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
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 000-23174
THE QUIZNO'S CORPORATION
Colorado 84-1169286
7555 East Hampden Avenue, Suite 601 Denver,
Colorado 80231
Registrant's Telephone Number Is (303) 368-9424
Check whether issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or 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
State the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class May 10, 1996
Common Stock, $0.001 par value 2,864,757 shares
THE QUIZNO'S CORPORATION
Commission File Number: 000-23174
Quarter Ended March 31, 1996
FORM 10-QSB
Part I FINANCIAL INFORMATION
Consolidated Statements of Operations Page 1
Consolidated Balance Sheets Page 2
Consolidated Statements of Cash Flows Page 4
Consolidated Statement of Stockholders' Equity Page 6
Notes to Consolidated Financial Statements Page 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations Page 9
<TABLE>
THE QUIZNO'S CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
REVENUE:
Royalty fees $318,935 $209,576
Initial franchise fees 255,000 75,000
Area director marketing fees 250,486 180,895
Sales by Company owned stores 627,992 667,272
Sales by stores held for resale 16,946 89,943
Interest income 40,814 42,820
Other 55,170 36,770
1,565,343 1,302,276
EXPENSES:
Sales and royalty commissions 133,726 26,477
Franchise advertising and promotion 88,573 7,451
General and administrative expenses 738,267 542,303
Cost of sales at Company stores 218,694 228,477
Cost of labor at Company stores 191,013 207,047
Other Company store expenses 208,718 266,315
Stores held for resale expenses 30,529 134,988
Loss of sale of Company stores 60,079 -
Depreciation and amortization 71,643 54,888
Interest expense 17,149 32,796
Provision for loss on stores
held for resale - 6,000
1,758,391 1,506,742
Net loss (193,048) (204,466)
Preferred stock dividends (14,235) (14,235)
Net loss applicable to
common shareholders $(207,283) $(218,701)
Net loss per share of common stock $(0.07) $(0.08)
Weighted average common shares
outstanding 2,864,757 2,861,250
</TABLE>
<TABLE>
THE QUIZNO'S CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
March 31, December
31,
1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,038,013 $1,684,422
Restricted cash 19,526 15,927
Accounts receivable, net of allowance
for doubtful accounts of $13,877 in
1996 and $11,777 in 1995 322,624 276,522
Current portion of notes receivable 452,156 304,918
Other current assets 226,559 155,973
Assets of stores held for resale - 144,499
Total current assets 2,058,878 2,582,261
Property and equipment, at cost, net
of accumulated depreciation and
amortization of $168,980 in 1996
and $144,561 in 1995 1,282,657 1,083,476
OTHER ASSETS:
Intangible assets, net of accumulated
amortization of $463,803 in 1996
and $414,500 in 1995 511,203 537,149
Deferred assets 475,799 588,051
Deposits 20,544 31,454
Notes receivable 681,978 528,484
Total other assets 1,689,524 1,685,138
$5,031,059 $5,350,875
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $671,929 $713,446
Accrued liabilities 77,187 53,168
Line of credit 130,000 160,000
Current portion of long term
obligations 163,631 171,217
Provision for loss on stores sold 23,892 58,000
Total current liabilities 1,066,639 1,155,831
Line of credit 190,505 215,505
Long term obligations 303,494 341,453
Other liabilities 2,226 12,101
Deferred revenue 1,358,648 1,309,155
Total liabilities 2,921,512 3,034,045
STOCKHOLDERS' EQUITY:
Preferred stock, 6.5% cumulative,
convertible,$.001 par value,
liquidation value of $6 per
share plus unpaid and accumulated
dividends, 1,000,000 authorized,
issued and outstanding 146,000
in 1995 and in 1994 146 146
Common stock, $.001 par value,
9,000,000 shares authorized,
issued and outstanding 2,864,757 in
1996 and 1995 2,865 2,865
Additional paid in capital 3,276,120 3,290,355
Accumulated deficit (1,169,584) (976,536)
Total stockholders' equity 2,109,547 2,316,830
$5,031,059 $5,350,875
</TABLE>
<TABLE>
THE QUIZNO'S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(193,048) $(204,466)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 73,722 54,889
Provision for losses on accounts
receivable 2,100 1,100
Reserve for losses on stores sold (19,609) 8,788
Promissory notes accepted for
area director fees (178,986) -
Changes in assets and liabilities:
Restricted cash (3,600) (268)
Accounts receivable (100,454) (5,925)
Other current assets (70,586) (66,434)
Accounts payable (41,517) (15,699)
Accrued liabilities 24,018 59,582
Deferred franchise costs 112,253 (10,186)
Deferred initial franchise fees 49,493 74,812
Other (9,875) -
Net cash used in operations (356,089) (103,807)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (93,600) (24,788)
Acceptance of notes receivable (119,611) (60,902)
Principle payments received on notes
receivable 50,117 --
Intangible assets (23,357) --
Change in deposits 10,910 6,516
Investment in stores under development - (27,672)
Net cash used in investing
activities (175,541) (106,846)
(continued on next page)
</TABLE>
<TABLE>
THE QUIZNO'S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(continued from previous page)
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable 5,000 -
Principle payments on long term
obligations (50,544) (66,835)
Principle payments on lines of credit (55,000) --
Dividends paid (14,235) (14,235)
Net cash (used) provided by
financing activities (114,779) (81,070)
Net increase (decrease) in cash (646,409) (291,723)
Cash, beginning of period 1,684,422 3,112,575
Cash, end of period $1,038,013 $2,820,852
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for
interest $17,149 $32,796
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
During the first quarter of 1996, the Company subleased a
Company owned restaurant and granted the sublessee an option
to purchase the restaurant through December 31, 1995 for
$135,000. During the first quarter of 1996, the assets of
the restaurant were reclassified from Assets of Stores Held
for Resale to Property and Equipment, and written down to the
amount of the option price, with the loss, which had been
accrued at December 31, 1995, charged to Provision for Loss
on Stores Held for Resale.
During the first quarter of 1995 the Company issued 2,500 shares
of its $.001 par value common stock to Berger Restaurant
Corporation in exchange for the general partner's interest in
Quiz One Limited Partnership owned by Berger Restaurant
Corporation. The shares and the general partner's interest
were valued at $10,000.
<TABLE>
THE QUIZNO'S CORPORATION CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
<CAPTION>
Convertible Additional
Preferred Stock Common Stock
Paid-in Accumulated
Shares Amount Shares Amount
Capital Deficit
<S> <C> <C> <C> <C>
<C> <C>
Balances at
January 1,
1995 146,000 $146 2,860,000 $2,860 $3,339,495 $(684,964)
Issuance of common
stock in exchange
for general partnership
interest - - 2,500 3 9,997 --
Purchase price paid for
Quiz One Limited
Partnership general
partner's interest
over historical
book value (goodwill) - - - - (10,000) -
Issuance of common stock
pursuant to employee
benefit plan - - 2,257 2 7,803 -
Preferred stock dividends - - - - (56,940) -
Net loss - - - - - (193,048)
Balances at Dec. 31,
1995 146,000 146 2,864,757 2,865 3,290,355 1,169,584)
Preferred stock
dividends - - - - (14,235) -
Net loss - - - - - (193,048)
Balances at March 31,
1996 146,000 $146 2,864,757 $2,865 $3,276,120 $(1,169,584)
THE QUIZNO'S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments necessary for a
fairstatement of (a) the results of consolidated operations for
the three month periods ended March 31, 1996 and March 31, 1995,
(b) the consolidated financial position at March 31, 1996, (c)
the statements of cash flows for the three month periods ended
March 31, 1996, and March 31, 1995, and (d) the consolidated
changes in stockholders' equity for the three month period ended
March 31,1996, have been made.
2. The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information.
Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles
for financial statements. For further information, refer to the
audited consolidated financial statements and notes thereto for
the year ended December 31, 1995, included in the Company's
Annual Report on Form 10-QSB to the Securities and Exchange
Commission filed on March 29, 1996.
3. The results for the three month period ended March 31, 1996
are not necessarily indicative of the results for the entire
fiscal year of 1996.
4. RELATED PARTY TRANSACTIONS
In 1995, the Company sold the Detroit area directorship to
Michigan Restaurant Development Corp., which is 100% owned by a
majority stockholder of the Company, for $150,000 paid in cash.
Two directors of the Company own more than 50% of the
outstanding shares of Illinois Food Managers, Inc., which owns
the Chicago area directorship and two operating franchises in
Chicago.
Two directors of the company own 55% of S&K Food Services,
Inc., which was a franchisee until such franchise was sold in
October, 1995.
Two shareholders of the Company loaned Schaden and Schaden,
Inc. (Schaden) $99,243 in 1991 and another $62,000 in 1994 under
notes payable agreements. The notes were assumed by the Company
when it acquired Schaden in 1994.
THE QUIZNO'S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. RELATED PARTY TRANSACTIONS (continued)
Summarized below is a recap of related party transactions
included in the financial statements as of March 31:
</TABLE>
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Assets
Accounts receivable $8,112 $20,680
Current portion of notes receivable 8,352 5,010
Notes receivable 52,752 24,979
Liabilities
Current portion of long
term obligations 19,659 35,639
Long term obligations 8,209 104,694
Revenue
Royalty fees 6,095 13,436
Other income 4,350 7,350
Expenses
General and administrative 17,441 13,928
</TABLE>
THE QUIZNO'S CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's primary business, and the focus of its
organizational structure, continues to be franchising QUIZNO'S
restaurants. As a franchisor, revenue is derived from; (1) area
director marketing fees, (2) initial franchise fees, and (3)
royalties paid by franchisees. Area director fees occur only
once for each exclusive area sold. Although the Company believes
there are a substantial number of markets remaining to be sold,
eventually such fees are expected to decline as the number of
available remaining markets decline. Initial franchise fees are
one time fees paid upon the sale of a franchise and vary directly
with the number of franchises the Company can sell and open.
Royalties, on the other hand, are ongoing fees paid by every
franchised restaurant and will increase as the number of
franchised restaurants increase. Each of these sources of
revenue contributes to the profitability of the Company, but the
relative contribution of each source will vary as the Company
matures. The Company expects that over time initial franchise
fees and royalties will generate proportionally more revenue than
area director marketing fees.
The following chart reflects the Company's growth in terms of
units, franchise sales, and systemwide sales.
<TABLE>
<CAPTION>
First Quarter
1996 1995
<S> <C> <C>
Restaurants open, beginning 105 66
New restaurants opened 13 6
Restaurants closed (2) -
Restaurants open, end 116 72
New franchises sold 24 9
Initial franchise fees collected $425,000 $160,000
Systemwide sales $7.2 million $5.6 million
Same store sales (2, 3) down 8.9% down .7%
Average unit volume for
the prior calendar year (1, 3) $321,000 $363,000
</TABLE>
THE QUIZNO'S CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
(1) In 1994, the Quizno's restaurant was significantly redesigned
to reduce initial costs, reduce breakeven sales levels, and to
fit the units in spaces 50% to 60% smaller than previously
required. The Company expected reduced sales at these smaller
locations, but with a corresponding reduction in operating costs,
including rent, labor and utilities. Thus, although volumes are
lower, the breakeven point is also lower, resulting in
approximately the same return on sales and a higher return on
investment for such locations.
(2) Same store sales is based on 64 stores. 41 of these 64
stores are located in Colorado, the Company's largest market for
Quizno's restaurants. In keeping with a recent industry trend,
many QSR chains are experiencing reduced same store sales.
Quizno's decrease is attributable, in large part to the fact that
included in the mix are the Company's top-volume stores in
Colorado which are approaching their maturity after several years
of double digit growth. The other factor that impacted the
Company's decrease is the fact that some new market stores, which
are not yet operating in markets built out to a critical mass,
have come into the mix. In response, the Company has replaced
the head of its marketing department with a person having
substantial experience and credentials in the quick service
restaurant industry, committed to contribute up to an addition
$360,000 to retail advertising in 1996, and, beginning in March
of 1996, offered a value priced meal in many of its markets
backed by the largest media advertising campaign in the Company's
history.
(3) Because the Company is and will continue to be in an
aggressive growth mode for the next few years, it is anticipated
that same store sales will fluctuate as we track units operating
in evolving market mixes. The Company will continue to
concentrate on its overall rapid growth as a primary goal and to
provide interpretation of same store sales from year to year.
Results of Operations
Comparison of the First Quarter of 1996 with the First Quarter
of 1995
Total revenue increased 20% in the first quarter of 1996 to
$1,565,343 from $1,302,276 for the same quarter last year.
Royalty fees increased 52% in the first quarter of 1996 to
$318,935 from $209,576 in the same quarter last year. Royalty
fees are a percentage of each franchisee's sales paid to the
company weekly or monthly and will increase as new franchises
open, sales increase, and as the average royalty percentage
increases. Company owned stores do not pay royalties. At March
31, 1996 there were 108 franchises open as compared to 63 at
March 31, 1995. The royalty fee is between 4% and 6%, depending
on when the franchise was purchased. The Company has no
immediate plans to further increase the royalty percent.
THE QUIZNO'S CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Initial franchise fees increased 240% in the first quarter of
1996 to $255,000 from $75,000 in the same quarter last year.
Initial franchise fees are one time fees paid by franchisees at
the time the franchise is sold, and are not recognized as income
until the period in which all of the Company's obligations
relating to the sale have been substantially performed, which
generally occurs when the franchise opens. In the first quarter
of 1996, the Company opened 13 franchises as compared to 6
franchises opened in the first quarter of 1995. The Company's
initial franchise fee has been $20,000 since November 1, 1994.
Some of the franchises opened in the first quarter of 1996
purchased the franchise before November 1, 1994 and paid an
initial franchise fee less than $20,000. Beginning in 1996, the
Company will sell an existing franchisee a second franchise for
$15,000, and a third for $10,000. For franchises to be operated
in non-traditional kiosk type locations with another business,
the initial franchise fee is $10,000 for the first, $7,500 for
the second, and $5,000 for additional franchises.
For a limited period of time in 1996, estimated to begin June 1,
1996 and continue through August 15, 1996, the Company will sell
to approved franchisees one additional franchise for every
currently effective franchise agreement for an initial franchise
fee of $1,000. Such franchises must be opened by December 31,
1996. If the purchaser does not have a franchise currently open,
the first franchise must be open by December 31, 1996 and the
second franchise, purchased under this discount program, must be
opened by December 31, 1997.
Area director marketing fees increased 38% in the first quarter
of 1996 to $250,488 from $180,895. Area director marketing fees
are one time fees paid to the Company for the right to sell
franchises in a designated, non-exclusive, geographical area. The
fee is $.03 per person in the designated area, plus a training
fee of $10,000. The population based portion of the fee is
deemed fully earned by the Company when the area director
marketing agreement is signed and is recognized as income in that
period. In the first quarter of 1996 the company sold four area
directorships as compared to two area directorships sold in the
first quarter of 1995. At March 31, 1996, the Company had a
total of 49 area directors who owned areas encompassing a
population base equal to approximately 45% of the population of
the United States.
THE QUIZNO'S CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
In 1995 the Company began offering long term financing to area
director candidates for up to 50% of the area director marketing
fee. The amount financed is required to be paid to the Company
in installments over five years ranging from 11% to 15% interest.
The promissory notes are personally signed by the area director
and secured by collateral unrelated to the area directorship,
usually a second mortgage in the area director's home. Of the
four area directorships sold in the first quarter of 1996, one
used this financing for $22,500. A portion, $156,486 as of March
31, 1996, of the area director marketing fees for the first
quarter of 1996, were financed for terms of approximately 30
days.
Sales by Company owned stores decreased by 6% in the first
quarter of 1996 to $627,992 from $667,272 in the first quarter of
1995. In 1996, the Company operated seven stores for the full
three months (the eighth store is located in a baseball stadium
and did not re-open until April). In the first quarter last
year, the Company also operated seven stores. During the first
quarter of 1996 the Company earned a profit of $9,567 at Company
stores compared to a loss of $34,567 in the same quarter last
year. Management does not expect to acquire or sell a
significant number of Company stores in 1996.
The net loss from stores held for resale was $13,583 in the first
quarter of 1996. The 1996 loss is attributable to one store
taken over during the quarter from a franchisee and operated by
the Company until it was resold to a new franchisee on March 31,
1996.
Sales and royalty commissions expense increased 405% to $133,726
in the first quarter of 1996 from $26,477 in the first quarter of
1995. Sales and royalty commissions represent amounts paid to
the area directors of the Company under the new area director
program implemented in March of 1995. Since this program was not
implemented until the end of the first quarter of 1995, the
related expenses for that quarter were small. Area directors
receive a sales commission equal to 50% of the initial franchise
fees received by the Company for franchises sold and opened in
the area directors territory. Area directors also are paid 40%
of the royalties received by the Company from franchises open in
the area directors territory. In exchange for these payments,
the area director is required to market and sell franchises,
provide location selection assistance, provide on-site opening
assistance to new franchisees, and perform monthly quality
control reviews at each franchise open in the area director's
territory. Sales and royalty commission expense is expected to
continue to increase in direct proportion to the number of
franchise openings and the increase in royalty fee revenue.
THE QUIZNO'S CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Franchise advertising and promotion expenses increased to $88,573
in the first quarter of 1996 from $7,451 in the first quarter of
1995. The increase reflects the Company's commitment to an
aggressive and rapid franchise sales and development program,
which includes consistent and regular national advertising of the
Company's franchise opportunity combined with regularly scheduled
orientation and discovery days for franchise and area director
candidates.
General and administrative expenses increased 36% to $738,267 for
the first quarter of 1996 from $542,303 in the same quarter last
year. General and administrative expenses include all of the
operating expenses of the Company. The Company believes its
general and administrative expenses are adequate and are not
excessive in relation to the size of the Company.
Loss on sale of Company stores was $60,079 in the first quarter
of 1996. The loss is primarily related to a franchised store in
Missouri that was taken over by the Company from a franchisee and
sold to a new franchisee, all within the first quarter of 1996.
In addition, the Company incurred costs related to the sale of a
Company owned store in Michigan sold in the first quarter of 1996
that were over and above the amount reserved at December 31,
1995. There were no Company stores sold in the first quarter of
1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities in the first quarter of
1996 was $356,089 compared to cash used in operating activities
of $103,807 in the same quarter last year. Of the $356,089 used
in operations in the first quarter of 1996, $178,986 is
attributable to promissory notes accepted for area director fees,
of which $156,486 was paid within the five weeks after the end of
the quarter.
Net cash used in investing activities in the first quarter of
1996 was $175,541 compared to cash used in investing activities
of $106,846 in the first quarter of 1995. Cash used by investing
activities in the first quarter of 1996 was primarily related to
the acceptance of a promissory note for $115,000 related to the
sale of a store located in Missouri on March 31, 1996.
THE QUIZNO'S CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Cash used by financing activities in the first quarter of 1996
was $114,779 compared to cash used by financing activities of
$81,070 in the same quarter last year. The amounts for both
years represent primarily cash used for the reduction of debt and
the payment of preferred stock dividends.
The Company had cash and cash equivalents of $1,038,013 and
positive working capital of $992,239 at March 31, 1996. The
Company has a commitment to build and finance a turnkey store in
Florida on behalf of a franchisee, if requested. The Company
currently has no other commitments to build turnkey stores, nor
does the Company any longer offer a turnkey development program
to its franchisees.
The Company has made commitments and has plans under way in which
it will provide up to approximately $360,000 in funds to be used
for retail advertising by franchisee advertising cooperatives in
several markets in 1996. Of this amount, approximately $170,000
will be in the form of interest bearing loans that will be repaid
in 1997. The balance of approximately $190,000 will be grants
that will be expensed by the Company in 1996.
Other than the above, the Company's operations as a franchisor
are not capital intensive. The Company has been able to finance
its operations and growth, excluding company owned stores,
through initial franchise fees, area director fees, and
royalties.
The Company does not expect seasonality to effect its operations
in a materially adverse manner. However, the Company's
restaurant sales, and therefore royalties, during the months of
November through February are generally lower due to the location
of most of its restaurants.
THE QUIZNO'S CORPORATION
Commission File Number: 000-23174
Quarter Ended March 31, 1996
Form 10-QSB
PART II OTHER INFORMATION
Item 1. Legal Proceedings None.
Item 2. Changes in Securities None.
Item 3. Defaults Upon Senior Securities None.
Item 4. Submission of Matters to a Vote of Security Holders None.
Item 5. Other Information None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-B No
exhibits are included with this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter for which this report is filed.
THE QUIZNO'S CORPORATION Commission File Number: 000-23174
Quarter Ended March 31, 1996 Form 10-QSB
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE QUIZNO'S CORPORATION
By: Original signed by John L. Gallivan John L. Gallivan
Chief Financial Officer
(Principal Financial and Accounting Officer)
Denver, Colorado
May 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,057,539
<SECURITIES> 0
<RECEIVABLES> 336,501
<ALLOWANCES> 13,877
<INVENTORY> 0
<CURRENT-ASSETS> 2,058,878
<PP&E> 1,451,637
<DEPRECIATION> 168,980
<TOTAL-ASSETS> 5,031,059
<CURRENT-LIABILITIES> 1,066,639
<BONDS> 0
0
146
<COMMON> 2,865
<OTHER-SE> 2,106,536
<TOTAL-LIABILITY-AND-EQUITY> 5,031,059
<SALES> 1,565,343
<TOTAL-REVENUES> 1,565,343
<CGS> 0
<TOTAL-COSTS> 1,741,242
<OTHER-EXPENSES> 14,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,149
<INCOME-PRETAX> (207,283)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (207,283)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
