<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
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 0-28290
AKSYS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 36-3890205
(State of incorporation) (I. R. S. Employer
Identification No.)
Two Marriott Drive, Lincolnshire, Illinois 60069
(address of principal executive offices) (Zip Code)
Registrant's telephone number 847-229-2020
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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
The number of shares of Common Stock, $.01 Par Value, outstanding as of April
24, 2000 was 16,769,034.
<PAGE>
AKSYS, LTD.
FORM 10-Q
For the Quarterly Period Ended March 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART 1 - FINANCIAL INFORMATION Page
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 2000 (Unaudited)
and December 31, 1999........................................................................... 3
Consolidated Statements of Operations for the Three-Month
Periods Ended March 31, 2000 and 1999 (Unaudited)............................................... 4
Consolidated Statements of Cash Flows for the Three-Month Periods
Ended March 31, 2000 and 1999 (Unaudited)........................................................ 5
Notes to Consolidated Financial Statements (Unaudited)........................................... 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................................................. 8-10
Item 3. Quantitative and Qualitative Disclosures About Market Risk....................................... 11
PART II - OTHER INFORMATION
Item 2. Changes in Securities ........................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders ............................................. 11
Item 6. Exhibits and Reports on Form 8-K................................................................. 12
SIGNATURES................................................................................................ 12
EXHIBITS.................................................................................................. 13
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
March 31, December 31,
Assets 2000 1999
- --------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,103,242 $ 4,322,635
Short-term investments 6,507,160 10,518,853
Interest receivable 205,588 298,567
Prepaid expenses 188,361 43,115
Other current assets 96,714 49,542
- --------------------------------------------------------------------------------
Total current assets 11,101,065 15,232,712
- --------------------------------------------------------------------------------
Long-term investments 780,000 780,000
Property and equipment, net 2,378,263 2,564,075
Other assets 210,618 234,647
- --------------------------------------------------------------------------------
$14,469,946 $18,811,434
================================================================================
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,405,554 $ 1,028,662
Accrued liabilities 332,990 622,359
Deferred revenue 3,215,397 4,390,687
- --------------------------------------------------------------------------------
Total current liabilities 4,953,941 6,041,708
- --------------------------------------------------------------------------------
Other long-term liabilities 150,304 146,345
- --------------------------------------------------------------------------------
Total liabilities 5,104,245 6,188,053
- --------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, par value $.01 per
share, 1,000,000 shares authorized,
0 shares issued and outstanding in
2000 and 1999 - -
Common stock, par value $.01 per share,
50,000,000 shares authorized, 15,252,337
and 15,076,996 shares issued and
outstanding in 2000 and 1999, respectively 152,523 150,770
Additional paid-in capital 70,828,660 70,448,778
Accumulated other comprehensive income 13,030 13,030
Deficit accumulated during development stage (61,628,512) (57,989,197)
- --------------------------------------------------------------------------------
Total stockholders' equity 9,365,701 12,623,381
- --------------------------------------------------------------------------------
$14,469,946 $18,811,434
================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Operations
For the Three-Month Periods Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative
from
Jan. 18, 1991
Three months ended Mar. 31, (inception)
------------------------------- through
2000 1999 Mar. 31, 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Joint development income $ 1,175,290 $ - $ 11,784,603
- --------------------------------------------------------------------------------
Operating expenses:
Research and development 3,795,912 3,448,867 59,119,342
Business development 179,253 353,768 5,052,740
General and administrative 1,029,808 956,375 16,473,881
- --------------------------------------------------------------------------------
Total operating expenses 5,004,973 4,759,010 80,645,963
- --------------------------------------------------------------------------------
Operating loss (3,829,683) (4,759,010) (68,861,360)
- --------------------------------------------------------------------------------
Other income (expense):
Interest income 190,368 244,580 7,191,588
Interest expense - - (23,591)
Other income - - 67,884
- --------------------------------------------------------------------------------
190,368 244,580 7,235,881
- --------------------------------------------------------------------------------
Net loss $(3,639,315) $(4,514,430) $(61,625,479)
- --------------------------------------------------------------------------------
Net loss per share, basic
and diluted $ (0.24) $ (0.30) $ (9.71)
- --------------------------------------------------------------------------------
Weighted average shares
outstanding 15,219,289 14,808,540 6,346,784
================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative
from
Jan. 18, 1991
(inception)
through
2000 1999 March 31, 2000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(3,639,315) $(4,514,430) $ (61,625,479)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 219,238 270,350 3,798,362
Adjustment of fixed asset
carrying value - - 980,912
Compensation expense related to
stock options - - 3,240
Issuance of stock in exchange
for services rendered - - 378,305
Changes in assets and liabilities:
Interest receivable 92,979 (53,904) (205,588)
Prepaid expenses (145,246) (44,315) (188,631)
Other current assets (47,172) (96,530) (96,714)
Accounts payable 376,892 (507,314) 1,405,554
Deferred revenue (1,175,290) - 3,215,397
Accrued liabilities (289,369) (289,654) 489,902
Other 3,959 (14,882) (538,272)
- --------------------------------------------------------------------------------
Net cash used in operating activities (4,603,324) (5,250,679) (52,383,012)
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of
investments 4,011,693 5,500,000 113,855,562
Purchases of investments - (1,007,403) (121,150,265)
Purchases of property and equipment (9,397) (274,716) (6,692,532)
Organizational costs incurred - - (19,595)
- --------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities 4,002,296 4,217,881 (14,006,830)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of common
stock, net of issuance costs 381,635 275,147 58,260,509
Proceeds from issuance of
preferred stock - - 12,336,096
Proceeds from issuance of
note payable - - 41,792
Repayment of notes payable - - (41,792)
Repayment of lease obligation - - (103,521)
- --------------------------------------------------------------------------------
Net cash provided by financing
activities 381,635 275,147 70,493,084
- --------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (219,393) (757,651) 4,103,242
Cash and cash equivalents at beginning
of period 4,322,635 8,671,576 -
- --------------------------------------------------------------------------------
Cash and cash equivalents at end
of period $ 4,103,242 $ 7,913,925 $ 4,103,242
================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Notes to Consolidated Financial Statements - Unaudited
(1) Basis for Presentation
The consolidated financial statements of Aksys, Ltd. and Subsidiary (the
"Company") presented herein are unaudited, other than the consolidated
balance sheet at December 31, 1999, which is derived from audited financial
statements. The interim financial statements and notes thereto have been
prepared pursuant to the rules of the Securities and Exchange Commission
for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. In the opinion of management, the interim financial statements
reflect all adjustments consisting of normal, recurring adjustments
necessary for a fair statement of the results for interim periods. The
operations for the three-month period ended March 31, 2000 are not
necessarily indicative of results that ultimately may be achieved for the
entire year ending December 31, 2000. These financial statements should be
read in conjunction with the financial statements and notes thereto for the
year ended December 31, 1999, included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 30,
2000.
(2) Revenue Recognition
On June 21, 1999, the Company entered into a co-development and license
agreement (the "Agreement") with Teijin Limited of Osaka, Japan. Under the
terms of the Agreement, Teijin paid $7.0 million to the Company for the
right to manufacture and sell the PHD System in Japan. The Company is also
entitled to future royalty payments from future product sales in Japan. The
$7.0 million has been recognized as revenue. Teijin also paid the Company a
$7.0 million co-development fee relating to the PHD System. Use of the
proceeds from the co-development fee is restricted to development costs
incurred on the PHD System and may not be used for other general corporate
purposes. Amounts paid under the co-development arrangement are recognized
as revenue as development costs on the PHD System are incurred. The Company
recognized $1.2 million of revenue related to co-development of the PHD
System during the quarter ended March 31, 2000.
(3) Subsequent Event
On April 11, 2000, the Company issued 1,516,697 shares its of Common Stock
in a private placement to four institutional investors, at a per share
price of $7.75, resulting in gross proceeds of $11,754,402. After offering
costs, net proceeds to the Company were approximately $11.0 million. The
Company has agreed to prepare and file a registration statement with the
Securities and Exchange Commission covering the resale of the shares sold
in the private placement by May 11, 2000.
6
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Notes to Consolidated Financial Statements - Unaudited
(4) Comprehensive Income
Other comprehensive income is comprised of the following:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
2000 1999
---- ----
<S> <C> <C>
Net loss $(3,639,315) $(4,514,430)
Foreign currency
translation adjustment 0 1,253
----------- -----------
Comprehensive income $(3,639,315) $(4,513,177)
=========== ===========
</TABLE>
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Since its inception in January 1991, the Company has been engaged in the
development of hemodialysis products and services for patients suffering from
End-Stage Renal Disease. The Company has developed the Aksys Personal
Hemodialysis PHD System (the "PHD System"), which is designed to enable patients
to perform daily hemodialysis at alternate sites, such as the patient's home.
The Company has never generated sales revenue and has incurred losses since its
inception. At March 31, 2000, the Company had a deficit accumulated during the
development stage of $61.6 million. The Company expects to incur additional
losses in the foreseeable future at least until such time, if ever, that it
obtains necessary regulatory clearances or approvals from the FDA to market the
PHD System in the United States or it is able to secure equivalent regulatory
approvals to market the PHD System in countries other than the United States.
Comparison of Results of Operations
For the quarter ended March 31, 2000, the Company reported a net loss of $3.6
million ($0.24 per share), compared with a net loss of $4.5 million ($0.30 per
share) for the quarter ended March 31, 1999. The decrease in net loss for the
quarter ended March 31, 2000, compared with the same period last year, is
primarily due to joint development income related to the co-development and
license agreement entered into with Teijin Limited during the quarter ended June
30, 1999.
Joint development income. On June 21, 1999, the Company entered into a co-
development and license agreement (the "Agreement") with Teijin Limited of
Osaka, Japan. Under the terms of the Agreement, Teijin paid $7.0 million to the
Company for the right to manufacture and sell the PHD System in Japan. The
Company is also entitled to future royalty payments from future product sales in
Japan. The $7.0 million has been recognized as revenue. Teijin also paid the
Company a $7.0 million co-development fee relating to the PHD System. Use of the
proceeds from the co-development fee is restricted to development costs incurred
on the PHD System and may not be used for other general corporate purposes.
Amounts paid under the co-development arrangement are recognized as revenue as
development costs on the PHD System are incurred. The Company recognized $1.2
million of revenue related to co-development of the PHD System during the
quarter ended March 31, 2000.
Operating expenses. Operating expenses for the quarter ended March 31, 2000 were
$5.0 million, compared with $4.8 million for the comparable period in 1999.
Research and development expenses increased $0.4 million for the quarter, to
$3.8 million, as the Company incurred costs associated with the clinical
evaluation of the PHD System.
Business development expenses decreased $0.2 million to $0.2 million during the
quarter ended March 31, 2000. The primary reason for the decrease was a
reduction in pre-commercialization activities in Europe and Japan in 2000 as
compared to 1999
General and administrative expenses remained relatively constant at $1.0 million
during the quarters ended March 31, 2000 and March 31, 1999.
8
<PAGE>
Interest income. Interest income for the quarters ended March 31, 2000 and March
31, 1999 was relatively constant, at $0.2 million for each period.
Liquidity and Capital Resources
The Company has financed its operations to date primarily through public and
private sales of its equity securities. Through March 31, 2000, the Company
received net offering proceeds from public and private sales of equity
securities of approximately $70.6 million. In addition, on April 11, 2000, the
Company completed a private placement to institutional investors of shares of
its common stock, with net proceeds to the Company of approximately $11.0
million. Since its inception in 1991 through March 31, 2000, the Company made
$6.7 million of capital expenditures and used $52.4 million in cash to support
its operations. At March 31, 2000, the Company had cash, cash equivalents and
short-term investments of $10.6 million, working capital of $6.1 million and
long-term investments of $0.8 million.
The Company expects that the majority of cash expended on operations will be
used to (i) conduct clinical studies using the PHD System, and (ii) prepare for
pre-commercialization activities of the PHD System. The Company expects to
continue to incur substantial expenses related to manufacturing scale-up and
commercialization of the PHD System and the protection of patent and other
proprietary rights. The Company believes that cash and investments as of March
31, 2000, together with net proceeds of approximately $11.0 million from the
private placement of its common stock on April 11, 2000, are sufficient to
finance the Company's operations, except for working capital needs related to
commercial production of PHD Systems, through the date the Company expects to
receive 510(k) approval of the PHD System.
Generally, the Company expects U.S. customers to purchase PHD Systems and enter
into contracts whereby the Company will provide all products and services
related to the PHD Systems for a single monthly price, which would include all
consumables, service and product support. As an alternative, U.S. customers may
enter into lease agreements for the PHD Systems, under which the single monthly
price would also include a lease payment. The Company's present
commercialization plan for markets outside of the United States is to develop a
partnership in those markets to distribute the PHD System and related
consumables and service. Financing production of the PHD System in quantities
necessary for commercialization will require a significant investment in working
capital. This need for working capital will increase to the extent that demand
for the PHD System increases. The Company would, therefore, have to rely on
sources of capital beyond cash generated from operations to finance production
of the PHD System even if the Company was successful in marketing its products
and services. The Company currently intends to finance the working capital
requirements associated with these arrangements through equipment and receivable
financing with a commercial lender. If the Company is unable to obtain such
equipment financing, it would need to seek other forms of financing, through the
sale of equity securities or otherwise, to achieve its business objectives. The
Company has not yet obtained a commitment for such equipment financing, and
there can be no assurance that the Company will be able to obtain equipment
financing or alternative financing on acceptable terms or at all.
The Company's funding needs will depend on many factors, including the timing
and costs associated with obtaining FDA clearance or approval, continued
progress in research and development, the results of clinical studies,
manufacturing scale-up, the cost involved in filing and enforcing patent claims
and the status of competitive products. In the event that the Company's plans
change, its assumptions change or prove inaccurate or it is unable to obtain
production financing on commercially reasonable
9
<PAGE>
terms, the Company could be required to seek additional financing sooner than
currently anticipated. In addition, in the future the Company will require
substantial additional financing to fund full-scale production and marketing of
the PHD System and related services. The Company has no current arrangements
with respect to sources of additional financing. There can be no assurance that
FDA clearance or approval will be obtained in a timely manner or at all or that
additional financing will be available to the Company when needed, on
commercially reasonable terms, or at all.
The Company has not generated taxable income to date. At March 31, 2000, the net
operating losses available to offset future taxable income were approximately
$64 million. Because the Company has experienced ownership changes, future
utilization of the carryforwards may be limited in any one fiscal year pursuant
to Internal Revenue Code regulations. The carryforwards expire at various dates
beginning in 2008. As a result of the annual limitation, a portion of these
carryforwards may expire before ultimately becoming available to reduce federal
income tax liabilities.
Note on Forward-Looking Information
Certain statements in this Quarterly Report on Form 10-Q and in future filings
made by the Company with the Securities and Exchange Commission and in the
Company's written and oral statements made by or with the approval of an officer
of the Company constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and the Company intends that such forward-looking
statements be subject to the safe harbors created thereby. The words "believes,"
"expects," "estimates," "anticipates," and "will be," and similar words or
expressions, identify forward-looking statements made by or on behalf of the
Company. These forward-looking statements reflect the Company's views as of the
date they are made with respect to future events and financial performance, but
are subject to many uncertainties and factors which may cause the actual results
of the Company to be materially different from any future results expressed or
implied by such forward-looking statements. Examples of such uncertainties and
factors include, but are not limited to, (i) risks related to the failure to
meet development and manufacturing milestones on a timely basis, (ii) the
Company's need to achieve manufacturing scale-up in a timely manner with its
primary manufacturing contractor and its need to provide for the efficient
manufacturing of sufficient quantities of its products, (iii) changes in GMP
requirements, (iv) the Company's need to develop the marketing, distribution,
customer service and technical support and other functions critical to the
success of the Company's business plan, (v) the uncertainty regarding the
effectiveness and ultimate market acceptance of the PHD System, the Company's
primary product in development, (vi) changing market conditions, (vii) the need
to further establish the clinical benefits of daily hemodialysis, (viii) the
capital requirements necessary to fund the development and commercialization of
the Company's products and services and effectively compete with its
competitors, many of whom have substantially greater resources, (ix) the
potential adverse impact of possible changes to Medicare reimbursement policies
and rates (x) the Company's dependence on key personnel and on patents and
proprietary information, and (xi) risks related to the regulatory approval
process. Regulatory risks include the timing, scope and results of the Company's
clinical trials, and whether and when the Company will obtain clearance from the
FDA of a 510(k) pre-market notification (and equivalent regulatory clearances
for Europe and Japan), and what additional clinical and other data the Company
might have to obtain in connection with seeking such clearances. The Company
does not undertake any obligation to update or revise any forward-looking
statement made by it or on its behalf, whether as a result of new information,
future events, or otherwise.
10
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company's market risk during the
three-month period ended March 31, 2000. For additional information refer to
Item 7A in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
On April 11, 2000, the Company completed a private placement to four
institutional investors of 1,516,697 shares of its common stock. The gross
proceeds of the offering were approximately $11,750,000. The shares were sold
with the assistance of U.S. Bancorp Piper Jaffray ("Piper Jaffray"). As the
placement agent, Piper Jaffray received a fee of approximately $700,000, plus
reimbursement of expenses of approximately $50,000.
The shares of common stock were sold in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933. The private
placement was made without any general solicitation or advertising and each
investor represented to the Company in writing that it was an accredited
investor within the meaning of Rule 501(a) of Regulation D.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on April 20, 2000. The
stockholders elected one director to serve for a term ending in 2003 and until
his successor is elected. The stockholders present in person or by proxy cast
the following numbers of votes in connection with the election of a director,
resulting in the election of the nominee of the Company:
Votes For Votes Against Abstain/Non-Vote
--------- ------------- ----------------
Richard B. Egen 13,559,078 75,368 0
The names of the remaining directors who did not stand for election at the
Annual Meeting and whose terms of office as directors continue after such
meeting are William C. Dow, Peter H. McNerney, W. Dekle Rountree, Jr. and
Bernard R. Tresnowski. K. Shan Padda served as a director until the Annual
Meeting, but decided not to stand for re-election.
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
(3.1) Restated Certificate of Incorporation/(1)/
(3.2) Amended and Restated Bylaws/(1)/
(27) Financial Data Schedule
</TABLE>
- ------------
/(1)/ Incorporated by reference to Aksys, Ltd.'s Registration Statement on Form
S-1 (Registration No. 333-02492)
(b) Reports on Form 8-K
On April 19, 2000, the Company filed a Current Report on Form 8-K, reporting the
details of a private placement of shares of its Common Stock. Details of the
private placement are provided in Item 2 above.
Signatures
Pursuant to 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.
Aksys, Ltd.
Date: May 4, 2000 By: /s/ William C. Dow
----------- ------------------------------------
William C. Dow
President, Chief Executive Officer
and Director
Date: May 4, 2000 By: /s/ Steven A. Bourne
----------- ------------------------------------
Steven A. Bourne
Controller
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
March 31, 2000 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,103
<SECURITIES> 7,287
<RECEIVABLES> 206
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,101
<PP&E> 5,786
<DEPRECIATION> 3,408
<TOTAL-ASSETS> 14,470
<CURRENT-LIABILITIES> 4,954
<BONDS> 0
0
0
<COMMON> 153
<OTHER-SE> 9,213
<TOTAL-LIABILITY-AND-EQUITY> 14,470
<SALES> 0
<TOTAL-REVENUES> 1,175
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,005
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,639)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,639)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,639)
<EPS-BASIC> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
