UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to_______________
Commission file number: 0-27704
DIGITAL DATA NETWORKS, INC.
(Name of small business issuer in its charter)
Washington 91-1426372
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3102 Maple Avenue, Suite 230
Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
(214) 969-7200
(Registrant's telephone number, including area code)
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 September 30, 1998, 2,314,597 shares of Common Stock and 1,840,000 Common
Stock Purchase Warrants were outstanding.
<PAGE>
INDEX
Page
PART I. FINANCIAL INFORMATION
1. Consolidated Financial Statements 3
2. Management's Discussion and Analysis or Plan of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds (a)
Item 3. Defaults Upon Senior Securities (a)
Item 4. Submission of Matters to a Vote of Security Holders (a)
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
- ----------------------------------------------------------------------------
(a) These items are inapplicable or have a negative response and have therefore
been omitted.
<PAGE>
DIGITAL DATA NETWORKS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ -------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 540 $ 151
Trade accounts receivable, net of reserves
for doubtful accounts of $33 and $7 58 51
Prepaid expenses and other current assets 50 19
Due from officer, net of reserves of $0 and $42 42 -
Notes receivable, net of reserves of $1,048 320 60
--------- --------
Total current assets 1,010 281
Equipment, net of accumulated depreciation
of $1,543 and $1,410 147 135
Other assets (Notes 4 and 7) 73 267
--------- --------
Total assets $ 1,230 $ 683
========= ========
Current liabilities
Accounts payable and accrued liabilities $ 308 $ 183
Accrued payroll and related 44 16
Current portion of long-term debt 21 18
Unearned income 89 26
--------- --------
Total current liabilities 462 243
Long-term obligations
Long-term debt, less current portion 164 157
Due to shareholders (Note 3) 114 -
--------- --------
Total liabilities 740 400
--------- --------
Commitments and contingencies (Notes 4 and 5)
Stockholders' equity
Preferred Stock, no par value, 1,000,000 shares
authorized, no shares issued or outstanding - -
Common Stock, no par value, 10 million shares authorized,
2,339,267 and 2,314,597 shares issued and outstanding 13,399 13,393
Treasury Stock, at cost, 30,000 shares -- (7)
Accumulated deficit (12,914) (13,103)
Cumulative foreign currency translation adjustment 5 -
--------- --------
Total stockholders' equity 490 283
--------- --------
Total liability and stockholders' equity $ 1,230 $ 683
========= ========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
DIGITAL DATA NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1998 1997 1998
-------- --------- ---------- -------
<S> <C> <C> <C> <C>
Revenues $ 136 $ 155 $ 410 $ 443
-------- -------- --------- -------
Expenses
Direct operating costs 142 59 375 139
Salaries and related 158 80 500 287
Marketing, general and administrative 168 66 480 195
Financing, legal and other consulting 15 13 123 87
-------- --------- --------- -------
Total expenses 483 218 1,478 708
-------- --------- --------- -------
Other income (expense), net 38 (33) 91 (11)
-------- ---------- --------- --------
Loss from continuing operations (309) (96) (977) (276)
Loss from discontinued operations (13) (16) (206) (50)
Gain on disposition of discontinued operations - 137 - 137
-------- --------- --------- ---------
Net income (loss) $ (322) $ 25 $ (1,183) $ (189)
======== ========= ========= =======
Loss from continuing operations per share $ (.13) $ (.04) $ (.42) $ (.12)
======== ========= ========= =======
Net income (loss) per share $ (.14) $ .01 $ (.51) $ (.08)
======== ========= ========= =======
Weighted Average Shares Outstanding 2,332 2,291 2,332 2,314
======== ========= ========= =======
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
DIGITAL DATA NETWORKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1997 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (1,183) $ (189)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 248 99
Gain on disposition of discontinued operations - (137)
Other non-cash operating expense - 49
Decrease in prepaid expenses and other current assets 58 31
(Decrease) increase in accounts payable and accrued liabilities 79 (125)
Other 10 (4)
-------- ---------
Net Cash Used by Operating Activities (788) (276)
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances to / investments in acquisition targets (1,048) (250)
Payments received on notes receivable - 272
Purchases of equipment (57) (120)
-------- ----------
Net Cash Used by Investing Activities (1,105) (98)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of expanded license commitment (78) -
Repayment of notes payable (252) (15)
-------- ----------
Net Cash Used by Financing Activities (330) (15)
-------- ----------
Net Decrease in Cash and Cash Equivalents (2,223) (389)
CASH AND CASH EQUIVALENTS
Beginning of Period 2,865 540
-------- ---------
End of Period $ 642 $ 151
======== =========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Description of Business
Digital Data Networks, Inc. ("the Company" or DDN") was incorporated in 1988.
The Company's Transit Network Division operates a network of computerized
electronic message displays that delivers current news, information and
advertising to riders on-board public transit vehicles, with operations in
Dallas, Texas since 1991. As described in Note 3, in September 1998, the
Company's Canadian subsidiary sold its entire operations, which comprised the
Company's internet services business segment.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and related notes thereto included in the Company's 1997
Annual Report on Form 10-KSB. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, considered necessary for a fair
presentation have been included. Operating results for 1998 interim periods are
not necessarily indicative of results that may be expected for the year ending
December 31, 1998.
Certain reclassifications have been made to prior period financial statements in
order to conform to current period classifications.
Note 2 Financial Condition, Liquidity and Going Concern
DDN incurred net losses of approximately $2 million and $2.9 million during 1996
and 1997, respectively, and continues to experience losses from continuing
operations and negative cash flows from operations. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The Company has taken actions to reduce negative cash flows, including disposing
of portions of the business, such as the sale of the internet services segment
(as described in Note 3) and closing the Rhode Island Public Transportation
Authority operations, reducing general and administrative expenses, and
minimizing capital expenditures. Further, management believes that its future
operating activities and strategies, which include the proposed disposition of
the Transit Network business segment, and the proposed merger with Internet
Sports Network (as described in Note 4) will, in the near term, provide
sufficient cash flows to fund its remaining ongoing operations.
The ability of the Company and the potential successor business of Internet
Sports Network to generate positive cash flows from operations and net income,
is dependent on, among other things, market conditions, the recovery of recorded
assets, cost control, and the Company's ability to raise capital under
acceptable terms. While the Company has had some successes in certain of these
endeavors in the past, there can be no assurance that its efforts will be
successful in the future. These financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Note 3 Disposition of Business
Pursuant to a September 1998 Asset Purchase Agreement, the Company's wholly
owned subsidiary, DDN Canada, sold all of its assets and interests in its
internet services business to ProNet Communications, Inc. ("ProNet"), the
principals of which include DDN's former Chief Operating Officer and a former
DDN Director, both of whom are DDN shareholders (the "Principals"). ProNet
assumed DDN Canada liabilities relating to the internet business and released
the Company from, among other things, amounts owed by DDN to the Principals,
which approximated $100,000, and received $20,000 cash from the Company. The
excess of liabilities assumed over the net book value of assets sold and
disposition costs is reported as gain on disposition of discontinued operations
for the periods ended September 30, 1998. The accompanying statements of
operations present the results of the internet services business segment
operations as a one-line item net loss from discontinued operations for all
periods presented.
6
<PAGE>
Note 4 Potential Business Combination and Potential Business Disposition
In October 1998, the Company entered into a Merger Agreement with Internet
Sports Network, Inc. ("ISN"), a sports entertainment and information company
that offers interactive competitive sports leagues, pools and contests via the
internet. Pursuant to terms of the Merger Agreement, ISN would merge (the
"Merger") with and into DDN, such that following completion of the Merger, ISN
shareholders would own approximately 86% of the merged entity, and DDN
shareholders and optionholders would own approximately 14% of the merged entity.
The Merger is subject to a number of certain conditions, including, among other
things, consummation of a private financing by ISN raising in excess of $1
million, and shareholder approval by both DDN and ISN shareholders. In
connection with the proposed Merger, the Company acquired for $250,000 cash, in
private placement transactions, 625,000 shares of ISN common stock, which such
investment is included in other assets in the accompanying September 30, 1998
consolidated balance sheet.
The Company is in the process of considering alternatives available with respect
to the transit division, such alternatives including a potential sale of the
operations. In this regard, in October 1998, the Company received a proposal
from a potential purchaser (the "Purchaser"). Pursuant to terms of the proposed
sale, the Company would sell all of its assets and interests in the Transit
Network to the Purchaser and the Purchaser would assume all of the operating
liabilities and receive cash in the amount of deferred revenue assumed. At
September 30, 1998, the net book value of transit division assets reasonably
approximated the net book value of transit division liabilities. The excess of
assets sold over liabilities assumed (or excess of liabilities assumed over
assets sold) would be reported as a loss (or gain) on disposition of
discontinued operations during the period of sale. In the event of a disposition
of transit operations, results of operations relating to the transit division
would be reclassified to discontinued operations in the Company's consolidated
statements of operations.
Note 5 Commitments and Contingencies
During the nine months ended September 30, 1998, the Company settled litigation
pertaining to one of the Company's 1996 acquisitions. Pursuant to terms of the
settlement agreement, the Company paid approximately $40,000 and received 30,000
shares of DDN common stock. The estimated value of stock received has been
recorded as Treasury stock based upon prevailing market prices around the
settlement agreement date. Settlement net costs are included in financing, legal
and administrative costs in the accompanying statement of operations.
During 1997, the Company entered into a letter of intent with Advanced
Communication and Information Services ("ACIS") to acquire all of the
outstanding stock of ACIS in exchange for DDN common shares. Under provisions of
the letter of intent, the Company forwarded ACIS $1,048,000 pursuant to terms of
promissory notes to be used as working capital pending the completion of the
acquisition. Subsequently, ACIS withdrew from the letter of intent. ACIS
defaulted on repayment of amounts owed the Company and in the fourth quarter of
1997, the Company fully reserved the receivable. In April 1998, the Company
received a judgment from the King County Superior Court in the State of
Washington against ACIS, ordering ACIS to pay the Company the amount of the
loan, plus interest, plus a $300,000 cancellation fee. The Company continues to
pursue various collection actions, including, but not limited to, additional
litigation and acquisition of debtor assets and/or businesses. There can be no
assurance that the Company will be successful in recovering all or part of this
judgment.
During the nine months ended September 30, 1998, compensation being paid to the
Company's President was reduced and then eliminated at the direction of the
Board. The Company has continued to request repayments on amounts due from this
officer, although none have been made to date. Nevertheless, during the nine
months ended September 30, 1998, the entire amount of the receivable was
reserved.
Note 6 Stockholders' Equity
During the nine months ended September 30, 1998, as a result of non-performance
by what was to have been a service provider to the Company, the Company
rescinded and canceled 25,000 shares of its common stock which were issued in
1996 in exchange for services to be provided. The estimated fair value of the
stock canceled has been recorded as a decrease in common stock and included in
financing, legal and administrative costs in the accompanying statements of
operations.
7
<PAGE>
Note 6 Stockholders' Equity (continued)
During the nine months ended September 30, 1997, certain of the Company's
creditors exchanged approximately $161,000 of the Company's debt obligations for
approximately 37,000 shares of the Company's common stock.
Note 7 Other Assets
Other assets at December 31, 1997 and September 30, 1998 include $52,000 and
$265,000, respectively, of investments in marketable equity securities, which
are recorded at estimated fair market value. During the three months ended
September 30, 1998, the Company recorded unrealized losses of approximately
$37,000 relating to mark-to-market adjustments for certain of the Company's
investments in marketable equity securities.
Note 8 Effect of Recently Issued Accounting Standards
In March and April of 1998, the Accounting Standards Executive Committee of the
American Institute of CPAs, issued Statement of Position 98-1, "Accounting for
the Cost of Computer Software Developed or Obtained for Internal Use" ("SOP
98-1") and Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities" ("SOP 98-5"). Adoption of these standards is not expected to have a
material impact on the Company's financial position, results of operations, or
cash flows. The standards are effective for transactions entered into in fiscal
years beginning after December 15, 1998.
8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations
Safe Harbor Statement
Forward-looking statements, within the meaning of Section 21E of the Securities
and Exchange Act of 1934, are made throughout this Management's Discussion and
Analysis or Plan of Operations. For this purpose, any statements contained
herein that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes", "anticipates", "plans", "expects", "estimates" and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause the results of the Company to
differ materially from those indicated herein. These factors include, but are
not limited to, those set forth in Item 7 entitled Management's Discussion and
Analysis or Plan of Operations in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997.
Results of Operations
In September 1998, the Company sold all of its assets and interests in
its internet services business. The accompanying statements of operations
present the results of the internet services business segment operations as a
one-line item net loss from discontinued operations for all periods presented.
The following management's discussion has been prepared on the basis giving
effect to the sale of the Company's internet services business segment as
discontinued operations consistent with the manner presented in the accompanying
financial statements. Accordingly, amounts disclosed relating to prior periods
have been restated to reclassify discontinued operations from continuing
operations.
Revenue of $155,000 and $443,000 for the three and nine months ended
September 30, 1998, respectively, increased from $136,000 and $410,000 for the
comparative prior year periods due to increased advertising volume from the
Company's Transit Network Division in Dallas, Texas. The increases were offset
by decreases of $9,000 and $54,000 for the three and nine month periods,
respectively, relating to Cyber America and Rhode Island transit operations
which were closed in 1997.
Total expenses decreased from $483,000 to $218,000 and from $1,478,000
to $708,000 during the three and nine months ended September 30, 1998, as
compared to prior year periods. Total expenses relating to operations closed in
1997 approximated $109,000 and $303,000 for the three and nine months ended
September 30, 1997, respectively. Direct costs also decreased due to a reduction
in depreciation expense by the Transit Network due to the declining net book
value of assets in operation. Salaries and related expenses and marketing,
general and administrative expenses decreased primarily due to elimination of
costs for operations closed in 1997 as well as due to decreases in corporate
salaries and certain other corporate-related costs in 1998 as compared to
expenditure levels in 1997. Financing, legal and consulting expenses also
9
<PAGE>
decreased in 1998, primarily the result of declining merger and acquisition
related activity than in the prior year. Other income (expense) decreased from
$91,000 income for the nine months ended September 30, 1997 to $11,000 expense
for the comparative 1998 period, due to having lower balances of cash and
investments in 1998 as compared to the prior year, as well as due to having
recorded in 1998 unrealized losses of approximately $37,000 relating to
mark-to-market adjustments for certain of the Company's investments in
marketable equity securities.
The Company's discontinued operations had net losses of $50,000 during
the nine months ended September 30, 1998 as compared to losses of $206,000 in
the prior year. The decrease in net loss is primarily attributable to decreases
in product development expenditures in 1998. As a result of the sale of
discontinued operations during the three months ended September 30, 1998, the
Company recorded a gain on disposition of $137,000 representing the excess of
liabilities assumed over the net book value of assets sold and disposition
costs.
Financial Condition, Liquidity and Capital Resources
Net cash used by operating activities for the nine months ended
September 30, 1998 was $276,000, a significant decrease from $788,000 used by
operating activities during the comparative prior year period. Cash used by
operating activities was, for the most part, due to the Company's loss for the
respective period. During the nine months ended September 30, 1998, the Company
incurred capital expenditures approximating $120,000 to install its computerized
electronic network on DART light rail vehicles.
In October 1998, the Company entered into a Merger Agreement with
Internet Sports Network, Inc. ("ISN"), a sports entertainment and information
company that offers interactive competitive sports leagues, pools and contests
via the internet. Pursuant to terms of the Merger Agreement, ISN would merge
(the "Merger") with and into DDN, such that following completion of the Merger,
ISN shareholders would own approximately 86% of the merged entity, and DDN
shareholders and optionholders would own approximately 14% of the merged entity.
The Merger is subject to a number of certain conditions, including, among other
things, consummation of a private financing by ISN raising in excess of $1
million, and shareholder approval by both DDN and ISN shareholders. In
connection with the proposed Merger, the Company acquired for $250,000 cash, in
private placement transactions, 625,000 shares of ISN common stock.
During 1997, the Company entered into a letter of intent with Advanced
Communication and Information Services ("ACIS") to acquire all of the
outstanding stock of ACIS in exchange for DDN common shares. Under provisions of
the letter of intent, the Company forwarded ACIS $1,048,000 pursuant to terms of
promissory notes. Subsequently, ACIS withdrew from the letter of intent. ACIS
defaulted on repayment of amounts owed the Company, and in April 1998, the
Company received a judgment from the King County Superior Court in the State of
Washington against ACIS, ordering ACIS to pay the Company the amount of the
loan, plus interest, plus a $300,000 cancellation fee. The Company continues to
pursue various collection actions, including, but not limited to, additional
litigation and acquisition of debtor assets and/or businesses. There can be no
assurance that the Company will be successful in recovering all or part of this
judgment. See "Legal Proceedings."
10
<PAGE>
At September 30, 1998, the Company's principal current assets consisted
of approximately $151,000 of cash, most of which was invested in short-term,
interest-bearing investments with banks and other financial institutions,
$51,000 of trade accounts receivable, and $60,000 of notes receivable. The
Company's total obligations of $400,000 consisted primarily of $199,000 in
accounts payable and accrued liabilities, and approximately $175,000 of
long-term debt, including current portion.
DDN incurred net losses of approximately $2 million and $2.9 million in
1996 and 1997, respectively, and continues to experience losses from continuing
operations and negative cash flows from operations. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The Company has taken actions to reduce negative cash flows, including
disposing of portions of the business, such as the sale of the internet services
segment and closing the Rhode Island Public Transportation Authority operations,
reducing general and administrative expenses, and minimizing capital
expenditures. Further, management believes that its future operating activities
and strategies, which include the proposed disposition of the transit network
business segment, and the proposed merger with Internet Sports Network (as
described in Note 4) will, in the near term, provide sufficient cash flows to
fund its remaining ongoing operations.
The ability of the Company and the potential successor business of
Internet Sports Network to generate positive cash flows from operations and net
income, is dependent on, among other things, market conditions, the recovery of
recorded assets, cost control, and the Company's ability to raise capital under
acceptable terms. While the Company has had some successes in certain of these
endeavors in the past, there can be no assurance that its efforts will be
successful in the future. The accompanying financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Effect of Recently Issued Accounting Standards
In March and April of 1998, the Accounting Standards Executive
Committee of the American Institute of CPAs issued Statement of Position 98-1,
"Accounting for the Cost of Computer Software Developed or Obtained for Internal
Use" and Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities." Adoption of these standards is not expected to have a material
impact on the Company's financial position, results of operations, or cash
flows. The standards are effective for transactions entered into in fiscal years
beginning after December 15, 1998.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In January 1998, the Company filed a lawsuit in King County Superior
Court, Seattle, Washington, against ACIS for repayment of its five promissory
notes owed to the Company which are past due. The Company filed for repayment of
the entire principal amount of these promissory notes (approximately
$1,048,000), plus accumulated interest, plus a cancellation fee in the amount of
approximately $300,000. In April 1998, the Company received a judgment against
ACIS in the principal amount of approximately $1,348,000. The Company continues
to pursue various collection actions, including, but not limited to, additional
litigation and acquisition of debtor assets and/or businesses. The entire amount
of the receivable was reserved during 1997. There can be no assurance that the
Company will be successful in recovering any, all, or part of this judgment.
Item 5. Other Information
In October 1998, the Company entered into a Merger Agreement with
Internet Sports Network, Inc. ("ISN"), a sports entertainment and information
company that offers interactive competitive sports leagues, pools and contests
via the internet. Pursuant to terms of the Merger Agreement, ISN would merge
(the "Merger") with and into DDN, such that following completion of the Merger,
ISN shareholders would own approximately 86% of the merged entity, and DDN
shareholders and optionholders would own approximately 14% of the merged entity.
The Merger is subject to a number of certain conditions, including, among other
things, consummation of a private financing by ISN raising in excess of $1
million, and shareholder approval by both DDN and ISN shareholders.
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K - On October 5, 1998, the Company filed a
Current Report on Form 8-K having a September 20, 1998 date of
report relating to the Company's sale of its internet services
business.
On October 9, 1998, the Company filed a Current Report on Form
8-K having an October 7, 1998 date of report relating to the
announcement that the Company entered into a Merger Agreement.
12
<PAGE>
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.
Digital Data Networks, Inc.
(Registrant)
Date: November 13, 1998 By: /s/ Donald B. Scott, Jr.
------------------------------
Donald B. Scott, Jr., President
Date: November 13, 1998 By: /s/ Richard J. Boeglin
----------------------------
Richard J. Boeglin
Vice President, Finance & Operations
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 151
<SECURITIES> 0
<RECEIVABLES> 51
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 281
<PP&E> 1,545
<DEPRECIATION> 1,410
<TOTAL-ASSETS> 683
<CURRENT-LIABILITIES> 243
<BONDS> 157
<COMMON> 13,393
0
0
<OTHER-SE> (13,103)
<TOTAL-LIABILITY-AND-EQUITY> 683
<SALES> 443
<TOTAL-REVENUES> 443
<CGS> 139
<TOTAL-COSTS> 708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> (189)
<INCOME-TAX> 0
<INCOME-CONTINUING> (189)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> 0
</TABLE>
