SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2004
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Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER 0-25413
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INTERNATIONAL IMAGING SYSTEMS, INC.
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(Exact name of Small Business Issuer as Specified in its Charter)
DELAWARE 65-0854589
- --------------------------------- ------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
6689 N.W. 16th Terrace, Fort Lauderdale, FL 33309
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(Address of Principal Executive Offices)
(954) 978-9090
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(Issuer's Telephone Number, Including Area Code)
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(Former Name and Former Address of Issuer Since Last Report)
Check whether the issuer (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 [ ] No [X]
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: As of December 3, 2004, the Registrant
had 6,028,700 shares of Common Stock outstanding.
Transmittal Small Business Disclosure Format (check one)
Yes [ ] No [X]
INTERNATIONAL IMAGING SYSTEMS, INC.
FORM 10-QSB
For the Quarter Ended June 30, 2004
INDEX
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Page
Number
------
PART I FINANCIAL INFORMATION
Item 1 - Consolidated Balance Sheet at June 30, 2004 1
Consolidated Statements of Operations
for the three months and six months
ended June 30, 2004 and June 30, 2003 2
Consolidated Statements of Cash Flows
for the six months ended
June 30, 2004 and June 30, 2003 3
Notes to Consolidated Financial Statements 4
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations 12
Item 3 - Controls and Procedures 14
PART II
Item 1 - Legal Proceedings 16
Item 2 - Changes in Securities 16
Item 3 - Defaults Upon Senior Securities 16
Item 4 - Submission of Matters to a Vote of Security Holders 16
Item 5 - Other Information 16
Item 6 - Exhibits and Reports on Form 8-K 16
Signature 17
Exhibit 31.1 18
Exhibit 32.1 20
INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 2004
ASSETS
CURRENT ASSETS:
Accounts Receivable - Net of Allowance for Doubtful
Accounts of $24,324 $ 389,450
Inventories 127,379
Net Assets of Discontinued Operations 4,869
-----------
TOTAL CURRENT ASSETS 521,698
PROPERTY AND EQUIPMENT 194,647
OTHER ASSETS:
Security Deposits 3,700
-----------
TOTAL ASSETS $ 720,045
===========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Notes and Loans Payable - Current $ 186,711
Accounts Payable 670,179
Accrued Expenses 37,836
Customer Deposits 26,962
-----------
TOTAL CURRENT LIABILITIES 921,688
NOTES AND LOANS PAYABLE - Non-Current 522,379
-----------
TOTAL LIABILITIES 1,444,067
-----------
SHAREHOLDERS' DEFICIENCY:
Preferred Stock - $.001 Par Value - 1,000,000 Shares
Authorized; -0- Shares Issued and Outstanding --
Common Stock - $.001 Par Value - 29,000,000 Shares
Authorized; 6,028,700 Shares Issued and Outstanding 6,029
Additional Paid-In Capital 96,134
Accumulated Deficit (826,185)
-----------
TOTAL SHAREHOLDERS' DEFICIENCY (724,022)
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 720,045
===========
See accompanying notes to consolidated financial statements.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NET SALES $ 1,611,195 $ 1,680,695 $ 704,590 $ 833,187
COST OF GOODS SOLD 1,150,101 1,082,201 501,908 548,999
------------ ------------ ------------ ------------
GROSS PROFIT 461,094 598,494 202,682 284,188
GENERAL AND ADMINISTRATIVE
EXPENSES 683,607 566,484 378,627 290,259
------------ ------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (222,513) 32,010 (175,945) (6,071)
INCOME FROM DISCONTINUED
OPERATIONS 1,855 -- 655 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (220,658) $ 32,010 $ (175,290) $ (6,071)
============ ============ ============ ============
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE $ (.037) $ .007 $ (.029) $ (.001)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING:
Basic and Diluted 6,028,700 4,656,200 6,028,700 4,656,200
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2004 AND 2003
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (220,658) $ 32,010
Adjustments to Reconcile Net Income (Loss)
to Net Cash (Used) by Operating Activities:
Depreciation 27,594 21,222
Net Assets of Discontinued Operations (4,869) (3,520)
Change in Operating Assets and Liabilities:
Accounts Receivable 61,746 (100,023)
Inventories 27,151 (186,083)
Accounts Payable 107,959 100,547
Accrued Expenses (7,397) (150)
Customer Deposits 470 34,607
------------ ------------
NET CASH (USED) BY OPERATING ACTIVITIES (8,004) (101,390)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for Property and Equipment (10,167) (13,951)
------------ ------------
NET CASH (USED) BY INVESTING ACTIVITIES (10,167) (13,951)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Borrowings 304,500 328,236
Repayment of Borrowings (303,082) (220,325)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,418 107,911
------------ ------------
NET (DECREASE) IN CASH (16,753) (7,430)
CASH - Beginning of Period 16,753 7,430
------------ ------------
CASH - End of Period $ -- $ --
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest Paid $ 30,559 $ 10,743
============ ============
Income Taxes Paid $ -- $ --
============ ============
See accompanying notes to consolidated financial statements.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Nature of Operations:
A.M.S. Marketing, Inc. was incorporated in the State of Delaware
on July 23, 1998. In October, 2003, the Company changed its name
to International Imaging Systems, Inc.
The Company, through its wholly-owned subsidiary, Advanced
Imaging Systems, LLC ("AIS"), is principally engaged in the
manufacture and sale of telephone credit cards, check cashing
cards and security cards of all types. The Company markets such
products domestically and abroad. The Company also markets
pre-owned, brand name photocopier machines for an unrelated party
(see Note J).
Basis of Presentation:
The consolidated financial statements include the accounts of the
Company and its subsidiaries. Intercompany transactions and
accounts have been eliminated.
On July 31, 2003, A.M.S. Marketing, Inc, ("AMS") acquired 100%
ownership of "AIS" in exchange for 1,200,000 shares of its
previously unissued common stock. Prior to the execution of the
exchange agreement, the members (owners) of "AIS" purchased
directly from an existing "AMS" shareholder 3,600,000 shares of
"AMS" common stock. The combined result of the foregoing
transactions is that the previous owners of "AIS" own 81.96% of
the outstanding common stock of "AMS".
For accounting purposes, "AIS" is considered to be the acquirer
and "AMS", the acquired entity. The business combination is
considered to be a "reverse merger" since the former owners of
"AIS" now control more than 50% of "AMS" as a result of the
merger. The effect of this transaction reflects historical values
of assets and liabilities of the combined entities with a
recapitalization of "AMS" shareholders' equity.
Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued) -
Financial Instruments:
The carrying values of accounts receivable, accounts payable, and
notes payable approximate fair value at June 30, 2004.
Inventories:
Inventories are valued at the lower of the first-in, first-out
cost or market with respect to direct material costs. Capitalized
overhead costs are determined on the basis of average costs.
Property and Equipment:
Property and equipment are recorded at cost, less depreciation.
Depreciation is primarily accounted for on the straight-line
method based on estimated useful lives. The depreciation of
leasehold improvements is based on the shorter of the lease term
or the life of the improvement. The carrying value of property
and equipment is assessed when factors indicating impairment is
present. The Company determines fair value by obtaining market
quotes for replacement property.
Sales:
Revenue is recognized when materials are shipped. Reported sales
are arrived at by deducting discounts and return allowances.
Advertising:
Advertising costs are expensed as incurred.
Income Taxes:
Deferred taxes are provided for temporary differences that will
result in taxable or deductible amounts in future years based on
the reporting of certain costs in different periods for financial
statement and income tax purposes.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued) -
Earnings or (Loss) Per Common Share:
Basic earnings per common share is calculated by dividing net
income by the weighted average number of common shares
outstanding during the period. Diluted earnings per common share
is calculated by adjusting weighted average outstanding shares,
assuming conversion of all of the Company's "Exchangeable Notes"
(see note J) as if conversion to common shares had occurred at
the beginning of the current period. Interest expense applicable
to the notes is added back to net income for purposes of
computing diluted earnings per share. The additional shares
contingently issuable to holders of the exchangeable notes were
not considered for the period ended June 30, 2004 because their
effect would have been anti-dilutive.
NOTE B - INVENTORIES -
Inventories consists of the following at June 30, 2004:
Raw Materials $ 75,581
Work in Process 51,798
------------
$ 127,379
============
NOTE C - PROPERTY AND EQUIPMENT -
Property and equipment consists of the following at June 30, 2004:
Furniture and Fixtures $ 6,680
Machinery and Equipment 221,290
Leasehold Improvements 62,211
------------
290,181
Accumulated Depreciation (95,534)
------------
$ 194,647
============
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE D - STOCK COMPENSATION PLAN -
The Company's 2003 Equity Incentive Program provides for the grant of
incentive stock options, nonqualified stock options, and restricted
stock awards. Certain awards are intended to qualify as "incentive
stock options" within the meaning of the Internal Revenue Code (the
"Code"). Other awards granted under the "Program" are not intended to
qualify as incentive stock options under the "Code".
The total number of shares of the Company's common stock that may be
issued during the first year under the "Program" may not exceed
6,000,000, of which 1,000,000 will be available for issuance as
incentive stock option grants and 5,000,000 will be available for
issuance as nonqualified stock option grants. The total number of
shares may be increased annually based upon the total number of common
shares outstanding in subsequent years.
As of June 30, 2004, no stock options were granted under the Program.
NOTE E - CONCENTRATION OF RISK -
Customers:
Three of the Company's major customers accounted for 46% of the
sales revenues for the six months ended June 30, 2004. Sales to a
single customer amounted to 21% of sales for the six months ended
June 30, 2004.
Suppliers:
The Company is dependent upon a limited number of major
suppliers. If a supplier had operational problems or ceased
making material available to the Company, operations could be
adversely affected.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE F - COMMITMENTS -
Rent:
The Company leases its general office and production facilities.
Rental expense amounted to $22,593 for the six months ended June
30, 2004. The Company is committed to total minimal annual rental
payments through 2005 in the amount of $18,125.
Consulting Agreement:
In April, 2003, the Company entered into a three year management
services contract with a shareholder. The agreement provides for
monthly payments of $6,700, plus expense reimbursements, through
March, 2004 and $5,500 thereafter.
Employment Agreements:
In July, 2003, the Company entered into three year employment
contracts with five individuals considered to be key employees.
The contracts provide for annual remuneration aggregating
approximately $372,000 with cost of living increases in the last
two years of the contracts. In addition, the contracts provide
for expense account allowances aggregating to $30,000 annually.
NOTE G - RELATED PARTY TRANSACTIONS -
Shareholder Advances:
During 2004, the Company received $304,500 working capital
advances from shareholders, of which $277,175 was repaid as of
June 30, 2004. The advances are short-term and bear no interest.
Sales:
Sales to customers related to employees of the Company amounted
to $35,166 and $47,398 for the six months ended June 30, 2004 and
2003, respectively.
Promotional Fees:
During the periods ended June 30, 2004 and 2003, the Company paid
promotional/marketing development fees to an entity owned by the
Chief Executive Officer of $2,500 and $18,155, respectively.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE H - NOTES AND LOANS PAYABLE -
Notes payable consist of the following at June 30, 2004:
12% Note Payable - Shareholder - Due in monthly
installments of $3,500, including interest
through August, 2004 $ 21,059
12% Note Payable - Shareholder - Due in monthly
installments of $2,335, including interest
through November, 2004 14,814
6% Note Payable - Shareholder - Due in monthly
installments of $1,500, including interest
through August, 2007 52,636
Demand Loans Payable - Shareholders - Working
capital advances bearing no interest and
expected to be repaid within one year 85,581
6% Exchangeable Notes Payable - Maturing at
various times through December, 2005. The notes
may be exchanged for common stock at maturity,
at the discretion of the lenders based upon an
exchange price of $.50 per common share for
each dollar owed. Included in this amount are
notes to shareholders amounting to $105,000
535,000
-----------
709,090
Deduct Current Portion (186,711)
-----------
$ 522,379
===========
The Company has pledged substantially all production machinery and
equipment as collateral on the notes owing to officers and
shareholders.
Interest expense amounted to $30,559 and $10,743 for the six months
ended June 30, 2004 and 2003, respectively.
The maturities of notes and loans payable for each of the succeeding
five years subsequent to the current period as follows:
JUNE 30, AMOUNT
-------- -----------
2005 $ 186,711
2006 501,198
2007 17,197
2008 3,984
2009 --
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE I - INCOME TAXES -
The Company has a net operating loss carryforward of approximately
$900,000, which may be carried forward through the year 2024, to offset
future taxable income.
Deferred tax assets, amounting to approximately $357,000, relating to
the potential tax benefit of future tax deductions was offset by a
valuation allowance due to the uncertainty of profitable operations in
the future.
NOTE J - PENDING SPIN-OFF -
On December 12, 2003, the Company formed a wholly-owned subsidiary,
Renewable Assets, Inc., to carry on the promotional services line of
the business from the predecessor company, A.M.S. Marketing, Inc. The
promotional services line of the business consists of marketing
pre-owned photocopy machines.
The chief executive officer of Renewable Assets, Inc. is also a
shareholder and creditor of International Imaging Systems, Inc.
On April 13, 2004, the Board of Directors approved a spin-off of
Renewable Assets, Inc. to International Images, Inc.'s shareholders of
record on April 14, 2004.
The shares of Renewable Assets, Inc. have not been distributed pending
compliance with applicable rules and regulations.
At June 30, 2004, the net assets of Renewable Assets, Inc. are
presented as "net assets of discontinued operations" in the
accompanying consolidated balance sheet. The results of the photocopy
division operations for the six months ended June 30, 2004 are
presented in the consolidated financial statements of International
Imaging Systems, Inc. and Subsidiaries as income from Discontinued
Operations as required under Financial Accounting Standards Board
Statement 144.
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INTERNATIONAL IMAGING SYSTEMS, INC.
AND SUBSIDIARIES
(SUCCESSOR TO A.M.S. MARKETING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE K - NON-MONETARY TRANSACTIONS -
During the six months ended June 30, 2004, the Company sold finished
manufactured goods to certain suppliers for non-cash consideration
amounting to $7,451. Payment was received in the form of supplies and
materials. The transactions were valued at the Company's customary
selling prices.
NOTE L - GOING CONCERN -
A net loss from operations, negative working capital, and a capital
deficiency are issues that raise substantial doubt about the Company's
ability to continue as a going concern. Management has taken steps to
achieve profitable operations by restructuring its sales pricing
policies and production methods. In addition, the Company is pursuing
negotiations with private and institutional lenders to secure
additional working capital in the form of some combination of equity
and debt. The accompanying financial statements have been prepared on
the basis of a going concern, and do not reflect any adjustments
resulting from an alternative assumption.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------
Overview
Since the Company's formation in July, 1998, we have engaged in the
business of marketing pre-owned, brand name photocopy machines for an unrelated
third party. On December 12, 2003, the Company formed a wholly owned subsidiary
in Delaware, Renewable Assets, Inc. ("RAI"), through which we now conduct our
business of marketing previously owned photocopy machines. On April 13, 2004,
our Board of Directors approved the spin-off of all of the shares of RAI owned
by us to our shareholders of record as of April 14, 2004. Although the Company
expected to complete the spin-off on or before October 31, 2004, it has been
delayed due to the inability of the Company to comply timely with its reporting
obligations as a public company. It is contemplated that the spin-off will be
completed during the first quarter of 2005, but it could be further delayed.
Through our wholly owned limited liability company, Advanced Imaging
Systems, LLC ("AIS"), acquired in July, 2003 as a result of a reverse merger,
the Company is also engaged in the design, manufacture and marketing of plastic
and paper card products, including credit cards, pre-paid telephone cards, value
storage cards, access entry cards, identity cards and business cards.
As discussed below, the three month period ended June 30, 2004 (the
"2004 Second Quarter") was characterized by a 15% decrease in sales as compared
to the three month period ended June 30, 2003 (the "2003 Second Quarter") and by
increases in the cost of goods sold and general and administrative expenses,
resulting in a net loss of $175,290 in the 2004 Second Quarter as compared to a
net loss of $6,071 in the 2003 Second Quarter.
Results of Operations
Sales
- -----
Sales for the 2004 Second Quarter were $704,590 as compared to sales of $833,187
for 2003 Second Quarter, a decline of 15%. Sales for the six month period ended
June 30, 2004 (the "2004 Period") were $1,611,195 as compared to sales of
$1,680,695 for the same period in the prior year (the "2003 Period"), a decline
of 4%. The decline in sales for both periods is primarily a result of decreased
sales volume to certain existing customers in specific segments of the Company's
product line offering. The Company does not believe that such decline is
necessarily indicative of a trend but may be more related to factors beyond the
- 12 -
Company's control, such as customer needs and timing of receipt of orders.
Accordingly, comparisons between periods may not be meaningful. Substantially
all of the sales for the 2004 Second Quarter, the 2004 Period, the 2003 Second
Quarter and the 2003 Period were attributable to AIS.
Gross Profit
- ------------
Gross profit as a percentage of sales ("gross margin") declined to 29% for the
2004 Second Quarter as compared to 34% for the 2003 Second Quarter. Gross margin
for the 2004 Period declined to 29% from 35% for the 2003 Period. The decline in
gross margins for both the 2004 Second Quarter and the 2004 Period is primarily
attributable to the industry wide price contraction that began in the fourth
quarter of 2003 and continued into the 2004 Period. The Company believes that
such contraction is likely to continue for the foreseeable future.
To improve future performance and increase its gross profit margin, AIS has
modified its cost accounting system in order to more accurately accumulate
production and overhead costs, thereby assisting management in determining
break-even analysis and product pricing. In addition, AIS has aggressively
negotiated more favorable pricing on many of the components of the cost of goods
sold, instituted price increases on its lower margin products and adjusted its
product mix to increase the percentage of sales derived from higher margin
products. If such actions do not result in improved profit margins, the Company
will have to consider other actions, such as ceasing to produce low margin
products and the like.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses ("G&A") were $378,627, or 54% of sales for
the 2004 Second Quarter as compared to $290,259,or 35% of sales for 2003 Second
Quarter. G&A were $683,607, or 42% of sales for the 2004 Period as compared to
$566,484, or 34% of sales for 2003 Period. The increase in G&A as a percentage
of sales is primarily attributable to the increase in certain of the costs and
expenses incurred in the 2004 Period relating to the Company being a reporting
issuer.
Other Expenses
- --------------
Interest expense for the 2004 Second Quarter increased to $11,363 from $6,616
for the 2003 Second Quarter. Interest expense for the 2004 Period increased to
$30,559 from $10,743 for the 2003 Period. The increase in interest expense is
primarily attributable to the additional indebtedness incurred by AIS during the
fourth quarter of 2003.
- 13 -
Liquidity and Capital Resources
- -------------------------------
The Company financed its operations during the six month period ended June 30,
2004, through revenues from operations and shareholder advances of $304,500. As
of June 30, 2004, the Company's principal sources of liquidity consisted of
accounts receivable of $389,450. The Company believes that the timely collection
of such accounts receivable, together with expected revenues from operations,
must be supplemented by additional capital from both existing and new
shareholders in order to maintain its operations at current levels and to expand
its operations. There can be no assurance that we will be able to find sources
of financing on terms acceptable to us, if at all. If we do not find sources to
finance such activities, we will be unable to expand our operations, and we may
have to curtail certain of our current activities.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
------------------------------------------------
Within the 90 days prior to the date of this report, International Imaging
Systems, Inc. (the "Company") carried out an evaluation, under the supervision
and with the participation of the Company's management, including the Company's
Chief Executive and Chief Financial Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting him to material information required
to be included in the Company's periodic SEC filings relating to the Company
(including its consolidated subsidiaries).
(b) Changes in Internal Controls
----------------------------
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these internal controls subsequent to
the date of our most recent evaluation.
FORWARD LOOKING STATEMENTS
--------------------------
This Form 10-QSB and other reports filed by the Company from time to time with
the Securities and Exchange Commission (collectively the "Filings") contain or
may contain forward looking statements and information that are based upon
beliefs of and information currently available to the Company's management as
well as estimates and assumptions made by the Company's management.
- 14 -
When used in the filings the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions as they relate to
the Company or the Company's management identify forward looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations and any businesses that may be
acquired by the Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
intended or planned.
- 15 -
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Principal Executive and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
32.1 Certification of Chief Executive and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K - Current Report on Form 8-K filed on
April 29, 2004.
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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.
Registrant
INTERNATIONAL IMAGING SYSTEMS, INC.
By: /s/ C. LEO SMITH
-------------------------------------
C. Leo Smith,
Chief Executive Officer, President
and Chief Financial Officer
Date: December 6, 2004
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