<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTER ENDED DECEMBER 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 0-16449
BLYTH HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3046892
(State of incorporation) (IRS Employer Identification No.)
989 E. Hillsdale Boulevard #400
Foster City, California 94404
(Address of principal executive offices)
(415) 571-0222
(Registrant's telephone number)
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 January 29, 1997 there were 16,830,442 shares of registrant's Common
Stock, $.01 par value, outstanding.
1
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BLYTH HOLDINGS INC.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
December 31, 1996 and March 31, 1996 3
Condensed Consolidated Statements of Operations -
Three and nine months ended December 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Nine months ended December 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
2
<PAGE>
BLYTH HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, 1996 March 31, 1996
----------------- --------------
(Unaudited) (Derived from audited
financial statements)
<S> <C> <C>
Current Assets:
Cash and equivalents $8,418,000 $5,129,000
Trade accounts receivable, less
allowance for doubtful accounts
and returns of $422,000 and
$400,000, respectively 2,406,000 2,303,000
Inventory 20,000 71,000
Other current assets 904,000 1,155,000
------------ ------------
Total current assets 11,748,000 8,658,000
------------ ------------
Property, furniture and equipment, net 1,543,000 1,831,000
Capitalized software development costs, net - 300,000
Other assets - 52,000
------------ ------------
Total Assets $13,291,000 $10,841,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $1,564,000 $1,822,000
Deferred revenue 892,000 1,093,000
Current portion of long term debt 150,000 108,000
------------ ------------
Total current liabilities 2,606,000 3,023,000
------------ ------------
Long term debt, net of unamortized
issuance costs of $403,000 and
$0, respectively 3,858,000 26,000
------------ ------------
Total liabilities 6,464,000 3,049,000
------------ ------------
Stockholders' Equity:
Common stock 138,000 98,000
Paid in capital 38,402,000 35,722,000
Accumulated deficit (31,931,000) (28,152,000)
Foreign currency translation adjustment 218,000 124,000
------------ ------------
Total stockholders' equity 6,827,000 7,792,000
------------ ------------
Total Liabilities and
Stockholders' Equity $ 13,291,000 $ 10,841,000
------------ ------------
------------ ------------
</TABLE>
3
<PAGE>
BLYTH HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31 December 31
1996 1995 1996 1995
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues:
Products $ 1,128,000 $ 1,834,000 $ 3,578,000 $ 4,576,000
Services 1,272,000 1,918,000 4,654,000 5,722,000
----------- ------------ ------------ ------------
Total net revenues 2,400,000 3,752,000 8,232,000 10,298,000
----------- ------------ ------------ ------------
Cost and expenses:
Cost of sales 995,000 1,700,000 3,936,000 5,418,000
Research & development 790,000 580,000 2,052,000 2,287,000
Sales, general and administrative 2,053,000 2,164,000 5,913,000 7,345,000
----------- ------------ ------------ ------------
Total costs and expenses 3,838,000 4,444,000 11,901,000 15,050,000
----------- ------------ ------------ ------------
Operating loss (1,438,000) (692,000) (3,669,000) (4,752,000)
----------- ------------ ------------ ------------
Other income (expense):
Interest income 165,000 87,000 332,000 201,000
Interest expense (120,000) (11,000) (408,000) (116,000)
Loss of foreign exchange
transactions (4,000) (1,000) (5,000) (3,000)
----------- ------------ ------------ ------------
41,000 75,000 (81,000) 82,000
----------- ------------ ------------ ------------
Loss before income taxes (1,397,000) (617,000) (3,750,000) (4,670,000)
Income tax expense 1,000 3,000 29,000 31,000
----------- ------------ ------------ ------------
Net loss $(1,398,000) $ (620,000) $(3,779,000) $(4,701,000)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Net loss per common share: $ (0.12) $ (0.06) $ (0.36) $ (0.55)
Weighted average number of common
shares outstanding 11,336,484 9,652,858 10,458,950 8,490,893
4
</TABLE>
<PAGE>
BLYTH HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31
1996 1995
------------ ------------
Cash flows from operating activities:
Net loss $(3,779,000) $(4,701,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization expense 650,000 964,000
Capitalization software development cost
amortization expense 300,000 842,000
Accrued interest converted into stock -- 47,000
Change in assets and liabilities:
Net (increase) decreases in assets:
Trade accounts receivable (103,000) 1,304,000
Inventory 51,000 51,000
Other current assets 251,000 (276,000)
Other assets 52,000 3,000
Net increases (decreases) in liabilities:
Accounts payable and accrued liabilites (258,000) (334,000)
Deferred revenue (201,000) 153,000
--------- ---------
Net cash used for operating activities (3,037,000) (1,947,000)
--------- ---------
Cash flows from investing activities:
Purchases of property, furniture and equipment (257,000) (194,000)
--------- ---------
Net cash used for investing activities (257,000) (194,000)
--------- ---------
Cash flows from financing activities:
Exercise of stock options 122,000 116,000
New proceeds from issuance of long-term debt 6,835,000 2,585,000
Repayment of debt (371,000) 16,000
--------- ---------
Net cash provided by financing activities 6,586,000 2,717,000
--------- ---------
Effect of exchange rate changes on cash (3,000) (57,000)
Net increase in cash and equivalents 3,289,000 519,000
Cash and equivalents at beginning of period 5,129,000 4,593,000
--------- ---------
Cash and equivalents at end of period $8,418,000 $5,112,000
--------- ---------
--------- ---------
NON CASH INVESTING AND FINANCING ACTIVITIES
Conversion of convertible subordinated debentures
into common stock $2,794,000 $4,829,000
--------- ---------
--------- ---------
5
<PAGE>
BLYTH HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited financial information furnished herein reflects all
adjustments, consisting only of normal recurring items, which in the
opinion of management are necessary to fairly state the Company's financial
position, the results of its operations and the changes in its financial
position for the periods presented. These financial statements should be
read in conjunction with the Company's audited financial statements for the
year ended March 31, 1996. The results of operations for the period ended
December 31, 1996 are not necessarily indicative of results to be expected
for any other interim period or the year ending March 31, 1997.
2. Net loss per share for the three and nine months ended December 31,
1996 is based on the weighted average number of common shares outstanding
during the period including, where applicable, common stock equivalent
shares.
3. In June 1996 the Company closed an offering of $7,350,000 of 8%
Convertible Debentures due June 3, 1999, (net proceeds of $6,836,000). The
principal and interest are convertible into shares of the Company's common
stock and the Company may force conversion at its option after June 3,
1999. The Company's other long term debt consists primarily of long term
leases. In November 18, 1996 a special meeting of the Company's
shareholders was held which ratified the 8% Convertible Debentures due June
3, 1999 in accordance with the rules of the National Association of
Security Dealers (Nasdaq). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Other Income
(Expense)" and "Liquidity and Capital Resources".
6
<PAGE>
BLYTH HOLDINGS INC. AND SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
REVENUES. Total net revenues declined 36% to $2,400,000 for the
three months ended December 31, 1996 from $3,752,000 for the three
months ended December 31, 1995. The decline in total net revenues for
the three months ended December 31, 1996 as compared to the three
months ended December 31, 1995 was due to a decline of both product
and service revenues. In addition, total net revenues declined 20% to
$8,232,000 for the nine months ended December 31, 1996 from
$10,298,000 for the nine months ended December 31, 1995. The decline
in total net revenues for the nine months ended December 31, 1996 as
compared to the nine months ended December 31, 1995 was due to a
decline of both service revenues and product revenues.
Product revenues decreased 39% to $1,128,000 for the three
months ended December 31, 1996 from $1,834,000 for the three months
ended December 31, 1995. The lower product revenues for the
three months ended December 31, 1996 as compared to the three months
ended December 31, 1995 is attributable, in part, to the fact that the
revenues for the three months ended December 31, 1995 included a $750,000
site license sale to a large Latin American customer. Product revenues
decreased 22% to $3,578,000 for the nine months ended December 31, 1996
from $4,576,000 for the nine months ended December 31, 1995. The decrease
in product revenues for the nine months ended December 31, 1996 as
compared to the nine months ended December 31, 1995 was primarily due
to the $750,000 site license sale to a large Latin American customer
and decreased selling prices of the Company's software as a result of
a price decrease in September of 1995 in response to competitive
pressures.
Service revenues for the three months ended December 31, 1996
decreased 34% to $1,272,000 from $1,918,000 from the three months
ended December 31, 1995. Service revenues for the nine months ended
December 31, 1996 decreased 19% to $4,654,000 from $5,722,000 from the
nine months ended December 31, 1995. The decrease in service revenues for
the three months and nine months ended December 31, 1996 as compared
to the three months and nine months ended December 31, 1995 was a
result of decreased consulting revenues from services provided in
connection with implementation of the Company's products, partially as a
result of declines in sales of the Company's products, together with a
decrease in maintenance and support revenues.
COST OF SALES Cost of sales is comprised of the following: 1)
product cost which includes the cost of both internal and
subcontracted production, technical support and maintenance services
during the warranty period (primarily personnel related), and
amortization of capitalized software development costs, and 2) service
cost, primarily personnel related, which consists of consulting,
technical support, maintenance services outside the warranty period
and training. Cost of sales as a percentage of total net revenues
decreased to 42% from 45% for the three months ended December 31, 1996
compared to the three months ended December 31, 1995. This is
primarily due to the absence of amortization of software development
cost in the three months ended December 31, 1996 as compared to the three
months ended December 31, 1995 offset, in part, by an increase in the
costs of sales associated with a higher mix of service revenues as
compared to product revenues. Cost of products and services as a
percentage of total net revenues decreased to 48% from 53% for the nine
months ended December 31, 1996 compared to the nine
7
<PAGE>
months ended December 31, 1995. This decrease was attributable to a
lower cost of product sales, particularly with respect to product
sales in the early part of the nine months ended December 31, 1996,
and to only two quarters of amortization of capitalized software
development costs, in the nine months ended December 31, 1996.
Such costs were fully-amortized to cost of sales during the three
months ended September 30, 1996 compared to three quarters of
amortization in the nine months ended December 31, 1995.
RESEARCH AND DEVELOPMENT EXPENSE Research and development
costs increased to $790,000 for the three months ended December 31,
1996 from $580,000 for the three months ended December 31, 1995. The
increase in research and development costs for the three months ended
December 31, 1996 as compared to for the three months ended December
31, 1995 is primarily due to increased investment in the Company's new
electronic commerce products. Research and development costs decreased
to $2,052,000 for the nine months ended December 31, 1996 from
$2,287,000 for the nine months ended December 31, 1995. The decrease
in research and development costs for the nine months ended December
31, 1996 as compared to the nine months ended December 31, 1995 is
primarily due to decreased staffing and associated support costs
offset in part by increased investment in the Company's new electonic
commerce products in the three months ended December 31, 1996. The
Company continues to invest in the development of new products aimed
at sales opportunities that the Company expects will expand its
markets.
SALES, GENERAL AND ADMINISTRATIVE EXPENSES Sales, general and
administrative expenses decreased to $2,053,000 for the three
months ended December 31, 1996 from $2,164,000 for the three months
ended December 31, 1995, representing 86% and 58% of total net
revenues during these periods, respectively. The increase in
sales, general and administrative expenses as a percentage of total
net revenues is due primarily to a decrease in total net revenues
without a proportional decrease in such expenses. Sales, general
and administrative expenses decreased to $5,913,000 for the nine
months ended December 31, 1996 from $7,345,000 for the nine months
ended December 31, 1995, representing 72% and 71% of total net
revenues during these periods, respectively. The decrease in
absolute dollars for the three and nine months ended December 31,
1996 compared to the same prior period primarily represents the
effect of the Company's continuing cost control measures instituted
during the fiscal year ended March 31, 1996. The Company
currently plans to significantly increase its spending on marketing
during the next two quarters, and if the Company's sales do not increase
significantly as a result of these marketing efforts, the Company's
business, results of operations and financial conditions could be
materially adversely affected.
OTHER INCOME (EXPENSE) Other income (expense) is comprised
primarily of interest income earned on cash and equivalents,
interest expense related to the Company's 8% Convertible Debentures
due June 3, 1999 (issued June 4, 1996 with net proceeds to the
Company of $6,836,000), and loss on foreign currency transactions.
Interest income increased to $165,000 for the three months ended
December 31, 1996 from $87,000 for the three months ended December
31, 1995 and increased to $332,000 for the nine months ended
December 31, 1996 from $201,000 for the nine months ended December
31, 1995, primarily due to higher average balances of cash and
equivalents. Interest expense increased to $120,000 for the three
months ended December 31, 1996 from $11,000 for the three months
ended December 31, 1995 and increased to $408,000 for the nine
months ended December 31, 1996 from $116,000 for the nine months
ended December 31, 1995 due primarily to the accrual of interest on
the outstanding 8% Convertible Debentures due June 3, 1999 and
premiums paid in order to redeem certain of the 8% Convertible
Debentures when they were submitted for conversion. As of December
31, 1996 of the $7,350,000 of 8% Convertible Debentures due June 3,
1999, $2,794,333 had converted into 3,922,819 shares of common
stock and $407,333 had been redeemed for $497,264 of cash. As of January
29, 1997 $4,178,333 had been converted into 6,994,061 shares of
common stock and $672,333 of the aggregate principal amount of the
87% Convertible Debentures had been redeemed for $901,095 of cash.
The Company recognized a net loss of $1,398,000 for the three
months ended December 31, 1996 versus a net loss of $620,000 for the
three months ended December 31, 1995. The increase in net loss for
the three months ended December 31, 1996 as compared to the three
months ended December 31, 1995 is primarily due to the decrease in
product and service revenues. A net loss of $3,779,000 was recorded
for the nine months ended December 31 1996 versus a net loss of
$4,701,000 for the nine months ended December 31, 1995. The decrease
in net loss for the nine months ended December 31,
1996 as compared to the nine months ended December 31, 1995 is
primarily due to decreases in costs and expenses offset by the
decrease in product and service revenues.
8
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VARIABILITY OF RESULTS
The Company has experienced significant quarterly fluctuations in
operating results and anticipates such fluctuations in the future.
The Company generally ships orders as received and, as a result,
typically has little or no backlog. Quarterly revenues and operating
results, therefore, depend on the volume and timing of orders received
during the quarter, which are difficult to forecast. Furthermore, the
Company has typically sold to large corporate enterprises which often
purchase in significant quantities, and therefore, the timing of the
receipt of such orders could cause significant fluctuations in the
operating results. Historically, the Company has often recognized a
substantial portion of its license revenues in the last month of the
quarter. Service revenues tend to fluctuate as consulting projects,
which may continue over several quarters, are undertaken or completed.
Operating results may also fluctuate due to factors such as the demand
for the Company's products, the size and timing of customer orders,
the introduction of new products and product enhancements by the
Company or its competitors, changes in the proportion of revenues
attributable to licenses and service fees, commencement or conclusion
of significant consulting projects, changes in the level of operating
expenses, and competitive conditions in the industry.
The Company's staffing and other operating expenses are based on
anticipated revenue, a substantial portion of which is not typically
generated until the end of each quarter. As a result, despite careful
planning, delays in the receipt of orders can cause significant
variations in operating results from quarter to quarter. In addition,
revenues in quarters after a new product release may be significantly
affected by the amount of upgrade revenue, which tends to increase
soon after the release of a new product and then decline rapidly.
A number of additional factors have, from time to time, caused
and may in the future cause the Company's revenues and operating
results to vary substantially from period-to-period. These factors
include: pricing competition, delays in introduction of new products
or product enhancements, size and timing of demand for existing
products and shortening of product life cycle, inventory obsolescence
and general economic conditions.
The Company's future operating results will depend, to a
considerable extent, on its ability to rapidly and continuously
develop new products that offer its customers enhanced performance at
competitive prices. Inherent in this process are a number of risks.
The development of new, enhanced software products is a complex and
uncertain process requiring high levels of innovation from the
Company's designers as well as accurate anticipation of customers and
technical trends by the marketing staff. Once a product is developed,
the Company must rapidly bring it into production, a process that
requires long lead times on some product components and accurate
forecasting of production volumes, among other things, in order to
achieve acceptable product costs.
The Company's operating results will also be affected by the
volume, mix and timing of orders received during a period and by
conditions in the industries that it serves as well as the general
economy. With the addition of the alternate channels and expanded
geographical efforts which started in fiscal 1995, the Company has
entered the worldwide market. Accordingly, changes in the economies,
trade policies and fluctuations in interest or exchange rates of other
countries in which the Company sells its products may have an impact
on its future financial results.
The Company's operating expenses may increase as it expands its
operations. During fiscal 1997, the Company continues making
significant investments in product development, marketing and
expansion of its sales channel in an effort to increase its
9
<PAGE>
presence in the increasingly competitive client/server market
place. Future operating results will be adversely affected if
net revenues do not increase accordingly.
The development and introduction of new or enhanced products also
requires the Company to manage the transition from older, displaced
products in order to minimize disruptions in customer ordering
patterns and excessive levels of older product inventory and to ensure
that adequate supplies of new products can be delivered to meet
customer demand. Because the Company is continuously engaged in this
product development and transition process, its operating results may
be subject to considerable fluctuations, particularly when measured on
a quarterly basis.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company's principal sources of
liquidity consisted of cash and equivalents of $8.4 million.
The Company's working capital position increased to $9.1 million
at December 31, 1996 from $5.6 million at March 31, 1996. This
increase in working capital during the first quarter of fiscal 1997
was primarily due to the fact that on June 3, 1996 the Company
completed a private offering under Regulation S of the Securities Act
of 1933, as amended, of 8% Convertible Debentures due June 3, 1999
which resulted in net proceeds to the Company of $6,836,000.
The Company believes that its cash and equivalents, together with
expected net revenues, will be adequate to meet the Company's anticipated
cash needs for operations through fiscal 1998. However, the Company
believes the level of financial resources is a significant competitive
factor in its industry and may choose, prior to the end of fiscal 1998,
to raise additional capital through debt or equity financings to strengthen
its financial position, to accelerate growth or to provide the Company with
additional flexibility to take advantage of business opportunities that
might arise. There can be no guarantee that additional capital will be
available to the Company or, if available, on terms favorable to the
Company. If the Company is unable to raise additional capital through
operations or financings, the Company's business and operation results
may be materially and adversely impacted as management would be required to
significantly curtail operations, which could have a significant adverse
effect on the Company's business.
10
<PAGE>
BLYTH HOLDINGS INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 18, 1996, a special meeting of the stockholders of the
Company was held to ratify the issuance of 8% Convertible Debentures in the
principal amount of $7.35 million, effective June 4, 1996 (the "Original
Debentures") and the subsequent amendment of the Original Debentures,
effective September 6, 1996 amending Original Debentures in the aggregate
amount of $4.2 million (the "Amended Debentures"). Under the terms of the
amendment, the Amended Debentures and any accrued interest thereon are
convertible into common stock at a conversion price equal to the lower of (i)
95% of the highest ten day average closing bid price of the Company's common
stock as reported on The Nasdaq National Market between October 15, 1996 and
November 15, 1996, not to exceed $3.00 per share or be less than $2.25 per
share or (ii) 85% of the average closing bid price of the Company's Common
Stock for the five trading days immediately preceeding the date of
conversion. Fifty percent of the aggregate principal amount of each Amended
Debenture will be convertible on December 1, 1996 and the balance of the
principal amount of the Amended Debentures will become convertible on March
1, 1997. Out of 10,931,350 shares of common stock entitled to vote. 5,772,640
shares were present or represented. The proposal received 4,996,909 votes
"FOR" the proposal, 740,416 votes "AGAINST" with 35,315 abstentions. There
were no broker non-votes.
ITEM 5. OTHER INFORMATION
None.
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
(i) The Company filed a current report on Form 8-K on February 12,
1997 with respect to certain changes in management.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 14, 1997 BLYTH HOLDINGS INC.
(Registrant)
/s/ Timothy P. Negris
-----------------------
Timothy P. Negris
President and Chief
Executive Officer
/s/ William M. Glynn
-----------------------
William M. Glynn
Vice President, Finance
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 602,000
<SECURITIES> 7,816,000
<RECEIVABLES> 2,828,000
<ALLOWANCES> 422,000
<INVENTORY> 20,000
<CURRENT-ASSETS> 11,748,000
<PP&E> 4,008,000
<DEPRECIATION> 2,465,000
<TOTAL-ASSETS> 13,291,000
<CURRENT-LIABILITIES> 2,606,000
<BONDS> 3,858,000
0
0
<COMMON> 138,000
<OTHER-SE> 6,689,000
<TOTAL-LIABILITY-AND-EQUITY> 13,291,000
<SALES> 1,128,000
<TOTAL-REVENUES> 2,400,000
<CGS> 995,000
<TOTAL-COSTS> 3,838,000
<OTHER-EXPENSES> (41,000)
<LOSS-PROVISION> 422,000
<INTEREST-EXPENSE> 120,000
<INCOME-PRETAX> (1,397,000)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (1,398,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,398,000)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
