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UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
Form 10-QSB
(Mark one)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 2000
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transaction period from: ________________________ to ___________________
Commission File number: 0-24031
Integrated Business Systems and Services, Inc.
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(Exact name of small business issuer as specified in its charter)
South Carolina 57-0910139
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
115 Atrium Way, Suite 228, Columbia, SC 29223
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(Address of principal executive offices)
(803) 736-5595
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(Issuer's telephone number)
115 Atrium Way, Suite 128, Columbia, SC 29223
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(Former Name, address or fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. (X) YES ( ) NO
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
13,781,699 shares of no par common shares outstanding at March 31, 2000
Transitional Small Business Disclosure Format (check one) ( ) YES (X) NO
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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
INDEX
PAGE
NUMBER
------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets - March 31, 2000, and
December 31, 1999 3
Statements of Operations for the three months
ended March 31, 2000, and 1999, respectively 4
Statements of Cash Flows for the three months
ended March 31, 2000, and 1999, respectively 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of 7 - 11
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Items 1 - 6 12 - 13
SIGNATURES 14
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PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Integrated Business Systems & Services, Inc.
Balance Sheets
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
(UNAUDITED) (AUDITED)
------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,130,841 $ 82,996
Accounts receivable 12,578 91,638
Related party note receivable 0 183,680
Interest receivable 6,903 0
Unbilled revenue 28,885 28,885
Prepaid commissions 19,560 0
Other prepaid expenses 30,865 50,426
------------------------------------
Total current assets 4,229,632 437,625
Capitalized software costs, net 725,933 768,001
Property and equipment, net 288,741 155,654
Related party receivable 84,195 82,944
Other assets 1,629 2,793
------------------------------------
Total assets $ 5,330,130 $ 1,447,017
====================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Notes payable $ -- $ 28,976
Accounts payable 30,851 129,223
Accrued liabilities
Accrued compensation and benefits 91,942 63,767
Accrued payroll taxes 3,511 305,402
Other 45,566 107,703
Deferred revenue 54,304 88,273
------------------------------------
Total current liabilities 226,174 723,344
Long-term debt, net of current portion 1,250,000 1,250,000
Subordinated debt 0 180,000
------------------------------------
Total liabilities 1,476,174 2,153,344
Commitments and contingencies -- --
Stockholders' equity (deficiency):
Class A common shares, voting, no par value, 100,000,000 shares
authorized, 13,756,199 and 10,537,635 shares outstanding at
March 31, 2000, and December 31, 1999, respectively 10,392,685 4,142,098
Notes receivable - stock (944,800) (190,800)
Accumulated deficit (5,593,929) (4,657,625)
------------------------------------
Total shareholders' equity (deficiency) 3,853,956 (706,327)
------------------------------------
Total liabilities and shareholders' equity (deficiency) $ 5,330,130 $ 1,447,017
====================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
Statements of Operations
(Unaudited)
THREE MONTHS
ENDED MARCH 31,
------------------------------------
2000 1999
------------------------------------
REVENUES
Services and other income $ 32,359 $ 243,006
Hardware sales 0 1,507
Software licensing 0 2,779
Maintenance 22,088 44,079
------------------------------------
Total revenues 54,447 291,371
------------------------------------
OPERATING EXPENSES
Cost of revenues 174,093 124,808
Research and development costs 42,278 5,011
General and administrative 654,296 241,766
Sales and marketing 209,318 32,643
------------------------------------
Total operating expenses 1,079,985 404,228
------------------------------------
Loss from operations (1,025,538) (112,857)
OTHER INCOME (EXPENSE)
Interest expense (26,605) (19,354)
Interest income 25,574 0
Other income 90,265 0
------------------------------------
Total 89,234 (19,354)
------------------------------------
Net loss $ (936,304) $ (132,211)
====================================
Earnings (loss) per share:
------------------------------------
Basic and diluted $ (0.08) $ (0.02)
====================================
------------------------------------
Weighted average common shares outstanding 11,571,026 8,753,927
====================================
The accompanying notes are an integral part of these financial statements.
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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------------------
2000 1999
--------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (936,304) $(132,211)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation/amortization 19,498 13,870
Amortization of software costs 42,068 5,863
Write-off of accounts payable (90,285) 0
Changes in assets and liabilities
Accounts receivable 79,060 53,527
Interest receivable (6,903) 0
Unbilled revenue 0 (1,468)
Prepaid commissions (19,560) (5,000)
Prepaid expenses and other assets 19,561 (4,152)
Refundable deposits 1,164 100
Accounts payable (8,087) (8,926)
Accrued expenses (335,853) (536,473)
Deferred revenue (33,969) (22,085)
--------------------------------
Cash used in operating activities (1,269,610) (636,955)
--------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment, net (152,585) (2,394)
Capitalized internal software development costs 0 (50,742)
Related party note receivable 183,680 0
Related party receivable (1,251) 0
--------------------------------
Cash provided by (used in) investing activities 29,844 (53,136)
--------------------------------
FINANCING ACTIVITIES
Payments on notes payable, net (28,976) (92,828)
Payments on long-term debt 0 (9,000)
Sale of common shares 4,872,070 843,567
Proceeds from exercise of common stock options
and warrants 444,517 14,804
Payable to a related party, net 0 (35,300)
--------------------------------
Cash provided by financing activities 5,287,611 721,243
--------------------------------
Net increase in cash 4,047,845 31,152
Cash and cash equivalents at beginning of period 82,996 16,593
--------------------------------
Cash and cash equivalents at end of period $ 4,130,841 $ 47,745
================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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NOTES TO FINANCIAL STATEMENTS
(unaudited)
BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310 of Regulation S-B
promulgated by the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete Financial Statements. In the opinion of
management, all adjustments (consisting only of those of a normal recurring
nature) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000. For further information, refer to the audited
financial statements and footnotes thereto included in the Company's Form 10-KSB
for year ended December 31, 1999.
EARNINGS PER SHARE:
The computation of basic earnings (loss) per share and diluted earnings (loss)
per share is in conformity with the provisions of Statement of Financial
Accounting Standards No. 128.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which the Company
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the financial statements and notes thereto.
Results of Operations
For the three months ended March 31, 2000, as compared to the three months ended
March 31, 1999
Revenues. Total revenues decreased $236,924 to $54,447 in the three months ended
March 31, 2000, from $291,371 in the three months ended March 31,1999. This
decrease was primarily attributable to a continued decrease in the sales of
services, data collection equipment and maintenance due to the increased
emphasis on the completion and sales of the Company's new core products, Synapse
Manufacturing, Synapse EAI+, and Synapse B2B. The Company's strategy during 1998
and 1999 was to substantially reduce all of the Company's service revenue and
focus the Company on completing and marketing it's core Synapse based products.
In addition to the reduction of service based business, as the first install of
Synapse Manufacturing to a manufacturer of women's knitted hosiery neared
completion, revenue from this customer substantially decreased.
Cost of Revenues. Total cost of revenues increased $49,286 to $174,094 in the
three months ended March 31, 2000, from $124,808 in the three months ended March
31, 1999. This increase was attributable to an increase in labor costs as well
as an increase in the amortization of software costs due to the completion of
Synapse Manufacturing 2.0 at the end of the first quarter of 1999.
The cost of revenues as a percentage of total revenues was 102% and 43% in the
three months ended March 31, 2000, and 1999, respectively. Accordingly, the
gross margin was (2%) and 57% in the three months ended March 31, 2000, and
1999, respectively.
Research and Development. Research and development costs increased $37,267 to
$42,278 in the three months ended March 31, 2000, from $5,011 in the three
months ended March 31, 1999. The Company released Version 2.0 of the Synapse
Manufacturing System for general product availability at the end of the first
quarter of 1999; therefore, additional development costs were expensed rather
than capitalized. Research and development costs represented approximately 25%
and 2% of total revenues for the three months ended March 31, 2000, and 1999,
respectively.
General and Administrative. General and administrative expenses, including
interest expense, increased $419,781 to $680,901 in the three months ended March
31, 2000, from $261,120 in the three months ended March 31, 1999. General and
administrative expenses increased due to the addition of a Vice President of
Sales and a clerical person, general salary increases, legal and accounting
fees, consultant fees, NASDAQ application fee and an increase in rent expense
due to the increased office space leased in Columbia and for the lease of office
space in Detroit, Michigan. General and administrative expenses, including
interest expense, represented approximately 400% and 90% of total revenues in
the three months ended March 31, 2000, and 1999, respectively.
Sales and Marketing. Sales and marketing expenses increased $176,675 to $209,318
in the three months ended March 31, 2000, from $32,643 in the three months ended
March 31, 1999. This increase was attributable to an increase in marketing
salaries due to an addition of a sales representative, an increase in
depreciation expense for marketing and equipment purchased, an increase in
public relations and investor public relations awareness as well as an increase
in marketing travel related expenses. Sales and marketing expenses represented
approximately 123% and 11% of total revenues in the three months ended March 31,
2000, and 1999, respectively.
Corporate and Other Related Non-Operating Items. Interest expense, increased
$7,251 to $26,605 in the three months ended March 31, 2000, from $19,354 in the
three months ended March 31, 1999. This increase was due to the net effect of
the $1,250,000 convertible debenture in the third quarter of 1999, and the
repayments of various other notes in 1999. Interest income increased $25,574 in
the quarter ended March 31, 2000, as a result of cash management on cash
balances
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of the Company. The average interest rate earned by the Company was
approximately 5.65%. Other income of $90,265 in the quarter ended March 31,
2000, was the result of a gain related to the write-off of payable balances to
vendors included in accounts payable. Management determined that accounts
payable balances totaling $90,265 were no longer valid claims against the
Company, and accordingly, reduced the payables balance.
Financial Condition at March 31, 2000
Cash and cash equivalents increased by $4,047,845 during the three months ended
March 31, 2000.
Accounts receivable decreased by $79,060 during the three months ended March 31,
2000, reflecting decreased sales of of services, data collection equipment and
maintenance due to the increased emphasis on the completion and sales of IBSS's
new core products, Synapse Manufacturing, Synapse EAI+, and Synapse B2B.
The $497,170 decrease in current liabilities during the three months ended March
31, 2000, is due to the write off of certain accounts payables and to the
partial use of funds from private placements on February 15, 2000, and March 8,
2000.
The Company's current assets exceeded its current liabilities at March 31, 2000,
by $4,003,458.
Liquidity and Capital Resources
Prior to 1997, the Company primarily financed its operations through revenues
from operations, including funded research and development revenues, and
occasional short term loans from the Company's principals or their
acquaintances. Since the middle of 1997, the Company has financed its operations
primarily through private and public offerings of Common Stock and convertible
debt, and to a lesser extent through borrowings from third-party lenders and
from revenues from operations.
In December 1995, the Company entered into a factoring arrangement that was
being administered as a short term borrowing arrangement collateralized by
accounts receivable, which generally permitted borrowing of up to 75% of
accounts receivable. This arrangement was terminated by the Company in March,
1999. In February, 1996, the Company entered into a loan for $180,000
collateralized by substantially all of the assets of the Company. This loan was
retired in July of 1999.
During 1997, the Company received approximately $1,540,000 in net proceeds
(after deduction of commissions and offering costs) from the sale of 3,800,000
shares of its Common Stock, of which approximately $1,220,000 was received
through the Company's initial public offering in November, 1997, and
approximately $320,000 was received from a private offering in June of 1997. The
Company used a portion of these proceeds to repay debt of approximately
$320,000. In addition, in November, 1997, convertible debt issued by the Company
in March, 1997, in the principal amount of $116,700 was converted into shares of
Common Stock.
During 1998, the Company received approximately $288,400 in gross proceeds from
the exercise by Wolverton Securities, Ltd of warrants for the purchase of
430,000 shares of the Company's Common Stock. During 1999, the Company received
approximately $43,500 in gross proceeds from the exercise by Wolverton
Securities, Ltd, of warrants for the purchase of 56,000 shares of the Company's
Common Stock.
In June 1998, the Company completed a private placement of five-year convertible
notes in the amount of $500,000 and non-transferable share purchase warrants
entitling the holders to purchase an aggregate of 541,000 common shares of the
Company. The notes, which bear interest at 12% per year, may be converted into
common shares of the Company at a conversion price of $0.923 per share during
the first year and during each of the remaining four years of the term of of the
notes; a conversion price that is higher than the conversion price in the
previous year by $0.175 per share. In June, 1999, $320,000 of the $500,000
convertible note was converted into 346,692 common shares at a conversion price
of $0.923 per share. In November and December 1999, 259,680 shares were issued
due to the exercise of non-transferable share purchase warrants at $1.061 per
share. Additional non-transferable warrants were issued entitling the holders to
purchase an aggregate of 259,680 common shares of the Company at $1.07 per share
during the first year. In February 2000, the balance of the $500,000 convertible
note, $180,000, was converted into common shares at a conversion price of $1.098
per share. Also in February 2000, 259,680 shares were issued due to the exercise
of non-transferable share purchase warrants at $1.07 per share. Additional
non-transferable warrants were issued entitling the holders to purchase
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aggregate of 259,680 shares of the Company at $5.94 per share during the first
year, $6.83 per share during the second year, $7.85 per share during the third
year, $9.03 per share during the fourth year and $10.38 per share during the
fifth year.
In the first quarter of 1999, the Company completed a private placement of
800,000 shares of Common Stock and two-year warrants for the purchase of 80,000
shares of Common Stock, pursuant to which the Company received gross proceeds of
$800,000. The warrants are exercisable at $1.00 per share during the first year
following their issuance and at $1.25 per share during the second year following
their issuance. In February, 2000, the Company received gross proceeds of
$80,000 for 80,000 warrants exercised at $1.00 per share.
In the first quarter of 1999, the Company completed a private placement of
60,000 shares of Common Stock and two-year warrants for the purchase of 6,000
shares of Common Stock, pursuant to which the Company received gross proceeds of
$60,000. Under the terms of this private placement, the Company also issued
1,800 shares of Common Stock as finder's fees. The warrants are exercisable at
$1.00 per share during the first year following their issuance and at $1.25 per
share during the second year following their issuance.
In the second quarter of 1999, the Company issued Common Stock Purchase Warrants
with accredited investors for the purchase of 1,000,000 shares of Common Stock,
pursuant to which the Company received gross proceeds of $200,000. The warrants
are exercisable at $1.00 per share during the term of this Agreement. In the
fourth quarter of 1999, the Company received $200,000 in gross proceeds from the
exercise of 200,000 of these warrants. A new Common Stock Warrant Agreement was
issued for the purchase of the balance of 800,000 shares of Common Stock at
$1.00 per share during the term of this Agreement or $0.75 per share if
exercised prior to November 1, 2000. In the first quarter of 2000, the Company
received a secured promissory note in the principal amount of $600,000 for the
exercise of warrants for the purchase of 800,000 shares of the Company's Common
Stock at $0.75 per share. The note matures March 2, 2002, and has an interest
rate of 5% per annum.
In the third quarter of 1999, the Company completed a Private Placement Offering
for an aggregate principal amount of $1,250,000 through a Convertible Debenture
with an interest rate of 7% through January 1, 2000; 10% thereafter with a
maturity date of January 1, 2002. In conjunction with the Convertible Debenture,
the Company also entered into a Common Stock Purchase Warrant Agreement for the
purchase of 1,850,000 shares of Common Stock. In the first quarter of 2000, the
Company received a secured promissory note in the principal amount of $154,000
for the exercise of warrants for the purchase of 110,000 shares of the Company's
Common Stock at $1.40 per share. The note matures March 2, 2002, and has an
interest rate of 5% per annum.
In the first quarter of 2000, the Company completed a private placement to two
private investors of an aggregate of 125,000 units each for $8.00 per unit for
aggregate proceeds of $2,000,000. Each unit consisted of two shares of Common
Stock and a detachable three-year warrant for the purchase of one share of
Common Stock. The warrants are exercisable at $5.00 per share during the first
year following their issuance, $6.00 per share during the second year following
their issuance, and at $6.50 per share during the third year following their
issuance
In the first quarter of 2000, the Company completed a private placement to eight
private investors of an aggregate of 300,000 units for $10.00 per unit for
aggregate proceeds of $3,000,000. Each unit consisted of four shares of Common
Stock, and a detachable Class A five-year warrant for the purchase of one share
of Common Stock and a detachable Class B five-year warrant for the purchase of
one share of Common Stock. The Class A and Class B warrants are exercisable at
$2.50 and $3.50 per share, respectively.
The Company expects that the proceeds from its capital raising activities along
with revenues generated from operations will be adequate to meet the Company's
projected working capital and other cash requirements for at least the next
twelve months. Management intends to closely follow the Company's progress and
to reduce expenses if the Company's strategies do not result in sufficient
revenues within a reasonable period. Any such reduction will involve scaling
back, delaying or postponing those development activities that are not essential
to the Company achieving its stated objectives.
The Company leased its principal facilities under a noncancellable operating
lease through October 31, 1999, which had a five-year renewable term at market
rates. The lease was subject to annual adjustments for facility operating costs
in excess of an established base year. On December 31, 1998, the Company reduced
the size of the facilities by approximately 38%. The minimum annual commitment
for rent under this lease was approximately $82,700. The rent expense under this
lease in 1999 and 1998 was approximately $82,700 and $133,200, respectively.
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The Company entered into a lease agreement dated October 1,1999, with the Atrium
Northeast Limited Partnership effective November 1, 1999, for a 5 year period
with an option to renew for one 5-year period at market rates. The lease is for
18,124 square feet of office space at a base rent of $276,391 for the first
year. The second year base rent increases to $280,922. The third through fifth
year base rent increases to $285,453. The Company entered into a lease addendum
dated March 1, 2000, with the Atrium Northeast Limited Partnership effective
March 1, 2000, and continuing in effect through the existing Lease term of
October 31, 2004. This addendum is for 1,350 square feet of office space making
the office space 19,474 square feet at a base rate of $296,978 for the first
year. The second year base increases to $301,847. The third through fifth year
base rent increases to $306,716.
Net cash used in operating activities was approximately $1,270,000 during the
three months ended March 31, 2000, as compared to approximately $637,000 during
the three months ended March 31, 1999. The increase in cash used in operating
activities was mainly due an increase in the net loss and a decrease in current
liabilities, partially offset by a decrease in accounts receivable.
Net cash provided by investing activities was approximately $29,800 during the
three months ended March 31, 2000, as compared to net cash used of approximately
$53,100 during the three months ended March 31, 1999. The net cash provided by
investing activities was due to the payoff of related party note receivable
offset by the purchase of equipment and software.
Net cash provided by financing activities was approximately $5,287,600 during
the three months ended March 31, 2000, as compared to approximately $721,200
during the three months ended March 31, 1999. The net cash provided by financing
activities resulted primarily from the completion of private placements of
approximately $4,872,000, the receipt of approximately $444,500 from the
exercise of Common Stock options and warrants offset by payments on the
Company's short-term debt.
The Year 2000
The Company did not experience any significant malfunctions or errors in its
operations or business systems as a result of the Year 2000. Based on operations
since January 1, 2000, the Company does not expect any significant impact to its
ongoing business as a result of the year 2000. It is possible the full impact of
the date change has not been fully recognized. However, the Company believes any
such problems are likely to be minor and correctable. In addition, the Company
could still be negatively affected if its customers or suppliers are adversely
affected by the Year 2000 or similar issues. The Company currently is not aware
of any significant year 2000 or similar problems that have arisen for its
customers and suppliers.
As of March 31, 2000, the Company has not, nor does it expect to, incur any
material costs associated with the year 2000.
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Advisory Note Requiring Forward-looking Statements
This form 10-QSB contains forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. The Company
cautions readers of this Form 10-QSB that such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from those expressed or implied by such forward-looking statements.
Although the Company's management believes that their expectations of future
performance are based on reasonable assumptions within the bounds of their
knowledge of their business and operations, there can be no assurance that
actual results will not differ materially from their expectations. Factors which
could cause actual results to differ from expectations included, among other
things, the risk associated with start-up companies, including start-up losses,
liquidity problems, uncertainty of revenues, markets, profitability and the need
for additional funding; the risks that the Company may be unable to raise
additional capital through private financings, debt or equity offerings or
collaborative arrangements with others on acceptable terms; intense competition
from a variety of competitors with greater resources and market acceptance; the
Company's limited experience in assembling a sales and marketing team and
strategy; the the potential need to make continuing significant investments in
software development in response to rapidly evolving technologies and
technological shifts; the risks associated with the potential loss of one or
more key customers of the Company; the Company's dependence upon key personnel;
the challenges and uncertainties in the implementation of the Company's
expansion and development strategies; and other factors described in other
reports filed by the Company with the Securities and Exchange Commission.
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PART II
OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
The Company is not party to any pending litigation.
Item 2 CHANGES IN SECURITIES
During the three months ended March 31, 2000, the securities identified below
were issued by the Company without registration under the Securities Act of
1933, as amended (the "1933 Act"). In each case, all of the securities were
issued pursuant to the exemption from registration contained in Section 4(2) and
Rule 506 of Regulation D of the 1933 Act as a transaction, not involving a
general solicitation, in which the purchaser was purchasing for investment. The
Company believes that each purchaser was given or had access to detailed
financial and other information with respect to the Company and possessed
requisite financial sophistication.
On February 15, 2000, the Company completed a private placement to two private
investors of an aggregate of 125,000 units for $8.00 per unit each for aggregate
proceeds of $2,000,000. Each unit consisted of two shares of Common Stock and a
detachable three-year warrant for the purchase of one share of Common Stock. The
warrants are exercisable at $5.00 per share during the first year following
their issuance, $6.00 per share during the second year following their issuance,
and at $6.50 per share during the third year following their issuance
On February 16, 2000, the convertible note in the principal amount of $180,000,
originally issued on June 5, 1998, to a private investor, was converted by the
investor into 163,934 shares of Common Stock at the second year conversion rate
of $1.098 per share.
On February 16, 2000, the Company received $277,858 in gross proceeds from three
private investors from the exercise of warrants for the purchase of 259,680
shares of the Company's Common Stock at $1.07 per share.
On February 16, 2000, the Company received $80,000 in gross proceeds from a
private investor from the exercise of warrants for the purchase of 80,000 shares
of the Company's Common Stock at $1.00 per share.
On March 3, 2000, the Company received a secured promissory note in the
principal amount of $600,000 from a private investor for the exercise of
warrants for the purchase of 800,000 shares of the Company's Common Stock at
$0.75 per share. The note matures March 2, 2002, with an interest rate of 5% per
annum.
On March 3, 2000, the Company received a secured promissory note in the
principal amount of $154,000 from a private investor for the exercise of
warrants for the purchase of 110,000 shares of the Company's Common Stock at
$1.40 per share. The note matures March 2, 2002, with an interest rate of 5% per
annum.
On March 8, 2000, the Company completed a private placement to eight private
investors of an aggregate of 300,000 units for $10.00 per unit for aggregate
proceeds of $3,000,000. Each unit consisted of four shares of Common Stock, and
a detachable Class A five-year warrant for the purchase of one share of Common
Stock and a detachable Class B five-year warrant for the purchase of one share
of Common Stock. The Class A and Class B warrants are exercisable at $2.50 and
$3.50 per share, respectively.
Item 3 DEFAULTS UPON SENIOR SECURITIES
This item is not applicable.
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Item 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders of the Company
during the first quarter of fiscal year 2000.
Item 5 OTHER INFORMATION
This item is not applicable.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
There were no Form 8-K filings during the period.
10.16 - Lease Addendum dated February 25, 2000, to the Lease Agreement
dated October 1, 1999, between the Company and Atrium Northeast Ltd
Partnership.
The Financial Data Schedule is included herein as Exhibit 27.
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SIGNATURE
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto, duly authorized.
Integrated Business Systems and Services, Inc.
(Registrant)
/s/ Harry P. Langley
- -------------------------------------
Harry P. Langley
President, Treasurer, Chief Executive
Officer, Chief Financial Officer and
Chairman of the Board
Date: May 15, 2000
Page 14
<PAGE> 1
EXHIBIT 10.16
LEASE ADDENDUM
This Addendum is hereby incorporated into the Lease Agreement dated
October 1, 1999, between Atrium Northeast Limited Partnership, the Landlord, and
Integrated Business Systems & Services, Inc., the Tenant.
Whereas the above noted parties wish to enter into a Lease space
expansion agreement in the facility known as the Atrium Northeast Office
Building at 115 Atrium Way, Columbia, South Carolina.
Now and therefore the following provisions are agreed:
1. This Lease Addendum will be effective beginning March 1, 2000, and
continue in effect through the existing Lease term of October 31, 2004.
2. The Tenant has determined to expand its space to suite 207.
Accordingly, the leased premises will be expanded, in its as is condition, by
the addition of the suite's area totaling 1,350 rentable square feet.
The new rentable area will total 19,474 rentable square feet.
3. The pro-rata share is .34, or 34%, percent.
4. Base rental will be adjusted to $24,748.21 per month March 1, 2000,
through October 31, 2000. Base Rental increases November 1, 2000, through
October 31, 2001 to $25,153.93 per month. Base Rental increases November 1,
2001, through October 31, 2004, to $25,559.63 per month. First year's Annual
Base Rental is $296,978.50. Second year's Annual Base Rental increases to
$301,847.00. Third through fifth year's Annual Base Rental increases to
$306,715.50.
5. Landlord will provide an allowance of $6,075.00 to be used for
improvements to premises.
Except as outlined above, all terms and conditions of the original
Integrated Business Systems & Services, Inc., Lease shall remain in full force
and effect.
Agreed this ___ day of February, 2000, by and between
ATRIUM NORTHEAST LIMITED PARTNERSHIP
BY:
----------------------------------
ITS:
----------------------------------
INTEGRATED BUSINESS SYSTEMS & SERVICES, INC.
BY:
----------------------------------
ITS:
----------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC. FOR THE
THREE MONTHS ENDING MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,130,841
<SECURITIES> 0
<RECEIVABLES> 48,366
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,229,632
<PP&E> 567,219
<DEPRECIATION> (278,478)
<TOTAL-ASSETS> 5,330,130
<CURRENT-LIABILITIES> 226,174
<BONDS> 1,250,000
0
0
<COMMON> 10,392,685
<OTHER-SE> (6,538,729)
<TOTAL-LIABILITY-AND-EQUITY> 5,330,130
<SALES> 0
<TOTAL-REVENUES> 170,286
<CGS> 174,093
<TOTAL-COSTS> 216,371
<OTHER-EXPENSES> 863,614
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,605
<INCOME-PRETAX> (936,304)
<INCOME-TAX> 0
<INCOME-CONTINUING> (936,304)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (936,304)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
