<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1997
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
Commission file No. 0-13167
TM CENTURY, INC.
(Name of small business issuer as specified in its
charter)
Delaware 73-1220394
(State of incorporation)(IRS Employer Identification No.)
2002 Academy, Dallas, Texas 75234
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (972) 247-8850
Check whether the issuer (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___
The number of issuer's shares of Common Stock
outstanding as of July 31, 1997 was 2,483,193.
Transitional Small Business Disclosure Format (check
one): Yes___ No X
<PAGE>
<TABLE>
TM CENTURY, INC.
Balance Sheets
June 30, 1997 (Unaudited) and September 30, 1996
ASSETS
<CAPTION>
June 30, September 30,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash $365,173 $377,855
Accounts and notes receivable
less allowances of $169,000 and $144,000, respectively
760,387 829,848
Inventories, net 912,392 1,220,454
Deferred federal income taxes 173,377 171,877
Prepaid expenses and other current assets
58,555 51,573
TOTAL CURRENT ASSETS 2,269,884 2,651,607
PROPERTY AND EQUIPMENT 2,425,928 2,298,086
Less accumulated depreciation (1,480,874) (1,224,005)
NET PROPERTY AND EQUIPMENT 945,054 1,074,081
INVENTORIES - NONCURRENT, net 161,021 351,016
OTHER ASSETS 18,259 15,388
TOTAL $3,394,218 $4,092,092
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $174,544 $225,260
Accrued expenses 217,196 123,619
Current portion of obligation under capital lease
156,254 121,303
Deferred revenue 16,017 24,298
Customer deposits 61,393 71,568
TOTAL CURRENT LIABILITIES 625,404 566,048
OBLIGATION UNDER CAPITAL LEASE 192,985 246,555
CUSTOMER DEPOSITS - NONCURRENT 164,145 159,531
DEFERRED FEDERAL INCOME TAXES 45,247 43,747
TOTAL LIABILITIES 1,027,781 1,015,881
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 7,500,000 shares;
2,970,481 shares issued 29,705 29,705
Paid-in capital 2,275,272 2,275,272
Treasury stock - at cost, 487,288 and 433,288 shares,
respectively (1,291,227) (1,250,316)
Retained earnings 1,352,688 2,021,550
TOTAL STOCKHOLDERS' EQUITY 2,366,438 3,076,211
TOTAL $3,394,219 $4,092,092
</TABLE>
<PAGE>
<TABLE>
TM CENTURY, INC.
Statements of Operations and Retained Earnings (Unaudited)
For the Three Months Ended June 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
REVENUES $1,962,285 $1,583,184
COSTS AND EXPENSES:
Production, programming & technical costs 824,465 753,013
General and administrative 514,717 600,269
Selling and commissions 634,667 433,388
Depreciation 90,000 62,095
TOTAL 2,063,849 1,848,765
OPERATING LOSS (101,564) (265,581)
OTHER INCOME (EXPENSES):
Interest expense (6,629) (1,624)
Other, net 2,082 (36,914)
TOTAL (4,547) (38,538)
LOSS BEFORE INCOME TAXES (106,111) (304,119)
INCOME TAX (BENEFIT) PROVISION:
Deferred - 17,556
TOTAL - 17,556
NET LOSS ($106,111) ($321,675)
</TABLE>
<PAGE>
<TABLE>
TM CENTURY, INC.
Statements of Operations and Retained Earnings (Unaudited)
For the Nine Months Ended June 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
REVENUES $5,469,684 $5,118,906
COSTS AND EXPENSES:
Production, programming and technical 2,313,954 2,285,924
General and administrative 1,657,728 1,672,514
Selling and commissions 1,736,143 1,365,168
Depreciation 270,368 160,470
Reduction in carrying value of inventories 148,000 -
TOTAL 6,126,193 5,484,076
OPERATING LOSS (656,509) (365,170)
OTHER INCOME (EXPENSES):
Interest expense (19,809) (1,691)
Other, net 7,456 (32,257)
TOTAL (12,353) (33,948)
LOSS BEFORE INCOME TAXES (668,862) (399,118)
INCOME TAX (BENEFIT) PROVISION:
Deferred - (2,188)
TOTAL - (2,188)
NET LOSS ($668,862) ($396,930)
</TABLE>
<PAGE>
<TABLE>
TM CENTURY, INC.
Statements of Cash Flows(Unaudited)
For the Nine Months Ended June 30, 1997
<CAPTION>
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss (668,862) (396,930)
Adjustments to reconcile net income
to net cash provided by (used in) operations:
Depreciation 256,869 160,470
Amortization 267,330 287,677
Deferred income taxes 0 (5,451)
Provision for doubtful accounts 58,000 60,000
Loss on disposition of property and equipment 0 40,836
Reduction in carrying value of inventories 148,000 29,935
Changes in operating assets and liabilities:
Accounts receivable 11,460 188,000
Inventories 82,727 17,157
Prepaid expenses and other assets (9,853) (24,355)
Accounts payable and accrued expenses 42,861 (161,279)
Federal income taxes receivable/payable 0 132,220
Deferred revenue (8,281) 0
Customer deposits (5,561) (174,256)
NET CASH PROVIDED BY OPERATING ACTIVITIES 174,690 154,024
INVESTING ACTIVITIES:
Acquisition of treasury stock (40,911) 0
Purchases of property and equipment (23,964) (50,744)
Principal payments received on notes receivable 0 4,423
NET CASH USED IN INVESTING ACTIVITIES (64,875) (46,321)
FINANCING ACTIVITIES:
Principal payments on capital lease obligations (122,497) (25,630)
NET CASH USED IN FINANCING ACTIVITIES (122,497) (25,630)
INCREASE (DECREASE) IN CASH (12,682) 82,073
CASH AT BEGINNING OF PERIOD 377,855 245,812
CASH AT END OF PERIOD 365,173 327,885
Supplemental disclosures of cash flow information:
Cash paid for interest 19,809 1,624
Noncash investing and financing activities
Capital lease obligation incurred 103,878 426,149
</TABLE>
<PAGE>
TM CENTURY INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
1. BASIS OF PRESENTATION
The interim financial statements of TM Century, Inc.
(the _Company_) at June 30, 1997, and for the three
and nine months ended June 30, 1997 and 1996, are
unaudited, but include all adjustments (consisting
only of normal recurring adjustments) which the
Company considers necessary for a fair presentation.
The September 30, 1996 balance sheet was derived
from the balance sheet included in the Company's
audited financial statements as filed on Form 10-KSB
for the year ended September 30, 1996. Certain
amounts previously reported in prior interim
financial statements have been reclassified to
conform to the 1997 presentation.
The accompanying unaudited interim financial
statements are for interim periods and do not
include all disclosures normally provided in annual
financial statements, and should be read in
conjunction with the Company's audited financial
statements. The accompanying unaudited interim
financial statements for the three and nine months
ended June 30, 1997 are not necessarily indicative
of the results which can be expected for the entire
fiscal year.
2. INCOME TAXES
Deferred income taxes are provided, when applicable,
on temporary differences between the recognition of
income and expense for tax and for financial
accounting purposes in accordance with Statement of
Financial Accounting Standards No. 109 (_SFAS 109_).
Temporary differences which give rise to deferred
taxes include basis differences of property and
equipment, accelerated tax depreciation in excess of
book depreciation, and valuation allowances provided
in excess of amounts deductible for tax purposes.
Under the provisions of SFAS 109, recognition of
deferred tax assets is permitted for such amounts
which can be carried forward to future periods.
The Company has net operating loss carryforwards of
approximately $1.5 million available to offset
future taxable income expiring in 2008 through 2009.
The Company has recorded a deferred tax asset of
$173,000 after deduction of a valuation allowance of
$440,000 to reduce the total deferred tax asset
because it is likely that a portion of the tax asset
will not be realized. Realization is dependent on
generating sufficient taxable income prior to
expiration of the loss carryforwards. Management
believes it is more likely than not that the non-
reserved portion of the deferred tax asset will be
realized. The amount of the deferred tax asset
considered realizable, however, could be reduced in
the near term if estimates of
<PAGE>
future taxable income during the carryforward period
are reduced. Certain provisions of the tax law may
limit the net operating loss, capital loss and
credit carryforwards available for use in any given
tax year in the event of a significant change in
ownership interest.
3. LONG-TERM DEBT AND LEASE OBLIGATIONS
The Company has a $300,000 revolving Line of Credit
with a bank which provides a negative pledge on all
accounts receivable, contract rights, and inventory
of the Company. Borrowings under the Line of Credit
bear a fluctuating interest rate of prime plus 1.5%,
payable monthly. The Line of Credit, which bears an
annual commitment fee of 0.5% of the unused amounts,
is renewable annually, subject to the consent of
both parties. The Line of Credit was renewed
through February 28, 1998 with no other changes in
terms. No borrowings were drawn under the Line of
Credit during the quarter. In conjunction with the
Company's leasing arrangement discussed below, the
availability under the Line of Credit was reduced
from $300,000 to $100,000.
In May 1996 the Company entered into a lease
agreement for the financing of an upgrade of its
computer hardware and software systems. During the
quarter ended December 31, 1996, the Company
obtained financing on the remaining $100,000 of the
total $550,000 project. The lease is backed by a
$200,000 letter of credit which must be renewed
annually subject to the renewal of the Company's
Line of Credit. The requirement of the letter of
credit will be reviewed on an annual basis. The
lease has a term of three years and contains an
option to purchase the equipment at its fair market
value or renew the lease at its fair market rental
value at the end of the initial term. Based on
borrowing rates currently available to the Company
on similar arrangements, the fair value of the lease
agreement approximates the carrying value.
4. TREASURY STOCK
On December 19, 1996, the Board of Directors by
resolution authorized the Company to purchase up to
50,000 shares of its common stock, and on January
27, 1997, authorized the Company to purchase an
additional 25,000 shares of its common stock on the
open market or through privately negotiated
transactions, from time to time, dependent upon
market conditions, through December 31, 1997. As of
June 30, 1997, the Company has made purchases
totaling 54,000 shares. These purchases were funded
and future purchases, if any, are expected to be
funded by cash reserves of the Company. There were
no purchases made during the quarter.
<PAGE>
5. SALE OF ASSETS
During the quarter ended March 31, 1997, the Company
recorded a charge against operations of
approximately $148,000 to reduce the carrying value
of equipment inventory and assets relating to its
automated music playback system, the Ultimate
Digital System_ ("UDS") to their net realizable
value. On June 6, 1997 the Company sold all
equipment inventory and assets relating to UDS to an
unaffiliated party. After consideration of the
$148,000 reserve recorded in the second quarter of
1997, there was no significant financial impact to
the Company in connection with the sale.
<PAGE>
TM CENTURY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
TM Century, Inc. is engaged primarily in the
creation, production, marketing, and worldwide
distribution of compact disc music libraries,
production libraries, station identification
jingles, and computer software used in music
scheduling for radio stations.
Forward-Looking Statements
This Quarterly Report contains forward-looking
statements about the business, financial condition
and prospects of the Company that reflect
assumptions made by management and management's
beliefs based on information currently available to
it. The Company can give no assurance that the
expectations indicated by such forward-looking
statements will be realized. If any of management's
assumptions should prove incorrect, or if any of the
risks and uncertainties underlying such expectations
should materialize, the Company's actual results may
differ materially from those indicated by the
forward-looking statements.
The key factors that are not within the Company's
control and that may have a direct bearing on
operating results include, but are not limited to,
the Company's ability to develop new products cost-
effectively; continued maturation of the domestic
and international markets for compact disc
technology; acceptance by customers of the Company's
existing and any new products and formats; the
development by competitors of products using
improved or alternative technologies and the
potential obsolescence of technologies used by the
Company; the continued availability of software and
other products obtained by the Company from third
parties; dependence on distributors, particularly in
the international market, and on third parties
engaged to replicate the Company's products on
compact discs; the retention of employees; the
success of the Company's current and future efforts
to reduce operating expenses; the effectiveness of
new marketing strategies; and general economic
conditions. There may be other risks and
uncertainties that management is not able to
predict.
When used in this Quarterly Report, words such as
believes, expects, intends, plans, anticipates,
estimates and similar expressions
are intended to identify forward-looking statements,
although there may be certain forward-looking
statements not accompanied by such expressions. All
forward-looking statements are intended to be
covered by the safe harbor created by Section 21E of
the Securities Exchange Act of 1934.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company relies upon current sales of music
libraries, jingles, and software on terms of cash
upon delivery for operating liquidity. Liquidity is
also provided by cash receipts from customers under
contracts for production libraries and weekly music
service contracts having terms of up to four years.
The Company is obligated to provide music updates
throughout the contract terms for weekly music
service contracts. Sales of music libraries,
jingles, and specialized computer equipment and
software and the payments under production library
and weekly music service contracts will provide, in
the opinion of management, adequate liquidity to
meet operating requirements at least through the end
of fiscal 1997. During the quarter ended June 30,
1997, the Company had positive cash flows from
operations for the three-month period.
During the quarter ended June 30, 1997,
approximately $78,000 was spent for the purchase of
property and equipment and for product development
costs for new music libraries, music library
updates, and jingles. Funds for operating needs,
new product development, and capital expenditures
for the period were provided from cash reserves.
The Company's expenditures for property, equipment,
and development of new products are discretionary.
Product development expenditures are expected to be
approximately $175,000 in fiscal 1997. Management
anticipates that cash flow from operations, cash
reserves, and funds available under the Company's
line of credit will be sufficient to meet these
capital requirements at least through the end of
fiscal year 1997.
In May 1996 the Company entered into a lease
agreement for the financing of an upgrade of its
computer hardware and software systems. The Company
is required to repay the amount financed, totaling
$550,000 in equal monthly payments of principal and
interest during the term of the lease. Monthly
payments on the lease are approximately $16,000.
The term of the lease is three years and the lease
is backed by a letter of credit in the amount of
$200,000. The letter of credit reduces the
availability under the Company's revolving Line of
Credit from $300,000 to $100,000. Management
anticipates that cash flow from operations and cash
reserves will be sufficient to meet these capital
requirements. The Company has no other significant
commitments for capital expenditures in fiscal 1997.
The Company's revolving Line of Credit with a bank
provides a negative pledge on all accounts
receivable, contract rights, and inventory of the
Company. Borrowings under the Line of Credit bear a
fluctuating interest rate of prime plus 1.5%,
payable monthly. The Line of Credit, which bears an
annual commitment fee of 0.5% of the unused amounts,
is renewable annually, subject to the consent of
both parties. The Line of Credit was renewed
through February 28, 1998. No borrowings were drawn
under the Line of Credit during the quarter.
<PAGE>
On December 19, 1996, the Board of Directors by
resolution authorized the Company to purchase up to
50,000 shares of its common stock, and on January
27, 1997, authorized the Company to purchase an
additional 25,000 shares of its common stock on the
open market or through privately negotiated
transactions, from time to time, dependent upon
market conditions, through December 31, 1997. As of
June 30, 1997, the Company has made purchases
totaling 54,000 shares at an average price of $.76
per share. These purchases were funded by cash
reserves of the Company. Future purchases are
expected to be funded by cash reserves of the
Company.
RESULTS OF CONTINUING OPERATIONS
Comparison of the Three-Month Periods Ended June 30,
1997 and 1996
Revenues increased approximately 24% or $379,000 in
the three-month period ended June 30, 1997 as
compared to the same period for the previous year.
The increase was due primarily to increases in
revenue for a weekly comedy service of approximately
$30,000 and increases in sales of compact disc music
libraries of approximately $290,000.
The increase in revenue from weekly comedy services
is due primarily to barter arrangements whereby
revenues are derived from obtaining commercial
airtime from radio stations in exchange for such
weekly services and marketing such airtime to
advertisers. The Company has begun to market other
products using similar barter arrangements.
Revenues from such barter arrangements are expected
to continue to increase in the future.
The increase in compact disc music library revenues
was due to the introduction in the fourth quarter of
1996 of a new music format targeted to non-broadcast
customers. As the compact disc music library market
matures, sales of compact discs are generated
primarily from changes in music formats or sales of
new music libraries or formats rather than from
conversions to compact disc music delivery
technology. The market for compact disc music
libraries to broadcast customers has reached a
substantial level of maturity in the United States,
which is the market from which the Company derives
most of its music library revenues. A decline in
revenues from music library sales may result in a
proportionately greater decline in operating income
because music libraries provide higher margins than
the Company's other products. However, management
believes that sales to non-broadcast customers and
the introduction of new products will counteract the
declines in revenues from existing music libraries.
New products include pre-recorded music provided to
equipment manufacturers for hard drive systems which
was introduced during the quarter and a new music
library targeted to non-broadcast customers which
was introduced during the fourth quarter. Renewals
and new sales growth are subject to customer
acceptance of the new products.
<PAGE>
Overall production library revenues remained
consistent with the prior year. Decreases in
production library revenue from the expiration of
three-year contracts were offset by new contracts
under barter arrangements for new and existing
libraries. Although production library revenues from
existing libraries may continue to decline as
additional three-year contracts expire, management
believes that production libraries will continue to
generate a significant portion of overall revenues
from sales of existing products through barter
arrangements and sales of new products. The Company
introduced a new production library in the second
quarter of fiscal 1997. Sales and new sales growth
are subject to customer acceptance of the new
products.
Production, programming and technical costs
increased approximately $71,000 and as a percentage
of revenue decreased from 47% to 42%. The decrease
as a percentage of revenues is due to the increase
in sales of compact disc libraries which have higher
profit margins.
Selling and commission costs increased $201,000 and
as a percentage of revenues increased from 27% to
32% of revenue due primarily to higher selling costs
for products sold under barter arrangements,
promotional costs of new products and sales
promotions and increases in sales salaries due to
changes in sales force and commission plans.
Commissions on international sales accounted for 30%
of selling and commission costs.
General and administrative costs decreased $85,000
due to decreases in salaries related to changes in
personnel and decreases in professional fees.
Depreciation increased approximately $30,000 due
primarily to depreciation expense for computer
hardware and software acquired under capital leases.
On June 6, 1997 the Company sold all equipment
inventory and assets relating to its automated music
playback system to an unaffiliated party. After
consideration of the reserve previously established
with respect to the assets, there was no significant
financial impact to the Company in connection with
the sale. Management believes that the sale will
allow the Company to better concentrate on its core
competencies of music software products and
services.
Comparison of the Nine-Month Periods Ended June 30,
1997 and 1996.
Revenues increased approximately 6.9% or $350,000 in
the nine-month period ended June 30, 1997 as
compared to the same period for the previous year.
The increase was due primarily to increases in sales
of compact disc music libraries of approximately
$400,000, and an increase of approximately $225,000
in sales of a weekly comedy service. The increases
were offset by a decline in music scheduling
software sales of approximately $150,000 and a
decline in sales of specialized computer equipment
of $70,000.
<PAGE>
The increase in compact disc music library revenues
was due to the introduction in the fourth quarter of
1996 of a new music format targeted to non-broadcast
customers. Refer to discussion above for the three
month period for information regarding the music
library market.
The increase in revenue from weekly comedy services
was due primarily to barter arrangements whereby
revenues are derived from obtaining commercial
airtime from radio stations in exchange for such
weekly services and marketing such airtime to
advertisers. The Company has begun to market other
products using similar barter arrangements.
Revenues from such barter arrangements are expected
to continue to increase in the future.
The decline in software sales was due to the
termination in January 1996 of the Company's
agreement with its former supplier of computer
software used in programming music sequences. The
Company is currently marketing a music scheduling
software produced by another supplier. The Company
expects that it will be able to build its customer
base for its music scheduling software over the next
five years but does not expect revenue levels to
attain its former levels.
The decline in sales of specialized computer
equipment was due to declines in sales of the
Company's automated music playback system, the UDS.
During the quarter ended March 31, 1997, the Company
recorded a charge against operations of
approximately $148,000 to reduce the carrying value
of equipment inventory and assets relating to the
UDS to their net realizable value. On June 6, 1997
the Company sold all equipment inventory and assets
relating to the UDS to an unaffiliated party. After
consideration of the reserve previously established
with respect to the assets, there was no significant
financial impact to the Company in connection with
the sale.
Selling and commission costs as a percentage of
revenue increased approximately $183,000 and as a
percentage of revenues increased from 27% to 32% of
revenue due primarily to higher selling costs for
products sold under barter arrangements, and
increases in salaries and commissions due to changes
in sales force and commission plans. Commissions on
international sales accounted for 40% of selling and
commission costs.
General and administrative costs decreased
approximately $15,000 due primarily to the prior
year settlement of approximately $60,000 with a long
distance service carrier for long distance calls
fraudulently charged to the Company's toll free
telephone numbers offset by an increase in occupancy
costs related to the lease of Company's headquarters
of $40,000.
<PAGE>
Production, programming and technical costs
increased approximately $28,000 and as a percentage
of revenue decreased from 45% to 42%. The decrease
as a percentage of revenues is due to the increase
in sales of compact disc libraries which have higher
profit margins.
Depreciation increased approximately $110,000 due
primarily to depreciation expense for computer
hardware and software acquired under capital leases.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings - Not applicable.
Item 2. Changes in securities - Not applicable.
Item 3. Defaults upon senior securities - Not
applicable.
Item 4. Submission of matters to a vote of security
holders - Not applicable.
Item 5. Other information - Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. Material Contracts: None.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company
during the three month period ending June 30, 1997.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the
Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned thereunto
duly authorized.
Dated: August 14, 1997
TM CENTURY, INC.
BY:/s/Janette L. Williams
Janette L. Williams
Chief Accounting Officer
(Principal Accounting
Officer)
BY:/s/Neil W. Sargent
Neil W. Sargent
Chief Executive Officer
(Principal Executive
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS ON PAGES 2 AND 4 OF THE COMPANY'S FORM
10-QSB FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 365173
<SECURITIES> 0
<RECEIVABLES> 929387
<ALLOWANCES> 169000
<INVENTORY> 1073413
<CURRENT-ASSETS> 2269884
<PP&E> 2425928
<DEPRECIATION> 1480874
<TOTAL-ASSETS> 3394218
<CURRENT-LIABILITIES> 625404
<BONDS> 0
0
0
<COMMON> 29705
<OTHER-SE> 2336733
<TOTAL-LIABILITY-AND-EQUITY> 3394219
<SALES> 5469684
<TOTAL-REVENUES> 5469684
<CGS> 2584322
<TOTAL-COSTS> 2584322
<OTHER-EXPENSES> 148000<F1>
<LOSS-PROVISION> 58000
<INTEREST-EXPENSE> 19809
<INCOME-PRETAX> (668862)
<INCOME-TAX> 0
<INCOME-CONTINUING> (668862)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (668862)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.27)
<FN>
<F1>REFER TO NOTE 5 TO THE INTERIM FINANCIAL STATEMENTS OF THE COMPANY'S FORM
10-QSB FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
</FN>
</TABLE>
