UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 0-8609
Future Petroleum Corporation
(Exact name of small business issuer as specified in charter)
Utah 87-0239185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2351 West Northwest Highway, Suite 2130
Dallas, Texas 75220
(Address of principal executive offices) (Zip Code)
(214)350-7602
(Issuer's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [x ] No [ ]
Transitional Small Businness Disclosure Format (Check One): Yes __ No X
APPLICABLE ONLY TO CORPORATE ISSUERS:
The Company had approximately 13,986,733 shares of common stock, par value
$0.01 per share, issued and outstanding as of November 14, 1998.
Transitional Small Business Disclosure Format (Check One): Yes No x
Page 1 of 13 Consecutively Numbered Pages
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by Future Petroleum Corporation (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. However, in the opinion of management, all
adjustments (which consist only of normal recurring adjustments) necessary to
present fairly the financial position and results of operations for the periods
presented have been made. These condensed consolidated financial statements
should be read in conjunction with financial statements and the notes thereto
included in the Company's Form 10-KSB filing for the year ended December 31,
1997.
-2-
FUTURE PETROLEUM CORPORATION
Consolidated Balance Sheets
(Unaudited)
September 30, 1998
ASSETS
<TABLE>
<S>
CURRENT ASSETS: <C>
Cash and interest-bearing deposits $ 425,811
Current portion of notes receivable 93,177
Trade accounts receivable:
Joint interest billings 10,016
Accrued oil and gas sales 786,024
-----------
Total Current Assets 1,315,028
PROPERTY AND EQUIPMENT:
Proved oil and gas properties, using the full cost method of
accounting 19,585,590
Other 49,660
-----------
19,635,250
Less accumulated depletion, depreciation, amortization and
impairment (942,315)
-----------
Net Property and Equipment 18,692,935
LEASE OPERATING RIGHTS:
Lease operating rights 106,000
Less accumulated amortization (17,500)
-----------
Net Operating Rights 88,500
OTHER ASSETS:
Mining properties held for sale 39,977
Other 40,140
-----------
Net other assets 80,117
-----------
TOTAL ASSETS $ 20,176,580
===========
</TABLE>
-3-
FUTURE PETROLEUM CORPORATION
Consolidated Balance Sheets
(Unaudited)
September 30, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
CURRENT LIABILITIES:
Trade accounts payable $ 833,758
Current portion of notes payable 26,486
Accrued oil and gas proceeds payable 20,508
------------
Total Current Liabilities 880,752
DEFERRED GAIN ON SALE 40,336
LONG TERM NOTES PAYABLE 12,778,033
DEFERRED TAX LIABILITY 1,200,650
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 200,000 shares authorized,
no shares issued --
Common stock, $.01 par value, 30,000,000 shares authorized,
shares issued and outstanding; 13,696,733 at September 30, 1998 and
5,678,779 at December 31, 1997 136,967
Additional paid-in capital 5,384,196
Accumulated deficit (244,354)
------------
Total Stockholders' Equity 5,276,809
------------
Total Liabilities and Stockholders' Equity $ 20,176,580
============
</TABLE>
-4-
FUTURE PETROLEUM CORPORATION
Consolidated Statement of Operations and Accumulated Deficit
(Unaudited)
<TABLE>
Three Months Ended
September 30,
<S> <C> <C>
1998 1997
--------- -----------
REVENUES:
Oil and gas sales $ 790,893 $ 60,417
Well operation fees 21,433 60,204
----------- -----------
Total Revenues 812,326 120,621
COSTS AND EXPENSES:
Lease operations and production taxes 488,305 56,500
General and administrative 70,300 32,123
Interest 124,385 1,004
Depletion, depreciation and amortization 166,443 28,926
----------- -----------
Total Expenses 849,433 118,553
OTHER INCOME:
Miscellaneous income 1,422 (313)
Interest income 921 3,967
----------- ----------
Total Other Income 2,343 3,654
----------- ----------
Income (Loss) Before Taxes (34,764) 5,722
Deferred Income Tax Benefit 12,000 --
NET INCOME (LOSS) (22,764) 5,722
----------- ----------
BEGINNING ACCUMULATED DEFICIT (221,590) (38,617)
----------- ----------
ENDING ACCUMULATED DEFICIT $ (244,354) $ (32,895)
----------- ----------
NET INCOME PER COMMON SHARE $ (0.00) $ 0.00
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 9,708,000 4,092,000
=========== ===========
</TABLE>
FUTURE PETROLEUM CORPORATION
Consolidated Statement of Operations and Accumulated Deficit
(Unaudited)
<TABLE>
Nine Months Ended
September 30,
<S> <C> <C>
1998 1997
------------ -----------
REVENUES:
Oil and gas sales $ 1,822,127 $ 175,696
Well operation fees 80,728 168,023
------------ -----------
Total Revenues 1,902,855 343,719
COSTS AND EXPENSES:
Lease operations and production taxes 1,131,754 147,278
General and administrative 290,953 126,547
Interest 406,511 4,221
Depletion, depreciation and amortization 368,756 88,040
----------- -----------
Total Expenses 2,197,974 366,086
OTHER INCOME:
Miscellaneous income 12,382 29,377
Interest income 3,639 12,533
----------- -----------
Total Other Income 16,021 41,910
----------- -----------
Income Before Taxes (279,098) 19,543
Deferred Income Tax Benefit 98,000 --
----------- ----------
NET INCOME (LOSS) (181,098) 19,543
----------- ----------
BEGINNING ACCUMULATED DEFICIT (63,256) (52,438)
----------- ----------
ENDING ACCUMULATED DEFICIT $ (244,354) $ (32,895)
----------- ----------
NET INCOME PER COMMON SHARE $ (0.03) $ 0.00
============ ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,053,000 4,092,000
============ ==========
</TABLE>
-5-
FUTURE PETROLEUM CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Nine Months Ended
September 30,
<S> <C> <C>
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (181,098) $ 19,543
Adjustments to reconcile to net cash
used in continuing operations:
Depreciation, depletion, and amortization 368,756 88,040
Decrease (increase) in receivables (518,418) (172,680)
Deferred tax benefit (98,000) --
(Decrease) increase in accounts payable
and accrued expenses 556,638 208,255
Other assets (11,471) (5,209)
------------ ------------
Net cash provided by
operations 116,407 137,949
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (7,187,420) (174,419)
Reduction of lease operating rights -- 35,464
------------- ----------
Net cash used in investing
activities (7,187,420) (138,955)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 251,086 30,000
Additions to long-term debt 8,773,594 --
Repayment of long-term debt (1,820,787) (18,470)
------------- -----------
Net cash provided by financing
activities 7,203,893 11,530
------------- -----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 132,880 10,524
CASH AND CASH EQUIVALENTS, beginning
of period $ 292,931 $ 114,150
------------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 425,811 $ 124,674
============= ===========
CASH PAID FOR INTEREST DURING, the period $ 406,511 $ 4,221
============= ===========
</TABLE>
-6-
FUTURE PETROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Acquisition of Properties
In August, 1998, the Company acquired approximately 51 gross producing
wells in South Coles field located in California for $5,800,000 and 4,700,000
shares of the Company's common stock. The transaction was accounted for under
the purchase method of accounting. Revenues and expenses of the properties are
included in the Company's Statement of Operations beginning August 1, 1998.
The following pro forma information has been prepared as if the acquisition
had been completed at the beginning of the respective periods:
Nine Months Ended September 30,
1998 1997
_______________ _______________
Revenues $ 3,997,000 $ 4,288,000
Net income (loss) $ (204,000) $ 269,000
Net income (loss) per share $ (.01) $ .02
See notes to financial statement included in the Company's 1997 Annual Report on
Form 10-KSB.
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS
Caution Respecting Forward-Looking Information
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When
used in the document, the words "anticipate," "believe," "estimate,"
"expect," and "intend" and similar expressions, as they relate to the Company
or its management, are intended to identify forward-looking statements. Such
statements reflect the current view of the Company respecting future events
and are subject to certain risks, uncertainties, and assumptions, including
the risks and uncertainties noted. Should one or more of these risk or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.
Overview
This discussion should be read in conjunction with Management's
Discussion and Analysis or Plan of Operation in the Company's annual report on
Form 10-KSB for the year ended December 31, 1997.
The Company is engaged through its subsidiaries and subsidiary
partnerships in the development of oil and natural gas properties located
onshore primarily in Texas, New Mexico, Oklahoma, California, and, through
recent acquisitions, Mississippi.
On August 14, 1998, the Company closed an acquisition by merger of oil
and gas properties from Bargo Energy Resources, Ltd. ("Bargo") for a purchase
price of $5.8 million, 4.7 million shares of the Company's common stock and a
warrant to purchase an additional 250,000 shares of common stock. The oil and
gas properties purchased were a 37.68% working interest in the South Coles
Levee Unit in Kern County, California. As of August 1, 1998, the properties
had estimated net proved reserves of 500,000 barrels of oil and 8 billion
cubic feet of natural gas, or 11 billion cubic feet equivalent. Also on that
date, certain partnerships affiliated with EnCap Investments L.C. ("EnCap")
agreed to modify and extend their outstanding loans to the Company in the
amount of approximately $7.3 million. In connection with the renewal and
amendment of the EnCap loans, the EnCap affiliates received 2.8 million shares
of Future common stock. Following the transactions, the outstanding common
stock of the Company was owned approximately one-third by the EnCap
affiliates, one-third by Bargo and one-third by management and public
shareholders.
On October 15, 1998, the Company completed the acquisition of additional
oil and gas properties in five transactions, as follows:
(1) A 100% working interest in the Cross Creek Field located
in Harris and Montgomery Counties, Texas, was acquired from Bargo Energy
Resources, Ltd., a Texas limited partnership and a principal shareholder
of the Company ("Bargo"). On the same date, Bargo had acquired such
properties from Chevron U.S.A., Inc., a Pennsylvania corporation. The
effective date of the acquisition was October 1, 1998.
-8-
(2) An interest in the Gin Unit located in Dawson
County, Texas, was acquired from NCI Properties, Ltd., a Texas limited
partnership. The effective date of the acquisition was August 1, 1998.
(3) An additional interest in the Shawnee Townsite
Unit located in Pottawatomie County, Oklahoma, was acquired from NCI
1990, Ltd., NCI Reserves, Ltd., NCI Properties, Ltd., Southwest Sulphur
& Oil, Inc., Wayne Newkumet, and Castello Enterprises, Inc. The
effective date of the acquisition was August 1, 1998.
(4) Interests in the NE Limes Field located in Live
Oak County, Texas, the Candy Field located in San Patricio County,
Texas, the Sand Hills Field located in Crane County, Texas, the Bruce
Roy Field located in Wharton County, Texas, the Bluitt Field located in
Roosevelt County, New Mexico, and the N. Yellow Creek Field located in
Wayne and Clark Counties, Mississippi, were acquired from Bargo Energy
Company, a Texas corporation and affiliate of Bargo, and TJG
Investments, Inc., a Texas corporation of which Tim J. Goff, a director
of the Company, is the president. The effective date of the acquisition
was September 1, 1998.
(5) An interest in the Buna Field located in Jasper County,
Texas, was acquired from Pledger Partners, Ltd., a Texas limited
partnership and affiliate of Bargo. The effective date of the
acquisition was September 1, 1998.
The aggregate purchase price for the assets and interests acquired was $11.1
million in cash, 280,000 shares of the Company's common stock and promissory
notes in the aggregate principal amount of $4 million payable to Bargo Energy
Company and TJG Investments, Inc. The Company financed the cash portion of the
purchase price of the properties by increasing the borrowing base under the
credit agreement with Bank of America established in August 1998 and borrowing
such funds from Bank of America. As of September 1, 1998, the properties had
aggregate estimated net proved reserves of 791,000 barrels of oil and 19.407
billion cubic feet of natural gas, or 24.153 billion cubic feet equivalent.
Liquidity and Capital Resources
In August 1998, the Company entered into a $20 million credit facility
with Bank of America ("Credit Facility"). Maximum amounts which may be
outstanding under the Credit Facility are limited by a borrowing base
currently set at $19.5 million, which will be adjusted from time to time based
on the value of the Company's oil and gas properties. Borrowings of $19.3
million were used to finance the purchase price of the properties in the
acquisitions described above and certain closing costs associated with the
acquisitions.
During the fourth quarter of 1998, the Company anticipates that it will
make capital expenditures on oil and gas properties (other than acquisitions)
of approximately $50,000. The Company does not have a specific acquisition
budget but rather examines potential future acquisitions on a case-by-case
basis. The Company continues to seek financing to fund the development of
existing properties and to acquire additional assets. The Company believes
that proceeds from the issuance of equity and debt, cash flow from operations,
sales of non-strategic properties and borrowings under the Credit Facility
will provide the required capital for funding the Company's capital budget
through 1998.
The Company's operations during the first nine months of 1998 provided cash
of $116,000 resulting from a net loss of $181,000, an increase in receivables of
$518,000 that was offset by a $555,000 increase in accounts payable and $369,000
in depreciation, depletion, and amortization. Operating activities for the
corresponding period in 1997 provided $138,000 in cash, a difference of $22,000
as compared to the current period.
-9-
Financing activities provided $7,204,000 (net of debt repayments of
$1,821,000), which was used primarily to acquire oil and gas properties. The
proceeds were primarily from borrowing under the newly established Credit
Facility. During the corresponding period in 1997, financing activities
provided the Company with $11,000 and $174,000 was used in investing activities
to acquire oil and gas properties.
During the last five years, the Company's primary source of capital
has been from the issuance of debt and restricted stock in exchange for oil
and gas properties or interests in oil and gas properties and, to a lesser
extent, cash flows from operations and the sale of non-strategic mining
properties. The Company has traditionally required cash for general and
administrative expenses, maintaining its properties, and for other items that
are required in order for the Company to continue, in addition to costs to
advance its ongoing expansion program. With the purchase of the additional
producing properties in August and October 1998, the Company expects that
operations will provide funds for the Company's general and administrative
expenses and maintaining its properties. The Company expects that its other
needs will be met with funds drawn under its Credit Facility and the sale of
additional equity securities.
As of September 30, 1998, the Company had a working capital surplus of
$434,000.
Results of Operations
The Company's results of operations are dependent upon the difference
between prices received for its oil and gas production and the costs to find
and produce such oil and gas. Oil and gas prices have been and are expected
in the future to be volatile and subject to fluctuations based on a number of
factors beyond the control of the Company.
Three Months Ended September 30, 1998 and 1997
For the third quarter period ending September 30, 1998, oil and gas
sales increased over thirteen times the level in the same period in 1997,
attributable principally to the acquisition of producing properties in
November 1997 and May and August 1998 and notwithstanding a 24% decrease
in oil prices and a 33% decrease in gas prices as compared to the same
period in 1997. Well operation income decreased $39,000 for the third
quarter of 1998, when compared to the same period in 1997, primarily
due to reduced outside ownership of the Company's properties.
The Company's production expenses for the third quarter of 1998
increased $432,000, or approximately nine times the production expenses for
the same period in 1997. This increase was due primarily to the increased
number of properties acquired in November 1997 and May and August 1998.
General and administrative expenses increased $38,000 to $70,300 for
the three-month period ended September 30, 1998, when compared to the same
period in 1997. The primary contributors were an increase in professional
fees related to the August 1998 acquisition. Depreciation, depletion, and
amortization increased for the three-month period ended June 30, 1998, by
$138,000 to $166,000 primarily as a result of increased number of properties
resulting from the acquisitions.
-10-
Interest expense increased $123,000 to $124,000, primarily due to interest
on outstanding long-term debt related to the property acquisitions.
Nine Months Ended September 30, 1998 and 1997
For the nine months ending September 30, 1998, oil and gas sales increased
937% to $1,822,000 as compared to $176,000 in the same period in 1997,
attributable to the newly acquired properties. This increase was
notwithstanding a 24% decrease in oil prices and a 33% decrease in gas prices
as compared to the same nine months in 1997. Well operator income decreased
$87,000 for the first nine months of 1998, a 52% decrease compared to the same
period in 1997, which was primarily due to reduced outside ownership of the
Company's properties.
The Company's production expenses for the first nine months of 1998
increased $984,000, or 672%, to $1,132,000. This increase was due to the
properties acquired in November 1997 and May and August 1998.
General and administrative expenses increased $164,000 to $291,000 for
the nine months ended September 30, 1998, when compared to the same period in
1997. The primary contributors were an increase in professional fees
associated with the May and August 1998 acquisitions and increased activities
of the Company. Depreciation, depletion, and amortization increased $281,000
for the nine months ended September 30, 1998, when compared to the same nine
months in 1997, primarily as a result of increased production from acquired
properties.
Interest expense increased $401,000 to $406,000, due to interest on
outstanding long-term debt related to the property acquisitions.
Accounting Treatment of Certain Capitalized Costs
The Company uses the full cost method of accounting for its oil and gas
properties. Under the full cost method of accounting, the costs of successful
and unsuccessful exploration and development wells are capitalized as property
and equipment, and the sum of net capitalized costs and estimated future
development and dismantlement costs is amortized over the production of proved
reserves using the unit of production method. The costs of unproved
properties are excluded from amortization until the properties are evaluated.
Interest on properties not subject to amortization and in the process of
development is capitalized. Proceeds from the sale of properties are
accounted for as reductions to capitalized costs, unless the sale results in a
significant change in the relationship between costs and the estimated value
of proved reserves or the underlying value of unproved properties, in which
case a gain or loss is recognized. Unamortized costs of proved properties are
subject to a ceiling test, which limits the maximum amount of such costs to
the present value (discounted at 10%) of future net cash flows, after income
taxes attributable to the Company's estimated net proved reserves.
Accordingly, reductions in the prices of oil and gas, or reductions in the
Company's proved reserves quantities, could reduce the ceiling below the
unamortized costs resulting in a charge to earnings.
As part of the Company's evaluation of its oil and gas reserves in
connection with the preparation of the Company's annual financial statements,
the Company completes an engineering evaluation of its properties based on
current engineering information, oil and gas prices, and production costs,
which may result in material changes in the total undiscounted net present
value of the Company's oil and gas reserves and may, therefore, result in an
impairment allowance as discussed above.
-11-
Inflation
The Company's activities have not been, and in the near term are not
expected to be, materially affected by inflation or changing prices in
general. However, the Company's oil exploration and production activities are
generally affected by prevailing prices for oil.
Year 2000 Issue
The Company has reviewed its current computer software and hardware
systems, and is currently working to resolve the potential problems associated
with the Year 2000 and the processing of date sensitive information by such
systems. Based on preliminary information, the Company believes that it will
be able to implement successfully the systems and programming changes
necessary to address the Year 2000 issues, and does not expect the cost of
such changes to have a material impact on the Company's financial position,
results of operations or cash flows in future periods.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not presently a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Item 701-Unregistered Sales
During the quarter ended September 30, 1998, the Company sold securities
without registration under the Securities Act of 1933 (the "Securities Act")
in the following transactions:
1. On August 14, 1998, the Company acquired certain producing oil
and gas properties from Bargo Energy Resources, Ltd., through a merger of a
subsidiary of Bargo with and into a subsidiary of the Company, pursuant to
which the Company issued 4,694,859 shares of common stock of the Company and
warrants to purchase 250,000 shares.
2. On August 14, 1998, certain creditors of the Company agreed to
modify and extend their outstanding loans to the Company. In connection with
the renewal and amendment of such loans, the Company issued such creditors an
aggregate of 2,844,859 shares of common stock of the Company.
The securities issued in the transactions described above were issued in
reliance on the exemption from the registration and prospectus delivery
requirements of the Securities Act provided in section 4(2) thereof.
-12-
Each of the persons acquiring such securities acknowledged in writing
that such person was obtaining "restricted securities" as defined in rule 144
under the Securities Act; that such shares could not be transferred without
registration or an available exemption therefrom; that such person must bear
the economic risk of the investment for an indefinite period; and that the
Company would restrict the transfer of the securities in accordance with such
representations. Such persons also agreed that any certificates representing
such shares would be stamped with a restrictive legend covering the transfer
of such shares. The certificates representing the foregoing shares bear an
appropriate restrictive legend conspicuously on their face, and stop transfer
instructions are noted on the Company's stock transfer records.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the third quarter of 1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
During the quarter ended on September 30, 1998 the Company filed the
following reports on form 8-K.
Date Event Reported Item Reported
August 14, 1998 Item 1. Changes in Control of Registrant
Item 2. Acquisitions or Dispositions of
Assets
Item 7. Financial Statements
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FUTURE PETROLEUM CORPORATION
(Registrant)
Dated: November 14, 1998 By: /s/ B. Carl Price
B. Carl Price, President,
Principal Financial and
Accounting Officer
-13-
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 425811
<SECURITIES> 0
<RECEIVABLES> 796040
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1315028
<PP&E> 19585590
<DEPRECIATION> (942315)
<TOTAL-ASSETS> 20176580
<CURRENT-LIABILITIES> 880752
<BONDS> 0
0
0
<COMMON> 137829
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20176580
<SALES> 812326
<TOTAL-REVENUES> 812326
<CGS> 849433
<TOTAL-COSTS> 849433
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2343
<INCOME-PRETAX> (34764)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22764)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
