<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15d of the Securities Exchange Act
of 1934 for the quarterly period ended: September 30, 1996
[ ] Transition report pursuant to Section 13 or 15d of the Securities
Exchange Act of 1934 For the Transition period from ___________________
to___________________
Commission file number: 1-12966
INSCI CORP
(Exact name of registrant as specified in its charter)
Delaware 06-1302773
- ------------------------------------- ------------------------------------
(State of incorporation) (IRS employer identification number)
Two Westborough Business Park
Westborough, MA 01581
(Address of principal executive offices)
Issuer's telephone number, including area code: (508) 870-4000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 __
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Title of Each Class Outstanding at September 30, 1996
- ------------------- ---------------------------------
Common stock, par value $.01 4,005,471
Transitional Small Business Disclosure Format (check one)
Yes X No ___
<PAGE>
INSCI CORP
INDEX
PART I FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheet as of September 30, 1996 3
Condensed Statements of Operations for the Three Months 4
and Six Months Ended September 30, 1996 and 1995
Condensed Statement of Cash Flows for the Six Months 5
Ended September 30, 1996 and 1995
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 4 Submission to Matters to a Vote of Security Holders... 13
Item 5 Other Events 14
Item 6 Exhibits and Reports on Form 8-K 14
Signature 15
<PAGE>
INSCI Corp
BALANCE SHEET
(in thousands)
(unaudited)
ASSETS SEPTEMBER 30,
1996
-------------
Current assets:
Cash and cash equivalents $ 3,035
Accounts receivable, net 1,986
Prepaid expenses and other 222
-------
Total current assets 5,243
Property & equipment 1,892
Less: accumulated depreciation (1,077)
-------
Total equipment, net 815
Capitalized software development costs,
net of accumulated amortization of $812 636
Purchased software, net of accumulated amortization of $217 895
Other assets 76
-------
Total assets $ 7,665
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 27
Accounts payable 858
Accrued liabilities 936
Customer deposits 48
Unearned maintenance revenue 595
-------
Total current liabilities 2,464
Note payable 44
Stockholders' equity :
Common stock 39
Preferred stock 30
Additional paid-in capital 20,806
Accumulated deficit (15,718)
-------
Total stockholders' equity 5,157
-------
Total liabilities and stockholders' equity $ 7,665
=======
See accompanying notes
<PAGE>
<TABLE>
INSCI Corp
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenue
Product $ 980 $ 1,383 $ 2,479 $ 1,728
Maintenance 411 425 880 836
Services 694 268 1,662 353
-------- ------- ------- --------
Total revenue 2,085 2,076 5,021 2,917
Cost of revenue
Product 371 463 759 757
Maintenance 344 220 703 500
Services 370 167 694 284
-------- ------- ------- --------
Total cost of revenue 1,085 850 2,156 1,541
-------- ------- ------- --------
Gross margin 1,000 1,226 2,865 1,376
Expenses
Sales and marketing 792 504 1,670 1,093
Product development 547 308 992 704
General and administrative 552 339 1,004 857
Non-recurring - (170) - 150
-------- ------- ------- --------
Total expenses 1,891 981 3,666 2,804
-------- ------- ------- --------
Income (loss) from operations (891) 245 (801) (1,428)
Interest income (expense)
Interest income 16 14 24 32
Interest expense (3) - (4) -
-------- ------- ------- --------
Interest income (expense) net 13 14 20 32
-------- ------- ------- --------
Net income (loss) (878) 259 (781) (1,396)
Preferred stock dividend (52) - (81) (27)
-------- ------- ------- --------
Net income (loss) applicable to common shares $ (930) $ 259 $ (862) $ (1,423)
======== ======= ======= ========
Net income (loss) per common share $ (0.23) $ 0.07 $ (0.22) $ (0.39)
======== ======= ======= ========
Weighted average common shares outstanding 3,982 3,640 3,946 3,640
-------- ------- ------- --------
</TABLE>
See accompanying notes
<PAGE>
INSCI Corp
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
SIX MONTHS ENDED
SEPTEMBER 30
1996 1995
------- -------
Cash flows from operating activities:
Net income (loss) $ (781) $(1,396)
Reconciliation of net loss to net cash
used in operating activities:
Depreciation and amortization 231 224
Amortization of deferred software costs 451 412
Changes in assets and liabilities:
Accounts receivable 116 5
Inventory 12 25
Prepaid expenses and other current assets (82) 61
Note payable (21) --
Accounts payable 197 126
Accrued and other liabilities (133) 92
Customer deposits (209) (103)
Deferred maintenance revenue 21 (41)
------- -------
Net cash used in operating activities (198) (595)
Cash flows from investing activities:
Additions to capitalized software development costs (388) (80)
Capital expenditures (213) (30)
Other assets 2
------- -------
Net cash used in investing activities (601) (108)
Cash flows from financing activities:
Proceeds from exercise of stock options 103 --
Proceeds from sale of preferred stock 3,763 1,200
Payment of preferred stock issuance costs (447) (260)
Redemption of preferred stock and dividends (1,000)
Payment of capital lease obligations (21) (18)
------- -------
Net cash provided by (used in) financing activities 3,398 (78)
------- -------
Net change in cash and cash equivalents 2,599 (781)
Cash and cash equivalents at beginning of year 436 1,605
------- -------
Cash and cash equivalents at end of period $ 3,035 $ 824
======= =======
See accompanying notes
<PAGE>
INSCI CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The financial statements included herein have been prepared by INSCI
Corp (the "Company" or "INSCI"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. However,
the Company believes that the disclosures contained herein are adequate to make
the information presented not misleading. The financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's annual reports on Form 10-K, filed on July 1, 1996, for the fiscal
year ended March 31, 1996, and with the Company's definitive proxy statement for
its 1996 Annual Meeting of Stockholders filed with the Commission on July 29,
1996.
In the opinion of the management of the Company, the accompanying
unaudited financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary to present fairly the financial position
of the Company as of September 30, 1996 and the results of operations for the
quarter ended September 30, 1996 and 1995 and six months ended September 30,
1996 and 1995 and cash flows for the six months ended September 30, 1996 and
1995.
The computation of income (loss) per common and common equivalent
shares has been calculated on the basis of the weighted average number of common
shares outstanding during each period. When dilutive, stock options and warrants
are included as share equivalents using the modified treasury stock method.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
COMPARISON OF RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentage relationship that certain items of the Company's results of
operations bear to total revenue.
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
% % % %
--- --- --- ---
<S> <C> <C> <C> <C>
Revenue
Product 47 67 49 59
Maintenance 20 20 18 29
Services 33 13 33 12
--- --- --- ---
Total revenue 100 100 100 100
Cost of revenue
Product 18 22 15 26
Maintenance 16 11 14 17
Services 18 8 14 10
--- --- --- ---
Total cost of revenue 52 41 43 53
--- --- --- ---
Gross margin 48 59 57 47
Expenses
Sales and marketing 38 24 33 38
Product development 26 15 20 24
General and administrative 27 16 20 29
Non-recurring 0 -8 0 5
--- --- --- ---
Total expenses 91 47 73 96
--- --- --- ---
Income (loss) from operations (43) 12 (16) (49)
Interest income (expense)
Interest income 1 0 0 1
Interest expense 0 0 0 0
--- --- --- ---
Interest income (expense) net 1 0 0 1
--- --- --- ---
Net income (loss) (42) 12 (16) (48)
=== === === ===
</TABLE>
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED
TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995:
REVENUE
INSCI sells, installs and supports imaging, print-on-demand, data
management and archival storage software products. Sales to end users generally
include software, optical storage hardware, systems integration and consulting
services, installation and training. Post-installation maintenance and customer
support is available under the terms of a separate contract at an additional
charge. INSCI also sells software products directly to value added resellers and
distributors.
Total revenue for the quarter ended September 30, 1996 was $2,085,000
compared to $2,076,000 for the quarter ended September 30, 1995. Revenue is net
of discounts and allowances. Product revenue for the current quarter totaled
$980,000 and decreased by 29% versus last year's quarter. The Company has been
transitioning to selling larger value orders to key accounts and larger
customers, which inherently can create more volatility in quarter to quarter
revenue.
Maintenance revenue was $411,000 for the September 30, 1996 quarter and
decreased by $14,000 from the comparable 1995 quarter due to minor changes in
contract renewal timing. Services revenue, which includes charges for
consulting, systems integration services, custom applications, installation and
training, totaled $694,000 for the current quarter and increased by $426,000
over the September 30, 1995 quarter. This increase is directly attributable to
the increase in revenue from the Company's consulting and systems integration
activities.
GROSS MARGIN
Gross margin for the quarter ended September 30, 1996 and 1995 were
$1,000,000 (48%) and $1,226,000 (59%), respectively. Cost of revenue for the
September 30, 1996 quarter was $1,085,000 or 52% of revenue, compared to
$850,000, or 41% of revenue, for the same quarter of 1995.
Cost of revenue for product revenue was $371,000 for the September 30,
1996 quarter compared to $463,000 for the same quarter last year. Costs
associated with product revenue include the costs of hardware and software
products purchased for resale, and charges for the amortization of capitalized
software development costs. Cost of product revenue varies depending upon the
mix of software and hardware products including individual system orders. Cost
of product revenue includes software amortization charges of $229,000 for the
September 30, 1996 quarter compared to $223,000 for the comparable period last
year.
Costs for maintenance and services revenue include the costs of systems
integration, consulting, customer support personnel, the cost of third-party
services and hardware maintenance subcontracts. Total combined cost of revenue
for maintenance and services were $714,000 for the September 30, 1996 quarter
compared to $387,000 for the comparable period last year. This increase reflects
added personnel costs associated with upgrading the level of maintenance support
provided to customers combined with additional personnel associated with
increased billings in systems integration services.
SALES AND MARKETING
Sales and marketing expenses for the quarter ended September 30, 1996
were $792,000 or 38% of total revenue compared to $504,000 or 24% of total
revenue for the quarter ended September 30, 1995. The expense increase of
$288,000 was attributable to additions in marketing programs and personnel.
PRODUCT DEVELOPMENT
Product development expenses were $547,000, or 26% of revenues, (after
capitilization of software developments costs of $184,000) for the quarter ended
September 30, 1996 compared to $308,000, or 15% of revenues, (after
capitilization of software developments costs of $31,000) for the comparable
quarter in 1995. The $239,000 increase in expenses reflects resources, primarily
personnel additions, to develop future company products.
GENERAL AND ADMINISTRATIVE
General and administrative expenses were $552,000, or 27% of revenues,
for the quarter ended September 30, 1996 compared to $339,000, or 16% of
revenues for the comparable quarter in 1995. The increase of $213,000 is
attributable to additional audit, legal, professional, shareholder relations,
compensation and insurance expenses.
NON-RECURRING COSTS
The Company had recorded a charge of $320,000 in the quarter ended June
30, 1995 for expenses to be incurred pursuant to a restructure plan.
Subsequently, it was determined that in order to support the Company's planned
growth in the systems integration and consulting area, the Company would need to
retain some of the facility space and the equipment that it had previously
planned to dispose of. As a result of this change and the resultant lower level
of expenses incurred, during the quarter ended September 30, 1995 the Company
reversed $170,000 of the restructure charge accrued in the previous quarter. The
restructure plan was completed in November, 1995.
INTEREST INCOME (EXPENSE)
Interest income (expense) net was $13,000 in the quarter ended
September 30, 1996 compared to $14,000 for the comparable quarter last year.
NET INCOME (LOSS)
Net loss was $878,000 for the quarter ended September 30, 1996 compared
to a net profit of $259,000 for the quarter ended September 30, 1995. Net loss
applicable to common shares, after preferred stock dividend charges, was
$930,000, or $(.23) per share for the September, 1996 quarter compared to a
profit of $259,000, or $.07 per share for the quarter ended September 30, 1995.
<PAGE>
SIX MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE SIX MONTHS ENDED
SEPTEMBER 30, 1995:
REVENUE
Total revenue for the six months ended September 30, 1996 was
$5,021,000 and increased by 72% compared to revenue of $2,917,000 for the six
months ended September 30, 1995. Product revenue was $2,479,000 for the latest
six month period and increased by 43% compared to the same period in 1995. This
increase is attributable to an increase in the size of sales orders reflecting
the Company's emphasis on selling to key accounts and larger customers.
Maintenance revenue was $880,000 for the six months ended September 30,
1996 and increased by $44,000 compared to the same period in 1995. Services
revenue was $1,662,000 for the latest six month period and increased by
$1,309,000 compared to the six months ended September 30, 1995. This increase is
directly attributable to the increase in revenue from the Company's consulting
and systems integration activities. During the last four quarters, the Company
has focused on increasing its systems integration services to increase total
revenue and to provide support services to enable higher sales volumes of its
core software products.
GROSS MARGIN
Gross margin for the six months ended September 30, 1996 and 1995 were
$2,865,000 (57%) and $1,376,000 (47%), respectively. Cost of revenue for these
periods, respectively, was $2,156,000 or 43% of revenue, compared to $1 541,000,
or 53% of revenue. The increase in the gross margin percentage during 1996
reflects an increase in sales volume with a lower rate of increase in cost of
revenue, much of which, including software amortization and support expenses,
does not increase in proportion to revenue increases.
Cost of revenue for product revenue was $759,000 for the six months
ended September 30, 1996 compared to $757,000 for the same period during 1995.
The cost of product revenue includes software amortization charges of $452,000
for the September 30, 1996 period compared to $412,000 for the comparable period
last year.
Total combined costs of revenue for maintenance and services were
$1,397,000 for the six months ended September 30, 1996 and increased by 78%
compared to 784,000 for the six months ended September 30, 1995. This compares
with a 113% increase in the revenues related to these costs. The increase in
cost of revenue reflects added personnel costs associated with upgrading the
level of maintenance support provided to customers combined with additional
personnel associated with increased billings in systems integration services.
<PAGE>
SALES AND MARKETING
Sales and marketing expenses for the six months ended September 30,
1996 were $1,670,000 or 33% of total revenue compared to $1,093,000 or 38% of
total revenue for the six months ended September 30, 1995. The expense increase
of $577,000 is attributable higher sales commissions related to increased
revenue levels, combined with added marketing programs and personnel additions.
PRODUCT DEVELOPMENT
Product development expenses were $992,000, or 20% of revenues, ( after
capitilization of software developments costs of $364,000) for the six months
ended September 30, 1996 compared to $704,000, or 24% of revenues, ( after
capitilization of software developments costs of $80,000) for the comparable
period in 1995. The $288,000 increase in expenses reflects resources, both in
personnel and outside contractors, added to develop future company products. .
GENERAL AND ADMINISTRATIVE
General and administrative expenses were $1,004,000, or 20% of
revenues, for the six months ended September 30, 1996 compared to $857,000, or
29% of revenues for the comparable period in 1995. The increase of $147,000 is
attributable to additional audit, legal, professional, shareholder relations,
compensation and insurance expenses.
NON-RECURRING COSTS
The Company recorded a net charge of $150,000 for the six months ended
September 30, 1995 for expenses to be incurred pursuant to a restructure plan
approved in June, 1995. The restructure plan was completed in November, 1995.
INTEREST INCOME (EXPENSE)
Interest income (expense) net was $20,000 for the six months ended
September 30, 1996 compared to $32,000 for the comparable period in 1995.
NET INCOME (LOSS)
Net loss was $781,000 for the six months ended September 30, 1996
compared to a net loss of $1,396,000 for the six months ended September 30,
1995. Net loss applicable to common shares for these periods, respectively,
after preferred stock dividend charges, was $862,000, or $(.22) per share for
1996 and $1,423,000, or $(.39) per share for 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized below for the periods
indicated:
Six months ended
September 30,
-----------------------
1996 1995
---------- ---------
Cash provided by (used in):
Operating activities $ (198,000) $(595,000)
Investing activities (601,000) (108,000)
Financing activities 3,398,000 (78,000)
---------- ---------
Increase (decrease) in cash $2,599,000 $(781,000)
========== =========
<PAGE>
The Company generated net negative cash flows of ($198,000) from
operations in the six months ended September 30, 1996. The Company had a
negative cash flow of ($601,000) from investing activities relating to additions
to capitalized software and capital expenditures. Financing activities generated
cash flow of $3,398,000, and included proceeds from the sale of preferred stock,
net of issuance costs, of $3,316,000. Working capital at September 30, 1996 was
$2,779,000 compared to $91,000 at September 30, 1995.
The Company presently has no material commitments for capital
expenditures.
RISK FACTORS
INSCI has experienced, an may in the future experience, significant
quarter to quarter fluctuations in revenues and the results of operations. Such
fluctuations may result in volatility in the price of the Company's Common
Stock. Quarterly revenues and results of operations may fluctuate as a result of
a variety of factors, including the lengthy sales cycle for the Company's
products, the proportion of revenues attributable to software license fees
versus services, the amount of revenue generated by alliances with other
companies selling INSCI's products, demand for the Company's products, the size
and timing of individual license transactions, the introduction of new products
and product enhancements by the Company or its competitors, changes in customer
budgets, competitive conditions in the industry and general economic conditions.
Further, the sale of the Company's products generally involves a significant
commitment of capital and may be delayed due to time-consuming authorization
procedures within an organization.
For these and other reasons, the sales cycles for the Company's products are
typically lengthy and subject to a number of significant risks over which the
Company has little or no control. The Company has historically operated with
little backlog, since its products are generally shipped as orders are received.
The Company has historically recognized a substantial portion of its revenues in
the last month of the quarter, with these revenues concentrated in the last week
of the quarter. Delays in the timing of recognition of specific revenues may
adversely and disproportionately affect the Company's results of operations due
the relatively fixed nature of a high percentage of the Company's operating
expenses, and planned expenditure increases, such as additional expenditures for
product development or expansion of the Company's sales force. Only a small
percentage of the Company's expenses vary with its revenues. Accordingly, the
Company believes that period to period comparisons of results of operations are
not necessarily meaningful and should not be relied upon as an indication of
future results of operations. There can be no assurance that the Company will be
profitable in any future quarter. Due to the foregoing factors, it is likely
that in some future quarter the Company's operating results will be below the
expectations of public market analysts and investors. Such an event would have a
material adverse effect on the price of the Company's Common Stock.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Securities and Exchange Commission (the "Commission") issued an
order, dated April 13, 1995, authorizing a private investigation of Imtech
(INSCI's former majority shareholder) and INSCI, and its officers and directors
during the period from March 1993 and continuing until April 13, 1995. The order
of investigation inquiring into whether the Company and its then officers and
directors engaged in violations of Rule 10b-5 of the Securities Exchange Act of
1934 (the "Exchange Act"); failed to file annual reports and other information
as required by the rules and regulations of the Commission in violation of
Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13; and
failed to maintain proper books and records in violation of Section 13(b)2 of
the Exchange Act or falsified or caused to be falsified books and records of the
Companies in violation of Sections 13(b)(2)(a), Rule 13b2-1, and Rule 13b2-2 of
the Exchange Act.
On September 10, 1996 the Company was informed by the Commission that
the staff inquiry relating to these matters had been terminated and that no
enforcement action had been recommended this time.
The Company has previously agreed to use its best efforts to file a
registration statement for shares of stock in the Company pursuant to a
conversion right granted to holders of convertible preferred stock in the
Company and to certain Stockholders and Option and Warrant Holders. The Company
is in the process of preparing a registration statement for the securities.
ITEM 2. CHANGES IN SECURITIES
Changes in securities are incorporated by reference. Refer to Item
6.(b) on this report.
ITEM 4. SUBMISSION TO MATTERS TO A VOTE OF SECURITY HOLDERS
On September 26, 1996, the Company held its Annual Meeting of
Shareholders, and the Shareholders ratified the following:
(1) To approve the 1997 Equity Incentive Plan authorizing 3,000,000
shares of Common Stock $0.01 par value to replace 3,077,935 shares
under the 1992 Stock . Option Plan that will be terminated.
(2) To ratify the Board of Directors resolution with respect to the
direct grant of 3,000,000 stock options to certain employees,
directors and consultants.
(3) To amend the 1992 Directors Option Plan.
The Company incorporates, by reference, the proxy material submitted to
the Shareholders eligible to vote at its Annual Meeting.
<PAGE>
ITEM 5. OTHER EVENTS
On November 11, 1996, the Company completed the balance of the Private
Placement Offering with J. Michael Reisert, Inc. (Reisert), acting as the
Placement Agent, of 663,334 Units, consisting of 663,334 shares of 8%
Convertible-Preferred Stock and Warrants to purchase 663,334 shares of Common
Stock at $5.00 per share. Additionally, the Company issued 66,333 Placement
Agent Units to Reisert at $5.50 per unit. The Company received gross proceeds of
$2,487,503 as a result of the completion of the Placement, and incorporates, by
reference, the Company's filing on Form 8-K as filed with the Commission dated
September 12, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The reports on Form 8-K to be included to the 10-K and Proxy Statement
filed by the Company (incorporated by reference)
(A) EXHIBITS. None filed with this report.
(B) REPORTS ON FORM 8-K.
A report on Form 8-K, dated March 28, 1996, was filed on April 5, 1996
by the Company regarding the appointment of a new director.
A report on Form 8-K, dated March 28, 1996, was filed on April 12, 1996
by the Company regarding the acquisition of Courtland.
A report on Form 8-K, dated April 10, 1996, was filed on April 12, 1996
by the Company regarding the settlement with Bank of New York.
A report on Form 8-K, dated April 29, 1996, was filed on May 6, 1996 by
the Company regarding the resignation of the Chief Financial Officer.
A report on Form 8-K, dated April 30, 1996, was filed on May 16, 1996
by the Company regarding the warrant exchange with Norcross.
A report on Form 8-K/A , dated June 11, 1996 was filed on June 11, 1996
by the Company regarding the audited financial statements of Courtland.
A report on Form 8-K, dated September 12, 1996, was filed on September
20, 1996 by the Company regarding the private placement of convertible
preferred stock.
A report on Form 8-K, dated September 16, 1996, was filed on September
23, 1996 by the Company regarding the sale of shares by IMTECH.
A report on Form 8-K, dated September 20, 1996, was filed on September
20, 1996 by the Company regarding the financing with Amerivet/Dymally
Securities.
<PAGE>
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.
INSCI CORP.
Date: November 14, 1996 By: /S/ ROGER C. KUHN
-------------------------------------------
Roger C. Kuhn
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE SECOND QUARTER 10-QSB FOR INSCI'S 1997 FISCAL YEAR
</LEGEND>
<CIK> 0000878612
<NAME> m7rpwrt@
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 3035
<SECURITIES> 0
<RECEIVABLES> 2086
<ALLOWANCES> 100
<INVENTORY> 0
<CURRENT-ASSETS> 5243
<PP&E> 1892
<DEPRECIATION> 1077
<TOTAL-ASSETS> 7665
<CURRENT-LIABILITIES> 2464
<BONDS> 0
0
30
<COMMON> 39
<OTHER-SE> 5088
<TOTAL-LIABILITY-AND-EQUITY> 7665
<SALES> 5021
<TOTAL-REVENUES> 5021
<CGS> 2156
<TOTAL-COSTS> 2156
<OTHER-EXPENSES> 3666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (20)
<INCOME-PRETAX> (781)
<INCOME-TAX> 0
<INCOME-CONTINUING> (781)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (781)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
