<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB - A
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the quarterly period ended March 31, 1996.
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
Commission File No. 0-16140
U.S. TRANSPORTATION SYSTEMS, INC.
------------------------------------------------------
(Exact name of the Registrant as specified in Charter)
Nevada 34-1397328
- ------------------------ ---------------------------
(State of Incorporation) (I.R.S. Employer ID Number)
33 W. Main Street, Suite 205, Elmsford, New York 10523
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including Area Code: 914-345-3339
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or 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
--- ---
As of May 9, 1996, there were 18,447,545 shares of Common Stock, $.01 par value,
net of treasury shares.
Transitional Small Business Disclosure Format
YES NO X
--- ---
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC.
AND SUBSIDIARIES
Index
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet as of
March 31, 1996 3-4
Consolidated Statements of Income for
the Three Months Ended March 31, 1996
and 1995 5
Consolidated Statements of Stockholders'
Equity for the Year Ended December 31,
1995 and the Three Months Ended
March 31, 1996 6-7
Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1996
and 1995 8-10
Notes to Consolidated Financial Statements 11-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13
PART II. OTHER INFORMATION
Item 6. Exhibit 14
Signatures 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,078,091
Cash - restricted 167,035
Accounts receivable, net of allowance for doubtful
accounts of $321,000 3,747,288
Notes receivable 373,037
Costs and estimated earnings in excess of billings 483,457
Net investment in sales-type leases 586,252
Inventories 838,773
Prepaid and other assets 758,950
---------
TOTAL CURRENT ASSETS 8,032,883
---------
PROPERTY, PLANT AND EQUIPMENT:
Revenue equipment - highway coaches 3,447,394
Other 3,181,450
---------
Total - at cost 6,628,844
Less: Accumulated depreciation (2,776,928)
---------
PROPERTY, PLANT AND EQUIPMENT- NET 3,851,916
ASSETS HELD FOR SALE 55,953
OTHER ASSETS:
Net investment in sales-type leases 2,070,913
Deferred taxes 750,000
Goodwill, net of amortization of $423,453 5,113,191
Other intangibles, principally operating rights - net
of amortization of $73,334 319,233
Notes receivable 418,343
Other assets 748,099
---------
TOTAL OTHER ASSETS 9,419,779
---------
TOTAL ASSETS $21,360,531
===========
See notes to consolidated financial statements.
3
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Cash overdraft $ 302,778
Notes payable 3,519,080
Accounts payable 1,489,320
Accrued liabilities 572,231
Due to related party 263,697
------------
TOTAL CURRENT LIABILITIES 6,147,106
------------
LONG-TERM OBLIGATIONS, NET OF CURRENT
MATURITIES:
Notes payable 1,195,904
Due to related party 281,296
------------
TOTAL LONG-TERM OBLIGATIONS, NET OF
CURRENT MATURITIES 1,477,200
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock - par value $.01 per share,
redemption value $10.00 per share:
Authorized - 10,000,000 shares
Issued and outstanding - 180,000 shares 1,800,000
Common stock - par value
$.01 per share:
Authorized - 50,000,000 shares
Issued and outstanding - 18,447,545 shares 184,475
Additional paid-in capital 18,927,372
Stock subscription receivable (290,285)
Deferred compensation (607,292)
Retained earnings (deficit) (6,278,045)
------------
TOTAL STOCKHOLDERS' EQUITY 13,736,225
------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 21,360,531
============
See notes to consolidated financial statements.
4
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
----------- ----------
REVENUES $ 6,516,126 $3,427,311
----------- ----------
EXPENSES:
Cost of goods sold 1,742,564 376,697
Operating expenses 2,388,968 1,859,584
Selling, general and administrative 1,289,529 834,861
Depreciation and amortization 213,329 31,792
Amortization of intangible assets 166,535 29,732
Rent expense 270,741 70,778
----------- ----------
TOTAL EXPENSES 6,071,666 3,203,444
----------- ----------
INCOME FROM OPERATIONS 444,460 223,867
----------- ----------
OTHER INCOME (EXPENSES):
Interest expense (133,550) (65,955)
Interest income 68,711 50,415
Gain (loss) on sales of assets 50,427 (39,448)
Other (8,383) 8,113
----------- ----------
NET OTHER EXPENSES (22,795) (46,875)
----------- ----------
NET INCOME 421,665 176,992
Less: Preferred dividends 47,925 47,925
----------- ----------
NET INCOME APPLICABLE TO COMMON
SHAREHOLDERS $ 373,740 $ 129,067
========== =========
EARNINGS PER COMMON SHARE $ .02 $ .02
========== =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 16,746,500 7,303,190
========== =========
See notes to consolidated financial statements.
5
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional
---------------------- --------------------- Paid-In
Shares Amount Shares Amount Capital
--------- -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 7,333,190 $ 73,332 180,000 $1,800,000 $13,508,983
Preferred stock issuance - - 170,000 2,040,000 (1,073,524)
Preferred stock conversion 2,550,000 25,500 (170,000) (2,040,000) 2,014,500
Restricted stock grant issuance - - - - -
Stock options issued - - - - -
Preferred dividends 57,480 575 - - (575)
Common stock issued in connection with
purchase of Armstrong Freight Express 780,000 7,800 - - 557,700
Common stock issued in connection with
purchase of Trans-Lynx Express 116,539 1,165 - - 83,325
Common stock issued in connection with
purchase of Automated Solutions 1,800,000 18,000 - - 1,332,000
Common stock issued in exchange for consulting
services 335,000 3,350 - - 239,275
Common stock issued in connection with
Contract Settlement 50,000 500 - - 35,750
Stock options exercised 370,000 3,700 - - 247,475
Net income - - - - -
---------- -------- ------- ---------- -----------
Balance, December 31, 1995 (carried forward) 13,392,209 $133,922 180,000 $1,800,000 $16,944,909
=========== ======== ======= ========== ===========
</TABLE>
<PAGE>
{RESTUBBED FROM ABOVE TABLE]
<TABLE>
<CAPTION>
Stock Sub- Deferred Retained
scription Compen- Earnings
Receivable sation (Deficit) Total
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $ - $ (811,359) $ (7,555,263) $7,015,693
Preferred stock issuance - - - 966,476
Preferred stock conversion - - - -
Restricted stock grant issuance - 135,667 - 135,667
Stock options issued - 17,188 - 17,188
Preferred dividends - - (220,440) (220,440)
Common stock issued in connection with
purchase of Armstrong Freight Express - - - 565,500
Common stock issued in connection with
purchase of Trans-Lynx Express - - - 84,490
Common stock issued in connection with
purchase of Automated Solutions - - - 1,350,000
Common stock issued in exchange for consulting
services - - - 242,625
Common stock issued in connection with
Contract Settlement (36,250) - - -
Stock options exercised (254,035) - - (2,860)
Net income - - 1,123,918 1,123,918
---------- ---------- ------------- ----------
Balance, December 31, 1995 (carried forward) $(290,285) $ (658,504) $ (6,651,785) $11,278,257
========= ========== ============= ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONCLUDED)
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional
---------------------- --------------------- Paid-In
Shares Amount Shares Amount Capital
---------- -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 (brought forward) 13,392,209 $133,922 180,000 $1,800,000 $16,944,909
Preferred stock issuance - - 300 300,000 (43,272)
Preferred dividends - - - - -
Debentures converted into common stock 4,522,002 45,220 - - 1,731,068
Preferred stock conversion 533,334 5,333 (300) (300,000) 294,667
Restricted stock grant issuance - - - - -
Stock options issued - - - - -
Repurchase of common stock (110,000) (1,100) - - (81,400)
Common stock issued in connection with
purchase of Krogel 110,000 1,100 - - 81,400
Net income - - - - -
---------- -------- ------- ---------- -----------
Balance, March 31, 1996 18,447,545 $184,475 180,000 $1,800,000 $18,927,372
========== ======== ======= ========== ===========
</TABLE>
[RESTUBBED FROM ABOVE TABLE]
<TABLE>
<CAPTION>
Stock Sub- Deferred Retained
scription Compen- Earnings
Receivable sation (Deficit) Total
--------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 (brought forward) $(290,285) $ (658,504) $ (6,651,785) $11,278,257
Preferred stock issuance - - - 256,728
Preferred dividends - - (47,925) (47,925)
Debentures converted into common stock - - - 1,776,288
Preferred stock conversion - - - -
Restricted stock grant issuance - 37,844 - 37,844
Stock options issued - 13,368 - 13,368
Repurchase of common stock - - - (82,500)
Common stock issued in connection with
purchase of Krogel - - - 82,500
Net income - - 421,665 421,665
--------- ---------- ------------- -----------
Balance, March 31, 1996 $(290,285) $ (607,292) $ (6,278,045) $13,736,225
========= ========== ============= ===========
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income from continuing operations $373,740 $129,067
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 379,864 61,524
(Gain) loss on sale of assets (50,427) 39,448
Change in assets and liabilities:
Accounts receivable (896,430) 52,623
Inventories 138,130 (97,450)
Other receivables (6,367) 39,390
Costs and estimated earnings in excess
of billings (240,162) -
Prepaid and other assets 34,799 (59,205)
Accounts payable (384,042) (109,163)
Billings in excess of costs and estimated
earnings (354,512) -
Dividends payable on preferred stock 47,925 47,925
Accrued liabilities (93,842) 114,786
-------------- --------------
Net cash provided by (used in) continuing
operations (1,051,324) 218,945
-------------- --------------
Discontinued operations:
Adjustments - change in net assets and liabilities
of discontinued operations and net cash
provided by (used in) discontinued operations 96,547 (204,943)
-------------- --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
(CARRIED FORWARD) $(954,777) $14,002
-------------- --------------
</TABLE>
See notes to consolidated financial statements.
8
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
(BROUGHT FORWARD) $(954,777) $14,002
INVESTING ACTIVITIES:
Capital expenditures (1,775) (56,411)
Acquisition of intangible assets (150,000) -
Proceeds from sale of assets - 410,163
Transfers to restricted cash (1,282) (2,281)
Advances on notes and leases receivable (25,000) -
Collections of notes and leases receivable 112,184 156,563
Other (13,297) 25,964
-------------- --------------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (79,170) 533,998
-------------- --------------
FINANCING ACTIVITIES:
Principal payments to related party (105,227) -
Cash overdraft 302,778 (35,571)
Proceeds from issuance of preferred stock 256,728 1,555,933
Borrowings on debt 2,221,950 2,045,563
Principal payments on long-term debt (2,291,980) (2,510,503)
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 384,249 1,055,422
-------------- --------------
NET (DECREASE) INCREASE IN CASH (649,698) 1,603,422
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 1,727,789 -
-------------- --------------
CASH AND CASH EQUIVALENTS, END
OF PERIOD $1,078,091 $1,603,422
-------------- --------------
</TABLE>
See notes to consolidated financial statements.
9
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
1996 1995
-------------- --------------
Cash paid during the period for:
Interest $ 135,000 $ 151,000
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
During the three months ended March 31, 1996 and 1995, the Company
sold buses in exchange for $154,351 and $763,846, respectively, of sales-type
financing leases receivable.
During the three months ended March 31, 1996, the Company acquired
revenue equipment utilizing long-term debt of $529,359.
During the three months ended March 31, 1996, holders of $1,776,288
of convertible debentures converted such debentures into 4,522,002 shares of the
Company's common stock.
During the three months ended March 31, 1996, the Company converted
300 shares of convertible preferred stock into 533,334 shares of common stock.
During the three months ended March 31, 1996, the Company acquired
110,000 shares of its common stock for $82,500.
During the three months ended March 31, 1996 and 1995, the Company
accrued $47,925 of preferred dividends in both periods.
In February 1996, the Company issued 110,000 shares of its common
stock valued at $82,500, as part of its acquisition of certain personal property
and contract rights from Krogel Freight Systems of Tampa, Inc. and Krogel Air
Freight, Inc.
In March 1995, the Company sold a substantial portion of the assets
of Suncoast Transportation for $25,000 cash and a promissory note of $175,000.
See notes to consolidated financial statements.
10
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Management's Representation
In the opinion of management, the accompanying unaudited financial
statements present fairly, in all material respects, the financial position of
U.S. Transportation Systems, Inc. and Subsidiaries and the results of their
operations and their cash flows for the three months ended March 31, 1996 and
1995, and, accordingly, all adjustments (which include only normal recurring
adjustments) necessary to permit that fair presentation have been made. Certain
information and footnote disclosures normally required by financial accounting
principles have been condensed or omitted. It is suggested that these statements
be read in conjunction with the financial statements and notes thereto included
in the Company's December 31, 1995 Form 10-KSB report. The results of operations
for the period ended March 31, 1996 are not necessarily indicative of the
operating results for the full year.
Note 2 - Reclassification
The March 1995 financial statements have been restated to conform
to the current presentation.
Note 3 - Convertible Debentures and Convertible Preferred Stock
In November 1995, the Company sold an aggregate of $3,150,000
principal amount of 8% convertible debentures for approximately $1,776,000 and
in February 1996, the Company sold $300,000 of convertible preferred stock. Each
of these transactions were made in reliance upon Regulation S of the Securities
Act. The Securities and Exchange Commission (the "Commission"), has taken the
position that certain sales of securities pursuant to Regulation S, effected in
a manner similar to the sales made by the Company (which includes the sale of a
substantial number of shares at a significant discount to the them market price,
which shares were resold soon after the 40 day holding period expired), were in
fact not made in compliance with such Regulation. Although management believes
that its transactions were in compliance with the requirements of Regulations S,
there can be no assurance that the Commission will not review such transactions
and determine that securities laws have been violated. If this were to occur,
the Company could become subject to actions by the Commission which could result
in an injunction against the Company from future violations of the federal
securities laws and/or fines against the Company. Any such actions by the
Commission could have an adverse impact on the Company for which no reserve has
been established. In January 1996, the debentures were converted by the holders
into 4,522,000 shares of common stock.
11
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 4 - Capitalization
On February 21, 1996, the Board of Directors approved an increase
in the authorized common stock shares from 20,000,000 to 50,000,000 shares.
Note 5 - Acquisition
On February 23, 1996, the Company purchased certain personal
property, intangible assets and contract rights from Krogel Air Freight, Inc.
and Krogel Freight Systems of Tampa, Inc. for $150,000 in cash and 110,000
shares of common stock. This acquisition was accounted for as a purchase.
Note 6 - Subsequent Events
On April 18, 1996, the Company issued $1,200,000 of 5% subordinated
promissory notes and bridge units. Simultaneously with the issuance of this
note, the holder hereof is entitled to receive such number of shares of the
Company's common stock and common stock purchase warrants, as equals (a) 35% of
the principal amount of this note, divided by the lesser of the closing high bid
price of the common stock (the "Bid Price") on the day on which a registration
statement pursuant to the Securities Act of 1993, registering such Unit
Securities is declared effective, or the price of the units to be sold by the
Company in its proposed secondary public offering pursuant to such registration
statement, if such effective date shall occur on or prior to four months from
the final closing; or (b) 40% of the principal amount of this note divided by
the lesser of the Bid Price or the offering price on the effective date, if such
effective date shall occur between five months and seven months from the final
closing; or (c) 50% of the principal amount of this note divided by the lesser
of the Bid Price or the offering price on the effective date, if such effective
date shall occur on or after the end of seven months from the final closing. In
the event that either (a) these notes have not been paid on or prior to the
maturity date; or (b) the unit securities have not been registered by on or
prior to the end of seven months from the final closing, then, at the sole
option of the holder of this note, the entire principal amount of this note may
be converted into such number of shares of common stock and warrants as equals
the principal amount of this note, divided by 50% of the Bid Price on the day
prior to the effective date.
On April 29, 1996, the Company filed a registration statement under
the Securities Act of 1933, with the Securities and Exchange Commission. The
Company estimates the net proceeds from the offering to be $8,617,500.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 vs.
Three Months Ended March 31, 1995
Results of Operations
The Company's revenue for the first three months of 1996 increased
significantly from the same period in 1995, from $3,427,311 in 1995 to
$6,516,126 in 1996, i.e., by 90 percent. This increase substantially resulted
from the acquisition of Armstrong Freight in June 1995, Trans Lynx in July 1995,
Automated Solutions (ASI) in November 1995 and Krogel in February 1996.
Armstrong's revenue (combined with Trans Lynx and Krogel, the
operations of which acquisitions have been merged into Armstrong), for the three
months ended March 31, 1996 was $1,285,263. ASI's revenue for the three months
ended March 31, 1996 was $1,716,910.
At the end of 1993, the Company's Board of Directors decided to
terminate the Company's charter bus operations. Charter operations had produced
very small profit margins in recent years and only when undertaken in
conjunction with contract operations. All charter operations have been
discontinued, sold or otherwise dissolved by the end of 1995. As of March 31,
1996, the only assets remaining from the discontinued segment was one (1) motor
coach bus with a book value of $55,953.
Liquidity and Capital Resources
The Company's working capital of $1,885,777 at March 31, 1996
represented an increase of $469,516 from the Company's working capital of
$1,416,261 at December 31, 1995. This improvement is chiefly the result of the
Company's operation in the quarter.
Cash flow from operations was $751,102 for the three months ended
March 31, 1996 before the application of funds to working capital components.
The Company anticipates positive cash flow from continuing operations in the
foreseeable future. Further, the Company anticipates that cash flow from the
discontinued charter segment will continue to be positive as the Company
disposes of this segment's assets.
The Company has no significant commitments at this time which would
require it to expend capital and believes its current facilities and capital
equipment are adequate for the Company as currently structured.
13
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibit
15.1 Letter on Unaudited Interim Financial Information
14
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC.
AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf on August 7, 1996 by the undersigned, thereunto duly authorized.
U.S. TRANSPORTATION SYSTEMS, INC.
/s/ Michael Margolies
----------------------------------
MICHAEL MARGOLIES
CHIEF EXECUTIVE OFFICER
/s/ Terry A. Watkins
----------------------------------
TERRY A. WATKINS
CHIEF FINANCIAL OFFICER
15
Exhibit 15.1 Letter on Unaudited Interim Financial Information
INDEPENDENT ACCOUNTANT'S REPORT
To the Stockholders and Board of Directors
U.S. Transportation Systems, Inc.
We have reviewed the accompanying consolidated balance sheet of
U.S. Transportation Systems, Inc. and Subsidiaries as of March 31, 1996, and the
related consolidated statements of income, stockholders' equity and cash flows
for the three months then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
MAHONEY COHEN RASHBA & POKART, CPA, PC
May 10, 1996
New York, New York
