=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A - 1
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 0-15223
HEMACARE CORPORATION
(Exact name of registrant as specified in its charter)
State or other jurisdiction of I.R.S. Employer I.D.
incorporation or organization: California Number: 95-3280412
---------- ----------
4954 Van Nuys Boulevard
Sherman Oaks, California 91403
(Address of principal executive offices) (Zip Code)
___________________
Registrant's telephone number, including area code: (818)986-3883
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 13, 1996, 5,941,765 shares of Common Stock of the Registrant
were issued and outstanding.
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<PAGE> 2
INDEX
HEMACARE CORPORATION
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Quarterly
Report for the fiscal quarter ended March 31, 1996 on Form 10-Q as set
forth in the pages attached hereto:
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits
These adjustments are being made to reflect an adjustment in materials
inventory related to a prior period.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date February 10, 1997 HEMACARE CORPORATION
-----------------
By: /s/ Sharon C. Kaiser
-------------------------
Sharon C. Kaiser, Vice
President, Finance and Chief
Financial Officer
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEMACARE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
March 31, December 31,
1996 1995
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 820,000 $ 997,000
Accounts receivable, net of allowance for
doubtful accounts - $110,000 (1996) and
$95,000 (1995) 1,373,000 1,627,000
Product inventories 153,000 141,000
Supplies 247,000 328,000
Prepaid expenses 114,000 117,000
Note receivable from officer - current 15,000 15,000
------------- -------------
Total current assets 2,722,000 3,225,000
Plant and equipment, net of accumulated
depreciation and amortization of
$1,605,000 (1996) and $1,513,000 (1995) 994,000 1,051,000
Note receivable from officer - non-current 81,000 94,000
Other assets 98,000 87,000
------------- -------------
$ 3,895,000 $ 4,457,000
============= =============
LIABILITIES AND SHAREHOLDER' EQUITY
Current liabilities:
Accounts payable $ 536,000 $ 473,000
Accrued blood purchases 161,000 252,000
Accrued payroll and payroll taxes 344,000 310,000
Other accrued expenses 212,000 264,000
Current obligations under capital leases 215,000 209,000
Reserve for discontinued operations -
current 246,000 336,000
------------- -------------
Total current liabilities 1,714,000 1,844,000
Obligations under capital leases, net
of current portion 644,000 649,000
Other accrued employee benefits 176,000 138,000
Reserve for discontinued operations -
non-current 600,000 600,000
Commitments and contingencies
Shareholders' equity:
Common stock, without par value -
20,000,000 shares authorized,
5,929,285 and 5,911,285 issued
and outstanding in 1996 and 1995,
respectively 12,210,000 12,179,000
Accumulated deficit (11,449,000) (10,953,000)
------------- -------------
Total shareholders' equity 761,000 1,226,000
------------- -------------
$ 3,895,000 $ 4,457,000
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended March 31,
1996 1995
-------------- -------------
Revenues:
Blood products $ 1,684,000 $ 1,726,000
Blood services 1,126,000 960,000
------------- -------------
Total revenues 2,810,000 2,686,000
Operating costs and expenses:
Blood products 1,874,000 1,262,000
Blood services 794,000 694,000
------------- -------------
Total operating costs and expenses 2,668,000 1,956,000
------------- -------------
Operating profit 142,000 730,000
General and administrative expense 627,000 488,000
Interest income 9,000 15,000
Interest expense (20,000) (8,000)
------------- -------------
Income (loss) from continuing
operations before income taxes (496,000) 249,000
Provision for income taxes - -
Discontinued operations:
Loss from discontinued operations - (297,000)
------------- -------------
Net loss $ (496,000) $ (48,000)
============= =============
Per share amounts:
Income (loss) from continuing
operations $ (0.08) $ 0.04
Discontinued operations:
Loss from discontinued operations - (0.05)
------------- -------------
Net loss $ (0.08) $ (0.01)
============= =============
Weighted average common and common
equivalent shares outstanding 6,069,642 5,567,628
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
HEMACARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended March 31,
1996 1995
-------------- -------------
Cash flows from operating activities:
Net loss $ (496,000) $ (48,000)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 81,000 128,000
Provision for losses on accounts
receivable 15,000 16,000
Issuance of common stock for employee
compensation - 55,000
Changes in operating assets and liabilities:
Decrease in accounts receivable 288,000 270,000
Decrease (increase) in inventories,
supplies and prepaid expenses 72,000 (101,000)
Increase in other assets, net (11,000) (7,000)
Decrease in accounts payable and
accrued expenses (46,000) (428,000)
Increase (decrease) in other accrued
employee benefits 38,000 (44,000)
Net expenditures for discontinued
operations (90,000) -
---------- ------------
Net cash used in operating activities (149,000) (159,000)
---------- ------------
Cash flows from investing activities:
Decrease (increase) in note receivable
from officer 13,000 (11,000)
Increase in short-term investments - (4,000)
Purchase of plant and equipment, net (36,000) (25,000)
---------- ------------
Net cash used in investing activities (23,000) (40,000)
---------- ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 31,000 357,000
Principal payments on line of credit and
capital leases (36,000) (33,000)
---------- ------------
Net cash (used in) provided by financing
activities (5,000) 324,000
---------- ------------
Increase (decrease) in cash and cash
equivalents (177,000) 125,000
Cash and cash equivalents at beginning
of period 997,000 786,000
---------- ------------
Cash and cash equivalents at end of
period $ 820,000 $ 911,000
========== ============
Supplemental disclosure:
Interest paid $ 20,000 $ 8,000
========== ============
Items not impacting cash flows:
Increase in capital lease obligations $ 37,000 $ 167,000
========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
HEMACARE CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
Note 1 - Basis of Presentation and General Information
The accompanying unaudited consolidated financial statements of
HemaCare Corporation (the "Company" or "HemaCare") have been prepared
in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 1996
are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. Certain 1995 amounts have been
reclassified to conform to the 1996 presentation. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
From 1990 to November 1995, the Company, through its wholly owned
subsidiary, HemaBiologics, Inc. ("HBI"), conducted research and
development of ImmupathTM, an anti-HIV hyperimmune plasma-based
product intended to be used in the treatment of Acquired Immune
Deficiency Syndrome ("AIDS"). The Company had a license agreement
with Medicorp, Inc. ("Medicorp") for the rights to the United States
patent to commercialize Immupath. In November 1995, the Company's
Board of Directors decided to discontinue the operations of HBI.
(Notes 2 and 5).
In September 1995, the Company formed Gateway Community Blood Program,
Inc. ("Gateway"), a wholly owned subsidiary incorporated in Missouri,
to provide blood products and services in portions of Missouri and
Illinois.
The Company opened its University of Southern California Blood Center
("USC Blood Center"), a full-service blood donation and services
facility, in February 1996. The USC Blood Center facility is leased
from USC and is staffed and operated by HemaCare under its Food and
Drug Administration ("FDA") license. Located on the USC Health
Sciences Campus in Los Angeles, California, the center provides
services to the USC/Norris Comprehensive Cancer Center and Hospital
and the USC University Hospital (the "USC Hospitals"). The USC
Hospitals have agreed that HemaCare will be their primary provider of
blood products and therapeutic services for the three-year period
ending February 1999. Pathologists on the USC medical faculty provide
medical direction services for the USC Blood Center as consultants to
the Company.
Note 2 - Discontinued Operations
In November 1995, the Company's Board of Directors decided to
discontinue the operations of HBI, including the research and
development of Immupath and the associated specialty plasma business.
In connection with this decision, the Company wrote off the remaining
book value of HBI's assets and provided a reserve for estimated
operating losses from the November 30, 1995 measurement date through
December 1996, the expected date of substantial completion of
disposal. The loss on the disposition of HBI's operations has been
6
<PAGE> 7
accounted for as discontinued operations, and prior year financial
statements have been restated to reflect the discontinuation of these
operations. Revenues from such operations for the three months ended
March 31, 1995 were $70,000. Net loss from discontinued operations
for the first quarter of 1996 of $90,000 reduced the reserve for
discontinued operations. The operating loss reserve was estimated
based on the best available information. However, actual operating
losses during the disposition period may differ from the estimate.
The Company has been actively pursuing a sale of HBI's research and
development and associated specialty plasma assets, and in May 1996,
the Company signed a definitive agreement to sell substantially all
the tangible assets of the discontinued operations and two of the
three remaining FDA source plasma licenses. Closing of the sale is
contingent upon obtaining FDA approval to transfer the licenses to the
purchaser and certain other conditions.
Note 3 - Line of Credit
Since August 1991, the Company has maintained a line of credit with a
commercial bank secured by its accounts receivable, inventory and
equipment. At March 31, 1996, the Company was in technical violation
of certain of the covenants of its credit line agreement, due to the
write off of the assets of its discontinued operations (Note 2).
However, its lender had waived compliance with these covenants through
April 30, 1996, the credit line expiration date. Effective May 1,
1996, the credit line was renewed through April 30, 1997. Under the
terms of the new credit line agreement, the Company may borrow up to
70% of eligible accounts receivable, up to a maximum of $700,000 and
must maintain certain ratios and achieve defined operating objectives,
including maintaining a tangible net worth of not less than $370,000
prior to September 30, 1996 and not less than $2 million thereafter.
Interest on credit line borrowings is at the lender's prime rate
(8.25% at March 31, 1996) plus one-half of a percentage point. There
were no borrowings outstanding on the credit line at March 31, 1996.
On April 17, 1996 and May 7, 1996, the Company borrowed $200,000 and
$100,000, respectively, under the line of credit.
Note 4 - Shareholders' Equity
In April 1994, HemaCare sold 250,000 units consisting of one share of
common stock and three warrants to purchase additional shares (at
$4.00 per unit) in an offshore transaction, from which it received net
proceeds of approximately $900,000. The second group of 250,000
warrants was fully exercised in the first quarter of 1995 and yielded
net proceeds of approximately $350,000. In consideration of this
exercise, which was made 45 days prior to the expiration date, a
fourth group of 250,000 warrants exercisable at a price of $3.50 per
share and expiring in December 1998 was granted to the purchaser. The
third group of 250,000 warrants was exercised in June and July 1995,
yielding net proceeds of approximately $390,000. The fourth group of
options remains outstanding at March 31, 1996. In connection with the
sale of the units and the subsequent exercise of related warrants, the
Company granted to the finder warrants to purchase 50,000 shares of
the Company's common stock (Finder Warrants). The Finder Warrants
expire five years from their issue date and are exercisable at prices
ranging from $1.45 to $4.00. Up to 12,500 additional Finder Warrants
may be issued at $3.50 per share, depending on the number of the
fourth group of 250,000 warrants which are exercised.
In November 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock Based Compensation" ("SFAS 123"). SFAS 123 recommends changes
7
<PAGE> 8
in accounting for employee stock based compensation plans and requires
certain disclosures with respect to these plans. The Company will
adopt SFAS 123 prior to December 31, 1996.
Note 5 - Commitments and Contingencies
On March 11, 1994, the Company was served with a lawsuit filed by a
former employee against the Company and its wholly owned subsidiary,
HBI, in the Superior Court of the State of California, related to the
termination of this employee and seeking relief in the amount of
$550,000. At this stage in the proceedings, neither management nor
counsel are in a position to evaluate the probable merits of the claim
asserted by this former employee. Accordingly, the resolution of this
lawsuit could have a material impact on the Company's financial
conditions and results of operations.
In September 1995, the Company entered into a letter of intent to make
royalty payments to certain parties in consideration of certain
commitments to the establishment of Gateway. The definitive agreement
providing for the payment of these royalties has not been completed
due to a dispute with one of the parties. The letter of intent
provides for cash royalties of 20% of Gateway's cash flow, as defined,
and shares of HemaCare common stock with a value equal to the cash
royalty, up to a maximum of 500,000 shares of HemaCare common stock.
Royalty payments commence after the Company recovers its initial
investment in Gateway, including capital expenditures and operating
deficits, and terminate in 2003.
In November 1995, the Company terminated its license agreement with
Medicorp (Note 1) due to a default by the license holder. The Company
also notified Medicorp that the stock purchase warrants (exercisable
for 400,000 shares of HemaCare common stock at $5.50 per share) issued
by the Company to Medicorp had terminated under their terms, due to
the default. Medicorp has denied that it has breached the license
agreement and has alleged that the Company is liable for royalties
under the license agreement of approximately $425,000 and that its
warrants remain outstanding. The Company intends to vigorously defend
any legal action which may result from this dispute.
In February 1996, the Company terminated an agreement with a vendor,
based on an unsatisfactory level of performance of the vendor's
product. The vendor is disputing the basis for the termination. The
Company intends to vigorously defend any legal action which may result
from this dispute, and the resolution of this matter is not expected
to have a material impact on the Company's financial position or
results of operations.
Note 6 - Related Party Information
In 1995 and 1994, the Company made a series of personal loans to
Joshua Levy totaling $98,307. The proceeds of these loans were used
to refinance existing debt which was collateralized by HemaCare stock
owned by Dr. Levy. In January 1996, these individual notes were
consolidated into a promissory note, collateralized by HemaCare stock
owned by Dr. Levy, which accrues interest at a rate equal to the rate
the Company pays under its line of credit (Note 3), adjusted
quarterly. Interest accrued related to the loans made to Dr. Levy for
the quarters ended March 31, 1996 and 1995 was $2,126 and $2,221,
respectively. The note requires four annual installment payments of
8
<PAGE> 9
$15,000 due on January 31, with the balance of the principal and
accrued interest due on January 31, 2000. The Company received its
first annual installment payment of $15,000 in January 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
All comparisons within the following discussions are to the previous
year. In late December 1995, the Gateway Community Blood Program
("Gateway') opened in St. Louis, Missouri. The University of Southern
California (USC) Blood Center, located in Los Angeles, California,
opened in late February 1996. These new operations are collectively
referred to as the "Expansion Operations" in the following
discussions.
Revenues and Operating Profit
Revenues for the first quarter of 1996, increased 5% ($124,000), as
the result of a 2% decrease in blood products revenues, offset by a
17% increase in therapeutic services revenues. The Company's operating
profit as a percentage of sales ("profit margin') decreased to 5% in
the first quarter of 1996 from 27% in the comparable quarter of 1995
due to start-up losses incurred by the Expansion Operations. The
Company's first quarter gross profit margin before the effect of the
Expansion Operations was 27%.
Blood Products
The 2% ($42,000) decrease in blood products revenues for the first
quarter of 1996 was due to decreased unit sales of apheresis
platelets (10%) and whole-blood component products (8%), partially
offset by price increases for both products. Revenue from Expansion
Operations totaled $59,000 for the 1996 quarter.
Before the effect of the Expansion Operations, first quarter 1996
operating costs and expenses approximated the 1995 amount, but the
1996 profit margin decreased to 23% as compared to 28% in 1995. The
lower 1996 profit margin was due to (1) a higher number of imported
products sold in the 1996 quarter and (2) higher fixed costs per sale
as a result of a lower volume of units sold. The first quarter loss
from Expansion Operations was $559,000.
Blood Services
Blood services revenues increased 17% ($166,000) in the first quarter
of 1996, primarily as a result of a 6% increase in the number of
therapeutic procedures performed in Los Angeles and a 26% increase in
therapeutic procedures performed in northern Georgia. Both locations
also experienced an increase in the price per procedure in 1996.
The profit margin on blood services increased to 29% in the first
quarter of 1996 from 28% in the comparable period of 1995. This
increase was due to (1) lower fixed costs per procedure resulting from
the higher number of 1996 procedures and (2) costs incurred in the
1995 quarter associated with the development of a new therapeutic
procedure, partially offset by a $47,000 adjustment in materials
inventory related to a prior period.
9
<PAGE> 10
General and Administrative Expense
General and administrative expense increased 29% ($139,000) in the
first quarter of 1996. The increase was primarily due to changes in
the Company's corporate structure necessary to implement its national
expansion strategy, including the addition of a business development
department.
Discontinued Operations
In November 1995, the Company discontinued its Immupath related
research and development activities and established a reserve for
operating losses and contingent liabilities related to the disposal of
the research and development and related specialty plasma businesses.
Although the disposal reserve was estimated based on the best
available information, actual losses during the disposition period may
vary from the estimate. The Company is actively pursuing a sale of
the assets of the discontinued operations. (See "Liquidity and Capital
Resources".)
Liquidity and Capital Resources
At March 31, 1996, the Company had cash and cash equivalents of
$820,000 and working capital of $1,055,000. The Company's blood
products and services businesses, other than the Expansion Operations,
are profitable and cash flow positive.
The Company has a $700,000 line of credit with a commercial bank which
is in effect through April 30, 1997. Under the terms of the credit
line agreement, the Company may borrow up to 70% of its eligible
accounts receivable and must maintain certain operating ratios and
achieve defined operating objectives, including maintaining a tangible
net worth of not less than $370,000 through September 29, 1996 and
$2,000,000 thereafter. In order to comply with the tangible net worth
covenant after September 1996, the Company will be required to
increase its shareholder equity through the sale of additional equity
securities. The Company is currently exploring various financing
alternatives, but no assurance can be given that one or more financing
transactions adequate to satisfy these covenants will be completed on
a timely basis or at all. At March 31, 1996, there were no borrowings
outstanding on the credit line. On April 17, 1996 and May 7, 1996 the
Company borrowed $200,000 and $100,000, respectively under the credit
line.
Operating under the terms of its three-year agreements which end in
February 1999, the USC Blood Center provides services to USC
University Hospital and the USC/Kenneth Norris Comprehensive Cancer
Center and Hospital (the "USC Hospitals"). The Company is the primary
provider of blood products and services to the USC Hospitals and is
entitled to recoup the cost of tenant improvements for the USC Center
through surcharges to the Hospitals. Until its operations reach break
even, the Company will be required to fund the USC Blood Center=s cash
flow deficits.
Gateway began conducting blood drives in December 1995. Competing in
many of the same markets as the American Red Cross, Gateway is
currently developing its donor and customer bases. Management
believes that Gateway will be able to capture a sufficient portion of
the sales of blood products and services in its target markets to
achieve profitable operations, however, the success of operations will
be dependent on a number of factors and circumstances, many of which
will be outside the Company's control. Accordingly, there can be no
10
<PAGE> 11
assurance that profitable operations will be achieved. Until
Gateway's operations achieve break even, the Company will be required
to fund its working capital needs.
Management is evaluating a number of additional expansion
opportunities, including blood centers and regional programs similar
to the USC Blood Center and Gateway and operations similar to the
Company's existing southern California business. However, further
expansion will require that the Company obtain additional financing.
Various financing arrangements are under consideration, but there can
be no assurance that the Company will be able to obtain the funds
necessary to finance additional expansion projects.
Winding down discontinued operations will require funding operating
costs, including salaries and benefits and facilities costs, until
disposal of these operations is complete. A reserve for disposal, net
of estimated proceeds from the disposition of the assets of the
discontinued operations, was established in November 1995. Although
the reserve was estimated based on the best available information,
there can be no assurance that the reserve provided will be sufficient
to cover all disposal costs. Approximately $90,000 of the reserve was
funded in the first quarter of 1996. In April, one FDA source plasma
license was sold subject to FDA approval, and in May 1996, the Company
signed a definitive agreement to sell substantially all the tangible
assets of the discontinued operations and two of the three remaining
FDA source plasma licenses. Closing of the sale is contingent upon
obtaining FDA approval to transfer the licenses to the purchaser and
certain other conditions.
On March 11, 1994, the Company was served with a lawsuit filed by a
former employee against the Company and its wholly owned subsidiary,
HBI, in the Superior Court of the State of California, related to the
termination of this employee and seeking relief in the amount of
$550,000. The case is still in the discovery stage in the proceedings
and neither management nor counsel are in a position to evaluate the
probable merits of the claim asserted by this former employee.
Accordingly, the resolution of this lawsuit could have a material
impact on the Company's financial condition and results of operations.
In February 1996, the Company terminated an agreement with a vendor,
based on the inability of the vendor's product to perform to the
standards outlined in the agreement. The vendor is disputing the
basis for the termination. The Company intends to vigorously defend
any legal action which may result from this dispute, and the
resolution of this matter is not expected to have a material impact on
the Company's financial position or future results of operations.
The Company anticipates that positive cash flow from its profitable
operations, its cash and investments on hand and funds available under
its credit line will be sufficient to provide funding for the
anticipated operating deficits of the Expansion Operations, fund the
costs of disposing of its discontinued operations and meet its other
working capital needs for the next 12 months.
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27 Financial Data Schedule for the Quarter Ending
March 31, 1996.
<PAGE> 13
Index to Exhibits
<TABLE>
<CAPTION>
<S> <C> <C>
Method of Filing
----------------
27 Financial Data Schedule for the quarter
ending March 31, 1996. . . . . . . . . . Filed herewith electronically
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from unauditedd financial
statements contained in Form 10-Q for the quarter ending March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 820,000
<SECURITIES> 0
<RECEIVABLES> 1,483,000
<ALLOWANCES> 110,000
<INVENTORY> 447,000
<CURRENT-ASSETS> 2,722,000
<PP&E> 2,599,000
<DEPRECIATION> 1,605,000
<TOTAL-ASSETS> 3,895,000
<CURRENT-LIABILITIES> 1,714,000
<BONDS> 0
0
0
<COMMON> 12,210,000
<OTHER-SE> (11,449,000)
<TOTAL-LIABILITY-AND-EQUITY> 3,895,000
<SALES> 2,810,000
<TOTAL-REVENUES> 2,810,000
<CGS> 2,668,000
<TOTAL-COSTS> 2,668,000
<OTHER-EXPENSES> 627,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 20,000
<INCOME-PRETAX> (496,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (496,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (496,000)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
