UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 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 77-0436410
(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: (831) 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 September 30, 1998, the number of shares outstanding of the Issuer's Common
Stock, par value $.001 per share, was 4,641,758 shares.
2
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THINKING TOOLS, INC.
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
Part I - FINANCIAL INFORMATION PAGE NO.
- ------------------------------ --------
<S> <C>
Item 1. FINANCIAL STATEMENTS
Condensed Balance Sheets as of September 30, 1998 and December 31, 1997............ 3
Condensed Statements of Operations for the quarter and nine months
ended September 30, 1998 and 1997.................................................. 4
Condensed Statements of Cash Flows for nine months
ended September 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....................................................................... 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K................................................... 15
Signatures ................................................................................... 16
Financial Data Schedule.......................................................................... 17
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THINKING TOOLS, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997 (1)
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 151 $ 2,597
Accounts receivable 162 7
Prepaid expenses and other current assets 19 131
--------- --------
Total current assets 332 2,735
--------- --------
Property and equipment, net 199 265
Other assets 12 29
--------- --------
Total assets $ 543 $ 3,029
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 183 200
Accrued expenses 195 359
Notes payable 0 88
Capital lease obligations 5 13
--------- --------
Total current liabilities 383 660
Long term deposits 15 --
--------- --------
Total liabilities 398 660
Shareholders' equity:
Common stock 5 5
Additional paid-in capital 11,090 11,288
Deferred stock compensation -- (198)
Accumulated deficit (10,950) (8,726)
--------- --------
Total shareholders' equity 145 2,369
--------- --------
Total liabilities and shareholders' equity $ 543 $ 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
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THINKING TOOLS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ------------------------
1998 1997 1998 1997
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 193 $ -- $ 358 $ 94
Costs -- -- 1 94
-------- -------- -------- --------
Gross profit 193 -- 357 --
-------- -------- -------- --------
Operating Expenses
Selling, general, and administrative 522 893 1,681 2,099
Research and development 282 562 929 1182
-------- -------- -------- --------
Total operating expenses 804 1,455 2,610 3,281
-------- -------- -------- --------
Operating loss (611) (1,455) (2,253) (3,281)
Other income, net 2 61 29 215
-------- -------- -------- --------
Loss before income taxes (609) (1,394) (2,224) (3,066)
Income tax expense -- -- -- --
======== ======== ======== ========
Net loss $ (609) $ (1,394) $ (2,224) $ (3,066)
======== ======== ======== ========
Basic and diluted loss per share $ (0.13) $ (0.30) (0.48) (0.66)
======== ======== ======== ========
Shares used in calculating per share data 4,642 4,642 4,642 4,642
======== ======== ======== ========
</TABLE>
See Notes to Condensed Financial Statements
4
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THINKING TOOLS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months ended
September 30
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,224) $(3,066)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 49 45
Stock compensation expense -- 78
Changes in operating assets and liabilities:
Accounts receivable (155) 136
Prepaid expenses and other assets 112 102
Other assets 17 (12)
Accounts payable (17) 135
Accrued expenses (164) 2
Billings in excess of costs on uncompleted contracts and deferred -- (32)
revenue
------- -------
Net cash used in operating activities (2,382) (2612)
------- -------
Cash flows from investing activities:
Purchase of property and equipment (8) (245)
Loss on sale of fixed assets 25 0
------- -------
Net cash provided by (used in) investing activities 17 (245)
------- -------
Cash flows from financing activities:
Principal payment on short-term notes payable (88) (127)
Principal payments on capital leases (8) (15)
Long-term deposits 15 --
------- -------
Net cash used in financing activities (81) (142)
------- -------
Net decrease in cash and equivalents (2446) (2,999)
Cash and equivalents at beginning of period 2,597 6,869
======= =======
Cash and equivalents at end of period $ 151 $ 3,870
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 4 $ 0
======= =======
</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. Net 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.
3. Reporting Comprehensive Income
Beginning January 1, 1998, the company adopted statement of Financial Accounting
Standard 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 three months and nine months ended September 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 all periods, as
defined.
4. 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 standard will not impact the
Company's financial position, results of operations or cash flows. This standard
is effective for the Company beginning for fiscal 1998. The Company will include
the required disclosures within its Annual Report as of December 31, 1998.
5. Subsequent Event
The Company had received notification from The Nasdaq Stock Market, Inc.
("Nasdaq"), on May 5, 1998 that the Company was 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. On October 7, 1998
Nasdaq notified the Company that its stock has been
6
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delisted from the Nasdaq SmallCap Market due to the Company's failure to
maintain compliance with these quantitative requirements. 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 trading in the Company's securities,
including delivery of a disclosure schedule explaining the nature and risk of
the penny stock market. Such requirements could severely limit the liquidity of
the Company's securities.
7
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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 this 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, significant portions 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 fiscal 1998 to date, the
Company has 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. For the nine months ended September 30, 1998, the
Company recorded revenues of $357,900 from product sales, and had a backlog of
$75,000 at the end of the third quarter. The Company's current and planned
expense levels are based in part on its expectations towards anticipated
revenue.
8
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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 place more emphasis on the distribution of its products
through existing and future strategic partners, as well as continuing direct
sales to customers. The company plans to continue adding to it's existing
strategic partners accordingly. Agreements are now in place with Viasoft to
distribute Think 2000 and efforts are continuing to broaden the circle of
Distributors, Resellers and VAR agreements. The Company is in discussion with
additional prospective strategic partners in these areas. The Company believes
that Think 2000, with its Risk Management and Contingency Planning capabilities,
can draw deserved attention throughout 1999, as businesses realize that their
time frames for remediation efforts have reached milestones where they must
invest in managing risk and contingency planning. The Company has also taken
steps to materialize on other areas of its competency like Technology Based
Training Simulation (TBTS) and Enterprise Modeling and has completed agreements
with SHL Systemhouse Inc. (SHL) by which the Company has the rights to sell
"Project Challenge", a project management simulation developed by Thinking
Tools, Inc. and SHL. The Company plans to continue making presentations and
appearances at academic forums and corporate sponsored events.
As of September 30, 1998, the Company had experienced cumulative losses
of $10,950,000 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, marketing and general and administrative expenses. Through
September 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"). As of September 30, 1998 the Company had a negative working
capital of approximately $51,000. The Company is actively seeking additional
funds through public or private sales (including employees, board members and
existing stockholders) of debt or equity securities. 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 was 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.
9
<PAGE>
Results of Operations
Comparison of the quarter ended September 30, 1998 and September 30, 1997
Revenues: Revenues for the three months ended September 30, 1998
increased by $193,000,or 100%, as compared to nil for the same period ended
September 30, 1997. During the three months ended September 30, 1998, the
Company continued to 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
$75,000 at September 30,1998.
Gross Margin: Gross margin for the three months ended September 30,1998
was $193,000 compared to nil for the same period ended September 30,1997. During
the three months ended September 30, 1998, the Company did not record any direct
cost to revenues, indirect costs were recorded in Research and Development.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses decreased by $371,000, or 42%, for the three months
ended September 30, 1998, to $522,000, from $893,000 for the three months ended
September 30, 1997. Selling, general, and administrative expenses consist
primarily of costs associated with labor. The decrease in selling, general and
administrative expenses was primarily due to reductions in staff and outside
consultants/contractors. The Company expects selling, general and administrative
expenses to increase in future periods as the Company continues to aggressively
implement its selling and marketing program and expand its staff and facilities
accordingly.
Research and Development: Research and development expenses for the
three months ended September 30, 1998, decreased by $280,000, or 50%, to
$282,000 from $562,000 for the three months ended September 30, 1997. This
decrease was primarily due to a reduction in headcount and contractors. The
Company anticipates that research and development costs will maintain at current
levels for future periods as the Company seeks to develop additional products as
part of its strategic plan.
Other Income, Net : Interest expense did not change for the three
months ended September 30, 1998 and remained at $4,000 year to date compared to
nil for the three months ended September 30, 1997. Other income net for the
three months ended September 30, 1998 decreased by $59,000, or 97%, to $2,000,
from $61,000 for the three months ended September 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 $10,000 during the third quarter ended September 30, 1998.
Provision for Income Taxes: The Company recorded no provisions for
income taxes for the three months ended September 30, 1998 and the same period
ended September 30, 1997, as the Company recognized taxable losses for which no
significant benefit has been realized.
10
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Net Loss: As a result of the foregoing, net loss for the three months
ended September 30, 1998 decreased by $785,000, or 56%, to $609,000, from
$1,394,000 for the three months ended September 30, 1997.
11
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Comparison of nine months ended September 30, 1998 and September 30, 1997
Revenues: Revenues for the nine months ended September 30, 1998
increased by $264,000, or 281%, to $358,000 from $94,000 for nine months ended
September 30, 1997. During the 1997 period, the Company's revenues were derived
primarily from a relatively small number of development contracts. During the
nine months ended September 30, 1998, the sales were derived from the "Think
2000" product.
Gross Margin: Gross margin for the nine months ended September 30, 1998
was $357,000 as compared to nil for the nine months ended September 30, 1997.
During the nine months ended September 30, 1997, the Company had completed 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 $418,000, or 20%, for the nine months ended
September 30, 1998, to $1,681,000 from $2,099,000 for the nine months ended
September 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, California facility, in January 1998.
Research and Development: Research and development expenses for the
nine months ended September 30, 1998 decreased by $253,000, or 21%, to $929,000
from $1,182,000 for the nine months ended September 30, 1997. The decrease in
research and development expenses were primarily due to staff and outside
contract reductions.
Interest Expenses: Interest expenses for the nine months ended
September 30, 1998 increased by $3,000, to $4,000 from $1,000 for the nine
months ended September 30, 1997.
Other Income: Other income for the nine months ended September 30, 1998
decreased by $186,000 to $29,000 from $215,000 for the nine months ended
September 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.
Provision for Income Taxes: The company recorded no provision for
income taxes for the nine months ended September 30, 1998 and the same period
ended September 30, 1997, as the Company had taxable losses for which no
significant benefit has been realized.
Net Loss: As a result of the foregoing, net loss for the nine months
ended September 30, 1998, decreased by $842,000, or 27%, to $2,224,000 from
$3,066,000 for the nine months ended September 30,1997.
12
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Liquidity and Capital Resources
Since its inception and through September 30, 1998, the Company has
incurred cumulative losses aggregating approximately $10,950,000 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 marketing, general, 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 September 30, 1998, the Company had cash and equivalents of
approximately $151,000, a negative working capital of approximately $51,000 and
shareholders' equity of approximately $145,000. At September 30, 1998, the
Company had $15,000 of long-term deposits outstanding.
Net cash used in operating activities for the nine months ended
September 30, 1998 and 1997, totaled approximately $2,382,000 and $2,612,000
respectively, and was primarily a result of the Company's net losses during
those periods. Net cash used in financing activities for the nine months ended
September 30, 1998 and 1997, totaled approximately $81,000 and $142,000,
respectively due primarily to the repayment on short term notes payable.
The Company is now required to raise substantial additional debt or
equity financing in order to fund its future operations and growth strategy. The
Company is currently evaluating its financing options and seeking additional
funding through public or private sales of debt or equity securities. There can
be no assurance that the Company will be able to obtain such additional capital
either on a timely basis, on favorable terms, or at all.
Year 2000
The Company has developed a three part contingency plan, which are
at various stages of completion, on its internal computer systems to address the
implications of Year 2000. Scheduled completion of the plan is September 1999.
Additionally, 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 has
not realized nor does it anticipate any financial impact of making the required
changes to its systems and applications to become Year 2000 compliant which will
be material to the Company's financial position, results of operations or cash
flows.
13
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PART II - OTHER INFORMATION
Item 5. Other Events
The Company had received notification from The Nasdaq Stock Market, Inc.
("Nasdaq"), on May 5, 1998 that the Company was 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. On October 7, 1998
Nasdaq notified the Company that its stock has been delisted from the Nasdaq
SmallCap Market due to the Company's failure to maintain compliance with these
quantitative requirements. 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 trading in the Company's securities, including
delivery of a disclosure schedule explaining the nature and risk of the penny
stock market. Such requirements could severely limit the liquidity of the
Company's securities.
14
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the quarter ended
September 30, 1998
15
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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: November 13, 1998 By: /s/ Moshe Zarmi
------------------------------
Moshe Zarmi
President and CEO
By: /s/ Patricia Kessler
------------------------------
Patricia Kessler
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 151
<SECURITIES> 0
<RECEIVABLES> 162
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 332
<PP&E> 343
<DEPRECIATION> 144
<TOTAL-ASSETS> 543
<CURRENT-LIABILITIES> 383
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 140
<TOTAL-LIABILITY-AND-EQUITY> 543
<SALES> 358
<TOTAL-REVENUES> 358
<CGS> 1
<TOTAL-COSTS> 1
<OTHER-EXPENSES> 29
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (2,224)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,224)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,224)
<EPS-PRIMARY> (.48)
<EPS-DILUTED> (.48)
</TABLE>
