<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
[ ] TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1999
Commission file number 0-19031
National Quality Care, Inc.
(EXACT NAME OF REGISTRANT)
Delaware 84-1215959
(State of Incorporation) (IRS Employer ID No.)
1835 South La Cienega Boulevard, Suite 235
Los Angeles, CA 90035
(Address of Principal Executive Offices) (Zip Code)
(310) 280-2758
(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 November 12, 1999 is 9,889,878.
1
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National Quality Care, Inc.
Table of Contents
Page
Part I. Financial Information 3
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1999 and December 31, 1998 4
Consolidated Statements of Operations
for the Three Months Ended September 30, 1999
and 1998 5
Consolidated Statements of Operations
for the Nine Months Ended September 30, 1999
and 1998 6
Consolidated Statements of Stockholders'
Equity for the Nine Months Ended September 30, 1999 7
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
3
<PAGE>
<TABLE>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
ASSETS
September December
1999 1998
------------------ ------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 34,818 $ 27,754
Accounts receivable, net of allowances for
doubtful accounts of $150,000 and $180,000 700,350 651,354
Supplies inventory 57,306 54,539
Other current assets 125,789 50,521
------------------ ------------------
Total current assets 918,263 784,168
Property and equipment, net 2,638,592 2,713,800
Deposits and other long-term assets 48,373 64,006
------------------ ------------------
Total assets $ 3,605,228 $ 3,561,974
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 823,558 998,561
Accrued expenses 303,158 266,374
Note payable 42,053 -----
Current portion of long-term debt 287,737 202,075
------------------ ------------------
Total current liabilities 1,456,506 1,467,010
Long-term debt, net of current portion 2,047,764 2,047,779
------------------ ------------------
Total liabilities 3,504,270 3,514,789
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, 9,889,878 and 9,814,878
shares issued and outstanding 98,898 98,148
Additional paid-in capital 2,177,657 2,163,407
Notes receivable from stockholder (266,713) (269,025)
Accumulated deficit (1,908,884) (1,945,345)
------------------ ------------------
Total stockholders' equity 100,958 47,185
------------------ ------------------
Total liabilities and stockholders' equity $ 3,605,228 $ 3,561,974
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
4
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<TABLE>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Income
Medical service income $ 985,778 $ 985,791
Rental income 67,925 67,925
--------------- ---------------
Total income 1,053,703 1,053,716
--------------- ---------------
Operating expenses
Cost of medical services 675,875 721,488
Selling, general, and administrative 249,914 284,403
Depreciation and amortization 35,515 15,422
Rent and other 19,006 11,156
--------------- ---------------
Total operating expenses 980,310 1,032,469
--------------- ---------------
Income from operations 73,393 21,247
Other income (expense)
Interest expense (71,599) (55,347)
Interest income 1,983 2,463
Other income 3,385 10,089
--------------- ---------------
Net other expenses (66,231) (42,795)
--------------- ---------------
Income (loss) before provisions for income taxes 7,162 (21,548)
Provision for income taxes ----- -----
--------------- ---------------
Net income (loss) $ 7,162 $ (21,548)
=============== ===============
Basic and diluted income (loss) per share $ 0.00 $ 0.00
=============== ===============
Weighted average shares outstanding 9,871,128 9,814,878
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
<TABLE>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Income
Medical service income $ 2,988,623 $ 2,676,977
Rental income 203,775 203,775
--------------- ---------------
Total income 3,192,398 2,880,752
Operating expenses
Cost of medical services 2,036,518 1,932,123
Selling, general, and administrative 786,493 910,112
Depreciation and amortization 97,247 54,602
Rent and other 52,218 44,172
--------------- ---------------
Total operating expenses 2,972,476 2,941,009
--------------- ---------------
Income (loss) from operations 219,922 (60,257)
Other income (expense)
Interest expense (204,797) (158,385)
Interest income 13,501 7,151
Other income (expense) 9,435 17,517
--------------- ---------------
Net other expenses (181,861) (133,717)
--------------- ---------------
Income (loss) before provision for income taxes 38,061 (193,974)
Provision for income taxes 1,600 1,600
--------------- ---------------
Net income (loss) $ 36,461 $ (195,574)
=============== ===============
Basic and diluted income (loss) per share $ 0.00 $ (0.02)
=============== ===============
Weighted average shares outstanding 9,843,999 9,727,881
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
<TABLE>
NATIONAL QUALITY CARE, INC, AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Nine Months Ended September 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Additional Receivable Accumulated Total
Shares Amount Paid-In From Deficit
Capital Stockholder
---------- ------------ ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 9,814,878 $ 98,148 $ 2,163,407 $ (269,025) $(1,945,345) $ 47,185
Options exercised for cash 75,000 750 14,250 15,000
Increase in receivable from stockholder (interest) 2,312 2,312
Net loss 36,461 36,461
---------- ------------ ------------ ----------- ------------ ----------
Balance, September 30, 1999 9,889,878 $ 98,898 $ 2,177,657 $ (266,713) $(1,908,884) $ 100,958
========== ============ ============ =========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
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<TABLE>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30,
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 36,461 $ (195,574)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 122,639 88,071
(Increase) decrease in receivable from stockholder (interest) (4,719) (7,151)
Issuance of common stock options for services ----- 64,479
(Increase) decrease in
Accounts receivable (48,997) (299,997)
Supplies inventory (2,767) (17,841)
Other current assets (60,635) (43,876)
Increase (decrease) in
Accounts payable 37,164 310,134
Accrued expenses 52,160 (1,199)
------------ -------------
Net cash (used) provided by operating activities $ 131,306 $ (102,954)
------------ -------------
Cash flows from investing activities
Collection of lease receivable from stockholder 7,030 -----
(Increase) decrease in deposits 1,000 (40)
Purchase of building and equipment (47,430) (17,460)
------------ -------------
Net cash used in investing activities (39,400) (17,500)
Cash flows from financing activities
Repayment of capital lease obligations (80,137) (24,807)
Repayment of debt (128,659) (40,721)
Proceeds from debt 108,954 145,000
Proceeds fron exercise of stock options 15,000 15,125
------------ -------------
Net cash (used) provided by financing activities (84,842) 94,597
------------ -------------
Net increase (decrease) in cash during period 7,064 (25,858)
------------ -------------
Cash and equivalents, beginning of period 27,754 39,220
------------ -------------
Cash and equivalents, end of period $ 34,818 $ 13,362
------------ -------------
Supplemental disclosures of cash information:
Cash paid during the nine-month period:
Interest $ 204,797 $ 158,385
Income taxes 1,600 1,600
In February 1999, the Company signed a promissory note with Priority
Healthcare to convert $212,166 of accounts payable and $15,373 of
accrued service charges into a long-term note payable in 23 monthly
installments with interest upon the unpaid principle balance at the
rate of 10% 227,539 -----
Interest receivable from stockholder accrued but not received (4,719) (7,151)
In April 1999, the Company agreed to reduce notes receivable from an
affiliate in exchange for a lease receivable $ 75,000 $ -----
</TABLE>
The accompanying notes are an integral part of these financial statements
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NATIONAL QUALITY CARE
September 30, 1999
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB. 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. These consolidated financial statements should
be read in conjunction with the consolidated financial statements and related
notes contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998. In the opinion of Management, all adjustments considered
necessary for a fair presentation have been included in the interim period.
Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999.
(2) CAPITAL LEASE
The Company entered into back to back sale and leaseback arrangements
for $75,000 of equipment with an affiliate, financing such equipment through a
third party. The transaction resulted in a capital lease receivable from the
shareholder affiliate replacing a portion of the note receivable from that
affiliate and an identical capital lease liability to the third party.
Minimum payments under the capital lease receivable and payable are as
follows:
Year ending December 31:
1999 27,957
2000 30,498
2001 30,498
2002 30,498
2003 30,498
2004 2,542
----------
152,491
Less amount representing interest 77,492
----------
Present value of minimum lease payments 66,907
Less current portion 7,864
----------
Long-term portion 59,043
==========
9
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(3) EARNINGS PER SHARE
Weighted average shares outstanding for both basic and diluted income
(loss) per share for the three months ended September 30, 1999 and September 30,
1998 were 9,871,000 and 9,815,000, respectively. For the first nine months of
1999 and 1998 the weighted average shares outstanding were 9,843,999 and
9,728,000, respectively. The Company has not included the effect of assumed
conversions and exercises of stock options and warrants for September 30, 1999
and September 30, 1998 since the effect of such an inclusion would be
antidilutive for both periods.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
OVERVIEW OF PRESENTATION. Since approximately May 1996, the focus of
the Company's principal business operation has been to provide high-quality
integrated dialysis services for patients suffering from End Stage Renal Disease
("ESRD").
The Company conducts its business through its wholly-owned operating
subsidiary, Los Angeles Community Dialysis, Inc. For purposes of clarity in this
section, the term "Company" reflects the financial condition and results of
operations of Los Angeles Community Dialysis, Inc. and the combined operations
of the parent holding company and Los Angeles Community Dialysis, Inc.
This report, including the disclosures below, contains certain
forward-looking statements that involve substantial risks and/or uncertainties.
When used herein, the terms "anticipates," "expects," "estimates," "believes"
and similar expressions, as they relate to the Company or its management, are
intended to identify such forward-looking statements. The Company's actual
results, performance or achievements may differ materially from those expressed
or implied by such forward-looking statements.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998. Total income for the three months
ended September 30, 1999 remained essentially the same at $1,053,703 as compared
with $1,053,716 for the three months ended September 30, 1998. For the first
nine months of 1999, total income increased approximately 11% to $3,192,398 from
$2,880,752 for the first nine months of 1998. Medical service revenue for the
three months ended September 30, 1999 remained unchanged at $985,778 from
$985,791 for the three months ended September 30, 1998. For the first nine
months of 1999 medical service revenue increased approximately 11% to $2,988,623
from $2,676,977 for the first nine months of 1998. For the three months ended
September 30, 1999, the increase in revenue from inpatient and outpatient
services was offset by lower usage of drugs and medications. For the nine months
ended September 30, 1999 the increase was primarily from the same sources and
was partially offset by the lower utilization of medications.
10
<PAGE>
Total operating expenses during the three months ended September 30,
1999 decreased 5% to $980,310 from $1,032,469 during the three months ended
September 30, 1998. For the first nine months of 1999, total operating expenses
increased 1% to $2,972,476 from $2,941,009 for the first nine months of 1998.
Total operating expenses include (i) Cost of medical services, (ii) Selling,
general and administrative expenses, and (iii) Rental expense, as follows:
Cost of medical services during the three months ended September 30,
1999 decreased 6% to $675,875 from $721,488 during the three months ended
September 30, 1998. For the first nine months of 1999, cost of medical services
increased 5% to $2,036,518 from $1,932,123 for the first nine months of 1998.
Cost of medical services primarily consists of two (2) categories: (i) Medical
services and supplies, and (ii) Outside services.
Medical services and supplies for the three months ended September 30,
1999 decreased approximately 11% to $574,001 from $649,343 for the three months
ended September 30, 1998. For the first nine months of 1998, medical services
and supplies increased 1% to $1,719,719 from $1,694,708 for the first nine
months of 1998. For the three months ended September 30, 1999, medical services
and supplies decreased due to the lower usage of drugs and medications, which
more than offset the rising usage of medical supplies prescribed due to the
increase in patient volume. The slight increase for the nine months ended
September 30, 1999 was primarily due to the same trends of increasing patient
volume and lower drug usage.
Outside services for the three months ended September 30, 1999
increased 41% to $101,874 from $72,145 for the three months ended September 30,
1998. For the first nine months of 1999, outside services increased 33% to
$316,799 from $237,415 for the first nine months of 1998. This increase was
primarily due to an increase in in-patient volume.
Selling, general and administrative expenses during the three months
ended September 30, 1999 decreased to $249,914 from $284,403 during the three
months ended September 30, 1998. This decrease is primarily related to two
items: (i) Reduced overhead of approximately $8,000; and (ii) Approximately
$25,000 in lower professional fees. For the first nine months of 1999, selling,
general and administrative expenses decreased 14% to $786,493 from $910,112 for
the first nine months of 1998. This decrease is primarily related to two items:
(i) Reduced administrative payroll of approximately $45,000, which was partially
offset by an increase of approximately $21,000 in other general and
administrative expenses; and (ii) Approximately $101,000 in lower professional
fees.
Depreciation and amortization expenses during the nine months ended
September 30, 1999 increased to $97,247 from $54,602 during the nine months
ended September 30, 1998. This increase in expenses is a result of capitalized
medical equipment leases.
Other expenses increased from $42,795 to $66,231 for the three months
ended September 30, 1999 and September 30, 1998. Other expenses increased during
the nine months ended September 30, 1999 to $181,861 from $133,717 during the
nine months ended September 30, 1998. The primary reason for this increase was
due to an increase in interest expense relating to capital lease obligations and
notes.
11
<PAGE>
As a result of the foregoing, the Company generated a net income of
$7,162 during the three months ended September 30, 1999, as compared to net loss
of $21,548 during the three months ended September 30, 1998. For the first nine
months of 1999, the Company experienced net income of $36,461 as compared to net
loss of $195,574 for the first nine months of 1998. The Company experienced
income from operations during the three months ended September 30, 1999 of
$73,393 compared to income from operations of $21,247 during the three months
ended September 30, 1998. For the first nine months of 1999, the Company
experienced an income from operations of $219,922 compared to loss from
operations of $60,257 for the first nine months of 1998. Management believes the
income from operations during the nine months ended September 30, 1999 resulted
from an increase in inpatient and outpatient services and from the streamlining
of operations.
As of December 31, 1998, the Company had net operating loss
carryforwards totaling approximately $4,700,000 and $2,000,000 for federal and
state income tax purposes, respectively. Utilization of the Company's net
operating loss may be subject to limitations under certain circumstances.
LIQUIDITY AND CAPITAL RESOURCES. At September 30, 1999, the ratio of
current assets to current liabilities was .63 to 1.00 compared to .53 at
December 31, 1998.
The Company has historically financed its operations through the use of
working capital and loans to the Company. The Company's cash flow needs for the
nine months ended September 30, 1999 were primarily provided from operations and
existing cash. The Company had a working capital deficit of approximately
$538,200 at September 30, 1999. The working capital deficit at December 31, 1998
was approximately $682,800.
Cash and cash equivalents were $34,818 as of September 30, 1999, as
compared to $27,754 as of December 31, 1998. During the first nine months of
1999, the Company generated $136,025 from operations, obtained $108,954 in
long-term financing and received $15,000 of equity through the exercise of stock
options. The primary use of funds was to repay $208,796 in long-term debt.
As of September 30, 1999, the Company had long-term borrowings in the
aggregate amount of $2,335,501 the current portion of which was $287,737. As of
December 31, 1998, the Company had aggregate long-term borrowings of $2,249,854.
During February 1999, the Company converted certain accounts payable of $212,166
into a note with monthly payments of $10,000 plus interest, to be paid in 23
installments.
In the second quarter of 1999, a lease receivable from Medipace Medical
Group, Inc., an affiliate of two of the Company's four (4) directors and largest
stockholders, was entered into which reduced an existing note from the affiliate
for a like amount. The Company received $75,000 in consideration for a lease
payable for the same amount. Both leases are identical in terms. These leases
are classified as capital leases in accordance with Statement of Financial
Accounting Standards No. 13, "Accounting for Leases." For accounting purposes,
the Company has treated this transaction as a financing arrangement. Payments
are due in installments through March 2004.
12
<PAGE>
As of September 30, 1999, the balance on the lease receivable discussed
in the previous paragraph was $67,969. The Company also had a note receivable
from the same group including accrued interest in the amount of $55,954, bearing
interest at the rate of 8% PER ANNUM.
During 1996, the Company sold certain assets for no gain or loss to
former affiliates for $71,219 of cash, net of encumbrances paid on those assets
of $78,781 and promissory notes totaling $865,202 that bore 8% interest and were
due September, 1996. The notes were collateralized by approximately 648,000
shares of the Company's Common Stock and were in default at December 31, 1996.
Subsequently, the notes were assumed by a third party, who purchased, from the
affiliate, approximately 630,000 shares of Common Stock. The third party
executed an additional $135,000 non-interest bearing note to the Company, which
is fully reserved. Both notes are due February, 2000 and are secured by
approximately 570,000 shares. During 1997, 60,000 shares of Common Stock were
sold and the proceeds were applied to reduce principal and accrued interest by
$3,412 and $73,388, respectively. The Company has provided for a valuation
allowance of $719,000 on the $861,790 of notes to reserve for the difference
between the approximate fair value of the collateral and the book value of the
notes.
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
acquirers will have significantly greater capital than the Company.
Recent Accounting Pronouncements
- --------------------------------
FASB recently issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted as of
December 31, 2000. SFAS No. 133 establishes standards for reporting financial
and descriptive information regarding derivatives and hedging activity. Since
the Company does not have any derivative instruments, this standard will have no
impact on the Company's financial position or results of operations.
Year 2000
- ---------
The Company has developed plans to address issues related to the impact
on its computer systems for the Year 2000. The Company has established a task
force with representatives from its operating units and financial management.
Financial and operational systems have been assessed and plans have been
developed to address systems modification requirements.
13
<PAGE>
The accounting systems have been tested and are Year 2000 compliant.
The major suppliers of the Company's operations hardware and software equipment
have provided information that the systems and embedded technology are Year 2000
compliant. A majority of the Company's other vendors have also indicated that
their systems are Year 2000 compliant.
The Company's business relies heavily upon its ability to obtain
reimbursement from third party payors, including Medicare, Medicaid and private
insurers. The Health Care Financing Administration ("HCFA") has testified to a
committee of the U.S. House of Representatives that it is far behind in
remedying Year 2000 problems. The failure of HCFA, Medicare intermediaries,
Medicaid payors or any of the Company's other significant third party payors to
remedy Year 2000 related problems could result in a delay in the Company's
receipt of payments for services, which could have a material adverse impact on
the Company's earnings, financial condition and business. Presently, the Company
cannot assess whether these governmental agencies will be prepared for the Year
2000. This may result in a material impact to the Company. A majority of the
Company's non-governmental customers has provided information indicating that
their systems are Year 2000 compliant and the Company does not expect any
significant impact on its earnings, financial condition or business.
The Company is aware that its dialysis and other medical systems may
include imbedded chips that process dates and date-sensitive material. These
imbedded chips are both difficult to identify in all instances and difficult to
repair. Often, total replacement of the chips is necessary. The manufacturer of
the majority of this equipment has certified it to be Year 2000 compliant. If
such systems should fail, there could be a material adverse impact on the
Company's earnings, financial condition and business.
The Company has developed contingency plans to address Year 2000 issues
should they arise including (i) making certain that back-up power generators at
certain locations, (ii) ensuring that alternative sources are available to
supply the Company with key medical supplies, or making appropriate alternative
arrangements, and (iii) the Company will arrange for alternative payment methods
with any principal payor who is adversely affected by Year 2000 issues.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
-------------------
The Company filed no report on a Form 8-K during the Quarterly Period
ended September 30, 1999.
(b) Exhibit
27. Financial Data Schedule
15
<PAGE>
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: November 12, 1999 NATIONAL QUALITY CARE, INC.
By: /s/ Ron Berkowitz
----------------------------
Ron Berkowitz
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 34,818
<SECURITIES> 0
<RECEIVABLES> 700,350
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 918,263
<PP&E> 2,638,592
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,605,228
<CURRENT-LIABILITIES> 1,456,506
<BONDS> 0
0
0
<COMMON> 98,898
<OTHER-SE> 2,060
<TOTAL-LIABILITY-AND-EQUITY> 3,605,228
<SALES> 2,988,623
<TOTAL-REVENUES> 3,192,398
<CGS> 2,972,476
<TOTAL-COSTS> 2,972,476
<OTHER-EXPENSES> 9,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,501
<INCOME-PRETAX> 38,061
<INCOME-TAX> 1,600
<INCOME-CONTINUING> 36,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,461
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
