<PAGE>
UNITED STATES
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 JUNE 30, 1996
[_] 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: 0 - 27794
SEGUE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 95-4188982
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1320 Centre Street, Newton Centre, Massachusetts 02159
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 796-1000
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 a 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 [_]
The number of shares of Registrant's Common Stock outstanding as of
July 19, 1996 was 6,544,618.
<PAGE>
SEGUE SOFTWARE, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements:
<S> <C>
Balance Sheets 3
June 30, 1996 and December 31, 1995
Statements of Operations 4
Three and six months ended June 30, 1996 and 1995
Statements of Cash Flows 5
Six months ended June 30, 1996 and 1995
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibits Index 15
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEGUE SOFTWARE, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $17,343 $ 442
Short-term investments 22,484 _
Accounts receivable, net of
allowances of $110 and $150 3,117 2,595
Other current assets 315 96
------- -------
Total current assets 43,259 3,133
Property and equipment, net 1,751 1,154
Intangible assets, net of accumulated
amortization of $309 and $266 21 64
Other assets 156 145
------- -------
Total assets $45,187 $ 4,496
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 779 $ 461
Accrued compensation and benefits 456 604
Accrued expenses 543 185
Deferred revenue 1,434 1,068
Accrued royalties 147 219
Convertible debt to stockholders 574 654
------- -------
Total current liabilities 3,933 3,191
Stockholders' equity:
Series A Preferred Stock, $0.01 par value;
noncumulative; 4,000,000 shares authorized;
0 and 2,291,458 shares issued and outstanding - 23
Common Stock, $0.01 par value; 30,000,000
shares authorized; 6,532,618 and 1,586,090
issued and outstanding 65 16
Additional paid-in capital 45,492 5,027
Unearned compensation (515) -
Accumulated deficit (3,788) (3,761)
------- -------
Total stockholder's equity 41,254 1,305
------- -------
Total liabilities and stockholders' equity $45,187 $ 4,496
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
SEGUE SOFTWARE, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
-------------------- ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software $2,511 $1,881 $5,109 $3,442
Services 1,031 647 2,022 1,149
Royalties _ 40 _ 83
------ ------ ------ ------
Total revenue 3,542 2,568 7,131 4,674
Cost of revenue:
Cost of software 80 104 156 163
Cost of services 504 290 840 525
Cost of royalties - 9 - 19
------ ------ ------ ------
Total cost of revenue 584 403 996 707
Gross margin 2,958 2,165 6,135 3,967
Operating expenses:
Sales and marketing 1,970 1,291 3,796 2,373
Research and development 932 535 1,756 1,025
General and administrative 587 454 1,105 834
Severance charges - 449 - 449
------ ------ ------ ------
Total operating expenses 3,489 2,729 6,657 4,681
------ ------ ------ ------
Loss from operations (531) (564) (522) (714)
Other income (expense), net 502 (7) 495 (12)
------ ------ ------ ------
Net loss $ (29) $ (571) $ (27) $ (726)
====== ====== ====== ======
Net income (loss) per common and
common equivalent per share/(1)/ $ - $(0.14) $(0.01) $(0.18)
====== ====== ====== ======
Weighted average common shares and
common equivalent shares
outstanding/(1)/ 6,426 4,065 5,326 4,064
</TABLE>
/(1)/Presented on a pro forma basis giving effect to the conversion of all
outstanding shares of preferred stock.
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
SEGUE SOFTWARE, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six months ended
June 30
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (27) $(726)
Adjustments to reconcile net income(loss)
to net cash provided by operating activities:
Depreciation and amortization 279 209
Loss on disposal of property and equipment - 21
Noncash compensation charges 59 -
Changes in operating assets and liabilities:
Accounts receivable (522) 176
Other current assets (219) (44)
Other assets (11) 13
Accounts payable 184 (20)
Accrued expenses, compensation, and benefits 210 297
Accrued royalties (72) 17
Deferred revenue 367 234
-------- -----
Net cash provided (used) by operating activities 248 177
-------- -----
Cash flows from investing activities:
Additions to property and equipment (834) (356)
Decrease (increase) in short-term investments (22,484) -
-------- -----
Net cash used in investing activities (23,318) (356)
-------- -----
Cash flows from financing activities:
Net proceeds from initial public offering 39,674 -
Proceeds from exercise of stock options 297 6
-------- -----
Net cash provided by financing activities 39,971 6
-------- -----
Net increase (decrease) in cash and cash equivalents 16,901 (173)
Cash and cash equivalents, beginning of period 442 711
-------- -----
Cash and cash equivalents, end of period $ 17,343 $ 538
======== =====
Supplemental disclosure of noncash financing
transactions:
Conversion of convertible debt to stockholders into
common stock $ 80 $ -
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
SEGUE SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
1. The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes, however, that disclosures are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements for
the year ended December 31, 1995 and the notes thereto included in the Company's
Registration Statement filed on Form S-1 (Registration No. 333-1488).
This financial information reflects, in the opinion of management, all
adjustments of a normal recurring nature necessary to present fairly the results
for the interim periods. Results of interim periods may not be indicative of
results for the full year.
2. Cash and cash equivalents include cash on hand and all highly liquid short-
term investments with original maturities of three months or less when
purchased. Cash equivalents are stated at cost plus accrued interest, which
approximates market.
3. Net income (loss) per share is computed based upon the weighted average
number of common and common equivalent shares outstanding during each period.
Common equivalent shares are included in the per share calculations where the
effect of their inclusion would be dilutive. The convertible debt outstanding
is not considered a common stock equivalent. In accordance with the Securities
and Exchange Commission Staff Accounting Bulletin No. 83 ("SAB No. 83"), all
common and common equivalent shares (including stock options) issued during the
twelve month period prior to the initial filing date in February 1996 of the
Registration Statement relating to the Company's initial public offering have
been included in the calculation as if they were outstanding for all periods
presented. As a result, the common equivalent shares for stock options were
determined using the treasury stock method.
On a historical basis, net income (loss) per common and common equivalent shares
is as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
---------- -----------
1996 1995 1996 1995
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net income (loss) per common $ - $ (.32) $ (.01) $ (.41)
and common equivalent share
Weighted average common 6,373,000 1,774,000 4,091,000 1,773,000
and common equivalent shares
outstanding
</TABLE>
6
<PAGE>
Net income (loss) per common share on a pro forma basis is computed in the same
manner as net income (loss) per common share on a historical basis except all
outstanding shares of the Series A Preferred Stock are included in the
computation as if they had been converted into an equivalent number of shares of
common stock even if anti-dilutive.
Fully diluted net income (loss) per common share is the same as primary net
income (loss) per common share.
4. In April 1996, an initial public offering of 3,162,500 of the Company's
Common Stock ($.01 par value) at an initial public offering price of $18.00 per
share was consummated. Concurrent with the closing of the offering in April
1996, all outstanding shares of Series A Preferred Stock were converted into
Common Stock. The total shares sold in the offering consisted of 2,000,000
shares sold by the Company, 750,000 shares sold by selling shareholders and an
additional 412,500 shares sold by the Company to cover the underwriters' over-
allotment option. Proceeds to the Company from this offering, net of
underwriters' discount and associated costs, were approximately $39.7 million.
5. In February 1996, the Board of Directors of the Company voted for the
following, which were approved by the shareholders on February 16, 1996: (i) the
reincorporation of the Company from a California corporation to a Delaware
corporation; (ii) an amendment of the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock and Preferred Stock to
30,000,000 and 9,000,000 shares, respectively; (iii) the designation of
4,000,000 shares of such 9,000,000 shares of Preferred Stock as Series A
Preferred Stock; (iv) the changing of the per share par value of the Common
Stock and Preferred Stock from no par value to $.01 par value; (v) the amendment
and restatement of the Company's 1989 Incentive and Non-Qualified Stock Option
Plan (the "Option Plan"), pursuant to which, among other things, the number of
shares of Common Stock reserved for issuance pursuant to options granted
pursuant to the Option Plan was increased to 2,450,000 shares, the name of the
Option Plan was changed to the 1996 Amended and Restated Incentive and Non-
Qualified Stock Option Plan, and stock option grants to non-employee directors
were authorized; and (vi) the approval of the Employee Stock Purchase Plan,
which permits eligible employees to purchase Common Stock of the Company up to a
maximum of 100,000 shares of Common Stock. The accompanying balance sheets
reflect these changes in capital structure for all periods presented.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain unaudited quarterly results of
operations expressed as a percentage of total revenue for the periods indicated:
<TABLE>
<CAPTION>
Percentage of Revenue for Percentage of Revenue for
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- --------------------------
1996 1995 1996 1995
------------- -------------- ------------ --------
<S> <C> <C> <C> <C>
Revenue:
Software 70.9% 73.2% 71.6% 73.6%
Services 29.1 25.2 28.4 24.6
Royalties - 1.6 - 1.8
----- ------ ----- -----
Total revenue 100.0 100.0 100.0 100.0
Cost of revenue:
Cost of software 2.3 4.0 2.2 3.5
Cost of services 14.2 11.3 11.8 11.2
Cost of royalties - .4 - .4
----- ------ ----- ------
Total cost of revenue 16.5 15.7 14.0 15.1
Gross margin 83.5 84.3 86.0 84.9
Operating expenses:
Sales and marketing 55.6 50.3 53.2 50.8
Research and development 26.3 20.8 24.6 21.9
General and administrative 16.6 17.7 15.5 17.8
Severance charges - 17.5 - 9.6
----- ------ ----- ------
Total operating expenses 98.5 106.3 93.3 100.1
Income (loss) from operations (15.0) (22.0) (7.3) (15.2)
Other income (expense), net 14.2 (.2) 6.9 (.3)
----- ------ ----- ------
Net income (loss) (.8)% (22.2)% (.4)% (15.5)%
===== ====== ===== ======
</TABLE>
REVENUE
Revenue from Software. Software revenue increased 33% to $2,511,000
during the second quarter of 1996 from $1,881,000 in the second quarter of 1995.
For the six month period ended June 30, 1996, software revenue increased 48% to
$5,109,000 from $3,442,000 for the first six months of 1995. These increases
are primarily due to the continuing growth in unit shipments of the Company's
principal product, QA Partner. The increase in unit shipments came largely
through the Company's direct domestic channel. Revenue from the Company's
domestic indirect channels and from the Company's international distributors
accounted for 8 % and 11 % of the revenue in the quarter, respectively, and 7%
and 11% for the six month period ended June 30, 1996, respectively. In the
8
<PAGE>
comparable quarter in 1995, those channels accounted for 0% and 9% of total
revenue, respectively. For the six month period ended June 30, 1995, revenues
for domestic indirect channels and from the Company's international distributors
accounted for 0% and 10%, respectively.
Revenue from Services. Service revenue increased 59 % to $ 1,031,000
during the second quarter of 1996 from $ 647,000 in the second quarter of 1995,
driven by the increase in maintenance revenue and training and consulting
revenue related to the increase in software licenses sold. Training and
consulting revenue increased 33%, while maintenance revenue increased 81%. For
the six month period ended June 30, 1996, service revenue increased 76% to
$2,022,000 from $1,149,000 for the first six months of 1995. For the six month
period ended June 30, 1996, training and consulting revenue increased 52 %,
while maintenance revenue increased 95 % over the comparable period in 1995.
These increases were driven by the increase in software licenses sold.
Revenue from Royalties. Royalty revenue amounted to $ 40,000 in the
quarter ended June 30, 1995 and $83,000 for the six month period ended June 30,
1995. There were no royalty revenues in the second quarter or the first six
months of 1996. Royalty revenue is related to porting contracts completed in
1991 for Lotus Development Corporation. The Company does not expect any
significant revenues, if any, from these contracts in the future.
COST OF REVENUE
Cost of Software. Cost of software decreased 23% to $80,000 during the
second quarter of 1996 from $104,000 in the second quarter of 1995. For the six
month period ended June 30, 1996, cost of software declined slightly to $156,000
from $163,000 for the six months ended June 30, 1995. As a percent of software
license revenue, costs in the current quarter declined to 3.2% of revenue from
5.5% of revenue a year earlier. For the six month period ended June 30, 1996,
cost of software as a percent of software license revenue declined to 3.1% from
4.7% for the six months ended June 30, 1995. This is largely the result of some
fixed costs being amortized over a larger revenue base.
Cost of Services. Cost of services increased 74% to $504,000 during
the second quarter of 1996 from $290,000 in the second quarter of 1995. For the
six months ended June 30, 1996, cost of services increased 60% to $840,000 from
$525,000 for the six months ended June 30, 1995. As a percent of service
revenue, costs in the current quarter increased to 49% of revenue from 45% of
revenue a year earlier. For the six months ended June 30, 1996, cost of
services as a percent of service revenue decreased to 42% from 46% for the six
months ended June 30, 1995. The increase in the current quarter over the prior
year is largely the result of the cost of a product upgrade sent to customers in
the quarter. The decrease in the year to date over the comparable period in
1995 is largely due to the fact that maintenance revenue grew at a faster rate
than the customer support hotline costs and a slightly improved margin on the
Company's training and consulting business.
9
<PAGE>
Cost of Royalties. There were no royalty revenues or costs related
thereto in the second quarter or the first six months of 1996. Cost of
royalties totaled $9,000 in the second quarter of 1995 and $19,000 for the six
months ended June 30, 1995. These costs represent the portion of royalties that
the Company received from Lotus Development Corporation that are due to the
third parties who assisted the Company in completing the porting contracts for
Lotus Development Corporation in 1991.
OPERATING EXPENSES
Sales and Marketing. Sales and marketing expenses increased 53% to
$1,970,000 during the second quarter of 1996 from $1,291,000 in the second
quarter of 1995. For the six months ended June 30, 1996, sales and marketing
expenses increased 60% to $3,796,000 from $2,373,000 for the first six months of
1995. These increases are largely due to the Company's increased investment in
its marketing programs, increased sales commissions related to the increase in
revenue and the addition of sales and marketing personnel to support the growth
of the business. The total number of employees in sales and marketing totaled
44 as of June 30, 1996. This is an increase of 18 employees over the period
ended June 30, 1995.
Research and Development. Research and development expenses increased
74% to $932,000 during the second quarter of 1996 from $535,000 in the second
quarter of 1995. For the six months ended June 30, 1996, research and
development expenses increased 71% to $1,756,000 from $1,025,000 for the first
six months of 1995. These increases are largely due to the growth of the
Company's research and development staff in order to continue to enhance the
Company's products and develop new products. The staff grew from 22 employees
at June 30, 1995 to 35 employees at June 30, 1996. To date, all of the
Company's costs for research and development have been charged to operations as
incurred, since the amount of software development costs qualifying for
capitalization has been immaterial.
General and Administrative. General and administrative expenses
increased 29% to $587,000 during the second quarter of 1996 from $454,000 in the
second quarter of 1995. For the six months ended June 30, 1996, general and
administrative expenses increased 32% to $1,105,000 from $834,000 for the first
six months of 1995. These increases are largely attributable to the increase in
the general and administrative staff, performance bonus awards related to the
completion of several key objectives, consulting assistance related to the
implementation of the Company's new order entry and financial systems, and
increased legal costs related to SEC filings as a public company and to
litigation matters (see Legal Proceedings).
Severance Charges. In 1995, the Company entered into an employment
separation agreement with its former Chief Executive Officer. The costs of the
employment separation agreement totaled $449,000 and included severance pay and
the purchase of vested options.
10
<PAGE>
OTHER INCOME AND (EXPENSE), NET
Other income and (expense), net is comprised primarily of interest
income from cash, cash equivalents and short-term investments. Prior to April
2, 1996, the Company generally invested in money market accounts. On April 2,
1996, the Company completed an initial public offering and received net proceeds
of approximately $39.7 million. The Company has invested, and will continue to
invest the offering proceeds, primarily in U.S.Government and Government
Agency securities, in A1 rated commercial paper and in money market accounts
until such time as the proceeds are needed to fund operations. As a result of
the Company's receipt and investment of the offering proceeds, the Company
expects that other income will increase substantially over prior periods.
Interest income is partially offset by interest expense related to the Company's
convertible debt.
PROVISION FOR INCOME TAXES
The Company has no provision for income taxes for the second quarter
of 1996, the six months ended June 30, 1996 and for fiscal 1995 due to the fact
that it incurred net losses.
INFLATION
Inflation has not had a significant impact on the Company's operating
results to date.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased from $442,000 at December 31, 1995
to $17,343,000 at June 30, 1996. Short-term investments increased from $0 at
December 31, 1995 to $22,484,000 at June 30, 1996. These increases resulted
primarily from the funds raised in the Company's initial public offering.
The Company provided $248,000 in operating activities in the first six months of
1996 and provided $177,000 in operating activities in the first six months of
1995. In the first six months of 1996, funds provided by operating activities
were primarily the result of the growth in accrued expenses and deferred revenue
partially offset by the growth in accounts receivable and other current assets.
In the first six months of 1995, funds were provided largely from a reduction in
accounts receivable coupled with an increase in accrued expenses and deferred
revenue.
The Company utilized $23,318,000 and $356,000 for investing activities in the
first six months of 1996 and 1995, respectively. The investing activities in
the first six months of 1996 were the result of investing part of the initial
public offering proceeds and continuing to build the information systems
infrastructure to support the Company's growth. The investing activities in the
first six months of 1995 were the result of capital expenditures to provide
computers, software and furniture for new employees.
11
<PAGE>
The Company generated funds from financing activities of $39,971,000 and $6,000
in the first six months of 1996 and 1995, respectively. As noted above, the
Company generated approximately $39,700,000, net of expenses, from its initial
public offering.
Assuming there is no significant change in the Company's business, the Company
believes that the existing cash balances and short-term investment balances and
cash flow from operations, will be sufficient to meet its working capital
requirements for at least the next twelve months.
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Form 10-Q contains forward-looking statements within the meaning
of the "safe-harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include statements regarding the
sufficiency of the Company's liquidity and capital. Such statements are based
on management's current expectations and are subject to a number of
uncertainties and risks that could cause actual results to differ materially
from those described in the forward-looking statements. Such uncertainties and
risks include, but are not limited to, potential fluctuations in the Company's
quarterly results, the Company's dependence on revenues from licenses from QA
Partner, dependence on key personnel, developments in the emerging automated
software testing product market, technological change, competition, and the
Company's ability to manage its recent growth, expand its international sales,
develop indirect sales channels, avoid channel conflicts, introduce new products
and avoid product defects and product liability, and protect its intellectual
property and proprietary rights. For more explanation of these and other risk
factors, please see the Company's final prospectus dated March 28, 1996.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has previously reported the matter captioned Softbridge,
-----------
Inc. v. Laurence Kepple, et al. on a Current Report on Form 8-K filed
------------------------------
August 1, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.1 Computation of primary and fully-diluted net income (loss) per
common share for the three months and six months ended
June 30, 1996 and 1995.
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
None.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 12, 1996
SEGUE SOFTWARE, INC.
/s/ ELISABETH ELTERMAN
----------------------
President and Chief Executive Officer
/s/ J. JEFFREY BINGENHEIMER
---------------------------
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
14
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
- --- -----------
11.1 Computation of primary and fully-diluted net income (loss) per common
share for the three months and six months ended June 30, 1996 and
June 30, 1995.
27.1 Financial Data Schedule
15
<PAGE>
EXHIBIT 11.1
SEGUE SOFTWARE, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
-------------------
June 30, 1996 June 30, 1995
------------------- -----------------
<S> <C> <C>
Net loss $ (29,000) $ (571,000)
========== ==========
Weighted average common stock outstanding
during the period 6,373,000 1 ,531,000
Weighted average cheap stock outstanding
during the period (1) - 243,000
---------- ----------
Weighted average common and common
equivalent shares outstanding 6,373,000 1,774,000
========== ==========
Net income (loss) per common and common
equivalent shares $ - $ (0.32)
========== ==========
Six Months Ended
----------------
June 30, 1996 June 30, 1995
------------- -------------
Net loss $ (27,000) $ (726,000)
========== ==========
Weighted average common stock outstanding
during the period 4,030,000 1,530,000
Weighted average cheap stock outstanding
during the period(1) 61,000 243,000
---------- ----------
Weighted average common and common
equivalent shares outstanding 4,091,000 1,773,000
========== ==========
Net income (loss) per common and common
equivalent shares $(.01) $ (.41)
========== ==========
</TABLE>
(1) In accordance with the Securities and Exchange Commission Staff Accounting
Bulletin No. 83, issuances of Common Stock and Common Stock equivalents within
one year prior to the initial filing date of the registration statement, at
share prices less than the assumed initial public offering price, are considered
to have been made in anticipation of the public offering which was completed
April 2, 1996. Accordingly, these equity issuances are treated as if issued and
outstanding, using the treasury stock method, for all periods presented.
Fully diluted net income (loss) per common share is the same as primary net
income (loss) per common share.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITEM 1 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> APR-01-1996 APR-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> 17,343 442
<SECURITIES> 22,484 0
<RECEIVABLES> 3,227 2,745
<ALLOWANCES> 110 150
<INVENTORY> 50 40
<CURRENT-ASSETS> 43,259 3,133
<PP&E> 2,510 1,474
<DEPRECIATION> 759 320
<TOTAL-ASSETS> 45,187 4,496
<CURRENT-LIABILITIES> 3,933 3,191
<BONDS> 0 0
0 0
0 23
<COMMON> 65 16
<OTHER-SE> 41,189 1,266
<TOTAL-LIABILITY-AND-EQUITY> 45,187 4,496
<SALES> 3,542 2,568
<TOTAL-REVENUES> 3,542 2,568
<CGS> 584 403
<TOTAL-COSTS> 3,460 2,729
<OTHER-EXPENSES> 513 (8)
<LOSS-PROVISION> 29 0
<INTEREST-EXPENSE> 11 15
<INCOME-PRETAX> (29) (571)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (29) (571)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (29) (571)
<EPS-PRIMARY> 0.0 (.32)
<EPS-DILUTED> 0.0 (.32)
</TABLE>
