<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
----------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to_______________________
Commission file Number: 0-18338
I-Flow Corporation
(Exact name of registrant as specified in its charter)
California 33-0121984
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2532 White Road, Irvine, CA 92614
(Address of principal executive offices) (Zip Code)
(714)553-0888
(Registrant's telephone number, including area code)
Not Applicable
(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 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. [ x ] Yes [ ] 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 [ ] 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.
As of November 8, 1996, there were 11,765,313 shares outstanding of
Common Stock and 656,250 shares outstanding of Series B Preferred
Stock.
<PAGE> 2
I-FLOW CORPORATION
FORM 10-Q
SEPTEMBER 30, 1996
TABLE OF CONTENTS
Page
----
Part I: Financial Information
Consolidated Balance Sheets as of September 30, 1996 (Unaudited) and
December 31, 1995 3
Consolidated Statements of Operations for the three and nine-month
periods ended September 30, 1996 and 1995 (Unaudited) 4
Consolidated Statements of Cash Flows for the nine-month periods
ended September 30, 1996 and 1995 (Unaudited) 5
Notes to Financial Statements 6
Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Part II: Other Information 12
Signatures 13
2
<PAGE> 3
I-FLOW CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,524,000 $ 5,628,000
Accounts receivable, net 3,022,000 1,567,000
Inventories 3,666,000 1,067,000
Prepaids and other 211,000 75,000
------------ ------------
Total current assets 8,423,000 8,337,000
------------ ------------
PROPERTY:
Furniture, fixtures and equipment 2,854,000 1,494,000
Rental and demonstration equipment 169,000 156,000
------------ ------------
Total property 3,023,000 1,650,000
Less accumulated depreciation (1,220,000) (1,155,000)
------------ ------------
Property, net 1,803,000 495,000
------------ ------------
OTHER ASSETS:
Goodwill 5,187,000 --
Other intangibles 3,020,000 --
Notes receivable 571,000 --
Patents and other 354,000 275,000
------------ ------------
Total other assets 9,132,000 275,000
------------ ------------
TOTAL $ 19,358,000 $ 9,107,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,257,000 $ 260,000
Accrued payroll and related expenses 538,000 553,000
Deferred revenue 432,000 516,000
Other liabilities 398,000 50,000
Current portion - Long-term debt 1,000,000 --
------------ ------------
Total current liabilities 3,625,000 1,379,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT 2,947,000 --
SHAREHOLDERS' EQUITY:
Preferred stock - no par value; 5,000,000 shares
authorized; 656,250 series B shares issued
and outstanding at September 30, 1996 and
December 31, 1995, respectively (aggregate
preference on liquidation is $1,575,000) 1,494,000 1,494,000
Common stock - no par value; 40,000,000 shares
authorized; 11,648,584 shares issued and
outstanding at September 30, 1996, 8,201,834
shares issued and outstanding at December 31, 1995 32,445,000 24,258,000
Accumulated deficit (21,153,000) (18,024,000)
------------ ------------
Net shareholders' equity 12,786,000 7,728,000
------------ ------------
TOTAL $ 19,358,000 $ 9,107,000
============ ============
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
I-FLOW CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 2,965,000 $ 2,637,000 $ 4,695,000 $ 7,132,000
Licensing fees 1,000,000 -- 3,600,000 --
------------ ------------ ------------ ------------
Total revenues 3,965,000 2,637,000 8,295,000 7,132,000
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales 1,140,000 1,240,000 2,045,000 3,169,000
Selling and marketing 824,000 356,000 1,556,000 1,163,000
General and administrative 982,000 505,000 2,259,000 1,626,000
Product development 334,000 208,000 804,000 651,000
In process research and development 4,900,000 -- 4,900,000 --
------------ ------------ ------------ ------------
Total costs and expenses 8,180,000 2,309,000 11,564,000 6,609,000
INCOME (LOSS) BEFORE
INTEREST AND TAXES (4,215,000) 328,000 (3,269,000) 523,000
INTEREST INCOME (EXPENSE) (10,000) 12,000 173,000 53,000
INCOME TAXES -- -- (35,000) --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (4,225,000) $ 340,000 $ (3,131,000) $ 576,000
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE $ (0.34) $ 0.04 $ (0.28) $ 0.06
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 11,569,690 9,432,579 11,225,418 9,080,710
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements
4
<PAGE> 5
I-FLOW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (3,131,000) $ 576,000
Adjustments to reconcile net income (loss)
to net cash provided by (used by) operations:
In process research and development 4,900,000 --
Depreciation and amortization 172,000 147,000
Changes in operating assets and liabilities:
Accounts receivable 602,000 (902,000)
Inventories (52,000) (555,000)
Prepaid expenses and other (120,000) (25,000)
Accounts payable and accrued liabilities 653,000 (298,000)
------------ ------------
Net cash provided by (used by) operating activities 3,024,000 (1,057,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions (including rental and
demonstration equipment) (466,000) (193,000)
Business acquisition (16,036,000) (50,000)
Increase in other assets (147,000) --
------------ ------------
Net cash used by investing activities (16,649,000) (243,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase is notes payable 3,947,000 --
Proceeds from exercise of stock options and warrants 5,574,000 1,725,000
------------ ------------
Net cash provided by financing activities 9,521,000 1,725,000
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,104,000) 425,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 5,628,000 1,834,000
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,524,000 $ 2,259,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Liabilities issued and assumed in connection with acquisition:
Fair value of assets acquired
(including intangibles) $ 18,091,000
Cash outflows for business acquisition (16,036,000)
Common Stock Issued 2,615,000
------------
Liabilities issued and assumed 4,670,000
============
Interest paid $ 115,000
============
Income tax payments $ 35,000
============
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
I-FLOW CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring adjustments) which, in the opinion of
management, are necessary to present fairly the financial position of the
Company at September 30, 1996 and the results of its operations and its
cash flows for the nine-month periods ended September 30, 1996 and 1995.
Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to rules and
regulations of the Securities and Exchange Commission although the Company
believes that the disclosures in the financial statements are adequate to
make the information presented not misleading.
The financial statements included herein should be read in conjunction
with the financial statements of the Company, included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 filed with
the Securities and Exchange Commission on March 27, 1996.
Certain amounts previously reported have been reclassified to conform with
the presentation at September 30, 1996.
2. COMMON STOCK OPTIONS AND WARRANTS
The Company has stock option plans which currently provide for the
granting of options to employees, officers, consultants and directors.
Stock option activity for the nine-month period ended September 30, 1996
is summarized as follows:
<TABLE>
<CAPTION>
Shares Exercise
Subject to Price per
Options Share
---------- -------------
<S> <C> <C>
Balance, December 31, 1995 2,478,888 $0.25 - $5.15
Granted 245,000 $4.13 - $5.38
Exercised/Expired (274,915) $0.25 - $4.05
---------- -------------
Balance, September 30, 1996 2,448,973 $0.25 - $5.38
========== =============
</TABLE>
Options to purchase 1,280,410 shares of the Company's common stock were
exercisable at September 30, 1996 at exercise prices ranging from $0.25 to
$5.38 per share.
6
<PAGE> 7
Outstanding warrants as of September 30, 1996 are summarized below. During
the nine-month period ended September 30, 1996, Series G Warrants to
purchase 1,718,453 shares of the Company's Common Stock were exercised
raising net proceeds of approximately $5,200,000.
Shares Subject Exercise Price
Description to Warrants Per Share Expiration Date
----------- -------------- -------------- ---------------
Underwriter Warrants 46,051 $6.79 February 1997
Series F Warrants 607,032 $2.40 to $4.80 October 1997
Series G Warrants 291,502 $3.00 December 1996
Series H Warrants 150,000 $2.75 to $3.25 March 1997
Series I Warrants 250,000 $4.62 July 2001
3. BANK FINANCING AND LONG TERM DEBT
During the year ended December 31, 1995, the Company entered into a
financing agreement with a bank which provides for a working line of
credit expiring in August 1996. Under the line of credit, the Company may
borrow up to the lesser of $1,500,000 (increased to $3,000,000 in July
1996) or 75% of eligible accounts receivable, as defined, at a bank's
prime rate plus 1% (9.75% at September 30, 1996). The Company increased
the maximum available borrowing limit on its line of credit from
$1,500,000 to $3,000,000 in July 1996 and extended the expiration date to
July 1997. There were no borrowings outstanding under the line as of
September 30, 1996.
In conjunction with the acquisition described in Note 5, the Company
entered into a $4,000,000 note payable with a bank due in monthly
installments bearing interest at the bank's prime rate plus 1.5% (10.25%
at September 30, 1996) through July 2000. The note is collateralized by
substantially all of the Company's assets and requires the Company to
comply with certain covenants.
4. LICENSING FEE
In November 1994, the Company signed an exclusive national distribution
agreement with SoloPak Pharmaceuticals Inc. (SoloPak) for the
SideKick(TM), Paragon(TM) and elite(TM) product lines. In February 1996,
this agreement was superseded with a new agreement in which SoloPak
purchased the exclusive right and license to manufacture and sell the
products in the United States and Puerto Rico. Pursuant to the new
agreement, SoloPak paid the Company $1.3 million in consideration of the
license in February 1996 and will pay the Company guaranteed royalties of
$1.0 million during each of the three succeeding quarters in 1996.
Additionally, SoloPak will pay I-Flow a royalty equal to two percent of
its net sales of the
7
<PAGE> 8
products for the 1997 and 1998 calendar years. Per the terms of the
agreement, I-Flow has the right of first refusal to supply SoloPak with
services and assistance in assembling the completed products until
February 1998. The Company retained the rights to sell the products
outside the United States and Puerto Rico.
5. ACQUISITION OF BLOCK MEDICAL, INC.
On July 3, 1996, the Company entered into an agreement for the purchase of
substantially all of the assets of Block Medical, Inc. The transactions
contemplated by this agreement were consummated on July 22, 1996. The
assets were acquired for an aggregate purchase price of approximately $18
million. The purchase price has been allocated to the net assets acquired,
in-process research and development, goodwill and other intangibles. The
amount allocated to in-process research and development of $4.9 million
has been expensed as of the acquisition date. Consideration for the
purchase consisted of: cash of $15,000,000, 433,018 shares of I-Flow
Corporation Common Stock with a value of $2,000,000 as of the date of
closing, and a warrant to purchase 250,000 shares of I-Flow Corporation
Common Stock at an exercise price of $4.62, expiring July 22, 2001, valued
at $615,000 at the date of closing.
The consolidated pro forma results of operations for the nine-month period
ended September 30, 1996 and 1995, as if the Block Medical acquisition had
occurred at the beginning of 1995, are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Total revenues $ 16,499,000 $ 10,177,000
Net income (loss) $ 1,223,000 $ (6,474,000)
Net income (loss) per share $ 0.10 $ (0.18)
</TABLE>
The pro forma information presented above does not purport to be
indicative of the results that actually would have been obtained if the
combined operations had been conducted during the periods presented and is
not intended to be a projection of future results.
8
<PAGE> 9
I-FLOW CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
When used in this discussion, the words "believes", "anticipates" and
similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected. Readers
are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes
no obligation to republish revised forward-looking statements to reflect
the occurrence of unanticipated events. Readers are also urged to
carefully review and consider the various disclosures made by the Company
in this report which seek to advise interested parties of the factors that
affect the Company's business, as well as in the Company's periodic
reports on Forms 10-K, 10Q and 8K filed with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
Net sales during the three and nine-month periods ended September 30, 1996
were $2,965,000 and $4,695,000, respectively, compared to $2,637,000 and
$7,132,000 for the same periods in the prior year. However, during the
three and nine-month periods ended September 30, 1996, the Company
received licensing fees of $1,000,000 and $3,600,00, respectively, which
brought total revenues for these periods to $3,965,000 and $8,295,000.
Included in net sales for the three-month period ended September 30, 1996
were sales from the Company's new subsidiary, Block Medical, Inc., of
$1,953,000. Block Medical, Inc. was acquired on July 22, 1996.
In November 1994, the Company signed an exclusive distribution agreement
with SoloPak Pharmaceuticals Inc. (SoloPak) for the SideKick(TM),
Paragon(TM), and elite(TM) product lines. Sales to SoloPak were
approximately $4,660,000 for the nine-month period ended September 30,
1995, whereas there were no sales to SoloPak during 1996.
In February 1996, this agreement was superseded with a new agreement in
which SoloPak purchased the exclusive right and license to manufacture and
sell the products in the United States and Puerto Rico. Pursuant to the
new agreement, SoloPak paid the Company $1.3 million in consideration of
the license in February 1996 and agreed to pay the Company guaranteed
royalties of $1.0 million during each of the three succeeding quarters in
1996. Additionally, SoloPak agreed to pay I-Flow a royalty equal to two
percent of its net sales of the products for the 1997 and 1998 calendar
years. Per the terms of the agreement, I-Flow has the right of first
refusal to supply SoloPak with services and assistance in assembling the
products until February 1998. The Company retained the right to sell the
products outside the United States and Puerto Rico.
In July, 1996, the Company purchased substantially all of the assets of
Block Medical, Inc. ("Block"), a wholly-owned subsidiary of Hillenbrand
Industries, Inc. Block, which manufactures and sells portable infusion
devices for the alternative site market, is headquartered in San Diego,
California and has a manufacturing facility in Northern Mexico.
9
<PAGE> 10
Block had revenues of approximately $13.5 million for the fiscal year
ended December 2, 1995. The Company believes that if Block's operations
are successfully integrated, the Company could achieve combined revenues
in the low to mid $20 million range next year, with resulting earnings per
share exceeding $0.30 per share (assuming no significant change in the
number of shares outstanding).
In addition to revenue growth, the Company believes that the acquisition
of Block brings several other strategic advantages to the Company, one of
which is an expanded product line with single-dose, one-time use infusion
pumps and a new electronic device. Also, with the plant in Mexico, the
Company believes the acquisition will help it become more profitable by
lowering its direct labor costs. The acquisition additionally seeks to
strengthen the Company's sales and marketing with an established 18 person
sales force and a strong customer base.
Cost of sales of $1,140,000 and $2,045,000 were incurred during the three
and nine-month periods ended September 30, 1996, respectively. As a
percentage of net sales, cost of sales decreased by 9% for the three-month
period ended September 30, 1996 compared to the same period in the prior
year. This increase in gross profit on sales is primarily the result of a
higher percentage of sales to foreign customers, and the addition of the
Block sales which have a higher margin.
Selling and marketing expenses for the three and nine-month periods ended
September 30, 1996 increased over the same periods in the prior year by
$468,000, or 131% and $393,000, or 34%, respectively. These higher
expenses primarily resulted from the increased internal sales force from
four persons to 18 persons as a result of the acquisition of Block.
General and administrative expenses for the three and nine-month periods
ended September 30, 1996 increased over the same period in the prior year
by $477,000, or 94% and $633,000, or 39%, respectively. These expenses
primarily represent costs for administrative personnel, facilities and
other miscellaneous items. These costs have increased primarily as a
result of the acquisition of Block. As the Company integrates the
operations of Block with its own and recognizes the synergies of the
businesses, these costs are expected to decrease.
Product development expenses for the three and nine-month periods ended
September 30, 1996 increased compared to those for the same period in the
prior year by $126,000, or 61% and $153,000, or 24%, respectively. With
the acquisition of Block, the Company increased its engineering staff and
the number of new products under development. The Company will continue to
incur product development expenses as it continues its efforts to
introduce new improved-technology, cost-efficient products into the
market.
FINANCIAL CONDITION
During the nine-month period ended September 30, 1996, funds of $3,024,000
were provided by operating activities as non-cash expenses of $5,072,000
plus net changes in operating assets and liabilities of $1,083,000
exceeded a net loss of $3,131,000. The changes in operating assets and
liabilities consisted of a decrease in accounts receivable of $602,000
10
<PAGE> 11
and an increase in accounts payable and other liabilities of $653,000 less
an increase in inventories and prepaid expenses of $172,000.
The Company used funds for investing activities during the nine-month
period ended September 30, 1996 by acquiring property (including rental
and demonstration equipment) and other assets aggregating $613,000. Also,
the Company used funds of $16,036,000 for the acquisition of substantially
all of the assets of Block Medical, Inc. (note 5 of Notes to Financial
Statements).
During the nine-month period ended September 30, 1996, funds of $9,521,000
were provided by financing activities consisting of an increase in notes
payable of $3,947,000 and proceeds from the exercise of stock options and
Series G Warrants of $5,574,000.
As of September 30, 1996, the Company had a cash balance of $1,524,000 and
net receivables of $3,022,000. To date, the Company has financed its
operations and working capital requirements primarily through equity
financings. Management believes the Company's available funds are
sufficient to provide for its short-term projected needs for operations.
11
<PAGE> 12
PART II - OTHER INFORMATION
Items 1.-5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - The list of exhibits contained in the
accompanying Index to Exhibits is herein incorporated by
reference.
(b) During the quarter ended September 30, 1996, the Company
filed a Current Report on Form 8-K dated July 22, 1996
regarding the acquisition of substantially all of the
assets of Block Medical, Inc.
12
<PAGE> 13
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.
I-FLOW CORPORATION
-------------------
(Registrant)
Date: November 11, 1996 /s/ Donald M. Earhart
-------------------------------------
Donald M. Earhart,
Chairman, President and CEO
Date: November 11, 1996 /s/ Gayle L. Arnold
-------------------------------------
Gayle L. Arnold,
Vice President, Finance
13
<PAGE> 14
INDEX TO EXHIBITS
Set forth below is a list of the exhibits included as part of this report:
Exhibit No. Exhibit
----------- -------
3.1 (1) Restated Articles of Incorporation
of the Company
3.2 (2) Certificate of Amendment to Restated
Articles of Incorporation dated June 14, 1991
3.3 (3) Certificate of Amendment to Restated
Articles of Incorporation dated May 12, 1992
3.4 (3) Certificate of Determination covering Company's Series B
Preferred Stock filed with the Secretary of State on October
5, 1992
3.5 (2) Restated Bylaws as of July 22, 1991
of the Company
27 Financial Data Schedule
(1) Incorporated by reference to exhibit with this title filed with the
Company's Form 10-K for its fiscal year ended September 30, 1990.
(2) Incorporated by reference to exhibit with this title filed with the
Company's Registration Statement (#33-41207-LA) declared effective
August 8, 1991.
(3) Incorporated by reference to exhibit with this title filed with the
Company's Post Effective Amendment to its Registration Statement
(#33-41207-LA) declared effective November 6, 1992.
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,524,000
<SECURITIES> 0
<RECEIVABLES> 3,022,000
<ALLOWANCES> 0
<INVENTORY> 3,666,000
<CURRENT-ASSETS> 8,423,000
<PP&E> 3,023,000
<DEPRECIATION> (1,220,000)
<TOTAL-ASSETS> 19,358,000
<CURRENT-LIABILITIES> 3,625,000
<BONDS> 0
0
1,494,000
<COMMON> 32,445,000
<OTHER-SE> (21,153,000)
<TOTAL-LIABILITY-AND-EQUITY> 19,358,000
<SALES> 4,695,000
<TOTAL-REVENUES> 8,295,000
<CGS> 2,045,000
<TOTAL-COSTS> 2,045,000
<OTHER-EXPENSES> 9,519,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,269,000
<INCOME-TAX> (35,000)
<INCOME-CONTINUING> (3,131,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,131,000)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> 0
</TABLE>
