<PAGE>
UNITED STATES
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 March 31, 1998
Commission file number 0-18836
MIDLAND RESOURCES, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
TEXAS 75-2286814
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
616 F.M. 1960 West, Suite 600, Houston, Texas 77090
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(281) 580-9989
(ISSUER'S TELEPHONE NUMBER)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Common Stock, $.001 par value: 4,463,499 shares outstanding at May 12, 1998
<PAGE>
MIDLAND RESOURCES, INC.
TABLE OF CONTENTS
<TABLE>
PAGE
----
PART I. FINANCIAL INFORMATION
<S> <C>
Consolidated Balance Sheets as of March 31, 1998 (Unaudited) and
December 31, 1997 3
Unaudited Consolidated Statements of Operations for the three
month periods ended March 31, 1998 and March 31, 1997 5
Unaudited Consolidated Statements of Cash Flows for the three
month periods ended March 31, 1998 and March 31, 1997 6
Notes to Unaudited Financial Statements 7
Management's Discussion and Analysis or Plan of Operation 9
PART II. OTHER INFORMATION 11
SIGNATURES 12
</TABLE>
PAGE 2
<PAGE>
PART I - FINANCIAL INFORMATION
MIDLAND RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
March 31, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 121,946 $ 150,890
Accounts receivable:
Oil and gas sales 476,803 670,093
Related parties 109,111 60,822
Sales of properties - 563,757
Property operations and other 416,938 296,052
Property held for sale 200,000 200,000
Other current assets 70,891 57,531
Deferred tax asset 37,000 37,000
------------ ------------
Total current assets 1,432,689 2,036,145
Property and equipment, at cost, partially
pledged:
Oil and gas properties and equipment,
using successful efforts method 28,981,661 28,623,500
Transportation equipment 215,749 215,749
Computer equipment and software 244,138 244,138
Office furniture and equipment 98,019 96,732
Land, building and leasehold improvements 15,347 15,347
Wells in progress 124,779 15,233
Less accumulated depreciation, depletion
and amortization (16,279,676) (15,975,838)
------------ ------------
Property and equipment, net 13,400,017 13,234,861
Other assets:
Deferred tax asset 1,120,941 1,011,193
Goodwill, net of amortization 713,912 720,584
Contracts and leases, net of amortization 193,769 199,116
Note receivable 298,786 302,490
Other 171,691 116,094
------------ ------------
Total assets $ 17,331,805 $ 17,620,483
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTE IS AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 3
<PAGE>
MIDLAND RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
March 31, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 134,000 $ 583,481
Accounts payable and accrued expenses 1,343,301 981,202
----------- -----------
Total current liabilities 1,477,301 1,564,683
Long-term debt 9,107,188 9,115,370
Payable for the purchase of subsidiary 213,639 221,404
----------- -----------
Total liabilities 10,798,128 10,901,457
Stockholders' equity:
Preferred stock, par value $0.01 per share;
20,000,000 shares authorized; none issued - -
Common stock, par value $0.001 per share;
80,000,000 shares authorized; 4,463,499
shares issued at March 31, 1998 and
December 31, 1997 4,463 4,463
Additional paid in capital 8,487,801 8,487,801
Unearned compensation (136,817) (164,516)
Retained earnings (deficit) (1,821,770) (1,608,722)
----------- -----------
Total stockholders' equity 6,533,677 6,719,026
----------- -----------
Total liabilities and stockholders' equity $17,331,805 $17,620,483
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTE IS AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 4
<PAGE>
MIDLAND RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
Three months ended March 31,
----------------------------------
1998 1997
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Operating revenue:
Oil and gas sales $1,155,062 $1,828,255
Property operator fees 26,720 27,079
Other 8,945 2,805
----------- ----------
Total operating revenue 1,190,727 1,858,139
Operating costs and expenses:
Oil and gas production 730,463 737,489
Exploration costs 3,126 8,555
Abandonments 34,086 -
Depreciation, depletion and amortization 315,859 314,781
General and administrative 232,015 333,849
----------- ----------
Total operating costs and expenses 1,315,549 1,394,674
----------- ----------
(124,822) 463,465
Other income (expenses):
Gain on sale of property and equipment - 351,079
Interest and other income 7,297 9,956
Interest expense (205,271) (212,637)
----------- ----------
Total other income and expenses (197,974) 148,398
----------- ----------
Income (loss) before income taxes (322,796) 611,863
Deferred federal income tax expense (benefit) (109,748) 206,125
----------- ----------
Net income (loss) $ (213,048) $ 405,738
----------- ----------
Earnings (loss) per share:
Basic $ (0.05) $ 0.09
----------- ----------
Diluted $ (0.05) $ 0.09
----------- ----------
</TABLE>
THE ACCOMPANYING NOTE IS AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 5
<PAGE>
MIDLAND RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
Three months ended March 31,
-----------------------------
1998 1997
----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(213,048) $ 405,738
Deferred federal income tax expense (benefit) (109,748) 206,125
Depreciation, depletion and amortization 315,859 314,781
Gain on sale of property and equipment - (351,079)
Decrease in accounts receivable 24,115 85,201
Increase in accounts payable relating
to operations 362,099 612,635
Increase in other current assets (13,360) (56,323)
Non-cash stock based compensation 27,699 43,078
Other 12,257 8,010
--------- -----------
Net cash provided by operating activities 405,873 1,268,166
Cash flows from investing activities:
Proceeds from sales of property and equipment 563,757 1,649,407
Additions to property and equipment (468,994) (980,292)
Payments to minority interests in Summit (7,765) (97,025)
Investments in limited partnership - (602,532)
Cost reimbursement from limited partnership - 360,479
Other (67,855) -
--------- -----------
Net cash provided by investing
activities 19,143 330,037
Cash flows from financing activities:
Exercise of stock options and warrants - 32,813
Collection on note receivable 3,703 3,420
Long-term borrowings 100,000 406,250
Principal payments on long-term debt (557,663) (1,671,614)
Repayment of drilling advances - (393,254)
--------- -----------
Net cash used in financing
activities (453,960) (1,622,385)
--------- -----------
Net decrease in cash (28,944) (24,182)
Cash, beginning of the period 150,890 366,677
--------- -----------
Cash, end of period $ 121,946 $ 342,495
--------- -----------
--------- -----------
</TABLE>
THE ACCOMPANYING NOTE IS AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
PAGE 6
<PAGE>
MIDLAND RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
Midland Resources, Inc. ("Company"), was organized in 1990 with the
issue of common stock and warrants in exchange for oil and gas partnership
interests. The Company and its wholly owned subsidiaries are headquartered in
Houston, Texas. The Company is involved in the acquisition, exploration,
development and production of oil and gas and owns producing properties and
undeveloped acreage and royalty interests in Texas, Colorado and Illinois.
The majority of its activities are centered in the Permian Basin of West
Texas. Midland Resources Operating Company Inc. ("MRO"), a wholly owned
subsidiary, is in the business of oil and gas property operations. Summit
Petroleum Corporation ("Summit") is a wholly owned subsidiary engaged in oil
and gas acquisition, exploration, development and production.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated balance sheets include the accounts of the
Company and its wholly owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position of the Company and its wholly owned subsidiaries as of
March 31, 1998, the results of their operations for the three month periods
ended March 31, 1998 and 1997 and cash flows for the three month periods then
ended. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for a full year. The
accounting policies followed by the Company are set forth in more detail in
Note A of the "Notes to Consolidated Financial Statements" in the Company's
annual report on Form 10-KSB filed with the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this Form 10-QSB
pursuant to the rules and regulations of the Securities and Exchange
Commission. However, the disclosures herein are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Form 10-KSB.
PAGE 7
<PAGE>
MIDLAND RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EARNINGS PER SHARE
Earnings (loss) per share for the three month periods ended March 31,
1997 and 1998 is computed as follows:
<TABLE>
Three Months ended
March 31,
--------------------------
1997 1998
---------- -----------
<S> <C> <C>
Net income (loss) $ 405,738 $ (213,048)
---------- ----------
---------- ----------
Weighted average common and common equivalent shares:
Common stock 4,406,031 4,463,499
Stock options and warrants, net of shares assumed to be
repurchased with proceeds from assumed exercise of
options and warrants 187,194 -
---------- ----------
Total for diluted computation 4,593,225 4,463,499
---------- ----------
Earnings (loss) per share
Basic $ 0.09 $ (0.05)
---------- ----------
Diluted $ 0.09 $ (0.05)
--------- ----------
</TABLE>
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share" which
requires changes in the computation and reporting of earnings per share.
This pronouncement, which became effective December 15, 1997, provides for
the presentation of basic earnings per share, computed without regard to
options, warrants, and other stock equivalents, and diluted earnings per
share, which gives effect to these potential dilutive common shares when they
have a dilutive effect on earnings (loss) per share.
PAGE 8
<PAGE>
MIDLAND RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis or Plan of Operation ("MD&A")
contains "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All statements other than statements of historical fact included in MD&A,
including statements regarding the Company's operating strategy, plans,
objectives and beliefs of management for future operations, planned capital
expenditures and acquisitions are forward-looking statements. Although the
Company believes that the assumptions upon which such forward-looking
statements are based are reasonable, it can give no assurance that such
assumptions will prove to be correct.
PLAN OF OPERATION
During 1996 and 1997 the Company's exploration efforts consumed most of
its available resources. While the Company believes its exploratory efforts
have identified possible future drilling opportunities, its ability to
actively pursue these efforts as well as to actively exploit existing
developed properties is dependent upon securing additional capital.
Beginning in early 1997 the Company determined that it should explore
strategic alternatives to raising capital through sales of equity. To
assist the Company it engaged in an investment banking firm. During 1997 and
continuing into 1998 the Company considered various alternative transactions,
primarily consisting of the sale of all or substantially all of its assets,
acquisitions of another smaller company, merging with a company of equal size
and merging with a larger company. The company terminated its contract with
its investment banking firm in December 1997.
On April 9, 1998, the Company announced it was pursuing a merger
transaction with Vista Resources, Inc. (Vista), a privately held oil and gas
exploration and production company located in Midland, Texas. Consummation
of any transaction pursuant to these negotiations depends upon the
satisfaction or waiver of a number of conditions, including, without
limitation, shareholder approval, execution of a definitive agreement and
receipt of a fairness opinion. If a transaction with Vista is not
consummated, the Company expects to restrict its operations, including future
development, to a level that its current operations can support, and continue
to seek a strategic transaction as well as consider the sale of equity.
The Company's initial capitalization was through the acquisition of
interests of the seven public oil and gas income limited partnerships in
exchange for common stock and warrants of the Company. There were 2,264,522
shares of common stock issued and, for each share of common stock issued, two
warrants were issued entitling the holder to purchase one share of common
stock at $2.50 and one share at $4.00 during the period of November 1990 to
November 2002. In October, 1995, the Company called for redemption of its
$2.50 warrants. Holders received a redemption payment of $0.05 per warrant
for aggregate payments of $63,373, which was charged to additional paid in
capital. 997,009 of the $2.50 warrants were exercised, resulting in net
proceeds of approximately $1,831,000. As of March 31, 1998, 11,428 of the
$4.00 warrants had been exercised.
CAPITAL RESOURCES AND LIQUIDITY
In the first quarter of 1998, net cash provided by operations decreased
from the same period in 1997 by $862,293, reflecting decreased oil and gas
revenue, partially offset by decreased general and administrative expenses.
Net cash from investing activities decreased from the first quarter of 1997
by $310,894. This was due to lesser proceeds from the sale of oil and gas
properties collected in 1998 which was offset, in part, by lower capital
expenditures in 1998. In the first quarter of 1998, cash payments for
development of oil and gas properties totaled $468,994. During the same
period in 1997, cash payments for capital expenditures totaled $1,222,345,
which was comprised primarily of oil and gas drilling and development
expenditures and an investment in an oil and gas limited partnership. Net
cash used in financing activities decreased from 1997 by $1,168,425, due
primarily to greater reductions in long-term debt in 1997.
At March 31, 1998, the Company had negative working capital of
approximately $45,000 compared to positive working capital of approximately
$471,000 at December 31, 1997, for a net decrease of $516,000. This is due
to (a) lower product prices in 1998 and (b), the funding of capital
expenditures and major repairs from operations during the first quarter of
1998.
Management believes current debt maturities can be funded from cash flow
from operations. Management also believes that its credit facilities and
its cash flow from operations are adequate to meet its liquidity needs and,
to the extent necessary, operational changes will be made. Any
future drilling will depend on the Company's ability to raise additional
capital through bank borrowings, private placements or merger transactions.
PAGE 9
<PAGE>
MIDLAND RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has a revolving credit agreement with Compass Bank (Compass)
which provides for a credit facility of $30 million and an initial borrowing
base of $10,500,000. Amounts borrowed under this agreement are
collateralized by a first lien on substantially all of the Company's oil and
gas properties. Interest under this agreement is payable monthly at an annual
rate which, at the Company's option, is equal to (a) the Compass prime
lending rate (8.5% at December 31, 1997) or (b) the London Interbank Offered
Rate, plus 2.5%. In addition , a commitment fee equal to 1/2% per annum on
the unused portion of the borrowing base is required. The borrowing base is
reduced at the rate of $120,000 per month beginning February 1, 1998 and is
subject to redetermination on each May 1st and November 1st. This agreement
also requires that the Company maintain certain financial ratios and
generally restricts the Company's ability to incur debt, sell assets,
materially change the nature of the Company's business structure or pay
dividends. As of March 31, 1998, the balance due under this facility was
$9,200,000 and the borrowing base was $10,170,000. As of May 14, 1998, the
balance due under this agreement was $9,700,000. Management anticipates that
upon redetermination effective May 1, 1998, low oil prices will cause further
reductions in the borrowing base.
The prices of crude oil have fluctuated significantly in recent years as
well as in recent months. As of March 31, 1998, the company was receiving
$13.67 per bbl as compared to $16.52 at January 1, 1998 and $19.52 at March
31, 1997. Fluctuations in price have a significant impact on the Company's
financial condition and liquidity.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Net income decreased from a net income of $405,738 for the three months
ended March 31, 1997, to a net loss of $213,048 for the same period in 1998,
a decrease of $618,786. Individual categories of income and expense are
discussed below.
Oil and gas sales decreased from $1,828,255 in the first quarter of 1997
to $1,155,062 in the same period of 1998. This decrease of $673,193 or 37%
resulted from decreased oil and gas prices, and, to a lesser extent, to
decreased gas production. Oil and gas production quantities were 47,791 bbls
and 218,886 mcf for the first quarter of 1998 and 47,425 bbls and 251,073 mcf
in 1997, an increase of 366 bbls and an decrease of 32,187 mcf, or 13%.
Average gas prices decreased from $3.01 per mcf in 1997 to $2.12 per mcf in
1998, while average oil prices decreased from $22.64 per bbl in 1997 to
$14.46 per bbl in 1998.
Production costs decreased from $737,489 in the first quarter of 1997 to
$730,463 for the same period of 1998, a decrease of $7,026 or 1%. Major
repairs and workovers conducted in 1998 and normal operating costs on wells
drilled in 1997 were offset by reductions due to the sale of properties in
1997.
In the first quarter of 1997, the Company realized gains on the sales of
oil and gas properties and equipment of $351,079. There were no sales of
properties in the first quarter of 1998. The 1997 gain includes $349,079
from the sale of the Company's interest in the Redfish Bay properties.
General and administrative expenses (G&A) were $232,015 in the first
quarter of 1998, a decrease of $101,834 from the first quarter of 1997. This
is due primarily to cost reduction measures implemented in the later part of
1997.
In the first quarter of 1998, the Company incurred abandonment costs of
$34,086. There was no similar item in the first quarter of 1997.
PAGE 10
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
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
a. Exhibits:
27 Article 5 Financial Data Schedule for first quarter
10-QSB (only filed electronically)
b. Reports on Form 8-K - None.
PAGE 11
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
MIDLAND RESOURCES, INC.
(Registrant)
Date: May 14, 1998 By: /s/ Robert R. Donnelly
--------------------------------
Robert R. Donnelly, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
Date: May 14, 1998 By: /s/ Howard E. Ehler
--------------------------------
Howard E. Ehler, Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 121,946 342,495 80,380 36,139
<SECURITIES> 0 0 0 0
<RECEIVABLES> 978,160 1,108,668 1,196,914 942,600
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 592,397
<CURRENT-ASSETS> 1,432,689 1,989,666 1,739,197 2,000,224
<PP&E> 29,679,693 28,811,020 28,891,906 29,776,101
<DEPRECIATION> 16,279,676 14,354,901 14,950,908 14,306,733
<TOTAL-ASSETS> 17,331,805 18,547,963 18,719,221 18,925,546
<CURRENT-LIABILITIES> 1,477,301 3,012,110 3,165,528 2,624,615
<BONDS> 9,320,827 6,403,327 7,012,488 8,125,475
0 0 0 0
0 0 0 0
<COMMON> 4,463 4,411 4,435 4,440
<OTHER-SE> 6,529,214 8,654,478 8,322,316 8,171,016
<TOTAL-LIABILITY-AND-EQUITY> 17,331,805 18,547,963 18,719,221 18,925,546
<SALES> 1,155,062 1,828,255 3,346,815 4,758,502
<TOTAL-REVENUES> 1,198,024 2,219,174 3,900,287 5,386,673
<CGS> 730,463 737,489 1,449,529 2,293,627
<TOTAL-COSTS> 1,315,549 1,394,674 3,617,229 5,201,327
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> (205,271) 212,637 410,832 648,047
<INCOME-PRETAX> (322,796) 611,863 (127,774) (462,701)
<INCOME-TAX> (109,748) 206,125 (45,291) (163,108)
<INCOME-CONTINUING> (213,048) 405,738 (82,483) (299,593)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (213,048) 405,738 (82,483) (299,593)
<EPS-PRIMARY> (.05) .09 (.02) (.07)
<EPS-DILUTED> (.05) .09 (.02) (.07)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996
<CASH> 58,511 44,738 88,962
<SECURITIES> 297,383 334,610 309,132
<RECEIVABLES> 777,453 670,770 982,600
<ALLOWANCES> 29,674 29,674 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 2,100,425 1,987,391 2,093,094
<PP&E> 22,621,612 23,593,971 26,199,432
<DEPRECIATION> 12,032,391 11,856,157 12,111,126
<TOTAL-ASSETS> 14,367,321 15,525,188 18,295,054
<CURRENT-LIABILITIES> 2,176,928 1,029,910 1,172,884
<BONDS> 4,551,072 6,875,051 8,852,787
0 0 0
0 0 0
<COMMON> 4,394 4,429 4,401
<OTHER-SE> 7,634,927 7,615,798 7,954,439
<TOTAL-LIABILITY-AND-EQUITY> 14,367,321 15,525,188 18,295,054
<SALES> 1,493,141 3,105,326 4,870,664
<TOTAL-REVENUES> 1,547,826 3,244,896 5,041,620
<CGS> 681,785 1,422,289 2,203,103
<TOTAL-COSTS> 1,398,389 3,041,056 4,877,312
<OTHER-EXPENSES> 1,889 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 152,207 312,582 496,900
<INCOME-PRETAX> (4,659) (108,742) (297,418)
<INCOME-TAX> (1,582) (36,971) (101,120)
<INCOME-CONTINUING> (3,077) (71,771) (196,298)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (3,077) (71,771) (196,298)
<EPS-PRIMARY> (.001) (0.016) (0.045)
<EPS-DILUTED> (.001) (0.016) (0.045)
</TABLE>
