U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File No. 0-25386
FX ENERGY, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0504461
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3006 Highland Drive, Suite 206
Salt Lake City, Utah 84106
(Address of principal executive offices)
(801) 486-5555
(Issuer's telephone number)
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
State the number of shares outstanding of each of the issuer's class of common
equity, as of the latest practicable date: 12,584,381 shares of $.001 par value
common stock outstanding as of May 9, 1997.
Transitional Small Business Disclosure Format: Yes No X
<PAGE>
- ---------------------------------------------------------------------------
PART I.
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,774,441
Accounts receivable:
Accrued oil sales 251,176
Due from joint interest owners 615,560
Inventory 18,466
Other current assets 24,749
------------
Total current assets 13,684,392
------------
Property and equipment, at cost:
Oil and gas properties
(successful efforts method):
Proved 7,013,031
Unproved 701,738
Other property and equipment 2,002,155
------------
9,716,924
Less accumulated depreciation, depletion and
amortization (1,547,894)
------------
Net property and equipment 8,169,030
------------
Other assets:
Certificates of Deposit 381,500
Other 1,854
------------
Total other assets 383,354
------------
TOTAL ASSETS $ 22,236,776
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 469,528
Accrued liabilities 366,859
------------
Total current liabilities 836,387
------------
Long term debt: 2,109,367
------------
Total liabilities 2,945,754
------------
Stockholders' Equity
Common stock, $.001 par value, 20,000,000
shares authorized, 12,584,381 issued and
outstanding 12,592
Additional paid-in capital 30,216,572
Accumulated deficit (10,938,142)
------------
Total stockholders' equity 19,291,022
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,236,776
=============
<PAGE>
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------------
1997 1996
------------- ------------
Revenues:
Oil sales $ 578,977 $ 504,933
Drilling revenue 300 475
------------- ------------
Total revenues 579,277 505,408
Operating costs and expenses:
Operating costs 353,517 293,243
Production taxes 37,339 31,948
Exploration costs 1,332,733 188,860
Drilling costs 15,498 24,270
Depreciation, depletion
and amortization 144,822 138,286
General and administrative 643,677 365,859
------------- ------------
Total operating costs
and expenses 2,527,586 1,042,466
------------- ------------
Operating loss (1,948,309) (537,058)
------------- ------------
Other income (expense):
Interest and other 202,831 35,640
income
Interest expense (33,233) (81,519)
------------- ------------
Total other
income(expense) 169,598 (45,879)
------------- ------------
Net loss $ (1,778,711) $ (582,937)
============= ============
Net loss per common share $(0.14) $(0.07)
============= ============
Weighted average number of
shares outstanding 12,552,261 8,086,025
============= =============
<PAGE>
FX ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
FOR THREE MONTHS ENDED
MARCH 31,
-----------------------------
1997 1996
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,778,711) $ (582,937)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation, depletion and
amortization 144,822 138,286
Common stock and options issued for
services -- 113,750
Increase (decrease) from changes in:
Accounts receivable (479,855) (23,437)
Interest receivable 131,889 --
Inventory 1,750 1,317
Other current assets 42,734 (42,849)
Accounts payable and accrued
liabilities 250,191 (351,136)
------------- ------------
Net cash used in operating
activities (1,687,180) (747,006)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (16,993) (89,032)
Additions to other property and (113,189) (58,183)
equipment
Additions to other assets (1,854) --
Proceeds from sale of interest in
unproved properties -- 100,000
Proceeds from maturing bonds 5,476,574 --
------------- ------------
Net cash provided by (used in)
investing activities 5,344,538 (47,215)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long term debt (83,389)
Proceeds from long term debt 609,117 --
Proceeds from issuance of common stock,
net of offering costs -- 993,060
Proceeds from exercise of warrants and
options 162,052 --
------------- ------------
Net cash provided by financing
activities 771,169 909,671
INCREASE IN CASH AND CASH EQUIVALENTS 4,428,527 115,450
------------- ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 8,345,914 743,721
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,774,441 $ 859,171
============= ============
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
FX ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The interim financial data are unaudited; however, in the opinion of the
management of FX Energy, Inc. ( formerly Frontier Oil Exploration Company) and
Subsidiaries ("FX Energy" or the "Company"), the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for the interim periods. The financial statements
should be read in conjunction with FX Energy's annual report on Form 10-KSB for
the year ended December 31, 1996, the financial statements and notes thereto
included in its Form 10-KSB.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated in consolidation. At March 31, 1997, the
Company owned 100% of the voting stock of its subsidiaries, including FX
Producing Company, Inc. ("FX Producing").
NOTE 2: CASH AND CASH EQUIVALENTS
The Company had $5,477,000 invested in short term bonds at December 31,
1996. The entire bond portfolio matured during the first quarter of 1997 and
was subsequently reinvested into a money market equities fund.
NOTE 3: INCOME TAXES
The Company recognized no income tax benefit from the losses generated in
the first quarter of 1997 and the first quarter of 1996.
NOTE 4: COMMON STOCK
During the three months ended March 31, 1997 warrants for 12,500 shares and
options for 79,334 shares were exercised. This resulted in net proceeds of
$14,000 for warrants and $148,000 for options respectively to the Company.
In connection with the purchase of the Company's producing oil properties
and well servicing equipment in 1994, the Company agreed to issue to the former
owners up to 400,000 shares of Company common stock in semi-annual increments of
50,000 shares each beginning October 1, 1994 on the attainment of certain levels
of oil production from the properties acquired. Production levels as of April
1, 1997 had not been reached. Accordingly, the number of shares that may be
issued in the future has been reduced to 100,000 shares.
NOTE 5: LONG TERM DEBT - AGREEMENT WITH RWE-DEA
On May 3, 1996, the Company entered into an agreement with RWE-DEA
Aktiengesellschaft fur Mineraloel und Chemie, Hamburg, Germany ("RWE-DEA"),
which provides for joint operations on the Company's approximately 2.4 million
acre on-shore Baltic Platform Concession area in northern Poland. This
agreement grants to RWE-DEA the right to earn 50% interest in the concession
area by paying the Company $250,000 in cash, paying up to $1,100,000 for a
seismic survey and $1,000,000 of cost relating to the initial exploratory well
to be drilled at a location to be designated by RWE-DEA. To retain its interest
in the Baltic Concession RWE-DEA must fund fifty percent of the cost relating to
the second exploratory well in the Baltic Concession.
In order to obtain desired treatment under Polish tax laws for joint
activities with RWE-DEA on the Baltic Concession, the Company and RWE-DEA have
determined to effect their 50-50 ownership in the project through RWE-DEA's
purchase of 50% of the shares of the Company's subsidiary which holds the
Baltic Concession, Warmia Petroleum Company, Sp z o.o. ("Warmia"). This
transaction requires approval by the Polish government. The Company expects
such approval will be obtained in the second quarter of 1997 based on
discussions among representatives of the Company, RWE-DEA, and the Polish
Government. If such approval is not obtained, the Company will reimburse
RWE-DEA for its direct expenditures related to the Baltic Concession.
Accordingly, all Baltic Concession exploration costs are reflected as the
Company's expenses until approval by the Polish government is received.
As of March 31, 1997 RWE-DEA had advanced Warmia $2,109,367 to fund exploration
activity on the Baltic Concession. The Company currently accounts for the
advanced funds as a long term note payable. However, upon approval of
RWE-DEA's purchase of 50% of Warmia the Company will de-consolidate Warmia
and begin accounting for its investment in Warmia using the equity method.
NOTE 6: NET LOSS PER SHARE
Net loss per share of common stock is computed based on the weighted
average number of common and common equivalent shares outstanding during the
period. Options, warrants, and convertible preferred stock are excluded from
the calculation when their effect would be antidilutive.
NOTE 7: SUBSEQUENT EVENTS
The Orneta #1, the initial exploratory well on the Baltic Concession, was
spudded on February 3, 1997 . The well was drilled to the top of the Cambrian
section at a total true vertical depth of 7,987 feet on April 14, 1997. After
coring the well began flowing water at a sufficient level to require shutting
the well in. However, no economic quantities of oil or gas were encountered.
The Orneta #1 was subsequently plugged and abandoned as a dry hole.
On April 16, 1997 the Company entered into an agreement with Apache
Corporation whereby Apache Corporation will earn a 50% interest in the Company's
Lublin Concession (containing approximately 2 million acres) by paying the
Company $150,000 in cash, shooting 500 kilometers (approximately 300 miles) of
2D seismic, and drilling two exploratory wells prior to June 30, 1998 at its own
expense. Apache Corporation has a minimum contractual obligation to shoot 300
miles of seismic and to drill the first well. It is anticipated that Apache
Corporation will spend approximately $5,000,000 to earn its interest in the
Lublin Concession. Apache Corporation will become the operator of the Lublin
Concession. The Company and Apache Corporation also created an area of mutual
interest covering approximately 4 million additional acres on blocks adjacent
and near the Lublin Concession.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS
Forward-Looking Information May Prove Inaccurate
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When
used in this document, the words "anticipate," "believe," "estimate,"
"expect," and "intend" and similar expressions, as they relate to the Company
or its management, are intended to identify forward-looking statements. Such
statements reflect the current view of the Company respecting future events and
are subject to certain risks, uncertainties, and assumptions, including the
risks and uncertainties noted. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected, or intended.
FINANCIAL CONDITION
Working Capital
The Company had working capital of $12,848,000 at March 31, 1997 as
compared to $13,843,000 at December 31, 1996. The decrease of $995,000 is
primarily attributed to the operating loss for the first quarter of 1997 of
$1,779,000 which was partially offset by an increase of $609,000 in long term
debt and net proceeds of $162,000 relating to the exercise of stock options and
warrants.
Operating Activities
The net cash used in operating activities during the first quarter of 1997
was $1,687,000, an increase of $940,000 over the first quarter 1996 amount
of $747,000. The increase was due principally to a net loss of $1,779,000
for the first quarter of 1997, an increase of $1,196,000 over the first quarter
of 1996 net loss of $583,000. The increased net loss was a result of increased
exploration efforts in the Company's Poland Concessions. Accounts receivable
increased $480,000 for the first quarter of 1997 primarily due to additional
advances due from RWE-DEA, the Company's partner in its Baltic Concession.
There were no accounts receivable amounts associated with RWE-DEA during
the first quarter of 1996. Accounts payable also increased $250,000 during
the first quarter of 1997 as a result of additional accrued liabilities
associated with drilling the Orneta #1 well in Poland.
Investing Activities
During the first three months of 1997 the Company expended a net amount of
$17,000 on additions to oil and gas properties as compared to $89,000 during the
first quarter of 1996. The decrease of $72,000 was due to less capital spent
$51,000 in additions to producing properties (primarily the Cut Bank field), had
a $210,000 reduction in oil and gas properties related to the Orneta #1 (the
well was determined to be a dry hole in the first quarter of 1997 but was
carried as work in process as of December 31, 1996), and $176,000 in additional
unproved leasehold costs ($77,000 relating to Poland and $99,000 for acquiring
leases in the Williston Basin of North Dakota). The Company currently has
capitalized costs totaling $701,000 relating to unproved properties which are
concentrated in two main areas, namely the Williston Basin in North Dakota and
Poland. In accordance with generally accepted accounting principles, should
the Company determine that prospects' capitalized costs are not recoverable
following unsuccessful exploration drilling or otherwise, the Company would
record an impairment charge which may materially and adversely affect the
Company's results of operations for the period during which such impairment
is recognized. There were no impairments in the first quarter of 1997 or the
first quarter of 1996.
Additions to other property and equipment totaled $113,000 for the first
quarter of 1997, an increase of $55,000 over the first quarter of 1996. In
1997, the Company spent $75,000 upgrading its well servicing and drilling
equipment in Montana and $38,000 for additional office equipment in its Salt
Lake City office.
Financing Activities
During the first quarter of 1997 warrants and options for 91,834 shares
resulting in net proceeds of $162,000 net to the Company were exercised.
Due to the method of reporting the Company's receipt of funds from RWE-DEA
(all funds received from RWE-DEA must be recorded as long term debt), its
partner in the Baltic Concession, the Company's long term debt increased to
$2,109,000, an increase of $609,000 over its December 31, 1996 balance of
$1,500,000. The Company expects the Polish government to approve RWE-DEA as a
50% shareholder in Warmia, its wholly owned Polish subsidiary, during the
second quarter of 1997. Upon approval by the Polish government, the Company
will recognize a gain or loss on the transaction, de-consolidate Warmia
(including eliminating the long term debt associated with RWE-DEA) and report
its activity using the equity method of accounting.
The Company has continued to maintain its credit facility with Bank One
which includes a borrowing base of $3,580,000 collateralized by assets owned
by FX Producing, a wholly owned subsidiary. Due to the Company's current
favorable working capital position there are no immediate plans to utilize the
credit facility.
The Company's planned expenditures are as follows: (i) a net amount of
approximately $2,300,000 to drill two wells and acquire additional seismic data
on its Baltic Concession through early 1998 assuming continued participation by
RWE-DEA, (ii) approximately $5,500,000 in its Lublin concession to drill two
wells and acquire seismic data, of which an estimated amount of $5,000,000
will be paid 100% by Apache Corporation through mid 1998, (iii) approximately
$1,400,000 for the review and evaluation of available geological and geophysical
data and the potential initiation of exploratory activities in the Carpathian
joint study area during the next twelve months, (iv) approximately $6,100,000
for in-fill development drilling in the Cut Bank field in Montana subject to the
continuing evaluation of data from previous development as discussed below and
(v) approximately $800,000 for exploration activities in the western United
States. The allocation of the Company's capital among the categories of
anticipated expenditures is discretionary and will depend upon future events
that cannot be predicted. Such events include the actual results and costs of
future exploration and development drilling activities. Consistent with
previous practice, the Company may obtain partial funding for its exploration
and potential development activities through strategic arrangements with
industry or financial partners.
The Company will continue to monitor the results from the infill drilling
completed in January 1996 in the Cut Bank field and will study the details of
production from other areas of the field to determine whether such infill
drilling is resulting in a financial return to the Company that is satisfactory
as compared to other opportunities then available to the Company. If, in the
opinion of the Company other development opportunities then available to the
Company, including development in the Baltic Concession and other areas of
Poland, are likely to provide a greater financial return to the company, funds
initially budgeted to the Cut Bank field development may be utilized for
development of other fields.
RESULTS OF OPERATIONS
Comparison of the First Quarter 1997 to the First Quarter 1996
Oil sales increased $74,000 in the first quarter of 1997 to $579,000 as
compared to $505,000 in the same quarter of 1996. The increase was due to an
average increase of approximately $2.44 per barrel in the price of oil sold
during the first quarter of 1997 as compared to the first quarter of 1996.
Production was essentially flat, at 31,122 barrels for the first quarter of
1997, compared to 31,595 for the same quarter in 1996.
Drilling revenues of $300 for the first quarter of 1997 were virtually
unchanged from the $475 in the first quarter of 1996. The Company did not
drill any exploratory wells with its drilling rig during the first quarter of
1997 or the first quarter of 1996. Drilling revenue will vary with the timing
of wells being drilled, costs of the wells and the Company's working interest.
Operating costs increased $61,000 to $354,000 in the first quarter of 1997
as compared to $293,000 in the same quarter of 1996. The increase was
primarily due to a continuation of concerted efforts to perform increased
maintenance on the Southwest Cut Bank Sand Unit in conjunction with the
Company's ongoing program to enhance the overall production of the field.
Production taxes increased $5,000 to $37,000 in the first quarter of 1997
as compared to $32,000 in the same quarter of 1996. The first quarter of 1996
was lower due to production tax adjustments from prior production periods.
Exploration costs increased $1,144,000 in the first quarter of 1997 to
$1,333,000 as compared to $189,000 in the same period of 1996. The increase is
principally due to the Orneta #1, a dry hole drilled on the Company's Baltic
concession in Poland which cost $1,100,000. RWE-DEA has advanced the Company
its share of costs in the Orneta #1, a total of approximately $1,050,000.
However, since the Polish government has not formally recognized RWE-DEA as a
fifty percent owner in the Baltic Concession, the funds advanced to the Company
by RWE-DEA are recorded as long term debt instead of reducing the dry hole costs
associated with drilling the Orneta #1.
Drilling costs decreased $9,000 to $15,000 in the first quarter of 1997 as
compared to $24,000 in the same quarter of 1996. The Company's drilling rig was
not utilized for exploratory drilling in the first quarter of 1997 or the first
quarter of 1996.
Depreciation, depletion and amortization increased $7,000 to $145,000 in
the first quarter of 1997 as compared to $138,000 for the same period of 1996.
The increase in depreciation was primarily due to the depreciation of furniture
and equipment additions purchased after the first quarter of 1996. Depletion
was essentially the same due to flat production volumes.
There were no leasehold impairments in the first quarter of 1997 or the
first quarter of 1996. Leasehold impairments will vary from quarter to quarter
and year to year based upon management's periodic assessment to determine
whether the unproved properties have been impaired.
General and administrative expenses increased $278,000 to $644,000 in the
first quarter of 1997 as compared to $366,000 in the same quarter of 1996. The
increase was primarily due to the additional general and administrative expenses
associated with the Company's Polish operations. The Company's expanded Polish
activity includes four separate Polish exploraiton subsidiaries in the first
quarter of 1997 as compared to only the Baltic Concession in the first quarter
of 1996.
Interest and other income increased $167,000 to $203,000 for the first
quarter of 1997 as compared to $36,000 in the same quarter of 1996. The
increase is primarily due to an increase in the interest earned on cash
and other investments of $164,000 in the first quarter of 1997 as compared to
$12,000 in the first quarter of 1996. The Company's cash position was
$12,215,000 higher in the first quarter of 1997 as compared to the first quarter
of 1996 due to the remaining cash proceeds of the Company's public offering in
August 1996.
Interest expense decreased $49,000 to $33,000 for the first quarter of 1997
as compared to $82,000 in the same quarter of 1996. The decrease is primarily
due to a $1,329,000 reduction in the of the Company's long term debt from the
first quarter of 1996 to the first quarter of 1997. The Company's long term
debt of $3,439,000 at March 31, 1996 was paid off in August 1996. The Company's
long term debt of $2,109,000 at March 31, 1997 pertains to advances received
from RWE-DEA, its partner in the Baltic concession. The Company expects the
Polish government to approve RWE-DEA's purchase of fifty percent of Warmia, a
wholly owned subsidiary, in the second quarter of 1997. Upon approval by the
Polish government the Company will recognize a gain or loss on the transaction,
de-consolidate Warmia (including the long term debt associated with the RWE-DEA
advances) and report its results using the equity method of accounting.
OTHER MATTERS
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share. This statement
establishes standards for computing and presenting earnings per share ("EPS")
and applies to entities with publicly-held common stock or potential common
stock. This statement simplifies the standards for computing EPS and makes them
comparable to international EPS standards. This statement is effective for
financial statements for both interim and annual periods ending after December
15, 1997. The Company is currently evaluating the impact of the recently issued
statement and will adopt the requirements for the year ending December 31, 1997.
The Company has reviewed all other recently issued, but not yet adopted,
accounting standards in order to determine their effects, if any, on the results
of operations or financial position of the Company. Based on that review, the
Company believes that none of these pronouncements will have a significant
effect on current or future earnings or operations.
- ---------------------------------------------------------------------------
PART II. OTHER INFORMATION
- ---------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
- ------ --------- -------------------- ------------
Item 4. Instruments Defining the Rights of
Security Holders
- ------------------------------------------------------
4.01 4 Form of Amendment To Articles Of Incorporated by
Incorporation Designating Rights, Reference (1)
Privileges, And Preferences Of
Series "A" Preferred Stock
4.02 4 Form of Rights Agreement dated as Incorporated by
of April 4, 1997, between FX Reference (1)
Energy, Inc., and Fidelity
Transfer Corp.
(1) Incorporated by reference from the current report on Form 8-K dated April
4, 1997
(b) Reports on Form 8-K.
During the quarter ended March 31, 1997, the Company filed the following
reports on Form 8-K:
Date of Event Reported Item(s) Reported
- ---------------------- -------------------------------
February 3, 1997 Item 5. Other Events
March 17, 1997 Item 5. Other Events
April 1, 1997 Item 5. Other Events
April 4, 1997 Item 5. Other Events
Item 7. Financial Statements and
Exhibits
April 14, 1997 Item 5. Other Events
April 18, 1997 Item 5. Other Events
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FX ENERGY, INC.
(Registrant)
By /s/ David N. Pierce
Chief Executive Officer, President, Chief
Financial and Accounting Officer, and Director
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1997, AND STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S>.............................................................<C>
<PERIOD-TYPE>...................................................3-MOS
<FISCAL-YEAR-END>...............................................DEC-31-1996
<PERIOD-START>..................................................JAN-01-1997
<PERIOD-END>....................................................MAR-31-1997
<CASH>..........................................................12,774,441
<SECURITIES>....................................................0
<RECEIVABLES>...................................................866,736
<ALLOWANCES>....................................................0
<INVENTORY>.....................................................18.466
<CURRENT-ASSETS>................................................13,684,392
<PP&E>..........................................................8,169,030
<DEPRECIATION>..................................................1,547,894
<TOTAL-ASSETS>..................................................22,236,776
<CURRENT-LIABILITIES>...........................................836,387
<BONDS>.........................................................0
<COMMON>........................................................12,592
...........................................0
.....................................................0
<OTHER-SE>......................................................19,478,430
<TOTAL-LIABILITY-AND-EQUITY>....................................22,236,776
<SALES>.........................................................473,490
<TOTAL-REVENUES>................................................579,277
<CGS>...........................................................0
<TOTAL-COSTS>...................................................2,527,586
<OTHER-EXPENSES>................................................0
<LOSS-PROVISION>................................................0
<INTEREST-EXPENSE>..............................................33,233
<INCOME-PRETAX>.................................................(1,778,711)
<INCOME-TAX>....................................................0
<INCOME-CONTINUING>.............................................(1,778,711)
<DISCONTINUED>..................................................0
<EXTRAORDINARY> ................................................0
<CHANGES>.......................................................0
<NET-INCOME>....................................................(1,667,711)
<EPS-PRIMARY>...................................................(0.14)
<EPS-DILUTED>...................................................(0.14)
</TABLE>
