SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 June 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-13840
PUDGIE'S CHICKEN, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 31-1369735
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Earle Ovington Boulevard, Suite 604, Uniondale, New York 11553
(Address of principal executive offices) (zip code)
(516) 222-8833
(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 _____
As of August 12, 1996, the registrant had 4,475,421 shares of its Common Stock,
$.01 par value, issued and outstanding.
Page 1 of 14
The Exhibit Index is on Page 13
<PAGE>
PUDGIE'S CHICKEN, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1 - Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995..................................................................3
Consolidated Statements of Income for the three and the six months ended
June 30, 1996 and June 30, 1995........................................................4
Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and June 30, 1995..................................................5
Notes to Consolidated Financial Statements...........................................6-7
Item 2 - Management's Discussion and Analysis or Plan of Operation...........................7-11
PART II. OTHER INFORMATION
Item 2 - Changes in Securities.................................................................11
Item 6 - Exhibits and Reports on Form 8-K......................................................11
Signature Page .................................................................................12
Exhibit Index ..................................................................................13
</TABLE>
2
<PAGE>
PUDGIE'S CHICKEN, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, June 30,
Assets 1995 1996
(unaudited) (unaudited)
<S> <C> <C>
Current assets
Cash $ 823,440 $ 465,700
Franchise and advertising royalties receivable,net 376,975 443,850
Inventories 123,670 115,520
------------ ------------
Total current assets 1,324,085 1,025,070
Property and equipment, net 2,729,600 2,780,950
Intangible assets ,net 8,759,100 8,721,620
Other assets 418,575 435,370
------------ ------------
Total assets $ 13,231,360 $ 12,963,010
============ ============
Liabilities, Redeemable Preferred Stock,
Redeemable Convertible Preferred Stock and
Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 830,137 $ 864,720
Deferred franchise fees 230,000 30,000
Sales tax payable 78,670 276,624
Interest payable 37,526 70,827
Other liabilities 98,297 70,888
------------ ------------
Total current liabilities 1,274,630 1,313,059
Note payable to stockholder 3,606,837 3,606,837
Note payable -- 92,753
------------ ------------
Total liabilities 4,881,467 5,012,649
------------ ------------
Redeemable Preferred Stock; $.01 par value;
10,000 shares authorized, issued and outstanding
(redemption and liquidation value of $1,069,000) 1,069,000 1,069,000
Redeemable Convertible Preferred Stock; $.01 par value; 200 Series A shares
authorized, issued and outstanding
(redemption and liquidation value of $2,440,000) -- 1,665,922
------------ ------------
Stockholders' equity
Preferred stock, 250,000 shares authorized (including 10,000 shares of
Redeemable Preferred Stock issued and outstanding, 200 shares of
Redeemable Convertible Preferred Stock issued and outstanding and 50,000
shares of $4 Cumulative
Preferred Stock, $.01 par value, issued and outstanding), 500 500
(liquidation value of $500,000)
Common stock, $.01 par value, 10,000,000 shares authorized;
4,506,972 and 4,475,421 shares, issued and outstanding, respectively 45,070 44,754
Additional paid in capital 16,159,920 16,002,489
Accumulated deficit (8,699,235) (10,767,508)
Deferred Compensation (225,362) (64,796)
------------ ------------
Total stockholders' equity 7,280,893 5,215,439
Commitments and contingencies
------------ ------------
Total liabilities, redeemable preferred stock
redeemable convertible preferred stock and
stockholders' equity $ 13,231,360 $ 12,963,010
============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
PUDGIE'S CHICKEN, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Revenue
Restaurant sales $ 2,316,570 $ 2,740,589 $ 4,266,025 $ 5,183,150
Franchise and advertising royalties 339,873 242,482 686,072 483,798
Franchise fees -- 255,000 60,000 255,000
Interest income and other revenue 22,525 20,597 40,478 43,129
----------- ----------- ----------- -----------
2,678,968 3,258,668 5,052,575 5,965,077
----------- ----------- ----------- -----------
Costs and Expenses
Restaurant cost of sales 908,648 1,027,387 1,667,352 1,989,049
Restaurant operating expenses 1,141,687 1,365,525 2,210,988 2,833,634
Franchising costs 21,973 31,123 43,989 61,153
General and administrative 924,750 1,076,133 1,636,712 1,977,510
Research and development 20,000 -- 20,000 --
Advertising expenses 563,597 241,191 743,727 447,653
Depreciation and amortization 190,946 231,582 449,208 484,679
Interest expense 292,214 105,661 462,464 211,697
----------- ----------- ----------- -----------
4,063,815 4,078,602 7,234,440 8,005,375
----------- ----------- ----------- -----------
Net loss ($1,384,847) ($ 819,934) ($2,181,865) ($2,040,298)
=========== =========== =========== ===========
Net loss per common share ($0.74) ($0.18) ($1.18) ($0.46)
=========== =========== =========== ===========
Shares used in computation 1,873,127 4,475,421 1,843,141 4,475,421
=========== =========== =========== ===========
Net loss per common share diluted for conversion ($0.15) ($0.37)
=========== ===========
Shares used in computation 5,475,421 5,475,421
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
PUDGIE'S CHICKEN, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
(unaudited)
1995 1996
----------- -----------
<S> <C> <C>
Cash flows provided by (used in) operating activities
Net loss ($2,181,865) ($2,040,298)
Adjustments to reconcile net income
to net cash provided by operations
Deferred compensation expense 14,352 2,818
Depreciation and amortization 449,208 484,679
Bad debt expense 93,559 53,288
Changes in operating assets and liabilities
(Increase)decrease in operating assets
Franchise and advertising royalties receivable (91,783) (55,384)
Inventories (46,521) 8,150
Other assets 87,663 (16,795)
Deferred charges (536,882) --
Increase(decrease)in operating liabilities
Accounts payable and accrued expenses 600,743 34,583
Deferred franchise fees (60,000) (200,000)
Sales tax payable 339,525 197,954
Other liabilities 669,732 (27,409)
----------- -----------
Net cash provided by (used in) operating activities (662,269) (1,558,414)
----------- -----------
Cash flows used in investing activities
Purchase of property and equipment (316,734) (316,915)
Acquisition of stores (874,486) (181,634)
----------- -----------
Net cash (used in) investing activities (1,191,220) (498,549)
----------- -----------
Cash flows provided by financing activities
Additions to notes payable 1,451,115 211,697
Repayments of borrowings -- (178,396)
Proceeds from issuance of
Preferred Stock, net of issuance costs 494,964 1,665,922
----------- -----------
Net cash provided by financing activities 1,946,079 1,699,223
----------- -----------
Net increase (decrease) in cash 92,590 (357,740)
Cash at beginning of period 165,860 823,440
----------- -----------
Cash at end of period $ 258,450 $ 465,700
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
PUDGIE'S CHICKEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with instructions to Form 10-QSB and Item 310(b) of Regulation S-B
promulgated under the Securities Act of 1933, as amended, and, therefore, do not
include all information and footnotes normally included in financial statements
prepared in conformity with generally accepted accounting principles.
The accompanying financial statements are unaudited and include all
adjustments (consisting of normal recurring adjustments and accruals) that
management considers necessary for a fair presentation of the Company's
financial position and results of operations for the interim periods presented.
The results of operations for the interim periods are not necessarily indicative
of the results that may be expected for the entire year.
The accompanying financial statements should be read in conjunction with
the Company's December 31, 1995 Form 10-KSB.
2. CONTINGENCIES
On June 30, 1995, an area developer of the Company's franchised restaurants
commenced an action against the Company alleging common law fraud and alleging
violations of the Franchise Sales Act of the State of New York regarding its
area development agreement with the Company. The Company believes that it has
meritorious defenses to the action, has asserted counterclaims alleging fraud in
the inducement and breach of contract by that area developer, and has commenced
a separate action against the principal of the area developer. The court
proceedings have been stayed pending the outcome of an arbitration instituted by
the Company against the area developer and its principal involving the subject
matter of the court actions. Final briefs were submitted to the arbitration
panel in June of 1996 and the decision of the arbitration panel is pending.
Claims against the Company exceed $1 million. Although a range of possible loss,
if any, cannot be reasonably estimated at this time, the Company believes that
the ultimate resolution of this matter will not have a material adverse effect
on its financial position, results of operations or liquidity.
The Company is subject to various other legal proceedings and claims which
arose in the ordinary course of its business. In the opinion of management and
legal counsel, the amount of ultimate liability, if any, which may arise as the
result of these proceedings will not materially affect the Company's financial
position or results of operations.
The Company has outstanding 200 shares of Series A Convertible Preferred
Stock that contain a purchase option that requires the Company to purchase the
Preferred Shares if at any time after May 3, 1996, the conversion price on any
20 trading days during any 30 consecutive trading day period is less than $2.00.
Each holder of any Preferred Shares will then, upon notice from the Company, be
entitled to elect to have the Company purchase all, but not less than all of the
Preferred Shares then held by such holder for a cash purchase price of $10,800
per Preferred Share together with all accrued and unpaid dividends thereon. This
option provision has not been triggered.
6
<PAGE>
PUDGIE'S CHICKEN, INC. AND SUBSIDIARIES
A $3.6 million note payable matures in February 1997. The Company has had
discussions with the holder of such note with respect to refinancing or
extending the term of such note as it is unlikely that the Company's 1996
operations will generate sufficient funds to repay such note.
3. ISSUANCE OF SECURITIES
On May 3, 1996, the Company received gross proceeds of $2 million from a
private placement of 200 Units, each Unit consisting of one share of Series A
Convertible Preferred Stock and 500 Common Stock Purchase Warrants. The
Preferred Shares will be convertible into the Company's Common Stock after July
29, 1996 and as soon as a registration statement for the shares of Common Stock
underlying the Series A Convertible Preferred Stock is effective. The Preferred
Shares have a redemption value of $12,200 per share, plus dividends, an annual
dividend of $800 per share, contain a provision which requires the Company to
repurchase the Preferred Shares upon the occurrence of certain events and at the
election of the holder, and convert automatically to Common Stock on April 30,
1998. As a result of the Company not having such registration statement declared
effective by July 29, 1996, the holders of the Preferred Shares are entitled to
receive penalty payments, in cash or Common Stock at the option of the Company,
in the amount of $200 per share per month until the date on which the
registration statement is made effective. These penalty payments are being
accrued. The Company plans to file the registration statement on or about
September 3, 1996.
Item 2. Management's Discussion and Analysis or Plan of Operation
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 Compared with Three Months Ended June 30, 1995
Total revenue was approximately $3.3 million for the three months ended
June 30, 1996, an increase of approximately $580,000,or 22%, over revenue of
approximately $2.7 million for the three months ended June 30, 1995. This
increase was primarily due to the increase in the number of Company-owned
restaurants from 24 at June 30, 1995 to 30 at June 30, 1996, of which three
restaurants opened at the end of the three month period ended June 30, 1996.
This increase was partially offset by the decreased number of franchised
restaurants operating during that period from 41 at June 30, 1995 to 32 at June
30, 1996.
System-wide sales at all Company-owned and franchised restaurants were
approximately $5.7 million for the three months ended June 30, 1996 and
approximately $6.4 million for the comparable prior year period. The effect of
the lower average number of Pudgie's restaurants in operation for the three
months ended June 30, 1996 was the primary cause of the decrease in sales.
7
<PAGE>
Revenue from sales at Company-owned restaurants was approximately $2.7
million for the three months ended June 30, 1996, an increase of approximately
$424,000, or 18%, over sales at Company-owned restaurants of approximately $2.3
million for the three months ended June 30, 1995. This increase was due to the
increased number of Company-owned restaurants. Franchise royalty and advertising
fees paid by franchisees were approximately $242,000 for the three months ended
June 30, 1996, a decrease of approximately $97,000, or 29%, from approximately
$340,000 for the comparable prior year period. This decrease resulted from the
lower number of franchised restaurants in operation during the three months
ended June 30, 1996 compared to the three months ended June 30, 1995. Franchise
fees increased approximately $255,000 for the three months ended June 30, 1996
over the comparable prior year period. The increase was primarily attributable
to the recognition of revenue for fees relating to two area developers who
forfeited their development rights and the opening of two franchised restaurants
during the three months ended June 30, 1996.
With respect to Company-owned restaurants, costs of products sold and
restaurant operating expenses were approximately $2.4 million for the three
months ended June 30, 1996, an increase of approximately $343,000, or 17%, from
approximately $2.1 million for the three months ended June 30, 1995. This
increase was due primarily to the increased number of Company-owned restaurants
in 1996. General and administrative expenses were approximately $1.1 million for
the three months ended June 30, 1996, an increase of approximately $151,000, or
16%, from approximately $925,000 for the comparable period in 1995, primarily
due to an increase in legal expenses due to costs of approximately $90,000 for
the arbitration of a dispute with the Company's former area developer for
Northern Virginia and increases in corporate overhead due to the expansion of
the corporate infrastructure in comparison to the prior year period.
Restaurant cost of sales and restaurant operating expenses, as a percentage
of restaurant sales, were 87% in the three months ended June 30, 1996, compared
to 89% in the comparable 1995 period. The increased margins resulted primarily
from a decrease in cost of sales as a result of renegotiated food contracts and
changes in the menu mix for the three months ended June 30, 1996.
Advertising expenses decreased approximately $322,000, or 57%, to
approximately $241,000 for the three months ended June 30, 1996 from
approximately $564,000 for the comparable prior year period. The decrease in
advertising cost was primarily due to television being used in 1995 and not in
1996, and better economies of scale as a result of increased buying power for
the mediums used for the three months ended June 30, 1996.
Depreciation and amortization was approximately $232,000 for the three
months ended June 30, 1996, compared to approximately $191,000 for 1995. The
increase was attributable to the purchase and depreciation of equipment for new
Company-owned restaurants.
Interest expense was approximately $106,000 for the three months ended June
30, 1996, a decrease of approximately $187,000, or 64%, from approximately
$292,000 for the comparable period in 1995. This decrease resulted from the
payments by the Company in August 1995 to reduce outstanding promissory notes
from an aggregate of $3.9 million to $3.6 million, the repayment in full in
August 1995 of a separate promissory note held by Pudgie's founder, the
outstanding balance of which was then $4.7 million, and the repayment in August
1995 of bridge notes issued by the Company in May 1995 in the aggregate of $1.0
million.
8
<PAGE>
The Company incurred a net loss of approximately $820,000 during the three
months ended June 30, 1996, a decrease of approximately $565,000, or 41%, from
the net loss of approximately $1,385,000 in the comparable 1995 period. The
decrease in the loss was attributable principally to the increase in the number
of Company-owned restaurants generating additional revenue, franchise fee
revenue recognized as a result of the termination of two area developer
agreements and the growth of total revenue by approximately 22% from the
comparable prior year period over growth of less than 1% in total expenses from
the prior year comparable period.
No provision for income taxes was required in either the three months ended
June 30, 1996 or 1995 because of the net losses incurred by the Company.
Six Months Ended June 30, 1996 Compared with Six Months Ended June 30, 1995
Total revenue was approximately $6.0 million for the six months ended June
30, 1996, an increase of approximately $913,000, or 18%, over revenue of
approximately $5.1 million for the six months ended June 30, 1995. This increase
was primarily due to the increase in the number of Company-owned restaurants
from 24 at June 30, 1995 to 30 at June 30, 1996. This increase was partially
offset by the decreased number of franchised restaurants operating during that
period from 41 at June 30, 1995 to 32 at June 30, 1996.
System-wide sales at all Company-owned and franchised restaurants were
approximately $11.1 million for the six months ended June 30, 1996 and
approximately $12.6 million for the comparable prior year period. The effect of
the lower average number of Pudgie's restaurants in operation for the six months
ended June 30, 1996 was the primary cause of the decrease in sales.
Revenue from sales at Company-owned restaurants was approximately $5.2
million for the six months ended June 30, 1996, an increase of approximately
$917,000, or 21%, over sales at Company-owned restaurants of approximately $4.3
million for the six months ended June 30, 1995. This increase was due to the
increased number of Company-owned restaurants. Franchise royalty and advertising
fees paid by franchisees were approximately $484,000 for the six months ended
June 30, 1996, a decrease of approximately $202,000, or 29%, from approximately
$686,000 for the comparable prior year period. This decrease resulted from the
lower number of franchised restaurants in operation during the six months ended
June 30, 1996 compared to the six months ended June 30, 1995. Franchise fees
increased approximately $195,000, or 325%, for the six months ended June 30,
1996 from approximately $60,000 for the prior year period. This increase was
primarily attributable to the recognition of revenues for fees relating to two
area developers who forfeited their development rights.
With respect to Company-owned restaurants, costs of products sold and
restaurant operating expenses were approximately $4.8 million for the six months
ended June 30 1996, an increase of approximately $944,000, or 24%, from
approximately $3.9 million for the six months ended June 30, 1995. This increase
was due primarily to the increased number of Company-owned restaurants in 1996.
The increase in operating costs was also due to increased utilities and supply
costs during the first three months of 1996 as a result of severe weather
conditions. General and administrative expenses were approximately $2.0 million
for the six months ended June 30, 1996, an increase of approximately $341,000,
or 21%, from approximately $1.6 million for the comparable period in 1995,
9
<PAGE>
primarily due to legal expenses of approximately $176,000 for the arbitration of
a dispute with the Company's former area developer for Northern Virginia and
increases in corporate overhead due to the expansion of the corporate
infrastructure in comparison to the prior year period.
Restaurant cost of sales and restaurant operating expenses, as a percentage
of restaurant sales, were 93% in the six months ended June 30, 1996, compared to
91% in the comparable 1995 period. The decreased margins resulted primarily from
increased operating and other costs incurred by the Company during the first
three months of 1996 as a result of the impact on revenues of the severe weather
conditions.
Advertising expenses decreased approximately $296,000, or 40%, to
approximately $448,000 for the six months ended June 30, 1996 from approximately
$744,000 for the comparable prior year period, principally due to a change in
the type of advertising done and better economies of scale.
Depreciation and amortization was approximately $485,000 for the six months
ended June 30, 1996, compared to approximately $449,000 for 1995. The increase
was attributable to the purchase and depreciation of equipment for new
Company-owned restaurants.
Interest expense was approximately $212,000 for the six months ended June
30, 1996, a decrease of approximately $251,000, or 54%, from approximately
$462,000 for the comparable period in 1995. This decrease resulted from the
payments by the Company in August 1995 to reduce outstanding promissory notes
from an aggregate of $3.9 million to $3.6 million, the repayment in full in
August 1995 of a separate promissory note held by Pudgie's founder, the
outstanding balance of which was then $4.7 million, and the repayment in August
1995 of bridge notes issued by the Company in May 1995 in the aggregate of $1.0
million.
The Company incurred a net loss of approximately $2.0 million during the
six months ended June 30, 1996, a decrease of approximately $142,000, or 6%,
from the net loss of approximately $2.2 million in the comparable 1995 period.
The decrease in the loss was attributable principally to the increase in the
number of Company-owned restaurants generating additional revenue, franchise fee
revenue recognized as a result of the termination of two area developer
agreements and the growth of total revenue by approximately 18% from the
comparable prior year period over growth of approximately 11% in total expenses
from the prior year comparable period.
No provision for income taxes was required in either the six months ended
June 30, 1996 or 1995 because of the net losses incurred by the Company.
Liquidity and Capital Resources
As of June 30, 1996, the Company had a working capital deficit of $287,989
as compared to a working capital deficit of $3,439,818 at June 30, 1995. This
change in working capital is primarily attributable to the repayment of a bridge
note in August 1995 of $1.0 million and the reduction of accounts payable,
accrued expenses and other liabilities outstanding. These repayments were made
as a result of funds raised through the Company's initial public offering
completed in August 1995 and a private placement of equity for $2 million
completed in April 1996.
10
<PAGE>
Stockholders' equity was $5,215,439 at June 30, 1996 as compared to a
deficit of $1,275,358 at June 30, 1995. The increase in stockholders' equity is
primarily due to the raising of approximately $10 million through the Company's
initial public offering, which has been offset by continued losses since June
30, 1995.
Cash decreased from $823,440 at December 31, 1995 to $465,700 at June 30,
1996. The decrease of $357,740 is primarily due to cash spent to fund the losses
during the six months ended June 30, 1996 and the purchase of property and
equipment.
Cash used in operating activities of $1,558,414 for the six months ended
June 30, 1996 is primarily attributable to funding the Company's loss of
$2,040,298, offset by depreciation and amortization of $484,679.
Cash used in investing activities of $498,549 was for the purchase of
property and equipment and the acquisition of one franchised restaurant during
the six months ended June 30, 1996.
Cash provided by financing activities of $1,699,223 for the six months
ended June 30, 1996 is primarily due to a private placement of 200 units of
Series A Convertible Preferred Stock at $10,000 per unit, net of issuance costs.
The Company is seeking to privately place additional equity to raise
additional capital for general working capital purposes and to reduce debt. In
order to conserve cash for further development purposes and to reduce the
Company's losses, the Company is currently seeking to reduce corporate overhead
and operating expenses. A $3.6 million note payable matures in February 1997.
The Company has had discussions with the holder of such note with respect to
refinancing or extending the term of such note as it is unlikely that the
Company's 1996 operations will generate sufficient funds to repay such note.
There can be no assurance that the Company will be able to obtain such
refinancing or extension.
PART II
Other Information
Item 2. Changes in Securities
As a result of the termination of employment of two individuals with
the Company, 31,551 unvested shares of the Company's Common Stock were
forfeited during the six months ended June 30, 1996 and are no longer
outstanding.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the six months ended June 30,
1996.
11
<PAGE>
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.
PUDGIE'S CHICKEN, INC.
August 12, 1996 /s/ Steven Wasserman
- --------------- --------------------
Date Steven Wasserman
President/Chief Executive Officer
August 12, 1996 /s/ Helen Papa
- --------------- --------------------
Date Helen Papa
Vice President/Chief Financial Officer/Secretary
(and principal accounting officer)
12
<PAGE>
EXHIBIT INDEX
Exhibit Number Page Number
- -------------- -----------
27 Financial Data Schedule ............................ 14
13
<TABLE> <S> <C>
<ARTICLE>5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 465,700
<SECURITIES> 0
<RECEIVABLES> 724,377
<ALLOWANCES> (280,527)
<INVENTORY> 115,520
<CURRENT-ASSETS> 1,025,070
<PP&E> 13,478,344
<DEPRECIATION> 1,975,774
<TOTAL-ASSETS> 12,963,010
<CURRENT-LIABILITIES> 1,313,059
<BONDS> 0
2,734,922
500
<COMMON> 44,754
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,963,010
<SALES> 5,183,150
<TOTAL-REVENUES> 5,965,077
<CGS> 4,822,683
<TOTAL-COSTS> 8,005,375
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 53,288
<INTEREST-EXPENSE> 211,697
<INCOME-PRETAX> (2,040,298)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,040,298)
<EPS-PRIMARY> .46
<EPS-DILUTED> .37
</TABLE>
