-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iv8jltDYhF0IA6bUvP+Miekp9epmDr8808h3dnHpLNjpA5PCRJ7VjH8Fl8bWBmwf iJhx+Rf63wDh3e9ReoCOSQ== 0000724910-97-000014.txt : 20030213 0000724910-97-000014.hdr.sgml : 20030213 19970922114623 ACCESSION NUMBER: 0000724910-97-000014 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970815 DATE AS OF CHANGE: 19971007 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIS CORP CENTRAL INDEX KEY: 0000724910 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 411424202 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-12196 FILM NUMBER: 97683470 BUSINESS ADDRESS: STREET 1: 15301 HIGHWAY 55 WEST CITY: PLYMOUTH STATE: MN ZIP: 55447 BUSINESS PHONE: 6125501999 MAIL ADDRESS: STREET 1: 15301 HIGHWAY 55 WEST CITY: PLYMOUTH STATE: MN ZIP: 55447 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT Commission file number 0-12196 PREMIS CORPORATION (Exact name of small business issuer as specified in its charter) Minnesota 41-14240202 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 13220 County Road 6, Plymouth, Minnesota 55441 (Address of principal executive office) (612) 550-1999 (Issuer's telephone number) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] The number of shares outstanding of the Issuer's Common Stock, $.01 par value, was 4,711,677 as of July 31, 1997. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ] PART 1 - FINANCIAL INFORMATION: ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PREMIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended June 30, 1997 1996 REVENUES: Systems $ 1,583 $ 1,584 Maintenance and other services 493 330 Total revenues 2,076 1,914 COST OF REVENUES: Systems 1,067 826 Support and other 164 142 Total cost of revenues 1,231 968 GROSS PROFIT 845 946 OPERATING EXPENSES: Selling, general and administrative 727 402 Research and development 385 - Total operating expenses 1,112 402 Operating income (loss) (267) 544 Interest income, net 33 - Other income 25 - INCOME BEFORE TAXES (209) 544 Income tax expense 2 212 NET INCOME $ (211) $ 332 Net income (loss) per share $ (.04) $ .11 Shares used in per share calculation 4,716 2,980 PREMIS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, 1997 March 31, 1997 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $ 2,721 $ 2,434 Accounts receivable, net 1,802 2,137 Inventory 111 396 Prepaid expenses and other current assets 650 883 Deferred income taxes 134 134 Total current assets 5,418 5,984 Property and equipment, net 1,375 1,395 Note receivable 523 523 Software distribution rights, net 145 165 TOTAL ASSETS $ 7,461 $ 8,067 LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 827 $ 1,272 Unearned revenue 1,096 787 Bank line of credit 65 246 Current portion of notes payable 173 174 Current portion of capital lease obligation 42 56 Total current liabilities 2,203 2,535 Long-term liabilities: Capital lease obligation 855 855 Unearned income 187 187 Notes payable 152 152 Total long-term liabilities 1,194 1,194 Shareholders' equity: Common stock 47 47 Additional paid in capital 9,643 9,703 Retained earnings (accumulated deficit) (5,617) (5,406) Foreign currency translation adjustment (9) (6) Total shareholders' equity 4,064 4,338 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,461 $ 8,067 PREMIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended June 30, 1997 1996 OPERATING ACTIVITIES Net income $ (211) $ 332 Adjustments to reconcile net income to net cash (used) provided by operating activities: Depreciation and amortization 82 27 Changes in assets and liabilities: Current assets 824 (846) Current liabilities (136) (207) Net cash (used) provided by operating activities 559 (694) INVESTING ACTIVITIES Repurchase of common stock (61) - Purchase of property and equipment (41) (8) Net cash (used) by investing activities (102) (8) FINANCING ACTIVITIES Proceeds from the exercise of common stock options 1 127 Proceeds from note payable 47 - Proceeds from notes receivable 25 - Repayment of bank line of credit (181) - Capital lease obligations (13) - Payments on notes payable (49) (25) Net cash provided by financing activities (170) 102 Net increase (decrease) in cash and cash equivalents 287 (600) Cash and cash equivalents, beginning of fiscal year 2,434 968 Cash and cash equivalents, end of the quarter $ 2,721 $ 368 PREMIS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS UNAUDITED 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared by the Company without audit, with the exception of the balance sheet for March 31, 1997 which was derived from audited financial statements, and reflect all adjustments (consisting only of normal and recurring adjustments and accruals) which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. The statements have been prepared in accordance with the regulations of the Securities and Exchange Commission, but omit certain information and footnote disclosures necessary to present the statements in accordance with generally accepted accounting principles. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the Financial Statements and footnotes thereto included as an exhibit to the Company's Annual 10-KSB Report for the year ended March 31 , 1997 and the Registration Statement on Form S-2 (SEC File No. 333-10917) which was declared effective September 26, 1996 as previously filed with the Securities and Exchange Commission. 2. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 3. NET INCOME (LOSS) PER SHARE Net income (loss) per share for the three months ended June 30, 1997 and 1996 are computed using the weighted average number of common stock outstanding during the periods including common stock equivalents if dilutive. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128") in February 1997. The Company is required to implement SFAS No. 128 for interim and annual periods ending after December 15, 1997. SFAS No. 128 prescribes a presentation of basic net income per share, which is calculated utilizing only weighted average common shares outstanding, and a net income per share - assuming dilution. After the effective date, all prior period earnings per share data must be restated to conform with SFAS No. 128. There is no impact expected to net income (loss) per share for the three months periods ended June 30, 1997 and June 30, 1996. ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Statements The statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations, except for the historical information contained herein, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by that statute. Such statements are subject to certain risks and uncertainties, some of which are discussed below. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include: volatility in the demand and price for retail software systems; the risk of push-outs of delivery dates for system orders; the risk of order cancellations; the risk of delays in introducing new software products and the market's acceptance of such products and the successful integration of the personnel, products and operations of PREMIS Systems Canada Incorporated (formerly, REF Retail Systems Corp. Incorporated)with those of PREMIS Corporation. The reader is urged to consider the more comprehensive summary of such risks found in the Company's Registration Statement on Form S-2 (SEC File No. 333-10917) which was declared effective September 26, 1996. Readers are cautioned not to place undue reliance on those forward looking statements which speak as to matters only as of the date hereof. The Company has no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Results of Operations REVENUE. Revenues increased 8 percent to $2,076,000 over first quarter revenues of $1,914,000 in the prior fiscal year. The increase resulted from higher revenues generated from commercial and U.S. Postal Service "Store of the Future" and POS ONE system installations. In May 1997, the Company completed its final installation under the "Store of the Future" program while transitioning to POS ONE installations. Under the POS ONE contract the Company is a subcontractor to NCR Corp. The Company expects revenue generated per site under POS ONE installations to be approximately 70% less than comparable "Store of the Future" sites because the Company no longer provides the hardware. Additionally, under the POS ONE program the Company is developing point-of-sale software as a subcontractor to NCR Corp. which is expected to be installed during fiscal year 1998. POS ONE will be deployed in three phases. Phase One is expected to generate revenues of approximately $2,200,000 upon roll-out. Phases Two and Three have not been awarded by the USPS. The Company expects revenues derived from its systems sales, including OpenStore, to increase in fiscal 1998. GROSS PROFIT. Gross profit decreased to $845,000 in the first quarter of fiscal 1998 down from $946,000 in the same period of fiscal 1997. Gross profit as a percentage of revenue decreased from 49 percent in the first quarter of fiscal 1997 to 41 percent in the same period of fiscal 1998. The lower margin resulted from a higher mix of lower margin hardware compared to software. The Company expects gross profit to increase in fiscal 1998 with increased focus on software sales and the expected roll-out of POS ONE which is anticipated in fiscal 1998. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses increased by 81 percent to $727,000 in the first quarter of fiscal 1998 up from $402,000 in the same period of fiscal 1997. As a percentage of revenue, expenses were 35 percent for the three month period ended June 30, 1997 compared to 21 percent in the same period of the prior fiscal year. The Company expects sales and marketing expenses to increase during the remainder of fiscal 1998 with the expected general release of PREMIS OpenStore. The Company expects its first installation of PREMIS OpenStore during the second quarter of fiscal 1998 which represents a significant component of the PREMIS OpenEnterprise suite of products. With the general availability of the entire PREMIS OpenEnterprise solution, the Company expects to increase its sales and marketing expenditures during the remainder of fiscal 1998. The Company will continue to invest in infrastructure, sales and marketing activities of its products, development of market opportunities, and promotion of PREMIS Corporation's competitive position. INTEREST AND OTHER INCOME. The difference in interest and other income between periods reflects interest earned on investments, as well as interest earned on the 5 year 12% note receivable in the amount of $651,000 related to the licensing in fiscal 1997 of ADVANTAGE, the Company's Food Brokerage Technology. Such note is due and payable in monthly installments of $14,481. The interest income is off-set by interest expense on various debt instruments, including the Company's building capital lease obligation. Other income is generated from a sub-leasing arrangement for a portion of the Company's current U.S. office facility. The sub-leasing arrangement expired on June 30, 1997. INCOME TAX EXPENSE. The Company recognized income tax expense of $2,000 during the first quarter of fiscal 1998, compared to $212,000 in the same period of fiscal 1997. The Company believes it is more likely than not that deferred tax assets, which total $134,000 at June 30, 1997, will be realized. The computation of the deferred tax assets and valuation allowance are based in part on taxable income expected to be earned on existing contracts. The amount of the deferred tax assets considered realizable could be reduced in the near term if estimates of future taxable income are reduced. Liquidity and Capital Resources The Company's cash and cash equivalents increased by approximately $288,000 from March 31, 1997 to June 30, 1997. The increase resulted primarily from cash provided by operating activities of $559,000. The cash provided by operating activities was primarily off-set by the reduction in the bank line of credit of $181,000, payment obligations on notes payable and the repurchase of the Company's common stock. As of June 30, 1997, the Company had working capital of $3.2 million. The Company's Canadian subsidiary has a line of credit of $289,000 ($400,000 CAN) of which $65,000 was outstanding at June 30, 1997. The Company anticipates using available cash to fund growth in operations, research and development activities and investment in capital equipment. Capital expenditures for property and equipment in the first three months of fiscal 1998 were $41,000. These expenditures primarily consisted of sales promotional equipment, computers and related equipment. The Company expects to invest another $200,000 throughout the remainder of 1997 mainly for computer equipment and upgrades and facilities. On April 15, 1997, the Company authorized open market repurchase of its common stock at times and prices to be determined by management for a period of 90 days. The Company repurchased 28,600 shares at a cost of $61,000. As of August 1, 1997, the Company has no definitive plans to acquire additional shares. Effective July 15, 1997, Edward W. Anderson ceased to be employed by the Company as President and Chief Executive Officer of PREMIS Systems Canada Incorporated (formerly, REF Retail Systems Corp. Incorporated). Under certain circumstances, the Company may be required to pay Mr. Anderson an amount equal to his base salary that would have been payable for the balance of the initial 5 year term which commenced October 1, 1996. Mr. Anderson's annual base salary at the time of termination was CND$150,000. The Company's obligation to make such payments, if any, arise under its Employment Agreement with Mr. Anderson. No determination of the amount or timing of such payments, if any, has been made as of August 12, 1997. At its current level of operations, the Company believes that its existing cash and cash equivalents are sufficient to meet the Company's current working capital and capital expenditure requirements through at least the next 12 months. PART 2 - OTHER INFORMATION: ITEM 1. LEGAL PROCEEDINGS Not Applicable. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULT UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION Effective July 15, 1997, Edward W. Anderson ceased to be employed by the Company as President and Chief Executive Officer of PREMIS Systems Canada Incorporated (formerly, REF Retail Systems Corp. Incorporated). At the time of filing of this 10QSB, Mr. Anderson is also no longer a member of the Boards of Directors of the Company or its subsidiary. ITEM 6. EXHIBITS AND REPORTS ON FORM 8K (A) EXHIBITS None. (B) REPORTS ON FORM 8-K None. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: August 15, 1997 PREMIS CORPORATION (Registrant) /S/ F. T. Biermeier F. T. Biermeier Chairman and Chief Executive Officer /S/ Richard R. Peterson Richard R. Peterson Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-QSB
5 1,000 3-MOS MAR-31-1998 JUN-30-1997 2721 0 1802 247 111 5418 1375 82 7461 2203 0 47 0 0 4017 7461 2076 2076 1231 1231 1112 0 12319 (209) 2 (211) 0 0 0 (211) (.04) (.04)
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