SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 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 No.: 1-5270
SOFTNET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 11-1817252
-------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 Logue Avenue, Mountain View, California 94043
------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 965-3700
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at December 31, 1997
------------------------------- --------------------------------
Common stock, without par value 6,974,967
<PAGE>
SOFTNET SYSTEMS, INC.
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
December 31, 1997 and September 30, 1997
Condensed Consolidated Statements of Operations
for the Three Months Ended
December 31, 1997 and December 31, 1996
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended
December 31, 1997 and December 31, 1996
Notes to Condensed Consolidated Financial Statements
for the Three Months Ended
December 31, 1997 and December 31, 1996
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of December 31, 1997 and September 30, 1997
(In thousands, except share data)
Dec. 31, Sept. 30,
1997 1997
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash ................................................ $ 50 $ 37
Restricted cash (cash held in escrow) ............... 4,600 --
Accounts receivables, net ........................... 6,410 6,983
Inventories ......................................... 4,128 4,310
Prepaid expenses .................................... 670 473
-------- --------
Total current assets ............................ 15,858 11,803
Property and equipment, net ............................ 1,569 1,637
Costs in excess of fair value of net
assets acquired, net ................................. 6,605 6,900
Other assets ........................................... 3,964 4,037
-------- --------
$ 27,996 $ 24,377
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ............... $ 7,813 $ 7,264
Current portion of long term debt ................... 1,390 1,712
Current portion of capital leases ................... 36 46
Deferred revenue .................................... 1,486 1,479
-------- --------
Total current liabilities ....................... 10,725 10,501
-------- --------
Long term debt, net of current portion ................. 12,680 11,747
-------- --------
Capital Lease obligation, net of current portion ....... 92 101
-------- --------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value,
4 million shares authorized,
Series A Convertible, 5,000 shares
outstanding at December 31, 1997................. -- --
Common stock, $.01 par value,
25 million shares authorized,
6,974,967 and 6,870,559 shares
outstanding, respectively ....................... 70 69
Capital in excess of par value ...................... 39,227 34,379
Accumulated deficit ................................. (34,798) (32,420)
-------- --------
Total shareholders' equity ...................... 4,499 2,028
-------- --------
$ 27,996 $ 24,377
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended December 31, 1997 and 1996
(In thousands, except per share data)
(Unaudited)
1997 1996
------- --------
Net sales ....................................... $ 6,870 $ 10,778
Cost of sales ................................... 5,103 6,648
------- --------
Gross profit ................................. 1,767 4,130
------- --------
Operating expenses:
Selling ...................................... 1,263 1,294
Engineering .................................. 582 550
General and administrative ................... 1,694 1,374
Amortization of goodwill and transaction costs 346 362
------- --------
Total operating expenses ................. 3,885 3,580
------- --------
Income (loss) from operations ................ (2,118) 550
Interest expense ................................ (328) (256)
Other income (expense) .......................... 68 (39)
------- --------
Income (loss) before income taxes ............ (2,378) 255
Provision for income taxes ...................... -- --
------- --------
Net income (loss) ............................ $(2,378) $ 255
======= ========
Earnings (Loss) per share:
Basic ........................................ $ (0.34) $ 0.04
======= ========
Diluted ...................................... $ (0.34) $ 0.04
======= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 1997 and 1996
(In thousands)
(Unaudited)
1997 1996
------- -------
Cash flows from operating activities:
Net income (loss) ............................ $(2,378) $ 255
Adjustments to reconcile net income (loss)
to net cash used by
operating activities:
Depreciation and amortization .......... 539 517
Provision for bad debts ................ 16 8
Changes in operating assets and liabilities:
Receivables .............................. 556 (1,895)
Inventories .............................. 182 (87)
Prepaid expenses ......................... (196) 106
Accounts payable and accrued expenses .... 548 (311)
Deferred revenue ......................... 7 535
------- -------
Net cash used in operating activities ........... (726) (872)
------- -------
Cash flows from investing activities:
Purchase of property and equipment ........... (117) (55)
Additions to capitalized product design ...... -- (155)
Decrease in other assets ..................... 15 11
------- -------
Net cash used by investing activities ........... (102) (199)
------- -------
Cash flows from financing activities:
Repayment of long-term debt .................. (723) (33)
Borrowings under revolving credit note ....... 2,017 2,556
Payments under revolving credit note ......... (475) (1,769)
Proceeds from sale of preferred stock ........ 4,600 --
Proceeds held in escrow (restricted cash) .... (4,600) --
Proceeds from exercise of warrants ........... 42 --
Capitalized lease obligations paid ........... (20) (49)
------- -------
Net cash provided by financing activities ....... 841 705
------- -------
Increase (decrease) in cash ..................... 13 (366)
Cash, beginning of period ....................... 37 426
------- -------
Cash, end of period ............................. $ 50 $ 60
======= =======
Cash paid during the period for:
Interest ..................................... $ 422 $ 244
Income taxes ................................. -- --
Supplemental non-cash transactions
Common stock issued for the conversion
of subordinated notes ..................... $ 208 --
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
The financial information, except for the balance sheet as of September 30,
1997, included herein is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the condensed
consolidated statements of financial position, results of operations and cash
flows as of and for the interim periods ended December 31, 1997 and 1996.
The Company's annual report on Form 10-K for the fiscal year ended September 30,
1997, as filed with the Securities and Exchange Commission, should be read in
conjunction with the accompanying condensed consolidated financial statements.
The condensed consolidated balance sheet as of September 30, 1997 was derived
from the Company's audited Consolidated Financial Statements.
The results of operation for the three months ended December 31, 1997 are based
in part on estimates that may be subject to year-end adjustments and are not
necessarily indicative of the results to be expected for the full year.
2. Restricted Cash
On December 31, 1997, the Company sold 5,000 shares of Series A Convertible
Preferred Stock, $0.01 par value per share, for a purchase price of $5 million.
The proceeds were delivered by the investor into escrow on this date. On January
2, 1998, the net proceeds of $4.6 million, after issuance costs of $400,000,
were wired to the account of the Company and were used to reduce the balance of
the bank revolving credit note.
3. Debt
Long-term debt is summarized as follows (in thousands):
Dec. 31, Sept. 30,
1997 1997
---------- ---------
Bank Debt (See Note 3) ................ $ 10,204 $ 9,026
Convertible subordinated notes ........ 3,416 3,624
Other ................................. 450 809
-------- --------
14,070 13,459
Less current portion .................. (1,390) (1,712)
-------- --------
$ 12,680 $ 11,747
======== ========
4. Preferred Stock
On December 31, 1997, the Company sold 5,000 shares of Series A Convertible
Preferred Stock, $0.01 par value per share ("Convertible Preferred"), for an
aggregate purchase price of $5 million. The Convertible Preferred shares accrue
dividends at a rate of 5% per annum, payable quarterly, at the Company's option,
in cash or additional Convertible Preferred shares. In addition, the Company
issued warrants to purchase 170,000 shares of the Company's common stock at
prices at or above the market price (20,000 shares at $6.625 expiring on
December 31, 2000 and 150,000 shares at $7.95 expiring on December 31, 2001). On
January 2, 1998, the Company used the net proceeds of $4.6 million, after
issuance costs of $400,000, to reduce the balance of the bank revolving credit
note.
Each share of Convertible Preferred is convertible, at the option of the holder,
into the number of shares of common stock as defined by the stated value of the
Convertible Preferred multiplied by 5% per annum, less any dividends paid,
divided by the conversion price. The stated value of the Convertible Preferred
is $1,000 per share and the conversion price is the lower of $8.28 or a two day
average market price within a 20 day trading period prior to the conversion.
Pursuant to the Company's Articles of Incorporation, as amended, the holders of
the Convertible Preferred stock may only convert their outstanding Convertible
Preferred stock into an aggregate amount of common stock that does not exceed
19.99% of the outstanding common stock of the Company. Any excess shares of
common stock that are issuable upon conversion of outstanding Convertible
Preferred, that exceed this 19.99% limitation, are subject to mandatory
<PAGE>
redemption at the option of the holder of the Convertible Preferred stock,
unless the Company either obtains stockholder approval for the additional
conversions over 20%, or the Company receives permission to allow such issuances
from the American Stock Exchange. All outstanding shares of Convertible
Preferred, subject to the aforementioned restrictions, automatically convert to
common stock on December 31, 2000.
Holders of Convertible Preferred do not have voting rights, except for certain
protective provisions relating to changes in the rights of holders of
Convertible Preferred. The Convertible Preferred ranks senior to the Company's
common stock as to dividends, distributions and distribution of assets upon
liquidation, dissolution or winding up of the Company. The Convertible Preferred
is subject to mandatory redemption upon certain circumstances, including the
Company's (i) failure to convert the Convertible Preferred when required (ii)
bankruptcy, and (iii) suspension from trading on the American Stock Exchange.
The Company shall have the right to redeem the Convertible Preferred on or after
December 31, 1998 at a price equal to the greater of 130% of the stated value or
the market price multiplied by the number of shares of common stock into which
the Convertible Preferred can be converted.
5. Stock Options and Warrants
Outstanding options and warrants to purchase shares of common stock at December
31, 1997 were as follows (in thousands, except price per option data):
Outstanding at September 30, 1997 1,435
Granted (at $6.625-$7.95) (See Note 4) 170
Canceled (17)
Exercised (at $1.75) (64)
--------
Outstanding at December 31, 1997 1,524
=======
6. Earnings (Loss) per Share
The Company adopted Statement of Financial Accounting Standard (SFAS) No. 128,
"Earnings Per Share," in the quarter ended December 31, 1997. SFAS 128 requires
the computation of basic and diluted earnings per share. Basic earnings (loss)
per share is computed using the weighted average number of common shares
outstanding. Diluted earnings (loss) per share is computed using the weighted
average number of common shares outstanding and the dilutive common stock
equivalents (using the treasury stock method for warrants and options).
Summarized below is the reconciliation of basic and diluted earnings (loss) per
share for the quarters ended December 31, 1997 and 1996 (in thousands except per
share amounts):
Net Income Per Share
(Loss) Shares Amount
For the Quarter ended December 31, 1997:
Basic earnings (loss) per share ........ $(2,378) 6,941 $ (0.34)
Effect of outstanding securities (a)-
Warrants and options ............... -- --
Convertible debt ................... -- --
Convertible preferred stock ........ -- --
-------- -----
Diluted earnings (loss) per share ...... $(2,378) 6,941 $ (0.34)
-------- -----
For the Quarter ended December 31, 1996:
Basic earnings per share ............... $ 255 6,554 $ 0.04
Effect of outstanding securities (b)-
Warrants and options ............... -- 252
Convertible debt ................... -- --
-------- -----
Diluted earnings per share ............. $ 255 6,806 $ 0.04
-------- -----
(a) As the Company had a net loss, the outstanding securities were
antidilutive.
(b) The remaining outstanding warrants and options and the convertible debt
were antidilutive.
<PAGE>
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
This Form 10-Q contains forward-looking statements that involve risks and
uncertainties. The actual results of SoftNet Systems, Inc. and its subsidiaries
could differ significantly from those set forth herein. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in "Risk Factors" as set forth in the Company's annual report on Form
10-K for the fiscal year ended September 30, 1997, as filed with the Securities
and Exchange Commission, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" as well as those discussed elsewhere in
this Quarterly Report. Statements contained herein that are not historical facts
are forward-looking statements that are subject to the safe harbor created by
the Private Securities Litigation Reform Act of 1995. Words such as "believes",
"anticipates", "expects", "intends" and similar expressions are intended to
identify forward-looking statements, but are not the exclusive means of
identifying such statements. A number of important factors could cause the
Company's actual results for fiscal 1998 and beyond to differ materially from
past results and those expressed in any forward-looking statements made by, or
on behalf of, the Company. These factors include, without limitation, the
following: limited operating history; lack of profitable operations;
fluctuations in quarterly results; lack of backlog; rapid technological change;
dependence on new products; dependence on the Internet; ability to expand the
Internet business; risks associated with acquisitions; and competition. The
Company undertakes no obligation to release publicly the results of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
The Company's fiscal year ends September 30 and the first quarter of the fiscal
year ends December 31. "Fiscal 1998" refers to the twelve months ending
September 30, 1998 with similar references to other twelve month periods ending
September 30.
Results of operations for the First Quarter of Fiscal 1998 compared to the same
period in Fiscal 1997
Consolidated net sales decreased $3.9 million (or 36.3%) for the three months
ended December 31, 1997, as compared to the same period in 1996. Sales in the
document management segment decreased $2.8 million (or 51.1%), primarily as a
result of a decrease in the sale of computer output microfiche equipment
("COM"). The document management segment entered fiscal year 1998 with a backlog
of $1.4 million compared to a backlog of $3.4 million for the same period in
fiscal 1997. Incoming COM orders appear strong and the Company expects this
revenue to normalize in the ensuing quarters. Sales in the telecommunications
segment decreased by $1.2 million (22.9%), primarily as the result of fewer
healthcare and major system installs by both the Milwaukee and Chicago
divisions. In addition, telecommunication sales for the three months ended
December 31, 1996 included revenues of $148,000 from the Company's wholly-owned
subsidiary, Communicate Direct Inc. ("CDI"), which was completely dissolved by
the Company in fiscal 1997.
Consolidated gross profit decreased $2.4 million in the three months ended
December 31, 1997, with profit margins decreasing to 25.7% from 38.3% for the
same period in 1996. The percentage decrease is primarily related to the
decrease in the document management segment's COM sales, which contribute the
highest product profit margins. As such, profit margins in the document
management segment decreased for the three months ended December 31, 1997 to
24.7% from 45.9% in the same period in 1996. Gross profit decreased $105,000 in
the internet segment for the three months ended December 31, 1997, primarily as
a result of a reclassification of certain web development expenses being charged
entirely to cost of goods sold. Due to immateriality, similar expenses in prior
year presentations have not been reclassified.
<PAGE>
Operating expenses, primarily selling, engineering, general and administrative,
increased $321,000 to $3.5 million for the three months ended December 31, 1997
from $3.2 million for the same period in 1996. The increase in operating
expenses is primarily the result of the consolidation and relocation of the
Chicago based operations to the Company's existing headquarters in Mountain
View, California. These activities resulted in the one time write-off of
leasehold improvements and moving expenses ($240,000 for the three months ended
December 31, 1997). In addition, the internet services segment increased its
administrative and sales force ($163,000 for the three months ended December 31,
1997). This increase was offset by the disposition in fiscal 1997 of all
operations of CDI (operating losses of $75,000 for the three months ended
December 31, 1997).
Amortization expense decreased $16,000 for the three months ended December 31,
1997, to $346,000 as compared to $362,000 for the same period in 1996.
The Company made no provision for income taxes for the three months ended
December 31, 1996, as a result of the Company's net operating loss
carry-forward.
Consolidated interest expense increased $72,000 (or 28.1%) to $328,000 for the
three months ended December 31, 1997 compared to $256,000 for the same period in
1996. The increase in interest expense was the result of a higher level of
outstanding indebtedness on the company's line of credit facility in the first
quarter of fiscal 1998.
For the first quarter of fiscal 1998, the Company had a net loss of $2.4
million, or a basic loss per share of $0.34, compared to net income of $255,000
in fiscal 1997, or basic earnings per share of $0.04.
Liquidity and Capital Resources
At December 31, 1997, the Company's current ratio was 1.48 to 1 with working
capital of $5.1 million. This compares with a current ratio of 1.12 to 1 and
working capital of $1.3 million at September 30, 1997.
For the first quarter of fiscal 1998, cash flows used by operating activities
were $726,000 compared to $872,000 for the same period in fiscal 1997. Cash
flows used by investing activities were $102,000 for the first quarter of fiscal
1998 compared to $199,000 for the same period in fiscal 1997. Cash flows
provided by financing activities were $841,000 for the first quarter of fiscal
1998 compared to $705,000 for the same period in fiscal 1997.
On December 31, 1997, the Company sold $5 million of Convertible Preferred
stock. On January 2, 1998, the net proceeds of this sale of $4.6 million were
used to reduce the balance of the bank revolving credit note. See Note 4 of
Notes to Condensed Consolidated Financial Statements for additional information.
The Company expects to be able to finance its fiscal 1998 working capital
requirements and capital expenditures from its operating income and existing
revolving credit facility.
Other - Year 2000 Issue
Many existing computer systems and related software applications, and other
control devices, use only two digits to identify a year in a date field, without
considering the impact of the upcoming change in the century. Such systems,
applications and/or devices could fail or create erroneous results unless
corrected so that they can process data related to the Year 2000. The Company
relies on such computer systems, applications and devices in operating and
monitoring all major aspects of its business, including, but not limited to, its
financial systems (such as general ledger, accounts payable and payroll
modules), customer services, internal networks and telecommunications equipment,
and end products. The Company also relies, directly and indirectly, on the
external systems of various independent business enterprises, such as its
customers, suppliers, creditors, financial organizations, and of governments,
both domestically and internationally, for the accurate exchange of data and
related information.
The Company is currently in the process of evaluating the potential impact of
the Year 2000 issue on its business and the related expenses that would
foreseeably be incurred in attempting to remedy such impact (including testing
and implementation of remedial action). Management's current estimate is that
the costs associated with the Year 2000 issue should not have a material adverse
affect on the results of operations or financial position of the Company in any
given year. However, despite the Company's efforts to address the Year 2000
impact on its internal systems, the Company is not sure that it has fully
identified such impact or that it can resolve it without disruption of its
business and without incurring significant expenses. In addition, even if the
internal systems of the Company are not materially affected by the Year 2000
issue, the Company could be affected as a result of any disruption in the
operation of the various third-party enterprises with which the Company
interacts.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities.
On December 31, 1997, the Company issued 5,000 shares of Series A
Convertible Preferred Stock, $0.01 par value, ("Convertible Preferred")
and warrants to purchase 150,000 shares of common stock, exercisable at
$7.95 per share and expiring on December 31, 2001 ("RGC Warrants"), to
RGC International Investors, LDC, for an aggregate purchase price of $5
million. The Convertible Preferred shares accrue dividends at a rate of
5% per annum, payable quarterly, at the Company's option, in cash or
additional Convertible Preferred shares. Holders of Convertible
Preferred do not have voting rights, except for certain protective
provisions relating to changes in the rights of holders of Convertible
Preferred. The Convertible Preferred ranks senior to the Company's
common stock as to dividends, distributions and distribution of assets
upon liquidation, dissolution or winding up of the Company. The
Convertible Preferred is subject to mandatory redemption upon certain
circumstances, including the Company's (1) failure to convert the
Convertible Preferred when required (2) bankruptcy, and (3) suspension
from trading on the American Stock Exchange. The Company shall have the
right to redeem the Convertible Preferred on or after December 31, 1998
at a price equal to the greater of 130% of the stated value per share
($1,000) or the two day average market price within a 20 day trading
period prior to conversion multiplied by the number of shares into
which the Convertible Preferred can be converted. The sale of the
Convertible Preferred and the RGC Warrants was arranged by Shoreline
Pacific Institutional Finance, the Institutional Division of Financial
West Group, who received a fee of $250,000 plus warrants, exercisable
at $6.625 per share and expiring on December 31, 2000, to purchase
20,000 shares of common stock.
Each share of Convertible Preferred is convertible, at the option of
the holder, into the number of shares of common stock as defined by the
stated value of the Convertible Preferred multiplied by 5% per annum,
less any dividends paid, divided by the conversion price. The stated
value of the Convertible Preferred is $1,000 per share and the
conversion price is the lower of $8.28 or a two day average market
price within a 20 day trading period prior to the conversion. All
outstanding shares of Convertible Preferred automatically convert to
common stock on December 31, 2000. Depending on market conditions at
the time of conversion, the number of common shares issuable could
prove to be significantly greater in the event of a decrease in the
trading price of the common stock. Purchasers of common stock could
therefore experience substantial dilution upon conversion of the
Convertible Preferred.
During the quarter ended December 31, 1997, the Company issued 48,780
shares of common stock pursuant to the conversion of $200,000 of
convertible debt by a single holder of the Company's 10% convertible
subordinated notes due October 31, 1999. These 10% notes have a
conversion price of $4.10. Additionally, the Company issued 1,120
shares of common stock pursuant to the conversion of $7,560 of
convertible debt by a single holder of the Company's 9% convertible
subordinated notes due September 15, 2000. These 9% notes have a
conversion price of $6.75. These shares are exempt under Section
3(a)(9) of the Securities Act.
During the quarter ended December 31, 1997, the Company issued a
combined total of 64,000 shares of common stock to three separate
warrant holders, upon the exercise of outstanding warrants (exercise
price of $1.75 per share). These shares were issued in a nonpublic
offering pursuant to transactions exempt under Section 4(2) of the
Securities Act of 1933, as amended.
Item 3. Defaults upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. Not applicable
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1997. On January 12, 1998, the Company filed a Form
8-K reporting the designation and issuance of 5,000 shares of Series A
Convertible Preferred Stock. See Note 4 of Notes to Condensed
Consolidated Financial Statements. On February 12, 1998, the Company
filed a Form 8-K reporting the description of the Company's capital
stock.
<PAGE>
SIGNATURES
In accordance with 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.
SOFTNET SYSTEMS, INC.
/s/ A. J. R. Oosthuizen
- ----------------------------
A. J. R. Oosthuizen
President and
Chief Executive Officer
/s/ Mark A. Phillips
- ----------------------------
Mark A. Phillips
Principal Accounting Officer
Dated: February 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
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<NAME> SOFTNET SYSTEMS INC.
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