<PAGE>
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, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number: 1-8443
TELOS CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-0880974
(State of Incorporation) (I.R.S. Employer Identification No.)
19886 Ashburn Road, Ashburn, Virginia 20147-2358
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (703) 724-3800
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 2, 1997 the registrant had 23,076,753 shares of Class A Common Stock,
no par value, 4,037,628 shares of Class B Common Stock, no par value; and
3,595,586 shares of 12% Cumulative Exchangeable Redeemable Preferred Stock, par
value $.01 per share, outstanding.
No public market exists for the registrant's Common Stock.
Number of pages in this report (excluding exhibits): 12
<PAGE>
TELOS CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income for the Three Months Ended
March 31, 1997 and 1996................................................3
Condensed Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996..................................................4
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996..........................................5
Notes to Condensed Consolidated Financial Statements...................6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....................8-10
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities....................................11
Item 6. Exhibits and Reports on Form 8-K...................................11
SIGNATURES...................................................................12
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
TELOS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(amounts in thousands)
Three Months Ended
March 31,
---------
1997 1996
---- ----
<S> <C> <C>
Sales
Systems and Support Services $26,118 $26,232
Systems Integration 28,227 13,931
------ ------
54,345 40,163
Costs and expenses
Cost of sales 46,648 35,903
Selling, general and
administrative expenses 6,525 6,051
Goodwill amortization 225 275
------ ----
Operating income (loss) 947 (2,066)
Other income (expenses)
Other income 12 3
Interest expense (1,760) (1,200)
----- -----
Loss before taxes (801) (3,263)
Income tax provision -- --
----- -----
Loss from continuing operations $(801) $(3,263)
Discontinued operations:
Loss from discontinued operations -- (131)
--- -----
Net loss $(801) $(3,394)
=== =====
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
TELOS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
(amounts in thousands)
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Current assets
Cash and cash equivalents,
(including $56 and $1,121 of
restricted cash, respectively) $ 979 $ 2,781
Accounts receivable, net 47,868 51,549
Inventories, net 14,421 17,066
Other current assets 3,533 2,567
----- ------
Total current assets 66,801 73,963
Property and equipment, net of
accumulated depreciation of
$20,802 and $20,390 respectively 16,496 16,486
Goodwill 13,320 13,545
Other assets 6,315 6,070
------ ------
$102,932 $110,064
======= =======
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Accounts payable $17,800 $35,730
Other current liabilities 10,947 11,708
Accrued compensation and benefits 7,527 10,163
------ ------
Total current liabilities 36,274 57,601
Senior credit facility 31,318 15,418
Senior subordinated notes 16,819 17,439
Capital lease obligation 12,386 12,537
Other long-term liabilities 20 154
------ ------
Total liabilities 96,817 103,149
------ -------
Redeemable preferred stocks
Senior redeemable preferred stock 4,910 4,828
Class B redeemable preferred stock 11,293 11,087
Redeemable preferred stock 24,578 24,230
------ ------
Total preferred stock 40,781 40,145
------ ------
Stockholders' investment
Common stock 78 78
Capital in excess of par 3,413 4,048
Retained earnings (deficit) (38,157) (37,356)
------- -------
Total stockholders' investment (34,666) (33,230)
------ ------
$102,932 $110,064
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
TELOS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
Three Months
Ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net loss $ (801) $(3,394)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation and amortization 989 787
Goodwill amortization 225 390
Other non-cash items 220 191
Changes in assets and liabilities that
(used) provided cash (16,459) 1,809
------ -----
Cash used in operating activities (15,826) (217)
------ ---
Investing activities:
Purchase of property and equipment (553) (643)
Investment in products (563) (119)
----- ---
Cash used in investing activities (1,116) (762)
----- ---
Financing activities:
Proceeds from senior credit facility 15,900 1,247
Repayment of long-term debt (675) --
Payments under capital leases (85) --
Proceeds from capital lease transaction -- 1,121
------ -----
Cash provided by financing activities 15,140 2,368
------ -----
(Decrease) increase in cash and cash equivalents (1,802) 1,389
Cash and cash equivalents at beginning of period 2,781 735
----- ----
Cash and cash equivalents at end of period $ 979 $2,124
===== =====
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
TELOS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. General
The accompanying condensed consolidated financial statements of Telos
Corporation ("Telos") and its wholly owned subsidiaries, Telos Corporation
(California), Telos Field Engineering, Inc., Telos International Corporation,
and enterWorks.com, inc. (collectively, the "Company") have been prepared
without audit. Certain information and note disclosures normally included in the
financial statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes the disclosures
made are adequate to make the information presented consistent with past
practices. However, these condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1996.
In the opinion of the Company, the accompanying condensed consolidated
financial statements reflect all adjustments and reclassifications (which
include only normal recurring adjustments) necessary to present fairly the
financial position of the Company as of March 31, 1997 and December 31, 1996,
and the results of its operations and its cash flows for the three month periods
ended March 31, 1997 and 1996. Interim results are not necessarily indicative of
fiscal year performance because of the impact of seasonal and short-term
variations.
In December 1996, the Company sold substantially all of the assets of its
consulting division, Telos Consulting Services (TCS), to COMSYS Technical
Services, Inc., a subsidiary of COREStaff, Inc. for approximately $31.6 million.
The sale of TCS was treated as a discontinued operation in accordance with APB
Opinion Number 30. Accordingly, the results of operations for TCS included in
the three month period ended March 31, 1996 have been reported separately as
"loss from discontinued operations". Included in the results of the discontinued
operations is allocated interest expense of $309,000 which has been allocated
based on the net assets of the discontinued operations at March 31, 1996 in
relation to the Company's consolidated net assets plus non-specific debt.
Additionally, goodwill amortization of $115,000 has been included in the results
of the discontinued operations.
Certain reclassifications have been made to the prior year's financial
statements to conform to the classifications used in the current period.
Note 2. Accounts Receivable
The components of accounts receivable are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Billed accounts receivable $36,892 $40,225
Unbilled accounts receivable 11,970 12,249
------ ------
48,862 52,474
Allowance for doubtful accounts (994) (925)
------- -----
$47,868 $51,549
====== ======
</TABLE>
<PAGE>
TELOS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3. Debt Obligations
Senior Subordinated Note, Series A
During the first quarter of 1997, the Company retired the $675,000 Senior
Subordinated Note, Series A held by John R. Porter, the majority common
shareholder.
Note 4. Preferred Stock
Senior Redeemable Preferred Stock
The components of the senior redeemable preferred stock are Series A-1 and
Series A-2 redeemable preferred stock each with $.01 par value and 1,250 and
1,750 shares authorized, issued and outstanding, respectively. From July 1, 1995
through June 30, 1997, the Series A-1 and A-2 each carry a cumulative dividend
rate equal to 11.125% per annum of its liquidation value, and increases to
14.125% per annum thereafter. The dividends are payable semi-annually on June 30
and December 31 of each year. The liquidation preference of the preferred stock
is the face amount of the Series A-1 and A-2 ($1,000 per share), plus all
accrued and unpaid dividends. The Series A-1 and A-2 Preferred Stock is senior
to all other present and future equity of the Company. The Company is required
to redeem all of the outstanding shares of the Series A-1 and A-2 on December
31, 2001, subject to the legal availability of funds. At March 31, 1997 and
December 31, 1996 cumulative undeclared, unpaid dividends relating to Series A-1
and A-2 Preferred Stock were accrued for financial reporting purposes in the
amount of $1,910,000 and $1,828,000, respectively.
Class B Redeemable Preferred Stock
The Class B Redeemable Preferred Stock has a $.01 par value, with 7,500
shares authorized, issued and outstanding. The Class B Redeemable Preferred
Stock has a cumulative dividend payable semi-annually at June 30 and December
31. From July 1, 1995 through June 30, 1997, the dividend is calculated at a
rate equal to 11.125% per annum of its liquidation value, and increases to
14.125% per annum thereafter. The Class B Redeemable Preferred Stock may be
redeemed at its liquidation value together with all accrued and unpaid dividends
at any time at the option of the Company. The liquidation preference of the
preferred stock is the face amount, $1,000 per share, plus all accrued and
unpaid dividends. The Company is required to redeem all of the outstanding
shares of the stock on December 31, 2001, subject to the legal availability of
funds. At March 31, 1997 and December 31, 1996 cumulative undeclared, unpaid
dividends relating to the Class B Redeemable Preferred Stock were accrued for
financial reporting purposes in the amount of $3,793,000 and $3,587,000
respectively.
12% Cumulative Exchangeable Redeemable Preferred Stock
A maximum of 6,000,000 shares of 12% Cumulative Exchangeable Redeemable
Preferred Stock, par value $.01 per share, have been authorized for issuance.
The Company has issued 3,595,586 shares of 12% Cumulative Exchangeable
Redeemable Preferred Stock (the "Preferred Stock"). The Preferred Stock accrues
a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the
liquidation preference of $10 per share and is fully cumulative.
Through November 21, 1995, the Company had the option to pay dividends in
additional shares of Preferred Stock in lieu of cash (provided there were no
blocks on payment as further discussed below). Dividends are payable by the
Company, provided the Company has legally available funds under Maryland law and
is able to pay dividends under its charter and other corporate documents, when
and if declared by the Board of Directors, commencing June 1, 1990, and on each
six month anniversary thereof. Dividends in additional shares of the Preferred
Stock were paid at the rate of 0.06 of a share for each $.60 of such dividends
not paid in cash. No dividends have been declared or paid during fiscal years
1992 through 1996. Cumulative undeclared dividends as of December 31, 1996
accrued for financial reporting purposes totaled $10,421,000. Dividends for the
years 1992 through 1994 and for the dividend payable June 1, 1995 were accrued
under the assumption that the dividend will be paid in additional shares of
preferred stock and are valued at $3,950,000. Had the Company accrued these
dividends on a cash basis, the total amount accrued would have been $15,101,000.
The dividends payable on December 1, 1995 and for June 1 and December 1, 1996 of
$6,471,000 were accrued on a cash basis.
The Company has not declared or paid dividends since 1991, due to
restrictions and ambiguities relating to the payment of dividends contained
within its charter, its working capital facility agreement, and under Maryland
law.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
In the first three months of 1997, the Company had increased revenue and
profitability as compared to 1996. The increased revenue resulted from increased
order volume in the Systems Integration Group. The increase in profitability was
attributable to the cost reductions and branch consolidation measures
implemented by the Company in the last half of 1996. The profitability was also
increased by a margin improvement due to a change in product mix on the
Company's long term contracts.
Total backlog from existing contracts was approximately $1.2 billion as of
March 31, 1997 and December 31, 1996. As of March 31, 1997, the funded backlog
of the Company totaled $126 million, an increase of $11 million from December
31, 1996. Funded backlog represents aggregate contract revenues remaining to be
earned by the Company at a given time, but only to the extent, in the case of
government contracts, funded by a procuring government agency and allotted to
the contracts.
Results of Operations
The condensed consolidated statements of income include the results of
operations of Telos Corporation and its wholly owned subsidiaries Telos
Corporation (California), Telos Field Engineering, Inc. ("TFE"), Telos
International Corporation ("TIC"), and enterWorks.com, inc. ("enterWorks"),
("the Company"). The major elements of the Company's operating expenses as a
percentage of sales for the three month periods ended March 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1997 1996
---- ----
<S> <C> <C>
Sales 100.0% 100.0%
Cost of sales (85.8) (89.4)
SG&A expenses (12.0) (15.1)
Goodwill amortization (0.4) (0.7)
----- -----
Operating income (loss) 1.8 (5.2)
Other income -- --
Interest expense (3.2) (3.0)
Income tax provision -- --
---- ---
Loss from continuing operations (1.4) (8.2)
Discontinued operations:
Loss from discontinued operations -- (0.3)
--- ---
Net loss (1.4)% (8.5)%
=== ===
</TABLE>
<PAGE>
Financial Data by Market Segment
The Company operates in two market segments: systems and support services
(the "Systems and Support Services Group"), which consists of enterWorks and
hardware and software support services; and the Systems Integration Group.
Sales, gross profit, and gross margin by market segment for the first
quarter of 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1997 1996
---- ----
(amounts in thousands)
<S> <C> <C>
Sales:
Systems and Support Services $26,118 $26,232
Systems Integration 28,227 13,931
------ ------
Total $54,345 $40,163
====== ======
Gross Profit:
Systems and Support Services $3,767 $2,880
Systems Integration 3,930 1,380
----- -----
Total $7,697 $4,260
===== =====
Gross Margin:
Systems and Support Services 14.4% 11.0%
Systems Integration 13.9% 9.9%
Total 14.2% 10.6%
</TABLE>
For the three month period ended March 31, 1997 sales increased by
approximately $14.2 million, or 35.3%, to $54.3 million from $40.1 million for
the comparable 1996 period. This increase for the three month period is due to
the Systems Integration Group, which reported increased sales of $14.3 million.
Offsetting this increase was decreased sales during the period by the Systems
and Support Services Group of approximately $114,000.
Systems Integration Group sales increased by $14.3 million during the first
quarter of 1997 as compared to the first quarter of 1996 as a result of
increased order volume on its Small Multiuser Computer II and Immigration
Naturalization Service contracts, as well as increased sales in other business
lines of the division.
Within the Systems and Support Services Group, software services sales
increased approximately $481,000 due to increased activity and head count under
certain large labor contracts. The increase was offset by a $501,000 decrease in
hardware support sales and a decrease in enterWorks sales of $94,000. The
decrease in hardware support sales is due to the loss of certain follow-on work
to existing contracts. The decline in hardware support revenue is also
attributable to continued price competitiveness within the industry. The
decrease in enterWorks sales is due to a decline in order volume for the
quarter.
Cost of sales increased by $10.7 million or 29.9% to $46.6 million during
the three month period ended March 31, 1997, from $35.9 million in the
comparable 1996 period. The increase in cost of sales resulted from the increase
in sales for the period.
Gross profit increased by $3.4 million in the first quarter of 1997 to $7.7
million from $4.3 million in the comparable 1996 period as a result of the
matters discussed above. In addition, the Systems Integration Group experienced
shifts in product mix on its large contracts which improved profit margins. The
Systems and Support Services Group improved its gross margin by maximizing its
efforts on profitable contracts and progressively reducing the number of less
profitable contracts. The Group further enhanced its gross profit through cost
reduction measures implemented in the fourth quarter of 1996. Total Company
gross margins were 14.2% and 10.6% for the three month periods ended March 31,
1997 and 1996, respectively.
<PAGE>
Selling, general and administrative costs increased for the three month
period by approximately $474,000 to $6.5 million in 1997 from $6.1 million in
1996. This increase is due to the Company's increased investment in research and
development and sales and marketing for its enterWorks division. The increase
was partially offset by indirect cost control measures implemented in late 1996.
SG&A as a percentage of sales was 12.0% and 15.1% for the three month periods
ended March 31, 1997 and 1996, respectively.
Goodwill amortization expense was $225,000 for the three months ended March
31, 1997 compared to $275,000 for the period ended March 1996. The reduction in
goodwill amortization is attributable to adjustments in the goodwill balance as
a result of realization of acquired tax benefits resulting from the 1992
acquisition of Telos Corporation (California).
Operating income increased by $3.0 million during the three months ended
March 31, 1997 to $947,000 in operating profit. The Company had an operating
loss of $2.1 million in the comparable period of 1996. The increase in operating
profit resulted primarily from the aforementioned sales and gross profit
increases.
Interest expense increased by approximately $560,000 to $1.8 million during
the three month period ended March 31, 1997, from $1.2 million in the comparable
period of 1996. The increase is primarily attributed to an increase in the
outstanding balance of the subordinated debt and related interest rate as well
as interest recorded for capital lease payments for leases entered into after
March 1996.
The Company did not have a tax provision in either the three month period
ended March 31, 1997 or 1996 as a result of the net operating losses.
Liquidity and Capital Resources
For the three months ended March 31, 1997, the Company used $15.8 million
of cash in its operating activities primarily as a result a significant
reduction in trade accounts payable and other Company obligations. The use of
cash was also a result of a significant investment by the Company in its
enterWorks division. The Company funded its net loss and use of operating cash
as well as its investing activities through increased borrowings under its term
facility.
As a result of the Company's sale of its TCS division for $31.6 million in
December 1996, the Company's short-term liquidity constraints have improved.
However, the Company continues to aggressively manage its cash and reduce its
discretionary spending. The Company also continues to evaluate its cost
reduction programs and its investment in enterWorks.
At March 31, 1997, the Company had outstanding debt of $48.1 million,
consisting of $31.3 million under the secured senior credit facility and $16.8
million in subordinated debt. Subsequent to December 31, 1996, the Company's
bank entered into an agreement with the Company to refinance its $45 million
Facility and extend the maturity date to July 1, 2000. The terms and conditions
of the new facility are similar to the previous senior credit facility except
for amendments made to certain of the financial and non financial covenants.
The Company is not in compliance with certain financial covenants contained
in the senior credit facility as of March 31, 1997. The Company's bank has
waived such non compliance.
The Company is actively reviewing its financing requirements for
enterWorks, and continues to fund on-going product development, sales and
marketing, and business activities of the subsidiary. The Company will continue
to evaluate various financing alternatives to maintain the enterWorks
operations.
The Company anticipates that its current senior credit facility will be
adequate for 1997. However, the Company continues to evaluate the funding
requirements for the operational activities and investments of the Company, and
will aggressively pursue additional financing alternatives if necessary.
<PAGE>
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Senior and Class B Redeemable Preferred Stocks
The Company has not declared dividends on its Senior Redeemable Preferred
Stock, Series A-1 and A-2, and its Class B Redeemable Preferred Stock since
their issuance. Total undeclared unpaid dividends, accrued for financial
reporting purposes, are $1,910,000 for the Series A-1, A-2 Preferred stock and
$3,793,000 for the Class B Preferred Stock at March 31, 1997.
12% Cumulative Exchangeable Redeemable Preferred Stock
A maximum of 6,000,000 shares of 12% Cumulative Exchangeable Redeemable
Preferred Stock, par value $.01 per share, have been authorized for issuance.
The Company had 3,595,586 shares of 12% Cumulative Exchangeable Redeemable
Preferred Stock (the "Preferred Stock"), par value $.01 per share outstanding at
March 31, 1997. The Preferred Stock accrues a semi-annual dividend at the annual
rate of 12% ($1.20) per share, based on the liquidation preference of $10 per
share, and is fully cumulative.
Through November 21, 1995, the Company had the option to pay dividends in
additional shares of Preferred Stock in lieu of cash (provided there were no
blocks on the payment of dividends), all dividends thereafter are to be paid in
cash. Dividends are payable by the Company, provided the Company has legally
available funds under Maryland law and is able to pay dividends under its
charter and other corporate documents, when and if declared by the Board of
Directors, commencing June 1, 1990, and on each six month anniversary thereof.
Dividends in additional shares of the Preferred Stock are paid at the rate of
0.06 of a share of the Preferred Stock for each $.60 of such dividends not paid
in cash.
No dividends were declared or paid during fiscal years 1992 through 1996.
Cumulative undeclared dividends as of December 31, 1996 accrued by the Company
were $10,421,000. The Company has accrued these dividends for the periods
although the Company is uncertain when or if these dividends will be declared or
paid.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K: Registrant filed a Current Report on Form
8-K, dated January 10, 1997, in respect of the Registrant's
selling its consulting division, Telos Consulting Services, on
December 27, 1996.
<PAGE>
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.
DATE: May 15, 1997 TELOS CORPORATION
/s/ Lorenzo Tellez
Lorenzo Tellez
(Principal Financial Officer &
Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and statements of income for Telos Corporation and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 979,000
<SECURITIES> 0
<RECEIVABLES> 48,862,000
<ALLOWANCES> 994,000
<INVENTORY> 14,421,000
<CURRENT-ASSETS> 66,801,000
<PP&E> 37,298,000
<DEPRECIATION> 20,802,000
<TOTAL-ASSETS> 102,932,000
<CURRENT-LIABILITIES> 36,274,000
<BONDS> 48,137,000
40,781,000
0
<COMMON> 78,000
<OTHER-SE> (34,744,000)
<TOTAL-LIABILITY-AND-EQUITY> 102,932,000
<SALES> 28,227,000
<TOTAL-REVENUES> 54,345,000
<CGS> 24,297,000
<TOTAL-COSTS> 46,648,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,760,000
<INCOME-PRETAX> (801,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (801,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (801,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
