<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number 0-25794
____________________
OPEN ENVIRONMENT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-3168610
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
25 TRAVIS STREET
BOSTON, MASSACHUSETTS 02134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 562-0900
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. [X] Yes [_] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The Registrant had 7,519,325 shares of Common Stock, $.01 par value, outstanding
as of May 9, 1996.
================================================================================
<PAGE>
OPEN ENVIRONMENT CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1996
INDEX
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 1
Condensed Consolidated Statements of Operations for the three
months ended March 31, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 3
Notes to Condensed Consolidated Financial Statements 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II - OTHER INFORMATION 9
SIGNATURES 10
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OPEN ENVIRONMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,483,071 $ 7,012,333
Marketable securities 8,888,905 10,678,125
Accounts receivable, net 5,086,779 7,609,007
Due from related parties 149,414 2,362,752
Due from joint ventures 899,425 1,428,090
Prepaid expenses and other current 3,000,491 1,676,530
assets ------------- -------------
Total current assets 26,508,085 30,766,837
Property and equipment, net 3,141,562 3,214,341
Capitalized software costs, net 642,934 800,206
Investment in and advances to joint 720,630 858,123
ventures
Deferred income taxes 547,184
Other assets 450,041 459,982
------------- -------------
$31,463,252 $36,646,673
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,051,073 $ 1,545,684
Accounts payable and accrued expenses 4,116,642 4,143,880
Advance billings and customer deposits 553,910 629,734
Deferred maintenance revenue 859,580 1,054,135
Income taxes payable 350,000
Current portion of capital lease 140,081 178,904
obligations ------------- -------------
Total current liabilities 6,721,286 7,902,337
Deferred income taxes
Obligations under capital leases, less 7,616 27,185
current portion
Stockholders' equity
Preferred stock
Common stock 80,686 80,505
Additional paid-in capital 30,759,103 30,694,500
Retained earnings (deficit) (2,605,439) 1,442,146
Treasury stock (3,500,000) (3,500,000)
------------- -------------
Total stockholders' equity 24,734,350 28,717,151
------------- -------------
$31,463,252 $36,646,673
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
1
<PAGE>
<TABLE>
<CAPTION>
OPEN ENVIRONMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<S> <C> <C>
THREE MONTHS ENDED MARCH 31,
1996 1995
-------------- -----------
Revenues:
License fees $2,582,404 $4,357,421
Maintenance and service fees 1,398,933 1,320,491
Education and training 297,405 514,662
----------- -----------
Total revenues 4,278,742 6,192,574
----------- -----------
Cost of revenues:
Cost of software, maintenance and 1,843,691 948,458
services
Cost of education and training 412,682 402,131
----------- -----------
Total cost of revenues 2,256,373 1,350,589
----------- -----------
Gross profit 2,022,369 4,841,985
Operating expenses:
Selling and marketing 3,987,624 2,600,033
General and administrative 902,466 751,543
Research and development 1,377,098 956,032
----------- -----------
Total operating expenses 6,267,188 4,307,608
----------- -----------
Operating income (loss) (4,244,819) 534,377
Equity in loss of joint venture (312,384)
Other income (expense) 197,234 7,453
----------- -----------
Income (loss) before income taxes (4,047,585) 229,446
Provision for income taxes 55,743
----------- -----------
Net income (loss) ($4,047,585) $ 173,703
=========== ===========
Net income (loss) per share ($0.54) $0.03
=========== ===========
Weighted average shares outstanding 7,478,430 6,734,840
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
OPEN ENVIRONMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<S> <C> <C>
THREE MONTHS ENDED MARCH 31,
1996 1995
-------------- ------------
OPERATING ACTIVITIES
Net income (loss) ($4,047,585) $173,703
Adjustments to net income (loss)
Depreciation 423,553 275,929
Amortization of capitalized software 158,486 66,490
Allowance for doubtful accounts 542,651 65,842
Equity in loss of joint venture 312,384
Deferred income taxes 833,791 (175,777)
Changes in operating assets and
liabilities
Accounts receivable 2,004,875 (1,850,546)
Due from related party 2,213,338
Prepaid expenses and other current (1,577,219) (357,474)
assets
Due from joint venture 528,665 15,104
Other assets 12,869 20,723
Accounts payable and accrued expenses (80,005) 268,972
Advance billings and customer deposits (88,305) 47,341
Deferred maintenance revenue (194,555) 31,529
Income taxes payable (348,827) (33,937)
Due to related party (25,409) (2,348)
----------- -----------
NET CASH PROVIDED BY (USED IN) 356,323 (1,142,065)
OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchase of marketable securities (13,107,516)
Sale of marketable securities 14,899,388
Investment in and advances to joint 136,700 (63,302)
ventures
Purchase of property and equipment (337,060) (794,531)
Additions to capitalized software (87,414)
----------- -----------
NET CASH PROVIDED BY (USED IN) 1,591,512 (945,247)
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Net proceeds (repayments) of notes (354,530) 828,928
payable to bank
Repayment of capital lease obligations (198,473) (58,162)
Exercise of stock options 64,785 66,900
------------ -----------
NET CASH PROVIDED BY (USED IN) (488,218) 837,666
FINANCING ACTIVITIES
------------ -----------
Effect of exchange rates on cash 11,121 (17,634)
NET INCREASE (DECREASE) IN CASH AND 1,470,738 (1,267,280)
EQUIVALENTS
Cash and equivalents at beginning of 7,012,333 1,693,118
period
------------ -----------
CASH AND EQUIVALENTS AT END OF PERIOD $8,483,071 $425,838
============ ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
OPEN ENVIRONMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements presented have been
prepared by Open Environment Corporation and subsidiaries (the "Company")
without audit and, in the opinion of management, reflect all adjustments
consisting only of normal recurring adjustments necessary for fair presentation
of the financial results for the interim periods shown. The results of
operations for the interim periods shown in this report are not necessarily
indicative of results for any future interim period or for the entire fiscal
year. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted, although the Company believes that the disclosures
included are adequate to make the information presented not misleading. The
condensed consolidated financial statements and the notes included herein should
be read in conjunction with the financial statements and notes for the fiscal
year ended December 31, 1995 included in the Company's Annual Report on Form 10-
K as filed with the Securities and Exchange Commission on April 1, 1996.
2. CONSOLIDATED FINANCIAL STATEMENT INFORMATION
Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during each period.
Included in these amounts are dilutive common stock options and 1,428,571 shares
of Series A Convertible Preferred Stock which automatically converted upon the
closing of the initial public offering into 999,998 shares of common stock on
April 13, 1995. Fully diluted and primary earnings per share data are the same
for each period presented.
Investment Securities
All of the Company's investments are classified as held-to-maturity at March 31,
1996 and December 31, 1995. The fair market value of these investments at March
31, 1996 and December 31, 1995 approximates amortized cost basis. The following
is a summary of these investments:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
-----------------------------------
<S> <C> <C>
U.S. Treasury securities and
obligations of U.S. government agencies $10,845,599 $12,135,987
Tax-exempt mutual and money market funds 2,767,702 1,513,183
90-day bank notes 2,165,846 2,136,747
-----------------------------------
$15,779,147 $15,785,917
===================================
</TABLE>
Foreign Currency Translation
Assets and liabilities of foreign operations are translated at year end exchange
rates, and statement of operations accounts are translated at average exchange
rates. Gains and losses from translation are not material for the periods
presented. Foreign currency transaction gains and losses are included in the
statements of operations and are not material for the periods presented.
4
<PAGE>
3. INVESTMENT IN AND ADVANCES TO JOINT VENTURES
On January 17, 1994, the Company entered into a joint venture with a Japanese
corporation to develop, distribute, promote and market the Company's software
products and provide related education services in Japan. Under the terms of the
agreement, the Company owned 50% of the outstanding voting common stock and two
shares of the non-voting preferred stock. Concurrent with this agreement, the
Company granted the joint venture an exclusive license to establish, develop,
distribute and market the Company's software products and educational services
in Japan. In return for this license, the Company receives royalties from the
sale of these products and services as follows: software products (40%);
educational services (25%); and maintenance services (60%).
On September 30, 1995, the Company sold 30.5% of the outstanding voting common
stock of the joint venture to its joint venture partner for $488,000, which
approximated the Company's cost basis in the joint venture. As a result, the
Company currently owns 19.5% of the voting common stock of the joint venture.
The Company accounted for the joint venture using the equity method from the
inception of the joint venture until September 30, 1995. Effective October 1,
1995, the Company accounts for its remaining investment in the joint venture
using the cost method.
At March 31, 1996, investment in and advances to joint ventures consisted of
investment in and advances to the Japanese joint venture of $499,000, and
investments in other joint ventures of $222,000. Due from joint ventures
represents trade accounts receivable due from the Company's joint ventures.
4. RELATED PARTY TRANSACTIONS
The Company entered into a reseller agreement with Cambridge Technology Group,
Inc. ("CTG"). CTG is principally owned by the Company's Chairman of the Board
and stockholder. Under the terms of the Reseller Agreement, as amended, CTG was
appointed as a non-exclusive reseller of the Company's products in the U.S. and
Canada effective February 1, 1995. Prior to February 1, 1995, CTG did not
distribute the Company's products. Pursuant to this agreement, CTG receives a
50% discount from list prices of the Company's software and a 30% discount from
list prices on the Company's educational programs. The Company is permitted to
cancel the agreement at any time upon payment to CTG of a termination fee equal
to $2,500,000 less 20% of aggregate list price value of software products sold
by CTG under the reseller agreement. The Company made no sales to CTG under this
agreement during the three months ended March 31, 1996. Sales to CTG under this
agreement during the three months ended March 31, 1995 amounted to $350,000.
In June 1995, the Company entered into a reseller agreement with Business@Web
(formerly Object Power Inc.), a Company principally owned by the Company's
Chairman of the Board and a stockholder. Under this agreement, Business@Web
receives a 50% discount from list prices of the Company's software and a 25%
discount from list prices on the Company's educational programs and services.
Aggregate revenues from Business@Web under this agreement during the three
months ended March 31, 1996 amounted to $11,000.
5
<PAGE>
OPEN ENVIRONMENT CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
- - ------------
The Company derives revenues from product license fees and charges for services,
including education and training, on-site technical support and phone-in
customer support (maintenance). For all periods presented, the Company has
recognized revenue in accordance with Statement of Position 91-1 entitled
"Software Revenue Recognition," ("SOP 91") issued by the American Institute of
Certified Public Accountants. SOP 91 requires that software license revenues be
recognized upon shipment, provided no significant obligations to the customer
then exist, and that maintenance revenues be recognized ratably over the term of
the maintenance agreement. Revenues for other services and training are
recognized upon delivery of the service. The Company's license agreements
generally do not provide a right of return. Reserves are maintained for
potential credit losses.
Prior to 1994, the Company's focus was largely educational in nature. During
1994, the Company began to shift its focus from educational services to software
development and licensing in order to capitalize on the growing demand for its
products and services which had been generated by the Company's education
seminars. In the early stages of this transition, the Company's educational
services provided the Company with name recognition and introductory marketing
opportunities. However, as the Company has transitioned to the business of
developing and licensing software, its continued growth is increasingly based on
a growing installed base, the continued acceptance by that installed base of the
Company's products, increased distribution and marketing channels, and
technological competitiveness, rather than a continued emphasis on educational
services. This evolution has caused the Company to shift the focus of its
education offerings from a marketing to post-sales training and customer
support. As the Company shifted its focus to software development and licensing,
it also expanded its efforts in international markets, including the
establishment of joint ventures in Japan in 1994 and Korea in 1995 and the
acquisition of Jarrah Technologies in 1995.
For a discussion of uncertainties associated with the Company's business, see
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the fiscal year ended December 31, 1995 included in the Company's
Annual Report on Form 10-K.
RESULTS OF OPERATIONS
- - ---------------------
Total revenues decreased 31% to $4,279,000 in the three months ended March 31,
1996 from $6,193,000 in the three months ended March 31, 1995. The revenue
decreases were largely attributable to software license fees, which decreased to
$2,582,000 in the three months ended March 31, 1996 from $4,357,000 in the three
months ended March 31, 1995. Software revenues accounted for 60% of total
revenues for the three months ended March 31, 1996 as compared to 70% for the
three months ended March 31, 1995. Approximately $1,060,000 in revenues were
attributable to a $2.5 million transaction with a major distributor; revenue
from the balance of such order will be recognized on sell-through. This decrease
can be attributed to a number of factors including: the Company's continued
reliance on major transactions each quarter to reach revenue targets with the
associated risk of revenue shortfall if such transactions are delayed or fail to
close; the extended sales cycle of the Company's products of approximately 9 to
12 months; and the decrease in revenues from reselling certain software products
by the Company's Australian subsidiary, as that operation transitions from such
resale activities to the sale of the Company's Entera product line. The Company
believes that it must refocus its sales and marketing strategy in order to
address these shortfalls in revenue, reduce sales cycles and diminish its
dependence on a limited number of large transactions. Also contributing to the
decrease in total revenues was a decrease in
6
<PAGE>
education revenues to $297,000 in the three months ended March 31, 1996 from
$515,000 in the three months ended March 31, 1995. This decrease is consistent
with the Company's shift away from the use of education to further market
awareness to the use of education as technical training for software licensing.
These decreases were partially offset by an increase in maintenance and service
fees, which increased to $1,399,000 in the three months ended March 31, 1996
from $1,320,000 in the three months ended March 31, 1995. This increase reflects
the continued demand for project related services as well as the increase in
maintenance revenues from the broadened installed base.
Revenues from Open Environment Australia and other international customers
accounted for $1,336,000 (31%) of total net revenues for the three months ended
March 31, 1996, as compared to $2,969,000 (48%) for the three months ended March
31, 1995. This decrease is attributable to the decrease in revenues from Open
Environment Australia as noted above as well as the lack of major international
transactions in the first quarter of 1996 and the timing of orders from
international resellers. The Company believes that international sales will
continue to represent a significant portion of the Company's net revenue.
However, the percentage of revenue derived from international sales will
continue to fluctuate based on the timing of orders from international customers
and resellers and the addition of new international customers and resellers.
Cost of revenues increased to $2,256,000 for the three months ended March 31,
1996 from $1,351,000 for the three months ended March 31, 1995, and gross
profits decreased to 47% for the three months ended March 31, 1996 from 78% for
the three months ended March 31, 1995. The Company's cost structure is
predominantly fixed in the short term because it largely represents personnel
and the infrastructure necessary to support them. A shortfall in revenues has a
direct and immediate impact on the Company's gross profits and operating
profitability due to the Company's inability to react to a revenue shortfall
from a cost perspective in the near term. Fixed costs that are classified as
cost of revenues include personnel costs in the education, services and
maintenance departments as well as amortization of capitalized software.
Selling and marketing expenses increased to $3,988,000 in the three months ended
March 31, 1996 from $2,600,000 in the three months ended March 31, 1995. These
increases are the result of the hiring of additional personnel and increased
marketing programs as the Company continues to develop its direct sales force,
build its marketing channels and increase its promotional activities to broaden
market awareness. The Company expects to continue to invest a significant amount
of its resources in its selling and marketing efforts.
General and administrative expenses increased to $902,000 in the three months
ended March 31, 1996 from $752,000 in the three months ended March 31, 1995. The
increase is largely the result of the addition of infrastructure to support the
Company's domestic and international expansion. However, general and
administrative expenses decreased by 4% from $940,000 in the three months ended
December 31, 1995 as the Company has focused on slowing growth in areas that are
not revenue-related.
Research and development expenses increased to $1,377,000 in the three months
ended March 31, 1996 from $956,000 in the three months ended March 31, 1995.
These increases reflect significant personnel increases in the research and
development department. No software development costs were capitalized under FAS
86 for the three months ended March 31, 1996, while amortization of previously
capitalized software amounted to $157,000, as compared to capitalization of
$87,000 and amortization expense of $66,000 for the three months ended March 31,
1995. The decrease in software development costs capitalized in the three months
ended March 31, 1996 was due to the fact that minimal activities were devoted to
projects at the point of technological feasibility as defined by FAS 86. The
Company expects to continue to increase its research and development expenses to
keep pace with the technological needs of the marketplace.
7
<PAGE>
During the third quarter of 1995, the Company sold a portion of its interest in
its Japanese joint venture to its joint venture partner. The transaction results
in the Company now owning 19.5% of the joint venture and accordingly, accounting
for the joint venture under the equity method has been discontinued. The Company
will continue to recognize royalty revenue from the joint venture, but no longer
recognizes any share of the venture's operating income or loss.
Other income increased to $198,000 in the three months ended March 31, 1996 from
$7,500 in the three months ended March 31, 1995. This increase reflects the
income generated from the remaining investment of the net proceeds of the
initial public offering of the Company's common stock in April 1995.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
As of March 31, 1996, the Company's cash and cash equivalents increased to
$8,483,000 from $7,012,000 at December 31, 1995, and the Company also held
marketable securities amounting to $8,889,000 at March 31, 1996, a decrease from
$10,678,000 at December 31, 1995. The net decrease in cash and cash equivalents
and marketable securities was primarily the result of repayment of lines of
credit and lease obligations offset by cash generated from operations in spite
of the loss generated during the quarter ended March 31, 1996. The positive cash
flow from operations was generated by the collection of a significant portion of
the Company's December 31, 1995 accounts receivable balances.
The Company has a credit facility consisting of a demand line of credit of
$2,000,000 and a revolving equipment line of $1,000,000. Availability under the
demand line of credit is based on a percentage of qualified accounts receivable.
Borrowings outstanding on January 1, 1996 under the revolving equipment line
converted to a two-year term note. Interest on the demand line of credit accrues
at the prime rate, and interest on the revolving equipment line accrues at prime
plus one-quarter percent. As of March 31, 1996, aggregate borrowings under the
line of credit amounted to $875,000, which primarily represents the remaining
balance on the revolving equipment line that converted to a two-year term note.
This balance is classified as currently payable due to the fact that the Company
is in violation of a financial covenant related to quarterly cash flows.
While the Company believes that its invested cash balances and available
borrowings under its line of credit facility will be adequate to meet its
operational cash flow requirements and planned capital requirements for the
remainder of 1996, certain events or occurrences could require the Company to
seek additional capital prior to such time, including, but not limited to,
unexpected shortfalls in revenues or profitability, restructuring charges or
acquisition opportunities. There is no assurance that, if the Company seeks
additional financing, such financing will be available upon acceptable terms, if
at all.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
- - ---------------------------
None.
ITEM 2. CHANGES IN SECURITIES.
- - -------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
- - -----------------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- - -------------------------------------------------------------
None.
ITEM 5. OTHER INFORMATION.
- - ---------------------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- - ------------------------------------------
A. EXHIBITS
Exhibit 11.1 - Statement regarding computation of Net Income (Loss) Per
Share
B. REPORTS ON FORM 8-K
None.
9
<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 hereunto duly authorized.
OPEN ENVIRONMENT CORPORATION
Date: May 10, 1996 By: /s/ Phillip R. Copeland
--------------------------
Phillip R. Copeland, Acting Chief
Executive Officer
(Principal Executive Officer)
By: /s/ James J. Driscoll
------------------------
James J. Driscoll, Vice President of Finance
(Principal Financial Officer and Principal
Accounting Officer)
10
<PAGE>
Exhibit 11.1
OPEN ENVIRONMENT CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1996 1995
--------------- ------------
<S> <C> <C>
Weighted average shares of common stock 7,478,430 4,610,560
outstanding
Common stock equivalents:
Series A Convertible Preferred Shares 999,998
Dilutive effect of stock options 1,124,282
--------------- ------------
7,478,430 6,734,840
=============== ============
Net income (loss) ($4,047,585) $ 173,703
=============== ============
Net income (loss) per share ($0.54) $0.03
=============== ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE
PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,483,071
<SECURITIES> 8,888,905
<RECEIVABLES> 7,252,125
<ALLOWANCES> (1,116,507)
<INVENTORY> 0
<CURRENT-ASSETS> 26,508,085
<PP&E> 6,044,704
<DEPRECIATION> (2,903,142)
<TOTAL-ASSETS> 31,463,252
<CURRENT-LIABILITIES> 6,721,286
<BONDS> 0
0
0
<COMMON> 80,686
<OTHER-SE> 24,653,664
<TOTAL-LIABILITY-AND-EQUITY> 31,463,252
<SALES> 4,278,742
<TOTAL-REVENUES> 4,278,742
<CGS> 2,256,373
<TOTAL-COSTS> 2,256,373
<OTHER-EXPENSES> 6,267,188
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,047,585)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,047,585)
<EPS-PRIMARY> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
