SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 1995.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
Commission file number: I-9418
THE CANTON INDUSTRIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0509512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
(Address of principal executive offices) (Zip Code)
(801) 575-8073
(Issuer's telephone number)
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 XX No
The number of shares of the issuer's common stock (par value $0.001 per
share) outstanding as of November 1, 1995 was 4,667,088.
The number of shares of the issuer's preferred stock (par value $0.001
per share) outstanding as of November 1, 1995 was 0.
1
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TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS ...........................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.......4
PART II
ITEM 1. LEGAL PROCEEDINGS...............................................8
ITEM 5. OTHER INFORMATION..............................................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................10
SIGNATURES....................................................................11
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page
Consolidated Balance Sheets..................................................F-1
Consolidated Statements of Operations........................................F-3
Consolidated Statements of Cash Flows........................................F-5
Consolidated Statements of Stockholders' Equity..............................F-6
Condensed Notes to Consolidated Financial Statements.........................F-7
3
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
ASSETS ............................................... Sept 30, December 31,
1995 1994
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash .............................................. $ 76,892 $ 29,009
Receivable - brokerage account .................... - 65,525
Accounts receivable - trade ....................... 29,908 35,242
Accounts receivable - related parties ............. 156,728 165,474
Accounts receivable - other ....................... 35,089 9,925
Notes receivable .................................. 100,000 100,000
---------- ----------
TOTAL CURRENT ASSETS 398,617 405,175
PROPERTY AND EQUIPMENT ............................... 3,215,351 3,192,778
OTHER ASSETS
Investment securities ............................. 827,238 229,476
Mortgages receivable .............................. 353,000 750,000
Notes receivable .................................. 665,027 592,827
Investments - other ............................... 241,220 170,196
Deposits .......................................... 17,620 22,345
Trade and media credits ........................... 199,261 192,261
---------- ----------
TOTAL OTHER ASSETS 2,303,366 1,957,105
---------- ----------
TOTAL ASSETS $5,917,334 $5,555,058
========== =========
See notes to consolidated unaudited financial statements.
F-1
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
LIABILITIES AND SHAREHOLDERS' EQUITY Sept 30, December 31,
1995 1994
----------------- -------------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 212,246 $ 241,048
Accounts payable 301,031 312,901
Accounts payable - related parties 134,799 99,563
Real estate taxes payable 315,412 96,472
Payroll and related taxes payable 217,098 154,768
Accrued and other liabilities 211,432 7,612
Refundable deposits 6,939 -
Deferred income 16,838 146,264
----------------- -------------------
TOTAL CURRENT LIABILITIES 1,415,795 1,058,628
Long-term debt (less current portion 1,571,182 1,719,495
----------------- -------------------
TOTAL LIABILITIES 2,986,977 2,778,123
----------------- -------------------
Contingent liabilities - -
Minority interests in subsidiaries 139,399 151,000
SHAREHOLDERS' EQUITY
Preferred stock - $.001 par value:
20,000,000 shares authorized;
- 0 - shares issued - -
Additional paid-in-capital - -
Common stock - $.001 par value:
200,000,000 shares authorized;
4,667,088 issued
(2,832,864 at December 31) 4,667 2,833
Additional paid-in capital 10,935,570 10,268,120
Stock Subscriptions (11,000) -
Retained deficit (8,138,279) (7,645,018)
----------------- -------------------
TOTAL SHAREHOLDERS' EQUITY 2,790,958 2,625,935
----------------- -------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 5,917,334 $ 5,555,058
================= ===================
See notes to consolidated unaudited financial statements.
F-2
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
-----------------------------------
Sept 30, Sept 30,
1995 1994
---------------- ---------------
<S> <C> <C>
Revenue $ 769,255 $ 1,227,757
Cost of revenue 208,939 160,283
---------------- ---------------
Gross Profit 560,316 1,067,474
Selling, general and administrative
expenses 286,522 534,660
---------------- ---------------
Operating Profit (loss) 273,794 532,814
---------------- ---------------
Other income (expense):
Interest income - -
Interest expense (120,015) (71,282)
Gain (Loss) from disposal of
subsidiary 70,544 -
Gain (Loss) from sale of property-
related party - 752,467
Gain (Loss) from sale of assets - (5,842)
Gain (Loss) from investments (93,361) (441,851)
Loss from foreclosure - related party - -
Other income (expense)-related party - 148,010
Other income (expense) (14,401) 64,670
---------------- ---------------
Total Other Income (Expenses) (157,233) 446,172
---------------- ---------------
Income (Loss) Before Disc.Oper. 116,561 978,986
---------------- ---------------
Gain (Loss) from disposition
of Subsidiary - 329,182
Gain (Loss) from Discontinued
Operations (4,614) (110,472)
---------------- ---------------
Net Income (Loss) $ 111,947 $ 1,197,696
================ ===============
Earnings per share data:
Income (loss) before
discontinued operations $ 0.03 $ 0.46
Gain (loss) from
discontinued operations - 0.10
---------------- ---------------
Net income (loss) $ 0.03 $ 0.56
================ ===============
Weighted average number
of shares outstanding 4,256,651 2,121,989
================ ===============
See notes to consolidated unaudited financial statements
F-3
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Nine Months Ended
-----------------------------------
Sept 30, Sept 30,
1995 1994
---------------- ---------------
<S> <C> <C>
Revenue $ 1,559,321 $ 1,543,889
Cost of revenue 692,239 747,323
---------------- ---------------
Gross Profit 867,082 796,566
Selling, general and administrative
expenses 947,028 802,662
---------------- ---------------
Operating Profit (loss) (79,946) (6,096)
---------------- ---------------
Other income (expense):
Interest income 28,838 -
Interest expense (195,216) (82,751)
Gain (Loss) from disposal of
subsidiary 70,544 -
Gain (Loss) from sale of
property-related party - 752,467
Gain (Loss) from sale of assets 71,660 40,696
Gain (Loss) from investments 49,201 (691,851)
Loss from forclosure - related party (519,342) -
Other income (expense)-related party - 148,010
Other income (expense) 57,089 65,705
---------------- ---------------
Total Other Income (Expenses) (437,226) 232,276
---------------- ---------------
Income (Loss) Before Disc.Oper. (517,172) 226,180
--------------- ---------------
Gain (Loss) from disposition of
Subsidiary - 329,182
Gain (Loss) from Discontinued
Operations 23,911 (110,472)
---------------- ---------------
Net Income (Loss) $ (493,261) $ 444,890
================ ===============
Earnings per share data:
Income (loss) before discontinued
operations $ (0.15) $ 0.09
Gain (loss) from discontinued operations 0.01 0.09
---------------- ---------------
Net income (loss) $ (0.14) $ 0.18
================ ===============
Weighted average number of shares
outstanding 3,466,252 2,539,745
================ ===============
See notes to consolidated unaudited financial statements
F-4
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994
Nine Months Ended
----------------------------------
Sept 30, Sept 30,
1995 1994
---------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (493,261) $ 444,890
---------------- -------------
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation and Amortization 141,231 115,736
Stock issued for assets and debt 122,186
Loss (gain) from sale of assets (71,660) (40,696)
Loss (gain) from forclosure -
related party 519,342 (752,467)
Loss (gain) from investments
(Note 3) (49,201) 691,851
Adjustment to prior period
paid-in-capital (241,842)
Stock issued for services and
expenses 105,157 185,973
---------------- -------------
767,055 (41,445)
---------------- -------------
(Increase) decrease in:
Accounts and notes receivable - trade 5,334 (255,066)
Receivable - related parties 8,746
Other current assets 40,361 37,435
Increase (decrease) in:
Accounts payable (11,870) (148,430)
Payables - related parties 35,236
Accrued liabilities 492,029
Current portion of long-term debt (28,802) (23,248)
Deferred income (129,426) 270,967
------------- -------------
411,608 (118,342)
---------------- -------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 685,402 285,103
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of property sold 215,965
Purchase of assets (1,399,738) (457,151)
---------------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (1,183,773) (457,151)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of stock 397,941 137,100
Proceeds from borrowing 263,014
Cancellation of investment for
stock subscription (226,761)
Payment on debt 148,313 (24,994)
---------------- -------------
NET CASH PROVIDED
(USED) BY FINANCING ACTIVITIES 546,254 148,359
NET INCREASE (DECREASE) IN CASH 47,883 (23,689)
CASH AT BEGINNING OF PERIOD 29,009 (27,626)
---------------- -------------
CASH AT END OF PERIOD $ 76,892 $ (51,315)
================ =============
See notes to consolidated unaudited financial statements
F-5
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1995
Common Stock Paid-in Stock Shareholders'
Shares Amount Capital Subscriptions Deficit Equity
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES
DECEMBER 31, 1994 ............... 2,832,864 $ 2,833 $10,268,120 $ -- $(7,645,018) $ 2,625,935
Common Stock Activity:
Issued for Services .............. 397,352 397 104,760 -- -- 105,157
Issued for Debt .................. 352,134 352 79,559 -- -- 79,911
Issued for Assets ................ 65,000 65 42,210 -- -- 42,275
Issued for Cash .................. 1,019,738 1,020 407,921 -- -- 408,941
Stock Subscriptions .............. -- -- -- (11,000) -- (11,000)
Subsidiaries Minority
Interests ......................... -- -- 33,000 -- -- 33,000
Net Income .......................... -- -- -- -- (493,261) (493,261)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES
SEPTEMBER 30, 1995 ............. 4,667,088 $ 4,667 $10,935,570 $ (11,000) $(8,138,279) $ 2,790,958
=========== =========== =========== ============ ============ ============
See Notes to consolidated unaudited financial statements
F-6
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The Canton Industrial Corporation and its subsidiaries
Notes to Consolidated Unaudited Condensed Financial Statements
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements
have been prepared by management in accordance with the instructions on Form
10-QSB and, therefore, do not include all information and footnotes required by
generally-accepted accounting principles and should therefore, be read in
conjunction with the Company's Annual Report to Shareholders on Form 10-KSB for
fiscal year ended December 31, 1994. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operation results are not
necessarily indicative of the results for the full year ending December 31,
1995.
2. Additional footnotes included by reference
Except as indicated in the footnotes above there has been no other
material change in the information disclosed in the notes to the financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994 and Forms 10-QSB for the quarters ended March 31, 1995
and June 30, 1995. Therefore those footnotes are included herein by
reference.
F-7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Introduction
The Canton Industrial Corporation (the "Company") is an international
holding company that, through its subsidiaries, provides financial consulting
services and invests in undervalued real estate. The Company employs in-house
attorneys, certified public accountants, consultants, and support employees in
its consulting operations. Advisory services being provided by the Company range
from mergers and acquisitions to turnarounds. Typical services and support
functions include document preparation, capital formation, financial analysis,
debt settlement and general corporate problem solving.
The Company charges its clients monthly fees which are negotiated on an
individual basis and accepts cash, securities of the client company, or both, as
payment. This fee arrangement has allowed many companies, especially start-up
ventures and those experiencing financial difficulties, to obtain quality
services without the use of valuable cash flows. The Company bases its fees upon
the risk involved in the securities of a client and the cost of providing the
service or services desired.
The Company's clients are not limited to any one particular industry.
Instead, the Company focuses on public companies which need the services
provided by the Company or private companies that need assistance in becoming
publicly owned. The Company determines whether or not to accept a prospective
client based on its financial stability and the nature of the services needed.
During the quarter ended September 30, 1995, the Company continued its
efforts to expand its client base. However, the Company cannot give any
assurances that its financial consulting operations will expand. In addition,
because the number of clients, the financial strength of clients, and the range
of services provided can vary greatly from quarter to quarter, it is difficult
to project the revenue that can, or is likely to, be produced by performing
these services.
Through its real estate divisions, the Company has acquired a wide
variety of commercial properties. While most of the Company's real estate
holdings are in Utah, the Company also owns several properties in other parts of
the United States. (For further information see Part I, Item 2, of the Company's
annual report on Form 10-KSB for the year ended December 31, 1994). The
Company's commercial real estate subsidiaries handle acquisitions, leasing and
other management functions as well as sales of Company properties and the
properties of its clients. The Company hopes to increase its revenues generated
from these properties and to obtain additional real estate. The ability of
management to locate and acquire undervalued real estate, with little or no cash
down, and turn such properties into profitable assets is a key to the Company's
success.
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Material Events
KMC Foods, Inc. ("KMC"), a Virginia corporation and a subsidiary of the
Company, has instituted foreclosure proceedings on an industrial plant upon
which KMC holds a promissory note and formerly occupied near Cheriton, Virginia.
The property's owner of record, Potomac Engineering and Management Systems
Company, Inc. ("PEMSCO"), is in default on the promissory note owned by KMC
which is secured by a deed of trust and a judgment lien. The foreclosure sale
was scheduled for July 21, 1995. On July 19, 1995, PEMSCO filed for
reorganization under Chapter 11 of the Bankruptcy Code, thus automatically
stopping the sale, pending further proceedings before the United States
Bankruptcy Court for the Eastern District of Virginia, Norfolk Division. Relief
to permit the Company to proceed with its foreclosure is being pursued with the
bankruptcy court. See Part II, Item 1 "Legal Proceedings."
On July 27, 1995, the Company and Gardens, Inc., an Illinois corporation,
entered into an agreement whereby Gardens would remove waste tires presently on
site at the Canton plant. The Canton Plant is located at 200 East Elm Street in
Canton, Illinois and is a manufacturing and warehousing facility formerly owned
by the plow division of International Harvester. Located on the property are
steel and glass constructed buildings. (For further information see Part I, Item
2 of the Company's annual report on Form 10-KSB for the year ended December 31,
1994). Gardens subsequently subcontracted performance under this agreement with
EcoSystems, Inc., a New York corporation, which is active in the handling and
disposal of waste tires. Eco-Systems is currently baling the waste tires and
casting them in concrete forms at a rate of 400 to 500 bales per month. Plans
also call for disposal of these bales in an environmentally-sound manner. In
September, 1995, the Illinois State Environmental Protection Agency ("IEPA")
sent the Company notice that it had rejected the Company's plan and started its
own program for removal of all waste tires from the site. The Company sought to
prevent that action, based upon the fact that the IEPA had not followed its own
state statutes and environmental laws in rejecting the Company's plan and
instituting its own plan. However, the local Illinois Circuit Court allowed the
IEPA to continue their operations. The Company filed an appeal with the IEPA to
prevent further action, no response has been received by the Company from the
IEPA. The Company believes that the total cost of removal will not exceed the
original estimate. See Part 2, Item 1, Legal Proceedings.
On September 1, 1995, a subsidiary of the Company, West Jordan Real
Estate Holdings, Inc. ("WJREH"), a Utah corporation, acquired a lease/purchase
interest in a neighborhood shopping center located in southwest Salt Lake City.
WJREH acquired control of the property under a triple net three year lease, with
an option for three additional years. The lease payment is equal to the current
owner's underlying mortgage payment. Additionally, WJREH has an option to
purchase the property for $799,000.00 at any time during the initial or
subsequent term of the lease. The property consists of 5.5 acres of land of
which some parcels are fee-owned and others are municipal leased. Located on the
property is a 76,000 square foot shopping center which is currently about 43%
occupied under a combination of month to month and term lease tenancies.
5
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The Company is currently involved in negotiations with A-Z Professional
Consultants, Inc., ("A-Z"), a Utah corporation, and Investment Sanctuary
Corporation, a Utah corporation, ("ISC") to effectuate a consulting agreement(s)
whereby A-Z and/or ISC will be compensated in Common Stock of the Company for
consulting services rendered. Additionally, A-Z and/or ISC will receive a
finders fee of 10% for any transactions introduced by them to the Company, and
into which the Company enters.
Results of Operations
Revenue for the quarter ended September 30, 1995 was $769,255 compared with
$1,227,757 for the third quarter of 1994 and revenue for the nine months ended
September 30, 1995 was $1,559,321 compared with $1,542,889 for the nine months
ended September 30, 1994. The decrease in revenues from the prior year's quarter
is attributable to a greater volume of consulting done during the quarter ended
September 30, 1994. The increase in the nine months ended September 30, 1995 is
attributable to the Company's ability to attract and maintain quality clients
along with an increase in rental revenues from the Company's real estate
holdings.
The cost of revenues for the quarter ended September 30, 1995 increased
over the cost of revenues for the third quarter of 1994 by $48,656, although the
cost of revenues for the nine months ended September 30, 1995 decreased by
$55,084 as compared with the nine months ended September 30, 1994. The increase
in cost of revenue for the quarter ended September 30, 1995 is attributable to
the Company's ability to attract and maintain quality employees, which accounts
for the decrease in cost of revenues for the nine months ended September 30,
1995. Selling, and general and administrative expenses for the quarter ended
September 30, 1995 decreased to $286,522 from $534,660 for the quarter ended
September 30, 1994. The decrease in selling, general, and administration costs
was due primarily to the inherent costs involved in adjusting the quantity and
quality of consulting services performed by the Company. As the Company
continues its emphasis on its consulting services and real estate operations, it
is expected that these costs will rise significantly in 1995 compared to 1994.
The net income for the quarter ended September 30, 1995 was $111,947 as
compared with net income of $1,197,696 for the quarter ended September 30, 1994.
The change was chiefly due to the non operating gains incurred during the
quarter ended September 30, 1994.
Capital Resources and Liquidity
The deficiency in working capital increased from $923,054 in the third
quarter of 1994 to $1,017,178 in the third quarter of 1995. The Company
generated positive cash flows during the first three quarters of 1995. Operating
cash flows are closely aligned with consulting revenue and the cost of providing
consulting services. The most significant cost of providing consulting service
is the payroll of the Company's approximately 25 employees. The Company expects
an increase in payroll expenses if its consulting services division is increased
as a result of a substantial influx of clients.
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On August 7, 1995, the Company's board of directors approved a
resolution which authorized an Option Agreement and resulting stock issuances,
to five non U. S entities. The Option Agreements allow these entities to
purchase shares of the Company's common stock pursuant to Regulation S of the
Securities Act of 1933, as amended. The exercise price of each option is set at
$0.30 per share; the option expires one year from the date of approval and may
be exercised in full or in part. Pursuant to these Option Agreements, the
following shares have been exercised to the following entities as of September
30, 1995: 100,001 shares issued to Lexington Sales Corporation, a corporation
organized under the laws of the Isle of Man, with headquarters on the Isle of
Man; 196,668 shares issued to East-West Trading Corporation, a corporation
organized under the laws of the British Virgin Islands, with headquarters in
Nevis, West Indies; 15,000 shares issued to World Financial Securities, a
corporation organized under the laws of the British Virgin Islands, with
headquarters in London, England; and, 98,334 shares issued to Karston
Electronics Ltd. a corporation organized under the laws of the British Virgin
Islands, with headquarters in Tortola, BVI.
On June 28, 1995, the Company entered into an agreement with Ms. Pienne
Chow Sau Har, a Hong Kong resident, whereby Ms. Chow purchased 250,000 shares of
the Company's common stock for $140,000 pursuant to an exemption provided by
Regulation S of the Securities Act of 1933, as amended. This capital-for-equity
infusion provided the Company with the funds needed to satisfy its obligations
regarding the clean-up of the Canton, Illinois, plant. In further consideration
for the infusion, the Company guaranteed the value of the investment at an
interest rate of 12% per annum for a period of one year from the date of the
transaction. Subsequently, on August 4, 1995, the Company was required, by
reason of the aforementioned guarantee, to issue 144,634 additional shares to
Ms. Chow to cover shortfalls occasioned by a drop in the Company's stock price,
the exchange conversion rate, and the prepaid interest.
The Company intends to further limit or discontinue the practice of
issuing shares for services in lieu of cash payments. The Company may have to
continue to pay for services through the issuance of its common stock until it
is able to further improve its cash flows from operations. Where appropriate,
the Company may also issue common stock to acquire real estate and other assets.
During the second quarter of 1995, the Company began to limit the issuance of
stock for the above purposes and hopes to further limit the issuance of stock as
cash flows improve.
PART II
ITEM 1. LEGAL PROCEEDINGS
The following are material pending legal proceedings involving the
Company.
TAC Inc. vs. Ozora Corporation and Mark C. Hungerford. TAC, Inc. a
subsidiary of the Company filed this suit in the United States District Court
for the Central Division of Utah with Case Number 95-C-75 G. Recovery was sought
on a promissory note in the amount of
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$100,000 plus the interest due and the recovery of 99,800 shares of class A
common stock of Transcisco Industries, Inc. pledged as collateral on the note.
Judgment was entered against Ozora and Hungerford for $276,945.89 plus interest
and costs on May 30, 1995. Defendants have failed to attend scheduled
Supplemental Proceedings to enforce the judgment. The Court has issued its Order
compelling the Defendants' attendance at the Supplemental Proceedings. In
addition, the Company has filed a lien against real property owned by Mr.
Hungerford in the states of Montana and California.
Canton Industrial Corporation and Canton Industrial of Salt Lake City
vs. Delmar A. Janovec and KLH Engineering Group, Inc. This suit was filed on
April 19, 1995, in the United States District Court, in the Central District of
Utah, Civil Case No. 2:95 CV 363G. The Company has filed suit to seek
enforcement of the August 31, 1994 Settlement Agreement and Mutual Release
entered into between the Company and Janovec and KLH with respect to delivery to
the Company of 10,994,666 shares of common stock of KLH. The Company also seeks
recovery for the difference between the represented and the actual value of real
property located in Johnson County, Kansas to be conveyed to the Company by KLH.
The parties have continued efforts to settle this suit. Mr. Janovec and KLH have
failed to file an answer in this matter and the Company is in the process
obtaining default judgement against them.
West Virginia Property. Canton Tire Recycling of West Virginia, Inc. a
wholly-owned subsidiary of the Company owns property located in the city of
Parkersburg, West Virginia. The West Virginia Division of Environmental
Protection ("WVDEPA") has notified the Company of violations regarding certain
above ground storage tanks, alleged stains and alleged hydrocarbons located on
the property. Testing has been conducted at the site by Kemron Environmental
Services and results have been provided to the appropriate agencies in West
Virginia. The potential liability will remain uncertain until the testing is
evaluated by the State of West Virginia and notification to the Company by the
state as to what actions the state may require as to the clean-up of the site.
State of Illinois vs. The Canton Industrial Corporation. This action is
pending in the Ninth Judicial Circuit, County of Fulton, State of Illinois, Case
No. 93MR45, seeking the removal and disposal of waste tires presently located at
the Canton Plant in Canton, Illinois. At a hearing held on May 31, 1995, the
court entered a Supplemental Contempt Order compelling the Company to complete
the removal of the waste tires from the site prior to December 31, 1995.
Sanctions of $14,000 will be imposed if the Company fails to meet that deadline.
A plan for the removal of all waste tires has been filed with both the Court and
the Illinois Environmental Protection Agency ("IEPA"). The Company's contractor
began performance under the plan in August of 1995. On September 28, 1995 the
IEPA rejected the Company's plan and directed its own subcontractor to begin
removal of waste tires on October 2, 1995. The Company sought an injunction from
the Circuit Court to prevent the IEPA from taking or continuing its activity,
this request was denied by the Court on October 10th. An appeal was filed with
the Director of the IEPA on October 16th. No response has been received from
that appeal. The IEPA directed and funded removal of waste tires is continuing
at the site, as does removal by the Company's contractor. A decision by the IEPA
to seek recovery of
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costs related to the waste tire removal is not expected until after the process
has been completed. See Part I, Item 2 for additional discussion of this
dispute.
Vincent Liotta vs. Joseph Roberts & Co., et al. Suit has been filed by Mr.
Liotta in the U.S. District Court, Eastern District of New York, Case No.
CV-95-1659, alleging damages relating to his purchase of stock in ATC II, Inc.
("ATC"). Mr. Liotta claims that the Company, as a consultant to ATC, was
instrumental in effecting the transaction whereby Mr. Liotta purchased stock of
ATC and therefore has named the Company as a defendant in addition to Allen Z.
Wolfson individually, Canton Financial Services Corporation, ATC II, Inc. and
John Does 1-9. The Company filed an answer denying any involvement in the
underlying transactions and disputing any liability in the matter.
The Canton Industrial Corporation vs. Mi-Jack Products, Inc. Suit was
filed in the U.S. District Court, Central District of Utah, Civil Case No. 2:95
CV 651S, on July 14, 1995 seeking to recover damages based upon the improper
operation of equipment provided to the Company by Mi-Jack in connection with the
Company's now defunct tire recycling operations in Canton Illinois. Summons have
been placed in the hands of process servers and further action will follow upon
completion of service of process.
Xeta Corporation vs. The Canton Industrial Corporation. This case was
filed in the United States District Court, in the Northern District of Oklahoma,
Case Number 94-C-1080- BU. Xeta Corporation is suing the Company in an attempt
to recover funds that it asserts were improperly transferred to the Company from
its client, ATC. The Company filed a motion to dismiss the action for lack of
personal jurisdiction which was granted on February 16, 1995. Xeta refiled this
case in the United States District court, in the Central District of Utah, Case
Number 95CV-218G on March 8, 1995. Xeta asserted the same claim against the
Company as the case filed against the Company in Oklahoma. Xeta has filed a
Motion for Summary Judgment. The court has delayed consideration of this motion
until discovery is completed. Discovery and procedural filings continue under
the direction of the presiding court. The Company has been informed by the
current management of ATC that ATC is pursuing a global settlement of all of
Xeta's claims and ATC's outstanding debts to Xeta, such a settlement could
include resolution of this action against the Company.
KMC Foods, Inc. vs. Potomac Engineering Management Systems Co. KMC
Foods, Inc., a subsidiary of the Company, has filed a Motion for Relief from the
Automatic Stay in PEMSCO's, Chapter 11 Bankruptcy Case No. 95-23691-DHA pending
in the U. S. Bankruptcy Court for the Eastern District of Virginia, Norfolk
Division. KMC seeks to have PEMSCO either provide adequate protection of the
real property securing its promissory note in the amount of $352,000 or allow
KMC to proceed with its rights to foreclose on the land. The land consists of
approximately 65 acres in the vicinity of Cheriton, Virginia where the former
KMC Foods plant and warehouse are located, for which PEMSCO claims a value of
$1,700,000.00. A resolution either through the bankruptcy court or by agreement
with PEMSCO is being sought. See Part I, Item 2 for further discussion of this
dispute.
9
<PAGE>
Squires Construction, Inc. vs. TAC, Inc. Squires Construction obtained a
judgment of $16,400.00 against TAC, Inc., a Utah corporation ("TAC"), a wholly
owned subsidiary of the Company from Case No. 950003093CU in the Third Circuit
Court, Salt Lake County, State of Utah. This judgement stems from un-paid costs
of improvement to a warehouse in West Jordan, Utah owned by TAC. Enforcement of
the judgement consists of Squires garnishing the rents collected by TAC from
tenants at the warehouse until the judgement is satisfied or a settlement of the
judgment is reached.
Hi-Tech Mechanical Systems, Inc. vs. The Canton Industrial Corporation
Hi-Tech Mechanical Systems filed suit in the Third Circuit Court, Salt Lake
County, Utah, Civil No. 95- 0009467 seeking recovery for primarily heating and
cooling system repairs in the amount of $10,746. A Settlement Agreement has been
signed by both parties to resolve the matter over a period of six months. Once
the Company meets all the conditions of the Settlement Agreement, Hi-Tech
Mechanical Systems will motion the court to have the matter dismissed. The
services were provided at properties owned by subsidiaries of the Company.
Other material legal proceedings are pending, however, no changes in
such suits occurred in the third quarter of 1995. For more information
concerning these legal proceedings, see "Legal Proceedings" in the Company's
annual report on Form 10-KSB for the fiscal year ended December 31, 1994.
ITEM 5. OTHER INFORMATION
At an August 17, 1995, board of directors meeting, Richard Surber, the
president and a director of the Company, announced his resignation as president
of the Company. The board accepted this resignation and appointed Steven A.
Christensen, an employee of the Company to serve as its president. Additionally,
the board appointed Kevin S. Woltjen, an employee of the Company, as its vice
president. Subsequently, on August 30, 1995, the board of directors approved a
resolution appointing Matthew G. Colvin, an employee of the Company, as the
Company's secretary/treasurer. On October 3, 1995, the board appointed Mr.
Surber as chief executive officer of the Company and asked him to serve in an
advisory capacity to the new management of the Company because of his intimate
knowledge of and experience with the business affairs of the Company. On October
24, 1995, Mr. Colvin resigned his position as secretary/treasurer and the board
of directors appointed Susan S. Waldrop, an employee of the Company as chief
financial officer and secretary/treasurer of the Company. The Company is
currently involved in negotiations to effectuate management contracts for the
Company's president and vice president, a management contract for the chief
financial officer/secretary/treasurer has been executed and attached to this
quarterly report as an exhibit which is incorporated herein by this reference.
10
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) ExIndex to Exhibits beginning on page 12 of this Form 10-QSB, which is
incorporated herein by this reference.
(b) Reports on Form 8-K. During the quarter ended September 30, 1995, the
Company did not file any reports on Form 8-K.
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, this 20th day of November, 1995.
THE CANTON INDUSTRIAL CORPORATION
Date: November 20, 1995 By: /s/ Steven A. Christensen
----------------------------
Name : Steven A. Christensen
Title: President
Date: November 20, 1995 By: /s/ Susan S. Waldrop
-----------------------
Name: Susan S. Waldrop
Title: Chief Financial Officer,
Secretary/Treasurer
11
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
MATERIAL CONTRACTS
10(i)(a) 20 Employment Agreement dated November 10, 1995,
with an effective date of October 4, 1995, between
the Company and Susan S. Waldrop.
12
CANTON INDUSTRIAL CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made effective as of the 4th day of
October, 1995 between The Canton Industrial Corporation, a Nevada corporation
(the "Corporation"), and Susan S. Waldrop (the "Executive"), all parties'
principal place of business being 268 West 400 South, Suite 300, Salt Lake City,
Utah 84101.
WITNESSETH
The Executive is the Chief Financial Officer/Secretary/Treasurer of the
Corporation and possesses an intimate knowledge of the business and affairs of
the Corporation. The Corporation recognizes the Executive's contribution to the
growth and success of the Corporation and desires to assure to the Corporation
the continued benefits of the Executive's expertise and knowledge. The
Executive, in turn, desires to continue in full-time employment with the
Corporation on the terms provided herein.
Accordingly, in consideration of the mutual covenants and representations
contained herein, the parties hereto agree as follows:
1. Employment of Executive.
1.1. Duties and Status.
(a) The Corporation hereby engages the Executive as an
Executive employee for the period (the "Employment Period") specified in Section
4, and the Executive accepts such employment, on the terms and conditions set
forth in this Agreement. During the Employment Period, the Executive shall
exercise such authority and perform such executive duties as are commensurate
with the authority being exercised and duties being performed by the Executive
for the Corporation immediately prior to the effective date of this Agreement,
provided, however, that Executive shall not with out her written consent be
assigned duties that are materially inconsistent with her training, experience
and abilities nor to an executive position which is materially inconsistent with
this criteria.
(b) During the Employment Period, the Executive shall (i)
render such services to the Corporation and its affiliates as are reasonably
required by the Board of Directors of the Corporation and as may be required by
virtue of the office(s) and positions Executive holds subject to the standards
and criteria set forth herein, and (ii) accept such additional office or offices
to which he may be elected by the Board of Directors of the Corporation,
provided that the performance of the duties of such office or offices shall be
consistent with the scope of the duties provided for in subsection (a) of this
Section 1.1.
(c) The Executive will be required to perform the services and
duties provided for in subsection (a) of this Section 1.1 only at the location
where the Executive was employed immediately prior to the effective date of this
Agreement or such other location of the principal executive offices of the
Corporation in the current metropolitan area as the Board of Directors of the
Corporation may designate, unless Executive receives additional compensation to
move to another location, including payment for all expenses associated with
said move.
1.2. Compensation and General Benefits. As compensation for her
services under This Agreement, the Executive shall be compensated as
follows:
(a) The Corporation shall pay the Executive an annual salary
of $67,500.00. Two-thirds (2/3) of the annual salary ($45,000) is payable in
cash simultaneously with the bi-weekly payroll of the Corporation. One-third
(1/3) of the annual salary ($22,500) is payable in shares of The Canton
Industrial Corporation stock issued on a monthly basis. The stock received by
the Executive shall be issued pursuant to applicable exemptions from
registration, and/or made available pursuant to a Form S-8 registration and
shall be valued at the average bid price for the ten pay period preceding the
end of the month during which the Executive serves as such, or the closing bid
price for the quarter, whichever is lower, fractional shares shall be rounded up
to the nearest whole share. The Executive shall also be entitled to other
bonuses as
<PAGE>
they become available, to be reviewed by the Board of Directors. The annual
salary of the Executive shall be subject to normal periodic review on a
bi-annual basis, by the Board of Directors.
(b) The Executive shall be eligible to participate in such
profit-sharing, bonus, incentive, or any other transactions in which an employee
of the Corporation receives, or may receive, additional compensation, including,
but not limited to, receipt of stock in other organizations (such as the 504
incentives type of compensation, etc.), and performance award programs which
provide opportunities to receive compensation which are the greater of
opportunities (i) then provided by the Corporation to executives, and or other
employees with reasonably comparable authority and duties (and in any event not
lesser than those provided to executives or regular employees with junior
authority or duties), or (ii) available to the Executive immediately prior to
the effective date of this Agreement.
(c) The Executive shall be entitled to receive employee
benefits, if available, including, without limitation, pension, disability,
group life, sickness, accident and health insurance programs and split-dollar
life insurance programs, and prerequisites provided by the Corporation to
executives which are the greater of the employee benefits and prerequisites (i)
then provided by the Corporation to executives with comparable authority or
duties (and in any event not lesser than those provided to executives with
junior authority or duties), or (ii) available to the Executive immediately
prior to the effective date of this Agreement, all in accordance with
Corporation's Employee Manual. Additionally, the Executive shall have additional
paid vacation time as follows: first year of employment two weeks, one to two
years three weeks; three or more years four weeks. The Executive will only be
available for 4 hours on Fridays.
2. Competition; Confidential Information. The Executive and the
Corporation recognize that due to the nature of her prior association with the
Corporation and of her engagements hereunder, and the relationship of the
Executive to the Corporation, both in the past and in the future hereunder, the
Executive has had access to and has acquired, will have access to and will
acquire, and has assisted in and may assist in developing, confidential and
proprietary information relating to the business and operations of the
Corporation and its affiliates, including, without limiting the generality of
the foregoing, information with respect to their present and prospective
products, systems, customers, agents, processes, and sales and marketing
methods. The Executive acknowledges that such information has been and will
continue to be of central importance to the business of the Corporation and its
affiliates and that disclosure of it to or its use by others could cause
substantial loss to the Corporation. The Executive and the Corporation also
recognize that an important part of the Executive's duties will be to develop
good will for the Corporation and its affiliates through her personal contact
with customers, agents and others having business relationships with the
Corporation and its affiliates, and that there is a danger that This good will,
a proprietary asset of the Corporation and its affiliates, may follow the
Executive if and when her/her relationship with the Corporation is terminated.
The Executive accordingly agrees as follows:
2.1. Non-Competition.
(a) Except for reasons as stated in subsection 2.1 (b), during
the Employment Period and for a period of two years thereafter the Executive
will not, directly or indirectly, either individually or as owner partner,
agent, employee, consultant or otherwise, except for the account of and on
behalf of the Corporation or their affiliates, engage in any activity
competitive with the business of the Corporation or its affiliates, nor will
she, in competition with the Corporation or its affiliates, solicit or otherwise
attempt to establish for herself or any other person, firm or entity, any new
business relationships with any person, firm or corporation which is, at the
time this Agreement is entered into, or during her time in office, a customer or
employee of the Corporation or one of its affiliates.
(b) Executive may accept employment by a competitor or client
of the Corporation , if two times the Executive's annual compensation is paid to
the Corporation by the competitor, or client. Prior to the Executive accepting
such position Executive shall give at least two weeks notice unless otherwise
agreed by the Corporation and Executive. All others provisions set forth in 2.1
(a) shall remain in effect irrespective of this exception.
(c) Nothing in this Section 2 shall be construed to prevent
the Executive from owning, as an investment, not more than 15% of a class of
equity securities issued by any competitor of the Corporation or its affiliates
and publicly traded and registered under Section 12 of the Securities Exchange
Act of 1934.
2.2. Trade Secrets. The Executive will keep confidential any trade
secrets or confidential or proprietary information of the Corporation and
its affiliates, which are now known to her or which hereafter may become
known to her,
<PAGE>
as a result of her employment or association with the Corporation and shall not
at any time directly or indirectly disclose any such information to any person,
firm or corporation, or use the same in any way other than in connection with
the business of the Corporation or its affiliates during and at all times after
the expiration of the Employment Period. For purposes of this Agreement, "trade
secrets or confidential or proprietary information" means information unique to
the Corporation or any of its affiliates which has a significant business
purpose and is not known or generally available from sources outside the
Corporation or any of its affiliates, or typical of industry practice.
3. Corporation's Remedies for Breach. It is recognized that damages in
the event of breach of paragraph 2 by the Executive would be difficult, if not
impossible, to ascertain, and it is, therefore, agreed that the Corporation, in
addition to and without limiting any other remedy or right it may have, shall
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any breach, and the Executive hereby waives
any and all defenses he may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief.
3.1. Payment for Termination. Should the Corporation terminate the
Executive's employment during the term of this agreement without sufficient
cause as defined herein, the Executive shall be entitled to thirty (30) days of
full compensation due to her under this contract with the Corporation, including
issuance of such stock in The Canton Industrial Corporation, along with the
appropriate percentages of any transactions closed by the Corporation to which
the Executive would otherwise been eligible to receive through continued
employment, all of which together constitute "compensation" for the purposes of
this paragraph. All compensation due normally payable in cash is payable in cash
on the day of termination, all compensation due normally payable in stock shall
be delivered within fifteen (15) days of termination. The stock issued will be
valued pursuant to paragraph 1.2(a).
4. Employment Period; Certain Rights.
4.1 Duration. The Employment Period shall commence on the date of this
Agreement and shall continue for one year . The Employment Period may be renewed
from year to year by agreement executed in writing prior to each such
anniversary.
4.2 Termination. This Agreement may be terminated at will by either
party. Executive is required to give two weeks notice, unless subsequently
agreed to by the Corporation. The Corporation shall be subject to section 3.1 in
the event the Executive is terminated without cause, and shall pay no severance
for termination with cause.
(a) Disability/Retirement. If, as a result of the Executive's
incapacity due to physical or mental illness or infirmity, the
Executive shall have been absent from the full-time performance of her
employment duties with the Corporation for forty-five (45) consecutive
days during the term of this agreement the Corporation reserves the
right to terminate this agreement.
(b) Cause. Termination by the Corporation of the Executive's
employment for "cause" shall mean termination upon:
(I) the continued failure by the Executive to perform
substantially all of her duties with the Corporation (other
than any such failure resulting from incapacity due to
physical or mental illness, or infirmity or any such actual or
anticipated failure after issuance of a Notice of Termination)
within a reasonable period of time after a written demand for
substantial performance is delivered to you by the
Corporation, which demand specifically identifies the manner
in which the Corporation believes that the Executive has not
substantially performed her duties. For purposes of this
paragraph "a reasonable period of time" means a period of not
less then 10 working days, nor more than 20 working days.
5. Indemnity. The Corporation agrees to indemnify and hold harmless the
Executive from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which the Executive may become subject, and will
provide a legal defense at no cost to the Executive, or should a conflict arise
between a defense available to the Corporation and another Defendant and the
Executive, the Corporation shall reimburse the Executive for any legal or other
expenses reasonably incurred by him in connection with investigating or
defending any claims or actions, whether or not resulting in liability,
<PAGE>
insofar as such losses, claims, damages, expenses, liabilities, including any
and all costs, fees, attorneys fees, or judgments entered against him, and agree
to defend said Executive from all causes of action which may be initiated
against the Executive as a result of her position with the Corporation, and or
the performance of her duties with the Corporation, or any of its' affiliates or
subsidiaries, including, but not limited to, all outstanding withholding taxes,
state taxes, unpaid corporate obligations, litigation, administrative
investigations, existing or future claims of any nature.
6. Successors; Binding Agreement.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger consolidation or otherwise; to all or
substantially all of the business and/or assets of the Corporation to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Corporation would be required to
perform it if no such succession had taken place. Failure of the
Corporation to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the
Corporation in the same amount and on the same terms as set forth in
section (3) of this Agreement.
(b) This Agreement shall bind and inure to the benefit of and be
enforceable by the Corporation and the Executive and our respective
personal or legal representatives, executors, administrators,
successors, assigns, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to her
hereunder if she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement in accordance with the most recent beneficiary
designation which the Executive may have executed and delivered to the
Corporation after the date of this Agreement, and in the absence of any
such designation, the payments shall be made to her estate.
(c) If the Executive's employment is continued with a successor
(whether directly or indirectly) to all or substantially all of the
business and assets of the Corporation and such successor assumes the
obligations of the Corporation under this Agreement, the Executive will
not be entitled to any severance benefits under this Agreement solely
by reason of the assumption of this Agreement and the termination of
her employment with the Corporation in connection with such succession.
7. Enforcement of Agreement. The Corporation will not at any time contest
the validity or enforceability of this Agreement.
8. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement (except that all notices to the Corporation shall be directed to the
attention of its President) or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that any notice
of change in address shall be effective only upon receipt.
9. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and an authorized officer of the Corporation. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in This Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Utah. All references to sections of the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state, or local law.
10. Prior Agreements. This Agreement contains the entire understanding
between the parties hereto with respect to the terms and conditions of the
Executives employment and severance benefits and supersedes any prior agreement
between the Corporation (or any predecessor of the Corporation) and the
Executive with respect to the subject matter hereof.
<PAGE>
If there is any discrepancy or conflict between this Agreement and any plan,
policy or program of the Corporation regarding any term or condition of
severance benefits, the language of this Agreement shall govern.
11. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. Binding Agreement. This Agreement shall be effective as of the date
hereof and shall be binding upon and inure to the benefit of the Executive, her
heirs, personal and legal representatives, guardians and permitted assigns. The
rights and obligations of the Corporation under this Agreement shall inure to
the benefit of and shall be binding upon any successor or assignee of the
Corporation.
14. Entire Agreement. This Agreement constitutes the entire understanding
of the Executive and the Corporation with respect to the subject matter hereof
and supersedes any and all prior understandings written or oral. This Agreement
may not be changed, modified, or discharged orally, but only by an instrument in
writing signed by the parties.
IN WITNESS WHEREOF, the parties have executed, sealed and delivered this
Agreement as of the date first above written.
ATTEST: The Canton Industrial Corporation
By: /s/ Richard Surber, CEO
WITNESS: /s/ Matthew G. Colvin 11/10/95 Executive: /s/ Susan Waldrop 11/10/95
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S SEPTEMBER 30,
1995QUARTERLY REPORT ON FORM 10-SB AND IS QUALIFIED IN ITS ENTRIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 76,892
<SECURITIES> 0
<RECEIVABLES> 221,725
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 398,617
<PP&E> 3,799,730
<DEPRECIATION> 584,499
<TOTAL-ASSETS> 5,917,334
<CURRENT-LIABILITIES> 1,415,795
<BONDS> 0
<COMMON> 4,667
0
0
<OTHER-SE> 2,786,291
<TOTAL-LIABILITY-AND-EQUITY> 5,917,334
<SALES> 0
<TOTAL-REVENUES> 769,255
<CGS> 0
<TOTAL-COSTS> 208,939
<OTHER-EXPENSES> 286,522
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120,015
<INCOME-PRETAX> 116,561
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<INCOME-CONTINUING> 116,561
<DISCONTINUED> 4,614
<EXTRAORDINARY> 0
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<NET-INCOME> 111,947
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