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, 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 August 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)
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
Current assets
Cash $ 190,401 $ 361,113
Marketable securities available for sale 100,378 78,641
Commissions receivable 63,568 127,136
Note receivable - related party 173,237 167,194
Prepaid lease - 12,649
Interest receivable 8,989 6,487
---------- ----------
Total current assets 536,573 753,220
---------- ----------
Property and equipment
Automobiles 58,415 90,417
Equipment 58,734 58,734
Furniture and fixtures 22,133 22,133
---------- ----------
139,282 171,284
Less: accumulated depreciation (71,115) (80,941)
---------- ----------
Net property and equipment 68,167 90,343
---------- ----------
Other Assets
Investment in real estate - 107,584
Net deferred tax asset 195,560 195,560
Deposits and other assets 31,866 37,860
---------- ----------
Total other assets 227,426 341,004
---------- ----------
Total Assets $ 832,166 $1,184,567
========== ==========
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
Current liabilities
Accounts payable $ 156,948 $ 120,074
Commissions payable 63,568 127,136
Short-term borrowings - 20,471
Accrued liabilities 380,329 318,348
Income taxes payable 256,641 256,641
Preferred dividends payable 38,026 34,868
Current portion of long-term debt 473,001 517,765
---------- ----------
Total current liabilities 1,368,513 1,395,303
---------- ----------
Long-term debt, net of current portion 397,321 405,071
---------- ----------
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 12,386 (6,150)
Accumulated deficit (8,565,770) (8,355,454)
---------- ----------
Total stockholders' deficit (1,173,682) (960,359)
---------- ----------
Total liabilities and stockholders' deficit $ 832,166 $1,184,567
========== ==========
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Commission revenue $ 998, 825 $1,191,400 $ 1,723,085 $2,262,172
Commission expense 860,844 1,044,424 1,453,273 1,946,224
Gross profit 137,981 146,976 269,812 315,948
General and administrative
expense 327,369 349,142 553,408 708,136
---------- ----------- ----------- ----------
Loss from operations (189,388) (202,166) (283,596) (392,188)
Other Income (Expense)
Interest income 56,210 58,850 113,583 114,590
Interest expense (10,459) (23,187) (23,117) (25,354)
---------- ----------- ----------- ----------
Loss before income taxes (143,637) (166,503) (193,130) (302,952)
Income tax provision - 4,022 - 8,022
---------- ----------- ----------- ----------
Loss before minority interest (143,637) (170,525) (193,140) (310,974)
Minority interest, preferred
dividend of subsidiary 8,592 12,032 17,186 24,064
---------- ----------- ----------- ----------
Net Loss $ (152,229) $ (182,557) $ (210,316) $ (335,038)
========== =========== =========== ==========
Net Loss Per Common Share $ (0.04) $ (0.04) $ (0.05) $ (0.08)
========== =========== =========== ==========
Weighted average number of
common shares outstanding 4,279,449 4,241,482 4,279,449 4,248,383
========== =========== =========== ==========
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
AMERICAN FINANCIAL HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Increase (Decrease) in Cash
For the Six Months
Ended June 30,
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (210,316) $ (335,038)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 6,557 17,992
Write off of stockholders' notes
receivable 225,988 210,369
Interest accrued on shareholders'
notes receivable (108,367) (28,636)
Changes in current assets and liabilities 112,325 51,364
Other (14,794) (9,420)
---------- ----------
Net cash provided by (used in) operating
activities 11,393 (93,369)
---------- ----------
Cash flows from investing activities
Increase in stockholders' notes receivable (117,621) (159,064)
Purchase of equipment - (204)
Purchase of real estate held for investment - (113,389)
Proceeds from sale of real estate 109,800 -
Purchase of marketable securities (249,141) -
Proceeds from sale of marketable securities 275,655 67,526
---------- ----------
Net cash provided by (used in) investing
activities 18,693 (205,131)
---------- ----------
Cash flows from financing activities
Proceeds from sale of common stock - 53,416
Principal payments on short-term borrowings
and long-term debt (60,689) (37,802)
Redemption of and dividends paid to
minority interest (118,566) (16,501)
Other (21,543) -
---------- ----------
Net cash provided by (used in) financing
activities (200,798) (887)
---------- ----------
Net decrease in cash (170,712) (299,387)
Cash at beginning of period 361,113 988,904
---------- ----------
Cash at end of period $ 190,401 $ 689,517
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 23,117 $ 4,705
========== ==========
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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 INVESTMENT 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 $8,565,770 through June
30, 1997, and has working capital deficiency of $831,940 and a capital
deficiency of $1,173,682 as of june 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. If successful in obtaining
sufficient financing, management desires to acquire small insurance
companies with profitable operations and growth potential. 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
to the Company, conditioned on Management's ability to close a purchase of
an insurance company. The Company has not identified an acquisition target
nor have any commitments been made to acquire an insurance company. The
first phase of the potential financing agreement would be in the amount of
$1,000,000, and if successful, the second and third phases thereof would be
in larger amounts. 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 liabilities.
NOTE 5-NOTE RECEIVABLE RELATED PARTY
During the year ended December 31, 1996, Mr. Raymond Punta purchased a
condiminium 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.
The balance of the note receivable, including interest, was approximately
$173,000 as of June 30, 1997. 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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 six months
ended June 30, 1997 and 1996, the Company suffered net losses applicable
to common stockholderrs of $210,316 and $335,038, respectively, and, as of
June 30, 1997, had an accululated deficit of $8,565,770. At June 30, 1997,
the Company had a stockholders' deficit of $1,173,682. 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 substantial 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 half 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 proposes to undertake an organization restructuring
which management believes will enhance the ability of the Company to obtain
equity of from $1 million to $5 million to fund the activation of its
reinsurance subsidiary and expansion of marketing which, together with
proceeds from the financing, shoudl enable the Company to continue. Prio
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 were 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 June 30, 1997, AF Reinsurance had accounts receivable from Triad and
AFH of $764,000. 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 $764,000 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 intends to file the required reports and pay the
required fees and penalties during the third quarter of 1997; however, without
additional investment of admitted assets into AF Reinsurance, the Company does
not expect that its certificate of authority will be reinstated.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements of $170,712 for the first half 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 six months ended June 30, 1997, the Company experienced positive cash flow
from operating activities of $11,000 compared with negative cash flow from
operating activities of $93,000 in the same period of 1996. The increased cash
flow from 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 provided cash of $18,000 during the first half of 1997
as compared to the use of $205,000 in 1996. The largest components of the
Company's investing activities in 1997 consisted of $118,000 loaned to
shareholders which was offset by the proceeds from the sale of real estate in
the amount of $109,800.
During the first half of 1997, the Company's financing activities used
cash of $201,000, consisting principally of $119,000 used to redeem and pay
dividends on Triad Preferred Stock and $61,000 for principal payments on
short- and long-term borrowings.
At June 30, 1997, the Company had notes and open accounts receivable of
$3,314,000 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 $2,445,000 of the notes receivable in each period as
compensation expense to certain officers and directors. Of this amount,
$226,000 and $210,000 was expensed in the six months ended June 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 six months ended June 30, 1997 and 1996, the Company recognized
$108,000 and $29,000 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 believes that the remaining capitalization of AF Reinsurance
may not be sufficient for the subsidiary to begin operations. 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 $1,369,000 current liabilities were past due at June
30, 1997, to pay ongoing operating losses, and to provide funds for additional
marketing by Income Builders.
By activating 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 June 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
nnual principal payments of $42,500 due annually, commencing September 30, 1996.
The Company expects to continue to utilize proceeds from these surplus
debentures, which form a portion of the surplus of AF Reinsurance, to pay the
principal portion of the amount due in the future.
The Company has issued a promissory note aggregating $340,000 at December
31, 1996, bearing interest at 8% (12% after default) and due five days after
demand, but in any event, by March 31, 1997. This note is currently in default,
but the Company does not expect that collection efforts will be commenced 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 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. 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 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.
American Financial Holding, Inc., is considering the possible separation of
its Triad reinsurance activities, Income Builders, and currently inactive
American Financial Marketing from the holding company parent, as discussed
above. 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
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 for the six months ended June 30, 1997 decreased
$539,000, or 23.8%, to $1,723,000 from $2,262,000 during 1996. 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 declined $493,000, or 25.3%, to $1,453,000 in the first six
months of 1997 as compared to $1,946,000 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 $269,000 in the first six months of 1997, or 15.6% of
commission revenue, is a decline from the $316,000 in gross profit in 1996,
equivalent to 14.0% of commission revenue. 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 decreased $155,000 or 21.9%, to
$553,000 in the first quarter of 1997 as compared to $708,000 in 1996. The 1997
decrease is offset by the recognition of an expense of $226,000 in 1997 compared
to $210,000 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) remained the same in
1997 at $90,000 as compared to $89,000 in 1996. The principal component of other
income (expense) in both years ($108,000 in 1997 and $28,000 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 $110,000 or 36.3%, to $193,000 in the first six months of 1997 as
compared to $303,000 in 1996. After income tax provision and minority interest
preferred stock dividend, the net loss applicable to common stockholders
decreased $125,000 or 37.3% to $210,000 in the first six months of 1997, or a
loss of $0.05 per share on a weighted average of 4,279,000 shares issued and
outstanding, as compared to $335,000 in 1996, or a loss of $0.08 on a weighted
average of 4,248,383 shares outstanding.
The net loss applicable to common stockholders decreased $30,000 or 16.5%
to $152,000 for the three months ended June 30, 1997 or a loss of $0.04 per
share as compared to $182,000 or a loss of $0.04 per share during the three
months ended June 30, 1996. The decrease in the loss was due to lower general
and administrative expenses offset by a lower gross profit on sales. These
changes were caused by the same factors as discussed above with regard to
the six months ended June 30, 1997.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None
(b) Reports on Form 8-K
During the quarter ended June 30, 1997, the Company did not
file any reports on Form 8-K.
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: August 15, 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 June 30, 1997, and statements of operations for the six months ended
June 30, 1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 109,401
<SECURITIES> 100,378
<RECEIVABLES> 245,794
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 536,573
<PP&E> 139,282
<DEPRECIATION> 71,115
<TOTAL-ASSETS> 832,166
<CURRENT-LIABILITIES> 1,368,513
<BONDS> 637,335
0
0
<COMMON> 42,794
<OTHER-SE> (1,216,476)
<TOTAL-LIABILITY-AND-EQUITY> 832,166
<SALES> 1,723,085
<TOTAL-REVENUES> 1,723,085
<CGS> 1,453,273
<TOTAL-COSTS> 553,408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,117
<INCOME-PRETAX> (193,130)
<INCOME-TAX> 0
<INCOME-CONTINUING> (193,130)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193,130)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
