<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED March 31, 1995 COMMISSION FILE NO. 1-7949
-------------- ------
REGENCY AFFILIATES, INC.
------------------------
(Exact Name Of Registrant As Specified In Its Charter)
Delaware 72-0888772
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5445 D.T.C. Parkway., Suite 300, Greenwood Village, CO 80111
- ------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 220-9952
--------------
(Former name, former address and former fiscal year, if changed)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
$.40 Par Value Common Stock- 10,666,997 shares as of March 31, 1995.
1
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
PART I - FINANCIAL INFORMATION....................................................................................3
Item 1. Financial Statements............................................................................3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................................11
PART II -- OTHER INFORMATION.....................................................................................14
Item 1. Legal Proceedings..............................................................................14
Item 2. Changes in Securities..........................................................................14
Item 3. Defaults Upon Senior Securities................................................................14
Item 4. Submission of Matters to a Vote of Security Holders............................................14
Item 5. Other Information..............................................................................14
Exhibits and Reports on Form 8-K.................................................................................14
</TABLE>
2
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
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<S> <C> <C>
ASSETS (UNAUDITED)
CURRENT ASSETS
Cash $245,651 $150,027
Accounts receivable 2,129 2,129
Prepaid expenses 39,911 -
---------- ----------
287,691 152,156
---------- ----------
OTHER ASSETS
Investment in partnership 726,000 450,000
Inventory 850,000 850,000
Other 75,007 21,676
---------- ----------
1,651,007 1,321,676
---------- ----------
Total Assets $1,938,698 $1,473,832
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $300,000 $300,000
Notes payable - related party 80,000 105,800
Accounts payable 147,947 73,382
Accrued expenses 6,886 5,705
---------- ----------
534,833 484,887
---------- ----------
LONG-TERM DEBT 304,000 296,500
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES 109,891 111,391
SERIAL PREFERRED STOCK SUBJECT TO
MANDATORY REDEMPTION 373,454 261,454
SHAREHOLDERS' EQUITY
Serial preferred stock not subject to mandatory
redemption (maximum liquidation preference,
$24,885,382) 1,052,988 1,052,988
Common stock, par value $.40, authorized 25,000,000
shares issued and outstanding 10,666,997 and
10,546,997 shares (net of 22,460 treasury shares) 4,247,508 4,199,508
Readjustment resulting from quasi-reorganization at
December 31, 1987 (1,670,596) (1,670,596)
Accumulated deficit (3,013,380) (3,262,300)
---------- ----------
616,520 319,600
---------- ----------
Total Liabilities and Shareholders' Equity $1,938,698 $1,473,832
========== ==========
</TABLE>
3
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
NET SALES $ -- $ --
OPERATING EXPENSES
General and administrative expenses 50,994 34,588
Interest expense 14,970 --
--------- ---------
INCOME (LOSS) FROM OPERATIONS (65,964) (34,588)
INCOME FROM EQUITY INVESTMENT IN
PARTNERSHIP 376,000 --
--------- ---------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
AND MINORITY INTEREST 310,036 (34,588)
INCOME TAX EXPENSE (50,000) --
MINORITY INTEREST 1,500 --
--------- ---------
NET INCOME (LOSS) $ 261,536 $ (34,588)
========= =========
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK (after accrued preferred stock
dividends of $12,616
and $-0-) $ 248,920 $ (34,588)
--------- =========
NET INCOME (LOSS) PER SHARE
(primary and fully diluted) $ .02 $ (0.00)
========= =========
</TABLE>
4
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $261,536 $(34,588)
Net Income (loss)
Adjustments to reconcile net income (loss) to net cash
used by operating activities: (1,500) --
Minority interest (376,000) --
Income from equity investment in partnership 7,500 --
Interest amortization on long-term debt
Changes in operating assets and liabilities: (39,911) --
Prepaid expenses (53,331) --
Other assets 61,949 (4,684)
Accounts payable 1,181 4,800
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Accrued expenses (138,576) (34,472)
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Net cash used by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES 100,000 --
Distribution from partnership
CASH FLOWS FROM FINANCING ACTIVITIES (25,800) 37,200
Net short-term borrowings (payments) 152,000 --
Proceeds from issuance of preferred stock 48,000 --
Proceeds from issuance of common stock (40,000) --
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Offering costs 134,200 37,200
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Net cash provided by financing activities
95,624 2,728
INCREASE IN CASH
150,027 3,922
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CASH-BEGINNING
$245,651 $6,650
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CASH-ENDING
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A. Basis of Presentation - The accompanying unaudited condensed
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required
by generally accepted accounting principles for comlete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the three-month period ended
March 31, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Registrant
Company and Subsidiaries' annual report on Form 10- K for the
year ended December 31, 1994.
B. Principles of Consolidation - The consolidated financial
statements include the accounts of Regency Affiliates, Inc.
(the "Company") and its 80% owned subsidiaries National
Resource Development Corporation ("NRDC"), Transcontinental
Drilling Company ("Drilling") and RegTransco, Inc. ("RTI").
All significant intercompany balances and transactions have
been eliminated in consolidation.
C. Earnings (Loss) Per Share - Net income (loss) per common share
was determined by dividing the net income (loss) applicable to
common stock by the average number of common shares actually
outstanding. The effects of the outstanding convertible
securities were not considered since the conversion provisions
of such securities are "contingent" provisions and can only be
exercised in the event of an occurrence or non-occurrence of
specified future events. In addition, the shares to be issued
in connection with the conversion provisions of certain
securities will be based on the fair value of the Company's
common stock at date of conversion.
D. Inventory - Inventory, which consists of aggregate, is stated
at lower of cost or market. Liens have been attached to the
aggregate inventory by the note payable to the related party
and the holders of the zero coupon bonds. The Company is also
subject to a royalty agreement which requires the payment of
certain royalties to a previous owner of the aggregate
inventory upon sales of the aggregate.
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E. Income Taxes - Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109 ("SFAS
109"), "Accounting for Income Taxes," which requires an asset
and liability approach to financial accounting and reporting
for income taxes. The difference between the financial
statement and tax basis of assets and liabilities is
determined annually. Deferred income tax assets and
liabilities are computed for those temporary differences that
have future tax consequences using the current enacted tax
laws and rates that apply to the periods in which they are
expected to affect taxable income. In some situations SFAS 109
permits the recognition of expected benefits of utilizing net
operating loss and tax credit carryforwards. Valuation
allowances are established, if necessary, to reduce the
deferred tax asset to the amount that will, more likely than
not, be realized. Income tax expense is the current tax
payable or refundable for the period plus or minus the net
change in the deferred tax assets and liabilities.
7
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. INVESTMENT IN PARTNERSHIP
In November 1994, the Company invested $50,000 and a $300,000
note payable for a limited partner interest in Security Land
and Development Company Limited Partnership ("Security"),
which owns and operates an office complex. The Company has
limited voting rights and is entitled to be allocated 95% of
the profit and loss of the partnership until October 31, 2003
(the lease termination date of the sole tenant of the office
complex) and 50% thereafter. The Company is to receive certain
limited cash flow after debt service, and a contingent equity
build-up depending upon the value of the project upon
termination of the lease. The Company is also entitled to
receive certain management fees relating to the partnership.
Security was organized to own and operate, for investment
purposes, a building of approximately 717,000 square feet
consisting of a two-story office building and a connected
six-story office tower. The building was purchased by Security
in 1986 and is located on approximately 34.3 acres of land
which is also owned by Security. The building has been
occupied by the United States Social Security Administration's
Office of Disability and International Operations for
approximately 22 years under leases between the United States
of America, acting by and through the General Services
Administration ("GSA"). Effective November 1, 1994, Security
and the GSA entered into a nine-year lease (the "Lease") for
100% of the building. Security has received an opinion of the
Assistant General Counsel to the GSA that lease payments are
not subject to annual appropriation by the United States
Congress and the obligations to make such payments are
unconditional general obligations of the United States
Government.
The Company accounts for the investment in partnership on the
equity method, whereby the carrying value of the investment is
increased or decreased by the Company's allocable share of
income or loss. The investment in partnership included in the
Consolidated Balance Sheet at March 31, 1995 was $726,000. The
income and undistributed earnings from the Company's equity
investment in the partnership for the three months ended March
31, 1995 was $376,000.
8
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Summarized operating data for Security for the three months
ended March 31, 1995 is as follows:
<TABLE>
<S> <C>
Revenues $3,227,224
Operating Expenses 751,644
Depreciation and Amortization 1,027,040
Interest Expense, Net 1,052,864
---------
Net Income $395,676
========
</TABLE>
NOTE 3. STOCK OFFERING
Through a private placement memorandum dated November 18,
1994, the Company offered for sale 80 units of securities,
each unit consisting of 88.5 shares of 12.5% cumulative
convertible Series E preferred stock and 6,000 shares of
common stock. The units were priced at $10,000 per unit. As of
March 31, 1995, subscriptions for 55 units were received
netting the Company $386,654 after offering costs of $44,546.
Purchasers of units were issued financial statements
containing certain errors resulting from the improper
accounting treatment of the acquisition of NRDC. (The
acquisition was recorded at the appreciated market value of
NRDC's inventory whereas the cost of such inventory to NRDC
was substantially lower). Management intends to offer such
purchasers rescission, however, because the appraised fair
value of the underlying net assets of NRDC are significantly
in excess of the carrying value for accounting purposes,
management believes the likelihood of rescission is remote.
NOTE 4. INCOME TAXES
As referred to in Note 1, the Company adopted SFAS 109,
"Accounting for Income Taxes," effective January 1, 1993. The
deferred taxes are the result of long-term temporary
differences between financial reporting and tax reporting for
earnings from the Company's partnership investment in Security
Land and Development Company Limited Partnership related to
depreciation and amortization and the recognition of income
tax carryforward items.
9
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REGENCY AFFILIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At March 31, 1995, the Company's net deferred tax asset,
utilizing a 34% effective tax rate, consists of:
<TABLE>
<S> <C>
Deferred tax assets:
Investment partnership earnings $ 1,455,000
Net operating loss carryforwards 15,775,000
----------
Total deferred tax assets before valuation
allowance 17,230,000
Valuation allowance (17,230,000)
----------
Net deferred tax asset $ -
==========
</TABLE>
The valuation allowance was established to reduce the net
deferred tax asset to the amount that will more likely than
not be realized. This reduction is necessary due to
uncertainty of the Company's ability to utilize the net
operating loss and tax credit carryforwards before they
expire.
For regular federal income tax purposes, the Company has
remaining net operating loss carryforwards of approximately
$47,700,000. These losses can be carried forward to offset
future taxable income and, if not utilized, will expire in
varying amounts beginning in the year 2000.
For the three months ended March 31, 1995, the tax effect of
net operating loss carryforwards reduced the current provision
for federal income taxes by approximately $435,000.
NOTE 5. NOTE PAYABLE
The $300,000 note payable issued in connection with the
acquisition of the Partnership interest, at the option of the
Company, may be paid by the issuance of common stock.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources.
On June 4, 1993, the Company entered into an Acquisition Agreement with
Statesman Group, Inc., a Bahamian international business corporation
("Statesman"), and National Resource Development Corporation (Delaware) (the
"Acquisition Agreement"), which provided for Statesman or its nominees to
acquire 2,975,000 shares of the Company's $0.40 par value common stock, 208,850
shares of the Company's Series C Preferred stock and 20% of the outstanding
shares of Transcontinental Drilling Co., a subsidiary of the Company. Statesman
undertook to deliver to the Company 80% of the issued and outstanding common
shares of National Resource Development Corporation (Delaware), the owner of
approximately 75 million short tons of previously quarried and stock piled rock
located at the site of the Groveland Mine in Dickinson County, Michigan (the
"Aggregate").
The scheduled closing of July 6, 1993 under the Acquisition Agreement
was deferred to July 7, 1993. At that time, various modifications were made to
the June 4, 1993 Acquisition Agreement, including the substitution of National
Resource Development Corporation ("NRDC"), a Nevada corporation formed on June
29, 1993 for National Resource Development Corporation (Delaware), which newly
formed corporation was wholly owned by Statesman and acquired title to the
Aggregate. On July 7, 1993, 2,975,000 shares of the Company's common stock,
208,850 shares of the Company's Cumulative Contingent Convertible Senior
Preferred Series C stock and 20% of the outstanding shares of Transcontinental
Drilling Co. were delivered to Statesman (the "1993 Transaction").
Statesman, in addition to receiving the rights to 28.78% of the
Company's common stock under the Acquisition Agreement, received irrevocable
proxies over 855,991 shares of Regency's $0.40 par value common stock. The
proxies, when combined with the 2,644,710 shares of Regency common stock owned
directly by Statesman as of March 31, 1995, entitled Statesman to vote a total
of 3,500,701 shares, or approximately 32.81% of the 10,666,997 outstanding
shares as of March 31, 1995.
As reflected in the financial statements of Regency Affiliates, Inc.,
the carrying value of NRDC's Aggregate is $850,000. This represents the purchase
cost of NRDC at a figure approximating the historical cost of NRDC's underlying
assets and liabilities and does not reflect the fair market value of the
Aggregate. Management believes that $15 million is a fair appraisal of the
current fair market value of the Aggregate.
On November 18, 1994, Regency Affiliates, Inc. acquired a limited
partnership interest in Security Land and Development Company Limited
Partnership (the "Partnership") for an equity investment of $350,000, which
investment was used to pay brokerage fees related to Regency's purchase of its
interest in the Partnership. Regency has no obligation to make any further
capital contribution to the Partnership. The Partnership owns the 34.3 acre
complex at 1500 Woodlawn Drive, Woodlawn, MD containing the Security West
Building, an approximately 717,011 square foot, two-phase office building,
consisting of a two-story office building and a connected six-story office
11
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tower occupied by the United States Social Security Administration Office of
Disability and International Operations under a nine year lease expiring October
31, 2003 (the "Lease"). The construction of the Security West Building was
completed in 1972 and the building has been occupied by the Social Security
Administration since then under prior leases between the U.S. Government and the
Partnership.
During 1994, the Partnership completed the placement of a $56,450,000
non-recourse project note, due November 15, 2003, issued by the Partnership. The
placement of the project note was undertaken by the issuance of 7.90%
certificates of participation and was underwritten by Dillon Read & Co., Inc.
The net proceeds received from the sale of the certificates will be used to
refinance existing debt of the Partnership related to the project, to finance
certain alterations to the project by the Partnership, to fund certain reserves
and to pay costs of issue. The project note is a non-recourse obligation of the
Partnership and is payable solely from the Lease payments from the U.S.
Government, which rental payments under the Lease are not subject to annual
appropriation by the United States Congress and accordingly, the obligations to
make such payments are unconditional general obligations of the government
backed by the full faith and credit of the United States.
The terms of the Security Land and Development Company Limited
Partnership Agreement (as amended) and the project note (which note will be
fully amortized over the term of the lease) call for Regency Affiliates, Inc. to
be allocated 95% of the profits and losses of the Partnership until October 31,
2003, and 50% thereafter. Regency is to receive certain limited cash flow after
debt service, and a contingent equity build-up depending upon the value of the
project upon termination of the Lease. Regency will also receive certain
management fees relating to the Partnership.
The equity investment of $350,000 in Security Land And Development
Company Limited Partnership was financed in part by the delivery of a promissory
note to the Partnership in the amount of $300,000. The note to the Partnership
carries interest at the "prime rate" as set forth in the "Money Rates" section
of the Wall Street Journal and is due July 8, 1995. At the option of the
Company, the Note to the Partnership may be paid by the issuance of Common
Stock.
In the fiscal quarter ending March 31, 1995, the Company's investment
income from the Partnership was $376,000. Management anticipates that the
investment in the Partnership will provide Regency Affiliates, Inc. with limited
cash flow, approximating $100,000 per annum, and a contingent buildup of equity
in the Partnership that, resulting from an allocation by the Partnership of 95%
of the booked income to the Company, could result in a 50% beneficial interest
in the Security West Building at the termination of the lease in 2003. Despite
the cash flow from the Partnership and the working capital raised by the Private
Placement, the Company continues to suffer from a relative lack of liquidity and
capital resources.
In the last quarter of 1994, Regency Affiliates, Inc. commenced a
private placement of its Cumulative Convertible $100 Series-E Preferred Stock
and $0.40 p.v. Common Stock (the "Private Placement") in a transaction reported
on Form D, Notice of Sale of Securities Pursuant To Regulation D, filed with the
Securities and Exchange Commission on November 23, 1994, the contents of which
are incorporated herein by reference thereto. As of March 31, 1995, Regency
Affiliates, Inc. had
12
<PAGE> 13
placed 55 Units ($550,000) of the $350,000 minimum, $800,000 maximum offering.
The securities were offered in 80 Units, each consisting of 88.5 shares in
Cumulative Convertible $100 Series-E Preferred Stock and 6,000 shares of the
Common Stock, to accredited investors as defined in Regulation D for a cost of
$10,000 per unit. The proceeds of the offering are being used to fund the
Company's investment in Security Land And Development Company Limited
Partnership, for working capital and to fund acquisitions. Because of the
restatement of the acquisition cost of NRDC, management has determined to offer
rescission to the purchasers in the Private Placement. Management believes there
is no substantial likelihood that the purchasers will exercise rescission
because the restatement does not result from a change in the fair market value
of the Aggregate.
As part of the 1993 transaction with NRDC, the Company received a
working capital loan of $100,000 from Statesman Group, Inc. ("Statesman"), which
loan was scheduled to mature on July 7, 1995 and carries a 10% interest
obligation payable quarterly in arrears. Statesman has agreed to extend the
maturity of its loan to January 1, 1996. Effective March 31, 1995, Statesman
converted $20,000 of its loan into 12,000 shares of the Company's $0.40 par
value Common Stock and 177 shares of the Company's Cumulative Convertible $100
Series E Preferred Stock, reducing the principal balance on its loan to $80,000.
Regency Affiliates, Inc. is continuing to explore opportunities for the
acquisition of companies with operations that will provide additional liquidity
and cash flow. The Company anticipates that such acquisitions would be financed
by borrowings secured by the assets acquired and by the Aggregate.
Results of Operations.
Operations of Regency Affiliates, Inc. and its subsidiaries in the
quarter ending March 31, 1995 were limited to the Company's ongoing effort to
secure acquisitions and/or business combinations to provide the Company with
material operations and cash flow.
The statement of operations reflects the income from investment in the
Partnership of $376,000, which represents 95% of the net income of Security Land
and Development Company Limited Partnership. Interest expense includes interest
on NRDC's zero coupon bonds, the loan to Statesman and the note to the
Partnership.
13
<PAGE> 14
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the Company is
a party.
ITEM 2. CHANGES IN SECURITIES.
Statesman Group, Inc. has has consented to an amendment to the
Certificate of Designation of the Company's Cumulative Contingent Convertible
$100 Series-C Preferred stock which will eliminate the contingent conversion
rights of these securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There have been no defaults in the payment of principal or interest
with respect to any senior indebtedness of Regency Affiliates, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the vote of security holders during the
reporting period ending March 31, 1995.
ITEM 5. OTHER INFORMATION.
None reported.
EXHIBITS AND REPORTS ON FORM 8-K
Dated-February 10, 1995
Item Reported-
4. Changes in Registrant's Certifying Accountant
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REGENCY AFFILIATES, INC.
---------------------------------------------------
(Registrant)
May 18, 1995 By: /s/ Craig R. Grossman
- ------------ -----------------------
Date Craig R. Grossman, President
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 245,651
<SECURITIES> 0
<RECEIVABLES> 2,129
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 287,691
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,938,698
<CURRENT-LIABILITIES> 534,833
<BONDS> 304,000
<COMMON> 4,247,508
373,454
1,052,988
<OTHER-SE> (4,683,976)
<TOTAL-LIABILITY-AND-EQUITY> 1,938,698
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 50,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,970
<INCOME-PRETAX> 310,036
<INCOME-TAX> 50,000
<INCOME-CONTINUING> 261,536
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 261,536
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
