<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR QUARTER ENDED JUNE 30, 1996.
or
___ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to ____________
COMMISSION FILE NUMBER 0-10370
IPL SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 04-2511897
(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
124 ACTON STREET, MAYNARD, MASSACHUSETTS 01754
(Address of principal executive offices and Zip Code)
(508) 461-1000
(Registrant's Telephone Number, including area code)
________________________________________________________________________
Former name, former address, and former fiscal year,
if changed since last report.
Indicate by a 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 periods 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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT JUNE 30, 1996
----- -----------------------------
<S> <C>
Class A $.01 par value 5,633,819
</TABLE>
1
<PAGE> 2
IPL SYSTEMS, INC.
----------------
FORM 10-Q INDEX
---------------
<TABLE>
<CAPTION>
Page No.
---------
<S> <C> <C> <C>
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - June 30, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations (Unaudited) -
Three Months Ended June 30, 1996
and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended June 30, 1996 and June 30,
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Quarterly Consolidated Statements . . . . . . . . . . . . . . . . . . . . . . . 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.......... . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Consolidated Financial Statements
IPL SYSTEMS, INC.
----------------
<TABLE>
CONSOLIDATED BALANCE SHEETS
--------------------------
(Thousands of Dollars)
ASSETS
------
<CAPTION>
(Unaudited)
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Current Assets:
Cash and equivalents $ 2,357 $ 3,595
Accounts receivable-net 4,375 4,019
Inventories 3,619 3,375
Other current assets 296 405
------- -------
Total Current Assets 10,647 11,394
Equipment and Improvements, net 1,916 2,348
------- -------
Total Assets $12,563 $13,742
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable and accrued
expenses $ 4,247 $ 5,199
Shareholders' Equity:
Class A Common Stock, par value
$.01: Authorized, 20,000,000 shares;
issued and outstanding, 5,633,819
and 5,200,590 shares 56 52
Convertible Class C Common Stock,
par value $.01: Authorized,
2,250,000 shares issued and
outstanding, -0- shares and
386,929 shares 0 4
Additional paid-in capital 17,352 17,230
Deficit (9,092) (8,743)
------- -------
Total Shareholders' Equity 8,316 8,543
------- -------
Total Liabilities and Shareholders' Equity
$12,563 $13,742
======= =======
</TABLE>
See notes to unaudited quarterly consolidated financial statements.
3
<PAGE> 4
PART I. FINANCIAL INFORMATION - Continued
- -------------------------------------------
IPL SYSTEMS, INC.
----------------
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
(Thousands of Dollars, Except Per Share Amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 4,464 $ 6,707 $ 11,566 $ 13,224
Cost of sales 2,693 4,078 6,983 8,271
---------- ---------- ---------- ----------
Gross profit 1,771 2,629 4,583 4,953
Expenses:
Selling, general & administrative 2,064 2,824 4,429 5,657
Engineering & development 338 304 705 634
Restructure expense (income) --- --- (100) ---
---------- ---------- ---------- ----------
Operating income (loss) (631) (499) (451) (1,338)
Other income 50 110 100 164
---------- ---------- ---------- ----------
Income (loss) before income taxes (581) (389) (351) (1,174)
---------- ---------- ---------- ----------
Income tax - - - -
---------- ---------- ---------- ----------
Net income (loss) $ (581) $ (389) $ (351) $ (1,174)
---------- ---------- ---------- ----------
Net Income (loss) per share $ (0.10) $ (0.07) $ (0.06) $ (0.22)
========== ========== ========== ==========
Common and common equivalent
shares used in calculation
of income (loss) per share 5,613,326 5,384,519 5,602,034 5,383,319
========== ========== ========== ==========
</TABLE>
See notes to unaudited quarterly consolidated financial statements.
4
<PAGE> 5
PART I. FINANCIAL INFORMATION - Continued
- ------------------------------------------
IPL SYSTEMS, INC.
----------------
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
(Thousands of Dollars)
<CAPTION>
Six Months Ended
----------------
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ (351) $(1,174)
------- -------
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Restructure expenses (income) . . . . . . . . . . . . . . . . . (100) --
Depreciation and amortization . . . . . . . . . . . . . . . 497 605
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . (356) 5,005
Inventories . . . . . . . . . . . . . . . . . . . . . . . (244) (621)
Prepaid expenses and other current assets . . . . . . . . 109 1,264
Accounts payable and accrued expenses . . . . . . . . . . (852) (1,832)
------- -------
Total adjustments . . . . . . . . . . . . . . . . (946) 4,421
------- -------
Net cash used by operating activities . . . . . . . . . . . . . (1,297) 3,247
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to equipment and improvements . . . . . . . . . . . . (63) (427)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock . . . . . . . . . . . . . . 122 8
------- -------
CASH AND EQUIVALENTS:
Net increase (decrease) . . . . . . . . . . . . . . . . . . . (1,238) 2,828
BALANCE, beginning of period . . . . . . . . . . . . . . . . . 3,595 2,239
------- -------
BALANCE, end of period . . . . . . . . . . . . . . . . . . . . $ 2,357 $ 5,067
======= =======
SUPPLEMENTARY CASH FLOW INFORMATION:
Taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8 $ 11
======= =======
</TABLE>
See notes to unaudited quarterly consolidated financial statements.
5
<PAGE> 6
PART I. FINANCIAL INFORMATION - Continued
- ------------------------------------------
IPL SYSTEMS, INC.
----------------
NOTES TO UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS
----------------------------------------------------
1. Financial Statements
--------------------
The consolidated balance sheet as of June 30, 1996, and the
consolidated statements of operations and cash flows for the six month
periods ended June 30, 1996 and June 30, 1995 have been prepared by
the Company without audit. The consolidated financial statements
include the accounts for the Company and its wholly-owned
subsidiaries, IPL Investments, Inc. and IPL Foreign Sales Corporation.
All intercompany accounts and transactions have been eliminated. In
the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial
position of the Company as of June 30, 1996, and for all periods
presented, have been made.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation" which will be effective for
the Company beginning January 1, 1996. SFAS No. 123 requires expanded
disclosures of stock-based compensation arrangements with employees
and encourages (but does not require) compensation cost to be measured
based on the fair value of the equity instrument awarded. Companies
are permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the
equity instrument awarded. The Company will continue to apply APB
Opinion No. 25 to its stock based compensation awards to employees and
will disclose the required pro forma effect on net income and earnings
per share.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the Securities and
Exchange Commission rules and regulations. It is suggested that these
financial statements be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, including
the audited financial statements and related notes included therein.
The results of operations for the period ended June 30, 1996 are not
necessarily indicative of the operating results for the full year.
6
<PAGE> 7
PART I. FINANCIAL INFORMATION - Continued
- ------------------------------------------
2. Accounts Receivable
-------------------
<TABLE>
Accounts receivable consist of the following:
<CAPTION>
(Thousands of dollars)
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Total accounts receivable $6,178 $6,130
Less allowance for doubtful
accounts 1,803 2,111
------ ------
Net Accounts Receivable $4,375 $4,019
------ ------
</TABLE>
3. Equipment and Improvements
--------------------------
<TABLE>
Equipment and improvements consist of the following:
<CAPTION>
(Thousands of dollars)
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Customer support equipment $ 3,546 $ 3,500
Manufacturing equipment 4,887 4,883
Office equipment & fixtures 2,316 2,320
Leasehold improvements 1,339 1,335
------- -------
12,088 12,038
Less accumulated depreciation 10,172 9,690
------- -------
$ 1,916 $ 2,348
======= =======
</TABLE>
7
<PAGE> 8
PART I. FINANCIAL INFORMATION - Continued
- ------------------------------------------
4. Income Taxes
------------
The Company plans to offset its 1996 federal income tax obligations
through the use of prior unrecognized net operating loss carry forward
amounts. Accordingly, there was no income tax recorded in the first six
months of 1996. There was no tax benefit recorded with the first six
months 1995 pre-tax loss.
5. Restructuring
-------------
In November 1994, the Company approved and executed a restructuring
program (the "Plan") to focus future product development and sales
efforts in the open systems market. As a result of this change, the
Company streamlined its operations by reducing its workforce,
consolidating and closing certain facilities and writing off idle and
excess assets. A restructuring charge of $1,971,000 was recorded in
1994. The Company increased its estimate of the remaining occupancy
costs by $497,000 in the third quarter of 1995 to cover the full
occupancy costs for the balance of the lease term for unused space in
its Maynard facility. In March 1996, a portion of the Maynard facility
was leased resulting in a $100,000 reduction in restructuring expenses.
<TABLE>
The changes in the restructuring accrual are as follows:
<CAPTION>
Balance Balance
December 31, 1995 Decrease Paid June 30, 1996
----------------- ---------- ----- -------------
<S> <C> <C> <C> <C>
Occupancy Costs $ 595 $ 100 $ 121 $ 374
</TABLE>
The occupancy costs will be paid through March 31, 1998.
8
<PAGE> 9
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
---------------------
Quarterly Results
- -----------------
Revenues for the second quarter of 1996 were $4,460,000 compared to $6,707,000
for the second quarter of 1995. This 33% decrease in revenue compared to a
year ago is the result of several factors. These were: the continuing slow
transition from A/S 400 to open systems product sales through our European
distributors; the departure of three key sales executives, one being the Vice
President of U.S. Sales, mid-quarter; and the Company's decision to delay the
introduction of strategic new technology to incorporate product enhancements
identified by customers during the beta test process. On June 1, 1996, a new
Vice President of Sales was appointed, and on June 11, 1996, the Company
released for general availability its new database backup and disaster recovery
solution called ParallelBACK(TM). In the second quarter of 1996, the Company's
sales of open systems products were 48% of total product revenue. In the
U.S. 70% of sales were in open systems products while 5% of international
sales were from open systems products. Total U.S. sales accounted for 69% of
the total revenue in the second quarter of 1996 compared with 76% of total
revenue in the second quarter of 1995. Total international sales decreased 15%
in the second quarter of 1996 from the second quarter of 1995 due to a
reduction in purchases of AS/400 disk product and a slow transition to open
systems products in the Company's overseas markets.
Disk sales accounted for 79% of revenue in the second quarter of 1996 compared
with 81% in the same period in 1995. Tape sales accounted for 6% and 9%
respectively for the comparable period.
In the second quarter of 1996, the gross margin was 39.7% compared to 39.2% in
the same period last year. The continued improvement is the result of increased
open system sales and reduced costs in 1996.
Selling, general and administrative expenses decreased 27% to $2,064,000 in the
second quarter of 1996 compared with $2,824,000 in the second quarter of 1995.
This $760,000 decrease is the result of ongoing expense management as a key
factor in assuring the Company's competitiveness going forward.
Engineering and development expenses increased $34,000 in the second quarter of
1996 compared to the same period last year. The ParallelBACK technology, new
backup and disaster recovery solution for the database storage segment of the
UNIX market, is now in general release.
The loss before income taxes for the second quarter of 1996 was $581,000
compared with $389,000 for the same period last year. The Company's reported
net loss was also $581,000, or $ 0.10 per share compared with a net loss of
$389,000, or $ 0.07 per share for the second quarter of 1995.
9
<PAGE> 10
The Company plans to offset any 1996 federal and state income tax obligations
through the use of prior unrecognized net operating loss carry forward amounts.
There was no tax benefit recorded in the second quarter of 1995 since the
Company fully utilized the benefit from its tax net operating carryback in
1994.
Six Months Results
- ------------------
Revenue for the first six months of 1996 were $11,566,000 compared to
$13,224,000 for the first six months of 1995 primarily due to the continued
reduction in purchases made by the Company's European distributors. Despite
continuing decreases in international revenue, U.S. sales were in line with
expectations in the first quarter 1996. Sales in the second quarter declined
due to the departure of the Vice President of North American Sales and two
field sales people. The Company also chose to delay the introduction of
strategic new technology to incorporate enhancements identified by customers
during the beta test process. The Company's transition to the open systems
products continues to move at a slower pace in Europe than in the U.S..
International revenue declined to 26% of revenue in 1996 compared to 36% in
1995. U.S. revenue accounted for 74% of the Company's revenue through the
second quarter of 1996 compared with 64% in the same period last year. This
improvement reflects the continued progress of the Company's strategy of
selling open systems products which accounted for 42% of the six months
revenue.
The disk product line represents 75% and 77% of the Company's revenue in the
first six months of 1996 and 1995, respectively. The tape product line
accounted for 11% and 12%, respectively, of the Company's revenue for the same
period.
Gross margins in the first six months of 1996 were 39.6% compared with 37.5% in
the first six months of 1995. The improvement in gross margin is primarily due
to increasing open systems product sales and reduced costs in the first six
months of 1996.
Total operating expenses decreased 20% in the first six months of 1996 compared
with the same period of 1995. Selling, general and administrative expenses
decreased by $1,228,000 or 22% compared to the same period in 1995, primarily
due to ongoing expense control.
Engineering and development expenses increased $71,000 during the first six
months of 1996 in comparison to the first six months of 1995. This increase is
due to advancing the development of open systems products.
The loss before income taxes for the first six months of 1996 was $351,000
compared with $1,174,000 for the comparative period of 1995. The Company's net
loss was also $351,000, or $0.06 per share compared with a net loss of
$1,174,000, or $0.22 per share, for the same period of 1995.
The Company plans to offset any 1996 federal and state income tax obligations
through the use of prior unrecognized net operating loss carryforward amounts.
There was no tax benefit recorded in the first six months of 1995 since the
Company fully utilized the benefit from its tax net operating carryback in
1994.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's cash and equivalents as of June 30, 1996 were $2,357,000,
reflecting a 34% decrease or $1,238,000 from December 31, 1995. Accounts
receivable balances increased by 9% to $4,375,000 due to increased days sales
outstanding at the end of the second quarter 1996. Inventories increased from
$3,375,000 at December 31, 1995 to $3,619,000 at June 30, 1996 to establish
adequate levels of inventory for expected sales of open systems products.
Accounts payable and accrued expenses decreased $952,000 primarily due to
reduced operating expenses.
Management believes that its cash and equivalents, cash provided by operations,
and other capital resources will be sufficient to meet its operating and
capital requirements for its existing business. The Company remains free of any
short-term and long-term debt obligations. The Company continues to evaluate
its operating capital requirements should the future growth of the business
require additional financial investment. Accordingly, the Company is pursuing
contingency arrangements should such financing be required.
11
<PAGE> 12
PART II. OTHER INFORMATION - Continued
- --------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
<TABLE>
The Company held its annual meeting of stockholders on
Wednesday, May 29, 1996. The following represents the results of the
proposals submitted to a vote of security holders:
<CAPTION>
Votes Cast
Against or Absentions and
Votes Cast For Withheld Broker Non-Votes
-------------- -------- ----------------
<S> <C> <C> <C>
Fix the number of Directors at four 4,148,179 80,630 34,471
Election of Directors
Ronald J. Gellert 4,098,806 59,474 0
Stephen J. Ippolito 4,098,806 59,474 0
Cornelius P. McMullan 4,098,806 59,474 0
Harris Ravine 4,098,806 59,474 0
Approval of the Company's 1996 Equity
Incentive Plan, its 1995 Equity Incentive
Plan, and the consolidation of such plans as
the 1996 Consolidated Equity Incentive Plan
1,205,059 405,009 2,549,212
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
--------
Exhibit 11 - Computation of Net Income (Loss) Per
Common Share - Page 15
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed with the
Securities and Exchange Commission during the
fiscal quarter ended June 30, 1996.
12
<PAGE> 13
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.
IPL SYSTEMS, INC.
----------------
DATE: August 9, 1996 By: /s/Ronald J. Gellert
--------------------
Ronald J. Gellert
President
Chief Executive Officer
By: /s/Eugene F. Tallone
--------------------
Eugene F. Tallone
Chief Financial Officer
Principal Accounting Officer
13
<PAGE> 14
IPL SYSTEMS, INC.
FORM 10-Q, JUNE 30, 1996
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
No. Description Page No.
- ------- ------------------- --------
<S> <C> <C>
11 Computation of weighted average shares used in
computing earnings per share amounts. Filed herewith 15
</TABLE>
14
<PAGE> 1
EXHIBIT 11
IPL SYSTEMS, INC.
----------------
<TABLE>
COMPUTATION OF NET LOSS PER COMMON SHARE
----------------------------------------
(Thousands of dollars except per share amounts)
<CAPTION>
Three Months Ended
------------------
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
Primary
-------
Net income (loss) $ ( 581) $ ( 389)
---------- ----------
Weighted average shares outstanding 5,613,326 5,384,519
---------- ----------
Dilutive stock options based on the
treasury stock method using average - -
market price for the period ---------- ----------
Common shares used in calculation of
net loss per share 5,613,326 5,384,519
========== ==========
Net income (loss) per share $ (0.10) $ (0.07)
========== ==========
Fully Diluted
-------------
Net income (loss) $ (581) $ (389)
========== ==========
Weighted average shares outstanding 5,613,326 5,384,519
Dilutive stock options based on the
treasury stock method using the
higher of average or period end
market price (A) 177,089 259,342
---------- ----------
Common shares used in calculation of
net loss per share 5,790,415 5,643,861
========== ==========
Net income (loss) per share $ (0.10) $ (0.07)
========== ==========
</TABLE>
(A) This calculation is presented in accordance with Item 601 of
Regulation S-X although it is not required by Paragraph 14 of APB
Opinion No. 15.
15
<PAGE> 2
EXHIBIT 11
(CONTINUED)
IPL SYSTEMS, INC.
----------------
COMPUTATION OF NET LOSS PER COMMON SHARE
----------------------------------------
(Thousands of dollars except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
-----------------
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
Primary
-------
Net loss $ (351) $ (1,174)
---------- ----------
Weighted average shares outstanding 5,602,034 5,383,319
Dilutive stock options based on the
treasury stock method using average
market price for the period - -
---------- ----------
Common shares used in calculation of
net loss per share 5,602,034 5,383,319
========== ==========
Net loss per share $ (0.06) $ (0.22)
========== ==========
Fully Diluted
-------------
Net income (loss) $ (351) $ (1,174)
========== ==========
Weighted average shares outstanding 5,602,034 5,383,319
Dilutive stock options based on the
treasury stock method using the
higher of average or period end
market price (A) 163,074 303,261
---------- ----------
Common shares used in calculation of
net loss per share 5,765,108 5,687,780
========== ==========
Net income (loss) per share $ (0.06) $ (0.21)
========== ==========
</TABLE>
(A) This calculation is presented in accordance with Item 601 of
Regulation S-X although it is not required by Paragraph 14 of APB
Opinion No. 15.
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,357
<SECURITIES> 0
<RECEIVABLES> 6,178
<ALLOWANCES> 1,803
<INVENTORY> 3,619
<CURRENT-ASSETS> 10,647
<PP&E> 12,088
<DEPRECIATION> 10,172
<TOTAL-ASSETS> 1,916
<CURRENT-LIABILITIES> 4,247
<BONDS> 0
0
0
<COMMON> 56
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,563
<SALES> 4,464
<TOTAL-REVENUES> 4,464
<CGS> 2,693
<TOTAL-COSTS> 5,095
<OTHER-EXPENSES> (50)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (581)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (581)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
