<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/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
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period From _______________ to ________________.
Commission file number 0-27074
----------
SECURE COMPUTING CORPORATION
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1637226
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2675 Long Lake Road
Roseville, Minnesota 55113
--------------------------------------- -----------
(Address of principal executive offices) (Zip code)
(612) 628-2700
--------------------------------------------------
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 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 / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date: Common Stock, $.01
par value -- 6,772,158 issued and outstanding as of August 2, 1996.
1
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SECURE COMPUTING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
Item 1. Condensed Financial Statements:
Condensed Balance Sheets as of
June 30, 1996 (Unaudited) and
December 31, 1995 3
Condensed Statements of
Operations (Unaudited) for the three
months ended June 30, 1996 and
1995 and the six months ended
June 30, 1996 and 1995 4
Condensed Statements of
Cash Flows (Unaudited) for the six
months ended June 30, 1996 and
1995 5
Notes to the Condensed Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 7-9
PART II. OTHER INFORMATION 10-11
SIGNATURES 12
2
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PART 1. Financial Information
SECURE COMPUTING CORPORATION
CONDENSED BALANCE SHEETS
June 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
6/30/96 12/31/95
(Unaudited) (See note 1.)
----------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 27,542,000 $ 32,599,000
Accounts receivable, net 3,614,000 3,779,000
Other current assets 1,959,000 1,603,000
------------ ------------
Total current assets 33,115,000 37,981,000
PROPERTY AND EQUIPMENT, AT COST 7,455,000 5,378,000
Less accumulated depreciation and amortization (3,571,000) (2,928,000)
------------ ------------
3,884,000 2,450,000
OTHER ASSETS 970,000 919,000
------------ ------------
$ 37,969,000 $ 41,350,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other accrued liabilities $ 3,179,000 $ 3,192,000
Accrued acquisition costs 3,084,000 ---
Deferred revenue 798,000 790,000
------------ ------------
Total current liabilities 7,061,000 3,982,000
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01; 2,000,000 shares
authorized, none issued and outstanding --- ---
Common Stock, par value $.01; 25,000,000 shares
authorized; issued and outstanding - June 30, 1996--
6,771,658 and December 31, 1995--6,480,011 68,000 65,000
Additional paid-in capital 45,549,000 42,823,000
Accumulated deficit (14,709,000) (5,520,000)
------------ ------------
Total stockholders' equity 30,908,000 37,368,000
------------ ------------
$ 37,969,000 $ 41,350,000
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to condensed financial statements.
3
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SECURE COMPUTING CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
For the three-months ended June 30, 1996 and 1995 and
for the six-months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
6/30/96 6/30/95 6/30/96 6/30/95
----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Products and services $ 2,037,000 $ 803,000 $ 4,039,000 $ 1,900,000
Government contracts 4,048,000 3,197,000 9,399,000 6,647,000
----------------------------------------------------------
6,085,000 4,000,000 13,438,000 8,547,000
Cost of revenue 3,789,000 2,787,000 8,302,000 5,705,000
----------------------------------------------------------
Gross profit 2,296,000 1,213,000 5,136,000 2,842,000
Operating expenses:
Selling and marketing 2,026,000 603,000 3,334,000 1,014,000
Research and development 2,005,000 1,128,000 3,464,000 1,987,000
General and administrative 932,000 572,000 1,564,000 851,000
Acquisition costs 6,728,000 --- 6,728,000 ---
----------------------------------------------------------
11,691,000 2,303,000 15,090,000 3,852,000
----------------------------------------------------------
Operating loss (9,395,000) (1,090,000) (9,954,000) (1,010,000)
Net interest income (expense) 380,000 (2,000) 765,000 (15,000)
----------------------------------------------------------
Loss before income taxes (9,015,000) (1,092,000) (9,189,000) (1,025,000)
Income taxes --- --- --- ---
----------------------------------------------------------
Net loss $ (9,015,000) $(1,092,000) $(9,189,000) $(1,025,000)
----------------------------------------------------------
----------------------------------------------------------
Net loss per share $(1.35) $(.28) $(1.39) $(.27)
----------------------------------------------------------
----------------------------------------------------------
Weighted average shares outstanding 6,672,000 3,816,000 6,615,000 3,729,000
----------------------------------------------------------
----------------------------------------------------------
</TABLE>
See accompanying notes to condensed financial statements.
4
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SECURE COMPUTING CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
For the six-months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
6/30/96 6/30/95
------------- -----------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES ($2,455,000) $ (297,000)
INVESTING ACTIVITIES
Cash paid in purchase of Webster Network Strategies,
Inc. (759,000) --
Purchase of property and equipment (2,077,000) (683,000)
Increase in intangibles and other assets (72,000) (49,000)
----------- ----------
Net cash used in investing activities (2,908,000) (732,000)
FINANCING ACTIVITIES
Payments on long-term debt --- (94,000)
Proceeds from issuance of Preferred Stock --- 1,661,000
Proceeds from issuance of Common Stock 306,000 297,000
----------- ----------
Net cash provided by (used in) financing activities 306,000 1,864,000
----------- ----------
Increase (decrease) in cash and cash equivalents (5,057,000) 835,000
Cash and cash equivalents beginning of period 32,599,000 934,000
----------- ----------
Cash and cash equivalents at end of period $27,542,000 $1,769,000
----------- ----------
----------- ----------
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid $ --- $58,000
----------- ----------
----------- ----------
Income taxes pid $1,000 $10,000
----------- ----------
----------- ----------
NONCASH TRANSACTION
Common Stock issued in purchase of Webster Network
Strategies, Inc. $ 2,601,000
-----------
-----------
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
SECURE COMPUTING CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements have been prepared by the
Company without audit, with the exception of the balance sheet for December
31, 1995 which was derived from audited financial statements, and reflect
all adjustments (consisting only of normal and recurring adjustments and
accruals) which are, in the opinion of management, necessary to present a
fair statement of the results for the interim periods presented. The
statements have been prepared in accordance with the regulations of the
Securities and Exchange Commission, but omit certain information and
footnote disclosures necessary to present the statements in accordance with
generally accepted accounting principles. The results of operations for
the interim periods presented are not necessarily indicative of the results
to be expected for the full fiscal year. These condensed financial
statements should be read in conjunction with the Financial Statements and
footnotes thereto included as an exhibit to the Company's Annual 10-K
Report for the year ended December 31, 1995 previously filed with the
Securities and Exchange Commission.
2. INVENTORY
Inventory consists mainly of purchased components.
3. NET LOSS PER SHARE
Net loss per share for the three months ended June 30, 1995 and the six
months ended June 30, 1995 are computed using the weighted average number
of common stock and common stock equivalents outstanding during the periods
after giving effect for additional shares as calculated under the rules of
the Securities and Exchange Commission Staff Accounting Bulletin No. 83 and
for the conversion of all preferred stock as of the beginning of the
periods. Net loss per share for the three months ended June 30, 1996 and
the six months ended June 30, 1996 are computed using the weighted average
number of common stock outstanding during the periods and does not include
common stock equivalents as they would be anti-dilutive.
4. ACQUISITIONS
In May 1996, the Company acquired Webster Network Strategies, Inc.
("Webster"), a Florida based Internet software developer, for a total cost
of $3,360,000, consisting of 102,000 shares of Common Stock valued at
$2,601,000 and $500,000 cash in exchange for all outstanding shares of
Webster, and $259,000 of acquisition-related expenses. The acquisition was
accounted for under the purchase method, and results of Webster operations
since May 1996 are included in the Company's statement of operations. In
conjunction with the purchase, the Company expensed all purchased research
and development in process based upon an independent appraisal. The amount
expensed was approximately $3,360,000. Former Webster stockholders have
escrowed 10,000 shares to cover pre-acquisition contingent legal expenses.
Also in May 1996, the Company signed a definitive agreement to acquire
Canadian based Border Network Technologies, Inc. ("Border"), a network
security software provider, for approximately 5,000,000 shares of Common
Stock and the conversion of approximately 1,500,000 warrants and stock
options.
In June 1996, the Company signed a definitive agreement to acquire Enigma
Logic, Inc. ("Enigma"), a California based developer of identification and
authentication software and products, for approximately 2,100,000 shares of
Common Stock and the conversion of approximately 600,000 stock options.
Both the Border and Enigma acquisitions are intended to be accounted for as
a pooling of interests under the rules of Accounting Principles Board
Opinion No. 16. The acquisitions are expected to close in August 1996.
6
<PAGE>
SECURE COMPUTING CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
REVENUE. The Company's revenue increased by 52.1 percent to $6,085,000 for the
second quarter of 1996 up from $4,000,000 in the same period of 1995. For the
six months ended June 30, 1996, revenue increased 57.2 percent to $13,438,000
from $8,547,000 in 1995. The increase resulted from higher revenue in both
products and services and government contracts revenue. Products and services
revenue was $2,037,000 and $4,039,000 for the quarter and six months ended June
30, 1996, respectively, an increase of 153.7 and 112.6 percent over the same
periods in 1995, and was attributable to sales of the Sidewinder product and
related services which more than offset lower sales of products to the
government. Government contracts revenue was $4,048,000 and $9,399,000 for the
quarter and six months ended June 30, 1996, respectively, an increase of 26.6
and 41.4 percent over the same periods in 1995, and reflects the Company's
increased efforts on the Secure Network Server program for the NSA. The Company
expects government contracts revenue to remain steady for the remainder of the
year and that products and services revenue will rise.
GROSS PROFIT. Gross profit as a percentage of revenue increased from 30.3
percent in the second quarter of 1995 to 37.7 percent in 1996. Gross profit
percentage also increased in the six month period ended June 30, 1996 to
38.2 percent from 33.3 percent in the same period of 1995. The increases
resulted mainly from products and services revenue, which carry higher margins
than contracts, gaining as a percentage of the revenue mix. The Company
believes, with the leveling in government contracts revenue and gains in
products and services revenue, that margins for the remainder of the year should
trend higher.
SELLING AND MARKETING. Selling and marketing expenses increased by 236.0
percent to $2,026,000 in the second quarter of 1996 up from $603,000 in the
same period of 1995. Selling and marketing expenses also increased in the six
month period ended June 30, 1996 to $3,334,000 up from $1,014,000 in the same
period of 1995. As a percentage of revenue, expenses were 33.3 and 24.8
percent for the three month and six month periods ended June 30, 1996
compared to 15.1 and 11.9 percent in 1995. The increase resulted primarily
from expenses associated with the Company's increased order activity , a
stronger marketing presence and personnel additions made to position the
Company for future growth. The Company expects the quarterly amount of
selling and marketing expenses to increase during the remainder of 1996.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by
77.7 percent to $2,005,000 in the second quarter of 1996 up from $1,128,000
in the same period of 1995. Research and development expenses also increased
in the first half of 1996 to $3,464,000 up from $1,987,000 in the same period
of 1995. As a percentage of revenue, research and development expenses were
32.9 and 25.8 percent for the three month and six month periods ended June
30, 1996 compared to 28.2 and 23.2 percent in 1995. The increase resulted
primarily from the Company's continued development investments in new and
existing products, including Sidewinder version 3.0 and LOCKout remote access
control. The Company expects research and development expenses to remain at
similar levels in the third quarter for enhancements on Sidewinder version
3.0, as well as development of NetCourier secure browser and a Windows NT
enterprise intrawall.
GENERAL AND ADMINISTRATIVE. General and administrative expenses as a
percentage of revenue were 15.3 percent for the second quarter of 1996
compared to 14.3 percent for the second quarter of 1995, and 11.6 percent for
the first six months of 1996 compared to 10.0 percent for the first six
months of 1995. The Company expects the quarterly amount of general and
administrative expenses as a percentage of revenue will decrease during the
remainder of 1996.
ACQUISITION COSTS. Certain acquisition costs were recognized in the second
quarter of 1996 relating to the Webster Network Strategies, Inc. ("Webster"),
Border Network Technologies Inc. ("Border") and Enigma Logic, Inc. ("Enigma")
acquisitions. Purchased research and development in process of $3,360,000 was
expensed in connection with the Webster acquisition, based on an independent
appraisal, in accordance with purchase accounting rules. Also $3,368,000 of
acquisition costs were recorded for
7
<PAGE>
investment banking and other professional fees for the Border and Enigma
acquisitions in accordance with pooling rules.
NET INTEREST INCOME (EXPENSE). The difference in net interest income
(expense) between the periods reflects interest earned in 1996 by the Company
on cash and cash equivalents generated from its initial public offering in
November, 1995 and a decrease in interest expenses due to the repayment of an
outstanding note by the Company in December, 1995.
INCOME TAXES. The Company recognized no income tax expense for either of the
periods in both 1996 and 1995. Management believes it is more likely than
not that deferred tax assets, which total $1,373,000 at June 30, 1996, will
be realized. The computation of the Company's deferred tax assets and
valuation allowance are based in part on taxable income expected to be earned
on existing government contracts and projected interest income. The amount
of the deferred tax assets considered realizable could be reduced in the near
term if estimates of future taxable income are reduced.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased by approximately $5.1
million from December 31, 1995 to June 30, 1996. The decrease resulted
primarily from the use of cash to fund operations, purchase capital equipment
and make an acquisition. As of June 30, 1996, the Company had working
capital of $26.1 million. The Company anticipates using available cash to
fund growth in operations, invest in capital equipment and to acquire
businesses or license technology or products related to the Company's line of
business.
Capital additions in the first half of 1996 were $2.1 million and were
primarily made up of computer equipment , office furniture and leasehold
improvements. The Company expects to invest another $2 million throughout the
remainder of 1996 mainly for computer equipment and facilities and business
systems upgrades. The Company used $800,000 of cash in its acquisition of
Webster. Upon closing of the proposed acquisitions of Border and Enigma, the
Company will pay investment banking fees based on the values of such
transactions at a certain time prior to such closings.
At its current level of operations, the Company believes that its existing
cash and cash equivalents are sufficient to meet the Company's current
working capital and capital expenditure requirements through at least the
next 12 months.
ACQUISITIONS
In May 1996, the Company acquired Webster for 102,000 shares of Common Stock
valued at $2,601,000 and $500,000 cash in exchange for all outstanding shares
of Webster.
In May 1996, the Company signed a definitive agreement to acquire Canadian
based Border Network Technologies Inc., a network security software provider,
for approximately 5,000,000 shares of Common Stock and the conversion of
approximately 1,500,000 warrants and stock options.
In June 1996, the Company signed a definitive agreement to acquire Enigma
Logic, Inc., a California based developer of identification and
authentication software and products, for approximately 2,100,000 shares of
Common Stock and the conversion of approximately 600,000 stock options.
Both the Border and Enigma acquisitions are intended to be accounted for as a
pooling of interests under the rules of Accounting Principles Board Opinion
No. 16. The acquisitions are expected to close in August 1996.
8
<PAGE>
FORWARD LOOKING STATEMENTS
Certain statements made above, which are summarized below, are
forward-looking statements that involve risks and uncertainties, and actual
results may be materially different. Factors that could cause actual results
to differ include those identified below:
- - MARGINS FOR THE REMAINDER OF THE YEAR SHOULD TREND HIGHER -- This
expectation may be adversely impacted by presently unanticipated higher
expenses, price cutting pressures or lower products and services revenue
within the total revenue mix.
- - QUARTERLY AMOUNT OF SELLING AND MARKETING EXPENSES TO INCREASE DURING THE
REMAINDER OF 1996 -- Lower than expect selling and marketing activity could
reduce the amount of selling and marketing expenses.
- - RESEARCH AND DEVELOPMENT EXPENSES TO REMAIN AT SIMILAR LEVELS IN THE THIRD
QUARTER FOR ENHANCEMENTS ON SIDEWINDER VERSION 3.0, AS WELL AS DEVELOPMENT
OF NETCOURIER SECURE BROWSER AND A WINDOWS NT ENTERPRISE INTRAWALL -- This
expectation depends on the Company maintaining the current anticipated
level of product development, which may not occur due to unexpected
increases in such costs or because of a perceived need to accelerate or
begin new product development.
- - QUARTERLY AMOUNTS OF GENERAL AND ADMINISTRATIVE EXPENSES AS A PERCENTAGE OF
REVENUE WILL DECREASE DURING THE REMAINDER OF 1996 -- Meeting this
expectation depends upon the Company's ability to control costs and
achieving a higher level of revenue, which may not occur for a variety of
reasons, including general market conditions for the Company's products and
services, development and acceptance of new products offered by the
Company, and introduction of products by competitors. In addition, this
expectation depends upon the successful integration of the acquisitions
described above, which may not occur. If such integration did not occur as
anticipated, general and administrative expenses would be expected to rise
as a percentage of revenue. Finally, this expectation assumes that the
Company's government security clearance will be maintained after the
acquisitions close. If government security clearance is lost, general
and administrative expenses would be expected to rise as a percentage
of revenue.
9
<PAGE>
SECURE COMPUTING CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Company was held on May 1,
1996. At such meeting, the stockholders approved (i) the election of
all four director nominees named in the Company's proxy statement
(Kermit M. Beseke, 5,424,573 votes; Stephen M. Puricelli, 5,428,654
votes; Timothy H. Hanson, 5,428,654 votes; and Dennis J. Shaughnessy,
5,428,754 votes); (ii) the Amended and Restated 1995 Omnibus Stock
Plan of the Company (4,284,215 votes for, 610,891 votes against and
8,061 abstentions); (iii) the Employee Stock Purchase Plan of the
Company (4,838,888 votes for, 58,157 votes against and 6,122
abstentions; and (iv) the appointment of Ernst and Young LLP as
independent auditors for the Company was ratified (5,424,368 votes
for, 4,767 votes against and 7,526 abstained). For further
information respecting all such matters reference is made to the
Company's proxy statement dated April 1, 1996.
ITEM 5. OTHER INFORMATION
None
10
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits are filed as part of this Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1996:
4.3 Secure Computing Corporation Employee Stock Purchase Plan(1)
10.1 Acquisition and Pre-Amalgamation Agreement among Secure Computing
Corporation, EDGE Acquisition Inc. and Border Network Technologies
Inc. dated as of May 28, 1996(2)
10.2 Agreement and Plan of Merger among Secure Computing Corporation, Owl
Acquisition, Inc. and Enigma Logic, Inc. dated as of June 24, 19962
27 Financial Data Schedule
Copies of Exhibits will be furnished upon request and payment of the
Company's reasonable expenses in furnishing the Exhibits.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the quarterly
period ended June 30, 1996.
- ---------------------
(1) Incorporated by reference to the like numbered Exhibit to
the Company's Registration Statement on Form S-8 (File No. 333-06563).
(2) Incorporated by reference to Appendix A of the Company's Definitive Proxy
Statement dated August 5, 1996 and filed August 7, 1996 with the Securities
and Exchange Commission (File No. 0-27074).
11
<PAGE>
SECURE COMPUTING CORPORATION
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.
SECURE COMPUTING CORPORATION
DATE: August 13, 1996 By: \s\ Timothy P. McGurran
-------------------------------------
Timothy P. McGurran,
Vice President of Finance, Treasurer
and Chief Financial Officer
(Duly authorized officer and
Principal Financial Officer)
12
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
4.3 Secure Computing Corporation Employee Stock Purchase Plan(1)
10.1 Acquisition and Pre-Amalgamation Agreement among Secure Computing
Corporation, EDGE Acquisition Inc. and Border Network Technologies
Inc. dated as of May 28, 1996(1)
10.2 Agreement and Plan of Merger among Secure Computing Corporation, Owl
Acquisition, Inc. and Enigma Logic, Inc. dated as of June 24, 1996(2)
27 Financial Data Schedule FILED
ELECTRONICALLY
</TABLE>
- ---------------------
(1) Incorporated by reference to the like numbered Exhibit to the Company's
Registration Statement on Form S-8 (File No. 333-06563).
(2) Incorporated by reference to Appendix A of the Company's Definitive Proxy
Statement dated August 5, 1996 and filed August 7, 1996 with the Securities
and Exchange Commission (File No. 0-27074).
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 27,542,000
<SECURITIES> 0
<RECEIVABLES> 3,662,000
<ALLOWANCES> 48,000
<INVENTORY> 645,000
<CURRENT-ASSETS> 33,115,000
<PP&E> 7,445,000
<DEPRECIATION> 3,571,000
<TOTAL-ASSETS> 37,969,000
<CURRENT-LIABILITIES> 7,061,000
<BONDS> 0
0
0
<COMMON> 68,000
<OTHER-SE> 45,549,000
<TOTAL-LIABILITY-AND-EQUITY> 37,969,000
<SALES> 13,438,000
<TOTAL-REVENUES> 13,438,000
<CGS> 8,302,000
<TOTAL-COSTS> 8,302,000
<OTHER-EXPENSES> 15,090,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,189,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,189,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,189,000)
<EPS-PRIMARY> (1.39)
<EPS-DILUTED> (1.39)
</TABLE>
