<PAGE> 1
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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 DECEMBER 31, 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: 0-26156
NOVADIGM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3160347
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
185 BERRY STREET, SUITE 3515, SAN FRANCISCO, CA 94107
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 541-8420
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. Yes [X] No [ ]
On December 31, 1996, there were 17,508,734 shares of the Registrant's
Common Stock outstanding.
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<PAGE> 2
NOVADIGM, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I.... FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 1996 and
March 31, 1996........................................................ 3
Condensed Consolidated Statements of Operations for the three-month and
nine-month periods ended December 31, 1996 and December 31, 1995...... 4
Condensed Consolidated Statements of Cash Flows for the nine-month
periods ended December 31, 1996 and December 31, 1995................. 5
Notes to Condensed Consolidated Financial Statements.................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 7
PART II. OTHER INFORMATION....................................................... 11
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES.......................................................................... 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOVADIGM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
MARCH
DECEMBER 31, 31,
1996 1996
------------ --------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents............................................ $ 7,178 $ 13,361
Short-term marketable securities..................................... 19,258 14,827
Accounts receivable.................................................. 6,383 7,883
Prepaid expenses and other assets.................................... 1,324 1,057
-------- --------
Total current assets....................................... 34,143 37,128
Property and equipment, net.......................................... 1,729 1,302
Long-term marketable securities...................................... 3,195 11,428
Other assets......................................................... 510 274
-------- --------
$ 39,577 $ 50,132
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other liabilities............................... $ 4,069 $ 3,101
Deferred revenue..................................................... 1,087 4,196
-------- --------
Total current liabilities.................................. 5,156 7,297
Long-term deferred revenue........................................... 196 313
Stockholders' equity:
Preferred stock: 5,000 shares authorized and no shares
outstanding..................................................... -- --
Common stock: 30,000 shares authorized; 17,509 shares outstanding
at December 31, 1996 and 17,402 shares outstanding at March 31,
1996............................................................ 11 11
Additional paid-in capital...................................... 65,125 64,552
Cumulative translation adjustment............................... (148) (12)
Accumulated deficit............................................. (30,763) (22,029)
-------- --------
Total stockholders' equity................................. 34,225 42,522
-------- --------
$ 39,577 $ 50,132
======== ========
</TABLE>
See accompanying notes.
3
<PAGE> 4
NOVADIGM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS FOR THE NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Licenses.......................................... $ 2,933 $ 4,747 $ 8,098 $12,965
Services.......................................... 2,731 2,250 7,679 3,865
------- ------- ------- -------
Total revenues.......................... 5,664 6,997 15,777 16,830
OPERATING EXPENSES:
Cost of services.................................. 1,586 891 4,925 1,393
Sales and marketing............................... 4,409 2,789 11,985 7,899
Research and development.......................... 1,580 1,085 4,436 3,134
General and administrative........................ 1,384 1,125 3,949 2,291
------- ------- ------- -------
Total operating expenses................ 8,959 5,890 25,295 14,717
------- ------- ------- -------
Operating income (loss)........................... (3,295) 1,107 (9,518) 2,113
Interest income, net.............................. 378 545 1,255 939
------- ------- ------- -------
Income (loss) before provision for income taxes... (2,917) 1,652 (8,263) 3,052
Provision for income taxes........................ 1 60 20 96
------- ------- ------- -------
Net income (loss)................................. $(2,918) $ 1,592 $(8,283) $ 2,956
======= ======= ======= =======
Net income (loss) per common share................ $ (0.17) $ 0.09 $ (0.48) $ 0.17
======= ======= ======= =======
Weighted average common and common equivalent
shares.......................................... 17,415 18,713 17,416 17,718
======= ======= ======= =======
</TABLE>
See accompanying notes.
4
<PAGE> 5
NOVADIGM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
DECEMBER 31,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................... $ (8,283) $ 2,956
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization expense.............................. 701 337
Decrease (increase) in accounts receivable......................... 1,500 (1,402)
Increase in prepaid expenses and other assets...................... (267) (899)
Increase in other assets........................................... (236) (158)
Increase in accounts payable and accrued liabilities............... 968 1,149
Increase (decrease) in deferred revenue............................ (3,226) 3,981
-------- --------
Net cash provided by (used in) operating activities.................. (8,843) 5,964
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................................. (1,128) (1,065)
Purchases of marketable securities................................... (15,917) (19,547)
Proceeds from maturity of marketable securities...................... 19,719 --
-------- --------
Net cash provided by (used in) investing activities.................. 2,674 (20,612)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of issuance costs............ 911 32,422
Proceeds from loan repayment......................................... 99 --
Purchase of treasury stock........................................... (888) --
-------- --------
Net cash provided by financing activities............................ 122 32,422
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.............................. (136) (53)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................. (6,183) 17,721
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD............. 13,361 1,312
-------- --------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD................... $ 7,178 $ 19,033
======== ========
</TABLE>
See accompanying notes.
5
<PAGE> 6
NOVADIGM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared by Novadigm, Inc. (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (the "Commission").
Certain information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of the Company's management, the statements include all adjustments
(which are of a normal and recurring nature) necessary for the fair presentation
of the financial information set forth therein. These financial statements
should be read in conjunction with the Company's audited consolidated financial
statements included within the Company's Form 10-K filed with the Commission on
June 28, 1996 (Reg. No. 0-26156). The interim results presented herein are not
necessarily indicative of the results of operations that may be expected for the
full fiscal year ending March 31, 1997, or any other future period.
2. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average number
of outstanding shares of common stock and common stock equivalents from
outstanding stock options (when dilutive using the treasury stock method).
Common equivalent shares were excluded from the calculations of loss per share
in the fiscal 1997 periods because the effect of including such shares in the
computation would be anti-dilutive. Primary and fully diluted earnings per
common share were substantially the same in all periods presented.
3. UNITED STATES INITIAL PUBLIC OFFERING
In July of 1995, the Company completed a public offering in the United
States of 2,875,000 shares of common stock at $15 per share (which included
500,000 shares sold by stockholders), resulting in net proceeds to the Company
of approximately $32.2 million after offering costs. The Company's shares trade
on the Nasdaq National Market.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information below, which anticipates the Company's results of
operations for fiscal periods after the quarter ended December 31, 1996,
contains forward-looking statements that involve a number of risks and
uncertainties. The Company's quarterly operating results have fluctuated
significantly in the past, and may fluctuate in the future, due to a number of
factors, including the number, size and timing of customer orders, the timing
and market acceptance of the Company's new products, the level and pricing of
international sales, foreign currency exchange rates, changes in the level of
operating expenses, technological advances and new product introductions by the
Company's competitors and competitive conditions in the industry. In addition,
the sales cycle for the Company's products is lengthy and unpredictable
depending upon the interest of the prospective customer in the Company's
products, the size of the order, the decision-making and acceptance procedures
within the customer's organization, the complexity of implementation and other
factors. The Company's operating results may also vary significantly due to
seasonal trends, as a result of efforts by the Company's direct sales personnel
to meet annual quotas, lower international revenues in the summer months when
many European businesses experience lower sales, the establishment of calendar
year capital budgets by prospective customers, as well as other factors.
RESULTS OF OPERATIONS
The Company generates revenues principally from licensing the rights to use
its software products to end users and from sublicense fees received from
resellers. The Company also generates service revenues from consulting and
training activities performed for license customers and maintenance revenues
from support and software update rights.
For the periods indicated, the following table sets forth the percentage of
total revenue represented by the respective line items in the Company's
condensed consolidated statements of operations (unaudited):
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------- ---------------
1996 1995 1996 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
REVENUES:
Licenses.......................................... 51.8% 67.8% 51.3% 77.0%
Services.......................................... 48.2 32.2 48.7 23.0
----- ----- ----- -----
100.0 100.0 100.0 100.0
----- ----- ----- -----
OPERATING EXPENSES:
Cost of services.................................. 28.0 12.7 31.2 8.3
Sales and marketing............................... 77.8 39.9 76.0 46.9
Research and development.......................... 27.9 15.5 28.1 18.6
General and administrative........................ 24.5 16.1 25.0 13.6
----- ----- ----- -----
Total operating expenses.................. 158.2 84.2 160.3 87.4
----- ----- ----- -----
Operating income (loss)............................. (58.2) 15.8 (60.3) 12.6
----- ----- ----- -----
Interest income, net................................ 6.7 7.8 7.9 5.6
----- ----- ----- -----
Income (loss) before provision for income taxes..... (51.5) 23.6 (52.4) 18.2
Provision for income taxes.......................... -- 0.9 0.1 0.6
----- ----- ----- -----
Net income (loss)................................... (51.5)% 22.7% (52.5)% 17.6%
----- ----- ----- -----
</TABLE>
Total revenues for the quarter ended December 31, 1996 were $5,664,000
compared to $6,997,000 for the same quarter of the previous year. The lower
revenues were due to $1,814,000 lower license revenues, partially offset by
$481,000 higher service revenues. Total revenues for the nine months ended
December 31, 1996 were $15,777,000 compared to $16,830,000 for the same
nine-month period of the previous year. The lower total revenues were due to
$4,867,000 lower license revenues, partially offset by $3,814,000 higher service
revenues
7
<PAGE> 8
associated with the increasing contribution of maintenance revenues from a
larger installed base of customers and from professional services rendered to
customers.
License revenues were $2,933,000 or 52% of total revenues and $8,098,000 or
51% of total revenues for the three and nine-month periods ended December 31,
1996, respectively, compared to $4,747,000 or 68% of total revenues and
$12,965,000 or 77% of total revenues for the same periods last year,
respectively. The lower license revenues were primarily attributable to; the
timing of guaranteed sublicense fees from the non-exclusive OEM and distribution
agreement with Amdahl Corporation ("Amdahl"), which provided no such fees in the
current fiscal year, and $1,850,000 and $5,550,000 in the three and nine-month
periods ended December 31, 1995, respectively, the lengthening of direct sales
cycles and smaller initial contract sizes committed to by customers caused by
competitive factors in the marketplace, as well as long lead times required to
close the larger, more complex indirect sales transactions. Revenues from
indirect channels were 38% of total revenues for the three-month period ending
December 31, 1996 and 30% for the comparable period of the prior year. The
increase in revenues from indirect channels as a percentage of total revenues
for the three month period this year was due to lower total revenues. Indirect
channels provided 41% of total revenues for the nine-month period ended December
31, 1996 and 43% for the comparable period of the prior year. The decrease in
revenues from indirect channels as a percentage of total revenues for the
nine-month period ending December 31, 1996 over the comparable period of the
prior year was primarily due to revenue provided by the Amdahl agreement in the
prior year. The Company anticipates revenues from indirect channels to grow as a
percent of total revenues as the Company develops the indirect channel.
Service revenues were $2,731,000 and $7,679,000 for the three and
nine-month periods ended December 31, 1996, respectively, compared to $2,250,000
and $3,865,000 for the three and nine-month periods ended December 31, 1995,
respectively. The higher service revenue for the three and nine-month periods
ended December 31, 1996 compared to the same periods last year were due
primarily to the Company's agreement with International Business Machines
Corporation ("IBM") signed in December 1995, which provides payment for ongoing
services through the fourth quarter of fiscal 1997. For the three and nine-month
periods ended December 31, 1996, service revenues provided by the IBM agreement
were $1,267,000 and $3,801,000, respectively. In addition, the higher service
revenues reflect higher maintenance fees associated with a growing installed
base and higher fees from services performed by the Company's professional
services staff. The Company expects maintenance revenues to grow moderately
throughout the remainder of the current fiscal year, however, consulting
revenues will decline significantly upon the expiration of the IBM contract.
Cost of services includes the direct and indirect costs of providing
training, technical support and consulting services to the Company's customers.
Cost of services consists primarily of payroll and benefits for field engineers
and support personnel, other related overhead and third-party consulting fees.
Cost of services were $1,586,000 or 58% of service revenues for the quarter
ended December 31, 1996, and $4,925,000 or 64% of service revenues for the first
nine months ended December 31, 1996 compared to $891,000 or 40% of service
revenues and $1,393,000 or 36% of service revenues for the same periods last
year, respectively. The higher cost of services in the three and nine-month
periods ended December 31, 1996, as compared to the same periods for the prior
year, was primarily due to the increase in the professional services staff and
the related cost of training new personnel resulting from the Company's decision
in the third quarter of the last fiscal year to formalize its professional
services organization to support the anticipated growth in the customer base.
The Company expects cost of services as a percent of service revenues to remain
approximately at the same percentage rate throughout fiscal 1997. The cost of
services as a percentage of service revenues is expected to increase after the
agreement with IBM expires in March 1997.
Sales and marketing expenses consist primarily of salaries, related
benefits, commissions, travel and other costs associated with the Company's
sales and marketing efforts. Sales and marketing expenses were $4,409,000 or 78%
of total revenues and $11,985,000 or 76% of total revenues for the three and
nine-month periods ended December 31, 1996, respectively. This compares to
$2,789,000 or 40% of total revenues and $7,899,000 or 47% of total revenues for
the same periods last year, respectively. Employees were added to the sales and
marketing departments accounting for the higher payroll expense and related
higher travel expense
8
<PAGE> 9
in the fiscal 1997 first and second quarters. The additional personnel were
hired to develop the indirect distribution channels, including opening
distribution in Japan and in Latin America, and to expand the direct sales and
pre-sales field engineering staffs in both the U.S. and in Europe. During the
three month period ended December 31, 1996, the Company held a series of
seminars performed across the country. The cost of advertising and performing
the seminars was charged to the period. The Company is developing a plan to
reduce operating expenses. The plan may result in a restructuring charge in a
subsequent quarter. The Company does not expect sales and marketing expenses to
increase for the remainder of the fiscal year.
Research and development expenses consist primarily of salaries, related
benefits, consultant fees and other costs associated with the Company's research
and development efforts. Research and development expenses were $1,580,000 or
28% of total revenues and $4,436,000 or 28% of total revenues in the three and
nine-month periods ended December 31, 1996, respectively, compared to $1,085,000
or 16% of total revenues and $3,134,000 or 19% of total revenues for the same
periods last year, respectively. The higher expenses for the three and
nine-month periods of this fiscal year were primarily due to the hiring of
additional employees in the department to support ongoing and new product
development, the development of Enterprise Desktop Manager(TM) ("EDM") for
different platforms, the development of EDM "Adapters" and research and
development relating to the Company's intranet and internet activities.
Additional employees were also hired within the quality assurance and
documentation departments. The Company will continue to channel resources into
product development but does not anticipate further increases in research and
development expenses in the subsequent quarter.
General and administrative expenses consist primarily of salaries, related
benefits, travel and fees for professional services such as legal and
accounting. General and administrative expenses were $1,384,000 or 25% of total
revenues and $3,949,000 or 25% of total revenues for the three and nine-month
periods ended December 31, 1996, respectively, compared to $1,125,000 or 16% of
total revenues and $2,291,000 or 14% of total revenues for the same period of
last year, respectively. The primary reason for the higher expenses were due to
the hiring of additional employees in connection with building the
infrastructure for the anticipated growth of the Company's business, including
increases in accounting, purchasing and data processing departments, and higher
expenses for professional fees.
Net interest was $378,000 and $1,255,000 for the three and nine-month
periods ending December 31, 1996, respectively, compared to $545,000 and
$939,000 for the same periods of last year, respectively. Interest income is
comprised primarily of interest earned on the Company's cash equivalents and
marketable securities. Interest income decreased for the three month period
ended December 31, 1996 compared to the same period in the prior year due to
lower average cash and securities balances in the current year. Interest income
increased for the nine-month period ended December 31, 1996 over the comparable
period for the prior year as a result of interest income earned on the
investment of the proceeds from the sale of common stock in the Company's
initial public offering in July 1995. Interest income is offset by interest
expense and bank fees.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations for the nine months ended December 31, 1996 was
$8,843,000 compared to cash provided by operations of $5,964,000 for the same
period last year. This increase in cash used in operations of $14,807,000 was
primarily due to the reported net loss of $8,283,000 compared to a net profit of
$2,956,000 last year, and the decrease in deferred revenue of $3,226,000 during
the current nine-month period compared to an increase in deferred revenue of
$3,981,000 in the same period last year. The decrease in operating cash flows
was partially offset by a decrease in accounts receivable in fiscal 1997.
As of December 31, 1996, the Company had working capital of $28,987,000,
including $26,436,000 of cash and short-term marketable securities. In addition,
at December 31, 1996, the Company had invested $3,195,000 in long-term
marketable securities. The Company has a revolving line of credit which permits
unsecured borrowings up to $2,000,000 through August 1997. As of December 31,
1996, $360,000 was outstanding under the line of credit and the Company was in
compliance with the terms of the agreement.
9
<PAGE> 10
Property and equipment expenditures for the nine months ended December 31,
1996 were $1,128,000. The Company has no material commitments to purchase
property and equipment and expects to purchase property and equipment throughout
the remainder of the year at a rate consistent with the first nine months of
fiscal 1997.
During the first quarter of fiscal 1997, the Board of Directors approved
the repurchase of up to 500,000 shares of the Company's stock on the open
market. During the quarter ended December 31, 1996, $888,000 was expended to
repurchase common shares. The Company expects to purchase additional shares of
its common stock throughout the remainder of the fiscal year.
Although it is difficult for the Company to predict future liquidity
requirements with certainty, the Company believes that its existing cash and
marketable securities balances, together with cash from operations and funds
available under the existing line of credit, will be adequate to finance its
operations for the next twelve months.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 Financial Data Schedule
(b) The Company has not filed any Form 8-K during the quarter ended
December 31, 1996.
11
<PAGE> 12
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.
Dated: February 14, 1997 NOVADIGM, INC.
By: /s/ WALLACE D. RUIZ
--------------------------------------
Wallace D. Ruiz
Vice President & Chief Financial
Officer
(Principal Financial and Chief
Accounting Officer)
12
<PAGE> 13
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 7,178
<SECURITIES> 19,258
<RECEIVABLES> 6,383
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,143
<PP&E> 3,399
<DEPRECIATION> 1,670
<TOTAL-ASSETS> 39,577
<CURRENT-LIABILITIES> 5,156
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> 34,214
<TOTAL-LIABILITY-AND-EQUITY> 39,577
<SALES> 0
<TOTAL-REVENUES> 5,664
<CGS> 0
<TOTAL-COSTS> 8,959
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (378)
<INCOME-PRETAX> (2,917)
<INCOME-TAX> 1
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,918)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
