<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JULY 31, 1997.
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO
-------- -------
COMMISSION FILE NUMBER
0-18288
DIRECT CONNECT INTERNATIONAL INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2705223
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
266 Harristown Road
Glen Rock, New Jersey 07452
- --------------------- -----
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code - (201) 445-2101
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 1997: 9,062,066
---------
<PAGE>
DIRECT CONNECT INTERNATIONAL INC. AND SUBSIDIARY
INDEX
-----
PART I. FINANCIAL INFORMATION PAGE NO
--------------------- -------
Item 1. Financial Statements
Condensed Consolidated
Balance Sheets -
July 31, 1997 and
April 30, 1997 3
Condensed Statements
Of Consolidated
Operations - Three
Months Ended July 31,
1997 and July 31, 1996 4
Condensed Statements
Of Consolidated Cash
Flows - Three Months
Ended July 31, 1997
and July 31, 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion
and Analysis of Results
of Operations and
Financial Condition 7 - 12
PART II. OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports
on Form 8-K 13
Signatures 14
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
Direct Connect International Inc. and Subsidiary
Consolidated Balance Sheets
ASSETS
<CAPTION>
July 31, 1997 April 30, 1997
------------- --------------
<S> <C> <C>
(Unaudited)
Current assets
Cash and cash equivalents $101,104 $32,939
Accounts receivable 18,617 22,857
Notes receivable-officers 91,105 90,404
Investments 13,001 13,001
Prepaid financing costs and other expenses 71,524 56,314
------- -------
Total current assets 295,351 215,515
------- -------
Property and equipment , at cost
Furniture and fixtures 42,543 42,543
Molds, tools and dies 267,498 267,498
------- -------
310,041 310,041
Less: accumulated depreciation 269,634 263,083
------- -------
40,407 46,958
------- -------
Investment in Glasgal 3,073,788 1,694,395
Security deposits 700 700
--------- ---------
3,074,488 1,695,095
--------- ---------
Total assets $3,410,246 $1,957,568
========== ==========
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $548,896 $534,901
Accrued expenses and taxes payable 138,219 85,564
Notes payable-officers and stockholders --- 253,680
Notes payable-other, current portion 1,795,890 1,404,661
Investment, warrants to sell Glasgal 300,000 300,000
--------- ---------
Total current liabilities 2,783,005 2,578,806
--------- ---------
Stockholders' equity
Convertible preferred stock:
Authorized 5,000,000 shares, $.001
par value; issued and outstanding-
5,000,000 shares 5,000 5,000
Common stock:
Authorized 15,000,000 shares, $.001
par value; issued and outstanding-
9,062,066 shares 9,062 9,062
Capital in excess of par value 5,148,449 5,128,449
Accumulated deficit (4,439,929) (5,668,408)
Unrealized loss on investments (95,341) (95,341)
--------- ---------
Total stockholders' equity 627,241 (621,238)
--------- ---------
Total liabilities and
stockholders' equity $3,410,246 $1,957,568
========== ==========
</TABLE>
3
<PAGE>
<TABLE>
Direct Connect International Inc. and Subsidiary
Consolidated Statements of Operations
<CAPTION>
For the
Three Months Ended
------------------
July 31,1997 July 31,1996
------------ ------------
(Unaudited)
<S> <C> <C>
Revenues:
Sales $0 $171,749
------- --------
Costs and expenses
Cost of goods sold --- 163,477
Royalties/licensing fees --- 15,809
Product development costs --- 6,000
Depreciation 6,551 6,551
General and administrative expenses 235,484 234,664
Less: management fees (6,676) (255,000)
------- --------
235,359 171,501
------- -------
Operating income (loss) (235,359) 248
Gain on sale of securities 1,522,614 916,935
Interest income 774 65
Other income --- 2,278
Interest expense (59,551) (25,753)
--------- -------
Net income $1,228,478 $893,773
========== ========
Income per common share $0.08 $0.06
===== =====
</TABLE>
4
<PAGE>
<TABLE>
Direct Connect International Inc. and Subsidiary
Consolidated Statements of Cash Flows
<CAPTION>
For Three Months Ended
----------------------
July 31, 1997 July 31, 1996
------------- -------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $1,228,478 $893,773
---------- --------
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation 6,551 6,551
Gain on sale of Glasgal stock (1,522,614) (916,935)
(Increase) decrease in assets
Accounts receivable 4,240 (179,723)
Prepaid financing costs and other expenses (15,210) 57,468
Increase (decrease) in liabilities
Accounts payable 13,995 (51,066)
Accrued expenses and taxes payable 52,655 70,928
--------- ---------
Total adjustments (1,460,383) (1,012,777)
---------- ----------
Net cash (used in) operating activites (231,905) (119,004)
---------- ----------
Cash flows from investing activities
Notes receivable-officers, increases (701) (7,635)
Increase in Due from Kidsview, Inc. --- (1,179,050)
Acquisition of property and equipment --- (9,352)
Proceeds from sale of Glasgal stock 1,999,547 1,028,100
Acquisition of Glasgal stock (1,856,325) ---
---------- ---------
Net cash (used in) provided by investing activities 142,521 (167,937)
------- --------
Cash flows from financing activities
Increase in notes payable-officers and stockholders --- 1,048
Decrease in notes payable-officers and stockholders (253,680) ---
Increase in notes payable-other 391,229 386,941
Increase in paid in capital 20,000 ---
--------- -------
Net cash provided by financing activities 157,549 387,989
--------- ---------
Net increase in cash and cash equivalents 68,165 101,048
Cash and cash equivalents at beginning of period 32,939 67,886
-------- --------
Cash and cash equivalents at end of period $101,104 $168,934
======== ========
Supplemental disclosure of cash flows information
Cash paid during the three months for interest $59,551 $25,753
------- -------
</TABLE>
5
<PAGE>
DIRECT CONNECT INTERNATIONAL INC.
AND SUBSIDIARY
Notes to Financial Statements
1. In the opinion of management, the accompanying unaudited financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly (a) the financial position as
of July 31, 1997, (b) the results of operations for the three months
ended July 31, 1997 and July 31, 1996 and (c) changes in cash flows for
the three months ended July 31, 1997 and July 31, 1996.
2. Refer to the audited financial statements for the fiscal year ended
April 30, 1997 for details of accounting policies and accounts, none of
which have changed significantly in composition since that date.
3. Financial results for the interim period ended July 31, 1997 may not be
indicative of the financial results for the fiscal year ending April
30, 1998.
4. The Company has available carry forward losses applicable to the
reduction of future Federal income taxes aggregating approximately
$2,400,000 at July 31, 1997 and which expire during various years
through 2011.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales
- ---------
Net sales for the three months ended July 31, 1997 were $0 as compared to
$171,749 for the same period in the prior fiscal year.
The Company intends to develop additional product lines; however, there can be
no assurance that it will be able to do so on a commercially viable basis. If
such product lines are so developed, the Company may be required to sell or
license such product lines, depending on, among other factors, its financial
resources.
At July 31, 1997, the Company did not have a backlog of confirmed orders from
its customers.
Gross Profit
- ------------
Gross Profit percentage for the three months ended July 31, 1997 was 0% as
compared to 4.81% for the three months ended July 31, 1996. Such decrease for
the three months ended July 31, 1997 was a result of no sales during this
period.
Royalties/Licensing Fees
- ------------------------
Royalties/Licensing fees are variable expenses which increase as sales increase.
For the three month period ended July 31, 1997, the Company paid $0 and $15,809
(or 9% of sales) for the three months ended July 31, 1996. The decrease in
royalties was a result of no sales during the three months ended July 31, 1997.
Other Income
- ------------
Other income amounted to approximately $1,500,000 for the three months ended
July 31, 1997 as compared to approximately $900,000 for the three months ended
July 31, 1996. The increase for the three month period ended July 31, 1997 was
due to the sale of additional shares of Glasgal stock by the Company at a higher
price than in the prior year..
General and Administrative Expenses
- -----------------------------------
For the three months ended July 31, 1997, the Company earned a management fee of
$6,676 as compared to $255,000 for the three months ended July 31, 1996, which
covers the monthly reimbursement of the costs incurred by the Company in
connection with its operations as it relates to supporting the product lines
which were sold. The reason for the decrease was the reduction in revenues from
the Company's management activities on behalf of Evolutions, Inc., which
terminated in May 1997. Set forth below are the principal components.
7
<PAGE>
General and administrative expenses for the three months ended July 31, 1997
were $235,484 as compared to $234,664 for the three months ended July 31, 1996.
For the three months ended July 31, 1997 there were no commissions as compared
to $8,467 in commissions for the three months ended January 31, 1996. This
decrease resulted primarily from the decline in the amount of sales upon which
commissions are based. Professional fees were $37,524 for the three months ended
July 31, 1997 as compared to $12,049 for the three months ended July 31, 1996.
This increase for the three months ended July 31, 1997 was due primarily to
incurring professional fees in connection with the Company's annual audit and
expenses involved with respect to financing activities. Letter of credit and
foreign office expenses amounted to $0 for the three months ended July 31, 1997
as compared to $13,065 for the three months ended July 31, 1996. This decrease
was due primarily to the decline in purchases resulting from the decrease in
sales and the decline in the cost of goods purchased.
For the three months ended July 31, 1997, salaries were $82,807 as compared to
$109,275 for the three months ended July 31, 1996.
Travel and entertainment expenses increased to $37,200 for the three months
ended July 31, 1997 as compared to $33,218 for the three months ended July 31,
1996. This increase resulted from the Company's efforts to expand sales under
its management activities which have terminated.
LIQUIDITY AND CAPITAL RESOURCES
During the next twelve months, in addition to meeting its operating needs, the
Company will have notes payable in the amount of approximately $1,800,000
becoming due. The Company does not believe that it will be able to pay these
obligations out of operating revenues, and, accordingly, it will have to seek
additional financing or sell assets to do so. The Company owns approximately
1,000,000 shares of common stock of Glasgal Communications, Inc. (Glasgal) and
may, from time to time, sell a portion of such shares. There can be no assurance
that the Company will be able to obtain such financing or sell assets, in which
event such obligations will have a material adverse effect upon the Company's
operations.
For the three months ended July 31, 1997 the Company used cash from operations
in the amount of $231,905 as compared to using $119,004 from operations for the
three months ended July 31, 1996. The Company obtained $157,549, from its
financing activities for the three months ended July 31, 1997 as compared to
obtaining $387,989 for the three months ended July 31, 1996. These amounts
resulted primarily from borrowings using the Company's Glasgal shares as
collateral.
8
<PAGE>
For the three months ended July 31, 1997, the Company provided $142,521 from its
investing activities as compared to using $167,937 for the three months ended
July 31, 1996. Included in the amount for the three months ended July 31, 1997
were proceeds received in the amount of $1,999,547 from the sale of 493,300
shares of Glasgal stock. The Company also used $1,856,325 to acquire 480,000
shares of Glasgal stock. Cash flows for the three months ended July 31, 1996
included $1,028,100 from the sale of 115,000 shares of Glasgal stock. Also
included in that amount was cash used to increase the Company's advances to
Kidsview, Inc. by $1,179,050. In connection with the transactions involving the
Glasgal stock, Glasgal relinquished certain options regarding purchase of shares
of such stock from the Company, and the option granted to the Company by Glasgal
to purchase additional shares of Glasgal stock was increased.
In June 1997, the Company entered into a lending arrangement with Barbara
Rosner, wife of a director and chief financial officer of the Company, whereby
she agreed to provide funds to the Company in the aggregate amount of $225,000.
The Company agreed to issue to her secured promissory notes, with interest at
the rate of 10% per annum, to cover the loans as made from time to time. As an
inducement for her to make the loans, the Company agreed to issue to her
warrants to purchase an aggregate of 100,000 shares of common stock of the
Company at an exercise price of $.20 per share. At July 31, 1997 the Company
received $115,000 under such lending arrangement and issued notes for such
amount. Such notes are secured by 64,100 shares of Glasgal common stock. Two
notes aggregating $115,000 become due in October 1997 and two additional notes
issued in August 1997 aggregating $20,110, and secured by 6600 shares of Glasgal
common stock, become due in December 1997. .
In October 1995 the Company issued to two individual lenders promissory notes in
the aggregate principal amount of $350,000. Such notes are secured by a total of
200,000 shares of Glasgal common stock held by the Company and bear interest at
the rate of 10% per annum and became due in March 1997, as extended. As an
inducement for the noteholders to make the $350,000 loan to the Company, the
Company agreed to deliver to such holders an aggregate of 19,440 shares of
Glasgal common stock held by the Company and to deliver to such holders (a)
warrants to purchase for a period of twenty-four months an aggregate of 19,440
shares of Glasgal common stock held by the Company at an exercise price of $2.00
per share, as adjusted, and (b) warrants to purchase for a period of twenty-four
months an aggregate of 38,880 shares of the Company's common stock at an
exercise price of $ .20 per share. The Company negotiated with such noteholders
regarding the extension for repayment of the notes and will deliver an
additional 11,666 shares of Glasgal common stock as consideration for such
extension.
To expand its business, the Company will have to seek additional financing and
there can be no assurance that it will be able to obtain such financing. No
assurance can be given as to the number of outstanding warrants, which represent
a potential source of funds, that will be exercised. The Company is exploring
alternatives to utilizing its equity investments in connection with financing
its operations and developing new products.
9
<PAGE>
In order to arrive at the completed stage, the Company's products must go
through the following processes: product concept and design, product development
and engineering, pre-production approval and product manufacture and
distribution.
In order to supplement its cash flow, the Company, on March 6, 1991, entered
into loan agreements with several investors whereby the Company borrowed an
aggregate of $282,000 for six months with interest at the semiannual rate of
14.5%. As part of such transaction, the Company issued to such investors, in a
private placement, an aggregate of 17,000 shares of its common stock, on a
restricted basis, for an aggregate consideration of approximately $22,000. In
October 1991, the Company paid off $32,000 (plus accrued interest) with respect
to such loans. At such time the Company renegotiated the balance of such loans
(plus accrued interest) and issued new notes, maturing in one year, amounting to
approximately $290,000 including interest thereon at the annual rate of 10%. In
September 1992 the Company delivered 200,000 shares of common stock to one of
such investors in exchange for the contemplated cancellation of substantially
all the balance of such loans. The Company under the terms of this arrangement
remains contingently liable for the prior obligation depending on the future
stock price and salability of the shares. The investor has been unable to sell
the shares for a price of at least $1.625 and, accordingly, the shares can be
returned to the Company. The Company is obligated to pay such investor the value
of the note, plus accrued interest, aggregating, after giving effect to partial
repayments, approximately $190,000 at July 31, 1997. If the Company is unable to
pay this obligation out of operating revenues, it will have to seek additional
financing or sell a portion of its equity holdings in Glasgal to do so. There
can be no assurance that the Company will be able to obtain such financing or
sell such equity, in which event this obligation would have a material adverse
effect upon the Company's operations.
Given the nature of the Company's business, the length of the typical product
cycle in the toy business, the need to respond rapidly to developments in the
marketplace and to, if necessary, make rapid changes in product lines and
strategic plans to meet the rapid changes in the marketplace, the Company's
planning historically has been limited to approximately a twelve month
time-frame at any given time. It is anticipated that the Company will continue
to operate in a similar fashion in the future. Accordingly, analyses of long
term liquidity and capital requirements are not meaningful.
In 1992, the Company, in order to regain listing on the NASDAQ Small Cap System,
to provide for operating requirements and in contemplation of a possible change
in the nature of the Company's business, completed a private placement of
securities in October 1992, in which investors subscribed for 100 Units, each
Unit consisting of 50,000 shares of Convertible Preferred Stock and 25,000 1992
Warrants to purchase shares of Common Stock, for a total of $3,000,000. The
warrants expired on June 30, 1997. Such private placement was closed in two
stages, the first of which involved the purchase of 52-1/2 Units and closed in
July 1992, with the balance of the Units offered (47-1/2 Units) being purchased
10
<PAGE>
in October 1992. As a result of the consummation of such private placement, (a)
the Redeemable Class A Warrant exercise price has been adjusted from $1.00 per
share to $.53 per share and the number of shares of Common Stock issuable upon
exercise of Redeemable Class A Warrants has been increased from 3,438,900 shares
to 6,488,517 shares of Common Stock so that each holder of a Redeemable Class A
Warrant will be able to purchase 1.8868 shares of Common Stock for $1.00 upon
exercise of each Warrant and (b) the Redeemable Class B Warrant exercise price
has been adjusted from $1.50 per share to $ .75 per share and the number of
shares of Common Stock issuable upon exercise of Redeemable Class B Warrants has
been increased from 1,719,450 shares to 3,438,900 shares of Common Stock so that
each holder of a Redeemable Class B Warrant will be able to purchase one share
of Common Stock per warrant upon exercise of such Warrant.
In order to provide for additional working capital, to meet expenses related to
a proposed, but not consummated, merger with Glasgal, and to be in position to
assist Glasgal in solving its cash flow problems in contemplation of the merger,
the Company entered into lending arrangements with several individuals under
which the Company issued notes aggregating $780,000 plus interest thereon at the
annual rate of 8% in private placements pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended (the
Act). Such notes matured between December 31, 1993, as extended, and December
31, 1995. At July 31, 1997, such notes amounted to approximately $823,000
including accrued interest thereon. As an inducement for making such loans, it
was intended that the holders would have an opportunity to convert such notes
into equity securities when the Company next undertook a private placement, the
terms of which had not been determined, provided that the holders met
suitability requirements thereof. The Company believes that all of such holders
either were officers of the Company or relatives of officers of the Company who
in all cases were deemed to be suitable investors or other individuals who had
preexisting personal relationships with officers or directors of the Company
and, in addition, would have been deemed "accredited investors" as such term is
defined in Rule 501 of Regulation D under the Act if an exemption had been
sought under Regulation D. In view of the Company's default in payment of its
obligations under the notes and its inability to afford the noteholders an
opportunity to convert such notes into equity securities, several of the
noteholders have recently contacted the Company and have threatened to commence
litigation against the Company to enforce the Company's obligations under the
notes. The Company intends either to pay off the obligations or to convert the
notes (including accrued interest thereon) into Common Stock at a rate of five
shares of Common Stock per dollar subject to stockholder approval of an increase
in authorized shares of Common Stock in connection with a proposed meeting of
stockholders. There can be no assurance that the Company will be able to
effectuate such payment or conversion. Litigation by noteholders to enforce the
notes would materially adversely affect the Company's operations. Approximately
$1,000,000 of the Company's outstanding notes have been acquired by Medical
Device Alliance, Inc.
The Company, after termination of the proposed Glasgal merger, entered into a
common stock purchase agreement (the "Agreement") with Glasgal governing certain
equity investments which the Company has made, and in the future intends to
11
<PAGE>
make, in Glasgal common stock. Pursuant to the Agreement, in January 1994 the
Company converted outstanding indebtedness of Glasgal owed to the Company into
equity of Glasgal which, upon consummation of the Glasgal merger with Sellectek
Incorporated, resulted in the Company owning approximately 28% of the
outstanding shares of Glasgal or 18.5% on a fully diluted basis. In addition,
the Agreement gives Glasgal the right to require the Company to purchase an
additional number of shares of common stock of Glasgal equal to 13.5% of the
then outstanding shares (the "Additional Shares"), or 10% on a fully diluted
basis, for an aggregate of approximately $8.4 million after giving effect to
certain warrant solicitation fees (the "Additional DCI Investment"). Glasgal may
require this purchase if, and then only to the extent that, the Company receives
proceeds from the exercise of existing Company warrants. There can be no
assurance that any or all of such warrants will be exercised. The Company has
issued warrants to the public to purchase 6,448,517 shares of Common Stock at
$ .53 per share and warrants to purchase 3,438,900 shares of Common Stock at
$ .75 per share. Such warrants will expire in November 1997, as extended. The
Company has the right to retain the first $500,000 of warrant exercise proceeds;
however, such amount must be used by the Company to purchase shares of Common
Stock of Glasgal if the aggregate amount of warrant exercise proceeds applied to
the purchase of Glasgal common stock, after the earlier of the expiration of
exercise of all warrants or 24 months after the effectiveness of the
registration statement covering the Common Stock underlying the warrants, is
less than $8.4 million. In view of the fact that, at the present time and
throughout 1996, the price of the Common Stock has been substantially below the
exercise price of the warrants, it is impossible to predict the timing of
exercise of any of the outstanding warrants, or if such warrants will ever be
exercised. The Company anticipates such an event will not arise for at least two
years and that, should such eventuality arise, the Company will attempt to meet
such obligation either through loans (which may be secured by all or a portion
of its Glasgal equity), equity financings or some combination thereof. If
Glasgal does not require the Additional DCI Investment, the Company may still
purchase, on the same terms, the Additional Shares.
In November 1993, the Company issued to several investors secured promissory
notes aggregating $500,000 with interest thereon at the annual rate of 8%. Such
notes were secured by all the assets of the Company and matured on September 30,
1994, as extended, and were paid off on October 6, 1994. As an inducement for
such investors to make such loan, the Company issued to such investors warrants,
which expire on November 23, 1998, to purchase an aggregate of 750,000 shares of
Common Stock at an exercise price of $ .05 per share, as adjusted ("1993
Warrants"). The proceeds from such transaction were loaned to Glasgal to fulfill
certain commitments to Glasgal. As an inducement to extend the maturity date of
such notes to September 30, 1994, the Company issued an aggregate of 500,000
additional warrants ("1994 Warrants") to the holders of such notes on the same
terms and conditions as the 1993 Warrants except that the exercise price of the
1994 Warrants is $ .20 per share.
DEFERRED INCOME TAX ASSETS
Deferred income tax assets as of April 30, 1997 and July 31, 1997 have been
reduced to zero due to uncertainties concerning their realization.
12
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
Financial Data Schedule
Reports on Form 8-K:
None.
13
<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.
DIRECT CONNECT INTERNATIONAL INC.
(Registrant)
Date: September 18, 1997 By /s/Peter L. Schneider
------------------ ---------------------
Peter L. Schneider
President and Chief
Operating Officer
Date: September 18, 1997 By /s/Barry A. Rosner
------------------ ------------------
Barry A. Rosner
Treasurer and Chief
Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 101,104
<SECURITIES> 13,001
<RECEIVABLES> 18,617
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 295,351
<PP&E> 310,041
<DEPRECIATION> 269,634
<TOTAL-ASSETS> 3,410,246
<CURRENT-LIABILITIES> 2,783,005
<BONDS> 0
0
5,000
<COMMON> 9,062
<OTHER-SE> 613,179
<TOTAL-LIABILITY-AND-EQUITY> 3,410,246
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 235,359
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59,551
<INCOME-PRETAX> 1,228,478
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,228,478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,228,478
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
