SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 AND 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 Commission File No. 0-18540
UNITED INCOME, INC.
(Exact Name of Registrant as specified in its Charter)
Ohio 37-1224044
(State or other jurisdiction (I.R.S.Employer
incorporation or organization) Identification No.)
P.O. Box 5147, Springfield, Illinois 62705
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (217)241-6300
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 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 Registrant's classes
of common stock, as of the latest practicable date.
Shares outstanding at April 30, 1997:
19,887,572
Common stock, no par value per share
<PAGE>
UNITED INCOME, INC.
(the "Company")
INDEX
Part I: Financial Information
Balance Sheets as of March 31, 1997 and
December 31, 1996 3
Statements of Operations for the three
months ended March 31, 1997 and 1996 4
Statements of Cash Flows for the three months
ended March 31, 1997 and 1996 5
Notes to Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Part II: Other Information
Item 5. Other information 15
Item 6. Exhibits 15
Signatures 16
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED INCOME, INC.
Balance Sheet
<TABLE>
March 31, December 31,
1997 1996
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 537,913 $ 439,676
Mortgage loans 122,532 122,853
Notes receivable from affiliate 864,100 864,100
Accrued interest income 11,722 11,784
Property and equipment (net of $92,525
accumulated depreciation in 1997
and $92,140 in 1996) 2,193 2,578
Investment in affiliates 11,340,937 11,324,947
Receivable from (indebtedness to) affiliate (13,198) 31,837
Other assets (net of $155,265 accumulated
amortization in 1997 and $146,011 in 1996) 74,020 83,274
Total assets $ 12,940,219 $ 12,881,049
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities and accruals:
Convertible debentures $ 902,300 $ 902,300
Other liabilities 9,846 1,273
Total liabilities 912,146 903,573
Shareholders' equity:
Common stock - no par value, stated value
$.033 per share. 33,000,000 shares authorized,
22,424,572 issued in 1997, 22,424,572
issued in 1996 740,010 740,010
Additional paid-in capital 14,634,122 14,634,122
Unrealized depreciation of investments held
for sale of affiliate (64,483) (59,508)
Accumulated deficit (3,197,855) (3,253,427)
12,111,794 12,061,197
Common stock in treasury, at cost
(2,537,000 shares) (83,721) (83,721)
Total shareholders' equity 12,028,073 11,977,476
Total liabilities and
shareholders' equity $ 12,940,219 $ 12,881,049
</TABLE>
See accompanying notes.
3
<PAGE>
UNITED INCOME, INC.
Statement of Operations
<TABLE>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Revenues:
Interest income $ 2,659 $ 3,673
Interest income from affiliates 19,956 18,078
Service agreement income from affiliates 294,095 536,604
Other income from affiliates 25,947 25,272
342,657 583,627
Expenses:
Management fee to affiliate 226,457 421,963
Operating expenses 50,318 51,804
Interest expense 20,866 21,430
297,641 495,197
Income before provision for income
taxes and equity income of investees 45,016 88,430
Provision for income taxes 0 0
Equity in income of investees 10,556 147,039
Net income $ 55,572 $ 235,469
Net income per common share $ 0.00 $ 0.01
Weighted average common shares outstanding 19,887,572 19,886,572
</TABLE>
See accompanying notes.
4
<PAGE>
UNITED INCOME, INC.
Statement of Cash Flows
<TABLE>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Net income $ 55,572 $ 235,469
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 9,639 11,478
Accretion of discount on mortgage loans (67) (165)
Equity in gain of investees (10,556) (147,039)
Changes in assets and liabilities:
Change in accrued interest income 62 (1,306)
Change in indebtedness of affiliates 45,035 (39,716)
Change in other liabilities 8,573 (38,873)
Net cash provided by operating activities 108,258 19,848
Cash flows from investing activities:
Change in notes receivable from affiliate 0 (150,000)
Purchase of investments in affiliates (10,409) 0
Payments of principal on mortgage loans 388 1,148
Net cash used in investing activities (10,021) (148,852)
Net increase (decrease) in cash and cash equivalents 98,237 (129,004)
Cash and cash equivalents at beginning of period 439,676 364,370
Cash and cash equivalents at end of period $ 537,913 $ 235,366
See accompanying notes.
5
</TABLE>
<PAGE>
UNITED INCOME, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by United Income,
Inc. (the "Company") pursuant to the rules and regulations of the Securities
and Exchange Commission. Although the Company believes the disclosures are
adequate to make the information presented not be misleading, it is suggested
that these consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes thereto presented in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1996.
The information furnished reflects, in the opinion of the Company, all
adjustments (which include only normal and recurring accruals) necessary for a
fair presentation of the results of operations for the periods presented.
Operating results for interim periods are not necessarily indicative of
operating results to be expected for the year or of the Company's future
financial condition.
At March 31, 1997, the affiliates of United Income, Inc., were as depicted on
the following organizational chart.
6
<PAGE>
ORGANIZATIONAL CHART
AS OF MARCH 31, 1997
United Trust, Inc. ("UTI") is the ultimate controlling company. UTI owns 53%
of United Trust Group ("UTG") and 30% of United Income, Inc.("UII"). UII
owns 47% of UTG. UTG owns 72% of First Commonwealth Corporation("FCC") and
FCC owns 100% of Universal Guaranty Life Insurance Company("UG"). UG owns
100% of United Security Assurance Company ("USA"). USA owns 84% of
Appalachian Life Insurance Company ("APPL") and APPL owns 100% of Abraham
Lincoln Insurance Company ("ABE").
7
<PAGE>
2. STOCK OPTION PLANS
The Company has a stock option plan under which certain directors, officers
and employees may be issued options to purchase up to 450,000 shares of common
stock at $.915 per share. Options become exercisable at 25% annually
beginning one year after date of grant and expire generally in five years. At
March 31, 1997, options for 155,550 shares were exercisable and options for
293,950 shares were available for grant. No options have been exercised
during 1997.
On January 15, 1991, the Company adopted an additional Non-Qualified Stock
Option Plan under which certain employees and sales personnel may be granted
options. The plan provides for the granting of up to 600,000 options at an
exercise price of $.033 per share. The options generally expire five years
from the date of grant. A total of 166,000 option shares have been granted
and exercised as of March 31, 1997. At March 31, 1997, 3,300 options have
been granted and are exercisable. No options have been exercised during 1997.
3. COMMITMENTS AND CONTINGENCIES
The insurance industry has experienced a number of civil jury verdicts which
have been returned against life and health insurers in the jurisdictions in
which the Company does business involving the insurers' sales practices,
alleged agent misconduct, failure to properly supervise agents,and other
matters. Some of the lawsuits have resulted in the award of substantial
judgments against the insurer, including material amounts of punitive damages.
In some states, juries have substantial discretion in awarding punitive
damages in these circumstances.
Under insurance guaranty fund laws in most states, insurance companies doing
business in a participating state can be assessed up to prescribed limits for
policyholder losses incurred by insolvent or failed insurance companies.
Although the Company cannot predict the amount of any future assessments, most
insurance guaranty fund laws currently provide that an assessment may be
excused or deferred if it would threaten an insurer's financial strength.
Those mandatory assessments may be partially recovered through a reduction in
future premium taxes in some states. The Company does not believe such
assessments will be materially different from amounts already provided for in
the financial statements.
The Company and its affiliates are named as defendants in a number of legal
actions arising primarily from claims made under insurance policies. Those
actions have been considered in establishing the Company's liabilities.
Management and its legal counsel are of the opinion that the settlement of
those actions will not have a material adverse effect on the Company's
financial position or results of operations.
4. TERMINATION OF AGREEMENT REGARDING PENDING CHANGEIN CONTROL OF UNITED
INCOME, INC.
On April 14, 1997, United Trust, Inc. and United Income, Inc. formally
terminated their stock purchase agreement contract with LaSalle Group, Inc.
("LaSalle"), whereby LaSalle was to acquire certain authorized but unissued
shares of UTI and UII and additional outstanding shares inprivately
negotiated transactions so that LaSalle would own not less than 51% of the
outstanding common stock of UTI and indirectly control 51% of UII.
LaSalle had not performed its obligations under the terms of the contract, and
the Company felt it should be free to negotiate with other interested parties
in becoming an equity partner.
5. SUMMARIZED FINANCIAL INFORMATION OF UNITED TRUST GROUP, INC.
The following provides summarized financial information for the Company's 47%
owned affiliate:
8
<PAGE>
UNITED TRUST GROUP, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
March 31, December 31,
ASSETS 1997 1996
<S> <C> <C>
Investments:
Total investments $ 226,027,145 $ 223,964,687
Cash and cash equivalents 15,199,253 16,903,789
Reinsurance receivables 42,227,051 42,601,137
Cost of insurance acquired 47,037,430 47,536,812
Deferred policy acquisition costs 11,084,697 11,325,356
Other assets 13,745,116 12,667,841
TOTAL ASSETS $ 355,320,692 354,999,622
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities $ 269,754,146 $ 268,771,766
Notes payable 19,839,853 19,839,853
Deferred income taxes 11,127,269 11,591,086
Other liabilities 6,186,262 6,335,866
TOTAL LIABILITIES 306,907,530 306,538,571
Minority interests in consolidated
subsidiaries 13,318,295 13,332,034
Shareholders' equity:
Common stock no par value.
Authorized 10,000 shares - 100
shares issued 45,926,705 45,926,705
Unrealized depreciation of
investments held for sale (137,197) (126,612)
Accumulated deficit (10,694,641) (10,671,076)
TOTAL SHAREHOLDERS' EQUITY 35,094,867 35,129,017
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 355,320,692 $ 354,999,622
9
</TABLE>
<PAGE>
The following provides summarized financial information for the Company's
47% owned affiliate:
UNITED TRUST GROUP, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
<TABLE>
Three Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
Premiums and other considerations $ 7,926,386 $ 8,481,511
Net investment income 3,859,875 3,974,407
Other (4,383) 58,774
11,781,878 12,514,692
Benefits, claims and
settlement expenses 7,718,015 6,528,760
Commissions, DAC and cost of
insurance acquired amortizations 1,670,854 2,567,921
Operating and interest expenses 2,884,663 3,616,660
12,273,532 12,713,341
Net income (loss) before income
taxes and minority interest (491,654) (198,649)
Credit for income taxes 459,073 612,190
Minority interest in (income) loss
of consolidated subsidiaries 9,016 (144,866)
Net income (loss) $ (23,565) $ 268,675
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's financial
condition, changes in financial condition and results of operations which
reflect the performance of the Company. The information in the financial
statements and related notes should be read in conjunction with this section.
At March 31, 1997 and December 31, 1996, the balance sheet reflects UII's 47%
equity interest in United Trust Group, Inc. ("UTG"). The statements of
operations and statements of cash flows presented include UII and UII's equity
share of UTG.
LIQUIDITY AND CAPITAL RESOURCES
UII's cash flow is dependent on revenues from a management agreement with USA
and its earnings received on invested assets and cash balances. At March 31,
1997, substantially all of the shareholders equity represents investment in
affiliates. UII does not have significant day to day operations of its own.
Cash requirements of UII primarily relate to the payment of interest on its
convertible debentures and expenses related to maintaining the Company as a
corporation in good standing with the various regulatory bodies which govern
corporations in the jurisdictions where the Company does business. The
payment of cash dividends to shareholders is not legally restricted. However,
insurance company dividend payments are regulated by the state insurance
department where the company is domiciled. UG's dividend limitations are
described below.
Ohio domiciled insurance companies require five days prior notification to the
insurance commissioner for the payment of an ordinary dividend. Ordinary
dividends are defined as the greater of: a) prior year statutory earnings or
b) 10% of statutory capital and surplus. For the year ended December 31,
1996, UG had a statutory gain from operations of $8,006,000. At December 31,
1996, UG statutory capital and surplus amounted to $10,227,000. Extraordinary
dividends (amounts in excess of ordinary dividend limitations) require prior
approval of the insurance commissioner and are not restricted to a specific
calculation.
The Company currently has $538,000 in cash and cash equivalents. The Company
holds one mortgage loan. Operating activities of the Company produced cash
flows of $108,000 and $20,000 in the first quarter of 1997 and 1996,
respectively. The Company had uses of cash from investing activities of
$10,000 and $149,000 in the first quarter of 1997 and 1996, respectively.
In early 1994, UII received $902,300 from the sale of Debentures. The
Debentures were issued pursuant to an indenture between the Company and First
of America Bank - Southeast Michigan, N.A., as trustee. The Debentures are
general unsecured obligations of UII, subordinate in right of payment to any
existing or future senior debt of UII. The Debentures are exchangeable and
transferrable, and are convertible at any time prior to March 31, 1999 into
UII's Common Stock at a conversion price of $1.75 per share, subject to
adjustment in certain events. The Debentures bear interest from March 31,
1994, payable quarterly, at a variable rate equal to one percentage point
above the prime rate published in the Wall Street Journal from time to time.
On or after March 31, 1999, the Debentures will be redeemable at UII's option,
in whole or in part, at redemption prices declining from 103% of their
principal amount. No sinking fund will be established to redeem the
Debentures. The Debentures will mature on March 31, 2004. The Debentures are
not listed on any national securities exchange or the NASDAQ National Market
System.
Management believes that the overall sources of liquidity available to the
Company will be more than sufficient to satisfy its financial obligations.
11
<PAGE>
RESULTS OF OPERATIONS
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996:
(a) REVENUES
The Company's source of revenues is derived from service fee income which is
provided via a service agreement with USA. The service agreement between UII
and USA is to provide USA with certain administrative services. The fees are
based on a percentage of premium revenue of USA. The percentages are applied
to both first year and renewal premiums at different rates.
The Company holds $864,100 of notes receivable from affiliates. The notes
receivable from affiliates consists of three separate notes. The $700,000
note bears interest at the rate of 1% above the variable per annum rate of
interest most recently published by the Wall Street Journal as the prime rate.
Interest is payable quarterly with principal due at maturity on May 8, 2006.
In February 1996, FCC borrowed an additional $150,000 from UII to provide
additional cash for liquidity. The note bears interest at the rate of 1% over
prime as published in the Wall Street Journal, with interest payments due
quarterly and principal due upon maturity of the note on June 1,1999. The
remaining $14,100 are 20 year notes of UTG with interest at 8.5% payable semi-
annually. At current interest levels, the notes will generate approximately
$80,000 annually.
(b) EXPENSES
The Company has a sub-contract service agreement with United Trust, Inc.
("UTI") for certain administrative services. Through its facilities and
personnel, UTI performs such services as may be mutually agreed upon between
the parties. The fees are based on a percentage of the fees paid to UII by
USA. The Company has incurred $226,000 and $422,000 in service fee expense in
the first quarter 1997 and 1996, respectively.
Interest expense of $21,000 and $21,000 was incurred in the first quarter of
1997 and 1996, respectively. The interest expense is directly attributable to
the convertible debentures. The Debentures bear interest at a variable rate
equal to one percentage point above the prime rate published in the Wall
Street Journal from time to time.
(c) EQUITY IN INCOME OR (LOSS) OF INVESTEES
Equity in income or (loss) of investees represents UII's 47% share of net
income or (loss) of UTG for the first quarter of 1997 and 1996. Following is
a discussion of the operating results of UTG for first quarter 1997 compared
to 1996. Please refer to Note five of United Income, Inc.'s Notes to
Financial Statements for Condensed Financial Statements of United Trust Group,
Inc.
REVENUES OF UTG
Premiums and other considerations decreased 7% when comparing first
quarter 1997 to the first quarter of 1996. The decrease is primarily
attributed to the reduction in new business production. The Company's
primary product is the "Century 2000" universal life insurance product.
Universal life and interest sensitive insurance products contribute only
the risk charge to premium income, however traditional insurance
products contribute all monies received to premium income. Since the
Company does not actively market traditional life insurance products, it
is expected that premium income will continue to decrease in future
periods as a result of expected lapses of business inforce.
12
<PAGE>
Net investment income decreased 3% when comparing the first quarter of
1997 to 1996. The decrease is the result of a smaller invested asset
base from one year ago. During the fourth quarter 1996, the Company
transferred approximately $22,000,000 in assets as part of a coinsurance
agreement with First International Life Insurance Company ("FILIC").
The overall investment yields for first quarter 1997 and 1996, are 7.28%
and 7.12%, respectively. The improvement in investment yield is
primarily attributed to the fixed maturity portfolio. The Company has
invested financing cash flows generated by cash received through sales
of universal life insurance products.
The Company's investments are generally managed to match related
insurance and policyholder liabilities. The comparison of investment
return with insurance or investment product crediting rates establishes
an interest spread. The minimum interest spread between earned and
credited rates is 1% on the "Century 2000" universal life insurance
product, the Company's primary product. The Company monitors investment
yields, and when necessary adjusts credited interest rates on its
insurance products to preserve targeted spreads. It is expected that
the monitoring of the interest spreads by management will provide the
necessary margin to adequately provide for associated costs on insurance
policies the Company has in force and will write in the future.
EXPENSES OF UTG
Benefits, claims and settlement expenses increased 18% in the first
quarter of 1997 compared to 1996. The increase in life benefits is
attributed to an increase in mortality. There is no single event that
caused mortality to increase. Policy claims vary from year to year and
therefore, fluctuations in mortality are to be expected and are not
considered unusual by management.
Commissions, DAC and cost of insurance acquired amortizations decreased
35% in first quarter 1997 compared to first quarter 1996. The decrease
is attributed to the coinsurance agreement with First International Life
Insurance Company ("FILIC") as of September 30, 1996. Under the terms
of the agreement, UG ceded to FILIC substantially all of its paid-up
life insurance policies. Paid-up life insurance generally refers to a
non-premium paying life insurance policy. Cost of insurance acquired is
amortized in relation to expected future profits, including direct
charge-offs for any excess of the unamortized asset over the projected
future profits. The Company did not have any charge-offs during the
periods covered by this report.
Operating and interest expenses decreased 20% when comparing first
quarter of 1997 to first quarter of 1996. The decrease in operating
expenses is attributable to the settlement of certain litigation in the
fourth quarter of 1996. The Company incurred elevated legal fees in the
previous year due to the litigation. Operating expenses were further
reduced from a restructuring of the home office personnel completed in
late 1996.
On May 8, 1996, FCC refinanced its senior debt of $8,900,000. The
refinanced debt bears interest to a rate equal to the "base rate" plus
nine-sixteenths of one percent. Prior to refinancing, the interest rate
was equal to the base rate plus one percent. The decrease in interest
rate and principal reductions made during the last year, provided the
decrease in interest expense for the first quarter of 1997.
NET INCOME (LOSS) OF UTG
The Company had a net loss of ($24,000) for first quarter 1997 compared
to net income of $269,000 for the first quarter of 1996. The decline
results is primarily due to the increase in mortality and the decrease
in premium income.
13
<PAGE>
(d) NET INCOME
The Company recorded net income of $56,000 for the first quarter of 1997
compared to net income of $235,000 for the same period one year ago. The net
income is attributed primarily to the operating results of the Company's 47%
equity interest in UTG.
FINANCIAL CONDITION
The Company owns 47% equity interest in UTG which controls total assets of
approximately $358,000,000. Summarized financial information of UTG is
provided in Note five of the Notes to the Financial Statements.
FUTURE OUTLOOK
The Company operates in a highly competitive industry. In connection with the
development and sale of its products, the Company encounters significant
competition from other insurance companies, many of which have financial
resources or ratings greater than those of the Company.
The insurance industry is a mature industry. In recent years, the industry
has experienced virtually no growth in life insurance sales, though the aging
population has increased the demand for retirement savings products.
Management believes that the Company's ability to compete is dependent upon,
among other things, its ability to attract and retain agents to market its
insurance products and its ability to develop competitive and profitable
products.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
REVERSE STOCK SPLIT
On March 25, 1997, the Board of Directors voted to have a reverse stock split
of UII's common stock whereby one new share of common stock will be issued for
each 14.2857 shares that are currently held by each shareholder. Fractional
shares will receive a cash payment on the basis of $.70 for each Old share.
The reverse split will be effective to shareholders of record on May 12, 1997.
PROPOSED MERGER OF UNITED TRUST, INC. AND UNITED INCOME, INC.
On March 25, 1997, the Board of Directors of UTI and UII voted to recommend to
the shareholders a merger of the two companies. Under the Plan of Merger, UTI
would be the surviving entity with UTI issuing one share of its stock (after
its reverse stock split of one share for each ten shares) for each share held
by UII shareholders (after the reverse stock split).
UTI stock currently trades on NASDAQ. The reverse stock split should increase
the price at which the Company's stock trades, enabling it to meet new NASDAQ
requirements regarding eligibility to remain listed.
UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII owns 47% of United Trust Group, Inc. Neither UTI nor UII have any other
significant holdings or business dealings. The Board of Directors of each
company thus concluded a merger of the two companies would be in the best
interests of the shareholders. The merger will result in certain cost
savings, primarily related to costs associated with maintaining a corporation
in good standing in the states in which it transacts business.
ITEM 6. EXHIBITS
The Company hereby incorporates by reference the exhibits as reflected in the
Index to Exhibits of the Company's Form 10-K for the year ended December 31,
1996.
15
<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.
UNITED INCOME, INC.
(Registrant)
Date: May 13,1997 By /s/Thomas F. Morrow
Thomas F. Morrow, Chief
Operating Officer and
Vice Chairman
Date: May 13, 1997 By /s/James E. Melville
James E. Melville, Chief
Financial Officer and Senior
Executive Vice President
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<DEBT-HELD-FOR-SALE> 0 0
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 122,532 181,224
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 122,532 181,224
<CASH> 537,913 235,366
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 0 0
<TOTAL-ASSETS> 12,940,219 13,516,005
<POLICY-LOSSES> 0 0
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 0 0
<NOTES-PAYABLE> 902,300 902,300
0 0
0 0
<COMMON> 740,010 739,977
<OTHER-SE> 11,288,063 11,823,726
<TOTAL-LIABILITY-AND-EQUITY> 12,940,219 13,516,005
0 0
<INVESTMENT-INCOME> 22,615 21,751
<INVESTMENT-GAINS> 0 0
<OTHER-INCOME> 320,042 561,876
<BENEFITS> 0 0
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 45,016 88,430
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 45,016 88,430
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 55,572 235,469
<EPS-PRIMARY> 0.00 .01
<EPS-DILUTED> 0.00 .01
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
