FORM 10-QSB
________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997.
Commission File No. 1-8129.
US 1 INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 95-3585609
(State of Incorporation) (I.R.S. Employer Identification No.)
1000 Colfax, Gary, Indiana 46406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 944-6116
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_ No ___
As of November 4, 1997, there were 10,618,224 shares of common stock were
outstanding.
TOTAL OF SEQUENTIALLY
NUMBERED PAGES: 15
<PAGE>
Part I
Item 1. FINANCIAL STATEMENTS.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996
ASSETS
September 30, December 31,
1997 1996
(Unaudited)
CURRENT ASSETS:
Cash $ 500,290 $ 225,541
Accounts receivable--trade less allowance for
doubtful accounts of $67,254 and $50,000 3,884,394 1,501,947
Other receivables 682,202 136,648
Deposits 154,126 153,892
Prepaid expenses 179,960 116,476
------------ ------------
Total current assets 5,400,972 2,134,504
------------ ------------
FIXED ASSETS:
Equipment 60,647 17,193
Less accumulated depreciation and amortization (9,391) (7,682)
------------ ------------
Net fixed assets 51,256 9,511
------------ ------------
ASSETS HELD FOR SALE:
Land 195,347 195,347
Valuation allowance (141,347) (141,347)
------------ ------------
Net assets held for sale 54,000 54,000
------------ ------------
TOTAL ASSETS $ 5,506,228 $ 2,198,015
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEBER 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
SEPTEMBER 30, DECEMBER 31,
1997 1996
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 3,984,129 $ 2,722,897
Accrued expenses 158,037 152,098
Short-term debt 2,567,912 1,769,146
Insurance and claims 284,370 252,153
Accrued interest 72,900 46,880
Accrued compensation 35,460 32,428
Estimated fuel and other taxes 136,083 174,377
----------- -----------
Total current liabilities 7,238,891 5,149,979
----------- -----------
LONG-TERM DEBT 2,150,579 521,160
REDEEMABLE PREFERRED STOCK,
authorized 5,000,000 shares; no par value,
Series A shares outstanding: 1,094,224
Liquidation preference $0.3125 per share. 737,699 691,541
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock authorized 20,000,000 shares;
no par value; shares outstanding:
September 30, 1997 and December 31, 1996 were
10,618,224 and 10,573,780, respectively. 40,844,296 40,824,296
Accumulated deficit (45,465,237) (44,988,961)
------------ ----------
Total shareholders' equity (deficiency) (4,620,941) (4,164,665)
------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,506,228 $ 2,198,015
============ ===========
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1997 1996 1997 1996
OPERATING REVENUES $ 6,440,892 $ 3,990,436 $17,096,558 $11,733,831
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Purchased transportation 5,146,788 3,049,586 13,260,572 8,863,860
Insurance and claims 190,042 216,722 569,596 479,306
Salaries, wages, and other 314,872 154,407 926,630 462,340
Commissions 616,118 311,708 1,662,373 1,039,393
Operating supplies and expense 188,585 263,916 619,111 524,911
Operating taxes and licenses 34,952 (2,040) 101,608 66,524
Communications and utilities 36,424 16,839 106,311 49,224
Rents 14,945 11,500 62,586 29,267
Depreciation and amortization 1,734 471 5,780 1,412
------------ ------------ ------------ -----------
Total operating expenses 6,544,460 4,023,109 17,314,567 11,516,237
------------ ------------ ------------ -----------
OPERATING INCOME (103,568) (32,673) (218,009) 217,594
------------ ------------ ------------ -----------
NON-OPERATING INCOME (EXPENSE):
Interest income 473 1,710 1,809 18,698
Interest expense (93,836) (65,039) (253,353) (217,162)
Other income (8,876) 7,932 39,435 62,746
------------ ------------ ------------ -----------
Total non-operating (expense) (102,239) (55,397) (212,109) (135,718)
------------ ------------ ------------ -----------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (205,807) (88,070) (430,118) 81,876
------------ ------------ ------------ -----------
EXTRAORDINARY ITEM:
Gain on debt forgiveness on
Termination of Paltrans Partnership 458,968 458,968
------------ ------------ ------------ -----------
NET INCOME (LOSS) $ (205,807) $ 370,898 $ (430,118) 540,844
============ ============ ============ ============
EARNINGS (LOSS) PER COMMON SHARE
Continuing operations (0.02) (0.01) (0.04) 0.01
Extraordinary item 0.05 0.05
------------ ------------ ------------ -----------
Net earnings (loss) $ (0.02) $ 0.04 $ (0.04) $ 0.06
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 10,615,936 9,829,336 10,615,936 9,829,336
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
Nine Months Ended September 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $(430,118) $ 540,844
Adjustments to reconcile net income (loss) to net
cash provided from (used for) operations:
Depreciation and amortization 5,780 1,413
Extraordinary item (458,968)
Changes in operating assets and liabilities:
Accounts receivable - trade (2,382,447) (94,216)
Other receivables (545,554) (144,078)
Prepaid assets (63,484) (2,264)
Deposits (234) 16,881
Accounts payable 1,261,232 301,028
Accrued expenses 5,939 (133,047)
Accrued interest 40,472 (3,514)
Insurance and claims 32,217 52,051
Other accrued compensation (11,420) (18,815)
Fuel and other taxes (38,294) 57,225
Other 37,867
---------- ----------
Net Cash used for operating activities (2,125,911) 152,407
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (47,525)
---------- ----------
Net cash used for investing activities (47,525)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 1,453,566 155,584
Proceeds from other related party short term loans 105,913
Proceeds from other related party long term loans 1,629,419
Repayment of other related party short term loans (654,800)
Repayment of other loans
Proceeds from issuance of common stock 20,000
---------- ----------
Net cash provided from financing activities 2,448,185 261,497
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 274,749 413,904
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 225,541 53,602
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 500,290 $ 467,506
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1. BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of September 30, 1997 and the
consolidated statements of operations and cash flows for the nine month periods
ended September 30, 1997 and 1996 are unaudited, but, in the opinion of
management, include all adjustments necessary for a fair presentation of the
financial position and the results of operations for such periods. The
December 31, 1996 balance sheet data was derived from audited financial
statements. These statements should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December 31, 1996
and the notes thereto included in the Company's Annual Report on Form 10-KSB.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted, as permitted by the requirements of the Securities and
Exchange Commission, although the Company believes that the disclosures
included in these financial statements are adequate to make the information not
misleading. The results of operations for the nine months ended September 30,
1997 and 1996 are not necessarily indicative of the results for a full year.
2. GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has experienced
operating losses and negative cash flows in recent years. At September 30,
1997 and December 31, 1996, the Company's current liabilities exceeded its
current assets by $1.8 million and $3.0 million, respectively. The Company's
future depends heavily on raising the capital to fund operations until its
revenue grows and generates sufficient cash flows to satisfy its indebtedness.
Revenue growth and the resulting improved cash flows would enable the Company
to reduce its third party debt and improve its working relationships with
potential agents and independent contractors. The Company is exploring options
to raise capital and various other potential transactions. Recent poor
results, negative cash flows from operations, and inability to remain in
compliance with financial covenants with its lenders, continue to raise
substantial doubts about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. SHORT-TERM DEBT
Short-term debt at September 30, 1997 and December 31, 1996 comprises:
September 30, December 31,
1997 1996
---------- ----------
Line of credit $2,506,300 $1,052,734
Current portion of long-term debt 61,612 61,612
Due to August Investment Partnership 100,000
Due to Antonson/Kibler 554,800
---------- ----------
Total $2,567,912 $1,769,146
========== ==========
Under its revolving line of credit agreement the Company may borrow up to a
maximum of $3,000,000. Borrowings are limited to 80% of eligible accounts
receivable and bear interest at the prime rate (8.25% at September 30, 1997 and
December 31, 1996, respectively) plus 3.25%. At September 30, 1997, the
Company has borrowed essentially the maximum allowed under the agreement.
Advances under the line of credit agreement are collateralized by the Company's
accounts receivable, property and other assets. The agreement contains a
clause providing for extension of the agreement for one year unless either
party notifies the other of their intent to terminate the agreement. At May
31, 1997, the agreement automatically extended for one year. The Company and
the lender are currently in the process of extending the line of credit for
multiple years although no final agreement has been approved.
The line of credit is subject to termination upon various events of default,
including failure to remit timely payments of interest, fees and principal, any
adverse change in the business of the Company or the insecurity of the lender
concerning the ability of the Company to repay its obligations as and when due
or failure to meet certain financial covenants. Financial covenants include:
minimum net worth requirements, total debt service coverage ratio, capital
expenditure limitations, restrictions on compensation levels of key officers,
and prohibition of additional indebtedness without prior authorization. As of
December 31, 1996, the Company was in violation of the debt service coverage
ratio covenant. At September 30, 1997, it is in violation of the debt service
coverage ratio, additional indebtedness, and the net worth covenants. As a
result, the lender may at any time declare the commitment terminated and demand
payment. Management does not expect the lender to terminate the agreement
before it expires.
Other-Outstanding short term loans from the President of the Company and
another General Partner of August Investment Partnership ("AIP") (the Company's
largest shareholders, Kibler and Antonson) and AIP were $654,800 at December
31, 1996. The interest rate on these loans approximated the prime rate (8.25%)
at December 31, 1996. These amounts were refinanced as long term debt now
reflected in Footnote 4 below.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. LONG-TERM DEBT
Long-term debt at September 30, 1997 and December 31, 1996 comprises:
September 30, December 31,
1997 1996
--------- ------------
Mortgage note payable to August Investment
Partnership collateralized by land,
interest at prime + .75%, interest only
payments required, principal balance due
July 31, 1999 $ 250,000 $250,000
Mortgage note payable to Antonson/Kilber
collateralized by land, interest at
prime + .75%, interest only payments
required, principal balance due
July 3, 2003 600,000
Mortgage note payable to AIFE,
collateralized by land, interest at 9%,
monthly repayments of $5,000, including
interest, remaining principal balance
due July 31, 1999 219,319 239,372
TIP trailer settlement payments of principal
only of $1,000 per month, principal due
February, 2003 85,400 93,400
Due to August Investment Partnership
interest at prime + .75%, interest only
payments required, principal balance due
January, 1999 100,000
Due to Antonson/Kibler interest at prime + .75%,
interest only payments required, principal
balance due January, 1999 957,472
---------- --------
Total debt 2,212,191 582,772
Less current portion 61,612 61,612
---------- --------
Total long-term debt $2,150,579 $521,160
========== ========
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. COMMITMENTS AND CONTINGENCIES
Over the past few years, the Company has had a significant number of lawsuits
instituted or threatened against it as a result of its poor financial condition
and its inability to meet certain financial obligations. For the most part,
these resulting suits have been settled through cash payments of a reduced
amount or through the institution of payment plans. The undisputed claims that
have not been settled are reflected as liabilities in the Company's financial
statements and are included in accrued expenses in the accompanying
consolidated balance sheets. The Company's significant litigation activity
that is currently pending includes the following:
McCormick v. Trailblazer. Mr. McCormick, the owner of C.A. White Trucking
Company ("White"), filed an action on October 1, 1993, alleging that
Trailblazer failed to make required payments under an employment contract.
Trailblazer did not make the payments as a result of a dispute related to
undisclosed liens on assets purchased from White. The Company has lost this
suit, however, Trailblazer was closed in 1994 and has no funds to pay the
judgment. The judgment was for approximately $59,000. The suit has since been
brought against US 1. The suit has been dismissed from Federal Court during
the second quarter of 1997. However, McCormick has refiled the case in Texas
State Court during the third quarter of 1997.
Simpson V. Keystone Lines--Mr. Simpson, an independent owner-operator leased to
Keystone Lines, is claiming approximately $54,000 for injuries he sustained to
his back while working for the Company. The Company is vigorously defending
against this claim on the basis that Mr. Simpson was not an employee and is not
entitled to a workers compensation claim.
Cam Regional Transport, Inc., Miller, Pry v. Trailblazer, Transcon
Incorporated. Mr. Miller and Mr. Pry, owners of Cam Regional Transport, Inc.,
filed an action in 1994, alleging that Trailblazer failed to make required
payments under an employment contract and purchase agreement alleging damages
of $293,000. Trailblazer ceased to make the payments as a result of a dispute
related to their employment and inability to obtain title to the assets
purchased. The Company is vigorously defending the action.
In December 1996, Trailblazer Transportation, a subsidiary of Keystone Lines,
filed for protection from its creditors under the bankruptcy laws. At
September 30, 1997, Trailblazer's liabilities exceeded its assets.
The Company believes it has adequately reserved for the above claims, however,
additional liability is possible and the ultimate disposition of these claims
may have a material adverse effect to the Company's results of operations, cash
flows and financial position.
The Company carries insurance for public liability and property damage, and
cargo loss and damage through various programs. The Company's insurance
liabilities are based upon the best information currently available and are
subject to revision in future periods as additional information becomes
available. Management believes it has adequately provided for insurance
claims.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. SUBSEQUENT EVENTS
As a result of a lawsuit concerning the ownership of property, US 1 Industries,
Inc. was awarded title to a property in Kansas City. The property is
encumbered by a mortgage of $50,000 and unpaid real estate taxes of
approximately $123,000. The Company believes the property to be worth in
excess of $450,000. The Company obtained title to the property on October 3,
1997.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Results of Operations
The financial statements and related notes contained elsewhere in this Form 10-
QSB and in the Company's Form 10-KSB for its fiscal year ended December 31,
1996 are essential to an understanding of the comparisons and are incorporated
by reference into the discussion that follows.
Three Month Period 1997 Compared to 1996
The Company's operating revenues increased from $4.0 million for the quarter
ended September 30, 1996 to $6.4 million for the same period in 1997. The
Company's operating revenues are generated principally from its truckload
carriers, who generate sales through independent agents who originate shipments
that then are transported by independent contractors who own their own
equipment. The increase in operating revenues resulted from the addition of
Carolina National Transportation in January 1997 and Gulf Line Transportation
in December 1996.
Total operating expenses increased from $4.0 million in 1996 to $6.5 in 1997.
The largest component of operating expenses is purchased transportation, which
generally varies in proportion to operating revenues at approximately 77%.
Commissions generally vary in proportion to operating revenues. The Company
has added salaried agents with the addition of Carolina National Transportation
and Gulf Line Transportation. These additions have increased commission
expense beyond the normal levels and until revenues increase sufficiently will
result in continued operating losses. Insurance and claims also generally vary
in proportion to operating revenues, although they also depend on claims
experience. Wages, Communications, and Rent increased from $0.2 million to
$0.4 million from 1996 to 1997 with the addition of Carolina National
Transportation and Gulf Line Transportation.
Non-operating income and (expenses) increased from an expense of $0.06 million
in 1996 to $0.10 million in 1997. Interest expense increased from $.06 million
for the three months ended September 30, 1996 to $.09 million for the same
period in 1997. Interest expense varies in proportion to the Company's
outstanding interest-bearing indebtedness which increased during 1997 as the
result of the additional financing of accounts receivable for Carolina National
Transportation.
Overall results for the three month period ended September 30, 1997 decreased
to a loss of $0.2 million from an income of $0.4 million for the same period in
1996. The difference in additional costs of operations of approximately $0.6
million was caused by the operating losses as described above and the presence
of an extraordinary gain on the termination of Paltrans in 1996.
<PAGE>
Nine Month Period 1997 Compared to 1996
The Company's operating revenues increased from $11.7 million for the first
nine months of 1996 to $17.1 million for the same period in 1997. The
Company's operating revenues are generated principally from its truckload
carriers, who generate sales through independent agents who originate shipments
that then are transported by independent contractors who own their own
equipment. The increase in operating revenues resulted from the addition of
Carolina National Transportation in January 1997 and Gulf Line Transportation
in December 1996. These additions also resulted in the increase in the
accounts receivable balance from December 31, 1996 to September 30, 1997.
Total operating expenses increased from $11.5 million for the period ended
September 30, 1996 to $17.3 million for the same period in 1997. The largest
component of operating expenses is purchased transportation, which generally
varies in proportion to operating revenues at approximately 77%. Purchased
transportation increased from $8.9 million in 1996 to $13.3 million in 1997.
Commissions also increased from $1.0 million in 1996 to $1.7 million in 1997.
Commissions vary in proportion to operating revenues. Insurance and claims,
which increased from $0.5 million in 1996 to $0.6 million for 1997, similarly
vary in proportion to operating revenues, although they also depend on claims
experience. The remaining operating expenses increased from $1.1 in 1996 to
$1.8 million for 1997. As the result of the addition of Carolina National and
Gulf Line, incurred operating losses will continue until revenue increases.
Other expense increased from approximately $0.1 for the first nine months of
1996 to $0.2 for the first nine months of 1997 and consists primarily of
interest expense. Interest expense varies in proportion to the Company's
outstanding interest-bearing indebtedness which increased during 1997 as the
result of increased FINOVA borrowing on Carolina National receivables.
The Company started two new operations, Carolina National Transportation in
January 1997 and Gulf Line Transportation in December 1996. The costs of these
startups resulted in a loss of approximately $0.4 million, which affected the
overall operating results for the first nine months of 1997. During 1996, the
Company realized a one time extraordinary gain from the termination of Paltrans
of $0.5 million. Overall results for the first nine months of 1997 decreased
to a $0.4 million loss from a gain of $0.5 million in 1996.
Future Prospects
The Company's management remains optimistic about its future prospects.
Revenue for each month in 1997 has increased over revenue in the prior month,
primarily due to the Company start-up of two new operations, Carolina National
Transportation and Gulf Line Transportation. However, the Company's future
depends on continuing to increase its revenues, its ability to resolve its cash
flow problems, and bringing its new operations to profitability.
<PAGE>
Liquidity and Capital Resources
As of September 30, 1997, the Company's financial position remains precarious.
The Company had a deficit in shareholders' equity of $4.6 million and its
current liabilities of $7.2 million exceeded its current assets by $1.8
million. The Company has experienced significant operating losses in the
current and prior years and losses from discontinued operations in prior years
leaving the Company in its current position. The Company's borrowing from the
partners of AIP and the Company's president to alleviate the current cash
shortages has enabled the Company to continue in operation. While the
Company's current situation is not good, current plans are designed to grow the
Company and regain profitable, which should enable it to improve its liquidity
position.
The Company continues to suffer from negative cash flows from operations, the
negative cash flow increased from a negative of $.2 million during the first
nine months of 1996 to a negative $2.1 million during the same period of 1997.
Cash flow was provided by borrowing $1.0 million from the Company's president
and a partner of AIP and by borrowing $1.5 million from FINOVA. This borrowing
resulted in a positive cash flow of $0.3 million for the nine months ended
September 30, 1997
The Company's principal source of outside liquidity is its $3 million line of
credit with FINOVA. The availability of the line of credit is based on 80% of
Keystone's eligible accounts receivable and 75% of the Carolina National
eligible accounts receivable. At September 30, 1997, the outstanding
borrowings were $2.6 million, which essentially was the entire amount that the
Company was eligible to borrow. The agreement contains a clause providing for
extension of the agreement for one year unless either party notifies the other
of their intent to terminate the agreement. At May 31, 1997, the agreement
automatically extended for one year. The Company and the lender are currently
in the process of extending the line of credit for multiple years although no
final agreement has been approved. The Company is currently in violation of
several covenants of the lender. As a result, the lender may at any time
declare the commitment terminated and demand payment, however, management does
not expect the lender to demand payment. The Company expects these covenants
to be modified as part of the new agreement.
Shareholders and potential investors in the Company are cautioned that the
Company's financial condition remains precarious. An increase in operating
performance is essential to its long-term survival. Unfortunately, there can
be no assurance that this will be achieved.
<PAGE>
PART II. OTHER INFORMATION
Item 6(b). Reports on Form 8-K
No Reports on Form 8-K have been filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
US 1 Industries, Inc.
Michael E. Kibler
President
James C. Day
Chief Financial Officer
November 20, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
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<ALLOWANCES> 67254
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<PP&E> 60647
<DEPRECIATION> 9391
<TOTAL-ASSETS> 5506228
<CURRENT-LIABILITIES> 7238891
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737699
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<INTEREST-EXPENSE> 253353
<INCOME-PRETAX> (400118)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (400118)
<EPS-PRIMARY> (.04)
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</TABLE>
