<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
Commission File Number 001-11807
---------------------------
UNIFY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2710559
- ----------------------------------- ----------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
181 METRO DRIVE, THIRD FLOOR
SAN JOSE, CALIFORNIA 95110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE: (408) 467-4500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
7,826,000 shares of Common Stock, $.001 par value, as of August 31, 1996
- --------------------------------------------------------------------------------
<PAGE>
UNIFY CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of July 31, 1996 and April 30, 1996. . . . . . . . . 3
Condensed Consolidated Statements of Operations
for the three months ended July 31, 1996 and 1995. . . . 4
Condensed Consolidated Statements of Cash Flows
for the three months ended July 31, 1996 and 1995. . . . 5
Notes to Condensed Consolidated Financial Statements. . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 8
PART II. OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 13
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UNIFY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 31, April 30,
1996 1996
----------- ----------
(unaudited) *
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,130 $ 3,028
Short-term investments 8,579 -
Accounts receivable, net 8,266 5,270
Prepaid expenses and other current assets 878 1,012
--------- ---------
Total current assets 32,853 9,310
Property and equipment, net 3,391 3,358
Other assets 250 329
--------- ---------
Total assets $ 36,494 $ 12,997
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 234 $ 255
Accounts payable 1,584 1,866
Amounts due to minority interest shareholders 1,567 1,392
Accrued compensation and related expenses 2,085 1,655
Other accrued liabilities 2,699 2,675
Deferred revenue 4,263 4,650
--------- ---------
Total current liabilities 12,432 12,493
Long-term debt, net of current portion 2,427 2,456
Minority interest 382 495
Redeemable preferred stock - 26,726
Shareholders' equity (deficit):
Common stock 8 2
Additional paid-in capital 52,355 2,188
Notes receivable from shareholders (204) (265)
Cumulative translation adjustments (811) (816)
Accumulated deficit (30,095) (30,282)
--------- ---------
Total shareholders' equity (deficit) 21,253 (29,173)
--------- ---------
Total liabilities and shareholders' equity (deficit) $ 36,494 $ 12,997
--------- ---------
--------- ---------
</TABLE>
* Derived from audited financial statements
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
UNIFY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended July 31,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
Revenues:
Software licenses $ 6,529 $ 3,618
Services 2,511 2,494
---------- ----------
Total revenues 9,040 6,112
---------- ----------
Cost of revenues:
Software licenses 356 549
Services 1,128 1,069
---------- ----------
Total cost of revenues 1,484 1,618
---------- ----------
Gross margin 7,556 4,494
Operating expenses:
Product development 1,691 1,401
Selling, general and administrative 5,667 4,211
---------- ----------
Total operating expenses 7,358 5,612
---------- ----------
Income (loss) from operations 198 (1,118)
Other income, net 47 204
---------- ----------
Income (loss) before income taxes 245 (914)
Provision for income taxes (58) (65)
---------- ----------
Net income (loss) $ 187 $ (979)
---------- ----------
---------- ----------
Net income (loss) per share $ 0.03 $ (0.17)
---------- ----------
---------- ----------
Shares used in per share computations 7,450 5,681
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
UNIFY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended July 31,
---------------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 187 $ (979)
Reconciliation of net income (loss) to net cash
used for operating activities:
Depreciation 333 233
Amortization of capitalized software - 242
Minority interest (113) (206)
Imputed interest on note payable to preferred
shareholders 73 -
Changes in assets and liabilities:
Accounts receivable (2,981) 292
Prepaid expenses and other current assets 87 (245)
Accounts payable (285) 236
Amounts due to minority interest shareholders 192 (186)
Accrued compensation and related expenses 424 (71)
Other accrued liabilities 189 (537)
Deferred revenue (414) 166
--------- ---------
Net cash used for operating activities (2,308) (1,055)
--------- ---------
Cash flows from investing activities:
Purchases of available-for-sale securities (8,579) -
Purchase of property and equipment (341) (166)
Other assets 77 (1)
--------- ---------
Net cash used for investing activities (8,843) (167)
--------- ---------
Cash flows from financing activities:
Principal payments under debt obligations (69) (66)
Proceeds from issuance of common stock, net 23,253 1
Payment on notes receivable from shareholders 61 -
Additional investment in subsidiary by minority
interest shareholders - 591
--------- ---------
Net cash provided by financing activities 23,245 526
--------- ---------
Effect of exchange rate changes on cash 8 (37)
--------- ---------
Net increase (decrease) in cash and cash equivalents 12,102 (733)
--------- ---------
Cash and cash equivalents at beginning of period 3,028 3,776
--------- ---------
Cash and cash equivalents at end of period $ 15,130 $ 3,043
--------- ---------
--------- ---------
Supplemental schedule of noncash financing activities:
Conversion of redeemable preferred stock to common stock $ 26,726 $ -
--------- ---------
--------- ---------
Cancellation of common stock and shareholder's receivable $ - $ (432)
--------- ---------
--------- ---------
Cash paid during the period for:
Interest $ 97 $ 15
--------- ---------
--------- ---------
Income taxes $ 63 $ 132
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
UNIFY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by Unify
Corporation (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). While the quarterly financial
information contained in this filing is unaudited, the financial statements
presented reflect all adjustments (consisting only of normal recurring
adjustments) which the Company considers necessary for a fair presentation of
the financial position at July 31, 1996 and April 30, 1996, and the results of
operations and cash flows for the three months ended July 31, 1996 and 1995.
The results for interim periods are not necessarily indicative of the results to
be expected for the entire year. These financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Final Prospectus (the "Final Prospectus") dated June
14, 1996 as filed with the SEC pursuant to Rule 424(b).
2. PER SHARE INFORMATION
Net income (loss) per share is computed using the weighted average number
of common shares outstanding, dilutive common equivalent shares from stock
options and warrants (using the treasury stock method) and redeemable preferred
stock (using the as if converted method, even if antidilutive). Pursuant to
certain SEC Staff Accounting Bulletins, common and common equivalent shares
issued at prices below the initial public offering ("IPO") price during the
twelve month period prior to the offering have been included in the calculation,
even if antidilutive, as if they were outstanding for all periods presented
using the treasury stock method and the IPO price.
3. SHORT-TERM INVESTMENTS
The Company's investments are classified as available-for-sale under the
provisions of Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
investments are carried at cost, which approximates fair value. Material
unrealized gains or losses are reported as a separate component of shareholders'
equity. Realized gains and losses and declines in value judged to be other than
temporary on available-for-sale securities are included in net interest income.
The cost of securities sold is based on the specific identification method.
Interest and dividends on securities classified as available-for-sale are
included in net interest income.
The investments included in the Company's current assets under the caption
"Short-Term Investments" at July 31, 1996 consist entirely of corporate debt
securities and there were no material realized or unrealized gains or losses for
the three months ended July 31, 1996. All corporate debt securities held at
July 31, 1996 mature within one year.
6
<PAGE>
UNIFY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. LINE OF CREDIT
The Company has a revolving line of credit with a bank which expires in
March 1997 with borrowings generally limited to 80% of eligible accounts
receivable and up to $500,000 available to finance equipment purchases.
Recently, the Company increased the total line of credit from $2.5 million to $5
million and decreased the interest rate from the bank's prime lending rate plus
2.75% for receivables and 3.5% for equipment to 1.5% over the bank's prime
lending rate for both types of borrowings.
5. INITIAL PUBLIC OFFERING OF COMMON STOCK
In June 1996, the Company completed an initial public offering of 2,187,000
shares of common stock at $12 per share with net proceeds to the Company of
$23.3 million. In connection with the IPO, all of the outstanding preferred
stock and accrued dividends automatically converted into 2,876,136 and 690,161
shares of common stock, respectively, and warrants to purchase 190,459 shares of
common stock were exercised.
6. RECENTLY ISSUED ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." The new standard defines a fair
value method of accounting for stock options and other equity instruments, such
as stock purchase plans. Under this method, compensation cost is measured based
on the fair value of the stock award when granted and is recognized as an
expense over the service period, which is usually the vesting period. This
standard will be effective for the Company beginning in fiscal 1997 and requires
measurement of the awards made beginning in fiscal 1996.
The new standard permits companies to continue to account for equity
transactions with employees under existing accounting rules, but requires
disclosure in a note to the financial statements of the pro forma net income and
earnings per share as if the company had applied the new method of accounting.
The Company intends to implement these disclosure requirements for its employee
stock plans beginning in fiscal 1997. Based on the Company's current use of
equity instruments, adoption of the new standard will not impact reported net
income or net income per share, and will have no effect on the Company's cash
flows.
7
<PAGE>
UNIFY CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in Part
1, Item 1 of this Quarterly Report and the audited consolidated financial
statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Final Prospectus.
The Company's common stock price may be subject to significant volatility.
For any given quarter, a shortfall in the Company's announced revenue or
earnings from the levels expected by securities analysts could have an immediate
and adverse effect on the trading price of the Company's common stock. The
Company may not learn of, nor be able to confirm, revenue or earnings shortfalls
until late in the quarter or following quarter end. The Company participates in
a very dynamic high technology industry, which can result in significant
fluctuations in the Company's common stock price at any time.
The Company's operating results are subject to quarterly and other
fluctuations due to a variety of factors, including the size and timing of
significant orders and their fulfillment, demand for the Company's products, the
number, timing and significance of product enhancements and new product
announcements by the Company or its competitors, seasonality, changes in pricing
policies by the Company or its competitors, changes in the level of operating
expenses, changes in the Company's sales incentive plans, budgeting cycles of
its customers, customer order deferrals in anticipation of enhancements or new
products offered by the Company or its competitors, product life cycles, product
defects and other product quality problems, personnel changes, the results of
international expansion, currency fluctuations, and general domestic and
international economic and political conditions. The Company typically receives
a number of orders ranging in size from several hundred thousand dollars to
approximately $1 million in any fiscal quarter. Because a significant portion
of the Company's revenues has been, and the Company believes will continue to
be, derived from such large orders, the timing of such orders and their
fulfillment has caused and is expected to continue to cause material
fluctuations in the Company's operating results, particularly on a quarterly
basis.
Due to the foregoing factors, quarterly revenues and operating results are
difficult to forecast. Revenues are also difficult to forecast because the
market for client/server application development software is rapidly evolving,
and the Company's sales cycle, from initial evaluation to purchase and the
provision of support services, is lengthy and varies substantially from customer
to customer. Because the Company normally ships products within a short time
after it receives an order, it typically does not have any material backlog. As
a result, to achieve its quarterly revenue objectives, the Company is dependent
upon obtaining orders in any given quarter for shipment in that quarter.
Furthermore, because many customers place orders toward the end of a quarter,
the Company generally recognizes a substantial portion of its revenues at the
end of a quarter. As the Company's expense levels are based in significant part
on the Company's expectations as to future revenues and are therefore relatively
fixed in the short term, if revenue levels fall below expectations, net income
is likely to be disproportionately adversely affected. The Company is
increasing its sales, marketing and product development expenditures, and
operating results will be
8
<PAGE>
UNIFY CORPORATION
materially adversely affected if the Company does not achieve revenue growth.
There can be no assurance that the Company will be able to achieve or maintain
profitability on a quarterly or annual basis in the future. 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. In such event, the price of the Company's common stock would likely
be materially adversely affected.
This report contains forward looking statements regarding, among other
matters, the Company's future strategy, product development plans, and sales and
marketing strategy. The forward looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward looking statements address matters which are subject to a number of
risks and uncertainties. In addition to the general risks associated with the
development of complex technology, as noted above, future results of the Company
will depend on a variety of factors. Reference is made to the Final Prospectus
and the Company's fillings with the Securities and Exchange Commission for
further discussion of risks and uncertainties regarding the Company's business.
RESULTS OF OPERATIONS
REVENUES
The Company recognizes software license revenue when a non-cancelable
license agreement has been executed, the product has been shipped, all
significant contractual obligations have been satisfied and collection of the
resulting receivable is deemed probable by management. Software licenses
include both development and run-time licenses. Maintenance revenue is
recognized ratably over the maintenance period. Payments for maintenance fees
are generally received in advance and are nonrefundable. Revenues from
consulting and training services are recognized as performed.
The Company's strategy is to aggressively market and enhance Unify VISION.
The Company continues to support its extensive installed based of Unify ACCELL
and DataServer products, which represents a significant source of potential
Unify VISION customers. The Company also generates significant revenue from
services, including customer maintenance, consulting and training. The
following table sets forth the revenues from licenses of the Company's Unify
VISION and Unify ACCELL and DataServer products and services revenue for the
period indicated:
Three Months Ended July 31,
----------------------------
1996 1995
-------- --------
License revenues:
Unify VISION $ 2,194 $ 540
Unify ACCELL and DataServer 4,335 3,078
-------- --------
Total license revenues 6,529 3,618
Services revenues 2,511 2,494
-------- --------
Total revenues $ 9,040 $ 6,112
-------- --------
-------- --------
9
<PAGE>
UNIFY CORPORATION
Total revenues for the quarter ended July 31, 1996 increased by 48% from
$6.1 million to $9.0 million over the same quarter of the prior year. Software
license revenues increased by 80% from $3.6 million to $6.5 million over the
same quarter of the prior year. Software license revenues from Unify VISION
increased 306% over the same quarter of the prior year to $2.2 million,
reflecting the increased acceptance of Unify VISION. Service revenues for the
quarter remained relatively constant at $2.5 million as compared to the same
quarter of the prior year.
Revenues for the quarter ended July 31, 1996 reflected the impact of
several significant contracts relating to the Company's ongoing efforts to
generate revenues from customers based in the People's Republic of China. Unify
VISION and Unify ACCELL and Dataserver revenues included a $1.2 million and a
$2.6 million order, respectively, from two separate China based end-users. The
Company expects to continue to devote significant efforts toward the development
of revenues from the People's Republic of China. However, there can be no
assurances of the timing or amount of additional license revenues, if any, which
the Company can derive from customers in China. Business with customers in
China is impacted by a number of additional risks, including, but not limited
to, whether China maintains its "most favored nation" trade status with the
United States. In addition, the extent to which the current trade discussions
between the United States and China favorably impacted on the orders received by
the Company during the quarter ended July 31, 1996 and the impact which future
discussions may have on future business by the Company in China cannot be
determined.
In part based upon the transactions with customers in China, international
revenues, increased to 75% of total revenues in the quarter ended July 31, 1996
from 69% in the same quarter of the prior year.
COST OF REVENUES
Cost of software licenses consists primarily of product documentation,
packaging and production costs in the U.S. and Japan, costs related to funded
development contracts, and royalties paid for licensed technology costs. Cost
of software licenses for the quarter ended July 31, 1996 decreased to $0.4
million, or 5% of software license revenues, as compared to $0.5 million, or 15%
of software license revenues, for the same quarter of the prior year. There was
no amortization of capitalized software development costs for the quarter ended
July 31, 1996, as compared to $0.2 million for the same quarter of the prior
year.
Cost of services consists primarily of employee, facilities and travel
costs incurred in providing customer support under software maintenance
contracts and consulting and training services. Cost of services for the
quarter remained relatively constant at $1.1 million, or 45% of service
revenues, as compared to the same quarter of the prior year.
PRODUCT DEVELOPMENT
Product development expenses consist primarily of employee and facilities
costs incurred in the development and testing of new products and in the porting
of new and existing products to additional hardware platforms and operating
systems. Product development expenses for the
10
<PAGE>
UNIFY CORPORATION
quarter ended July 31, 1996 increased to $1.7 million, or 19% of total revenues,
as compared to $1.4 million, or 23% of total revenues, for the same quarter of
the prior year. The increase in product development expenses in absolute
dollars was primarily the result of increased staffing required to complete the
Company's next major release of Unify VISION. The Company believes that
substantial investment in product development is critical to maintaining
technological leadership and therefore intends to increase product development
expenditures in absolute dollars.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, General and Administrative (SG&A) expenses consist primarily of
salaries, bonuses and commissions, promotional and travel expenses, professional
services, facilities, and bad debt expenses. SG&A for the quarter ended July
31, 1996 increased to $5.7 million, or 63% of total revenues, as compared to
$4.2 million, or 69% of total revenues for the same quarter of the prior year.
The increase in SG&A expenses was primarily due to the recruitment of several
key sales and marketing employees, increased commissions on growing revenues and
additional professional service costs as a result of becoming a publicly traded
company. The Company expects to continue to increase its expenditures in SG&A
in absolute dollars.
OTHER INCOME, NET
Other income, net, consists of the minority interest in the Company's
Japanese joint venture, interest earned by the Company on its cash and cash
equivalents, offset by interest expense on long-term debt and exchange gains and
losses. Other income was $47,000 for the quarter ended July 31, 1996 and $0.2
million for the same quarter of the prior year.
PROVISION FOR INCOME TAXES
The Company recorded a tax provision related primarily to foreign income
tax withholding on software license royalties paid to the Company by certain
foreign licensees. For the quarters ended July 31, 1996 and 1995, the Company
recorded no federal or state income tax provision as the Company had available
federal net operating loss carryforwards of approximately $10.7 million as of
April 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
In June 1996, the Company completed an initial public offering of 2,187,000
shares of common stock at $12.00 per share with net proceeds to the Company of
$23.3 million.
As of July 31, 1996, the Company had cash, cash equivalents and short-term
investments of $23.7 million, compared to $3.0 million as of April 30, 1996.
Working capital increased to $20.4 million at July 31, 1996 from a deficit of
$3.2 million at April 30, 1996.
The Company's operating activities used cash of $2.3 million during the
quarter ended July 31, 1996, primarily from increases in accounts receivable
and decreases in accounts payable and deferred revenues. The increase in
receivables reflects several large international orders that were received and a
high percentage of sales near the end of the quarter.
11
<PAGE>
UNIFY CORPORATION
Investing activities used cash of $8.8 million representing short term
investments of $8.6 and property and equipment purchases of $0.3 million.
Cash provided by financing activities was $23.2 million consisting
primarily of net proceeds from the Company's IPO.
The Company has a $2.3 million line of credit provided by certain
stockholders of the Company with the full amount outstanding as of July 31,
1996. This facility expires in July 1997 and bears interest at 3.75% per annum.
The Company also has a revolving line of credit with a bank which expires in
March 1997 with borrowings generally limited to 80% of eligible accounts
receivable and up to $500,000 available to finance equipment purchases.
Recently, the Company increased the total line of credit from $2.5 million to $5
million and decreased the interest rate from the bank's prime lending rate plus
2.75% for receivables and 3.5% for equipment to 1.5% over the bank's prime
lending rate for both types of borrowings.
The Company believes that current cash balances and investments,
anticipated cash flow from operations, and unused borrowing capacity will be
sufficient to meet its cash requirements during the next 12 months. Thereafter,
depending on its rate of growth and profitability, the Company may require
additional equity or debt financing to meet its working capital or capital
equipment requirements. There can be no assurance that additional financing
will be available when required or, if available, with terms satisfactory to the
Company.
12
<PAGE>
UNIFY CORPORATION
PART II. OTHER INFORMATION
Item 5. Other Information
The I.R.S. Employer Identification Number on the cover of this
Quarterly Report represents a change from the number set forth on the
Registration Statement on Form S-1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11.01 Statement Regarding Computation of Net Income (Loss)
Per Share (see page 15)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended July 31,
1996. A Form 8-K reporting a change in independent accountants was
filed on September 6, 1996.
13
<PAGE>
UNIFY CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: September 11, 1996 Unify Corporation
(REGISTRANT)
By:
/s/
----------------------------------------
Susan Salvesen
Vice President, Finance and
Administration and Chief Financial
Officer (Principal Financial and
Accounting Officer)
14
<PAGE>
EXHIBIT 11.01
UNIFY CORPORATION
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended July 31,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Net income (loss) $ 187 $ (979)
--------- ---------
--------- ---------
Weighted average common shares outstanding during
the period 3,100 1,288
Weighted average preferred shares and dividends
outstanding on an as if converted basis 3,566 3,365
Common share equivalents for stock options and warrants
outstanding using the treasury stock method 784 -
Common share equivalents for stock options and
warrants issued at prices below the IPO price during
the twelve month period prior to the offering - 1,028
--------- ---------
Total shares used in per share computation 7,450 5,681
--------- ---------
--------- ---------
Net income (loss) per share $ 0.03 $ (0.17)
--------- ---------
--------- ---------
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JULY 31, 1996 AND CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 1996 FOUND ON PAGES
3 AND 4 OF THE COMPANYS FORM 10Q 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> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 15130
<SECURITIES> 8579
<RECEIVABLES> 8817
<ALLOWANCES> 553
<INVENTORY> 0
<CURRENT-ASSETS> 32853
<PP&E> 9219
<DEPRECIATION> 5828
<TOTAL-ASSETS> 36494
<CURRENT-LIABILITIES> 12432
<BONDS> 0
0
0
<COMMON> 52363
<OTHER-SE> (31110)
<TOTAL-LIABILITY-AND-EQUITY> 36494
<SALES> 9040
<TOTAL-REVENUES> 9040
<CGS> 1484
<TOTAL-COSTS> 7358
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 218
<INCOME-PRETAX> 245
<INCOME-TAX> 58
<INCOME-CONTINUING> 187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
