===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 0-16322
ECOS GROUP, INC.
------------------------------------------------
(Name of small business issuer as specified in its charter)
COLORADO 84-1061207
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 SOUTHERN BOULEVARD, SUITE 200
WEST PALM BEACH, FLORIDA 33405
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (561) 835-0990
Check whether the issuer (1) has 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 [ X]
No [ ]
As of August 7, 1997, the Company had a total of 17,600,026 common stock, $.012
par value, outstanding.
Transitional Small Business Disclosure format (check one): Yes [ ] No [X]
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<PAGE>
ECOS GROUP, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Consolidated balance sheets
- June 30, 1997 and March 31, 1997 3
Consolidated statements of operations
- Three Months Ended June 30, 1997 and 1996 4
Consolidated statements of cash flows
- Three Months Ended June 30, 1997 and 1996 5-6
Notes to financial statements 7-10
Item 2. Management's Discussion and Analysis or
Plan of Operation 11-13
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
<TABLE>
<CAPTION>
ECOS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30,1997 MARCH 31, 1997
------------- --------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and equivalents $ 506,432 $ 449,782
Restricted cash 13,859 9,080
Marketable securities 140,000 140,000
Accounts receivable, net of allowance of $513,219 and $460,106 1,624,881 1,618,120
Note receivable 100,000 250,000
Prepaid expenses & other 328,552 248,490
---------- ----------
Total current assets 2,713,724 2,715,472
Amounts due under
state reimbursement program 567,978 650,158
Property & equipment, net 2,782,146 2,851,798
Goodwill, net of amortization of $1,001,020 and $869,295 6,377,603 6,509,328
Other assets 457,398 428,026
----------- -----------
Total assets $12,898,849 $13,154,782
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,972,430 $ 1,941,521
Accrued expenses 667,585 678,594
Related party notes payable and advances 2,264,629 1,625,363
Current portion of capital lease obligation & notes payable 69,943 326,948
Deferred revenues 238,194 300,000
---------- -----------
Total current liabilities 5,212,781 4,872,426
Notes payable, net of current portion 594,260 682,983
Note payable to affiliated company 303,000 303,000
Commitments & contingencies - -
Stockholders' equity:
Preferred stock:
Series A, $.001 par value, 5,000,000 authorized,
none issued and outstanding - -
Series B convertible, $.01 par value, 1,000,000 authorized,
issued and outstanding - -
Common stock, $.012 par value, 75,000,000 authorized,
17,600,026 and 17,597,626 issued and outstanding; respectively 211,200 211,172
Additional paid-in capital 16,125,896 16,125,228
Net unrealized loss on marketable securities (10,000) (10,000)
Accumulated deficit (9,538,288) (9,030,027)
----------- -----------
Total stockholders' equity 6,788,808 7,296,373
------------ -----------
Total liabilities & stockholders' equity $12,898,849 $13,154,782
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements
3
<PAGE>
<TABLE>
<CAPTION>
ECOS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
1997 1996
----------- -------
<S> <C> <C>
Revenue:
Consulting services $ 1,317,859 $ 1,265,045
Soil remediation 924,288 -
------------ -----------
Total revenue 2,242,147 1,265,045
------------ -----------
Costs of consulting services:
Direct labor & employee benefit costs 428,783 505,550
Other direct costs & expenses 356,954 278,995
------------ -----------
785,737 784,545
Costs of soil remediation 931,083 -
------------ -----------
Total direct costs & expenses 1,716,820 784,545
------------ -----------
Gross profit 525,327 480,500
------------ -----------
Other costs & expenses:
General, administrative &
other operating costs 1,050,338 706,396
Reserve for restructuring - 350,000
Gain on disposal of laboratory assets (95,230) -
------------ -----------
Total other costs & expenses 955,108 1,056,396
------------ -----------
Operating loss (429,781) (575,896)
------------ -----------
Other income (expense):
Interest, net (76,131) (23,104)
Other income (expense), net (2,349) 1,000
------------ -----------
(78,480) (22,104)
------------ -----------
Loss from continuing operations (508,261) (598,000)
Gain on disposal from discontinued operations, net of $0 taxes - 509,036
------------ -----------
Loss before extraordinary items (508,261) (88,964)
Extraordinary items, net of $0 taxes - 1,215,072
------------ -----------
Net income (loss) $ (508,261) $ 1,126,108
=========== ===========
Income (loss) per share from:
Continuing operations $ (0.03) $ ( 0.08)
------------ -----------
Discontinued operations $ 0.00 $ 0.07
------------ -----------
Extraordinary items $ 0.00 $ 0.16
------------ -----------
$ (0.03) $ 0.15
============ ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements
4
<PAGE>
<TABLE>
<CAPTION>
ECOS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
1997 1996
----------- --------
<S> <C> <C>
Operating activities:
Net income (loss) $ (508,261) $ 1,126,108
Adjustments to reconcile net income
(loss) to net cash used
in operating activities:
Depreciation & amortization 136,562 40,366
Gain on sale of equipment (95,230) (1,000)
Other - 10,545
Discontinued operations - (509,036)
Extraordinary items - (1,215,072)
Goodwill amortization 131,725 24,889
Changes in operating assets & liabilities:
Accounts receivable (6,761) 79,760
Prepaid expenses & other (80,062) 59,935
Amounts due under reimbursement
program - (41,398)
Other assets (47,106) 334
Accounts payable 16,141 (320,312)
Accrued expenses (11,009) 196,666
Deferred revenues (61,806) -
----------- -----------
Net cash used by operating activities of:
Continuing operations (525,807) (548,215)
Discontinued operations - -
----------- -----------
Net cash used by operating activities (525,807) (548,215)
----------- -----------
</TABLE>
The accompanying notes are an integral part
of these financial statements
5
<PAGE>
<TABLE>
<CAPTION>
ECOS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
1997 1996
------------ -----------
<S> <C> <C>
Investing activities:
Restricted cash (4,779) 121,729
Proceeds from disposal of discontinued
operations, net of expenses 250,000 547,007
Proceeds from disposal of equipment 10,000 1,000
Purchases of equipment (49,176) (4,745)
------------ -----------
Net cash provided by
investing activities 206,045 664,991
------------ -----------
Financing activities:
Proceeds from warrant exercise 696 112,500
Proceeds from notes payable - 62,881
Proceeds from related party notes payable
and advances 639,266 -
Payments on capital lease obligations
and notes payable (263,550) (21,876)
------------ -----------
Net cash provided by financing activities 376,412 153,505
------------ -----------
Net increase in cash 56,650 270,281
Cash and equivalents, beginning of period 449,782 178,121
------------ -----------
Cash and equivalents, end of period $ 506,432 $ 448,402
============ ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements
6
<PAGE>
ECOS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS AND ORGANIZATION
The Company is engaged, through its wholly-owned subsidiaries, in
environmental consulting and other environmental related services (the
"Consulting Division") and soil remediation (the "Remediation
Division").
2. SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL STATEMENTS: The accompanying unaudited financial
statements have been prepared in accordance with the instructions to
Form 10-QSB and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. The consolidated balance sheet as of March 31,
1997 has been derived from the audited financial statements as of the
period ended March 31, 1997, but does not include all disclosures
required by generally accepted accounting principles. In the opinion of
management, these statements reflect all adjustments, consisting of
normal recurring adjustments, considered necessary for a fair
presentation for the periods presented. Operating results for the three
months ended June 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended March 31, 1998. These statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the
period ended March 31, 1997.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
All intercompany balances and transactions have been eliminated.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
REVENUE RECOGNITION: Consulting revenue is recognized as services are
performed.
Soil remediation revenues are recognized as soil is processed. The
Company bills customers upon receipt of contaminated soil at its
remediation facility. Amounts billed in excess of revenues recognized
are classified as "Deferred revenues" on the accompanying balance sheet.
7
<PAGE>
ECOS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PER SHARE DATA: Per share data is based on the weighted average number
of shares of common stock, 17,597,652 and 7,732,202 for the quarters
ended June 30, 1997 and June 30, 1996, respectively. For the period
ended June 30, 1997, common stock equivalents have not been included in
the weighted average number of shares as they are anti-dilutive. For the
96 Quarter, 4,085,101 common stock options and warrants which are common
stock equivalents were assumed to be exercised for computation of
earnings per share.
DISCONTINUED OPERATIONS: During April 1996, ABC Cable Products, Inc., a
wholly-owned subsidiary engaged in the production and sale of cable
products (the "Cable Products Division"), ceased operations and disposed
of all of its operating assets. As such, the Company has treated the
Cable Products Division as discontinued operations for all periods
presented.
3. COMMITMENTS AND CONTINGENCIES
CONTINGENT LIABILITY: The Company has been involved in various
discussions with a former private senior lender to the Company. The
purpose of these discussions has been to settle all outstanding
differences between the former lender and the Company regarding a
variety of matters, including, without limitation, the exercise price of
the former lender's outstanding warrants, amounts claimed to be owed to
the former lender for legal and financial advisory fees, shares claimed
to be owed to the former lender for the loan of funds and services
rendered, and claimed rights to additional shares of the Company's
stock. Although all cash amounts owed to the former lender for principal
and interest were paid in full in July 1996, the former lender has
continued to make further demands on the Company as well as asserting
enforceability of claimed agreements. Although the Company has rejected
the validity of all such claims it has agreed to reach an accommodation
with the former lender on some of these claims solely for the purpose of
reaching a definitive settlement of all outstanding differences. To date
the former lender has not agreed to any settlement. The Company is
unable to foresee the ultimate outcome of this matter.
4. RELATED PARTY DEBT
In July 1995, the Company borrowed $85,000 from the spouse of the
Chairman of the Board of Directors. The note is due upon demand and
bears interest at 12% per annum. The Chairman disclaims any beneficial
interest in the loan. The balance of this note is $60,000 at June 30,
1997.
8
<PAGE>
ECOS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. RELATED PARTY DEBT (CONTINUED)
In June 1996, the Company's remediation subsidiary acquired a used
thermal desorption plant located at the Port of Los Angeles for a
purchase price of $600,000. This equipment was acquired on behalf of the
Company by the father of one of the Company's directors and shareholders
pursuant to a demand note for $515,000 bearing interest at 12% per
annum, secured by the acquired plant.
The Company's remediation subsidiary also has a note payable to an
affiliated company under common ownership of the Company's chief
executive officer for $303,000 with a 13.5% interest rate. Interest is
payable monthly and a balloon payment of the principal is due in June
1999. The loan is collateralized by accounts receivable.
On December 31, 1996 the Company borrowed $1,000,000 from a shareholder
and director of the Company pursuant to a one year promissory note
bearing interest at 14% per annum. This note was subsequently repaid on
May 5, 1997 from proceeds of a loan received from the father of the
director and shareholder. The loan was modified as a three month
promissory note maturing on August 5, 1997, with interest only payable
monthly at 12% per annum and secured by all trade receivables of the
Company. In June 1997, this same individual and the mother of the
Company's chief executive officer and major shareholder provided the
Company with additional borrowings aggregating $644,000, the financing
terms of which are still being negotiated.
As of August 11, 1997 no demand for repayment have been made by any of
the above referenced debt holders of demand notes.
5. SALE OF LABORATORY ASSETS
On June 6, 1997, the Company sold its secured claim to all assets from a
previously disposed wet chemistry laboratory operation for total
consideration of $110,000 to an unrelated company. The total sales price
was $10,000 payable at closing, a promissory note in the principal
amount of $30,000, which bears interest at 9% per annum payable in equal
monthly installments over 12 months from the closing date and an
executed service agreement for free lab services valued at $70,000. The
note and service agreement are secured by the assets acquired.
9
<PAGE>
ECOS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. GOING CONCERN CONSIDERATION
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company
has suffered significant net losses for the years ended March 31, 1997
and 1996 and at June 30, 1997 its current liabilities exceed its current
assets. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management has developed a plan
that will include, but is not limited to, the following actions to fund
its working capital requirements and raise capital for future
operations:
1. engage an investment banker to raise capital through an additional
equity/convertible debt offering;
2. continuing limited financial support from various related parties
(see Note 4 above);
3. develop a marketing strategy to stabilize selling prices at its
Remedial Division;
4. initiate production of Biosolid treatment program creating a new
revenue stream for the Remedial Division; and
5. continue cost reduction measures at all operating divisions.
Management has begun the implementation of its foregoing plans. These
measures, if successful are expected to result in positive working
capital for the year ended March 31, 1998; however, actual results may
differ and there can be no assurance that such plans will be
effectuated.
In the absence of obtaining profitable operations or obtaining
additional debt or equity financing the Company may not have sufficient
funds to continue operations through the fiscal year ended March 31,
1998.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS: From time to time, the Company may publish
forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments,
new products, research and development activities and similar matters.
With respect to this Quarterly report, statements included in
Management's Discussion and Analysis or Plan of Operation and in the
Notes to the Consolidated Financial Statements which are not historical
in nature, are intended to be and are hereby identified as "forward
looking statements" for purposes of the safe harbor by the Private
Securities Litigation Reform Act of 1995. In order to comply with the
terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations expressed
in the Company's forward-looking statements. The risks and uncertainties
that may affect the operations, performance, development and results of
the Company's business include the following: (i) changes in legislative
enforcement and direction, (ii) unusually bad weather conditions, (iii)
unanticipated delays in contract execution, (iv) sudden loss of key
personnel, (v) abrupt changes in competition, and (vi) decisions by the
Company's lenders to demand the Company's indebtedness.
RESULTS OF OPERATIONS: Revenues for the quarter ended June 30, 1997 (the
"97 Quarter") increased by $977,102 or 77.2% to $2,242,147 from
$1,265,045 of the corresponding prior quarter ended June 30, 1996 (the
"96 Quarter"). This increase in revenue is directly attributable to the
acquisition of the Company's new remediation division, American Remedial
Technologies, Inc. ("ART") in July 1996. Total comparable revenues for
the Consulting Division increased from $1,265,045 for Fiscal 96 to
$1,317,859 for Fiscal 97 or $52,814, just over 4%.
Direct costs were $1,716,820 for the 97 Quarter, representing an
increase of $932,275 or 118.8% from the 96 Quarter. The 96 Quarter did
not contain any soil remediation direct costs, which were $931,083 for
the 97 Quarter, or over 99% of the increase. Direct costs related to the
Consulting Division of $785,737 in the 97 Quarter increased marginally
over the 96 Quarter cost. Direct costs for the Consulting Division
consist of all professional and technical labor, employee benefit costs,
subcontractor, supplies and other revenue generating expenses. Direct
cost for soil remediation consist of plant and equipment rental, labor,
fuel, replacement parts and other processing costs.
Gross profit as a percentage of revenue was 23.4% and 37.9% in the 97
Quarter and 96 Quarter, respectively, or a decrease of approximately
14%. The gross profit for the Consulting Division for the 97 Quarter of
40.4% improved approximately 3% over the 96 Quarter of 37.9% as a result
of the restructuring efforts implemented by the Company's new management
over the past nine months. In contrast, the gross profit for the
Remediation Division of near zero continued to be hampered by lower
processing prices offered to our customers due to market competition.
Additionally, in April 1997 the Remedial Division's Lynwood plant
received three Notices of Violation from the local environmental
regulatory agency for having installed biosolids treatment equipment
without a permit and alleged public nuisance complaints. These actions
stymied the processing for the Lynwood plant for approximately 25 days.
The Company's management has been working closely with the local
regulatory agency to resolve its permitting issues and expects
11
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
to secure the permit. Out of an abundance of caution, ART's management
chose to take the operation off line to undergo maintenance operations
and install additional equipment, where appropriate, to eliminate public
perception that its operations cause a nuisance. The plant continued to
accept soil receipts and resumed processing in May 1997. However, gross
margin for the Remediation Division for the 97 Quarter improved from a
negative 16.9% for the recent year ended March 31, 1997. These
improvements in gross margins for the Company's two operating divisions
during the 97 Quarter is the result of the Company's plans of cost
reduction measures and changes in marketing strategies to stabilize
selling prices at its Remedial Division.
General administrative and other operating costs increased $343,942, or
nearly 49%, to $1,050,338 for the 97 Quarter compared to $706,396 for
the 96 Quarter. The Remedial Division accounted for $299,186 or 87% of
the increase plus the amortization of goodwill of $106,836 associated
with this acquisition.
The 96 Quarter also includes several non-recurring operating
transactions and extraordinary items totaling a net gain of $1,374,108.
One of these non-recurring transactions was a charge to earnings of
$350,000 for the company's restructuring plans initiated in the 96
Quarter for the streamlining of operations and administrative functions
and integration with ART. During the 96 Quarter the Company reached a
settlement with certain of its trade creditors who accepted a payout of
$.20 for each $1.00 of their allowed claim. This settlement resulted in
a net gain of $280,981 for the Company. In addition, on June 28, 1996,
the Consulting Division completed an Offer in Compromise Agreement with
the IRS settling all outstanding issues and disputes related to
delinquent payroll taxes. As a direct result of this settlement, the
Company recorded a gain of $934,091, net of professional fees and costs.
The 96 Quarter also included a gain from the sale of operating assets
and assumption of certain liabilities of ABC Cable Products, Inc., a
wholly owned subsidiary, on April 3, 1996 for a net gain on disposal of
$509,036.
Net loss for the 97 Quarter was $508,261 compared to net income of
$1,126,108 in the 96 Quarter. The net loss for the 97 Quarter improved
approximately $90,000 or just over 15% from the 96 Quarter, excluding
the non-recurring extraordinary items totaling $1,215,072 and the gain
on disposal from discontinued operation of $509,036.
LIQUIDITY AND CAPITAL RESOURCES
For the 97 Quarter, the Company's primary source of liquidity was
approximately $644,000 in cash from related party borrowings. These
proceeds were used for operating and working capital as well as the
start-up of the Biosolid waste treatment program creating a new revenue
stream for the Remedial Division.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company had a working capital deficit of $2,499,057 at June 30, 1997
compared to a working capital deficit of $2,156,954 at March 31, 1997.
This working capital increase in deficit of $342,103 reflects a working
capital ratio of .52 at June 30, 1997 from .56 at March 31, 1997.
Historically the Company has experienced capital and liquidity problems
and no assurances can be given that for the future the Company will not
continue to have these shortages.
Major components of cash flow used in operating activities of $525,807
include the cash provided from depreciation and amortization of $136,562
and the goodwill amortization of $131,725 less the net gain on disposal
of laboratory equipment of $95,230.
Net cash used in investing activities of $206,045 consisted mainly of
purchases of equipment of $49,176 plus the cash provided from the
payment of the note receivable balance of $250,000 from the ABC sale.
The net cash provided by financing activities of $376,412, includes
$639,266 in proceeds from related party borrowings. The cash and cash
equivalents at June 30, 1997 was $506,432.
The Company has no material commitments for capital expenditures.
The Company's soil remediation facility at Lynwood is currently
operating under a Permit to Construct until it secures its permit to
operate its Biosolid equipment. The Company's management is working
closely with the local environmental regulatory agency to resolve its
permitting issues and expects to secure the permit by the current 1998
fiscal year. However, if the permit for the Biosolid equipment is not
issued, the revenues from the growth of the Company's Remedial Division
would be significantly impacted.
The Company intends to fund its current operations from the combination
of cash on hand, cash generated from operations, potential sale of
equity and/or assets, as well as costs savings generated from its
continued cost reduction measures. These sources of capital are expected
to largely fund the Company's current operations through March 31, 1998.
Management expects a return to profitability in Fiscal 1998; however, if
the Company does not return to profitability, and absent alternative
sources of financing, there would be a material adverse effect on the
financial condition, operations and business prospects of the Company.
The Company has no arrangements in place for alternative sources of
financing, and there can be no assurance that any such financing will be
available at all or on terms acceptable to the Company.
13
<PAGE>
ECOS GROUP, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)(27) Financial Data Schedule
(b)(i) No reports on Form 8-K were filed during the period
covered by this Form 10-QSB.
14
<PAGE>
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.
ECOS GROUP, INC.
August 14, 1997 By: /S/ DAVID C. LANGLE
-------------------
David C. Langle
Chief Financial Officer
On behalf of the Registrant and as
Principal Accounting Officer
15
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 506,432
<SECURITIES> 140,000
<RECEIVABLES> 2,138,100
<ALLOWANCES> (513,219)
<INVENTORY> 0
<CURRENT-ASSETS> 2,713,724
<PP&E> 4,093,161
<DEPRECIATION> (1,311,015)
<TOTAL-ASSETS> 12,898,849
<CURRENT-LIABILITIES> 5,212,781
<BONDS> 0
0
0
<COMMON> 211,200
<OTHER-SE> 16,125,896
<TOTAL-LIABILITY-AND-EQUITY> 12,898,849
<SALES> 2,242,147
<TOTAL-REVENUES> 2,242,147
<CGS> 1,716,820
<TOTAL-COSTS> 2,671,928
<OTHER-EXPENSES> 2,349
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,131
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (508,261)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (508,261)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
