SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996 Commission File Number 0-9519
REGENT TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Colorado 84-0807913
(State of Incorporation) (I. R. S. Employer Identification No.)
350 N. St. Paul, Suite 2410, Dallas, Texas 75201
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 888-999-6977
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
Common Stock, $.01 Par Value None
Indicate by a 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 and (2) has been subject to such filing
requirements for the past 90 days. [X]
Indicate by a 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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or an
amendment to this Form 10-KSB. [ ]
The aggregate market value of the Registrant's Common Stock held by non-
affiliates of the Registrant on April 12, 1997 was approximately $958,667.
Number of shares outstanding of the Registrant's Common Stock at
April 12, 1997: 12,867,189 shares, par value $.01 per share.
REGENT TECHNOLOGIES, INC.
ANNUAL REPORT ON FORM 10-KSB
Securities and Exchange Commission
Item Number and Description Page
PART I
Item 1. Business........................................................... 2
Item 2. Description of Properties.......................................... 3
Item 3. Legal Proceedings.................................................. 3
Item 4. Submission of Matters to a Vote of Security Holders................ 3
PART II
Item 5. Market for the Registrant's Common Equity and Related Matters...... 4
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 4
Item 7. Financial Statements and Supplemental Data......................... 6
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.......................................... 7
PART III
Item 9. Directors and Executive Officers of the Registrant................. 7
Item 10. Executive Compensation............................................ 8
Item 11. Security Ownership of Certain Beneficial Owners and Management.... 9
Item 12. Certain Relationships and Related Transactions.................... 10
PART IV
Item 13. Exhibits, Financial Statements Schedules and Reports on Form 8-K.. 10
SIGNATURES................................................................. 11
ACCOUNTANTS' REPORTS...................................................... F-1
<PAGE>
PART I
Item 1. Description of Business
The terms "Company" and "Regent" when used herein mean Regent Technologies,
Inc. and its subsidiaries through which Regent conducts its business, unless
the context indicates or implies otherwise. Regent was incorporated under
the laws of the State of Colorado on January 18, 1980 as Regent Petroleum
Corporation and adopted its present name in December, 1994.
Regent is in the business of acquiring, developing and marketing new and
emerging technologies. In 1993, management decided to invest the Company's
resources in the development and marketing of new technologies related to
environmental services and resource recovery. In October, 1994, the Company
acquired SSB Environmental, Inc. ("SSBE") for the consideration of (1) the
delivery and exchange of 441,579 shares of newly issued common stock of the
Company to the stockholders of SSBE and (2) the implementationof an incentive
stock option plan. SSBE provides a range of environmental services, with an
emphasis on landfill reclamation. In 1995, SSBE accounted for over 90% of
the Company's revenues. Due to a reduction of state monies available to muni-
cipalities for landfill reclamation, the potential for new business and profi-
tability diminished. Effective January 1, 1996, the Board of Directors of
the Company voted to sell 81% of the ownership of SSBE to the management of
SSBE for $10,000 cash and 500,000 shares of common stock of the Company. In
August, 1996, management licensed the worldwide right of first refusal to
utilize the technology, digital equipment and software necessary to offer
Internet access for personal and business use (See "Internet Service Provider"
and "The License Agreement" below).
INTERNET Service Provider
On August 20, 1996, the Company completed the execution of Contract and
License Agreements whereby the Company licensed the worldwide right of first
refusal to utilize the technology, digital equipment and software of National
Knowledge Networks, Inc. for Internet access through an exclusive sublicense
agreement from NKN Technologies, Inc. Under the Contract, the Company granted
to NKN Technologies, Inc. 2,500,000 shares of the common stock of the Company
of which 600,000 shares were registered and 1,900,000 shares were restricted
shares. To accomplish the grant of the registered stock, the Board approved
the exchange of restricted shares of the Company for registered shares on the
basis of three restricted shares for one registered share.
The License Agreement
The License Agreement ("License") will give the Company access to digital
telecommunications equipment which is superior in quality to that available
from the traditional Internet Service Providers ("ISP") for the purpose of
dialup services for Internet access. The worldwide right of first refusal
is exclusive for any Point of Presence ("POP") for which the Company elects to
exercise its right of first refusal, excluding POPs activated prior to the
execution of the License. The Company provides ISP services under the name
TEL1.net which has been registered with the Internic. The Company offers
website development services to its customers, both for personal and commercial
use. The License Agreement has a primary term of ten (10) years.
Principal Products and Services
The Telecommuications Act of 1996 has initiated the deregulation of one
the largest business segments in the world thereby creating new opportunities
for competition in a multibillion dollar industry. The Registrant has deve-
loped alliances with some of the largest carriers in the telecommunications
2
business, such as Worldcom and AT&T, to resell their products and services
with an emphasis on telephone service, pre-paid debit cards and local access.
In addition, the Company is working with regional carriers to offer interstate
and intrastate long distance as well as Internet access (See generally
"Management's Discussion and Analysis" on page 4).
Principal Customers
The customers of the Company are any users, both business and personal, of
the Internet and telephone products and services. The Company is focusing its
efforts on marketing dial-up and dedicated Internet access to customers in the
Dallas-Ft. Worth metroplex with a view toward offering additional telecommuni-
cations products to its subscriber base. In addition, the Company is planning
to offer its shareholders savings on communications products and services.
Competition
The Company's competition includes all major carriers as well as numerous
regional and small service providers. The Company may be at a competitive
disadvantage in offering Internet and telecommunications products and services
since it must compete with companies which have greater financial resources
and larger technical staffs. The Company plans to differentiate its products
and services by competing with price and quality of service in niche
markets.
Regulation
The Company's operations are affected in various degrees by political
developments, federal and state laws and regulations. The telecommunications
industry is regulated primarily by the Federal Communications Commission and
the Federal Trade Commission. The F.C.C. is scheduled to issue rules in 1997
that will transform the heavily regulated telephone business into a free
market.
Employees
At December 31, 1996, the Company conducted all of its business through
consulting agreements. Effective April 1, 1997, the Company hired two full
time employees as Chairman and President. In addition, the Company plans to
hire one part time secretary and accountant plus continue to engage consultants
as necessary.
Item 2. Description of Property.
Offices
Effective April 1, 1997, the Company utilizes office space at One Dallas
Centre, 350 North St. Paul Street, Suite 2410, Dallas, Texas 75201, at a
cost of $750.00 per month.
Item 3. Legal Proceedings.
The Company is not a party to any pending litigation and no litigation or
legal proceeding has been threatened against the Company.
Item 4. Submission of Matters To Vote of Security Holders.
The Company did not submit any proposals to a vote for security holders in
1996.
3
PART II
Item 5. Market For Registrant's Common Stock and Related Security Holder
Matters.
The Company's Common Stock is traded in the over-the-counter market and
currently listed on the electronic bulletin board under the symbol "REGT."
The following table sets forth the range of high and low bid quotations as
reported by security dealers listed in the "Pink Sheets." The market quota-
tions may not necessarily represent actual transactions.
Bid Price
1994 High Low
1st Quarter .02 .02
2nd Quarter .02 .02
3rd Quarter .02 .01
4th Quarter .07 .01
1995
1st Quarter .18 .10
2nd Quarter .10 .05
3rd Quarter .05 .02
4th Quarter .02 .01
1996
1st Quarter .01 .01
2nd Quarter .01 .01
3rd Quarter .08 .01
4th Quarter .08 .05
Regent has not declared any cash dividends on the Regent Common Stock
since formation and does not anticipate declaring any such dividend in the
foreseeable future. The approximate number of record holders of Regent Common
Stock at April 12, 1997, was 3,500.
Item 6. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
General
Effective January 1, 1996, the Board of Directors of the Company voted to
sell 81% of its holdings in SSB Environmental, Inc. ("SSBE") to management of
SSBE due to projected losses of SSBE. While the SSBE investment generated over
$400,000 of revenues in 1995, SSBE had a loss of $3,946. The outlook for
1996 for SSBE was for additional losses which was primarily the result of
SSBE's only contract being suspended indefinitely. Without the prospect for
profit contributions, the Company's Board of Directors voted to sell its
investment.
On September 15, 1996, the Company announced it had initiated highspeed
Internet access for home and business using the National Knowledge Networks,
Inc. ("NKN") digital network. The NKN digital network was designed by a team
of telecommunications specialists with 20 years of experience and hands-on
knowledge of the field. The Company is offering Internet access under the
commercial name of TEL1.net and the first phase of the TEL1 Internet access
will include the Dallas-Fort Worth metroplex. Key features of the TEL1 Internet
access include: (1) Speed: TEL1 is connected to the Gigaswitch at the major
Internet peering points and is located in the same building where its major
fiber bypass carrier, MFS Worldcom, houses its central switch; (2) Re-
4
liability: TEL1 is more reliable due to its connection to a fault-tolerant
ring with no single point of failure. TEL1 operates under uninterrupted power
supplies to protect against power outages and TEL1 provides triple redundancy
to the Internet; (3) Hardware: TEL1 utilizes top-of-the-line, ISDN ready
digital modems, SUN servers and CISCO 7513 routers which have superior perfor-
mance features; and (4) Clear Channel Service: TEL1 with its direct connec-
tion to the Internet offers a clear channel network, meaning that the full
bandwidth of its T-3 line is exclusively used by TEL1 customers while most
other local providers use T-1 lines to support their servers.
In addition, the Company is partnering with numerous telecommunication provi-
ders to offer the best options available to its subscribing customers for their
telecommunication needs. The Company's current product offerings include
interstate and intrastate long distance service through Coastal Telephone
Company and cellular service through an AT&T exclusive product.
Liquidity and Capital Resources
At December 31, 1996, the Company had a working capital deficit of $29,181.
The Company has no amortization requirements under any term loan agreements.
At yearend, the Company was delinquent on certain trade payables due to a
shortage of working capital. All trade creditors have agreed to delayed
payments by the Company and most were paid current through March 31, 1997.
The Company continues to raise monies as needed through sale proceeds from the
Company's authorized, unissued and restricted stock. During fiscal 1996, the
Company raised $9,500 by selling 325,000 shares of new restricted previously
unissued common stock of which 225,000 shares were sold for $4,500 to a rela-
ted party. On December 31, 1996, the President loaned the Company $2,000 for
the payment of miscellaneous trade payables.
Results of Operations
The Company's net loss for fiscal 1996 was $90,000, or $.009 cents per common
share, compared with a net loss of $74,174, or $.008 per common share for
fiscal 1995. The difference was due primarily to the Company's write-off of
its remaining oil and gas investment.
General Financial Analysis
1996 versus 1995
For the twelve months ending December 31, 1996, the Company experienced a
significant decrease in sales, current assets and liabilities, all due to the
sale of SSBE. Property and equipment decreased due to the write-off of the
Company's remaining oil and gas assets which represented undrilled overriding
royalty interests. The Company's increase in Other Assets of $270,000 was due
to the acquisition of the Technology License (see The License Agreement above)
which was booked at $364,000 at September 30, 1996. The License is being
amortized over ten (10) years and experienced amortized cost of $9,104 for the
the three months ending December 31, 1996. The Company experienced a gain of
$2,465 on the sale of 81% of the ownership of SSBE. The remaining 19% has a
book value of $13,496 and is included in Other Assets. During the fourth
quarter, the Company initiated test-marketing dial-up services in the Dallas-
Ft. Worth area. The Company realized approximately $1,000 in sales for the
three months endind December 31, 1996. In addition, for the same period, the
Company earned nominal receipts for commissions for reselling long distance
services.
1995 versus 1994
For the twelve months ending December 31, 1995, the Company had a 353%
increase in sales from $98,312 to $446,310. This increase in sales was due
primarily to the acquisition of SSBE and the Town of Hague contract. For
fiscal 1995, the Company had a net loss of $74,174 compared to a net loss of
5
$58,202 for fiscal 1994. The 1995 loss was due primarily to increased general
and administrative expenses related to the SSBE acquisition and higher than
expected costs for the Hague contract. The Hague contract expenses included
the cost of rental equipment. The decrease of oil and gas sales for the same
period was due to the sale of certain oil and gas properties in May, 1995.
Depreciation, deletion and amortization increased in 1995 and included a $9,400
write down of oil and gas properties due to the full cost ceiling value being
in excess of the capitalized costs. The interest income of $362 was from the
payments for the water distillation unit which the Company leased to a Houston
laboratory. The lease agreement provided for ownership by the laboratory at
the end of 36 monthly lease payments of $400. The final payment was received
in June, 1996 and the Company has no plans for manufacturing the distillation
unit in the future. The gain of $4,273 was from the sale of a Company vehicle.
The miscellaneous income of approximately $14,000 was from certain feasibility
studies performed by SSBE.
1994 versus 1993
For the twelve months ending December 31, 1994, the Company had an increase
in sales of $27,255 for the same period in 1993 due primarily to the acquisi-
tion SSBE. The decrease in oil and gas sales and related expenses for the
period is attributable to the sale of certain oil and gas properties in 1993.
The miscellaneous income was $946 in 1994 and $14,536 in 1993 for a refund of
Utah State income taxes and $2,775 in 1993 from the manufacturing of a water
distillation unit which the Company leased to a Houston laboratory. The lease
lease payments of $400 without any additional payment. The Company has no
plans for the manufacturing of the distillation unit in the future. For the
period, general and administrative expenses decreased as compared to 1993 due
primarily to the capitalization of expenses related to the acquisition of SSBE.
The payment of $2,000 per month to the President as salary was initiated in
October, 1993 and continued through 1994. Interest expense decreased for
1994 due to less debt outstanding.
Item 7. Financial Statements and Supplemental Data
Consolidated Financial Statements (included herein at Pages F-1 through F-16):
Reports of Independent Certified Public Accountants F-1
Balance Sheets - December 31, 1996 and 1995 F-3
Statements of Operations for the years ended December 31,
1996, 1995 and 1994 F-4
Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994 F-5
Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 F-6
Notes to Financial Statements F-7
6
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Regent Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Regent Techno-
logies, Inc. (a Colorado corporation) and subsidiaries as of December 31, 1996
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the two years in the period ended December 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstate-
ment. 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 presenta-
tion. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Regent Technologies, Inc. and subsidiaries as of December 31, 1996, and the
results of their operations and their cash flows for the years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
SALMON, BEACH & COMPANY, P.C.
Dallas, Texas
April 12, 1997
F-1
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Regent Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Regent Techno-
logies, Inc. (a Colorado corporation) and subsidiaries as of December 31, 1994,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for the period ended December 31, 1994. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial state-
ments based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mater-
ial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estima-
tes made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of their
operations and their cash flows of Regent Technologies and subsidiaries for
the year ended December 31, 1994, in conformity with generally accepted
accounting principles.
FARMER, FUQUA, HUNT & MUNSELLE, P.C.
Dallas, Texas
April 5, 1995
F-2
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(Amounts in thousands, except per share data)
ASSETS 1996 1995
CURRENT ASSETS
Cash $ 1 $ 9
Costs and estimated earnings in excess of billings -- 16
Accounts receivable 1 40
Deposit -- 25
Other -- 12
______ ______
Total current assets 2 102
PROPERTY AND EQUIPMENT - AT COST
Net investment properties, using the
full cost method of accounting -- 29
Furniture and fixtures 4 4
______ ______
4 33
Less accumulated depreciation, depletion and amortization 3 2
______ ______
1 31
OTHER ASSETS 369 99
______ ______
$ 372 $ 232
______ ______
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 16 $ 72
Accrued compensation 14 --
Notes payable to affilitiates 2 10
______ ______
Total current liabilities 32 82
NOTES PAYABLE TO AFFILIATE, less current portion -- 44
COMMITMENTS -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 100,000,000
shares, issued and outstanding 12,467,189 and
8,974,201 shares for 1996 and 1995, respectively 125 90
Additional paid-in capital 2,517 2,228
Accumulated deficit (2,302) (2,212)
______ ______
Total Stockholders' Equity 340 106
______ ______
$ 372 $ 232
______ ______
The accompanying notes are an integral part of these statements.
F-3
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
(Amounts in thousands, except per share data)
1996 1995 1994
REVENUES
Internet sales and service $ 1 $ -- $ --
Investment income -- 427 95
Gain on sale of assets 3 4 --
Interest income and other -- 15 3
______ ______ ______
4 446 98
COSTS AND OTHER DEDUCTIONS
Costs of Internet sales and services -- -- --
Costs of investment income -- 338 70
General and administrative 55 149 71
Depreciation, amortization and impairment 39 28 11
Interest expense -- 5 4
______ ______ ______
94 520 156
______ ______ ______
NET LOSS ($90) ($74) ($58)
______ ______ ______
LOSS PER COMMON SHARE ($0.009) ($0.008) ($0.007)
______ ______ ______
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 9,596,689 8,878,369 8,507,301
______ ______ ______
The accompanying notes are an integral part of these statements.
F-4
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Amounts in thousands, except per share data)
Add'l Treasury
Common Stock Paid-In Accum. Stock
Shares Amount Capital Deficit Shares Amount Equity
------ ------ ------- ------- ------ ------ ------
BAL.,JANUARY 1, 1994 8,390,000 $84 $2,205 ($2,080) --- --- $209
Issuance of common stock 469,203 5 19 --- --- --- 24
Net loss --- --- --- (58) --- --- (58)
______ ______ ______ ______ ______ ______ _______
BAL.,DECEMBER 31, 1994 8,859,203 89 2,224 (2,138) --- --- 175
Issuance of common stock 114,998 1 4 --- --- --- 5
Net loss --- --- --- (74) --- --- (74)
______ ______ ______ ______ ______ ______ _______
BAL.,DECEMBER 31, 1995 8,974,201 90 $2,228 (2,212) --- --- 106
Acquisition of stock in
connection with SSBE
transaction --- --- --- --- 500,000 50,000 ---
Exchange of registered
stock for restricted
stock --- --- --- --- 570,844 --- ---
Issuance of stock 3,492,988 35 289 ---(1,070,844)(50,000) 324
Net loss --- --- --- (90) --- --- (90)
______ ______ ______ ______ ______ ______ _______
BAL., DECEMBER 31, 1996
12,467,189 $125 $2,517 ($2,302) 0 $0 $340
In November, 1995, the Company offered 500,000 shares of its common stock as
restricted stock for $.05 per share through a private placement memorandum or
other private transactions. In March, 1996, the Company offered 500,000 shares
of its common stock as restricted stock for $.02 per share to raise working
capital.
At December 31, 1996, the Company had sold 451,300 shares of its common stock
as restricted stock for an average price of $.033 per share to raise working
capital in 1995 and 1996 under the aforementioned resolutions
At September 30, 1996, the Company issued 3,141,688 previously unissued shares
of its common stock as restricted stock as partial consideration for the
Technology License.
The accompanying notes are an integral part of these statements.
F-5
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(Amounts in thousands, except per share data)
1996 1995 1994
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss ($90) ($74) ($58)
Adjustments To Reconcile Net Earnings Loss
to Net Cash Provided (Used) by Operating Activities:
Gain on sale of assets (3) (4) --
Depreciation, depletion, amortization and
impairment 39 28 11
(Increase) Decrease in
Accounts receivable (1) 30 (67)
State tax refunds receivable -- 2 12
Other current assets 2 (3) (6)
Costs and estimated earnings in excess
of billings -- (15) --
Increase (Decrease) in
Accounts payable and accrued liabilities 12 (6) 76
Accrued compensation 14 -- 1
______ ______ ______
Net Cash Used In Operating Activities (27) (42) (31)
______ ______ ______
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of oil and gas properties -- 37 --
Net collections on notes receivable 2 14 31
Proceeds (Costs) of investment in subsidiary 6 -- (50)
(Increase) Decrease of property and equipment -- 17 (1)
(Increase) Decrease in other assets -- (25) 7
______ ______ ______
Net Cash Provided (Used) From Investing Activities 8 43 (13)
______ ______ ______
CASH FLOW FROM FINANCING ACTIVITIES:
Net repayment of borrowings -- (20) (3)
Issuance of common stock 9 5 10
Net proceeds from (repayment of) note
to stockholder 2 (2) (10)
______ ______ ______
Net Cash Provided (Used) From Financing Activities 11 (17) (3)
______ ______ ______
Decrease In Cash (8) (16) (47)
______ ______ ______
Cash at Beginning of Period 9 25 72
______ ______ ______
Cash at End of Period $ 1 $ 9 $ 25
______ ______ ______
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest -- 2 4
______ ______ ______
The accompanying notes are an integral part of these statements.
F-6
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Regent Technologies, Inc. (the "Company"), formerly Regent Petroleum Corpora-
tion, was incorporated on January 18, 1980, for the purpose of exploration and
development of oil and gas properties in the United States. Activities of the
Company up to 1992 were primarily organization, issuance of equity capital and
acquisition of developed and undeveloped oil and gas properties which included
the formation of Earth Minerals, Inc. in 1991, which was later renamed Regent
Industries, Inc. In 1992, the Company redirected its core business to enviro-
mental technologies and Regent Industries joint-ventured water filtration sys-
tems. In 1994, the Company acquired SSB Environmental, Inc. ("SSBE"), which
was organized for the purpose of providing environmental services and was
accounted for under the purchase mehtod of accounting. Effective January 1,
1996, the Company sold 100% of Regent Industries and 81% of its interest in
SSBE, and the remaining 19% is accounted for on the cost method of accounting.
In September, 1996, the Company licensed proprietary technology for the purpose
of offering Internet access and related products and services. During the
fourth quarter of 1996, the Company organized TEL1 Communications, Inc. as a
wholly owned subsidiary to market its Internet and telecommunications products
and services.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. Regent Industries and SSBE were consolidated
in the financial statements of the Company in the fiscal years ended 1994 and
1995 and TEL1 Communications, Inc., incorporated in Nevada in December, 1996.,
and registered in Texas as Turbonet, Inc., was consolidated for the fiscal year
ended 1996.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and reported
revenues and expenses. Actual results could differ from these estimates.
Revenue and Cost Recognition on Contracts
The Company recognizes revenues from fixed-price contracts on the percentage-
of-completion method, measured by the percentage of cost incurred to date to
estimated total cost for each contract. Contract costs include all direct
material and labor costs and those indirect costs related to contract per-
formance, such as indirect labor, supplies, tools, repairs and depreciation.
Selling, general, and administration costs are charged to expense as
incurred. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined. Changes in job performance,
job conditions, and estimated profitability may result in revisions to costs
and income, which are recognized in the period in which the revisions are
determined. Changes in estimated job profitability resulting from job per-
formance, job conditions, contract penalty provisions, claims, change orders,
and settlements, are acocunted for as changes in estimates in the current
period.
The asset, "Costs and estimated earnings in excess of billings", represents
revenues recognized in excess of amounts billed. The liability, "Billing in
excess of costs and estimated earnings", represents billings in excess of
revenues recognized.
F-7
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued
Depreciation, Amortization and Impariment
Depreciation of furniture and fixtures is provided in amounts sufficient to
relate the cost of depreciable assets to operations over their estimated
service lives (5 years). The straight-line method of depreciation is used
for financial reporting purposes, while accelerated methods are used for tax
purposes. Amortization of the Technology License is provided in amounts which
reflect the anticipated minimum number of years of the License Agreement (10
years). Amortization of Goodwill and Intangibles is provided in amounts to
reflect the life of the asset purchased (40 years and 15 years respectively).
Stock Options and Awards
In 1994, as part of the acquisition of SSBE, the Company adopted a nonquali-
fied stock option plan which was terminated with the sale of 81% of the SSBE
stock. The Plan terminated without the grant of any stock thereunder.
In 1995, the Directors approved a resolution granting each Director stock
options of 100,000 shares with an exercise price of $.075 for a term of ten
years or ninety days after termination or resignation, whichever comes first.
Income Taxes
The Company utilizes the method of accounting for income taxes set forth in
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109). SFAS 109 requires the recognition of deferred tax liabi-
lities and assets for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax bases of
assets and liabilities, using enacted tax rates in effect in the years in
which the differences are expected to reverse. These temporary differences
primarily relate to depreciation, depletion and amortization. The Company has
not recognized the benefit of any net operating loss carryforwards as the
result of adopting SFAS 109, and no deferred tax assets have been recorded in
the books of the Company due to uncertainty as to the Company's ability to
utilize the loss carryforwards.
Consolidated Statements of Cash Flows
The Company does not consider any of its assets to meet the definition of a
cash equivalent.
(2) SALE OF ASSETS
Effective January 1, 1996, the Company sold 81% of its ownership in SSBE to
management of SSBE for the consideration of cash of $10,000 and 500,000 shares
of common stock of the Company, of which 29,156 shares were registered shares
of common stock of the Company. The sale resulted in a gain of $2,765. The
remaining 19% investment ownership has a book value of $13,496, which can by
purchased by the buyers under a two year option for the consideration of the
greater of the Company's book value or the market value at the date of the
exercise of the option.
F-8
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
The following summarized information presents the results of operations of
SSBE for the years ended December 31, 1995 and December 31, 1994. The contract
with the Town of Hague, New York, accounted for $421,794 of the $435,577 total
revenues in 1995 and $79,684 in 1994. This contract was suspended indefinitely
in 1996.
1995 1994
Revenues $ 435,577 $ 79,684
Net loss ($3,946) ($7,682)
Net loss per common share ($0.0004) ($0.0009)
Weighted average common shaes 8,878,369 8,507,301
(3) PURCHASE OF TECHNOLOGY LICENSE
Effective August 16, 1996, the Board of Directors of the Company approved the
acquisition of the license (the "Technology License") of the hardware and the
software necessary for the Company to offer dialup access to the Internet.
The license was obtained from NKN Technologies, Inc. ("NKN") for the conside-
ration of the grant of 2,500,000 shares of common stock of the Company, consis-
ting of 600,000 registered shares and 1,900,000 restricted shares. To have a
sufficient number of registered shares, the Board of Directors approved the
exchange of three (3) shares of restricted stock for one (1) share of registered
stock resulting in the exchange of 1,712,532 shares of restricted stock for
570,844 registered shares. The Company issued 3,141,688 shares of newly issued
restricted common stock plus the 500,000 shares received from SSBE to satisfy
the consideration for the license, all valued at $.10 per share.
(4) NOTES RECEIVABLE
1996 1995
Financing note receivable, bearing interest at 7%,
payable in monthly installments of $400, including
interest, through May 1996, collateralized by a
water distillation unit with an original
cost of $10,180 $ --- $ 2,471
(5) OTHER ASSETS
1996 1995
Goodwill, less accumulated amortization of $ 2,391 --- 74,107
in 1995.
Investment, minority ownership SSBE 13,496 ---
Intangibles, less accumulated amortization
of $10,927 in 1995. --- 25,570
Technology License, less accumulated amortization
of $9,104 in 1996. 355,064 ---
------- -------
$ 368,560 $ 99,677
F-9
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(6) TRANSACTIONS WITH RELATED PARTIES
From October 1992, through March 1997, the Company rented administrative
office space from the President for $750.00 per month.
In 1994, SSBE issued two notes payable to Schillinger, Salerni and Boyd, Inc.,
owned by certain stockholders of the Company. In 1995, the Company paid
$109,039 to Schillinger, Salerni and Boyd, Inc. for services rendered.
In November 1995, the wife of the Company's President, purchased 100,000
restricted shares of the Company's common stock for $.05 per share.
Effective January 1, 1996, management of SSBE purchased 81% of the ownership
of SSBE from the Company for 500,000 shares of the common stock of the Company
and cash of $10,000. Management also received an option for two years to
purchase the remaining 19%.
In May 1996, the Board of Directors of the Company approved the sale of
500,000 shares of restricted common stock for $.02 per share to raise working
capital. In the second and third quarters, the wife of the Company's Presi-
dent, purchased 225,000 shares of common stock of the Company in two transac-
tions for a total of $4,500 to provide working capital.
In June 1996, the wife of the Company's President, purchased the stock of
Regent Industries, Inc. with an effective date of January 1, 1996. The stock
had a book value of less than $100 and was sold for $300 for the purpose of
raising working capital for the Company.
In September 1996, certain officers and directors of the Company exchanged
520,844 registered shares of common stock of the Company for 1,562,532 shares
of restricted stock of the Company to complete the grant of registered stock
to NKN.
On December 31, 1996, and January 27, 1997, the President issued notes to the
Company in the amounts of $2,000 and $1,500 to assist in the payment of cer-
tain trade payables. The notes are due upon demand and bear interest at eight
percent (8%) per annum.
On February 27, 1997 and March 19,1997, the wife of the Company's President
purchased on each date 100,000 of restricted common stock of the Company for
$.05 per share.
On April 1, 1997, Mr. Roy Mers, a director since March, 1997, purchased
200,000 shares of restricted common stock of the Company for $.05 per share.
(7) COMMITMENTS
In April, 1997, the Company moved its corporate offices to 350 N. St. Paul,
Suite 2410, Dallas, Texas, under a month-to-month lease which provides for
rental payments of $750 per month. Rent expense was approximately $9,600 in
1996 and 1995 and $12,000 in 1994.
F-10
REGENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(8) INCOME TAXES
There is no provision for federal income taxes due to the net operating losses.
The Company has net operating loss carryforwards for tax purposes totaling
approximately $2,257,000, which expire at various dates beginning in 1996 and
expiring in 2010. The utilization of the net operating loss carryforwards to
offset future taxable income could be significantly restricted under Section
382 of the Internal Revenue Code due to a change of 50 percent or more of
ownership of the Company in the last three years.
(9) STATEMENTS OF CASH FLOWS
Excluded from the consolidated statements of cash flows were the effects of
certain non-cash investing and financing activities, as follows:
Year ended December 31,
1996 1995 1994
------ ------ ------
Issuance of common stock for directors' fees $ --- $ 750 $ ---
Issuance of common stock with sale of note --- 100 ---
Issuance of common stock upon acquisition
of SSBE on December 19, 1994 --- --- 22,079
Issuance of 27,599 shares common stock
upon settlement of consulting agreement
with investment banker on October 31, 1994 --- --- 1,380
Issuance of note for costs of intangibles --- --- 44,111
Sale of 81% of SSBE's net assets
for 500,000 shares of common stock 47,535 --- ---
Issuance of 3,141,688 shares of common stock
and 500,000 shares of Treasury stock for
the acquisition of the Technology License 364,000 --- ---
Issuance of 26,300 shares of common stock
for trade payable 526 --- ---
(10) CONCENTRATION OF CREDIT RISK
The Company receives its revenues from various individual and business accounts
for Internet access and from reseller contracts for telecommunications products
and services.
(11) EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of shares
outstanding during each year.
F-11
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosures
(a) The client-auditor relationship between the registrant and its principal
accountant for the periods ending 1994, Farmer, Fuqua, Hunt & Munselle, P.C.,
ceased effective December 31, 1995. The decision to change accountants was
recommended by the audit committee due to the change of employment of the
primary auditor performing the audit of the registrant's financial statements.
The former accountant`s reports on the financial statements of the registrant
for the year ended 1994 did not contain an adverse opinion or a disclaimer of
opinion or was qualified in any way. There were no disagreements with the
former accountant at any time.
(b) A new independent principal accountant was engaged by the registrant for
1995. The name of the registrant's new principal accountant is Salmon, Beach
& Company, P. C., 12720 Hillcrest Road, Suite 900, Dallas, Texas 75230. Mr.
William H. Sims, a CPA with the registrant's principal accountant, was the
registrant's primary auditor with the firm of Farmer, Fuqua, Hunt & Munselle.
PART III
Item 9. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company, together with certain
information about them, are as follows:
Name Age Director Since Position
-------------------------------------------------------------------
Roy W. Mers 50 March, 1997 Director, Chairman
and CEO
David A. Nelson 49 October, 1992 Director, President,
COO and Secretary
Gordon M. Boyd 51 December, 1994 Director
William D. Bingham 42 December, 1994 Director
Mr. Mers has served as a director since March, 1997, and Chairman of the Com-
pany since April, 1997. From May, 1996 to March, 1997, Mr. Mers was the Chief
Financial Officer and Board member of National Knowledge Networks, Inc. NKN
is a member of the Verio network and is the leading wholesale Internet provider
in the Dallas-Ft. Worth metroplex. As the recent past President of Electronic
Transmission Corporation, Mr. Mers participated in and directed the initial
growth of the company which successfully developed network integration of
managed care financial data. Mr. Mers was the founding stockholder of Hunting-
ton Systems which was instrumental in the integration of the Canon Color Laser
technology as a computer output device. Mr. Mers served as a consultant to JC
Penney Company and Sony Corporation to develop a viable digital photography.
Mr. Mers holds a BS degree from Southern Methodist University and has completed
graduate studies in economics and finance.
Mr. Nelson has served as President of the Company since October, 1992. From
November, 1988 to September, 1992, Mr. Nelson was President, Chief Executive
Officer and Chairman of Intramerican Corporation, formerly Intramerican Oil
and Minerals, Inc., a public oil and gas corporation. Mr. Nelson managed the
rebuilding of Intramerican through the addition of business segments related
to gas gathering and property management and moved the company from a nega-
tive earnings position in 1988 to consecutive profitable years in 1989, 1990
and 1991. Mr. Nelson grauduated from Baylor University with BA and JD degrees
7
and Texas A&M with a Masters in Computing Sciences. He is a licensed attorney
in the State of Texas. He was employed from 1971 to 1983 at Republic National
Bank and last served as a Vice President in the commercial lending department.
Mr. Boyd is President of SSB Environmental, Inc. and was the founder of
Schillinger, Salerni and Boyd, Inc. which specializes in environmental consult-
ing services to the solid waste management and recycling industries. From 1979
to 1983, Mr. Boyd served as an environmental policy aide to the State Assembly
of New York. In 1983, he was appointed executive director of the New York State
Legislative Commission on Solid Waste Management. In 1989, he was appointed by
the Governor of New York to the State Solid Waste Management Board. Mr. Boyd
is a graduate of Hamilton College with a BA degree.
Mr. Bingham is President of Forecast Futures Group, Inc., a network computer
technology company serving the financial markets. Mr. Bingham is also a prin-
cipal in Internetexplorer, a venture specializing in website development for
businesses. From 1986 to 1994, Mr. Bingham was a Vice President of Browning
Ferris Industries where he helped launch BFI's medical waste business. As
a Vice President, Mr. Bingham initiated BFI's entry into the organic
waste business and as a Divisional Vice President, he had responsibility for
all operations in New York and Connecticut. His education includes studies at
Stanford and UCLA.
Item 10. Executive Compensation
Compensation which the Company paid for services in all capacities for the
year ended December 31, 1996, to the executive officers of the Company is set
forth as follows:
Long Term Compensation
Annual Compensation Awards Payouts
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other
and Annual Restricted
Principal Compen- Stock Options/ LTIP Other
Position Year Salary Bonus sation(1) Awards SARs(#) Payouts Comp.(3)
- -----------------------------------------------------------------------------
David A. Nelson,
President (2) 1996 $24,000 -- $6,000
1995 $24,000 -- $1,600
1994 $24,000 -- $1,600
(1) Other Annual Compensation is an automobile allowance.
(2) The Company rented administrative office space from the President for
$750.00 per month. This rental was terminated March 31, 1997.
(3) The Company paid, or otherwise incurred, a consulting fee of $24,000 to
the President in 1996, 1995 and 1994.
(4) The Company also paid the following consulting fees in 1995: Salerni,
Schillinger & Boyd, Inc., $109,038 and $360 to the Law firm of
Lawrence R. Schillinger.
Other Benefits.
The Directors of the Company receive $250 each for meetings attended and each
director has agreed to convert the Director's fee to newly issued restricted
common stock at a price of $.15 per share to conserve cash. Also, the Direc-
tors voted to grant each Director stock options of 100,000 shares with an
exercise price of $.075 for a term of ten years or ninety days after termina-
tion or resignation as a Director, whichever comes first.
Effective April 1, 1997, the Company approved employment contracts for the
Chairman and the President. The contracts call for a base salary of $10,000
and $9,000 respectively, with half being paid in Company stock at $.10, at
the Company's election, per share for six months and the cash portion of the
salary being deferred until the Company receives capitalization of $200,000.
The Chairman has agreed to capitalize the Company with $100,000 through the
purchase of 2,000,000 shares of restricted common stock for $.05 per share.
As of April 12, 1997, the Chairman had acquired 200,000 shares for $10,000.
8
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the ownership of the Company's Common Stock
$.01 par value per share as of December 31, 1996, by (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding
shares of its Common Stock and (ii) information as to the shares beneficially
owned by all directors and officers of the Company as a group.
Principal Shareholders
The following table sets forth certain information respecting the holdings of
each shareholder who was known to the Company to be the beneficial owner, as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, of
more than 5% of the Common Stock of the Company. Each of the persons or enti-
ties named below as beneficially owning the shares set forth opposite his name
has sole voting power and sole investment power with respect to such shares,
unless otherwise indicated. The amounts include spousal ownership and the
grant of director options.
Name and address of Amount and Nature of Beneficial
Beneficial Owner Beneficial Ownership Ownership
Roy W. Mers (1) 1,283,333 Shares 9.67%
3537 Normandy Avenue, Unit C
Dallas, Texas 75205
David A. Nelson 3,478,760 Shares 26.22%
3424 Princeton Avenue
Dallas, Texas 75205
NKN Technologies, Inc. (1) 1,666,667 Shares 12.56%
400 N. St. Paul, Suite 500
Dallas, Texas 75201
Jesse G. Edwards 1,712,073 Shares 12.90%
1890 Valley View Lane
Tyler, Texas 75703
(1) Includes 833,333 shares of indirect ownership through Mr. Mers' one
third ownership of NKN Technologies, Inc.
Security Ownership of Management
The following table sets forth certain information with respect to the Common
Stock of the Company beneficially owned by the directors and the directors and
officers as a group and includes director options. The person named below as
beneficially owning the shares set forth opposite his name has sole voting
power and sole investment power with respect to such shares, unless otherwise
indicated.
Name and address of Amount and Nature of Beneficial
Beneficial Owner Beneficial Ownership (1) Ownership
- ------------------ --------------------
Roy W. Mers, Chairman 1,283,333 Shares 9.67%
David A. Nelson, President and Sec. 3,478,760 Shares 26.22%
Gordon M. Boyd, Director 366,532 Shares 2.76%
William D. Bingham 100,000 Shares .75%
Officers and Directors as a Group 5,228,625 Shares 39.41%
9
Item 12. Certain Relationships and Related Transactions
From October 1992, through March 1997, the Company rented administrative
office space from the President for $750.00 per month.
In 1994, SSBE issued various notes payable to Schillinger, Salerni and Boyd,
Inc., owned by certain stockholders of the Company. In 1995, the Company
paid $109,039 to Schillinger, Salerni and Boyd, Inc. for services rendered.
In November 1995, the wife of the Company's President, purchased 100,000
restricted shares of the Company's common stock for $.05 per share.
Effective January 1, 1996, management of SSBE purchased 81% of the ownership
of SSBE from the Company for 500,000 shares of the common stock of the Company
and cash of $10,000. Management also received an option for two years to
purchase the remaining 19%.
In May 1996, the Board of Directors of the Company approved the sale of
500,000 shares of restricted common stock for $.02 per share to raise working
capital. In the second and third quarters, the wife of the Company's Presi-
dent, purchased 225,000 shares of common stock of the Company in two transac-
tions for a total of $4,500 to provide working capital.
In June 1996, the wife of the Company's President, purchased the stock of
Regent Industries, Inc. with an effective date of January 1, 1996. The stock
had a book value of less than $100 and was sold for $300 for the purpose of
raising working capital for the Company.
In September 1996, certain officers and directors of the Company exchanged
520,844 registered shares of common stock of the Company for 1,562,532 shares
of restricted stock of the Company to complete the grant of registered stock
to NKN.
On December 31, 1996, and January 27, 1997, the President issued notes to the
Company in the amounts of $2,000 and $1,500 to assist in the payment of
certain trade payables. The notes are due upon demand and bear interest at
eight percent (8%) per annum.
On February 27, 1997 and March 19,1997, the wife of the Company's President
purchased on each date 100,000 of restricted common stock of the Company for
$.05 per share. On April 1, 1997, Mr. Roy Mers purchased 200,000 shares of
restricted common stock of the Company for $.05 per share.
PART IV
Item 13. Exhibits, Financial Schedules and Reports on Form 8-K.
(a) Listing of Documents
(1) Financial Statements. The Company's Consolidated Financial Statements
included in Item 7 hereof, as required at December 31, 1996 and 1995, and for
the years ended December 31, 1996, 1995, 1994, consist of the following:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements for Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
10
(2) Exhibits.
2.1 Agreement and Plan of Reorganization relating to the Acquisition
of SSB Environmental, Inc. as a subsidiary of Regent Petroleum
Corporation. (1)
3.1 Restated Articles of Incorporation of Regent Technologies, Inc. (2)
3.2 Bylaws of Regent Technologies, Inc. as amended. (2)
22. List of Subsidiaries
(1) Incorporated by reference to Regent Petroleum Corporation Proxy
Statement for Special Meeting of Shareholders held December 19, 1994, dated
November 28, 1994.
(2) Incorporated by reference to Regent Petroleum Corporation Proxy Statement
for Special Meeting of Shareholders held January 26, 1988, dated December 30,
1987.
(b) Reports on Form 8-K.
The Company filed an 8-K on November 21, 1996 announcing a Private Placement
Offering to sell common stock and warrants to raise $400,000. This offering
expired without subscriptions.
SIGNATURES
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.
REGENT TECHNOLOGIES, INC.
By: David A. Nelson
---------------
David A. Nelson
President
Dated: April 12, 1996
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 and on the date indicated.
Name Title Date
/s/David A. Nelson Director and President, April 12, 1997
David A. Nelson the Principal Executive
Officer and Principal
Accounting Officer
/s/Gordon M. Boyd Director April 12, 1997
Gordon M. Boyd
11
Exhibit 22
Regent Technologies, Inc.
List of Subsidiaries
1. TEL1 Communications, Inc.
350 N. St. Paul Street, Suite 2410
Dallas, Texas 75201
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[CASH] 1
[SECURITIES] 0
[RECEIVABLES] 1
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 2
[PP&E] 4
[DEPRECIATION] 3
[TOTAL-ASSETS] 372
[CURRENT-LIABILITIES] 32
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 125
[OTHER-SE] 2517
[TOTAL-LIABILITY-AND-EQUITY] 372
[SALES] 1
[TOTAL-REVENUES] 4
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 94
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (90)
[INCOME-TAX] 0
[INCOME-CONTINUING] (90)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (90)
[EPS-PRIMARY] (.009)
[EPS-DILUTED] (.009)
</TABLE>
