UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
Commission file No. 0-12969
TOUCHSTONE SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
California 95-3778226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2124 Main Street, Huntington Beach, CA 92648
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 969-7746
Indicated by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities 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 April 24, 1996 there were
7,390,450 shares of Common Stock outstanding
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying financial statements and notes thereto
do not contain all information required by
generally accepted accounting principles to be included
in a full set of financial statements.
In the opinion of management, the financial statements
reflect all adjustments necessary for a fair
presentation of the registrant's financial position and
results of operations. However, the results of
operations for the three months ended March 31, 1996
are not necessarily indicative of the results to be
expected for the full year.
2.
<PAGE>
TOUCHSTONE SOFTWARE CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
A S S E T S
- -----------
Current assets:
Cash and cash equivalents $13,862,919
Investments 2,993,403
Income tax refund receivable 341,490
Accounts receivable, net 233,126
Inventories 409,826
Prepaid expenses and other current assets 138,333
Employee advances 39,912
-------------
Total current assets $18,019,009
Investments 114,000
Property, net 293,182
Software development costs, net 153,814
Other assets 34,389
-------------
$18,614,394
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $2,547,184
Accrued payroll and related expenses 390,021
Accrued cooperative advertising costs 743,340
Other accrued liabilities 848,537
-------------
Total current liabilities 4,529,082
Deferred compensation 114,000
Deferred lease obligation 29,700
Shareholders' equity:
Preferred stock, $.001 par value, 3,000,000 shares
authorized, none issued or outstanding
Common stock, $.001 par value, 20,000,000
shares authorized; 7,385,450 shares issued
and outstanding 7,385
Additional paid-in capital 17,883,045
Accumulated deficit (3,924,729)
Notes receivable from sale of common stock (24,089)
-------------
Net shareholders' equity 13,941,612
-------------
$18,614,394
=============
See accompanying notes to consolidated financial statements
3.
<PAGE>
TOUCHSTONE SOFTWARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months Three months
ended ended
March 31, 1996 March 31, 1995
-------------- --------------
Revenues:
Product sales $654,544 $2,760,895
Royalty income 101,526 100,100
------------- ------------
Total revenues 756,070 2,860,995
Cost of Sales 698,961 749,778
------------- ------------
Gross Profit 57,109 2,111,217
Operating expenses:
Sales and marketing 950,308 860,409
General and administrative 894,257 398,291
Research and development 260,550 128,575
------------- ------------
Total operating expenses 2,105,115 1,387,275
------------- ------------
Income (loss) from operations (2,048,006) 723,942
------------- ------------
Other income, net 190,270 13,703
------------- ------------
Income (loss) before provision
for income taxes (1,857,736) 737,645
Provision for income taxes 280,300
------------- ------------
Net income (loss) ($1,857,736) $457,345
============= ============
Net income (loss) per share of
common stock outstanding ($0.25) $0.07
============= ============
Weighted average shares 7,366,000 6,570,000
============= ============
See accompanying notes to consolidated financial statements.
4.
<PAGE>
<TABLE>
TOUCHSTONE SOFTWARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three months Three months
ended ended
March 31, 1996 March 31, 1995
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) ($1,857,736) $457,345
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation and amortization 67,077 85,670
Provision for doubtful accounts 20,063 30,100
Provision for obsolete inventories 38,375 30,100
Change in deferred lease obligation 7,425
Amortization of investment premium 1,798
Loss on disposal of assets 947
Changes in operating assets and liabilities:
Income tax refund receivable 657,400
Accounts receivable (28,136) 241,320
Inventories (149,923) 69,811
Prepaid expenses and other current assets (21,316) (48,669)
Employee advances (20,487) 2,717
Other assets (1,630) (127,542)
Accounts payable 512,893 (70,094)
Accrued liabilities 306,741 147,965
-------------- ------------
Net cash provided by (used in)
operating activities (467,456) 819,670
Cash flow from investing activities:
Sale of investments 3,500,000
Capitalized software development costs (43,748) (69,994)
Purchase of investments (1,990,105) -
Purchases of property (71,492) (21,743)
-------------- -------------
Net cash provided by (used in)
investing activities 1,394,655 (91,737)
Cash flow from financing activities:
Principal payments on notes payable (85,019)
Principal payments under capital
lease obligations (1,645)
Proceeds from exercise of stock warrants and
options and repayment on notes receivable 17,077 18,511
-------------- ------------
Net cash provided by (used in)
financing activities 17,077 (68,153)
--------------- ------------
Net increase in cash and cash equivalents 944,276 659,780
Cash and cash equivalents, beginning of period 12,918,643 1,298,201
-------------- -----------
Cash and cash equivalents, end of period $13,862,919 $1,957,981
============== ============
Supplemental cash flow information:
Interest paid - $51,137
============== ============
Income taxes paid - $3,620
============== ============
See accompanying notes to consolidated financial statements
</TABLE>
5.
<PAGE>
TOUCHSTONE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1. GENERAL
The consolidated financial statements of the Company include
the financial statements of the Company's wholly-owned
subsidiary, TouchStone Europe Ltd., which commenced
operations in the United Kingdom in July 1995. These
consolidated financial statements have been prepared by the
Registrant, without audit, and include all adjustments which
are, in the opinion of management, necessary for a fair
presentation of the results of operations for the three
months ended March 31, 1996 and 1995, the financial position
at March 31, 1996, and the cash flows for the three months
ended March 31, 1996 and 1995, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the
Registrant believes that the disclosures in such financial
statements are adequate to make the information presented
not misleading. These consolidated financial statements
should be read in conjunction with the TouchStone Software
Corporation financial statements and notes thereto included
in the TouchStone Software Corporation Annual Report filed
with the Securities and Exchange Commission on Form 10-KSB
for the year ended December 31, 1995.
NET INCOME (LOSS) PER SHARE
Certain shares reserved for outstanding common stock
purchase warrants and options have been considered common
stock equivalents in computing net income per share for the
three months ended March 31, 1995. Such common equivalent
shares were not included in the calculation of the net loss
per share for the three months ended March 31, 1996 as their
effect would have been antildilutive.
2. ACCOUNTS RECEIVABLE
At March 31, 1996, accounts receivable is presented net of
allowance for doubtful accounts, reseller rebate reserves,
and product return reserves of approximately $94,000,
$537,200, and $1,329,700, respectively. Certain
distributors' accounts resulted in credit balances and
therefore were reclassified to accounts payable.
3. FINANCING ARRANGEMENTS
At March 31, 1996, the Company had a bank line of credit
which provided for borrowings up to $300,000 and bore
interest at the prime rate (8.5% at March 31, 1996) plus
1.5%. Borrowings are collateralized by substantially all
Company assets and guaranteed by three of the Company's
executive officers. The borrowing facility contains certain
financial covenants which require, among other things, the
Company to be profitable on an annual basis, minimum levels
of tangible net worth, and maintenance of certain financial
ratios, as defined. This line of credit also prohibits
payment of dividends without prior approval of the bank, and
limits annual capital expenditures to $75,000. There were no
borrowings under this line of credit at March 31, 1996.
The Company was not in compliance with certain of these
covenants at March 31, 1996. The Company received a waiver
for the covenant violations.
This line of credit expired May 5, 1996. The Company is
currently renegotiating with the bank for a new bank line of
credit with increased available borrowings. The Company
anticipates a new bank line of credit will be secured in
1996.
6.
<PAGE>
TOUCHSTONE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
4. CONTINGENT LIABILITIES
On January 26, 1996, a purported class and derivative action
entitled DARRIN J. CARAMONTA v. LARRY W. DINGUS, ET AL., AND
TOUCHSTONE SOFTWARE CORPORATION, was filed in the United
States District Court for the Central District of
California, in which Mr. Caramonta, on behalf of himself and
all others who purchased the Company's Common Stock between
May 2, 1995 and December 21, 1995, alleges that the Company,
and Larry W. Dingus, C. Shannon Jenkins, Ronald Maas,
Kenneth Welch III, Donald C. Watters, and Sigmund Fidyke III
violated Section 10(b) and Rule 10b-5 promulgated under the
Securities Exchange Act of 1934, as amended, and various
state statutes sounding in fraud, by reporting earnings for
the first three quarters of 1995 that allegedly were
knowingly inflated due to inadequate reserves for product
returns, in part, in order to assist the Company and the
individual defendants in selling Common Stock at an
allegedly inflated price in the Company's August 25, 1995
public offering. The derivative claims essentially assert
that the allegations sounding in fraud constituted a breach
of the individual defendants' fiduciary duties. The Company
and each of the individual defendants have denied all
allegations made against them in the lawsuit. On March 11,
1996, the Company and the individual defendants filed a
motion to dismiss the lawsuit for failure to state a claim.
On March 13, 1996, a second purported class and derivative
action entitled JACK BODNER AND PAUL L. FARBER v. LARRY W.
DINGUS, ET AL., and TouchStone Software Corporation, was
filed in the same court. This complaint essentially repeats
the allegations in the Caramonta lawsuit but also adds
claims for an alleged violation of Section 11 of the
Securities Act of 1933, as amended, against the Company and
certain of the individual defendants, and against the two
managing underwriters of the Company's August 25, 1995
public offering, Cruttenden Roth, Inc. and Punk, Ziegel &
Knoell. On March 21, 1996 a third purported class action,
MARC JAFFE v. LARRY W. DINGUS, ET AL., AND TOUCHSTONE
SOFTWARE CORPORATION, was also filed in the same Court. The
Jaffe action is essentially identical to the Caramonta
action except that it does not allege any derivative claims.
The Company and the individual defendants also deny the
allegations in the BODNER and JAFFE actions, and intend to
move to dismiss these lawsuits as well.
Based on its current knowledge, the Company does not believe
that the outcome of the referenced matters are likely to
have a material adverse effect on the financial condition of
the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This quarterly report on Form 10-QSB contains forward-looking
statements that involve risks and uncertainties. The actual
future results of TouchStone Software Corporation ("Company")
could differ materially from those statements. Factors that could
cause or contribute to such differences include, but are not
limited to, those discussed in this report, uncertainties
regarding market acceptance of new products and product
enhancements, delays in the introduction of new products, and
risks associated with managing the Company's growth, as well as
those factors discussed in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1995.
GENERAL
The Company is a leading developer and publisher of utility
software for personal computers. The Company recognized increases
in revenues and profitability during 1994, attributable primarily
to the April 1994 release of SetUp Advisor, a Windows-based
utility that helps users install modems, fax cards, sound cards,
CD-ROM drives and other devices in their personal computer
systems. Following the August 1994 introduction of WINCheckIt for
users of Microsoft's Windows operating system, the Company's
revenues and profitability grew at an accelerated rate during the
last five months of 1994 and the first quarter of 1995. In March
1995, the Company introduced FastMove!, software packaged with a
cable to assist users of multiple personal computers in
transferring and synchronizing data files while simultaneously
scanning for viruses, and a new version of SetUp Advisor that has
been enhanced to address the needs of personal
7.
<PAGE>
computer users who intend to upgrade their personal computers to
multimedia systems. In July 1995, the Company released WIN'95
Advisor, a utility software product that permits users to analyze
their personal computer's compatibility with Microsoft's
operating system, Windows 95, which was released by Microsoft on
August 24, 1995. In October 1995, the Company released WINCheckIt
4.0, TouchStone's latest version of its Windows problem solver.
WINCheckIt 4.0 provides a suite of diagnostic tools, normally
found in separate programs, that have been designed to work in
both Windows 95 and Windows 3.1 environments. In November 1995,
TouchStone released PC-cillin 95, an anti-virus utility software
program that is compatible with Windows 95 and Internet use. In
March 1996, the Company released CheckIt Diagnostic Kit, a
multi-utility package designed to meet the specific needs of both
technicians and technical users.
Revenues are recorded at the time products are shipped less
estimated reserves for product returns. However, the Company's
operations are subject to substantial risk of product returns
from distributors and retailers either through the exercise by
the Company's customers of contractual return rights or as a
result of the Company's policy of assisting customers in
balancing and updating inventories. Although the Company attempts
to monitor and manage the volume of its sales to its customers,
large shipments in anticipation of demand which is subsequently
unrealized can lead to overstocking by the distributors and
substantial product returns. Although the Company maintains
allowances for projected returns, there can be no assurance that
actual levels of returns will not significantly exceed amounts
anticipated by the Company. Prior to the third quarter of 1995,
the Company based reserves on historical experience, and returns
were within the estimated reserve range. In the third and fourth
quarters of 1995, due to slow sell-through of WIN'95 Advisor,
the Company granted price protections and recorded additional
reserves based on revised estimates of retail sell-through of
that product. Certain of the Company's customer agreements also
provide for rebates should the price of the Company's products
decline subsequent to shipment. The Company accrues for such
rebates when such price declines are known or become anticipated.
The Company's results of operations for the year ended December
31, 1995 were adversely affected by actual and anticipated
product returns of unsold reseller inventories of WIN '95
Advisor, which was released in July 1995, and WINCheckIt 2.0,
which required the booking of additional reserves for price
protection rebates and product returns, of approximately $1.1
million and $2 million in the third and fourth quarters of 1995,
respectively. The sell-through rate of WIN'95 Advisor at the
retail level dropped substantially in the fourth quarter of 1995,
in spite of price reductions implemented in October and November
1995. Market acceptance of Windows 95 for upgrades has not
materialized to the extent expected by the Company, which
negatively affected sales of WIN'95 Advisor at the retail level.
Management believes that confusion in the marketplace by personal
computer users as to whether to upgrade their operating system to
Windows 95 also led to a reduction in sales of WINCheckIt 2.0 at
the retail level in 1995.
The Company has deferred revenue recognition on all shipments of
WINCheckIt 4.0 during the three months ended March 31, 1996 and
will record revenues on these shipments and on initial shipments
of CheckIt Diagnostic Kit and other new products after obtaining
more information on retail sell-through.
These factors, combined with increased general and administrative
expenses as reflected in the accompanying unaudited, consolidated
financial statements, have adversely affected profitability and
resulted in a loss for the three months ended March 31, 1996.
The Company's revenues consist of product sales and royalty
income. Royalty income is derived, for the most part, from
international sales of the Company's products under agreements
with co-publishers, principally those who sell the Company's
products in Europe.
Most of the Company's operating expenses relate directly to sales
volume. Cost of sales includes the cost of blank diskettes,
software duplication, packaging materials and user manuals, in
addition to amortization of software development costs, royalties
paid to other software development companies under various
agreements, and inventory obsolescence reserves. Sales and
marketing expense consists primarily of salaries and commissions
paid to the Company's sales, customer service and technical
support personnel and expenditures for retail product
merchandising and promotions. In addition to the base salaries of
employees in general administration, general and administrative
expense includes legal and accounting expenses and amounts paid
to all of the Company's personnel under the Company's annual
bonus plans that are based upon the Company's overall levels of
quarterly net income. The Company's products can be expected to
have short product life cycles, characterized by decreases in
retail prices as a given product's life cycle advances. In order
for the Company to maintain satisfactory gross margins, the
Company will need to introduce new products to offset declining
margins associated with older products.
8.
<PAGE>
Research and development expense consists primarily of salaries
and related benefits paid to computer programmers to research and
design new software products. In addition to amounts expensed for
research and development activities, salaries paid to the
Company's software programmers and fees paid to outside software
development consulting firms for further development and
enhancement after technological feasibility of a product has been
established are capitalized in accordance with SFAS 86.
As further discussed in "Results of Operations" below, the
Company incurred a net loss of $1,858,000 during the three months
ended March 31, 1996, as compared to net income of $457,000
during the three months ended March 31, 1995. In order to improve
operating results, the Company's plans include, but are not
limited to, the introduction of new software products in 1996 and
the expansion of marketing channels by the promotion of products
directly to corporate and institutional customers. No assurance
may be given that the implementation of such plans will result in
profitable operating results.
The following information should be read in conjunction with the
unaudited, consolidated financial statements included herein. All
dollar amounts presented have been rounded to the nearest
thousand, and all percentages are approximate.
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations
data as a percentage of total revenues for the three-month
periods ended March 31:
1996 1995
---- ----
Revenues:
Product sales 86.6% 96.5%
Royalty income 13.4 3.5
------- ------
Total revenues 100.0 100.0
Cost of sales 92.4 26.2
------- ------
Gross profit 7.6 73.8
Sales and marketing 125.7 30.1
General and administrative 118.3 13.9
Research and development 34.5 4.5
------- ------
Total operating expenses 278.5 48.5
------- ------
Income (loss) from operations (270.9) 25.3
Other income, net 25.2 0.5
------- ------
Income (loss) before taxes (245.7) 25.8
Provision for income taxes 9.8
------- ------
Net income (loss) (245.7)% 16.0%
======= ======
Revenues
Total revenues for the three months ended March 31, 1996 were
$756,000, a decrease of $2,105,000, or 73.6%, compared to
$2,861,000 for the three months ended March 31, 1995, as sales of
WINCheckIt 4.0 in the first quarter of 1996 were significantly
less than expected. Although sales of PC-cillin in 1996 exceeded
management's expectations, sales of PC-cillin did not offset
declining sales of WINCheckIt 4.0. Further, as discussed above,
the Company deferred recognition of revenue related to sales of
CheckIt Diagnostic Kit in March 1996. The Company expects that
sales of PC-cillin will contribute a substantial portion of total
revenues during 1996.
For the three months ended March 31, 1996, royalty income was
$102,000, an increase of $2,000, or 1.4%, compared to $100,000
for the three months ended March 31, 1995. Royalty income
increased as a percentage of total revenues, from 3.5% during the
three months ended March 31, 1995 to 13.4% for the three months
ended March 31, 1996.
9.
<PAGE>
Gross Profit
Gross profit for the three months ended March 31, 1996 was
$57,000, a decrease of $2,054,000, or 97.3%, compared to
$2,111,000 for the three months ended March 31, 1995. Gross
profit as a percentage of total revenues declined from 73.8% in
1995 to 7.6% in 1996. This decrease was primarily attributable to
increased royalty expense to other software companies ($260,000
in the three months ended March 31, 1996, compared to $41,000 in
the three months ended March 31, 1995), primarily incurred in
connection with sales of the Company's PC-cillin product.
Additionally, the gross profit percentage declined because the
sales volume is low in relation to certain fixed expenses. Such
increased costs were offset somewhat by a decline in amortization
of software development costs, which decreased from $75,000 in
the three months ended March 31, 1995 to $40,000 in the three
months ended March 31, 1996.
Sales and Marketing Expense
Sales and marketing expense for the three months ended March 31,
1996 was $950,000, an increase of $90,000, or 10.4%, compared to
$860,000 for the three months ended March 31, 1995. This increase
was primarily attributable to an increase in the number of
customer service and technical support personnel in 1996 as
compared to 1995. Such increased costs were offset somewhat by a
decline in certain promotional expenditures. Due to these
additional expenditures and the decline in product sales, sales
and marketing expenses increased as a percentage of total
revenues from 30.1% in the first quarter of 1995 to 125.7% in the
first quarter of 1996.
General and Administrative Expense
General and administrative expense for the three months ended
March 31, 1996 was $894,000, an increase of $496,000, or 125%,
compared to $398,000 for the three months ended March 31, 1995.
The increase is primarily attributable to increased legal
expenses relating to the matters identified in Note 4, and
compensation expense related to a stock buy back agreement
incurred in connection with the resignation of a Company officer.
Additionally, investor relations and audit costs increased. These
increased costs were partially offset by a decline in
profit-sharing bonuses paid to employees ($158,000 in the three
months ended March 31, 1995, as compared to none in the three
months ended March 31, 1996). As a percentage of total revenues,
general and administrative expenses increased from 13.9% to
118.3% during the three months ended March 31, 1995 to the three
months ended March 31, 1996, respectively.
Research and Development Expense
Research and development expense for the three months ended March
31, 1996 was $261,000, an increase of $132,000, or 102.6%,
compared to $129,000 during the three months ended March 31,
1995. The increase was attributable primarily to the hiring of
additional personnel to develop new products, and to salary
increases for existing programmers. Research and development
expense also increased as a percentage of total revenues, from
4.5% for the three months ended March 31, 1995 to 34.5% for the
three months ended March 31, 1996.
Other Income
During the three months ended March 31, 1995, the Company's
interest income exceeded its interest expense by approximately
$14,000. Interest income exceeded interest expense in the three
months ended March 31, 1996, by approximately $190,000, as
interest-bearing investments increased and debt decreased from
1995 levels.
10.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1996, the Company used
its cash resources primarily for investments in debt securities
totaling $1,990,000. Additionally, the Company used $467,000 for
operating activities. The Company also invested $44,000 in
software development and purchased equipment totaling $71,000.
These expenditures were funded primarily by cash received from
sale of investments of $3,500,000. The Company also received
proceeds from sales of common stock aggregating $17,000.
During the three months ended March 31, 1995, the Company used
its cash resources primarily to repay debt and capital lease
obligations aggregating $87,000. Additionally, the Company
invested $70,000 in software development and purchased equipment
totaling $22,000. The Company used cash generated from operations
of $820,000, and cash received from sales of common stock of
$19,000, to fund these expenditures.
Primarily as a result of the net loss incurred in the three
months ended March 31, 1996 as discussed above, the Company's
working capital has decreased from $15,373,000 at December 31,
1995 to $13,490,000 at March 31, 1996. Cash and cash equivalents
increased from $12,919,000 at December 31, 1995 to $13,863,000 at
March 31, 1996.
During the first quarter of 1996, the Company had available a
bank line of credit which provided for borrowings up to $300,000
and bore interest at the prime rate (8.5% at March 31, 1996),
plus 1.5%. The borrowing facility contained certain financial
covenants. At March 31, 1996, the Company was not in compliance
with certain of these loan covenants. The Company received a
waiver for the covenant violations. There were no borrowings
under this line of credit at March 31, 1996.
This bank line of credit matured May 5, 1996. There were no
outstanding borrowings under the line of credit at maturity. The
Company is currently negotiating with the bank for a new bank
line of credit with increased available borrowings. The Company
anticipates a new bank line of credit will be secured in 1996.
Management believes that the Company's existing cash resources
and anticipated cash flows from operations, and periodic
borrowings under the line of credit, will be sufficient to fund
the Company's operations at currently anticipated levels through
March 31, 1997. The Company plans to use its cash resources to
finance new product development and existing product
enhancements, expand internationally, expand the direct sales
force for corporate customers, and for general corporate
purposes. The execution of such plans may include strategic
acquisitions of or investments in complementary businesses,
products or technologies.
11.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Not applicable
ITEM 2. Changes in Securities.
Not applicable.
ITEM 3. Defaults Upon Senior Securities.
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
a. Exhibit 27 - Financial Data Schedule
b. No reports on Form 8-K have been filed at March 31, 1996.
12.
<PAGE>
S I G N A T U R E S
-------------------
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.
TOUCHSTONE SOFTWARE CORPORATION
(Registrant)
/s/ Larry C. Jordan President and Chief Operating
- ----------------------------------------- Officer
Larry C. Jordan Dated: May 15, 1996
/s/ Ronald R. Maas Executive Vice President,
- ------------------------------------------
Ronald R. Maas Dated: May 15, 1996 Chief Financial Officer,
Principal Accounting Officer
and Director
<TABLE> <S> <C>
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<NAME> TOUCHSTONE SOFTWARE CORPORATION
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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<CASH> 13,862,919
<SECURITIES> 2,993,403
<RECEIVABLES> 233,126
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</TABLE>
