U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1998
---------------
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 0-12706
Tubby's, Inc.
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(Exact name of small business issuer as specified in its charter)
New Jersey 22-2166602
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(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification Number)
6029 E. Fourteen Mile Road, Sterling Heights, Michigan 48312
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(Address of principal executive officers)
(810) 978-8829
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(Issuer'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 period that the
registrant was required to filed such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_ No ___
As of October 12, 1998, there were 2,583,114 shares of common stock
outstanding.
<PAGE>
INDEX
TUBBY'S, INC. AND SUBSIDIARIES
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Consolidated Balance Sheets,
August 31, 1998 and November 30, 1997 3-4
Consolidated Statements of Operations,
Three Months and Nine Months Ended August 31, 1998
and August 31, 1997 5
Consolidated Statements of Cash Flows,
Nine Months Ended August 31, 1998
and August 31, 1997 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II - OTHER INFORMATION
Item 4. Submission of matters to vote of Securities Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS (UNAUDITED).
<TABLE>
<CAPTION>
TUBBY'S INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31, November 30,
1998 1997
ASSETS (Unaudited) (Note)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Current Assets
Cash and Equivalents $ 648,522 $ 864,229
Certificate of Deposit 105,398 105,430
Marketable Securities 25,431 25,383
Accounts Receivable -- Trade, less
allowance for doubtful accounts
of $48,387 in 1998 and $36,740 in 1997 671,869 443,810
Notes Receivable 60,708 66,217
Inventories 323,278 99,419
Prepaid Expenses & Other 109,327 51,449
---------- ----------
Total Current Assets 1,944,533 1,655,937
---------- ----------
Property and Equipment
Land 187,984 325,347
Buildings & Improvements 663,754 663,753
Equipment 539,847 527,265
Furniture & Fixtures 139,444 138,394
Vehicles 11,509 15,009
---------- ----------
1,542,538 1,669,768
Less: accumulated depreciation 857,384 773,576
---------- ----------
Net Property & Equipment 685,154 896,192
---------- ----------
Other Assets
Goodwill, less amortization of $122,161
and $81,118 in 1998 and 1997 253,875 229,918
Notes Receivable, less allowance for
doubtful accounts of $20,000 in 1998 and
$-0- in 1997
419,426 543,342
---------- ----------
Total Other Assets 673,301 773,260
---------- ----------
Total Assets $3,302,988 $3,325,389
========== ==========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
TUBBY'S INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
August 31, November 30,
LIABILITIES & STOCKHOLDERS' EQUITY 1998 1997
(Unaudited) (NOTE)
- ----------------------------------------------- ----------- ------------
<S> <C> <C>
Current Liabilities
Accounts Payable $ 400,210 $ 106,407
Accrued Liabilities:
Compensation 51,253 19,887
Other 26,483 16,153
Deferred Revenue 114,493 115,489
Long-Term Debt due within one year 13,492 220,520
----------- -----------
Total Current Liabilities 605,931 478,456
Deferred Revenue 40,000 60,867
Long-Term Debt, less amounts due in one year 127,924 139,932
----------- -----------
Total Liabilities 773,855 679,255
----------- -----------
Stockholders' Equity
Common Stock, $.01 Par Value, 6,000,000
shares authorized, 2,583,114 issued
and outstanding 25,832 25,832
Additional Paid In Capital 3,485,844 3,485,844
Retained Earnings (Deficit) (982,543) (865,542)
----------- -----------
Total Stockholders' Equity 2,529,133 2,646,134
----------- -----------
Total Liabilities and Stockholders' Equity $ 3,302,988 $ 3,325,389
=========== ===========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TUBBY'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Month Ended Nine Month Ended
------------------------- -------------------------
August 31, August 31, August 31, August 31,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Restaurant Food Sales $ 262,787 $ 231,501 $ 655,218 $ 731,386
Distribution Food Sales 1,342,766 0 2,983,503 0
Franchise Fees:
Monthly 279,382 209,875 671,057 576,432
Initial 36,500 32,134 111,001 120,884
Equipment & Restaurant Sales 75,530 120,526 361,679 446,218
Advertising Fees 160,715 157,790 496,009 466,470
Commissions & Other Fees (1,558) 10,500 31,261 25,019
---------- ---------- ---------- ----------
Total Revenues 2,156,122 762,326 5,309,728 2,366,409
---------- ---------- ---------- ----------
Costs & Expenses:
Operating Expenses 1,037,137 578,491 2,489,585 1,733,156
Cost of Restaurant Food Sales 188,644 67,995 443,873 254,134
Cost of Distribution Food Sales 1,032,572 0 2,314,319 0
Cost of Equipment & Restaurant Sales 65,152 98,551 294,053 358,601
---------- ---------- ---------- ----------
Total Costs & Expenses 2,323,505 745,037 5,541,830 2,345,891
---------- ---------- ---------- ----------
Operating Income (Loss) (167,383) 17,289 (232,102) 20,518
Other Income (Expense):
Interest Expense (5,817) (3,139) (10,648) (13,623)
Interest Income 24,383 20,626 55,543 57,818
Miscellaneous 32,144 18,838 70,206 61,482
---------- ---------- ---------- ----------
Total Other Income (Expense) 50,710 36,325 115,101 105,677
---------- ---------- ---------- ----------
Income (Loss) Before Taxes on Income (116,673) 53,614 (117,001) 126,195
Taxes on Income 0 32,497 0 32,497
---------- ---------- ---------- ----------
Net Income (Loss) $ (116,673) $ 21,117 $ (117,001) $ 93,698
========== ========== ========== ==========
Earnings (Loss) per Share --
Basic & Diluted $ (0.05) $ 0.01 $ (0.05) $ 0.04
========== ========== ========== ==========
Weighted Average Common Shares
Outstanding 2,583,114 2,583,114 2,583,114 2,583,114
========== ========== ========== ==========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
TUBBY'S INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Month Ended
-----------------------
August 31, August 31,
1998 1997
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $(117,001) $ 93,698
Adjustments To Reconcile Net Income(Loss)
To Net Cash Used and Provided By Operating
Activities:
Depreciation & Amortization 125,846 99,268
Taxes on Income 0 32,447
Gain on Sale of Assets (1,287) 0
Increase (Decrease) In Cash Due To
Changes In:
Accounts Receivable (228,059) (88,350)
Inventories (223,859) 48,480
Prepaid Expenses & Other (57,878) 18,170
Accounts Payable 293,803 (31,668)
Accrued Liabilities 41,696 26,893
Deferred Revenues (21,863) (9,514)
--------- ---------
Net Cash (Used In) Provided By Operating
Activities (188,602) 189,424
Cash Flows From Investing Activities
Sale of Certificate of Deposits (16) (83)
Acquisition of McTub 49% interest (65,000) 0
Purchase Of Property & Equipment (19,616) (57,005)
Payments On Notes Receivable 129,425 43,565
Sale of Property 147,138 0
--------- ---------
Net Cash (Used In) Provided by Investing
Activities 191,931 (13,523)
Cash Flows From Financing Activities:
Payments On Long-Term Debt (219,036) (76,134)
--------- ---------
Net Cash (Used In) Financing Activities (219,036) (76,134)
--------- ---------
Net (Decrease) Increase In Cash (215,707) 99,767
Cash and Equivalents, at beginning of period 864,229 793,494
--------- ---------
Cash and Equivalents, at end of period $ 648,522 $ 893,261
========= =========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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<PAGE>
TUBBY'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements do not include all of the information
and footnotes necessary for the annual presentation of financial position,
results of operation and cash flows in conforming with generally accepted
accounting principles. In the opinion of the company, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in cash flow at August
31, 1998 and August 31, 1997 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto as of November 30, 1997 and the Form 10-KSB as of November 30,
1997.
2. ACCOUNTING FOR INCOME TAXES
The Company has acquired net operating loss carry forwards relating to the
SYF merger of approximately $876,000 which are available to offset future
taxable income. However, to the extent such loss carry forwards are utilized
to reduce future operating income, the related tax benefit will first be
credited to goodwill until fully eliminated and then to income. Utilization
of these losses is limited based on the taxable income generated by the
activity that generated these losses and expire beginning in 1999.
The Company also has net operating loss carry forwards for tax purposes of
approximately $892,000 relating to losses incurred subsequent to the SYF
acquisition which expires beginning in 2006.
3. MARKETABLE SECURITIES
The Company has classified its marketable debt as available-for-sale and are
reported at fair market value with unrealized gains or losses reported as a
component of stockholders' equity. Available-for-sale securities are
comprised of corporate bonds. During the six months ending August 31, 1998,
and the year ending November 30, 1997, there were no realized or unrealized
gains or losses reported as cost approximated fair value.
4. LITIGATION & LITIGATION SETTLEMENT
In January 1998, the Company entered into a release and settlement agreement
with Patrick J. McCourt (McCourt), minority shareholder of McTub Company, in
connection with the litigation between the Company and McCourt. The agreement
required the Company to pay McCourt the sum of $200,000 which constitutes
repayment of the principle of a term note dated in October 1993. Also, in
connection with the agreement, the Company paid McCourt $65,000 for his 49%
interest in McTub Company. The agreement discharges and releases the Company
from any and all claims with McCourt.
-7-
<PAGE>
Tubby's, Inc. vs. Walter Lasko
On August 14, 1998, the Company commenced a civil action in Macomb County
Circuit Court against Walter Lakso seeking specific performance of the
Company's option to purchase the building in which it's headquarters is
located. The Complaint asserts counts for specific performance, equitable
estoppel and unjust enrichment in connection with Mr. Lasko's refusal to
honor the option to purchase. Six months after agreeing to honor the option
to purchase, Mr. Lasko refused to close stating that the Company's notice to
him that it was exercising the option was five days late. At this time, Mr.
Lasko has not yet filed an answer to the Complaint. On the basis of all the
facts and circumstances, the Company believes that it is substantially likely
to prevail on the merits of this Action.
SUBperior Distribution Systems, Inc. vs. Sun Valley Foods Company, Inc.
and Greg Tatarian
On September 4, 1998, the Company commenced a civil action in Macomb County
Circuit Court against Sun Valley Foods Company, Inc., alleging Breach of
Contract, Reimbursement of Overcharges, Fraudulent Misrepresentation and
Reimbursement for Damaged and/or Missing inventory, in connection with
disputes arising out of a Warehousing and Distribution Agreement.
In November of 1997, the Company entered into a Warehousing and Distribution
Agreement with Sun Valley Foods Company, Inc. Pursuant to that Agreement, Sun
Valley was to provide warehousing and distribution services to SUBperior
Distribution Systems, Inc. ("SDS"), a wholly owned subsidiary of the Company,
which began distributing products to Tubby's Sub Shops in February of 1998.
Sun Valley failed to perform numerous obligations of the Agreement, resulting
in, among other things, a material breach of the Agreement and requiring the
Company to undertake various obligations of Sun Valley, at great expense to
the Company. The Company attempted to resolve these disputes with Sun Valley
prior to commencing the Action but was unable to do so.
The Company is seeking a judgment for the value of all of the administrative
obligations it was required to perform, reimbursement for overcharges and the
value of damaged and missing inventory. At this time, the Company believes
that it is likely to prevail on the merits of this Action.
-8-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto and with the
Company's Form 10-KSB and audited financial statements and notes thereto for
the fiscal year-ended November 30, 1997.
FINANCIAL CONDITION
Cash and Equivalents decreased by $215,707 for the nine months ended August
31,1998, as compared with an increase of $99,767 for the nine months ended
August 31, 1997. The current period decrease in the Company's cash position
resulted primarily from the commencement of operation on February 1, 1998, of
SUBperior Distribution Systems, Inc., ("SDS"), the Company's new food
distribution subsidiary, and the release and settlement of litigation, (see
note #4 of the Consolidated Financial Statements).
Consolidated Revenues increased by $2,943,319 primarily as a result of SDS
Product Sales of $2,983,503. Consolidated Expenses increased by $3,195,939
primarily due to Cost of Product Sales and incremental Operating Expenses in
the distribution subsidiary of $2,900,044. The Company views the results of
SDS's first seven months of operations to be very encouraging. SDS personnel
were able to quickly and effectively resolve the start-up glitches that are
common in most new operations of this magnitude. SDS's results are discussed
below.
With thirteen new franchised Tubby's Subs Shops opening in Windsor, Ontario,
Missouri and in Michigan during the nine months ended August 31, 1998, the
Company's increased efforts to develop the Southeastern Michigan region as
well as other out-of-state areas are successfully continuing. In addition,
the Company expects four additional restaurants to open during the fourth
quarter.
At August 31, 1998, the Company operated three restaurants and franchised
ninety-one restaurants. Franchised restaurants are located in Michigan,
Missouri, Arizona, Ohio, Indiana, New Jersey and the Canadian province of
Ontario.
Results of operations for the three months ended August 31, 1998 as compared
with the three months ended August 31, 1997.
Revenues for the three months ended August 31, 1998, increased by $1,393,796
or 182% to $2,156,122. The increase in Total Revenues was attributable to:
o SDS Product Sales for the quarter were $1,342,766.
o A $31,286 or 13.5% decrease in Food Sales resulted primarily from the
sale of two Company-owned restaurants to franchisees in the third and
fourth quarters of 1997 and the closing of one Company-owned restaurant
in the third quarter of 1998.
o Monthly Franchise Fees for the quarter were $279,382, up 33% from the
same period last year. This increase reflects the income derived from
the increased franchisee food sales resulting from the advertising
efforts of the Company and the additional monthly fees derived from it's
-9-
<PAGE>
new franchisees. As successful new franchised Tubby's Sub Shops are
opened, Monthly Franchise Fees are expected to increase, accordingly.
o Equipment and Restaurant Sales decreased $44,996 or 37.3% for the
three months ended August 31, 1998 as compared to the three months
ended August 31, 1997. The decrease is a result of opening three stores
for the three month period ended August 31, 1998 as compared to four
stores for the three month period ended August 31, 1997.
Total Costs & Expenses for the three months ended August 31, 1998 increased
by $1,578,468 or 212% as compared to the three months ended August 31, 1997.
The current three month period shows a Net Loss of $116,673 as compared to a
Net Income $21,117 in the same three months of the prior year.
o Operating Expenses increased by $458,646 or 79% in 1998. The increase
is primarily due to operating expenses related to the opening of SDS in
February 1998.
o The Cost of Restaurant Food Sales increased in 1998 compared to 1997
due to vendor commissions being recorded as a reduction in Cost of
Distribution Food Sales through SDS rather than as a reduction in Cost
of Restaurant Food Sales.
o Cost of Distribution Food Sales was $1,032,572 or 77% of Distribution
Food Sales for the three months ended August 31, 1998.
o Cost of Equipment Sales increased as a percentage of Equipment &
Restaurant Sales from 82% in 1997 to 86% in 1998 reflecting decreased
gross profit margins.
Results of Operations for the nine months ended August 31,1998 as compared to
the nine months ended August 31, 1997.
The company incurred a Net Loss of $117,001 for the nine months ending August
31, 1998 as compared to a Net Income of $93,698 for the nine months ending
August 31, 1997. The Company had anticipated profits from SDS during the nine
months ended August 31, 1998 to offset operating losses incurred in
Company-owned stores and in Equipment Sales. The anticipated profits from SDS
did not occur due to higher than expected warehousing and outbound freight
costs. A new warehousing and delivery arrangement has begun effective
September 8,1998 to address this issue.
Total Revenues for the nine months ending August 31, 1998 increased by
$2,943,319 or 124% to $5,309,728. The increase in Total Revenues was
attributable to:
o SDS's first seven months of operations resulting in $2,983,503 in
Distribution Food Sales.
o A $76,168 or 10% decrease in Restaurant Food Sales resulted primarily
from the sale of two Company-owned restaurants to franchisees in the
third and fourth quarters of 1997, and closing a company-owned store in
the third quarter of 1998 due to a lease non-renewal.
o An increase in Monthly Franchise Fees of $94,625 or 16% and in
Advertising Fees of $29,539 or 6% resulting from improved Food Sales of
existing restaurants and Food Sales of new
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<PAGE>
restaurants opened in the past year.
o An $84,539 or 18% decrease in Equipment Sales. This is a result of
opening thirteen stores in the nine months ended August 31, 1998 as
compared to fifteen stores in the same period of the prior year.
Total Costs & Expenses for the nine months ended August 31, 1998 increased by
$3,195,939 or 136% as compared to the nine months ended August 31, 1997.
o Operating Expenses increased by $756,429 or 44% in 1998. Incremental
operating expenses related to SDS operations were approximately
$586,000. The balance of the increase is comprised of increases in
Advertising, Commissions paid to Development Agents, Reserve For Bad
Debts, and Salaries, as well as a decrease in Franchise Development
Costs and in Outside Professional Services.
o The Cost of Restaurant Food Sales increased in 1998 compared to 1997
due to vendor commissions being recorded as a reduction in Cost of Food
Distribution through SDS rather than as a reduction in Cost of
Restaurant Food Sales.
o Cost of Distribution Food Sales was 78% of Distribution Food Sales for
the nine months ended August 31,1998.
o Cost of Equipment Sales was at 81% of Equipment & Restaurant Sales for
the nine month period ended August 31, 1998 and 80% for the same period
of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and Equivalents decreased by $215,707 for the nine months ended August
31,1998, as compared with a increase of $99,767 for the nine months ended
August 31, 1997. The current period decrease in the Company's cash position
resulted primarily from the Net Loss for the period of $117,001, the increase
in Accounts Receivable and Inventory (net of the increase in Accounts
Payable) of approximately $270,000 related to the commencement of operation
on February 1, 1998, of SUBperior Distribution Systems, Inc., ("SDS") and the
release and settlement of litigation, (see note #4 of the Consolidated
Financial Statements) which utilized an additional $265,000. Increases in
Cash and Equivalents are primarily from Depreciation and Amortization of
$125,846, the sale of property of $147,138 and from payments on Notes
Receivable of $129,425.
The increase in Cash and Equivalents for the nine months ended August 31,
1997 was primarily from Net Income of $93,698, Depreciation and Amortization
of $99,268, a $32,447 non-cash Provision for Federal Income Taxes and a
decrease in inventory of $48,480 offset by a $88,350 increase in Accounts
Receivable, a $31,668 decrease in Accounts Payable and Purchases of new
equipment of $57,005.
In addition to the Thirteen new restaurants that opened in the first nine
months of 1998, four new Tubby's Sub Shops are expected to open by the end of
the fourth quarter. All restaurants scheduled to be opened by the end of 1998
are expected to be owned and operated by franchisees. The Company anticipates
that it will be operating three restaurants and franchising ninety-five
-11-
<PAGE>
restaurants by the end of 1998.
The Company maintains two $250,000 revolving lines of credit with a local
financial institution. These lines of credit can be drawn upon as needed to
meet future cash requirements. As of October 12, 1998, the entire line of
credit was available to the Company.
The Company is responsible for supervising construction and equipment
installation for some new locations. As part of that process, the Company
will contract for the purchase of equipment and execute construction
contracts. Although the Company is reimbursed entirely for its costs, it
often must prepay some costs. As of October 12, 1998, the Company has four
new locations scheduled to open by November 30, 1998. The Company may be
responsible for the construction and equipment installation of some of these
locations. The Company anticipated estimated costs will vary between $50,000
to $100,000 each. The Company believes it has sufficient working capital to
internally finance these projects.
Year 2000
The Company is in the process of evaluating Year 2000 issues in it's
financial systems. Costs to address systems compliance are anticipated to be
minimal. Management does not expect a significant impact on Operations.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) There are no exhibits submitted with this report.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
by the Registrant during the three months ended August 31,
1998
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SIGNATURES.
TUBBY'S, INC.
/s/ Robert M. Paganes
---------------------------------
By: Robert M. Paganes
President/Chief Executive Officer
Dated: October 12, 1998
/s/ Theresa M. Borto
---------------------------------
By: Theresa M. Borto
Chief Financial Officer
Dated: October 12, 1998
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> AUG-31-1998
<CASH> $ 753,920
<SECURITIES> 25,431
<RECEIVABLES> 1,152,003
<ALLOWANCES> 68,387
<INVENTORY> 323,278
<CURRENT-ASSETS> 1,944,533
<PP&E> 1,542,538
<DEPRECIATION> 857,384
<TOTAL-ASSETS> 3,302,988
<CURRENT-LIABILITIES> 605,931
<BONDS> 0
<COMMON> 25,832
0
0
<OTHER-SE> 2,503,301
<TOTAL-LIABILITY-AND-EQUITY> 3,302,988
<SALES> 1,681,083
<TOTAL-REVENUES> 2,156,122
<CGS> 1,286,368
<TOTAL-COSTS> 1,042,954
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,817
<INCOME-PRETAX> (116,673)
<INCOME-TAX> 0
<INCOME-CONTINUING> (116,673)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,673)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
