UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
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 000-21295
THINKING TOOLS, INC.
(Exact Name of Small Business Issuer as Specified In Its Charter)
Delaware 77-043641
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1 Lower Ragsdale Drive, 1-250
Monterey, California 93940
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (408) 373-8688
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
Check whether the issuer (1) has filed all reports, required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
At July 30, 1998, the number of shares outstanding of the Issuer's Common Stock,
par value $.001 per share, was 4,641,758 shares.
<PAGE>
THINKING TOOLS, INC.
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
INDEX
<TABLE>
<CAPTION>
Part I - FINANCIAL INFORMATION PAGE NO.
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Item 1. FINANCIAL STATEMENTS
Condensed Balance Sheets as of June 30, 1998 and December 31, 1997........... 3
Condensed Statements of Operations for the quarter and six months
ended June 30, 1998 and 1997................................................. 4
Condensed Statements of Cash Flows for six months
ended June 30, 1998 and 1997................................................. 5
Notes to Condensed Financial Statements...................................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................ 8
Part II - OTHER INFORMATION
Item 5. OTHER EVENTS................................................................. 13
Item 6. EXHIBITS AND REPORTS ON FORM 8-K............................................. 14
Signatures ............................................................................. 15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. FINANCIAL STATEMENTS
THINKING TOOLS, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997 (1)
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 752 $ 2,597
Accounts receivable 121 7
Prepaid expenses and other current assets 69 131
-------- --------
Total current assets 942 2,735
-------- --------
Property and equipment, net 215 265
Other assets 22 29
-------- --------
Total assets $ 1,179 $ 3,029
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 145 $ 200
Accrued expenses 227 359
Notes payable 33 88
Capital lease obligations 5 13
-------- --------
Total current liabilities 410 660
Long Term deposits
Total Liabilities 15 --
-------- --------
425 660
Shareholders' equity:
Common stock 5
Additional paid-in capital 11,090 11,288
Deferred stock compensation -- (198)
Accumulated deficit (10,341) (8,726)
-------- --------
Total shareholders' equity 754 2,369
-------- --------
Total liabilities and shareholders' equity $ 1,179 $ 3,029
======== ========
</TABLE>
(1) Derived from the December 31, 1997, audited balance sheet
included in the Company's 1997 Annual Report on Form 10-KSB
See Notes to Condensed Financial Statements
3
<PAGE>
THINKING TOOLS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $ 166 $ 24 $ 166 $ 94
Costs 1 24 1 94
------- ------- ------- -------
Gross profit 165 -- 165 --
------- ------- ------- -------
Operating Expenses
Selling, general, and administrative 687 631 1,159 1,207
Research and development 313 498 647 619
------- ------- ------- -------
Total operating expenses 1,000 1,129 1,806 1,826
------- ------- ------- -------
Operating loss (835) (1,129) (1,641) (1,826)
Other income, net 1 73 27 155
------- ------- ------- -------
Loss before income taxes (834) (1,056) (1,614) (1,671)
Income tax expense -- 1 -- 1
======= ======= ======= =======
Net loss $ (834) $(1,057) $(1,614) $(1,672)
======= ======= ======= =======
Basic and diluted loss per share $ (0.18) $ (0.23) (0.35) (0.36)
======= ======= ======= =======
Shares used in calculating per share data 4,642 4,642 4,642 4,642
======= ======= ======= =======
</TABLE>
See Notes to Condensed Financial Statements
4
<PAGE>
THINKING TOOLS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months ended
June 30
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,614) $(1,672)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 32 30
Stock compensation expense -- 52
Changes in operating assets and liabilities:
Accounts receivable (114) 123
Prepaid expenses and other assets 62 75
Other assets 7 (16)
Accounts payable (55) (30)
Accrued expenses (132) 62
Billings in excess of costs on uncompleted contracts and deferred revenue -- (32)
------- -------
Net cash used in operating activities (1,814) (1,408)
------- -------
Cash flows from investing activities:
Purchase of property and equipment 2 (159)
Sale/Loss on sale of fixed assets 15 0
------- -------
Net cash used in investing activities 17 (159)
------- -------
Cash flows from financing activities:
Principal payment on short-term notes payable (55) (109)
Principal payments on capital leases (8) (9)
Long-term deposits 15 --
------- -------
Net cash used in financing activities (48) (118)
------- -------
Net decrease in cash and equivalents (1,845) (1,685)
Cash and equivalents at beginning of period 2,597 6,869
======= =======
Cash and equivalents at end of period $ 752 $ 5,184
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 4 $ 3
======= =======
</TABLE>
See Notes to Condensed Financial Statements
5
<PAGE>
THINKING TOOLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. In the opinion of management, all adjustments considered necessary
for a fair presentation of the financial position and the results of operations
and cash flows for the interim periods have been included. Interim results are
not necessarily indicative of results for a full year.
These interim condensed financial statements should be read in conjunction with
the information included in the Company's Annual Report on Form 10-KSB filed
with the Securities Exchange Commission for the year ended December 31, 1997.
2. Common Stock
In August 1996, Thinking Technologies, LP, a principal stockholder of the
Company, converted $1,320,000 of notes and interest into an aggregate of 263,158
shares of common stock.
In October and November 1996, the Company completed its Initial Public Offering
(IPO) (including the exercise of the underwriter's over-allotment option) and
issued 1,610,000 shares of common stock at $6.50 per share for net proceeds of
approximately $8,470,000. In connection with its IPO, the Company sold to its
underwriter warrants to purchase 140,000 common shares for $.001 per warrant.
These warrants are exercisable for a period of five years at an exercise price
equal to 160% of the IPO price ($10.40 per share). Approximately $1,856,500 of
the net proceeds from the IPO was used to retire outstanding indebtedness under
certain promissory notes issued in a bridge financing in August 1996.
The Company has received notification from The Nasdaq Stock Market, Inc.
("Nasdaq"), that the Company is not in compliance with certain quantitative
requirements for continued listing of its Common Stock on the Nasdaq SmallCap
Market. Nasdaq requires, among other things, companies listed on the Nasdaq
SmallCap Market (i) maintain net tangible assets of $2,000,000, (ii) a market
capitalization of $35,000,000 or (iii) net income (in the latest fiscal year or
two of the last three fiscal years) of $500,000. Nasdaq has notified the Company
that its stock will be delisted from the Nasdaq SmallCap Market due to the
Company's failure to maintain compliance with these quantitative requirements.
The Company has formally appealed the pending delisting and presented its appeal
at an oral hearing before a panel of the National Association of Securities
Dealers, Inc. ("NASD") Board of Governors on July 24, 1998. There can be no
assurance that the Common Stock will not be delisted from trading on the Nasdaq
SmallCap Market. The effects of delisting include, without limitation, the
limited release of market prices of the Company's securities, limited news
coverage of the Company, and restriction of investors' interest in the Company,
and may adversely materially affect the trading market and prices for the
Company's securities, thereby affecting the
6
<PAGE>
Company's ability to issue additional securities or secure additional
financing. In addition, if the Company's securities are also deemed penny stocks
under the Securities Enforcement Penny Stock Reform Act of 1990, additional
disclosure would be required in connection with traded in the Company's
securities, including delivery of a disclosure schedule explaining the nature
and risk of the penny stick market. Such requirements could severely limit the
liquidity of the Company's securities.
3. Net Loss Per Share
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128,"Earnings Per Share," which requires presentation of basic and diluted
earnings (loss) per share and restatement of all prior year earnings (loss) per
share. Due to the Company's net loss, all convertible securities are
antidultive; hence both basic and diluted loss per share are computed based on
the weighted average number of shares of common stock outstanding during the
period. The earnings per share amount for the periods ended June 30, 1997 has
been restated to conform to SFAS 128.
4. Reporting Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Comprehensive Income," which requires that an enterprise report, by major
components and as a single total, the change in its net assets during the period
from non-owner sources. The Company's financial statements for the quarters
ended June 30, 1998 and 1997 do not include amounts which are considered
components of other comprehensive income, consequently, net loss and
comprehensive loss are equivalent for both periods as defined.
5. Recently Issued Accounting Standard
In June 1997, the Financial Accounting Standards Board Issued SFAS No. 131
"Disclosure about Segments of an Enterprise and Related Information", which
establishes annual and interim reporting standards for an enterprise's business
segments and related disclosures about its products, services, geographical
areas, and major customers. Adoption of this statement will not impact the
Company's financial position, results of operations or cash flows. This
statement is effective for the Company beginning January 1, 1998. The Company
will include the required disclosures within its Annual Report as of December
31, 1998.
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements contained in this Quarterly Report on Form 10-QSB, other than the
historical financial information, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All such
forward-looking statements involve known and unknown risks, uncertainties or
other factors which may cause actual results, performance or achievement of the
Company to be materially different from any future results, performance or
achievement expressed or implied by such forward-looking statements. Factors
that might cause such a difference include, but are not limited to, risks and
uncertainties related to the Company's limited operating history, uncertain
future profitability, future financing needs, limited marketing experience and
dependence on emerging market for business simulation software; competition
risks; uncertainties regarding the commercial acceptance of Think 2000 and the
development of additional products; risks associated with the Company's growth
strategy, and other risks described herein and in the Company's 1997 Annual
Report on Form 10-KSB.
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in the Quarterly Report on Form
10-QSB.
OVERVIEW
The Company commenced operations in December 1993 to develop and
market business simulation software. Since its inception, the Company has been
engaged in research and development activities and organizational efforts,
including the development of its initial products, recruiting personnel, and
establishing marketing and manufacturing capabilities and raising capital.
The Company commenced commercial activities in January 1994, but to
date has not generated substantial revenues from the sale of its products. Prior
to the quarter ended June 30, 1998, the Company's revenues had been primarily
derived from software development projects completed under contracts with
customers. Historically, a significant portion of such revenues were derived
from a limited number of relatively large development projects contracted for by
a small number of customers. Such customers were not affiliated with the
Company, and all such contracts have been completed. During the six-month period
ended June 30, 1998, the Company continued to implement its previously announced
strategy to change its focus from custom projects to self-funded development of
simulation products for broader markets. As part of this strategy, the Company
is continuing to seek to leverage its existing products and technology platform
to become a product-oriented, sales-driven company. During this transition
period, revenues are not expected to be material, as the Company will be
focusing on developing new product sales channels. During the quarter ended June
30, 1998, the Company recorded revenues of $166,000 from product sales, and had
a backlog of $100,000. As of June 30, 1998 the Company's current and planned
expense levels are based in part on its expectations towards anticipated
revenue.
8
<PAGE>
In September 1997, the Company introduced Think 2000, a Year 2000
risk simulation software program. Think 2000 is the first simulation product
which the Company internally funded and is bringing to a broader market. The
Company has made a significant investment in the development and
commercialization of Think 2000, and as a result, does not currently anticipate
significant revenues in the near future from other sources. The Company
currently has limited capital and human resources and is focusing such resources
primarily on Think 2000. Any failure of the Company to successfully
commercialize Think 2000 or to meet demands for such product on a timely basis
could have a material adverse effect on the Company's business, operating
results and financial condition. The Company is relying on the success of Think
2000, as well as the successful development, commercialization and marketing of
additional products for its long-term viability and growth.
The Company intends to distribute its products through its existing
strategic partners, new service providers as well as by initiating direct sales
to customers. The Company is also in discussion with additional prospective
value-added resellers ("VARs"). As the Company moves into new specific product
areas, it intends to seek alliances in such areas. The Company plans to continue
making presentations and appearances at academic forums and corporate-sponsored
events.
As of June 30, 1998, the Company had experienced cumulative losses
of $10,341,000 and has not experienced any quarter of profitable operations. The
Company expects to incur additional operating losses at least through the end of
1998 , principally as a result of expenses associated with the Company's product
development efforts and anticipated sales, marketing and general and
administrative expenses. Through June 30, 1998, the Company's operations have
been funded primarily through private sales of debt and equity securities and
the Company's Initial Public Offering ("IPO"). In October and November 1996, the
Company completed the IPO (including the exercise of the underwriter's
over-allotment option) and issued 1,610,000 shares of common stock at $6.50 per
share for net proceeds of approximately $8,470,000. Approximately $1,856,500 of
the net proceeds of the IPO were used to retire outstanding indebtedness under
certain promissory notes issued in a bridge financing in August 1996. The
remainder of the net proceeds from the IPO are being used to fund the Company's
sales and marketing and product development efforts, and for working capital and
general corporate purposes.
The Company expects to incur substantial operating expenses in the
future as it seeks to expand sales and marketing efforts in accordance with its
strategic plan.
9
<PAGE>
Results of Operations
Comparison of the quarter ended June 30, 1998 and June 30, 1997
Revenues: Revenues for the three months ended June 30, 1998
increased by $142,000,or 86%, to $166,000 from $24,000 for the three months
ended June 30, 1998. During the three months ended June 30, 1998, the Company
continued to of implement a new marketing and business strategy to become a
product-oriented, sales-driven company. The positive results of this business
strategy resulted in the above mentioned revenues and a backlog of approximately
$100,000 at June 30,1998.
Gross Margin: Gross margin for the three months ended June 30,1998
were $165,000 compared to nil for the same period ended June 30,1997. During the
three months ended June 30, 1998, the Company did not record any direct cost to
revenues, indirect costs were recorded in Research and Development. During the
same period ended June 30, 1997, the Company was in the process of completing
its only remaining custom project under contract.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased by $56,000, or 8 %, for the three months ended
June 30, 1998, to $687,000, from $631,000 for the three months ended June 30,
1997. Selling, general, and administrative expenses consisted primarily of costs
associated with labor. The increase in selling, general and administrative
expenses was primarily due to implementation of a new selling and marketing
program. The Company expects selling, general and administrative expenses to
increase in future periods as the Company continues to implement its selling and
marketing program and expand its staff and facilities.
Research and Development: Research and development expenses for the
three months ended June 30, 1998, decreased by $185,000, or 37%, to $313,000
from $498,000 for the three months ended June 30, 1997. This decrease was
primarily due to a reduction in headcount and contractors. The Company
anticipates that research and development costs will maintain in future periods
as the Company seeks to develop additional products as part of its strategic
plan.
Other Income, Net : Interest expense for the three months ended June
30, 1998 decreased by $2,000, or 66%, to $1,000, from $3,000 for the three
months ended June 30, 1997. Other income net for the three months ended June 30,
1998 decreased by $74,000, or 97%, to $2,000, from $76,000 for the three months
ended June 30, 1997. Other income is the result of interest income generated
from investing the excess proceeds raised from the Company's IPO. The decrease
from the comparable period in 1997 is due to the decrease in invested funds.
Additionally, the sale of furnishings and adjustments of leasehold improvements
at the closed San Jose facility resulted in a net book loss of $15,000.
Net Loss: As a result of the foregoing, net loss for the three
months ended June 30, 1998 decreased by $223,000, or 27%, to $834,000, from
$1,057,000 for the three months ended June 30, 1997.
10
<PAGE>
Comparison of six months ended June 30, 1998 and June 30, 1997
Revenues: Revenues for the six months ended June 30, 1998 increased
by $72,000, or 77%, to $166,000 from $94,000 for six months ended June 30, 1997.
During the 1997 period The Company's revenues were derived primarily from a
relatively small number of development contracts. During the six months ended
June 30, 1998, the sales were derived from the "Think 2000" product.
Gross Margin: Gross margin for the six months ended June 30, 1998
was $165,000 as compared to nil for the six months ended June 30, 1997. During
the six months ended June 30, 1997, the Company was in the process of completing
its only remaining custom project under contract. Contract costs equaled
contract revenue in the first half of 1997 because the expected loss was
recorded in 1996.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses decreased by $81,000, or 7%, for the six months ended
June 30, 1998, to $1,159,000 from $1,207,000 for the six months ended June 30,
1997. Selling, general, and administrative expenses consisted primarily of costs
associated with labor. The decrease in selling, marketing and administration
expenses were primarily due to a reduction in headcount, and the closing of the
San Jose Office.
Research and Development: Research and development expenses for the
six months ended June 30, 1998 increased by $28,000, or 5%, to $647,000 from
$619,000 for the six months ended June 30, 1997.
Interest Expenses: Interest expenses for the six months ended June
30, 1998 decreased by $1,000, to $3,000 from $4,000 for the six months ended
June 30, 1997.
Other Income: Other income for the six months ended June 30, 1998
decreased by $128,000 to $27,000 from $155,000 for the six months ended June 30,
1997. This decrease was primarily due to the balance of excess proceeds raised
from the Company's Initial Public Offering causing interest earnings to decrease
accordingly.
Net Loss: As a result of the foregoing, net loss for the six months
ended June 30, 1998, decreased by $58,000, or 3%, to $1,614,000 from $1,672,000
for the six months ended June 30,1997.
Liquidity and Capital Resources
Since its inception and through June 30, 1998, the Company has
incurred cumulative losses aggregating approximately $10,341,000 and has not
experienced any quarter of profitable operations. The Company expects to
continue to incur operating losses at least through the end of 1998, principally
as a result of expenses associated with the Company's product development
efforts and anticipated sales, marketing and general
11
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and administrative expenses. During the past two fiscal years, the Company has
satisfied its cash requirements principally from advances from shareholders, and
private and public sales of equity securities and, to a limited extent, from
cash flows from operations. The primary uses of cash have been to fund research
and development and for sales, general and administrative expenses.
At June 30, 1998, the Company had cash and equivalents of
approximately $752,000, working capital of approximately $532,000 and
shareholders' equity of approximately $754,000. At June 30, 1998, the Company
had $15,000 of long-term deposits outstanding.
Net cash used in operating activities for the six months ended June
30, 1998 and 1997, totaled approximately $1,846,000 and $1,408,000 respectively,
and was primarily a result of the Company's net losses during those periods. Net
cash used in financing activities for the three months ended June 30, 1998 and
1997, totaled approximately $48,000 and $118,000, respectively due primarily to
the repayment on short term notes payable.
Based on the Company's operating plan, the Company believes that its
current cash balances will be sufficient to satisfy its capital requirements and
finance its operation through the mid-September 1998. Such belief is based upon
certain assumptions, and there can be no assurance that such assumptions are
correct. The Company will be required to raise substantial additional debt or
equity financing in order to fund its future operations and growth strategy. The
Company anticipates that it will be required to seek additional funding through
public or private sales of debt or equity securities. The Company is currently
evaluating its financing options. There can be no assurance that the Company
will be able to obtain such additional capital on a timely basis, on favorable
terms, or at all. In any such event, the Company may be unable to implement its
business plan.
Year 2000
The Company has developed three projects, which are at various
stages of completion, on its internal computer systems to address the
implications of Year 2000. Scheduled completion of all projects is September
1999. The Company has developed a program to provide information to its
customers on Year 2000 compliance status of all its products. The Company has
communicated with its application vendors, suppliers, financial institutions and
other third parties with whom it is conducting business to address the impact of
the Year 2000 and have received compliance agreements from all. The Company does
not anticipate that the financial impact of making the required changes to its
systems and applications to become Year 2000 compliant will be material to the
Company's financial position, results of operations or cash flows.
12
<PAGE>
PART II - OTHER INFORMATION
Item 5. OTHER EVENTS
The Company has received notification from The Nasdaq Stock Market, Inc.
("Nasdaq"), that the Company is not in compliance with certain quantitative
requirements for continued listing of its Common Stock on the Nasdaq SmallCap
Market. Nasdaq requires, among other things, companies listed on the Nasdaq
SmallCap Market (i) maintain net tangible assets of $2,000,000, (ii) a market
capitalization of $35,000,000 or (iii) net income (in the latest fiscal year or
two of the last three fiscal years) of $500,000. Nasdaq has notified the Company
that its stock will be delisted from the Nasdaq SmallCap Market due to the
Company's failure to maintain compliance with these quantitative requirements.
The Company has formally appealed the pending delisting and presented its appeal
at an oral hearing before a panel of the National Association of Securities
Dealers, Inc. ("NASD") Board of Governors on July 24, 1998. As of the date of
this Memorandum, the Company is awaiting the NASD's decision. While the Company
believes that upon completion of this Offering it will be in compliance with the
net tangible assets test set forth above, there can be no assurance that the
Common Stock will not be delisted from trading on the Nasdaq SmallCap Market.
The effects of delisting include, without limitation, the limited release of
market prices of the Company's securities, limited news coverage of the Company,
and restriction of investors' interest in the Company, and may adversely
materially affect the trading market and prices for the Company's securities,
thereby affecting the Company's ability to issue additional securities or secure
additional financing. In addition, if the Company's securities are also deemed
penny stocks under the Securities Enforcement Penny Stock Reform Act of 1990,
additional disclosure would be required in connection with traded in the
Company's securities, including delivery of a disclosure schedule explaining the
nature and risk of the penny stick market. Such requirements could severely
limit the liquidity of the Company's securities.
13
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibit 27 Financial Data Schedule
14
<PAGE>
SIGNATURES
In accordance with 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.
THINKING TOOLS, INC.
Date: August 14, 1998 By: /s/ Moshe Zarmi
----------------
Moshe Zarmi
President and CEO
By: /s/ Patricia Kessler
----------------
Patricia Kessler
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 752
<SECURITIES> 0
<RECEIVABLES> 121
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 942
<PP&E> 352
<DEPRECIATION> 137
<TOTAL-ASSETS> 1179
<CURRENT-LIABILITIES> 410
<BONDS> 0
0
5
<COMMON> 0
<OTHER-SE> 749
<TOTAL-LIABILITY-AND-EQUITY> 1179
<SALES> 166
<TOTAL-REVENUES> 166
<CGS> 1
<TOTAL-COSTS> 1
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (834)
<INCOME-TAX> 0
<INCOME-CONTINUING> (834)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (834)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
