SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended April 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934.
For the transition period from to
---------------- ----------------
Commission file number 2-86360
INFORMEDICS, INC.
(Exact name of small business issuer as specified in its charter)
Oregon 93-0750571
(State of incorporation) (I.R.S. Employer Identification No.)
4000 Kruse Way Place
Bldg 3, Suite 300
Lake Oswego, OR 97035
---------------------
(Address of principal executive offices)
Issuer's telephone number: (503) 697-3000
Check whether the issuer (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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes /X/ No / /
Number of shares of Informedics, Inc. $.01 par value common stock outstanding as
of May 30, 1997: 2,650,307.
<PAGE>
INFORMEDICS, INC.
Part I - Financial Information
The information included herein is unaudited. However, such
information reflects all adjustments (consisting solely of normal, recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the results of operations for the interim periods. The interim
financial information and notes thereto should be read in conjunction with the
Company's latest annual report on Form 10-KSB. The results of operations for
the six months ended April 30, 1997 are not necessarily indicative of results
to be expected for the entire year.
<PAGE>
INFORMEDICS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
----------------------------------------- ---------------------------------------
1997 1996 1997 1996
------------------ ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
REVENUE:
Product Sales $ 274,249 $ 390,478 $ 424,010 $ 817,358
Customer Service and Support 640,985 894,226 1,336,920 1,751,527
------------------ ------------------- ------------------- -----------------
Total Revenue 915,234 1,284,704 1,760,930 2,568,885
------------------ ------------------- ------------------ -----------------
COSTS AND EXPENSES:
Cost of Products Sold 25,450 133,416 53,661 367,241
Cost of Customer Service and Support
471,916 765,852 973,002 1,476,711
Selling & Administrative Expenses 521,721 510,957 1,006,868 1,148,949
Depreciation & Amortization 100,627 128,159 202,237 215,357
------------------ ------------------- ------------------ -----------------
Total Costs and Expenses 1,119,714 1,538,384 2,235,768 3,208,258
------------------ ------------------- ------------------ -----------------
Operating Loss (204,480) (253,680) (474,838) (639,373)
------------------ ------------------- ------------------ -----------------
OTHER INCOME (EXPENSE):
Interest Expense (686) ---- (4,521) (7)
Interest Income 11,019 4,561 19,699 8,665
Other Income 6,430 329 10,099 115
------------------ ------------------- ------------------ -----------------
Total Other Income 16,763 4,890 25,277 8,773
------------------ ------------------- ------------------ -----------------
LOSS BEFORE INCOME TAXES (187,717) (248,790) (449,561) (630,600)
INCOME TAX --- (94,752) --- (240,715)
BENEFIT
------------------ ------------------- ------------------ -----------------
NET LOSS $ (187,717) $ (154,038) $ (449,561) $ (389,885)
================== =================== ================== =================
Weighted Average Number of Common
Shares Outstanding and Common Stock
Equivalents Outstanding
2,650,307 2,645,208 2,650,307 2,644,296
================== =================== ================== =================
LOSS PER SHARE $ (0.07) $ (0.06) $ (0.17) $ (0.15)
================== =================== ================== =================
See Notes to Financial Statements.
</TABLE>
<PAGE>
INFORMEDICS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, October 31,
ASSETS 1997 1996
------------------- -------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 166,152 $ 323,217
Accounts Receivable, less allowance
for doubtful accounts of $ 61,000 in
1997 and $ 28,439 in 1996 492,398 681,303
Inventories 14,876 23,833
Prepaid Expenses and Other Current Assets 31,336 36,150
Deferred Income Taxes 159,251 182,483
Current Portion of Long-Term 11,928 11,928
Receivable
Current Portion of Notes Receivable 335,174 54,095
------------------- -------------------
Total Current Assets 1,211,115 1,313,009
------------------- -------------------
FIXED ASSETS:
Furniture and Fixtures 134,282 134,282
Machinery and Equipment 596,256 583,961
Automobiles 29,138 29,138
Leasehold Improvements 26,738 20,442
Other Fixed Assets 139,781 136,805
------------------- -------------------
926,195 904,628
Less accumulated depreciation and amortization 744,108 672,300
-------------------
-------------------
Total Fixed Assets 182,087 232,328
------------------- -------------------
OTHER ASSETS:
Long-Term Account Receivable 36,778 42,742
Notes Receivable --- 305,102
Software Development Costs,
less accumulated amortization of $ 663,924 in
1997 and $ 542,884 in 1996 242,198 305,415
Covenants Not to Compete,
less accumulated amortization of $ 487,415 in 1997
and $ 479,698 in 1996 6,630 14,348
Deferred Income Taxes, less valuation reserve of
$ 185,089 in 1997 636,292 613,060
Other 39,874 41,816
------------------- -------------------
Total Other Assets 961,772 1,322,483
------------------- -------------------
TOTAL ASSETS $ 2,354,974 $ 2,867,820
=================== ===================
See Notes to Financial Statements
</TABLE>
<PAGE>
INFORMEDICS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, October 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
------------------ ------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses:
Trade Accounts $ 113,044 $ 115,543
Customer Deposits 11,255 4,120
Accrued Wages, Payroll Taxes and Employee
Benefits 125,174 175,285
Other Accrued Liabilities 8,541 767
Revolving Line of Credit (Note 2) 100,000 125,000
Deferred Revenue 1,289,537 1,274,687
Current Portion of Deferred Rent 13,033 13,033
Current Portion of Deferred Gain on Sale of Assets 98,073 19,615
------------------ ------------------
Total Current Liabilities 1,758,657 1,728,050
LONG-TERM OBLIGATIONS:
Deferred Rent 23,894 30,411
Deferred Gain on Sale of Assets --- 87,375
------------------ ------------------
Total Current Liabilities and
Long-Term Obligations 1,782,551 1,845,836
------------------ ------------------
STOCKHOLDERS' EQUITY:
Preferred Stock, $ .01 par value:
authorized 5,000,000 shares;
no shares outstanding --- ----
Common Stock, $.01 par value:
authorized 15,000,000 shares;
shares outstanding: 2,650,307 in 1997 and 1996 26,503 26,503
Capital in Excess of Par Value 1,914,213 1,914,213
Note Receivable from Stockholder (22,000) (22,000)
Accumulated Deficit (1,346,293) (896,732)
------------------ ------------------
Total Stockholders' Equity 572,423 1,021,984
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,354,974 $ 2,867,820
================== ==================
See Notes to Financial Statements.
</TABLE>
<PAGE>
INFORMEDICS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended April 30,
-----------------------------------------
1997 1996
-----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (449,561) $ (389,885)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation and Amortization 202,237 215,357
Provision for losses on (write off of) accounts receivable 32,561 (16,234)
Deferred Income Taxes --- (241,521)
Tax benefits from stock options exercised --- 796
Gain on Sale of Assets (8,917) ---
Changes in Assets and Liabilities:
Accounts Receivable 162,308 66,377
Income taxes receivable --- 29,087
Inventories 8,957 38,093
Prepaid Expenses and Other Current Assets 4,814 52,367
Accounts Payable and Accrued Expenses (37,701) 44,804
Notes Receivable 24,023 ---
Deferred Revenue 14,850 258,337
Deferred Rent (6,517) (6,516)
------------------ ------------------
Net cash provided by (used in) operating activities (52,946) 51,062
------------------ ------------------
INVESTING ACTIVITIES:
Property additions (23,238) (57,253)
Capitalized software development costs (57,823) (135,477)
Other 1,942 3,287
------------------ ------------------
Net cash used in investing activities (79,119) (189,443)
------------------ ------------------
FINANCING ACTIVITIES:
Decrease in revolving line of credit (25,000) ---
Proceeds from issuance of common stock --- 2,997
------------------ ------------------
Net cash provided by (used in) financing activities (25,000) 2,997
------------------ ------------------
NET DECREASE IN CASH (157,065) (135,384)
CASH AT BEGINNING OF PERIOD 323,217 534,260
------------------ ------------------
CASH AT END OF PERIOD $ 166,152 $ 398,876
================== ==================
</TABLE>
<PAGE>
INFORMEDICS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended April 30,
-------------------------------------------
1997 1996
-------------------------------------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow
Information:
Cash paid for:
Interest $ 4,521 $ 7
Income Taxes Received ---- (29,077)
</TABLE>
See Notes to Financial Statements.
<PAGE>
INFORMEDICS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Industry Segment
----------------
The Company derives its revenue solely from the sales and servicing of
microcomputer software and related hardware.
Inventories
-----------
Inventories are stated at the lower of cost or market. Specific
identification is used to determine the costs of hardware and software
inventory.
Fixed Assets
------------
Fixed Assets are stated at cost, less accumulated depreciation and
amortization. The costs of fixed assets are depreciated over the
estimated useful lives (two to five years) of the assets using the
straight-line method. Leasehold improvements are amortized over the
term of the lease (five years).
Customer Service and Support Revenue
------------------------------------
Customer service and support revenue represents revenue earned from
hardware and software maintenance contracts, training, installation of
new systems, and general software support and programming services
provided to customers. Under renewable maintenance contracts, the
Company provides, for a term of generally not more than one year,
essentially all maintenance and repairs resulting from the normal and
intended use of its products. Deferred revenue on maintenance
contracts is amortized by the straight-line method over the life of
the contracts.
Revenue Recognition
-------------------
Revenue from sales of software and hardware is generally recorded when
the product is shipped. Revenue from custom software products, which
are marketed to customers primarily under perpetual license
arrangements, is recorded at the time the product is installed and
accepted by the customer. Revenue from services other than maintenance
contracts is recognized as performed.
Income Taxes
------------
Income taxes are accounted for using the methodology established by
Statement of Financial Accounting Standards (SFAS) No.109, "Accounting
for Income Taxes", which requires an asset and a liability approach to
financial accounting and reporting for income taxes. Deferred income
tax assets and liabilities are computed for differences between the
financial statement and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future. A valuation
allowance is established when necessary to reduce deferred tax assets
to amounts expected to be realized, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to
affect taxable income. Income tax expense or benefit is the tax payable
or refundable for the period, plus or minus the change during the
period in deferred tax assets and liabilities.
<PAGE>
INFORMEDICS, INC.
NOTES TO FINANCIAL STATEMENTS
Software Development Costs
--------------------------
Certain software development costs are being capitalized and amortized
over the estimated economic life of the software, on a straight-line
method, commencing when each product or enhancement is available for
general release. Amortization using the straight-line method for the
six-month periods ended April 30, 1997 and 1996 was $ 121,040 and $
80,693, respectively.
Covenants Not to Compete
------------------------
Covenants not to compete are stated at the estimated value of the
consideration given for the covenants (including the present value of
any future payments to be made under each agreement), less accumulated
amortization. The costs of the covenants are being amortized over four
or seven years, using the straight-line method. Amortization for the
six-month periods ended April 30, 1997 and 1996 was $ 7,718 and $
38,582, respectively.
Loss Per Share
--------------
Loss per share is computed on the basis of weighted average number of
shares outstanding plus common stock equivalents which would arise from
the exercise of stock options and warrants. Common stock equivalents
are excluded from the calculation of net loss per share for the six
months ended April 30, 1997 and 1996, as they are antidilutive.
Cash and Cash Equivalents
-------------------------
The Company considers cash on hand, deposits in bank and highly liquid
debt instruments purchased with original maturity dates of three
months or less, as cash.
Accounting Changes
------------------
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation". This statement establishes
an alternative method of accounting that requires recognizing as
expense the fair value of employee stock options and other stock-based
awards at the grant date. SFAS No. 123 also allows the continuation of
the current accounting treatment under which the Company does not
recognize compensation expense for the stock options it awards to
employees. Since the Company is electing to retain its current method,
it will be required to present pro forma disclosures in its 1997
annual financial statements as if the fair value based method had been
applied.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
per Share". SFAS 128, requires all companies whose capital structures
include convertible securities and options to make a dual presentation
of basic and diluted earnings per share (EPS) on the face of the
income statement and requires additional disclosures regarding the
computation of EPS. The new standard becomes effective for interim
statements issued after December 15, 1997. The effect on earnings per
share for all periods reported is immaterial.
<PAGE>
INFORMEDICS, INC.
NOTES TO FINANCIAL STATEMENTS
Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform to the
current year presentation. These reclassifications have no effect on
net income.
2. CREDIT AGREEMENTS
In April 1997 the Company renewed its revolving line of credit
agreement with United States National Bank of Oregon ("USNB"). The line
of credit agreement allows the Company to borrow up to $700,000 and
requires the Company to maintain certain financial ratios. All assets
of the Company are pledged as security for the loan. The agreement
requires the Company to make monthly interest-only payments on all
amounts outstanding under the agreement. The interest rate varies from
1% to 2% above USNB's prime interest rate. On April 30, 1997, the
Company's balance outstanding under the agreement was $100,000 and the
interest rate was 9.50%. The agreement expires April 15, 1998.
<PAGE>
INFORMEDICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS. THOSE
STATEMENTS INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THE EXPECTATION STATED, INCLUDING THE
FOLLOWING: SLOWER THAN EXPECTED SALES OF INFORMEDICS' PRODUCTS, DETERIORATION OF
BUSINESS CONDITIONS GENERALLY OR SPECIFICALLY IN THE HEALTH-CARE INDUSTRY,
REGULATORY CHANGES INVOLVING HEALTH CARE, COMPETITIVE FACTORS, PRICE PRESSURES
AND HIGHER THAN EXPECTED TURNOVER IN KEY PERSONNEL.
Highlights
- ----------
On October 31, 1996, the Company sold certain assets of its ClinicManager
product line to Adaptive Health Systems of Washington, Inc. (`Adaptive'). In
April 1997 certain conditions of the sale were satisfied, resulting in an
acceleration of the note receivable payments due from Adaptive. On May 8, 1997,
the Company received $406,500 from Adaptive to pay off the note. The Company
expects to recognize a gain of approximately $166,000 during its third quarter
ended July 31, 1997 relating to the funds received from Adaptive in May 1997.
The sale of the ClinicManager product line and other cost cutting measures
resulted in improved operating results, as the Company reduced its loss before
income taxes for the second quarter and the first six months of 1997, when
compared to the same periods in 1996. The loss before income taxes decreased
from $248,790 in second quarter 1996 to $187,717 in second quarter 1997 and from
$630,600 for the first six months of 1996 to $449,561 for the first six months
of 1997.
The elimination of the ClinicManager product line from the Company's revenue
base resulted in a decrease in both product sales and customer service and
support revenue for the second quarter and the first six months of 1997. Total
revenue decreased from $1,284,704 and $2,568,885 for the second quarter and
first six months of 1996, respectively, to $915,234 and $1,760,930 for the
second quarter and first six months of 1997, respectively.
The Company did not record an income tax benefit in fiscal 1997 because it
established a valuation reserve against its deferred tax assets in the amount of
$185,089 for the six month period. This resulted in the Company's reporting a
higher loss (after taxes) for second quarter 1997 of $187,717 or $0.07 per share
compared to $154,038 or $0.06 per share for second quarter 1996. For the first
six months of 1997, the Company reported a net loss of $449,561 or $0.17 per
share compared to a net loss of $389,885 or $0.15 per share for the first six
months of 1996.
Results of Operations - Material Changes
- ----------------------------------------
The decrease in product sales of $116,229 for second quarter 1997 as compared to
second quarter 1996 resulted from the loss of revenue from the ClinicManager
product line, offset in part by an increase in laboratory system product sales.
The decrease in product sales of $393,348 for the first six months of 1997
resulted from the loss of revenue from the ClinicManager product line and a
decrease in laboratory system product sales during the first quarter of 1997.
During the second quarter of 1997, the Company hired additional salespersons to
increase product sales in future periods. Management believes that products
sales for 1997 will continue to lag 1996 results until sales of its new
IntraMed.net product line exceed previous ClinicManager sales levels.
The decrease in customer service and support revenue of $253,241 and $414,607
for the second quarter and first six months of 1997, respectively, when compared
to the same periods in 1996, resulted from a loss of revenue from the
ClinicManager product line, a decrease in the number of customers who purchased
the Company's hardware support services and a reduction in revenue from not
charging laboratory systems' customers a regulatory fee in 1997 as it did in
1996. In the second quarter of 1997, the Company began marketing a new technical
support service to help replace the revenue lost from the hardware support
services. Management believes that customer service and support revenue for the
remainder of 1997 will continue to be less than comparable periods in 1996.
A decrease in hardware sales of $124,771 and $367,739 for the second quarter and
first six months of 1997, respectively, resulted in a decrease in the cost of
products sold. The decrease in hardware sales resulted from the
<PAGE>
INFORMEDICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
elimination of revenue from the ClinicManager product line, a decrease in the
number of laboratory systems sold in the first quarter, and a decrease in
hardware sales related to the Company's lab order entry product line as Quest
Diagnostics, Inc., elected to purchase its hardware from another vendor.
The decrease of $293,936 and $503,709 in cost of customer service and support
for the second quarter and first six months of 1997, respectively, resulted from
a reduction in staff and other costs as a result of the sale of the
ClinicManager product line. Management anticipates that cost of customer service
and support for the remainder of 1997 will be less than comparable periods in
1996.
The increase of $10,764 in selling and administration expenses for the second
quarter of 1997 compared to the second quarter of 1996, resulted from increases
in sales and marketing costs and in bad debt expense, offset in part by a
decrease in rent expense. The increase in sales and marketing costs resulted
from hiring additional salespersons, placing more advertisements and incurring
additional travel related costs to market the Company's IntraMed.net and
LifeLine product lines. The increase in bad debt expense resulted from setting
up a reserve for one customer who is experiencing financial difficulties. The
decrease in rent expense resulted from the Company subletting part of the its
office space. Management anticipates that selling and administration expenses
will be higher during the remainder of 1997 than comparable periods in 1996, as
the Company plans to continue its expanded sales and marketing efforts of its
IntraMed.net and LifeLine product lines.
Liquidity - Capital Resources
- -----------------------------
The Company's cash position decreased from $323,217 on October 31, 1996 to
$166,152 on April 30, 1997, as the Company used $52,946 of its cash for
operating activities, $79,119 for investing activities and $25,000 for financing
activities. As discussed earlier, the Company received $406,500 from Adaptive on
May 8, 1997 in full payment of the Company's note receivable. Based upon the
anticipation of higher product sales, reduced operating expenses and the receipt
of funds from Adaptive, management believes that the Company's current cash
position and available funds under its revolving line of credit agreement will
be sufficient to fund its operating and investment activities for the remainder
of fiscal 1997.
Continuing losses resulted in a negative working capital of $547,542 on April
30, 1997 as compared to a negative working capital of $415,041 on October 31,
1996. Excluding the deferred revenue liability, which is a liability for future
services, the Company's working capital on April 30, 1997 was $741,995, compared
to $859,646 on October 31, 1996.
Capital expenditures for property additions were $23,238 for the first six
months of 1997 compared to $57,253 for the first six months of 1996. The
decrease resulted from management's decision to reduce capital expenditures in
1997. Management anticipates that capital expenditures for property additions
for remainder of 1997 will continue to be less than 1996 amounts.
Capitalized software development costs amounted to $57,823 and $135,477 for the
first six months of 1997 and 1996, respectively. The decrease resulted from the
reduction of the software development costs associated with the ClinicManager
product. Management anticipates that capitalized software development cost for
the remainder of 1997 will continue to be less than 1996 amounts.
In April 1997 the Company renewed its $700,000 uncommitted revolving line of
credit with the Company's bank. At April 30, 1997, the Company's balance under
this line of credit was $100,000. All of the assets of the Company are pledged
as security for the line of credit. Terms of the revolving line of credit
require the Company to maintain certain financial ratios. As of the date of this
Quarterly Report, the Company has maintained the required ratios. The line of
credit expires April 15, 1998.
<PAGE>
INFORMEDICS, INC.
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The 1997 Annual Shareholders Meeting was held March 14, 1997.
(b) The following directors were re-elected at the meeting with the
following votes:
Votes For Votes Withheld
--------- --------------
John Tortorici 2,297,385 74,532
Charles V. Dexter 2,317,435 54,482
Richard D. Glaser 2,296,435 75,482
Ronald P. Witcosky 2,307,435 64,482
Gerald P. Kelly 2,322,635 49,282
(c) The following other matters were approved at the meeting:
Ratification of the appointment of Deloitte & Touche LLP as independent
public accountants for fiscal 1997.
For Against Abstain
--- ------- -------
2,340,500 15,200 16,217
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K. On March 26, 1997, the Company
filed Form 8-K, dated March 14, 1997. In the Form 8-K,
the Company reported the resignation of Mr. Gerald
Kelly as President and Chief Operating Officer and as
director of the Company.
<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.
INFORMEDICS, INC.
(Registrant)
Date June 11, 1997 By /s/ John Tortorici
--------------- -------------------------------------
John Tortorici, Chairman, President
and Chief Executive Officer
Date June 11, 1997 By /s/ Dale E. Conner
--------------- -------------------------------------
Dale E. Conner, Vice President
and Chief Financial Officer
<PAGE>
FORM 10-QSB
Exhibit Index
Exhibit
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INFORMEDICS,
INC.'S FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON FORM 10-QSB FOR
THE PERIOD ENDED APRIL 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1997
<CASH> 166,152
<SECURITIES> 0
<RECEIVABLES> 553,398
<ALLOWANCES> 61,000
<INVENTORY> 14,876
<CURRENT-ASSETS> 1,211,115
<PP&E> 926,195
<DEPRECIATION> 744,108
<TOTAL-ASSETS> 2,354,974
<CURRENT-LIABILITIES> 1,758,657
<BONDS> 0
0
0
<COMMON> 26,503
<OTHER-SE> 545,920
<TOTAL-LIABILITY-AND-EQUITY> 2,354,974
<SALES> 424,010
<TOTAL-REVENUES> 1,760,930
<CGS> 53,661
<TOTAL-COSTS> 1,026,663
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,521
<INCOME-PRETAX> (449,561)
<INCOME-TAX> 0
<INCOME-CONTINUING> (449,561)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (449,561)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
