<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 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: 0-20789
PRIMIX SOLUTIONS INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3249618
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Arsenal Marketplace, Second Floor, Watertown, Massachusetts 02472
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 923-6500
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 May 7, 1999, there were 14,618,160 shares of registrant's Common Stock
outstanding.
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Primix Solutions Inc.
Table of Contents
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
Item 1. Condensed Consolidated Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets at December 31, 1998 and March 31, 1999 3
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1998 and 1999 4
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
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Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Primix Solutions Inc.
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ -------------
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 26,693 $ 23,782
Marketable securities - 1,517
Accounts receivable, net 2,871 2,339
Prepaid expenses and other current assets 443 426
Note receivable from related party - current portion - 150
------------ ------------
Total current assets 30,007 28,214
Property and equipment, net 821 662
Other assets:
Goodwill, net 2,178 2,123
Notes receivable from related party 150 150
------------ ------------
Total other assets 2,328 2,273
------------ ------------
Total assets $ 33,156 $ 31,149
------------ ------------
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease obligation $ 83 $ 72
Accounts payable 965 534
Accrued expenses 2,162 1,686
Note payable to related party 204 -
Deferred revenue 84 98
------------ ------------
Total current liabilities 3,498 2,390
Capital lease obligation, net of current portion 42 36
------------ ------------
Total liabilities 3,540 2,426
------------ ------------
Stockholders' equity:
Common stock 15 15
Treasury stock (1,517) (1,475)
Additional paid-in capital 59,180 59,167
Accumulated deficit (28,062) (28,984)
------------ ------------
Total stockholders' equity 29,616 28,723
------------ ------------
Total liabilities and stockholders' equity $ 33,156 $ 31,149
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
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Primix Solutions Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Unaudited
Three Months Ended
March 31,
--------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Revenues:
Consulting and education services $ 965 $ 1,940
Software license and maintenance 94 -
------------ ------------
Total revenues 1,059 1,940
Cost of Revenues:
Consulting and education services 1,156 1,894
Software license and maintenance 45 -
------------ ------------
Total cost of revenues 1,201 1,894
------------ ------------
Gross profit (loss) (142) 46
Operating Expenses:
Sales and marketing 349 622
General and administrative 518 590
Research and development 424 -
Amortization of goodwill - 54
------------ ------------
Total operating expenses 1,291 1,266
------------ ------------
Operating loss (1,433) (1,220)
Interest Income, net 439 298
------------ ------------
Loss before provision for income taxes (994) (922)
Provision for income taxes - -
------------ ------------
Net loss $ (994) $ (922)
------------ ------------
------------ ------------
Basic and Diluted Net Loss per Common Share $ (0.07) $ (0.06)
------------ ------------
------------ ------------
Shares Used in Computing Net Loss per Common Share 14,389 14,618
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
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Primix Solutions Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Unaudited
Three Months Ended
March 31,
---------------------
1998 1999
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (994) $ (922)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 216 279
Changes in operating assets and liabilities:
Accounts receivable 251 532
Prepaid expenses and other current assets 24 17
Accounts payable (85) (431)
Accrued expenses (261) (476)
Deferred revenue (224) 14
-------- --------
Net cash used in operating activities (1,073) (987)
Cash flows from investing activities:
Sales/(purchases) of marketable securities, net 3,876 (1,517)
Purchases of property and equipment (28) (65)
Increase in other assets (150) (150)
-------- --------
Net cash provided by (used in) investing activities 3,698 (1,732)
Cash flows from financing activities:
Payment of note payable to related party - (204)
Proceeds from common stock purchased through employee stock purchase plan 30 29
Proceeds from the exercise of stock options 1 -
Payment of capital lease obligations - (17)
-------- --------
Net cash provided by (used in) financing activities 31 (192)
Net increase/(decrease) in cash and cash equivalents 2,656 (2,911)
Cash and cash equivalents, beginning of period 10,804 26,693
-------- --------
Cash and cash equivalents, end of period $ 13,460 $ 23,782
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
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Primix Solutions Inc.
Notes to Condensed Consolidated Financial Statements
( Unaudited )
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein are
unaudited and reflect all adjustments, consisting of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. These financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 as filed with the Securities and Exchange Commission.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates and would impact future
results of operations and cash flows.
The results of operations for the reported 1999 period are not necessarily
indicative of the results to be achieved for the entire year ending December 31,
1999.
2. ACQUISITION OF ADVIS, INC.
On December 31, 1998, the Company acquired Advis, Inc., a privately held
Boston based e-Business consulting company, which augmented the depth and
breadth of the Company's capabilities in developing highly advanced systems
architectures that support e-Business solutions.
The transaction has been accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations".
Accordingly, the operating results of Advis, Inc. are included in the Company's
consolidated financial statements effective January 1, 1999. The excess purchase
price over the net assets acquired of $2,118,000 has been recorded as goodwill
and is being amortized over its estimated useful life of 10 years.
3. COMPUTATION OF BASIC AND DILUTED NET LOSS PER COMMON SHARE
In accordance with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 128, Earnings Per Share, basic net loss per
share is computed by dividing net loss by the weighted average common shares
outstanding, with no consideration given for any potentially dilutive
securities. Diluted net loss per share is the same as basic net loss per share
because the inclusion of common stock issuable pursuant to stock options and
warrants (number of antidilutive shares were 1,248,000 and 2,198,000 at March
31, 1998 and 1999, respectively) would be antidilutive.
4. OTHER ASSETS
In March 1999, the Company issued two separate promissory notes, each in
the amount of $75,000 to two employees of the Company. The promissory notes are
due on December 31, 2001 and bear interest at a rate of 6.75% per annum.
5. MARKETABLE SECURITIES
Marketable securities consist of marketable financial instruments with
original maturities greater than 90 days. The Company has established guidelines
relative to concentration, maturities, and credit ratings that maintain safety
and liquidity.
In accordance with Statement of Financial Accounting Standard No. 115
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115"), the Company has classified its investments in marketable securities as
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"Held-to-Maturity" Securities. Accordingly, marketable securities at March 31,
1999 are recorded at amortized cost, which approximates market. The Company had
no investments in marketable securities at December 31, 1998.
6. COMPREHENSIVE INCOME
During 1998, the Company adopted SFAS No. 130, "Reporting of Comprehensive
Income". Comprehensive income refers to the change in an entity's equity during
a period, exclusive of investment by and distributions to owners. Comprehensive
income includes net income and other comprehensive income items. The Company has
no other comprehensive income items as defined in SFAS No. 130 and, therefore,
net income is equal to comprehensive income and no other additional disclosure
is required.
7. SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 establishes standards for
the way that public business enterprises report information and operating
segments in annual and interim financial statements and requires that
enterprises report selected information about operating segments in financial
reports issued to stockholders. The Company adopted this statement in the year
ended December 31, 1998. Based on a review of SFAS No. 131, the Company believes
that it currently operates in one segment.
8. NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The statement is
effective for the year ended December 31, 2000. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. The Company does not expect adoption of
this statement to have a material impact on its consolidated financial position
or result of operations.
7
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following information should be read in conjunction with the financial
statements and notes thereto and risk factors contained in the section entitled
"Certain Factors That May Affect Future Results" on page 17 of the Company's
1998 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially from
those set forth in the forward-looking statements. Factors that might cause such
a difference are discussed in the section entitled "Certain Factors That May
Affect Future Results" below.
OVERVIEW
Primix Solutions Inc. ("Primix" or the "Company") historically has helped
organizations build applications that integrate and extend disparate information
systems. Late in the first quarter of 1998, the Company unified its software
products and consulting services business units into a single consulting
services organization focused on delivering "e-Business" solutions on a
fixed-price/fixed-time basis. On December 31, 1998, Primix acquired Advis, Inc.
("Advis"), a privately held e-Business consulting company. During the first
quarter of 1999, the Company added to its management team executives with
experience in cross-media brand development, Web site design, and strategic and
business process consulting.
As a result of the Company's significant transition during 1998, management
cannot currently anticipate future revenue levels. However, management does
anticipate incurring significant expenses as the Company continues to grow its
sales, creative, strategy and consulting staffs.
RESULTS OF OPERATIONS
REVENUES
Total revenues increased $881,000 to $1,940,000 for the three months ended
March 31, 1999 from $1,059,000 for the comparable quarter in 1998. The increase
was primarily due to the December 1998 acquisition of Advis. Consulting and
education services revenues increased $975,000 to $1,940,000 for the three
months ended March 31, 1999 from $965,000 for the comparable quarter in 1998 as
a result of an increase in the number of consulting engagements serviced during
the first quarter of 1999 relative to the first quarter of 1998. The increase in
the number of consulting engagements serviced was primarily due to the December
1998 acquisition of Advis. Additionally, software license and maintenance
decreased by $94,000 to $0 for the three months ended March 31, 1999 from
$94,000 for the comparable quarter in 1998 due to the fact that the Company
ceased marketing its software products in 1998.
GROSS PROFIT (LOSS)
The cost of consulting and education services consists primarily of
consulting and education personnel salaries and related costs and fees to third
party service providers. For the three months ended March 31, 1999, the gross
margin percentage for consulting and education services revenues was 2% compared
to a gross loss percentage of 20% for the three months ended March 31, 1998. The
improvement in the Company's gross margin for consulting and education services
revenues compared to the prior year period is primarily atttributable to the
increase in sales volume offset by an increase in costs associated with
increased headcount. Headcount for the consulting staff increased 152% from
March 31, 1998 to March 31, 1999, with 53% of this increase due to the Advis
December 1998 acquisition. The Company ceased marketing its software products in
1998; consequently, there was no cost of software license and maintenance in the
first quarter of 1999.
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SALES AND MARKETING
Sales and marketing expenses consist primarily of salaries and benefits
for sales and marketing personnel and costs for advertising and marketing.
Sales and marketing expenses increased to $622,000, or 32% of total revenues,
for the three months ended March 31, 1999 from $349,000, or 33% of total
revenues, for the comparable prior year period. The absolute dollar increase
for the three-month period is primarily due to increased headcount in sales
and marketing and the Company's increased efforts associated with its sales
and marketing programs. Sales and marketing headcount increased 120% from
March 31, 1998 to March 31, 1999. The increased headcount in sales is
attributable to the Advis December 1998 acquisition. The Company expects
sales and marketing expenses to increase during 1999 as the Company seeks to
hire additional sales and marketing personnel.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of salaries and
benefits for executive, finance, information technology, human resource and
administrative personnel, professional fees, and system support costs. General
and administrative expenses increased to $590,000, or 30% of total revenues, for
the three months ended March 31, 1999 from $518,000, or 49% of total revenues,
for the comparable prior year period. The absolute dollar increase for the
three-month period is primarily due to increased recruiting costs associated
with the Company's effort to hire additional personnel and partially due to the
December 1998 Advis acquisition. The Company expects general and administrative
expenses to increase during 1999 to support the Company's expanding business.
RESEARCH AND DEVELOPMENT
Research and development expenses decreased to $0 for the three months
ended March 31, 1999 from $424,000, or 40% of total revenues, for the comparable
prior year period. The decrease is attributable to the discontinuance of the
Company's software product development.
AMORTIZATION OF GOODWILL
Amortization of goodwill of $54,000 for the three months ended March 31,
1999 is attributable to the Advis December 1998 acquisition. The excess purchase
price over the net assets acquired of $2,118,000 was recorded as goodwill in
December 1998 and is being amortized over its estimated useful life of 10 years,
beginning January 1, 1999.
INTEREST INCOME, NET
Interest income, net decreased to $298,000 for the three months ended
March 31, 1999 from $439,000 for the comparable prior year period. The decrease
in interest income is primarily the result of a decline in the average combined
daily balances of the Company's cash, cash equivalents and marketable
securities.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized approximately $987,000 for the
three months ended March 31, 1999, resulting primarily from the net loss for the
quarter.
The Company's investing activities, which primarily consisted of net
purchases of short-term marketable securities, utilized approximately $1,732,000
for the three months ended March 31, 1999.
The Company's financing activities, which consisted of payment of the note
payable to a related party and the issuance of common stock for the employee
stock purchase plan, utilized approximately $192,000 for the three months ended
March 31, 1999.
In March 1999, the Company issued two separate promissory notes, each in
the amount of $75,000 to two employees of the Company. The promissory notes are
due on December 31, 2001 and bear interest at a rate of 6.75% per annum.
9
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The Company currently anticipates that the existing cash, cash equivalents
and marketable securities balances will be sufficient to meet its anticipated
working capital and capital expenditure requirements for at least the next
twelve months. Thereafter, the Company may need to raise additional funds. The
Company may in the future seek to expand its business through possible
acquisitions. The Company, however, has no commitments or agreements with
respect to any future acquisition and no assurances can be given with respect to
the likelihood or financial or business effect, of any future acquisition.
Future acquisitions could be financed by internally generated funds, bank
borrowings, public offerings or private placements of equity or debt securities,
or a combination of the foregoing. There can be no assurance that additional
financing will be available when needed on terms favorable to the Company or at
all.
YEAR 2000 READINESS
The following statements under this section include "Year 2000 readiness
disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act.
Historically, certain computer programs have been written using two digits
rather than four digits, to identify the applicable year. This could lead, in
many cases, to a computer's recognition of a date using "00" as 1900 rather than
the year 2000. This phenomenon could result in significant computer system
failures or miscalculations, and is generally referred to as the "Year 2000"
problem or issue.
The Company is currently in the process of assessing its exposure from the
Year 2000 problem, and has established a response to that exposure. Generally,
the Company has Year 2000 exposure in the following areas: (i) financial and
management operating computer systems used to manage the Company's business,
(ii) microprocessors and other equipment used by the Company ("embedded chips")
and (iii) computer systems used by third parties; in particular financial
institutions, vendors and suppliers of the Company.
As of December 31, 1998, the Company completed an inventory of its
financial and management operating systems and made a preliminary determination
of which programs were or were not Year 2000 compliant. Prior to September 30,
1999, the Company intends to test each significant program which is believed to
be Year 2000 compliant and to remediate all significant programs that are not
Year 2000 compliant. In some cases, Year 2000 issues will be corrected in the
development of new programs, which enhance or provide new functionality to these
financial and management operating systems. While the Company has not undertaken
any independent verification and review, the Company estimates that the
incremental cost of this remediation effort should not exceed $30,000, including
capital cost for new computers and related equipment. This amount does not
include costs for computer software developed in order to provide or improve
functionality. The Company expects to substantially complete Year 2000 testing
and remediation on its financial and management operating systems by September
30, 1999.
The Company has begun an inventory and assessment of its exposure to
embedded chips in its facilities or equipment used in those facilities and
capability of the vendors of such equipment to successfully remediate Year 2000
problems in equipment with embedded chips.
The Company began in the fourth quarter of 1998 to interview third parties,
vendors and suppliers of the Company to determine their exposure to Year 2000
issues, their anticipated risks and responses to those risks.
If the Company is unsuccessful in completing remediation of non-compliant
systems, correcting embedded chips and vendors or suppliers cannot rectify Year
2000 issues, the Company could incur additional costs. The cost to develop
alternative methods of managing its business and replacing non-compliant
equipment may be substantial. The Company is in the process of establishing a
contingency plan in the event of noncompliance by its vendors and suppliers and
expects to complete this contingency plan by September 30, 1999.
The preceding "Year 2000 Readiness Disclosure" contains various
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These
forward-looking statements represent the Company's beliefs or expectations
regarding future events. When used in the "Year 2000 Readiness Disclosure," the
words "believes," "expects," "estimates" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements include, without
limitation, the Company's expectations as to when it will complete the
modification and testing phases of its Year 2000 project plan as well as its
Year 2000 contingency plans; and its estimated cost of achieving Year 2000
readiness. All forward-looking statements involve a
10
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number of risks and uncertainties that could cause the actual results to differ
materially from the projected results. Factors that may cause these differences
include, but are not limited to, the availability of qualified personnel and
other information technology resources; the ability to identify and remediate
all date sensitive lines of computer code or to replace embedded computer chips
in affected systems or equipment; and the actions of governmental agencies or
other third parties with respect to Year 2000 problems.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Statements made or incorporated into this Form 10-Q include a number of
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward
looking statements include, without limitation, statements containing the words
"anticipates," "believes," "expects," "intends," "future," and words of similar
import which express management's beliefs, expectations or intentions regarding
the Company's future performance. The Company's actual results could differ
materially from its historical results and from those set forth in the
forward-looking statements and may fluctuate between operating periods. Factors
that might cause such differences and fluctuations include the following: the
success of the Company's new business strategy, the Company's ability to
efficiently consolidate the operations of its newly acquired subsidiary, Advis,
Inc., the Company's ability to retain its sales and consulting staffs, the
Company's ability to close sales, risks related to the management of growth, the
Company's ability to attract, train and retain qualified strategic, creative and
technical personnel, development and promotional expenses related to the
introduction of new service offerings, changes in technology and industry
standards, limited operating history, changes in the market for the Company's
services, the rate of acceptance of the Company's services, dependence of the
Company's business on the Internet, increased competition, changing of pricing
policies by the Company or its competitors, the timing of receipt of orders from
major customers, development of Internet and Intranet products or enhancements
by vendors of existing client/server or legacy software systems that compete
with the Company's consulting services, dependence on key personnel, proprietary
technology and the inherent difficulties in protecting intellectual property,
dependence on third-party technology, and exposure for product and professional
services liability. The market price of the Company's Common Stock has been, and
in the future will likely be, subject to significant fluctuations in response to
variations in quarterly operating results and other factors, such as
announcements of technological innovations or new products by the Company or its
competitors, or other events.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company owns financial instruments that are sensitive to market risks
as part of its investment portfolio. The investment portfolio is used to
preserve the Company's capital until it is required to fund operations. All of
these market-risk sensitive instruments are classified as held-to-maturity and
are not held for trading purposes. The Company does not own derivative financial
instruments in its investment portfolio. The investment portfolio contains
instruments that are subject to the risk of a decline in interest rates.
INTEREST RATE RISK. The Company's investment portfolio includes investment
grade debt instruments. These bonds are subject to interest rate risk, and could
decline in value if interest rates fluctuate. Due to the short duration and
conservative nature of these instruments, the Company does not believe that it
has a material exposure to interest rate risk.
11
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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
On January 14, 1999, the Company filed a Report under Item
5 on Form 8-K.
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.
Dated: May 13, 1999
PRIMIX SOLUTIONS INC.
/s/ DAVID W. CHAPMAN
-------------------------------------------------------
David W. Chapman
Chief Financial Officer and Principal Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 23,782
<SECURITIES> 1,517
<RECEIVABLES> 2,389
<ALLOWANCES> 50
<INVENTORY> 0
<CURRENT-ASSETS> 28,214
<PP&E> 3,045
<DEPRECIATION> 2,383
<TOTAL-ASSETS> 31,149
<CURRENT-LIABILITIES> 2,390
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 28,708
<TOTAL-LIABILITY-AND-EQUITY> 31,149
<SALES> 0
<TOTAL-REVENUES> 1,940
<CGS> 0
<TOTAL-COSTS> 1,894
<OTHER-EXPENSES> 1,266
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<INCOME-PRETAX> (922)
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> (922)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
