<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File Number 0-17244
LONE STAR INTERNATIONAL ENERGY, INC.
(Name of small business issuer in its charter)
NEVADA 87-0434288
(State of incorporation) (IRS Employer Identification Number)
200 PALO PINTO, SUITE 108
WEATHERFORD, TEXAS 76086
(Address of principal executive offices) (Zip code)
(817) 598-0542
Issuer's telephone number
Check whether the issuer (1) filed all the reports required to be filed by
section 13 or 15(d) of the Exchange Act 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. [ X ] Yes
[ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, Par Value $.001; 20,550,283 Shares as of November 14, 1997
Transitional Small Business Disclosure Format: Yes [ ] No [x]
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
LONE STAR INTERNATIONAL ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and marketable securities $1,087,265 $ 1,397
Accounts receivable - oil and gas revenues 45,750 21,263
Accounts receivable - JIB, net of allowance of $20,500 43,143 22,319
Accounts receivable - related party 328,684 347,589
Prepaid expenses 1,162,877
---------- ----------
Total current assets 2,667,719 392,568
---------- ----------
Properties and equipment, at cost 5,982,320 1,638,403
Less - accumulated depreciation, depletion and amortization 186,464 92,650
---------- ----------
Property and equipment, net 5,795,856 1,545,753
---------- ----------
Other assets 85,139 525
---------- ----------
TOTAL ASSETS $8,548,714 $1,938,846
========== ==========
</TABLE>
<PAGE> 3
LONE STAR INTERNATIONAL ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
-------------- -------------
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 680,051 $ 121,063
Production payable 276,187 232,272
Accrued interest payable 51,461 47,643
Accrued payroll taxes payable 111,850 672
Notes payable 404,072 467,963
Accounts Payable - interest owners 23,795 74,347
Wages payable 435,780
Debenture payable 2,500,000
Current portion of long term debt 1,700
----------- -----------
Total current liabilities 4,484,896 943,960
----------- -----------
Long term debt 17,993
----------- -----------
Total liabilities 4,502,889 943,960
----------- -----------
STOCKHOLDERS' EQUITY
Common stock - par value $.001, 100,000,000 shares
authorized, 20,550,283 shares issued and outstanding 20,550 8,397
Common shares to be issued 44,500 21,500
Stock subscriptions receivable (5,000) (5,000)
Additional paid in capital 6,889,492 1,797,445
Retained deficit (2,903,717) (827,456)
----------- -----------
Total stockholders' equity 4,045,825 994,886
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,548,714 $ 1,938,846
=========== ===========
</TABLE>
<PAGE> 4
LONE STAR INTERNATIONAL ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Oil and gas production $ 126,086 $ 59,839 $ 305,060 $ 122,959
Operating income 16,800 1,950 40,600 3,900
Other income 5,461 16 5,477 53
------------ ------------ ------------ ------------
Total revenues 148,347 61,805 351,137 126,912
------------ ------------ ------------ ------------
EXPENSES
Production expenses 114,285 47,023 254,862 113,423
Depreciation, depletion and amortization 32,857 25,631 93,814 52,045
General and administrative expenses 1,019,823 31,745 2,078,722 80,243
------------ ------------ ------------ ------------
Total expenses 1,166,965 104,399 2,427,398 245,711
------------ ------------ ------------ ------------
Net income (loss) $ (1,018,618) $ (42,594) $ (2,076,261) $ (118,799)
============ ============ ============ ============
Net income (loss) per common share $ (0.067) $ (0.005) $ (0.137) $ (0.014)
============ ============ ============ ============
Weighted average shares outstanding 15,121,552 8,706,000 15,121,552 8,706,000
============ ============ ============ ============
</TABLE>
<PAGE> 5
LONE STAR INTERNATIONAL ENERGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(2,076,261) $ (240,836)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 513,453 66,026
Changes in operating assets and liabilities:
(Increase) decrease -
Accounts receivable (45,311) 20,493
Increase (decrease) in -
Accounts payable and accrued expenses 1,058,241 62,601
Revenues payable 43,915 106,241
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (505,963) 14,525
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other assets (84,614) (300)
(Increase) decrease in due from related parties 18,905 (83,566)
Purchase of property and equipment (1,196,696) (6,699)
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,262,405) (90,565)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payments) on notes and loans payable, net 2,404,236
Proceeds from borrowings from interest owners 34,597
Increase (decrease) in cash overdraft (2,660)
Sale of common stock 450,000 45,500
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,854,236 77,437
----------- -----------
NET INCREASE (DECREASE) IN CASH 1,085,868 1,397
CASH, Beginning of period 1,397
----------- -----------
CASH, End of period $ 1,087,265 $ 1,397
=========== ===========
</TABLE>
<PAGE> 6
LONE STAR INTERNATIONAL ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization - Lone Star International Energy, Inc., a Nevada Corporation (the
"Company"), was incorporated in the state of Utah on April 11, 1986 as
Quiescent Corporation. To reincorporate as a Nevada corporation, on December 1,
1993, the Company's shareholders approved a merger with a newly formed Nevada
corporation with the same name. A Certificate of Merger of the Utah and Nevada
corporations was executed on December 30, 1993 and following that action the
Utah Corporation filed Articles of Dissolution in Utah on December 30, 1993. In
October 1995 the Company discovered that Articles of Merger had not been
recorded in Nevada. As a result, the status of the company resulting from the
filing of the Articles of Dissolution in 1993 and the filing of the Articles of
Merger in 1995 was not clear. The Company consulted the Director, Divisions of
Corporations State of Utah in August 1997, and through the cooperation of that
office concluded that the previous dissolution of Quiescent in Utah was not
effective. A Notice of merger was prepared and filed with the Utah Department
of Commerce, Division of Corporations and Commercial Code on October 12, 1997,
which included the Articles of Merger and the Plan of Merger. These actions
result in the status of the company being corrected to reflect that the
original Quiescent Corporation, a Utah Corporation remained in existence until
the merger with Cumberland Companies, Inc. on October 12, 1995, with the
formality of notifying Utah via the notice of Merger occurring on October 12,
1997. Consequently, Quiescent was re-incorporated in Nevada effective October
12, 1995. The Company had no operations until the completion of the reverse
acquisition described below on May 2, 1995.
Reverse Acquisition - The Company entered into an Agreement dated as of April
10, 1995, with Cumberland Petroleum, Inc., a Texas corporation ("Cumberland"),
pursuant to which, on May 2, 1995 the Company acquired from C.E. Justice, 100%
of the capital stock of Cumberland in the exchange for the issuance of
5,000,000 shares of the Company's common stock. The Company changed its name to
Cumberland Holdings, Inc. on May 3, 1995, and to Cumberland Companies, Inc. On
August 17, 1995, and to Lone Star International Energy, Inc. on January 30,
1997.
For accounting purposes, the transaction has been treated as a recapitalization
of Cumberland with Cumberland as the acquirer (reverse acquisition). The
historical financial statements prior to May 2, 1995 are those of Cumberland.
The historical stockholders' equity accounts of Cumberland at December 31, 1994
have been retroactively restated to reflect the equivalent number of shares of
common stock received in this transaction after giving effect to the difference
in par value.
2. COMMENTS
The accompanying consolidated financial statements are unaudited but, in the
opinion of the management of the company, contain all adjustments, consisting
of only normal recurring accruals, necessary to present fairly the financial
position at September 30, 1997, the results of operations and changes in cash
flows for the nine months then ended. Certain information and footnote
disclosures normally included in financial statements that have been prepared
in accordance with generally accepted accounting principals have been condensed
or omitted pursuant to the rules and regulations of the Securities and Exchange
Commission, although management of the Company believes that the disclosures
contained in these financial statements are adequate to make the information
presented therein not misleading. For further information, refer to the
Company's annual report on Form 10-KSB for the year ended December 31, 1996.
The results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the results of operations to be expected for the full
year ended December 31, 1997.
<PAGE> 7
3. SALE OF COMMON STOCK
During the nine months ended September 30, 1997, the Company sold 1,800,000
shares of common stock, in reliance on exemptions from registration, at a price
of $.25 per share for total cash considerations of $450,000. This stock is
restricted and subject to the provisions of Rule 144, which requires a minimum
one-year holding restriction. In November 1996, the Company negotiated
consulting agreements with ten separate individuals, whereby the Company was to
issue each consultant a total of 700,000 shares of common stock as
consideration for the services to be performed over a one-year contract. The
consulting services contracted with these ten individuals included regional
marketing coordinators for the Mid West, Northeast, West Coast and Southeast
regions; investor relations; media events coordinator; mass marketing computer
coordinator; due diligence analysis; asset evaluation; and project director.
Although the contracts were negotiated and completed in 1996, the Company
issued the shares of common stock to each of these individuals in the first
quarter of 1997, for which a registration statement on S-8 was effective. In
prior reporting periods, the Company reported these consulting contracts and
the stock compensation issued to the consultants at the average share price at
the time the shares were registered under the S-8 registration. A review of
this situation and after consulting with the Company's auditors, it was
determined that due to minimum trading activity in the Company's stock at the
time the contracts were negotiated the value of the consideration given be
correctly stated at a price of $0.10 per share, and this correction to the
Company's accounts is reflected herein. The Company will also amend its prior
filings to reflect this change in value of the compensation for the consulting
contracts. During the second quarter of 1997, the Company terminated seven of
the contracts and retired 3,500,000 shares of the common stock, at no cost to
the company, that the Company had issued in regard to the above mentioned
consulting agreements. In addition, during this current reporting period, an
additional 900,000 shares of the common stock issued in accordance with the ten
consulting contracts was returned to the company at no cost, and is being
retired. During April, 1997 the Company acquired Energy Reclaim Refrigeration,
Inc. and the Northridge oil and gas properties with 3,333,333 shares and
1,100,000 shares respectively of the Company's' restricted common stock.
During the first quarter, the Company entered into a consulting agreement with
a petroleum engineer, to provide engineering services to the Company for a
two-year term. As consideration for these services, the Company issued 250,000
shares of common stock during the third quarter, for which a registration
statement on S-8 was effective. In addition, during the third quarter, the
Company entered into separate consulting agreements with two consultants,
wherein each was to provide due diligence services with regard to a possible
merger being proposed to the Company, as well as performing promotional
services to assist the Company in creating awareness of its goods and services.
In consideration for the services to be performed over a three-year period,
each consultant was issued 500,000 shares of common stock for which a
registration statement on S-8 was effective. The Company during the third
quarter cancelled and terminated the consulting contract of one of these
consultants and through a compromise and settlement, will redeem 425,000 shares
of the common stock previously issued, and these shares will be retired at no
cost to the Company. Finally, during the third quarter the company entered
into a consulting agreement an investor relations and public relations firm for
a one year period. As compensation, the Company issued 280,000 shares of its
restricted Rule 144 common stock.
<PAGE> 8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CERTAIN STATEMENTS CONTAINED IN THIS DOCUMENT, INCLUDING WITHOUT LIMITATION
STATEMENTS CONTAINING THE WORDS "BELIEVES", "ANTICIPATES", "INTENDS",
"EXPECTS", AND WORDS OF SIMILAR IMPORT, CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT. SUCH
FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE COMPANY TO MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD LOOKING STATEMENTS.
OVERVIEW:
Effective May 2, 1995, the Company acquired Cumberland. Cumberland operates oil
and gas properties, for accounting purposes; the transaction has been treated
as a recapitalization of Cumberland with Cumberland as the acquirer (reverse
acquisition). The historical financial statements prior to May 2, 1995 are
those of Cumberland.
The Company intends to increase production and reserves through development of
existing oil and gas properties and future acquisitions. Future acquisitions
will require additional capital and the Company believes it can raise such
capital through either public or private financing, or a combination of both.
In April 1997, the Company acquired Energy Reclaim Refrigeration, Inc.
(Energy), and made it a wholly owned subsidiary. As a result of this
acquisition, the Company now owns the patents to two new energy savings
absorption refrigeration technology devices, one referred to as the "Magnetron"
Residential System, and the second as the "Fresh Catch." A third patent for
the "By-Pass Chiller" is currently pending. As demonstrated by the Company's
prototype, the By-Pass Chiller when retrofitted to an existing refrigeration
unit is expected to reduce the kilowatt demand resulting in proven energy
consumption reduction by approximately 25% to 30%. Based upon the test results
of the By-Pass Chiller prototype, the Company has begun development of the
production model, and is engaged in negotiations with a major public utility to
conduct a pilot project. Under the pilot project, a production model of the
By-Pass Chiller will be retrofitted to the air conditioning system on one of
the utility's buildings. The utility will then beta test, data log and provide
its engineering assistance necessary for the commercial production of the
By-Pass Chiller. The main applications for the By-Pass Chiller include office
complexes, skyscrapers, power plants, factories, utility companies and any
other facility interested in reducing energy costs and using a minimum 25-ton
air conditioning system.
The Company's patented latent heat absorption refrigeration system called the
Fresh Catch, designed initially for the fishing industry, can be attached to
any heat source (exhaust heat from the diesel engine, steam waste, hot water
waste pipe, etc.) and transforms the heat to provide freezing, refrigeration,
as well as air conditioning for the entire vessel. The resulting refrigeration
from the Fresh Catch system operates virtually without cost, has no moving
parts and is completely environmentally friendly. A prototype model of the
Fresh Catch has been employed for testing on a shrimp trawler owned by Offshore
Vessel and Equipment, Inc. ("Offshore"). In addition to the commercial fishing
industry, this technology has applications for cargo ships, luxury cruise
ships, and offshore drilling rigs.
Based upon the test results of the By-Pass Chiller prototype and the Fresh
Catch deployed on the shrimp trawler, the Company entered into an exclusive
marketing and distribution contract with Offshore, whereby Offshore was granted
the global marketing and distribution rights to the Fresh Catch for commercial
fishing and other maritime industry applications. In addition, Offshore was
granted marketing and distribution rights to the By-Pass Chiller for the States
of Florida, Georgia, Alabama, Mississippi, Louisiana, and the coastal areas of
the State of Texas. To date, the Company has received purchase orders for its
By-Pass Chiller and Fresh Catch units totaling approximately $6,000,000.00 in
proposed sales. No assurance can be given that such purchase orders will
ultimately result in sales revenue. The Company has elected not to accept
additional purchase orders until such time as its manufacturing facility is
completed and actual production of the units is underway.
<PAGE> 9
In July 1997, the Company completed an unregistered debenture offering. The
total commitment under the private placement was $5,000,000.00; however, the
Company has drawn down only one-half or $2,500,000.00 as of the date of this
report. Proceeds from the private placement were used to secure the
acquisition of equipment necessary to complete the manufacturing facility for
the Fresh Catch and By-Pass Chiller units. Critical to the manufacturing
process was the Bystronic CNC Laser Center, which was purchased at a cost of
$650,000.00. Delivery and installation of the laser was completed in late
September at the Company's 27,000 sq. ft. manufacturing and assembly facility
in Mineral Wells, Texas. This laser is only one of an estimated three of its
size and capabilities in the State of Texas, and it will allow the Company to
substantially manufacture both of its products in house, guaranteeing quality
control as well as achieving both significant cost and time savings as a
result.
With the installation of the laser equipment, the Company will also be in a
position to offer contract cutting and machining services to other original
equipment manufacturers. With that in mind, the Company is in preliminary
negotiations with several companies to provide such services, and plans to
formalize these agreements over the next several weeks after the laser is
operational.
The Company's oil and gas division has adopted the business philosophy of
acquiring existing cash flow properties to add to its current inventory of
producing properties. The targeted property acquisitions will be low risk with
multiple up-side potential for return on investment through further development
of the existing producing reserves. The initial acquisition made in April by
the Company involved approximately 60 wells from Northridge Oil Company. These
wells were all located in Texas, and were made up of a combination of oil and
gas producers. The majority of the acquired wells were shut-in and required
remedial work on equipment in order to restore production. The Company has
undertaken a systematic approach to the evaluation of each of these wells, and
is completing the remedial work in an orderly fashion to restore production.
As a result of the Northridge property acquisition, the Company now owns and
operates approximately 28 different oil and gas properties, consisting of a
total of 100 wells. Many of these wells remain shut-in as the remedial work is
continuing. Gross current monthly production includes over 800 barrels of oil
and 25 million cubic feet of gas. The Company's average net revenue interest
is eighty percent (80%). These levels are expected to increase as additional
shut-in wells are restored to production.
The Company is currently negotiating the renewal of its natural gas contracts,
which cover the sale of its natural gas production. The renewal contracts are
expected to increase cash flow from sale of production by up to 25% with no
increase in current volumes produced. At existing production and revenue
levels, the oil and gas division of the Company is self-sufficient. The
Company is poised to expand this division through the liquidation of certain
marginal wells and the acquisition of other more productive properties, some of
which have already been targeted.
The Company periodically evaluates other businesses within what it broadly
describes as the energy industry. The Company does not expect that any
associated costs to evaluate such business projects will impair its liquidity.
<PAGE> 10
RESULTS OF OPERATIONS:
Three months ended September 30, 1997 and 1996 -
Revenues increased from $61,805 for the three months ended September 30, 1996
to $148,347 for the three months ended September 30, 1997. Production expenses
increased from $47,023 for the three months ended September 30, 1996 to
$114,285 for the three months ended September 30, 1997 primarily as a result of
the work over of several wells.
General and administrative expenses increased from $31,745 for the three months
ended September 30, 1996 to $1,019,823 for the three months ended September 30,
1997. The basis of the increase includes amortization of consulting fees of
$299,944, expenses related to Energy Reclaim Refrigeration of $203,741, wages
of $100,394 and legal and professional fees of $314,781.
Nine months ended September 30, 1997 and 1996 -
Revenues increased from $126,912 for the nine months ended September 30, 1996
to $351,137 for the nine months ended September 30, 1997 primarily as a result
of the work over of several wells as well as the purchase of the additional
working interests. Production expenses increased from $113,423 for the nine
months ended September 30, 1996 to $254,862 for the nine months ended September
30, 1997 primarily as a result of the work over of several wells.
General and administrative expenses increased from $80,243 for the six months
ended September 30, 1996 to $2,078,722 for the three months ended September 30,
1997. The basis of the increase includes amortization of consulting fees of
$440,264, expenses related to Energy Reclaim Refrigeration of $495,686, wages
of $516,547 and legal and professional fees of $410,205.
<PAGE> 11
PART II--OTHER INFORMATION
ITEM 2. DESCRIPTION OF SECURITIES
During the third quarter the Company entered into a private transaction with an
individual, whereby the individual loaned the Chairman of the Company money
collateralized by the Chairman's stock. The Chairman then loaned the money to
the Company. As additional consideration for the transaction and utilization
of proceeds, the Company then issued the lender a Warrant Certificate for 50,000
Warrants to purchase common stock. The certificate was issued July 29, 1997
and is valid for two years, expiring at 5:00 P.M. July 28, 1999. The warrants
may be exercised to purchase one share of common stock for each warrant at the
exercise price of $3.00 per share.
Through an unregistered debenture offering in the third quarter, the Company
issued four convertible debentures for a cumulative funding of $2,500,000.00,
and the commitment to fund an additional $2,500,000.00 of debentures at a later
date as may be required by the company. The four debentures issued are made up
of two instruments of $1,000,000.00 each, an instrument in the face amount of
$300,000.00 and an instrument in the amount of $200,000.00. Each debenture
provides for interest at the rate of 8%, and allows the holder to convert up to
one-third of the face amount plus interest, into free trading common stock of
the company on the earliest of either the effective date of the registration
statement to be completed by the Company in accordance with the debenture
offering, or October 15, 1997. The holder is entitled to convert an additional
one-third of the face amount thirty days after the initial conversion, and the
final one-third may be converted sixty days after the initial conversion. For
purposes of computing the conversion rate, the share price to be utilized is
75% of the average of the 5 day closing bid price of the shares for the 5
trading days immediately preceding the date of conversion. The Company has
negotiated an amendment to the debentures with the holders thereof. This
amendment allows the Company a ninety-day exclusive option to redeem the
debentures for a fixed cash amount plus interest. This exclusive option period
begins October 15, 1997, and the debenture holders agreed not to attempt to
convert or assign the debentures during that period. As additional
consideration to the debenture holders for granting the Company this exclusive
option, the Company will issue the holders a total of 1,000,000 warrants for
the purchase of common stock. These warrants will have a two year term from
the effective date of the registration statement for the underlying securities.
The exercise price will be equal to the market price of the stock on the day
the registration statement is effective.
As previously reported herein, the Company entered into three separate
consulting agreements during the previous nine months. As consideration for
the services to be performed, the Company issued a total of 1,250,000 shares of
common stock for which a registration statement on S-8 was effective. Since
that time, one of these consulting contracts was terminated, and in settlement
thereof, 425,000 shares of common stock issued with the S-8 registration
statement will be redeemed and retired by the Company. In addition, the
Company entered into a consulting agreement with a new investor
relations/public relations group whereby 280,000 shares of restricted common
stock was issued.
<PAGE> 12
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
Item 2, April 7, 1997.
Item 2, April 23, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
LONE STAR INTERNATIONAL ENERGY, INC.
- ------------------------------------
(Registrant)
Date: November 18, 1997 /s/ C. E. Justice
President (principal executive officer)
Date: November 18, 1997 /s/ Michael D. Herrington
Chief Financial Officer, Treasurer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 587,265
<SECURITIES> 500,000
<RECEIVABLES> 45,750
<ALLOWANCES> 20,500
<INVENTORY> 0
<CURRENT-ASSETS> 2,667,719
<PP&E> 5,982,320
<DEPRECIATION> 186,464
<TOTAL-ASSETS> 8,548,714
<CURRENT-LIABILITIES> 4,484,896
<BONDS> 2,922,065
0
0
<COMMON> 20,550
<OTHER-SE> 4,025,275
<TOTAL-LIABILITY-AND-EQUITY> 8,548,714
<SALES> 305,060
<TOTAL-REVENUES> 351,137
<CGS> 0
<TOTAL-COSTS> 254,862
<OTHER-EXPENSES> 2,172,536
<LOSS-PROVISION> 20,500
<INTEREST-EXPENSE> 57,103
<INCOME-PRETAX> (2,076,261)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,076,261)
<EPS-PRIMARY> (0.137)
<EPS-DILUTED> 0
</TABLE>
