SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
(X) Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (fee required) or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (no fee required)
For the fiscal year ended December 31, 1996 Commission File Number 0-1607
----------------- ------
MID-STATE RACEWAY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York State 15-0555258
- ------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
VERNON, NEW YORK 13476
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (315) 829-2201
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK $.10 PAR VALUE PER SHARE
-------------------------------------
(Title of Class)
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 and (2) has been subject to the filing
requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent files pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. YES X NO
--- ---
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of a specified date within 60 days prior to the date of
filing.
Class Outstanding at February 26, 1997
COMMON STOCK $.10 PAR VALUE 250,386 SHARES
- --------------------------- --------------
DOCUMENTS INCORPORATED BY REFERENCE
Part(s) where
incorporated
-------------
Proxy Statement of the registrant to be filed April 30, 1997 III
The total number of pages in this report is 24.
1
<PAGE>
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT - 1996
MID-STATE RACEWAY, INC.
<TABLE>
<CAPTION>
Part I Page
----
<S> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 3
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters . . . . . . . . . . . . . . . . . . . 4
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 5-6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . .7-8
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . 9-20
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . 21
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . 22
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 22
Item 12. Security Ownership of Certain Beneficial Owners and Management . . 22
Item 13. Certain Relationships and Related Transactions . . . . . . . . . 22
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . 22-24
</TABLE>
2
<PAGE>
PART I
Item 1. Business.
- -----------------
(a) Mid-State Raceway, Inc., known as Vernon Downs in Vernon, New York, is
licensed under and subject to the regulations of the Pari-Mutuel Revenue Law and
supervision of the New York Racing and Wagering Board to conduct harness racing
at its track and to simulcast racing from other tracks.
(b) The company is engaged in one business segment.
(c) Generally, Mid-State Raceway is not in competition with other harness racing
tracks in New York State for patrons. A thoroughbred race track, which conducts
a day-time racing meet is located about 110 miles from Vernon, New York, and
competes to some extent for the Vernon Downs customers primarily on weekend
dates.
Increased off-track wagering on thoroughbred and harness racing due to a live
television signal being sent into OTB shops in Central New York, the New York
State Lottery and the Oneida Indian Nation's Turning Stone Casino, approximately
7 miles away in Verona, New York, were the principal causes to affect Vernon's
on-track daily averages of handle and attendance.
Competition for good horses with the resultant attractive racing programs, has
increased in recent years, particularly from the metropolitan New York - New
Jersey area. However, entries in Vernon Downs' early closing and stake events
continue at prior years' levels in both the number and quality of horses.
The Company employed 207 persons during the fiscal year.
Item 2. Properties
- -------------------
The Racing Plant is located in Vernon, Oneida County, New York. Since the
opening of the plant and related facilities in 1953, the Company has maintained
a policy of continuously improving and modernizing its facilities. In the period
ended December 31, 1996, approximately $379,000 was expended for equipment and
renovations to the plant.
The plant can accommodate approximately 14,000 patrons, which includes seating
for 2,000 in the Grandstand and 1,700 in the Clubhouse. There are parking
facilities for approximately 5,900 automobiles.
The track is a 3/4 mile oval stone dust track with a 1/4 mile chute. The track
is illuminated by a metal-halide and quartz lighting system. Most races are for
a distance of one mile. The stables accommodate approximately 1,000 horses and
are located adjacent to three exercise tracks and the main track.
Item 3. Legal Proceedings.
- ---------------------------
The Company is a defendant in an action claiming damages in connection with an
injury claim. No estimate can yet be made of the potential for liability or
damages or the likely outcome of the litigation.
Item 4. Submission of Matters to a Vote of Securities Holders.
- --------------------------------------------------------------
There are no matters that were submitted during the quarter requiring a vote of
securities holders, therefore, this item is not applicable.
3
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
--------------------------------------------------------------------
Matters.
-------
(a) Price Range of Stock
The following table shows the range of closing bid prices for the
Common Stock in the over-the-counter market for the calendar quarters
indicated. The prices are based upon local quotes only, as the stock is
not listed or reported by NASDAQ.
Bid Prices
----------------------------------------
Year Ended 9 Months Ended
December 31, 1996 December 31, 1995
Low - High Low - High
----------------- -----------------
Quarter Ended March 31 $5.00 - 10.00
Quarter Ended June 30 5.00 - 11.00 8.50 - 22.00
Quarter Ended September 30 5.75 - 15.39 15.00 - 18.50
Quarter Ended December 31 1.50 - 9.30 7.75 - 22.00
(b) Approximate Number of Equity Security Holders
Title of Class Number of Record Holders
-------------- ------------------------
Common stock, $.10 539
par value per share
(c) Dividends
There were no dividends paid during the year ended December 31, 1996,
or the nine months ended December 31, 1995.
There are no restrictions on the payment of dividends on the Company's
Common Stock. Future payment of dividends will be within the discretion
of the Company's Board of Directors and will depend on earnings,
capital requirements and the operating and financial condition of the
Company.
4
<PAGE>
Item 6. Selected Financial Data
- -------------------------------
<TABLE>
<CAPTION>
Year Ended 9 Months Ended Years Ended March 31,
December 31, December 31, ----------------------------------------
1996 1995 1995 1994 1993
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Number of racing days 115 122 155 137 146
Operating revenues:
Pari-mutuel commissions and breakage $7,050,079 $7,121,567 $7,415,272 $7,174,657 $7,741,035
----------- ---------- ---------- ---------- ----------
Less payments to New York State 297,001 291,317 543,773 609,281 602,663
Breeders' Fund 238,859 271,316 267,838 234,553 266,416
Purses 188,888 223,586 320,981 363,010 418,211
----------- ---------- ---------- ---------- ----------
724,748 786,219 1,132,592 1,206,844 1,287,290
----------- ---------- ---------- ---------- ----------
Net pari-mutuel commissions and breakage 6,325,331 6,335,348 6,282,680 5,967,813 6,453,745
Admissions 92,655 123,522 240,667 251,313 232,956
Concessions and other revenues 311,094 679,410 1,134,225 982,459 846,758
----------- ---------- ---------- ---------- ----------
Total operating revenues 6,729,080 7,138,280 7,657,572 7,201,585 7,533,459
----------- ---------- ---------- ---------- ----------
Operating expenses:
Purses 2,259,038 2,378,086 2,583,262 2,239,368 2,366,657
Other 5,880,547 5,223,229 5,980,559 5,781,239 5,520,993
----------- ---------- ---------- ---------- ----------
Total operating expenses 8,139,585 7,601,315 8,563,821 8,020,607 7,887,650
----------- ---------- ---------- ---------- ----------
Loss from operations (1,410,505) (463,035) (906,249) (819,022) (354,191)
----------- ---------- ---------- ---------- ----------
Other income:
Commissions for capital improvements 146,224 140,985 192,488 199,735 205,256
Investment income 6,367 31,434 30,380 107,216 140,006
----------- ---------- ---------- ---------- ----------
Total other income 152,591 172,419 222,868 306,951 345,262
----------- ---------- ---------- ---------- ----------
Income (loss) before taxes on income (1,257,914) (290,616) (683,381) (512,071) (8,929)
Provision (credit) for taxes on income 103,524 18,163 (11,770) (199,871) (19,690)
----------- ---------- ---------- ---------- ----------
Income (loss) before cumulative effect (1,361,438) (308,779) (671,611) (312,200) 10,761
Cumulative effect (100,000)
----------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) ($1,361,438) ($308,779) ($671,611) ($412,200) $10,761
=========== ========== ========== ========== ==========
Per share of common stock:
Income (loss) before cumulative effect* ($5.44) ($1.23) ($2.68) ($1.25) $0.04
Net income (loss)* ($5.44) ($1.23) ($2.68) ($1.65) $0.04
Cash dividends $0.00 $0.00 $0.00 $0.20 $0.65
Shareholders' equity $4.82 $10.26 $11.47 $14.17 $16.02
</TABLE>
* Based on weighted average shares outstanding
5
<PAGE>
Item 6. Selected Financial Data (Continued)
- --------------------------------------------
<TABLE>
<CAPTION>
Year Ended 9 Months Ended Years Ended March 31,
December 31, December 31, -----------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION
Number of racing days 115 122 155 137 146
Current assets $ 694,165 $1,228,020 $1,582,667 $1,808,156 $2,562,208
Marketable securities -- due
after one year 89,100 270,770 248,722 651,341 561,098
Net property, plant and equipment 2,066,520 1,933,496 2,018,003 2,125,328 1,776,458
Other assets 454,062 576,462 572,942 577,618 590,432
---------- ---------- ---------- ---------- ----------
$3,303,847 $4,008,748 $4,422,334 $5,162,443 $5,490,196
========== ========== ========== ========== ==========
Current liabilities $1,186,621 $ 508,558 $ 520,195 $ 582,391 $ 390,031
Non-current liabilities 908,011 929,731 1,030,857 1,031,304 1,089,140
Shareholders' equity 1,209,215 2,570,459 2,871,282 3,548,748 4,011,025
---------- --------- ---------- ---------- ----------
$3,303,847 $4,008,748 $4,422,334 $5,162,443 $5,490,196
========== ========== ========== ========== ==========
</TABLE>
6
<PAGE>
Item 7. Management's Discussion and Analysis
- --------------------------------------------
Results of Operations
- ---------------------
Fiscal Year Ended December 31, 1996 as Compared to Nine Months Ended
- --------------------------------------------------------------------
December 31, 1995
- -----------------
During the fiscal year ended December 31, 1996, operating a revenues decreased
by $409,200, as compared with the nine month period ended December 31, 1995. A
portion of the reduced operating revenues are due to seven fewer live racing
days during the current season, offset by increases in revenues derived from
off-track wagering on Vernon Downs races at both OTB's and at other race tracks.
Net corporate sponsorship of racing events decreased $235,984 from the previous
racing season.
The Comfort Suites hotel, located on the Raceway's property, continues to
benefit the Company's operations. The Raceway operates a mutuel operation in the
hotel, which provided in excess of $7 million in total wagers during 1996.
The current year operating expenses increased $538,270 compared to the nine
month period ended December 31, 1995. The principal cause for the increase was
that the current year included a full 12 month period, whereas the previous nine
month transitional period eliminated three months of fixed expenses.
The Company's simulcast operations continued to expand, offering a variety of
racing from over fifty different harness and thoroughbred tracks from around the
country and internationally during the year ended December 31, 1996. While the
simulcast operation operates at a profitable margin, the revenues are not
sufficient to cover the losses experienced through live racing.
With declining handles generating fewer revenues, track management has focused
on the reduction of operating expenses through a variety of measures. Several
live racing dates were removed from the fall schedule, and fewer live dates are
planned for the 1997 season. We have eliminated all of our outside stakes races
for the 1997 season, including the prestigious Founders Gold Cup trot and the
Thomas P. Gaines pace.
The Company has downsized significant numbers of employees in several
departments, and negotiated concessions in wages, health care benefits,
vacations and retirement benefits with unions representing our employees. A
resolution was passed by the Company's Board of Directors to discontinue
compensation to directors, and all officers of the Corporation have taken
significant salary reductions. We are continuing to work with the Raceway's
suppliers and vendors, to accommodate payment schedules and express our need for
additional cost cutting measures.
The New York State Department of Environmental Conservation issuance of an order
and consent, requiring the Raceway to construct a sewer line between the track
property and the Village of Vernon's sewer system, (at a cost in excess of
$300,000), and the defeat of the proposed casino legislation in the New York
State Senate's have necessitated further financial assistance. We are attempting
to sell non-operational properties owned by the Raceway, and have submitted a
proposal to the Oneida County Department of Economic Development seeking
financial assistance. Additionally we have contacted other local and state
representatives, attempting to obtain economic developmental relief, and have
appealed for a deferral of local and school taxes on real property.
We are currently continuing to explore our options for raising operating
capital.
7
<PAGE>
Item 7. Management's Discussion and Analysis (Continued)
- --------------------------------------------------------
Statistical Comparison:
- -----------------------
12 Months Ended December 31, 1996 vs. 12 Months Ended December 31, 1995
- -----------------------------------------------------------------------
Twelve Months Ended
December 31,
-------------------------------- INCREASE
1996 1995 (DECREASE)
-------------- --------------- ----------
GROSS HANDLE:
Live Harness $10,793,627 $14,128,540 ($3,334,913)
OTB & ITW 17,643,366 11,731,203 5,912,163
Thoroughbred Simulcast 6,046,861 6,688,883 (642,022)
Harness Simulcast 9,841,602 12,376,358 (2,534,756)
DAILY AVERAGE:
Live Harness Handle $93,858 $115,807 ($21,949)
OTB & ITW Handle 153,421 96,157 57,264
Attendance 1,742 1,685 57
LIVE RACING DAYS 115 122 (7)
9 Months Ended December 31, 1995 as Compared to Year Ended March 31, 1995
- -------------------------------------------------------------------------
During the nine month period ended December 31, 1995, operating revenues
decreased by $519,292, compared with the fiscal year ended March 31, 1995. The
reduced operating revenues were the effect of the Company's change in year end,
resulting in a nine month transitional period. A portion of the decrease is due
to 33 less live racing days during the transitional period, offset by
significant increases in revenues, due to full-card simulcasting of both in
state and out of state harness and thoroughbred racing, over the entire
transitional period. Net corporate sponsorship of racing events decreased
$193,820 from the previous racing season, and are expected to diminish
significantly in the 1996 season.
Operating expenses decreased by $962,506 compared to the fiscal year ended March
31, 1995. The principal causes for the decrease were the reduction 33 days of
racing coupled with the shorter transitional period which eliminated three
months of fixed expenses.
The Omnibus Racing bill, originally passed in July, 1994, continued to generate
positive increases in the Company's simulcast operations. The bill, which lifted
several of the restrictions on receiving simulcast race signals and wagering on
out of state races, allowed Vernon Downs to offer a variety of harness and
thoroughbred races from more than thirty tracks around the country.
The Company continues to concentrate on the reduction of operating expenses.
Efforts such as the elimination of live race dates which have historically
proven to be unprofitable and the closing of the track's Grandstand during the
fall and winter, significantly reduced the related expenses. Negotiations with
collective bargaining units have produced concessions to both payroll and other
operational expenses.
Liquidity and Capital Resources
- -------------------------------
In 1997, the funding of financing activities and capital requirements for
Mid-State Raceway's business will be substantially sourced by cash from
operations, although the Company's financial condition may require alternative
sources for cash requirements. The Company's current ratio at December 31, 1996
was approximately one to two.
8
<PAGE>
[LOGO] Urbach Kahn & Werlin PC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Mid-State Raceway, Inc.
We have audited the accompanying balance sheets of Mid-State Raceway, Inc. as of
December 31, 1996 and 1995, and the related statements of operations, changes in
shareholders' equity, and cash flows for the year ended December 31, 1996 and
the nine months ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
statements of Mid-State Raceway, Inc. as of March 31, 1995, were audited by
other auditors whose report dated May 12, 1995, expressed an unqualified opinion
on those statements, and noted that as described in the notes to the financial
statements, the Company changed its accounting for investments in certain
securities in 1995.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the December 31, 1996 and 1995 financial statements referred to
above present fairly, in all material respects, the financial position of
Mid-State Raceway, Inc. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the year ended December 31, 1996 and the nine
months ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ URBACH KAHN & WERLIN PC
Albany, New York
February 26, 1997
66 State Street, Albany, NY 12207-2595 (518)449-3166 FAX (518)449-5832
9
<PAGE>
<TABLE>
<CAPTION>
MID-STATE RACEWAY, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS 1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 236,541 $ 551,567
Cash restricted for purses and uncashed winning tickets 190,542 141,629
Investments 14,075 8,775
Accounts receivable, net of allowance for doubtful accounts of
$30,000 in 1996 and $0 in 1995 201,541 333,073
Prepaid insurance, taxes and other expenses 49,111 171,293
Refundable income taxes 2,355 21,683
----------- -----------
Total current assets 694,165 1,228,020
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land, racing plant and equipment 12,538,616 12,159,787
Other properties 121,672 121,672
----------- -----------
12,660,288 12,281,459
Less accumulated depreciation 10,593,768 10,347,963
----------- -----------
2,066,520 1,933,496
----------- -----------
OTHER ASSETS
Investments 89,100 270,770
Cash restricted for future stake events purses 15,770
Deferred income taxes 325,902 426,032
Other assets 128,160 134,660
----------- -----------
543,162 847,232
----------- -----------
$ 3,303,847 $ 4,008,748
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 888,514 $ 259,364
Current portion of deferred retirement benefits 107,565 107,565
Uncashed winning tickets 87,332 58,229
Early closing and stake events purse funds 103,210 83,400
----------- -----------
Total current liabilities 1,186,621 508,558
----------- -----------
DEFERRED RETIREMENT BENEFITS 908,011 913,961
----------- -----------
FUTURE STAKE EVENTS PURSE FUNDS -- 15,770
----------- -----------
SHAREHOLDERS' EQUITY
Common stock, par value $.10 per share;
authorized 10,000,000 shares;
issued and outstanding 250,386 shares 25,039 25,039
Additional paid-in capital 225,347 225,347
Retained earnings 956,534 2,317,972
Unrealized gain on investments 2,295 2,101
----------- -----------
Total shareholders' equity 1,209,215 2,570,459
----------- -----------
$ 3,303,847 $ 4,008,748
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
<TABLE>
<CAPTION>
MID-STATE RACEWAY, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996,
NINE MONTHS ENDED DECEMBER 31, 1995 AND
YEAR ENDED MARCH 31, 1995
For the For the Nine For the
Year Ended Months Ended Year Ended
December 31, 1996 December 31, 1995 March 31, 1995
(115 Racing Days) (122 Racing Days) (155 Racing Days)
----------------- ----------------- -----------------
<S> <C> <C> <C>
Operating revenues
Net pari-mutuel commissions and breakage
from wagering
Vernon Downs Harness $1,840,413 $2,201,200 $3,014,863
Off-track betting 1,468,103 1,109,876 1,468,874
Simulcasting 3,016,815 3,024,272 1,798,943
---------- ----------- ----------
6,325,331 6,335,348 6,282,680
Admissions 92,655 123,522 240,667
Concessions 142,721 223,782 456,715
Corporate sponsors 18,224 354,208 548,028
Other revenues 150,149 101,420 129,482
---------- ----------- ----------
Total operating revenues 6,729,080 7,138,280 7,657,572
---------- ----------- ----------
Operating expenses
Purses 2,259,038 2,378,086 2,583,262
Payroll 1,588,250 1,467,316 1,897,334
Taxes, other than income 357,590 287,151 394,347
Outside services and rentals 562,175 518,764 672,252
Utilities 330,620 248,441 403,292
Simulcasting expenses 1,350,902 1,260,726 788,405
Depreciation 245,805 180,478 254,794
Bad debts 33,769
Other expenses 1,411,431 1,260,353 1,570,135
---------- ----------- ----------
Total operating expenses 8,139,585 7,601,315 8,563,821
---------- ----------- ----------
Loss from operations (1,410,505) (463,035) (906,249)
---------- ----------- ----------
Other income
Commissions for capital improvements 146,224 140,985 192,488
Investment income 6,367 31,434 30,380
---------- ----------- ----------
Total other income 152,591 172,419 222,868
---------- ----------- ----------
Loss before provision (credit) for federal and
state income taxes (1,257,914) (290,616) (683,381)
---------- ----------- ----------
Provision (credit) for federal and state
income taxes
Currently payable 3,524 1,838 2,676
Deferred 100,000 16,325 (14,446)
----------- ---------- ----------
103,524 18,163 (11,770)
----------- ---------- ----------
Net loss $(1,361,438) $ (308,779) $ (671,611)
=========== ========== ==========
Loss per common share $ (5.44) $ (1.23) $ (2.38)
=========== ========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
<TABLE>
<CAPTION>
MID-STATE RACEWAY, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1996,
NINE MONTHS ENDED DECEMBER 31, 1995 AND
YEAR ENDED MARCH 31, 1995
Common Stock
Issued and
Outstanding Additional Unrealized Gain
----------------- Paid-In Retained (Loss) on
Shares Amount Capital Earnings Investments Total
------ ------ ---------- -------- ---------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balances at March 31, 1994 250,386 $250,386 $3,298,362 $3,548,748
Unrealized loss on investments
upon adoption of SFAS
No. 115 on April 1, 1994 (see Note 1) ($3,468) (3,468)
Net loss for the year (671,611) (671,611)
Increase in unrealized loss on
investments (2,387) (2,387)
Effect of change in common
stock par value to $.10 per
share from $1.00 per share (225,347) $225,347
------- -------- -------- ---------- ------- ----------
Balances at March 31, 1995 250,386 25,039 225,347 2,626,751 (5,855) 2,871,282
Net loss for the nine months (308,779) (308,779)
Change in unrealized gain
(loss) on investments 7,956 7,956
------- -------- -------- ---------- ------- ----------
Balances at December 31, 1995 250,386 25,039 225,347 2,317,972 2,101 2,570,459
Net loss for the year (1,361,438) (1,361,438)
Change in unrealized gain
(loss) on investments 194 194
------- -------- -------- ---------- ------- ----------
Balances at December 31, 1996 250,386 $ 25,039 $225,347 $ 956,534 $2,295 $1,209,215
======= ======== ======== ========== ======= ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
MID-STATE RACEWAY, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996,
NINE MONTHS ENDED DECEMBER 31, 1995 AND
YEAR ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
For the For the Nine For the
Year Ended Months Ended Year Ended
December 31, 1996 December 31, 1995 March 31, 1995
(115 Racing Days) (122 Racing Days) (155 Racing Days)
----------------- ----------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,361,438) $(308,779) $ (671,611)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 245,805 180,478 254,794
Net amortization/accretion of investments 4,705 697 1,826
Deferred income taxes 100,000 16,325 (14,446)
Allowance for doubtful accounts 30,000
Changes in:
Restricted cash (33,143) 83,494 34,880
Accounts receivable 101,532 (187,592) (23,421)
Prepaid expenses 122,182 (8,954) 5,155
Other assets 6,500 (9,379) 23,026
Accounts payable 629,150 10,230 (31,672)
Purse funds 4,040 (141,723) (34,880)
Uncashed winning tickets 29,103 58,229 --
Refundable income taxes 19,328 (2,355) 93,313
Deferred retirement benefits (5,950) (39,499) 3,909
----------- --------- ----------
Net cash used in operating activities (108,186) (348,828) (359,127)
----------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of held-to-maturity
investment securities -- -- 1,249,715
Proceeds from maturities and sales of available-
for-sale investment securities 456,989 556,000 --
Purchase of available-for-sale investment
securities (285,000) (179,295) (449,642)
Purchase of properties and equipment (378,829) (95,972) (147,469)
----------- --------- ----------
Net cash (used in) provided by
investing activities (206,840) 280,733 652,604
----------- --------- ----------
Net increase (decrease) in cash and cash equivalents (315,026) (68,095) 293,477
Cash at beginning of year 551,567 619,662 326,185
----------- --------- ----------
Cash at end of year $ 236,541 $ 551,567 $ 619,662
=========== ========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid (received) during the year for:
Income taxes $ (13,824) $ 2,274 $ (92,000)
=========== ========= ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
NATURE OF OPERATIONS:
Mid-State Raceway, Inc. (the "Company"), known as Vernon Downs,
operates a harness racing track in Vernon, New York. The Company
is licensed by the New York Racing and Wagering Board to conduct
harness racing at its track and to simulcast racing from other
tracks.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
CHANGE IN FISCAL YEAR:
In 1995 the Company changed its fiscal year end to December 31
from March 31. Consequently, the statements of operations, changes
in shareholders' equity, and cash flows for the period ended
December 31, 1995 present the activities for nine months.
INVESTMENT SECURITIES:
Effective April 1, 1994, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 115, Accounting for
Certain Investments in Debt and Equity Securities. As required by
this pronouncement, the Company has classified its investments in
securities as held-to-maturity or available-for-sale.
Held-to-maturity securities are those for which the Company has
the positive intent and ability to hold to maturity, and are
reported at cost, adjusted for amortization of premiums and
accretion of discounts. Securities not classified as
held-to-maturity are classified as available-for-sale and reported
at fair value, with net unrealized gains and losses reflected as a
separate component of shareholders' equity, net of the applicable
income tax effect. None of the Company's investment securities
have been classified as trading securities. The effect of this
change in accounting as of April 1, 1994 was to decrease
investment securities by $5,780 and shareholders' equity by
$3,468, net of deferred taxes of $2,312.
PROPERTY, PLAN AND EQUIPMENT:
Property, plant and equipment are carried at cost less accumulated
depreciation computed by the straight-line and accelerated
methods.
The estimated useful life of the various classes of assets on
which current provisions were based are as follows:
Land improvements 5 to 20 years
Buildings and improvements 10 to 40 years
Other structures 15 to 31 1/2 years
Equipment 3 to 20 years
14
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, CONTINUED
RETIREMENT PLANS:
The Company sponsors a number of retirement plans that cover
substantially all employees. One group of union employees are
covered under an industry-wide union pension plan. The other group
of union employees are covered under a defined contribution
individual account retirement severance plan which is funded
currently. The total contribution under both plans for the year
ended December 31, 1996, the nine months ended December 31, 1995
and the year ended March 31, 1995 was $35,996, $44,080, and
$66,726, respectively.
The remaining employees are covered by a defined contribution
currently funded individual account retirement plan or an unfunded
deferred compensation plan. The total expense charged to
operations for these plans amounted to $113,615, $51,925, and
$125,325 for the year ended December 31, 1996, the nine months
ended December 31, 1995 and the year ended March 31, 1995,
respectively. The deferred compensation plan's projected benefit
obligation approximates the accrued liability. The defined
contribution currently funded individual account retirement plan
was terminated by the Company, effective December 31, 1996.
LOSS PER COMMON SHARE:
Loss per share of common stock has been calculated based on the
weighted average shares outstanding during each year. The weighted
average number of common shares outstanding was 250,386 during the
year ended December 31, 1996, the nine months ended December 31,
1995 and the year ended March 31, 1995.
ADVERTISING:
The Company follows the policy of charging the costs of
advertising to expenses as incurred. Advertising expense was
$269,953, $359,464 and $352,816 for the year ended December 31,
1996, the nine months ended December 31, 1995 and the year ended
March 31, 1995, respectively.
INCOME TAXES:
The Company recognizes deferred income taxes for the tax
consequences in future years of differences between the tax bases
of assets and liabilities and their financial reporting amounts at
each year-end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to
be realized. Income tax expense is the tax payable for the period
and the change during the period in deferred tax assets and
liabilities.
REVENUE RECOGNITION:
The Company recognizes revenue for commissions from wagering,
corporate sponsors, admissions, and commissions for capital
improvements when the related racing event is run. Investment
income is recognized on the accrual basis.
15
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, CONTINUED
PAR VALUE OF COMMON STOCK:
The Company decreased its common stock par value from $1.00
at March 31, 1994 to $.10 per share at March 31, 1995. The
Company also increased shares authorized from 612,000 at
March 31, 1994 to 10,000,000 shares at March 31, 1995.
RECLASSIFICATIONS:
Certain balances in prior year financial statements have been
reclassified for comparative purposes.
NOTE 2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
DECEMBER 31, DECEMBER 31,
1996 1995
---- ----
Land, racing plant, and equipment
Land $ 77,802 $ 77,802
Land improvements 1,257,909 929,931
Buildings and improvements 5,682,906 5,682,906
Race plant structures 1,258,915 1,235,065
Equipment 4,249,438 4,219,946
Construction in progress 11,646 14,137
------------ ------------
12,538,616 12,159,787
Other properties
Land 121,672 121,672
------------ ------------
Total properties 12,660,288 12,281,459
Less accumulated depreciation 10,593,768 10,347,963
------------ ------------
$ 2,066,520 $ 1,933,496
------------ ------------
16
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 INCOME TAXES
Net deferred tax assets in the accompanying balance sheets have
been provided for the temporary differences between the tax bases
of assets and liabilities and their financial reporting amounts.
The temporary differences that give rise to a significant portion
of the deferred tax liability and deferred tax asset and their
approximate tax effects are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,1996 DECEMBER 31, 1995
-------------------------- -----------------------------
TEMPORARY TAX TEMPORARY TAX
DIFFERENCE EFFECT DIFFERENCE EFFECT
---------- ------ ---------- ------
<S> <C> <C> <C> <C>
Deferred compensation $1,015,000 $ 378,502 $1,022,000 $380,008
Net operating loss carryforwards 2,400,000 816,000 1,255,000 427,000
Other (44,500) (16,700) (50,615) (18,976)
---------- ---------- ---------- --------
3,370,500 1,177,802 2,226,385 788,032
Less valuation allowance -- (851,900) -- (362,000)
---------- ---------- ---------- --------
$3,370,500 $ 325,902 $2,226,385 $426,032
========== ========== ========== ========
</TABLE>
The Company owns certain assets whose market values are
significantly greater than their book values. The Company has not
recorded a valuation allowance against certain of its deferred tax
assets on the basis of its available tax planning strategies,
including the potential for sale of the above noted assets at
gains significant enough to enable realization of certain tax
benefits.
The net operating loss carry forward will expire at various dates
from December 31, 2009, through December 31, 2011.
A reconciliation of the provision (credit) for income taxes to the
statutory amount is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE MONTHS FOR THE YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31, ENDED MARCH 31,
1996 1995 1995
------------------ ------------------- ---------------
AMOUNT % AMOUNT % AMOUNT %
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income tax ($438,000) (34.0) ($99,000) (34.0) ($232,000) (34.0)
Variances from statutory rate
Add state income tax,
net of federal tax benefit 3,524 0.3 4,193 1.4 4,800 0.7
Increase in valuation allowance 489,900 38.0 139,000 47.8 223,000 32.7
Prior year's tax 24,000 1.9 (13,430) (4.6) 7,000 1.0
Less reduction for
Tax exempt income (4,000) (0.6)
Other 24,100 1.8 (12,600) (4.4) (10,570) (1.5)
-------- --- ------- --- -------- ----
Effective tax (credit) $103,524 8.0 $18,163 6.2 ($11,770) (1.7)
======== === ======= === ======== ====
</TABLE>
17
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4. MARKETABLE SECURITIES
As discussed more fully in Note 1, the Company adopted SFAS No.
115, Accounting for Certain Investments in Debt and Equity
Securities effective April 1, 1994.
The amortized cost, gross unrealized gains, gross unrealized
losses, and market values for current marketable securities and
marketable securities maturing in greater than one year are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------------------------------- -------------------------------------------
GROSS UNREALIZED GROSS UNREALIZED
AMORTIZED ---------------- AMORTIZED ----------------
COST GAIN LOSS MARKET COST GAIN LOSS MARKET
--------- ---- ----- ------ --------- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities Available-for-Sale
Municipal bonds $90,421 $ -- $1,321 $ 89,100 $272,115 $ 237 $1,582 $270,770
Other 8,929 5,146 -- 14,075 3,929 4,846 -- 8,775
------- ------ ------ -------- -------- ------ ------ --------
Total Available-
for-Sale $99,350 $5,146 $1,321 $103,175 $276,044 $5,083 $1,582 $279,545
======= ====== ====== ======== ======== ====== ====== ========
</TABLE>
The carrying value and estimated market value of investment
securities at December 31, 1996 by contractual maturity are shown
below:
AVAILABLE FOR SALE
----------------------------
ESTIMATED
CARRYING MARKET
VALUE VALUE
-------- --------
Due in one year or less $ 8,929 $ 14,075
Due in one through five years 90,421 89,100
-------- --------
$ 99,350 $103,175
======== ========
Market value equals quoted market price, if available. If a quoted
market price is not available, market value is estimated using
quoted market prices for similar securities.
NOTE 5. LEASES
The Company leases certain equipment for use during each racing
season including an agreement for pari-mutuel totalisator
equipment and services.
The total rent expense for the year ended December 31, 1996, the
nine months ended December 31, 1995, and the year ended March 31,
1995 amounted to $654,780, $566,786, and $604,127 of which
$415,178, $311,038, and $259,751 was paid on the totalisator
contract for the respective years.
The current totalisator lease agreement expires on May 31, 2000.
Under the agreement, rents charged for the equipment and services
are dependent upon the number of live racing meets held and the
number of tracks simulcasted. Future rental charges are dependent
upon future live racing and simulcast events.
18
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 6. COMMISSION FOR CAPITAL IMPROVEMENTS
On July 26, 1983, legislation was passed permitting Upstate New
York harness tracks to apply for an increase of 1% of on-track
regular and multiple bet pools and 1/2 of 1% from OTB regular and
multiple bet pools. Under the law and subject to the approval of
the New York State Racing and Wagering Board, these additional
funds must be used exclusively for capital improvements. The
Company elected to increase such commissions effective September
14, 1983. Expenditures for the related capital improvements
through December 31, 1996 under this program have exceed total
commissions received by approximately $571,000, and are
effectively reimbursable in future years if sufficient commissions
are generated.
NOTE 7. INVESTMENT INCOME
Investment income consisted of the following for the year ended
December 31, 1996, the nine months ended December 31, 1995 and the
year ended March 31, 1995:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1996 1995 1995
------------ ------------ ---------
<S> <C> <C> <C>
Interest and dividends $12,867 $22,054 $53,407
Equity in earnings (loss) of
Syracuse Mile, Inc. (an
insignificant subsidiary) (6,500) 9,380 (23,027)
------ ------- -------
$6,367 $31,434 $30,380
====== ======= =======
</TABLE>
NOTE 8. CORPORATE SPONSORS
During the year ended December 31, 1996, the nine months ended
December 31, 1995 and the year ended March 31, 1995, the Company
received a total of $18,234, $382,000, and $634,400 (before
expenses), respectively, for corporate sponsorship of races.
Various companies affiliated with the Company's former majority
shareholder purchased an aggregate of $148,000, and $76,500
(before expenses) of these sponsorships in the nine months ended
December 31, 1995 and the year ended March 31, 1995, respectively.
There were no purchases in 1996.
NOTE 9. HOTEL LEASE
During fiscal year 1994, the Company, as lessor, entered into a
lease agreement with a partnership that includes the Company's
majority shareholder. The Company has leased, for an initial
period of twenty years, a certain portion of their property for
the purpose of permitting the partnership to construct, own, and
operate a hotel. Anytime during the lease or any renewal period
of the lease, the Company may elect to assume all of the lessee's
duties, obligations, rights and responsibilities under the lease.
Lease payments during the initial twenty year period are $10,000
per year. Construction of the hotel by the partnership
19
<PAGE>
MID-STATE RACEWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9. HOTEL LEASE (CONTINUED)
was completed in October 1994. The Company also operates
pari-mutuel wagering on the hotel premises. Net pari-mutuel
commissions and breakage from wagering on these premises
approximated $1,203,000 for the year ended December 31, 1996
($1,597,000 for the nine months ended December 31, 1995 and
$263,000 for the year ended March 31, 1995).
NOTE 10. CONTINGENCIES
The Company is a defendant in an action claiming damages in
connection with an injury claim. No estimate can yet be made of
the potential for liability or damages, or the likely outcome of
the litigation.
NOTE 11. FINANCIAL CONDITION
The Company sustained a significant operating loss in the year
ended December 31, 1996, and working capital has significantly
decreased during this period.
Management has developed the following plans to deal with the
Company's deteriorating financial condition, and actions necessary
to support operations for at least the next 12 months:
o Decrease operating expenses through a reduction of live
racing days, eliminating outside stake races from the 1997
season, downsizing a number of employees in several
departments and negotiating concessions in wages, health
care benefits, vacations and retirement benefits with
unions and non-union employees.
o Explore options for raising operating capital, including
the sale of property not used in operations, and applying
for economic developmental relief funds.
o Increase marketing of concerts, fairs and festivals to
promote Vernon Downs as a family and young adult
entertainment center.
20
<PAGE>
Item 9. Changes in Registrant's Certifying Accountant.
- ------------------------------------------------------
On April 17, 1996, Coopers & Lybrand, LLP, the firm of accountants previously
engaged to audit Registrant's financial statements, resigned. The resignation
was unilateral and was first communicated orally without explanation. The
resignation was confirmed in a letter of the same date received by facsimile and
regular mail. The resignation was not requested or prompted by Registrant.
The day after the resignation, it was publicly announced that Richard C.
Breeden, a partner with the firm of Coopers & Lybrand, LLP, was a candidate for
appointment as trustee in a Chapter 11 bankruptcy proceeding involving Bennett
Funding Group, Inc. and two related companies, all owned by Patrick Bennett and
members of his family. Patrick Bennett was, at the time, owner with his wife of
54 percent of the outstanding common stock of Registrant.
Coopers & Lybrand, LLP's reports on Registrant's financial statements for the
past two years contained no adverse opinion or disclaimer of opinion, nor were
they qualified or modified for any reason.
During Registrant's two most recent fiscal years and the subsequent interim
period up to the date of the resignation there were no disagreements with
Coopers & Lybrand of the character described in paragraph (a)(1)(iv) nor any
reportable events of the character described in paragraph (a)(i)(v) of
Regulation ss.229.304, Item 304, except as follows: Coopers & Lybrand, LLP
advised Registrant of the need to expand significantly the scope of its audit
for the reason discussed in Item 5 of Form 8-K dated April 8, 1996, and due to
Coopers & Lybrand, LLP's resignation, such expanded work was not completed.
The Board of Directors ratified Urbach Kahn & Werlin PC, Certified Public
Accountants as independent auditors for the period ended December 31, 1995 at
the Board of Directors meeting on May 23, 1996, subject to the receipt of a
letter of engagement. On May 29, 1996 such letter of engagement was received and
the services of Urbach Kahn & Werlin PC, Certified Public Accountants were
retained.
An accountant's opinion letter from Coopers & Lybrand, LLP as of March 31, 1995
and for the year then ended does not accompany this filing. There is a
continuing dispute with Coopers & Lybrand, LLP. The Registrant does not
anticipate a resolution of this matter which would result in Coopers & Lybrand,
LLP re-issuing its opinion letter from March 31, 1995.
21
<PAGE>
PART III
- --------
The information required by Items 10, 11, and 12 relating to directors and
executive officers of Mid-State Raceway, Inc. is incorporated by reference to
pages 2 through 9 of the Company's definitive Proxy Statement dated April 30,
1997.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The information required by Item 13 is incorporated by reference to Notes 8 and
9 of the financial statements included in this Form 10-K.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- ------------------------------------------------------------------------
(a) 1. Financial Statements Page
-------------------- ----
Included in Part II, Item 8 of this report
Independent Auditors' Report 9
Balance Sheets, December 31, 1996 and 1995 10
Statements of Operations,
Years Ended December 31, 1996, and March 31, 1995 and
Nine Months Ended March 31, 1995 11
Statements of Changes in Shareholders' Equity,
Years Ended December 31, 1996, and March 31, 1995 and
Nine Months Ended March 31, 1995 12
Statements of Cash Flows,
Years Ended December 31, 1996, and March 31, 1995 and
Nine Months Ended March 31, 1995 13
Notes to Financial Statements 14 - 20
2. Financial Statement Schedules
-----------------------------
Schedules have been omitted because they are not required, not
applicable, or the required information is shown in the financial
statements or notes thereto.
(b) Reports on Form 8-K
-------------------
None were filed for the quarter ended December 31, 1996.
22
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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 in the Village of Vernon,
State of New York, on the 21st day of March __, 1997.
---- ---------
MID-STATE RACEWAY, INC.
by /S/ FRANK O. WHITE, JR.
-------------------------------------
Frank O. White, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ FRANK O. WHITE, JR. President, Chief Executive 03/21/97
- ------------------------------ Officer and Director
Frank O. White, Jr.
/s/ JAMES J. MORAN Vice President, 03/21/97
- ------------------------------ Secretary and Director
James J. Moran
/s/ THOMAS P. HEGEMAN Treasurer - (Principal 03/21/97
- ------------------------------ Financial and Accounting Officer)
Thomas P. Hegeman
/s/ DAVID H. BROWN Assistant to the 03/21/97
- ------------------------------ President and Director
David H. Brown
/s/ DOUGLAS BURCH Director 03/21/97
- ------------------------------
Douglas Burch
/s/ CARL J. EILENBERG Director 03/21/97
- ------------------------------
Carl J. Eilenberg
/s/ ROBERT W. JAQUINT Director 03/21/97
- ------------------------------
Robert W. Jaquint
/s/ JEREMIAH C. LAW Director 03/21/97
- ------------------------------
Jeremiah C. Law
/s/ ROBERT V. McSWEENEY Director 03/21/97
- ------------------------------
Robert V. McSweeney
/s/ JAMES E. RAYMONDA Director 03/21/97
- ------------------------------
James E. Raymonda
23
<PAGE>
SIGNATURES (continued)
----------
Signature Title Date
- --------- ----- ----
/s/ DAVID SLYMAN, SR. Director 03/21/97
- ------------------------------
David Slyman, Sr.
/s/ FRANK O. WHITE Director 03/21/97
- ------------------------------
Frank O. White
/s/ JEROME M. WILSON Director 03/21/97
- ------------------------------
Jerome M. Wilson
24
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 427,083
<SECURITIES> 14,075
<RECEIVABLES> 231,541
<ALLOWANCES> 30,000
<INVENTORY> 0
<CURRENT-ASSETS> 694,165
<PP&E> 12,660,288
<DEPRECIATION> 10,593,768
<TOTAL-ASSETS> 3,303,847
<CURRENT-LIABILITIES> 1,186,621
<BONDS> 0
<COMMON> 25,039
0
0
<OTHER-SE> 1,184,176
<TOTAL-LIABILITY-AND-EQUITY> 3,303,847
<SALES> 0
<TOTAL-REVENUES> 6,881,671
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,139,585
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,257,914)
<INCOME-TAX> 103,524
<INCOME-CONTINUING> (1,361,438)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,361,438)
<EPS-PRIMARY> (5.44)
<EPS-DILUTED> (5.44)
</TABLE>
