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 September 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 September 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 Six Months Ended September 30, September 30, 2000 1999 2000 1999 REVENUES: Systems $ $ 3,199 $ $ 3,199 Maintenance and other services 48 91 116 269 ________ ________ ________ ________ Total revenues 48 3,290 116 3,468 COST OF REVENUES Systems Support and other 41 39 95 78 ________ ________ ________ ________ Total cost of revenues 41 39 95 78 GROSS PROFIT 7 3,251 21 3,390 OPERATING EXPENSES Selling, general and administrative 47 164 61 258 ________ ________ ________ ________ Total operating expenses 47 164 61 258 ________ ________ ________ ________ Operating income (loss) (40) 3,087 (40) 3,132 Interest income, net 12 35 22 54 Other income 3 220 6 226 ________ ________ ________ ________ NET INCOME (LOSS) BEFORE TAXES (25) 3,342 (12) 3,412 Income tax (benefit) expense 313 313 ________ ________ ________ ________ NET INCOME (LOSS) $ (25) $ 3,029 $ (12) $ 3,099 ________ ________ ________ ________ Net (loss) per share-Basic and Diluted $ .00 $ .60 $ .00 $ .62 Weighted Average Shares Outstanding 5,294 5,028 5,294 5,028 PREMIS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 2000 March 31, 2000 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $ 1,005 $ 1,055 Accounts receivable, net 31 8 Prepaid expenses and other current assets 40 40 _________ _________ Total current assets 1,076 1,103 Property and equipment, net - - _________ _________ TOTAL ASSETS $ 1,076 $ 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 (2,866) (2,854) _________ _________ Total shareholders' equity 1,063 1,075 _________ _________ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,076 $ 1,103 _________ _________ PREMIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended June 30, 2000 1999 OPERATING ACTIVITIES Net income (loss) $ (12) $ 3,411 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization Gain on sale of fixed assets (15) Changes in assets and liabilities: Current assets (22) (165) Current liabilities (16) (223) ________ ________ Net cash provided by operating activities (50) 3,006 ________ ________ FINANCING ACTIVITIES Repurchase of common stock - (25) ________ ________ Net cash (used in) financing activities - (25) Effect of exchange rates on cash 5 ________ ________ Net increase in cash and cash equivalents (50) 2,986 Cash and cash equivalents, beginning of fiscal year 1,055 2,783 ________ ________ Cash and cash equivalents, end of period $ 1,005 $ 5,769 ________ ________ 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 Co 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 financial statements represent solely the operations of the US Company as it had disposed of the 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 September 30, 2000 and 1999 (in 000's) are as follows: Three Months Ended September 30, 2000 1999 Comprehensive income (loss): Net income (loss) $ (25) $ 3,029 Other comprehensive income (loss): Foreign currency translation adjustments - 5 _________ _________ Comprehensive income (loss) $ (25) $ 3,034 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 2001, 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 Until April 1999, the Company developed, marketed and supported a line of enterprise-wide solutions to meet the information needs of multi-store specialty and general merchandise retailing chains. Pursuant to a resolution adopted by the shareholders at the annual meeting in July, 1999, the Company has been winding down operations and selling its remaining assets. In November 1999, we completed a series of transactions resulting in the sale of substantially all of our operating assets. By September, 2000, the Company's staff has been reduced to two people which were meeting the Company's obligations under extended software maintenance contracts and reviewing opportunities for a business combination. As of September 30, 2000 the Company has completed its obligations under all prior software maintenance agreements. On September 22, 2000 the Company announced it had entered into a merger agreement with Nonvolatile Electronics, Incorporated of Eden Prairie Minnesota ("NVE"). The merger agreement is subject to the approval of the shareholders of both companies. As of September 30, 2000, the Company has ceased all business operations, and is using its existing cash resources to complete the business combination with NVE. The results of the quarter ended September 30, 2000 should not be viewed as the results of a company seeking to operate in the normal course of business. The comparisons of current and prior year periods set forth below should be evaluated in light of the Company's objective, which were to wind down and cease operations prior to the anticipated merger. Results of Operations Revenue. The Company's revenues have historically been divided into two categories: systems revenues and maintenance and other services revenues. No systems revenues were recorded for the period ended September 30, 2000. Maintenance fees and other services revenues are composed principally of system maintenance contracts. Revenues derived from extended system maintenance contracts have been deferred in the past and recognized ratably over the contract periods, which typically were twelve months. Most recently contract periods have been reduced 30 days and revenue has been recognized in the month when the services were provided. Total revenues for the second quarter of fiscal 2001 were $48,000 compared to $3,290,000 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. During September 2000, the Company completed its obligations under the remaining software support contract and has ceased its operations. Total revenues for the six months ended September 30, 2000, were $116,000 compared to $3,468,000 for the same period in fiscal 2000. Gross Profit. Gross profit for the second quarter of fiscal 2001 was $7,000 compared to $3,251,000 for the same period in fiscal 2000. Gross profit for the six months ended September 30, 2000, was $21,000, compared to $3,390,000 for the same period in fiscal 2000. The Company is not expected to record any gross profit for the remainder of the fiscal year due to the cessation of operations. Selling, General And Administrative. Selling, general and administrative expenses for the second quarter of fiscal 2001 were $47,000 compared to $164,000 for the same period in fiscal 2000. Selling, general and administrative expenses for the six months ended September 30, 2000, were $61,000, compared to $258,000 for the same period in fiscal 2000. Research And Development. The Company had no research and development expense for the quarter or the six month period ended September 30, 2000 or for the same periods ending September 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 second quarter period in fiscal 2001was $12,000 compared to $35,000 for the same period in fiscal 2000. . Interest income for the six months ended September 30, 2000, was $22,000, compared to $54,000 for the same period in fiscal 2000. Income Tax Expense. For the three and six month period ending September 30, 2000, no income tax expense was recorded, since the Company believes net loss for the period and the operating loss carryforward are adequate to offset current period earnings. Liquidity and Capital Resources The Company's cash and cash equivalents decreased by $50,000 from March 31, 2000 to September 30, 2000. The decrease is primarily the result of the payment of accrued expenses recorded at fiscal 2000 year end and expenses related to the search for a merger partner. As of September 30, 2000, the Company had working capital of $1,063,000 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 September 30, 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 2. Agreement and Plan of Merger by and between PREMIS Corporation and Nonvolatile Electronics Incorporated, dated September 22, 2000 (Incorporated by reference to Appendix A to Definitive Proxy Statement on Schedule 14A filed on October 16, 2000) (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 10, 2000 PREMIS CORPORATION (Registrant) /S/ F. T. Biermeier F. T. Biermeier Chairman and Chief Executive Officer Chief Financial Officer