<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 March 31, 1999
[ ] 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
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 March 31, 1999, there were 5,215,115 shares of common
stock outstanding.
<PAGE> 2
INTERVISUAL BOOKS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Balance Sheets - March 31, 1999, and December 31, 1998 1
Statements of Operations - Three months ended
March 31, 1999 and 1998 2
Statements of Cash Flows - Three months ended
March 31, 1999 and 1998 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
</TABLE>
i
<PAGE> 3
INTERVISUAL BOOKS, INC.
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
3/31/99 12/31/98
---------- --------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 772 $ 1,561
Accounts receivable, less allowances
of $178 and $175 1,124 2,246
Inventories 1,932 1,634
Prepaid expenses 231 242
Royalty advances 348 352
Income taxes receivable 117 117
Other current assets 175 206
-------- --------
Total current assets 4,699 6,358
Production costs, net of accumulated
amortization of $15,853 and $15,721 3,535 3,427
Property and equipment, net of accumulated
depreciation of $970 and $952 171 187
Deferred income taxes 512 443
-------- --------
$ 8,917 $ 10,415
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,963 $ 3,131
Line of credit 1,900 1,700
Accrued royalties 98 282
Accrued expenses 204 226
Customer deposits 71 68
-------- --------
Total current liabilities 4,236 5,407
Other liabilities 72 85
TOTAL LIABILITIES 4,308 5,492
-------- --------
Stockholders' Equity:
Common stock, no par value; shares
authorized 10,000,000, shares issued and
outstanding 5,215,115 at March 31, 1999
and 5,164,531 at December 31, 1998 4,800 4,731
Additional paid in capital 330 330
Retained earnings (521) (138)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 4,609 4,923
-------- --------
$ 8,917 $ 10,415
======== ========
</TABLE>
See notes to financial statements.
1
<PAGE> 4
INTERVISUAL BOOKS, INC.
STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
------- -------
<S> <C> <C>
Net sales $ 1,519 $ 1,158
Rights income 2 152
------- -------
Total revenues 1,521 1,310
Cost of sales 1,069 891
------- -------
Gross profit 452 419
Selling, general and administrative expenses 875 1,078
Interest expense (39) 0
Other income 9 14
------- -------
Loss before income taxes (453) (645)
Income tax benefit (70) (182)
------- -------
Net loss $ (383) $ (463)
======= =======
Loss per common share
Basic $ (0.07) $ (0.09)
======= =======
Diluted $ (0.07) $ (0.09)
======= =======
Weighted average number of common shares
and equivalents outstanding:
Basic 5,191 5,050
======= =======
Diluted 5,191 5,050
======= =======
</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>
Three Months Ended
March 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (383) $ (463)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 150 108
Provision for losses on accounts receivable 3 4
Provision for abandoned titles 5 3
Deferred income taxes (69) --
Excess fair market value over book value
of assets acquired -- (3)
Increase (decrease) from changes in:
Accounts receivable 1,119 2,886
Inventories (298) (208)
Prepaid expenses 11 (340)
Royalty advances 4 (55)
Other current assets 31 9
Accounts payable (1,168) (2,540)
Accrued royalties (184) (172)
Accrued expenses (22) (63)
Income taxes payable -- (130)
Customer deposits 3 23
Other liabilities (13) (13)
------- -------
Net cash used in operating activities (811) (954)
------- -------
Cash flows from investing activities:
Additions to property and equipment (2) (10)
Additions to production costs (245) (351)
------- -------
Net cash used in investing activities (247) (361)
------- -------
Cash flows from financing activities:
Proceeds from exercise of options 69 50
Proceeds from bank line of credit 200 --
------- -------
Net cash provided by financing activities 269 50
------- -------
Net decrease in cash and cash equivalents (789) (1,265)
Cash and cash equivalents, beginning of period 1,561 2,383
------- -------
Cash and cash equivalents, end of period $ 772 $ 1,118
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ -- $ 153
Interest expense 39 --
</TABLE>
See notes to financial statements.
3
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(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 March 31, 1999, and the
results of operations and cash flows for the three month period ended March 31,
1999 and 1998. 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, 1998.
The results of operations for the three month period ended March 31, 1999, 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, 1998.
Note 2 - 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 for the three months ended
March 31, 1999 and 1998 were not included in the computation of diluted loss per
common share because the effect would be antidilutive.
Note 3 - Fast Forward Marketing Acquisition
- -------------------------------------------
On May 14, 1999, the Company completed the acquisition of Fast Forward
Marketing, Inc., (Fast Forward). The transaction was completed under the terms
and conditions of a definitive agreement signed March 29, 1999. Under this
agreement, the Company acquired all the outstanding shares of Fast Forward for
670,000 shares of its common stock, a contingent cash payment of up to $200,000
due April 1, 2000, and a cash payment of $150,000 due April 1, 2001 subject to
reduction for the payment by the Company of certain tax withholdings. The
contingent cash payment of up to $200,000 or a lesser prorated amount is due if
Fast Forward Marketing achieves between 70% and 90% of its 1999 projected gross
margin, provided a minimum gross margin requirement is met. Of the 670,000
shares to be issued 594,940 are restricted for three years so that no more than
10% can be sold in any one year. The
4
<PAGE> 7
remaining 75,060 shares will be issued to certain employees under a
pre-existing Fast Forward Phantom Stock Plan. The transferability of these
shares is restricted for the period the employee remains with the Company or
three years whichever is less. In connection with the acquisition of Fast
Forward, The Hunt Family Trust agreed to vote its shares in favor of the
election to the Company's Board of Directors of Steven Ades and a second
nominee, mutually acceptable to the Company and Mr. Ades, as long as Mr. Ades is
employed by the Company. This transaction will be accounted for as a purchase.
Note 4 - Lines of Credit
- ------------------------
The Company signed an agreement on May 12, 1999 with its bank that provides for
borrowings up to a maximum of $2,000,000 depending on availability. This
agreement which expires on May 1, 2000 has an interest rate of 2.5% over prime.
The Company also on May 12, 1999 signed a loan agreement with a private party
that provides a revolving line of credit of up to $2,300,000. This agreement is
for one year and has an interest rate of 5% above the 3-month LIBOR rate. At the
Company's option, this agreement can be extended for an additional year under
the same terms and conditions. If the Company decides to extend this line of
credit, the agreement requires that warrants for up to 150,000 shares of the
Company's common stock to be issued. These warrants are execisable for up to two
years after the issue date at a price equal to the average trading price of the
Company's stock for the 20 day period prior to the Company's notice to extend
the loan agreement. In both credit agreements, the Company makes affirmative and
negative covenants and the agreement with the Company's bank contains certain
financial covenants. In connection with both agreements, the Company granted to
the lenders a security interest in all of its assets.
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 recent acquisition of Fast Forward Marketing, Inc. (see Note 3
and discussion below) brings to the Company a trained sales force which will
enhance the Company's ability to sell and service retailers. Fast Forward
Marketing, Inc., Marina del Rey, California, is a leading independent sales
organization that distributes video and audio products for major motion picture
studios, including Walt Disney, Warner Bros., Universal, Paramount, 20th Century
Fox, and many independent producers. Since its founding in 1987, Fast Forward
Marketing, Inc. has built an account base of more than 4,000 retailers,
including national chains such as Toys R Us, Blockbuster, Target, Borders,
Musicland and Best Buy, as well as specialty retailers such as Zany Brainy,
Store of Knowledge, Noodle Kidoodle, Gymboree, Books A Million and other
children's bookstores, gift shops, museums, zoos and Internet retailers such as
E-Toys. The Company also markets its products to retailers using the services of
Andrews McMeel, a leading US publisher/distributor located in Kansas City.
Andrews McMeel handles 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 is
gaining 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.
6
<PAGE> 9
On May 14, 1999, the Company completed the acquisition of Fast Forward
Marketing, Inc., (Fast Forward). The transaction was completed under the terms
and conditions of a definitive agreement signed March 29, 1999. Under this
agreement, the Company acquired all the outstanding shares of Fast Forward for
670,000 shares of its common stock, a contingent cash payment of up to $200,000
due April 1, 2000, and a cash payment of $150,000 due April 1, 2001 subject to
reduction for the payment by the Company of certain tax withholdings. The
contingent cash payment of up to $200,000 or a lesser prorated amount is due if
Fast Forward Marketing achieves between 70% and 90% of its 1999 projected gross
margin, provided a minimum gross margin requirement is met. Of the 670,000
shares to be issued 594,940 are restricted for three years so that no more than
10% can be sold in any one year. The remaining 75,060 shares will be issued to
certain employees under a pre-existing Fast Forward Phantom Stock Plan. The
transferability of these shares is restricted for the period the employee
remains with the Company or three years whichever is less. In connection with
the acquisition of Fast Forward, The Hunt Family Trust agreed to vote its shares
in favor of the election to the Company's Board of Directors of Steven Ades and
a second nominee, mutually acceptable to the Company and Mr. Ades, as long as
Mr. Ades is employed by the Company. This transaction will be accounted for as a
purchase.
RESULTS OF OPERATIONS
Net sales for the three month period ended March 31, 1999 were $1,519,000 as
compared to $1,158,000 for the prior year. The sales increase of $361,000 for
the three month period was made up of increases in foreign sales of $348,000 and
domestic sales of $13,000. For the first quarter of 1999, foreign sales were
$941,000 as compared to $593,000 in the first quarter of 1998. Domestic sales
were $578,000 for the first three months of 1999 compared to $565,000 for the
same period last year.
Rights income in the first quarter of 1999 was $2,000 as compared to $152,000
for the same period of the prior year. The 1998 income is primarily derived from
the Company's sale 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 expects to receive licensing income in the second
quarter of 1999 comparable to that recorded in the first quarter of 1998.
Gross profit margin for the three month period ended March 31, 1999 was 29.6% of
sales (excluding rights income) as compared to 23.1% for the same period of
1998. This reduction was due primarily to lower cost of goods resulting from
returns received in 1999 for products sold in 1998. This was offset by lower
margins on sales of close out inventory sold at lower than normal gross margins.
Costs of sales consists primarily of manufacturing costs, book development
amortization, and royalties. Manufacturing costs were $899,000 or 59.2% of sales
for the three months ended March 31, 1999, compared to $772,000 or 66.7% of
sales for the same period of 1998. Amortization was $132,000 or 8.7% of sales
for the three months ended March 31, 1999, versus $78,000 or 6.8% of sales for
the comparable period of 1998. Royalties for the first three months of 1999 were
$38,000 or 2.5% of sales compared to $41,000 or 3.5% of sales for the same
period of 1998. All percentages are calculated on net sales which do not include
rights income.
Selling, general and administrative expenses for the three month period ended
March 31, 1999 were $875,000 as compared to $1,078,000 for the comparable period
of the prior year. These expenses are comprised of personnel, selling and
administrative. Personnel expenses were $437,000 for the three
7
<PAGE> 10
month period ended March 31, 1999, as compared to $561,000 for the same period
of 1998, a decrease of $124,000. This decrease can be attributed primarily to
salary and staff reductions in the latter part of 1998 as well as the expiration
of a consulting agreement in January of 1999. Selling expenses were $170,000 for
the three month period ended March 31, 1999, as compared to $224,000 for the
same period of 1998, a decrease of $54,000. This decrease is primarily related
to lower distribution costs relating to the Company's self-publishing efforts
and lower travel and entertainment expenses, partially offset by increased
expenses relating to the addition of a UK sales person. The Company's
administrative expenses were $268,000 for the three month period ended March 31,
1999, as compared to $293,000 for the same period of 1998, a decrease of
$25,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased by $789,000 to $772,000 at
March 31, 1999 from $1,561,000 at December 31, 1998. At March 31, 1999, working
capital was $463,000 compared to $951,000 at December 31, 1998. The primary use
of cash during the three months ended March 31, 1999 was from operations.
Net cash used in operations was $811,000 for the first quarter of 1999 as
compared to $954,000 for the corresponding period of the previous year. The
$143,000 change in cash from operations for the first three months of 1999 was
primarily attributable to decreases in net operating loss and accounts payable,
which were partially offset by a decrease in accounts receivable. Net cash used
in investing activities amounted to $247,000 as compared $361,000 during the
same period in 1998. This decrease in cash used is primarily from a decrease in
production costs in the first quarter of 1999 versus the same period of 1998.
Net cash provided by financing activities was $269,000 in 1999 as compared to
$50,000 for the same period in 1998. This increase in cash provided is primarily
from borrowing on the Company's line of credit from its bank..
The Company signed an agreement on May 12, 1999 with its bank that provides for
borrowings up to a maximum of $2,000,000 depending on availability. This
agreement which expires on May 1, 2000 has an interest rate of 2.5% over prime.
The Company also on May 12, 1999 signed a loan agreement with a private party
that provides a revolving line of credit of up to $2,300,000. This agreement is
for one year and has an interest rate of 5% above the 3-month LIBOR rate. At the
Company's option, this agreement can be extended for an additional year under
the same terms and conditions. If the Company decides to extend this line of
credit, the agreement requires that warrants for up to 150,000 shares of the
Company's common stock to be issued. These warrants are execisable for up to two
years after the issue date at a price equal to the average trading price of the
Company's stock for the 20 day period prior to the Company's notice to extend
the loan agreement. In both credit agreements, the Company makes affirmative and
negative covenants and the agreement with the Company's bank contains certain
financial covenants. In connection with both agreements, the Company granted to
the lenders a security interest in all of its assets.
As of May 1, 1999, the Company did not have any commitments for any material
capital expenditures for 1999 or beyond. Management of the Company believes that
the existing levels of funds and its ability to borrow on its lines of credit,
combined with the Company's ability to generate cash, 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 has reviewed its computer systems to evaluate the extent to which
modifications are necessary to insure year 2000 compliance. The Company has
upgraded its accounting software for year 2000 compliance, as well as other
software programs. Remaining computer upgrades or modifications are expected to
be completed by July 1, 1999. The total expenditures to date have been minimal,
and additional expenditures needed to complete the process are not expected to
exceed $20,000. 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.
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; 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
All sales by the Company are denominated in US dollars and, accordingly, the
Company does not enter into hedging transactions with regard to any foreign
currencies. Currency fluctuations can, however, increase the price of the
Company's products to its foreign customers which can adversely impact the level
of the Company's export sales from time to time. The majority of the Company's
cash equivalents are bank accounts and money markets, and the Company does not
believe it has significant market risk exposure with regard to its investments.
9
<PAGE> 12
PART II - OTHER INFORMATION
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
None
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: May 17, 1999
------------
10
<PAGE> 13
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER 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 MARCH 31, 1999, AND STATEMENTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 31, 1999 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 772
<SECURITIES> 0
<RECEIVABLES> 1,302
<ALLOWANCES> (178)
<INVENTORY> 1,932
<CURRENT-ASSETS> 4,699
<PP&E> 1,141
<DEPRECIATION> (970)
<TOTAL-ASSETS> 8,917
<CURRENT-LIABILITIES> 4,236
<BONDS> 0
0
0
<COMMON> 4,800
<OTHER-SE> (191)
<TOTAL-LIABILITY-AND-EQUITY> 4,609
<SALES> 1,519
<TOTAL-REVENUES> 1,521
<CGS> 1,069
<TOTAL-COSTS> 1,069
<OTHER-EXPENSES> 875
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> (453)
<INCOME-TAX> (70)
<INCOME-CONTINUING> (383)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (383)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
