<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1999
Commission File Number 0-14881
WASTE RECOVERY, INC.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1833498
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
309 S. PEARL EXPRESSWAY, DALLAS, TX 75201
(Address of Principal Executive Offices) (Zip Code)
(214) 741-3865
(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. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, at the latest practicable date. Common stock, no par
value 17,494,321, November 9, 1999.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WASTE RECOVERY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 221,444 $ 69,594
Accounts receivable, less allowance for doubtful accounts
of $228,705 and $135,435, respectively 1,895,750 1,889,440
Other receivables - 6,066
Inventories 131,392 16,398
Other current assets 408,516 801,592
Restricted cash and cash equivalents 676,277 43,640
------------ ------------
Total current assets 3,333,379 2,826,730
------------ ------------
Property, plant and equipment 21,440,274 23,291,611
Less accumulated depreciation (10,270,791) (11,113,546)
------------ ------------
Net property, plant and equipment 11,169,483 12,178,065
------------ ------------
Restricted cash and cash equivalents 338,877 1,454,358
Bond and debt issuance costs, less accumulated amortization of
$67,264 and $197,580, respectively 416,173 576,250
Goodwill, less accumulated amortization of $134,259 and
$98,720, respectively 813,453 848,992
Other assets 357,053 319,516
------------ ------------
$ 16,428,418 $ 18,203,911
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
WASTE RECOVERY, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
(Unaudited)
<S> <C> <C>
Current Liabilities:
Current installments of bonds payable $ 280,000 $ 260,000
Notes payable 1,747,154 1,270,800
Current installments of long-term debt 1,132,322 878,901
Current installments of capital lease obligations 12,075 24,938
Accounts payable 3,550,478 2,549,389
Other accrued liabilities 2,673,209 2,494,383
Deferred grant revenue 26,668 259,350
------------ ------------
Total current liabilities 9,421,906 7,737,761
------------ ------------
Bonds payable, noncurrent 6,135,000 6,415,000
Long-term debt, excluding current installments 2,972,089 3,777,629
Note payable 177,499 174,578
Obligations under capital leases, excluding current
installments - 8,167
Deferred grant revenue, noncurrent 160,000 160,000
------------ ------------
Total liabilities 18,866,494 18,273,135
------------ ------------
Stockholders' Equity:
Cumulative preferred stock, $1.00 par value, 250,000 shares
authorized, 203,580 issued and outstanding in 1999 and 1998
(liquidating preference $16.36 per share, aggregating
$3,330,205, and $16.01 per share, aggregating $3,259,537, in
1999 and 1998, respectively) 203,580 203,580
Preferred stock, $1.00 par value, authorized and unissued
9,750,000 shares in 1999 and 1998 - -
Common stock, no par value, authorized 30,000,000 shares,
17,494,323 shares issued and outstanding
in 1999 and 1998 407,800 407,800
Additional paid-in capital 18,604,904 18,604,904
Accumulated deficit (21,460,479) (19,091,628)
------------ ------------
(2,244,196) 124,656
Treasury stock, at cost, 1,603,760 common shares (193,880) (193,880)
------------ ------------
Total stockholders' deficit (2,438,076) (69,224)
------------ ------------
Commitments and contingencies
$ 16,428,418 $ 18,203,911
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
WASTE RECOVERY, INC.
Consolidated Statements Of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues:
Tire-derived fuel sales $ 868,346 $ 832,666
Wire sales 106,915 67,769
Disposal fees, hauling and other revenue 3,607,702 4,654,159
------------ ------------
Total revenues 4,582,963 5,554,594
Operating expenses 3,521,902 3,962,017
General and administrative expenses 972,051 1,416,560
Depreciation and amortization 592,609 572,731
------------ ------------
Operating loss (503,599) (396,714)
------------ ------------
Other income (expense):
Interest income 9,667 33,234
Interest expense (265,503) (242,915)
Other income 41,985 153,725
Gains on sales of property and equipment - 74,152
Gain on involuntary conversion of assets - 524,227
------------ ------------
(213,851) 542,423
------------ ------------
Net income (loss) (717,449) 145,709
Undeclared cumulative preferred stock dividends 35,919 35,919
------------ ------------
Net income (loss) available to common shareholders $ (753,368) $ 109,790
============ ============
Net income (loss) per common share $ (.04) $ .01
============ ============
Weighted average number of common shares
Outstanding 17,494,321 17,390,563
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
WASTE RECOVERY, INC.
Consolidated Statements Of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues:
Tire-derived fuel sales $ 2,834,934 $ 2,928,961
Wire sales 353,775 573,283
Disposal fees, hauling and other revenue 9,378,484 14,476,022
------------ ------------
Total revenues 12,567,193 17,978,266
Operating expenses 9,638,974 14,095,824
General and administrative expenses 2,990,875 4,978,854
Depreciation and amortization 1,564,002 1,900,419
------------ ------------
Operating loss (1,626,658) (2,996,831)
------------ ------------
Other income (expense):
Interest income 30,780 83,454
Interest expense (918,147) (677,085)
Other income 234,676 356,674
Gains (loss) on sales of property and equipment (89,506) 74,152
Gain (loss) on involuntary conversion of assets - 586,578
------------ ------------
(742,193) 423,773
------------ ------------
Net loss (2,368,851) (2,573,058)
Undeclared cumulative preferred stock dividends 106,587 106,587
------------ ------------
Net loss available to common shareholders $ (2,475,438) $ (2,679,645)
============ ============
Net loss per common share $ (.14) $ (.15)
Weighted average number of common shares
outstanding 17,494,321 17,390,563
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
WASTE RECOVERY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,368,851) $(2,573,058)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,485,265 1,801,409
Provision for losses on accounts receivable 93,258 202,000
Gains (loss) on sales of property, plant and equipment 89,505 (74,152)
Gain on involuntary conversion of assets - (586,578)
Amortization of goodwill 35,539 99,010
Interest imputed on discounted note payable 2,921 2,921
Amortization of bond premium (40,552)
Loss on early retirement of debt 22,562
Changes in assets and liabilities:
Accounts receivable (99,569) 304,160
Note and other receivables 6,066 3,727,363
Inventories (114,994) 165,390
Other current assets 336,202 (307,705)
Other assets (40,816) (49,924)
Debt issuance costs 113,091 (457,268)
Accounts payable 1,001,617 87,380
Accrued liabilities 175,826 816,152
Deferred grant revenue (232,682) (290,115)
Other - (4,810)
----------- -----------
Net cash provided by operating activities 481,850 2,844,185
----------- -----------
Cash flows from investing activities:
Purchases of property, plant, and equipment (1,206,049) (3,226,317)
Proceeds from sale of property, plant and equipment 750,000 122,000
Cash placed in restricted accounts (433,242) (4,256,952)
Cash payments out of restricted accounts 916,086 4,609,740
----------- -----------
Net cash provided (used) by investing activities 26,795 (2,751,529)
----------- -----------
Cash flows from financing activities:
Payment of bonds payable (260,000) (7,549,805)
Proceeds from issuance of bonds payable - 6,675,000
Proceeds from issuance of notes payable 3,183,040 1,721,703
Payment of notes payable (2,706,686) (804,644)
Proceeds from issuance of long term debt 553,452 416,941
Repayment of long-term debt (1,105,571) (427,824)
Repayment of capital lease obligations (21,030) (60,554)
----------- -----------
Net cash used by financing activities (356,795) (29,183)
----------- -----------
Net increase (decrease) in cash and cash equivalents 151,850 63,473
Cash and cash equivalents at beginning of period 69,594 -
----------- -----------
Cash and cash equivalents at end of period $ 221,444 $ 63,473
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
WASTE RECOVERY, INC.
Notes to Consolidated Financial Statements
September 30, 1999
Note 1: ADJUSTMENTS
The financial information presented has been prepared from the books
and records without audit, and does not include all disclosures required by
generally accepted accounting principles. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial information for the periods indicated, have
been included. The results of operations for the three months and nine months
ended September 30, 1999, are not necessarily indicative of operating results
for the entire year. For further information regarding the Company's accounting
policies, refer to the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1998.
Note 2: INVENTORIES
The inventories at September 30, 1999 and December 31, 1998 were
comprised entirely of manufactured fuel.
Note 3: OTHER CURRENT ASSETS
Other current assets at September 30, 1999 and December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Prepaid expenses $ 210,471 $ 460,917
Parts inventory 198,045 340,675
---------- ----------
$ 408,516 $ 801,592
========== ==========
</TABLE>
Note 4: GOODWILL
Goodwill associated with the purchase of Domino Salvage, Tire Division,
Inc. (Domino) which was being amortized on a straight line basis over 10 years,
was written off in 1998 because it was concluded that the unamortized balance of
$343,037 could not be recovered from future operations. This adjustment was
retroactively reflected for the first time in this quarter.
Note 5: LONG-TERM DEBT
On January 29, 1999 the Company made a cash payment of $1,193,153 to
the bondholder of industrial revenue bonds (the Atlanta Bonds) which were issued
in 1988 for the construction of the Company's Atlanta tire processing facility.
The Atlanta Bonds carried an interest rate of 10.5%, had a scheduled maturity
date of December 1, 2007, and were secured by restricted cash, a first lien on
the Atlanta facility, and a second lien on the Company's Portland facility. The
Atlanta Bonds were extinguished with $747,042 of proceeds from the sale of the
Portland plant and $446,111 of restricted cash which secured the Atlanta Bonds.
On the date of extinguishment, the Atlanta Bonds had an outstanding balance of
$1,140,000 and accrued interest of $18,953.
Note 6: PREFERRED STOCK DIVIDENDS
Undeclared cumulative preferred stock dividends were $1,330,324 and
$1,187,818 at September 30, 1999 and 1998, respectively. Net loss is adjusted by
the effect of undeclared dividends on preferred stock of $106,587 and $106,587
for the nine months ended September 30, 1999 and 1998, respectively, and by
$35,919 and $35,919 for the three months ended September, 1999 and 1998,
respectively. The effect was to increase net loss per common share by $.006 and
by $.006 for the nine months ended September 30, 1999 and 1998, respectively,
and
7
<PAGE>
increase net loss per common share by $.002 and $.002 for the three months
ended September 30, 1999 and 1998, respectively. Basic and diluted earnings
per share are the same in 1999 and 1998.
Note 7: SALE OF PORTLAND FACILITY
On January 29, 1999 the Company sold its Portland facility for $750,000
in cash. The Company recorded a loss of $89,505 in connection with the sale. The
proceeds were used to extinguish long-term debt relating to the Atlanta plant.
Note 8: STATEMENTS OF CASHFLOWS
The Company paid $1,144,464 and $677,811 for interest for the nine
months ended September 30, 1999 and 1998, respectively. No income taxes were
paid during the nine months ended September 30, 1999 and 1998.
Note 9: LITIGATION
The registrant has no material pending legal proceedings.
Other notes have been omitted pursuant to Rule 10-01(a)(5) of Regulation S-X.
[End of Page]
8
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q under "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations", constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of Waste
Recovery, Inc. (the "Company" or "Registrant") to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; competition; success of operating
initiatives; development and operating costs; adverse publicity; changes in
business strategy or development plans; quality of management; availability,
terms and deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs; changes
in, or failure to comply with, government regulations; and other factors
referenced in this Form 10-Q.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company owns and operates plants in or geographically near Houston, Texas;
Atlanta, Georgia; Philadelphia, Pennsylvania; St. Louis, Missouri; and Chicago,
Illinois.
Regional services are coordinated from the operating bases mentioned above.
Operations encompass full-service scrap tire disposal and the recycling of tires
into various end products, which include: a supplemental fuel product known as
tire-derived fuel ("TDF"), bead wire removed from the tires which is sold as
scrap steel, and a processed rubber product for various other uses. The Company
generates revenues from scrap tire disposal fees, from hauling of scrap tires,
and from the sale of used tires collected from its tire flow and the products
described above.
On July 8, 1999 the Company issued $1 million in senior secured convertible
notes out of a total expected issue of $1.5 million. The convertible debt is an
obligation of Waste Recovery-Illinois, the partnership that owns the Company's
two Illinois facilities. The term of the debt is for five years with interest at
8% payable quarterly beginning September 30, 1999, and provides for a conversion
into 49% of the common shares of the Company. The Company expects to issue the
remaining $500,000 of convertible debt by year end. The proceeds from the sale
of this debt will be used for working capital purposes.
On January 29, 1999 the Company sold it's Portland, Oregon facility for $750,000
in cash, the proceeds from which were used to retire long-term indebtedness. The
plant was sold because of its marginal profitability and to facilitate
management's plans to restructure the Company's debt and generate additional
cash flow. The Company reported a loss of $89,505 in the first quarter of 1999
in connection with the sale of this facility.
On November 10, 1998 the Company entered into a loan agreement with a third
party lender that provided for a $250,000 term loan and a line of credit in the
maximum amount of $2,500,000, which was secured by some of the Company's
accounts receivable, and a portion of the Company's property, plant and
equipment. These credit facilities were expanded in the first quarter of 1999,
increasing the term portion to $600,000, and expanding the revolving credit to
include the operations of the Company's Illinois facilities. Both the original
loan and the subsequent increase were obtained to provide additional working
capital and repay term debt.
To date, the effects of inflation on the Company's operations have been
negligible.
GENERAL COMMENTS
The Company suffered a net loss of $717,449 on revenues of $4,582,963 in the
third quarter of 1999 compared to net income of $145,709 on revenues of
$5,554,594 during the same period in 1998. Revenue declined as a result of the
sale of the U.S. Tire and Portland facilities.
9
<PAGE>
The Dupo facility, which was substantially destroyed by fire in June of 1998,
resumed operations in the first quarter of 1999. By the end of the first quarter
and throughout the second and third quarters of 1999, tire flow, TDF production
and TDF sales had regained levels reached immediately prior to the fire.
As of February 1, 1999, the Marseilles plant resumed operation of its TDF
processing system. Tire shreds stored at the site prior to the March 21, 1998
fire are being converted into TDF and sold. The shredding system became fully
operational in May 1999.
During the first, second and third quarters of 1999, revenue and profitability
increased at the Houston facility versus the comparable periods in 1998. These
events took place despite mechanical problems that had the effect of reducing
the facility's production during the period. The increased operating levels are
attributable to sales of used tires and stronger TDF markets.
During the first quarter of 1999, operations at the Company's Philadelphia
facility continue to be hampered by equipment problems. In December 1998 a wire
recycling system, funded primarily with grant money from the state of
Pennsylvania, was put into operation. At the end of the quarter preparations
were underway to install a new shredding system. The combination of these two
mechanical changes allowed for a more efficient operating environment starting
in the second quarter of 1999. TDF sales through the third quarter were
significantly higher than the prior year, which is attributable to one new
customer which was brought on line in June of 1998.
The Atlanta facility operated at levels in the first quarter of 1999 similar to
those of the same period in 1998. In the second quarter of 1999 operations were
considerably lower compared to the same period in 1998 due to the fact that the
facility was shut down for the better part of April to effect the replacement of
the primary shredder. In the third quarter, the facility again operated at
levels comparable to the prior year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED
WITH THREE MONTHS ENDED SEPTEMBER 30, 1998
Total revenues of $4,582,963 for the third quarter of 1999 were 17% lower than
the $5,554,594 generated for the same period in 1998. The decrease is primarily
due to the sale of the Company's North Carolina facility, U.S. Tire Recycling
Partners, L.P. (U.S. Tire) in October 1998, and the sale of the Portland plant
on January 29, 1999. This was partially offset by TDF and wire sales being
slightly higher in the quarter ended September 30, 1999 compared to the same
period last year, mainly at the Houston and Illinois plants. Disposal, hauling
and other fees was down 23% to $3,607,702 for the three months ended September
30, 1999 compared to $4,654,159 for the same period in 1998. As noted
previously, the decrease is primarily due to the sale of the U.S. Tire and
Portland facilities.
Operating expenses for the third quarter of 1999 were $3,521,902 or 77% of
revenue, down from $3,962,017 or 71% of revenue for the third quarter of 1998.
The decrease in operating expense is primarily due to the sale of the U.S. Tire
and Portland facilities as noted previously. The increase in operating costs as
a percentage of revenues is attributable to operations at the facilities, in
addition to the effect of eliminating the Portland plant which suffered from
poor operating margins.
General and administrative expenses of $972,051 for the third quarter of 1999
were significantly reduced from the $1,416,560 for the same period in 1998. As a
percentage of revenues, general and administrative expenses were lower at 21%
for the three months ended June 30, 1999 compared to 26% for the same period in
1998. The decrease is primarily due to the sale of the U.S. Tire and Portland
facilities.
Depreciation and amortization expense increased 3% to $592,609 in the third
quarter of 1999 from $572,731 for the same period in 1998. The increase is due
to additions to fixed assets at Houston and Atlanta, and the resumption of
depreciation following the rebuilding of the Illinois plants. This increase was
partially offset by the sale of the U.S. Tire and Portland facilities.
10
<PAGE>
Interest expense increased 9% to $265,503 in the third quarter of 1999 compared
to $242,915 in the comparable period in 1998. The increase is primarily
attributable to the new term financing and credit facility previously discussed
that was obtained by the Company in November 1998 and amended in February 1999.
This new debt carries a higher interest cost which contributed to the increase
in interest expense in the third quarter of 1999 compared to the same period in
1998. This increase was partially offset by the extinguishment of debt related
to the Atlanta plant on February 1, 1999.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED
WITH NINE MONTHS ENDED SEPTEMBER 30, 1998
Total revenues of $12,567,193 for the nine months ended September 30, 1999 were
30% lower than the $17,978,266 earned for the same period in 1998. All revenue
categories were lower in the nine months ended September 30, 1999 compared to
the same period in 1998 primarily as a result of the sale of the U.S. Tire and
Portland plants. TDF sales were down 4% in the nine months ended September 30,
1999 compared to the same period in 1998, resulting from the sale of the
Portland and U.S. Tire facilities partially offset by healthy increases in TDF
sales for the Houston and Philadelphia plants. In addition, wire sales were
lower in the nine months ended September 30, 1999 compared to the same period in
1998 due to weaker demand for scrap steel.
Operating expenses for the nine months ended September 30, 1999 were $9,638,974
or 76% of total revenues compared to $14,095,824 or 78% of total revenues for
1998. Operating costs decreased as noted previously primarily as a result of the
sale of the U.S. Tire and Portland facilities. General and administrative
expenses of $2,990,875 for the nine months ended September 30, 1999 were 40%
lower compared to $4,978,854 for the same period in 1998, which is also
attributable to the sale of the U.S. Tire and Portland plants. Depreciation and
amortization expense decreased 18% to $1,564,002 for the nine months ended
September 30, 1999 compared to $1,900,419 for the same period in 1998. The
decrease in depreciation is primarily the result of the sale of the U.S. Tire
and Portland facilities as noted previously.
Interest expense increased 35% to $918,147 in the nine months ended September
30, 1999 compared to $677,085 for the same period in 1998. As noted previously,
the increase is primarily due to financing that was obtained by the Company in
November 1998 and amended in February 1999; and the write-off of unamortized
bond issuance costs and a 3% prepayment penalty on extinguishment of the
Atlanta Bonds.
FINANCIAL CONDITION AS OF SEPTEMBER 30, 1999
The Company's working capital balance at September 30, 1999 was a deficit of
$6,088,527. Current assets increased from $2,826,730 at December 31, 1998 to
$3,333,379 at September 30, 1999. This increase is attributable to increasing
current restricted cash in anticipation of bond payments in February of 2000 and
increased manufactured fuel inventory. Current liabilities increased to
$9,421,906 at September 30, 1999 from $7,737,761 at December 31, 1998. This
increase is attributable to increases in notes payable, current installments of
long term debt, and accounts payable.
The Company received $1 million through the issuance of secured convertible
notes on July 8, 1999. While the funds obtained have allowed for the continued
operation of the Company, the Company believes that it will need the proceeds
from additional equity and long term debt to meet the levels of liquidity that
are necessary for future operations.
11
<PAGE>
PART II
OTHER INFORMATION
Form 10-Q
Part II
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
None
Item 27. FINANCIAL DATA SCHEDULE
[End of Page]
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WASTE RECOVERY, INC.
DATE: November 15, 1999 /s/ THOMAS L. EARNSHAW
----------------------------------
By: Thomas L. Earnshaw
President
(Principal Executive Officer)
/s/ WILLIAM R. HOWE
----------------------------------
William R. Howe
Vice President
(Principal Financial Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 221,444
<SECURITIES> 0
<RECEIVABLES> 1,895,750
<ALLOWANCES> (228,705)
<INVENTORY> 131,392
<CURRENT-ASSETS> 3,333,379
<PP&E> 21,440,274
<DEPRECIATION> (10,270,791)
<TOTAL-ASSETS> 16,428,418
<CURRENT-LIABILITIES> 9,421,906
<BONDS> 6,135,000
0
203,580
<COMMON> 407,800
<OTHER-SE> 18,604,904
<TOTAL-LIABILITY-AND-EQUITY> 16,428,418
<SALES> 0
<TOTAL-REVENUES> 4,582,963
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (265,503)
<INCOME-PRETAX> (717,449)
<INCOME-TAX> 0
<INCOME-CONTINUING> (717,449)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (717,449)
<EPS-BASIC> (.04)
<EPS-DILUTED> 0
</TABLE>
