<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
/ / 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: 33-18600-D
QCS CORPORATION
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 98-0132465
---------------------------------- -----------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
650 CASTRO STREET, SUITE 210, MOUNTAIN VIEW, CA 94041
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(650) 966-1214
- -------------------------------------------------------------------------------
(Issuer'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
--- ---
Common stock outstanding as of April 12, 1998: 18,110,284 shares
Transitional Small Business Disclosure Format YES X NO
--- ---
<PAGE>
QCS CORPORATION
CONTENTS
PAGE
PART I FINANCIAL INFORMATION
ITEM 1 Consolidated Financial Statements (unaudited):
Consolidated Balance Sheets as of
March 31, 1998 (unaudited) and June 30, 1997 3
Consolidated Statements of Operations
for the three and nine month periods ended
March 31, 1998 and 1997 (unaudited) 4
Consolidated Statements of Cash Flows
for the nine month period ended
March 31, 1998 and 1997 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
ITEM 2 Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
PART II OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8K 10
SIGNATURE 10
2
<PAGE>
QCS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
ASSETS 1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 475,145 $ 1,274,157
Accounts receivable (net of allowance for doubtful accounts of
$39,138 on March 31, 1998 and $55,036 on June 30, 1997) 250,750 152,789
Other current assets 7,916 14,896
------------ ------------
Total current assets 733,811 1,441,842
Fixed assets, net of accumulated depreciation and amortization 133,390 242,243
Security deposits 14,135 32,059
------------ ------------
Total assets $ 881,336 $ 1,716,144
------------ ------------
------------ ------------
LIABILITIES
Current liabilities:
Accounts payable $ 326,938 $ 240,007
Accrued liabilities 450,545 520,305
Capital lease obligations, short-term portion 8,838 9,097
Preference dividends payable 793,965 605,462
------------ ------------
Total current liabilities 1,580,286 1,374,871
Capital lease obligations, long-term portion 8,448 14,892
------------ ------------
Total liabilities 1,588,734 1,389,763
STOCKHOLDERS' EQUITY (DEFICIT)
Series A convertible preferred stock, par value $.001 per share:
Authorized: 5,000,000 shares; issued and outstanding 4,310,684 and
4,368,937 shares at March 31, 1998 and June 30, 1997, respectively
(aggregate liquidation preference: $4,440,005) 4,311 4,369
Common stock, par value $.001 per share: Authorized: 40,000,000 shares;
issued and outstanding 18,110,284 and 17,136,531at March 31, 1998 and
June 30, 1997, respectively 18,110 17,137
Additional paid in capital 11,264,651 10,653,231
Deferred stock compensation - (107,250)
Subscriptions receivable from stockholders (200,100) (200,100)
Accumulated deficit (11,975,340) (10,160,862)
Cumulative foreign currency translation adjustment 180,970 119,856
------------ ------------
Total stockholders' equity (deficit) (707,398) 326,381
------------ ------------
Total liabilities and stockholders' equity (deficit) $ 881,336 $ 1,716,144
------------ ------------
------------ ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
QCS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Network $ 144,805 $ 285,852 $ 539,971 $ 1,055,258
Consulting 105,000 - 105,000 -
----------- ----------- ----------- -----------
249,805 285,852 644,971 1,055,258
Cost of revenues:
Network 73,624 215,594 356,357 658,871
Consulting 105,000 - 105,000 -
----------- ----------- ----------- -----------
178,624 215,594 461,357 658,871
Gross profit 71,181 70,258 183,614 396,387
Operating expenses:
Selling, general and administrative 521,496 781,094 1,636,805 2,510,547
Research and development 118,347 76,806 281,910 262,388
Adjustment to long-term contract (156,702) - (156,702) -
----------- ----------- ----------- -----------
Total operating expenses 483,141 857,900 1,762,013 2,772,935
Operating loss (411,960) (787,642) (1,578,399) (2,376,548)
Other income (expense), net (28,982) (46,578) (65,146) (42,072)
Interest income 1,320 24,569 17,570 80,356
----------- ----------- ----------- -----------
Net loss $ (439,622) $ (809,651) $(1,625,975) $(2,338,264)
Preferred dividend payable not
included in net loss (64,537) (59,298) (188,503) (180,856)
----------- ----------- ----------- -----------
Net loss available to common
stockholders $ (504,159) $ (868,949) $(1,814,478) $(2,519,120)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net loss per share (basic & diluted) $ (0.03) $ (0.05) $ (0.11) $ (0.15)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of shares
used in per share calculation
(basic & diluted) 17,474,312 17,166,531 17,264,914 17,043,090
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
QCS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
MARCH 31, MARCH 31,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,625,975) $(2,338,264)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization expense 50,803 56,063
Unrealized exchange loss 64,516 65,085
Write-off of fixed assets 15,181 4,183
Change in allowance for doubtful accounts (15,898) 35,808
Stock option compensation 107,250 194,338
Changes in operating assets and liabilities:
Changes in accounts receivable (82,063) (48,444)
Changes in other current assets and security deposits 24,904 9,622
Changes in accounts payable 86,931 (127,489)
Changes in accrued and other liabilities (3,601) 126,379
----------- -----------
Net cash used in operating activities (1,377,952) (2,022,719)
Cash flows from investing activities:
Purchases of fixed assets (44,034) (68,670)
Proceeds from sale of fixed assets 19,405 -
----------- -----------
Net cash used in investing activities (24,629) (68,670)
Cash flows from financing activities:
Net proceeds from issuance of common stock 611,585 1,031,969
Common stock subscriptions received - 262,484
Exercise of stock options and warrants 750 130,000
Payments on capital leases (6,703) (1,954)
----------- -----------
Net cash provided by financing activities 605,632 1,422,499
Effect of exchange rate changes on cash (2,063) 18,598
----------- -----------
Net decrease in cash and cash equivalents (799,012) (650,292)
Cash and cash equivalents, beginning of the period 1,274,157 2,607,118
----------- -----------
Cash and cash equivalents, end of the period $ 475,145 $ 1,956,826
----------- -----------
----------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 3,225 $ 2,331
Capital lease additions - 21,593
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
NOTES TO UNAUDITED FINANCIAL STATEMENTS
The consolidated financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation, in all material respects, of the
financial position and operating results for the interim periods. The results
of operations for the three and nine month periods ended March 31, 1998 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending June 30, 1998. The year-end balance sheet data was derived from the
audited financial statements.
This financial information should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Form 10-KSB for
the fiscal year ended June 30, 1997 as filed with the Securities and Exchange
Commission.
COMPUTATION OF NET LOSS PER SHARE
The Company adopted the provisions of Statement of Financial Accounting Standard
No. 128 (SFAS 128) "Earnings per Share" effective December 31, 1997. SFAS
requires the presentation of basic and diluted earning per share. Basic EPS is
computed by dividing the income available to common shareholders by weighted
average number of common shares outstanding for the period. Diluted EPS is
computed by giving effect to all dilutive potential common shares that were
outstanding during the period. For the Company, dilative potential common
shares consist of incremental common shares issuable upon the exercise of stock
options and warrants for all periods. In accordance with SFAS 128, all prior
period earnings per share amounts have been restated to reflect this method of
calculation.
Basic and diluted earnings per share are calculated as follows during the three
and nine-month periods ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
3/31/98 3/31/97 3/31/98 3/31/97
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
BASIC:
Weighted average shares outstanding
for the period 17,474,312 17,166,531 17,264,914 17,043,090
----------- ------------ ----------- ------------
Shares used in per share calculation 17,474,312 17,166,531 17,264,914 17,043,090
Net loss available to common
shareholders $ (504,159) $ (868,949) $(1,814,478) $(2,519,120)
----------- ------------ ----------- ------------
Net loss per share $ (0.03) $ (0.05) $ (0.11) $ (0.15)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
DILUTED:
Weighted average shares outstanding for
the period 17,474,312 17,166,531 17,264,914 17,043,090
Common stock equivalents from stock
options and warrants - - - -
Convertible preferred stock - - - -
----------- ------------ ----------- ------------
Shares used in per share calculation 17,474,312 17,166,531 17,264,914 17,043,090
Net loss available to common
shareholders $ (504,159) $ (868,949) $(1,814,478) $(2,519,120)
----------- ------------ ----------- ------------
Net loss per share $ (0.03) $ (0.05) $ (0.11) $ (0.15)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
6
<PAGE>
Options and warrants to purchase 3,459,548 and 2,937,971 shares of common stock
were at March 31, 1998 and 1997, but were not included in the computation of
diluted earnings per share because inclusion of the options and warrants was
antidulitive.
RECLASSIFICATION
Certain prior period balances have been reclassified to conform to the current
period's presentation.
RECENT PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive
Income." SFAS 130 establishes standards for reporting and display of financial
statements. The impact of adopting SFAS 130, which is effective in fiscal 1999,
has not been determined.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (SFAS 131) "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 requires publicly held
companies to report financial and other information about key revenue-producing
segments of the entity for which such information is available and is utilized
by the chief operation decision maker. Specific information to be reported for
individual segments includes profit or loss, certain revenue and expense items
and total assets. A reconciliation of segment information to amounts reported in
the financial statements would be provided. SFAS 131 is effective in fiscal 1999
and the impact has not been determined.
PART I FINANCIAL INFORMATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this report and other Company reports, including
without limitation statements containing the words "believes," "anticipates,"
"expects" and other words of similar import, constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These factors include, but are not limited to, the effect of (i)
risks related to the Company's recent marketing and technology alliance with
IBM, (ii) future capital needs and uncertainty of additional financing, (iii)
possible competitive entries, (iv) other risks detailed in this report. These
factors are discussed in more detail in the Risk Factors section of the
Company's report on Form 10-KSB for the fiscal year ended June 30, 1997. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to publicly announce the results of any revisions of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments.
OVERVIEW
QCS Corporation (the "Company") is an electronic commerce service provider
serving the worldwide retail industry. The Company's revenues are derived from
its software products and services which include application software for a one
time registration fee and network access for which the Company charges a fixed
monthly fee and/or volume-based recurring usage fees. The Company from time to
time also derives
7
<PAGE>
revenues from consulting services. Based on the marketing agreement signed
in December 1996, IBM will be assuming responsibility for much of the sales,
marketing and end user support efforts for the Company. The Company believes
this alliance with IBM to be an essential component of its business plan, but
the involvement with IBM is still at a preliminary stage and the Company can
give no assurance of when or if the alliance will ultimately be successful.
As of April 30, 1998, no significant sales have been generated from this
alliance.
From inception in 1993 through March 31, 1998, the Company has generated an
accumulated deficit of $11,975,340. Since inception, the Company has incurred
substantial costs to develop and enhance its technology, to create, introduce
and enhance its product offerings, to establish marketing and distribution
relationships, to recruit and train a sales and marketing group and to build
an administrative organization. The Company's prospects must be considered
in light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development, particularly companies in new,
unproved and rapidly evolving markets. The limited operating history of the
Company makes the prediction of future results of operations difficult or
impossible, and, therefore, there can be no assurance that the Company will
sustain growth or achieve profitability. The Company's success depends to a
significant degree upon the continued contributions of key management,
engineering, sales and marketing, and finance personnel, certain of whom
would be difficult to replace. The loss of the services of any of the key
personnel, the inability to attract or retain qualified personnel in the
future or delays in hiring required personnel could have a material adverse
effect on the Company's business, operating results or financial condition.
Also, as indicated above, the Company's success is highly dependant on its
and IBM's ability to execute in a timely manner the joint sales and marketing
plan, of which no assurance can be made. If this fails to occur, the Company
would be materially and adversely effected. Additionally, the Company is in
immediate need of equity capital if it is to sustain current operations. See
"Liquidity and Capital Resources."
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998
The Company's network revenues decreased by 49% to $144,805 for the third
quarter of fiscal year 1998 (Q3 98) as compared to $285,852 for the third
quarter of fiscal year 1997 (Q3 97). This decrease is primarily attributed to
the Company's lower sales of its full Notes based supplier stations and the
related installation and monthly subscription fees. The loss of these revenues
has not been compensated by revenues of the new Internet based QCS Supplier
Stations. Internet revenue for Q3 98 was $7,545 or 5% of network revenues. The
Company entered into an service agreement with IBM Corporation to provide
sales, marketing and end-user support services to assist in marketing QCS
products. The revenue associated with this agreement in Q3 98 was $105,000.
The combined network and consulting revenues of $249,805 represent a 13%
decrease of total revenues of $285,852 from Q3 97.
Cost of network revenues decreased by 66% to $73,624 for Q3 98 from $215,594 in
Q3 97. Effective in Q3 98 cost of network revenues will be primarily calculated
as a percentage of network revenues in accordance to the IBM revenue sharing
arrangement. In Q3 97 cost of revenues included cost of purchasing network
services, the cost of internal and external labor to install and support
customer sites, and third party software and hardware for the existing Lotus
Notes based product. Cost of consulting revenue in Q3 98 was $105,000, which
represents the cost of services provided to IBM.
Selling, general and administrative expenses (SG&A) consist primarily of
personnel-related costs in the Company's sales, marketing and general management
organizations and other administrative support costs such as external legal and
financial services. SG&A expenses decreased 33% to $521,496 in Q3 98 from
$781,094 in Q3 97. The decrease was due in part to the aforementioned cost of
sales, marketing and end-user support services, which are now invoiced to IBM.
In Q3 98 the company realized savings of approximately $40,000 rents and
depreciation from the closure of the Nice and Hong Kong offices. The Company
recorded non-cash stock option compensation charges of $107,250 in Q3 98 and
$25,688 in Q3 97. Research and development expenses increased by $41,541 to
$118,347 in Q3 98 from last year, due to consulting services purchased for the
development of back-end administrative features of the Company's new Internet
product.
8
<PAGE>
During Q3 98 the Company recorded an adjustment to the 1996 IBM contract of
$156,702 to reverse cost accrued to cost of sales during the first six months
of fiscal 1998.
As a result of the foregoing, the net loss decreased 46% to $439,622 for Q3
98 from $809,651 in Q3 97.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1998
The Company's network revenues decreased by 49% to $539,971 for the first
nine months of fiscal year 1998 as compared to $1,055,258 for the first nine
months of fiscal year 1997. This decrease is primarily attributed to the
Company's lower sales of its full Notes based supplier stations and the
related installation and monthly subscription fees. The loss of these
revenues has not been compensated by revenues of the new Internet based
Supplier Sales Stations. In November, the Company reduced its monthly
Internet subscription fee from $195 per month to $55 per month. Internet
revenue for the first nine months of fiscal 1998 was $58,170 or 11% of total
network revenues. Total revenue, including Network and Consulting, for the
nine months ended March 31, 1998 were $644,971 is 39% below the same period
last year.
Cost of network revenues decreased by 46% to $356,357 from $658,871 for the
first nine months of 1998 from the same period in fiscal 1997. This was due
primarily to the decrease in sales of the full Lotus Notes based product and
to cost of network revenues recorded as a percentage of notes revenues in
accordance to the IBM revenue sharing agreement effective January 1998. Cost
of sales in fiscal 1997 consisted primarily of the cost of purchasing network
services, the cost of internal and external labor to install and support
customer sites, and third party software and hardware for the existing Lotus
Notes based product.
Selling, general and administrative expenses (SG&A) consist primarily of
personnel-related costs in the Company's sales, marketing and general
management organizations and other administrative support costs such as
external legal and financial services. SG&A expenses decreased 35% to
$1,636,805 from $2,510,547 for the first nine months of fiscal 1998 from the
same period in fiscal 1997. The decrease was due to reduced payroll expenses
from lower headcount and the classification of $105,000 of labor costs
associated with the IBM service contract to cost of consulting services, and
a reduction of accounting and legal fees. The Company recorded non-cash stock
option compensation charges of $107,250 in the nine months ended March 31,
1998 versus $194,338 in the same period last year.
As a result of the foregoing, the net loss decreased 30% to $1,625,975 from
$2,338,264 for the first nine months of fiscal 1998 from the same period in
fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents at March 31, 1998 was $475,145,
representing a $799,012 decrease from June 30, 1997. Cash used in operating
activities for the nine months ended March 31, 1998 was $1,377,952, compared
to $2,022,719 for the first nine months of fiscal 1997. During the third
quarter of fiscal 1998, the Company raised $611,585 in net proceeds for the
sales of 840,500 shares of common stock at $0.75 per share in a private
placement. As of May 14, 1998, the Company has received and accepted (i) an
executed subscription agreement and (ii) an executed financial consulting
agreement, each memorializing understandings reached between the parties on
March 6, 1998, whereby the Investor has agreed to pay the Company $270,000 in
immediately available funds (less incidental expenses in the amount of
$7,150), and to perform certain financial consulting services for the Company
over the next two years, in return for 270,000 equity "Units," each such
"Unit" to consist of one share of Company common stock, together with a
warrant to purchase an additional three shares of Company common stock at an
exercise price of $1.00 per share. The Company expects to receive the
proceeds from this subscription, in the amount of $262,850, in due course.
The Company's business plan for fiscal 1998 calls for continued increases in
spending for product development and key technical personnel. The Company's
ability to operate is dependent upon raising additional equity capital until
revenues under the IBM relationship develop to a level that will sustain
operations. The Company is currently negotiating with potential investors to
raise additional capital through a private placements of common stock, but
can give no assurance that it will be successful in obtaining this financing.
The Company is continuing its efforts to implement its relationship with IBM
and believes that, if it is successful in doing so, it will continue to lower
its marketing and selling expenses and be in a better situation to attract
equity capital which it anticipates would be sufficient to fund operations
for the next year. While the Company believes it will be successful in
implementing its alliance with IBM, there can be no assurance of this result
or of success in future fund raising efforts.
9
<PAGE>
With the capital currently on hand, the proceeds of the aforementioned
Investor subscription in the amount of $262,850, the Company has resources to
fund its operations through approximately the end of August, 1998. Should the
Company's current fund raising efforts and implementation of its agreement
with IBM prove unsuccessful, the Company will have to reduce its operating
expenses significantly, which would materially and adversely effect the
Company's business, and raise substantial doubts about its ability to
continue as a going concern.
The Company does not currently have a bank credit line. The Company does not
intend to pay cash dividends with respect to common stock in the foreseeable
future.
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
27 Financial Data Schedule
B. REPORTS ON FORM 8-K
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the third quarter of fiscal 1998.
SIGNATURE
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.
Dated: April 14, 1998
QCS CORPORATION
(Registrant)
By: s/ Marcel van Heesewijk
------------------------------
Marcel van Heesewijk, President,
Chief Executive Officer, Acting
Principal Accounting and Financial
Officer and Chairman of the Board
of Directors
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM STATEMENT FOR THE
THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEEMNTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 475
<SECURITIES> 0
<RECEIVABLES> 290
<ALLOWANCES> 39
<INVENTORY> 0
<CURRENT-ASSETS> 734
<PP&E> 192
<DEPRECIATION> 59
<TOTAL-ASSETS> 881
<CURRENT-LIABILITIES> 1,580
<BONDS> 0
0
4
<COMMON> 18
<OTHER-SE> (729)
<TOTAL-LIABILITY-AND-EQUITY> 881
<SALES> 0
<TOTAL-REVENUES> 250
<CGS> 0
<TOTAL-COSTS> 179
<OTHER-EXPENSES> 512
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (440)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (440)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
