<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
FEBRUARY 29, 1996
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 March 31, 1996.
Common Stock $0.01 par value 5,758,635 shares
(Class of Stock) (Number of Shares)
Total number of pages is 14
--
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS FEBRUARY 29, 1996 AUGUST 31, 1995
- ---------- ----------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 165,583 $ 85,918
Accounts receivable-net 560,928 345,974
Inventory-principally raw materials 116,571 103,956
Note receivable 302,528 602,528
Prepaid expenses 25,766 60,714
----------- -----------
Total Current Assets 1,171,376 1,199,090
PROPERTY & EQUIPMENT
Oil & gas properties-net of impairment 2,718,277 2,170,415
Mineral properties-net of impairment 306,564 704,967
Transportation and other equipment 219,772 193,404
Equipment under capital leases 93,326 93,326
Fuel stations 178,866 159,729
----------- -----------
3,510,805 3,321,841
Less accumulated depreciation, depletion
and amortization (512,086 (413,152)
----------- -----------
2,998,719 2,908,689
OTHER ASSETS
Investment & advances - CNG International 352,693 150,000
Option to acquire oil and gas properties 66,667 166,667
Other assets 153,928 168,446
----------- -----------
573,288 485,113
----------- -----------
Total Assets $ 4,743,383 $ 4,592,892
=========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY FEBRUARY 29, 1996 AUGUST 31, 1995
- ------------------------------------ ----------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 673,776 $ 590,975
Due to joint interest partners 114,373 69,209
Current portion of long-term debt 278,000 188,419
Current portion of capital lease obligations 16,000 16,693
------------ ------------
Total Current Liabilities 1,082,149 865,296
LONG TERM LIABILITIES
Long-term debt 2,295,658 2,300,115
Capital lease obligations 42,608 49,734
------------ ------------
2,338,266 2,349,849
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share;
authorized 200,000,000 shares; issued
and outstanding 5,733,635 shares at
February 29, 1996 and 5,527,970 shares
at August 31, 1995 57,336 55,280
Additional paid-in capital 17,883,493 17,348,088
Accumulated deficit (16,617,861) (16,025,621)
------------ ------------
Total Stockholders' Equity 1,322,968 1,377,747
------------ ------------
Total Liabilities and Stockholders' Equity $ 4,743,383 $ 4,592,892
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
FEBRUARY 29, 1996 FEBRUARY 28, 1995
----------------- -----------------
<S> <C> <C>
REVENUES:
Oil and gas sales $ 102,566 $ 74,289
ExproFuels' sales 395,617 84,649
Other Income 62,797 5,787
---------- -----------
560,980 164,725
COSTS AND EXPENSES:
Lease operating expenses 18,849 8,400
Production and taxes 15,030 12,887
Exploration expenses 3,977 6,178
Depreciation, depletion and amortization 70,467 49,800
Impairment of mineral properties -0- 42,876
ExproFuels' costs of sales 312,897 72,275
General and administrative expenses 311,465 436,288
---------- -----------
732,685 628,704
---------- -----------
Loss From Operations (171,705) (463,979)
OTHER INCOME (EXPENSE):
Interest income 1,774 1,257
Interest expense (77,130) (50,285)
---------- -----------
(75,356) (51,542)
---------- -----------
Net Loss $ (247,061) $ (513,007)
========== ===========
AMOUNTS PER COMMON SHARE:
Net Loss $ (0.04) $ (0.11)
========= ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
FEBRUARY 29, 1996 FEBRUARY 28, 1995
----------------- -----------------
<S> <C> <C>
REVENUES:
Oil and gas sales $ 184,573 $ 146,082
ExproFuels' sales 596,115 244,080
Other Income 71,014 9,291
---------- -----------
851,702 399,453
COSTS AND EXPENSES:
Lease operating expenses 24,136 12,616
Production and taxes 26,028 23,318
Exploration expenses 10,966 108,714
Depreciation, depletion and amortization 140,934 93,900
Impairment of mineral properties -0- 85,752
ExproFuels' costs of sales 448,330 216,527
General and administrative expenses 642,631 827,641
---------- -----------
1,293,025 844,411
---------- -----------
Loss From Operations (441,323) (969,015)
OTHER INCOME (EXPENSE):
Interest income 2,061 2,414
Interest expense (152,979) (81,556)
---------- ------------
(150,918) (79,142)
---------- -----------
Net Loss $ (592,241) $(1,048,157)
========== ===========
AMOUNTS PER COMMON SHARE:
Net Loss $ (0.11) $ (0.23)
========== ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
FEBRUARY 29, 1996 FEBRUARY 28, 1995
----------------- -----------------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net Loss $ (592,241) $ (1,048,157)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation, depletion and amortization 140,934 93,900
Impairment of mineral properties -0- 85,752
Cash flows increased (decreased) from change
in operating assets and liabilities:
Accounts receivable (214,954) 45,433
Inventory (12,615) 26,493
Prepaid expenses and other 34,948 45,407
Accounts payable and accrued expenses 124,923 (228,570)
Due to joint interest partners 45,164 (224,467)
---------- ------------
Net Cash Used in Operating Activities (473,841) (1,204,209)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in CNG International (202,693) -0-
Development of oil and gas properties (91,862) (52,022)
Purchase of other property & equipment (62,505) (89,364)
Sale of oil and gas properties -0- 254,749
Other assets 139,518 (31,308)
---------- ------------
Net Cash From Investing Activities (217,542) 82,055
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock issuance-net 312,463 50,000
Additional borrowing-net of financing fees 170,861 1,146,578
Principal payment on note receivable 300,000 -0-
Principal payments on long-term
obligations (12,276) (37,153)
---------- ------------
Net Cash From Financing Activities 771,048 1,159,425
---------- ------------
Net Increase in Cash 79,665 37,271
Cash at Beginning of Period 85,918 103,756
---------- ------------
Cash at End of Period $ 165,583 $ 141,027
========== ============
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
THE EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS FOR THE PERIODS ENDED FEBRUARY 29, 1996
and FEBRUARY 28, 1995 (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, 1995, which is
incorporated herein by reference.
2. 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
During the first quarter, the Company prepared an offering pursuant
to Regulation S of the Securities Act of 1933, as amended, to raise
up to $3,000,000 by offering shares to non-U.S. persons as defined
in Regulation S. As of November 30, 1995, the Company had received
$165,000 in exchange for 82,500 shares of its common stock.
During the second quarter, the Company continued its offering of
shares pursuant to Regulation S and as of February 29, 1996, had
received an additional $135,000 in exchange for 67,500 shares of
its common stock.
7
<PAGE> 8
Subsequent to February 29, 1996, the Company has received an
additional $50,000 pursuant to the terms of its ongoing Regulation
S offering in exchange for 25,000 shares of its common stock.
As of February 29, 1996, the Company had outstanding and
exercisable warrants and options to purchase 1,769,765 shares of
common stock at prices ranging from $2.00 to $6.00 per share. The
warrants and options expire at various dates through February 2005.
Earnings per share are computed based on the weighted average
number of common shares outstanding during the periods presented as
follows:
THREE MONTHS SIX MONTHS
------------ ----------
February 29, 1996 5,717,619 5,633,924
February 28, 1995 4,681,087 4,653,186
4. INVESTMENT IN CNG INTERNATIONAL
During the quarter ended February 29, 1996, the Company made
additional cash investments and advances totaling $21,500 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
Uzbekistan, a former Soviet Republic.
5. LEGAL PROCEEDINGS AND SUBSEQUENT EVENTS
During the current quarter, the Company entered into a final
settlement agreement of its lawsuit filed in 1992 involving its
ownership interest in the Holmgreen Ranch non-producing mineral
interest. The settlement required the Company to convey a 32.5%
mineral interest, with a basis of $398,402 to the plaintiff, in
exchange for certain assets with the same value transferred to the
Company by the other defendants (who were also the prior owners of
the mineral interest from which the Company acquired its interest).
Value recovered by the Company from the other defendants included
the reduction of a note payable and related accrued interest and
accounts payable of $123,402; non-producing oil and gas leasehold
acreage in the North Dakota Lodge Pole oil and gas play valued at
$225,000 for 1,500 net acres; and other tangible assets, including
certain equipment and seismic data valued at $50,000. The Company
did not recognize a gain or loss on the settlement of the lawsuit
as a result of the agreement. The Company continues to own a 50%
mineral interest in the Holmgreen Ranch and has a mineral lease on
the remaining 50% mineral interest which will allow it to develop
underlying mineral deposits, as originally contemplated.
8
<PAGE> 9
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, 1995.
FINANCIAL CONDITION AND CAPITAL RESOURCES
During the first quarter of fiscal 1996 the Company entered into an agreement
with Comstar BioCapital, Inc., a foreign entity, to raise up to $3,000,000
through an offering of the Company's common stock to foreign investors. The
offering was prepared pursuant to Regulation S of the Securities Act of 1933,
as amended, and has extended to several foreign parties.
During the first two quarters of fiscal 1996, the Company had received $300,000
under this arrangement. Management is uncertain at this time of Comstar's
ability to successfully place the Regulation S Offering in its entirety in the
near future and continues to investigate other financing alternatives for its
ongoing capital requirements. These funds, along with the $300,000 payment on
the outstanding note receivable, as well as $55,000 received from TransTexas
Gas Corporation due to the expiration of a drilling option to explore the deep
mineral rights on the Company's Maverick County leasehold interest, were used
to fund the cash loss from operations for the six months ended of $473,841,
fund for the current quarter $85,000 in capital expenditures, including $19,000
in the ExproFuels division, and invest an additional $21,500 in CNG
International, L.L.C., the Tennessee company directing the development of the
alternative fuels project in Uzbekistan, a former Soviet Republic.. As a
result of these fund raising efforts, the Company's current ratio (current
assets divided by current liabilities) deteriorated for the period, from 1.38
to 1 at August 31, 1995, to 1.08 to 1 at February 29, 1996.
In order to carry out management's plans to develop its Maverick County
leaseholds, continue evaluation of its recently acquired Lodgepole acreage
positions in North Dakota and Montana, and continue 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. Since the end of the second quarter, through April 10, 1996,
additional operating funds have been raised through the ongoing Regulation S
offering of $50,000. Management is continuing to investigate several
alternatives to raise capital to fund ongoing normal operations and to meet the
Company's debt obligations If management's efforts to raise additional capital
are not successful, the Company's financial condition and liquidity would be
materially adversely affected.
9
<PAGE> 10
RESULTS OF OPERATIONS
OIL AND GAS DIVISION
The increase in oil and gas sales and depletion expense for the second quarter
and for the six month year-to-date period of fiscal year 1996 is directly
attributable to production from the Paloma #1-107 gas well and the Paloma "A"
#83-1H gas well which began producing during the third and fourth quarter,
respectively, of fiscal 1995 and the general strengthening of gas prices during
the current winter season.. The decrease in year-to-date exploration expenses
to $10,966 compared to $108,714 in the prior year reflects the lack of dry
holes during the period. The Company drilled and completed another Glen Rose
test well, the Paloma "B" #2-112 during the second quarter at a total cost of
$65,393. The well flowed at rates up to 2,467,000 cubic feet per day and 30
barrels of condensate per day, with an absolute open flow potential of
approximately 20,000,000 cubic feet of gas per day. Although first production
commenced during February, 1996, first sales will be reflected in third quarter
operations. The success of this well is very significant as an indication of
the Company's engineers and geologists ongoing ability to distinguish between
water-filled versus gas-filled reefs. Based upon the seismic that has been run
to date, the Company is further assured to have numerous porosity-bearing patch
reefs scattered across its extensive acreage position, and is scheduled to
commence additional drilling on its Paloma lease in the third quarter of this
year.
The Company continues its evaluation of the available 2-D and 3-D seismic over
its leasehold in the Lodgepole play in North Dakota. Independent geophysicists
have determined that the Company has numerous anomalies on the acreage that
appear to be Lodgepole waulsortian reefs. The Company intends to acquire 3-D
seismic over its prospects prior to commencement of drilling operations.
EXPROFUELS DIVISION
Sales for the second quarter and the six month period ended February, 1996
increased by approximately 450% and 240%, respectively, over the same periods
of fiscal 1995. Changes in cost of sales levels followed the sales increases,
with gross margins improving in the second quarter of fiscal 1996.
Contributing most significantly to the sales increase and improved margins was
the success of the Company's ongoing efforts to identify and obtain favorably
priced CNG fuel station construction contracts with Kelly AFB in San Antonio,
Texas valued at $250,000 and LPG vehicle conversion contracts valued at over
$30,000 with Star Shuttle, Inc., a private contractor providing public
transportation services under contracts with several municipal entities in San
Antonio, Texas.
ExproFuels' U.S. based revenues, profitability and future rate of growth are
dependent on its ability to increase its sales level primarily by winning bids
from various governmental agencies as well as from private fleets which have
been mandated by various legislation to convert their vehicle fleets to
alternative fuels. In the event ExproFuels is unsuccessful in the
competitive bidding 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.
10
<PAGE> 11
During the second quarter of fiscal 1996, the Company made an additional cash
investment of $21,500 in CNG International, L.L.C., continuing the Company's
plan, together with this Tennessee based company, to develop the joint goal of
converting a national fleet of motor vehicles to operate on alternative fuels,
manufacturing and selling related component equipment and developing the
necessary refueling infrastructure to support the operation of motor vehicles
on alternative fuels, in Uzbekistan, a former Soviet Republic. The Company ,
together with CNG, is actively involved in negotiating with various
international banking organizations and numerous Uzbek ministries, in
preparation for the issuance of that countries' Presidential decree giving the
final approval to the implementation phase of the venture between that country
and CNG International. During the second quarter, the Company was also
approached by representatives of other former Soviet Republics interested in
initiating similar, national scale projects in their respective countries and
is pursuing preliminary discussions with the appropriate parties.
Also during the second quarter, the Company's ongoing efforts to develop
markets in Latin America were bolstered by the sale of approximately $12,000 of
motor vehicle LPG conversion equipment to the Colombian government's national
oil company, Ecopetrol. The Company will direct the actual conversion of 4
vehicles as a prototype fleet test for the benefit of Ecopetrol. Upon the
successful completion of conversions and satisfactory operating performance of
the vehicles, plans include the development of a complete conversion facility
for ongoing conversion of numerous governmental and private fleets. The
Company is actively involved in structuring strategic alliances with various
private sector parties to jointly own and operate said conversion facilities,
and expects to initiate operations in the fourth quarter of fiscal 1996.
In additional to Colombia, Management believes that opportunities currently
being pursued in Bolivia, Mexico, Venezuela and Central America may develop
into attractive ventures for the Company. Accordingly, the ExproFuels division
has continued to invest in sales and promotional activities during the six
months ended February 29, 1996.
CORPORATE DIVISION
The increase in amortization expense during the first and second quarter is
related to ongoing amortization of deferred financing fees not present during
the same periods of fiscal year 1995. The increase in interest expense for the
current quarter and the six month year-to-date period is directly attributable
to the increase in long-term debt over amounts in previous periods. The
reduction in impairment of mineral properties reflects the Company's position
that the remaining carrying value of the mineral properties are properly
stated.
Other Income for the second quarter and six month period ended February, 1996
increased by over $60,000 over the same periods of fiscal 1995, primarily due
to insurance premium refunds of approximately $26,000 due to the reduction of
exposures obtained through the closing of the Louisiana conversion facilities
during the second quarter of fiscal 1995. The ongoing decline of general and
administrative expenses reflects the Company's continuing efforts to keep
staffing levels and office expenses at a minimum, resulting in reduced
insurance costs associated with lower payrolls and significant rate reductions,
and the drop in office expenses related to operating efficiencies after closing
the Louisiana conversion facility in fiscal 1995.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the current quarter, the Company entered into a final
settlement agreement of the lawsuit filed in 1992 involving its
ownership interest in the Holmgreen Ranch non-producing mineral
interest. The settlement required the Company to convey a 32.5%
mineral interest, with a basis of $398,402, to the plaintiff, in
exchange for certain assets with the same value transferred to the
Company by the other defendants (who were also the prior owners of the
mineral interest from which the Company acquired its interest.) Value
recovered by the Company from the other defendants included the
reduction of a note payable and related accrued interest and accounts
payable of $123,402; non-producing oil and gas leasehold acreage in
the North Dakota Lodgepole oil and gas play valued at $225,000 for
1500 net acres; and other tangible assets, including certain equipment
and seismic data valued at $50,000. The Company did not recognize a
gain or loss on the settlement of the lawsuit as a result of the
agreement. The Company continues to own a 50% mineral interest in the
Holmgreen Ranch and has a mineral lease on the remaining 50% mineral
interest which will allow it to develop underlying mineral deposits.
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 March 29, 1996, the Company held the Annual Meeting of Shareholders
at its offices in San Antonio, Texas pursuant to the notice mailed to
shareholders of record on February 10, 1996. 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 3,709,470 68,845
Thomas H. Gose 3,705,570 72,745
James E. Sigmon 3,709,470 68,845
</TABLE>
There were no changes in directors of the Company.
12
<PAGE> 13
2. Proposal to ratify the adoption of Akin, Doherty, Klein & Fuege, P.C.,
as Independent Auditors for the Company for the fiscal year 1996.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----------- --------------- -------------------
<S> <C> <C>
3,738,850 8,612 30,853
</TABLE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
1. Exhibit (27) - Financial Data Schedule.
(b) Reports on 8-K:
No reports on Form 8-K were filed in the quarter for
which this report is filed.
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: April 12, 1996
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
EXPLORATION COMPANY UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER AND
SIX MONTHS ENDED FEBRUARY 29, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 165,583
<SECURITIES> 0
<RECEIVABLES> 570,901
<ALLOWANCES> 9,973
<INVENTORY> 115,571
<CURRENT-ASSETS> 1,171,376
<PP&E> 3,510,805
<DEPRECIATION> 512,086
<TOTAL-ASSETS> 4,743,383
<CURRENT-LIABILITIES> 1,082,149
<BONDS> 2,338,266
<COMMON> 57,336
0
0
<OTHER-SE> 1,265,632
<TOTAL-LIABILITY-AND-EQUITY> 4,743,383
<SALES> 498,183
<TOTAL-REVENUES> 560,980
<CGS> 350,753
<TOTAL-COSTS> 732,685
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77,130
<INCOME-PRETAX> (247,061)
<INCOME-TAX> 0
<INCOME-CONTINUING> (247,061)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247,061)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> 0
</TABLE>
