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Report on Virgil Corporation and Z-calc Data.

Summary

For the past five years, Finanswers Consultants have been providing management 
data and financial planning consulting services to tow medium-sized Texas-based 
corporations in the high-tech Silicon Prairie industrial near Austin.  Virgil 
Corporation is a manufacturer of technical workstations for the biomedical 
research field.  Z-Calc Data is a supplier and franchiser of payroll systems to 
small accounting firms.  Both companies have emerged as clear success stories.  
Each has show consistent, rapid growth over the period.  More important, the two 
have successfully undertaken ambitious programs aimed at repositioning their 
operations for continued growth.  Prospects for both companies appear to be 
excellent.

Background: Virgil Corp.

Founded in 1961 by electro-oscilloscope inventor R. Stanley Mahanovich, Virgil 
Corporation developed into a manufacturer of technical instrumentation for 
medical laboratories.  In 1978, with Mananovich still at the helm. the company 
began to expand its scope toward designing and manufacturing an entire line of 
technical tools<197>including microcomputer workstations<197>for both the 
medical and biotechnical fields.  Today, Virgil supplies three turnkey 
workstation systems for researchers, including software and instrument 
peripherals.

Background: Z-Calc Data.

Z-Calc Data was founded in 1977 by two computer science graduate students at the 
University of Texas, Roberta Orbison and Lucy Chin.  Initially the firm was 
exclusively involved in accounting and payroll processing.  After growing 
rapidly for five years, Z-Calc began shifting its activities to supplying 
payroll processing systems on a franchise basis throughout Texas, Oklahoma, 
Louisiana, and New Mexico to independent accountants and payroll firms.  
Meanwhile, the company has sold its won payroll processing business and reduced 
its miscellaneous accounting work.

Five Year Performance.

Both Virgil Corporation and Z-Calc Data have posted solid gains since 1982.  As 
shown in the Financial Snapshot table, Virgil grew from $36 million in revenues 
in 1982 to $81 million in 1986.  Z-Calc grew somewhat more slowly, from $12 
million in revenues in 1982 to $41 million in 1986.

Both companies have succeeded in taking advantage of the rapid general growth 
that has occurred in the Silicon Prairie area around Austin<197>Virgil by 
broadening the scope of its existing operations, Z-Calc by shifting into an area 
with a larger potential for expansion.

This Year's Performance.

Both companies showed enviable track records during the past year in posting 
positive financial indices.  As the Financial Snapshot shows, the two companies 
have nearly identical margins and revenue per employee.  Currently, Virgil's 
price-earnings ration is greater, possibly because of current investor optimism 
for growth in biotechnology.  Virgil's income growth during 1986 was over twice 
as fast as Z-Calc's, mainly because Virgil's Model IX-3 advanced researcher's 
workstation went on the market in the second quarter of the year.  Significant 
income form Z-Calc's new franchisees,  on the other hand,  is not expected until 
late 1987.

Future Prospects.

Both companies have successfully shifted their activities to take advantage of 
new opportunities that have arisen in the past five years.  With the expected 
growth in biotechnology over the coming decade, Virgil is currently well 
positioned for rapid expansion.  Having developed a solid reputation for quality 
in the medical instrumentation field, it has superb prospects for selling a 
broader line of tools form biotechnical research.

From its has as an independent payroll processing service, Z-Calc has 
successfully taken on the challenge of shifting into a completely different 
business that of payroll systems franchiser.  Despite the inherent costs of such 
a transition, the company has nevertheless maintained a solid revenue and income 
growth rate.  Now that the shift has been accomplished, Z-Calc's prospects for 
rapid growth are excellent.

Recommendations.

We strongly recommend that the existing advisory relationships that Finanswers 
Consultants have forged with both Virgil Corp. and Z-Calc Data be extended 
during the foreseeable future.  In addition, the laudable track record that both 
these companies have posted can provide a model to many of Finanswers' other 
client corporations.  We also recommend that Finanswers Consultants continue to 
establish new consultancy relationships with high-technology companies in the 
Austin Area.