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 March 31, 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, May 14, 1998, was 1,787,398 shares of
Class A Common Stock, $.001 par value.
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<TABLE>
GULFWEST OIL COMPANY
FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1998
<CAPTION>
Page of
Form 10-Q
<S> <C>
Part I: Financial Statements
Item 1. Financial Statements
Consolidated Balance Sheets, March 31, 1998,
and December 31, 1997 3
Consolidated Statements of Operations-for the three
months ended March 31, 1998, and 1997 5
Consolidated Statements of Cash Flows-for the three
months ended March 31, 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
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on 8-K 11
Signatures 15
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
GULFWEST OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 8,302 $ 626,519
Accounts Receivable - Trade, Net of Allowance for Doubtful
Accounts of -0- in 1998 and 1997, respectively 682,972 855,383
Prepaid Expenses 153,406 54,494
Total Current Assets 844,680 1,536,396
Oil & Gas Properties, Using the Successful Efforts Method of Accounting:
Undeveloped Properties 4,585 4,585
Developed Properties 20,816,346 17,026,171
20,820,931 17,030,756
Other Property and Equipment 1,217,018 1,171,214
Less - Accumulated Depreciation, Depletion,
and Amortization (3,175,335) (2,874,403)
Net Oil and Gas Properties and
Other Property and Equipment 18,862,614 15,327,567
Deposits on Developed Oil and Gas Properties 18,744 225,892
Total Assets $19,726,038 $17,089,855
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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<TABLE>
GULFWEST OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Current Liabilities:
Notes Payable $ 350,000 $ 350,000
Notes Payable - Related Parties 150,000 150,000
Current Portion of Long-Term Debt 10,890,982 311,233
Current Portion of Long-Term Debt - Related Parties 350,000 350,000
Accounts Payable - Trade 1,690,587 1,427,661
Accrued Expenses 259,673 290,362
Total Current Liabilities 13,691,242 2,879,256
Long-Term Debt, Net of Current Portion 3,744,579 11,185,055
Long-Term Debt, Related Parties 1,000,000 1,000,000
Commitments and Contingencies - -
Stockholders' Equity:
Preferred Stock 54 54
Common Stock 1,759 1,759
Additional Paid-in Capital 7,591,092 7,583,236
Retained Deficit (6,150,214) (5,407,031)
Long-Term Accounts and Notes Receivable -
Related Parties, Net of Allowance for Doubtful
Accounts of $448,230 and $448,230 in 1998
and 1997, respectively (152,474) ( 152,474)
Total Stockholders' Equity 1,290,217 2,025,544
Total Liabilities and Stockholders'
Equity $19,726,038 $17,089,855
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
<TABLE>
GULFWEST OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Oil and Gas Sales $ 678,259 $ 1,154,621
Well Servicing Revenues 127,522 73,055
Operating Overhead and Other Income 34,969 77,046
Total Revenues 840,750 1,304,722
Costs and Expenses:
Lease Operating Expenses 466,552 397,086
Cost of Well Servicing Operations 115,960 44,475
Depreciation, Depletion and Amortization 300,932 232,768
General and Administrative 343,072 311,755
Total Costs and Expenses 1,226,516 968,084
Income (Loss) From Operations (385,766) 318,638
Other Income and Expense:
Interest Income 28 298
Interest Expense (311,493) (232,914)
Total Other Income and Expense (311,465) (232,616)
Net Income (Loss) Before Taxes (697,231) 86,022
Income Tax Provision - -
Net Income (Loss) (697,231) 86,022
Preferred Stock Dividend Requirement (62,211) (90,132)
Net (Loss) to Common Shareholders $ (759,442) $ (4,110)
(Loss) Per Share and Common Stock Equivalents $ (.43) $ (0.02)
Weighted Average Number of Shares 1,759,185 1,655,097
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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<TABLE>
GULFWEST OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows Provided (Used) By Operating Activities:
Net Income (Loss) $ (697,231) $ 86,022
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided By (Used By) Operating Activities:
Depreciation, Depletion, and Amortization 300,932 232,768
Common Stock and Warrants Issued and Charged to Operations 7,856 10,000
(Increase) Decrease in Accounts Receivable - Trade, Net 172,411 (820,885)
(Increase) Decrease in Prepaid Expenses (98,912) (6,335)
Increase (Decrease) in Accounts Payable 262,926 471,439
Increase (Decrease) in Accrued Expenses (30,689) (54,407)
Net Cash Provided By (Used By) Operating Activities (82,707) (81,398)
Cash Flows From Investing Activities:
Purchase of Property and Equipment (3,628,831) (640,750)
(Increase) Decrease in Accounts and Notes and Receivable - Related Party - 14,964
Payments Received on Loans to Related Parties - (200,000)
Net Cash Used In Investing Activities (3,628,831) (825,786)
Cash Flows From Financing Activities:
(Increase) in Notes Receivable - (100,000)
Proceeds From Sale of Common Stock, Net - 153,377
Proceeds From Sale of Preferred Stock, Net - 231,980
Payments on Debt (7,492,728) (707,650)
Proceeds From Debt Issuance 10,632,001 1,383,657
Dividends Paid (45,952) (71,745)
Net Cash Provided (Used) By Financing Activities 3,093,32 889,619
Increase (Decrease) in Cash and Cash Equivalents (618,217) (17,565)
Cash and Cash Equivalents, Beginning of Period 626,519 84,477
Cash and Cash Equivalents, End of Period $ 8,302 $ 66,912
Cash Interest Paid $ 298,312 $ 216,668
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
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GULFWEST OIL COMPANY AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 ("GWT") and
GulfWest Permian Company ("GWP") all formed in 1996; and DutchWest Oil
Company ("DutchWest") formed in 1997. 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.
7
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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 oil and gas properties that may be non-core to larger independent and major
oil and gas companies.
During 1997, the Company acquired various additional working interests in
oil and gas properties located in Texas, Kansas and Oklahoma through five
negotiated transactions.
In January 1998, the Company commenced a program to drill seventeen (17)
infield wells in the Vaughn Field, Crockett County, Texas. If successful, upon
completion of the drilling program, the Company will have increased its Proved
Producing oil reserves in the Vaughn Field from approximately 700,000 barrels to
an estimated 1.7 million barrels.
Management is seeking a partner to assist in the horizontal development of
wells on its Madisonville properties. Management has identified 7 wells for
re-entry using its horizontal technique which has proved up an additional
400,000 barrels of oil equivalent. The partner would be required to provide
sufficient funds to pay down the existing debt on the property and fund the
drilling and completion of the horizontal wells in exchange for a substantial
operating interest in those wells.
Results of Operations
Comparative results of operations for the periods indicated are discussed below.
Three-Month Period Ended March 31, 1998 compared to Three Month Period Ended
March 31, 1997.
Revenues
Oil and gas revenues for the first quarter decreased from $1,154,600 in
1997 to $678,259 in 1998, as a result of lower oil and natural gas prices. The
average prices received for production decreased for oil from $20.69 per Bbl
during the first three months of 1997 to $12.52 per Bbl during the period in
1998 and natural gas prices decreased from an average of $2.61 per Mcf for the
first three months of 1997 to $2.22 per Mcf for the period in 1998. Oil and gas
sales volumes were slightly less in 1998 compared to 1997 as a result of
management's decision to curtail production of certain wells due to the low
prices.
8
<PAGE>
Operations for third parties produced well servicing revenues of $127,522
less expenses of $115,960 in 1998 compared to $73,055 less expenses of $44,475
for 1997. Revenues from operating overhead and other income decreased 54% from
$77,046 in 1997 to $34,969 in 1998. 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 increased 17% from $397,100 in 1997 to $466,600 in
1998, due to the acquisition of additional working interests ownership.
Financial Condition and Capital Resources
During the fourth quarter of 1996, the Company acquired and assumed
operations for $10,654,000 in oil properties in West Texas (the "Acquired
Properties"). 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 $7,632,000 for refinancing the
Acquired Properties and $2,605,000 for payment toward the acquisition of certain
other oil properties in West Texas, with a purchase price of $2,976,000. The
Company also entered into a purchase and sale agreement for certain other oil
properties in West Texas for a purchase price of $1,450,000, by increasing the
aforementioned bank note and seller note $1,000,000 and $450,000, respectively.
On January 7, 1997, the Company established a $2,000,000 revolving credit
facility with Southwest Bank of Texas, with part of the proceeds used for
payment of short-term notes incurred for acquisitions made during the fourth
quarter of 1996. On July 2, 1997, the Company's revolving credit facility was
increased to $2,750,000 with the additional funds used for acquisitions and
further enhancements of the Company's West Texas properties. The revolving
credit facility is guaranteed by J. Virgil Waggoner, a director of the Company.
On March 30, 1998, the revolving credit facility of $2,750,000 was renewed with
a maturity date of April 10, 2000 and the demand feature of the note was
removed.
On March 3, 1998, the Company established a $500,000 revolving credit
facility with Compass Bank of Dallas, to be used for equipment purchases and
working capital for its subsidiary, VanCo Well Service, Inc. ("VanCo"). The
credit facility is guaranteed by J. Virgil Waggoner, a director, Marshall A.
Smith, III, President of the Company and Jay Waggoner, an officer of VanCo.
On December 15, 1997, the Company obtained a loan from J. Virgil Waggoner,
a director of the Company, for $1,000,000 to drill seventeen developmental wells
in the Vaughn Field. On March 25, 1998, Mr. Waggoner agreed to extend the due
date of the note to June 30, 1999 and, at the Company's option, to convert the
outstanding principal amount of the note to Common Stock of the Company as part
of the private placement discussed below.
In a subsequent event, on May 14, 1998, and Mr. Waggoner agreed to convert
the $1,000,000 principal amount of his note to 500,000 shares of the Company's
Common Stock at a price of $2.00 per share, as part of the private placement
discussed below. As a result of this conversion, the Company's net tangible
assets will increase from $1,290,217 at March 31, 1998 to approximately
$2,290,000.
9
<PAGE>
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 at a price to be determined
whereby gross proceeds of at least $500,000 and up to $5.5 million are
anticipated to be raised. If fully subscribed, the Company expects to use the
proceeds from the offering for working capital and general corporate purposes.
These general purposes may include (i) approximately $2.75 million for payment
of the current balance of a revolving credit facility with Southwest Bank of
Texas (this credit facility would continue to be available to the Company for
acquisition, development and enhancement of oil and gas properties); (ii)
approximately $1 million for repayment of a drilling loan from J. Virgil
Waggoner; and (iii) approximately $600,000 for placement agent fees and expenses
of the offering. The use of proceeds is subject to change, however, based upon
the number of shares of Common Stock sold in the offering, the amount of net
proceeds to the Company, competitive developments and the availability to the
Company of other methods of financing.
Although management believes the above actions will ultimately provide the
Company with the means to become profitable, there is no guarantee these actions
can be effectively implemented. Adverse changes in prices of oil and gas and/or
the inability of the Company to continue to raise the money necessary to develop
existing reserves or acquire new reserves would have a severe impact on the
Company.
10
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A special meeting of the shareholders of the Company was held on
March 24, 1998 to consider a proposal for the offering, sale and
issuance of the Company's Common Stock through a private
placement at a price to be determined whereby gross proceeds of
at least $500,000 and up to $5.5 million are anticipated to be
raised. Of the 1,759,185 outstanding shares of Common Stock
entitled to be voted at the meeting, there were, either in person
or represented by proxy, 1,024,465 holders of such shares, which
was 58% of the outstanding shares entitled to be voted at the
meeting and was a sufficient quorum to conduct business. The
proposal was approved with 978,691 votes (96%) in favor of the
proposal, 44,608 votes (4%) against and 1,166 abstentions (less
than 1%). No other matters were considered at this special
meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits -
Number Description
X2.1 Restructuring Agreement Regarding Madisonville Prospect,
dated April 18, 1995.
X2.2 Unanimous Consent to First Amendment to Regulations of
S.G.C. Transmission, L.L.C., dated July 17, 1995.
X2.3 Security Agreement RE: Subsequently Acquired Interests,
dated July 17, 1995.
&2.4 Purchase and Sale Agreement, with amendments, between
Pharaoh Oil and Gas, Inc, as Seller, and WestCo Producing
Company, as Purchaser, dated June 12, 1996.
&2.5 Addendum of Purchase and Sale Agreement by and between Gary
O. Bolen, Individually and d/b/a Badger Oil Company, Pharaoh
Oil and Gas, Inc., and GulfWest Texas Company.
&2.6 Assignment of Purchase and Sale Agreement by and between
Gary O. Bolen, Individually and d/b/a Badger Oil Company,
Pharaoh Oil and Gas, Inc., GulfWest Texas Company and WestCo
Producing Company.
&2.7 Assignment and Bill of Sale by and between Gary O. Bolen,
Individually and d/b/a Badger Oil Company and Pharaoh Oil
and Gas, Inc. as Assignor and GulfWest Texas Company as
Assignee.
11
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@2.8 Purchase and Sale Agreement between Pharaoh Oil and Gas,
Inc., Taylor Link Operating Co. and Gary O. Bolen,
Individually and d/b/a Badger Oil Company (collectively,
"Pharaoh"), as Seller, and WestCo Producing Company, as
Purchaser, dated November 6, 1996.
@2.9 Addendum of Purchase and Sale Agreement between Pharaoh and
WestCo Producing Company, dated December 5, 1996.
@2.10Assignment of Purchase and Sale Agreement by and between
Pharaoh, GulfWest Permian Company and WestCo Producing
Company, dated December 5, 1996.
@2.11Form of Assignment and Bill of Sale by and between Pharaoh
as Assignor and GulfWest Permian Company as Assignee.
*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.
^4.1 Form of Note Purchase and Sale Agreement for the Company's
1995 Series A 9.5% Subordinated Notes, undated.
^4.2 Subscription and Registration Rights Agreement for the
Purchase of Preferred Stock Between the Company and Eco2,
Inc. dated March 13, 1996.
&4.3 Term note in the amount of $1,500,000.00 payable to the
order of Pharaoh Oil and Gas, Inc. and to be executed by
GulfWest Texas Company.
@4.4 Term note in the amount of $5,900,000.00 payable to the
order of Pharaoh Oil and Gas, Inc. and executed by GulfWest
Permian Company, dated December 5, 1996.
@4.5 Term note in the amount of $1,604,000.00 payable to the
order of Pharaoh Oil and Gas, Inc. and executed by GulfWest
Permian Company, dated December 5, 1996.
+10.2GulfWest Oil Company 1994 Stock Option Plan, approved by
the Board of Directors on February 11, 1994.
12
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+10.3Form of Nonqualified Stock Option Agreement, dated February
11, 1994 between the Company and certain officers, directors
and advisors of the Company.
#10.4Letter Agreement between the Company and Madisonville
Project, Limited, dated December 28, 1993 and amendment
dated March 28, 1994.
#10.5Investment Letter Subscription Agreement of the
Madisonville Project, Limited, executed by the Company on
July 31, 1994.
#10.6The Madisonville Project, Limited Agreement of Limited
Partnership, dated July 31, 1994.
+10.7Warrant Agreement between the Company and Jackson & Walker,
L.L.P., dated December 21, 1994.
^10.8Stock Option Agreement between the Company and John E.
Loehr, dated May 11, 1995.
^10.9Stock Option Agreement between the Company and Marshall A.
Smith III, dated May 11, 1995.
^10.10 Employment Agreement between the Company and Marshall A
Smith III, dated July 1, 1995.
^10.11 Employment Agreement between the Company and Jim C.
Bigham, dated July 1, 1995.
~16 Letter from Arthur Andersen, L.L.P., dated December 28, 1995
agreeing with the statements contained in Item 4 of the Form
8-KA report.
?20.1 Letter to Shareholders dated August 12, 1996.
25 Power of Attorney (included on signature page of this Annual
Report).
%27.1 Financial Data Schedule.
_______________
@ Previously filed with the Company's Form 8-K, Current Report dated December
5, 1996, filed with the Commission on December 17, 1996.
& 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 Quarterly Report on Form 10-Q for the
period ended June 30, 1996, filed with the Commission on August 14, 1996.
^ Previously filed with the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, filed with the Commission on April 12, 1996.
13
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~ Previously filed with the Company's Form 8-K/A, Current Report dated
December 12, 1995, filed with the Commission on December 29, 1995.
X Previously filed with the Company's Form 8-K, Current Report dated July 17,
1995, filed with the Commission on July 31, 1995.
+ Previously filed with the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, filed with the Commission on April 14, 1995.
# Previously filed with the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1994, filed with the Commission on August 14, 1994.
* 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 -
The Company filed a Current Report on Form 8-K, dated March 20,
1998, with the Commission on April 3, 1998 and an amendment on
Form 8-K/A on April 13, 1998 reporting a series of transactions
to acquire working interests in additional oil properties and
refinance oil properties previously purchased by the Company.
14
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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: May 15, 1998 By: /s/ Jim C. Bigham
Jim C. Bigham
Executive Vice President and
Secretary
Date: May 15, 1998 By: /s/ John E. Loehr
John E. Loehr
Chairman of the Board and
Chief Financial Officer
15
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE GULFWEST
OIL COMPANY'S QUARTERLY REPORT FILED ON FORM 10-Q FOR THE QUARTER ENDED MARCH
31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 8,302
<SECURITIES> 0
<RECEIVABLES> 682,972
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 844,680
<PP&E> 22,037,949
<DEPRECIATION> 3,175,335
<TOTAL-ASSETS> 19,726,038
<CURRENT-LIABILITIES> 13,691,242
<BONDS> 0
0
54
<COMMON> 1,759
<OTHER-SE> 1,288,404
<TOTAL-LIABILITY-AND-EQUITY> 19,726,038
<SALES> 678,259
<TOTAL-REVENUES> 840,750
<CGS> 0
<TOTAL-COSTS> 1,226,516
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (311,493)
<INCOME-PRETAX> (697,231)
<INCOME-TAX> 0
<INCOME-CONTINUING> (697,231)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (697,231)
<EPS-PRIMARY> (.43)
<EPS-DILUTED> (.43)
</TABLE>
