SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-7914
BASIC EARTH SCIENCE SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 84-0592823
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
633 Seventeenth Street, Suite 1670, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
(303) 294-9525
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]
Shares of common stock outstanding on February 14, 1997: 16,580,487
<PAGE>
BASIC EARTH SCIENCE SYSTEMS, INC.
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Balance Sheets - December 31, 1996
and March 31, 1996 3
Consolidated Statements of Operations - Quarter Ended
and Nine Months Ended December 31, 1996 and
December 31, 1995 5
Consolidated Statements of Cash Flows - Nine Months Ended
December 31, 1996 and December 31, 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 8
Results of Operations 11
PART II. OTHER INFORMATION
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
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
<PAGE>
PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements
Basic Earth Science Systems, Inc.
Consolidated Balance Sheets
Page 1 of 2
<TABLE>
<CAPTION>
December 31 March 31
1996 1996
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Assets:
Current assets:
Cash & cash equivalents $102,000 $92,000
Accounts receivable:
Oil and gas sales 345,000 322,000
Joint interest and other, net 190,000 155,000
Other current assets 158,000 148,000
------------ ------------
Total current assets 795,000 717,000
------------ ------------
Property and equipment:
Oil and gas property (full cost
method) 32,158,000 31,844,000
Support equipment 422,000 432,000
------------ ------------
32,580,000 32,276,000
Accumulated depletion - FCP
(includes cumulative ceiling
limitation charges of
$14,091,000) (29,714,000) (29,295,000)
Accumulated depreciation (359,000) (356,000)
------------ ------------
Net property & equipment 2,507,000 2,625,000
Other noncurrent assets 76,000 77,000
------------ ------------
Total assets $3,378,000 $3,419,000
============ ============
</TABLE>
See accompanying notes.
<PAGE>
Basic Earth Science Systems, Inc.
Consolidated Balance Sheets
Page 2 of 2
<TABLE>
<CAPTION>
December 31 March 31
1996 1996
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Liabilities:
Current liabilities:
Accounts payable and
accrued liabilities $709,000 $699,000
Current portion of long-term debt 81,000 126,000
------------ ------------
Total current liabilities 790,000 825,000
Long-term debt, less current
portion 599,000 692,000
------------ ------------
Total liabilities 1,389,000 1,517,000
------------ ------------
Shareholders' Equity:
Preferred stock, $.001 par value;
Authorized - 3,000,000 shares;
Issued - 0 shares -- --
Common stock, $.001 par value;
32,000,000 shares authorized;
16,580,487 shares outstanding at
December 31 and at March 31 17,000 17,000
Additional paid-in capital 22,692,000 22,692,000
Accumulated deficit (20,705,000) (20,792,000)
Less: treasury stock (299,265
shares at December 31 and at
March 31); at cost (15,000) (15,000)
------------ ------------
Total shareholders' equity 1,989,000 1,902,000
------------ ------------
Total liab. & shareholders' equity $3,378,000 $3,419,000
============ ============
</TABLE>
See accompanying notes.
<PAGE>
Basic Earth Science Systems, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Quarter Ended
December 31 December 31
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Oil and gas sales $2,288,000 $2,107,000 $808,000 $710,000
Well service rev. 26,000 5,000 9,000 2,000
---------- ---------- ---------- ----------
Total revenue 2,314,000 2,112,000 817,000 712,000
---------- ---------- ---------- ----------
Expenses:
Oil & gas prod. 1,378,000 1,292,000 589,000 411,000
Production tax 210,000 168,000 70,000 54,000
Well service exp. 26,000 5,000 9,000 2,000
Depreciation,
depletion and
amortization 429,000 493,000 156,000 151,000
General & admin. 130,000 108,000 47,000 40,000
---------- ---------- ---------- ----------
Total expenses 2,173,000 2,066,000 871,000 658,000
---------- ---------- ---------- ----------
Income (loss) from
operations 141,000 46,000 (54,000) 54,000
---------- ---------- ---------- ----------
Other inc. (exp.):
Interest/other inc. 13,000 4,000 3,000 2,000
Interest expense (67,000) (80,000) (22,000) (23,000)
---------- ---------- ---------- ----------
Total other income
(expense) (54,000) (76,000) (19,000) (21,000)
---------- ---------- ---------- ----------
Net income (loss)
before inc. taxes 87,000 (30,000) (73,000) 33,000
Income taxes -- -- -- --
---------- ---------- ---------- ----------
Net income (loss) $87,000 $(30,000) $(73,000) $33,000
========== ========== ========== ==========
Weighted average
number of shares
outstanding 16,580,487 16,445,242 16,580,487 16,580,487
========== ========== ========== ==========
Net income (loss)
per share $.005 $(.002) $(.004) $.002
========== ========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE>
Basic Earth Science Systems, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $87,000 $(30,000)
Adjustments to reconcile net inc. (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 429,000 493,000
Change in current assets and current
liabilities:
Accounts receivable, net (59,000) 208,000
Accounts payable and accrued liabilities 8,000 (16,000)
Other current assets (12,000) (76,000)
Other noncurrent assets 3,000 (22,000)
Other adjustments 11,000 8,000
---------- ----------
Net cash provided by operating activities 467,000 565,000
---------- ----------
Cash flows from investing activities:
Capital expenditures:
Oil and gas property (315,000) (336,000)
Support equipment (5,000) (5,000)
Proceeds from sale of property & equipment 1,000 --
---------- ----------
Net cash used in investing activities (319,000) (341,000)
---------- ----------
Cash flows from financing activities:
Proceeds from borrowing 132,000 220,000
Long-term debt payments (270,000) (474,000)
Purchase of treasury stock -- --
---------- ----------
Net cash used in financing activities (138,000) (254,000)
---------- ----------
Cash:
Net increase (decrease) 10,000 (30,000)
Balance at beginning of period 92,000 83,000
---------- ----------
Balance at end of period $102,000 $53,000
========== ==========
Supplemental disclosure of cash flow
information:
Cash paid for interest $67,000 $80,000
</TABLE>
See accompanying notes.
<PAGE>
Basic Earth Science Systems, Inc.
Notes to Financial Statements
December 31, 1996
The accompanying interim financial statements of Basic Earth Science Systems,
Inc. (Basic or the Company) are unaudited. However, in the opinion of
management, the interim data includes all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the results for the
interim period.
The financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
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 such rules and regulations.
Management believes the disclosures made are adequate to make the information
not misleading and suggests that these condensed financial statements be read in
conjunction with the financial statements and notes hereto included in Basic's
March 31, 1996 Form 10-QSB.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RECLASSIFICATIONS Certain prior year amounts may have been reclassified to
conform to current year presentation.
CASH AND CASH EQUIVALENTS For purposes of the Consolidated Balance Sheets and
Statements of Cash Flows, Basic considers all highly liquid investments with a
maturity of ninety days or less when purchased to be cash equivalents.
USE OF 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 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. There are many factors, including global events, that may influence
the production, processing, marketing, and valuation of crude oil and natural
gas. A reduction in the valuation of oil and gas properties resulting from
declining prices or production could adversely impact depletion rates and
ceiling test limitations.
INCOME TAXES The Company recognizes deferred income tax assets and liabilities
based upon enacted tax laws for all temporary differences between financial
reporting and tax bases of assets, liabilities and carryforwards. Deferred tax
assets are then reduced, if deemed necessary (i.e., more likely than not), by a
valuation allowance for the amount of any tax benefits which, based on current
circumstances, are not expected to be realized.
The Company's deferred tax liabilities and assets are comprised of the following
components at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation and depletion $(372,000) $(546,000)
Deferred tax assets:
Net operating loss carryforward 5,279,000 5,705,000
Statutory depletion carryforward 1,237,000 1,155,000
Valuation allowance (6,144,000) (6,314,000)
------------ ------------
Net deferred tax asset $0 $0
============ ============
</TABLE>
At March 31, 1996, the Company had available approximately $15,083,000 of net
operating loss carryforwards which expire in varying amounts in the years 1997
through 2011. The Company also has available a depletion carryover of
approximately $3,534,000.
The Company has established a valuation allowance due to the uncertainty that
the full amount of the operating loss carryforwards will be utilized due to
expiration and other factors. Although management expects improvement in future
results of operations, it emphasizes past performance rather than income
projections when determining the valuation allowance. Any subsequent
adjustments to the valuation allowance, if deemed appropriate due to changed
circumstances, will be recognized as a separate component of the provision for
income taxes.
Item 2. Management's Discussion and Analysis
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY During the past three quarters, current assets increased 11% from
$717,000 at year ended March 31, 1996 (March 31) to $795,000 at December 31,
1996 (December 31) and current liabilities decreased 4% from $825,000 at March
31 to $790,000 at December 31. Consequently, the Company's current ratio
increased from .87:1 at March 31 to 1.01:1 at December 31. For Bank covenant
purposes, at March 31 the current ratio was 1.03:1 and increased to 1.12:1 at
December 31.
HEDGING At December 31, 1996, the Company had 22 open futures and/or options
contracts to hedge future deliveries with maturities ranging from February 1997
through June 1997 at prices ranging from $19.50 to $25.00 per barrel. It should
be noted that 22 contracts does not necessarily imply that the Company has
hedged 22,000 barrels of production because some futures contracts may offset
each other in volume.
DEBT On December 13, 1996, the Company and its Bank modified its previous loan
agreement to extend the maturity date of the Company's Declining Balance
Revolving Line of Credit (DBRLOC) from May 31, 1998 to April 1, 2000. In
addition, on December 13, 1996, the Company's borrowing base was set at
$1,200,000 and declines on the first day of each month by $30,000 commencing
January 1, 1997. On the maturity date of April 1, 2000, the Borrowing Base
amount shall be zero.
In addition to the above modifications, on December 13, 1996, the Company and
its Bank modified the terms of the Company's second Revolving Line of Credit
(RLOC) to extend the maturity date of the RLOC from October 31, 1996 to October
31, 1997. In addition, the Company is required to pay a loan commitment fee of
$1,000 upon the execution of the December 13, 1996 amended loan documents.
All other terms and conditions of the DBRLOC and RLOC remain unchanged and in
effect at December 31, 1996.
LIQUIDITY OUTLOOK The Company's primary source of funding is the net cash flow
from the sale of its oil and gas production. The profitability and cash flow
generated by the Company's operations in any particular accounting period will
be directly related to: (a) the volume of oil and gas produced and then sold,
(b) the average realized prices for oil and gas sold, and (c) lifting costs.
Despite the Company's increased monthly debt repayment and interest
requirements, management believes the cash generated from operations and hedging
activities will enable the Company to meet its existing and normal recurring
obligations as they become due in the remainder of fiscal year 1997.
STRATEGY IMPLEMENTATION
During the quarter just ended, the Company participated with unrelated third
parties for a minority interest (10%) in the drilling of a 12,800 foot,
directional, exploratory Red River test in McKenzie County, North Dakota. This
3-D seismic prospect was developed by a third party on leases partially held by
Basic. Rather than sell its interest, the Company elected to participate in the
drilling of the test. While the Company did not incur any seismic, leasehold or
development costs, the Company became responsible for ten percent of the actual
costs to drill the well, estimated to be $760,000 (or $76,000 to Basic's
interest).
Subsequent to the end of the quarter covered by this report, the well reached
its objective depth, had incurred an estimated $1,000,000 in costs and was
determined to be non-productive at the target location at the bottom of the well
(bottom hole location). Several parties in the test proposed to directionally
drill the well an additional 350 feet north to an alternate bottom hole location
and estimated the additional costs to be $350,000.
Rather than incur additional costs in this proposed salvage operation, the
Company negotiated to cap its costs at $100,000 and sold its working interest,
while retaining a four percent overriding royalty interest. The well was then
drilled to the alternate bottom hole location by the parties remaining in the
well with no additional liability incurred by Basic. Upon reaching the
alternate bottom hole location, the well was determined to be non-productive and
was plugged and abandoned.
Management believes these types of projects provide exposure to "high tech"
exploration techniques and, if successful, are capable of increasing reserves
and cash flow with reasonable risk. Therefore, management does not rule out
similar efforts in the future.
In addition to the above, during the quarter just ended, the Company attempted
to reestablish production from a well in Sheridan County, Montana. This well
was no longer economic in the Winnepagosis formation and attempts were made to
reestablish production from the Interlake, Duperow and Mission Canyon
formations. The attempts in the Interlake and Duperow did prove to be
unsuccessful. The Mission Canyon recompletion does not appear to be a success.
However, efforts to verify this have been hampered by harsh weather conditions
which have required the well to be shut-in until spring. If the Mission Canyon
is not productive, the well will be plugged. The Company expended approximately
$67,000 on these efforts.
With respect to oil and gas production expense, the Company was adversely
affected by non-routine repairs to two wells in Richland County, Montana and one
well in Billings County, North Dakota. During routine maintenance it was
discovered that these wells had subsurface equipment stuck in the their
respective wellbores. Although some equipment could not be removed and was
abandoned in the wells, repairs were moderately successful in that all three
wells were returned to production. The Company expended approximately $84,000
on these efforts. The Company previously disclosed that it was adversely
affected by the magnitude of unanticipated routine repair costs associated with
equipment on recently-acquired Williston basin properties. The two
aforementioned Montana wells were part of that acquisition. However, the
Company considers those repairs and the repairs to the well in North Dakota to
be non-routine and does not expect their reoccurrence.
In addition to these three workovers, several other wells experienced routine
subsurface equipment repairs in the quarter just ended. The Company expended
approximately $96,000 on these efforts.
OUTLOOK FOR REMAINDER OF FISCAL YEAR 1997
To the extent that funds are available, the Company intends to pursue the
acquisition of producing properties and the exploitation of both existing
properties and those which it acquires. However, the Company may alter or vary
its plan of operation based upon changes in circumstances, unforeseen
opportunities, inability to negotiate favorable acquisition or loan terms, lack
of funding, change in oil or gas prices, lending institution requirements and
other events which the Company is not able to anticipate.
RESULTS OF OPERATIONS
YEAR-TO-DATE COMPARISON
OVERVIEW
Operations in the nine months ended December 31, 1996 (1996) resulted in net
income of $87,000 compared to a net loss of ($30,000) in the nine months ended
December 31, 1995 (1995).
REVENUES
Oil and gas sales revenue increased $181,000 (9%) in 1996 from 1995. Of this
amount, oil price increases accounted for a positive variance of $336,000 (186%)
while decreases in oil production accounted for a negative variance of $188,000
(-104%). Gas volume increases accounted for a positive variance of $4,000 (2%)
and gas price increases accounted for a $29,000 positive variance (16%).
VOLUMES AND PRICES
Total liquid production decreased 10%, from 114,500 barrels in 1995 to 102,900
barrels in 1996, while the average price per barrel increased 20% from $16.21 in
1995 to $19.48 in 1996. Total gas production increased 2% from 160,700 MCF in
1995 to 163,300 MCF in 1996, and the price per MCF increased 12% from $1.56 in
1995 to $1.74 in 1996. The decrease in liquid production was primarily due to
normal production decline.
EXPENSES
Oil and gas production expense, including production tax, increased $128,000
(9%) in 1996 from 1995. The majority of this increase occurred in lease
operating expenses and workovers, which increased $86,000 (7%) in 1996.
Consequently, the overall lifting cost per equivalent barrel increased 18%, from
$10.33 in 1995 to $12.20 in 1996.
Total depreciation, depletion and amortization expense decreased $64,000 (13%)
in 1996 from 1995 due to the decrease in oil production volume in the nine
months just ended combined with an increase in the Company's reserves at the end
of fiscal 1996. As a result, the average depletion expense per equivalent
barrel decreased 6% from $3.41 in 1995 to $3.21 in 1996.
Net general and administrative expense increased $22,000 (20%) in 1996 from
1995. This increase is attributable to higher compensation and office expenses
which were partially offset by lower professional and other expenses. In
addition, fewer expenses were charged out to the full cost pool and
administrative overhead in 1996, adding to the increase in net general and
administrative expense. As a result of the overall increase, and in conjunction
with decreased production volumes in 1996 compared to 1995, net general and
administrative expense per equivalent barrel increased from $.76 in 1995 to
$1.00 in 1996.
QUARTER ENDED DECEMBER 31, 1996 COMPARED TO QUARTER ENDED DECEMBER 31, 1995
OVERVIEW
Operations in the quarter ended December 31, 1996 (1996) resulted in a net loss
of ($73,000) compared to net income of $33,000 in the quarter ended December 31,
1995 (1995).
REVENUES
Oil and gas sales revenue increased $98,000 (14%) in 1996 from 1995. Of this
amount, oil production decreases accounted for a negative variance of $81,000 (-
83%) while oil price increases accounted for a positive variance of $158,000
(161%). Gas volume increases accounted for a variance of $5,000 (5%) while the
increase in gas prices accounted for a positive $16,000 (17%) of the total
variance.
VOLUMES AND PRICES
Total liquid production decreased 13%, from 38,700 barrels in 1995 to 33,700
barrels in 1996, while the average price per barrel increased 29%, from $16.18
in 1995 to $20.88 in 1996. Total gas production increased 6%, from 50,100 MCF
in 1995 to 52,900 MCF in 1996, and the price per MCF increased 19%, from $1.67
in 1995 to $1.98 in 1996. The decrease in liquid production was primarily due
to normal production decline. The increase in gas production is due primarily
to revenue that had been held in suspense since December 1995 pending final
division orders.
EXPENSES
Oil and gas production expense, including production tax, increased $194,000
(42%) in 1996 from 1995 primarily as a result of an increase in the number of
workovers in 1996. Consequently, the overall lifting cost per equivalent barrel
increased 57%, from $9.88 in 1995 to $15.50 in 1996.
Total depreciation, depletion and amortization expense increased $5,000 (3%) in
1996 from 1995. The average depletion expense per equivalent barrel increased
15% from $3.12 in 1995 to $3.60 in 1996.
Net general and administrative expense increased $7,000 (18%) in 1996 compared
to 1995. This increase is attributable to higher compensation and office
expenses which were partially offset by lower professional and other expenses.
In addition, fewer expenses were charged out to the full cost pool and
administrative overhead in 1996, adding to the increase in net general and
administrative expense. As a result of the overall increase, and in conjunction
with decreased production volumes in 1996 compared to 1995, net general and
administrative expense per equivalent barrel increased from $.85 in 1995 to
$1.11 in 1996.
<PAGE>
LIQUIDS AND NATURAL GAS PRODUCTION, SALES PRICES AND PRODUCTION COSTS
The following table shows selected financial information for the nine months and
quarter ended December 31 in the current and prior year. Certain prior year
amounts may have been reclassified to conform to current year presentation.
<TABLE>
<CAPTION>
Nine Months Ended Quarter Ended
December 31 December 31
1996 1995 1996 1995
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Production
Oil (barrels) 102,900 114,500 33,700 38,700
Gas (mcf) 163,300 160,700 52,900 50,100
Revenue
Oil $2,004,000 $1,856,000 $703,000 $626,000
Gas 284,000 251,000 105,000 84,000
---------- ---------- -------- --------
2,288,000 2,107,000 808,000 710,000
Total production exp.(1) 1,588,000 1,460,000 659,000 465,000
---------- ---------- -------- --------
Gross profit $700,000 $647,000 $149,000 $245,000
========== ========== ======== ========
Depletion expense $418,000 $482,000 $153,000 $147,000
Depl. exp. per BOE(3) $3.21 $3.41 $3.60 $3.12
Average sales price(3)
Oil (per barrel) $19.48 $16.21 $20.88 $16.18
Gas (per mcf) 1.74 1.56 1.98 1.67
Avg. prod. exp.(2)(3) $12.20 $10.33 $15.50 $9.88
</TABLE>
- ------------------
(1) Operating expenses, including production tax
(2) Operating expenses, including production tax, per equivalent barrel (6 mcf
of gas is equivalent to 1 barrel of oil)
(3) Averages calculated based upon non-rounded numbers
<PAGE>
PART II.
OTHER INFORMATION
(Cumulative from March 31, 1996)
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
is signed by the following authorized person on behalf of Basic.
BASIC EARTH SCIENCE SYSTEMS, INC.
/s/ Ray Singleton
Ray Singleton, President
Date: February 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets, statements of operations, and statements of cash
flow found on pages 3, 4, 5 and 6 of the Company's Form 10-QSB for the
year-to-date and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 102,000
<SECURITIES> 0
<RECEIVABLES> 576,000
<ALLOWANCES> (41,000)
<INVENTORY> 0
<CURRENT-ASSETS> 795,000
<PP&E> 32,580,000
<DEPRECIATION> (30,073,000)
<TOTAL-ASSETS> 3,378,000
<CURRENT-LIABILITIES> 790,000
<BONDS> 0
0
0
<COMMON> 17,000
<OTHER-SE> 17,000
<TOTAL-LIABILITY-AND-EQUITY> 3,378,000
<SALES> 2,288,000
<TOTAL-REVENUES> 2,314,000
<CGS> 2,173,000
<TOTAL-COSTS> 2,173,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,000
<INTEREST-EXPENSE> 67,000
<INCOME-PRETAX> 87,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 87,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,000
<EPS-PRIMARY> .005
<EPS-DILUTED> .005
</TABLE>
