<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 0-13226
SULCUS COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1369276
(state of other jurisdiction of (I.R.S.Employer
corporation or organization) Identification Number)
SULCUS CENTRE, 41 NORTH MAIN STREET, GREENSBURG, PA 15601
(Address of principal executive offices, including zip code)
(412) 836-2000
(Registrant's Telephone Number, including area code)
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
As of May 9, 1997 there were 16,755,878 shares of Common Stock, no par value,
outstanding.
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<PAGE> 2
INDEX
PART I. FINANCIAL INFORMATION PAGE
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996.................... 3
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996.............. 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996.............. 5
Notes to Consolidated Financial Statements....................... 6-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations .............................. 8-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................ 12
Signature........................................................ 13
<PAGE> 3
SULCUS COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 4,186,041 $ 2,503,475
Short-term investments (at market) 11,794,830 12,393,411
Accounts receivable, net of allowance of $2,048,286
and $1,913,107 in 1997 and 1996, respectively 8,340,418 12,995,894
Inventories 3,043,009 2,614,321
Deferred taxes 204,759 207,837
Other current assets 1,333,287 1,082,184
----------- -----------
Total current assets 28,902,344 31,797,122
Purchased and capitalized software, net of accumulated amortization
of $11,413,478 and $10,660,801 in 1997 and 1996, respectively 2,908,260 3,260,063
Property and equipment, net of accumulated depreciation of $4,923,004
and $4,801,119 in 1997 and 1996, respectively 2,452,537 2,473,324
Goodwill, net of accumulated amortization of $3,645,728
and $3,447,509 in 1997 and 1996, respectively 7,022,419 7,220,638
Deferred taxes 1,894,994 1,891,916
Other noncurrent assets 1,250,293 1,307,036
----------- -----------
Total Assets $44,430,847 $47,950,099
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $5,154,935 $5,826,577
Current portion of long-term debt 15,760 27,175
Current portion of obligations under capital leases 153,161 155,216
Accounts payable 3,880,113 3,947,597
Deferred revenues 5,338,766 6,497,107
Customer deposits 1,750,492 2,102,731
Other accrued liabilities 2,533,107 1,891,494
----------- -----------
Total current liabilities 18,826,334 20,447,897
Long-term debt, net of current portion -- --
Obligations under capital leases, net of current portion 144,212 184,604
Commitments and contingencies
Stockholders' equity
Common stock, no par value; 30,700,000 shares
authorized (16,835,709 and 16,832,663 shares
issued and issuable in 1997 and 1996, respectively) 40,786,566 40,780,066
Retained earnings (deficit) (15,108,343) (13,353,160)
Foreign currency adjustment (126,526) (108,453)
Cumulative unrealized gain (loss) on investments available for sale (91,396) (855)
----------- -----------
Total Stockholders' Equity 25,460,301 27,317,598
----------- -----------
Total Liabilities and Stockholders' Equity $44,430,847 $47,950,099
=========== ===========
</TABLE>
See notes to the consolidated financial statements.
3
<PAGE> 4
SULCUS COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net revenue:
System sales $ 7,700,697 $ 6,524,818
Support revenue 4,922,794 4,417,170
Dividends and other 345,592 333,031
----------- -----------
Total revenue 12,969,083 11,275,019
----------- -----------
Cost of goods sold and services provided:
Systems 4,391,030 3,307,969
Support services 1,475,125 1,159,797
----------- -----------
Total cost of sales and services provided 5,866,155 4,467,766
Expenses:
Selling, general, and administrative 7,914,842 5,506,194
Research and development (net of capitalized
software of $341,437 and $240,650 during the
three months ended March 31, 1997 and
1996, respectively) 394,433 267,251
Interest 120,500 128,799
Depreciation and amortization 412,866 383,605
Realized loss on investments 15,470 --
----------- -----------
Total expenses 8,858,111 6,285,849
----------- -----------
Income before income taxes (1,755,183) 521,404
Income taxes -- --
----------- -----------
Net income (loss) ($1,755,183) $521,404
=========== ===========
Income per common share:
Net income (loss) ($0.10) $0.03
====== =====
Weighted average number of common shares 16,880,624 16,614,944
=========== ===========
</TABLE>
See notes to the consolidated financial statements.
4
<PAGE> 5
SULCUS COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($1,755,183) $ 521,404
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation 214,647 191,413
Amortization of capitalized software 747,418 555,627
Amortization of goodwill 198,219 192,192
Provision for doubtful accounts 201,918 153,571
Realized and unrealized (gain) loss on investments 15,470 (8,750)
Change in assets and liabilities:
Restricted cash -- 171,867
Accounts receivable 4,453,558 3,021,601
Inventories (428,688) 60,434
Other current assets (234,871) (49,469)
Other assets 67,028 (44,608)
Accounts payable (67,484) (752,370)
Deferred revenues (1,158,341) (1,032,650)
Shareholder litigation liability -- (209,499)
Customer deposits (352,239) (124,092)
Accrued liabilities 647,994 (454,587)
---------- ----------
Total adjustments 4,304,629 1,670,680
---------- ----------
Net cash provided by operating activities 2,549,446 2,192,084
---------- ----------
Cash flows from investing activities:
Purchases of available for sale securities (7,430) (382,740)
Proceeds from sales of available for sale securities 500,000 250,000
Investment in sales-type leases (72,652) (68,358)
Payments received on sales-type leases 46,135 28,569
Capital expenditures (247,919) (223,112)
Software development capitalized (341,437) (240,650)
---------- ----------
Net cash (used in) investing activities (123,303) (636,291)
---------- ----------
Cash flows from financing activities:
Short term borrowings (671,642) 142,733
Principal payments on long-term debt (11,415) (14,442)
Payments under capital lease agreements (42,447) (10,671)
Proceeds from stock options exercised -- 91,524
---------- ----------
Net cash provided by (used in) financing activities (725,504) 209,144
---------- ----------
Cumulative translation adjustment (18,073) 33,249
---------- ----------
Net increase in cash and cash equivalents 1,682,566 1,798,186
Cash equivalents at beginning of period 2,503,475 1,202,325
---------- ----------
Cash equivalents at end of period $4,186,041 $3,000,511
========== ==========
</TABLE>
See notes to the consolidated financial statements.
5
<PAGE> 6
SULCUS COMPUTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Sulcus
Computer Corporation and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated. Investments in 50%
or less owned affiliates over which the Company has the ability to exercise
significant influence are accounted for using the equity method.
The accompanying unaudited interim consolidated financial statements
reflect all adjustments (consisting of normal recurring accruals) which, in the
opinion of management, are necessary for a fair presentation of the results for
the interim periods presented. These financial statements have been prepared in
accordance with both generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the Company's annual audited financial statements for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission on Form
10-K.
Certain prior year amounts have been reclassified to conform with
current year reporting practices.
NOTE 2. INCOME TAXES
In the three months ended March 31, 1997, the Company reflected no
provision for income taxes on a pre-tax loss of $(1,755,183). During the first
quarter of 1997, the Company increased the valuation allowance for deferred
taxes, representing the temporary differences and net operating loss
carryforwards generated where management believes that it is not likely that
future tax benefits will arise.
At March 31, 1997 and December 31, 1996, the Company had net deferred
tax assets, liabilities and valuation reserves as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets (net of deferred tax
liabilities), including tax loss carryforwards $9,517,704 $9,068,229
Valuation allowance (7,417,951) (6,968,476)
---------- ----------
Net deferred tax amounts $2,099,753 $2,099,753
---------- ----------
</TABLE>
NOTE 3. EARNINGS (LOSS) PER SHARE
Primary earnings (loss) per share is determined by dividing net
earnings by the weighted number of common shares outstanding. When dilutive,
common stock options are included in the computation. Fully diluted net income
(loss) per share is not presented as it is either anti-dilutive or not
different from primary earnings (loss) per share.
The Financial Accounting Standards Board issued a statement in
February 1997 entitled "Earnings per Share" which will be effective for the
Company in the fourth quarter of 1997. This statement revises the computation
and presentation of earnings per share. This new standard is not expected to
materially change amounts presented by the Company under existing accounting
standards.
6
<PAGE> 7
NOTE 4. SEVERANCE OBLIGATION
On February 24, 1997, the Company's Chairman gave notice to the
Company of termination of his employment agreement. Termination provisions of
his employment agreement resulted in a severance obligation of approximately
$1,050,000, plus certain indirect costs. The intent is for the obligation to be
paid monthly over a 36-month period, however, the former Chairman may elect a
lump sum distribution. The Company's former Chairman disagrees as to the
interpretation of the amount due to him under the termination provisions and
the parties are continuing to negotiate to reach a settlement.
7
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AS COMPARED TO THREE MONTHS ENDED
MARCH 31, 1996
The Company had a net loss of $(1,755,183) in the quarter ended March
31, 1997 as compared to net income of $521,404 in the quarter ended March 31,
1996 on sales which increased by $1,681,503 (15%) for these same periods. The
Company's results for the quarter ended March 31, 1997 were unfavorable as
compared to the same period of 1996 primarily as a result of severance costs
for the Company's former chairman and the Company's former president which
totaled $1,537,609, decreased margins in the Company's property management
system business, as the result of a change in the mix of sales between hardware
and software, and increases in selling, general, and administrative expenses
resulting from additional research and development expenses to support the
launch and support of new products.
Net sales for the quarter ended March 31, 1997 were $12,623,491,
representing an increase of $1,681,503 (15%) when compared to net sales of
$10,941,988 for the same period of 1996, principally as a result of increases
in net system sales. Net system sales for the quarter ended March 31, 1997 were
$7,700,697 as compared to $6,524,818 for the same period of 1996, an increase
of $1,175,879 (18%) due primarily to increased sales of the Company's Point of
Sale Systems and the delivery of systems under significant contracts by the
Company's Pacific Region sales offices. Support revenues for the quarter ended
March 31, 1997 were $4,922,794 as compared to $4,417,170 for the same period of
1996, an increase of $505,624 (11%) due primarily to an increased base of Point
of Sale installations in 1996. Support revenues are billed and collected in
advance for periods of one to twelve months and are recognized as support
revenues ratably over the contract period. Sales by offices and distributors of
the Company were $10,742,844 (85%) and $1,880,647 (15%), respectively, of net
sales for the quarter ended March 31, 1997, the same mix between offices and
distributors as that in the first quarter of 1996.
Cost of goods sold for the quarter ended March 31, 1997 increased to
$5,866,155 from $4,467,766, an increase of $1,398,389 (31%) from the comparable
1996 period, principally as a result of increases in system sales and changes
in the mix of sales between hardware and software. Cost of goods sold as a
percentage of net sales increased for the quarter ended March 31, 1997 to 46%,
as compared to 41% for the same period of 1996. Gross margins of the Company
increased to $6,757,336 from $6,474,222, an increase of $283,114 (4%) over the
same period of 1996, due primarily to increases in the Company's Domestic Point
of Sale systems and partially offset by decreases in the margins of the
Domestic Property Management subsidiary. Cost of system sales for the quarter
ended March 31, 1997 was $4,391,030 (57% of system sales) as compared to
$3,307,969 (51% of system sales) for the same period of 1996, an increase of
$1,083,061 (33%), due primarily to the mix of software and hardware sales. The
cost of sale components for hardware sales is higher than that for software
sales. Cost of support for the quarter ended March 31, 1997 was $1,475,125 (30%
of support revenues) as compared to $1,159,797 (26% of support revenues) for
the same period of 1996, an increase of $315,328 (27%).
Selling, general, and administrative expenses increased in 1997 when
compared to 1996. For the quarter ended March 31, 1997, these expenses were
$7,914,842 as compared to $5,506,194 an increase of $2,408,648 (44%) from the
same period of 1996. These increases were the result of severance obligations
to the Company's former chairman of the board and the former president in the
amount of $1,537,609, increased expenditures for salaries and wages of
$403,451, and increased expenditures for advertising expenses of $80,777.
Selling, general, and administrative expenses as a percentage of net sales was
63% for the quarter ended March 31, 1997 as compared to 50% for the same period
of 1996. At the beginning of the second quarter of 1997, management reduced
staffing levels in its domestic property management business and in certain
corporate staff positions as part of its efforts to improve the productivity of
the organization.
Research and development expense for the quarter ended March 31, 1997
increased to $394,433 from $267,251, an increase of $127,182 (48%) over the
same period of 1996. Total amounts expended on research and development
(including amounts expensed and amounts capitalized) was $735,870 and $507,901
for the quarters ended March 31, 1997
8
<PAGE> 9
and 1996, respectively. This increase is primarily the result of work
being conducted on the Company's property management software.
Depreciation and amortization expense for the quarter ended March 31,
1997 increased to $412,866 from $383,605 for the same period of 1996, an
increase of $29,261 (7%).
Dividends and other income for the quarter ended March 31, 1997 was
$345,592 as compared to $333,031 for the same period of 1996, an increase of
$12,561 (4%).
Interest expense for the quarter ended March 31, 1997 decreased to
$120,500 from $128,799 for the same period of 1996, a decrease of $8,299 (6%).
This decrease is primarily the result of lower borrowings under the Company's
margin account.
The Company conducts its worldwide operations through separate
geographic area organizations which represent major markets or combinations of
related markets. Transfers between markets are valued at cost. Financial
information by geographic area for the quarters ended March 31, 1997 and 1996
and as of March 31, 1997 and December 31, 1996 is summarized as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
1997 1996
---- ----
<S> <C> <C>
Net revenues(1):
Domestic $ 7,822,613 $ 7,127,466
Canada 1,262,589 1,094,057
Pacific Region 2,630,906 1,518,945
Europe 1,252,975 1,534,551
----------- -----------
Consolidated net revenues $12,969,083 $11,275,019
=========== ===========
Net income (loss):
Domestic $(1,441,511) $ 633,939
Canada (13,537) (19,706)
Pacific Region (69,235) (69,330)
Europe (230,900) (23,499)
----------- -----------
Consolidated net income, (loss) $(1,755,183) $ 521,404
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Identifiable assets:
Domestic $34,177,972 $38,179,244
Canada 2,015,730 1,738,378
Pacific Region 4,162,470 3,966,656
Europe 4,074,675 4,065,821
----------- ----------
Consolidated identifiable assets $44,430,847 $47,950,099
=========== ===========
</TABLE>
(1) Sales between geographic areas and export sales are not material.
The Company had a net deferred tax asset amounting to $2,099,753 net
of valuation allowances of $7,417,951 at March 31, 1997 and $6,968,476 at
December 31, 1996. The valuation allowance was increased in the quarter ended
March 31, 1997 by $449,475 and was decreased in the quarter ended March 31,
1996 by $132,388 reflecting the Company's estimate of the valuation allowance
necessary to reflect the net deferred tax asset to the net recoverable amount.
As a result, the income statements for the quarters ended March 31, 1997 and
1996 do not reflect any income tax provision on the pre-tax operating results
for those periods. The realizability of this deferred tax asset is contingent
upon a number of factors including the ability of the Company to maintain a
level of operations that will generate taxable income. Management
9
<PAGE> 10
believes that it is more likely than not that it will generate taxable income
sufficient to realize a portion of the tax benefits associated with net
operating losses and tax credit carryforwards prior to their expiration. This
belief is based upon the fact that the Company had taxable income in 1996 and
the Company's view of expected profits in 1997 and the next several years.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is dependent upon its ability to generate
sufficient working capital through profitable operations. Management believes
that in order to sustain profitability, it must continue to increase sales and
improve productivity related to selling, general and administrative expenses.
In order to increase sales, the Company believes that it must increase its
distribution channels and introduce additional developed or acquired
competitive products in its current market segment.
Current short-term capital needs will be funded primarily through
internal working capital, a recently acquired credit facility, anticipated
operating revenues from new sales, continuing and new support services revenue,
and a backlog of orders received and pending.
At March 31, 1997, Sulcus' cash and cash equivalents increased to
$4,186,041 from $2,503,475 at December 31, 1996, an increase of $1,682,566.
This increase is primarily the result of net cash provided by operating
activities which includes cash received during the first quarter of 1997
related to annual customers support agreements. This cash will be used to
support operations throughout the remainder of 1997. Since the Company operates
in a number of countries, cash and cash equivalents are maintained by the
various operating subsidiaries in the local currencies of these countries for
the purpose of paying expenses as they are due. Payments under a severance
obligation with the Company's former Chairman are expected to be made monthly
over a 36-month period, however, a lump-sum settlement may be elected.
The Company maintains a portfolio of short-term investments (primarily
in the form of preferred stocks) which may be used for the purpose of providing
liquidity. At March 31, 1997, the Company's short-term investment portfolio,
valued at market, decreased to $11,794,830, from $12,393,411 at December 31,
1996, primarily as the result of the sale of certain assets. The proceeds of
asset sales were used to repay borrowings on the related margin account. These
investments are subject to risk, most notably the risk that the market value of
these assets will decline as the result of general market fluctuations,
increases in interest rates or changes in the underlying operations of the
investee. Company policy does not require temporary investments to be
investment grade as determined by a nationally recognized statistical rating
organization nor does it require that such investments have any additional
safety feature such as insurance. The Company had borrowings at March 31, 1997,
of $5,154,935 on margin against its investments at the brokers internally
established floating interest rate which was 7.875%.
At March 31, 1997, accounts receivable decreased to $8,340,418, from
$12,995,894 at December 31, 1996 representing primarily amounts collected from
customers for annual support agreements. The Company's gross accounts
receivable includes hardware and software support contracts as well as amounts
due on system installations. The Company records a provision for amounts which
it estimates may ultimately be uncollectible from customers.
The Company purchases computer hardware and other equipment from
vendors under open accounts payable for the purpose of including these items in
systems sold to customers. Hardware and equipment are readily available in the
marketplace and therefore it is not necessary for the Company to maintain large
quantities of inventories to meet customer needs.
The Company leases facilities under operating lease agreements of
varying terms. Properties and equipment consist primarily of leasehold
improvements and equipment used in the conduct of business.
In addition to borrowings on margin against its investments, the
Company has outstanding long-term borrowings from various financial
institutions. At March 31, 1997, the Company had no short-term borrowings
(excluding borrowings
10
<PAGE> 11
under margin), and long-term borrowings (including current and noncurrent
portions) of $313,133. In April 1997, the Company obtained a credit facility in
the amount of $3,000,000 secured by domestic receivables, inventory and
equipment. Borrowings under this facility will bear interest at the banks prime
rate plus one percent . Borrowings under this facility will be used to provide
working capital.
The backlog of hardware and software orders at March 31, 1997 is
expected to be filled within one year and amounted to $5,740,000.
The Company's ability to develop and expand its presence in the
hospitality industry and expand existing business lines for its other markets
depends, in a large part, on the availability of adequate funds. Management
expects that to meet customer needs, it must continue to invest in the
development of the Company's software products at levels consistent with those
of the past two years. To finance these needs, the Company will rely primarily
on operating cash flow over the next several years together with currently
available working capital. Nonetheless, if technological changes render Sulcus'
products uncompetitive or obsolete, or, if the Company continues to incur
operating losses, additional capital may be required. There can be no assurance
that additional financing will be available when needed, or, if available, that
it can be obtained on terms satisfactory to the Company.
In furtherance of the Company's strategy of acquisition of computer
software products or companies that complement or expand existing business
lines, the Company intends to continue its pursuit to acquire additional
businesses or software products and/or to create joint ventures related to
existing businesses for this purpose. The Company currently has no plans,
agreements or commitments for any such transactions and is not currently
engaged in any active negotiations with respect to any such transactions. There
can be no assurance that the Company will be able to acquire companies or
software products on a favorable basis.
Certain lawsuits arising in the ordinary course of business are
pending against the Company and its subsidiaries. The Company believes that the
ultimate outcome of these actions will not result in a material adverse effect
on the Company's consolidated financial position, results of operations, and
liquidity.
FORWARD-LOOKING STATEMENTS
The foregoing discussion and the Company's consolidated financial
statements contain certain forward-looking statements that involve risks and
uncertainties, including the following: (i) risks relating to the management of
diverse operations and the political and economic stability of particular
countries in which the Company has international operations, (ii) the need for
additional capital to fund the development and expansion of the Company's
presence in the hospitality industry and to expand its existing business lines
in other markets, (iii) rapidly changing technology, accelerated product
obsolescence and rapidly changing industry standards in the market for the
Company's products, resulting in the need to update products and introduce new
products and services in a timely manner to meet evolving customer
requirements, (iv) expectations of future taxable income to realize the
recorded value of deferred tax assets, (v) variation in the Company's operating
results such that past operating results and period-to-period comparisons
should not be relied upon as an indication of future performance. As a result,
the Company's actual results could differ materially from the results discussed
in the forward-looking statements.
11
<PAGE> 12
PART II-OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
12
<PAGE> 13
SIGNATURE
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.
SULCUS COMPUTER CORPORATION
DATE: May 14, 1997 BY: /s/ H. Richard Howie
------------ --------------------------
Chief Financial Officer
(Mr.Howie is the Principal Financial
Officer and has been duly authorized
to sign on behalf of the Registrant)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1997, AS SUBMITTED IN
THE COMPANY'S 10-Q FOR THAT PERIOD AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000726712
<NAME> SULCUS COMPUTER CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,186,041
<SECURITIES> 11,794,830
<RECEIVABLES> 10,388,704
<ALLOWANCES> 2,048,286
<INVENTORY> 3,043,009
<CURRENT-ASSETS> 28,902,344
<PP&E> 7,375,541
<DEPRECIATION> 4,923,004
<TOTAL-ASSETS> 44,430,847
<CURRENT-LIABILITIES> 18,826,334
<BONDS> 144,212
0
0
<COMMON> 40,786,566
<OTHER-SE> (15,326,265)
<TOTAL-LIABILITY-AND-EQUITY> 44,430,847
<SALES> 12,623,491
<TOTAL-REVENUES> 12,969,083
<CGS> 5,866,155
<TOTAL-COSTS> 5,866,155
<OTHER-EXPENSES> 8,858,111
<LOSS-PROVISION> 201,918
<INTEREST-EXPENSE> 120,500
<INCOME-PRETAX> (1,755,183)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,755,183)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,755,183)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
