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, 1998 0-10665
SOFTECH, INC.
State of Incorporation IRS Employer Identification
Massachusetts 04-2453033
3260 EAGLE PARK DRIVE, N.E., GRAND RAPIDS, MICHIGAN 49525
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,
1998 was 6,130,542 shares.
<PAGE>
Form 10-Q
Page 2
SOFTECH, INC.
INDEX
PART I. Financial Information Page Number
-----------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
February 28, 1998 and May 31, 1997 3
Consolidated Condensed Statements of Income --
Three and Nine Months Ended February 28, 1998 and
February 28, 1997 4-5
Consolidated Condensed Statements of Cash Flows --
Nine Months Ended February 28, 1998 and
February 28, 1997 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
<PAGE>
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,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 106 $ 580
Available-for-sale securities -- 787
Accounts receivable, net 4,910 3,300
Unbilled costs and fees 2,207 491
Inventory 97 378
Prepaid expenses and other assets 834 527
Net assets (liabilities) of discontinued operations (Note D) (200) 6
-------- --------
Total current assets 7,954 6,069
Property and equipment, net (Note C) 1,856 1,478
Goodwill, net 3,893 2,497
Other assets (Note F) 4,778 114
-------- --------
TOTAL ASSETS $ 18,481 $ 10,158
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable, line of credit $ 2,464 $ --
Accounts payable 3,378 1,664
Accrued expenses 1,702 1,024
Deferred maintenance revenue 1,071 383
Current portion of capital lease obligations 145 78
-------- --------
Total current liabilities 8,760 3,149
-------- --------
Capital lease obligations, net of current portion 217 172
-------- --------
Stockholders' equity (Note C) 9,504 6,837
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,481 $ 10,158
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
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 28,
1998 1997
---------- ----------
<S> <C> <C>
Revenue
Products $ 2,760 $ 1,891
Services 2,437 1,619
---------- ----------
Total revenue 5,197 3,510
Cost of products sold 1,059 1,202
Cost of services provided 1,309 998
---------- ----------
Gross margin 2,829 1,310
Selling, general and administrative 2,445 1,070
---------- ----------
Income from continuing operations before income taxes 384 240
Provision for federal and state income taxes 11 25
---------- ----------
Net income $ 373 $ 215
========== ==========
Basic net income per common share (Note H) $ 0.06 $ 0.05
========== ==========
Weighted average common shares outstanding 5,935,486 4,432,543
Dilutive net income per common share (Note H) $ 0.06 $ 0.05
========== ==========
Weighted average diluted common share equivalents outstanding 6,403,344 4,447,725
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
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 28,
1998 1997
----------- -----------
<S> <C> <C>
Revenue
Products $ 5,874 $ 7,696
Services 8,417 3,677
----------- -----------
Total revenue 14,291 11,373
Cost of products sold 2,844 5,163
Cost of services provided 4,757 2,469
----------- -----------
Gross margin 6,690 3,741
Selling, general and administrative 5,759 3,010
----------- -----------
Income from continuing operations 931 731
Gain on available-for-sale securities 253 --
----------- -----------
Income from continuing operations before income taxes 1,184 731
Provision for federal and state income taxes 111 40
----------- -----------
Income from continuing operations 1,073 691
Discontinued operations (Notes B and D)
Loss from operations -- (750)
----------- -----------
Net income (loss) $ 1,073 $ (59)
=========== ===========
Basic income from continuing operations per common share (Note H) $ 0.19 $ 0.16
=========== ===========
Basic net income (loss) per common share $ 0.19 $ (0.01)
=========== ===========
Weighted average common shares outstanding 5,515,055 4,206,128
Dilutive income from continuing operations per common share (Note H) $ 0.18 $ 0.16
=========== ===========
Dilutive net income (loss) per common share $ 0.18 $ (0.01)
=========== ===========
Weighted average diluted common share equivalents outstanding 5,806,630 4,206,128
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
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 28,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,073 $ (59)
------- -------
Adjustments to reconcile net income (loss) to net cash used by operating
activities:
Depreciation and amortization 1,066 572
Gain on sale of available-for-sale securities (253) --
Change in current assets and liabilities:
Accounts receivable (1,610) (300)
Unbilled costs and fees (2,066) (493)
Inventory 389 104
Prepaid expenses and other assets (1) (6)
Accounts payable 1,714 261
Accrued expenses (1,178) 369
Deferred maintenance revenue (275) (262)
Net assets of discontinued operations 206 2,617
------- -------
Total adjustments (2,008) 2,862
------- -------
Net cash provided (used) by operating activities (935) 2,803
------- -------
Cash flows from investing activities:
Capital expenditures (652) (313)
Acquisition of businesses, net of cash acquired -- (270)
Purchase of net assets of AMT, including acquisition costs (1,915) --
Proceeds from sale of available-for-sale securities 810 --
Loans to officers (368) --
------- -------
Net cash used by investing activities (2,125) (583)
------- -------
Cash flows from financing activities:
Net borrowings under bank line of credit 2,464 1,224
Proceeds from exercise of stock options 10 114
Payment of dividends -- (6,256)
Net proceeds from capital lease financing 112 --
------- -------
Net cash provided (used) by financing activities 2,586 (4,918)
------- -------
Net decrease in cash and cash equivalents (474) (2,698)
Cash and cash equivalents, beginning of period 580 3,017
------- -------
Cash and cash equivalents, end of period $ 106 $ 319
======= =======
Supplemental Disclosure of Cash Flow Information:
Non-Cash Investing Activities:
Fair value of shares issued in connection with acquisition
AMT and CGC $ 1,897 $ --
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
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:
February 28, May 31,
1998 1997
------------ -------
Property and equipment $ 3,742 $ 2,342
Accumulated depreciation
and amortization (1,886) (864)
-------- -------
Property and equipment, net $ 1,856 $ 1,478
-------- -------
Common stock, $.10 par value $ 657 $ 568
Capital in excess of par value 9,308 7,488
Unrealized gain -- 315
Retained earnings (deficit) 1,021 (52)
Less treasury stock (1,482) (1,482)
-------- -------
Stockholders' equity $ 9,504 $ 6,837
======== =======
(D) In September 1996, the Company sold its Network Systems Group to Data
Systems Network Corporation ("DSN"). The description of the transaction was
described in the Company's Form 10-K filing dated August 29, 1997. Revenue
from discontinued operations for the three and nine months ended February
28, 1998 and 1997 was $0 and $7,490,000, respectively.
At February 28, 1998 and May 31, 1997, the net assets (liabilities) of
discontinued operations, which are included in the Consolidated Condensed
Balance Sheets, are as follows:
February 28, May 31,
1998 1997
------------ -------
Accounts receivable, net $ 110 $ 355
Deferred income taxes receivable -- 334
-------- -------
Total assets 110 689
-------- -------
Accounts payable -- 129
Accrued expenses 310 554
-------- -------
Total liabilities 310 683
-------- -------
Net assets (liabilities) of
discontinued operations $ (200) $ 6
-------- -------
<PAGE>
Form 10-Q
Page 8
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(E) On November 10, 1997, the Company completed the acquisition of certain
assets and assumed certain liabilities of the Advanced Manufacturing
Technology ("AMT") division of CIMLINC, Incorporated ("CIMLINC"). CIMLINC
is a privately held Delaware corporation with headquarters in Itasca,
Illinois.
AMT is a technology group that targets its application software products to
the Mold and Die industry. AMT has been operated as a separate profit
center of CIMLINC since 1992. At the transaction date, AMT employed 31 full
time employees and is located in Troy, Michigan. AMT's software products
have been primarily targeted to the tier two automotive component suppliers
in the U.S. marketplace that create molds and dies from electronic models.
AMT's software technology enhances the efficiency of the mold building
process by reducing project development time and costs and increasing the
quality of molds and tools.
SofTech acquired all of the material assets of AMT except for accounts
receivable with a net value of approximately $2.0 million as of the
transaction date. In the acquisition, SofTech acquired assets with a net
book value of approximately $338,000 (unaudited) and a defined list of
liabilities with a net book value of approximately $2,325,000 (unaudited).
The assets acquired included office furniture, computer equipment and
off-the-shelf software currently marketed and supported by AMT known as
PROSPECTOR(TM), EXPERTCAD(TM), EXPERTCAM(TM), TOOLDESIGNER(TM) and
TOOLMAKER(TM). The Company intends to continue to utilize such physical
assets acquired in the business.
The purchase price for the acquired assets was $1,750,000 in cash, 200,000
shares of SofTech stock and the assumption of the above referenced
liabilities. The source of the funds used in the acquisition came from
existing working capital resources including the Company's credit facility
with Deutsche Financial Services Corporation. SofTech provided CIMLINC with
a guarantee that the shares received in the transaction would have a value
of at least $1.0 million within two years or an additional payment would be
due for the difference. The guarantee is cancelled if, during the two year
period, the shares are sold or if the aggregate value of the shares equals
or exceeds $1.4 million for a specified period. The additional payment, if
due, can be made in cash or shares or any combination thereof at the
discretion of SofTech; provided, however, that in no event will the total
shares issued to complete this transaction exceed 19.9% of shares
outstanding before the transaction. If the additional payment is to be made
in shares the average closing price for the last thirty (30) trading days
of the two year period shall be used to derive the per share value.
In addition, SofTech will issue 157,143 shares of stock to a group of AMT
employees to satisfy certain amounts due to those individuals upon the sale
of AMT by CIMLINC. CIMLINC had entered into these arrangements with the key
AMT employees in order to ensure their cooperation and continued employment
in the event of a sale. SofTech has guaranteed the recipients of 65,714 of
those 157,143 shares that the value of the shares will be at least $3.50 in
two years or an additional payment will be made in cash for the difference.
SofTech will also issue 357,981 shares of stock for the benefit of certain
AMT employees. These individuals received a stock award that vests 50% at
the first anniversary and 50% at the second anniversary of the transaction.
In exchange for the share award these individuals agreed to take a salary
reduction of either 10% or 20% from their current compensation plans. All
of such salary reductions can be recovered by those individuals in the
event that the revenue generated from the AMT business exceeds certain
forecasted targets. If any of the recipients terminate their employment
prior to vesting, their non-vested shares are forfeited and allocated to
the recipients on a pro rata basis. If the employment of any of these
individuals is terminated by the Company for any reason,
<PAGE>
Form 10-Q
Page 9
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
other than fraud or illegal activity, during the two year vesting period
the individuals are allowed to continue to purchase the non-vested shares.
At the one year anniversary any participant can elect to withdraw from the
program but will only receive 40% of the stock awarded to them.
The acquisition was accounted for as a purchase and resulted in the
recording of capitalized software of $4.0 million, fixed assets of $.2
million and goodwill of approximately $1.0 million.
(F) The Company capitalizes certain costs incurred to internally develop
software that is licensed to customers. Capitalization of internally
developed software begins upon the establishment of technological
feasibility. Costs incurred prior to the establishment of technological
feasibility are expensed as incurred.
Capitalized software costs of approximately $4,000,000 at February 28, 1998
are included in other long-term assets in the accompanying balance sheets.
Such costs are amortized using the ratio of current gross revenues for the
product to the total of current and anticipated future gross revenues.
During fiscal 1998, the Company capitalized $4,000,000 of software
development costs in the acquisition of AMT in November 1997 and amortized
approximately $54,000 of such costs to cost of products sold since that
acquisition.
(G) As previously reported in the Proxy Statement for the fiscal 1997 Annual
Meeting, management has been reviewing its relationship with Coopers &
Lybrand LLP due to the relocation of its corporate headquarters from
Massachusetts to Michigan and has been evaluating alternative independent
accountants in the process. Effective January 12, 1998, SofTech management,
its Board of Directors and Coopers & Lybrand LLP, mutually agreed that due
to the aforementioned relocation of corporate headquarters that it no
longer made economic sense to provide audit services from the Boston office
of Coopers & Lybrand LLP. SofTech management has recommended to the Board
of Directors the appointment of Ernst & Young LLP to provide such audit
services for fiscal year 1998. For this purpose, "audit services" include:
examination of annual fiscal statements; review and consultation in
connection with filings of annual reports and registration statements with
the SEC; consultation on accounting matters; preparation of reports to
management covering recommendations on accounting, internal control and
similar matters; meetings with the Audit Committee; and audits of employee
benefit plans. Ernst & Young LLP has also been asked to audit the financial
statements of the Company's most recent acquisition for inclusion in an
amended Form 8-K to be filed on January 26, 1998. The appointment of Ernst
& Young LLP was approved by the company's Board of Directors.
For the fiscal year 1996 and 1997 audits, Coopers & Lybrand LLP issued an
unqualified opinion but modified its opinion with a "going concern"
paragraph. This paragraph emphasized that given the company's minimal
operating income and deteriorating relationship with a major supplier there
existed "substantial doubt as to the Company's ability to continue as a
going concern."
(H) In the quarter ended February 28, 1998, the Company has adopted Statement
of Financial Accounting Standards No. 128 (SFAS 128) - Earnings per Share
and all historical net income (loss) per share data presented has been
restated to conform to the provisions of this statement. SFAS No. 128
requires the disclosure of basic and diluted earnings per share. Basic
earnings per common share and dilutive earnings per share are computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period, respectively. Dilutive common
equivalent shares are calculated using the treasury stock method and
consist of stock option grants. Options to purchase shares of the Company's
common stock of 467,858 were included in the computation of diluted
earnings per share for the three and nine months ended February 28, 1998.
Options to purchase shares of the Company's common stock of 15,182 were
included in the computation of diluted earnings per share for the three
months ended February 28, 1997. These options were not included in the
<PAGE>
Form 10-Q
Page 10
SOFTECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
computation of diluted earnings per share for the nine months ended
February 28, 1997 because they were antidilutive.
(I) On March 27, 1998, Parametric Technology Corporation ("PTC") filed a
complaint in the Massachusetts Superior Court claiming the Company owed
certain amounts for purchases of software technology and maintenance under
its now terminated reseller arrangements. On April 6, 1998, the Company
filed a counterclaim denying PTC's claim and alleging that PTC owed SofTech
moneys in excess of its claim. Such amounts due SofTech were the result of
services performed by SofTech under a subcontract arrangement with PTC,
amounts due from PTC for sales to SofTech's former Pro/E customers during
the period October 1, 1996 to December 31, 1996, and breach of contract
under an arrangement that extended SofTech's right to market software
maintenance through September 1998. On April 7, 1998, a preliminary hearing
was conducted. No ruling has been made as of the date of this filing. It is
unclear, at this time, how this matter will be resolved.
<PAGE>
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 months ended February 28, 1998 was
approximately $5.2 million and $14.3 million, respectively, as compared to
approximately $3.5 million and $11.4 million for the same periods in the prior
fiscal year. The current year revenues represent an increase of about 48% and
26%, respectively, for the three and nine months ended February 28, 1998 over
the comparable periods in the prior fiscal year. Service revenue for Q3 of
fiscal 1998 was approximately $2.4 million, as compared to approximately $1.6
million for the third quarter of fiscal 1997, an increase of 50%. Service
revenue for the nine months ended February 28, 1998 was approximately $8.4
million as compared to approximately $3.7 million for the comparable period in
fiscal 1997, an increase of about 129%. The increase in service revenue is the
result of the acquisitions of the services-only businesses in the third quarter
of fiscal year 1997 and the maintenance revenue generated by the technology
group acquired in November 1997. Product revenue was approximately $2.8 million
for the current quarter as compared to $1.9 million for the same period in
fiscal 1997, an increase of 46%. Year-to-date product revenue was approximately
$5.9 million as compared to $7.7 million, a decrease of 24%. The decrease in
product revenue is the result of the transition to the mid-range software
offering during the second quarter of fiscal 1997 which has had a negative
impact on both hardware and software revenue as discussed under the section
labeled "Product Transition" in the Company's Form 10-K filing for fiscal 1997.
This decrease has been partially offset by revenues generated by the technology
group acquired in November 1997.
Product gross margin was 61.6% and 51.6% for the three and nine month periods
ended February 28, 1998, respectively, as compared to 36.4% and 32.9% for the
same periods in fiscal 1997. The increase in product gross margin in Q3 '98 as
compared to Q3 '97 is due to the acquisition of AMT in November 1997 and the
resulting sales of AMT software in the current quarter. The increase in
year-to-date product gross margin is due to the Q3 '98 sales of SofTech's
software and the increased margin on the mid-range software offering relative to
the high-end software offering marketed by the Company through September 30,
1996 as discussed in detail under the section labeled "Product Transition" in
the Company's Form 10-K filing for fiscal 1997. Gross margin generated from
service revenue increased to 46.3% and 43.5% for the three and nine month
periods ended February 28, 1998, respectively, from 38.4% and 32.9%,
respectively, for the comparable periods in fiscal 1997. The increase in service
gross margin is due to the service businesses acquired in the third quarter of
fiscal 1997, increased productivity of the engineering group and the
contribution of maintenance revenue from the technology group acquisition.
Selling, general and administrative expense for the third quarter of fiscal 1998
was $2,445,000, an increase of 129% from the third quarter fiscal 1997
expenditures of $1,070,000. Selling, general and administrative expense for the
nine months ended February 28, 1998 was $5,759,000 as compared to $3,010,000, an
increase of about 91%. The increase is primarily attributable to the technology
group acquired in November 1997, the service businesses acquired in the third
quarter of fiscal 1997 and the higher variable compensation from increased gross
margin dollars.
Net income from continuing operations for the second quarter of fiscal 1998 was
$373,000 or $.06 per share as compared to net income of $215,000 or $.05 per
share for the same period in fiscal 1997. For the nine months ended February 28,
1998, net income from continuing operations was $1,073,000 or $.19 per share as
compared to $691,000 or $.16 per share for the same period in fiscal 1997. The
first quarter of fiscal 1998 earnings included a pretax investment gain of
$253,000. The improved performance in fiscal 1998 relative to fiscal 1997 was
the result of increased gross margin on products and services and the increase
in service revenue from the fiscal 1998 and 1997 acquisitions.
The company expects to be sheltered from most, if not all, federal tax in the
current year due to the availability of net operating loss and tax credit
carryforwards.
<PAGE>
Form 10-Q
Page 12
SOFTECH, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - continued
The Company's reseller agreement with Parametric Technology Corporation
(NASDAQ:PMTC) expired on September 30, 1997 and was not renewed. On March 19,
1998, the Company announced that it had signed an agreement with Structural
Dynamics Research Corporation (NASDAQ:SDRC) to represent its products throughout
all of its markets in the United States. During the third quarter of fiscal 1998
the revenue generated from the sale of third party software was negligible.
Capital Resources and Liquidity
The Company ended the third quarter with borrowings under its line of credit of
$2,464,000. The acquisition of the assets of CIMLINC's Advanced Manufacturing
Technology group in November 1997 as detailed in Note E herein and the funding
of expanded operations has been the primary use of the cash during the second
and third quarters of fiscal 1998 and the reason for the borrowings under the
credit facility.
Net cash used by operations totaled about $935,000 for the nine months ended
February 28, 1998. Net income adjusted for non-cash expenses generated
approximately $1,886,000, the reduction of inventory generated $389,000 and
growth in accrued liabilities generated an additional $261,000 which was offset
by accounts receivable growth of about $3.7 million. The accounts receivable
growth is primarily due to the concentration of revenue during the last month of
Q3 FY98 as compared to the last month of Q4 FY97, a few large slow-paying
accounts and several deferred payment arrangements on software maintenance.
Investing activities utilized approximately $2.1 million for the nine months
ended February 28, 1998. The cash utilized to acquire AMT totaled approximately
$1.9 million. Capital expenditures and loans to officers used approximately
$1,020,000 during the first nine months of fiscal 1998. The loans to officers
related to tax payments due by them from the share issuance approved by
shareholders in April 1997. Approximately $810,000 was generated from the sale
of securities. Borrowings under the line of credit facility and certain
borrowings for capital equipment acquisitions generated approximately $2.5
million.
The Company believes that the additional borrowings under the line of credit
together with the cash flow from operations will be sufficient for meeting its
liquidity and capital resource needs for the next year.
The statements made above with respect to SofTech's outlook for fiscal 1998
represent "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 are subject to a number of risks and uncertainties. These include general
business and economic conditions, maintaining agreements with technology
partners and the efficient and effective integration of the AMT business unit
into the Company, and the ability of the Company to attract and retain qualified
personnel both in our existing markets and in new office locations.
<PAGE>
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 by Article 5 of Regulation S-X.
(b) Reports on Form 8-K
The Company filed a Form 8-K/A with the Securities and Exchange Commission
on January 26, 1998 and an amended 8-K/A on January 28, 1998 with the pro
forma financial information and the related audited financial statements,
required to be filed pursuant to Item 7 of Form 8-K, reflecting the
purchase of substantially all of the net assets of the Advanced
Manufacturing Technology division of CIMLINC, Incorporated on November 10,
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 14, 1998 /s/ Joseph P. Mullaney
---------------------------------------
Joseph P. Mullaney
Vice President
Chief Financial Officer
Date: April 14, 1998 /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-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 106
<SECURITIES> 0
<RECEIVABLES> 5,122
<ALLOWANCES> (212)
<INVENTORY> 97
<CURRENT-ASSETS> 7,954
<PP&E> 3,742
<DEPRECIATION> (1,886)
<TOTAL-ASSETS> 18,481
<CURRENT-LIABILITIES> 8,760
<BONDS> 0
0
0
<COMMON> 657
<OTHER-SE> 8,847
<TOTAL-LIABILITY-AND-EQUITY> 18,481
<SALES> 14,291
<TOTAL-REVENUES> 14,291
<CGS> 7,601
<TOTAL-COSTS> 13,360
<OTHER-EXPENSES> (253)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,184
<INCOME-TAX> 111
<INCOME-CONTINUING> 1,073
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,073
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.18
</TABLE>
