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
