<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File Number 000-27900
ISOCOR(R)
(Exact name of Registrant as specified in its charter)
California 95-4310259
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3420 Ocean Park Blvd., Santa Monica, CA 90405
(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code: (310) 581-8100
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of 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
----- -----
9,362,472 Shares of Common Stock of the Registrant were outstanding as of
March 31, 1997
<PAGE> 2
ISOCOR
INDEX TO FORM 10-Q
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1997
and December 31, 1996....................................................................... 3
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1996............................................................... 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 1997 and 1996........................................................ 5
Notes to Consolidated Financial Statements.................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................. 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K....................................................... 13
Signature........................................................................................... 14
</TABLE>
2
<PAGE> 3
ISOCOR
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(unaudited) (audited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 8,397 $ 13,374
Marketable securities $ 15,505 11,739
Trade accounts receivable
Customer, net 8,482 11,160
Related party 125 74
Other current assets 1,991 1,618
-------- --------
Total current assets 34,500 37,965
Property and equipment, net 3,031 2,990
Other assets 326 343
-------- --------
Total assets $ 37,857 $ 41,298
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,110 $ 819
Other accrued expenses 3,186 3,677
Deferred revenues 2,975 2,730
Product development obligation 204 380
Other current liabilities 281 301
-------- --------
Total current liabilities 7,756 7,907
Other long-term liabilities 169 187
-------- --------
Total liabilities 7,925 8,094
Commitments and contingencies
Shareholders' equity:
Common stock, authorized 10,000,000 shares,
issued and outstanding 9,362,472 and 9,315,241 shares at
March 31, 1997 and December 31, 1996, respectively 39,082 39,047
Notes receivable from shareholders (26) (26)
Accumulated deficit (8,857) (5,680)
Deferred compensation (187) (205)
Cumulative foreign currency translation adjustment (80) 68
-------- --------
Total shareholders' equity 29,932 33,204
-------- --------
Total liabilities and shareholders' equity $ 37,857 $ 41,298
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE> 4
ISOCOR
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
------- -------
<S> <C> <C>
Revenues:
Products:
Customer $ 2,591 $ 5,019
Related parties 4 385
Services:
Customer 1,239 1,078
Related parties -- 27
------- -------
Total revenues 3,834 6,509
Cost of revenues:
Products 430 717
Services 558 558
------- -------
Total cost of revenues 988 1,275
------- -------
Gross profit 2,846 5,234
------- -------
Operating expenses:
Engineering 2,011 2,118
Sales and marketing 3,587 2,322
Administration 819 606
Agency grants (56) (145)
------- -------
Total operating expenses 6,361 4,901
------- -------
Income (loss) from operations (3,515) 333
Income (loss) from currency fluctuations 38 (13)
Interest income 308 65
------- -------
Income (loss) before income taxes (3,169) 385
Provision for income taxes 8 187
------- -------
Net Income (loss) ($3,177) $ 198
======= =======
Net income (loss) per share $ (0.34) $ 0.02
======= =======
Shares used in per share calculation 9,344 8,189
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE> 5
ISOCOR
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------
1997 1996
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 3,177) $ 198
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Provision for doubtful accounts, returns and price protection 529 445
Depreciation and amortization 360 301
Amortization of deferred compensation 19 19
Deferred rent (26) (5)
(Increase) / decrease in:
Accounts receivable 1,622 (980)
Other current assets (448) (150)
Other assets (20) (8)
Increase / (decrease) in:
Accounts payable 337 (184)
Other accrued expenses (335) 783
Deferred revenues 341 461
Other current liabilities 3 69
Product development obligation (176) (18)
Long-term liabilities 15 (5)
-------- --------
Net cash provided (used) by operating activities (956) 926
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (504) (470)
Purchase of marketable securities (3,766) 547
-------- --------
Net cash used by investing activities (4,270) 77
-------- --------
Cash flows from financing activities:
Proceeds from the sale of stock, net 35 20,167
-------- --------
Net cash provided (used) by financing activities 35 20,167
-------- --------
Effect of exchange rate changes on cash 214 63
-------- --------
Net increase (decrease) in cash (4,977) 21,233
Cash and cash equivalents, beginning of year 13,374 5,880
-------- --------
Cash and cash equivalents, end of year $ 8,397 $ 27,113
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE> 6
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by ISOCOR
(the "Company"), pursuant to the regulations of the U.S. Securities and Exchange
Commission. In the opinion of management, the financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
fairly present the consolidated financial position at March 31, 1997 and the
consolidated statements of operations and cash flows for the three month periods
ended March 31, 1997 and 1996. These interim statements do not include all of
the disclosures required by generally accepted accounting principles for annual
statements.
The statements of operations and cash flows for the 1997 interim periods are not
necessarily indicative of results to be expected for the full year.
These consolidated financial statements should be read in conjunction with the
financial statements included in the Company's Annual Report on Form 10-K, as of
December 31, 1996, as filed with the Securities and Exchange Commission.
Concentration of credit risk
- ----------------------------
Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of cash, cash equivalents and accounts
receivable. The Company's accounts receivable are derived from sales directly to
customers and indirectly through resellers, systems integrators and OEMs. The
Company performs ongoing credit evaluations of its customers before granting
uncollateralized credit and to date has not experienced any unusual
credit-related losses. Cash equivalents are managed by major investment firms in
accordance with the Company's investment policy. At March 31, 1997 the Company
held balances in U.S. banks of approximately $1,328,000 which exceeded federally
insured limits.
Recently issued accounting standards
- ------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No. 128").
SFAS No. 128 requires dual presentation of newly defined basic and diluted
earnings per share on the face of the income statement for all entities with
complex capital structures. SFAS No. 128 is effective for financial statements
issued for periods ending after December 15, 1997, and earlier application is
not permitted. The Company has not yet determined the impact of SFAS No. 128.
2. ACQUISITION
Pursuant to the Stock Purchase Agreement dated August 29, 1996 by and among
ISOCOR B.V., a wholly owned subsidiary of the Company, NetCS Informationstechnik
GmbH, a corporation organized under the laws of the Federal Republic of Germany
("NetCS") and the stockholders of NetCS, (the "Purchase Agreement"), the Company
acquired (the "Acquisition") all of the outstanding quota interests (shares) in
NetCS in exchange for an aggregate of 475,000 shares of its Common Stock. NetCS
is a distributor, integrator and developer of communication software products
for the UNIX arena. NetCS has particular expertise in the area of ISDN and
Internet based communications subsystems including Internet extensions to
wireless messaging systems. As a result of the Acquisition, NetCS has become a
wholly owned subsidiary of ISOCOR B.V. and, in turn, the Company.
6
<PAGE> 7
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
The Acquisition has been accounted for under "pooling of interests" accounting
treatment, and therefore, as required by Accounting Principles Board Statement
No. 16, all financial statements herein have been restated as though the
Acquisition had been effected for all periods presented. Therefore the
Consolidated Statements of Operations in this report include the operations of
NetCS for the three months ended March 31, 1996 and 1997 and the Consolidated
Balance Sheets as of December 31, 1996 and March 31, 1997 include the financial
position of NetCS at those respective dates. A reconciliation of the Company's
previously reported revenue and earnings to those earnings shown in this report
is provided below.
<TABLE>
<CAPTION>
(dollars in thousands)
Revenues Earnings (Loss)
------------- ---------------
1996
- ----
<S> <C> <C>
ISOCOR only, three months ended March 31, 1996 $5,329 $200
NetCS only, three months ended March 31, 1996 1,180 (2)
------ ----
Combined company three months ended March 31, 1996 $6,509 $198
====== ====
</TABLE>
3. MARKETABLE SECURITIES
At March 31, 1997 the Company held the following positions (dollars in
thousands):
<TABLE>
<CAPTION>
March 31, 1997
--------------
<S> <C>
Corporate notes.................................... $13,853
U.S. Government obligations........................ 1,652
-------
$15,505
=======
</TABLE>
4. ACCOUNTS RECEIVABLE
Customer trade accounts receivable, net of allowances as of March 31, 1997 and
December 31, 1996 were (dollars in thousands):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Accounts receivable $ 10,594 $ 12,807
Less: Allowance for doubtful accounts, returns and
price protection (2,112) (1,647)
-------- --------
$ 8,482 $ 11,160
======== ========
</TABLE>
7
<PAGE> 8
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
5. OTHER ACCRUED EXPENSES
Other accrued expenses include (dollars in thousands):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Salaries and related expenses...................... $1,235 $1,196
Royalties.......................................... 247 556
Commissions........................................ 343 440
Other.............................................. 1,361 1,485
-------------- -----------------
$3,186 $3,677
============== =================
</TABLE>
6. INCOME TAXES
The source of income (loss) before income taxes for the three months ended March
31, 1997 and 1996 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
United States........... $(1,345) $(491)
Foreign................. (1,824) 876
---------------- -------------------
Income (loss) before
income taxes and
minority interest....... $(3,169) $385
=============== ===================
</TABLE>
On an interim basis, the Company provides for income taxes using its estimated
effective tax rate for the year for foreign and domestic source income. As of
March 31, 1997, no net operating loss carryforwards remain in foreign
jurisdictions. The taxes provided relate primarily to foreign source income.
7. PER SHARE INFORMATION
Net income (loss) per common share is computed using the weighted average number
of shares of Common Stock and common equivalent shares outstanding. Common
equivalent shares related to stock options are excluded from the computation
when their effect is antidilutive.
All of the 475,000 common shares of the Company issued to effect the business
combination with NetCS have been treated as outstanding for all periods
presented for the computation of the weighted average number of shares
outstanding as required for "pooling of interests" accounting treatment.
8
<PAGE> 9
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
8. RELATED PARTY TRANSACTIONS
Included in revenues for the three months ended March 31, 1997 and 1996 was
approximately $0 and $260,000 respectively relating to product sales to and
software maintenance agreements with an affiliate of a shareholder. Included in
accounts receivable as of March 31, 1997 was $72,000 relating to this affiliate.
Included in operating expenses for the three months ended March 31, 1997 and
1996 was approximately $68,000 and $61,000, respectively, relating to consulting
services provided by this affiliate. Included in accounts payable as of March
31, 1997 was $125,000 related to these consulting services.
Included in revenues for the three months ended March 31, 1997 and 1996 was
approximately $4,000 and $152,000, respectively, relating to software license
and maintenance agreements with a shareholder.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The consolidated financial statements of the Company contained in this report
have been retroactively restated for all periods presented to include the
financial position, results of operations and cash flows of NetCS
Informationstechnik GmbH in accordance with the pooling of interests method of
accounting.
Except for the historical information contained in this Report on Form 10-Q,
the matters discussed herein are forward-looking statements that are subject to
certain risks and uncertainties that could cause the actual results to differ
materially from those projected. Factors that could cause actual results to
differ materially include, but are not limited to, the introduction and market
acceptance of new products offered by the Company and its competitors, the
volume and timing of large transactions with customers, the level of product and
price competition, the Company's success in expanding its direct sales force and
indirect distribution channels, the risks related to international operations,
and other risks detailed below and discussed from time to time in the Company's
other SEC reports and press releases, copies of which are available from the
Company upon request. The Company assumes no obligation to update any
forward-looking statements contained herein.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31,
1996
Revenues. Total revenues were $3,834,000 and $6,509,000 for the three
months ended March 31, 1997 and 1996, respectively, representing a decrease in
1997 of 41% over the same period one year ago. Revenues from domestic sources
accounted for approximately 14% and 21% of total revenues in the three months
ended March 31, 1997 and 1996, respectively, while the Company's international
revenues accounted for 86% and 79%, respectively, of the Company's total
revenues in the same periods.
Product revenues were $2,595,000 and $5,404,000 for the three months
March 31, 1997 and 1996, respectively. The 52% decrease from 1996 to 1997 was
mainly due to decreased volumes of the Company's products sold, partially offset
by increased prices in some product lines. The decreased volumes of products
sold relate primarily to an earlier than anticipated shift in market demand away
from the Company's X.400 product lines during the transition to its newer
Internet/Intranet product offerings.
Service revenues were $1,239,000 and $1,105,000 for the three months
ended March 31, 1997 and 1996, respectively. The 12% increase from 1996 to 1997
resulted primarily from increased software support and update service fees.
Cost of Revenues. Cost of product revenues consists primarily of
hardware purchased from third party vendors, costs of media duplication, manuals
and packaging materials, and third party royalties relating to licensed
technology. The decrease in cost of product revenues from the three months ended
March 31, 1996 to the three months ended March 31, 1997 resulted from decreased
costs relating to hardware purchased from and royalties paid to third party
vendors.
Cost of service revenues consists primarily of personnel-related costs
of providing software support and update, training and installation, and custom
engineering services.
Gross Profit. Gross profit was $2,846,000 and $5,234,000 for the three
months ended March 31, 1997 and 1996, respectively, representing 74% and 80% of
revenues for those same periods, respectively.
10
<PAGE> 11
Gross profit from product sales was $2,165,000 and $4,687,000 for the
three months ended March 31, 1997 and 1996, respectively, representing 83.4% and
86.7% of product sales for those same periods, respectively. This percentage
decrease is primarily due to the impact of relatively fixed production capacity
costs on decreased product revenues.
Gross profit from services was $681,000 and $547,000 for the three
months ended March 31, 1997 and 1996, respectively, representing 55.0% and 49.5%
of services revenues for those same periods, respectively. This percentage
increase is due to reductions in the costs of custom engineering and software
support and upgrade services.
Engineering. Engineering expenses were $2,011,000 and $2,118,000 for
the three months ended March 31, 1997 and 1996, respectively, representing 52.5%
and 32.5% of revenues for those same periods, respectively. The absolute
decrease in engineering expenses resulted principally from decreased expenses in
labor and consulting, while the increase in the percentage is driven by the
lower revenue in the three months ended March 31, 1997.
Sales and Marketing. Sales and marketing expenses were $3,587,000 and
$2,322,000 for the three months ended March 31, 1997 and 1996, respectively,
representing 93.6% and 35.7% of revenues for those same periods, respectively.
The increase in sales and marketing expenses resulted principally from
labor-related costs arising from increased levels of personnel and to a lesser
extent from marketing program expenses. Both increases resulted from an
intensified focus by the Company on sales and marketing efforts. The increase in
sales and marketing expenses as a percentage of revenues is also driven by the
lower revenue in the three months ended March 31, 1997.
Administration. Administration expenses were $819,000 and $606,000 for
the three months ended March 31, 1997 and 1996, respectively, representing 21.4%
and 9.3% of revenues for those same periods, respectively. The absolute increase
primarily resulted from increased labor expenses relating to the hiring of
additional personnel, and the costs associated with being a public company,
while the increase in the percentage is driven by the lower revenue in the three
months ended March 31, 1997.
Agency Grants. Agency grants have been received from two sources. Under
an incentive program designed to induce organizations to locate and conduct
business in Ireland, the Industrial Development Authority of Ireland makes
grants that are based predominately upon the number of new jobs created by the
Company there. The amount of grants in any given period will therefore vary
based upon the number of jobs created and the timing of receipt of grant aid
payments and will continue to fluctuate on a quarterly basis. The Economic and
Technological Finance Authority - Berlin makes grants to promote research and
development in small and medium-sized German-owned companies located in Berlin.
The grants are paid quarterly based upon actual development costs, including
salaries, and depend upon the work being carried out in Berlin. As of August 31,
1996, the Company is no longer eligible to receive these grants in Germany.
(Income) loss from currency fluctuations. (Income) loss from currency
fluctuations was $38,000 and ($13,000) for the three months ending March 31,
1997 and 1996, respectively. The fluctuation during these periods resulted from
changes in foreign currency exchange rates.
Interest income. Interest income was $308,000 for the three months
March 31, 1997 as compared with $65,000 in the same period in 1996. The increase
resulted primarily from interest earned on the investment of cash received in
the Company's initial public offering which was completed in mid-March 1996.
11
<PAGE> 12
Provision for Income Taxes. The income tax provision was $8,000 on a
pre-tax loss of $3,515,000 for the three months ended March 31, 1997, which
resulted from taxes on the Company's foreign operations. For the three months
ended March 31, 1996, the income tax provision of $187,000 on pre-tax income of
$333,000 related primarily to the Company's profitable foreign operations.
LIQUIDITY AND CAPITAL RESOURCES
During March 1996 the Company completed a public offering and sale of
2,300,000 shares (including the over-allotment option) of its Common Stock at $9
per share, resulting in net proceeds to the Company after offering costs of
approximately $18,379,000. The Company received an additional $1,500,000 from
Intel Corporation and an additional $288,000 from Thomson-CSF Ventures as a
result of the sale and issuance of 166,667 and 39,942 shares of Common Stock,
respectively.
The Company generated (used) cash from operating activities of
($956,000) and $926,000 for the three months ended March 31, 1997 and 1996,
respectively. The primary factor in the change in cash flow for the three months
ended March 31, 1997 from that of the three months ended March 31, 1996 was the
net loss of $3.2 million for the three months ended March 31, 1997; net income
was $198,000 for the three months ended March 31, 1996. The impact of the loss
in the 1997 period was mitigated by an increase in cash flow from collections of
accounts receivables.
As of March 31, 1997, total accounts receivable, net was $8,607,000
versus $11,234,000 at December 31, 1996. The Company typically generates a large
percentage of its quarterly revenue during the last few weeks of the quarter,
and has payment terms in excess of 90 days on some of its larger sales. Certain
of the Company's larger sales have longer payment terms, thus slowing the cash
flow cycle, and the Company expects that future large sales will follow the same
pattern. The Company does not believe these longer payment terms are likely to
have a material adverse effect on the collectibility of the related receivables.
As of March 31, 1997, the Company had a balance of $8,397,000 in cash
and cash equivalents, and a balance of $15,505,000 in marketable securities. The
Company believes that its existing capital resources will be adequate to finance
the Company's operations and capital expenditures through the end of 1998.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
12
<PAGE> 13
PART II Other Information
Item 6. - Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this Quarterly Report on
Form 10-Q:
11.1- Statement of Computation Shares Used in Per Share Computation.
27.1- Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for which
this report has been filed.
13
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report on Form 10Q to be signed on its
behalf by Janine M. Bushman, thereunto duly authorized to sign on behalf of the
registrant and as the principal financial officer thereof.
ISOCOR
Date: May 15, 1997 By: /s/ JANINE M. BUSHMAN
------------------------------
Janine M. Bushman, Vice President,
Finance and Administration, and Chief
Financial Officer
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibits Page
- ---------------------------------------------------------------------------------------------------
<S> <C>
11.1 Statement of Computation Shares Used in Per Share Computation.......................
27.1 Financial Data Schedule.............................................................
</TABLE>
<PAGE> 1
Exhibit 11.1
ISOCOR
STATEMENT OF COMPUTATION OF SHARES USED IN PER SHARE COMPUTATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended
------------------
March 31, March 31,
1996 1997
---- ----
<S> <C> <C>
Computation of shares used in net income (loss) per share:
Weighted average common shares outstanding................ 7,307 9,344
Common equivalent shares attributable to stock
options (treasury stock method)........................... 882 --
Common equivalent shares attributable to redeemable
preferred stock......................................... --
----- -----
Shares used in per share calculation........................... 8,189 9,344
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND THE RELATED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS IN THE PERIOD ENDED MARCH 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,397
<SECURITIES> 15,505
<RECEIVABLES> 10,594
<ALLOWANCES> 2,112
<INVENTORY> 0
<CURRENT-ASSETS> 34,500
<PP&E> 6,972
<DEPRECIATION> 3,941
<TOTAL-ASSETS> 37,857
<CURRENT-LIABILITIES> 7,756
<BONDS> 0
0
0
<COMMON> 39,082
<OTHER-SE> (9,150)
<TOTAL-LIABILITY-AND-EQUITY> 37,857
<SALES> 3,834
<TOTAL-REVENUES> 3,834
<CGS> 430
<TOTAL-COSTS> 988
<OTHER-EXPENSES> 6,361
<LOSS-PROVISION> 107
<INTEREST-EXPENSE> (308)
<INCOME-PRETAX> (3,169)
<INCOME-TAX> 8
<INCOME-CONTINUING> (3,177)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,177)
<EPS-PRIMARY> (.34)
<EPS-DILUTED> (.34)
</TABLE>
