<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
July 31, 1995 0-16288
FISHER BUSINESS SYSTEMS, INC.
- - --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-1366235
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Circle 75 Parkway, Atlanta, Georgia 30339
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area: (404) 951-6844
------------------------------------
Not applicable
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(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 Securities Exchange Act of 1934 during the last 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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $.01 Par Value 4,330,363
----------------------------------- -----------------------------------
Class Outstanding at September 1, 1995
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FISHER BUSINESS SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
July 31, January 31,
1995 1995
---------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 205,058 $ 69,219
Certificates of deposit - 36,586
Accounts receivable, net 58,954 10,860
Other current assets - 4,064
-------------- --------------
Total current assets 264,012 120,729
-------------- --------------
EQUIPMENT, FURNITURE AND VEHICLES
Computer equipment 140,445 140,445
Office furniture and fixtures 64,930 64,930
-------------- --------------
205,375 205,375
Less accumulated depreciation (190,035) (184,023)
-------------- --------------
Net equipment, furniture, and vehicles 15,340 21,352
-------------- --------------
OTHER 3,380 -
-------------- --------------
TOTAL ASSETS $ 282,732 $ 142,081
============== ==============
</TABLE>
The condensed financial statements as of January 31, 1995 were derived from the
audited financial statements at that date.
See notes to condensed financial statements.
<PAGE> 3
FISHER BUSINESS SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
July 31, January 31,
1995 1995
-------------- --------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 606,100 $ 722,908
Accrued compensation and benefits 3,379 10,885
Deferred revenue 233,498 362,048
Redeemable stock 169,607 339,875
-------------- --------------
Total current liabilities 1,012,584 1,435,716
-------------- --------------
SHAREHOLDERS' DEFICIT
Preferred stock, par value $.10, authorized
5,000,000 shares, 1,500,000 issued and outstanding 150,000 -
Common stock, par value $.01, authorized 10,000,000 shares 40,862 27,532
Additional paid-in-capital 8,166,818 7,731,817
Accumulated deficit (9,080,782) (9,046,234)
Less treasury stock at cost (6,750) (6,750)
-------------- --------------
Total shareholders' deficit (729,852) (1,293,635)
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 282,732 $ 142,081
============== ==============
</TABLE>
The condensed financial statements as of January 31, 1995 were derived
from the audited financial statements at that date.
See notes to condensed financial statements.
<PAGE> 4
FISHER BUSINESS SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Three Months
Ended July 31, Ended July 31,
------------------------------ ------------------------------
1995 1994 1995 1994
-------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
REVENUES $ 373,072 $ 715,299 $ 197,957 $ 322,550
COST OF GOODS SOLD 127,145 308,244 66,651 110,385
-------------- ----------- ----------- -----------
GROSS MARGIN 245,927 407,055 131,306 212,165
-------------- ----------- ----------- -----------
EXPENSE
Allowance for doubtful accounts
(recoveries) - 3,000 - 1,500
Selling, general and administrative 297,687 998,122 143,516 384,839
-------------- ----------- ----------- -----------
TOTAL EXPENSES 297,687 1,001,122 143,516 386,339
-------------- ----------- ----------- -----------
NET (LOSS) INCOME FROM OPERATIONS
(51,760) (594,067) (12,210) (174,174)
-------------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Gain on disposal - 13,015 - 3,285
Interest expense - (9,537) - (490)
Other miscellaneous
income 17,211 - 17,274 -
-------------- ----------- ----------- -----------
17,211 3,478 17,274 2,795
-------------- ----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES ON
INCOME AND EXTRAORDINARY ITEM (34,549) (590,589) 5,064 (171,379)
TAXES ON INCOME (LOSS) - - (750) -
-------------- ----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES ON
INCOME AND EXTRAORDINARY ITEMS (34,549) (590,589) 4,314 (171,379)
EXTRAORDINARY ITEM - - 750 -
-------------- ----------- ----------- -----------
NET INCOME (LOSS) $ (34,549) $ (590,589) $ 5,064 $ (171,379)
============== =========== =========== ===========
EARNINGS PER SHARE OF
COMMON STOCK:
Before extraordinary item $ (.01) $ (.20) $ .00 $ (.06)
Extraordinary item - - - -
-------------- ----------- ----------- -----------
Net income (loss) per share $ (.01) $ (.20) $ .00 $ (.06)
============== =========== =========== ===========
Weighted average shares
outstanding 3,803,171 2,886,533 4,553,171 2,803,200
============== =========== =========== ===========
</TABLE>
See notes to condensed financial statements.
<PAGE> 5
FISHER BUSINESS SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended July 31,
---------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (34,549) $ (590,589)
Net loss
Adjustments to reconcile net income to net cash provided
(used for) operating activities:
Depreciation and amortization 6,012 154,522
Allowance for losses and accounts receivable - 3,000
Gain on sale of assets - (13,015)
Changes in operating assets and liabilities
affecting operations:
Accounts receivable (48,084) 677,000
Inventory - 20,305
Certificate of deposit 36,586 -
Other assets (684) 35,476
Accounts payable and accrued expenses (116,808) 70,741
Accrued compensation and benefits (7,506) (10,292)
Deferred revenue (128,550) (163,963)
--------------- ---------------
Net cash provided by (used for) operating activities (293,583) 183,185
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net sale (purchases) of equipment and furniture - 250,000
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of preferred stock 300,000 -
Proceeds from sale of common stock 300,000 -
Repayments on line of credit - (410,484)
Repurchase of redeemable stock (170,578) -
--------------- ---------------
Net cash provided by (used for) financing activities 429,422 (410,484)
--------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 135,839 22,701
CASH AND CASH EQUIVALENTS, at beginning of period 69,219 3,830
--------------- ---------------
CASH AND CASH EQUIVALENTS, at end of period $ 205,058 $ 26,531
=============== ===============
</TABLE>
See notes to condensed financial statements.
<PAGE> 6
FISHER BUSINESS SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 1995
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These statements should be read in conjunction with Form
10-K for the fiscal year ended January 31, 1995. In the opinion of management,
all adjustments considered necessary for a fair presentation have been made and
are of a normal recurring nature. Operating results for the six month period
ended July 31, 1995 are not necessarily indicative of the results that may be
expected for the year ending January 31, 1996.
Note B - Net Income (Loss) Per Share of Common Stock.
Income (loss) per share for the fiscal periods ended July 31, 1995 and 1994
have been computed on the weighted average number of shares outstanding. The
effects of common share equivalents have been considered using the treasury
stock method, however, their effects are not material and they have been
excluded from the calculation.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FINANCIAL CONDITION
Total assets increased $140,651 or 99% from January 31, 1995 due
primarily to increases in cash and cash equivalents of $135,839 and an increase
in accounts receivable of $48,094, partially offset by the redemption of a
certificate of deposit ($36,586). The increase in cash and cash equivalents
resulted from the proceeds of a private placement of common stock by the
Company in the second quarter of fiscal 1995. See "Liquidity and Capital
Resources." The increase in accounts receivable is primarily a result of sales
of the Company's systems on deferred payment terms. The certificate of deposit
redemption was required for the Company to fund its current obligations during
the first three months of the current fiscal year.
RESULTS OF OPERATIONS
Revenues for the six months ended July 31, 1995 were $373,072, a
decrease of $342,227, or 48%, from the prior period revenues of $715,299.
Revenues for the three months ended July 31, 1995 were $197,957, a decrease of
$124,593, or 39%, from the prior period revenues of $322,550. The decrease in
revenues is primarily attributable to the loss of the Company's client/server
service business in early 1994.
Selling, general and administrative expenses were $297,687 for the six
months ended July 31, 1995 compared to $998,122 for the prior year period.
Selling, general and administrative expenses were $143,516 for the three months
ended July 31, 1995 compared to $384,839 for the prior year period. The
significant decreases were largely due to reduction in personnel during fiscal
1995.
No interest expense was incurred during the six months ended July 31,
1995 as the Company's line of credit has expired. A replacement facility has
not been obtained by the Company.
The Company recorded a net loss for the six months ended July 31, 1995
of $34,549, as compared to a net loss of $590,589 for the prior year period.
The net loss was primarily due to the loss of the Company's client/server
services businesses. The size of the loss, however, was mitigated by the
Company's significant personnel reductions during fiscal 1995. The Company
recorded net income of $5,064 for the three months ended July 31, 1995, as
compared to a net loss of $171,379 for the prior year period. The net income
for the quarter is attributable to the Company's significant personnel
reductions during fiscal 1995 and to $17,274 of debt forgiveness recorded
during the period.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1995, the Company had a working capital deficit of
$748,572, compared to a deficit of $1,174,987 at January 31, 1995. With the
departure in January 1994 of substantially all of the former Blue Mountain
employees, the Company lost its ability to provide client/server services to
its customers, including MCI. Accordingly, the Company's revenues and cash
flow have been materially adversely affected by the loss of revenues from its
former client/server business.
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<PAGE> 8
On April 5, 1994, an action was filed against the Company in the
Superior Court of Fulton County, Georgia, by Keith E. Woodall ("Woodall"), a
former shareholder of Blue Mountain, which the Company acquired in February
1993. Pursuant to a stock repurchase agreement entered into between the
Company and Woodall in connection with the acquisition, the Company agreed to
repurchase the shares of Company common stock issued to Woodall in connection
with the acquisition of Blue Mountain over a period of three years from the
date of closing of the acquisition. Woodall claimed damages for breach of the
stock repurchase agreement and an employment agreement with the Company.
On August 8, 1994, the Company entered into a Mutual General Release
and Settlement Agreement (the "Settlement Agreement") with Woodall settling the
litigation that had been filed against the Company by Woodall. Pursuant to the
Settlement Agreement, the Company resumed payments under the employment
agreement, issued 250,000 shares of the Company's common stock to Woodall, and
agreed to the entry of a judgment against the Company in the amount of
$357,500.02, which Woodall agreed not to enforce so long as the Company timely
makes all payments under the employment agreement and Woodall receives $250,000
from the Company or its designee no later than February 1, 1995. The Company
had the right to redeem 350,000 shares of the Company's common stock held by
Woodall for a redemption price of $250,000 on or before February 1, 1995. The
amount of the judgment against the Company shall be reduced every 60 days by
the amounts of all payments received by Woodall under the employment agreement
and all amounts received by Woodall from the sale of his common stock of the
Company.
The Settlement Agreement was amended on February 27, 1995 to, among
other things, amend the entry of judgment against the Company to $339,875,
which Woodall agreed not to enforce so long as the Company timely makes all
payment under the Employment Agreement and the Company redeems 300,000 shares
of the Company's common stock held by Woodall as follows: (a) 21,000 shares
for a total price of $15,000 on or before March 1, 1995; (b) an additional
21,000 shares at a total price of $15,000 on or before April 1, 1995; (c) an
additional 133,000 for a total price of $98,000 on or before May 1, 1995 and
(d) an additional 125,000 shares for a total price of $140,000 on or before
February 1, 1996. On each of March 1, 1995 and April 1, 1995, the Company
redeemed 21,000 shares of Woodall's common stock for $15,000. On May 1, 1995,
the Company redeemed 133,000 shares of Woodall's common stock for $98,000.
There is no assurance that the Company will be able to meet the conditions that
preclude Woodall from enforcing the judgment. If the judgment is enforced,
Woodall will be able to obtain and execute a judgment lien against the assets
of the Company. If the Company were to fail to meet these conditions, it is
likely that it would file for protection from creditors under the federal
bankruptcy laws.
On October 21, 1994, the Company entered into a letter of intent with
Global Software, Inc. ("Global"), pursuant to which the Company would enter
into a license agreement granting Global the exclusive worldwide right to
sublicense the Fisher Restaurant Management System(R) and certain other
proprietary software of the Company within the hospitality industry. As
consideration for these rights, Global would agree to pay the Company 50% of
all license fees received for said software plus 50% of the margin generated by
Global from the sale of associated services for a period of not less than eight
months. Payments by Global may be made in cash or services. The letter of
intent with Global is subject in all respects to definitive documentation,
which has not yet been executed. Accordingly, there can be no assurance that
any agreement with Global will be finalized. However,
-3-
<PAGE> 9
the Company and Global are operating in conjunction with each other
substantially under the terms set forth in the letter of intent.
The Company has instituted stringent measures designed to reduce
expenses as much as possible consistent with providing the level of services
required by its customers, including a reduction of the number of personnel.
The Company presently employs four people.
In September of 1994, the Company took certain measures designed to
improve its liquidity. In connection with a change by the Company in its
maintenance service contractor, the Company billed its customers earlier than
usual for its 1995 service and maintenance fees. Receipt of a portion of these
fees has provided the Company with some liquidity. The relocation of the
Company's office space from its prior location to the offices of Global has
also resulted in savings on cash rentals.
In the second quarter of fiscal 1996, the Company completed a private
placement of 1,500,000 shares of Common Stock and 1,500,000 shares of Class A
Convertible Preferred Stock, resulting in proceeds of $600,000. The Preferred
Stock is convertible into Common Stock on a one-for-one basis, subject to
certain adjustments based on the Company's earnings and the price per share
paid by the Company in any acquisition. The proceeds of this offering were
applied to repay accounts payable, to repurchase certain of Woodall's shares,
to fund accounts receivable and marketing expenses and to increase the working
capital of the Company.
Management believes that the opportunity exists to consolidate the
operations of six to ten of the software companies which presently serve the
hospitality food service market. There currently is no dominant player in the
industry, and financial instability has been one of the limiting factors for
most of these companies. By combining certain of the areas of each business,
namely support, administration, and sales, management believes that new
products can be added which can be sold to the existing customer base and new
customer bases will be acquired into which the existing products and services
can be sold. The Company has identified more than 30 software companies in the
hospitality food service industry which have appropriate application software
already developed. These companies also have existing customer bases into
which the Company's point of sale system can be sold. Initial contacts have
been made with several of these companies, and there is reason to believe that
the Company's consolidation strategy can be implemented over the next 18 to 24
months.
Until such time as a suitable acquisition can be consummated, the
Company's revenue will be limited to revenue from support contracts with
existing customers, direct sales of its software and services and indirect
sales of its software and services through its relationship with Encore.
-4-
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended July 31, 1995.
-5-
<PAGE> 11
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.
FISHER BUSINESS SYSTEMS, INC.
Dated: September 5, 1995 By: /s/ Larry Fisher
-------------------- -------------------------------------------
Larry Fisher, President and Chief Executive
Officer (chief executive and financial
officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 205,058
<SECURITIES> 0
<RECEIVABLES> 58,954
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 264,012
<PP&E> 205,375
<DEPRECIATION> 190,035
<TOTAL-ASSETS> 282,732
<CURRENT-LIABILITIES> 1,012,584
<BONDS> 0
<COMMON> 40,862
0
150,000
<OTHER-SE> (920,714)
<TOTAL-LIABILITY-AND-EQUITY> 282,732
<SALES> 373,072
<TOTAL-REVENUES> 373,072
<CGS> 127,145
<TOTAL-COSTS> 127,145
<OTHER-EXPENSES> 297,687
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (51,760)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 17,211
<CHANGES> 0
<NET-INCOME> (34,549)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
