U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from: __________ to __________
Commission file number 0-23178
Equisure, Inc.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1309882
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
527 Marquette, Suite 1800
Minneapolis, Minnesota 55402
(Address of principal executive offices)
(612) 338-3738
(Issuer's telephone number)
Aloe Vera Naturel, Inc.
600 South Conklin Avenue, Sioux Falls, South Dakota 57103-1931
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) 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
As of August 14, 1996, there were 5,575,833 shares of the issuer's common stock,
par value $0.001 per share.
Transitional Small Business Disclosure Format (check one):
Yes ____; No __X__
EQUISURE, INC. AND SUBSIDIARY
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Required by Form 10-Q 2
Condensed Consolidated Balance Sheet of Equisure, Inc.
and Subsidiary as of June 30, 1996 and 1995 3
Condensed Consolidated Statements of Operations
of Equisure, Inc. and Subsidiary for the Three and
Six Months Ended June 30, 1996 and 1995 4
Condensed Consolidated Statement of Stockholders'
Equity for the Six Months Ended June 30, 1996 5
Condensed Consolidated Statements of Cash Flows
of Equisure, Inc. and Subsidiary for the Six Months
Ended June 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information - Audited Condensed Financial
Statements of Equisure, Inc. and Subsidiary
as of May 10, 1996. 19
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
PART I
FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q
Equisure, Inc. (formerly Aloe Vera Naturel, Inc.) (the "Registrant"), files
herewith condensed consolidated balance sheets of the Registrant as of June 30,
1996, and December 31, 1995, and the related condensed consolidated statements
of operations for the three months ended June 30, 1996 and 1995, and the six
months ended June 30, 1996 and 1995, together with the condensed consolidated
statement of stockholders' equity for the six months ended June 30, 1996 and the
condensed consolidated statements of cash flows for the six months ended June
30, 1996 and 1995. In the opinion of the management of the Registrant, the
condensed consolidated financial statements reflect all adjustments, all of
which are normal recurring adjustments, necessary to fairly present the
financial condition of the Registrant for the interim periods presented.
The Registrant was incorporated on August 12, 1977, and for several years prior
to May 10, 1996, was not engaged in any business activity. On May 10, 1996, the
Registrant acquired, as a wholly-owned subsidiary, Equihot Herverzekering N.V.
(EH), which operates under the laws of Belgium and whose principal activity is
the assumption of risks arising from reinsurance policies primarily ceded by
Equihot Verzekering N.V., a company related historically through common
ownership and also has a small portfolio of third-party business. Effective, May
10, 1996, the stockholders of the Registrant approved amendments to its Articles
of Incorporation changing the corporate name to Equisure, Inc.
On May 10, 1996, the Registrant entered into an exchange agreement with Equihot
Delfstoffen N.V. in which the former stockholder of EH exchanged all 50,000
shares of outstanding common stock of EH for 5,297,041 shares of authorized but
unissued common stock of Equisure.
Immediately prior to entering into the exchange agreement, the Registrant
approved a 20-for-1 reverse stock split, which reduced the number of outstanding
shares of common stock from 5,575,833 shares to 278,792 shares.
Following the exchange, the former stockholder of EH, Equihot Delfstoffen N.V.,
held 95% of the Registrant's common stock outstanding. For accounting purposes,
this exchange/acquisition was treated as a reverse purchase acquisition. As a
result, the condensed consolidated financial statements filed herewith present
the operations of EH prior to May 10, 1996 and include the Registrant's
operations only from the dated of acquisition.
<TABLE>
<CAPTION>
EQUISURE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
(Unaudited) (Unaudited)
------------ ------------
ASSETS
<S> <C> <C>
Assets:
Investments, available for sale $ 25,025,805 $ 15,790,358
Cash and cash equivalents 29,005,183 32,216,805
Premiums receivable 1,535,239 75,329
Prepaid reinsurance 4,125,000 --
Due from related party 6,907,857 10,751,974
Accrued interest 162,304 80,680
Deferred income taxes -- 38,000
------------ ------------
Total assets $ 66,761,388 $ 58,953,146
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Underwriting reserves $ 26,402,920 $ 16,909,846
Premiums payable 300,134 822,232
Accrued income taxes 200,000 --
Due to related parties 1,223,706 6,618,235
Deferred income taxes 950,000 --
Other 1,327,523 675,352
------------ ------------
Total liabilities 30,404,283 25,025,665
------------ ------------
Stockholders' equity:
Common stock, par value $.001, authorized
10,000,000 shares, issued and outstanding
5,575,833 shares at June 30, 1996 and no
par value, authorized, issued and outstanding
50,000 shares at December 31, 1995 5,576 1,594,896
Additional paid-in capital 35,640,660 34,051,340
Retained earnings (deficit) 563,645 (1,663,883)
Net unrealized appreciation (depreciation)
on investments, available for sale 147,224 (54,872)
------------ ------------
Total stockholders' equity 36,357,105 33,927,481
------------ ------------
Total liabilities and
stockholders' equity $ 66,761,388 $ 58,953,146
============ ============
The December 31, 1995 figures represent the historic position of Equihot
Herverzekering, N.V.
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
EQUISURE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Reinsurance income assumed $ 1,162,007 $ 1,079,192 $ 2,278,960 $ 2,090,700
Net investment income 2,502,094 222,000 2,970,373 222,000
----------- ----------- ----------- -----------
Total revenues 3,664,101 1,301,192 5,249,333 2,312,700
----------- ----------- ----------- -----------
Expenses:
Acquisition costs 116,201 132,200 227,896 256,110
Administrative expenses 654,517 686,591 1,441,722 1,362,650
Foreign currency exchange (gains) losses 48,283 (41,684) 302,187 22,229
Interest -- 487,500 -- 975,000
----------- ----------- ----------- ----------
Total expenses 819,001 1,264,607 1,971,805 2,615,989
----------- ----------- ----------- -----------
Income (loss) before income taxes 2,845,100 36,585 3,277,528 (303,289)
Income taxes (1,050,000) -- (1,050,000) --
----------- ----------- ----------- -----------
Net income (loss) $ 1,795,100 $ 36,585 $ 2,227,528 $ (303,289)
=========== =========== =========== ===========
Net income (loss) per weighted average
number of common shares outstanding $ .33 $ .01 $ .41 $ (.06)
=========== =========== =========== ===========
Weighted average number of common
shares outstanding 5,455,023 5,297,401 5,376,032 5,297,401
=========== =========== =========== ===========
The 1995 comparative figures represent the historic position of Equihot Herverzekering, N.V.
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
EQUISURE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
Net Unrealized
Appreciation
(Depreciation) Net
Additional On Investments, Retained
Common Stock Paid-In Available Earnings
Shares Amount Capital For Sale (Deficit) Total
--------- ----------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996 50,000 $ 1,594,896 $34,051,340 $(54,872) $(1,663,883) $33,927,481
Effects of reverse purchase acquisition:
Recapitalization 5,247,041 (1,589,599) 1,589,599 -- -- --
Issuance of additional
common stock to
effect merger 278,792 279 (279) -- -- --
Change in unrealized
appreciation on
investments, available
for sale -- -- -- 202,096 -- 202,096
Net income -- -- -- -- 2,227,528 2,227,528
--------- ----------- ----------- -------- ----------- -----------
BALANCE, June 30, 1996 5,575,833 $ 5,576 $35,640,660 $147,224 $ 563,645 $36,357,105
========= =========== =========== ======== =========== ===========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
EQUISURE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
SIX MONTHS ENDED
JUNE 30,
------------------------------
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,227,528 $ (303,289)
Adjustments to reconcile net income to net
cash flows from operating activities:
Gain on sale of investments (2,118,112) --
Foreign currency exchange loss 302,187 22,229
Deferred income taxes 850,000 --
Change in:
Premiums receivable (1,459,910) --
Prepaid reinsurance (4,125,000) --
Underwriting reserves 9,493,074 5,507,502
Due from/due to related parties (1,615,540) 11,464,849
Premiums payable 977,106 --
Other (663,529) (224,168)
------------ ------------
Net cash flows from operating activities 3,867,804 16,467,123
------------ ------------
Cash flows from investing activities:
Proceeds from sale of investments 7,117,868 --
Purchases of investments (13,895,107) --
------------ ------------
Net cash flows from investing activities (6,777,239) --
------------ ------------
Effect of foreign currency exchange rate
changes on cash (302,187) (22,229)
------------ ------------
Net change in cash and
cash equivalents (3,211,622) 16,444,894
Cash and cash equivalents, beginning of period 32,216,805 19,316,261
------------ ------------
Cash and cash equivalents, end of period $ 29,005,183 $ 35,761,155
============ ============
The 1995 comparative figures represent the historic position of Equihot
Herverzekering, N.V.
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
EQUISURE, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
1. BACKGROUND, ACQUISITION AND MERGER
Aloe Vera Naturel, Inc. (the Company) was incorporated on August 12,
1977, and for several years prior to December 31, 1995, was not engaged
in any business activity. On May 10, 1996, Aloe Vera Naturel, Inc.
acquired, as a wholly-owned subsidiary, Equihot Herverzekering N.V.
(EH), which operates under the laws of Belgium and whose principal
activity is the assumption of risks arising from reinsurance policies
primarily ceded by Equihot Verzekering N.V., a company related
historically through common ownership. The Company also has a small
portfolio of third-party business. Effective, May 10, 1996, the
stockholders of the Company approved amendments to its Articles of
Incorporation changing the corporate name to Equisure, Inc.
On May 10, 1996, Aloe Vera Naturel, Inc. entered into an exchange
agreement with Equihot Delfstoffen N.V. in which the former stockholder
of EH exchanged all 50,000 shares of outstanding common stock of EH for
5,297,041 shares of authorized but unissued common stock of Equisure.
Immediately prior to entering into the exchange agreement, Aloe Vera
Naturel, Inc. approved a 20-for-1 reverse stock split, which reduced
the number of outstanding shares of common stock from 5,575,833 shares
to 278,792 shares.
Following the exchange, the former stockholder of EH, Equihot
Delfstoffen N.V., held 95% of the Company's common stock outstanding.
For accounting purposes, this exchange/acquisition was treated as a
reverse purchase acquisition.
The historical condensed consolidated financial statements presented
according to U.S. generally accepted accounting principles, for 1995
were derived from the audited financial statements of Equihot
Herverzekering N.V. as of December 31, 1995. This audit was carried out
by Moores Rowland International, Belgium, on financial statements
prepared in accordance with generally accepted European accounting
standards.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements have been
prepared by the Company. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. In the opinion of the Company's management, the disclosures
made are adequate to make the information presented not misleading, and
the condensed consolidated financial statements contain all adjustments
necessary to present fairly the financial position as of June 30, 1996,
results of operations for the three months and six months ended June
30, 1996 and 1995 and cash flows for the six months ended June 30, 1996
and 1995.
The results of operations for the six months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full
year.
The condensed consolidated financial statements are stated in United
States dollars and are prepared in conformity with accounting
principles generally accepted in the United States of America.
The preparation of condensed consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the condensed consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Equihot Herverzekering
N.V. All material intercompany transactions have been eliminated.
Investments
Investments consist of marketable equity securities available for sale.
They are carried at fair value based on quoted market prices.
Unrealized appreciation (depreciation) are excluded from operations and
reported as a separate component of stockholders' equity. Realized
gains and losses are determined on the specific identification method.
Cash and Cash Equivalents
For the purpose of presentation in the Company's statements of cash
flows, cash equivalents are short-term, highly liquid investments that
are both (1) readily converted into known amounts of cash and (2) so
near to maturity that they present insignificant risk of changes in
value due to changing interest rates.
Premiums and Determination of Underwriting Results and Reserves
Premium revenues on short-duration reinsurance contracts is accounted
for using the periodic method. Premiums that commence within the
current underwriting year are taken into revenues as earned.
Retrocession and acquisition costs together with claims incurred are
matched against premiums. Calculations are made to determine the
unearned premiums and deferred acquisition costs as necessary.
Long-duration reinsurance contracts are accounted for using the
open-year method. Premiums, retrocession and acquisition costs together
with claims incurred are allocated to underwriting year accounts
according to the inception of the contracts. The aggregation of the
underwriting year accounts form the basis of the underwriting reserves
on the balance sheet. The underwriting reserves will be desegregated
and reported on the statement of operations as premiums, claims and
expenses only when earned premiums become reasonably determinable. If
at any time an underwriting year or class of business within an
underwriting year shows a deficiency, this loss will be recognized
immediately.
Income Taxes
Income tax provisions are based on the asset and liability method.
Deferred income taxes have been provided for temporary differences
between the tax basis of assets and liabilities and their reported
amounts in the condensed consolidated financial statements. Such
differences relate principally to the unrealized appreciation
(depreciation) on investments, available for sale and the undistributed
earnings of the foreign subsidiary.
Retrocession
Retrocession protection is purchased from other insurers and reinsurers
by the Company in the normal course of business to reduce the Company's
exposure to certain levels of risk. The Company, however, remains
liable under its initial reinsurance contract, but then collects where
appropriate from its own reinsurers. Premiums are allocated in whole or
in part to the applicable underwriting year and are included in the
determination of underwriting reserves.
3. INVESTMENTS, AVAILABLE FOR SALE
Substantially all of the investments, available for sale consist of
marketable equity securities in South African mining companies, which
are publicly traded on the London stock exchange.
The aggregate fair value, gross unrealized holding gains, gross
unrealized holding losses and cost for available for sale marketable
equity securities are as follows:
June 30, December 31,
1996 1995
----------- ------------
Marketable equity securities:
Cost $24,778,581 $15,883,230
Gross unrealized holding gains 486,713 737,743
Gross unrealized holding losses (239,489) (830,615)
----------- -----------
Fair value $25,025,805 $15,790,358
=========== ===========
4. UNDERWRITING RESERVES
Underwriting reserves consisted of the following:
June 30, December 31,
1996 1995
----------- -----------
Reinsurance premiums written $59,920,574 $45,158,208
Retrocession premiums (28,101,366) (24,456,449)
Acquisition costs (5,416,288) (3,791,913)
----------- -----------
$26,402,920 $16,909,846
=========== ===========
Acquisition costs consist of commissions to the ceding companies and
brokerage and agents commissions.
Movements for the period January 1, 1996 to June 30, 1996 were as
follows:
Reinsurance premiums written $14,762,366
Retrocession premiums (3,644,917)
Acquisition costs (1,624,375)
-----------
$ 9,493,074
===========
5. INCOME TAXES
Prior to May 10, 1996, the Company was subject to corporate income taxes
in Belgium. Subsequent to May 10, 1996, the Company is subject to
corporate income taxes in both Belgium and the Unites States. The
Company's effective tax rate is lower than what would be expected
applying statutory tax rates because of expenses for tax purposes that
are considered equity transactions for financial reporting purposes. For
tax purposes, the Company incurred $699,863 of interest expense to
stockholders under an agreement that was considered additional paid-in
capital for financial reporting purposes. As of May 10, 1996, the
underlying debt agreement was contributed to stockholders' equity as
part of the exchange agreement (Note 1). No material net operating loss
carryforwards are available due to additional equity transactions being
treated as taxable events under Belgium tax laws.
The provision for income taxes consists of the following:
June 30, December 31,
1996 1995
---------- ------------
Current:
Foreign $ 200,000 $ --
Deferred:
Federal 850,000 --
---------- ----------
$1,050,000 $ --
========== ==========
Amounts for deferred income tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Deferred income tax assets:
Unrealized depreciation on investments,
available for sale $ - $ 38,000
========== ==========
Deferred income tax liabilities:
Unrealized appreciation on investments,
available for sale $ 100,000 $ --
Undistributed earnings of foreign subsidiary 850,000 --
---------- ----------
$ 950,000 $ --
========== ==========
</TABLE>
6. RELATED PARTY TRANSACTIONS
Transactions or balances with related parties included in the condensed
consolidated financial statements are as follows:
Statements of Operations
All of the reinsurance premiums assumed were related to transactions
with Equihot Verzekering N.V., while all the acquisition costs were
due to transactions with Equihot Delfstoffen N.V.
Balance Sheets
All amounts due from and due to related parties represent
non-interest bearing obligations, receivable from or payable to
either Equihot Delfstoffen N.V. or one of its wholly-owned
subsidiaries, and are due within one year.
7. FAIR VALUES OF FINANCIAL INSTRUMENTS
Cash and cash equivalents are carried at their face amount.
Investments, available for sale are carried at fair value as determined
based on quoted market prices.
8. RETAINED EARNINGS RESTRICTIONS
Belgian company law requires 5% of annual net income to be transferred
to a legal reserve which is not normally distributable to stockholders.
These transfers must be made until the legal reserve has attained 10%
of the value of the paid in common stock.
Paid in common stock for the Company under Belgian company law is
$1,594,896. At June 30, 1996 and December 31, 1995, the Company's legal
reserve under Belgian company law was $111,000 and $6, respectively.
9. CONTINGENCIES
Underwriting reserves are provisions for the future losses based on
individual underwriting years. To the extent that an underwriting year
becomes fully developed and earned premiums can be ascertained, credit
can be taken to the statement of operations comprising the loss
provision no longer required.
Belgian fiscal authorities have examined the records for the year ended
December 31, 1994, the first year of activity as a reinsurer. By their
letter on May 13, 1996, they contest the basis on which the Company has
determined its underwriting reserves. Directors believe that the
authorities have misunderstood the nature of the time frame of the
risks provided against. A formal rejection of authorities' assertions
is currently being drawn up.
In the unlikely event of the total underwriting reserve for 1994 of
$8,488,697 being deemed to be profit by the tax authorities, a tax
charge of some $4,200,000 would arise. However, if the authorities
accept the Directors' assertions, taxation will in any event become due
for 1999 if the underwriting reserve of 1994 suffers no losses. Based
on current tax rates, the amount payable at that time would be
$3,600,000. Similar considerations may apply to the 1995 and 1996
underwriting years.
Any change in the revenues recognition policy for tax purposes would
result in gross temporary timing differences, the proposed adjustments
would be substantially offset by deferred income taxes and would not be
material to the condensed consolidated financial statements taken as a
whole.
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following information should be read in conjunction with the unaudited
condensed consolidated financial statements included herein, see Item 1,
together with the audited condensed financial statements as of May 10, 1996, see
Item 5.
Overview
Equisure, Inc. has a wholly-owned subsidiary, Equihot Herverzekering
N.V., a Belgian reinsurer, incorporated in Belgium and operating
principally from Antwerp, the main commercial Flemish city of Belgium.
The word "Herverzekering" is Dutch-Flemish for reinsurance.
Prior to May 10, 1996, Equihot Herverzekering N.V. was a wholly-owned
subsidiary of Equihot Delfstoffen N.V. This former parent is a metals
trading corporation, warehousing through third parties, with trade
links in Australia, Indonesia, South Africa and Zambia.
Equihot Herverzekering N.V. has been underwriting reinsurance since
January 1, 1994, and specializes in financial risk and political risk
reinsurance, as well as underwriting a general reinsurance account.
In percentage terms, these two classes, financial and political,
accounted for 100% of risks written for 1994, approximately 95% in 1995
and an estimated 65% for 1996. The target portfolio balance is 50%
financial and political reinsurance and 50% general reinsurance to be
achieved by the year ending 1997.
The general reinsurance account is derived specifically from the
following classes:
1994 1995 1996
---- ----- ---------
Marine Hull 0% 3.50% 12.50% estimate
Aviation Hull 0% 0.90% 5.50% estimate
Marine Cargo 0% 0.57% 12.00% estimate
Personal Accident 0% .00% 4.00% estimate
Misc. Property and Casualty 0% .00% 1.00% estimate
No other classes of reinsurance are sought or accepted.
The majority of the financial and political risk reinsurance is
ultimately derived from the former parent trading activities. In
overall reinsurance premiums written terms Equihot Herverzekering N.V.
considers the financial and political risk sector to ceiling at
approximately $30,000,000, by choice. In the general reinsurance
sector, the intended ceiling is also approximately $30,000,000, again
by choice, giving a combined $60,000,000 net premiums written ceiling
per year. In balance sheet terms, Equihot Herverzekering N.V. is then
limiting its annual underwriting premiums written to less than twice
stockholders' equity. This deliberate under use of capacity allows for
selective growth on a conservative basis, producing a steady increase
in profitability. Reinsurance premiums written in the six months
totalled $17,041,326, of which $2,278,960 related to short-term expired
policies and therefore is credited to income, and $14,762,366 relates
to longer term policies and therefore is credited to underwriting
reserves.
Related party transactions with the former parent, Equihot Delfstoffen
N.V. are commission payments on business introduced. This agreement is
in keeping with market levels of 10%, and will continue up until
December 31, 2005.
Equihot Verzekering N.V., an insurance company, fronts for part of
Equihot Herverzekering N.V.'s business. Equihot Verzekering N.V. is
owned 100% by Equihot Delfstoffen N.V. Since a reinsurer does not
insure directly, it must enter into fronting arrangements with
insurance companies. Fronting arrangements are defined as reinsurance
arrangements in which the ceding insurance company issues a policy and
reinsures all or substantially all of the insurance risk with the
reinsurer. This service is provided for a fee of 2.5% on net ceded
reinsurance premiums written from Equihot Verzekering N.V., and this
level will be maintained until December 31, 1996. Thereafter, a fee of
5% will be levied on all business fronted by Equihot Verzekering N.V.,
up to December 31, 2005. This fronting fee is normal commercial
practice, and 5% is considered by management to be competitive with
market rates.
On July 23, 1996, the management of Equisure, Inc. and a group of
independent investors purchased 4,047,338 shares in Equisure, Inc. from
Equihot Delfstoffen N.V. The total number of shares held by Equihot
Delfstoffen N.V. had been 5,297,041. There are now 1,249,703 shares
held by Equihot Delfstoffen N.V.
The Directors are encouraged by the results of the Company since the
acquisition on May 10, 1996, and will consider the payment of an
interim dividend after the close of the third quarter ended September
30, 1996.
Liquidity and Capital Resources
The Company remains in a strong liquid position, despite a cash flow
deficiency of $3,211,622, for the six months ended June 30, 1996. This
was derived from positive cash flows from operations of $3,867,804,
proceeds from the sale of investments of $7,117,868, reduced by the
purchase of investments amounting to $13,895,107.
Results of Operations
Three Months Ended June 30, 1996, Compared to Three Months Ended June
30, 1995
Reinsurance income assumed on the completion of short-duration
reinsurance contracts for the three months ended June 30, 1996, of
$1,162,007 showed a 7.7% increase on the comparative quarters figure of
$1,079,192 and is reflective of the steady growth of business in this
sector.
Net investment income showed a marked increase from $222,000 for the
three months ended June 30, 1995, to $2,502,094 for the three months
ended June 30, 1996. The largest factor in respect of the increase in
net investment income was the result of realized gains on the sale of
selected quoted investments held for sale. This produced income of
$2,118,112 for the three months ended June 30, 1996. No such
comparative sales were made in the second quarter of 1995. The
remainder of the increase was due to increases in dividend and interest
income resulting from higher cash and investment balances in 1996,
compared to 1995.
Acquisition costs in respect of the underwriting of reinsurance
contracts were down by 12.1% for the three months ended June 30, 1996
at $116,201 compared with $132,200 for the 1995 comparative quarter.
This is due directly to the fact that the Company now deals directly
with its main insurer, Equihot Verzekering N.V., rather than through a
broker.
Administrative expenses for the current quarter are down 4.7% at
$654,517, compared with $686,591 for the three months ended June 30,
1995. This decrease is attributable to savings achieved by the
restructuring of various administrative procedures.
Foreign currency exchange gains and losses occur due to the
fluctuations in the rate of exchange between the U.S. dollar and other
major currencies, where transactions occur and where balances are held
in those currencies.
Interest payments of $487,500 for the three months ended June 30, 1995,
represent the interest due on a note held by the previous parent,
Equihot Delfstoffen N.V. No similar payment is shown for the three
months ended June 30, 1996, as this has been eliminated during the
consolidation of Equisure, Inc. with its subsidiary. The note was
assigned to Equisure, Inc. by Equihot Delfstoffen N.V. on May 10, 1996
as part of the reverse purchase acquisition.
No income taxes are due in respect of the results for the three months
ended June 30, 1995, as this quarter represents the results of Equihot
Herverzekering N.V. prior to the reverse purchase acquisition and no
income taxes were payable in Belgium.
Six Months Ended June 30, 1996, Compared to The Six Months Ended June
30, 1995
Reinsurance premiums assumed on the completion of short-duration
reinsurance contracts for the six months ended June 30, 1996, of
$2,278,960 showed a 9.0% increase on the comparative six month's figure
of $2,090,700 and is reflective of the steady growth of business in
this sector.
Net investment income showed a dramatic increase from $222,000 for the
six months ended June 30, 1995, to $2,970,373 for the six months ended
June 30, 1996. The largest factor in respect of the increase in net
investment income was the result of realized gains on the sale of
selected quoted investments held for sale. This produced income of
$2,118,112 for the six months ended June 30, 1996. No such comparative
sales were made in the first six months of 1995. The remainder of the
increase was due to increases in dividend and interest income resulting
from higher cash and investment balances in 1996, compared to 1995.
Acquisition costs in respect of the underwriting of reinsurance
contracts were down by 11.0% for the six months ended June 30, 1996 at
$227,896 compared with $256,110 for the 1995 comparative six months.
This is due directly to the fact that the Company now deals directly
with its main insurer, Equihot Verzekering N.V., rather than through a
broker.
Administrative expenses for the six months ended June 30, 1996 are up
5.8% at $1,441,722, compared with $1,362,650 for the six months ended
June 30, 1995. This increase is attributed to increases in marketing
and research expenditures.
Foreign currency exchange gains and losses occur due to the
fluctuations in the rate of exchange between the U.S. dollar and other
major currencies, where transactions occur and where balances are held
in those currencies. During January, 1996, the U.S. dollar weakened
against certain European currencies.
Interest payments of $975,000 for the six months ended June 30, 1995,
represent the interest due on a note held by the previous parent,
Equihot Delfstoffen N.V. No similar payment is shown for the six months
ended June 30, 1996, as this has been eliminated during the
consolidation of Equisure, Inc. with its subsidiary. The note was
assigned to Equisure, Inc. by Equihot Delfstoffen N.V. on May 10, 1996
as part of the reverse purchase acquisition.
No income taxes are due in respect of the results for the six months
ended June 30, 1995, as this six months represents the results of
Equihot Herverzekering N.V. prior to the reverse purchase acquisition
and no income taxes were payable in Belgium.
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
Reference is made to a Form 8-K, filed on May 23, 1996.
Item 5. Other Information
The following information was derived from the audited financial statements of
Equisure, Inc. and Subsidiary as of May 10, 1996.
CONDENSED CONSOLIDATED AUDITED BALANCE SHEET
ASSETS
Assets:
Investments, available for sale $18,558,341
Cash and cash equivalents 35,471,966
Accrued interest receivable 103,994
Premiums receivable 107,548
Prepaid reinsurance 5,273,125
Due from related party 1,507,271
-----------
Total assets $61,022,245
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Underwriting reserves $21,484,702
Reinsurance premiums payable 493,695
Due to related parties 1,539,456
Accrued expenses 325,682
Deferred income taxes 1,075,000
-----------
Total liabilities 24,918,535
-----------
Stockholders' equity:
Common stock, par value $.001, authorized
10,000,000 shares, issued and outstanding
5,575,833 shares 5,576
Additional paid-in capital 35,640,660
Retained deficit (1,142,637)
Net unrealized appreciation on investments,
available for sale 1,600,111
-----------
Total stockholders' equity 36,103,710
-----------
Total liabilities and
stockholders' equity $61,022,245
===========
The following information was derived from the audited financial statements of
Equisure, Inc. and Subsidiary for the period from January 1, 1996 to May 10,
1996.
CONDENSED CONSOLIDATED AUDITED STATEMENT OF OPERATIONS
Revenues:
Reinsurance premiums assumed $ 1,476,952
Retrocession premiums --
-----------
Net premiums 1,476,952
Net investment income 643,388
-----------
Total revenues 2,120,340
-----------
Expenses:
Acquisition costs 147,695
Administrative expenses 1,088,926
Foreign currency exchange loss 362,473
-----------
Total expenses 1,599,094
-----------
Net income $ 521,246
===========
Net income per share $ .10
===========
Weighted average number of common
shares outstanding 5,297,041
===========
Item 6. Exhibits and Reports on Form 8-K
Audited Consolidated Financial Statements of Equisure, Inc. and
Subsidiary for the Period January 1, 1996 to May 10, 1996.
Form 8-K filed May 23, 1996 regarding shareholders meeting.
Form 8-K filed June 11, 1996 regarding change in accountants.
Form 8-K filed July 11, 1996 regarding director who resigned.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 20, 1996
Equisure, Inc.
By /s/ D. J. Sachman
-----------------------------------
EQUISURE, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 1996 TO MAY 10, 1996
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Consolidated Financial Statements:
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
To The Stockholders
EQUISURE, INC. AND SUBSIDIARY
Minneapolis, Minnesota
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheet of Equisure, Inc.
and Subsidiary as of May 10, 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for the period from January 1,
1996 to May 10, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects the financial position of Equisure, Inc. and
Subsidiary as of May 10, 1996, and the results of their operations and their
cash flows for the period from January 1, 1996 to May 10, 1996 in conformity
with generally accepted accounting principles.
/s/ Stirtz Bernards Boyden Surdel & Larter
Edina, Minnesota
June 5, 1996
EQUISURE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MAY 10, 1996
ASSETS
Assets:
Investments, available for sale $ 18,558,341
Cash and cash equivalents 35,471,966
Accrued interest receivable 103,994
Premiums receivable 107,548
Prepaid reinsurance 5,273,125
Due from related party 1,507,271
------------
Total assets $ 61,022,245
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Underwriting reserves $ 21,484,702
Reinsurance premiums payable 493,695
Due to related parties 1,539,456
Accrued expenses 325,682
Deferred income taxes 1,075,000
------------
Total liabilities 24,918,535
------------
Stockholders' equity:
Common stock, par value $.001, authorized
10,000,000 shares, issued and outstanding
5,575,833 shares 5,576
Additional paid-in capital 35,640,660
Retained deficit (1,142,637)
Net unrealized appreciation on investments,
available for sale 1,600,111
------------
Total stockholders' equity 36,103,710
------------
Total liabilities and
stockholders' equity $ 61,022,245
============
See Notes to Consolidated Financial Statements.
EQUISURE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1996 TO MAY 10, 1996
Revenues:
Reinsurance premiums assumed $1,476,952
Retrocession premiums --
----------
Net premiums 1,476,952
Net investment income 643,388
----------
Total revenues 2,120,340
----------
Expenses:
Acquisition costs 147,695
Administrative expenses 1,088,926
Foreign currency exchange loss 362,473
----------
Total expenses 1,599,094
----------
Net income $ 521,246
==========
Net income per share $ .10
==========
Weighted average number of common
shares outstanding 5,297,041
==========
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
EQUISURE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 1996 TO MAY 10, 1996
Net Unrealized
Appreciation
(Depreciation)
Additional On Investments Net
Common Stock Paid-In Available Retained
Shares Amount Capital For Sale Deficit Total
--------- ----------- ----------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996 50,000 $ 1,594,896 $34,051,340 $ (240,980) $(1,663,883) $33,741,373
Effects of reverse purchase acquisition:
Recapitalization 5,247,041 (1,589,599) 1,589,599 -- -- --
Issuance of additional
common stock to
effect merger 278,792 279 (279) -- -- --
Change in unrealized
appreciation on
investments -- -- -- 1,841,091 -- 1,841,091
Net income -- -- -- -- 521,246 521,246
--------- ----------- ----------- ---------- ----------- -----------
BALANCE, May 10, 1996 5,575,833 $ 5,576 $35,640,660 $1,600,111 $(1,142,637) $36,103,710
========= =========== =========== ========== =========== ===========
See Notes to Consolidated Financial Statements.
</TABLE>
EQUISURE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1996 TO MAY 10, 1996
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Net income $ 521,246
Adjustments to reconcile net income to net
cash flows from operating activities:
Foreign currency exchange loss 362,473
Change in:
Premiums receivable 9,168,911
Prepaid reinsurance (5,273,125)
Underwriting reserves 4,574,856
Due from/due to related parties (4,654,752)
Reinsurance premiums payable (600,576)
Accrued expenses (457,589)
Accrued interest receivable (23,810)
------------
Net cash flows from operating activities 3,617,634
------------
Cash flows from investing activities --
------------
Cash flows from financing activities --
------------
Effect of exchange rate changes on cash (362,473)
------------
Net change in cash and
cash equivalents 3,255,161
Cash and cash equivalents, beginning of period 32,216,805
------------
Cash and cash equivalents, end of period $ 35,471,966
============
See Notes to Consolidated Financial Statements.
EQUISURE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 1996 TO MAY 10, 1996
1. BACKGROUND, ACQUISITION AND MERGER
Aloe Vera, Inc. (the Company) was incorporated on August 12, 1977, and for
several years prior to December 31, 1995, was not engaged in any business
activity. On May 10, 1996, Aloe Vera, Inc. acquired, as a wholly-owned
subsidiary, Equihot Herverzekering N.V. (EH), which operates under the
laws of Belgium and whose principal activity is the assumption of risks
arising from insurance policies primarily ceded by Equihot Verzekering
N.V., a company related through common ownership. The Company also has a
small portfolio of third-party business. Effective, May 10, 1996, the
stockholders of the Company approved amendments to its Articles of
Incorporation changing the corporate name to Equisure, Inc.
On May 10, 1996, Aloe Vera, Inc. entered into an exchange agreement with
Equihot Herverzekering N.V. in which the former stockholder of EH
exchanged all 50,000 shares of outstanding common stock of EH for
5,297,041 shares of authorized but unissued common stock of Equisure.
Immediately prior to entering into the exchange agreement, Aloe Vera, Inc.
approved a 20-for-1 reverse stock split, which reduced the number of
outstanding shares of common stock from 5,575,833 shares to 278,792
shares.
Following the exchange, the former stockholder of EH, Equihot Delfstoffen
N.V., held 95% of the Company's common stock outstanding. For accounting
purposes, this exchange/acquisition was treated as a recapitalization of
the Company with EH as the acquirer (a reverse purchase acquisition).
The historical financial statements prior to May 10, 1996, are those of
EH. The consolidated financial statements include Aloe Vera, Inc. only
from the date of acquisition. Pro forma information for EH and Aloe Vera
for periods prior to the exchange/acquisition is not presented because
such information is not material to an understanding of the current or
future operations and Aloe Vera has not had any business activity for
several years.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements are stated in United States dollars
and are prepared in conformity with accounting principles generally
accepted in the United States of America.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Equihot Herverzekering N.V. All material
intercompany transactions have been eliminated.
Investments
Investments consist of marketable equity securities available for sale.
They are carried at fair value based on quoted market prices as of May 10,
1996. Unrealized appreciation (depreciation) are excluded from operations
and reported as a separate component of stockholders' equity. Realized
gains and losses will be determined on the specific identification method.
Cash and Cash Equivalents
For the purpose of presentation in the Company's statement of cash flows,
cash equivalents are short-term, highly liquid investments that are both
(1) readily converted into known amounts of cash and (2) so near to
maturity that they present insignificant risk of changes in value due to
changing interest rates.
Premiums and Determination of Underwriting Results and Reserves
Premium income on short-duration reinsurance contracts is accounted for
using the periodic method. Premiums that commence within the current
underwriting year are taken into revenues as earned. Retrocession and
acquisition costs together with claims incurred are matched against
premiums. Calculations are made to determine the unearned premiums and
deferred acquisition costs as necessary.
Long-duration reinsurance contracts are accounted for using the open-year
method. Premiums, retrocession and acquisition costs together with claims
incurred are allocated to underwriting year accounts according to the
inception of the contracts. The aggregation of the underwriting year
accounts form the basis of the underwriting reserves on the balance sheet.
The underwriting reserves will be disaggregated and reported on the
statement of operations as premiums, claims and expenses only when earned
premiums become reasonably determinable. If at any time an underwriting
year or class of business within an underwriting year shows a deficiency,
this loss will be recognized immediately.
Income Taxes
Income tax provisions are based on the asset and liability method.
Deferred income taxes have been provided for temporary differences between
the tax basis of assets and liabilities and their reported amounts in the
consolidated financial statements. Such differences relate principally to
the unrealized appreciation (depreciation) on investments, available for
sale.
Retrocession
Retrocession protection is purchased from other insurers and reinsurers by
the Company in the normal course of business to reduce the Company's
exposure to certain levels of risk. The Company, however, remains liable
under its initial reinsurance contract, but then collects where
appropriate from its own reinsurers. Premiums are allocated in whole or in
part to the applicable underwriting year and are included in the
determination of underwriting reserves.
3. INVESTMENTS
Substantially all of the investments available for sale consist of
marketable equity securities in South African mining companies, which are
publicly traded on the London stock exchange.
Major categories of net investment income are summarized as follows:
Marketable equity securities $ 109,943
Cash equivalents 533,445
-----------
$ 643,388
===========
The aggregate fair value, gross unrealized holding gains, gross unrealized
holding losses and cost for available for sale marketable equity
securities are as follows:
Marketable equity securities:
Cost $15,883,230
Gross unrealized holding gains 2,985,750
Gross unrealized holding losses (310,639)
-----------
Fair value $18,558,341
===========
4. UNDERWRITING RESERVES
Underwriting reserves at May 10, 1996, consisted of the following:
Reinsurance premiums $53,015,696
Retrocession premiums (26,960,825)
Acquisition costs (4,570,169)
-----------
$21,484,702
===========
Changes in underwriting reserves were as follows:
Balance January 1, 1996 $16,909,846
Reinsurance premiums 7,857,488
Retrocession premiums (2,504,376)
Acquisition costs (778,256)
-----------
Balance May 10, 1996 $21,484,702
===========
Acquisition costs consist of commissions to the ceding companies and
brokerage and agents commissions.
5. INCOME TAXES
The Company is subject to corporate income taxes in Belgium. There are no
tax liabilities for the period ended May 10, 1996. The Company's effective
tax rate is lower than what would be expected applying statutory rates
because of expenses for tax purposes that are considered equity
transactions for financial reporting purposes. For tax purposes, the
Company incurred $699,863 of interest expense to stockholders under an
agreement that was considered additional paid-in capital for financial
reporting purposes. As of May 10, 1996, the underlying debt agreement was
contributed to stockholders' equity as part of the exchange agreement
(Note 1). No material net operating loss carryforwards are available due
to additional equity transactions being treated as taxable events under
Belgium tax laws.
Amounts for deferred income tax assets and liabilities are as follows:
Deferred income tax assets $ --
==========
Deferred income tax liabilities $1,075,000
==========
6. STATUTORY NET INCOME (LOSS) AND STOCKHOLDERS' EQUITY
Generally accepted accounting principles differ in certain respects from
the accounting practices permitted by Belgium regulatory authorities
(statutory basis). The Company had a statutory net loss of approximately
$392,674 for the period ended May 10, 1996, and statutory stockholders'
equity was approximately $35,302,340 at May 10, 1996.
7. RELATED PARTY TRANSACTIONS
Transactions or balances with related parties included in the consolidated
financial statements are as follows:
<TABLE>
<CAPTION>
Equihot Equihot Equihot
Delfstoffen Verzekering Accounting
N.V. N.V. Services, Ltd.
----------- ----------- --------------
<S> <C> <C> <C>
Statement of Operations
Reinsurance premiums assumed $ -- $ 1,476,952 $ --
Acquisition costs $ 147,695 $ -- $ --
Balance Sheet
Due from related party
(unsecured, non-interest
bearing, due December 31,
1996) $ 1,507,271 $ -- $ --
Underwriting reserves (derived
from but not payable to
related parties):
Reinsurance premiums $ -- $ 32,368,691 $ --
Retrocession premiums $ -- $(15,580,030) $ --
Acquisition costs $(3,092,294) $ (809,216) $ --
Due to related parties
(unsecured, non-interest
bearing, due December 31,
1996) $ 757,551 $ 773,453 $ 8,452
</TABLE>
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents are carried at their face amount.
Investments are carried at fair value as determined based on quoted market
prices.
9. RETAINED EARNINGS RESTRICTIONS
Belgian company law requires 5% of annual net income to be transferred to
a legal reserve which is not normally distributable to stockholders. These
transfers must be made until the legal reserve has attained 10% of the
value of the paid in common stock.
Paid in common stock for the Company under Belgian company law is
$1,594,896. At May 10, 1996, the Company's legal reserve under Belgian
company law was $6.
10. CONTINGENCIES
Underwriting reserves are provisions for the future losses based on
individual underwriting years. To the extent that an underwriting year
becomes fully developed and earned premiums can be ascertained, credit can
be taken to the income statement comprising the loss provision no longer
required.
Belgian fiscal authorities have examined the records for the year ended
December 31, 1994, the first year of activity as a reinsurer. By their
letter on May 13, 1996, they contest the basis on which the Company has
compiled its underwriting reserves. Directors believe that the authorities
have misunderstood the nature of the time frame of the risks provided
against. A formal rejection of authorities' assertions is currently being
drawn up.
In the unlikely event of the total underwriting reserve for 1994 of
$8,488,697 being deemed to be profit by the tax authorities, a tax charge
of some $4,200,000 would arise. However, if the authorities accept the
Directors' assertions, taxation will in any event become due for 1999 if
the underwriting reserve of 1994 suffers no losses. Based on current tax
rates, the amount payable at that time would be $3,600,000. Similar
considerations may apply to the 1995 and 1996 underwriting years.
Any change in the revenue recognition policy for tax purposes would result
in gross temporary timing differences, the proposed adjustments would be
substantially offset by deferred income taxes and would not be material to
the consolidated financial statements taken as a whole.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 29,005,183
<SECURITIES> 25,025,805
<RECEIVABLES> 1,535,239
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 66,761,388
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 66,761,388
<CURRENT-LIABILITIES> 30,404,283
<BONDS> 0
0
0
<COMMON> 5,576
<OTHER-SE> 36,351,529
<TOTAL-LIABILITY-AND-EQUITY> 66,761,388
<SALES> 1,162,007
<TOTAL-REVENUES> 3,664,101
<CGS> 116,201
<TOTAL-COSTS> 819,001
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,845,100
<INCOME-TAX> 1,050,000
<INCOME-CONTINUING> 1,795,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,795,100
<EPS-PRIMARY> .33
<EPS-DILUTED> 0
</TABLE>
