<PAGE>
================================================================================
UNITED STATES
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
September 30, 1997
________ 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: 0-27468
ULTRADATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2746681
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5000 Franklin Drive, Pleasanton, CA 94588-3031
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code:
510/463-8356
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
------- -------
As of November 4, 1997, Registrant had outstanding 7,607,133 shares of Common
Stock, $.001 par value.
================================================================================
<PAGE>
ULTRADATA CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART 1 FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Condensed Balance Sheets as of September 30, 1997 and
December 31, 1996 1
Condensed Statements of Operations for the Three Months and
Nine Months Ended September 30, 1997 and 1996 2
Condensed Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996 3
Notes to Condensed Financial Statements 4
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II OTHER INFORMATION
ITEM 6 - Exhibits and Report on Form 8-K 11
SIGNATURES 12
</TABLE>
<PAGE>
ULTRADATA CORPORATION
Condensed Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
Sept 30, Dec 31,
----------- -----------
Assets 1997 1996
------- ----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,140 $ 1,583
Short term investments 402 1,420
Restricted cash 596 --
Trade accounts receivable, net 3,316 6,586
Unbilled revenues 2,906 3,870
Inventories 804 1,173
Prepaid expenses and other current assets 631 1,027
Income taxes receivable 5 958
------- -------
Total current assets 9,800 16,617
Property and equipment, net 4,495 3,532
Other assets -- 254
------- -------
$14,295 $20,403
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Bank borrowings $ 596 $ 96
Accounts payable 2,033 3,659
Accrued expenses 1,199 2,008
Deferred revenue and customer advances 2,535 3,508
------- -------
Total current liabilities 6,363 9,271
Deferred revenue and customer advances 1,329 1,313
Bank borrowing, excluding current portion -- 323
------- -------
Total liabilities 7,692 10,907
------- -------
Stockholders' equity:
Preferred stock; par value $.001; 2,000,000 shares authorized; none
outstanding -- --
Common stock; par value $.001; 23,000,000 shares authorized;
7,607,133 and 7,526,313 shares issued and outstanding in 1997 and 1996,
respectively 8 7
Additional paid in capital 15,202 14,941
Accumulated deficit (8,607) (5,452)
------- -------
Total stockholders' equity 6,603 9,496
------- -------
$14,295 $20,403
======= =======
</TABLE>
See accompanying notes to condensed financial statements
1
<PAGE>
ULTRADATA Corporation
Condensed Statements of Operations
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Software $2,076 $ 1,929 $ 5,216 $10,059
Maintenance 2,540 2,290 7,647 6,246
Services and other 1,378 1,878 4,668 5,807
------ ------- ------- -------
Subtotal 5,994 6,097 17,531 22,112
Hardware 743 2,595 4,425 11,629
------ ------- ------- -------
Total revenues 6,737 8,692 21,956 33,741
------ ------- ------- -------
Cost of revenues:
Software 362 408 862 2,077
Maintenance 1,497 1,359 4,629 3,553
Services and other 1,300 1,733 4,330 5,598
Hardware 506 1,801 3,161 8,097
------ ------- ------- -------
Total cost of revenues 3,665 5,301 12,982 19,325
------ ------- ------- -------
Gross margin 3,072 3,391 8,974 14,416
------ ------- ------- -------
Operating expenses:
Product development 1,104 1,627 3,601 4,402
Selling, general and administrative 2,285 4,376 9,358 11,125
Gain on transfer of service bureau
contracts (558) -- (558) --
------ ------- ------- -------
Total operating expenses 2,831 6,003 12,401 15,527
------ ------- ------- -------
Operating (loss) income 241 (2,612) (3,427) (1,111)
Interest income, net 19 96 18 316
Other income -- -- 254 --
------ ------- ------- -------
Income (loss) before income taxes 260 (2,516) (3,155) (795)
Income tax benefit -- (931) -- (294)
------ ------- ------- -------
Net income (loss) $ 260 $(1,585) $(3,155) $ (501)
====== ======= ======= =======
Net income (loss) per common and common
equivalent share $ 0.03 $ (0.21) $ (0.38) $ (0.07)
====== ======= ======= =======
Shares used in per share computations 7,673 7,432 7,567 7,086
</TABLE>
See accompanying notes to condensed financial statements
2
<PAGE>
ULTRADATA CORPORATION
Condensed Statements of Cash Flows
In thousands
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1997 1996
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,155) $ (501)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 958 781
Deferred income taxes -- 181
Gain on sale of joint venture (238) --
Loss on disposition of property and equipment 17 --
Equity in earnings of unconsolidated subsidiary (16) (62)
Changes in operating assets and liabilities:
Trade accounts receivable 3,270 (2,061)
Unbilled revenues 964 (3,755)
Inventories 369 (535)
Prepaid expenses and other assets 404 (617)
Income taxes receivable 953 --
Accounts payable (1,626) (2,364)
Accrued expenses (809) 154
Income taxes payable -- (107)
Deferred revenue and customer advances (957) (1,725)
------- --------
Net cash (used for) provided by operating activities (134) (10,611)
------- --------
Cash flows from investing activities:
Capital expenditures (2,130) (1,737)
Proceeds from disposition of service bureau assets 192 --
Sale of investment in joint venture 500 --
Sale of short term investments 1,018 --
Decrease of stockholders notes receivable -- 1,453
------- --------
Net cash used for investing activities (420) (284)
------- --------
Cash flows from financing activities:
Bank borrowings 500 --
Repayment of debt (323) (1,233)
Restricted cash (596) --
Net proceeds from issuance of stock 262 --
Net proceeds from initial public offering -- 14,750
------- --------
Net cash provided by (used for) financing activities (157) 13,517
------- --------
Net increase (decrease) in cash (443) 2,622
Cash and cash equivalents at beginning of period 1,583 1,124
------- --------
Cash and cash equivalents at end of period $ 1,140 $ 3,746
======= ========
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
ULTRADATA CORPORATION
Notes to Condensed Financial Statements
September 30, 1997 and 1996
1. Basis of Presentation
These unaudited financial statements have been prepared in accordance with the
instructions for Form 10-Q and therefore certain information and footnote
disclosures normally contained in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These statements should be read in conjunction with the financial statements
contained in the Company's report on Form 10-K for the year ended December 31,
1996.
The accompanying unaudited financial statements of the Company reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to present a fair statement of the financial position as
of September 30, 1997 and the results of operations and cash flows for the
interim periods presented.
2. Revenue Recognition
The Company recognizes revenues from licenses of computer software provided that
a noncancelable license agreement has been signed, the software and related
documentation have been shipped, there are no material uncertainties regarding
customer acceptance, collection of the resulting receivable is deemed probable,
and no other significant vendor obligations exist. Maintenance revenues are
deferred and recognized over the related contract period, generally three months
to five years. Services and other revenues generated from professional
consulting and training services and software customization services are
recognized as the services are performed. Hardware revenues are recognized upon
shipment.
3. Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) recently issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" which is
effective for annual and interim periods ending after December 15, 1997. SFAS
No. 128 requires the presentation of basic earnings per share ("EPS") and, for
companies with complex capital structures or potentially dilutive securities,
such as convertible debt, options and warrants, diluted EPS. Had SFAS No. 128
been effective for the quarter and nine months ended September 30, 1997, basic
EPS and diluted EPS would not have been significantly different from the
reported net income or loss per share. The FASB also recently issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 130 and 131 are
effective for fiscal 1998. The company is currently evaluating the impact of
these statements on the financial statements.
4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties,
including those discussed below and in the other reports filed with the
Securities and Exchange Commission, that could cause results to differ
materially from historical results or those anticipated. In this Report, the
words "expects", "anticipates", "believes" and similar expressions identify
forward-looking statements, which speak only as of the date hereof.
Overview
The Company provides open architecture, fully-integrated on-line information
management solutions that enable relationship-oriented financial institutions to
efficiently manage their businesses and offer real-time customized financial
services 24 hours per day, seven days per week. These solutions allow the
Company's customers to provide, among other things, financial services such as
checking, savings and investment accounts, credit and debit cards, ATM access
and consumer lending. The Company's products are currently targeted primarily
to large and mid-sized credit unions.
The Company derives its revenues from software license fees, maintenance fees,
disaster recovery services, custom development, training and installation
services, sales of third party software and hardware products,and, through
September 1997, service bureau operation fees. In 1997 the Company commenced
billing software relicense fees to its existing customers to extend the term
of the original license periods. The Company intends to continue this process
which is standard software industry practice. A significant portion of the
Company's revenues are derived from substantial contracts with organizations
that have long decision-making cycles, typically from six to twelve months. The
decision to purchase the Company's products is followed by an installation and
training cycle, which is labor-intensive and generally requires from three to
twelve months to complete.
Each new customer system consists of the Company's ULTRAFIS product which may be
combined with selected client-server applications, hardware and services. The
Company expects revenues related to the ULTRAFIS system to represent a
significant portion of its total revenues for the next several years.
The high volume of system sales in 1995 and 1996 and the introduction and demand
for the Company's new client-server applications across its customer base,
exceeded the capacity of the Company's training, installation and customer
support organizations. In addition, the Company's customers expressed strong
demand for the new client-server applications, causing the Company to release
certain products before implementation of an effective product field testing
process. Customer difficulties occurred as certain product errors and failures
arose and as customers became aware of certain perceived functionality issues.
As a result, broad market acceptance did not occur, and the Company made some
economic accommodations to resolve the product issues. These difficulties
resulted in an increase in the Company's unbilled revenues, a significant
increase in the Company's reserve for doubtful accounts and sales returns and
contributed to significant decreases in new customers and software sales during
the last two quarters of 1996 and the first quarter of 1997.
Results of operations for the third quarter of 1997 include a gain of $558,000
from the transfer in September 1997 of the Company's direct service bureau
operations to Premier Systems, Incorporated, the Company's current largest
distributor of service bureau products. The terms of the sale provide that an
additional $350,000 will be paid to the Company in
5
<PAGE>
four quarterly installments commencing December 31, 1998, contingent upon
renewal of service bureau contracts transferred to Premier Systems. The Company
expects that it will only provide service bureau services through value added
resellers in the future.
The Company's employee headcount at September 30, 1997 was 186 compared to 305
at December 31, 1996 The headcount reductions were primarily in administrative
and management overhead positions across the Company and were combined with a
reallocation of Company resources to focus on client-server product lines,
product standardization and customer support.
Results of Operations
Revenues
The following table sets forth the Company's revenues, gross margins and gross
margin percentages for the three month periods ended September 30, 1997 and
1996, respectively:
<TABLE>
<CAPTION>
Revenue Gross Margin Gross Margin
(in thousands) (in thousands) (Based on Revenues) Change in
Three Months Three Months Three Months Gross Margin
Ended Ended Ended Increase
September 30, September 30, (Decrease)
----------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
------------ ---------- ------------ ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Software 2,076 1,929 1,714 1,521 83% 79% 4%
Maintenance 2,540 2,290 1,043 931 41% 41% --%
Services & Other 1,378 1,878 78 145 6% 8% (2)%
----------------------------------------------------------------------------------------------
Subtotal 5,994 6,097 2,835 2,597 47% 43% 4%
Hardware 743 2,595 237 794 32% 31% 1%
----------------------------------------------------------------------------------------------
$6,737 $8,692 $3,072 $3,391 46% 39% 7%
================================================================================================
</TABLE>
Software revenues increased 8% from $1.9 million in the third quarter of 1996 to
$2.1 million in the third quarter of 1997. Software revenues in the third
quarter of 1997 includes $680,000 of software relicense revenues. Approximately
$300,000 of relicense revenue was recorded in the second quarter of 1997.
Future software relicense revenues will vary depending on when such licenses
require renewal.
Maintenance revenues increased 11% from $2.3 million in the third quarter of
1996 to $2.5 million in the third quarter of 1997. The increase was primarily a
result of growth in the number of credit unions using ULTRADATA systems.
Services and other revenues decreased 27% from $1.9 million in the third quarter
of 1996 to $1.4 million in the third quarter of 1997. The decline was mainly
attributable to decreases in training and installation activities due to lower
sales volumes during the last twelve months. Services and other revenues also
includes custom development, service bureau operation fees and disaster recovery
contracts.
See Overview concerning the transfer of the Company's service bureau contracts.
Prior to such transfer, the Company's direct service bureau revenues were
$301,000 and $690,000, respectively for the three months and nine months ended
September 30, 1997.
Hardware revenues decreased from $2.6 million in the third quarter of 1996 to
$0.7 million in the third quarter of 1997. Hardware no longer represents a core
focus of the Company's operation. The 71% decrease in hardware sales in 1997 was
primarily attributable to the decrease in the number of new customer hardware
purchases and customer product installations during the last twelve months. The
Company's high volume of shipments during the first nine months of 1996 were due
to the number of new order's received during the second half of 1995 requiring
delivery during the first six months of
6
<PAGE>
1996. The percentage of hardware revenues depends on the mix of customer orders
and the timing of particular customer installations and can be expected to
fluctuate substantially from quarter to quarter.
Gross Margin
Total gross margin as a percentage of total revenue increased 7% from 39% in the
third quarter of 1996 to 46% in third quarter of 1997, primarily due to the
increased proportion of software sales.
Software gross margin as a percentage of software revenue increased 4% from 79%
in the third quarter of 1996 to 83% in the third quarter of 1997.
The gross margin percentage from services and other revenues decreased by 2%
from 8% in the third quarter of 1996 to 6% in the third quarter of 1997. In
1997 expenses of $0.2 million for a product development group were classified
as cost of revenue to reflect the reorganization of company personnel to
address service and installation needs.
Hardware gross margin as a percentage of hardware revenues increased 1% from 31%
in the third quarter of 1996 to 32% in the third quarter of 1997 due to the mix
of hardware products shipped during the third quarter of 1997.
Operating Expenses
The following table sets forth the Company's operating expenses for the three
month periods ended September 30, 1997 and 1996, in the aggregate and as a
percentage of revenues:
<TABLE>
<CAPTION>
Three Months
Ended (Decrease) As a Percent of
September 30, Revenue
--------------------------------------------------------------------------
1997 1996 $ % 1997 1996
------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Product development 1,104 1,627 (523) 32% 16% 19%
Selling, general and 2,285 4,376 (2,091) 48% 34% 50%
administrative
Gain on transfer of service bureau
contracts (558) ---- (558) N/M (8%) ---
--------------------------------------------------------------------------
$2,831 $6,003 (3,172) 53% 42% 69%
==========================================================================
</TABLE>
Product development expenses decreased 32% to $1.1 million compared to $1.6
million for the same quarter of the prior year. These costs are primarily for
staffing to support product development programs such as Ultra-Access Remote
Banking modules, Financial Services Platform modules, product enhancements,
and regulatory compliance. In 1997 expenses of $0.2 million for a product
development group were classified as cost of revenue to reflect the
reorganization of company personnel to address service and installation needs.
The remainder of the decrease in 1997 expenses is due to staff reductions
primarily in higher salaried administrative functions since the prior year's
quarters.
Selling, general and administrative expenses decreased to $2.3 million in third
quarter of 1997 from $4.4 million in third quarter 1996. Selling, general and
administrative expenses as a percent of total revenues, decreased from 50% for
the third quarter of 1996 to 34% for the third quarter of 1997. Selling,
general, and administrative expenses for the third quarter of 1996 included a
provision of $930,000 of reserves for accounts receivable whereas no reserves
were included in selling, general, and administrative expenses in the third
quarter of 1997. The remainder of the decrease was primarily due to staff
reductions.
7
<PAGE>
Future Operating Results
The Company's operating performance is subject to various risks and
uncertainties as discussed in this Report and in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission on May 9, 1997, as
amended, and Quarterly Report on form 10-Q filed with the SEC on August 14,
1997. This Report on Form 10-Q should be read in conjunction with the Form 10-
K, particularly "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained therein. The Company's
future operating results will depend upon demand for its products and its
ability to enhance its existing products and introduce new products on a timely
basis. The Company must also manage growth and change effectively as failure to
do so could materially and adversely affect its business, financial condition
and results of operations.
Installation of the Company's ULTRAFIS system is a complex process that must
typically be done without any disruption of the customer's service. In 1996,
the Company experienced difficulty in the installation and training process on
several conversions, resulting in delays, reductions in revenues and increases
in expenses primarily as a result of the increase in new customer activity in
1996 and the failure of the Company's training and installation organization to
perform to contract schedules. Failure by the Company to successfully install
an ULTRAFIS system could result in significant loss of revenue in a particular
quarter and fluctuation in the Company's results of operations. Although the
Company schedules the installations of its products several months in advance,
its ability to achieve its revenue plans, both in the near term and in the long
term, depends on the Company's continued ability to sign new customer contracts
and to complete such contracts on schedule. Failure to close new customer
contracts as a result of lost sales or deferrals of customer decisions could
have a material adverse impact on the future operating results. There can be no
assurance that sales or installations will continue to occur at historical rates
or in accordance with the Company's expectations.
The Company's quarterly and annual revenues and operating results have varied
significantly in the past, and may do so in the future. Operating results may
fluctuate due to factors such as the demand for the Company's products, the
introduction and acceptance of new products and product enhancements by the
Company or its competitors, changes in the levels of operating expenses,
customer order deferrals in anticipation of new products, competitive conditions
in the credit union and financial services markets and economic conditions
generally or in various industry segments. In addition, a significant portion
of the Company's business has been derived from substantial contracts with large
organizations with long decision-making cycles, and the timing of such orders
has caused material fluctuations in the Company's operating results. The
Company's expense levels are based in part on its expectations regarding future
revenues and in the short term are fixed to a large extent. Therefore, the
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. As a result, if anticipated revenues do not
occur or are delayed, the Company's operating results would be
disproportionately affected. The Company expects quarterly and annual
fluctuations to continue for the foreseeable future. Accordingly, the Company
believes that period-to-period comparisons of its financial results should not
be relied upon as an indication of future performance.
The Company has previously experienced delays in the development and
introduction of new products and product enhancements, including certain of its
client-server products. The length of these delays has varied depending upon
the size and scope of the project and the nature of the problems encountered.
Any significant delay in the development of new products, or the failure of
these new products, if and when installed, to achieve a significant degree of
market acceptance, could have a material adverse effect upon the Company's
business, financial condition and results of operations.
In addition, software products as complex as those offered by the Company often
contain undetected errors or failures when first introduced or as new versions
are released. There can be no assurance that,
8
<PAGE>
despite testing by the Company and by current and potential customers, errors
will not be found in new products after commencement of commercial shipments.
The occurrence of such errors could result in loss of, or delay in, market
acceptance of the Company's products, which could have a material adverse effect
on the Company's business, financial condition and results of operations.
The widespread use of computer programs that rely on two-digit data programs to
perform computation and decision-making functions may cause computer systems
generally to malfunction with respect to dates in the new century. The Company
has been modifying its software and expects to release updated versions of its
software products to address this issue in 1998. However, because of the
interdependent nature of computer systems, the Company and its customers may be
adversely impacted in or with respect to the year 2000 depending on whether it
or other entities not affiliated with the Company address this issue
successfully. The Company's success in addressing this issue will depend on a
number of factors including its ability to adequately assess the extent of the
issue and verify year 2000 compliance in all of its programs, to implement
appropriate remedial steps in a timely manner and to verify and cause compliance
by third party software and hardware providers.
Substantially all of the Company's revenues historically have been related to
the Company's ULTRAFIS system, and the Company expects that for several years a
substantial portion of its revenues will continue to be related to the ULTRAFIS
system. The Company is also dependent upon the success of its new client-server
products. The Company's success will depend in large part on its ability to
sell, install, maintain and enhance the ULTRAFIS system and client-server
products and to develop, on a timely and cost-effective basis, utilizing new
technologies, application modules that meet evolving customer needs. Any
failure by the Company to anticipate or to respond adequately to new and
changing market conditions, enhance the ULTRAFIS system and develop application
modules, compete with new product offerings by third parties, complete new
standalone product offerings, respond to emerging industry standards, adapt to
changing technologies, maintain sales of the Company's products, or continue to
sign and complete new customer contracts would have a material adverse effect on
the Company's business, financial condition and results of operations.
On October 25, 1996 the U.S. District Court ruled that federal credit unions may
not extend membership benefits to individuals who are not part of the credit
union's original charter group. This ruling imposes limits on new customers
that a federal credit union may attract. As a result, some federal credit
unions have expressed a reluctance to pursue extensive capital purchases until
the impact of the ruling is further assessed. Accordingly, if this ruling
results in deferred customer purchase decisions for the Company's products, it
could have a material adverse effect on the Company's business, financial
condition, and results of operations. While federal credit unions represent
approximately 60% of all credit unions, less than half of these credit unions
are affected by this ruling.
Liquidity and Capital Resources
The Company's management believes current cash, cash equivalents and short-term
investments, and expected cash generated from operations will satisfy its
expected working capital and capital expenditure requirements through the
immediate future.
In May 1997, the Company entered into a factoring agreement which provides for
borrowing by the Company of up to $1.5 million, to be effected by the bank's
purchase of eligible accounts receivable and payment to the Company of an amount
equal to 80% of the purchased accounts receivable. Purchases of receivables and
corresponding advances to the Company are at the discretion of the bank. There
is a 0.5% administrative fee for each receivable purchased and a 1.75% monthly
finance charge for as long as each purchased receivable remains outstanding.
The factoring agreement renews, unless terminated by the Company or the bank, in
April 1998 and is terminable by the Company or the bank at any time. The
agreement also provides that the borrowings are secured by all tangible and
intangible assets of the
9
<PAGE>
Company. As part of the factoring agreement, no further draws will be available
under the prior capital equipment facility and the Company established cash
collateral for this balance. As of September 30, 1997, the Company has not drawn
on the factoring agreement but has an outstanding balance of $596,000 on the
prior capital equipment facility.
Capital expenditures of $2.1 million during the first three quarters of 1997
were primarily for furniture and leasehold improvements related to the Company's
occupancy of a new office facility commencing in February 1997.
Net cash provided by operations was $0.1 million for the nine months ending
September 30, 1997, including the $3.2 million net loss for the first three
quarters of 1997. For the nine months ending September 30, 1996, net cash used
for operations was $10.6 million. Unbilled revenue decreased to $2.9 million at
September 30, 1997 compared to $3.9 million at December 31, 1996 and $6.0
million at September 30, 1996. There can be no assurance that the Company will
continue to realize such improvements in the future or that collections of
amounts billed will occur as expected.
10
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.31 Purchase Agreement dated September 30, 1997 between Company and
Premier Systems, Incorporated, and schedules thereto.*
11.01 Computation of Earnings (Loss) per Share (in thousands
except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------------------------------------------------------
1997 1996 1997 1996
------- -------- -------- -------
<S> <C> <C> <C> <C>
Net income (loss) $ 260 ($1,585) ($3,155) ($501)
======= ======= ======= ======
Weighted average outstanding shares 7,607 7,432 7,567 7,086
Common stock equivalents 66 -- -- --
======= ======= ======= ======
7,673 7,432 7,567 7,086
======= ======= ======= ======
Net income (loss) per common and common
equivalent share $ 0.03 $(0.21) $(0.38) $(0.07)
======= ======= ======= ======
</TABLE>
27.01 Financial Data Schedule
(b) There have been no reports filed on Form 8-K during the quarter ended
September 30, 1997.
______________
* Confidential treatment has been requested with respect to certain portions of
this exhibit. Confidential portions have been omitted from the public filing
and filed separately with the Securities and Exchange Commission.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ULTRADATA CORPORATION
Date November 14, 1997 By /s/ ROBERT J. MAJTELES
Robert J. Majteles
President and Chief Executive Officer
Date November 14, 1997 By /s/ PHILIP D. RANGER
Philip D. Ranger
Vice President and Chief Financial Officer
12
<PAGE>
EXHIBIT 10.31
[CONFIDENTIAL TREATMENT REQUESTED]
PURCHASE AGREEMENT
ULTRADATA'S CALIFORNIA SERVICE BUREAU
ULTRADATA Corporation, a Delaware corporation ("ULTRADATA") and Premier Systems,
Incorporated, an Iowa corporation ("PSI") hereby enter into this agreement for
the transfer of ULTRADATA's service bureau located at 5000 Franklin Drive,
Pleasanton, CA 94588 (the "California Bureau"):
1. "CU CONTRACTS" means all of ULTRADATA's rights under its data processing
contracts with the credit unions listed below (the "Contracted CUs").
ULTRADATA hereby assigns to PSI, and PSI hereby assumes, all of its rights in
and obligations under the CU Contracts, effective as of September 30,
1997(the "Closing Date"). If ULTRADATA does not have the right to
unilaterally assign a CU Contract, then the sale of that contract is subject
to ULTRADATA's ability to obtain that credit union's consent to this
assignment. PSI agrees to use its best efforts to assist ULTRADATA in
obtaining from each Contracted CU a novation of its respective CU Contract
eliminating ULTRADATA as a party thereto as soon as practicable following the
Closing Date.
2. PURCHASE PRICE. PSI will buy, and ULTRADATA will sell, Hardware and CU
Contracts as detailed in sections 1 and 4, and ULTRADATA will license the
Software as detailed in section 3, for a purchase price of $1,100,000 as
adjusted pursuant to section 1 and subsection 2.C. Hardware and Software
that is licensed or assigned to PSI as applicable under this Agreement is
listed on Schedules A-1 through A-4, attached hereto and incorporated by this
Agreement. PSI will pay the purchase price in cash as follows:
A. A $250,000 down payment payable upon execution of this Agreement.
B. Four quarterly payments of $125,000 each payable on December 31, 1997,
March 31, 1998, June 30, 1998, and September 30, 1998.
C. Four quarterly "Hold Back" payments of $87,500 each payable during the
second year of this Agreement on December 31, 1998, March 31, 1999,
June 30, 1999, and September 30, 1999. Quarterly Hold Back payments
described herein are contingent upon the Contracted CU remaining on the
PSI bureau through out the calendar quarters ended on the above dates;
provided however, the second year Hold Back payments assigned to each
Contracted CU, as listed on Schedule B, will be paid to ULTRADATA
within 30 days of the Contracted CU signing a PSI contract of three
years or greater. The balance of the remaining Quarterly Hold Back
payments will be reduced by the acceleration of payments to ULTRADATA
by PSI, if a PSI Agreement with a Contracted CU is signed prior to the
end of the scheduled payment.
______________
* Confidential treatment has been requested with respect to certain portions of
this exhibit. Confidential portions have been omitted from the public filing
and filed separately with the Securities and Exchange Commission.
1
<PAGE>
D. If a Contracted CU converts off the PSI bureau any time prior to
signing a contract with PSI or September 30, 1999, whichever is
earlier, the Quarterly Hold Back payments will be reduced on a pro-rata
basis as defined on Schedule B.
3. "SOFTWARE" when capitalized means all of the software currently used by
ULTRADATA in the operation of the California Bureau for the benefit of the
Contracted CUs, including operating programs, data base programs, modules,
custom programs, interfaces, and related programs, whether developed by
ULTRADATA or by one or more third parties. Schedules A-1 through A-4 as
applicable, detail Software licensed and or assigned under this Agreement.
A. ULTRADATA STANDARD PROGRAMS. To the extent the Software is comprised of
programs developed by ULTRADATA of a type that ULTRADATA is currently
licensing to PSI pursuant to the Software Agreement, these programs
(including AIX/UNIX, UniData, Uniplex, ALPS, and FSP), such Software
will be deemed to be licensed under the Software Agreement, and PSI's
rights in the Software will be determined pursuant to the Software
Agreement. For purposes of this Agreement, "Software Agreement" means
that certain Software and Services Agreement between ULTRADATA and PSI
effective as of July 1, 1997.
B. ULTRADATA CUSTOM PROGRAMS. ULTRADATA grants PSI a nonexclusive license,
pursuant to the terms and conditions of the Software Agreement, to use
all Software which is comprised of programs developed by ULTRADATA
which are not of a type that ULTRADATA is currently licensing to PSI
pursuant to the Software Agreement. This includes custom programs and
related third party interfaces, such as online ATM interfaces and
shared branching interfaces. PSI will have the right under this license
to use this Software on any system operated by PSI within the scope of
the licenses granted under the Software Agreement. ULTRADATA will
provide PSI with a copy of the source code for this Software upon
request to enable PSI to support and maintain this Software.
C. OTHER PROGRAMS. ULTRADATA will assign to PSI all of its rights in the
license's of Software which is comprised of programs developed by
someone other than ULTRADATA and used solely by the California Bureau,
subject to the terms and conditions of the agreement under which
ULTRADATA obtained such Software.
4. "HARDWARE" means the equipment listed on Schedules A-1 through A-4 as
applicable, whether located at the California Bureau or at a Contracted CU.
To the extent the Hardware is leased to Contracted CUs, ULTRADATA hereby
assigns to PSI, and PSI hereby assumes, all of ULTRADATA's rights in and
obligations under
2
<PAGE>
these leases, and ULTRADATA's sale of the leased items is subject to the
rights of the Contracted CUs pursuant to these leases. Schedule A includes a
list of all such leases. ULTRADATA warrants that it has good title to the
Hardware, free and clear of all liens and encumbrances other than the leases
to the Contracted CUs of equipment located at these credit unions and any
rights or encumbrances imposed by the original lessor of any Hardware not
owned by ULTRADATA. ULTRADATA warrants that the Hardware is in good operating
condition, and that the IBM R40 CPU located at the California Bureau is under
a maintenance contract with IBM. ULTRADATA assigns to PSI all of ULTRADATA's
rights in the manufacturer's warranties for the Hardware. PSI will coordinate
moving the Hardware from ULTRADATA to PSI and will assume the costs of
packaging, shipping and other related costs. PSI agrees to use its best
efforts to assist ULTRADATA in obtaining from each Contracted CU a novation
of any Hardware lease eliminating ULTRADATA as a party thereto as soon as
practicable following the Closing Date.
5. TRANSITION PROVISIONS.
A. HOLD HARMLESS. PSI is not assuming any of ULTRADATA's contracts with
third party vendors, including maintenance contracts and contracts
for data lines, other than lease agreements with respect to the
Hardware as specified in section 4 above. Subject to the terms and
conditions hereof, ULTRADATA agrees to hold PSI harmless from any
claims under these vendor contracts and from any claims by a
Contracted CU for services performed or which should have been
performed by ULTRADATA pursuant to a CU Contract prior to the Closing
Date. PSI agrees to hold ULTRADATA harmless from any claims by a
Contracted CU for services performed or which should have been
performed, and for any other claim or liability arising out of the CU
Contracts, Hardware, assigned Hardware leases or activities of PSI as
contemplated under this Agreement, on or after the Closing Date. The
party granting a hold harmless will also hold the other party
harmless from the costs of defending against such a claim, including
reasonable attorneys' fees; provided that as a condition to the
obligations of the party responsible for holding harmless (the
"Indemnifying Party") under this subsection 5.A, the other party (the
"Indemnified Party") will (a) promptly notify the Indemnifying Party
of any such claim; (b) tender full control of the defense and
settlement of such claim to the Indemnifying Party, provided that the
Indemnified Party will have the right to reasonably approve the
counsel selected by the Indemnifying Party and to participate at its
own expenses in such defense and settlement, and provided further
that the Indemnifying Party will not settle any such claim in a
manner materially adverse to the Indemnified Party without the
Indemnified Party's written consent, which will not be unreasonably
withheld or delayed; and (c) provide such assistance as the
Indemnifying Party may reasonably request.
3
<PAGE>
B. OPERATIONAL SUPPORT. ULTRADATA will provide operational support to
the California Bureau consistent with the operational support
provided by ULTRADATA prior to the Closing Date until April 30, 1998
or until an earlier date specified by PSI with at least 30 days
advanced written notice. This operational support will include full
staffing of the California Bureau in accordance with current levels
of personnel including the weekend work necessary to convert
Contracted CUs to PSI's facility, first level CRC to the California
Bureau, disaster recovery and back up support for the California
Bureau. PSI will pay ULTRADATA **** per month for this operational
support. Payment will be made on the last business day for each month
by wire transfer, under this operational contract. During this period
of operational support, ULTRADATA will provide PSI with remote access
to the computer system at the California Bureau under specifications
established by PSI and mutually agreed upon by both parties.
C. CONVERSION SUPPORT. ULTRADATA will assist PSI in the planning and
conversion of Contracted CUs from the California Bureau to PSI's West
Des Moines facility. ULTRADATA will provide reasonable levels of
training to PSI personnel on the custom modules and interfaces used
at the California Bureau, and ULTRADATA will provide support in
accordance with the support provided under the Software Agreement for
these modules and interfaces for a reasonable time after the
conversion to PSI's West Des Moines facility as mutually agreed upon
by both parties.
D. LICENSE FEES. **** PSI will use best efforts to obtain signed
processing agreements with each Contracted CU as soon as practicable
following the Closing Date. Within 24 months after the Closing Date
and provided a Contracted CU has signed a processing agreement with
PSI, PSI will pay ULTRADATA **** of the software license and
maintenance fees specified in the Software Agreement or other
applicable agreement. During this 24 month period, the members of the
Contracted CU's will be treated as members in excess of **** members
for purposes of applying the license and maintenance fees under
section 6.2 of the Software and Services Agreement. After the end of
this 24 month period, PSI will pay the full amount of the software
license and maintenance fees specified in the Software Agreement or
other applicable agreement; provided however, at all times following
the Closing Date, PSI will pay to ULTRADATA the full cost of software
license and maintenance fees applicable to new software licensed for
use by a Contracted CU. PSI shall obtain ULTRADATA's prior written
______________
* This information has been omitted as the Company is seeking confidential
treatment for such information.
4
<PAGE>
approval of any processing agreement between PSI and a Contracted CU,
which has a term of less than 36 months.
E. NON-COMPETE. ULTRADATA will not convert a Contracted CU to an in-
house system utilizing the ULTRAFIS software for a period of ****
following the Closing Date. ULTRADATA will not Participate in
the Business of operating a service bureau to service any of the
Contracted CUs utilizing ULTRAFIS software for a period of ****
after the Closing Date. "Participate in the Business" means to
operate or invest in such a service bureau, or to license the use of
ULTRAFIS software to an unrelated service bureau if ULTRADATA has
received written notice at the time of licensing that the service
bureau intends to service any of the Contracted CUs.
6. LIMITATION OF WARRANTIES. Except as set forth in this agreement, ULTRADATA
will provide the Software and the Hardware "AS IS" WITH NO WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
WARRANTIES ARISING FROM A COURSE OF DEALING OR TRADE PRACTICE.
7. LIMITATIONS OF LIABILITY. The Software Agreement is unaffected by this new
Agreement. With the exception of the Software Agreement, the commitments
explicitly stated in this Agreement will be the only obligations of the
parties with respect to the subject matter of this Agreement. NEITHER PARTY
WILL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, OR
EXEMPLARY DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
whether based on breach of contract, tort, negligence, product liability,
or otherwise, or whether the party has been advised of the possibility of
such damage.
8. GENERAL PROVISIONS.
A. ASSIGNMENT. Neither party may assign this Agreement without the prior
written consent of the other party.
B. INTERPRETATION OF THIS AGREEMENT. With the exception of the Software
Agreement, this Agreement constitutes the entire contract between the
parties as of the Closing Date. With respect to the Software
Agreement, the provisions of section 5.D of this Agreement will
control over the provisions of the Software Agreement to the extent
specified in Section 5.D.. This Agreement revokes and replaces all
other prior written or oral contracts between the parties covering
the same subject matter with respect to performance after the Closing
Date. This Agreement can only be modified by a written letter or
other document signed by both parties. The use of the term
"including" followed by
* This information has been omitted as the Company is seeking confidential
treatment for such information.
5
<PAGE>
examples means that the examples are illustrative of the general
concept, but the examples are not intended to be an exhaustive
recitation of the general concept. If any provision of this Agreement
is found invalid or unenforceable, that provision will be enforced to
the maximum extent permissible, and other provisions of this
agreement will remain in force.
C. VENUE AND GOVERNING LAW. If PSI deems it appropriate to initiate
litigation, such litigation will be commenced in California and be
pursuant to California law. If ULTRADATA deems it appropriate to
initiate litigation, such litigation will be commenced in Iowa and be
pursuant to Iowa law.
D. FORCE MAJEURE. Neither party will be responsible for any failure to
perform due to causes beyond its reasonable control, including but
not limited to, acts of God, war, riot, civil or military
authorities, fire, flood, earthquake, accident, or labor dispute.
E. INDEPENDENT CONTRACTOR. The parties are independent contractors.
There is no relationship of partnership, joint venture, franchise, or
agency between the parties.
F. NOTICES. A party will give formal notices required by this agreement
to the other party's chief executive officer at the other party's
principal office. Formal notices will be given by either first class
mail or overnight courier service.
ULTRADATA CORPORATION PREMIER SYSTEMS, INCORPORATED
By: /s/ Philip D. Ranger By: /s/ Thomas Griffiths
Name: Philip D. Ranger Name: Thomas Griffiths
Title: Vice President and CFO Title: Chairman
Date: September 30, 1997 Date: September 30, 1997
6
<PAGE>
Purchase Agreement
Schedule A-1
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SERVICE BUREAU EQUIPMENT INVENTORY
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
ITEM # SERIAL # DESCRIPTION MAKE MODEL QUANTITY USE
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1 CPU HP H70 1 Host CPU
2 CPU HP E45 1 Optical Server
3 CPU REST 2 Remote Banking Servers
4 CPU Intervoice IBM PS/2 77s 1 VRIII PC
5 Terminal/Keyboard HP 700/96 2 Host & Optical Console
6 Terminal/Keyboard Optiquest 1000S 2 Remote Banking Console & Terminal
7 Terminal/Keyboard IBM 14L8 1 VRIII Console
8 UPS Emerson AccuTower 1 Host System UPS
9 UPS Emerson AccuPower Gold 2 Comm Equip UPS
10 UPS A{C SmartUPS 1400 1 Remote Banking UPS
11 SureStore Optical HP 330fx 1 Optical Disk Storage
12 Printer Okidata MicroLine 184 Turbo 1 Host Monitor Printer
13 Terminal/Keyboard Wyse Wyse50 1 Host Terminal
14 REST SupraExpress 33.6 1 Remote Banking
15 Annex Xylogics Annex3 3
16 Synchronous Engine Telamon N/A 12 Bisynch 0
17 Bisynch 1
18 Bisynch 2
19 Bisynch 3 (LBS)
20 ESP Live ATMs
21 PAR ATMs
22 SIL Shared Branch
23 SSS ATMs
24 BVF ATMs
25 OAK ATMs
26 SIL Live ATMs
27 Modem AJ 1445 2 Security Modems
28 Modem Codex 3512 1 JEF Shared Branch
29 Modem Codex 2660 1 (Not connected)
30 Modem Codex 3380 1 PARISHIONERS
31 Modem Codex 3261 2 Bisynch Transmissions
32 Modem Codex 3260 2 Bisynch Transmissions
33 Modem Codex 2205 1 Bisynch Transmissions
34 Modem Racal-Milgo OmniMode 96 1 SIL ATM's (owned by EDS)
35 Modem Practical Peripherals PM144MT2 2 ALPS Credit Report
36 Modem Practical Peripherals PM288MT II V.34 1 ALPS Credit Report
37 DSU Codex 3500 4 JEF
38 OAK
39 SIL3
40 SIL2
41 DSU ADTRAN DSU SW56 DBU 3 CAL
42 SIL Main(1)
43 SIL Main(2)
44 DSU Motorola UDS SW 56 11 1 Dial Backup (owned by Deluxe)
45 DSU Motorola 3520 1 Owned by Deluxe
46 ISU Terminal Adaptor ADTRAN ISU 2X64 1 ISDN restoral for CU's
47 Router 3COM Netbuilder II 1 Frame Relay
48 T1DSU ADTRAN TSU 2 MCI Frame Relay
49 GST Frame Relay
50 Power Sensor Sensaphone 1000 1
51 Hub Gateway G/EtherTwist 1 LAN Connection
52 Open Network Server TyLink ONS150 1
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Purchase Agreement
Schedule A-2
Service Bureau IBM Information
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
IBM System
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------
Unix Licenses
- ------------------
UniData Licenses
- ------------------
Uniplex Licenses
- ------------------
Uniplex Release
- ------------------
Ultrafis Release
- ------------------
ALPS Release
- ------------------
ALPS Licenses
- ------------------
VR Level (2,3,4)
- ------------------
VR @ UD?
- ------------------
ATM Online/Offline
- ------------------
ATM Vendor
- ------------------
Shared Branch y/n
- ------------------
SB Vendor
- ------------------
Optical MR y/n
- ------------------ * * * *
UA Release
- ------------------
Debit/Visa Vendor
- ------------------
VISA Level (1,4)
- ------------------
ACH/Deposit
Network Vendor
- ------------------
Share Draft
Processor
- ------------------
System
Hardware:
- ------------------
Model
- ------------------
Memory
- ------------------
Disk
- ------------------
Tape Drives
- ------------------
</TABLE>
<TABLE>
<CAPTION>
IBM System SIL FAM BV CSC SSS CVA
<S> <C> <C> <C> <C> <C> <C>
Unix Licenses
- ------------------
UniData Licenses
- ------------------
Uniplex Licenses
- ------------------
Uniplex Release
- ------------------
Ultrafis Release
- ------------------
ALPS Release
- ------------------
ALPS Licenses
- ------------------
VR Level (2,3,4)
- ------------------
VR @ UD?
- ------------------
ATM Online/
Offline
- ------------------
ATM Vendor
- ------------------
Shared Branch * * * *
y/n
- ------------------
SB Vendor
- ------------------
Optical MR y/n
- ------------------
UA Release
- ------------------
Debit/Visa
Vendor
- ------------------
VISA Level (1,4)
- ------------------
ACH/Deposit
Network Vendor
- ------------------
Share Draft
Processor
- ------------------
System
Hardware:
- ------------------
Model
- ------------------
Memory
- ------------------
Disk
- ------------------
Tape Drives
- ------------------
</TABLE>
______________
* This information has been omitted as the Company is seeking confidential
treatment for such information.
8
<PAGE>
Purchase Agreement
Schedule A-3
- -------------------------------------------------------------------------------
Service Bureau Credit Unions Using ALPS
- -------------------------------------------------------------------------------
CREDIT UNION NUMBER OF MEMBERS
* * * *
------------------
Total * * * *
______________
* This information has been omitted as the Company is seeking confidential
treatment for such information.
9
<PAGE>
Purchase Agreement
Schedule A-4
- -------------------------------------------------------------------------------
Third Party Interfaces on the Service Bureau
- -------------------------------------------------------------------------------
Interface For: Interface With (vendor):
Share Drafts WesCorp
Bank of the West
First National Bank
Travelers
Federal Reserve Bank
Colorado CU League
------------------------------------------------
ACH & Deposit Federal Reserve Bank
Network EIS
WesCorp
------------------------------------------------
Debit/Visa EIS
Equifax/First Security
------------------------------------------------
ATM Deluxe on-line
FiServ off-line
Deluxe off-line
Trans Alliance off-line
EDS on-line
EDS off-line
------------------------------------------------
Shared Branch Deluxe
------------------------------------------------
10
<PAGE>
SCHEDULE B
Contracted CU's and Holdback Allocation
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Second Year Monthly
"Contracted CU" Hold Back Hold Back
Allocation Allocation
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Hold Back Allocation $350,000 $29,167
================================================================================
</TABLE>
______________
* This information has been omitted as the Company is seeking confidential
treatment for such information.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY AS REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,138
<SECURITIES> 0
<RECEIVABLES> 8,244
<ALLOWANCES> (2,022)
<INVENTORY> 804
<CURRENT-ASSETS> 9,800
<PP&E> 11,277
<DEPRECIATION> (6,782)
<TOTAL-ASSETS> 14,295
<CURRENT-LIABILITIES> 6,363
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 6,603
<TOTAL-LIABILITY-AND-EQUITY> 14,295
<SALES> 6,737
<TOTAL-REVENUES> 6,737
<CGS> 3,665
<TOTAL-COSTS> 2,831
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 260
<INCOME-TAX> 0
<INCOME-CONTINUING> 260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 260
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
