U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 12 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 31,
1996.
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number 33-20252-NY
TRANSWORLD TELECOMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Pennsylvania 52-1546434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identificaiton No.)
102 West 500 South, Suite 320
Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 328-5618
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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 X No
As of September 16, 1996, 26,564,228 shares of the issuers common stock, par
value $.001 per share, were outstanding.
1
<PAGE>
PART I : FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
The accompanying unaudited consolidated financial statements have been
prepared by Transworld Telecommunications, Inc. (the Company) pursuant to the
rules and regulations of the Securities and Exchange Commission. They do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring entries) necessary
for the fair presentation of the Company's results of operations, financial
position and changes therein for the periods presented have been included.
TRANSWORLD TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
July 31, October 31,
1996 1995
----------- -----------
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 1,027,203 $ 94,391
Receivable from investee company 14,711 3,672
Other current assets 161,048 15,215
----------- -----------
Total current assets 1,202,962 113,278
Furniture and equipment, at cost, less accumulated
depreciation 26,325 33,259
Deposits and other assets 6,198 7,666
Investment in and advances to investee companies 649,735 1,457,642
------------ -----------
Total Assets $ 1,885,220 $ 1,611,845
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued liabilities $ 360,445 $ 584,487
Note payable - related party - 150,000
Net current liabilities of discontinued operation - 825,178
----------- -----------
Total current liabilities 360,445 1,559,665
Note Payable 2,500,000 -
----------- -----------
Total liabilities 2,860,445 1,559,665
Stockholders' Equity (Deficit):
Common stock 26,564 28,564
Additional paid-in capital 13,853,881 12,964,990
Accumulated deficit (14,855,670) (12,941,374)
----------- ------------
Total stockholders' equity (deficit) (975,225) 52,180
----------- ------------
Total Liabilities and Stockholders'
Equity (Deficit) $ 1,885,220 $ 1,611,845
=========== =============
</TABLE>
The accompanying notes are an integral part of the
financial statements.
2
<PAGE>
TRANSWORLD TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED JULY 31, 1996 AND 1995
<TABLE>
<CAPTION>
July 31, July 31,
1996 1995
----------------- ----------------
<S> <C> <C>
Net revenue $ - $ -
Operating expenses:
Administrative expenses 212,264 84,264
Salaries and related benefits 191,018 174,964
Professional fees and contract services 847,623 26,473
Channel rights and programming fees - 73,087
Depreciation and amortization 2,312 36,061
Other 2,755 2,930
Total operating expense 1,255,972 397,779
Operating loss (1,255,972) (397,779)
Other income (expense):
Interest income 3,614 -
Other income 130,730 -
Interest expense (33,165) (4,769)
Equity in net loss of investee companies (157,758) (1,533,700)
Total other income (expense) (56,579) (1,538,469)
Loss from continuing operations (1,312,551) (1,936,248)
Income from discontinued operations, net of tax of
$9,652 in 1996 and $37,715 in 1995 151,217 512,528
Net Loss $ (1,161,334) $(1,423,720)
================= ================
Loss per common share:
Continued operations $ (0.05) $ (0.07)
Discontinued operations 0.01 0.01
--------------- ----------------
Net loss per common share $ (0.04) $ (0.06)
================ ================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
3
<PAGE>
TRANSWORLD TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED JULY 31, 1996 AND 1995
<TABLE>
<CAPTION>
July 31, July 31,
1996 1995
----------------- ----------------
<S> <C> <C>
Net revenue $ - $ -
Operating expenses:
Administrative expenses 370,688 298,489
Salaries and related benefits 597,417 548,772
Professional fees and contract services 1,078,111 431,358
Channel rights and programming fees - 173,187
Depreciation and amortization 6,934 110,174
Other 23,304 10,037
---------------- ----------------
Total operating expense 2,076,454 1,572,017
---------------- ----------------
Operating loss (2,076,454) (1,572,017)
Other income (expense):
Interest income 3,614 207,852
Other income 172,023 12,568
Interest expense (43,358) (14,204)
Equity in net loss of investee companies (807,907) (3,965,200)
------------------ ----------------
Total other income (expense) (675,628) (3,758,984)
----------------- ----------------
Loss from continuing operations (2,752,082) (5,331,001)
Income from discontinued operations, net of tax of
$53,476 in 1996 and $98,282 in 1995 837,786 1,539,746
----------------- ----------------
Net Loss $ (1,914,296) $(3,791,255)
================= ================
Loss per common share:
Continued operations $ (0.10) $ (0.19)
Discontinued operations 0.03 0.05
----------------- ----------------
Net loss per common share $ (0.07) $ (0.14)
================= ================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
4
<PAGE>
TRANSWORLD TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED JULY 31, 1996 AND 1995
<TABLE>
<CAPTION>
July 31, July 31,
1996 1995
----------------- ----------------
Cash flows from continuing operating activities:
<S> <C> <C>
Loss from continuing operations $ (2,752,082) $ (5,331,001)
Adjustments to reconcile net loss to net cash
used in continuing operating activities:
Depreciation and amortization 6,934 110,174
Equity in net loss of investee companies 807,907 3,965,200
Issuance of stock options - 7,500
Common stock issued for services - 50,000
Interest income charged to notes receivable - (207,852)
Changes in assets and liabilities:
Receivable from investee company (11,039) 69,559
Other current assets (144,365) 51,179
Accounts payable and accrued liabilities (224,042) (284,272)
Net cash used in continuing
operating activities (2,316,687) (1,569,513)
Cash flows from discontinued operating activities:
Income from discontinued operations 837,786 1,539,746
Change in net liabilities of discontinued operations 61,713 (59,746)
Net cash provided by discontinued
operating activities 899,499 1,480,000
Cash flows from financing activities:
Proceeds from note payable 2,500,000 -
Payment of note payable - related party (150,000) -
Net cash provided by
financing activities 2,350,000 -
Increase (decrease) in cash 932,812 (89,513)
Cash at beginning of the period 94,391 265,462
Cash at end of the period $ 1,027,203 $ 175,949
================= ================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
5
<PAGE>
TRANSWORLD TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
(Unaudited)
1. Presentation
The consolidated financial statements include the accounts of Transworld
Telecommunications, Inc. (the Company) and its wholly owned subsidiaries,
including Carolina Communications, Inc. (CCI), a discontinued operation,
which was disposed of by the Company on July 1, 1996 (see Item 5 below).
All significant intercompany accounts and transactions have been
eliminated in consolidation. The Company accounts for its 50 percent
interest in Wireless Holdings, Inc. (WHI) and its 20 percent interest in
Videotron (Bay Area), Inc. (Videotron Tampa Bay) on the equity method.
2. Investments in and advances to investee companies
Summary financial information as of and for the periods indicated below
for the Company's investment in WHI and Videotron Tampa Bay is presented
as follows:
Videotron Tampa Bay: May 31, August 31,
1996 1995
---------------- ------------
Current assets $ 1,169,818 $ 1,271,865
Current liabilities (2,814,333) (2,082,336)
---------------- ---------------
Working capital (1,644,515) (810,471)
Property and equipment, net 8,400,479 5,564,829
Intangible assets, net 10,726,095 11,220,579
Deferred income taxes 936,801 (493,987)
Long-term debt (14,601,668) (9,331,296)
Stockholders' equity 3,817,192 6,149,654
Three Months Ended May 31, 1996 and 1995
1996 1995
----------------- ----------------
Total revenues $ 780,813 $ 219,000
Net loss (788,792) (921,000)
Company's equity in net loss (157,758) (184,200)
Nine Months Ended May 31, 1996 and 1995
1996 1995
------------------- ------------------
Total revenues $ 1,963,805 $ 664,000
Net loss (2,332,464) (1,961,000)
Company's equity in net loss (466,493) (392,200)
6
<PAGE>
2. Business combination (continued)
WHI: May 31, August 31,
1996 1995
------------------- -----------------
Current assets $ 1,652,000 $ 1,558,000
Current liabilities (6,862,000) (1,718,000)
Working capital (5,210,000) 160,000
Property and equipment, net 12,527,000 11,113,000
Intangible assets, net 28,906,000 29,135,000
Long-term debt (48,052,000) (44,103,000)
Other 23,000 (53,000)
Stockholders' equity (11,806,000) (4,068,000)
Three Months Ended May 31, 1996 and 1995
1996 1995
------------------- ------------------
Total revenues $ 1,299,000 $ 1,047,000
Net loss (2,387,000) (2,739,000)
Company's equity in net loss -0- (1,369,500)
Nine Months Ended May 31, 1996 and 1995
1996 1995
------------------- -----------------
Total revenues $ 3,599,000 $ 3,210,000
Net loss (7,738,000) (7,146,000)
Company's equity in net loss (341,414) (3,573,000)
The Company recognizes equity in net loss of investee companies to the
extent of investment in and advances to investee companies. As of the
beginning of the fiscal year, the Company had $341,414 of investment in
WHI available for offsetting losses. During the nine months ended May 31,
1996, the Company completely offset the remaining $341,414 of investment
in WHI with its portion of losses in WHI. Therefore, the Company has
discontinued reporting its share of future losses in WHI on its financial
statements. The Company's unrecognized cumulative portion of loss from
its investment in WHI totaled $3,527,586 at May 31, 1996.
7
<PAGE>
3. Discontinued operations
A summary of operating results for the three and nine months ended July
31, 1996 and 1995 and net liabilities of discontinued operations as of
July 31, 1996 and October 31, 1995 is as follows:
<TABLE>
<CAPTION>
Three months ended July 31, Nine months ended July 31,
1996 1995 1996 1995
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 350,310 $ 906,531 $ 1,716,528 $ 2,940,934
============== ============== ============== ===============
Income before
income tax expense $ 160,869 $ 545,243 $ 891,262 $ 1,638,028
Income tax expense (9,652) (32,715) (53,476) (98,282)
Net income $ 151,217 $ 512,528 $ 837,786 $ 1,539,746
============== ============== ============== ===============
</TABLE>
<TABLE>
<CAPTION>
July 31, October 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Current assets $ - $ 275,816
Other - 33,081
Accounts payable and accrued liabilities - (758,282)
Amounts payable to related party - (336,146)
Net current liabilities of discontinued operation $ - $ (785,531)
================ ================
</TABLE>
The results for the three and nine months ended July 31, 1996 contain
activity through June 30, 1996 at which time these operations were
transferred to the Company's largest shareholder in redemption of
2,000,000 shares of the Company's common stock.
4. Net loss per share
Net loss per share was computed based upon the weighted average number of
shares of common stock outstanding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
A. MATERIAL CHANGES IN FINANCIAL CONDITION
At July 31, 1996, the Company had current assets of $1,202,962, compared
to $113,278 at October 31, 1995, for an increase of $1,089,684. Cash increased
by $932,812 from $94,391 to $1,027,203 during the nine-month period, primarily
as a result of the Company obtaining a $2,500,000 loan from the Pacific
Mezzanine Fund ("Pacific Loan") for the purposes of facilitating the payment of
expenses associated with completing its proposed liquidation and distribution in
conjunction with the Pacific Telesis Group transaction (see Item 5 below). A
portion of the net loan proceeds was used to pay accounts payable, accrued
liabilities, a related party note payable and to fund a loan commitment to
Wireless Cable & Communications, Inc., ("WCCI"). This loan commitment is more
particularly described in the section entitled "Auckland and Park City Asset
Spin-Off" in the Company's report on Form 10-QSB for the period ended July 31,
1995, which is incorporated herein by this reference. Current
8
<PAGE>
liabilities as of July 31, 1996, were $360,445, compared to $1,559,665 as of
October 31, 1995, for a decrease of $1,199,220.
At July 31, 1996, total assets were $1,885,200, compared to $1,611,845 as
of October 31, 1995, for an increase of $273,375. The increase in total assets
was due to the receipt by the Company of the net proceeds from the Pacific Loan
described above and partially offset by a decrease attributable to the equity in
net loss of WHI and Videotron Tampa Bay, totaling $807,907 for the nine month
period (which reduces investment in and advances to investee companies account)
and a decrease in cash which was primarily used to reduce accounts payable and
accrued liabilities. Total stockholders' equity (deficit) decreased by
$1,027,405 from $52,180 at October 31, 1995, to ($975,225) at July 31, 1996.
B. MATERIAL CHANGES IN RESULTS OF OPERATIONS
The Company did not have operating revenues for either of the nine months
ended July 31, 1995 or 1996. However, in the same period, the Company's
discontinued operations generated revenue of $2,940,934 and $1,716,528 during
1995 and 1996, respectively. The revenue from discontinued operations decreased
$1,224,406, in large part because of new regulations imposed on the audiotex
industry which restrict the number of phone lines available for the business and
because 1996 results are through June 30, 1996 at which time the Company
disposed of its discontinued operations (see Item 5 below). During the nine
months ending July 31, 1996, total operating expenses (and operating loss) were
$2,076,454, compared to $1,572,017 for the same nine-month period a year
earlier, for an increase of $504,437. The increase in operating loss is a result
of an increase in administrative expenses and professional fees due to the
expenses incurred by the Company in conjunction with the Pacific Telesis Group
transaction and the expenses associated with the Pacific Loan. This increase was
offset by a decrease in channel rights and amortization associated with the
assets which the Company transferred to WCCI.
During the nine months ending July 31, 1996, the Company had a net loss
of $1,914,296, compared to a net loss of $3,791,255 for the same period a year
earlier, for a decrease of $1,876,959. The decrease in net loss is primarily a
result of the decrease in the equity in the net loss of WHI, offset by a
decrease in income from discontinued operations and the increase in
administrative expenses and professional fees. The equity in the net loss of WHI
was lower because the Company has completely written off its investment in and
advances to investee companies in WHI, and, therefore, will not continue to
record WHI losses. The decrease in the income from discontinued operations was
offset partially by a decrease in operating expenses primarily due to changing
the clearing house parameters to screen fraudulent callers which reduced
chargeback expenses. For the nine months ended July 31, 1996, there was a net
loss per share of $(0.07), compared to a net loss per share of $(0.14) for the
same period a year earlier.
C. LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1996, the Company's current assets exceeded its current
liabilities by $842,517. The Company, subject to approval by the Company's
shareholders, and Videotron have agreed to sell their stock in WHI and Videotron
Bay Area as more particularly described in the section entitled "Other
Information," set forth in the Company's quarterly report on Form 10-QSB for the
period ended January 31, 1996, which is incorporated herein by this reference.
Therefore, the Company expects to satisfy all liabilities with its current cash
and the funds it anticipates receiving as a result of the Pacific Telesis Group
transaction.
9
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to three legal proceedings:
Viernow Litigation. The Company is a party to an action that was filed
in the state court of Texas in January, 1995. This proceeding is more
particularly described in the section entitled "Legal Proceedings," set forth in
the Company's quarterly report on Form 10-QSB for the period ended January 31,
1996, which is incorporated herein by this reference. On August 12, 1996, the
U.S. District Court for the State of Utah, Central Division, ruled in favor of
the Company on its motion for summary judgement and dismissed the action with
prejudice. On September 9, 1996, the court entered an order in the matter
dismissing the suit with prejudice.
Videotron Litigation. On March 1, 1996, the Company filed a complaint
against Videotron asking for the appointment of a custodian to resolve a
critical management issue for WHI. This proceeding is more particularly
described in the section entitled "Other Information," set forth in the
Company's quarterly report on Form 10-QSB for the period ended January 31, 1996,
which is incorporated herein by this reference. On April 25, 1996, the court
held a hearing on the Company's petition for a custodian. This matter was
dismissed on August 21, 1996.
Vanguard Litigation. In January, 1996, Vanguard Communications, L.P.
and its general partner commenced an action in the United States District Court
for the District of Delaware against a number of related defendants, including
WHI and Videotron. Other defendants in the case include certain individuals who
are officers or directors of Videotron, WHI and/or their affiliates. The suit
alleged that Vanguard and OpTel (which was controlled by a Videotron affiliate),
suffered damages as a result of restrictions of OpTel's ability to operate in
certain geographic markets which were imposed on OpTel by Videotron, WHI and
Videotron's affiliates pursuant to a contractual arrangement. The Vanguard
litigation is more particularly described in the section entitled "Other
Information" in the Company's report on Form 10-QSB for the period ended January
31, 1996. The Company is not named as a defendant in the Vanguard lawsuit,
although the complaint filed in the action alleges that the Company entered into
a "combination or conspiracy" with Videotron and WHI.
In August, 1996, the parties to the Vanguard lawsuit settled the
litigation without any cost to the Company. In connection with that settlement,
the parties, including the Company, executed general releases in favor of the
other parties, pursuant to which they released any claims or causes of action
arising against the named parties. As a consequence of the settlement, the
Company dismissed its custodial action against Videotron. See Item 1, Legal
Proceedings "Videotron Litigation" above.
ITEM 2. CHANGES IN SECURITIES
During the period covered by this report, the Company redeemed
2,000,000 shares of common stock held by F. Lorenzo Crutchfield, Jr., the
Company's largest shareholder, in exchange for the distribution from the Company
to Mr. Crutchfield of all of the outstanding stock of Carolina Communications,
Inc. (see Item 5 below).
10
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MATTERS SUBMITTED TO A VOTE OF THE COMPANY'S SHAREHOLDERS
None.
ITEM 5. OTHER INFORMATION
Disposition of Carolina Communications, Inc.
In February, 1994, the Company's Board of Directors voted to
discontinue the business operations of Carolina Communications, Inc.
("Carolina"), a wholly-owned subsidiary of the Company that provided telephone
pay-per-call services. Effective July 1, 1996, the Company transferred its
interest in Carolina to F. Lorenzo Crutchfield, Jr., the Company's largest
shareholder, in redemption of 2,000,000 shares of Mr. Crutchfield's common
stock. As a result of the transaction, Mr. Crutchfield's beneficial ownership of
the outstanding shares of the Company's common stock was reduced from
approximately 53.8% (on a fully diluted basis) to approximately 46.5% (on a
fully diluted basis). Mr. Crutchfield's agreement to acquire Carolina was
conditioned upon the receipt of an opinion of counsel that the transaction will
qualify for tax-free treatment under section 355 of the Internal Revenue Code of
1986, as amended. Prior to the transfer, Mr. Crutchfield acted as President of
Carolina and his wholly-owned corporation, Teleworld Communications, Inc., which
provided management services to Carolina.
In connection with the Company's disposition of its interest in
Carolina to Mr. Crutchfield, the Company entered into a management agreement
with Carolina pursuant to which it agreed to provide certain management and
administrative services to Carolina during the four month period from July
through October, 1996, in exchange for a management fee of $100,000 per month.
Prior to its transfer to Mr. Crutchfield, Carolina provided all of the
Company's cash flow. Carolina's revenues for the 1995 and 1994 fiscal years
were, respectively, $3,714,383 and $5,810,419, which are reduced by expenses and
included in the income of the Company as income from discontinued operations.
The decrease in Carolina's revenues was primarily due to increased regulation in
the pay-per-call services industry, which resulted in a reduction of available
telephone lines. During those same periods, however, Carolina's net income as a
percentage of net sales increased from 40% in fiscal 1994 to 51% in fiscal 1995.
The increase was primarily attributable to a decrease in chargeback expenses due
to changing the clearing house parameters used in screening fraudulent callers.
As a result of the transfer of Carolina to Mr. Crutchfield, Carolina's
liabilities (approximately $886,891 at June 30, 1996) were no longer
attributable to the Company.
Pacific Mezzanine Fund Financing.
To enable the Company to pay the expenses associated with its proposed
liquidation and distribution and the transaction with Pacific Telesis Group and
its affiliates, in June, 1996, the Company borrowed $2,500,000 from Pacific
Mezzanine Fund, L.P., an unrelated party ( the "Pacific Loan"). The unpaid
principal amount of the Pacific Loan bears interest at 14% per annum, and is
payable in quarterly installments of $137,500 beginning July 1, 1997. All unpaid
portions of the Pacific Loan are due and payable on
11
<PAGE>
the fifth anniversary of the loan.
The loan is collateralized by a promissory note payable to the Company
from WHI, in the original principal amount of approximately $2,375,000, and the
Company's rights under the terms of its agreement with Videotron, which requires
Videotron to purchase, at the Company's election, the Company's 20% interest as
a shareholder in Videotron Bay Area, for at least $2,600,000. As partial
consideration for making the Pacific Loan, Pacific Mezzanine Fund and/or its
affiliates received warrants to purchase 150,000 shares of the Company's common
stock at an exercise price of $.75 per share. In addition, the Company paid
processing fees and prepaid interest of approximately $414,100.
Under the terms of the Pacific Loan the Company may loan funds to WCCI
pursuant to the Loan Commitment Agreement between the Company and WCCI. The Loan
Commitment Agreement is more particularly described in the section entitled
"Auckland and Park City Asset Spin-Off" in the Company's report on Form 10-QSB
for the period ended July 31, 1995. The maximum amounts committed to be loaned
by the Company to WCCI under that agreement was $1,000,000. As of the date
hereof, the Company has loaned WCCI $275,000 from the net proceeds of the
Pacific Loan.
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
A. EXHIBITS.
None
B. REPORTS ON FORM 8-K
None
12
<PAGE>
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 thereunto duly authorized.
TRANSWORLD TELECOMMUNICATIONS, INC.
Date: September 16, 1996 BY /s/ ANTHONY SANSONE
-----------------------------------
Anthony Sansone
Chief Financial Officer
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 1,027,903
<SECURITIES> 0
<RECEIVABLES> 14,711
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,202,962
<PP&E> 46,223
<DEPRECIATION> 19,898
<TOTAL-ASSETS> 1,885,220
<CURRENT-LIABILITIES> 360,445
<BONDS> 0
0
0
<COMMON> 26,564
<OTHER-SE> (1,001,789)
<TOTAL-LIABILITY-AND-EQUITY> 1,885,220
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,076,454
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,358
<INCOME-PRETAX> (2,752,082)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,752,082)
<DISCONTINUED> 837,786
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (294,068)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
