<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended April, 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 1-14382
---------------
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
(Exact name of registrant as specified in its character)
Delaware 59-3361076
- --------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
521 East State Road 434, Longwood, Florida 32750
------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 339-4997
--------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all the 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. X Yes No
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 2,395,000 shares of the Registrant's common stock outstanding as of
April 30, 1997.
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTER ENDED APRIL 30, 1997
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTER ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C> <C>
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF SUNSTAR
HEALTHCARE, INC. AND SUBSIDIARIES.......................................... 1
Consolidated Balance Sheets................................................ 1
Consolidated Statements of Operations - 3 months ended April 30, 1997...... 2
Consolidated Statements of Operations - 9 months ended April 30, 1997...... 3
Consolidated Statements of Cash Flows...................................... 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.......................................................... 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................... 10
SIGNATURES .......................................................................... 11
</TABLE>
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
Item 1. Consolidated Financial Statements (unaudited) of SunStar Healthcare,
Inc. and Subsidiaries
Consolidated Balance Sheets
April 30, 1997
(unaudited)
<TABLE>
<CAPTION>
ASSETS JULY 31, 1996 APRIL 30, 1997
------ ------------- --------------
<S> <C> <C>
Current assets
Cash and cash equivalents $5,993,609 4,963,608
Partners accounts receivable, less allowance for doubtful
of approximately $110,000 and $225,000 181,556 228,477
Due from Medicare 38,448
Other receivables 32,500
Prepaid expenses and other assets 150,949 279,344
Deferred Taxes 38,700 38,700
---------- ----------
Total Current assets 6,403,262 5,542,629
Furniture, equipment and leasehold improvements, net 229,403 425,648
Goodwill, net 387,562 355,812
Restricted cash 280,000 280,000
Deposits and other assets 175,360 162,657
Deferred taxes 23,900 23,900
---------- ----------
Total assets $7,499,487 6,790,646
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
-----------------------------------
Current Liabilities
Accounts payable and accrued expenses 315,894 388,833
Unearned premium - Medicare 159,521 189,547
Capital lease obligations, current 16,144 19,432
Income taxes payable 13,639
---------- ----------
Total current liabilities 505,198 597,812
Capital lease obligations, noncurrent 16,540 118,489
---------- ----------
Total liabilities 521,738 716,301
Shareholders' equity
preferred stock, par value $.001 per share, 1,000,000 shares
authorized, no shares outstanding
Common stock, par value $.001 per share, 10,000,000 shares
authorized, 2,395,000 shares issued and outstanding 2,395 2,395
Additional paid-in capital 7,193,852 7,163,800
Unearned compensation from stock options (195,313) (146,485)
Retained earnings (deficit) (23,185) (945,365)
---------- ----------
Total shareholders' equity 6,977,749 6,074,345
---------- ----------
Total liabilities and shareholders' equity $7,499,487 6,790,646
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the three months ended April 30, 1996 and 1997
(unaudited)
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Patient service revenue $ 1,174,484 $ 1,142,024
Cost and expenses:
Cost of patient related services 860,720 847,275
General and administrative 413,647 797,590
Amortization of intangibles 10,582 10,760
--------- ---------
Total operating expenses 1,284,949 1,655,625
--------- ---------
Income (loss) from operations (110,465) (513,601)
Interest income 914 61,536
--------- ---------
Income (loss) before income taxes (109,551) (452,065)
Provision for income taxes (24,400)
--------- ---------
Net income (loss) $ (85,151) $ (452,065)
========= =========
Net income (loss) per share $ (.07) $ (.16)
Weighted average shares outstanding 1,208,750 2,748,778
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the nine months ended April 30, 1996 and 1997
(unaudited)
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Patient service revenue $ 3,621,085 $ 3,630,917
Cost and expenses:
Cost of patient related services 2,438,451 2,676,848
General and administrative 1,324,081 2,053,156
Amortization of intangibles 31,749 32,158
--------- ---------
Total operating expenses 3,794,281 4,762,162
--------- ---------
Income (loss) from operations (173,196) (1,131,245)
Interest income 4,605 195,388
--------- ---------
Income (loss) before income taxes (168,591) (935,857)
Provision for income taxes 28,100 (13,677)
Net income (loss) $ (196,691) $ (922,180)
========= =========
Net income (loss) per share $ (.16) $ (.34)
Weighted average shares outstanding 1,208,750 2,748,778
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
ConsolidateD Statements Of Cash Flows
For the nine months ended April 30, 1996 and 1997
(unaudited)
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(196,691) (922,180)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 99,101 115,685
Provision for doubtful accounts 114,562
Deferred taxes -
Noncash Compensation 197,916 48,828
Operating expenses and income taxes
funded by National Home Health Care, Corp. 46,850
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 27,639 (161,482)
Decrease (increase) in other receivables (56,850) (32,500)
Decrease (increase) in due from Medicare 38,448
Decrease (increase) in prepaid expenses and other assets (141,902) (115,692)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 103,110 207,816
-------- --------
Net cash provided by (used in) operating activities 79,173 (706,515)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements (9,512) (280,181)
-------- --------
Net cash (used in) investing activities (9,512) (280,181)
Cash flows from financing activities:
Principal payments under capital lease obligations (16,066) (13,253)
Adjustment of initial public offering expenses (30,052)
Shareholder distributions (193,003)
--------- -------
Net cash (used in) financing activities (209,069) (43,305)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (139,408) (1,030,002)
Cash and cash equivalents, beginning of period 216,440 5,993,609
--------- -----------
Cash and cash equivalents, end of period $77,032 4,963,607
======= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 4,577 $ 6,270
========= ===========
</TABLE>
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) ORGANIZATION
------------
SunStar Healthcare, Inc. (the "Company") was incorporated in December
1995 and issued 875,000 shares (prior to a stock split discussed
below) of common stock. In January 1996, National Home Health Care
Corp. ("NHHC"), then the sole shareholder of the Company, contributed
to SunStar 100% of the outstanding capital stock of its wholly-owned
subsidiaries, First Health, Inc. ("First Health") and Brevard Medical
Centers, Inc. ("Brevard"), which included 100% of the outstanding
capital stock of Brevard's wholly-owned subsidiary, SunStar Health
Plan, Inc. ("SHP") (formerly known as Boro Medical Corp.). The
Company, First Health, Brevard and SHP collectively are referred to
herein as SunStar. SunStar provides managed healthcare services
pursuant to contractual arrangements, as well as on a fee-for-service
basis, through its outpatient medical centers in central Florida. On
February 24, 1997 SHP was granted a license to operate as an HMO by
the Florida Department of Insurance.
The Company is authorized to issue 10,000,000 shares of common stock,
par value $.001 per share, and 1,000,000 shares of preferred stock,
par value $.001 per share. The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of
issuance by the Board of Directors. In April 1996, the Board of
Directors approved a 1.02857 for one stock split. As a result of the
stock split, NHHC holds 900,000 shares of the Company's common stock
representing a 37.6% interest. All share amounts have been
retroactively adjusted for all periods presented.
On May 15, 1996, the Company completed an initial public offering (the
Offering), pursuant to which the Company sold 1,300,000 shares of
previously unissued common stock, par value $.001. The Offering
resulted in net proceeds to the Company of $5,230,372. On June 7,
1996, the underwriters in the Offering exercised their over-allotment
option to purchase additional shares of common stock, pursuant to
which the Company sold 195,000 shares of common stock, par value
$.001, resulting in additional net proceeds to the Company of
$853,125. During December 1996, the company recognized $30,052 of
additional offering expenses as a reduction to additional paid in
capital. As of April 30, 1997 the Company had issued 2,395,000 shares
of common stock.
(b) BASIS OF PRESENTATION
---------------------
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting
solely of normal recurring adjustments, necessary for a fair
presentation of the financial results for the interim periods
presented. Pursuant to the rules and regulations of the Securities and
Exchange Commission, certain footnote disclosures which would
substantially duplicate the disclosures contained in the audited
financial statements of the Company have been omitted from these
interim financial statements. Although the Company believes that the
disclosures presented below are adequate to make the interim financial
statements presented not misleading, it is suggested that these
unaudited condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the
year ended July 31, 1996.
5
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
The formation of the Company has been accounted for as a reorganization.
Accordingly, the financial statements have been prepared using NHHC's
historical basis in the assets and liabilities of First Health and Brevard
(the Predecessor), including goodwill and other intangibles recognized by
NHHC in the acquisition of certain companies. All significant intercompany
accounts have been eliminated.
The financial statements reflect the results of operations, financial
condition and cash flows of the Company, from the date of its formation,
and the Predecessor, as a component of NHHC, and may not be indicative of
actual results of operations and financial position of the Company under
other ownership. The statements of operations include, in management's
opinion, a reasonable allocation of administrative costs incurred by NHHC.
Such allocation is based on the value of time devoted by NHHC employees.
(c) Revenue Recognition
-------------------
The Company recognized fee-for-service revenues based on net realizable
amounts due from patients and third-party payors at the time medical
services are rendered. The Company recognizes capitated fee arrangements
from Health Maintenance Organizations (HMOs) on a monthly basis for each
participating enrollee, regardless of utilization: health care costs
relating to capitation fee arrangements from HMOs are recognized as
services are provided. Reimbursement for the Company's participation under
a federal third-party reimbursement contract is based on cost reimbursement
principles and is subject to audit and retrospective adjustment. The
accompanying consolidated financial statements reflect an estimated
settlement for open-year cost reports subject to audit.
(d) Per Share Data
--------------
The Company has reflected in its calculations of earnings per share for
1996 and 1997 the 900,000 shares issued by SunStar to NHHC and 492,500
common shares issuable upon the exercise of options granted to directors,
key employees and consultants as if such shares were considered to have
been issued at the beginning of the respective period. The earnings per
share are computed to give effect to stock options with exercise prices
below the Offering price using the treasury stock method. In accordance
with Securities and Exchange Commission rules, such effect is also included
in a loss period where the impact of the incremental shares is
antidilutive.
(e) Malpractice
-----------
The Company insures its malpractice risks on a claims-made basis. The
Company has secured claims-made coverage from August 1, 1996 through
October 31, 1997, with retroactive coverage through July 1, 1993. No
accrual for possible losses attributable to incidents which may have
occurred and not been identified under the Company's incident reporting
system has been made, because the amount, if any, is not readily estimable.
6
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL FINANCIAL INFORMATION.
<TABLE>
<CAPTION>
QUARTER ENDED APRIL 30
(unaudited)
1996 1997
---- ----
<S> <C> <C>
Patient service revenue $1,174,484 $1,142,024
Income (loss) from continuing
operations $(85,151) (452,065)
Income (loss) from continuing
operations per common share $(0.07) $(0.16)
Total Assets $1,223,178 $6,790,646
Total Equity $892,378 $6,074,345
</TABLE>
The Company recognizes fee-for-service revenues based on net realizable
amounts due from patients and third-party payors at the time medical services
are rendered. Capitation revenues from HMOs that contract with the Company are
recognized on a monthly basis. Reimbursement under the Company's contract with
HCFA are based on costs incurred in connection with medical services provided
and are subject to audit and retrospective adjustment.
Results Of Operations.
QUARTER ENDED APRIL 30, 1997 COMPARED TO QUARTER ENDED APRIL 30, 1996
During the third quarter of fiscal 1997 the company's HMO subsidiary
SunStar Health Plan, Inc. received its license to operate as an HMO from the
Florida Department of Insurance. Since marketing for May effective enrollments
the company has added 478 members as of June 12, 1997 in its initial service
area, which is consistent with managements expectations. Also consistent with
management's expectations and the estimates provided in the companys offering
statement with respect to the costs associated with the achievement of this HMO
license and its initial marketing efforts is the net loss of $(452,065) for the
quarter ended April 30, 1997.
Net income decreased by $366,914 to $(452,065) for the quarter ended April
30, 1997 from a loss of $(85,151) for the quarter ended 1996. This decrease
resulted from (i) a decrease of approximately $(32,460) in patient service
revenues; (ii) a net increase in operating expenses of approximately $(370,676)
(iii) increased interest income of $60,622; and (iv) a decrease in income tax
benefit of $(24,400).
Patient service revenue decreased by approximately $32,460 to $1,142,024 at
April 30, 1997 from $1,174,484 at April 30, 1996 primarily due to a continued
decline in Medicare service revenues and revenues received from the company's
prepaid health clinic contract. The company is precluded from filing a Medicare
risk contract application with the Health Care Finance Administration ("HCFA")
until it achieves a commercial base of at least 5,000
7
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
members through the HMO. The Medicare risk contract is anticipated to be filed
with the State in fiscal 1998.
Patient related services decreased by $13,445 to $847,275 at April 30, 1997
from $860,720 at April 30, 1996. Patient related services as a percentage of
total income was consistent at 74% for the quarter ended April 30, 1997 compared
to 73% at April 30, 1996.
General and administrative expenses of $797,590 for the third quarter
ended April 30, 1997, increased by $383,943 over $413,647 of such expenses in
the third quarter of 1996. The increase represents additional expenses related
to development and marketing costs necessary to transform the company into an
HMO.
LIQUIDITY.
At April 30, 1997, the Company had working capital of $4,944,817 as
compared to working capital of $218,152 at April 30, 1996. The Company has
historically financed its working capital requirements through cash flows from
operating activities. The substantial increase in working capital at April 30,
1997 is attributable primarily to proceeds received from a public offering of
the Company's Common Stock in May, 1996.
Net cash used by operating activities was $(706,515) for the nine months
ended April 30, 1997, as compared to net cash provided by operating activities
of $79,173 for the nine months ended April 30, 1996. The cash used by operating
activities was attributable to depreciation and amortization charges of
$115,685; a net increase in accounts receivable of $(46,920); an increase in
other receivables of $(32,500); an increase in prepaid expenses and other assets
of $(115,692); noncash compensation expense of $48,828; a decrease in the amount
due from Medicare of $38,448; an increase in other liabilities of $207,816 and a
year to date loss of $(922,180).
Net cash used in investing activities for the nine months ended April 30,
1997 was approximately $280,181, primarily as a result of furniture, equipment
and leasehold improvements associated with the development of the SunStar
administrative offices and replacement of medical office equipment. This
compares to a $9,512 change for the six months ended April 30, 1996.
Net cash used in financing activities for the nine months ended April 30,
1997 was $43,305 as compared to net cash used in financing activities of
$209,069 for the period ended April 30, 1996. This difference is attributable to
$193,003 of shareholder distributions which occurred in the period ended April
30, 1996 and a $30,053 adjustment to offering proceeds which was made in
December of 1996.
During the next fiscal year, the Company's liquidity will be affected by
the HMO operations and proposed expansions. As an HMO, SunStar Health Plan, Inc.
will be required to maintain a minimum surplus in an amount which is the greater
of $500,000 or 10% of total liabilities in minimum capital surplus pursuant to
Section 641 of the Florida Insurance Code. At December 31, 1996, SunStar Health
Plan, Inc.'s audited financial statements reflect an actual surplus of
$2,685,000. The companies cash balances are currently maintained as a cash
equivalent of a Money Market Trust Fund which invests in securities issued or
guaranteed by the U.S. Treasury and repurchase agreements relating to such
securities.
HMO development costs will continue to be incurred by SunStar Health Plan,
Inc. in fiscal years 1997 and 1998 to establish arrangements with physicians,
hospitals, and other health care providers as well as develop marketing and
other growth strategies necessary to operate and maintain HMO operations in
accordance with statutory requirements (which shall include the costs of key
employees' salaries and expenses).
8
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
Although the Company is unable to predict with any degree of certainty the
effect on the Company of its proposed shift of business focus (e.g., from the
provision of primary care services under provider agreements to the
establishment of commercial HMO operations), it is possible that the Company's
HMO operations could result in increased competition with HMOs operating in the
State of Florida. As a result of such competition, it is possible that certain
HMOs may terminate provider agreements with the Company, which could result in a
significant decline in revenues. In addition, the Company's operating expenses
can be expected to increase significantly in connection with the Company's
proposed expansion, which will require the Company to make significant up-front
expenditures to further develop new provider relationships, either contractually
or otherwise, and pay salaries for additional personnel. The Company anticipates
that it will make capital expenditures associated with, among other things,
leasehold improvements and office equipment (including telephone and management
information systems and software). The Company expects to pay salaries for
additional financial, development, marketing and other personnel to augment the
Company's efforts to successfully manage anticipated growth. There can be no
assurance that the foregoing factors will not adversely affect the Company's
future operating results.
The Company conducted an initial public offering in May, 1996 to provide
funds for its expansion plans, and it is anticipated that the net proceeds from
such offering, approximating $6,000,000, will be used to implement such
expansion. The Company anticipates, based on currently proposed plans and
assumptions relating to its operations (including the costs associated with, and
the timetable for, its proposed expansion), that such offering proceeds,
together with projected cash flow from operations, will be sufficient to satisfy
its contemplated cash requirements through the end of its current fiscal year.
There can be no assurance that the offering proceeds will be sufficient to
permit the Company to meet its objective of providing low-cost managed
healthcare products to individuals and employers and to otherwise determine the
viability and potential of proposed HMO expansions. In the event that the
Company's plans change, its assumptions change or prove to be inaccurate or if
the proceeds of the public offering prove to be insufficient (due to
unanticipated expenses, difficulties, problems or otherwise), the Company may be
required to seek additional financing. There can be no assurance that additional
financing will be available to the Company on acceptable terms, or at all. To
the extent that the Company's available cash resources are insufficient to allow
the Company to engage in operations sufficient to generate meaningful revenues
or achieve profitable operations, the inability to obtain additional financing
will have a material adverse effect on the Company.
9
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on form 8-K
(a) Exhibits:
NONE
(b) Reports on form 8-K:
NONE
10
<PAGE>
SUNSTAR HEALTHCARE, INC. AND SUBSIDIARIES
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.
SUNSTAR HEALTHCARE, INC.
/s/
Date:__________________________ ------------------------------
Jack Shields
Vice President and
Chief Financial Officer
SUNSTAR HEALTHCARE, INC.
/s/
Date:__________________________ ------------------------------
David Jesse
Executive Vice President and
Chief Operating Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUNSTAR
HEALTHCARE, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENT FOR APRIL 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> APR-30-1997
<CASH> 4,964
<SECURITIES> 0
<RECEIVABLES> 486
<ALLOWANCES> 225
<INVENTORY> 0
<CURRENT-ASSETS> 5,543
<PP&E> 1,756
<DEPRECIATION> 1,330
<TOTAL-ASSETS> 6,791
<CURRENT-LIABILITIES> 598
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 6,074
<TOTAL-LIABILITY-AND-EQUITY> 6,791
<SALES> 1,142
<TOTAL-REVENUES> 1,142
<CGS> 847
<TOTAL-COSTS> 1,656
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (62)
<INCOME-PRETAX> (452)
<INCOME-TAX> 0
<INCOME-CONTINUING> (452)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (452)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
