 110,202 362,317
Increase (decrease) in accrued and other liabilities 84,298 (255,782)
Gains from sales of foreclosed real estate -- (11,310)
------------ ------------
Net cash provided by operating activities 1,574,718 968,447
------------ ------------
Cash flows from investing activities:
Collections of notes receivable 1,786 930,520
Proceeds from sales of foreclosed real estate -- 51,479
Additions to fixed assets (14,632) --
Increase in restricted cash investments (2,307) (2,131)
------------ ------------
Net cash (used in) provided by investing activities (15,153) 979,868
------------ ------------
Cash flows from financing activities:
Issuance of common stock -- 23,091,951
Stock issuance costs -- (628,123)
------------ ------------
Net cash provided by financing activities -- 22,463,828
------------ ------------
Net increase in unrestricted cash and cash equivalents 1,559,565 24,412,143
Unrestricted cash at beginning of period 52,474,290 27,245,594
------------ ------------
Unrestricted cash at end of period $ 54,033,855 $ 51,657,737
============ ============
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
LIBERTE INVESTORS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
Note A - Organization
Liberte Investors Inc., a Delaware corporation (the "Company"), was organized in
April 1996 in order to effect the reorganization of Liberte Investors, a
Massachusetts business trust (the "Trust"). At a special meeting of the
shareholders of the Trust held on August 15, 1996, (the "Special Meeting"), the
Trust's shareholders approved a plan of reorganization whereby the Trust
contributed its assets to the Company and received all of the Company's
outstanding common stock, par value $.01 per share ("Shares" or "Common Stock").
The Trust then distributed to its shareholders in redemption of all outstanding
shares of beneficial interest in the Trust (the "Beneficial Shares") the Shares
of the Company. The Company assumed all of the Trust's assets and outstanding
liabilities and obligations. Thereafter, the Trust was terminated.
Unless otherwise indicated, the information contained in the Form 10-Q which
relates to periods prior to August 16, 1996 is information relating to the
Trust, and information relating to periods on and after August 16, 1996 is
information relating to the Company.
Note B - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X and therefore do not include all of the information and footnotes
necessary for a fair presentation of financial condition, results of operations,
and cash flows in conformity with generally accepted accounting principles. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended March 31, 1998, are not necessarily
indicative of the results that may be expected for the fiscal year ending June
30, 1998.
The accompanying financial statements include the accounts of the Company and
LNC Holdings, Inc., a wholly-owned subsidiary whose sole asset is approximately
40 acres of land located in Arlington, Texas. All intercompany balances and
transactions have been eliminated.
Note C - Foreclosed Real Estate Held For Sale
At March 31, 1998, the Company held foreclosed real estate for sale in the form
of single-family lots and land. The March 31, 1998 carrying amount of these
assets was approximately $3,436,000. The foreclosed real estate for sale
consists of 55 single-family lots in Fontana, California, land totaling
approximately 603 acres in San Antonio, Texas, and approximately 40 acres in
Arlington, Texas.
Note D - Commitments and Contingencies
The Company's wholly-owned subsidiary, LNC Holdings Inc., owns approximately 40
acres of land located in Arlington, Texas which is encumbered by property tax
liens totaling $976,000 including penalties and interest. There is no carrying
value of the property due to the encumbrances.
7
<PAGE>
On April 16, 1997, LNC Holdings Inc. received a notice of final judgment from
the City of Arlington with regard to the delinquent taxes. On May 27, 1997, LNC
Holdings Inc. notified the City of Arlington that it would execute a deed
without warranty to allow the taxing units to obtain title to the property. No
response has yet been received. LNC Holdings Inc. has accrued property taxes for
calendar years 1998, 1997 and 1996 totaling $91,000. Management believes that
resolution of the delinquent tax issue with the taxing authorities will not
result in a material adverse impact on the consolidated financial statements.
Cash and cash equivalents at March 31, 1998, included restricted cash of
approximately $64,000 for claims due to bankruptcy. On June 30, 1997, the court
issued an Administrative Closing Order and Final Decree with regard to the
bankruptcy case. The claims remaining represent unclaimed dividend checks dated
May 20, 1994. Any check not claimed will be voided after five years.
The Company is involved in routine litigation incidental to its business, which,
in the opinion of management, will not result in a material adverse impact on
the Company's financial condition or results of operations.
Note E - Federal Income Taxes
Although the Company had taxable income for the nine months ended March 31, 1998
and 1997, no tax liability has been recognized due to a reduction in the
valuation allowance related to its net operating loss carryforwards. Based on
current business activity, management believes it is more likely than not that
the Company will not realize the benefits of the loss carryforwards. Therefore,
a full valuation allowance has been established. In the event the Company
expands its business operations through an acquisition, the ability to use the
loss carryforwards may change.
Note F - Reclassifications
Certain 1997 amounts have been reclassified to conform with 1998
classifications.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The fiscal year ended June 30, 1997 was a transition year for Liberte Investors
Inc. With the reorganization of the Trust into the Company, the additional cash
provided by the issuance of stock to Hunter's Glen/Ford, Ltd., a Texas limited
partnership, and the associated changes in management, the Company believes it
is prepared to seek and acquire a viable operating company that will generate
increased value per share to existing stockholders and provide a new focus and
direction for the Company. Although substantial efforts have been made to
identify quality acquisitions in fiscal 1998, the Company has not yet entered
into any definitive acquisition agreements.
Nine Months Ended March 31, 1998 versus Nine Months Ended March 31, 1997
Net income for the nine months ended March 31, 1998 was $1,380,000 compared to
net income of $850,000 for the same period in 1997. The change in operating
results for the nine months was due to the various factors discussed below.
Interest income related to interest-bearing deposits in banks increased to
$2,041,000 for the nine months ended March 31, 1998 from $1,715,000 for the same
period in 1997. This increase is due to growth in the unrestricted cash balance
available for interest-bearing deposits. Unrestricted cash increased by $23.1
million due to the sale of newly-issued shares of common stock on August 16,
1996, thereby increasing the cash balance available to invest in
interest-bearing deposits. This increase in unrestricted cash resulted in a
higher average daily balance of interest-bearing deposits during the nine months
ended March 31, 1998 versus the nine months ended March 31, 1997. Unrestricted
cash increased from $52.5 million at March 31, 1997 to $54.0 million at March
31, 1998 primarily due to collections on the notes receivable of $414,000 and
interest earned on the unrestricted cash accounts.
Notes receivable interest income decreased to $41 for the nine months ended
March 31, 1998 from $97,000 for the same period in 1997 as a result of a lower
outstanding balance of notes receivable. The notes receivable balance was zero
at March 31, 1998 compared to $414,000 at March 31, 1997 due to the pay off of a
$414,000 note receivable.
There were no gains on sales of foreclosed real estate during the nine months
ended March 31, 1998 as compared to $11,000 for the same period in 1997. The
gains on sales of real estate represent proceeds received from the sale of
foreclosed real estate in excess of its carrying value. The gain recognized
during the nine months ended March 31, 1997 resulted from the sale of
single-family lots in San Antonio, Texas.
Other income increased to $38,000 for the nine months ended March 31, 1998 from
$34,000 for the same period in 1997. Other income for the nine months ended
March 31, 1998 consisted primarily of dividends on Resurgence Properties, Inc.
preferred stock and interest received on property tax refunds, while other
income for the nine months ended March 31, 1997 consisted primarily of dividends
on Resurgence Properties, Inc. preferred stock.
Insurance expense decreased to $117,000 for the nine months ended March 31,
1998, as compared to $239,000 for the same period in 1997. The decrease is
primarily due to decreased premiums related to Directors' and Officers'
insurance.
Compensation and employee benefits expense decreased by $47,000 from $111,000
during the nine months ended March 31, 1997 to $64,000 for the same period in
1998. The decrease is due to a decrease in the number of employees from nine to
two.
9
<PAGE>
Legal, audit and advisory fees were $55,000 for the nine months ended March 31,
1998, a decrease of $90,000 from the same period in 1997. Prior period activity
included additional legal expenses related to the collection of deficiency notes
that had been previously written-off and the review of a possible acquisition
candidate.
Franchise tax expense decreased from $114,000 for the nine months ended March
31, 1997 to $73,000 for the nine months ended March 31, 1998. Franchise tax
expense for the nine months ended March 31, 1998 represents Delaware,
California, and Texas franchise taxes due as a result of the reorganization of
the Trust into the Company. Franchise tax expense for the nine months ended
March 31, 1997 represents an adjusting accrual made to record 1996 Delaware
franchise taxes due as a result of the reorganization of the Trust into the
Company.
Foreclosed real estate operations expense decreased from $177,000 for the nine
months ended March 31, 1997 to $148,000 for the same period in 1998. The
decrease is due to a special accrual made during the nine months ended March 31,
1997 to record 1996 property taxes relating to the 40 acres of land located in
Arlington, Texas held by LNC Holdings, Inc., and lower property tax expense for
the period ended March 31, 1998 due to property tax refunds resulting from
reduced appraised values for 1995 and 1996 on land owned in San Antonio, Texas.
General and administrative expense increased by $21,000 from $222,000 during the
nine months ended March 31, 1997 to $243,000 for the same period in 1998. The
increase is attributed primarily to an increase in director's fees and rent
expense and a decrease in shareholder relations expense for the nine months
ended March 31, 1998. Director fees increased due to an increase in the number
of directors of the Company, and rent expense increased when the Company
relocated into new office space in July 1997. Shareholder relations expense for
the nine months ended March 31, 1998 is less due to additional expenses for the
nine months ended March 31, 1997 relating to two shareholders' meetings and the
annual listing fee for the New York Stock Exchange.
Three Months Ended March 31, 1998 versus Three Months Ended March 31, 1997
Net income for the three months ended March 31, 1998 was $390,000 compared to
net income of $236,000 for the same period in 1997. The change in operating
results for the three months was due to various factors discussed below.
Interest income related to interest-bearing deposits in banks increased to
$677,000 for the three months ended March 31, 1998 from $625,000 for the same
period in 1997. This increase is due to a higher average daily balance of
interest-bearing deposits during the three months ended March 31, 1998 versus
the three months ended March 31, 1997. Unrestricted cash increased from $52.5
million at March 31, 1997 to $54.0 million at March 31, 1998 primarily due to
collections on the notes receivable of $414,000 and interest earned on the
unrestricted cash accounts.
There was no interest income on notes receivable for the three months ended
March 31, 1998 as compared to $27,000 for the same period in 1997. The notes
receivable balance was reduced to zero at March 31, 1998 from $414,000 at March
31, 1997 due to the pay off of a $414,000 note receivable.
Other income decreased to $9,000 for the three months ended March 31, 1998 as
compared to $14,000 for the three months ended March 31, 1997. Other income for
the three months ended March 31, 1997 represents two dividend payments received
on Resurgence Properties, Inc. preferred stock. Other income for the three
months ended March 31, 1998 represents one dividend payment received on
Resurgence Properties, Inc. preferred stock and interest received on property
tax refunds.
10
<PAGE>
Insurance expense decreased to $38,000 for the three months ended March 31,
1998, as compared to $79,000 for the same period in 1997. The decrease is
primarily due to decreased premiums related to Directors' and Officers'
insurance.
Compensation and employee benefits expense increased to $26,000 for the three
months ended March 31, 1998 from $23,000 for the same period in 1997. The
increase is due to an increase in employees' salaries due to yearly adjustments.
Legal, audit and advisory fees decreased to $18,000 for the three months ended
March 31, 1998 as compared to $79,000 for the three months ended March 31, 1997.
The decrease is primarily due to higher legal expenses during the three months
ended March 31, 1997 relating to the review of a possible acquisition candidate.
Franchise tax expense decreased from $114,000 for the three months ended March
31, 1997 to $44,000 for the three months ended March 31, 1998. Franchise tax
expense for the three months ended March 31, 1998 represents Delaware,
California, and Texas franchise taxes due as a result of the reorganization of
the Trust into the Company. Franchise tax expense for the three months ended
March 31, 1997 represents an adjusting accrual made to record 1996 Delaware
franchise taxes due as a result of the reorganization of the Trust into the
Company.
Foreclosed real estate operations expense increased $23,000 from $52,000 for the
three months ended March 31, 1997 to $75,000 for the same period in 1998. The
increase is due to higher property tax expense and expenses relating to the
potential sale of foreclosed real estate for the three months ended March 31,
1998.
General and administrative expense increased by $11,000 from $84,000 during the
three months ended March 31, 1997 to $95,000 for the same period in 1998. The
increase is attributed primarily to an increase in monthly director's fees and
rent expense and a decrease in shareholder relations expense for the three
months ended March 31, 1998. Director fees increased due to an increase in the
number of directors of the Company, and rent expense increased when the Company
relocated into new office space in July 1997. Shareholder relations expense for
the three months ended March 31, 1998 is less due to additional expenses for the
three months ended March 31, 1997 relating to the two shareholders' meetings and
the annual listing fee for the New York Stock Exchange.
Liquidity and Capital Resources
The Company's principal funding requirements are operating expenses, including
legal, audit, and advisory expenses expected to be incurred in connection with
evaluation of potential acquisition candidates and other strategic
opportunities. The Company anticipates that its primary sources of funding
operating expenses are proceeds from the sale of foreclosed real estate,
interest income on cash and cash equivalents, and cash on hand.
The proceeds from the sale of newly-issued shares of stock to Hunter's
Glen/Ford, Ltd. ("Hunter's Glen") in August of 1996 for $23.1 million
substantially increased cash available to the Company. Management believes that
the additional cash will assist the Company in its efforts to expand its
business through acquisitions. Hunter's Glen is an affiliate of Mr. Gerald J.
Ford, who became the Chief Executive Officer and Chairman of the Board of the
Company following the Trust's reorganization into the Company and the sale of
the shares of stock to Hunter's Glen.
Statements contained in this Quarterly Report on Form 10-Q which are not
historical facts are forward-looking statements. In addition, the Company,
through its senior management, from time to time makes forward-looking public
statements concerning its expected future operations and performance, including
its
11
<PAGE>
ability to acquire businesses in the future, and other developments. Such
forward-looking statements are necessarily estimates reflecting the Company's
best judgment based upon current information, involve a number of risks and
uncertainties, and there can be no assurance that other factors will not affect
the accuracy of such forward-looking statements. While it is impossible to
identify all such factors, factors which could cause actual results to differ
materially from those estimated by the Company include, but are not limited to,
the uncertainty as to whether the Company will be able to make future business
acquisitions or that any such acquisitions will be successful, the Company's
ability to obtain financing for any possible acquisitions, general conditions in
the economy and capital markets, and other factors which may be identified from
time to time in the Company's Securities and Exchange Commission filings and
other public announcements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Required disclosures under this item are not yet applicable.
12
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
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
(a) Exhibits:
27.1 Financial Data Schedules (included only in the EDGAR filing).
(b) Reports on Form 8-K:
None
13
<PAGE>
SIGNATURE
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 thereunder duly authorized.
LIBERTE INVESTORS INC.
May 14, 1998 By: /s/ Gerald J. Ford
-------------------------------------------------
Gerald J. Ford
Chief Executive Officer and Chairman of the Board
May 14, 1998 By: /s/ Samuel C. Perry
-------------------------------------------------
Samuel C. Perry
Controller and Principal Accounting Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This cchedule contains summary financial information extracted from the
Company's unaudited financial statements as of March 31, 1998 and is quailified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 54,097,399
<SECURITIES> 0
<RECEIVABLES> 376,937
<ALLOWANCES> 0
<INVENTORY> 3,435,621
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 57,909,957
<CURRENT-LIABILITIES> 323,843
<BONDS> 0
0
0
<COMMON> 202,561
<OTHER-SE> 57,383,553
<TOTAL-LIABILITY-AND-EQUITY> 57,909,957
<SALES> 0
<TOTAL-REVENUES> 2,079,287
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 698,852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,380,435
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,380,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,380,435
<EPS-PRIMARY> .07
<EPS-DILUTED> .00
</TABLE>
