SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
For Quarter ended March 31, 1996
/x/ Quarterly Report pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Commission File Number 1-10768
MEDIWARE INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 11-2209324
(State of other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1121 Old Walt Whitman Road
Melville, New York 11747-3005
(Address of Principal Executive Officer) (Zip Code)
(516) 423-7800
(Registrant's telephone number, including area code)
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 ______
As of December 31, 1995, there were 2,654,950 shares of Common Stock, $0.10 par
value, of the registrant outstanding.
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MEDIWARE Information Systems, Inc.
Index
Part I. Financial Information Page
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1995
(audited) and March 31, 1996 (unaudited)..............................2
Consolidated Statements of Operations
for the three months and nine months ended
March 31, 1996 & 1995 (unaudited).....................................3
Consolidated Statements of Cash Flows
for the nine months ended
March 31, 1996 & 1995 (unaudited).....................................4
Notes to Financial Statements.........................................5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................6 - 7
Signature Pages............................................................8 - 9
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MEDIWARE Information Systems, Inc. and Subsidiary
Consolidated Balance Sheet
As at March 31, 1996
(unaudited)
ASSETS Mar-31 Jun-30
1996 1995
--------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $699,000 $509,000
Accounts receivable, less estimated doubtful accounts 3,332,000 2,840,000
of $190,000 at March 31, 1996 and $176,000 at June 30,
1995
Current portion of long-term accounts receivable 14,000 30,000
Inventories 160,000 45,000
Prepaid expenses and other current assets 147,000 61,000
---------- ----------
Total current assets 4,352,000 3,485,000
Long-term accounts receivable, less current portion 6,000 12,000
Fixed assets, at cost, less accumulated depreciation of 309,000 318,000
$1,323,000 at March 31, 1996 and $1,205,000 at June 30,
1995
Capitalized software costs 1,024,000 998,000
Excess of cost over fair value of net assets acquired, 885,000 932,000
net of accumulated amortization of $351,000 at March 31,
1996 and $304,000 at June 30, 1995
Other assets 38,000 25,000
---------- ---------
TOTAL $6,614,000 $5,770,000
========== ===========
LIABILITIES
Current liabilities:
Accounts payable 599,000 674,000
Notes payable 1,179,000 1,299,000
Accrued expenses and other current liabilities 1,011,000 805,000
Advances from customers 891,000 697,000
Current portion of capital leases payable 7,000 7,000
---------- ---------
Total current liabilities 3,687,000 3,482,000
Capital leases payable, less current portion 15,000 19,000
---------- ---------
Total liabilities 3,702,000 3,501,000
---------- ---------
STOCKHOLDERS' EQUITY
Common stock - $.10 par value; authorized 12,000,000 265,000 260,000
shares; issued and outstanding; 2,654,950 shares at
March 31, 1996 and 2,596,410 shares at June 30, 1995
Additional paid-in capital 8,205,000 8,147,000
(Deficit) (5,558,000) (6,138,000)
Total stockholders' equity 2,909,000 2,269,000
---------- ----------
TOTAL $6,614,000 $5,770,000
========== ==========
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MEDIWARE Information Systems, Inc. and Subsidiary
Consolidated Statements of Operations
For the three and nine months ended March 31, 1996
(unaudited)
Three Months Ended Nine Months Ended March
March 31, 31,
------------------ -----------------------
(unaudited) (unaudited)
1996 1995 1996 1995
--------------------- ------------------------
Revenues:
System sales $1,495,000 $439,000 $4,519,000 $3,216,000
Services 1,216,000 1,045,000 3,214,000 2,953,000
---------------------- ------------------------
Total revenues 2,711,000 1,484,000 7,733,000 6,169,000
---------------------- ------------------------
Costs and expenses:
Cost of systems 608,000 320,000 1,375,000 1,178,000
Cost of services 459,000 446,000 1,350,000 1,233,000
Software development 429,000 394,000 1,185,000 1,141,000
costs
Selling, general and
administrative 1,122,000 836,000 3,093,000 2,763,000
---------------------- -----------------------
2,618,000 1,996,000 7,003,000 6,315,000
Earnings (loss) before other
income, interest and
provision for taxes 93,000 (512,000) 730,000 (146,000)
Other income - net 0 12,000 0 12,000
Interest income 3,000 1,000 3,000 2,000
Interest (expense) (42,000) (104,000) (150,000) (166,000)
---------------------- ----------------------
Earnings before taxes 54,000 (603,000) 583,000 (298,000)
Provision for income taxes 2,000 3,000 1,000
---------------------- ----------------------
NET EARNINGS (LOSS) $54,000 ($605,000) $580,000 ($299,000)
======================= ======================
New income (loss per share
of commom stock: Primary $0.02 $(0.23) $0.19 $(0.12)
======================= ======================
Assuming full dilution $0.16
Weighted average common ==========
shares outstanding: Primary 3,899,000 2,596,410 3,884,000 2,596,410
====================== ========================
4,037,000
Assuming full dilution =========
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MEDIWARE Information Systems, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Nine Months Ended
-----------------
-----------------
Mar-31 Mar-31
1996 1995
------------------------
(unaudited (unaudited)
Cash flows from operating activities:
Net earnings (loss) $580,000 ($299,000)
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Provision for doubtful accounts 14,000 17,000
Depreciation and amortization 490,000 530,000
Contract installment sales
Proceeds from contract installments receivable 22,000 5,000
Changes in operating assets and liabilities:
(Increase) in accounts receivable (506,000) (659,000)
(Increase) decrease in inventory (115,000) 1,000
(Increase) decrease in prepaid and other assets (99,000) 14,000
Increase in accounts payable, accrued expenses
and customer advances 321,000 224,000
-----------------------
Net cash provided by operating activities 707,000 (167,000)
-----------------------
Cash flows from investing activities:
Acquisitions of fixed assets (109,000) (83,000)
Capitalized software costs (351,000) (212,000)
------------------------
Net cash (used in) investing activities (460,000) (295,000)
------------------------
Cash flows from financing activities:
Proceeds of notes payable 275,000
Common stock issued 63,000
Repayment of long-term debt (120,000) (16,000)
------------------------
Net cash (used in) provided by financing
activities (57,000) 259,000
------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 187,000 (203,000)
Cash and cash equivalents, beginning of period 509,000 414,000
------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $699,000 $211,000
========================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $29,000 $26,000
Income taxes, net $3,000 $1,000
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MEDIWARE Information Systems, Inc., & Subsidiary
Notes to Unaudited Financial Statements
1. Financial Statements:
In the opinion of management, the accompanying unaudited, consolidated,
condensed financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial position
of the Company and its results of operations and cash flows for the interim
periods presented. Such financial statements have been condensed in accordance
with the applicable regulations of the Securities and Exchange Commission and
therefore, do not include all disclosures required by generally accepted
accounting principles. These financial statements should be read in conjunction
with the Company's audited financial statements for the year ended June 30, 1995
included in the Company's annual report filed on Form 10-KSB.
The results of operations for the nine months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the entire fiscal
year.
2. Earnings (Loss) Per Share:
Earnings (Loss) per share is computed on the basis of the weighted
average number of common shares outstanding during each period. Common share
equivalents relating to shares issuable upon exercise of stock options and
warrants and are included in the computation when the results are dilutive.
3. Income Taxes:
The provision for income taxes is minimal due to the benefit from the
net operating loss carry forward.
4. Related Party Transactions:
During the years ended June 30, 1995 and June 30, 1994 the Company
incurred legal fees of approximately $25,000 and $600,000, respectively, from a
firm at which a partner is a director of the Company. Substantially all of the
fees incurred during the year ended June 30, 1994 represent costs to enforce the
software license agreement and defend the perpetual license for one of the
software products. Included in accounts payable is a note payable to the
aforementioned firm of $137,000, which is due June 30, 1996 or earlier under
certain circumstances. If the note is not paid when due, the liability will
increase to $324,000 (see Company's form 10-KSB for the year ended June 30,
1995). See also "Liquidity and Capital Resources" for information about the
purchase of notes and warrants of the Company by investors, including two
directors.
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ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations: 1996 vs. 1995:
System Sales Revenue increased by $1,056,000 or 241% to $1,495,000 for
the three months ended March 31, 1996 compared to $439,000 for the comparable
period a year earlier. System Sales increased $1,303,000 or 41% for the nine
months ended March 31, 1996 to $4,519,000 compared to the comparable period last
year. The increases were due to the increased revenues by the Hemocare and
Digimedics product centers.
Service Revenues increased by $171,000 or 16% to $1,216,000 for the
three months ended March 31, 1996 versus $1,045,000 for the comparable period in
1995. Service revenues increased by $261,000 or 9% for the nine months ended
March 31, 1996 compared to the comparable period last year. These increases are
due to the increased software maintenance revenues from new system
implementations and an increased number of installations completed.
Cost of Systems increased by $288,000 or 90% to $608,000 for the three
months ended March 31, 1996 compared to $320,000 for the same period a year
earlier. Cost of Systems increased by $197,000 or 17% for the nine months ended
March 31, 1996 compared to $1,178,000 for the comparable period last year. This
is due to a higher number of system sales which included hardware.
Costs of Services increased by $13,000 or 3% to $459,000 for the three
months ended March 31, 1996 compared to $446,000 for the same period last year.
Cost of services increased by $117,000 or 9% for the nine months ended March 31,
1996 compared to $1,233,000 for the same period last year. The increase was due
to increased expense incurred from recent installations and increased expenses
due to existing hardware maintenance obligations.
Software Development costs increased by $35,000 or 9% to $429,000 for
the three months ended March 31, 1996 compared to $394,000 for the same period
last year. The increase was due to the increase in the number of people in
development. Software Development costs increased by $44,000 or 4% for the nine
months ended March 31, 1996 as compared to the comparable period last year.
Selling, General and Administrative costs increased by $286,000 or 34%
to $1,122,000 for the three months ended March 31, 1996 compared to $836,000 for
the same period last year. Selling, General and Administrative costs increased
by $330,000 or 12% as compared to the same period last year. This increase
reflects the increased sales commissions and expenses associated with marketing
literature.
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Interest Expense decreased by $62,000 to $42,000 for the three months
ended March 31, 1996 compared to $104,000 for the same period last year.
Interest Expense decreased by $62,000 to $150,000 for the nine months ended
March 31, 1996 as compared to $166,000 for the same period the year before. This
was due to completion of the amortization of debt discount related to the bridge
financing.
Net Earnings increased by $659,000 or 109% to $54,000 for the three months
ended March 31, 1996 compared to a net loss of $605,000 for the comparable
period last year. Net earnings for the nine months ended March 31, 1996
increased by $879,000 or 294% compared to a net loss of $299,000 for the
comparable period last year. The increased earnings are due to increased systems
revenue for Hemocare and Digimedics product centers.
Liquidity and Capital Resources:
The Company has extended its bridge loans to enable the Company to have
available sufficient cash to take care of anticipated capital needs. The Company
has also acquired a credit facility of $75,000 from its bank in New York, and is
currently negotiating to further expand its credit facility. However, it cannot
be assured at this time that it will be successful. On April 9, 1996, the
Company announced that it has signed a non-binding letter of intent to purchase
a healthcare information system business. Completion of the transaction will be
subject to satisfaction of due diligence review, approval of the boards of both
companies, a definitive purchase agreement, and appropriate financing on the
part of the Company. The Company has engaged in an investment banking firm to
raise funds to finance the acquisition and to provide working capital.
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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.
MEDIWARE Information Systems, Inc.
----------------------------------
(Registrant)
May 14, 1996 By: /s/ Les N. Dace
------------ --------------------------
(Date) Les N. Dace, President CEO
May 14, 1996 By: /s/ Les N. Dace
------------ --------------------------
(Date) Les N. Dace, CFO
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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.
MEDIWARE Information Systems, Inc.
----------------------------------
(Registrant)
May 14, 1996 By: /s/ Les N. Dace
------------ --------------------------
(Date) Les N. Dace, President CEO
May 14, 1996 By: /s/ Les N. Dace
------------ ---------------------------
(Date) Les N. Dace, CFO
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MEDIWARE INFORMATION SYSTEMS, INC. AND SUBSIDIARY
EXHIBIT 11
SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
Three months ended Nine months ended
March 31, 1996 March 31, 1996
------------------ -----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Modified treasury stock method adjustment
to net income:
Net income $54,000 $54,000 $580,000 $580,000
Reduction in interest expense from retiring debt 25,000 23,000 143,000 83,000
------- ------- -------- --------
$79,000 $77,000 $723,000 $663,000
======= ======= ======== ========
Modified treasury stock method adjustment
to common stock:
Weighted average shares outstanding 2,654,950 2,654,950 2,654,950 2,654,950
Add: Net shares from exercise of options/warrants:
Assumed exercise of options 1,774,991 1,774,991 1,759,713 1,759,713
Assumed repurchase of shares 530,990 382,647 530,990 377,758
Incremental shares 1,244,001 1,392,344 1,228,723 1,381,955
--------- --------- ---------- ---------
Adjusted shares 3,898,951 4,047,294 3,883,673 4,036,905
========= ========= ========= =========
EARNINGS PER SHARE $0.02 $0.02 $0.19 $0.16
========= ========= ========= =========
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