<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1999
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number 0-29788
SCOTTISH ANcNUITY & LIFE HOLDINGS, LTD.
(Exact Name of Registrant as Specified in Its Charter)
Cayman Islands Not Applicable
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
P.O. Box 10657 APO Not Applicable
Grand Pavilion Commercial Center
802 West Bay Road
Grand Cayman
The Cayman Islands, B.W.I.
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (345) 949-2800
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
------ -----
As of May 12, 1999, Registrant had 18,576,440 Ordinary Shares outstanding.
================================================================================
<PAGE>
Table of Contents
PART I
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets, March 31, 1999 (Unaudited)
and December 31, 1998 (Note 1) 2
Consolidated Statement of Income for the Three Months
Ending March 31, 1999 (Unaudited) 3
Consolidated Statement of Comprehensive Loss
for the Three Months Ending March 31, 1999 (Unaudited) 3
Consolidated Statement of Shareholders' Equity for the
Three Months Ending March 31, 1999 (Unaudited) 4
Consolidated Statement of Cash Flows for the Three
Months Ending March 31, 1999 (Unaudited) 5
Condensed Notes to Consolidated Financial Statements
(Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANAYLSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK 12
PART II OTHER INFORMATION
ITEM 1. through ITEM 6. 12
SIGNATURES 13
EXHIBIT INDEX 14
-1-
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
Consolidated Balance Sheets
(Stated in United States Dollars)
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Investments
Fixed Maturities $ 243,441,668 $ 229,756,293
Short-term investments 12,985,024 14,511,683
------------- -------------
Total Investments 256,426,692 244,267,976
Cash 2,270,671 3,863,042
Receivables
Due from Brokers - 3,060,543
Due from related parties 219,082 -
Accrued interest receivable 2,451,926 2,883,009
Net fixed assets and leasehold improvements 367,732 -
Other assets 226,076 271,669
------------- -------------
Total Assets $ 261,962,179 $ 254,346,239
============= =============
LIABILITIES
Accounts payable and accrued expenses $ 918,552 $ 1,959,160
Due to Brokers 9,951,437 -
Due to related parties - 326,900
------------- -------------
Total Liabilities 10,869,989 2,286,060
------------- -------------
SHAREHOLDERS' EQUITY
Share capital, par value $0.01 per share
Issued and fully paid: 18,576,440 ordinary shares
(18,568,440 ordinary shares in 1998) 185,764 185,684
Additional paid in capital 252,429,366 252,291,320
Accumulated other comprehensive loss -
Unrealized depreciation of investments (3,576,386) (853,146)
Retained Earnings 2,053,446 436,321
------------- -------------
Total shareholders' equity 251,092,190 252,060,179
------------- -------------
Total liabilities and shareholders' equity $ 261,962,179 $ 254,346,239
============= =============
</TABLE>
See accompanying notes.
-2-
<PAGE>
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
Consolidated Statement of Income
(Stated in United States Dollars)
For the Three Months Ending March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
REVENUES
Interest income, net $ 3,321,252
Realized losses on securities, net (963,914)
Insurance administration fees 225,785
-----------
Total revenues 2,583,123
-----------
EXPENSES
Salaries and benefits 492,471
Professional fees 210,445
Administrative expenses 263,082
-----------
Total expenses 965,998
-----------
Net income $ 1,617,125
===========
BASIC AND DILUTED EARNINGS PER ORDINARY SHARE $ 0.09
===========
</TABLE>
See accompanying notes
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
Consolidated Statement of Comprehensive Loss
(Stated in United States Dollars)
For the Three Months Ending March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Net Income $ 1,617,125
Other comprehensive loss
Unrealized depreciation on investments:
Unrealized holding depreciation arising during the period (3,687,154)
Add: reclassification adjustment for losses included in net income 963,914
-----------
Unrealized depreciation on investments (2,723,240)
-----------
Comprehensive loss $(1,106,115)
===========
</TABLE>
See accompanying notes
-3-
<PAGE>
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
Consolidated Statement of Shareholders' Equity
(Stated in United States Dollars)
For the Three Months Ending March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional other
Class A Class B Share paid-in comprehensive Retained
Shares warrants warrants capital capital loss earnings Total
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning balance 18,568,440 2,850,000 200,000 $ 185,684 $252,291,320 $ (853,146) $ 436,321 $ 252,060,179
Issuance of shares 8,000 80 87,920 88,000
Issuance of equity options 50,126 50,126
Unrealized depreciation on
investments (2,723,240) (2,723,240)
Net income 1,617,125 1,617,125
------------------------------------------------------------------------------------------------------
Ending balance 18,576,440 2,850,000 200,000 $ 185,764 $252,429,366 $(3,576,386) $2,053,446 $ 251,092,190
======================================================================================================
</TABLE>
See accompanying notes
-4-
<PAGE>
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
Consolidated Statement of Cash Flows
(Stated in United States Dollars)
For the Three Months Ending March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net income $ 1,617,125
Adjustments to reconcile net income to net cash provided by
operating activities:
Realized losses on securities, net 963,914
Non cash salaries and benefits 88,000
Non cash professional fees 50,126
Depreciation 4,838
Changes in assets and liabilities:
Receivables 3,491,626
Fixed assets and leasehold improvements (372,570)
Other assets 45,593
Accounts payable and accrued expenses 8,910,829
Due to/from related parties (545,982)
---------------------
Net cash provided by operating activities 14,253,499
---------------------
INVESTING ACTIVITIES
Purchase of securities (448,554,653)
Proceeds on sales of securities 432,708,783
---------------------
Net cash used in investing activities (15,845,870)
---------------------
Net change in cash (1,592,371)
Cash at the beginning of the period 3,863,042
---------------------
CASH AT THE END OF THE PERIOD $ 2,270,671
=====================
Supplemental information - non-cash transactions
Issuance of shares $ 88,000
Issuance of equity options 50,126
---------------------
$ 138,126
=====================
</TABLE>
See accompanying notes
-5-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Condensed Notes to Consolidated Financial Statements (Unaudited)
For the Three Months Ending March 31, 1999
1. Basis of presentation
Accounting Principles - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information ("GAAP") and with the instructions
to Form 10-Q 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 the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month
period ending March 31, 1999 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999.
The comparative consolidated balance sheet as of December 31, 1998 has been
derived from the audited consolidated financial statements for the period ended
December 31, 1998, but does not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company and Subsidiaries' annual
report on Form 10-K for the period ended December 31, 1998.
Consolidation - We consolidate our results and have eliminated all significant
intercompany transactions.
Estimates, risks and uncertainties - The preparation of GAAP financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosures of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Our most significant assumptions will be for
assumed reinsurance liabilities, which will be provided by the ceding companies.
It is typical for these ceding companies to periodically review and revise these
estimates. We also will review and revise these estimates as appropriate. Any
adjustments made to these estimates will be reflected in the period the
estimates are revised.
2. Earnings per ordinary share
We calculate earnings per ordinary share in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings per Share" ("EPS").
Basic EPS excludes the dilutive effect of options and warrants. Diluted EPS
includes the dilutive effect of these securities using the treasury stock
method. The weighted-average number of shares is calculated by weighting how
long the shares have been outstanding over the accounting period.
-6-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Condensed Notes to Consolidated Financial Statements (Unaudited)
For the Three Months Ending March 31, 1999 (continued)
Our warrants and options were not deemed to be dilutive as of March 31, 1999
because the strike price of $15 was greater than our market value.
Three Months Ended
March 31, 1999
------------------
Net income $ 1,617,125
Weighted average number of shares outstanding 18,573,507
------------------
Basic and diluted earnings per ordinary share $ 0.09
==================
Actual shares outstanding at March 31, 1999 18,576,440
==================
3. Fixed maturities
The amortized cost, gross unrealized appreciation and depreciation, and
estimated fair values of our fixed maturity investments are as follows:
<TABLE>
<CAPTION>
March 31, 1999
--------------------------------------------------------------------------
Gross
Amortized unrealized Unrealized Estimated fair
cost appreciation depreciation value
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities
and obligations of U.S.
government agencies $ 49,711,833 $ 943 $(1,802,256) $ 47,910,520
U.S. corporate securities 109,594,104 171,715 (1,357,345) 108,408,474
Mortgage and asset backed
securities 87,712,117 15,263 (604,706) 87,122,674
--------------------------------------------------------------------------
Total fixed maturities $247,018,054 $ 187,921 $(3,764,307) $243,441,668
==========================================================================
</TABLE>
The contractual maturities of the fixed maturities are as follows. Actual
maturities may differ as a result of calls and prepayments.
Amortized Estimated fair
cost value
----------------------------------
Due in one year or less $ 10,792,461 $ 10,789,209
Due in one year through five years 85,411,035 84,274,121
Due in five years through ten years 40,216,045 39,492,025
Due after ten years 22,886,396 21,763,639
--------------------------------
159,305,937 156,318,994
Mortgage and asset backed securities 87,712,117 87,122,674
---------------------------------
$247,018,054 $243,441,668
=================================
Proceeds from sales of securities during the three months ended March 31, 1999
were $432,708,783. Gross gains of $146,961 and gross losses of $1,110,875 were
realized on those sales.
-7-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Condensed Notes to Consolidated Financial Statements (Unaudited)
For the Three Months Ending March 31, 1999 (continued)
4. Taxation
There is presently no taxation imposed on income or capital gains by the
Government of the Cayman Islands. If any taxation were to be enacted, we and
Scottish Annuity & Life Insurance Company (Cayman) Ltd. ("Scottish Insurance"),
our wholly owned subsidiary, have been granted exemptions therefrom until 2018.
We operate in a manner such that we will owe no United States tax other than
premium excise taxes and withholding taxes on certain investment income.
5. Statutory requirements and dividend restrictions
Under The Insurance Law of the Cayman Islands (1998 Revision), Scottish
Insurance must maintain a minimum net capital worth of $240,000.
Our ability to pay dividends depends on the ability of Scottish Insurance to pay
dividends to us. While we are not subject to any significant legal prohibitions
on the payment of the dividends, Scottish Insurance will be subject to Cayman
Islands regulatory constraints, which affect its ability to pay dividends.
Scottish Insurance is prohibited from declaring or paying a dividend if such
payment would reduce its net capital worth below $240,000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
Scottish Annuity & Life Holdings is an insurance holding company. Our
principal asset is Scottish Annuity & Life Insurance Company (Cayman) Ltd.
("Scottish Insurance"). We were formed on May 12, 1998, and Scottish Insurance
was formed on June 8, 1998, under the laws of the Cayman Islands. We commenced
our insurance operations on November 30, 1998, immediately following our initial
public offering.
-8-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of operations
The following table summarizes our operating earnings for the period from
January 1, 1999 to March 31, 1999. Operating earnings, which excludes realized
investment gains (losses) is a common measure used in the insurance industry.
Revenues
Interest income, net $3,321,252
Insurance administration fee 225,785
----------
Total revenues 3,547,037
----------
Expenses
Salaries and benefits 492,471
Professional fees 210,445
Administrative expenses 263,082
----------
Total expenses 965,998
----------
Operating earnings $2,581,039
==========
Basic and diluted operating earnings $0.14
per ordinary share ==========
Overview
Our operating earnings of $2,581,039 or $0.14 per share were driven by
revenues from our investment portfolio and insurance administration fees.
Investments
Our investment portfolio is managed by three professional investment
managers, Pacific Investment Management Company, Prudential Investment
Corporation and Gen Re - New England Asset Management, Inc. Our investment
guidelines are designed to diversify the portfolio to maximize investment income
while minimizing risk. At March 31, 1999, the portfolio had an average quality
rating of AA, an average duration of 4.73 years and an average book yield of
5.80%. The average yield has improved from year-end 1998 because the proceeds
of our initial public offerring were fully deployed during the first quarter of
1999. At year-end our investment managers were still in the process of
deploying the proceeds from the stock offering. A realized loss of $963,914 and
net unrealized depreciation of $2,723,240 was recognized on investments during
the period. The realized loss occurred as one of our investment managers
reallocated the portfolio to take advantage of increasing interest rates. The
unrealized depreciation was the result of interest rates increasing from
year-end.
-9-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Insurance operations
Our business consists of two lines of business, variable life insurance and
life and annuity reinsurance. Our first quarter 1999 results only reflected
revenues from the insurance administration portion of our variable life
business. The insurance administration business consists of a variety of
insurance administration, accounting and other services provided to Scottish
Annuity Company (Cayman) Ltd.
Outlook
During the first quarter we continued to review a number of variable life
and reinsurance transactions. On May 4, 1999, we announced that we entered into
a definitive binder to reinsure a block of disability income payment obligations
issued by a major U.S. insurance company. The transaction will involve the
transfer of approximately $120 million of reserves to us. The transaction is
subject to the normal due diligence and will be effective June 1, 1999 and will
close on or before June 30, 1999.
Our variable life insurance product offers a unique feature, independent
investment management, which we believe will differentiate us in the market.
Our reinsurance focus is on the annuity business although we will consider life
reinsurance.
Capital Resources and Liquidity
At March 31, 1999, total capitalization was $251,092,190. We currently
have no material commitments for capital expenditures and do not anticipate
incurring material indebtedness other than letters of credit, which may be
required in the ordinary course of our reinsurance business.
At our April 28, 1999 Board of Directors meeting, a stockholder dividend of
$0.05 per ordinary share was declared on the shares outstanding as of the record
date of June 7, 1999 to be paid on June 23, 1999.
We expect that our cash and investments, together with cash generated from
our businesses, will provide sufficient sources of liquidity and capital to meet
our needs for the next several years.
Year 2000 Risk
Many existing computer programs use only two digits to identify a year in
the date field. These programs, if not corrected, could fail or create erroneous
results by or at the year 2000. This "Year 2000" Issue is believed to affect
virtually all companies and organizations, including us. Because most of our
computer hardware and software is less than three years old, we believe that our
exposure with respect to our own computer systems to Year 2000-related problems
is not significant. In addition, we recently upgraded our principal accounting
software from a DOS-based version which was not Year 2000 compliant to a Windows
NT version which is certified Year 2000 compliant by the software vendor.
-10-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
We rely significantly on a number of third party service providers, such as
PIMCO, General Re and Prudential Investment, each of whom confirmed to us, or is
in the process of confirming, that they are Year 2000 compliant. We also intend
to require that any new service providers be or become Year 2000 compliant in a
timely manner. There can be no assurance, however, that our operations will not
experience disruptions due to the failure of third parties, including
reinsurance counter parties, to become fully Year 2000 compliant in a timely
manner or that a failure will not otherwise have an adverse effect on our
business, results of operations or financial condition. In the event our plans
with respect to Year 2000 readiness fail to protect our operations from
disruptions or its business, results of operations or financial condition from
adverse effect, we have no contingency plan other than the replacement of
existing third party service providers which are not Year 2000 compliant with
comparable third party service providers who are Year 2000 compliant. We may
also have an exposure to Year 2000 issues from reinsurance business we write in
the future. Since we have not written any reinsurance business we do not know
what these exposures are or whether they will be material.
Changes in Accounting Standards
The Financial Accounting Standards Board's Statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued in June 1998 and
requires adoption no later than fiscal quarters or fiscal years beginning after
June 15, 1999. The new standard establishes accounting and reporting standards
for derivative instruments. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. We have not yet completed our evaluation of the effect this
standard will have on us.
Forward Looking Statements
Some of the statements contained in this report are not historical facts
and are forward-looking within the meaning of the Private Securities Litigation
Reform Act. Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results to differ
materially from the forward-looking statements. When used, the words "may,"
"will," "expect," "anticipate," "continue," "estimate," "project," "plan,"
"intend" and similar expressions identify forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, the following: our ability to execute the business plan; changes in
the general economic conditions including the performance of the financial
markets and interest rates; changes in insurance regulations or taxes; changes
in rating agency policy; the loss of key executives; trends in the insurance and
reinsurance industries; government regulations; trends that may affect our
financial condition or results of operations; the declaration and payment of
dividends and Year 2000 issues. Potential investors
-11-
<PAGE>
Scottish Annuity & Life Holdings, Ltd.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
are cautioned that any forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties. Actual results may
differ materially from those included within the forward-looking statements as a
result of various factors. Factors that could cause or contribute to such
differences include, but are not limited to, those described under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and under the heading "Risks Factors of Investing in our Ordinary
Shares" set forth in our Annual Report on Form 10-K filed with the Securities
and Exchange Commission. We assume no obligation to update any forward-looking
statement to reflect actual results or changes in or additions to the factors
affecting such forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Qualitative Disclosure of Market Risk
Our qualitative disclosure about market risk is incorporated herein by
reference to "Item 7A: Quantitative and Qualitative Disclosures About Market
Risk" of our Annual Report on Form 10-K for the Fiscal Year Ended December 31,
1998.
Quantitative Disclosure of Interest Rate Risk
Our quantitative disclosure about interest rate risk is incorporated herein
by reference to "Item 7A: Quantitative and Qualitative Disclosures About Market
Risk" of our Annual Report on Form 10-K for the Fiscal Year Ended December 31,
1998.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not currently involved in any litigation or arbitration.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Default Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders.
Scottish Holdings did not submit any matter to a vote of securities holders
during the first quarter of 1999.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
-12-
<PAGE>
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.
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
Date: May 13, 1999 By: /s/ Michael C. French
---------------------
Michael C. French
Chief Executive Officer and President
Date: May 13, 1999 By: /s/ Peter W. Presperin
-----------------------
Peter W. Presperin
Senior Vice President-Chief Financial
Officer and Secretary (Principal Financial
Officer and Principal Accounting Officer)
-13-
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Document
------ -----------------------
27.1 Financial Data Schedule
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<DEBT-HELD-FOR-SALE> 243,441,668
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 256,426,692
<CASH> 2,270,671
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 261,962,179
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 185,764
<OTHER-SE> 250,960,426
<TOTAL-LIABILITY-AND-EQUITY> 261,962,179
0
<INVESTMENT-INCOME> 3,321,252
<INVESTMENT-GAINS> (963,914)
<OTHER-INCOME> 225,785
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 1,617,125
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,617,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,617,125
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
