FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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 1-12108
GULFWEST OIL COMPANY
(Exact name of Registrant as specified in its charter)
Texas 87-0444770
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
16800 Dallas Parkway
Suite 250
Dallas, Texas 75248
(Address of principle executive offices) (zip code)
(972) 250-4440
(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.
NO ___ YES _X_
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date, November 12, 1998, was 2,963,517
shares of Class A Common Stock, $.001 par value.
<PAGE>
GULFWEST OIL COMPANY
FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Page of
Form 10-Q
<S> <C>
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets, September 30, 1998,
and December 31, 1997 3
Consolidated Statements of Operations-for the three months
and nine months ended September 30, 1998, and 1997 5
Consolidated Statements of Cash Flows-for the nine
months ended September 30, 1998, and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
Part II: Other Information 12
Signatures 13
</TABLE>
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GULFWEST OIL COMPANY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
<CAPTION>
Sept. 30, December 31,
1998 1997
ASSETS
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ - $ 626,519
Accounts Receivable - Trade, Net of Allowance for Doubtful
Accounts of -0- in 1998 and 1997 654,297 855,383
Accounts Receivable - Related Party 102,000
Prepaid Expenses 151,381 54,494
Total Current Assets 907,678 1,536,396
Oil & Gas Properties, Using the Successful Efforts Method of Accounting:
Undeveloped Properties 2,202,506 4,585
Developed Properties 22,059,376 17,026,171
Other Property and Equipment 1,364,411 1,171,214
Less - Accumulated Depreciation, Depletion,
and Amortization (3,657,100) (2,874,403)
Net Oil and Gas Properties and
Other Property and Equipment 21,969,193 15,327,567
Deposits on Developed Oil & Gas Properties - 225,892
Total Assets $22,876,871 $ 17,089,855
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
<TABLE>
GULFWEST OIL COMPANY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
<CAPTION>
Sept. 30, December 31,
1998 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Payable to Financial Institutions $ 41,834 $ -
Notes Payable 300,000 350,000
Notes Payable - Related Party 150,000 150,000
Current Portion of Long-Term Debt 10,009,660 311,233
Current Portion of Long-Term Debt - Related Parties 1,299,259 350,000
Accounts Payable - Trade 1,834,103 1,427,661
Accrued Expenses 478,566 290,362
Total Current Liabilities 14,113,422 2,879,256
Long-Term Debt, Net of Current Portion 5,379,070 11,185,055
Long-Term Debt, Related Parties 295,741 1,000,000
Total Long-Term Debt 5,674,811 12,185,055
Stockholders' Equity:
Preferred Stock, Par Value at $.01, 10,000,000 Shares
Authorized, 9,190 and 5,390 shares Issued and Outstanding
in 1998 and 1997, respectively 92 54
Common Stock, Par Value at $.001, 20,000,000 Shares
Authorized, 2,963,517 and 1,759,185 Shares Issued and Outstanding
in 1998 and 1997, respectively 2,963 1,759
Additional Paid-in Capital 11,327,265 7,583,236
Retained Deficit (8,089,208) (5,407,031)
Long-Term Accounts and Notes Receivable -
Related Parties, Net of Allowance for Doubtful Accounts
of $448,230 in 1998 and 1997 (152,474) (152,474)
Total Stockholders' Equity 3,088,638 2,025,544
Total Liabilities and Stockholders'
Equity $ 22,876,871 $ 17,089,855
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
<TABLE>
GULFWEST OIL COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Oil and Gas Sales $ 439,614 $ 921,891 $ 1,592,747 $ 3,132,514
Well Servicing Revenues 169,605 130,731 477,127 250,572
Operating Overhead and Other Income 18,973 51,020 107,572 168,076
Total Revenues 628,192 1,103,642 2,177,446 3,551,162
Costs and Expenses:
Lease Operating Expenses 403,458 537,956 1,306,767 1,360,135
Cost of Well Servicing Operations 162,964 103,604 451,805 189,728
Depreciation, Depletion and Amortization 221,444 335,100 783,707 886,821
General and Administrative 341,646 384,640 1,125,713 1,042,305
Total Costs and Expenses 1,129,512 1,361,300 3,667,992 3,478,989
Income (Loss) From Operations (501,320) (257,658) (1,490,546) 72,173
Other Income and Expense:
Interest Income 2,550 1,455 9,075 1,896
Interest Expense (406,998) (294,893) (1,109,130) (777,951)
Gain (Loss) on Sale of Assets 15,000 - 9,678 -
Total Other Income and Expense (389,448) (293,438) 1,090,377 (776,055)
Net Income (Loss) Before Taxes (890,768) (551,096) (2,580,923) (703,882)
Income Tax Provision - - - -
Net (Loss) (890,768) (551,096) (2,580,923) (703,882)
Preferred Stock Dividend Requirement 61,375 (60,621) 183,410 (210,682)
Net (Loss) to Common Shareholders $ (952,143) $ (611,717) $ 2,764,333 $ (914,564)
(Loss) Per Share and Common Stock
Equivalents $ (.32) $ (.35) $ (1.26) $ (.53)
Weighted Average Number of Shares 2,961,351 1,753,428 2,186,201 1,715,055
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
<TABLE>
GULFWEST OIL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows Provided (Used) By Operating Activities:
Net Income (Loss) $(2,580,923) $ (703,882)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided By (Used By) Operating Activities:
Depreciation, Depletion, and Amortization 783,707 886,821
Common Stock Options and Warrants Issued
and Charged to Operations 22,856 59,087
(Increase) Decrease in Accounts Receivable - Trade, Net 201,086 (76,230)
(Increase) Decrease in Prepaid Expenses (96,887) (78,536)
Increase (Decrease) in Accounts Payable 543,272 (59,364)
Increase (Decrease) in Accrued Expenses 288,295 76,292
Net Cash Provided By (Used By) Operating Activities (838,594) 104,188
Cash Flows From Investing Activities:
Purchase of Property and Equipment (1,742,436) (2,249,652)
Sale of Property and Equipment 60,000 -
(Increase) Decrease in Accounts and Notes Receivable-Related Party (102,000) (113,507)
Investment in Souheast Texas Oil & Gas, L.L.C. (95,000) -
Net Cash Provided (Used) By Investing Activities (1,879,436) (2,363,159)
Cash Flows From Financing Activities:
(Increase) in Notes Receivable - (100,000)
Proceeds From Sale of Common Stock, Net 148,872 180,262
Proceeds From Sale of Preferred Stock, Net - 406,967
Payments on Debt (8,905,383) (1,313,992)
Proceeds From Debt Issuance 10,900,489 3,252,083
Dividends Paid (94,301) (150,062)
Net Cash Provided (Used) By Financing Activities 2,049,677 2,275,258
Increase (Decrease) in Cash and Cash Equivalents (668,353) 16,287
Cash and Cash Equivalents, Beginning of Period 626,519 84,477
Cash and Cash Equivalents, End of Period $ (41,834) $ 100,764
Cash Interest Paid $ 730,330 $ 707,780
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
GULFWEST OIL COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
1. During interim periods, GulfWest Oil Company ("the Company") follows the
accounting policies set forth in its Annual Report on Form 10-K filed with
the Securities and Exchange Commission. Users of financial information
produced for interim periods are encouraged to refer to the footnotes
contained in the Annual Report when reviewing interim financial results.
2. The accompanying financial statements include the Company and its
wholly-owned subsidiaries: WestCo Oil Company ("WestCo"), formed in 1995;
VanCo Well Service, Inc. ("VanCo"), GulfWest Texas Company ("GulfWest
Texas") and GulfWest Permian Company ("GulfWest Permian") all formed in
1996; DutchWest Oil Company ("DutchWest") formed in 1997; Setex Oil and Gas
Company ("SETEX") formed in 1998; and Southeast Texas Oil & Gas Co., L.L.C
("SETEX, LLC") acquired September 1, 1998. All material intercompany
transactions and balances are eliminated upon consolidation.
3. In management's opinion, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, the
results of operations, and the statements of cash flows of GulfWest Oil
Company for the interim periods.
4. Non-Cash Investing and Financing Activities
In 1998, the Company acquired oil and gas properties through the
issuance of debt totaling $2,830,429 and other property and equipment
through the issuance of debt totaling $130,380.
During the nine month period ended September 30, 1998, the Company
issued 1,009,424 shares of Common Stock to retire notes payable
$50,000, current portion of long-term debt - related parties $105,000,
accounts payable $311,500, accrued expenses $100,091 and long-term
debt - related parties $1,000,000.
Additionally, 200 shares of the Company's Class AAA Preferred Stock
along with accumulated and unpaid dividends in the amount of $540 were
converted to 77,988 shares of Common Stock.
On September 1, 1998, the Company acquired 100% of the membership
interests of Setex, L.L.C. by issuing 4,000 shares of Series C
Preferred Stock with an aggregate value of $2,000,000. As a result of
this transaction, the Company's cash increased by $4,601, undeveloped
properties by $2,162,921, developed properties by $302,478, other
property and equipment by $14,900, accounts payable by $174,670 and
notes payable by $310,230.
In 1997, the Company acquired other property and equipment through the
issuance of debt totaling $220,870. Additionally, the Company
exchanged a related party note receivable of $73,782 for oil and gas
properties. 51,250 shares of common stock were issued to related
parties upon the exercise of warrants and paid for by conversion of
short term notes payable and accrued expenses to such parties of
$26,250.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
GulfWest Oil Company ("GulfWest" or the "Company") is an independent oil
and gas company primarily engaged in the acquisition of producing oil and gas
properties with proved reserves which have the potential for increased value
through continued development and enhanced recovery technology. The Company's
objective is to significantly increase the production of such properties through
workovers of the wells, horizontal drilling from existing wellbores, development
drilling or other enhancement operations.
Management's acquisition strategy is for the Company to be an aggressive
consolidator of small, under-capitalized operators with undeveloped properties
and a purchaser of oil and gas properties that may be non-core to larger
independent and major oil and gas companies.
Results of Operations
Comparative results of operations for the periods indicated are discussed below.
Three-Month Period Ended September 30, 1998 compared to Three-Month Period Ended
September 30, 1997.
Revenues
Oil and gas sales for the third quarter decreased 52% from $921,900 in 1997
to $439,600 in 1998, primarily as a result of lower oil and natural gas prices.
The average prices received for production of oil decreased 40% from $17.24 per
Bbl for the three months of 1997 to $10.90 per Bbl for the period in 1998.
Natural gas prices decreased 29% from an average of $2.09 per Mcf for the three
months of 1997 to $1.48 per Mcf for the period in 1998. Oil sales volumes for
the period were less in 1998 compared to 1997 due primarily to management's
decision to curtail production of certain wells due to the low prices.
Operations for third parties produced well servicing revenues of $169,600
less expenses of $163,000 in 1998 compared to revenues of $130,700 less expenses
of $103,600 for the period in 1997.
Revenues from operating overhead and other income decreased from $51,000 in
1997 to $19,000 in 1998, due to the curtailment of production.
Costs and Expenses
Lease operating expenses decreased 25% from $538,000 in 1997 to $403,500 in
1998, due to the curtailment of production.
Interest expense for the second quarter of 1998 compared to 1997 increased
from $295,000 to $407,000 due to borrowing costs related to the acquisition of
additional oil properties and other debt incurred during the year to finance the
operations and development of the Company's properties.
8
<PAGE>
Nine-Month Period Ended September 30, 1998 compared to Nine-Month Period Ended
September 30, 1997.
Revenues
Oil and gas sales for the period decreased 49% from $3,132,500 in 1997 to
$1,592,700 in 1998, primarily as a result of lower oil and natural gas oil
prices. The average prices received for production of oil decreased 36% from
$18.55 per Bbl for the nine months of 1997 to $11.93 per Bbl for the period in
1998 and for the production of natural gas decreased 22% from $2.29 per Mcf for
the nine months of 1997 to $1.78 per Mcf for the period in 1998. Oil sales
volumes for the period were less in 1998 compared to 1997 due primarily to
management's decision to curtail production of certain wells due to the low
prices.
Operations for third parties produced well servicing revenues of $477,100
less expenses of $451,800 for the period in 1998 compared to $250,600 less
expenses of $189,700 for the period in 1997.
Revenues from operating overhead and other income decreased from $168,100
for the period in 1997 to $107,600 for the period in 1998, however the revenues
in 1997 included a $37,500 gain on the sale of a lease and no such gains were
recorded for 1998.
Costs and Expenses
Lease operating expenses decreased from $1,360,100 in 1997 to $1,306,800 in
1998, due to the curtailment of production.
Interest expense increased from $778,000 for the period in 1997 to
$1,109,100 for the period in 1998 due to borrowing costs related to the
acquisition of additional properties and other debt incurred during the year to
finance the operations and development of the Company's properties.
Financial Condition and Capital Resources
During the fourth quarter of 1996, the Company acquired and assumed
operations for additional oil properties in West Texas for a purchase price of
$10,654,000. In connection with these acquisitions, the Company issued senior
debt due October and December, 1999 in the original principal amount of
$7,400,000. On March 20, 1998, the Company obtained a loan from a banking
institution for $10,237,000, which included $7,432,000 for refinancing the
properties and $2,805,000 for payment toward the acquisition of certain other
oil properties with a purchase price of $2,976,000.
In a subsequent event, effective October 1, 1998, the Company sold 100% of
its stock ownership interest in its subsidiary, GulfWest Permian. With the sale
of GulfWest Permian, the Company divested itself of approximately $9,000,000 in
short-term bank debt and assets consisting of working interests in certain oil
properties in West Texas with estimated proved reserves of approximately 1.26
million barrels of oil.
On November 18, 1997, the Company completed a private placement of $500,000
of debentures (the "Debentures"). The Debentures bear interest at a rate of 12%
payable quarterly and are collateralized by certain assets of the Company.
Effective June 30, 1998, the holders of the Debentures have the option for one
year to convert all or a part of the outstanding principal and any accrued and
unpaid interest to GulfWest Common Stock at a strike price of $1.30 per share.
At September 30, 1998, $50,000 of the Debentures had been converted to Common
Stock.
9
<PAGE>
On December 15, 1997, the Company obtained a loan from Mr. J. Virgil
Waggoner, a director of the Company, in the amount of $1,000,000 to drill
seventeen developmental wells in the Vaughn Field, as part of its expanded
waterflood operations in that field. On June 29, 1998, Mr. Waggoner converted
the outstanding principal amount of the note and unpaid interest to 643,329
shares of the Company's Common Stock at a price of $1.625 per share, as part of
the Company's private placement discussed below.
On January 7, 1997, the Company established a $2,000,000 revolving
line-of-credit with Southwest Bank of Texas, with part of the proceeds to be
used for payment of short-term notes incurred for acquisitions made during the
fourth quarter of 1996. The revolving line-of-credit was subsequently increased
to $3,000,000 with the additional funds to be used for acquisitions, further
enhancements of the Company's West Texas properties and working capital. The
line-of-credit is guaranteed by Mr. J. Virgil Waggoner, a director of the
Company. The line-of-credit has a maturity date of April 10, 2000.
On March 3, 1998, the Company established a $500,000
revolving-line-of-credit with Compass Bank of Dallas, with the proceeds to be
used for equipment purchases and working capital for its subsidiary, VanCo. The
line-of-credit is guaranteed by Mr. J. Virgil Waggoner, a director, and Mr.
Marshall A. Smith, III, president of the Company.
At a special meeting of the shareholders of the Company on March 24, 1998,
the shareholders approved the offering, sale and issuance of shares of the
Company's Common Stock through a private placement whereby gross proceeds of at
least $500,000 and up to $5.5 million would be raised. At June 30, 1998, when
the offering was closed, the Company had received $1,680,741 as a result of the
sale and issuance of 1,034,296 shares of Common Stock at $1.625 per share.
Effective September 1, 1998, the Company acquired all the membership
interests of SETEX, LLC, pursuant to an Interest Purchase Agreement
("Agreement"). The aggregate purchase consideration for all the membership
interests consisted of 4,000 shares of the Series C Preferred Stock of GulfWest,
par value $.01 per share and liquidation value $500 per share and Warrants to
purchase 100,000 shares of GulfWest Common Stock. In this transaction, the
Company acquired working interests in proved undeveloped oil and gas properties
located in six (6) counties in South and East Texas with estimated proved
reserves of approximately 3 billion cubic feet of natural gas equivalent net to
the Company's interest. The consideration was determined through negotiations
based upon third party engineering reports.
In a subsequent event, effective October 1, 1998, the Company sold 100% of
its stock ownership in its operating subsidiary WestCo for $150,000 in the form
of a promissory note. The Company will continue to operate properties through
its subsidiary SETEX. The sale of Westco is part of a program to reduce
operating expenses by avoiding duplicate efforts and consolidating field
personnel and equipment into other subsidiaries.
Management has identified seven (7) wells on its Madisonville properties
which can be re-entered by using the horizontal drilling technique which,
according to independent engineering reports, has increased the Company's Proved
Reserves by an additional 400,000 barrels of oil equivalent (BOE). The Company
commenced this horizontal drilling program in September, 1998 by successfully
re-entering and horizontally drilling the Powledge #1 well.
10
<PAGE>
Management's acquisition strategy is for the Company to be an aggressive
consolidator of small, under-capitalized operators with undeveloped properties
and a purchaser of oil and gas properties that may be non-core to larger
independent and major oil and gas companies. Management intends to continue to
seek additional sources of capital which will enable the Company to carry out
this strategy while continuing to develop the oil and gas properties it
currently owns.
Although management believes the above business strategy will ultimately
provide the Company with the means to become profitable, there can be no
assurance that the necessary funds will be available or that the strategy can be
effectively accomplished. Continued unfavorable oil and/or gas prices and the
inability of the Company to raise the capital necessary for its acquisition and
development programs could have a severe impact on the Company.
Management intends to continue to raise capital through equity offerings
which will allow the Company to remain in compliance with Nasdaq listing
requirements.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits -
Number Description
*3.1 Articles of Incorporation of the Registrant and
Amendments thereto.
*3.2 Bylaws of the Registrant.
#3.3 Statement of Resolution Establishing and Designating
the Company's Class AA Preferred Stock, filed with the
Secretary of State of Texas as an amendment to the
Company's Articles of Incorporation on September 23,
1996.
#3.4 Statement of Resolution Establishing and Designating
the Company's Class AAA Preferred Stock, filed with the
Secretary of State of Texas as an amendment to the
Company's Articles of Incorporation on September 23,
1996.
^3.5 Statement of Resolution Establishing and Designating
the Company's Series C Preferred Stock, filed with the
Secretary of State of Texas as an amendment to the
Company's Articles of Incorporation on September 15,
1998.
%27.1 Financial Data Schedule.
_______________
^ Previously filed with the Company's Form 8-K, Current Report dated
September 15, 1998, filed with the Commission on September 24, 1998.
# Previously filed with the Company's Form 8-K, Current Report dated October
10, 1996, filed with the Commission on October 25, 1996.
* Previously filed with the Company's Registration Statement (on Form S-1,
Reg. No. 33-53526), filed with the Commission on October 21, 1992.
% Filed herewith.
(b) Form 8-K -
Current Report on Form 8-K, dated September 15, 1998, filed
with the Commission on September 24, 1998.
Current Report on Form 8-K, dated October 1, 1998, filed
with the Commission on October 16, 1998.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GULFWEST OIL COMPANY
(Registrant)
Date: November 16, 1998 By: /s/ Jim C. Bigham
--------------------
Jim C. Bigham
Executive Vice President
and Secretary
Date: November 16, 1998 By: /s/ Richard L. Creel
----------------------
Richard L. Creel
Vice President of Finance
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTACTED FROM THE GULFWEST
OIL COMPANY'S QUARTELY REPORT FILED ON FORM 10-Q FOR THE QUARTE ENDED SEPTEMBER
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000813779
<NAME> 0
<MULTIPLIER> 1
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 756,297
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 907,678
<PP&E> 25,626,293
<DEPRECIATION> 3,657,100
<TOTAL-ASSETS> 22,876,871
<CURRENT-LIABILITIES> 14,113,422
<BONDS> 0
0
92
<COMMON> 2,963
<OTHER-SE> 3,085,583
<TOTAL-LIABILITY-AND-EQUITY> 22,876,871
<SALES> 439,614
<TOTAL-REVENUES> 628,192
<CGS> 0
<TOTAL-COSTS> 1,129,512
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (389,448)
<INCOME-PRETAX> (890,768)
<INCOME-TAX> 0
<INCOME-CONTINUING> (890,768)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (890,768)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
</TABLE>
