Form 10-Q
Page 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------
For the Quarter Ended Commission File Number
- ------------------------------------- ------------------------------------
February 28, 1997 0-10665
SOFTECH, INC.
State of Incorporation IRS Employer Identification
- ------------------------------------- ------------------------------------
Massachusetts 04-2453033
3260 EAGLE PARK DRIVE, N.E., GRAND RAPIDS, MICHIGAN 49505
Telephone (616) 957-2330
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 [ ]
The number of shares outstanding of registrant's common stock at February 28,
1997 was 4,825,776 shares.
Form 10-Q
Page 2
SOFTECH, INC.
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information Page Number
-----------
<S> <S> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets February 28, 1997 and
May 31, 1996 3
Consolidated Condensed Statements of Income - Three and Nine
Months Ended February 28, 1997 and February 29, 1996 4-5
Consolidated Condensed Statements of Cash Flows - Nine Months
Ended February 28, 1997 and February 29, 1996 6
Notes to Consolidated Condensed Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
Form 10-Q
Page 3
PART I. FINANCIAL INFORMATION
SOFTECH, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(dollars in thousands)
February 28, May 31,
1997 1996
------------ --------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 319 $ 3,017
Investment securities (Note D) 4,658 --
Accounts receivable 3,890 3,211
Unbilled costs and fees 627 134
Inventory 375 341
Prepaid expenses and other assets 551 531
Net assets of discontinued operations (Note D) 2,140 7,523
----------------------
Total current assets 12,560 14,757
Property and equipment, net (Note C) 929 517
Goodwill, net 2,651 1,763
----------------------
TOTAL ASSETS $ 16,140 $ 17,037
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Note payable, line of credit (Note H) $ 1,224 $ --
Accounts payable 1,593 862
Accrued expenses 1,335 550
Deferred maintenance revenue 406 668
----------------------
Total current liabilities 4,558 2,080
Stockholders' equity (Note C) 11,582 14,957
----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,140 $ 17,037
======================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Form 10-Q
Page 4
SOFTECH, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except for per
share data)
Three Months Ended
-----------------------------
February 28, February 29,
1997 1996
------------ ------------
<S> <C> <C>
Revenue
Products $ 1,891 $ 3,001
Services 1,619 1,007
--------------------------
Total revenue 3,510 4,008
Cost of products sold 1,202 2,095
Cost of services provided 998 773
--------------------------
Gross margin 1,310 1,140
Selling, general and administrative 1,070 1,034
--------------------------
Income from continuing operations before taxes 240 106
Provision for federal and state income taxes 25 --
--------------------------
Income from continuing operations 215 106
Discontinued operations (Notes B and D)
Loss from operations -- (733)
--------------------------
Net income (loss) $ 215 $ (627)
==========================
Income from continuing operations per common share $ 0.05 $ 0.03
==========================
Net income (loss) per common share $ 0.05 $ (0.15)
==========================
Weighted average common shares outstanding 4,447,725 4,090,490
</TABLE>
See accompanying notes to consolidated financial statements.
Form 10-Q
Page 5
SOFTECH, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except for per
share data)
Nine Months Ended
-----------------------------
February 28, February 29,
1997 1996
------------ ------------
<S> <C> <C>
Revenue
Products $ 7,696 $ 8,265
Services 3,677 2,462
--------------------------
Total revenue 11,373 10,727
Cost of products sold 5,163 5,827
Cost of services provided 2,469 1,866
--------------------------
Gross margin 3,741 3,034
Selling, general and administrative (Note E) 3,010 3,243
--------------------------
Income (loss) from continuing operations before taxes 731 (209)
Provision for federal and state income taxes 40 --
--------------------------
Income (loss) from continuing operations 691 (209)
Discontinued operations (Notes B and D)
Loss from operations (750) (2,367)
--------------------------
Net loss $ (59) $ (2,576)
==========================
Income (loss) from continuing operations per common share $ 0.16 $ (0.05)
==========================
Net loss per common share $ (0.01) $ (0.63)
==========================
Weighted average common shares outstanding 4,206,128 4,069,619
</TABLE>
See accompanying notes to consolidated financial statements.
Form 10-Q
Page 6
SOFTECH, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(dollars in thousands)
Nine Months Ended
-----------------------------
February 28, February 29,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (59) $ (2,576)
-------------------------
Adjustments to reconcile loss to net
Cash provided (used) by operating activities:
Depreciation and amortization 572 474
Gain on sale of fixed assets -- (49)
Deferred provision for income taxes -- 1,130
Change in current assets and liabilities:
Accounts receivable (300) (639)
Unbilled costs and fees (493) 88
Inventory 104 89
Prepaid expenses and other assets (6) 101
Accounts payable 261 (437)
Accrued expenses 369 (259)
Deferred maintenance revenue (262) (180)
Net assets from discontinued operations 2,617 2,175
-------------------------
Total adjustments 2,862 2,493
-------------------------
Net cash provided (used) by operating activities 2,803 (83)
-------------------------
Cash flows from investing activities:
Purchase of property and equipment, net (313) (367)
Proceeds from sale of fixed assets -- 153
Acquisition of businesses, net of cash acquired (270) --
-------------------------
Net cash used by investing activities (583) (214)
-------------------------
Cash flows from financing activities:
Net proceeds from borrowings 1,224 --
Procceds from exercise of stock options 114 112
Payment of dividends (6,256) --
-------------------------
Net cash provided (used) by financing activities (4,918) 112
-------------------------
Net decrease in cash and cash equivalents (2,698) (185)
Cash and cash equivalents, beginning of period 3,017 2,373
-------------------------
Cash and cash equivalents, end of period $ 319 $ 2,188
=========================
</TABLE>
See accompanying notes to consolidated financial statements.
Form 10-Q
Page 7
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(A) The consolidated condensed financial statements have been prepared from
the accounts of SofTech, Inc. and its wholly owned subsidiaries (the
"Company") without audit; however, in the opinion of management, the
information presented reflects all adjustments which are of a normal
recurring nature and elimination of intercompany transactions which are
necessary to present fairly the Company's financial position and results
of operations.
(B) The consolidated financial statements have been restated to reflect the
net assets and operating results of the Company's Network Systems Group
("NSG") as a discontinued operation (see Note D below). The assets and
liabilities of NSG have been reclassified in the Consolidated Condensed
Balance Sheets as Net assets of discontinued operations. The operating
results of NSG are shown net of taxes in the Consolidated Condensed
Statements of Income as Loss from operations.
(C) Details of certain balance sheet captions are as follows:
<TABLE>
<CAPTION>
February 28, May 31,
1997 1996
------------ --------
<S> <C> <C>
Property and equipment $ 2,144 $ 1,023
Accumulated depreciation and amortization (1,215) (506)
-----------------------
Property and equipment, net $ 929 $ 517
=======================
Common stock, $.10 par value $ 527 $ 454
Capital in excess of par value 11,454 16,463
Unrealized gain 1,620 --
Retained deficit (537) (478)
Less treasury stock (1,482) (1,482)
-----------------------
Stockholders' equity $ 11,582 $ 14,957
=======================
</TABLE>
(D) On September 12, 1996, the Company sold its Network Systems Group to Data
Systems Network Corporation ("DSN"). The Company had previously announced
the signing of a letter of intent on June 18, 1996. Data Systems
purchased certain assets and assumed certain liabilities of NSG with a
net book value on July 31, 1996 of approximately $200,000 in exchange for
$890,000 in cash and 540,000 shares of DSN common stock. The DSN shares
received in the transaction are unregistered shares and the Company is
restricted, by its agreement with DSN, from selling such shares without
DSN's prior approval. The tangible assets acquired by DSN from SofTech
totaled approximately $1.7 million and were primarily composed of fixed
assets and service inventory for maintaining the NSG installed base of
hardware and software. Liabilities assumed by DSN from SofTech included
deferred revenue associated with maintenance contracts and other accrued
expenses with a total book value of about $1.5 million. The agreement
provides for dollar for dollar adjustment based on the net book value of
the assets as of the transaction date.
As is the custom in a transaction such as this, the Company remains
liable for certain breaches of representations made as part of the sale
of this Group to DSN as detailed in the Purchase Agreement filed with the
Form 8-K on September 23, 1996. In addition, the Company remains liable
as a guarantor for certain leases for NSG office space.
Form 10-Q
Page 8
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(D) Continued
Revenue from discontinued operations for the three and nine months ended
February 28, 1997 was $0 and $7,490,000, respectively. Revenue from
discontinued operations for the comparable periods in fiscal 1996 was
approximately $7,210,000 and $22,872,000, respectively.
At February 28, 1997 and May 31, 1996, the net assets of discontinued
operations, which are included in the Consolidated Condensed Balance
Sheets, are as follows:
<TABLE>
<CAPTION>
February 28, May 31,
1997 1996
------------ --------
<S> <C> <C>
Accounts receivable (net) $ 2,247 $ 6,466
Unbilled costs and fees -- 686
Inventory 78 1,603
Prepaid expenses and other receivables 105 504
Fixed assets (net) 461 1,544
Other assets (net) -- 1,730
-----------------------
Total assets 2,891 12,533
Accounts payable 27 1,855
Accrued expenses 711 1,844
Deferred revenue -- 1,311
Deferred and accrued income taxes 13 --
-----------------------
Total liabilities 751 5,010
-----------------------
Net assets from discontinued operations $ 2,140 $ 7,523
=======================
</TABLE>
(E) On September 20, 1995, the Company amended its Purchase Agreement with
the stockholders of Micro Control, Inc. ("Seller"). In consideration for
the Seller waiving their right to receive certain contingent payments
that may have been due if certain profit goals were attained (see Note J
and Management's Discussion and Analysis to the 1995 Annual Report which
detail the potential liabilities) over the subsequent two years, the
Company made a cash payment to them totaling $426,497.
The payment of $426,497 is composed of three separate items which are as
follows:
* a $281,497 non-recoverable cash payment;
* an advance of $70,000 recoverable only against commissions earned
through the sale of the CAD Division; and
* a $75,000 cash payment for termination of the final two years of
the building lease at the Pennsylvania facility owned by a Family
Trust of which the Seller is a Trustee. In addition, a twelve (12)
month option to buy out the period from November 5, 1998 to
November 4, 2000 for an additional cash payment of $75,000 was
extended to the Company. This option was not exercised in September
1996.
The non-recoverable cash payment and the lease buy out which total
$356,497 was expensed to operations in the second quarter of fiscal 1996.
The $70,000 commission advance was expensed in the fourth quarter of
fiscal 1996.
Form 10-Q
Page 9
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(F) In August 1996, the Company's Board of Directors approved a preliminary
plan for distributing the net proceeds from the NSG sale ("Distribution
Plan") and transitioning management and the Board of Directors
("Transition Plan").
The Distribution Plan contemplated a distribution of the cash realized
from the sale and the subsequent liquidation of the NSG balance sheet
together with the 540,000 shares of DSN received in the transaction upon
approval from the Securities and Exchange Commission ("SEC"). The cash
was distributed on December 30, 1996 and amounted to $1.50 per share. The
DSN shares are expected to be distributed upon registration with the SEC
which is in process.
The following actions have taken place or been approved by the Board of
Directors with regard to the Transition Plan:
* Norman Rasmussen retired as President and CEO of SofTech, Inc. and
Mark Sweetland was appointed to those positions;
* Mr. Sweetland and Timothy Weatherford, a senior manager in the CAD
Division, were elected to the Board of Directors;
* On January 10, 1997, the Board approved, subject to shareholder
approval, the issuance of the 204,750 SofTech shares to each of
Messrs. Sweetland and Weatherford as previously announced with the
agreement that any future distribution of the DSN shares or
proceeds from the sale of such shares to SofTech shareholders
received by them by virtue of this issuance would revert directly
to the Company;
* On January 10, 1997, the Board voted to increase the size of the
Board of Directors to nine and appointed four new non-employee
directors. These newly appointed directors are Timothy Tyler,
President of Burroughs Corporation, a privately held Michigan based
manufacturer of industrial shelving and material handling
equipment, William Johnston, President of the Kalamazoo Investment
Group, an investment advisory firm, Ronald Elenbaas, President of
Stryker Medical, a division of Stryker Corporation, a Fortune 500
company, and Kenneth Ledeen, a consultant with Covington
Associates, an investment advisory firm.
* Other matters approved by the Board of Directors on January 10,
1997 include the following, all of which will be subject to
shareholder approval at the 1996 Annual Meeting:
* Eliminate cash compensation for Board members. Compensation
instead to be in the form of 10,000 stock options immediately
with an additional 3,000 options awarded on the anniversary
date of the initial award, subject to shareholder approval;
and
* Reprice the exercise price of all outstanding options to
reflect the $1.50 per share distribution as required by 1994
Stock Option Plan.
While it is the present intent of the Board to distribute the DSN shares
as soon as practicable following the approval from the SEC, the final
decision regarding such distribution is subject to the continuing review
and oversight of the Board of Directors. There can be no assurance that
the DSN stock distribution contemplated by the Distribution Plan will in
fact take place.
Form 10-Q
Page 10
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(G) Effective January 1, 1997, the Company acquired the stock of Computer
Graphics Corp. ("CGC") in exchange for 405,000 shares of SofTech stock.
The Stock Purchase Agreement (the "Agreement") provides for the issuance
of up to 210,000 additional shares based on attainment of certain
profitability goals for the twelve month period ended December 31, 1997.
The Agreement also provides for the remittance directly to the Company of
future distributions made to the SofTech shareholders prior to June 30,
1997 of DSN shares or proceeds from the sale of the shares. If the DSN
share distribution is not accomplished on or before June 30, 1997, the
former CGC shareholders shall share in such distribution based on their
SofTech stock holdings. The acquisition was accounted for as a purchase
and resulted in goodwill of approximately $635,000, which will be
amortized over a five year period.
Effective February 27, 1997, the Company acquired the stock of Ram Design
& Graphics Corp ("RAM") in exchange for 250,000 shares of SofTech stock,
plus 50,000 stock options that vest equally over five years. The Stock
Purchase Agreement (the "Agreement") provides for the issuance of up to
100,000 additional shares based on attainment of certain profitability
goals for the twelve month period ended December 31, 1997. The
acquisition was accounted for as a purchase and resulted in goodwill of
approximately $600,000, which will be amortized over a period of five
years.
(H) In December 1996, the Company's credit facility with a commercial lending
entity was reestablished. The credit facility provides for borrowings of
up to $4.0 million limited to 85% of domestic accounts receivable
outstanding less than 90 days from invoice date. The line of credit had
been reduced from $10 million to $1 million during Q1 '97 pending the
sale of the NSG business.
Form 10-Q
Page 11
SOFTECH, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Total revenue for the three and nine month periods ended February 28, 1997 was
$3,510,000 and $11,373,000, respectively, as compared to $4,008,000 and
$10,727,000 for the same periods in the prior fiscal year. The current year
revenues represent a decrease of about 12% for the three month period ended
February 28, 1997 and an increase of about 6% for the nine month period ended
over the comparable periods in the prior fiscal year. Service revenue for Q3 of
fiscal 1997 was $1.6 million, an increase of 61% from the same period in fiscal
1996. Year-to-date 1997 service revenue was $3.7 million, an increase of 49%
from the previous year. Year to date service revenue as a percentage of total
revenue was about 32% for fiscal 1997 as compared to 23% in the prior fiscal
year.
Gross margin as a percentage of revenue was 37.3% and 32.9% for the three and
nine month periods ended February 28, 1997, respectively, as compared to 28.4%
and 28.3% for the same periods in fiscal 1996. Margins improved on both product
and service revenue during all three quarters of fiscal 1997 as compared to
fiscal 1996. The improved product margins in fiscal 1997 as compared to fiscal
1996 are primarily due to the higher margin software offering marketed by the
Company beginning October 1, 1996. The improved margins on service revenue are
due primarily to the acquisition of CGC in December, the expansion of the
discreet project and outsourcing service business in Texas and strict cost
containment in the service organization.
Selling, general and administrative ("SG&A") expense for the third quarter of
fiscal 1997 was approximately $1,070,000, an increase of 3% from the third
quarter fiscal 1996 spending of $1,034,000. For the nine months ended February
28, 1997, SG&A expense was $3,010,000, a decrease of 7% from the $3,243,000 of
SG&A expenditures for the nine months ended February 29, 1996. Included in the
prior year nine-month expense was a one-time, second quarter, charge of
$356,000 related to an amendment to the Purchase Agreement with the
stockholders of Micro Control, Inc. (see Note J to the Company's 1996 Annual
Report and Note E to this Form 10-Q). Before this one time charge, SG&A
spending increased 4.3% for the nine month period ended February 28, 1997, as
compared to the nine months ended February 29, 1996. The increases in SG&A
expenditures in the fiscal 1997 three and nine month periods as compared to the
same periods in fiscal 1996 (before one-time charge) are primarily attributable
to the acquisition of CGC and the higher variable compensation from increased
gross margin dollars.
Net income from continuing operations for the third quarter of fiscal 1997 was
$215,000 or $.05 per share as compared to net income of $106,000 or $.03 per
share for the same period in fiscal 1996. Net income from continuing operations
for the first nine months of fiscal 1997 was $691,000 or $.16 per share as
compared to a loss of $(209,000) or $(.05) per share for the same period in the
prior fiscal year. The improved performance in fiscal 1997 relative to fiscal
1996 was the result of increased gross margin on products and services, the
increase in service revenue from the fiscal 1997 acquisitions, the absence of
any unusual non-recurring charges and keeping percentage increases in SG&A
expense in the single digits.
Included in stockholders' equity as of the end of the third quarter is an
unrealized gain of $1,620,000 related to the 540,000 shares of DSN stock
received by the Company in the sale of its Network Systems Group. The gain
represents the increase in value of the Company's DSN holdings from the date
the shares were received, $3,037,500 or $5.625 per share, to the value at the
end of the third quarter, $4,657,500 or $8.625 per share. The difference
between the value of the shares on the day they were received and the value on
the day the shares are ultimately sold or distributed will result in a realized
gain or loss in that period.
The company expects to be sheltered from most, if not all, federal tax in the
current year due to the first quarter loss from discontinued operations and the
utilization of tax carryforwards.
Form 10-Q
Page 12
SOFTECH, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
- -------------------------------
The Company ended the third quarter of fiscal 1997 with cash of about $319,000,
a decrease of about $2.7 million from fiscal year end 1996. The net loss
adjusted for non-cash expenses generated $513,000 for the first nine months of
fiscal 1997. The net income from continuing operations adjusted for non-cash
expenses generated $1,263,000 which was offset by the loss from discontinued
operations of $750,000 in the first quarter. The sale of the Network Systems
Group and the subsequent collection of accounts receivable from that
discontinued operation generated cash of approximately $2.6 million for the
first nine months of the year. Cash generated by operations was offset by the
distribution paid to shareholders during the third quarter of fiscal 1997 of
approximately $6.3 million. In addition, net borrowings on the line of credit
provided approximately $1.2 million.
On December 16, 1996, the Company announced a cash distribution of $1.50 per
share, with a record date of December 26, 1996 and a payment date of December
30, 1996. The cash distribution of $1.50 per share was part of the preliminary
plan adopted by the Company's Board of Directors to distribute the net proceeds
from the sale of the Network Systems Group, a plan that was disclosed in the
year end Form 10-K filing (See Note 12 to 1996 Annual Report on Form 10-K).
This preliminary plan included the distribution of the 540,000 shares of Data
Systems Network Corporation that were received in the transaction directly to
the SofTech shareholders upon the registration of such shares with the
Securities and Exchange Commission. It is the present intent of the Board to
distribute these shares as soon as practicable following the registration.
Effective January 1, 1997, the Company acquired the stock of Computer Graphics
Corporation ("CGC") in exchange for 405,000 shares of SofTech, Inc. CGC is an
eight year old, privately held, Indiana based provider of discreet engineering
services related to the CAD/CAM marketplace including contract consulting,
design and placement services. The Stock Purchase Agreement ("Agreement")
provides for the issuance of up to 210,000 additional shares based on
attainment of certain profitability goals for the twelve month period ended
December 31, 1997. The Agreement also provides that the CGC principals will not
share in the distribution of the Data Systems shares to SofTech shareholders
which is expected to take place in fiscal 1997 as detailed above so long as
that distribution takes place prior to June 30, 1997. The acquisition has been
accounted for as a purchase.
Effective February 27, 1997, the Company acquired the stock of Ram Design &
Graphics Corp. ("RAM") in exchange for 250,000 shares of SofTech stock, plus
50,000 stock options that vest equally over five years. RAM is a two year old,
privately held, North Carolina based provider of discreet engineering services
related to the CAD/CAM marketplace including contract consulting, design and
placement services. The Stock Purchase Agreement provides for the issuance of
up to 100,000 additional shares based on attainment of certain profitability
goals for the twelve month period ended December 31, 1997. The acquisition has
been accounted for as a purchase.
As disclosed in Note 6 to the Company's 1996 Annual Report on Form 10-K, with
the sale of the Network Systems Group, the Company's $10 million line of credit
was reduced to $1.0 million until such time as the lender had an opportunity
subsequent to the sale to reevaluate the reorganized entity's borrowing needs.
In December 1996, the credit facility was reestablished with a maximum
borrowing of $4 million based on 85% of accounts receivable less than 90 days
past due. The line of credit expires on June 29, 1997. The Company believes its
working capital, positive cash flow from continuing operations, and available
borrowings under the line of credit will be sufficient to meet working capital
needs through at least fiscal 1997.
Form 10-Q
Page 13
PART II. OTHER INFORMATION
SOFTECH, INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
27(i) Financial Data Schedule as required to Article 5 of Regulation S-X.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months ended
February 28, 1997.
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.
SOFTECH, INC.
Date: April 4, 1997 /s/ Joseph P. Mullaney
----------------- ----------------------------
Joseph P. Mullaney
Vice President
Chief Financial Officer
Date: April 4, 1997 /s/ Jan E. Yansak
----------------- ----------------------------
Jan E. Yansak
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> FEB-28-1997
<CASH> 319
<SECURITIES> 4,658
<RECEIVABLES> 4,090
<ALLOWANCES> (200)
<INVENTORY> 375
<CURRENT-ASSETS> 12,560
<PP&E> 2,144
<DEPRECIATION> (1,215)
<TOTAL-ASSETS> 16,140
<CURRENT-LIABILITIES> 4,558
<BONDS> 0
0
0
<COMMON> 527
<OTHER-SE> 11,055
<TOTAL-LIABILITY-AND-EQUITY> 16,140
<SALES> 11,373
<TOTAL-REVENUES> 11,373
<CGS> 7,632
<TOTAL-COSTS> 10,642
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 731
<INCOME-TAX> 40
<INCOME-CONTINUING> 691
<DISCONTINUED> (750)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
