<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
For the Quarterly Period Ended October 31, 1995 Commission File No. 0-14234
</TABLE>
KINGS ROAD ENTERTAINMENT, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-3587522
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
</TABLE>
1901 Avenue of the Stars, Suite 605
Los Angeles, California 90067
(Address of principal executive office)
Registrant's telephone number, including area code: (310) 552-0057
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.
YES X NO
--- ---
On December 20, 1995 the Registrant had 5,120,047 shares of its common stock,
$.01 par value, issued and outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - (UNAUDITED)
<TABLE>
<CAPTION>
As Of
Oct. 31, 1995
-------------
<S> <C>
ASSETS
Cash and Cash Equivalents $ 662,273
Marketable Securities, at cost - Note B 300,118
Accounts Receivable, net of allowance of $15,000 734,201
Film Costs, net of amortization of $164,902,972 - Note C 3,291,124
Prepaid Expenses 20,656
Fixed Assets, net of depreciation of $208,642 13,720
Other Assets 5,500
------------
TOTAL ASSETS $ 5,027,592
============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts Payable $347,130
Due to Related Party - Note D 175,000
Accrued Expenses 25,875
Income Taxes Payable 17,957
Deferred Revenue 560,528
------------
TOTAL LIABILITIES 1,126,490
COMMITMENTS AND CONTINGENCIES
Note E
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 12,000,000
shares authorized; 5,120,047 shares issued
and outstanding - Note F 45,716
Additional Paid-in Capital 24,902,177
Deficit (21,046,791)
------------
TOTAL SHAREHOLDERS' EQUITY 3,901,102
------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 5,027,592
============
</TABLE>
The accompanying notes are an integral part of this statement.
2
<PAGE> 3
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED OCTOBER 31, ENDED OCTOBER 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Feature Films $1,072,919 $491,833 $2,057,268 $1,344,485
Interest Income 5,958 7 7,433 278
Other Income 678 0 3,317 1,510
---------- ---------- ---------- ----------
1,079,555 491,840 2,068,018 1,346,273
COSTS AND EXPENSES:
Costs Related to Revenue 721,140 367,323 1,627,213 832,564
Selling Expenses 179,141 67,221 309,621 242,743
General & Admin. Exp. 229,763 95,579 523,901 320,018
Interest - Note C 1,773 0 12,392 0
---------- ---------- ---------- ----------
1,131,817 530,123 2,473,127 1,395,325
INCOME/(LOSS) BEFORE
INCOME TAXES (52,262) (38,283) (405,109) (49,052)
Provision for Income
Taxes - Note G 19,287 28,450 45,544 50,350
---------- ---------- ---------- ----------
NET INCOME/(LOSS) ($71,549) ($66,733) ($450,653) ($99,402)
========== ========== ========== ==========
Net Earnings
Per Share - Note A ($0.01) ($0.01) ($0.09) ($0.02)
========== ========== ========== ==========
Weighted Average Number
of Common Shares 5,120,047 5,120,047 5,120,047 5,120,047
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - (UNAUDITED)
<TABLE>
<CAPTION>
Common Common Additional Total
Stock Stock Paid-In Shareholders'
Shares Amount Capital Deficit Equity
--------- ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance,
April 30, 1994 5,080,047 $45,316 $24,886,327 ($20,201,393) $4,730,250
Net Loss ----- ----- ----- (394,745) (394,745)
Exercise of
Stock Options 40,000 400 15,850 ----- 16,250
--------- ------- ----------- ------------ ----------
Balance,
April 30, 1995 5,120,047 $45,716 $24,902,177 ($20,596,138) $4,351,755
Net Loss ----- ----- ----- (450,653) (450,653)
--------- ------- ----------- ------------ ----------
Balance,
Oct. 31, 1995 5,120,047 $45,716 $24,902,177 ($21,046,791) $3,901,102
========= ======= =========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JULY 31,
1995 1994
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($450,653) ($99,402)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,628,766 838,111
Changes in Assets and Liabilities:
Decrease in Accounts Receivable 279,208 780,336
Increase in Prepaid Expenses (12,103) 0
Increase in Other Assets 0 (2)
(Decrease)/Increase in Accounts Payable (252,129) 7,778
(Decrease)/Increase in Accrued Expenses (140,773) 17,059
Increase/(Decrease) in Deferred Revenue 345,816 (4,439)
--------- ----------
NET CASH AND CASH EQUIVALENTS
PROVIDED BY OPERATING ACTIVITIES 1,398,132 1,539,441
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Marketable Securities (300,118) 0
Purchase of Fixed Assets (9,460) (1,839)
Gross Additions to Film Cost (312,069) (3,056,844)
--------- ----------
NET CASH AND CASH EQUIVALENTS
USED IN INVESTING ACTIVITIES (621,647) (3,058,683)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Debt 0 2,588,941
Repayment of Debt 0 (1,473,649)
Borrowing from Related Party 0 283,000
Repayments to Related Party (268,132) 0
Proceeds from Exercise of Stock Options 0 16,250
--------- ----------
NET CASH AND CASH EQUIVALENTS (USED
IN)/PROVIDED BY FINANCING ACTIVITIES (268,132) 1,414,542
--------- ----------
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS 508,353 (104,700)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 153,920 177,364
--------- ----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $662,273 $72,664
========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PREPARATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements. Accordingly, they do not include all of the information
and disclosures required for annual financial statements. These financial
statements should be read in conjunction with the consolidated financial
statements and related footnotes for the year ended April 30, 1995, included in
the Kings Road Entertainment, Inc. ("Company" or "Registrant") annual report on
Form 10-KSB for that period.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of October 31, 1995 and the results of operations and cash flows
for the three and six month periods ended October 31, 1995 and 1994 have been
included.
The results of operations for the three and six month periods ended October 31,
1995 are not necessarily indicative of the results to be expected for the full
fiscal year. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-KSB for the year ended April 30, 1995.
Net Income or Loss per share amounts have been calculated using the weighted
average number of common shares outstanding. Stock options have been excluded
as common stock equivalents because of their antidilutive or non-material
effect.
NOTE B - MARKETABLE SECURITIES
On October 27, 1995, the Company purchased US Treasury Bills in the face amount
of $308,000 maturing on April 25, 1996 at a discount rate of 5.09%. As of
October 31, 1995, the market value of these securities was approximately
$299,792. The Company intends to hold these securities until maturity.
NOTE C - FILM COSTS
Film Costs Consist of:
<TABLE>
<CAPTION>
As of
Oct. 31, 1995
-------------
<S> <C>
Released Films, less amortization $3,123,515
Films in Production 0
Films in Development 167,609
----------
Total Film Costs $3,291,124
==========
</TABLE>
6
<PAGE> 7
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE C - FILM COSTS (CONTINUED)
In accordance with Financial Accounting Standards No. 34, interest costs are
capitalized to feature film productions until the date of completion. No
interest expense was capitalized to Film Costs during the three or six month
periods ended October 31, 1995. Approximately $38,000 and $47,000 of interest
expense was capitalized to Film Costs for the three and six month periods ended
October 31, 1994, respectively.
NOTE D - RELATED PARTY TRANSACTIONS
In December 1992, the Company borrowed $175,000 from Stephen Friedman, an
officer of the Company, at an interest rate of 6% per annum. Interest expense
to Mr. Friedman during the six month period ending October 31, 1995 was
approximately $5,250.
NOTE E - LITIGATION AND CONTINGENCIES
In December 1994, the Company filed a lawsuit in Los Angeles Superior Court
against The Movie Group, Inc. ("TMG") alleging causes of action for breach of
contract, conversion and breach of fiduciary duty, among other things, and
seeking an accounting, declaratory relief and monetary damages, among other
things, arising from a sales agency agreement ("Agreement") with TMG in
connection with one of the Company's films. Under the Agreement, the Company
is entitled to receive certain monies derived from exploitation of the film
after the deduction of certain fees and expenses. The Company believes TMG has
substantially underpaid the monies which the Company is entitled to receive.
While management believes it may prevail on some or all of the causes of
action, the likelihood of any monetary recovery is uncertain and the Company
may be required to share any recovery with certain third parties. TMG has
filed a cross-complaint against the Company and a third party alleging, among
other things, inducing breach of contract, recision based on fraud and
intentional interference with existing business relationships. Management
believes it has substantial defenses to all of the allegations in the
cross-complaint.
On October 20, 1995, as amended on November 9, 1995, SK Films Ltd., Inc. (the
"Limited Partner") filed a lawsuit in Los Angeles Superior Court against Mother
Productions Limited Partnership, a limited partnership of which the Company is
general partner and the Limited Partner is the sole limited partner. The
lawsuit alleges breaches of the partnership agreement, fraud, and
misrepresentation, among other things, and seeks recission of the partnership
agreement, the appointment of a receiver and declaratory relief, among other
things in addition to monetary damages of not less than $2,254,157 plus
interest. Although not named as a defendant, the Company, as general partner,
is responsible for conducting business on behalf of the partnership and could
liable for any damages, if any, awarded to the Limited Partner. Management
believes the partnership has substantial defenses against all of the causes of
action contained in the lawsuit and, as such, does not believe the ultimate
resolution of this lawsuit will have a materially adverse impact on the
Company's financial position or results of operations. (SEE "ITEM 2 - FUTURE
COMMITMENTS").
7
<PAGE> 8
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE E - LITIGATION AND CONTINGENCIES (CONTINUED)
In the ordinary course of business, the Company has or may become involved in
disputes or litigation. On the basis of information available to it,
management believes such contingencies will not have a materially adverse
impact on the Company's financial position or results of operations.
NOTE F - STOCK OPTIONS AND WARRANTS
The Company's 1987 Non-qualified Stock Option Plan ("1987 Plan") provides for
the grant of options to purchase up to 850,000 shares. At October 31, 1995,
options to purchase up to 302,375 shares were outstanding under the 1987 Plan
at exercise prices ranging from $.25 to $.56 per share. Of the outstanding
options under the 1987 Plan, 235,500 are held by the Chief Executive Officer,
16,875 by a director and officer, and 50,000 by another officer of the Company.
Options to purchase an additional 250,000 shares have also been granted to the
Chief Executive Officer outside the 1987 Plan at an exercise price of $.25 per
share. Of the outstanding options, 502,375 expire in August 1997 and 50,000
expire in November 1999.
NOTE G - INCOME TAXES
A reconciliation of the provision for income taxes to the expected income tax
expense at the statutory tax rate of 34% is as follows:
<TABLE>
<CAPTION>
Quarter Ending
Oct. 31, 1995
--------------
<S> <C>
Computed Expected Tax at Statutory Rate ($150,000)
State and Local Income Taxes 5,413
Foreign Taxes 40,131
Valuation Allowance 150,000
--------
$ 45,544
========
- --------
</TABLE>
For federal income tax purposes, the Company has available investment tax
credits of approximately $2,166,000, after being reduced 35% by the Tax Reform
Act of 1986 (expiring between 2000 and 2002) and net operating loss
carryforwards of approximately $16,274,000 (expiring between 2001 and 2007) to
offset future income tax liabilities.
Deferred tax assets and liabilities result from temporary differences between
financial and tax accounting in the recognition of revenue and expenses.
Temporary differences and carryforwards which give rise to deferred tax assets
and liabilities are as follows:
8
<PAGE> 9
KINGS ROAD ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE F - INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
As of
Assets/(Liabilities) Oct. 31, 1994
-------------------- -------------
<S> <C>
Deferred Revenue $86,000
Film Cost Amortization (158,000)
Net Operating Loss Carryforwards 6,488,000
Investment Tax Credit Carryforwards 2,166,000
Foreign Tax Credit Carryforwards 400,000
----------
8,982,000
Valuation Allowance (8,982,000)
----------
$0
==========
</TABLE>
A valuation allowance of $8,982,000 has been recorded to offset the net
deferred tax assets due to the uncertainty of realizing the benefits of the tax
assets in the future.
9
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
POSITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the three months ended October 31, 1995, the Company reported a
net loss of approximately $72,000 on revenues of approximately $1,080,000
compared to a net loss of approximately $67,000 on revenues of approximately
$492,000 for the same period last year. For the six month periods ending
October 31, 1995 and 1994, the Company reported net losses of approximately
$451,000 and $99,000, respectively. The increased loss for the six month period
ending October 31, 1995 versus the same period last year results primarily from
the write-down to net realizable value, in accordance with generally accepted
accounting principles, of the Company's investment in a film produced during a
prior fiscal year. The increase in revenues during the quarter ended October
31, 1995 of approximately 220% versus the same quarter last year, results
primarily from the release of "The Redemption" to the domestic pay television
market and certain key foreign markets. Future revenues of the Company will be
dependent upon the success of its films and on the Company's ability to
continue to generate working capital for the development and production of new
motion picture projects. The Company is not currently in production on any new
film projects. (SEE "LIQUIDITY AND CAPITAL RESOURCES").
Costs relating to revenue were approximately $721,000 during the three
months ended October 31, 1995 versus approximately $367,000 during the three
months ended October 31, 1994. These costs relate to amortization of
production costs of films for which revenue was recognized during the period.
Selling expenses increased to approximately $179,000 during the quarter versus
approximately $67,000 for the same period last year, this results primarily
from the substantial increase in revenues discussed above. General and
administrative expenses increased to approximately $230,000 during the quarter
from approximately $96,000 during the same period last year. This increase
results primarily from increased legal expenses in connection with the various
lawsuits referred to in NOTE E TO THE CONSOLIDATED FINANCIAL STATEMENTS.
LIQUIDITY AND CAPITAL RESOURCES
The production of motion pictures requires substantial capital. In
producing a motion picture, the Company must expend substantial sums for both
production and distribution of a picture, all before any revenues are generated
by the film. In certain instances the Company obtains advances and guarantees
from its distributors, but these advances and guarantees defray only a small
portion of a film's cost.
The Company's principal source of working capital during the quarter
ending October 31, 1995 has been motion picture licensing income. During the
fiscal year ended April 30, 1995, significant working capital was also provided
under a revolving credit facility ("Credit Facility") with Credit Lyonnais Bank
Nederland N.V. ("CLBN"); borrowings were limited to a percentage of qualifying
contracts receivable of the Company and were secured by first position liens on
all amounts to be received under the Company's film license agreements and the
copyrights to all of the Company's films. The Credit Facility expired March 1,
1995.
10
<PAGE> 11
For the six months ended October 31, 1995, the Company's net cash flow
provided by operating activities was approximately $1,398,000 compared to
approximately $1,539,000 during the same period last year. Net cash flows of
approximately $622,000 were used in investing activities primarily through the
purchase of marketable securities and gross additions to film costs. Net cash
flows of approximately $268,000 were used in financing activities reflecting
the repayment to Stephen Friedman, Chief Executive Officer, of certain loans
made in prior fiscal years. Cash and cash equivalents increased from
approximately $73,000 as of October 31, 1994 to approximately $662,000 as of
October 31, 1995.
The principal asset on the Company's balance sheet is unamortized film
costs. The Company's unamortized film costs at October 31, 1995 and 1994 were
approximately $3,291,000 and $6,684,000, respectively. Not reflected on the
balance sheet, in accordance with generally accepted accounting standards, is
the full value of the Company's film library. In October 1995, the Company
entered into a Purchase and Sale Agreement ("Agreement") with World Icon
Distribution Enterprises C.V. ("Icon") whereby the Company agreed to sell
substantially all right, title and interest in and to certain motion pictures
owned or distributed by the company, throughout the world excluding the United
States and Canada, for the sum of $6,500,000 subject to reduction pursuant to
the terms of the agreement. Subsequent to this transaction, the Company will
retain ownership of the domestic and Canadian rights to its films along with
the foreign rights to certain films not subject to the Agreement. The Company
expects this transaction to be completed during the quarter ending January 31,
1996. (SEE THE COMPANY'S FILING ON FORM 8-K DATED OCTOBER 26, 1995).
FUTURE COMMITMENTS
The Company's anticipated major financial commitments relate to the
development, production and release of its motion pictures. In recent years,
the Company has been concentrating on lower budget films and expects to
continue producing these types of films, but will pursue projects with higher
budgets if management feels sufficient resources are available and risk is
limited. The financial resources necessary for the production and release of
films are generally dependent on adequate borrowing availability. The Credit
Facility with CLBN expired March 1, 1995 and allowed the Company to borrow a
percentage of qualifying contracts receivable. There are a number of banks in
the entertainment industry that support this type of lending and the Company is
actively pursuing a new facility with these banks. Although management
believes it will be able to obtain financing for the production of new films,
the Company's financial position and results of operations will be constrained
by the availability of adequate financing.
The Company owns 50% of a limited partnership created for the sole
purpose of producing and distributing a film entitled "The Haunted Heart". The
Company, which acts as the general partner, guaranteed repayment of 50% of a
loan made to the partnership by the sole limited partner in the approximate
amount of $1,500,000. In management's opinion, this potential future
commitment will not have a materially adverse impact on the Company's financial
position or results of operations.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On October 20, 1995, as amended November 9, 1995, SK Films Ltd., Inc. (the
"Limited Partner") filed a lawsuit in Los Angeles Superior Court against Mother
Productions Limited Partnership, a limited partnership of which the Company is
general partner and the Limited Partner is the sole limited partner. The
complaint alleges breaches of the partnership agreement, fraud, and
misrepresentation, among other things, and seeks recission of the partnership
agreement, the appointment of a receiver and declaratory relief, among other
things in addition to monetary damages of not less than $2,254,157 plus
interest. Although not named as a defendant, the Company, as general partner,
is responsible for conducting business on behalf of the partnership and could
be liable for any damages, if any, awarded to the Limited Partner. Management
believes the partnership has substantial defenses against all of the causes of
action contained in the lawsuit and, as such, does not believe the ultimate
resolution of this lawsuit will have a materially adverse impact on the
Company's financial position or results of operations.
In the ordinary course of business, the Company has or may become involved in
disputes or litigation. On the basis of information available to it,
management believes such contingencies will not have a materially adverse
impact on the Company's financial position or results of operations.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
None.
(B) FORMS 8-K
On October 26, 1995, the Company filed a Form 8-K reporting
under Item 2 thereof the sale of certain assets of the Company.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
KINGS ROAD ENTERTAINMENT, INC.
Dated: December 20, 1995 /s/ Stephen J. Friedman
-------------------------------------
Stephen J. Friedman
Chairman of the Board of Directors
and Chief Executive Officer (Principal
Executive Officer)
Dated: December 20, 1995 /s/ Christopher M. Trunkey
-------------------------------------
Christopher M. Trunkey
Vice President, Chief Financial and
Administrative Officer and Secretary
(Principal Financial and Accounting
Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM FORM 10-QSB FOR THE
QUARTERLY PERIOD ENDING OCTOBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> OCT-31-1995
<CASH> 662,273
<SECURITIES> 300,118
<RECEIVABLES> 749,201
<ALLOWANCES> (15,000)
<INVENTORY> 3,291,124
<CURRENT-ASSETS> 4,987,716
<PP&E> 222,362
<DEPRECIATION> (208,642)
<TOTAL-ASSETS> 5,027,592
<CURRENT-LIABILITIES> 565,962
<BONDS> 0
<COMMON> 24,947,893
0
0
<OTHER-SE> (21,046,791)
<TOTAL-LIABILITY-AND-EQUITY> 5,027,592
<SALES> 1,072,919
<TOTAL-REVENUES> 1,079,555
<CGS> 721,140
<TOTAL-COSTS> 1,130,044
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,773
<INCOME-PRETAX> (52,262)
<INCOME-TAX> 19,287
<INCOME-CONTINUING> (71,549)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71,549)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
