<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 24,1997
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 0-10558
ALPHA MICROSYSTEMS
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3108178
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2722 S. FAIRVIEW STREET, SANTA ANA, CA 92704
(Address of principal executive offices)
Registrant's telephone number, including area code: (714) 957-8500
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 September 29, 1997, there were 10,887,198 shares of the registrant's
Common Stock outstanding.
<PAGE> 2
ALPHA MICROSYSTEMS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited) at August 24, 1997 and
February 23, 1997 3
Condensed Consolidated Statements of
Operations (Unaudited) for the Three
and Six Months Ended August 24, 1997 and
August 25, 1996 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended August 24,
1997 and August 25, 1996 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II-- OTHER INFORMATION
Item 4. Submission of Matters to a vote of
Security-Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
August 24, February 23,
1997 1997
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 825 $ 1,768
Short-term investments in U.S. treasury 5,311 6,812
bills
Accounts receivable, net of allowance for
doubtful accounts of $124 and $139 at
August 1997 and February 1997, respectively 2,969 3,028
Inventories 346 305
Notes receivable 797 830
Prepaid expenses and other current assets 282 233
-------- --------
Total current assets 10,530 12,976
Property and equipment, net of accumulated
depreciation of $8,855 and $13,101 at
August 1997 and February 1997, respectively 2,649 2,932
Service contracts, net 514 364
Software costs, net 1,154 815
Other assets, net 111 108
-------- --------
$ 14,958 $ 17,195
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 891 $ 1,201
Deferred revenue 1,526 1,686
Accrued compensation 288 345
Other accrued liabilities 554 381
Current portion of long-term debt 34 35
-------- --------
Total current liabilities 3,293 3,648
Long-term debt 28 34
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized; none issued - -
Common stock, no par value; 20,000,000 shares
authorized; 10,887,198 and 10,821,897 shares
issued and outstanding at August 24, 1997
and February 23, 1997, respectively 30,972 30,919
Accumulated deficit (19,399) (17,464)
Unamortized restricted stock plan expense - (13)
Foreign currency translation adjustment 64 71
-------- --------
Total shareholders' equity 11,637 13,513
-------- --------
$ 14,958 $ 17,195
======== ========
</TABLE>
See accompanying notes.
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<PAGE> 4
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
August 24, August 25, August 24, August 25,
1997 1996 1997 1996
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales:
Product $ 1,394 $ 2,135 $ 2,770 $ 4,933
Service 3,206 4,013 6,379 8,291
--------- --------- ---------- ---------
Total net sales 4,600 6,148 9,149 13,224
--------- --------- ---------- ---------
Cost of sales:
Product 899 1,111 1,853 2,606
Service 2,562 2,942 5,164 6,176
--------- --------- ---------- ---------
Total cost of sales 3,461 4,053 7,017 8,782
--------- --------- ---------- ---------
Gross Margin 1,139 2,095 2,132 4,442
Selling, general and administrative 1,600 2,342 3,461 4,541
expense
Engineering, research and development
expense 381 511 744 1,068
--------- --------- ---------- ---------
Total operating expenses 1,981 2,853 4,205 5,609
--------- --------- ---------- ---------
Loss from operations (842) (758) (2,073) (1,167)
Interest income (82) (64) (181) (68)
Interest expense 3 10 4 26
Other (income) expense, net 11 (33) 12 (108)
Foreign exchange (gain) loss 24 (19) 17 (26)
--------- --------- ---------- ---------
Total other income (44) (106) (148) (176)
--------- --------- ---------- ---------
Loss before taxes (798) (652) (1,925) (991)
Provision for income taxes - - 10 5
--------- --------- ---------- ---------
Net loss $ (798) $ (652) $ (1,935) $ (996)
========= ========= ========= =========
Net loss per share $ (0.07) $ (0.06) $ (0.18) $ (0.11)
========= ========= ========= =========
Number of shares used in the
computation of per share amounts 10,834 10,939 10,828 9,183
========= ========= ========= =========
</TABLE>
See accompanying notes.
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<PAGE> 5
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
August 24, August 25,
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,935) $ (996)
Adjustments to reconcile net loss to net cash
used in operating activities:
Gain on sale of subsidiary/product lines - (45)
Loss on sale of fixed asset - 1
Depreciation and amortization 802 1,126
Provision for losses on accounts receivable 21 35
Provision for slow-moving inventory 29 (57)
Restricted stock plan expense amortization 13 -
Other changes in operating assets and liabilities:
Accounts receivable 39 410
Inventories (61) (106)
Notes receivable 33 -
Prepaid expenses and current assets (54) (253)
Accrued compensation (57) 22
Accounts payable and accrued liabilities (137) 390
Deferred revenue (160) (396)
Other, net (13) (174)
--------- ---------
Net cash used in operating activities (1,480) (43)
--------- ---------
Cash flows from investing activities:
Purchase of short-term investments (6,417) (6,000)
Proceeds from sale of short-term investments 7,918 -
Proceeds from sale of fixed assets - 9
Acquisition of service assets (265) -
Purchases of equipment (304) (245)
Capitalization of software costs (433) (290)
Purchase of intangible assets (5) -
Sale of subsidiary - (599)
--------- ---------
Net cash provided by (used in) investing
activities 494 (7,125)
--------- ---------
Cash flows from financing activities:
Issuance of stock 20 9,510
Stock options exercised 33 87
Principal debt repayments (7) (576)
--------- ---------
Net cash provided by financing activities 46 9,021
--------- ---------
Effect of exchange rate changes on cash (3) (5)
--------- ---------
Increase (decrease) in cash and cash equivalents (943) 1,848
Cash and cash equivalents at beginning of period 1,768 505
--------- ---------
Cash and cash equivalents at end of period $ 825 $ 2,353
========= =========
</TABLE>
See accompanying notes.
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<PAGE> 6
ALPHA MICROSYSTEMS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTORY NOTE
This Quarterly Report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. These forward-looking statements include (i) the market
acceptance of the Company's hardware and software products and services,
including its AlphaCONNECT Internet/intranet product, (ii) the continued
development of the Company's technical, manufacturing, sales, marketing and
management capabilities, and (iii) anticipated competition.
Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, competitive and market conditions, all of
which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. In addition, the business and operations of
the Company are subject to substantial risks that increase the uncertainty
inherent in the forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company, or any other person that the objectives or plans of the Company will be
achieved.
1. INTERIM ACCOUNTING POLICY
In the opinion of management of Alpha Microsystems (the "Company" or
"Alpha Micro"), the accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary to fairly present the consolidated
financial position of the Company at August 24, 1997, the consolidated results
of its operations for the three and six month periods ended August 24, 1997 and
August 25, 1996 and its cash flows for the six month periods ended August 24,
1997 and August 25, 1996. These condensed consolidated financial statements do
not include all disclosures normally presented annually under generally accepted
accounting principles and, therefore, they should be read in conjunction with
the Company's annual report on Form 10-K for the year ended February 23, 1997.
The results of operations for the six month period ended August 24, 1997
are not necessarily indicative of the results to be expected for the full fiscal
year.
REVENUE RECOGNITION
The Company recognizes revenue on its hardware and software sales on
shipment, and recognizes revenue on its service sales and post contract customer
support on a straight-line basis over the contract period. When significant
obligations remain after a software product has been delivered, revenue is not
recognized until obligations have been completed or are no longer significant.
The costs of any insignificant obligations are accrued when the related revenue
is recognized. Revenue is recognized only when collection of the resulting
receivable is probable.
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<PAGE> 7
PER SHARE INFORMATION
Per share information is based upon the weighted average common shares
outstanding during the period ended August 24, 1997 and August 25, 1996. Common
stock equivalents were anti-dilutive in all periods presented.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share", which is required to be adopted in the
fourth quarter of fiscal 1998. The Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating basic earnings per share, the
dilutive effect of stock options will be excluded. The impact of the adoption is
not expected to materially impact basic earnings per share. The Company has not
yet determined what the impact of Statement No. 128 will be on the calculation
of fully diluted earnings per share.
2. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is
determined on the first-in, first-out method. Inventories, net of reserves for
excess and obsolete inventories of $56,000 and $41,000 at August 24, 1997, and
February 23, 1997, respectively, comprise the following:
(In thousands)
<TABLE>
<CAPTION>
AUGUST 24, 1997 FEBRUARY 23, 1997
--------------- -----------------
<S> <C> <C>
Raw materials $ 242 $ 263
Work in process 63 9
Finished goods 41 33
-------------- ---------------
$ 346 $ 305
============== ===============
</TABLE>
3. CONTINGENCIES
LITIGATION
The Company's current involvement with litigation is as follows:
Carlos Garralda and Andre Warnier, employees of the Company's former
subsidiary, Alpha Microsystems Belgium, S.A. ("AMB"), filed an action in
November 1995 against AMB and the Company in Orange County Superior Court
alleging that AMB is in breach of its obligations under Belgium employment law
to pay salaries for a notice period of up to two years following termination of
employment. The Plaintiffs allege, among other things, that the Company has
alter ego liability for these obligations. The plaintiffs are claiming
compensatory damages in excess of $780,000 and unspecified punitive damages. In
September 1995, the plaintiffs instituted virtually identical litigation against
AMB in Belgium. A settlement of the case between AMB and Andre Warnier in the
Belgium action was effected on October 18, 1996. Five hundred thousand dollars
($500,000) of the compensatory damages in the Orange County lawsuit are related
to the claims by Mr. Warnier. As a result of this settlement, the Company and
Mr. Warnier have a tentative agreement to mutually release each other in the
Orange County litigation with a dismissal with prejudice to be filed by Mr.
Warnier upon execution of the Agreement, without payment by Alpha Microsystems.
The Court has continued its temporary stay of this lawsuit in its entirety until
November 1997 in order to await the outcome of the litigation instituted by Mr.
Garralda against AMB in Belgium. Although no assurances as to the outcome of the
litigation can be given, management believes that its defenses to the litigation
are meritorious.
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<PAGE> 8
In December 1995, Phoenix Marketing, Inc. d.b.a. Electronic Business
Systems, Inc., in response to the Company's collection efforts for a past due
account, filed an amended cross-complaint alleging damages of $3,200,000 for
defective merchandise, loss of business reputation and loss of future business.
The Iowa court has referred this case to arbitration, which arbitration is
scheduled to begin on January 12, 1998. Significant discovery is presently being
conducted by both parties. Although no assurances as to the outcome of the
litigation can be given, management believes that the plaintiff's claims are
without merit.
The Company is currently involved in certain other claims and
litigation. The Company does not consider any of these other claims or
litigation to be material. Management has made provisions in the Company's
financial statements for the settlement of lawsuits for which unfavorable
outcomes are both probable and estimable. In the opinion of management, results
of known existing claims and litigation will not have a material adverse effect
on the Company's consolidated financial position, results of operations or cash
flows.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
SUMMARY
The following table was derived from the Condensed Consolidated
Statements of Operations as a percentage of net sales for the three and six
month periods ended August 24, 1997, and August 25, 1996:
<TABLE>
<CAPTION>
RELATIONSHIP TO NET SALES
--------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------------------------
AUGUST 24, AUGUST 25, AUGUST 24, AUGUST 25,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 75.2 65.9 76.7 66.4
----- ----- ----- -----
Gross margin 24.8 34.1 23.3 33.6
Selling, general and administrative
expense 34.8 38.1 37.8 34.3
Engineering, research and
development expense 8.3 8.3 8.1 8.1
Interest income (1.8) (1.0) (2.0) (0.5)
Interest expense 0.1 0.1 - 0.2
Other (income) expense, net 0.2 (0.5) 0.2 (0.8)
Foreign exchange (gain) loss 0.5 (0.3) 0.2 (0.2)
----- ----- ----- -----
Loss from operations before taxes (17.3) (10.6) (21.0) (7.5)
Provision for income taxes - - 0.1 -
----- ----- ----- -----
Net loss (17.3)% (10.6)% (21.1)% (7.5)%
===== ===== ===== =====
</TABLE>
GENERAL
During the second quarter of fiscal year 1998, the Company continued to
focus on the development, marketing and distribution of its family of
AlphaCONNECT software products for the Internet and intranet market. On July 22,
1997, the Company announced first shipments of AlphaCONNECT BusinessVue, which
provides end-users with a feed of filtered corporate and business information.
-8-
<PAGE> 9
The Company intends to significantly expand its sales and marketing
resources for Internet and intranet products. While it is unlikely that revenues
for these products will increase sufficiently to offset the additional
investment in the short-term, management believes that these products will
enhance the long-term outlook of the Company.
The Company had a net loss of $1,935,000, or $0.18 per share, during the
six months ended August 24, 1997, compared to a net loss of $996,000, or $0.11
per share, during the same period in the prior fiscal year. This loss reflects
$1,326,000 relating to the marketing and launching of the AlphaCONNECT product
line and a reduction in both product and service revenues.
In August 1997, the Company acquired the assets of Data Enhancement
International Inc. (DEI), an enterprise integration firm that specializes in
client and server development, along with local and wide area Internet/intranet
networking technologies. This acquisition is a continuation of the strategic
thrust within the Company's service division to target market segments that are
sustaining higher growth and higher margins than the traditional service
business. In September 1997, the Company acquired from Atlantic Systems Inc.
certain service business assets associated with point-of-sale systems in the
Baltimore, Maryland area.
RESULTS OF OPERATIONS
Six Months Ended August 24, 1997 and August 25, 1996
Net sales decreased $4,075,000, or 30.8 percent, to $9,149,000 for the
six month period ended August 24, 1997 from $13,224,000 for the six month period
ended August 25, 1996. This decrease includes $2,728,000 relating to product
lines and subsidiaries sold during fiscal year 1997.
Total product revenues declined $2,163,000, or 43.8 percent, to
approximately $2,770,000 from approximately $4,933,000 for the comparable
period. Approximately 71.4 percent, or $1,545,000, of the decline in product
revenues was attributable to the absence of the UK subsidiary that was sold in
August 1996. The remaining decline was due primarily to the sale of the
Company's remaining vertical software product lines.
Total service revenue declined $1,912,000, or 23.1 percent, to
$6,379,000 for the six month period just ended from $8,291,000 for the same
period in the prior year. Approximately 83.6 percent, or $1,598,000, of this
decline was due to the sale of both the Company's UK and domestic
AlphaHealthCare subsidiaries. The remaining decline was due primarily to a
decrease in the Company's traditional Alpha Micro Operating System ("AMOS")
based service contracts. The Company has expanded its base of support services,
including field maintenance and networking, and intends to invest additional
resources in this area. In addition, the Company is expanding its domestic
service sales and marketing efforts to capitalize on its current base and
further expand revenues from the open systems generation market.
Total gross margin for the Company for the six months ended August 24,
1997, decreased to 23.3 percent compared to 33.6 percent during the same period
last year, with declines for both product and service. Product gross margin for
the six months ended August 24, 1997 decreased to 33.1 percent compared to 47.2
percent during the same period in the prior year. The decrease in product gross
margin was primarily due to a relatively lower proportion of higher margin AMOS
products sold, combined with higher inventory and warranty reserves in the first
half of fiscal year 1998.
-9-
<PAGE> 10
Services business gross margin declined to 19.0 percent during the half
year ended August 24, 1997, from 25.5 percent during the same period in the
prior year. The decline in gross margin was primarily due to a significant
increase in the service sales force and the sale of the Company's UK subsidiary
that generated higher service margins than the domestic service organization.
Additionally, the third-party service contracts contributed lower margins than
the traditional AMOS-based service contracts. To improve revenues, the service
organization is focusing on obtaining new contracts for its networking support
and consulting services, supporting vertical markets with services, and
increasing third-party services. Revenues from these new areas of focus are
expected in the aggregate to produce lower margins than the Company's
traditional service business. The acquisitions of DEI and Atlantic Systems Inc.
will support this effort. The Company continues to evaluate additional potential
service acquisitions that meet its financial and market criteria.
Selling, general and administrative expenses decreased $1,080,000 to
$3,461,000 for the six months ended August 24, 1997, compared to $4,541,000 for
the six months ended August 25, 1996. The sale of the UK and AlphaHealthCare
subsidiaries and the remaining vertical software product resulted in a decrease
in selling, general and administrative expenses of approximately $1,858,000,
which was partially offset by increases in the Company's investment in resources
for the Internet and intranet markets.
Research and development expenses (which include engineering support and
services) incurred for the six months ended August 24, 1997, decreased by
$324,000 to $744,000 from $1,068,000 during the same period in the prior fiscal
year. Additionally, approximately $433,000 of new software development expenses
have been capitalized in the first half of the current fiscal year, as compared
to $290,000 in the comparable period in fiscal year 1997. Research and
development expenses as a percentage of product sales increased to 26.9 percent
for the six months just ended from 21.7 percent during the comparable period in
the prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended August 24, 1997, the Company's working
capital decreased $2,091,000 to $7,237,000 from $9,328,000 at February 23, 1997.
Net cash and short-term investments in U.S. treasury bills decreased during the
six months ended August 24, 1997 by $2,445,000 to $6,135,000. Net cash used in
operating activities for the first half ended August 24, 1997 was $1,480,000
compared to $43,000 for the same period in the previous fiscal year. This is
primarily due to the Company's increased investment in Internet and intranet
products.
Net accounts receivable decreased approximately $59,000 to $2,969,000 at
August 24, 1997 from $3,028,000 at February 23, 1997. The decline in accounts
receivable was mainly due to revenue decline and improved collections.
The Company believes that its current cash position, augmented by
operating activities, will provide it with sufficient resources to finance its
working capital requirements for the remainder of the fiscal year. The Company's
future capital requirements depend on a variety of factors, including, but not
limited to, the rate of decline in the traditional business; the success,
timing, and amount of investment required to penetrate the Internet/intranet
markets; service revenue growth or decline; and potential acquisitions.
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<PAGE> 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of Shareholders of Alpha Microsystems was held on
August 13, 1997. At the Annual Meeting, all of management's nominees for
directors listed in the Proxy Statement were elected and there was no
solicitation in opposition to such nominees. Voting was as follows:
<TABLE>
<CAPTION>
WITHHOLD
DIRECTORS FOR AUTHORITY ABSTAIN
--------- --- --------- -------
<S> <C> <C> <C>
Clarke E. Reynolds 9,925,556 549,921 N/A
Douglas J. Tullio 9,896,256 579,221 N/A
Rockell N. Hankin 9,934,106 541,371 N/A
John F. Glade 9,938,106 537,371 N/A
Richard E. Mahmarian 9,934,056 541,421 N/A
</TABLE>
The proposal to ratify the appointment of Ernst & Young, LLP, as
independent auditors of the Company and its subsidiaries for the year ending
February 22, 1998 was approved, receiving 10,175,349 votes for approval and
239,935 votes against approval, with 60,193 abstentions. The proposal to
reincorporate the Company in Delaware was not approved, receiving 3,883,843
votes for approval, 657,919 votes against approval and 48,580 abstentions. This
proposal required the affirmative votes of a majority of the outstanding shares
of common stock.
Item 6. Exhibits and Reports on Form 8-K.
Exhibit No.
-----------
27 Financial Data Schedule
(b) No Form 8-K was filed during the second quarter ended
August 24, 1997.
<PAGE> 12
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.
ALPHA MICROSYSTEMS
(Registrant)
Date: October 2, 1997 By: /s/ Douglas J. Tullio
-------------------------
President and
Chief Executive Officer
Date: October 2, 1997 By: /s/ James A. Sorensen
-------------------------
Vice President and
Chief Financial Officer
-12-
<PAGE> 13
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-22-1998
<PERIOD-START> FEB-24-1997
<PERIOD-END> AUG-24-1997
<EXCHANGE-RATE> 1
<CASH> 825
<SECURITIES> 5,311
<RECEIVABLES> 3,093
<ALLOWANCES> 124
<INVENTORY> 346
<CURRENT-ASSETS> 10,530
<PP&E> 11,504
<DEPRECIATION> 8,855
<TOTAL-ASSETS> 14,958
<CURRENT-LIABILITIES> 3,293
<BONDS> 28
0
0
<COMMON> 30,972
<OTHER-SE> (19,335)
<TOTAL-LIABILITY-AND-EQUITY> 14,958
<SALES> 2,770
<TOTAL-REVENUES> 9,149
<CGS> 1,853
<TOTAL-COSTS> 7,017
<OTHER-EXPENSES> 4,205
<LOSS-PROVISION> 21
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> (1,925)
<INCOME-TAX> 10
<INCOME-CONTINUING> (1,935)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,935)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
