U.S. 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 October 31, 2003
[ ] 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: 333-90618
INFOTEC BUSINESS SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 98-0358149
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
444 Columbia St. E., New Westminster BC V3L 3W9
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number (604) 777-1707
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.
YES [ X ] 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: 18,350,000 as of
December 10, 2003.
INFOTEC BUSINESS SYSTEMS, INC.
Form 10-QSB for the quarter ended October 31, 2003
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Page
PART I Financial Information
Item 1. Financial Statements (unaudited):
Consolidated:
Balance Sheets as of October 31, 2003 and April 30, 2003
(audited) 3
Statements of Operations for the six month periods
ended October 31, 2003 and October 31, 2002 and for
the period from August 30, 2001 (inception) to
October 31, 2003 4
Statements of Operations for the three month periods
ended October 31, 2003 and October 31, 2002 5
Consolidated Statements of Stockholders' Equity 6
Statements of Cash Flows for the six month periods
ended October 31, 2003 and October 31, 2002 and
for the period from August 30, 2001 (inception) to
October 31, 2003 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of
Operation 11
Item 3. Controls and Procedures 16
PART II Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 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
SIGNATURES 17
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Balance Sheets
October 31, April 30,
2003 2003
(unaudited) (audited)
-----------------------
Assets
Current assets
Cash $ 166,302 $3,818
Amounts receivable 796 757
Prepaid expenses and other current assets 2,273 -
---------------------
$ 169,371 $4,575
=====================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $3,920 $ 2,542
Accounts payable - related 8,011 47,708
---------------------
Total current liabilities 11,931 50,250
Stockholders' equity (deficiency)
Share capital (Note 3)
Authorized
150,000,000 preferred shares with $0.001 par value
300,000,000 common shares with $0.001 par value
Issued
18,350,000 common shares at October 31, 2003 18,350 -
27,000,000 common shares at April 30, 2003 - 27,000
Additional paid-in capital 445,400 100,000
Deficit accumulated during the
development stage (306,310) (172,675)
--------------------
Total stockholders' equity (deficiency) 157,440 (45,675)
====================
$ 169,371 $4,575
--------------------
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
Period from
August
30, 2001
Six Month Period (Inception)
Ended October 31, to October 31,
2003 2002 2003
---------------------------------------------
Operating Expenses
Administration costs $17,275 $ 2,950 $ 27,625
Professional fees 5,193 11,858 21,402
Salaries and fees 41,889 - 41,889
Consulting 500 1,000 1,500
Rent and occupancy 10,000 9,000 38,500
Equipment rental 9,000 9,000 37,308
Stock based compensation
(Note 4) 16,750 - 16,750
Software development costs 33,028 9,000 121,336
----------------------------------------
Total operating expenses 133,635 42,808 306,310
-----------------------------------------
Net (Loss) (133,635)$(42,808) $ (306,310)
-----------------------------------------
Net (loss) per share -
Basic and Diluted $ (0.01) $ (0.01)
----------------
Weighted average shares
of common stock outstanding 24226359 26021739
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
Three Month
Period Ended October 31,
2003 2002
Operating Expenses
Administration costs $ 7,599 $ 1,469
Professional fees 566 6,229
Salaries and fees 26,889 -
Rent and occupancy 5,500 4,500
Equipment rental 4,500 4,500
Software development costs 20,848 4,500
-------------------
Total operating expenses 65,902 21,198
Net (Loss) $(65,902) $ (21,198)
-------------------
Net (loss) per share -
Basic and Diluted $ (0.01) $ (0.01)
-------------------
Weighted average shares
of common stock outstanding 18,350,000 12,600,000
----------------------
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(Unaudited)
Common Stock
---------------------------- Deficit
Additional Accumulated
Number of Paid-in During the
Shares Amount Capital Development Total
Stage
Initial capitalization
October, 2001 for cash 2100000 $2100 $4900 $ $ 7,000
Net (loss) (92,438) (92,438)
- -----------------------------------------------------------------------
Balance as of
April 30, 2002 2,100,000 2,100 4,900 (92,438) (85,438)
Shares issued for:
Settlement of
accounts payable 1,200,000 1,200 58,800 60,000
Private placement 1,200,000 1,200 58,800 60,000
Forward split (6:1)
February, 2003 22,500,000 22500 (22,500)
Net (loss) (80,237) (80,237)
- -----------------------------------------------------------------------
Balance as of
April 30, 2003 27,000,000 27000 100,000 (172,675) (45,675)
Shares issued for:
Private placement 100,000 100 319,900 320,000
Return to treasury (8,750,000)(8750) 8,750
Stock based
compensation 16,750 16,750
Net (loss) (133,635) (133,635)
- -----------------------------------------------------------------------
Balance as of
October 31,
2003 18,350,000 18350 $445,400 $(306,310)$(157,440)
- -----------------------------------------------------------------------
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
Period from
August
30, 2001
Six Month (Inception)
Period Ended October to October
2003 31,2002 31, 2003
Cash flows from operating activities
Net Loss $(133,365) $(42,808) $(306,310)
Non-cash items:
Stock based compensation 16,750 - 16,750
Changes in non-cash working
capital, net (40,901) (6,836) 68,862
---------------------------------
(157,516) (49,644) (220,698)
---------------------------------
Cash flows from financing activities
Proceeds from issuance of
common stock 400,000 60,000 467,000
Costs of issuance of common stock (80,000) - (80,000)
---------------------------------
320,000 60,000 387,000
---------------------------------
Increase (decrease) in cash
in the period 162,484 10,356 166,302
Cash - beginning of period 3,818 2,066 -
---------------------------------
Cash - end of period $ 166,302 $ 12,422 $166,302
Supplementary cash flow information
Shares issued to settle
accounts payable - related $ - $60,000 $ 60,000
- -------------------------------------------------------------------------
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
(a) Interim Financial Data
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to form 10-QSB.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. All adjustments that, in the opinion of
management, are necessary for the fair presentation of the results of
operations for the interim periods have been made and are of a recurring
nature unless otherwise disclosed herein. The results of operations for
the six month period ended October 31, 2003 are not necessarily
indicative of the results that will be realized for a full year. For
further information, refer to the Company's audited financial statements
and notes thereto for the fiscal year ended April 30, 2003.
(b) Going Concern
The financial statements have been presented on the basis that the Company
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company reported a net loss of $306,310 since inception to October 31,
2003. At October 31, 2003, the Company had working capital of $157,440.
The Company will need additional working capital to be successful in its
planned development activity for the coming year, and, therefore,
continuation of the Company as a going concern is dependent upon
obtaining the additional working capital necessary to accomplish its
objective. Management has developed a strategy, which it believes will
accomplish this objective, and is presently engaged in marketing and
sales activities and in seeking various sources of additional working
capital including equity funding through a private placement and long
term financing.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result
from the outcome of this uncertainty.
(c) Significant Accounting Policies
Stock Based Compensation - The Company accounts for non-employee stock
based compensation using the fair market value method prescribed in SFAS
No. 123 - "Accounting for Stock-Based Compensation", and related
interpretations. Accordingly, compensation cost for such compensation
is measured as its fair value at the date of grant.
NOTE 2: COMMITMENT
Pursuant to a purchase agreement dated October 3, 2001, the Company is
committed to paying a royalty of 2% on the net sales revenue, quarterly,
for any product or service that uses all or any portion of the software
acquired until the amount paid totals $250,000, after which the royalty
drops to 1%. The software development costs were acquired from Danby
Technologies Corporation ("Danby"), a company controlled by a majority
shareholder.
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited )
NOTE 2: COMMITMENT (continued)
Pursuant to a licensing agreement dated July 8, 2003, the Company has
committed to pay monthly, a royalty of 10% of the net sales revenue,
from any commguardO branded product or service until the amount paid
totals $7,500,000, after which the royalty drops to 7.5%. The license
was granted by CTEC Security Solutions Inc., a company with a director
in common. On September 25, 2003 the license was amended to remove
territorial restrictions for sales, in consideration of an additional
license fee of $0.25 per month for each digital certificate issued and
in force.
NOTE 3: SHARE CAPITAL
On June 3, 2003, the Company completed a private placement of 100,000
units to a single accredited investor at $4.00 per unit for proceeds of
$400,000. Each unit consists of one common share and one common share
warrant exercisable at $4.50 per share during the initial six month
period, and at an exercise price of $5.50 for the final six month
period.
In conjunction with the above private placement, certain directors and
stockholders of the Company agreed to return to treasury for
cancellation a total of 8,750,000 common shares.
NOTE 4: STOCK BASED COMPENSATION
The Company applies SFAS No. 123 in accounting for stock-based
compensation for non-employees and, accordingly, the Company determined
compensation cost based on the fair value at the grant date for the six
month period ended October 31, 2003 as $16,750 (2002 - $Nil).
Warrants to purchase 25,000 common shares for a period of one year were
issued in the six month period ended October 31, 2003. The per share
weighted average fair value of warrants granted was $0.67 (2002 - $Nil)
using the Black-Scholes option pricing model with the following
assumptions: no expected dividends, 60.81% volatility, risk free
interest rate of 1.71% and an expected term of one year. The remaining
weighted contractual life of the warrants outstanding at October 31,
2003 was 7.5 months, with weighted exercise price of $5.30.
NOTE 5: RELATED PARTY TRANSACTIONS
During the period, the Company entered into transactions (recorded at
exchange values) with related parties as follows:
i) The Company engages Danby to provide a shared internet enabled network
system, provide development staff and office premises. In the six month
period to October 31, 2003, fees aggregated $39,000 (2002, $27,000).
ii) The Company pays fees in respect of services to Danby Financial
Management Corp. a company controlled by a director, at the rate of
$5,000 per month. In the six month period to October 31, 2003, the
Company has incurred service fees aggregating $30,000 (2002, $Nil).
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited )
NOTE 5: RELATED PARTY TRANSACTIONS (continued)
iii)During the six month period ended October 31, 2003, the Company
engaged a company controlled by a director to provide consulting
services for $500 (2002, $1,000).
iv)During the six month period ended October 31, 2003, the Company engaged a
company with a director in common to provide service and support staff for
$7,526 (2002, $Nil).
ITEM 2. Management's Discussion and Analysis or Plan of Operation
General
Management's discussion and analysis or plan of operation contains
various forward looking statements within the meaning of the Securities
and Exchange Act of 1934. These statements consist of any statement other
than a recitation of historical fact and can be identified by the use of
forward looking terminology such as "may," "expect," "anticipate,"
"estimates" or "continue" or use of negative or other variations of compa
rable terminology. We caution that these statements are further qualified
by important factors that could cause actual results to differ materially
from those contained in our forward looking statements, that these forward
looking statements are necessarily speculative, and there are certain
risks and uncertainties that could cause actual events or results to
differ materially from those referred to in our forward looking
statements.
The following discussion should be read together with the information
contained in the financial statements and related notes included elsewhere
in this quarterly report.
General
Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate these estimates, including those related to software development
expenses, financing operations and contingencies and litigation. We base
these estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions
or conditions.
Operation Development and Plan
We are an emerging development stage company. We have undertaken
initial marketing of our products and services, however, to date, we have
not generated revenue from our activities. Our business plan is to operate
and market online solutions and services. We plan to market our products
and service to businesses in the U.S. and Canada and throughout the world,
principally through resellers, agents and other channel partners, and to
earn revenue from monthly service fees, usage and transaction fees.
Since April 30, 2003, we have introduced our virtual office system and
platform and our management and customization services to potential
customers and joint venture partner, as a backbone for operating and
managing their office and business processes online. Our discussions have
assisted us in identifying potential opportunities for running and
operating online security and access control systems and specialized
process such as those for managing events.
To expand our online offerings and opportunities, in May 2003, we
entered into a licensing agreement with CTEC Security Solutions Inc., a
related company, to sell their commguardO branded access and security
control products and services in the United States. In September, 2003,
the license was amended to remove any territorial restrictions and enabling
us to sell to CTEC's contacts in Canada. Through this license, we also
have a source of supply for our smartcards and smartcard readers at
competitive market rates. Since acquiring this opportunity, we have among
other things:
- completed implementation and testing of our third generation
Certification Authority and Management system for the issuance, management
and deployment of commguardO branded digital certificates;
- completed validation and testing of commguardO branded digital
certificates by an independent agency for use by their members;
- developed and printed marketing literature and published a web site
at www.commguard.com to provide information on these products;
- developed support services, user instructions and policies and
practices documentation for the operation of our Certificate
Authorities and all of the aspects of the issuance of digital
certificates (www.commguard.com/support);
- introduced commguardO branded e-mail communication security to
potential customers through:
co-attendance at the Canadian Bar Association conference held in
Montreal in August 2003, and the Pacific Legal Technical Conference
held in Vancouver in November, 2003, where we had an opportunity to
exhibit to strong interest from the legal community in Canada.
marketing, with the assistance of a sales consultant we engaged from
August through October, to additional industries and communities
including government for e-filings, telecoms, advertising and online
gaming and others firms for whom privacy is a concern; and
- commenced deployment of commguardO branded digital certificates and
building of an initial base of users.
Our current plan is to build on our initial marketing and sales
efforts and focus on building our relationships with potential
business partners and resellers and building a larger base of
commguardO digital certificate users throughout the world. Our devel
opment activities will also be focused on the systems and interfaces
for managing the deployment of commguardO digital certificates.
Marketing
During the early phase of our plan, we undertook to develop awareness
of our virtual business system as a platform for the deployment of
business applications over the Internet and our commguardO branded
security products through direct contact, trades conferences and via
the Internet. We have currently identified opportunities for each of
our product lines which we are actively pursuing, including
developing customer and channel relationships and related sales
opportunities. In December we expect to complete and publish the
Infotec Web Site which will provide customers and interested parties
with more details regarding our online services offerings.
From our initial marketing and introduction efforts, management is lead
to believe that there is an immediate opportunity to provide
businesses with easy to use, cost effective solutions for e-mail
security. Our current and planned marketing efforts will focus on
exploiting this opportunity through follow-up sales and marketing
calls, developing business partner and reseller opportunities and
selling to our current contacts and potential customer base. To meet
the needs expressed by some potential customers, we will also offer a
complete co-marketing or branding program for businesses to offer
commguard products to their existing and potential customers.
We currently have insufficient staff resources to expand product
introductions. We also lack the financial resources to broaden our
marketing efforts or engage professional advisors. We are seeking
opportunities for marketing through channel partners and resellers
which are funded by the business partner or reseller. We believe we
can engage sales and marketing professionals when needed.
Development
The principal focus of our development activities is to support the
opportunities our marketing program has determined. Our focus for
the next quarter is to:
- complete interface development and customization for the certificate
management system for businesses and resellers to manage the
deployment of certificates to their employees or customers;
- complete the integration and automation of the certificate management
and cryptographic modules of our system;
- develop an online purchasing interface; and
- continue support and service development,
related to the online issuance and management of commguardO digital
certificates.
Additional projects related to the productivity application, designed
for use with the virtual office to provide a unified base for contact,
task, communication, and resource and document management and our
planned event management system are on a reduced priority schedule
currently awaiting funding and business opportunity development. We
hope to resume development of these and other projects in the fourth
quarter.
We plan to maintain an ongoing development program that will continue
enhancing and upgrading our systems, developing new products and
services and providing support for our product and service offerings.
Our development staff are responsible for our system operation and
maintenance, for providing our custom development services and for
service and support services. We have budgeted approximately $72,000
for our development activities over the next six month period. Further
additions to our budget are dependant on the receipt of adequate
additional funding.
Our current plan is to maintain our staff at three part-time technical
consultants, which we believe, in conjunction with available sub-
contractors, will be satisfactory to accomplish our development through
the end of the third quarter. We believe that in future, we can engage
additional employees, consultants and subcontract development staff
with the required skills, as they may be needed.
Results of Operations
We have not yet engaged in any revenue-producing activities, nor are we
a party to any binding agreements that will generate revenues. For the
period from incorporation, August 30, 2001 through October 31, 2003, we
incurred a deficit of $306,310. Our principal areas of expenditure
during the period were for development costs of $121,336, rent and
occupancy costs of $38,500, system rental of $37,308 and professional
fees of $21,402.
For the second three month period ended October 31, 2003, we incurred a
net loss of $65,902. Our principal areas of expenditure during the
first quarter ended October 31, 2003 were for occupancy costs of
$5,500, system rental of $4,500, development costs of $20,848, salaries
and fees $26,889 and administrative costs of $7,599. For the six month
period ended October 31, 2003, we incurred a net loss of $133,635. Our
principal areas of expenditure during the six months ended October 31,
2003 were for occupancy costs of $10,000, system rental of $9,000,
development costs of $33,028, salaries and fees $41,889 and
administrative costs of $9,676.
Administrative and development costs were higher in the current quarter
and the current six month period over their comparative prior periods
due to our increased general operation activities and the increase in
development undertaken in the period. Salaries and fees reflect
payments for increased management services and the engagement of a
sales and marketing consultant and part-time support personnel during
these periods.
Liquidity and Capital Resources
As of October 31, 2003, we had an accumulated deficit of $306,310 and
cash in the bank of $166,302. Working capital at October 31, 2003 was
$157,440. The accumulated deficit and our working capital was funded
by proceeds from the issuance of common shares and the conversion of
indebtedness to common shares.
For the six month period ended October 31, 2003, net cash used in
operating activities was $157,516, which primarily resulted from the
net cash loss of $133,365 combined with changes in working capital
amounts. Cash provided by financing activities was $320,000 for a net
cash addition during the period of $162,484.
Management believes that our working capital will be sufficient to
sustain our current operations for a period of six months and, while
management believes that sales and ultimately profitable operations,
can be attained in the future, there is no assurance that sales will be
made or that if made, they will be of a level required to generate
profitable operations or provide positive cash flow. Management has a
desire to expand our planned marketing and development activities to
more fully exploit our opportunities. Expanding our marketing and
development activities would require additional funding. We are unable
to predict at this time the exact amount of any additional working
capital we will require to fund the implementation of our business plan
and achieve cash flow sufficient to sustain operations and achieve
profitability. We may receive additional capital from the exercise of
share purchase warrants or, alternatively, we may seek additional
capital in the private and/or public equity markets through the sale of
equity or debt securities, or through the issuance of debt instruments.
If we receive additional funds through the issuance of equity
securities, however, our existing stockholders may experience
significant dilution. If we issue new securities, they may contain
certain rights, preferences or privileges that are senior to those of
our common stock. Moreover, we may not be successful in obtaining
additional financing when needed or on terms favorable to our
stockholders. As we have no commitments from any third parties to
provide additional equity or debt funding, we cannot provide any
assurance that we will be successful in attaining such additional
funding.
We have commenced marketing of our products and services, however, we
have not yet generated any revenues, nor are we a party to any binding
agreements that will generate revenues. Due to our lack of revenue-
production to date, and our lack of contractual commitments to generate
revenue, there is no basis at this time for investors to make an
informed determination as to the prospects for our future success. For
this reason and, as we have not achieved profitable operations and
require additional capital to achieve our objectives, our auditors have
included in their report covering our financial statements for the
period from incorporation to April 30, 2003, that there is substantial
doubt about our ability to continue as a going concern.
Additional Risk Factors
As noted throughout this quarterly report, Infotec Business Systems, Inc.,
is an emerging development stage company and accordingly, there are
many risks that affect our operations and our ultimate viability. It
is not possible, however, to foresee all risks which may affect us.
Moreover, we cannot predict the magnitude of each risk nor can we
predict whether we will successfully effectuate our current business
plan. Each prospective investor is encouraged to carefully analyze the
risks and merits of an investment in our shares and to take into
consideration when making such analysis, among others, the financial
risks discussed under the subheading "Liquidity and Capital Resources"
above and the additional risk factors we have set out below.
Operating History - We are presently in the process of marketing
products and services we have developed and that we are currently
refining for market acceptance. We have not yet earned any revenues
and accordingly, we have no operating history from which investors can
evaluate our future business prospects or management's performance. As
a result, you have no reliable means to determine whether you should
make an investment in our company.
Marketable Products - In order to sell our products and services, we
have to demonstrate to potential customers that we have systems and
services that are functional, supported, cost effective and address a
customer's need. We have developed products and services which we have
introduced to potential customers. At present we have limited history
in offering and supporting our product offerings. If, consequently,
our products and services do not meet customer needs and if customers
are not convinced we can maintain, support and upgrade our offerings in
future, or if our products contain product flaws or bugs, we will not
be able to successfully market our products and services or earn any
revenues.
Staff Availability - We have only two directors and we rely principally
on Mr. Robert Danvers our President for his entrepreneurial skills and
experience and to implement our business plan. We currently also
engage three part-time technical consultants for our development and
for our product service and support. We do not currently have
employment agreements with any of the directors, officers or
contractors, we depend on for the successful implementation of our
plan. Moreover, our ability to sell our products and successfully
implement our business plan may be adversely affected by the limitation
in availability of our staff.
Competition - We face competition from a wide range of competitors in
the online application services industry. These companies include
large, well established and financially stronger companies. As we have
indicated previously, we have only limited resources to compete and may
never have sufficient funds to be able to refine our applications and
successfully market our offerings so that we may become a factor in our
industry. These competitive disadvantages represent another factor
which may cause investors in our stock to lose the value of their
investment.
Management Control - Mr. Robert Danvers owns or controls approximately
59% of the outstanding shares of our common stock. Accordingly, he
will have almost complete influence in determining the outcome of all
corporate transactions and business decisions. The interests of Mr.
Danvers may differ from the interests of the other stockholders, and
since he has the ability to control most decisions through his control
of our common stock, our investors will have limited ability to affect
decisions made by management.
Product Research and Development
We anticipate spending $72,000 over the next twelve month period for
product development to complete development of systems and support for
the deployment and management of digital certificates.
Property or Plant
Subject to adequate additional funding, we have estimated the costs of
infrastructure upgrades, including computer equipment, software license
fees and related expenses will be approximately $80,000.
Except as noted above, we do not expect to purchase or sell plant and
significant equipment in the next twelve months.
Employment
We expect our operations to remain constant at our current level of one
full-time and three part-time contractors. The number and positions of
any new employees and contractors will be determined by additional
funding, if obtained.
ITEM 3. Controls and Procedures
On October 31, 2003, our management concluded its evaluation of
the effectiveness of the design and operation of our disclosure
controls and procedures. As of the Evaluation Date, our Chief
Executive Officer and Chief Financial Officer concluded that we
maintain disclosure controls and procedures that are effective in
providing reasonable assurance that information required to be
disclosed in our reports under the Securities Exchange Act of 1934
(Exchange Act) is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to our management,
including our Chief Executive Officer and our Chief Financial Officer,
as appropriate, to allow timely decisions regarding required
disclosure. Our management necessarily applied its judgment in
assessing the costs and benefits of such controls and procedures,
which, by their nature, can provide only reasonable assurance regarding
management's control objectives.
There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls over
financial reporting subsequent to its evaluation.
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities and Use of Proceeds
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submissions of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits
Exhibits Description of Documents
10.1 License Agreement (1)
10.2 License Amendment Agreement (1)
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and
Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
________________
(1) Incorporated by reference to the Form 8-K filed with the
Securities and Exchange Commission on October 1, 2003.
(b) Reports on 8-K.
Report Date Items Reported
September 25, 2003 Item 5, Amendment to License
Agreement with CTEC Security Solutions Inc.
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.
Infotec Business Systems, Inc.
(Registrant)
Date.....................December 12, 2003................................
By................../s/Robert Danvers..................................
(Robert Danvers, President, Director, CEO,
Chief Financial and Accounting Officer)