<PAGE> 1
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, 1998
| | Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transitional period from _____________ to ____________
Commission File No. 1-13362
------------
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
-------------------------------------
(Name of Small Business Issuer as specified in its charter)
NEVADA 04-3226365
----------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
822 BOYLSTON STREET, SUITE 300, CHESTNUT HILL, MA 02167
-------------------------------------------------------
(Address of principal executive offices)(Zip Code)
(617) 266-3600
-------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 4,170,791 Shares of Common
Stock, as of August 18, 1998
Transitional Small Business Issuer Format (check one):
YES NO X
--- ---
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED BALANCE SHEET
Unaudited
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
June 30,
1998
- ----------------------------------------------------------------------------
ASSETS
<S> <C>
CURRENT:
Cash and cash equivalents $ 506,409
Interest and other receivables 142,447
Inventories 122,302
Prepaid expenses and other current assets 86,813
--------
Total current assets 857,971
--------
PROPERTY AND EQUIPMENT:
Property and equipment, net of accumulated depreciation 14,121,106
-----------
OTHER ASSETS:
Restricted cash 22,925
Water rights 1,051,992
Investment in golf facilities 1,059,071
Other assets 237,906
-----------
Total other assets 2,371,894
-----------
$17,350,971
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,830,103
Current portion of long term debt 878,970
Current portion of obligation under water-rights agreement 89,071
Deferred revenues 89,572
-----------
Total current liabilities 2,887,716
-----------
LONG TERM LIABILITIES:
Obligation under water rights agreement 738,778
Long term debt 9,347,572
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value; 5,000,000 shares authorized 0
Common stock, $.001 par value; 15,000,000 shares authorized;
4,333,003 shares issued; 4,220,791 shares outstanding 4,333
Additional paid-in capital 10,186,101
Treasury stock, at cost (308,583)
Management options 608,562
Accumulated deficit (6,113,508)
-----------
Total stockholders' equity 4,376,905
-----------
$17,350,971
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERLY PERIODS ENDED JUNE 30, 1998 & 1997
Unaudited
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Three Month Three Month
Period Ended Period Ended
June 30, 1998 June 30, 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $1,833,033 $1,411,884
COSTS AND EXPENSES:
Operating, general and administrative 2,020,361 1,545,119
Noncash compensation charge/(credit) - management stock
options 0 (37,500)
---------- ----------
Operating income (loss) (187,328) (95,735)
Interest income 8 2,155
Interest expense (305,353) (168,291)
---------- ----------
Income (loss) before equity in losses from
unconsolidated affiliate (492,673) (261,871)
Equity in losses of unconsolidated affiliate (41,677) (65,000)
---------- ----------
NET INCOME (LOSS) ($534,350) ($326,871)
========== ==========
Net income (loss) per common and common equivalent share:
Basic ($0.14) ($0.09)
========== ==========
Diluted ($0.14) ($0.09)
========== ==========
Weighted average number of common and common equivalent shares
outstanding:
Basic 3,766,220 3,732,280
========== ==========
Diluted 3,766,220 3,732,280
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERLY PERIODS ENDED JUNE 30, 1998 & 1997
Unaudited
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Three Month Three Month
Period Ended Period Ended
June 30, 1998 June 30, 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(534,350) $ (326,871)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 155,314 115,909
Noncash compensation charge/(credit) - management
stock options 0 (37,500)
Noncash equity in losses of Las Vegas Golf Center 41,677 65,000
Changes in assets and liabilities:
Interest and other receivables 32,669 105,501
Prepaid expenses and other assets (4,292) (10,638)
Inventories 277 (24,202)
Deferred Revenue (49,508) (50,604)
Accounts payable and accrued expenses (5,717) 502,098
--------- -----------
Cash provided by (used in) operating activities (363,930) 338,693
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (40,854) (13,969)
Golf course development costs capitalized 0 (2,583,108)
Proceeds from sale of construction in progress 323,099 0
Investment in unconsolidated affiliate (43,507) (64,757)
--------- -----------
Net cash provided by (used in) investing activities 238,738 (2,661,834)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from exercise of stock options, net 328,976 0
Repayment of long term debt (121,427) (96,883)
Proceeds from long term debt 129,306 2,069,257
--------- -----------
Net cash provided by (used in) financing activities 336,855 1,972,374
--------- -----------
Net increase (decrease) in cash and cash equivalents $ 211,663 $ (350,767)
Cash and cash equivalents, beginning of period $ 294,746 $ 521,447
--------- -----------
Cash and cash equivalents, end of period $ 506,409 $ 170,680
--------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERLY PERIODS ENDED JUNE 30, 1998 & 1997
Unaudited
(Continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Three Month Three Month
Period Ended Period Ended
June 30, 1998 June 30, 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Equipment acquired under capital lease $ 0 $ 256,876
========= ==========
Common stock issued for Las Vegas Golf Center purchase $ 0 $ 72,000
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 & 1997
Unaudited
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Six Month Six Month
Period Ended Period Ended
June 30, 1998 June 30, 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $3,633,856 $2,776,667
COSTS AND EXPENSES:
Operating, general and administrative 3,420,693 2,621,954
Noncash compensation charge/(credit) - management
stock 0 (33,258)
---------- ----------
Operating income (loss) 213,163 187,971
Interest income 253 13,253
Interest expense (596,785) (356,200)
---------- ----------
Income (loss) before equity in losses from
unconsolidated affiliate (383,369) (154,976)
Equity in losses of unconsolidated affiliate (84,677) (103,000)
---------- ----------
NET INCOME (LOSS) $ (468,046) $ (257,976)
========== ==========
Net income (loss) per common and common equivalent share:
Basic ($0.12) ($0.07)
========== ==========
Diluted ($0.12) ($0.07)
========== ==========
Weighted average number of common and common equivalent
shares outstanding:
Basic 3,758,736 3,716,639
========== ==========
Diluted 3,758,736 3,716,639
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 & 1997
Unaudited
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Six Month Six Month
Period Ended Period Ended
June 30, 1998 June 30, 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(468,046) $ (257,976)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 309,039 231,082
Noncash compensation charge/(credit) - management
stock options 0 (33,258)
Noncash equity in losses of Las Vegas Golf Center 84,677 103,000
Distributions to minority interests in Forest Lakes 0 (349,946)
Changes in assets and liabilities:
Interest and other receivables 26,639 1,139,526
Prepaid expenses and other assets (48,173) 5,611
Inventories 67,349 (32,471)
Deferred Revenue (84,647) (66,532)
Accounts payable and accrued expenses (371,579) (67,472)
--------- -----------
Cash provided by (used in) operating activities (484,741) 671,564
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (49,199) (24,300)
Golf course development costs capitalized 0 (3,256,947)
Proceeds from sale of construction in progress 323,099
Investment in unconsolidated affiliate (86,507) (64,757)
Cash (restricted) released from escrow 0 0
Increase in other assets 0 0
Net cash provided by (used in) investing activities 187,393 (3,346,004)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from exercise of stock options, net $ 328,976 $0
Repayment of long term debt (267,082) (1,592,373)
Proceeds from long term debt 564,689 2,851,882
--------- -----------
Net cash provided by (used in) financing activities 626,583 1,259,509
--------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 329,235 $(1,414,931)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 177,174 $ 1,585,611
--------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 506,409 $ 170,680
--------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 & 1997
Unaudited
<TABLE>
<CAPTION>
(Continued)
- --------------------------------------------------------------------------------------
Six Month Six Month
Period Ended Period Ended
June 30, 1998 June 30, 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Equipment acquired under capital lease $ 0 $ 256,876
--------- -----------
Common stock issued for Las Vegas Golf Center purchase $ 0 $ 72,000
--------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
SENIOR TOUR PLAYERS DEVELOPMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
Senior Tour Players Development, Inc. and Subsidiary ("the Company")
was organized as a Nevada corporation on April 6, 1994 for the purposes
of developing, acquiring, and managing semi-private, private, and
public golf courses and golf practice facilities throughout the United
States.
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary, The Badlands Golf Club,
Inc. ("The Badlands"), which was established in 1995, and is located in
Las Vegas, Nevada. All significant intercompany transactions and
balances have been eliminated in consolidation.
On May 7, 1998 the Company announced that it has signed a Merger
Agreement dated May 6, 1998, with Golf Club Partners LLC ("GCP"), a
privately held Oklahoma limited liability company which is not
affiliated with the Company or its management. Consummation of the
merger is subject to several conditions set forth in the Merger
Agreement, including the approval of the Company's shareholders. The
Merger Agreement provides that prior to the merger, the Company will
sell or otherwise dispose of all of the Company's assets other than The
Badlands Golf Club in Las Vegas, Nevada, and the Company will pay or
otherwise discharge all of its liabilities except for certain
liabilities relating to The Badlands and the mortgage debt on The
Badlands. GCP will then acquire the Company through the merger in
exchange for a cash payment equal to $26.0 million, less The Badlands'
mortgage debt, any expenses relating to the merger, and any of the
Company's other liabilities. In addition to the balance of the $26.0
million cash payment, the Company will receive the proceeds from the
exercise of the Company's stock options, and plus or minus, as the case
may be, an adjustment relating to the working capital of The Badlands
at the time of the merger. The rights of the Company's shareholders
will thereafter consist solely of their rights to receive their
portion of the merger consideration. (See Note 10a - Subsequent
Event-Anticipated Completion of Merger.)
On December 31, 1996 the Company purchased and retained a minority
21.5% ownership interest in the Las Vegas Golf Center (the "Center"), a
golf practice center located in Las Vegas, Nevada. The Center opened
for business on January 17, 1997. The Company has accounted for its
ownership interest in the Center
<PAGE> 10
under the equity method. Under this method, the original investment in
the Center was recorded at cost and is adjusted periodically to
recognize the Company's share of earnings or losses after the date of
acquisition. During the second quarter of 1998, the Company recorded a
$41,677 loss representing the Company's pro rata share in the Center's
operating losses. Also, during the second quarter of 1998, the Company
made an additional capital contribution to the Center in the amount of
$43,507. At June 30, 1998 the Company had capitalized $1,059,071
related to this investment, which is carried as Investment in Golf
Facilities on the accompanying balance sheet. The investment was
partially offset by a $683,464 reserve, established in 1997, in
anticipation of a possible write down of the Company's investment in
the Las Vegas Golf Center, LLC. (See Note 10b - Subsequent Event - Sale
of Interest in Las Vegas Golf Center, LLC.)
The accompanying consolidated financial statements reflect the
application of certain accounting policies described in this note and
elsewhere in the accompanying notes to consolidated financial
statements.
Interim Financial Statements
The accompanying financial statements have been prepared and presented
by the Company without audit in accordance with generally accepted
accounting principles for interim financial statements and with the
instructions to Form 10-QSB. Accordingly, these interim financial
statements do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. The financial statements reflect all adjustments and
accruals which management considers necessary for a fair presentation
of financial position as of June 30, 1998, and results of operations
for the three month periods ended June 30, 1998 and 1997. The results
for the interim periods presented are not necessarily indicative of
results to be expected for any future period.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Concentration of Risk
<PAGE> 11
Statement of Financial Accounting Standards (SFAS) No. 105, Disclosure
of Information About Financial Instruments with Off-Balance-Sheet Risk
and Financial Instrument with Concentrations of Credit Risk, requires
disclosure of any significant off-balance-sheet and credit risk
concentrations. The Company has no significant off-balance-sheet
concentration of credit risk, such a foreign exchange contracts,
options contracts or other foreign hedging arrangements.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market, and consist of
food & beverage, golf equipment, clothing, and accessories.
Property, Furniture, Equipment, and Depreciation
Property, furniture, and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated useful lives
of the assets.
Revenue
Revenue consists primarily of green fees, membership dues, golf cart
rental fees, golf course management and development fees, revenue from
food and beverage sales, and pro shop merchandise sales. Deferred
revenue consists of prepaid membership dues which are recognized
ratably over the term of the membership.
Net Income (Loss) per Common and Common Equivalent Share
In 1997, the Company adopted SFAS No. 128, Earnings per Share,
effective December 15, 1997. SFAS No. 128 establishes standards for
computing and presenting earning per share and applies to entities with
publicly held common stock or potential common stock. The Company has
applied the provisions of SFAS No. 128 retroactively to all periods
presented. The dilutive effect of potential common shares consisting of
outstanding stock options is determined using the treasury methods and
the if-converted methods, respectively, in accordance with SFAS No.
128. Diluted weighted average shares outstanding for
<PAGE> 12
1998 and 1997 exclude the potential common shares from stock options
because to do so would have been antidilutive for the years presented.
Common Stock
Shares issued and outstanding at June 30, 1998 include 161,644 shares
to be issued in January 1998 in accordance with the Company's purchase
of the 21.5% interest in the Las Vegas Golf Center, LLC, a Delaware
limited liability company (the LLC), during 1996 (see Note 2). However,
the issuance of those shares was delayed pending the outcome of legal
action brought by the Company against certain prior owners of the LLC.
(See Note 10c - Subsequent Event-Settlement of White-Weber Litigation.)
Recently Issued Accounting Standards
As of January 1, 1998 the Company adopted Statement of Financial
Accounting Standards No. 130 - "Reporting Comprehensive Income" ("SFAS
130"). SFAS 130 establishes new rules for the reporting and display of
comprehensive income and its components (e.g., foreign currency
translation adjustments and unrealized gains and losses on certain
marketable securities). The Company's total comprehensive income for
the six month period ended June 30, 1998 and 1997, were the same as
reported net income for those periods.
The FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," which is required to be adopted by
the Company no later than fiscal year 1998. This statement introduces a
new model for segment reporting, called the "management approach." The
management approach is based on the way that the chief operating
decision maker organizes segments within a company for making operating
decisions and assessing performance. Reportable segments can be based
upon any manner in which management desegregates the company. Such
segments could include products and services, geography, legal
structure and management structure. The Company does not expect the
adoption of this standard to have a material effect on its financial
position or its results of operations.
In April 1998, the AICPA issued its Statement of Position 98-5 ("SOP
98-5"), Reporting on the Costs of Start-Up Activities. SOP 98-5
requires that costs incurred during start-up activities, including
organization costs, be expensed as incurred. SOP 98-5 is effective for
financial statements for fiscal years beginning after December 15,
1998, although early application is encouraged. Initial application of
SOP 98-5 should be as of the beginning of the fiscal year in which
<PAGE> 13
it is first adopted and should be reported as a cumulative effect of a
change in accounting principle. The Company has intended to adopt SOP
98-5 on January 1, 1999. The adoption of SOP 98-5 will not have a
material effect on the Companies financial statements.
2. SALES
PROPOSED GOLF COURSE DEVELOPMENT - MCKINNEY, TEXAS
During March, 1996 the Company signed a purchase and sale agreement and
related documents for the proposed development of an 18-hole
championship golf facility located within the Stonebridge Ranch
Development in McKinney, Texas, approximately 25 miles north of Dallas.
During November, 1996, Westerra Holdings, LLC ("Westerra") purchased
and succeeded to the interest of Mobil Land in the Stonebridge Ranch
development. The Purchase and Sale Agreement expired on August 15,
1997, and to date, no development has commenced.
On March 23, 1998 the Company assigned to Westerra all of the Company's
development rights with respect to the Stonebridge Ranch project in
McKinney, Texas. In consideration of such assignment Westerra agreed to
reimburse the Company's actual costs incurred to date and to assume
certain unpaid liabilities related to this development, which are
included in construction in process in the accompanying financial
statements. Accordingly during April 1998, the Company was reimbursed
in full for the $323,099 of development costs which the Company had
capitalized in connection with Stonebridge Ranch development.
GOLFTOWN PRACTICE CENTER - SAUGUS, MASSACHUSETTS
On May 26, 1998, the Company sold its 21.8% equity ownership of
Golftown, Inc. ("Golftown") to David A. Deutsch, who is the
brother-in-law of Stanton V. Abrams, the Company's President. In
consideration of such transfer, Mr. Deutsch paid to the Company
approximately $29,000 in cash (which represented the investment which
the Company had previously made in Golftown and costs and advances made
by the Company on behalf of Golftown), and Mr. Deutsch had previously
arranged for the Company to be released from the Company's guarantee of
up to $295,000 of Golftown's debt to a local financial institution
through the provision by Mr. Deutsch of a similar personal guarantee of
such debt.
<PAGE> 14
INVESTMENT IN LAS VEGAS GOLF CENTER, LLC - LAS VEGAS, NEVADA
On June 23, 1998, the Company entered into an agreement with The
Ranchito Company, LLC ("Ranchito") which provided for the Company to
assign its 21.5% membership interest and rights as manager of the Las
Vegas Golf Center, LLC (the "LLC") to Ranchito. On the date of the
agreement Ranchito was one of the two members of the LLC other than the
Company, and Ranchito, exclusive of the interest covered by the
agreement with the Company, owned in that capacity a 30% membership
interest in the LLC. In consideration of such assignment, Ranchito
agreed to (i) pay $200,000 in cash to the Company, (ii) arrange for the
Company to be released from the Company's joint and several guarantee
of up to $4,000,000 of the LLC's indebtedness to US Bank of Nevada, and
(iii) return to the Company the 50,000 shares of the Company's Common
Stock which the Company had issued to Ranchito in December 1996 in
connection with the Company's acquisition of its interest in the LLC.
In addition, if the LLC (or its assets) is acquired within six months
after the date of the agreement between the Company and Ranchito for
aggregate net proceeds in excess of $1,750,000 (after payment of all
outstanding liabilities of the LLC and transaction expenses), Ranchito
will pay additional consideration to the Company equal to 21.5% of such
excess. (See Note 10b - Subsequent Event-Sale of Interest in Las Vegas
Golf Center.)
3. ASSIGNMENT OF MANAGEMENT AGREEMENT - HARBOR LINKS GOLF
COURSE OF NORTH HEMPSTEAD, NEW YORK
Effective January 27, 1998, the Company entered into a Golf Facilities
Management Agreement (the "Management Agreement") with the Town of
North Hempstead in New York (the "Town"). The Town is constructing a
new municipal golf facility in the Town of North Hempstead, New York
which will include an 18-hole championship golf course, a 9-hole
executive golf course, driving range, clubhouse, maintenance building,
practice and learning center, parking lot and related golf facilities,
five athletic fields, the surrounding cliff areas and at the discretion
of the Town, a miniature golf course, collectively referred to as the
"Facility." Under the Management Agreement, the Company agreed to
manage the Facility for the Town including but not limited to
marketing, maintaining the golf course, clubhouse and golf facilities.
Under the Management Agreement, the Company was required to provide the
Town an initial capital contribution for the Facility of $1,000,000 on
July 1, 1998 (or such later date as the Town should, in its sole
discretion, determine). The Company would be entitled to receive a
return of the initial capital contribution in five equal annual
installments of $200,000 payable on March 1 of each year commencing
<PAGE> 15
March 1, 2001. The Company would also be entitled to receive interest
on the outstanding portion of such capital contribution which had not
been returned to the Company at an interest rate equal to the lesser of
2% above the prime rate as reported by the Federal Reserve Bank or the
actual interest rate paid by the Company on financing obtained to fund
the initial capital contribution to the Facility.
The Merger Agreement with Golf Club Partners, LLC (see Notes 1 and 10a)
required the Company to dispose of its rights and obligations under the
Management Agreement prior to the effective date of the merger. In
order to comply with this requirement, the Company assigned the
Management Agreement as of June 1, 1998 to Arnold Palmer Harbor Links,
LLC ("APHL") in consideration of the payment by APHL to the Company of
$25,000 in cash and the agreement by APHL with the Company and the Town
to make the $1,000,000 capital contribution. The Company had originally
negotiated with Arnold Palmer Golf Management LLC ("Palmer") the
funding of the $1,000,000 capital contribution, but Palmer was willing
to agree to fund only $500,000 of the capital contribution required
under the Management Agreement. Accordingly, Palmer agreed with the
Town to provide $500,000 of such capital contribution , and Stanton V.
Abrams, the Company's President, agreed with the Town to provide the
remaining $500,000 which Palmer was not willing to provide. This
arrangement was formalized through (i) the formation of APHL as a joint
venture between Palmer and Mr. Abrams, with Palmer contributing
$525,000 to APHL on July 1, 1998 (of which $25,000 was paid by APHL to
the Company as described above), and Mr. Abrams agreeing to contribute
$500,000 to APHL by not later than August 1, 1998, and (ii) the
assignment by the Company of the Management Agreement to APHL with the
written consent of the Town to such assignment and to the other terms
summarized above. Under the terms of such consent, the Company remained
severally liable to fund the $500,000 portion of the capital
contribution which has not yet been funded until Mr. Abrams funded such
amount in accordance with his agreement with the Town and the Company.
In early August, the Company funded such $500,000 capital contribution
to the Town (in part through funds advanced by Golf Club Partners,
L.L.C.), and Mr. Abrams agreed to repay such amount through a deduction
of $500,000 from the portion of the merger consideration which Mr.
Abrams will be entitled to receive in exchange for his outstanding
shares of the Company's Common Stock. In the future, as the two members
of APHL, Palmer and Mr. Abrams will each be entitled to receive from
the Facility a portion of the management fees under the Management
Agreement (as assigned) and a return of their respective capital
contributions to APHL in five equal yearly installments beginning in
2001, with interest on the portion of their respective capital
contributions which have not
<PAGE> 16
been returned to an interest rate equal to 2% above the prime rate as
reported by the Federal Reserve Bank of St. Louis.
4. GOLF COURSE DEVELOPMENT COSTS
In connection with the original eighteen hole facility at The Badlands
Golf Club, which was completed in October 1995, and the additional nine
holes, which were completed in September, 1997, the Company has entered
into the following significant contracts and agreements:
(a) Badlands Land Lease Agreement
The Company leases 186 acres of land in Las Vegas, Nevada, for a term
of 50 years, expiring in July, 2045. The lease agreement contains four
10-year options to extend the term of the lease based on certain terms
as defined. The lease requires minimum rental payments of $240,000 per
annum, commencing July 1, 1995, with an increase every three years
based on the increase in the Consumer Price Index.
During June 1996, the Company leased an additional 67 acres abutting
The Badlands which was used to develop an additional nine holes that
was completed in September 1997. The term of the lease will be
coterminous with the existing lease, expiring in July 2045, with four
ten-year extension options. The lease requires minimum rental payments
of $120,000 per annum, commencing on October 1, 1997 with an increase
every three years based on the increase in the Consumer Price Index.
Both leases contain a contingent rental clause requiring the Company to
pay an amount equal to the amount by which 6% of annual gross receipts,
as defined, at The Badlands exceeds the minimum annual rental of
$360,000. The lease also requires the Company to pay real estate taxes,
assessments and other charges in connection with the leased property.
(b) Water Rights Agreement
The Company has purchased 399 acre-feet of water rights under a water
rights agreement (the "Agreement") for use at The Badlands. The
Agreement requires the Company to pay $13,300 per month commencing on
July 1, 1995 and continuing for ten years through July 2005. The
obligation under the water rights agreement has been capitalized in the
accompanying consolidated balance sheet. The capitalized water rights
will not be amortized since the asset has an indefinite
<PAGE> 17
and indeterminable life span and is transferable by the Company subject
to certain restrictions in the Agreement.
<TABLE>
<CAPTION>
5. LONG TERM DEBT
<S> <C>
Long-term debt consisted of the following at June 30, 1998:
Mortgage note payable to NationsCredit, secured by The Badlands, interest is at
10.78%, with principal and interest due monthly of approximately $ 47,800, final
maturity date of December, 2001 $ 4,831,316
Construction note payable to NationsCredit, secured by The Badlands, interest is
at 10.95%, with principal and interest due monthly of approximately $48,250, final
maturity date of December, 2001 4,379,138
Capital lease obligation for turf maintenance and other equipment, principal and
interest payments of approximately $12,660 due monthly, final maturity date of
September 30, 1999 176,102
Capital lease obligation for furniture, fixtures, and other equipment, principal and
interest payments of approximately $3,995 due monthly, final maturity date of
January 1, 2002 140,244
Capital lease obligation for equipment principal and interest payments of
approximately of $1,040 due monthly, final maturity date of June 13, 2001 35,282
Capital lease obligation for equipment principal and interest payments of 4,916
approximately $130 due monthly, final maturity date of May 31, 2002
Capital lease obligation for turf maintenance and other equipment principal and
interest payments of approximately $4,460 due monthly, final maturity date of
June 1, 2002 176,619
Capital lease obligation for telephone equipment, principal and interest payments
of approximately $595 due monthly, final maturity date of September 11, 2001 17,925
Unsecured line of credit, with interest at the prime rate (8.5% at March 31, 1998)
plus 1.5%, final maturity date of October 31, 1998 465,000
-----------
Total debt $10,226,542
Less-Current portion 878,970
-----------
Total long-term debt $9,347,572
</TABLE>
<PAGE> 18
6. STOCKHOLDERS' EQUITY
Common Stock
During 1996, the Company issued 742,836 shares of common stock in
connection with the purchase and sale of investment in the Las Vegas
Golf Center, LLC (LVGC). In addition, the Company issued 25,000 shares
to Johnny Miller Design Ltd. for design services rendered at The
Badlands.
During 1997, the Company issued an additional 50,000 shares of common
stock in connection with the purchase of the investment in the LVGC,
discussed in Note 2.
Stock Option Plans
On June 20, 1994, the Company adopted the 1994 Employee Stock Option
Plan (the Employee Plan) that provides for the granting of
non-qualified and incentive stock options, as defined by the Internal
Revenue Code, to key employees at prices as determined by the
Compensation Committee of the Board of Directors. Under the Employee
Plan, options for a maximum of 350,000 shares of common stock may be
granted over a period not to exceed ten years. At June 30, 1998,
195,000 options have been granted under this plan. However, during
1997, three of the employees who had been granted options under the
plan resigned from the Company, resulting in the termination of 131,428
options. For the remaining options granted under the Employee Plan,
35,000 options had an exercise price of $2.1875 per share, the fair
market value on the date of grant and vest in five annual equal
installments beginning in December 1997. At June 30, 1998, 7,000 of
these options had vested. The terms of the other remaining 28,572
options issued under the Employee Plan are detailed below in Deferred
Compensation.
On November 10, 1996, the Board of Directors of the Company adopted,
subject to shareholder approval, the 1996 Non-Employee Director Stock
Option Plan (the Nonemployee Plan), which was subsequently ratified by
the shareholders. Under the Nonemployee Plan, options for a maximum
200,000 shares of common stock may be granted. As of June 30, 1998,
80,000 options have been granted under this plan. The options were
granted with an exercise price equal to fair market value on the date
of
<PAGE> 19
grant, and vested immediately. During the second quarter of 1998 45,000
of these options were exercised for an aggregate exercise price of
$95,938.
Stock Option Agreements - Management Options
Effective June 20, 1994, the Company entered into employee stock option
agreements with certain officers and key employees granting them
options to acquire up to 1,111,111 shares of the Company's common stock
for an exercise price of $1.00 per share. Under these agreements, each
employee's options vest and become exercisable based on the Company
achieving certain financial benchmarks, as defined. The options must be
exercised by December 31, 2004.
At December 31, 1996, 555,555 (representing 50%) of the management
stock options vested, as the Company achieved the financial benchmarks
called for under the option agreements for the year ended December 31,
1996. On March 19, 1997, a vote was adopted by the Company's
Compensation Committee, and then ratified by the Board of Directors, to
amend the option agreements in order to delete the benchmarks. The
Board voted to accept the optionholders' voluntary delay of 10% of
their vested option shares and to replace the benchmarks with an
extended vesting schedule, based on continuing employment with the
Company. Under the revised vesting schedule, 40% or 444,445 of the
options vested on December 31, 1996 and the remaining 666,666 options
will vest pro rata on December 31, 1997, 1998, and 1999. As of June 30,
1998 a total of 655,556 of the options have vested. During the second
quarter of 1998 536,834 of these options were exercised. Additionally,
in return for paying $308,583 of employees tax related liability
associated with exercising these options, one of the employees returned
112,212 shares of the Companies Common Stock to the Company. These
shares had a fair market value on the date of the transaction of $2.75
per share. Accordingly, these shares have been recorded as Treasury
Stock held at cost. At the time these options were exercised, the
proceeds were credited to additional paid-in capital accounts.
Deferred Compensation
Effective December 11, 1996, the Company granted stock options to an
officer of the Company granting options to acquire up to 100,000 shares
of the Company's common stock for an exercise price of $1.00 per share.
<PAGE> 20
Under the stock option agreement, the options vest pro rata over seven
years beginning March 5, 1995.
At December 31, 1996, the Company recorded a charge to deferred
compensation and a corresponding credit to additional paid-in capital
in the amount of $89,062, net of amortization, which represents the
difference between the market price of the Company's common stock on
December 11, 1996, the date of the option grant ($2.1875) and the
exercise price of $1.00 per share, multiplied by the number of shares
subject to the option (100,000). During 1997, the officer resigned from
the Company, resulting in no future vesting of these options. As of
June 30, 1998, a total of 28,752 shares had vested.
7. INCOME TAXES
At June 30, 1998, the Company had a net operating loss carryforward
available for federal tax purposes of approximately $3,300,000 with
expiration dates beginning in 2009. The Company has provided a
valuation allowance equal to 100% of the gross deferred tax asset due
to the uncertainty surrounding the realization of the deferred tax
asset. Additionally, net operating loss carryforwards may be limited in
the event of certain changes in ownership interests of significant
stockholders.
8. CONTINGENT LIABILITIES
1998 BONUS PLAN
During 1998 the Company established the 1998 Key Employee Bonus Plan
(the Plan). Under the Plan employees may receive cash bonuses in the
aggregate amount of approximately $530,000. The bonuses are contingent
upon certain conditions set forth in the Plan, including: (1) the
consummation of the merger between the Company and Golf Club Partners
L.L.C., (2) each employee provides full and complete cooperation to the
Company, and (3) each employee remains employed by the Company until
the earlier of (i) the date he or she is discharged by the Board of
Directors, or (ii) thirty (30) days following the closing of the
merger. (See Note 10a - Subsequent Event-Anticipated Completion of
Merger.)
<PAGE> 21
9. RELATED PARTY TRANSACTIONS
See Notes 2 and 3 above relating to the sale of the Company's interest
in Golftown Practice Center and the assignment of the Company's
Management Agreement for the Harbor Links Golf Course.
10. SUBSEQUENT EVENTS
(a) Anticipated Completion of Merger
On May 7, 1998 the Company announced that it had signed a Merger
Agreement dated May 6, 1998, with Golf Club Partners L.L.C. ("GCP"), a
privately held Oklahoma limited liability company which is not
affiliated with the Company or its management. Consummation of the
merger is subject to several conditions set forth in the Merger
Agreement, including the approval of the Company's shareholders. The
Company's shareholders approved the Merger Agreement at a Special
Meeting held on July 24, 1998.
The Company now anticipates that the merger will become effective on or
about August 20, 1998. On the effective date, each of the Company's
4,170,791 shares of Common Stock outstanding immediately prior to the
effective time on that date will be automatically converted into a
right to receive in cash the Merger Consideration Per Share as
described in the Merger Agreement. The completion of the merger and
the effective date remain, however, subject to satisfaction of certain
remaining closing conditions set forth in the Merger Agreement.
(b) Sale of Interest in Las Vegas Golf Center, LLC
On July 27, 1998, the Company closed the sale to The Ranchito Company,
LLC of the 21.5% membership interest in Las Vegas Golf Center, LLC,
which was formerly owned by the Company. The terms of the sale were as
described above under Note 2 - Sales - Investment in Las Vegas Golf
Center, LLC.
(c) Settlement of White-Weber Litigation
Effective as of August 7, 1998, the Company settled the litigation
which had previously been outstanding with certain parties (the
"White-Webber Group") who had sold to the Company in December 1996 the
Company's 21.5% membership interest in the Las Vegas Golf Center, LLC
(see Notes
<PAGE> 22
1 and 2 above). Under the terms of the purchase, the Company had agreed
to deliver 161,644 shares of Common Stock and pay $200,000 in cash to
the White-Webber Group in January 1998. Under the terms of the
settlement, the Company has issued 161,644 shares of the Company's
Common Stock and has agreed to pay by August 21 $108,000 of cash
in full settlement of the claims of the White-Webber Group. In
connection with the White-Webber Litigation, the Company has also
incurred approximately $28,000 of legal and other expenses.
<PAGE> 23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES.
As described in Note 10a to the financial statements included in this
report ("Subsequent Event-Anticipated Completion of Merger"), the Company now
anticipates that it will be acquired by Merger on or about August 20, 1998 and
all of its outstanding shares of Common Stock will then be converted into a
right to receive a cash payment provided by Golf Club Partners L.L.C. ("GCP").
Accordingly, the Company now anticipates that its liquidity and capital
resources will become as of the effective date of the merger the responsibility
of GCP.
PLAN OF OPERATION.
On May 7, 1998 the Company announced that it has signed a Merger
Agreement dated May 6, 1998, with GCP, a privately held Oklahoma limited
liability company which is not affiliated with the Company or its management.
Consummation of the Merger is subject to several conditions set forth in the
Merger Agreement. The Company now anticipates that the Merger will become
effective on or about August 20, 1998.
RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1998 VS. THREE MONTH PERIOD ENDED JUNE 30,
1997
REVENUES during the second quarter ended June 30, 1998 totaled $1,833,033
compared to $1,411,884 during the second quarter of 1997, an increase of
$421,149. The primary reason for the increase, which was anticipated by
management, was the increased revenue at The Badlands due to the opening of the
third nine holes in September 1997.
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES were $2,020,361 during the
quarter ended June 30, 1998 compared to $1,545,119 for the corresponding period
in 1997, an increase of $475,242. Operating Expenses include approximately
$353,000 of deal related expense associated with the Merger discussed in Note
10a.
INTEREST EXPENSE totaled $305,353 for the quarter ended June 30, 1998 compared
to $168,291 during the quarter ended June 30, 1997. Total bank debt and capital
lease obligations at The Badlands as of June 30, 1998 totaled $10,226,542, and
the long term obligation under the water rights agreement was $827,849 as of
June 30, 1998. See Note 4 to the consolidated financial statements included
herein.
EQUITY IN LOSSES OF UNCONSOLIDATED AFFILIATE. On December 31, 1996 the Company
purchased and retained a minority 21.5% ownership interest in the Las Vegas Golf
Center (the "Center"), a golf practice center located in Las Vegas, Nevada. The
Center opened for business on January 17, 1997. The Company accounted for its
ownership interest in the Center under the equity method. Under this method, the
original investment in the Center was recorded at cost and adjusted
<PAGE> 24
periodically to recognize the Company's share of earnings or losses after the
date of acquisition. During the second quarter of 1998, the Company recorded a
$41,677 loss representing the Company's pro rata share in the Center's operating
losses compared to $65,000 during the corresponding period in 1997. See notes to
consolidated financial statements included herein.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 10c - Settlement of White-Weber Litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matter was submitted during the fiscal quarter ended June 30, 1998 covered by
this report to a vote of security holders, whether through the solicitation of
proxies or otherwise. However, at a Special Meeting of Stockholders held on July
24, 1998, the Merger Agreement with Golf Club Partners L.L.C. was approved by
the affirmative vote of the holders of 3,083,669 shares of Common Stock, which
represented 76% of the total outstanding shares on the recent date for such
Special Meeting.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 10.31 - Amendment No. 1 dated August 17, 1998 to Merger Agreement among
the Company, Golf Club Partners L.L.C. and STPD Acquisition Company.
<PAGE> 25
(b) REPORTS ON FORM 8-K.
None
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SENIOR TOUR PLAYERS
DEVELOPMENT, INC.
Dated: August 19, 1998 By: /s/ Brendan Kissane
-------------------
Brendan Kissane, Controller
(Principal Accounting Officer)
<PAGE> 1
Exhibit 10.31
FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of
August 17, 1998 (the "Amendment"), is made and entered into among GOLF CLUB
PARTNERS L.L.C., an Oklahoma limited liability company ("Acquiror"), STPD
ACQUISITION COMPANY, an Oklahoma corporation and a wholly-owned subsidiary of
Acquiror ("Acquiror Sub"), and SENIOR TOUR PLAYERS DEVELOPMENT, INC., a Nevada
corporation (the "Company"). Unless otherwise defined herein or the context
hereof otherwise requires, all terms defined in the Agreement and Plan of
Merger, dated as of May 6, 1998 (the "Merger Agreement") among the parties
hereto shall have the same meanings herein.
RECITALS
The Merger Agreement currently provides that Acquiror Sub will be
merged with and into the Company with the Company to be the Surviving
Corporation after the Merger and to become a wholly-owned subsidiary of
Acquiror. The respective Boards of Directors of Acquiror Sub and the Company,
and the manager of Acquiror, have determined that it is advisable and in the
best interests of the respective corporations and limited liability company and
their respective shareholders and members that the Merger Agreement be amended
so that the Company will be merged with and into Acquiror Sub, with Acquiror
Sub, and not the Company, to be the Surviving Corporation and a wholly-owned
subsidiary of Acquiror after the Merger. Section 9.3 of the Merger Agreement
provides that the Merger Agreement may be amended by the parties at any time
prior to the Effective Time, by an instrument in writing signed by each of the
parties hereto; provided, however, that after approval of the Merger Agreement
by the shareholders of the Company, no amendment that would reduce the amount or
change the type of consideration into which each share of Company Common Stock
shall be converted pursuant to the Merger Agreement upon consummation of the
Merger may be made without further approval of the shareholders of the Company.
The parties agree that the amendments to the Merger Agreement to be made herein
would not reduce the amount or change the type of consideration into which each
share of Company Common Stock will be converted pursuant to the Merger
Agreement.
AGREEMENTS
In consideration of the representations, warranties, covenants and
agreements set forth in this Amendment, the parties agree as follows:
1. Section 1.1 of the Merger Agreement is amended to read,
in full, as follows:
<PAGE> 2
THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in
accordance with the Oklahoma Law and the Nevada Law,
at the Effective Time (as defined in Section 1.2
below), the Company shall be merged with and into
Acquiror Sub. As a result of the Merger, the separate
corporate existence of the Company shall cease and
Acquiror Sub shall continue as the surviving
corporation of the Merger (the "Surviving
Corporation"). Acquiror Sub and the Company are
sometimes collectively referred to in this Agreement
as the "Constituent Corporations."
2. Section 1.4 of the Merger Agreement is amended to read,
in full, as follows:
CERTIFICATE OF INCORPORATION; BYLAWS. At the
Effective Time, the Certificate of Incorporation, as
modified by amendments approved by all parties
hereto, which amendments shall become effective only
at the Effective Time, and the Bylaws of Acquiror Sub
shall be the Certificate of Incorporation and the
Bylaws of the Surviving Corporation, except the name
of the Surviving Corporation shall, immediately
following the Merger, be changed to "Senior Tour
Players Development, Inc."
3. Section 1.5 of the Merger Agreement is amended to read,
in full, as follows:
DIRECTORS AND OFFICERS. The directors of Acquiror
Sub immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation,
each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the
Surviving Corporation, and the officers of Acquiror
Sub immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in
each case until their respective successors are duly
elected or appointed and qualified.
4. Section 2.1(c) of the Merger Agreement is amended to
read, in full, as follows:
2
<PAGE> 3
(c) each share of common stock, $.01 par value,
of Acquiror Sub issued and outstanding immediately
prior to the Effective Time shall thereafter
represent one fully paid and nonassessable share of
common stock of the Surviving Corporation ("Surviving
Corporation Common Stock").
5. Upon execution and delivery of this Amendment by all
parties hereto, the Merger Agreement shall be amended as set forth
herein. Except as otherwise expressly provided herein, all of the
terms and provisions of the Merger Agreement shall remain in full
force and effect; provided, however, that to the extent not already
provided herein, the Merger Agreement shall be deemed to be further
amended to the minimum extent necessary to reflect that the Company
will be merged into Acquiror Sub and Acquiror Sub will continue as the
Surviving Corporation of the Merger, so long as such further amendment
does not reduce the amount or change the type of consideration into
which each share of Company Common Stock will be converted pursuant to
the Merger Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Agreement and Plan of Merger effective as of the date first above
written.
"ACQUIROR" GOLF CLUB PARTNERS L.L.C., an
Oklahoma limited liability
company
By: GOLF CLUB OPERATING PARTNERS
L.L.C., an Oklahoma limited
liability company, its Manager
By:
-----------------------------
Elby J. Beal, Manager
By:
-----------------------------
David K. Hardin, Manager
By:
-----------------------------
James D. Gressett, Manager
3
<PAGE> 4
"COMPANY" SENIOR TOUR PLAYERS DEVELOPMENT,
INC., a Nevada corporation
By:
-----------------------------
Name: Stanton V. Abrams
---------------------------
Title: President
--------------------------
"ACQUIROR SUB" STPD ACQUISITION COMPANY, an
Oklahoma corporation
By:
----------------------------
Elby J. Beal, President
4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 506,409
<SECURITIES> 0
<RECEIVABLES> 142,447
<ALLOWANCES> 0
<INVENTORY> 122,302
<CURRENT-ASSETS> 857,971
<PP&E> 14,121,106
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,350,971
<CURRENT-LIABILITIES> 2,887,716
<BONDS> 10,086,350
0
0
<COMMON> 4,333
<OTHER-SE> 4,372,572
<TOTAL-LIABILITY-AND-EQUITY> 17,350,971
<SALES> 1,833,033
<TOTAL-REVENUES> 1,833,033
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,020,361
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 305,353
<INCOME-PRETAX> (534,350)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (534,350)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
