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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 0-22521
NETSPEAK CORPORATION
(Exact Name of Registrant
as Specified in Its Charter)
FLORIDA 65-0627616
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
902 Clint Moore Road, Suite 104
Boca Raton, Florida 33487
561-997-4001
(Address, including zip code, and telephone
number (including area code) of registrant's
principal executive office)
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 last 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 practicable date.
CLASS SHARES OUTSTANDING AT JULY 31, 1997
- ----------------------------- -----------------------------------
Common Stock, $.01 par value 10,554,721
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<PAGE>
NETSPEAK CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
PAGE NO.
--------
<S> <C>
Condensed Consolidated Balance Sheets as of December 31, 1996 and June 30, 1997............ 3
Condensed Consolidated Statements of Operations for the three and
six months ended June 30, 1996 and 1997................................................. 4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1996 and 1997......................................... 5
Notes to Condensed Consolidated Financial Statements....................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................................ 8
PART II - OTHER INFORMATION
- ---------------------------
Other Information..........................................................................12
Signatures.................................................................................13
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. FINANCIAL STATEMENTS
NETSPEAK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(unaudited)
DECEMBER 31, JUNE 30,
1996 1997
------------------- -----------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 6,295 $ 23,351
Accounts receivable 340 496
Prepaid and other current assets 86 299
Deferred tax asset 182 139
------------------- -----------------
Total current assets 6,903 24,285
Property and equipment, net 1,050 1,412
Other assets 325 473
=================== =================
$ 8,278 $ 26,170
=================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 92 $ 345
Accrued compensation 83 243
Other accrued expenses 182 370
Unearned revenue 2,242 1,157
------------------- -----------------
Total current liabilities 2,599 2,115
------------------- -----------------
Commitments and contingencies --- ---
Shareholders' equity:
Preferred stock: 1,000,000 shares of $.01 par value
authorized; no shares issued or outstanding
Common stock: 25,000,000 shares of $.01 par value
authorized; 7,698,532 and 10,554,721 issued
and outstanding at December 31, 1996 and
June 30, 1997, respectively 77 106
Additional paid-in capital 9,110 29,590
Accumulated deficit (3,508) (5,641)
------------------- -----------------
Total shareholders' equity 5,679 24,055
=================== =================
$ 8,278 $ 26,170
=================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
NETSPEAK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------- ---------------------------------
1996 1997 1996 1997
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net revenues $ 90 $ 1,130 $ 181 $ 2,034
--------------- -------------- -------------- -------------
Operating expenses:
Cost of revenues 7 162 11 206
Research and development 421 1,154 749 2,301
Sales and marketing 176 675 267 1,074
General & administrative 211 368 297 680
--------------- -------------- -------------- -------------
Total operating expenses 815 2,359 1,324 4,261
Loss from operations (725) (1,229) (1,143) (2,227)
Interest and other income 29 126 46 183
--------------- -------------- -------------- -------------
Loss before income taxes (696) (1,103) (1,097) (2,044)
Income taxes --- 45 --- 89
--------------- -------------- -------------- -------------
Net loss $ (696) $ (1,148) $ (1,097) $ (2,133)
=============== ============== ============== =============
Net loss per share $ (0.08) $ (0.13) $ (0.13) $ (0.25)
=============== ============== ============== =============
Weighted-average shares outstanding 8,198 9,171 8,198 8,688
=============== ============== ============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
NETSPEAK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
SIX MONTHS ENDED
JUNE 30,
-----------------------------------
1996 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (1,097) $ (2,133)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation 63 251
Common stock issued for services 35 ---
Deferred taxes --- 43
Changes in assets and liabilities:
Accounts receivable --- (156)
Prepaid and other current assets (41) (146)
Other assets (127) (148)
Accounts payable 63 253
Accrued compensation --- 160
Other accrued expenses 220 188
Unearned revenue --- (1,085)
--------------- ---------------
Net cash used in operating activities (884) (2,773)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (521) (613)
--------------- ---------------
Net cash used in investing activities (521) (613)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 3,878 17,943
Proceeds from exercise of warrant 2,491
Proceeds from exercise of employee stock options 133 8
--------------- ---------------
Net cash provided by financing activities 4,011 20,442
--------------- ---------------
Net increase in cash and cash equivalents 2,606 17,056
Cash and cash equivalents, beginning of period 483 6,295
--------------- ---------------
Cash and cash equivalents, end of period $ 3,089 $ 23,351
=============== ===============
SUPPLEMENTAL INFORMATION:
Cash paid for income taxes --- $ 30
--------------- ---------------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
NETSPEAK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim consolidated financial statements as of June 30, 1997 and for
the three and six months ended June 30, 1996 and 1997 are unaudited. Such
interim consolidated financial statements have been prepared on the same basis
as the audited consolidated financial statements and, in the opinion of
management, reflect all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the financial position, results
of operations and cash flows for the interim periods presented. The results of
operations for the interim periods presented are not necessarily indicative of
the results to be expected for the full year. The interim consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto, contained in the Company's Registration Statement
on Form S-1 which was declared effective on May 29, 1997.
2. SALE OF COMMON STOCK
On June 3, 1997, the Company closed an initial public offering of Common
Stock. The Company offered and sold 2,400,000 shares of Common Stock at an
initial public offering price of $8.75 per share, raising proceeds, net of
offering costs, of approximately $17,943,000. Upon consummation of the offering,
Motorola, Inc., a strategic partner of and investor in the Company, exercised a
previously granted warrant to purchase 452,855 shares of Common Stock for
$2,491,000 or $5.50 per share.
3. NET LOSS PER SHARE
Net loss per share was calculated by dividing net loss by the weighted
average number of common shares outstanding during the period adjusted for the
effect of common stock equivalents, consisting of stock options and warrants,
using the treasury stock method with an initial public offering price of $8.75
per share. Pursuant to the requirements of the Securities and Exchange
Commission, common stock issued by the Company during the twelve months
immediately preceding the planned initial public offering, plus the number of
common equivalent shares pursuant to the grant of common stock options or
warrants during the same period, have been included in the calculation of the
shares used in computing net loss per share as if they were outstanding
for all periods presented, including the interim period that encompasses the
initial public offering prospectus.
In February 1997 Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share" was issued. SFAS No. 128, requires a dual presentation
of basic and diluted earnings per share on the face of the income statement.
Basic earnings per share excludes dilution and is computed by dividing income or
loss attributable to common shareholders by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were converted into common stock. SFAS No. 128 is effective
for financial statements issued for fiscal periods ending after December 15,
1997; when adopted, all prior-period earnings per share data are required to be
restated. The Company believes that the adoption of SFAS No. 128 will not have
an effect on previously reported net loss per share.
4. COMMITMENTS AND CONTINGENCIES
Elk Industries has asserted, in a letter to the Company, just prior to the
November 1996 expiration of U.S. Patent No. 4,128,773, owned by Elk Industries,
that the Company's WebPhone client software product infringed the now expired
patent. Given the initial distribution of the Company's WebPhone client software
prior to expiration of the asserted patent, the Company believes any potential
liability
6
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related to the allegation is not significant. Accordingly, the Company
believes that this matter will not have a material effect on its financial
position or results of operations.
In May 1997, the Company received a letter from e-Net, Inc. ("e-Net")
alleging that the Company's WebPhone product infringes U.S. Patent No. 5,526,353
owned by e-Net. Although there can be no assurance of the outcome of this
uncertainty, following an analysis of the subject patent and the WebPhone
product, management believes the allegations are without merit and that any
potential liability related to e-Net's allegations will not have a material
effect on the Company's financial position and results of operations.
At present, there are few laws or regulations that specifically address
access to or commerce on the Internet. The increasing popularity and use of the
Internet, however, enhance the risk that the governments of the United States
and other countries in which the Company sells or expects to sell its products
will seek to regulate computer telephony and the Internet with respect to, among
other things, user privacy, pricing and the characteristics and quality of
products and services. The Company is unable to predict the impact, if any,
that future legislation, legal decisions or regulations may have on its
business, financial condition or results of operations.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NetSpeak Corporation (the "Company") cautions readers that certain
important factors may affect the Company's actual results and could cause such
results to differ materially from any forward-looking statements which may be
deemed to have been made in this report or which are otherwise made by or on
behalf of the Company. For this purpose, any statements contained in this report
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may", "will", "expect", believe", "anticipate", "intend", "could", "would",
"estimate", or "continue" or the negative other variations thereof or comparable
terminology are intended to identify forward-looking statements. Factors which
may affect the Company's results include, but are not limited to, the Company's
limited operating history, the need for ongoing product development in an
environment of rapidly changing technology, the uncertainty of acceptance of the
Company's products in the marketplace, the uncertainty of the Internet and its
use as a means for real-time voice and video communications, the uncertainty of
future governmental regulation, the highly competitive nature of the industry
and the Company's ability to compete successfully, the Company's ability to
successfully enter into new, and maintain existing, strategic relationships, the
Company's ability to develop a recurring revenue stream, manage growth, obtain
patent protection, obtain additional funds and other risks discussed in the
Company's Registration Statement on Form S-1, File No. 333-22123 and in this
Report.
INTRODUCTION
NetSpeak develops, markets, licenses and supports a suite of intelligent
software modules which provide business solutions for concurrent, real-time
interactive voice, video and data communications over packetized data networks
such as the Internet and Local Area Networks and Wide Area Networks. NetSpeak's
technologies allow organizations to build new voice and video-enabled
communications networks, or to add these communications capabilities to their
existing networks.
The Company released its first product in February 1996 and, for accounting
purposes, emerged from the development stage during 1996. Since inception, the
Company has raised an aggregate of approximately $29,094,000, net of offering
costs, of which approximately $17,943,000 was raised through an initial public
offering consummated in June 1997 (the "IPO") and approximately $11,151,000
through private offerings of equity securities.
The Company generates revenues from products, licenses and fees for
services. The Company's products are licensed primarily to telecommunications
companies, network service providers, corporate customers and directly to
individual client software end-users. Service revenues consist of customer
support and engineering fees.
Product and license revenues are generally recognized upon shipment,
provided that there are no significant post-delivery obligations and that
payment is due within one year. If customer acceptance is required, revenues are
recognized upon customer acceptance. Customer support revenues are recognized
over the term of the support period, which is typically one year. Engineering
fees are recognized upon customer acceptance or over the period in which
services are provided if customer acceptance is not required. All research and
development costs to date have been expensed as incurred.
The Company has only a limited operating history upon which an evaluation
of the Company and its prospects can be based. As of June 30, 1997, the Company
had an accumulated net loss of $5,641,000. The limited operating history of the
Company makes its future results of operations difficult to predict. In
addition, the Company's operating results may fluctuate significantly in the
future as a result of a variety of factors such as the introduction of new
products or services by the Company or its competitors, the amount and timing of
capital expenditures and other costs relating to the expansion of the Company's
8
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operations, the budgeting cycles of potential customers, technical difficulties
with respect to product development or the use of products developed by the
Company and general economic conditions.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Net revenues for the three months ended June 30, 1997 were $1,130,000 as
compared to $90,000 for the three months ended June 30, 1996. Net revenues were
$2,034,000 and $181,000 for the six months ended June 30, 1997 and 1996,
respectively. The increase in net revenues was primarily due to fees for
engineering services and product license and distribution fees received from
Creative Technology Ltd. ("Creative"), a strategic partner of the Company. Sales
of gateway products and business systems increased as a percentage of net
revenues for the three months ended June 30, 1997 as compared to the three
months ended March 31, 1997, as a result of additional shipments of evaluation
systems for use in trial deployments by telecommunications carriers and service
providers. The Company is working closely with several of its key customers and
strategic partners, to enhance and refine the functionality and usability of its
carrier-grade gateway products and business systems, prior to general
distribution. Client software sales also increased for the three months ended
June 30, 1997, primarily as a result of additional orders by Creative.
Net revenues for the six months ended June 30, 1996 were primarily
generated from license fees paid by individual client software end-users.
Creative, the Company's largest customer, accounted for 75% and 72% of net
revenues for the three and six months ended June 30, 1997, respectively;
Creative is expected to continue to be one of the Company's principal customers
in the near future. As of June 30, 1997, the Company had unearned revenue of
$1,157,000 of which approximately $1,070,000 primarily represents the advance
payments for product licenses and maintenance agreements from Creative.
Cost of revenues for the three months ended June 30, 1997 was $162,000 as
compared to $7,000 for the three months ended June 30, 1996. Cost of revenues
was $206,000 and $11,000 for the six months ended June 30, 1997 and 1996,
respectively. The increase in cost of revenues was due to a greater volume of
WebPhone sales, primarily the result of additional orders from Creative. The
Company also began reselling third party computer hardware and software
platforms integrated with its gateway products and business systems. The Company
anticipates that such amounts will not become a significant portion of the sales
mix, although the amounts may fluctuate in the near future. As a result, the
Company estimates that cost of revenues will continue to remain relatively
consistent, or increase nominally, as a percentage of net revenues as the
Company's sales mix is comprised primarily of software based products. Should
the Company begin to sell a significant amount of third party computer platforms
or elect to manufacture and sell certain specialized computer hardware
components that it is currently designing, cost of revenues would increase as a
percentage of net revenues.
Research and development expenses for the three months ended June 30, 1997
were $1,154,000 as compared to $421,000 for the three months ended June 30,
1996. Research and development expenses were $2,301,000 and $749,000 for the six
months ended June 30, 1997 and 1996, respectively. The increases in research and
development expenses were primarily the result of the expansion of the Company's
engineering staff. As a result, the Company also increased development operating
expenses, primarily through increased costs of computer hardware and software
utilized in product development and greater equipment depreciation. All research
and development costs have been expensed as incurred. The Company intends to
significantly increase research and development expenses in future periods to
perform product enhancements and new product development to establish and
maintain a competitive advantage.
9
<PAGE>
Sales and marketing expenses for the three months ended June 30, 1997 were
$675,000 as compared to $176,000 for the three months ended June 30, 1996. Sales
and marketing expenses were $1,074,000 and $267,000 for the six months ended
June 30, 1997 and 1996, respectively. The increases in sales and marketing
expenses were primarily due to the expansion of the Company's sales, marketing
and customer support staff. The Company also increased its promotional
activities, primarily through generating a greater presence at industry trade
shows and conferences. The Company intends to continue to intensify and expand
its sales and marketing efforts and, as a result, intends to significantly
increase sales and marketing expenses in future periods.
General and administrative expenses for the three months ended June 30,
1997 were $368,000 as compared to $211,000 for the three months ended June 30,
1996. General and administrative expenses for the six months ended June 30, 1997
and 1996 were $680,000 and $297,000, respectively. The increases in general and
administrative expenses were due to the expansion of the Company's corporate
infrastructure primarily through the addition of finance and administrative
personnel and greater general operating expenses as a result of the expansion
thereof, as well as professional services associated with filing patent
applications. The Company intends to increase general and administrative
expenses in future periods in order to continue to expand its infrastructure.
Income taxes for the three and six months ended June 30, 1997 were $45,000
and $89,000, respectively. Such taxes were the result of income taxes paid to
the Singapore government related to license fees received pursuant to agreements
with Creative. The Company paid no income taxes during the six months ended June
30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had $23,351,000 in cash and cash
equivalents. The Company does not currently have any available lines of credit.
Since inception, the Company has financed its operations through the sale of
equity securities.
Net cash used in operating activities during the six months ended June 30,
1997 and 1996 was $2,773,000 and $884,000, respectively. Net cash used in
operating activities primarily related to the Company's continued expansion of
its research and development and sales and marketing efforts. Included in
accounts receivable at June 30, 1997, was $339,000, related to product license
fees from Creative.
Net cash used in investing activities during the six months ended June 30,
1997 and 1996 was $613,000 and $521,000, respectively. The expenditures
primarily related to purchases of computer equipment.
Net cash provided by financing activities for the six months ended June 30,
1997 was $20,442,000. On June 3, 1997, the Company closed the IPO. The Company
offered and sold 2,400,000 shares of Common Stock at an initial public offering
price of $8.75 per share, raising proceeds, net of offering costs, of
approximately $17,943,000. Upon consummation of the IPO, Motorola, Inc., a
strategic partner of and investor in the Company, exercised a previously granted
warrant to purchase 452,855 shares of Common Stock for $2,491,000 or $5.50 per
share. Net cash provided by financing activities for the six months ended June
30, 1996 was $4,011,000 and was primarily attributable to private offerings of
equity securities.
The Company has no material commitments other than those under office and
equipment leases. The Company expects to increase its capital expenditures in
future periods as a result of anticipated growth, primarily through the purchase
of computer-related equipment. The Company anticipates that, based on its
present plans and assumptions, the current cash balances will be sufficient to
enable it to maintain its
10
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current and planned operations for a period of at least 12 months. If the
Company's estimates or assumptions prove to be incorrect, the Company may
require additional capital. Additional funding, whether obtained through public
or private debt or equity financing, or from strategic alliances, may not be
available when needed or may not be available on terms acceptable to the
Company. Failure to secure needed additional financing, if and when needed, may
have a material adverse effect on the Company's business, financial condition
and results of operations.
11
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PART II - OTHER INFORMATION
- ---------------------------
ITEM 2. CHANGES IN SECURITIES.
Upon consummation of the Company's initial public offering in June
1997, Motorola, Inc. ("Motorola"), a strategic partner of and
investor in the Company, exercised a previously issued warrant to
purchase 452,855 shares of Common Stock for $2,491,000 at $5.50
per share. Such shares were issued pursuant to the exemption from
registration afforded by Section 4(2) under the Securities Act of
1933, as amended, as a transaction by an issuer not involving a
public offering, Motorola having delivered appropriate investment
representations to the Company with respect thereto and having
consented to the imposition of a restrictive legend upon the
certificates evidencing the shares. No commissions were paid in
connection with the issuance of the shares.
ITEM 5. OTHER INFORMATION. None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
11 Computation of net loss per share.
27 Financial Data Schedule.
(b) Reports on Form 8-K. None.
12
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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.
NETSPEAK CORPORATION
--------------------
(Registrant)
Date: August 12, 1997 By: /s/ STEPHEN R. COHEN
----------------------------------------
Chairman of the Board and Chief
Executive Officer
By: /s/ JOHN W. STATEN
----------------------------------------------
Chief Financial Officer (Principal Finance and
Accounting Officer)
13
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
11 Computation of net loss per share.
27 Financial Data Schedule.
14
EXHIBIT 11
<TABLE>
<CAPTION>
COMPUTATION OF NET LOSS PER SHARE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1996 1997 1996 1997
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Net loss $ (696) $ (1,148) $ (1,097) $ (2,133)
======== ======== ======== ========
Weighted average common stock outstanding
during the period 7,019 8,160 7,019 7,677
Impact of shares issued within 12 months
of the initial public offering 680 680 680 680
Effect of stock options granted within
12 months of the initial public offering,
using the treasury stock method 243 243 243 243
Effect of warrants granted within 12 months
of the initial public offering, using the
treasury stock method 256 88 256 88
======== ======== ======== ========
Shares used in computing net loss per share 8,198 9,171 8,198 8,688
======== ======== ======== ========
Net loss per share $ (0.08) $ (0.13) $ (0.13) $ (0.25)
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,351
<SECURITIES> 0
<RECEIVABLES> 496
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,285
<PP&E> 1,412
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,170
<CURRENT-LIABILITIES> 2,115
<BONDS> 0
0
0
<COMMON> 106
<OTHER-SE> 23,949
<TOTAL-LIABILITY-AND-EQUITY> 26,170
<SALES> 1,130
<TOTAL-REVENUES> 1,130
<CGS> 162
<TOTAL-COSTS> 162
<OTHER-EXPENSES> 2,359
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,103)
<INCOME-TAX> 45
<INCOME-CONTINUING> (1,229)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,148)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> 0
</TABLE>
