<PAGE> 1
================================================================================
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 quarter ended DECEMBER 31, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Transition Period from
____to____.
COMMISSION FILE NUMBER: 0-23132
OBJECTSHARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0143293
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16811 HALE AVENUE, SUITE A, IRVINE, CALIFORNIA 92606-5020
(Address of principal executive offices)
(714) 833-1122
(Registrant's telephone number, including area code)
PARCPLACE-DIGITALK, INC.
(Former name)
999 EAST ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086
(Former address)
(408) 481-9090
(former telephone number)
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 periods 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 [ ]
As of January 31, 1998, the registrant had outstanding 12,102,946 shares
of Common Stock.
<PAGE> 2
OBJECTSHARE, INC.
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets
as of December 31, 1997 and March 31, 1997 3
Condensed Consolidated Statements of Operations
for the three and nine months ended December 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended December 31, 1997 and 1996 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 14
SIGNATURE 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OBJECTSHARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,592 $ 7,418
Marketable securities 600 5,538
Accounts receivable, net of allowance of $1,943 at
December 31 and $2,309 at March 31 5,847 5,586
Inventories 136 220
Other current assets 478 946
-------- --------
Total current assets 13,653 19,708
Marketable securities 0 1,500
Property and equipment:
Property and equipment 5,689 5,797
Less accumulated depreciation (4,722) (4,002)
-------- --------
Net property and equipment 967 1,795
Other assets 325 869
-------- --------
Total assets $ 14,945 $ 23,872
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 969 $ 1,219
Accrued compensation 713 1,421
Other accrued liabilities 2,653 2,827
Deferred revenue 4,920 5,066
Accrued restructuring costs 1,185 1,067
-------- --------
Total current liabilities 10,440 11,600
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value:
Authorized shares - 30,000
Issued and outstanding shares - 12,103 at
December 31 and 11,929 at March 31 12 12
Additional paid-in capital 49,881 49,863
Accumulated deficit (45,325) (37,416)
Cumulative translation adjustment (63) (187)
-------- --------
Total stockholders' equity 4,505 12,272
-------- --------
Total liabilities and stockholders' equity $ 14,945 $ 23,872
======== ========
</TABLE>
See accompanying notes.
3
<PAGE> 4
OBJECTSHARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months For the nine months
ended December 31, ended December 31,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues:
License $ 2,031 $ 4,229 $ 5,524 $ 17,145
Service 2,903 3,860 9,284 12,919
-------- -------- -------- --------
Total net revenues 4,934 8,089 14,808 30,064
Cost of net revenues:
License 403 1,043 1,271 4,763
Service 1,887 2,595 5,740 8,113
-------- -------- -------- --------
Total cost of net revenues 2,290 3,638 7,011 12,876
-------- -------- -------- --------
Gross profit 2,644 4,451 7,797 17,188
Operating expenses:
Sales and marketing 1,399 4,394 6,064 16,184
Research and development 965 2,185 3,808 7,214
General and administrative 988 1,833 3,482 6,090
Acquired research and development -- 646 -- 3,513
Restructuring costs (175) 2,182 2,622 2,182
-------- -------- -------- --------
Total operating expenses 3,177 11,240 15,976 35,183
-------- -------- -------- --------
Loss from operations (533) (6,789) (8,179) (17,995)
Interest income and other, net 129 (100) 308 503
-------- -------- -------- --------
Loss before provision for income taxes (404) (6,889) (7,871) (17,492)
Provision for income taxes 13 25 38 71
-------- -------- -------- --------
Net loss $ (417) $ (6,914) $ (7,909) $(17,563)
======== ======== ======== ========
Net loss per share $ (0.03) $ (0.59) $ (0.66) $ (1.50)
======== ======== ======== ========
Shares used in computing
net loss per share 12,075 11,800 11,990 11,725
======== ======== ======== ========
</TABLE>
See accompanying notes
4
<PAGE> 5
OBJECTSHARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the nine months
ended December 31,
----------------------
1997 1996
-------- --------
<S> <C> <C>
Operating Activities
Net loss $ (7,909) $(17,563)
Adjustments to reconcile net loss to net cash
used in operating activities:
Research and development expensed on acquisition -- 3,513
Depreciation and amortization 1,207 3,455
Changes in operating assets and liabilities:
Accounts receivable (261) 3,411
Inventories 84 138
Other current assets 468 (90)
Accounts payable and accrued liabilities (1,132) (954)
Accrued restructuring costs 118
Deferred revenue (146) (116)
-------- --------
Net cash used in operating activities (7,571) (8,206)
Investing activities
Purchase business combination -- (3,699)
Purchases of property and equipment 108 (1,466)
Maturities of marketable securities 6,438 21,239
Purchases of marketable securities -- (16,479)
Decrease (increase) in other assets 57 (228)
-------- --------
Net cash provided by (used in) investing activities 6,603 (633)
Financing activities
Proceeds from issuance of common stock, net of repurchases 18 1,127
-------- --------
Net cash provided by financing activities 18 1,127
Effect of exchange rate changes on cash
and cash equivalents 124 (128)
-------- --------
Net decrease in cash and cash equivalents (826) (7,840)
Cash and cash equivalents at beginning of period 7,418 14,367
-------- --------
Cash and cash equivalents at end of period $ 6,592 $ 6,527
======== ========
</TABLE>
See accompanying notes.
5
<PAGE> 6
OBJECTSHARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared by the Company pursuant to the rules and regulations
of the United States 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 audited financial statements included in the
Company's Annual Report and Form 10-K for the fiscal year ended March
31, 1997.
In the opinion of management the accompanying unaudited condensed
consolidated financial statements have been prepared on the same basis
as the audited financial statements and include all recurring
adjustments (consisting only of normal recurring adjustments) necessary
for a fair presentation of the financial position and results of the
operations for interim periods presented. The operating results for the
nine months ended December 31, 1997 are not necessarily indicative of
the results expected for the full fiscal year ending March 31, 1998.
2. Net Loss per Share
Net loss per share is computed using the weighted average number of
shares of common stock outstanding. Common equivalent shares have been
excluded from the computation as their effect would be antidilutive.
In February 1997, the Financial Accounting Standards Board ("FAS")
issued Statement of Financial Accounting Standard No. 128, "Earnings per
Share" (FAS 128). The Company has adopted FAS 128 this quarter.
The impact of adoption of FAS 128 for the quarter ended December 31,
1997 will not change primary EPS as presented. The impact of FAS 128 on
fully diluted EPS is not expected to be material.
3. Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Short-term marketable securities consist principally of debt instruments
with maturities between three and twelve months. Long-term marketable
securities consist of debt instruments with maturities exceeding twelve
months.
At December 31, 1997, all of the Company's debt securities were
classified as available-for-sale and are carried at fair market value
with unrealized gains and losses recorded in stockholders' equity. The
cost of the securities is based upon the specific identification method.
6
<PAGE> 7
OBJECTSHARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Restructuring Costs
The Company has recorded restructuring charges in previous quarters of
the fiscal year totaling $2,797,000 of which $1,678,000 was paid. The
balance in the restructuring accrual at the start of fiscal 1998 was
$1,067,000. In fiscal 1998, the Company accrued an additional
$1,821,000, recorded a return of reserve residuals of $475,000 for
events that were completed during the quarter, and paid $1,228,000
through third quarter of fiscal 1998.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
ObjectShare, Inc. (formerly ParcPlace-Digitalk, Inc.) is the
object-oriented solutions provider for networking computing. ObjectShare
offers complete client/server web application development tool sets for
both Java and Smalltalk development. The Company's products support open
computing, portability and industry standards for distributed and
web-based enterprise computing. The Company also provides a
comprehensive range of services including customer support, training,
on-site assistance and consulting.
This Form 10-Q includes a number of forward-looking statements that are
subject to certain risks and uncertainties that could cause the
Company's actual results and financial position to be affected
negatively as events unfold in the market for the Company's products.
These events include, but are not limited to, the risks inherent in the
development and marketing of relatively new technologies, and the
Company's ability to deliver competitive products, retain key employees
and maintain sufficient sales revenue to fund ongoing research and
development, as well as the risks discussed below under "Factors
Affecting Future Results". The Company assumes no obligation to update
or revise any such forward-looking statements to reflect events or
circumstances that may arise after this report is filed, and that may
have an effect on the Company's overall performance.
8
<PAGE> 9
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated (I) the percentage of
net revenues represented by certain line items in the Company's Condensed
Consolidated Statements of Operations, (II) the gross margins on license and
service revenues and (III) the percentage changes from the preceding periods.
<TABLE>
<CAPTION>
Percentages of total net revenues for the
-----------------------------------------
Percent Change
Three months ended Nine months ended Of dollar Amounts
December 31, December 31, 1997 compared to 1996
--------------- ---------------- ---------------------
Three Nine
1997 1996 1997 1996 months months
---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net revenues:
License 41% 52% 37% 57% (52%) (68%)
Service 59% 48% 63% 43% (25%) (28%)
--- --- --- ---
Total net revenues 100% 100% 100% 100% (39%) (51%)
Cost of net revenues:
License 8% 13% 8% 16% (61%) (73%)
Service 38% 32% 39% 27% (27%) (29%)
--- --- --- ---
Total cost of net revenues 46% 45% 47% 43% (37%) (46%)
--- --- --- ---
Gross margin: 54% 55% 53% 57% (41%) (55%)
Operating expenses:
Sales and marketing 28% 54% 41% 54% (68%) (63%)
Research and development 20% 27% 26% 24% (56%) (47%)
Acquired research and 0% 8% 0% 12% 0% 0%
development
General and administrative 20% 23% 24% 20% (46%) (43%)
Restructuring costs (4%) 27% 17% 7% (8%) 21%
--- --- --- ---
Total operating expenses 64% 139% 108% 117% (72%) (55%)
--- --- --- ---
Loss from operations (10%) (84%) (55%) (60%) (92%) (55%)
Interest and other income, net 2% (1%) 2% 2% 229% (39%)
--- --- --- ---
Loss before income taxes (8%) (85%) (53%) (58%) (94%) (55%)
Provision for income taxes 0% 0% 0% 0% (48%) (46%)
--- --- --- ---
Net loss (8%) (85%) (53%) (58%) (94%) (55%)
Gross margin:
License 80% 75% 77% 72% (49%) (66%)
Service 35% 33% 38% 37% (20%) (26%)
</TABLE>
Net revenues
Total net revenues for the third quarter and first nine months ended December
31, 1997 were $4.9 million and $14.8 million, respectively, a decrease of 39%
and 51%, respectively, from the comparable periods of fiscal 1997. The Company
has experienced major decreases in revenues over the past few years, due in
large part to the rising popularity of Java.
A new management team was installed at the end of the first quarter of fiscal
1998 to refocus key areas, including marketing, product development & services,
sales and operations. These actions included leveraging and redirecting the
Company's technology and consulting resources and revamping the marketing
strategy to incorporate a more solutions-and services-oriented approach.
Management believes that these actions are contributing to a revitalization of
the sales organization and improvement in customer perceptions of the Company.
9
<PAGE> 10
License revenues for the third quarter ended December 31, 1997 rose 18% over the
second quarter, increasing to 41.2% of sales, up from 35%, of total revenues in
the first quarter. License sales, particularly renewals, are often seen as a
barometer of marketplace acceptance. Accordingly, the sales increase in this
market segment in the third quarter is viewed by management as a validation of
the new strategy, signaling a reversal of the downward sales spiral that the
Company endured over the past few years. Compared to the third quarter of fiscal
1997, license income dropped $2.2 million to $2.0 million.
International sales remained strong in the third quarter, at $1.6 million, with
a third of the Company's revenues coming from outside the United States.
European sales efforts have experienced considerable success in integrated
solutions marketing, in particular, with Unilever and other accounts.
Service and training revenues remained basically stable at $2.9 million for the
third quarter, typically the slowest training period of the year due to the
holiday season.
Cost of revenues
Cost of license revenues is primarily comprised of the cost of production of the
Company's products and related royalties. Costs associated with license income
decreased by more than two-thirds compared to the same period in fiscal year
1997 and decreased by 20% over the previous quarter, due in large part to
decreased royalty and obsolescence costs. Combined with the impact of increased
license volumes, improved license margins raised overall gross margins 350 basis
points to revenue and $.264 million over the second quarter.
Cost of service revenues consists primarily of salaries, commissions, facility
expenses, travel related expenses and advertising. Costs of service were higher
on a percent to sales basis compared to the third quarter of fiscal 1997, rising
from 32% to 38%, largely as a function of fixed administrative costs allocated
against a smaller volume of service revenues which dropped $.957 million from
the same quarter in fiscal 1997. Cost of sales for service was unchanged from
the second quarter.
Operating expenses
Operating expenses, excluding restructuring costs, declined $5.7 million
compared to the third quarter of fiscal year 1997 and were $1.3 million lower
than the previous quarter. Over the last two quarters, revenue recovery and
stabilization have allowed for reduction and normalization of operating
expenses. The Company accrued $2.8 million in restructuring expenses in the
second quarter to cover the costs associated with the sale of its French
operations, reduce overhead and staffing levels in non-core development areas,
facility move and consolidation and delayering of marketing management. All of
the planned restructuring changes were executed during the second and third
quarters, with the exception of the move of corporate offices into the new
Irvine, California facility, which was completed in January.
The impact of the restructuring has taken effect, as the workforce was reduced
to 107 as of December 31, 1997, a decrease of 82 since the start of the fiscal
year. The operating loss for the quarter, without restructuring charges fell to
$.708 million, an improvement of $3.9 million from $4.6 million in the third
quarter of fiscal 1997 and an improvement of $1.5 million over the second
quarter.
Sales and marketing expenses consisting primarily of salaries, commissions,
travel-related expenses, and advertising, have declined by 33% over the second
quarter to $1.4 million and dropped by $3.0 million over the same period of
fiscal 1997. Marketing expenses are now at 28% of revenue, down from 44% in the
second quarter and 54% in the third quarter of fiscal 1997, largely achieved
through delayering of management and tightened marketing focus and strategic
direction. Management believes that these ratios are more in line with the
Company's current revenue base and will provide sufficient funding to capture
and support chosen market targets.
10
<PAGE> 11
Research and development expenses for the quarter dropped 26% from the second
quarter to $1.0 million and were less than half of last year's 3rd quarter
expense of $2.2 million reflecting significant manpower reductions. R&D expenses
dropped to 20% to sales in the third quarter, down from 27% both in the second
quarter and for the same quarter of fiscal 1997. Key technical personnel have
been retrained and have been refocused to support the Company's strategic
direction and customer requirements. Development has focused in the Smalltalk
arena on the launch of VisualWorks 3.0, which was released, on time, in
February, and in the Java development group on the new Parts for Java product
which is still in development.
General and administrative expenses were also significantly reduced in the third
quarter with completion of several restructuring tasks as expenses dropped $.224
million from the second quarter to $.988 million, a reduction of $.845 million
over the third quarter of fiscal 1997. G&A expenses for the first nine months
were $3.5 million, a drop of $2.6 million compared to fiscal 1997. G&A in the
third quarter decreased to 20% to revenue, down from 26% in the second quarter
and down from 23% in fiscal 1997.
Interest and other income (expense), net
Interest and other income (expense) was $129,000 in the third quarter of fiscal
1998 compared with a net expense of $100,000 in the third quarter of the prior
year. Although it reflects an increase over the same period of fiscal 1997, the
cash and marketable securities balances were lower. This occurs as a result of
an extraordinary expense in fiscal 1997, totaling $250,000, in settlement of a
securities class action lawsuit.
Provision for income taxes
Although the Company recorded losses for the third quarter and first nine months
of both fiscal 1998 and fiscal 1997, it provided for foreign and local taxes of
$13,000 and $38,000, respectively.
Restructuring Costs
The Company has recorded restructuring charges in previous quarters of the
fiscal year totaling $2,797,000 of which $1,678,000 was paid. The balance in the
restructuring accrual at the start of fiscal 1998 was $1,067,000. In fiscal
1998, the Company accrued an additional $1,821,000, recorded a return of reserve
residuals of $475,000 for events that were completed during the quarter, and
paid $1,228,000 through third quarter of fiscal 1998.
FACTORS AFFECTING FUTURE RESULTS
The Company has experienced significant quarterly fluctuations in operating
results and anticipates such fluctuations in the future. The Company's results
in recent quarters are not necessarily indicative of future results and the
Company believes that period-to-period, or year over year comparisons of its
financial results should not be relied upon as an indicator of future
performance.
Previous quarters were adversely affected by substantially lower license
revenues, which the Company attributes to factors discussed above under "Results
of Operations - Net Revenues". The Company generally ships orders as received
and as a result typically has little or no backlog. Quarterly revenues and
operating results therefore depend on the volume and timing of orders received
during the quarter, which are difficult to forecast. Historically, the Company
has received a substantial portion of its product orders in the last month of
the quarter, with a concentration of such orders in the last week. Delays in the
receipt of orders can therefore cause significant variations in quarterly
license revenues. License revenues may also be affected by seasonal trends, as
well as other factors.
The Company's future success will depend to a large extent on growth in market
acceptance of object-oriented technology in general and the Company's transition
from Smalltalk-based products to distributed computing products in particular,
and will also depend on acceptance of the Company's products for use in
11
<PAGE> 12
new applications and operating environments such as the Internet. The market for
the Company's products is characterized by ongoing technological developments,
evolving industry standards and rapid changes in customer requirements. If the
Company is unable to develop and introduce new products or enhancements to
existing products in a timely manner in response to changing market conditions
or customer requirements, or if errors are found in products after commercial
shipments, the Company's business and results of operations will be adversely
affected.
The Company's recent stabilization of revenues and significant reductions in
operating expenses has created a more stabile environment, with turnover of
technical staff substantially lower in the third quarter than what was
experienced in previous periods. Intense competition for qualified technical
personnel continues to be a threat, in particular given the reduced size of the
technical staff, however turnover is frequently a product of organizational
stability and development focus which has clearly improved. A resumption of high
turnover in the technical staff or inability to hire qualified personnel to
support growth opportunities most likely would adversely affect the Company's
business and results of operations.
While the Company's internal development staff is substantially smaller than in
past years, limiting the Company's options in pursuing diversified research and
development activities, a major contributing factor to the Company's
difficulties in earlier years related directly to a lack of strategic focus and
emphasis on execution in product development. Considerable vertical integration
existed within the development groups in earlier years, with little utilization
of strategic partnerships to leverage complementary technologies. This strategy
has been reversed within the last two quarters with considerable emphasis placed
on partnership arrangements with influential partners including IONA, Oracle and
others, with the Company assuming more of a project integration management role
as part of a systems solution selling strategy.
Partnership relationships are subject to complex contractual and operational
relationships and require both technical and commercial sophistication, and are
not always beneficial to all parties involved as each party brings their own
technical and commercial strengths and weaknesses to the venture. However, the
Company believes that the partnerships that have been entered into strengthen
the firm's market reach and complement the Company's offerings.
The Company does not appear to have significant direct exposure to Asian market
fluctuations as less than 5% of sales are to that region. Indirect impact to the
Company, from the Asian market fluctuations, as a result of the direct impact to
our customers is harder to predict and will vary from company to company.
The Company's products are not impacted by the year 2000 issue. Internal Company
operating systems have been evaluated for year 2000 compliance and have been
found to be non-compliant. An internal software selection and implementation
project is expected to be complete no later than January 1, 1999. Cost of the
transition is projected to be not material to the Company's operating results.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the Company had cash, cash equivalents and marketable
securities of $7.2 million and working capital of $3.2 million compared to $14.5
million and $8.1 million, respectively, as of March 31, 1997.
The Company used cash for operations of $7.5 million in the first nine months of
fiscal 1998, which included a net loss of $7.9 million and a decrease in
accounts payable, accrued liabilities, and deferred revenue of $1.3 million,
partially offset by depreciation and amortization of $1.2 million.
Although the Company is unable to state whether it has adequate resources to
sustain its present level of operations for any particular periods of time,
management believes that its existing balances of cash, cash equivalents, and
marketable securities, in combination with possible further reductions in
operating
12
<PAGE> 13
expenses, will be sufficient to meet its cash requirements for continuing its
core business at least through fiscal 1998.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) The exhibit listed below is filed herewith as part of this report.
27 Financial Data Schedule
B) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended December
31, 1997.
SIGNATURE
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: February 13, 1998
OBJECTSHARE, INC. a
Delaware Corporation
By: /s/ GLENN J. BROWN
--------------------------------------
Glenn J. Brown
Vice President and Chief Financial
Officer (on behalf of the Registrant
and as principal financial officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------ -----------
<S> <C>
Ex-27 Financial Data Schedule
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in the Company's Form 10-Q for the period ending
December 31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,592
<SECURITIES> 600
<RECEIVABLES> 7,790
<ALLOWANCES> 1,943
<INVENTORY> 136
<CURRENT-ASSETS> 13,653
<PP&E> 5,689
<DEPRECIATION> (4,722)
<TOTAL-ASSETS> 14,945
<CURRENT-LIABILITIES> 10,440
<BONDS> 0
0
0
<COMMON> 49,893
<OTHER-SE> (45,388)
<TOTAL-LIABILITY-AND-EQUITY> 14,945
<SALES> 14,808
<TOTAL-REVENUES> 14,808
<CGS> 7,011
<TOTAL-COSTS> 15,976
<OTHER-EXPENSES> 308
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,871)
<INCOME-TAX> 38
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,909)
<EPS-PRIMARY> (0.66)
<EPS-DILUTED> (0.66)
</TABLE>
