U.S. Securities and Exchange Commission
Washington, D.C. 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 December 31, 1996
or
[_] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ______________ to _____________
Commission file number 0-13117
MICROFRAME, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
New Jersey 22-2413505
------------------------------ -------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
21 Meridian Road, Edison, New Jersey 08820
------------------------------------------
(Address of Principal Executive Offices)
(908) 494-4440
------------------------------------------
(Issuer's Telephone Number, Including Area Code)
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 [_]
There were 4,822,142 shares of Common Stock outstanding at January 29, 1997
Transitional Small business Disclosure Format:
Yes [_] No [X]
<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 1996
PART I. FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Information 2
Condensed Consolidated Balance Sheets as of December 31, 1996
and March 31, 1996 (Unaudited) 3
Condensed Consolidated Statements of Operations for the
three months ended December 31, 1996 and December 31, 1995;
nine months ended December 31, 1996 and December 31, 1995
(Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended December 31, 1996 and December 31, 1995 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6-8
Item 2. Management's Discussion and Analysis or Plan of Operation 9-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I. Financial Information
Item 1. Condensed Consolidated Financial Information.
---------------------------------------------
The condensed consolidated financial statements included herein have
been prepared by the registrant without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Although the registrant
believes that the disclosures are adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the registrant's latest Annual Report on Form 10-KSB.
-2-
<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 657,256 $ 48,302
Accounts receivable, less allowance for doubtful
accounts of $100,000 1,532,220 1,540,561
Inventory 999,137 1,084,870
Prepaid expenses and other current assets 114,252 77,426
----------- -----------
Total current assets 3,302,865 2,751,159
Property and equipment at cost, net 367,491 409,866
Capitalized software, less accumulated amortization
of $766,811 and $649,332, respectively 316,398 266,319
Goodwill, less accumulated amortization of
$13,625 and $5,766 respectively 87,985 95,844
Security deposits 34,110 34,983
----------- -----------
Total assets $ 4,108,849 $ 3,558,171
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank borrowings $ 41,261 $ 538,754
Accounts payable 192,396 395,619
Accrued payroll and related liabilities 206,086 285,651
Deferred income 255,880 258,856
Other current liabilities 347,532 435,215
----------- -----------
Total current liabilities 1,043,155 1,914,095
----------- -----------
Committments and contingencies -- --
Long-term debt 41,353 72,833
Stockholders' equity
Common stock - par value $.001 per share;
authorized 50,000,000 shares, issued 4,822,542
shares and outstanding 4,822,142 shares at
December 31, 1996; issued 3,718,075 shares
and outstanding 3,717,675 shares at March 31, 1996 4,822 3,718
Preferred stock - par value $10 per share;
authorized 200,000 shares, none issued -- --
Additional paid-in capital 6,185,743 4,856,924
Accumulated deficit (3,162,244) (3,285,399)
----------- -----------
3,028,341 1,575,243
Less - Treasury stock, 400 shares, at cost (4,000) (4,000)
----------- -----------
Total stockholders' equity 3,024,341 1,571,243
----------- -----------
Total liabilities and stockholders' equity $ 4,108,849 $ 3,558,171
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements
-3-
<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31,
------------ ------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 5,264,210 $ 4,334,057 $ 1,826,698 $ 1,727,117
Cost of sales 2,016,324 1,796,923 762,434 631,049
----------- ----------- ----------- -----------
Gross Margin 3,247,886 2,537,134 1,064,264 1,096,068
Research and development expenses 664,711 440,082 236,701 146,032
Selling, general and administrative expenses 2,464,871 2,811,044 781,852 904,907
----------- ----------- ----------- -----------
Income (loss) from operations 118,304 (713,992) 45,711 45,129
Interest income 27,620 3,262 6,520 200
Interest expense (22,749) (17,910) (1,881) (16,216)
----------- ----------- ----------- -----------
Income (loss) before income tax provision/benefit 123,175 (728,640) 50,350 29,113
Income tax provision/benefit 0 0 0 0
----------- ----------- ----------- -----------
Net income (loss) $ 123,175 $ (728,640) $ 50,350 $ 29,113
=========== =========== =========== ===========
Per share data
Primary
Net income (loss) per share $ 0.02 $ (0.20) $ 0.01 $ 0.01
----------- ----------- ----------- -----------
Weighted average number of common shares outstandin 5,083,248 3,699,178 5,126,845 3,717,885
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements
-4-
<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 123,175 $ (728,640)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 272,273 243,054
Provision for bad debts 49,751 42,455
Provision for inventory obsolescence 35,000 19,609
(Increase) decrease in
Accounts receivable (41,410) 346,407
Inventory 50,733 (732,021)
Prepaid expenses and other current assets (36,826) 16,259
Security deposits 873 (11,492)
Increase (decrease) in
Accounts payable (203,223) 167,312
Accrued payroll and related liabilities (79,565) (118,843)
Deferred income (2,976) 29,814
Other current liabilities (87,683) 46,486
----------- -----------
Net cash provided (used) by operating activities 80,122 (679,600)
----------- -----------
Cash flows from investing activities
Capital expenditures (104,560) (194,410)
Capitalized software (167,558) (247,810)
Acquisition of European Business Associates 0 (50,206)
----------- -----------
Net cash used in investing activities (272,118) (492,426)
----------- -----------
Cash flows from financing activities
Proceeds of short-term borrowings 0 702,965
Repayments of debt (528,973) 0
Issuance of common stock 1,329,923 9,384
----------- -----------
Net cash provided by financing activities 800,950 712,349
----------- -----------
Net increase (decrease) in cash and cash equivalents 608,954 (459,677)
Cash and cash equivalents - beginning of period 48,302 490,261
----------- -----------
Cash and cash equivalents - end of period $ 657,256 $ 30,584
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements
-5-
<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Unaudited)
Note 1 - Condensed Consolidated Financial Statements:
- -----------------------------------------------------
The condensed consolidated balance sheets as of December 31, 1996 and March 31,
1996, the condensed consolidated statements of operations for the nine month
periods ended December 31, 1996 and 1995 and the condensed consolidated
statements of cash flows for the nine month periods then ended have been
prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
December 31, 1996 and 1995 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. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto as of March 31, 1996 and for the year then ended.
Note 2 - Inventory:
- -------------------
Inventory consists of the following:
December 31, 1996 March 31, 1996
----------------- --------------
Raw materials $ 640,670 $ 676,120
Work in process 325,405 367,820
Finished goods 33,062 40,930
---------- ----------
Total $ 999,137 $1,084,870
========== ==========
-6-
<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Unaudited)
Note 3 - Stockholders' Equity:
- ------------------------------
During the nine months ended December 31, 1996, stockholders' equity changed for
the following items:
Net income $ 123,175
Issuance of common stock of $1,329,923
In April, 1996, the Company sold 860,000 shares of common stock to unrelated
investors, at $1.25 per share and received net proceeds of approximately
$1,030,000. In conjunction with this sale, warrants to purchase 860,000 shares
of common stock with an exercise price of $1.50 and warrants to purchase an
additional 860,000 shares of common stock with an exercise price of $2.00 were
issued. These warrants expire in April, 2000.
In addition, the Company sold 241,467 shares of common stock at $1.25 per share
to four current shareholders of record who held the contractual right to
maintain their share of ownership. The Company received net proceeds of
approximately $300,000. In conjunction with this sale, warrants to purchase
241,467 shares of common stock with an exercise price of $1.50 and warrants to
purchase an additional 241,467 shares of common stock with an exercise price of
$2.00 were issued. These warrants expire in April, 2000.
Note 4 - Net Income Per Share:
- ------------------------------
The computation of earnings per common and common equivalent share is based upon
the weighted average number of common shares outstanding during the period plus
(in periods in which they have a dilutive effect) the effect of common stock
equivalents, comprised of outstanding stock options and warrants. Fully diluted
earnings per share also reflect additional dilution related to outstanding stock
options due to the use of the market price at the end of the period, when higher
than the average price for the period.
-7-
<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Unaudited)
Note 5 - Contingent Liabilities
- -------------------------------
The Company is involved in proceedings with respect to certain sales tax
matters. Total amounts included in other current liabilities related to these
proceedings is $75,000 at December 31, 1996. In the opinion of management of the
Company, amounts accrued for assessments in connection with sales tax are
adequate and ultimate resolution of these matters will not have a material
effect on the Company's consolidated financial position, results of operations
or cash flows.
Note 6 - Stock-Based Compensation
- ---------------------------------
In fiscal 1997, the Company will be required to adopt the provisions
of Statement of Financial Standards No. 123, "Accounting for Stock-Based
Compensation". This Statement requires companies to estimate the fair value of
common stock, stock options, or other equity instruments ("Equity Instruments")
issued to employees using pricing models which take into account various factors
such as current price of the common stock, volatility and expected life of the
Equity Instrument. The Standard permits companies to either provide pro forma
footnote disclosure, or to adjust operating results, for the amortization of the
estimated value of the Equity Instrument over the vesting period of the Equity
Instrument. The Company has elected to account for stock options under
Accounting Principles Board Opinion No. 15 and will disclose certain pro forma
information beginning in fiscal 1997.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
This section and the financial information provided herein contain
forward looking statements that involve risks and uncertainties. The Company's
actual results may differ materially from Management's expectations and the
results discussed in the forward looking statements.
Results of Operations
- ---------------------
Revenues for the quarter ended December 31, 1996 were $1,826,698 as
compared with revenues of $1,727,117 for the same quarter of the previous fiscal
year, or an increase of approximately 6 %. This improvement is primarily due to
the successful introduction of the Company's new flagship product, the Sentinel
2000, as well as the first delivery of another member of the new family of
products, the Manager 2000.
Initially introduced during the fiscal quarter ended June 30, 1996,
shipments of the Sentinel 2000 have progressively increased in each of the three
fiscal quarters in the current fiscal year. Shipments for the quarter ended
December 31, 1996 were approximately $739,000, compared to $585,000 in the
quarter ended September 30, 1996 and $325,000 in the quarter ended June 30,
1996. The Sentinel 2000 represented the first member of the new family of
products, collectively referred to as Secure Network Systems/2000, which are
being introduced in the current fiscal year (ending March 31, 1997). The Manager
2000 represents the second member of this family of industry standards based
products which are designed to address the growing demand for remote network
management of mission critical integrated voice and data networks. These
products integrate security management, remote access, fault management and
problem identification/resolution into a powerful suite of network management
solutions to monitor, maintain and increase the operational integrity and access
to the voice and data network. The Secure Network Systems/2000 family of
products generated approximately 43% of the Company's revenues for the quarter
ended December 31, 1996.
A large portion of the success of the new product is due to the new
contractual relationships the Company has formed with new customers, the most
recent being with TELE Business Communications of Finland, a subsidiary of
Telecom Finland, the state-owned telecommunication company. Announced in
November, 1996, this represented the Company's first major successful
introduction in the European community. After successful introductions in both
the Pacific Rim and the United States in the first six months of the fiscal
year, this most recent relationship continues to establish the Company's
worldwide presence. The Company believes these new relationships will continue
to build the foundation which this next generation of products has established.
-9-
<PAGE>
The reliance on the Company's two primary customers, Lucent
Technology and MCI, continues to be reduced as only 29% of revenues in the
quarter ended December 31, 1996 were attributable to these two long-term
customer relationships. This is a decrease from 41% in the quarter ended
December 31, 1995 and a decrease from 48% with respect to fiscal 1996 as a
whole. This is directly attributable to the Company's commitment to expand its
customer base in order to reduce its vulnerability in relying on two primary
customers. In addition, the Company experienced a significant increase in
shipments to Europe, primarily due to the aforementioned TELE Business
Communications relationship, after a slowdown experienced in the first six
months of the fiscal year. Shipments to the European market increased to
approximately $434,000 in the quarter ended December 31, 1996 from $165,000 in
the quarter ended September 30, 1996 and $368,000 in the quarter ended December
31, 1995.
The Company's cost of goods sold increased from $631,049 for the
quarter ended December 31, 1995 to $762,434 for the quarter ended December 31,
1996 as a result of both increased shipment levels and increased costs for the
initial shipments of the Sentinel 2000. Cost of goods sold as a percentage of
sales increased from 36.5% for the previous comparable fiscal period to 41.7%
for this fiscal period, primarily due to the initially higher costs of the new
family of products. The Company continues to focus on lowering the costs related
to these products as they begin to mature.
Research and development expenses, net of capitalized software
development, increased from $146,032 in the quarter ended December 31, 1995 to
$236,701 in the current fiscal quarter, an increase of 62%. This is a direct
reflection of the Company's increased activity related to the development of the
Secure Network Systems/2000 set of products being introduced in fiscal 1997 and
the significantly lower amounts of development expenses being capitalized
subsequent to the initial shipments of the Sentinel 2000. Research and
development expenses as a percentage of revenues increased from 8% to 13%.
Selling, general and administrative expenses decreased 14% from $904,907 for the
prior year's comparable fiscal period to $781,852 for the fiscal period ended
December 31, 1996. This is a result of Management's focus on reducing
administrative overhead in order to help return the Company to profitability.
The Company's operating profit before interest and taxes were almost
identical for the comparable quarters - $45,711 for the current quarter verses
$45,129 for the prior comparable quarter. However, due to the reduction in
interest costs to the Company, net income of $50,350 for the current quarter
ended December 31, 1996 exceeded the $29,113 net income reported in the fiscal
quarter ended December 31, 1995. As the Company has available unused federal and
state net operating loss carryforwards of approximately $2,400,000 and
$1,000,000, respectively, at March 31, 1996 and has fully provided a valuation
allowance against its existing deferred tax assets, it is in a position to
record no income tax provision until such time as the net operating loss
carryforwards are utilized or expire. The current expiration dates range from
the years 2001 through 2011.
-10-
<PAGE>
First Nine Months of Fiscal 1997 Versus First Nine Months Fiscal 1996
- ---------------------------------------------------------------------
Revenues for the nine months ended December 31, 1996 were $5,264,210
as compared with revenues of $4,334,057 for the comparable period of the
previous fiscal year, or an increase of approximately 21%. This improvement is
due to both the introduction of the Company's new flagship product, the Sentinel
2000, the expanding domestic customer base, and the poor performance of the
Company in the quarter ended September 30, 1995. Sales of the Sentinel 2000 have
approximated $1,650,000 (over 31% of revenue) during the first nine months of
fiscal 1997, which represents, the fastest introduction rate of any product in
the Company's history. At the same time, shipments to the Company's two primary
customers, Lucent Technology and MCI, represent approximately 26% of the total
revenues for the nine month period versus 42% over the comparable nine-month
period in fiscal 1996. These events have helped to offset the decrease in
shipments to the European market. Shipments to Europe decreased to approximately
$802,000 in the nine months ended December 31, 1996 from $851,000 in the prior
comparable period, or a decrease of 6%. As mentioned previously, European volume
did ramp up in the quarter ended December 31, 1996.
The Company's cost of goods sold increased from $1,796,923 for the
nine months ended December 31, 1995 to $2,016,324 for the nine months ended
December 31, 1996 as a result of increased shipment levels. Cost of goods sold
as a percentage of sales decreased from 41.4% for the previous comparable fiscal
period to 38.3% for this fiscal period, as the increase in materials cost for
the new product set has been offset by both increased sales volume and improved
purchasing and materials management systems.
Research and development expenses, net of capitalized software
development, increased from $440,082 in the nine months ended December 31, 1995
to $664,711 in the current fiscal period, an increase of 51%. As stated
previously, this is a direct reflection of the Company's increased activity
related to the development of the Secure Network Systems/2000 set of products
being introduced in fiscal 1997 and the substantial reduction in the amount of
development expenses being capitalized. In addition, research and development
expenses as a percentage of revenues increased from 10.2% to 12.6%. Selling,
general and administrative expenses decreased 12.3% from $2,811,044 for the
prior year's comparable fiscal period to $2,464,871 for the nine months ended
December 31, 1996 primarily due to Management's commitment to reducing
administrative overhead.
The Company's operating profit before interest and taxes increased by
approximately $832,000 from an operating loss of $713,992 during the nine months
ended December 31, 1995 to an operating profit of $118,304 for the nine months
ended December 31, 1996. The Company's available unused loss carryforwards and
its fully provided valuation allowance against its existing deferred tax assets
allows it to record no income tax provision currently.
-11-
<PAGE>
Financial Condition and Capital Resources
- -----------------------------------------
During the first nine months of fiscal year 1997, the Company's
financial condition improved significantly as stockholder's equity increased
from $1,571,243 at March 31, 1996 to $3,024,341 at December 31, 1996, and the
Company's working capital increased from $837,064 to $2,259,710. This
improvement is a direct result of the completion of a private placement of
860,000 shares of the Company's Common Stock for net proceeds of approximately
$1,030,000. In addition, 241,467 shares of the Company's Common Stock were
issued to existing shareholders who had the contractual right to maintain their
percentage ownership in the Company. Net proceeds of approximately $300,000 were
received. Of the private placement net proceeds of $1,330,000, $500,000 was used
to pay down in full the Company's line of credit which had been outstanding at
March 31, 1996.
The Company previously had a credit agreement with CoreStates Bank
("CoreStates") for a credit line of $1,000,000 to finance future working capital
requirements, collateralized by accounts receivable, inventory, equipment and
all other assets of the Company, as well as a $150,000 credit facility to
finance purchases of machinery and equipment, convertible into a three-year
secured term loan when utilized. The Company borrowed $124,000 against this
facility in November, 1995, at which time this debt was converted into a
three-year term loan. As of December 31, 1996, $82,614 remained outstanding on
this loan. The Company was informed in June, 1996, that the working capital
credit line would not be renewed upon its expiration date of July 31, 1996. The
outstanding balance was repaid by the Company on September 5, 1996, in
accordance with an agreement with CoreStates which stated that payment was to be
made no later than October 31, 1996. On August 30, 1996, the Company executed a
credit agreement with Farrington Bank of North Brunswick, New Jersey. The
agreement provides the Company with a $500,000 line of credit to finance future
working capital requirements, collateralized by accounts receivable of the
Company. The agreement expires on August 30, 1997. No portion of this credit
line had been utilized as of December 31, 1996.
Based on its current cash and working capital position, as well as
its available line of credit, the Company believes that it will have sufficient
capital to meet its financial requirements for the next twelve months.
-12-
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
-----------------
In March 1996, the Company received a Notice of Determination from
the New York State Department of Taxation and Finance in which a sales tax
assessment was made in the sum of approximately $227,392, including interest and
penalties. The Company believes that New York's position is without merit and is
vigorously defending its position that no tax is owed. A conciliation conference
took place before the Bureau of Conciliation and Mediation services of the New
York State Department of Taxation and Finance on October 21, 1996, at which the
Company was provided an additional period of time to provide additional
documentation to justify its position. In the opinion of the management of the
Company, amounts accrued for assessments in connection with sales tax are
adequate and the ultimate resolution of these matters will not have a material
effect on the Company's consolidated financial position, results of operations
or cash flows.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits: None.
(b) Reports on Form 8-K: None
-13-
<PAGE>
SIGNATURES
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.
Date: February , 1997
MICROFRAME, INC.
/s/ StephenB.Gray
-------------------------------
Stephen B. Gray, President and
Chief Operating Officer
/s/ Mark A. Simmons
-------------------------------
Mark A. Simmons, Chief Financial
Officer (Principal Financial Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000754813
<NAME> MICROFRAME, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 657,256
<SECURITIES> 0
<RECEIVABLES> 1,632,220
<ALLOWANCES> (100,000)
<INVENTORY> 999,137
<CURRENT-ASSETS> 3,302,865
<PP&E> 1,066,187
<DEPRECIATION> (698,696)
<TOTAL-ASSETS> 4,108,849
<CURRENT-LIABILITIES> 1,043,155
<BONDS> 0
0
0
<COMMON> 4,822
<OTHER-SE> 3,019,519
<TOTAL-LIABILITY-AND-EQUITY> 4,108,849
<SALES> 5,264,210
<TOTAL-REVENUES> 5,264,210
<CGS> 2,016,324
<TOTAL-COSTS> 5,145,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,749
<INCOME-PRETAX> 123,175
<INCOME-TAX> 0
<INCOME-CONTINUING> 123,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,175
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
