FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 1998
----------------------
Commission File Number: 0-18344
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SOONER HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Oklahoma 73-1275261
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2680 West Interstate 40, Oklahoma City, OK 73108
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (405) 236-8332
--------------
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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
YES NO
--------- ----------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 8,471,350 shares of
common stock as of June 18, 1998.
This document consists of 14 pages. The exhibit index is on page 12.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOONER HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 28,185
Accounts receivable 1,781
Inventories, net 4,869
Prepaid expenses and deposits 1,522
-----------
Total current assets 36,357
PROPERTY AND EQUIPMENT, net 2,314,627
OTHER ASSETS, net 29,065
-----------
$ 2,380,049
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities to related parties $ 85,712
Accrued liabilities 33,495
Real estate taxes payable 25,049
Accounts payable 6,974
Current portion of notes payable 805,666
Deferred revenue 1,250
-----------
Total current liabilities 958,146
-----------
NOTES PAYABLE, less current portion 1,579,156
COMMITMENTS AND CONTINGENCIES --
-----------
SHAREHOLDERS' DEFICIT:
Preferred stock; undesignated, 10,000,000 shares authorized,
no shares issued and outstanding --
Common stock; $.001 par value, 100,000,000 shares authorized,
7,471,350 shares issued and outstanding 7,471
Additional paid-in-capital 5,497,907
Accumulated deficit (5,662,631)
-----------
Total shareholders' deficit (157,253)
-----------
$ 2,380,049
===========
The accompanying notes are an integral part of this consolidated balance sheet.
2
<PAGE>
SOONER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
1998 1997
----------- -----------
REVENUES $ 71,815 $ 165,002
----------- -----------
OPERATING EXPENSES:
Cost of products sold 394 273
General and administrative 29,438 44,035
Depreciation and amortization 15,513 14,939
Interest expense 55,344 57,936
----------- -----------
Total operating expenses 100,689 117,183
----------- -----------
INCOME (LOSS) FROM OPERATIONS (28,874) 47,819
OTHER INCOME 1,210 --
----------- -----------
NET INCOME (LOSS) $ (27,664) $ 47,819
=========== ===========
EARNINGS PER SHARE - BASIC $ (.004) $ .006
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 7,471,350 7,471,350
=========== ===========
EARNINGS PER SHARE - DILUTED $ (.004) $ .006
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 7,471,350 7,471,350
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
SOONER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(27,664) $ 47,819
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 15,513 14,939
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (114) 826
Decrease in inventories 197 101
Increase in prepaid expenses and deposits (342) --
Increase (decrease) in accounts payable (8,350) 3,933
Increase in real estate taxes payable 3,400 8,200
Increase in accrued liabilities to related parties 17,425 26,317
Increase (decrease) in accrued liabilities (4,498) 5,003
Decrease in deferred revenue (1,583) (71,830)
-------- --------
Net cash provided by (used in) operating activities (6,016) 35,308
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (48,648) (3,645)
-------- --------
Net cash used in investing activities (48,648) (3,645)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes payable (4,284) (28,642)
Borrowings on notes payable 76,313 --
Borrowings on notes payable to related parties 6,338 9,000
-------- --------
Net cash provided by (used in) financing activities 78,367 (19,642)
-------- --------
NET INCREASE IN CASH 23,703 12,021
CASH, beginning of year 4,482 2,649
-------- --------
CASH, end of period $ 28,185 $ 14,670
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $ 43,796 $ 44,164
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
SOONER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(unaudited)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and operations
- ---------------------------
Sooner Holdings, Inc., an Oklahoma corporation (the Company), operates
primarily through one of its subsidiaries, Charlie O Business Park Incorporated
(Business Park). Business Park is engaged in the ownership and rental of a
business park in Oklahoma City, Oklahoma. The Company also owns 100% of SD
Properties, Inc. (SDPI), which acts as a marketing representative for
construction contractors to develop business opportunities for those contractors
for a fee, Charlie O Beverages, Inc. (Beverages), which operates the original
in-home soda fountain business, and New Directions Acquisition Corp. (NDAC),
which subsequent to the quarter-end, acquired certain assets of a community
corrections business in Oklahoma City, Oklahoma (see Note 4).
With the NDAC acquisition, the Company intends to shift its growth
focus to the community corrections business and either liquidate or de-emphasize
its other operating subsidiaries.
Basis of presentation
- ---------------------
The unaudited consolidated financial statements presented herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations for interim financial information and the instructions to Form
10-QSB and Regulation S-B. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principals have been omitted. These unaudited
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997 (the 1997 Form
10-KSB). In the opinion of management, the unaudited consolidated financial
statements reflect all adjustments (consisting of normal recurring accruals
only) which are necessary to present fairly the consolidated financial position,
results of operations, and changes in cash flow of the Company. Operating
results for interim periods are not necessarily indicative of the results, which
may be expected for the entire year.
Management plans
- ----------------
The unaudited consolidated financial statements presented herein have
been prepared contemplating continuation of the Company as a going concern. The
Company has sustained recurring operating losses in recent years and is expected
to need additional amounts of working capital for its operations. At March 31,
1998, the Company has a shareholders' deficit of $157,253 and has a working
capital deficiency of $921,789. In view of these matters, realization of a major
portion of the assets is dependent upon continued operations of the Company,
which in turn is dependent upon the Company's ability to meet its financing
requirements and the success of its future operations. Management's plans are
discussed in
5
<PAGE>
the 1997 Form 10-KSB, including the potential NDAC acquisition. Management
believes that with the completion of the NDAC acquisition subsequent to the
quarter-end, its plans now provide the Company the opportunity to continue as a
going concern. However, there can be no assurance that these plans will be
successful.
Principles of consolidation
- ---------------------------
The unaudited consolidated financial statements presented herein
include the accounts of Sooner Holdings, Inc. and its subsidiaries. All
significant intercompany transactions have been eliminated.
(2) PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1998 is comprised of the following:
Land $ 1,191,400
Buildings and improvements 1,522,844
Machinery 50,000
-----------
2,764,244
Less accumulated depreciation (449,617)
-----------
Property and equipment, net $ 2,314,627
===========
(3) RELATED PARTIES
The Company's related parties are discussed in the 1997 Form 10-KSB.
The following table reflects amounts owed to related parties at March 31, 1998:
Accounts Payable
Notes and Accrued
Payable Liabilities
------- -----------
President of the Company $166,913 $ 26,819
Aztore Holdings, Inc. 307,796 45,441
Talbot -- 13,452
-------- --------
Total related party liabilities $474,709 $ 85,712
======== ========
The president has personally guaranteed $1,764,029 of the Company's
notes payable.
(4) ACQUISITION OF ASSETS
Subsequent to the quarter-end, NDAC completed the acquisition of the
operating assets of New Directions Centers of America, LLC (New Directions).
These assets relate to the operation of a community corrections business in
Oklahoma City, Oklahoma. The purchase price for the assets acquired was the
issuance of 1,000,000 shares of common stock
6
<PAGE>
of the Company, $1,000,000 in notes payable (the Notes) and the assumption of
approximately $100,000 of liabilities.
The acquisition of these assets will be accounted as a purchase in
accordance with Accounting Principles Board Opinion No. 16, with the cost
allocated to the net assets acquired based on their estimated fair values. The
operations of the New Directions business will be included in the financial
statements of the Company from the date of acquisition.
The assets acquired included a $250,000 Certificate of Deposit and the
rights to a long-term lease on a facility for and in use as a community
corrections center. NDAC did not acquire New Direction's stock ownership
interest in this facility. The lease on the facility has renewable options
through the year 2017. The base lease payment is $8,500 per month (the Base
Payment) plus the greater of $6,000 or 6% of the facility's monthly revenues. If
NDAC exercises its option to renew the lease on the facility, the Base Payment
increases by 20% at each renewal.
The Notes issued to New Directions bear interest of 10% per annum and
are due in three years. New Directions is expected to distribute the shares of
common stock and the Notes to its members, including the president of the
Company and the new president of NDAC, who previously managed the New Directions
business (See Note 5). The president of the Company and the new president of
NDAC have agreed to convert their Notes, when distributed by New Directions,
into a newly designated series of preferred stock of the Company. This new
series of preferred stock will have a 12% cumulative dividend and be convertible
into common stock at $.15 per share (the Series A Preferred Stock).
The new president of NDAC also received stock options to acquire
1,200,000 shares of common stock of the Company at an exercise price of $.05 per
share, with 400,000 options vested immediately and the balance vesting equally
over three years on the anniversary of the grant.
(5) COMMITMENTS AND CONTINGENCIES
During 1996, the Company was named as a defendant in a lawsuit. The
plaintiff alleges damages of approximately $100,000. The Company believes it has
no liability under this claim due to various defenses, which it intends to
vigorously assert. There has been no activity by the plaintiff regarding this
litigation for more than 18 months. As a result, no accrual has been made in the
unaudited consolidated financial statements presented herein.
The Company is involved in certain other administrative proceedings
arising in the normal course of business. In the opinion of management, such
matters, including the lawsuit described above, will be resolved without
material effect on the Company's results of operations or financial condition.
As discussed in Note 4, subsequent to the quarter-end, NDAC completed
the acquisition of certain operating assets of New Directions. The majority of
the members of New Directions approved the acquisition. However, dissenting
members of New Directions filed a lawsuit against New Directions; the president
of the Company, individually; the new president of NDAC, individually; and
Horizon Lodges, Inc. (HLI), the corporation that owns the facility that NDAC is
leasing. Neither the Company nor NDAC are named in the lawsuit.
7
<PAGE>
The lawsuit relates to the ownership of the HLI facility or the
ownership of HLI itself. Since NDAC did not acquire any stock ownership interest
in HLI or any ownership of the facility and only has a long-term lease on the
facility, it believes it has no exposure to the ultimate outcome of this
lawsuit. New Directions and the other defendants have filed a counterclaim
seeking more than $1,000,000 in damages from the dissenting members. Although
neither the Company nor NDAC are named in the lawsuit, if named in the future,
the Company and NDAC would vigorously defend itself. Regardless, management
believes the ultimate outcome of this lawsuit will not have a material effect on
the Company's results of operations or financial condition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the
Company's financial statements and notes thereto included elsewhere in this Form
10-QSB report. In addition, the discussion of the Company's Plan of Operation in
the 1997 Form 10-KSB, is incorporated herein in its entirety as the discussion
of the Plan of Operation as required by Item 303(a) of Regulation S-B.
Plan of Operation
Subsequent to the quarter-end, NDAC completed the acquisition of the
operating assets of New Directions related to the operation of a community
corrections business. With the NDAC acquisition, the Company intends to shift
its growth focus to the community corrections business and either liquidate or
de-emphasize its other operating subsidiaries.
NDAC assumed operation of a community corrections center, commonly
known as a halfway house, which currently has approximately 150 beds available
but is licensed to provide up to 300 beds. The center operates under a contract
with the Oklahoma Department of Corrections, which provides clients to the
center.
The assets acquired included a $250,000 Certificate of Deposit and the
rights to a long-term lease on a facility for and in use as a community
corrections center. The lease on the facility has renewable options through the
year 2017. The base lease payment is $8,500 per month (the Base Payment) plus
the greater of $6,000 or 6% of the facility's monthly revenues. If NDAC
exercises its option to renew the lease on the facility, the Base Payment
increases by 20% at each renewal.
The center is a residential facility for adult male and female
offenders transitioning from institutional to independent living. Offenders are
eligible for these programs based upon the type of offense committed and
behavior while incarcerated in prison. Offenders generally spend the last six
months of their sentence in a community corrections program. The goal and
mission of NDAC's community corrections business is to reduce the likelihood of
an inmate committing an offense after release by assisting in the reunification
process with family and the community. Offenders must be employed, participate
in substance abuse programs, submit to random drug testing, and pay a fixed
payment to the government to offset the cost of the program. The Company
supervises these activities at its center. The Company has retained all existing
management and employees of the center.
8
<PAGE>
The Company's business strategy is to become a leading developer and
manager of a quality, privatized community corrections facilities, initially
focusing in Oklahoma. Management intends on developing its community corrections
business by developing facilities or expanding into existing facilities.
Liquidity and Capital Resources - March 31, 1997 compared to March 31, 1998
The Company has had severe liquidity problems for the last several
years. The Company's liquidity is reflected in the table below, which shows
reported deficiencies in working capital for the periods presented.
March 31, December 31,
1998 1997 1997
----------- ------------- -----------
Deficiency in working capital $ (921,789) $ (1,432,839) $ (863,925)
Although the Company's working capital remains negative, the Company
has been able to meet its obligations as a result of the financial support
received from certain of the Company's related parties. Current working capital,
which has been provided in the form of notes payable, has been primarily
supplied by the Company's president or by Aztore. Aztore has agreed to
restructure a majority of its liabilities as part of the NDAC acquisition.
Approximately $433,000 of the Company's current liabilities relate to
the acceleration of a long-term note due to a technical default of approximately
$15,000. The Company expects this default to be cured before the end of the
Company's third fiscal quarter.
Exclusive of funds required for debt repayment, the Company believes
that it can borrow any additional funds from its related parties to maintain its
operations, although there can be no assurance that such funds will be available
when needed. In the event that the Company cannot refinance, or obtain
forbearance on its current liabilities or on its long-term liabilities as they
come due, the Company will undoubtedly face further severe liquidity problems
which may lead to litigation, the inability to transact business, and/or
foreclosure actions being initiated against a majority of the Company's assets.
As discussed above, the Company acquired certain assets related to the
operation of a community corrections business subsequent to the quarter-end. The
purchase price for the assets acquired was the issuance of 1,000,000 shares of
common stock of the Company, $1,000,000 in notes payable and the assumption of
approximately $100,000 of liabilities. The notes issued to New Directions bear
interest of 10% per annum and are due in three years.
The Company believes the operations of the community corrections
business will be cash flow positive and be profitable and that the cash flow
from the new business will be sufficient to service the debt payments under the
notes and the lease payments on the facility. The Company also intends to
continue the rehabilitation of the facility in order to bring the inmate
occupancy up to 300 beds. In the event that cash flow is insufficient to satisfy
the Company's needs, management believes that it can borrow any additional funds
from its related parties to maintain its operations.
9
<PAGE>
Results of Operations - The quarter ended March 31, 1998 compared to the quarter
ended March 31, 1997
The following table illustrates the Company's revenue mix:
Quarter ended March 31,
--------------------------
1998 1997
-------- --------
Business Park revenue $ 69,613 $ 87,844
SDPI revenue 1,583 76,830
Beverages revenue 619 328
-------- --------
Total revenue $ 71,815 $165,002
======== ========
Business Park revenues decreased $18,231 (21%) during the first quarter
of 1998 as compared to the same period in 1997. This decrease is primarily
attributable to the loss of one tenant that accounted for 23% of total revenues
for Business Park, as discussed in the 1997 Form 10-KSB. The Company is
aggressively seeking a new tenant for this space. During 1997, Business Park
successfully renegotiated eleven leases (or 32% of the total square footage)
from one year leases to three to five year leases at an average increase of $.39
per square foot. The Company believes its long-term prospects will improve with
longer leases and higher rates. Losses of tenants in the future could affect
future operations and financial position because of the cost of new leasehold
improvements and lower revenue due to any prolonged vacancy. There is no
assurance the Company's historically high occupancy rate will continue.
SDPI revenues decreased $75,247 (98%) in the first quarter of 1998
compared to the same quarter in 1997. SDPI revenues in fiscal 1997 came from the
recognition of deferred revenue related to the expiration of warranty service on
1996 contracts. During 1995 to early 1997 SDPI acted as a marketing
representative for construction contractors to develop business opportunities
for those contractors for a fee. Although SDPI continues to evaluate
opportunities related to this business, additional revenues in this business are
unlikely.
Beverages revenues were nominal during the quarter ended March 31,
1998. The Company has been trying to sell Beverages as a going concern or
liquidate the assets of this business, although at this time the Company has no
formal plan of disposal. The Company continues to support the existing Beverages
customers but does not anticipate any material revenues from this business in
1998.
Total operating expenses for the three months ended March 31, 1998 were
$100,689 as compared to total operating expenses for the comparable 1997 period
of $117,183. The decrease in the 1998 expenses was due to a decrease in general
and administrative expenses, consisting primarily of professional and
incentive-based compensation agreements.
The Company recorded net loss in the first quarter 1998 of
approximately $27,664 or less than $.01 per share, compared to net income in the
first quarter 1997 of $47,819, or $.01 per share. This decrease in profits was
due primarily to the decrease in SDPI revenues.
10
<PAGE>
Capital Expenditures and Commitments
During the first quarter ending March 31, 1998, the Company spent
approximately $49,000 on capital expenditures, primarily for leasehold
improvements at the Business Park. The Company expects to spend an additional
$100,000 for leasehold improvements on its Business Park.
Factors that May Affect Future Results
A number of uncertainties exist that may affect the Company's future
operating results. These include, but are not limited to, the uncertain general
economic conditions, regulatory changes, the ongoing support of the related
parties, the ability of the Company to refinance its notes payable on
satisfactory terms, and the Company's ability to acquire sufficient funding to
sustain its operations and develop the new business related to the operation of
a community corrections facility. A majority of these issues directly or
indirectly relate to the Company's ability to sell additional equity or obtain
additional debt at reasonable prices or rates, if at all. The Company and all
its subsidiaries have had unsuccessful operating histories and have been
consistently unprofitable. If this trend continues the Company, or any
subsidiary, may have to seek formal court protection from creditors.
Forward-Looking Statements
Certain statements and information contained herein concerning future,
proposed, and anticipated activities of the Company, certain trends with respect
to the Company's revenue, operating results, capital resources, and liquidity or
with respect to the markets in which the Company competes and other statements
contained herein regarding matters that are not historical facts are
forward-looking statements, as such term is defined in the Securities Act.
Forward-looking statements, by their very nature include risks and
uncertainties, many of which are beyond the Company's control. Accordingly,
actual results may differ, perhaps materially, from those expressed in or
implied by such forward-looking statements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During 1996, the Company was named as a defendant in a lawsuit. The
plaintiff alleges damages of approximately $100,000. The Company believes it has
no liability under this claim due to various defenses, which it intends to
vigorously assert. There has been no activity by the plaintiff regarding this
litigation for more than 18 months. As a result, no accrual has been made in the
unaudited consolidated financial statements presented herein.
The Company is involved in certain other administrative proceedings
arising in the normal course of business. In the opinion of management, such
matters, including the lawsuit described above, will be resolved without
material effect on the Company's results of operations or financial condition.
As discussed in Note 4, to the financial statements subsequent to the
quarter-end, NDAC completed the acquisition of certain operating assets of New
Directions. The majority of the members of New Directions approved the
acquisition. However, dissenting members of New Directions filed a lawsuit
against New Directions; the president of the Company,
11
<PAGE>
individually; the new president of NDAC, individually; and Horizon Lodges, Inc.
(HLI), the corporation that owns the facility that NDAC is leasing. Neither the
Company nor NDAC are named in the lawsuit.
The lawsuit relates to the ownership of the HLI facility or the
ownership of HLI itself. Since NDAC did not acquire any stock ownership interest
in HLI or any ownership of the facility and only has a long-term lease on the
facility, it believes it has no exposure to the ultimate outcome of this
lawsuit. New Directions and the other defendants have filed a counterclaim
seeking more than $1,000,000 in damages from the dissenting members. Although
neither the Company nor NDAC are named in the lawsuit, if named in the future,
the Company and NDAC would vigorously defend itself. Regardless, management
believes the ultimate outcome of this lawsuit will not have a material effect on
the Company's results of operations or financial condition.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: June 22, 1998
----------------------
SOONER HOLDINGS, INC.
----------------------------------------
(Registrant)
By: /s/ R. C. Cunningham II
------------------------------------
R.C. Cunningham II, President
(Chairman of the Board)
By: /s/ Raymond C. Cunningham III
------------------------------------
Raymond C. Cunningham III, Treasurer
(Chief Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 28,185
<SECURITIES> 0
<RECEIVABLES> 1,781
<ALLOWANCES> 0
<INVENTORY> 4,869
<CURRENT-ASSETS> 36,357
<PP&E> 2,764,244
<DEPRECIATION> 449,617
<TOTAL-ASSETS> 2,380,049
<CURRENT-LIABILITIES> 958,146
<BONDS> 0
0
0
<COMMON> 5,505,378
<OTHER-SE> (5,662,631)
<TOTAL-LIABILITY-AND-EQUITY> 2,380,049
<SALES> 71,815
<TOTAL-REVENUES> 71,815
<CGS> 394
<TOTAL-COSTS> 45,345
<OTHER-EXPENSES> (1,210)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,344
<INCOME-PRETAX> (27,664)
<INCOME-TAX> 0
<INCOME-CONTINUING> (27,664)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,664)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
