As filed with the Securities and Exchange Commission on June 12, 2001.
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Commission File No. 333-57632
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_________________________________________
Integrated Spatial Information Solutions, Inc.
(Name of small business issuer in its charter)
Colorado 7373 84-0868815
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
19039 East Plaza Drive, Suite 245
Parker, Colorado 80134
(720) 851-0716
(Address and Telephone Number of Registrant's Principal
Executive Office)
Frederick G. Beisser, Vice President - Finance
Integrated Spatial Information Solutions, Inc.
19039 East Plaza Drive, Suite 245
Parker, Colorado 80134
(720) 851-0716
(Name, Address and Telephone Number of Agent for Service)
With copies to:
Lester R. Woodward, Esq.
Robert P. Attai, Esq.
Davis Graham & Stubbs LLP
1550 Seventeenth Street, Suite 500
Denver, Colorado 80202
(303) 892-9400
Approximate date of commencement of
proposed sale to public: As soon as possible after
the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of Registration Fee
Title of Securities Proposed Maximum Amount of
to be Registered Aggregate Offering Price Registration Fee
- ----------------------------- ------------------------ -------------------
Subscription Rights(1) $0 $0
- ----------------------------- ------------------------ -------------------
Common Stock, no par value $2,800,000(2) $700(3)
(1) Evidencing the rights to subscribe for shares of common stock. Pursuant to
Rule 457(g), no separate registration fee is required for the rights since
they are being registered in the same registration statement as the common
stock underlying the rights.
(2) Consists of _____ shares to be offered by the registrant pursuant to the
rights offering at a price of $__ per share. Estimated solely for the
purpose of calculating the registration fee in accordance with Rule 457(o)
under the Securities Act of 1933 on the estimated maximum offering price
of the common stock.
(3) Registration fee previously paid with initial filing.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
Subject to Completion, dated June 12, 2001
PROSPECTUS
Integrated Spatial Information Solutions, Inc.
Common Stock, ______ Shares
Integrated Spatial Information Solutions, Inc. is distributing to the
holders of five hundred shares or more of our common stock, rights to purchase
up to an aggregate of ____ shares of our common stock. If this offering is fully
subscribed, then we will receive a total of $2,800,000. The rights are not
transferable and will not be listed for trading on any stock exchange.
Each shareholder of record who holds five hundred shares or more as of
the close of business on April 30, 2001 will receive a right to purchase ___
share[s] of our common stock at a price of $___ for each share owned by the
shareholder on that date. If the shares available under the rights are not fully
subscribed by the expiration date, shareholders who fully exercise their basic
subscription rights will be offered over-subscription rights to purchase any
remaining shares. Concurrent with the rights offering, we will notify those
shareholders of record on April 30, 2001 that hold less than five hundred shares
of the opportunity to purchase a minimum of ___ shares of our common stock from
those shares remaining after shareholders holding five hundred or more shares
have exercised their basic and over-subscription rights. Any shares remaining
may then be offered to non-shareholder investors identified by ISIS.
Shareholders may exercise their subscription rights beginning on the
date of this prospectus until 5:00 p.m., Mountain Time, on _____, 2001. We, in
our sole discretion, may extend the period for exercising the rights for up to
two additional 30 day periods. All subscriptions will be held in escrow by our
subscription agent, Computershare Trust Company, Inc., until accepted by us. If
we do not receive at least $600,000, then the offering will be terminated and
all proceeds received to date will be returned.
Our common stock is listed on the Nasdaq Over-the-Counter Bulletin
Board under the symbol "ISSS." On June 7, 2001, the closing price of a share of
our common stock on the Over-the-Counter Bulletin Board was $0.12.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
================================================================================
Min. Per Share Min. Total Max. Per Share Max. Total
-------------- ---------- -------------- ----------
Offering price........ $_________ $________ $_________ $________
Estimated Expenses.... $_________ $________ $_________ $________
Net Proceeds to ISIS.. $_________ $________ $_________ $________
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ___, 2001.
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. We are offering to sell, and seeking offers
to buy, shares of our common stock only in jurisdictions where offers and sales
are permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.
Table of Contents
Prospectus Summary.........................................................1
Risk Factors...............................................................3
Use Of Proceeds............................................................5
Business...................................................................6
Description Of Property...................................................10
Legal Proceedings.........................................................10
Management's Discussion And Analysis......................................11
Description Of Securities To Be Registered................................19
Market For Common Stock...................................................19
Security Ownership Of Certain Beneficial Owners And Management............20
Determination Of Offering Price...........................................22
Plan Of Distribution......................................................22
Directors And Executive Officers..........................................28
Certain Relationships And Related Transactions............................30
Executive Compensation....................................................32
Cautionary Statement Concerning Forward-Looking Statements................35
Validity Of Securities....................................................35
Experts...................................................................36
Disclosure Of Commission Position Of Indemnification
For Securities Act Liabilities....................................36
Where You Can Find More Information.......................................36
Index To Financial Statements............................................F-1
Our executive offices are located at 19039 East Plaza Drive, Suite 245, Parker,
Colorado 80134, and our telephone number is (720) 851-0716. We also have a web
site located at http://www.isis.cc. Any information that is included on or
linked to our web site is not a part of this prospectus.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This prospectus contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this prospectus.
The Company
Integrated Spatial Information Solutions ("ISIS") is an information
technology company specializing in the design, implementation and integration of
information management solutions. These include design and development of
computer systems that handle data that may come from or be presented in the
format of a map. Typically we are involved in the design, specification and
implementation of various elements of these systems including software
applications, databases and warehouses and secure data communication networks
that manage, access and use the geographic information assets of our clients
through internet-enabled applications and delivery systems.
The Rights Offering
Purpose of the
offering........... Completion of this rights offering will enable us to raise
up to approximately $2,800,000, before paying the costs of
the offering. The minimum amount necessary to complete the
rights offering is $600,000. The primary purpose of this
offering is to alleviate serious liquidity and capital
adequacy concerns. Our inability to complete this rights
offering and raise the expected proceeds would potentially
leave us without adequate working capital which could
materially impair our business and operations.
Shares outstanding/
authorized........ As of June 7, 2001, we had 19,606,525 shares of common stock
issued and outstanding. Assuming full subscription, after
the rights offering we will have ______ shares issued and
outstanding.
Grant of basic
subscription
rights............ All shareholders of record who hold 500 shares or more of
our common stock on April 30, 2001 will be granted a
non-transferable right to purchase up to _____ share[s] of
our common stock at $___ per share for each share of common
stock held by them on the record date. We will not issue
fractional shares. We will round the rights upward to the
nearest whole share.
Grant of
over-subscription
rights............ Shareholders owning at least 500 shares who fully exercise
their basic subscription rights will be offered
over-subscription rights, subject to proration, to purchase
any shares remaining available for purchase after the
exercise of their basic subscription rights. If
over-subscription requests exceed the number of shares that
are available, then we will allocate the available shares
1
pro-rata among those rights holders who over-subscribed.
Shareholders
holding less
than 500 shares... Shareholders who hold less than 500 shares as of the record
date will be sent a letter from ISIS notifying them of the
rights offering. Such shareholders will be offered the right
to purchase a minimum of ______ shares of our common stock
from those shares remaining after shareholders holding 500
or more shares have exercised their basic and
over-subscription rights. Shareholders holding less than 500
shares may, at their option, request a copy of the rights
offering materials and subscribe for shares by the
expiration date.
Non-Shareholder
Investors......... Remaining shares, if any, may be offered to non-shareholder
investors identified by ISIS.
Subscription
period ........... The rights offering will remain open for a 30-day period
from _____, 2001 until _____, 2001, unless such period is
extended by us, in our sole discretion, for up to two
additional 30 day periods. Shareholders who wish to exercise
their subscription rights must return the completed
subscription documents along with their payment, as
instructed in the subscription documents, to the
subscription agent, Computershare Trust Company, Inc., no
later than 5:00 p.m., Mountain Time, on ______, 2001, unless
the subscription period is extended by us as described
above.
Use of proceeds... If all of the rights offered are exercised, then the gross
proceeds to ISIS will be $2,800,000. The gross proceeds from
the offering will be used to bring our trade accounts
payable current; pay an arbitration award to our former
chief financial officer; reimburse our subsidiary,
PlanGraphics, for expenses incurred on our behalf; enhance
working capital; fund general corporate purposes; and pay
the costs of the offering.
2
RISK FACTORS
An investment in our common stock involves a high degree of risk.
Prospective purchasers of our common stock should consider carefully the
information set forth below, as well as the other information in this report, in
determining whether to purchase our common stock.
We have incurred recent losses and may not be able to continue as a going
concern.
We have suffered losses from operations in the past, and our ability to
achieve profitability in future reporting periods is uncertain. Since the
acquisition of PlanGraphics, Inc. in September 1997, we have incurred net losses
for the fiscal years ended September 30, 1997, 1998, 1999 and 2000 in the amount
of $2,550,000, $3,000,000, $1,050,000 and $2,570,000, respectively. In
connection with their audit report on our consolidated financial statements as
of and for the year ended September 30, 2000, BDO Seidman, LLP, our independent
certified public accountants, expressed substantial doubt about our ability to
continue as a going concern.
Our inability to complete this rights offering could materially impair our
business.
Our inability to complete this rights offering and raise the expected
proceeds would potentially leave us without adequate working capital which could
materially impair our business and operations. We need additional capital to
fund our current operations, bring our trade accounts payable current, satisfy
an arbitration award, reimburse PlanGraphics for funds spent on our behalf and
fund future growth. There can be no assurance that cash flow from operations,
coupled with presently available working capital, will be sufficient to fully
fund our expenditures.
Our breach of covenants in a loan agreement may put us at risk of relinquishing
control of PlanGraphics.
On May 31, 2001, PlanGraphics entered into a line of credit with Branch
Banking & Trust Company to replace an expiring line of credit with National City
Bank of Kentucky. The accounts receivable and general intangibles of
PlanGraphics and a pledge of $325,000 in an account held by HumanVision L.L.C.,
a related party, serve as collateral for the line of credit. As a condition to
offering this pledge, HumanVision L.L.C. required PlanGraphics to indemnify it
against any draws or other claims that may be presented under the pledge, ISIS
to guarantee PlanGraphics' indemnification obligations, PlanGraphics to grant a
security interest in its accounts receivable, and ISIS to pledge its stock in
PlanGraphics to HumanVision L.L.C. as security for ISIS's guaranty to
HumanVision L.L.C. If we default on the line of credit and Branch Banking &
Trust Company calls the line of credit, it may look to HumanVision L.L.C.'s
pledge for payment of the debt. If HumanVision L.L.C. were to pay the debt on
behalf of PlanGraphics pursuant to its pledge, there can be no assurance that
HumanVision L.L.C. would not look to ISIS's pledge of its stock in PlanGraphics
and possibly assume ownership of such stock.
Our revenues historically are concentrated in a limited number of customers.
We have had some concentration of revenues and associated accounts
receivable balances in certain customers. During the fiscal year ended September
30, 2000, approximately 19.5% of our sales were concentrated in one customer and
during the fiscal year ended September 30, 1999, 12.7% of our sales were
concentrated in that same customer. In addition, at September 30, 2000, a
separate customer accounted for 19% of our outstanding accounts receivable. The
volume of work that we perform for a specific client is likely to vary from
period to period, and a significant client in one period may not use our
services at the same level or at all in a subsequent period. The loss of a key
customer could have an adverse impact on revenues.
3
Our future success depends in significant part on the continued service of
certain technical and management personnel and our ability to attract and retain
key technical, sales, marketing, information systems, financial and executive
personnel.
Key employees of ISIS include Gary S. Murray, Chairman of the Board of
Directors, and John C. Antenucci, Acting Chief Executive Officer. ISIS has
entered into an employment agreement with Mr. Antenucci and a services agreement
with Mr. Murray that expire in September 2003 and June 2001, respectively. Both
agreements contain a non-compete provision that restricts Mr. Antenucci and Mr.
Murray from, for one year following his termination date unless otherwise
approved by us, performing work either that is in backlog for PlanGraphics or
that PlanGraphics is pursuing. Competition for personnel is intense, and there
can be no assurance that ISIS can retain its key personnel or that it can
attract, assimilate or retain other highly qualified personnel in the future.
The loss of key personnel, especially without advance notice, or the inability
to hire or retain qualified personnel, could have a material adverse effect on
our business, financial condition and results of operation.
Delinquent reporting under the Securities Exchange Act of 1934 may delay future
financings and may result in the NASD removing our shares from the
Over-the-Counter Bulletin Board.
We were delinquent in filing our Annual Report on Form 10-KSB for the
fiscal year ended September 30, 2000. Our delinquency in filing certain reports
as required by the Securities Exchange Act of 1934 prohibits us from using a
short-form registration statement on Form S-3 to register shares of our common
stock until we are in compliance with Securities Exchange Act filing
requirements for a period of at least twelve calendar months immediately
preceding such registration statement filing. Our inability to use a short form
registration statement may delay future financings. In addition, an extended
delay in filing our periodic reports could cause the NASD to remove us from the
Over-the-Counter Bulletin Board. If our common stock is not traded on the
Over-the-Counter Bulletin Board and, instead is traded on the "pink sheets"
maintained by the National Quotation Bureau, the ability of stockholders to sell
their ISIS common stock may be impaired.
The United States penny stock rules may make it more difficult for investors to
sell their shares.
Shares of the Company's common stock are subject to rules adopted by
the Securities and Exchange Commission regulating broker-dealer practices in
connection with transactions in "penny stocks." These rules require that prior
to effecting any transaction in a penny stock, a broker or dealer must give the
customer a risk disclosure document that describes various risks associated with
an investment in penny stocks, as well as various costs and fees associated with
such an investment. It is possible that some brokers may be unwilling to engage
in transactions involving shares of the Company's common stock because of these
added disclosure requirements, which would make it more difficult for a
purchaser in this offering to sell his shares.
Shareholders who do not exercise their rights will experience dilution.
This offering may result in our issuance of up to an additional ___
shares of our common stock, assuming full exercise of the rights offered
pursuant to the rights offering. If a shareholder chooses not to exercise fully
the shareholder's rights, the shareholder's relative ownership interest in ISIS
will be diluted.
4
USE OF PROCEEDS
The gross proceeds that we expect to receive from the rights offering
are estimated to be $2,800,000, assuming a price of $ _____ per share, before
deducting the offering expenses. The offering expenses of this offering are
estimated to be $125,000. The gross proceeds will be used as follows if 100%,
75% or 50% of the maximum offering is sold:
100% 75% 50%
---------- ---------- ----------
Funds available: $2,800,000 $2,100,000 $1,400,000
========== ========== ==========
Proposed uses:
Additional costs of this offering:
Registration, filing & related fees $10,000 $10,000 $10,000
Legal fees 50,000 50,000 50,000
Accounting fees 25,000 25,000 25,000
Printing fees 20,000 20,000 20,000
Subscription agent fees 30,000 30,000 30,000
Payment of arbitration award 350,000 350,000 350,000
Payment of accounts payable to service contractors 180,000 180,000 180,000
Repayment of note to HumanVision L.L.C. 115,000 115,000 115,000
Repayment of note to BDO Seidman, LLP 91,000 91,000 91,000
Payment of accounts payable to PlanGraphics 650,000 650,000 350,000
Unallocated working capital 1,279,000 579,000 179,000
---------- ---------- ----------
Total: $2,800,000 $2,100,000 $1,400,000
========== ========== ==========
We have approximately $180,000 outstanding beyond customary terms in
accounts payable to our service providers. These services include printing,
communications, investor relations, legal and accounting. We expect to bring
these accounts payable current with a portion of the proceeds received in this
offering.
As of April 30, 2001 we owed PlanGraphics approximately $641,500 for
expenditures made on behalf of ISIS that include salaries, benefits, litigation
expenses, bookkeeping expenses, insurance, legal fees, accounting fees, rent,
utilities, communications and other common business expenses. We expect that sum
to increase approximately $20,000 to $30,000 per month reflecting business
expenses unrelated to the offering. Depending on whether this offering is fully
subscribed, we estimate that we will reimburse PlanGraphics up to $600,000 from
proceeds received in this offering.
We owe BDO Seidman, LLP $91,000 pursuant to a promissory note dated
February 15, 2001 for accounting services. The promissory note requires payment
of approximately $13,000 per month. The balance outstanding shall be paid from
the proceeds of this offering either in a lump-sum or from working capital
through the balance of the term of the promissory note.
We owe HumanVision L.L.C., a related party, an aggregate of $115,000
pursuant to promissory notes dated February 2, 2001 and May 15, 2001. Pursuant
to a First Amendment to Promissory Notes, the balance of outstanding principal
and accrued and unpaid interest of the notes automatically converts to shares of
ISIS common stock at the lower of $0.07 per share or the price per share of the
rights offered to existing shareholders, on February 3, 2002 and May 16, 2002,
respectively.
5
In a final arbitration decision dated April 20, 2000, we were ordered
to pay $330,000 to our former chief financial officer for severance compensation
and fees and expenses related to arbitration. The outstanding amount owed on
that award including interest and expenses is approximately $350,000.
The unallocated working capital will be used for general corporate and
working capital purposes.
BUSINESS
Business Development
Integrated Spatial Information Solutions, Inc. ("ISIS") was
incorporated as DCX, Inc., a Colorado corporation, on December 8, 1981. At that
time, we operated in the custom design and contract manufacture of
aircraft-related electronic cable assemblies. As DCX, Inc., we operated
principally under contracts to defense contractors for United States Department
of Defense acquisition programs and military aircraft maintenance support. At
that time, we provided engineering design, prototype development, testing and
manufacture of medium and high technology electronic cable assemblies, wire
harnesses, electromechanical devices, and test equipment for aircraft
maintenance applications.
On September 22, 1997, we acquired all of the outstanding shares of
PlanGraphics, Inc., a professional services information technology company that
specializes in the design and implementation of spatial data management systems
commonly referred to in our industry as geographic information systems, or "GIS"
for short. PlanGraphics, which was incorporated in 1979 in the state of
Maryland, has its headquarters in Frankfort, Kentucky.
Effective as of September 30, 1997, we sold our DCX, Inc. defense
electronics manufacturing assets. On June 29, 1998, we changed our name from
DCX, Inc. to Integrated Spatial Information Solutions, Inc. Our principal
business is now carried out through our wholly owned subsidiary, PlanGraphics,
Inc. PlanGraphics provides business-based solutions to the information
management needs of federal, state and local governments, public and investor
owned utilities, and commercial enterprises where locational or "spatial"
information is mission critical. PlanGraphics services clients through the
definition, design, implementation and operation of e-services and other
computer-based solutions.
Since we operate primarily through our wholly owned subsidiary,
PlanGraphics, we will often use pronouns such as "we," "us," and "our" in this
prospectus to refer to the Company and our subsidiary, PlanGraphics, Inc.
Business
Introduction
In most business settings today, computers are utilized for three
general purposes: word processing, data management and spreadsheets. For science
and engineering applications, computers have also become critical in
alpha-numeric analysis and design. Within the last 30 years, a new application
of computer technology has transformed the application of computer science to
cartography, geography, planning and engineering by both government and private
industry. Known as "Geographic Information Systems" or GIS, this application
combines geography, computer cartography and data management into one tool.
6
GIS provides a means for managing and analyzing information by relating
the geographic location of a feature or event to other descriptive information.
GIS software allows information, in both graphic or map information and
alphanumeric data to be combined, segregated, modeled, analyzed and displayed.
Once largely limited to local and state government agencies and large
utilities responsible for land and physical asset management, the use of GIS and
other spatial information systems has become widespread. While government
organizations still build and maintain GIS systems to analyze, plan and regulate
land use and natural resources, and utilities continue to use GIS to track and
maintain their physical assets, other uses of GIS have become both more common.
For example, GIS is being used by utilities to acquire and retain high margin
customers, to analyze demographic attributes of potential customers and match
the results with facility capacity, and to identify where facility capacity
needs to be expanded. State and local governments use the technology for
dispatching police and fire resources, responding to catastrophic events,
insuring parity in tax appraisals and locating facilities in areas suitable for
development.
In a January 2001 press release, International Data Corporation of
Framingham, Massachusetts, estimated that the worldwide spatial information
management market reached $1.08 billion in 1999 and would reach $2.1 billion per
year by 2004. These numbers are exclusive of the demand of government and
commercial enterprises to have higher levels of web access and capability for
their information assets - a large portion of which have locational or spatial
components. Spatial and data management applications and services have become
information technology decision-making tools for utilities, local and state
government agencies, and land and resource management organizations. They are
used in a wide range of applications, including land management, mineral
exploration, crop management and forecasting, environmental remediation,
military planning and surveillance, infrastructure development and construction,
and business market analysis.
Such applications and services are part of a broader market,
information systems and the information systems consulting market. In an article
in Washington Technology, published February 19, 2001, Gartner DataQuest of
Stamford, Connecticut, estimated the market for e-government solutions would
increase from $1.9 billion in 2001 to $6.5 billion per year in 2005. Similarly,
in U.S. and Worldwide Markets and Trends, 1996-2003, found in International Data
Corporation's publication #W18902, International Data Corporation projected that
consulting service revenue would grow 14.8% per year, reaching $55 billion by
2003. With the anticipated growth in the IS market, we have decided to expand
the services we offer to meet the growing information and systems integration
needs of public and private enterprises by leveraging our e-services
capabilities and specialization in spatial information systems.
We believe that the information services and technology markets are
undergoing structural changes with an increasing frequency of outsourcing of
many technological and operational functions. These changes create demand for
high quality technology advisory services, project design and management and
professional services.
Overview of Operations
We are independent management consultants who develop GIS and
information technology solutions to meet the specific needs of our clients. We
do not make the software, but we fill a wide variety of roles to make
state-of-the-art software work for a particular organization. We are fully
integrated GIS implementers providing our clients with business-based total
information technology solutions.
7
We serve as architects who work closely with the client to conceive an
appropriate solution, whether it be a new computer application, an entire
information system, or a fundamental reworking of an existing system. For
example, we are helping the Sacramento County, California Assessor's Office
transform the way it manages parcel and property ownership data.
We function as design engineers who define and refine specifications
for an information system and lay out pragmatic, cost-effective ways to achieve
a solution. For example, we are designing and building a spatial data warehouse
for New York City that provides internet-enabled access and applications to a
wealth of city data.
We serve as general contractors who manage the work of several types of
vendors, including software and data conversion vendors. We guide clients
through the process of acquiring technology, installing networks and building
and integrating databases to increase the value of their geographic and spatial
information. For example, we are working as a system and data integrator for the
Metropolitan Sewerage District in Madison, Wisconsin, building on the
information assets of other jurisdictions in the service area and developing GIS
applications specific to the sewerage district.
We function as facility managers, providing on-site professionals who
manage and bring technical experience to operate and maintain information
systems. For example, we have had an on-site team providing data preparation and
quality control for a massive data conversion project for Rhode Island's
Providence Gas Company and we are the GIS project manager to the City of
Columbus, Ohio Department of Technology.
We serve as auditors of information systems. We look for improvements
to existing systems and keep up with ever-changing technology to ensure that
clients are always on the cutting edge of the best practices in the industry.
For example, we facilitated the preparation of a statewide strategy for spatial
information within the state of Oregon.
In short, we build and transform legacy systems into systems that
provide solutions emphasizing the value of locational data. We extend
departmental databases into enterprise assets. We take concepts involving data
about places, time, people and things and build practical, cost-effective
capabilities that can enable a workforce to better meet the needs and demands of
its customers. Although we perform these various functions and services,
management views our operations as one business segment.
Our Sales and Marketing Concept
We conduct our business development using a principal selling model. In
doing so, we draw on PlanGraphics' president and practice managers who manage
business units and have sales responsibility. Each of the practice managers is
supported by a number of executive consultants who have both business
development and executive level service delivery responsibilities. We also
develop business and follow-on assignments through our project managers. In
addition, we maintain business alliances with suppliers of software, data and
professional services, including among others, Oracle, ESRI and Space Imaging.
Our customer service philosophy is to fully understand our customers'
needs so that we are able to deliver a high level of value-added services and
after-sales support. We believe that highly differentiated customer service and
technical support is a key competitive asset. Because both GIS and the Internet
are evolving and complex, customers require significant technical support.
Consequently, we have developed proprietary methodologies that assure
consistency in performance and attain maximum customer satisfaction through
attention to customer communication and technical expertise.
8
We continually monitor our customer service strategy through customer
satisfaction surveys, frequent contact with the executive consultants and
oversight by practice managers and our senior management.
Business Objectives and Milestones
We intend to grow our presence in the information services industry by
building on the reputation and specialty skills of our subsidiary, PlanGraphics,
and to achieve growth rates through proper capitalization at rates that are
equal to or in excess of industry growth rates.
We also believe that there is a market opportunity to consolidate
information services and technology companies thereby transforming us into a
full service information technology services company with a specialized
capability that is proactive in spatial information systems. We further intend
to exploit these market opportunities and to increase revenues by acquiring
companies with capabilities complementing and enhancing our current services
offered to potential clients.
Competition in our Markets
The spatial information management and technology market includes GIS
and is divided into two broad categories: the government sector, which includes
agencies at all levels and is presently the larger of the two categories; and
the commercial sector.
The markets in which we operate are highly competitive and can be
significantly influenced by marketing and pricing decisions of competitors that
have substantially greater resources. We believe that competition will intensify
in the future. Our ability to compete successfully depends on a number of
factors including:
o Market presence and geographic coverage;
o Reputation for reliability, service and effective customer support;
o Breadth and depth of expertise, independence, and sensitivity to the
client's requirement for responsiveness and timeliness; and
o Ability to react to changes in the market and industry and economic trends.
We believe we compete effectively on the basis of breadth and depth of
expertise, independence, and sensitivity to the client's requirement for
responsiveness and timeliness.
Proprietary Rights
We rely on general copyright, trademark and trade secret laws to
protect our methodologies, prior work and technology. ISIS and PlanGraphics have
registered their names and trademarks in the United States and Canada.
PlanGraphics has developed and maintains a proprietary methodology for
conducting its business. This methodology and certainmarketing, customer and
prospect data are maintained and handled as trade secrets and are protected by
policy and employment agreements. It is also our policy to require employees,
consultants and, when possible, suppliers to execute confidentiality agreements
upon the commencement of their relationships with us.
9
Employees
Presently we employ 57 full-time employees and 21 part-time employees.
Five of our employees are in executive management and three have practice
management responsibilities. An additional eight employees are executive
consultants. We employ three individuals dedicated to sales. 28 employees serve
in varying capacities as consultants and system developers and 21 others are
paid only for the time billable to clients.
Administrative support consists of accounting, human resources and
creative services. Two executive managers and five staff members are involved in
accounting services and human resources. An additional five individuals are
assigned to creative services and are available to support consulting projects
as well as marketing and sales.
DESCRIPTION OF PROPERTY
Our corporate executive offices are located in Parker, Colorado. We
lease commercial property in the following locations:
Location Property Leased Approximate Size Number of Employees
-------- --------------- ---------------- -------------------
Frankfort, Kentucky land and a building 20,500 square feet 32
Parker, Colorado office space 350 square feet 1
Silver Spring, Maryland office space 3,854 square feet 15 (An additional 23
work in Providence,
Rhode Island at a client
site)
Newport Beach, California office space 600 square feet 3
Newark, New Jersey office space 1,200 square feet 4
The length of our leases vary from one to five years. We believe that
such properties are adequate to meet our current needs. Were any of the existing
leases terminated, we believe that there are affordable alternate facilities
available and such action would not have a material adverse effect on our
business.
LEGAL PROCEEDINGS
ISIS was the respondent in an arbitration claim brought by our former
chief financial officer filed in August 1999 with the American Arbitration
Association in Jacksonville, Florida. He claimed that he was constructively
discharged from ISIS and sought severance compensation equal to three years'
compensation, an amount that he argued was provided for in his employment
agreement. We asserted that he resigned and was not constructively discharged
and, accordingly, was not entitled to severance compensation. The case was
arbitrated in February 2000. In a final decision dated April 20, 2000, the
arbitrator awarded the former officer $330,000 in separation payments, fees and
expenses. All costs incurred by ISIS associated with the arbitration award were
expensed as of June 30, 2000. On July 18, 2000, we filed an appeal of the award
with the State Circuit Court for Duval County, Florida. The appeal
10
was not sustained. It is anticipated that the outstanding amount owed on the
award including interest and expenses will be paid out of the proceeds of this
offering.
We are engaged in various litigation matters from time to time in the
ordinary course of business. In the opinion of management, the outcome of such
litigation will not materially affect the financial position or results of
operations of ISIS.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read together with ISIS's financial
statements and accompanying notes included elsewhere in this prospectus.
Financial information for each of the two years in the period ended September
30, 2000 has been derived from audited financial statements. Financial
information for the six months ended March 31, 2001 and 2000 has been derived
from unaudited financial statements.
Financial Condition
Going Concern
In connection with their audit report on our consolidated financial
statements as of and for the year ended September 30, 2000, BDO Seidman, LLP,
our independent certified public accountants, expressed substantial doubt about
our ability to continue as a going concern because of recurring net losses and
negative cash flow.
The audited financial statements contained in this prospectus show
$17.7 million being invested in or contributed to the company since its
inception. Our stockholders' equity has declined to approximately $3.2 million
as a result of a cumulative deficit of $14.5 million, which includes non-cash
charges of $684,000 during the fiscal year ended September 30, 2000, and
cumulative non-cash charges of approximately $2.7 million since October 1, 1997.
Our operations are not currently profitable, although PlanGraphics, when viewed
on a stand-alone basis, has experienced breakeven or better levels of
profitability since June 30, 2000, exclusive of extraordinary expenses including
those associated with defending a non-compete agreement.
We require additional funds to bring current our accounts payable, to
satisfy our obligations to a former officer as a result of an arbitration award,
to repay PlanGraphics for funds advanced in the normal course of business and
for working capital through the fiscal year ending September 30, 2002.
PlanGraphics requires funds in excess of the amounts due from the parent
organization to provide working capital for operations and growth of its
business.
The minimum level of funding that we require to meet the aforementioned
funding requirements for ISIS is approximately $1.4 million. Management intends
to raise approximately $2.8 million through this rights offering. In addition,
management may seek additional and extended lines of credit. Our continued
existence is uncertain if we are not successful in obtaining outside funding in
an amount sufficient for us to meet our working capital requirements as we
resume internal growth.
To address our immediate needs for cash and liquidity, we have entered
into a number of formal and informal agreements with vendors and professional
service providers to extend the terms on payables currently due. Our accounts
payable to trade is approximately $289,200 which includes $90,000 beyond
standard terms, $91,000 in a short-term note with our independent auditors, BDO
Seidman, LLP dated February 15, 2001, and $42,000 in payables covered by
informal agreements with five of our vendors.
11
PlanGraphics has accounts payable to trade, subcontractors and vendors of
approximately $668,600 of which $159,500 is beyond 30 days. It has formal
payment arrangements with three vendors totaling $152,730, including a
short-term note with Evans, Mechwart, Hambleton & Tilton, Inc. dated November 7,
2000 with an outstanding balance of $119,280. PlanGraphics has informal
agreements with an additional eight vendors and subcontractors for a total of
$224,900.
We also have reduced or delayed expenditures on items that are not
critical to operations. On May 31, 2001, PlanGraphics obtained a line of credit
with Branch Banking and Trust Company to replace the line of credit with
National City Bank of Kentucky that expired on April 30, 2001. Furthermore,
during the course of the fiscal year ended September 30, 2000, we were able to
reduce monthly cash flows in excess of $27,000 per month after we made final
payments to our former chief executive officer and to a former shareholder of
PlanGraphics as well as "right"-sized our office leases.
We also will continue to consider periodically the sale of our interest
in Jobsview.com LLC, held by PlanGraphics. The 7.9% ownership interest of this
entity is valued at our original investment cost of $56,400 on the PlanGraphics
balance sheet. Recent sales during calendar year 2000 of equity by Jobsview.com
would value our holdings at approximately $460,000. Efforts to conserve and
develop new sources of cash and equity are complimentary of the improved
operating performance of our operating subsidiary during the past two quarters.
We anticipate the improved results to continue through the remainder of 2001 as
a result of increased contract backlog and assignments as discussed below.
Although management feels there is a reasonable basis to believe that
we will successfully raise the needed funds through equity and debt financing,
no assumption can be made that we will be able to raise sufficient capital to
sustain operations or that the subsidiary business will be able to achieve a
level of profitability sufficient to carry the parent company's operating
expenses. Even though we have successfully obtained working capital in the past
by extending our line of credit and raising funds through private placements,
there can be no assurance that we will be successful in the future.
Cash Flow
As of March 31, 2001 we had a net working capital deficit of $1,232,092
as compared to a net working capital deficit of $440,758 at March 31, 2000. This
increase in working capital deficit resulted primarily from the operating loss
offset by funds from the private placement received in the fiscal quarter ended
December 31, 2000.
In the six months ended March 31, 2001, we used net cash of $78,824 in
operations, as compared to $407, 826 used in operations in the six months ended
March 31, 2000. The reduction in cash use was primarily related to the operating
loss coupled with the increase in accounts receivable offset by changes in
several other operating asset and liability accounts. We expect to continue to
have operating cash flow deficiencies for the near future as we develop and
expand our business.
In the six months ended March 31, 2001, net cash used in investing
activities was $7,505 as compared to $87,041 of net cash used in investing
activities in the six months ended March 31, 2000. Decreased equipment purchases
accounted for the change.
We generated net cash of $78,933 from financing activities in the six
months ended March 31, 2001, as compared to net cash of $327,284 in the six
months ended March 31, 2000. This decrease in net cash was primarily the result
of decreased payments on debt and a reduction of $262,000 in proceeds received
from the issuance of stock.
12
Capital Resources
As of September 30, 2000, we had lease payment commitments through 2005
of $2,403,075, that will require total annual payments of approximately $572,000
during the fiscal year ending September 30, 2001 as compared to $655,000 for the
fiscal year ended September 30, 2000. Of the required payment amount for the
current fiscal year, approximately $109,000 is for capital lease obligations and
$463,000 relates to operating leases. Management believes normal operating cash
flows are adequate to fund these payments. (See also Note 6 to the September 30,
2000 Financial Statements.) We consider our facilities adequate to support
anticipated sales and operations for the next several years; accordingly, no
major commitment for additional facilities expansion has been entered into for
the year ending September 30, 2001. In recent years, however, we have
transitioned to smaller and less expensive space when possible. Were any of the
existing leases to be terminated we believe that there are affordable alternate
facilities available and such action would not have an adverse impact.
Since entering the information technology sector in 1997, we have
funded our operations and working capital needs primarily through the public and
private placement of our equity securities. In addition, a portion of our
capital expenditures has been financed through capital lease obligations payable
to financial institutions. We have also on occasion borrowed limited amounts
from John C. Antenucci, our acting chief executive officer and Gary Murphy,
PlanGraphics' chief financial officer in order to fund temporary working capital
requirements. At March 31, 2001 there was no balance outstanding to them and we
owed $75,000 to an entity controlled by a director.
During the fiscal year that ended September 30, 2000, we issued
1,658,452 shares of common stock through two private placements in consideration
of approximately $463,000 in gross proceeds. In connection with these sales, we
also issued warrants to purchase 1,232,452 shares of common stock with varying
expiration dates. The warrants are all immediately exercisable and 630,000 are
valid for three years and have an exercise price of $.50 per share and 806,452
are valid for five years and have an exercise price of $0.65 per share.
In October 2000, we completed the sale of another private offering to
accredited investors and officers and directors. Pursuant to that offering, we
issued 580,000 shares of common stock for gross proceeds of $145,000. We also
issued 290,000 warrants to purchase common stock at a price of $0.50 per share,
such warrants being exercisable for three years from the date of issue.
On February 9, 2001 we borrowed $75,000 from an entity controlled by
one of our directors and executed a convertible promissory note. On May 15, 2001
we borrowed an additional $40,000 from the same entity. The proceeds from these
borrowings were used to meet certain working capital requirements. On May 31,
2001, PlanGraphics obtained a $500,000 line of credit from Branch Banking and
Trust Company to replace the line of credit with National City Bank of Kentucky
that expired on April 30, 2001. The expired line of credit had been extended to
June 11, 2001 and was paid in full on June 1, 2001. The new line of credit will
expire on February 2, 2002.
As of March 31, 2001, we had minimal cash and cash equivalents. Our
management team estimates that, based upon current expectations for growth, we
will require additional funding of up to $2.5 million for the recapitalization
of the company and the execution of our current business plan, including the
financing of our anticipated capital expenditures, operating losses and the
evaluation of acquisition targets. Our management team believes that our current
operating funds along with the additional funds generated by the pending
shareholder rights offering will be sufficient to fund our cash requirements
through September 30, 2002. The Company's long-term liquidity requirements may
be significant in order to implement its plans. There can be no guarantee such
funds can be secured.
13
Operations Outlook
We believe that information technology, which includes geographic
information systems or "GIS," continues to be a global market that is rapidly
evolving and becoming the basis for a myriad of new applications and services to
solve customer problems and creating additional markets. We also believe the
potential gross profit margins in information technology are much higher than we
presently experience and we are working to grow the spatial data management and
integration solutions of our GIS business base according to forward looking
statements in our business plan, augmenting growth to be achieved through
acquisitions.
PlanGraphics had work backlog and assignments of approximately $9.6
million as of March 31, 2001 and $8.6 million as of September 30, 2000, compared
to $5.0 million of work backlog and assignments as of March 31, 2000 and $5.4
million as of September 30, 1999. PlanGraphics reports backlog based on executed
contracts. Assignments include contract awards where documentation is pending or
task orders based on existing indefinite quantity contract vehicles. A typical
contract, standard for the industry, includes terms that permit termination for
convenience by either party with 30 days prior notice. Most of our orders are
from existing or previous customers with whom we have a good relationship.
Therefore, we do not anticipate cancellation of such contracts or order
assignments. A majority of the balance of the revenue from existing backlog and
assignments will be recognized in the next twelve to fifteen months.
Currently, we plan to grow internally and through acquisitions. We have
made substantial progress in positioning PlanGraphics as a provider of
Internet-accessible data repositories and warehouses that leverage spatial data.
Several of our current assignments and a material portion of our contract
backlog and assignments are associated with these initiatives. Furthermore our
past marketing investments in China continue to yield results measured by the
increased sales of Ikonos imagery, current and anticipated projects funded by
the World Bank and a number of alliances and business partner arrangements that
have been consummated. In addition, we have taken specific steps to position our
company for additional acquisitions including reorganizing our corporate
governance and management structure and the retention of third party advisors
and investment bankers.
Our management team believes that we have the capacity to address the
immediate needs for cash and liquidity through an aggressive approach on a
number of fronts. We have entered into a number of formal agreements and
promissory notes as well as informal agreements with vendors and professional
service providers to extend the terms on payables currently due. We have reduced
or delayed expenditures on items that are not critical to operations. For
instance, the new line of credit available to PlanGraphics expires February 2,
2002.
We also periodically consider the sale of our interest in Jobsview.com
L.L.C., held by PlanGraphics. The 7.9% ownership interest in Jobsview.com is
valued at the investment cost of $56,400 on the PlanGraphics balance sheet.
Recent sales of common stock by Jobsview.com during fiscal year 2000 would value
our holdings at approximately $480,000. Efforts to conserve and to develop new
sources of cash and equity are complimentary to the improved operating
performance of PlanGraphics during the past two quarters. We anticipate the
improvement to continue through the remainder of 2001 and to be accompanied by
positive cash flows.
14
Results of Operations
6 Months Ended March 31 Years Ended September 30
2001 2000 2000 1999
---- ---- ---- ----
(unaudited) (unaudited)
Statement of Operations
Information:
Revenues $3,438,028 $3,368,138 $6,048,570 $7,990,808
Cost and expenses 3,855,591 4,095,645 7,826,655 9,289,150
Net loss (611,922) (1,452,515) (1,778,085) (1,298,342)
Balance Sheet Information:
Total Assets 7,775,458 8,541,665 7,731,880 9,156,604
Total current liabilities 3,184,856 2,514,981 2,819,956 2,192,935
Working capital (1,232,092) (440,758) (1,240,722) 251,802
Shareholders Equity 2,927,897 4,266,365 3,199,707 4,947,579
Result of Operations for the Six Months ended March 31, 2001
Revenues
Revenues for the six months ended March 31, 2001 were $3,438,028
compared to $3,368,138 for the six months ended March 31, 2000. This is a slight
increase of $69,890 over the same six-month period from 2001 to 2000 and
resulted entirely from the geographic information systems activities of
PlanGraphics. Management believes that revenues were constrained by delays
encountered in the start up of contracts and work assignments awarded in the
fiscal quarters ended September 30, 2000 and December 31, 2000. As a
consequence, delays of unexpected length impacted our revenue generation in
previous quarters. Notices to proceed were obtained for most of the delayed
assignments by mid-December 2000. Accordingly, we have experienced small
increases in revenue and expect to see further revenue increases in the ensuing
quarters.
Costs and Expenses
Our total operating costs and expenses for the six months ended March
31, 2001 amounted to $3,855,591 or 112% of revenues. In the same period in 2000,
our total operating costs and expenses were $4,095,644 or 122% of revenues. This
year's costs reflect a $240,053 or 5.8% reduction of operating costs from the
same period in 2000. Reductions in costs were a result of spending constraints
implemented to better align costs with revenues such as reductions in salaries,
employee benefits and overhead, which were partially offset by increased
expenditures in public and corporate affairs. Such costs included increased fees
for audits, investment banking and shareholder communications. Operating costs
for PlanGraphics for the six months ended March 31, 2001 were $3,251,270 or 94%
of revenues, down 8% from $3,522,504 incurred during the same period in 2000.
Net Loss
Our net operating loss for the six months ended March 31, 2001
decreased by $309,943 or 43% over the same period in 2000. In addition to the
reductions of operating costs and expenses, this decrease reflects a 5%
reduction in interest expenses and no charges associated with litigation as was
the case in the prior period. Our subsidiary, PlanGraphics, had net operating
income for the six months ended March 31, 2001 of $186,757 compared to net
operating loss of $154,367 for the same period in 2000. Management believes
PlanGraphics will continue its six-month trend of positive cash and
profitability.
15
ISIS's interest expense decreased by $9,080 over the prior year as a
result of a small decrease in the average outstanding balance of PlanGraphics'
line of credit and lower interest rates. Other income increased slightly to
$44,404 from the prior year total of $32,727 principally as a result of
increased commissions on travel expenditures. No preferred stock dividends were
paid in the current period as there was no preferred stock outstanding at March
31, 2001. The total net loss of $536,922 for the current period is therefore
attributable to holders of common stock.
Contract Backlog
We have a backlog of GIS contracts and work assignments amounting to
approximately $9.6 million. The year prior there was $5.0 million of uncompleted
work in the backlog. We expect this 92% increase in backlog to result in
significantly increased revenue in the ensuing quarters.
Result of Operations for the Year Ended September 30, 2000
Revenues
Our revenues decreased $1,942,238 or 24% from $7,990,808 for the fiscal
year ended September 30, 1999 to $6,048,570 for the fiscal year ended September
30, 2000. We believe this decrease was related to the delay of contract awards
and work assignments that were held in abeyance due to distractions caused by
Year 2000 issues. The delays impacted our revenue generation on projects because
we typically encounter some lag time finalizing contractual arrangements and
arranging needed resources before we are able to begin work. The Year 2000
effect on us was a large decrease in revenue.
Accounts receivable balances at September 30, 2000 and 1999, include
both billed receivables and work-in-process. The payment terms on accounts
receivable are generally net 30 days and collections generally average 45 to 60
days after invoicing. The actual collection period is consistent with industry
experience with clients in the public sector. While this results in an elevation
and aging of the billed accounts receivable balance, our history reflects
consistent collectibility of the receivable balances. Work-in-process represents
work that has been performed but has not yet been billed. This work will be
billed in accordance with milestones and other contractual provisions. The
amount of unbilled revenues will vary in any given period based upon contract
activity.
Costs and Expenses
The costs and expenses for the fiscal year ended September 30, 2000
amounted to $7,826,655, a decrease of $1,462,495, compared to $9,289,150 for the
fiscal year ended September 30, 1999. Significant reductions in costs and
expenses were primarily related to adjustments responding to decreased operating
levels. We reduced direct contract costs by approximately $684,306, salaries and
benefits by approximately $482,394, and general and administrative expenses by
approximately $556,515.
Net Loss
Our operating loss for the fiscal year ended September 30, 2000 was
$1,778,085 compared to $1,298,342 for 1999, a reduction in operating losses of
$479,743. This reduction is a result of reduced revenues offset by cost savings
in direct contract costs, salaries and benefits and general and administrative
expenses.
Interest expense was reduced by $104,264 to $330,004 in 2000 as
compared to $434,268 during 1999, a decrease of 24 percent. The decrease is
attributable to an overall reduction of interest bearing
16
debt. Other income increased over the prior year total by $33,900 or 40 percent
as a result of increased miscellaneous income.
Our net loss for the fiscal year ended September 30, 2000 was
$2,593,816 compared to $1,057,779 for 1999, an overall increase of $1,518,035.
The increased losses for 2000 were primarily due to $589,432 of losses on
litigation settlements described in Note 11 to the September 30, 2000 financial
statements as compared to a gain of $414,312 that we experienced for litigation
settlements in 1999. Net loss attributable to common stockholders amounted to
$2,593,816 for the fiscal year ended September 30, 2000 as compared to
$1,094,502 in the prior year. Preferred stock dividend expense amounted to
$18,002 for fiscal year 2000 compared to $36,723 in fiscal year 1999.
Subsequent Events
On May 15, 2001, we issued a promissory note in favor of HumanVision,
L.L.C., a related party, in the principal amount of $40,000. Pursuant to a First
Amendment to Promissory Notes, the balance of outstanding principal and accrued
and unpaid interest of the note automatically converts to shares of ISIS common
stock at the lower of $0.07 per share or the price per share of the rights
offered to existing shareholders on May 16, 2002. Such shares that may be issued
on conversion of the promissory note will be "restricted" as defined in Rule 144
promulgated under the Securities Act of 1933, as amended.
On May 31, 2001, PlanGraphics obtained a line of credit from Branch
Banking and Trust Company in the maximum principal amount of $500,000. This line
of credit, which replaces the National City Bank of Kentucky line of credit,
expires on February 2, 2002. The Branch Banking and Trust Company line of credit
is collateralized by PlanGraphics' accounts receivable and general intangibles
and a pledge of a $325,000 Branch Banking and Trust Company account held by
HumanVision, L.L.C.
On February 9, 2001, the board of directors ratified a loan of $75,000
from HumanVision L.L.C, a related party, in exchange for a promissory note dated
February 2, 2001. The funds were to be used for certain specified working
capital requirements. Pursuant to a First Amendment to Promissory Notes, the
balance of outstanding principal and accrued and unpaid interest of the note
automatically converts to shares of ISIS common stock at the lower of $0.07 per
share or the price per share of the rights offered to existing shareholders on
February 3, 2002. Such shares that may be issued on conversion of the promissory
note will be "restricted" as defined in Rule 144 promulgated under the
Securities Act of 1933, as amended.
Also on February 9, 2001, the board approved a resolution authorizing
us to provide to HumanVision, L.L.C. a security interest in the PlangGraphics'
accounts receivable and subordinately, the ownership of PlanGraphics as further
collateral for providing a standby letter of credit to collateralize an
extension of PlanGraphics' line of credit with National City Bank of Kentucky
and subsequently, Branch Banking and Trust Company. Subsequent to this
transaction, National City Bank of Kentucky provided an extension of a $500,000
promissory note for PlanGraphics through June 11, 2001. Effective June 1, 2001,
this promissory note was paid in full and substituted with a line of credit from
Branch Banking and Trust Company.
Historically, PlanGraphics' accounts receivable have been more than
adequate to cover its line of credit and management believes that this will
continue to be the case. Should PlanGraphics default on its line of credit with
Branch Banking and Trust Company and should its accounts receivable be
inadequate to cover its standby letter of credit with HumanVision L.L.C., ISSI
may lose its interest in PlanGraphics which could result in the loss of the
Company's sole source of revenue. HumanVision L.L.C. has not expressed an
interest in obtaining the underlying collateral used to support the standby
letter of credit.
17
In November 2000, we announced that we entered into a Letter of Intent
to acquire certain business assets of both Microhard Technology, Inc and
Certified Professionals and Engineers, Inc. As a result of due diligence reviews
we have decided to allow the Letter of Intent to lapse without a transaction.
Both parties to the Letter on Intent have agreed to work together on a number of
strategic and tactical initiatives and to revisit the acquisition discussions in
the future.
We received notification on November 15, 2000 that our appeal in State
Circuit Court for Duval County, Florida of an arbitration award made to our
former chief financial officer, Robert S. Vail was unsuccessful. The case was
arbitrated in February 2000. In a final decision on April 20, 2000, the
arbitrator awarded Mr. Vail a total of $330,000 plus expenses and interest that
now total approximately $350,000. The arbitration award will be paid with the
proceeds of this rights offering. (See Legal Proceedings on Page 10).
Deferred Tax Valuation Allowance -- FY 2001
We have net operating loss carry-forwards of approximately $10.1
million (See Note 3 to the Condensed and Consolidated Financial Statements in
our Form 10-QSB for December 31, 2000). We have established a 100 % valuation
allowance on the net deferred tax asset arising from the loss carry forwards in
excess of the deferred tax liability. The valuation allowance has been recorded,
as our management has not been able to determine that it is more likely than not
that the deferred tax assets will be realized.
Effect of Recent Accounting Pronouncements
The pronouncements that may affect us in the current fiscal year are:
The Financial Accounting Standards Board has recently issued Statement
on Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133, amended by
SFAS No. 138, established standards for recognizing all derivative instruments
including those for hedging activities as either assets or liabilities in the
statement of financial position and measuring those instruments at fair value.
This statement is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The adoption of this statement has had no
material impact on our consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued Emerging
Task Force Issue No. 00-2, "Accounting for Web Site Development Costs" ("EITF
00-2"), which was effective for all such costs incurred for fiscal quarters
beginning after June 30, 2000. EITF 00-2 establishes accounting and reporting
standards for costs incurred to develop a web site based on the nature of each
cost. Currently, as we have no web site development costs, the adoption of EITF
00-2 had no impact on our financial condition or results of operations. To the
extent we begin to enter into such transactions in the future, we will adopt the
issue's disclosure requirements in the quarterly and annual financial statements
for the year ending September 30, 2001.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation" ("FIN 44"), which was effective July 1, 2000, except that certain
conclusions in this Interpretation which cover specific events that occur after
either December 15, 1998 or January 12, 2000 are recognized on a prospective
basis from July 1, 2000. This interpretation clarifies the application of APB
Opinion 25 for certain issues related to stock issued to employees. We believe
our existing stock based compensation policies and procedures are in compliance
with FIN 44 and therefore, the adoption of FIN 44 had no material impact on our
financial condition, results of operations or cash flows.
18
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements" which provides additional guidance in applying generally accepted
accounting principles to revenue recognition in financial statements. SAB 101 is
effective as of the fourth quarter of fiscal year ending September 30, 2001.
Management believes the adoption of this bulletin will have no material impact
on our financial statements.
DESCRIPTION OF SECURITIES TO BE REGISTERED
This prospectus covers our offer and sale of up to ________ shares of
common stock, pursuant to the rights offering described herein. In our articles
of incorporation, as amended, we are authorized to issue up to 2,000,000,000
shares of common stock, no par value, and 20,000,000 shares of preferred stock,
par value $.001 per share, designated as cumulative convertible preferred stock.
As of June 7, 2001, we had 19,605,525 shares of common stock outstanding. No
shares of preferred stock are currently outstanding. All of the issued shares of
common stock are fully paid and non-assessable.
Under our articles of incorporation, all of the shares of common stock
rank equally as to voting rights, participation in a distribution of assets of
ISIS on a liquidation, dissolution or winding-up of ISIS and entitlement to
dividends. The shareholders are entitled to receive notice of all meetings of
shareholders and to attend and vote the shares at the meetings. Each share of
common stock carries with it the right to one vote. Our common stock has no
preemptive or conversion rights.
In the event of a liquidation, dissolution or winding-up of ISIS or
other distribution of our assets, the holders of the shares of common stock will
be entitled to receive ratably and equally all of the assets of ISIS after we
have paid out our liabilities. Distribution in the form of dividends, if any,
will be set by ISIS's board of directors.
We have never declared or paid dividends on our common stock. We do not
anticipate paying any cash dividends in the foreseeable future as we intend to
retain any future earnings to finance growth.
MARKET FOR COMMON STOCK
Our common stock is traded on Nasdaq's Over-the-Counter Bulletin Board
under the symbol "ISSS."
The range of high and low sales prices per share for ISIS common stock
as quoted (without retail markup or markdown and without commissions) on the
Over-the-Counter Bulletin Board for the fiscal years ended September 30, 2000
and September 30, 1999, as well as for the first two fiscal quarters of the
fiscal year ending September 30, 2001, is provided below. The figures shown
below reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions:
19
High Price Low Price
2001
Second Quarter $0.24 $0.09
First Quarter $0.23 $0.14
2000
Fourth Quarter $0.38 $0.22
Third Quarter $0.81 $0.22
Second Quarter $0.81 $0.20
First Quarter $.34 $0.20
1999
Fourth Quarter $0.38 $0.27
Third Quarter $0.44 $0.25
Second Quarter $0.66 $0.31
First Quarter $0.40 $0.30
On June 7, 2001, the last reported sales price of our common stock was $0.12.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security ownership of certain beneficial owners:
The following parties own more than five percent of our common stock as of
June 7, 2001:
- ------------------------ --------------------------------------- ----------
Name and Address of Amount & Nature of Beneficial Ownership Percentage
Beneficial Owner
- ------------------------ --------------------------------------- ----------
Ausost Anstalt Schaan 1,433,4281 7.3%
Landstrasse 163 Sole dispositive and voting power
9494 Furstentum
Vaduz, Liechtenstein
Balmore S.A. 1,379,6972 7.1%
Trident Chambers, Road Town Sole dispositive and voting power
Tortola, British Virgin Islands
(1) According to information on Schedule 13G/A filed with the SEC on November
13, 2000, Austost Anstalt Schaan, a corporation organized in Liechtenstein,
holds 1,433,428 shares of ISIS Common Stock.
(2) According to information on Schedule 13G filed with the SEC on November 13,
2000, Balmore S.A., a corporation organized in the British Virgin Islands,
holds 1,379,697 shares of ISIS Common Stock.
20
Security ownership of management:
The directors and officers of ISIS own the following percentages of our common
stock as of June 7, 2001:
- ------------------------ --------------------------------------- ----------
Name and Address of Amount & Nature of Beneficial Ownership Percentage
Beneficial Owner
- ------------------------ --------------------------------------- ----------
Jean M. Anderson 114,000 0.6%
Director Sole dispositive and voting power
c/o Integrated Spatial
Information Solutions
19039 East Plaza Drive,
Suite 245
Parker, Colorado 80134
John C. Antenucci 1,824,302(1) 8.5%
President and Director Sole dispositive and voting power
c/o Integrated Spatial
Information Solutions
19039 East Plaza Drive,
Suite 245
Parker, Colorado 80134
Frederick G. Beisser 251,993(2) 1.3%
Chief Financial Officer, Sole dispositive and voting power
Secretary, Treasurer
andDirector
c/o Integrated Spatial
Information Solutions
19039 East Plaza Drive,
Suite 245
Parker, Colorado 80134
Raymund E. O'Mara 337,261(3) 1.7%
Director Sole dispositive and voting power
c/o Integrated Spatial
Information Solutions
19039 East Plaza Drive,
Suite 245
Parker, Colorado 80134
Gary S. Murray 2,438,042(4) 11.1%
Chairman and Director Sole voting power
c/o Integrated Spatial
Information Solutions
19039 East Plaza Drive,
Suite 245
Parker, Colorado 80134
J. Gary Reed 317,033(5) 1.6%
Director Sole dispositive and voting power
c/o Integrated Spatial
Information Solutions
19039 East Plaza Drive,
Suite 245
Parker, Colorado 80134
All Directors and Officers 5,302,631 21.3%
As a group (6 persons)
- ---------------
(1) Includes 551,427 shares of common stock issuable pursuant to the
exercise of options and warrants and 13,000 shares of common stock
owned by Mr. Antenucci's spouse, for which he is deemed to be a
beneficial owner.
(2) Includes 179,093 shares of common stock issuable pursuant to the
exercise of options and warrants.
(3) Includes 122,500 shares of common stock issuable pursuant to the
exercise of options and warrants.
(4) Includes 195,000 shares of common stock issuable pursuant to the
exercise of options and warrants. Also includes 848,709 shares of
common stock, options to purchase 645,162 shares of common stock and
warrants to purchase 405,000 shares of common stock owned by
HumanVision L.L.C. Mr. Murray, as a member and sole manager, is a
control person of HumanVision L.L.C.
(5) Includes 304,090 shares of common stock issuable pursuant to the
exercise of options and warrants.
21
DETERMINATION OF OFFERING PRICE
The board of directors of ISIS decided to set a $ ____ per share
subscription price after considering several factors, including the potential
increase in the number of outstanding shares in the event the rights offering is
fully subscribed. In determining the per share subscription price, the board of
directors took into account the recent trading prices of our shares, the
possibility that existing shareholders may wish to purchase additional shares of
common stock from us and the multiples of book value at which shares of
similarly situated companies are trading. The $___ per share subscription price
should not be considered to be an indication of our actual value or of the value
of our common stock. We have neither sought, nor obtained, any valuation opinion
from outside financial advisors or investment bankers.
PLAN OF DISTRIBUTION
General
We are offering _____ shares of our common stock to our shareholders of
record who hold five hundred shares or more as of April 30, 2001 at $ ___ per
share in this rights offering. We have not engaged an underwriter in connection
with this rights offering. If the rights offering is fully subscribed, we expect
to raise proceeds of approximately $2,800,000, before offering costs.
Concurrent with the rights offering to shareholders holding 500 or more
shares, we will notify those shareholders of record on April 30, 2001 that hold
less than 500 shares of the opportunity to purchase a minimum of ________ shares
of our common stock from those shares remaining after shareholders holding 500
or more shares have exercised their basic and over-subscription rights. Any
shares remaining may then be offered to non-shareholder investors identified by
ISIS.
Our officers and directors may solicit responses from shareholders
receiving rights to purchase. These individuals will be acting solely on behalf
of ISIS and neither ISIS nor the officers and directors will charge any fee or
receive any commissions for the sales. Based on these facts, the officers and
directors will not register as brokers or dealers.
We have retained Brean Murray & Co., Inc. of New York, New York to
assist us in structuring the rights offering and to provide other financial and
business advisory services. For these services, Brean Murray & Co. will receive
warrants to purchase up to 2% of the shares of common stock outstanding after
the rights offering. Such warrants will expire five years after the date of
issuance and will be exercisable at a price equal to 110% of the exercise price
of the rights.
We have also retained Crossways Consulting Group of Palisades, New York
to identify qualified investors to purchase any shares remaining after the
current shareholders have exercised their basic and over-subscription rights,
provide advisory services on the structure of the rights offering and make
recommendations on the positioning and promotion of ISIS to domestic and
international business opportunities. For these efforts, Crossways Consulting
Group will receive warrants to purchase up to 2% of the shares of common stock
outstanding after the rights offering. Such warrants will expire five years
after the date of issuance and will be exercisable at a price equal to 110% of
the exercise price of the rights.
22
Minimum Amount of Offering
If the rights offering is fully subscribed, we expect to raise proceeds
of approximately $2,800,000, before offering costs. The minimum amount needed by
ISIS to complete the rights offering is $600,000. If that minimum amount is not
reached by the expiration date, or the extended expiration date as described
below, we will instruct the subscription agent to return any amount submitted by
shareholders without interest or deduction as soon as practicable after the
offering is terminated. Officers, directors and beneficial owners of 5% or more
of ISIS common stock will be able to exercise their basic and over-subscription
rights to purchase shares in order to reach the minimum.
Expiration of the Rights
Shareholders may exercise their rights at any time before 5:00 p.m.,
Mountain Time, on ______, 2001, the expiration date for the rights. If a
shareholder does not exercise his or her rights before the expiration date, such
unexercised rights will be null and void. We will not be obligated to honor the
exercise of rights if the subscription agent receives the documents relating to
a shareholder's exercise after the expiration date of the rights, regardless of
when such documents were transmitted. We may extend the expiration date for up
to two additional 30 day periods by giving oral or written notice to the
subscription agent on or before the scheduled expiration date. If we elect to
extend the expiration date of the rights, we will issue a press release
announcing the extension no later than 9:00 a.m., Mountain Time, on the business
day before the most recently announced expiration date. The rights offering will
not be extended beyond September 30, 2001.
Description of the Rights Offered
Shareholders Holding 500 or More Shares
Basic Subscription Rights
We are granting to our shareholders that hold five hundred or more
shares as of the close of business on April 30, 2001, non-transferable basic
subscription rights to purchase up to _____ shares of our common stock, at a
price of $___ per share, for each share of common stock held on April 30, 2001.
We will not issue fractional shares. We will round basic subscription
and over-subscription rights up to the next whole share. The basic subscription
and non-subscription rights are not transferable, except that the assignment by
a record or nominee owner of shares to the beneficial owner will be permitted to
the extent allowable under applicable state securities laws. A shareholder who
does not participate in the rights offering will experience ownership dilution.
A shareholder may purchase all or part of the shares to which the shareholder is
entitled. Our officers and directors, in their capacity as shareholders, will
have the same rights to purchase shares in the rights offering as other
shareholders.
Our directors and officers hold approximately 21 percent of our
presently outstanding shares. We believe that they will exercise approximately
50 percent of their shareholder rights during this offering. We further expect
that at least one of these officers and directors will elect to participate in
over-subscription rights, if available.
Shareholders cannot revoke their rights subscription certificates once
submitted. The board of directors reserves the right to modify, postpone or
cancel the rights offering at any time prior to its consummation if it
determines that such modification, postponement or cancellation is in our best
interests.
23
Over-subscription Rights
Shareholders holding 500 or more shares who fully exercise their basic
subscription rights will be offered over-subscription rights, subject to
availability of shares and subject to proration, following the exercise of the
basic subscription rights. Pursuant to the grant of over-subscription rights,
shareholders who fully exercise their basic subscription rights will be entitled
to purchase, also at $_____ per share, the shares remaining available, if any,
after exercise of the basic subscription rights by the other shareholders. In
the event that more than the available number of shares are subscribed to in
connection with the exercise of over-subscription rights, shares will be
allocated pro-rata, based on the ratio that the number of shares subscribed to
by each over-subscribing shareholder bears to the total number of shares that
all over-subscribing shareholders seek to purchase.
Shareholders must elect to exercise their over-subscription rights
during the subscription period, in the manner set forth in the subscription
documents provided to them. As with the basic subscription rights, the exercise
of any over-subscription rights may not be revoked. Payment for the exercise of
any over-subscription rights must be remitted with the payment for basic
subscription rights.
Shareholders Holding Less than 500 Shares
Shareholders who hold less than 500 shares on April 30, 2001 will be
sent a letter from ISIS notifying such shareholders of the rights offering. Such
shareholders may, at their option, request a copy of the rights offering
materials and subscribe for a minimum of _______ shares by the expiration date.
After the shareholders holding 500 or more shares have exercised their
basic and over-subscription rights, the remaining shares will be allocated
pro-rata among those shareholders holding less than 500 shares. The pro-rata
allocation will be based on the ratio that the number of shares subscribed to by
each shareholder holding less than 500 shares bears to the total number of
shares that all such shareholders seek to purchase.
Secondary Offering
Concurrent with the rights offering, we will offer certain
non-shareholder investors the opportunity to participate in the offering and
offer them the right to purchase any remaining shares at $ ____ per share, after
shareholders holding 500 or more shares have exercised their basic and
over-subscription rights and shareholders holding less than 500 shares have
exercised their subscription rights, if any. After existing shareholders have
exercised their rights to purchase, we will determine the number of remaining
shares available for purchase by non-shareholder investors. In the event that
more than the available number of shares are subscribed to in connection with
the exercise of such rights by any non-shareholder investors, shares will be
allocated pro-rata, based on the ratio that the number of shares subscribed to
by each non-shareholder investor bears to the total number of shares that all
non-shareholder investors seek to purchase.
No underwriter will be involved in the offering to non-shareholder
investors. We have retained Crossways Consulting Group to provide advisory
services on the structure of the rights offering and make introductions of
individuals and organizations to ISIS who may become qualified investors. ISIS's
officers and directors will be acting solely on behalf of ISIS to sell any
remaining shares, and neither the officers and directors nor ISIS will charge
any fee or receive any commissions for the sales. Based on these facts the
officers and directors will not register as brokers or dealers.
24
Subscription Agent
By an agreement dated ______, 2001, we appointed Computershare Trust
Company, Inc. as subscription agent for the offering. We will pay its fees and
expenses related to the offering. Shareholders may direct any questions or
requests for assistance concerning the method of exercising your rights,
additional copies of this prospectus, the instructions, any nominee-related
documents or other subscription documents referred to in this prospectus, to the
subscription agent, at the following telephone number and address:
Computershare Trust Company, Inc.
P.O. Box 1596
Denver, Colorado 80201-1596
(303) 986-5400
Exercise of Rights
You may exercise your rights by delivering the following to the
subscription agent, at or before 5:00 p.m., Mountain Time, on ______, 2001, the
date on which the rights expire:
o Your properly completed and executed subscription certificate
with any required signature guarantees or other supplemental
documentation; and
o Your full subscription price payment for each share subscribed
for under your subscription privileges.
Do not send your subscription certificate and subscription price
payment to ISIS. Please make sure to send it to the subscription agent.
Method of Payment
Your payment of the subscription price must be made in U.S. dollars for
the full number of shares of common stock you are subscribing for by either:
o Check or bank draft drawn upon a U.S. bank or postal, telegraphic
or express money order payable to the subscription agent; or
o Wire transfer of immediately available funds to the subscription
account maintained by the subscription agent for the purpose of
accepting subscription, in accordance with the following wire
instructions: Union Bank & Trust, 100 Broadway, Denver, Colorado
80209, (303) 744-3221, ABA No. 102000908, further credit to
85-02961, Attention: Computershare Trust Company, Inc., Escrow
Agent.
Receipt of Payment
Your payment will be considered received by the subscription agent only
upon:
o Clearance of any uncertified check;
o Receipt by the subscription agent of any certified check or bank
draft drawn on a U.S. bank or of any postal, telegraphic or
express money order; or
o Receipt of collected funds in the subscription account designated
above.
25
Clearance of Uncertified Checks
If you are paying by uncertified personal check, please note that
uncertified checks may take at least five business days to clear. If you wish to
pay the subscription price by uncertified personal check, we urge you to ensure
that your payment is received sufficiently in advance of the time the rights
expire to ensure that your payment is received and cleared by that time. We urge
you to consider using a certified or cashier's check, money order or wire
transfer of funds to avoid missing the opportunity to exercise your rights.
Delivery of Subscription Materials and Payment
You should deliver your executed subscription certificate and payment
of the subscription price to the subscription agent by one of the methods
described below:
o If by mail to: Computershare Trust Company, Inc.
P.O. Box 1596
Denver, Colorado 80201-1596
o If by hand delivery or by overnight courier to:
Computershare Trust Company, Inc.
12039 West Alameda Parkway
Suite Z-2
Lakewood, Colorado 80228
o You may call the subscription agent at (303) 986-5400.
Your delivery to an address other than the address set forth above will
not constitute valid delivery. You are responsible for the method of delivery of
your subscription certificate with your subscription price payment to the
subscription agent. If you send your subscription certificate and subscription
price payment by mail, we recommend that you send them by registered mail,
properly insured, with return receipt requested. You should allow a sufficient
number of days to ensure delivery to the subscription agent before the time the
rights expire.
Calculation of Rights Exercised for Shareholders Holding 500 or More Shares
If you do not indicate the number of rights being exercised, or do not
forward full payment of the total subscription price payment for the number of
rights that you indicate are being exercised, then you will be deemed to have
exercised your basic subscription privilege with respect to the maximum number
of rights that may be exercised with the aggregate subscription price payment
you deliver to the subscription agent. If your aggregate subscription price
payment is greater than the amount you owe for your subscription, you will be
deemed to have exercised your over-subscription privilege for the maximum number
of shares. If we do not apply your full subscription price payment to your
purchase of shares of common stock, we will return the excess amount to you by
mail without interest or deduction as soon as practicable after the offering is
completed.
Your Funds Will Be Held by the Subscription Agent Until Shares of Common Stock
are Issued
The subscription agent will hold your payment of the subscription price
in a segregated account with other payments received from other rights holders
until we issue your shares to you.
26
Notice to Beneficial Holders by Brokers, Trustees and Depositories
If you are a broker, a trustee or a depositary for securities who holds
shares of our existing common stock for the account of others on April 30, 2001,
the record date for the issuance of rights under this offering, you should
notify the beneficial owners of those shares of the offering as soon as possible
to find out their intentions with respect to exercising their rights. You should
obtain instructions from the beneficial owners with respect to the rights, as
set forth in the instructions we have provided to you for your distribution to
beneficial owners. If a beneficial owner so instructs, you should complete the
appropriate subscription certificate and submit it to the subscription agent
with the proper payment. If you hold shares of our existing common stock for the
account of more than one beneficial owner, you may exercise the number of rights
to which all beneficial owners in the aggregate otherwise would have been
entitled had they been direct record holders of our existing common stock on the
record date for the issuance of rights under this offering.
Beneficial Owners
If you are a beneficial owner of shares of our existing common stock or
will receive your rights through a broker, custodian bank or other nominee, we
will ask your broker, custodian bank or other nominee to notify you of this
offering. If you wish to exercise your rights, you will need to have your
broker, custodian bank or other nominee act for you. If you hold certificates of
our common stock directly and would prefer to have your broker, custodian bank
or other nominee exercise your rights, you should contact your nominee and
request it to effect the transactions for you. If you wish to obtain a separate
subscription certificate, you should contact the nominee as soon as possible and
request that a separate subscription certificate be provided to you.
Determinations Regarding the Exercise of Your Rights
We will decide all questions concerning the timeliness, validity, form
and eligibility of your exercise of your rights and our determinations will be
final and binding. We, in our sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within a period
of time as we may determine. We may reject the exercise of any of your rights
because of any defect or irregularity. We will not receive or accept any
subscription until all irregularities have been waived by us or cured by you
within a period of time as we decide, in our sole discretion.
Neither we nor the subscription agent will be under any duty to notify
you of any defect or irregularity in connection with your submission of your
subscription certificate and we will not be liable for any failure to notify you
of any defect or irregularity. We reserve the right to reject subscription
certificate if it is not in accordance with the terms of the offering or in
proper form. We will also not accept your subscription certificate if our
issuance of shares of our common stock to you could be deemed unlawful under
applicable law or is materially burdensome to us.
No Revocation
Once you have exercised your subscription privileges, you may not
revoke your exercise. Rights not exercised before the expiration date of the
rights will expire.
Extensions and Termination
We may extend the offering and the period for exercising your rights,
in our sole discretion. In addition, we may terminate the offering at any time
before the time the rights expire.
27
No Recommendation to Holders of Rights
We are not making any recommendations as to whether or not you should
subscribe for shares of our common stock. You should decide whether to subscribe
for shares based upon your own assessment of your best interests in consultation
with your legal and financial advisors.
Regulatory Limitation
We will not be required to issue to you shares of our common stock in
the offering if, in our opinion, you would be required to obtain prior clearance
or approval from any state or federal regulatory authorities to own or control
the shares and if, at the time the rights expire, you have not obtained that
clearance or approval.
Issuance of Common Stock
Computershare Trust Company, Inc. will issue to you certificates
representing shares of common stock you purchase under the offering as soon as
practicable after the time the rights expire.
Your payment of the aggregate subscription price will be retained by
the subscription agent and will not be delivered to us until your subscription
is accepted and you are issued your share certificates. We will not pay you any
interest on funds paid to the subscription agent, regardless of whether the
funds are applied to the subscription price or returned to you. You will have no
rights as a shareholder of ISIS, with respect to shares of our common stock
subscribed for, until certificates representing the shares are issued to you.
Upon our issuance of the certificates, you will be deemed the owner of the
shares you purchased by exercise of your rights. Unless otherwise instructed in
the subscription certificate, your certificates for shares issued as a result of
your exercise of rights will be registered in your name.
If the offering is not completed for any reason, the subscription agent
will promptly return, without interest or deduction, all funds received by it.
We will retain any interest earned on the funds held by the subscription agent.
Compliance with State Regulations Pertaining to the Offering
We are not making the offering in any state or other jurisdiction in
which it is unlawful to do so. We will not sell or accept an offer to purchase
our common stock from you if you are a resident of any state or other
jurisdiction in which the sale or offer of the rights would be unlawful. We may
delay the commencement of the offering in these states or other jurisdictions to
comply with their laws. We do not expect that there will be any changes in the
terms of the offering. However, we may decide, in our sole discretion, not to
modify the terms of the offering as may be requested by some of these states or
other jurisdictions. If that happens and you are a resident of the state or
jurisdiction that requests the modification, you will not be eligible to
participate in the offering.
28
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of ISIS are:
Name Age Position
Jeanne M. Anderson 49 Director
John C. Antenucci 54 Vice Chairman, Director, President and
Acting Chief
Executive Officer
of ISIS; President
and Chief
Executive Officer
of PlanGraphics,
Inc.
Frederick G. Beisser 58 Director, Vice President - Finance and
Administration, Secretary and Treasurer
Raymund E. O'Mara 60 Director
Gary S. Murray 50 Chairman and Director
J. Gary Reed 51 Director and Chief Operating Officer of
PlanGraphics, Inc.
All directors hold office until the next annual meeting of shareholders and
serve until their successors are duly elected and qualified, or until their
earlier death, resignation or removal.
Jeanne M. Anderson has been a director of our company continuously since 1987
and served as Chairman of the Board of Directors from January 1, 1997 through
October 2, 1997. She is a former President and Chief Executive Officer of ISIS.
She served as President and Chief Executive Officer from October 1, 1991 through
December 31, 1996. Ms. Anderson has been a small business owner and entrepreneur
since retiring from her position as an officer of the company and is presently
engaged in cosmetology and related beauty salon activities.
John C. Antenucci is ISIS's President and Acting Chief Executive Officer and has
been a director since November 3, 1997. He is the founder and has been the
President and Chief Executive Officer of PlanGraphics, Inc. since 1979. He is a
former president of AM/FM International (now GITA), a professional association
for utility industry users of geographic information systems. He is also a
member of the National Academy of Sciences Advisory Committee on the Future of
U.S. Geological Survey and served in a similar capacity on the Academy's
Advisory Committee for Mapping Sciences. He serves as an advisor to Ohio State
University's Center for Mapping, has recently co-authored a chapter of a
to-be-published text book on geographic information systems, global positioning
systems and remote sensing and was editor and co-author of a leading textbook on
geographic information systems. Mr. Antenucci holds an MS in Civil
Engineering/Water Resources from Catholic University of America in Washington,
D.C. and a Bachelor of Civil Engineering from the same institution.
Frederick G. Beisser joined ISIS as Chief Financial Officer in July 1990 and was
promoted to his current position of Vice President - Finance and Administration,
on March 28, 1997. He was elected to the Board of Directors in March 1991 at
which time he also became Treasurer and was subsequently appointed Secretary on
October 1, 1991. Mr. Beisser is a Colorado Certified Public Accountant. Prior to
joining ISIS, he held financial management and controller positions with the
U.S. Air Force in the United States and abroad. Retired with the rank of Major
in 1989, he holds a Ph.D. from American International University in Canoga Park,
California, an MBA from Golden Gate University in San Francisco and a BS in
Business Administration from the University of Southern Colorado in Pueblo,
Colorado. In addition, Mr. Beisser has a diploma from the Air War College. He is
also a member of the Board of Directors of Wastemasters, Inc. of El Reno,
Oklahoma.
29
Raymund E. O'Mara has been a director of ISIS since November 3, 1997. He is a
principal with Booz Allen & Hamilton, consultants, since 1996. Prior to joining
Booz Allen & Hamilton, Mr. O'Mara retired from the U.S. Air Force in 1994 with
the rank of Major General. From 1993 until his retirement, he was Director,
Defense Mapping Agency, Bethesda, Maryland and prior to that served as Vice
Commander in Chief, Atlantic Command, Norfolk Virginia for two years. Mr. O'Mara
holds a Master of Arts from State University of New York at Plattsburgh, New
York and a BS in Electrical Engineering from the New Jersey Institute of
Technology at Newark.
Gary S. Murray was appointed Chairman of the Board of Directors on July 6, 1999
and has served as a director of the Company since June 26, 1998. Mr. Murray is
the founder and managing member of HumanVision L.L.C., an advisory and
investment firm located in Landover, Maryland. He is also co-founder and a
principal of Timebridge Technologies (Lanham, Maryland), an e-commerce firm
specializing in database and network services that was acquired by Dimension
Data Holdings PLC in November 2000. Mr. Murray was founder, chairman and
president of systems integrator Sylvest Management Systems (Lanham, Maryland)
until its acquisition by Federal Data Corporation in June 1997. He holds a BBA
from Howard University, Washington, D.C. and is a Certified Public Accountant.
J. Gary Reed became a director of ISIS on November 3, 1997. He is the Chief
Operating Officer of PlanGraphics, Inc. Mr. Reed has been employed by
PlanGraphics in several capacities since 1995. Prior to joining PlanGraphics, he
held several executive positions during a twenty-one year career with Geonex
Corporation and was named President of that corporation in 1994. Mr. Reed holds
an MBA from the Keller Graduate School of Management in Chicago and a BS in
Biology from Virginia Polytechnic Institute and State University in Blacksburg,
Virginia.
Other Associations
During the past five years, one principal of ISIS has served as a
principal of the following reporting issuers during the periods and in the
capacities noted below:
Principal Reporting Issuer Capacity Period
- ------------ ---------------------- ------------ ---------
Frederick G. Beisser Wastemasters, Inc. Director March 1999
to present
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John C. Antenucci, President and a director of ISIS, is a 10% partner
in the organization that owns the facilities in Frankfort, Kentucky, leased by
PlanGraphics, Inc. The annual lease cost is approximately $327,000 per year for
20,500 square feet. PlanGraphics entered into the lease in 1995, prior to the
acquisition of PlanGraphics by ISIS. When entered into, the lease rate exceeded
the fair market value for similar facilities in the area by approximately 20%.
This transaction, however, was considered to be in the best interests of
PlanGraphics at that time by the disinterested members of its Board of
Directors.
John C. Antenucci, President and a director of ISIS, personally
guaranteed an obligation of ISIS on September 22, 1997. As consideration for
such guaranty, ISIS agreed to pay Mr. Antenucci 5% of the outstanding loan
balance on an annual basis. ISIS has not paid all monies owed to Mr. Antenucci
pursuant to this agreement and to date, the outstanding balance of the debt owed
Mr. Antenucci is $20,175. The agreement was considered to be in the best
interests of ISIS at the time of agreement by the disinterested members of its
Board of Directors.
30
Gary S. Murray, Chairman and a director of ISIS, is the principal owner
and executive officer of HumanVision L.L.C. On July 6, 1999, we entered into a
consulting agreement with HumanVision L.L.C. Compensation for the consulting
services of HumanVision L.L.C. consists of performance options to purchase
322,581 shares of common stock at an exercise price of $0.31 per share if our
market capitalization exceeds $30,000,000 for greater than twenty consecutive
business days at any time prior to June 30, 2002, and an additional 322,581
shares of common stock at an exercise price of $0.31 per share if our market
capitalization exceeds $60,000,000 for greater than twenty consecutive business
days at any time prior to June 30, 2002. The options will be exercisable for a
period of three years from the date of issue. The agreement also provides for a
success fee of 1.5% of the transaction value in the event of a successful merger
or acquisition of stock or assets.
On February 2, 2001, we executed a promissory note in favor of
HumanVision L.L.C. for the sum of $75,000. The note is due on October 21, 2001
and bears interest at prime plus six percent. Pursuant to the First Amendment to
Promissory Notes, executed on May 21, 2001, any balance of outstanding principal
and accrued and unpaid interest as of February 3, 2002 will automatically
convert into shares of ISIS common stock at the lower of $.07 per share or the
price per share of any offer to our shareholders of stock or rights to purchase
our common stock. The shares issuable upon conversion of this note will be
"restricted" as defined by Rule 144 promulgated under the Securities Act of
1933, as amended.
On February 9, 2001, PlanGraphics entered into an agreement with
HumanVision L.L.C. whereby HumanVision L.L.C. agreed to provide a $325,000
standby letter of credit to National City Bank of Kentucky as additional
collateral for PlanGraphics' existing line of credit that has been replaced with
the Branch Banking & Trust Company line of credit. As consideration,
PlanGraphics will make quarterly payments of an amount equal to two percent of
the value of the standby letter of credit. In the event Branch Banking & Trust
Company calls the standby letter of credit, PlanGraphics will execute a
convertible debt instrument payable to HumanVision L.L.C. at an annual interest
rate of prime plus six percent for a term not to exceed nine months. At any time
prior to the instrument's maturation, HumanVision L.L.C. may convert the debt
and accrued interest into shares of our common stock valued at $.07 per share.
The accounts receivable of PlanGraphics serve as collateral should the standby
letter of credit be called. ISIS also provided a guarantee to HumanVision L.L.C.
offering its stock in PlanGraphics as consideration.
On May 15, 2001, we executed a promissory note in favor of HumanVision
L.L.C. for the sum of $40,000. The note is due on October 21, 2001 and bears
interest at prime plus six percent. Pursuant to the First Amendment to
Promissory Notes, executed on May 21, 2001, any balance of outstanding principal
and accrued and unpaid interest as of May 16, 2002 will automatically convert
into shares of ISIS common stock at the lower of $.07 per share or the price per
share of any offer to our shareholders of stock or rights to purchase our common
stock. The shares issuable upon conversion of this note will be "restricted" as
defined by Rule 144 promulgated under the Securities Act of 1933, as amended.
31
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid and accrued by
ISIS for services rendered during the fiscal years ended September 30, 2000,
September 30, 1999 and September 30, 1998 to certain of our executive officers.
Long Term
Annual Compensation Compensation
----------------------------------------- --------------------------
Awards Payouts
------ -------
Other Annual Options/ LTIP
Name and Bonus Compen-sation SARs granted Payouts All Other
Principal Position Year Salary ($) ($) ($) (#) ($) ($)
- ------------------------- ---- ---------- ----- -------------- ------------ ------- ---------
John C. Antenucci, 2000 $138,219 - - - - -
Vice Chairman, President 1999 $159,374 - - - - -
and Acting CEO 1998 $175,000 - - 260,853(2) - -
Stephen Carreker, 2000 $17,719 - $240,750(1) - - -
Former Chairman and CEO 1999 $124,808 - - - - -
1998 $175,000 - - 327,655(2) - -
J. Gary Reed, Director 2000 $96,104 $8,000 - - - -
and Chief Operating 1999 $105,660 - - - - -
Officer of PlanGraphics 1998 $106,248 - - 171,348(2) - -
<FN>
(1) The amount of "Other Compensation" for Mr. Carreker represents the total of
our payments made to him and to his attorney on behalf of Mr. Carreker
pursuant to the settlement agreement we entered into with Mr. Carreker upon
his departure.
(2) Quantity of Stock Options granted during fiscal year 1998 for Carreker,
Antenucci and Reed represents the quantity of antidilution stock options
accrued during the year pursuant to employment agreements (the board of
directors and the employees have agreed to annul this provision for periods
subsequent to June 30, 1998) at prices ranging from $1.125 to $2.125 per
share.
</FN>
Option/SAR Grants in Last Fiscal Year
We made no grants to the named officers during the fiscal year ended September
30, 2000.
32
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- ------------ ------------------ ------------- -------------
John C. Antenucci, Vice
Chairman, President and 452,966 / 0(1)
Action CEO - - -
Stephen Carreker, - - 452,966 / 340,038(2) -
Former Chairman and CEO
J. Gary Reed, Director
and Chief Operating
Officer of PlanGraphics - - 301,934/0(3) -
<FN>
(1) Mr. Antenucci received fully stock options to purchase 300,000 shares of
our common stock at an exercise price of $1.75 on September 22, 1997. In
addition, Mr. Antenucci is entitled to 268,004 antidilution options related
to his employment agreement that are prorated between immediately vested
and performance options.
(2) Mr. Carreker received options to purchase 30,000 shares of our common stock
at a price of $1.125 on January 2, 1997 that were fully vested upon grant.
In connection with his employment agreement Mr. Carreker received fully
vested stock options to purchase 200,000 shares of our common stock
effective January 7, 1997. In addition, at September 30, 2000, he was
entitled to 301,988 antidilution options related to vested options. All of
these options terminated with the completion of all of our obligations
under the settlement agreement with Mr. Carreker.
(3) Mr. Reed received fully vested options to purchase 200,000 shares of our
common stock at an exercise price of $1.75 on September 22, 1997. In
addition, Mr. Reed is entitled to 101,934 antidilution options related to
his employment agreement that were immediately vested.
</FN>
Compensation of Directors
Our directors who are employees of our company or our subsidiaries do
not receive any compensation for their services as directors. Nonemployee
directors receive $1,000 for each scheduled board meeting attended in person and
$250 for each scheduled board meeting attended via conference call. Meetings of
committees of the board are compensated at $250 per meeting attended in person
or via conference call. During fiscal year 1999, we instituted a standardized
compensation program for nonemployee directors whereby the nonemployee director
receives stock options on the date of election to the board to purchase 10,000
shares of our common stock at the market price on that date. Such options vest
quarterly provided that the director has attended 75 percent or more of the
scheduled board meetings.
33
One nonemployee director, Ms. Anderson, is compensated at a rate of
$850 per month pursuant to a previous agreement. During fiscal year 2000, Ms.
Anderson received $10,421 in fees and expenses for her services as a director.
Effective July 6, 1999, we entered into an Agreement for Services with
Mr. Murray for his services as Chairman of the Board. The agreement expires June
30, 2001 and provides for annual base compensation of $50,000, payable monthly
in shares of our common stock valued at the average price for the five business
days preceding the date of the agreement ($0.2906). The agreement also provides
Mr. Murray with options to purchase 175,000 shares of our common stock per annum
at an exercise price of $0.31 per share, vesting in quarterly installments and
exercisable for three years from the date of the agreement. In addition, Mr.
Murray received fully vested and immediately exercisable options to purchase
688,235 shares of our common stock at an exercise price of $0.2906. During
fiscal year 2000, Mr. Murray received $4,882 in fees and expenses for his
services as chairman and director.
Employment Contracts and Termination of Employment and Change-in-Control
Agreements.
Mr. Antenucci. ISIS entered into a three-year employment agreement with
John C. Antenucci effective September 22, 1997 that automatically renewed for an
additional three-year term in 2000. The agreement provides for a salary of
$175,000 per year with provisions for bonuses of up to 21% of base salary if
certain goals were achieved. Mr. Antenucci received a one-time advance payment
of $50,000 of his FY 1998 salary for entering into the agreement. On June 26,
1998, the Compensation Committee of the Board of Directors reduced the annual
compensation of Mr. Antenucci by 10 percent to $157,500 annually. This reduction
became effective October 1, 1998. Subsequently, Mr. Antenucci's annual
compensation was again reduced and effective July 2, 1999, his current annual
compensation was set by the Board of Directors at $157,499.
The agreement provided Mr. Antenucci with fully vested stock options to
purchase 300,000 shares of common stock and performance options to purchase
225,000 shares of common stock that vest upon attainment of certain performance
goals. The performance related options to acquire common stock have lapsed and
are no longer valid.
34
Mr. Antenucci is entitled to continued base compensation for three
years following date of termination if not for death, disability, cause,
voluntary resignation other than constructive termination or the expiration of
the agreement's term. If termination is for one of the above-stated reasons, all
benefits including salary are continued for 18 months. Mr. Antenucci is entitled
to a three-year consulting period at one half of average annual salary for the
immediately preceding 36-month period should he exercise his option to terminate
his employment voluntarily after June 30, 2000.
Mr. Beisser. On March 28, 1997 we entered into a three-year employment
agreement with our Vice President - Finance & Administration, Frederick G.
Beisser, effective January 1, 1997 that automatically renewed for an additional
three-year term in 2000. The agreement provides for a base salary of $60,000.
The board of directors reduced Mr. Beisser's base salary by 10 percent effective
October 1, 1998 and immediately thereafter restored it to its former level.
Subsequently, the board of directors reduced it to $59,999, its present level,
effective July 2, 1999.
The agreement granted 70,000 fully vested nonqualified stock options to
acquire 70,000 shares of our common stock as an incentive to enter into the
agreement and further granted 50,000 of performance stock options requiring the
attainment of certain goals. The agreement also provides for certain cash bonus
payments upon meeting defined performance goals. The performance related options
to acquire common stock have lapsed and are no longer valid.
Under the agreement Mr. Beisser is entitled to continuation of base
compensation for a period of two years if employment is terminated for any
reason other than death, disability, cause, voluntary resignation or the
expiration of the term of the employment agreement; otherwise termination for
the stated reasons results in payment of base salary, performance and incentive
bonuses for 12 months.
Mr. Reed. We entered into a three year employment agreement with the
Chief Operating Officer, J. Gary Reed, of PlanGraphics, Inc., effective
September 22, 1997. The employment agreement renewed automatically in 2000 for
an additional three-year term. The agreement set Mr. Reed's base salary at
$115,000 per year with provisions for bonuses of up to 21% of base salary if
certain goals are achieved. The board of directors reduced the base salary by 10
percent to $103,500 effective October 1, 1998 and to it present level of
$103,499 effective July 2, 1999. Pursuant to the agreement, Mr. Reed also
received fully vested performance based options to purchase 200,000 shares of
our common stock. These performance related options to acquire common stock have
lapsed and are no longer valid.
Under the agreement, Mr. Reed is entitled to continued base
compensation for three years following date of termination if not for death,
disability, cause, voluntary resignation other than constructive termination or
the expiration of the agreement's term; if termination is for one of these
reasons then all benefits including salary are continued for 18 months.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements. Such
forward-looking statements may concern, among other things, results of
operations and business prospects, ISIS's ability to operate effectively and
profitably, and other statements of expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts. In particular, any statements, express or implied, concerning future
operating results or the ability to generate revenues and operating income are
forward-looking statements. Such forward-looking statements generally are
accompanied by words such as "expect," "predict," "anticipate," "should,"
"assume," "believe," "plan," "intend," "estimate," "project," "projected," or
other words that convey the uncertainty of future events or outcomes.
Such forward-looking information is based upon management's current
plans, expectations, estimates and assumptions and is subject to a number of
risks and uncertainties that could significantly affect current plans,
anticipated actions, the timing of such actions and ISIS's financial condition
and results of operations. As a consequence, actual results may differ
materially from expectations, estimates or assumptions expressed in or implied
by any forward-looking statements made by or on behalf of ISIS. Also, the impact
of competition on all aspects of the business is not predictable. Additionally,
unpredictable or unknown factors not discussed herein could have material
adverse effects. Forward-looking statements speak only as of the date hereof.
ISIS does not intend to update these cautionary statements.
VALIDITY OF SECURITIES
The validity of the ISIS common stock offered hereby has been passed
upon for ISIS by Davis Graham & Stubbs LLP, Denver, Colorado.
35
EXPERTS
The consolidated financial statements of ISIS as of and for the fiscal
years ended September 30, 2000 and 1999 included in this prospectus have been
audited by BDO Seidman, LLP, independent auditors, as stated in their report
appearing herein and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing. The report for
the year ended September 30, 2000 contains a paragraph regarding our ability to
continue as a going concern.
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of ISIS pursuant to its articles of incorporation and bylaws, or
otherwise, ISIS has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment by ISIS of
expenses incurred or paid by a director, officer or controlling person of ISIS
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, ISIS will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
WHERE YOU CAN FIND MORE INFORMATION
ISIS files annual, quarterly and other reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information we file at the Securities and
Exchange Commission's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the Securities and Exchange Commission
at 1-800-732-0330 for further information on the public reference rooms. Our
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the Securities and Exchange
Commission at "http://www.sec.gov."
ISIS has filed a registration statement on Form SB-2 to register with
the Securities and Exchange Commission the common stock offered by this
prospectus. This prospectus is part of that registration statement. As allowed
by the Securities and Exchange Commission rules, this prospectus does not
contain all the information you can find in the registration statement or the
exhibits to the registration statement.
You can obtain a complete copy of the registration statement, including
exhibits, without charge by submitting a request in writing or by telephone to
ISIS at the following address:
Frederick G. Beisser
Integrated Spatial Information Solutions, Inc.
19039 East Plaza Drive, Suite 245
Parker, Colorado 80134
(720) 851-0716
36
[Back Cover of Prospectus]
Until ________, 2001, (40 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as an
underwriter and with respect to unsold allotments or subscriptions.
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Certified Public Accountants.......................F-2
Consolidated Financial Statements for the Years
Ended September 30, 1999 and 2000
Consolidated Balance Sheets.....................................F-3
Consolidated Statements of Operations...........................F-5
Consolidated Statements of Stockholders' Equity.................F-6
Consolidated Statements of Cash Flows...........................F-8
Summary of Accounting Policies..................................F-9
Notes to Consolidated Financial Statements......................F-16
Condensed and Consolidated Balance Sheets as of March 31, 2001
(unaudited) and September 30, 2000 (audited).........................F-37
Condensed Consolidated Unaudited Statements of Operations
for the six months ended March 31, 2001 and 2000 and the
three months ended March 31, 2001 and 2000....................F-39
Condensed Consolidated Unaudited Statements of Cash Flows
for the six months ended March 31, 2001 and 2000............. F-40
Notes to Condensed Consolidated Financial Statements........... F-41
F-1
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Consolidated Balance Sheets
Report of Independent Certified Public Accountants
The Board of Directors and Stockholders
Integrated Spatial Information Solutions, Inc.
Frankfort, Kentucky
We have audited the accompanying consolidated balance sheets of Integrated
Spatial Information Solutions, Inc. and subsidiary as of September 30, 2000 and
1999 and the related consolidated statements of operations, stockholders' equity
and cash flows for each of the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Integrated Spatial Information Solutions, Inc. and subsidiary as of September
30, 2000 and 1999 and the consolidated results of their operations and their
cash flows for each of the years then ended, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company's significant operating losses
and working capital deficiency raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/S/ BDO Seidman, LLP
Denver, Colorado
February 12, 2001, except for Note 13,
which is as of June 1, 2001
F-2
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 2000 1999
- --------------------------------------------------------------- ---------- ----------
Assets
Current:
Cash and cash equivalents $ 20,306 $ 373,825
Accounts receivable, less allowance for doubtful accounts
of $1,007 and $51,577 (Note 2) 1,386,774 1,923,412
Restricted cash -- 25,000
Prepaid expenses and other 172,154 122,500
- -----------------------------------------------------------------------------------------
Total current assets 1,579,234 2,444,737
- -----------------------------------------------------------------------------------------
Property and equipment:
Land and building under capital lease -
related party (Note 6) 1,866,667 1,866,667
Equipment and furniture 699,165 574,292
Other leased assets 255,600 255,600
- -----------------------------------------------------------------------------------------
2,821,432 2,696,559
Less accumulated depreciation and amortization 1,084,027 735,728
- -----------------------------------------------------------------------------------------
Net property and equipment 1,737,405 1,960,831
- -----------------------------------------------------------------------------------------
Other assets:
Goodwill, net of accumulated amortization of
$1,146,522 and $782,599 4,312,267 4,676,192
Other 102,974 74,844
- -----------------------------------------------------------------------------------------
Total other assets 4,415,241 4,751,036
- -----------------------------------------------------------------------------------------
$7,731,880 $9,156,604
- -----------------------------------------------------------------------------------------
See Report of Independent Certified Public Accountants,
summary of accounting policies and notes to consolidated financial statements.
F-3
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 2000 1999
- ----------------------------------------------------------- ------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable - current maturities (Note 3) $ 559,647 $ 222,584
Obligations under capital lease -current (Note 6) 13,286 65,501
Obligations under capital leases - related party,
current (Note 6) 90,091 79,367
Checks written against future deposits 61,612 --
Accounts payable (Note 10) 871,288 480,024
Accrued payroll costs and vacation 325,613 643,423
Accrued expenses 696,841 593,448
Deferred revenue 201,578 108,588
- ------------------------------------------------------------------------------------------
Total current liabilities 2,819,956 2,192,935
- ------------------------------------------------------------------------------------------
Long-term liabilities:
Notes payable, less current maturities (Note 3) -- 200,496
Obligations under capital leases - related
party, less current maturities (Note 6) 1,712,217 1,815,594
- ------------------------------------------------------------------------------------------
Total long-term liabilities 1,712,217 2,016,090
- ------------------------------------------------------------------------------------------
Total liabilities 4,532,173 4,209,025
- ------------------------------------------------------------------------------------------
Commitments and Contingencies (Notes 1, 6, 8, 9, and 11)
Stockholders' equity (Note 7):
Cumulative convertible preferred stock,
$.001 par value, 20,000,000 shares authorized,
0 and 590 shares issued or outstanding -- 1
Common stock, no par value, 2,000,000,000
shares authorized, 18,674,382 and 13,242,112
shares issued and outstanding 14,254,487 13,065,330
Common stock to be issued 25,000 31,500
Additional paid-in capital 3,400,882 3,737,594
Accumulated deficit (14,480,662) (11,886,846)
- ------------------------------------------------------------------------------------------
Total stockholders' equity 3,199,707 4,947,579
- ------------------------------------------------------------------------------------------
$ 7,731,880 $ 9,156,604
- ------------------------------------------------------------------------------------------
See Report of Independent Certified Public Accountants,
summary of accounting policies and notes to consolidated financial statements.
F-4
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Consolidated Statements of Operations
F-7
Year Ended September 30, 2000 1999
- --------------------------------------------------------------------------------------------------
Revenues $ 6,048,570 $ 7,990,808
- --------------------------------------------------------------------------------------------------
Cost and expenses:
Direct contract costs 3,681,054 4,365,360
Salaries and employee benefits 1,865,357 2,347,751
General and administrative expenses 1,067,445 1,623,960
Marketing expenses 367,828 244,133
Other operating expenses 844,971 707,946
- --------------------------------------------------------------------------------------------------
Total costs and expenses 7,826,655 9,289,150
- --------------------------------------------------------------------------------------------------
Operating loss (1,778,085) (1,298,342)
- --------------------------------------------------------------------------------------------------
Other income (expense):
Other income 116,674 82,775
Gain on sale of assets (Note 4) 5,033 177,744
Gain (loss) on litigation settlements (Note 11) (589,432) 414,312
Interest expense (330,004) (434,268)
- --------------------------------------------------------------------------------------------------
Total other income (expense) (797,729) 240,563
- --------------------------------------------------------------------------------------------------
Net loss (2,575,814) (1,057,779)
Preferred stock dividends (Note 7) (18,002) (36,723)
- --------------------------------------------------------------------------------------------------
Net loss available to common stockholders $ (2,593,816) $ (1,094,502)
- --------------------------------------------------------------------------------------------------
Basic and diluted loss per common share $ (.16) $ (.09)
- --------------------------------------------------------------------------------------------------
Weighted average number of shares of common stock outstanding 15,749,738 11,982,785
- --------------------------------------------------------------------------------------------------
See Report of Independent Certified Public Accountants,
summary of accounting policies and notes to consolidated financial statements.
F-5
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
Year Ended
September 30,
1999 Series A Additional
Preferred Stock Common Stock Paid-in Capital
--------------- ------------ --------------------
Common
Stock to Accumulated
(See Note 7) Shares Amount Shares Amount be Issued Common Preferred Deficit Total
- ------------------ -------- --------- ---------- ----------- ---------- ---------- -------- ------------ -----------
Balance,
October 1, 1998 700 $ 1 11,456,571 $12,635,423 $ - $3,298,264 $445,400 $(10,792,344) $5,586,744
Issuance of
common stock
for cash on - - 688,235 200,000 - - - - 200,000
options
exercised
Common stock
issued for - - 455,754 122,319 - - - - 122,319
services
Conversion of
preferred
stock into
common stock (110) - 501,552 71,188 - - (71,188) - -
Preferred stock
dividends - - - - - - - (36,723) (36,723)
Stock options
and warrants
issued for - - - - - 35,718 - - 35,718
consulting
services
Settlement of
legal
disputes
through
issuance of
common stock
warrants - - 140,000 36,400 31,500 29,400 - - 97,300
Net loss - - - - - - - (1,057,779) (1,057,779)
- ------------------ -------- --------- ---------- ----------- ---------- ---------- -------- ------------ -----------
Balance,
September 30,
1999 590 $ 1 13,242,112 $13,065,330 $31,500 $3,363,382 $374,212 $(11,886,846) $4,947,579
- ------------------ -------- --------- ---------- ----------- ---------- ---------- -------- ------------ -----------
See Report of Independent Certified Public Accountants,
summary of accounting policies and notes to consolidated financial statements.
F-6
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
Year Ended
September 30, Series A Additional Paid-in
2000 Preferred Stock Common Stock Capital
------------------ ------------------- ---------------------
(See Note 7) Common
Stock to Accumulated
Shares Amount Shares Amount be Issued Common Preferred Deficit Total
- ------------------ ------- -------- ---------- ----------- ----------- --------- --------- ------------ ----------
Balance,
October 1, 1999 590 $ 1 13,242,112 $13,065,330 $31,500 $3,363,382 $374,212 $(11,886,846) $4,947,579
Issuance of
common stock
for cash and - - 127,967 30,250 - - - - 30,250
options
exercised
Issuance of
common stock
to related
parties - - 852,000 213,000 - - - - 213,000
Issuance of
common stock
to unrelated
parties - - 806,452 250,000 25,000 - - - 275,000
Stock issued for
services 388,979 88,434 - - - - 88,434
Conversion of
preferred
stock into
common stock (590) (1) 2,597,064 374,212 - - (374,212) - (1)
Issuance of
common stock
for preferred
stock
dividends - - 181,131 56,151 - - - - 56,151
Preferred stock
dividends - - - - - - - (18,002) (18,002)
Stock options
and warrants
issued for
consulting
services - - - - - 37,500 - - 37,500
Settlement of
legal
disputes
through
issuance of
common stock - - 202,703 75,000 (31,500) - - - 43,500
Settlement of
legal
disputes
through
issuance of
common stock
upon exercise
of options
and warrants - - 275,974 102,110 - - - - 102,110
Net loss - - - - - - - (2,575,814) (2,575,814)
- ------------------ ------- -------- ---------- ----------- ----------- --------- --------- ------------ ----------
Balance,
September 30,
2000 - $ - 18,674,382 $14,254,487 $25,000 $3,400,882 $ - $(14,480,662) $3,199,707
- ------------------ ------- -------- ---------- ----------- ----------- --------- --------- ------------ ----------
See Report of Independent Certified Public Accountants,
summary of accounting policies and notes to consolidated financial statements.
F-7
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
Years Ended September 30, 2000 1999
- ---------------------------------------------------------------------------- ------------ -----------
Operating activities:
Net loss $(2,575,814) $(1,057,779)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 715,265 707,946
Provision for losses on accounts receivable (50,570) 110,809
Gain on litigation settlement -- (414,312)
Stocks and warrants issued in settlement of legal disputes 177,110 --
Stock issued for services 88,434 158,719
Stock (issued)/to be issued for litigation settlement (31,500) 31,500
Stock options and warrants issued for consulting services 37,500 65,118
Gain on sale of assets (5,033) (177,744)
Changes in operating assets and liabilities:
Accounts receivable 587,208 537,645
Prepaid expenses and other (49,654) 41,671
Other assets (28,130) 21,305
Accounts payable 391,264 (199,357)
Accrued expenses (176,268) 320,284
Deferred revenue 92,990 (4,417)
- ---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (827,198) 141,388
- ---------------------------------------------------------------------------------------------------------
Investing activities:
Purchase of equipment (124,873) (97,968)
Proceeds from sale of assets 1,990 1,245,000
Restricted cash 25,000 75,000
- ---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (97,883) 1,222,032
- ---------------------------------------------------------------------------------------------------------
Financing activities:
Checks written against future deposits 61,612 (207,650)
Proceeds from debt 5,316,044 --
Payments on debt (5,179,477) (831,303)
Payments on obligations under capital lease (144,868) (160,044)
Payments on stock purchase liability -- (45,643)
Proceeds from exercise of stock options 30,250 200,000
Proceeds from the issuance of common stock 463,000 --
Proceeds from stock to be issued 25,000 --
Conversion of preferred stock into common stock 1 --
- ---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 571,562 (1,044,640)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (353,519) 318,780
Cash and cash equivalents, beginning of year 373,825 55,045
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 20,306 $ 373,825
- ---------------------------------------------------------------------------------------------------------
See Report of Independent Certified Public Accountants,
summary of accounting policies and notes to consolidated financial statements.
F-8
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
Organization and These consolidated financial statements include the accounts
Business of Integrated Spatial Information Solutions, Inc. and those
of its wholly owned subsidiary PlanGraphics, Inc.
(collectively the "Company"). PlanGraphics, Inc. is an
independent consulting firm specializing in the design and
implementation of Geographic Information Systems ("GIS") as
well as advisory services in the United States and foreign
markets. The customer base consists primarily of utilities,
government agencies, and land and resource management
organizations.
Principles of The consolidated financial statements include the accounts
Consolidation of the Company and it's wholly owned subsidiary. All
significant inter-company accounts and transactions have
been eliminated in consolidation.
Cash Equivalents The Company considers all highly liquid
investments purchased with an original maturity of three
months or less to be cash equivalents.
Revenue and Revenues from fixed fee projects are recognized on the
Cost Recognition percent complete method and as services are provided for
time and material projects. Revisions in cost and profit
estimates during the course of the work are reflected in the
accounting period in which they become known.
Contract costs include all direct material and labor costs
and those indirect costs related to contract performance,
such as supplies, tools, repairs and depreciation costs.
General and administrative costs are charged to expense as
incurred. Deferred revenue primarily represents retainage in
connection with these contracts.
Goodwill Goodwill represents the excess of the cost over the fair
value of its net assets acquired at the date of acquisition
and is being amortized on the straight-line method over
fifteen years. Amortization expense on goodwill was $363,924
and $322,707 for the fiscal years ended September 30, 2000
and 1999, respectively.
F-9
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
Long-Term Long-lived assets, identifiable intangibles, and associated
Assets goodwill are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. If the expected future cash flow
from the use of the assets and its eventual disposition is
less than the carrying amount of the assets, an impairment
loss is recognized and measured using the asset's fair
value.
Property, Property and equipment are recorded at cost.
Depreciation is provided primarily Equipment and using
accelerated methods over the estimated useful lives ranging
from 5 to 31 Depreciation years. Depreciation and
amortization expense on property and equipment was And
$351,341 and $385,239 for the years ended September 30, 2000
and 1999. Amortization Maintenance and repairs are charged
to expense as incurred and expenditures for major
improvements are capitalized. When assets are retired or
otherwise disposed of, the property accounts are relieved of
costs and accumulated depreciation and any resulting gain or
loss is credited or charged to operations.
Taxes on Income The Company accounts for income taxes under Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes." Deferred income taxes result from
temporary differences. Temporary differences are differences
between the tax basis of assets and liabilities and their
reported amounts in the financial statements that will
result in taxable or deductible amounts in future years.
F-10
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
Net Loss Per Share The Company provides for the calculation of "Basic" and
"Diluted" earnings per share in accordance with SFAS No.
128, "Earnings Per Share". Basic earnings per share includes
no dilution and is computed by dividing income (loss)
available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution of
securities that could share in the earnings of an entity,
similar to fully diluted earnings per share.
For the years ended September 30, 2000 and 1999, total stock
options and stock warrants convertible into 6,441,916 and
6,961,439 shares of common stock and preferred stock
convertible into 0 and 1,716,114 shares of common stock were
not included in the computation of diluted loss per share
because their effect was anti-dilutive.
Concentrations The Company's financial instruments that are
exposed to concentrations of credit of Credit Risk risk
consist of cash and cash equivalent balances in excess of
the insurance provided by governmental insurance
authorities. The Company's cash and cash equivalents are
placed with financial institutions and are primarily in
demand deposit accounts.
Concentrations of credit risk with respect to accounts
receivable are associated with a few customers dispersed
across geographic areas. The Company reviews a customer's
credit history before extending credit and establishes an
allowance for doubtful accounts based upon the credit risk
of specific customers, historical trends and other
information. Generally, the Company does not require
collateral from its customers, as a significant number of
the customers are governmental entities.
F-11
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
Fair Value of Financial Instruments. The estimated fair
value of financial instruments has been determined using
available market information or other appropriate valuation
methodologies, including the Black Scholes model. However
considerable judgment is required in interpreting market
data to develop estimates of fair value. Consequently, the
estimates are not necessarily indicative of the amounts that
could be realized or would be paid in a current market
exchange. The carrying amounts of financial instruments
reported on the consolidated balance sheets approximate
their respective fair values.
Segment Information. The Company follows the provisions of
SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information." This statement establishes
standards for the reporting of information about operating
segments in annual and interim financial statements.
Operating segments are defined as components of an
enterprise for which separate financial information is
available that is evaluated regularly by the chief operating
decision maker(s) in deciding how to allocate resources and
in assessing performance. The Company currently operates in
one business segment.
Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date
of the consolidated financial statements, and the reported
revenues and expenses during the reporting periods. The
Company's operations require it to make significant
assumptions concerning cost estimates for labor and expenses
on contracts in process. Due to the uncertainties inherent
in the estimation process of costs to complete for contracts
in process, it is possible that completion costs for some
contracts may have to be revised in future periods.
F-12
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
Capitalized Software Costs. Costs incurred internally in
creating software products for resale are charged to
Software Costs expense until technological feasibility has
been established upon completion of a detail program design.
Thereafter, all software development costs are capitalized
until the point that the product is ready for sale and
subsequently reported at the lower of amortized cost or net
realizable value.
Stock Option The Company applies Accounting Principles Board Opinion 25,
Plans "Accounting for Stock Issued to Employees" ("APB Opinion
25"), and the related Interpretation in accounting for all
stock option plans. Under APB Opinion 25, compensation cost
is recognized for stock options issued to employees when the
exercise price of the Company's stock options granted is
less than the market price of the underlying common stock on
the date of grant.
SFAS No. 123, "Accounting for Stock-Based Compensation",
requires the Company to provide pro forma information
regarding net income (loss) as if compensation cost for the
Company's stock options plans had been determined in
accordance with the fair value based method prescribed in
SFAS No. 123. To provide the required pro forma information,
the Company estimates the fair value of each stock option at
the grant date by using the Black-Scholes option-pricing
model.
Comprehensive Effective October 1, 1998, the Company has adopted the
Income provisions of SFAS No. 130, "Reporting Comprehensive
Income." Comprehensive income includes all changes in equity
except those resulting from investments by owners and
distribution to owners. For the fiscal years ended September
30, 2000 and 1999, the Company had no items of comprehensive
income (loss) other than net losses; therefore, a separate
statement of comprehensive income (loss) has not been
presented for these periods.
F-13
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
Recent Accounting The Financial Accounting Standards Board has recently issued
Pronouncements Statement on Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133, amended by SFAS
No. 138, established standards for recognizing all
instruments including those for hedging as either assets or
liabilities in the of financial position and measuring
instruments at fair value. This Statement is for all fiscal
quarters of all fiscal years beginning after June 15, 2000.
Management believes the adoption of this statement will not
have a material impact on the Company's consolidated
statements.
In March 2000, the FASB issued Emerging Issues Task Force
Issue No. 00-2, Accounting for Web Site Development Costs"
("EITF 00-2"), which was for all such costs incurred for
fiscal quarters beginning after June 30, 2000. This Issue
establishes accounting and reporting standards for costs
incurred to develop a web site based on the nature of each
cost. Currently, as the Company has no web site development
costs, the adoption of 00-2 had no impact on the Company's
financial or results of operations. To the extent Company
begins to enter into such transactions in the future, the
Company will adopt the Issue's disclosure requirements in
the quarterly and annual financial statements for the year
ending September 30, 2001.
In March 2000, the FASB issued FASB Interpretation. 44,
"Accounting for Certain Transactions Stock Compensation"
("FIN 44"), which effective July 1, 2000, except that
certain conclusions in this Interpretation which cover
events that occur after either December, 1998 or January 12,
2000 are recognized on a prospective basis from July 1,
2000. This Interpretation clarifies the application of APB
25 for certain issues related to stock issued to employees.
The Company believes its existing stock based compensation
policies and procedures are in compliance with FIN 44 and
therefore, the adoption of FIN 44 had no material impact on
the Company's financial condition, results of operations or
cash flows.
F-14
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Summary of Accounting Policies
In December 1999, the Securities and Exchange (the "SEC")
issued Staff Accounting Bulletin No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements" which provides
additional guidance in applying generally accepted
accounting principles to revenue recognition in financial
statements. SAB 101 is effective as of the fourth quarter of
fiscal year ending September 30, 2001. Management believes
the adoption of this bulletin will have no material impact
on the Company's financial statements.
Reclassifications Certain consolidated financial amounts have been
reclassified for consistent presentation.
F-15
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
1. Going Concern The consolidated financial statements have been prepared
and assuming the Company will continue as a going concern. The
Management Plan Company incurred losses totaling $2,575,814 during the year
ended September 30, 2000 and has a history of losses that
have resulted in an accumulated deficit of $14,480,662 at
September 30, 2000.
Management believes that the Company has the capacity to
address the immediate needs for cash and liquidity through
an aggressive approach on a number of fronts. The Company
has entered into a number of formal agreements and
promissory notes as well as informal agreements with vendors
and professional service providers to extend the terms on
payables currently due. The Company has also reduced or
delayed expenditures on items that are not critical to
operations. The credit line available to PlanGraphics has
been replaced by a new credit line (see Note 13).
Additionally, the Company has initiated a recapitalization
effort based on rights offering to shareholders of their
common stock.
F-16
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Subsequent to September 30, 2000 the Company completed the
sale of a private offering to accredited investors and
officers and directors. The Company issued 580,000 shares of
common stock for gross proceeds of $145,000. The Company
also issued 290,000 warrants to purchase common stock at a
price of $0.50 per share. Included in the gross proceeds is
$25,000 received prior to the year ended September 30, 2000,
for which shares of common stock were issued subsequent to
September 30, 2000. Accordingly, $25,000 has been reflected
as common stock to be issued in the accompanying statement
of stockholders' equity.
There can be no assurance that any funds required during the
next twelve months or thereafter can be generated from
operations or that if such required funds are not internally
generated that funds will be available from external sources
such as debt or equity financings or other potential
sources. The lack of additional capital resulting from the
inability to generate cash flow from operations or to raise
capital from external sources, would force the Company to
substantially curtail or cease operations and would,
therefore, have a material adverse effect on its business.
Further, there can be no assurance that any such required
funds, if available, will be available on attractive terms
or that they will not have a significantly dilutive effect
on the Company's existing shareholders.
There is substantial doubt about the Company's ability to
continue as a going concern. These consolidated financial
statements do not include any adjustments relating to the
recoverability or classification of asset carrying amounts
or the amounts and classification of liabilities that may
result should the Company be unable to continue as a going
concern.
2. Accounts The components of accounts receivable are as follows:
Receivable
September 30, 2000 1999
-----------------------------------------------------------------------
Contract receivables:
Billed $ 1,225,741 $ 1,654,877
Unbilled 162,040 320,112
-----------------------------------------------------------------------
1,387,781 1,974,989
Less allowance for doubtful accounts 1,007 51,577
-----------------------------------------------------------------------
Accounts receivable, net $ 1,386,774 $ 1,923,412
-----------------------------------------------------------------------
F-17
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Deferred revenue amounts of $130,788 and $108,588 at
September 30, 2000 and 1999, respectively, represents
amounts billed in excess of amounts earned. Included in the
deferred revenue balance at September 30, 2000 was $70,790
related to retainers received for future services and over
payments by customers on specific invoices.
PlanGraphics has historically received greater than 10% of
its annual revenues from one customer. One customer
accounted for 19.5% of revenues for the year ended September
30, 2000. The same customer accounted for 12.7% of revenues
for the year ended September 30, 1999.At September 30, 2000,
two customers accounted for 19.0% and 15.3% (11.4% at
September 30, 1999) of accounts receivable.
3. Notes Notes payable at September 30 are as follows:
Payable
September 30, 2000 1999
---------------------------------------------------------------------------
Note payable to bank in variable monthly
payments from $15,000 to $20,832, interest
at 8.5%, collateralized by equipment and
accounts receivable, maturing on July 24,
2001. Note paid in full January 10, 2000. $ - $ 423,080
Revolving line of credit agreement with a
bank up to $1,200,000, interest at prime
plus 2.0%, collateralized by accounts
receivable, originally expiring October
31, 2000. On November 14, 2000 the line
was reduced to $650,000 and extended to
December 31, 2000. On February 9, 2001,
the line was reduced to $500,000 and
extended to April 30, 2001. 559,647 -
---------------------------------------------------------------------------
559,647 423,080
Less current maturities 559,647 222,584
---------------------------------------------------------------------------
Long-term notes payable $ - $ 200,496
---------------------------------------------------------------------------
F-18
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Principal payments on all notes payable are due by September
30, 2001.
At September 30, 2000, the Company was in violation of
certain financial covenants. The bank has not granted a
waiver for the violation. Subsequent to September 30, 2000,
a director has provided a standby letter-of-credit to
further collateralize the line of credit.
4. Sale of Assets On April 8, 1999, the Company completed the sale of land and
a building located in Franktown, Colorado. The sale
generated gross cash proceeds of $1,245,000, which were used
to pay off the corresponding note payable of $620,000, plus
interest (see Note 3) as well as legal fees and
miscellaneous expenses. The Company reported a gain on the
sale of the building of approximately $177,700 during the
fiscal year ended September 30, 1999.
5. Taxes on Income The provision for income taxes consisted of the following:
Year Ended September 30, 2000 1999
--------------------------------------------------------------------------------
Deferred (provision) benefit:
Federal $ 555,000 $ 100,000
State 57,000 10,000
--------------------------------------------------------------------------------
612,000 110,000
(Increase) decrease in valuation allowance (612,000) (110,000)
--------------------------------------------------------------------------------
$ - $ -
--------------------------------------------------------------------------------
F-19
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
A reconciliation of the effective tax rates and the
statutory U.S. federal income tax rates is as follows:
2000 1999
----------------------------------------------------------------------------------
U.S. federal statutory rates (34.0)% (34.0)%
State income tax benefit, net
of federal tax amount (3.3) (3.3)
Increase in deferred tax asset
valuation allowance 37.3 37.3
----------------------------------------------------------------------------------
Effective tax rate -% -%
----------------------------------------------------------------------------------
Temporary differences that give rise to a significant
portion of the deferred tax asset are as follows:
Years Ended September 30, 2000 1999
----------------------------------------------------------------------------------
Net operating loss carryforwards $ 3,642,500 $ 3,024,000
Capital loss carryover 114,000 114,000
Expense for stock options and
warrants 212,500 237,000
Provision for losses on accounts
receivable 1,000 19,000
Accrued litigation - 11,000
Accrued wages and vacation 183,000 136,000
----------------------------------------------------------------------------------
Total gross deferred tax asset 4,153,000 3,541,000
Valuation allowance (4,153,000) (3,541,000)
----------------------------------------------------------------------------------
Net deferred tax asset $ - $ -
----------------------------------------------------------------------------------
F-20
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
A valuation allowance equal to the gross deferred tax asset
has been recorded, as management of the Company has not been
able to determine that it is more likely than not that the
deferred tax assets will be realized.
At September 30, 2000, the Company had net operating loss
carryforwards of approximately $9,766,000 with expirations
through 2020 and a $305,000 capital loss carryover, which
expires through 2002. The utilization of the loss carry
forwards may be limited under Internal Revenue Service Code
Section 382 regulations related to transfers of ownership.
6. Leases Obligations Under Capital Leases - Related Party
The Company leases an office facility from Capitol View
Development, LLC, and a partnership, which includes a
related party, under a triple net commercial lease. An
officer/shareholder owns approximately ten percent of
Capitol View Development. The lease includes an annual base
rent increasing over the term of the lease plus an
adjustment based on Capitol View Development's rate of
interest on its loan. The initial lease term is for a period
of fifteen years ending 2010 with five renewal options for a
term of one year each. Annual payments approximate $320,000
per year. The Company has the option to purchase the
facility subsequent to the tenth year of the term of the
lease.
The Company also leases certain equipment under capital
leases from a bank. Original lease terms are for three to
five years.
F-21
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
The following is a schedule, by years, of future
noncancellable minimum payments required under these leases,
together with their present value as of September 30, 2000.
Related Party
Year Ending Land and
September 30, Building Equipment Total
-------------------- -------------------- ----------------- -----------------
2001 $ 337,089 $ 14,529 $ 351,618
2002 338,133 - 338,133
2003 337,441 - 337,441
2004 334,891 - 334,891
2005 326,082 - 326,082
Thereafter 1,660,053 - 1,660,053
-------------------- -------------------- ----------------- -----------------
3,333,689 14,529 3,348,218
Less: amounts
representing
interest 1,531,381 1,243 1,532,624
-------------------- -------------------- ----------------- -----------------
Present value
of minimum
lease payments $ 1,802,308 $ 13,286 1,815,594
-------------------- -------------------- -----------------
Less: current maturities 103,377
-----------------
Obligations under capital leases
less current maturities $ 1,712,217
----------------------------------------- ----------------- -----------------
As of September 30, 2000 and 1999, accumulated amortization
for the building and equipment under capital lease
obligations was $1,197,799 and $995,617.
F-22
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Operating Lease Commitments
The Company leases certain office facilities and certain
furniture and equipment under various operating leases. The
remaining lease terms range from one to three years.
Minimum annual operating lease commitments at September 30,
2000 are as follows:
September 30,
--------------------------------------------------------
2001 $ 220,816
2002 169,156
2003 172,920
2004 148,355
2005 3,663
--------------------------------------------------------
$ 714,910
--------------------------------------------------------
In January 2001, the Company entered into a lease for its
administrative offices in Colorado. The lease term is for
twelve months commencing February 1, 2001, with monthly
lease payments of $750.
Rental expense for the years ending September 30, 2000 and
1999 totaled approximately $223,215 and $186,800.
F-23
7. Equity Preferred Stock
Transactions
In November 1996, the Company amended its articles of
incorporation to provide for a Series A 6% Cumulative
Convertible Preferred Stock, $.001 par value (Series A). The
Company designated 1,000,000 shares of Series A as part of
the authorized class of preferred shares. The Series A
preferred stock and any accumulated and unpaid dividends are
convertible at the option of the holder at the lesser of
105% of the average of the closing bid price per share of
the Company's common stock for the five trading days prior
to issuance or 80% of the average of the closing bid price
per share of the Company's common stock for three of the ten
trading days preceding the date of conversion. The Series A
Preferred is subject to mandatory conversions two years
after issuance.
During the fiscal year ended September 30, 1999, the holders
of the 700 shares of Series A converted 110 shares of the
preferred into common stock at various times during the year
in exchange for 501,552 shares of common stock.
During the fiscal year ended September 30, 2000, the holders
of the remaining 590 shares of Series A converted these
shares of the preferred into common stock at various times
during the year in exchange for 2,597,064 shares of common
stock. Additionally, the Company issued 181,131 shares of
common stock in lieu of payment of preferred stock dividends
in arrears of $56,151.
As of September 30, 1999, dividends in arrears associated
with the Series A amounted to and $36,723. No dividends were
in arrears as of September 30, 2000.
F-24
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Common Stock
The Company occasionally issues common stock for the payment
of services, settlement of debt and the payment of preferred
stock dividends. The number of shares of common stock issued
in each instance is representative of the trading price of
the Company's common stock at the date of issue.
During the fiscal year ended September 30, 2000, the Company
issued 1,658,452 shares of common stock through two separate
private placements. The Company received $213,000 in gross
proceeds from the issuance of 852,000 shares of common stock
to officers of the Company. Additionally, the Company issued
806,452 shares of common stock to outside investors for
$250,000. In connection with these sales, warrants to
purchase 1,232,452 shares of common stock were issued. The
warrants have varying expiration dates and are immediately
exercisable. Of the warrants issued, 426,000 are valid for
three years at an exercise price of $.50 per share and
806,452 are valid for five years at an exercise price of
$.65 per share.
During the fiscal year ended September 30, 1999, the Company
exchanged $122,319 in services for the equivalent value of
455,754 shares of common stock. The Company also issued
140,000 shares of common stock worth $36,400 in connection
with a settlement of a wrongful termination lawsuit with a
former employee in July 1999. Upon settlement, the former
employee was awarded stock options to purchase 140,000
shares of the Company's common stock at $0.26 per share, the
trading price of the stock on the settlement date, expiring
one year from date of issue. The options were valued under
the Black Scholes model at $16,800. In accordance with the
settlement agreement, the Company waived the payment upon
the individual's exercise of the options in August 1999.
F-25
During the fiscal year ended September 30, 2000, the Company
exchanged $88,434 in services for the equivalent value of
388,979 shares of common stock. The Company also issued
478,677 shares of common stock worth $177,110 in connection
with a settlement of a lawsuit with its former consultants
in February 2000, when the trading price of the Company's
common stock was $0.37 per share. Of the 478,677 shares
issued, 202,703 shares valued at $75,000 were issued
directly while the other 275,974 shares valued at $102,110
were issued upon the immediate exercise of options and
warrants granted in the settlement. See Note 11 for further
discussion.
Effective July 1999, the Company entered into an Agreement
for Services with a director of the Company. As part of the
agreement, the director's annual base compensation consists
of $50,000, payable in equal monthly installments in the
Company's common stock, and options to purchase 175,000
shares of the Company's common stock at an exercise price of
$0.31 per share each year for three years. During fiscal
2000, the Company issued 172,016 shares of common stock to
the director as payment for the $50,000 compensation in
accordance with the agreement. Of these shares issued,
43,014 shares related to the fourth quarter of fiscal 1999,
thus the Company has accrued $12,500 at September 30, 2000
to account for the director's fiscal 2000 fourth quarter
compensation. In addition, as part of the July 1999
agreement, the director received incentive options to
acquire 688,235 shares of common stock at $0.2906 per share,
the average trading price of the Company's common stock for
the five trading days prior the agreement date, which he
exercised on July 13, 1999 for $200,000 in cash.
As part of a settlement agreement to settle all outstanding
amounts owed to a certain consulting firm, the Company
issued warrants to purchase 117,623 shares of common stock
in January 1999 with a total value of $10,586. The warrants
are exercisable at $0.894 per share through August 18, 2001.
The warrants were valued using the Black Scholes model in
accordance with SFAS 123.
F-26
On September 22, 1999, the Company settled an arbitration
proceeding with an outside consultant whereby the Company
agreed to issue 150,000 shares of common stock worth
$31,500, a warrant to purchase 30,000 shares of common stock
at $1.00 per share and a warrant to purchase 20,000 shares
of common stock at $1.50 per share. The stock was
subsequently issued on October 12, 1999, when the trading
price of the Company's stock was $0.21 per share. The
warrants were valued at $12,600 using the Black Scholes
model and were recorded as consulting expense.
During the fiscal year ended September 30, 1999, the Company
issued additional options and warrants to purchase the
Company's common stock in connection with the settlement of
certain legal disputes previously discussed and for
consulting services with a total value of $41,932. The
options and warrants were valued using the Black Scholes
model in accordance with SFAS No. 123.
F-27
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
During the fiscal year ended September 30, 2000, the Company
received proceeds of $30,250 in connection with the exercise
of stock options for the purchase of 127,967 shares of
common stock
During the fiscal year ended September 30, 2000, the Company
issued warrants to purchase 125,000 shares of the Company's
common stock in connection with consulting services for a
total value of $37,500. The warrants were valued using the
Black Scholes model in accordance with SFAS No. 123.
Stock Options
The Company's Board of Directors has reserved 300,000,
1,150,000 and 4,000,000 shares under three stock option
plans (1991, 1995, and 1997, respectively). The Company
grants options under the Plan in accordance with the
determinations made by the Option Committee. The Option
Committee will, at its discretion, determine the individuals
to be granted options, the time or times at which options
shall be granted the number of shares subject to each option
and the manner in which options may be exercised. The option
price shall be the fair market value on the date of the
grant and expire five years subsequent to the date of grant.
The Company applies APB Opinion 25, "Accounting for Stock
Issued to Employees," and related Interpretations in
accounting for the plans. Under APB Opinion 25, when the
exercise price of the Company's employee stock options is
less than the market price of the underlying stock on the
date of grant, compensation cost is recognized.
F-28
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
SFAS No. 123, "Accounting for Stock-Based Compensation"
requires the Company to provide pro forma information
regarding net income and net income per share as if
compensation costs for the Company's stock option plans and
other stock awards had been determined in accordance with
the fair value based method prescribed in SFAS No. 123. The
Company estimated the fair value of each stock award at the
grant date by using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for
grants in the years ended September 30, 2000 and 1999:
dividend yield of 0 percent, expected volatility of 95 to
140 percent, risk-free interest rates between 4 and 6
percent, and expected option lives of one to five years for
all years presented.
Under the accounting provisions for SFAS No. 123, the
Company's net loss and net loss per share would have been
adjusted to the following unaudited pro forma amounts:
Years Ended September 30, 2000 1999
-------------------------------- -------------- ---------------
Net loss
As reported $ (2,575,814) $ (1,057,779)
Pro forma (2,687,093) (1,199,155)
Net loss per share
As reported $ (.16) $ (.09)
Pro forma (.17) (.10)
-------------------------------- ----------------- -----------------
F-29
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
A summary of the status of the Company's stock option plans,
changes and outstanding options and warrants as of September
30, 2000 and 1999 and changes during the years ending on
those dates is presented below:
Options Warrants
----------------------------- -----------------------------
Weighted Weighted
Number of Average Number of Average
Shares Exercise Price Shares Exercise Price
----------------- ---------- --------------- ----------- ----------------
Outstanding 4,512,194 $ 1.47 1,825,686 $ 1.68
10/1/98
Granted 2,274,316 0.35 167,623 0.99
Cancelled (378,110) 1.59 (156,281) 2.16
Exercised (1,283,989) 0.28 - -
----------------- ---------------- --------------- ---------------- ----------------
Outstanding
09/30/99 5,124,411 1.26 1,837,028 1.57
Granted 804,788 0.28 1,488,258 0.55
Cancelled (1,718,628) 1.22 (690,000) 2.32
Exercised (273,135) 0.31 (130,806) 0.37
----------------- ---------------- --------------- ---------------- ----------------
Outstanding
9/30/00 3,937,436 $ 1.14 2,504,480 $ 0.83
----------------- ---------------- --------------- ---------------- ----------------
Exercisable
09/30/00 2,438,334 $ 1.23 2,504,480 $ 0.83
Exercisable
09/30/99 3,352,400 $ 1.36 1,837,028 $ 1.57
----------------- ---------------- --------------- ---------------- ----------------
F-30
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Options Warrants
--------------------------- --------------- --------------------
Weighted average fair
value of options and
warrants granted
during 2000 $ 0.14 $ 0.38
Weighted average fair
value of options and
warrants granted
during 1999 $ 0.14 $ 0.14
The following information summarizes stock options and
warrants outstanding and exercisable at September 30, 2000:
Outstanding Exercisable
------------ ------------------------------------------- ---------------------------
Weighted
Average
Remaining Weighted Weighted
Range of Contractual Average Average
Exercise Number Life in Exercise Number Exercise
Prices Outstanding Years Price Exercisable Price
------------ ------------ ------------- ---------- ------------- ----------
Options
$0.21-$0.50 1,377,459 1.13 $ 0.29 657,797 $ 0.27
$0.65-$1.13 376,496 1.89 $ 0.98 228,698 0.97
$1.25-$1.75 1,496,844 1.74 $ 1.69 1,155,089 1.67
$1.81-$2.13 686,637 0.70 $ 1.73 396,750 1.72
------------ ------------ ------------- ---------- ------------- ----------
$0.21-$2.13 3,937,436 1.36 $1.14 2,438,334 $ 1.23
------------ ------------ ------------- ---------- ------------- ----------
Warrants
$0.30-$0.50 551,000 2.78 $ 0.45 551,000 $0.45
$0.65-$0.98 1,179,075 3.33 $ 0.70 1,179,075 0.70
$1.00-$1.50 591,490 1.54 $ 1.05 591,490 1.05
$1.87-$2.13 182,915 0.56 $ 1.99 182,915 1.99
------------ ------------ ------------- ---------- ------------- ----------
$0.30-$2.13 2,504,480 2.58 $ 0.83 2,504,480 $0.83
------------ ------------ ------------- ---------- ------------- ----------
F-31
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
8. Employee 401 (k) Plan
Benefit Plans
PlanGraphics, Inc. ("PlanGraphics") has a Section 401(k)
deferred compensation provision covering substantially all
employees. The plan allows participating employees to defer
up to 20% of their annual salary with a tiered matching
contribution by PlanGraphics up to 1.75%. Additional
contributions may be made at the PlanGraphics' discretion
based upon the PlanGraphics' performance. The expense
charged to operations for the plan was $49,999 and $50,900
for the years ended September 30, 2000 and 1999 and includes
no discretionary match.
9. Contingency Self Insurance
The Company is partially self-insured for employee medical
liabilities, which covers risk up to $20,000 per individual
covered under the plan. The Company has purchased excess
medical liability coverage (from a national medical
insurance carrier) for individual claims in excess of
$20,000 and approximately $250,000 in the aggregate.
Premiums and claim expenses associated with the medical
self-insurance program are included in the accompanying
statement of operations.
Employment Agreements
The Company has entered into employment agreements with two
directors that extend from June 30, 2001 through June 30,
2003. The employment agreements set forth-annual
compensation to the two directors of between $50,000 and
$157,500 each.
F-32
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
10. Related Party A Director of the Company is the principal owner and
Transactions executive officer of an organization that entered into a
consulting agreement with the Company on July 6, 1999. The
agreement ends upon the earlier of June 30, 2001; the date
upon which the Director is not elected as a Director or is
removed as a Director; and the date upon which he does not
own more than 50% of the voting power of the organization.
Under the agreement, the organization will provide certain
services related to developing and implementing actions to
increase shareholder value through articulation of a vision
for the Company, identifying and reviewing merger and
acquisition candidates, obtaining capital (debt or equity)
to finance mergers and acquisitions, and recruiting and
evaluating candidates for senior executive and director
position. Compensation for these services consists of
performance options in two quantities of 322,581 each to
acquire common stock of the Company at an exercise price of
$0.31 per share if the market capitalization of the Company
exceeds $30 million for the first quantity and $60 million
for the second quantity for 20 of 30 consecutive business
days at any time prior to June 30, 2002. As of September 30,
2000, the Company had not achieved the market capitalization
levels, which would require the additional compensation.
Included in accounts payable at September 30, 2000 is
$40,983 of interest due the CEO for interest in connection
with guaranteeing certain debt of the Company's wholly-owned
subsidiary.
11. Litigation In 1998, the Company had appealed the Government's
assessment of excessive reprocurement costs against the
Company on a manufacturing contract terminated for default.
The appeal of the default termination was unsuccessful. As
such, the Company had recorded a reserve for $479,000 as of
September 30, 1998 for potential losses. In March 1999, the
assessment against the Company was settled with the
Government for approximately $65,000, resulting in a
recovery of approximately $414,000 from the September 30,
1998 estimated loss reserve.
F-33
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
The Company was a defendant in an arbitration action brought
by its former Chairman and CEO, alleging "constructive
termination" of an employment agreement. Through a civil
claim filed in July 1999 in Denver District Court, the
Company asserted damages incurred by the Company for actions
taken and not taken by the former Chairman and CEO. The
matter was resolved through settlement dated November 19,
1999. The settlement required the Company to pay a total of
$236,250 to the former Chairman and CEO and his counsel. All
costs of the settlement have paid as of September 30, 2000.
The Company was the respondent in an arbitration claim by
their former Chief Financial Officer, which was filed in
August 1999 with the American Arbitration Association. The
former CFO claimed that he was constructively discharged and
sought severance compensation equal to three year's
compensation as allegedly provided for in his employment
agreement. The Company asserted that the CFO resigned and
was not constructively discharged; therefore he was entitled
to no severance compensation. The case was arbitrated in
February 2000. In a final decision on April 20, 2000 the
arbitrator awarded the CFO $330,000 in separation payments,
fees and expenses in the dispute stemming from his
employment agreement with the Company. All costs associated
with the arbitration award were expensed as of June 30,
2000. On July 18, 2000 the Company filed an appeal of that
award. The appeal was not sustained. The Company will have
to pay the former CFO the awarded sum and has entered into
discussion with the former CFO to develop a schedule for the
payment.
The Company was the defendant in a claim for damages by
former consultants in July 1999. The Company counterclaimed.
As a result of directed mediation the claims were settled
and the Company ultimately paid the consultants $175,000 in
stock. See Note 7 for further discussion. The settlement
resulted in an agreement that the consultants would
relinquish its anti-dilution rights to a five-percent
ownership in the company subsequent to the February 15, 2000
settlement agreement.
F-34
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
The Company is engaged in various litigation matters from
time to time in the ordinary course of business. In the
opinion of management, the outcome of any such litigation
will not materially affect the financial position or results
of operations of the Company.
12. Supplemental Years Ended September 30, 2000 1999
Data to -------------------------------------------------------------------
Statement
of Cash Flows
Cash paid for interest $ 325,722 $ 438,101
Non-cash Investing and Financing
Activities:
Preferred stock dividend accrued 18,002 36,723
Common stock issued for payment of
preferred stock dividends 54,725 -
Conversion of preferred stock into
common stock 374,213 71,188
--------------------------------------------------------------------
13. Subsequent In February 2001 the Board of Directors approved a
Events recapitalization plan as a precedent to the further
execution of the Company's business plan. The Board of
Directors authorized a right offering to existing
shareholders of their common stock and to certain other
qualified parties. The Board established April 30, 2001 as
the record date and that the rights would be
non-transferable. The terms of the offering have not yet
been finalized.
F-35
Integrated Spatial Information
Solutions, Inc. and Subsidiary
Notes to Consolidated Financial Statements
On February 9, 2001, the Board of Directors approved a loan
in exchange for a convertible promissory note dated February
2, 2001 of $75,000 from an entity controlled by a director.
The funds are to be used for certain specified working
capital requirements. The Board also approved a resolution
authorizing the Company to provide to a related party a
security interest in PlanGraphic's accounts receivable and
subordinately, the ownership of PlanGraphics, as further
collateral for the entity providing a standby letter of
credit to further collateralize an extension of their
subsidiary's line of credit with National City Bank of
Kentucky, and subsequently, Branch Banking and Trust
Company. Subsequent to this transaction, National City Bank
provided an extension of a $500,000 line of credit for their
operating subsidiary through April 30, 2001. The line of
credit was subsequently extended through June 11, 2001.
Effective June 1, 2001, the line of credit had been paid in
full and substituted with a line of credit from Branch
Banking and Trust Company.
Historically, PlanGraphics' accounts receivable has been
more than adequate to cover its line of credit and
management believes that this will continue to be the case.
Should PlanGraphics default on its line of credit with
Branch Banking & Trust Company and its accounts receivable
be inadequate to cover its standby letter of credit with the
related party, the Company may lose its interest in
PlanGraphics which would result in the loss of the Company's
sole source of revenue. The related party has not expressed
an interest in obtaining the underlying collateral used to
support the standby letter of credit.
In November 2000 the Company announced that they had entered
into a Letter of Intent to acquire certain business assets
of Microhard Technology, Inc. and Certified Professionals
and Engineers, Inc. As a result of due diligence reviews the
Company decided to allow the Letter of Intent to lapse
without a transaction. Both parties to the Letter of Intent
have agreed to work together on a number of strategic and
tactical initiatives and to revisit the acquisition
discussions in the future. All costs associated with the
proposed acquisition have been expensed.
F-36
Part I
Financial Information
Item 1. Financial Statements
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Balance Sheets
March 31 September 30
2001 2000
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------
Assets
Current:
Cash and Cash Equivalents $ 9,910 $ 20,306
Accounts receivable (net of allowance
for doubtful accounts of $0 and $1,007) 1,843,120 1,386,774
Prepaid expenses and other 99,734 172,154
- --------------------------------------------------------------------------------
Total current assets 1,952,764 1,579,234
- --------------------------------------------------------------------------------
Property and Equipment:
Land and building under capital
lease - related party 1,866,667 1,866,667
Equipment and furniture 706,670 699,165
Other leased assets 255,600 255,600
- --------------------------------------------------------------------------------
2,828,937 2,821,432
Less accumulated depreciation and amortization 1,223,502 1,084,027
- --------------------------------------------------------------------------------
Net property and equipment 1,605,435 1,737,405
- --------------------------------------------------------------------------------
Other Assets:
Goodwill, net of accumulated amortization 4,130,305 4,312,267
Other 86,954 102,974
- --------------------------------------------------------------------------------
Total other assets 4,217,259 4,415,241
- --------------------------------------------------------------------------------
$7,775,458 $7,731,880
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-37
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Balance Sheets
March 31 September 30
2001 2000
(Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current:
Notes payable - current maturities $ 574,793 $ 559,647
Other notes payable 246,530 --
Obligations under capital lease - current 1,630 13,286
Obligations under capital
leases - related party - current 106,933 90,091
Checks written against future deposits 94,582 61,612
Accounts payable 935,086 871,288
Accrued payroll costs and vacation 379,701 325,613
Accrued expenses 545,767 696,841
Deferred revenue 299,834 201,578
- -------------------------------------------------------------------------------------
Total current liabilities 3,184,856 2,819,956
- -------------------------------------------------------------------------------------
Long-term Liabilities
Obligations under capital leases - related party 1,662,705 1,712,217
- -------------------------------------------------------------------------------------
Total liabilities 4,847,561 4,532,173
- -------------------------------------------------------------------------------------
Commitments and Contingencies:
Stockholders' Equity:
Cumulative convertible preferred stock,
$.001 par value, 20,000,000 shares authorized,
none outstanding -- --
Common stock, no par value, 2,000,000,000
shares authorized, 19,546,525 and 18,674,382 shares
issued and outstanding March 31, 2001, and
September 30, 2000, respectively 14,467,115 14,254,487
Common stock to be issued -- 25,000
Additional paid-in capital 3,553,366 3,400,882
Accumulated deficit (15,092,584) (14,480,662)
- -------------------------------------------------------------------------------------
Total stockholders' equity 2,927,897 3,199,707
- -------------------------------------------------------------------------------------
$ 7,775,458 $ 7,731,880
- -------------------------------------------------------------------------------------
See accompanying notes to financial statements
F-38
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Statements of Operations
(Unaudited)
Six months ended Three months ended
March 31, March 31,
2001 2000 2001 2000
- ----------------------------------------------------------------------------------------------------------------
Revenues $ 3,438,028 $ 3,368,138 $ 1,789,006 $ 1,561,989
Cost and expenses
Salaries and employee benefits 799,037 944,924 429,797 486,495
Direct contract costs 1,935,946 1,990,534 967,674 972,116
General & administrative costs 548,616 635,917 258,329 330,582
Marketing costs 103,491 154,655 62,661 88,007
Public & corporate affairs expense 145,573 33,127 27,281 18,730
Other operating costs 322,928 336,488 158,747 185,004
- ----------------------------------------------------------------------------------------------------------------
Total costs and expenses 3,855,591 4,095,645 1,904,489 2,080,934
- ----------------------------------------------------------------------------------------------------------------
Operating loss (417,563) (727,507) (115,483) (518,945)
- ----------------------------------------------------------------------------------------------------------------
Other income (expense):
Interest expense (238,763) (172,843) (158,166) (99,741)
Other income 44,404 32,727 30,978 16,785
Loss on litigation -- --
(584,892) (584,892)
- ----------------------------------------------------------------------------------------------------------------
Total other income (expense) (194,359) (725,008) (127,188) (667,848)
- ----------------------------------------------------------------------------------------------------------------
Loss from continuing operations (611,922) (1,452,515) (242,671) (1,186,793)
- ----------------------------------------------------------------------------------------------------------------
Net loss (611,922) (1,452,515) (242,671) (1,186,793)
- ----------------------------------------------------------------------------------------------------------------
Preferred stock dividends -- (18,002) --
(9,152)
- ----------------------------------------------------------------------------------------------------------------
Net loss attributable to common
stockholders $ (611,922) $ (1,470,517) $ (242,671) (1,195,945)
- ----------------------------------------------------------------------------------------------------------------
Basic and diluted loss per common share:
Loss from continuing operations attributable to
common stockholders $ (.03) $ (.10) $ (.01) $ (.08)
Loss attributable to common stockholders $ (.03) $ (.10) $ (.01) $ (.08)
Weighted average number of shares of common
stock outstanding 19,260,453 14,484,849 19,411,556 15,544,840
- ----------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
F-39
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Statements of Cash Flow
(Unaudited)
Six Months Ended March 31, 2001 2000
- --------------------------------------------------------------------------------
Operating Activities:
Net loss $ (611,922) $(1,452,515)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 321,437 366,043
Provision for losses on accounts receivable (1,007) (51,577)
Stock options and warrants issued/to be
issued for services performed 124,500 181,050
Loss on litigation -- 505,000
Sale of assets -- (2,426)
Write off of acquisition costs 25,608 --
Amortization of debt discount 75,000 --
Changes in operating assets:
(Increase) decrease in accounts receivable (455,339) 248,184
(Increase) decrease in other assets 62,832 (25,784)
Increase in accounts payable 310,529 196,768
Increase in accrued expenses (28,718) (228,371)
Increase (decrease) in deferred revenue 51,191 (1,011)
Increase in deposits 47,065 (143,187)
- --------------------------------------------------------------------------------
Net cash used in operating activities (78,824) (407,826)
- --------------------------------------------------------------------------------
Investing Activities:
Purchase of equipment (7,505) (112,041)
Restricted cash -- 25,000
- --------------------------------------------------------------------------------
Net cash used in investing activities (7,505) (87,041)
- --------------------------------------------------------------------------------
Financing Activities:
Payments on checks written against future deposits 32,970 102,450
Proceeds from borrowing 75,000 --
Payments on debt (172,649) (110,220)
Proceeds from issuance of common stock 120,000 382,610
Proceeds from exercise of stock options 20,612 --
Payments on stock repurchase liability -- (47,556)
- --------------------------------------------------------------------------------
Net cash provided by financing activities 75,933 327,284
- --------------------------------------------------------------------------------
Net increase (decrease) in cash (10,396) (167,583)
Cash and cash equivalents, beginning of period 20,306 373,825
- --------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 9,910 $ 206,242
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-40
Integrated Spatial Information Solutions, Inc.
and Subsidiaries
NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
(1) Condensed and Consolidated Financial Statements
The condensed and consolidated financial statements included herein have been
prepared by us without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. We believe that the disclosures are adequate
to make the information presented not misleading. In the opinion of management,
the accompanying unaudited condensed and consolidated financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly our consolidated financial position as of March 31,
2001, the consolidated results of our operations for the three and six-month
periods ended March 31, 2001, and 2000 and statements of cash flows for the
six-month periods then ended.
The accounting policies followed by us are set forth in the annual report of
September 30, 2000, filed on Form 10-KSB and the audited consolidated financial
statements in it with the accompanying notes. While management believes the
procedures followed in preparing these consolidated financial statements are
reasonable, the accuracy of the amounts are in some respects dependent upon the
facts that will exist, and procedures that will be accomplished by us later in
the year.
The consolidated results of operations for the six-month period ended March 31,
2001, are not necessarily indicative of the results to be expected for the full
year ending September 30, 2001.
Certain prior year financial statements have been restated to conform to the
current year presentation.
(2) Accounts Receivable
The components of accounts receivable are as follows:
March 31 September 30
2001 2000
- --------------------------------------------------------------------------------
Contract Receivables:
Billed 1,483,869 1,225,741
Unbilled 359,251 162,040
- --------------------------------------------------------------------------------
1,843,120 1,387,781
Less allowance for doubtful accounts -- 1,007
- --------------------------------------------------------------------------------
Accounts receivable, net $1,843,120 $1,386,774
- --------------------------------------------------------------------------------
Deferred revenue amounts were $299,834 and $201,578 at March 31, 2001 and
September 30, 2000, respectively, which represents amounts billed in excess of
amounts earned.
We have historically received greater than 10% of annual revenues from one or
more customers. One customer accounted for 29.9% of revenue for the quarter
ended March 31, 2001, compared to 19.5% of revenue for the largest and different
customer for the quarter ended March 31, 2000. In addition, at March 31, 2001
two customers accounted for 40.7% and 15% of accounts receivable, compared to
two different customers who accounted for 29.5% and 10% of accounts receivable
at March 31, 2000. The largest of our current "customers" represents a contract
vehicle utilized by as many as 10 different departments within the contracting
organization through individual order assignments. The diversity of order
assignments and range of departments as clients diminishes the concentration of
revenue and receivables in a manner not obvious from the financial reports.
F-41
(3) Provision for Income Taxes
At the beginning of the fiscal year we had net operating loss carryforwards of
$9.8 million with expirations through 2020. At March 31, 2001, the amount of the
net operating loss carryforward balance is estimated at $10.3 million. We expect
to incur a minimal amount of alternative minimum tax for the fiscal year. Since
we are unable to determine that deferred tax assets exceeding tax liabilities
are more likely than not to be realized, we have recorded a valuation allowance
equal to the excess deferred tax assets at fiscal year end.
(4) Going Concern Issues
As a result of recurring losses from operations over several years, negative
cash flows and certain other factors, the report of our independent certified
public accountants for the fiscal year ended September 30, 2000 includes a
qualification statement in the audit opinion expressing substantial doubt about
our ability to continue as a going concern. Management believes that we have the
capacity to address our immediate needs for cash and liquidity through an
aggressive approach on a number of fronts. We have entered into a number of
formal and informal agreements with vendors and professional service providers
to extend the terms on payables currently due. We also have reduced or delayed
expenditures on items that are not critical to operations. The credit line
available to our subsidiary organization expired April 30, 2001 and we have
obtained a commitment for a replacement line of credit with Branch Banking and
Trust Company ("BB&T") providing for an initial maximum principal amount of
$500,000 (See Note 11, below). We have initiated a recapitalization effort based
on a rights offering to shareholders of our common stock (see Note 8, below).
Furthermore, during the course of FY 2000 we reduced monthly operational cash
flow in excess of $27,000 per month and made final payments to our former CEO
and to a former shareholder of PlanGraphics as well as "right" sizing our office
leases. We recommend you review the Form 10-KSB for September 30, 2000 and read
the more extensive Going Concern discussion at the beginning of Item 6,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, appearing on page 12 of that report and footnote 1 to the
consolidated financial statements.
(5) Litigation
We were the respondent in an arbitration claim by our former Chief Financial
Officer filed in August 1999 with the American Arbitration Association in
Jacksonville, Florida. He claimed that he was constructively discharged and
sought severance compensation equal to three year's compensation as allegedly
provided for in his employment agreement. We asserted that he resigned and was
not constructively discharged; therefore he would have been entitled to no
severance compensation. The case was arbitrated in February 2000. In a final
decision on April 20, 2000 the arbitrator awarded him, a total of $330,000 in
separation payments, fees and expenses in the dispute stemming from his
employment agreement with us. All costs associated with the arbitration award
were expensed as of June 30, 2000. On July 18, 2000 we filed an appeal of that
award in State Circuit Court for Duval County, Florida. The appeal was not
sustained. We will have to pay our former CFO the awarded sum and costs.
Subsequent to March 31, 2001 we made an initial payment of $48,000 and have
developed a schedule for the balance that is acceptable to both parties.
(6) Sale of Common Stock
During a limited private offering that began in the fourth quarter of the prior
fiscal year we sold 580,000 shares of our common stock and raised $145,000 with
accredited investors and certain affiliates of our company. The offering
consisted of $1,000 units each of which included 4,000 shares of common stock
and three-year warrants to purchase 2,000 shares of common stock at $0.50 per
share. The resulting shares from the offering have not been registered with the
Securities and Exchange Commission and the resulting shares of stock are subject
to the restrictions in Rule 144. The issuance of the common stock in this
transaction was exempt from registration under the Securities Act of 1933, as
amended, in reliance upon Section 4(2).
(7) Lease Obligations
We lease various equipment as well as facilities under capital and operating
leases that expire through the year 2005 as noted in Note 7 to the Consolidated
Financial Statements in Form 10-KSB/A1 September 30, 2000.
F-42
(8) Recapitalization
On February 9, 2001 the Board of Directors approved a recapitalization plan as a
precedent to the further execution of the company's business plan. The Board of
Directors authorized a rights offering to existing shareholders of our common
stock and to certain other qualified parties. The Board directed management to
prepare the SB-2 registration statement and related prospectus documents and to
file them with the SEC. The Board has established April 30, 2001 as the record
date and that the rights will be non-transferable. The company determined that
it would establish and announce the pricing, volume, subscription ratio, other
terms of the offering and the anticipated issuance date at the time of its final
filing with the SEC. The offering will be completed during the first half of
calendar year 2001.
The Board of Directors authorized consulting agreements with Crossways
Consulting Group, Inc. and Brean Murray & Co., Inc. for advice and assistance in
the completion of our shareholder rights offering. The agreements provide that
we will, upon successful completion of the offering, issue warrants to each of
the companies to acquire common stock in a quantity equal to two percent of the
number of shares outstanding immediately after completing the offering. The
warrant exercise fee will be equal to 110% of the shareholder rights
subscription fee.
(9) Related Party Transaction
On February 9, 2001, the Board of Directors also approved a loan of $75,000 and
we entered into a convertible promissory note payable to Human Vision LLC, an
entity controlled by a director. The proceeds are to be used for certain
specified working capital requirements. The note was to mature on October 21,
2001 and was convertible into our common stock at the option of the holder at a
designated conversion price of $0.07 per share or the price per share of any
rights offering, whichever is lower. As a result of this beneficial conversion
feature, we have recorded the debt discount amount of $75,000 as a charge to
interest expense and a credit to additional paid in capital as required by
Emerging Issues Task Force ("EITF") Issue 98-5. Pursuant to an Amendment to
Promissory Notes dated May 21, 2001, any unpaid principal and interest as of
February 3, 2002, will automatically convert into common stock at a conversion
price of the lesser of $0.07 per share, or the price per share in any offering
to existing shareholders. The Board also approved a resolution authorizing us to
provide to Human Vision LLC a security interest in the ownership of our
subsidiary, PlanGraphics, Inc. as further collateral for providing a standby
letter of credit to further collateralize an extension of our subsidiary's line
of credit with National City Bank of Kentucky and subsequently Branch Banking &
Trust Company ("BB&T"). Subsequent to this transaction, National City Bank of
Kentucky provided an extension of a $500,000 line of credit and promissory note
for our operating subsidiary through June 11, 2001. Effective June 1, 2001, this
line of credit and promissory note has been paid in full and substituted with a
line of credit from Branch Banking & Trust Company. Historically, PlanGraphics'
accounts receivable have been more than adequate to cover its line of credit and
management believes that this will continue to be the case. Should PlanGraphics
default on its line of credit with Branch Banking & Trust Company and its
accounts receivable be inadequate to cover its standby letter of credit with
Human Vision LLC, ISIS may lose its interest in PlanGraphics which could result
in the loss of our sole source of revenue. Human Vision LLC has not expressed an
interest in obtaining the underlying collateral used to support the standby
letter of credit. See the discussion in Item 6, Management Discussion and
Analysis in our Form 10-KSB/A1 for the fiscal year ended September 30, 2000. See
also Note 11, Subsequent Events, below.
(10) Net Loss Per Common Share.
We have adopted Statement of Financial Accounting Standard ("SFAS") No. 128
issued by the Financial Accounting Standards Board. SFAS No. 128 provides for
the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing loss attributable to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, in order to disclose
fully diluted earnings per share, when appropriate.
As we incurred net losses in the three and six-month periods ending March 31,
none of our outstanding options or warrants were included in the computation of
diluted earnings per share as their effect would be anti-dilutive. The total of
warrants and options outstanding at March 31, 2001 and 2000 were 7,250,747 and
8,065,880, respectively.
F-43
(11) Subsequent Events.
Line of Credit. On April 30, 2001 the Line of Credit with National City Bank
with a loan balance of approximately $500,000 expired and was amended to extend
through June 11, 2001. On May 31, 2001, PlanGraphics obtained a line of credit
with a Maryland based banking institution, Branch Banking & Trust Company,
comparable in terms with the previous line and for an initial amount of
$500,000. The new line of credit is also collateralized by the accounts
receivable of PlanGraphics, a standby letter of credit provided by a related
party, Human Vision L.L.C. and the personal guarantee of an officer and
director.
Convertible Promissory Note. On May 21, 2001 the terms of the Human Vision
promissory note concerning the note's conversion were amended effective as of
the note's date of origination. The note, as amended, provides that any balance
of unpaid principle or accrued interest remaining unpaid as of February 3, 2002
will automatically convert into our common stock at a conversion price of the
lesser of $0.07 per share, or the price per share of any offering to existing
shareholders.
F-44
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ISIS is incorporated in the state of Colorado. As permitted by the
Colorado Business Corporation Act, the articles of incorporation of ISIS
eliminate the liability of directors to ISIS or its shareholders for monetary
damages for breach of fiduciary duty as a director, except to the extent
otherwise required by the Colorado Business Corporation Act.
The articles of incorporation provide that ISIS will indemnify any and
all of its directors and officers against expenses actually and necessarily
incurred to them to the fullest extent permitted under Colorado Corporate Code,
in connection with the defense of any action, suit or proceeding in which they
or any of them, are made parties, or a party, by reason of being a director or
officer of ISIS except in relation to matters to which any such director or
officer shall be adjudged in such action, suit or proceeding to be liable for
gross negligence or willful misconduct in the performance of duty.
In addition, the articles of incorporation provide that, to the
furthest extent provided by applicable law, no director of ISIS shall have any
personal liability form monetary damages to ISIS or its shareholders for breach
of fiduciary duty as a director, except that indemnity is not provided to a
director whose conduct involves (1) a breach of the director's duty of loyalty
to ISIS or its shareholders, (2) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3) acts specified
in section 7-5-114 of the Colorado Business Corporation Act, or (4) any
transaction from which the director derived an improper personal benefit.
The bylaws of ISIS provide similar indemnification provisions.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, payable by ISIS,
in connection with the sale of the common stock being registered (all amounts
are estimated except the Commission Registration Fee).
Commission registration fee..................................... $700
Blue Sky fees and expenses...................................... $5,000
Legal fees and expenses......................................... $50,000
Accounting fees and expenses.................................... $25,000
Subscription agent fees......................................... $30,000
Printing expenses............................................... $10,000
Total $120,700
II-1
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Over the past three years, ISIS has issued the following securities
without registering them under the Securities Act of 1933:
o On May 15, 2001, ISIS executed a promissory note in favor of HumanVision
L.L.C. for the sum of $75,000. Pursuant to the First Amendment to
Promissory Notes, executed on May 21, 2001, any balance of outstanding
principal and accrued and unpaid interest as of May 15, 2002 will
automatically convert into shares of ISIS common stock at the lower of $.07
per share or the price per share of any offer to our shareholders of stock
or rights to purchase our common stock. The note was issued in reliance on
an exemption from registration under Section 4(2) of the Securities Act of
1933 in a transaction not involving a public offering. The shares issuable
upon conversion of the note will be "restricted" as defined by Rule 144
promulgated under the Securities Act of 1933.
o On February 2, 2001, ISIS executed a promissory note in favor of
HumanVision L.L.C. for the sum of $75,000. Pursuant to the First Amendment
to Promissory Notes, executed on May 21, 2001, any balance of outstanding
principal and accrued and unpaid interest as of February 3, 2002 will
automatically convert into shares of ISIS common stock at the lower of $.07
per share or the price per share of any offer to our shareholders of stock
or rights to purchase our common stock. The note was issued in reliance on
an exemption from registration under Section 4(2) of the Securities Act of
1933 in a transaction not involving a public offering. The shares issuable
upon conversion of the note will be "restricted" as defined by Rule 144
promulgated under the Securities Act of 1933.
o During September 2000, ISIS initiated a private placement of units under
which 157 units were subscribed to by a total of six accredited investors
at a price of $1,000 per unit, or total consideration of $157,000. Each
unit consisted of 4,000 shares of common stock and three-year warrants to
purchase 2,000 shares of common stock at $0.50 per share. The units were
issued in reliance on an exemption from registration under Section 4(2) of
the Securities Act of 1933 in a transaction not involving a public
offering. Each investor had access to the same type of information about
ISIS that is typically available in a registration statement.
o In March 2000, ISIS sold 806,452 units in a private offering to two
accredited purchasers, or total consideration of $240,500. Each unit
consisted of one share of common stock and one five-year warrant to
purchase one share of common stock at $0.65 per share. The units were
issued in reliance on an exemption from registration under Rule 506 of
Regulation D promulgated under the Securities Act of 1933 in a transaction
not involving a public offering. Each investor had access to the same type
of information about ISIS that is typically available in a registration
statement.
o In January 2000, ISIS sold 213 units in a private offering to six
accredited purchasers at a price of $1,000 per unit, or total consideration
of $213,000. Each unit consisted of 4,000 shares of common stock and
three-year warrants to purchase 2,000 shares of common stock at $0.50 per
share. The units were issued in reliance on an exemption from registration
under Section 4(2) of the Securities Act of 1933 in a transaction not
involving a public offering. Each investor had access to the same type of
information about ISIS that is typically available in a registration
statement.
o On August 19, 1998, ISIS sold a total of 700 shares of its Series A
Preferred Stock in a private offering. The total offering price was
$700,000 and the sale was made to two entities who ISIS reasonably believed
prior to making the sale to be sophisticated investors. The shares were
issued in reliance on an exemption from registration under Rule 506 of
Regulation D promulgated under the Securities Act of 1933 in a transaction
not involving a public offering. The Ridgefield Group of Ridgefield,
Connecticut acted as ISIS's placement agent for the transaction. The
Company paid commissions of 12% of the total offering price to The
Ridgefield Group. The Series A Preferred Stock was convertible to shares of
common stock. On November 14, 1998, the Securities and Exchange Commission
declared effective a registration statement of ISIS that included the
underlying common stock. Shares issued pursuant to this offering have all
converted to shares of common stock.
o On August 18, 1998, ISIS sold 57,142 shares of its common stock to two
sophisticated investors in a private placement. ISIS received cash proceeds
of $50,000. The shares were issued in reliance on an exemption from
registration under Rule 506 of Regulation D promulgated under the
Securities Act of 1933 in a transaction not involving a public offering.
Each investor had access to the same type of information about ISIS that is
typically available in a registration statement.
ITEM 27. EXHIBITS
Exhibit
Number Description of Exhibit
2.1 Acquisition Agreement between DCX, Inc. and PlanGraphics, Inc. (filed
with Current Report, Form 8-K, on September 24, 1997 and incorporated
herein by reference)
3.1 Amended and Restated Articles of Incorporation of ISIS (filed with our
Definitive Proxy Statement dated May 3, 1991 and incorporated herein
by reference).
3.2 Articles of Amendment to the Articles of Incorporation dated November
6, 1996 (filed with Current Report, Form 8-K, on November 27, 1996 and
incorporated herein by reference).
3.3 Articles of Amendment to the Articles of Incorporation dated July 30,
1997 (filed with Current Report, Form 8-K, on August 15, 1997 and
incorporated herein by reference).
3.4 Bylaws of ISIS (filed with Registration Statement on Form S-18, file
no. 33-1484 and incorporated herein by reference).
4.1 Specimen Stock Certificate (filed with Registration Statement on Form
S-18, file no. 33-1484 and incorporated herein by reference).
4.2 ISIS 1991 Stock Option Plan (filed with Registration Statement on Form
S-8 on September 30, 1996 and incorporated herein by reference).
4.3 ISIS 1995 Stock Incentive Plan (filed with Registration Statement on
Form S-8 on September 30, 1996 and incorporated herein by reference).
4.4 ISIS Equity Incentive Plan (filed with Annual Report on Form 10-KSB on
January 13, 1998 and incorporated herein by reference).
4.5 ISIS Equity Compensation Plan (filed with Registration Statement on
Form S-8 on September 8, 1999 and incorporated herein by reference).
4.6** Warrant to be issued to Crossways Consulting Group, Inc.
4.7** Warrant to be issued to Brean Murray & Co., Inc.
5.1** Opinion and Consent of Davis Graham & Stubbs LLP.
10.1** Subscription Agent Agreement with Computershare Trust Company, Inc.
10.2 Agreement for Services with Crossways Consulting Group, Inc. dated
February 28, 2001. (filed with Registration Statement on Form SB-2 on
March 26, 2001 and incorporated herein by reference).
10.3 Letter Agreement with Brean Murray & Co., Inc. dated March 13, 2001
(filed with Registration Statement on Form SB-2 on March 26, 2001 and
incorporated herein by reference).
10.4 Executive Employment Agreement dated March 28, 1997 between ISIS and
Frederick G. Beisser (filed with Quarter Report on Form 10-QSB on May
14, 1997 and incorporated herein by reference).
10.5 Executive Employment Agreement dated September 22, 1997 between ISIS
and John C. Antenucci (filed with Annual Report on Form 10-KSB on
January 13, 1998 and incorporated herein by reference).
10.6 Executive Employment Agreement dated September 22, 1997 between ISIS
and J. Gary Reed (filed with Annual Report on Form 10-KSB on January
13, 1998 and incorporated herein by reference).
10.7 Agreement for Services dated July 6, 1999 between ISIS and Gary S.
Murray (filed with Quarterly Report on Form 10-QSB on August 5, 1999
and incorporated herein by reference).
10.8 Consulting Services Agreement dated July 6, 1999 between ISIS and
HumanVision L.L.C. (filed with Quarterly Report on Form 10-QSB on
August 5, 1999 and incorporated herein by reference).
10.9 Convertible Promissory Note by and between ISIS and HumanVision L.L.C.
(filed with Annual Report on Form 10-KSB on February 20, 2001 and
incorporated herein by reference).
10.10 Stock Pledge Agreement by and between ISIS and HumanVision L.L.C.
(filed with Annual Report on Form 10-KSB on February 20, 2001 and
incorporated herein by reference).
10.11 Guaranty by ISIS in favor of HumanVision L.L.C. (filed with Annual
Report on Form 10-KSB on February 20, 2001 and incorporated herein by
reference).
10.12* Secured Promissory Note issued to BDO Seidman, LLP dated February 15,
2001
10.13* Promissory Note issued to Evans, Mechwart, Hambleton & Tilton, Inc.
dated November 7, 2000
10.14* Convertible Promissory Note by and between ISIS and HumanVision,
L.L.C. dated May 15, 2001
10.15* First Amendment to Promissory Notes by ISIS for the benefit of
HumanVision LLC dated May 21, 2001
10.16* Loan Agreement dated May 31, 2001 by and between Branch Banking and
Trust Company, PlanGraphics, Inc., John C. Antenucci and Robin L.
Antenucci
10.17* Security Agreement dated May 31, 2001 by and between Branch Banking
and Trust Company and PlanGraphics, Inc.
10.18* Promissory Note by PlanGraphics, Inc. in favor of Branch Banking and
Trust Company dated May 31, 2001
10.19* Guaranty Agreement dated May 31, 2001 by John C. Antenucci
21 List of Subsidiaries (filed with Annual Report on Form 10-KSB on
February 20, 2001 and incorporated herein by reference).
23* Consent of BDO Seidman, LLP
- -------------------
* Filed herewith.
** Final form to be filed via amendment.
ITEM 28. UNDERTAKINGS
The undersigned hereby undertakes that:
(1) It will file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) Include any prospectus required by section 10(a)(3) of the Securities
Act;
(b) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(c) Include any additional or changed material information on the plan of
distribution.
(2) For purposes of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering.
(3) It will file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) It will supplement the prospectus, after the end of the subscription
period, to include the results of the subscription offer, the transactions
by the underwriters during the subscription period, the amount of
unsubscribed securities that the underwriters will purchase and the terms
of any later reoffering. In addition, if the underwriters make any public
offering of the securities on terms different from those on the cover page
of the prospectus, it will file a post-effective amendment to state the
terms of such offering.
(5) For determining any liability under the Securities Act, it will treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by it under Rule 424(b)(1) or (4) or 497(h) under the
Securities Act as part of this registration statement as of the time the
Commission declared it effective.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration to
be signed on its behalf by the undersigned, in the City of Frankfurt, State of
Kentucky on June 12, 2001.
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
By: /s/ John C. Antenucci
----------------------------------
John C. Antenucci
President and Acting Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John C. Antenucci and Frederick G.
Beisser, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution for him and his name, place
and stead, in any and all capabilities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all exhibits and schedules thereto, including any subsequent
registration statement filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended, together with all schedules and exhibits thereto and other
certificates, instruments, agreements and other documents as may be necessary or
appropriate in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
/s/ John C. Antenucci President, Director and Acting June 12, 2001
- -----------------------------------------
John C. Antenucci Chief Executive Officer
/s/ Fred G. Beisser Vice President - Finance and June 12, 2001
- ----------------------------------------- Administration, Secretary,
Frederick G. Beisser Treasurer and Director (Principal
Financial and Accounting Officer)
/s/ John C. Antenucci, Attorney-in-Fact Chairman and Director June 12, 2001
- -----------------------------------------
Gary S. Murray
/s/ John C. Antenucci, Attorney-in-Fact Director June 12, 2001
- -----------------------------------------
J. Gary Reed
/s/ John C. Antenucci, Attorney-in-Fact Director June 12, 2001
- -----------------------------------------
Ray O'Mara
II-7
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Acquisition Agreement between DCX, Inc. and PlanGraphics, Inc. (filed
with Current Report, Form 8-K, on September 24, 1997 and incorporated
herein by reference)
3.2 Amended and Restated Articles of Incorporation of ISIS (filed with our
Definitive Proxy Statement dated May 3, 1991 and incorporated herein
by reference).
3.3 Articles of Amendment to the Articles of Incorporation dated November
6, 1996 (filed with Current Report, Form 8-K, on November 27, 1996 and
incorporated herein by reference).
3.4 Articles of Amendment to the Articles of Incorporation dated July 30,
1997 (filed with Current Report, Form 8-K, on August 15, 1997 and
incorporated herein by reference).
3.5 Bylaws of ISIS (filed with Registration Statement on Form S-18, file
no. 33-1484 and incorporated herein by reference).
4.1 Specimen Stock Certificate (filed with Registration Statement on Form
S-18, file no. 33-1484 and incorporated herein by reference).
4.2 ISIS 1991 Stock Option Plan (filed with Registration Statement on Form
S-8 on September 30, 1996 and incorporated herein by reference).
4.3 ISIS 1995 Stock Incentive Plan (filed with Registration Statement on
Form S-8 on September 30, 1996 and incorporated herein by reference).
4.4 ISIS Equity Incentive Plan (filed with Annual Report on Form 10-KSB on
January 13, 1998 and incorporated herein by reference).
4.5 ISIS Equity Compensation Plan (filed with Registration Statement on
Form S-8 on September 8, 1999 and incorporated herein by reference).
4.6** Warrant to be issued to Crossways Consulting Group, Inc.
4.7** Warrant to be issued to Brean Murray & Co., Inc
5.1** Opinion and Consent of Davis Graham & Stubbs LLP.
10.1** Subscription Agent Agreement with Computershare Trust Company, Inc.
10.2 Agreement for Services with Crossways Consulting Group, Inc. dated
February 28, 2001 (filed with Registration Statement on Form SB-2 on
March 26, 2001 and incorporated herein by reference).
10.3 Letter Agreement with Brean Murray & Co., Inc. dated March 13, 2001
(filed with Registration Statement on Form SB-2 on March 26, 2001 and
incorporated herein by reference).
10.4 Executive Employment Agreement dated March 28, 1997 between ISIS and
Frederick G. Beisser (filed with Quarter Report on Form 10-QSB on May
14, 1997 and incorporated herein by reference).
10.5 Executive Employment Agreement dated September 22, 1997 between ISIS
and John C. Antenucci (filed with Annual Report on Form 10-KSB on
January 13, 1998 and incorporated herein by reference).
10.6 Executive Employment Agreement dated September 22, 1997 between ISIS
and J. Gary Reed (filed with Annual Report on Form 10-KSB on January
13, 1998 and incorporated herein by reference).
10.7 Agreement for Services dated July 6, 1999 between ISIS and Gary S.
Murray (filed with Quarterly Report on Form 10-QSB on August 5, 1999
and incorporated herein by reference).
10.8 Consulting Services Agreement dated July 6, 1999 between ISIS and
HumanVision L.L.C. (filed with Quarterly Report on Form 10-QSB on
August 5, 1999 and incorporated herein by reference).
10.9 Convertible Promissory Note by and between ISIS and HumanVision L.L.C.
(filed with Annual Report on Form 10-KSB on February 20, 2001 and
incorporated herein by reference).
10.10 Stock Pledge Agreement by and between ISIS and HumanVision L.L.C.
(filed with Annual Report on Form 10-KSB on February 20, 2001 and
incorporated herein by reference).
10.11 Guaranty by ISIS in favor of HumanVision L.L.C. (filed with Annual
Report on Form 10-KSB on February 20, 2001 and incorporated herein by
reference).
10.12* Secured Promissory Note issued to BDO Seidman, LLP dated February 15,
2001
10.13* Promissory Note issued to Evans, Mechwart, Hambleton & Tilton, Inc.
dated November 7, 2000
10.14* Convertible Promissory Note by and between ISIS and HumanVision,
L.L.C. dated May 15, 2001
10.15* First Amendment to Promissory Notes by ISIS for the benefit of
HumanVision LLC dated May 21, 2001
10.16* Loan Agreement dated May 31, 2001 by and between Branch Banking and
Trust Company, PlanGraphics, Inc., John C. Antenucci and Robin L.
Antenucci
10.17* Security Agreement dated May 31, 2001 by and between Branch Banking
and Trust Company and PlanGraphics, Inc.
10.18* Promissory Note by PlanGraphics, Inc. in favor of Branch Banking and
Trust Company dated May 31, 2001
10.19* Guaranty Agreement dated May 31, 2001 by John C. Antenucci
21 List of Subsidiaries (filed with Annual Report on Form 10-KSB on
February 20, 2001 and incorporated herein by reference).
23* Consent of BDO Seidman, LLP
- -------------------
* Filed herewith.
** Final form to be filed via amendment.
II-10
Exhibit 10.12
SECURED PROMISSORY NOTE
$130,000 Dated: February 15, 2001
Due: December 21, 2001
FOR VALUE RECEIVED, and in consideration of (i) the forbearance by BDO
Seidman, LLP, a New York limited liability partnership ("BDO"), of the
initiation of a collection action against Integrated Spatial Information
Solutions, Inc., a Colorado corporation ("CLIENT"); (ii) the agreement of BDO to
continue to provide services to CLIENT for the purpose of completing the
September 30, 2000 audit and the December 31, 2000 10Q for CLIENT; BDO's
agreement regarding continuance of the provision of services to CLIENT being
conditioned upon, and subject to, CLIENT paying, upon receipt, all invoices
issued by BDO for services rendered by BDO for CLIENT after the date of this
Note, together with payment by CLIENT of this Note upon the terms hereof; and
(iii) other consideration, the receipt and sufficiency of which is hereby
acknowledged by CLIENT, CLIENT promises to pay to the order of BDO the principal
sum of One Hundred Thirty Thousand and 00/100 Dollars ($130,000.00), which is
the outstanding amount due and payable to BDO by CLIENT for prior services
rendered to CLIENT through February 15, 2001, together with interest thereon at
a rate of nine percent (9%) per annum (the "Base Rate") from the date hereof
until the principal sum due and payable hereunder is paid in full. Interest
shall be calculated on the basis of a three hundred sixty (360) day year for the
actual number of days in which any principal, accrued interest or any other sum
due from CLIENT to BDO pursuant to the terms of this Note (collectively, the
"Indebtedness") remains outstanding and unpaid. If CLIENT fails to pay any
payment when due and payable hereunder, the then entire unpaid Indebtedness
shall become immediately due and payable by CLIENT to BDO and interest shall
accrue at a rate equal to three percent (3%) in excess of the Base Rate until
all said amounts have been paid in full to BDO.
CLIENT shall pay the Indebtedness evidenced by this Note to BDO in
twenty (20) bimonthly installments of Six Thousand Five Hundred and 00/100
Dollars ($6,500.00) each, consisting of principal only, plus the applicable
accrued interest thereon. The installment payments of principal and accrued
interest shall be payable on the 7th and 21st day of each calendar month
commencing March 7, 2001 and continuing until paid in full. Notwithstanding
anything to the contrary stated in this Note, the entire unpaid Indebtedness
shall become immediately due and payable by CLIENT to BDO upon the effective
date of the consummation by CLIENT of any transaction with a third party other
than BDO, the effect of which is to infuse additional funds into CLIENT in an
amount equal to or greater than three (3) times the then outstanding
Indebtedness, including, without limitation, any recapitalization or other
restructuring of CLIENT, or upon the effective date of the consummation by
CLIENT of a sale or other transfer of all or substantially all of its assets or
capital stock, a merge or consolidation or a liquidation of, or filing of
bankruptcy by or with respect to, CLIENT.
The full and timely payment of the Indebtedness and CLIENT's full and
timely performance of all of the covenants, agreements, terms, conditions and
obligations pursuant to this Note (collectively the "Covenants") are secured by
security interests, liens and encumbrances granted by CLIENT to BDO pursuant to
the terms of this Note; and the other agreements, instruments, documents and
guaranties as heretofore, contemporaneously herewith or hereafter may be
granted, executed and delivered to BDO by CLIENT and any other persons and
entities, from time to time, as the case may be, evidencing, securing or
guaranteeing the Covenants and the Indebtedness.
To secure the prompt payment to BDO of the Indebtedness and the prompt,
full and faithful performance by CLIENT of all Covenants, CLIENT grants to BDO a
security interest and lien in and to all of CLIENT's now existing or owned and
hereafter arising or acquired: (i) accounts, accounts receivable and goods for
sale, lease or other disposition by CLIENT; (ii) contact rights and all
documents, instruments, contracts or other writings executed in connection with
the sale of goods or provision of services by CLIENT; and (iii) all
substitutions, renewals, improvements, accessions or additions thereto and
products and proceeds thereof, including, without limitation, proceeds of
insurance policies insuring the foregoing collateral, if any (all of the
foregoing property is referred to herein individually and collectively as
"Collateral").
CLIENT shall make appropriate entries upon its financial statements and
its books and records disclosing BDO's security interest and lien in and to the
Collateral and CLIENT shall execute and deliver to BDO concurrently with the
execution of this Note and at any time or times hereafter at the request of BDO,
all financing statements and other agreements as BDO may reasonably request to
evidence, perfect, continue, renew and extend the lien and security interest in
and to the Collateral. CLIENT hereby appoints BDO as CLIENT's attorney-in-fact
for the limited purpose of executing and filing financing and continuation
statements on CLIENT's behalf, provided CLIENT has failed, upon request by BDO,
to promptly execute any financing and continuation statements reasonably
requested by BDO.
CLIENT may prepay all or any portion of the Indebtedness without
premium or penalty. All payments of the Indebtedness, including prepayments, if
any, shall be applied first to BDO's costs of collection, if any, then to
accrued and unpaid interest and lastly to principal. The Indebtedness shall be
payable with lawful money of the United States at BDO Seidman, LLP, Attention:
Kreg Brown, 303 East 17th Avenue, Suite 600, Denver, Colorado 80203, or at such
other place as may from time to time be designated in writing by BDO.
BDO or the legal holder hereof, as the case may be, shall be entitled
to its costs of collection of the Indebtedness, including, without limitation,
reasonable attorneys' fees and court costs. The acceptance by BDO of any partial
payment of the Indebtedness after default will not establish a custom or waive
any of BDO's rights or remedies under this Note, at law, in equity or otherwise.
CLIENT hereby waives presentment for payment, demand and protest,
notice of presentment, demand, protest, dishonor, default, non-payment and
maturity and all other notices and demands whatsoever. Any forbearance by BDO or
the legal holder hereof in exercising any right or remedy hereunder or otherwise
afforded by law shall not be or be deemed to be a waiver, and shall not preclude
the subsequent exercise, of any such right or remedy. CLIENT's rights and
remedies under this Note are cumulative and are not exclusive, and no right or
remedy hereunder or otherwise afforded by law shall be, or be deemed to be, the
exclusive right or remedy of the legal holder hereof.
This Note is governed by, interpreted under and construed in accordance
with the laws and decisions of the State of Colorado, as to interpretation,
enforcement, validity, construction, effect, choice of law and in all other
respects. This Note shall inure to the benefit of BDO, the legal holder hereof
and any of their respective legal representatives, successors and assigns, as
the case may be, and shall be binding upon CLIENT and its legal representatives,
successors and assigns, if any.
Whenever possible, each provision of this Note shall be interpreted in
such a manner as to be effective, valid and enforceable under applicable law,
but if any provision of this Note is held to be invalid or unenforceable by a
court of competent jurisdiction, such provision shall be severed herefrom and
such invalidity or unenforceability shall not affect any other provision of this
Note, the balance of which shall remain in and have its intended full force and
effect; provided, however, if such provision may be modified so as to be valid
and enforceable as a matter of law, such provision shall be deemed to have been
modified so as to be valid and enforceable to the maximum extend permitted by
law. If any rate of interest set forth in this Note is greater than the maximum
rate of interest permitted to be charged or collected by applicable law, the
interest rate set forth in this Note shall be reduced to the maximum rate
permitted to be charged or collected by applicable law, as the case may be.
IN WITNESS WHEREOF, CLIENT has executed and delivered this Note to BDO
as of the date first set forth above.
Integrated Spatial Information Solutions, Inc.
By: /s/ John C. Antenucci
-----------------------------------
Title: President
--------------------------------
Exhibit 10.13
PROMISSORY NOTE
Principal
Amount: $185,000.00 Interest Rate: 9.50% Date of Note: November 7, 2000
Borrower: Lender:
PlanGraphics, Inc. Evans, Mechwart, Hambleton & Tilton, Inc.
112 East Main Street 170 Mill Street
Frankfort, KY 40601 Gahanna, OH 43230
PROMISE TO PAY. PlanGraphics, Inc. ("Borrower") promises to pay to Evans,
Mechwart, Hambleton & Tilton, Inc. ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Hundred Eighty Five
Thousand & 00/100 Dollars ($185,000.00), together with interest on the unpaid
principal balance from November 9, 2000, until paid in full.
PAYMENT. Borrower will pay this loan in 8 monthly principal and interest
payments of Twenty Three Thousand Eight Hundred Fifty-Six & 05/100 Dollars
($23,856.05). Borrower's first payment is due November 21, 2000, and all
subsequent payments are due on the same day of each month after that. Borrower's
final payment, due June 21, 2001, will be for all principal and accrued interest
not yet paid. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs.
INTEREST RATE. The interest rate to be applied to the unpaid principal balance
of the Note will be at a rate of 9.50% per annum.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower fails to comply with
or to perform when due any other term, obligation, covenant, or condition
contained in this Note. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note. (d) Borrower becomes insolvent, a
receiver is appointed for any part of Borrower's property, Borrower makes an
assignment for the benefit of creditors, or any proceeding is commenced wither
by Borrower or against Borrower under any bankruptcy or insolvency laws. (e) A
material adverse change occurs in Borrower's financial condition.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued interest immediately due, without notice,
and then Borrower will pay that amount. Upon default, including failure to pay
upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the interest rate on this Note to 13.50% per annum.
Lender may hire or pay someone else to help collect this Note if Borrower does
not pay. Borrower also will pay Lender that amount. This includes, subject to
any limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgement
collection services. If not prohibited by applicable laws, Borrower also will
pay any court costs, in addition to all other sums provided by law. This Note
shall be governed by and construed in accordance with the laws of the State of
Ohio.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower
makes a payment on Borrower's loan and the check with which Borrower pays is
later dishonored.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. In particular, this section means (among other
things) that Borrower does not agree or intend to pay, and Lender does not agree
or intend to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "charge or collect"), any amount in the
nature of interest or in the nature of a fee for this loan, which would in any
way or event (including demand, prepayment or acceleration) cause Lender to
charge or collect more for this loan than the maximum Lender would be permitted
to charge or collect by federal law or the law of the State of Ohio (as
applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. Lender may delay or forgo enforcing any of its rights or remedies
under this Note without losing them. Borrower, to the extent allowed by law,
waives presentment, demand for payment, protest and notice of dishonor.
PRIOR TO SIGINING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
Borrower:
PlanGraphics, Inc. PlanGraphics, Inc.
By: /s/ John C. Antenucci By: /s/ Gary W. Murphy
----------------------------------------- --------------------
John Antenucci, President & CEO Gary Murphy, CFO
Exhibit 10.14
CONVERTIBLE PROMISSORY NOTE
$40,000 May 15, 2001
For value received INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC., a Colorado
corporation ("Payor"), promises to pay to HUMANVISION, LLC, a Maryland limited
liability company, or its assigns ("Holder"), the principal sum of Forty and
00/100 Thousand Dollars ($40,000) with interest on the outstanding principal
amount at the rate of the prime rate as published in the Wall Street Journal
plus six (6) percent per annum, compounded annually based on a 360-day year.
Interest shall commence with the date hereof and shall continue on the
outstanding principal until paid in full.
1. All payments of interest and principal shall be in lawful money of
the United States of America. All payments shall be applied first to any fees
and costs due hereunder, then to accrued interest, and thereafter to principal.
All payments shall be made to Payor at 8181 Professional Place, Suite 200,
Landover, Maryland 20785, or at such other address as may be designated by
Holder.
2. The entire outstanding principal balance of this note (the "Note")
and all unpaid accrued interest shall become fully due and payable on October
21, 2001 (the "Maturity Date"); provided, however, that repayment will be made
in ten (10) equal semi-monthly payments of $4,000, plus accrued interest,
commencing on June 7, 2001 and continuing on June 21, 2001 and on the 7th and
21st day of each succeeding month through October 21, 2001.
3. At any time prior to the Maturity Date, Holder may, in its sole
discretion, elect to convert the outstanding principal balance of this Note, and
any accrued interest, into common shares of the stock of the Payor, which shares
shall be registered and freely transferable by the Holder at any time without
restriction, at a conversion price of seven cents ($0.07) per share. If, prior
to the Maturity Date, Payor should offer to its shareholders the right to
purchase any stock of the Payor, Holder may, in its sole discretion, elect to
convert the outstanding principal balance of this Note, and any accrued
interest, into shares of such stock, which shares shall be registered and freely
transferable by the Holder at any time without restriction, at a conversion
price of the lower of (a) seven cents ($0.07) per share or (b) the offering
price of such stock.
4. Failure to pay any amount due hereunder, or to issue any stock
pursuant to the exercise of a right of conversion hereunder, shall constitute a
default (a "Default").
5. In the event of any Default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note.
6. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.
7. The terms of this Note shall be construed in accordance with the
laws of the State of Maryland, as applied to contracts entered into by Maryland
residents within the State of Maryland, which contracts are to be performed
entirely within the State of Maryland.
8. Holder shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Payor, it being the sole and express
intention of the parties to establish a relationship of debtor and creditor.
9. Subject to the conversion rights set forth in Paragraph 3, this Note
may be prepaid by Payor at any time without penalty.
IN WITNESS WHEREOF, Payor has executed this Convertible Promissory Note
on this 15th day of May, 2001 under seal and pursuant to due authority.
WITNESS/ATTEST: INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
By:Donald E. Mack By: /s/ Fred Beisser
------------------------------------------
Name: Frederick G. Beisser
-------------------------------
Title: Vice President - Finance
------------------------------
Exhibit 10.15
FIRST AMENDMENT TO PROMISSORY NOTES
THIS FIRST AMENDMENT TO PROMISSORY NOTES (this "Amendment") is made as
of the 21st day of May, 2001, by Integrated Spatial Information Solutions, Inc,
a Colorado corporation ("Payor") for the benefit of HumanVision LLC, a Maryland
limited liability company ("Lender").
Recitals
--------
This Amendment is made with respect to the following facts:
A. Payor executed that certain Promissory Note dated February 2, 2001,
in the principal amount of $75,000.00 payable to Lender ("February Note"). Payor
also executed that certain Promissory Note dated May 15, 2001 in the principal
amount of $40,000.00 payable to Lender ("May Note").
B. The February Note and May Note provided that at any time prior to
October 21, 2001, the Maturity Date, the holder may, in its sole discretion,
elect to convert the outstanding principal balance of each note, and any accrued
interest, into shares of common stock of Payor.
C. Payor and Lender have agreed to amend, effective as of February 2,
2001 for the February Note and effective as of May 15, 2001 for the May Note,
the conversion provisions of the February Note and the May Note to eliminate the
discretionary conversion feature and provide for automatic conversion of the
February Note on February 3, 2002 and automatic conversion of the May Note on
May 16, 2002.
Agreement
In consideration of the February Note, the May Note, and the promises
and agreements made in this Amendment, the sufficiency of which are hereby
acknowledged, Payor and Lender hereby agree as follows:
1. Amendment to February Note.
---------------------------
Section 3 of the February Note is hereby restated in its
entirety to read as follows:
"3. (a) Subject to clause (b) below, if this Note is not paid
in full by February 3, 2002, the outstanding principal balance
of this Note and any accrued interest shall automatically
convert on February 3, 2002 into shares of common stock of the
Payor, which shares shall be "restricted" as defined by Rule
144 promulgated under the Securities Act of 1933. The
conversion price shall be seven cents ($0.07) per share. (b)
If, prior to February 3, 2002, Payor should offer to its
shareholders the right to purchase any stock of the Payor, the
outstanding principal balance of this Note, and any accrued
interest, shall automatically convert on February 3, 2002 into
shares of common stock of the Payor, which shares shall be
"restricted" as defined by Rule 144 promulgated under the
Securities Act of 1933. The conversion price shall be the
lesser of (i) seven cents ($0.07) per share or (ii) the
offering price of such stock."
2. Amendment to May Note.
----------------------
Section 3 of the May Note is hereby restated in its entirety
to read as follows:
"3. (a) Subject to clause (b) below, if this Note is not paid
in full by May 16, 2002, the outstanding principal balance of
this Note and any accrued interest shall automatically convert
on May 16, 2002 into shares of common stock of the Payor,
which shares shall be "restricted" as defined by Rule 144
promulgated under the Securities Act of 1933. The conversion
price shall be seven cents ($0.07) per share. (b) If, prior to
May 16, 2002, Payor should offer to its shareholders the right
to purchase any stock of the Payor, the outstanding principal
balance of this Note, and any accrued interest, shall
automatically convert on May 16, 2002 into shares of common
stock of the Payor, which shares shall be "restricted" as
defined by Rule 144 promulgated under the Securities Act of
1933. The conversion price shall be the lesser of (i) seven
cents ($0.07) per share or (ii) the offering price of such
stock."
3. Effect. Except as specifically amended by Section 1 of this
------ ---------
Amendment, the February Note and May Note shall not be
amended or modified hereby. As amended, as provided in
Section 1 of this Amendment, the February Note and May Note
---------
shall continue in full force and effect.
(The rest of this page intentionally left blank.)
IN WITNESS WHEREOF, the Payor and Lender have executed this Amendment
on the 21st day of May, 2001, intending this Amendment be effective as of the
2nd day of February, 2001 for the February Note and effective as of the 15th day
of May, 2001 for the May Note.
Payor:
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
/s/ Fred Beisser
------------------------------------------------
Frederick G. Beisser
Vice President-Finance and Administration
Lender:
HUMANVISION, LLC
/s/ Gary S. Murray
------------------------------------------------
Gary S. Murray, Sr.
Manager
Exhibit 10.16
BB&T
LOAN AGREEMENT
95500276302/00001
-----------------
Account Number
This Loan Agreement (the "Agreement") is made this 31 day of May, 2001 by and
between BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation
("Bank"), and:
PlanGraphics, Inc., a Maryland corporation ("Borrower"), having executive
offices at Frankfort.
John C. Antenucci and Robin L. Antenucci (individually "Guarantor" and
collectively the "Guarantors").
The Borrower has applied to Bank for and the Bank has agreed to make, subject to
the terms of this Agreement, the following loan(s):
Line of Credit ("Line of Credit") in the maximum principal amount not to exceed
$500,000.00 at any one time outstanding for the purpose of temporary expansion
of current assets which shall be evidenced by the Borrower's Promissory Note(s)
dated on or after the date hereof which shall mature January 31, 2002, when the
entire unpaid principal balance then outstanding plus accrued interest thereon
shall be paid in full. Prior to maturity or the occurrence of any Event of
Default hereunder and subject to any Borrowing Base limitations, the Borrower
may borrow, repay, and reborrow hereunder through maturity. Line of Credit shall
bear interest at the rate set forth in any such note evidencing all or any
portion of the Line of Credit, the terms of which are incorporated herein by
reference, and shall be secured by a first lien on all Accounts Receivable and
General Intangibles and a BB&T Business Investors Deposit Account for
Humanvision, LLC.
Additional terms, conditions and covenants of this Agreement are described in
Schedule "DD" attached hereto.
Section 1 Conditions Precedent
The Bank shall not be obligated to make any disbursement until all of the
following conditions have been satisfied by proper evidence, execution, and/or
delivery to the Bank of the following items in addition to this Agreement, all
in form and substance satisfactory to the Bank and the Bank's counsel in their
sole discretion:
Note(s): The Note(s) evidencing the above referenced loans duly executed by the
Borrower.
Security Agreement: A Security Agreement in which Borrower shall grant to Bank a
first and prior security interest in the Borrower's or other owner's
specified personal property. (If Bank will be a junior lienholder on any
personal property, Borrower must fully disclose to Bank any and all prior
security interests, and Bank must specifically approve its junior lien
position.)
UCC Financing Statements: Acknowledged copies of UCC Financing Statements
(UCC-1) duly filed in all jurisdictions necessary, or in the opinion of the
Bank desirable, to perfect the security interests granted in the Security
Agreement, and certified copies of Requests For Information (UCC- 11)
identifying all previous financing statements on record for the Borrower
from all jurisdictions indicating that no security interest has previously
been granted in any of the collateral described in the Security Agreement,
unless prior approval has been given by the Bank.
Commitment Fee: A commitment fee (or balance thereof) of $1,250.00 payable
to the Bank on the date of execution of the Loan Documents.
Corporate Resolution: A Corporate Resolution duly adopted by the Board of
Directors of the Borrower authorizing the execution, delivery, and
performance of the Loan Documents on or in a form provided by or acceptable
to Bank.
Articles of Incorporation: A copy of the Articles of Incorporation and all other
charter documents of the Borrower, all filed with and certified by the
Secretary of State of the State of the Borrower's incorporation.
By-Laws: A copy of the By-Laws of the Borrower, certified by the Secretary of
the Borrower as to their completeness and accuracy.
Certificate of Incumbency: A certificate of the Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower
authorized to sign the Loan Documents.
Certificate of Existence: A certification of the Secretary of State of the State
of the Borrower's Incorporation or Organization as to the existence or good
standing of the Borrower and its charter documents on file.
Guaranty: Guaranty Agreement(s) duly executed by the Guarantor(s). In addition,
the Guarantor(s) covenants and agrees to provide the Bank with appropriate
financial information including 1040 federal tax returns, a balance sheet,
and income information satisfactory to the Bank upon request, but not less
often than annually.
Assignment of Savings Account(s)/Instrument(s): An Assignment of Savings
Account(s)/Savings Instrument(s) in which Borrower shall assign to Bank
savings account(s) and/or savings instrument(s) in the amount of
$325,000.00 as collateral for the Note(s).
Additional Documents: Receipt by the Bank of other approvals, opinions, or
documents as the Bank may reasonably request.
Section 2 Representations and Warranties
The Borrower and Guarantor(s) represent and warrant to Bank that:
2.01. Financial Statements. The balance sheet of the Borrower and its
subsidiaries and the related Statements of Income and Retained Earnings of
the Borrower and its subsidiaries, the accompanying footnotes together with
the accountant's opinion thereon, and all other financial information
previously furnished to the Bank, are true and correct and fairly reflect
the financial condition of the Borrower and its subsidiaries as of the
dates thereof, including all contingent liabilities of every type, and the
financial condition of the Borrower and its subsidiaries as stated therein
has not changed materially and adversely since the date thereof. Each
Guarantor also makes the same representations and warranties as the
Borrower concerning its financial statements and condition.
2.02. Capacity and Standing. If the Borrower and/or any Guarantor is a
corporation, limited liability company, or limited liability partnership,
each warrants and represents that it is duly organized and validly existing
under the laws of its respective state of incorporation or organization, it
and its subsidiaries are duly qualified and in good standing in every other
state in which the nature of their business shall require such
qualification, and are each duly authorized by their board of directors,
managers or partners respectively to enter into and perform the obligations
under the Loan Documents.
2.03. No Violation of Other Agreements. The execution of any of the Loan
Documents, and the performance by the Borrower, the Pledgor or the
Guarantors thereunder will not violate any provision of its articles of
incorporation or by-laws, articles of organization or operating agreement,
or agreement of partnership or limited partnership, as applicable or of any
law, other agreement, indenture, note, or other instrument binding upon the
Borrower or Guarantor, or give cause for the acceleration of any of the
respective obligations of the Borrower or Guarantor.
2.04. Authority. All authority from and approval by any federal, state, or
local governmental body, commission, or agency, necessary to the making,
validity, or enforceability of this Agreement or the other Loan Documents
has been obtained.
2.05. Asset Ownership. The Borrower and each Guarantors have good and
marketable title to all of the properties and assets reflected on the
balance sheets and financial statements furnished to the Bank, and all such
properties and assets are free and clear of mortgages, deeds of trust,
pledges, liens, and all other encumbrances except as otherwise disclosed by
such financial statements.
2.06. Discharge of Liens and Taxes. The Borrower, its subsidiaries, and
each Guarantors have filed, paid, and/or discharged all taxes or other
claims which may become a lien on any of their respective properties or
assets, excepting to the extent that such items are being appropriately
contested in good faith and for which an adequate reserve for the payment
thereof is being maintained.
2.07. Regulation U. None of the proceeds of the loan(s) made pursuant to
this Agreement shall be used directly or indirectly for the purpose of
purchasing or carrying any margin stock in violation of any of the
provisions of Regulation U of the Board of Governors of the Federal Reserve
System.
2.08. ERISA. Each employee benefit plan, as defined by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained by
the Borrower or by any subsidiary of the Borrower or Guarantor(s) meets, as
of the date hereof, the minimum funding standards of Section 302 of ERISA,
all applicable requirements of ERISA and of the Internal Revenue Code of
1986, as amended, and no "Reportable Event" nor "Prohibited Transaction"
(as defined by ERISA) has occurred with respect to any such plan.
2.09. Litigation. There is no pending or threatened action or proceeding
against or affecting the Borrower, any of its subsidiaries, or the
Guarantor(s) before any court, commission, governmental agency, whether
State or Federal, or arbitration which may materially adversely affect the
financial condition, operations, properties, or business of the Borrower,
any such subsidiary, or the Guarantor(s), or the ability of the Borrower or
the Guarantor(s) to perform their obligations under the Loan Documents.
2. 10. Binding and Enforceable. The Loan Documents, when executed, shall
constitute valid and binding obligations of the Borrower and Guarantors
respectively and are enforceable in accordance with their terms, except as
may be limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditors' rights generally.
Section 3 Affirmative Covenants
The Borrower covenants and agrees that from the date hereof and until payment in
full of all indebtedness and performance of all obligations under the Loan
Documents, it will:
3.01. Maintain Existence. Preserve and maintain its existence and good
standing in the state of its organization, and qualify and remain qualified
as a foreign corporation, limited partnership, LLC, or LLP in each
jurisdiction in which such qualification is required.
3.02. Maintain Records. Keep adequate records and books of account, in
which complete entries will be made in accordance with generally accepted
accounting principles consistently applied, reflecting all financial
transactions of the Borrower.
3.03. Maintain Properties. Maintain, keep, and preserve all of its
properties (tangible and intangible) necessary or useful in the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.
3.04. Conduct of Business. Continue to engage in an efficient, prudent, and
economical manner in a business of the same general type as now conducted.
3.05. Maintain Insurance. Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and covering
such risks as are usually carried by companies engaged in the same or a
similar business, and business interruption insurance if required by Bank,
which insurance may provide for reasonable deductible. The Bank shall be
named as loss payee (Long Form) on all policies which apply to the Bank's
collateral, and the Borrower shall deliver certificates of insurance at
closing evidencing same. All such insurance policies shall provide, and the
certificates shall state, that no policy will be terminated without 20 days
prior written notice to Bank.
3.06. Comply With Laws. Comply in all respects with all applicable laws,
rules, regulations, and orders including, without limitation, paying before
the delinquency of all taxes, assessments, and governmental charges imposed
upon it or upon its property, and all Environmental Laws.
3.07. Right of Inspection. Permit the officers and authorized agents of the
Bank, at any reasonable time in the Bank's sole discretion, to examine and
make copies of the records and books of account of, to visit the properties
of the Borrower, and to discuss such matters with any officers, directors,
and the Borrower's independent accountant as the Bank deems necessary.
3.08. Reporting Requirements. Furnish to the Bank:
Quarterly Financial Statements: As soon as available and not more than
thirty days (30) days after the end of each quarter, balance sheets,
statements of income, cash flow, and retained earnings for the period
ended and a statement of changes in the financial position, all in
reasonable detail, and all prepared in accordance with GAAP
consistently applied and certified as true and correct by an officer,
general partner or manager of the Borrower. Annual Financial
Statements: As soon as available and not more than one hundred twenty
days (120) days after the end of each fiscal year, balance sheets,
statements of income, and retained earnings for the period ended and a
statement of changes in the financial position, all in reasonable
detail, and all prepared in accordance with GAAP consistently applied.
The financial statements must be of the following quality or better;
Reviewed.
Loan Base Report: Borrower shall submit a current loan base report in a
form satisfactory to the bank on a monthly basis and with each request
for an advance under the Line of Credit. Funds shall be advanced under
the Line of Credit at the request of the Borrower based on the lesser
of the maximum principal amount of the Line of Credit or the loan base
indicated by a current loan base report.
Notice of Litigation: Promptly after the receipt by the Borrower of
notice or complaint of any action, suit, and proceeding before any
court or governmental agency of any type which, if determined
adversely, could have a material adverse effect on the financial
condition, properties, or operations of the Borrower.
Tax Returns: As soon as available each year, complete copies
(including all schedules) of all state and federal tax returns filed
by Borrower.
Other Information: Such other information as the Bank may from time to
time reasonably request.
3.09. Deposit Accounts. Maintain substantially all of its demand
deposit/operating accounts with the Bank.
Section 4 Financial Covenants
The Borrower covenants and agrees that from the date hereof until payment in
full of all indebtedness and the performance of all obligations under the Loan
Documents, the Borrower shall at all times maintain the following financial
covenants and ratios all in accordance with GAAP unless otherwise specified:
A) Determination of the loan base for the Line of Credit shall be based
on advance rates of 70% for eligible Accounts Receivable.
Section 5 Negative Covenants
The Borrower covenants and agrees that from the date hereof and until payment in
full of all indebtedness and performance of all obligations under the Loan
Documents, the Borrower shall not, without the prior written consent of the
Bank:
5.01. Liens. Create, incur, assume, or suffer to exist any lien upon or
with respect to any of its properties, or the properties of any pledgor,
now owned or hereafter acquired, except:
(a) Liens and security interests in favor of the Bank;
(b) Liens for taxes not yet due and payable or otherwise being
contested in good faith and for which appropriate reserves are
maintained; (c) Other liens imposed by law not yet due and payable, or
otherwise being contested in good faith and for which appropriate
reserves are maintained; (d) Liens on n/a securing an obligation to n/a
not to exceed $n/a, or described on Schedule "n/a" attached hereto; (e)
Purchase Money Liens on any property hereafter acquired, provided that
such lien shall attach only to the property acquired.
5.02. Debt. Create, incur, assume, or suffer to exist any debt, except:
(a) Debt to the Bank;
(b) Debt presently outstanding and shown on the most recent financial
statements submitted to the Bank; (c) Accounts payable to trade
creditors incurred in the ordinary course of business; (d) Debt secured
by purchase money liens as outlined above in Section 5.01 (e); (e)
Additional debt not to exceed $n/a in the aggregate at any time.
5.03. Capital Expenditures. Expenditures for fixed assets in any fiscal
year shall not exceed in the aggregate the sum of $n/a.
5.04. Mergers. Merge or consolidate with or sell, assign, lease, or
otherwise dispose of all or substantially all of its assets to any person,
or acquire all or substantially all of the assets or the business of any
person.
5.05. Leases. Create, incur, assume, or suffer to exist any leases, except:
(a) Leases presently outstanding and showing on the most recent
financial statement submitted to the Bank; (b) Operating Leases for
machinery and equipment which do not in the aggregate require payments
in excess of $n/a in any fiscal year of the Borrower.
5.06. Dividends or Distributions. Declare or pay any dividends or
distributions; or purchase or redeem, retire, or otherwise acquire any of
its capital stock now or hereafter outstanding in excess of $n/a in any
fiscal year of the Borrower.
5.07. Salaries. Salaries and any other cash compensation to
owners/officers/partners/managers shall be limited as follows: n/a.
5.08. Guaranties. Assume, guarantee, endorse, or otherwise be or become
directly or contingently liable for obligations of any Person, except
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
5.09. Loans. Loans to directors, officers, partners, members, shareholders,
subsidiaries and affiliates shall be limited as follows: n/a.
5. 10. Sale of Assets. Sell, lease, or otherwise dispose of any of its
assets or properties except in the ordinary and usual course of its
business.
5.11. Transfer of Ownership. If Borrower is a corporation, transfer or sell
more than 10% of the total number of the issued and outstanding shares of
stock in Borrower prior to the maturity of the Note(s).
Section 6 Hazardous Materials and Environmental Compliance
6.01. Investigation. Borrower hereby certifies that it has exercised due
diligence to ascertain whether its real property, including without
limitation the Mortgaged Property, is or has been affected by the presence
of asbestos, oil, petroleum or other hydrocarbons, urea formaldehyde, PCBs,
hazardous or nuclear waste, toxic chemicals and substances, or other
hazardous materials (collectively, "Hazardous Materials"), as defined in
applicable Environmental Laws. Borrower represents and warrants that there
are no such Hazardous Materials contaminating its real property, nor have
any such materials been released on or stored on or improperly disposed of
on its real property during its ownership, occupancy or operation thereof.
Borrower hereby agrees that it shall not knowingly permit any release,
storage or contamination as long as any indebtedness or obligations to Bank
under the Loan Documents remains unpaid or unfulfilled. In addition,
Borrower does not have or use any underground storage tanks on its property
which are not registered with the appropriate Federal and/or State agencies
and which are not properly equipped and maintained in accordance with all
Environmental Laws. If requested by Bank, Borrower shall provide Bank with
all necessary and reasonable assistance required for purposes of
determining the existence of Hazardous Materials on the Mortgaged Property,
including allowing Bank access to the Mortgaged Property, and access to
Borrower's employees having knowledge of, and to files and records within
Borrower's control relating to the existence, storage, or release of
Hazardous Materials on the Mortgaged Property.
6.02. Compliance. Borrower agrees to comply with all applicable
Environmental Laws, rules and regulations, including, without limitation,
all those relating to Hazardous Materials. Borrower further agrees to
provide Bank, and all appropriate Federal and State authorities , with
immediate notice in writing of any release of Hazardous Materials on the
Mortgaged Property and to pursue diligently to completion all appropriate
and/or required remedial action in the event of such release.
6.03. Remedial Action. Bank shall have the right, but not the obligation,
to undertake all or any part of such remedial action in the event of a
release of Hazardous Materials on the Mortgaged Property and to add any
expenditures so made to the principal indebtedness secured by the Deed(s)
of Trust. Borrower agrees to indemnify and hold Bank harmless from any and
all loss or liability arising out of any violation of the representations,
covenants, and obligations contained in this Section 6, or resulting from
the recording of the Deed(s) of Trust.
Section 7 Events of Default
The following shall be Events of Default by Borrower or any Guarantor:
7.01. The failure to make prompt payment of any installment of principal or
interest on the Note(s) when due or payable.
7.02. Any representation or warranty made in the Loan Documents which shall
prove to be false or misleading in any material respect.
7.03. Any report, certificate, financial statement, or other document
furnished prior to the execution of or pursuant to the terms of this
Agreement shall prove to be false or misleading in any material respect.
7.04. The Borrower or any Guarantor shall default on the performance of any
other obligation of indebtedness when due or in the performance of any
obligation incurred in connection with money borrowed.
7.05. The breach of any covenant, condition, or agreement made by the
Borrower or any Guarantor under the Loan Documents.
7.06. If a custodian shall be appointed for or take possession of any or
all of the assets of the Borrower or any Guarantor, or should the Borrower
or any Guarantor either voluntarily or involuntarily become subject to any
insolvency proceeding, any proceeding to dissolve the Borrower or any
Guarantor, any proceeding to have a receiver appointed, or should the
Borrower or any Guarantor make an assignment for the benefit of creditors,
or should there be an attachment, execution, or other judicial seizure of
all or any portion of the Borrower's or any Guarantor's assets, including
an action or proceeding to seize any funds on deposit with the Bank, and
such seizure is not discharged within 30 days.
7.07. Final judgment for the payment of money shall be rendered against the
Borrower or any Guarantor which is not covered by insurance and shall
remain undischarged for a period of 30 days unless such judgment or
execution thereon be effectively stayed.
7.08. Upon the death of a Borrower who is an individual, or upon the
dissolution or termination of the existence of either the Borrower or any
Guarantor.
7.09. The Borrower or any Guarantor shall become a Debtor (as such term is
defined in the U.S. Bankruptcy Code), whether voluntarily or involuntarily.
7.10. Should the Bank in good faith deem itself, its liens and security
interests, if any, or any debt thereunder unsafe or insecure, or should the
Bank believe in good faith that the prospect of payment of any debt or
other performance by the Borrower or any Guarantor is impaired.
7.11. Should any lien or security interest granted to Bank to secure
payment of the Note(s) terminate, fail for any reason to have the priority
believed by Bank on the date granted, or become unperfected or invalid for
any reason. 7.12. If any Guaranty given in connection with the Loan is
terminated by, or upon the death of, any Guarantor. 7.13. Should the
Borrower, any Guarantor or any Pledgor contest the validity, legality or
enforceability of any Loan Document to which it is a party.
Section 8 Remedies Upon Default
Upon the occurrence of any of the above listed Events of Default, the Bank may
at any time thereafter, at its option, take any or all of the following actions,
at the same or at different times:
8.01. Declare the balance of the Note(s) to be immediately due and payable,
both as to principal and interest, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived by Borrower,
each Guarantor, and Pledgor, such balance shall accrue interest at the
Default Rate;
8.02. Require the Borrower or Guarantor(s) to pledge additional collateral
to the Bank from the Borrower's or Guarantor's assets and properties, the
acceptability and sufficiency of such collateral to be determined in the
Bank's sole discretion;
8.03. Take immediate possession of and foreclose upon any or all collateral
which may be granted to the Bank as security for the indebtedness and
obligations of Borrower or any Guarantor under the Loan Documents;
8.04. Exercise other rights and remedies as the Bank may be provided in the
Loan Documents, as a secured party under the Maryland Uniform Commercial
Code, and as provided by law;
8.05. Any obligation of the Bank to advance funds under the Note(s) and all
other obligations, if any, of the Bank under the Loan Documents shall
immediately cease and terminate unless and until Bank shall reinstate in
writing.
Section 9 Miscellaneous Provisions
9.01. Definitions.
"Borrowing Base" shall mean the lesser of (i) the maximum principal
amount of the Line of Credit or (ii) the Total Available Loan Base shown on
the Loan Base Report furnished by Borrower to Bank on a monthly basis and
with each request for an advance under the Line of Credit as long as this
Agreement shall remain in force. The percentages of acceptable collateral,
as defined by Bank, which will be used to determine the Total Available
Loan Base, shall be the following (unless otherwise set forth in Schedule
DD hereto): Eligible Inventory - n/a%; Eligible Accounts - 70%.
"Default Rate" shall mean a rate of interest equal to Bank's Prime Rate
plus five percent (5%) per annum (not to exceed the legal maximum rate)
from and after the date of an Event of Default hereunder which shall apply,
in the Bank's sole discretion, to all sums owing, including principal and
interest, on such date.
"Environmental Laws" shall mean all federal and state laws and
regulations which affect or may affect the Mortgaged Property, including
without limitation the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. Sections 9601 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), as such laws or regulations
have been amended or may be amended.
"Loan Documents" shall mean this Agreement, the Note(s), the Deed(s) of
Trust, the Security Agreement(s), Assignment(s) of Leases and Rents, all
UCC-1 Financing Statements, the Guaranty Agreement(s), and all other
documents, certificates, and instruments executed in connection therewith,
and all renewals, extensions, modifications, substitutions, and
replacements thereto and therefore.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, limited liability company, limited liability
partnership, association, joint venture, or a government agency or
political subdivision thereof
"GAAP" shall mean generally accepted accounting principles as
established by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants, as amended and supplemented from
time to time.
"Prime Rate" shall mean the rate of interest per annum announced by the
Bank from time to time and adopted as its Prime Rate, which is one of
several rate indexes employed by the Bank when extending credit, and may
not necessarily be the Bank's lowest lending rate.
9.02. Non-impairment. If any one or more provisions contained in the Loan
Documents shall be held invalid, illegal, or unenforceable in any respect,
the validity, legality, and enforceability of the remaining provisions
contained therein shall not in any way be affected or impaired thereby and
shall otherwise remain in full force and effect.
9.03. Applicable Law. The Loan Documents shall be construed in accordance
with and governed by the laws of the state of Maryland.
9.04. Waiver. Neither the failure or any delay on the part of the Bank in
exercising any right, power or privilege granted in the Loan Documents
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise of any other right, power,
or privilege which may be provided by law.
9.05. Modification. No modification, amendment, or waiver of any provision
of any of the Loan Documents shall be effective unless in writing and
signed by the Borrower and Bank.
9.06. Payment Amount Adjustment. In the event that any Loan(s) referenced
herein has a variable (floating) interest rate and the interest rate
increases, Bank, at its sole discretion, may at any time adjust the
Borrower's payment amount(s) to prevent the amount of interest accrued in a
given period to exceed the periodic payment amount or to cause the Loan(s)
to be repaid within the same period of time as originally agreed upon.
9.07. Stamps and Fees. The Borrower shall pay all federal or state stamps,
taxes, or other fees or charges, if any are payable or are determined to be
payable by reason of the execution, delivery, or issuance of the Loan
Documents or any security granted to the Bank; and the Borrower and
Guarantor agree to indemnify and hold harmless the Bank against any and all
liability in respect thereof
9.08. Attorneys Fees. In the event the Borrower or Guarantor shall default
in any of its obligations hereunder and the Bank believes it necessary to
employ an attorney to assist in the enforcement or collection of the
indebtedness of the Borrower to the Bank, to enforce the terms and
provisions of the Loan Documents to modify the Loan Documents, or in the
event the Bank voluntarily or otherwise should become a party to any suit
or legal proceeding (including a proceeding conducted under the Bankruptcy
Code), the Borrower and Guarantors agree to pay the reasonable attorney's
fees of the Bank and all related costs of collection or enforcement that
may be incurred by the Bank. The Borrower and Guarantor shall be liable for
such attorney's fees and costs whether or not any suit or proceeding
commences.
9.09. Bank Making Required Payments. In the event Borrower shall fail to
maintain insurance, pay taxes or assessments, costs and expenses which
Borrower is, under any of the terms hereof or of any Loan Documents,
required to pay, or fail to keep any of the properties and assets
constituting collateral free from new security interests, liens, or
encumbrances, except as permitted herein, Bank may at its election make
expenditures for any or all such purposes and the amounts expended together
with interest thereon at the Default Rate, shall become immediately due and
payable to Bank, and shall have benefit of and be secured by the collateral
The Bank shall be under no duty or obligation whatever with respect to any
of the foregoing expenditures.
9.10. Right of Offset. Any indebtedness owing from Bank to Borrower may be
setoff and applied by Bank on any indebtedness or liability of Borrower to
Bank, at any time and from time to time after maturity, whether by
acceleration or otherwise, and without demand or notice to Borrower. Bank
may sell participations in or make assignments of any loans made under this
Agreement, and Borrower agrees that any such participant or assignee shall
have the same right of setoff as is granted to the Bank herein. 9.11.
Modification and Renewal Fees. Bank may, at its option, charge any fees for
modification, renewal, extension, or amendment of any terms of the Note(s)
permitted by applicable law and the Loan Documents. 9.12. Conflicting
Provisions. If provisions of this Agreement shall conflict with any terms
or provisions of the Note(s), the provisions of the Note(s) shall take
priority over any provisions in the Agreement. 9.13. Notices. Any notice
permitted or required by the provisions of this Agreement shall be deemed
to have been given when delivered in writing to the City Executive or any
Vice President of the Bank at its offices in College Park, Maryland, and to
the President of the Borrower at its offices in Frankfort, Kentucky when
sent by certified mail and return receipt requested. 9.14. Consent to
Jurisdiction. Borrower hereby irrevocably agrees that any legal action or
proceeding arising out of or relating to this Agreement may be instituted
in any Maryland state court or federal court sitting in the state of
Maryland, or in such other court and venue as Bank may choose as its sole
discretion. Borrower consents to the jurisdiction of such courts and waives
any objection relating to the basis for personal or in rem jurisdiction or
to venue which Borrower may now or hereafter have in any such legal action
or proceedings. 9.15. Counterparts. This Agreement may be executed by one
or more parties on any number of separate counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument. 9.16. Entire Agreement. The Loan Documents embody the entire
agreement between Borrower and Bank with respect to the Loans, and there
are no oral or parol agreements existing between Bank and Borrower with
respect to the Loans which are not expressly set forth in the Loan
Documents.
[SIGNATURES ON FOLLOWING PAGE]
SIGNATURE PAGE
IN WITNESS WHEREOF, the Borrower and Guarantor have caused this Agreement to be
duly executed all as of the date first above written.
Borrower is a Corporation:
PlanGraphics, Inc.
----------------------------------
Name of Corporation
- ---------
Attest: /s/ J. Gary Reed By: /s/ John C. Antenucci
------------------------------ -------------------------------
John C. Antenucci
Title: Sr. Vice President/COO Title: President
------------------------------- ----------------------------
By:
------------------------------
(Corporate Seal)
Title:
---------------------------
Additional Co-makers or Guarantors:
WITNESS:
/s/ Gary W. Murphy /s/ John C. Antenucci (SEAL)
- -------------------------------- ------------------------------------
John C. Antenucci
/s/ Gary W. Murphy /s/ Robin L. Antenucci (SEAL)
- -------------------------------- ------------------------------------
Robin L. Antenucci
(SEAL)
- -------------------------------- ------------------------------------
(SEAL)
- -------------------------------- ------------------------------------
BRANCH BANKING AND TRUST COMPANY
Attest: /s/ Jack Welborn By: /s/ George Kapusta
----------------------------------- ----------------------------
George Kapusta
(Corporate Seal) Title: Senior Vice President
-------------------------
BB&T
SCHEDULE "DD" TO BB&T LOAN AGREEMENT
This Schedule "DD" is an attachment to and a part of the Loan Agreement (the
"Loan Agreement") dated May 31, 2001, between Branch Banking and Trust Company
("Bank") and PlanGraphics, Inc. ("Borrower").
DD.01. Definitions.
-----------
In addition to the words and terms defined elsewhere in this Schedule DD, the
Loan Agreement and the Uniform Commercial Code of Kentucky, the following terms
shall have the following specified meanings:
(a) Account Debtor.
--------------
Any Person to whom goods and/or services have been sold by Borrower and are
obligated on an Account.
(b) Accounts.
-------------
Any account, receivable, contract right, note, draft, instrument,
acceptance, chattel paper, lease or other writing or open account which
evidence a right to receive payment of any sums due or to become due
resulting from the sale of merchandise, and/or the performance of services
rendered, or loans made.
(c) Advance Rate.
-----------------
The percentage of the total value of Eligible Accounts the Bank will lend
to Borrower and/or the percentage of the total value of Eligible Inventory
the Bank will lend to Borrower, as set forth in Section DD.02.
(d) Bill and Hold.
------------------
Those Accounts generated by the sale of goods, for which an invoice has
been issued to the buyer, but the goods represented by Accounts remain on
the premises of the Borrower.
(e) Asset-Based Sweep Agreement Service Agreement.
--------------------------------------------------
That agreement between the Bank and the Borrower whereby the Borrower
agrees that all remittances in payment of Accounts mailed to and received
at the Bank lockbox will be applied directly to the outstanding line of
credit, as well as other provisions. This agreement is to be read in
conjunction with, and is a part of, the Cash Management Services Agreement,
the Loan Agreement, and this Schedule DD.
(f) Collateral Loan Value.
---------------------
The aggregate value of the Advance Rate of the Eligible Accounts and/or the
Eligible Inventory.
(g) Contra Accounts.
--------------------
Those Accounts subject to offset by any Account Debtor of the Borrower.
(h) Eligible Account and/or Eligible Inventory.
-----------------------------------------------
Those Accounts which are not Ineligible Accounts, as defined in Section
DD.03 hereof and/or Inventory which is not Ineligible Inventory, as defined
in Section DD.04 hereof.
(i) Fees.
---------
Those fees which the Borrower will pay to Bank for the use of Bank's
Asset-Based Lending Service, whether or not actual loan obligations exist,
and separate and apart from any other fee which the Bank may charge
Borrower, while the Loan Agreement is in force and in effect.
(j) Foreign Accounts.
----------------
Any Accounts due from any Person located outside the United States or
Canada.
(k) Inter-company Accounts.
---------------------------
Any Accounts representing monies due for goods sold and/or services
rendered, from any Person which owns any stock or other interest in
Borrower, who are employees and/or officers of the Borrower, or which is an
affiliate of the Borrower.
(1) Ineligible Accounts and/or Ineligible Inventory.
-----------------------------------------------
Shall have the meanings given in Sections DD.03 and DD.04 hereof.
(m) Inventory.
--------------
Goods which are held by Borrower for sale or lease, or to be furnished
under contract(s) of service. Such inventory shall include finished goods,
work-in-process, and raw materials to be used and/or consumed in a
business.
(n) Inventory Cap.
-------------
The maximum loan amount that may be supported by the Eligible Inventory
collateral loan value, as set forth in
Section DD.02.(b).
(o) Loan Base Report.
---------------------
That report on the Bank's standard form, or in a form acceptable to the
Bank, to be prepared by the Borrower in accordance with the Bank's
instructions, and submitted to the Bank by the Borrower at specified
intervals and/or occasions, and detailing pertinent information as regards
the Accounts and/or Inventory, including the Total Available Loan Base.
(p) On-Site Asset-Based Lending Collateral Reviews/Examinations.
----------------------------------------------------------------
Those examinations of the Borrower's books and/or records, including the
inspection of Inventory, pertaining to the quality and quantity of
Borrower's Accounts and/or Inventory, including standard testing of those
books and records, by Bank's representatives, at any time during normal
business hours of the Borrower, on the premises of the Borrower, with or
without prior notice by Bank to Borrower.
(q) Person.
-----------
Any individual, corporation, general or limited partnership, limited
liability company or partnership, trust, unincorporated organization,
association, joint venture, or a government agency or political subdivision
thereof.
(r) Cross Aging Rule.
---------------------
Any Accounts due Borrower from an Account Debtor which also has n/a% or
more of the total aggregate Accounts aged at n/a days or more from the
original n/a date shall render Accounts from such Account from Account
Debtor ineligible.
DD.02. Advance Rates/Advances.
- ------------------------------
The Advance Rates to be used to calculate the collateral loan value shall be:
(a) Accounts. The Advance Rate shall be 70% of the Eligible Accounts.
(b) Inventory. The Advance Rate shall be 0% of the Eligible Inventory.
Inventory values will not exceed the lower of cost or market and, if
applicable, will be reduced by the LIFO reserve. The total loan advance
against Eligible Inventory shall not exceed $n/a.
(c) Advances. (check one)
|X| In all events, request(s) for Advances shall be in writing, or if initially
oral, shall be confirmed in writing, and Borrower shall deliver, along with such
request, a Loan Base Report. Borrower shall submit a completed Loan Base Report
to Bank at least once per month and per advance request so long as any
obligations are outstanding under the Loan Agreement.
|_| Bank agrees to make Advances under the Line of Credit automatically, without
any request by Borrower, upon the presentment of items drawn against the
Borrower's Checking account, provided the Borrowing Base is sufficient to cover
such Advances. Borrower shall submit a completed Loan Base Report to Bank at
least once per week so long as any obligations to Bank are outstanding. It is
further provided that Borrower releases the Bank from any liability or
obligation for and agrees to indemnify and hold the Bank harmless from and
against any loss, cost, damage or expense (including the Bank's reasonable
attorneys' fees) incurred or suffered as a result of the payment by the Bank of
any item drawn against the Borrower's checking account that is subsequently
determined to have been improperly paid for any reason, except for the gross
negligence or willful misconduct of the Bank. Bank also reserves the right, in
its sole discretion, to discontinue the automatic payment of items presented to
the Bank, and to require written or oral advance requests to be made by the
Borrower.
DD.03. Ineligible Accounts.
-------------------
Ineligible Accounts shall include the following:
(a) Accounts aged more than 60 days from the original invoice date.
New York City invoices accepted up to 90 day
(b) Those Accounts which are Contra Accounts.
(c) Those Accounts subject to the Cross Age Rule.
(d) Inter-company Accounts.
(e) Foreign Accounts.
(f) Accounts representing Bill and Hold arrangements.
(g) Any Accounts due from any branch or agency of the Federal Government
for which the proper Assignment of Claims form and Notice of Assignment
form have not been fully executed.
(h) Any Accounts due from any government agency which, by contract from
agency, precludes and/or prohibits the assignment of those Accounts to
a third party.
(i) Any Accounts which, at the discretion of the Bank, are deemed doubtful
for collection for any reason to include, but not be limited to,
disputes, returns, and legal proceedings, whether in process or
pending.
DD.04. Ineligible Inventory.
--------------------
Ineligible Inventory shall include the following:
(a) Goods not legally owned by the Borrower, to include, but not be limited
to goods on consignment from any supplier, vendor, and/or
individual(s), goods on demonstration and/or for trial.
(b) Goods not in new and/or salable condition to include, but not limited
to damaged goods, goods used by Borrower and/or potential buyers, goods
with missing components/parts and not in a whole condition.
(c) Goods which have been held by the Borrower for sale or lease more than
n/a months without being sold and/or leased.
(d) Goods representing work-in-process.
(e) Goods deemed by the Bank, at its discretion, to cause and/or represent
unusual danger to the health and/or safety of individual(s) and/or the
environment.
(f) Any goods held for sale and/or lease which violate any laws of the
city, county, or state where the goods are stored, or any federal law
in effect.
(g) Goods of which the Borrower is the legal owner but which are being
stored and/or housed at a location other than the place of business of
the Borrower.
(h) Any goods deemed otherwise ineligible by Bank at its discretion.
DD.05. Collections of Accounts and Disbursement of Collections.
-------------------------------------------------------
(Check if applicable)
|_| (a) Borrower shall notify, or cause to be notified, all Account Debtors to
forward all remittances to __________, in accordance with the
Wholesale/Retail Lockbox Agreement by and between the Bank and Borrower.
|_| (b) Borrower agrees that all collections shall, in accordance with the
Asset-Based Sweep Service Agreement, be applied directly to the then
outstanding principal balance on the loan.
DD.06. Reporting. (Check if applicable)
---------
Borrower shall forward the following reports to Bank at 9658 Baltimore
Ave., Suite 207, College Park, MD 20740 on the 10th day of each month, or
the next business day following.
|X| (a) Loan Base Report.
|X| (b) Accounts and Aging Report.
|_| (c) Inventory Report showing description of goods, quantities,
and values.
|_| (d) Accounts Payable Aging Report.
|_| (e) Balance sheet of Borrower.
|_| (f) Borrower shall forward to Bank any of these reports at such other
times as Bank may them and/or any other report(s) deemed necessary
by the Bank in its discretion to properly monitor and manage
collateral pledged for the loan.
DD.07. Fees.
----
(a) Borrower shall pay to the Bank the sum of $n/a per beginning on as a
fee for the use of Bank's Asset-Based Lending Service. (b) Borrower shall
pay to Bank as reimbursement for expense(s) incurred in the proper
monitoring and management of the Accounts and Inventory by the Bank any
unusual expense(s) such as, but not limited to, travel expense(s),
specialized equipment needed to count and/or value goods pledged as
collateral to Bank, the use of outside firms to perform On-Site Asset-Based
Lending Collateral Reviews/Examinations as deemed necessary by Bank to
properly manage/monitor collateral, with said reimbursement being
represented by receipts and/or listing of expense(s) submitted to the
Borrower by Bank along with the Bank's invoice for payment/reimbursement.
This agreement is made and entered into for the sole protection and benefit of
Bank and Borrower, their successors and assigns, and no third person or persons
shall have any right(s) to action hereon.
IN WITNESS WHEREOF, Borrower and Bank have executed this Schedule "DD" as of
this date and have adopted as their respective seal the "seal" appearing beside
or near their signatures below.
Borrower is a Corporation:
PlanGraphics, Inc.
--------------------------------------
Name of Corporation
Attest: /s/ J. Gary Reed By: /s/ John C. Antenucci
--------------------------- -----------------------------------
John C. Antenucci
Title: Senior VP/ COO Title: President
By:
----------------------------------
(Corporate Seal) Enter Name
Title:
-------------------------------
Additional Co-makers or Guarantors:
WITNESS:
/s/ Gary W. Murphy /s/ John C. Antenucci (SEAL)
- ----------------------------------- -----------------------------------
John C. Antenucci
/s/ Gary W. Murphy /s/ Robin L. Antenucci (SEAL)
- ----------------------------------- -----------------------------------
Robin L. Antenucci
(SEAL)
- ----------------------------------- -----------------------------------
Enter Name
(SEAL)
- ------------------------------------ ------------------------------------
Enter Name
BRANCH BANKING AND TRUST COMPANY
Attest: /s/ Jack Welborn By: /s/ George Kapusta
---------------------------- ------------------------------
George Kapusta
(Corporate Seal) Title: Senior Vice President
Exhibit 10.17
COLLEGE PARK, MD.
MAY 31, 2001
BB&T
SECURITY AGREEMENT
In order to secure (i) the payment of a promissory note or notes
(collectively the "Note") dated as of MAY 31, 2001 and executed and delivered by
PLANGRAPHICS, INC. (the "Borrower(s)"), to the Bank in the aggregate principal
sum of $500,000.00 payable as provided therein (the Note and any loan agreement
or other agreement executed in connection with the loan secured hereby are
incorporated herein by reference); (ii) all other obligations and liabilities
(whether direct or indirect, absolute or contingent, primary or secondary, sole
or joint and several) now existing or hereafter arising of the Borrower to the
Bank; and (iii) performance by the Borrower or the Debtor (as hereinafter
defined) of the agreements hereinafter set forth or contained in any loan
agreement or other agreement entered into in connection with the loan (all
obligations secured hereby are referred to as the "Secured Obligations"), the
Borrower, or if the Collateral (as hereinafter defined) is not owned by the
Borrower,
- --------------------------------------------------------------------------------
(such owner of the Collateral being hereinafter referred to as the "Debtor"),
hereby grants to BRANCH BANKING AND TRUST COMPANY (the "Bank") a security
interest in the following property including any and all additions, replacements
and substitutions of all or any part thereof (and other items of property of the
same class) whether now owned or hereafter acquired or arising and all proceeds
thereof (including insurance proceeds) (all collectively called the
"Collateral").
Collateral will be located at addresses listed below until such times
as written consent to a change of location is obtained from the Bank. If the
Collateral is or includes vehicles or goods that are mobile and ordinarily used
in more than one location, such vehicles or goods will be kept at the address
set forth below except for temporary and ordinary use in other locations. If the
Collateral is or includes Accounts, all records concerning such Accounts are
located at the address set forth below.
|_| All Equipment, including but not limited to the following:
|_| Equipment, more specifically described as follows:
(Unless otherwise specified above, the term "Equipment" shall have the
definition given it in the Maryland Uniform Commercial Code (Annotated Code of
Maryland, Commercial Law Article ss.9-109) and shall include all accessions,
parts, attachments, tools, operating manuals, and all replacements therefor.)
|_| Vehicles described below:
New/Used Year/Make Model/Body Type Serial Number If Truck - Ton & Class
If Mobile Home - #2 S/N
============ ========== ================ ============== ========================
1.
- ------------ ---------- ---------------- -------------- ------------------------
- ------------ ---------- ---------------- -------------- ------------------------
2.
- ------------ ---------- ---------------- -------------- ------------------------
- ------------ ---------- ---------------- -------------- ------------------------
3.
- ------------ ---------- ---------------- -------------- ------------------------
- ------------ ---------- ---------------- -------------- ------------------------
4.
- ------------ ---------- ---------------- -------------- ------------------------
- ------------ ---------- ---------------- -------------- ------------------------
5.
- ------------ ---------- ---------------- -------------- ------------------------
|_| Farm Products described below (describe all crops, livestock and supplies
that are used or produced in the farming operation and that are to serve as
security):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
including products of the described crops or livestock in their unmanufactured
states in the Debtor's possession and any offspring of the described livestock.
(Unless otherwise specified above, "Farm Products" shall have the definition
given it in the Maryland Uniform Commercial Code (Annotated Code of Maryland,
Commercial Law Article ss.9-109).)
|X| All Accounts, including but not limited to the following:
|_| Accounts, more specifically described below:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(The term "Accounts" shall have the definition given it in the Maryland Uniform
Commercial Code (Annotated Code of Maryland, Commercial Law Article ss.9-106),
no matter how evidenced, including accounts receivable, contract rights, checks,
notes, drafts, acceptances, and other forms of obligations and receivables.)
|_| All Inventory, including but not limited to the following:
|_| Inventory, more specifically described below:
(Unless otherwise specified above, "Inventory" shall have the definition given
it in the Maryland Uniform Commercial Code (Annotated Code of Maryland,
Commercial Law Article ss.9-109).)
|_| All Goods, including all furniture and fixtures, including but not limited
to the following:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
|_| Goods, including furniture and fixtures, more specifically described as
follows:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Unless otherwise specified above, "Goods" shall have the definitions given them
in the Maryland Uniform Commercial Code (Annotated Code of Maryland, Commercial
Law Article ss.9-105).)
|X| All Documents, Instruments, Chattel Paper, and General Intangibles,
including but not limited to the following:
|_| Documents, Instruments, Chattel Paper, and General intangibles, more
specifically described as follows:
All documents, instruments, Chattel paper and general intangibles now owned and
hereafter acquired.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Unless otherwise specified above, "Documents," "Instruments," `Chattel Paper,"
and "General Intangibles" shall have the definitions given them in the Maryland
Uniform Commercial Code (Titles 1 through 10 of the Commercial Law Article of
the Annotated Code of Maryland).)
Debtor warrants and agrees that:
1. Use of Collateral. The Collateral is and will be used for
|_| personal |X| business |_| farming purposes
If checked here |_| the Collateral is being acquired with the proceeds of the
advance as evidenced by this agreement and the Note, which proceeds the Bank may
disburse directly to the seller of Collateral as shown on the Bank's records. If
acquired with such advance the Collateral was delivered to the Debtor on or
before
2. Debtor's Residence or place of business. Debtor's residence
(or place of business if Debtor is an organization) is
PLANGRAPHICS, INC. - 112 EAST MAIN STREET, FRANKFORT, KY 40601
(if the Debtor is an organization and has more than one place of business, use
the chief executive office.) The Debtor will immediately notify the Bank in
writing of any change in the Debtor's residence (or place of business).
Exhibit 10.18
Borrower: PLANGRAPHICS INC
------------------------------------------------------------------
Account Number: 955-0276302 Note Number: 00001
------------- -----------------------
Address: 112 E MAIN ST College Park, Maryland
-------------------- -----------------------
FRANKFORT, KY 40601 Date: MAY 31, 2001
-------------------- -----------------
BB&T
PROMISSORY NOTE
THE UNDERSIGNED REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR
(select one) |X| BUSINESS/COMMERCIAL OR |_| AGRICULTURAL PURPOSES. For value
received, the undersigned, jointly and severally if more than one, promises to
pay to BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation
(the "Bank"), or order, at any of Bank's offices in the above referenced city
(or such other place or places that may be hereafter designated by Bank), the
principal amount of FIVE HUNDRED THOUSAND DOLLARS & 00/100 Dollars ($500,000.00)
plus accrued interest thereon, in immediately available coin or currency of the
United States of America. Interest shall accrue from the date hereof on the
unpaid principal balance outstanding from time to time at the:
|_| Fixed rate of ____________% per annum.
|X| Variable rate of the Bank's Prime Rate plus 2.00 % per annum to be adjusted
Daily as the Bank's Prime Rate changes. If checked here |_|, the interest rate
will not exceed a(n) |_| fixed |_| average maximum rate of ____% or a |_|
floating maximum rate of the greater of _______% or the Bank's Prime Rate; and
the interest rate will not decrease below-a fixed minimum rate of _______%. If
an average maximum rate is specified, a determination of any required
reimbursement of interest by Bank will be made: |_| when Note is repaid in full
by Borrower |_| annually beginning on ___________________________.
|_| Fixed rate of ______% per annum through _______________ which automatically
converts on ___________________ to a variable rate equal to the Bank's Prime
Rate plus _____% per annum which shall be adjusted _______________ as such Prime
Rate changes.
|_|
---------------------------------------------------------------------------
Principal and interest are payable as follows
|X| Principal plus any accrued interest not otherwise scheduled herein
} is due in full at maturity on } |_| Principal plus accrued interest }
FEBRUARY 2, 2002.
|_| Payable in consecutive ___ installments of |_| Principal}
} commencing on ___
|_| Principal and
Interest }
and continued on the same day of each calendar period thereafter, in ______
equal payments of $________, with one final payment of all remaining principal
and accrued interest due on ______________________.
|_| Business ChoiceLine Payment Option: 2% of outstanding balance is payable
monthly commencing on _____________________ and continuing on the same day of
each calendar period thereafter, with one final payment of all remaining
principal and accrued interest due on _______________________.
|X| Accrued interest is payable Monthly commencing on JULY 2, 2002 and
------- ------------
continuing on the same day of each calendar period thereafter, with one final
payment of all remaining interest due on FEBRUARY 2, 2002.
|_| Bank reserves the right in its sole discretion to adjust the fixed payment
due hereunder ___________________ on ______________ and continuing on the same
day of each calendar period thereafter, in order to maintain an amortization
period of no more than ________ months from the date of this Note. Borrower
understands the payment may increase if interest rates increase.
|X| Prior to an event of default, Borrower may borrow, repay, and reborrow
hereunder pursuant to the terms of the Loan Agreement, hereinafter defined.
|_|
---------------------------------------------------------------------------
In addition, the undersigned promises to pay to Bank, or order, a late
fee in the amount of five percent (5%) of any installment past due for fifteen
(15) or more days. When any installment payment is past due for fifteen (15) or
more days, subsequent payments shall first be applied to the past due balance.
All interest shall be computed and charged for the actual number of days elapsed
on the basis of a year consisting of three hundred sixty (360) days. In the
event periodic accruals of interest shall exceed any periodic fixed payment
amount described above, the fixed payment amount shall be immediately increased,
or additional supplemental interest payments required on the same periodic basis
as specified above (increased fixed payments or supplemental payments to be
determined in the Bank's sole discretion), in such amounts and at such times as
shall be necessary to pay all accruals of interest for the period and all
accruals of unpaid interest from previous periods. Such adjustments to the fixed
payment amount or supplemental payments shall remain in effect for so long as
the interest accruals shall exceed the original fixed payment amount and shall
be further adjusted upward or downward to reflect changes in the variable
interest rate; provided that unless elected otherwise above, the fixed payment
amount shall not be reduced below the original fixed payment amount. However,
Bank shall have the right, in its sole discretion, to lower the fixed payment
amount below the original payment amount.
This Promissory Note ("NOTE") is given by the undersigned pursuant to
and/or in connection with the following agreements and instruments: (if any)
Deed(s) of Trust / S.C. Mortgage(s) granted in favor of Bank as beneficiary /
mortgagee:
|_| dated ______________ in the maximum principal amount of $
-------------
granted by
-----------------------------------------------------------
|_| dated ______________ in the maximum principal amount of $
------------
granted by
-----------------------------------------------------------
Security Agreement(s) granting a security interest to Bank:
|X| dated MAY 31, 2001 granted by PLANGRAPHICS INC
------------- --------------------------------
|_| dated granted by
------------- --------------------------------
|_| Loan Agreement dated _____________________ executed by |_| |_| All of the
terms, conditions and covenants of the above described instruments and
agreements and instruments (the "Agreements") are expressly made a part of this
Note by reference in the same manner and with the same effect as if set forth
herein at length and any holder of this Note is entitled to the benefits of and
remedies provided in the Agreements and any other agreements by and between the
undersigned and the Bank.
In addition to collateral pledged pursuant to the terms of the
Agreements (if any) described above, the undersigned, as collateral security for
the indebtedness evidenced by this Note, hereby grants the Bank a security
interest and lien in and to all deposit accounts, certificates of deposit,
securities and stocks now or hereafter in Bank's possession or on deposit with
the Bank including but not limited to the following pledged to Bank: BB&T
Savings Account(s)/Instruments(s), including all renewals, amendments, and
proceeds thereof (if applicable):
|X| #__________ in the amount of $325,000.00 in the name(s) of PLANGRAPHICS INC
---------- ----------------
|_| #__________ in the amount of $___________ in the name(s) of
-------------
|_|
---------------------------------------------------------------------------
If any stock or securities are pledged to Bank herein, the pledge and
security interest includes all cash dividends, stock dividends and splits,
reissued shares, substituted shares, and all proceeds thereof, which the
undersigned promises to deliver to Bank.
No delay or omission on the part of the Note holder in exercising any
right hereunder shall operate as a waiver of such right or of any other right of
the Note holder, nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of the same or of any other right on any future
occasion. Each of the undersigned and every endorser or guarantor of this Note
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any one or more extensions or
postponements of the time of payment or any other indulgences, to any
substitutions, exchanges or releases of collateral if at any time there be
available to the Note holder collateral for this Note, and to the additions or
releases of any other parties or persons primarily or secondarily liable
herefor.
The failure to pay any part of the principal or interest when due on
this Note or to fully perform any covenant, obligation or warranty on this or on
any other liability to the Bank by any one or more of the undersigned, by any
affiliate of the undersigned (as defined in 11 USC Section (101) (2)), or by any
guarantor or surety of this Note (such affiliate, guarantor, and surety each
herein called Obligor), or if any financial statement or other representation
made to the Bank by any of the undersigned or any Obligor shall be found to be
materially incorrect or incomplete, or in the event of default under any of the
Agreements or any other obligation of any of the undersigned or any Obligor in
favor of the Bank, or in the event the Bank demands that the undersigned secure
or provide additional security for its obligations under this Note and security
deemed adequate and sufficient by the Bank is not given when demanded, or in the
event one or more of the undersigned or any Obligor shall die, terminate its
existence, allow the appointment of a receiver for any part of its property,
make an assignment for the benefit of creditors, or where a proceeding under
bankruptcy or insolvency laws is initiated by or against any of the undersigned
or any Obligor, or in the event the Bank should otherwise in good faith deem
itself, its security interest, or any collateral unsafe or insecure; or should
the Bank in good faith believe that the prospect of payment or other performance
is impaired, or if there is an attachment, execution, or other judicial seizure
of all or any portion of the Borrower's or any Obligor's assets, including an
action or proceeding to seize any funds on deposit with the Bank, and such
seizure is not discharged within 20 days, or if final judgment for the payment
of money shall be rendered against the Borrower or any Obligor which is not
covered by insurance and shall remain undischarged for a period of 30 days
unless such judgment or execution thereon is effectively stayed, or the
termination of any guaranty agreement given in connection with this Note, then
any one of the same shall be a material default hereunder, and this Note and
other debts due the Bank by any one or more of undersigned shall immediately
become due and payable without notice, at the option of the Bank. From and after
any event of default hereunder, interest shall accrue on the sum of the
principal balance and accrued interest then outstanding at the variable rate
equal to the Bank's Prime Rate plus 5% per annum ("Default Rate"), provided that
such rate shall not exceed at any time the highest rate of interest permitted by
the laws of the State of Maryland; and further provided that such rate shall
apply after judgement. In the event of any default, the then remaining unpaid
principal amount and accrued but unpaid interest then outstanding shall bear
interest at the Default Rate called for hereunder until such principal and
interest have been paid in full. In addition, upon default, the Bank may pursue
its full legal remedies at law or equity, and the balance due hereunder may be
charged against any obligation of the Bank to any party including any Obligor.
Bank shall not be obligated to accept any check, money order, or other payment
instrument marked "payment in full" on any disputed amount due hereunder, and
Bank expressly reserves the right to reject all such payment instruments.
Borrower agrees that tender of its check or other payment instrument so marked
will not satisfy or discharge its obligation under this Note, disputed or
otherwise, even if such check or payment instrument is inadvertently processed
by Bank unless in fact such payment is in fact sufficient to pay the amount due
hereunder. If this Note is placed with an attorney for collection, the
undersigned agrees to pay, in addition to principal and interest, all costs of
collection, including but not limited to reasonable attorneys' fees.
The following paragraph does not apply if the Agricultural purpose
block was checked on Page 1 : Upon the occurrence of any default hereunder, the
Borrower authorizes any attorney admitted to practice before any court of record
in the United States to appear on behalf of the Borrower in any court having
jurisdiction in one or more proceedings, or before any clerk thereof or
prothonotary or other court official, and to CONFESS JUDGMENT AGAINST THE
BORROWER, WITHOUT PRIOR NOTICE OR OPPORTUNITY OF THE BORROWER FOR PRIOR HEARING,
in favor of the Bank for the full amount due on this Note (including the
outstanding Principal, accrued interest and any and all other costs, fees,
expenses and late charges) plus court costs and attorney's fees of 15% of the
total amount then due hereunder. The Borrower waives the benefit of any and
every statute, ordinance or rule of court which may be lawfully waived
conferring upon the Borrower any right or privilege of exemption, homestead
rights, appeal, stay of execution or supplementary proceedings, inquisition,
extension upon any levy on real estate or personal property, and any other
relief from the enforcement or immediate enforcement of a judgment or related
proceedings on a judgment. The authority and power to appear for and enter
judgment against the Borrower shall not be exhausted by one or more exercises
thereof, or by any imperfect exercise thereof, and shall not be extinguished by
any judgment entered pursuant thereto; such authority and power may be exercised
on one or more occasions, from time to time, in the same or different
jurisdictions as often as the Bank shall deem necessary or advisable, for all of
which this Note shall be sufficient authority.
THE BORROWER HEREBY (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (ii) WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO WHICH THE BANK AND THE BORROWER MAY BE PARTIES
ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS NOTE, ANY OF
THE AGREEMENTS AND/OR ANY TRANSACTIONS, OCCURRENCES, COMMUNICATIONS, OR
UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO THE
DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE PARTIES. THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS, WHETHER INITIATED BY THE BORROWER AGAINST
THE BANK OR INITIATED BY THE BANK AGAINST THE BORROWER. THIS WAIVER OF JURY
TRIAL IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
BORROWER AND THE BORROWER HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR
OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE BANK IS HEREBY AUTHORIZED TO
SUBMIT THIS NOTE TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND
THE BORROWER SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF RIGHT TO
TRIAL BY JURY. THE BORROWER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED
IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND/OR THAT IT HAS HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
The term "Prime Rate," if used herein, means the rate of interest per
annum announced by the Bank from time to time and adopted as its Prime Rate,
which is one of several rate indexes employed by the Bank when extending credit.
Any change in the interest rate resulting from a change in the Bank's Prime Rate
shall become effective as of the opening of business on the effective date of
the change. All obligations of the undersigned and of any Obligor shall bind his
heirs, executors, administrators, successors, and assigns. Use of the masculine
pronoun herein shall include the feminine and the neuter, and also the plural.
If more than one party shall execute this Note, the term "undersigned" as used
herein shall mean all the parties signing this Note and each of them, and all
such parties shall be jointly and severally obligated hereunder. Wherever
possible, each provision of this Note shall be interpreted in such a manner to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under such law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Note. The proceeds of the loan evidenced by this Note may be paid to any one or
more of the undersigned. From time to time the maturity date of this Note may be
extended, or this Note may be renewed in whole or in part, or a new note of
different form any be substituted for this Note, or the rate of interest may be
modified, or changes may be made in consideration of loan extensions, and the
Note holder, from time to time may waive or surrender, either in whole or in
part any rights, guaranties, secured interest, or liens, given for the benefit
of the Note holder in connection with the payment and the securing the payment
of this Note; but no such occurrence shall in any manner affect, limit, modify,
or otherwise impair any rights, guaranties or security of the Note holder not
specifically waived, released, or surrendered in writing, nor shall the
undersigned Borrower makers, or any obligor either primarily or contingently, be
released from such event. The Note holder, from time to time, shall have the
unlimited right to release any person who might be liable hereon, and such
release shall not affect or discharge the liability of any other person who is
or might be liable hereon. No waivers and modifications shall be valid unless in
writing and signed by the Bank. The Bank may, at its option, charge any fees for
the modification, renewal, extension, or amendment of any of the terms of the
Note permitted by applicable laws. In case of a conflict between the terms of
this Note and the Loan Agreement or Commitment Letter issued in connection
herewith, the priority of controlling terms shall be first this Note, then the
Loan Agreement, and then the Commitment Letter if the Commitment Letter survives
closing. This Note shall be governed by and construed in accordance with the
laws of Maryland.
CREDIT LIFE AND DISABILITY INSURANCE
Subject to certain underwriting criteria and limitations, INDIVIDUAL BORROWERS
AND ADDITIONAL CO-MAKERS HAVE THE RIGHT TO REQUEST CREDIT LIFE AND DISABILITY
INSURANCE PROTECTION FOR THIS LOAN. One or two Borrowers/Co-makers may be
covered by BB&T Credit Life Insurance and one Borrower/Co-maker may be covered
by BB&T Credit Disability Insurance. However, the purchase of credit life and
credit disability insurance from the Bank is not a condition of obtaining this
loan.
I, the undersigned, desire the credit insurance with the cost and terms
described below and promise to pay the premium of such insurance
coverage. I understand that I may cancel this credit insurance at any
time.
|_|Product I : Complete the following:
|_|Fidelity Security Insurance Company Flex Plan (Complete separate application)
CREDIT LIFE INSURANCE Effective Date Term in Mos. Initial Ins. Amount Credit Life Premium
|_| Single |_| Level
|_| Joint |_| Decreasing $ 500,000-00 $
------------ ----------- ----------- ----------------
CREDIT DISABILITY INSURANCE Monthly Benefit Amount Credit Disability Premium
Effective Date and Terms in Mos.
Same as Credit Life Insurance Above $ $
------------------------ ------------------------
Credit Disability Insurance is subject to a 14-day elimination period and a
60-month maximum benefit period. Only the Borrower or Co-Maker who signs the
first line under "Signature(s) of Borrower" is covered by Credit Disability
Insurance.
Signature(s) of Borrowers Total Credit Life and Disability
Insurance Premium
----------------------------------
Signature of Primary Borrower
$
---------------------------------- ---------------------------
Signature of Secondary Borrower
(SIGNATURES ON FOLLOWING PAGE)
BB&T
PROMISSORY NOTE SIGNATURE PAGE
Borrower: PLANGRAPHICS, INC.
--------------------------------------------------------------------
Account Number: 955-0276302 Note Number: 00001
----------------------- -----------
Note Amount: 500,000.00 Date: MAY 31, 2001
-------------------------- -----------------
Notice of Right to Copy of Appraisal: If a 1-4 family residential dwelling is
pledged as collateral for this Note, you, the undersigned, have a right to a
copy of the real estate appraisal report used in connection with your
application for credit. If you wish to receive a copy, please notify the Bank in
writing at the branch office where you applied for credit. You must mail or
deliver your request to the Bank no later than 90 days after the date of this
Note. In your request letter, please provide your name, mailing address,
appraised property address, the date of this Note, and the Account and Note
Numbers shown on the front of this Note.
Sharing of Information with Affiliates. Applicable law permits Bank to share
information with third parties about its credit and account history with you.
Applicable law also permits Bank to share additional information about you and
your accounts with companies related to BB&T by common ownership or control
("Affiliates"). We provide this additional information to our Affiliates so that
you may receive special offers and promotions from our Affiliates. You may
request that Bank not furnish this additional information (other than credit and
account history) to our Affiliates by writing to Branch Banking and Trust
Company, Client Services Administration, P.O. Box 1847, Wilson, North Carolina
27894-1847. Please include your name, address, telephone number, account number
(if known), and social security (tax identification) number. Due to marketing
programs already in progress, please allow a reasonable period of time for your
request to take effect. In order for us to communicate important loan or deposit
account information, we will continue to notify you through occasional statement
inserts or other customer service mailings. Please be aware that state and
federal laws impose certain mandatory disclosures of customer information by
financial institutions. We must comply with laws that require mandatory
production or disclosure.
IN WITNESS WHEREOF, the undersigned, on the day and year first written above,
has caused this note to be executed under seal.
If Borrower is a Corporation:
ATTEST: /s/ Gary W. Murphy PLANGRAPHICS, INC.
-------------------------------------- ----------------------------
NAME OF CORPORATION
Title: CFO/Treasurer PlanGraphics, Inc. By: /s/ John C. Antenucci
-------------------------------------- ------------------------
John C. Antenucci
Title: PRESIDENT
----------------------
By:
-------------------------
Title:
----------------------
[Corporation Seal ]
(Affix seal or insert name of corporation
in seal to adopt as seal of Borrower)
If Borrower is a Partnership, Limited Liability Company, or
Limited Liability Partnership:
WITNESS: NAME OF PARTNERSHIP, LLC, OR LLP
By: (SEAL)
----------------------------- ------------------------------
General Partner or Manager
By: (SEAL)
----------------------------- ------------------------------
General Partner or Manager
By: (SEAL)
----------------------------- ------------------------------
General Partner or Manager
If Borrower is an Individual
WITNESS:
----------------------------- ----------------------------------
Additional Co-makers
WITNESS:
----------------------------- ----------------------------------
(SEAL)
----------------------------- ----------------------------------
(SEAL)
----------------------------- ----------------------------------
(SEAL)
----------------------------- ----------------------------------
Exhibit 10.19
BB&T
GUARANTY AGREEMENT
BRANCH BANKING AND TRUST COMPANY MAY 31, 2001
------------
COLLEGE PARK
Dear Sirs:
As an inducement to Branch Banking and Trust Company ("Bank") to extend
credit to and to otherwise deal with PLANGRAPHICS INC ("Borrower"), and in
consideration thereof, the undersigned (and each of the undersigned jointly and
severally if more than one) hereby absolutely and unconditionally guarantees to
Bank and its successors and assigns the due and punctual payment of any and all
notes, drafts, debts, obligations and liabilities, primary or secondary (whether
by way of endorsement or otherwise), of Borrower, at any time, now or hereafter,
incurred with or held by Bank, together with interest, as and when the same
become due and payable, whether by acceleration or otherwise, in accordance with
the terms of any such notes, drafts, debts, obligations or liabilities or
agreements evidencing any such indebtedness, obligation or liability including
all renewals, extensions and modifications thereof. The obligation of the
undersigned is a guarantee of payment and not of collection.
The undersigned is Bank's debtor for all indebtedness, obligations and
liabilities for which this Guaranty is made, and Bank shall also at all times
have a lien on and security interest in all stocks, bonds and other securities
of the undersigned at any time in Bank's possession and the same shall at Bank's
option be held, administered and disposed of as collateral to any such
indebtedness, obligation or liability of the Borrower, and Bank shall also at
all times have the right of set-off against any deposit account of the
undersigned with Bank in the same manner and to the same extent that the right
of set-off may exist against the Borrower.
It is understood that any such notes, drafts, debts, obligations and
liabilities may be accepted or created by or with Bank at any time and from time
to time without notice to the undersigned, and the undersigned hereby expressly
waives presentment, demand, protest, and notice of dishonor of any such notes,
drafts, debts, obligations and liabilities or other evidences of any such
indebtedness, obligation or liability.
Bank may receive and accept from time to time any securities or other
property as a collateral to any such notes, drafts, debts, obligations and
liabilities, and may surrender, compromise, exchange and release absolutely the
same or any part thereof at any time without notice to the undersigned and
without in any manner affecting the obligation and liability of the undersigned
hereby created. The undersigned agrees that Bank shall have no obligation to
protect, perfect, secure or insure any security interests, liens or encumbrances
now or hereafter held for the indebtedness, obligations and liabilities for
which this Guaranty is made.
This obligation and liability on the part of the undersigned shall be a
primary, and not a secondary, obligation and liability, payable immediately upon
demand without recourse first having been had by Bank against the Borrower or
any other guarantor, person, firm or corporation, and without first resorting to
any property held by Bank as collateral security (provided that, notwithstanding
anything to the contrary provided herein, the undersigned shall have no
liability hereunder unless and until the Borrower shall have defaulted on any of
its obligations to Bank) and the undersigned hereby waives the benefits of all
provisions of law for stay or delay of execution or sale of property or other
satisfaction of judgment against the undersigned on account of obligation and
liability hereunder until judgment be obtained therefor against the Borrower and
execution thereon returned unsatisfied, or until it is shown that the Borrower
has no property available for the satisfaction of the indebtedness, obligation
or liability guaranteed hereby, or until any other proceedings can be had; and
the undersigned hereby agrees to indemnify the Bank for all costs of collection,
including but not limited to the costs of repossession, foreclosure, reasonable
attorneys' fees, and court costs incurred by the Bank in the event that the Bank
should first be required by the undersigned to resort to any property held by
the Bank or in which the Bank has a security interest or to obtain execution or
other satisfaction of a judgment against the Borrower on account of Borrower's
obligation and liability for its indebtedness guaranteed hereby; and the
undersigned further agrees that the undersigned is responsible for any
obligation or debt, or portion thereof, of the Borrower to the Bank which has
been paid by the Borrower to the Bank and which the Bank is subsequently
required to return to the Borrower or a trustee for the Borrower in any
bankruptcy or insolvency proceeding; and the undersigned further agrees that
none of the undersigned shall have any right of subrogation, reimbursement or
indemnity whatsoever, nor any right of recourse to security for the debts and
obligations of the Borrower to Bank unless and until all of the debts and
obligations of the Borrower to Bank have been paid in full. The undersigned
hereby waives, to the extent avoidable under any provision of the Bankruptcy
Code, any right arising upon payment by the undersigned of any obligation under
this Guaranty to assert a claim against the bankruptcy estate of the Borrower.
Check applicable box:
|X| This Guaranty is unlimited and applies to all indebtedness of Borrower,
whether now existing or hereafter arising.
|_| This Guaranty applies to all indebtedness of Borrower evidenced by its
promissory note numbers ________ dated _________________ (including all
extensions, renewals, and modifications thereof) in the aggregate principal
amount of $______________.
|_| This Guaranty is limited to an amount of $____________ plus accrued
interest, late fees, costs of collection (including attorneys' fees) and all
other obligations and indebtedness which may accrue or be incurred with respect
to the Borrower's indebtedness and obligations to Bank.
To secure the payment of all obligations of the undersigned hereunder,
the undersigned hereby grants a security interest and lien in the following
goods and property owned by the undersigned:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------- ("Collateral").
The undersigned hereby agrees to execute and deliver to Bank any security
agreement, deed of trust, mortgage, UCC financing statement, or other document
required by the Bank in order to protect its security interest or lien in the
Collateral. This document shall constitute a security agreement under the
Uniform Commercial Code of Maryland ("Code"), and in addition to having all
other legal rights and remedies, the Bank shall have all rights and remedies of
a secured party under the Code.
This agreement shall inure to the benefit of Bank, its successors and
assigns, and the owners and holders of any of the indebtedness, obligations and
liabilities hereby guaranteed, and shall remain in force until a written notice
revoking it has been received by Bank; but such revocation shall not release the
undersigned from liability to Bank, its successors and assigns, or the owners
and holders of any of the indebtedness, obligations and liabilities hereby
guaranteed, for any indebtedness, obligation or liability of the Borrower which
is hereby guaranteed and then in existence or from any renewals, extensions or
modifications thereof in whole or in part, whether such renewals, extensions or
modifications are made before or after such revocation, with or without notice
to the undersigned. The undersigned waives presentment, demand, protest and
notices of every kind and assents to any one or more extensions, modifications,
renewals or postponements of the time or amount of payment or any other
indulgences given to Borrower. The undersigned shall be responsible for and
shall reimburse the Bank for all costs and expenses (including reasonable
attorneys' fees) incurred by the Bank in connection with the enforcement of this
Guaranty or the protection or preservation of any right or claim of the Bank in
connection herewith, including without limitation costs and expenses incurred by
the Bank in connection with its attempts to collect the indebtedness,
obligations, and liabilities guaranteed hereby.
If the Borrower is a corporation, this instrument covers all
indebtedness, obligations and liabilities to Bank purporting to be made or
undertaken on behalf of such corporation by any such officer or agent of said
corporation without regard to the actual authority of such officer or agent. The
term "corporation" shall include associations of all kinds and all purported
corporations, whether correctly and legally chartered and organized.
The undersigned covenants, warrants, and represents to the Bank that:
(i) this guaranty is enforceable against the undersigned in accordance with its
terms; (ii) the execution and delivery of this Guaranty does not violate or
constitute a breach of any agreement to which the undersigned is a party; (iii)
that there is no litigation, claim, action or proceeding pending or, to the best
knowledge of the undersigned, threatened against the undersigned which would
materially adversely affect the financial condition of the undersigned or his
ability to fulfill his obligations hereunder; and (iv) that the undersigned has
knowledge of the Borrower's financial condition and affairs.
Upon the occurrence of any default by the Borrower on any of its
obligations to Bank, the undersigned authorizes any attorney admitted to
practice before any court of record in the United States to appear on behalf of
the undersigned in any court having jurisdiction in one or more proceedings, or
before any clerk thereof or prothonotary or other court official, and to CONFESS
JUDGMENT AGAINST THE UNDERSIGNED, WITHOUT PRIOR NOTICE OR OPPORTUNITY OF THE
UNDERSIGNED FOR PRIOR HEARING, in favor of Bank for the full amount due under
this Guaranty plus court costs and attorneys' fees of 15% of the total amount
then due hereunder. The undersigned waives the benefit of any and every statute,
ordinance or rule of court which may be lawfully waived conferring upon the
undersigned any right or privilege of exemption, homestead rights, appeal, stay
of execution or supplementary proceedings, inquisition, extension upon any levy
on real estate or personal property, and any other relief from the enforcement
or immediate enforcement of a judgment or related proceedings on a judgment. The
authority and power to appear for and enter judgment against the undersigned
shall not be exhausted by one or more exercises thereof, or by any imperfect
exercise thereof, and shall not be extinguished by any judgment entered pursuant
thereto; such authority and power may be exercised on one or more occasions,
from time to time, in the same or different jurisdictions, as often as Bank
shall deem necessary or advisable, for all of which this Guaranty shall be
sufficient authority.
THE UNDERSIGNED HEREBY (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (ii) WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO WHICH BANK AND THE UNDERSIGNED MAY BE PARTIES
ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS GUARANTY,
ANY OF THE AGREEMENTS AND/OR ANY TRANSACTIONS, OCCURRENCES, COMMUNICATIONS, OR
UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO THE
DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE PARTIES. THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS, WHETHER INITIATED BY THE UNDERSIGNED
AGAINST BANK OR INITIATED BY BANK AGAINST THE UNDERSIGNED. THIS WAIVER OF JURY
TRIAL IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
UNDERSIGNED AND THE UNDERSIGNED HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR
OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BANK IS HEREBY AUTHORIZED TO
SUBMIT THIS GUARANTY TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER
AND THE UNDERSIGNED SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF
RIGHT TO TRIAL BY JURY. THE UNDERSIGNED REPRESENTS AND WARRANTS THAT IT HAS BEEN
REPRESENTED IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND/OR THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
This Guaranty is made in and shall be construed in accordance with the laws and
judicial decisions of the State of Maryland. The undersigned agrees that any
dispute arising out of this Guaranty shall be adjudicated in either the state or
federal courts of Maryland and in no other forum. For that purpose, the
undersigned hereby submits to the jurisdiction of the state and/or federal
courts of Maryland. The undersigned waives any defense that venue is not proper
for any action brought in any federal or state court in the State of Maryland.
Witness the signature and seal of each of the undersigned.
WITNESS
/s/ Tina Sutton /s/ John C. Antenucci (SEAL)
- ---------------------------- --------------------------------------------
signature of JOHN C. ANTENUCCI
Tina Sutton (SEAL)
- ---------------------------- --------------------------------------------
Address of Guarantor(s): 2746 SHADRICK FERRY RD.
---------------------------
FRANKFORT, KY 40601
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State of Kentucky: Franklin County
--------------------------
I, Gary W. Murphy , Notary Public of State at Large - Ky
---------------- ----------------------
County, do hereby certify that John C. Antenucci of
2746 Shadrick Ferry Rd
Frankfort KY 40601 and
------------------------
Tina Sutton of Frankfort Ky
- ------------------------------------------------------------
personally appeared before me this day and acknowledged the due execution of the
foregoing instrument in writing.
Witness my hand and seal, this 30th day of May , 2001 .
---- ------------ ---------------
My Commission Expires: April 26, 2003 /s/ Gary W. Murphy
------------------- --------------------------
NOTARY PUBLIC
Gary Wayne Murphy, Notary Public
State at Large, Kentucky
My Commission Expires 4/26/2003
Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Integrated Spatial Information Solutions, Inc.
Frankfort, Kentucky
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated February 12, 2001, relating to
the consolidated financial statements of Integrated Spatial Information
Solutions, Inc, which is contained in that Prospectus and appearing in the
Company's Annual Report on Form 10-K for the year ended September 30, 2000.
Our report contains an explanatory paragraph regarding the Company's ability
to continue as a going concern.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
Denver, Colorado
June 12, 2001