<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:
October 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 code: (770) 951-6844
--------------------------------
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 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
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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 4,619,500
- -------------------------------- ------------------------------------
Class Outstanding at December 7, 1995
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FISHER BUSINESS SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
October 31, January 31,
1995 1995
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(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 182,942 $ 69,219
Certificates of deposit - 36,586
Accounts receivable, net 55,860 10,860
Other current assets 3,380 4,064
-------------- --------------
Total current assets 242,182 120,729
-------------- --------------
EQUIPMENT, FURNITURE AND VEHICLES
Computer equipment 141,725 140,445
Office furniture and fixtures 64,930 64,930
-------------- --------------
206,655 205,375
Less accumulated depreciation (194,042) (184,023)
-------------- --------------
Net equipment, furniture, and vehicles 12,613 21,352
-------------- --------------
TOTAL ASSETS $ 254,795 $ 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.
2
<PAGE> 3
FISHER BUSINESS SYSTEMS, INC.
LIABILITIES AND SHAREHOLDERS DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
October 31, January 31,
1995 1995
------------ -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 470,489 $ 722,908
Accrued compensation and benefits 1,149 10,885
Deferred revenue 135,684 362,048
Redeemable stock - 339,875
-------------- --------------
Total current liabilities 607,322 1,435,716
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SHAREHOLDERS' DEFICIT
Preferred stock, par value $.10, authorized
5,000,000 shares, 1,500,000 issued 150,000 -
Common stock, par value $.01, authorized 10,000,000 shares,
4,619,500 issued 46,195 27,532
Additional paid-in- capital 8,510,659 7,731,817
Accumulated deficit (9,052,631) (9,046,234)
Less treasury stock at cost (6,750) (6,750)
-------------- --------------
Total shareholders deficit (352,527) (1,293,635)
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TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 254,795 $ 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.
3
<PAGE> 4
FISHER BUSINESS SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
October 31, October 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES $ 527,470 $ 1,023,184 $ 154,398 $ 307,885
COST OF GOODS SOLD 192,431 375,249 65,286 67,055
-------------- -------------- ------------ ------------
GROSS MARGIN 335,039 647,935 89,112 240,880
-------------- -------------- ------------ ------------
EXPENSE
Allowance for doubtful accounts (recoveries) - 500 - (2,500)
Selling, general and administrative 453,536 1,362,526 155,849 364,404
-------------- -------------- ------------ ------------
TOTAL EXPENSES 453,536 1,363,026 155,849 361,904
-------------- -------------- ------------ ------------
NET (LOSS) INCOME ON OPERATIONS (118,497) (715,091) (66,737) (121,024)
-------------- -------------- ------------ ------------
OTHER INCOME (EXPENSE)
Gain (loss) on disposal - (98,025) - (111,040)
Interest icnome (expense) - (8,589) - 948
Forgiveness of debt 112,100 - 94,891 -
-------------- -------------- ------------ ------------
112,100 (106,614) 94,891 (110,092)
-------------- -------------- ------------ ------------
NET INCOME (LOSS) $ (6,397) $ (821,705) $ 28,154 $ (231,116)
============== ============== ============ ============
EARNINGS (LOSS) PER SHARE OF
COMMON STOCK $ - $ (.28) $ .01 $ (.08)
============== ============== ============ ============
Weighted average shares outstanding 4,205,370 2,886,533 4,439,822 3,053,200
</TABLE>
See notes to condensed financial statements
4
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FISHER BUSINESS SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (6,397) $ (821,705)
Net loss
Adjustments to reconcile net income to net cash provided
(used for) operating activities:
Depreciation and amortization 10,019 194,174
Forgiveness of debt (112,100) -
Allowance for losses and accounts receivable - 500
Loss on sale of assets - 124,027
Changes in operating assets and liabilities
affecting operations:
Accounts receivable (45,000) 678,806
Inventory - 66,899
Certificate of deposit 36,586 -
Other current assets 684 166,745
Accounts payable and accrued expenses (140,319) 50,252
Accrued compensation and benefits (9,736) (27,714)
Deferred revenue (226,364) (212,259)
--------------- ----------------
Net cash provided by (used for) operating activities (492,627) 219,725
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CASH FLOWS FROM INVESTING ACTIVITY
Net sale (purchases) of equipment and furniture (1,280) 250,000
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on line of credit - (410,484)
Proceeds from sale of preferred stock 300,000 -
Proceeds from sale of common stock 500,000 -
Repurchase of redeemable stock (192,370) -
--------------- ----------------
Net cash provided by (used for) financing activities 607,630 (410,484)
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INCREASE IN CASH AND CASH EQUIVALENTS 113,723 59,241
CASH AND CASH EQUIVALENTS, at beginning of period 69,219 3,830
--------------- ----------------
CASH AND CASH EQUIVALENTS, at end of period $ 182,942 $ 63,071
=============== ================
</TABLE>
See notes to condensed financial statements.
5
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FISHER BUSINESS SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 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 three month and
nine month periods ended October 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.
Loss per share for the fiscal periods ended October 31, 1995 and 1994 have been
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.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FINANCIAL CONDITION
Total assets increased $112,714 or 79% from January 31, 1995 due
primarily to increases in cash and cash equivalents of $113,723 and an increase
in accounts receivable of $45,000, 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 1996. 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 nine months ended October 31, 1995 were $527,470, a
decrease of $495,714, or 48%, from the prior period revenues of $1,023,184.
Revenues for the three months ended October 31, 1995 were $154,398, a decrease
of $153,487, or 50%, from the prior period revenues of $307,885. 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 $453,536 for the
nine months ended October 31, 1995 compared to $1,368,526 for the prior year
period. Selling, general and administrative expenses were $155,849 for the
three months ended October 31, 1995 compared to $364,404 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 nine months ended October
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 nine months ended October 31,
1995 of $6,397, as compared to a net loss of $821,705 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 $28,154 for the three months ended October
31, 1995, as compared to a net loss of $231,116 for the prior year period. The
net income for the quarter is attributable to continued revenues from existing
customers and resolution of maintenance billings.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 1995, the Company had a working capital deficit of
$365,140, 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.
7
<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. A
final Satisfaction of Judgment was filed by Woodall on September 29, 1995
following the purchase from Woodall of his 325,000 remaining shares of Common
Stock of the Company by Jeffrey C. Brenner. Mr. Brenner is a director of the
Company. In connection therewith, Mr. Woodall released the Company from all
claims which Woodall may have against the Company.
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,
8
<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.
On December 14, 1995, the Company entered into a definitive merger
agreement to merge its operations with AUBIS, L.L.C. of Atlanta, GA, a supplier
of systems and services to the food service industry. AUBIS also provides
network solutions to a variety of industries including health care, real
estate, and others. Under the terms of the merger agreement, AUBIS will
receive 10,500,000 shares of Common Stock of the Company, which will represent
a majority of the issued and outstanding shares of Common Stock of the
Company upon Consumation of the merger. The consummation of the merger is
subject to, among other things, the approval of the shareholders of the
Company.
Until such time as the AUBIS merger 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.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 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 October 31, 1995.
10
<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: December 8, 1995 By: /s/ Larry Fisher
--------------------- --------------------------------------
Larry Fisher, President and Chief Executive
Officer (chief executive and financial
officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 182,942
<SECURITIES> 0
<RECEIVABLES> 55,860
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 242,182
<PP&E> 206,655
<DEPRECIATION> 194,042
<TOTAL-ASSETS> 254,795
<CURRENT-LIABILITIES> 607,322
<BONDS> 0
<COMMON> 46,195
0
150,000
<OTHER-SE> (548,722)
<TOTAL-LIABILITY-AND-EQUITY> 254,795
<SALES> 527,470
<TOTAL-REVENUES> 527,470
<CGS> 192,431
<TOTAL-COSTS> 192,431
<OTHER-EXPENSES> 453,536
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (118,497)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 112,100
<CHANGES> 0
<NET-INCOME> (6,397)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
