FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2000.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15900
DUPONT DIRECT FINANCIAL HOLDINGS, INC.
(Exact name of Issuer as specified in its charter)
Georgia 59-3461241
other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
42 Broadway, Suite 1100-26
New York, New York 10004
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (917) 320-4800
Indicate by check mark whether the Issuer (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 Issuer
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No[_]
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable dates.
At September 30, 2000 there were 8,755,739 shares issued and outstanding.
<PAGE>
ITEM 1. FINANCIAL STATEMENTS.
The financial statements required to be set forth in this Item
precede and accompany this narrative description. No comparable "year-earlier"
periods are presented since at that time the Company had no business, and such a
comparison would be meaningless.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS.
A. Financial Results of Operations.
During the fiscal period ended September 30, 2000, the
consolidated Company had revenues of $1,548,000 (rounded) and net income of
$919,000 (rounded), and thus achieved earnings per share on a fully diluted
basis of approximately $0.12 per share. The largest component of revenue was
derived from firm trading of securities at a total of $936,663, much of which
was attributable to a single, large trade that may not necessarily be
anticipated to be duplicated in future fiscal periods on any reliable basis.
Moreover, such trading inherently also involves risks of losses as well as the
potential for gains. The second largest component of revenue was from
investment/management advisory fees at $455,500. This business line is more
stable and far less exposed to adverse risk. Because this work is performed
largely by senior management of the Company, the Company achieves a greatly
enhanced margin on this work because the senior managers forgo the usual and
customary employee's share of the profits on such transactions in order to
advance the Company's accumulation of capital. There can be no assurance that
such work will be as profitable in the future.
B. Background.
During the fiscal period ended June 30, 2000, by on or about
May 17, 2000, the Company completed the reorganization (the "2000
Reorganization") more fully described in the Company's annual report on Form
10-KSB filed on or about August 8, 2000. Pursuant to that reorganization, the
Company transformed itself from a "shell" company without any significant
business or operations into a financial services holding company owning several
operating businesses and several substantial investments. In the fiscal period
ended September 30, 2000, the company completed its first full operating
quarter.
<PAGE>
The principal operating business during this quarter was
Dupont Securities Group, Inc. ("DSGI"), a broker-dealer registered with the
United States Securities and Exchange Commission ("SEC") with membership in the
National Association of Securities Dealers, Inc. ("NASD"). The other businesses
it acquired are Wavecount Asset Management LLC (WAM), Wavecount Futures, Inc.
("Futures"), and a forty-nine percent (49%) interest in Native American
Financial Services Company ("NAFSCO"). (see footnote 1) During the fiscal period
ended September 30, 2000, the Company also acquired and renamed a
previously-formed, otherwise dormant company named Wavecount Advisory Services,
Inc. (WASI) that the Company employs to engage in management advisory services
for clients who are not yet at a point in their development to require or
contemplate the issuance of securities for the development of their businesses,
and who thus do not require the services of a registered broker-dealer. Until
WASI was enlisted to serve in this function, some of these management advisory
services had been performed directly in the parent holding company. It is not
the Company's intention to generate this business in the parent holding company
in the future, but rather, to compartmentalize all operating business in
subsidiary companies and to use the parent company exclusively as a formal
holding company.
C. The Operating Companies.
<PAGE>
Dupont Securities Group, Inc. ("DSGI") is the Company's most
active and productive operating business. (see footnote 2) During the fiscal
period ended September 30, 2000, DSGI received approval from the NASD for its
continued membership in the NASD following the transfer of its ownership to
DIRX.
<PAGE>
Also, during the period, DSGI and First Montauk Securities
Corporation terminated, on amicable terms, the third-party clearing arrangement
between them that had facilitated DSGI's procurement of Guaranty Letters from
Schroder that enabled DSGI to engage in institutional fixed income trading with
the highest-caliber counter parties in the world. DSGI entered a direct clearing
arrangement with Schroder in order to maintain such institutional fixed income
trading. As a result, DSGI was required to post collateral security with
Schroder adequate for this purpose, and was thus able on a compensating basis to
terminate its monthly payments to First Montauk for the prior accommodation in
procuring the Guaranty Letters. The collateral deposited at Schroder for this
purpose remains part of DSGI's capital (regulatory and otherwise), and the
termination of the third-party clearing relationship with First Montauk allows
DSGI to regain a material portion of revenues that had previously been committed
for procuring First Montauk's accommodation services.
Through its new ownership and management provided by
Wavecount, Inc. ("WVCI") (and now "DIRX"), DSGI provides a broad range of
securities services to a diverse clientele, including high net worth
individuals, institutions, and other broker/dealers, and corporation finance and
investment banking services to a variety of businesses. As the business was
originally envisioned, the main business lines were expected to center around
Fixed Income Securities including Brokerage Execution Services, Management of
Funds to be invested in Fixed Income and assistance in raising funds via Fixed
Income offerings.
Over the course of the just-ended fiscal quarter, DSGI has
made arrangements to transfer the institutional fixed income clearing services
portion of its business to Prudential Securities Incorporated's (Prudential or
PSI) wholly-owned Wexford Clearing Services Corporation (Wexford or WCSC),
another world-renowned financial services company with a stature at least equal
to that of Schroder. When completed, this transfer is not expected to have any
material impact on DSGI's business.
As a specialty, the Company has focused on providing
assistance to Native American Nations in analyzing their financing requirements,
structuring offerings, evaluating business proposals for these needs and raising
funds and managing funds. During the fiscal period ended September 30, 2000,
through DIRX' 49% ownership interest in Native American Financial Services Co.
(NAFSCo), DSGI established NAFSCo as a branch office capable of performing
minority set-aside securities execution services for those money-managers
wishing to engage it. This business line has thus begun to generate revenue, at
the moment at a break-even level, and it is expected to grow, possibly
exponentially, in the next several fiscal periods. (see footnote 3)
<PAGE>
DSGI also specializes in providing Fixed Income execution
services to small dealers without their own bond desks or by providing expertise
to other bond traders in specialized securities. DSGI's staff (see footnote 4)
has many years of experience in a wide variety of Fixed Income products. DSGI
has established alliances for this purpose with many other dealers, with their
exact number and identity constantly changing, and generally increasing in
number.
DSGI is a member of the NASD operating under Net Capital rules
as a $100,000 broker dealer. This entitles DSGI to provide a full line of
investment services including underwriting, market-making in both Fixed Income
and Equities, Private Placements, and regular transactional brokerage services.
DSGI has registered as an Insurance Agency in order to provide retail clients
the opportunity to purchase insurance-wrapped investment products such as
annuities.
Through Schroder, DSGI will shortly be able to provide
Internet access for trade execution and market information for retail equity
clients. The Company sees this as a significant growth area for Fixed Income
business. (Customers will also be able to trade stocks electronically via these
facilities). The service will be available through DSGI's website under the name
DupontDirect.com. Via a hot link to Schroder, clients will be able to open
accounts, receive market information, execute trades and see the status of their
account.
DSGI limits its investment banking activities to businesses
that contemplate a near-term (within twelve months) need to raise capital,
generally in the form of securities, in which it has, through the experience of
its senior staff, an in-depth understanding of that particular business's
orientation and financial needs. The Company currently limits its trading and
investing to maintaining inventory for the servicing of retail clients and
investments in which the principals have particular expertise, or are willing to
school themselves as may be required..
<PAGE>
During the fiscal period ended September 30, 2000, DSGI
decided and embarked upon a program to increase its retail equity business, both
by internal expansion and the acquisition of franchised branches. It is believed
this will enhance revenue and profit in its own right, and complement overall
management and investment advisory services within DSGI itself and its related
companies. Thus far, however, the expenses of this expansion have exceeded the
revenues it has produced. These results are expected to be reversed in the
immediately forthcoming fiscal periods.
During the fiscal period ended September 30, 2000, the Company
continued the completion of its agreement with Capital International CSBIC, LP
(CISBIC), a small business investment corporation licensed by the Small Business
Administration ("SBA") of the United States Department of Commerce. (see
footnote 5)
During the fiscal period ended September 30, 2000, the Company
arranged bridge loan financing for one of its investment advisory clients,
pending the Company's arrangement of permanent equity financing for the client,
with the assistance of a Guaranty provided by the CISBIC. The Company also
continued with the completion of its due diligence in connection with the
finalization of this business arrangement with the CISBIC.
<PAGE>
PART II. OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
Since the date of the Company's last report on Form 10-QSB,
there are none. Since March 31, to June 30, however, several legal proceedings
were initiated against the Company or its subsidiaries in the normal course of
its businesses. All of these, however, are based on matters and events occurring
prior to the time that WVCI owned the operating businesses acquired by the
Company from WVCI. Management believes that all of these proceedings are
frivolous and were brought when the claimants learned that the Company was no
longer dormant and had acquired or agreed to acquire viable operating
businesses. All of these matters are so recent that little discovery has taken
place, but based on management's own information and investigations, all of
these matters are judged to be without merit. It is management's intention to
defend all such matters vigorously.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During the fiscal period ended September 30, 2000, the Company
issued, approximately 50,000 shares, on a fully diluted basis, of its stock. All
such securities were issued to persons or entities outside the Company.
Wavecount, Inc. remains the majority shareholder by a considerable margin.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO SHAREHOLDERS' VOTE.
None. Given that the Company has undergone a material
reorganization since the spring of 2000, including a change in its fiscal
year-end to March 31, the Board of Directors has determined that, in the absence
of an extraordinary matter, the Company will hold its next shareholders' meeting
sometime between September 1, 2001, and October 1, 2001; i.e., sixty to ninety
days following the legal deadline for completion and submission of the Company's
next annual report to the SEC on Form 10-KSB. The Board has amended the
Company's By-laws so to provide, and will seek shareholder ratification of such
change at such shareholders' meeting.
ITEM 5. OTHER INFORMATION.
<PAGE>
During the period following the end of the fiscal period
ending June 30, 2000, and the filing of this Report, the Company, aside from the
arrangement with the CISBIC described above, through its Futures subsidiary,
also consummated a previously executory agreement to become a Guaranteed
Introducing Broker with REFCO, Inc., LFG Division, one of the most prominent and
prestigious firms in the futures products business, if not the world-wide
recognized leader in the field, relative to that firm providing the requisite
credit guarantees for the Company's derivative products, including foreign
exchange and futures business.
SIGNATURES.
In accordance with the requirements of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned,
duly authorized.
Dupont Direct Financial Holdings, Inc.
/s/
----------------------------------------
Randy M. Strausberg, Chairman and
President
November 13, 2000
/s/
----------------------------------------
David W. Parsons, Director and Secretary
--------
1 With respect to the operating businesses aside from DSGI, a brief description
of each of the other businesses follows in the margin.
WAM is a New York state-registered investment advisor that
anticipates generating revenues from money-management activities, principally
linked to clientele obtained or secured by NAFSCO. Aside from strict "directed
equity" business pursuant to which the trust funds belonging to the Navajo
Native American Nation, and other Native American Nations, are invested in the
United States equity markets with a portion (known as a "set aside") required to
be invested through or via the facilities of minority (Navajo)-owned
broker-dealers, WAM offers all clients access to a fixed income
yield-enhancement program based on U.S. government zero coupon instruments.
Since NAFSCO is the only financial services firm recognized as a certified
Navajo enterprise, WAM expects to capture a substantial amount of the more than
$1.4 billion under management for the Navajo Nation Trust. WAM's zero-coupon
investment program typically can enhance a conservative, fixed-income investment
portfolio by 2% per annum on the investment, or an incredible 30% to 40% of the
yield. This component of DIRX' business lines has not yet begun to generate any
appreciable revenues.
Futures is a firm registered with the Commodities Futures
Trading Commission ("CFTC") for the purpose of engaging in dealing and brokerage
in the financial services instruments based upon commodities and futures. This
business line has not yet produced any significant revenues for the Company, but
the character of such a business is such that its revenue production is
developed over a relatively long time line. That is, very substantial revenue is
derived from relatively few transactions that require the short-term investment
of high amounts of human capital. The Company's results of operations during the
fiscal period herein reported upon do not include the consummation of any
transactions in this business line, but significant transactions are nonetheless
under development.
NAFSCO is the Company's business embodiment of its involvement
in the development of financial services relations with the many Native American
Nations. At the present time, these relations are linked principally to the
Navajo Nation, which is the single largest Native American Nation, not only in
population and land area, but in secured Trust Funds as well. During the fiscal
quarter ended June 30th, the Company commenced the application process to guide
NAFSCO through the NASD to become, or more precisely to own, its own
broker-dealer that will be resident on the Navajo Nation. The Company is also
involved with the Nation's political subdivisions for the financing of
badly-needed municipal infrastructure such as schools and hospitals, and with
the management of its Trust Funds provided by the United States government in
connection with the resettlement of the Members (or their ancestors) from their
native lands. The Company also expects to enjoy the benefits of a significant
amount of "directed equity" retail stock commission business. This means that
the institutional money mangers who control the investments of the Trust Funds
will be required to place a significant amount of the transactions for their
Native American funds through a firm such as DIRX. This business line also
produced little or no revenue for the Company during the present quarter, but
until the "directed equity" business is firmly obtained, revenue from NAFSCO
will tend to be sporadic or nonexistent, and exceptionally high when the
"directed equity" business is firmly secured.
2 DSGI is registered as a broker-dealer with the Securities and Exchange
Commission (SEC) pursuant to section 15 of the Securities Exchange Act of
1934,('34 Act or Exchange Act), and is a member of the National Association of
Securities Dealers, Inc. (NASD), a national securities association registered
with the SEC pursuant to section 15A of the '34 Act. It is also registered with
the Municipal Securities Rulemaking Board (MSRB), a board appointed by the SEC
and under its supervision, and a subscriber to the coverage of the Securities
Investors Protection Corporation (SIPC). DSGI has Instinet market execution
facilities, a million dollar asset in itself, although off-balance sheet, and
clearing arrangements with associated guarantees from world-renowned financial
services institutions such as Schroder & Co., and Prudential Securities, Inc.,
that allow it to conduct business at the very highest levels of world monetary
commerce. As a result of these various qualifications, it is eligible to conduct
its operations nationwide and worldwide, including all U.S. districts and
territories, and is in fact licensed to conduct its business in approximatly 30
domestic jurisdictions.
DSGI is an introducing broker/dealer that ultimately clears
and settles all of its customer and proprietary trades through Schroder and Co.,
an internationally renowned investment banking firm headquartered in London,
United Kingdom, with offices worldwide. Through Schroder the firm's retail
accounts are insured up to $50 million ($100,000 for cash, the same as a bank).
This arrangement provides DSGI with back office support, transaction processing
on all principal, national and international securities exchanges, and access to
many other financial services and products. This allows DSGI to provide or offer
products and services comparable to the world's largest and most prestigious
securities firms.
DSGI provides principal dealing services to Institutional and
Retail Clients. Currently, the firm has opened as accounts a number of
well-known International Banks, Investment Funds and Quasi-Governmental Agencies
to trade in a variety of Investment Grade Securities. Generally, a salesmen will
receive a firm order to buy or sell a security or group of securities from an
Institutional account. Typically, these orders are executed with large
market-making bond dealers, usually those designated as Primary Dealers by the
Federal Reserve Bank, or institutions of like standing. DSGI trades with these
large accounts facilitated with Guaranty Letters provided by Schroder & Co.,
Inc.
3 The plan for the further development of NAFSCo is to cause it to become the
100% shareholder of its own broker-dealer. To this end, during the period ended
September 30, 2000, application was made to create a broker-dealer wholly-owned
by NAFSCo. This application is pending and remains in process. In addition, DIRX
and NAFSCo are constantly scrutinizing the market for broker-dealers for sale,
and may, before the application for a new broker-dealer owned by NAFSCo is
completed and approved, acquire an existing broker-dealer to be owned by NAFSCo,
and thus substantially advance the progress of the development of this business
segment. If so, such business would be moved from DSGI to NAFSCo directly,
presumably with the corresponding Income Statement and Balance Sheet
adjustments.
4 Each of the Company's senior managers has over 20 years of investment
experience, particularly Fixed Income. The senior managers have an established
clientele of institutional investors and individual investors who require a wide
variety of analytical and brokerage services, and that demand hands-on trading
and order execution capabilities that are not generally available through
similar-sized competitive firms in the securities brokerage, commodities
brokerage and investment banking industries.
5 The Agreement provides for DIRX to obtain up to $1,500,000 and up to 14.9% of
the stock of the CISBIC presently worth approximately $4.9MM, in exchange for
500,000 shares of its own voting common stock, and 600,000 shares of its
convertible (1:1) Series A 7.5% Preferred (Nonvoting) Stock. The purpose of a
Small Business Investment Corporation ("SBIC") is to foster, on behalf of the
SBA, the development of nascent business enterprises through loans that are made
possible by the SBA lending funds to the particular SBIC at a ratio of 3X the
equity of the SBIC. Aside from the value that this lends to the business on its
balance sheet directly, DIRX expects that the businesses developed by the CISBIC
will require further financing, and that DIRX will be instrumental in working
with these companies to procure that financing, of course for appropriate
compensation.
<PAGE>
<TABLE>
<CAPTION>
Dupont Direct Financial Holdings, Inc.
Balance Sheet
September 30, 2000
(Unaudited)
Consolidated
----------------
----------------
<S> <C>
ASSETS
Current Assets
Cash ....................................... $ 341,559
Receivable from clearing agent ............. 369,800
Trading marketable equity
securities, at market value ............. 219,328
Government securities, at
market value ............................ 494,007
Prepaid expenses and other
current assets .......................... 24,487
-----------
-----------
Total current assets ............... 1,449,181
-----------
-----------
Property & equipment, at cost .................. 142,042
Less accumulated depreciation and
amortization ............................... (85,354)
-----------
-----------
56,688
-----------
-----------
Investment in subsidiaries ..................... --
Investment in affiliates ....................... 82,089
Investment in marketable securities,
net of allowance for unrealized loss ....... 126,500
Investment in warrants on marketable securities,
net of allowance for unrealized loss ....... 125,807
Other assets
Rent security deposit ...................... 68,329
-----------
-----------
$ 1,908,594
===========
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable and accrued expenses ...... 108,638
Income taxes payable ....................... 78,000
Marketable debt securities sold short ...... 5,277
Deferred rent payable ...................... 44,317
-----------
-----------
Total current liabilities .......... 236,232
-----------
-----------
Stockholder's equity
Common stock ............................... 75,120
Additional paid-in capital ................. 1,250,273
Retained earnings (deficit) ................ 894,330
Unrealized loss on securities .............. (547,361)
-----------
-----------
1,672,362
-----------
-----------
$ 1,908,594
===========
===========
-----------
</TABLE>
<TABLE>
<CAPTION>
Dupont Direct Financial Holdings, Inc.
Statement of Income and Retained Earnings
Three months ended September 30, 2000
(Unaudited)
Consolidated
----------------
----------------
<S> <C>
Revenues
Investment banking fees ..................... $ 455,500
Commissions and rebates ...................... 153,657
Dividends and interest ....................... 2,250
Firm trading income .......................... 936,683
-----------
-----------
1,548,090
-----------
-----------
Expenses
Employee compensation ........................ 194,923
Clearance .................................... 56,354
Communication ................................ 23,582
Rent ......................................... 49,142
Management fees paid to stockholder .......... 106,438
Depreciation ................................. 7,071
Fees and licenses ............................ 12,961
Office expense ............................... 88,521
Unsecured debits at clearing agent ........... 40,000
-----------
-----------
578,992
-----------
-----------
Income (loss) before net income of consolidated
subsidiaries and income tax expense .......... 969,098
Net income of consolidated subsidiaries .......... --
-----------
-----------
Income (loss) before income tax expense .......... 969,098
Income tax expense ............................... 49,800
-----------
-----------
NET INCOME (LOSS) .................... 919,298
Retained earnings (deficit) at beginning of period (24,968)
-----------
-----------
Retained earnings (deficit) at end of period ..... $ 894,330
===========
===========
-----------
Average outstanding shares ....................... 7,511,964
Basic and fully diluted earnings per share ....... $ 0.12
===========
===========
</TABLE>
<TABLE>
<CAPTION>
Dupont Direct Financial Holdings, Inc.
Statement of Cash Flows
Three months ended September 30, 2000
(Unaudited)
Consolidated
----------------
----------------
<S> <C>
Cash provided by operating activities
Net income (loss) .................................. $ 919,298
Adjustments to reconcile net income to net
cash provided by operating activities
Net income of consolidated subsidiaries ......... --
Depreciation .................................... 7,071
Increase in receivable from clearing agent ...... (358,099)
Decrease(increase)in marketable equity securities (57,780)
Increase in marketable Government securities .... (296,139)
Decrease in prepaid expenses .................... 1,245
Increase (decrease) in accounts payable ......... 9,607
Increase in income taxes payable ................ 49,800
Increase in deferred rent payable ............... 6,411
---------
---------
281,414
---------
---------
Cash flows from investing activities
Employee loan ...................................... (17,612)
Net cash remitted to stockholder ................... (31,244)
Investment in affiliate ............................ --
Investment in subsidiary ........................... --
---------
---------
(48,856)
---------
---------
Cash flows from financing activities
Capital contribution ............................... 100,000
---------
---------
100,000
---------
---------
Net increase (decrease) in cash ........................ 332,558
Cash at beginning of period ............................ 9,001
---------
---------
Cash at end of period .................................. $ 341,559
=========
=========
There was no cash paid for interest and income taxes.
</TABLE>
<TABLE>
<CAPTION>
Dupont Direct Financial Holdings, Inc.
Statement of Income and Retained Earnings
Six months ended September 30, 2000
(Unaudited)
Consolidated
----------------
----------------
<S> <C>
Revenues
Investment banking fees ..................... $ 575,122
Commissions and rebates ...................... 203,702
Dividends and interest ....................... 4,083
Firm trading income .......................... 1,028,645
-----------
-----------
1,811,552
-----------
-----------
Expenses
Employee compensation ........................ 283,519
Clearance .................................... 79,511
Communication ................................ 43,086
Rent ......................................... 68,095
Management fees paid to stockholder .......... 106,438
Depreciation ................................. 9,428
Fees and licenses ............................ 16,065
Office expense ............................... 99,360
Unsecured debits at clearing agent ........... 40,000
-----------
-----------
745,502
-----------
-----------
Income (loss) before net income of consolidated
subsidiaries and income tax expense .......... 1,066,050
Net income of consolidated subsidiaries .......... --
-----------
-----------
Income (loss) before income tax expense .......... 1,066,050
Income tax expense ............................... 77,200
-----------
-----------
NET INCOME (LOSS) .................... 988,850
Retained earnings (deficit) at beginning of period (94,520)
-----------
-----------
Retained earnings (deficit) at end of period ..... $ 894,330
===========
===========
-----------
Average outstanding shares ....................... 5,984,040
Basic and fully diluted earnings per share ....... $ 0.17
===========
===========
</TABLE>
<TABLE>
<CAPTION>
Dupont Direct Financial Holdings, Inc.
Statement of Cash Flows
Six months ended September 30, 2000
(Unaudited)
Consolidated
----------------
----------------
<S> <C>
Cash provided by operating activities
Net income (loss) .................................. $ 988,850
Adjustments to reconcile net income to net
cash provided by operating activities
Net income of consolidated subsidiaries ......... --
Depreciation .................................... 9,428
Increase in receivable from clearing agent ...... (336,276)
Decrease(increase)in marketable equity securities (45,370)
Increase in marketable Government securities .... (295,033)
Decrease in prepaid expenses .................... 1,245
Increase(decrease)in accounts payable ........... (26,805)
Increase in income taxes payable ................ 76,400
Increase in deferred rent payable ............... 12,822
---------
---------
385,261
---------
---------
Cash flows from investing activities
Employee loan ...................................... (24,612)
Cash remitted to stockholder prior to acquisition .. (60,800)
Net cash remitted to stockholder ................... (68,329)
Investment in affiliate ............................ (20,000)
Investment in subsidiary ........................... --
---------
---------
(173,741)
---------
---------
Cash flows from financing activities
Cash balances of subsidiaries acquired ............. 10,039
Capital contribution ............................... 120,000
---------
---------
130,039
---------
---------
Net increase (decrease) in cash ........................ 341,559
Cash at beginning of period ............................ --
---------
---------
Cash at end of period .................................. $ 341,559
=========
=========
There was no cash paid for interest and income taxes.
During the 3 months ended June 30, 2000, the Company issued 6,180,000 shares of
common stock, in exchange for various securities valued at approximately
$1,170,000 plus approximately $10,000 in cash.
</TABLE>
