<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
Commission file number 0-9951
ADVANCED OXYGEN TECHNOLOGIES, INC.
(Name of small business Issuer in its charter)
Delaware 91-1143622
(State of incorporation) (I.R.S. Employer Identification No.)
c/o Edelson Technology Partners
300 Tice Boulevard
Woodcliff Lake, New Jersey 07675
(Address of principal executive offices) (Zip Code)
201-930-8900
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act 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
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [ x ]
For the year ended June 30, 1997, Issuer's revenues were $0.
The aggregate market value of Common Stock at December 1, 1997 held by non-
affiliates approximated $23,871 based upon the average bid and asked prices for
a share of Common Stock on that date. For purposes of this calculation, persons
owning 10% or more of the shares of Common Stock are assumed to be affiliates,
although such persons are not necessarily affiliates for any other purpose.
As of December 1, 1997, there were 4,796,252 issued and outstanding shares
of the registrant's Common Stock, $.01 par value.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
ADVANCED OXYGEN TECHNOLOGIES, INC.
FORM 10-KSB
FOR THE FISCAL YEAR ENDED
JUNE 30, 1997
Table of Contents
Page
Part I ----
Item 1. Description of Business................................... 1
Item 2. Description of Property................................... 3
Item 3. Legal Proceedings......................................... 3
Item 4. Submission of Matters to a Vote of
Security Holders.......................................... 3
Part II
Item 5. Market for Registrant's Common
Equity and Related Stockholder Matters.................... 3
Item 6. Plan of Operation......................................... 4
Item 7. Financial Statements...................................... 4
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.................... 4
Part III
Item 9. Directors and Executive Officers of Registrant............ 5
Item 10. Executive Compensation.................................... 6
Item 11. Security Ownership of Certain Beneficial Owners
and Management............................................ 6
Item 12. Certain Relationships and Related Transactions............ 7
Item 13. Exhibits and Reports on Form 8-K.......................... 7
<PAGE>
PART I
Item 1. Description of Business
The Patent Sale and Cessation of Business
Advanced Oxygen Technologies, Inc. ("Advanced Oxygen Technologies", "AOT" or the
"Company"), incorporated in Delaware in 1981 under the name Aquanautics
Corporation, was, from 1985 until May 1995, a development stage specialty
materials company producing new oxygen control technologies. On May 1, 1995, the
Company sold its patents, and all related technology and intellectual property
rights (collectively the "Patent Rights") to W. R. Grace & Co. - Conn, a
Connecticut corporation ("Grace"). The price for the Patent Rights was $335,000,
in cash, and a royalty as described below. Of the cash, $100,000 was paid to the
Company prior to the closing and used to cover the Patent Sale's transactional
costs and to preserve the Patent Rights. The remaining $235,000 was paid at the
closing of the sale of the Patent Rights (the "Patent Sale").
In addition to the $335,000, the Company is to receive a royalty until April 30,
2007 of two percent (2%) of the net sales price of (a) all products sold by
Grace that include, as a component, material that absorbs, bars, eliminates,
extracts and/or concentrates oxygen that, but for the purchase of the Patent
Rights, would infringe the Patent Rights, and (b) any mixture or compound (other
than a finished product) which includes as a component material that absorbs,
bars, eliminates, extracts and/or concentrates oxygen that, but for the purchase
of the Patent Rights, would infringe the Patent Rights. If Grace licenses the
Patent Rights during the first three years after the Closing to a third party
(other than a Grace affiliate), the Company will receive 50% of the royalties
received by Grace from such third party but will not receive the 2% royalty on
either products or material sold by or to that third party.
The Company has agreed to indemnify Grace for any out of pocket costs incurred
because of claims, litigation, arbitration or other proceedings (a) relating to
the validity or ownership of the Patent Rights, (b) any infringement by the
Patent Rights of any other patent or trademark owned by a third party, (c) any
breach by Company of its representations, warranties, covenants in the Purchase
Agreement or (d) arising from any state of affairs existing at Closing which was
not disclosed by the company to Grace. If in any one year Grace incurs costs
covered by this indemnity, the indemnity is for all such costs up to $75,000 and
for 50% of such costs over $75,000. Amounts due Grace under the indemnity would
be paid by withholding royalties from Company.
In August 1994, in order to retain senior management, the Company agreed to pay
Mr. Kopetz, Ms. Castle and David Overmyer, the Company's then Controller, a
bonus if the Company successfully completed a sale of the Company or its
technology by May 31, 1995. The bonus was equal to 5% of the first million
dollars of the gross proceeds from such sale, 4% of the next million dollars of
such gross proceeds, 3% of the third million, 2% of the fourth million and 1% of
all amounts received from the such sale over $4 million. This bonus was shared
equally by Mr. Kopetz, Ms. Castle and Mr. Overmyer. Upon the Closing, they
received an aggregate of $16,750, or $5,583.33 each.
In addition, certain of the directors advanced $275,000 to the Company in
August, 1994 (the "Director Loans"). None of these advances has been repaid.
They will be repaid from the royalties, if any.
The Patent Sale may not necessarily result in the dissolution and liquidation of
the Company. Since the Patent Sale, the Board continued to explore the
possibility of deriving value from the Company's two remaining non-contingent
assets, its publicly held corporate shell and its net operating loss carry
forwards. Unless that is accomplished, the Company may have to be dissolved and
liquidated. The Board may decide in that connection, or alternatively, that it
is in the best interests of the stockholders to assign the potential (or actual,
if it develops) royalty stream from the Patent Sale to an agent for the
stockholders (the "Agent"). In this event, the Agent would collect the royalties
received from Grace, if any, and disburse them, after paying any ongoing
expenses and any remaining liabilities, including the Director Loans, to the
former stockholders, pro rata according to their stock ownership as of the date
of the assignment.
1
<PAGE>
Whether the aggregate liquidation preferences of the Preferred Stock would have
to be satisfied before distributions of the royalty stream could be made on
Common shares would depend on the form of the transaction, i.e., whether the
Company was being liquidated. In the event of such an assignment of royalties,
each stockholder would have a beneficial interest in the royalties, which
interest will not be transferable other than by operation of law (e.g., upon
death). The prohibition against transfer, other than by operation of law, is a
condition to ensure that the Agent is not a reporting company for Securities
Exchange Act of 1934 purposes. Such other conditions as are, in the Board's
opinion, necessary to ensure that the Agent would not be a reporting entity will
also be imposed. Whether the Board decides to assign the royalties to the Agent
will depend on several corporate, tax and securities law issues, many of which
cannot be anticipated at this time.
Uncertainties as to the aggregate amount of royalties, if any, that will be
received by the Company (or the Agent) make it impractical to predict the total
amount that ultimately may be received by stockholders. Claims, liabilities and
expenses from operations (including operating costs, salaries and miscellaneous
expenses) will continue to accrue or be incurred during the twelve-year royalty
period, which will reduce the amount available for ultimate distribution.
The Company's Board of Directors has decided that, depending on the outcome of
its efforts to realize value from the Company's status as a publicly held
corporate shell and its net operating loss carry forward, it may be in the best
interests of the Company and its stockholders to dissolve and liquidate the
Company. The Board and the Company's stockholders accordingly approved a
Contingent Plan of Liquidation (the "Contingent Plan") to be implemented if the
Board, in its sole discretion, deems implementation to be in the best interests
of the Company and its stockholders.
The Company does not have sufficient resources to continue to exist for more
than a limited time. As a publicly held Company, the Company is subject to
costly ongoing reporting and compliance requirements, and absent the possibility
of deriving value from the publicly held corporate shell and the net operating
loss carry forwards, the Board would have recommended to the stockholders that
the Company liquidate and dissolve immediately and transfer the royalties to a
liquidating trust.
The Board retained for the Company $57,000 from the proceeds of the Patent Sale
so that the Company could exist for a period of time to allow it to search for
and negotiate with possible acquirers of the corporate shell and/or its net
operating loss carry forwards. If that process is not successful, the Board
intends to implement the Contingent Plan. If that process is successful, it is
unclear whether the Board would implement the Contingent Plan, because such a
determination would depend on the form of the transaction.
Contingent Plan of Liquidation
A Contingent Plan of Liquidation (the "Contingent Plan") was adopted by the
stockholders of the Company by written consents pursuant to a Proxy Statement
dated April 3, 1995. The Contingent Plan provides for the dissolution of the
Company pursuant to the provisions of the Delaware General Corporation Law. The
Contingent Plan is to be carried out only upon subsequent implementation by
action of the Board of Directors. If the Board of Directors acts to implement
the Contingent Plan, the Company will file a Certificate of Dissolution with the
Delaware Secretary of State. The Company will continue to exist, but only to
liquidate its assets, wind up its business affairs, pay its liabilities and
distribute its remaining assets, if any. Approval of the Contingent Plan
authorized the Board of Directors to sell or otherwise dispose of the assets of
the Company on such terms and conditions and for such consideration as it deems
advisable, without any further stockholder approval.
The Contingent Plan contemplates that upon it being made effective by the Board,
if there are any accrued and contingent liabilities of or claims against the
Company, payment or provision for payment thereof must be made out of the
Company's assets. After that, any assets remaining would be distributed to
stockholders as promptly as possible.
2
<PAGE>
The Contingent Plan authorizes the Board of Directors to abandon the dissolution
of the Company any time before the Certificate of Dissolution is filed, if the
Board of Directors deems such action to be in the best interest of the Company.
The Board of Directors has not considered the specific circumstances, if any,
under which it might abandon the dissolution of the Company nor does it
presently have any expectations to abandon the dissolution, should the
Contingent Plan be implemented.
Under the Contingent Plan, the Board of Directors may choose to transfer the
assets of the Company to a liquidating trust to (i) retain and receive the
Company's assets, including the royalties, (ii) satisfy the Company's
liabilities, whether known, unknown, contingent or otherwise, (iii) retain any
assets on behalf of stockholders who cannot be located and (iv) distribute
remaining assets to stockholders, after satisfying any liquidation preferences
of the Company's Series 2 Preferred Stock, which preferences aggregate $885,000.
All determinations as to the amount, time and form of liquidating distributions
(including the transfer to the liquidating trust) will be made in the absolute
discretion of the Board of Directors. Although the Board is authorized to make
distributions to the stockholders in stock or other assets, it is not presently
anticipated that, except for the distribution of the royalty stream to a
liquidating trust, any distributions will be made.
If there is a liquidating distribution to a liquidating trust, then the
stockholders must surrender their common stock certificates to the Company for
cancellation as a condition to entitlement to receive distributions from the
trust. If a stockholder fails to surrender his certificate, his share of any
distribution will be retained until his certificate is surrendered or until he
furnishes an indemnity bond in case of loss or destruction of the certificates.
No interest will be paid or accrued on the cash or other assets payable upon
surrender of Company stock certificates. The stockholders of the Company will be
notified as promptly as possible of the procedure for surrender of their
certificates in exchange for their beneficial interest in the trust. If the
Contingent Plan of Liquidation is ultimately implemented by the Board of
Directors, the Agent will most likely be a Liquidating Trust.
No estimate of the amount available for distribution to stockholders is
possible. It is impossible to predict either (i) what royalties might be
received from the Patent Sale or when, or (ii) whether value will be derived
from the Company's public corporate shell or its net operating loss carry
forwards.
If the Contingent Plan is implemented by the Board of Directors, the stock
transfer books of the Company will be closed as of the close of business on the
date the Certificate of Dissolution is filed. After that, no assignment or
transfers of shares of stock of the Company (except those occurring by will,
intestate succession or operation of law) will be recorded.
Employees
As an inactive corporation, the Company had no employees during the fiscal year
ended June 30, 1997 and at the date of this Annual Report on Form 10-KSB.
Item 2. Description of Property
The Company has no facilities and owns no property.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders
3
<PAGE>
There were no matters submitted to a vote of security holders during the prior
fiscal year.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is traded in the over-the-counter market. The
following table sets forth the range of high and low bid quotations on the
Common Stock for the quarterly periods indicated, as reported by the National
Quotation Bureau, Inc. The quotations are interdealer prices without retail
mark-ups, markdowns or commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
Fiscal Year Ended June 30, 1996
First Quarter....................... .01 .01
Second Quarter...................... .01 .01
Third Quarter....................... .01 .01
Fourth Quarter...................... .01 .01
</TABLE>
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
Fiscal Year Ended June 30, 1997
First Quarter....................... .01 .01
Second Quarter...................... .01 .01
Third Quarter....................... .01 .01
Fourth Quarter...................... .01 .01
</TABLE>
At December 1, 1997, the approximate number of holders of record of the
Company's Common Stock was 1,598.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations
(a) Plan of Operation
-----------------
The Company has ceased operations since the sale of its technology to Grace in
the Patent Sale. Several offers to acquire the shell have been examined and
deemed inadequate. The Company continues to explore potential mergers with
companies desiring to go public by acquiring its shell. If these efforts fail,
the Company will most likely implement the Contingent Plan and form a
Liquidating Trust to receive and ultimately distribute royalties (if any) from
the use of its former technology by Grace. Royalties would first be paid to debt
holders and then to preferred stockholders and finally to common stockholders.
To this date, no royalties have been forthcoming from Grace.
Item 7. Financial Statements
An unaudited Balance Sheet for the fiscal year ended June 30, 1997, and
unaudited Statements of Income, Cash Flows and Changes in Stockholders Equity
for each of the two fiscal years preceding the date of the Balance Sheet are
attached following the signature page hereof.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Because it became an inactive business in the fiscal year ended June 30, 1995
and due to its lack of financial resources, the Company ceased to engage KPMG
Peat Marwick as its independent accountants and has engaged no independent
4
<PAGE>
accountants since the Company filed its Annual Report on Form 10-KSB for the
1995 fiscal year.
5
<PAGE>
PART III
Item 9. Directors and Executive Officers of the Registrant
Set forth below is information regarding the Company's directors and executive
officers, including information furnished by them as to their principal
occupations for the last five years, other directorships held by them and their
ages as of September 8, 1997. All directors are elected for one-year terms which
expire as of the date of the Company's Annual Meeting each year.
<TABLE>
<CAPTION>
Director
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
Emile A. Battat........... 59 Director 1993
Harry Edelson............. 61 Chairman of the Board and 1988
Chief Executive Officer
Richard O. Jacobson....... 60 Director 1988
Albert J. James........... 60 Director 1993
</TABLE>
Emile A. Battat is President of Piedmont Enterprises Inc., a privately held
investment and consulting firm. From 1978 to 1994 he was President and Chief
Financial Officer of Minemet, Inc., a privately held company engaged in the
international trade of industrial raw materials. From 1965 to 1978 he held
various positions with Kaiser Aluminum Corporation including Vice President and
Director of Kaiser International. Mr. Battat is a director of Alatenn Resources,
Inc., a transporter and seller of natural gas. Mr. Battat joined the Company's
Board of Directors in July 1993.
Harry Edelson has been managing partner of Edelson Technology Partners, a
limited partnership venture capital fund, since July 1984. Mr. Edelson joined
the Company's Board of Directors in April 1988.
Richard O. Jacobson has been President and Chief Executive Officer of Jacobson
Warehouse Company, Inc., since 1968. Jacobson Warehouse Company is a public
warehouse and distribution company. Mr. Jacobson is also President and Chief
Executive Officer of Jacobson Transportation Company, Inc. Mr. Jacobson is a
director of Firstar of Iowa NA, a bank holding company, and is a director of
Firstar of Des Moines NA, based in Des Moines, Iowa. He also is a director of
Alatenn Resources, Inc., a transporter and seller of natural gas, Allied Group,
Inc., a regional insurance holding company, FelCor Suite Hotels and Heartland
Express, Inc., an irregular truckload motor carrier. Mr. Jacobson joined the
Company's Board of Directors in November 1988.
Albert J. James has been providing marketing and operational strategy consulting
services to several food companies since 1990. From 1988 to 1990, he was the
President and Chief Executive Officer of Continental White Cap, Inc. From 1975
to 1988 he held various positions within R.J. Reynolds/RJR Nabisco, including
President, Chief Executive Officer and Chairman of the Board of Canadian
Canners, Ltd. Mr. James joined the Company's Board of Directors in August 1993.
6
<PAGE>
Item 10. Executive Compensation
No officer or director received any compensation from the Company during the
last fiscal year.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1997, by (i) all those
known by the Company to be beneficial owners of more than 5% of its Common
Stock; (ii) all directors; and (iii) all officers and directors of the Company
as a group.
<TABLE>
<CAPTION>
Beneficial
Ownership
Name and Address of ----------------------------
Beneficial Owner Shares Percent
---------------- ------ -------
<S> <C> <C>
IRITECH, S.p.A............................................ 300,000 6.25%
Pizza della Liberta 20
Rome, Italy 00192
Harry Edelson and Edelson Technology Partners/(1)/........ 1,199,333 25.00%
300 Tice Boulevard
Woodcliff Lake, New Jersey 07675
Emile A. Battat/(2)/...................................... 202,000 4.21%
Richard O. Jacobson/(3)/.................................. 617,800 12.88%
P. O. Box 224
Des Moines, IA 50301
Albert J. James /(4)/..................................... 90,000 1.88%
All Officers and Directors as a Group (4 persons)/(5)/.... 2,099,133 43.97%
</TABLE>
(1) Includes 8,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of December 1, 1997, 226,666 shares of Common
Stock issuable upon the exercise of warrants exercisable within 60 days of
December 1, 1997, and 40,000 shares of Series 2 Preferred Stock convertible
into 80,000 common shares. Mr. Edelson, a director of the Company, is a
partner with a beneficial interest in Edelson Technology Partners, a New
York limited partnership ("ETP"). ETP is the owner, beneficially and of
record, of 884,667 shares of Common Stock and, due to his position with ETP,
Mr. Edelson may be deemed to be the beneficial owner of those shares.
(2) Includes 30,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of December 1, 1997, 86,000 shares of Common
Stock issuable upon exercise of warrants exercisable within 60 days of
December 1, 1997, and 23,000 shares of Series 2 Preferred Stock convertible
into 46,000 common shares.
(3) Includes 8,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of December 1, 1997, 233,000 shares of Common
Stock issuable upon exercise of warrants exercisable within 60 days of
December
7
<PAGE>
1, 1997, and 83,000 shares of Series 2 Preferred Stock convertible
into 166,000 common shares.
(4) Includes 30,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of December 1, 1997, 30,000 shares of Common
Stock issuable upon the exercise of warrants exercisable within 60 days of
December 1, 1997, and 15,000 shares of Series 2 Preferred Stock convertible
into 30,000 common shares.
(5) Includes 316,667 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of December 1, 1997, 580,666 shares of Common
Stock issuable upon the exercise of warrants exercisable within 60 days of
December 1, 1997, and 162,000 shares of Series 2 Preferred Stock convertible
into 324,000 common shares.
Item 12. Certain Relationships and Related Transactions
The Company's transactions with its officers, directors and affiliates have
been, and such future transactions will be, on terms no less favorable to the
Company than could have been realized by the Company in arms-length transactions
with non-affiliated persons and will be approved by a majority of the
independent disinterested directors.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No report on Form 8-K was filed during the last Quarter of the fiscal
year ended June 30, 1997.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant): ADVANCED OXYGEN TECHNOLOGIES, INC.
Date: December 15, 1997 By (Signature and Title): /s/ Harry Edelson
----------------------
Harry Edelson
Chairman of the Board and Chief Executive Officer
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 dates indicated.
Date: December 15, 1997 By (Signature and title): /s/ Harry Edelson
------------------------
Harry Edelson, Chairman
of the Board and Chief
Executive Officer and
Principal Financial Officer
Date: December 15, 1997 By (Signature and title): /s/ Emile A. Battat
------------------------
Emile A. Battat, Director
8
<PAGE>
Date: December 15, 1997 By (Signature and title): /s/ Richard O. Jacobson
---------------------------
Richard O. Jacobson, Director
Date: December 15, 1997 By (Signature and title): /s/ Albert J. James
----------------------------
Albert J. James, Director
9
<PAGE>
Advanced Oxygen Technologies, Inc.
BALANCE SHEET JUNE 30, 1997
ASSETS
------
<TABLE>
<S> <C> <C> <C>
CURRENT ASSETS
CASH $ 398
TOTAL CURRENT ASSETS $ 398*
OTHER ASSETS
DEPOSITS 524
TOTAL OTHER ASSETS 524*
TOTAL ASSETS $922*
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE-TRADE $ 2,000
DUE TO DIRECTORS 275,000
ACCRUED LIABILITIES 64,500
TOTAL CURRENT LIABILITIES $ 341,500*
STOCKHOLDERS' EQUITY
CAPITAL STOCK 47,963
PREFERRED STOCK 1,770
ADDITIONAL PAID IN CAPTAL 19,797,051
RETAINED EARNINGS (20,157,356)
NET INCOME/LOSS (30,006)
TOTAL STOCKHOLDERS' EQUITY (340,578)*
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $922*
</TABLE>
10
<PAGE>
Advanced Oxygen Technologies, Inc.
INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
--- Year to Date ---
Actual Percent
====================
<S> <C> <C>
OPERATING EXPENSES
ACCOUNTING $ 2,000 0.0
BANK CHARGES 60 0.0
INTEREST 27,500 0.0
RENT - OTHER 446 0.0
-------- ---
* TOTAL OPERATING EXPENSES 30,006 0.0
-------- ---
* INCOME FROM OPERATIONS (30,006) 0.0
-------- ---
* OTHER INCOME/(EXPENSE) (30,006) 0.0
-------- ---
* NET INCOME BEFORE TAXES (30,006) 0.0
-------- ---
* NET INCOME AFTER TAXES $(30,006) 0.0
======== ===
</TABLE>
11
<PAGE>
Advanced Oxygen Technologies, Inc.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Current Year to Date
<S> <C> <C>
CASH FLOWS-OPERATIONS
NET INCOME (LOSS-) $(6,875) $(30,006)
NET CHANGE RECEIVABLES 55
NET CHANGE PAYABLES 2,000
NET CHANGE ACCRUED EXPENSES 6,875 27,500
------- --------
TOTAL CASH FLOWS-OPERATIONS 0 451
------- --------
NET CHANGE IN CASH $ 0 $ (451)
======= ========
CASH AT BEGINNING OF PERIOD $ 398 $ 849
------- --------
CASH AT END OF PERIOD $ 398 $ 398
======= ========
</TABLE>
12
