<PAGE> 1
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 QUARTERLY PERIOD ENDED DECEMBER 31, 1997
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: 0-19272
MICRONICS COMPUTERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0132288
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification No.)
45365 NORTHPORT LOOP WEST
FREMONT, CALIFORNIA 94538-6417
(Address of principal executive offices)
(510) 651-2300
(Registrant's telephone number, including area code)
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
At January 31, 1998 there were 12,902,565 shares of the registrant's common
stock outstanding.
<PAGE> 2
MICRONICS COMPUTERS, INC.
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1997
INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
<S> <C>
Item 1: Financial Statements
Condensed Consolidated Balance Sheets at
December 31, 1997 and September 30, 1997............................................... 3
Condensed Consolidated Statements of Results of Operations
for the three months ended December 31, 1997
and December 31, 1996.................................................................. 4
Condensed Consolidated Statements of Cash Flows for
the three months ended December 31, 1997
and December 31, 1996.................................................................. 5
Notes to Condensed Consolidated Financial
Statements............................................................................. 6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................................. 8
Item 3: Quantitative and Qualitative Disclosures
About Market Risk...................................................................... 9
PART II: OTHER INFORMATION
Item 5: Other Information.............................................................................. 10
Item 6: Exhibits and Reports on Form 8-K............................................................... 10
SIGNATURES ............................................................................................... 10
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
MICRONICS COMPUTERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1997
------- -------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ...... $18,686 $22,690
Short-term investments ......... 999 500
Accounts receivable, net ....... 13,032 10,325
Inventories .................... 6,392 9,853
Prepaid expenses and
other assets.................. 988 1,544
------- -------
Total current assets ........ 40,097 44,912
Property and equipment, net ........ 4,494 4,698
Other assets ....................... -- 39
------- -------
$44,591 $49,649
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............... $ 6,088 $ 8,304
Other accrued liabilities ...... 7,199 6,966
------- -------
Total current liabilities ... 13,287 15,270
Stockholders' equity:
Common stock ................... 130 142
Additional paid-in capital ..... 30,964 33,308
Retained earnings .............. 210 929
------- -------
Total stockholders' equity .. 31,304 34,379
------- -------
$44,591 $49,649
======= =======
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
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<PAGE> 4
MICRONICS COMPUTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales .......................... $ 19,459 $ 36,188
Cost of sales ...................... 16,905 31,503
-------- --------
Gross profit ....................... 2,554 4,685
Operating expenses:
Research and development ....... 994 1,310
Selling and marketing .......... 1,465 2,142
General and administrative ..... 1,045 1,223
-------- --------
Total operating expenses .... 3,504 4,675
-------- --------
Income (loss) from operations ...... (950) 10
Interest income .................... 252 305
Other expense, net ................. (21) (149)
-------- --------
Total other income .......... 231 156
-------- --------
Net income (loss) .................. $ (719) $ 166
======== ========
Basic and diluted earnings per share $ (0.05) $ 0.01
======== ========
Number of shares used in computation
of basic.......................... 13,499 13,923
======== ========
Number of shares used in computation
of diluted........................ 13,499 13,926
======== ========
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
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<PAGE> 5
MICRONICS COMPUTERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................ $ (719) $ 166
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization ................................. 206 293
Loss on disposal of property and equipment .................... 8 75
Gain on exercise of Osborne put option ........................ -- (44)
Changes in operating assets and liabilities:
Accounts receivable ........................................ (2,707) (2,781)
Inventories ................................................ 3,461 (2,498)
Prepaid expenses and other assets........................... 556 (559)
Accounts payable ........................................... (2,216) 2,976
Other accrued liabilities .................................. 233 862
-------- --------
Net cash used in operating activities ............................ (1,178) (1,510)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments .............................. (499) (4,067)
Maturities or sales of short-term investments .................... -- 26
Exercise of Osborne put option ................................... -- 794
Purchases of property and equipment, net ......................... (10) (137)
Other assets ..................................................... 39 13
-------- --------
Net cash used for investing activities ........................... (470) (3,371)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock ....................................... (2,418) --
Proceeds from issuance of common stock, net ...................... 62 174
-------- --------
Net cash provided by (used for) financing activities ............. (2,356) 174
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS ............................ (4,004) (4,707)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..................... 22,690 19,876
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ........................... $ 18,686 $ 15,169
======== ========
</TABLE>
See accompanying notes to condensed
consolidated financial statements.
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<PAGE> 6
MICRONICS COMPUTERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the consolidated financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of the financial position,
operating results and cash flows for those periods presented. The results of
operations for the interim periods presented are not necessarily indicative of
the results that may be expected for the full fiscal year. The accompanying
consolidated financial statements should be read together with the audited
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended September 30, 1997.
In recent quarters, the Company has experienced declining net sales and
lower gross margins as a result of competitive pressures and the effects of the
loss of and slowing order rates from its major OEM and government customers. The
Company's ability to reverse the trend of declining net sales, which have
yielded net losses, is dependent on several factors including increased order
rates for the Company's products, successful and timely development and market
acceptance of the Company's next generation products, the availability of
qualified sales and engineering personnel and successful competition with the
Company's competitors on a price, service and performance basis. Many of these
factors are not within the Company's control and if order rates for the
Company's products fail to increase, if the Company's next generation products
are not accepted by the Company's customers, or if the Company cannot
successfully compete with its competitors, many of whom have substantially
greater resources than the Company, the Company's net sales will continue to
decline. To the extent that the Company is unable to offset such sales declines
with cost reductions, recurring losses are likely. The Company cannot at this
time foresee when it again will reach profitability, if at all. Management
believes, however, that its available cash reserves are sufficient to meet its
working capital requirements and anticipated level of operations for at least
the next 12 months.
NOTE 2. EARNINGS PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS
128). SFAS 128 requires dual presentation of basic earnings per share ("EPS")
and diluted EPS on the face of all statements of earnings for all entities with
complex capital structures. Basic EPS is computed as net earnings divided by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from common shares issuable
through stock-based compensation plans including stock options, restricted stock
awards, warrants and other convertible securities using the treasury stock
method. The following summarizes the computation of basic EPS and diluted EPS
(in thousands except for per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1997 1996
-------- --------
<S> <C> <C>
Net income (loss) available to common stockholders
used in basic EPS and diluted EPS ................ $ (719) $ 166
======== ========
Weighted average number of common shares
used in computing basic EPS ...................... 13,499 13,923
Effect of dilutive securities:
Options ...................................... -- 3
-------- --------
Weighted number of common shares and dilutive
potential common stock used in diluted EPS ....... 13,499 13,926
======== ========
</TABLE>
Options on 1,167,630 and 1,016,444 shares of common stock for the periods ended
December 31, 1997 and December 31, 1996, respectively, were not included in
computing diluted EPS because their effects were antidilutive.
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<PAGE> 7
NOTE 3. SHORT-TERM INVESTMENTS
Short-term investments consist of corporate bonds and U.S. agency
securities with original maturities beyond three months and less than twelve
months.
NOTE 4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1997
------ ------
(UNAUDITED)
<S> <C> <C>
Raw materials ............ $2,241 $4,085
Work-in-process .......... 571 1,285
Finished goods .......... 3,580 4,483
------ ------
$6,392 $9,853
====== ======
</TABLE>
NOTE 5. COMMITMENTS AND CONTINGENCIES
The Internal Revenue Service examinations of the Company's tax returns
for years 1993 through 1995 have resulted in a preliminary finding that the
Company owes additional taxes and interest amounting to approximately $3.9
million. Although it is reasonably possible the Company may incur a loss upon
conclusion of this claim, the Company believes that adequate tax payments have
been made and accruals recorded for all years and that this matter will, when
resolved, not have a significant material adverse effect on the Company's
financial condition or results of operations.
The Company is party to various legal actions which arose in the normal
course of business. In the opinion of management and its legal advisors, the
ultimate disposition of these matters will not have a material adverse effect on
the financial condition or results of operations of the Company.
The Company has a purchase commitment with one of its suppliers for
approximately $12 million in graphics chips. The ultimate value of this
commitment to the Company is dependent on the Company's ability to sell its
graphics add-on card in fiscal 1998. It is reasonably possible that the Company
may not fulfill its sales projections for this product and therefore this
commitment may have a material adverse effect on the Company's results of
operations.
NOTE 6. REPURCHASE OF COMMON STOCK
On November 24,1997, the Company repurchased from a single shareholder
approximately 1.2 million shares of its outstanding common stock for a cash
price less than market, or approximately $2.4 million. These shares have been
retired.
NOTE 7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, "Reporting Comprehensive Income." This Statement establishes
standards for reporting and displaying comprehensive income and its components
in the consolidated financial statements. It does not, however, require a
specific format for the statement, but requires the Company to display an amount
representing total comprehensive income for the period in that financial
statement. The Company is in the process of determining its preferred format.
This Statement is effective for fiscal years beginning after December 15, 1997.
Also, in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Statement establishes
standards for the way public business enterprises are to report information
about operating
-7-
<PAGE> 8
segments in interim financial reports issued to shareholders. This Statement
is effective for financial statements for the periods beginning after
December 31, 1997. The Company does not believe it has any separately
reportable segments.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The Company's Common Stock price may be subject to significant
volatility. For any given quarter, a shortfall in the Company's announced
revenue or earnings from the levels expected by those who trade in the Company's
stock could have an immediate and adverse effect on the trading price of the
Company's Common Stock. The Company may not learn of, or be able to confirm,
revenue or earnings shortfalls until late in the quarter or following the end of
the quarter. In general, the Company participates in a very dynamic high
technology industry which can result in significant fluctuations in the
Company's Common Stock price at any time.
Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended, that involve risks and uncertainties,
including the rate of orders for the Company's products, the timely availability
and acceptance of new products, changes in management of the Company,
difficulties experienced by the Company with respect to hiring and retaining
qualified personnel, the impact of competitive products and pricing, the impact
of the Company's efforts to implement its evolving long-term strategy and the
other risks detailed below including, without limitation, the risks described in
the section labeled "Factors That May Affect Future Results," and the risks
described from time to time in the Company's other reports filed with the
Securities and Exchange Commission. The actual results that the Company achieves
may differ materially from any forward-looking projections due to such risks and
uncertainties. Words such as "believes," "anticipates," "expects," "future,"
"intends," and similar expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such statements.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Micronics Computers, Inc. operates in a rapidly changing environment
that involves a number of risks, some of which are beyond the Company's control.
The following discussion highlights some of those risks.
The Company's operating results are subject to quarterly and other
fluctuations due to a variety of factors, including the volume and timing of
orders received, potential cancellation or rescheduling of orders, competitive
pressures, availability and cost of component parts and materials from the
Company's suppliers, adequate forecasting of the mixed product demand due to
production lead times, the timing of new product announcements and introductions
by the Company or its competitors, changes in the mix of products sold, research
and development expenses associated with new product introductions, the timing
and level of development costs, market cyclical nature of the semiconductor
industry and economic conditions generally or in various geographic areas and
the Company's ability to develop new product features.
In recent quarters, the Company has experienced declining net sales and
has incurred lower gross margins as a result of competitive pressures and the
effects of the loss of and slowing order rate from its major OEM and government
customers. The Company's ability to reduce the trend of declining net sales,
which have yielded net losses, is dependent on several factors including
increased order rates for the Company's products, successful and timely
development and market acceptance of the Company's next generation products, the
availability of qualified sales and engineering personnel and successful
competition with the Company's competitors on a price, service and performance
basis. Many of these factors are not within the Company's control, and if order
rates for the Company's products fail to increase, if the Company's next
generation products are not successfully and timely developed and accepted by
the Company's customers, or if the Company cannot successfully compete with its
competitors, many of whom have substantially greater resources than the Company,
the Company's net sales will continue to decline. To the extent that the Company
is unable to offset such sales declines with cost reductions, recurring losses
are likely. The Company cannot at this time foresee when it will again reach
profitability, if at all.
Many of the Company's technical employees are critical to its success.
The loss of one or more of these employees could have a materially adverse
effect on the Company's operations. The demand for key technical employees in
the industry, and especially in the Silicon Valley, has become very intense.
Companies have been luring away key employees with very attractive offers. The
Company has lost, from time to time, some of its talent to this intense
competition, and there can be no assurance that the Company will be able to hire
and retain its key talent due to this intense competition.
The Company has had several personnel changes in other areas of the
organization. The Company tries to find the best talent available; however, new
employees have a ramp-up time to understand and learn the Company's products,
build customer relationships, and manage administrative activities. These
changes could have a negative impact on the Company's future sales and
profitability.
COMPARISON OF RESULTS
-8-
<PAGE> 9
NET SALES Net sales were $19.5 million for the three months ended
December 31, 1997, a decrease of 46% from $36.2 million for the similar period
ended December 31, 1996. The reduction in revenue from the prior year period is
primarily the result of a decline in unit sales of motherboards in the OEM
channel to Micron Electronics, Inc., partially offset by sales of motherboards
to a new OEM customer, maturation of the Company's products in the motherboard
business and declining average selling price (ASP). The Company does not
presently expect sales to Micron to return to historical levels. The revenue
decline is partially offset by an increase in unit sales for the Company's
Righteous (TM) 3D add-in card.
The Company anticipates that the aggregate dollar value of motherboard
sales may decline during the quarter ending March 31, 1998 (the second quarter
of fiscal 1998) over sales reported for the first quarter and that sales of the
Company's multimedia graphics accelerator add-in card may increase slightly
during the same period.
The Company attempts to minimize sales price erosion by continually
shifting its product mix to newer products based upon more powerful
microprocessors, higher clock speeds, faster bus architectures and other
advanced features for which the Company can often realize higher prices.
However, the Company's current products are generally mid- to end-of-life
products. Future revenue will depend on the level of sales to existing major
customers, the ability to sign on new customers, the mix of products developed
and sold by the Company and the Company's ability to maintain unit prices
despite competitive pressures.
The Company's customers are in the computer industry, which is subject to
rapid technological change, product obsolescence and intense price competition.
The factors affecting the computer industry in general, and the Company's major
customers in particular, could have a material adverse effect on the Company's
results of operations.
COST OF SALES/GROSS PROFIT The Company's gross profit as a percentage of
net sales was 13.1% and 12.9% for the first quarter of fiscal 1998 and the first
quarter of fiscal 1997, respectively. The increase in the first quarter of
fiscal 1998 gross profit margin is primarily related to higher overall margins
for the Company's Righteous(TM) 3D add-in card.
OPERATING EXPENSES Operating expenses for the first quarter ended
December 31, 1997 decreased 25% or $1.2 million to $3.5 million from $4.7
million for the comparable quarter in the prior fiscal year. Research and
development decreased $.3 million, selling and marketing expenses decreased $.7
million, and general and administrative expenses decreased $.2 million for the
three months ended December 31, 1997. The reduction is due primarily to lower
salary and benefit expenses associated with the reduction in employee headcount
and lower overhead costs due to the continued consolidation of functional groups
within the Company and its subsidiaries.
INTEREST AND OTHER INCOME AND EXPENSE Interest income of $252,000 for the
first quarter of the fiscal year decreased 17% compared to $305,000 for the
comparable prior year period. Last year's invested balances were slightly higher
and included income of $44,000 from the exercise of the Osborne put option.
PROVISION FOR INCOME TAXES The Company recorded no income tax expense in
the first quarters ended December 31, 1997 and December 31, 1996. The Internal
Revenue Service examinations of the Company's tax returns for years 1993 through
1995 have resulted in a preliminary finding that the Company owes additional
taxes and interest amounting to approximately $3.9 million. Although it is
reasonably possible the Company may incur a loss upon conclusion of this claim,
the Company believes that adequate tax payments have been made and accruals
recorded for all years and that this matter will when resolved not have a
significant material adverse effect on the Company's financial condition or
results of operations.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital at December 31, 1997 was $26.8 million, down $2.8 million
from $29.6 million at September 30, 1997. The decrease in working capital was
primarily due to the first quarter loss and the use of approximately $2.4
million to repurchase Micronics common stock from a single shareholder.
At December 31, 1997, the Company's principal sources of liquidity
included $19.7 million of cash and cash equivalents and short-term
interest-bearing financial instruments.
Management believes existing cash and cash equivalents and short-term
investments will provide sufficient funds to meet the Company's operating and
capital requirements over the next twelve months.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
-9-
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 5: OTHER INFORMATION
Effective February 6, 1998, the Company changed its principal officers.
Charles J. Hart was appointed Chief Executive Officer, President and a director
of the Company. Mr. Hart replaces interim President Fred Dietrich and interim
Chief Executive Office Bill Shelander. Mr. Shelander continues as Chairman of
the Board of the Company.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11.01 Computation of Net Income (Loss) Per Share
27.01 Financial Data Schedule
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.
Micronics Computers, Inc.
-------------------------------
Registrant
Date: February 13, 1998 /s/Bill R. Finley
---------------------------------- -------------------------------
Bill R. Finley
Duly Authorized Officer
Vice President, Finance and
Chief Financial Officer
-10-
<PAGE> 11
EXHIBIT INDEX
-------------
Exhibit Description
- ------- -----------
11.01 Computation of Net Income (Loss) Per Share
27.01 Financial Data Schedule
<PAGE> 1
EXHIBIT 11.01
MICRONICS COMPUTERS, INC.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
-----------------------------
1997 1996
-------------- -------
<S> <C> <C>
BASIC EPS
Net income (loss) .................................. $ (719) $ 166
============== =======
Average shares outstanding ......................... 13,499 13,923
============== =======
Earnings per common share .......................... $ (.05) $ .01
============== =======
DILUTED EPS
Net income (loss) .................................. $ (719) $ 166
============== =======
Average shares outstanding ......................... 13,499 13,923
Options ............................................ -- 3
-------------- -------
Total common stock and common stock equivalents.. 13,499 13,926
============== =======
Earnings per common share - assuming dilution ...... $ (.05) $ .01
============== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DEC 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 18,686
<SECURITIES> 999
<RECEIVABLES> 13,032
<ALLOWANCES> 0
<INVENTORY> 6,392
<CURRENT-ASSETS> 40,097
<PP&E> 9,939
<DEPRECIATION> 5,445
<TOTAL-ASSETS> 44,591
<CURRENT-LIABILITIES> 13,287
<BONDS> 0
0
0
<COMMON> 130
<OTHER-SE> 31,174
<TOTAL-LIABILITY-AND-EQUITY> 44,591
<SALES> 19,459
<TOTAL-REVENUES> 19,459
<CGS> 16,905
<TOTAL-COSTS> 16,905
<OTHER-EXPENSES> 3,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (719)
<INCOME-TAX> 0
<INCOME-CONTINUING> (719)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (719)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
