<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
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: 0-13772
USAA Income Properties III Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 74-2356253
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 Robert F. McDermott Fwy., IH 10 West, Suite 600
San Antonio, Texas 78230-3884
(Address of principal executive offices) (Zip code)
(210) 498-7391
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if
changed since last report.)
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 file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes [ ] No
1
<PAGE>
PART I
Item 1. Financial Statements
<TABLE>
USAA Income Properties III Limited Partnership
Condensed Balance Sheets
<CAPTION>
September 30,
1997 December 31,
(Unaudited) 1996
<S> <C> <C>
Assets
Rental properties, net $ 40,667,918 39,262,249
Temporary investments, at cost
which approximates market value-
Money market fund 5,780,791 9,301,147
Cash 570,992 118,000
Cash and cash equivalents 6,351,783 9,419,147
Accounts receivable, net of allowance for doubtful
accounts of $90,000 239,509 555,959
Deferred rent 3,020,432 2,882,064
Deferred charges and other assets, at
amortized cost 1,975,498 1,646,751
$ 52,255,140 53,766,170
Liabilities and Partners' Equity
Mortgages payable to affiliates $ 26,000,000 26,000,000
Accounts payable, including amounts due
to affiliates of $66,025 and $101,194 247,744 414,274
Accrued expenses and other liabilities 1,044,958 344,651
Total liabilities 27,292,702 26,758,925
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 1,294 14,982
Cumulative distributions (275,960) (269,199)
(273,666) (253,217)
Limited Partners (111,549 units):
Capital contributions, net of offering
costs 52,428,030 52,428,030
Cumulative net income 128,117 1,483,181
Cumulative distributions (27,320,043) (26,650,749)
25,236,104 27,260,462
Total Partners' equity 24,962,438 27,007,245
$ 52,255,140 53,766,170
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
<TABLE>
USAA Income Properties III Limited Partnership
Condensed Statements of Operations
(Unaudited)
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1997 1996
<S> <C> <C>
Income
Rental income $ 2,220,223 2,124,366
Interest income, $62,880 from affiliate for 1997 83,367 140,421
Total income 2,303,590 2,264,787
Expenses
Direct expenses, $110,306 and $37,223
to affiliate (note 1) 1,129,290 463,832
Depreciation 455,233 369,800
General and administrative, $57,972 and
$69,262 to affiliates (note 1) 160,430 104,501
Management fee to affiliate (note 1) 9,872 (46,611)
Interest, $590,565 and $507,517
to affiliates (note 1) 590,565 566,142
Total expenses 2,345,390 1,457,664
Net income (loss) $ (41,800) 807,123
Net income (loss) per limited partnership unit $ (0.37) 7.16
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
<S> <C> <C>
Income
Rental income $ 4,710,055 7,305,187
Gain on disposal of rental property -- 157,852
Interest income, $100,088 from affiliate for 1997 289,315 463,301
Total income 4,999,370 7,926,340
Expenses
Direct expenses, $303,205 and $86,583
to affiliate (note 1) 2,737,329 911,130
Depreciation 1,286,830 1,108,732
General and administrative, $238,736 and
$169,846 to affiliates (note 1) 494,149 343,814
Management fee to affiliate (note 1) 97,378 19,526
Interest, $1,752,436 and $1,515,727
to affiliates (note 1) 1,752,436 1,746,446
Total expenses 6,368,122 4,129,648
Net income (loss) $ (1,368,752) 3,796,692
Net income (loss) per limited partnership unit $ (12.15) 33.70
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
<TABLE>
USAA Income Properties III Limited Partnership
Condensed Statements of Cash Flows
Nine months ended September 30, 1997 and 1996
(Unaudited)
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,368,752) 3,796,692
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 1,286,830 1,108,732
Amortization 183,665 77,448
Gain on disposal of rental property -- (157,852)
Loss on early retirement of assets -- 10,600
Decrease (increase) in accounts receivable 316,450 (1,256,159)
Increase in deferred charges and other assets (650,780) (422,824)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 533,777 (2,165,907)
Cash provided by operating activities 301,190 990,730
Cash flows from investing activities:
Additions to rental properties (2,692,499) (1,224,217)
Proceeds from disposal of real estate property -- 220,400
Cash used in investing activities (2,692,499) (1,003,817)
Cash flows from financing activities:
Repayment of mortgages payable -- (1,818,182)
Distributions to partners (676,055) (873,237)
Cash used in financing activities (676,055) (2,691,419)
Net decrease in cash and cash equivalents (3,067,364) (2,704,506)
Cash and cash equivalents at beginning of period 9,419,147 12,775,043
Cash and cash equivalents at end of period $ 6,351,783 10,070,537
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
<TABLE>
USAA Income Properties III Limited Partnership
Notes to Condensed Financial Statements
September 30, 1997
(Unaudited)
1.Transactions with Affiliates
A summary of transactions with affiliates follows for the
nine-month period ended September 30, 1997:
<CAPTION>
Quorum
USAA USAA Las Colinas Real Estate
Capital Real Estate Management Services
Corporation Company Company Corporation
<S> <C> <C> <C> <C>
Reimbursement of
expenses (a) $ -- 176,165 -- 158,929
Interest income (100,088) -- -- --
Management fees -- 97,378 -- 144,276
Lease commissions -- -- -- 62,571
Interest expense (b) -- 678,760 1,073,676 --
Total $ (100,088) 952,303 1,073,676 365,776
</TABLE>
(a) Reimbursement of expenses represents amounts paid or
accrued as reimbursement of expenses incurred on behalf of
the Partnership at actual cost and does not include any
mark-up or items normally considered as overhead.
(b) Represents interest expense at market rate on a
mortgage loan.
2.Other
Reference is made to the financial statements in the Annual
Report filed as part of the Form 10-K for the year ended
December 31, 1996 with respect to significant accounting and
financial reporting policies as well as to other pertinent
information concerning the Partnership. Information furnished
in this report reflects all normal recurring adjustments which
are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented.
Further, the operating results presented for these interim
periods are not necessarily indicative of the results which
may occur for the remaining three months of 1997 or any other
future period.
5
<PAGE>
The financial information included in this interim report as
of September 30, 1997 and for the three months and nine months
ended September 30, 1997 and 1996 has been prepared by
management without audit by independent certified public
accountants who do not express an opinion thereon. The
Partnership's annual report includes audited financial
statements.
Certain 1996 balances have been reclassified to conform to the
1997 presentation.
6
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1997, the Partnership had cash of $570,992 and
temporary investments of $5,780,791. These funds were held in
the working capital reserve for the payment of obligations of the
Partnership. Accounts receivable consisted of amounts due from
tenants. Deferred rent resulted from recognition of income as
required by generally accepted accounting principles. Deferred
charges and other assets included lease commissions and prepaid
expenses. Accounts payable included amounts due to affiliates for
reimbursable expenses and amounts payable to third parties for
expenses incurred for operations. Accrued expenses and other
liabilities consisted primarily of accrued property taxes,
prepaid rent and security deposits.
During the quarter ended September 30, 1997, the Partnership
distributed $223,098 to Limited Partners and $2,253 to the
General Partner for a total of $225,351. Management evaluates
reserves and the availability of funds for distribution to
Partners on a continuing basis based on anticipated leasing
activity and cash flows available from the Partnership
investments. Based on the amount of funds needed for tenant
improvements, lease commissions and renovation costs at Manhattan
Towers and Skygate Commons, future distributions may be
suspended. In addition, the Partnership may need to borrow funds
to cover any shortage in the working capital reserve.
As of September 30, 1997, Curlew Crossing was 91% leased;
however, Color Tile is in the process of vacating approximately
5,200 square feet. This space is currently being marketed for
lease. During the second quarter, the Partnership was awarded a
favorable summary judgment against the defaulted tenant for one
of the two out parcels vacated by the tenant at Curlew Crossing
in 1996. The summary judgment was granted in favor of the
Partnership with respect to one of the out parcel leases,
declaring the lease to be valid and existing, and granting the
judgment against the tenant. The tenant has resumed payment of
its rent obligations under the lease. The Partnership is
awaiting a ruling by the court on the other out parcel.
During the third quarter, the Partnership received a settlement
of $295,000 from a previous anchor tenant at Curlew Crossing.
The tenant vacated approximately 78,000 square feet in October
1990 in conjunction with reorganization under Chapter 11
bankruptcy proceedings.
7
<PAGE>
As of September 30, 1997, Manhattan Towers was 99% leased.
During the second quarter, a fifty-six month lease was signed at
Manhattan Towers with TRW, Inc. for 155,118 square feet at a net
monthly base rent of $141,200 that commenced in August 1997. In
addition, TRW will pay its pro rata share of operating expenses
of the property. TRW will occupy one of the two towers at the
property. The Partnership provided a tenant improvement
allowance for a total of approximately $2.7 million, or
approximately $17 per square foot, to be paid out of the working
capital reserve of the Partnership.
During the third quarter, TRW signed a five-year lease for
approximately 81,000 square feet at a net monthly base rent of
$81,360 to commence January 1, 1998. This lease represents 52.7%
of the first tower at Manhattan Towers. Upon commencement of the
lease, TRW will pay its pro rata share of operating expenses of
the property. The Partnership provided a tenant improvement
allowance for a total of approximately $1.7 million to be paid
out of the working capital reserve of the Partnership.
At Manhattan Towers, the property renovations are approximately
95% complete with a scheduled completion date by year-end. The
parking garage water damage remediation work is estimated to be
approximately $1.1 million and will be funded from the working
capital reserve of the Partnership. Renovations at the property
include lobby area, corridors and parking lot as well as exterior
landscaping and signage. The cost for renovations is estimated
to be approximately $1.4 million and will be funded from the
working capital reserve of the Partnership.
In September, a settlement agreement was negotiated with Hughes
Electronics, the previous single tenant at Manhattan Towers, for
deferred maintenance items. The Partnership anticipates
receiving $575,000 from Hughes during the fourth quarter.
As part of a marketing campaign to lease the two vacant buildings
of the three building complex at the Phoenix, Arizona property,
the name of the property has been changed from Ramada World
Headquarters Building to Skygate Commons. Renovation to the two
vacant buildings began during the first quarter of 1997 which
includes improvements to comply with the Americans With
Disabilities Act, and heating, air conditioning and exterior
renovations. The total cost of the renovations has been revised
to include parking lot improvements, signage and landscaping with
the new estimate to be approximately $1.2 million to be paid from
the working capital reserve of the Partnership. In addition, the
construction of additional parking on the adjacent land is
planned in an attempt to increase the property's competitiveness
in the market. The cost for the parking lot is estimated at
$120,000 to be funded from the working capital reserve of the
Partnership. The property renovations are approximately 70%
complete with final completion anticipated to occur during the
fourth quarter.
8
<PAGE>
During April, a five-year lease was signed at Skygate Commons
with FHP International Corporation for one of the two vacant
buildings, or 22,120 square feet, at an annual rental rate
beginning at $14.75 per square foot. The lease commenced July
1997 and terminates June 2002. The Partnership provided a tenant
improvement allowance of $331,800 to be paid from the working
capital reserve of the Partnership. Negotiations have commenced
with a current tenant at Skygate Commons to lease the remaining
vacancy at the property, which totals approximately 27,000 square
feet. As of September 30, 1997, Skygate Commons was 89% leased.
On June 10, 1997, the Partnership signed a letter of intent with
American Industrial Properties REIT [NYSE: IND] (the "Trust")
contemplating the merger of four real estate limited
partnerships, including the Partnership, into the Trust. The
four real estate limited partnerships are USAA Real Estate Income
Investments I Limited Partnership, USAA Real Estate Income
Investments II Limited Partnership, USAA Income Properties III
Limited Partnership and USAA Income Properties IV Limited
Partnership (collectively, the "RELPs"). Each of the RELPs is
affiliated with USAA Real Estate Company, which currently owns
approximately 13.74% of the outstanding shares of the Trust.
On July 7, 1997, the Trust signed definitive merger agreements
with each of the RELPs pursuant to which the RELPs will be merged
into the Trust (the "Merger"). According to the Merger
Agreements, the Trust will issue an aggregate of 4,412,829 shares
of beneficial interest at $13.125 per share (for a total value of
$57,918,385) in exchange for the limited partnership interests in
the RELPs. The number of Shares and per Share amount have been
restated to reflect the impact of the one for five reverse Share
split approved by the Trust shareholders on October 15, 1997.
The number of Shares to be issued to each RELP will be equal to
the net asset value for each RELP (as agreed by the Trust and
each RELP) divided by $13.125. The number of Shares to be
received by a Limited Partner in each RELP will be computed in
accordance with such partner's percentage interest in the RELP.
The general partner of each RELP has waived any right it may have
to receive Shares to which it may be entitled in exchange for its
general partnership interest. The Merger is a taxable
transaction to the partners in the RELPs. Prudential Securities,
Inc., on behalf of the Trust, and Houlihan, Lokey, Howard & Zukin
on behalf of the RELPs, have rendered opinions to their
respective parties that the transaction is fair from a financial
point of view.
The Merger, which has been approved by the Trust's Board of Trust
Managers and the Board of Directors of each of the general
partners of the RELPs, is subject to due diligence by both
parties and certain other conditions, including approval by the
Limited Partners of each of the RELPs and the shareholders of the
Trust. Accordingly, there can be no assurance that the mergers
will ultimately be consummated. There has been a meeting of
Limited Partners tentatively scheduled for early January 1998 to
consider a vote on the proposed transaction.
9
<PAGE>
Curlew Crossing will not be part of the merger but will be
purchased by USAA Real Estate Company ("Realco") or an affiliate
of Realco for $11,200,000 if the Merger is approved.
On August 20, 1997, a purported class action lawsuit (the
"Lawsuit"), which was filed in the Superior Court of the State of
Arizona, was served upon USAA Real Estate Company, USAA
Properties I, Inc. ("RELP GP I"), USAA Properties II, Inc. ("RELP
GP II"), USAA Properties III, Inc. ("RELP GP III"), USAA
Properties IV, Inc. ("RELP GP IV", together with RELP GP I, RELP
GP II and RELP GP III, the "RELP GPs"), certain other affiliated
entities and the individual members of the boards of directors of
each of the RELP GPs. The Trust was also named as a defendant.
The Lawsuit was subsequently removed to federal court and has
been transferred to the Western District of Texas, San Antonio
Division. The suit alleges among other things, breaches of
fiduciary duty in connection with the transactions contemplated
by merger agreements entered into by the RELPs and the Trust,
dated as of June 30, 1997, whereby each RELP would be merged with
and into the Trust.
The Lawsuit seeks, among other things, to enjoin the consummation
of the Merger and damages, including attorneys' fees and
expenses. The defendants believe that the plantiffs' claims are
without merit and intend to defend vigorously against the
Lawsuit.
Future liquidity is expected to result from cash generated from
operations of the properties, interest on temporary investments
and ultimately through the sale of the properties.
Results of Operations
For the three-month and nine-month periods ended September 30,
1997 and 1996, income was generated from rental income from the
income-producing real estate properties and interest income
earned on the funds in temporary investments.
Expenses incurred during the same periods were associated with
the operation of the Partnership's properties, interest on the
mortgages payable and various other costs required for
administration of the Partnership.
Rental properties increased as of September 30, 1997 as compared
to December 31, 1996 due to renovation costs and tenant
improvements at Manhattan Towers and Skygate Commons offset by
depreciation. The decrease in cash and cash equivalents at
September 30, 1997 was due to payment for renovations and tenant
improvements. Accounts receivable decreased at September 30,
1997 primarily due to receipts from tenants at Skygate Commons.
The increase in deferred charges and other assets at September
30, 1997 was due to lease commissions paid at Manhattan Towers
and Skygate Commons. The decrease in accounts payable reflected
timing in the payment of renovation costs at Manhattan Towers.
The increase in accrued expenses and other liabilities was a
result of an increase in prepaid rent, property tax accruals and
security deposits.
10
<PAGE>
The changes in rental income for the three-month and nine-month
periods ended September 30, 1997 as compared to the same periods
ended September 30, 1996 were the result of the following changes
at each property. The increase in rental income at Curlew
Crossing of approximately $630,000 and $454,000 for the three-
month and nine-month periods, respectively was due to receiving
1996 and 1997 rent on one of the two outparcels as a result of
the summary judgement awarded against the defaulted tenant.
Also, part of this increase was the receipt of $295,000 from the
Ames lawsuit. Skygate Commons had an increase in rental income
for the periods ended September 30, 1997 as compared to the same
periods ended September 30, 1996 of approximately $98,000 and
$47,000, respectively due to an increase in occupancy. Offsetting
these increases was a decrease in rental income at Manhattan
Towers of approximately $632,000 and $3,096,000 for the three-
month and nine-month periods ended September 30, 1997 as a
result of a decrease in occupancy after the expiration of the
Hughes lease. Rental rates for the new leases at Manhattan
Towers since the expiration of the Hughes lease in August 1996
are lower than the rate charged to Hughes, reflecting market
conditions in the area surrounding the property.
The gain on disposal of rental property in 1996 was a result of
the land condemned by the Florida Department of Transportation in
connection with the widening of Curlew Road.
Interest income decreased for the three-month and nine-month
periods ended September 30, 1997 as compared to the same periods
ended September 30, 1996 due to lower cash balances. During the
second quarter of 1997, the Partnership invested in short-term
commercial paper with USAA Capital Corporation, an affiliate of
the General Partner.
Direct expenses were higher for the three-month and nine-month
periods ended September 30, 1997 as compared to the same periods
ended September 30, 1996 as a result of the Partnership assuming
control of the daily operations at both Manhattan Towers and
Skygate Commons. Prior to the Hughes lease expiration on August
31, 1996 at Manhattan Towers, Hughes was responsible for all
operating expenses under terms of their triple net lease.
Operating expenses at Manhattan Towers accounted for
approximately $181,000 and $917,000 of the increase for the three-
month and nine-month periods ended September 30, 1997,
respectively. Prior to substantial completion of the tenant
improvements for Hospitality Franchise Systems, Inc. ("HFS") at
Skygate Commons on October 31, 1996, HFS was responsible for all
operating expenses. Operating expenses at Skygate Commons for the
periods ended September 30, 1997 accounted for approximately
$377,000 and $805,000, respectively. Operating expenses included
utilities, cleaning, landscaping, repairs and maintenance,
property taxes, property insurance, management fees and other
building service expenses. The remaining increase in direct
expenses resulted from higher legal fees related to the defaulted
tenants at Curlew Crossing. Also, during the quarter ended
September 30, 1997, the parking lot at Curlew Crossing was
restriped and resealed.
11
<PAGE>
Depreciation expense increased for the three-month and nine-month
periods ended September 30, 1997 as compared to the three-month
and nine-month periods ended September 30, 1996 due to
depreciation on the tenant improvements at Manhattan Towers and
at Skygate Commons for HFS.
General and administrative expenses were higher for the three-
month and nine-month periods ended September 30, 1997 as compared
to the same periods ended September 30, 1996 due to lease
commission expense at Manhattan Towers and Skygate Commons.
The management fee is based on cash flow from operations of the
Partnership adjusted for cash reserves and fluctuated
accordingly.
Interest expense increased for the three-month and nine-month
periods ended September 30, 1997 as compared to the same periods
ended September 30, 1996. The payment terms of the Manhattan
Towers loan for the three months and nine months ended September
30, 1997 included monthly interest only payments at an interest
rate of 9.57% on a principal balance of $15,000,000. Terms of
the mortgage loan for the first eight months of 1996 included
monthly principal payments in the set mount of $227,272.72 and
interest payments set monthly at the London Interbank Offered
Rate (LIBOR) plus .625%. The interest rate on the Curlew
Crossing mortgage loan was decreased to 8.25% in April 1996
compared to 10.25% paid in March 1996. Interest expense on the
Curlew Crossing mortgage loan for the nine-month period ended
September 30, 1997 decreased by approximately $58,000 offset by
the increase in interest expense for the Manhattan Towers loan of
approximately $64,000.
12
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Sequentially
Exhibit Numbered
No. Description Page
4.1 Restated Certificate and Agreement of
Limited Partnership dated as of May 6, 1985,
attached as Exhibit A to the Partnership's
Prospectus dated May 6, 1985, filed pursuant
to Rule 424(b) Registration No. 2-96113, and
incorporated herein by this reference. --
4.2 Certificate of Amendment to Restated Certificate
and Agreement of Limited Partnership of USAA
Income Properties III Limited Partnership dated
February 14, 1990, attached as Exhibit
3(b) to the Partnership's Annual Report
on Form 10-K for the year ended December 31,
1989, Registration No. 2-96113, and incorporated
herein by this reference. --
27 Financial Data Schedule 15
(b) A Current Report on Form 8-K was filed July 21, 1997
regarding the signed definitive merger agreements between the
Partnership and American Industrial Properties REIT (the "Trust")
pursuant to which the Partnership will be merged into the Trust.
A Current Report on Form 8-K was filed September 2, 1997
regarding a purported class action lawsuit served upon the
Partnership seeking to enjoin the consummation of the
Merger with the Trust.
13
<PAGE>
FORM 10-Q
SIGNATURES
USAA INCOME PROPERTIES III LIMITED PARTNERSHIP
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
USAA INCOME PROPERTIES III
LIMITED PARTNERSHIP (Registrant)
BY: USAA PROPERTIES III, Inc.,
General Partner
November 12, 1997 BY: /s/Edward B. Kelley
Edward B. Kelley
Chairman, President and
Chief Executive Officer
November 12, 1997 BY: /s/Martha J. Barrow
Martha J. Barrow
Vice President -
Administration and
Finance/Treasurer
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,351,783
<SECURITIES> 0
<RECEIVABLES> 239,509
<ALLOWANCES> 90,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 40,667,918
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,255,140
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,962,438
<TOTAL-LIABILITY-AND-EQUITY> 52,255,140
<SALES> 0
<TOTAL-REVENUES> 4,710,055
<CGS> 0
<TOTAL-COSTS> 4,024,159
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,752,436
<INCOME-PRETAX> (1,368,752)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,368,752)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,368,752)
<EPS-PRIMARY> (12.15)
<EPS-DILUTED> 0
</TABLE>
