<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 0-020992
MATHSOFT, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2842217
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
101 MAIN STREET
CAMBRIDGE, MASSACHUSETTS 02142-1521
(Address, including zip code, of registrant's principal executive offices)
(617) 577-1017
(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 AT LEAST THE PAST 90 DAYS.
YES X NO
-----
AS OF NOVEMBER 8, 1996 THERE WERE 8,674,858 SHARES OF COMMON STOCK, $.01 PAR
VALUE PER SHARE, OUTSTANDING.
Total number of sequentially numbered pages - 16
<PAGE> 2
MATHSOFT, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION:
Item 1. Consolidated Condensed Financial Statements
- Consolidated Condensed Balance Sheets as of September
30, 1996 and June 30, 1996 3-4
- Consolidated Condensed Statements of Operations for the
Three Month Periods Ended September 30, 1996 and 1995 5
- Consolidated Condensed Statements of Cash Flows for the
Three Month Periods Ended September 30, 1996 and 1995 6-7
- Notes to Consolidated Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
Item 3. Cautionary Statements 12-14
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
<PAGE> 3
MATHSOFT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1996 1996
------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,561,572 $ 4,954,416
Accounts receivable and other receivables, less reserves of
approximately $820,000 at September 30, 1996
and $776,000 at June 30, 1996 3,579,322 3,881,568
Inventories 551,508 547,892
Prepaid expenses 462,484 381,638
----------- -----------
Total current assets 9,154,886 9,765,514
----------- -----------
PROPERTY AND EQUIPMENT, AT COST:
Computer equipment and software 4,244,494 4,052,662
Furniture and fixtures 969,107 968,644
Leasehold improvements 621,355 621,354
----------- -----------
5,834,956 5,642,660
Less - Accumulated depreciation and amortization 4,252,655 4,044,072
----------- -----------
1,582,301 1,598,588
OTHER ASSETS:
Purchased technology, net of accumulated amortization
of approximately $2,559,000 at September 30, 1996 and
$2,505,000 at June 30, 1996 449,818 504,006
Other Assets 52,100 31,044
----------- -----------
501,918 535,050
----------- -----------
$11,239,105 $11,899,152
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE> 4
MATHSOFT, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
SEPTEMBER 30, JUNE 30,
1996 1996
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of capital lease obligations $ 13,877 $ 16,753
Accounts payable 2,243,050 1,699,414
Accrued expenses 1,244,155 2,255,214
Accrued restructuring, current portion 14,622 13,316
Deferred revenue 1,164,103 1,092,541
------------ ------------
Total current liabilities 4,679,807 5,077,238
------------ ------------
ACCRUED RESTRUCTURING, LESS CURRENT PORTION 21,518 24,152
------------ ------------
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 894 2,694
------------ ------------
ACCRUED RENT, LESS CURRENT PORTION 32,113 36,372
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value -
Authorized - 1,000,000 shares
Issued and outstanding-none -- --
Common stock, $.01 par value-
Authorized - 20,000,000 shares
Issued and outstanding - 8,666,239 shares
at September 30, 1996 and 8,579,262 shares at
June 30, 1996 86,662 85,793
Additional paid-in capital 28,377,082 28,158,558
Accumulated deficit (21,939,599) (21,474,509)
Cumulative translation adjustment (19,372) (11,146)
------------ ------------
Total stockholders' equity 6,504,773 6,758,696
------------ ------------
$ 11,239,105 $ 11,899,152
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE> 5
MATHSOFT, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
----------- ----------
<S> <C> <C>
REVENUES:
Software licenses $3,924,406 $4,413,974
Services and other 601,871 674,114
---------- ----------
Total revenues 4,526,277 5,088,088
---------- ----------
COST OF REVENUES:
Software licenses 783,034 705,227
Services and other 191,273 241,281
---------- ----------
Total cost of revenues 974,307 946,508
---------- ----------
Gross profit 3,551,970 4,141,580
---------- ----------
OPERATING EXPENSES:
Sales and marketing 2,425,480 2,414,572
Research and development 1,090,842 751,895
General and administrative 525,610 585,892
---------- ----------
Total operating expenses 4,041,932 3,752,359
---------- ----------
INCOME (LOSS) FROM OPERATIONS (489,962) 389,221
INTEREST INCOME, NET 39,708 38,310
---------- ----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (450,254) 427,531
PROVISION FOR INCOME TAXES 14,836 11,196
---------- ----------
NET INCOME (LOSS) $ (465,090) $ 416,335
========== ==========
NET INCOME (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $ (0.05) $ 0.05
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING 8,616,653 9,203,693
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
5
<PAGE> 6
MATHSOFT, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (465,090) $ 416,335
Adjustments to reconcile net income (loss) to net
cash used in operating activities -
Depreciation and amortization 262,771 291,467
Changes in assets & liabilities-
Accounts receivable and other receivables 302,246 (717,282)
Inventories (3,616) (155,601)
Prepaid expenses (80,846) (120,498)
Accounts payable 543,636 292,470
Accrued expenses (1,016,646) (321,425)
Deferred revenue 71,562 (155,320)
----------- ----------
Net cash used in operating activities (385,983) (469,854)
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in short-term investments -- 249,078
Purchases of property and equipment (192,296) (144,941)
Decrease in deposits and other assets (21,056) 12,000
----------- ----------
Net cash provided by (used in) investing activities (213,352) 116,137
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital lease obligations (4,676) (29,658)
Proceeds from exercise of stock options & warrants 219,393 137,207
Net proceeds from sale of common stock -- 2,940,463
----------- ----------
Net cash provided by financing activities 214,717 3,048,012
Effect of exchange rate changes on cash (8,226) (6,270)
----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (392,844) 2,688,025
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,954,416 3,486,329
----------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD 4,561,572 6,174,354
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
6
<PAGE> 7
MATHSOFT, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
------- ------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for-
Interest $ 715 $2,262
======= ======
Income taxes $22,366 $ --
======= ======
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
7
<PAGE> 8
MATHSOFT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared by MathSoft, Inc. ("MathSoft" or the "Company") pursuant to the rules
and regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the consolidated
financial statements and notes thereto for the fiscal year ended June 30, 1996.
The accompanying consolidated condensed financial statements reflect all
adjustments (consisting solely of normal, recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of results for the
interim periods presented. The results of operations for the three month periods
ended September 30, 1996 are not necessarily indicative of the results to be
expected for the full fiscal year.
2. INVENTORIES
<TABLE>
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following:
<CAPTION>
SEPTEMBER 30, JUNE 30,
1996 1996
------------- --------
<S> <C> <C>
Materials and supplies $139,556 $162,627
Finished goods 411,952 385,265
-------- --------
$551,508 $547,892
======== ========
</TABLE>
3. SALE OF STOCK
On July 27, 1995, the Company completed a private placement of 750,000 shares of
common stock. The Company received net proceeds of approximately $2.94 million.
8
<PAGE> 9
MATHSOFT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues decreased 11.0% from $5,088,000 in the first quarter of fiscal
1996 to $4,526,000 in the first quarter of fiscal 1997. The decrease in total
revenues was primarily attributable to a decrease in upgrade revenue generated
by the Company's core product, Mathcad, offset primarily by growth in the
Company's worldwide Mathcad non-upgrade product line sales, and to a lesser
extent, revenue generated from the Axum product line acquired in the second
quarter of fiscal 1996 and revenue generated by the release of the StudyWorks
product line in June 1996. The release of Mathcad 6.0 in July 1995 supported
upgrade revenue of $1,839,000 in the first quarter of fiscal 1996 compared to
upgrade revenue of $206,000 in the first quarter of fiscal 1997, a decrease as a
percentage of total revenues from 36.1% to 4.6%, respectively. Worldwide Mathcad
non-upgrade product line sales increased 32.0% from $1,439,000 in the first
quarter of fiscal 1996 to $1,900,000 in the first quarter of fiscal 1997 and
increased as a percentage of total revenues from 28.3% in the first quarter of
fiscal 1996 to 42.0% in the first quarter of fiscal 1997. The increase in
worldwide Mathcad non-upgrade revenues was due primarily to the Company's
continued focus on generating new license sales by an increased penetration into
the education market and renewed growth in the commercial markets. Worldwide
licenses into the education market increased 96.7% from $578,000 in the first
quarter of fiscal 1996 to $1,137,000 in the first quarter of fiscal 1997, and
increased as a percentage of total revenues from 11.4% in the first quarter of
fiscal 1996 to 25.1% in the first quarter of fiscal 1997.
Worldwide S-PLUS product line and services revenue remained relatively constant
at $1,381,000 in the first quarter of fiscal 1996 compared to $1,402,000 in the
first quarter of fiscal 1997, and increased as a percentage of total revenues
from 27.1% in the first quarter of fiscal 1996 to 31.0% in the first quarter of
fiscal 1997. Total international revenues decreased 4.3% from $1,360,000 in the
first quarter of fiscal 1996 to $1,301,000 in the first quarter of fiscal 1997,
and increased as a percentage of total revenues from 26.7% in the first quarter
of fiscal 1996 to 28.7% in the first quarter of fiscal 1997. Revenues
attributable to the Axum product line accounted for $274,000, or 6.1% of total
revenues, in the first quarter of fiscal 1997.
Total cost of revenues increased 2.9% from $947,000 in the first quarter of
fiscal 1996 to $974,000 in the first quarter of fiscal 1997, and increased as a
percentage of total revenues from 18.6% to 21.5%, respectively. The increase in
total cost of revenues as a percentage of total revenues was primarily
attributable to higher cost product lines, such as localized international
Mathcad 6.0 releases and third party products, representing a greater proportion
of total revenues. In addition, fixed costs such as amortization of purchased
technology and royalties were allocated over a lower revenue base in the first
quarter of fiscal 1997.
9
<PAGE> 10
MATHSOFT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Sales and marketing expenses remained relatively constant at $2,415,000 in the
first quarter of fiscal 1996 compared to $2,425,000 in the first quarter of
fiscal 1997, and increased as a percentage of total revenues from 47.5% to
53.6%, respectively. The increase in sales and marketing expenses as a
percentage of total revenues was primarily attributable to expenses incurred
related to the launch of its StudyWorks product line in addition to the Company
maintaining strong advertising and channel programs throughout the Mathcad life
cycle in order to continue to grow the Mathcad core business and build a
stronger presence in educational markets. International marketing expenses
increased from $376,000 in the first quarter of fiscal 1996 to $392,000 in the
first quarter of fiscal 1997.
Research and development expenses increased 45.1% from $752,000 in the first
quarter of fiscal 1996 to $1,091,000 in the first quarter of fiscal 1997, and
increased as a percentage of total revenues from 14.8% in the first quarter of
fiscal 1996 to 24.1% in the first quarter of fiscal 1997. The increase in
overall research and development expenses was due to expenses incurred related
to development initiatives in the Company's Data Analysis Products Division and
additional personnel to support such initiatives as well as the addition of
personnel from the TriMetrix, Inc. acquisition in the second quarter of fiscal
1996.
General and administrative expenses decreased 10.2% from $586,000 in the first
quarter of fiscal 1996 to $526,000 in the first quarter of fiscal 1997, and
increased slightly as a percentage of total revenues from 11.5% to 11.6%,
respectively. The decrease in overall general and administrative expenses was
primarily attributable to lower management incentive compensation provisions,
which are based primarily on the achievement of profitability targets.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, totaling $4,561,000 at September 30, 1996, decreased
$393,000 during the three month period ended September 30, 1996 from $4,954,000
at June 30, 1996. The negative cash flow resulted primarily from cash used in
operating activities of approximately $386,000 and purchases of property and
equipment of approximately $192,000, offset by proceeds received from the
exercise of stock options of approximately $219,000.
10
<PAGE> 11
MATHSOFT, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's financial reserves are represented by cash and cash equivalents as
of September 30, 1996. The Company has a line of credit agreement with a
commercial bank. Borrowings under the line are limited to the lesser of 80% of
eligible domestic accounts or $1,000,000. Borrowings are secured by a first
security interest on substantially all of the Company's assets and bear interest
at the bank's prime rate plus 1/2%. The line of credit contains certain
restrictive covenants, including minimum amounts of profitability, equity,
leverage and liquidity, all as defined in the agreement, and expires on December
1, 1996. As of September 30, 1996, the Company was in default of a financial
covenant for which it has received a waiver from the bank. There were no amounts
outstanding under the line at September 30, 1996.
The Company believes its financial reserves and cash flows from future
operations will be sufficient to meet its liquidity requirements for at least
the next twelve months. The foregoing statement is forward-looking and involves
risks and uncertainties, many of which are outside the Company's control. The
Company's actual experience may differ materially from that discussed above.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Cautionary Statements" as well as future events that have
the effect of reducing the Company's available cash balances, such as
unanticipated operating losses or capital expenditures or cash expenditures
related to possible future acquisitions. The Company may be presented from time
to time with acquisition opportunities which require additional external
financing, and the Company may from time to time seek to obtain additional funds
from public or private issuances of equity or debt securities. There can be no
assurance that any such financing will be available at all or on terms
acceptable to the Company.
11
<PAGE> 12
MATHSOFT, INC. AND SUBSIDIARIES
CAUTIONARY STATEMENTS
In addition to the other information in this report, the following cautionary
statements should be considered carefully in evaluating the Company and its
business. Information provided by the Company from time to time may contain
certain "forward-looking" information, as that term is defined by (i) the
Private Securities Litigation Reform Act of 1995 (the "Act") and (ii) in
releases made by the Securities and Exchange Commission (the "SEC"). These
cautionary statements are being made pursuant to the provisions of the Act and
with the intention of obtaining the benefits of the "safe harbor" provisions of
the Act.
VARIABILITY OF QUARTERLY OPERATING RESULTS. The Company's quarterly operating
results may vary significantly from quarter to quarter, depending upon factors
such as the introduction and market acceptance of new products and new versions
of existing products, the ability to reduce expenses, and the activities of
competitors. Because a high percentage of the Company's expenses are relatively
fixed in the near term, minor variations in the timing of orders and shipments
can cause significant variations in quarterly operating results. The Company
operates with little or no backlog and has no long-term contracts, and
substantially all of its product revenues in each quarter result from software
licenses issued in that quarter, and the Company's ability to accurately
forecast future revenues and income for any period is necessarily limited. Any
forward-looking information provided from time to time by the Company represents
only management's then-best current estimate of future results or trends, and
actual results may differ materially from those contained in the Company's
estimates.
POTENTIAL VOLATILITY OF STOCK PRICE. There has been significant volatility in
the market price of securities of technology companies. The Company believes
factors such as announcements of new products by the Company or its competitors,
quarterly fluctuations in the Company's financial results or other software
companies' financial results, shortfalls in the Company's actual financial
results compared to results previously forecasted by stock market analysts, and
general conditions in the software industry and conditions in the financial
markets could cause the market price of the Common Stock to fluctuate
substantially. These market fluctuations may adversely affect the price of the
Company's Common Stock.
RISKS ASSOCIATED WITH DISTRIBUTION CHANNELS. The Company markets and distributes
its S-PLUS products in the U.S. through the Company's telesales force and
internationally through third party resellers and distributors. The Company has
historically marketed and distributed its Mathcad products primarily through
prospect direct mail, but the Company has altered its marketing strategy to
de-emphasize this distribution channel. Mathcad products are currently marketed
and distributed in the U.S. through third party resellers and distributors,
telesales and direct mail (for upgrades to the Company's installed base).
Internationally, the Company's Mathcad products are marketed and distributed
through third party resellers and distributors. There can be no assurance that
the Company will be able to retain its current resellers
12
<PAGE> 13
MATHSOFT, INC. AND SUBSIDIARIES
CAUTIONARY STATEMENTS
and distributors, or expand its distribution channels by entering into
arrangements with new resellers and distributors in the Company's current
markets or in new markets.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Sales outside North America
accounted for approximately 36.1% of the Company's total revenues in fiscal
1995, approximately 32.5% of the Company's total revenues in fiscal 1996 and
approximately 29.3% for the three months ended September 30, 1996, and may
continue to represent a significant portion of the Company's product revenues.
Any decrease in sales outside North America may have a materially adverse effect
on the Company's operating results. The Company's international business and
financial performance may be affected by fluctuations in exchange rates and by
trade regulations.
RELIANCE ON THIRD PARTY LICENSORS. Maple V, a software product, licensed as a
part of the most recent version of Mathcad, certain copyrighted texts licensed
from third party publishers incorporated in the Company's Electronic Books, and
the S programming language, the language on which all of StatSci's products are
based, are currently licensed from a single source or limited source suppliers.
If such licenses are discontinued, there can be no assurance that the Company
will be able to independently develop substitutes or to obtain alternative
sources or, if able to be developed or obtained as needed in the future, that
such efforts would not result in delays or reductions in product shipments or
cost increases that could have a material adverse effect on the Company's
consolidated business operations.
RAPID TECHNOLOGICAL CHANGE; COMPETITION. The technical calculation software
market is subject to rapid and substantial technological change, similar to that
affecting the software industry generally. The Company, to remain successful,
must be responsive to new developments in hardware and chip technology,
operating systems, programming technology and multimedia capabilities. In
addition, the Company competes against numerous other companies, some of which
have significant name recognition, as well as substantially greater capital
resources, marketing experience, research and development staffs and production
facilities than the Company. The Company's financial results may be negatively
impacted by the failure of new or existing products to be favorably received by
retailers and consumers due to price, availability, features, other product
choices or the necessity of promotions to increase sales of the Company's
products.
13
<PAGE> 14
MATHSOFT, INC. AND SUBSIDIARIES
CAUTIONARY STATEMENTS
UNCERTAINTIES REGARDING PROTECTION OF PROPRIETARY TECHNOLOGY; UNCERTAINTIES
REGARDING PATENTS. The Company believes that while the mathematical calculations
performed by the Company's software are not proprietary, the speed and quality
of displaying the computation and the ease of use are unique to MathSoft's
products. The Company's success will depend, in part, on its ability to protect
the proprietary aspects of its products. The Company seeks to protect these
proprietary aspects of its products principally through a combination of
contract provisions and copyright, trademark and trade secret laws. There can be
no assurance that the steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of its technology. Although
the Company believes that its products and technology do not infringe any
existing proprietary rights of others, the use of patents to protect software
has increased and there may be pending or issued patents of which the Company is
not aware that the Company may need to license or challenge at significant
expense. There can be no assurance that any such license would be available on
acceptable terms, if at all, or that the Company would prevail in any such
challenge.
RISKS ASSOCIATED WITH ACQUISITIONS. The Company has made a number of
acquisitions and will continue to review future acquisition opportunities. No
assurances can be given that acquisition candidates will continue to be
available on terms and conditions acceptable to the Company. Acquisitions
involve numerous risks, including, among other things, possible dilution to
existing shareholders, difficulties and expenses incurred in connection with
the acquisitions and the subsequent assimilation of the operations and services
or products of the acquired companies, the difficulty of operating new (albeit
related) businesses, the diversion of management's attention from other
business concerns and the potential loss of key employees of the acquired
company. In the event that the operations of an acquired business do not live
up to expectations, the Company may be required to restructure the acquired
business or write-off the value of some or all of the assets of the acquired
business. There can be no assurance that any acquisition will be successfully
integrated into the Company's operations.
RELIANCE ON ATTRACTING AND RETAINING KEY EMPLOYEES. The Company's continued
success will depend in large part on its ability to attract and retain
highly-qualified technical, managerial, sales and marketing and other personnel.
Competition for such personnel is intense. None of the senior management of the
Company is subject to an employment contract, although the Company does have
non-competition agreements with its key management and technical personnel.
There can be no assurance that the Company will be able to continue to attract
or retain such personnel.
14
<PAGE> 15
MATHSOFT, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
The Company filed a current Report on Form 8-K dated October
10, 1996 reporting first quarter results.
15
<PAGE> 16
MATHSOFT, INC. AND SUBSIDIARIES
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.
MATHSOFT, INC.
Dated: November 14, 1996 By /s/ Charles J. Digate
----------------------------------------
Charles J. Digate
Chairman, President and Chief Executive
Officer (Principal Executive Officer)
Dated: November 14, 1996 By /s/ Robert P. Orlando
----------------------------------------
Robert P. Orlando
Vice President Finance and Administration,
Chief Financial Officer, Treasurer, and
Clerk (Principal Financial and Accounting
Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000895095
<NAME> MATHSOFT, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,561,572
<SECURITIES> 0
<RECEIVABLES> 3,579,322
<ALLOWANCES> 0
<INVENTORY> 551,508
<CURRENT-ASSETS> 9,154,886
<PP&E> 5,834,956
<DEPRECIATION> 4,252,655
<TOTAL-ASSETS> 11,239,105
<CURRENT-LIABILITIES> 4,679,807
<BONDS> 0
<COMMON> 86,662
0
0
<OTHER-SE> 6,418,111
<TOTAL-LIABILITY-AND-EQUITY> 11,239,105
<SALES> 3,924,406
<TOTAL-REVENUES> 4,526,277
<CGS> 783,034
<TOTAL-COSTS> 974,307
<OTHER-EXPENSES> 4,041,932
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (450,254)
<INCOME-TAX> 14,836
<INCOME-CONTINUING> (465,090)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (465,090)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
