<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(X) ANY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal year ended December 31, 1998
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ___ to ___
Senior Retirement Communities, Inc.
Louisiana 72-1394159
(State or other jurisdiction of incorporation)
or organization)
507 Trenton Street, West Monroe, Louisiana 71291
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(318) 323-2115
Securities registered pursuant to Section 12 (b) of the Act:
First Mortgage Bonds $9,000,000
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 twelve (12) months (or for such shorter
period that the registrant was required to file such report) and (2) has
subject to such filing requirements for the past ninety (90) days.
Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of the Form 10-KSB
Revenues for fiscal year 1998 - $16.081
Number of share outstanding of each of the registrant's class of common
shares and preferred shares, as of
December 31, 1998
Common Shares 624,410 par value $.10 per share:
Preferred shares 425,000 par value $1.00 per share:
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DOCUMENTS INCORPORATED BY REFERENCE
<PAGE>
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SENIOR RETIREMENT COMMUNITIES, INC.
Form 10-KSB
INDEX
Part 1 Page
Item 1. Business 1-3
Item 2. Properties and method of Financing 4
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of Security Holders 5
Part II.
Item 5. Market for Registrant's Bonds 5
Item 6. Management's Discussion and Analysis of Results of Operations 5-8
Item 7. Financial Statements and Supplementary Data 8
Item 8. Changes in and Disagreements with Accountants 8
Part III.
Item 9. Directors and Executive Officers of the Registrant 8
Item 10. Executive Compensation 9
Item 11. Security Ownership of Certain Beneficial Owners and Mgt. 9
Item 12. Certain Relationships and Related Transactions 9-11
Part IV.
Item 13. Exhibits, Financial Statement Schedules Reports on Form 8-K 11
<PAGE>
Part I
Item 1. Business
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General
- -------
Senior Retirement Communities, Inc. (the "Company" or SRC) was organized
as a Corporation under the laws of the State of Louisiana on September
10, 1997. The Corporate charter has been amended one time on November
6, 1997. The Company is in the business of developing and owning housing
for seniors. SRC's primary interests are in the development of Assisted
Living Facilities ("ALF's"). ALF's contain one or more facilities for
seniors who are independent, require some assistance or suffer from Dementia.
Dementia units are primarily for the support of individuals suffering
from Alzheimer's and related disorders.
Independent Living
- ------------------
Independent Living facilities are anticipated to make up a small amount
of the Company's business. It is anticipated as the Independent Living
group of seniors age, they will convert to Assisted Living within the
community thereby reducing their impact upon the communities. The Company
has maintained excess land in each of the communities in order to meet
the demands of seniors, no matter which direction senior care evolves.
Assisted Living
- ---------------
Assisted Living will make up the largest impact upon the Company's success.
Assisted Living continues to evolve with State and Federal interest in
this form of Senior Care. It is anticipated that political pressure will
continue to grow, because of the impact that Assisted Living is having
on other forms of senior care. In Louisiana the Nursing Home industry,
which has strong political support in the Louisiana Legislature, has introduced
a bill, which would have a negative impact upon the industry. SRC along
with other Assisted Living Communities are aware of the proposed legislation.
It is the Company's intent to resist these efforts.
Dementia
- --------
Independent Dementia facilities are fairly new in Louisiana. The Company
has built the first independent Dementia facility in Bossier City and
Shreveport, Louisiana. It used as a model the Terrace located in West
Monroe, Louisiana which was built by an affiliate of the Company. It
is anticipated that Dementia facilities will have a growing impact on
the company's success. The same political pressures discussed above will
also impact Dementia.
1
<PAGE>
Employees
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Prior to the opening of the Ruston ALF, the Company had no operations.
Employees consisted of the President, Joanne M. Caldwell-Bayles, and
two other employees. After the opening of the Ruston ALF on October 16,
1998, the Company's employees increased to 18 full time and less than
3 part time. It is anticipated upon opening of the Bossier and Shreveport
facilities, the number of employees will increase to 38 full time and
less than 9 part time. As occupancy increases, additional employees will
be required. The number required will be determined by the increase in
occupancy of each facility.
Source of Business
- ------------------
The Company's business is designed to provide secure, comfortable, and
healthy living environment for seniors with disposal income of approximately
$20,00 and up, between the age of 72 and up and in the case of Independent
Living and Dementia younger.
Method of Operation
- -------------------
The Company's ALF's are managed by The Forsythe Group, Inc. (Forsythe)
which is owned by Joanne M. Caldwell-Bayles, President of the Company.
The ALF management staff consists of four individuals includes MS. Bayles.
Two members of the staff have Master's degrees in Gerontology. They have
over 20 years of experience in Hospitals, Nursing Homes, and Assisted
Living industry. They have direct management responsibility for each
Administrator of each ALF. One member has a degree in Business Administration
with emphasis in human resources. She is responsible for administration of
employee relations, payroll, personnel files and keeps up to date on all
wage and hour issues and year 2000 issues. In addition to their other
duties, the balance of the Forsythe staff aids and assists the ALF management
staff as necessary.
Prior to the formation of the Company, Forsythe kept close relation with
the Department of Social Services of the State of Louisiana, which is
the authority responsible for regulating ALF's in Louisiana. In 1996
Social Service began developing new Minimum Standards for ALF's. When
a decision was made for the Company to develop ALF's, the Forsythe staff
recommended that the Company adopt the proposed new minimum standards
for all of its project. As a result, the design staff of Forsythe designed
all of the ALF's which the Company owns meet the new stricter requirements.
The Company also adopted the new standards for of its personnel. The
new Adult Residential Care Minimum Standards were adopted and became effective
on March 31, 1999. As a result the Company is in compliance with the
new stricter requirement including buildings, staffing, and education
requirements as well.
The Forsythe ALF management staff has central purchasing, payroll, accounts
payable, menu planning and programming. All menus are planned with the
assistance of a registered dietitian.
2
<PAGE>
Administrators are required to meet the standards set forth in the new
regulations. Employees are required to submit to drug testing before
employment as well as during employment. All employees are required to
submit to a background check by the State Police before employment.
Competition
- -----------
ALF's are under ever growing competition for the senior market. Competition
is coming from additional ALF's being built in each market and Nursing
home upgrading and expansion. In addition, government regulation will
continue to increase. The one area in which competition remains at a
reasonable pace is in the area of independent Dementia units. While many
ALF's are including Dementia units it has not grown in the Company's markets
as much as traditional ALF's.
In the fourth quarter of 1998, an Assisted Living facility without a
formal Dementia facility was announced in Ruston, Louisiana. While smaller
than the Arbor of Ruston it is and will be a factor in the market. It
will take some business, which would have moved into the Arbor. As a
result, the rent up period will be longer than anticipated. As part of
the Company planning, some of the Assisted Living units and all of the
Independent Living units will be converted to Dementia. Special dining
and activity designed for Dementia areas will also be added. The new
areas will be completed by June 1999. The Company believes that by moving
quickly the new facilities will regain any lost business and income because
of the new Assisted Living facility.
In the fourth Quarter of 1998, an Assisted Living Facility was started
in Bossier City, the new facility will open sometime in the summer of
1999. The Company believes the market in Bossier City will be able to
support both facilities. Additional new facilities would increase
competition and may have negative impact on the Company's ALF.
The Company operates its Dementia Facilities under the name of the Terrace.
The Terrace in Bossier City and Shreveport are being received with what
appears to be strong support from the medical community and the local
hospitals. As of now, there does not appear to be any additional
freestanding Dementia facilities planned.
Property Environmental
- ----------------------
The Company's ALF's are all in compliance with all environmental laws.
Prior to building, each site was inspected and an environmental engineer
studied past history. Each site was not subject to any environmental
problems.
3
<PAGE>
Item 2. Properties and Methods of Financing
- ---------------------------------------------
As of December 31, 1998 the Company had one ("ALFs") open for business
and two under construction. The Ruston, Louisiana ALF's Assisted Living
Units (assisted and Independent living units) opened for business in October
1999. The Company is converting independent living units and adding additional
facilities to be operated as a 16-unit Dementia facility, along with activity
and dinning facilities. When completed the Ruston ALF will contain 40
Assisted/Independent and 16 Dementia units the conversion is the result
of increased demand for Alzheimer's facilities in the area and an increase
in competition in Assisted Living facilities. One facility under construction
is located in Bossier City, with a 36- unit assisted living facility and
a 24-unit Dementia facility. The other site is located in Shreveport,
Louisiana consisting of a 24-unit Dementia facility. The Shreveport facility
opened for business on January 22, 1999. The Bossier City Facilities
opened for Business on March 10, 1999. All of the Company's Facilities
have passed inspection by the Department of Social Services of the State
of Louisiana.
The construction of the facilities are being financed through the sale
of Co-First Mortgage bonds as set forth in the prospectus dated June 23,
1998 with construction loans provided by Church Loans and Investment Trust.
All of the Construction loans will be paid in full by March 10, 1999.
The Company also owns approximately 26 acres of land located in Ruston
(20 acres), Shreveport (2 acres), and Minden (4 acres), Louisiana for
future construction.
The Company continues to finance the expansion and development by a
combination of private placement of Common stock and Preferred stock as
well as the public offering of First Mortgage Bonds. In March 1998, the
Company purchased approximately 6 acres of land for $525,000 paying $100,000
in cash and issuing 425,000 shares of $1.00 par value Preferred stock.
The property is the location of the Bossier City, Louisiana facility.
The Preferred stock is paying dividends at a rate of 4% for the first
two years, 6% for the second two years, and 8% for the final two years.
The Preferred stock shall be redeemed in full at the end of the fifth
year for the total sum including accrued dividends. It is recallable
at anytime at the option of the Company.
The holders of the Preferred stock shall also have the right to purchase
common stock at a 20% discount if and when the Company issues additional
common stock in the form of a public offering if done so within 8 years
of date issued for preferred stock.
Item 3. Legal Proceedings
- ----------------------------
The Company is not involved in any legal proceedings at this time.
4
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1998.
Part II.
Item 5. Market for Registrant's Bonds
- ----------------------------------------
The Bonds are offered by MMR Investment Bankers, Inc. (the "Underwriter")
on a best efforts basis as agent for the Company. The Bonds are offered
subject to prior sale. The Offering of the Bonds (the "Offering") will
continue until the sale of all Bonds or for a period of one year from
the date of the Prospectus (June 23, 1998). As of December 31, 1998 $7,123,000
of the issue of $9,000,000 had been sold. The Underwriter does not intend
to make a market in the Bonds. There is no quoted market for the Bonds
and there is no assurance a market will develop.
Item 6. Management's Discussion and Analysis of Results of Operations
- ------------------------------------------------------------------------
The Company's first ALF opened for business on October 16, 1998 in Ruston,
Louisiana. The Facility has been well received by the community. There
have been insufficient rentals to form an opinion of future success with
any certainty. The operating loss for the year ending December 31, 1998
was $145,967, which includes start-up costs of approximately $100,000.00
for the Ruston ALF, excluding a one time gain of $86,059 from the sale
of the Minden, Louisiana property. The Shreveport and Bossier City facilities
are expected to open for business in the first quarter of 1999 at which
point all of the facilities will be open and operating. Operating results
for the first quarter of 1999 will depend on the actual date of the completion
and opening of the Shreveport and Bossier City ALF's.
This commentary should be read in connection with the following documents
for a full understanding of Senior Retirement Communities, Inc. financial
condition and the status of the Company which reflect little or no operations;
the entire Prospectus dated June 23, 1998; 10Q for the period ending June
30, 1998; and September 30, 1998 and the unaudited financial statement
presented therein along with all of the footnotes thereto. As a result
of the Company having little operations as of the end of the year, readers
should be aware of the success and/or failures within the Assisted Living
Industry. Because the bonds are being sold on a best efforts basis,
particular attention should be paid to the bond sale results as set forth in
footnote 8 of the financial statement.
5
<PAGE>
Major changes in Financial Conditions
The major changes in financial condition between December 31, 1997 and
December 31, 1998 is as follows: Current assets consisted primarily of
cash in the amount of $1,336,583. Cash is restricted as follows: $182,280
to fund bond reserve accounts and the balance of $1,154,303 is restricted
to pay Operating Fund Payments and retire Construction Loans. Reader
is encouraged to read page 13 of the Prospectus. Property, Plant, and
Equipment increased from $1,351,307 as of December 31,1997 to $8,671,668
as of December 31, 1998. The increase is the result of land acquisition
and construction in progress at Ruston, Bossier City and Shreveport, Louisiana.
Other assets increased from $122,000 as of December 31, 1997 to $693,968
as of December 31, 1998 which consisted of deferred charges. Deferred
charges consist of loan fees to be amortized as interest expense over
the life of the related loan by use of the interest method. Total current
liabilities increased $471,405 as of December 31, 1997 to $1,631,274 as
of December 31, 1998 consisting primarily of construction loans. Long
term debt increased from $0 as of December 31, 1997 to $7,123,000 as of
December 31, 1998 which consisted of bond payables. Liabilities due
stockholders and affiliates increased from $58,200 as of December 31, 1997 to
$424,217 as of December 31, 1998. Total Stockholders Equity increased from
$948,179 as of December 31, 1997 to $1,527,853 as of December 31, 1998. The
increase is the result of issuing 425,000 shares of Preferred Stock to the
Patterson Insurance Company, less operating loss of $145,967. The Preferred
Stock was for the purchase of land for the Bossier City, Louisiana location.
(A more detailed explanation is set forth in Note 6 of the financial
statement.)
Liquidity and Financial Position
The Company receives significant operating funds from its affiliate,
The Forsythe Group, Inc., through short-term loans. The ability of The
Forsythe Group to continue to make available loans is necessary for the
continuing success of the company. If future conditions would create
problems in Forsythe's ability to advance funds to the Company, the Company's
future success would be in doubt.
Year 2000
The Company relies on computer hardware, software, and related technology,
together with data, in the operation of its business. In addition, the
Company is dependent on the same type of technology and data generated
by financial institutions; the Federal Government including the Social
Security Administration; State of Louisiana; Investment Bankers; Trustees
for the bondholder; Interim lenders; and Utility companies. The Company
has initiated an enterprise wide program to prepare for the year 2000.
The Company has created a year 2000 program office reporting to the Chief
Executive Officer to coordinate and oversee the company's year 2000 program.
All of the Company's computer systems have been cleared to meet the year
2000 requirements by contacting the manufacturer of the equipment and
receiving written notice of compliance.
6
<PAGE>
The computer software necessary for the accounting function has also
been cleared for the year 2000 requirements in writing from the developer
of the accounting software.
The Company has discussed the year 2000 with all of the above set forth
companies and agencies and has been assured either in writing or verbally
that each anticipates compliance for the year 2000. As a result of the
Company's own operations already being in compliance with the year 2000,
it is dependent upon outside forces to also be in compliance. It is
impossible for the Company to be sure that all governmental agencies,
utilities, financial institutions, and others with whom it does business will
also be in compliance. The failure or some or all the above stated agencies
being in compliance with the year 2000 would be catastrophic, and the
survival of the Company would be in doubt.
Because of the uncertainty of the problems faced with the year 2000 the
Company has adopted an action plan to protect the seniors living with
the Communities. The major item to be included is as follows;
1. Place in storage at each community a five-day supply of food item,
including canned meats and vegetables, water, and other non-perishable
items necessary for providing meals.
2. Prepare, with the assistance of residents, a five-day supply of
clothing that will not have to be cleaned in order to aid in healthy
living.
3. Encourage Physicians to obtain and supply adequate supply of necessary
medical needs of residence.
4. Encourage residents and their families to meet the financial needs
for each resident by having some cash on hand at the end of the year.
The cash to be reserved for residences should not be held at the
residents quarters.
5. Work with local officials in preparing a safety plan of operation
in event of failure of medical, public safety, utilities and other
services.
6. Adequate fuel to operate vehicles, heating devices and other services.
7. Such other assistance that may come to our attention as the Company
continues to monitor the year 2000 problems.
Forward- Looking Statements:
Statements that are not historical facts, including statements about
(I) operating profits or losses as those discussed in results of operations;
(II) Impact of political decisions and new laws from the State and Federal
Government. The Company wishes to caution the reader that factors below,
along with the factors set forth in the Company's June 23, 1998, September
30, 1998 and the prospectus along with the Company's other documents filed
with the SEC, have affected and could affect the Company's actual results
causing results to differ materially from those in any forward-looking
statement. These factors
7
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include: the acceptance of the Assisted Living Concept by each of the
communities in which they are located, increased competition in each of
the communities, economic outlook whether the economy improves or slips
into recession, technological changes in dealing with seniors, change
in government regulation, the success of strategic decisions to improve
financial performance, the ability of the Company to contain cost, and
the continued increase in the market acceptance of ALF's.
Item 7. Financial Statements and Supplementary Data
- ------------------------------------------------------
The financial statements for the Company and independent auditors' report
are included herein following Item 13if this Annual Report on Form 10KSB
commencing on page F-1.
Item 8. Changes in and Disagreements with Accountants
- --------------------------------------------------------
None
Part III.
Item 9. Directors and Executive Officers of the Registrant
- -------------------------------------------------------------
The executive officers of Senior Retirement Communities, Inc. as of December
31, 1998 were as follows:
<TABLE>
<CAPTION>
Name Age Position with Company
<S> <C> <C>
Joanne M. Caldwell-Bayles 39 Chairperson of the Board,Chief Executive
Officer, President, Director
Raymond L. Nelson 62 Vice President and Director
Jean Gaffney Nelson 60 Director
</TABLE>
Joanne M. Caldwell-Bayles, has been the President for the Company since
its inception in September 1997. Mrs. Caldwell-Bayles has senior executive
experience in the development and operation of assisted living, retirement
and memory disorder facilities in West Monroe, Ruston, Bossier City and
Shreveport, Louisiana.
Raymond L. Nelson has been the Vice-President for the Company since its
inception. He is not active in the day to day management of the Company.
Mr. Nelson devotes his time to the Insurance business in Houston, Texas.
He is the husband of Jean Gaffney Nelson.
Jean Gaffney Nelson is retired from a thirty-year career with Methodist
Hospital in Houston, Texas where she was the business manager for the
Cardiology Unit. She is the wife of Raymond L. Nelson.
8
<PAGE>
Item 10. Executive Compensation
- ---------------------------------
Joanne M. Caldwell-Bayles $60,000 per year
The company pays no other Executive, officer or Director
Item 11. Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
Name & Address of Beneficial Owner Title of Class Class Owned
<S> <C> <C>
Joanne M. Caldwell Bayles Common Stock 16.7%
507 Trenton Street
West Monroe, LA 71291
Raymond and Jean Nelson Common Stock 9.0%
1075 Katy Freeway, Suite 150
Houston, TX 77024
The Forsythe Group, Inc. (1) Common Stock 55.4%
507 Trenton Street
West Monroe, LA 71291
The Arbor Group, L.L.C. (2) Common Stock 18.9%
507 Trenton Street
West Monroe, LA 71291
</TABLE>
Note 1: Joanne M. Caldwell-Bayles owns 100% of the capital stock of the
Forsythe Group, Inc.
Note 2: Joanne M. Caldwell-Bayles owns 50%, Raymond and Jean Nelson own
40% and The Forsythe Group, Inc. owns 10% of the capital stock of
The Arbor Group, L.L.C.
The executive officers and directors of the Company as a group are
the beneficial owners of 100% of the common stock of the Company.
Item 12. Certain Relationships and Related Transactions
- ----------------------------------------------------------
Joanne M. Caldwell-Bayles and Raymond and Jean Nelson, the principal
shareholders of the Company, individually and/or through their ownership
of affiliated companies, have or intend to engage in the following transactions
with the Company. See "Principal Owners of the Company".
9
<PAGE>
Land Acquisition
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On September 10, 1997, the Company acquired 6 acres of land at the Ruston
location with an estimated fair market value of $450,000 in a transaction
with The Forsythe Group, Inc. in exchange for 77,500 shares of common
stock of the Company and by assuming a debt of $200,000. This transaction
would have resulted in a gain to The Forsythe Group, Inc. of approximately
$95,000 had it not been a tax-free exchange.
On September 10, 1997, the Company acquired 20 acres of land at the Ruston
location with an estimated fair market value of $250,000 in a transaction
with The Forsythe Group, Inc. in exchange for 40,000 in shares of common
stock. This transaction would have resulted in a gain to The Forsythe
Group, Inc. of approximately $170,000 had it not been a tax-free exchange.
On September 10, 1997 the Company acquired land in West Monroe, Louisiana
with an estimated fair market value of $200,000 in a transaction with
The Arbor Group, L.L.C. in exchange for 100,000 shares of common stock.
This transaction would have resulted in no gain to The Arbor Group, L.L.C.
had it not been a tax-free exchange.
On January 7, 1998, the Company entered into a real estate agreement
with Patterson Insurance Company ("Patterson") to purchase approximately
six acres of land on which the Bossier City Project is to be built. This
transaction closed on April 24, 1998. The sale and conveyance of this
property by Patterson to the Company was subject to the following terms:
the Company paid Patterson a total consideration of $525,000 for the property
by the issuance of $425,000 in preferred stock of the Company and $100,000
in cash at closing.
On March 6, 1998, the Company acquired approximately 3 acres of land
in Shreveport, Louisiana on which the Shreveport Projects is to be built.
The Company acquired this land by securing a loan with The Forsythe Group,
Inc., in the amount of the purchase price of the property, $266,500.
The loan bears interest at the annual rate of 1% over the Prime Rate.
Interest is payable monthly, and the loan has no stated maturity date.
This loan was retired on April 24, 1998 with proceeds from the Shreveport
Construction Loan.
Construction Contracts
- ----------------------
On November 5, 1997, the Company entered into a construction contract
in the amount of $2,750,000 with The Forsythe Group, Inc. to construct
the Ruston Project. The contract calls for the cash payments of $2,500,000
during the building of the Ruston Project as approved by the contract
engineer and the issuance of additional 125,000 shares of common stock
at the completion of the project. Such stock issuance is to be paid to
The Forsythe Group, Inc. as its builder's profit in the project.
On December 16, 1997, the Company entered into a construction contract
in the amount of $2,200,000 with The Forsythe Group, Inc. to construct
the Bossier City Project. The contract calls for the cash payments of
$2,200,000 during the building of the Bossier City Project as approved
by the contract engineer.
On December 16, 1997, the Company entered into a construction contract
in the amount of $1,225,000 with The Forsythe Group, Inc. to construct
the Shreveport Project. The contract calls for the cash payments of $1,225,000
during the building of the Shreveport Project as approved by the contract
engineer.
10
<PAGE>
Management Contract
- -------------------
On September 10, 1997, The Forsythe Group, Inc. entered into a Management
Agreement with the Company for the management of the Facilities to be
constructed as a result of the issuance of the Bonds. The Agreement extends
to the year 2010, with compensation based on each facility, paying the
Manager $1,500 per month of seven percent (7%) of the gross collections
of a facility, whichever is greater. The Management Agreement can be
terminated by mutual consent of the parties, bankruptcy or for cause.
The Company anticipates the payments under the Management Agreement to
The Forsythe Group, Inc. will exceed $60,000 per year.
Other Services Rendered
- -----------------------
On September 10, 1997, the Company issued 85,896 shares of common stock
of the Company to Joanne M. Caldwell-Bayles in exchange for services rendered
in connection with developing the plans for construction for the Ruston
Project and a deposit on the plans for the Bossier City, Shreveport, Minden
and West Monroe Locations.
On September 10, 1997, the Company issued 57,264 shares of common stock
of the Company to Raymond and Jean Nelson in exchange for services rendered
in connection with developing the plans for construction for the Ruston
Project and a deposit on the plans for the Bossier City, Shreveport, Minden
and West Monroe locations.
On May 10, 1998, the Company issued 162,300 shares of common stock of
the Company to The Forsythe Group, Inc. in exchange for services rendered
in connection with developing plans for the Bossier City and Shreveport
Projects.
The Company has also reserved 90,140 shares of Common Stock to be issued
to The Forsythe Group, Inc. in exchange for services rendered in connection
with developing the plans for the Minden and West Monroe locations.
Part IV.
Item 13. Exhibits Reports on Form 8-K
- ---------------------------------------
(a) Exhibits
Ex-20 Cover letter to Bondholders
Ex-27 Financial Data Schedule
(1) Included by reference Prospectus dated June 23, 1998
(2) Included by reference 10-QSB dated June 30, 1998
(3) Included by reference 10-QSB dated September 30, 1998
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of 1998
11
<PAGE>
Pursuant to the requirements of Section 13 or 15 (d) 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, in
the City of West Monroe, State of Louisiana, on March 14, 1999.
Senior Retirement Communities, Inc.
/s/ Joanne M. Caldwell-Bayles
-----------------------------------
By: Joanne M. Caldwell-Bayles
President, Finance and Treasurer, Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated on March 15, 1999.
Signature Title
/s/ Joanne M. Caldwell-Bayles
- -----------------------------
Joanne M. Caldwell-Bayles President, Finance and Treasurer,
Director
/s/ Raymond L. Nelson
- -----------------------------
Raymond L. Nelson Vice-President, Director
/s/ Jean Gaffney Nelson
- -----------------------------
Jean Gaffney Nelson Director
<PAGE>
SENIOR RETIREMENT COMMUNITIES, INC.
FINANCIAL STATEMENT
DECEMBER 31, 1998
F-1
<PAGE>
Senior Retirement Communities, Inc.
Financial Statement
December 31, 1998
Table of Contents
Page
FINANCIAL STATEMENTS:
Report 1
Balance Sheets 2
Statements of Income 4
Statements of Retained Earnings 5
Statements of Cash Flows 6
Notes to Financial Statements 8
F-2
<PAGE>
WILLIAM R. HULSEY
CERTIFIED PUBLIC ACCOUNTANT
2117 FORSYTHE AVENUE
MEMBER MONROE, LOUISIANA MAILING ADDRESS
AMERICAN INSTITUTE OF P. 0. BOX 2253
CERTIFIED PUBIIC ACCOUNTANTS MONROE, LOUISIANA 71207
SOCIETY OF LOUISANA (318) 362-9900
CERTIFIED PUBLIC ACCOUNTANTS FAX (318) 362-9993
Senior Retirement Communities, Inc.
507 Trenton Street
West Monroe, Louisiana
I have audited the accompanying balance sheets of Senior Retirement
Communities, Inc. as of December 31, 1998 and 1997 and the related statements
of income, retained earnings and cash flows for the year ended December 31,
1998 and for the period from September 10, 1997 to December 31, 1997. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Senior Retirement Communities,
Inc. at December 31, 1998 and the results of its operations and its cash flows
for the year ended December 31, 1998 and for the period from September 10,
1997 to December 31, 1997 in conformity with generally accepted accounting
principles.
March 8, 1999
/S/WILLIAM R HULSEY
William R Hulsey
Certified Public Accountant
F-3
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Balance Sheets
December 31,
1998 1997
ASSETS
<S> <C> <C>
Current assets:
Cash $ 12,087 $ 352
Escrow cash 1,324,496 0
Prepaid insurance 4,125 4,125
---------- ----------
Total current assets 1,340,708 4,477
---------- ----------
Property and equipment:
Buildings 2,875,903 0
Building construction in progress 4,163,330 716,307
Furniture and fixtures 75,102 0
Land 1,508,820 635,000
---------- ----------
8,623,155 1,351,307
Less: Accumulated depreciation 5,991 0
---------- ----------
Net property and equipment 8,617,164 1,351,307
---------- ----------
Other assets:
Deposits 0 2,000
Deferred charges 693,968 120,000
---------- ----------
Total other assets 693,968 122,000
---------- ----------
$10,651,840 $ 1,477,784
---------- ----------
</TABLE>
See accompanying notes.
F-4
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Balance Sheets
December 31,
1998 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <S> <S>
Current liabilities:
Bank overdraft $ 0 $ 21,405
Accrued expenses 484,801 0
Residents, deposits 3,375 0
Notes payable 1,002,535 450,000
---------- ----------
Total current liabilities 1,490,711 471,405
---------- ----------
Long-term debt:
Bonds payable 7,123,000 0
---------- ----------
Other liabilities:
Due to stockholders and affiliates 424,217 58,200
---------- ----------
Stockholders' Equity
Common stock, $ 2 par value, 1,500,000
shares authorized, 624,410 shares issued
and outstanding 62,441 47,441
Preferred stock, $ 1 par value, 425,000
shares authorized, issued and outstanding 425,000 0
Additional paid-in capital 1,186,379 901,379
Retained earnings ( deficit ) accumulated
during the development stage (59,908) (641)
---------- ----------
Total stockholders' equity 1,613,912 948,179
---------- ----------
$10,651,840 $ 1,477,784
---------- ----------
</TABLE>
See accompanying notes.
F-5
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Statements of Income
For the Year ended December 31, 1998
and the period from September 10, 1997 to December 31, 1997
December 31, 1998 December 31, 1997
<S> <C> <C>
Revenues $ 16,081 $ 0
---------- ----------
Operating expenses
Advertising 12,355 0
Automobile 1,993 0
Bank charges 192 151
Casual labor 174 380
Donations 200 0
Depreciation 5,991 0
Dues and subscriptions 1,523 0
Education and training 3,063 0
Food cost 3,932 0
Housekeeping 4,407 0
Insurance 8,937 0
Interest 29,675 0
Legal and accounting 10,950 0
Maintenance 672 0
Miscellaneous 7,403 0
Office 3,260 0
Payroll 45,330 0
Permits 245 0
Postage and delivery 756 0
Printing 4,451 110
Taxes 2,858 0
Telephone 1,180 0
Travel and entertainment 1,520 0
Utilities 1,840 0
---------- ----------
Total operating expenses 152,907 641
---------- ----------
Net income (loss) - operations (136,826) (641)
Other Income
Gain on sale of real estate 86,059 0
---------- ----------
Net income (loss) (50,767) (641)
---------- ----------
</TABLE>
See accompanying notes.
F-6
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Statements of Retained Earnings ( Deficit
For the Year ended December 31, 1998
and the period from September 10, 1997 to December 31, 1997
December 31, 1998 December 31, 1997
<S> <C> <C>
Beginning retained earnings $ (641) $ 0
Net income (loss) (50,767) (641)
Preferred dividends paid (8,500) 0
---------- ----------
Ending retained earnings (deficit) $ (59,908) $ (641)
---------- ----------
</TABLE>
See accompanying notes.
F-7
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Statements of Cash Flows
For the Year ended December 31, 1998
and the period from September 10, 1997 to December 31, 1997
December 31, December 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Revenues received $ 16,081 $ 0
Cash paid to suppliers and employees (117,435) (4,766)
---------- ----------
Net cash provided (used) by operations (101,354) (4,766)
---------- ----------
Cash flows from investing activities 7
Acquisitions of land (991,500) (635,000)
Sales of land 203,739 0
Payments towards construction (5,939,333) (716,307)
Payments of deposits 2,000 (2,000)
Payment of deferred charges (573,968) (120,000)
---------- ----------
Net cash provided by (applied to)
investing activities (7,299,062) (1,473,307)
---------- ----------
Cash flows from financing activities
Issuance of common stock 300,000 948,820
Issuance of preferred stock 425,000 0
Interim construction loans 552,535 450,000
Issuance of bonds 7,123,000 0
Payment of Preferred dividends (8,500) 0
Loans from stockholders and affiliates 366,017 58,200
---------- ----------
Net cash provided by (applied to)
financing activities 8,758,052 1,457,020
---------- ----------
Net increase (decrease) in cash 1,357,636 (21,053)
Cash at the beginning of the period (21,053) 0
---------- ----------
Cash at the end of the period $ 1,336,583 $ (21,053)
---------- ----------
</TABLE>
See accompanying notes.
F-8
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Statements of Cash Flows
For the Year ended December 31, 1998
and the period from September 10, 1997 to December 31, 1997
December 31, December 31,
1998 1997
Reconciliation of net income to net cash provided by operations:
<S> <C> <C>
Net income (loss) from operations $ (136,826) $ (641)
Adjustments to reconcile net income to cash
provided by operations
Depreciation 5,991 0
(Increase) in prepaid expenses 0 (4,125)
Increase in accrued expenses 29,481 0
Net cash provided (used) by operations $ (101,354) $ (4,766)
</TABLE>
See accompanying notes.
F-9
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Nature of Business
The Company is a Louisiana corporation established to develop assisted
living center and dementia facilities for the housing and care of senior
citizens in Ruston, Bossier City and Shreveport, Louisiana.
Basis of Accounting
The Company uses the accrual basis of accounting and will utilize a
calendar year for all reporting purposes.
Income Taxes
The Company is treated as a corporation for federal income tax purposes.
Property, Buildings, Equipment and Depreciation
Buildings and equipment are stated at cost and are to be depreciated by
the straight-line method over their estimated economic lives. Buildings
shall include capitalized construction period interest which will be
treated as a component cost of the building and depreciated over the same
economic life as the building. Some of the land was acquired in a a
series of tax free exchange in return for shares of the Company's common
stock ( Note 5 ). Consequently, the Company's tax basis in those
properties for income tax purposes is the stockholder's basis.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
F-10
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies-(continued)
Deferred Charges
Deferred charges represent the costs associated with obtaining long-term
financing for the care facilities of the Company. These costs are to
amortized over the life of the bonds using the effective interest rate
method.
Basis of Presentation
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 and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In management's opinion,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation of the unaudited interim financial
statements have been included. Operating results for interim periods
reflected are not necessarily indicative of the results that may be
expected for a full fiscal year. These financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Form 10-KSB.
Certain reclassifications have been made to previously reported amounts
to conform with the current presentation.
Note 2 - Related Party Transactions
The Company acquired 6 acres of land at the Ruston location with an
estimated fair market value of $ 450,000 in a transaction with one of
its stockholders in exchange for 77,500 shares of common stock and by
assuming a debt of $ 200,000, which is reflected as a due to stockholders
and affiliates. This transaction would have resulted in a gain to the
transferring shareholder of approximately $ 95,000 had it not been a tax
free exchange. This land is included on the balance sheet at a value of
$ 355,000 which is the transferring shareholder's basis in this property.
F-11
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 2 - Related Party Transactions - (continued)
The Company acquired 20 acres of land at the Ruston location with an
estimated fair market value of $ 250,000 in a transaction with one of
its stockholders in exchange for 40,000 shares of common stock. This
transaction would have resulted in a gain to the transferring shareholder
of approximately $ 170,000 had it not been a tax free exchange. This
land is included on the balance sheet at a value of $ 80,000 which is
the transferring shareholder's basis in this property.
The Company acquired land at the West Monroe location with an estimated
fair market value of $ 200,000 in a transaction with one of its
stockholders in exchange for 100,000 shares of common stock. This
transaction would have resulted no gain to the transferring shareholder
had it not been a tax free exchange.
The Company has entered into a construction contract in the amount of
$ 2,750,000 with one of the shareholders to construct the Ruston facility.
The contract calls for the cash payments of $ 2,500,000 during the
building of the facility as approved by the contract engineer and the
issuance of an additional 125,000 shares of common stock at the
completion of the project, such stock issuance to represent the
builder's profit in the project. As of December 31, 1998, $ 2,470,553
has been paid on this contract.
The Company has entered into a construction contract in the amount of
$ 1,225,000 with one of the shareholders to construct the Shreveport
facility. The contract calls for the cash payments during the building
of the facility as approved by the contract engineer. As of December
31, 1998, $ 919,115 has been paid on this contract.
The Company has entered into a construction contract in the amount of
$ 2,200,000 with one of the shareholders to construct the Bossier City
facility. The contract calls for the cash payments during the building
of the facility as approved by the contract engineer. As of December 31,
1998, $ 1,928,455 has been paid on this contract.
Due to stockholders and affiliates consist of amounts advanced by
stockholders and other related entities.
F-12
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 2 - Related Party Transactions - (continued)
On October 2, 1998, the Company sold part of its real estate to The
Biltmore Group, LLC. The land sold was 5.72 acres of the total of
9.72 acres purchased for a potential Minden, Louisiana location. The
sales price was $ 203,739 which results in a gain to the Company of
$ 86,059. The Biltmore Group, LLC is a related party to the Company in
that the majority shareholders in the Company are also members of The
Biltmore Group, LLC.
Note 3 - Deferred Charges
Deferred charges are summarized as follows:
Loan fees $ 693,968
The loan fees are to be amortized as interest expense over the life of
the related loan by use of the interest method.
Note 4 - Notes Payable
Notes payable at December 31, 1998 consists of the following:
1. Church Loans $ 270,474
2. Church Loans 618,745
3. Church Loans 113,316
----------
Total $ 1,002,535
----------
1. Note payable to Church Loans, dated December 1. 1997. This note is
to provide the funding for the construction of the Ruston location in
an amount not to exceed $ 2,700,000. The loan is to be repaid from
the permanent financing of the project through the issuance of bonds
on a best efforts basis. This note calls for the payment of interest
at a rate of prime ( as published in the Wall Street Journal plus two
percent but in no case shall the rate be less than ten and one-half
percent per annum. The lender shall maintain a co-first mortgage
position on the Ruston location until such time as the bonds are sold.
At that time Church Loans will maintain a co-first mortgage position
for any amounts which are not liquidated by the bond proceeds in such
proportion that said amount bears to the amount of bonds issued for
that location.
F-13
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 4 - Notes Payable - (continued)
2. Note payable Church Loans, dated April 28, 1998. This note is to
provide the funding for the construction of the Bossier City location
in an amount not to exceed $ 2,200,000. The loan is to be repaid from
the permanent financing of the project through the issuance of bonds
on a best efforts basis. This note calls for the payment of interest
at a rate of prime ( as published in the Wall Street Journal plus two
percent but in no case shall the rate be less than ten and one-half
percent per annum. The lender shall maintain a co-first mortgage
position on the Bossier City location until such time as the bonds
are sold. At that time Church Loans will maintain a cofirst mortgage
position for any amounts which are not liquidated by the bond proceeds
in such proportion that said amount bears to the amount of bonds issued
for that location.
3. Note payable Church Loans, dated April 28, 1998. This note is to
provide the funding for the construction of the Shreveport location
in an amount not to exceed $ 1,845,000. The loan is to be repaid from
the permanent financing of the project through the issuance of bonds
on a best efforts basis. This note calls for the payment of interest
at a rate of prime ( as published in the Wall Street Journal plus two
percent but in no case shall the rate be less than ten and one-half
percent per annum. The lender shall maintain a co-first mortgage
position on the Shreveport location until such time as the bonds are
sold. At that time Church Loans will maintain a co-first mortgage
position for any amounts which are not liquidated by the bond
proceeds in such proportion that said amount bears to the amount of
bonds issued for that location.
Through December 31, 1998, the Company has incurred $ 562,468 of
interest expense, of which $ 532,793 has been treated as construction
period interest and included as part of the Building construction on
progress on the balance sheet and the remainder of $ 29,675 has been
charged to operations.
F-14
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 5 - Issuances of Common Stock
<TABLE>
<CAPTION>
The Company was formed September 10, 1997. The Company has issued
Common Stock totalling 624,410 shares of $ .10 par value in exchange
for property and cash as follows:
Total Issue
Description Shares Amount
<S> <C> <C>
1. Certificate number 1 issued in 20,417 $ 40,834
exchange for cash
2. Certificate number 2 issued in 85,896 171,792
exchange for services rendered
in connection with developing the
plans for construction for the Ruston
location and a deposit on the plans
for Bossier City and Shreveport.
3. Certificate number 3 issued in 20,417 40,834
exchange for cash
4. Certificate number 4 issued in 77,500 155,000
exchange for the equity in 6
acres of land at the Ruston location.
5. Certificate number 5 issued in 40,000 80,000
exchange for 20 acres of land at
the Ruston location.
6. Certificate number 6 issued in 57,264 114,528
exchange for services rendered
in connection with developing the
plans for construction for the Ruston
location and a deposit on the plans
for the Bossier City and Shreveport
locations
7. Certificate number 7 issued in 20,416 40,832
exchange for cash
8. Certificate number 8 issued in 100,000 200,000
exchange for land at the West
Monroe location.
9. Certificate number 9 issued in 52,500 105,000
</TABLE>
F-15
<PAGE>
<TABLE>
<CAPTION>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 5 - Issuances of Common Stock - continued
<S> <C> <C>
10. Certificate number 10 issued in 150,000 300,000
exchange for services rendered
in connection with developing the
plans for construction for the Ruston
Bossier City, and Shreveport -------- ----------
Totals 624,410 $ 1,248,820
</TABLE>
The Company has also reserved 102,440 shares of Common Stock to
be issued at the completion of the services described above
relative to certificates 2 and 6.
Note 6 - Issuances of Preferred Stock
<TABLE>
<CAPTION>
In April of 1998 the Company issued 425,000 shares of Preferred Stock in
connection with a purchase of land for the Bossier City, Louisiana
location, The stock certificates were issued as follows:
Description Shares Amount
<S> <C> <C>
1. Certificate number 1 issued in 100,000 $100,000
exchange for land
2. Certificate number 2 issued in 100,000 $100,000
exchange for land
3. Certificate number 3 issued in 100,000 $100,000
exchange for land
4. Certificate number 4 issued in 100,000 $100,000
exchange for land
5. Certificate number 5 issued in 25,000 $ 25,000
exchange for land -------- ----------
Totals 425,000 $425,000
======== ==========
</TABLE>
The Preferred Stock issued accrues dividends at the rate of four percent
per year for each of the first two years, then six percent per year for
the next two years then at eight percent per year for the final two years.
The Preferred Stock is callable at the Company's option and shall be
redeemed at the end of the sixth year if still outstanding. The
preferred shareholders have an option to purchase common stock at a
twenty percent discount at any time within eight years of the preferred
stock issue date if the Company issues additional common stock through a
public offering.
F-16
<PAGE>
Senior Retirement Communities, Inc.
Notes to Financial Statements
Note 7 - Development Stage Operations
The Company has begun construction of the Ruston, Shreveport, and Bossier
City facilities. Ruston was completed effective December 1, 1999, while
Shreveport and Bossier City are scheduled to open in early 1999. The
expenditures related to the Shreveport and Bossier City projects are
reflected as building construction in progress on the balance sheet while
the completed Ruston project is shown as buildings.
Note 8 - Bonds Payable
On June 23, 1998, the Company's issue of $ 9,000,000 of bonds became
effective. These bonds are to become the permanent financing for the
projects under construction reflected in this financial statement. As
of December 31, 1998, these bonds are in the process of being sold with
the proceeds of these bond sales being used to liquidate the construction
loans noted in note 4. As of December 31, 1998, the status of these bonds
is as follows:
Amount Amount
Location Authorized Issued
Ruston $ 3,685,000 $ 3,228,750
Bossier City 3,470,000 3,349,250
Shreveport 1,845,000 1,845,000
---------- ----------
Totals 9,000,000 $ 8,423,000
---------- ----------
These bonds have varying interest rates from 7.5 percent per annum to 11
percent per annum. The maturity of these bonds is from one to twenty
years.
<PAGE>
<PAGE>
Senior Retirement Communities, Inc.
507 Trenton Street
West Monroe, Louisiana 71291
318 323-2115 fax 318 323-6281
March 14, 1999
To our Stockholders and Bondholders
Our top priority in fiscal 1998 was to develop and begin constructing
three assisted living centers in Ruston, Bossier City and Shreveport,
Louisiana. I am pleased to report that all three facilities were completed
by March 10, 1999. The challenge of operating these facilities in
a successful manner is now our future. The Company and I accept this
challenge.
Management is providing you the entire 10-KSB ( including exhibits),
as filed with Securities and Exchange Commission for your review. After
careful review of the 10-KSB, you may call or write if you have any questions.
Thank you for your trust and faith in us.
Sincerely,
/s/ Joanne M. Caldwell-Bayles
Joanne M. Caldwell-Bayles
President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
==============================================================================
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE UNAUDITED FINANCIAL STATEMENT OF SENIOR RETIREMENT COMMUNITIES, INC.
DATED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
INFORMATION SET FORTH IN THIS SCHEDULE DOES NOT CONTAIN ALL OF THE INFORMATION
NECESSARY AND SHOULD BE READ IN CONJUNCTION WITH THE COMPLETE UNAUDITED
FINANCIAL STATEMENT DATED DECEMBER 31, 1998 INCLUDING FOOTNOTES.
===============================================================================
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 12,087
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,340,708
<PP&E> 8,623,155
<DEPRECIATION> 5,991
<TOTAL-ASSETS> 8,617,164
<CURRENT-LIABILITIES> 1,490,711
<BONDS> 0
425,000
0
<COMMON> 62,441
<OTHER-SE> 1,186,379
<TOTAL-LIABILITY-AND-EQUITY> 10,651,840
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 152,907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,767)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
