<PAGE> 1
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 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 0-15939
SHOWSCAN ENTERTAINMENT INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3940004
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3939 LANDMARK STREET 90232
CULVER CITY, CALIFORNIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 558-0150
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 and 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 August 10, 1996, the Registrant had 5,563,799 shares of Common
Stock, $.001 par value, issued and outstanding.
================================================================================
This report contains 16 consecutively numbered pages.
<PAGE> 2
SHOWSCAN ENTERTAINMENT INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of June 30, 1996
and March 31, 1996 3
Condensed Consolidated Statements of Operations for the Three
Months Ended June 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 1996 and 1995 6
Notes to the Condensed Consolidated Financial Statements 8
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
Signatures 16
2
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SHOWSCAN ENTERTAINMENT INC.
Condensed Consolidated Balance Sheets
(Dollars in Thousands Except Share Information)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1996 1996
------- --------
(unaudited) (Note)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,864 $ 5,055
Short-term investments 2,085 3,086
Accounts receivable (net of allowances) 4,601 3,241
Unbilled receivables on uncompleted
equipment contracts 2,271 1,122
Equipment sales inventory 1,620 1,547
Prepaid expenses and other current assets 174 122
------- -------
Total current assets 13,615 14,173
Film library (net of amortization) 4,370 3,481
Equipment and leasehold improvements (net
of depreciation and amortization) 1,218 1,313
Owned and operated theatres (Note 2) 3,955 4,045
Patents and other intellectual properties (net of
amortization) 1,661 1,770
Other assets, including note receivable
from affiliated company 1,717 1,975
------- -------
Total assets $26,536 $26,757
======= =======
</TABLE>
Note: The balance sheet at March 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
(Continued)
3
<PAGE> 4
SHOWSCAN ENTERTAINMENT INC.
Condensed Consolidated Balance Sheets (continued)
(Dollars in Thousands Except Share Information)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1996 1996
---- ----
(unaudited) (Note)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 291 $ 603
Customer advances on uncompleted
equipment contracts 4,392 2,143
Accrued expenses and other current liabilities 2,226 3,351
-------- --------
Total current liabilities 6,909 6,097
-------- --------
8% convertible notes (Note 3) 6,140 6,620
Stockholders' equity:
Series C Convertible Preferred Stock, $.001
par value; 100,000 shares authorized; 49,000
shares issued and outstanding -- --
Common stock, $.001 par value; 20,000,000
shares authorized; 5,563,799 and 5,480,324
shares issued and outstanding, respectively 6 5
Additional paid-in capital 42,881 42,446
Accumulated deficit (29,400) (28,411)
-------- --------
Total stockholders' equity 13,487 14,040
-------- --------
Total liabilities and stockholders' equity $ 26,536 $ 26,757
======== ========
</TABLE>
Note: The balance sheet at March 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE> 5
SHOWSCAN ENTERTAINMENT INC.
Condensed Consolidated Statements of Operations
(Dollars in Thousands Except Per Share Information)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1996 1995
----------------------
(Unaudited)
<S> <C> <C>
Revenues:
Film licensing $ 883 $ 2,596
Equipment sales and related services 2,361 2,218
------- -------
3,244 4,814
Cost of revenues 2,145 2,633
------- -------
Gross Profit 1,099 2,181
Costs and expenses:
General and administrative expenses 1,705 1,771
Depreciation and amortization 264 244
------- -------
1,969 2,015
------- -------
Operating income (loss) (870) 166
Other income (expense):
Equity in operations of owned and
operated theatres (38) (39)
Other income, including interest of
$116 (1996) and $21 (1995) 122 29
Interest and other expense (203) (36)
------- -------
(119) (46)
------- -------
Net income (loss) before taxes (989) 120
Provision for income taxes 0 5
------- -------
Net income (loss) $ (989) $ 115
======= =======
Net income (loss) per common share (Note 4) $ (.18) $ .02
======= =======
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE> 6
SHOWSCAN ENTERTAINMENT INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1996 1995
----------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (989) $ 115
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 264 244
Amortization of film library 133 200
Equity in operations of owned and operated theatres 38 39
Accrued interest on debt 129 10
Provision for doubtful accounts 80 130
Changes in operating assets and liabilities:
Accounts receivable (1,440) (1,433)
Equipment sales inventory (73) 792
Unbilled receivables on uncompleted equipment
contracts (1,149) (991)
Prepaid expenses and other assets (52) (77)
Investment in owned and operated theatres 31 (1,396)
Accounts payable, accrued expenses and other
current liabilities (1,566) 1,346
Customer advances on uncompleted equipment
contracts 2,249 581
------- -------
Net cash used in operating activities $(2,345) $ (440)
------- -------
Cash flows from investing activities:
Redemptions of short-term investments 1,001 --
Purchases of equipment and leasehold improvements (38) (44)
Additions to film library (1,022) (480)
Other assets 258 30
------- -------
Net cash provided by (used in) investing activities $ 199 $ (494)
------- -------
</TABLE>
(Continued)
6
<PAGE> 7
SHOWSCAN ENTERTAINMENT INC.
Condensed Consolidated Statements of Cash Flows (Continued)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1996 1995
-----------------------
(Unaudited)
<S> <C> <C>
Balance forwarded $(2,146) $ (934)
------- -------
Cash flows from financing activities:
Payments on subordinated note payable -- (3,131)
Proceeds from exercise of stock options -- 30
Other (45) (85)
------- -------
Net cash provided by (used in) financing activities (45) (3,186)
------- -------
Net decrease in cash and cash equivalents (2,191) (4,120)
Cash and cash equivalents, beginning of period 5,055 6,791
------- -------
Cash and cash equivalents, end of period $ 2,864 $ 2,671
======= =======
Supplemental disclosures of cash flow information:
Interest paid (included in subordinated note
payment above) $ -- $ 1,567
======= =======
Income taxes paid $ -- $ --
======= =======
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
7
<PAGE> 8
SHOWSCAN ENTERTAINMENT INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1--Introduction:
The accompanying unaudited condensed consolidated financial statements
of Showscan Entertainment Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 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-month period ended June 30, 1996 are not
necessarily indicative of the results that may be expected for any other quarter
in fiscal year 1997 or for the year ended March 31, 1997. 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
March 31, 1996.
Note 2--Owned and Operated theatres:
The Company retains an ownership interest, ranging from 25% to 50%, in
selected Showscan simulation theatre attractions ("Showscan Attractions")
through various financing arrangements. The Company currently operates and/or
has an ownership interest in Showscan Attractions at Universal CityWalk in Los
Angeles (November 1993), Trocadero in London (September 1994), Framingham,
Massachusetts (May 1995), Osaka, Japan (August 1995) and San Antonio, Texas
(March 1996). The Company accounts for its net ownership position under the
equity method of accounting.
Note 3--8% Convertible Notes:
On September 1, 1995, the Company completed a private placement of
$7,000,000 in secured convertible notes through a European financial
institution, Banca del Gottardo. The notes have a four-year maturity and an 8%
interest rate and are convertible at the option of the holder into 1,217,391
shares of the Company's $.001 par value Common Stock at a conversion price of
$5.75 per share. Interest payments are made semi-annually commencing March 1,
1996. Through June 30, 1996, $860,000 of notes were converted into 149,560
shares of common stock leaving an outstanding balance of $6,140,000.
Note 4--Net income/loss per common share:
Loss per common share for the three months ended June 30, 1996 and net
income per common share for the three months ended June 30, 1995 have been
determined by using 5,524,297 and 6,382,461 weighted average shares of Common
Stock, respectively. The impact of Common Stock equivalents and potentially
dilutive instruments, such as the assumed conversion of the Series C Convertible
Preferred Stock, the Company's outstanding warrants and options, and the 8%
8
<PAGE> 9
Convertible Notes due September 1, 1999, was not included in the loss per common
share calculation for the three months ended June 30, 1996, as such items are
anti-dilutive for the period presented. The earnings per common share for the
three months ended June 30, 1995 includes the impact of dilutive common stock
equivalents including the assumed conversion of Series C Convertible Preferred
Stock and Series A Convertible Preferred Stock. The assumed conversion of the
Company's outstanding warrants and options is not reflected in the earnings per
common share computation because of their anti-dilutive nature.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview:
Showscan Entertainment Inc. (the "Company") is a leading provider of
movie-based motion simulation theatre attractions ("Showscan Attractions") to
the rapidly expanding out-of-home entertainment market. The Company is presently
in the business of: (i) licensing and distributing the films in its library and
the proprietary technologies necessary to produce and exhibit Showscan films;
(ii) selling and installing attractions and specialty theatre equipment
(including projectors, screens, sound systems, synchronization and show control
and theatre design packages) used to exhibit films in the Showscan process as
well as 15/70 format films; (iii) selling motion bases and other equipment used
in Showscan Attractions and specialty theatres; (iv) producing films using the
Showscan process; and (v) operating Showscan Attractions in which the Company
has an ownership interest ("O&O Theatres"). The Company is also committed to the
continued recognition of the Showscan(R) brand name worldwide. The Company
announced in January 1996 the new "ShowMax"(TM) product line, a complete 15/70
giant screen theatre package. The Company anticipates that the ShowMax product
line will have a positive impact on sales in the future periods.
Currently, the principal sources of the Company's revenues are the
licensing of the Showscan film library and technologies, the sale and
installation of projectors, screens, sound systems and other equipment used to
exhibit Showscan films, and the sale of motion bases and other equipment used in
most Showscan Attractions. The Company currently derives most of its revenues
from export sales. The Company does not believe that inflation has had a
material impact on the Company's net revenues or on its results of operations
for the three most recent fiscal years.
Comparison of the three months ended June 30, 1996 and 1995:
Revenues for the three-month period ended June 30, 1996 (the "1997
First Quarter") decreased by $1,570,000 or 33% from revenues for the three-month
period ended June 30, 1995 (the "1996 First Quarter"). The increase of $143,000
in equipment sales and related services was offset by the decrease in film
licensing of $1,713,000.
Film licensing revenues decreased by 66% to $883,000 for the 1997 First
Quarter. The decrease was due primarily to (a) the renewal in previous fiscal
quarters of certain licensing contracts, which affected the timing of their
revenue recognition, including the renewal of the agreements with the Company's
large Japanese customer (Imagine Japan), and (b) the inclusion in the 1996 First
Quarter of a specific site license agreement, which revenues constituted all of
the revenues to be received with respect to such agreement. Revenues from film
licensing are based on new license agreements as well as renewals of existing
agreements and results fluctuate from quarter to quarter, with such fluctuations
being a result of the seasonality in the way that licensing agreements are
entered into and how the license agreements are structured. On an annual basis,
recurring film licensing revenues should increase over time as the number of
operating Showscan Attractions increases.
10
<PAGE> 11
Revenues from equipment sales and related services for the 1997 First
Quarter remained relatively constant when compared to the 1996 First Quarter.
The 6% increase in equipment sales and related services can be attributed to the
timing of such sales and their respective delivery dates.
The Company recognizes equipment sales under the
percentage-of-completion method of accounting, generally measured by the
percentage that the labor hours incurred to date bears to the estimated total
labor hours of each contract. This results in a disparity in the comparison of
equipment sales revenues over different time periods, as the Company records
revenues under this method rather than on the date that the sales agreement is
signed. The actual signing of a Showscan Attraction sale precedes its delivery
and installation by an average of six to seven months. Accordingly, the
recognition of revenue for equipment sales during the current and future
quarters is affected by (i) the timing of such sales, (ii) the schedule of the
build out of the Showscan Attractions and (iii) the shipment, delivery and
installation of the equipment and related services.
Cost of revenues were 66% of revenues in the 1997 First Quarter as
compared to 55% in the 1996 First Quarter. The cost of revenues on equipment
sales and related services remained fairly constant at 77% of revenues in the
1997 First Quarter and 79% in the 1996 First Quarter, whereas the distribution
and other costs of film licensing (excluding film amortization) as a percentage
of revenues were higher in the 1997 First Quarter (37%) than in the 1996 First
Quarter (34%). With the decrease in film licensing revenues in the 1997 First
Quarter as compared to the 1996 First Quarter, the result is a higher cost of
revenues percentage in the 1997 First Quarter. Amortization expense of the film
library for the 1997 First Quarter and the 1996 First Quarter was $133,000 and
$200,000, respectively. The decrease in amortization was due primarily to older
films in the Company's film library being fully amortized during the fiscal year
ended March 31, 1996.
The Company accounts for its net ownership position in O&O Theatres
using the equity method of accounting. The equity loss of $38,000 on the net
operations of O&O Theatres for the 1997 First Quarter was consistent with the
1996 First Quarter and is primarily the result of the following factors: (i)
expenses incurred in connection with the acquisition and development of future
O&O Theatre locations, (ii) operating losses, including initial start-up and
marketing expenses at the Riverwalk in San Antonio, Texas, (iii) operating
losses at the Trocadero in London, due to construction of a complex adjacent to
the theatre that directly affected theatre attendance, (iv) operating losses at
the Framingham theatres, and (v) offset by the combined operating profits of the
O&O Theatres at CityWalk and Osaka. The Company earns film licensing and
management fees (from some of the O&O Theatres) which are recorded separately in
the accompanying condensed consolidated statements of operations, thereby
inherently increasing the operating expenses at the specific O&O Theatres.
The Company incurred a net loss in the 1997 First Quarter of $989,000
from a $115,000 profit in the 1996 First Quarter. The decrease in film licensing
revenues was the primary factor for the decrease in performance.
11
<PAGE> 12
Liquidity and Capital Resources:
At June 30, 1996, the Company's working capital decreased to $6,706,000
from $8,076,000 at March 31, 1996. The decrease in working capital was primarily
due to the expenditures related to on-going production of two new films.
Cash and cash equivalents at June 30, 1996 decreased by $2,191,000 from
March 31, 1996. The decrease in cash was primarily due to (i) the financing of
the on-going production of two new films in the amount of approximately
$1,000,000, and (ii) account receivables and unbilled receivables on uncompleted
equipment contracts increased by a combined 58%, while accounts payable,
customer advances on uncompleted equipment contracts and accrued expenses and
other current liabilities increased by only 13%, offset by (iii) a $1,000,000
redemption of short-term investments. The changes to receivables, payables,
advances and accrued expenses are primarily attributable to variations in the
timing of Showscan Attractions sales and the specific contract terms of such
sales, which terms generally affect the timing of collections, shipments,
deliveries to customers, installations and the related payments to vendors. The
specific contract terms of each sale also dictate when invoicing occurs. The
increase in accounts receivable is primarily due to the issuance of certain
large invoices just prior to June 30, 1996, of which $1,250,000 was collected
before July 15, 1996.
The Company believes that its working capital will be sufficient to
fund the costs of operations for the next twelve months. The Company's business
strategy includes new film productions, new product development and new product
lines, enhancement of existing product lines and possible site acquisitions for
additional O&O Theatres. The Company plans to pursue further financing
alternatives by one or more of the following means: the selling of securities,
obtaining a line of credit from a banking institution, and/or forming strategic
alliances or joint ventures. There can be no assurance that the Company will be
able to obtain any of the aforementioned financing alternatives. If the Company
is unable to generate sufficient funds from operations or is unable to raise
additional capital through any of the aforementioned alternatives, the Company
will need to curtail its revised business strategy, specifically with regard to
the timing of new film productions and the number of new O&O Theatres. At July
12, 1996, the Company has reserved 4,651,832 shares of Common Stock for issuance
on the exercise of stock options, warrants, preferred stock and convertible
notes. Furthermore, the Company's current backlog is approximately $29 million,
comprising 37 screens of which 11 screens are scheduled to be open by the end of
fiscal year 1997.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Portions of this report on Form 10-Q (this "Report") may contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements. The discussion below,
together with portions of the discussion elsewhere in this Report and in the
Company's other reports on file with the Securities and Exchange Commission,
highlight some of the more important risks identified by the management of the
Company but should not be assumed to be the only things that could affect future
performance.
12
<PAGE> 13
Period to Period Fluctuations
The Company's operating results may fluctuate from period to period for
a number of reasons, including (a) the timing of sales of Showscan Attractions,
(b) the timing of delivery and installation of such sales (pursuant to
percentage of completion accounting) and any delays therein caused by permitting
or construction delays at the customer's site, (c) the size, type and
configuration of the Showscan Attractions sold, (d) the timing of film licensing
revenues from existing Showscan Attractions and the performance of those
Showscan Attractions that pay film rental based on a percentage of box office,
and (e) the timing of sales and marketing efforts and related expenditures.
Accordingly, the Company's revenues and earnings in any particular period
(quarterly and/or annually) may not be indicative of the results for any future
period.
The Company's performance depends primarily upon the number of Showscan
Attractions that it can sell and install. This dependence has been lessening as
the percentage of the Company's revenues derived from on-going film rental has
increased though there can be no assurance that this trend will necessarily
continue. The Company's results have followed a seasonal pattern, with revenues
tending to be stronger in the second and fourth fiscal quarters, reflecting the
buying patterns of the Company's customers for new Showscan Attractions.
International Operations
A significant portion of the Company's revenue is from sales and film
licensing outside the United States. The Company's results could be negatively
affected by such factors as changes in foreign currency exchange rates, trade
protection measures, policies with respect to currency and fiscal controls,
longer accounts receivable collection patterns, changes in regional or worldwide
economic or political conditions, or natural disasters. Though the Company faces
less direct exchange rate risks since nearly all of its contracts are
denominated in United States Dollars, fluctuations in exchange rates can
significantly affect the affordability of the Company's products and services
overseas.
Competition
The Company faces intense competition in all of its product lines. In
the motion simulation business, the Company's main competitor is Iwerks
Entertainment, Inc. though there are an increasing number of smaller
competitors. Iwerks has substantially greater financial resources than the
Company and as such may be able to both price its existing products and services
lower than the Company as well as produce new products. Imax Corporation is a
growing competitor of the Company in this segment and has dedicated substantial
resources to entering this market.
In the large screen, special format motion picture business, the
Company's main competitor is Imax though Iwerks is also very significant. The
15/70 format appears to be emerging as the most popular large format due
primarily to the large number of films available in that format. Imax is by far
the dominant company in this market. The Company is only a recent entrant into
this market and has not yet made any sales. The Company will have to continue to
invest funds in order to broaden its position in the 15/70 market and thus short
term results could be adversely affected until sales can be made.
13
<PAGE> 14
Dependence on Major Customers
The Company's motion simulation business has two significant
concentrations. The first concentration involves ongoing film licenses and is
located in Japan where a single customer presently operates or is otherwise
responsible for thirteen simulation attractions. The second concentration
relates to the Company's sales backlog where United Artists Theatre Circuit,
Inc. and King's Entertainment Co., Ltd. individually and collectively
represent a substantial portion of the outstanding equipment orders to be
delivered in the next few years. Of course, as each of these customers builds
more theatres they will then become a concentration in the area of ongoing
film rental. In the future, the Company plans to increase the number of
customers with which it has multi-system agreements. The Company's short and
long term performance could be adversely impacted if disruptions were to
occur in any of these areas of concentration such as order cancellations,
license terminations or payment problems.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
Current Report, dated May 28, 1996, Item 5. No financial statements were
filed with the foregoing report.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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, in the City of Culver
City, State of California on the 12th day of August, 1996.
Showscan Entertainment Inc.
(Registrant)
By /s/ DENNIS POPE
-----------------------------------------
Dennis Pope
Executive Vice President
- Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)
By /s/ GREGORY W. BETZ
-----------------------------------------
Gregory W. Betz
Vice President - Director of Finance
(Authorized Officer and Principal
Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2864
<SECURITIES> 2085
<RECEIVABLES> 7167
<ALLOWANCES> 295
<INVENTORY> 1620
<CURRENT-ASSETS> 13615
<PP&E> 5366
<DEPRECIATION> 4148
<TOTAL-ASSETS> 26536
<CURRENT-LIABILITIES> 6909
<BONDS> 6140
0
0
<COMMON> 6
<OTHER-SE> 13487
<TOTAL-LIABILITY-AND-EQUITY> 26536
<SALES> 2361
<TOTAL-REVENUES> 3244
<CGS> 2145
<TOTAL-COSTS> 1969
<OTHER-EXPENSES> (84)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 203
<INCOME-PRETAX> (989)
<INCOME-TAX> 0
<INCOME-CONTINUING> (989)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (989)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
</TABLE>
