1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark one)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: September 30, 2000
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transaction period from: _______________ to ________________
Commission File number: 0-24031
Integrated Business Systems and Services, Inc.
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0910139
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
115 Atrium Way, Suite 228, Columbia, SC 29223
(Address of principal executive offices)
(803) 736-5595
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(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 Exchange Act during the past 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. (X) YES ( ) NO
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
14,242,869 shares of no par value common stock outstanding at September 30, 2000
Transitional Small Business Disclosure Format (check one) ( ) YES (X) NO
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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
INDEX
PAGE
NUMBER
------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets - September 30, 2000, and
December 31, 1999 3
Statements of Operations for the three months and the
nine months ended September 30, 2000, and 1999,
respectively 4
Statements of Cash Flows for the nine months
ended September 30, 2000, and 1999, respectively 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 12
PART II OTHER INFORMATION
Items 1 - 6 13
SIGNATURES 14
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PART 1 FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2000 1999
(UNAUDITED) (AUDITED)
----------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,617,154 $ 82,996
Accounts receivable 634,044 91,638
Investments 50,000 0
Related party note receivable 0 183,680
Interest receivable 35,966 0
Unbilled revenue 28,885 28,885
Notes receivable 30,000 0
Other prepaid expenses 84,823 50,426
----------------------------------
Total current assets 2,480,872 437,625
Capitalized software costs, net 641,797 768,001
Property and equipment, net 457,568 155,654
Related party receivable 78,449 82,944
Other assets 4,128 2,793
----------------------------------
Total assets $ 3,662,814 $ 1,447,017
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Notes payable $ 0 $ 28,976
Accounts payable 50,764 129,223
Accrued liabilities
Accrued compensation and benefits 110,020 63,767
Accrued payroll taxes 6,694 305,402
Other 70,167 107,703
Deferred revenue 35,364 88,273
----------------------------------
Total current liabilities 273,009 723,344
Long-term debt, net of current portion 1,250,000 1,250,000
Subordinated debt 0 180,000
----------------------------------
Total liabilities 1,523,009 2,153,344
Commitments and contingencies -- --
Stockholders' equity (deficiency):
Common shares, voting, no par value,
100,000,000 shares authorized,
14,242,869 and 10,537,635 shares
outstanding at September 30, 2000, and
December 31, 1999, respectively 10,825,011 4,142,098
Notes receivable - stock (944,800) (190,800)
Accumulated deficit (7,740,406) (4,657,625)
----------------------------------
Total shareholders' equity (deficiency) 2,139,805 (706,327)
----------------------------------
Total liabilities and shareholders'
equity (deficiency) $ 3,662,814 $ 1,447,017
==================================
The accompanying notes are an integral part of these financial statements.
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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------------------- -------------------------------------
2000 1999 2000 1999
----------------------------------- -------------------------------------
REVENUES
Services and other income $ 80,080 $ 44,860 $ 246,700 $ 459,507
Hardware sales 0 25 0 2,551
Software licensing 0 1,853 500,000 7,411
Maintenance 38,888 38,748 83,065 122,565
----------------------------------- -------------------------------------
Total revenues 118,968 85,486 829,765 592,034
----------------------------------- -------------------------------------
OPERATING EXPENSES
Cost of revenues 249,799 105,029 578,384 387,202
Research and development costs 60,569 248,907 187,299 315,041
General and administrative 892,138 270,545 2,282,206 817,667
Sales and marketing 463,819 91,669 1,010,109 200,935
----------------------------------- -------------------------------------
Total operating expenses 1,666,325 716,150 4,057,998 1,720,845
----------------------------------- -------------------------------------
Loss from operations (1,547,357) (630,664) (3,228,233) (1,128,811)
OTHER INCOME (EXPENSE)
Interest expense (36,252) (22,940) (85,317) (64,509)
Interest income 51,440 2,936 140,284 4,254
Other income 5 0 90,485 6,582
----------------------------------- -------------------------------------
Total 15,193 (20,004) 145,452 (53,673)
----------------------------------- -------------------------------------
Net loss $ (1,532,164) $ (650,668) $ (3,082,781) $ (1,182,484)
=================================== =====================================
Earnings (loss) per share:
----------------------------------- -------------------------------------
Basic and diluted $ (0.11) $ (0.07) $ (0.23) $ (0.13)
=================================== =====================================
----------------------------------- -------------------------------------
Weighted average common shares outstanding 14,218,996 9,459,089 13,227,941 9,081,544
=================================== =====================================
The accompanying notes are an integral part of these financial statements.
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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS
ENDED SEPTEMBER 30,
-------------------------------------
2000 1999
-------------------------------------
OPERATING ACTIVITIES
Net loss $ (3,082,781) $ (1,182,484)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation/amortization 62,086 44,471
Amortization of software costs 126,204 95,070
Write-off of accounts payable (90,285) 0
Changes in assets and liabilities
Investments (50,000) 0
Accounts receivable (542,406) (82,251)
Interest receivable (35,966) (2,077)
Unbilled revenue 0 (1,468)
Notes receivable (30,000) 0
Prepaid commissions 0 (50,000)
Prepaid expenses and other assets (35,732) (41,920)
Accounts payable 11,826 (36,281)
Accrued expenses (289,992) (666,158)
Deferred revenue (52,909) (65,952)
-------------------------------------
Cash used in operating activities (4,009,955) (1,989,050)
-------------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment, net (364,000) (25,758)
Capitalized internal software development costs 0 (52,144)
Related party note receivable 183,680 0
Related party receivable 4,495 0
-------------------------------------
Cash used in investing activities (175,825) (77,902)
-------------------------------------
FINANCING ACTIVITIES
Payments on notes payable, net (28,976) (99,852)
Proceeds from long-term debt 0 1,250,000
Payments on long-term debt 0 (42,000)
Sale of common shares 4,872,067 1,156,922
Proceeds from exercise of common stock options and warrants 876,847 15,644
Payable to a related party, net 0 (15,300)
-------------------------------------
Cash provided by financing activities 5,719,938 2,265,414
-------------------------------------
Net increase in cash 1,534,158 198,462
Cash and cash equivalents at beginning of period 82,996 16,593
-------------------------------------
Cash and cash equivalents at end of period $ 1,617,154 $ 215,055
=====================================
The accompanying notes are an integral part of these financial statements.
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NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION:
The accompanying unaudited 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 Item 310 of Regulation S-B
promulgated by the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete Financial Statements. In the opinion of
management, all adjustments (consisting only of those of a normal recurring
nature) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000. For further information, refer to the audited
financial statements and footnotes thereto included in the Company's Form 10-KSB
for year ended December 31, 1999.
EARNINGS PER SHARE:
The computation of basic earnings (loss) per share and diluted earnings (loss)
per share is in conformity with the provisions of Statement of Financial
Accounting Standards No. 128.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which the Company
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the financial statements and notes thereto.
Results of Operations
For the three months ended September 30, 2000, as compared to the three months
ended September 30, 1999
Revenues. Total revenues increased $33,482 to $118,968 in the three months ended
September 30, 2000, from $85,486 in the three months ended September 30,1999.
This increase was primarily attributable to an increase in Service revenue due
to an increase in the Synapse based product sales.
Cost of Revenues. Total cost of revenues increased $144,770 to $249,799 in the
three months ended September 30, 2000, from $105,029 in the three months ended
September 30, 1999. This increase was attributable to increases in direct labor
costs due to an approximate 50% increase in the number of employees in the
development, design, production and project management areas.
The cost of revenues as a percentage of total revenues was 210% and 123% in the
three months ended September 30, 2000, and 1999, respectively. Accordingly, the
gross margin was (110%) and (23%) in the three months ended September 30, 2000,
and 1999, respectively.
Research and Development. Research and development costs decreased $188,338 to
$60,569 in the three months ended September 30, 2000, from $248,907 in the three
months ended September 30, 1999. The Company released Version 2.0 of the Synapse
Manufacturing System for general product availability at the end of the first
quarter of 1999; therefore, additional development costs were expensed rather
than capitalized. Research and development costs represented approximately 51%
and 291% of total revenues for the three months ended September 30, 2000, and
1999, respectively.
General and Administrative. General and administrative expenses, including
interest expense, increased $634,905 to $928,390 in the three months ended
September 30, 2000, from $293,485 in the three months ended September 30, 1999.
General and administrative expenses increased due to the addition of a Vice
President of Sales, a Chief Financial Officer and General Counsel, a Systems
Engineer and three clerical employees, general salary increases, related benefit
costs, employment recruitment and placement costs, as well as increases in
internet expense, governance fees, professional and consultant fees,
depreciation expense, interest expense and an increase in rent expense due to
the increased office space leased in Columbia and for the lease of office space
in Detroit, Michigan. General and administrative expenses, including interest
expense, represented approximately 780% and 343% of total revenues in the three
months ended September 30, 2000, and 1999, respectively.
Sales and Marketing. Sales and marketing expenses increased $372,150 to $463,819
in the three months ended September 30, 2000, from $91,669 in the three months
ended September 30, 1999. This increase was attributable to increases in
marketing salaries due to the addition of three sales representatives, a sales
support engineer and a business development specialist as well as increases in
brochures and collateral material, dues and subscriptions, public relations,
investor public relations awareness expenses, telephone, travel and
entertainment expenses and a reclassification of prepaid commissions. Sales and
marketing expenses represented approximately 390% and 107% of total revenues in
the three months ended September 30, 2000, and 1999, respectively.
Corporate and Other Related Non-Operating Items. Interest income increased
$48,504 in the quarter ended September 30, 2000, as a result of cash management
on cash balances of the Company. The average interest rate earned by the Company
was approximately 6.00%.
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For the nine months ended September 30, 2000, as compared to the nine months
ended September 30, 1999
Revenues. Total revenues increased $237,731 to $829,765 in the nine months ended
September 30, 2000, from $592,034 in the nine months ended September 30, 1999.
This increase was primarily attributable to an increase in License revenue due
to an increase in the Synapse based product sales which was partially offset by
a continued decrease in the sales of services, data collection equipment and
maintenance due to the increased emphasis on the completion and sales of the
Company's new core products, Synapse Manufacturing, Synapse EAI+, and Synapse
B2B. The Company's strategy during 1998 and 1999 was to focus substantially all
of the Company's efforts on completing and marketing it's core Synapse based
products while recognizing that the strategy would result in a substantial
reduction in the Company's service revenue during these periods. In addition to
the reduction of service based business, as the first install of Synapse
Manufacturing to a manufacturer of women's knitted hosiery neared completion,
revenue from this customer substantially decreased.
Cost of Revenues. Total cost of revenues increased $191,182 to $578,384 in the
nine months ended September 30, 2000, from $387,202 in the nine months ended
September 30, 1999. This increase was attributable to an increase in direct
labor costs due to an approximate 50% increase in the number of employees in the
development, design, production and project management areas as well as an
increase in the amortization of software costs due to the completion of Synapse
Manufacturing 2.0 at the end of the first quarter of 1999.
The cost of revenues as a percentage of total revenues was 70% and 65% in the
nine months ended September 30, 2000, and 1999, respectively. Accordingly, the
gross margin was 30% and 35% in the nine months ended September 30, 2000, and
1999, respectively.
Research and Development. Research and development costs decreased $127,742 to
$187,299 in the nine months ended September 30, 2000, from $315,041 in the nine
months ended September 30, 1999. The Company released Version 2.0 of the Synapse
Manufacturing System for general product availability at the end of the first
quarter of 1999; therefore, additional development costs were expensed rather
than capitalized. Research and development costs represented approximately 23%
and 53% of total revenues for the nine months ended September 30, 2000, and
1999, respectively.
General and Administrative. General and administrative expenses, including
interest expense, increased $1,485,347 to $2,367,523 in the nine months ended
September 30, 2000, from $882,176 in the nine months ended September 30, 1999.
General and administrative expenses increased due to the addition of a Vice
President of Sales, a Chief Financial Officer and General Counsel, a Systems
Engineer and three clerical employees, general salary increases, related benefit
costs, employment recruitment and placement costs, as well as increases in
internet expense, governance fees including Nasdaq application fees,
professional and consultant fees, depreciation expense, interest expense and an
increase in rent expense due to the increased office space leased in Columbia
and for the lease of office space in Detroit, Michigan. General and
administrative expenses, including interest expense, represented approximately
285% and 149% of total revenues in the three months ended September 30, 2000,
and 1999, respectively.
Sales and Marketing. Sales and marketing expenses increased $809,174 to
$1,010,109 in the nine months ended September 30, 2000, from $200,935 in the
nine months ended September 30, 1999. This increase was attributable to
increases in marketing salaries due to the addition of three sales
representatives, a sales support engineer and a business development specialist
as well as increases in brochures and collateral material, dues and
subscriptions, public relations, investor public relations awareness expenses,
telephone, travel and entertainment expenses and a reclassification of prepaid
commissions. Sales and marketing expenses represented approximately 122% and 34%
of total revenues in the three months ended September 30, 2000, and 1999,
respectively.
Corporate and Other Related Non-Operating Items. Interest expense increased
$20,808 to $85,317 in the nine months ended September 30, 2000, from $64,509 in
the nine months ended September 30, 1999. This increase was due to the net
effect of the $1,250,000 convertible debenture in the third quarter of 1999, and
the repayments of various other notes in 1999. Interest income increased
$136,030 in the nine months ended September 30, 2000, as a result of cash
management on cash balances of the Company. The average interest rate earned by
the Company was approximately 5.85%. Other income of $90,485 in the nine months
ended September 30, 2000, was primarily the result of a gain related to the
write-off of payable balances to vendors included in accounts payable.
Management determined that accounts payable balances totaling $90,265 were no
longer valid claims against the Company, and accordingly, reduced the payables
balance.
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Financial Condition at September 30, 2000
Cash and cash equivalents increased by $1,534,158 during the nine months ended
September 30, 2000.
Accounts receivable customers increased by $542,406 during the nine months ended
September 30, 2000, primarily reflecting an increase in Synapse based product
license sales.
The $450,335 decrease in current liabilities during the nine months ended
September 30, 2000, is due to the partial use of funds from private placements
on February 15, 2000, and March 8, 2000, and due to the write off of certain
accounts payables.
The Company's current assets exceeded its current liabilities at September 30,
2000, by $2,207,863.
Liquidity and Capital Resources
Prior to 1997, the Company primarily financed its operations through revenues
from operations, including funded research and development revenues, and
occasional short term loans from the Company's principals or their
acquaintances. Since the middle of 1997, the Company has financed its operations
primarily through private and public offerings of Common Stock and convertible
debt, and to a lesser extent through borrowings from third-party lenders and
from revenues from operations.
During 1997, the Company received approximately $1,540,000 in net proceeds
(after deduction of commissions and offering costs) from the sale of 3,800,000
shares of its Common Stock, of which approximately $1,220,000 was received
through the Company's initial public offering in November, 1997, and
approximately $320,000 was received from a private offering in June of 1997. The
Company used a portion of these proceeds to repay debt of approximately
$320,000. In addition, in November, 1997, convertible debt issued by the Company
in March, 1997 in the principal amount of $116,700 was converted into shares of
Common Stock.
During 1998 and 1999, the Company received approximately $288,400 and $43,500,
respectively, in gross proceeds from the exercise of warrants for the purchase
of 430,000 and 56,000 shares, respectively, of the Company's Common Stock.
In June 1998, the Company completed a private placement of five-year convertible
notes in the amount of $500,000 and non-transferable warrants entitling the
holders to purchase an aggregate of 541,000 shares of common stock of the
Company. The notes, which bore interest at 12% per year, were converted in 1999
and 2000 into 346,692 and 163,934 shares, respectively, of common stock of the
Company. In November and December, 1999, 259,680 shares were issued upon the
partial exercise of the warrants and additional warrants were issued entitling
the holders to purchase an aggregate of 259,680 shares of the Company. In
February, 2000, 259,680 shares were issued upon the exercise of these warrants
and additional warrants were issued entitling the holders to purchase an
aggregate of 259,680 shares of the Company at $5.94 per share during the first
year, $6.83 per share during the second year, $7.85 per share during the third
year, $9.03 per share during the fourth year and $10.38 per share during the
fifth year. In May and June, 2000, 281,320 shares were issued upon the partial
exercise of these warrants.
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In the first quarter of 1999, the Company completed a private placement of
800,000 shares of Common Stock and two-year warrants for the purchase of 80,000
shares of Common Stock, pursuant to which the Company received gross proceeds of
$800,000. In February, 2000, the Company received gross proceeds of $80,000 from
the exercise of 80,000 of these warrants.
In the first quarter of 1999, the Company completed a private placement of
60,000 shares of Common Stock and two-year warrants for the purchase of 6,000
shares of Common Stock, pursuant to which the Company received gross proceeds of
$60,000. Under the terms of this private placement, the Company also issued
1,800 shares of Common Stock as finder's fees. In August, 2000, the Company
received gross proceeds of $6,250 from the exercise of 5,000 of these warrants.
In the second quarter of 1999, the Company completed a private placement of
Common Stock Purchase Warrants for the purchase of 1,000,000 shares of Common
Stock, at $1.00 per share pursuant to which the Company received gross proceeds
of $200,000. In the fourth quarter of 1999, the Company received $200,000 in
gross proceeds from the exercise of 200,000 of these warrants. A new Common
Stock Warrant Agreement was issued for the purchase of the balance of 800,000
shares of Common Stock at $1.00 per share or $0.75 per share if exercised prior
to November 1, 2000. In the first quarter of 2000, the Company received a
secured promissory note in the principal amount of $600,000 for the exercise of
warrants for the purchase of 800,000 shares of the Company's Common Stock at
$0.75 per share. The note has an interest rate of 5% per annum. The note matures
on the earlier of the date five days following written notice from the Company
to the note holder of the declaration of any registration with the Securities
and Exchange Commission of the shares under the warrants, or March 2, 2002.
In the third quarter of 1999, the Company completed a private placement for an
aggregate principal amount of $1,250,000 through a Convertible Debenture with an
interest rate of 7% through July 1, 2000; 10% thereafter with a maturity date of
January 1, 2002. In conjunction with the Convertible Debenture, the Company also
entered into a Common Stock Purchase Warrant Agreement for the purchase of
1,850,000 shares of Common Stock. In the first quarter of 2000, the Company
received a secured promissory note in the principal amount of $154,000 for the
exercise of warrants for the purchase of 110,000 shares of the Company's Common
Stock. The note has an interest rate of 5% per annum. The note matures on the
earlier of the date five days following written notice from the Company to the
note holder of the declaration of any registration with the Securities and
Exchange Commission of the shares under the warrants, or March 2, 2002.
In the first quarter of 2000, the Company completed a private placement of
250,000 units for $8.00 per unit for aggregate proceeds of $2,000,000. Each unit
consisted of two shares of Common Stock and a detachable three-year warrant for
the purchase of one share of Common Stock. The warrants are exercisable at $5.00
per share during the first year following their issuance, $6.00 per share during
the second year following their issuance, and at $6.50 per share during the
third year following their issuance
In the first quarter of 2000, the Company completed a private placement of
300,000 units for $10.00 per unit for aggregate proceeds of $3,000,000. Each
unit consisted of four shares of Common Stock, and a detachable Class A
five-year warrant for the purchase of one share of Common Stock and a detachable
Class B five-year warrant for the purchase of one share of Common Stock. The
Class A and Class B warrants are exercisable at $2.50 and $3.50 per share,
respectively.
The Company expects that the proceeds from its capital raising activities along
with revenues generated from operations will be adequate to meet the Company's
projected working capital and other cash requirements for at least the next
twelve months.
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The Company entered into a lease agreement for its principal executive offices
effective November 1, 1999, for a 5 year period with an option to renew for one
5-year period at market rates. The lease is for 18,124 square feet of office
space at a base rent of $276,391 for the first year. The second year base rent
increases to $280,922. The third through fifth year base rent increases to
$285,453. The Company entered into a lease addendum effective March 1, 2000, and
continuing in effect through the existing lease term of October 31, 2004. This
addendum is for 1,350 square feet of office space making the office space 19,474
square feet at a base rent of $296,978 for the first year. The second year base
rent increases to $301,847. The third through fifth year base rent increases to
$306,716.
Net cash used in operating activities was approximately $4,010,000 during the
nine months ended September 30, 2000, as compared to approximately $1,989,000
during the nine months ended September 30, 1999. The increase in cash used in
operating activities was mainly due to an increase in the net loss, an increase
in customer accounts receivable, an increase in prepaid expenses and a decrease
in current liabilities.
Net cash used by investing activities was approximately $175,800 during the nine
months ended September 30, 2000, as compared to net cash used of approximately
$77,900 during the nine months ended September 30, 1999. The net cash used was
due to the purchase of equipment and software offset by the payoff of a related
party note receivable.
Net cash provided by financing activities was approximately $5,719,900 during
the nine months ended September 30, 2000, as compared to approximately
$2,265,400 during the nine months ended September 30, 1999. The net cash
provided by financing activities resulted primarily from the completion of
private placements of approximately $4,872,000, the receipt of approximately
$876,800 from the exercise of Common Stock options and warrants offset by
payments on the Company's short-term debt.
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Advisory Note Requiring Forward-looking Statements
This form 10-QSB contains forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. The Company
cautions readers of this Form 10-QSB that such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from those expressed or implied by such forward-looking statements.
Although the Company's management believes that their expectations of future
performance are based on reasonable assumptions within the bounds of their
knowledge of their business and operations, there can be no assurance that
actual results will not differ materially from their expectations. Factors which
could cause actual results to differ from expectations include, among other
things, the risks associated with start-up losses, liquidity problems,
uncertainty of revenues, markets, profitability and the need for additional
funding; the risks that the Company may be unable to raise additional capital
through private financings, debt or equity offerings or collaborative
arrangements with others on acceptable terms; intense competition from a variety
of competitors with greater resources and market acceptance; the Company's
limited experience in assembling a sales and marketing team and strategy; the
potential need to make continuing significant investments in software
development in response to rapidly evolving technologies and technological
shifts; the risks associated with the potential loss of one or more key
customers of the Company; the Company's dependence upon key personnel; the
challenges and uncertainties in the implementation of the Company's expansion
and development strategies; and other factors described in other reports filed
by the Company with the Securities and Exchange Commission.
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PART II
OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
The Company is not party to any pending litigation.
Item 2 CHANGES IN SECURITIES
In the third quarter of 2000, the Company received $56,250 in gross
proceeds from two private investors from the exercise of warrants for
the purchase of 55,000 shares of the Company's Common Stock. The
exercise price for 50,000 shares was $1.00 per share and the exercise
price for 5,000 shares was $1.25 per share. All of the securities were
issued pursuant to the exemption from registration contained in Section
4(2) and Rule 506 of Regulation D of the Securities Act of 1933 as a
transaction, not involving a general solicitation, in which the
purchaser was purchasing for investment. The Company believes that each
purchaser was given or had access to detailed financial and other
information with respect to the Company and possessed requisite
financial sophistication.
Item 3 DEFAULTS UPON SENIOR SECURITIES
This item is not applicable.
Item 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders of the Company
during the third quarter of fiscal year 2000.
Item 5 OTHER INFORMATION
This item is not applicable.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
A Form 8-K dated July 25, 2000 was filed to report the announcement of
an agreement with Symbol Technologies; the appointment of a new Chief
Financial Officer and General Counsel; the certification of Synapse
EAI+(TM) for EIGNER PARTNER'S axalant(TM) software; the filing of a
patent application for Synapse technology; and the strategic alliance
between the Company and BRAIN North America, Inc.
A Form 8-K dated August 9, 2000 was filed to reflect the Company's
notification that its Common Stock was approved for listing on the
Nasdaq National Market System.
A Form 8-K dated October 30, 2000 was filed to report the announcement
of an arrangement between the Company and Sun Developer Connection(SM)
Program.
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SIGNATURE
In accordance with 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.
Integrated Business Systems and Services, Inc.
(Registrant)
/s/ Harry P. Langley
- ----------------------------------------------
Harry P. Langley
President, Treasurer, Chief Executive
Officer and Chairman of the Board
Date: November 14, 2000
Page 14