<PAGE>
Securities and Exchange Commission
Washington, DC 20549
__________________________________
FORM 10-Q
Quarterly Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
Commission File Number 0-10077
EVERGREEN RESOURCES, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO 84-0834147
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation of Organization) Number)
1000 WRITER SQUARE
1512 LARIMER STREET
DENVER, COLORADO 80202
(Address of Principal Executive (Zip Code)
Offices)
(303) 534-0400
(Registrant's Telephone Number,
Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
--- ---
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest date.
CLASS OUTSTANDING AT NOVEMBER 14, 1995
Common Stock, No Par Value 5,674,141
<PAGE>
EVERGREEN RESOURCES, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets as of September 30, 1995
and March 31, 1995 ........................................ 3
Consolidated Statements of Operations for the Six and Three
Months Ended September 30, 1995 and September 30, 1994 .... 4 - 5
Consolidated Statements of Cash Flows for the Six Months
Ended September 30, 1995 and September 30, 1994 ........... 6
Notes to Consolidated Financial Statements .................. 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 8 - 11
PART II. OTHER INFORMATION .......................................... 12
</TABLE>
2
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS Sept. 30, 1995 March 31 1995
-------------- -------------
<S> <C> <C>
CURRENT:
Cash and cash equivalents $ 4,068,631 $ 2,038,157
Accounts receivable:
Oil and gas sales, net of allowance 193,857 297,602
Joint interest billings and other 1,088,751 945,557
Other current assets 217,512 76,341
------------ ------------
TOTAL CURRENT ASSETS 5,568,751 3,357,657
------------ ------------
PROPERTY AND EQUIPMENT:
Proved oil and gas properties, based on full-cost accounting 34,310,095 33,442,534
Unevaluated properties not subject to amortization 8,414,345 8,136,519
Gas gathering equipment 3,773,416 3,417,086
Support equipment 693,903 676,051
Less accumulated depreciation, depletion and amortization (11,423,779) (11,140,276)
------------ ------------
NET PROPERTY AND EQUIPMENT 35,767,980 34,531,914
------------ ------------
RESTRICTED CASH 663,623 593,024
OTHER ASSETS 614,791 657,573
------------ ------------
$ 42,615,145 $ 39,140,168
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 623,064 $ 843,852
Accrued expenses and other 231,962 89,646
Royalties and production taxes payable 537,235 567,656
------------ ------------
TOTAL CURRENT LIABILITIES 1,392,261 1,501,154
PRODUCTION TAX ESCROW 663,623 593,024
LONG TERM LIABILITIES 1,370,224 1,094,128
------------ ------------
TOTAL LIABILITIES 3,426,108 3,188,306
------------ ------------
REDEEMABLE PREFERRED STOCK 7,500,000 3,750,000
------------ ------------
COMMON STOCKHOLDERS' EQUITY:
Common stock, shares issued and outstanding,
5,674,141 and 5,672,159 56,741 56,721
Additional paid-in capital 41,389,845 41,419,179
Accumulated deficit (9,587,535) (9,266,898)
Foreign currency translation adjustment (170,014) (7,140)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 31,689,037 32,201,862
------------ ------------
$ 42,615,145 $ 39,140,168
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
REVENUE:
Oil and gas production $ 524,511 $1,192,243
Oil and gas services 370,453 405,281
Interest and dividend income 66,869 55,486
Other income 535,426 54,819
---------- ----------
TOTAL REVENUES 1,497,259 1,707,829
---------- ----------
COSTS AND EXPENSES:
Cost of production and operations 506,162 655,748
Cost of oil and gas services 375,926 433,381
Depreciation, depletion and amortization 322,202 342,807
General and administrative expenses 398,449 478,762
Interest expense 18,958 5,404
Other expense (7,979) 128,216
---------- ----------
TOTAL COSTS AND EXPENSES 1,613,718 2,044,318
---------- ----------
NET LOSS (116,459) (336,489)
PREFERRED STOCK DIVIDENDS 204,620 --
---------- ----------
NET LOSS ATTRIBUTABLE TO COMMON STOCK $ (321,079) $ (336,489)
========== ==========
NET LOSS PER SHARE OF COMMON STOCK $ (0.06) $ (0.06)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,674,141 5,255,796
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
-------------------------------
1995 1994
------------ -------------
<S> <C> <C>
REVENUE:
Oil and gas production $ 240,772 $ 624,476
Oil and gas services 184,563 199,625
Interest income 43,679 13,040
Other income 520,216 25,752
---------- ----------
TOTAL REVENUES 989,230 862,893
---------- ----------
COSTS AND EXPENSES:
Cost of production and operations 217,220 357,137
Cost of oil and gas services 163,285 252,834
Depreciation, depletion and amortization 155,052 166,283
General and administrative expenses 196,189 219,694
Interest expense 9,744 5,404
Other expense (270) 64,403
---------- ----------
TOTAL COSTS AND EXPENSES 741,220 1,065,755
---------- ----------
NET INCOME (LOSS) $ 248,010 $ (202,862)
PREFERRED STOCK DIVIDENDS 129,620 --
---------- ----------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $ 118,390 $ (202,862)
========== ==========
NET INCOME (LOSS) PER SHARE OF COMMON STOCK $ 0.02 $ (0.04)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,674,141 5,426,151
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
EVERGREEN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (116,459) $ (336,489)
Adjustments to reconcile loss to
cash (used) provided by operating activities:
Depreciation, depletion and amortization 322,202 342,889
Loss on sale of marketable securities -- 113,074
Gain on sale of subsidiary and other (525,287) 12,732
Changes in operating assets and liabilities:
Increase in accounts receivable (40,520) (145,558)
Increase in current assets (141,342) --
Increase (decrease) in accounts payable (219,215) 372,766
Increase (decrease) in accrued expenses 144,379 (84,004)
----------- -----------
NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES (576,242) 286,864
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities -- 2,014,708
Exploration and development and gas gathering costs (1,512,864) (1,999,651)
Proceeds from the sale of subsidiary 580,000 0
Proceeds from sale of oil and gas assets 122,180 22,658
Restricted cash (70,599) (5,373)
Change in production tax escrow 70,599 5,373
Increase in other assets (42,130) (83,076)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (852,814) (45,361)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of preferred stock 3,750,000 --
Proceeds from sale of common stock -- 77,946
Preferred stock offering costs (29,334) --
Debt issue costs (23,546) --
Principal payments on capital lease obligations (23,319) --
Payment of preferred stock dividends (204,620) --
Net proceeds of long-term debt -- 500,000
Increase in cash held from operating oil
and gas properties (30,421) 39,579
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,438,760 617,525
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 20,770 70,695
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,030,474 929,723
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD 2,038,157 930,273
----------- -----------
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD $ 4,068,631 $ 1,859,996
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
EVERGREEN RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1995
1. In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the
Company's financial position as of September 30, 1995 and the results of
its operations and changes in financial position for the three months and
six months then ended. All such adjustments are of a normal recurring
nature.
2. Certain information at March 31, 1995 has been condensed from the
audited financial statements included in the Company's most recent filing
on Form 10-K.
3. The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Evergreen Operating Corporation
("EOC") and Evergreen Resources (UK) Limited ("ERUK"). Primero Gas
Gathering, Co. (Primero), a 50% owned subsidiary, is recorded on a pro-rata
consolidation basis. All significant intercompany balances and
transactions have been eliminated.
4. The Company follows the full-cost method of accounting for oil and gas
properties. Under this method, all productive and nonproductive costs
incurred in connection with the exploration for and development of oil and
gas reserves are capitalized. Such capitalized costs include lease
acquisition, geological and geophysical work, delay rentals, drilling,
completing and equipping oil and gas wells and other related costs. Normal
dispositions of oil and gas properties are accounted for as adjustments of
capitalized costs, with no gain or loss recognized.
5. Depreciation and depletion of proved oil and gas properties is
computed on the units-of-production method based upon estimates of proved
reserves with oil and gas being converted to a common unit of measure based
on the relative energy content. Unproved oil and gas properties, including
any related capitalized interest expense, are not amortized, but are
assessed for impairment either individually or on an aggregated basis.
6. Restricted cash and production and ad valorem tax payable represent
amounts withheld from revenue for subsequent distribution to county
taxation authorities.
7. The functional currency for the Company's foreign operations is the
applicable local currency. The translation of the applicable foreign
currency into U.S. dollars is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue
and expense accounts using a weighted average exchange rate during the
period. The gains or losses resulting from such translation are included
in stockholders' equity.
7
<PAGE>
EVERGREEN RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
PREFERRED STOCK
On December 8, 1994, the Company received $3.75 million through the private
placement, with Institutional Investors, of 3,750,000 shares of ten year term
8% Convertible Preferred Stock, $1.00 par value ("the Preferred"). The
Company received an additional $3.75 million on July 26, 1995 by issuing an
additional 3,750,000 shares. All proceeds are to be used for development of
the Company's oil and gas leases in the Raton Basin of Colorado.
The Preferred is convertible into Common Stock at a conversion price of $8.34
per share. Annual cash dividends of 8% are payable quarterly. Evergreen may
call the Preferred at any time in whole or in part prior to the mandatory
redemption (minimum call being 20% of original issue), at par value, plus
accrued dividends. Evergreen has issued warrants which will be triggered and
will become exerciseable for 10 years at $8.34 per share if Evergreen
exercises all or part of its call option.
Evergreen can require the conversion of all of the Preferred Stock into
Common Stock provided the Common Stock has traded at not less than $16 per
share for 30 consecutive days.
A mandatory Sinking Fund of $1,250,000 is due annually commencing at the end
of year 5. All outstanding shares of Preferred Stock must be redeemed by
Evergreen in ten years at par value, plus accrued dividends.
The Preferred carries antidilution provisions, registration rights and, under
certain circumstances, voting rights.
RATON BASIN
Evergreen has acquired oil and gas leases covering over 120,000 gross acres
in the Raton Basin, Las Animas County in Southeastern Colorado. Over 500
drilling locations are available on the Company's acreage.
In August 1993 Evergreen formed a joint venture with PBI Fuels LP ("PBI").
PBI will participate with a 25 - 50% working interest in development of the
Project. Evergreen has retained the remaining 50 - 75% working interest and
serves as Operator.
Since early 1994 Evergreen has drilled and completed seventeen coalbed
methane gas wells in the Vermejo coals at depths of 1,000 to 2,100 feet.
Evergreen has a 50% interest in these wells, sixteen of which are in
production - one to be placed in production when gathering facilities are
available.
In January 1995, Evergreen and PBI completed a $4 million gathering system
designed to accommodate production from approximately 70 wells. Evergreen
owns 50% of the system and is the Operator. The system is tied in to a 24
mile pipeline which was completed in December 1994.
Evergreen's first gas sales began in January, 1995. Combined gross production
from the first sixteen wells is presently approximatel. 2.7 million cubic
feet per day.
8
<PAGE>
In March 1995, the Bureau of Land Management designated approximately 67,000
acres of Evergreen's Raton Basin oil and gas leases as a Federal Unit called
the Spanish Peaks Unit. Evergreen has been named Unit Operator. Formation of
the Unit allows Evergreen to base development decisions within the Unit on
technical, geologic and geophysical data rather than the fulfillment of term
lease obligations.
Evergreen's Unit obligation is to establish commercial production through the
drilling of three new unit wells and the re-completion of an existing well,
with the work program to be conducted during the next 2 years.
In early October 1995 drilling commenced on eight new wells. Five wells have
been drilled to the Vermejo coal intervals at depths ranging from 1,420 to
1,660 feet. Evergreen has a 75% working interest in four of these wells and
50% in the fifth well.
Evergreen has a 50% working interest in three additional wells to the Raton
coal intervals at depths of approximately 700 feet.
All of these wells are located within the Spanish Peaks Unit in close
proximity to Evergreen's producing wells and present gas gathering
facilities. The new wells are expected to be completed and placed into
production by year end.
Evergreen plans continual development of the Raton Basin acreage, including
new drilling and expansion of gathering and compression systems.
UNITED KINGDOM - GAS MARKETING
On August 30, 1995, Evergreen's 25% interest in ANGI Limited, a UK gas
marketing company, was sold to an unaffiliated entity for $580,000.
Evergreen did not choose to participate in the planned expansion of ANGI
Limited, which would have required a substantial financial commitment for a
company of Evergreen's size.
Evergreen recorded a gain of $525,000 on this sale in the current quarter.
UNITED KINGDOM - LICENSES
Under a new onshore licensing regime, to be implemented in the next few
months by the UK Department of Trade and Industry, Evergreen will convert its
existing onshore Exploration Licenses to new onshore licenses, called
Petroleum Exploration and Development Licenses.
These new licenses provide a 30 year term with a future relinquishment of up
to 50% of the acreage subject to development plans.
Evergreen will continue to control the largest onshore acreage position in
the UK, in excess of 600,000 acres, covering substantially all of six
distinct onshore UK basins.
Work commitments on the licenses have been fulfilled as a result of
Evergreen's prior UK activity through 1997 with extensions which are
currently being negotiated.
There are no royalties or burdens encumbering the licenses.
Evergreen is continuing to hold discussions with various funding sources,
including potential industry partners, for the purpose of resuming evaluation
and development of the licenses.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Evergreen currently has a $7.5 million revolving line of credit with Hibernia
National Bank of New Orleans with interest at the Bank's prime rate. Advances
pursuant to this line of credit are limited to the borrowing base, presently
$5.3 million. There are no restrictions associated with advances under the
line. An annual fee of one half of one percent is paid quarterly for any
unused portion of the credit line. The borrowing base is redetermined
semi-annually by the bank based upon reserve evaluations of the Company's oil
and gas properties.
Cash and funds available from the line-of-credit will be more than sufficient
to meet the Company's capital requirements for the remainder of the current
fiscal year, estimated to be $2 million.
Leases expiring in 1995 and 1996 are not material and do not require
significant drilling expenditures. The Company's properties outside of the
Raton Basin are held by production, and thus there is no requirement to drill
and expend capital.
Cash flows used by operating activities were approximately $576,000 for the
six months ended September 30, 1995, primarily due to the gain on sale of
ANGI, Ltd. of $525,000, net loss for the six months of $116,000, and a net
decrease in operating assets and liabilities of $257,000. These amounts were
offset by depreciation, depletion and amortization of $322,000.
Cash flows used by investing activities were $853,000 for the six months
ended September 30, 1995, and consisted of $1,513,000 in exploration and
development costs and gathering system costs. The exploration, development
and gas gathering costs were partially offset by proceeds from the sale of
ANGI, Ltd. of $580,000.
Cash flows provided by financing activities were $3,400,000 during the six
months ended September 30, 1995, due to the preferred stock issuance of
$3,750,000 partially offset by preferred stock dividends of $205,000.
Under the terms of certain gas gathering and tie-in agreements, EOC is
committed to meeting certain minimum volume levels during the term of the
agreements. Through September 30, 1995, volume levels have been below the
required minimums and EOC has accrued approximately $1,156,000 for this
shortfall, which is included with long-term liabilities. Such amount is
refundable if future volumes exceed the minimums and EOC is currently having
discussions with the owner of the system concerning obtaining additional
volumes or other possible alternatives.
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1995
The Company reported a net loss of $321,100 (after preferred stock dividends
of $204,600) or $.06 per common share for the six months ended September 30,
1995, compared to net loss of $336,500 or $.06 per share for the same period
in 1994.
For the three months ended September 30, 1995, the Company reported net
income of $118,400 (after preferred stock dividends of $129,600) or $.02 per
common share compared to a net loss of $202,900 or $.04 per share for the
same period in 1994.
Sharply lower gas prices and the disposition of the majority of Evergreen's
oil production more than offset a gain recorded on an asset sale in the
current quarter.
Oil and gas revenues were $524,500 during the six months ended September 30,
1995 compared to $1,192,200 for the six months ended September 30, 1994.
10
<PAGE>
During the three months ended September 30, 1995, oil and gas revenues were
$240,800 versus $624,500 in the prior year.
Gas revenues during the first six months of the current year were $385,000
lower than the prior year. Approximately $295,000 of the lower revenue level
was due to sharply lower gas prices and the remainder was due to property
dispositions.
Oil revenues during the first six months of the current year were $283,000
lower than prior year levels due to property dispositions.
<TABLE>
<CAPTION>
6 MONTHS 3 MONTHS
--------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
GAS
Revenues ($000) $455,954 $840,117 $210,538 $455,665
Production (Mcf) 414,494 465,011 206,829 267,667
Avg. Price per Mcf $1.10 $1.81 $1.02 $1.70
OIL
Revenues ($000) $68,557 $352,126 $ 30,234 $168,811
Production (Barrels) 4,463 21,774 2,506 10,373
Avg. Price per barrel $15.36 $16.17 $12.06 $16.27
</TABLE>
Oil and gas production costs and taxes for the six months ended September 30,
1995, were $506,000 compared to $655,700 for the six months ended September
30, 1994, a decrease of $149,700 or 22%. The decrease was primarily due to
property sales in fiscal 1995. The decrease in oil and gas production costs
were partially offset by higher operating costs associated with new wells in
the Raton Basin.
Oil and gas service revenues and cost of oil and gas services are
attributable to the Company's wholly owned subsidiary Evergreen Operating
Corporation (EOC), which is primarily responsible for drilling, evaluation
and production activities associated with various properties and for
negotiating the sales of oil and gas production from the properties. As of
November 14, 1995, EOC was serving as Operator for approximately 150
producing wells owned by the Company and also by other unaffiliated third
parties.
During the six months ended September 30, 1995, oil and gas service revenues
were $370,500, versus $405,300 for the six months ended September 30, 1994, a
decrease of 9%. The decrease is primarily due to the reduction of special
services provided and billed to outside parties. Costs of oil and gas
services during the six months ended September 30, 1995 were $375,000 vs.
$433,400 for the prior year, a decrease of $57,500 or 13% due to reduced
personnel and related salaries.
General and administrative expenses for the six months ended September 30,
1995 were $398,500 versus $478,700 for the six months ended September 30,
1994, a 17% overhead reduction.
The Company reported $534,400 of other income during the six months ended
September 30, 1995, $525,000 of which resulted from the sale of Evergreen's
interest in ANGI Limited.
Depreciation, depletion and amortization expenses for the six months ended
September 30, 1995 decreased 6. from the prior year.
11
<PAGE>
Interest and dividend income for the six months ended September 30, 1995 was
$66,900 as compared to $55,500 in 1994.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not engaged in any material pending legal proceedings to which
the Company or its subsidiary is a party or to which any of its property is
subject.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
On July 26, 1995, a report on Form 8-K was filed describing the Preferred
Stock issuance.
12
<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.
EVERGREEN RESOURCES, INC.
(Registrant)
DATE: November 14, 1995 By: /s/ James S. Williams
-------------------------------
James S. Williams
Chairman of the Board
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,068,631
<SECURITIES> 0
<RECEIVABLES> 1,282,608
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,568,751
<PP&E> 47,191,759
<DEPRECIATION> (11,423,779)
<TOTAL-ASSETS> 42,615,145
<CURRENT-LIABILITIES> 1,392,261
<BONDS> 0
<COMMON> 56,741
7,500,000
0
<OTHER-SE> 31,632,296
<TOTAL-LIABILITY-AND-EQUITY> 42,615,145
<SALES> 894,964
<TOTAL-REVENUES> 1,497,259
<CGS> 882,088
<TOTAL-COSTS> 1,602,739
<OTHER-EXPENSES> (7,979)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,958
<INCOME-PRETAX> (116,459)
<INCOME-TAX> 0
<INCOME-CONTINUING> (116,459)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,459)
<EPS-PRIMARY> (.06)<F1>
<EPS-DILUTED> 0
<FN>
<F1>Per Common Share after cash dividends paid on Preferred Stock.
</FN>
</TABLE>
