<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarter Ended March 31, 1997
Commission file number 0-19031
National Quality Care, Inc.
(EXACT NAME OF REGISTRANT)
Delaware 84-1215959
(State of Incorporation) (IRS Employer ID No.)
5901 W. Olympic Boulevard, Suite 109
Los Angeles, California 90036
(Address of Principal Executive Offices) (Zip Code)
(213) 692-0948
(Telephone Number)
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
--- ---
The number of shares of common stock outstanding
as of May 14, 1997 is 8,648,210.
1
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National Quality Care, Inc.
Table of Contents
Part I. Financial Information Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as
of March 31, 1997 and
December 31, 1996 3
Consolidated Statements of
Operations for the three months
ended March 31, 1997 4
Consolidated Statement of
Stockholders' Equity for the
three months ended March 31, 1997 5
Consolidated Statement of
Cash Flows for the three months
ended March 31, 1997 6
Notes to Financial Statements 7
Item 2. Management's Discussion and
Analysis or Plan of Operation 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
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NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS (NOTE 5)
March 31, December 31,
1997 1996
---------- -----------
Current assets
Cash and cash equivalents $ 80,149 $ 121,812
Accounts receivable, net of allowances for
doubtful accounts of $75,000 275,514 334,927
Note receivable-related parties (Note 3) 865,202 865,202
Supplies inventory 13,097 13,122
Other current assets 64,907 47,208
---------- -----------
Total current assets 1,298,869 1,382,271
Building and equipment, net (Note 4) 2,256,819 2,257,735
Deposits and other long-term assets 57,631 59,197
---------- -----------
Total assets $ 3,613,319 $ 3,699,203
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 379,517 448,521
Accrued expenses 317,562 303,597
Current portion of long-term debt (Note 5) 294,160 380,414
---------- -----------
Total current liabilities 991,239 1,132,532
Long-term debt, net of current portion (Note 5) 1,781,658 1,804,805
---------- -----------
Total liabilities 2,772,897 2,937,337
Commitments and contingencies (Note 6)
Stockholders' equity
Preferred stock, $.01 par value: 5,000,000 shares
authorized, no shares issued and outstanding
Common stock, $.01 par value: 50,000,000 shares
authorized, 8,233,471 and 7,815,471 shares
issued and outstanding 82,334 78,154
Additional paid-in capital 1,507,969 1,508,009
Notes receivable from stockholder (Note 2) (120,306) (118,044)
Accumulated deficit (629,575) (706,253)
---------- -----------
Total stockholders' equity 840,422 761,866
---------- -----------
Total liabilities and stockholder's equity $ 3,613,319 $ 3,699,203
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements.
3
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NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1997 1996
---------- ----------
Income
Medical service revenue $ 848,596 $ 791,093
Rental income 67,925 -
---------- ----------
Total income 916,521 791,093
---------- ----------
Operating expenses
Cost of medical services 493,930 417,941
Selling, general, and administrative expenses 259,556 74,877
Rental expenses 11,156 -
---------- ----------
Total operating expenses 764,642 492,818
---------- ----------
Income from operations 151,879 298,275
Other income (expense)
Interest expense (49,027) (14,521)
Interest income 3,090 -
Other expense (28,064) -
---------- ----------
Total other income (expense) (74,401) (14,521)
---------- ----------
Income before provision for income taxes 77,478 283,754
Provision for income taxes 800 -
---------- ----------
Net income $ 76,678 $ 283,754
---------- ----------
---------- ----------
Net income per share $ 0.01 $ 0.28
---------- ----------
---------- ----------
Weighted average common shares outstanding 7,999,049 1,000,000
---------- ----------
---------- ----------
The accompanying notes are an integral part of these financial statements.
4
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NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional Receivable Accumulated Total
------------------------ Paid-In From Deficit -------
Shares Amount Capital Stockholder -----------
------------------------ ---------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 7,815,471 $ 78,154 1,508,009 (118,044) (706,253) $ 761,866
OPTIONS EXERCISED
For services rendered 395,000 3,950 (3,950)
For cash 23,000 230 3,910 4,140
INCREASE IN RECEIVABLE FROM
STOCKHOLDER (INTEREST) (2,262) (2,262)
NET INCOME 76,678 76,678
----------- --------- ----------- ----------- ----------- ---------
BALANCE, MARCH 31, 1997 8,233,471 $ 82,334 $ 1,507,969 $ (120,306) $ (629,575) $ 840,422
----------- --------- ----------- ----------- ----------- ---------
----------- --------- ----------- ----------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cash flows from operating activities
Net income $ 76,678
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 22,483
(Increase) decrease in
Accounts receivable 59,413
Supplies inventory 25
Other current assets (17,700)
Increase (decrease) in
Accounts payable (69,003)
Increase in receivable from stockholder (13,965)
----------
Net cash provided by operating activities 85,861
Cash flows from investing activities
Increase in receivable from stockholder (interest) (2,262)
Purchase of building and equipment (20,001)
----------
Net cash used in investing activities (22,263)
Cash flows from financing activities
Repayment of debt (109,401)
Proceeds from exercise of stock options 4,140
----------
Net cash used in financing activities (105,261)
----------
Net increase in cash during period (41,663)
----------
Cash and equivalents, beginning of period 121,812
----------
Cash and equivalents, end of period $ 80,149
----------
----------
The accompanying notes are an integral part of these financial statements.
6
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NOTES TO FINANCIAL STATEMENTS NATIONAL QUALITY CARE
March 31, 1997
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB. Therefore, they do not include
all information and footnotes necessary for a fair presentation of financial
position and results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of Management, all adjustments
considered necessary for a fair presentation have been included in the interim
period. Operating results for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997.
NOTE 2. NOTES RECEIVABLE FROM STOCKHOLDER
Notes receivable from stockholder are unsecured with no stated maturity date
and bear interest at 8% per annum. At March 31, 1997, these notes receivable are
presented as an offset to stockholders' equity due to the relationship of the
parties involved and the uncertainty of the repayment of the notes.
NOTE 3. SALE OF ASSETS IN EXCHANGE FOR NOTES RECEIVABLE FROM RELATED PARTIES
As of May 14, 1997, the obligors on two (2) promissory notes payable to the
Company, in the aggregate principal amount of $865,000 (subject to certain
adjustments), assigned 630,201 of the shares of Common Stock to a third party,
who executed a promissory note payable to the Company in the principal amount of
$1,000,000, bearing interest at the rate of 10% PER ANNUM, and due and payable
on or before February 23, 1998. The promissory notes executed by the initial
obligors were canceled. The obligation owing to the Company on the $1,000,000
promissory note is secured by the 630,201 shares of Common Stock, which are held
in escrow.
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NOTE 4. BUILDING AND EQUIPMENT
Building and equipment as of March 31, 1997 consist of the following:
Land $ 855,897
Building 1,338,710
Medical equipment 283,677
Leasehold improvement 18,786
Office furniture and equipment 7,822
---------
2,504,892
Less accumulated depreciation and
amortization 248,073
---------
Total $ 2,256,819
------------
------------
Depreciation expense for the three months ended March 31, 1997 was $20,167.
NOTE 5. NOTES PAYABLE
Notes payable and long term debt at March 31, 1997 consist of the
following:
Notes payable - bank are collateralized by land,
building and equipment, and assignment of
$2,000,000 in life insurance of, and guaranteed
by, two majority stockholders. The notes are
payable in monthly installments of $20,293
including interest at prime plus 2% per annum.
Principal is due May 2006. $ 1,808,480
Note payable is collateralized by accounts
receivable. Note is payable in monthly
installments of $25,000 including interest of
8.25% per annum. Principal is due June 1997. 63,406
Note payable is collateralized by land, building and
assignments of rents. The note bears interest at
10% per annum. Note was converted to equity
after the statement date. 200,000
Other 3,932
---------
2,075,818
Less current portion 294,160
---------
Long-term portion $ 1,781,658
------------
------------
8
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NOTE 6. COMMITMENTS AND CONTINGENCIES.
LEASES.
The Company subleases certain facilites for its corporate office and
dialysis unit under a long-term lease agreement from a related party. Minimum
annual rental commitments under this lease are as follows:
Year Ending
December 31,
------------
1997 $ 81,144
1998 81,144
1999 81,144
2000 54,096
----------
TOTAL $ 297,528
-----------
-----------
OTHER AGREEMENTS.
During 1996, the Company purchased a building for $200,000 in cash and
notes payable of $2,050,000. The Company has assigned the Master Lease and rents
to an unrelated third party who facilitated the purchase (the "Facilitator") and
who is responsible for paying the expenses and debt service of the property, and
retains certain rights to sell the property. The term of the agreement is 30
years. As compensation, the Facilitator receives $1,000 per year payable in
arrears. Any rental income exceeding the payment of the expense is to be held by
the facilator as a reserve deposit. If the rental income is less than the
expenses, the Company is required to reimburse the Facilitator for the
difference. The Company recognizes the rental income and expenses in the
Company's statement of operations. At March 31, 1997, the net reserve deposit
held by the Facilitator is $19,412 which has been included in Other current
assets.
The lease agreement for the building provides for minimum rental income of
$22,642 per month through 1999. The rental income is subject to annual increases
based on the consumer price index. Minimum annual rental income under this lease
is as follows:
Year Ending
December 31,
------------
1997 $ 271,700
1998 271,700
1999 271,700
------------
TOTAL $ 815,100
------------
------------
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NEW DIALYSIS FACILITY.
Construction for the new dialysis unit began in March 1997, and the
Company is in the final stages of negotiating the construction agreement with
the contractor. Management expects that the total cost of building and equipment
the unit will be approximately $640,000.
In March 1997, the Company entered into a firm purchase agreement for
dialysis products with a vendor. The term of the agreement is three years and is
subject to cancellation after the first year by either party or in the event of
default under the agreement. During each year of the agreement, the Company
agrees to purchase virtually all of its dialysis equipment and dialysis supplies
from the vendor. In exchange the vendor agrees to provide discounted pricing.
LITIGATION.
The Company occupies its facilities for its corporate office and dialysis
unit pursuant to a sublease with Medipace Medical Group, Inc., an affiliate of
each of the Company's three directors and largest stockholder ("Medipace"),
dated May 10, 1996 ("Sublease). On or about January 16, 1997, Medipace received
a Three Day Notice to Pay Rent or Quit ("Three Day Notice") from its landlord,
Midway Hospital Medical Center, Inc. ("Midway"), alleging that Medipace is in
default on its rental obligation pursuant to the Company as well as additional
premises occupied by Medipace. The Three Day Notice includes office space
subleased to the Company. Medipace has not brought its rental obligation to
Midway current, but Midway has also not brought an unlawful detainer proceeding
to regain possession of the leased premises. Instead, Midway has brought suit
against Medipace for breach of the Master Lease and seeks amounts due under the
Master Lease, but did not include a claim for possession of the premises.
The Company believes that it is not in default of any obligations to either
Medipace or Midway. The Company also believes that should Midway try to evict it
from its office space, Midway will be unsuccessful. Therefore, the Company's
basis is that: (i) Midway consented to the Sublease, (ii) the Sublease provides
that if the Master Lease terminates before the expiration of the Sublease, the
Company will attorn to Midway at Midway's option, without right of the Company,
to terminate the Sublease or to surrender possession of the premises, (iii)
Midway has billed the Company directly and separately for the rent on its office
space, (iv) the Company has paid the rent on its office space directly to
Midway, and (v) the Company is current on the rent on its office space.
It is not known at this time whether Midway will allow the Company to
continue to occupy the office space for the duration of the Sublease or attempt
to evict the Company therefrom. Since no proceeding has been initiated and no
discovery has taken place, all relevant factors which may affect the outcome of
such a proceeding, if instituted, are not known to the Company, and the Company
is not able to evaluate the likelihood of a favorable or unfavorable outcome. In
the event of an unfavorable outcome, the Company believes it could find suitable
facilities for its corporate office and dialysis unit at favorable lease rates.
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
OVERVIEW OF PRESENTATION. On May 11, 1996, the Company entered into an
Agreement for Exchange of Stock (the "Share Exchange Agreement") with Los
Angeles Community Dialysis, Inc., a California corporation ("LACD"), Victor
Gura, M.D., Avraham H. Uncyk, M.D. and Ronald P. Lang, M.D., pursuant to which
the Company issued an aggregate of 4,234,128 shares of the Company's common
stock, par value $0.01 per share (the "Common Stock") in exchange for 100% of
the issued and outstanding shares of common stock of LACD. In connection with
the closing of the Share Exchange Agreement, LACD became the principal;
operating subsidiary of the Company. On May 28, 1996, the Company changed its
name to "National Quality Care, Inc."
Since approximately May, 1996, the focus of the Company's principal
business operations has been the providing of high-quality integrated dialysis
services for patients suffering from ESRD.
The financial statements of the Company included in this Report have been
presented, for accounting purposes, as a recapitalization of LACD, with LACD as
the acquiror of the Company. For purposes of clarity in this section, the term
"Company" reflects the financial condition and results of operations of LACD and
the combined operations of the parent holding company and LACD following the
completion of the Share Exchange Agreement.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH
31, 1996. Total income for the three months ended March 31, 1997 increased
approximately 16% to $916,521 from$791,093 for the three months ended March 31,
1996. Medical service revenue for the three months ended March 31, 1997
increased approximately 7% to $848,596 from $791,093 for the three months ended
March 31, 1996. This increase primarily resulted from an increase in volume of
inpatient and home dialysis care. In addition, the Company received rental
income of $67,925 during the three months ended March 31, 1997 from certain real
property owned by the Company in Los Angeles, California utilized by a non-
affiliate as a hospital facility.
Total operating expenses during the three months ended March 31, 1997
increased 55% to $764,642 from $492,818 during the three months ended March 31,
1996. Total operating expenses include: (i) cost of medical services, (ii)
selling, general and administrative expenses, and (iii) rental expenses, as
follows:
Cost of medical services during the year ended March 31, 1997 increased 18%
to $493,930 from $417,914 during the three months ended March 31, 1996. This
increase primarily resulted from the increase in medical supplies utilized in
the Company's business operations due to the corresponding increase in volume of
inpatient and home dialysis care. Cost of medical services primarily consist of
two (2) categories: (i) medical services and supplies, and (ii) outside
services. Medical services
11
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and supplies for the three months ended March 31, 1997 increased approximately
61% to $218,304 from $136,041 for the three months ended March 31, 1996. The
increase was primarily due to rising usage of medical supplies prescribed, which
in turn resulted in higher revenues. Outside services for the three months ended
March 31, 1997 increased approximately 24% to $126,675 from $102,430 for the
three months ended March 31, 1996. The increase was primarily attributable to
the rise of inpatient services.
Selling, general and administrative expenses during the three months ended
March 31, 1997 increased to $259,556 from $74,877 during the three months ended
March 31, 1996. This increase primarily related to ongoing legal and accounting
and consulting fees related to the development of the Company's business plan
and acquisition strategy.
Rental expenses during the three months ended March 31, 1997 were $11,156,
which were not incurred during the three months ended March 31, 1996. These
rental expenses related to the hospital building purchased by the Company in
1996.
Other expenses increased during the three months ended March 31, 1997 to
$74,401 from $14,521 during the three months ended March 31, 1996. This increase
in expenses between the respective periods resulted primarily from: (i) certain
non-recurring expenses of $42,750 in 1997 which were not incurred in the prior
year, related to a joint venture with respect to a potato harvester related to
the Company's prior business operations, and (ii) increased interest expenses to
$49,027 from $14,521, primarily arising from interest expenses relating to the
mortgage on the hospital facility. These expenses were offset by certain
additional income during the three months ended March 31, 1997 in the aggregate
of amount of $17,776, which the Company did not generate during the comparable
period in 1996.
As a result of the foregoing, the Company experienced net income of $76,678
during the three months ended March 31, 1997, as compared to net income of
$283,754 during the three months ended March 31, 1996. The Company also
experienced income from operations during each of the three months ended March
31, 1997 and 1996. However, income from operations during the three months ended
March 31, 1997 decreased to $151,879 from $298,275 during the three months ended
March 31, 1996. Management believes that this decrease in income from operations
primarily resulted from medical services, supplies, and legal as described
above. The Company believes there can be no assurances that comparable amounts
of legal expenses may not arise in connection with the development of the
Company's proposed business plan, particularly as may relate to any financings,
acquisitions or development which may occur. However, the Company's proposed
business plan contemplates the growth of revenues in connection with the
Company's expansion strategy. There can be no assurance that the Company's
acquisition strategy will create operating synergies with any acquired proposed
acquisition or development target or result in profitable operations. See
"Liquidity and Capital Resources."
As of December 31, 1996, the Company had net operating loss carryforwards
totalling approximately $670,000 and $335,000 for federal and state income tax
12
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purposes, respectively. Utilization of the Company's net operating loss may be
subject to limitations under certain circumstances.
LIQUIDITY AND CAPITAL RESOURCES. At March 31, 1997, the ratio of current
assets to current liabilities was 1.31 to 1.00. The inventory consists of
medical supplies and medications.
The Company has historically financed its operations through the use of
working capital and loans to the Company.
Cash and cash equivalents were $80,149 as of March 31, 1997, as compared to
$121,812 as of December 31, 1996. This decrease was primarily attributable to
the repayment of debt.
As of March 31, 1997, the Company had long-term borrowings in the aggregate
amount of $1,781,658, the current portion of which was $294,160. As of December
31, 1996, the Company had long-term borrowings of $1,804,805.
As of March 31, 1997, the Company had short-term borrowings in the
aggregate amount of $263,406, a decrease from $361,074 as of December 31, 1996.
The decrease was primarily attributable to the reduction of the Corporate
Funding Inc. ("Orion") working capital loan due on June 30, 1997 from $161,074
to $63,406. The amount owing to Orion is secured by the accounts receivable of
the Company, and the subject of a limited guaranty by Dr. Gura. As of May 14,
1997, the balance owing on the note to Orion was $38,134. The Company has
reached an agreement and completed the conversion of the $200,000 note into
Common Stock. In addition, $29,460 of the current portion of long-term debt will
be payable during the year ending December 31, 1997.
The Company has demand note receivables in the principal amounts of
$66,811.76 and $47,853.85 from Medipace Medical Group, Inc., an affiliate of
each of the Company's three (3) directors and largest stockholders, which are
the subject of demand promissory notes dated October 31, 1996 and May 22, 1996
respectively, each bearing interest at the rate of 8% PER ANNUM.
As of May 14, 1997, the obligors on two (2) promissory notes payable to the
Company, in the aggregate principal amount of $865,000 (subject to certain
adjustments), assigned 630,201 of the shares of Common Stock to a third party,
who executed a promissory note payable to the Company in the principal amount of
$1,000,000, bearing interest at the rate of 10% PER ANNUM, and due and payable
on or before February 23, 1998. The promissory notes executed by the initial
obligors were canceled The obligation owing to the Company on the $1,000,000
promissory note is secured by the 630,201 shares of Common Stock, which are held
in escrow. Management believes that the $1,000,000 note receivable will be
collected through the sale of the shares held in escrow.
The Company's cash flow needs for the three months ended March 31, 1997
were provided from operations.
13
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Management believes that, as of March 31, 1997, and for the foreseeable
future, the Company will be able to finance costs of current levels of
operations from revenues, including the payment of the obligations on the
hospital facility and the note payable to Orion.
The Company's current business plan includes a strategy to expand as a
provider of dialysis services through the development of new dialysis facilities
and the acquisition of additional facilities and other strategically related
health care services in selected markets. The market for such acquisition
prospects is highly competitive and management expects that certain potential
acquirors will have significantly greater capital than the Company. The Company
currently experiences profitable operations and positive cash flow. However, the
Company does not currently generate sufficient cash flow to finance any such
expansion plans rapidly. In order to finance more rapid expansion plans, the
Company will require financing from external sources. The Company does not have
any commitment for such financing and there can be no assurances that the
Company will be able to obtain any such financing on terms favorable to the
Company or at all. In the event the Company cannot obtain such additional
financing, the Company may be unable to achieve its proposed expansion strategy.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings Per Share," which is
effective for financial statements issued for periods ending after December 31,
1997. SFAS No. 128 requires public companies to present basic earnings per share
and, if applicable, diluted earnings per share, instead of primary and fully
diluted earnings per share. The Company has not yet determined the effect of
adopting SFAS No. 128.
14
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) REPORTS OF FORM 8-K.
The Company filed a report on Form 8-K on March 3, 1997,due on June 30,
1997 during the Quarterly Period ended March 31, 1997.
(b) EXHIBIT.
27. Financial Data Schedule
15
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized on the dates
indicated.
Dated May 14, 1997 NATIONAL QUALITY CARE, INC.
By: /s/ Ron Berkowitz, C.F.O.
---------------------------
Ron Berkowitz, C.F.O.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 80,149
<SECURITIES> 0
<RECEIVABLES> 350,514
<ALLOWANCES> 75,000
<INVENTORY> 13,097
<CURRENT-ASSETS> 1,298,869
<PP&E> 2,504,892
<DEPRECIATION> 248,073
<TOTAL-ASSETS> 3,613,319
<CURRENT-LIABILITIES> 991,239
<BONDS> 1,781,658
0
0
<COMMON> 82,334
<OTHER-SE> 758,088
<TOTAL-LIABILITY-AND-EQUITY> 3,613,319
<SALES> 0
<TOTAL-REVENUES> 916,521
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 790,016
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,027
<INCOME-PRETAX> 77,478
<INCOME-TAX> 800
<INCOME-CONTINUING> 76,678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,678
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
