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 January 31, 2004
[ ] 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
incorporation or organization) No.)
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 March 5,
2004.
INFOTEC BUSINESS SYSTEMS, INC.
Form 10-QSB for the quarter ended January 31, 2004
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Page
PART I Financial Information
Item 1. Financial Statements (unaudited):
Consolidated:
Balance Sheets as of January 31, 2004 and April 30, 2003
(audited) 3
Statements of Operations for the nine month periods
ended January 31, 2004 and January 31, 2003 and for
the period from August 30, 2001 (inception) to
January 31, 2004 4
Statements of Operations for the three month periods
ended January 31, 2004 and January 31, 2003 5
Consolidated Statements of Stockholders' Equity 6
Statements of Cash Flows for the nine month periods
ended January 31, 2004 and January 31, 2003 and
for the period from August 30, 2001 (inception) to
January 31, 2004 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
January 31, April 30,
2004 2003
(unaudited) (audited)
Assets
Current assets
Cash $ 109,107 $3,818
Amounts receivable 964 757
Prepaid expenses and other current assets 1,560 -
-------------------
$ 111,631 $4,575
-------------------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 276 $2,542
Accounts payable - related 7,680 47,708
-------------------
Total current liabilities 7,956 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 January 31, 2004 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 (360,075) (172,675)
--------------------
Total stockholders' equity (deficiency) 103,675 (45,675)
--------------------
$ 111,631 $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
Nine Month Period (Inception)
Ended January 31, to January 31,
2004 2003 2004
Operating Expenses
Administration costs $22,153 $ 5,460 $ 32,503
Professional fees 5,940 13,310 22,149
Salaries and fees 64,951 - 64,951
Consulting 500 1,000 1,500
Rent and occupancy 16,000 13,500 44,500
Equipment rental 13,500 13,500 41,808
Stock based compensation (Note 4) 16,750 - 16,750
Software development costs 47,606 13,500 135,914
------------------------------
Total operating expenses 187,400 60,270 360,075
------------------------------
Net (Loss) (187,400)$(60,270) $(360,075)
------------------------------
Net(loss)per share-Basic
and Diluted $ (0.01) $ (0.01)
----------------
Weighted average shares
of common stock outstanding 19,384,239 26,347,826
---------------------
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 January 31,
2004 2003
----------------------------
Operating Expenses
Administration costs $ 4,878 $ 2,510
Professional fees 747 1,452
Salaries and fees 23,062 -
Rent and occupancy 6,000 4,500
Equipment rental 4,500 4,500
Software development costs 14,578 4,500
--------------------
Total operating expenses 53,765 17,462
--------------------
Net (Loss) $(53,765) $ (17,462)
----------------------
Net (loss) per share - Basic
and Diluted $ (0.01) $ (0.01)
------------------------
Weighted average shares
of common stock outstanding 18,350,000 27,000,000
------------------------
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
Stage Total
Initial capitalization
October, 2001 for cash 2,100,000 $2,100 $4,900 $ 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 22,500 (22,500)
Net (loss) (80,237) (80,237)
-----------------------------------------------------
Balance as of
April 30, 2003 27,000,000 27,000 100,000 (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) (187,400) (187,400)
-----------------------------------------------------
Balance as of
January 31, 2004 18,350,000 $18,350 $445,400 $(360,075) $103,675
------------------------------------------------------
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
Nine Month (Inception)
Period Ended January 31, to January 31,
2004 2003 2004
------------------------------------
Cash flows from operating activities
Net Loss $(187,400) $(60,270) $(360,310)
Non-cash items:
Stock based compensation 16,750 - 16,750
Changes in non-cash working capital, net (44,061) (4,024) 65,432
------------------------------
(214,711) (56,246) (277,893)
------------------------------
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 105,289 3,754 109,107
Cash - beginning of period 3,818 2,066 -
------------------------------
Cash - end of period $ 109,107 $ 5,820 $109,107
------------------------------
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 nine month period ended January 31, 2004 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 $360,075 since inception to January 31, 2004. At
January 31, 2004, the Company had working capital of $103,675.
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
commguard 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 nine month period ended
January 31, 2004 as $16,750 (2002 - $Nil).
Warrants to purchase 25,000 common shares for a period of one year were issued
in the nine month period ended January 31, 2004. 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 January 31, 2004 was 4.5 months, with a weighted
exercise price of $5.50 per share.
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 Technologies Corporation to provide a shared
internet enabled network system, provide development staff and office
premises. In the nine month period to January 31, 2004, fees aggregated
$62,000 (2003, $40,500).
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 nine month period to January 31, 2004, the Company has incurred
service fees aggregating $45,000 (2003, $Nil).
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited )
NOTE 5: RELATED PARTY TRANSACTIONS (continued)
iii)During the nine month period ended January 31, 2004, the Company engaged a
company controlled by a director to provide consulting services for $500
(2003, $1,000).
iv)During the nine month period ended January 31, 2004, the Company engaged a
company with a director in common to provide service and support staff for
$13,432 (2003, $Nil).
ITEM 2. Management's Discussion and Analysis or Plan of Operation
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 comparable 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 to businesses and other organizations 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 to potential customers and joint venture partners, as a backbone for
operating and managing their office and business processes online. To expand
our online offerings and opportunities we entered into a license agreement with
CTEC Security Solutions Inc., a related company, to sell their commguard
branded access and security control products and services throughout the world.
In furtherance of our business plan 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 commguard branded digital certificates;
- completed validation and testing of commguard branded digital
certificates by an independent agency for use by their members;
- developed and printed marketing literature and published web sites at
www.infotecbusinesssystems.com and www.commguard.com to provide
information on our services;
- 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 commguard branded e-mail communication security to potential
customers through:
- co-attendance at the Canadian Bar Association conference held in Mont
real 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 other firms for whom privacy is a concern;
- commenced deployment of commguard branded digital certificates and
building of an initial base of users; and
- developed and introduced reseller programs for Internet Service
Providers, IT Consultants and for business web sites.
Our current plan is to build on our marketing and sales efforts and build
our relationships with potential business partners and resellers while
building a larger base of commguard digital certificate users
throughout the world. Our development activities will also be focused on
systems and interfaces to meet the business opportunities our marketing
efforts identify.
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 commguard branded security
products through direct contact, trade shows and via the Internet. Our
efforts over the last three quarters has provided our products with some
exposure and has begun to attract attention and interest from many
quarters. Our approach is to market to our strengths which includes our
systems, designs and our flexibility in delivering solutions that meet
our customer's need.
During the current quarter, we developed a commguard reseller program for
Internet Service Providers and for IT Consultants and have commenced
marketing these programs selectively. We have also identified potential
customers in the following market segments which we are currently
addressing, including:
- secure e-mail;
- access control and digital contracts within e-commerce and B2B web sites
- secure online gaming and payment processing;
- secure and signed online document filing for business and government; and
- secure online school systems.
Our current and planned marketing efforts will focus on exploiting these
opportunities through follow-up sales and marketing calls, developing
business partner and reseller opportunities and selling to our current
contacts and potential customer base.
We currently do not have sufficient staff resources to expand our product
introductions and marketing efforts. We also lack the financial
resources to broaden our marketing efforts or engage professional
advisors. We are accordingly seeking opportunities for marketing through
channel partners and resellers. We believe we can engage sales and
marketing professionals when needed.
Development
Our development activities are currently focused on product improvements,
system maintenance and support for new opportunities our marketing
program has identified. In the current quarter, we completed the initial
development of our web-based certificate management system and the
integration and automation of the certificate management and
cryptographic modules of our system.
During the upcoming quarter we expect to focus our development activities
on:
- adding functionality to our certificate manager application; and
- architecture and design for projects involving secure payment, document
filings and chat as a foundation for possible commguard product
implementations.
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 $48,000 for our
development activities over the next six month period, subject to
availability of funding. Further additions to our budget are dependent on
the receipt of adequate additional funding.
Our current plan is to maintain our staff at three part-time technicians,
which we believe, in conjunction with available sub-contractors, will be
satisfactory to accomplish our development through the end of the fourth
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 January 31, 2004, we incurred a
deficit of $360,075. Our principal areas of expenditure during the period
were for development costs of $135,914, rent and occupancy costs of $44,500,
system rental of $41,808, salaries and fees of $64,951 and professional fees
of $22,149.
For the three month period ended January 31, 2004, we incurred a net loss of
$53,765. Our principal areas of expenditure during the first quarter ended
January 31, 2004 were for occupancy costs of $6,000, system rental of
$4,500, development costs of $14,578 and salaries and fees of $23,062. For
the nine month period ended January 31, 2004, we incurred a net loss of
$187,400. Our principal areas of expenditure during the nine months ended
January 31, 2004 were for occupancy costs of $16,000, system rental of
$13,500, development costs of $47,606 and salaries and fees of $64,951.
Administrative and development costs were higher in the current quarter and
the current nine month period over their comparative prior periods due to
our increased general operation activities, marketing 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 January 31, 2004, we had an accumulated deficit of $360,075 and cash
on hand of $109,107 Working capital at January 31, 2004 was $103,675. 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 nine month period ended January 31, 2004, net cash used in operating
activities was $214,711, which primarily resulted from the net cash loss of
$187,400 combined with changes in working capital amounts. Cash provided by
financing activities was $320,000 for a net cash addition during the period
of $105,289.
Management believes that our working capital will be sufficient to sustain
our current operations for a period of five 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 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. 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 their needs. 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
Subject to adequate funding, we anticipate spending $96,000 over the next
twelve month period for product upgrades and enhancements; system
maintenance; technical support; and the design and testing of new products.
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 January 31, 2004, 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
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
(b) Reports on 8-K.
There were no reports on form 8-K filed in the quarter.
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...........................March 9, 2004
By........................../s/Robert Danvers....
(Robert Danvers, President, Director, CEO,
Chief Financial and Accounting Officer)