SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
==================================
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarter ended June 30, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (no fee required) for the transition period from
_______________ to _______________.
Commission File No. 0-17816
Sunrise Technologies International, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 77-0148208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
47265 Fremont Boulevard, Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-9001
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
-------- ---------
There were 27,886,247 shares of the Registrant's Common Stock issued and
outstanding on July 31, 1997.
<PAGE>
INDEX
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Statements of Operations--Three
and six months ended June 30, 1997 and 1996 1
Condensed Consolidated Balance Sheets--June 30, 1997 and
December 31, 1996 2
Condensed Consolidated Statements of Cash Flows--Six
months ended June 30, 1997 and 1996 3
Notes to condensed consolidated financial statements--
June 30, 1997 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 6
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES 10
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands except per share amounts)
<S> <C> <C> <C> <C>
Net revenues $ 1,454 $ 1,039 $ 2,463 $ 2,560
Cost of revenues 1,001 898 1,959 2,038
-------- -------- -------- --------
Gross Profit 453 141 504 522
Other costs and expenses:
Engineering and development 262 283 535 625
Sales, marketing and regulatory 784 769 1,443 1,716
General and administrative 1,200 640 1,906 1,206
-------- -------- -------- --------
Total other costs and expenses 2,246 1,692 3,884 3,547
-------- -------- -------- --------
Loss from operations (1,793) (1,551) (3,380) (3,025)
Gain on sale of dental assets 1,740 -- 1,740 --
Interest income 21 2 32 39
Interest expense, including non-cash interest
associated with redeemable convertible notes (131) -- (943) (6)
-------- -------- -------- --------
Net loss $ (163) $ (1,549) $ (2,551) $ (2,992)
======== ======== ======== ========
Net loss per share $ (0.01) $ (0.06) $ (0.09) $ (0.12)
======== ======== ======== ========
Shares used in calculation of net loss per share 27,886 25,395 27,879 25,355
======== ======== ======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
1
<PAGE>
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
June 30, December 31,
1997 1996
-------- --------
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 4,129 $ 647
Accounts receivable, net of allowance 750 472
Inventories 555 2,135
Prepaid expenses 120 288
-------- --------
Total current assets 5,554 3,542
Property and equipment, net 62 199
-------- --------
Total assets $ 5,616 $ 3,741
======== ========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 700 $ 1,586
Accrued payroll and related expenses 481 209
Accrued warranty 199 199
Other accrued expenses 642 475
-------- --------
Total current liabilities 2,022 2,469
Redeemable convertible notes 3,658 --
Commitments and contingencies -- --
Stockholders' equity (deficit):
Preferred Stock, $0.001 par value, 2,000,000 shares
authorized, none issued or outstanding -- --
Common Stock, $.001 par value, 75,000,000 shares
authorized, 27,886,247 and 27,868,613 shares
issued and outstanding at June 30, 1997 and
December 31, 1996 respectively 28 28
Additional paid-in capital 32,903 31,688
Accumulated deficit (32,995) (30,444)
-------- --------
Total stockholders' equity (deficit) (64) 1,272
-------- --------
Total liabilities and stockholders' equity (deficit) $ 5,616 $ 3,741
======== ========
NOTE: The consolidated balance sheet at December 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.
2
<PAGE>
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
Six months ended June 30,
1997 1996
-------- --------
(In thousands)
Cash flows for operating activities:
Net loss $(2,551) $(2,992)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 94 23
Provision for doubtful accounts 30 30
Gain on sale of dental assets (1,740) --
Non-cash interest expense 863 --
Changes in assets and liabilities:
Accounts receivable (308) 271
Inventories 202 (633)
Prepaid expenses 168 107
Accounts payable (1,137) (228)
Accrued payroll and related expenses 272 82
Other accrued expenses 67 (20)
------- -------
Total adjustments (1,489) (368)
------- -------
Net cash used in operating activites (4,040) (3,360)
------- -------
Cash flows from investing activities:
Purchase of property and equipment -- (21)
------- -------
Net cash used in investing activites -- (21)
------- -------
Cash flows from financing activities:
Issuance of common stock, net of offering costs 190 186
Issuance of redeemable convertible notes, net of
issuance costs 3,743 --
Proceeds from sale of dental assets 4,000 --
Costs associated with sale of dental assets (411)
------- -------
Net cash provided by financing activities 7,522 186
------- -------
Net increase (decrease) in cash and cash equivalents 3,482 (3,195)
Cash and cash equivalents at beginning of period 647 3,514
------- -------
Cash and cash equivalents at end of period $ 4,129 $ 319
======= =======
See accompanying notes.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
June 30, 1997
1. Basis of Presentation
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries after elimination of all material
intercompany balances and transactions. Certain reclassifications have been made
to prior year amounts in order to conform to the current presentation.
The condensed consolidated financial data for the periods ended June 30,
1997 and 1996 are unaudited, but include all adjustments (consisting only of
normal recurring adjustments) that the management of Sunrise Technologies
International, Inc. believes to be necessary for fair presentation of the
periods presented. Interim results are not necessarily indicative of results for
the full year. The financial statements should be read in conjunction with the
audited financial statements for the year ended December 31, 1996 included in
the Company's annual report on Form 10-K filed with the Securities and Exchange
Commission.
The Company has incurred significant losses for the last several years and
at June 30, 1997 has an accumulated deficit of approximately $32,995,000. The
accompanying condensed financial statements have been prepared assuming the
Company will continue as a going concern. Although the Company's management
believes existing working capital will provide sufficient funds for the
Company's planned operations through 1997, the Company's long term ability to
continue as a going concern is dependent upon performing profitably or obtaining
further financing. Management recognizes the need for additional cash infusion
and is pursuing various options which include debt or equity financing. There
can be no assurance that such financing, if necessary, will be available, in
which case management may need to curtail or suspend certain or all operations.
The preparation of unaudited financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
2. Net Loss per Share
Net loss per share for the periods ended June 30, 1997 and 1996 is based
solely on weighted average shares of common stock outstanding during the period.
Common equivalent shares have not been considered in the computation since their
inclusion would have an antidilutive effect.
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and restate all prior
periods. Under the new requirements for calculating basic earnings per share,
the dilutive effect of stock options will not be included. The computed basic
earnings per share will not be different from the primary earnings per share for
the periods ended June 30, 1997 and June 30, 1996.
3. Revenue Recognition
Revenues are recognized at time of shipment. A provision for the estimated
future cost of warranty is made at the time a sale is recorded.
4
<PAGE>
4. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and consisted of the following on the dates indicated:
June 30, December 31,
1997 1996
------- ------------
(In thousands)
Raw materials $ 359 $1,180
Work-in-process 160 299
Finished goods 36 656
------ ------
$ 555 $2,135
====== ======
5. Income Taxes
Due to the Company's losses from operations, all deferred tax assets, which
primarily result from net operating loss carry forwards, have been offset in
full by a valuation allowance in accordance with SFAS No. 109.
6. Issuance of Redeemable Convertible Notes
In February and March 1997, the Company completed a series of private
placements (collectively, the "1997 Notes Placement") of 5% redeemable
convertible notes due 1999 (convertible into common stock) (the "Notes") and
warrants to purchase common stock (the "Warrants"). The total face amount of the
Notes is approximately $4,100,000, and net proceeds aggregated approximately
$3,700,000. In accordance with recent Securities and Exchange Commission
Division of Corporation Finance guidance, the Company has recorded a premium of
approximately $769,000 associated with the conversion feature of the Notes as
additional interest associated with the Notes and paid-in capital. Because the
Notes are immediately convertible at the holders' option, the entire amount has
been recorded as interest expense upon issuance of the Notes. The Company has
recorded the Notes net of debt offering costs of approximately $358,000 and the
value associated with the Warrants of approximately $256,000, which will be
amortized as interest expense over the period that the Notes are outstanding.
7. Sale of Dental Assets
In June 1997, the Company completed the sale of the Company's assets
associated with its dental laser, air abrasive and composite curing systems (the
"Dental Assets") to Lares Research. The purchase price paid for the Dental
Assets was $5,500,000, consisting of $4,000,000 in cash paid at closing and
$1,500,000 in the form of a promissory note, with two installments due in three
and four years, respectively (the "Lares Note"). Although the Company
anticipates collecting interest and principal on the Lares Note, due to
subordination of the Lares Note to Lares' Bank, collection is not reasonably
assured and the Company intends to recognize proceeds from the sale and interest
on the Note as cash is received. On collection of the Lares Note principal the
Company will pay to American Dental Technologies ("ADT") an additional transfer
fee of ten percent of cash collected on the $1,000,000 first installment of the
Lares Note. The gain on sale of the Dental Assets is comprised as follows:
In thousands
Cash proceeds from sale of dental assets $ 4,000
Less: Inventory and equipment sold (1,498)
ADT transfer fee (275)
Transaction fees (237)
Other costs (250)
-------
Gain on sale of dental assets $ 1,740
=======
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
This Form 10-Q, as it may be amended or supplemented, and certain documents
incorporated by reference herein contain or may contain both statements of
historical fact and statements that are based on projections of revenue, income,
earnings per share and other financial items or relate to management's future
plans and objectives or Sunrise Technologies International Inc.'s (the
"Company") future economic performance. Such statements are "forward-looking
statements" within the meaning of Section 27A (I) of the Securities Act of 1933,
as amended, and Section 21E (I) of the Securities Exchange Act of 1934, as
amended.
Although any forward-looking statements contained herein or otherwise
expressed by or on behalf of the Company are, to the knowledge and in the
judgment of the officers and directors of the Company, expected to prove true
and to come to pass, management is not able to predict the future with absolute
certainty. Accordingly, shareholders and potential investors are hereby
cautioned that certain events or circumstances could cause actual results to
differ materially from those projected or predicted. In addition,
forward-looking statements are based on management's knowledge and judgment as
of the date hereof, and the Company does not intend to update any
forward-looking statements to reflect events occurring or circumstances existing
hereafter.
The Company develops, manufactures and markets laser systems for
applications in ophthalmology and, prior to June 26, 1997, dentistry. In
addition, the Company had developed, manufactured and marketed an air abrasive
cavity preparation system for dentistry. A substantial portion of the Company's
revenues (98% in 1996 and 80% for the first six months of 1997) were derived
from the domestic and international sales of the Company's dental laser and air
abrasive products.
Since mid-1992, the Company has focused a portion of its efforts on
engineering and development of its laser corneal shaping product (the "LTK
System") for the treatment of refractive errors of the eye, such as hyperopia
(farsightedness). The LTK System is based upon patented technology acquired in
the Company's acquisitions of in-process technology from Laser Biotech, Inc. and
Emmetropix Corporation in 1992.
The Company has incurred substantial losses in the past five years, which
have seriously depleted its working capital. Historically, the Company has been
able to raise additional working capital for all aspects of its business through
the private placement of its common stock and securities convertible into common
stock. Private placements of common stock raised approximately $15,296,000 in
net proceeds between 1994 and 1996. In the first quarter of 1997, the Company
issued in a series of private placements (collectively, the "1997 Notes
Placement") 5% redeemable convertible notes due 1999 (convertible into common
stock) and warrants to purchase common stock for aggregate net proceeds of
approximately $3,743,000.
In June 1997, the Company completed the sale of the Company's Dental Assets
to Lares Research. Lares is a privately held company located in Chico,
California. Lares paid the Company $4,000,000 in cash at closing and delivered a
promissory note for $1,500,000, which bears interest at the rate of 8%. Under
the Lares Note $1,000,000 is payable on the third anniversary of the closing,
and $500,000 is payable on the fourth anniversary of the closing. The Lares Note
is subordinate in right of payment to Lares' obligations to its bank (the
"Bank"). Lares has agreed that so long as the Lares Note is outstanding its
aggregate obligations to the Bank will not exceed $4,750,000. Although the
Company anticipates collecting interest and principal on the Lares Note, due to
subordination of the Lares Note to Lares' Bank, collection is not reasonably
assured and the Company intends to recognize proceeds from the sale and interest
on the Lares Note as cash is received. On collection of the Lares Note principal
the Company will pay to ADT an additional transfer fee of ten percent of cash
collected on the $1,000,000 first installment of the Lares Note. The transaction
was approved by the Company's stockholders on June 26, 1997.
6
<PAGE>
Financial Condition
As of June 30, 1997, the Company had $4,129,000 in cash and cash
equivalents. The Company's operating activities used $4,040,000 in the six
months ended June 30, 1997 and used $5,297,000 in cash during fiscal 1996. A
substantial portion of the 1996 and 1997 losses was funded by a series of
private placements of the Company's common stock in 1996, for aggregate net
proceeds of approximately $2,245,000 (collectively, the "1996 Stock
Placements"), and the 1997 Notes Placement, for aggregate net proceeds of
approximately $3,743,000.
The Company's current operations continue to be cash flow negative,
limiting the Company's working capital resources. Working capital at June 30,
1997, including the net proceeds from the sale of the Dental Assets
(approximately $3,589,000), amounted to approximately $3,532,000. At December
31, 1996, working capital amounted to approximately $1,073,000. The Company's
ability to continue as a going concern is dependent upon performing profitably
or obtaining further financing. Management believes existing working capital
will provide sufficient funds for the Company's planned operations in 1997.
The Company's independent auditors have included an explanatory paragraph
in their report covering the Company's financial statements for the year ended
December 31, 1996, which paragraph emphasizes substantial doubt as to the
Company's ability to continue as a going concern, based primarily on the
recurring operating losses that have been incurred by the Company. Failure to
return to profitable operations or to obtain other financing could result in a
reorganization or complete liquidation of the Company.
Results of Operations
Revenues of $1,454,000 and $2,463,000 for the three and six month periods
ended June 30, 1997 represent a 40% increase and 4% decrease, respectively, from
revenues of $1,039,000 and $2,560,000 for the same periods in 1996. These
results are due to higher sales of ophthalmic products in 1997 offset by a
decline in demand for the Company's dental laser products. For the three and six
month periods ended June 30, 1997 sales of dental laser and air abrasive
products accounted for 76% and 80%, respectively, of total revenue.
Gross profits as a percentage of revenue increased to 31% for the three
month period ended June 30, 1997, from approximately 14% for the same period in
1996. This increase is due primarily to an increase in the proportion of sales
of ophthalmic products, at higher gross margins, and to favorable pricing on
dental laser products. Gross profits as a percentage of revenue were 20% for the
six month period ended June 30, 1997, essentially unchanged from the same period
in 1996.
Engineering and development expenses totaled $262,000 and $535,000 for the
three and six month periods ended June 30, 1997 compared to $283,000 and
$625,000 for the same periods of 1996. Such expenses were higher in 1996 due
primarily to one-time costs, including consulting costs, associated with the
CureStar composite curing system, a dental product introduced in the first
quarter of 1997.
Sales, marketing and regulatory costs were $784,000 and $1,443,000 for the
three and six month periods, respectively, ended June 30, 1997 compared to
$769,000 and $1,716,000 for the same periods of 1996. The increase for the three
month period is due primarily to increased marketing and regulatory spending for
the ophthalmic products offset by reduced marketing for dental products. The
decrease for the six month period is due primarily to higher costs in the first
quarter of 1996 incurred in connection with the launch of the Associate(R), a
dental, air-abrasive product.
General and administrative expenses were $1,200,000 and $1,906,000 for the
three and six month periods, respectively, of 1997 compared to $640,000 and
$1,206,000 for the same periods of 1996, primarily as a result of changes in the
Company's management team including charges related to the separation and
release of certain executive officers and directors.
Gain on sale of dental assets for the periods ended June 30, 1997 of
$1,740,000 results from $4,000,000 cash proceeds from the sale less cost of
assets sold and the ADT transfer fee, transaction fees and other costs of
approximately $762,000. The Company intends to recognize gain on the remaining
$1,500,000 of the purchase
7
<PAGE>
price as cash is collected on the Lares Note, less additional transfer fees
payable to ADT when the first installment of the Lares Note is received by the
Company.
Interest expense for the three and six month periods ended June 30, 1997 of
$131,000 and $943,000, respectively, represents primarily non-cash deemed
interest associated with the issuance of the Notes.
Net loss for the three and six month periods ended June 30, 1997 of
$163,000 and $2,551,000, respectively, is due primarily to the decreased demand
for the Company's dental products and non-cash interest expense of $943,000
associated with the 1997 Notes Placement, offset by the gain on sale of the
Company's Dental Assets in June.
On June 26, 1997, the Company completed the sale of its Dental Assets to
Lares Research. Since this transaction occurred at the end of the quarter, there
is no material impact on revenues or loss from operations resulting from the
sale of the Dental Assets. The gain of $1,740,000, as described above, resulted
in a decrease in loss per share of $.06 for the three month period ended June
30, 1997.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Special Meeting of Stockholders
A. The Company held a Special Meeting of its Stockholders on June 24, 1997. The
meeting was adjourned and reconvened on June 25, 1997 and June 26, 1997.
B. The meeting involved a vote on the approval of the sale of Dental Assets to
Lares Research, substantially on the terms contained in the Asset Purchase
Agreement described in the Proxy Statement for the meeting.
The votes on such proposal were cast as follows:
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
14,534,441 425,689 119,729 3,312,921
C. The meeting also involved a vote on the proposed amendment to the Company's
Certificate of Incorporation to effect a "reverse stock split" by
amalgamating every three shares of the Company's stock into one share of the
Company's stock. The votes on such proposal were cast as follows:
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
6,855,686 10,234,515 121,928 1,180,651
D. The meeting also involved a vote on an amendment to the Company's
Certificate of Incorporation to increase the number of shares of the
Company's Common Stock authorized to be issued from 40,000,000 to
75,000,000. The votes on such proposal were cast as follows:
For Against Abstain
--- ------- -------
14,493,297 3,761,855 137,628
8
<PAGE>
Annual Meeting of Stockholders
A. The Company's Annual Meeting of Stockholders was held on June 26, 1997.
B. The following individual was reelected to the Company's Board of Directors
and received the number of votes in favor and votes withheld as follows:
Director In Favor Withheld
-------- -------- --------
Ronald A. Slocum 17,204,825 8,999,187
The following directors' terms in office continued after the meeting:
Joseph D. Koenig
C. Russell Trenary, III
C. In addition to the election of directors, votes were cast for the
ratification of Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending December 31, 1997 as follows:
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
24,711,122 259,982 73,560 1,099,348
D. The meeting also involved a vote on a new stock option plan pursuant to
which the Company could issue up to 3,000,000 shares to employees of and
consultants to the Company. The votes on such proposal were cast as follows:
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
15,175,217 9,309,299 144,285 1,575,211
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Number Description
2 Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession
2.1 Asset Purchase Agreement dated as of March 26, 1997, by and among
Sunrise Technologies International, Inc. and Lares Research, a
California corporation (1)
27 Financial Data Schedule
- ----------------------
(1) Incorporated by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 (File No. 1-10428)
B. Reports on Form 8-K
None
9
<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.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Date: August 14, 1997 By: /s/ C. Russell Trenary, III
---------------------------------------------------
President and Chief Executive Officer
Date: August 14, 1997 By: /s/ Timothy A. Marcotte
---------------------------------------------------
Vice President, Finance and Chief Financial Officer
(Principal Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,129,000
<SECURITIES> 0
<RECEIVABLES> 750,000
<ALLOWANCES> 203,000
<INVENTORY> 555,000
<CURRENT-ASSETS> 5,554,000
<PP&E> 62,000
<DEPRECIATION> 260,000
<TOTAL-ASSETS> 5,616,000
<CURRENT-LIABILITIES> 2,022,000
<BONDS> 0
0
0
<COMMON> 28,000
<OTHER-SE> (92,000)
<TOTAL-LIABILITY-AND-EQUITY> 5,616,000
<SALES> 1,454,000
<TOTAL-REVENUES> 1,454,000
<CGS> 1,001,000
<TOTAL-COSTS> 1,001,000
<OTHER-EXPENSES> 2,246,000
<LOSS-PROVISION> 18,000
<INTEREST-EXPENSE> 131,000
<INCOME-PRETAX> (163,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (163,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,000)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
