<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
Commission File No. 0-28910
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
GENERAL CREDIT CORPORATION
(Exact name of small business issuer as specified in its charter)
New York 13-3895072
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
370 Lexington Avenue, Suite 2000
New York, New York 10017
(Address of principal executive offices)
(212) 697-4441
(Issuer's Telephone Number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of September 30, 1997, the Company had a total of 3,435,000 shares (the
"Shares") of Common Stock, par value $.001 per share (the "Common Stock")
outstanding.
Traditional Small Business Disclosure Format (check one) Yes [X] No [ ]
DOCUMENTS INCORPORATED BY REFERENCE
Certain Exhibits to the Parts I and II of this Report
Registration Statement
on Form SB-2, as amended
(File No. 333-0009831).
<PAGE> 2
GENERAL CREDIT CORPORATION
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART 1
<S> <C>
Item 1. Financial Statements.......................................................................... 1
Item 2. Management's Discussion and Analysis or Plan of Operation .................................... 1
PART II. .............................................................................................. 4
Item 1. Legal Proceedings............................................................................. 4
Item 2. Changes in Securities......................................................................... 4
Item 3. Defaults Upon Senior Securities............................................................... 5
Item 4. Submission of Matters to Vote of Security Holders............................................. 5
Item 5. Other Information............................................................................. 5
Item 6. Exhibits and Reports on Form 8-K.............................................................. 5
SIGNATURES................................................................................................... 6
FINANCIAL STATEMENTS.....................................................................................F-1 - F-8
</TABLE>
(ii)
<PAGE> 3
6
<PAGE> 4
PART I
ITEM 1. FINANCIAL STATEMENTS
The unaudited, condensed consolidated financial statements included
herein, commencing at page F-1, have been prepared in accordance with the
requirements of Regulation S-B and supplementary financial information included
herein, if any, has been prepared in accordance with Item 310(b) of Regulation
S-B and, therefore, omit or condense certain footnotes and other information
normally included in financial statements prepared in accordance with generally
accepted accounting principles. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of the financial information for the interim periods reported have been made.
The financial statements should be read in conjunction with the financial
statements and notes thereto, together with Management's Discussion and Analysis
of Financial Condition or Plan of Operation, contained in the Company's
Registration Statement on Form SB-2 (SEC File No. 333-09831) declared effective
by the Securities and Exchange Commission on April 25, 1997 and the Company's
Forms 10-QSB for the quarters ended March 31, 1997 and June 30, 1997. Results of
operations for the three months and nine months ended September 30, 1997 are not
necessarily indicative of the results for a full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
General Credit Corporation (the "Company") was organized in February
1995. From its inception through May 2, 1997, the Company's operations were
limited to administrative activities. On May 2, 1997, the Company acquired
substantially all of the assets of New York Payroll Factors, Inc. ("NYPF")
concurrently with the closing of the Company's initial public offering of
securities (the "IPO") and commenced operations. For approximately seven years,
NYPF had been engaged in providing working capital financing to its customers
through the discounted purchase of checks (commonly referred to as "Check
Factoring"). Since May 3, 1997 the Company has provided check factoring services
to its customers, generally on a non-recourse basis with respect to its
customers except to the extent of forged signatures on and stop payments of the
purchased checks. In September 1997 the Company commenced purchasing credit card
sales slips on a discounted non-recourse basis. To date, the purchase of credit
card sales slips ("Credit Card Sales Slips") has not been a material part of the
Company's business. Pursuant to the closing of the IPO, the Company received net
proceeds of approximately $7,200,000 in consideration for the issuance of
900,000 Units, each Unit consisting of three shares of the Company's Common
Stock, par value $.001 per share and six warrants, each warrant entitling the
holder thereof to purchase one share of Common Stock at any time and from time
to time through April 24, 2002 at an exercise price of $3.375 per share.
Pursuant to the closing of the acquisition of substantially all of the assets of
NYPF (the "NYPF Business Combination"), the Company delivered the remaining
balance to close the NYPF Business Combination of $4,275,000 and issued a total
of 125,000 shares of the Company's Common Stock to Gerald Nimberg, a former
affiliate of NYPF and currently the Company's
1
<PAGE> 5
President in consideration for the business assets of NYPF.
RESULTS OF OPERATIONS
Management of the Company does not believe that a discussion of the
Company's results for prior comparative year periods would be meaningful because
the Company's operations prior to the NYPF Business Combination were limited to
administrative activities. Further, information provided below for the nine
month periods ended September 30, 1997 reflects the Company's check factoring
operations only from May 3, 1997 through September 30, 1997 (the "Operational
Period") as well as the period from January 1, 1997 through May 2, 1997 when the
Company's operations were limited to administrative activities (the
"Administrative Period"). Comparative information for periods prior to January
1, 1997 contained in the Financial Statements, commencing at page F-1 reflect
the Company's operations when they were limited to administrative activities.
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997
For the three and nine month (consisting solely of operations during
the Operational Period) periods ended September 30, 1997 the Company derived fee
income of $945,435 and $1,489,576 from the purchase of checks and Credit Card
Sales Slips. The face amount of checks purchased during the three and nine month
(consisting solely of operations during the Operational Period) periods was
approximately $84 million and $133 million and the face amount of Credit Card
Sales Slips during the three and nine month periods was approximately $230,416
and $789,504.
General and administrative expenses, including, among other expenses,
amounts paid in respect of sales representatives, payroll and related expenses
and office overhead costs (including rent) during the three and nine month
periods ended September 30, 1997 was $798,938 and $1,178,884, respectively,
representing $1,129,364 of expenses incurred during the Operational Period.
During the three and nine month periods ended September 30, 1997, general and
administrative expenses constituted approximately 84.5% and 79.0% of fee income.
For the three and nine month periods ended September 30, 1997, interest
expense was $144,941 and $ 445,441 of which $258,925 was incurred during the
Operational Period.
For the three and nine month periods ended September 30, 1997 the
Company incurred a non-cash expense of $ 77,461 and $129,275 consisting of
primarily the amortization of the purchase price paid by the Company in
connection with the NYPF Business Combination, all of which was incurred during
the Operational Period.
Net loss for the three months ended September 30, 1997 was $75,905 or
$.02 per share and net loss for the nine month period ended September 30, 1997
was $264,024 or a loss of $.12 per share. For the Operational Period, the
Company generated a net loss of $27,425 or $.01 per share.
2
<PAGE> 6
Earnings before taxes, depreciation and amortization ("EBTDA") during
the Operational Period and for the three month period ended September 30, 1997
was approximately $100,723 ($.03 per share) and $1,556 ($.00 per share). EBTDA
is not presented as an alternative to operating results or cash flow from
operations as determined by generally accepted accounting principles ("GAAP"),
but rather to provide additional information related to the ability of the
Company to meet current trade obligations and debt service requirements. EBTDA
should not be considered in isolation from, or construed as having greater
importance than, GAAP operating income or cash flows from operations as a
measure of an entity's performance.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements generally increase proportionately
to the aggregate face amount of checks purchased, although more rapid collection
of purchased checks can mitigate the Company's cash needs.
The Company received the net proceeds from the IPO in May 1997. In
addition to the use of the net proceeds and proceeds received from operations,
the Company finances its operations principally through (i) short term working
capital loans in the aggregate amount of up to $850,000, which amounts are
typically repaid daily or every few days, provided by two unaffiliated entities,
and (ii) a long term working capital loan in the aggregate amount of
$1,400,000(the "Long Term Loan") provided by a general partnership (the
"Affiliated General Partnership"), in part owned by Gerald Schultz, the former
owner of NYPF and Ann Nimberg, the wife of Gerald Nimberg, the President of the
Company (collectively, the "Working Capital Loans"). Ann Nimberg has informed
the Company that she owns 1/7 of the Affiliated General Partnership. Pursuant to
the terms of the Long Term Loan, the Affiliated General Partnership has
established a credit facility in favor of the Company in the aggregate principal
amount of $1.4 million. The Company has the right to borrow from the Affiliated
General Partnership an amount based upon funds derived from the purchase of
checks by the Company. Borrowings under the Long Term Loan bear interest at the
rate of 24% per annum. Interest only is payable monthly by the Company under the
Long Term Loan on the outstanding principal amount borrowed. All accrued but
unpaid interest as well as the principal amount owed under the Long Term Loan is
due in June 1999. The Long Term Loan may be prepaid by the Company provided the
Company pays to the Affiliated General Partnership at the time of such
prepayment an additional amount as a prepayment premium equal to the sum of
$168,000. As of September 30, 1997, the outstanding amount owed pursuant to the
Working Capital Loans is $1,400,000, all of which is owed pursuant to the Long
Term Loan.
The Company is currently seeking additional debt or equity financing to
fund expansion of the Company's business. There can be no assurances that
additional financing will be available on terms favorable to the Company, or at
all. If adequate funds are not available or are not available on acceptable
terms, the Company may not be able to fund growth, take advantage of certain
acquisition opportunities or respond to competitive pressures.
As of September 30, 1997 the Company had available cash and cash
equivalents of $4,030,642.
3
<PAGE> 7
Effects of Inflation
The Company believes that the results of its operations could be
materially impacted by inflation, including increases in interest rates
generally, if inflation materially adversely affected the operations of the
Company's customers and their customers, and if inflation materially increased
the Company's costs of obtaining working capital (e.g., if the Company entered
into larger lines of credit in lieu of its maintaining some of the current bank
deposits against which it negotiates checks purchased by it).
Forward Looking Information May Prove Inaccurate
This Quarterly Report on Form 10-QSB 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 the Company. When used in this document, the word "anticipate,"
"believe," "estimate," and "expect" and similar expressions, as they relate to
the Company, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions,
including those described in this Quarterly Report on Form 10-QSB and the
Company's Registration Statement on Form SB-2 (SEC File No. 333-09831) declared
effective by the Securities and Exchange Commission on April 25, 1997. 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 or expected. The Company
does not intend to update these forward-looking statements.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to, nor is it aware of any pending
litigation to which it is a party or of which its property is subject.
ITEM 2. CHANGES IN SECURITIES
In July 1997, the Company granted to an entity contractually obligated
to perform for the Company public relations services, the option to acquire
50,000 shares of the Company's Common Stock during the period commencing January
9, 1998 and ending July 7, 1999 at a purchase price of $1.50 per share (the
"July Stock Option"). The Company additionally granted to the holder of the July
Stock Option, a one-time demand right to register the shares of Common Stock
underlying the July Stock Option, exercisable if the "bid" price of the
Company's Common Stock per share as reported on Nasdaq for a period of five
consecutive trading days is in excess of $3.75. The Company relied upon the
exemption in Section 4(2) of the Securities Act of 1933 in connection with the
issuance of the July Stock Option.
4
<PAGE> 8
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
During the third quarter ended September 30, 1997, no matters were
submitted to a vote of security holders of the Company, through the solicitation
of proxies or otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
Current Report on Form 8-KA dated May 2, 1997 regarding the
NYPF Business Combination.
Current Report on Form 8-K dated September 5 , 1997 regarding
the dismissal of Coopers & Lybrand, L.L.P.
Current Report on Form 8-K dated September 30, 1997 regarding
the acquisition of Ace Ventures, Inc.
5
<PAGE> 9
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GENERAL CREDIT CORPORATION
Date: November 13, 1997 By: /s/ Irwin Zellermaier
-----------------------
Irwin Zellermaier,
Chief Executive Officer
Date: November 13, 1997 By: /s/ David Bader
----------------
David Bader,
Principal Financial and
Accounting Officer
6
<PAGE> 10
FINANCIAL STATEMENTS
F-1
<PAGE> 11
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 4,030,642 $ 650
Accounts receivable 514,223 -
Prepaid expenses 110,388 -
----------- -----------
Total current assets 4,655,253 650
Office equipment - net of accumulated
depreciation 78,355 -
Intangible assets - net of accumu-
lated amortization 5,189,822 -
Other assets 33,651 4,762
----------- -----------
Total assets $ 9,957,081 $ 5,412
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current maturities of long-term
debt $ 894,425 $ 518,000
Accounts payable and accrued
expenses 293,482 270,845
----------- -----------
Total current liabilities 1,187,907 788,845
----------- -----------
Long-term debt 1,735,575 -
----------- -----------
Shareholders' equity (deficiency):
Common shares, $.001 par value,
20,000,000 shares authorized,
3,435,000 shares and 1,758,000
shares issued and outstanding,
respectively 3,435 1,758
Additional paid-in capital 7,707,093 11,176
Deficit (676,929) (412,905)
Deferred offering costs - (383,462)
----------- -----------
Total shareholders' equity
(deficiency) 7,033,599 (783,433)
----------- -----------
Total liabilities and Shareholders'
equity (deficiency) $ 9,957,081 $ 5,412
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
F-2
<PAGE> 12
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- -------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Fee income - net $ 1,489,576 $ - $ 945,435 $ -
----------- ----------- ----------- -----------
Expenses:
General and administrative 1,178,884 50,798 798,938 17,855
Depreciation and amortization 129,275 37,000 77,461 13,011
Interest expense 445,441 33,827 144,941 10,827
----------- ----------- ----------- -----------
1,753,600 121,625 1,021,340 41,693
----------- ----------- ----------- -----------
Net loss $ (264,024) $ (121,625) $ (75,905) $ (41,693)
=========== =========== =========== ===========
Net loss per common share $(.12) $(.06) $(.02) $(.02)
===== ===== ===== =====
Weighted average number of
common shares outstanding 2,150,201 1,890,000 3,435,000 1,890,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of
the financial statements.
F-3
<PAGE> 13
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
------------ -------------
Cash flows from operating activities:
Net loss $ (264,024) $ (121,625)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and amortization 129,275 37,000
Change in assets and liabilities, net of
effects of acquisition of businesses
Accounts receivable (514,223) -
Prepaid expenses (110,388) -
Other assets (30,158) (5,412)
Accounts payable and
accrued expenses (77,363) 23,140
----------- -----------
Net cash used in operating
activities (866,881) (66,897)
----------- -----------
Cash flows from investing activities:
Purchase of office equipment (30,808) --
Payment for purchase of business (4,500,000) --
Deposit on acquisition -- (150,000)
----------- -----------
Net cash used in investing
activities (4,530,808) (150,000)
----------- -----------
Cash flows from financing activities:
Borrowings under long-term debt 2,250,000 -
Borrowings under bridge financing 366,390 423,000
Repayments of bridge financing (884,390) -
Proceeds from issuance of stock options - 10,980
Proceeds from issuance of common stock 8,254,150 -
Payment on common stock redemption (1,198) -
Deferred debt costs - (36,000)
Deferred offering costs (557,271) (162,134)
Loans from (repayments to)
officer and shareholder - (7,150)
----------- -----------
Net cash provided by
financing activities 9,427,681 228,696
----------- -----------
Net increase in cash
and cash equivalents 4,029,992 11,799
Cash and cash equivalents, beginning of
period 650 2,483
----------- -----------
Cash and cash equivalents, end of
period $ 4,030,642 $ 14,282
=========== ===========
The accompanying notes are an integral part of
the financial statements.
F-4
<PAGE> 14
The accompanying notes are an integral part of
the financial statements.
F-4
<PAGE> 15
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Supplemental schedule of noncash investing and financing activities:
The following table sets forth by period the amounts paid for the
acquisitions of New York Payroll Factors, Inc. and Ace Venture, Inc.
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
----------- -----
Office equipment acquired $ 52,684 $ -
Intangible assets acquired 5,312,691 -
Common stock issued (385,375) -
Notes issued 380,000 -
Accrued expenses 100,000 -
---------- -----
Cash paid $(4,500,000) $ -
========== =====
The accompanying notes are an integral part of
the financial statements.
F-5
<PAGE> 16
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - OPERATIONS
General Credit Corporation, (the "Company"), was incorporated in February,
1995, for the purpose of seeking out business opportunities, including
acquisitions (see Note 4).
NOTE 2 - BASIS OF PRESENTATION
The unaudited, condensed consolidated financial statements included herein,
commencing at page F-1, have been prepared in accordance with the requirements
of Regulation S-B and supplementary financial information included herein, if
any, has been prepared in accordance with Item 310(b) of Regulation S-B and,
therefore, omit or condense certain footnotes and other information normally
included in financial statements prepared in accordance with generally accepted
accounting principles. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
financial information for the interim periods reported have been made. The
financial statements should be read in conjunction with the financial statements
and notes thereto, together with Management's Discussion and Analysis of
Financial Condition or Plan of Operation, contained in the Company's
Registration Statement on Form SB-2 (SEC File No. 333-09831) declared effective
by the Securities and Exchange Commission on April 25, 1997 and the quarterly
reports on Form 10-QSB for the quarters ended March 31, 1997 and June 30, 1997.
Results of operations for the nine months and three months ended September 30,
1997 are not necessarily indicative of the results for a full year.
NOTE 3 - PUBLIC OFFERING
In May 1997, the Company sold, in its initial public offering of securities
(the "Offering"), 900,000 units at $10.00 per unit. Each unit consisted of three
shares of common stock and six redeemable common stock purchase warrants (the
"Warrants"). Each Warrant entitles the holder to purchase one additional share
of common stock at an exercise price of $3.375 through April 24, 2002. The
Warrants are redeemable by the Company, at the option of the Company, at $.25
per Warrant upon 30 days prior written notice, if the closing bid price as
reported on Nasdaq, or the closing price, as reported on a national or regional
securities exchange, as applicable, of the shares of common stock for 30
consecutive trading days ending within ten days of the notice of redemption of
the Warrants averages in excess of $6.00 per share. Prior to April 25, 1998, the
Warrants are not redeemable by the Company without the written consent of Barron
Chase Securities, Inc., the representative of the several underwriters of the
Company's initial public offering.
F-6
<PAGE> 17
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - PUBLIC OFFERING (CONT'D)
In connection with the Offering, the Company granted to the underwriter an
option to purchase up to 90,000 units at an exercise price of $16.50 per unit,
exercisable during a five-year period commencing on April 25, 1997.
The net proceeds to the Company, after deducting all expenses of the
Offering, was approximately $7,200,000.
NOTE 4 - ACQUISITIONS
On February 19, 1996, the Company entered into a definitive agreement to
acquire the business of New York Payroll Factors, Inc. ("NYPF") in exchange for
$3,145,000 in cash, 375,500 shares of the Company's common stock and a $300,000
note payable due in 42 equal monthly installments at an interest rate of 10.5%
per annum. During 1996, the Company made non-refundable payments of $200,000
towards the total purchase price. As stipulated under the original acquisition
agreement, if the acquisition did not close by November 15, 1996, the Company
would forfeit its deposit. Accordingly, as the acquisition did not close by
November 15, 1996 the deposit of $200,000 was expensed to operations during
fiscal 1996. On January 13, 1997, the Company and NYPF modified the terms of the
original agreement. The new terms required the Company to pay $4,500,000 in cash
and 125,000 shares of common stock (the "Acquisition Shares"). In February 1997,
the Company delivered a non-refundable deposit of $225,000 towards the purchase
price. The Company closed the acquisition of the business of NYPF and delivered
to NYPF the remaining balance of $4,275,000 and the Acquisition Shares on May 2,
1997 (the acquisition date).
On September 30, 1997 the Company acquired Ace Venture, Inc. ("Ace") for
$480,000 ($100,000 in cash which was paid in October 1997 and $380,000 in notes;
payable over six years with interest at 10% per annum). Prior to the Company=s
acquisition of Ace, Ace was engaged as an exclusive commissioned agent by the
Company.
The following unaudited pro forma results of operations assume the
acquisitions occurred as of January 1, 1996 and were recorded under the purchase
method of accounting. The acquisitions would result in the recording of
identifiable intangibles ($582,500) and goodwill ($4,730,191) which is being
amortized over a five-year and twenty-year period, respectively.
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
------------- -----------
Net revenue $ 2,577,291 $ 2,002,160
Net income 391,097 306,030
Earnings per share .11 .12
F-7
<PAGE> 18
GENERAL CREDIT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - NEWLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No.
128"), which establishes standards for computing and presenting earnings per
share. SFAS No. 128 will be effective for financial statements issued for
periods ending after December 15, 1997. Earlier application is not permitted.
Management has determined that the effects of this change on the Company's
financial statements will not be material.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"), which requires that changes in comprehensive income be shown in a
financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 will be effective in fiscal 1998. Management
has determined that the effects of this change on the Company's financial
statements will not be material.
F-8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,030,642
<SECURITIES> 0
<RECEIVABLES> 514,223
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,655,253
<PP&E> 68,492
<DEPRECIATION> 5,137
<TOTAL-ASSETS> 9,957,081
<CURRENT-LIABILITIES> 1,187,907
<BONDS> 0
0
0
<COMMON> 3,435
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,957,081
<SALES> 1,489,576
<TOTAL-REVENUES> 1,489,576
<CGS> 0
<TOTAL-COSTS> 1,308,159
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 445,441
<INCOME-PRETAX> 264,024
<INCOME-TAX> 0
<INCOME-CONTINUING> 264,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 264,024
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
