FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(As last amended by Re No 34-18524, eff 5/24/82.)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For Quarter Ended 12/31/98
Commission file number 33-5516-LA
Beeper Plus, Inc.
---------------------------------------------------------
(Exact Name of registrant as specified in its charter)
Nevada 88-0219239
- ------------------------------- ---------------------------
(State or other jurisdiction of (IRS Employer Identification
Incorporation or organization) Number)
3900 Paradise Road, Suite 201, Las Vegas, Nevada 89109
---------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (702) 737-5560
---------------
- ------------------------------------------------------------------
Former name, address and fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
Class Outstanding at Dec 31, 1998
- ------------------------------------------------------------------------
Common Stock, par value $.01 per share 4,283,000
<PAGE>
Beeper Plus, Inc.
Form 10-Q
Quarter Ended December 31, 1998
TABLE OF CONTENTS
Page
PART I - Financial Information:
- -------------------------------
Item I - Financial Statements:
See Appendix 1
Item II - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 3-4
PART II - Other Information: 5
- ----------------------------
Item 1 - Legal Proceedings.
Item 2 - Changes in Securities.
Item 3 - Defaults upon Senior Securities.
Item 4 - Submission of Matters to a Vote of Security
Holders.
Item 5 - Related Party Transactions.
Item 6 - Exhibits and Reports on Form 8-K.
Appendix I - Financial Statements: 7
- ----------------------------------
- 2 -
<PAGE>
Beeper Plus, Inc
Form 10-Q
December 31, 1998
Item II: Management's Discussion and Analysis of Financial Condition
And Results of Operations.
Financial Statements:
- ---------------------
In the opinion of Management, the accompanying Financial Statements contain all
adjustments which are normal and of a recurring nature and necessary to present
fairly Beeper Plus, Inc's Balance Sheet as of June 30, 1998 (audited) and Dec-
ember 31, 1998 (unaudited), and Statement of Operations and Deficit and State-
ment of Cash Flows for the six months ended December 31, 1998 and 1997. Also
included is a Statement of Operations and Deficit for the three months ended
December 31, 1998 and 1997.
Financial Condition:
- --------------------
As of December 31, 1998, the Company had working capital in the amount of
$22,640 compared to $136,253 as of June 30, 1998. Operating activities de-
creased cash in the amount of $103,494 for the six months ended December 31,
1998. Stockholders' equity decreased by $99,639 in the six months ended
December 31, 1998 representing a 35% decrease in stockholders' equity.
Since the current Management has been in place beginning October 12, 1998,
operating costs have been continually reduced. The Company has reduced the
staff and continues to work on developing other projects to bring in additional
revenue. The lack of a professional basketball season caused a slowdown in the
Company's income that is usually realized from this sport. College basketball
offered some recovery. Management anticipates an increase in revenue with the
oncoming baseball season and subsequent thereto, the onset of football which
is the Company's most profitable period.
The Company is commencing marketing plans to sell the sports beepers through
casinos in the Las Vegas area. This plan offers an incentive to the sports
enthusiast and an endorsement from the casino. Additionally, the Company is
negotiating for an upgrade in the beeper unit to provide more easily obtainable
sports information.
Results of Operations:
- ----------------------
During the six month period ended December 31, 1998, revenues decreased by
$31,683 as compared to the six month period ending December 31, 1997 while
operating expenses increased by $101,579. The Company sustained a loss of
$96,270 for the six months ended December 31, 1998.
- 3 -
<PAGE>
Beeper Plus, Inc.
Form 10-Q
December 31, 1998
Item II: Management's Discussion and Analysis of Financial Condition
And Results of Operations (Continued).
Results of Operations (Continued):
- ----------------------------------
For the three month period ended September 30, 1998, the Company was under
entirely different management. During this quarter, the Company's Operating
Loss was $75,128 as compared to a Net Income of $23,346 for the three month
period ended September 30, 1997.
For the three month period ended December 31, 1998, under current management,
the Company's Operating Loss was $21,142 as compared to an Operating Loss of
$5,254 for the three month period ended December 31, 1997.
The December 31, 1998 quarterly loss of $21,142 represents approximately a 72%
drop from the operating loss of $75,128 experienced by the quarter ended Sep-
tember 30, 1998. Management expects to continue this trend by maintaining a
more efficient operation as well as advancing marketing and sale efforts to
bring the Company back into a profitable operation.
- 4 -
<PAGE>
Beeper Plus, Inc.
Form 10-Q
December 31, 1998
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings:
- ---------------------------
None.
ITEM 2 - Changes in Securities:
- -------------------------------
None.
ITEM 3 - Defaults Upon Senior Securities:
- -----------------------------------------
Not Applicable.
ITEM 4 - Submission of Matters to a Vote of Security Holders:
- -------------------------------------------------------------
None.
ITEM 5 - Related Party Transactions:
- ------------------------------------
See Note 7 to the Financial Statements (Appendix 1).
ITEM 6 - Exhibits and Reports on Form 8-K:
- ------------------------------------------
Not Applicable.
- 5 -
<PAGE>
Beeper Plus, Inc.
Form 10-Q
December 31, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned therenuto duly authorized.
Beeper Plus, Inc.
-----------------
(Registrant)
By Frank H. DeRenzo 5/17/99
----------------------------------------- ------------
Frank H. DeRenzo, President Date
By Thomas J. Neavitt 5/17/99
----------------------------------------- ------------
Thomas J. Neavitt, Secretary/Treasurer Date
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By Frank H. DeRenzo 5/17/99
----------------------------------------- ------------
Frank H. DeRenzo, Director Date
By Hugo V. Cianciulli 5/17/99
----------------------------------------- ------------
Hugo V. Cianciulli, Director Date
By Thomas J. Neavitt 5/17/99
----------------------------------------- ------------
Thomas J. Neavitt, Director Date
- 6 -
<PAGE>
Beeper Plus, Inc.
Form 10-Q
December 31, 1998
APPENDIX I
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
Compilation Letter 1
Balance Sheet 2
Statement of Operations & Deficit 3-4
Statement of Cash Flows 5
Summary of Significant Accounting Policies and
Notes to Financial Statements 6-10
<PAGE>
Joseph F. Zerga, Ltd.
Certified Public Accountants
2950 E Flamingo Rd, Ste L
Las Vegas, NV 89121
(702)732-2775
To the Board of Directors
and Stockholders of
Beeper Plus, Inc.
We have compiled the accompanying balance sheet of Beeper Plus, Inc. as of
December 31, 1998 and the related statements of operations, deficit, and cash
flows for the six months ended December 31, 1998 and 1997, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
The financial statements for the year ended June 30, 1998 were audited by us
and we expressed an unqualified opinion on them in our report dated October
16, 1998, but we have not performed any auditing procedures since that date.
Joseph F. Zerga
Las Vegas, Nevada
April 19, 1999
- 1 -
<PAGE>
<TABLE>
BEEPER PLUS, INC.
Balance Sheet
December 31, 1998 and June 30, 1998
<CAPTION>
Dec 31 June 30
1998 1998
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Currents Assets
Cash (Note 2) $ 18,110 $ 226,722
Certificate of Deposit (Note 8) 160,000 0
Accounts Receivable (Note 3) 56,159 49,301
Inventories 10,969 8,426
Notes Receivable (Note 7) 100,000 0
Other Current Assets 3,528 12,915
--------- ---------
Total Current Assets 348,766 297,364
--------- ---------
Fixed Assets:
Net of Depreciation (Note 4) 17,078 18,404
--------- ---------
Other Assets:
Deposits 5,450 5,450
Distributorships, Net (Note 5) 9,800 10,200
Deferred Tax Assets (Note 6) 123,850 108,150
--------- ---------
Total Other Assets 139,100 123,800
--------- ---------
TOTAL ASSETS $ 504,944 $ 439,568
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Acounts Payable $ 7,867 $ 4,886
Other Accrued Expenses 23,484 2,587
Line of Credit (Note 8) 159,931 0
Deferred Service Revenue (Note 3) 118,844 137,638
Loans from Related Parties (Note 7) 16,000 16,000
--------- ---------
Total Current Liabilities 326,126 161,111
--------- ---------
Long-term Debt - 0 - - 0 -
--------- ---------
Stockholders' Equity:
Common Stock (Note 10) 42,880 42,880
Additional Paid-in Capital 948,950 948,950
Treasury Stock (Note 10) (3,369) 0
Accumulated Deficit (809,643) (713,373)
--------- ---------
Total Stockholders' Equity 178,818 278,457
--------- ---------
TOTAL LIABILITIES AND EQUITY $ 504,944 $ 439,568
========= =========
<FN>
see accountant's compilation report and notes to financial statements
- 2 -
</TABLE>
<PAGE>
<TABLE>
BEEPER PLUS, INC.
Statement of Operations and Deficit
For the Six Months Ended December 31, 1998 and 1997
(Unaudited)
<CAPTION>
Six Months Ended
Dec 31 Dec 31
1998 1997
--------- ---------
<S> <C> <C>
Revenue & Income:
Distribution Revenue $ 32,250 $ 70,857
Service Revenue 370,711 324,988
Pager Sales 15,665 25,304
Front Page Sales 25,742 71,085
Handicap Revenue 15,405 0
Interest Income 3,237 2,845
Other Revenue 1,071 685
--------- ---------
Total Revenue 464,081 495,764
--------- ---------
Operating costs and expenses:
Cost of Sales 108,375 161,329
Advertising & Promotion 17,390 9,823
Amortization 400 400
Bad Debts 16,727 0
Depreciation 3,006 7,329
Entertainment 873 1,167
Insurance 19,142 14,770
Interest Expense 3,377 0
Professional Fees 27,192 4,045
Maintenance & Repairs 694 4,246
Office Expense 10,983 6,223
Salaries & Wages 230,728 170,920
Postage & Shipping 11,623 2,588
Printing 921 1,788
Rent 27,944 26,570
Payroll Taxes & Benefits 28,712 21,002
Taxes & Licenses 808 2,841
Telephone 10,383 5,852
Utilities 2,211 1,958
Legal & Accounting 25,132 15,207
Trade Show Expenses 7,398 0
Miscellaneous 22,032 16,414
--------- ---------
Total Costs and Expenses 576,051 474,472
--------- ---------
Net Income (Loss) Before Tax (111,970) 21,292
Income Tax Expense (Benefit) (15,700) 3,200
--------- ---------
Net Income (Loss) After Tax $ (96,270) $ 18,092
Deficit Beginning of Period (713,373) (646,383)
--------- ---------
Deficit End of Period $(809,643) $(628,291)
========= =========
Income per Common Share (Note 1) $ (0.022) $ .004
========= =========
Weighted average number of common
shares outstanding 4,283,951 4,288,000
========= =========
<FN>
see accountant's compilation report and notes to financial statements
- 3 -
</TABLE>
<PAGE>
<TABLE>
BEEPER PLUS, INC.
Statement of Operations and Deficit
For the Three Months Ended December 31, 1998 and 1997
(Unaudited)
<CAPTION>
Three Months Ended
Dec 31 Dec 31
1998 1997
---------- ----------
<S> <C> <C>
Revenue & Income:
Distribution Revenue $ 16,125 $ 41,211
Service Revenue 189,572 142,854
Pager Sales 6,212 14,113
Front Page Sales 15,049 29,695
Interest Income 15,405 1,429
Handicap Revenue 2,006 0
Other Revenue 1,071 0
----------- -----------
Total Revenue 245,440 229,302
----------- -----------
Operating Costs and Expenses:
Cost of Sales 46,392 86,570
Advertising & Promotion 2,650 2,714
Amortization 200 200
Bad Debts 10,311 0
Depreciation 1,503 3,665
Entertainment 873 1,028
Insurance 8,798 5,411
Interest Expense 3,224 0
Professional Fees 2,511 4,045
Maintenance & Repairs 301 2,069
Office Expense 4,173 1,962
Salaries & Wages 131,582 82,671
Postage & Shipping 5,920 686
Printing 182 1,337
Rent 10,942 13,563
Payroll Taxes & Benefits 14,074 9,869
Taxes & Licenses 0 55
Telephone 5,601 2,321
Utilities 706 739
Legal & Accounting 5,200 6,575
Trade Show Expenses 0 0
Miscellaneous 14,329 9,976
-------- -------
Total Costs & Expenses 269,382 235,456
-------- -------
Net Income (Loss) Before Tax (23,942) (6,154)
Income Tax Expense (Benefit) (2,800) (900)
--------- --------
Net Income (Loss) After Tax $ (21,142) $ (5,254)
Deficit Beginning of Period (788,501) (623,037)
--------- ---------
Deficit End of Period $(809,643) $(628,291)
========== ==========
Income Per Common Share (Note 1) $ (0.005) $ (0.001)
========== ==========
Weighted Average Number of
Common Shares Outstanding 4,283,000 4,288,000
========= =========
See accountant's report and notes to financial statements
- 4 -
</TABLE>
<PAGE>
<TABLE>
BEEPER PLUS, INC.
Statement of Cash Flows
For the Six Months Ended December 31, 1998 and 1997
(Unaudited)
<CAPTION>
Three months ended
Dec 31 Dec 31
1998 1997
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss) $ (96,270) $ 18,092
Depreciation 3,006 7,329
Amortization 400 400
(Increase) Decrease in:
Accounts Receivable ( 6,858) ( 4,246)
Inventories ( 2,543) 3,605
Other Current Assets 9,387 ( 3,145)
Deferred Tax Asset (15,700) 3,200
Increase (Decrease) in:
Accounts Payable 2,981 71
Accrued Expenses 20,897 ( 10,172)
Deferred Revenue (18,794) 50,048
---------- ----------
NET OPERATING CASH (103,494) 65,182
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan to Maven Properties, Inc. (100,000) 0
Certificate of Deposit (160,000) 0
Capital Expenditures (1,680) (568)
--------- ---------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (261,680) (568)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase Treasury Stock (3,369) 0
Draw on Line of Credit 159,931 0
--------- ---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 156,562 0
--------- ---------
Net Increase (Decrease) in cash (208,612) 64,614
Cash at Beginning of Period 226,722 255,621
--------- ---------
Cash at End of Period $ 18,110 $ 320,235
========= =========
<FN>
see accountant's compilation report and notes to financial statements
- 5 -
</TABLE>
<PAGE>
Beeper Plus, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
The Company:
- ------------
Beeper Plus, Inc. (the Company) was incorporated under the laws of the State
of Nevada on March 25, 1986. On March 31, 1986, the Company acquired Dial-A-
Score, Inc. a Nevada corporation which was incorporated on July 5, 1985. Dial-
A-Score, Inc. was a privately held company with one stockholder, who is also a
director of the Company. Because Dial-A-Score was under common control for
accounting purposes, it is considered to be the predecessor of the Company.
The Company is engaged in the business of providing data services through
pagers for all major sporting events.
Inventories:
- ------------
Inventories of pagers are stated at the lower of cost (first-in, first-out
method) or market.
Depreciation:
- -------------
Furniture, fixtures and equipment are stated at cost. Depreciation is computed
by the straight-line method over estimated useful lives of five to seven years.
Maintenance, Repairs and Renewals:
- ----------------------------------
Maintenance, Repairs and Renewals which neither materially add to the value of
the equipment nor appreciably prolong its life are charged to expense as in-
curred. Gains or losses on dispositions of equipment are included in operations.
Amortization:
- -------------
The Company amortizes new distributorships purchased over 15 years for federal
income tax purposes in accordance with Internal Revenue Code Section 197 for
the amortization of intangible assets. The Company uses the same method for
financial reporting purposes because the length of time the Company will bill
the customers directly after the termination of the distributorship is
indefinite.
Revenue Recognition and Deferred Revenue:
- -----------------------------------------
Revenue is recognized when customers are billed for the services provided.
Deferred revenue results from the cash received from customers for the pre-
payment of services to be provided.
Estimates:
- ----------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of management's estimates.
Earnings per share:
- -------------------
The computation of earnings per share is based on the weighted average number
of outstanding common shares.
- 6 -
<PAGE>
Beeper Plus, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
December 31, 1998
NOTE 2 - Cash:
- --------------
A summary of cash at December 31, 1998 is as follows:
Citibank Nevada, N.A.
Non-Interest Bearing, Checking $ 68
Interest Bearing, Savings 6
Community Bank of Nevada
Non-Interest Bearing, Checking 2,446
Non-Interest Bearing, Payroll Acct (68)
Non-Interest Bearing, Checking 7,634
Non-Interest Bearing, Payroll Acct 7,877
Other Cash
Petty Cash 147
--------
Total Cash $ 18,110
Federal Depository Insured 17,963
--------
Uninsured $ 147
========
NOTE 3 - Accounts Receivable:
- -----------------------------
Accounts Receivable consist of amounts due from service customers and
distributors and is shown on the balance sheet net of allowance for doubtful
accounts. Prepayments on account by service customers and distributors is
shown as a current liability and the revenue is recognized when the customer
is billed for the services provided. Accounts Receivable at December 31, 1998
and June 30, 1998 are as follows:
1998
Dec 31 June 30
--------- ----------
Accounts Receivable $ 78,841 $ 149,376
Allowance for Doubtful Accounts (22,682) (100,075)
--------- ----------
Net Accounts Receivable $ 56,159 $ 49,301
========= ==========
Prepayments on Account $ 118,844 $ 137,638
========= ==========
- 7 -
<PAGE>
Beeper Plus, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
December 31, 1998
NOTE 4 - Furniture Fixtures and Equipment:
- ------------------------------------------
Dec 31 June 30
1998 1998
--------- ---------
Furniture and Equipment $ 280,705 $ 279,024
Leasehold Improvements 12,380 12,380
--------- ---------
Total Fixed Assets 293,085 291,404
Accumulated Depreciation (276,007) (273,000)
--------- ---------
Net Fixed Assets $ 17,078 $ 18,404
========= =========
NOTE 5 - Distributorships:
- --------------------------
On April 11, 1996, the Company purchased the Dallas distributorship for
$12,000, which terminated the distributor arrangement and allowed the Company
to bill customers directly, for $12,000. The asset was recorded at cost and is
amortizable over a period of fifteen years for federal income tax and financial
reporting purposes.
NOTE 6 - Income Taxes:
- ----------------------
During 1994 the Company adopted FASB Statement 109 on accoutning for income
taxes. The deferred tax asset recognized by the Company is a result of the
expected future tax benefit of the Net Operating Loss carryforward from the
schedule below.
The Company has reported taxable income each year from fiscal year end June 30,
1991 through fiscal year end June 30, 1997, which utilized a portion of the net
operating loss carryover from which the deferred tax asset is derived. The
Company sustained losses in the fiscal year end June 30, 1998 and the 6 months
ended December 31, 1998 of $66,990 and $95,170 respectively, which are material
in amount. Future operations are predicated on the ability of the Company to
produce profits.
The Company has reduced the staff and instituted other cost cutting policies as
a result of the recent losses and is now emphasizing annual contracts directly
with customers rather than through distributors. The Company believes it will
show profits in future periods sufficient to realize the tax benefit of the Net
Operating Loss carryover. However, if the Company does not show future profits
sufficent to utilize the Net Operating Loss carryover, the result would be a
reduction in the stockholders' equity in the amount of the deferred tax asset
equal to $123,850. This represents 69.3% of stockholders' equity.
- 8 -
<PAGE>
Beeper Plus, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
December 31, 1998
NOTE 6 - Income Taxes (Continued):
- ----------------------
The Company has net operationg loss carryforwards to fiscal 1998-99 of
$721,012, which if not utilized will expire as follows:
NOL Carryover
Year Ending Expires
June 30, June 30, NOL
----------- --------- ---------
1988 2003 $ 187,083
1989 2004 308,251
1990 2005 168,871
1998 2013 56,807
---------
TOTAL NOL $ 721,012
=========
During 1994 the Company adopted FASB Statement 109 on accounting for income
taxes. The deferred tax asset for the net operating loss above is as follows:
Deferred
Tax Asset
----------
Deferred Tax Asset at June 30, 1994 $ 114,060
Less Deferred Tax Used for Year Ended 6/30/95 (5,314)
---------
Deferred Tax Asset at June 30, 1995 108,746
Less Deferred Tax Used for Year Ended 6/30/96 (8,221)
---------
Deferred Tax Asset at June 30, 1996 100,525
Less Deferred Tax Used for Year Ended 6/30/97 (-0-)
---------
Deferred Tax Asset at June 30, 1997 100,525
Plus Tax Benefit of losses for year ended 6/30/98 7,625
---------
Deferred Tax Asset at June 30, 1998 108,150
Plus Tax Benefit of losses for 6 months ended 12/31/98 15,700
---------
Deferred Tax Asset at December 31, 1998 $ 123,850
=========
6 Months Year Ended
12/31/98 06/30/98
-------- ----------
Net Income (Loss) Before Tax $(111,970) $ (74,615)
Contributions Carryover 0 5,300
Travel & Entertainment 50% 436 1,289
Bad Debts per Allowance 6,578 11,106
Penalties 0 113
--------- ---------
Taxable Income (Loss) (104,956) (56,807)
--------- ---------
Income Tax Expense (Benefit) Recognized $ (15,700) $ (7,625)
========= =========
- 9 -
<PAGE>
Beeper Plus, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
December 31, 1998
NOTE 7 - Loans from Related Parties:
- ------------------------------------
Loans from related parties consist of a non-interest bearing note due to
shareholder Jamie Thompson with a balance due at December 31, 1998 of $16,000.
There were no repayments to related parties in the three months ended December
31, 1998.
On September 4, 1998, Maven Properties, Inc. (MPI) a related party to Maven
Enterprises, Inc. (MEI) a 45.87% shareholder in the Company, borrowed $100,000
from the Company to satisfy an obligation of MEI. The note bears interest at 8%
per annum, was due and payable on November 4, 1998 and lists security for the
loan as the property located at 1711 E Desert Inn Road, Las Vegas, NV 89109.
The note refers to a Deed of Trust executed by MPI on this property, however, no
Deed of Trust has been recorded with the Clark County Recorders office. The
loan is currently in default and the Company has initiated foreclosure proceed-
ings on the property.
NOTE 8 - Line of Credit and Certificate of Deposit:
- ---------------------------------------------------
The Company obtained a Line of Credit in the amount of $160,000 with Community
Bank of Nevada. The Line, at a current interest rate of 7.55%, matures August
13, 1999 and is secured by a Certificate of Deposit with Community Bank of
Nevada in the amount of $160,000, which bears interest 5.44% and matures August
13, 1999.
NOTE 9 - Long Term Debt:
- ------------------------
The Company had no Long Term Debt obligations during the six month period
ended 12/31/98.
NOTE 10 - Equity:
- -----------------
Common stock: Par value $.01 per share; Authorized 10,000,000 shares; Issued
4,288,000 shares; Outstanding 4,283,000 shares; Treasury stock 5,000 shares
purchased August 5, 1998.
NOTE 11 - Commitments and Contingencies:
- ----------------------------------------
Operating Leases
- ----------------
The Company leases approximately 3,500 square feet of office space at 3900
Paradise Road, Suite 200-201, Las Vegas, NV under a non-cancelable operating
lease from a non-affiliated lessor. The term of the lease is 36 months begin-
ning June 25, 1998 and ending June 30, 2001. The future minimum monthly lease
payments for the term of this lease are as follows:
Monthly Total
------- -----
Six Months Ended June 30, 1999 $5,400 $ 32,400
Year Ended June 30, 2000 5,600 67,200
2001 5,800 69,600
--------
$169,200
========
- 10 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1999
<PERIOD-START> Jul-01-1998
<PERIOD-END> Dec-31-1998
<CASH> 18110
<SECURITIES> 0
<RECEIVABLES> 78841
<ALLOWANCES> (22682)
<INVENTORY> 10969
<CURRENT-ASSETS> 348766
<PP&E> 293085
<DEPRECIATION> (276007)
<TOTAL-ASSETS> 504944
<CURRENT-LIABILITIES> 326126
<BONDS> 0
<COMMON> 42880
0
0
<OTHER-SE> 135938
<TOTAL-LIABILITY-AND-EQUITY> 504944
<SALES> 460844
<TOTAL-REVENUES> 464081
<CGS> 108375
<TOTAL-COSTS> 108375
<OTHER-EXPENSES> 467676
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3377
<INCOME-PRETAX> (111970)
<INCOME-TAX> (15700)
<INCOME-CONTINUING> (96270)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (96270)
<EPS-PRIMARY> (.022)
<EPS-DILUTED> (.022)
</TABLE>
