<PAGE> 1
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 EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-25803
AMERICA'S SENIOR FINANCIAL SERVICES, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0181535
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15544 N.W. 77th Court
Miami Lakes, FL 33014
----------------------------------------
(Address of principal executive offices)
(305) 828-2599
----------------------------------------------------
(Registrant's telephone number, including area code)
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 [ ]
Number of shares outstanding of each of the issuer's classes of common equity:
As of November 10, 1999, the Company had a total of 7,392,837 shares of
Common Stock, par value $.001 per share (the "Common Stock"), outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE> 2
AMERICA'S SENIOR FINANCIAL SERVICES, INC.
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 1999
INDEX
PAGE NO.
--------
PART I
Item 1. Financial Statements.............................................3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................5
PART II
Item 2. Changes in Securities............................................6
Item 6. Exhibits and Reports on Form 8-K.................................6
SIGNATURES...............................................................7
2
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
Note 1, Basis of Presentation
The unaudited, condensed, consolidated financial statements included
herein, commencing at page F-1, have been prepared in accordance with the
requirements of Regulation S-B and supplementary financial information included
herein, if any, has been prepared in accordance with Item 310(b) of Regulation
S-B and, therefore, omit or condense certain footnotes and other information
normally included in financial statements prepared in accordance with generally
accepted accounting principles. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the financial information for the interim periods reported have
been made. Certain reclassifications have been made to the 1998 financial
information to conform to the presentation used in 1999. Results of operations
for the three months ended September 30, 1999 and the nine months ended
September 30, 1999, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. These financial statements
should be read in conjunction with the Company's Form 10-SB as originally filed
with the Securities and Exchange Commission on April 16, 1999, and as
subsequently amended.
Note 2, Loss Per Share
The Company follows the provisions of SFAS No. 128, "Earnings Per
Share", which requires presentation of basic earnings per share including only
outstanding common stock, and diluted earnings per share including the effect
of dilutive common stock equivalents. The Company's basic and diluted losses
per share for all periods presented are the same since the Company's
convertible debentures, stock options, and warrants are anti-dilutive.
Note 3, Income Taxes
The Company follows the provisions of SFAS No. 109, "Accounting for
Income Taxes". In accordance with this statement, the Company records a
valuation allowance so that the deferred tax asset balance reflects the
estimated amount of deferred tax assets that may be realized. Therefore, the
deferred tax assets generated by the net losses in the periods presented have
been offset in their entirety by a deferred tax asset valuation allowance.
Note 4, Convertible Debentures
In May 1999, the Company entered into a Securities Purchase Agreement,
pursuant to which the Company issued $2,500,000 of 3% convertible debentures,
which are due May 6, 2002, and common stock purchase warrants for 34,383 shares
at $8.70 per share, which expire May 31, 2004. The Securities Purchase
Agreement, among other terms, allows the Company to require the buyer to
purchase additional convertible debentures up to $7,500,000. The holder of the
debentures may take the interest in either cash or Company common stock. The
3
<PAGE> 4
debentures are convertible into common stock at the option of the holder, and
are converted at a price of the lower of (a) $8.70 per share, or (b) 85% of the
average closing bid price for the common stock for 5 of the 20 trading days
ending immediately before the conversion. At the time the Company entered into
this agreement the debentures would be convertible at $6.16 per share of the
Company's common stock. Under EITF Topic D-60 this beneficial conversion rate
has resulted in the Company recognizing an interest expense of $441,176. In
connection with the placement, the Company issued 185,548 shares of common
stock and paid $268,780 in fees to consultants and placement agents, which
resulted in additional costs recognized of $1,491,628.
Note 5, Impaired Asset
On July 31, 1998, the Company acquired Dow Guarantee Corp. ("Dow") in a
tax free reorganization which was accounted for as a purchase per APB 16. The
recorded purchase price was approximately $3,437,500. Substantially all of the
purchase price was allocated to goodwill. For the period from acquisition
through December 31, 1998, Dow recorded a loss before goodwill amortization of
$40,131. During the three month period ended March 31, 1999, however, Dow
recorded a profit before goodwill amortization of $14,521. During the three
month period ended June 30, 1999, Dow lost $20,205 before goodwill amortization.
Because the subsidiary has operated at a cumulative loss since being acquired by
the Company through June 30, 1999, an impaired asset review of Dow was
initiated. Pursuant to SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", the Company evaluated the
recoverability of the long-lived Dow asset, including goodwill. As a result of
this evaluation, the Company recorded an impairment charge in June, 1999 to
adjust the carrying value of Dow's goodwill. The adjustment recorded was to
reduce the estimated fair value of the goodwill of Dow to approximately $830,000
by recording a non-cash impairment loss of approximately $2,243,000. The
estimated fair value of Dow was based, among other factors, on the price of
Company securities, which were sold during June 1999. Management believes that
the fair value of Dow approximates the amount to which it was written down.
Note 6, Jupiter Acquisition
On August 18, 1999, the Company acquired Jupiter Mortgage Corp.
("Jupiter") in a tax-free reorganization which was accounted for as a purchase
per APB 16. The recorded purchase price was approximately $3,150,000, with
360,750 shares of common stock of the Company issued to the sellers (valued at
$2,500,000), cash to the sellers of $300,000, and costs associated with the
acquisition of approximately $150,000. See item 6(i) pages F-5 and F-6, for Pro
Forma information on this acquisition.
Note 7, Loans held for Sale/Warehouse Line of Credit
As part of the Jupiter acquisition, the Company obtained certain loan
funding credit facilities. As a result, the balance sheet of the Company now
includes a "Warehouse line of credit" and "loans held for sale". The warehouse
line of credit is used to fund loans as they are produced, and this line of
credit is secured by the mortgages.
4
<PAGE> 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
INTRODUCTORY STATEMENT
The Private Securities Litigation Reform Act provides a "safe harbor"
for forward-looking statements. Certain statements included in this form 10-QSB
are forward looking and are based on the Company's current expectations and are
subject to a number of risks and uncertainties that could cause actual results
to differ significantly from results expressed or implied in any
forward-looking statements made by, or on behalf of, the Company. The Company
assumes no obligation to update any forward-looking statements contained herein
or that may be made from time to time by, or on behalf of, the Company.
RESULTS OF OPERATIONS
Revenues for the three-month period ending September 30, 1999 increased to
$1,013,321 from $512,745 for the three-month period ending September 30, 1998.
Revenues for the nine months ending September 30, 1999 increased to $2,984,009
from $877,755 for the nine months ended September 30, 1998. This growth in
revenues was primarily attributable to the contributions of the Capital Funding
of South Florida, Inc. ("Capital") and Jupiter Mortgage Corporation ("Jupiter")
subsidiaries, both of whom were acquired in 1999 and whose results were not part
of AMSE's 1998 results. The period ending September 30, 1998 includes two months
of Dow's operations as this subsidiary was acquired July 31, 1998.
Total Expenses for the three-month period ended September 30, 1999 compared to
the three-month period ended September 30, 1998 increased to $1,581,547 from
$532,285. Total Expenses for the nine-month period ending September 30, 1999
compared to the nine months ended September 30, 1998 increased to $7,863,589
from $1,001,748. This increase in expenses was partially attributable to the
inclusion of the costs associated with the Capital and Jupiter subsidiaries,
which were not a part of AMSE during the second quarter of 1998, and Dow which
was a part of AMSE for a portion of the period ended September 30, 1998.
These expenses also include an impairment write-down of $2,432,729 recorded in
June 1999 against the goodwill of Dow Guarantee Corp. (Dow). This impairment was
taken due to Dow having negative operations in the last five months of 1998 and
during the second quarter of 1999. These negative operations were specifically
the result of increased professional fees relating to the stringent reporting
requirements of AMSE, and represent approximately a $12,000 increase over what
Dow would typically have spent on such fees. Dow also recognized approximately
$10,000 of non capitalized expenses pertaining to the move of their primary
office. During the second quarter of 1999 Dow also lost some key sales
personnel, whom historically had been responsible for approximately 10% of Dow's
revenues. These personnel have been replaced.
The Company has also recognized, in its fiscal second quarter, approximately
$1,491,628 of costs related to the Convertible Debenture Financing. These
Debentures are immediately convertible into Common Stock and therefor the
expenses are recognized immediately and not amortized over the
5
<PAGE> 6
life of the Debenture. These expenses include approximately $280,000 of fees
paid out of the proceeds of the Debenture financing and the issuance of 185,548
shares of the Company's Common Stock issued to consultants and placement agents.
The Common Stock issued is valued with a 10% discount due to the restrictions
imposed on the transferability of the shares.
Total Other Expenses for the three-month period ended September 30, 1999
compared to the three-month period ended September 30, 1998 increased to $9,669
from $625. Total Other Expenses for the nine-month period ending September 30,
1999 compared to the nine months ended September 30, 1998 increased to $470,151
from $1,633. This increase in expenses was primarily due to the Interest
expense of the conversion benefit of the convertible debentures of $441,176.
Liquidity and Capital Resources
The Company issued $2,500,000 of Convertible Debentures in May 1999.
Each Debenture is convertible into Common Stock. The number of shares of Common
Stock that may be issued upon conversion of the Debentures depends upon the
market price of our Common Stock at the time of the conversion. Based upon the
recent price of Common Stock of $8.25, if the Debentures were converted into
Common Stock, the Company would issue 356,633 shares of Common Stock. The
Company may sell up to $7,500,000 of additional Convertible Debentures, which if
converted at our recent Common Stock price of $8.25 would result in the issuance
of an additional 1,069,900 shares of our Common Stock. The Company also issued
warrants to purchase 34,483 shares of Common Stock to the purchaser of the
Debentures and will issue more warrants in the event of the sale of additional
Debentures. The material risk associated with this type of Debenture is that if
the Company's stock price were to decrease from its current price of $8.25 per
share it could have a significant dilutive effect.
The Company has had negative cash flow from operations in addition to the costs
of ongoing acquisition activities. The Company is seeking additional financing,
either debt or equity, to cover these cash flows. No assurances can be given
that the Company will secure additional financing to cover these outflows.
PART II
"Y2K" Issue
The Company believes it is in full compliance with the "Y2K" issue. The
Company operates internal Local Area Networks for all of its computer operations
and all the software and substantially all the hardware in use will successfully
pass through the new year without disruption. Based on discussions with its
major vendors, the Company believes there will be no interruption from its
vendors that will interfere with the Company's operations. Management of the
Company believes that the "Y2K" issue will not have a material effect on the
Company's business, results of operations or financial condition.
ITEM 2. CHANGES IN SECURITIES
During the third quarter of 1999 the Company issued 377,500 shares of
Common Stock. 16,750 shares were issued to employees as restricted
stock grants which vest over a period of three years. An additional
360,750 shares were issued to three individuals as follows in
connection with the Jupiter Mortgage transaction: Michael J. Buono
169,553 shares, Deanne J. Anderson 169,553 shares and First Fidelity
Capital Markets, Inc. 21,644 shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
1. Financial Statements and Pro-Forma Financials begin
on page F-1.
6
<PAGE> 7
2. Exhibits:
27 Financial Data Schedule (For SEC use only).
(b) Reports on Form 8-K.
1. A Form 8-K was filed as of September 1, 1999 and a
Form 8-K/A was filed as of September 7, 1999, to
report the Jupiter acquisition (see Note 6 to
Item 1 - Financial Statements).
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.
AMERICA'S SENIOR FINANCIAL SERVICES, INC.
Dated: November 19, 1999 By: /s/ Nelson A. Locke
-------------------------------------
Nelson A. Locke, President
Chief Executive Officer
Principal Accounting Officer
7
<PAGE> 8
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
30-Sep-99 31-Dec-98
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 617,520 $ 195,728
Loans held for sale 2,455,035 --
Brokerage fees receivable 129,190 49,853
Due from employees and shareholders 182,376 93,146
Prepaid expenses 158,129 46,699
------------ -----------
TOTAL CURRENT ASSETS 3,542,250 385,426
PROPERTY AND EQUIPMENT, net 573,044 254,783
GOODWILL, net 6,009,475 3,348,215
OTHER ASSETS 779,543 319,940
------------ -----------
TOTAL $ 10,904,312 $ 4,308,364
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 17,129 $ 5,798
Accounts payable 469,405 173,904
Warehouse lines & Lines of credit 2,611,608 --
Accrued compensation and related taxes 58,900 49,054
------------ -----------
TOTAL CURRENT LIABILITIES 3,157,042 228,756
------------ -----------
LONG-TERM DEBT, less current portion 2,641,448 13,287
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock, $0.001 par value; 25,000,000 shares
authorized, shares issued and outstanding, 7,286,931
and 5,898,867 in 1999 and 1998, respectively 7,287 5,899
Additional paid-in capital 11,016,698 4,584,932
Retained earnings (deficit) (5,807,174) (457,443)
Unearned compensation - restricted stock (110,989) (67,067)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 5,105,822 4,066,321
------------ -----------
TOTAL $ 10,904,312 $ 4,308,364
============ ===========
</TABLE>
F-1
<PAGE> 9
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES 1,013,321 512,745 2,984,009 877,755
----------- ----------- ----------- -----------
EXPENSES:
Payroll and related expenses 1,018,250 347,369 2,349,668 603,467
Administrative, processing and occupancy 506,819 156,421 1,481,452 369,786
Debenture Financing Costs -- -- 1,491,628 --
Goodwill amortization 56,478 28,495 2,540,851 28,495
----------- ----------- ----------- -----------
TOTAL EXPENSES 1,581,547 532,285 7,863,589 1,001,748
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (568,226) (19,540) (4,879,480) (123,993)
----------- ----------- ----------- -----------
OTHER EXPENSES:
Interest expense 9,669 625 28,975 1,633
Interest expense - Conversion discount of Convertible Debentures -- -- 441,176 --
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSES 9,669 625 470,151 1,633
LOSS BEFORE INCOME TAXES (577,895) (20,165) (5,349,731) (125,626)
PROVISION FOR INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (577,895) $ (20,165) $(5,349,731) $ (125,626)
=========== =========== =========== ===========
LOSS PER SHARE:
Basic and Diluted $ (0.082) $ (0.004) $ (0.795) $ (0.027)
=========== =========== =========== ===========
Weighted average common shares outstanding (basic and diluted) 7,089,510 4,966,725 6,729,597 4,579,598
=========== =========== =========== ===========
</TABLE>
F-2
<PAGE> 10
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,349,731) $(125,626)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,596,633 51,480
Non-Cash Interest expense and Other Non-Cash Costs-
convertible debentures 1,932,804
Recognition of restricted stock earned 38,280 --
Changes in certain assets and liabilities, net of amounts
from an acquisition:
Brokerage fee receivable (79,337) (69,395)
Employee advances (111,848) (76,642)
Prepaid expenses and other (111,430) (68,064)
Accounts payable, accrued compensation and related taxes 316,678 24,719
----------- ---------
NET CASH USED IN OPERATING ACTIVITIES (767,951) (263,528)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (213,327) (36,795)
Acquisition expenditures, net of cash acquired (1,103,924) 9,821
Changes in other assets (726,180) 34,814
----------- ---------
NET CASH USED IN INVESTING ACTIVITIES (2,043,431) 7,840
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 598,948 430,500
Change in long-term debt 2,611,608 (10,025)
Change in due from shareholders 22,618 0
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,233,174 420,475
----------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 421,792 164,787
CASH AND CASH EQUIVALENTS, Beginning of period 195,728 86,376
----------- ---------
CASH AND CASH EQUIVALENTS, End of period $ 617,520 $ 251,163
=========== =========
</TABLE>
F-3
<PAGE> 11
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Common Common Additional Retained Total
Stock Stock, at Paid-in Restricted Earnings Stockholders'
# of Shares par value Capital Stock (Deficit) Equity
----------- -------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY, December 31, 1998 5,898,867 $ 5,899 $ 4,584,932 $ (67,067) $ (457,443) $4,066,321
Stock issued pursuant to an acquisition-
Capital Funding 237,664 237 1,558,963 1,559,200
Contribution to Capital 40,000 40,000
Stock issued pursuant to an acquisition- Jupiter 360,750 361 2,499,639 2,500,000
Stock issued for debenture financing costs 185,548 186 1,211,442 1,211,628
Beneficial Conversion feature of Convertible
Debentures 441,176 441,176
Restricted stock issued to employees 82,202 82 82,120 (82,202) --
Recognition of restricted stock earned 38,280 38,280
Issuances of common stock for cash, net of
expenses 521,900 522 598,426 598,948
Net loss for the period ended September 30, 1999 (5,349,731) (5,349,731)
--------- -------- ----------- ----------- ----------- ----------
STOCKHOLDERS' EQUITY, September 30, 1999 7,286,931 $ 7,287 $11,016,698 $ (110,989) $(5,807,174) $5,105,822
========= ======== =========== =========== =========== ==========
</TABLE>
F-4
<PAGE> 12
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
PROFORMA STATEMENTS OF OPERATIONS AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
1998 01/01/98 to 1998 1998
HISTORIC 7/31/98 HISTORIC HISTORIC PROFORMA
AMSE DOW CFSF JUPITER ADJUSTMENTS CONSOLIDATED
---------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES: $1,797,632 $1,490,249 $1,426,919 $2,746,104 $7,460,904
---------- ---------- ---------- ---------- ----------
EXPENSES:
Payroll and related expenses 1,335,488 822,372 826,415 1,632,728 4,617,003
Administrative, processing and occupancy 722,828 630,023 476,956 995,928 2,825,735
Acquisition costs 14,969 -- -- -- 14,969
Employee recruitment 50,333 -- -- -- 50,333
Goodwill amortization 71,239 -- -- -- $ 359,859 (a) 431,098
---------- ---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES 2,194,857 1,452,395 1,303,371 2,628,656 359,859 (a) 7,939,138
---------- ---------- ---------- ---------- ---------- ----------
PROFIT (LOSS) FROM OPERATIONS (397,225) 37,854 123,548 117,448 (359,859) (478,234)
---------- ---------- ---------- ---------- ---------- ----------
INTEREST EXPENSE (NET) 2,041 16,094 4,742 -- 22,877
---------- ---------- ---------- ---------- ---------- ----------
PROFIT (LOSS) BEFORE INCOME TAXES (399,266) 21,760 118,806 117,448 (359,859) (501,111)
PROVISION FOR INCOME TAXES -- -- -- -- -- 0
---------- ---------- ---------- ---------- ---------- ----------
NET PROFIT (LOSS) $ (399,266) $ 21,760 $ 118,806 $ 117,448 $ (359,859) (501,111)
========== ========== ========== ========== ========== ==========
</TABLE>
(a) To annualize goodwill as if these acquisitions took place on
January 1, 1998.
F-5
<PAGE> 13
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
PROFORMA STATEMENTS OF OPERATIONS INCLUDING JUPITER
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
01/01/99 to
HISTORIC 8/18/99 PROFORMA
AMSE JUPITER ADJUSTMENTS CONSOLIDATED
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES: $ 2,984,009 $1,771,773 $ 4,755,782
----------- ---------- --------- -----------
EXPENSES:
Payroll and related expenses 2,349,668 1,103,902 3,453,570
Administrative, processing, and occupancy 1,481,452 822,308 2,303,760
Debenture Financing Costs 1,491,628 --
Goodwill amortization 2,540,841 -- $ 164,040 (a) 2,704,881
----------- ---------- --------- -----------
TOTAL EXPENSES 7,863,589 1,926,210 164,040 8,462,211
----------- ---------- --------- -----------
PROFIT (LOSS) FROM OPERATIONS (4,879,580) (154,437) (164,040) (3,706,429)
----------- ---------- --------- -----------
Interest Expense (Net) 28,975 --
Interest Expense - conversion discount of Convertible Debentures 441,176 -- 441,176
----------- ---------- --------- -----------
470,151 --
PROFIT (LOSS) BEFORE INCOME TAXES (5,349,731) (154,437) (4,147,605)
PROVISION FOR INCOME TAXES -- -- --
----------- ---------- --------- -----------
NET PROFIT (LOSS) $(5,349,731) $(154,437) $(164,040) $(4,147,605)
=========== ========== ========= ===========
</TABLE>
(a) To annualize goodwill as if this acquisition took place on January 1, 1999.
F-6
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> SEP-30-1998 SEP-30-1999
<CASH> 251,163 617,520
<SECURITIES> 0 0
<RECEIVABLES> 74,890 556,847
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 491,178 3,542,250
<PP&E> 222,826 711,415
<DEPRECIATION> 62,700 138,371
<TOTAL-ASSETS> 4,048,424 10,904,312
<CURRENT-LIABILITIES> 59,485 3,157,042
<BONDS> 0 2,641,448
0 0
0 0
<COMMON> 4,698 7,287
<OTHER-SE> 3,963,810 5,098,535
<TOTAL-LIABILITY-AND-EQUITY> 4,048,424 10,904,312
<SALES> 0 0
<TOTAL-REVENUES> 877,755 2,984,009
<CGS> 0 0
<TOTAL-COSTS> 1,001,748 7,863,589
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,633 470,151
<INCOME-PRETAX> (125,626) (5,349,731)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (125,626) (5,349,731)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (125,626) (5,349,731)
<EPS-BASIC> (.027) (.795)
<EPS-DILUTED> (.027) (.795)
</TABLE>
