10QSB 1 0001.txt 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 June 30, 2000 [ ] 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 5,293,952 as of June 30, 2000. 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, 2000 1999 REVENUES: Systems $ $ Maintenance and other services 69 177 Total revenues 69 177 COST OF REVENUES Systems Support and other 54 39 Total cost of revenues 54 39 GROSS PROFIT 15 138 OPERATING EXPENSES Selling, general and administrative 15 93 Total operating expenses 15 93 Operating income (loss) - 45 Interest income, net 10 20 Other income 3 5 NET INCOME (LOSS) BEFORE TAXES 13 70 Income tax (benefit) expense - - NET INCOME (LOSS) $ 13 $ 70 Net (loss) per share - Basic and Diluted $ .00 $ .01 Weighted Average Shares Outstanding 5,294 5,029 PREMIS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, 2000 March 31, 2000 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $ 1,043 $ 1,055 Accounts receivable, net 18 8 Prepaid expenses and other current assets 40 40 Total current assets 1,101 1,103 Property and equipment, net - - TOTAL ASSETS $ 1,101 $ 1,103 LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 3 $ 2 Accrued Liabilities 10 26 Total current liabilities 13 28 Shareholders' equity: Common stock 53 53 Additional paid in capital 3,876 3,876 Accumulated deficit (2,841) (2,854) Total shareholders' equity 1,088 1,075 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,101 $ 1,103 PREMIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended June 30, 2000 1999 OPERATING ACTIVITIES Net income (loss) $ 13 $ 70 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization - - Changes in assets and liabilities: Current assets (9) 116 Current liabilities (16) (286) Net cash provided by operating activities (12) (100) INVESTING ACTIVITIES Proceeds from the sale of property and equipment - 14 Net cash provided by (used in) investing activities - 14 FINANCING ACTIVITIES Repurchase of common stock - (25) Net cash (used in) financing activities - (25) Net increase in cash and cash equivalents (12) (111) Cash and cash equivalents, beginning of fiscal year 1,055 2,782 Cash and cash equivalents, end of period $ 1,043 $ 2,671 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, 2000, 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, 2000. 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. As of April 1, 2000 the accompanying condensed financials represent solely the operations of the US Company as it had disposed of its Canadian subsidiary in November, 1999. 3. NET INCOME (LOSS) PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share", which was adopted on December 31, 1997. All earnings (loss) per share amounts for all periods have been presented to conform to the Statement 128 requirements. Basic earnings (loss) per share is computed on the basis of the weighted average number of common shares outstanding. Diluted earnings (loss) per share does not include the effect of outstanding stock options and warrants in a loss period as they are anti-dilutive. 4. COMPREHENSIVE INCOME (LOSS) The Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130"), effective April 1, 1999. 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 June 30, 2000 and 1999 (in 000's) are as follows: Three Months Ended June 30, 2000 1999 Comprehensive income (loss): Net income (loss) $ 13 $ 70 Other comprehensive income (loss): Foreign currency translation adjustments - 141 Comprehensive income (loss) $ 13 $ 211 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 2000 and it has not had a material impact on revenue recognition in fiscal 2000, to date. ITEM 2. MANAGEMENT'S 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. 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 to ACA Retail Canada Incorporated (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 from consummation of the Transaction, 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. In November of 1999 the Company completed the sale of PSC to ACA Retail Canada Incorporated. In December of 1999 the Company made a partial liquidating distribution to its shareholders of $1.126 per share. The management of the Company is proceeding to satisfy the obligations of the Company and review opportunities for a business combination. The results of the quarter ended June 30, 2000 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 which are meeting the obligations of extended software maintenance contracts and reviewing opportunities for a business combination. 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. No systems revenues were recorded for the period ended June 30, 2000. 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 first quarter of fiscal 2000 were $69,000 compared to $177,000 for the same period in fiscal 2000. For fiscal 2001 these revenues consisted of maintenance revenue and custom development related to maintenance contracts. In fiscal 2001 the Company derived its revenues from one customer software support contract. The Company does not expect these maintenance and support revenues to continue beyond the second fiscal quarter of 2001. Gross Profit. Gross profit for the first quarter of fiscal 2001 was $15,000 compared to $138,000 for the same period in fiscal 2000. For the remainder of the fiscal year, gross profit is expected to vary significantly as the liquidation proceeds on course. Selling, General And Administrative. Selling, general and administrative expenses were $15,000 compared to $93,000 for the same period in fiscal 2000. Research And Development. The Company had no research and development expense for the first quarter period ended June 30, 2000 or for the period ending June 30, 1999. The Company does not expect to have research and development expense during the remainder of the fiscal year 2001. Interest And Other Income. Interest income for both periods reflects interest earned on investments. Interest income for the first quarter period in fiscal 2001was $13,000 compared to $25,000 for the same period in fiscal 2000. Income Tax Expense. For the three month period ending June 30, 2001, no income tax expense was recorded, since the Company believes its net operating loss carryforward are adequate to offset current period earnings. Liquidity and Capital Resources The Company's cash and cash equivalents decreased by $12,000 from March 31, 2000 to June 30, 2000. The decrease is primarily the result of the payment of accrued expenses recorded at fiscal 2000 year end. As of June 30, 2000, the Company had working capital of $1,088,000 compared to working capital of $1,075,000 at March 31, 2000. During the period from approximately November 17, 1999 to November 17, 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 intends to liquidate and distribute the remaining net proceeds to the shareholders. There were no capital expenditures for property and equipment in the first fiscal quarter of 2001. The Company occupies a small office in a building in Plymouth, Minnesota pursuant to a month to month lease with a monthly gross rent of $150. The Company has no other lease obligations. PART 2 - OTHER INFORMATION: ITEM 1. LEGAL PROCEEDINGS In September 1997, 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 August 7, 2000. 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 None. 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: August 8, 2000 PREMIS CORPORATION (Registrant) /S/ F. T. Biermeier ___________________ F. T. Biermeier Chairman and Chief Executive Officer Chief Financial Officer