UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
Commission file number 0-12666
AMERICAN FINANCIAL HOLDING, INC.
(Exact name of registrant as specified in charter)
DELAWARE 87-0458888
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 SOUTH 200 WEST, SUITE 302, FARMINGTON, UTAH 84025
(Address of principal executive offices)
(801) 451-9580
(Registrant's telephone number, including area code)
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 [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The Company had 4,279,000 shares of common stock, par value $0.01
per share, issued and outstanding as of November 15, 1996.
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
SPECIAL NOTE
THIS REPORT ON FORM 10-QSB FOR THE INTERIM PERIOD ENDED JUNE 30, 1995, OF
AMERICAN FINANCIAL HOLDING, INC. (THE "COMPANY"), IS BEING FILED IN NOVEMBER
1996, SUBSTANTIALLY AFTER ITS DUE DATE. THIS REPORT SHOULD BE READ IN
CONJUNCTION WITH OTHER PERIODIC REPORTS REPORTING EVENTS OCCURRING AFTER
DECEMBER 31, 1995. SUCH OTHER PERIODIC REPORTS AND THE INFORMATION SET FORTH
THEREIN SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB, WHICH CONTAINS INFORMATION AS OF DECEMBER 31, 1995, AND THIS QUARTERLY
REPORT ON FORM 10-QSB UNLESS OTHERWISE INDICATED.
The consolidated condensed financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made. These
consolidated condensed financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1995.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
CURRENT ASSETS -------- ---------
Cash $689,517 $988,904
Marketable securities 20,574 88,100
Commissions receivable 25,000 170,014
Interest receivable 3,919 1,414
Other receivable 21,000 --
Real estate note receivable
from related party 147,955 --
-------- ---------
TOTAL CURRENT ASSETS 907,965 1,248,432
-------- ---------
PROPERTY AND EQUIPMENT
Automobiles 129,879 97,852
Equipment 48,875 48,238
Furniture and fixtures 22,133 22,133
------- -------
200,807 168,223
Less: accumulated depreciation (80,141) (65,622)
------- -------
NET PROPERTY AND EQUIPMENT 120,746 102,601
------- -------
OTHER ASSETS
Investment in real estate 113,389 102,955
Net deferred tax asset 195,560 195,560
Deposits 26,817 26,804
------- -------
TOTAL OTHER ASSETS 335,766 325,319
------- -------
TOTAL ASSETS $1,364,477 $1,676,352
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
JUNE 30, DECEMBER 31,
1996 1995
CURRENT LIABILITIES ------- ---------
Accounts payable $380,222 $317,277
Commissions payable 78,681 170,014
Short-term borrowings 20,432 53,478
Accrued liabilities 277,349 281,528
Income taxes payable 264,241 256,241
Preferred dividends payable 13,579 24,064
Current portion of long-term debt 21,449 57,738
--------- ---------
TOTAL CURRENT LIABILITIES 1,055,953 1,160,340
--------- ---------
LONG-TERM DEBT, net of current portion 589,869 522,403
--------- ---------
MINORITY INTEREST (preferred stock in
consolidated subsidiary) 455,986 437,938
--------- --------
STOCKHOLDERS' DEFICIT
Common stock - $.01 par value;
20,000,000 shares authorized,
4,279,449 and 4,232,399 shares issued
and outstanding at June 30, 1996
and December 31, 1995, respectively 42,794 42,324
Additional paid-in capital 7,431,370 7,378,424
Stockholders' notes receivable,
net of reserve of$1,056,955 and
$869,255 at June 30, 1996 and
December 31, 1995, respectively (383,366) (383,966)
Unrealized loss on marketable
securities (64,228) (53,412)
Accumulated deficit (7,785,970) (7,427,699)
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (737,331) (444,329)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $1,364,477 $1,676,352
========= =========
See the accompanying notes to condensed consolidated financial statements.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1996 1995 1996 1995
COMMISSION REVENUE $1,191,400 $1,504,644 $2,262,172 $2,660,868
COMMISSION EXPENSE 1,044,424 1,278,042 1,946,224 2,271,884
--------- --------- --------- ---------
GROSS PROFIT 146,976 226,622 315,948 388,984
GENERAL AND
ADMINISTRATIVE EXPENSE 349,142 353,927 708,136 649,580
--------- --------- --------- ---------
LOSS FROM OPERATIONS (202,166) (127,305) (392,188) (260,596)
OTHER INCOME (EXPENSE)
Interest income 58,850 43,504 114,590 81,312
Interest expense (23,187) (3,221) (25,354) (6,389)
--------- --------- --------- ---------
TOTAL OTHER INCOME 35,663 40,283 89,236 74,923
--------- --------- --------- ---------
LOSS BEFORE
INCOME TAXES (166,503) (87,022) (302,952) (185,673)
--------- --------- --------- ---------
INCOME TAX PROVISION 4,022 3,011 8,022 6,022
--------- --------- --------- ---------
LOSS BEFORE MINORITY
INTEREST (176,525) (90,033) (310,974) (191,695)
MINORITY INTEREST,
PREFERRED DIVIDEND
OF SUBSIDIARY 12,032 - 24,064 -
NET LOSS $(182,557) $ (90,033) $(335,038) $(191,695)
========= ========= ========= =========
NET LOSS PER
COMMON SHARE $ (0.05) $ (0.02) $ (0.08) $ (0.05)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 4,241.482 3,802,175 4,248,383 3,742,363
========= ========= ========= =========
See the accompanying notes to condensed consolidated financial statements.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
INCREASE ( DECREASE) IN CASH
FOR THE SIX MONTHS
ENDED JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES ------- --------
Net loss $ (333,642) $ (191,695)
Adjustments to reconcile net loss to
Depreciation and amortization 17,992 14,007
Unrealized loss on securities (10,816) -
Increase in reserve against
stockholders' notes receivable 210,369 126,739
Changes in current assets
and liabilities 51,364 95,266
Interest income added to
stockholders' notes receivable (28,636) (78,206)
Interest expense added to note payable - 2,316
------- -------
NET CASH USED IN OPERATING ACTIVITIES (93,369) (31,573)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in stockholders' notes receivable (159,064) (80,627)
Proceeds from sale of marketable securities 67,526 -
Purchase of equipment (204) -
Purchase of real estate held for investment (113,389) -
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (205,131) (80,627)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 53,416 176,138
Principal payments on short-term borrowings
and long-term debt (37,802) (10,961)
Cash payment of dividend (16,501) -
Stock issuance costs paid - (26,604)
Proceeds from collection of receivable
from shareholder - 9,800
Increase in minority interest
from issuance of preferred
stock by subsidiary - 500,000
------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES (887) 648,373
------- --------
NET INCREASE (DECREASE) IN
CASH AND RESTRICTED CASH (299,387) 536,173
Cash at beginning of period 988,904 38,007
-------- ---------
CASH AT END OF PERIOD $ 689,517 $ 574,180
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID FOR INTEREST $ 4,705 $ 4,073
======== =========
See the accompanying notes to condensed consolidated financial statements.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been
prepared by the Company, and are not audited. All adjustments necessary
for fair presentation have been included, and consist only of normal
recurring adjustments. These financial statements are condensed and,
therefore, do not include all disclosures normally required by generally
accepted accounting principles. These statements should be read in
conjunction with the Company's most recent annual financial statements
included in the Company's Annual Report on Form 10-K. The financial
position and results of operations presented in the accompanying financial
statements are not necessarily indicative of the results to be generated
for the remainder of 1996.
NOTE 2--STOCKHOLDERS' DEFICIT
During the six months ended June 30, 1996, an additional 47,050 shares of
common stock were issued for cash at an average price of $1.14 per share.
NOTE 3--DISPOSITION OF REAL ESTATE
Under the terms as an agreement, as amended in July 1995, on June 30, 1996,
the Company agreed to sell an investment in real estate at its carrying
value of $102,955 to an officer and director of the Company. In
consideration of the as adjusted amount due on purchase of such real estate
and additional advances of $45,000 during the quarter ended June 30, 1996,
and $15,000 on July 1, 1996, the officer and director delivered to the
Company a promissory note for $161,151, payable, with interest at 7.5%,
upon the resale of the real estate by the officer or June 30, 1997,
whichever is earlier. Until such resale, the Company is retaining title to
the real estate as security for the note. In the opinion of the board of
directors, the market value of the real estate exceeds the amount of the
note.
On August 7, 1996, the Company sold real estate which had been acquired in
February 1996. The property was sold for $130,180 and was paid in cash by
an unrelated third party. The sale resulted in a gain of $16,791 during
the quarter ended September 30, 1996.
NOTE 4--PREFERRED DIVIDEND TO MINORITY INTEREST
Triad Financial Systems, Inc., a subsidiary of the Company, paid $18,048 of
a preferred stock dividend by Triad issuing 1,504 shares of preferred
stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When
used in this document, the words "anticipate," believe," "estimate," expect,"
and "intend" and similar expressions, as they relate to the Company or its
management, are intended to identify forward-looking statements. Such
statements reflect the current view of the Company respecting future events and
are subject to certain risks, uncertainties, and assumptions, including the
risks and uncertainties noted. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected, or intended.
THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN-SHORTAGE OF WORKING CAPITAL
AND CONTINUING LOSSES
The Company has extremely limited available working capital, no credit
lines, and insufficient revenue to meet its operating requirements. For the
three month period ended June 30, 1996, the Company suffered net losses of
$183,000, and as of June 30, 1996, had an accumulated deficit of $7,786,000.
The Company expects that it will continue to incur operating losses and that its
accumulated deficit will increase. The Company has been, and expects that it
will continue to be, dependent solely upon cash provided by financing activities
to fund its operations. The principal source of capital from outside sources
during the preceding years has been receipts from the sale of securities. All
of the foregoing raises substantial concerns respecting the ability of the
Company to continue as a going concern.
The Company's operating plan for the balance of 1996 and into 1997 is
dependent upon the receipt of additional funding from equity or, if available,
debt financing. The Company received $53,000 in net proceeds from its sale of
common stock during the interim period ended June 30, 1996. There can be no
assurance that the Company will be able to sell additional equity securities or
arrange debt financing in the future to meet its capital requirements. The
Company is relying on the surplus of AF Reinsurance, the sale of common stock,
and borrowings, if available, to provide the $224,000 due under an October 1996
agreement to repurchase Triad Preferred Stock from APL and cancel its $100,000
claim. As a result of this redemption agreement, at September 30, 1996,
$224,000 of minority interest (preferred stock in consolidated subsidiary)
will be reclassified as a current liability.
The consolidated financial statements do not include any adjustments
relating to recoverability and classification of asset carrying amounts or the
amount and classification of liabilities if the Company were unable to continue
as a going concern.
To date, the Company has not provided funds to Income Builders to support
expansion of the marketing effort. The Company would benefit from additional
capital for increased marketing of products underwritten by Mass General and for
additional surplus for AF Reinsurance in order to retain coinsurance revenue
from the life insurance and annuity production of Income Builders. The Company
continues to incur costs in seeking capital for this planned expansion.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements for operating and investing activities
during the six months ended June 30, 1996, were provided by cash balances at the
beginning of the period. Operating activities used net cash of $93,000 for the
six-month period ended June 30, 1996, principally to fund the Company's net loss
and the increase in reserve against stockholders' notes. Investing activities
required net cash of $205,000, after using $159,000 for an increase in
stockholder notes receivable and $113,000 for the purchase of real estate
intended for the subsequent purchase by a newly recruited executive marketing
manager. Due to the failure to obtain additional Company funding to support
marketing expansion, the individual did not begin employment so the real estate
was sold to an unrelated party after June 30, 1996, for a gain of $16,791. Use
of cash for operating and investing activities resulted in a $299,000 net
decrease in cash during the six months ended June 30, 1996.
CAPITAL REQUIREMENTS
The Company believes that the initial capitalization of AF Reinsurance is
sufficient for the subsidiary to begin operations, although the Company is
seeking additional funding in order to launch its new product introduction and
marketing expansion and, in general, to form a broader base for planned
activities. In addition to funding for AF Reinsurance, the Company would
benefit from additional funds to cover accrued liabilities and accounts payable
inasmuch as most of the Company's $1,056,000 current liabilities were past due
at June 30, 1996, to pay ongoing operating losses, and to provide funds for
additional marketing by Income Builders.
In light of the organization of AF Reinsurance, the Company desires to
continue to expand its marketing organization and acquire additional insurance
company assets. The Company will require additional equity or debt capital to
fund this expansion, and there can be no assurance that such funding will be
available on terms viable to the Company.
As of September 30, 1996, Triad had issued and outstanding 52,138 shares of
Triad Preferred Stock with a liquidation preference of $12 per share, or an
aggregate of $625,656 (without giving effect to the proposed repurchase of
shares from APL discussed above), and AF Reinsurance had outstanding $425,000 in
principal amount of surplus debentures, bearing interest at 7.66% per annum, due
quarterly, with annual principal payments of $42,500 due annually, commencing
September 30, 1996, secured by all of the outstanding common stock of AF
Reinsurance. All principal and interest payments required to date have been
paid. The Company may elect to utilize proceeds from these surplus debentures,
which form a portion of the surplus of AF Reinsurance, to pay amounts due in the
future.
A substantial portion of the current assets of the Company consists of cash
and cash items of AF Reinsurance, which is required to maintain capital and
surplus aggregating at least $250,000 in order to conduct reinsurance
activities in Arizona. The Company represented to the purchasers of preferred
stock in Triad and $425,000 in surplus debentures of AF Reinsurance that the net
proceeds from the issuance of such securities would be used for the reinsurance
activities of AF Reinsurance. As of June 30, 1996, AF Reinsurance had a
$102,000 account receivable for advances to Triad. Subsequent to June 30, 1996,
AF Reinsurance used surplus to pay principal and interest due on the surplus
debenture and to advance funds to Triad to redeem Triad Preferred Stock under
the agreement with APL discussed above. AF Reinsurance may continue to utilize
its surplus for similar purposes in the future.
The Company also has converted an account payable into a promissory note
aggregating $317,000 at September 30, 1996, bearing interest at 8% (12% after
default) and due five days after demand, but in any event, by March 31, 1997,
for professional services rendered. The Company does not expect that demand
will be made on this note as long as it pays for ongoing professional services
and costs advanced as they are incurred on a current basis, and as long as the
payee, in its sole discretion, concludes that the Company is making substantial
progress toward obtaining sufficient financing to pay the note. This note is
secured by a pledge of officer and director notes payable to the Company
aggregating approximately $2,606,000.
Inasmuch as the Triad offering of Triad Preferred Stock was not successful
in obtaining the amount of funding anticipated, the Company has been unable to
launch its product introduction and marketing effort as discussed above.
Therefore, the Company is exploring other financing alternatives, including
borrowings, if available, and the sale of additional equity securities. Net
proceeds from such funding would be utilized to fund marketing expansion and
related new product introduction, to increase the surplus of AF Reinsurance, to
cover ongoing general and administrative expenses (including payments to
executive officers and directors), and perhaps to reduce the outstanding Triad
surplus debenture or to redeem Triad Preferred Stock. There can be no assurance
that any of the Company's efforts to obtain additional funding will be
successful or that the Company will be able to continue.
As part of the Company's strategic analysis and planning, it may consider a
number of corporate restructuring alternatives and may explore the possibility
of separating its Triad reinsurance activities and/or Income Builders marketing
organization from the holding company parent and its essentially inactive
subsidiary, American Financial Marketing. Management is analyzing the steps that
would be required to implement such a possible restructuring for submittal to
the board of directors for consideration. There can be no assurance as to
whether any such organizational restructuring will be pursued, whether it will
be implemented, or the business or financial effects thereof.
CERTAIN UNCERTAINTIES
The Company and Triad have sold securities in reliance on exemptions from
registration under the Securities Act and applicable state securities laws.
Management believes that the Company has materially complied with the
requirements of the applicable exemptions. However, since compliance with these
exemptions is highly technical, it is possible that the Company could be faced
with certain contingencies based on civil liabilities resulting from the failure
to meet the terms and conditions of such exemptions, which could have a material
adverse impact on the Company's financial condition. Neither the Company nor
Triad has received any demand from any shareholder requesting a return of his
investment, damages, or other remedies in connection with the purchase of
securities by such shareholder.
RESULTS OF OPERATIONS
Commission revenue for the second quarter of 1996 ("2Q96") and the first
half of 1996 ("IH96") decreased $313,000, or 20.8%, and $399,000, or 14.9%, from
the corresponding second quarter of 1995 ("2Q95") and first half of 1995
("IH95"), respectively, due to the absence of special marketing incentive
programs and generally moderate prevailing interest rates during 2Q96 and 1H96.
In contrast, during 1Q95 and IH95 the underwriter of the Company's principal
annuity products conducted an aggressive sales incentive program. In addition,
during 2Q95 and 1H95 prevailing interest rates were relatively higher than in
2Q96 and 1H96, during which equity markets enjoyed substantial increases, which
generally aided in the sale of annuity products such as those marketed by the
Company. As investors shifted from fixed yield annuities to equities as the
equity prices increased, industry wide annuity sales generally declined.
Commission expense was 87.7% and 86.0% of commission revenue during 2Q96
and 1H96, respectively, as compared to 84.9% and 85.3% during 2Q95 and IH95,
respectively. These fluctuations reflect ordinary variations in the commission
schedule of various products, the age and other demographic characteristics of
policy purchasers, the size of individual annuity and insurance policies sold,
the commission schedule of the individual insurance agent selling particular
policies, and similar factors, which will likely continue to fluctuate in the
future.
General and administrative expenses decreased $5,000 (1.3%) and increased
$59,000 (9.0%) during 2Q96 and IH96 as compared to 2Q95 and IH95, respectively.
The increase during IH96 was due principally to the increase in fees for
professional services.
The $5,000, or 11.4% decrease and the $14,000, or 19.1%, increase in other
income and expense in 2Q96 and IH96 as compared to 2Q95 and IH95, respectively,
is due principally to the interest accruing on the larger balance of outstanding
stockholder notes receivable during the later period and an increase in interest
expense on related notes payable.
As a result of the foregoing, the Company's net loss increased $93,000 or
102.7% in 2Q96 and $143,000, or 74.7%, in IH96 over the corresponding periods in
1995. These increases in the loss during 2Q96 and IH96 included accrued
dividends on outstanding preferred stock of a subsidiary of $12,032 and $24,064
during the three and six month periods, respectively. The increased loss
combined with the larger number of shares outstanding during 1996 as compared to
1995, reflecting the interim sale of Common Stock to provide funding required
for the Company to continue, caused the loss per common share to increase to
$0.05 and $0.08 for 2Q96 and IH96, respectively, when compared to $0.02 and
$0.05 for 2Q95 and IH95, respectively.
PART II
OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings, and, except
as noted below, no such proceedings have been threatened by or, to the best of
its knowledge, against it.
On October 9, 1996, the Company was advised by the Enforcement Division of
the Securities and Exchange Commission (the "Commission") that it is considering
recommending that the Commission bring an enforcement action, which could
include a civil penalty, against the Company in U.S. District Court for failing
to file timely periodic reports in violation of Section 13(a) of the Securities
Exchange Act of 1934 and the rules thereunder.
In October 1996 the Company also received a request for the voluntary
production of information to the Enforcement Division of the Commission related
to the resignation of Coopers & Lybrand LLP, the dismissal of Arthur Andersen
LLP, and the appointment of Jones, Jensen & Company as the Company's independent
accountant and the reasons therefor. In addition, the Company is requested to
provide certain information respecting its previous sales of securities. The
Company is cooperating in these inquiries.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
Item 10. Material Contracts
10.01 10 Promissory note dated July 1, 1996,for This Filing
$161,151 from Raymond L. Punta
(b) Reports on Form 8-K
During the quarter ended June 30, 1996, the Company filed the
following reports on Form 8-K:
Date of Event Reported Item Reported
June 17, 1996 Item 4. Changes in Registrant's
Certifying Accountants
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 thereunto duly authorized.
AMERICAN FINANCIAL HOLDING, INC.
(Registrant)
Dated:December 3, 1996 By /s/ Kenton L. Stanger, President
(Chief Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1996, AND STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 689,517
<SECURITIES> 20,574
<RECEIVABLES> 197,874
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 907,965
<PP&E> 200,807
<DEPRECIATION> 80,141
<TOTAL-ASSETS> 1,364,477
<CURRENT-LIABILITIES> 1,055,953
<BONDS> 589,869
<COMMON> 42,794
0
0
<OTHER-SE> (802,194)
<TOTAL-LIABILITY-AND-EQUITY> 1,364,477
<SALES> 2,262,172
<TOTAL-REVENUES> 2,262,172
<CGS> 1,946,224
<TOTAL-COSTS> 1,946,224
<OTHER-EXPENSES> 708,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,354
<INCOME-PRETAX> (302,952)
<INCOME-TAX> 8,022
<INCOME-CONTINUING> (310,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (335,038)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
PROMISSORY NOTE
July 1, 1996
The undersigned, jointly and severally, promise to pay the order of
American Financial Holding, Inc., at the AFH office in Farmington, Utah, or at
such other place as the holder hereof may designate in writing, the sun of One
Hundred Sixty-One Thousand One Hundred Fifty-one and 00/100 Dollars
($161,151.00) payable upon the sale of Maple Hills condo or June 30, 1997,
whichever occurs first, together both before and after judgment, with interest
on the unpaid balance thereof form date until paid at the rate of seven and
one-half percent (7.5%) per annum, interest payable as follows [blank]:
Prepayment of this note with interest to date of payment may be made at any
time without penalty.
If the holder deems itself insecure or if default be made in payment of the
whole or any part of any installment at the time when or the place where the
same becomes due and payable as aforesaid, then the entire unpaid balance, with
interest as aforesaid, shall, at the election of the holder hereof and without
notice of said election at once become due and payable. In the event of any
such default or acceleration, the undersigned, jointly and severally, agree to
pay the holder hereof reasonable attorney's fees, legal expenses and lawful
collection costs in addition to all other sums due hereunder.
Presentment, demand, protest, noticed of dishonor and extension of time
without notice are hereby waived and the undersigned consents to the release of
any security, or any part thereof, with or without substitution.
/s/ Raymond L. Punta
/s/ Kenton L. Stanger, witness
