FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: June 30, 1995
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: 0-8358
Micro General Corporation
(Exact name of registrant as specified in its charter)
Delaware 95-2621545
(State or other jurisdiction of ((I.R.S. Employer
incorporation or organization) Identification Number)
1740 Wilshire Ave. Santa Ana, California 92705
(Address of principal executive offices) (Zip Code)
(714) 667-0557
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 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter periods 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 [ ]
The number of shares outstanding of Common Stock, $.05 Par Value -
1,948,166 shares as of August 11, 1995.
<PAGE>
MICRO GENERAL CORPORATION
FORM 10-Q -- QUARTER ENDED JUNE 30, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets -- June 30, 1995 and December 31,
1994.
Statements of Operations -- Three months ended June 30, 1995
and June 30, 1994.
Statements of Operations -- Six months ended June 30, 1995
and June 30, 1994.
Statements of Cash Flows -- Six months ended June 30, 1995
and June 30, 1994.
Notes to Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
All other schedules are omitted as the required information is inapplicable
or the information is presented in the financial statements or notes thereto.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
MICRO GENERAL CORPORATION
Balance Sheets
June 30, 1995 and December 31, 1994
June 30, 1995 December 31,
(unaudited) 1994
-------------- ------------
<S> <C> <C>
Assets
Current assets:
Cash $ 540,613 $ 152,848
Accounts and notes receivable,
less allowance for doubtful receivables
and sales returns of $94,566 at 6/30/95
and $81,749 at 12/31/94 384,125 618,434
Income tax refund receivable 7,000 7,000
Inventories (note 2) 1,137,121 1,140,183
Prepaid expenses and accrued interest 265,413 277,432
-------------- -----------
Total current assets 2,334,272 2,195,897
Equipment and improvements, net (note 3) 180,438 179,206
Other assets, net (note 4) 33,963 44,688
-------------- -----------
$ 2,548,673 $ 2,419,791
============== ============
Liabilities and Stockholders' Equity
Current liabilities:
Note payable to bank (note 6) $ 0 $ 0
Accounts payable 72,367 296,071
Accrued expenses 231,494 228,072
Deferred rate change agreement revenue 150,881 159,853
-------------- ------------
Total current liabilities 454,742 683,996
Stockholders' equity:
Preferred stock, $.05 par value; 1,000,000
shares authorized no shares issued and
outstanding at 6/30/95 and 12/31/94. -- --
Common stock, $.05 par value; 4,000,000 shares
authorized 1,948,166 shares issued at 6/30/95
and 1,888,166 shares at 12/31/94 (note 1) 97,408 94,408
Additional paid-in capital 4,174,508 4,111,883
Accumulated deficit (2,177,985) (2,470,496)
-------------- ------------
Total stockholders' equity 2,093,931 1,735,795
-------------- ------------
$ 2,548,673 $ 2,419,791
============== ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MICRO GENERAL CORPORATION
Statements of Operations
For the Three Months Ended June 30, 1995 and June 30, 1994
(Unaudited)
June 30, June 30,
1995 1994
------------ ------------
<S> <C> <C>
Revenues:
Product sales, net of returns of $103,544
in 1995 and $86,012 in 1994 $ 411,713 $ 810,693
Service and rate change revenues (note 7) 253,283 191,047
------------ ------------
Total revenues 664,996 1,001,740
Cost of sales:
Net product sales 298,015 529,721
Service and rate revenues 80,657 44,432
------------ ------------
Total cost of sales 378,672 574,153
Gross profit 286,324 427,587
Operating expenses:
Selling, general and administrative 411,375 429,010
Engineering and development 199,164 96,532
Provision for doubtful receivables 4,000 (1,000)
------------ ------------
Total operating expenses 614,539 524,542
Operating loss (328,215) (96,955)
Interest income, net 793 3,286
Loss on sale or disposal of assets 0 (612)
------------- ------------
Earnings before income taxes (327,422) (94,281)
Income taxes (note 5) 0 0
------------- -------------
Net loss $ (327,422) $ (94,281)
============= =============
Net loss per common and common equivalent
share (note 1) $ (0.17) $ (0.05)
============= ============
Weighted average shares outstanding (note 1) 1,948,166 1,882,240
============= ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MICRO GENERAL CORPORATION
Statements of Operations
For the Six Months Ended June 30, 1995 and June 30, 1994
(Unaudited)
June 30, June 30,
1995 1994
------------ ------------
<S> <C> <C>
Revenues:
Product sales, net of returns of $209,878
in 1995 and $135,940 in 1994 $ 964,886 $ 1,493,994
$135,940 in 1994
Service and rate change revenues (note 7) 1,873,798 1,352,302
----------- -----------
Total revenues 2,838,684 2,846,296
Cost of sales:
Net product sales 797,993 1,174,028
Service and rate revenues 476,983 358,879
----------- ------------
Total cost of sales 1,274,976 1,532,907
----------- ------------
Gross profit 1,563,708 1,313,389
Operating expenses:
Selling, general and administrative 895,863 927,308
Engineering and development 367,171 206,547
Provision for doubtful receivables 13,000 8,000
------------ ------------
Total operating expenses 1,276,034 1,141,855
------------ ------------
Operating profit 287,674 171,534
Interest income, net 4,837 4,798
Loss on sale or disposal of assets 0 (611)
------------ -------------
Earnings before income taxes 292,511 175,721
Income taxes (note 5) 0 0
------------ -------------
Net earnings $ 292,511 $ 175,721
============ =============
Net earnings per common and common
equivalent share (note 1) $ 0.15 $ 0.09
============ =============
Weighted average shares outstanding (note 1) 1,935,238 1,882,240
============ =============
<FN>
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
MICRO GENERAL CORPORATION
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and June 30, 1994
(Unaudited)
June 30, June 30,
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 292,511 $ 175,721
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 49,003 50,286
Provision for losses on accounts
receivable and sales returns,
net of write-offs 12,817 (3,456)
Change in assets and liabilities:
Decrease in accounts receivable 221,492 216,992
(Increase) decrease in inventories 3,062 (97,428)
Decrease in prepaid expenses 12,019 47,853
Increase (decrease) in accounts payable (223,704) 7,056
Increase (decrease) in deferred rate revenue (8,972) 127,827
Increase (decrease) in accrued expenses 3,422 (27,944)
------------ ------------
Total adjustments 69,139 321,186
------------ ------------
Net cash provided by operating
activities 361,650 496,907
------------ ------------
Cash flows used in investing activities--capital
expenditures (39,510) (49,911)
------------ ------------
Cash flows from financing activities:
Common stock proceeds, net 65,625 0
Repayment of note payable to bank 0 (100,000)
------------ ------------
Net cash provided by (used in)
financing activities 65,625 (100,000)
------------ ------------
Net increase in cash 387,765 346,996
Cash - beginning of year 152,848 85,513
------------ ------------
Cash - end of period $ 540,613 $ 432,508
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 0 $ 0
============ ============
Income taxes $ 0 $ 0
============ ============
<FN>
See accompanying notes to financial statements
</TABLE>
<PAGE>
MICRO GENERAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR QUARTER ENDED JUNE 30, 1995
Note 1. Summary of Significant Accounting Policies
General
The operations of Micro General Corporation (the "Company") consist of
the design, manufacture and sale of computerized parcel shipping
systems, postal scales and piece-count scales.
The financial statements presented include, in the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) necessary for fair presentation of the results of
operations for the periods presented.
The results of operations for the quarter or the six months ended June
30, 1995, are not necessarily indicative of results that may be
expected for any other interim period or for the full year ending
December 31, 1995.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market (net realizable value).
Equipment and Improvements
Equipment and improvements are stated at cost. Depreciation and
amortization are provided using the straight-line method over the
estimated useful lives of the respective equipment and improvements.
Net Earnings (Per Common Share)
Net earnings per common share is computed based on the weighted average
of common shares outstanding. The potential exercise of stock options
are included in the computation of net earnings per common share and
common share equivalents. Per share computation is net income divided
by the weighted average number of common shares and common share
equivalents.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting for Income Taxes". Under the asset and liability method of
SFAS 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected
to be recovered or settled. Under SFAS 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized as income
in the period that includes the enactment date.
<PAGE>
Effective January 1, 1993, the Company adopted SFAS 109. The
application of SFAS 109 did not have a material effect and was not
recognized for the quarter or the six months ended June 30, 1995.
Warranties
The Company's products are sold with a ninety-day warranty on materials
and workmanship. Estimated warranty costs based on historical
experience are accrued as an expense at the time the products are sold.
Intangible Assets
Intangible assets are classified as other assets and are amortized on a
straight-line basis over periods ranging from 10 to 15 years (see note
4).
Deferred Revenue
The Company collects fees from its customers in anticipation of future
rate changes. Customers prepaying future rate changes receive memory
chips with the new tariffs without paying an additional charge. Rate
change fees are recorded as revenue on a pro rata basis over the
prepaid period.
Revenue Recognition
Product sales are recorded by the Company when products are shipped to
dealers and customers. Rate change revenues are recorded by the
Company at the time memory chips are reprogrammed with new tariffs and
shipped to the customer.
Sales Returns
The majority of the Company's product sales are to its authorized
dealers who resell the Company's products. The Company's policy is
that all sales are final, but dealers may, at the Company's sole
discretion and subject to a restocking fee, return certain out-of-warranty
products in exchange for products of comparable sales value.
Additionally, dealers may, at the Company's sole discretion, be
permitted to return their unopened inventory in the event they or the
Company terminate their dealership agreement, again subject to a
restocking fee. Upon acceptance of returned goods, the Company
reconditions the goods, at a nominal cost, and restocks them in
inventory to be sold at a later date. The Company provides an
allowance for such returns equal to the estimated gross profit on the
portion of sales estimated to be returned. This specific allowance is
a component of the Company's allowance for doubtful receivables and
sales returns.
Post Retirement Benefits
The Company does not have any postretirement benefits falling within
the scope of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions."
<PAGE>
Note 2. Inventories
Inventories are comprised of the following at June 30, 1995 and
December 31, 1994:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Parts & Supplies $ 779,838 $ 753,456
Purchased finished goods 253,089 292,099
Consigned inventory 104,194 94,628
----------- -----------
$ 1,137,121 $ 1,140,183
=========== ===========
</TABLE>
Note 3. Equipment and Improvements
Equipment and improvements are as follows at June 30, 1995 and
December 31, 1994:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Production equipment, tooling
and construction in process $ 428,232 $ 424,848
Office furniture and
equipment 511,959 484,229
Leasehold improvements 27,776 19,381
--------- ---------
967,967 928,458
Less accumulated depreciation
and amortization 787,529 749,252
--------- ---------
$ 180,438 $ 179,206
========= =========
</TABLE>
Note 4. Other Assets
Other assets are as follows at June 30, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
Estimated
Useful Life 1995 1994
----------- --------- ---------
<S> <C> <C> <C>
Excess cost of assets purchased
over fair market, value 15 years $ 232,531 $ 232,531
License rights 10 years 26,382 26,382
Other intangible assets 15 years 23,388 23,388
--------- ---------
$ 282,301 $ 282,301
Less accumulated amortization 248,338 237,613
--------- ---------
$ 33,963 $ 44,688
========= =========
</TABLE>
<PAGE>
Note 5. Income Taxes
The expected income tax expense(benefit) computed by multiplying
earnings (loss) before income tax expense by the statutory Federal
income tax rate of 34% differs from the actual income tax expense
as follows:
<TABLE>
<CAPTION>
6/30/95 6/30/94
---------- ---------
<S> <C> <C>
Expected tax expense $ 99,454 $ 59,745
Utilization of net operating
loss carryforward (102,454) (62,745)
Nondeductible amortization of the
excess cost of assets purchased
over fair market value 3,000 3,000
State income taxes - -
---------- ---------
$ 0 $ 0
========== =========
</TABLE>
At June 30, 1995, the Company had available net operating loss
carryforwards of approximately $1,649,000 and $228,000 for Federal
and state income tax purposes, respectively. If not used to offset
future taxable income, the net operating loss carryforwards will
expire for income tax purposes at various dates through 2009. The
Company also has investment tax credit and research and
experimentation credit carryforwards aggregating approximately
$85,000 which expire during the period 1994 to 2001.
Note 6. Notes Payable
The Company had a line of credit, which expired in May 1995. As of
June 30, 1995 and December 31, 1994, the Company had no outstanding
borrowings against the line of credit. The Company is currently
negotiating other financing agreements.
<PAGE>
Note 7. Commitments and Contingencies
Noncancelable operating lease commitments consist principally of
the lease for the Company's manufacturing, administrative and
research/development facilities. In February, 1994 the Company
extended its facility lease through 1999. At December 31, 1994,
the Company is committed to the following noncancelable operating
lease payments:
<TABLE>
<S> <C>
Year ending December 31,
1995 $ 120,278
1996 131,267
1997 137,945
1998 122,123
Thereafter 29,478
---------
$ 541,091
=========
</TABLE>
At June 30, 1995 and December 31, 1994, the Company was liable for
approximately $236,000 and $185,475, respectively for outstanding
letters of credit to procure inventory from overseas vendors.
These transactions relate solely to transactions denominated in
U.S. dollars.
The Company has a license agreement with Pitney Bowes which enables
the Company to manufacture and sell certain products. The license
agreement expires in 2004. Annual expenses for the license
agreement are minor.
From time to time, the United State Postal Service ("USPS") or
United Parcel Service ("UPS") change their rates. For a fee, the
Company provides its customers with programmable memory chips with
the new tariffs which can be inserted into the Company's products.
In some instances, customers prepay a fee to the Company which
assures they will receive new programmable memory chips for all
rate changes which occur within a predetermined period. In other
instances, customers incur a fee for each time they decide to
procure a new programmable memory chip. The Company experienced a
UPS rate change during the periods ended June 30, 1995 and June 30,
1994, and a USPS rate change during the period ending June 30,
1995. Recorded revenues from rate changes totaled approximately
$1,561,463 and $1,097,000 respectively. Gross profit totaled
$1,228,122 and $1,007,000 also for the same periods.
<PAGE>
MICRO GENERAL CORPORATION
FOR QUARTER ENDED JUNE 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Total net product sales decreased $398,980 or 49% in second quarter
1995 ("Q2 1995") over second quarter 1994 ("Q2 1994") while service and
rate change revenues increased $62,236 or 33%. The decrease in net product
sales was the main component in the $336,774 or 34% decrease in total
revenue during for Q2 1995 over Q2 1994. The decrease in net product sales
of $529,108 or 35% in year to date 1995 ("YTD 1995") as compared to year
to date 1994 ("YTD 1994") was offset by the $521,496 or 39% increase in
service and rate change revenue for the same period. In YTD 1995 and YTD
1994, rate change revenues represented approximately 62% and 42% of total
revenue, respectively. The increase in service and rate change revenues in
YTD 1995 as compared to YTD 1994, was the result of the USPS rate change in
Q1 1995. While YTD sales in the retail channel increased $69,405 or 23% as
compared YTD 1994, the sales in the historical dealer channel decreased
$598,514 or 50%. The decrease in the historical dealer channel is a result
of a decrease in net units sold and sales of lower priced models as well
as the impact of free software to customers from vendors such as United
States Parcel, in the manifest area of the company's business. New product
introductions in future period is expected to improve volume. The decline
in volume in the Q2 1995 for the retail channel of $176,056, was primarily
due to significant stocking in first quarter 1995 ("Q1 1995") prior to
implementation of a policy agreement in Q2 1995. Volume in this area is
expected to return to more normal levels in the third quarter of 1995. The
Company anticipates a further reduction in expenses and improved profit
margins in the retail channel in future years.
Cost of sales for YTD 1995 product sales decreased $376,035 or 32% as
compared to the same period in 1994. The decrease is due to a change in
product mix and a decrease in the historical dealer channel sales. The YTD
1995 service and rate change revenue costs increased $118,104 or 33% as
compared to the same period in 1994. This increase is due to an increase
in service and rate change revenues for the same period.
Gross margin for YTD 1995 was 55% compared to 46% for the same period
the prior year. The increase in the service and rate change revenue
margin is due to higher rate change revenue, while the slight decrease in
the product gross margin is a result of higher sales in the retail
distribution channel.
Operating expenses of the Company in YTD 1995 of $1,276,034 showed an
12% increase as compared to YTD 1994. This increase in engineering and
development expense is a result of preliminary research & development work
on products to increase the Company's product line offering. Normal
operating expenses are expected to remain the same in future periods.
The increase in YTD net earnings of $116,790 or 66% as compared to the
same period in 1994, is a result of the increase in rate change revenue.
Net earnings for Q2 1995 decreased $233,141 or 247% as compared to Q2 1994.
This decrease is primarily due to lower net product sales of $398,980 or
49% as compared to the prior period.
Financial Condition, Liquidity and Capital Resources
The Company's ability to generate cash depends on rate change revenue,
the sale of inventory and collection of accounts receivable. The Company's
June 30, 1995 cash balance increased $387,765 or 254% from December 31,
1994. The increase is primarily attributable to the cash generated from
prepaid rate change revenue derived from the United States Postal Service
("USPS") rate change effective January 1995 and the United Parcel Service
("UPS") rate change effective February 1995. The Company's YTD 1995 net
accounts receivable balance decreased $234,309 or 38% from December 31,
1994 levels. This decrease is due to a decrease in product sales for the
YTD 1995 period.
Working capital was $1,879,530 at June 30, 1995 as compared to the
December 31, 1994, amount of $1,511,901. The Company's current ratio at
June 30, 1995 was 5.1 as compared to 3.2 at December 31, 1994. This change
is a result of higher cash balances at June 30, 1995 due to the Q1 1995
rate changes.
The Company's total inventories decreased slightly $3,062 or .3% at
June 30, 1995 as compared to December 31, 1994.
The Company had a line of credit agreement which expired in May 1995.
(See note 6, of Notes to the Financial Statements). At June 30, 1995 and
December 31, 1994 the Company had outstanding borrowings against the line
of credit. The Company is negotiating other financing agreements to fund
research and development and current operations as may be needed.
The Company's Q2 1995, current liabilities have decreased 34% over the
December 31, 1994 balances. This is associated with a decrease in the
Company's accounts payable balance as compared to the December 31, 1994
balance.
The Company believes future liquidity requirements will be covered
from operations and financing arrangements. The Company's investment in
capital expenditures for YTD 1995 increased slightly over December 31, 1994
balances. There were no material commitments for capital expenditures as
of June 30, 1995. The Company does not anticipate any significant domestic
capital expenditures during the remainder of 1995.
The Company does not engage in any off balance sheet financing.
Inflation
The effect of inflation on operating results has, historically, been
insignificant.
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Annual Meeting of Stockholders was held on June 8, 1995.
b. Voting for the election of Directors at said meeting was duly and
properly conducted by ballot. The following five persons were
duly nominated, and each received the number of votes shown
opposite his name and was elected a Director.
<TABLE>
<CAPTION>
For Withheld
--------- --------
<S> <C> <C>
Newly Elected
John J. Cahill 1,635,759 494
Thomas E. Pistilli 1,635,759 494
Continuing
William P. Foley II 1,635,759 494
George E. Olenik 1,635,759 494
Carl A. Strunk 1,635,759 494
</TABLE>
c. Voting on the proposal to approve and adopt the 1995 Stock Option
Plan ( the "1995 Plan") was duly and properly conducted by
ballot. There were 1,185,673 votes cast for the proposal, 20,766
votes cast against the proposal, 5,908 abstentions and 423,906
broker non-votes. The vote for the proposal constituted a
majority of the shares outstanding and the 1995 Plan was
therefore approved.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits (listed by numbers corresponding to Exhibit Table of
Item 601 of Regulation S-K):
11. Computation of earnings (loss) per share is not provided as the
calculation can be clearly determined from the material
contained in Item 1 of Part I.
b. The Company did not file any reports on Form 8-K during the three
months ended June 30, 1995.
<PAGE>
MICRO GENERAL CORPORATION
FORM 10-Q - QUARTER ENDED JUNE 30, 1995
PART II - SIGNATURES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MICRO GENERAL CORPORATION
Date: August 11, 1995 /s/ Thomas E. Pistilli
_________________________________
Thomas E. Pistilli
President
Chief Executive Officer
Chief Financial Officer
Date: August 11,1995 /s/ Linda I. Morton
_________________________________
Linda I. Morton
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 540,613
<SECURITIES> 0
<RECEIVABLES> 478,691
<ALLOWANCES> 94,566
<INVENTORY> 1,137,121
<CURRENT-ASSETS> 2,334,272
<PP&E> 967,967
<DEPRECIATION> 787,529
<TOTAL-ASSETS> 2,548,673
<CURRENT-LIABILITIES> 454,742
<BONDS> 0
<COMMON> 97,408
0
0
<OTHER-SE> 4,174,508
<TOTAL-LIABILITY-AND-EQUITY> 2,093,931
<SALES> 2,838,684
<TOTAL-REVENUES> 2,838,684
<CGS> 1,274,976
<TOTAL-COSTS> 1,274,976
<OTHER-EXPENSES> 1,276,034
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 292,511
<INCOME-TAX> 0
<INCOME-CONTINUING> 292,511
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 292,511
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
