FORM 10-Q
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 quarter ended June 30, 1997
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 1-12727
SENTRY TECHNOLOGY CORPORATION 10
(Exact name of registrant as specified in its charter)
DELAWARE 96-11-3349733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 WIRELESS BOULEVARD, HAUPPAUGE, NEW YORK 11788
(Address of principal executive offices) (Zip Code)
516-232-2100
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
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
Number of shares outstanding of issuer's common stock as of August 4, 1997 was
9,700,884.
<PAGE>
SENTRY TECHNOLOGY CORPORATION
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets --
June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations --
Three Months Ended June 30, 1997 and 1996
and Six Months Ended June 30, 1997 and 1996 4
Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 1997 5
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1997 and 1996 6
Notes to Condensed Consolidated Financial
Statements -- June 30, 1997 7 - 8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 9 - 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
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<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,430 $ 7,658
Accounts receivable, less allowance for doubtful
accounts of $873 and $719, respectively 5,533 6,229
Net investment in sales-type leases -
current portion 588 1,496
Inventories 8,264 6,926
Prepaid expenses and other current assets 591 389
------ ------
Total current assets 17,406 22,698
NET INVESTMENT IN SALES-TYPE LEASES -
non-current portion 1,210 1,205
SECURITY DEVICES ON LEASE, net 207 281
PROPERTY, PLANT AND EQUIPMENT, net 7,068 7,288
GOODWILL AND OTHER INTANGIBLES, net 11,082 364
OTHER ASSETS 533 1,021
--------- ---------
$ 37,506 $ 32,857
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,139 $ 1,101
Accrued liabilities 3,171 2,268
Obligations under capital leases -
current portion 241 392
Deferred lease rentals 202 231
--------- ---------
Total current liabilities 4,753 3,992
OBLIGATIONS UNDER CAPITAL LEASES -
non-current portion 3,082 3,154
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 474 463
REDEEMABLE CUMULATIVE PREFERRED STOCK 24,644 ---
SHAREHOLDERS' EQUITY
Common stock 10 5
Additional paid-in capital 17,272 22,329
Retained earnings (accumulated deficit) (12,729) 2,914
--------- ---------
4,553 25,248
--------- ---------
$ 37,506 $ 32,857
========= =========
See notes to the condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Six Months Ended
JUNE 30, JUNE 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES $ 5,622 $ 6,887 $ 10,725 $ 12,439
COSTS AND EXPENSES:
Cost of sales 3,140 3,790 5,639 6,390
Customer service expenses 1,112 756 1,949 1,418
Selling, general and
administrative expenses 2,201 1,967 4,636 3,843
Research and development 419 359 849 731
Interest (income) expense, net 77 (41) 23 (41)
Purchased in-process
research and development --- --- 13,200 ---
--------- --------- --------- ---------
6,949 6,831 26,296 12,341
--------- --------- --------- ---------
OPERATING PROFIT (LOSS) (1,327) 56 (15,571) 98
OTHER INCOME:
Gain on sale of assets --- --- --- 2,462
--------- --------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES (1,327) 56 (15,571) 2,560
INCOME TAXES 36 14 72 640
--------- --------- --------- ---------
NET INCOME (LOSS) (1,363) 42 (15,643) 1,920
PREFERRED STOCK DIVIDENDS 457 --- 457 ---
---------- ------------ ----------- --------
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (1,820) $ 42 $ (16,100) $ 1,920
============= ========= ========= ========
NET INCOME (LOSS) PER SHARE $ (.19) $ .01 $ (1.89) $ .38
============ ========= ========= ========
WEIGHTED AVERAGE
COMMON SHARES 9,672 5,094 8,501 5,058
========= ========= ========= =========
See notes to the condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
SIX MONTHS ENDED JUNE 30, 1997
Additional Total
COMMON STOCK Paid-In Retained Shareholders'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996
(as previously reported) 5,773 $ 58 $ 22,276 $ 2,914 $ 25,248
Restatement of Knogo N.A.
shares due to the merger (971) (53) 53 --- ---
------ --------- --------- --------- --------
BALANCE, DECEMBER 31, 1996
(as restated) 4,802 5 22,329 2,914 25,248
Shares issued to Video Sentry
shareholders in connection with
the merger 4,842 5 19,449 --- 19,454
Preferred shares issued to former
Knogo N.A. shareholders in
connection with the merger --- --- (24,009) --- (24,009)
Exercise of stock options and
warrants 57 --- (40) --- (40)
Net loss --- --- --- (15,643) (15,643)
Preferred stock dividends --- --- (457) --- (457)
--------- ---------- ---------- --------- ---------
BALANCE, JUNE 30, 1997 9,701 $ 10 $ 17,272 $ (12,729) $ 4,553
===== ========= ========= ========= ========
See notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
JUNE 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (15,643) $ 1,920
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating activities:
Write-off of purchased in-process research
and development 13,200 ---
Depreciation and amortization of security
devices and property, plant and equipment 631 565
Amortization of goodwill and intangibles 674 28
Provision for bad debts 43 54
Changes in operating assets and liabilities,
net of effects of business acquired:
Accounts receivable 1,357 3,459
Net investment in sales-type leases 903 (759)
Inventories (452) (209)
Accounts payable (1,391) (1,081)
Accrued liabilities (2,391) 293
Other, net 218 10
--------- ---------
Net cash (used in) provided by operating activities (2,851) 4,280
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment, net (122) (192)
Security devices on lease 26 (351)
--------- ---------
Net cash used in investing activities (96) (543)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of acquired debt (2,166) ---
Repayment of obligations under capital leases (253) (89)
Exercise of stock options and warrants 138 64
--------- ---------
Net cash used in financing activities (2,281) (25)
(DECREASE) INCREASE IN CASH (5,228) 3,712
CASH, at beginning of period 7,658 409
--------- ---------
CASH, at end of period $ 2,430 $ 4,121
========= =========
See notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
SENTRY TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE A -- BASIS OF PRESENTATION - KNOGO NORTH AMERICA INC. AND VIDEO SENTRY
CORPORATION MERGER Sentry Technology Corporation ("Sentry") a newly publicly
traded Delaware Corporation, was established to effect the merger of Knogo North
America Inc. ("Knogo N.A.") and Video Sentry Corporation ("Video Sentry") which
was consummated on February 12, 1997 (the "Effective Date"). The merger resulted
in Knogo N.A. and Video Sentry becoming wholly owned subsidiaries of Sentry. The
term "Company" refers to Sentry as of and subsequent to February 12, 1997 and to
Knogo N.A. prior to such date.
Pursuant to the merger agreement, Sentry issued one share of Common Stock for
each one share of Video Sentry Common Stock outstanding at the effective time of
the merger. Sentry also issued one share of Common Stock and one share of Class
A Preferred Stock for each 1.2022 shares of Knogo N.A. Common Stock outstanding.
The Sentry Class A Preferred Stock has a face value of $5.00 per share and a
cumulative dividend rate of 5.0% (the first two years of which are
paid-in-kind). The preferred stock is non-voting and subject to a mandatory
redemption four years from the date of issuance and optional redemption by
Sentry at any time after one year from the date of issuance. The
redemption price will be equal to $5.00 per preferred share (plus accrued and
unpaid dividends as of the redemption date) plus the amount, if any, by which
the market price of Sentry's Common Stock at the time of redemption exceeds a
hurdle price based on the price of Sentry Common Stock one year after the
Effective Date. The minimum hurdle price is $5.00 per share and the maximum is
$6.50. The preferred stock is not convertible, but the redemption price may, in
certain circumstances, be paid in common stock at Sentry's option. Undeclared
and unpaid cumulative dividends totaled $457,000 as of June 30, 1997.
The merger was accounted for under the purchase method of accounting and
accordingly, the acquired assets and assumed liabilities have been recorded at
their estimated fair market values at the date of acquisition. Goodwill and
other intangibles in the amount of approximately $11,350,000 have been
capitalized and non-recurring charges of approximately $13,200,000 relating to
in-process research and development have been expensed. The goodwill and other
intangibles will be amortized over an estimated useful life of seven years.
Although Video Sentry shareholders have a majority voting interest in Sentry
based upon their common stock ownership percentage, generally accepted
accounting principles requires consideration of a number of factors, in addition
to voting interest, in determining the acquiring entity for purposes of purchase
accounting treatment. Such other factors to be considered include: (i) key
Sentry management positions are held by individuals previously holding similar
such positions in Knogo N.A.; (ii) the assets, revenues and net earnings of
Knogo N.A. significantly exceed those of Video Sentry; and (iii) the market
value of the securities received by the former holders of Knogo N.A. Common
Stock significantly exceeds the market value of the securities received by the
former holders of Video Sentry Common Stock. As a result of these other factors,
and solely for accounting and financial reporting purposes, the merger has been
accounted for as a reverse acquisition of Video Sentry by Knogo N.A. Accordingly
the financial statements of Knogo N.A. are the historical financial statements
of Sentry and the results of Sentry's operations include the results of
operations of Video Sentry after the Effective Date.
The consolidated balance sheet reflects the merger as of February 12, 1997, when
Sentry acquired all of the outstanding Video Sentry Common Stock at its fair
value plus direct costs incurred which are approximately $2,383,000. The
consolidated statements of operations and cash flows include the historical
results of Knogo N.A. in all periods presented and include the results of Video
Sentry after the Effective Date.
The consolidated financial statements are unaudited. In the opinion of
management, all adjustments, consisting of normal recurring adjustments
necessary for a fair presentation of the financial information for the periods
indicated have been included. Interim results are not necessarily indicative of
results for a full year.
NOTE B -- RESTATEMENT
Common stock, additional paid-in capital and the weighted average common shares
have been retroactively restated to the earliest year presented in order to
reflect the effect of the recapitalization that occurred during the reverse
acquisition.
<PAGE>
SENTRY TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE C -- NET INVESTMENT IN SALES-TYPE LEASES The Company is the lessor of
security devices under agreements expiring in various years through 2001. The
net investment in sales-type leases consists of:
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(in thousands)
<S> <C> <C>
Minimum lease payments receivable $ 2,158 $ 3,152
Allowance for uncollectible minimum
lease payments (108) (157)
Unearned income (282) (324)
Unguaranteed residual value 30 30
--------- ---------
Net investment 1,798 2,701
Less current portion 588 1,496
--------- ---------
Non-current portion $ 1,210 $ 1,205
========= =========
NOTE D -- INVENTORIES
Inventories consist of the following:
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(in thousands)
Raw materials $ 3,314 $ 2,498
Work-in-process 3,156 2,547
Finished goods 1,794 1,881
--------- ---------
$ 8,264 $ 6,926
========= =========
</TABLE>
Reserves for excess and obsolete inventory totaled $1,693,000 and $1,691,000 as
of June 30, 1997 and December 31, 1996, respectively and have been included as a
component of the above amounts.
NOTE E -- SUPPLY AGREEMENT
Knogo N.A. had a supply agreement under which Sensormatic Electronics
Corporation ("Sensormatic") was obligated to purchase $2 million of products
from Knogo N.A. per quarter through June 30, 1997. Such products were priced to
yield Knogo N.A. a 35% gross margin. Sales under the supply agreement were
$529,000 and $1,234,000 in the quarters ended June 30, 1997 and 1996 and
$1,303,000 and $3,397,000 in the six month periods ended June 30, 1997 and 1996,
respectively. During the periods presented, Sensormatic did not meet its minimum
order amounts and, accordingly, the Company recorded in revenues the cumulative
profits on the shortfall payable to the Company pursuant to the supply
agreement. These amounts were $674,000 and $1,176,000 in the quarter and six
months ending June 30, 1997, respectively and $301,000 in both the quarter and
six months ended June 30, 1996. Included in accounts receivable as of June 30,
1997 and December 31, 1996 are amounts due from Sensormatic of $948,000 and
$1,212,000, respectively.
NOTE F -- GAIN ON SALE OF ASSETS
In March 1996, the Company completed the sale of certain assets (primarily
patents and technology) of its library security systems business to Minnesota
Mining and Manufacturing Company ("3M") for a purchase price of $3 million, paid
at closing. In connection with such sale, Knogo N.A. and 3M entered into an
agreement pursuant to which the Company has become a distributor of certain of
3M's library systems products for an initial term of three years and has agreed
not to compete with 3M in the sale of security systems products (other than
closed circuit video systems) in the library market except as otherwise
contemplated by the transaction documentation. The parties also settled certain
patent litigation between them.
<PAGE>
SENTRY TECHNOLOGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS:
Consolidated revenues were 18% and 14% lower in the second quarter and six month
period ended June 30, 1997 than in the quarter and six month period ended June
30, 1996. Revenues from third party customers, other than Sensormatic, in the
current periods were $4,419,000 and $8,246,000 or 79% and 77% of total revenues,
a decrease as compared to $5,352,000 and $8,741,00 or 78% and 70% of total
revenues in the prior year periods. Since the merger was consummated, the
SentryVision(TM) product lines have contributed $1.4 million in new revenues.
This was partially offset by lower EAS and traditional CCTV sales primarily in
the retail markets. Sales under the supply agreement with Sensormatic in the
quarter and six month period ended June 30, 1997 were $529,000 and $1,303,000 or
9% and 12% of total revenues as compared to $1,234,000 and $3,397,000 or 18% and
27% of total revenues in the prior year periods. Under the terms of the supply
agreement, Sensormatic had minimum obligations to purchase $2 million in each of
the first two quarters of 1997 before the agreement expired on June 30. As
Sensormatic did not meet its minimum order amounts in certain of the periods
presented, the Company recorded in revenues $674,000 and $1,176,000 in the three
and six month periods ended June 30, 1997 and $301,000 in the six month period
ended June 30, 1996, which represented the minimum contractual margins on the
shortfall. Sensormatic has indicated that it will continue to purchase certain
EAS products subsequent to June 30, 1997, but without minimum order levels and
guaranteed minimum margins. Sentry expects to replace these revenues in the
future through the promotion of the SentryVision(TM) product line and continued
growth in its core markets. Sales represented 79% and service revenues and other
income 21% of total revenues in 1997 as compared to 89% and 11% in 1996.
Cost of sales were 56% and 53% of total revenues in the three and six months
ended June 30, 1997 compared to 55% and 51% in the same periods in the previous
year. The cost of sales percentage is impacted by several factors including the
mix of products sold to its third party customers and the amount of sales to
Sensormatic under the supply agreement. In the second quarter and first six
months of 1997, the Company sold a higher percentage of SentryVision(TM), CCTV
equipment and 3M library products to its third party customers than in the same
period in 1996. These products were not manufactured directly by Sentry and
carry lower margins than the traditional EAS products it does produce. In the
first six months of 1997 cost of sales was also negatively impacted by the lower
production levels at the Company's Puerto Rico manufacturing facility due to the
decline in sales to Sensormatic and the ramping up for the production of
SentryVision(TM) products which had not yet commenced.
Customer service expenses were higher in both the second quarter and first six
months of 1997 as compared to both the second quarter and first six months of
1996 due to the addition of Video Sentry customer service staff, technical
updates made to the existing installed Video Sentry customer base and cross
training for existing staff on EAS and CCTV (including SentryVision(TM)) product
lines.
The increase in selling, general and administrative expenses in 1997 as compared
to 1996 were primarily a result of the amortization of goodwill and intangibles
acquired in the merger which represented $389,000 and $649,000 in the second
quarter and first six months of 1997, respectively.
The increase in research and development costs in the second quarter and six
months ended June 30, 1997 as compared to the second quarter and six months
ended June 30, 1996 is a result of the continuing efforts to improve the
SentryVision(TM) traveling CCTV surveillance system which the Company commenced
selling in the first half of 1997.
Due to the consummation of the merger in the first quarter of 1997, Sentry
recorded for that period a non-recurring charge of $13,200,000 relating to
purchased in-process research and development. The amount was based on the
purchase price allocation and a valuation of existing technology and technology
in-process. The charge for in-process research and development equaled its
estimated current fair value based on risk adjusted cash flows of specifically
identified technologies for which the technological feasibility has not been
established and alternative future uses did not exist.
SENTRY TECHNOLOGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The Company had net interest expense in the current year periods as compared to
net interest income in the 1996 periods. Interest income was $23,000 and $98,000
in the second quarter and first six months of 1997 as compared to $61,000 and
$82,000 in the same periods of 1996. As a result of the merger, the Company
reduced the amount of its temporary investments. Interest expense was $100,000
and $121,000 in the three and six month periods ended June 30, 1997 as compared
to $20,000 and $41,000 in the same periods of 1996. The increase is due to
higher amounts of capitalized leases.
In the first quarter of 1996, the Company sold certain assets to 3M, consisting
of patents and technology, for a purchase price of $3 million. The proceeds, net
of certain costs including patent costs, inventory write downs, new product
training costs, legal and other costs, resulted in a gain of approximately $2.5
million which is included in the results of that period. See Note F.
Sentry's lower income taxes in the current periods represent the normal
provisions on the earnings of the Puerto Rico manufacturing operations which
cannot be offset by operating losses of other subsidiaries.. The higher amount
in the 1996 period was primarily related to the tax on the gain on the sale of
assets to 3M which were taxed at the statutory federal tax rate.
As a result of the foregoing, Sentry had a net loss of $1,363,000 and
$15,643,000 in the quarter and six months ended June 30, 1997 as compared to net
income of $42,000 and $1,920,000 in the quarter and six months ended June 30,
1997.
Preferred stock dividends of $457,000 have been accrued in 1997. These
amounts will be paid-in-kind as of February 12, 1998. See Note A.
FINANCIAL CONDITION AS OF JUNE 30, 1997
During the first six months and primarily as a result of the merger, Sentry used
approximately $5.2 million in cash. The Company utilized existing funds of $2.2
million to retire acquired Video Sentry debt and $2.5 million to satisfy long
term vendor payables. As of June 30, 1997 the Company had no bank debt.
Sentry intends to enter into a new credit arrangement, subject to the
finalization of financial covenants, with Knogo N.A.'s present lender, Fleet
Bank, and thereafter to make advances to each of Video Sentry and Knogo N.A. as
the businesses of the two subsidiaries may require. Based upon discussions
between Knogo N.A.'s management and senior lending officers at Fleet Bank,
Sentry believes that a new facility will be made available to it for at least
the same amount, and on substantially the same terms, as are currently made
available to Knogo N.A. Such facility would be secured by a lien on
substantially all of the assets of Sentry and its subsidiaries.
The Company anticipates that current cash reserves, cash generated by operations
and cash obtained under the bank credit facility expected to be entered into by
Sentry will be adequate to finance its anticipated working capital requirements
as well as future capital expenditure requirements for at least the next twelve
months.
<PAGE>
SENTRY TECHNOLOGY CORPORATION
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits:
27. Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the three months ended June 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SENTRY TECHNOLOGY CORPORATION
Date: AUGUST 4, 1997 By: /S/ PETER J. MUNDY
Peter J. Mundy, Vice
President - Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,430
<SECURITIES> 0
<RECEIVABLES> 6,406
<ALLOWANCES> 873
<INVENTORY> 8,264
<CURRENT-ASSETS> 17,406
<PP&E> 13,518
<DEPRECIATION> 6,450
<TOTAL-ASSETS> 37,506
<CURRENT-LIABILITIES> 4,753
<BONDS> 3,082
24,644
0
<COMMON> 10
<OTHER-SE> 4,543
<TOTAL-LIABILITY-AND-EQUITY> 37,506
<SALES> 8,459
<TOTAL-REVENUES> 10,725
<CGS> 5,639
<TOTAL-COSTS> 20,591
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 43
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> (15,571)
<INCOME-TAX> 72
<INCOME-CONTINUING> (15,643)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,643)
<EPS-PRIMARY> (1.89)
<EPS-DILUTED> (1.89)
</TABLE>
