<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to ______. Commission file number
0-6540.
OCEANIC EXPLORATION COMPANY
(Exact name of small business issuer as specified in its charter)
DELAWARE 84-0591071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 South Quebec Street, Suite 450, Denver, CO 80237
(Address of principal executive offices)
(303) 220-8330
(Issuer's Telephone number)
----------------------------------------------------
(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 Exchange Act 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
----- -----
Shares outstanding at Common $.0625 Par Value
January 31, 1999
9,916,154
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
December 31, 1998 March 31, 1998
----------------- ---------------
<S> <C> <C>
Cash $ 29,718 38,601
Receivables:
Affiliates 10,038 5,753
Other 1,680 3,006
------------ -----------
11,718 8,759
Prepaid expenses 2,122 1,482
------------ -----------
Total current assets 43,558 48,842
------------ -----------
Oil and gas property interests, full-cost
method of accounting (note 2) 39,000,000 39,000,000
Less accumulated amortization, depreciation
and valuation allowance (38,952,500) (38,810,000)
------------ -----------
47,500 190,000
Other assets 2,080 2,560
------------ -----------
$ 93,138 241,402
------------ -----------
------------ -----------
</TABLE>
(Continued)
2
<PAGE>
OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
December 31, 1998 March 31, 1998
----------------- ---------------
<S> <C> <C>
Current liabilities:
Note payable to shareholder (note 3) $ 982,636 842,636
Accounts payable 159,525 210,338
Accounts payable to affiliate 60,000 60,000
United Kingdom taxes payable, including
accrued interest 499,512 486,959
Accrued expenses 173,130 67,353
----------- -----------
Total current liabilities 1,874,803 1,667,286
Deferred income taxes (note 4) 45,735 102,735
----------- -----------
Total liabilities 1,920,538 1,770,021
----------- -----------
Stockholders' deficit:
Preferred stock, $10 par value. Authorized
600,000 shares; none issued -- --
Common stock, $.0625 par value. Authorized
12,000,000 shares; 9,916,154 shares
issued and outstanding 619,759 619,759
Capital in excess of par value 155,696 155,696
Accumulated deficit (2,602,855) (2,304,074)
----------- -----------
Total stockholders' deficit (1,827,400) (1,528,619)
----------- -----------
Contingencies (note 2)
$ 93,138 241,402
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31,
1998 1997 1998 1997
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales - Greece (note 2) $ 127,152 429,003 3,149 24,343
Other 358,105 241,204 130,650 78,227
--------- -------- -------- --------
485,257 670,207 133,799 102,570
--------- -------- -------- --------
Costs and expenses:
Interest and financing costs 75,101 68,019 25,858 22,215
Exploration expenses 5,443 28,937 1,091 5,651
Amortization and depreciation 142,500 193,400 47,500 64,500
General and administrative 567,133 455,802 178,990 156,347
--------- -------- -------- --------
790,177 746,158 253,439 248,713
--------- -------- -------- --------
Loss before income taxes (304,920) (75,951) (119,640) (146,143)
Income tax benefit (expense) (note 4) 6,139 (89,573) 17,741 17,648
--------- -------- -------- --------
Net loss $(298,781) (165,524) (101,899) (128,495)
--------- -------- -------- --------
--------- -------- -------- --------
Loss per common share $ (.03) (.02) ( .01) (.01)
--------- -------- -------- --------
--------- -------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
1998 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(298,781) (165,524)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization and depreciation 142,500 193,400
Deferred income tax benefit (57,000) (82,028)
Increase in accounts receivable and due from affiliates (2,959) (2,349)
Increase in prepaid expenses and other assets (160) (3,274)
Increase (decrease) in accounts payable and accounts
payable to affiliate (50,813) 15,251
Increase in United Kingdom taxes payable, including
accrued interest payable, and accrued expenses 118,330 33,420
--------- --------
Net cash used in operating activities (148,883) (11,104)
Cash flows from financing activities:
Advances from (repayments of) notes payable to shareholder 140,000 (81,838)
--------- --------
Net decrease in cash (8,883) (92,942)
--------- --------
Cash at beginning of period 38,601 201,715
--------- --------
Cash at end of period $ 29,718 108,773
--------- --------
--------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated balance sheet as of March 31, 1998 which has been
derived from audited statements and the unaudited interim consolidated
financial statements included herein have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations, although the Registrant believes that the disclosures made are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments consisting of normal reoccurring accruals have
been made which are necessary for the fair presentation of the periods
presented. The accounting policies of the Registrant are set forth in the
financial statements and notes thereto and are included in the Registrant's
latest annual report on Form 10-KSB. It is suggested that these consolidated
financial statements be read in conjunction with that document.
(2) OIL AND GAS SALES - GREECE
Effective January 1, 1993, the operator of the Greek properties
negotiated an agreement with the Greek government which amended the original
license agreement entered into in June 1975 (the "License Agreement"). The
amendment provides for a sliding scale for calculating the operator's
recoverable costs and expenses and for the calculation of the Greek royalty
interest. Denison Mines, Ltd. ("Denison"), the working interest owner having
the contractual obligation to the Registrant for the 15% net profits
interest, (also called "Prinos Interest" in some parts of this Report)
asserted that the calculation of the amounts due to the Registrant should be
based on the amended agreement with the Greek government. The Registrant
disagreed with this interpretation and commenced a legal action in Canada
seeking a declaration by the Ontario Court of Justice (General Division) in
Toronto, Canada (the "Court") that amounts due the Registrant attributable to
its 15% net profits interest be calculated based on the terms of the License
Agreement before this amendment. In December 1996, the Registrant received
notification that the Court had issued a judgment in its favor. The Court
ordered Denison to pay $6,098,290.68 including interest to the Registrant for
the period from January 1, 1993 through December 13, 1996 and to make
payments to the Registrant subsequent to December 13, 1996 also based on the
terms of the original License Agreement. The Court also awarded court costs
to the Registrant which are anticipated to be approximately $107,000 plus
interest. Denison subsequently filed a Notice of Appeal requesting that the
judgment be set aside. Therefore, it appears that the final determination
will likely have to be made by the Appellate Court. The hearing before the
Ontario Court of Appeal is scheduled for June 14-15, 1999. While the
6
<PAGE>
Registrant believes it has a reasonable probability of prevailing in its
action, the ultimate outcome of the matter cannot presently be determined.
Accordingly, no amounts have been recorded in the accompanying consolidated
financial statements for current revenues or damages, if any, that may
ultimately be awarded to the Registrant.
In January 1998, the Registrant was notified by Denison that 1998 may be
the final year of production for the Greek properties. In the final year of
production, Denison is entitled to 100% cost recovery; consequently, the
Registrant will not receive any payments for its net profits interest in the
final year. In anticipation of 1998 being the final year, Denison ceased
remitting net profits interest payments to the Registrant on a monthly basis.
In response, the Registrant notified Denison that this action was
inappropriate prior to the formal declaration to the Greek government that
1998 is the final year. Subsequently, Denison paid the Registrant for its net
profits interest relating to January, February and March 1998.
Denison has announced that the first and second exploration wells
drilled offshore Greece in 1998 would be plugged and abandoned due to
non-commercial hydrocarbon shows. An October 15, 1998 press release indicated
that Denison believed that it would terminate its operations at the Prinos
oil and gas field offshore Greece unless negotiations with the Greek
government resulted in a significant reduction in the operating costs of the
property. In January 1999, Denison notified the Registrant that Denison had
given notice to the Greek government on December 31, 1998 declaring calendar
year 1998 as the final year. Denison also advised the Registrant that the
payments made to the Registrant for January, February and March 1998 may be
repayable to Dension. Currently, the Registrant is trying to ascertain if the
final year was properly declared and if all portions of the Greek properties
are affected by the declaration of the final year.
(3) NOTE PAYABLE TO SHAREHOLDER
Note payable to shareholder at March 31, 1998 and December 31, 1998
previously represented borrowings under a $2,000,000 line of credit
established in favor of the Registrant by NWO Resources, Inc. ("NWO"), the
parent company of International Hydrocarbons, the Registrant's majority
stockholder. The line of credit is secured by the Registrant's 15% net
profits interest in the offshore Greece oil and gas property and all proceeds
from the pending litigation.
In September 1995, the Registrant entered into a Modification Agreement
with NWO (the "Modification Agreement") concerning the line of credit. The
Modification Agreement provided that NWO would forbear collection of
principal and interest on the line of credit until December 31, 1996. In
addition, the annual interest rate was adjusted to 8.25%. In exchange, the
Registrant was required to pursue funding from the sale of additional shares
of its common stock, which offering was subsequently completed.
In December 1996, an Extension Agreement was executed extending the
period of time during which NWO would forbear collection of principal and
interest until March 31, 1997. In March 1997, another Extension Agreement was
executed extending the forbearance period until March 31, 1998. This
agreement allowed the Registrant to retain 50% of all net profits interest
payments from
7
<PAGE>
Denison, with the remaining amount to be paid to NWO. In February 1998, a
third extension agreement was executed extending the forbearance period until
March 31, 1999. This agreement allows the Registrant to draw an additional
$350,000 for general working capital purposes and to defer all interest
payments until maturity. In October 1998, the note was assigned from NWO
Resources, Inc. to International Hydrocarbons, the Registrant's majority
stockholder.
As of December 31, 1998, the outstanding loan balance was $982,636.
Since it appears that the consortium has declared final year with respect to
the Prinos property, it is doubtful that the Registrant will receive any
additional net profits interest payments with which to repay its note payable
to International Hydrocarbons and must, therefore, rely on any proceeds
received from its pending lawsuit against Denison to repay the note. The note
currently matures on March 31, 1999. The Registrant plans to request an
extension of the maturity date, although there can be no assurance that it
will be successful. Due to the uncertainties regarding the outcome of the
litigation and the Registrant's ability to obtain additional financing to
fund its future operations and repay the amounts due to International
Hydrocarbons, in the event the judgment is overturned on appeal, there is
substantial doubt about the ability of the Registrant to continue as a going
concern. Accordingly, the Registrant's auditors have issued an opinion on the
Registrant's financial statements for the year ended March 31, 1998 that
includes an explanatory paragraph discussing the uncertainty regarding the
Registrant's ability to continue as a going concern. The financial statements
do not contain any adjustments that may be necessary if the Registrant is
unable to continue as a going concern.
(4) INCOME TAXES
Income tax benefit (expense) consists of the following:
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
1998 1997
-------- --------
<S> <C> <C>
Current:
Foreign - Greece (50,861) (171,601)
Deferred:
Foreign - Greece 57,000 82,028
-------- --------
Total income tax benefit (expense) $ 6,139 (89,573)
-------- --------
-------- --------
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Registrant's principal source of revenue has been from
its Prinos Interest. The Registrant also receives revenues from sales of
seismic data gathered in its oil and gas exploration and development
activities. That revenue is sporadic and is not sufficient to fund the
Registrant's ongoing operations. There have been no sales of seismic data
during the nine-month period ended December 31, 1998 or the year ended
March 31, 1998.
The Registrant currently receives approximately $478,000 per year in
connection with services it provides to Cordillera Corporation and San Miguel
Valley Corporation pursuant to management agreements providing for
reimbursement of costs for actual time and expenses incurred in activities
conducted on behalf of those entities. The amounts received under the
management agreements are a reimbursement for employee salaries and other
operating expenses.
Unless funds are collected as a result of the litigation with Denison,
the Registrant will be required to obtain additional capital to fund
continuing operations beyond March 1999 and to pay off the International
Hydrocarbons loan and accrued interest when due on March 31, 1999. Due to the
uncertainties regarding the outcome of the litigation and the Registrant's
ability to obtain additional financing to fund its future operations and
repay the amounts due to International Hydrocarbons, in the event the
judgment is overturned on appeal, there is substantial doubt about the
ability of the Registrant to continue as a going concern. Accordingly, the
Registrant's auditors have issued an opinion on the Registrant's financial
statements for the year ended March 31, 1998 that includes an explanatory
paragraph discussing the uncertainty regarding the Registrant's ability to
continue as a going concern. The financial statements do not contain any
adjustments that may be necessary if the Registrant is unable to continue as
a going concern.
When payments for the net profits interest were suspended in 1994, the
Registrant funded its operations through draws against the line of credit
initially established with NWO. Prior to the end of fiscal year 1995, the
Registrant's credit line was exhausted. During the first half of fiscal year
1996, the Registrant had no resources to make monthly interest payments on
the advances under the line of credit.
On September 19, 1995, the Registrant entered into the Modification
Agreement with NWO. The Modification Agreement, secured by the Registrant's
Prinos Interest and all proceeds from the Registrant's lawsuit against
Denison, provided for limited funding of litigation expenses and temporary
relief from any collection actions by NWO. The Modification Agreement also
allowed the Registrant to retain up to $200,000 of any proceeds received for
its net profits interest for general working capital purposes.
In February 1998, the Registrant executed an Extension Agreement to the
Modification Agreement whereby NWO agreed to forbear any collection
proceedings on the line of credit until
9
<PAGE>
March 31, 1999. In addition, this agreement allows the Registrant to draw an
additional $350,000 in principal for general working capital purposes and to
defer further principal and interest payments until maturity. In October
1998, the note was assigned from NWO Resources, Inc. to International
Hydrocarbons, the Registrant's majority stockholder.
As of December 31, 1998, the outstanding loan balance was $982,636.
Although funds available under the note payable should be sufficient to fund
the litigation and limited operations through at least March 31, 1999, the
Registrant will be required to obtain additional capital to fund continuing
operations beyond March 1999 and pay off the loan and accrued interest. Since
it appears that the consortium has declared the final year with respect to
the Prinos property, it is doubtful that the Registrant will receive any
additional net profits interest payments with which to repay its note payable
to International Hydrocarbons and must, therefore, rely on any proceeds
received from its pending lawsuit against Denison to repay the note. The note
currently matures on March 31, 1999. The Registrant plans to request an
extension of the maturity date, although there can be no assurance that it
will be successful.
As previously noted, payments received under the Registrant's net
profits interest in the offshore Greece property are currently the subject of
litigation. In June 1994, the Registrant commenced legal action against
Denison who has the contractual obligation to pay the net profits interest.
The Registrant was seeking a declaration by the Court that amounts due the
Registrant attributable to its interest be calculated based on the terms of
the License Agreement prior to a 1993 amendment agreed to by the consortium
and the Greek government. In September 1996, the lawsuit went to trial. In
December 1996, the Registrant received notification that the Court had
rendered a judgment in the Registrant's favor. The defendant subsequently
filed a Notice of Appeal requesting that the judgment be set aside.
Therefore, it appears that the final determination will likely be made by the
Appellate Court. The hearing before the Ontario Court of Appeal is scheduled
for June 14-15, 1999. While the Registrant believes there is a reasonable
probability of prevailing in the litigation, the ultimate outcome of the
lawsuit cannot be determined at this time.
Even if a final determination in the Registrant's favor is obtained, of
which there is no assurance, there is no guarantee that the Registrant would
be able to collect that judgment and, if able to collect, when the judgment
would be actually collected. Previously, it appeared, based on Denison's
public filings, that the financial stability of Denison was questionable and
that Denison continued to operate at the sufferance of its secured creditors.
Based upon more recent public filings, however, it appears that Denison's
debt restructuring approved in 1995 may have been successful in preserving
Denison as a going concern. This restructuring may also increase the
likelihood that Denison would have assets available for satisfaction of a
judgment in favor of the Registrant. However, the Registrant does not have
sufficient information to determine whether any assets of Denison are
unencumbered and available for satisfaction of a final determination in favor
of the Registrant.
If the final determination is not favorable, it appears that the
Registrant may be forced to liquidate its assets. In such case, little if any
assets would be available for distribution to shareholders.
10
<PAGE>
In January 1998, Denison notified the Registrant that based upon current
price and production levels, it anticipated that 1998 may be the final year
of production for the Greek properties. In the final year of production,
Denison is entitled to 100% cost recovery; consequently, the Registrant will
not receive any payments for its net profits interest. In anticipation of
1998 being the final year, Denison ceased remitting net profits interest
payments to the Registrant on a monthly basis. In response, the Registrant
notified Denison that this action was inappropriate prior to the formal
declaration to the Greek government of 1998 being the final year.
Subsequently, Denison paid the Registrant for its net profits interest
relating to January, February and March 1998.
Denison has announced that the first and second exploration wells
drilled offshore Greece in 1998 would be plugged and abandoned due to
non-commercial hydrocarbon shows. An October 15, 1998 press release indicated
that Denison believed that it would terminate its operations at the Prinos
oil and gas field offshore Greece unless negotiations with the Greek
government resulted in a significant reduction in the operating costs of the
property. In January 1999, Denison notified the Registrant that Denison had
given notice to the Greek government on December 31, 1998 declaring calendar
year 1998 as the final year. Denison also advised the Registrant that the
payments made to the Registrant for January, February and March 1998 may be
repayable to Dension. Currently, the Registrant is trying to ascertain if the
final year was properly declared and if all portions of the Greek properties
are affected by the declaration of the final year.
If the litigation with Denison is resolved in the Registrant's favor and
funds are received as a result, that revenue should be sufficient to repay
the International Hydrocarbons loan and fund on-going operations and limited
new exploration activities.
YEAR 2000 READINESS
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. As a result,
any of the Registrant's computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in system failures or miscalculations causing disruptions
of operations of the Registrant.
Since 1996, the Registrant has replaced all of its computer hardware and
software with that which is Year 2000 compliant. The cost associated with
these upgrades was not material.
Failure of third parties upon whom the Registrant's business relies to
timely remediate their Year 2000 Issues could adversely affect the
Registrant's operations. However, the major third parties with whom the
Registrant deals have indicated that they are addressing the Year 2000 Issue
and intend to have the matter resolved before December 1999.
The Registrant has not, to date, implemented a Year 2000 Contingency
Plan. However, the Registrant is prepared to develop and implement a
contingency plan should the status of any of the above change.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In June 1994, the Registrant commenced legal action against Denison
seeking a declaration by the Court that amounts due the Registrant
attributable to its net profits interest in certain oil and gas producing
areas offshore Greece be calculated based on the terms of the License
Agreement prior to a 1993 amendment agreed to by the consortium and the Greek
government. On December 13, 1996, the Registrant received notification that
the Ontario Court of Justice (General Division) in Toronto, Canada, had
issued a judgment in its favor. Specifically, the Court found that Denison is
obligated to pay the Registrant its 15% net profits interest in accordance
with the terms of the License Agreement prior to the 1993 amendment. First,
the Court ordered Denison to pay $6,098,290.68 including interest to the
Registrant for the period January 1, 1993 through December 13, 1996. Second,
the Court ordered Denison to make payments to the Registrant subsequent to
December 13, 1996, also calculated based on the terms of the original License
Agreement. Lastly, the Court awarded court costs to the Registrant which are
anticipated to be approximately $107,000 plus interest. Subsequent to
receiving the judgment from the Court, Denison filed a Notice of Appeal with
the Court in which it requested that the judgment be set aside for errors in
the judge's findings. The Registrant disagrees that there were errors made.
Therefore, it appears that the final determination will likely have to be
made by the Appellate Court. The hearing before the Ontario Court of Appeal
is scheduled for June 14-15, 1999. While the Registrant believes there is a
reasonable probability of prevailing in the litigation, the ultimate outcome
of the lawsuit cannot be determined at this time. Accordingly, no amounts
have been recorded in the accompanying financial statements for current
revenues or damages, if any, that may ultimately be awarded to the Registrant.
See the Registrant's Form 10-KSB for the fiscal year ended March 31, 1998,
for a more detailed discussion of these legal proceedings.
ITEM 2. CHANGE 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.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed herewith are listed below and if not located in
another previously filed registration statement or report, are attached to
this Report at the pages set out below. The "Exhibit Number" below refers to
the Exhibit Table in Item 601 of Regulation S-B. Those reports previously
filed with the Securities and Exchange Commission as required by Item 601 of
Regulation S-B are incorporated herein by reference, in accordance with the
provisions of Rule 12b-32, to the reports or registration statements
identified below.
Exhibit Number Name of Exhibit Location
- -------------- --------------- --------
None
(b) No reports on Form 8-K were filed during the quarter for which this
Report is filed.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
OCEANIC EXPLORATION COMPANY
Date: February 10, 1999 /s/ Charles N. Haas
--------------------- -------------------------
Charles N. Haas
President
Date: February 10, 1999 /s/ Lori A. Brundage
--------------------- -------------------------
Lori A. Brundage
Treasurer and Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 29,718
<SECURITIES> 0
<RECEIVABLES> 11,718
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,558
<PP&E> 39,000,000
<DEPRECIATION> (38,952,500)
<TOTAL-ASSETS> 93,138
<CURRENT-LIABILITIES> 1,874,803
<BONDS> 0
0
0
<COMMON> 619,759
<OTHER-SE> 155,696
<TOTAL-LIABILITY-AND-EQUITY> 93,138
<SALES> 0
<TOTAL-REVENUES> 485,257
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 715,076
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,101
<INCOME-PRETAX> (304,920)
<INCOME-TAX> (6,139)
<INCOME-CONTINUING> (298,781)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (298,781)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
