<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 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 [ ]
9,653,171 Shares of Common Stock of the Registrant were outstanding as of
March 31, 1998
<PAGE> 2
ISOCOR
INDEX TO FORM 10-Q
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1997
and March 31, 1998........................................................ 3
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1998............................................. 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 1997 and 1998...................................... 5
Consolidated Statements of Comprehensive Income for the three
months ended March 31, 1997 and 1998...................................... 6
Notes to Consolidated Financial Statements................................ 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk........... 13
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds............................ 14
Item 6. Exhibits and Reports on Form 8-K..................................... 14
Signature........................................................................ 15
</TABLE>
2
<PAGE> 3
ISOCOR
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,784 $ 8,048
Marketable securities 9,677 10,806
Trade accounts receivable
Customer, net 9,054 8,703
Related party 46 223
Other current assets 1,993 2,746
-------- --------
Total current assets 31,554 30,526
Property and equipment, net 2,405 2,208
Other assets 264 239
-------- --------
Total assets $ 34,223 $ 32,973
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 839 $ 727
Accrued expenses 3,667 3,959
Deferred revenues 3,678 4,052
Other current liabilities 222 252
-------- --------
Total current liabilities 8,406 8,990
Other long-term liabilities 133 120
-------- --------
Total liabilities 8,539 9,110
Commitments and contingencies
Shareholders' equity:
Preferred stock, undesignated, authorized 2,000,000 shares, -- --
none issued or outstanding
Common stock, authorized 50,000,000 shares,
issued and outstanding 9,551,931 and 9,653,171 shares at
December 31, 1997 and March 31, 1998, respectively 39,359 39,415
Notes receivable from shareholders (56) (15)
Accumulated deficit (13,584) (15,698)
Deferred compensation (130) (111)
Cumulative foreign currency translation adjustment 95 272
-------- --------
Total shareholders' equity 25,684 23,863
-------- --------
Total liabilities and shareholders' equity $ 34,223 $ 32,973
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
3
<PAGE> 4
ISOCOR
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1998
------- -------
<S> <C> <C>
Revenues:
Products:
Customer $ 2,591 $ 3,127
Related parties 4 158
Services:
Customer 1,239 1,725
Related parties -- 37
------- -------
Total revenues 3,834 5,047
Cost of revenues:
Products 430 545
Services 558 921
------- -------
Total cost of revenues 988 1,466
------- -------
Gross profit 2,846 3,581
------- -------
Operating expenses:
Engineering 2,011 1,454
Sales and marketing 3,587 3,560
Administration 819 812
Agency grants (56) 0
------- -------
Total operating expenses 6,361 5,826
------- -------
Loss from operations (3,515) (2,245)
Income (loss) from currency fluctuations 38 (163)
Interest income 308 311
------- -------
Loss before income taxes (3,169) (2,097)
Provision for income taxes 8 17
------- -------
Net loss $(3,177) $(2,114)
======= =======
Net loss per share, assuming no dilution $ (0.34) $ (0.22)
======= =======
Weighted average shares outstanding 9,344 9,595
======= =======
Net loss per share, assuming dilution $ (0.34) $ (0.22)
======= =======
Weighted average shares outstanding and dilutive shares 9,344 9,595
======= =======
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
4
<PAGE> 5
ISOCOR
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1997 1998
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 3,177) $( 2,114)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Provision for doubtful accounts, returns and price protection 529 221
Depreciation and amortization 360 247
Amortization of deferred compensation 19 19
Deferred rent (26) 0
(Increase) / decrease in:
Accounts receivable 1,622 (635)
Other current assets (448) (819)
Other assets (20) 4
Increase / (decrease) in:
Accounts payable 337 (88)
Other accrued expenses (335) 464
Deferred revenues 341 820
Other current liabilities 3 1
Product development obligation (176) 0
Long-term liabilities 15 (11)
-------- --------
Net cash used by operating activities (956) (1,891)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (504) (82)
Purchase of marketable securities (15,914) (19,548)
Sale of marketable securities 998 2,500
Marketable securities at maturity 11,150 15,920
-------- --------
Net cash used by investing activities (4,270) (1,210)
-------- --------
Cash flows from financing activities:
Proceeds from the sale of stock, net 35 95
-------- --------
Net cash provided by financing activities 35 95
-------- --------
Effect of exchange rate changes on cash 214 270
-------- --------
Net decrease in cash (4,977) (2,736)
Cash and cash equivalents, beginning of year 13,374 10,784
-------- --------
Cash and cash equivalents, end of year $ 8,397 $ 8,048
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
5
<PAGE> 6
ISOCOR
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1998
----------- ----------
<S> <C> <C>
Net loss ..................................................... $ (3,177) $ (2,114)
Income (loss) from foreign currency translation, net of tax... (148) 177
--------- ---------
Comprehensive loss ........................................... $ (3,325) $ (1,937)
</TABLE>
<PAGE> 7
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
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, 1998 and the
consolidated statements of operations and cash flows for the three month periods
ended March 31, 1997 and 1998. 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 1998 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, 1997, 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. At March 31, 1997 and 1998, United States, Ireland and
Other Europe represented 30%, 58% and 12%, and 49%, 36% and 15%, respectively,
of the Company's net accounts receivable. At March 31, 1997 and 1998, the
Company held balances in U.S. banks of approximately $1,328,000 and $885,000
respectively, which exceeded federally insured limits. Cash equivalents are
managed by major investment firms in accordance with the Company's investment
policy.
Comprehensive income
In January 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income." This statement
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general purpose financial statements.
Revenue recognition
In January 1998, the Company adopted the AICPA Accounting Standards Executive
Committee Statement of Position (SOP) 97-2, "Software Revenue Recognition," as
amended by SOP 98-4. SOP 97-2, as amended, supersedes the previous software
revenue recognition standard, SOP 91-1. The Company generally recognizes product
revenues when all the following criteria are met: (1) persuasive evidence of an
arrangement exists, (2) delivery has occurred, (3) the vendor's fee is fixed or
determinable, and (4) collectibility is probable. The Company recognizes service
revenues from customer support and maintenance fees ratably over the term of the
service period, which is typically 12 months. Payments for maintenance fees are
generally made in advance. The Company generally recognizes service revenues
from custom engineering which is separately contracted for and priced from the
software license fees, as specific milestones are met in the respective
agreements. Where customer engineering is essential to the functionality of the
software, the Company does not recognize revenue on the underlying software
until the requirements of the specific development arrangement are satisfied.
Deferred revenues represent the difference between amounts invoiced and amounts
recognized as revenues under software development and maintenance agreements.
The Company recognizes service revenues from training activities as the services
are provided.
Recently issued accounting standard
On June 30, 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for the way a public enterprise reports
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders in the year following the year
of adoption. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997 and requires restatement of earlier periods presented. The
Company is currently evaluating the requirements of SFAS No. 131.
6
<PAGE> 8
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
2. MARKETABLE SECURITIES
The Company held the following positions as of December 31, 1997 and March 31,
1998 (dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1998
----------------- --------------
<S> <C> <C>
Corporate notes........................... $8,182 $ 9,309
U.S. Government obligations............... 1,495 1,497
------ -------
$9,677 $10,806
====== =======
</TABLE>
3. ACCOUNTS RECEIVABLE
Customer trade accounts receivable, net of allowances as of December 31, 1997
and March 31, 1998 (dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1998
----------------- --------------
<S> <C> <C>
Accounts receivable....................... $10,563 $10,389
Less: Allowance for doubtful accounts,
returns and price protection.............. (1,509) (1,686)
------- -------
$ 9,054 $ 8,703
======= =======
</TABLE>
4. ACCRUED EXPENSES
Accrued expenses at December 31, 1997 and March 31, 1998 were (dollars in
thousands):
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1998
----------------- --------------
<S> <C> <C>
Salaries and related expenses............. $1,197 $1,051
Royalties................................. 499 595
Commissions............................... 464 265
Other..................................... 1,507 2,048
------ ------
$3,667 $3,959
====== ======
</TABLE>
7
<PAGE> 9
ISOCOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
5. INCOME TAXES
The sources of loss before income taxes for the three months ended March 31,
1997 and 1998 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
United States...... $(1,345) $(1,170)
Foreign............ (1,824) (927)
Loss before ------- -------
income taxes....... $(3,169) $(2,097)
======= =======
</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, 1998, no net operating loss carryforwards remain in foreign
jurisdictions. The taxes provided relate primarily to foreign source income.
6. PER SHARE INFORMATION
The Company has adopted SFAS No. 128, "Earnings Per Share" for the year ended
December 31, 1997, and has restated earnings per common share for all periods
presented in accordance with the new standard. Basic net loss per common share
is computed by dividing net loss by the weighted average number of shares of
common stock outstanding during the period. Diluted net loss per common share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding plus the number of additional common shares that would have
been outstanding if all dilutive potential common shares had been issued.
Potential common shares related to stock options are excluded from the
computation when their effect is antidilutive.
The following is a reconciliation of the numerator and denominator of the
basic and diluted earnings per share (EPS) computations for the three months
ended March 31, 1997 and 1998 (in thousands).
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, March 31,
1997 1998
------------ ------------
<S> <C> <C>
Numerator:
Net loss numerator
for basic and diluted EPS: $(3,177) $(2,114)
------- -------
Denominator:
Denominator for basic EPS-
weighted average shares 9,344 9,595
Effect of dilutive securities:
Stock options -- --
------- -------
Denominator for diluted EPS-
adjusted weighted average shares
and assumed conversions: 9,344 9,595
------- -------
</TABLE>
8
<PAGE> 10
6. PER SHARE INFORMATION (Continued)
Common shares related to stock options that are antidilutive amounted to
approximately 1,966,642 and 1,904,470 shares at March 31, 1997 and 1998,
respectively.
7. RELATED PARTY TRANSACTIONS
Included in revenues for the three months ended March 31, 1997 and 1998 was
approximately $0 and $150,000 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 and 1998 was $72,000 and $178,000,
respectively, relating to this affiliate. Included in operating expenses for the
three months ended March 31, 1997 and 1998 was approximately $68,000 and $1,000,
respectively, relating to consulting services provided by this affiliate.
Included in accounts payable as of March 31, 1997 and 1998 was $125,000 and
$75,000, respectively, related to these consulting services.
Included in revenues for the three months ended March 31, 1997 and 1998 was
approximately $4,000 and $45,000, respectively, relating to software license and
maintenance agreements with a distributor who is a shareholder. Included in
accounts receivable as of March 31, 1997 and 1998 was $0 and $45,000,
respectively, relating to this distributor who is a shareholder.
9
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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, general
changes in the markets in which the Company competes, the volume and timing of
large transactions with customers, the level or product and price competition,
the Company's success in expanding its marketing efforts, 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, 1998 AND MARCH 31,
1997
Revenues. Total revenues were $5,047,000 and $3,834,000 for the three
months ended March 31, 1998 and 1997, respectively, representing an increase in
1998 of 32% over the same period one year ago. Revenues from domestic sources
accounted for approximately 34% and 14% of total revenues in the three months
ended March 31, 1998 and 1997, respectively, while the Company's international
revenues accounted for 66% and 86%, respectively, of the Company's total
revenues in the same periods.
Product revenues were $3,285,000 and $2,595,000 for the three months
ended March 31, 1998 and 1997, respectively. The 27% increase from 1997 to 1998
was mainly due to increased prices of the Company's products driven by the
increased demand for software solutions as a result of the increased business
usage of the Internet, partially offset by decreased volumes of the Company's
products related to a shift in market demand away from X.400 software solutions.
ISOCOR's Internet Messaging product line consists primarily of the N-PLEX
products, including gateways associated with N-PLEX Hub implementations, and
accounted for $1.3 million or 38% of total product revenues in the three months
ended March 31, 1998, up from the three months ended March 31, 1997 level of
$700,000. Directory revenues accounted for $460,000 or 14% of total product
revenues in the three months ended March 31, 1998, up from the three months
ended March 31, 1997 level of $268,000. The remainder of total product revenues
in the three months ended March 31, 1998 relate primarily to ISOCOR's older
X.400-related product lines.
In addition, Product revenues during the three months ended March 31,
1998 were impacted by the application of Statement of Position (SOP) 97-2,
"Software Revenue Recognition" which delayed the recognition of certain
revenues into future quarters. The approximate impact of this delay was
$300,000.
Service revenues were $1,762,000 and $1,239,000 for the three months
ended March 31, 1998 and 1997, respectively. The 42% increase from 1997 to 1998
resulted primarily from increased custom engineering revenues.
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 increase in cost of product revenues from the three months ended
March 31, 1997 to the three months ended March 31, 1998 resulted primarily from
increased materials costs and royalties paid to third party vendors.
10
<PAGE> 12
Cost of service revenues consists primarily of personnel-related costs
of providing software support and update, training and installation, and custom
engineering services. The increase in cost of service revenues between the three
months ended March 31, 1998 from the three months ended March 31, 1997 resulted
primarily from increased costs associated with supporting a higher level of
service revenues.
Gross Profit. Gross profit was $3,581,000 and $2,846,000 for the three
months ended March 31, 1998 and 1997, respectively, representing 71% and 74% of
revenues for those same periods, respectively.
Gross profit from product sales was $2,740,000 and $2,165,000 for the
three months ended March 31, 1998 and 1997, respectively, representing 83.4% of
product sales for both of those periods, respectively.
Gross profit from services was $841,000 and $681,000 for the three
months ended March 31, 1998 and 1997, respectively, representing 47.8% and 55.0%
of services revenues for those same periods, respectively. The decrease in
gross profit percentage between the periods was primarily driven by the
utilization of higher priced external resources to provide the services.
Engineering. Engineering expenses were $1,454,000 and $2,011,000 for the
three months ended March 31, 1998 and 1997, respectively, representing 28.8% and
52.5% of revenues for those same periods, respectively. The absolute decrease in
engineering expenses resulted principally from decreased expenses in labor and
consulting, which is further affected on a percentage basis by the higher
revenue in the three months ended March 31, 1998.
Sales and Marketing. Sales and marketing expenses were approximately
constant at $3,560,000 and $3,587,000 for the three months ended March 31, 1998
and 1997, respectively, representing 70.5% and 93.6% of revenues for those same
periods, respectively. The decrease in the percentage is driven by the higher
revenue in the three months ended March 31, 1998.
Administration. Administration expenses were approximately constant at
$812,000 and $819,000 for the three months ended March 31, 1998 and 1997,
respectively, representing 16.1% and 21.4% of revenues for those same periods,
respectively. The decrease in the percentage is primarily driven by the higher
revenue in the three months ended March 31, 1998.
Agency Grants. Agency grants have been received 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 Company has decreased its level of employment in Ireland in the latter part
of 1997 and therefore did not earn any agency grants in Ireland during the three
months ended March 31, 1998. The Company is committed to retaining a significant
and continuing presence in Ireland, however the amount of grants in any given
period will 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.
(Income) loss from currency fluctuations. (Income) loss from currency
fluctuations was $163,000 and ($38,000) for the three months ending March 31,
1998 and 1997, respectively. The fluctuation during these periods resulted
principally from changes in foreign currency exchange rates.
Interest income. Interest income was $311,000 for the three months March
31, 1998 as compared with $308,000 in the same period in 1997.
Provision for Income Taxes. The income tax provision was $17,000 and
$8,000 for the three months ended March 31, 1998 and 1997, respectively, on
pre-tax losses of $2,097,000 and $3,169,000 for the three months ended March 31,
1998 and 1997, respectively which resulted from taxes on the Company's foreign
operations.
11
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash usage from operating activities of $1,891,000 and $956,000
for the three months ended March 31, 1998 and 1997, respectively, increased
period over period by $935,000. The primary reason for the increased cash usage
between the two periods is due to decreased net cash flow from accounts
receivable of $2,257,000, partially offset by increased cash flow of $799,000
related to other accrued expenses and increased cash flow of $642,000 resulting
from the decreased net loss (net of adjustments due to depreciation and
amortization and the provision for doubtful accounts, returns and price
protection).
As of March 31, 1998, total accounts receivable, net was $8,926,000 versus
$9,100,000 at December 31, 1997. The Company typically generates a large
percentage of its quarterly revenue during the last few weeks of the quarter.
Certain portions of the Company's larger sales have extended 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 payment terms
are likely to have a material adverse effect on the collectibility of the
related receivables. Cash flow from operations can vary significantly from
quarter to quarter depending upon the timing of operating cash receipts and
payments, especially accounts receivable and accounts payable.
As of March 31, 1998, the Company had a balance of $8,048,000 in cash and cash
equivalents, and a balance of $10,806,000 in marketable securities. The Company
believes that these existing capital resources will be adequate to finance the
Company's operations and capital expenditures through at least the end of 1999.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
12
<PAGE> 14
PART II OTHER INFORMATION
Item 2. - Changes in Securities and Use of Proceeds
In connection with its initial public offering in 1996, the Company filed a
Registration Statement on Form S-1, SEC File No. 333-606 (the "Registration
Statement"), which was declared effective by the Commission on March 13, 1996.
The Company registered 2,300,000 shares of its Common Stock, $0.001 par value
per share. The offering commenced on March 14, 1996 and did not terminate until
all of the registered shares had been sold. The aggregate offering price of the
registered shares was $20,700,000. The managing underwriters of the offering
were Hambrecht & Quist and Furman Selz LLP.
The Company incurred the following expenses in connection with the offering.
Underwriting discounts and commissions $1,449,000
Other expenses 981,000
----------
Total Expenses $2,430,000
All of such expenses were direct or indirect payments to others.
The net offering proceeds to the Company after deducting the total expenses
above were approximately $18,300,000. From March 14, 1996 to March 31, 1998,
the Company used such net offering proceeds, in direct or indirect payments to
others, as follows:
Purchase and installment of machinery and equipment $ 2,496,000
Working Capital 9,769,000
Investment in short-term, interest-bearing obligations 3,856,000
Repayment of short-term liabilities 1,368,000
Application to short-term assets 811,000
----------
Total $18,300,000
Each of such amounts is a reasonable estimate of the application of the net
offering proceeds. This use of proceeds does not represent a material change in
the use of proceeds described in the prospectus of the Registration Statement.
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:
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> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 10-Q 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, 1998 By: /s/ JANINE M. BUSHMAN
-----------------------------------
Janine M. Bushman, Vice President,
Finance and Administration,
and Chief Financial Officer
14
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibits Page
- ------- -------- -----
<S> <C>
27.1 Financial Data Schedule.................................... 1
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND THE RELATED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS IN THE PERIOD ENDED MARCH 31, 1998
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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,048
<SECURITIES> 10,806
<RECEIVABLES> 10,612
<ALLOWANCES> 1,686
<INVENTORY> 0
<CURRENT-ASSETS> 30,526
<PP&E> 6,933
<DEPRECIATION> 4,725
<TOTAL-ASSETS> 32,973
<CURRENT-LIABILITIES> 8,990
<BONDS> 0
0
0
<COMMON> 39,415
<OTHER-SE> (15,552)
<TOTAL-LIABILITY-AND-EQUITY> 32,973
<SALES> 5,047
<TOTAL-REVENUES> 5,047
<CGS> 545
<TOTAL-COSTS> 1,466
<OTHER-EXPENSES> 5,826
<LOSS-PROVISION> 146
<INTEREST-EXPENSE> (311)
<INCOME-PRETAX> (2,097)
<INCOME-TAX> 17
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<EPS-PRIMARY> (.22)
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</TABLE>
