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 September 30, 1997
Commission file number 0-12666
American Financial Holding, Inc.
(Exact name or 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)
(Former name, former address, and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The Company had 4,279,449 shares of common stock, par value $0.01 per
share, issued and outstanding as of November 14, 1997.
ITEM 1. FINANCIAL STATEMENTS
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, 1996.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
September 30, December 31,
1997 1996
---------- -----------
Current assets
Cash $ 160,877 $ 361,113
Marketable securities
available for sale 725,618 78,641
Commissions receivable 75,000 127,136
Note receivable - related
party - 167,194
Prepaid lease 22,203 12,649
Interest receivable 255 6,487
---------- -----------
Total current assets 983,953 753,220
---------- -----------
Property and equipment
Automobiles 32,977 90,417
Equipment 58,734 58,734
Furniture and fixtures 22,133 22,133
---------- -----------
113,844 171,284
Less: accumulated
depreciation (74,438) (80,941)
---------- -----------
Net property and
equipment 39,406 90,343
---------- -----------
Other Assets
Investment in real
estate - 107,584
Net deferred tax asset 195,560 195,560
Deposits and other
assets 31,804 37,860
---------- -----------
Total other assets 227,364 341,004
---------- -----------
Total Assets $1,250,723 $ 1,184,567
========== ===========
See the accompanying notes to condensed consolidated
financial statements.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' DEFICIT
September 30, December 31,
1997 1996
---------- ----------
Current liabilities
Accounts payable $ 147,098 $ 120,074
Commissions payable 30,450 127,136
Short-term borrowings 38,235 20,471
Accrued liabilities 445,378 318,348
Income taxes payable 256,641 256,641
Preferred dividends
payable 46,620 34,868
Current portion of
long-term debt 746,799 517,765
---------- ----------
Total current
liabilities 1,711,221 1,395,303
---------- ----------
Long-term debt, net of
current portion 20,980 405,071
---------- ----------
Minority interest (preferred
stock in consolidated
subsidiary) 240,014 344,552
---------- ----------
Stockholders' deficit
Common stock - $.01
par value; 20,000,000
shares authorized,
4,279,449 and 4,279,449
issued and outstanding,
respectively 42,794 42,794
Additional paid-in
capital 7,336,908 7,358,451
Stockholders' notes
receivable, net of
reserve of $869,255 and
$869,255, respectively - -
Unrealized gain (loss)
on marketable
securities 637,626 (6,150)
Accumulated deficit (8,738,820) (8,355,454)
---------- -----------
Total stockholders'
deficit (721,492) (960,359)
---------- -----------
Total liabilities and
stockholders' deficit $1,250,723 $ 1,184,567
========== ===========
See the accompanying notes to condensed consolidated
financial statements.
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
/TABLE/
/CAPTION/
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
---------- --------- ---------- ----------
[S] [C] [C] [C] [C]
Commission revenue $1,007,265 $ 992,098 $2,730,350 $3,242,422
Commission expense 798,220 760,028 2,251,493 2,694,404
---------- --------- ---------- ----------
Gross profit 209,045 232,070 478,857 548,018
General and
administrative
expense 448,148 363,109 1,001,556 1,074,039
---------- --------- ---------- ----------
Loss from operations (239,103) (131,039) (522,699) (526,021)
Other Income (Expense)
Gain on sale of
property 2,344 - 2,344 16,791
Gain (Loss) on sale
of marketable
securities 29,715 - 29,715 (19,874)
Interest income 52,223 58,054 165,806 172,644
Interest expense (9,634) (19,313) (32,751) (44,667)
---------- --------- ---------- ----------
Total Other Income 74,648 38,741 165,114 124,894
---------- --------- ---------- ----------
Loss before income taxes (164,455) (92,298) (357,585) (401,127)
Income tax provision - 4,000 - (12,022)
---------- --------- ---------- ----------
Loss before minority
interest (164,455) (96,298) (357,585) (413,149)
Minority interest,
preferred dividend
of subsidiary 8,595 12,392 25,781 (36,456)
---------- --------- ---------- ----------
Net Loss $ (173,050) $(108,690) $ (383,366) $ (449,605)
========== ========= ========== ==========
Net Loss Per Common
Share $ (0.04) $ (0.03) $ (0.09) $ (0.11)
========== ========= ========== ==========
Weighted average number
of common shares
outstanding 4,279,449 4,279,449 4,279,449 4,261,652
========== ========= ========== ==========
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 Nine Months
Ended September 30,
1997 1996
---------- ----------
Cash flows from operating activities
Net loss $ (383,366) $ (449,605)
Adjustments to reconcile net
loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 19,674 27,933
Write off of stockholders' notes
receivable 398,825 302,354
Changes in current assets and
liabilities 106,585 74,536
Interest accrued on shareholders'
notes receivable (144,458) (172,644)
Interest expense added to note
payable - 2,761
Minority interest in loss of
subsidiary 25,780 36,455
(Gain) loss on sale of marketable
securities (29,715) 19,874
Gain on sale of property (2,344) (16,791)
---------- ----------
Net cash used in operating
activities (9,019) (175,127)
---------- ----------
Cash flows from investing activities
Increase in stockholders' notes
receivable (185,281) (174,710)
Proceeds from sale of marketable
securities - 36,830
Proceeds from sale of real estate 109,800 130,180
Purchase of real estate held for
investment - (113,389)
Purchase of marketable securities (3,782) -
Increase of deposits - (5,052)
---------- ----------
Net cash used in investing
activities (79,263) (126,141)
---------- ----------
Cash flows from financing activities
Proceeds from sale of common stock - 53,416
Principal payments on short-term
borrowings and long-term debt (40,789) (43,195)
Cash payment of preferred dividends
and subsidiary (6,000) (20,000)
Proceeds from short-term borrowings 38,235 -
Proceeds from collection of receivable
from shareholder 30,000 -
Redemption of minority interest
preferred stock (112,566) -
Other (20,834) -
---------- ----------
Net cash used by financing
activities (111,954) (9,779)
---------- ----------
Net increase (decrease) in cash (200,236) (311,047)
Cash at beginning of period 361,113 988,904
---------- ----------
Cash at end of period $ 160,877 $ 677,857
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 32,751 $ 10,512
========== ==========
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 report on Form 10-KSB. 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 1997.
NOTE 2--REDEMPTION OF MINORITY INTEREST
During January and February 1997, the Company paid
approximately $112,000 to redeem 8,500 shares of preferred
stock of its subsidiary, Triad Financial Systems, Inc. Annual
dividend requirements on the remaining 35,807 preferred shares
outstanding are $34,375 and are payable semi-annually in cash
and additional shares of preferred stock at the semi-annual
rate of $0.24 per share in cash and $0.24 per share in
preferred shares computed at $12.00 per share.
NOTE 3-SALE OF INVEVESTMENT IN REAL ESTATE AND VEHICLES
The investment in real estate was sold during the first
quarter of 1997 for approximately $109,800 resulting in a
gain of $2,216. The Company also sold vehicles at approximately
their carrying value of $12,296. The proceeds were used to
pay the remaining balance due on related notes payable secured
by the vehicles in the amount of approximately $12,000.
NOTE 4--BUSINESS CONDITION
The Company has suffered cumulative losses of $8,738,820 through
September 30, 1997, and has a working capital deficiency of
$302,268 and a capital deficiency of $721,492 as of September
30, 1997. In addition, the Company is negotiating alternative
arrangements for the settlement of certain long-term notes
payable. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The
accompanying condensed consolidated financial statements do
not include any adjustments relating to recoverability and
classification of assets or the amount or classification of
liabilities that may result from the outcome of this uncertainty.
Management of the Company is seeking additional financing from
third-party investors which may possibly require reorganizing
the corporate structure of the Company, and may possibly require
separation of American Financial Holding, Inc. from its
subsidiaries. Although there is no assurance that these plans
will be accomplished, Management has recently held discussions
with representatives of a potential investor regarding a plan
whereby the investor is considering providing financing,
conditioned on combining the Company's marketing organization
with an insurance company with profitable operations and growth
potential. The Company has reviewed plans whereby it would
dispose of its marketing organization in consideration of ownership
interest in a larger company with funding to acquire and operate an
insurance company as well as the marketing organization. There is
no assurance that this or any other plan will be completed, or
that the Company can obtain profitable operations, continue
as a going concern or satisfy its liabilties.
NOTE 5--NOTE RECEIVABLE RELATED PARTY
During the year ended December 31, 1996, Mr. Raymond Punta purchased
a condominium from the Company for $102,955. In addition, the Company
advanced Mr. Punta approximately $58,000 of additional funds. In
return for the real estate and cash, Mr. Punta signed a promissory
note for $161,151. The note bears interest at 7.5% per annum and
was payable to the Company by June 30, 1997, or sooner if the
condominium were sold by Mr. Punta prior to that date. Mr. Punta
sold the condominium during July 1997 for approximately $162,000.
At that time, Mr. Punta repaid the Company approximately $107,000,
but the remaining $66,000 due on the note receivable currently
remains unpaid.
NOTE 6--DISCONTINUANCE OF STOCK BONUS PLAN
Effective April 1, 1997, the Company discontinued its stock bonus
program with Life USA.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ON PLAN OF OPERATION
THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN --SHORTAGE OF
WORKING CAPITAL AND CONTINUING LOSSES
The Company has extremely limited working capital, no credit lines,
and insufficient revenue to meet its operating requirements. For
the nine months ended September 30, 1997 and 1996, the Company
suffered net losses applicable to common stockholders of $383,366
and $449,605, respectively, and, as of September 30, 1997, had an
accumulated deficit of $8,738,820. At September 30, 1997, the
Company had a stockholders' deficit of $721,492. The Company
expects that it will continue to incur operating losses and that
its accumulated deficit will increase. During 1997, the Company
has continued to use the cash of its reinsurance subsidiary, AF
Reinsurance, to fund its operating, investing, and financing
activities. The principal source of cash from outside sources has
been receipts from the sale of real estate. All of the foregoing
raise substanital concerns respecting the ability of the Company
to continue as a going concern.
The Company's operating plan for the balance of 1997 and into 1998
is dependent upon the receipt of additional funding from equity
financing. The Company did not have any net proceeds from the sale
of common stock during the first three quarters of 1997. Cash
inflows were inadequate to offset cash required for other financing
activities, including redemption of Triad Preferred Stock, advances
to shareholders, and principal payments on borrowings. The Company
is considering plans to be acquired by a larger insurance company
wherby current shareholders would exchange their stock for an
ownership interest in the larger company. Prior to implementing
any organizational restructuring, it will be necessary for the
Company to obtain interim funds to pay related legal, accounting,
and other expenditures. There can be no assurance that any required
initial funding can be obtained for any of the foregoing or that
the Company will be able to continue.
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 was unable to continue as a going concern.
CONTINGENCIES
AF Reinsurance is required by the Arizona Department of
Insurance to maintain combined capital and surplus of at least
$150,000 in order to maintain its reinsurance charter. The
Company obtained an aggregate of $864,000 in initial capital
and surplus for AF Reinsurance, consisting of $439,000 in net
proceeds from the sale of 8% Payable in Cash and In Kind
Cumulative Convertible Preferred Stock of Triad ("Triad
Preferred Stock") and $425,000 in proceeds from a subordinated
surplus debenture issued to Mass General.
At September 30, 1997, AF Reinsurance had accounts receivable
from Triad and AFH of $777,800. Those entities used the
proceeds from such advances to pay $224,000 to redeem Triad
Preferred Stock from APL as discussed below, to pay interest
on the subordinated surplus debenture held by Mass General,
and for general and administrative expenses, including advances
to officers and directors of AFH. The resulting $777,800 in
inter-corporate advances is not an admitted asset for purposes
of determining AF Reinsurance's capital and surplus under the
requirements of the Arizona Department of Insurance. Therefore,
the Company believes that AF Reinsurance does not meet the
applicable capital and surplus requirements of the Arizona
Department of Insurance.
On June 6, 1997, the Arizona Department of Insurance entered
a Suspension order suspending the certificate of authority of
AF Reinsurance for its failure to file by March 31, 1997, its
annual statement of financial condition and pay the related fees.
The Company filed the required reports in the third quarter of 1997
and then withdrew from operations in Arizona.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements of $200,236 for the first three
quarters of 1997 were provided by cash balances at the beginning
of the year, principally cash proceeds from debt and equity
financings completed by Triad in 1995, from operating activities
and from the proceeds from the sale of real estate. For the nine
months ended September 30, 1997, the Company experienced negative
cash flow from operating activities of $9,000 compared with
negative cash flow from operating activities of $175,127 in
the same period of 1996. Less cash was required for operating
activities in 1997 as compared to 1996 was principally due to
the lower operating loss in 1997 due to decreased general and
administrative expenses, as discussed below.
Investing activities used cash of $79,000 during the first three
quarters of 1997 as compared to the use of $126,141 in 1996.
The largest components of the Company's investing activities in
1997 consisted of $185,000 loaned to shareholders which was
offset by the proceeds from the sale of real estate in the
amount of $109,800.
During the first three quarters of 1997, the Company's
financing activities used cash of $112,000, consisting
principally of $119,000 used to redeem and pay dividends on
Triad Preferred Stock and $41,000 for principal payments on
short- and long-term borrowings and $38,000 of proceeds from
short-term borrowings.
At September 30, 1997, the Company had notes and open accounts
receivable of $3,486,000 due from officers, directors and
stockholders of the Company. In 1993, Management recorded
a reserve of $869,000 against those portions of the
stockholders' notes receivable that had not previously been
expensed for financial reporting purposes. The Company has
expensed for financial reporting purposes the remaining
$2,617,000 of the notes receivable in each period as
compensation expense to certain officers and directors. Of
this amount, $399,000 and $302,000 were expensed in the nine
months ended September 30, 1997 and 1996, respectively.
However, these individuals are obligated under the promissory
notes to repay the entire stated principal of the loans.
During the nine months ended September 30, 1997 and
1996, the Company recognized $144,000 and $115,000
respectively, of interest income related to these notes
receivable. The interest income was not paid by the
shareholders but was added to the balance of the notes
receivable. The Company does not expect that payments under
these notes will provide capital during the next 12 months.
CAPITAL REQUIREMENTS
The Company is seeking additional funding in order to launch
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
$1,711,000 current liabilities were past due at September
30, 1997, to pay ongoing operating losses, and to provide
funds for additional marketing by Income Builders.
The Company desires to continue to expand its marketing
organization and will require additional equity or
debt capital to fund this expansion. There can be no
assurance that such funding will be available on terms viable
to the Company.
As of September 30, 1997, Triad had issued an outstanding 35,807
shares of Triad Preferred Stock with a liquidation preference
of $12 per share, or an aggregate of $429,684, 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. In view of the current status of AF Reinsurance, the
debenture holder may accelerate payment of principal and interest
due under the debenture. Accordingly, the liability has been
classified as current for financial reporting purposes. At
September 30, 1997, cash was insufficient to pay the debenture
and related interest.
At September 30, 1997, the Company had an outstanding promissary
note with a balance due for principal and interest of $375,000.
Subsequent to September 30, 1997 the note was settled for a
payment of $315,000, funded by loans from officers and directors.
This note was secured by a pledge of officer and director notes
payable to the Company which aggregated approximately
$2,606,000 at December 31, 1995.
Inasmuch as the 1995 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 and has been using the cash proceeds
from that offering and from the related sale of a surplus
debenture to meet the Company's cash requirements, as
discussed above. In addition, during 1997, the Company has utilized
$109,800 from the proceeds from selling the Company's real estate.
Therefore, the Company is exploring other financing alternatives,
including the sale of additional equity securities. Net proceeds
from such funding would be utilized to fund marketing expansion
and related new product introduction 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.
CERTAIN UNCERTAINTIES
American Financial Holding 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 AFH 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 quarter of 1997 increased slightly by $15,000,
or 1.5% but decreased $512,000, or 15.8%, to $2,730,000 from
$3,242,000 during 1996 for the nine months ended September 30, 1997.
The 1997 decrease is due to the absence of special marketing incentive
programs which were available during the previous period when the
underwriter of the Company's principal annuity products conducted an
aggressive sales incentive program. As investors shifted from
fixed-yield annuities to equities in 1997, industry-wide annuity
sales generally declined. Low interest rates continue into 1997.
Commission expense also increasd slightly by $38,000, or 5% but
declined $443,000, or 16.4%, to $2,251,000 in the first nine months
of 1997 as compared to $2,694,000 in 1996. This fluctuation reflects
ordinary variations in the commission schedule of various products,
the age and other demographics of policy purchasers, the size of
individual annuity and insurance policies sold, the commission
schedules of the individual insurance agents selling particular
policies, and similar factors, which will likely continue to fluctuate
in the future.
Gross profit of $209,000 in the third quarter of 1997 and $479,000 in
the first nine months of1997, or 20.8% and 17.5% of commission revenue,
respectively, is a decline from the$232,000 in gross profit in the third
quarter of 1996 and $548,000 in the nine months ended September 30,
1996, equivalent to 23.3% and 16.9% of commission revenue, respectively.
This improvement in the gross profit percentage in 1997 is due to the
foregoing factors and may not be indicative of the gross profit that
may be expected in future periods.
General and administrative expenses increased $85,000 to $448,000 from
$363,000 or 23.4% for the third quarter of 1997 as comparedto the
third quarter of 1996 due principally to a write-off of an officer's
note receivable but decreased $72,000 or 6.7%, to $1,001,000 in the
nine months ended September 30,1997 as compared to $1,074,000 in 1996.
The 1997 decrease is offset by the recognition of an expense of
$399,000 in 1997 compared to $302,000 in 1996 in stockholder notes
receivable based on management's determination that the ultimate
collectibility of such notes was uncertain and other declines in
expenses. Total other income (expense) increased $36,000, or 92.3%
in the third quarter of 1997 and $41,000 or 33.1% in the nine months
ended September 30, 1997 due primarily to a $30,000 gain on the sale
of marketable securities. The principal component of other income
(expense) in both years ($165,000 in 1997 and $173,000 in 1996),
consisted of interest accrued on notes and open accounts receivable
from executive officers and directors.
As a result of the foregoing, the Company's loss before income
taxes decreased $43,000 or 10.7%, to $358,000 in the first nine
months of 1997 as compared to $401,000 in 1996. After income tax
provision and minority interest preferred stock dividend, the net
loss applicable to common stockholders decreased $67,000 or 14.8%
to $358,000 in the first nine months of 1997, or a loss of $.09
per share on a weighted average of 4,279,000 shares issued and
outstanding, as compared to $450,000 in 1996, or a loss of $0.11
on a weighted average of 4,261,652 shares outstanding.
The net loss applicable to common stockholders increased
$64,000 or 58.7% to $173,000 for the three months ended
September 30, 1997 or a loss of $0.04 per share as compared to
$109,000 or a loss of $0.03 per share during the three months
ended September 30, 1996. The increase in the loss was due to
higher general and administrative expenses and by a lower
gross profit on sales. These changes were caused by the same
factors as discussed above with regard to the nine months
ended September 30, 1997.
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: November 14, 1997 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 September 30, 1997, and statements of operations for the nine months
ended September 30, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 160,877
<SECURITIES> 725,618
<RECEIVABLES> 75,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 983,953
<PP&E> 113,844
<DEPRECIATION> 74,438
<TOTAL-ASSETS> 1,250,723
<CURRENT-LIABILITIES> 1,711,221
<BONDS> 260,994
42,794
0
<COMMON> 0
<OTHER-SE> (764,286)
<TOTAL-LIABILITY-AND-EQUITY> 1,250,723
<SALES> 2,730,350
<TOTAL-REVENUES> 2,730,350
<CGS> 2,251,493
<TOTAL-COSTS> 1,001,556
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,751
<INCOME-PRETAX> (357,585)
<INCOME-TAX> 0
<INCOME-CONTINUING> (357,585)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (357,585)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
