<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d ) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-12346
IRONSTONE GROUP, INC.
(Name of Registrant as specified in its charter)
DELAWARE 95-2829956
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
9665 CHESAPEAKE DRIVE, SUITE 430, SAN DIEGO, CA 92123
(Address of principal executive offices, including zip code)
(619) 292-8777
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of June 30, 1998, 1,487,870 shares of Common Stock, $0.01 par value, were
outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
TOTAL NUMBER OF PAGES: 12 INDEX TO EXHIBITS AT PAGE: N/A
<PAGE> 2
IRONSTONE GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated statements of operations for the three
and six months ended June 30, 1998 and 1997............................. 3
Condensed consolidated balance sheet at June 30, 1998 ................... 5
Condensed consolidated statements of cash flows for the
six months ended June 30, 1998 and 1997................................. 6
Notes to condensed consolidated financial statements..................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders................... 11
SIGNATURES..................................................................... 12
</TABLE>
2
<PAGE> 3
IRONSTONE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Consulting fees $ 181,026 $ 698,439
Interest and other income 11,199 16,361
----------- -----------
Total revenues 192,225 714,800
----------- -----------
Costs and expenses:
Salaries and wages, payroll taxes and benefits 115,044 400,637
Depreciation 11,971 23,376
Amortization 25,333 33,822
Bad debt expense 264,590 (33,089)
Rent expense 59,015 80,446
Professional fees 38,110 88,403
Advertising and promotion 1,934 15,703
Office expense 6,534 25,908
Referral and split fees 2,011 50,465
Travel and entertainment 2,136 7,106
Research expense 3,382 18,791
Communications 3,126 12,413
Interest expense 3,651 14,252
Other operating expenses 17,673 36,853
Restructuring charges 338,218 --
----------- -----------
Total costs and expenses 892,728 775,086
----------- -----------
Loss before income taxes and minority interest (700,503) (60,286)
Income tax provision -- (3,300)
Minority interest -- 267
----------- -----------
Net loss $ (700,503) $ (63,319)
=========== ===========
Net loss per share - basic and diluted $ (0.47) $ (0.04)
=========== ===========
Average shares outstanding - basic 1,487,870 1,487,870
Average shares outstanding - diluted 1,487,870 1,487,870
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
3
<PAGE> 4
IRONSTONE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Consulting fees $ 457,846 $ 1,341,805
Interest and other income 19,516 23,177
----------- -----------
Total revenues 477,362 1,364,982
----------- -----------
Costs and expenses:
Salaries and wages, payroll taxes and benefits 433,008 908,635
Depreciation 24,192 41,669
Amortization 61,131 56,262
Bad debt expense 281,202 5,543
Rent expense 139,632 182,245
Professional fees 155,127 113,791
Advertising and promotion 2,272 18,407
Office expense 11,265 51,315
Referral and split fees 8,570 51,123
Travel and entertainment 3,778 14,413
Research expense 9,941 35,203
Communications 8,561 18,963
Interest expense 7,245 31,174
Other operating expenses 41,043 54,312
Restructuring charges 338,218 --
----------- -----------
Total costs and expenses 1,525,185 1,583,055
----------- -----------
Loss before income taxes and minority interest (1,047,823) (218,073)
Income tax provision (3,300) (3,300)
Minority interest -- (707)
----------- -----------
Net loss $(1,051,123) $ (222,080)
=========== ===========
Net loss per share - basic and diluted $ (0.71) $ (0.15)
=========== ===========
Average shares outstanding - basic 1,487,870 1,487,870
Average shares outstanding - diluted 1,487,870 1,487,870
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
4
<PAGE> 5
IRONSTONE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Current assets:
Cash $ 908,591
Marketable securities available for sale 1,875,300
Accounts receivable, net of allowance for doubtful accounts
of $644,905 547,723
Prepaid expenses 44,537
------------
Total current assets 3,376,151
------------
Property and equipment - net 80,011
Goodwill 25,932
Other assets 7,583
------------
Total assets $ 3,489,677
============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 126,835
Accrued compensation 58,339
Accrued restructuring charges 338,218
Margin loan 151,286
Capitalized lease obligations - current portion 6,831
Deferred revenue 102,000
Other current liabilities 22,821
------------
Total current liabilities 806,330
------------
Capitalized lease obligations - net of current portion 6,105
------------
Shareholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized of
which there are no issued and outstanding shares
Common stock, $0.01 par value, 25,000,000 shares authorized of
which 1,487,870 shares are issued and outstanding 14,879
Additional paid in capital 21,170,385
Accumulated deficit (19,497,145)
Accumulated other comprehensive income 989,123
------------
Total shareholders' equity 2,677,242
------------
Total liabilities and shareholders' equity $ 3,489,677
============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
5
<PAGE> 6
IRONSTONE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,051,123) $ (222,080)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation 24,192 41,669
Amortization 61,131 56,262
Undistributed minority interest in consolidated subsidiaries -- 707
Net (gain) loss on sale of property and equipment 2,381 (7,114)
Changes in assets and liabilities:
Accounts receivable 632,435 1,806,872
Other current assets 5,182 16,967
Other assets -- (46,434)
Accounts payable 42,301 (95,785)
Accrued compensation (46,581) (494,256)
Accrued restructuring charges 338,218 --
Other current liabilities (107,127) (304,058)
----------- -----------
Net cash provided (used) by operating activities (98,991) 752,750
----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment -- (22,750)
Proceeds from sale of property and equipment 21,278 15,236
----------- -----------
Net cash provided (used) by investing activities 21,278 (7,514)
----------- -----------
FINANCING ACTIVITIES:
Payments on line of credit -- (350,000)
Payments on capitalized lease obligations (15,312) (26,037)
Payments on notes payable (150,000) (235,294)
----------- -----------
Net cash used by financing activities (165,312) (611,331)
----------- -----------
Net increase (decrease) in cash (243,025) 133,905
Cash at beginning of period 1,151,616 529,543
----------- -----------
Cash at end of period $ 908,591 $ 663,448
=========== ===========
Non-cash operating, investing and financing activities:
Write-downs expensed to accrued restructuring charges:
Property and equipment $ 75,043 $ --
Goodwill and intangibles $ 33,515 $ --
Borrowings from capitalized lease obligations $ -- $ 21,377
Notes payable attained from asset purchase $ -- $ 15,000
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
6
<PAGE> 7
IRONSTONE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Business Activities
Ironstone Group, Inc. (the "Company"), consolidates the financial statements of
its majority-owned subsidiaries Belt Perry Associates, Inc., an Arizona
corporation ("BPA"), Belt Perry Associates, Inc., a California corporation
("BPC"), Taxnet, Inc., an Arizona corporation ("Taxnet") and DeMoss Corporation,
a California corporation ("DeMoss"). All significant intercompany transactions
have been eliminated in consolidation. The Company's significant business
activities have included reducing, for a fee, ad valorem taxes assessed to
owners of real and personal property, generally in the Arizona and California
markets. During the second quarter of 1998, the Board of Directors proceeded
with the Company's withdrawal from the real and personal property tax
consulting business, including a restructuring and wind down of the Belt Perry
property and tax services group (Note 4).
Adjustments
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments and
reclassifications considered necessary for a fair and comparable presentation
have been included and are of a normal recurring nature. The accompanying
condensed consolidated financial statements should be read in conjunction with
the Company's most recent Annual Report and Form 10-KSB for the year ended
December 31, 1997.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of 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.
Reclassifications
Certain 1997 amounts have been reclassified to conform to the 1998 presentation.
2. EARNINGS PER SHARE - BASIC AND DILUTED
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128"),
effective for financial statements issued after December 15, 1997. This
statement provides simplified standards for the computation and presentation of
earnings per share ("EPS"), making EPS comparable to international standards.
SFAS No. 128 requires dual presentation of "Basic" and "Diluted" EPS by entities
with complex structures, replacing "Primary" and "Fully Diluted" EPS under APB
Opinion No. 15.
Basic EPS excludes dilution from common stock equivalents and is computed by
dividing net income (loss) applicable to common shareholders by the weighted
average number of common shares actually outstanding during the period. Diluted
EPS reflects the potential dilution from common stock equivalents, except where
inclusion of such common stock equivalents would have an antidilutive effect,
similar to Fully Diluted EPS, but uses only the average stock price during the
period as part of the computation.
The weighted average number of shares of common stock for the three month
periods ended June 30, 1998 and 1997 was 1,487,870. The weighted average
dilutive common shares for the three month periods ended June 30, 1998 and 1997
was 1,487,870. Common stock equivalents for the three month periods ended June
30, 1998 and 1997 were not included in computing the weighted average dilutive
shares because their effects were anti-dilutive.
7
<PAGE> 8
IRONSTONE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
3. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No.
130 requires reporting and displaying comprehensive income (loss) and its
components which, for the Company, includes net income (loss) and unrealized
gains and losses on marketable securities available for sale. The adoption of
SFAS No. 130 had no impact on the Company's results of operations or financial
position. In accordance with SFAS No. 130, the accumulated balance of other
comprehensive income is disclosed as a separate component of shareholders'
equity. Prior year financial statements have been reclassified to conform to the
requirements of SFAS No. 130.
For the three month periods ended June 30, 1998 and 1997, comprehensive income
(loss) consisted of the following:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Net loss $(700,503) $ (63,319)
Other comprehensive income:
Unrealized gain on
marketable securities
available for sale 526,400 -0-
--------- ---------
Comprehensive loss $(174,103) $ (63,319)
========= =========
</TABLE>
4. RESTRUCTURING
During the second quarter of 1998, the Board of Directors proceeded with the
Company's withdrawal from the real and personal property tax consulting
business, including a restructuring and wind down of the Belt Perry property and
tax services group. The wind down process includes subleasing the Northern
California and Arizona facilities, and sublease agreements for these office
spaces were executed during the second quarter of 1998 for the remainder of the
lease terms. As of June 30, 1998, the Company's Los Angeles operations had also
ceased. In addition, management had begun discussions for early lease
termination of the San Diego office facilities, as well as actively seeking a
prospective tenant to assume the space.
During the three month period ended June 30, 1998, the Company recorded one-time
restructuring charges in the amount of $338,218. The restructuring charges
included employee severance costs, asset write-downs and goodwill and intangible
write-downs as follows:
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Severance and related costs $ 229,660
Write-down of property and equipment 75,043
Write-down of goodwill and intangibles 33,515
----------
Total restructuring charges $ 338,218
==========
</TABLE>
The restructuring process, which will result in the elimination of all Belt
Perry Associates personnel on or about the end of August 1998, is expected to be
completed by the end of 1998.
8
<PAGE> 9
IRONSTONE GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results Of Operations
Restructuring
During the second quarter of 1998, the Board of Directors proceeded with the
Company's withdrawal from the real and personal property tax consulting
business, including a restructuring and wind down of the Belt Perry property and
tax services group. The wind down process includes subleasing the Northern
California and Arizona facilities, and sublease agreements for these office
spaces were executed during the second quarter of 1998 for the remainder of the
lease terms. As of June 30, 1998, the Company's Los Angeles operations had also
ceased. In addition, management had begun discussions for early lease
termination of the San Diego office facilities, as well as actively seeking a
prospective tenant to assume the space.
During the three month period ended June 30, 1998, the Company recorded one-time
restructuring charges in the amount of $338,218. The restructuring charges
included employee severance costs, asset write-downs and goodwill and intangible
write-downs as follows:
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Severance and related costs $229,660
Write-down of property and equipment 75,043
Write-down of goodwill and intangibles 33,515
--------
Total restructuring charges $338,218
========
</TABLE>
The restructuring process, which will result in the elimination of all Belt
Perry Associates personnel on or about the end of August 1998, is expected to be
completed by the end of 1998.
Comparison of 1998 to 1997
Revenues for the three and six month periods ended June 30, 1998 decreased
$522,575 and $887,620 or 73.11% and 65.03%, respectively, as compared to the
same periods in 1997. Such declines are primarily due to a decrease in billings
as a result of the closing of the Company's Arizona and Northern California
operations, combined with further reductions in the Southern California business
operations, as part of the Company's overall plan to divest itself of the
property and tax services group.
Costs and expenses for the three month period ended June 30, 1998 increased
$117,642 or 15.18%, but decreased $57,870 for the six month period ended June
30, 1998, as compared to the same periods in 1997. The three month period
increase is comprised primarily of additional allowance provisions for bad debts
as well as one-time restructuring charges, partially offset by a decrease in
salaries and wages. Bad debts increased $297,679 or 899.63% as compared to the
same period in 1997 due primarily to two factors. First, as a result of the
Company's restructuring and wind down currently in progress, collection and
settlement efforts to resolve delinquent accounts has accelerated, and many
accounts previously considered collectible have been written off in full.
Secondly, during the same period in 1997, the reversal of $75,000 of bad debt
expense originally recorded in 1996 related to revenues billed under the revised
California contracts (see Note 13 in the Company's Form 10-KSB for the year
ended December 31, 1996) resulted in a credit balance in bad debt expense for
the 1997 second quarter.
One-time restructuring charges in the amount of $338,218 were recorded for the
three month period ended June 30, 1998, as compared to zero during the same time
period in 1997. The restructuring charges included current employee severance
costs, asset write-downs and goodwill and intangible write-downs.
Salaries and wages decreased $285,593 or 71.28% for the three month period ended
June 30, 1998 as compared to the same period in 1997 primarily due to reductions
in staff that occurred in January 1998 as a result of the Company's
restructuring the Southern California operations and closure of the Northern
California and Arizona operations.
The net decrease in costs and expenses for the six month period ended June 30,
1998 is attributable to the Company's efforts to reduce its overall operating
costs as part of the wind down of the property and tax services group. Such
decrease is comprised primarily of reductions in salaries and wages, rents and
other office expenses, partially offset by the second quarter increase in bad
debts and the one-time restructuring charges as discussed above.
9
<PAGE> 10
IRONSTONE GROUP, INC.
Liquidity And Capital Resources
Net cash used by operating activities for the three and six month periods ended
June 30, 1998 was $18,662 and $98,991, respectively. Cash remained about the
same for the three month period ended June 30, 1998, decreasing $23,460. For the
six month period ended June 30, 1998, however, cash decreased $243,025 primarily
due to payments of accrued officer bonuses and final note payments to former
shareholders. Due to the Company's recording a liability for accrued
restructuring charges of $338,218, combined with the $408,844 reduction in
accounts receivable, and partially offset by the $526,400 increase in the
unrealized gain on marketable securities held for sale, the Company's working
capital decreased by $138,411 and $320,770 during the three and six month
periods ended June 30, 1998, respectively. Management believes that its current
level of cash and anticipated cash flow from operations will be adequate to meet
its restructuring and other operating needs during 1998.
The Company may obtain additional equity or working capital through bank
borrowings and public or private sales of equity securities and exercises of
outstanding stock options. There can be no assurance, however, that such
additional financing will be available on terms favorable to the Company, or at
all.
Special Note Regarding Forward-Looking Statements
Certain of the statements in this document that are not historical facts
including, without limitation, statements of future expectations, projections of
financial condition and results of operations, statements of future economic
performance and other forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to differ materially from
those contemplated in such forward-looking statements. In addition to the
specific matters referred to herein, important factors which may cause actual
results to differ from those contemplated in such forward-looking statements
include (i) the results of the Company's efforts to implement its business
strategy; (ii) actions of the Company's competitors and the Company's ability to
respond to such actions; (iii) changes in governmental regulation, tax rates and
similar matters; and (iv) other risks detailed in the Company's other filings
with the Commission.
Trends and Uncertainties
Termination of Historical Business Lines
By winding down the Belt Perry property and tax services group, the Company will
have substantially exited from its traditional lines of business. The Company
will continue its efforts in the coming months to collect outstanding
receivables and to work through the remaining pending appeals in an effort to
maximize cash available for the Company's future business opportunities.
Management and the Board of Directors are actively seeking appropriate business
combination opportunities for the Company. In the alternative, management and
the Board are looking for an investment opportunity for the Company to invest
some or all of its remaining liquid assets. In the interim, the Company's cash
assets are invested in corporate securities and demand deposit accounts. If the
Company does not find an operating entity to combine with, and if its assets are
not invested in certain types of securities (primarily government securities),
it may be deemed to be an investment company under the terms of the Investment
Company Act of 1940, as amended.
Year 2000
The Company is working to resolve the potential impact of the Year 2000 issue on
the ability of the Company's computerized information systems to accurately
process information that may be date-sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company has not completed its
assessment, but management currently believes that costs of addressing this
issue will not have a material adverse impact on the Company's financial
position. However, if the Company and third parties upon which it relies are
unable to address this issue in a timely manner, it could result in a material
financial risk to the Company. In order to assure that this does not occur, the
Company plans to devote all resources required to resolve any significant Year
2000 issues in a timely manner.
10
<PAGE> 11
IRONSTONE GROUP, INC.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 1, 1998, the Company held its annual meeting of stockholders. The
Company elected the following two persons as directors, each to serve until the
next annual meeting of stockholders or until his successor is elected and
qualified. The Company's stockholders also voted to retain Deloitte & Touche,
LLP as the Company's independent public accountants for the fiscal year ending
December 31, 1998. The number of shares voted for, against, withheld, and
abstained for each director and the retention of Deloitte & Touche, LLP were as
follows:
<TABLE>
<CAPTION>
ELECTION OF DIRECTORS FOR WITHHELD
- --------------------- --- --------
<S> <C> <C>
William R. Hambrecht 1,289,593 4,560
Edmund H. Shea. Jr. 1,289,630 4,523
</TABLE>
Approval to retain Deloitte & Touche, LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1998:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- --- ------- -------
<S> <C> <C>
1,293,964 119 70
</TABLE>
11
<PAGE> 12
IRONSTONE GROUP, INC.
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 on Form 10-QSB to be
signed on its behalf by the undersigned, thereunto duly authorized.
IRONSTONE GROUP, INC.
A DELAWARE CORPORATION
Date: August 14, 1998 By: /s/ Gerald G. Pinkston
-------------------------------------
Gerald G. Pinkston
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/ Gerald G. Pinkston Chief Executive Officer, August 14, 1998
- ---------------------- Secretary and Treasurer
Gerald G. Pinkston (Principal Executive Officer and
Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 908,591
<SECURITIES> 1,875,300
<RECEIVABLES> 1,192,628
<ALLOWANCES> 644,905
<INVENTORY> 0
<CURRENT-ASSETS> 3,376,151
<PP&E> 415,112
<DEPRECIATION> 335,101
<TOTAL-ASSETS> 3,489,677
<CURRENT-LIABILITIES> 806,330
<BONDS> 12,936
0
0
<COMMON> 14,879
<OTHER-SE> 2,662,363
<TOTAL-LIABILITY-AND-EQUITY> 3,489,677
<SALES> 0
<TOTAL-REVENUES> 192,225
<CGS> 0
<TOTAL-COSTS> 892,728
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 264,590
<INTEREST-EXPENSE> 3,651
<INCOME-PRETAX> (700,503)
<INCOME-TAX> 0
<INCOME-CONTINUING> (700,503)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (700,503)
<EPS-PRIMARY> (.47)
<EPS-DILUTED> (.47)
</TABLE>
