<PAGE>
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 SEPTEMBER 30, 1997
--------------------------
TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ---- ACT
FOR THE TRANSITION PERIOD FROM TO
------------------ -----------------
COMMISSION FILE NUMBER 0-4169
----------
SYS
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
CALIFORNIA 95-2467354
------------------------------- -----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6363 GREENWICH DRIVE, SUITE 200, SAN DIEGO, CALIFORNIA 92122
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(619) 587-0484
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(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 Securities Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
----- ------
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 3,138,786 SHARES OF
COMMON STOCK, WITHOUT PAR VALUE, AS OF SEPTEMBER 30, 1997.
Transitional Small Business Disclosure Format (check one):
Yes X No
------ -------
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TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Condensed Balance Sheets (unaudited)
September 30, 1997 and June 30, 1997. . . . . . . . . . . 3
Condensed Statements of Operations (unaudited)
Three Months Ended September 30, 1997
and Three Months Ended September 30, 1996 . . . . . . . . 4
Condensed Statements of Cash Flows (unaudited)
Three Months Ended September 30, 1997
and Three Months Ended September 30, 1996 . . . . . . . . 5
Notes to Condensed Financial Statements (unaudited). . . . . . 6
Item 1a. Factors Which May Affect Future Results. . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Description of Business . . . . . . . . . . . . . . . . . 9
Results of Operations . . . . . . . . . . . . . . . . . .10
Liquidity and Capital Resources . . . . . . . . . . . . .10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 12
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 12
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 12
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . 13
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYS
CONDENSED BALANCE SHEETS
9/30/97 6/30/97
------------- ---------
(UNAUDITED)
ASSETS
- -------------------------------------------
Current assets:
Cash $ 18,000 $ 194,000
Contract receivables, net 1,317,000 1,043,000
Other current assets 266,000 215,000
---------- ----------
Total current assets $1,601,000 $1,452,000
Equipment, furniture and fixtures,
at cost, less accumulated
depreciation and amortization 151,000 148,000
Other assets 15,000 15,000
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$1,767,000 $1,615,000
---------- ----------
---------- ----------
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
Current liabilities:
Note payable to bank $ 297,000 $ 0
Accounts payable 293,000 462,000
Accrued payroll and related taxes 174,000 238,000
Other accrued liabilities 56,000 65,000
Current portion of other long-term debt 101,000 113,000
Income taxes payable 2,000 0
---------- ----------
Total current liabilities $ 923,000 $ 878,000
Other long-term debt 112,000 125,000
Stockholders' equity:
Preferred stock 55,000 55,000
Series B Preference Stock 76,000 78,000
Common stock 446,000 443,000
Retained earnings 155,000 36,000
---------- ----------
Total stockholders' equity $ 732,000 $ 612,000
---------- ----------
$1,767,000 $1,615,000
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SYS
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30
-----------------------------
1997 1996
------------- ------------
Contract revenues $2,034,000 $1,556,000
---------- ----------
Costs and expenses:
Contract costs $1,723,000 $1,290,000
General and administrative 184,000 181,000
---------- ----------
$1,907,000 $1,471,000
---------- ----------
Income from operations $ 127,000 $ 85,000
Other expenses:
Interest 8,000 9,000
---------- ----------
$ 8,000 $ 9,000
---------- ----------
Income before income taxes $ 119,000 $ 76,000
Provision for income taxes 0 0
---------- ----------
Net income $ 119,000 $ 76,000
Dividends on preferred shares 0 0
---------- ----------
Net income applicable to
common and common equivalent shares $ 119,000 $ 76,000
Retained earnings at beginning of period 36,000 (187,000)
---------- ----------
Retained earnings at end of period $ 155,000 $ (111,000)
---------- ----------
---------- ----------
Earning per common and
common equivalent shares $ 0.04 $ 0.03
---------- ----------
---------- ----------
Weighted average number of common and
common equivalent shares 3,253,651 2,827,186
---------- ----------
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SYS
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
------------------------
1997 1996
---------- ---------
<S> <C> <C>
Operating activities:
Net income $ 119,000 $ 76,000
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 13,000 11,000
Provision for doubtful accounts 0 0
Changes in operating assets and liabilities:
Contract receivables (274,000) (177,000)
Other current assets and other assets (51,000) (14,000)
Accounts payable (167,000) 75,000
Accrued payroll and related taxes (64,000) (73,000)
Other accrued liabilities (9,000) (24,000)
----------- ----------
Net cash provided by (used in) operating activities $ (433,000) $ (126,000)
Investing activities:
Acquisition of furniture and equipment $ (16,000) $ (9,000)
(Increase) decrease of other assets 0 0
----------- ----------
Net cash provided by (used in) investing activities $ (16,000) $ (9,000)
----------- ----------
Financing activities:
Proceeds from note payable to bank $ 2,048,000 $ 1,435,000
Payments on note payable to bank (1,747,000) (1,365,000)
Other notes payable (18,000) 104,000
Payments of capital lease obligations (10,000) (9,000)
Payments of preferred stock dividends 0 0
Proceeds from issuance of common shares 0 0
----------- ----------
Net cash provided by (used in) financing activities $ 273,000 $ 165,000
----------- ----------
Increase (decrease) in cash $ (176,000) $ 30,000
Cash at beginning of period 194,000 25,000
----------- ----------
Cash at end of period $ 18,000 $ 55,000
----------- ----------
----------- ----------
</TABLE>
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NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) In the opinion of the Registrant, the unaudited financial
information in this report reflects all adjustments, consisting only of
normal recurring accruals, which are considered necessary to a fair
presentation of the results of the periods shown. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to SEC regulations. It is suggested that these financial
statements be read in conjunction with the audited financial statements
included in the Registrant's Report on Form 10-KSB for the fiscal year ended
June 30, 1997.
(2) Income per common share is computed by dividing the net income
applicable to common stock for the year by the weighted average number of
common shares outstanding as adjusted for the dilutive effects of the assumed
conversion of the 4% preferred stock (a common stock equivalent) and the
exercise of stock options. The effects of the assumed conversion of the 9%
preference stock were either anti-dilutive or immaterial.
(3) The results of operations for the quarter ended September 30, 1997,
are not necessarily indicative of the results to be expected for the full
year.
ITEM 1A. FACTORS WHICH MAY AFFECT FUTURE RESULTS
Information contained in this Form 10-QSB should be studied carefully by
any potential investor while considering the following risk factors to the
Company.
1. LACK OF BUSINESS DIVERSIFICATION Essentially all the Company's
business at the present time is with the U.S. Navy. Even though the level of
business with its customers is growing and the Company has negotiated
multiple-year contracts, there is no certainty that budget changes in
Congress or the Defense Department will not seriously affect the Company.
2. DEPENDENCE ON KEY PERSONNEL The Company has a few key management,
project and technical personnel that are intimately involved in their
functions and have day to day relationships with critical customers. The
Company is not able to afford extra standby staff. As a result, at its
current size, it would be affected in an uncertain way if any of these
personnel are lost to the company.
3. COMPETITION The Company has many competitors who vie for the same
customers as SYS. They are competent, experienced and continuously working
to take work projects away from the Company.
4. PRIOR OPERATING HISTORY AND LACK OF TIMELY SEC FILINGS The Company
is current on its SEC filings and has been throughout the two years covered
by this 10-QSB.
5. LIMITED ASSETS OF THE COMPANY The Company has very limited assets
upon which to rely on for adjusting to business variations and for growing
new businesses. While the Company is
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likely to look for new funding to assist in the acquisition of other
profitable businesses, it is uncertain whether such funds will be available.
6. LIMITED MARKET FOR COMMON STOCK. The Company's stock is traded
(OTC) on the Electronic Bulletin Board. Trading for the stock is sporadic
and at present there is a limited market for the Company's Common Stock.
There can be no assurance that a market will in fact develop. Even if a
market does develop, it may not be sustained.
7. POSSIBLE RULE 144 STOCK SALES. A total of 2,191,104 shares of the
Company's outstanding Common Stock are "restricted securities" and may be
sold only in compliance with Rule 144 adopted under the Securities Act of
1933 or other applicable exemptions from registration. Rule 144 provides
that a person holding restricted securities for a period of one year may
thereafter sell in brokerage transactions, an amount not exceeding in any
three month period the greater of either (i) 1% of the Company's outstanding
Common Stock, or (ii) the average weekly trading volume during a period of
four calendar weeks immediately preceding any sale. Persons who are not
affiliated with the Company and who have held their restricted securities for
at least two years are not subject to the volume limitation. Possible or
actual sales of the Company's Common Stock by present shareholders under Rule
144 may have a depressive effect on the price of the Company's Common Stock
in any market which may develop.
8. RISKS OF LOW PRICED STOCKS. Trading in the Company's stock is
limited. Consequently, a shareholder may find it more difficult to dispose
of, or to obtain, accurate quotations as to the price of, the Company's
securities. In the absence of a security being quoted on NASDAQ, trading in
the Common Stock is covered by Rule 3a51-1 promulgated under the Securities
Exchange Act of 1934 for non-NASDAQ and non-exchange listed securities.
Under such rules, broker/dealers who recommend such securities to
persons other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net
worth in excess of $1,000,000 or an annual income exceeding $200,000 or
$300,000 jointly with their spouse) must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement
to a transaction prior to sale. Securities are also exempt from this rule if
the market price is at least $5.00 per share, or for warrants, if the
warrants have an exercise price of at least $5.00 per share. The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure
related to the market for penny stocks and for trades in any penny stock
defined as a penny stock.
The Commission has recently adopted regulations under such Act which
define a penny stock to be any NASDAQ or non-NASDAQ equity security that has
a market price or exercise price of less than $5.00 per share and allow for
the enforcement against violators of the proposed rules.
In addition, unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
Commission explaining important concepts involving a penny stock market, the
nature of such market, terms used in such market, the broker/dealer's duties
to the customer, a toll-free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customer's rights and remedies
in case of fraud or abuse in the sale.
Disclosure also must be made about commissions payable to both the
broker/dealer and the registered representative, current quotations for the
securities and, if the broker/dealer is the sole market maker, the broker/dealer
must disclose this fact and its control over the market.
7
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Monthly statements must be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in
penny stocks. While many NASDAQ stocks are covered by the proposed
definition of penny stock, transactions in NASDAQ stock are exempt from all
but the sole market-maker provision for (i) issuers $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operation for
three years), (ii) transactions in which the customer is an institutional
accredited investor and (iii) transactions that are not recommended by the
broker/dealer. In addition, transactions in a NASDAQ security directly with
the NASDAQ market maker for such securities, are subject only to the sole
market-maker disclosure, and the disclosure with regard to commissions to be
paid to the broker/dealer and the registered representatives.
Finally, all NASDAQ securities are exempt if NASDAQ raised its
requirements for continued listing so that any issuer with less than
$2,000,000 in net tangible assets or stockholder's equity would be subject to
delisting. These criteria are more stringent than the proposed increase in
NASDAQ'S maintenance requirements. the company's securities are subject to
the above rules on penny stocks and the market liquidity for the Company's
securities could be severely affected by limiting the ability of
broker/dealers to sell the Company's securities.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
DESCRIPTION OF BUSINESS
The Company provides management and technical services in systems
planning, management and analysis, systems engineering, naval architecture,
marine engineering, ordnance engineering, logistics analysis and engineering,
operations analysis, design development, reliability engineering and
analysis, hazardous materials reduction studies, computer systems analysis,
office automation, information management systems and related support
services. The Company also provides hardware integration and fabrication.
The Company currently has three principle contracts with the U. S.
Navy. These prime contracts are the Underway Replenishment (UNREP);
Management, Planning and Analysis (MPA); and Naval Architecture and Marine
Engineering (NAME).
The Underway Replenishment (UNREP) Program was extended into its
final of three option years on September 1, 1996. On July 25, 1997, the
contract was extended an additional six months which runs through February
28, 1998. The proposal for the follow on contract was submitted on September
11, 1997. UNREP provides in-service engineering support to the U.S. Navy
fleet. The Company is continuing its support for the research and development
project to design and build a full size ship mock-up of a missile rearming
system. An AEGIS Cruiser Vertical Launch Test System was fitted with a full
scale mock-up capable of demonstrating the rearming and strikedown system
feasibility for replenishing the Navy Standard Missile and the shipboard
Tomahawk missile system while underway at sea. This project will now
continue to refine the detail design. Shipboard technical assistance
continues to expand and provides the basis for continued business confidence
in the coming year.
The Management, Planning and Analysis (MPA) Program had its second
of four option years exercised on February 1, 1997. This Program supports
the U.S. Navy's Port Hueneme Division, Naval Surface Warfare Center. The
Statement of Work provides a broad and flexible scope of work which allows a
wide range of tasking. SYS has developed work competencies in such areas as
Management Consulting, Information Services, Human Resource Services, Combat
Systems Engineering and Facilities Engineering. The MPA Program has received
customer recognition for its high standards of excellence and
professionalism. Continued growth of this Program area is anticipated.
The Naval Architecture and Marine Engineering (NAME) Program had
its first of four option years exercised on November 25, 1996. This cost
plus fixed fee contract was issued by the U.S. Navy's Port Hueneme Division,
Naval Surface Warfare Center (PHD NSWC). The Company's largest customer on
this contract is the Ship Self Defense Department of PHD NSWC. Along with
our Associate Subcontractor, John J. McMullen Associates, Inc. (JJMA), we
provide extensive support for Ship Self Defense Systems in the areas of
weapon systems installation design, planning and coordination. The outlook
for this contract next year is good, but challenging. We are attempting to
expand our customer base in an environment of decreasing customer budgets.
9
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The Company was awarded a two year subcontract from Systems
Application and Technologies to continue its support to the Naval Air Systems
Command. This support provides environmental engineering and technical
services focusing on the identification and reduction of hazardous material
when providing maintenance to weapons and associated handling and shipping
equipment. Hazardous material reduction support is being expanded to include
support for Foreign Military Sales.
Washington Operations successfully recompeted for another five year
subcontract with their prime contractor, Tracor, to continue program
management support to the Program Executive Office, Surface Combatants/AEGIS
Program (PEO,SC/AP), PMS400. The Company provides contract and other
financial reconciliation and closure support for the Japanese AEGIS Foreign
Military Sales cases. The Company also provides other financial management
support including case closure processing support to PMS400.
On September 5, 1997, the Company began to provide UNREP-type
services to the Republic of Korea Navy through a subcontract with Lake Shore,
Inc. This program will run through most of this fiscal year.
The Company's sales of Sun computers and equipment continued at a
reduced level. The Company is also attempting to apply the skills acquired
in the Defense arena into the commercial sector. The Company recently
received notification from the State of California that it has been approved
as a supplier of services to the State.
RESULTS OF OPERATIONS
The Company revenues for the first quarter of FY 1998 are
approximately 31% higher than those in the same quarter in FY 1997. The
revenue increase is primarily due to a 9% increase in work on the MPA
contract, a 6% increase in work on the UNREP contract and a 410% increase in
work on the NAME contract. The profit for the quarter is $119,000 as
compared to $76,000 for this quarter in the prior year. The negotiated
contract backlog was approximately $4,583,000 at the end of the quarter.
The Company's line of credit with Scripps Bank increased to
$297,000 at the end of the first quarter of FY 1998. At the end of the same
period in FY 1997, the line of credit balance was $169,000. The reason for
the increased usage at September 30, 1997 is a timing difference. Billed
contract receivables had not been paid by the end of the quarter, but
payments were received shortly thereafter, which reduced the line of credit
balance to zero.
LIQUIDITY AND CAPITAL RESOURCES
The Company had contract receivables (net) of $1,317,000 at the end
of the first quarter of FY 1998. For the same quarter in FY 1997, the
contract receivables (net) were $1,164,000. This is a direct result of the
increase in revenue.
The Company had accounts payable of $293,000 at the end of the
first quarter of FY 1998. For the same quarter in FY 1997, the accounts
payable were $377,000.
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The Company maintains a $500,000 revolving credit facility with
Scripps Bank which matured on August 30, 1997. The Bank extended the loan to
October 15, 1997, at which time it was renewed for a year. The loan is
secured by all the Company's assets including contract receivables. Scripps
advances funds requested by the Company of up to 75% of the Company's billed
contract receivables which are less than 90 days old. Scripps charges an
interest rate of 1.5% over prime.
Management believes that the Company will have sufficient cash flow
from operations and funds available under the revolving credit agreement with
Scripps Bank to finance its operating and capital requirements through at
least the current fiscal year.
Several key factors indicating the Company's financial condition include:
SEPTEMBER 30, 1997 JUNE 30, 1997
----------------- -------------
Current ratio 1.73 1.65
Maximum debt to net worth 1.41 1.64
Net worth $732,000 $612,000
Net working capital $678,000 $574,000
Debt to total assets 59% 62%
Book value per common share $0.23 $0.20
The current ratio is derived by dividing total current assets by total
current liabilities. Maximum debt to net worth is calculated by dividing total
liabilities (total current liabilities plus other liabilities) by net worth.
Net worth is total stockholders' equity. Net working capital is total current
assets less total current liabilities. Debt to total assets is total
liabilities divided by total assets. Book value per common share is total
stockholders' equity divided by the weighted average number of common and common
equivalent shares.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 14, 1996, the Company filed a Notice of Appeal from the
Judgement and Order on the Jury Verdict of April 3, 1996 regarding the
outcome of the Gray, Cary, Ames & Frye (GCAF) lawsuit. To obviate the
necessity for bonding the appeal to preclude collection efforts during the
appeal, the Company paid the Judgement on May 9, 1997, reserving its rights
to continue the appeal.
In November 1995, a creditor of Systems Exploration, Inc. (SEI)
filed a breach of contract action against the Company in California Superior
Court. The Company maintains it has no liability to this plaintiff with
respect to this matter and has vigorously defended this action. On September
17, 1997, the Company submitted a settlement offer on this matter in an
effort to bring it to closure.
ITEM 2. CHANGES IN SECURITIES
On July 1, 1997, the Company granted the conversion of 2,684 shares
of Series B 9% Cumulative Convertible Callable Non-Voting Preference Stock
into 5,368 shares of Common Stock.
During the year ended June 30, 1997, the Board of Directors
authorized non-qualified stock purchase options of 25,000 Common shares each
to outside directors Paul I. Anderson, Charles H. Werner and Robert D. Mowry,
which may be exercised at $0.31, $0.09 and $0.47 per share, respectively.
Exercise of the Mowry and Werner options is subject to the approval of the
Shareholders to increase the number of shares allocated under the 1997 SYS
Incentive Stock Option and Restricted Stock Plan for non-employee directors
and consultants by 250,000 Common shares. There were originally 100,000
Common shares available to non-employee directors and consultants through the
Plan, 75,000 of those shares were previously issued. The remaining 25,000
shares currently issuable were allocated to Mr. Anderson under a
Non-Qualified Stock Option Agreement dated July 31, 1997.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Subsequent to the end of this reporting period, on October 28,
1997, an Action of the Holders of a Majority of the Shares Outstanding by
Written Consent in Lieu of a Meeting of SYS approved an amendment of Section
(a), Fourth Article, of the Articles of Incorporation. This amendment stated
"The number of directors of this corporation shall not be less than five, nor
more than nine, the exact number of which shall be fixed by a bylaw duly
adopted by the shareholders or by the corporation's board of directors." A
Certificate of Amendment of Articles of Incorporation of SYS was approved by
the Board of Directors and by the required vote of
12
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Shareholders and is pending filing with the Secretary of State of California.
ITEM 5. OTHER INFORMATION
Effective August 1, 1997, Mr Robert D. Mowry was elected as
Chairman of the Board and Chief Executive Officer of the Company.
At the Board of Directors meeting on August 20, 1997, Mr. L.
Randolph Knapp was elected to fill the vacant seat on the Board effective as
of September 16, 1997.
At the Board of Directors meeting on September 16, 1997, Mr.
Richard W. Wood was elected as a director of the Company effective on the
date the Company's Articles of Incorporation provide for nine (9) directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Form 8-K was filed on August 1, 1997, reporting that Mr. Robert D.
Mowry had been elected as Chairman of the Board and Chief Executive Officer
of the Company.
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SIGNATURES
In accordance with the requirements Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SYS
-----------------------------
(Registrant)
Date: November 10, 1997 /s/ ROBERT D. MOWRY
----------------- ------------------------------
Robert D. Mowry
Chairman and
Chief Executive Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,000
<SECURITIES> 0
<RECEIVABLES> 1,343,000
<ALLOWANCES> 26,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,601,000
<PP&E> 457,000
<DEPRECIATION> 306,000
<TOTAL-ASSETS> 1,767,000
<CURRENT-LIABILITIES> 923,000
<BONDS> 0
0
131,000
<COMMON> 446,000
<OTHER-SE> 155,000
<TOTAL-LIABILITY-AND-EQUITY> 1,767,000
<SALES> 0
<TOTAL-REVENUES> 2,034,000
<CGS> 0
<TOTAL-COSTS> 1,907,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> 119,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 119,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,000
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
