U.S. 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 March 31, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from N/A to N/A
Commission file number 0-15078
NOVA NATURAL RESOURCES CORPORATION
(Exact name of small business issuer as specified in its charter)
Colorado 84-1227328
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
789 Sherman Street, Suite 550
Denver, Colorado 80248
(Address of principal executive offices)
(303) 863-1997
(Issuer's telephone number)
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
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 5,788,506
Transitional Small Business Disclosure Format (Check One):
Yes ; No X
<PAGE>
NOVA NATURAL RESOURCES CORPORATION
BALANCE SHEET
MARCH 31, 1998
(Unaudited)
ASSETS
1998
CURRENT ASSETS:
Cash and equivalents $ 1,655
Accounts receivable:
Oil and gas 5,347
Other 1,086
Current maturities of note receivable 63,689
Accrued Interest receivable 10,822
Prepaid expenses and other 7,327
_________
Total current assets 89,926
OIL AND GAS PROPERTIES, at cost
(using the full
cost method of accounting):
Unproved properties not being amortized 34,924
Properties being amortized 5,969,108
_________
6,004,032
Accumulated depreciation, depletion
and amortization (5,922,913)
___________
Net oil and gas properties 81,119
MINERAL PROPERTIES, at cost 155,587
__________
OTHER ASSETS:
Note receivable, net of current maturities 307,862
Furniture and technical equipment,
net of accumulated depreciation
of $127,734 2,001
_______
Total other assets 309,863
_______
TOTAL ASSETS $ 636,495
See accompanying notes to these financial statements.
<PAGE>
NOVA NATURAL RESOURCES CORPORATION
BALANCE SHEET, CONTINUED
MARCH 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 8,612
Accounts payable 16,395
Accrued expenses 64,913
Short term note 21,348
_________
Total current liabilities 111,268
_________
LONG TERM DEBT, less current maturities 276,494
_________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Convertible preferred stock, $1.00
par value; 3,000,000 shares
authorized; 1,792,267 shares
issued and outstanding,
liquidation preference $1,792,267 1,792,267
Common stock, $.10 par value;
17,000,000 shares authorized;
5,788,506 shares issued and
outstanding; 578,850
Additional paid-in capital 7,217,801
Accumulated deficit (9,340,185)
___________
Total Stockholders' equity 248,733
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 636,495
See accompanying notes to these financial statements.
<PAGE>
<TABLE>
<CAPTION>
NOVA NATURAL RESOURCES CORPORATION
Condensed Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
________ ________ ________ ________
<S> <C> <C> <C> <C>
REVENUES:
Mineral sales:
Kaolin $ 0 $ 0 $ 584 $ 191,556
Gravel Royalties 0 1,913 1,320 1,913
Oil and gas sales 17,238 36,106 38,005 77,722
________ ________ _______ _______
17,238 38,019 39,909 271,191
EXPENSES:
Mining costs:
Kaolin operations 0 4,788 0 158,372
Gravel royalties 0 0 0 983
Oil and gas
production costs 18,520 27,166 39,685 57,581
Depletion, depreciation,
and amortization 4,575 7,271 8,959 16,763
Mineral property abandonments 1,125 0 6,938 60
General and administrative 71,246 102,530 158,239 214,750
Total costs and expenses 95,466 141,755 213,821 448,509
_______ _______ _______ _______
OPERATING LOSS $ (78,228) $ (103,736) $ (173,912)$ (177,318)
========= ======== ======== =======
OTHER INCOME(EXPENSES):
Equity in losses of
NovaChek LLC 0 (5,529) 0 (11,819)
Interest income 9,791 2,690 21,608 5,866
Interest expense (7,126) (4,547) (14,352) (12,880)
Gain on sale of assets 0 0 0 76,557
Other Miscellaneous income 410 0 410 0
________ ________ ________ ________
3,075 (7,386) 7,666 57,724
Net loss $ (75,153) $ (111,122) (166,246) (119,594)
Loss per share(Note 5) $ (.01) $ (.02) $ (.03)$ (.02)
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,788,506 6,326,074 5,788,935 6,411,131
========= ========= ========= =========
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOVA NATURAL RESOURCES CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
________ ________ ________ ________
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (75,153) $ (111,122) $ (166,246) $ (119,594)
Adjustments to reconcile net
loss to net cash
used by operating activities:
Depletion, depreciation,amortization 4,575 7,271 8,959 16,763
Gain on sale of assets -- -- -- (76,557)
Change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 1,578 23,931 16,896 409,503
Prepaid expenses and other (192) 2,782 (1,832) 693
Deposits -- -- -- (550)
Increase (decrease) in:
Accounts payable 2,168 (19,043) (50,964) (235,221)
Accrued expenses 8,745 (8,334) 62,069 (33,493)
_______ _______ _______ _______
Net cash provided by (used in)
operating activities (58,279) (104,515) (131,118) (38,456)
_______ _______ _______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets -- -- 13,890 229,957
Investment in and advances to
NovaChek, LLC -- (6,206) -- (58,432)
Capital expenditures (29,832) (19,588) (46,823) (13,752)
Collection of principal on
note receivable -- -- 36,366
_______ _______ _______ _______
Net cash provided by (used in)
investing activities (29,832) (25,794) 3,433 157,773
_______ _______ _______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of Kane stock -- (150,000) -- (150,000)
Discount on note payable -- 381 -- 381
Principal payments on long-term debt -- -- (4,670) --
Purchase and retirement of common
and preferred stock (17) -- (16,475) --
_______ _______ _______ _______
Net cash provided by (used in)
financing activities (17) (149,619) (21,145) (149,619)
_______ _______ _______ _______
INCREASE (DECREASE) IN CASH (88,128) (279,928) (148,830) (30,302)
CASH, at beginning of period 89,783 329,453 150,485 79,827
_______ _______ _______ _______
CASH, at end of period $ 1,655 $ 49,525 $ 1,655 $ 49,525
======= ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 12,500 $ 12,500 $ 13,830 $ 12,500
======= ======= ======= =======
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
NOVA NATURAL RESOURCES CORPORATION
Notes to Condensed Financial Statements
Six Months Ended March 31, 1998 and 1997
(1) The condensed financial statements included herein are unaudited. In the
opinion of management, all adjustments, consisting of normal recurring accruals,
have been made which are necessary for a fair presentation of the financial
position of the Company at March 31, 1998 and the results of operations for the
three and six month periods ended March 31, 1998 and 1997. Certain amounts have
been reclassified for comparability with the 1998 presentation. Quarterly
results are not necessarily indicative of expected annual results because of
fluctuations in the price received for oil and gas products, demand for natural
gas, and other factors. For a more complete understanding of the Company's
operations and financial position, reference is made to Management's Discussion
and Analysis of Financial Condition and Results of Operations herein and the
financial statements of the Company, and related notes thereto, filed with the
Company's annual report on Form 10-KSB for the year ended September 30, 1997,
previously filed with the Securities and Exchange Commission.
(2) During fiscal 1997, the Company offered to purchase common shares from the
shareholders desiring to sell for $.04 per share. Through September 30, 1997
the Company purchased and retired 13,700 shares for $548. In October 1997, an
additional 411,477 shares were purchased for $16,458 and retired. In March
1998, a final 426 shares were purchased for $17 and retired.
(3) In an action effective January 30, 1998 the Board of Directors of the
Company cancelled all outstanding options to purchase shares of the Company's
common stock held by the employees under the Nova Natural Resources Corporation
1989 Incentive Stock Option Plan, and cancelled all options held by the
Directors under the Nova Natural Resources Corporation 1989 Nonqualified Stock
Option Plan. These options had a strike price of $.10 per share. A total of
1,250,000 options were outstanding. In the same action the Board of Directors
granted options to purchase shares of the Company's common stock under the 1998
Nonqualified Stock Option Plan to all Directors and employees. Options were
granted to purchase a total of 3,373,577 shares at $.03 per share.
(4) In March, 1998 the Company secured a short term loan from Foothills Bank
of $101,348. The loan is to be used to cover operating costs and matures
December 30, 1998. The interest rate is 2 points over prime. Interest is to
be paid monthly, with a principal payment of $101,348 to be paid on December 30,
1998. This loan is guaranteed by the President and by Robert E. McDonald, a
director and large shareholder. The Company intends to repay this loan with the
proceeds from the collection of principal on the note receivable associated with
the sale of the kaolin mine.
(5) Net loss per common share is determined by dividing net loss attributable
to common stock by the weighted average number of common shares outstanding
during each period. Common share equivalents including convertible preferred
stock, stock options, and convertible debentures were not included in the
computation of diluted earnings per share as their effect was anti-dilutive for
1998 and 1997.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FORWARD-LOOKING STATEMENTS
Management's discussion of anticipated future operations contains predictions
and projections which may constitute forward looking statements. The Private
Securities Litigation Reform Act of 1995, including provisions contained in
Section 21E of the Securities & Exchange Act of 1934, provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of the Company's business include the following:
(a) The Company may not be able to enter into an agreement with a new
partner to assist the Company in carrying its paper-grade kaolin
project to the commercial feasibility stage on terms acceptable to Nova.
(b) The paper-grade kaolin project may encounter difficulties, currently
unforeseen, which will prevent attainment of commercial feasibility.
(c) The Company may not be able to find industry partners to evaluate its
oil & gas prospects.
(d) Present and anticipated sources of funds may be insufficient to meet the
Company's working capital needs.
RESULTS OF OPERATIONS
The Company realized net losses for the three month period and six month
periods ended March 31, 1998 of $75,153 and $166,246, respectively, compared to
net losses of $111,122 and $119,594 for the same periods in 1997.
Mineral product sales were $0 for the three months ended March 31, 1998 and
1997. Mineral product sales decreased $190,972 to $584 for the six months ended
March 31, 1998 compared to mineral sales of $191,556 for the same period in
1997. In July, 1997 the Company obtained shareholder approval for the sale of
its cement-grade Kaolin mine, which sale was effective in July 1997. The sale
of the mine was wholly responsible for the severe drop in sales.
Oil and gas sales for the three months and six months ended March 31, 1998
decreased $18,868 and $39,717, respectively, to $17,238 and $38,005 compared to
$36,106 and $77,722 for the three months and six months ended March 31, 1997.
The Company sold several oil & gas producing assets as of November 1, 1996,
primarily overriding royalty interests in producing oil & gas wells in the
Wyoming Overthrust Belt. The decrease in oil and gas sales is primarily
attributable to the lower volume of oil and gas produced net to the Company's
interest as a result of this sale, and to the dramatic decrease in the price of
oil for the three month and six month periods ended March 31, 1998 and the
decrease in gas prices for the three month period. The Company's future oil and
gas production volumes will be at this substantially reduced level, less normal
production decline, as a result of this sale unless new production can be
brought on stream from as yet undrilled properties, which is speculative. The
sales volumes and average sales prices during the periods were as follows:
Three Months Ended
March 31, 1998 March 31,1997
Sales
Oil (Bbl) 1,160 1,441
Gas (MCF) 2,440 3,667
Average Sales Price
Oil ($/Bbl) $12.02 $19.00
Gas ($/MCF) $ 1.25 $ 2.30
Six Months Ended
March 31, 1998 March 31, 1997
Sales
Oil (Bbls) 2,181 2,805
Gas (MCF) 5,048 12,876
Average Sales Price
Oil ($/Bbl) $13.75 $19.20
Gas ($/MCF) $ 1.45 $ 1.49
Mining costs, including transportation and royalties were $0 for the three
months and six months ended March 31, 1998 compared to $4,788 and $158,372 for
the same periods in 1997. The decline is almost wholly due to the sale of the
cement-grade kaolin mine in July, 1997. No payments of gravel royalties were
incurred during the fiscal 1998 quarters.
Oil and Gas lease operating expenses including production taxes decreased
$8,646 and $17,896 for the three months and six months ended March 31, 1998 as
compared to 1997. The decrease is primarily attributable to the lower
production volume in the 1998 period as a result of the production sale. Since
the sale involved primarily royalties, which are free of most production costs,
production costs did not decline as sharply as oil and gas sales, since the
remaining properties held are primarily working interests.
General and administrative expenses decreased $31,284 for the three month
period and $56,511 for the six month period ending March 31, 1998 compared to
the same periods ending March 31, 1997. This decrease is primarily due to
higher legal and printing expenses associated with the pending sale of the
Company's kaolin mine, as well as legal costs incurred in connection with the
repurchase of common and preferred stock from a major shareholder, both one-time
events occurring in the 1997 quarters. In February, 1997 the Company moved to
smaller space which decreased the rent and incurred moving costs for that
period. Travel was also dramatically reduced in the 1998 periods. Accounting
expenses were also lower in the 1998 periods, due to the fact that the company
engaged a new accounting firm which had a lower level of fees than the previous
firm and to the extra accounting work associated with both the pending sale of
the kaolin mine and the stock repurchase in the 1997 periods.
Depletion, depreciation, and amortization decreased 37% to $4,575 and 47%
to $8,959, respectively, in the three months and six months ended March 31,
1998, compared to $7,271 and $16,763 in the fiscal 1997 periods. This decrease
was primarily the result of the sale of producing assets, which substantially
reduced the full-cost pool, and to the sale of the cement-grade kaolin mine
which eliminated mineral depletion.
The Company's share of losses of NovaChek in the three and six months
periods ending March 31, 1997 were $5,529 and $11,819 respectively as compared
to $0 for the periods ending March 31, 1998. During fiscal 1997, NovaChek LLC
commenced dredging operations but management determined that it was not possible
to operate economically. In December 1997, the managers of NovaChek LLC decided
to liquidate the LLC by the end of 1997 and they determined that the net
realizable value of NovaChek LLC's assets would not be sufficient to satisfy all
of the liabilities. In September 1997, the Company wrote its investment in
NovaChek down to $4,000, which it received in February, 1998. The assets in
NovaChek were sold to a bidder in Nome, Alaska for $18,000 which will be paid
by November, 1998. These funds will be divided among all the creditors of
NovaChek. The Company's share will be approximately $12,800.
Mineral property abandonments increased to $1,125 and $6,938 for the three
months and six months ended March 31, 1998, compared to $0 and $60 for the
comparable periods in 1997. This is due to the abandonment of the Querida Gold
prospect in the 1998 fiscal period.
Interest income increased to $9,791 and $21,608 in the three months and six
months ended March 31, 1998, respectively, compared to $2,690 and $5,866 in the
1997 periods. The increase is due to the accrued interest on the note
receivable from the sale of the cement grade kaolin mine. Interest expense
increased to $7,126 compared to $4,547 for the three month period, and increased
to $14,352 from $12,880 for the six month period. This increase is due to the
accrued interest on the note payable for the repurchase of the common and
preferred stock from a former director.
A gain of $76,557 on the one-time sale of producing assets was recorded in
the six month period ended March 31, 1997 period. There was no such gain in the
1998 period.
CAPITAL RESOURCES-SOURCES OF CAPITAL
The Company's primary sources of cash flow during the six months ended
March 31, 1998 were the collection of accounts receivable, proceeds from the
non-recurring sale of an oil and gas prospect, collection of principal on the
note receivable associated with the sale of the kaolin mine, and a short term
note payable against the Company's receivable from the mine sale. Cash used by
operations totaled $58,279 for the three month period and $131,118 for the six
month period ended March 31, 1998 as compared to $104,515 and $38,456 for the
comparable periods in 1997. The decrease in cash and cash equivalents was
$148,830 for the six month period of 1998 and for the three month period was
$88,128. The decrease in 1997 was $30,302 for the six months and $279,928 for
the three months. Cash on hand at March 31, 1998 was $1,655 as compared to
$49,525 for the 1997 period.
CAPITAL RESOURCES-UTILIZATION OF CAPITAL
For the six month period ended March 31, 1998 the Company reduced accounts
payable by $50,964. Proceeds from the sale of properties were $13,890, and
collection of principal on the note receivable was $36,366. Capital
expenditures were $46,823 resulting in cash provided by investing activities of
$3,433. All funds for the remainder of the year will be provided by the
proceeds from the loan against future accounts receivable from the mine sale,
proceeds from drilling arrangements and/or outright sale of drilling prospects,
fees and other payments in connection with a potential joint venture on the
Company's paper kaolin properties, and/or the sale of an interest in the kaolin
properties, or the sale of stack in a private placement, none of which possible
events are guaranteed.
LIQUIDITY
At March 31, 1998, the Company's working capital totaled ($21,342) as
compared to $147,876 at September 30, 1997. Liquidity for the six months ended
March 31, 1998 was provided by the sale of an oil & gas prospect, collection of
principal on note receivable, and a short term loan against the receivable from
the mine sale.
FUTURE TRENDS
The Company asked its partner in its Minnesota paper kaolin exploration
project to withdraw from the project, and an agreement of termination was signed
on January 9, 1998. It is the Company's intent to replace its former partner
with a new partner who will financially support the work needed to bring the
project to final feasibility. The Company and its former partner have
expended in excess of $3 Million on this project through April, 1998. The cost
of reaching final feasibility has been estimated by the Company at an additional
$4.1 Million, which it is comtemplated would be expended over the next 2 - 3
years. The Company now controls 100% of the interest in the project, but
must make a future payment of $300,000 to its former partner within four years
to retain that interest or the properties will revert to its former partner.
The Company is proposing a program of development to potential industry
partners, which proposal includes overhead and management fees which the Company
would receive in return for operating the program to the point of commercial
feasibility. It is proposed that an industry partner would earn a majority
interest in the project by expending these funds, and would either finance or
arrange financing for a processing plant which would be required to initiate
production on the properties committed to the project, which would require an
estimated investment of $50 Million. It is the Company's goal to enter into an
agreement with a new partner and profitably put the properties into production.
While the Company believes it will be successful in entering into an agreement
with a new partner on terms favorable to the Company, that the project will
prove to be economically feasible, and that it will be put into profitable
production, there can be no assurance that any of these events will occur.
While this project is projected to generate substantial financial returns
over the first 25 years of contemplated operations, it can only be successful
by taking market share from established suppliers, whose financial resources and
expertise are considerable. The Company has a substantial transportation cost
advantage, however, since the Company's properties are much closer to the target
markets than all of its competitors, and the Company believes its products may
also have quality advantages over its competitors products. The Company's
processing costs are expected to be higher than those of its competitors, and
its mining costs may also be higher. It is contemplated that the Company's
efforts will be concentrated primarily on this project over the next several
years, and that overhead and management fees connected with this project, which
would be paid by its new partner, will be adequate to cover the Company's costs
and prevent any further deterioration in its working capital. However, until
an acceptable industry partner is located, the Company expects a continuing
decline in working capital.
The Company is in discussions with multiple potential partners in regard to
this project, and has supplied samples of its paper kaolin to more than one
potential partner for evaluation.
If the Company is unable to obtain a new partner to fund this project in
the next several months, the Company will be forced to consider merger or sale
opportunities, other sources of financing, or liquidation. In that event, the
project will likely be taken off the market while the Company determines whether
to continue in business or to liquidate. The Company has been approached by a
party which is interested in acquiring the Company, and exchanging the Company's
remaining natural resources assets, primarily its paper kaolin properties, to
the holders of the Company's preferred stock in exchange for that stock, which
has liquidation rights. Others have also expressed an interest in acquiring the
Company as a public vehicle. The Company has not entered into serious
discussions with any of these parties. If the Company were to liquidate, the
Company's assets would be inadequate to cover the amount due in liquidation to
the preferred shareholders, and accordingly all of the Company's net assets
would be distributed to the preferred shareholders, and no assets would be
available after payment of liabilities for distribution to the common
shareholders.
The Company has reduced its overhead substantially over the past two years,
and further reductions, including salary reductions, are being implemented until
an industry partner for the kaolin project can be secured.
OIL & GAS PROSPECTS
The Company holds a 50% interest in the Luman prospect, an exploratory gas
prospect in the State of Wyoming. The other 50% interest is held by the REM
Family Trust, Robert E. McDonald, Trustee. Mr. McDonald is the Company's
largest shareholder and a Director. The Company and the Trust are seeking an
industry partner to drill this prospect, and while the Company believes such a
partner will be found, there is no certainty that one will be found, nor can it
be determined at this time when this prospect will be drilled. A second
prospect, also in Wyoming, was sold to an industry partner, but the leases
expired on December 31, 1997, before the prospect could be drilled. The Luman
prospect leases have considerable time remaining before they are subject to
expiration.
The Company holds a similar interest in leases in the Great Salt Lake in
Utah, also jointly owned with the Trust. These leases will expire in one and
one-half years if not held by production or extended prior to expiration.
Significant effort has been expended with third parties to sell this lease
position to an industry partner with the capability to develop them. It cannot
be determined at this time whether these efforts will be successful.
NOME PROSPECT
The Company has reduced its lease position offshore Nome, Alaska, and has
entered into royalty arrangements on all of the remaining leases whereby an
unaffiliated third party will pay the rentals and other costs associated with
these leases, and attempt to establish commercial gold production on them. The
Company retained a term royalty interest in any gold production from these
leases, with a maximum royalty amount of $360,000. However, there is no
certainty that royalty income will result from these arrangements, nor as to the
amount should the Company realize income from them. The Company will incur no
further costs in connection with these leases.
A more complete description of these prospects is contained in the
Company's report on Form 10-KSB for fiscal 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibit 27, Financial Data Schedule (Submitted only in
electronic format.
(b) Form 8-K. A report on Form 8-K was filed on February 20, 1998.
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 of the
undersigned thereunto duly authorized.
NOVA NATURAL RESOURCES CORPORATION
Date: May 15, 1998 By: /s/ Brian B. Spillane
Brian B. Spillane,
President, Director, and
Chief Executive Officer
Date: May 15, 1998 By: /s/ James R. Schaff
James R. Schaff,
Secretary-Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<CASH> 1,655 1,655
<SECURITIES> 0 0
<RECEIVABLES> 80,944 80,944
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 89,926 89,926
<PP&E> 6,289,354 6,289,354
<DEPRECIATION> 6,050,647 6,050,647
<TOTAL-ASSETS> 636,495 636,495
<CURRENT-LIABILITIES> 111,268 111,268
<BONDS> 250,000 250,000
0 0
1,792,267 1,792,267
<COMMON> 578,850 578,850
<OTHER-SE> (2,122,384) (2,122,384)
<TOTAL-LIABILITY-AND-EQUITY> 636,495 636,495
<SALES> 17,238 39,909
<TOTAL-REVENUES> 27,439 27,439
<CGS> 0 0
<TOTAL-COSTS> 78,228 173,912
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 7,126 14,352
<INCOME-PRETAX> (75,153) (166,246)
<INCOME-TAX> (75,153) (166,246)
<INCOME-CONTINUING> (75,153) (166,246)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (75,153) (166,246)
<EPS-PRIMARY> (.01) (.03)
<EPS-DILUTED> (.01) (.03)
</TABLE>
