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$5,000 PROFIT ISN'T MUCH
THAT'S ALL BARRISTER EARNED IN QUARTER, STOCKHOLDERS TOLD

Barrister Information Systems Corp. made only $5,000 in the first quarter and expects its results to be about the same during the second.

"We're not pleased," Chief Executive Henry P. Semmelhack told shareholders during the company's annual meeting Friday.

"We're not satisfied with the performance of the company," he said. "Obviously, we're not where we want to be, but there are some signs that are very good."

The brightest part of Barrister's business has been its Javelan professional office management software, which has been installed at about 100 firms. Barrister's product sales jumped by 39 percent during the fiscal year that ended in March, although its software revenues have declined for the last two quarters.

Still, Semmelhack sees a lot of upside for Javelan. "There's a lot going on with Javelan," he said. "I wouldn't say we're satisfied with the progress, but we're encouraged."

The company updated the Javelan software last year to allow for more detailed billing, based on particular tasks, and to allow easier access to its database of information. Barrister currently is testing an upgrade that would include case management features.

"It's a relentless business. We cannot stand still," Semmelhack said.

Semmelhack said the company also hopes to be able to capitalize on Javelan's ability to handle transactions in the year 2000 and beyond. "There are many products out there that will not be able to make the transition to the year 2000," he said, predicting a "crescendo of activity" as firms switch to new software that can accommodate dates in the 21st century.

Semmelhack said Barrister's service business, which was battered by the loss of some major subcontracts from International Business Machines Corp., continues to struggle. "Service is the challenge for us," he said.

While Barrister has signed up new clients, especially among computer distributors and resellers to stem the 2 percent decline in service revenues that hit the firm last year, the company now faces the challenge of translating its rising service sales into higher profits.

"Getting that revenue engine growing now gives us the opportunity to harvest some profits," Semmelhack said.

But he warned the 17 people who attended the meeting, most of whom were company executives, directors or employees, that earning more from the service business is going to take some work.

"On the revenue side, we're beginning to make progress," he said. "The key now is to control expenses."

Indeed, Barrister has sharply increased its marketing efforts, which immediately boosted the company's expenses, but the results from those initiatives will take time to surface. The company also is installing a new computer system that will help it track costs associated with its service business in a timely fashion, which Semmelhack said will allow the firm to quickly make price adjustments or other changes needed to make sure a job is profitable.

"The investments we made can't be harvested right away. It takes months," he said.

Barrister, which currently has a $250,000 line of credit from Key Bank, also is negotiating with other banks to expand its borrowing capacity. Semmelhack said he hopes to reach an agreement within the next four to six weeks.

Shareholders overwhelmingly approved a plan to have the company reincorporate as a Delaware firm. The company currently is a New York corporation.

The switch will allow Barrister to take advantage of Delaware's more flexible corporate laws, which make it easier for companies to become involved in mergers and acquisitions, Semmelhack said.

"With the move to Delaware, we will begin a more aggressive campaign to see what opportunities exist," he said. Semmelhack said those opportunities could include Barrister buying other firms -- or being acquired by another company.

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