<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q/A
AMENDMENT NO. 1 TO
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 29, 1995
-------------------------------------
Commission file number 0-14063
--------------------------------
BARRISTER INFORMATION SYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
New York 16-1176561
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
465 Main Street, Buffalo, New York 14203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 845-5010
-----------------------
Not Applicable
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report).
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
----- -----
Class Outstanding at February 2, 1996
- ---------------------- -------------------------------
Common $.24 Par Value 6,197,972 Shares
B-1
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BARRISTER INFORMATION SYSTEMS CORPORATION
THIS AMENDMENT IS A RESTATEMENT OF FORM 10-Q PREVIOUSLY FILED FOR THIS QUARTER
IN ITS ENTIRETY BASED ON A CHANGE IN THE TREATMENT OF A $282,000 BENEFIT
RECEIVED BY THE COMPANY FROM DEBT FORGIVENESS BY BIS PARTNERS, L.P. FROM AN
EXTRAORDINARY GAIN TO A DIRECT CONTRIBUTION TO CAPITAL.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at
December 29, 1995 and March 31, 1995 ..............................3
Condensed Statements of Operations -
Three and Nine Months Ended
December 29, 1995 and December 30, 1994............................4
Statement of Shareholders' Equity -
Nine Months Ended December 29, 1995................................5
Condensed Statements of Cash Flows -
Nine Months Ended December 29, 1995
and December 30, 1994..............................................6
Notes to Condensed Financial Statements............................7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.............................................8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.........................11
</TABLE>
B-2
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PART I. FINANCIAL INFORMATION
BARRISTER INFORMATION SYSTEMS CORPORATION
Condensed Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
December 29 March 31
1995 1995
-------- --------
<S> <C>
ASSETS
Cash $ 22 $ 184
Accounts receivable 1,508 1,565
Inventories:
Service parts 3,421 3,823
Other 172 182
Prepaid expenses 49 43
------ ------
Total current assets 5,172 5,797
------ ------
Equipment and leasehold
improvements, at cost 4,088 4,184
Less accumulated depreciation 3,641 3,619
------ ------
Net equipment and leasehold
improvements 447 565
------ ------
Software production costs 326 132
Other assets 34 50
------ ------
$ 5,979 $ 6,544
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Note payable to bank $ 250 $ 250
Current installments of long term debt 601 96
Accounts payable 760 933
Accrued compensation and benefits 514 572
Customer advances and unearned revenue 1,032 956
Other liabilities 164 110
------ ------
Total current liabilities 3,321 2,917
------ ------
Long-term debt, excluding current installments
($1,510 in December and $2,357 in March
to a related party) 2,455 3,329
Shareholders' equity:
Preferred stock - -
Common stock ($.24 par value) 1,488 1,486
Additional paid-in capital 20,078 19,788
Accumulated deficit (21,363) (20,976)
------ ------
Total shareholders' equity 203 298
------ ------
$ 5,979 $ 6,544
====== ======
</TABLE>
See accompanying notes to condensed financial statements.
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BARRISTER INFORMATION SYSTEMS CORPORATION
Condensed Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Dec. 29 Dec. 30 Dec. 29 Dec. 30
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C>
Revenues:
Product sales $ 366 $ 515 $ 1,115 $ 1,948
Services 2,840 3,277 9,050 9,646
------ ------ ------ ------
Total revenues 3,206 3,792 10,165 11,594
------ ------ ------ ------
Costs and expenses:
Cost of product sales 148 421 523 1,556
Cost of services 2,488 2,493 7,599 7,574
------ ------ ------ ------
Total cost of revenues 2,636 2,914 8,122 9,130
------ ------ ------ ------
Selling, general and
administrative expenses 653 623 1,973 1,990
Product development and
engineering 117 156 308 492
------ ------ ------ ------
Total costs and expenses 3,406 3,693 10,403 11,612
------ ------ ------ ------
Operating income (loss) (200) 99 (238) (18)
Interest expense :
Related party - 49 108 138
Other 14 14 41 38
------ ------ ------ ------
Total interest 14 63 149 176
------ ------ ------ ------
Net income (loss) $ (214) $ 36 $ (387) $ (194)
====== ====== ====== ======
Net income (loss)
per common and common
equivalent share $ (0.03) $ 0.01 $ (0.06) $ (0.04)
====== ====== ====== ======
Weighted average number of
common and common
equivalent shares
outstanding 6,190 6,170 6,227 5,493
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed financial statements.
B-4
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BARRISTER INFORMATION SYSTEMS CORPORATION
Statement of Shareholders' Equity
(In thousands)
<TABLE>
<CAPTION>
Additional
Common paid-in Accumulated
Stock capital deficit Total
----- ------ ------ -----
<S> <C> <C> <C> <C>
Balance at March 31, 1995 $ 1,486 $ 19,788 $ (20,976) $ 298
Sale of 8,000 Common shares 2 8 - 10
Debt forgiven by BIS
Partners, L.P. 282 282
Net loss - - (387) (387)
----- ------ ------ -----
Balance at December 29, 1995 $ 1,488 $ 20,078 $ (21,363) $ 203
===== ====== ====== =====
</TABLE>
Common stock - 6,197,972 and 6,189,972 shares issued and outstanding at
December 29, 1995 and March 31, 1995.
See accompanying notes to condensed financial statements.
B-5
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BARRISTER INFORMATION SYSTEMS CORPORATION
Condensed Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Dec. 29 Dec. 30
1995 1994
----- -----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (387) $ (194)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 231 231
Loss on disposal of equipment - 1
Changes in current assets and liabilities:
Accounts receivable 57 185
Inventories 412 (259)
Prepaid expenses (6) (15)
Accounts payable (173) (153)
Accrued compensation and benefits (58) (301)
Customer advances and unearned revenues 76 (106)
Other liabilities 54 14
Net cash provided (used)
by operating activities 206 (597)
----- -----
Cash flows from investing activities:
Additions to equipment and leasehold
improvements (78) (68)
Additions to software production costs (229) -
Proceeds on sale of equipment 8
Other 16 16
----- -----
Net cash used in investing activities (291) (44)
----- -----
Cash flows from financing activities:
Net repayment of debt (87) (117)
Proceeds from sale of Common stock 10 -
Net cash used by ----- -----
financing activities (77) (117)
----- -----
Net decrease in cash (162) (758)
Cash at beginning of period 184 804
----- -----
Cash at end of period $ 22 $ 46
===== =====
Supplemental disclosure of cash flow information:
Interest paid $ 213 $ 127
===== =====
Non-cash financing activities:
Debt forgiven by Bis Partners, L.P. $ 282 $ -
Conversion of long term debt to
preferred stock - 250
Conversion of preferred stock to
common stock - 3,310
===== =====
</TABLE>
See accompanying notes to condensed financial statements.
B-6
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BARRISTER INFORMATION SYSTEMS CORPORATION
Notes to Condensed Financial Statements
1. In the opinion of management, the accompanying financial statements present
fairly the financial position, results of operations and cash flows for the
periods shown. The third quarter results for each year represent 13 weeks of
operations ended Friday, December 29, 1995 and December 30, 1994. The financial
data included herein was compiled in accordance with the same accounting
policies applied to the Company's audited annual financial statements. Any
adjustments made were of a normal recurring nature.
The results of operations for the nine month period ended December 29,
1995 are not necessarily indicative of the results expected for the full year.
2. A summary of long-term debt follows:
<TABLE>
<CAPTION>
Dec. 29 March 31
1995 1995
------ ------
(In thousands)
------------
<S> <C> <C>
Working capital note with
BIS Partners, L.P. $ 285 $ 285
Term note with BIS Partners, L.P. 1,764 2,108
Other 1,007 1,032
------ ------
Total long-term debt 3,056 3,425
Less current installments 601 96
------ ------
Long term debt, excluding
current installments $ 2,455 $ 3,329
====== ======
</TABLE>
On August 31, 1995, BIS Partners, L.P. (BIS) agreed to cancel $450,000 of
long-term debt and to reduce the interest rate on the remaining debt to 8
percent. In addition, the repayment terms were modified to interest-only
through March 31, 1996, with repayment in 36 equal installments thereafter. In
accordance with this agreement, the Company reduced the amount of debt owed to
BIS to equal the total cash to be repaid to BIS for both principal and
interest. This resulted in a debt reduction of $282,000 which due to the
related party nature of the transaction, was reflected as a contribution to
capital. All future payments to BIS will be recorded as a reduction in the debt
balance. In connection with this transaction, the Company issued warrants to
BIS to purchase 450,000 shares of its capital stock at $1.9375 per share (the
fair market value at issue date), exercisable through August 31, 2005.
B-7
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
- -------------------
The Company experienced a net decrease in cash of $162,000 for the first nine
months of fiscal 1996. Cash used for investing activities (additions to
equipment and software production costs) and financing activities exceeded the
cash provided by operating activities of $206,000. The positive cash from
operations was principally realized from depreciation and amortization, and
lower levels of inventories. These amounts were sufficient to offset the net
loss and reductions in accounts payable. This result also compared very
favorably to a decrease of $758,000 in cash for the first nine months of the
prior year.
The Company's ability to meet its cash requirements is currently dependent on
its ability to operate on a profitable basis and on the continued support of
its major debtholder, BIS Partners, L.P.(BIS). The Company has experienced
growth in Javelan sales which has resulted in higher gross profits from product
revenues. Based on increased levels of interest and prospects, current
expectations are that continued growth in Javelan sales and margins will occur.
In the services business, revenues have decreased based primarily on a
reduction in revenue from the Company's major service customer. The Company has
recently enhanced its selling and marketing capacity in the services area to
capture new business to replace what has been lost and for future business
growth. BIS has continued to support the Company by agreeing to cancel $450,000
of its debt in August 1995, to reduce the interest rate on its remaining debt
outstanding and to receive interest only payments during fiscal 1996. BIS
previously agreed to provide a $500,000 line of credit through June 30, 1996.
There was no borrowing under this line of credit at December 29, 1995. There
can be no assurances that the Company will operate on a profitable basis or
that BIS will continue to support the Company's cash requirements. The Company
is currently seeking additional sources of capital to strengthen its balance
sheet, to provide longer term liquidity and to enhance its selling and
marketing resources in both Javelan and the services business. To that effect,
in order that there be sufficient shares available for possible future
transactions, a Proxy has been filed with the SEC to increase the number of
authorized common shares from 10,000,000 to 20,000,000. The Proxy calls for a
Special Meeting of Shareholders to be held in March 1996.
B-8
<PAGE> 9
Results of Operations
- ---------------------
For the quarter ended December 29, 1995, total revenues decreased 15.5% from
the same quarter in 1994, with a net loss of $214,000 compared to a net profit
of $36,000 in the third quarter of the prior year. For the nine month period
ended December 29, 1995, total revenues decreased 12.3% compared with the nine
months ended December 30, 1994. The nine month net loss was $387,000 compared
to a net loss of $194,000 incurred in the comparable period for the prior year.
The principal reason for the loss incurred in the third quarter was lower
services revenues at the same time services expenses were constant.
Product sales decreased 28.9% for the comparable third quarters, and 42.8% for
the comparable first nine months. This was primarily due to a de-emphasis of
the sale of low margin commodity products. However, an increase was realized in
the sale of Javelan, the Company's windows-based management software product
which has only a small associated cost of sales. As a result, margins on
product sales improved from 18.3% to 59.6% for the comparable third quarters
and from 20.1% to 53.1% for the comparable nine month period.
Services revenues decreased 13.3% for the comparable third quarters and 6.2%
for the comparable nine month periods. These decreases were principally the
result of decreased revenues from hardware time and material billings and
hardware and software maintenance contracts. Effective August 1, 1995, two
large hardware maintenance contracts did not renew, based on customer decisions
to do self maintenance. This was the primary reason for the drop in services
revenues from the first to the second and from the second to the third quarter
of this fiscal year. The Company has recently hired a National Sales Manager to
head the marketing and sales effort for the services business. Focus is being
placed on direct sales of service contracts to prospects with large local and
wide area networks. Current expectations are that services revenues will
stabilize in the fourth quarter. Margins on services revenues decreased for the
comparable third quarters and nine month periods as the cost of providing
services remained about the same on lower service revenues. Savings in labor
costs have been offset by increased costs for parts utilized to maintain
equipment.
Due to lower levels of revenues, selling, general, and administrative expenses
increased from 16.4% to 20.4% of total revenue for the comparable quarters and
from 17.2% to 19.4% for the comparable nine month periods. Expenditures for
product development and engineering, before taking into account amounts
capitalized and amortized for software production costs, were approximately the
same for the comparable periods.
B-9
<PAGE> 10
Interest expense decreased from 1.7% to 0.4% of total revenues for the
comparable third quarters and remained the same at 1.5% for the comparable nine
month periods. This was the result of BIS Partners, L.P. cancellation of debt
in August 1995 which eliminated the requirement to record any interest expense
on this debt in the future.
The $282,000 contribution to capital (recorded in the second quarter) resulted
from an agreement with BIS to cancel $450,000 of its debt with the Company. The
contribution to capital was computed by reducing the amount of debt recorded on
the Company's books to an amount equal to the total cash to be repaid to BIS
for both principal and interest. As a result, all future payments on the
current notes outstanding to BIS will be recorded as a reduction in the debt
balance with no interest expense being recognized. This had a favorable impact
on interest expense in the second and third quarters and will continue to have
a favorable impact in future quarters.
No income taxes were recognized in the statements of operations since the
Company has use of net operating loss carryforwards to offset any taxes.
A loss of $.06 per share was incurred in the first nine months of this year
compared to a loss of $.04 per share in the first nine months of last year. The
increase in the weighted average number of common shares outstanding for the
comparable periods resulted primarily from the issuance of 2,030,000 common
shares upon the conversion of the Company's Series D preferred stock which was
not included in the number of shares until the second quarter of last year.
B-10
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
B-11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BARRISTER INFORMATION SYSTEMS CORPORATION
Date: July 23, 1996 By: /s/ Henry P. Semmelhack
------------------------------
Henry P. Semmelhack
President and
Chief Executive Officer
Date: July 23, 1996 By: /s/ Richard P. Beyer
------------------------------
Richard P. Beyer
Vice President, Finance
(Principal Financial Officer)
B-12
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-29-1995
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 1,508
<ALLOWANCES> 0
<INVENTORY> 3,593
<CURRENT-ASSETS> 5,172
<PP&E> 4,088
<DEPRECIATION> 3,641
<TOTAL-ASSETS> 5,979
<CURRENT-LIABILITIES> 3,321
<BONDS> 2,455
<COMMON> 1,488
0
0
<OTHER-SE> (1,285)
<TOTAL-LIABILITY-AND-EQUITY> 5,979
<SALES> 1,115
<TOTAL-REVENUES> 10,165
<CGS> 523
<TOTAL-COSTS> 8,122
<OTHER-EXPENSES> 2,281
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 149
<INCOME-PRETAX> (387)
<INCOME-TAX> 0
<INCOME-CONTINUING> (387)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (387)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
