<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 September 30, 1998
/ / TRANSITION REPORT PURSUANT OR TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _____________ to _____________
Commission File Number: 1-10916
INTERVISUAL BOOKS, INC.
(Exact name of registrant as specified in its charter)
California 95-2929217
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2716 Ocean Park Boulevard, Suite 2020
Santa Monica, California 90405
- -------------------------------------- --------
Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (310) 396-8708
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check 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
--- ---
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
practical date. As of September 30, 1998, there were 5,138,531 shares of common
stock outstanding.
<PAGE> 2
INTERVISUAL BOOKS, INC.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheets -September 30, 1998, and December 31, 1997 1
Statements of Operations - Three months ended September 30, 1998
and 1997; Nine months ended September 30, 1998 and 1997 2
Statements of Cash Flows - Nine months ended September 30,
1998 and 1997 3
Notes to Financial Statements - September 30, 1998 4
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
</TABLE>
i
<PAGE> 3
INTERVISUAL BOOKS, INC.
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
ASSETS 9/30/98 12/31/97
- ------ ------- --------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 718 $ 2,383
Accounts receivable, less allowances
of $167 and $128 4,830 5,631
Inventories 2,446 1,267
Prepaid expenses 396 105
Royalty advances 435 372
------- -------
Total current assets 8,825 9,758
Other Assets:
Acquisition costs 88 41
Production costs, net of accumulated
amortization of $15,054 and $14,267 3,827 3,677
Property and equipment, net of accumulated
depreciation of $927 and $855 212 249
------- -------
$12,952 $13,725
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable 4,434 5,541
Accrued royalties 243 379
Accrued expenses 168 230
Bank line of credit 1,700 --
Income taxes payable -- 130
Customer deposits 73 37
------- -------
Total current liabilities 6,618 6,317
Deferred income taxes 161 161
Other liabilities-long term 97 134
------- -------
TOTAL LIABILITIES 6,876 6,612
------- -------
Stockholders' Equity:
Common stock, no par value; shares
authorized 10,000,000, shares issued
and outstanding 5,138,531 at September 30,
1998 and 5,036,132 at December 31, 1997 4,708 4,574
Additional paid in capital 301 301
Retained earnings 1,067 2,238
------- -------
TOTAL STOCKHOLDERS' EQUITY 6,076 7,113
------- -------
$12,952 $13,725
======= =======
</TABLE>
See notes to financial statements.
1
<PAGE> 4
INTERVISUAL BOOKS, INC.
STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Sept. 30, Nine Months ended Sept. 30
1998 1997 1998 1997
------ ------ ------- -------
<S> <C> <C> <C> <C>
Net sales $3,537 $8,685 $ 8,274 $14,067
Rights income 53 5 256 21
------ ------ ------- -------
Total revenue 3,590 8,690 8,530 14,088
Cost of sales 2,920 6,854 6,672 11,101
------ ------ ------- -------
Gross profit 670 1,836 1,858 2,987
Selling, general and
administrative 1,041 991 3,357 3,427
Interest income (expense) (16) 11 (1) 41
------ ------ ------- -------
Income (loss) before income
tax expense (benefit) (387) 856 (1,500) (399)
Income tax expense (benefit) (94) 290 (397) (137)
------ ------ ------- -------
Net income (loss) $ (293) $ 566 $(1,103) $ (262)
====== ====== ======= =======
Income (loss) per common
share:
Basic $(0.06) $ 0.11 $ (0.22) $ (0.05)
====== ====== ======= =======
Diluted $(0.06) $ 0.11 $ (0.22) $ (0.05)
====== ====== ======= =======
Weighted average number of
common shares outstanding:
Basic 5,138 5,033 5,094 5,033
====== ====== ======= =======
Diluted 5,138 5,117 5,094 5,033
====== ====== ======= =======
</TABLE>
See notes to financial statements.
2
<PAGE> 5
INTERVISUAL BOOKS, INC.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,103) $ (262)
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 858 1,019
Provision for losses on accounts receivable 39 4
Provision for abandoned titles 27 34
Excess fair market value over book
value of assets acquired (3) 30
Increase (decrease) from changes in:
Accounts receivable 762 (3,255)
Inventories (1,179) (830)
Prepaid expenses (291) 66
Royalty advances (63) 3
Accounts payable (1,107) 2,878
Accrued royalties (136) (294)
Accrued expenses (99) (106)
Income taxes payable (130) --
Customer deposits 36 41
Officer loan -- (97)
Deferred income taxes -- (19)
------- -------
Net cash used in operating activities (2,389) (788)
------- -------
Cash flows from investing activities:
Proceeds from sales and maturities of
marketable securities -- 2,035
Additions to property and equipment (30) (127)
Additions to leasehold improvements (5) (62)
Additions to production costs (963) (1,070)
Addition to acquisition costs (47) (12)
------- -------
Net cash (used in) provided by investing activities (1,045) 764
------- -------
Cash flows from financing activities:
Proceeds from exercise of options 69 --
Proceeds from bank line of credit 1,700 --
------- -------
Net cash provided by financing activities 1,769 --
------- -------
Net decrease in cash and cash equivalents (1,665) (24)
Cash and cash equivalents, beginning of period 2,383 656
------- -------
Cash and cash equivalents, end of period $ 718 $ 632
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 153 $ 1
Interest expense 26 --
</TABLE>
See notes to financial statements.
3
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(unaudited)
Note 1 - Statement of Information Furnished
- -------------------------------------------
In the opinion of management the accompanying unaudited financial statements
contain all adjustments (consisting only of normal and recurring accruals)
necessary to present fairly the financial position as of September 30, 1998, and
the results of operations and cash flows for the three and nine month periods
ended September 30, 1998 and 1997. These results have been determined on the
basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
The results of operations for the three and nine month periods ended September
30, 1998, are not necessarily indicative of the results to be expected for any
other period or for the entire year.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. The accompanying financial statements should be
read in conjunction with the Company's audited financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Note 2 - Earnings (Loss) Per Common Share
- -----------------------------------------
The Company computes loss per common share under SFAS No. 128, "Earnings Per
Share," which requires presentation of basic and diluted earnings (loss) per
share. Basic earnings (loss) per common share is computed by dividing income or
loss available to common shareholders by the weighted average number of common
shares outstanding for the reporting period. Diluted earnings (loss) per common
share reflects the potential dilution that could occur if securities or other
contracts, such as stock options, to issue common stock were exercised or
converted into common stock. Common stock options were not included in the
computation of diluted loss per common share because the effect would be
antidilutive. Weighted average and per share information for the three and nine
months ended September 30, 1997 were restated in accordance with SFAS 128 which
had no effect on the income (loss) per common share previously presented.
Note 3 - Merger with the Hunt Group
- -----------------------------------
On March 20, 1998, the Company signed an agreement and plan of merger with the
Hunt Group, a related party, pursuant to which the Hunt Group was merged with
and into the Company in August 1998. The merger was approved by the Company's
shareholders at its annual meeting on July 22, 1998. Under the terms of the
agreement, the Company issued to the Hunt Family Trust, sole shareholder of the
Hunt Group, 250,000 shares of the Company's stock for all the outstanding stock
of the Hunt Group. Additionally, the agreement calls for an additional 78,000
contingent shares to be issued to the Hunt Family Trust in three separate
increments of 26,000 each when cumulative sales of the Hunt Group developed
products exceed $5,000,000, $6,000,000 and $7,000,000, respectively. As of
September 30, 1998 cumulative sales of the Hunt Group developed products
exceeded $6,000,000, and accordingly, an additional 52,000 shares of the
4
<PAGE> 7
Company stock were issued to the Hunt Family Trust and was included in weighted
average shares outstanding.
The merger was accounted for as a combination of entities under common control,
which is accounted for in a similar manner as a pooling of interest.
Accordingly, the Company's financial statements have been restated to include
the results of the Hunt Group for all periods presented.
5
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
- -------------
GENERAL
Intervisual Books, Inc. (the "Company") creates and produces interactive and
three-dimensional books designed for children and adults. These products include
picture books, playsets, board books and gift books. The Company's books
incorporate dimensional and moveable features which require hand-assembly in the
manufacturing process. Some titles require the incorporation of such materials
as plush, plastic novelty elements and electronic audio chips into the finished
books.
The majority of the Company's concepts and ideas for projects are generated
internally by the in house creative and editorial departments. Additional ideas
and concepts are conceived by the illustrators and designers with whom the
Company has been associated for many years. After the Company conceives an idea
and makes a dummy book, key US an UK publishers are consulted to determine if
they are interested in publishing and marketing the book. If an agreement is
reached, the Company and the publisher sign a co-publishing contract which
stipulates that the publisher will purchase the title with exclusive rights to
sell books in the English language to the book trade for generally a two to four
year period.
The Company also self-publishes titles and offers the books directly to
retailers. The Company sells and markets these books using the services of
Andrews McMeel, a leading US publisher/distributor located in Kansas City.
Andrews McMeel handles all sales, collection, billing, warehousing and order
fulfillment functions.
The market for packaged books has gone through recent changes which has made it
more difficult for the Company to generate co-editions. In the past five years,
there has been a consolidation trend in the US publishing industry that has
reduced the number of the Company's customers. Many of the surviving children's
imprints are still consolidating which is having a negative impact on the size
and frequency of their orders. This trend has been a major factor in the
Company's decision to self-publish. The Company's self-publishing program has
gained consumer acceptance, indicating its interactive books and playsets are
still in demand.
The Company does not engage in any of its own printing, binding, hand assembly,
or manufacturing. These services are contracted for with independent printers in
Colombia, Singapore, Hong Kong and Thailand. The Company supplies its printers
with artwork, color-separated materials and complete sample materials to serve
as guides for hand-assembly.
RESULTS OF OPERATIONS
Net sales for the three and nine month periods ended September 30, 1998 were
$3,537,000 and $8,274,000, respectively, as compared to $8,685,000 and
$14,067,000 for the comparable periods of the preceding year. The decrease for
the three month period of $5,148,000 can be attributed to decreases of
$2,237,000 in domestic sales and $2,911,000 in foreign sales. The decrease in
sales for the nine month period of $5,793,000 came from
6
<PAGE> 9
decreases of $2,235,000 in domestic sales and $3,558,000 in foreign sales. Net
sales from the Company's self-publishing efforts were up $451,000 for the
quarter and $537,000 for the nine month period as compared to last year. Several
factors affected the Company's sales for the periods ended September 30, 1998.
The strength of the US dollar against the currencies of major international
countries, especially Japan, UK and Germany, had an adverse impact on the
Company's ability to meet costing requirments with many of its foreign customers
which resulted in lower sales. Sales to the above three countries were lower by
over 60% for the nine months of 1998 versus the same period of 1997.
Additionally, the continuing Asian economic crisis has materially affected sales
to our customers in Japan which is traditionally the Company's third largest
market. On the domestic side, sales continue to be negatively affected by
consolidations within the US publishing industry. The Company expects increasing
sales from its self-publishing efforts to partially offset some of the loss in
sales from domestic customers, however, the decline in sales to US publishers
has been significant. The Company also recently hired a new Manager of Creative
Services with over 15 years of book creative and development experience who will
be leading a concentrated effort to form new relationships with the Company's
publishing partners. This effort is designed to rebuild the Company's domestic
sales which were lost due to consolidations.
Rights income for the three and nine month periods ended September 30, 1998 were
$53,000 and $256,000, respectively, as compared to $5,000 and $21,000 for the
comparable periods of the preceding year. This increase is due to the Company's
sales of worldwide direct marketing rights on some of its products. These sales
do not require that the Company manufacture, and, therefore, have no related
cost. The Company plans to continue to expand this source of revenues in the
future.
Gross profit margin as a percent of sales (excluding the affect from rights
income) for the three and nine month periods ended September 30, 1998 was 17.4%
and 19.4%, respectively, as compared to 21.1% for both the three and nine month
periods of last year, a decrease of 3.7% for the quarter and 1.7% for the nine
month period. Amortization of development cost is the major item included in the
gross profit calculation. Amortization is more a fixed than variable cost so it
has a negative effect on gross profit ( as a percent of sales ) when sales are
lower. This is the main reason gross profit declined for the periods ended
September 30, 1998 as compared to last year. Actual manufacturing costs of
products sold as a percent of sales were lower for the three and nine months
ended September 30, 1998.
Selling, general and administrative expenses for the three and nine month
periods ended September 30, 1998 were $1,041,000 and $3,357,000, respectively,
as compared to $991,000 and $3,427,000 for the comparable periods of the prior
year. This represents and increase of $50,000 for the three month period and a
decrease of $70,000 for the nine month period. These expenses are comprised of
personnel, selling and administrative. Personnel expenses were $484,000 and
$1,663,000 for the three and nine month periods ended September 30, 1998, as
compared to $471,000 and $1,656,000 for the corresponding periods of 1997.
Selling expenses were $302,000 and $894,000 for the three and nine month periods
ended September 30, 1998, as compared to $208,000 and $816,000 for the same
periods of 1997. These increases of $94,000 and $78,000 for the three and nine
month periods were primarily related to increases in distribution related costs
and promotion prototypes partially offset by decreases in delivery, catalog, and
7
<PAGE> 10
commission expenses. The Company's administrative expenses were $255,000 and
$800,000 for the three and nine month periods ended September 30, 1998, as
compared to $312,000 and $955,000 for the same periods of 1997. These decreases
of $57,000 and $155,000 for the three and nine month periods primarily related
to decreases in rent, moving expense, legal and accounting, and insurance costs
partially offset by increased bad debt expense and depreciation.
The net loss for the three and nine months ended September 30, 1998 was $293,000
and $1,103,000, respectively, as compared to net income of $566,000 for the
three months ended September 30, 1997 and net loss of $262,000 for the nine
months ended September 30, 1997. Increased losses for the three and nine months
ended September 30, 1998 were primarily the result of lower sales partially
offset by higher rights income.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased to $718,000 at September 30,
1998 from $2,383,000 at December 31, 1997. At September 30, 1998, working
capital was $2,207,000 compared to $3,441,000 at December 31, 1997.
Net cash used in operations was $2,389,000 as compared to $788,000 cash used in
operating activities for the corresponding period of the previous year. The
$1,601,000 change in cash from operations was primarily attributable to a
decrease in accounts receivable partially offset by a decrease in accounts
payable and the net loss for the nine month period, as well as an increase in
inventories on hand relating to the Company's efforts to self-publish titles. As
a result of the fluctuations and explanations indicated, the cash used in the
first nine months of 1998 was to support current operations. Net cash used in
investing activities amounted to $1,045,000 as compared to cash provided of
$764,000 during the same period in 1997. In 1997, all marketable securities were
allowed to mature to generate cash and no new investments have been made. Net
cash provided by financing activities was $1,769,000 in 1998 resulting from
borrowings against the line of credit and exercise of options.
During the first quarter of 1998, the Company secured a $2,000,000 revolving
line of credit with a bank which expires April 1, 1999. The Company may borrow
against this line, as well as issue letters of credit. The line of credit, which
is secured by the Company's assets, contains restrictive covenants, including
covenants which require a minimum tangible net worth of the Company, minimum
working capital and other requirements. All requirements were met at September
30, 1998. Borrowings on this line of credit were $1,700,000 and letters of
credit in the amount of $171,510 were issued at September 30, 1998.
As of November 1, 1998, the Company did not have any commitments for any
material capital expenditures. Management of the Company believes that the
existing levels of funds and its ability to borrow on its revolving line of
credit, combined with the Company's ability to generate, are adequate to finance
current and expected levels of activity as well as anticipated capital
expenditures of the Company for at least the next twelve months.
8
<PAGE> 11
YEAR 2000 MODIFICATIONS
The Company is reviewing its computer systems to evaluate the extent to which
modifications are necessary to insure year 2000 compliance. Recently, the
Company upgraded its accounting software for year 2000 compliance and the
Company is also considering upgrades to other software programs. The Company
currently does not anticipate that any material expenditures will be required to
modify its computer systems for year 2000 modifications. Given the nature of the
Company's products, the Company believes that its products do not pose year 2000
compliance issues. As with virtually all companies, the Company relies to some
degree, directly and indirectly, on external computer systems utilized by the
Company's suppliers and the Company is reviewing the impact that any failure by
these third parties to resolve their year 2000 problems might have on the
business of the Company.
FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q contains forward-looking statements and include
assumptions concerning the Company's operations, future results and prospects.
These forward-looking statements are based on current expectations and are
subject to a number of risks, uncertainties and other factors. In connection
with the Private Securities Litigation Reform Act of 1995, the Company provides
the following cautionary statements identifying important factors which, among
other things, could cause the actual results and events to differ materially
from those set forth in or implied by the forward-looking statements and related
assumptions contained in this Section and in this entire Report. Such factors
include, but are not limited to: product demand and market acceptance risks; the
effect of economic conditions; the impact of competitive products and pricing;
changes in foreign exchange rates; the Company's ability to increase sales from
its self-publishing efforts; the Company's ability to increase sales of
marketing rights; product development and commercialization difficulties;
capacity and supply constraints or difficulties; availability of capital
resources; general business and economic conditions; and changes in government
laws and regulations, including taxes.
These factors and others could cause operating results to vary significantly
from those in prior periods, and those projected in forward-looking statements.
Additional information with respect to these and other factors that could
materially affect the Company and its operations are included in the Company's
filings with the Securities and Exchange Commission and are incorporated herein.
9
<PAGE> 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
- -----------------------------------------------------------
The Annual Meeting of Shareholders of Intervisual Books, Inc. was held on July
22, 1998 and several matters were put to a vote. The issues and the results are
as follows:
<TABLE>
<CAPTION>
Abstentions
Votes Cast For Votes Cast Against Withhold Authority
-------------- ------------------ ------------------
<S> <C> <C> <C>
(1) To elect seven directors to serve until the next annual meeting of
shareholders and until their successors are chosen.
Waldo H. Hunt 4,168,967 0 59,200
Nathan N. Sheinman 4,168,967 0 59,200
Dan P. Reavis 4,168,967 0 59,200
Gordon Hearne 4,156,467 0 71,700
Leonard W. Jaffe 4,168,967 0 59,200
John J. McNaughton 4,168,967 0 59,200
Peter Seymour 4,156,467 0 71,700
(2) Proposal to approve grant of stock options to Waldo H. Hunt.
4,039,294 177,405 8,968
(3) Proposal to approve merger of the Hunt Creative Group with and into the
Company.
3,153,997 30,025 7,368
(3) To ratify the selection of BDO Seidman, LLP, as independent auditors of the
Company for 1998.
4,212,149 2,850 13,168
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits required by Item 601 of Regulation S-K
27. Financial Data Schedule
(b) Reports on Form 8-K
On July 17, 1998, the Company filed a Form 8-K disclosing under Item 5
of the form the Company's second quarter 1998 sales and loss.
10
<PAGE> 13
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.
INTERVISUAL BOOKS, INC.
BY: /s/ Nathan N. Sheinman
------------------------------------
Nathan N. Sheinman, President
Chief Operating Officer
BY: /s/ Dan P. Reavis
------------------------------------
Dan P. Reavis
Executive Vice President
Chief Financial Officer
Date: November 13, 1998
-----------------
11
<PAGE> 14
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AS OF SEPTEMBER 30, 1998 AND STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS REPORTED ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 718
<SECURITIES> 0
<RECEIVABLES> 4,997
<ALLOWANCES> (167)
<INVENTORY> 2,446
<CURRENT-ASSETS> 8,825
<PP&E> 1,139
<DEPRECIATION> (927)
<TOTAL-ASSETS> 12,952
<CURRENT-LIABILITIES> 6,618
<BONDS> 0
0
0
<COMMON> 4,708
<OTHER-SE> 1,368
<TOTAL-LIABILITY-AND-EQUITY> 12,952
<SALES> 8,274
<TOTAL-REVENUES> 8,530
<CGS> 6,672
<TOTAL-COSTS> 6,672
<OTHER-EXPENSES> 3,357
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> (1,500)
<INCOME-TAX> (397)
<INCOME-CONTINUING> (1,103)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,103)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
