SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
Commission File Number: 0-20307
AVALON COMMUNITY SERVICES, INC.
(Exact name of small business issuer as
specified in its corporate charter)
Nevada 13-3592263
------------------------ ----------------------------
(State of Incorporation) (I.R.S. Employer I.D. Number)
13401 Railway Drive, Oklahoma City, Oklahoma 73114
--------------------------------------------------
(Address of Principal executive offices)
(405) 752-8802
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or such
shorter period as the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days:
Yes X No ___
As of May 12, 1999, 4,667,838 shares of the issuer's Class A common stock,
par value $.001 were issued and outstanding.
Transitional Small Business Disclosure Format: Yes ___; No X .
<PAGE>
PART I - FINANCIAL INFORMATION
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------------- ----------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,208,000 $ 5,181,000
Restricted cash 748,000 ---
Investment in short term U.S. treasury bills 5,919,000
Accounts receivable 1,604,000 1,348,000
Current maturities of notes receivable 318,000 322,000
Prepaid expenses and other 121,000 100,000
----------------- ----------------
Total current assets 3,999,000 12,870,000
----------------- ----------------
Property and equipment, net 17,301,000 13,644,000
Notes receivable, net of current maturities --- ---
Other assets 2,715,000 2,251,000
----------------- ----------------
Total assets $ 24,015,000 $ 28,765,000
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued liabilities and other $ 911,000 $ 2,026,000
Current maturities of long-term debt 399,000 2,201,000
----------------- ----------------
Total current liabilities 1,310,000 4,227,000
----------------- ----------------
Long-term debt, less current maturities 12,809,000 14,348,000
Convertible debentures 3,850,000 3,850,000
Redeemable Common Stock, $.001 par value
1,622,448 shares issued and outstanding 4,124,000 4,124,000
Stockholders' equity:
Common stock:
Par value $.001; 20,000,000 shares
authorized; 4,667,838 and 4,664,598 shares
issued and outstanding, less 1,622,448 shares
subject to repurchase. 3,000 3,000
Preferred stock; par value $.001; 1,000,000
shares authorized; none issued and outstanding --- ---
Paid-In capital 6,626,000 6,618,000
Accumulated deficit (4,707,000) (4,405,000)
----------------- ----------------
Total stockholders' equity 1,922,000 2,216,000
----------------- ----------------
Total liabilities and stockholders' equity $ 24,015,000 $ 28,765,000
================= ================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 1
<PAGE>
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1999 1998
(See Note 7)
------------------ ------------------
<S> <C> <C>
Revenues $ 2,427,000 $ 1,807,000
------------------- -------------------
Costs and expenses
Direct operating 1,505,000 1,135,000
General and administrative 330,000 237,000
Development Costs 222,000 26,000
Depreciation and amortization expense 185,000 149,000
Interest Expense 452,000 223,000
------------------ ------------------
Income (loss) from continuing operations
before income tax expense (benefit) (267,000) 37,000
Income tax expense (benefit) --- ---
------------------ ------------------
Income (loss) before extraordinary items and
cumulative effect of change in accounting principles (267,000) 37,000
------------------ ------------------
Cumulative effect of change in accounting principles --- 74,000
Extraordinary loss from early
retirement of debt 35,000 ---
------------------ ------------------
Net income (loss) $ (302,000) $ (37,000)
================== ==================
Basic and diluted income (loss) per share:
Income (loss) before extraordinary loss and
cumulative effect of change in accounting principles $ (0.05) $ 0.01
Cumulative effect of change in accounting principles --- (0.02)
Extraordinary loss from early
retirement of debt (0.01) ---
------------------ ------------------
Net income (loss) per share: $ (0.06) $ (0.01)
================== ==================
Weighted average number of common
shares outstanding, basic and diluted 4,665,790 2,987,678
================== ==================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 2
<PAGE>
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
1999 1998
----------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (302,000) $ (37,000)
Adjustments to reconcile net income (loss) to
net cash used in operating activities
Depreciation and amortization 185,000 144,000
Cumulative effect of change in accounting principles --- 74,000
Amortization of debt issue costs 42,000 ---
Writeoff of development and acquisition costs 3,000 14,000
Extraordinary loss on early retirement of debt 35,000 ---
Changes in operating assets and liabilities:
Decrease (increase) in -
Accounts receivable (159,000) (109,000)
Prepaid expenses and other 3,000 15,000
Increase (decrease) in accounts payable,
accrued liabilities and other 116,000 (330,000)
----------------- -----------------
Net cash used in operating activities (77,000) (229,000)
----------------- -----------------
INVESTING ACTIVITIES:
Capital expenditures (5,140,000) (108,000)
Proceeds from short-term investments 5,919,000 ---
Proceeds from payments on notes receivable 4,000 3,000
----------------- -----------------
Net cash provided by (used in) investing activities 783,000 (105,000)
----------------- -----------------
FINANCING ACTIVITIES:
Payment of loan fees and deferred costs (637,000) ---
Deposit of escrow funds (748,000) ---
Proceeds from borrowings 1,775,000 1,583,000
Repayment of borrowings (5,077,000) (1,502,000)
Proceeds from warrant and option exercise 8,000 58,000
----------------- -----------------
Net cash provided by (used in)financing activities (4,679,000) 139,000
----------------- -----------------
Net Decrease in Cash and Cash Equivalents (3,973,000) (195,000)
Cash and Cash Equivalents, Beginning of Period 5,181,000 1,958,000
----------------- -----------------
Cash and Cash Equivalents, End of Period $ 1,208,000 $ 1,763,000
================= =================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 3
<PAGE>
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business -
Avalon Community Services, Inc. ("the Company" or "Avalon") is an Oklahoma
based corporation specializing in operating private correctional facilities and
providing intensive correctional programming. The Company currently operates in
Oklahoma, Texas, and Colorado with plans to significantly expand into additional
states. The Company owns and operates seven community correctional facilities
and one juvenile correctional facility.
Principles of Consolidation -
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries after elimination of all material intercompany
balances and transactions.
Use of Estimates -
The preparation of the consolidated financial statements requires the use
of management's estimates and assumptions in determining the carrying values of
certain assets and liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts for certain revenues and expenses during the reporting period.
Actual results could differ from those estimated.
Cash and Cash Equivalents -
The Company considers all highly liquid investments with original
maturities of three months or less when purchased and money market funds to be
cash equivalents.
Concentrations of Credit Risk -
Financial instruments potentially subjecting the Company to concentrations
of credit risk consist principally of temporary cash investments, accounts
receivable and notes receivable. The Company places its temporary cash
investments with high credit quality financial institutions and money market
funds and limits the amount of credit exposure to any one institution or fund.
The Company had a significant portion of its cash equivalents in United States
treasury bills at December 31, 1998. The Company maintains an allowance for
doubtful accounts for potential credit losses. The allowance for doubtful
accounts at March 31, 1999 and December 31, 1998 was $9,000 and $9,000,
respectively. Actual bad debt expenses have not been material. Credit risk on a
note receivable is partially mitigated by the collateralization of the note by
second lien on real estate.
Property and Equipment -
Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized, while minor replacements,
maintenance and repairs are charged to expense as incurred. When property and
equipment is retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
reflected in current operations. Depreciation is provided using the
straight-line method over the following estimated useful lives:
Buildings and Improvements 40 Years
Furniture and Equipment 5 to 7 Years
Transportation Equipment 3 to 15 Years
Page 4
<PAGE>
Impairment losses are recorded on long-lived assets when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amounts. When required,
impairment losses are recognized based upon the estimated fair value of the
asset.
Income Taxes -
Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the period in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
Revenue Recognition -
The Company recognizes revenues as services are provided. Revenues are
earned based upon the number of inmates on a per diem basis at the Company's
correctional facilities. Revenues are earned on a monthly contract basis for
substance abuse treatment services. All correctional and substance abuse
revenues are received monthly from various governmental agencies.
Deferred Development Costs -
Prior to 1998, development costs that could be directly associated with an
anticipated contract were capitalized, and, if the recoverability from that
contract was probable, they were deferred until the anticipated contract had
been awarded. The development costs of successful proposals were deferred and
amortized over the anticipated life of the contract (including option and
renewal periods), while costs of unsuccessful or abandoned contracts were
charged to expense when their recovery was not considered probable. Facility
costs were incurred (after a contract is awarded) in connection with the opening
of new facilities under the contract, and were capitalized from the date of
award until commencement of operations and amortized on a straight-line basis
over the term of the contract. As of January 1, 1998, the Company , pursuant to
Statement of Position 98-5 "Reporting on the Costs of Start Up Activities",
expensed development and new facility opening costs.
Net Income (Loss) Per Common Share -
Basic loss per share has been computed on the basis of weighted average
shares outstanding during each period. Diluted loss per share is the same as
basic loss per share because the assumed exercise of options and warrants, the
assumed redemption of 1,622,448 shares of common stock, and the conversion of
debentures would be anti-dilutive.
Interim Financial Statements -
The consolidated balance sheet as of March 31, 1999 and the statements of
operations for the three months ended March 31, 1999 and 1998 are unaudited and,
in the opinion of management, reflect all adjustments that are necessary for a
fair presentation of the financial position as of such date and the results of
operations and cash flows for the periods then ended. All such adjustments are
of a normal and recurring nature.
The financial statements included herein have been prepared in conformity
with generally accepted accounting principles and should be read in conjunction
with the December 31, 1998 Form 10-KSB filing. Footnote disclosures which would
substantially duplicate the disclosure contained in the most recent annual
report on Form 10-KSB have been condensed or omitted. The results of operations
for the three months ended March 31, 1999, are not necessarily indicative of the
results that may be expected for the entire year ended December 31, 1999.
Page 5
<PAGE>
NOTE 2. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------------------------------
<S> <C> <C>
Revolving bank line of credit $ --- $ 724,000
Notes payable to banks, collateralized by
equipment due in installments through
July 1999 with interest from 7.99% to 8.5% 1,000 2,000
Notes payable to banks, collateralized
by transportation equipment, due in
installments through March 2012
with interest ranging from 4.90% to 9.49%. 612,000 676,000
Notes payable to banks, collateralized
by land, buildings and improvements
due in installments through June 2012
with interest ranging from 8.95% to 11% 2,247,000 4,631,000
Note payable to an individual, uncollateralized,
with interest at 8.5%, due in full April 1999 --- 160,000
Note payable to an investment company, unsecured
with interest at 12.5%, due in four installments
beginning in 2005, including original issue premium 10,348,000 10,356,000
--------------- ---------------
13,208,000 16,549,000
Less - current maturities 399,000 2,201,000
--------------- ---------------
$ 12,809,000 $ 14,348,000
=============== ===============
</TABLE>
Avalon Community Services Inc. closed a senior credit facility with the
Fleet Capital Corporation on February 25, 1999. The new loan is a four year
revolving credit facility primarily utilized to finance the expansion of the
Company's business.
The credit facility provides for an $18 million senior revolving debt
facility secured by substantially all assets of the Company. The credit facility
is subject to a 1/2% unused line fee and interest on outstanding balances at
Prime + .25% - .50 % or LIBOR + 2.0 - 3.0%. The maturity date of the credit
facility is February 25, 2003.
Initially, no amounts were extended on the credit facility and the Company
utilized existing cash reserves to retire debt that was collateralized by assets
now pledged to Fleet Capital under the new agreement.
NOTE 3. CONVERTIBLE DEBENTURES
The Company completed a private placement of $4,150,000 of convertible
debentures on September 12, 1997. The convertible debentures bear interest at
7.5% and mature on September 12, 2007. The convertible debentures may be
redeemed by the Company at any time after May, 2001 at 106.5% of principal,
declining to 100% at maturity. The convertible debentures are convertible into
common stock at $3.00 per share at any time until their maturity.
Page 6
<PAGE>
The convertible debenture holders signed agreements to subordinate the
debentures to the $10,000,000 face value note issued on September 16, 1998. The
Company redeemed $300,000 of convertible debentures at face value in September
1998.
NOTE 4. STOCKHOLDERS' EQUITY
The Company's 275,100 Class B stock purchase warrants providing for the
purchase of the Company's common stock at a price of $6.00 per share expired
March 26, 1999. No Class B warrants were exercised during the quarter ending
March 31, 1999.
The Company issued 1,000,000 Class C stock purchase warrants in August
1994, in connection with a private placement. The placement provided for 100,000
Class C stock purchase warrants reserved for underwriters. The Company issued an
additional 165,000 Class C stock purchase warrants in 1996 and 25,000 Class C
stock purchase warrants in 1997. The Company has issued 452,500 shares of common
stock upon the exercise of the Class C stock purchase warrants through March 31,
1999. The Company currently has 837,500 Class C stock purchase warrants
outstanding, including the 100,000 warrants reserved for underwriters.
The Class C stock purchase warrants provide for the purchase of the
Company's common stock at any time until their expiration at December 30, 1999.
Anti-dilution provisions of the warrant agreement have reduced the exercise
price from $3.50 to $3.19 per share as of March 31,1999. The warrants may be
redeemed by the Company upon certain events, for $.01 per share.
The Company issued 200,000 Class D stock purchase warrants in August 1996,
in connection with the acquisition of the El Paso Intermediate Sanction
Facility. The Class D stock purchase warrants provide for the purchase of the
Company's common stock at any time until their expiration at August 2, 2001. The
exercise price of the class D warrants is $4.20 per share as of December 31,
1998. The warrants may be redeemed by the Company upon certain events for $.01
per share.
The Company issued 79,000 Class E stock purchase in September 1997, in
connection with the private placement of Convertible Debentures. The Class E
stock purchase warrants provide for the purchase of the Company's common stock
at a price of $3.00 per share at any time until their expiration at September
12, 2002. The warrants may be redeemed by the Company upon certain events for
$.01 per share.
The Company issued 200,539 stock purchase warrants to financial advisors in
September 1998, in connection with the $15,000,000 private placement. The stock
purchase warrants provide for the purchase of the Company's common stock at any
time until their expiration in September 2002. The exercise price of the
warrants is $3.75 per share as of December 31,1998. The warrants may be redeemed
by the Company upon certain events for $.01 per share. The fair value of the
warrants was allocated between the proceeds the debt and equity issues as debt
issue cost and a reduction in redeemable common stock.
A 1994 agreement provided for the issuance of 750,000 common stock purchase
warrants to purchase common stock at $1.50 per share for each dollar of Company
debt guaranteed by the Company's CEO. The warrants will have a five year term
from the date of issuance. Management believes that the warrants had no economic
value when granted, and accordingly, no amount has been assigned to such
warrants in the financial statements.
Page 7
<PAGE>
NOTE 5. STOCK OPTION PLAN
The Company adopted a stock option plan (the "Plan") providing for the
issuance of 250,000 shares of Class A common stock pursuant to both incentive
stock options, intended to qualify under Section 422 of the Internal Revenue
Code, and options that do not qualify as incentive stock options
("non-statutory"). The Option Plan was registered with the Securities and
Exchange Commission in November 1995. The purpose of the Plan is to provide
continuing incentives to the Company's officers, key employees, and members of
the Board of Directors. The options generally vest over a four or five-year
period with a ten year expiration period. On December 1, 1996, the Company
amended its stock option plan, increasing the number of shares available under
the Plan to 600,000. There are currently outstanding non-statutory options
providing for the issuance of 492,900 shares of Class A common stock at exercise
prices ranging from $1.50 to $4.25 per share. Options providing for the issuance
of 216,690 shares were exercisable at March 31, 1999.
NOTE 6. LITIGATION
The Company is a party to litigation arising in the normal course of
business. Management believes that the ultimate outcome of these matters will
not have a material effect on the Company's financial condition or results of
operations.
Note 7. CHANGE IN ACCOUNTING PRINICPLES
During the fourth quarter of 1998 the Company elected to adopt, for all of
1998 and future years, the provision of Statement of Position 98-5 "Reporting on
Costs of Start Up Activities". Development and new facility opening costs had
been deferred and amortized over the life of the contract prior to January 1,
1998. As a result of the adoption of the new pronouncement, deferred costs of
approximately $74,000 were charged to operations and reported as cumulative
effect of change in accounting principle, effective January 1, 1998. Pursuant to
the pronouncement, the results of operations of the first quarter of 1998 have
been restated to show the effect of adoption of the Statement of Position as of
January 1, 1998.
Page 8
<PAGE>
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Liquidity and Capital Resources -
The Company's business strategy is to focus on the private corrections
industry, expanding its operations into additional states through new Federal
and state contracts and selective acquisitions. The successful implementation of
the Company's growth plan has created the need for additional capital and
financing. The Company has been successful in securing $37 million of new
capital and credit facilities since September 1997.
Working capital at March 31, 1999 was $2,689,000 representing a current
ratio of 3.06:1, compared to working capital of $8,643,000 and a current ratio
of 3.04:1 at December 31, 1998. The decrease in working capital from December
31, 1998 is primarily due to construction costs of the Union City Juvenile
Facility and the El Paso Multi Purpose Facility. The Union City Juvenile
Facility was completed and became operational in the first quarter of 1999, and
the El Paso Multi Purpose Facility is scheduled for completion in the second
quarter of 1999.
The Company had approximately $1.2 million of cash available for new
projects at March 31, 1999. The Company believes it has adequate cash reserves
and cash flow from operations to meet its current cash requirements. The Company
expects current contracts to generate sufficient income to increase cash
reserves, while minimizing income taxes through the utilization of tax loss
carryforwards. The Company secured an $18 million senior credit facility with
Fleet Capital Corporation in February 1999. The credit facility and available
cash balance will enable the Company to expand its operations through
acquisitions and development.
Results of Operations -
Three Months Ended March 31, 1999 Compared to the Three Months
Ended March 31, 1998-
Total revenues increased by 35% to $2.43 million for the three months ended
March 31, 1999 from $1.81 million for the three months ended March 31, 1998. The
increase in revenue can be contributed to an increase of $100,000 from the
Turley Correctional Center compared to the period ending March 31, 1998, and
$530,000 in revenue from the Union City Juvenile Center. The Union City Juvenile
Center commenced operations in the first quarter of 1999.
The Company had net loss for the three months ended March 31, 1999 of
$302,000 or $.06 basic and diluted earnings per share, as compared to net loss
for the three months ended March 31, 1998 of $37,000 or $.01 basic and diluted
income per share. The Company's net loss for the period ending March 31, 1999
was a result of costs associated with the opening of the Union City Juvenile
Center. The Company's net loss for the period ending March 31, 1998 included a
$74,000 charge relating to a change in accounting principles.
Operating income, before interest, depreciation, and income taxes,
decreased approximately 11% for the three months ended March 31, 1999 to
$371,000 compared to $409,000 for the three months ended March 31, 1998. The
slight decrease in operating income was primarily due to costs associated with
the opening of the Union City Juvenile Facility. The average daily inmate census
increased 8% for the three months ended March 31, 1999 compared to the three
months ended March 31, 1998.
Page 9
<PAGE>
Direct operating expenses increased by 33% for the three months ended March
31, 1999 over the three months ended March 31, 1998, primarily as a result of
the commencement of operations at the Union City Juvenile Facility.
Corporate. General and administrative expenses increased by 39% to $330,000
for the three months ended March 31, 1999 from $237,000 for the three months
ended March 31, 1999. The majority of the increase was a result of an increase
in staffing.
The increase in interest expense of $229,000 for the three months ended
March 31, 1999 over the first quarter 1998 resulted from interest on the
$10,000,000 subordinated note placed in September 1998.
The Company is aware of the risk of computer error in the year 2000. Such
error could casuse computers to recognize the year 2000 as 1900 and cause the
computer to fail in calculation or function. As a result, the company has
reviewed its computer operations and have identified all computers and systems
that are not year 2000 compliant (y2k). The Company's primary exposure to y2k
problems is in its financial reporting area. The Company has purchased and
ordered computer equipment and software to become fully y2k compliant. The cost
of this equipment, including testing and implementation to become y2k compliant
is expected to be approximately $15,000. The Company will test and implement the
new equipment and software before July 1, 1999.
Page 10
<PAGE>
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None.
Item 2. Changes in Securities - None.
Item 3. Defaults Upon Senior Securities - None.
Item 4. Submission of Matters to a Vote of Security Holders - None.
Item 5. Other Information - None.
Item 6. a) Exhibits
Exhibit 27. Financial Data Schedule.
b) Reports on Form 8-K -
Filed a Form 8-K on March 10, 1999,
re: Financing agreement with Fleet Capital Corporation
Page 11
<PAGE>
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with the requirement of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: May 17, 1999 AVALON COMMUNITY SERVICES, INC.
By: /s/ Jerry M. Sunderland
------------------------------------
Jerry M. Sunderland, President
By: /s/ Paul Voss
------------------------------------
Paul Voss, Vice President of Finance
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,208,000
<SECURITIES> 0
<RECEIVABLES> 1,613,000
<ALLOWANCES> 9,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,999,000
<PP&E> 18,966,000
<DEPRECIATION> 1,665,000
<TOTAL-ASSETS> 24,015,000
<CURRENT-LIABILITIES> 1,310,000
<BONDS> 3,850,000
0
0
<COMMON> 3,000
<OTHER-SE> 6,043,000
<TOTAL-LIABILITY-AND-EQUITY> 24,015,000
<SALES> 0
<TOTAL-REVENUES> 2,427,000
<CGS> 0
<TOTAL-COSTS> 2,057,000
<OTHER-EXPENSES> 185,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 452,000
<INCOME-PRETAX> (267,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (267,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (35,000)
<CHANGES> 0
<NET-INCOME> (302,000)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
