8-K/A

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities and Exchange Act of 1934

Date of Report: July 13, 2001

Group 1 Software, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation) 0-6355
(Commission File Number) 52-0852578
(IRS Employer
Identification Number)

4200 Parliament Place, Suite 600, Lanham, Maryland
(Address of principal executive offices) 20706-1844
(Zip Code)

(301) 918-0400
(Registrant’s telephone number, including area code)

Item 2. Acquisition or Disposition of Assets.

The purpose of this amendment is to amend Item 7 to provide certain financial information with respect to the Purchase (as defined below), which information was impracticable to provide at the time the Registrant filed the Current Report on Form 8-K dated May 14, 2001.

On April 30, 2001, Group 1 Software, Inc., a Delaware corporation (“Group 1”), and TriSense Software, Ltd., a Minnesota corporation (“TriSense”), entered into an Agreement for the Purchase and Sale of Assets, pursuant to which Group 1 has purchased specifically identified assets and assumed specifically identified liabilities of TriSense (the “Purchase”) as of April 30, 2001. In consideration for the Purchase, Group 1 has delivered $1,545,000 in cash and a promissory note with a principal balance of $6,131,000 payable in installments of principal plus accrued interest at the annual rate of 4.63% totaling $3,280,000 due on each of the first and second anniversary dates of closing. The consideration paid to TriSense shareholders was based on the Company’s evaluation of the business operations and intellectual property of TriSense, and was negotiated in an arm’s length transaction among unrelated and unaffiliated (as defined under Rule 144 promulgated by the Securities and Exchange Commission) parties. The cash consideration for the acquisition was paid from Group 1‘s working capital and it is anticipated that future payments will also be made from working capital. Group 1 will account for the transaction as a purchase business combination.

TriSense develops and markets electronic bill presentment and payment (EBPP) software. Integration of TriSense’s PaySense EBPP offering will enable Group 1 to create an integrated solution providing digital and paper generation and delivery of customer-focused business documents.

ITEM 7 IS HEREBY AMENDED AND RESTATED AS FOLLOWS

Item 7. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

TriSense Financial Statements for the years ended December 31, 2000 and 1999 and Independent Auditor’s Report thereon are attached as Exhibit 99.1. The unaudited balance sheet as of March 31, 2001 and the related statements of operations and of cash flows for the three months ended March 31, 2001 and 2000 are attached hereto as Exhibit 99.2.

(b) Pro Forma Financial Information.

The following unaudited pro forma financial information required pursuant to Article 11 of Regulation S-X previously omitted from the Company’s 8-K filed on May 14, 2001 is filed with this amendment:

Introduction to the Unaudited Pro Forma Condensed Combined Financial Data.
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2001.
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended March 31, 2001.
Notes to unaudited Pro Forma Condensed Combined Financial Statements.

Group 1 Software, Inc.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The pro forma financial information gives effect to the following transaction:

ACQUISITION OF TRISENSE SOFTWARE, LTD.

On April 30, 2001, Group 1 Software, Inc., a Delaware corporation (“Group 1”), and TriSense Software, Ltd., a Minnesota corporation (“TriSense”), entered into an Agreement for the Purchase and Sales of Assets, pursuant to which Group 1 has purchased specifically identified assets and assumed specifically identified liabilities of TriSense (the “Purchase”) as of April 30, 2001. In consideration for the Purchase, Group 1 paid $1,545,000 in cash and delivered a promissory note with a principal balance of $6,131,000 payable in installments of principal plus accrued interest at the annual rate of 4.63% totaling $3,280,000 due on each of the first and second anniversary dates of closing.

The following unaudited pro forma condensed combined financial statements give effect to the Purchase as if it had been consummated, with respect to the statement of operations, at the beginning of the fiscal year presented or, with respect to the balance sheet, as of the date presented. The accounting policies of Group 1 and TriSense are substantially comparable.

This information is only a summary and should be read in conjunction with the historical consolidated financial statements and related notes thereto of Group 1 and the financial statements of TriSense, included herein. We are providing the unaudited pro forma condensed combined financial information for illustrative purposes only. The companies may have performed differently had they always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience.

Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2001

	Group 1 Software (1a)		TriSense (1b)		Adjust- ments		Total
ASSETS
Current assets:
Cash and cash equivalents	$   36,179				(1,545)	(a)	$   34,634
Short-term investments, available for sale	7,954						7,954
Trade and installment accounts receivable, less allowance	23,658						23,698
for doubtful accounts			40
Deferred income taxes	1,731						1,731
Prepaid expenses and other current assets	3,650		23				3,673
Total current assets	73,172		63		(1,545	)	71,690
Installment accounts receivable, long-term	695						695
Property and equipment, net	4,294		326		(117)	(b)	4,503
Computer software, net	20,234				1,188	(c)	21,422
Other assets	4,230		17		6,352	(d)	10,599
Total assets	102,625		406		5,878		108,909
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	1,977		102		(23)	(e)	2,056
Current portion of note payable	74				2,929	(f)	3,003
Accrued expenses	5,819		68				5,887
Accrued compensation	6,549						6,549
Current deferred revenues	29,032		44				29,076
Total current liabilities	43,451		214		2,906		46,571
Note payable, net of current portion	14				3,068	(g)	3,082
Deferred revenues, long-term	544						544
Deferred income taxes	4,165						4,165
Total liabilities	48,174		214		5,974		54,362
Commitments and contingencies
Stockholders’ equity:
6% cumulative convertible preferred stock $0.25 par value;
1,200 shares authorized; 48 shares issued and outstanding
(aggregate involuntary liquidation preference $950)	916						916
Common stock	3,327		60		(60)	(h)	3,327
Additional paid in capital	29,296		12,762		(12,666)	(h)	29,392
Retained earnings	24,533		(12,630	)	12,630	(h)	24,533
Accumulated other comprehensive loss	(1,286	)					(1,286	)
Less treasury stock, 497 shares, at cost	(2,335	)					(2,335	)
Total stockholders’ equity	54,451		192		(96	)	54,547
Total liabilities and stockholders’ equity	102,625		406		5,878		108,909

See notes to unaudited pro forma condensed combined financial statements

Unaudited Pro Forma Condensed Combined Statement of Operations For the Year Ended March 31, 2001

	Group 1 Software 1a		TriSense 1b		Pro Forma Adjust- ments		Proforma Total
Revenue:
Software license and related revenue	$ 40,055						$ 40,055
Maintenance and services	53,278		186				53,464
Total revenue	93,333		186				93,519
Cost of revenue:
Software license expense	11,204				238	(i)	11,442
Maintenance and service expense	19,149		188				19,337
Total cost of revenue	30,353		188		238		30,779
Gross profit	62,980		(2	)	(238	)	62,740
Operating expenses:
Research and development	6,376		1,884				8,260
Sales and marketing	31,043		312				31,355
General and administrative	13,460		1,035		1,455	(j)	15,950
Total operating expenses	50,879		3,231		1,455		55,565
Income from operations	12,101		(3,233	)	(1,693	)	7,175
Non-operating income:
Interest income	2,533				(77	)(k)	2,456
Interest expense	(109	)			(379	)(l)	(488	)
Other non-operating income	457		6				463
Total non-operating income (expense)	2,881		6		(456	)	2,431
Income before provision for income taxes	14,982		(3,227	)	(2,149	)	9,606
Provision (benefit) for income taxes	6,077				(2,400	)(m)	3,677
Net income (loss)	8,905		(3,227	)	251		5,929
Preferred stock dividend requirements	(56	)	(56	)
Net income available to common stockholders	$   8,849		$(3,227	)	$251		$   5,873
Basic earnings per share	$     1.46						$     0.97
Diluted earnings per share	$     1.28						$     0.85
Basic weighted average shares outstanding	6,059						6,059
Diluted weighted average shares outstanding	6,958						6,958

See notes to unaudited pro forma condensed combined financial statements

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(1) Basis of Presentation

On April 30, 2001, Group 1 completed the acquisition of TriSense. The acquisition was accounted for using the purchase method of accounting. Under the purchase method of accounting the purchase price is allocated to assets acquired, including intangible assets, and liabilities assumed based on their respective fair values on the acquisition date. Purchase price in excess of net tangible and intangible assets has been recorded as goodwill.

The total purchase price of $7,645,000, consisting of $1,545,000 paid in cash, a promissory note with the present value of $5,997,000 and acquisition costs of $103,000 was preliminarily allocated as follows (in thousands):

Tangible assets	$    248
Liabilities assumed	(143	)
Assembled workforce	255
Technology	1,188
Goodwill	6,097
	$ 7,645

Tangible assets will be depreciated over their estimated useful lives of two to five years. Assembled workforce will be amortized over one year. Technology will be amortized by the greater of (a) the ratio that current gross revenues for one product bear to the total of current and anticipated future gross revenues for one product or (b) the straight-line method over the estimated economic life of five years. Goodwill will be amortized over five years. Group 1 anticipates its final allocation of the purchase price will be completed during the first quarter of fiscal year 2002.

(2) Pro Forma Adjustments

1a. Represents the historical consolidated balance sheet and the related consolidated statement of operations of the Company as of and for the year ended March 31, 2001.

1b. Represents the historical unaudited balance sheet of TriSense as of March 31, 2001 and the historical unaudited statement of operations of TriSense for the twelve month period ended March 31, 2001.

The pro forma adjustments to the unaudited pro forma condensed combined financial statements for the year ended March 31, 2001 are as follows:

(a) Adjustment of $1.5 million for cash payment made at the acquisition date.

(b) Adjustment of $0.1 million to eliminate assets excluded per the purchase agreement.

(c) Adjustment of $1.2 million to record estimated value of technology acquired.

(d) Adjustment of $6.4 million to record estimated value of goodwill and acquired workforce.

(e) Adjustment for liabilities eliminated per the purchase agreement.

(f) Adjustment to record $2.9 million short-term portion of note payable per the purchase agreement.

(g) Adjustment to record $3.1 million long-term portion of note payable per the purchase agreement.

(h) Adjustment to eliminate TriSense equity accounts in purchase accounting and adjustment of $0.1 million to additional paid in capital to record the fair value of warrants to purchase Group 1’s common stock issued as part of the acquisition costs.

(i) Adjustment of $0.2 million for amortization of technology acquired.

(j) Adjustment of $1.2 million for amortization of goodwill over five years and $0.3 million for amortization of acquired workforce over one year, net of reduction in depreciation expense for assets not acquired.

(k) Adjustment of $0.1 million for lost interest income as a result of cash paid for purchase.

(l) Adjustment of $0.4 million for accrued interest expense, including amortization of discount, on promissory note issued for acquisition.

(m) Adjustment of $2.4 million to reduce income tax provision at an effective tax rate of 44.6%.

Item 8. Not Applicable.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Group 1 Software, Inc.



By
          ——————————
Name:   Mark D. Funston
Title:   Chief Financial Officer

Date: July 13, 2001

EXHIBIT INDEX

Exhibit No.	Description
(10.16)	Agreement for purchase and sale of assets by and between TriSense Software, Ltd. and Group 1 Software, Inc. dated April 30, 2001.

(23.1)* Consent of Lurie Besikof Lapidus & Company, LLP.

(99.1)* TriSense Software, Ltd. Financial Statements for the years ended December 31, 2000 and 1999 and Independent Auditor’s Report.

(99.2)* TriSense Software, Ltd. Unaudited Balance Sheet as of March 31, 2001 and Statements of Operations and of Cash Flows for the three months ended March 31, 2001 and 2000.

*Filed herwith

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-59417 and 333-59419) of Group 1 Software, Inc. of our report dated February 14, 2001 relating to the financial statements of TriSense Software, Ltd., which appears in the Current Report on Form 8-K/A of Group 1 Software, Inc. dated July 13, 2001 as Exhibit No. 23.1.

     /s/ Lurie Besikof Lapidus & Company, LLP

July 13, 2001

EX-99.1

Exhibit 99.1

INDEPENDENT AUDITOR’S REPORT

Board of Directors
TriSense Software, Ltd.
Burnsville, Minnesota

We have audited the accompanying balance sheets of Trisense Software, Ltd. as of December 31, 2000 and 1999, and the related statements of operations, stockholder’s equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Trisense Software, Ltd. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Lurie Besikof Lapidus & Company, LLP

February 14, 2001

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TRISENSE SOFTWARE, LTD.

BALANCE SHEETS

	December 31,
	2000	1999
ASSETS
CURRENT ASSETS
Cash	$    2,983	$        6,786
Receivables	91,760	7,500
Prepaid expenses	23,222	13,677
TOTAL CURRENT ASSETS	117,965	27,963
PROPERTY AND EQUIPMENT	363,519	455,876
OTHER ASSETS	18,475	24,285
	$499,959	$    508,124
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$    7,480	$    122,601
Accrued expenses	27,528	39,654
Deposits	53,750	35,000
TOTAL CURRENT LIABILITIES	88,758	197,255
DUE TO STOCKHOLDER	—	8,758,738
STOCKHOLDER’S EQUITY (DEFICIT)	411,201	(8,447,869	)
	$499,959	$    508,124

See notes to financial statements

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TRISENSE SOFTWARE, LTD.

STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2000		1999
REVENUE	$    172,221		$      75,750
OPERATING EXPENSES
Research and development	2,138,258		2,184,993
Sales and marketing	374,348		333,764
General and administrative	1,239,100		745,202
	3,751,706		3,263,959
OPERATING LOSS	(3,579,485	)	(3,188,209	)
OTHER
Miscellaneous income (expense)	7,444		(300	)
Interest expense	—		(384,977	)
	7,444		(385,277	)
NET LOSS	$(3,572,041	)	$(3,573,486	)

See notes to financial statements

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TRISENSE SOFTWARE, LTD.

STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT)

	Common Stock *		Additional			Stockholder’s
	Shares Issued	Amount	Paid-In Capital	Accumulated Deficit		Equity (Deficit)
BALANCE -
DECEMBER 31, 1998	6,000,000	$60,000	$              —	$(4,934,383	)	$(4,874,383	)
Net loss	—	—	—	(3,573,486	)	(3,573,486	)
BALANCE -
DECEMBER 31, 1999	6,000,000	60,000	—	(8,507,869	)	(8,447,869	)
Capital contributed	—	—	12,431,111	—		12,431,111
Net loss	—	—	—	(3,572,041	)	(3,572,041	)
BALANCE -
DECEMBER 31, 2000	6,000,000	$60,000	$12,431,111	$(12,079,910	)	$        11,201

* Authorized 10,000,000 shares, $.01 par value

See notes to financial statements

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TRISENSE SOFTWARE, LTD.

STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2000		1999
OPERATING ACTIVITIES
Net loss	$(3,572,041	)	$(3,573,486	)
Adjustments to reconcile net loss to net cash
used by operating activities:	142,375
Depreciation	162,662		5,810
Amortization	5,810
Accrued interest on stockholder advances	—		384,977
Changes in operating assets and liabilities:
Receivables	(84,260	)	20,870
Prepaid expenses	(9,545	)	2,122
Accounts payable	(115,121	)	60,317
Accrued expenses	(12,126	)	26,552
Deferred revenue	18,750		(12,500	)
Net cash used by operating activities	(3,605,871	)	(2,942,963	)
INVESTING ACTIVITY
Purchases of property and equipment	(70,305	)	(133,189	)
FINANCING ACTIVITIES
Capital contributed	3,672,373		—
Stockholder advances	—		3,067,772
	3,672,373		3,067,772
NET DECREASE IN CASH	(3,803	)	(8,380	)
CASH
Beginning of year	6,786		15,166
End of year	$        2,983		$        6,786
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY
Stockholder advances and accrued interest contributed
to additional paid-in capital	$ 8,758,738		$             —

See notes to financial statements

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TRISENSE SOFTWARE, LTD.

NOTES TO FINANCIAL STATEMENTS

1. The Company and Summary of Significant Accounting Policies -

The Company

TriSense Software, Ltd. is a software development company providing electronic bill presentment and payment services for use over the internet. Prior to 2000, the Company had been in the development stage.

Use of Estimates

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures in these financial statements and accompanying notes. Actual results could differ from these estimates.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated useful lives of the assets, primarily 3 to 15 years.

Other Assets

Patents and trademarks are amortized on the straight-line method over 15 years.

Advertising Costs

Advertising costs are expensed as incurred and were approximately $93,300 and $120,700 in 2000 and 1999, respectively.

401(k) Retirement Plan

The Company has a 401(k) retirement plan for qualified employees to which it has not made any contributions.

Income Taxes

No income tax provision is included in these financial statements as the sole stockholder elected to be taxed as an S corporation under the provisions of the Internal Revenue Code and applicable state regulations.

Reclassifications

Certain reclassifications were made to the 1999 financial statements to make them comparable with 2000. The reclassifications had no effect on net loss, stockholder’s deficit or net cash flows.

- 7 -

TRISENSE SOFTWARE, LTD.

NOTES TO FINANCIAL STATEMENTS

2. Property and Equipment -

Property and equipment are as follows:

	December 31,
	2000	1999
Computer equipment	$299,737	$250,843
Office equipment	217,319	201,383
Purchased software	73,984	69,224
Vehicles	91,590	91,590
Leasehold improvements	184,734	184,019
	867,364	797,059
Less accumulated depreciation	503,845	341,183
	$363,519	$455,876

3. Other Assets -

Other assets are as follows:

	December 31,
	2000	1999
Deposits	$  7,481	$  7,481
Patents and trademarks, net	10,735	16,102
Miscellaneous	259	702
	$18,475	$24,285

4. Due to Stockholder -

Due to stockholder included loans of $8,049,229 and accrued interest of $709,509 compounded monthly at the applicable federal rate of 5.74% as of and for the year ended December 31, 1999. On January 1, 2000, the balance of $8,758,738 was contributed to additional paid-in capital.

The stockholder is committed to fund the Company’s operations at least through December 31, 2001.

5. Operating Leases -

The Company leases facilities with monthly rents increasing from $7,880 to $8,880 over the lease term through July 2005. The Company is also required to pay its proportionate share of operating expenses, property taxes, and repairs. Rent and related expenses under all operating leases was $124,716 and $89,522 for 2000 and 1999, respectively.

(continued)

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TRISENSE SOFTWARE, LTD.

NOTES TO FINANCIAL STATEMENTS

5. Operating Leases - (continued)

Future minimum rents are approximately as follows:

Year	Amount
2001	$    97,300
2002	99,100
2003	101,500
2004	104,700
2005	62,100
	$  464,700

EX-99.2

Exhibit 99.2

TriSense Software, Ltd.
UNAUDITED INTERIM FINANCIAL STATEMENTS

The unaudited interim financial statements of TriSense Software, Ltd. as of March 31, 2001 and for the three month periods ended March 31, 2001 and 2000 do not provide all disclosures included in the annual financial statements. These interim financial statements should be read in conjunction with the annual audited financial statements and the footnotes thereto. Results for the interim periods are not necessarily indicative of the results for the fiscal year ending March 31, 2002. In the opinion of management, the accompanying interim financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial position and results of operations of TriSense Software, Ltd.

TriSense Software, Ltd. Unaudited Balance Sheet

	March 31, 2001
ASSETS
CURRENT ASSETS
Cash	$       497
Receivables	39,745
Prepaid expenses	22,949
TOTAL CURRENT ASSETS	63,191
PROPERTY AND EQUIPMENT	326,172
OTHER ASSETS	16,861
	$406,224
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES
Accounts payable	$102,253
Accrued expenses	67,508
Deferred revenue	44,200
TOTAL CURRENT LIABILITIES	213,961
DUE TO STOCKHOLDER	—
STOCKHOLDER’S EQUITY	192,263
	$406,224

TriSense Software, Ltd. Unaudited Statements of Operations

	Three Months Ended March 31,
	2001		2000
Revenue	$   56,864		$   43,055
Operating expenses:
Cost of revenue	42,630		48,597
Research and development	426,298		485,968
Sales and marketing	31,673		93,587
General and administrative	106,035		309,775
Total operating expenses	606,636		937,927
Loss from operations	(549,772	)	(894,872	)
Non-operating income	—		1,861
Income before provision for income taxes	(549,772	)	(893,011	)
Provision for income taxes	—		—
Net income	$(549,772	)	$(893,011	)

TriSense Software, Ltd. Unaudited Statements of Cash Flow

	Three Months Ended March 31,
	2001		2000
Cash flows from operating activities:
Net loss	$(549,772	)	$(893,011	)
Adjustments to reconcile net loss from operations to net
cash used in operating activities:
Amortization expense	1,614		1,453
Depreciation expense	43,918		40,666
Changes in assets and liabilities:
Receivables	52,015		(21,065	)
Prepaid expenses and other assets	273		(2,386	)
Deferred revenue	(9,550	)	4,688
Accounts payable	94,772		(28,780	)
Accrued expenses	39,982		(3,033	)
Net cash used in operating activities	(326,748	)	(901,468	)
Cash flows from investing activities:
Purchases of property and equipment	(6,571	)	(17,576	)
Net cash used in investing activities	(6,571	)	(17,576	)
Cash flows from financing activities:
Capital contributed	330,833		918,093
Net cash provided by financing activities	330,833		918,093
Net decrease in cash and cash equivalents	$    (2,486	)	$       (951	)
Cash and cash equivalents at beginning of period	$     2,983		$     6,786
Cash and cash equivalents at end of period	$        497		$     5,835