<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
Commission File Number: 0-8698
CONCORDE GAMING CORPORATION
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
COLORADO 84-0716683
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
3290 LIEN STREET
RAPID CITY, SOUTH DAKOTA 57709
(Address of principal executive offices)
(605) 341-7738
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of February 7, 1997, there were
26,755,193 shares of the issuer's $.01 par value common stock outstanding. A
subsidiary of the issuer owns 4,825,400 shares of the issuer resulting, for
financial statement reporting purposes only, in a total of 21,929,793 shares
outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE> 2
INDEX
CONCORDE GAMING CORPORATION
and Subsidiaries
PART 1 - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements Page No.
<S> <C>
Condensed Consolidated Balance Sheet 1-2
at December 31, 1996 (unaudited)
Condensed Consolidated Statements of Operations for 3
Three Months Ended December 31, 1996 and 1995
(unaudited)
Condensed Consolidated Statements of Stockholders' 4
Equity for the Periods Ended December 31, 1996,
September 30, 1996 and December 31, 1995
(unaudited)
Condensed Consolidated Statements of Cash Flows for 5-6
Three Months Ended December 31, 1996 and 1995
(unaudited)
Notes to Condensed Consolidated Financial Statements 7
(unaudited)
Item 2. Management's Discussion and Analysis of Financial 8-12
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
Exhibit No. 11 Computation of Per Share Earnings
</TABLE>
<PAGE> 3
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(unaudited)
<TABLE>
<S> <C>
Assets
Current assets:
Cash $ 132,488
Receivables:
Trade 13,735
Management agreement 206,612
Interest 17,548
Current maturities of long-term receivables:
The Three Affiliated Tribes 2,721,800
Notes receivable 43,527
Prepaid expenses 62,152
-----------
Total current assets $ 3,197,862
-----------
Investments and long-term receivables:
Long-term receivables from The Three Affiliated Tribes $ 2,870,527
Notes receivable, less current maturities 2,000
Investment in unconsolidated affiliate 241,351
Other 1,250
-----------
$ 3,115,128
-----------
Property and equipment, at cost:
Land $ 50,000
Building and improvements 205,511
Video lottery equipment 2,462,756
Furniture and equipment 272,391
Leasehold improvements 301,447
Vehicles 120,825
-----------
$ 3,412,930
Less accumulated depreciation (1,589,590)
-----------
$ 1,823,340
-----------
Intangibles:
Noncompetition agreements, net $ 27,859
Other, principally goodwill, net 375,712
Casino development and financing costs, net 509,750
-----------
$ 913,321
-----------
$ 9,049,651
===========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 4
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
December 31, 1996
(unaudited)
<TABLE>
<S> <C>
Liabilities and Stockholder's Equity
Current liabilities:
Notes payable $ 820,000
Current maturities of long-term debt 2,237,727
Current maturities of long-term debt, related party 690,000
Accounts payable:
Trade 181,839
Construction and property and equipment related 199,855
Accrued expenses:
Lottery state share 145,207
Other 305,160
Income tax payable 0
-----------
Total current liabilities $ 4,579,788
-----------
Long-term debt, less current maturities $ 519,487
-----------
Deferred income taxes $ 46,600
-----------
Stockholders' equity:
Common stock, par value $.01 per share; authorized
500,000,000 shares; issued and outstanding 26,755,193
at December 31, 1996 $ 267,552
Preferred stock, par value $.01 per share; authorized
10,000,000 shares; no shares issued and outstanding 0
Additional paid-in capital 3,915,588
Retained earnings 210,324
-----------
$ 4,393,464
Less stock subscription in the form of a note
and related accrued interest receivable (172,086)
Less cost of treasury stock, 4,825,400 shares (317,602)
-----------
$ 3,903,776
-----------
$ 9,049,651
===========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended December 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Revenues:
Video lottery $ 1,964,694 $ 2,470,796
Management agreement 208,371 523,410
Other 13,823 6,492
------------ ------------
$ 2,186,888 $ 3,000,698
------------ ------------
Costs and expenses:
Video lottery state share $ 977,116 $ 1,226,458
Video lottery location share 659,921 815,550
Compensation expenses 235,043 195,962
Business development costs 23,017 13,941
Depreciation and amortization 165,681 150,428
Operating expenses 213,084 282,976
------------ ------------
Total costs and expenses $ 2,273,862 $ 2,685,315
------------ ------------
Operating income (loss) $ (86,974) $ 315,383
------------ ------------
Other income (expense):
Interest income $ 582 $ 139,503
Gain/loss on sale of equipment 5,373 (457)
Other income 17,393 1,221
Interest expense and financing costs (157,788) (227,235)
------------ ------------
$ (134,440) $ (86,968)
------------ ------------
Income (loss) before income taxes $ (221,414) $ 228,415
Federal and state income taxes $ (81,200) $ 82,850
------------ ------------
Net income (loss) $ (140,214) $ 145,565
============ ============
Net income (loss) per common and
common equivalent share ($ 0.01) $ 0.01
============ ============
Weighted average number of common and
common equivalent shares outstanding 21,929,793 21,978,732
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Periods Ended
December 31, 1996, September 30, 1996 and December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Number of
Common Additional
Shares Common paid-in
Outstanding stock capital
-------------- ---------------- -------------------
<S> <C> <C> <C>
Balance, September 30, 1995 26,755,193 267,552 3,868,775
Net income 0 0 0
Issuance of warrant for 80,000 common shares in
connection with note payable 0 0 1,600
Interest earned on note receivable 0 0 10,000
Principal payments received on note receivable 0 0 0
----------- ----------- -----------
Balance, December 31, 1995 26,755,193 $ 267,552 $ 3,880,375
Net earnings 0 0 0
Interest earned on note receivable 0 0 27,172
Principal payments received on note receivable 0 0 0
----------- ----------- -----------
Balance, September 30, 1996 26,755,193 $ 267,552 $ 3,907,547
Net income 0 0 0
Interest earned on note receivable 0 0 8,041
Principal payments received on note receivable 0 0 0
----------- ----------- -----------
Balance, December 31, 1996 26,755,193 $ 267,552 $ 3,915,588
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Stock
subscription
in the form
of a note
Retained and related
earnings interest Treasury
(deficit) receivable stock Total
--------- ------------ -------- -----
<S> <C> <C> <C> <C>
Balance, September 30, 1995 (207,121) (226,032) (317,602) 3,385,572
Net income 145,565 0 0 145,565
Issuance of warrant for 80,000 common shares in
connection with note payable 0 0 0 1,600
Interest earned on note receivable 0 98 0 10,098
Principal payments received on note receivable 0 9,733 0 9,733
----------- ----------- ----------- -----------
Balance, December 31, 1995 $ (61,556) $ (216,201) $ (317,602) $ 3,552,568
Net earnings 412,094 0 0 412,094
Interest earned on note receivable 0 326 0 27,498
Principal payments received on note receivable 0 31,998 0 31,998
----------- ----------- ----------- -----------
Balance, September 30, 1996 $ 350,538 $ (183,877) $ (317,602) $ 4,024,158
Net income (140,214) 0 0 (140,214)
Interest earned on note receivable 0 119 0 8,160
Principal payments received on note receivable 0 11,672 0 11,672
----------- ----------- ----------- -----------
Balance, December 31, 1996 $ 210,324 $ (172,086) $ (317,602) $ 3,903,776
=========== =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended December 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(140,214) $ 145,565
Adjustments to reconcile net income (loss) to net cash flows
provided by operating activities:
Depreciation and amortization 165,681 150,428
Warrants issued 0 1,600
Loss (gain) on sale of property and equipment, real estate (5,373) 457
Other (9,800) 0
Changes in assets and liabilities:
Receivables - trade, management agreement, and interest 42,823 (190,327)
Prepaid expenses 19,061 12,673
Accounts payable and accrued expenses 147,533 77,303
Income taxes payable (126,600) 68,496
Other 0 0
--------- ---------
Net cash provided by operating activities 93,111 266,195
--------- ---------
Cash flows from investing activities:
Advances on long-term receivables (6,435) (39,500)
Principal payments received on long-term receivables 159,678 528,868
Proceeds from sale of property and equipment, real estate 20,514 36,304
Purchase of property and equipment (3,897) (221,605)
Payments for casino development costs (3,346) (27,287)
Other 0 0
--------- ---------
Net cash provided by investing activities 166,514 276,780
--------- ---------
Cash flows from financing activities:
Proceeds from long-term borrowing 0 12,992
Principal payments on long-term debt (492,541) (908,479)
Net change in short-term borrowings 225,000 (15,000)
Payments received on stock subscription in the form of a
note and related interest receivable 19,832 19,831
--------- ---------
Net cash (used in) financing activities (247,709) (890,656)
--------- ---------
Net increase (decrease) in cash 11,916 (347,681)
Cash:
Beginning 120,572 520,438
--------- ---------
Ending $ 132,488 $ 172,757
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 8
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Three Months Ended December 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash payments for:
Interest $ 86,165 $204,159
======== ========
Income taxes $ 50,000 $ 15,000
======== ========
Supplemental schedule of noncash investing and financing activities:
Property and equipment acquired by issuance of long-term debt $190,000
========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 9
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(unaudited)
(1) Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements
of Concorde Gaming Corporation and its wholly-owned subsidiaries (the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and the rules
and regulations of the U.S. Securities and Exchange Commission.
Accordingly, they do not include all of the information and notes
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 ended December 31, 1996 are not necessarily indicative of
the results that may be expected for the year ending September 30, 1997.
The accompanying condensed consolidated financial statements, and
related notes thereto, should be read in conjunction with the audited
financial statements of the Company, and notes thereto, for the year
ended September 30, 1996 included in the Company's 1996 Annual Report on
Form 10-KSB.
(2) Subsequent Events
On September 27, 1996, Bruce H. Lien Company, a wholly-owned subsidiary
of the Company ("BHL"), and the Three Affiliated Tribes ("TAT") entered
into a settlement agreement (the "Settlement Agreement") to resolve
disputes arising out of the management agreement (the "Management
Agreement") between BHL and TAT, pursuant to which BHL manages the Four
Bears Casino and Lodge (the "Casino"). The Settlement Agreement provides
that in consideration for the termination of the Management Agreement
that TAT will pay BHL $8.65 million and that the parties will dismiss,
with prejudice, all litigation between the parties. The Settlement
Agreement closed on February 13, 1997. The proceeds from the Settlement
Agreement will be used to pay off substantially all of the Company's
debt, other than approximately $900,000 related to its video lottery
operations, for working capital purposes, and to fund future projects.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
7
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The statements contained in this report, if not historical, are forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and involve risks and uncertainties that could cause actual
results to differ materially from the financial results described in such
forward looking statements. These risks and uncertainties include, among others,
the level and rate of growth in the Company's operations. The success of the
Company's business operations is in turn dependent on factors such as the
effectiveness of the Company's marketing strategies to grow its customer base
and improve customer response rates, retention of video lottery space lease
agreements, general competitive conditions within the gaming industry and
general economic conditions. Further, any forward looking statement or
statements speak only as of the date on which such statement was made, and the
Company undertakes no obligation to update any forward looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events.
Therefore, forward-looking statements should not be relied upon as a prediction
of actual future results.
The Settlement Agreement closed on February 13, 1997 and BHL received a
payment of $8,650,000. See "Note 2 to Notes to Condensed Consolidated Financial
Statements." The Company intends to use the proceeds from the Settlement
Agreement to repay substantially all of its existing debt, other than
approximately $900,000 related to its video lottery operations, for working
capital purposes, and to fund future projects. See "Liquidity and Capital
Resources."
RESULTS OF OPERATIONS
Three Months ended December 31, 1996 Compared to Three Months ended December 31,
1995
Revenues. Total revenues decreased 27.1% to $2,186,888 for the three
months ended December 31, 1996, compared to $3,000,698 for the three months
ended December 31, 1995. Video lottery revenues decreased 20.5% to $1,964,694
for the three months ended December 31, 1996, compared to $2,470,796 for the
three months ended December 31, 1995 primarily due to a decrease in revenue
generated by each video lottery machine during the three months ended December
31, 1996 of approximately 14.5% as compared to the three months ended December
31, 1995. This decrease is a result of some of the Company's higher
revenue-per-machine locations not renewing their lease agreements, and the
Company placing its machines in lower revenue-per-machine locations. Revenues
from the Management Agreement decreased 60.2% to $208,371 for the three months
ended December 31, 1996, compared to $523,410 for the three months ended
December 31, 1995. The decrease in revenues from the Management Agreement is
attributable to a decrease in earnings of the Casino for the three months ended
December 31, 1996 as compared to the same period in 1995 due primarily to
extreme winter weather in the North Dakota area.
8
<PAGE> 11
Costs and expenses. Total costs and expenses decreased 15.3% to
$2,273,862 for the three months ended December 31, 1996, compared to $2,685,315
for the three months ended December 31, 1995. The decrease was attributable to
decreases in video lottery state share, video lottery location share,
compensation expenses and operating expenses. Video lottery state share
decreased 20.3% to $977,116 for the three months ended December 31, 1996,
compared to $1,226,458 for the three months ended December 31, 1995 and video
lottery location share decreased 19.1% to $659,921 for the three months ended
December 31, 1996, compared to $815,550 for the three months ended December 31,
1995 due to the decrease in video lottery revenues. Operating expenses decreased
24.7% to $213,084 for the three months ended December 31, 1996, compared to
$282,976 for the three months ended December 31, 1995 as a result of decreases
in legal, travel and miscellaneous expenses. Compensation expense increased
19.9% to $235,043 for the three months ended December 31, 1996, compared to
$195,962 for the three months ended December 31, 1995, due primarily to an
increase in the number of employees in the Company's video lottery operations.
Other Income and Expense. Interest expense and financing costs decreased
30.6% to $157,788 for the three months ended December 31, 1996, compared to
$227,235 for the three months ended December 31, 1995. This decrease was the
result of the Company having reduced its notes payable to $4,267,214 at December
31, 1996, compared to $6,879,227 at December 31, 1995. Interest income decreased
99.6% to $582 for the three months ended December 31, 1996, compared to $139,503
for the three months ended December 31, 1995, as the Company has not recorded
interest income on the amounts due from TAT since September 30, 1996 in
accordance with the terms of the Settlement Agreement.
Federal and State Income Taxes. The Company has recorded a Federal and
State income tax benefit of $81,200 for the three months ended December 31,
1996, compared to income tax expense of $82,850 for the three months ended
December 31, 1995. The Company records income tax expense using the estimated
effective tax rate for the fiscal year. The Company records an income tax
benefit using the estimated effective tax rate for the fiscal year if the amount
of loss incurred is reasonably expected to be offset by future income, or is
available for carry back to previous years.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $132,488 at December 31,
1996, compared to $120,572 at September 30, 1996, an increase of $11,916. During
the three months ended December 31, 1996, cash flow from operations was $93,111,
compared to $266,195 during the three months ended December 31, 1995. The
decrease in cash flow from operations is due primarily to the decrease in
revenues from the Management Agreement.
Investing activities provided cash of $166,514 during the three months
ended December 31, 1996, compared to $276,780 during the three months ended
December 31, 1995. Principal payments received on long-term receivables were
$159,678 during the three months ended December 31, 1996, compared to $528,868
during the three months ended December 31, 1995.
9
<PAGE> 12
The decrease in principal payments received on long-term receivables during the
three months ended December 31, 1996 was the result of the Casino withholding
the November and December distributions owed BHL under the Management Agreement
for working capital purposes.
Financing activities used cash of $247,709 during the three months ended
December 31, 1996, compared to $890,656 during the three months ended December
31, 1995. Principal payments on long-term debt were $492,541 during the three
months ended December 31, 1996, compared to $908,479 during the three months
ended December 31, 1995. Short-term borrowings provided cash of $225,000 during
the three months ended December 31, 1996 compared to $15,000 during the three
months ended December 31, 1995. The Company borrowed additional amounts during
this period to offset the reduction in cash resulting from the Casino
withholding the November and December distributions.
The Company had a working capital deficit of $1,381,926 at December 31,
1996, compared to $1,849,222 at September 30, 1996, a decrease of $467,296 due
to an increase in the current maturities of long-term receivables from TAT. The
working capital deficits are a result of the Company's long-term borrowings
having repayment periods of three years or less.
As a result of the decrease in revenues during the current period, the
Company obtained an additional short-term loan from its bank in the principal
amount of $300,000. The loan is due April 11, 1997, with interest payable
monthly at a rate equal to the bank's prime rate plus 2%. In January and
February 1997, the Company also borrowed $100,000 and $140,000, respectively,
from BHL Capital Corporation. The loans are due September 30, 1997 and March 31,
1997, respectively, with interest payable at 2% over the prime rate published in
the Wall Street Journal. The Company also amended the settlement agreement with
Four Bears Investment Limited Liability Company ("FBILLC") to extend and
restructure the payment terms.
The Company intends to use the proceeds of the Settlement Agreement to
repay approximately $3.5 million in notes payable, and accrued interest thereon,
which represents the repayment of the following: (i) FBILLC, (ii) an individual,
(iii) its bank, and (iv) BHL Capital Corporation, including the $240,000
borrowed in January and February of 1997. The balance will be used for working
capital purposes and for acquisitions and to fund future projects.
SEASONALITY/QUARTERLY FLUCTUATIONS
On a historic basis, the revenues and cash flow of the Casino have been
seasonal in nature with the heaviest activity occurring during the Company's
third and fourth quarters.
FUTURE OPERATIONS
Effective on the closing of the Settlement Agreement, the Company's only
source of revenues will be from its video lottery operations. Revenues generated
from the Company's video lottery operations are currently not sufficient to meet
its working capital requirements, and the Company will be required to use a
portion of the proceeds from the Settlement Agreement
10
<PAGE> 13
for working capital purposes. In addition, the Company's video lottery space
lease agreements with establishments are for limited terms. There is no
assurance that the Company will be able to renew the space lease agreements with
existing establishments, or if the agreements are renewed, that the terms will
be as favorable to the Company as the current agreements. If the agreements are
not renewed, or renewed with terms less favorable to the Company, the Company's
revenues, net income and cash flow would be adversely impacted. Also, the trend
in current years has been a decrease in video lottery profits due to increased
state share, higher percentages paid to location owners and a decrease in
revenues-per-machine due to video lottery machines being placed in lower
revenue-per-machine locations.
The Company intends to actively pursue strategic acquisitions or
alliances in the gaming industry, to evaluate and investigate expanding or
acquiring additional interests in the video lottery and gaming industries in
states likely to legalize or expand in these industries in the future, the
acquisition or expansion of which may result in increased profitability and cash
flow. There is no assurance that the Company will be successful in such an
acquisition or expansion, be able to obtain additional financing, or that
increased profitability and cash flow would result. The Company anticipates
incurring additional expenses in order to investigate these possible future
business opportunities.
11
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
11 Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
b. Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter for
which this report is filed.
12
<PAGE> 15
Signatures:
In accordance with the requirements of the Exchange Act, the registrant
caused the report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONCORDE GAMING CORPORATION
Date: February 12, 1997 By: /s/ David L. Crabb
---------------------------------
David L. Crabb, Chief Financial Officer
13
<PAGE> 16
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
11 Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 11
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended December 31,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Weighted average shares outstanding, net of
treasury stock, beginning of year 21,929,793 21,929,793
Adjustments for common stock equivalents (1) 0 48,939
------------ ------------
Weighted average common and common equivalent
shares outstanding, end of year 21,929,793 21,978,732
============ ============
Net income (loss) $ (140,214) $ 145,565
============ ============
Net income (loss) per common and common equivalent share $ (0.01) $ 0.01
============ ============
</TABLE>
(1) Represents adjustments computed under the treasury stock method for stock
options and warrants granted at fair market value at date of grant. For the
three months ended December 31, 1996, stock options and warrants were
excluded due to their antidilutive effect.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 132,488
<SECURITIES> 0
<RECEIVABLES> 3,003,222
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,197,862
<PP&E> 3,412,930
<DEPRECIATION> 1,589,590
<TOTAL-ASSETS> 9,049,651
<CURRENT-LIABILITIES> 4,579,788
<BONDS> 0
267,552
0
<COMMON> 0
<OTHER-SE> 3,636,224
<TOTAL-LIABILITY-AND-EQUITY> 9,049,651
<SALES> 13,823
<TOTAL-REVENUES> 2,186,888
<CGS> 0
<TOTAL-COSTS> 2,273,862
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157,788
<INCOME-PRETAX> (140,214)
<INCOME-TAX> (81,200)
<INCOME-CONTINUING> (140,214)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (140,214)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
