UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended SEPTEMBER 30, 1998
-------------------------------------------------
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from to
-------------------------------------------------
Commission File Number 0 - 23136
------------
COUNTRY STAR RESTAURANTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 62-1536550
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4929 WILSHIRE BOULEVARD, SUITE # 428, LOS ANGELES, CA 90010
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(323) 634-5588
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of common stock outstanding as of November 13,
1998: 27,374,293
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COUNTRY STAR RESTAURANTS, INC.
INDEX
Page
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<S> <C> <C>
PART I - Financial Information
Item 1. Financial Statements
Condensed Balance Sheet at
September 30, 1998 (unaudited).......................... 3
Condensed Statements of Operations
for the Quarter Ended September 30, 1998
and September 30, 1997 (unaudited)..................... 4
Condensed Statements of Operations
for the Nine Months Ended September 30, 1998
and September 30, 1997 (unaudited)..................... 5
Condensed Statements of Cash Flows
for the Quarter Ended September 30, 1998
and September 30, 1997 (unaudited)..................... 6
Condensed Statements of Cash Flows
for the Nine Months Ended September 30, 1998
and September 30, 1997 (unaudited)..................... 7
Notes to Condensed Financial Statements
(unaudited)............................................. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 10
PART II - Other Information
Item 2. Changes in Securities........................................ 14
Item 6. Exhibits and Reports on Form 8-K............................. 15
SIGNATURES ............................................................. 16
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2
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<TABLE>
<CAPTION>
COUNTRY STAR RESTAURANTS, INC.
Condensed Balance Sheet
(Unaudited)
ASSETS
September 30, 1998
------------------
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 17,430
Inventories 130,992
Prepaid expenses 41,711
Other 99,835
------------
Total current assets 289,968
------------
PROPERTY AND EQUIPMENT AT COST, NET OF ACCUMULATED
DEPRECIATION AND AMORTIZATION OF $993,188:
Leasehold improvements 3,259,688
Furniture and equipment 1,092,107
Memorabilia 291,790
------------
TOTAL PROPERTY AND EQUIPMENT 4,643,585
------------
OTHER 90,261
------------
$ 5,023,814
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ 2,332,000
Accounts payable 419,335
Accrued legal settlements 100,000
Other accrued expenses 119,954
------------
TOTAL CURRENT LIABILITIES 2,971,289
------------
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $0.001 par value, 2,000,000 shares authorized,
no shares issued and outstanding --
Common stock, $0.01 par value, 250,000,000 shares authorized,
11,424,293 shares issued and outstanding 114,243
ADDITIONAL PAID-IN CAPITAL 48,108,403
ACCUMULATED DEFICIT (46,170,121)
------------
NET STOCKHOLDERS' EQUITY 2,052,525
------------
$ 5,023,814
============
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
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COUNTRY STAR RESTAURANTS, INC.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED SEPTEMBER 30,
-----------------------------------
1998 1997
----------- -----------
REVENUES:
<S> <C> <C>
Food and beverage $ 898,059 $ 1,217,833
Merchandise 22,177 75,193
----------- -----------
920,236 1,293,026
----------- -----------
COST AND EXPENSES:
Cost of revenues:
Food and beverage 281,213 400,327
Merchandise 13,634 75,010
Labor 423,079 588,155
Rent 82,060 674,847
Other restaurant operating 162,244 362,015
Selling, general and administrative 60,948 755,938
Depreciation and amortization 146,699 309,935
Loss on disposal of assets 114,247 --
----------- -----------
1,284,124 3,166,227
----------- -----------
LOSS FROM OPERATIONS (363,888) (1,873,201)
----------- -----------
OTHER INCOME (EXPENSE):
Interest income -- 1,598
Interest expense (79,813) 144,255
----------- -----------
(79,813) 145,853
----------- -----------
LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM (443,701) (1,727,348)
MINORITY INTEREST -- 371,596
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (443,701) (1,355,752)
EXTRAORDINARY ITEM - SETTLEMENT OF NOTES PAYABLE, NET OF 0 TAXES -- 301,161
----------- -----------
NET LOSS $ (443,701) $(1,054,591)
=========== ===========
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
Loss before extraordinary item $ (0.05) $ (0.45)
Extraordinary item -- 0.10
----------- -----------
Net loss per common share $ (0.05) $ (0.35)
=========== ===========
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 9,651,749 3,041,412
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
COUNTRY STAR RESTAURANTS, INC.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
1998 1997
------------ ------------
<S> <C> <C>
REVENUES:
Food and beverage $ 2,848,738 $ 4,817,375
Merchandise 105,674 471,524
------------ ------------
2,954,412 5,288,899
------------ ------------
COST AND EXPENSES:
Cost of revenues:
Food and beverage 901,018 1,580,653
Merchandise 75,849 398,879
Labor 1,353,881 2,183,509
Rent 327,686 2,104,455
Other restaurant operating 568,417 1,076,772
Selling, general and administrative 1,056,787 2,999,826
Depreciation and amortization 441,746 1,081,466
Loss on disposal of assets 114,247 --
------------ ------------
4,839,631 11,425,560
------------ ------------
LOSS FROM OPERATIONS (1,885,219) (6,136,661)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income -- 5,654
Interest expense (175,182) (54,174)
Embedded interest expense (313,000) (2,001,786)
------------ ------------
(488,182) (2,050,306)
------------ ------------
LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM (2,373,401) (8,186,967)
MINORITY INTEREST -- 1,106,926
------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (2,373,401) (7,080,041)
EXTRAORDINARY ITEM - SETTLEMENT OF NOTES PAYABLE, NET OF 0 TAXES 1,527,858 1,654,639
------------ ------------
NET LOSS $ (845,543) $ (5,425,402)
============ ============
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
Loss before extraordinary item $ (0.26) $ (3.40)
Extraordinary item 0.17 0.80
------------ ------------
Net loss per common share $ (0.09) $ (2.60)
============ ============
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 9,053,963 2,083,525
============ ============
The accompanying notes are an integral part of these financial statements.
5
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<CAPTION>
COUNTRY STAR RESTAURANTS, INC.
Condensed Statements of Cash Flows
(Unaudited)
FOR THE QUARTER ENDED SEPTEMBER 30,
-----------------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES $ (171,380) $(1,058,581)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES -- --
----------- -----------
Cash flows from financing activities:
Proceeds from line of credit 180,000 95,000
Payment of note payable -- --
Net proceeds from issuance of common and preferred stock -- 934,642
Capital lease payments -- --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 180,000 1,029,642
----------- -----------
Net increase (decrease) in cash 8,620 (28,939)
Cash and cash equivalents, beginning of period 8,810 166,699
----------- -----------
Cash and cash equivalents, end of period $ 17,430 $ 137,760
=========== ===========
SUPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Common stock issued upon conversion of debt $ 146,554 --
Common stock issued upon extinguishment of debt -- $ 76,578
Common stock issued upon purchase of equipment -- $ 50,000
Common stock issued upon rental discount -- $ 490,000
The accompanying notes are an integral part of these financial statements.
6
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<CAPTION>
COUNTRY STAR RESTAURANTS, INC.
Condensed Statements of Cash Flows
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES $(1,333,415) $(3,782,261)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES -- (10,445)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 1,432,000 595,000
Payment of note payable (1,300,000) --
Net proceeds from issuance of common and preferred stock -- 2,926,498
Capital lease payments -- (540,237)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 132,000 2,981,261
----------- -----------
Net decrease in cash (1,201,415) (811,445)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,218,845 949,205
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 17,430 $ 137,760
=========== ===========
SUPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Common stock issued upon conversion of debt $ 296,554 --
Common stock issued upon extinguishment of debt $ 167,500 $ 76,578
Common stock issued upon purchase of leased equipment -- $ 447,462
Embedded interest relating to convertible debt $ 313,000 $ 2,001,726
Common stock issued upon purchase of equipment -- $ 50,000
Common stock issued upon rental discount -- $ 490,000
The accompanying notes are an integral part of these financial statements.
7
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COUNTRY STAR RESTAURANTS, INC.
Notes to Condensed Financial Statements
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of
Country Star Restaurants, Inc. have been prepared by the
Company pursuant to the rules and regulations of the
Securities and Exchange Commission.
The information furnished herein reflects all adjustments,
consisting of only normal recurring accruals and adjustments
which are, in the opinion of management, necessary to fairly
state the operating results for the respective periods.
Certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The notes to the
condensed financial statements should be read in conjunction
with the notes to the consolidated financial statements
contained in the Company's Form 10-KSB for the year ended
December 31, 1997. Company management believes that the
disclosures are sufficient for interim financial reporting
purposes.
NOTE B - EMBEDDED INTEREST EXPENSE
Under the credit agreement, amounts advanced may be converted
to common stock at the lesser of (i) $13.30, or (ii) 80% of
the average closing bid price of the common stock for the five
consecutive trading days preceding the date of conversion.
Accordingly, the Company recorded embedded interest expense
for advances made under the line of credit. For the six months
ended June 30, 1998, the Company recorded $313,000 of net
embedded interest expense relating to these advances.
The board of directors amended the conversion features on July
27, 1998 so that the line of credit may be converted to common
stock at the lesser of (i) $13.30 per share, or (ii) the
closing bid price of the common stock on the date prior to the
date of conversion.
(continued)
8
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COUNTRY STAR RESTAURANTS, INC.
Notes to Condensed Financial Statements-Continued
(Unaudited)
NOTE C - EXTRAORDINARY ITEM
During the first quarter of 1998, the Company recorded an
extraordinary gain of $1.53 million on the extinguishment of
its $2,995,358 note payable to Cameron Capital.
Under the terms of the Settlement Agreement dated February 18,
1998, Cameron agreed to dismiss its legal action against the
Company and to accept as payment in full of its unconverted
debt $1.3 million cash and 670 thousand shares of the
Company's common stock with a market value of $167,500.
Cameron does not have any registration rights with respect to
the common stock, but is eligible to resell certain amounts
immediately pursuant to the provisions of Rule 144 under the
Securities Act of 1933.
NOTE D - YEAR 2K DISCLOSURE
The Company is working to resolve the potential impact of the
year 2000 on the ability of the Company's computerized
information systems to accurately process information that may
be date-sensitive. The Company has one program that recognizes
a date using "00" as the year 1900 rather than the year 2000
that could result in errors or system failures. The Company
has not completed its assessment, but currently believes that
costs of addressing this issue will not have a material
adverse impact on the Company's financial position.
9
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COUNTRY STAR RESTAURANTS, INC.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended September 30, 1998 compared to three months ended September
30, 1997
- --------------------------------------------------------------------------------
Revenues.
Total revenues decreased to $920 thousand for the three months ended September
30, 1998, compared with $1.293 million for the three months ended September 30,
1997, a decrease of $373 thousand or 29%. Same store revenues decreased 28% in
Hollywood and 27% in Las Vegas. The decrease was due to the closing of the Las
Vegas restaurant, the Company's limited advertising budget and customer
resistance to changes in food preparation and presentation. Steps are being
taken which management believes will increase sales at the Hollywood restaurant.
Costs and expenses.
Cost of revenues decreased from $475 thousand for the three months ended
September 30, 1997 to $295 thousand for the three months ended September 30,
1998. Cost of revenues as a percentage of revenues decreased from 37% to 32%.
Operating expenses decreased from $1.625 million for the three months ended
September 30, 1997 to $667 thousand for the three months ended September 30,
1998. As a percentage of revenues, operating expenses decreased from 126% to
73%.
General and administrative expenses decreased from $756 thousand for the three
months ended September 30, 1997 to 61 thousand for the three months ended
September 30, 1998. As a percentage of revenues, general and administrative
expenses decreased from 58% to 7%. The decrease is partially due to the
reduction of the estimated accrued legal settlement to $100,000.
The decrease in cost of revenues, operating expenses and general and
administrative expenses were due to the closing of two restaurants and the new
plans and policies implemented by management.
Depreciation and amortization decreased from $310 thousand for the three months
ended September 30, 1997 to $147 thousand for the three months ended September
30, 1998, reflecting the decrease in the number of buildings owned from three to
one. As a percentage of total revenues, depreciation and amortization decreased
from 24% to 16%.
(continued)
10
<PAGE>
COUNTRY STAR RESTAURANTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Interest expense increased from a $146 thousand dollar income to an $80 thousand
dollar expense, reflecting primarily the interest expense associated with the
convertible debt financing arrangements entered into on February 12, 1997.
Minority interest for the three months ended September 30, 1997 reflected the
Company's controlling interest of 50.05% in Country Star Las Vegas LLC triggered
by the opening of the Las Vegas facility in July, 1996. The Company sold its
interest in Country Star Las Vegas LLC on December 30, 1997, and entered into a
new sublease agreement directly between the Company and a nominee of the
landlord. The Company is obligated to pay base rent of 50% of monthly positive
cash flow. During the three months ended September 30, 1998, the Las Vegas
location did not generate positive cash flow and, therefore, no rental payments
were made.
The Company closed its Las Vegas restaurant upon the expiration of its lease on
September 30, 1998. The Landlord of the Restaurant was unwilling to extend the
lease beyond the scheduled expiration date. As a result of this event, the
remaining net value of the Las Vegas Restaurant equipment totaling $114 thousand
was written off on September 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by financing activities for the three months ended September
30, 1997 and September 30, 1998 were $1.030 million and $180 thousand
respectively, due primarily to the net proceeds from issuance of common stock in
1997 and borrowing under the convertible debt in 1998.
Net cash used in operating activities for the three months ended September 30,
1997 and September 30, 1998 decreased from $1.059 million to $171 thousand due
primarily to a decrease in accounts payable and the settlement with over 75
creditors during the three months ended September 30, 1997.
(continued)
11
<PAGE>
COUNTRY STAR RESTAURANTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
RESULTS OF OPERATIONS
Nine months ended September 30, 1998 compared to nine months ended September 30,
1997
- --------------------------------------------------------------------------------
Revenues.
Total revenues decreased to $2.954 million for the nine months ended September
30, 1998, compared with $5.289 million for the nine months ended September 30,
1997, a decrease of $2.335 million or 44%. Same store revenues decreased 35% in
Hollywood and 49% in Las Vegas. The decreases were due to the closing of Atlanta
and Las Vegas restaurants, the Company's limited advertising budget and customer
resistance to changes in food preparation and presentation. Steps are being
taken which management believes will increase sales at the Hollywood restaurant.
Costs and expenses.
Cost of revenues decreased from $1.980 million for the nine months ended
September 30, 1997 to $977 thousand for the nine months ended September 30,
1998. Cost of revenues as a percentage of revenues decreased from 37% to 33%.
Operating expenses decreased from $5.365 million for the nine months ended
September 30, 1997 to $2.250 million for the nine months ended September 30,
1998. As a percentage of revenues, operating expenses decreased from 101% to
76%.
General and administrative expenses decreased from $3.0 million for the nine
months ended September 30, 1997 to 1.057 million for the nine months ended
September 30, 1998. As a percentage of revenues, general and administrative
expenses decreased from 57% to 36%. The decrease is partially due to the
reduction of the estimated accrued legal settlement to $100,000.
The decrease in cost of revenues, operating expenses and general and
administrative expenses were due to the closing of two restaurants and the new
plans and policies implemented by management.
Depreciation and amortization decreased from $1.081 million for the nine months
ended September 30, 1997 to $442 thousand for the nine months ended September
30, 1998, reflecting the decrease in the number of buildings owned from three to
one. As a percentage of total revenues, depreciation and amortization decreased
from 20% to 15%.
(continued)
12
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COUNTRY STAR RESTAURANTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Interest expense decreased from $2.050 million to $488 thousand, reflecting
primarily the embedded interest expense associated with the convertible debt
financing arrangements entered into on February 12, 1997.
Minority interest for the nine months ended September 30, 1997 reflected the
Company's controlling interest of 50.05% in Country Star Las Vegas LLC triggered
by the opening of the Las Vegas facility in July, 1996. The Company sold its
interest in Country Star Las Vegas LLC on December 30, 1997, and entered into a
new sublease agreement directly between the Company and a nominee of the
landlord. The Company is obligated to pay base rent of 50% of monthly positive
cash flow. During the nine months ended September 30, 1998, the Las Vegas
location did not generate positive cash flow and, therefore, no rental payments
were made.
The Company closed its Las Vegas restaurant upon the expiration of its lease on
September 30, 1998. The Landlord of the Restaurant was unwilling to extend the
lease beyond the scheduled expiration date. As a result of this event, the
remaining net value of the Las Vegas Restaurant equipment totaling $114 thousand
was written off on September 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by financing activities for the nine months ended September
30, 1997 and September 30, 1998 were $2.981 million and $132 thousand
respectively, due primarily to the net proceeds from issuance of common stock
and borrowings in 1997 and borrowing under and repayment of the convertible
debts in 1998.
Net cash used in operating activities for the nine months ended September 30,
1997 and September 30, 1998 decreased from $3.782 million to $1.333 million due
primarily to the settlement with over 375 creditors during the nine months ended
September 30, 1997.
The Company will need to raise additional capital before it can attain
profitability from operations. Management believes it can raise this capital
through private placements of equity and the granting by lenders of
discretionary advances under outstanding lines of credit.
13
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COUNTRY STAR RESTAURANTS, INC.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On January 31, 1998 the Company's convertible debentures
issued in October 1997 for $150,000 were automatically
converted into 461,538 common shares in accordance with their
terms.
On February 12, 1998 the Company effected a one for ten
reverse common stock split. Accordingly, all references to
numbers of common shares, except shares authorized, and to per
share information in the financial statements have been
adjusted to reflect the reverse stock split on a retroactive
basis.
On February 18, 1998, the Company issued 670,000 shares of
Common Stock to Cameron Capital Ltd. under a Settlement
Agreement relating to settlement of the Company's long term
debt obligation to Cameron and issued warrants to acquire
43,333 shares of the Company's common stock at an exercise
price of $6.25 per share to an institutional lender in
connection with the settlement.
The issuance of the warrants and of the common stock were
exempt from registration pursuant to Section 4 (2) of the
Securities Act of 1933, as amended.
On March 10, 1998 the National Association of Securities
Dealers, Inc. (the "NASD") delisted the Company's securities
from the NASDAQ National Market because of the Company's
failure to meet listing requirements concerning minimum bid
price and market value of public float and advised the Company
its securities may be eligible to trade on the OTC Bulletin
Board. The Company will take all actions reasonably necessary
for there to be an active trading market for its outstanding
common stock.
During August and September 1998 the holders of convertible
debt of the Company in the aggregate principal amount of
$146,554 converted their debt into 2,420,000 shares of common
stock.
The convertible debt holders have converted 14.750 million
shares of common stock after September 30, 1998.
(continued)
14
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COUNTRY STAR RESTAURANTS, INC.
PART II
OTHER INFORMATION
(continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits None
(b) Reports on Form 8-K None
15
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COUNTRY STAR RESTAURANTS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
COUNTRY STAR RESTAURANTS, INC.
By: /s/ DAN J. RUBIN
----------------------------------------
Dan J. Rubin
Chief Executive Officer, President,
and Chairman of the Board
Dated: November 18, 1998
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000911220
<NAME> COUNTRY STAR RESTAURANTS, INC.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 17,430
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 130,992
<CURRENT-ASSETS> 289,968
<PP&E> 5,636,773
<DEPRECIATION> 993,188
<TOTAL-ASSETS> 5,023,814
<CURRENT-LIABILITIES> 2,971,289
<BONDS> 0
114,243
0
<COMMON> 0
<OTHER-SE> 1,938,282
<TOTAL-LIABILITY-AND-EQUITY> 5,023,814
<SALES> 920,236
<TOTAL-REVENUES> 920,236
<CGS> 294,847
<TOTAL-COSTS> 1,284,124
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 79,813
<INCOME-PRETAX> (443,701)
<INCOME-TAX> 0
<INCOME-CONTINUING> (443,701)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (443,701)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
