SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended
March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the Transition Period From
____________ to ____________
Commission file number 0-19688
DESTRON FEARING CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 84-1079037
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
490 Villaume Avenue
South St. Paul, MN 55075
(612) 455-1621
(Address of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
As of May 10, 1996, there were 11,640,232 outstanding shares of Common Stock.
DESTRON FEARING CORPORATION
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
Page
PART I -- FINANCIAL INFORMATION
Item 1 -- Financial Statements 3
Item 2 -- Management's Discussion and Analysis or Plan
of Operation 8
PART II -- OTHER INFORMATION
Item 1 -- Legal Proceedings 11
Item 6 -- Exhibits and Reports on Form 8-K 12
Signatures 12
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
DESTRON FEARING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1996 AND SEPTEMBER 30, 1995
(in thousands, except share and per share amounts)
======================================================================
ASSETS March 31, September 30,
1996 1995
======== ========
CURRENT ASSETS:
Cash $ 37 $ 62
Current portion of royalties receivable -- 402
Accounts receivable, net 3,245 1,823
Inventories, net 9,673 6,327
Prepaid expenses and other current assets 53 61
-------- --------
Total current assets 13,008 8,675
PROPERTY AND EQUIPMENT, net 2,186 2,131
INVESTMENT IN JOINT VENTURE 229 211
GOODWILL, net 2,127 2,168
OTHER ASSETS, net 382 455
-------- --------
$ 17,932 $ 13,640
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ 2,191 $ 438
Accounts payable 6,637 4,928
Accrued liabilities 579 443
Current portion of long-term obligations 306 1,446
-------- --------
Total current liabilities 9,713 7,255
LONG-TERM OBLIGATIONS,
net of current portion 1,051 281
-------- --------
Total liabilities 10,764 7,536
-------- --------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value;
20,000,000 shares authorized;
11,618,000 and 10,982,000 shares
issued and outstanding, respectively 116 110
Additional paid-in capital 16,671 14,651
Accumulated deficit (9,619) (8,657)
-------- --------
Total shareholders' equity 7,168 6,104
-------- --------
$ 17,932 $ 13,640
======== ========
The accompanying notes are an integral part
of these consolidated balance sheets.
DESTRON FEARING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTER AND SIX MONTHS ENDED MARCH 31, 1996 AND 1995
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
======================================================================================
Quarter Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
1996 1995 1996 1995
======== ======== ======== ========
<S> <C> <C> <C> <C>
NET REVENUE $ 4,206 $ 4,126 $ 6,682 $ 6,202
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales 2,946 2,438 4,577 3,773
Selling, general and administrative 1,570 1,096 2,559 2,036
Research and development 267 302 480 523
Interest expense and other 83 64 28 132
-------- -------- -------- --------
Total costs and expenses 4,866 3,900 7,644 6,464
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS (660) 226 (962) (262)
PROVISION FOR INCOME TAXES -- -- -- --
-------- -------- -------- --------
NET INCOME (LOSS) ($ 660) $ 226 ($ 962) ($ 262)
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE ($ 0.06) $ 0.02 ($ 0.08) ($ 0.03)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 11,612 10,654 11,399 10,295
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
DESTRON FEARING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND 1995
(in thousands)
===============================================================================
Six Months Ended
March 31,
------------------
1996 1995
======= =======
OPERATING ACTIVITIES:
Net loss ($ 962) ($ 262)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 237 195
Equity in income loss of joint venture and other (18) (1)
Changes in operating items:
Accounts receivable (1,422) (1,305)
Inventories (3,346) (935)
Prepaid expenses and other current assets 8 (15)
Royalties receivable 402 221
Accounts payable and accrued liabilities 1,845 1,311
------- -------
Net cash used in operating activities (3,256) (791)
------- -------
INVESTING ACTIVITIES:
Purchases of fixed assets (189) (218)
Change in other assets 11 16
Capitalized design costs -- (125)
------- -------
Net cash used in investing activities (178) (327)
------- -------
FINANCING ACTIVITIES:
Issuance of common stock, net 2,026 223
Borrowings under long-term obligations 875 --
Repayments of long-term obligations (1,245) (93)
Net borrowings on bank line of credit 1,753 947
------- -------
Net cash provided by financing activities 3,409 1,077
------- -------
NET DECREASE IN CASH (25) (41)
CASH, beginning of period 62 42
------- -------
CASH, end of period $ 37 $ 1
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 173 $ 163
======= =======
The accompanying notes are an integral part
of these consolidated financial statements.
DESTRON FEARING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996 and 1995
(unaudited)
- -------------------------------------------------------------------------------
1. GENERAL
The information included in the accompanying consolidated interim financial
statements is unaudited and should be read in conjunction with the audited
consolidated financial statements and notes thereto contained in the most recent
Annual Report on Form 10-KSB filed for Destron Fearing Corporation and its
subsidiaries (collectively, the "Company"). In the opinion of management, all
adjustments, consisting of normal recurring items, necessary for a fair
presentation of the financial position and results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the entire fiscal year.
2. INVENTORIES
Inventories are valued at the lower of first in, first out cost or market, and
consist of the following (in thousands):
March 31, 1996 September 30, 1995
-------------- ------------------
Raw materials $4,018 $2,396
Finished goods 5,655 3,931
------- -------
Total inventories $9,673 $6,327
Inventory increased at March 31, 1996 from September 30, 1995, because of
Schering-Plough Animal Health's (a customer) suspension of purchases for an
indefinite period to allow it to sell its existing inventory. Additionally,
because of previous commitments, the Company was unable to discontinue purchases
from its suppliers.
(See notes to Consolidated Financial Statements in the 1995 Annual Report for
further discussion of the Company's relationship with Schering-Plough.)
3. PRIVATE PLACEMENT OF COMMON STOCK
In December 1995, the Company completed a private placement of 625,000 shares of
common stock for proceeds of $2.0 million. A portion of these proceeds was used
to retire an outstanding $600,000 term loan, with the remaining proceeds
expected to be used to finance working capital needs and new product
development.
4. LEGAL PROCEEDINGS
Destron is a party to litigation in which it asserts infringement by a
competitor of one of the Company's patents related to certain of its technology.
The defendants assert that the patent is not infringed, is invalid and is
unenforceable. The defendants also have asserted antitrust and unfair
competition claims against the Company and Hughes Aircraft Company.
The trial in the litigation commenced on January 8, 1996. On January 29, 1996,
the jury in the trial returned a verdict in favor of the Company and found that
the defendants had willfully infringed on the Company's patent and awarded
damages of approximately $444,000. However, the defendants have announced that
they will appeal the verdict, although as of the date of this Quarterly Report
on Form 10-QSB, no appeal had been filed to the Company's knowledge. The
defendants have until thirty (30) days after the District Court's final judgment
(which was rendered on April 25, 1996) to file an appeal. While management and
its legal counsel continue to believe that the ultimate outcome of this
litigation will not have a significant adverse impact on the Company's future
financial position, cash flows or results of operations, there can be no
assurance of the ultimate outcome of the litigation. The Company incurred legal
expenses of $268,000 and $942,000, respectively, during the second quarter and
six-month periods ended March 31, 1996.
5. PRIVATE PLACEMENT OF DEBT
In March 1996, the Company borrowed a total of $875,000 (and an additional
$25,000 in April 1996) from private investors through the issuance of unsecured
notes due October 21, 1997 and bearing interest at the rate of 11% per annum. As
part of the transaction, the Company issued warrants to the noteholders to
purchase a total of 147,539 shares of the Company's common stock. The warrants
are exercisable at $4.8125 per share for a term of five (5) years beginning
March 21, 1996. The value of these warrants at the time of issuance was not
deemed to be significant. Funds received from these notes were used to retire
indebtedness that was due on March 21, 1996, and to provide additional working
capital for operations.
6. REAL ESTATE LOAN
In April 1996, the Company borrowed $658,000 from a commercial bank through the
issuance of a promissory note collateralized by its real estate. The note bears
interest at 8.98% and is due on April 8, 2001. The terms of the note call for 59
monthly payments of $6,668 and a final balloon payment of $533,372. The proceeds
of the loan were used to retire a previous bank loan and industrial development
revenue bonds, both of which were collateralized by real estate. The remaining
proceeds were used to provide additional working capital for operations.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
Net revenue for the quarter ended March 31, 1996 of $4,206,000 was 2% greater
than the $4,126,000 reported for the comparable quarter of fiscal 1995. For the
six-month period, fiscal 1996 revenues were $6,682,000, which represented an 8%
increase over the $6,202,000 fiscal 1995 amount. Revenue from the Radio
Frequency Identification Devices (RFID) increased 11% in the current quarter and
22% for the six-month period when compared to fiscal 1995. The RFID revenue in
the second quarter of fiscal 1996 reflected significant increases in shipments
to Europe and the fisheries industries with offsetting reductions in other
United States shipments. Visual identification revenue was lower than last
year's revenue in both the second quarter (-8%) and six-month period (-7%) of
fiscal 1996 because of a general decline in the beef producing industry caused
by higher grain prices and lower beef prices.
Cost of sales of $2,946,000 for the second quarter and $4,577,000 for the
six-month period ended March 31, 1996 were both 21% higher than for the
comparable periods of fiscal 1995. These increases were attributable to
nominally increased sales volumes during the respective periods and to sales of
electronic readers at low or negative gross profit margins. As a result, the
Company's gross profit percentage declined to 30% during the second quarter of
fiscal 1996 from 41% in the comparable quarter of fiscal 1995 and to 32% for the
six-month period from 39% in fiscal 1995.
Selling, general and administrative expenses of $1,570,000 in the second quarter
ended March 31, 1996 were 43% higher than the same period last year. For the
six-month period ended March 31, 1996, these expenses were $2,559,000, a 26%
increase over the comparable period in fiscal 1995. Legal expenses in fiscal
1996 were $674,000 in the second quarter and $942,000 for the six-month period
compared to $301,000 and $571,000, respectively, for the comparable periods of
fiscal 1995. These legal expenses related principally to the Company's action to
enforce certain patent rights against a competitor and defend against
counteractions in that lawsuit. (See Item 1. of Part II on Page 11 for the
current status of the legal proceedings.) The increase in legal expense combined
with charges related to a sales distribution agreement are the primary reasons
for fiscal 1996's increased selling, general and administrative expenses over
fiscal 1995. Additionally, the Company experienced higher investor relations
costs in the current quarter and six-month period of fiscal 1996 and recorded
lower pension expense than in fiscal 1995 as a result of termination of the
Company's defined benefit program in fiscal 1995.
Research and development expenses of $267,000 in the second quarter of fiscal
1996 declined 12% from fiscal 1995 while the expenses for the six-month period
of fiscal 1996 declined 8% from the previous year to $480,000. This year's
reductions resulted primarily from lower outside product development expenses
and reduced travel expenses.
Interest and other of $83,000 in the second quarter of fiscal 1996 were 30%
higher than the $64,000 reported for the comparable 1995 period. While interest
expense remained relatively unchanged in the second quarter and six-month period
of fiscal 1996 from the comparable fiscal 1995 periods, interest income was
lower during these periods. For the six-month period of fiscal 1996, interest
and other of $28,000 were 79% lower than for the same period of fiscal 1995,
principally because of the collection in the first quarter of fiscal 1996 of a
$137,000 indebtedness that the Company had charged to expense in a prior fiscal
year.
The Company derives a significant portion of its revenue from export sales. The
gross profit and cash requirements of these sales do not vary materially from
the requirements of its domestic sales.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has utilized financing sources such as public and
private equity offerings and borrowings from financial institutions and
individual investors to fund its operating activities. The Company believes that
funds available under its existing credit agreement, together with funds
generated by operations and, from private placements of common stock in December
1995, and unsecured notes in March 1996 will be sufficient to provide the
Company with adequate liquidity and capital resources for working capital and
other cash requirements. However, the information set forth in the preceding
sentence is forward-looking information. Therefore, if, for any reason
(including, without limitation, those described below), the Company's operations
require more capital than anticipated, revenues do not reach anticipated levels,
or cash flow needs are greater than planned, the Company may need additional
financing prior to the end of fiscal 1996 in order to maintain its operations.
There can be no assurance that the Company would be able to obtain any required
additional financing when needed or that such financing, if obtained, would be
on terms favorable or acceptable to the Company. If the Company was unable to
obtain additional financing when needed and under acceptable conditions, it
would be required to significantly scale back plans for growth and perhaps
reduce the scope of its operations. Factors that may affect the Company's
revenues, use of capital, expenses and/or cash flow, and that would cause actual
results to differ materially from those anticipated include, but are not limited
to, the introduction of competing products with performance equivalent to or
exceeding that of the Company's products, a claim (whether or not successfully
made) that the Company's products infringe a patent held by another company or
individual, any performance problems involving the Company's products, changes
in technology that could cause the Company's products to become obsolete, the
departure of key members of management and/or key employees, regulatory
requirements that would make the Company's products difficult or uneconomical to
produce, and general economic conditions.
The Company's operating activities used $3,256,000 during the six months ended
March 31, 1996, principally to finance the net loss for the period and increases
in accounts receivable of $1,422,000 and inventories of $3,346,000, the latter
of which resulted from Schering-Plough Animal Health's suspension of purchases
for an indefinite period to allow it to sell its existing inventory. As a result
of previous commitments, the Company was unable to discontinue purchases from
its suppliers. These items were offset partially by depreciation and
amortization of $237,000, collection of $402,000 of royalties receivable and
increases in accounts payable and accrued liabilities of $1,845,000.
The Company's investing activities used $178,000, primarily for the purchase of
fixed assets of $189,000.
The Company's financing activities provided net cash of $3,409,000 during the
six months ended March 31, 1996. Proceeds received from the issuance of 625,000
shares of common stock in connection with a private placement accounted for $2.0
million of this amount. The balance resulted from new borrowings of $875,000
from private investors and additional borrowings on the Company's bank line of
credit of $1,753,000. These funds were used to repay long-term obligations of
$1,245,000 and provide additional working capital for operations.
As of March 31, 1996, the Company had net working capital of $3,295,000 with a
current ratio of 1.3 to 1, which represents an increase in working capital of
$1,875,000 from September 30, 1995.
In June 1993, the Company entered into a $750,000 revolving credit agreement
with private investors (the "Lenders") that was amended in November 1993 to
reduce the principal to $600,000 and convert the indebtedness to a term loan.
One of the Lenders was a director of the Company through November 1995. In
connection with this credit agreement, the Company issued warrants to the
Lenders for the purchase of 220,000 shares of common stock at prices ranging
from $1.00 to $1.75 per share (of which 58,671 shares were issued during fiscal
1995 upon the exercise of certain of these warrants). As of September 30, 1995,
the Company had outstanding borrowings of $600,000 under this agreement, which
were repaid in November 1995 from the proceeds of the private placement of
common stock discussed below.
In November 1993, the Company entered into a $2,000,000 discretionary revolving
credit facility with a financial institution (which was increased to $3,000,000
in April 1995 and to $5,000,000 in August 1995). Borrowings under this facility
are limited based upon eligible accounts receivable and inventories, as defined
in the agreement. The credit facility is collateralized by an interest in the
Company's accounts receivable, inventories, equipment and intangibles. The
agreement is effective through December 31, 1996 and is payable on demand.
Interest on the credit facility is paid monthly at a rate of prime plus
one-quarter of one percent (1/4%); the effective rate was 8.50% at March 31,
1996. At March 31, 1996 the Company had borrowings of $2,191,000 outstanding
under this agreement, with maximum availability under the facility at that date
of $3,047,000.
In September 1994, the Company borrowed a total of $610,000 from private
investors (including certain executive officers and directors) through the
issuance of unsecured notes bearing interest at the rate of 12% per annum, due
March 21, 1996. In connection with these notes, the Company issued warrants to
the noteholders for the purchase of 183,000 shares of the Company's common stock
(of which 55,500 shares were issued during fiscal 1995 upon exercise of certain
of these warrants). The warrants have an exercise price of $1.50 per share and
are exercisable for a term of five years from the date of issuance. The value of
these warrants at the time of issuance was deemed to be insignificant. Funds
received on these notes were used to reduce outstanding borrowings under the
Company's bank line of credit and to provide additional working capital for
operations. These notes were repaid in March 1996 from the proceeds of the 11%
unsecured notes discussed below.
In March 1995, a warrant holder exercised a warrant for the purchase of 300,000
shares of the Company's common stock. The transaction was settled through a cash
payment of $3,000 and execution of a 15% promissory note for $297,000 due May 3,
1995 (and subsequently extended to July 3, 1995). The note was paid in full on
May 30, 1995.
In December 1995, the Company completed a private placement of 625,000 shares of
common stock for proceeds of $2.0 million. A portion of these proceeds was used
to retire the outstanding $600,000 term loan with the Lenders, with the
remaining proceeds used to finance working capital needs and new product
development.
In March 1996, the Company borrowed a total of $875,000 (and an additional
$25,000 in April 1996) from private investors through the issuance of unsecured
notes due October 21, 1997 and bearing interest at the rate of 11% per annum. As
part of the transaction, the Company issued warrants to the noteholders to
purchase a total of 147,539 shares of the Company's common stock. The warrants
are exercisable at $4.8125 per share for a term of five (5) years beginning
March 21, 1996. The value of these warrants at the time of issuance was not
deemed to be significant. Funds received from these notes were used to retire
the $610,000 indebtedness that was due on March 21, 1996, and to provide
additional working capital for operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In November 1993, the Company initiated a lawsuit for patent
infringement against three competitors in the U.S. District Court in
Colorado. (The patent involved is No. 5,211,129, which relates to the
Company's injectable transponder technology.) At a hearing on November
12, 1993, the Court found that it did not have jurisdiction in Colorado
over two of the competitors and dismissed the Colorado case against
them without prejudice. The Court suggested that the third competitor
may be an infringer on the patent, but did not order the temporary
injunction requested by the Company.
On December 1, 1993, the two dismissed competitors commenced an action
in U.S. District Court for Southern Illinois (which was subsequently
transferred to the U.S. District Court of Colorado) against the Company
requesting actual damages of $20,000,000. In the suit, the plaintiffs
sought to invalidate the above-described patent of the Company and
alleged unfair competition, violation of U.S. antitrust laws,
interference with business relationships and abuse of process due to
the actions the Company had allegedly taken in obtaining, announcing
and enforcing its patent rights against the plaintiffs.
The trial in the litigation commenced on January 8, 1996. On January
29, 1996, the jury in the trial returned a verdict in favor of the
Company and found that the defendants had willfully infringed on the
Company's patent and awarded damages of approximately $444,000.
However, the defendants have announced that they will appeal the
verdict, although as of the date of this Quarterly Report on Form
10-QSB, no appeal had been filed to the Company's knowledge. The
defendants have until thirty (30) days after the District Court's final
judgment (which was rendered on April 25, 1996) to file an appeal.
While management and its legal counsel continue to believe that the
ultimate outcome of this litigation will not have a significant adverse
impact on the Company's future financial position, cash flows or
results of operations, there can be no assurance of the ultimate
outcome of the litigation.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on February 29,
1996. At the meeting the shareholders elected four incumbent directors
and approved the selection of independent public accountants.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit 11.1 Calculation of Net Loss Per Common and Common
Equivalent Share
b. Reports on Form 8-K
No current reports on Form 8-K were filed during the quarter
ended March 31, 1996.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DESTRON FEARING CORPORATION
(Registrant)
-----------------------------
By Thomas J. Ahmann
Vice President Finance,
Chief Financial Officer
and Principal Accounting Officer
Exhibit 11.1
DESTRON FEARING CORPORATION
Calculation of Net Loss Per Common and Common Equivalent Share
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss) ($ 660) $ 226 ($ 962) ($ 262)
======== ======== ======== ========
Weighted average number of common and common
equivalent shares outstanding:
Weighted average number of
common shares outstanding 11,612 10,376 11,399 10,295
Dilutive effect of stock options after
application of the treasury stock
method -- 278 -- --
-------- -------- -------- --------
11,612 10,654 11,399 10,295
======== ======== ======== ========
Net income (loss) per common
and common equivalent share ($ 0.05) $ 0.02 ($ 0.08) ($ 0.03)
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 37
<SECURITIES> 0
<RECEIVABLES> 3,314
<ALLOWANCES> 69
<INVENTORY> 9,673
<CURRENT-ASSETS> 13,008
<PP&E> 2,836
<DEPRECIATION> 650
<TOTAL-ASSETS> 17,932
<CURRENT-LIABILITIES> 9,713
<BONDS> 0
0
0
<COMMON> 16,787
<OTHER-SE> (9,619)
<TOTAL-LIABILITY-AND-EQUITY> 17,932
<SALES> 6,682
<TOTAL-REVENUES> 6,682
<CGS> 4,577
<TOTAL-COSTS> 4,577
<OTHER-EXPENSES> 3,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173
<INCOME-PRETAX> (962)
<INCOME-TAX> 0
<INCOME-CONTINUING> (962)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (962)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
