Form 10-Q
Securities and Exchange Commission
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTON 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1998
-------------------------.
Commission file number 0-17080
--------
UNITRONIX CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2086851
- --------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Newbury Street, Peabody, MA 01960
---------------------------------------
(Address of principal executive offices)
(Zip Code)
(978) 535-3912
---------------------------------------------------
(Registrant's telephone number, including area code)
- -----------------------------------------------------------------------
Indicate by check mark whether 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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
9,456,932 shares of common stock, no par value, as of February 15, 1999
1
UNITRONIX CORPORATION
INDEX
-------
Page Number
-----------
Part I. Financial Information (Unaudited)
Item 1:
Balance Sheets-
December 31, 1998 and June 30, 1998 3
Statements of Income -
Three Months Ended December 31, 1998 and 1997 4
and Six Months Ended December 31, 1998 and 1997
Statement of Changes in Stockholders' Deficit-
Six Months Ended December 31, 1998 5
Statements of Cash Flows -
Six Months Ended December 31, 1998 and 1997 6
Notes to Financial Statements 7
Item 2:
Management's Discussion and Analysis of Results of 10
Operations and Financial Condition for the Three Months
Ended December 31, 1998 and the Six Months Ended
December 31, 1998
Part II. Other Information 13
2
UNITRONIX CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
December 31,
1998 June 30,
(Unaudited) 1998 (1)
ASSETS ----------- --------
CURRENT ASSETS:
Cash $96,798 $75,466
Accounts receivable, net 41,773 78,941
Prepaid expenses and other current assets 18,425 21,379
--------- ---------
TOTAL CURRENT ASSETS 156,996 175,786
--------- ---------
Property, plant and equipment, net 20,274 33,894
---------- ---------
Other assets 2,989 3,201
---------- -------
TOTAL ASSETS $180,259 $212,881
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable - related party $300,000 $300,000
Notes payable 202,688 245,455
Accounts payable 13,826 50,367
Accrued expenses 70,990 93,888
Accrued interest 9,880 14,250
Deferred revenue 117,296 100,703
-------- -------
TOTAL CURRENT LIABILITIES 714,680 804,663
Note Payable --- 490
Series A preferred stock, $1 par value, 6% cumulative
convertible nonvoting; authorized 1,000,000 shares;
956,728 issued and outstanding at December 31 and
June 30, 1998, net of unamortized issuance costs of
$3,850 at December 31, 1998 and $4,400 at June 30,
1998, plus undeclared accumulated dividends of $28,702
at December 31, 1998 and $0 at June 30, 1998 981,580 952,328
STOCKHOLDERS' DEFICIT:
Undesignated capital shares; authorized 2,000,000 shares at
December 31 and June 30, 1998; none outstanding --- ---
Common stock, no par value; authorized 12,000,000 shares;
9,456,932 shares issued and outstanding at
December 31 and June 30, 1998 3,485,412 3,485,412
Additional paid-in capital 7,640 1,170
Accumulated deficit (5,009,053) (5,031,182)
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (1,516,001) (1,544,600)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $180,259 $212,881
========= ========
(1) Derived from audited financial statements.
See notes to financial statements.
3
UNITRONIX CORPORATION
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
------ ------ ------ ------
REVENUE:
Computer systems and
software licenses $79,750 $299,300 $246,500 $336,800
Services 120,463 135,506 271,775 282,611
------- ------- ------- -------
TOTAL REVENUE 200,213 434,806 518,275 619,411
------- ------- ------- -------
COSTS AND EXPENSES:
Cost of computer systems
and software licenses 69 5,145 11,668 6,171
Cost of services 51,446 71,693 104,122 126,289
Product development 0 174,381 0 221,736
Selling and marketing 41,426 77,597 87,004 113,869
General and administrative 131,480 50,283 253,689 110,798
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 224,421 379,099 456,483 578,863
------- ------- ------- -------
PROFIT (LOSS) FROM OPERATIONS (24,208) 55,707 61,792 40,548
INTEREST INCOME (EXPENSE), NET (13,904) (29,670) (25,964) (53,390)
OTHER INCOME (EXPENSE), NET --- --- 15,003 ---
------- ------- ------- -------
PROFIT (LOSS) BEFORE INCOME TAXES (38,112) 26,037 50,831 (12,842)
------- ------- ------- -------
PROVISION FOR INCOME TAXES 0 0 0 0
------- ------- ------- -------
NET PROFIT (LOSS) $(38,112) $26,037 $50,831 $(12,842)
======= ======= ======= =======
BASIC AND DILUTED NET PROFIT (LOSS)
PER COMMON SHARE $(0.01) $0.00 $0.00 $(0.00)
======= ======= ======= =======
Weighted average number of common
shares outstanding 9,456,932 9,456,932 9,456,932 9,456,932
See notes to financial statements.
4
UNITRONIX CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(Unaudited)
For the Six Months Ended December 31, 1998
Common Stock
-------------- Additional
Shares Paid-in Accumulated Stockholders'
Issued Amount Capital Deficit Deficit
------ ------ ------- ------- -------
Balance,
June 30, 1998 9,456,932 $3,485,412 $1,170 $(5,031,182) $(1,544,600)
Net profit 50,831 50,831
Unpaid accumulated
preferred dividends (28,702) (28,702)
Expense of
issuance of
stock options
to consultant 7,020 7,020
Amortization of
preferred stock
issuance costs (550) (550)
--------- --------- ------ ---------- -----------
Balance,
December 31, 1998 9,456,932 $3,485,412 $7,640 $(5,009,053) $(1,516,001)
========= ========= ====== =========== ===========
See notes to financial statements.
5
UNITRONIX CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December 31,
--------------------------------
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit (Loss) $50,831 $(12,842)
Adjustments to reconcile net profit (loss)
to net cash used by operating activities
Depreciation and amortization 13,620 23,042
Non cash expense on issuance of stock
options to consultant 7,020 ---
Decreases (increases) in operating assets:
Accounts receivable 37,168 (50,927)
Prepaid expenses and other current assets 2,954 (199,461)
Other assets 212 441
Increases (decreases) in operating liabilities:
Accounts payable (36,541) (24,899)
Accrued expenses (22,898) (11,481)
Accrued interest (4,370) 45,619
Deferred revenues 16,593 41,428
------- -------
Net cash provided (used) by operating activities 64,589 (189,080)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 0 545,000
Repayments of borrowings (43,257) (245,185)
------- -------
Net cash provided by financing activities (43,257) 299,815
------- -------
Net increase (decrease) in cash 21,332 110,735
Cash at beginning of period 75,466 34,028
------- -------
Cash at end of period $96,798 $144,763
======= =======
See notes to financial statements.
6
UNITRONIX CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
------------------------------------------
Basis of Presentation
- ---------------------
The accompanying financial statements are unaudited. In the opinion of manage-
ment, all adjustments, which include only normal recurring adjustments necessary
to present fairly the financial position, results of operations, and cash flows
for all periods presented, have been made. The result of operations for interim
periods are not necessarily indicative of the operating results for the full
year.
Footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles has been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's June
30, 1998 Annual Report on Form 10-K.
2. Supplemental Disclosures of Cash Flow Information:
-------------------------------------------------
Cash paid for interest for the periods indicated was as follows:
Six Months Ended
December 31,
----------------
1998 1997
-------- --------
Interest, net $30,334 $7,771
3. Profit (loss) per Common Share:
---------------------
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128") Earnings per Share, which requires
disclosure of basic earnings per common share and diluted earnings per
common share for all periods presented. Adoption of SFAS 128 has not
affected the amounts presented in any period. The computation of basic and
diluted earnings per share is presented below.
7
UNITRONIX CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
continued
Basic and diluted net loss per share:
- ------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
Numerator:
Net profit (loss) $(38,112) $26,037 $50,831 $(12,842)
Preferred dividends (14,351) --- (28,702) ---
Amortization of preferred
stock issuance cost (275) --- (550) ---
-------- -------- -------- --------
Income available to
common shareholders $(52,738) $26,037 $21,579 $(12,842)
========= ======== ======= =========
Denominator:
Weighted average number of
shares issued and
outstanding 9,456,932 9,456,932 9,456,932 9,456,932
Assumed exercise of options
reduced by the number of
shares which could have been
purchased with the proceeds
of those options --- --- --- ---
Assumed conversion of
preferred stock --- --- --- ---
--------- --------- --------- ---------
Total shares 9,456,932 9,456,932 9,456,932 9,456,932
--------- --------- --------- ---------
Basic and diluted net profit (loss)
per share $(0.01) $0.00 $0.00 $(0.00)
The number of stock options outstanding was 465,000 as of December 31, 1998,
and 255,000 as of December 31, 1997. The number of potential shares convertible
into common stock from the exercise of convertible preferred stock was 956,728
as of December 31, 1998, and 0 as of December 31, 1997. Neither of these
situations qualify as common stock equivalents as they would have an anti-
dilutive effect on diluted earnings per share.
4. Legal Proceedings
-----------------
The Company filed suit against Computer Management Sciences, Inc. (CMSI) in
the United States District Court for the District of Massachusetts on October
25, 1996. The suit seeks damages resulting from the breach of three
contracts by CMSI to develop portions of the client-server ERP software,
such contracts having been entered into in 1995 and 1996. The Company
is seeking an amount in excess of $150,503, which is the amount that the
Company paid to CMSI during the course of the contracts, plus costs, interest
and such other relief that the Court deems just and equitable. On January
17, 1997, CMSI filed a counterclaim in the same Court alleging that the
Company is liable to CMSI in an amount exceeding $200,000 on account of the
8
Company's alleged breaches of the same contracts. Management believes that
the CMSI counterclaim is without merit and is defending this counterclaim
vigorously. There can be no assurance that a negative outcome will not
result in an adverse effect on the Company's financial position or results of
its operations.
On June 30, 1998, the Company filed for arbitration against InterObjects, a
software development firm, for breach of contract and failure to meet
milestones in the development of a new Enterprise Resource Planning system.
The Company made a prepayment of $300,000 in September of 1997 related to this
contract. During January of 1998, development of the new Enterprise Resource
Planning system by InterObjects ceased and the contract was subsequently term-
inated. The entire $300,000 prepayment was expensed during the fiscal year
ended June 30, 1998. InterObjects filed a counter-claim against the Company
for $1,100,000, which is the amount that they would have been paid had they
completed the software. There can be no assurance that a negative outcome will
not result in an adverse effect on the Company's financial position or results
of operations.
A mediation session in the InterObjects matter was conducted in the quarter
ended December 31, 1998, with representatives of the Company and Interobjects
and the attorneys for both parties in attendance. An arbitration hearing will
be conducted to attempt to resolve the claims.
5. Notes Payable
-------------
On August 1, 1993, the Company incurred a $37,937 note payable bearing
interest at 8% due to the Illinois Department of Revenue for settlement of
revenue taxes owed to the State of Illinois. The note is payable in monthly
installments of $527 and will expire on July 1, 1999. The note payable
balance as of December 31, 1998 and 1997 was $3,688 and $10,011, respectively.
On July 14, 1997, the Carolina First Bank loaned the Company $200,000 in the
form of a demand note that was secured by all of the assets of the Company.
This note was renewed for $199,000 on June 30, 1998, for a one year period
and bears variable interest at the prime rate of the Carolina First Bank.
9
UNITRONIX CORPORATION
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
The analysis of the Company's financial condition, capital resources
and operating results should be viewed in conjunction with the accompanying
financial statements, including the notes thereto.
RESULTS OF OPERATIONS
- ---------------------
The Company continued to sell additional PRAXA software modules and licenses,
software support services and consulting services to existing customers over
the past six months. In addition, the Company is marketing the latest version
of the PRAXA software to PRAXA users that are not covered by support agreements
because of the ability of the latest version to handle dates in the twenty-first
century (year 2000 compliant or Y2K compliant). During the first quarter of
fiscal 1999 the Company sold one PRAXA license upgrade and one copy of the Y2K
compliant version of PRAXA. During the second quarter of fiscal 1999 the
Company sold two PRAXA license upgrades and received one order for the Y2K
compliant version of PRAXA, which was in the sales order backlog as of December
31, 1998. The Company is attempting to identify additional prospects for the
Y2K compliant software. There can be no assurance that additional sales of the
PRAXA software will occur.
Discussions are currently underway to have an independent software developer
create a graphical user interface for PRAXA and to modify the software to
operate with relational database management systems. Several PRAXA users have
expressed interest in these features. An assessment of the likelihood of
selling these features to the interested users is currently being made. The
Company is also continuing to search for software products that will allow it
to continue in the business of marketing and supporting software. All of the
costs incurred with the search for software products have been included in
general and administrative costs in the statement of operations. There can be
no assurance that the envisioned enhancements to the PRAXA software will be
developed or that they can be sold, or that the needed products can be obtained.
Second Quarter Ended December 31, 1998, Compared to the Second Quarter Ended
- ----------------------------------------------------------------------------
December 31, 1997
- -----------------
Revenue for the three month period ended December 31, 1998, decreased by 54%
from the three month period ended December 31, 1997. Sales of computer systems
and software licenses decreased by 73% and revenue from services decreased by
11%. The sale of a corporate-wide, unlimited usage PRAXA license in the 1997
period that was not repeated in the 1998 period, as compared to the sale of two
PRAXA license upgrades in the 1998 period, accounted for the decrease in revenue
from computer systems and software licenses. The decrease in services revenue
was due to an 11% decrease in revenue from software maintenance and a 9%
decrease in consulting and custom programming revenue. The decrease in software
maintenance revenue was due to some users terminating their software support
agreements. Customers have not renewed their PRAXA support agreements because
they have converted to software that provides features not found in PRAXA or
have become sufficiently knowledgeable of PRAXA that they do not require support
services from the Company, both trends that management expects to continue in
future quarters.
10
Total costs and expenses decreased by 42% from the three month period ended
December 31, 1997, to the three months ended December 31, 1998. This decrease
was due to a complete elimination of product development costs, a 28% reduction
in the cost of services and a 47% reduction in selling expenses, all of which
were partially offset by a 152% increase in general and administrative expenses.
Product development costs were eliminated because the Company has not under-
taken any development activities in this fiscal year. The cost of services
was lower due to decreased consulting and custom programming activities and
fewer customers requiring software support service. Selling expenses decreased
because of lower sales commission expenses, due to the decrease in the sale
of computer systems and software licenses. General and administrative expenses
increased because the resources associated with the Company's product develop-
ment were redirected to general and administrative activities associated with
the Company's strategic direction. The Company also employed the services of a
business consultant during the 1998 period to develop opportunities for the
Company to distribute software produced by other vendors.
The decrease of approximately $5,000 in the cost of computer systems and soft-
ware licenses from the quarter ended December 31, 1997 to the quarter ended
December 31, 1998 was due to the purchase of one license upgrade for the Xentis
third party software in the 1997 period as compared no such license upgrade
in the 1998 period.
The decrease in sales from the 1997 period to the 1998 period resulted in a loss
from operations of approximately $24,200, or 12.1% of sales, in the 1998 period,
as compared with a profit from operations of approximately $55,700 in the like
period in 1997. Interest expense decreased 53% from the three month period
ended December 31, 1997, due to the conversion of several notes payable to
convertible preferred stock during the year ended June 30, 1998.
Six Months Ended December 31, 1998, Compared to Six Months Ended December 31,
- -----------------------------------------------------------------------------
1997
- ----
Revenue for the six month period ended December 31, 1998, decreased by 16%
from the like six month period in 1997. Sales of computer systems and software
licenses decreased by 27% and revenue from services decreased by 4%. The
decrease in sales of computer systems and software licenses was due to the sale
of a corporate-wide, unlimited usage PRAXA license and three PRAXA license
upgrades in the 1997 period, as compared to the sale of three PRAXA license
upgrades and one copy of the Y2K compliant version of PRAXA in the six months
ended December 31, 1998. The decrease in services revenue was due to a decrease
in revenue from software maintenance that was partially offset by an increase
in consulting and custom programming revenue associated with the sale of
training and installation services in conjunction with the sale of the Y2K
compliant version of PRAXA.
The 89% increase in the cost of computer systems and software licenses from the
six month period ended December 31, 1997 to the like period in 1998 reflects
the purchase of two license upgrades for the Xentis third party software in the
1998 period, as opposed to one such upgrade in the like period in 1997. The
Company resold the Xentis license upgrades in conjunction with the sale of the
Y2K compliant PRAXA software and one of the PRAXA license upgrades.
There were no product development expenses in the six month period ended
11
December 31, 1998, since there was no product development activity underway.
During the prior fiscal year, the Company paid a software development firm
$300,000 as a down payment for developing a new Enterprise Resource Planning
software product for the Company, $150,000 of which was expensed during the
six months ended December 31, 1997.
Selling expenses decreased by 24% from the six month period ended December 31,
1997 to the six month period ended December 31, 1998, due to lower sales comm-
issions. General and administrative expenses increased by 128% from the the
1997 period to the like period in 1998 because the resources associated with the
Company's product development were redirected to general and administrative
activities associated with the Company's strategic direction. The Company also
employed the full-time services of a business consultant during the 1998 period
to develop opportunities for the Company to distribute software produced by
other vendors. Additionally, the company incurred increased legal expenses
associated with ongoing litigation. Management believes that the Company must
acquire distribution rights for one or more such products in order to remain in
business. There can be no assurance that such product distribution rights will
be obtained.
Interest expense for the six month period ended December 31, 1998, decreased by
51% from the six month period ended December 31, 1997, due to the conversion
of several notes payable to convertible preferred stock during the year ended
June 30, 1998.
The Company earned a net profit of $50,831 in the six months ended December 31,
1998, as compared with a net loss of $12,842 in the like period in 1997. The
profit is due to lower operating expenses and lower interest expenses. There
can be no assurance that the Company will operate profitably in future periods.
Liquidity and Capital Resources
- -------------------------------
As of December 31, 1998, the working capital deficit was $(557,684) as compared
to a deficit of $(628,877) at June 30, 1998. The profitability of the Company
in the period ended December 31, 1998, was responsible for the reduction in
the working capital deficit.
Survival of the Company is contingent upon sales of the Y2K compliant version
of PRAXA to existing customers, acquiring new products to sell and additional
financing. The Company is searching for software products that will allow it
to continue in the business of software sales. There can be no assurance that
the needed products or other sources of funds can be obtained, in which case
the Company may be forced to cease operations.
Management projects that sufficient funds will be generated from the sale of
existing products and related services to allow the Company to operate through
the period ended March 31, 1999. There can be no assurance that management's
projections will be realized and that funds sufficient to operate through March
31, 1999, will be generated, in which case the Company may be forced to cease
operations.
In the event the Company is able to sustain operations through March 31, 1999
it may be forced to renegotiate its current loan outstanding to Carolina First
Bank due on June 30, 1999. Failure to negotiate a change in the terms of this
note could force the Company to violate those terms.
12
Year 2000 Readiness
- -------------------
As of December 31, 1998, the year 2000 compliant version of the Company's
PRAXA software had been shipped to all but 10 of the customers that are covered
by support agreements. Even if they have not requested it, the Company plans
to ship the year 2000 compliant software to these customers before the end of
the current fiscal year, which ends June 30, 1999.
The supplier of the Company's computer equipment, Compaq Computer Corporation,
has recommended that software patches be applied to the VMS operating systems
that are used on three of the Company's Digital Equipment Corporation computers,
even though it is highly unlikely that the absence of the patches will result in
any performance irregularities with the computers. The patches will be applied
to the Company's VMS operating systems by the end of the current fiscal year, at
a cost of $400. The Company will also upgrade its accounting system to the Y2K
compliant version of PRAXA during the same time period. The Company will test
the personal computers that its personnel use for administrative tasks for
year 2000 compliance by the end of the current fiscal year, and make any
necessary modifications to the equipment and software.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company filed suit against Computer Management Sciences, Inc. (CMSI) in
the United States District Court for the District of Massachusetts on October
25, 1996. The suit seeks damages resulting from the breach of three
contracts by CMSI to develop portions of the client-server ERP software,
such contracts having been entered into in 1995 and 1996. The Company
is seeking an amount in excess of $150,503, which is the amount that the
Company paid to CMSI during the course of the contracts, plus costs, interest
and such other relief that the Court deems just and equitable. On January
17, 1997, CMSI filed a counterclaim in the same Court alleging that the
Company is liable to CMSI in an amount exceeding $200,000 on account of the
Company's alleged breaches of the same contracts. Management believes that
the CMSI counterclaim is without merit and is defending this counterclaim
vigorously. There can be no assurance that a negative outcome will not
result in an adverse effect on the Company's financial position or results of
its operations.
On June 30, 1998, the Company filed for arbitration against InterObjects, a
software development firm, for breach of contract and failure to meet
milestones in the development of a new Enterprise Resource Planning system.
The Company made a prepayment of $300,000 in September of 1997 related to this
contract. During January of 1998, development of the new Enterprise Resource
Planning system by InterObjects ceased and the contract was subsequently term-
inated. The entire $300,000 prepayment was expensed during the fiscal year
ended June 30, 1998. InterObjects filed a counter-claim against the Company
for $1,100,000, which is the amount that they would have been paid had they
completed the software. There can be no assurance that a negative outcome will
not result in an adverse effect on the Company's financial position or results
of operations.
13
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
The Company did not file any reports on Form 8-K during this quarter.
14
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.
Unitronix Corporation
Date: February 15, 1999
By: /s/William C. Wimer
---------------
William C. Wimer
Vice President, Operations and
Chief Financial Officer
15
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 96,798
<SECURITIES> 0
<RECEIVABLES> 45,300
<ALLOWANCES> 3,527
<INVENTORY> 0
<CURRENT-ASSETS> 156,996
<PP&E> 568,964
<DEPRECIATION> 548,690
<TOTAL-ASSETS> 180,259
<CURRENT-LIABILITIES> 714,680
<BONDS> 0
<COMMON> 3,485,412
981,580
0
<OTHER-SE> 7,640
<TOTAL-LIABILITY-AND-EQUITY> 180,259
<SALES> 518,275
<TOTAL-REVENUES> 518,275
<CGS> 11,668
<TOTAL-COSTS> 11,668
<OTHER-EXPENSES> 444,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (25,964)
<INCOME-PRETAX> 50,831
<INCOME-TAX> 0
<INCOME-CONTINUING> 50,831
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