<PAGE>
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 28, 1998
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 for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of April 14, 1998.
Common Stock $0.01 par value 15,613,516
(Class of Stock) (Number of Shares)
Total number of pages is 13
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE EXPLORATION COMPANY
BALANCE SHEETS
(UNAUDITED)
Assets Feb 28, 1998 Aug 31, 1997
- ------ ------------ -------------
Current Assets
Cash ....................................... $ 302,949 $ 6,198,069
Accounts receivable-net .................... 715,074 362,426
Prepaid expenses ........................... 12,542 49,084
------------ ------------
Total Current Assets ......... 1,030,565 6,609,579
Property and Equipment
Oil and gas properties, net of impairment .. 19,672,495 14,991,690
Other equipment ............................ 205,337 194,550
Less accumulated depreciation, depletion
and amortization ....................... (904,658) (754,658)
------------ ------------
18,973,174 14,431,582
Other Assets
Deferred financing fees, net of amortization -0- 180,000
Other assets ............................... 449,069 431,565
------------ ------------
449,069 611,565
------------ ------------
Total Assets ................. $ 20,452,808 $ 21,652,726
============ ============
See notes to financial statements.
<PAGE>
THE EXPLORATION COMPANY
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity February 28, 1998 August 31, 1997
- ------------------------------------ ----------------- ---------------
<S> <C> <C>
Current Liabilities
Accounts payable and accrued expenses $ 2,516,336 $ 1,840,550
Accrued payroll and taxes 40,323 46,406
Current portion of notes payable 428,395 944,013
Current portion of capital lease obligations 19,957 17,962
------------- --------------
Total Current Liabilities 3,005,011 2,848,931
Long-term Liabilities
Long-term debt, net of current portion -0- 4,000,000
Long-term capital lease obligations, net of current portion 22,645 33,025
-------------- --------------
Total Long-term Liabilities 22,645 4,033,025
Stockholders' Equity
Common stock, par value $.01 per share; authorized 200,000,000 shares;
issued and outstanding 15,613,516 shares at February 28, 1998
and 14,759,198 shares at August 31, 1997 156,135 147,592
Additional paid-in capital 40,161,100 35,928,054
Accumulated deficit (22,892,083) (21,304,876)
------------ ------------
Total Stockholders' Equity 17,425,152 14,770,770
------------ ------------
Total Liabilities and Stockholders' Equity $ 20,452,808 $ 21,652,726
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
THE EXPLORATION COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended Ended
Feb 28, 1998 Feb 28, 1997
----------- -----------
Revenues:
Oil and gas sales .......................... $ 624,353 $ 147,212
Other income ............................... 40,703 50,338
----------- -----------
665,056 197,550
Costs and Expenses:
Lease operating expenses ................... 145,938 18,544
Production taxes ........................... 41,077 17,254
Exploration expenses ....................... 1,074,648 2,324
Impairment of properties ................... 50,000 -0-
Depreciation, depletion and amortization ... 316,245 86,687
General and administrative expenses ........ 352,635 263,823
----------- -----------
Total costs and expenses ........... 1,980,543 388,632
----------- -----------
(1,315,487) (191,082)
Net loss from ExproFuels equity ownership ...... -0- (89,693)
----------- -----------
Loss from operations ........................... (1,315,487) (280,775)
Other Income (Expense):
Interest income ............................ 9,401 33,213
Interest expense ........................... (24,332) (73,495)
Loss on currency translation ............... -0- -0-
----------- -----------
(14,931) (40,282)
----------- -----------
Net loss ....................................... $(1,330,418) $ (321,057)
=========== ===========
Amounts Per Common Share:
Basic loss per common share .................... $ (0.09) $ (0.03)
=========== ===========
See notes to financial statements.
<PAGE>
THE EXPLORATION COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Six Months
Ended Ended
Feb 28, 1998 Feb 28, 1997
------------ ------------
Revenues:
Oil and gas sales .......................... $ 1,153,592 $ 282,131
Other income ............................... 80,495 98,076
----------- -----------
1,234,087 380,207
Costs and Expenses:
Lease operating expenses ................... 345,398 28,067
Production taxes ........................... 51,561 33,347
Exploration expenses ....................... 1,148,399 172,368
Impairment of properties ................... 100,000 -0-
Depreciation, depletion and amortization ... 472,495 131,987
General and administrative expenses ........ 638,541 409,251
----------- -----------
Total costs and expenses ........... 2,756,394 775,020
----------- -----------
(1,522,307) (394,813)
Net loss from ExproFuels equity ownership ...... -0- (173,913)
----------- -----------
Loss from operations ........................... (1,522,307) (568,726)
Other Income (Expense):
Interest income ............................ 79,483 34,706
Interest expense ........................... (96,841) (127,131)
Loss on currency translation ............... (47,545) -0-
----------- -----------
(64,903) (92,425)
----------- -----------
Net loss ....................................... $(1,587,210) $ (661,151)
=========== ===========
Amounts Per Common Share:
Basic loss per common share .................... $ (0.11) $ (0.06)
=========== ===========
See notes to financial statements
<PAGE>
THE EXPLORATION COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Six Months
Ended Ended
Feb 28, 1998 Feb 28, 1997
------------- -------------
Operating Activities:
Net Loss ....................................... $ (1,587,210) $ (661,151)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Impairment of properties .................. 100,000 -0-
Depreciation, depletion and amortization .. 472,495 131,987
ExproFuels operations ..................... -0- 173,913
Changes in operating assets and liabilities:
Receivables ............................... (128,563) (12,639)
Drilling deposits and advances ............ -0- (537,783)
Prepaid expenses and other ................ 36,542 -0-
Accounts payable and accrued expenses ..... 1,317,251 537,350
------------ ------------
Net cash provided (used) in operating activities 210,515 (368,323)
Investing Activities:
Development and purchases
of oil and gas properties .............. (5,144,890) (7,064,451)
Advances to ExproFuels, Inc. .............. -0- (146,875)
Purchase of property and equipment ........ (10,787) (64,249)
Other assets .............................. (19,999) (295,604)
------------ ------------
Net cash (used) in investing activities ........ (5,175,676) (7,571,179)
Financing Activities:
Issuance of common stock, net of expenses . 20,000 13,998,750
Other financing expenses .................. -0- (78,898)
Proceeds from long-term debt obligations .. -0- 4,756,273
Payments on long-term obligations ......... (949,959) (746,743)
------------ ------------
Net cash provided (used) in financing activities (929,959) 17,929,382
------------ ------------
Increase (decrease) in cash and equivalents .... (5,895,120) 9,989,880
Cash and equivalents at beginning of period .... 6,198,069 967,838
------------ ------------
Cash and equivalents at end of period .......... $ 302,949 $ 10,957,718
============ ============
See notes to financial statements
<PAGE>
THE EXPLORATION COMPANY
NOTES TO FINANCIAL STATEMENTS FOR
THE PERIODS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997 (Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements of The Exploration
Company (TXCO or the Company) 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. The accounting policies
followed by the Company are set forth in Note A to the audited financial
statements contained in the Company's annual report on Form 10-K.
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. For further information, refer to the financial statements and
footnotes thereto included in the Registrant Company's annual report on Form
10-K for the year ended August 31, 1997, which is incorporated herein by
reference.
2. Common Stock and Basic Loss Per Share
As of February 28, 1998, the Company had outstanding and exercisable
warrants and options to purchase 1,387,906 shares of common stock at prices
ranging from $2.00 to $6.60 per share. The warrants and options expire at
various dates through May 2007.
Basic loss per share is computed based on the weighted average number of common
shares outstanding during the periods presented as follows:
Three Months Six Months
------------ ----------
February 28, 1998 15,320,695 15,039,947
February 28, 1997 11,279,736 10,558,708
3. Long Term Debt
At the beginning of the current quarter, the Company had an outstanding balance
of $4,000,000 under the terms of its two outstanding convertible debentures. On
January 1, 1998, the Company elected to convert the entire $4,000,000
outstanding debenture balance, plus accrued interest of $221,590, into 844,318
shares of its common stock at the stated conversion rate of $5 per share as
provided for under the terms of the debenture.
During the current quarter, the Company initiated negotiations regarding its
credit terms with a trade creditor. The Company restructured its existing trade
payable into a promissory note in the amount of $425,959, with repayment,
including monthly interest and principal payments of $35,000 and a final balloon
payment on the remaining balance prior to April 1, 1999.
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
financial statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended August 31, 1997.
Liquidity and Capital Resources
During the six month period ended February 28, 1998 beginning cash reserves of
$6,198,069 plus net cash provided from operating activities of $210,515 provided
a total of $6,408,584 in working capital for use in meeting the Company's
ongoing operational and development needs.
During the first quarter of fiscal 1998 portions of this capital was used to
fund payments on current portions of debt and capital leases of $947,048,
interest on debt of $72,509 and related currency translations losses of $47,545.
Included in the debt reduction was $940,481 in full prepayment of the Company's
outstanding line of credit with Luzerner Kantonalbank. Most significantly,
$4,211,778 was invested in the development of the Company's oil and gas
properties. The Company drilled three Williston Basin wells in North Dakota, one
Maverick Basin well in Texas and acquired $466,440 in 3-D seismic data over
certain of the Company's North Dakota properties and $83,578 in 3-D seismic in
Texas. Additionally, expenditures of $266,375 were incurred in completing the
new Maverick County gas gathering system that became operational in late
October.
During the second quarter ended February 28, 1998, working capital was used to
fund additional capital investments in developing the Company's oil and gas
properties. Ongoing drilling and completion costs totaled $788,412 and included
one new Maverick Basin gas well as well as costs relating to prior quarter
drilling activities for three Williston Basin oil wells and one Maverick Basin
gas well. Also included in second quarter capital expenditures were $219,854 of
new 3-D seismic located over company leases in North Dakota and $84,313 in
leasehold bonus payments for various Williston Basin leases.
During the current quarter, management continued to improve the Company's debt
structure by completing the conversion of its entire long-term debt of
$4,000,000 in outstanding debentures to equity. Effective January 1, 1998, under
terms of the debentures, the Company exercised its options to convert the
debentures, and accrued interest of $221,590 into 844,318 shares of common stock
at the conversion price of $5.00 per share. In addition to the extremely
favorable conversion price for the new stock issuance and the future reduction
of $240,000 in annual interest expense, management believes the elimination of
long term debt significantly enhances the Company's ability to pursue new
sources of equity or debt based working capital.
As a result of these activities, the Company ended the second quarter of fiscal
1998 with negative working capital of $1,974,446 and a current ratio of .34 to
1. This compares to positive working capital of $3,760,648 and a current ratio
of 2.32 to 1 at August 31, 1997. Although the Company's working capital position
became negative during the current quarter due to current levels of development
activity, management is confident that new gas production from the two latest
Maverick Basin gas wells placed on production in December, 1997 and April, 1998,
in addition to the increased sales capacity from the Maverick County pipeline
expansion, will generate sufficient additional cash flows to significantly
improve the Company's liquidity.
In order to carry out management's plans to continue the development of the
Company's Williston Basin leaseholds, to continue exploration on its extensive
Texas leaseholds, as well as to meet the Company's obligations in the ordinary
course of business, it will continue to be necessary for the Company to raise
additional equity or debt capital with terms consistent with its improving
internal cash generation capabilities.
Management is actively pursuing negotiations with various domestic and foreign
parties, including banks, pension funds, institutions, public and private
companies and individuals. Management is confident it will be successful in
obtaining the required levels of favorably structured equity capital and debt to
fund ongoing normal operations and continue the development of its extensive
drilling prospects on a timely basis. If Management's efforts to raise
additional capital are not successful, the Company's financial condition and
liquidity could be materially adversely affected.
Forward-looking statements in this 10-Q are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that all forward-looking statements involve risks and uncertainty,
including without limitation, the costs of exploring and developing new oil and
natural gas reserves, the price for which such reserves can be sold,
environmental concerns effecting the drilling of oil and natural gas wells, as
well as general market conditions, competition and pricing. Please refer to
TXCO's Securities and Exchange Commission filings, copies of which are available
from the Company without charge, for additional information.
Results of Operations
The increase by over 300% in oil and gas sales for the first quarter and six
month year to date period of fiscal year 1998 over the same periods in fiscal
year 1997 is attributable to increased production from the completion of three
new Maverick Basin gas wells and ten new Williston Basin oil wells subsequent to
November, 1996. Additionally, gas sales were significantly enhanced by the
completion of the new gas gathering system addition placed in service during
the first quarter of the current year. The increase in year-to-date lease
operating expenses to $345,398 is due primarily to completion of the ten new oil
wells subsequent to November 1996, with their high, production associated, water
disposal costs. Prior period lease operating expenses reflect the much lower
operating costs typical to the production of natural gas. The increase in
exploration expenses to $1,074,648 for the current six month period reflect the
accelerated exploration activity levels initiated after the receipt of
$35,000,000 in new working capital during the second quarter of fiscal year
1997. Current period exploration expenses include $1,002,239 of dry hole costs
incurred in drilling the Dottie #1-23, in the Williston Basin while the same
period in fiscal 1997 contained no significant dry hole charges. During the
first quarter of fiscal 1998, the Company established a $50,000 per quarter
reserve provision for impairment of non-producing leaseholds due to the
significant increase in new leases purchased during the past year while no such
provision was necessary in the prior fiscal year. Depreciation, depletion and
amortization increased by $340,508 over the same six month period of the prior
fiscal year. Depletion increased consistent with the higher oil and gas sales
levels of the current period. Amortization increased by $320,000. This increase
was due to the recognition in the current period of $180,000 in previously
capitalized prepaid loan fees related to the $4,000,000 debenture conversion
effective January 1, 1998, and $140,000 of 3-D seismic costs originally
capitalized subsequent February, 1997.
Decreased interest expense for the current quarter and the six month period of
fiscal 1998 reflects more favorable terms under the Company's new long-term debt
restructured in February 1997. Interest income increased by over $44,777 for the
six month period of fiscal 1998 due to the increase in working capital
subsequent to the end of the second quarter of fiscal 1997, while interest
income has decreased by $23,812 for the current quarter reflecting current lower
cash reserve levels.
The increase in general and administrative expenses is due primarily to staff
increases subsequent to November, 1996 and February 1997, and related benefits,
as required by increased exploration activity as well as higher legal and
accounting expenses related to ongoing compliance reporting requirements. The
elimination of losses from ExproFuels activity reflects the complete write-off
of the Company's investment in ExproFuels prior to the beginning of fiscal 1998.
During the first quarter, the Company completed six miles of 6 inch pipeline
across its Maverick County, Texas, Paloma lease through its 62.5% ownership in
Paloma Pipeline, L.P. The pipeline gathers the Company's gas to Aquilla Gas
Pipeline's system. The Company had previously experienced some curtailment in
its gas production because of the inability of the existing pipelines to carry
all the Company's gas. Upon completion of the line, the Company's gross
production increased from 2,400,000 cubic feet of gas per day to 3,800,000 cubic
feet per day. With continued exploration and development the Company has
substantially increased these volumes.
During the first quarter, the Company drilled the Paloma #2-83 on its 50,000
acres lease block in Maverick County, Texas. The well was completed in the Glen
Rose formation with an absolute open flow potential of 63,000,000 cubic feet of
gas per day after completion. Initial production commenced in December, 1997 at
a rate of 2,000,000 cubic feet per day. In January, 1998 production was
increased to 3,000,000 cubic feet per day and further increased to 4,000,000
cubic feet per day prior to the end of the current quarter. The Company owns a
62.5% working interest in the well.
During the second quarter, the Company drilled the Paloma #1-66 on the Maverick
County, Texas lease block. The well was completed in the Glen Rose formation
with an absolute open flow potential of 18,000,000 cubic feet of gas per day
after completion. Initial production in April, 1998 is expected to be at a rate
of at least 2,000,000 cubic feet per day and most probably at a rate of
4,000,000 cubic feet per day based upon results of flow tests and the Company's
experience with similar wells. The Company owns a 62.5% working interest in the
well and at current prices expects its net revenue to increase between $675,000
to $1,350,000 per year.
During the first quarter, the Company participated in drilling two Williston
Basin oil wells. The first well, Continental Resources, Inc.'s Table Mountain
#1-7 was drilled horizontally in the Red River "B" in Harding County, South
Dakota. The Company owns a 43% working interest in the well which is currently
producing at a rate of 60-75 barrels of oil per day and 350 barrels of water per
day. The second well, the Marty #1-17, owned 100% by the Company, was drilled in
the Red River "B" formation in Bowman County, North Dakota. The well was drilled
horizontally 3,350 feet using 3-D seismic and is currently producing 100 barrels
of oil and 200 barrels of water per day.
Also during the first quarter, the Company drilled the Dottie #1-23 in Golden
Valley, North Dakota. The well was drilled 1,750 feet horizontally in the Red
River "B" formation and did not encounter economic quantities of oil.
Consequently, all drilling cost incurred through the end of the current quarter
were charged to dry hole cost. Subsequently, the Company has decided to
plug-back the well and further evaluate the Ratcliff interval prior to
abandonment.
Since fiscal 1997, the Company has had an interest in several wells in the
Stadium Field, a field producing from the Lodgepole formation in Stark County,
North Dakota. Efforts continue to unitize the entire field to maximize primary
production and begin secondary recovery efforts. Company management anticipates
the North Dakota Industrial Commission will issue an order providing for the
unitized management, operation and further development of the Stadium-Lodgepole
Unit prior to the end of the current fiscal year. Current estimates indicate
that approximately 1,400,000 barrels of oil remain to be recovered under primary
production and 3,700,000 additional barrels will be recovered using secondary
recovery techniques. Under Phase I of the unitization agreement, the Company
will have a 0.5793% interest in all oil produced. After the primary production
has been recovered, the Company's interest in all oil produced will increase to
0.7084%. Based upon current information, the Company estimates that
approximately 34,000 barrels will be produced to the Company's interest over the
economic life of the field.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any significant matters of litigation
incidental to its business except for the two lawsuits filed in July,
1997 between the Company's former subsidiary, ExproFuels, Inc. versus
CNG International, American Engineering, Inc., (AEI) and American
Technical Institute (ATI), one being filed in federal court in San
Antonio, Texas by ExproFuels and the other by ATI and AEI in state
court in Memphis, Tennessee. On January 22, 1998, both cases were
consolidated into one case, to be adjudicated in federal court in the
Western District of Tennessee. Both parties have reached a preliminary
agreement to enter into court-annexed non-binding mediation
proceedings. To date, no final trial dates have been set. While the
Company and its counsel remain optimistic they will ultimately prevail
in the matter, and remain confident that any unfavorable outcome is
extremely unlikely, it is difficult to predict with any certainty the
likelihood of an unfavorable outcome of such litigation as of the date
of this writing.
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 February 27, 1998, the Company held the Annual Meeting of
Shareholders at the Double Tree Hotel in San Antonio, Texas pursuant to
the notice mailed to shareholders of record on January 9, 1998. 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 Five Directors:
Nominee For Against
- ---------------------------------------- --------- -------
Stephen M. Gose ........................ 8,868,813 15,253
Thomas H. Gose ......................... 8,868,813 15,253
James E. Sigmon ........................ 8,868,813 15,253
Michael Pint ........................... 8,868,813 15,253
Robert L. Foree, Jr .................... 8,868,813 15,253
There were no changes in Directors of the Company.
2. Proposal to ratify the adoption of Akin, Doherty, Klein &
Fuege, P.C., as independent Auditors for the Company for the
fiscal year 1998.
For Against Abstain
--------- ------- -------
8,865,633 1,258 17,175
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Report on Form 10-K:
A Form 8-K was filed on January 14, 1998 in order to report the
conversion of the Company's outstanding convertible debentures in the
amount of $4,000,000, plus accrued interest of $221,590 into 844,318
shares of the Company's common stock at a conversion price of $5.00 per
share effective January 1, 1998.
The cumulative effect of the transaction was that as of January 1, 1998
the Company had issued an additional 844,318 shares of its common
stock, thereby increasing its issued and outstanding shares total to
15,613,516. The Company's unaudited net equity was increased by
$4,221,590.
<PAGE>
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/ Roberto R. Thomae
Roberto R. Thomae,
Chief Financial Officer
(Signing on behalf of the Registrant and as
chief accounting officer)
Date: April 14, 1998
<PAGE>
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 ENDED
FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH.
</LEGEND>
<CIK> 0000313395
<NAME> THE EXPLORATION COMPANY
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 302,949
<SECURITIES> 0
<RECEIVABLES> 725,074
<ALLOWANCES> 9,973
<INVENTORY> 0
<CURRENT-ASSETS> 1,030,565
<PP&E> 19,672,495
<DEPRECIATION> 904,658
<TOTAL-ASSETS> 20,452,808
<CURRENT-LIABILITIES> 3,005,011
<BONDS> 0
0
0
<COMMON> 156,135
<OTHER-SE> 17,269,017
<TOTAL-LIABILITY-AND-EQUITY> 20,452,808
<SALES> 624,353
<TOTAL-REVENUES> 665,056
<CGS> 1,261,663
<TOTAL-COSTS> 1,980,543
<OTHER-EXPENSES> (9,401)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,332
<INCOME-PRETAX> (1,330,418)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,330,418)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,330,418)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> 0
</TABLE>
