<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 1999
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: 0-27556
NETWORK EVENT THEATER, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3864111
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation of Organization)
529 Fifth Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
(212) 622-7300
(Registrant's Telephone Number, Including Area Code)
Check 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 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
----- -----
At May 6, 1999 there were 14,635,935 shares of Common Stock, $.01 par value
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE>
Network Event Theater, Inc.
Form 10-QSB
Index
Page
PART I--FINANCIAL INFORMATION Number
------
Item 1 Financial Statements
Consolidated balance sheets - March 31, 1999
(unaudited) and June 30, 1998............................... 1
Consolidated statements of operations - three and nine
months ended March 31, 1999 and 1998 (unaudited)............ 2
Consolidated statements of cash flows - nine months ended
March 31, 1999 and 1998 (unaudited)......................... 3
Consolidated statement of stockholders' equity - nine
months ended March 31, 1999 (unaudited)..................... 4
Notes to consolidated financial statements.................. 5
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 7
PART II--OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K............................ 10
Signatures.................................................. 11
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Network Event Theater, Inc.
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 13,242 $ 2,271
Accounts receivable, net of allowance for doubtful accounts of $154
and $137 at March 31, 1999 and June 30, 1998, respectively 3,120 1,539
Prepaid expenses 758 348
Deposits and other current assets 231 181
------------ ------------
Total current assets 17,351 4,339
Property and equipment, net of accumulated depreciation of $3,799
and $2,664 at March 31, 1999 and June 30, 1998, respectively 5,188 4,861
Deferred financing costs, net of accumulated amortization of $211
and $12 at March 31, 1999 and June 30, 1998, respectively 928 77
Intangible assets, net of accumulated amortization of $1,222
and $857 at March 31, 1999 and June 30, 1998, respectively 6,034 6,399
------------ ------------
Total assets $ 29,501 $ 15,676
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 469 $ 914
Accrued employee compensation 539 520
Other accrued expenses 972 762
Deferred revenues 358 689
Current portion of long-term debt 842 789
------------ ------------
Total current liabilities 3,180 3,674
Long-term debt 6,906 3,459
Commitments and contingencies - -
Stockholders' Equity:
Preferred stock, $.01 par value, 1,000 shares authorized, no shares
issued and outstanding - -
Common stock, $.01 par value, 32,000 shares authorized, 14,605 shares
and 11,347 shares issued and outstanding at March 31, 1999
and June 30, 1998, respectively 146 113
Additional paid-in capital 43,200 27,198
Accumulated deficit (23,931) (18,768)
------------ ------------
Total stockholders' equity 19,415 8,543
------------ ------------
Total liabilities and stockholders' equity $ 29,501 $ 15,676
============ ============
</TABLE>
See notes to consolidated financial statements
1
<PAGE>
Network Event Theater, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
------------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenues $ 4,169 $ 3,442 $ 10,979 $ 9,397
Operating Expenses:
Selling, general and
administrative expenses 3,876 3,537 10,785 10,459
Corporate expenses 853 712 3,111 2,147
Depreciation and amortization 520 408 1,500 1,214
------- ------- --------- ---------
Total operating expenses 5,249 4,657 15,396 13,820
------- ------- --------- ---------
Loss from operations (1,080) (1,215) (4,417) (4,423)
Interest income 130 29 257 94
Interest expense (294) (116) (878) (442)
------- ------- --------- ---------
Loss before provision for income taxes (1,244) (1,302) (5,038) (4,771)
Provision for income taxes 32 48 125 153
------- ------- --------- ---------
Net loss $(1,276) $ (1,350) $ (5,163) $ (4,924)
======= ======== ========= =========
Net loss per basic and diluted common share $ (0.09) $ (0.12) $ (0.42) $ (0.48)
======= ======== ========= =========
Weighted average basic and diluted common
shares outstanding 13,808 10,937 12,207 10,229
======= ======== ========= =========
</TABLE>
See notes to consolidated financial statements
2
<PAGE>
Network Event Theater, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine months ended
March 31,
-----------------
1999 1998
---- ----
Cash Flows From Operating Activities
Net loss $(5,163) $(4,924)
Adjustments to reconcile net loss to
net cash used in operating activities:
Provision for bad debts 17 97
Depreciation and amortization 1,500 1,214
Amortization of deferred financing costs 199 -
Changes in assets and liabilities:
Increase in prepaid expenses (410) (255)
Increase in deposits and other current assets (50) (5)
Increase in accounts receivable (1,598) (2,146)
(Decrease) increase in accounts payable (445) 839
Increase in accrued employee compensation 19 14
Increase in other accrued expenses 210 939
(Decrease) increase in deferred revenues (331) 520
------- -------
Net cash used in operating activities (6,052) (3,707)
Cash Flows From Investing Activities
Capital expenditures (1,462) (1,089)
Notes receivable - 33
Payment for business acquisitions - (263)
------- -------
Net cash used in investing activities (1,462) (1,319)
Cash Flows From Financing Activities
Sale of warrants 188 -
Net proceeds from sale of common stock 15,295 4,574
Proceeds from long-term debt 4,502 4,988
Repayment of long-term debt (1,500) (4,189)
------- -------
Net cash provided by financing activities 18,485 5,373
------- -------
Increase in cash and cash equivalents 10,971 347
Cash and cash equivalents at beginning of period 2,271 4,185
------- -------
Cash and cash equivalents at end of period $ 13,242 $ 4,532
======== =======
Supplemental cash flow information;
Cash paid for interest $ 602 $ 412
======== =======
Cash paid for income taxes $ 70 $ 105
======== =======
Issuance of warrants in connection
with long-term debt $ 552 $ -
======== =======
See notes to consolidated financial statements
3
<PAGE>
Network Event Theater, Inc.
Consolidated Statement of Stockholders' Equity
For the period July 1, 1998 to March 31, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
---------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balances at June 30, 1998 11,347 $ 113 $ 27,198 $ (18,768) $ 8,543
Issuance of warrants in connection with long-term debt - - 740 - 740
Exercise of warrants and issuance of common stock 3,258 33 15,262 15,295
Net loss - - - (5,163) (5,163)
------ ------- ------- ---------- --------
Balances at March 31, 1999 14,605 $ 146 $ 43,200 $ (23,931) $ 19,415
====== ======= ========= ========== ========
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
Network Event Theater, Inc.
Notes to Consolidated Financial Statements
March 31, 1999
(Unaudited)
1. Organization and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Network Event Theater, Inc. ("NET"), and its wholly-owned subsidiaries Network
Event Theater Development, Inc., American Passage Media, Inc. ("American
Passage"), Campus Voice, Inc. ("Campus Voice"), Beyond the Wall, Inc. ("Beyond
the Wall") and Pik:Nik Media, Inc. ("Pik:Nik") (collectively, the "Company").
All significant intercompany transactions have been eliminated.
The Company owns and operates a proprietary national network of theaters on
college campuses (the "Network"). The Network delivers entertainment and
educational events via satellite for display through high resolution video
projectors on movie theater sized screens. Additionally, the Company owns and
operates collegiate media and marketing service businesses, which complement and
enhance the reach of its Network. The Company operates in one industry segment,
which provides media and marketing services to advertisers who want to reach
young adults.
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310 of Regulation
S-B. Accordingly, they do not include all the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for an interim period are not necessarily indicative of the
results that may be expected for the year ended June 30, 1999. Because the
Company earns most of its revenues during the academic year (September through
May), the Company's second and third quarters generally reflect higher levels of
revenues than are earned in the first and fourth quarters. For further
information, refer to the consolidated financial statements and footnotes
thereto included in Company's Form 10-KSB for the fiscal year ended June 30,
1998.
2. Reclassifications
Certain amounts in the NET's consolidated balance sheet of June 30, 1998 have
been reclassified to conform to the current period's presentation.
3. Pro Forma Financial Data
The effect of the On the House, Inc. acquisition in May 1998 was not material to
the reported net loss or net loss per share.
4. Long-Term Debt
A summary of long-term debt is as follows:
March 31, June 30,
1999 1998
---------- ----------
Note Payable to Bank (A) $2,572,000 $3,072,000
Note Payable to Finance Company (B) - 1,000,000
Note Payable - Private Placement (C) 5,000,000 -
Other 176,000 176,000
---------- ----------
7,748,000 4,248,000
Less current portion (842,000) (789,000)
---------- -----------
$6,906,000 $3,459,000
========== ==========
(A) This loan is secured by all of the assets of Campus Voice, Beyond the Wall
and American Passage (the "Borrowers") and is guaranteed by NET. This loan is
payable in equal monthly installments, commencing in February 1998, over a
maximum of six years (as defined). Interest is payable monthly at a rate of
interest of 275 basis points above LIBOR for U.S. dollar deposits of one month
maturity.
The Borrowers are also party to an interest rate exchange agreement originally
converting $3.0 million of the aforementioned floating rate debt to a fixed
rate. The balance of the interest rate agreement at March 31, 1999 was
$2,222,000. Under the interest rate exchange agreement, the Borrowers are
required to pay interest at a fixed rate of 9.11% on the notional amount covered
by the interest rate exchange agreement. In return, the Company receives
interest payments on the same notional amount at the prevailing LIBOR rate plus
275 basis points. The interest rate exchange agreement terminates in June 2002.
5
<PAGE>
Network Event Theater, Inc.
Notes to Consolidated Financial Statements (Continued)
March 31, 1999
(Unaudited)
The bank has also made available to the Borrowers a revolving line of
credit with a maximum principal amount of $1.0 million. All amounts
borrowed under this facility must be repaid by July 1999. The revolving
line of credit facility bears interest at the rate of the bank's prime
rate plus 25 basis points and interest is due monthly. Borrowings under
the revolving line of credit are secured by the Borrower's eligible
accounts receivable (as defined) and are also guaranteed by NET. As of
March 31, 1999 the Borrowers have not borrowed any amounts under this
facility.
(B) In February 1999, the note was fully repaid.
(C) In July 1998, the Company realized net proceeds of approximately $4.7
million from the sale of $5,000,000 of 11% Subordinated Notes (the
"Notes") and 375,000 warrants (see note 5). The Notes are due in July
2003. Interest at the rate of 11% per annum is due semi-annually.
5. Stockholders' Equity
In July 1998, in connection with the sale of the Notes (see Note 4), NET sold
375,000 warrants for approximately $188,000. Each warrant entitles the holder to
purchase one share of the Company's common stock for $4.125 and expires in July
2003. In connection with the sale of the Notes and warrants, the Company issued
150,000 warrants to the placement agent. Each warrant entitles the holder to
purchase one share of the Company's common stock for $4.125 and expires in July
2003. The 525,000 warrants described above were valued at $740,000 based on a
valuation from an independent third party. Such amount has been recorded as
deferred financing costs and is being amortized over the term of the related
debt.
The Company announced on December 28, 1998 that it had called for redemption as
of the close of business on January 28, 1999, all of its outstanding publicly
traded warrants at a redemption price of $0.10 per warrant. The warrants,
approximately 2.6 million, were issued in connection with the Company's initial
public offering in April 1996. The warrants permitted the holder to purchase one
share of the Company's common stock at a price of $5.00 per share. As of March
31, 1999, all but 1,501 of the warrants were exercised. The Company realized
approximately $13.2 million from the exercise of the publicly traded warrants.
In January and February 1999, approximately 317,000 warrants issued to
underwriters in the Company's initial public offering were exercised. The
Company realized approximately $1.9 million from the exercise of the
underwriter's warrants.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the consolidated financial
statements and related notes thereto. The following discussion contains certain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed herein. Factors that
could cause or contribute to such differences include, but are not limited to,
the ability to obtain financing, integration of acquisitions, the management of
growth, changing consumer tastes and general economic conditions. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.
The following financial analysis compares the three months and the nine months
ended March 31, 1999 (unaudited) to the three months and nine months ended March
31, 1998 (unaudited).
Results of Operations
For the three months ended March 31, 1999, net revenues were $4,169,000 as
compared to $3,442,000 for the three months ended March 31, 1998. The increase
of $727,000 is primarily due to increased sales efforts as a result of an
increase in sales staff.
For the nine months ended March 31, 1999, net revenues were $10,979,000 as
compared to $9,397,000 for the nine months ended March 31, 1998. The increase of
$1,582,000 is primarily due to increased sales efforts as a result of an
increase in sales staff.
For the three months ended March 31, 1999, selling, general and administrative
expenses were $3,876,000 as compared to $3,537,000 for the three months ended
March 31, 1998. The increase of $339,000 is primarily due to increased level of
sales and administrative staff in 1999 to support the increase in net revenues.
For the nine months ended March 31, 1999, selling, general and administrative
expenses were $10,785,000 as compared to $10,459,000 for the nine months ended
March 31, 1998. The increase of $326,000 is primarily due to costs relating to
increased level of sales and administrative staff in 1999 representing $739,000
of the increase, offset by $413,000 due to the termination of a consulting
agreement on December 31, 1997.
For the three months ended March 31, 1999, corporate expenses were $853,000 as
compared to $712,000 for the three months ended March 31, 1998. The increase of
$141,000 is primarily due to increased corporate personnel and related overhead
expenses required to support the Company's growth.
For the nine months ended March 31, 1999, corporate expenses were $3,111,000 as
compared to $2,147,000 for the nine months ended March 31, 1998. The increase of
$964,000 is primarily due to granting of bonuses to senior management of
$540,000. The remaining increase of $424,000 is due to increased corporate
personnel and related overhead expenses required to support the Company's
growth.
For the three months ended March 31, 1999, total operating expenses were
$5,249,000 as compared to $4,657,000 for the three months ended March 31, 1998.
The increase of $592,000 is primarily due to increased personnel and
depreciation relating to additional purchases of revenue generating assets
during the period from January 1998 through March 1999.
For the nine months ended March 31, 1999, total operating expenses were
$15,396,000 as compared to $13,820,000 for the nine months ended March 31, 1998.
The increase of $1,576,000 is primarily due to bonuses granted to senior
management, increased personnel and depreciation relating to additional
purchases of revenue generating assets during the period from October 1997
through March 1999, offset by a decrease in consulting fees.
For the three months ended March 31, 1999, interest income was $130,000 as
compared to $29,000 for the three months ended March 31, 1998. The increase of
$101,000 was due to interest earned on increased cash balances resulting from
redemption and exercise of warrants.
For the nine months ended March 31, 1999, interest income was $257,000 as
compared to $94,000 for the nine months ended March 31, 1998. The increase of
$163,000 was due to interest earned on increased cash balances resulting from
redemption and exercise of warrants.
For the three months ended March 31, 1999, interest expense was $294,000 as
compared to $116,000 for the three months ended March 31, 1998. The increase of
$178,000 primarily related to the issuance of $5,000,000 of subordinated notes
in July 1998.
For the nine months ended March 31, 1999, interest expense was $878,000 as
compared to $442,000 for the nine months ended March 31, 1998. The increase of
$436,000 primarily related to the issuance of $5,000,000 of subordinated notes
in July 1998.
For the three months ended March 31, 1999, net loss was $1,276,000 as compared
to $1,350,000 for the three months ended March 31, 1998. The decrease of $74,000
was due to increased revenues that were offset by selling, general and
administrative expenses, corporate expense and interest expense.
For the nine months ended March 31, 1999, net loss was $5,163,000 as compared to
$4,924,000 for the nine months ended March 31, 1998. The increase of $239,000
was due to increased selling, general and administrative expenses, corporate
expense and interest expense offset by increased revenues.
7
<PAGE>
Impact of Year 2000
During Fiscal Year 1998, the Company conducted an extensive review of its
computer systems and operations to identify the areas that could be affected by
the Year 2000 issue. A plan was developed which focused on the Company's
information systems and third-party relationships.
With respect to its own information systems, the Company adopted a five-phase
Year 2000 program consisting of: Phase I identification of the Company's systems
that may be vulnerable to Year 2000 problems; Phase II - assessment of items
identified in Phase I; Phase III - remediation or replacement of non-compliant
systems and components; Phase IV - testing of systems and components following
remediation; and Phase V - developing contingency plans to address the most
reasonable likely worse case Year 2000 scenarios. The Company has completed all
phases of this program.
With respect to its third-party relationships, the Company reviewed its list of
large suppliers, vendors and service suppliers and is contacting them to assess
their state of Year 2000 readiness. This process is almost completed and the
Company has commenced contingency planning to address the most reasonably likely
worst case Year 2000 scenarios with respect to its third party relationships,
including developing alternate third party relationships, if necessary.
Potential sources of risk include the inability of printers to print posters,
catalogs and postcards for distribution by the Company and the inability of
college newspapers to accept print advertisements from the Company on behalf of
the Company's clients. In addition, there is the potential risk that the Company
will not be able to broadcast events to its network of theaters on college
campuses.
The results to date indicate that based on the diversity of the Company's
suppliers and the availability of other suppliers, the Company does not believe
that the Year 2000 issue will have a material adverse effect on its financial
condition or results of operations. The Company's costs incurred to date
associated with the Year 2000 issue are not material. The Company estimates that
the costs to complete its five phase program, excluding any costs that may be
incurred by the Company as a result of the failure of any third parties to
become Year 2000 compliant, will also not be material. The Company believes that
by the end of fiscal 1999 it will have developed contingency plans to address
its most reasonably likely worst case Year 2000 scenarios.
Common Places, LLC
On November 10, 1998, the Company formed a limited liability company in Delaware
called Common Places, LLC ("CPL") and on November 25, 1998 signed an operating
agreement whereby the Company became a holder of 50% of the common interests in
CPL. CPL's management, who are experienced Internet managers, held the remaining
interests. Pursuant to the terms of the operating agreement, the Company is
obligated to provide $15.0 million worth of on-campus media and marketing
services to CPL over the next four years and access to other media at favorable
rates thereafter and contributed two of its active websites to CPL. The Company
has neither contributed nor advanced funds to CPL. In order to finance the
development of its CollegeBytes.com website and ancillary materials, CPL raised
approximately $6,012,000 in a private offering of approximately 14.1% common
interests on March 31, 1999. As a result of such private offering, the
Company's interest in CPL has been reduced to approximately 42.3%.
Liquidity and Capital Resources
In July 1998, the Company realized net proceeds of approximately $4.7 million
from the sale of $5,000,000 of 11% Subordinated Notes and 375,000 warrants.
During the period December 1998 through February 1999, the Company realized net
proceeds of approximately $13.2 million from the exercise of publicly traded
warrants.
In January and February 1999, the Company realized net proceeds of
approximately $1.9 million from the exercise of underwriter's warrants.
The Company used approximately $6.1 million in its operating activities in the
first nine months of fiscal year 1999 as compared to $3.7 million in the first
six months of fiscal year 1998. The increase of approximately $2.4 million
represents the decrease in short-term liabilities and the increase in accounts
receivable and other assets offset by the increase in depreciation and
amortization. Cash used in investing activities in the first nine months of
fiscal year 1999 of approximately $1.5 million is composed primarily of capital
expenditures. Cash provided by financing activities in the first nine months of
fiscal year 1999 of approximately $18.5 million is attributable to the issuance
of long term debt and related warrants, the proceeds from the exercise of the
publicly traded warrants and proceeds from the exercise of underwriter's
warrants.
The Company's primary capital requirements with respect to its operations have
been to fund corporate overhead and the operation of its Network of campus
theaters and postcard distribution. In the event that the Company's plans and
assumptions with respect to its Network change or prove to be inaccurate, if its
assumptions with respect to American Passage, Campus Voice, Beyond the Wall and
Pik:Nik being able to fund their operations and to make debt service payments
out of their own cash flow in the future prove to be inaccurate, or if the
working capital or capital expenditure requirements of American Passage, Campus
Voice, Beyond the Wall or Pik:Nik prove to be greater than anticipated, the
Company could be required to seek additional financing.
As of March 31, 1999, the Company had approximately $13.2 million in cash and
cash equivalents. The Company believes that such amounts will be sufficient to
fund working capital, including debt service and interest requirements for the
next fiscal year.
8
<PAGE>
The Company may also seek additional debt or equity financing to fund the cost
of additional expansion of its Network and the cost of developing and acquiring
additional media and marketing services businesses or to fund its operations. To
the extent that the Company finances its requirements through the issuance of
additional equity securities, including the exercise of its publicly traded
warrants, any such issuance would result in dilution to the interests of the
Company's stockholders.
Additionally, to the extent that the Company incurs indebtedness or issues debt
securities in connection with financing activities, the Company will be subject
to all of the risks associated with incurring substantial indebtedness,
including the risk that interest rates may fluctuate and cash flow may be
insufficient to pay principal and interest on any such indebtedness. The Company
has no current arrangements with respect to, or sources of, additional
financing. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, if at all.
9
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
May 14, 1999
BY: /s/ HARLAN D. PELTZ
----------------------------------
HARLAN D. PELTZ
Chairman of the Board
and Chief Executive Officer
BY: /s/ BRUCE L. RESNIK
----------------------------------
BRUCE L. RESNIK
Executive Vice President
Chief Financial Officer and
Chief Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 13,242,000
<SECURITIES> 0
<RECEIVABLES> 3,274,000
<ALLOWANCES> 154,000
<INVENTORY> 0
<CURRENT-ASSETS> 17,351,000
<PP&E> 8,988,000
<DEPRECIATION> 3,799,000
<TOTAL-ASSETS> 29,501,000
<CURRENT-LIABILITIES> 3,180,000
<BONDS> 0
0
0
<COMMON> 146,000
<OTHER-SE> 19,269,000
<TOTAL-LIABILITY-AND-EQUITY> 29,501,000
<SALES> 0
<TOTAL-REVENUES> 10,979,000
<CGS> 0
<TOTAL-COSTS> 15,396,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 878,000
<INCOME-PRETAX> (5,038,000)
<INCOME-TAX> 125,000
<INCOME-CONTINUING> (5,163,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,163,000)
<EPS-PRIMARY> (0.42)
<EPS-DILUTED> (0.42)
</TABLE>
