UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
( X ) Quarterly report pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934.
For the quarterly period ended September 30, 1998.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange
Act for the transition period from ___________ to ____________ .
Commission File Number: 333-06328
Sterling Financial Services of Florida I, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Florida 65-0716464
(State of Incorporation) (I.R.S. Employer I.D. No)
239 Halliday Park Drive, Tampa, Florida 33612
(Address of Principal Executive Offices)
(813) 932-2228
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 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 ( ) NO (X)
Indicate the number of shares outstanding of each of the issuer's classes of
stock as of June 23, 1999
1,000 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
Sterling Financial Services of Florida I, Inc.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of September 30, 1998 and December 31,
1997.................................... 3
Statements of Operations for the three and nine-months ended
September 30, 1998, the three-months ended September 30, 1997 and the
period January 3, 1997 (date of inception) to September 30,
1997.................................... 4
Statement of Stockholders' Deficit for the nine-months ended
September 30, 1998 ..................... 5
Statements of Cash Flows for the three and nine-months ended
September 30, 1998, the three-months ended September 30, 1997 and the
period January 3, 1997 (date of inception) to September 30,
1997.................................... 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
Item 1. Legal Proceedings ................................. 12
Item 2. Changes in Securities ............................... 12
Item 3. Defaults Upon Senior Securities ........................... 12
Item 4. Submission of Matters to a Vote of Securities Holders...... 12
Item 5. Other Information.......................................... 12
Item 6. Exhibits and Reports on Form 8-K........................... 12
Signatures
-2-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
BALANCE SHEETS
- -------------------------------------------------------------------
September
30, 1998 December
ASSETS Unaudited 31, 1997
----------- ----------
Cash and cash equivalents $1,769,224 $ 816,433
------------ ------------
Receivables:
Finance 1,074,824 196,503
Mobile home floor plan 265,092 86,040
Affiliate 18,300 12,550
------------ ------------
Total receivables 1,358,216 295,093
------------ ------------
Inventories 152,355 12,000
------------ ------------
Property and equipment - net 232,850 173,231
------------ ------------
Investment in Parkwood Estates
Mobile Home Park, L.C. 557,999
------------ ------------
Deferred debt issuance 434,923 172,856
costs, net
------------ ------------
TOTAL $ 4,505,567 $ 1,469,613
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Secured notes payable $ 5,130,000 $ 1,612,000
Accrued and other 66,566 8,150
liabilities
------------ ------------
Total liabilities 5,196,566 1,620,150
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock, no par value, 10,000
shares authorized,
1,000 shares issued and outstanding 1,000 1,000
Deficit (691,999) (151,537)
------------ ------------
Total stockholders' deficit (690,999) (150,537)
------------ ------------
TOTAL $4,505,567 $ 1,469,613
============ ============
- -------------------------------------------------------------------
See accompanying notes.
-3-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
- -----------------------------------------------------------------------------
Period
January
Three-Months Three-Months Nine-Months 3, 1997
Ended Ended Ended (date of
September September September inception)
30, 1998 30, 1997 30,1998 to
September
30, 1997
------------ ------------ -----------------------
REVENUES:
Interest and fees $74,892 $ 1,680 $164,444 $ 1,680
Rental income 27,203 647 27,203 647
Other 174 4,919
------------ ------------ -----------------------
Total revenues 102,269 2,327 238,883 2,327
------------ ------------ -----------------------
OPERATING EXPENSES:
Management fees 145,000 14,025 282,190 18,575
Interest 142,619 18,831 304,046 19,627
Occupancy and equipment 36,372 10,640 117,033 15,040
Professional fees 16,739 31,752
Equity in loss of Parkwood
Estates Mobile Home
Park, L.C. 3,607 3,607
Other 6,609 149 40,717 849
------------ ------------ -----------------------
Total operating
expenses 350,946 43,645 779,345 54,091
------------ ------------ -----------------------
NET LOSS $(248,677) $ (41,318) $(540,462) $(51,764)
============ ============ =======================
LOSS PER COMMON SHARE $ (248.68) $ (41.32) $(540.46) $ (51.76)
============ ============ =======================
- -----------------------------------------------------------------------------
See accompanying notes.
-4-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited)
- ------------------------------------------------------------------------------
Common Stock
Shares Amount Deficit Total
-------- ----------- ---------- --------
Balances, December 31, 1,000 $ 1,000 $(151,537) $ (150,537)
1997
Net loss for the
nine-months ended (540,462) (540,462)
September 30, 1998
-------- ----------- ----------- -----------
Balances, September 30, 1,000 $ 1,000 $(691,999) $ (690,999)
1998 ======== =========== =========== ===========
- ------------------------------------------------------------------------------
See accompanying notes.
-5-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period
January
Three-Months Three-Months Nine-Months 3, 1997
Ended Ended Ended (date of
September September September inception)
30, 1998 30, 1997 30,1998 to
September
30, 1997
------------ ------------ -----------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(248,677) $(41,318) $(540,462)$ (51,764)
Adjustments to reconcile net loss to net
cash provided by
(used in) operating activities:
Depreciation 6,974 1,815 19,866 1,815
Amortization and write off of deferred
debt issuance costs 28,183 6,888 61,933 6,888
Equity in loss of Parkwood Estates
Mobile Home Park, L.C. 3,607 3,607
Increase in inventories (140,355) (140,355)
Increase in accrued and other
liabilities 29,945 200 58,416 30,200
---------- ---------- ----------------------
NET CASH USED IN OPERATING ACTIVITIES (320,323) (32,415) (536,995) (12,861)
---------- ---------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (11,255) (106,156) (79,485) (115,791)
Investment in Parkwood Estates Mobile (561,606) (561,606)
Home Park, L.C.
Finance receivables originated and
purchased, net of (315,191) (79,115) (878,321) (79,115)
payments and discounts
Floor plan receivables, net of payments (74,026) (179,052)
---------- ---------- ----------------------
NET CASH USED BY INVESTING ACTIVITIES (962,078) (185,271) (1,698,464) (194,906)
---------- ---------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,000
Proceeds from issuance of secured notes
payable 1,327,000 845,000 3,518,000 984,000
Net increase (decrease) in stockholder
advance 1,750
Increase in affiliate receivables (6,000) (5,750)
Cash paid for deferred debt issuance (105,699) (104,856) (324,000) (158,172)
costs
---------- ---------- ----------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES
1,215,301 740,144 3,188,250 828,578
---------- ---------- ----------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (67,100) 522,458 952,791 620,811
---------- ---------- ----------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
1,836,324 98,353 816,433 -
---------- ---------- ----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,769,224 $620,811 $1,769,224 $620,811
========== ========== ======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Interest paid $ 114,436 $ 11,943 $ 242,113 $ 12,739
========== ========== ======================
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes.
-6-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Sterling Financial Services of Florida I, Inc. (the "Company") was incorporated
under the laws of the state of Florida on January 3, 1997. The Company, which
was in the development stage through December 31, 1997, is primarily engaged in
the business of originating and purchasing retail mobile home installment sales
contracts created in connection with the financing of manufactured homes. The
Company also owns and rents mobile homes located in the Halliday Village Mobile
Home Park, and has a 25% ownership interest in a mobile home park located in
Hillsborough County, Florida (see Note D). The Company's operations are located
in Tampa, Florida and substantially all of its customers are Florida residents.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principals for interim
financial information and the instructions to Form 10-QSB and Rule 10-1 of
Regulation S-X of the Securities and Exchange Commission (the "SEC").
Accordingly, these financial statements do not include all of the footnotes
required by generally accepted accounting principals. In the opinion of
management, all adjustments (consisting of normal and recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and nine-month periods ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. The accompanying financial statements and the notes should be
read in conjunction with the Company's audited financial statements as of
December 31, 1997 contained in its Form 10-KSB.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principals requires that management make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. The reported amounts of the revenues and expenses during the
reporting period, may be affected by the estimates and assumptions that
management is required to make. Estimates from management that are critical to
the accompanying financial statements include the appropriate level or allowance
for credit losses which can be significantly impacted by future industry, market
and economic trends and conditions. Actual results could differ from those
estimates.
Allowance for Credit Losses
The Company enters into agreements with dealers that establish the allowance for
credit losses through non-refundable acquisition discounts to protect the
Company from potential losses associated with the financing of installment sales
contracts. All or a portion of these negotiated discounts are available to
absorb credit losses. Credit loss experience, contractual delinquency of loan
receivables, the value of underlying collateral and current economic conditions
are factors management uses in negotiating the discounts and assessing the
overall adequacy of the discounts to absorb losses. Management attempts to
maintain the allowance at a level consistent with anticipated loan charge offs,
and if necessary will charge earnings when the negotiated discounts do not
appear adequate to absorb losses.
-7-
<PAGE>
The Company generally initiates repossession proceedings when an account is more
than two payments contractually past due, but the repossession process is
accelerated for loans which become delinquent in the first or second payment.
Investment in Parkwood Estates Mobile Home Park, L.C. ("Parkwood")
The Company uses the equity method to account for its 25% ownership interest in
Parkwood.
Loss Per Common Share
Loss per common share is based on the weighted average number of common and
common equivalent shares outstanding during the period. The weighted average
number of such shares outstanding for the three and nine-months ended September
30, 1998, the three-months ended September 30, 1997 and the period January 3,
1997 (date of inception) to September 30, 1997 was 1,000.
NOTE C - SECURED NOTES PAYABLE
Secured notes payable bear interest at 10.5%, with interest payable monthly, and
mature on June 30, 2002. The notes, which may be prepaid in whole or in part at
any time without premium or penalty, are secured by a first lien on any assets
acquired with the proceeds. The Company has registered $9.9 million of such
notes and as of September 30, 1998 is continuing to offer the remaining
$4,770,000 of notes for sale. Broker-dealers, who are members of the National
Association of Securities Dealers, Inc, are offering the notes on a
"best-efforts" basis.
NOTE D - RELATED PARTY TRANSACTIONS
Affiliate receivables bear interest at 12.9%, are unsecured and contain no
specified repayment terms.
Sterling Financial Services, Inc. ("SFS"), a related party due to common
ownership manages the Company and provides all services in connection with the
origination, purchasing and servicing of receivables. As consideration for these
services, the Company pays SFS for all of its expenses plus 20%. Management fees
paid to SFS during the three and nine-months ended September 30, 1998, the three
months ended September 30, 1997 and the period January 3, 1997 (date of
inception) to September 30, 1997 approximated $145,000, $282,000, $14,025 and
$18,575, respectively.
The Company rents certain lot space for mobile home rental units it owns, and
prior to April 1998 certain office space for its administrative operations, from
Halliday, a related party by virtue of Anthony Sutter's ownership. In May 1998,
SFS began to pay the rent on the administrative space and accordingly, the
related rent expense is included in SFS expenses on which the Company pays
management fees (see preceding paragraph). Total rent paid under these
arrangements for the three and nine-months ended September 30, 1998, the three
months ended September 30, 1997, and the period January 3, 1997 (date of
inception) to September 30, 1997 approximated $22,900, $71,500, $10,640 and
15,040, respectively.
During the three-months ended September 30, 1998, the Company purchased a
twenty-five percent interest in Parkwood Estates Mobile Home Park, L.C.
("Parkwood") for approximately $561,600; such entity was formed in August 1998
for the purpose of purchasing, selling and leasing mobile home units. The
remaining 75% interest is owned by Anthony Sutter the Companies' President and
majority stockholder. In addition to such cash outlay, the Company has agreed to
loan Parkwood up to $350,000 to fund its cash flow needs. Advances under this
arrangement are expected to accrue interest at a fixed rate of 12.9%, are
unsecured and have no specified repayment terms. At September 30, 1998 no
advances had been made to Parkwood.
- -------------------------------------------------------------------------------
-8-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The following discussion and analysis should be read in conjunction with the
balance sheet as of December 31, 1997 and the financial statements as of and for
the three and nine-months ended September 30, 1998, the three-months ended
September 30, 1997 and the period January 3, (date of inception) to September
30, 1997 included with this Form 10-QSB. The Company did not have significant
operations during the three months ended September 30, 1997 or for the period
January 3, 1997 (date of inception) to September 30, 1997 and as such this
analysis does not include any additional discussion as of and for such periods.
The Company, which was in the development stage through December 31, 1997, is
primarily in the business of originating and purchasing retail mobile home
installment sales contracts created in connection with the financing of
manufactured homes. The Company also owns and rents mobile homes, located in the
Halliday Village Mobile Home Park, and has a 25% ownership interest in a mobile
home park, both located in Hillsborough County, Florida. The Company's
operations are located in Tampa, Florida and substantially all of its customers
are Florida residents
Readers are referred to the cautionary statement, which addresses
forward-looking statements made by the Company.
RESULTS OF OPERATIONS
Three and Nine-Months Ended September 30, 1998
The Company generated revenues of approximately $102,300 and $238,900 during the
three and nine-months ended September 30, 1998, respectively as they continued
to implement their business plan. These revenues consisted primarily of interest
and fees of approximately $74,900 and $164,400, respectively earned on
receivables and cash equivalents. In addition, the Company generated
approximately $27,200 and $69,500 of rental income during the three and
nine-months ended September 30, 1998, respectively from the rental of mobile
homes owned by the Company. Operating expenses during the three and nine-months
ended September 30, 1998 totaled approximately $350,900 and $779,300,
respectively and consisted primarily of management fees of $145,000 and
$282,190, respectively and interest of $142,619 and $304,046, respectively. In
addition, occupancy and equipment included rent expense of approximately $23,000
and $71,500 during the respective three and nine-months ended September 30,
1998. The management fees and rent were paid to Sterling Financial Services,
Inc. ("SFS") and Halliday, respectively, which are related to the Company by
virtue of common ownership. The interest expense included cash outlays of
$114,436 and $242,113 during the three and nine-months ended September 30, 1998,
respectively on secured notes payable. The differences between such amounts and
actual interest expense resulted from amortization of deferred debt issuance
costs incurred in connection with the sale of the secured notes. The net losses
for the three and nine-months ended September 30, 1998, approximated $248,700
and $540,500, respectively and arose substantially because the Company's revenue
generating assets did not generate sufficient income to cover fixed expenses
arising from interest on the secured notes, and various other expenses necessary
to implement the Company's business plan.
LIQUIDITY AND CAPITAL RESOURCES
Three and Nine-Months Ended September 30, 1998
Operating activities during the three and nine-months ended September 30, 1998
used cash of approximately $320,300 and $537,000, respectively. The cash was
used primarily to fund the aforementioned operating losses less certain non-cash
expenses (i.e. depreciation and amortization of deferred debt issuance costs)
and certain accrued expenses which did not require the outlay of cash during the
reporting periods. In addition, the Company purchased mobile home inventories of
approximately $140,400 during the three months ended September 30, 1998.
-9-
<PAGE>
Investing activities during the three and nine-months ended September 30, 1998
used cash of approximately $962,100 and $1,698,500, respectively. The majority
of these cash outflows arose from the purchase and/or origination of contract
and floor plan receivables of approximately $1,057,400 during the nine-months
ended September 30, 1998, of which approximately $389,200 related to the
three-months ended September 30, 1998 (both of such amounts are net of principal
reductions on such receivables). In addition, during the nine-months ended
September 30, 1998, the Company purchased property and equipment to be used in
its operations of $79,485 (of which $11,255 was purchased during the
three-months ended September 30, 1998). Finally, during the three-months ended
September 30, 1998, the Company purchased a twenty-five percent investment in
Parkwood Estates Mobile Home Park, L.C. ("Parkwood") for $561,606. The remaining
75% interest is owned by Anthony Sutter (the Company's President and majority
stockholder). In addition to such cash outlay, the Company has agreed to loan
Parkwood up to $350,000 to fund cash flow needs. Advances under this arrangement
are expected to accrue interest at 12.9%, are unsecured and have no specified
repayment terms. No advances had been made to Parkwood as of September 30, 1998.
The above cash outflows were funded through cash existing at the beginning of
the respective periods and additional cash raised through financing activities
of $1,215,301 and $3,188,250 during the respective three and nine-month periods
ended September 30, 1998. These cash inflows resulted substantially from net
proceeds received from the sale of secured notes payable of $1,221,301 (gross
proceeds of $1,327,000 less cash paid for debt issuance costs of $105,699) and
$3,194,000 (gross proceeds of $3,518,000 less cash paid for debt issuance costs
of $324,000), during the respective three and nine-month periods ended September
30, 1998.
The Company is offering subscriptions for a maximum of 9,900 secured notes in
the principal amount of $1,000 each. As such, $4,770,000 of notes remain
available for sale as of September 30, 1998. If all of the remaining notes are
sold, the Company will net approximately $4,293,000. The notes, which bear
simple interest at 10.5%, and mature on June 30, 2002, require monthly payments
of interest only, may be prepaid in whole or in part at any time without premium
or penalty and are secured by a first lien on the assets acquired with the
proceeds of the offering. Interest is payable monthly.
The Company believes that it will be able to satisfy its cash requirements for
the foreseeable future if it does not expand its business by originating
additional finance receivable contracts. However, in order for the Company to
expand its dealer base and portfolio of receivable contracts, and to ultimately
pay the Notes in full, the Company will have to generate profitable results of
operations and/or secure additional capital resources through additional debt or
equity offering and/or institutional financing such as a line of credit. No
assurance can be given that the Company will generate profitable results of
operations or that additional capital resources will be available through such
sources, or available on reasonable terms. Also, if the Company is unable to
originate receivable contracts in an amount and at a pace that approximates the
amount and the pace that capital is raised through the issue of secured notes,
the interest earned on the capital raised will not be sufficient to cover the
cost of the interest on the secured notes.
YEAR 2000 ISSUE
Many software applications and operational programs written in the past were not
designed to recognize calendar dates beginning in the Year 2000. The failure of
such applications or systems to properly recognize the dates beginning in the
Year 2000 could result in miscalculations or system failures which could result
in an adverse effect on the Company's operations.
The Company does not currently utilize any critical date sensitive systems.
Although many of the Company's transactions rely on date sensitive calculations,
such calculations are currently being performed either manually or using off the
shelf spreadsheet programs. However, the Company is currently involved in
installing a new PC based server and accounting application, which is
represented to be Year 2000 compliant.
The Company has not incurred any costs to date related to Year 2000 compliance.
Additionally, the Company does not believe its cost of conversion will be
significant because of the installation of new systems that are represented to
be fully Year 2000 compliant. The Company believes that the costs to transition
its remaining systems to Year 2000 compliance will not have a material effect on
the Company's financial position or results of
10
<PAGE>
operations. The Company has not deferred any information technology projects to
address the Year 2000 issue. In addition to internal Year 2000 activities, the
Company will communicate with others with which our systems interface or on
which they rely to determine the extent to which those companies are addressing
their Year 2000 compliance. There can be no assurance that there will not be an
adverse effect on the Company, if third parties, such as utility companies or
mobile home suppliers, do not convert their systems in a timely manner and in a
way that is compatible with the Company's systems. However, management believes
that ongoing communication with, and assessment of, these third parties will
minimize these risks.
Although the Company anticipates minimal business disruption will occur as a
result of Year 2000 issues, possible consequences include, but are not limited
to, loss of electric power, inability to process transactions or engage in
similar normal business activities.
To date, the Company has not established a contingency plan for possible Year
2000 issues. Where needed, the Company will establish contingency plans based on
actual testing experience with our supplier base and assessment of outside
risks. We do not anticipate that a contingency plan will need to developed as
manual processes mitigate our outside risks.
The cost of the conversion and the completion dates are based on management's
best estimates and may be updated, as additional information becomes available.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically
in writing or orally by the Company's officers or its agents contain statements
which constitute forward-looking statements within the meaning of Section 27A of
the Securities Act, as amended and Section 21E of the Securities Exchange Act of
1934. The words expect, anticipate, believe, goal, plan, intend, estimate and
similar expressions and variations thereof if used are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-QSB and in other places, particularly, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
the Company's liquidity and capital resources; (ii) the Company's financing
opportunities and plans and (iii) the Company's future performance and operating
results. Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. The factors that might cause such differences include, among others,
the following; (i) any material inability of the Company to successfully
identify, consummate and integrate the acquisition of finance receivables at
reasonable and anticipated costs to the Company; (ii) any material inability of
the Company to successfully internally develop its products; (iii) any adverse
effect or limitations caused by Governmental regulations; (iv) any adverse
effect on the Company's continued positive cash flow and abilities to obtain
acceptable financing in connection with its growth plans; (v) any increased
competition in business; (vi) any inability of the Company to successfully
conduct its business in new markets; and (vii) other risks including those
identified in the Company's filings with the Securities and Exchange Commission.
The Company undertakes no obligation to publicly update or revise the forward
looking statements made in this Form 10-QSB to reflect events or circumstances
after the date of this Form 10-QSB or to reflect the occurrence of unanticipated
events.
-11-
<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 Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
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.
July 15, 1999 /s/ Anthony A. Sutter
- ---------------------------- --------------------------------
Date Anthony A. Sutter, President
-12-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,769,224
<SECURITIES> 0
<RECEIVABLES> 1,358,216
<ALLOWANCES> 0
<INVENTORY> 152,355
<CURRENT-ASSETS> 3,279,795
<PP&E> 258,993
<DEPRECIATION> 26,143
<TOTAL-ASSETS> 4,505,567
<CURRENT-LIABILITIES> 66,566
<BONDS> 5,130,000
0
0
<COMMON> 1,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,505,567
<SALES> 0
<TOTAL-REVENUES> 238,883
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 475,299
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 304,046
<INCOME-PRETAX> (540,462)
<INCOME-TAX> 0
<INCOME-CONTINUING> (540,462)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (540,462)
<EPS-BASIC> (540.46)
<EPS-DILUTED> (540.46)
</TABLE>
