<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
-----------------------------------------------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 31, 1995
-----------------------------------------------
Commission File No. 0-10061
AMERICAN CASINO ENTERPRISES, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Nevada 04-2709807
- - ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
6243 Industrial Rd., Las Vegas, Nevada 89118
- - -------------------------------------- -----
(Address of principal executive offices (Zip Code)
(702) 896-8888
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address & former fiscal year, if changed
since last report)
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
------ ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class December 11, 1995
----- -----------------
<S> <C>
Common Stock, $.01 Par Value 14,367,958
</TABLE>
<PAGE> 2
American Casino Enterprises, Inc. and Subsidiaries
Consolidated Balance Sheets
October 31, 1995 and July 31, 1995
<TABLE>
<CAPTION>
October 31, July 31,
1995 1995
----------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $11,042,000 $ 8,841,000
Consulting fee and other receivables 1,000 344,000
Income taxes receivable -- 73,000
Deferred tax asset 37,000 342,000
Prepaid expenses 58,000 39,000
----------- -----------
Total current assets 11,138,000 9,639,000
----------- -----------
Property and equipment, net 100,000 93,000
----------- -----------
Other assets:
Consulting agreement acquisition costs, net 229,000 243,000
Deferred tax asset -- 34,000
Deposits 16,000 15,000
----------- -----------
245,000 292,000
----------- -----------
$11,483,000 $10,024,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 65,000 $ 64,000
Income taxes payable 52,000 112,000
Advance payment of consulting fees 108,000 --
Accrued expenses 76,000 122,000
Payable to Table Mountain Tribe 336,000 233,000
----------- -----------
Total current liabilities 637,000 531,000
----------- -----------
Commitments -- --
Shareholders' equity:
Common stock; $.01 par; 20,000,000 shares
authorized; 14,367,958
shares issued and outstanding 144,000 144,000
Preferred stock; $.01 par; 10,000,000 shares
authorized; shares issued and outstanding - none -- --
Capital in excess of par 3,213,000 3,213,000
Retained earnings 7,489,000 6,136,000
----------- -----------
10,846,000 9,493,000
----------- -----------
$11,483,000 $10,024,000
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 3
American Casino Enterprises, Inc. and Subsidiaries
Consolidated Statements of Income
and Retained Earnings
Three Months Ended October 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Revenues:
Casino consulting fees $ 2,560,000 $ 1,740,000
------------ ------------
Costs and expenses:
Casino consulting 285,000 179,000
General and administrative 147,000 131,000
Amortization and depreciation 20,000 16,000
------------ ------------
452,000 326,000
------------ ------------
Income from operations 2,108,000 1,414,000
------------ ------------
Other income - interest 95,000 33,000
------------ ------------
Income before income taxes 2,203,000 1,447,000
------------ ------------
Income tax benefit (expense):
State - current (151,000) (101,000)
Federal:
Current (360,000) (136,000)
Deferred (339,000) (340,000)
------------ ------------
(850,000) (577,000)
------------ ------------
Net income 1,353,000 870,000
Retained earnings, beginning of period 6,136,000 1,335,000
------------ ------------
Retained earnings, end of period $ 7,489,000 $ 2,205,000
============ ============
Earnings per common share and
common share equivalent $ 0.09 $ 0.06
============ ============
Weighted average number of common shares
and common share equivalents 15,691,702 14,660,175
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
American Casino Enterprises, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended October 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,353,000 $ 870,000
------------ -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization and depreciation 20,000 16,000
Deferred income tax expense 339,000 340,000
Changes in other assets and liabilities, net 502,000 705,000
------------ -----------
861,000 1,061,000
------------ -----------
Net cash provided by operating activities 2,214,000 1,931,000
------------ -----------
Cash flows from investing activities:
Property and equipment, net (13,000) (18,000)
------------ -----------
Net cash used by investing activities (13,000) (18,000)
------------ -----------
Cash flows from financing activities -- --
------------ -----------
Net cash used by financing activities -- --
------------ -----------
Net increase in cash 2,201,000 1,913,000
Cash, at beginning of period 8,841,000 683,000
------------ -----------
Cash, at end of period $ 11,042,000 $ 2,596,000
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for state and federal income taxes $ 495,000 $ 27,000
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1995
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying consolidated financial statements and notes
have been condensed and, therefore, do not contain all disclosures required by
generally accepted accounting principles. The consolidated financial statements
include the accounts of American Casino Enterprises, Inc. and its wholly-owned
subsidiaries ("the Company"). All significant intercompany accounts and
transactions have been eliminated. For additional disclosures, refer to the Form
10KSB of the Company for the year ended July 31, 1995.
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods.
Certain amounts in the interim period financial statements for Fiscal 1995 have
been reclassified for comparability with the current period presentation.
The computations of earnings per common share and common share equivalents are
based on the weighted average number of common share and common share
equivalents outstanding. Stock warrants and options outstanding are considered
common stock equivalents. Fully diluted earnings per share is not presented
because the effect would be antidilutive or the dilutive effect is less than
three percent.
Results of the interim periods are not necessarily indicative of those to be
expected for the full year.
NOTE 2 - CONSULTING AGREEMENTS
TABLE MOUNTAIN CASINO & BINGO
The Company has a consulting agreement with the Table Mountain Band of Indians
(the "Tribe") for the Table Mountain Casino & Bingo (the "Casino") in Friant,
California.
Under the terms of the agreement, the consulting fee is 35 percent of each
month's net profits from the Table Mountain Casino for the first five years and
30 percent for the last two years. The agreement expires in March 2000. The
Company is also obligated to
5
<PAGE> 6
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1995
(UNAUDITED)
make advances to the Casino in certain circumstances, mainly for the acquisition
of capital assets which cannot be acquired using the Casino's operating cash
surplus.
By letter agreement dated September 11, 1995, effective June 19, 1995, the
Company entered into an amendment to the consulting agreement with the Tribe
providing for the Company to pay a concession to the Tribe equal to seven
percent (7%) of the net income, before consulting fees, of the Casino. The
amendment expires on June 19, 1996. During the three month period ended October
31, 1995, the concession totaled $638,000. Consulting fee revenue is reported
net of the concession to the Tribe.
During Fiscal 1992, the Company and the Tribe entered into an agreement
requiring the Tribe to repay $1,500,000 of contract advances made by Millerton
Games, Inc, an entity which was acquired by the Company. In addition, $289,000
of unpaid consulting fees for Fiscal 1992 were converted to a note receivable
payable in 1997. The notes were paid in full in May 1995.
In Fiscal 1993 the Casino began a substantial expansion and renovation program
to the property. To assist with the expansion costs, the Company advanced
approximately $365,000 to the Casino. The Casino paid the advance in full in
Fiscal 1995.
The expanded, renovated casino facility was completed in Fiscal 1995.
NOTE 3 - CONSULTING AGREEMENT ACQUISITION COSTS
Consulting agreement acquisition costs are amortized over the life of the
consulting contract with the Table Mountain Tribe.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes as provided by Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes.
At July 31, 1995, the Company had unused net operating loss carryforwards for
Federal income tax purposes totaling $1,099,000. The carryforwards expire
through 2006. Net operating loss carryforwards generated by American Casino
Enterprises, Inc. (the Parent) prior to the stock acquisition of certain
subsidiaries may be used to
6
<PAGE> 7
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1995
(UNAUDITED)
reduce future taxable income arising from the activities of the Parent only,
subject to limitations in accordance with Section 382 of the Internal Revenue
Code beginning on January 9, 1992. The annual limitation is calculated to be
approximately $1,000,000.
Approximately $1,000,000 of the net operating loss carryforwards ($2,000,000 in
the aggregate) was utilized to reduce the Company's current Federal income tax
liability for each of the three month periods ended October 31, 1995 and 1994.
Accordingly, the deferred tax benefit recorded in the consolidated balance
sheets was reduced by approximately $339,000 and $340,000 in Fiscal 1996 and
Fiscal 1995, respectively, and charged to operations in the respective periods.
NOTE 5 - LITIGATION
AMERICAN CASINO ENTERPRISES, INC.
On July 15, 1994, the Chairman of the National Indian Gaming Commission ("NIGC")
issued a Notice of Violation and a separate Notice to Show Cause to the Company.
The Notice of Violation charged that the Company was in violation of certain
provisions of the Indian Gaming Regulatory Act ("IGRA") and the NIGC's
regulations, in that the Company had allegedly; (1) engaged in management of the
Table Mountain Casino & Bingo without an approved management contract beginning
on November 1, 1990; and (2) operated illegal video gaming devices and
house-banked blackjack games without a Class III gaming compact with the State
of California. According to the Notice of Violation, the alleged violations may
result in the assessment of civil fines against the Company in an amount not to
exceed $25,000 per violation. If fines were to be assessed on a per violation
basis, it could ultimately have a material adverse effect on the Company's
operations and financial condition.
In April 1995, the NIGC proposed a fine of $6,000 per day beginning July 15,
1994 and extending each day the Company remains in alleged violation of the
notice.
The Notice to Show Cause advised the Company that the Chairman of the NIGC had
preliminarily decided to disapprove the proposed consulting agreement between
the Company and the Table Mountain Tribe, which owns the Table Mountain Casino &
Bingo. The reasons given in the Notice to Show Cause largely paralleled the
alleged violations set forth in the Notice of Violation, although the Notice to
Show Cause also alleged violations of the Johnson Act, which may result in fines
of not more than $5,000
7
<PAGE> 8
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1995
(UNAUDITED)
or imprisonment of not more than two years, or both.
The Company has vigorously contested these charges and defended against them. As
permitted under IGRA and NIGC regulations, the Company has appealed from the
Notice of Violation, denying all of its allegations and requesting a hearing at
which it can produce witnesses and offer evidence. The matter has been assigned
to a Presiding Official (a hearing officer) within the Office of Hearings and
Appeals, U.S. Department of the Interior and the administrative hearing process
has begun.
A hearing on the Notice of Violation and proposed fine is currently scheduled
for January 10, 1996. However, at the direction of the Presiding Official,
settlement discussions between the Company and the NIGC are presently underway
that could resolve some or all of the matters without the need for formal
adjudication.
The Company has also filed documents with the NIGC showing why the Chairman's
preliminary decision to disapprove the proposed consulting agreement was
erroneous, and why the agreement does not require NIGC approval. To date, the
Chairman has taken no further action with respect to the Notice to Show Cause.
It is not possible at present for the Company to predict the outcome of these
actions nor can it predict the fines or losses, if any, which might result. If
the NIGC's actions are upheld, it would have an adverse effect on the Company's
sole business activity.
TABLE MOUNTAIN CASINO
In 1992, the National Indian Gaming Commission promulgated regulations stating
that Indian casinos could not offer certain games, including electronic gaming
machines, such as the Table Mountain Tribe's video pull tab gaming devices,
without state approval under tribal-state compacts. Several tribes sought a
Compact to engage in full casino gaming, however, the State of California
refused to allow certain games.
In May 1992, the Tribe and other California Indian tribes filed a lawsuit in
Federal Court against the State of California and its Governor over the scope of
gaming permissible on Indian land, captioned as Rumsey v. Wilson. In July 1993,
the Federal District Court ruled that the proposed electronic games are a proper
subject of negotiation with Tribal State Compact and that the Tribes and State
should negotiate to determine whether other banked and percentage card games
will be permitted under a Tribal-State Compact. The State of California appealed
the District Court decision in Rumsey v.
8
<PAGE> 9
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1995
(UNAUDITED)
Wilson.
In November 1994, the U.S. Court of Appeals for the Ninth Circuit reversed in
part the July 1993 ruling by the District Court in favor of the tribes, and
remanded the case to the District Court for additional fact finding. The
remanded issue is whether California law permits the use of video gaming
devices. If California law is found to permit the use of video gaming devices,
the tribes are entitled to seek agreements for the use of such devices. If
California is not found to permit their use, the tribes would not be so entitled
under the Court of Appeals' analysis.
In December 1994, the tribes filed a petition for rehearing with the Ninth
Circuit and a suggestion for rehearing en banc. The petition and suggestion were
denied on August 11, 1995, with a vigorous dissent by six judges. The decision,
however, has not been finalized. On August 21, 1995, the Ninth Circuit issued an
order requesting further briefing by the parties on the relevance of an
important new decision of the California State Court of Appeals in Western
Telcon V. California State Lottery. In that case, the court held that the
California State Lottery was authorized to use most forms of slot machines and
that the Lottery was exempt from the State's Penal Code prohibitions against
banked games. On September 1, 1995, the parties in Western Telcon filed a
petition for review with the California Supreme Court, which is now pending. The
California Supreme Court is not required to grant review.
On October 6, 1995, the Ninth Circuit stayed its final decision in Rumsey until
the final disposition of Western Telcon by the California Supreme Court.
Effectively, this means that the Rumsey decision is still under consideration by
the Ninth Circuit.
While the Company is optimistic the California tribes will ultimately prevail in
this action, should the State of California be successful in its legal actions,
it could have an adverse effect on the Company's sole business activity.
9
<PAGE> 10
PART 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1995
REVENUES
Casino consulting fees in the three months ended October 31, 1995 ("the Fiscal
1996 Period") increased 47.1% to $2,560,000 from $1,740,000 for the same period
in Fiscal 1995, as a result of an increase in casino consulting fees derived
from the Table Mountain Casino & Bingo operation.
Consulting fees in the three month periods ended October 31, 1995 and 1994 are
derived from the consulting agreement the Company has with the Table Mountain
Band of Indians (the "Tribe") for the operation of the Table Mountain Casino &
Bingo (the "Table Mountain Casino"), which is located near Fresno, California.
Casino consulting fees represent 35% of the Table Mountain Casino's net income
before consulting fees. The consulting agreement provides for consulting fees at
35% of Table Mountain Casino's income for a five year period through 1998 and
30% for 1999 and 2000.
By letter agreement dated September 11, 1995, effective June 19, 1995, the
Company entered into an amendment to the consulting agreement with the Tribe
providing that the Company would pay a concession to the Tribe equal to seven
percent (7%) of the net income, before consulting fees, of the Table Mountain
Casino. The amendment expires on June 19, 1996. During the three month period
ended October 31, 1995, the concession totaled $638,000. Consulting fee revenue
is reported net of the concession to the Tribe.
COSTS AND EXPENSES
Casino consulting expenses in the three months ended October 31, 1995, increased
to $285,000, up by 59.2%, from $179,000 in the comparable quarter in Fiscal
1995. This increase is comprised principally of personnel costs and legal fees.
General and administrative expenses in the first quarter of Fiscal 1996
increased by $16,000 or 12.2% over the comparable quarter of Fiscal 1995. The
increase resulted mainly from personnel.
Amortization and depreciation was $20,000 and $16,000 in the three months ended
October 31, 1995 and 1994, respectively. Amortization is comprised of consulting
10
<PAGE> 11
agreement acquisition costs, which are being amortized over the term of the
Table Mountain Casino agreement.
OTHER OPERATIONAL ITEMS
Interest income, represented principally by interest on time deposits with
financial institutions in Fiscal 1996 and interest on the contract advance to
Table Mountain Casino in Fiscal 1995, totaled $95,000 and $33,000 in the three
months ended October 31, 1995 and 1994, respectively
The Company recorded provisions of $151,000 and $101,000 for State of California
income taxes for the three month periods ended October 31, 1995 and 1994,
respectively.
At July 31, 1995, the Company had unused net operating loss carryforwards for
Federal income tax purposes totaling $1,099,000. The carryforwards expire
through 2006. Net operating loss carryforwards generated by American Casino
Enterprises, Inc. (the Parent) prior to the stock acquisition of certain
subsidiaries may be used to reduce future taxable income arising from the
activities of the Parent only, subject to limitations in accordance with Section
382 of the Internal Revenue Code beginning on January 9, 1992. The annual
limitation is calculated to be approximately $1,000,000. Approximately
$1,000,000 of the net operating loss carryforwards ($2,000,000 in the aggregate)
was utilized to reduce the Company's current Federal income tax liability for
each of the three month periods ended October 31, 1995 and 1994.
Net income for the three months ended October 31, 1995 was $1,353,000 or $0.09
per common share and common share equivalent compared to $870,000 or $0.06 per
common share and common share equivalent for the three months ended October 31,
1994.
LIQUIDITY AND CAPITAL RESOURCES AT OCTOBER 31, 1995 AND
THE THREE MONTHS THEN ENDED
At October 31, 1995, the Company had consolidated working capital of
$10,501,000, as compared with working capital of $9,108,000 at July 31, 1995.
The change resulted principally from a combination of increases of cash
($2,201,000), prepaid expenses ($19,000), advance on consulting fees ($108,000),
and payable to Table Mountain Tribe ($103,000) and reductions of deferred tax
asset ($339,000), consulting fee receivable ($343,000), income taxes payable
($60,000), income tax receivable ($73,000), and accrued expenses ($46,000).
During the first three months of Fiscal 1996, the Company used $13,000 in
investing activities as compared to $18,000 used by investing activities in the
first three months of Fiscal 1995. The cash used in investing activities in
Fiscal 1996 and 1995 was to acquire additional office furniture and equipment
and leasehold improvements.
11
<PAGE> 12
There was no financing activity in the first three months of Fiscal 1996 or
1995. At October 31, 1995, the Company had no long-term debt outstanding.
Historically, the Company has provided funds for its operations from operating
activities, financing from financial institutions and shareholders, and issuance
of common stock and it will likely continue to do so in the future. The Company
has always sought and will continue to seek other suitable consulting contracts
and/or ownership of casinos and other gaming opportunities on and off Indian
land. In the event any of these opportunities come to fruition, management will
consider satisfying necessary financing from working capital, through borrowing
or capital infusion through public or private placement of common stock of the
Company or its subsidiaries.
At October 31, 1995, the Company had revolving lines of credit totaling $750,000
with two banks. One line for $250,000 expires in December 1995 and bears
interest at 3% above prime. The line is collateralized by 91,000 shares of the
Company's Common Stock pledged by Ronald J. Tassinari, the Company's president.
The line is also guaranteed by Audrey K. Tassinari, the Company's vice
president. The Company expects to renew this line under similar terms in
December 1995. The other $500,000 line of credit is unsecured, expires in
October 1996 and bears interest at 1% above an indexed prime (8.75% at October
31, 1995). At October 31, 1995, no funds were outstanding on the lines of
credit.
As discussed in the Notes to Consolidated Financial Statements for the three
months ended October 31, 1995, the National Indian Gaming Commission (the
"NIGC") issued a Notice of Violation and a separate Notice to Show Cause to the
Company regarding the Table Mountain Casino consulting contract. If the NIGC
were to prevail in its allegations, they could have a significant adverse effect
on the financial condition and operations of the Company.
12
<PAGE> 13
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) No reports on Form 8-K were filed by the Company during
the quarter ended October 31, 1995.
13
<PAGE> 14
SIGNATURE
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.
AMERICAN CASINO ENTERPRISES, INC.
Dated: December 13, 1995 By: /s/ Ronald J. Tassinari
----------------------
Las Vegas, Nevada Ronald J. Tassinari
President
(Principal Executive Officer)
/s/ Roy K. Keefer
--------------------------
Roy K. Keefer
Chief Financial Officer
(Principal Financial
and Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page
Exhibit Description Number
- - ----------- ------------------------------------------------ --------------
<S> <C> <C>
11.01 Schedule of Computation of Earnings Per Common Share 16
And Common Share Equivalent
27 Financial Data Schedule 17
</TABLE>
15
<PAGE> 1
EXHIBIT 11.01
American Casino Enterprises, Inc. and Subsidiaries
Schedule of Computation of Earnings Per Common Share
And Common Share Equivalent
Three Months Ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
PRIMARY:
Net income $ 1,353,000 $ 870,000
=========== ===========
Weighted average number of common shares
outstanding during the period 14,367,958 14,229,069
Add:
Common stock equivalents (determined
using the "treasury stock" method) representing
shares issuable upon exercise of options
and warrants 1,323,744 431,106
----------- -----------
Weighted average number of shares used in
calculation of primary income per share 15,691,702 14,660,175
=========== ===========
PRIMARY EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT $ 0.09 $ 0.06
=========== ===========
FULLY DILUTED:
Net income $ 1,353,000 $ 870,000
=========== ===========
Weighted average number of common shares
outstanding during the year 14,367,958 14,229,069
Add:
Common stock equivalents (determined
using the "treasury stock" method) representing
shares issuable upon exercise of options
and warrants 1,595,665 320,537
----------- -----------
Weighted average number of shares used in
calculation of fully diluted income per share 15,963,623 14,549,606
=========== ===========
FULLY DILUTED EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT $ 0.09 $ 0.06
=========== ===========
</TABLE>
NOTE: Fully diluted earnings per common share and common share equivalent is not
presented in the Consolidated Statements of Income and Retained Earnings
because the effect is antidilutive or the dilutive effect is less than three
percent.
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1
<CASH> 11,042,000
<SECURITIES> 0
<RECEIVABLES> 1,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,138,000
<PP&E> 141,000
<DEPRECIATION> 41,000
<TOTAL-ASSETS> 11,483,000
<CURRENT-LIABILITIES> 637,000
<BONDS> 0
<COMMON> 144,000
0
0
<OTHER-SE> 3,213,000
<TOTAL-LIABILITY-AND-EQUITY> 11,483,000
<SALES> 2,560,000
<TOTAL-REVENUES> 2,560,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 452,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,203,000
<INCOME-TAX> 850,000
<INCOME-CONTINUING> 1,353,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,353,000
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
