FORM 10-Q
AMENDMENT NO. 1
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 _____December 31, 1995________
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 ___________0-17637____________________
_________________Fronteer Directory Company, Inc.____________
(Exact name of registrant as specified in its charter)
_________Colorado______________ _____45-0411501______
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
_____________216 N 23rd Street, Bismarck, ND 58501__________
(Address of principal executive offices)
_______________________(701) 258-4970________________________
(Registrant's telephone number, including area code)
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.
__X__ Yes _____ 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.
The registrant had 12,558,061 shares of its $.01 par value common stock
outstanding as of February 9, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
FRONTEER DIRECTORY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1995 1995
------------ ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .............................................. $ 342,375 2,148,675
Broker dealer customer receivables, net ................................ 5,578,901 5,004,686
Receivables from brokers or dealers and
clearing organizations ............................................... 989,448 340,995
Trade receivables, net ................................................. 3,271,963 3,323,071
Other receivables ...................................................... 191,502 237,489
Securities owned, at market value ...................................... 1,980,765 1,374,725
Current portion of long-term notes receivable .......................... 477,358 731,766
Deferred directory costs ............................................... 410,785 438,412
Deferred income taxes .................................................. 368,374 368,374
Other assets ........................................................... 362,894 412,967
---------- ----------
Total current assets .............................................. 13,974,365 14,381,160
PROPERTY, FURNITURE AND EQUIPMENT, net
of accumulated depreciation .......................................... 1,625,150 1,698,488
LONG-TERM NOTES RECEIVABLE, net of
current portion ...................................................... -- 109,091
DEFERRED INCOME TAXES .................................................. -- --
INTANGIBLE ASSET:
Directory publishing rights, net of
accumulated amortization of $161,886 ............................... 4,433,752 4,530,883
----------- ----------
Total assets ...................................................... $20,033,267 20,719,622
=========== ===========
(Continued)
<PAGE>
FRONTEER DIRECTORY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
<CAPTION>
December 31, September 30,
1995 1995
------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY: (Unaudited)
<S> <C> <C>
Accounts payable, accrued expenses,
and other liabilities .................................................................. $ 3,229,580 2,958,180
Broker dealer customer payables .......................................................... 1,259,533 2,181,284
Payables to brokers or dealers and
clearing organizations ................................................................. 2,395,717 1,999,687
Deposits from clearing correspondent
brokers or dealers, net ................................................................ 1,461,498 483,319
Current portion of long-term debt ........................................................ 798,121 939,706
Notes payable to related parties ......................................................... 538,400 548,900
Deferred revenue ......................................................................... 563,886 639,184
Income taxes payable ..................................................................... 47,202 207,643
Other current liabilities ................................................................ 491,182 292,899
---------- ----------
Total current liabilities ........................................................... 10,785,119 10,250,802
LONG-TERM DEBT, NET OF CURRENT PORTION ................................................... 1,922,073 1,974,226
DEFERRED RENT CONCESSIONS ................................................................ 1,792,593 1,794,631
DEFERRED INCOME TAXES .................................................................... 1,085,590 1,085,590
---------- ----------
Total liabilities ................................................................... 15,585,375 15,105,249
---------- ----------
MINORITY INTEREST IN SUBSIDIARY .......................................................... 177,790 172,783
---------- ----------
STOCKHOLDERS' EQUITY:
Series A voting cumulative preferred stock, authorized 25,000,000 shares,
$0.10 par value, 87,500 shares issued and outstanding at September
30, 1995 (liquidation preference of $875,000). 875,000 ............................... 875,000
Common stock; authorized 100,000,000
shares, $0.01 par value; 12,558,061 shares
issued at September 30, 1995 ........................................................ 125,581 125,581
Additional paid-in capital ............................................................. 6,431,343 6,431,343
Retained earnings (deficit) ............................................................ (2,731,588) (1,560,100)
Treasury stock, 87,084 shares at cost .................................................. (80,234) (80,234)
Unearned ESOP shares ................................................................... (350,000) (350,000)
---------- ----------
Total stockholders' equity .......................................................... 4,270,102 5,441,590
---------- ----------
Total liabilities and ............................................................... $ 20,033,267 20,719,622
stockholders' equity .............................................................. ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
FRONTEER DIRECTORY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Unaudited)
Three Months Ended
December 31,
1995 1994
--------- ---------
<S> <C> <C>
REVENUE:
Directory ......................... $ 1,501,476 --
Brokerage commissions ............. 2,469,617 2,193,355
Investment banking ................ 325,895 546,500
Trading profits, net .............. (263,846) 209,787
Other broker dealer ............... 148,901 815,650
Computer hardware and
software operations ............. 1,396,060 1,208,533
Other ............................. 168,372 14,862
--------- ---------
5,746,475 4,988,687
--------- ---------
COST OF SALES AND OPERATING EXPENSES:
Directory cost of sales ........... 978,765 --
Broker dealer commissions ......... 1,629,242 1,293,165
Computer cost of sales ............ 1,472,643 1,227,445
General and administrative ........ 2,616,787 2,309,261
Depreciation and amortization ..... 225,278 118,387
--------- ---------
6,922,715 4,948,258
--------- ---------
Operating income (loss) ...... (1,176,240) 40,429
OTHER INCOME (EXPENSE):
Interest income ................... 162,267 298,197
Interest expense .................. (131,121) (170,961)
--------- ---------
31,146 127,236
--------- ---------
Income (loss) before minority
interest and income taxes ..... (1,145,094) 167,665
Minority interest in earnings ....... (5,007) (38,137)
--------- ---------
Income (loss) before income taxes (1,150,101) 129,528
Income tax benefit (expense) ........ (1,700) --
--------- ---------
Net income (loss) ............... (1,151,801) 129,528
Preferred stock dividend .......... (19,687) (2,154)
--------- ---------
Net loss per common shareholders .. $ (1,171,488) $ 127,374
============ ============
Weighted average number of
common shares outstanding ....... 12,558,061 *
Loss per common share ............. $ (0.09) *
<FN>
* Due to the limited number of shares outstanding during 1994, presentation of
earnings per share is not meaningful.
</FN>
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FRONTEER DIRECTORY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1995 AND
DECEMBER 31, 1994
Three Months Ended
December 31,
1995 1994
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) .................................................................. $(1,151,801) 129,528
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation .................................................................... 128,147 118,387
Amortization of directory costs ................................................. 97,131 --
Amortization of deferred rent ................................................... (2,038) (10,189)
Provision for bad debts ......................................................... 58,002 --
Deferred income tax benefit ..................................................... -- 98,243
Minority interest in earnings ................................................... 5,007 38,137
Changes in operating assets and liabilities:
Increase in broker dealer customer
receivables, net .............................................................. (574,215) (682,869)
Decrease (increase) in receivables from brokers or
dealers and clearing organizations ............................................ (648,453) 2,615,159
Decrease (increase) in trade receivables ........................................ 51,108 (256,155)
Decrease (increase) in other receivables ........................................ 45,987 (237,702)
Decrease (increase) in securities owned ......................................... (606,040) 471,160
Decrease in deferred directory costs ............................................ 27,627 --
Decrease (increase) in other assets ............................................. (7,929) 172,613
Increase (decrease) in accounts payable, accrued
expenses, and other liabilities ............................................... 271,400 (1,321,000)
Decrease in broker dealer customer payables ..................................... (921,751) (1,555,998)
Increase in payables to brokers or dealers
and clearing organizations .................................................... 396,030 3,471,317
Increase (decrease) in deposits from clearing
correspondent brokers or dealers .............................................. 978,179 (2,132,880)
Decrease in deferred revenue .................................................... (75,298) --
Decrease in income taxes payable ................................................ (160,441) --
Increase (decrease) in other current liabilities ................................ 198,283 ( 7,435)
---------- ---------
Net cash provided (used) by operating activities .............................. (1,891,065) 910,276
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collected on notes receivable ............................................ 369,499 --
Proceeds from sale of assets ....................................................... 7,465 --
Issuance of notes receivable ....................................................... ( 6,000) (7,626)
Purchase of property and equipment ................................................. (62,274) (323,547)
---------- ---------
Net cash provided by investing activities ..................................... 308,690 (331,173)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on short-term borrowings ............................................... -- 180,000
Borrowings on long-term notes payable ............................................... -- 30,127
Net borrowings from related parties ................................................. (10,500) --
Principal payments on long-term borrowings .......................................... (193,738) (32,464)
Dividends on preferred stock ........................................................ (19,687) (2,154)
--------- --------
Net cash used in financing activities ......................................... (223,925) 175,509
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS ............................................. (1,806,300) 754,612
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ........................................ 2,148,675 1,522,042
CASH AND CASH EQUIVALENTS, END OF PERIOD ............................................. $ 342,375 2,276,654
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
FRONTEER DIRECTORY COMPANY, INC.
SELECTED INFORMATION - SUBSTANTIALLY ALL
DISCLOSURES REQUIRED BY GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ARE NOT INCLUDED
DECEMBER 31, 1995
NOTE 1 - UNAUDITED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Fronteer Directory
Company, Inc. as of December 31, 1995, are the responsibility of the Company's
management. Except as explained in the following paragraph, management is not
aware of any material modifications that should be made to the accompanying
financial statements in order for them to be in conformity with generally
accepted accounting principles.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles.
The accompanying financial statements should be read in conjunction with the
Company's financial statements as of September 30, 1995.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION, BUSINESS COMBINATION, AND PRINCIPLES OF CONSOLIDATION - On
April 26, 1995, Fronteer Directory Company, Inc. (Fronteer) entered into a
Plan of Reorganization and Exchange Agreement (the Agreement) with RAFCO,
Ltd. (RAFCO). Under the Agreement, Fronteer acquired all of the assets of
RAFCO in exchange for the assumption by Fronteer of the liabilities of
RAFCO and the issuance by Fronteer to RAFCO of 7,223,871 shares of $.01 par
value common stock and 87,500 shares of $.10 par value series A voting
cumulative preferred stock ($10.00 per share redemption value). RAFCO has
dissolved as a corporation and has distributed Fronteer's common and
preferred stock to the shareholders of RAFCO. As a result of the
transaction, the former shareholders of RAFCO acquired a 55% interest in
Fronteer. Accordingly, the transaction has been accounted for as a "reverse
acquisition" of Fronteer by RAFCO using the purchase method of accounting
and the Fronteer's assets and liabilities have been adjusted to their
market value as of the date of the business combination. The adjustment to
market value resulted in an intangible asset, directory publishing rights,
which was recorded at $6,972,468 (see note 6). Fronteer's operations have
been included in the accompanying consolidated financial statements
beginning May 1, 1995, the effective date of the transaction. As a result
of the reverse acquisition accounting, historical financial statements
presented for periods prior to the business combination date include the
consolidated assets, liabilities, equity, revenues, and expenses of RAFCO
only. In addition, RAFCO's former subsidiaries, RAF and Secutron, have
changed their fiscal year ends to September 30 from December 31 and are now
subsidiaries of Fronteer.
The consolidated financial statements include Fronteer Directory
Company, Inc. (the Company) and the accounts of Fronteer Directory
(Fronteer) and its wholly-owned subsidiaries, Fronteer Personnel Services,
Inc. (FPS), Fronteer Marketing Group, Inc. (FMG), and RAF Financial
Corporation (RAF). They also include a majority-owned subsidiary, Secutron
Corporation (Secutron). All significant intercompany accounts and
transactions have been eliminated in the preparation of the consolidated
financial statements.
Fronteer is engaged in the publishing and distribution of telephone
directories, while FPS is engaged in employee leasing, and FMG is engaged
in the telemarketing business. RAF operates as a registered securities
broker/dealer. Secutron is engaged in industry specific software
development and provides consulting services.
NOTE 3 - NOTES PAYABLE TO RELATED PARTIES
The Company has various notes payable to related parties in the amount of
$538,400 at December 31, 1995. Such notes payable are unsecured, payable on
demand, and bear interest at a variable rate not to exceed the interest rate on
the Company's line of credit with BNC National Bank. At December 31, 1995, the
interest rate was 11.0%.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Financial Condition
At December 31, 1995, shareholders' equity was $4,270,102, down $1,171,488,
or 22%, from year end September 30, 1995. The ratio of current assets to current
liabilities at December 31, 1995, was 1.30 to 1, a decrease from the 1.40 to 1
at September 30, 1995.
Results of Operations
Three Months Ended December 31, 1995 vs. Three Months Ended December 31, 1994
The Company's acquisition of RAFCO under the terms of the RAFCO Agreement
dated April 26, 1995, has been accounted for as a reverse acquisition of
Fronteer Directory Company, Inc. by RAFCO using the purchase method of
accounting. This resulted in Fronteer adjusting its assets and liabilities to
their fair market value at the effective date of the acquisition, or May 1,
1995. The enclosed financial statements show RAFCO and its subsidiaries for the
three months ended December 31, 1994, while the Company and subsidiaries,
including RAFCO, are consolidated from October 1, 1995 to December 31, 1995, in
accordance with the purchase method of accounting.
Net loss for the three months ended December 31, 1995, totalled $1,151,801,
which compares to net income of $129,528 for the three months ended December 31,
1994, for the former RAFCO.
Revenues for the three months ended December 31, 1995, totalled $5,746,475,
an increase of $757,788 over the three months ended December 31, 1994. The
revenues for 1994 include no directory revenues, which totalled $1,501,476 for
1995. Computer revenues from Secutron for the first three months of fiscal 1996
totalled $1,396,060, an increase of $187,527, or 16%, from last year. Broker
dealer revenues for the first three months of 1996 came to $2,680,567 as
compared to $3,765,292 for the three months ended December 31, 1994.
Broker dealer revenues associated with R A F Financial is made up of
several components, which have changed in their makeup and materiality from last
year. Broker commissions for the first three months of fiscal 1996 totalled
$2,469,617, an increase of $272,262, or 13%, from last year. This increase is
attributable to the addition of brokers and increased productivity in the
Company's new brokerage offices in Reston, VA and Atlanta, GA. The Company also
opened an office in Chicago during this past quarter.
Various changes in the way the Company, through R A F, evaluates its
business opportunities has taken place over the last year. R A F's bank services
division, which had revenues of over $350,000 for the three months ended
December 31, 1994, was sold to Sheshunoff Information Services, Inc. during
1995. This completely eliminated bank services as a revenue source for the first
quarter of 1996. Revenues from clearing operations also declined significantly
from last year, from $228,000 for the three months ended December 31, 1994, to
$78,000 for the same period this year. This decline resulted from the Company
positioning its clearing business for its eventual sale or transfer to a larger
firm.
Subsequent to December 31, 1995, the Company signed an agreement to effect
the transfer of its clearing operations and associated personnel into a separate
new clearing firm which will become a subsidiary of OppenheimerFunds, Inc. The
Company will hold a financial interest in the new clearing firm.
The Company's investment banking revenues also declined sharply when
compared to the three months ended December 31, 1994. Revenues for the period
ended December 31, 1995, totalled $325,895 as compared to $546,500 last year, a
$220,605 decline.
During this year's first quarter, the Company recognized trading losses of
$263,846 as compared to a trading profit of $209,787 for the same period last
year. A large percentage of the losses are attributable to unrealized losses
resulting from the adjustment of securities to their fair market value at
December 31, 1995.
Other revenues jumped from $14,862 last year to $168,372 for the first
quarter of 1996. Revenues of $62,782 and $24,098 for Fronteer Marketing Group
and Fronteer Personnel Services, respectively, are included in this amount.
The Company recognized directory cost of sales for the three months ended
December 31, 1995, of $978,765. Due to the purchase method of accounting, no
cost of sales were recognized in the previous year. Directory cost of sales of
$978,765 compares favorably to directory revenues of $1,501,476.
Broker dealer commissions increased by $336,077 over last year's first
quarter, which coincides with an increase in commission revenues. During this
year's first quarter, the Company wrote off and expensed as broker dealer
commissions notes receivable from broker dealers in the amount of $58,000. These
notes receivable were made in the form of advances in order to attract broker
dealers to R A F Financial's two new offices in Reston, VA and Atlanta, GA
during 1994. As the salespeople meet certain length of employment and sales
goals, the loans are forgiven. During the quarter, the Company also expensed as
broker dealer commissions a $100,000 finder's fee, which was paid as a result of
the successful completion of the Fronteer/RAFCO Reorganization.
General and administrative expenses (G & A) totalled $2,616,787 for the
three months ended December 31, 1995. This compares to $2,309,261 for the same
period last year, an increase of $307,526. A total of approximately $100,000 in
expenses related to the Fronteer Directory/ RAFCO reorganization, including the
year-end audit and reporting, was incurred during the quarter and is found in G
& A. No expenses for the directory business are included for the quarter ended
December 31, 1994. Fixed operating expenses for both R A F and Fronteer are in a
state of decline due to reorganization and the sale of the bank services
division by R A F and the sale of directories by Fronteer.
Interest income for the first three months of 1996 totalled $162,267, a
decline of $135,930 from the three months ended December 31, 1994. This decline
is attributable to a large decline in the Company's margin debit interest, which
is associated with the decline in the Company's clearing business and revenues
over the past year.
Interest expense declined $39,840 when compared to the three months ended
December 31, 1994. This decline is also attributable to the decline in the
Company's clearing business and the subsequent decline in the margin debit
interest.
Pursuant to the purchase method of accounting, the Company adjusted the
value of its telephone directories to their fair market value at April 26, 1995.
The directories which the Company still publishes were valued at $4,692,769.
This amount is being amortized over ten years with amortization totalling
$97,131 for the quarter ended December 31, 1995.
The minority interest in the financial statements relates to the percentage
of Secutron stock not owned by the Company.
Liquidity and Capital Resources
At December 31, 1995, the Company had working capital of $3,189,246, down
$941,112 from the $4,130,358 at September 30, 1995.
The Company currently has a line of credit with its primary lender whereby
the Company may borrow up to 75% of its billed directory accounts receivable
under 60 days old. The Company currently has over $1,000,000 available on this
line. The Company also has credit agreements with the Pershing Division of
Donaldson, Lufkin & Jenrette, which include a broker loan line of finance
securities owned, securities held for correspondent accounts, and receivables in
customer margin accounts. This line may also be used to release pledged
collateral against day loans. Outstanding balances under these credit
arrangements are adequate to meet the short-term operating needs of RAF.
Liquidity is expected to be adequate in fiscal 1996.
Inflation
The effects of inflation on the Company's operations is not material and is
not anticipated to have any material effect in the future.
<PAGE>
PART II
ITEM 5. OTHER INFORMATION
Clearing Operations Agreement
On January 26, 1996, the Company signed an agreement to transfer its clearing
operations and associated personnel into a separate new clearing firm which wil
become a subsidiary of OppenheimerFunds, Inc. The Company will hold a financial
interest in the new clearing firm.
When all required regulatory approvals are obtained, R A F Financial Corporation
will become a fully disclosed clearing correspondent of the new firm.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Plan of Reorganization and Exchange Agreement dated April 26, 1995 with
Exhibits A, B, C, F, and I.*
2.2 Sale and Purchase Agreement dated April 27, 1995, with Exhibits A and J.*
2.3 Option Agreement dated April 27, 1995, with Exhibits A, B, and D.*
3.0 Articles of Incorporation of Registrant.**
3.0(i) Articles of Amendment to the Registrant's Articles of Incorporation dated
April 28, 1995.*
3.2 Bylaws of Registrant.**
* Incorporated by reference to Registrant's 8-K dated May 9,
1995.
** Incorporated by reference to Registrant's 10-K dated September 30, 1995.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed with the SEC for the quarter ended
December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 25, 1996 FRONTEER DIRECTORY COMPANY, INC.
a Colorado corporation
By: /s/ Dennis W. Olson
-------------------------------
Dennis W.Olson, President and
Chief Executive Officer
By: /s/ Lance Olson
-------------------------------
Lance Olson, CPA, Principal
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Date Name and Title Signature
March 25, 1996 Dennis W. Olson, Director /s/ Dennis W. Olson
------------------------
March 25, 1996 Robert A. Fitzner, Jr., Director /s/ Robert A. Fitzner, Jr.
------------------------
March 25, 1996 Robert L. Long, Director /s/ Robert L. Long
------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 342,375
<SECURITIES> 1,980,765
<RECEIVABLES> 10,119,429
<ALLOWANCES> 87,615
<INVENTORY> 0
<CURRENT-ASSETS> 13,974,365
<PP&E> 4,287,045
<DEPRECIATION> 2,661,895
<TOTAL-ASSETS> 20,033,267
<CURRENT-LIABILITIES> 10,785,119
<BONDS> 1,922,073
0
875,000
<COMMON> 125,581
<OTHER-SE> 3,269,521
<TOTAL-LIABILITY-AND-EQUITY> 20,033,267
<SALES> 0
<TOTAL-REVENUES> 5,746,475
<CGS> 0
<TOTAL-COSTS> 6,922,715
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 131,121
<INCOME-PRETAX> (1,145,094)
<INCOME-TAX> 1,700
<INCOME-CONTINUING> (1,151,801)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,151,801)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
