SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: June 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM:
__________________________________
Commission File Number: 0-25170
__________________________________
ROYAL SILVER MINES, INC.
(Exact name of registrant as specified in its charter)
UTAH 91-29382934
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
10220 N. Nevada, Suite 230, Spokane, WA 99218
(Address of Principal Executive Offices) (Zip Code)
509-466-3144
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 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 outstanding at June 30, 1996: 9,549,845
shares
<PAGE>
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF ROYAL SILVER MINES, INC.
(Hereinafter referred to as Registrant or Company)
Condensed financial statements, and an accompanying independent
accountants' report, are filed as part of this Quarterly Report at
pages 7 to 28. In management's opinion, these financial statements
present fairly in all material respects Registrant's financial
condition and changes in condition as of June 30, 1996 and
September 30, 1995, and the results of operations, stockholders'
equity and cash flows for the nine months ended June 30, 1996 and
1995, and from inception on February 17, 1994 through June 30,
1996, in conformance with generally accepted accounting principles.
The accompanying financial statements consolidate the financial
statements of Celebration Mining Company and Royal Silver Mines,
Inc. due to the Reorganization discussed in Note 1 of the financial
statements following this Report. All significant intercompany
accounts and transactions have been eliminated. Also, the
consolidation required a change in fiscal year-end, from November
30 (Celebration) to September 30 (Royal). The financial statements
account for the Reorganization using the purchase method of
accounting (see Note 1 to the financial statements). Celebration
is treated as the acquiring company for financial reporting
purposes because its shareholders constitute greater than 50
percent of the combined shareholder group. In conformity with
generally accepted accounting principles and the Company's
accounting policy, Celebration is recognized as the predecessor
entity. Consequently, Celebration's assets and liabilities were
not adjusted in the accompanying financial statements. The
financial statements for the period from the inception of
Celebration on February 17, 1994 to November 30, 1994 ("Fiscal
1994") do not include the balance sheet data or results of
operations of Consolidated Royal Mines, Inc. The accompanying
financial statements represent the activities of Royal Silver Mines
and Celebration, but are not considered consolidated financial
statements since Royal Silver is the successor to Celebration.
As discussed in greater detail under Item 2 below, a substantial
portion of Registrant's assets consist of investments in mineral
properties for which additional exploration is required to
determine if they contain ore reserves that are economically
recoverable. The realization of these investments is contingent to
large extent upon the success of Registrant's property
transactions as a whole, the existence of economically recoverable
reserves, the ability of the Company to obtain financing or make
other arrangements for development, and upon future profitable
production. Accordingly, the accompanying financial statements
make no provision for any asset impairment or other adjustment that
might result from the outcome of this uncertainty.
<PAGE>
2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES. There is
considerable risk in any mining venture, and there can be no
assurance that the Company's operations will be successful or
profitable. Exploration for commercially minable ore deposits is
highly speculative and involves risks greater than those involved
in the discovery of mineralization. Mining companies use the
evaluation work of professional geologists, geophysicists, and
engineers in determining whether to acquire an interest in a
specific property, or whether or not to commence exploration or
development work. These estimates are not always scientifically
exact, and in some instances result in the expenditure of
substantial amount of money on a property before it is possible to
make a final determination as to whether or not the property
contains economically minable ore bodies. The economic viability
of a property cannot be finally determined until extensive
exploration and development work, plus a detailed economic
feasibility study, has been performed. Also, the market prices for
mineralization produced are subject to fluctuation and uncertainty,
which may negatively affect the economic viability of properties on
which expenditures have been made. During the development stage of
the Company, from inception to June 30, 1996, the Company
accumulated a deficit of $1,900,128.
At June 30, 1996, $4,845,366 of the Company's total assets of
$5,243,891 were investments in mineral properties. Additional
exploration is required to substantiate or determine whether these
mineral properties contain ore reserves that are economically
recoverable. The realization of these investments is dependent
upon the success of future property sales, the existence of
economically recoverable reserves, the ability of the Company to
obtain financing, the Company's success in carrying out its present
plans or making other arrangements for development, and upon future
profitable production. The ultimate outcome of these investments
cannot be determined at this time; accordingly, no provision for
any asset impairment that may result, in the event the Company is
not successful in developing or selling these properties, has been
made in the Company's financial statements.
LIQUIDITY AND CAPITAL RESOURCES. The Company currently has no
revenues but, as explained above, has an accumulated deficit.
Although it has recurring losses from operations, the Company has
increased its operating capital and improved its financial
condition and ability. Regarding its losses from operations, the
Company cannot assure that it will be able to fully carry out its
plans as budgeted without additional operating capital. At June
<PAGE>
3
30, 1996, the Company had working capital of $261,027. That is a
significant improvement in liquidity and capital resources from its
position of negative working capital of ($665,274) at September 30,
1995. This reversal from deficit to positive working capital was
brought about by a number of events that occurred during the first
three quarters of fiscal 1996.
During the first quarter of fiscal 1996, the Company reduced its
short-term debt position from $670,920 to $100,000 by issuing
common stock to the holders of promissory notes and convertible
debentures in exchange for the cancellation of those instruments
(See Note 6 of the Financial Statements). Also, during the first
three quarters of fiscal 1996, the Company's cash position
increased substantially from $151,698 at September 30, 1995 to
$382,360 at June 30, 1996, primarily from the proceeds of sales of
the Company's common stock (see Note 6 of the Financial
Statements). With the added cash, the Company decreased the
balance of its accounts payable and accrued expenses from a
combined total of $150,114 at September 30, 1995 to $39,847 at June
30, 1996. Aside from its increased cash position, however, the
Company does not have any other significant current assets. At
June 30, 1996, the Company had no long-term debt.
The Company has estimated that it will need capital resources of
approximately $25,000-30,000 per month to meet its estimated
expenditures for fiscal 1996. Throughout the second quarter of
fiscal 1996, acting on instructions from the Board, several key
members of management, in particular the CEO of the Company, met
with experienced financial and investment firms through out Europe
and North America and negotiated the preliminary terms and
arrangements for such capital fund raising. During the third
quarter, the Company raised $876,053 in funds, primarily through
the private placement of shares and warrants. The Company is
continuing with the previously described negotiations and various
alternatives to raise capital.
The Board of Directors reasonably believes that the Company is able
to engage in nearly any size operation or scope of mining activity
depending on the circumstances and merits of each proposed
operation or mining activity. Accordingly, the Board has not
limited the size of operation or scope of project which it believes
is reasonable for management to consider in achieving the Company's
business plan. Therefore, management has been authorized to
consider and review numerous proposals and, upon satisfactory
assessment, to then make a specific determination as to an
estimated range of funding amounts that each such proposal
reasonably might require.
<PAGE>
4
Inasmuch as the Company has not yet determined in detail the
specifications of the project, operation or mining activity that it
intends to undertake, management is not able at this time to
provide a detailed listing or exact range of operation costs,
including increases in general and administrative expense, if any.
However, the Company plans to fund any increases in general and
administrative expense principally from joint venture revenues or
funds it may receive or savings it may realize through corporate
restructuring or business combination arrangements. Funds required
to finance the Company's exploration and development of mineral
properties are expected to come primarily from the contributions of
its joint venture participants, and from the funds generated from
such joint ventures and other lease or royalty arrangements.
The Company consistently has made full and timely payment of its
expenses, in particular to the various governmental payees it
interacts with, and has met its obligations to the entities which
provide its personnel, office space, and equipment needs. The
Company currently is seeking alternate sources of working capital
sufficient to increase the funding of additional general and
administrative expenses that may become necessary as the Company's
business plan develops, and to continue meeting its ongoing payment
obligations for its leases to governmental entities.
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED JUNE 30, 1995 AND JUNE 30,
1996, RESPECTIVELY. General and administrative expenses increased
from $172,771 during the first three quarters of fiscal 1995 to
$633,871 during the first three quarters of fiscal 1996. The
increase is principally due to an increase in the amount of stock
issued to officers, directors, and a consultant as compensation for
services and bonus. As a result, during the first three quarters
of fiscal 1995 compared to during the first three quarters of
fiscal 1996, the net loss increased from $317,121 to $937,393 while
the net loss per share increased correspondingly.
The Company is unable to fully determine the impact of future
transactions on its operating capital. Hence, the Company has
determined not to incur and does not have any commitments or plans
for material capital expenditures during the remainder of its
current fiscal year for which it does not have a reasonably
available source of payment. It is uncertain what effect this
decision may have with respect to restricting capital expenditures.
On the one hand, if the Company were to continue such restriction,
the likely effect might be adverse to the preservation of its
assets and capital base, thereby narrowing the scope of plans for
future operations and constricting liquidity. On the other hand,
if the Company were to discontinue such restriction without an
increase in sustained cash flow, the likely effect of that might be
<PAGE>
5
an increase in accumulated deficits which could be adverse to the
Company's financial condition with respect to liabilities and
stockholders' equity. Therefore, while the Company continues to
seek a joint venture participant and additional sources of capital
for financing operations during the remainder of its current fiscal
year, the Company will continue to carefully monitor its capital
expenditures.
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.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ROYAL SILVER MINES, INC.
/s/ Howard Crosby August 2, 1996
____________________________________ Dated: _________________
By: Howard Crosby
Its: Chief Executive Officer
/s/ Robert Jorgensen August 2, 1996
___________________________________ Dated: _________________
By: Robert Jorgensen
Its: Principal Accounting Officer
<PAGE>
6
ROYAL SILVER MINES, INC.
(A Development Stage Company)
Financial Statements
June 30, 1996 and September 30, 1995
<PAGE>
7
<TABLE>
<CAPTION>
C O N T E N T S
<S> <C>
Accountant's Review Report F1
Balance Sheets F2-3
Statements of Operations F4
Statements of Stockholders' Equity F5-7
Statements of Cash Flows F8-10
Notes to the Financial Statements F11-20
</TABLE>
<PAGE>
8
The Board of Directors
Royal Silver Mines, Inc.
(A Development Stage Company)
Spokane, Washington
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Royal Silver
Mines, Inc. (a development stage company) as of June 30, 1996, and
the related statements of operations, shareholders' equity, and
cash flows for the three months and nine months then ended,
respectively, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these
financial statements is the representation of the management of
Royal Silver Mines, Inc.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying financial
statements in order for them to be in conformity with generally
accepted accounting principles.
The balance sheet at September 30, 1995 and the related statements
of operations, cash flows, and stockholders' equity for the ten
months then ended and from inception on February 17, 1994 through
September 30, 1995 were audited by other auditors, and they
expressed an unqualified opinion on them in their report dated
December 5, 1995, but they have not performed any auditing
procedures since that date.
/s/ Kevin J. Williams & Co. CPA's
Kevin J. Williams & Co.
Certified Public Accountants
Spokane, Washington
July 26, 1996
F-1
<PAGE>
9
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<CAPTION>
June 30, September 30,
ASSETS 1996 1995
_____________ _____________
<S> <C> <C>
CURRENT ASSETS
Cash $ 382,360 $ 151,698
Prepaid expenses 3,803 4,350
_____________ _____________
TOTAL CURRENT ASSETS 386,163 156,048
_____________ _____________
MINERAL PROPERTIES 4,845,366 3,869,515
_____________ _____________
PROPERTY AND EQUIPMENT
Furniture and equipment 14,632 11,629
Less: accumulated depreciation (2,554) (589)
_____________ _____________
TOTAL PROPERTY AND EQUIPMENT 12,078 11,040
_____________ _____________
OTHER ASSETS
Deferred debt issuance costs, net - 19,736
Organization costs, net 284 359
_____________ _____________
TOTAL OTHER ASSETS 284 20,095
_____________ _____________
TOTAL ASSETS $ 5,243,891 $ 4,056,698
============= =============
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-2
<PAGE>
10
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<CAPTION>
June 30, September 30,
LIABILITIES AND 1996 1995
SHAREHOLDERS' EQUITY _____________ _____________
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 3,537 $ 60,026
Payable to related parties 289 289
Accrued expenses 36,310 90,088
Notes payable 85,000 670,919
_____________ _____________
TOTAL CURRENT LIABILITIES 125,136 821,322
_____________ _____________
LONG-TERM DEBT - -
_____________ _____________
COMMITMENTS AND CONTINGENCIES - -
_____________ _____________
SHAREHOLDERS' EQUITY
Common stock, $.01 par value;
40,000,000 shares authorized,
9,549,845 and 7,757,063
shares issued and outstanding,
respectively 95,499 77,571
Additional paid-in capital 6,923,384 4,120,540
Deficit accumulated during
development stage (1,900,128) (962,735)
_____________ _____________
TOTAL SHAREHOLDERS' EQUITY 5,118,755 3,235,376
_____________ _____________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,243,891 $ 4,056,698
============= =============
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-3
<PAGE>
11
(In order to transmit to the SEC via EDGAR, these Statements of
Operations of Royal Silver Mines, Inc. (a development stage
company) have been formatted to fit across two consecutive pages.)
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<CAPTION>
Three months ended
June 30, June 30,
1996 1995
____________________________
<S> <C> <C>
REVENUES $ - $ -
___________ ___________
GENERAL AND ADMINISTRATIVE EXPENSES
Mineral leases 2,758 -
Depreciation and amortization 616 15,804
Officers' and directors' compensation 54,999 47,900
General and administrative 219,682 49,134
___________ ___________
Total expenses 278,055 112,838
___________ ___________
OPERATING LOSS (278,055) (112,838)
___________ ___________
OTHER EXPENSES
Interest expense (2,159) (18,745)
Loss on disposition of assets - -
___________ ___________
Total other expenses (2,159) (18,745)
___________ ___________
NET LOSS $ (280,214) $ (131,583)
=========== ===========
NET LOSS PER COMMON SHARE $ (0.03) $ (0.02)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,396,915 6,578,313
=========== ===========
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-4
<PAGE>
12
(In order to transmit to the SEC via EDGAR, these Statements of
Operations of Royal Silver Mines, Inc. (a development stage
company) have been formatted to fit across two consecutive pages.)
<TABLE>
<CAPTION>
Period from
Nine months ended February 17, 1994
June 30, June 30, (inception) through
1996 1995 June 30, 1996
____________________________ ___________________
<C> <C> <C>
$ - $ - $ -
____________ _____________ _____________
8,122 - 8,965
21,776 51,182 81,656
226,215 69,900 605,448
633,871 172,771 984,355
____________ _____________ _____________
929,984 293,853 1,680,424
____________ _____________ _____________
(929,984) (293,853) (1,680,424)
____________ _____________ _____________
(7,409) (23,268) (74,966)
- - (144,738)
____________ _____________ _____________
(7,409) (23,268) (219,704)
____________ _____________ _____________
$ (937,393) $ (317,121) $(1,900,128)
============ ============= =============
$ ( 0.11) $ (0.05) $ (0.28)
============ ============= =============
8,742,325 6,347,993 6,726,245
============ ============= =============
<PAGE>
12A
(In order to transmit to the SEC via EDGAR, this Statement of
Shareholders' Equity of Royal Silver Mines, Inc. (a development
stage company) have been formatted to fit across two consecutive
pages.)
</TABLE>
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Common Stock
_____________________________
Number
of Shares Amount
______________________________
<S> <C> <C>
Balance, February 17, 1994 - $ -
Issuance in May 1994 of
shares at $.002 per share
to officers and directors in
exchange for assignment
of mining property option 2,250,000 22,500
Issuance in July 1994 of
shares for cash at $.402
in private placement, net
of costs 1,050,000 10,500
Issuance in August 1994 of
shares to a director in
exchange of services,
valued at $.417 per share 150,000 1,500
Net loss for the year ended
November 30, 1994 - -
_____________ ____________
Balance, November 30, 1994 3,450,000 34,500
Issuance of shares in debt
offering at $.03 per share 416,250 4,163
Issuance of shares for
mineral properties valued
at $1.00 per share 262,500 2,625
Issuance of shares for cash
at $1.00 per share 15,000 150
Stock issuance costs - -
_____________ ____________
Balance forward 4,143,750 $ 41,438
_____________ ____________
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-5
<PAGE>
13
(In order to transmit to the SEC via EDGAR, this Statement of
Shareholders' Equity of Royal Silver Mines, Inc. (a development
stage company) have been formatted to fit across two consecutive
pages.)
<TABLE>
<CAPTION>
Additional Total
Paid-in Deficit Shareholders'
Capital Accumulated Equity
_____________ ______________ ______________
<C> <C> <C>
$ - $ - $ -
(18,500) - 4,000
411,116 - 421,616
61,000 - 62,500
- (211,796) (211,796)
_____________ ____________ _____________
453,616 (211,796) 276,320
9,712 - 13,875
259,875 - 262,500
14,850 - 15,000
(58,202) - (58,202)
_____________ ____________ _____________
$ 679,851 $ (211,796) $ 509,493
_____________ ____________ _____________
</TABLE>
<PAGE>
13a
(In order to transmit to the SEC via EDGAR, this Statement of
Shareholders' Equity of Royal Silver Mines, Inc. (a development
stage company) have been formatted to fit across two consecutive
pages.)
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
(continued)
<CAPTION>
Common Stock
_____________________________
Number
of Shares Amount
______________________________
<S> <C> <C>
Balance forward 4,143,750 $ 41,438
Issuance of shares to acquire
Consolidated Royal Mines,
Inc., $.15 per share 2,434,563 24,346
Issuance of shares to
directors and employees
for services at prices
ranging from $2.00 to $2.50
per share 12,750 127
Issuance of shares in
exchange for mineral
properties at prices
ranging from $3.13
to $3.25 per share 800,000 8,000
Issuance of shares for cash
at prices ranging from $1.50
to $2.00 per share 166,000 1,660
Issuance of shares in exchange
for debt at $1.50 per share 200,000 2,000
Net loss for ten months
ended September 30, 1995 - -
______________ ___________
Balance, September 30, 1995 7,757,063 $ 77,571
______________ ___________
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-6
<PAGE>
14
(In order to transmit to the SEC via EDGAR, this Statement of
Shareholders' Equity of Royal Silver Mines, Inc. (a development
stage company) have been formatted to fit across two consecutive
pages.)
<TABLE>
<CAPTION>
Additional Total
Paid-in Deficit Stockholder's
Capital Accumulated Equity
____________ _______________ _____________
<C> <C> <C>
679,851 $ (211,796) $ 509,493
335,750 - 360,096
29,473 - 29,600
2,530,126 - 2,538,126
247,340 - 249,000
298,000 - 300,000
- (750,939) (750,939)
______________ ___________ ____________
4,120,540 $ (962,735) $3,235,376
______________ ___________ ____________
</TABLE>
<PAGE>
14a
(In order to transmit to the SEC via EDGAR, this Statement of
Shareholders' Equity of Royal Silver Mines, Inc. (a development
stage company) have been formatted to fit across two consecutive
pages.)
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
(continued)
<CAPTION>
Common Stock
_____________________________
Number
of Shares Amount
______________________________
<S> <C> <C>
Balance forward 7,757,063 $ 77,571
Issuance of shares for
cash at $1.50 per share 1,076,832 10,769
Issuance of shares to
directors and employees
for services at $1.50
per share 159,900 1,599
Issuance of shares in
exchange for debt at $1.50
per share 406,050 4,060
Issuance of shares for cash
at $2.20 per share 150,000 1,500
Issuance of warrants for cash
at $.05 per warrant - -
Stock issuance costs - -
Net loss for the nine months
ended June 30, 1996 - -
_______________ _____________
Balance, June 30, 1996 9,549,845 $ 95,499
=============== =============
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-7
<PAGE>
15
(In order to transmit to the SEC via EDGAR, this Statement of
Shareholders' Equity of Royal Silver Mines, Inc. (a development
stage company) have been formatted to fit across two consecutive
pages.)
<TABLE>
<CAPTION>
Additional Total
Paid-in Deficit Shareholders'
Capital Accumulated Equity
_____________ ______________ ______________
<C> <C> <C>
$ 4,120,540 $ (962,735) $ 3,235,376
1,605,010 - 1,615,779
238,251 - 239,850
605,015 - 609,075
328,500 - 330,000
41,068 - 41,068
(15,000) - (15,000)
- (937,393) (937,393)
_______________ _____________ _____________
6,923,384 $(1,900,128) $ 5,118,755
=============== ============= =============
</TABLE>
<PAGE>
15A
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<CAPTION>
From
For the nine For the nine February 17,
Months Ended Months Ended 1994 Inception
June 30, June 30, Through
1996 1995 June 30, 1996
_____________ _____________ ______________
<S> <C> <C> <C>
Cash flows from
operating
activities:
Net loss $ (937,393) $ (317,121) $ (1,900,128)
Adjustments to
reconcile net
loss to net cash
used by operating
activities:
Depreciation and
amortization 21,776 51,182 81,656
Issuance of common
stock for services 239,850 - 331,950
Changes in assets
and liabilities:
Prepaid expenses 547 13,831 (3,803)
Other assets - - (23,637)
Accounts payable (56,489) 8,280 3,537
Accrued expenses (15,622) 32,268 74,466
Payable to related
parties - - 300,289
___________ ___________ ____________
Net cash used in
operating
activities (747,331) (211,560) (1,135,670)
____________ ___________ ____________
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-8
<PAGE>
16
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
<CAPTION> From
For the nine For the nine February 17,
Months Ended Months Ended 1994 Inception
June 30, June 30, Through
1996 1995 June 30, 1996
_____________ _____________ ______________
<S> <C> <C> <C>
Cash flows from
investing activities:
Purchase and
development of
mineral properties (975,851) (339,742) (1,601,644)
Purchase of fixed
assets (3,003) (4,696) (14,632)
____________ ____________ ____________
Net cash used in
investing
activities (978,854) (344,438) (1,616,276)
____________ ____________ _____________
Cash flows from
financing
activities:
Stock issuance and
offering costs (15,000) (81,338) (144,835)
Proceeds received on
long-term debt - 675,000 675,000
Payments made on
notes payable (15,000) - (84,206)
Issuance of common
stock for cash 1,945,779 - 2,647,279
Issuance of warrants
for cash 41,068 - 41,068
__________ ___________ _____________
Net cash provided
by financing
activities 1,956,847 593,662 3,134,306
__________ ___________ _____________
Net increase
in cash $ 230,662 $ 37,664 $ 382,360
__________ ___________ _____________
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-9
<PAGE>
17
<TABLE>
ROYAL SILVER MINES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
<CAPTION> From
For the nine For the nine February 17,
Months Ended Months Ended 1994 Inception
June 30, June 30, Through
1996 1995 June 30, 1996
_____________ _____________ ______________
<S> <C> <C> <C>
Net increase in cash
(balance forward) $ 230,662 $ 37,664 $ 382,360
Cash, beginning
of period 151,698 30,076 -
____________ ____________ ______________
Cash, end of
period $ 382,360 $ 67,740 $ 382,360
============ ============ ==============
Supplemental
cashflow
disclosure:
Income taxes $ - $ - $ 350
Interest $ 1,722 $ - $ 24,405
Non-cash financing
activities:
Common stock issued
for services
rendered $ 239,850 $ - $ 331,950
Common stock issued
for mineral
properties $ - $ - $ 2,800,626
Common stock issued
for exchange for
debt $ 609,075 $ 271,250 $ 922,950
Common stock issued
in acquisition
of Consolidated
Royal Mines, Inc. $ - $ - $ 360,096
Option rights
acquired in
exchange for a
payable $ - $ - $ 79,000
Common stock issued
for assignment
of mining
property options $ - $ - $ 4,000
</TABLE>
[FN]
See accountant's report and accompanying notes.
F-10
<PAGE>
18
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Royal Silver Mines, Inc. (Royal) was incorporated in April of 1969
under the laws of the State of Utah primarily for the purpose of
acquiring and developing mineral properties. Royal conducts its
business as a "junior" natural resource company, meaning that it
intends to receive income from property sales or joint ventures
with larger companies.
Celebration Mining Company (Celebration), currently a wholly-owned
subsidiary of Royal was incorporated for the purpose of
identifying, acquiring, exploring and developing mining properties.
Celebration was organized on February 17, 1994 as a Washington
Corporation. Celebration has not yet realized any revenues from
its planned operations.
On August 8, 1995, Royal and Celebration completed an Agreement and
Plan of Reorganization whereby the Company issued 4,143,750 shares
of its common stock and 1,455,000 warrants in exchange for all of
the outstanding common stock of Celebration. Pursuant to the
reorganization the name of the Company was changed to Royal Silver
Mines, Inc. Immediately prior to the Agreement and Plan of
Reorganization, the Company had 2,375,463 common shares issued and
outstanding.
The acquisition was accounted for as a purchase by Celebration of
Royal, because the shareholders of Celebration control the company
after the acquisition. Therefore, Celebration is treated as the
acquiring entity. There was no adjustment to the carrying value of
the assets or liabilities of Royal in the exchange as the market
value approximated the net carrying value. Royal is the acquiring
entity for legal purposes and Celebration is the surviving entity
for accounting purposes.
The $4,845,366 cost of mineral properties included in the
accompanying balance sheet as of June 30, 1996 is related to
exploration properties. The Company has not determined whether the
exploration properties contain ore reserves that are economically
recoverable. The ultimate realization of the Company's investment
in exploration properties is dependent upon the success of future
property sales, the existence of economically recoverable reserves,
the ability of the Company to obtain financing or make other
arrangements for development and upon future profitable production.
The ultimate realization of the Company's investment in exploration
properties cannot be determined at this time and, accordingly, no
provision for any asset impairment that may result, in the event
the Company is not successful in developing or selling these
properties, has been made in the accompanying financial statements.
F-11
<PAGE>
19
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)
The Company is actively seeking additional capital and management
believes the properties can ultimately be sold or developed to
enable the Company to continue its operations. However, there are
inherent uncertainties in mining operations and management cannot
provide assurances that it will be successful in this endeavor.
Furthermore, the Company is in the development stage as it has not
realized any significant revenues from its planned operations.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual
method of accounting.
LOSS PER SHARE
Loss per share was computed by dividing the net loss by the
weighted average number of shares outstanding during the year The
weighted average number of shares was calculated by taking the
number of shares outstanding and weighing them by the amount of
time they were outstanding.
The outstanding warrants were not included in the computation of
loss per share because the exercise price of the outstanding
warrants is higher than the market price of the stock, thereby
causing the warrants to be antidilutive.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
MINERAL PROPERTIES
Costs of acquiring, exploring and developing mineral properties are
capitalized by project area. Costs to maintain the mineral rights
and leases are expensed as incurred. When a property reaches the
production stage, the related capitalized costs will be amortized,
using the units of production method on the basis of periodic
estimates of ore reserves. Mineral properties are periodically
assessed for impairment of value and any losses are charged to
operations at the time of impairment.
Should a property be abandoned, its capitalized costs are charged
to operations. The Company charges to operations the allocable
portion of capitalized costs attributable to properties sold.
Capitalized costs are allocated to properties sold based on the
proportion of claims sold to the claims remaining within the
project area.
F-12
<PAGE>
20
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PRINCIPLES OF CONSOLIDATION
The financial statements include those of Royal Silver Mines, Inc.
and Celebration Mining Company. All significant intercompany
accounts and transactions have been eliminated. The financial
statements are not considered consolidated statements since Royal
Silver Mines, Inc. was the successor by merger to Celebration
Mining Company.
CONCENTRATION OF RISK
The Company maintains its cash accounts in primarily one commercial
bank in Washington. Accounts are guaranteed by the Federal Deposit
Insurance Corporation (FDIC) up to $100,000. The Company's cash
balance exceeds that amount by $282,360 at June 30, 1996.
PROVISION FOR TAXES
At June 30, 1996, the Company had net operating loss carryforwards
of approximately $1,328,000 that may be offset against future
taxable income through 2010. No tax benefit has been reported in
the financial statements as the Company believes there is a 50% or
greater chance the net operating loss carryforwards will expire
unused. Accordingly, the potential tax benefits of the net
operating loss carryforwards are offset by a valuation allowance of
the same amount.
RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued a
new statement titled "Accounting for Impairment of Long-Lived
Assets." This new standard is effective for years beginning after
December 15, 1995 and would change the Company's method of
determining impairment of long-lived assets. Although the Company
has not performed a detailed analysis of the impact of this new
standard on the Company's financial statements, the Company does
not believe that adoption of the new standard will have a material
effect on the financial statements.
In October 1995, the Financial Accounting Standards Board issued a
new statement titled "Accounting for Stock-Based Compensation "
(FAS 123). The new statement is effective for fiscal years
beginning after December 15, 1995. FAS 123 encourages, but does
not require, companies to recognize compensation expense for grants
of stock, stock options, and other equity instruments to employees
based on fair value. Companies that do not adopt the fair value
accounting rules must disclose the impact of adopting the new
method in the notes to the financial statements. Transactions in
equity instruments with non-employees for goods or services must be
accounted for on the fair value method. The Company currently
intends to adopt the fair value accounting prescribed by FAS 123.
However, the Company intends to continue its analysis of FAS 123 to
determine its ultimate effect in the future.
F-13
<PAGE>
21
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTERIM FINANCIAL STATEMENTS
The interim financial statements of and for the nine months ended
June 30, 1995 and 1996, included herein have been prepared by the
Company, without audit. They reflect all adjustments which are, in
the opinion of the management, necessary to present fairly the
results of operations for these periods. All such adjustments are
normal recurring adjustments. The results of operations for the
periods presented are not necessarily indicative of the results to
be expected for the full fiscal year.
RESTATEMENT
The restatement of the financial statements have resulted in
certain changes in presentation which have no effect on the net
losses or shareholder's equity for September 30, 1995 or the year
then ended.
NOTE 3 - MINERAL PROPERTIES
In October 1994, Celebration and United Silver Mine, Inc., (United)
entered into a joint venture agreement, whereby Celebration may
acquire up to an 80% interest in a mining property located in the
State of Utah. Under the terms of the agreement, United was to
contribute real properties for an initial 75% interest in the joint
venture, and Celebration was to remove all liens associated with
the real properties by paying $175,000 to a bank which was the
primary lien holder for its initial 25% interest in the venture.
Celebration will be granted an additional 25% interest upon
providing a $300,000 loan to United. Terms of the loan call for 5%
annual interest over a 15-year period with the principal and
interest to be repaid from the sellers remaining interest in
certain underground minerals, or the loan will be forgiven.
Celebration will be granted an additional 30% interest if it
expends $4,000,000 on underground development of the properties by
June 1, 1998. Celebration is responsible for providing 100% of the
net operating capital of the joint venture until commercial
production commences. Thereafter, capital contributions will be
based upon equity interest in the venture.
Prior to June 30, 1996, Celebration expended $175,000 to purchase
the aforementioned promissory note. The property was auctioned in
a public auction in May, 1995 and by virtue of Celebration's first
position lien, Celebration was able to successfully bid the full
amount of the underlying promissory note. Additional expenditures
have been made on the property through June 30, 1996.
F-14
<PAGE>
22
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 3 - MINERAL PROPERTIES (Continued)
In February 1995, Celebration entered into an agreement to acquire
a fifty year renewable mineral lease on a property in Shoshone
County, Idaho. The mining property consists of twelve patented
claims and associated unpatented claims. In connection with this
lease, Celebration has paid $50,000 and issued 175,000 shares of
common stock. In addition, 10,000 shares were issued to a new
director for his assistance in obtaining this lease. Celebration
was originally obligated to pay $950,000 by September 1, 1995, as
"an advance royalty". Although the original due date was extended,
the Company paid $600,000 of the aforementioned $950,000 (in April,
1996) and has the option of extending its lease for an additional
forty-nine years. When, and if, the property achieves gross sales
of $40,000,000, Celebration will be obligated to pay an additional
.5% royalty on future sales. Furthermore, beginning after
September 1, 1995, and at such time as the average price of silver has
reached $6.00 per ounce for a 30-day period, Celebration is
obligated to spend not less than $2,000,000 during the subsequent
36 months to de-water and repair the mine. Thereafter, Celebration
will be required to maintain the mine in a condition to allow it to
be put into production within sixty days. There are certain claims
by the U.S. Environmental Protection Agency and the County on this
property for which the lessor is obligated to pay. In the event
these claims are not satisfactorily resolved, they may effect
Celebration's rights to the property.
In March 1995, Celebration entered into a joint venture agreement
with an Australian company for exploration of a certain mineral
property in Australia. Under the original terms of the joint
venture agreement, Celebration could acquire up to a 50% interest
subject to a vesting schedule which required $100,000 to be paid by
April 1995 (which was paid) for an initial 10% interest. An
additional interest can be obtained by payment of the following:
$100,000 within 60 days after receipt of assays from the first
drill hole (10%); $1,000,000 not later than six months after the
second drill hole (15%) and; $1,000,000 not later than twelve
months after the prior payment (15%).
During the year ended September 30, 1995, Celebration purchased
through the issuance of 800,000 shares of its common stock, various
mineral properties located in the States of Washington and Idaho.
The mineral properties were recorded at the fair market value of
the shares paid on the date of issuance ranging from $3.13 to $3.25
per share for a total purchase price of $2,538,126.
F-15
<PAGE>
23
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 3 - MINERAL PROPERTIES (Continued)
The Company's proposed future mining activities will be subject to
laws and regulations controlling not only the exploration and
mining of mineral properties, but also the effect of such
activities on the environment. Compliance with such laws and
regulations may necessitate additional capital outlays, affect the
economics of a project, and cause changes or delays in the
Company's activities.
The total mineral properties at June 30, 1996 are classified as
follows:
<TABLE>
<S> <C>
Mineral properties under joint ventures $ 352,739
Other mineral properties 4,492,627
___________
Total Mineral Properties $ 4,845,366
===========
</TABLE>
The Company's mineral properties are valued at the lower of cost or
net realizable value.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance and
repairs that do not increase the useful life of the assets are
expensed as incurred. Depreciation of property and equipment is
determined using the straight-line method over the expected useful
lives of the assets of five years.
NOTE 5 - INTANGIBLE ASSETS
Deferred debt issuance costs and organization costs are recorded at
cost. Amortization of these intangible assets is determined using
the straight-line method over the expected useful lives of the
assets as follows:
<TABLE> Description Useful Lives
____________________________ ____________
<S> <S>
Deferred debt issuance costs 1 year
Organization costs 5 years
</TABLE>
F-16
<PAGE>
24
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 6 - COMMON STOCK
During the year ended November 30, 1994, Celebration issued
1,500,000 shares of common stock to directors for services
rendered, valued at $.003 to $.625 per share, which is the fair
market value of the shares on the date of issuance.
During the year ended September 30, 1995, the Company issued 12,750
shares of common stock to directors and employees for services
rendered, valued at prices ranging from $2.00 to $2.50 per share,
which is the fair market value of the shares on the date of
issuance.
During the year ended September 30, 1995, Celebration issued
975,000 shares of common stock in exchange for mineral properties
(See Note 3) and sold 176,000 shares of common stock for $264,000
cash.
The Company issued 200,000 shares of its common stock during the
year ended September 30, 1995 in lieu of outstanding debt that was
owed to Centurion Mines Corporation (Centurion), a related entity.
The stock was issued at $1.50 per share in payment of $300,000 of
the then outstanding debt (See Note 9). The Company also issued
277,500 shares in connection with the issuance of notes payable
(See Note 8). (See also the disclosure in Note 1).
During the nine months ended June 30, 1996, the Company sold
1,226,832 shares of its common stock for $1,945,779 in cash. The
Company also issued 159,900 shares to directors and employees for
services rendered valued at $1.50 per share, which is the fair
market value of the shares on the date of issuance.
The Company also issued 406,050 shares of its common stock in lieu
of outstanding debt. The stock was issued at $1.50 per share for
a total value of $609,075.
NOTE 7 - COMMON STOCK OPTIONS AND WARRANTS
In January 1992, the shareholders of Royal approved a 1992 Stock
Option and Stock Award Plan under which up to ten percent of the
issued and outstanding shares of the Company's common stock could
be awarded based on merit of work performed. As of June 30, 1996,
12,750 shares of common stock have been awarded under the Plan.
Celebration, prior to the exchange agreement with Royal, had
granted securities to certain shareholders which represented rights
to purchase or receive shares of Celebration's common stock. These
options were assumed by the Company after the merger at a rate of
1.5 shares for each option still outstanding. Thus, the Company
F-17
<PAGE>
25
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 7 - COMMON STOCK OPTIONS AND WARRANTS (continued)
has granted options, with varying conditions and requirements, to
purchase a total of 1,455,000 shares of its common stock. There are
255,000 of the stock options exercisable at $1.50 per share which
expire March 21, 2000. The remaining 1,200,000 stock options are
exercisable at $0.93 per share and expire on August 31, 2001. As
of June 30, 1996, none of these options have been exercised.
On January 9, 1996, the Board of Directors approved the issuance of
warrants to Howard Crosby and Robert Jorgensen to purchase a total
of 300,000 shares for a purchase price of $2.50 per share,
exercisable from the date of issuance until January 9, 1999.
On March 22, 1996, the Board of Directors approved the issuance of
warrants to purchase 625,000 shares of common stock of the Company
to an investor in partial completion of a private placement of
stock. These warrants are exercisable until September 30, 1998, at
a price of $1.50 per share, which is 67% of the closing price on
March 22, 1996.
On April 10, 1996, following the close of the second quarter of
fiscal 1996, the Board of Directors authorized the issuance of
420,666 warrants to unaffiliated investors as part of the private
placement of stock. These warrants are exercisable until April 12,
1997 at prices ranging from $2.50 to $2.625 per share. As of June
30, 1996, 320,666 warrants have been issued (but not exercised) for
a total amount of $41,068.
NOTE 8 - ADDITIONAL PAID-IN CAPITAL
The following is a summary of additional paid-in capital at June
30, 1996 and September 30, 1995:
<TABLE>
June 30, 1996 September 30, 1995
_____________ _____________
<S> <C> <C>
Applicable to:
Common stock $ 6,882,316 $ 4,120,540
Stock warrants 41,068 -
____________ _____________
$ 6,923,384 $ 4,120,540
</TABLE>
F-18
<PAGE>
26
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 9 - NOTES PAYABLE
In February 1995, Celebration raised $555,000 through the issuance
of promissory notes. During the second quarter ended March 31,
1996, $470,000 of the total amount plus accrued interest of $29,265
was converted into 332,800 shares of the Company's common stock,
leaving an amount owing of $85,000. The notes bear interest at 10%
per annum and will be due on the earlier of January 1, 1997 or the
closing of any public offering of equity securities by the Company.
The note holders also received 277,500 shares of Celebration's
common stock. A 10% commission was charged by an underwriter on
the sale of almost all of the notes.
In April 1995, Celebration raised $120,000 in 10% convertible
debentures. In late 1995, $105,000 of the total amount plus
accrued interest of $4,810 was converted into 73,250 shares of the
Company's common stock, leaving an amount owing of $15,000. During
the third quarter ended June 30, 1996, this remaining $15,000 plus
accrued interest was paid.
NOTE 10 - RELATED PARTY TRANSACTIONS
Royal has received advances from a related party in order to pay
ongoing operating expenses. The amount owed eventually exceeded
$300,000 during 1995. Therefore, the Company approved the issuance
of 200,000 shares of common stock in payment of $300,000 of the
then outstanding balance (See Note 6). The balance outstanding at
June 30, 1996 was $289.
NOTE 11 - FUTURE LEASE OBLIGATIONS
The Company is obligated under its lease arrangements to make
additional lease payments subsequent to June 30, 1996 as follows:
<TABLE>
Year Ended September 30, Amount
_______________________ __________
<S> <C>
1996 $ 7,800
1997 5,000
1998 5,000
1999 5,000
2000 and thereafter 25,000
_________
Total $ 47,800
=========
</TABLE>
F-19
<PAGE>
27
ROYAL SILVER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and September 30, 1995
_________________________________________________________________
NOTE 12 -PRIVATE STOCK OFFERING
The Company has initiated a private placement of its common stock
of up to 2,000,000 shares at $1.50 per share. The primary purpose
of the offering by the Company is to provide the Company with the
needed capital to commence its mining operations and joint ventures
and for general corporate purposes.
NOTE 13 - SUBSEQUENT EVENTS - FAUSETT AGREEMENT
The Company has entered into an agreement with Fausett
International, an Idaho Corporation, whereby the Company may
acquire 81% of the total outstanding shares of Fausett
International in exchange for 850,000 shares of its common stock.
The proposed acquisition has not been made final as of the date of
this report. Management believes that the likelihood of completing
the acquisition is less than 50%. Fausett International is a prior
shareholder of Celebration and is considered to be a related party
at June 30, 1996.
NOTE 14 - SUBSEQUENT EVENT - OPTION FOR JOINT VENTURE
In April 1996, the Company entered into an option with Placer
Mining Corporation ("Placer") of Kellogg, Idaho. The option
agreement provides that the Company, by paying $1,000,000 in cash
and by issuing 1,000,000 of its common stock to Placer, can acquire
a joint venture interest in the Bunker Hill Mine, a
silver-lead-zinc mine in Shoshone County, Idaho. The option also
provides that the Company can increase its percentage ownership of
the joint venture to a maximum of 80% by spending $40,000,000 on
the development of the mining property over the next four years.
The Company had not yet exercised its option as of the date of this
report. The original option date was July 21, 1996, but it has
been subsequently extended for thirty days.
F-20
<PAGE>
28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from the Financial Statements at June 30, 1996
(unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 382,360
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 386,163
<PP&E> 14,632
<DEPRECIATION> 2,554
<TOTAL-ASSETS> 5,243,891
<CURRENT-LIABILITIES> 125,316
<BONDS> 0
0
0
<COMMON> 95,499
<OTHER-SE> 5,023,256
<TOTAL-LIABILITY-AND-EQUITY> 5,243,891
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 929,984
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,409
<INCOME-PRETAX> (937,393)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (937,393)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
