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 March 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)

    717 Forest Avenue, Lake Forest, Illinois               60045
   ------------------------------------------          --------------
   (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code:  (847) 266-8150

                                 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 March 31, 1997
  -------------------------------             --------------------------------
  Common stock, without par value                         6,565,644

<PAGE>

                              SOFTNET SYSTEMS, INC.
                                      INDEX



                                                                         Page
                                                                        Number
                                                                        ------

PART I    FINANCIAL INFORMATION

 Item 1.  Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheets
               March 31, 1997 and September 30, 1996                       3

           Condensed Consolidated Income Statements
               for the Three and Six Months Ended
               March 31, 1997 and March 31, 1996                           4

           Condensed Consolidated Statements of Cash Flows
               for the Six Months Ended
               March 31, 1997 and March 31, 1996                           5


 Item 2.   Management's Discussion and Analysis of
               Financial Condition and Results of Operations               8


PART II    OTHER INFORMATION

 Item 4.   Submission of Matters to a Vote of Security Holders            11

 Item 6.   Exhibits and Reports on Form 8-K                               11


SIGNATURES                                                                12



<PAGE>


                     SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
                                  

                                                       Mar. 31,    Sept. 30,
                                                         1996        1996
                                                       --------    --------
                                                     (unaudited)
         ASSETS
Current assets:
   Cash .............................................  $     63    $    426
   Accounts Receivables, net ........................    10,429       6,074
   Inventories ......................................     4,496       5,904
   Prepaid expenses .................................       182         340
                                                       --------    --------
          Total current assets ......................    15,170      12,744

Property and equipment, net .........................     2,026       2,314
Costs in excess of fair value
  of net assets acquired, net .......................     7,494       8,101
Other assets ........................................     2,974       2,427
                                                       --------    --------
                                                       $ 27,664    $ 25,586
                                                       ========    ========

         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses ............  $  8,457    $  8,672
   Current portion of long term debt ................       694         744
   Current portion of capital leases obligation......        34         187
   Deferred revenue .................................     1,354       1,428
                                                       --------    --------
          Total current liabilities .................    10,539      11,031
                                                       --------    --------

Long term debt, net of current portion ..............    12,492      10,598
                                                       --------    --------

Capital Lease obligation,
  net of current portion ............................        58         164
                                                       --------    --------

Commitments and contingencies

Shareholders' equity:
   
   Common stock, $.01 par value,
     25 million shares authorized,
     6,565,644  and 6,540,065 shares
     outstanding, respectively ......................        66          65
Capital in excess of par value ......................    33,760      33,517
Accumulated deficit .................................   (29,251)    (29,789)
                                                       --------    --------
          Total shareholders' equity ................     4,575       3,793
                                                       --------    --------
                                                       $ 27,664    $ 25,586
                                                       ========    ========

<PAGE>


                     SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                            Three Months Ended      Six Months Ended    
                                                                 March 31,               March 31,      
                                                          ---------------------   --------------------- 
                                                            1997         1996       1997         1996   
                                                          --------     --------   --------     -------- 
<S>                                                       <C>          <C>        <C>          <C>      
Net sales ............................................    $ 10,174     $ 12,190   $ 20,952     $ 22,062 
Cost of sales ........................................       6,192        7,811     12,840       14,241 
                                                          --------     --------   --------     -------- 
   Gross profit ......................................       3,982        4,379      8,112        7,821 
                                                          --------     --------   --------     -------- 
                                                                                                        
Operating expenses:                                                                                     
   Selling ...........................................       1,072        1,318      2,366        2,454 
   Engineering .......................................         564          435      1,114          838 
   General and administrative ........................       1,407        1,785      2,781        3,308 
   Amortization of goodwill and transaction costs ....         346          370        708          689 
                                                          --------     --------   --------     -------- 
             Total operating expenses ................       3,389        3,908      6,969        7,289 
                                                          --------     --------   --------     -------- 
                                                                                                        
   Income from operations ............................         593          471      1,143          532 
                                                                                                        
Interest expense .....................................        (320)        (435)      (576)        (830)
Gain on sale of available-for-sale securities ........          --        1,883         --        1,883 
Other income (expense) ...............................          10            5        (29)          16 
                                                          --------     --------   --------     -------- 
                                                                                                        
   Net income (loss) .................................    $    283     $  1,924   $    538     $  1,601 
                                                          ========     ========   ========     ======== 
                                                                                                        
Earnings per share:       

   Primary ...........................................    $   0.04     $    .31   $   0.08     $   0.25 
                                                          ========     ========   ========     ======== 
   Fully diluted .....................................          --     $    .25         --     $   0.21 
                                                          ========     ========   ========     ======== 

Weighted average shares outstanding:

   Primary ...........................................       6,930        6,177      6,864        6,313 
                                                          ========     ========   ========     ======== 
   Fully diluted .....................................          --        7,551         --        7,688 
                                                          ========     ========   ========     ======== 

</TABLE>


<PAGE>                                                                       

                     SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                  (Unaudited)

                                                             Six Months Ended
                                                                  March 31,
                                                            --------------------
                                                              1997        1996
                                                            --------    --------
Cash flows from operating activities:
  Net income .............................................. $    538    $ 1,601
  Adjustments to reconcile net income
    to net cash used by operating activities:
       Gain on sale of available-for-sale securities ......        -     (1,883)
       Depreciation and amortization ......................    1,132      1,102
       Provision for bad debts ............................       15         37
       Changes in operating assets 
         and liabilities, net of effect of
         purchase transactions:
           Accounts receivable ............................   (4,525)    (1,820)
           Inventories ....................................      766     (1,751)
           Prepaid expenses ...............................      157         69
           Accounts payable and accrued expenses ..........      106       (793)
           Deferred revenue ...............................      178      1,321
                                                            --------    --------
             Net cash used in operating activities ........   (1,633)    (2,117)
                                                            --------    --------

Cash flows from investing activities:
  Purchase of property and equipment ......................     (530)      (580)
  Additions to capitalized product design .................     (502)      (155)
  Acquisition of business, net of cash acquired ...........       --     (1,860)
  Proceeds from sale of available-for-sale securities .....               2,410
  Payment for acquisition costs ...........................       --       (144)
  Settlement of remaining obligations to owners of
    discontinued operations ...............................       --       (116)
  Increase in other assets ................................        5       (418)
                                                            --------    --------
             Net cash used by investing activities ........   (1,027)      (863)
                                                            --------    --------

Cash flows from financing activities:
  Repayment of long-term debt .............................      (71)       (84)
  Borrowings under revolving credit note ..................    5,068      7,767
  Payments under revolving credit note ....................   (2,547)    (5,586)
  Proceeds from exercise of warrants ......................       --         14
  Payment for put obligation ..............................       --       (200)
  Proceeds from settlement of related party receivable ....       --        819
  Capitalized lease obligations paid ......................     (153)      (126)
                                                            --------    --------
             Net cash provided by financing activities ....    2,297      2,604
                                                            --------    --------

Net decrease in cash ......................................     (363)      (376)
Cash, beginning of period .................................      426        573
                                                            --------    --------
Cash, end of period ....................................... $     63    $   197
                                                            ========    ========

Cash paid during the period for:
Interest ..................................................  $   504    $   797


Supplemental non-cash transactions
Property acquired by capitalized leases ...................       --        108
Change in unrealized appreciation 
  in available-for-sale securities ........................       --       (798)

<PAGE>


                     SoftNet Systems, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                             March 31, 1997 and 1996
                                   (unaudited)



1.  Basis of Presentation

The  financial  information,  except for the balance  sheet as of September  30,
1996,  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 March 31, 1997 and 1996.

The Company's annual report on form 10-K for the fiscal year ended September 30,
1996, 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, 1996 was derived
from the Company's audited Consolidated Financial Statements.

The results of  operation  for the six months  ended March 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.  Debt

Debt is summarized as follows (in thousands):
                                                      March 31,    September 30,
                                                        1997             1996
                                                   -------------   -------------
                                                    (unaudited)

      Bank Debt                                          $8,620         $6,649
      Convertible subordinated notes                      3,806          4,011
      Other                                                 760            682
                                                    ------------   ------------
                                                         13,186         11,342
      Less current portion                                 (694)          (744)
                                                    ------------   ------------

                                                      $  12,492      $  10,598
                                                    ============   ============


During the six months  ended March 31,  1997,  the Company  received a temporary
increase in its borrowing  facility  whereby the Company was able to borrow $1.0
million in excess of  available  assets for the months of January  and  February
1997,  $750,000 for March 1997, and $500,000 for April 1997. On May 1, 1997, the
amount of credit available under the revolving  credit facility  reverted to the
original amount available not to exceed $9.5 million.  In addition,  the Company
extended the maturity date of its revolving  credit  facility to April 15, 1998.
March 31, 1997 accounts  receivable were subsequently  reduced when $2.7 million
of accounts receivable owed by one customer were paid and the proceeds were used
to pay down the Company's bank debt.



<PAGE>



3.  Stock Options and Warrants

Outstanding options and warrants to purchase shares of common stock at March 31,
1997 were as follows (in thousands, except price per option data):

       Outstanding at October 1, 1996                                     1,569

       Granted at prices ranging from $4.94 to $5.31                        400

       Exercised or canceled at prices ranging from $8.25 to $4.94          (50)
                                                                      ----------

       Outstanding at March 31, 1997                                      1,919
                                                                      ==========


In November 1996 the Company repriced 312,167 employee stock options by reducing
the  exercise  price from $8.25 to $4.94 per share (the market price on the date
of such change).

4.    Earnings per common share

At March 31, 1997, the  computation  of both primary and fully diluted  earnings
per share were based on the weighted average number of shares  outstanding.  The
inclusion  of  additional  shares  assuming  the  exercise of stock  options and
warrants  and  the  conversion  of all  convertible  subordinated  notes  had an
immaterial effect on the earnings per share computation.



<PAGE>


Item 2.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


This Form 10-Q contains "forward looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995, including (without limitation)
statements as to  expectations,  beliefs and future  financial  performance  and
assumptions  underlying  the  foregoing  relating to the ability to meet working
capital   requirements,   capital   expenditure  and  expected  cash  flow  from
operations.  The actual results or outcomes could differ  materially  from those
discussed  in  the  particular  forward  looking   statements.   The  risks  and
uncertainties  that may affect the  operations,  performance,  developments  and
results of the Company's  business include the following:  national and regional
economic  conditions;  market acceptance of the Company's products and services;
the Company's continued ability to provide integrated  communications  solutions
for customers in a dynamic industry, as well as competitive factors.

Results of operations for the three months ended March 31,  1997,compared to the
same period in 1996.

For the three months ended March 31, 1997,  net sales  decreased by $2.0 million
(or 16.5%) to $10.2 million compared to $12.2 million for the three months ended
March 31,  1996.  Sales were  unchanged  in the  Company's  document  management
segment  in  comparison  with the same  period in 1996.  Sales in the  Company's
telecommunications  segment  decreased $2.4 million (or 34.4%).  The decrease in
sales  in  the  telecommunications   segment  was  primarily  a  result  of  the
disposition of substantially all of the operations of the Company's wholly owned
subsidiary,  Communicate  Direct,  Inc. ("CDI") in October 1996 (with revenue of
$2.2  million for the three  months  ended March 31,  1996).  This  decrease was
offset in part by the June 1996 acquisition of MediaCity World, Inc., a provider
of internet services, which added $396,000 to revenue for the three months ended
March 31, 1997.

For the three months ended March 31, 1997, gross profit  decreased  $397,000 (or
9.1%) to $4.0  million  from $4.4  million for the same period in 1996.  For the
three  months  ended  March 31,  1997,  gross  profit as a  percentage  of sales
increased from 35.9% in 1996 to 39.1% in 1997. The percentage  increase  relates
primarily to improving margins in the telecommunications  segment as a result of
the disposition of  substantially  all of the operations of the Company's wholly
owned subsidiary CDI.

Selling, engineering, general and administrative expenses decreased $474,000 (or
13.8%) to $3.0  million  for the three  months  ended  March 31,  1997 from $3.5
million for the same period in 1996. The decrease in operating  expenses  caused
by the  disposition  of CDI ($677,000 for the three months ended March 31, 1996)
was offset in part by the acquisitions of Executone Information Systems,  Inc.'s
Milwaukee  operations  ("Executone-Milwaukee")  ($248,000  for the three  months
ended  March 31,  1997  compared  to  $201,000  for the same period in 1996) and
MediaCity ($202,000 for the three months ended March 31, 1997).

Amortization expense deceased $24,000 (or 6.6%) to $346,000 for the three months
ended March 31,  1997,  from  $370,000  for the same period in 1996.  During the
three months ended March 31, 1996, the Company incurred  amortization expense of
the goodwill  which arose from the  acquisition  of CDI in October 1994. In June
1996, the Company wrote off the remaining goodwill of CDI in connection with the
disposition  of certain  assets.  Accordingly,  the three months ended March 31,
1997 did not include any goodwill amortization from CDI.

During   the  three   months   ended   March  31,   1996,   the   Company   sold
available-for-sale securities for net proceeds of $2.4 million. Accordingly, the
Company  recorded a gain on the sale of  available-for-sale  securities  of $1.9
million.

The Company's has made no provision for income taxes for the three months ending
March 31, 1997, as a result of the Company's net operating loss carry forward.

<PAGE>

Interest expense decreased  $115,000 (or 26.5%) to $320,000 for the three months
ended March 31, 1997 from $435,000 for the same period in 1996. Interest expense
decreased  as a result of lower debt  outstanding  during the three month period
ended  March 31,  1997  compared  to the same  period in 1996.  The  decrease in
outstanding  indebtedness  was  principally  a result of the  conversion of $4.1
million convertible subordinated notes in June 1996.

For the three months ended March 31, 1997,  net income  decreased  $1,641,000 to
$283,000 and primary earnings per share decreased $.27 to $.04,  compared to the
same period in 1996.  This decrease was primarily the result of a second quarter
fiscal 1996 gain of $1.9 million on the sale of available for sales securities.

At March 31, 1997, the  computation  of both primary and fully diluted  earnings
per share were based on the weighted average number of shares  outstanding.  The
inclusion  of  additional  shares  assuming  the  exercise of stock  options and
warrants  and  the  conversion  of all  convertible  subordinated  notes  had an
immaterial effect on the earnings per share computation.

Results of operations  for the six months ended March 31,  1997,compared  to the
same period in 1996.

For the six months ended March 31, 1997,  net sales  decreased by $1,110,000 (or
5.0%) to $21.0  million  compared to $22.1  million for the same period in 1996.
Sales  increased in the Company's  document  management  segment by $779,000 (or
7.8%)  principally as a result of higher volume of units sold as compared to the
same period in the prior year. Sales in the Company's telecommunications segment
decreased   $2.5   million   (or   20.7%).   The   decrease   in  sales  in  the
telecommunications  segment  was  primarily  a  result  of  the  disposition  of
substantially  all of the operations of the Company's  wholly owned  subsidiary,
CDI in October 1996 (with revenue of $4.4 million for the six months ended March
31, 1996  compared to $142,000 for the same period in 1997).  This  decrease was
offset in part by the acquisition of Executone-Milwaukee in December 1995 (which
added $2.2 million to revenue for the six months  ended March 31, 1997  compared
to $975,000 for the same period in 1996). In addition,  MediaCity  World,  Inc.,
which  provides  internet  services,  acquired in June 1996,  added  $618,000 to
revenue for the six months ended March 31, 1997.

For the six months ended March 31, 1997,  gross  profit  increased  $291,000 (or
3.7%) to $8.1 million from $7.8 million for the same period in 1996. For the six
months ended March 31, 1997,  gross  profit as a percentage  of sales  increased
from 35.5% in 1996 to 38.7% in 1997. The percentage  increase relates  primarily
to  improving  margins  in the  telecommunications  segment  as a result  of the
disposition of the operations of the Company's wholly owned subsidiary CDI.

Selling, engineering, general and administrative expenses decreased $339,000 (or
5.1%) to $6.3  million for the six months ended March 31, 1997 from $6.6 million
for the same period in 1996.  The decrease in operating  expenses  caused by the
disposition  of CDI ($1.1  million for the six months  ended March 31, 1996) was
offset in part by the acquisitions of Executone-Milwaukee  ($508,000 for the six
months  ended March 31, 1997  compared to $201,000  for the same period in 1996)
and MediaCity ($425,000 for the six months ended March 31, 1997).

Amortization  expense increased $19,000 (or 2.8%) to $708,000 for the six months
ended March 31, 1997, from $689,000 for the same period in 1996. The increase in
amortization  expense was caused by the acquisitions of MediaCity World (in June
1996) and  Executone-Milwaukee  (in December 1995).  During the six months ended
March 31, 1996, the Company incurred  amortization expense of the goodwill which
arose from the  acquisition  of CDI in October 1994.  In June 1996,  the Company
wrote off the remaining  goodwill of CDI in connection  with the  disposition of
certain assets. Accordingly, the six months ended March 31, 1997 did not include
any goodwill amortization from CDI.

During the six months ended March 31, 1996, the Company sold  available-for-sale
securities for net proceeds of $2.4 million. Accordingly, the Company recorded a
gain on the sale of available-for-sale securities of $1.9 million.

The  Company's  has made no provision for income taxes for the six months ending
March 31, 1997, as a result of the Company's net operating loss carry forward.

<PAGE>

Interest  expense  decreased  $254,000 (or 30.6%) to $576,000 for the six months
ended March 31, 1997 from $830,000 for the same period in 1996. Interest expense
decreased  as a result of lower debt  outstanding  during  the six month  period
ended  March 31,  1997  compared  to the same  period in 1996.  The  decrease in
outstanding  indebtedness  was  principally  a result of the  conversion of $4.1
million convertible subordinated notes in June 1996.

For the six months  ended March 31, 1997,  net income  decreased  $1,063,000  to
$538,000 and primary earnings per share decreased $.17 to $.08,  compared to the
same period in 1996.  This decrease was primarily the result of a second quarter
fiscal 1996 gain of $1.9 million on the sale of available for sales securities.

At March 31, 1997, the  computation  of both primary and fully diluted  earnings
per share were based on the weighted average number of shares  outstanding.  The
inclusion  of  additional  shares  assuming  the  exercise of stock  options and
warrants  and  the  conversion  of all  convertible  subordinated  notes  had an
immaterial effect on the earnings per share computation.


Liquidity and Capital Resources

At March 31,  1997,  the  Company's  current  ratio  was 1.44 to 1 with  working
capital of $4.6  million.  This  compares  with a current ratio of 1.16 to 1 and
working capital of $1.7 million at September 30, 1996.

For the six months ended March 31, 1997, cash flows used by operating activities
were $1.6  million  compared to $2.1  million  for the same period in 1996.  The
primary  cause for the use of cash by operating  activities  was the increase in
accounts  receivable  of $4.5 million.  Cash flows used by investing  activities
were $1.0 million for the six months  ended March 31, 1997  compared to $863,000
for the same period in 1996.  The increase in cash used in investing  activities
was a  primarily a result of an  increase  in net  capital  expenditures  due to
significant  investment by the Company's  document  management  segment in lease
contracts with its customers.  Cash flows provided by financing  activities were
$2.3  million for the six months  ended March 31, 1997  compared to $2.6 million
for the same period in 1996.

During the six months  ended March 31,  1997,  the Company  received a temporary
increase in its borrowing  facility  whereby the Company was able to borrow $1.0
million in excess of  available  assets for the months of January  and  February
1997,  $750,000 for March 1997, and $500,000 for April 1997. On May 1, 1997, the
amount of credit available under the revolving  credit facility  reverted to the
original amount available not to exceed $9.5 million.  In addition,  the Company
extended the maturity  date of its revolving  credit  facility to July 15, 1998.
March 31, 1997 accounts  receivable were subsequently  reduced when $2.7 million
of accounts receivable owed by one customer were paid and the proceeds were used
to pay down the Company's bank debt.

The Company expects to be able to finance its working capital  requirements  and
capital  expenditures  from its  operating  income and  existing  line-of-credit
facility for the fiscal year ending September 30, 1997.


Adoption of New Accounting Standards

Effective for periods ending after December 15, 1997, the Company is required to
adopt Statement of Financial  Accounting  Standards No. 128 "Earnings Per Share"
("SFAS  128").  SFAS 128  requires  companies  to  calculate  basic and  diluted
earnings  per share based upon  standards  designed to provide  consistency  and
compatibility  with  calculations  of  other  countries  and  with  that  of the
International  Accounting  Standards  Committee.  The  Company  does not  expect
earnings per share as reported to be materially  different than basic or diluted
earnings per share to be reported upon adoption of the new accounting standard.




<PAGE>






PART II. OTHER INFORMATION

ITEM  4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual  Meeting of  Shareholders  held on March 26, 1997,  the  following
proposals were adopted by the margins indicated:

1.   To elect a Board of Directors to hold office until the next annual  meeting
     of shareholders and until their successors are elected and qualified.

                                                     NUMBER OF SHARES
                                                FOR                  WITHHELD
         John J. McDonough                4,759,327                   410,923
         Ian B. Aaron                     5,165,598                    17,267
         John G. Hamm                     5,165,151                    17,717
         A.J.R. Oosthuizen                5,031,047                   151,817
         Ronald I. Simon                  5,013,427                   157,326


2.    To authorize and approve the  Amended SoftNet Systems, Inc. 1995 Long Term
      Incentive Plan.

         For                                          3,899,186
         Against                                         87,939
         Abstain                                          8,014
         Broker Non-Votes                             1,182,781

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 March 31, 1997.

<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/ John J. McDonough
                                          ------------------------------------
                                          John J. McDonough
                                          Chairman and Chief Executive Officer



                                          /s/ Martin A. Koehler
                                          ------------------------------------
                                          Martin A. Koehler
                                          Vice President - Finance and
                                            Chief Financial Officer


Dated:  May 15, 1997