<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
[ X ] Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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) 346-1100
(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 or 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.
8,437,296 shares of Common Stock, $0.001 par value, as of August 31, 1998
- -------------------------------------------------------------------------------
<PAGE>
UNIFY CORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
July 31, 1998 and April 30, 1998................................ 3
Condensed Consolidated Statements of Operations for
the three months ended July 31, 1998 and 1997.................. 4
Condensed Consolidated Statements of Cash Flows
for the three months ended July 31, 1998 and 1997.............. 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 6. Exhibits and Reports on Form 8-K.................................... 13
SIGNATURE ............................................................................... 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIFY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 31, April 30,
1998 1998
--------- ---------
(unaudited) (audited)
<S>
ASSETS <C> <C>
Current assets:
Cash and cash equivalents $ 5,297 $ 5,279
Short-term investments 5,149 5,460
Accounts receivable, net 4,884 5,568
Prepaid expenses and other current assets 824 779
-------- --------
Total current assets 16,154 17,086
Property and equipment, net 1,858 1,925
Other assets 68 88
-------- --------
Total assets $ 18,080 $ 19,099
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ -- $ 18
Accounts payable 1,099 1,041
Amounts due to minority interest stockholders 527 756
Accrued compensation and related expenses 1,469 1,889
Other accrued liabilities 2,888 3,076
Deferred revenue 3,114 3,745
-------- --------
Total current liabilities 9,097 10,525
Long-term debt, net of current portion 3 4
Minority interest 239 275
Stockholders' equity:
Common stock 8 8
Additional paid-in capital 53,631 53,474
Notes receivable from stockholders (219) (216)
Cumulative translation adjustments (487) (521)
Accumulated deficit (44,192) (44,450)
-------- --------
Total stockholders' equity 8,741 8,295
-------- --------
Total liabilities and stockholders' equity $ 18,080 $ 19,099
-------- --------
-------- --------
</TABLE>
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,
---------------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues:
Software licenses $ 4,242 $ 2,869
Services 2,418 2,265
-------- --------
Total revenues 6,660 5,134
-------- --------
Cost of revenues:
Software licenses 226 233
Services 1,053 1,081
-------- --------
Total cost of revenues 1,279 1,314
-------- --------
Gross margin 5,381 3,820
-------- --------
Operating expenses:
Product development 1,449 1,448
Selling, general and administrative 3,653 4,560
-------- --------
Total operating expenses 5,102 6,008
-------- --------
Income (loss) from operations 279 (2,188)
Other income, net 23 60
-------- --------
Income (loss) before income taxes 302 (2,128)
Provision for income taxes (44) (47)
-------- --------
Net income (loss) $ 258 $(2,175)
-------- --------
-------- --------
Net income (loss) per share, basic and diluted $ 0.03 $ (0.27)
-------- --------
-------- --------
Shares used in computing net income (loss) per share:
Basic 8,388 8,180
-------- --------
-------- --------
Diluted 8,524 8,180
-------- --------
-------- --------
</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,
----------------------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 258 $(2,175)
Reconciliation of net income (loss) to net cash used
in operating activities:
Depreciation 276 264
Provision for losses on accounts receivable 113 42
Minority interest (36) (63)
Liquidation of Benelux subsidiary -- 136
Changes in operating assets and liabilities:
Accounts receivable 510 447
Prepaid expenses and other current assets (60) 77
Accounts payable 69 275
Amounts due to minority interest stockholders (182) (29)
Accrued compensation and related expenses (411) (371)
Other accrued liabilities (180) (675)
Deferred revenue (594) (502)
------- -------
Net cash used in operating activities (237) (2,574)
------- -------
Cash flows from investing activities:
Purchases of available-for-sale securities (1,250) (3,543)
Sales of available-for-sale securities 1,561 3,998
Purchases of property and equipment (212) (218)
Other assets 20 166
------- -------
Net cash provided by investing activities 119 403
------- -------
Cash flows from financing activities:
Principal payments under debt obligations (19) (2,260)
Proceeds from issuance of common stock, net 157 327
Accrual of interest on notes receivable from stockholders (3) (2)
------- -------
Net cash provided by (used in) financing activities 135 (1,935)
------- -------
Effect of exchange rate changes on cash 1 (64)
------- -------
Net increase (decrease) in cash and cash equivalents 18 (4,170)
Cash and cash equivalents, beginning of period 5,279 9,513
------- -------
Cash and cash equivalents, end of period $ 5,297 $ 5,343
------- -------
------- -------
Supplemental schedule of noncash investing and financing activities:
Cash paid during the period for:
Interest $ 26 $ 250
------- -------
------- -------
Income taxes $ 32 $ 31
------- -------
------- -------
</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 interim 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 as of July 31, 1998 and April 30, 1998, the results of
operations for the three months ended July 31, 1998 and 1997, and the cash
flows for the three months ended July 31, 1998 and 1997. The results for
interim periods are not necessarily indicative of the results to be expected
for the entire fiscal year. These financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes thereto,
together with Management's Discussion and Analysis of Financial Condition and
Results of Operations, which are included in the Company's Annual Report on
Form 10-K for the year ended April 30, 1998 as filed with the SEC.
2. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share computations for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended July 31,
----------------------------
1998 1997
------- -------
<S> <C> <C>
NET INCOME (LOSS) (NUMERATOR):
Net income (loss), basic and diluted $ 258 $(2,175)
------- -------
------- -------
SHARES (DENOMINATOR):
Weighted average shares of common stock
outstanding, basic 8,388 8,180
Weighted average common equivalent shares
outstanding 136 --
------- -------
Weighted average shares of common stock
outstanding, diluted 8,524 8,180
------- -------
------- -------
PER SHARE AMOUNT:
Net income (loss) per share, basic and diluted $ 0.03 $ (0.27)
------- -------
------- -------
ANTIDILUTIVE SHARES: 433 706
------- -------
------- -------
</TABLE>
6
<PAGE>
UNIFY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. COMPREHENSIVE INCOME
Effective May 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This
statement requires that all items recognized under accounting standards as
components of comprehensive income be reported in an annual financial
statement that is displayed with the same prominence as other annual
financial statements. This statement also requires that an entity classify
items of other comprehensive income by their nature in an annual financial
statement. For example, other comprehensive income includes foreign currency
translation adjustments. Annual financial statements for prior periods will
be reclassified, as required. The Company's total comprehensive income (loss)
was as follows:
<TABLE>
<CAPTION>
Three Months Ended July 31,
-----------------------------
1998 1997
------- -------
<S> <C> <C>
Net income (loss) $ 258 $(2,175)
Other comprehensive loss, net of tax (34) (71)
------- -------
Total comprehensive income (loss) $ 224 $(2,246)
------- -------
------- -------
</TABLE>
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments and hedging activities. This statement is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. The Company
has not yet determined the impact of SFAS No. 133 on the Company's financial
statements.
7
<PAGE>
UNIFY CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE DISCUSSION IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS
FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT
THE SOFTWARE INDUSTRY AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S
MANAGEMENT. WORDS SUCH AS "ANTICIPATES", "EXPECTS", "INTENDS", "PLANS",
"BELIEVES", "SEEKS", "ESTIMATES", VARIATIONS OF SUCH WORDS AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT;
THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS AND
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET FORTH HEREIN UNDER
"VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY
RESULTS" AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K UNDER "BUSINESS -
RISK FACTORS." UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION
TO UPDATE PUBLICLY ANY FORWARD- LOOKING STATEMENTS, WHETHER AS A RESULT OF
NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. HOWEVER, READERS SHOULD
CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THE
COMPANY FILES FROM TIME TO TIME WITH THE SEC, PARTICULARLY THE COMPANY'S
ANNUAL REPORTS ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q AND ANY CURRENT
REPORTS ON FORM 8-K.
The following discussion should be read in conjunction with the
unaudited Condensed Consolidated Financial Statements and Notes thereto in
Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited
Consolidated Financial Statements and Notes thereto, together with
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included in the Company's Annual Report on Form 10-K
for the year ended April 30, 1998 as filed with the SEC.
RESULTS OF OPERATIONS
REVENUES
The Company's strategy is to aggressively market and enhance its
graphical product, Unify VISION. The Company continues to support its
extensive installed base of Unify DataServer and Unify ACCELL character
products, which the Company believes represents a significant source of
potential customers for Unify VISION. The Company also generates significant
revenues from services, including customer maintenance, consulting and
training. The following table sets forth revenues from licenses of its
graphical and character products and from services for the periods indicated:
8
<PAGE>
UNIFY CORPORATION
<TABLE>
<CAPTION>
Three Months Ended July 31,
---------------------------
1998 1997
------ ------
<S> <C> <C>
License revenues:
Graphical $2,150 $1,257
Character 2,092 1,612
------ ------
Total license revenues 4,242 2,869
Services revenues 2,418 2,265
------ ------
Total revenues $6,660 $5,134
------ ------
------ ------
</TABLE>
Total revenues for the quarter ended July 31, 1998 increased 30% over
the same quarter of the prior year to $6.7 million. Graphical license
revenues of $2.2 million in the first quarter of fiscal 1999 were 71% higher
than the same quarter of the prior year. The growth in graphical license
revenues was primarily attributable to several sales in the $250,000 to
$500,000 range; fewer similar sales occurred in the same quarter of fiscal
1998. Because of factors such as those described in "Volatility of Stock
Price and General Risk Factors Affecting Quarterly Results," especially
continuing longer sales cycles associated with enterprise-level sales
transactions, there can be no assurance that the Company will be able to
maintain the same level of graphical license revenues as recorded for the
quarter ended July 31, 1998. Character license revenues increased 30% over
the same quarter of the prior year to $2.1 million, reflecting normal
fluctuation in the level of character license revenues. Service revenues
remained relatively constant in the first quarter of fiscal 1999 as compared
to the same quarter of the previous year.
International revenues were comparable at 52% and 50% of total revenues
in the quarters ended July 31, 1998 and 1997, respectively.
COST OF REVENUES
Cost of software licenses were stable in absolute dollars and
represented 5% and 8% of license revenues for the quarters ended July 31,
1998 and 1997, respectively. The decrease in cost of software licenses as a
percentage of license revenues in the fiscal 1999 quarter was due to
economies of scale associated with the growth in license revenues.
Cost of services were comparable at $1.1 million, or 44% and 48% of
service revenues in the first quarters of fiscal 1999 and 1998, respectively.
Within total services, the levels of customer maintenance and consulting and
training revenues and expenses were also stable in the first quarter of
fiscal 1999 as compared with the same quarter of the prior year. As the
Company continues to increase its emphasis on providing comprehensive
application development solutions in fiscal 1999 it expects that consulting
service costs may increase.
9
<PAGE>
UNIFY CORPORATION
PRODUCT DEVELOPMENT
Product development expenses were stable at $1.4 million and represented
22% and 28% of total revenues for the quarters ended July 31, 1998 and 1997,
respectively. The decrease in product development expenses as a percentage of
total revenues was due to the growth in first quarter fiscal 1999 license
revenues as compared to the same quarter of the prior year. The Company
believes that substantial investment in product development is critical to
maintaining technological leadership and therefore intends to continue to
devote significant resources to product development.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative ("SG&A") expenses for the quarter
ended July 31, 1998 decreased to $3.7 million, or 55% of total revenues, as
compared to $4.6 million, or 89% of total revenues, for the same quarter of
the prior year. SG&A expenses decreased in absolute dollars compared to the
same period of the prior year as the Company continued to closely manage
expenses. The decrease in SG&A expenses as a percentage of total revenues was
attributable to the decrease in absolute dollars as well as to the increase
in first quarter fiscal 1999 license revenues as compared to the same quarter
of the prior year. The Company expects that total SG&A expenses may fluctuate
from quarter to quarter primarily because of variability in marketing program
spending and sales commission expense.
PROVISION FOR INCOME TAXES
The Company recorded tax provisions for the quarters ended July 31, 1998
and 1997 which related primarily to foreign income tax withholding on
software license royalties paid to the Company by certain foreign licensees.
For the same periods, the Company recorded no federal or state income tax
provisions as the Company had substantial net operating loss carryforwards.
10
<PAGE>
UNIFY CORPORATION
VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS
The Company's common stock price has been and is likely to continue to
be subject to significant volatility. A variety of factors could cause the
price of the Company's common stock to fluctuate, perhaps substantially,
including: announcements of developments related to the Company's business;
fluctuations in the Company's quarterly operating results and order levels;
general conditions in the computer industry or the worldwide economy;
announcements of technological innovations; new products or product
enhancements by the Company or its competitors; changes in financial
estimates by securities analysts; developments in patent, copyright or other
intellectual property rights; and developments in the Company's relationships
with its customers, distributors and suppliers. In addition, in recent years
the stock market in general, and the market for shares of equity securities
of many high technology companies in particular, has experienced extreme
price fluctuations which have often been unrelated to the operating
performance of those companies. Such fluctuations may adversely affect the
market price of the Company's common stock.
The Company's quarterly operating results have varied significantly in
the past, and the Company expects that its operating results are likely to
vary significantly from time to time in the future. Such variations result
from, among other factors, the following: 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 and its competitors; ability of the Company to attract and
retain key employees; seasonality; changes in pricing policies by the Company
or its competitors; realignments of the Company's organizational structure;
changes in the level of the Company's operating expenses; changes in the
Company's sales incentive plans; budgeting cycles of the Company's 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; the results of international
expansion; currency fluctuations; and general domestic and international
economic and political conditions. Because a significant portion of the
Company's revenues have been, and the Company believes will continue to be,
derived from orders ranging in size from several hundred thousand dollars to
approximately $1 million, 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 and Internet application development software is
rapidly evolving, and the Company's sales cycle, from initial evaluation to
purchase and the provision of maintenance services, is lengthy and varies
substantially from customer to customer. In particular, with the fiscal 1997
release of Unify VISION 3.0 and VISION/Web as well as the May 1998 release of
VISION 4.0, the Company has experienced new opportunities to compete for
larger, enterprise-level sales transactions. These transactions have even
longer sales cycles than the Company has experienced in the past. 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 fiscal
11
<PAGE>
UNIFY CORPORATION
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 operating results are likely to be disproportionately
adversely affected.
The Company also expects that its operating results will be affected by
seasonal trends. The Company believes that, in general, it is likely it will
experience relatively higher revenues in fiscal quarters ending April 30 and
relatively lower revenues in fiscal quarters ending July 31 as a result of
efforts by its direct sales force to meet fiscal year-end sales quotas. The
Company also anticipates that it may experience relatively weaker demand in
fiscal quarters ending July 31 and October 31 as a result of reduced business
activity in Europe during the summer months.
In particular, due to the foregoing factors and due to longer sales
cycles associated with Unify VISION 4.0, the operating results of the Company
for the quarter ending October 31, 1998 are subject to significant
uncertainty. The Company has incurred net losses in five of the last eight
fiscal quarters and in each of the last five fiscal years. Although the
Company recorded small operating profits for the quarters ended January 31,
1998, April 30, 1998 and July 31, 1998, there can be no assurance regarding
the Company's continued profitability.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1998, the Company had cash, cash equivalents and short-term
investments of $10.4 million, compared to $10.7 million at April 30, 1998.
Working capital increased to $7.1 million at July 31, 1998 from $6.6 million
at April 30, 1998.
The Company's operating activities used cash of $0.2 million during the
three months ended July 31, 1998. Investing activities during the period
generated cash of $0.1 million, consisting principally of net sales of short
term investments of $0.3 million offset by equipment purchases of $0.2
million. Cash provided by financing activities during the period was $0.1
million, representing primarily proceeds from issuance of common stock.
The Company believes that current cash, cash equivalents and short-term
investments will be sufficient to meet its cash requirements during the next
12 months. Thereafter, depending on its operating results, 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, that it will be
on terms satisfactory to the Company.
12
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UNIFY CORPORATION
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K
during the quarter ended July 31, 1998.
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 9, 1998 Unify Corporation
(REGISTRANT)
By:
Reza Mikailli
------------------------------------------
Reza Mikailli
President, Chief Executive Officer, Acting
Vice President, Finance and Administration,
and Director (Principal Executive,
Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JULY 31, 1998 AND
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JULY
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> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 5,297
<SECURITIES> 5,149
<RECEIVABLES> 5,527
<ALLOWANCES> 643
<INVENTORY> 0
<CURRENT-ASSETS> 16,154
<PP&E> 6,592
<DEPRECIATION> 4,734
<TOTAL-ASSETS> 18,080
<CURRENT-LIABILITIES> 9,097
<BONDS> 0
0
0
<COMMON> 53,639
<OTHER-SE> (44,898)
<TOTAL-LIABILITY-AND-EQUITY> 18,080
<SALES> 6,660
<TOTAL-REVENUES> 6,660
<CGS> 1,279
<TOTAL-COSTS> 6,381
<OTHER-EXPENSES> (51)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 302
<INCOME-TAX> (44)
<INCOME-CONTINUING> 258
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 258
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
