<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended Commission File No. 0-9120
MAY 31, 1995
THE EXPLORATION COMPANY
(Exact Name of Registrant as Specified in its Charter)
COLORADO 84-0793089
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
500 NORTH LOOP 1604 E., SUITE 250 78232
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (210) 496-5300
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 or 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 July 8, 1995.
Common Stock $0.01 par value 5,250,971
(Class of Stock) (Number of Shares)
Total number of pages is 14
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MAY 31, 1995 AUGUST 31, 1994
- - ------ ------------ ---------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 103,581 $ 103,756
Accounts receivable-net 193,711 166,252
Inventory-principally raw materials 159,355 121,871
Prepaid expenses 9,681 71,729
---------- ----------
Total Current Assets 466,328 463,608
PROPERTY & EQUIPMENT
Mineral properties-net of impairment 747,844 876,472
Oil & gas properties-net of impairment 1,802,138 1,448,934
Transportation and other equipment 193,404 160,199
Equipment under capital leases 93,325 86,510
Fuel stations 153,318 95,106
---------- ----------
2,990,029 2,667,221
Less accumulated depreciation, depletion
and amortization (321,751) (214,650)
---------- ----------
2,668,278 2,452,571
OTHER ASSETS
Marketable securities 602,528 -0-
Investment - CNG International 100,000 -0-
Deferred contract charges-net 100,000 -0-
Option to acquire oil and gas properties 166,667 200,000
Deferred financing fees-net of amortization 239,976 36,809
Other assets 26,539 -0-
---------- ----------
1,235,710 236,809
---------- ----------
Total Assets $4,370,316 $3,152,988
========== ==========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
THE EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY MAY 31, 1995 AUGUST 31, 1994
- - ------------------------------------ ------------ ---------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 476,618 $ 528,918
Due to joint interest partners 24,664 248,739
Current portion of long-term debt 22,794 32,872
Current portion of capital lease obligations 16,000 13,740
------------ ------------
Total Current Liabilities 540,076 824,269
LONG TERM LIABILITIES
Long-term debt 2,342,697 654,634
Capital lease obligations 54,744 60,964
------------ ------------
2,397,441 715,598
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share; authorized
200,000,000 shares; issued and outstanding
5,250,971 shares at May 31, 1995
and 4,591,087 shares at August 31, 1994 52,510 45,912
Additional paid-in capital 16,943,460 15,439,465
Accumulated deficit (15,563,171) (13,872,256)
------------ ------------
Total Stockholders' Equity 1,432,799 1,613,121
------------ ------------
Total Liabilities and Stockholders' Equity $ 4,370,316 $ 3,152,988
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDING ENDING
MAY 31, 1995 MAY 31, 1994
------------ ------------
<S> <C> <C>
REVENUES:
Oil and gas sales $ 76,974 $ 74,322
ExproFuels' sales 121,257 255,210
Other Income 11,688 21,082
---------- ----------
209,919 350,614
COSTS AND EXPENSES:
Lease operating expenses 4,292 3,092
Production and taxes 12,619 9,987
Exploration expenses 86,630 50,180
Depreciation, depletion and amortization 154,700 26,402
Impairment of mineral properties 42,877 -0-
ExproFuels' costs of sales 106,231 191,812
General and administrative expenses 381,336 310,874
---------- ----------
788,685 592,347
---------- ----------
Income (Loss) From Operations (578,766) (241,733)
OTHER INCOME (EXPENSE):
Interest income 3,427 442
Interest expense (67,419) (8,587)
---------- ----------
Income (Loss) Before Extraordinary Item (642,758) (249,878)
Extraordinary Item-gain on cancellation of debt -0- -0-
---------- ----------
Net Income (Loss) $ (642,758) $ (249,878)
========== ==========
AMOUNTS PER COMMON SHARE:
Income (Loss) before extraordinary item $ (0.13) $ (0.06)
Extraordinary item ---------- ----------
Net Income (Loss) $ (0.13) $ (0.06)
========== ==========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDING ENDING
MAY 31, 1995 MAY 31, 1994
------------ ------------
<S> <C> <C>
Revenues:
Oil and gas sales $ 223,056 $ 133,022
ExproFuels' sales 365,337 516,192
Other Income 20,979 29,672
----------- -----------
609,372 678,886
COSTS AND EXPENSES:
Lease operating expenses 16,908 10,096
Production and taxes 35,937 16,741
Exploration expenses 195,344 55,491
Depreciation, depletion and amortization 248,600 72,882
Impairment of mineral properties 128,629 -0-
ExproFuels' costs of sales 322,757 405,762
General and administrative expenses 1,208,978 875,785
----------- -----------
2,157,153 1,436,757
----------- -----------
Income (Loss) From Operations (1,547,781) (757,871)
OTHER INCOME (EXPENSE):
Interest income 5,841 441
Interest expense (148,975) (44,914)
----------- -----------
Income (Loss) Before Extraordinary Item (1,690,915) (802,344)
Extraordinary Item-gain on cancellation of debt -0- 322,492
----------- -----------
Net Income (Loss) $(1,690,915) $ (479,852)
=========== ===========
AMOUNTS PER COMMON SHARE:
Income (Loss) before extraordinary item $ (0.36) $ (0.20)
Extraordinary item 0.08
----------- -----------
Net income (Loss) $ (0.36) $ (0.12)
=========== ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDING ENDING
MAY 31, 1995 MAY 31, 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) $(1,690,915) $ (479,852)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation, depletion and amortization 248,600 72,882
Cancellation of debt -0- (322,492)
Impairment of mineral properties 128,628 -0-
Cash flows increased (decreased) from change
in operating assets and liabilities:
Accounts receivable (27,459) (165,793)
Inventory (37,484) (139,429)
Prepaid expenses and other 62,048 (12,443)
Accounts payable and accrued expenses (52,300) 16,998
Due to joint interest partners (224,075) (54,981)
----------- -----------
Net Cash Used in Operating Activities (1,592,957) (1,085,110)
INVESTING ACTIVITIES:
Investment in CNG International (100,000) -0-
Deferred contract charges (200,000) -0-
Development of oil and gas properties (158,171) (138,018)
Purchase of property & equipment (98,232) (121,330)
Sale of oil and gas properties 254,749 -0-
Other assets (26,539) -0-
----------- -----------
Net Cash Used in Investing Activities (328,193) (259,348)
FINANCING ACTIVITIES:
Stock issuance-net 400,000 1,424,122
Additional borrowing-net of financing fees 1,567,614 500,000
Principal payments on long-term
obligations (46,639) (283,264)
----------- -----------
Net Cash From Financing Activities 1,920,975 1,640,858
----------- -----------
Net Increase (Decrease) in Cash (175) 296,400
Cash at Beginning of Period 103,756 46,769
----------- -----------
Cash at End of Period $ 103,581 $ 343,169
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
THE EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR
THE PERIODS ENDED May 31, 1995 and May 31, 1994 (Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited 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
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company's annual
report on Form 10-K for the year ended August 31, 1994, which is
incorporated herein by reference.
2. PROPERTIES
Mineral Properties: The Company expenses costs associated with
identifying prospective mining properties while the costs of
acquiring and developing unproven mining properties are
capitalized. The Company has not incurred development or
production costs on its mining properties.
Oil and Gas Properties: The Company uses the successful efforts
method of accounting for oil and gas producing activities. Costs
to acquire mineral interests in oil and gas properties, to drill
and equip exploratory wells that find proved reserves, and to drill
and equip development wells are capitalized. Costs to drill
exploratory wells that do not find proved reserves, geological and
geophysical costs, and costs of carrying and retaining unproved
properties are expensed as incurred.
Proved and unproved oil and gas properties are periodically
assessed for impairment of value, and loss is recognized at the
time of impairment by providing an impairment allowance.
Capitalized costs of producing oil and gas properties are
depreciated and depleted by the unit-of-production method on a
property-by-property basis based on proved oil and gas reserves as
estimated by company engineers.
3. COMMON STOCK AND EARNINGS PER SHARE
As of May 31, 1995, the Company had outstanding and exercisable
warrants and options to purchase 2,016,141 shares of common stock
at prices ranging from $2.00 to $6.00 per share. The warrants and
options expire at various dates through May 2005 and February 2004
respectively.
Earnings per share are computed based on the weighted average
number of common shares outstanding during the periods presented as
follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
------------ -----------
<S> <C> <C>
May 31, 1995 4,829,609 4,712,096
May 31, 1994 4,408,350 4,106,915
</TABLE>
7
<PAGE> 8
During the current quarter, the Company received $80,000 in full
payment of the Stockholder note receivable which had been recorded as a
reduction to Stockholders' Equity in the previous quarters' financial
statements.
4. CONVERTIBLE LONG-TERM DEBT
During the quarter ended May 31, 1995, the Company raised an
additional $1,126,969 under the terms of its master note payable and indenture
of trust agreement. Of this amount, $457,969 was cash and $669,000 was
received in the form of marketable securities. As of May 31, 1995, a total of
$2,433,697 has been raised under the master note, including the marketable
securities. The related financing fees of $281,476 are being amortized over
the three-year term of each advance.
Also during the quarter, two holders of the Company's convertible
long-term debt totaling $669,000 elected to convert their notes to common stock
at $2.50 per share, under the terms of the debt agreement. Accordingly,
$602,528, which is net of the related financing fees, was transferred to common
stock and additional paid-in capital. See also note 5. below.
5. MARKETABLE SECURITIES AND SUBSEQUENT EVENT
The amount carried in marketable securities represents the value of
marketable securities received by the Company as consideration for issuing $
669,000 of its convertible long-term debt (net of financing fees of
approximately $67,000). See also note 4. above.
Subsequent to May 31, 1995, the Company exchanged the marketable
securities for a $602,000 promissory note from an affiliate of the Company's
investment banker. The promissory note is secured by certain marketable
securities, bears interest at 9% per annum and is due June 6, 1996.
6. INVESTMENT IN CNG INTERNATIONAL
As of May 31, 1995, the Company has invested $100,000 in CNG
International, L.L.C., a Tennessee limited liability company formed for the
purpose of converting motor vehicles to operate on alternative fuels,
manufacturing and selling of related component equipment and to develop the
necessary infrastructure to support operation of motor vehicles on alternative
fuels primarily in Uzebekistan, a former Soviet Republic. Under the terms of
an agreement with American Technical Institute, Inc., a Tennessee
not-for-profit corporation and American Engineering, Inc., a Delaware
corporation, the Company has the option to earn up to 50% of CNG International
by making additional investments in CNG International based upon the successful
completion of agreed upon project activities or milestones at each stage of the
project. For each $50,000 invested, the Company has earned a 1.18% equity
interest in CNG International. Subsequent to May 31, 1995, the Company has
invested an additional $50,000 in CNG International which increased its equity
ownership to 3.54%.
During the quarter ending May 31, 1995, the Company sold equipment
and provided services to CNG International in the amounts of $22,406 and
$24,215 respectively. The amount for services has been recorded as a reduction
to general and administrative expenses in the accompanying financial
statements.
7. ACQUISITION OF OIL AND GAS PROPERTIES
During the quarter ended May 31, 1995 the Company increased its
interest in two leaseholds in Maverick County, Texas from its existing partners
in exchange for Common Stock of the Company. In two transactions valued at
approximately $448,000, the Company issued 136,000
8
<PAGE> 9
shares and 27,496 shares of Common Stock respectively. The transactions
increased the Company's leasehold interest by approximately 9,325 net acres.
One of the transactions included the partial exercise of the
Company's $200,000 option which has been recorded in the accompanying financial
statements. The remaining $166,667 balance of the option price expires on
October 1, 1995.
8. DEFERRED CONTRACT CHARGES
The amount carried in deferred contract charges represents the
unamortized portion of $200,000 paid to the Company's investment banker and
public relations firm during the third quarter of the fiscal year. The
remaining balance of $100,000 at May 31, 1995 will be charged to operations
during the fourth quarter of the fiscal year which is the estimated period for
benefits to be received by the Company under the terms of the agreements.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
consolidated financial statements and notes thereto, and with the Company's
audited consolidated financial statements and notes thereto for the fiscal year
ended August 31, 1994.
FINANCIAL CONDITION AND CAPITAL RESOURCES
During the first three quarters of fiscal year 1995, a gross amount of
$2,358,697 was raised by Texas Capital Securities, Inc., the Company's
Investment Banker, under the terms of its three year convertible master note
payable and indenture of trust agreement. This provided approximately
$1,500,000 in cash to the Company, net of the related financing fees, and
marketable securities with a value of approximately $602,000 (see note 4 to
the financial statements). Other major sources of capital included $150,000
received from the exercise of options to purchase shares under the Company's
Stock Option Plan by its President and its Chairman of the Board of Directors,
and an additional $250,000 received from the exercise of options and warrants
by other stockholders. These funds, as well as approximately $255,000
generated from the sale of an option for the deep rights on the Company's
50,000 acre leasehold interest in Maverick County, Texas, were primarily
utilized to fund the cash loss from operations of $1,592,957, for approximately
$250,000 in capital expenditures and $300,000 for the Company's investment in
CNG International and contractual agreements with its investment banking and
public relations firm. Although the Company's current ratio (current assets
divided by current liabilities) has improved from .56 to 1 at August 31, 1994,
to .86 to 1 at May 31, 1995, the Company has had recurring cash flow shortages
throughout the current fiscal year which at times has prevented it from meeting
its obligations on a timely basis.
In order to carry out management's plans to accelerate development of its
Maverick County leasehold interest and to continue with expansion of the
ExproFuels division, as well as to meet the Company's obligations in the
ordinary course of business, it will be necessary for the Company to raise
additional capital. Further, until such time as the Company attains profitable
operations, additional capital will be required to fund recurring cash losses
from operations. Management is continuing to investigate several alternatives
to raise the needed capital. If management's efforts to raise additional
capital are not successful, the Company's financial condition and liquidity
would be materially adversely affected.
RESULTS OF OPERATIONS
Oil and Gas Division
The increase in oil and gas sales for the nine month year-to-date period of
fiscal year 1995 is directly attributable to production from the Paloma #1-107
gas well that began producing mid-way through the third quarter of the last
fiscal year. The increase in year-to-date exploration expenses to $195,344
compared to $55,491 the previous year is the result of increased delay rentals
due on the Company's additional leasehold acreage acquired during the current
quarter and to the plugging and abandoning of the Paloma #1- 133 which was
drilled during the first quarter of the year. Although the reef was present as
predicted by the Company's 3-D seismic, it contained water and not
hydrocarbons. Although the Company's engineers and geologists are 100%
successful in locating patch reefs on the Company's leasehold, the Company has
only a 1 in 3 success ratio in finding reefs that are not filled with water.
Management is reviewing the data it has obtained while drilling these reefs to
improve its success ratio to an acceptable level. Due the uncertainty of when
economic conditions may allow the Company to develop its Holmgreen Ranch
mineral property, the carrying value has been reduced by recording an
impairment expense of 42,876 during each of
10
<PAGE> 11
the first three quarters of the current fiscal year. The increase in interest
expense for the current quarter and the nine month year-to-date period is
directly attributable to the increase in long-term debt over last year. The
increase in depreciation, depletion, and amortization during the current
quarter and the nine month year-to-date period is primarily attributable to
amortization of deferred financing fees and deferred contract charges as
further explained in notes 4 and 8 to the financial statements.
Since selling TransTexas Gas Corporation a one-year option during the first
quarter of this fiscal year to drill a deep, Jurassic test on the Company's
Maverick county leasehold, the Company has not had any communication from
TransTexas regarding its drilling plans. Management had anticipated that the
well would have been started by now and is not certain that TransTexas has
sufficient time to drill the test well before the option expires on September
26, 1995. Subsequent to the end of the quarter, the Company entered into an
agreement with Edco Energy, Inc. to drill a horizontal well in the Georgetown
formation to test the Company's theory that increased production from the
formation can be obtained by intersecting fractures and faults in the reservoir
with a horizontal wellbore. The success of this well would be significant to
the Company because the zone appears to be potentially productive under the
Company's entire 50,000 acres.
ExproFuels Division
Sales for the current quarter and the nine month year-to-date period decreased
significantly compared to the corresponding periods of the previous fiscal
year. Contributing most significantly to the decrease was the reduction in
sales of approximately $90,000 at the Company's New Orleans conversion facility
during the current quarter and the year-to-date periods. Due to a general lack
of conversion business and continued vehicle delivery problems as explained in
previous reports, the Company closed it New Orleans facility during the current
quarter. In an effort to reduce its operating costs, the Company subleased the
facility to a third party for the balance of its lease term. Ongoing and
future projects in Louisiana are scheduled to be handled through a network of
affiliates.
An investment of $100,000 was made by the Company during this quarter in CNG
International, LLC, a Tennessee limited liability company formed for the
purpose of converting motor vehicles to operate on alternative fuels,
manufacturing and selling related component equipment and developing the
necessary infrastructure to support the operation of motor vehicles on
alternative fuels in Uzebekistan, a former Soviet Republic. The Company has
the option to purchase up to 50% of CNG International but management has
decided to stage its investment to coincide with attainment of performance
goals by CNG International with the Company's help. To that end, the Company's
technicians are currently in Uzebekistan converting test vehicles to natural
gas and gathering information crucial to the development of a feasibility study
to determine the economic potential of the venture. Once the study is
completed, it will be presented to the various Uzebekistan ministry partners
for their review and approval.
Because the alternative fuels industry in the United States has not grown as
fast as most experts projected, ExproFuels has continued to investigate the use
of its expertise and knowledge in several foreign countries. Management
believes that opportunities currently being pursued in Colombia and Poland may
develop into attractive ventures for the Company. However, ExproFuels'
revenues, profitability and future rate of growth are dependent upon its
ability to increase its sales levels primarily by winning bids from various
national and international governmental agencies as well as from private fleets
to convert their fleets to alternative fuels and to sell these vehicles the
alternative fuel. Accordingly, the ExproFuels division has continued to invest
heavily in sales and promotional activities during the year. These expenses,
as well as the increased overhead expenses associated with the Dallas and
Tucson conversion centers opened since the third quarter of last year primarily
account for the increase in general and administrative expenses during the
current quarter and the year-to-date periods. In the event ExproFuels is
unsuccessful in the competitive bidding
11
<PAGE> 12
process, or legislative changes significantly reduce or delay the mandates for
vehicle conversions, the Company's revenues and ability to achieve
profitability would be materially adversely affected.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The trial scheduled for January 4, 1995, regarding the Company's
interest in the Holmgreen Ranch has been postponed by mutual consent of the
parties. The parties are attempting to work out a resolution of the case. If
an agreement cannot be reached, a new trial will be set later this year.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 28, 1995, the Company held the Annual Meeting of Shareholders
at its office in San Antonio, Texas pursuant to notice mailed to shareholders
of record on March 10, 1995. The following matters were submitted to a vote at
the meeting and the results of the voting is shown for each matter:
1. Election of Three Directors
<TABLE>
<CAPTION>
Nominee For Against
------- --- -------
<S> <C> <C>
Stephen M. Gose 3,393,758 24,033
Thomas H. Gose 3,393,804 23,987
James E. Sigmon 3,393,824 23,967
</TABLE>
There were no changes in directors of the Company.
2. Proposal to approve the Company's 1995 Flexible Incentive Plan
<TABLE>
<CAPTION>
For Against Withheld
--- ------- --------
<S> <C> <C>
2,941,378 88,625 19,568
</TABLE>
3. Proposal to Reincorporate the company from Colorado to Delaware by the
Adoption of a Plan and Agreement of Merger.
<TABLE>
<CAPTION>
For Against Withheld
--- ------- --------
<S> <C> <C>
2,462,484 49,419 9,776
</TABLE>
12
<PAGE> 13
4. Proposal to Ratify the Appointment of Akin, Doherty, Klein & Feuge,
Certified Public Accountants, as Independent Auditors for 1995.
<TABLE>
<CAPTION>
For Against Withheld
--- ------- --------
<S> <C> <C>
3,396,761 4,973 16,057
</TABLE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 -- Financial Data Schedule
Form 8-K filed May 10, 1995, relating to compliance with the National
Association of Securities Dealers (NASDAQ) minimum capital and surplus
requirement.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
THE EXPLORATION COMPANY
(Registrant)
/s/ James E. Sigmon
----------------------------------------
James E. Sigmon, President and Treasurer
(Signing on behalf of the Registrant and as
chief accounting officer)
Date: July 12, 1995
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000313395
<NAME> EXPLORATION CO.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-START> SEP-1-1994
<PERIOD-END> MAY-31-1995
<CASH> 103,581
<SECURITIES> 602,528
<RECEIVABLES> 193,711
<ALLOWANCES> 0
<INVENTORY> 159,355
<CURRENT-ASSETS> 466,328
<PP&E> 2,999,029
<DEPRECIATION> 321,751
<TOTAL-ASSETS> 4,370,316
<CURRENT-LIABILITIES> 540,076
<BONDS> 2,342,697
<COMMON> 52,510
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,370,316
<SALES> 588,393
<TOTAL-REVENUES> 20,979
<CGS> 322,757
<TOTAL-COSTS> 2,157,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,975
<INCOME-PRETAX> (1,690,915)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,690,915)
<EPS-PRIMARY> (.36)
<EPS-DILUTED> 0
</TABLE>
