<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
March 30, 1999
BARRISTER INFORMATION SYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-14063 16-1176561
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) 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 or former address , if changed since last report.)
<PAGE> 2
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial information is being filed to satisfy the
financial statement requirements for the Form 8-K filed January 29, 1999.
(a) Financial Statements for Business Acquired
Consolidated financial statements of Icon Technology LLC as of and for the
years ended December 31, 1998 and 1997, together with Independent Auditors'
Report.
Icon Technology LLC
Balance Sheets
December 31, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
ASSETS
Cash $ 13 $ 1
Accounts receivable 72 95
Prepaid expenses 3 --
---- ----
Total current assets 88 96
---- ----
Computer and other equipment 40 --
Less accumulated depreciation 8 --
---- ----
Net computer and other equipment 32 --
---- ----
Other assets 2 --
---- ----
Total assets $122 $ 96
==== ====
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 35 $ 96
Customer advances 26 --
---- ----
Total current liabilities 61 96
---- ----
Capital 7 4
Accumulated earnings (deficit) 54 (4)
---- ----
Total shareholders' equity 61 --
---- ----
Total liabilities and shareholders' equity $122 $ 96
==== ====
See accompanying notes to financial statements.
</TABLE>
<PAGE> 3
Icon Technology LLC
Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1998 1997
---- ----
<S> <C> <C>
Product Sales $ 60 $ --
Services 1,026 866
------ ------
Total revenues 1,086 866
------ ------
Cost of product sales 12 --
Cost of services 1,018 874
------ ------
Total expenses 1,030 874
------ ------
Earnings (loss) from operations 56 (8)
Interest income 2 --
------ ------
Net earnings (loss) $ 58 $ (8)
====== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
Icon Technology LLC
Statements of Shareholders' Equity
(In thousands)
<TABLE>
<CAPTION>
Accumulated
Members' Earnings
Capital (Deficit)
------- ---------
<S> <C> <C>
Balance, January 1, 1997 $ 2 $ 4
Net loss (8)
Capital contributed 2
---- ----
Balance, December 31, 1997 4 (4)
Net earnings 58
Capital contributed 3
---- ----
Balance, December 31, 1998 $ 7 $ 54
==== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
Icon Technology LLC
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 58 $ (8)
Adjustments to reconcile net earnings (loss) to net
cash provided (used) by operating activities:
Depreciation 8 --
Changes in current assets and liabilities:
Accounts receivable 23 (74)
Prepaid expenses (3) --
Accounts payable (61) 76
Customer advances 26 --
---- ----
Net cash provided (used) by operating
activities 51 (6)
---- ----
Cash flows from investing activities:
Additions to computer and other equipment (40) --
Other (2) --
---- ----
Net cash used by investing activities (42) --
---- ----
Cash flows from financing activities:
Proceeds from capital transactions 3 2
---- ----
Net cash provided by financing activities 3 2
---- ----
Net increase (decrease) in cash 12 (4)
Cash at beginning of year 1 5
---- ----
Cash at end of year $ 13 $ 1
==== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
Notes to Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
(a) Nature of Organization - Icon Technology, LLC (the "Company") is
a limited liability company engaged in the business of providing
computer related consulting services primarily to the legal
market. The Company is also a developer and seller of a software
product called LegalHouse. A typical software transaction will
consist of an initial license fee for the delivery of the
software and separately priced fees for software conversion,
installation, training and any customer programming.
(b) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(c) Revenue Recognition - Product sales consist of LegalHouse licensing
fees. Software license revenue is recognized upon delivery of the
software product to the customer, unless the Company has significant
related obligations remaining or the probability of collection is in
doubt. When obligations remain after delivery, revenue is recognized
when such obligations are no longer significant.
Services revenues include consulting services and services
associated with LegalHouse sales, such as system conversions,
installation, training and custom programming. Service revenue,
which is priced separately from the software license, is recognized
as the service is provided.
The American Institute of Certified Public Accountants' Accounting
Standards Executive Committee (AcSEC) has issued Statements of
Position (SOP) 97-2 "Software Revenue Recognition" and 98-9
"Modification of SOP 97-2, Software Revenue Recognition, with
Respect to Certain Transactions." The Company has adopted SOP 97-2
which specifies the accounting requirements for software revenue
recognition, including the methods used to allocate revenues among
elements (licensing, support, services, etc.) in a multiple-element
software arrangement. The Company is presently reviewing the impact,
if any, of SOP 98-9 on revenue recognition.
(d) Equipment and Leasehold Improvements - Depreciation is recorded on
the double-declining method based on the estimated useful lives of
the assets. Computer and other equipment are depreciated over
estimated useful lives of five years.
(2) Cost of Services
Included in the cost of services are payments to the owners of $614,000
and $570,000 for the years ended December 31, 1998, and 1997,
respectively.
<PAGE> 7
(3) Income Taxes
The Company operated as a partnership in 1997 and as a limited liability
company in 1998. The Company elected to be taxed as a partnership on the
cash basis. Therefore no income taxes are included in the financial
statements.
(4) Lease Commitment
The Company conducts its operations from a leased facility. The lease runs
for a one year period beginning July 1, 1998, at a monthly cost of $1,644.
It is expected that in the normal course of business, this lease will be
renewed or replaced.
(5) Major Customers
Sales to the Company's largest customer accounted for 55% and 90% of total
revenues for 1998 and 1997 respectively. Sales to another customer were
34% of total revenues for 1998, with no sales to this customer in 1997.
(6) Subsequent Event
On January 15, 1999, the Company exchanged substantially all its assets
for 2,500 shares of preferred stock of Barrister Information Systems
Corporation, which will be converted into 2,500,000 shares of common stock
after shareholder approval at the next annual meeting. Barrister develops
and licenses software for professional organizations and provides computer
equipment maintenance services to its clients.
<PAGE> 8
Independent Auditors' Report
The Members of
Icon Technology LLC:
We have audited the accompanying balance sheets of Icon Technology LLC as of
December 31, 1998 and 1997, and the related statements of operations,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Icon Technology LLC as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Buffalo, New York
March 12, 1999
<PAGE> 9
(b) Pro Forma Financial Information
The following Unaudited Pro Forma Condensed Consolidated Balance
Sheet and the Unaudited Pro Forma Condensed Consolidated Statements
of Operations give effect to the acquisition of Icon Technology LLC
("Icon") by the registrant, Barrister Information Systems
Corporation (the "Company") as if the acquisition, as further
described below, had occurred on December 25, 1998, for the
Unaudited Pro Forma Condensed Consolidated Balance Sheet, April 1,
1997, for the Unaudited Pro Forma Condensed Consolidated Statements
of Operations for the year ended March 31, 1998, and April 1, 1998
for the Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the nine month period ended December 25, 1998.
The unaudited pro forma condensed consolidated financial statements
are not necessarily indicative of the financial position or future
results of operations or results that might have been achieved if
the foregoing transaction had been consummated as of the indicated
dates. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the related notes
thereto and the Company's historical financial statements in its
Annual Report on Form 10-K for the fiscal year ended March 31, 1998,
and its Quarterly Report on Form 10-Q for the nine month period
ended December 25, 1998, filed with the Securities and Exchange
Commission.
The unaudited pro forma condensed consolidated financial statements,
presented below, incorporate the following transaction based on a
preliminary allocation of the purchase price. On January 15, 1999,
the Company acquired the assets of Icon, a privately held software
development and consulting company for 2,500 shares of preferred
stock which will be converted into 2,500,000 shares of common stock
after shareholder approval at the next annual meeting. The Company
will account for the acquisition as a purchase, with the purchase
price being determined by taking an average of the market price of
the Company's common stock three days before and after January 15,
1999, and then applying a discount based primarily on certain
restrictions associated with the resale of the common shares. Assets
acquired and liabilities assumed will be recorded at their estimated
fair values at the date of acquisition. The excess of the purchase
price over the fair value of tangible and intangible net assets
acquired will be recorded as goodwill and amortized over a period of
7 years.
<PAGE> 10
Barrister Information Systems Corporation
and Icon Technology LLC
Unaudited Pro Forma
Condensed Consolidated Statements of Operations
For the Year Ended March 31, 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
Barrister
Information Icon
Systems Technology LLC
Corporation For the Year Combined
For the Year Ended Unaudited Unaudited
Ended March December 31, Pro Forma Note Pro Forma
31, 1998 1997 Adjustments Ref. Statements
--------- --------- --------- ---- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales $ 1,927 $ - $ - $ 1,927
Services 15,138 866 - 16,004
--------- --------- --------- ---------
Total revenues 17,065 866 - 17,931
--------- --------- --------- ---------
Costs and expenses:
Cost of product sales 392 - 392
Cost of services 11,657 873 (235) (3) 12,295
--------- --------- --------- ---------
Total cost of revenues 12,049 873 (235) 12,687
Selling, general and
administrative expenses 4,023 - 203 (2) 4,226
Product development and
engineering 779 - 779
--------- --------- --------- ---------
Total costs and expenses 16,851 873 (32) 17,692
--------- --------- --------- ---------
Operating earnings (loss) 214 (7) 32 239
Interest expense 191 - 191
--------- --------- --------- ---------
Net earnings (loss) $ 23 $ (7) $ 32 $ 48
========= ========= ========= =========
Net earnings per common share:
Basic $ 0.00 $ 0.00
========= =========
Diluted $ 0.00 $ 0.00
========= =========
Weighted average number of
common shares outstanding:
Basic 8,207 (1) 10,707
========= =========
Diluted 8,478 10,978
========= =========
</TABLE>
See accompanying notes to the unaudited pro forma condensed consolidated
financial statements.
<PAGE> 11
Barrister Information Systems Corporation
and Icon Technology LLC
Unaudited Pro Forma
Condensed Consolidated Statements of Operations
For the Nine Months Ended December 25 , 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
Barrister
Information
Systems
Corporation Icon
For the Nine Technology LLC
Months For the Nine Combined
Ended Months Ended Unaudited Unaudited Pro
December 25, September 30, Pro Forma Note Forma
1998 1998 Adjustments Ref. Statements
--------- --------- --------- ---- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales $ 1,576 $ 30 $ - $ 1,606
Services 9,594 777 10,371
--------- --------- --------- ---------
Total revenues 11,170 807 - 11,977
--------- --------- --------- ---------
Costs and expenses:
Cost of product sales 324 6 330
Cost of services 7,407 744 (87) (3) 8,064
--------- --------- --------- ---------
Total cost of revenues 7,731 750 (87) 8,394
Selling, general and
administrative expenses 2,625 - 152 (2) 2,777
Product development and
engineering 456 - 456
--------- --------- --------- ---------
Total costs and expenses 10,812 750 65 11,627
--------- --------- --------- ---------
Operating earnings 358 57 (65) 350
Interest expense 146 - 146
--------- --------- --------- ---------
Net earnings $ 212 $ 57 $ (65) $ 204
========= ========= ========= =========
Net earnings per common share:
Basic $ 0.03 $ 0.02
========= =========
Diluted $ 0.03 $ 0.02
========= =========
Weighted average number of
Common shares outstanding:
Basic 8,224 (1) 10,724
========= =========
Diluted 8,445 10,945
========= =========
</TABLE>
See accompanying notes to the unaudited pro forma condensed consolidated
financial statements.
<PAGE> 12
Barrister Information Systems Corporation
and Icon Technology LLC
Unaudited Pro Forma
Condensed Consolidated Balance Sheet
(In thousands)
<TABLE>
<CAPTION>
Barrister Icon
Information Technology
Systems LLC Combined
Corporation September Unaudited Unaudited
December 25, 30, Pro Forma Note Pro Forma
1998 1998 Adjustments Ref. Statements
-------- -------- --------- ---- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $ 159 $ 76 $ (8) (5) $ 227
Accounts receivable 2,534 111 2,645
Inventories 2,487 2,487
Prepaid expenses 27 27
-------- -------- --------- --------
Total current assets 5,207 187 (8) 5,386
Net equipment and leasehold
improvements 384 26 (9) (5) 401
Software production costs 824 115 (7) 939
Goodwill - 1,151 (6) 1,151
Other assets 254 2 256
-------- -------- -------- --------
Total assets $ 6,669 $ 215 $ 1,249 $ 8,133
======== ======== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Note payable to bank $ 245 $ $ $ 245
Note payable to related party 100 100
Current installments of long-term
debt 222 222
Accounts payable 994 154 60 (8) 1,208
Accrued compensation and
benefits 641 641
Customer advances and unearned
revenue 757 757
Other liabilities 146 146
-------- -------- -------- --------
Total current liabilities 3,105 154 60 3,319
-------- -------- -------- --------
Long-term debt, excluding current
installments 1,355 1,355
Preferred stock - 1,250 (4) 1,250
Common stock 1,974 7 (7) (9) 1,974
Additional paid-in capital 21,567 21,567
Accumulated deficit (21,332) 54 (54) (9) (21,332)
-------- -------- -------- --------
Total shareholders' equity 2,209 61 1,189 $ 3,459
-------- -------- -------- --------
Total liabilities and shareholders'
equity $ 6,669 $ 215 $ 1,249 $ 8,133
======== ======== ======= =======
</TABLE>
See accompanying notes to the unaudited pro forma condensed consolidated
financial statements.
<PAGE> 13
Barrister Information Systems Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
1. The accompanying pro forma condensed consolidated financial statements of
Barrister Information Systems Corporation (the "Company") are presented to
reflect the acquisition of Icon Technology LLC ("Icon"). On January 15,
1999, the Company acquired the assets of Icon in exchange for 2,500 shares
of preferred stock which are convertible into 2,500,000 shares of common
stock. The weighted average number of common shares outstanding used in
the computation of the pro forma net earnings per common share assumes
that the preferred stock has been converted. The unaudited pro forma
condensed consolidated balance sheet as of December 25, 1998, gives effect
to the acquisition as if it had occurred on December 25, 1998. The
unaudited pro forma condensed consolidated statements of operations for
the year ended March 31, 1998, and for the nine months ended December 25,
1998, give effect to the acquisition as if the transaction occurred on
April 1, 1997, and April 1, 1998, respectively.
2. The acquisition is accounted for as a purchase. Accordingly, assets
acquired and liabilities assumed are recorded at their estimated fair
values at the date of acquisition. The pro forma financial statements
reflect a preliminary allocation of the purchase price based on
information presently available. The excess of the purchase price over the
fair value of net assets acquired is recorded as goodwill and amortized
over a period of 15 years. The pro forma adjustment represents
amortization of certain intangible assets in connection with the
acquisition as follows: a) the excess of the Icon purchase price over the
fair market value of the net assets acquired totaling $1,151,000 and b)
software capitalized at $115,000.
3. Represents compensation paid to Icon principals in excess of current
compensation arrangements established with the Company.
4. Estimated value of the preferred shares issued in exchange for Icon's
assets. The value was determined by taking an average of the market price
of the Company's common stock three days before and after the January 15,
1999 acquisition date and then applying a discount based primarily on
certain restrictions associated with the resale of the common shares.
5. Represents an adjustment to record assets at their estimated fair market
value or assets retained by Icon on the date of acquisition.
6. Represents the excess of the Icon purchase price over the fair value of
the net assets acquired. This intangible asset will be amortized using the
straight-line method over a period of 7 years.
7. Estimated fair value of capitalized software which will be amortized over
three years beginning January 1, 1999.
8. Legal and professional fees incurred in connection with the transaction.
9. Reflects the elimination of Icon's shareholders' equity.
<PAGE> 14
c) Exhibit No. Description
23.01 Consent of KPMG LLP, Independent Auditors
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 hereunto duly authorized.
BARRISTER INFORMATION SYSTEMS CORPORATION
Date: March 29, 1999 By: /s/ Henry P. Semmelhack
Henry P. Semmelhack
Chairman, President and CEO
<PAGE> 1
Exhibit 23.01
The Board of Directors
Barrister Information Systems Corporation
We consent to the incorporation by reference in the registration statements (No.
333-16365 and 33-23309) on Form S-8, and in the registration statement (No.
333-3701) on Form S-3 of Barrister Information System Corporation of our report
dated March 12, 1999 with respect to the balance sheets of Icon Technology LLC
as of December 31, 1998 and 1997, and the related statements of operations,
shareholders' equity, and cash flows for the years then ended, which report
appears in the Form 8-K/A of Barrister Information Systems Corporation dated
March 29, 1999.
/s/ KMPG LLP
Buffalo, New York
March 23, 1999
