FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the quarter ended March 31, 1998
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 01-18695
WORK RECOVERY, INC
(Exact name of registrant as specified in its charter)
Delaware 86-0848910
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1121 East Missouri Avenue, Suite 100, Phoenix, AZ 85014
(Address of principal executive offices) (Zip Code)
(602) 274-6707
Registrant's telephone number, including area code
2341 South Friebus Avenue, Tucson, AZ 85713
(Former name, former address and former fiscal year, if changed since last
report.)
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 Act of 1934during 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X . No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Registrant has only one class of common stock outstanding. As of April 30,
1998, approximately 14,722,830 shares of common stock were issued or reserved
for issuance pursuant to the Amended Plan of Reorganization.
<PAGE>1
FORM 10-Q
WORK RECOVERY, INC.
For the Quarter ended March 31, 1998
INDEX
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets at March 31, 1998 and June 30, 1997
Consolidated Statements of Operations for the three months and nine months
ended March 31, 1998 and for the two months ended March 31, 1997 (Successor
Company), one month ended February 1, 1997 (Successor Company), and seven
months ended February 1, 1997
Consolidated Condensed Statements of Cash Flows for the nine months ended March
31, 1998 and for the two-months ended March 31, 1997 (Successor Company) and
seven months ended February 1, 1997 (Predecessor Company)
Notes to Consolidated Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II. Other Information:
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WORK RECOVERY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
----------- ---------
ASSETS
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 32 $ 460
Receivables, net 109 266
Inventories 590 682
Prepaid Expenses and Other Assets 96 109
-------- --------
Total Current Assets 827 1,517
Property, Plant and Equipment, net 182 1,697
Intangible Assets 90 107
Other Assets 20 121
-------- -------
Total Assets $ 1,119 $ 3,442
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable $ 504 $ 236
Claims Payable 1,756 1,756
Accrued Expenses 1,155 1,032
Notes Payable, Related Parties 2,000 1,887
Other Debt 153 1,269
------ ------
Total Current Liabilities 5,568 6,180
Commitments and Contingent Liabilities
Shareholders' Equity (Deficit):
Common Stock, $.01 par value:
Authorized 48,000,000 shares, issued and
outstanding 14,722,830 shares 147 147
Preferred Stock, $.01 par value, 2,000,000
shares authorized, no shares issued and outstanding
Additional Paid-in Capital 37,454 37,353
Accumulated Deficit (42,050) (40,238)
-------- -------
Total Shareholders' (Deficit) (4,449) (2,738)
-------- -------
Total Liabilities and Shareholders' (Deficit) $ 1,119 $ 3,442
======== =======
</TABLE>
See notes to Consolidated Financial Information
<PAGE>2
WORK RECOVERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Successor Company Predecessor Company
------------------------------------- -----------------
Three Months Ended Two Months Ended One Month
March 31, 1998 March 31, 1997 February 1, 1997
<S> <C> <C> <C>
Net Revenues:
Sales and Related Services $ 246 $ 94 $ 28
Clinic Services 9 2
--------- --------- -------
Total Net Revenues 246 103 30
Cost of Sales 122 133 269
--------- --------- -------
Gross Profit (Loss) 124 (30) (239)
Expenses:
Selling, General and
Administrative 484 707 5,798
Amortization of Excess
Reorganization Value 675
-------- -------- -------
Loss From Operations (360) (1,412) (6,037)
________ ________ ________
Other Income (Expense):
Interest Expense (51) (33) (25)
Interest Income 4
Miscellaneous Income (Expense) 23 (160)
-------- -------- --------
Net Other Expense (28) (29) (185)
-------- -------- --------
Loss From Operations Before
Reorganization Items, Income
Taxes and Extraordinary Gain
on Debt Discharge (388) (1,441) (6,222)
Reorganization Items (16,134)
Loss Before Income Taxes and
Extraordinary Gain on Debt
__________ __________ ________
Discharge (388) (1,441) (22,356)
Income Taxes
Net Loss Before Extraordinary Gain __________ __________ ________
on Debt Discharge (388) (1,441) (22,356)
Extraordinary Gain on Debt
Discharge 16,819
---------- ----------- --------
Net Loss $ (388) $ (1,441) $ (5,537)
========== =========== ========
Loss per Common Share $ (.03) $ (.10)
========== ===========
Weighted average Number of Common
Shares Outstanding 14,722,830
==========
</TABLE>
See Notes to Consolidated Financial Information
<PAGE>3
WORK RECOVERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Successor Company Predecessor Company
------------------------------------ -------------------
Nine Months Ended Two Months Ended Seven Months Ended
March 31, 1998 March 31, 1997 February 1, 1997
----------------- ---------------- ------------------
<S> <C> <C> <C>
Net Revenues:
Sales and Related Services $ 667 $ 94 $ 1,252
Clinic Services 9 76
--------- --------- ------------
Total Net Revenues 667 103 1,328
Cost of Sales 392 133 1,030
--------- --------- ------------
Gross Profit (Loss) 275 (30) 298
Expenses:
Selling, General and
Administrative 1,776 707 7,726
Amortization of Excess
Reorganization Value 675
--------- -------- -----------
Loss From Operations (1,501) (1,412) (7,428)
--------- -------- ------------
Other Income (Expense):
Interest Expense (209) (33) (196)
Interest Income 4 3
Miscellaneous Income (Expense) (17) (236)
--------- --------- ------------
Net Other Expense (226) (29) (429)
--------- ---------- ------------
Loss From Operations Before
Reorganization Items, Income
Taxes and Extraordinary
Gain on Debt Discharge (1,727) (1,441) (7,857)
Reorganization Items (22,927)
Loss Before Income Taxes
and Extraordinary Gain on --------- ----------- ------------
Debt Discharge (1,727) (1,441) (30,784)
Income Taxes
Net Loss Before Extraordinary --------- ----------- -----------
Gain on Debt Discharge (1,727) (1,441) (30,784)
Extraordinary Gain on Debt Discharge 16,819
--------- ----------- -----------
Net Loss $ (1,727) $ (1,441) $ (13,965)
========= ============ ==========
Loss per Common Share $ (.12) $ (.10)
========= ===========
Weighted average Number of Common
Shares Outstanding 14,722,240
==========
</TABLE>
See Notes to Consolidated Financial Information
<PAGE>4
WORK RECOVERY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Successor Company Predecessor Company
------------------------------------ -------------------
Nine Months Ended Two Months Ended Seven Months Ended
March 31, 1998 March 31, 1997 February 1, 1997
----------------- ---------------- -------------------
<S> <C> <C> <C>
Net Cash Used in Operating Activities $ (803) $ (1,596) $ (1,396)
Cash Flows from Investing Activities:
(Purchases)Sales of Clinical Centers,
Property, Plant and Equipment
In-Service 23 (119) 1,217
Sale of Investments 96
--------- ---------- -----------
Net Cash (Used in)Provided by
Investing Activities 119 (119) 1,217
--------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock 17 1,816
Net Repayments on Short-Term Debt (18) (144) (73)
Proceeds from Notes Payable 267 1,800 1,057
Repayment of Long-Term Debt (10) (133) (968)
Dividends Paid (14) (14)
---------- ---------- ------------
Net Cash Provided by Financing Activities 256 3,325 2
---------- ---------- ------------
Net Increase (Decrease) in Cash (428) 1,610 (177)
Cash at Beginning of Period 460 12 189
---------- ---------- ------------
Cash at End of Period $ 32 $ 1,622 $ 12
========== ========== ============
</TABLE>
See Notes to Consolidated Financial Information
<PAGE>5
1. Basis of Accounting
The accompanying unaudited financial statements of Work Recovery, Inc. ("WRI")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q 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, the consolidated financial
statements include all adjustments which consist only of normal recurring
adjustments necessary for a fair presentation of operating results for the
interim period. Operating results for the nine month period ended March 31,
1998 are not necessarily indicative of the results that may be expected for
the year ending June 30, 1998.
For further information, refer to the unaudited financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for
the year ended June 30, 1997.
The accompanying unaudited financial statements have been prepared on a going
concern basis which assumes continuity of operations and realization of assets
and liquidation of liabilities in the ordinary course of business. The
appropriateness of using the going concern basis is dependent upon, among
other things, success of future operations and the ability to generate
sufficient cash from operations and financing sources to meet obligations.
2. Bankruptcy and Reorganization Events
On May 29, 1996 Work Recovery, Inc., a Colorado corporation and its wholly-owned
subsidiary Work Recovery Centers, Inc., an Arizona corporation (collectively
"Old WRI") filed voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy Court for
the District of Arizona (the "Bankruptcy Court"). The creditor and equity
holders subsequently approved Old WRI's Plan of Reorganization (the "Plan")
and on December 4, 1996 the Bankruptcy Court issued its order confirming the
Plan.
On February 1, 1997 (the "Effective Date"), all of the assets of Old WRI were
transferred to Work Recovery, Inc., a Delaware corporation, ("Work Recovery",
"WRI", the "Company" or the "Registrant") and the Company assumed all
liabilities of Old WRI as such liabilities were modified pursuant to the
terms of the Plan.
For more detailed information concerning the Plan, refer to the Company's
Form 8-K dated January 30, 1997 and its Form 10-Q for the quarter ended
December 31, 1996.
3. Fresh-Start Reporting
As of the Effective Date, the Company adopted fresh-start reporting in
accordance with AICPA Statement of Position 90-7, "Financial Reporting By
Entities in Reorganization Under the Bankruptcy Code" ("Fresh-Start Reporting").
In connection with the adoption of Fresh-Start Reporting a new entity has been
deemed created for financial reporting purposes. The periods presented prior
to the Effective Date have been designated "Predecessor Company" and the periods
subsequent to the Effective Date have been designated "Successor Company". For
financial reporting purposes, the Company accounted for the consummation of the
Plan effective February 1, 1997.
In accordance with Fresh-Start Reporting, the Company valued its assets and
liabilities at fair values and eliminated its accumulated deficit at the
Effective Date. The reorganization value of the Company was determined on
the basis of pro forma discounted cash flows of the new entity for a period
of ten years. The total reorganization value as of the Effective Date was
$36,766,000 which was approximately $40,336,000 in excess of the aggregate
fair value of the Company's tangible and identified intangible assets. Such
excess, and other eliminations related to the plan, was included in Intangible
Assets as of the Effective Date and was to be amortized over a period of ten
years. It has since been determined that the asset is impaired. The
financial condition of the Company is perilous and it is very doubtful it
will achieve the ten year cash flow projections reviewed and agreed upon by
the Company's creditors and the Bankruptcy Court. At June 30, 1997, the
unamortized excess was reclassified to Impairment Losses.
<PAGE>6
4. Inventories
<TABLE>
<CAPTION>
Inventories consist of the following: March 31, 1998 June 30, 1997
-------------- -------------
<S> <C> <C>
Raw Material $ 427,000 $ 446,000
Finished Goods 242,000 288,000
Work-in-Progress 92,000 118,000
Reserve for Excess and Obsolete Inventory (171,000) (170,000)
-------- ---------
Total $ 590,000 $ 682,000
======== =========
</TABLE>
5. Property, Plant and Equipment
<TABLE>
<CAPTION>
Property, Plant and Equipment consist
of the following: March 31, 1998 June 30, 1997
--------------- -------------
<S> <C> <C>
Land $ 0 $ 300,000
Furniture and Equipment 1,087,000 1,122,000
Leasehold Improvements 0 18,000
Vehicles 70,000 70,000
Buildings 0 1,608,000
--------- ---------
Total at Cost 1,157,000 3,118,000
Less Accumulated Depreciation and Amortization (975,000) (1,421,000)
--------- ---------
Net Property, Plant and Equipment $ 182,000 $ 1,697,000
========= =========
</TABLE>
Work Recovery signed a Warranty Deed in Lieu of Foreclosure effective December
31, 1997 (the "Deed"). The Deed, in effect, granted the land and building at
2341 S. Friebus Avenue, Tucson, AZ. to the mortgage holder. In exchange,
Work Recovery was released from the $1,169,000 mortgage payable and other
contingent liabilities relating to the mortgage.
6. Loan Agreements
In January 1997, WRI entered into a Loan Agreement with Allsup Inc. and Quest
Trading, Inc. (collectively, "the Lenders") pursuant to which the Lenders agreed
to loan WRI up to $2,000,000 in one or more advances (the "Loan"), subject to
the satisfaction of certain conditions set forth in the Loan Agreement. At
December 30, 1997, WRI had borrowed $2,000,000. The Loan will revolve and,
provided applicable conditions are satisfied, repaid principal may be re-
borrowed until the extended maturity date of the Loan, May 15, 1998. The
Company is currently in negotiations to extend the maturity date; however, there
is no assurance such extension will be granted. The Loan was used to support
the working capital needs of the Company and to make payments due under the
Bankruptcy Plan. The Loan is secured by a security interest in all of the
Company's personal property including its intellectual property.
On February 3, 1997, pursuant to the Loan Agreement the Lenders were granted
options to purchase 100,00 shares of New Common Stock of the Company at an
exercise price of $1.56 per share. These options have since expired. On
April 30, 1997 225,000 options were granted at an exercise price of $0.42
per share and on December 31, 1997 75,000 options were granted at an exercise
price of $0.06 per share. These options will expire twelve months from date
of delivery to the Lenders.
<PAGE>7
7. Sale of Joint Venture in Lexington, Kentucky
Effective August 1, 1997 Work Recovery, Inc. sold its 50% equity interest in
Return to Work Center, Lexington, Kentucky to American Rehabilitation Group,
P.S.C. for $80,000 subject to certain adjustments.
8. Earning per Share
Earnings per share for the three months ended March 31, 1998 have been
calculated on the basis of 14,722,830 shares outstanding. Earnings per
share for the nine months ended March 31, 1998 have been calculated on the
basis of 14,722,240 shares outstanding. Common stock equivalents, including
stock options, are excluded from the computation because their inclusion
would be anti-dilutive. Loss per common and common equivalent share data is
not meaningful for periods prior to February 1, 1997 due to the significant
change in the capital structure of the Company.
9. Other
In May 1998, the Company relocated its corporate headquarters from Tucson to
Phoenix, Arizona and its manufacturing and customer service operations to
reduced leased facilities in Tucson, Arizona.
<PAGE>8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
THE COMPANY'S PRESENT FINANCIAL CONDITION IS EXTREMELY SERIOUS AND ITS CASH
RESOURCES ARE SEVERELY LIMITED. AS A RESULT, THE FINANCIAL STATEMENTS FOR
THE YEAR ENDED JUNE 30, 1997 WERE NOT AUDITED OR REVIEWED BY THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
The Company's Ability to Continue as a Going Concern
The Company has suffered recurring losses from operations and there is
substantial doubt about its ability to continue as a going concern. The
Company continues to have substantial obligations to certain bankruptcy
creditors and continues to experience slow sales of ERGOS( Systems, its only
product. As a result, the Company will need additional capital to continue
as a going concern, the source of which is unknown at this time. See
Liquidity and Capital Resources.
Results of Operations
The following discussion of the results of operations for the nine-months ended
March 31, 1998, as compared to the nine months ended March 31, 1997, and
financial condition of the Company as of March 31, 1998, as compared to the
fiscal year ended June 30, 1997, should be read in conjunction with the
financial statements and related notes appearing under Part I. - Item 1.
Net Revenues for the three months ended March 31, 1998 increased by 85.0% as
compared to the corresponding period of fiscal 1997. Net revenues decreased
by 53.4% for the nine months ended March 31, 1998 compared to the corresponding
period of fiscal 1997. The decrease in sales and related services for the nine
months is primarily due to minimal sales of new ERGOS( systems during fiscal
1998. Clinic services decreased due to the selling of the Company's
remaining clinic services centers during 1997.
Gross profit increased by approximately $393,000 for the three months ended
March 31, 1998 compared to the same period in the prior year. The increase
is due primarily to increased sales of ERGOS( in 1998 which have a higher
profit margin than ERGOS( upgrades which comprised most of the sales in the
same period of the prior year.
Selling, general and administrative expenses ("SG&A") decreased approximately
92.6% and 78.9% during the three month and six month period ended March 31,
1998 compared to the comparable periods of the prior fiscal year. Decreased
SG&A costs resulted from continued cost reduction efforts implemented by
management including staff and cost reductions in all departments, and
reductions in legal and consulting fees.
Net Other Expense decreased from $458,000 for the nine months ended March 31,
1997 to $226,000 for the nine months ended March 31, 1998. The decrease
results primarily from losses from the sale of assets in the prior year
period. Net Other Expense for the nine months ended March 31, 1998 includes
a net loss of approximately $196,000 recognized from the transfer of the
Company's building and land to the mortgage holder. See Note 5 to Consolidated
Financial Information.
Reorganization items are as a result of the Company's Chapter 11 bankruptcy
proceedings. The Company emerged from bankruptcy on February 1, 1997 and,
accordingly, has no continuing reorganization costs.
Cash decreased from approximately $460,000 at June 30, 1997 to approximately
$32,000 at March 31, 1998. The principal use of cash for the quarter was
$803,000 for operating activities. The principal sources of cash were
$267,000 received in proceeds from notes payable and $80,000 received from
the sale of the Kentucky center.
The $157,000 decrease in net receivables from the end of fiscal 1997 is due
primarily to aggressive collection efforts for past due receivables.
<PAGE>9
Property, plant and equipment decreased by $1,515,000 from $1,697,000 at June
30, 1997 to approximately $182,000 at March 31, 1998. The decrease is due
primarily to the transfer of the Company's building and land to the mortgage
holder. See Note 5 to Consolidated Financial Information.
Other assets decreased by approximately $101,000 during the first nine months
of the fiscal year mostly due to the sale of the Kentucky center and the
netting of a former officer's accounts receivable balance against the same
former officers' accounts payable balance.
Accounts Payable increased $268,000 from June 30,1997 to $504,000 at March
31, 1998. Of this increase, $219,600 is due FCE Technologies, Inc., an
afilliated Company organized to sell ERGOS(r) Systems. The increase is due
to insufficient cash resources to pay vendors.
Other debt decreased by $1,116,000 to approximately $153,000 at March 31, 1998
from approximately $1,269,000 at June 30, 1997. A mortgage balance of
approximately $1,169,000 was released following a Warranty Deed in Lieu of
Foreclosure that was signed effective December 31, 1997. See Note 5 to
Consolidated Financial Information.
Additional paid-in capital decreased by $101,000 from approximately $37,353,000
at June 30, 1997 to approximately $37,454,000 at March 31, 1998. The decrease
resulted from an $85,000 reclassification of dividends paid from the accumulated
deficit at the fiscal year ended June 30, 1997 and $16,000 in exercised
warrants.
Liquidity and Capital Resources
The Company has continued to sustain significant losses and as of March 31,
1998 had a working capital deficit of approximately $4,741,000. The
financial condition of the Company is perilous. The Company is in need of
additional funds for ongoing operations and it will need substantial
additional funds in order to fulfill its remaining obligations under the Plan.
Subsequent to emerging from bankruptcy, the Company has received a total of
$2,000,000 from a $2,000,000 line of credit from Allsup Inc. and Quest
Trading, Inc. (see Note 6 to Consolidated Financial Information). On
February 3, 1998, Allsup Inc. and Quest Trading, Inc. signed an agreement
with the Company to extend the loan maturity to May, 15, 1998. The Company is
currently negotiating an extension of this loan agreement; however, there can
be no assurance such extension will be granted.
In addition, the Company is continuing in its attempts to obtain additional
investment capital. However, the Company cannot guarantee that such efforts
will be successful considering the tenuous financial condition of the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Financial Data Schedule
(a) No reports on Form 8-K were filed during the quarter for which this report
is filed.
<PAGE>10
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.
WORK RECOVERY, INC.
(Registrant)
/s/ DORCAS R. HARDY
Dorcas R. Hardy, Chief Executive Officer
Date: May 15 ,1998
/s/ VERNON S. SCHWEIGERT
Vernon S. Schweigert
President and Chief Operating Officer
Date: May 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1998 AND STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
MARCH 31, 1998 OF THE COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 32
<SECURITIES> 0
<RECEIVABLES> 370
<ALLOWANCES> 261
<INVENTORY> 590
<CURRENT-ASSETS> 827
<PP&E> 1157
<DEPRECIATION> 975
<TOTAL-ASSETS> 1119
<CURRENT-LIABILITIES> 5568
<BONDS> 0
0
0
<COMMON> 147
<OTHER-SE> (4596)
<TOTAL-LIABILITY-AND-EQUITY> 1119
<SALES> 432
<TOTAL-REVENUES> 667
<CGS> 392
<TOTAL-COSTS> 1776
<OTHER-EXPENSES> 17
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 209
<INCOME-PRETAX> (1727)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1727)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1727)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
