-----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, TQKlqf+RWlFPpJgFdWSz/iEvp3NlRp+14wvEQ3P8hekEpupjK/blLQIewRY7jLSI 72wITdW7WBiFDHrD3w2SFg== 0000724910-99-000015.txt : 19991115 0000724910-99-000015.hdr.sgml : 19991115 ACCESSION NUMBER: 0000724910-99-000015 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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: SEC FILE NUMBER: 000-12196 FILM NUMBER: 99747545 BUSINESS ADDRESS: STREET 1: 13220 COUNTY ROAD 6 CITY: PLYMOUTH STATE: MN ZIP: 55441 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 ACTi OF 1934 For the quarterly period ended September 30, 1999 [ ] 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 41-1424202 (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 5,028,952 as of September 30, 1999. 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 Six Months Ended September 30, September 30, 1999 1998 1999 1998 REVENUES: Systems $ 3,199 $ 3,461 $ 3,199 $ 3,839 Maintenance and other services 91 303 269 489 _______ _______ _______ _______ Total revenues 3,290 3,764 3,468 4,328 COST OF REVENUES: Systems 35 102 Support and other 39 84 78 262 _______ _______ _______ _______ Total cost of revenues 39 119 78 364 GROSS PROFIT 3,251 3,645 3,390 3,964 OPERATING EXPENSES: Selling, general and administrative 164 531 258 1,085 Research and development 432 1,112 _______ _______ _______ _______ Total operating expenses 164 963 258 2,197 Operating income 3,087 2,682 3,132 1,767 Interest income, net 35 7 54 9 Other (expense) income 220 (83) 226 (26) _______ _______ _______ _______ BEFORE TAXES 3,342 2,606 3,412 1,750 Income tax (benefit) expense 313 - 313 (4) _______ _______ _______ _______ NET INCOME $ 3,029 $ 2,606 $ 3,099 $ 1,754 Basic earnings (loss) per $ .60 $ .55 $ .62 $ .37 Diluted earnings (loss) per share $ .57 $ .52 $ .59 $ .36 Shares used to compute: Basic earnings (loss) per share 5,028 4,734 5,028 4,732 Diluted earnings (loss) per share 5,283 5,027 5,283 5,027 PREMIS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 1999 March 31, 1999 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $ 5,769 $ 2,781 Accounts receivable, net 42 116 Current Portion of Note Receivable 100 Prepaid expenses and other current assets 64 41 Refundable income taxes 249 264 ________ ________ Total current assets 6,124 3,302 Property and equipment, net 29 45 ________ ________ TOTAL ASSETS $ 6,153 $ 3,347 LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 172 $ 479 Accrued Taxes Payable 313 Unearned revenue 226 456 ________ ________ Total current liabilities 711 935 Shareholders' equity: Common stock 50 50 Additional paid in capital 9,635 9,659 Stock Subscription Receivable (51) (51) Accumulated deficit (4,450) (7,549) Cumulative translation adjustment 258 302 ________ ________ Total shareholders' equity 5,442 2,412 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,153 $ 3,347 ________ ________ PREMIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended September 30, 1999 1998 OPERATING ACTIVITIES Net income (loss) $ 3,411 $ 1,754 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 159 Gain on sale of fixed assets (15) (5) Proceeds from note receivable 47 Changes in assets and liabilities: Current assets (165) 289 Current liabilities (223) (54) _______ _______ Net cash provided by operating activities 3,006 2,190 FINANCING ACTIVITIES Proceeds from the exercise of common stock options 4 Repurchase of common stock (25) Capital lease obligations (30) Repayment of debt (55) _______ _______ Net cash (used in) financing activities (25) (81) Effect of exchange rate changes on cash 5 111 _______ _______ Net increase in cash and cash equivalents 2,986 1,226 Cash and cash equivalents, beginning of fiscal year 2,783 1,360 _______ _______ Cash and cash equivalents, end of period $ 5,769 $ 3,586 _______ _______ PREMIS CORPORATION NOTES TO CONDENSED CONSOLIDATED 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, 1999, 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 fiscal year ended March 31, 1999. 2. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation. 3. NET INCOME (LOSS) PER SHARE All earnings (loss) per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. Shares used in the net income (loss) per share calculation are as follows: Three Months Ended Six Months Ended September 30, September 30, 1999 1998 1999 1998 Shares- Basic earnings (loss) per share 5,029 4,734 5,029 4,732 Dilutive common stock equivalents 255 293 255 146 _____ _____ _____ _____ Shares- Dilutive earnings (loss) per share 5,283 5,027 5,283 4,878 Basic earnings (loss) per share is computed on the basis of the weighted average number of common shares outstanding. 4. COMPREHENSIVE INCOME (LOSS) The Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130") effective April 1, 1998. SFAS No. 130 requires that items defined as other comprehensive income, such as foreign currency translation adjustments, be separately classified in the financial statements and that the accumulated balance of other comprehensive income be reported separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. The components of comprehensive income for the three and six months ended September 30, 1999 and 1998 are as follows: Three Months Ended Six Months Ended September 30, September 30, 1999 1998 1999 1998 Comprehensive income (loss): Net income (loss) $ 3,029 $ 2,606 $ 3,099 $ 1,754 Other comprehensive income (loss): Foreign currency translation adjustments 97 88 (44) 89 _______ _______ _______ _______ Comprehensive income (loss) $ 3,126 $ 2,694 $ 3,055 $ 1,843 5. SOFTWARE REVENUE RECOGNITION In November 1997, the Financial Accounting Standards Board issued Statement of Position ("SOP") 97-2 "Software Revenue Recognition" to replace SOP-91-1. The Company adopted SOP 97-2 in the first quarter of fiscal 1999 and it did not materially impact revenue recognition for this time period. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITI ON 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: The likelihood and volatility regarding the expected date of arrival of certain cash payments under license and sale agreements. The risk of delays in receiving approvals for certain tax maters from foreign governments. Readers are cautioned not to place undue reliance on the forward-looking statements contained in this Report, since such statements necessarily reflect the knowledge and belief of the Company which speak as to matters only as of the date hereof. The Company does not undertake, and shall have 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. General On July 15, 1999 the shareholders of the Company approved the following three proposals placed before the Annual Meeting: 1. Sale of the Company's ownership of its subsidiary, PREMIS Systems Canada Incorporated ("PSC") and PSC's OpenEnterprise software (the "Transaction"): 2. Adoption of a Plan of Complete Liquidation and Dissolution of the Company (the "Plan of Liquidation"): 3. Holdback of up to $1 million of the proceeds of the Transaction for a period of up to 12 months to identify and secure a business combination which may provide shareholders with additional value, and thereby delaying or terminating implementation of the Plan of Liquidation. The management of the Company is proceeding to satisfy the obligations of the Company, sell its remaining assets and review opportunities for a business combination. As of the date of this report on Form 10QSB it is anticipated that the sale of PSC to ACA Facilitair will be completed by late November, 1999. The results of the quarter ended September 30, 1999 should not be viewed as the results of a company seeking to operate in the normal course of business. The staff has been reduced to a small group of people whom are meeting the obligations of extended software maintenance contracts, preparing for the sale of PCS, and liquidating the remaining unused assets of the company. The comparisons of current and prior year periods set forth below should be evaluated in light of the Company's objective, which is winding down and ceasing operations. Results of Operations Revenue. The Company's revenues are divided into two categories: systems revenues and maintenance and other services revenues. $3,199,000 in systems revenues were recorded for the period ended September 30, 1999. Under a software license agreement with NCR Corporation, a one-time software license fee would be paid to the Company by NCR in two installments of $3,250,000. The first license fee installment was received during the second quarter of fiscal 1999. The second and final installment was received during this second quarter of fiscal 2000 and recorded as systems revenues. Maintenance fees and other services revenues are composed principally of system maintenance contracts. Revenues derived from system maintenance contracts are deferred and recognized ratably over the contract period, which is typically twelve months. Total revenues for the second quarter of fiscal 2000, were $3,290,000 compared to $3,764,000 for the same period in fiscal 1998. The Company expects continued low level of maintenance and support revenues throughout the remainder of fiscal 2000. For the six months ended September 30, 1999 the total revenues were $3,468,000 compared to $4,328,000 for the same period in the prior year. Gross Profit. Gross profit for the second quarter of fiscal 2000 was $3,251,000 compared to $3,645,000 for the same period in fiscal 1999. For the remainder of the fiscal year, Gross profit is expected to vary significantly as the liquidation proceeds on course. For the six months ended September 30, 1999 the gross profit was $3,390,000 compared to $3,964,000 for the same period in the prior year. Selling, General And Administrative. Selling, general and administrative expenses for the second quarter of fiscal 2000 were $164,000 compared to $531,000 for the same period in fiscal 1999. A large portion of the fiscal 2000 SG&A are one-time expenses related to the liquidation. For the six months ended September 30, 1999 the selling, general and administrative expense was $258,000 compared to $1,085,000 for the same period in the prior year. Research And Development. The Company had no research and development expense for the second quarter period ended September 30, 1999 compared to $432,000 for the period ending September 30, 1998. The Company does not expect to have research and development expense during the remainder of the fiscal year 2000. For the six months ended September 30, 1999 there were no research and development expenditures compared to $1,112,000 for the same period in the prior year. Interest And Other Income. Interest income for the period reflects interest earned on investments. Interest income for the first quarter period was $35,000 compared to $7,000 for the same period in fiscal 1999. Other income for the quarter was $220,000 as compared to an expense of $83,000 for the prior year. For the six months ended September 30, 1999 interest income was $54,000 compared to $9,000 for the same period in the prior year while other income was $226,000 compared to an expense of $26,000 in the same period in the prior year. Income Tax Expense. For the three month period ending September 30, 1999, $313,000 was recorded for income tax expense was recorded, compared to none for the same period in fiscal 1999. The Company has recorded a deferred tax asset and related income tax benefit associated with its accumulated net operating losses in the amount of $249,000, in the 1999 Fiscal year. For the six months ended September 30, 1999, $313,000 was recorded for income tax expense compared to none for the same period in the prior year. Liquidity and Capital Resources The Company's cash and cash equivalents decreased by $2,985,000 for the six months ending September 30, 1999. The increase is primarily the result of the after tax benefit of the NCR payment received in the quarter ending September 30,1999. As of September 30, 1999, the Company had working capital of $5,442,000 compared to working capital of $2,367,000 at March 31, 1999. On July 15, 1999, the shareholders of the Company voted to sell its Canadian subsidiary to ACA Facilitair, liquidate the Company and distribute the cash assets to the shareholders. The shareholders also approved a holdback from the distribution of $1,000,000 to seek a merger partner for the Company, if the second NCR license payment is received. Upon closing of the sale of PSC, the net cash of the Company, after providing for its obligations, less $1,000,000 to be held back, will be distributed to its shareholders. During the period from approximately July 15, 1999 to July 15, 2000 the Company will be seeking a business combination with another entity. In the absence of such a combination within this general time frame, the Company will liquidate and distribute the remaining net proceeds to the shareholders. There were no capital expenditures for property and equipment in the first three months of fiscal 2000. On September 15, 1999 the Company entered into a lease termination agreement with the landlord of the building housing its headquarters in Plymouth, Minnesota. The agreement called for the payment of one months minimum rent and $4,000 to secure a release from its obligations under a 36 month lease which became effective January 1, 1999, for approximately 7,000 square feet at a minimum monthly base rent of $4,333. In addition the Company paid a realtor fee of $18,000 to find a new occupant for space. Effective July 1, 1999, the Company's Canadian subsidiary received a release from its obligations under a lease that became effective January 1, 1999, for a approximately 8,300 square feet and a minimum monthly rental of CDN$7,463. As of October 1, 1999, the Company has no lease obligations in either Canada or the US other than month to month leases for storage of its business records. PART 2 - OTHER INFORMATION: ITEM 1. LEGAL PROCEEDINGS In September 1998, the Company commenced legal proceedings against Robert E. Ferguson, a former owner of REF Retail Systems Corp. ("REF") which the Company acquired on October 1, 1996, seeking damages in an unspecified amount related to alleged breaches of the agreement for the purchase of REF, and related matters. The legal proceeding against Mr. Ferguson was filed in the Ontario Court of Justice, General Division on September 22, 1997 (Case No. 97-CV-132581). The Ferguson suit has not been settled as of November 11, 1999. The Company expects to provide for its continuing litigation under the plan of liquidation. 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 At the annual meeting of the shareholders of the Company on July 15, 1999, the following proposals were voted upon by the shareholders: 1. Sale of the Company's ownership of its subsidiary, PREMIS Systems Canada Incorporated ("PSC") and PSC's OpenEnterprise software (the "Transaction"): For: 3,284,147 Against: 19,900 Abstain: 4,600 2. Adoption of a Plan of Complete Liquidation and Dissolution of the Company (the "Plan of Liquidation"): For: 3,053,305 Against: 50,142 Abstain: 205,200 3. Holdback of up to $1 million of the proceeds of the Transaction for a period of up to 12 months to identify and secure a business combination which may provide shareholders with additional value, and thereby delaying or terminating implementation of the Plan of Liquidation. For: 3,045,253 Against: 243,994 Abstain: 19,400 4. Election of five (5) Directors: For Against F. T. Biermeier 4,635,862 63,350 Mary Ann Calhoun 4,635,862 63,350 Gerald F. Schmidt 4,635,862 63,350 Albert D. Hanser 4,635,862 63,350 Terrence W. Glarner 4,635,862 63,350 5. Ratification of appointment of PriceWaterhouseCoopers, LLP as the independent auditors of the Company for the year ending March 31, 2000: For: 4,486,441 Against: 21,950 Abstain: 9,977 All proposals were approved by the shareholders, by a majority of the outstanding shares of record on June 1, 1999. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (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 duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 12, 1999 PREMIS CORPORATION (Registrant) /S/ F. T. Biermeier F. T. Biermeier Chairman and Chief Executive Officer and Chief Financial Officer EX-27 2 ART. 5 FDS FOR QTR END 10-QSB
5 1,000 3-MOS MAR-31-2000 SEP-30-1999 5769 0 42 0 0 6124 29 0 6153 711 0 50 0 0 5392 6153 3290 3290 39 39 164 0 (35) 3342 313 3029 0 0 0 3029 (.60) (.57)
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