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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
COMMISSION FILE NUMBER: 0-28814
COTTON VALLEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
YUKON, CANADA 98-0164357
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6510 ABRAMS ROAD
SUITE 300
DALLAS, TEXAS 75231
(Address of principal executive offices)
TELEPHONE NUMBER (214) 221-6500
(Registrant's telephone number, including area code)
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
--- ---
As of March 31, 1998 there were 17,073,248 shares of the Registrant's
Common Stock outstanding.
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COTTON VALLEY RESOURCES CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C> <C>
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of
March 31, 1998 and June 30, 1997 3
Condensed Consolidated Statements of Operations and Comprehensive
Income 4
For the nine months ended March 31, 1998 and 1997
Condensed Consolidated Statements of Operations and Comprehensive
Income 5
For the three months ended March 31, 1998 and 1997
Condensed Consolidated Statements of Cash Flow
For the nine months ended March 31, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES AND USES OF PROCEEDS 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K 11
SIGNATURES 12
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
COTTON VALLEY RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
--------------- ---------------
March 31, 1998 June 30, 1997
--------------- ---------------
CURRENT ASSETS: (U.S. Dollars)
<S> <C> <C>
Cash $ 1,536,875 642,612
Trade accounts receivable 622,810 --
Oil and gas sales receivable 125,811 85,602
Prepaid expenses 74,767 25,196
-------------- -------------
TOTAL CURRENT ASSETS 2,360,263 753,410
OIL AND GAS PROPERTIES 20,200,230 11,821,346
OILFIELD EQUIPMENT AND INVENTORY 4,125,850
OFFICE FURNITURE AND EQUIPMENT 80,226 40,649
OTHER ASSETS 737,485 --
-------------- -------------
TOTAL ASSETS $ 27,504,054 12,615,405
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: (U.S. Dollars)
Accounts payable and accrued liabilities $ 1,225,478 384,433
Current portion of long-term debt 110,250
200,000
Note payable -- 455,000
Accrued payroll taxes -- 197,006
Accrued expenses -- 31,598
Other current liabilities -- 80,000
-------------- -------------
TOTAL CURRENT LIABILITIES 1,335,728 1,348,037
LONG TERM DEBT 4,564,710 --
ADVANCES FROM RELATED PARTIES -- 139,710
DEFERRED INCOME TAXES 2,382,369 669,000
MINORITY INTERESTS 131,713
--
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value, authorized-unlimited, none issued -- --
Common Stock, no par value, authorized-unlimited, 17,073,248 issued 1998, 21,264,357 12,707,063
12,590,473 issued 1997
Subscribed -177,000 shares -- 197,750
Warrants -- 323,000
Paid in capital 479,162 --
Deficit accumulated in development stage (2,769,155) (2,769,155)
Accumulated earnings 115,170 --
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 19,089,534 10,458,658
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,504,054 12,615,405
============== =============
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
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COTTON VALLEY RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Expressed in U.S. Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Period from Period from
July 1, 1997 to July 1, 1996 to
March 31, 1998 March 31, 1997
------------------------ --------------------------
REVENUE:
<S> <C> <C>
Oil and gas sales $ 619,160 $ 131,986
Equipment Sales 1,052,429 --
Well Service Income 596,904 --
Gain on Sale of Assets 636,881 --
Other Income 2,357 --
---------------- ----------------
TOTAL REVENUE 2,907,731 131,986
---------------- ----------------
EXPENSES:
Oil and gas production 419,398 --
Cost of equipment sold 503,094 --
Well service operating expenses 477,866 --
General and administrative 795,518 1,462,532
Depreciation and depletion 97,683 80,757
Other expenses 540 --
---------------- ----------------
TOTAL EXPENSES 2,294,099 1,543,289
---------------- ----------------
INCOME (LOSS) FROM OPERATIONS 613,632 (1,411,303)
OTHER INCOME (EXPENSE)
Minority Interests (21,327) --
Interest expense (71,925) (54,115)
Financing Expense (335,519) --
---------------- ----------------
TOTAL OTHER 428,771 (54,115)
---------------- ----------------
INCOME (LOSS) BEFORE INCOME TAX 184,861 (1,465,618)
INCOME TAX BENEFIT (PROVISION) (69,691) 500,000
---------------- ----------------
NET AND COMPREHENSIVE INCOME (LOSS) $ 115,170 $ (965,418)
================ ================
NET AND COMPREHENSIVE INCOME (LOSS) PER SHARE (Basic and Diluted) $ 0.01 $ (0.07)
================ ================
WEIGHTED AVERAGE SHARES 16,263,265 13,390,524
================ ================
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
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COTTON VALLEY RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Expressed in U.S. Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Period from Period from
January 1, 1998 to January 1, 1997 to
March 31, 1998 March 31, 1997
--------------------------- ----------------------------
REVENUE:
<S> <C> <C>
Oil and gas sales $ 157,400 $ 90,621
Equipment sales 338,807 --
Well service income 596,904 --
Gain on Sale of Assets 636,881 --
Other Income 1,423 --
-------------- ------------------
TOTAL REVENUE 1,731,415 90,621
-------------- ------------------
EXPENSES:
Oil and gas production 167,002 --
Cost of equipment sold 243,521 --
Well service operating expense 477,866 --
General and administrative 279,574 559,213
Depreciation and depletion 41,065 80,757
Other expense 540 --
-------------- ------------------
TOTAL EXPENSES 1,209,568 639,970
-------------- ------------------
INCOME (LOSS) FROM OPERATIONS 521,847 (549,349)
OTHER INCOME (EXPENSE)
Minority interests (21,327) --
Interest Expense (86,951) (18,953)
Financing Expense (301,245) --
-------------- ------------------
TOTAL OTHER (409,523) (18,953)
-------------- ------------------
INCOME (LOSS) BEFORE INCOME TAX 112,324 (568,302)
INCOME TAX BENEFIT (PROVISION) (51,557) 205,000
NET AND COMPREHENSIVE (LOSS) $ 60,767 $ (363,302)
============== ==================
NET AND COMPREHENSIVE (LOSS) PER SHARE (Basic and Diluted) $ 0.00 $ (0.03)
============== ==================
WEIGHTED AVERAGE SHARES 17,238,924 13,390,000
============== ==================
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
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COTTON VALLEY RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Expressed in U.S. Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Period from Period from
July 1, 1997 to July 1, 1996 to
March 31, 1998 March 31, 1997
----------------------- -----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 115,170 $ (965,418)
Adjustments to reconcile to net cash used by operating activities:
Deferred income tax provision (benefit) 69,691 (500,000)
Depreciation and depletion 97,683 9,216
Amortization of debt discount 301,245 --
Common stock issued for services -- 863,862
Change in accounts payable and other liabilities 532,441 193,495
Change in accounts receivable (663,019) --
Other 97,688 (204,800)
--------------- -------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 550,899 (603,645)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (1,964,502) (893,250)
Addition to oilfield equipment inventory (2,396,958) --
Additions to drilling and other equipment (2,282,582) --
Purchase of other assets (223,372) (101,520)
--------------- -------------
NET CASH USED BY INVESTING ACTIVITIES (6,867,414) (994,770)
--------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in advances from related parties -- (21,999)
Sale of common stock and exercise of warrants 3,988,092 889,089
Increase in long-term debt 4,564,710 --
Costs related to sale of stock and notes (453,274) (14,600)
Repayment of notes payable (888,750) --
--------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,210,778 852,490
--------------- -------------
INCREASE (DECREASE) IN CASH 894,263 (745,925)
CASH - Beginning of period 642,612 803,070
--------------- -------------
CASH - End of period $ 1,536,875 $ 57,145
=============== =============
SUPPLEMENTAL INFORMATION
Debt incurred in acquisition of oil and gas $ 300,000 355,000
properties
Oil and gas properties acquired with common stock 4,530,000 --
Conversion of note payable to common stock 100,000 --
Issuance of common stock for stock offering costs -- 12,409
Cash paid for interest (17,025) 35,162
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
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NOTES TO CONDENSED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
(1) NATURE OF BUSINESS AND BASIS OF PREPARATION AND PRESENTATION
Cotton Valley Resources Corporation (the "Company") has its primary
business focus in the acquisition of ownership interests in, and the
production of oil and gas from, existing oil and gas fields that indicate a
potential for increased production through rehabilitation. The Company
purchases, repairs, rehabilitates and sells used oilfield production
equipment. Also, beginning in February, 1998, the Company provides well
servicing and horizontal drilling services on its own properties and for
other operators.
The condensed consolidated financial statements of Cotton Valley Resources
Corporation and subsidiaries (collectively "Cotton Valley") included herein
have been prepared by Cotton Valley without audit. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted, since Cotton Valley believes that the disclosures
included are adequate to make the information presented not misleading. In
the opinion of management, the condensed consolidated financial statements
include all adjustments consisting of normal recurring adjustments
necessary to present fairly the financial position, results of operations,
and cash flows as of the dates and for the periods presented. These
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto included
for the fiscal year ended June 30, 1997.
(2) COMMON STOCK
During the nine months ended March 31, 1998, Cotton Valley issued 2,511,317
shares of common stock to four individuals to purchase Aspen Energy
Corporation ("Aspen") which was recorded at $4,700,000, issued 272,700
shares of common stock in a private placement for proceeds of $454,000,
issued additional shares for the acquisition of an oil and gas well, and
for the conversion of $100,000 of a note payable to common stock, and
issued approximately 1,677,000 shares of common stock on exercise of
options and warrants for approximately $2,920,000. Also 270,000 shares were
retired, which were received in payment of $425,000 of indebtedness.
(3) ACQUISITION OF ASPEN ENERGY CORPORATION
During the period, Cotton Valley acquired Aspen for $4,995,000, consisting
of $500,000 cash and notes and 2,511,317 shares of common stock, of which
270,000 shares were returned to Cotton Valley by two (2) Aspen shareholders
in settlement of notes payable to Aspen in the amount of $425,000. The
acquisition was accounted for as a purchase and the operations of Aspen are
consolidated with the Company beginning on August 1, 1997.
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(4) ACQUISITION OF SEARS RANCH PROSPECT
During the period, Cotton Valley acquired the 6,600 acre Sears Ranch
Prospect in Nolan and Fisher Counties, Texas, for $400,000.
(5) ACQUISITION OF HORIZONTAL DRILLING EQUIPMENT
During the period, Cotton Valley acquired substantially all the business
and equipment of M&M Directional Services Consultants for $550,000, through
a newly formed 85% subsidiary, Mustang Horizontal Services, Inc.
(6) ACQUISITION OF WELL SERVICE RIGS AND EQUIPMENT
During the period, Cotton Valley acquired two (2) well service rigs and
related well service equipment for $1,220,000, and formed Mustang Well
Servicing Company to operate the rigs and provide well servicing, of which
85% is owned by the Company and the remainder by officers of the Company
and its subsidiaries.
(7) SECURED CONVERTIBLE DEBENTURES
During the period, Cotton Valley sold $4,320,000 of 7% Secured Convertible
Debentures to a group of private investors. Portions of the proceeds were
used to complete the acquisition of the well service rigs and related
equipment.
The amount of the beneficial conversion feature related to the secured
convertible debentures in the amount of $479,162, is being amortized over a
ten month period using an accelerated amortization method. For the three
month and nine month periods ended March 31, 1998, $301,245 of this amount
was amortized and is included in financing expenses in the accompanying
financial statements. As the conversion price of the debentures is at a
discount of the trading price of the common stock, the amount of the
conversion feature that was "in the money" at the date of issue is being
amortized to increase the effective interest rate of the debentures.
(8) ZAMA LAKE ACQUISITION AND SALE
During the period Cotton Valley completed the acquisition of substantially
all of the oil and gas interests in the Zama Lake area in Alberta, Canada
owned by a Canadian independent producer. The purchase price was $6.9
million. Immediately following the purchase, the Company sold all of its
interests to Phillips Petroleum Resources, Ltd. and certain of its
affiliates for $7.5 million. The company recognized a gain on sale of
assets of approximately $636,881 from the transactions.
-8-
<PAGE> 9
(9) MEANS-(QUEEN) WATERFLOOD DEVELOPMENT FINANCING
During the period Cotton Valley has entered into a letter of intent for a
$10,000,000 mezzanine financing facility with Cambrian Capital Corporation.
The funds are to be used primarily for the development of the Means-(Queen)
waterflood and in-fill development project in Andrews County, Texas.
(10) CONTINGENT LIABILITY
On February 9, 1998, the Company continued from Ontario to Yukon
Territory, Canada (the "Continuance") in accordance with applicable
Canadian law. The Continuance was approved by the shareholders of the
Company at a meeting held on December 10, 1996, for which proxies were
solicited in accordance with applicable Canadian laws, but the transaction
was not registered under the Securities Act of 1933, as amended (the
"Act"), which may have been a violation of Section 5 of the Act. As a
result, the Company may have a contingent liability to certain of its
shareholders, which the Company is presently unable to quantify.
-9-
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
FIRST NINE MONTHS FISCAL 1998 AND FIRST NINE MONTHS FISCAL 1997
During the first nine months ended March 31, 1998, Cotton Valley
incurred a net income of $115,170, which compares to a net loss of $965,418
during the first nine months of 1997. The improvement results from the first
used equipment sales by Cotton Valley's subsidiary, Mustang Oilfield Equipment
Company, well service income from Mustang Well Service Company and Mustang
Horizontal Services, Inc., oil and gas production beginning August, 1997, from
the Aspen Energy Corporation properties, oil and gas production beginning
November, 1997, from the Sears Ranch Prospect, and continued production from the
Company's Alden Field and Cheneyboro properties.
Oil and gas sales increased 369% from $131,986 for the nine months
ended March 31, 1997 to $619,160 for the nine months ended March 31, 1998,
reflecting the addition of the Aspen, Alden and Sears Ranch acquisitions. Oil
and gas production costs increased to $419,398 for the nine months ended March
31, 1998, reflecting the addition of the acquisitions and continued remedial
work required at the Alden Field.
Used equipment sales for the first nine months of fiscal 1998 were
$1,052,429 as compared to no sales for the comparable nine months of fiscal
1997. Cost of goods sold for the first nine months of fiscal 1998 was $503,094.
Well Service revenues were $596,904 and Well Service expenses were $477,866 as
compared with none in the prior nine months.
General and administrative costs were $795,518 in the first nine months
of fiscal 1998, a decrease of $667,014 or 46% less than the $1,462,532 incurred
in the first nine months of fiscal 1997. Much of the decrease was due to an
administrative cost reduction program instituted by management in mid-June,
1997. In addition, the Company allocated approximately $310,000 of general and
administrative expenses that were directly associated with oil and gas
acquisition and development activities during the nine months ended March 31,
1998 to oil and gas properties.
The Company has provided for income taxes of $69,691 for the first nine
months of fiscal 1998 as compared to recognition of an income tax benefit of
$500,000 for the first nine months of fiscal 1997. This is directly related to
the size of the profit or loss before income taxes.
3RD QUARTER FISCAL 1998 AND 3RD QUARTER FISCAL 1997
During the three months ended March 31, 1998, Cotton Valley incurred a
net income of $60,767, which compares to a net loss of $363,302 during the third
Quarter of 1997. The improvement results from used equipment sales by Cotton
Valley's subsidiary, Mustang Oilfield Equipment Company, revenues from Mustang
Horizontal Services Company, Mustang Well Servicing Company, increased oil and
gas production beginning August, 1997, from the Aspen
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Energy Corporation properties, oil and gas production from the Sears Ranch
Prospect, and continued production from the Company's Alden Field and Cheneyboro
properties.
Oil and gas sales increased 74% from $90,621 for the three months ended
March 31, 1997 to $157,400 for the three months ended March 31, 1998, reflecting
the addition of the Aspen, Alden and Sears Ranch acquisitions. Oil and gas
production costs increased to $167,002 for the three months ended March 31,
1998, reflecting the addition of the acquisitions and continued remedial work
required at the Alden Field.
Used equipment sales for the 3rd quarter of fiscal 1998 were $338,807
as compared to no sales for the comparable quarter of fiscal 1997. Cost of goods
sold for the 3rd quarter of fiscal 1998 was $243,521. Well Service revenues were
$596,904 and Well Service expenses were $477,866 as compare with none in the
previous quarter.
General and administrative costs were $279,574 in the third quarter of
fiscal 1998, a decrease of $279,639 or 50% less than the $559,213 incurred in
the third quarter of fiscal 1997. Much of the decrease was due to an
administrative cost reduction program instituted by management in mid-June,
1997. In addition, the Company allocated approximately $110,000 of general and
administrative expenses that were directly associated with oil and gas
acquisition and development activities during the three months ended March 31,
1998 to oil and gas properties.
The Company has an income tax provision of $51,557 for the 3rd quarter
of fiscal 1998 as compared to an income tax benefit of $205,000 for the 3rd
quarter of fiscal 1997. This is directly related to the profit or loss before
income taxes.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, Cotton Valley has working capital of $1,024,535.
Management estimates that aggregate capital expenditures of approximately $3.5
million will be spent during the remainder of fiscal 1998 to acquire and develop
oil and gas reserves. The majority of this capital will be derived from a
mezzanine financing facility from Cambrian Capital, which management expects to
close by June 15, 1998. No assurance can be given that the Company will be
successful in these efforts.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date of this filing, there are no legal proceedings pending against
Cotton Valley.
ITEM 2. CHANGES IN SECURITIES AND USES OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
None
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this filing, and elsewhere (such as in other filings by
Cotton Valley with the Commission, press releases, presentations by Cotton
Valley or its management and oral statements) constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Cotton Valley to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, (i)
significant variability in Cotton Valley's quarterly revenues and results of
operations as a result of variations in the Cotton Valley's production in a
particular quarter while a significant percentage of its operating expenses are
fixed in advance, (ii) changes in the prices of oil and gas, (iii) Cotton
Valley's ability to obtain capital, (iv) other risk factors commonly faced by
development stage oil and gas companies.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
None
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: May 14, 1998
COTTON VALLEY RESOURCES CORPORATION
(Registrant)
/s/ EUGENE A. SOLTERO
---------------------------------------
Eugene A. Soltero
Chief Executive Officer
/s/ LEON A. ROMERO
---------------------------------------
Leon A. Romero
Chief Financial Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONDENSED CONSOLIDATED BALANCE
SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH MARCH 1998 10Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,536,875
<SECURITIES> 0
<RECEIVABLES> 748,621
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,360,263
<PP&E> 19,370,838
<DEPRECIATION> 107,835
<TOTAL-ASSETS> 27,504,054
<CURRENT-LIABILITIES> 1,338,728
<BONDS> 4,564,710
0
0
<COMMON> 21,264,357
<OTHER-SE> (2,653,983)
<TOTAL-LIABILITY-AND-EQUITY> 27,504,054
<SALES> 2,907,731
<TOTAL-REVENUES> 2,907,731
<CGS> 503,094
<TOTAL-COSTS> 2,294,099
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 79,125
<INCOME-PRETAX> 184,861
<INCOME-TAX> (69,691)
<INCOME-CONTINUING> 115,170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,170
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
