UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED APRIL 30, 2003
COMMISSION FILE NO. 027619
IBIZ TECHNOLOGY CORP.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 86-0933890
- ---------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2238 West Lone Cactus, Phoenix, Arizona 85027
- ------------------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (623) 492-9200
---------------
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ----
Class Outstanding at June 16, 2003
----- ----------------------------
Common stock, $0.001 par value 234,376,619
TABLE OF CONTENTS
PART I. - FINANCIAL INFORMATION.......................................................................... F-1
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
BALANCE SHEETS .................................................................................. F-1
STATEMENTS OF OPERATIONS......................................................................... F-2 - F-3
STATEMENT OF CASH FLOWS........................................................................... F-4
NOTES TO FINANCIAL STATEMENTS..................................................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............. 12
ITEM 3. CONTROLS AND PROCEDURES............................................................................ 25
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................................................................. 19
ITEM 2. CHANGES IN SECURITIES............................................................................. 19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................................................... 20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................... 20
ITEM 5. OTHER INFORMATION................................................................................. 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................................. 20
i
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
APRIL 30, 2003
(UNAUDITED)
ASSETS
CURRENT ASSETS
Accounts receivable, net $ 37,037
Inventories 124,880
Prepaid expenses 21,450
------------
TOTAL CURRENT ASSETS $ 183,367
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 99,267
OTHER ASSETS
Intellectual Properties Rights, net 187,000
Note receivable, officer $ 373,159
Less allowance for doubtful accounts 373,159 0
------------
Deposits 2,500
------------
TOTAL OTHER ASSETS 189,500
------------
TOTAL ASSETS $ 472,134
============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Bank overdraft $ 14,688
Accounts payable and accrued expenses 709,354
Note payable, Gammage and Burnham 30,000
Accrued wages and bonuses 576,547
Accrued interest 587,105
Taxes payable 168,347
Deferred income 1,802
Convertible debentures, current portion 3,271,509
Note payable, factor 15,000
Note payable, other, current portion 6,840
------------
TOTAL CURRENT LIABILITIES $ 5,381,192
LONG -TERM LIABILITIES
Convertible debentures payable, long-term portion 750,000
------------
TOTAL LONG -TERM LIABILITIES 750,000
STOCKHOLDERS' ( DEFICIT)
Preferred stock
Authorized - 50,000,000 shares, par
value $.001 per share
Issued and outstanding -0- shares
3,500,000 shares reserved 0
Common stock
Authorized - 5,000,000,000 shares, par
value $.001 per share
Issued and outstanding - 234,376,619 shares 234,376
Additional paid in capital 16,508,679
Accumulated deficit (22,402,113)
------------
TOTAL STOCKHOLDERS' (DEFICIT) (5,659,058)
------------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) $ 472,134
============
F-1
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2003 AND 2002
(UNAUDITED)
Three Months Ended Six Months Ended
April 30, April 30,
---------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ---------- ------------
SALES $ 60,637 $ 115,324 $ 135,947 $ 251,061
----------- ----------- ----------- -----------
COST OF SALES 56,882 68,218 148,617 151,734
GROSS PROFIT (LOSS) 3,755 47,106 (12,670) 99,237
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 462,224 426,102 903,453 875,407
----------- ----------- ----------- -----------
OPERATING (LOSS) (458,469) (378,996) (916,123) (776,080)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income 3 22 3 37
Cancellation of debt 809 0 809 42,031
Interest expense (83,161) (37,532) (165,513) (123,285)
Interest expense - convertible
debentures-beneficial
conversion feature (147,141) (66,666) (985,139) (182,880)
----------- ----------- ----------- -----------
TOTAL OTHER
INCOME (EXPENSE) (229,490) (104,176) (1,149,840) (264,097)
----------- ----------- ----------- -----------
(LOSS) FROM CONTINUING
OPERATIONS (687,959) (483,172) (2,065,963) (1,040,177)
DISCONTINUED OPERATIONS
(Loss) from operations of
discontinued business segments 0 (5,313) 0 (246,160)
Write-down of net assets
held for sale 0 (171,542) 0 (171,542)
----------- ----------- ----------- -----------
(LOSS) FROM DISCONTINUED
OPERATIONS 0 (176,855) 0 (417,702)
----------- ----------- ----------- -----------
NET (LOSS) $ (687,959) $ (660,027) $(2,065,963) $(1,457,879)
=========== =========== =========== ===========
F-2
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2003 AND 2002
(UNAUDITED)
Three Months Ended Six Months Ended
April 30, April 30,
------------------------------------ --------------------------------------
2003 2002 2003 2002
--------------- --------------- ----------------- -----------------
NET (LOSS) PER
COMMON SHARE
Basic and Diluted:
Continuing operations $ ( 0.01) $ ( 0.02) $ ( 0.17) $ ( 0.04)
Discontinued operations N/A ( 0.01) N/A ( 0.02)
--------------- --------------- ----------------- ----------------
NET (LOSS) $ ( 0.01) $ ( 0.03) $ ( 0.17) $ ( 0.06)
=============== =============== ================= ================
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING
Basic and diluted 124,826,349 23,968,861 124,826,349 23,968,861
=============== ================ ================= =================
F-3
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE SIX MONTHS ENDED APRIL 30, 2003
(UNAUDITED)
Preferred Stock Common Stock
------------------------- ---------------------------
Shares Amount Shares Amount
---------- ----------- ----------- -----------
BALANCE, NOVEMBER 1, 2002 0 $ 0 45,000,097 $ 45,000
CONVERSION OF DEBENTURES FOR
COMMON STOCK:
PRINCIPAL 0 0 68,573,552 68,573
INTEREST 0 0 4,527,259 4,528
FEES AND COSTS FOR ISSUANCE OF
COMMON STOCK 0 0 0 0
ISSUANCE OF COMMON STOCK FOR:
CONSULTING FEES 0 0 8,500,000 8,500
LEGAL FEES 0 0 2,000,000 2,000
EMPLOYEE RETENTION BONUSES 0 0 105,775,711 105,775
INTEREST EXPENSE - CONVERTIBLE
DEBENTURES - BENEFICIAL
CONVERSION FEATURE 0 0 0 0
NET (LOSS) FOR THE SIX MONTHS
ENDED APRIL 30, 2003 0 0 0 0
------------ ------------
BALANCE, APRIL 30, 2003 0 $ 0 234,376,619 $ 234,376
============ ============
Additional
Paid-in Accumulated
Capital Deficit Total
------------ ------------- -------------
BALANCE, NOVEMBER 1, 2002 $ 15,349,368 $(20,336,150) $ (4,941,782)
CONVERSION OF DEBENTURES FOR
COMMON STOCK:
PRINCIPAL 27,526 0 96,099
INTEREST 814 0 5,342
FEES AND COSTS FOR ISSUANCE OF
COMMON STOCK (46,000) 0 (46,000)
ISSUANCE OF COMMON STOCK FOR:
CONSULTING FEES 90,500 0 99,000
LEGAL FEES 22,000 0 24,000
EMPLOYEE RETENTION BONUSES 79,332 0 185,107
INTEREST EXPENSE - CONVERTIBLE
DEBENTURES - BENEFICIAL
CONVERSION FEATURE 985,139 0 985,139
NET (LOSS) FOR THE SIX MONTHS
ENDED APRIL 30, 2003 0 (2,065,963) (2,065,963)
------------ ------------ ------------
BALANCE, APRIL 30, 2003 $ 16,508,679 $(22,402,113) $ (5,659,058)
============ ============ ============
F-4
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002
(UNAUDITED)
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) from continuing operations $(2,065,963) $(1,040,177)
----------- -----------
Adjustments to reconcile net (loss) to
net cash (used) in operating activities of
continuing operations:
Loss from discontinued operations 0 (417,702)
Write down of net assets held for sale 0 171,542
Depreciation 10,937 110,222
Amortization 13,000 0
Interest expense - convertible debentures -
beneficial conversion feature 985,139 182,880
Common stock issued for expenses 308,788 128,500
Provision for uncollectible accounts 4,217 (10,154)
Changes in operating assets and liabilities:
Accounts receivable (29,387) 70,323
Inventories (29,279) (19,122)
Prepaid expenses (3,450) (6,229)
Accounts and notes payable 93,577 309,322
Accrued liabilities and taxes 248,645 241,427
Deferred income (4,114) 5,992
----------- -----------
NET CASH (USED) IN OPERATING ACTIVITIES (467,890) (273,176)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets held for sale 0 48,635
----------- -----------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 0 48,635
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft 14,688 4,483
Net proceeds from issuance of
convertible debentures payable 454,000 293,723
Repayments on note payable, factor 0 (70,734)
Repayment of note payable, other (1,746) (1,242)
Changes in notes and loan receivable, officer 0 (8,670)
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 466,942 217,560
----------- -----------
F-5
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED APRIL 30, 2003 AND 2002
(UNAUDITED)
2003 2002
--------- ---------
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS $ (948) $ (6,981)
CASH AND CASH EQUIVALENTS, AT
BEGINNING OF PERIOD 948 6,981
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF PERIOD $ 0 $ 0
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during year for:
Interest $ 4,602 $ 26,972
========= =========
Taxes $ 0 $ 0
========= =========
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of common stock for convertible debentures $ 96,099 $ 334,777
========= =========
Issuance of common stock for fees, services and
expenses $ 308,788 $ 218,083
========= =========
Issuance of common stock for accounts payable
and accrued liabilities $ 4,661 $ 339,618
========= =========
Interest expense - convertible debentures-beneficial
conversion feature $ 985,139 $ 182,880
========= =========
F-6
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
IBIZ Technology Corp. (hereinafter referred to as the Company)
was organized on April 6, 1994, under the laws of the State of
Florida. The Company operates as a holding company for subsidiary
acquisitions.
IBIZ, Inc. designs, manufactures (through subcontractors), and
distributes a line of accessories for the PDA and handheld
computer market which are distributed through large retail chain
stores and e-commerce sites. IBIZ Inc. also markets LCD monitors,
OEM notebook computers, third party software, and general purpose
financial application keyboards.
Invnsys Technology Corporation (hereinafter referred to as
Invnsys) is an inactive entity.
Qhost, Inc. is an inactive entity.
PRESENTATION
The interim consolidated financial statements of the Company are
condensed and do not include some of the information necessary to
obtain a complete understanding of the financial data. Management
believes that all adjustments necessary for a fair presentation
of results have been included in the unaudited consolidated
financial statements for the interim periods presented. Operating
results for the six-month period ended April 30, 2003 are not
necessarily indicative of the results that may be expected for
the year ended October 31, 2003. Accordingly, your attention is
directed to footnote disclosures found in the October 31, 2002
Annual Report and particularly to Note 1 which includes a summary
of significant accounting policies.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
IBIZ Technology Corp. and its wholly owned subsidiaries - IBIZ,
Inc., Invnsys Technology Corporation and Qhost, Inc.
All material inter-company accounts and transactions have been
eliminated.
INVENTORIES
Inventories are stated at the lower of cost (determined
principally by average cost) or market. The inventories are
comprised of finished products at April 30, 2003.
7
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major renewals and
improvements are charged to the asset accounts while
replacements, maintenance and repairs, which do not improve or
extend the lives of the respective assets, are expensed. At the
time property and equipment are retired or otherwise disposed of,
the asset and related accumulated depreciation accounts are
relieved of the applicable amounts. Gains or losses from
retirements or sales are credited or charged to income.
The Companies depreciates their property and equipment for
financial reporting purposes using the straight-line method based
upon the following useful lives of the assets:
Tooling 3 Years
Machinery and equipment 10 Years
Office furniture and equipment 5 - 10 Years
Vehicles 5 Years
Molds 5 Years
ACCOUNTING FOR CONVERTIBLE DEBT SECURITIES
The Company has issued convertible debt securities with
non-detachable conversion features. The Company accounts for such
securities in accordance with Emerging Issues Task Force Topic
D-60. The Company has recorded the fair value of the beneficial
conversion features as interest expense and an increase to
Additional Paid in Capital.
COMMON STOCK ISSUED FOR NON-CASH TRANSACTIONS
It is the Company's policy to value stock issued for non-cash
transactions at the stock closing price at the date the
transaction is finalized.
REVENUE RECOGNITION
Product sales - When the goods are shipped and title passes to
the customer.
Maintenance agreements - Income from maintenance agreements is
being recognized on a straight-line basis over the life of the
service contracts. The unearned portion is recorded as deferred
income.
Service income - When services are performed.
SHIPPING AND HANDLING COSTS
The Company's policy is to classify shipping and handling costs
as part of cost of goods sold in the statement of operations.
8
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING
All direct advertising costs are expenses as incurred. The
Company charged to operations $18,577 and $17,552 in advertising
costs for the six months ended April 30, 2003 and 2002,
respectively.
RESEARCH AND DEVELOPMENT
The Company expenses research and development costs as incurred.
INCOME TAXES
Provisions for income taxes are based on taxes payable or
refundable for the current year and deferred taxes on temporary
differences between the amount of taxable income and pretax
financial income and between the tax bases of assets and
liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in
the financial statements at currently enacted income tax rates
applicable to the period in which the deferred tax assets and
liabilities are expected to be realized or settled as prescribed
in FASB Statement No.109, Accounting for Income Taxes. As changes
in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
NET (LOSS) PER SHARE
The Company adopted Statement of Financial Accounting Standards
No. 128 that requires the reporting of both basic and diluted
(loss) per share. Basic (loss) per share is computed by dividing
net (loss) available to common stockholders by the weighted
average number of common shares outstanding for the period.
Diluted (loss) per share reflects the potential dilution that
could occur if securities or other contracts to issue common
stock were exercised or converted into common stock. In
accordance with FASB 128, any anti-dilutive effects on net (loss)
per share are excluded.
During 2002, the Company enacted a 10 for 1 reverse stock split.
Weighted average shares outstanding and per share amounts have
been retroactively adjusted to reflect the stock split.
CONCENTRATION OF RISK
INDUSTRY
The Company's products are intended for the computer and
technology-related industry. This industry experiences a high
degree of obsolescence and changes in buying patterns. The
Company must expend funds for research and development and
identification of new products in order to stay competitive.
9
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade
accounts receivable.
Concentrations of credit risk with respect to trade receivables
are normally limited due to the number of customers comprising
the Company's customer base and their dispersion across different
geographic areas. The Company routinely assesses the financial
strength of its customers. The Company normally does not require
a deposit to support large customer orders.
At April 30, 2003, three customers accounted for 98% of net
receivables.
PURCHASES
The Company relies primarily on three suppliers for its products.
The loss of a supplier could have a material impact on the
Company's operations. Purchases from these suppliers for six
months ended April 30, 2003 totaled 79%, 11% and 8%.
REVENUES
For the six months ended April 30, 2003, the Company had two
customers whose sales exceeded 35% of total revenues.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB recently issued the following statements:
FASB 144 - Accounting for the impairment or disposal
of long-lived assets
FASB 145 - Rescission of FASB statements 4, 44 and 64
and amendment of FASB 13
FASB 146 - Accounting for costs associated with exit or
disposal activities
FASB 147 - Acquisitions of certain financial institutions
FASB 148 - Accounting for stock based compensation
10
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
These FASB statements did not have a material impact on the
Company's financial position and results of operations.
GOING CONCERN
These consolidated financial statements are presented on the
basis that the Company is a going concern. Going concern
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business over a reasonable
length of time. The following factors raise substantial doubt as
to the Company's ability to continue as a going concern:
A. Continued operating losses
B. Negative working capital
C. Lack of cash from continuing operations
D. Delinquent payroll taxes
E. Unpaid wages
F. Decline in national economy
Management's plans to eliminate the going concern situation
include, but are not limited to:
A. Paid some, but not all, delinquent payables and unpaid wages
through the issuance of common stock.
B. Increase sales through new line of products acquired on July
11, 2002.
C. Requested abatement of delinquent payroll tax penalties.
Should the Company be unsuccessful in its plans, the operations
of the company could be discontinued.
NOTE 2 PROPERTY AND EQUIPMENT
Property and equipment and accumulated depreciation at April 30,
2003 consists of:
Tooling $ 68,100
Machinery and equipment 37,641
Office furniture and equipment 81,027
Vehicle 39,141
Molds 50,000
--------
275,909
Less accumulated depreciation 176,642
--------
Total property and equipment $ 99,267
========
11
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 3 INTELLECTUAL PROPERTY RIGHTS AND RELATED ROYALTY AGREEMENT
On July 11, 2002, the Company purchased the Xela Case Keyboard
and all related Intellectual Property and Resale Rights from
ttools, LLC for $200,000. The Company is obligated to pay a
royalty of $2.00 per unit sold on the first one million units. In
accordance with FASB 142, the Company will amortize the
Intellectual Property Rights over its estimated useful life of
three years from the date the products are fully developed and
ready for sale.
Estimated Amortization Expense:
For the year ended October 31, 2003 $ 39,000
For the year ended October 31, 2004 66,667
For the year ended October 31, 2005 66,667
For the year ended October 31, 2006 27,666
---------
Total Estimated Amortization Expense $ 200,000
=========
NOTE 4 NOTES RECEIVABLE, OFFICERS
Invnsys Technology Corporation
A note due from the president of the Company, which is payable on
demand and accrues interest at 6%. Management believes the note
is uncollectible since IBIZ no longer has collateral for the
note. The Company elected to write-off the loan as uncollectible
by establishing an allowance for doubtful collections for the
total amount due on the note.
Total amount of note receivable $ 373,159
Less allowance for doubtful collection ( 373,159)
----------
Note Receivable, Net $ 0
==========
NOTE 5 NOTE PAYABLE, GAMMAGE AND BURNHAM
In July 2001, the Company issued a note to Gammage and Burnham,
PLC for the payment of $80,000 of legal fees previously recorded
in accounts payable. The note is secured by accounts receivable
but the security is waived in favor of the note payable to
Platinum Funding Corporation providing Gammage and Burnham PLC
receives $2,500 each time that Invnsys draws against its
factoring line. As of April 30, 2003, the Company is in default
of their loan agreement.
12
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 6 TAXES PAYABLE
Taxes payable consists of the following:
Payroll taxes payable, current and deferred $149,319
California income tax payable 19,028
--------
$168,347
========
NOTE 7 TAX CARRYFORWARDS
The Company has the following tax carryforwards at April 30,
2003:
EXPIRATION
YEAR AMOUNT DATE
------------------ ------------- ----------------
Net operating loss
October 31, 1995 $ 2,500 October 31, 2010
October 31, 1997 253,686 October 31, 2012
October 31, 1998 71,681 October 31, 2013
October 31, 1999 842,906 October 31, 2019
October 31, 2000 3,574,086 October 31, 2020
October 31, 2001 5,051,232 October 31, 2021
October 31, 2002 1,838,129 October 31, 2022
April 30, 2003 1,089,394 April 30, 2023
--------------
$ 12,723,614
==============
NOTE 8 CONVERTIBLE DEBENTURES
See detail of terms and conditions in Form 10-KSB for the year
ended October 31, 2002.
Convertible Debentures
CURRENT
TOTAL PORTION
----- -------
Unsecured Debentures
Lites Trading Company - $1,600,000 debenture $ 750,000 $ 0
$5,000,000 convertible debenture 1,681,319 1,681,319
Laurus Master Fund, Ltd. 328,190 328,190
Alpha Capital 240,000 240,000
---------- ----------
Total Unsecured Debentures $2,999,509 $2,249,509
========== ==========
13
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 8 CONVERTIBLE DEBENTURES (CONTINUED)
CURRENT
TOTAL PORTION
----- -------
Secured Debentures
AJW Entities $ 1,022,000 $1,022,000
----------- ----------
Total Secured Debentures $ 1,022,000 $1,022,000
=========== ==========
Total Debentures $ 4,021,509 $3,271,509
=========== ==========
Maturities of convertible debentures are as follows:
FISCAL
------
2003 $3,171,509
2004 100,000
2005 750,000
----------
Total $4,021,509
==========
NOTE 9 NOTE PAYABLE, FACTOR
On October 9, 2001, the Company entered into a two year factoring
agreement with Platinum Funding Corporation. The terms of the
agreement provide that Platinum Funding Corporation may purchase
Invnsys' accounts receivable, without recourse, by advancing 70%
of the sales invoice to Invnsys. The interest charged on the loan
is based upon the period of time an invoice is unpaid and ranges
from 3% to 15%. At October 31, 2002, the Company discontinued use
of the services of Platinum Funding Corporation and plans to
settle the account balances for an estimated $15,000.
NOTE 10 CANCELLATION OF DEBT
2003 2002
------ -----------
Settlement of prior year liabilities $ 809 $ 42,031
====== ===========
14
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 11 COMMITMENTS AND CONTINGENCIES
OPERATING LEASE
The Company leases its office and warehouse facilities under the
following terms and conditions:
1. Term - Three years from February 1, 2002 to January 31, 2005
2. Size of facility - 4,343 square feet
3. Base rent - Monthly rentals plus taxes and common area
operating expenses
4. Base rental schedule -
MONTHS RENT
1 - 12 $ 2,172
13 - 24 3,692
25 - 36 4,343
Future minimum lease payments excluding taxes and expenses are as
follows:
October 31, 2003 $ 39,744
October 31, 2004 50,163
October 31, 2005 13,029
---------
$ 102,936
Rent expense for the six months ended April 30, 2003 and 2002 was
$19,363 and $35,099, respectively.
PAYROLL TAXES
The Company is negotiating a settlement regarding delinquent
payroll taxes of approximately $65,000. Interest is being accrued
on the outstanding balance. No amounts have been accrued for any
penalties.
WORKERS' COMPENSATION INSURANCE
Through May 2003, the Company did not carry general liability or
workers' compensation coverage, nor was it self-insured. The
Company accrues liabilities when it is probable that future costs
will be incurred and such costs can be reasonably estimated. As
of May 31, 2003, there were no known liability claims. No amounts
have been accrued for any penalties which may be assessed by the
State of Arizona for non-compliance with the laws and regulations
applicable to workers' compensation insurance.
15
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 11 COMMITMENTS AND CONTINGENCIES (CONTINUED)
LEGAL
The Company is the defendant in one lawsuit for unpaid wages.
Management has recorded a liability in the amount of $20,000.
REAL ESTATE
The Company has pledged all of its assets, except inventory, to
guarantee a mortgage of $898,824 on the premises it previously
occupied at 1919 W. Lone Cactus Drive, Phoenix, Arizona. Ken
Schilling, the President of the Company has an ownership interest
in the property at 1919 W. Lone Cactus Drive.
OFFICERS' COMPENSATION
As of April 30, 2003, the Company has employment agreements with
two of its corporate officers. The contracts are for three years
beginning July 2001 and provide for the following:
1. Salaries from $150,000 to $250,000 for each officer.
2. Bonuses of 1% of total sales for each officer.
3. Options for 120,000 shares of common stock which will vest
and be exercisable for a period of ten years.
4. Option price of $0.20 a share.
5. Termination -
Termination by the Company without cause
- the employee shall receive six months
salary. Change of control - in the event
of change of control, the Company shall
pay the employee a lump sum payment of
three years annual salary.
UNPAID OFFICERS' SALARIES
On December 20, 2001, the Board of Directors authorized the
issuance of convertible debentures to the officers of the Company
as consideration for their unpaid wages. As of the date of this
filing, the debentures have not been issued.
NOTE 12 COMMON STOCK
Stock Issuances
1. On November 26, 2002, the Company filed an S-B Registration
Statement with the SEC and subsequently issued 9,000,000
shares of common stock to individuals for services rendered.
2. On December 6, 2002, the Company issued 1,500,000 shares of
restricted common stock in consideration of services
rendered.
3. On February 7, 2003, the Company issued 105,775,711 shares
of restricted common stock to its current officers and
employees as a retention bonus.
16
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 12 COMMON STOCK (CONTINUED)
STOCK PURCHASE WARRANTS
As of April 30, 2003, the Company has issued the following common
stock purchase warrants:
NUMBER EXERCISE
DATE OF SHARES TERM PRICE
---- --------- -------- ------------------
December 28, 1999 20,000 5 years $ 9.40
January 10, 2000 28,125 5 years $ 9.90
March 27, 2000 61,500 5 years $ 14.50 - 20.50
May 17, 2000 12,500 3 years $ 10.20 - 50.00
August 30, 2000 3,413 5 years $ 9.37
August 30, 2000 25,000 3 years $ 5.00
August 30, 2000 25,000 3 years $ 7.50
August 30, 2000 3,636 3 years $ 10.00
September 3, 2000 10,900 3 years $ 10.00
September 27, 2000 27,875 3 years $ 9.00
October 31, 2000 50,000 2 years $ 4.76
December 20, 2000 40,000 5 years $ 2.28
December 20, 2000 15,000 5 years $ 2.28
April 26, 2001 150,000 5 years $ 1.23
June 22, 2001 150,000 5 years $ 0.42
June 27, 2001 150,000 5 years $ 0.21
August 21, 2001 52,500 5 years $ 0.39
October 9, 2001 35,000 5 years $ 0.26
January 15, 2002 16,667 5 years $ 105% of Closing
January 15, 2002 50,000 5 years $ 105% of Closing
January 30, 2002 500,000 5 years $ 0.06
April 23, 2002 300,000 5 years $ 0.06
August 15, 2002 105,000 5 years $ 0.05
October 9, 2002 75,000 5 years $ 0.05
November 5, 2002 30,000 5 years $ 0.05
January 31, 2003 1,500,000 5 years $ 0.01
March 20, 2003 500,000 7 years $ 0.01
----------
3,937,116
==========
3,937,116 shares are exercisable at April 30, 2003.
17
IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2003
(UNAUDITED)
NOTE 13 PREFERRED STOCK
On December 20, 2001, the Board of Directors authorized the
issuance of 3,500,000 shares of preferred stock to three officers
and one director in lieu of their annual bonus and retention
incentives. The preferred stock will have a 10:1 conversion rate
from common stock to preferred stock and will have a "super"
voting right of 100:1. As of the date of this report the
preferred stock had not been issued. The Company has not
designated any other rights or dividend policy in regard to the
Preferred Stock.
NOTE 14 RELATED PARTY TRANSACTION
On February 1, 2002, the Company transferred $249,918 of net
assets held for sale in full payment of delinquent rent and
property taxes in the amount of $78,376 on property previously
rented by the Company. Ken Schilling, the President of the
Company has an ownership interest in this property.
NOTE 15 CHANGE IN AUTHORIZED SHARES
On February 24, 2003, the Articles of Incorporation were amended
to increase the number of authorized shares of common stock from
450,000,000 shares to 5,000,000,000 shares.
NOTE 16 SUBSEQUENT EVENTS
Conversions of Convertible Debentures
For the period of May 1 through May 23, 2003, the Company issued
approximately 32,678,841 shares of common stock for the
conversion of convertible debentures. The detail of the
conversions is as follows:
COMMON STOCK ADDITIONAL
----------------------- PAID-IN
SHARES AMOUNT CAPITAL TOTAL
---------- ---------- ---------- ------------
Conversion of debentures for common stock:
Principal 29,916,181 $ 29,916 $ (8,175) $ 21,741
Interest 2,762,660 2,763 (720) 2,043
--------- ----- ---- -----
Total 32,678,841 $ 32,679 $ (8,895) $ 23,784
========== ========== ========== ==========
STOCK ISSUANCES
On June 9, 2003, the Company filed an S-8 Registration Statement
with the SEC and subsequently issued approximately 68 million
shares of common stock to officers and employees for retention
bonuses and individuals for services rendered.
18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. In consultation with our Board of Directors, we have identified eight
accounting principles that we believe are key to an understanding of our
financial statements. These important accounting policies require management's
most difficult, subjective judgments.
(1) ACCOUNTS RECEIVABLE
Accounts receivable are reported at the customer's outstanding balances
less any allowance for doubtful accounts. The Company does not normally
require collateral to support receivables and interest is not accrued
thereon.
(2) ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts on accounts receivables is charged to
income in amounts sufficient to maintain the allowance for uncollectible
accounts at a level management believes is adequate to cover any probable
losses. Management determines the adequacy of the allowance based on
historical write-off percentages and information collected from individual
customers. Accounts receivable are charged off against the allowance when
collectibility is determined to be permanently impaired (bankruptcy, lack
of contact, account balance over one year old, etc.).
(3) INVENTORIES
Inventories are stated at the lower of cost (determined principally by
average cost) or market.
(4) ACCOUNTING FOR CONVERTIBLE DEBT SECURITIES
The Company has issued convertible debt securities with non-detachable
conversion features. The Company has recorded the fair value of the
beneficial conversion features as interest expense and an increase to
Additional Paid in Capital.
(5) REVENUE RECOGNITION
Product Sales - when the goods are shipped and title passes to the
customer.
Maintenance Agreements - Income from maintenance agreements is being
recognized on a straight-line basis over the life of the service contracts.
The unearned portion is recorded as deferred income.
19
SERVICE INCOME - WHEN SERVICES ARE PERFORMED.
(6) GOING CONCERN
As shown in the accompanying financial statements, the Company has incurred
significant losses, has negative working capital and needs additional
capital to finance its operations. These factors create substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern. The Company also intends
to finance its operations through sales of its securities as well as
entering into loans and other types of financing arrangements such as
convertible debenture.
(7) CONSULTING AGREEMENTS
The Company issued common stock for payment of consulting services. The
cost of the consulting services was determined by multiplying the common
shares issued by the market price of the shares at the inception date of
the agreement.
20
SELECT FINANCIAL INFORMATION
THREE MONTH PERIOD ENDED
04/30/03 04/30/02 SIX MONTH PERIOD ENDED
(UNAUDITED) (UNAUDITED) 04/30/03 04/30/02
----------- ----------- -------- --------
Statement of Operations Data
Total revenue $ 60,637 $ 115,324 $ 135,947 $ 251,061
Operating income (loss) (458,469) (378,996) (916,123) (776,080)
Net earnings (loss) after tax (687,959) (660,027) (2,065,963) (1,457,879)
Net earnings (loss) per share (0.01) (0.03) (0.17) (0.06)
Balance Sheet Data
Total assets 472,134 378,686 472,134 378,686
Total liabilities 6,131,192 4,619,969 6,131,192 4,619,969
Stockholders' deficit (5,659,058) (4,241,283) (5,659,058) (4,241,283)
RESULTS OF OPERATIONS
The three months ended April 30, 2003 compared to the three months ended April
30, 2002.
REVENUES
Sales from continuing operations decreased by approximately 47% to $60,637 in
the three months ended April 30, 2003 from $115,324 in the three months ended
April 30, 2002. The decrease was mainly a result of the focus by management on
raising financing for IBIZ, Inc., a transition to a new line of industry unique
products and the overall slow down in the national economic conditions.
COST OF SALES
The cost of sales of $56,882 (94% of sales) in the three months ended April 30,
2003 decreased from $68,218 (59% of sales) for the three months ended April 30,
2002. This increase in the percentage of cost of sales is due to the fixed
nature, primarily wages, component of a large portion of the Company's cost of
goods sold. Thus the significant reduction in sales resulted in the increased
percentage in this quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased approximately 8% to
$462,224 in the three months ended April 30, 2003 from $426,102 in the three
months ended April 30, 2002. The increase in expenses resulted from the issuance
of stock to employees in this quarter as retention bonuses.
INTEREST EXPENSE
Interest expense increased 122% to $83,161 in the three months ended April 30,
2003 from $37,532 in the three months ended April 30, 2002. The increase in
interest is a result of a
21
approximately $1,100,000 new convertible debentures issued at 12% from August
2002 to March 2003.
INTEREST EXPENSE - CONVERTIBLE DEBENTURES-BENEFICIAL CONVERSION FEATURE
The Company has issued convertible debt securities with a non-detachable
convertible feature that were "in-the-money" at the date of issuance. The
Company has recorded the fair value of the beneficial conversion feature as
interest expense and an increase in paid-in-capital. Interest expense on the
convertible debentures was $147,141 and $66,666 for three months ended April 30,
2003 and 2002, respectively.
NET LOSS FROM CONTINUING OPERATIONS
Net loss from continuing operations increased 42% to $687,959 for the three
months ended April 30, 2003 from a net loss of $483,172 for the three months
ended April 30, 2002. The increase in net loss was primarily the result of the
reduction in sales, higher unit costs, the payment of retention bonuses by
issuing restricted common stock in lieu of cash, and the increase in beneficial
conversion interest.
DISCONTINUED OPERATIONS
Loss from discontinued operations was $176,855 for three months ended April 30,
2002 as a result of management's election to discontinue non-profitable segments
of the Company's operations and to focus on profitable business units as of
October 31, 2001. The Company completed the discontinuance at October 31, 2002
and incurred no further expenses from that date.
The six months ended April 30, 2003 compared to the six months ended April 30,
2002.
REVENUES
Sales from continuing operations decreased by approximately 46% to $135,947 in
the six months ended April 30, 2003 from $251,061 in the six months ended April
30, 2002. The decrease was mainly a result of the focus by management on raising
financing for IBIZ, Inc., a transition to a new line of industry unique products
and the overall slow down in the national economic conditions.
COST OF SALES
The cost of sales of $148,617 (110% of sales) in the six months ended April 30,
2003 decreased from $151,734 (61% of sales) for the six months ended April 30,
2002. This increase in the cost of sales percentage is due to the fixed nature
component, primarily wages, of a portion of the cost of sales.
22
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased approximately 3% to
$903,453 in the six months ended April 30, 2003 from $875,407 in the six months
ended April 30, 2002. The increase in expenses resulted from the issuance of
stock to employees in the 2nd quarter as retention bonuses.
INTEREST EXPENSE
Interest expense increased 34% to $165,513 in the six months ended April 30,
2003 from $123,285 in the six months ended April 30, 2002. The increase in
interest is a result of approximately $1,100,000 new convertible debentures
issued at 12% from August 2002 to March 2003.
INTEREST EXPENSE - CONVERTIBLE DEBENTURES-BENEFICIAL CONVERSION FEATURE
The Company has issued convertible debt securities with a non-detachable
convertible feature that were "in-the-money" at the date of issuance. . The
Company has recorded the fair value of the beneficial conversion feature as
interest expense and an increase in paid-in-capital. Interest expense on the
convertible debentures was $985,139 and $182,880 for the six months ended April
30, 2003 and 2002, respectively.
NET LOSS FROM CONTINUING OPERATIONS
Net loss from continuing operations increased 99% to $2,065,963 for the six
months ended April 30, 2003 from a net loss of $1,040,177 for the six months
ended April 30, 2002. The increase in net loss was primarily the result of the
reduction in sales, higher unit costs, the payment of retention bonuses by
issuing restricted common stock in lieu of cash, and the increase in beneficial
conversion interest.
DISCONTINUED OPERATIONS
Loss from discontinued operations was $417,702 for six months ended April 30,
2002 as a result of management's election to discontinue non-profitable segments
of the Company's operations and to focus on profitable business units as of
October 31, 2001. The Company completed the discontinuance at October 31, 2002
and incurred no further expenses from that date.
LIQUIDITY
Net cash (used) by operating activities for the six months ended April 30, 2003
was $467,890 compared to $273,176 (used) by operating activities for the six
months ended April 30, 2002. The $194,714 change was primarily due to:
a. Increase in accounts receivable resulting from the Company's
major customer paying on approximately 60 day terms instead
of the agreed upon terms of 45 days.
b. Increase in inventories resulting from the purchase of new
product line for shipment in the third quarter of this
fiscal year.
23
c. Partially offset by the increase in accounts and notes
payable and accrued liabilities and taxes due to cash flow
restrictions.
d. Increase in net loss after adjustments for non-cash
activities due to reduction in sales as discussed above.
The Company plans to remedy the deficiency of operating cash flows by increasing
income from its new product line.
Our investing activities for the six months ended April 30, 2003 provided no
cash, as compared to $48,635 which was provided in the six months ended April
30, 2002. The primary change was that the Company received cash from the sale of
assets during the six months ended April 30, 2002 and had no investing
activities in the six months ended April 30, 2003.
Our financing activities for the six months ended April 30, 2003 provided cash
of $446,942 compared to $217,560 for the six months ended April 30, 2002. the
primary change was that the Company obtained $454,000 of new debenture financing
for the six months ended April 30, 2003 compared to $293,723 for the six months
ended April 30, 2002. The Company also repaid $70,734 on its note payable factor
during the six months ended April 30, 2002 and $-0- during the six months ended
April 30, 2003.
CAPITAL RESOURCES
Working capital is summarized and compared as follows:
APRIL 30, 2003 APRIL 30, 2002
-------------- --------------
Current assets $ 183,367 $ 288,468
Current liabilities 5,381,192 3,601,653
----------------- -----------------
Working capital (deficit) $ ( 5,197,825) $ ( 3,313,185)
================= =================
This increase in the deficit in working capital was primarily due to the net
loss sustained from operations and the increase in the convertible debentures,
current portion.
At April 30, 2003, stockholders' deficit was $5,659,058, as compared to a
stockholders' deficit of $4,941,782 at October 31, 2002. The $717,276 change in
stockholders' deficit was accounted for as follows:
Increase in Stockholders' Equity
Issuance of common stock $ 189,376
Conversion of convertible
debentures, net of costs 174,172
Interest expense - convertible
debentures - beneficial
conversion feature 985,139
Decreases in stockholders'equity
net loss (2,065,963)
------------
Net Change $ (717,276)
============
The Company currently has no material commitments for capital expenditures.
The Company has $3,271,509 and $750,000 of debt payments related to convertible
debentures due within the next year and next two to five years, respectively.
24
ITEM 3. CONTROLS AND PROCEDURES
As of April 30, 2003, an evaluation was performed by our Chief Executive Officer
and Acting Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on that evaluation,
Our Chief Executive Officer and Acting Chief Accounting Officer concluded that
our disclosure controls and procedures were effective as of April 30, 2003.
There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to April
30, 2003.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
iBIZ has been assessed approximately $62,000 in penalties and interest by
the IRS in connection with payroll taxes due through the first quarter of 1999.
The Company has paid the taxes, interest, and some portion of the penalty, but
has requested an abatement of the remaining penalty imposed. The Company is
awaiting a final disposition by the IRS.
ITEM 2. CHANGES IN SECURITIES
(C) RECENT SALES OF UNREGISTERED SECURITIES
The securities described below represent securities of iBIZ sold by iBIZ
during the six month period ended April 30, 2003, that were not registered under
the Securities Act of 1933, as amended (the "Securities Act"), all of which were
issued by the Company pursuant to exemptions under the Securities Act.
Underwriters were not involved in these transactions.
Private Placements of Common Stock and Warrants for Cash
None.
Sales of Debt and Warrants for Cash
To obtain funding for our ongoing operations, we entered into a Securities
Purchase Agreement with three accredited investors on January 31, 2003 for the
sale of (i) $500,000 in convertible debentures and (ii) warrants to buy
2,500,000 shares of our common stock. This registration statement covers the
resale of the common stock underlying these securities. The investors are
obligated to provide us with the funds as follows:
- $300,000 was disbursed on January 31, 2003.
- $100,000 was disbursed on March 20, 2003.
- $100,000 was disbursed on May 9, 2003.
The debentures bear interest at 12%, mature one year from the date of
issuance, and are convertible into our common stock, at the investors' option,
at the lower of (i) $0.01 or (ii) 50% of the average of the three lowest
intraday trading prices for the common stock on a principal market for the 20
25
trading days before but not including the conversion date. The full principal
amount of the convertible debentures are due upon default under the terms of the
convertible debentures. The warrants are exercisable until seven years from the
date of issuance at an exercise price of $0.01 per share.
OPTION GRANTS
None.
ISSUANCES OF STOCK FOR SERVICES OR IN SATISFACTION OF OBLIGATIONS
None.
The above offerings and sales were deemed to be exempt under Regulation D
and Section 4(2) of the Securities Act. No advertising or general solicitation
was employed in offering the securities. The offerings and sales were made to a
limited number of persons, all of whom were business associates of iBiz or
executive officers and/or directors of iBiz, and transfer was restricted by iBiz
in accordance with the requirements of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
99.1 Certification of the Chief Executive Officer and Chief
Financial Officer of iBiz Technologies Corp. Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
None.
26
Pursuant to the requirements of Section 12 of the Securities Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated this 15th day of June 2003
IBIZ TECHNOLOGY CORP.
By: /s/ KENNETH W. SCHILLING
-------------------------------
Kenneth W. Schilling, President,
and acting principal
accounting officer
By: /s/ MARK H. PERKINS
-----------------------------------
Mark H. Perkins, Executive Vice President
27
CERTIFICATION
I, Kenneth Schilling, CEO and Acting CFO, certify that:
1. I have reviewed this annual report on Form 10-QSB of IBIZ Technology Corp.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. I have indicated in this annual report whether there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
June 16, 2003
/s/ Kenneth Schilling
- --------------------------
CEO and Acting CFO
28