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
