<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
-------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________________
Commission File Number 0-4395
- --------------------------------------------------------------------------------
COBB RESOURCES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Mexico 85-0206160
- ------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 East Jackson, West Columbia, Texas 77486
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(409) 345-5666
- --------------------------------------------------------------------------------
(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 of 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 XXX NO
--- ---
As of February 8, 1998, the Registrant had outstanding 8,534,257 shares
of common stock, par value $.10 per share.
Page 1 of 13
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COBB RESOURCES CORPORATION
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated Statements of Operations 3
- Consolidated Balance Sheets 5
- Consolidated Statements of Cash Flows 6
- Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
COBB RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Mining royalty income, net $ 77,000 $ 77,000
Interest and other income 4,000 10,000
---------- ----------
Total revenues 81,000 87,000
---------- ----------
Costs and expenses:
Property lease expenses 3,000 4,000
Depreciation, depletion and
amortization 16,000 10,000
General and administrative 19,000 42,000
---------- ----------
Total costs and expenses 38,000 56,000
---------- ----------
Net earnings from operations 43,000 31,000
Realized gain (loss) on marketable
equity securities 156,000 419,000
Gain on sale of building -- 27,000
---------- ----------
Net earnings (loss) $ 199,000 $ 477,000
========== ==========
Net earnings (loss) per common
share $ .02 $ .05
========== ==========
Weighted average number of
common share and common
share equivalents outstanding 8,534,257 8,534,257
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
COBB RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
Interest and other income $ 4,000 $ 9,000
----------- -----------
Total revenues 4,000 9,000
----------- -----------
Costs and expenses:
Property lease expenses 3,000 --
Depreciation, depletion and
amortization 8,000 6,000
General and administrative 12,000 20,000
----------- -----------
Total costs and expenses 23,000 26,000
----------- -----------
Net earnings from operations (19,000) (17,000)
Realized gain (loss) on marketable
equity securities 176,000 (40,000)
----------- -----------
Net earnings (loss) $ 157,000 $ (57,000)
=========== ===========
Net earnings (loss) per common
share $ .02 $ (.01)
=========== ===========
Weighted average number of
common share and common
share equivalents outstanding 8,534,257 8,534,257
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
COBB RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, JUNE 30,
------ 1997 1997
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 547,000 $ 447,000
Marketable equity securities 190,000 194,000
Accounts receivable 294,000 231,000
Note receivable 12,000 12,000
----------- -----------
Total current assets 1,043,000 884,000
----------- -----------
Property and equipment, at cost:
Equipment 34,000 34,000
Oil and gas properties 120,000 97,000
----------- -----------
154,000 131,000
Less accumulated depreciation,
depletion and amortization (59,000) (43,000)
----------- -----------
Net property and equipment 95,000 88,000
----------- -----------
Other mineral properties 5,000 5,000
----------- -----------
$ 1,143,000 $ 977,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes Payable $ 29,000 $ 34,000
Accounts payable 4,000 32,000
----------- -----------
Total current liabilities 33,000 66,000
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.10; -- --
authorized 5,000,000 shares;
none issued
Common Stock, par value $.10;
authorized 25,000,000 shares;
issued and outstanding
8,534,257 shares at December
31, 1997 and June 30, 1997 853,000 853,000
Additional paid-in capital 6,156,000 6,156,000
Accumulated deficit (5,893,000) (6,092,000)
Treasury stock, at cost (6,000) (6,000)
----------- -----------
Total stockholders' equity 1,110,000 911,000
----------- -----------
$ 1,143,000 $ 977,000
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
COBB RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 199,000 $ 477,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion
and amortization 16,000 10,000
Gain on sale of building -- (27,000)
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable (63,000) (52,000)
(Increase) decrease in marketable
equity securities 4,000 166,000
Increase (decrease) in
accounts payable (28,000) 1,000
---------- ----------
Net cash provided by (used
in) operating activities 128,000 575,000
---------- ----------
Cash flows from investing activities:
Additions of property and
equipment, net (13,000) (3,000)
Payment of note payable (5,000) (100,000)
Proceeds from sale of building -- 84,000
---------- ----------
Net cash provided by (used
in) investing activities (18,000) (19,000)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 100,000 556,000
Cash and cash equivalents at
beginning of period 447,000 49,000
---------- ----------
Cash and cash equivalents at
end of period $ 547,000 $ 605,000
========== ==========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
No cash was paid for interest or income taxes for the six months ended
December 31, 1997 and 1996.
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
COBB RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
For a summary of significant accounting principles, see Notes
to Consolidated Financial Statements and Note 1 thereof contained in the
unaudited Annual Report on Form 10-K of Cobb Resources Corporation (the
"Company) for the year ended June 30, 1997, which is incorporated herein by
reference. The Company follows the same accounting policies during interim
periods as it does for annual reporting purposes.
The accompanying consolidated financial statements are
condensed and unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). In the opinion of
management, the unaudited interim financial statements furnished reflect all
adjustments of a normal recurring nature which are necessary to a fair statement
of the results for the interim periods presented. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to SEC rules or regulations; however, the Company believes that
the disclosures made are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
unaudited financial statements and the notes thereto included in the Company's
unaudited Form 10-K for the year ended June 30, 1997.
(2) COPPER FLAT PROPERTY
Pursuant to an agreement with Hydro Resources Corporation, a
New Mexico corporation owned substantially by Mr. George O. Lotspeich, a former
President and a former director of the Company ("Hydro"), the Company sold the
Copper Flat property in July 1989 to Copper Flat Mining Company, Ltd., a
Colorado corporation ("CFMC"). Proceeds to the Company which were paid at
closing included the first year's annual minimum royalty of $150,000 and an
expense reimbursement of $25,000. The agreement with CFMC provides for
continuing minimum annual royalty payments of $150,000 until production begins.
Thereafter royalties are 2-1/2% Net Smelter Return ("NSR") until the earlier of
payout or five years and 5% NSR thereafter. NSR refers to gross proceeds from
sales of concentrates less transportation costs and penalties. After the initial
royalty payment to the Company of $150,000, the Company and Hydro were to each
receive 50% of all future payments, after reimbursement of expenses. In an
agreement entered into between the Company and Hydro dated April 5, 1991, Hydro
reconveyed a portion of its royalty and reversionary rights in the Copper Flat
property to the Company. As a result, the Company will receive 51% of all future
royalty payments after reimbursement of expenses, and Hydro will receive the
remaining 49% of each royalty payment. In the event the Copper Flat property
reverts under the agreement with CFMC, the Company and Hydro would receive a 51%
and a 49% interest, respectively, in the property.
Annual royalty payments from the Copper Flat property are due
and payable not later than September 30 of each year, although such payment may
be paid within a 60 day grace period following written notification and demand.
The payment for the current year's annual royalty was received by the Company
during October 1997.
7
<PAGE> 8
COBB RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On January 26, 1994, the Company and Hydro entered into an
agreement with Alta Gold Company, a Nevada Corporation, ("Alta") whereby the
royalty interests held by the Company and Hydro in the Copper Flat property
would be adjusted in order to make the development of the Copper Flat property
viable. In consideration of the foregoing, Alta agreed to provide the
Company/Hydro with 375,000 restricted shares of Alta stock within thirty days of
Alta's acquisition of the Copper Flat property. At any time within two years
from the date on which the stock is issued, Alta shall have the right to
repurchase 125,000 shares for $4.00 per share, upon giving the Company/Hydro
thirty days notice. The Company/Hydro will have the option, upon written demand
to Alta within thirty days after the second anniversary date of the stock
issuance, if the market price of the stock on the second anniversary is less
than $4.00 per share, to demand that Alta pay to the Company/Hydro the
difference between $4.00 per share and the market price per share on the second
anniversary date as multiplied by a maximum of 250,000 shares. Alta shall have
sixty days from the date of said demand to pay same.
On June 14, 1994 Alta acquired the Copper Flat property and
thereafter on June 22, 1994 Alta issued to the Company its pro rata 51% of the
375,000 shares of Alta common stock. At that date, the market price of the Alta
common stock as traded on NASDAQ was $1.25 per share. As a result of the
transaction, the Company reported a net gain of $239,000 reflecting the price of
$1.25 per share. The Company's interest in the Copper Flat property had been
previously written off as discontinued mining operations.
At various times during July and August 1996, the Company sold
all its holdings totaling 191,250 shares of common stock in Alta for combined
net proceeds of $674,173. In accordance with the agreement, Alta paid the
Company $55,781 in September 1996 which represented the difference between $4.00
per share and the market price per share on the second anniversary date of the
agreement.
As a result of the agreement, Alta will be obligated to pay
the Company/Hydro a 2-1/2% Net Smelter Return for as long as Alta operates the
Copper Flat property which amends the 5% Net Smelter Return as above. The annual
minimum royalty payment will be credited against future production royalties
after Alta acquires the Copper Flat property. If the Copper Flat property is not
in production at the end of said five year period, the annual minimum royalty
payment will no longer be credited against future production royalty. In no
event, however, will the production royalty due the Company/Hydro be less than
$150,000 per year.
The Company/Hydro also granted Alta a Right of First Refusal
on the royalty interest held. Alta will have sixty days from the date it is
notified to exercise its Right of First Refusal. The Right of First Refusal
granted will have a term of 10 years from the date Alta exercised its option to
purchase the Copper Flat property.
8
<PAGE> 9
COBB RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) OIL AND GAS PROPERTIES
The Company participated in the successful completion of two
gas wells located in the Permian Supai Formation on the crest of the St. John's
Anticline in Arizona. There were plans to drill five additional wells to
increase producibility for the industrial parks being developed to utilize the
carbon dioxide reserves. The land lease holdings exceed 40,000 acres covering
three known surface structures. The Company had a 5 percent working interest in
the Arizona project.
During March 1997, the Company exchanged its working interest
in the Arizona project for 115,385 shares of common stock of Arizona Resources
Industries, Inc., a Canadian company. During April 1997, the Company entered
into a stock purchase and voting agreement with Ridgeway Petroleum Corp., a
Canadian company, whereby the Company received 126,923 shares of unrestricted
common stock of Ridgeway Petroleum Corporation in exchange for the 115,385
shares of Arizona Resources Industries, Inc. During November and December 1997,
the Company sold its common stock holdings of Ridgeway Petroleum Corporation for
a net gain of $206,149.
(4) CAPITAL STOCK
The Company has reserved 500,000 shares of Common Stock under
an Incentive Stock Option Plan. The options granted thereunder are exercisable
within ten years from the date of grant. Upon the termination of employment of
any employee to whom an option has been granted and is outstanding, the option
may be exercised within 90 days after which the option will expire. Option
prices are at the quoted bid value at the date of the grant. On July 10, 1994
the Company granted Charles Cobb, IV, the President and Director, an option
under this Plan to purchase 250,000 shares of the Company's Common Stock at $.06
per share, the quoted bid price on the date of grant. The option is exercisable
on or before July 10, 2004.
In connection with an agreement with an individual to identify
potential oil and gas interests, the Company granted a stock option on April 30,
1994 for 250,000 shares of the Company's Common Stock at an exercise price of
$.10 per share. This option expired unexercised on May 1, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company's operations were funded primarily through
internally generated funds from operations and the sale of certain marketable
equity securities. Currently, the Company is placing renewed emphasis on its
minerals sector and selective oil and gas prospects. In the interim, management
intends to continue to hold fixed and administrative expenditures to low levels
which are consistent with the Company's balance sheet financial ratios and
anticipated income.
9
<PAGE> 10
COBB RESOURCES CORPORATION
Currently, the Company's primary source of operating income is
the royalty interest on its Copper Flat property in southern New Mexico and
proceeds from the sale of certain marketable equity securities. Since 1990 the
Copper Flat property has been held for possible development by Copper Flat
Mining Company, Ltd., a subsidiary of Gold Express Corporation ("Gold Express")
with the payment of annual delay rentals to the Company of $150,000 per year on
a gross basis. Such amounts are then divided on a 51/49% basis with Hydro
Resources Corporation. Annual royalty payments from the Copper Flat property are
due and payable not later than September 30 of each year, although such payment
may be paid within a 60 day grace period following written notification and
demand. The payment for the current year's annual royalty was received by the
Company during October 1997.
On January 26, 1994, the Company and Hydro entered into an
agreement with Alta Gold Company, a Nevada Corporation, ("Alta") whereby the
royalty interests held by the Company and Hydro in the Copper Flat property
would be adjusted in order to make the development of the Copper Flat property
viable. In consideration of the foregoing, Alta agreed to provide the
Company/Hydro with 375,000 restricted shares of Alta stock within thirty days of
Alta's acquisition of the Copper Flat property. At any time within two years
from the date on which the stock is issued, Alta shall have the right to
repurchase 125,000 shares for $4.00 per share, upon giving the Company/Hydro
thirty days notice. The Company/Hydro will have the option, upon written demand
to Alta within thirty days after the second anniversary date of the stock
issuance, if the market price of the stock on the second anniversary is less
than $4.00 per share, to demand that Alta pay to the Company/Hydro the
difference between $4.00 per share and the market price per share on the second
anniversary date as multiplied by a maximum of 250,000 shares. Alta shall have
60 days from the date of said demand to pay same.
On June 14, 1994 Alta acquired the Copper Flat property and
thereafter on June 22, 1994 Alta issued to the Company its pro rata 51% of the
375,000 shares of Alta common stock. At that date, the market price of the Alta
common stock as traded on NASDAQ was $1.25 per share. As a result of the
transaction, the Company reported a net gain of $239,000 reflecting the price of
$1.25 per share. The Company's interest in the Copper Flat property had been
previously written off as discontinued mining operations.
As a result of the agreement, Alta will be obligated to pay
the Company/Hydro a 2-1/2% Net Smelter Return for as long as Alta operates the
Copper Flat property which amends the 5% Net Smelter Return as above. The annual
minimum royalty payment will be credited against future production royalties
after Alta acquires the Copper Flat property. If the Copper Flat property is not
in production at the end of said five year period, the annual minimum royalty
payment will no longer be credited against future production royalty. In no
event, however, will the production royalty due the Company/Hydro be less than
$150,000 per year.
At various times during July and August 1996, the Company sold
all its holdings totaling 191,250 shares of common stock in Alta for combined
net proceeds of $674,173. In accordance with the agreement, Alta paid the
Company $55,781 in September 1996 which represented the difference between $4.00
per share and the market price per share on the second anniversary date of the
agreement.
10
<PAGE> 11
COBB RESOURCES CORPORATION
The Company/Hydro also granted Alta a Right of First Refusal
on the royalty interest held. Alta will have sixty days from the date it is
notified to exercise its Right of First Refusal. The Right of First Refusal
granted will have a term of 10 years from the date Alta exercised its option to
purchase the Copper Flat property.
In conjunction with its reorientation of its business
objectives, the Company terminated all cost for full-time employees and entered
into a contract for sale of its office building. The sale transaction was
completed in August 1996 with the Company receiving net proceeds of $83,778. The
Company anticipates that for the near term, the Company's operating expenditures
will continue to be strictly limited.
Cash and cash equivalents increased from $447,000 to $547,000,
a net increase of $100,000 for the six months ended December 31, 1997. Such
increase resulted from the gain on sale of certain marketable equity securities.
For the six months ended December 31, 1997 the Company provided $128,000 in cash
from operating activities compared to cash provided by operating activities of
$575,000 for the prior year six months. On a consolidated basis as of December
31, 1997 the Company had working capital of $1,010,000 compared to working
capital of $818,000 as of June 30, 1997.
At present, the Company plans to remain a public entity
operating principally in the minerals and oil and gas business. The Company
holds interests in several small oil and gas prospects and its royalty interest
in the Copper Flat property.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
The Company reported no mining royalty income for the current
and prior year quarter. The royalty income reflects the Company's proportionate
share of the annual minimum royalty payment related to the Copper Flat property.
For additional information concerning the Copper Flat property, see Notes to
Consolidated Financial Statements and Note 2 thereof. Interest and other income
decreased to none for the quarter ended December 31, 1997 compared to $1,000 for
the previous year quarter.
There were oil and gas property lease expenses of $3,000
during the current quarter compared to none for the prior year quarter.
Depreciation, depletion and amortization was $8,000 and $6,000 for each of the
respective quarters ended December 31, 1997 and 1996. General and administrative
expenses decreased to $12,000 for the quarter ended December 31, 1997 compared
to $20,000 for the prior year quarter. These expenses continue at relatively low
levels primarily as a result of management's efforts to impose strict
limitations on operating expenditures. General and administrative expenses for
the quarters ended December 31, 1997 and 1996 primarily included limited
administrative, legal, consulting and other professional services and general
expenses.
The Company realized a net gain on the sale of marketable
equity securities for the current quarter of $176,000 compared to a net loss of
$40,000 in the prior year quarter. Such current year gains resulted from the
11
<PAGE> 12
COBB RESOURCES CORPORATION
sale of the common stock of Ridgeway Petroleum Corporation.
Primarily reflecting the factors discussed above, the Company
reported net earnings of $157,000 for the quarter ended December 31, 1997
compared to a net loss of $57,000 for the prior year quarter.
COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
The Company reported mining royalty income for the current six
months and prior year comparable period of $77,000 and $77,000, respectively.
The royalty income reflects the Company's proportionate share of the annual
minimum royalty payment related to the Copper Flat property. For additional
information concerning the Copper Flat property, see Notes to Consolidated
Financial Statements and Note 2 thereof. Interest and other income decreased to
$4,000 for the six months ended December 31, 1997 compared to $10,000 for the
previous six month period.
There were oil and gas property lease expenses of $3,000
during the current six months compared to $4,000 for the prior year six month
period. Depreciation, depletion and amortization was $16,000 and $10,000 for
each of the respective six months periods ended December 31, 1997 and 1996.
General and administrative expenses decreased to $19,000 for the six months
ended December 31, 1997 compared to $42,000 for the prior year six month period.
These expenses continue at relatively low levels primarily as a result of
management's efforts to impose strict limitations on operating expenditures.
General and administrative expenses for the six months ended December 31, 1997
and 1996 primarily included limited administrative, legal, consulting and other
professional services and general expenses.
The Company realized net gains on the sale of marketable
equity securities for the current six months of $156,000 compared to net gains
of $419,000 in the prior year six month period. Such prior year gains resulted
from the sale of the common stock of Alta and the market price differential paid
by Alta. During the prior year six month period, the Company completed the sale
of its office building in Albuquerque, New Mexico which resulted in a net gain
on sale of $27,000.
Primarily reflecting the factors discussed above, the Company
reported net earnings of $199,000 for the six months ended December 31, 1997
compared to a net earnings of $477,000 for the prior year six month period.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COBB RESOURCES CORPORATION
Date: February 10, 1998 By: /S/ CHARLES COBB, IV
---------------------------- -------------------------------------
Charles Cobb, IV
President
Principal Financial Officer
13
<PAGE> 14
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 547,000
<SECURITIES> 190,000
<RECEIVABLES> 306,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,043,000
<PP&E> 154,000
<DEPRECIATION> 59,000
<TOTAL-ASSETS> 1,143,000
<CURRENT-LIABILITIES> 33,000
<BONDS> 0
0
0
<COMMON> 853,000
<OTHER-SE> 257,000
<TOTAL-LIABILITY-AND-EQUITY> 1,143,000
<SALES> 77,000
<TOTAL-REVENUES> 81,000
<CGS> 19,000
<TOTAL-COSTS> 38,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 199,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 199,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199,000
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
