<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the quarterly period ended March 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the transition period from ____________ to ____________.
Commission File Number 1-11111
THE TESSERACT GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1581297
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3800 West 80th Street
Suite 1400
Minneapolis, Minnesota 55431
- --------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(612) 837-8700
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
As of May 12, 1999, there were issued and outstanding 9,580,331 shares of Common
Stock, $.01 par value.
<PAGE>
THE TESSERACT GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
MARCH 31, 1999
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed consolidated balance sheets as of
March 31, 1999 and June 30, 1998 3
Condensed consolidated statements of operations for
the three months ended March 31, 1999 and 1998 4
Condensed consolidated statements of operations for
the nine months ended March 31, 1999 and 1998 5
Condensed consolidated statements of cash flows for
the nine months ended March 31, 1999 and 1998 6
Notes to condensed consolidated financial statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
Signatures 13
</TABLE>
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE TESSERACT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
(DOLLARS IN THOUSANDS) 1999 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,812 $ 5,543
Settlement receivable -- 650
Accounts receivable, net 3,084 2,370
Other current assets 2,172 1,927
------------ ------------
Total current assets 7,068 10,490
PROPERTY AND EQUIPMENT, NET 20,268 19,479
INTANGIBLE ASSETS, NET 16,751 18,984
OTHER ASSETS 1,624 310
------------ ------------
$ 45,711 $ 49,263
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit and other bank borrowings $ 1,633 $ 470
Accounts payable 821 984
Other current liabilities 6,193 5,767
------------ ------------
Total current liabilities 8,647 7,221
LONG-TERM OBLIGATIONS 7,614 8,578
OTHER 1,000 715
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000
shares authorized; no shares issued and outstanding -- --
Common stock, $.01 par value, 25,000,000 shares authorized;
issued and outstanding
9,580,331 shares at March 31, 1999 and
9,570,803 shares at June 30, 1998 96 96
Additional paid-in capital 57,704 57,673
Accumulated deficit (29,350) (25,020)
------------ ------------
Total shareholders' equity 28,450 32,749
------------ ------------
$ 45,711 $ 49,263
------------ ------------
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
THE TESSERACT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) March 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
REVENUE $ 11,184 $ 6,206
OPERATING EXPENSES 9,800 5,975
-------- --------
SCHOOL OPERATING PROFIT 1,384 231
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 1,125 1,430
-------- --------
OPERATING INCOME (LOSS) 259 (1,199)
-------- --------
OTHER INCOME (EXPENSE)
Investment income 44 119
Interest expense (205) (35)
-------- --------
(161) 84
-------- --------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE 98 (1,115)
INCOME TAX EXPENSE -- --
-------- --------
NET INCOME (LOSS) $ 98 $ (1,115)
-------- --------
-------- --------
NET INCOME (LOSS) PER COMMON SHARE -
BASIC AND DILUTED $ .01 $ (.12)
-------- --------
-------- --------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
BASIC 9,580 9,465
DILUTED 9,598 9,465
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
THE TESSERACT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) March 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
REVENUE $ 27,957 $ 8,751
OPERATING EXPENSES 28,737 8,734
-------- --------
SCHOOL OPERATING PROFIT (LOSS) (780) 17
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 3,386 3,503
-------- --------
OPERATING LOSS (4,166) (3,486)
-------- --------
OTHER INCOME (EXPENSE)
Investment income 182 703
Interest expense (346) (37)
-------- --------
(164) 666
-------- --------
LOSS BEFORE INCOME TAX EXPENSE (4,330) (2,820)
INCOME TAX EXPENSE -- --
-------- --------
NET LOSS $ (4,330) $ (2,820)
-------- --------
-------- --------
NET LOSS PER COMMON SHARE -
BASIC AND DILUTED $ (.45) $ (.34)
-------- --------
-------- --------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 9,579 8,249
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<PAGE>
THE TESSERACT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
(IN THOUSANDS) March 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (4,330) $ (2,820)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 2,082 477
Changes in operating assets and liabilities 353 84
-------- --------
Net cash used in operating activities (1,895) (2,259)
-------- --------
INVESTING ACTIVITIES
Purchase of Sunrise Educational Services, Inc.,
net of cash acquired -- (6,465)
Purchase of Academy of Business, Inc.,
net of cash acquired (106) (1,526)
Cash of Preschool Services, Inc. 1,137 --
Additions to property and equipment (14,689) (6,341)
-------- --------
Net cash used in investing activities (13,658) (14,332)
-------- --------
FINANCING ACTIVITIES
Proceeds from exercise of stock options 31 417
Proceeds from financing transactions 12,295 --
Prepayment of facility financing costs (581) --
Advances on line of credit 799 --
Repayment of long-term debt and short term borrowings (722) (123)
-------- --------
Net cash provided by financing activities 11,822 294
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (3,731) (16,297)
Cash and cash equivalents at beginning of period 5,543 23,246
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,812 $ 6,949
-------- --------
-------- --------
</TABLE>
See notes to condensed consolidated financial statements.
-6-
<PAGE>
THE TESSERACT GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting solely of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three-month and nine-month periods ended March 31, 1999, are not
necessarily indicative of the results that may be expected for the year
ending June 30, 1999. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended June 30, 1998.
2. ACCOUNTING POLICIES
BASIS OF CONSOLIDATION: The condensed consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
Intercompany balances and transactions have been eliminated in
consolidation.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and contingency
disclosures included in the financial statements. Ultimate results could
differ from these estimates.
3. PRESCHOOL SERVICES, INC.
The Company adopted the general guidelines of Emerging Issues Task Force
97-2 effective July 1, 1998, and accordingly has consolidated Preschool
Services, Inc. ("PSI"), a Hawaii non-profit corporation, in which the
Company has a controlling interest. Prior to the Company's December 1997
acquisition of Sunrise Educational Services, Inc. ("Sunrise"), Sunrise had
transferred a portion of its operations to PSI. Sunrise provides PSI with
management, administration, and an educational program for PSI's child care
centers and charter schools and leases substantially all of the equipment
and other property necessary for the operation of the related educational
facility to PSI under an Administrative Services Agreement, License and
Equipment Lease (the "PSI Agreement"). The PSI Agreement stipulates that
Sunrise is to receive a fee for providing the services described above. The
results of operations of PSI for the period from the acquisition of Sunrise
(December 18, 1997) through June 30, 1998, were not material to the
consolidated financial statements of the Company for the year ended June
30, 1998.
Prior to its acquisition by the Company, Sunrise had written off amounts
due from PSI due to the historical and anticipated inability of PSI to
generate sufficient cash flow to make the lease and other payments due to
Sunrise. As of June 30, 1998, the cumulative amount written off by Sunrise
related to the PSI Agreement approximated $1,800,000. During the nine
months ended March 31, 1999, PSI generated sufficient cash flow to
reimburse Sunrise the entire amount previously written off. This
reimbursement has been recorded as a reduction of previously recorded
goodwill associated with the Sunrise acquisition.
-7-
<PAGE>
4. FINANCING OBLIGATIONS
LINE OF CREDIT
On March 31, 1999, the Company entered into an agreement with Pioneer
Venture Fund LLC ("Pioneer") in which Pioneer agreed to provide the Company
a $5,000,000 working capital line of credit. Pioneer is a private
investment group in which one of the Company's board members is a Managing
Member.
In consideration for providing this line of credit, the Company issued to
Pioneer a warrant to purchase 150,000 shares of the Company's common stock
at $3.00 per share. The fair value of these warrants, as calculated by the
Black-Scholes option-pricing model, is $180,000 and will be amortized over
the term of the line of credit. Interest on the outstanding principal
balance on the line is payable at 12%.
If the outstanding principal and interest is not paid in full by September
30, 1999, the line of credit is automatically extended to March 31, 2000.
Upon such extension, the Company is obligated to issue a warrant to Pioneer
to purchase an additional 250,000 shares of the Company's common stock at
$3.00 per share. If the outstanding principal and interest is not paid in
full by March 31, 2000, or if the Company defaults (as defined in the
agreement) at any time during the term of the agreement, Pioneer will have
the ability to convert the then outstanding principal and interest balance
into common shares of the Company at the lesser of $1.00 per share or the
lowest closing price during the 30 days prior to the conversion of the
shares.
At March 31, 1999, the outstanding principal balance on the line of credit
was $799,000.
INSTALLMENT NOTES
On March 31, 1999, the Company amended its Credit and Security Agreement
with a bank related to approximately $834,000 of installment notes,
originally due at various times through August 2003. The amendment waived
all past financial covenant violations and eliminated all financial
covenants going forward. In consideration for the covenant revisions, the
Company agreed to accelerate the repayment of the notes to January 2000.
LONG-TERM OBLIGATIONS
During the nine months ended March 31, 1999, the Company received proceeds
totaling $5,800,000 on the refinancing of two private school facilities,
representing the facilities cost. Under the terms of the refinancing
agreements, title to these properties has been transferred to the lender
and the lender has been granted a security interest in certain assets of
the Company. Interest payments on the financing, amounting to approximately
$630,000 on an annual basis, are subject to annual increases based upon
changes in the Consumer Price Index. The financing obligations are
structured as leases, having an initial term of 15 years, with the Company
having two 10-year renewal options. The terms of the lease require that the
Company prepay, on September 1 of each year, the next 12 months rent and
estimated property taxes and property insurance premiums into an account
jointly controlled by the Company and the lender.
-8-
<PAGE>
During March 1999, the Company amended these two facility leases, as well
as two additional private school facility leases entered into by the
Company during fiscal 1998. The amendment eliminated the security interest
the lender had in certain assets of the Company and changed the structure
of the leases to operating leases. As a result, the Company has removed the
property and equipment and associated financing debt from its balance sheet
at March 31, 1999. The gain on the sale and leaseback of these facilities
is being amortized over the remaining term of the lease. Payments under
these leases, totaling $355,000 and $932,000 in the three and nine months
ended March 31, 1999, respectively, previously incurred as interest expense
have been reclassified as operating expenses in the accompanying condensed
consolidated statements of operations in order to improve the comparability
of the statements of operations between periods.
During the nine months ended March 31, 1999, the Company also financed a
newly constructed private school facility with a $6,500,000 mortgage. The
terms of the mortgage require the Company prepay, on September 1 of each
year, the next 12 months principal and interest payments, estimated
property taxes, and property insurance premiums into an account jointly
controlled by the Company and the lender. Upon meeting certain financial
criteria at the school, the Company can require the lender to refinance the
facility with sale/leaseback financing. In addition, the lender has the
option to refinance the facility with sale/leaseback financing at any time.
5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information ("SFAS No. 131"), will be
effective for the Company's fiscal year ending June 30, 1999. SFAS No. 131
requires disclosures of business and geographic segments in the
consolidated financial statements of the Company. The Company is currently
analyzing the impact it will have on the disclosures in its financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenue for the three and nine months ended March 31, 1999, was $11,184,000 and
$27,957,000, respectively, compared to $6,206,000 and $8,751,000 for the same
periods of the prior year. Operating expenses for the three and nine months
ended March 31, 1999, were $9,800,000 and $28,737,000, respectively, compared to
$5,975,000 and $8,734,000 for the same periods of the prior year. The increase
in both revenue and operating expenses in the current year three-month period is
a result of the opening of four new TesseracT private and charter schools in
September 1998 along with the consolidation of the results of operations of
Preschool Services, Inc. ("PSI") in the current year (see Note 3).
The increase in revenue and operating expenses in the current year nine-month
period is a result of the new TesseracT private and charter schools and the
consolidation of PSI, mentioned above, along with a full nine months of
operations from Sunrise Educational Services, Inc. ("Sunrise") and Academy of
Business, Inc. ("ABC"). The Company acquired Sunrise in December 1997, while the
acquisition of ABC occurred in January 1998.
-9-
<PAGE>
School operating profit increased from $231,000 for the three months ended March
31, 1998, to $1,384,000 for the three months ended March 31, 1999. This
improvement is primarily attributed to strong operating results from the
Company's charter school operations in the current year third quarter, offset
somewhat by the current year quarter operating results at the Company's ABC
business unit. For the nine months ended March 31, 1999, the Company recorded a
school operating loss of $780,000, compared to an operating profit of $17,000 in
the same period last year. The decline in operating results in the current year
nine-month period is primarily attributed to the operating results at ABC. The
current year period includes a full nine months of operations at ABC, compared
to only the three months subsequent to the acquisition being included in the
prior year.
Selling, general, and administrative expenses totaled $1,125,000 and $3,386,000
in the three and nine-month periods ended March 31, 1999, respectively, compared
to $1,430,000 and $3,503,000 for the same periods of the prior year. The
reduction in the current year three and nine-month periods is primarily due to
lower new school development costs incurred in the current year. New school
development costs represent costs incurred in one fiscal year for schools that
are planned to open in the following year. New school development costs in the
current year three and nine month periods totaled $64,000, compared to $284,000
and $325,000 in the prior year three and nine month periods, respectively.
Current year new school development costs are associated with the charter
schools the Company anticipates opening in the fall of 1999. Prior year costs
related to the three TesseracT private schools and one TesseracT charter school
that the Company opened in the fall of 1998. New school development costs
related to a new private school are typically higher than a charter school due
to the greater level of marketing and student recruitment necessary to open a
new private school.
At June 30, 1998, other current liabilities included a reserve for contract
contingencies related to the Company's past dealings with Baltimore and Hartford
totaling approximately $700,000. This reserve had been provided primarily to
address any remaining issues related to the Company's public school management
contracts in Baltimore and Hartford. Based upon a review by management during
the third quarter, it was determined that the potential for any additional
issues to arise from Baltimore or Hartford is remote and that the reserve for
contract contingencies is no longer necessary. The Company has also announced
that by the end of the current fiscal year, it will complete a relocation of its
corporate offices from Minneapolis to Phoenix. Related to this move, the Company
established a relocation reserve in the third quarter totaling approximately
$725,000 for relocation, severance and other costs associated with this move.
Investment income totaled $44,000 and $182,000, respectively, in the three and
nine months ended March 31, 1999, compared to $119,000 and $703,000 in the same
periods of the prior year. The current year decrease is due to lower cash
investment levels.
The Company recorded interest expense of $205,000 and $346,000 in the three and
nine month periods ended March 31, 1999, primarily resulting from the mortgage
financing on its newly constructed North Scottsdale private school facility. As
discussed in Note 4, the Company has reclassified amounts previously reported as
interest expense related to the financing of four of its private school
facilities to operating expenses.
The Company reported net earnings of $98,000 or $.01 per share in the three
months ended March 31, 1999, compared to a net loss of $1,115,000 or $.12 per
share in the same period of the prior year. Increases in operating results at
the Company's charter schools and lower selling, general, and administrative
costs offset by operating results at ABC and an increase in net interest expense
in the third quarter, account for the improved results.
For the nine months ended March 31, 1999, the Company reported a net loss of
$4,330,000 or $.45 per share, compared to a net loss of $2,820,000 or $.34 per
share for the same period of the prior year. Lower operating results at ABC and
an increase in net interest expense account for the increase in the net loss in
the current year nine-month period.
-10-
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
During the nine months ended March 31, 1999, net cash used in operating
activities totaled $1,895,000, primarily due to the net loss incurred during the
nine months, offset by changes in operating assets and liabilities and non-cash
charges.
At March 31, 1999, the Company has a deficit in working capital of $1,579,000.
Due to the nature of the Company's business, a significant amount of cash will
be received for the operation of its private schools in the first quarter of the
fiscal year. The Company intends to utilize cash generated from operations and
draws on the working capital line of credit discussed in Note 4 to fund any cash
shortfalls through the end of the current fiscal year end.
Additions to property and equipment during the first nine months of the year
totaled $14,689,000, primarily related to costs at two new private schools
constructed in the Phoenix metropolitan area during the first half of the
current fiscal year. These two schools were subsequently refinanced during the
second quarter, generating proceeds of approximately $11,750,000. The remaining
capital additions relate to computers, furniture and other items at these two
schools as well as certain of the Company's other schools.
As noted in Note 4, in March 1999, the Company entered into an agreement for a
$5,000,000 working capital line of credit. At March 31, 1999, the Company has
outstanding draws on the line totaling $799,000. In addition, in March 1999, the
Company restructured the installment notes it has outstanding with a bank. In
consideration for the bank waiving past covenant violations and removing
financial covenants going forward, the Company agreed to accelerate the
repayment of the notes to January 2000.
The Company is currently constructing an addition to its North Scottsdale
private school, with construction related costs approximating $2,200,000.
Interim and long-term financing has been secured for approximately 85% of the
cost of this project. The balance will be funded by the Company. At March 31,
1999, costs totaling approximately $1,200,000 have been incurred on this
project. The Company has also entered into commitments to construct two charter
schools in the Phoenix metropolitan area, with total costs approximating
$11,300,000. The Company is currently pursuing different alternatives regarding
the interim construction financing and long-term permanent financing of these
two schools. The Company will utilize the line of credit to finance the
construction until alternative financing is obtained.
Management currently believes that cash on hand, including the available balance
on the line of credit, along with cash projected to be generated from operations
will be adequate to ensure uninterrupted performance of its operating
obligations as currently structured and anticipated. If the Company does not
achieve it's projected operating results or is unable to secure interim and
long-term financing on the two charter schools being constructed, management
believes it has options available to obtain necessary capital, including
issuance of subordinated debt or private placement equity financing. There can
be no assurance, however, that these sources would be available to the Company
on acceptable terms, or at all.
YEAR 2000 ISSUE
Based on an internal analysis, the Company does not believe that the Year 2000
issue will materially affect its information technology, which consists of the
Company's financial and accounting systems. The Company is in the process of
integrating its current multiple financial and accounting systems into a
consolidated system that will be Year 2000 compliant. This integration is
scheduled to be completed in 1999. Failure to meet such schedule may have a
material adverse effect on the Company's operations. The Company anticipates
incurring costs of approximately $200,000 over the next six months to replace
its current financial systems and replace or upgrade related hardware.
-11-
<PAGE>
The Company does not believe that the Year 2000 compliance of its suppliers or
customers will materially effect the Company's operations. The Company does not
intend to solicit assurances of Year 2000 compliance from its suppliers because
the products purchased from such suppliers are available from numerous
substitute sources and are not fundamental to the Company's operations as a
service provider. The Company's customers consist primarily of individuals who
make tuition payments to the Company on behalf of themselves or their children
in exchange for educational services. The Company does not believe soliciting
assurances of Year 2000 compliance from its customers is practical or necessary
as the ability of these customers to make tuition payments is not expected to be
materially affected by the Year 2000 issue.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
27 Financial Data Schedule (EDGAR version only).
(b) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed during the three months ended
March 31, 1999.
-12-
<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.
THE TESSERACT GROUP, INC.
Date: May 13, 1999 By /s/ John T. Golle
-----------------
John T. Golle
Chairman and Chief
Executive Officer
Date: May 13, 1999 By /s/ Richard C. Yonker
---------------------
Richard C. Yonker
Chief Financial Officer
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,812
<SECURITIES> 0
<RECEIVABLES> 3,084
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,068
<PP&E> 20,268
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,711
<CURRENT-LIABILITIES> 8,647
<BONDS> 7,614
0
0
<COMMON> 96
<OTHER-SE> 28,354
<TOTAL-LIABILITY-AND-EQUITY> 45,711
<SALES> 0
<TOTAL-REVENUES> 27,957
<CGS> 0
<TOTAL-COSTS> 28,737
<OTHER-EXPENSES> 3,386
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 346
<INCOME-PRETAX> (4,330)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,330)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,330)
<EPS-PRIMARY> (.45)
<EPS-DILUTED> (.45)
</TABLE>
