<PAGE>
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, 1996; 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 1-19577
-------
HARMONY HOLDINGS, INC.
--------------------------------
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
Delaware 95-4333330
- - ------------------------------- ------------------
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
1990 WESTWOOD BOULEVARD, SUITE 310
-------------------------------------------
LOS ANGELES, CALIFORNIA 90025-4676
-------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(310) 446-7700
----------------------------------
(Registrant's Telephone Number, Including Area Code)
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
------- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
<TABLE>
<CAPTION>
Class Outstanding at May 7, 1996
----------------------- --------------------------
<S> <C>
Common Stock, par value 5,693,198 Shares
$.01 per share
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
ITEM 1.
<S> <C>
FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets: 3
March 31, 1996 (unaudited) and June 30, 1995
Consolidated Statements of Operations (unaudited): 4
Nine Months Ended March 31, 1996 and 1995
Consolidated Statements of Operations (unaudited): 5
Three Months Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows (unaudited): 6
Nine Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 7
</TABLE>
2
<PAGE>
HARMONY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
----------- -----------
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 61,955 $ 229,909
Accounts receivable 5,147,853 5,294,213
Unbilled accounts receivable 1,389,807 1,434,402
Prepaid expenses and other assets 373,753 748,330
----------- -----------
Total current assets 6,973,368 7,706,854
Property and equipment, at cost, less
accumulated depreciation and amortization 1,604,785 1,581,891
Goodwill, less accumulated amortization 3,022,391 3,181,226
Other assets 232,147 484,974
----------- -----------
Total assets $11,832,691 $12,954,945
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,148,184 $ 2,267,134
Accrued liabilities 2,676,867 2,815,721
Bank line of credit 2,000,000 0
Deferred income 775,733 1,113,040
----------- -----------
Total current liabilities 6,600,784 6,195,895
Subordinated notes payable 385,000 385,000
----------- -----------
Total Liabilities 6,985,784 6,580,895
Commitments and contingencies
Stockholders' Equity:
Preferred Stock, $.01 par value, authorized
10,000,000 shares; none issued
Common stock, $.01 par value, authorized
20,000,000 shares, issued and
outstanding 5,693,198 and 5,660,220 56,933 56,608
Additional paid-in capital 12,735,136 12,673,902
Accumulated deficit (7,945,162) (6,356,460)
----------- -----------
Stockholders' equity 4,846,907 6,374,050
----------- -----------
Total Liabilities and stockholders' equity $11,832,691 $12,954,945
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
HARMONY HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
--------------------------
<S> <C> <C>
Contract revenues $50,395,467 $46,457,923
Cost of production 43,056,478 40,389,210
----------- -----------
Gross profit 7,338,989 6,068,713
----------- -----------
Selling expenses 2,272,369 1,996,398
Operating expenses 5,054,417 3,428,795
Write off of abandoned projects 621,528 0
Litigation expense 200,000 486,050
Severance salaries 186,488 0
Depreciation and amortization 419,389 394,824
----------- -----------
Income (loss) from operations (1,415,202) (237,354)
Interest income 4,620 37,704
Interest expense (178,120) (31,782)
----------- -----------
Net income (loss) $(1,588,702) $ (231,432)
=========== ===========
Net income (loss) per share $(0.28) $(0.04)
Weighted average shares outstanding 5,693,198 5,511,394
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
HARMONY HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
--------------------------
<S> <C> <C>
Contract revenues $18,601,032 $18,069,753
Cost of production 15,908,221 16,301,035
----------- -----------
Gross profit 2,692,811 1,768,718
Selling expenses 813,891 785,480
Operating expenses 1,573,784 1,264,440
Litigation expense 0 486,050
Depreciation and amortization 136,990 155,718
----------- ----------
Income (loss) from operations 168,146 (922,970)
Interest income 3,488 11,232
Interest expense (68,185) (26,541)
----------- ----------
Net income (loss) $ 103,449 $ (938,279)
=========== ==========
Net income (loss) per share $0.02 $(0.17)
Weighted average shares outstanding 5,693,198 5,511,394
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
HARMONY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,588,698) $ (231,432)
Adjustments to reconcile net loss to
cash used by operating activities:
Depreciation and amortization 419,389 394,824
Amortization of prepaid interest 68,819 0
Changes in assets and liabilities:
Accounts receivable 146,360 (2,695,341)
Unbilled accounts receivable 44,595 (1,285,445)
Prepaid expenses and other assets 371,361 145,990
Other assets 184,004 (211,866)
Accounts payable (1,118,950) 725,761
Accrued liabilities (138,854) 2,122,263
Deferred income (337,307) 186,654
----------- -----------
Net cash used by operating activities (1,949,281) (848,592)
----------- -----------
Cash flows from investing activities:
Capital expenditures (280,232) (564,217)
----------- -----------
Net cash used by investing activities (280,232) (564,217)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of stock 61,559 585,283
Borrowings under bank line of credit 10,400,000 0
Repayments of bank line of credit (8,400,000) 0
Subordinated notes payable 0 385,000
----------- -----------
Net cash provided by financing activities 2,061,559 970,283
----------- -----------
Net decrease in cash (167,954) (442,526)
Cash, beginning of period 229,909 662,777
----------- -----------
Cash, end of period $ 61,955 $ 220,251
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
6
<PAGE>
HARMONY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 1996
(1) Basis of presentation
---------------------
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
accruals) which are, in the opinion of management, necessary to present fairly
the results of operations for the periods presented.
The information contained in this Quarterly Report on Form 10-Q should be
read in conjunction with the audited financial statements as of June 30, 1995
filed as part of the Company's Annual Report on Form 10-K.
(2) Reclassifications
-----------------
The Company has reclassified the following at March 31, 1995 (as reported
on the Quarterly report on Form 10-Q at March 31, 1995) to make the financials
comparable with March 31, 1996; $1,215,089 and $487,112 in sales commissions and
$781,309 and $298,368 of other selling expenses for the nine months and three
months ended March 31, 1995, respectively, have been reclassified from operating
expense to selling expense.
Litigation expense has been reclassified to operating expense and $283,950
insurance receivable has been reclassified from revenue to reduece the
litigation expense at March 31, 1995.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- - ---------------------
For the nine months ended March 31, 1996 as compared with the nine months ended
- - -------------------------------------------------------------------------------
March 31, 1995
- - --------------
For the nine months ended March 31, 1996, revenues increased by
approximately 8%, or $3,937,426 to $50,395,467 from $46,457,923 for the nine
months ended March 31, 1995. The increase in revenues is primarily attributable
to a 40%, or $4,825,000 increase in revenues by one of the Company's
subsidiaries offset by a 6%, or $1,303,000 decrease in revenues by another
subsidiary.
Cost of Production is directly related to revenues and includes all direct
costs incurred in connection with the production of television commercials and
music videos, including film, crews, location fees and directors' fees. Cost of
production for the nine months ended March 31, 1996 increased by approximately
7%, or $2,667,268 to $43,056,478 from $40,389,210 for the nine months ended
March 31, 1995. Expressed as a percentage of revenues, cost of sales for the
nine months ended March 31, 1996 was approximately 85% as compared to
approximately 87% for the nine months ended March 31, 1995 and resulted in a
gross profit percentage of approximately 15% and 13% for these periods,
respectively. The decrease in cost of production expressed as a percentage of
revenues and the resultant increase in gross profit for the nine months ended
March 31, 1996 was primarily due to management's continued efforts to increase
the gross margin.
Selling expenses consist of sales commissions, advertising and promotional
expenses, travel and other expenses incurred in the securing of commercial
contracts. Selling expenses for the nine months ended March 31, 1996 increased
to $2,272,369 from $1,996,398 for the nine months ended March 31, 1995,
representing an increase of $275,971. Selling commissions increased by $14,874
while other selling expenses increased by $261,097. The increase in other
selling expenses is primarily attributed to a $153,000 increase in sample reels
and speculation pieces, a $45,000 increase in advertising expense and $50,000
related to the two new subsidiaries.
Operating expenses consist of overhead costs such as office rent and
expenses, executive, general and administrative payroll, and related items.
Operating expenses for the nine months ended March 31, 1996 increased to
$5,054,417 from $3,428,795 for the nine months ended March 31, 1995,
representing an increase of $1,625,622. Approximately $944,000 relates to
subsidiaries that have been closed or are in the process of closing. The
following account for the primary additional increases in operating expenses,
salaries $210,000, legal and accounting $190,000, rent and miscellaneous office
expenses $195,000 and $60,000 related to bad debts incurred from receivables
with former employees and affiliates of the Company .
Litigation expense for March 31, 1996 and 1995 relate the termination and
settlement with a former officer of the Company. The $200,000 expense at March
31, 1996 was due to a revision of a insurance reimbursement receivable.
8
<PAGE>
Interest expense for the nine months ended March 31, 1996 increased by
$146,338 to $178,120 from $31,782. The increase was due to the utilization of
the bank line of credit.
Net income (loss) for the nine months ended March 31, 1996 and March 31,
1995, includes losses of $1,735,643 and $286,077 related to subsidiaries that
have been closed or are in the process of closing.
For the three months ended March 31, 1996 as compared with the three months
- - ---------------------------------------------------------------------------
ended March 31, 1995
- - --------------------
For the three months ended March 31, 1996, revenues increased by
approximately 3%, or $531,279, to $18,601,032 from $18,069,753 for the three
months ended March 31, 1995. The level of revenues earned by the Company is
comparable with the prior years quarter.
Cost of production for the three months ended March 31, 1996 decreased by
approximately 2%, or, $392,814 to $15,908,221 from $16,301,035 for the three
months ended March 31, 1995. Expressed as a percentage of revenues, cost of
production for the three months ended March 31, 1996 was approximately 86% as
compared to approximately 89% for the three months ended March 31, 1995 and
resulted in a gross profit percentage of approximately 14% and 11% for these
periods, respectively. The decrease in cost of production expressed as a
percentage of revenues and the resultant increase in gross profit for the three
months ended March 31, 1996 was primarily due to management's continued efforts
to increase the gross margin.
Selling expenses consist of sales commissions, advertising and promotional
expenses, travel and other expenses incurred in the securing of commercial
contracts. Selling expenses for the three months ended March 31, 1996 increased
to $813,891 from $785,480 for the three months ended March 31, 1995,
representing an increase of $28,411. The level of selling expense incurred by
the Company is comparable with the prior years quarter.
Operating expenses consist of overhead costs such as office rent and
expenses, executive, general and administrative payroll, and related items.
Operating expenses for the three months ended March 31, 1996 increased to
$1,573,784 from $1,264,440 for the three months ended March 31, 1995,
representing an increase of $309,344. Approximately, $253,000 relates to
subsidiaries that have been closed or are in the process of closing.
Litigation expense for the three months ended March 31, 1995, relate the
termination and settlement with a former officer of the Company.
Interest expense for the three months ended March 31, 1996 increased by
$41,644 to $68,185 from $26,541. The increase was due to the utilization of the
bank line of credit.
Net income (loss) for the three months ended March 31, 1996 and March 31,
1995, includes losses of $471,265 and $224,836 related to subsidiaries that have
been closed or are in the process of closing.
9
<PAGE>
Liquidity and Capital Resources
- - -------------------------------
For the nine months ended March 31, 1996 as compared with the nine months ended
- - -------------------------------------------------------------------------------
March 31, 1995
- - --------------
As of March 31, 1996, the Company had working capital of $372,584,
including cash of $61,955 compared with $1,510,959, including cash of $229,909
at March 31, 1995. Cash used in operating activities for the nine months ended
March 31, 1996 increased approximately 130% or $1,100,689 to $1,949,281 from
$848,592 for the nine months ended March 31, 1995. The material increases in the
amount of cash used in operations were $1,357,266 increase in loss from
operations; $4,171,741 decrease in billed and unbilled accounts receivable and
$4,105,828 decrease in accounts payable and accrued expenses. Cash used in
investing activities for the nine months ended March 31, 1996 decreased
approximately 50%, or $283,985, to $280,232 from $564,217 for the nine months
ended March 31, 1995. Cash provided by financing activities for the nine months
ended March 31, 1996 increased approximately $1,091,276 to $2,061,559 from
$970,283 for the nine months ended March 31, 1995. The material increase in the
amount of cash provided by financing activities consisted of a $523,724 decrease
in the proceeds from the issuance of stock, a $2,000,000 increase in borrowings
under the Company's bank line of credit agreement and a $385,000 decrease in
issuance of subordinated notes payable.
On May 10, 1995, the Company entered into a $3,000,000 asset based revolving
line of credit with a bank, with interest at the bank's prime rate plus 1.0% per
annum, collateralized by the assets of the Company. The bank prime rate at March
31, 1996 was 8.25%. The agreement expires October 31, 1996. Borrowing is based
upon certain percentages of acceptable receivables. As of March 31, 1996, the
Company had $2,000,000 outstanding under the line. The loan agreement has
certain financial covenants one of which is to maintain $1,250,000 of net worth
on a quarterly basis. As of March 31, 1996 the Company was not in compliance
with this requirement and the noncompliance was waived by the bank.
To the extent that future revenues and related gross profits from the
Company's operations do not provide sufficient funds to offset operating costs,
the Company's present resources will decrease. The Company has entered into
various employment agreements with its commercial directors, salespeople and
corporate and subsidiary officers which obligate it to make minimum payments of
approximately $2,411,660 during the twelve months ending March 31, 1997. Certain
of these agreements provide for additional compensation based on revenues and
other items. Other agreements provide for additional compensation based on
certain defined operating profits. This additional compensation is payable
whether or not the Company has a profit. The Company has no material commitments
for capital expenditures. Based on the availability of the line of credit,
subject to the qualifications of the preceding paragraph, management believes
that the Company's present cash and other resources are sufficient for its needs
for at least the next twelve months.
For the three months ended March 31, 1996 as compared with the three months
- - ---------------------------------------------------------------------------
ended March 31, 1995
- - --------------------
Cash provided by operating activities for the three months ended March 31,
1996 decreased approximately 34%, or $119,742 to $236,866 from $356,608 for the
three months ended March 31, 1995. The material decreases in the amount of cash
provided by operations consisted of a $1,041,727 decrease in loss from
operations; $2,085,303 decrease in accounts payable and accrued expenses,
$2,369,253 decrease in deferred income and $2,970,664 decrease in
10
<PAGE>
accounts receivable and unbilled accounts receivable. Cash used in investing
activities for the three months ended March 31, 1996 decreased approximately 70%
or $196,799 to $85,880 from $282,679 for the three months ended March 31, 1995.
Cash provided by financing activities for the three months ended March 31, 1996
decreased approximately $347,638 to cash used in financing activities of
$200,000 from cash provided by financing activities of $147,638 for the three
months ended March 31, 1995. The material decrease in the amount of cash
provided by financing activities was $200,000 decrease in the amount outstanding
under the bank line of credit.
Inflation
- - ---------
Inflation has not had a significant effect on the Company.
11
<PAGE>
ITEM 5. Other Information
-----------------
On January 19, 1996, Gary Horowitz was terminated as Chief Executive Officer
and President of the Company. On January 29, 1996 Gary Horowitz resigned his
position as a member of the Company's board of directors.
On April 18, 1996, the Company received a proposal to sell 100% of the
outstanding shares of the Company to Unimedia S.A. and Capital Media Group
Limited for stock and cash priced at $3.50 per share, one third cash and two
thirds common stock of Capital Media Group. The transaction is subject to, among
other things, completion of due diligence, Negotiation and execution of a
Definitive Agreement, approval of the various Boards of Directors and approval
of a majority of the shareholders of the Company.
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits -
---------
10. Proposal to sell 100% of the Company's stock.
17. Horowitz resignation.
(b) Reports on Form 8-K - None
-------------------
No other Items of Part II of the Quarterly Report on Form 10-Q are applicable
to the period covered by this Quarterly Report on Form 10-Q.
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.
HARMONY HOLDINGS, INC.
Date: May 10, 1996
By /s/ Harvey Bibicoff
----------------------
Harvey Bibicoff
Chairman of the Board, Chief Executive Officer
Date: May 10, 1996
By /s/ Brian Rackohn
--------------------
Brian Rackohn
Chief Financial Officer, Secretary
(Principal Financial and Chief Accounting Officer)
13
<PAGE>
<TABLE>
<CAPTION>
UNIMEDIA S.A. CAPITAL MEDIA (UK) LIMITED
- - ----------------------- --------------------------
<S> <C>
Immueble ie levant Mayfair House
2, rue du nouveau Bercy 40 South Audley Street
94220, Charenton London W1Y 5DH
France England
Tel: 33 1 43 53 69 99 Tel: 44 171 495 8662
Fax: 33 1 43 75 12 37 Fax: 44 1 171 629 78 70
</TABLE>
April 18, 1996
Harvey Bibicoff
Harmony Holdings, Inc.
Chairman of the Board
1990 Westwood Blvd.
Los Angeles, CA 90025
Dear Harvey,
This is a proposal for the purchase of Harmony.
Capital Media Group Ltd. (CMG) and Unimedia S.A. (Unimedia) would buy up to
100% of the stock of Harmony Holdings, Inc. (Harmony) at a purchase price of
$3.50 per share of which one third would be paid in cash and two thirds would be
paid in the common stock of CMG.
The price of the CMG stock would be determined using a five day closing price
average at the time of shareholders' approval.
A Purchase and Merger Agreement (the Agreement) will be negotiated in good
faith and executed expeditiously.
This Agreement will contain all of the usual, necessary and appropriate
representations, warranties and covenants.
The completion of the contemplated transaction is subject to:
a) Satisfactory completion of a due diligence review by Harmony and CMG
and by CMG and Unimedia on Harmony.
14
<PAGE>
b) Execution of the Agreement (in a form satisfactory to each of the
parties).
c) Approval of the transaction by the respective Boards of Directors of
Harmony, CMG and Unimedia.
d) Approval of the transaction by Harmony's stockholders.
e) Approval of the transaction by regulatory authorities having
jurisdiction.
Neither Harmony, CMG nor Unimedia will issue a Press release or other
disclosure of this contemplated transaction without prior approval of the other,
which will not be unreasonably withheld unless, in the good faith opinion of
counsel, such disclosure is required by law and time does not permit the request
of such consent.
We propose to start due diligence immediately. We expect an answer from our
boards by next week.
Since this letter confirms our mutual understanding of the contemplated
transaction, you are kindly requested to confirm your acceptance and
understanding of the above by signing and returning a copy of this letter.
Kindest regards,
Your sincerely,
Gilles Assouline
Chairman and CEO
For and on behalf of
Unimedia S.A.
Charles R. Koppel
Chairman and CEO
For and on behalf of
Capital Media Group Limited
Signed in acceptance and understanding of the above
Harvey Bibicoff
Chairman of the Board
For and on behalf of
Harmony Holdings, Inc.
15
<PAGE>
<TABLE>
<CAPTION>
UNIMEDIA S.A. CAPITAL MEDIA (UK) LIMITED
- - ------------- --------------------------
<S> <C>
Immueble ie levant Mayfair House
2, rue du nouveau Bercy 40 South Audley Street
94220, Charenton London W1Y 5DH
France England
Tel: 33 1 43 53 69 99 Tel: 44 171 495 8662
Fax: 33 1 43 75 12 37 Fax: 44 1 171 629 78 70
</TABLE>
April 24, 1996
Harvey Bibicoff
Harmony Holdings, Inc.
Chairman of the Board
1990 Westwood Blvd.
Los Angeles, CA 90025
Dear Harvey,
These are additional comments on our proposal to purchase 100% of the stock of
Harmony Holdings, Inc. (Harmony).
1-CMG and Unimedia will loan Harmony between US $500,000 and One million
US $ on terms to be further discussed.
2-We are preparing information on Capital Media and Unimedia including
financial statements and a confidential Business Plan. We should DHL
these documents to you within a week.
3-Unimedia's attorney is:
-Mr. Alain Mallot, assisted by Mr. Marcus Billam
69 Ave. Victor Hugo, 75008, Paris
Tel: 33 1 45 02 19 19
4-CMG will give you the name of its attorney very shortly.
5-Due diligences will be driven by:
Mr. Ken Jones
Mme Anne-Marie Assouline
Mr. Michael Assouline
16
<PAGE>
on behalf of Unimedia. (CMG appointees to be notified shortly).
Due diligences should start within two weeks.
6-Our respective boards should give an approval on the contemplated
transaction shortly.
Kindest regards,
Your sincerely,
Gilles Assouline
Chairman and CEO
For and on behalf of
Unimedia S.A.
Charles R. Koppel
Chairman and CEO
For and on behalf of
Capital Media Group Limited
Signed in acceptance and understanding of the above
Harvey Bibicoff
Chairman of the Board
For and on behalf of
Harmony Holdings, Inc.
- page 2-
17
<PAGE>
January 31, 1996
Harvey Bibicoff
Chairman of the Board/Harmony Holdings, Inc.
310-446-7711
Dear Harvey,
In addition to my resignation from the board of Harmony Holdings, Inc., I
also resign from all the boards of any Harmony Holdings subsidiaries that I
hold. I also resign any office or titles that I currently hold in Harmony
Holdings or it's subsidiaries.
Sincerely,
By/s/Gary Horowitz
Gary Horowitz
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 61,955
<SECURITIES> 0
<RECEIVABLES> 6,537,660
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,973,368
<PP&E> 1,604,785
<DEPRECIATION> 419,389
<TOTAL-ASSETS> 11,832,691
<CURRENT-LIABILITIES> 6,600,784
<BONDS> 0
0
0
<COMMON> 56,933
<OTHER-SE> 4,789,974
<TOTAL-LIABILITY-AND-EQUITY> 11,832,691
<SALES> 50,395,467
<TOTAL-REVENUES> 50,395,467
<CGS> 43,056,478
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,481,822
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178,120
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,415,202)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> 0
</TABLE>
