<PAGE>
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 September 30, 1998 (Third quarter
of fiscal 1998)
OR
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the
transition period from_____________ to ________________
Commission File No. 0-24073
IBS INTERACTIVE, INC.
(Exact name of Small Business Issuer as specified in its Charter)
DELAWARE 13-3817344
(State or other jurisdiction of (I.R S. Employer I.D. No.)
incorporation or organization)
2 RIDGEDALE AVENUE
SUITE 350
CEDAR KNOLLS, NJ 07927
(Address of Principal Executive Offices)
(973) 285-2600
(Registrant's Telephone Number, Including Area Code)
--------------------------------------------------------
(Former Name, Former Address and Former 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.
YES |X| No |_|
As of November 12, 1998, 3,430,488 shares of the issuer's common stock,
par value $.01 per share, were outstanding.
Transitional Small Business Disclosure Format (check one): Yes |_|
No |X|
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<PAGE>
IBS INTERACTIVE, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
ITEM 1. FINANCIAL STATEMENTS
Condensed Interim Balance Sheet as of September
30, 1998 (unaudited)..................................... 1
Condensed Interim Statements of Operations for
the three and nine months ended September 30,
1998 and 1997, (unaudited)............................... 3
Condensed Interim Statements of Cash Flows for
the nine months ended September 30, 1998 and
1997 (unaudited)......................................... 4
Notes to Condensed Interim Financial Statements.......... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................... 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..................................... 12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............. 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................... 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS... 13
ITEM 5. OTHER INFORMATION..................................... 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................... 13
SIGNATURES..................................................... 14
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
IBS INTERACTIVE, INC.
Condensed Interim Balance Sheet
(unaudited, in thousands)
ASSETS SEPTEMBER 30, 1998
------------------
Current Assets
Cash and cash equivalents........................ $ 6,071
Accounts receivable (net of allowance for doubtful 2,308
accounts of $43)...............................
Prepaid expenses................................. 57
Deferred tax assets.............................. 137
Other current assets............................. 14
-------
Total Current Assets...................... 8,587
-------
Property and equipment, net........................... 894
Intangible assets..................................... 796
Intangible asset - deferred compensation.............. 715
Other assets.......................................... 114
-------
TOTAL ASSETS.............................. $11,106
=======
See Accompanying Notes to Condensed Interim Financial Statements.
1
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IBS INTERACTIVE, INC.
Condensed Interim Balance Sheet
(unaudited, in thousands)
LIABILITIES & STOCKHOLDERS' EQUITY SEPTEMBER 30, 1998
------------------
Current Liabilities
Long term debt and capital lease obligations, current $ 539
portion .................................................
Accounts payable and accrued expenses.................... 992
Current portion of deferred compensation................. 391
Other current liabilities................................ 105
---------
Total Current Liabilities........................... 2,027
---------
Long term debt and capital lease obligations................ 147
Non-current liabilities..................................... 563
Deferred tax liabilities.................................... 48
---------
Total Liabilities........................................ 2,785
---------
Stockholders' Equity
Preferred Stock, $.01 par value, authorized 1,000,000
shares, none issued and outstanding................... --
Common Stock, $.01 par value, authorized 11,000,000
shares, 3,431,221 shares issued and outstanding....... 34
Additional paid in capital............................... 9,653
Accumulated deficit...................................... (1,366)
----------
Total Stockholders' Equity............................... 8,321
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,106
=========
See Accompanying Notes to Condensed Interim Financial Statements.
2
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IBS INTERACTIVE, INC.
Condensed Interim Statements of Operations
For the three months ended September 30, 1998 and 1997 and the nine months ended
September 30, 1998 and 1997
(unaudited, in thousands)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------ ---------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues.................................. $ 6,091 $1,359 2,183 $ 479
Cost of services.......................... 3,759 945 1,377 383
------- ------ ------ ------
Gross profit.............................. 2,332 414 806 96
Operating expenses:
Selling, general and administrative.... 1,841 1,284 728 380
Amortization of intangible assets...... 147 55 58 24
Compensation expense-non cash...... 188 - 99 -
------- ------ ------ ------
Operating income (loss)................... 156 (925) (79) (308)
Interest expense (income), net............ (58) 23 (60) 9
------- ------ ------ ------
Income (loss) before income taxes......... 214 (948) (19) (317)
Tax provision............................. 120 - 4 -
------- ------ ------ ------
Net income (loss)......................... $ 94 $ (948) $(23) (317)
======= ====== ====== ======
Earnings (loss) per share
Basic and Diluted........................ $ 0.03 $(0.50) $(0.01) $(0.17)
------- ------ ------ ------
Weighted average common shares
outstanding
Basic.................................... 2,773,777 1,889,901 3,485,278 1,899,304
Diluted.................................. 2,862,254 1,889,901 3,544,649 1,899,304
</TABLE>
See Accompanying Notes to Condensed Interim Financial Statements.
3
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IBS INTERACTIVE, INC.
Condensed Interim Statements of Cash Flows
for the nine months ended
September 30, 1998 and 1997
(unaudited, in thousands)
Nine months ended September 30,
1998 1997
---- ----
Cash Flows used in Operating Activities......... $ (133) $ (627)
Cash Flows used in Investing Activities......... (485) (257)
Cash Flows provided by Financing Activities..... 6,565 779
------- ---------
NET INCREASE (DECREASE) IN CASH
and CASH EQUIVALENTS............................ 5,947 (105)
CASH and CASH EQUIVALENTS
at BEGINNING of PERIOD.......................... 124 181
------- ---------
CASH and CASH EQUIVALENTS
at END of PERIOD................................ $ 6,071 $ 76
======= =========
See Accompanying Notes to Condensed Interim Financial Statements.
4
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NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
1. FINANCIAL STATEMENT PRESENTATION
a. The condensed interim financial statements of IBS Interactive, Inc.
("IBS," or the "Company") included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission with respect to Form 10-QSB.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the
disclosures made herein are adequate to make the information contained
herein not misleading. These condensed interim financial statements
should be read in conjunction with the Company's audited financial
statements for the year ended December 31, 1997 and the notes thereto
included in the Company's Prospectus dated May 14, 1998. In the
Company's opinion, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the
information shown herein have been included. As discussed in Note 2,
the Company acquired DesignFX Interactive, LLC ("DesignFX") in a
business combination accounted for as a pooling-of-interests.
Accordingly, all prior periods' financial statements have been
restated to give effect to the combination.
b. The results of operations for the three months and nine months ended
September 30, 1998 and cash flows for the nine months ended September
30, 1998 presented herein are not necessarily indicative of the
results of operations and cash flows expected for the year ending
December 31, 1998.
c. Basic earnings (loss) per share have been computed using the weighted
average number of shares of common stock outstanding, which includes
the shares issued in connection with the DesignFX combination. Diluted
earnings (loss) per share includes the assumed exercise price of stock
options, warrants and convertible debt (using the treasury stock
method) that could potentially dilute earnings (loss) per share.
2. BUSINESS COMBINATION
a. On September 24, 1998, the Company signed an agreement with DesignFX
to issue 176,944 shares of its common stock for all of the outstanding
membership interests of DesignFX, a Web-design, programming and
hosting services provider. The Company has also reserved 23,216 common
shares for issuance in connection with the DesignFX combination,
pending the final calculation of defined financial data. The business
combination has been accounted for as a pooling-of-interests and,
accordingly, the Company's consolidated financial statements have been
5
<PAGE>
restated to include the results of operations, financial position and
cash flows of DesignFX for all periods presented. There were no
material adjustments necessary for the Company and DesignFX to conform
to consistent accounting policies. The fiscal year end of DesignFX
also conforms to that of the Company. Net revenues and net income for
the Company and DesignFX for the nine months ended September 30, 1998
and selected September 30, 1998 balance sheet data, are as follows:
IBS DESIGNFX COMBINED
--- -------- --------
NINE MONTHS ENDED
SEPTEMBER 30, 1998
Net revenues $4,910 $1,181 $ 6,091
Net income 52 42 94
ASSETS AND LIABILITIES AT SEPTEMBER 30, 1998
IBS DESIGNFX COMBINED
--- -------- --------
Cash and cash equivalents $ 6,033 $ 38 $ 6,071
Other current assets 2,270 246 2,516
Property and equipment (net) 596 298 894
Other assets 1,571 54 1,625
------- ---- -------
Total assets $10,470 $636 $11,106
======= ==== =======
Current liabilities $ 1,183 $844 $ 2,027
Long-term liabilities 624 134 758
------- ---- -------
Total liabilities $ 1,807 $978 $ 2,785
======= ==== =======
3. 1998 INITIAL PUBLIC OFFERING
On May 14, 1998, the Company's registration statement on Form SB-2, as
amended (the "Registration Statement"), relating to its initial offering
of common stock, was declared effective by the Securities and Exchange
Commission (the "Offering"). Whale Securities Co., L.P. acted as the
underwriter in connection with the Offering which was consummated on May
20, 1998. In connection with the Offering, the Company registered, issued
and sold 1,380,000 shares of common stock, including 180,000 shares of
common stock issued in connection with the exercise in full of the
underwriter's over-allotment option at an initial public offering price of
$6.00 per share resulting in proceeds to the Company (net of underwriting
discounts, commissions and other expenses payable by the Company) in the
aggregate approximate amount of $6,630,000. To date, the Company has used
the proceeds of the offering to pay debt of $295,000 in principal amount
and $18,000 of interest thereon relating to outstanding borrowings. The
Company intends to use the remainder of the net proceeds for the purposes
as set forth in the Registration Statement.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This Quarterly Report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"). Actual results, events and circumstances (including future
performance, results and trends) could differ materially from those set forth in
such statements due to various factors, risks and uncertainties including those
set forth under the caption "Risk Factors" in the Company's Prospectus dated May
14, 1998. Except as otherwise required to be disclosed in periodic reports
required to be filed by companies registered under the Exchange Act by the rules
of the Securities and Exchange Commission (the "Commission"), the Company has no
duty and undertakes no obligation to update such statements.
OVERVIEW
The Company provides a broad range of computer networking, programming,
applications development and Internet services primarily to businesses and
organizations. The Company's revenues are derived principally from consulting
fees earned in connection with the performance of systems integration services,
recurring monthly Internet connectivity fees and consulting fees earned in
connection with programming and applications development services.
The Company commenced operations in June 1995 as an Internet service
provider offering Web-site hosting services. Since April 1996, the Company has
acquired Interactive Networks, Inc., Mordor International and Allnet Technology
Services, Inc. ("Allnet"), each an Internet service provider principally
offering dial-up access services. The Company began to provide Systems
Integration and Programming and Applications Development services in April 1996
and has increasingly emphasized such services. In January 1998, the Company
acquired Entelechy, Inc. ("Entelechy"), a provider of programming and
applications development services, including distance learning and on-line
trading applications. In January 1998, the Company also acquired substantially
all of the assets of JDT Webwerx LLC (consisting primarily of computer equipment
and intangible assets).
In September 1998, the Company acquired all of the outstanding
membership interests of DesignFX, a Cherry Hill, New Jersey, based provider of
Web-design, programming and hosting services, in exchange for 176,944 shares of
the Company's common stock. The Company has also reserved 23,216 common shares
for issuance in connection with the DesignFX combination, pending the final
calculation of defined financial data. The business combination has been
accounted for using the pooling-of-interests method and, accordingly, the
Company's consolidated financial statements have been restated to include the
results of operations, financial position and cash flows of DesignFX. IBS
intends to continue the existing operations of DesignFX without any material
changes.
The Company's consulting services generally produce higher profit
margins than the Company's Internet services. For the nine months ended
7
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September 30, 1998, Systems Integration, Programming and Applications
Development and Internet services accounted for approximately 64%, 17% and 19%,
respectively, of the Company's revenues as compared to 45%, 22% and 33%,
respectively, for the year ended December 31, 1997.
Although the Company was profitable for the nine months ended September
30, 1998, the Company expects that operating expenses will increase
significantly in connection with expansion activities that the Company
anticipates undertaking, including those related to: potential acquisitions of
systems integrators, programming and applications development firms and Internet
service providers; further development and upgrade of the Company's network; and
increased marketing activities. Utilizing proceeds from the Offering of common
stock consummated on May 20, 1998, the Company began, during the second quarter
of 1998, to increase its expenditures in connection with network development and
marketing efforts that resulted in increased operating expenses during
subsequent periods. Accordingly, the Company's future profitability will depend
on corresponding increases in revenues from operations.
The Company's projected expense levels are based on its expectations
concerning future revenues and are fixed to a large extent. Any decline in
demand for the Company's services or increases in expenses which are not offset
by corresponding increases in revenue could have a material adverse effect on
the Company. The Company also expects to incur charges of approximately
$180,000, $197,000, $197,000 and $17,000 related to the acquisition of Entelechy
in the years ending December 31, 1998, 1999, 2000 and 2001; and charges of
approximately $23,900, $39,700, $39,700 and $26,500 in the years ended December
31, 1998, 1999, 2000 and 2001 in connection with the 1998 award of a restricted
stock grant to an executive officer. The value of these grants will be expensed
ratably over the respective periods that the stock is earned.
The Company anticipates that growth in its client and subscriber base
will increase operating costs (including expenses related to network
infrastructure and client support) and will require the Company to hire
additional network engineers, programmers and technical personnel. The Company
currently has 79 full-time employees (66 from IBS and 13 from DesignFX). The
Company has entered into employment agreements with eighteen of its employees,
including its executive officers, which provide for aggregate salaries of
$3,549,000 during the year ending December 31, 1998. The Company also intends to
hire up to five additional technical and support personnel.
Management believes that the combination with DesignFX will enhance as
well as expand the Web-design and programming services that the Company offers
to its present and prospective clients, allow it to cross-market its other
services to DesignFX's present and prospective clients and provide a strong base
for its further expansion into the Southern New Jersey/Philadelphia market.
8
<PAGE>
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30,1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
Revenues:
Revenues increased by $4,732,000 from $1,359,000 for the nine months
ended September 30, 1997 ("1997") to $6,091,000 for the nine months ended
September 30, 1998 ("1998"). Revenues for 1998 increased primarily due to
Systems Integration services and, to a lesser extent, Programming and
Applications Development services that were also significantly higher than those
recognized in 1997. Additionally, the continued expansion of the Company's
network infrastructure during 1998 resulted in additional Internet access
subscribers and related revenue. The Company's largest customer (which engaged
the Company in October 1997) accounted for 51% of the Company's consolidated
revenue for 1998 and 30% for the third quarter of 1998.
Cost of Services:
Cost of Services consists primarily of expenses relating to the
operation of the network, including telecommunications and Internet access
costs, costs associated with monitoring network traffic and quality and
providing technical support to clients and subscribers, cost of equipment and
applications sold to clients and subscribers, salaries and expenses of
engineering, programming and technical personnel and fees paid to outside
consultants. Cost of services increased by $2,814,000 from $945,000 for 1997 to
$3,759,000 for 1998. This is a result principally of increases in salaries and
expenses paid to an increased number of engineering, programming and technical
personnel whose services are billed by the Company to clients and which are
directly related to the provision of services offered. Additionally, the Company
incurred increased telecommunications and Internet access costs due to expansion
of the Company's network and an increase in the number of Internet access
subscribers. The Company expects that these costs will continue to increase in
the future to the extent the Company is able to expand its client and subscriber
base and expand its service offerings and network.
Selling, General and Administrative:
Selling, general and administrative expenses consist primarily of
salaries and costs associated with sales personnel, marketing literature,
advertising, direct mailings and the Company's management, accounting, finance
and administrative functions. Selling, general and administrative expenses
increased by $557,000 or 43% from $1,284,000 in 1997 to $1,841,000 for 1998.
This increase is primarily attributed to the hiring of additional personnel
whose salaries, in whole or in part, are not directly allocable to hours billed
for services rendered to clients and additional costs incurred in connection
with expanded administrative functions. In addition, the Company has recognized
a charge of approximately $48,000 through the third quarter of the year ending
December 31, 1998 related to the issuance of options to outside members of the
Board of Directors.
9
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Amortization of Intangible Assets:
Amortization of intangible assets increased by $92,000, from $55,000
for 1997 to $147,000 for 1998. This increase is primarily attributed to the
amortization of intangible assets, including customer lists and goodwill,
acquired by the Company in connection with its purchase of Allnet and Entelechy
which were consummated in April 1997 and January 1998, respectively.
Interest Expense (Income):
Interest expense (income) consists of interest on indebtedness and
capital leases and financing charges in connection with the Company's borrowings
offset by interest income. Interest expense (income) changed by $81,000 from
interest expense (net) of approximately $23,000 for 1997 to interest income
(net) of $58,000 for 1998.
The increase in 1998 interest expense of $51,000 was principally
attributable to outstanding borrowings of DesignFX and interest costs related to
the Company's existing debt.
The increase in 1998 interest income of $132,000 is primarily due to an
increase in invested funds as a result of the Company's receipt of net proceeds
of approximately $6,630,000 from the Offering.
Net Income:
As a result of the foregoing, the Company achieved net income of
$94,000 for 1998 compared to a net loss of $948,000 for 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements have been to fund expenses in
connection with providing consulting services to clients and Internet access to
subscribers. The Company has historically satisfied its working capital
requirements principally through the issuance of equity and debt securities and
borrowings.
At September 30, 1998, the Company had working capital of $6,560,000.
The increase in liquidity resulted primarily from the receipt of net proceeds
from the Offering in the amount of $6,630,000.
Net cash used in operating activities decreased from $627,000 in 1997
to $133,000 in 1998. This change was primarily attributable to: increased
operating results which resulted in net income in the amount of $94,000 for the
nine months ended September 30, 1998, compared to a net loss in the amount of
$948,000 for the corresponding nine month period in 1997, and increases during
the same period for depreciation and amortization of $470,000, offset by
increases in accounts receivable in the amount of $793,000 and decreases during
the same period in deferred revenue in the amount of $238,000.
10
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Net cash used in investing activities increased from $257,000 for 1997
to $485,000 for 1998 due to increased capital expenditures principally related
to the expansion and enhancement of the Company's network.
Net cash provided by financing activities was $779,000 for 1997,
compared to $6,565,000 for 1998. This change is primarily attributable to
$8,266,000 in Offering receipts reduced by $1,636,000 in Offering related costs
and debt repayments of $295,000 in principal and $18,000 in interest relating to
outstanding borrowings, and $9,000 in principal relating to an outstanding bank
loan.
At September 30, 1998, the Company had capital lease obligations in the
aggregate amount of $75,000 that are secured by the personal guarantees of each
of Nicholas R. Loglisci, Jr., the Company's President and Chief Operating
Officer, Clark D. Frederick, the Company's Chief Technical Officer, and Frank R.
Altieri, Jr., the Company's Chief Information Officer. In addition, certain of
these capital lease agreements are secured by the equipment that is the subject
of the capital lease.
At September 30, 1998, the Company had $631,000 in loans payable of
DesignFX, of which $386,000 was repaid in October 1998. The remaining balance
will be refinanced by the Company through available lines of credit.
In June 1998, the Company secured a line of credit in the amount of
$1.5 million from First Union National Bank. The line of credit is for a
one-year period effective July 1, 1998.
Additionally, in May 1998, the Company secured equipment lines of
credit from Ascend Credit Corp., Cisco Systems Capital Corp. and PAM Financial
Corp., each in the amount of $500,000. At September 30, 1998, the Company had no
outstanding indebtedness under any such line of credit.
YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This situation could result in a system
failure or miscalculations causing disruptions of operations, including
inability to process transactions or engage in normal business activities.
Management has evaluated the Company's computer software and hardware
systems, and, based on currently available information, believes that it will
not have to replace or modify any of its hardware or software so that its
systems will function properly with respect to dates in the year 2000 and
thereafter. It is believed that the greatest risk to the Company will be from
outside firms that the Company relies on for its operations as well as the
legacy computer systems of its clients. The failure by outside firms and/or
clients' failure to address Year 2000 Issues, could interfere with the Company's
11
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ability to provide its services, and therefore impact future revenues. As of
November 14, 1998, the Company does not have contingency plans in place to
address these types of problems, but it plans to have all such risks to its
operations identified and fully covered by contingency plans no later than
mid-1999.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) Not Applicable.
(b) Not applicable.
(c) As part of the acquisition of DesignFX, on September 24, 1998 the
Company issued to the interest holders of DesignFX 176,944 shares of the
Company's common stock in exchange for all of the issued and outstanding
membership interests of DesignFX. The issuance of the Company's common stock to
the interest holders of DesignFX was exempt from registration under the
Securities Act of 1933, as amended (the "Act"), pursuant to Section 4(2) of the
Act.
(d) On May 14, 1998, the Company's registration statement on Form SB-2,
as amended (file number 333-47741) (the "Registration Statement"), relating to
the Offering, was declared effective by the Commission. Whale Securities Co.,
L.P. acted as the underwriter in connection with the Offering which was
consummated on May 20, 1998. In connection with the Offering, the Company
registered, issued and sold 1,380,000 shares of common stock, including 180,000
shares of common stock issued in connection with the exercise in full of the
underwriter's over-allotment option at an initial public offering price of $6.00
per share resulting in proceeds to the Company (net of underwriting discounts,
commissions and other expenses payable by the Company) in the aggregate
approximate amount of $6,630,000. Additionally, the Company registered 120,000
shares of common stock underlying warrants to purchase common stock which
warrants were sold by the Company to the underwriter for $100. The warrants are
exercisable for a four-year period commencing on May 14, 1999 at an initial
exercise price of $8.10 per share.
From the effective date of the Registration Statement through September
30, 1998, the Company applied an aggregate of $321,000 of the net proceeds of
the Offering for the repayment of indebtedness and $73,000 towards the purchase
of equipment. The Company believes that none of the proceeds used in the third
quarter of fiscal 1998 was paid, directly or indirectly, to (i) directors or
officers of the Company or their affiliates, (ii) persons owning ten percent or
12
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more of the common stock or (iii) affiliates of the Company. To date, the
Company believes that it has used the net proceeds of the Offering in a manner
consistent with the use of proceeds described in the Registration Statement and
the Prospectus dated May 14, 1998. The remaining net proceeds of the Offering in
the amount of $6,236,000 remain unused.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits in the following table have been filed as part of
this Quarterly Report on Form 10-QSB:
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
27 Financial Data Schedule for the
nine-month period ended
September 30,1998
(b) Reports on Form 8-K.
On October 9, 1998 the Company filed a Report on Form 8-K, under
Item 2, to report the execution of a definitive Membership
Interest Purchase Agreement, dated as of September 24, 1998, among
the Company and the interest holders of DesignFX, whereby the
Company acquired all of the issued and outstanding membership
interests of DesignFX, a Cherry Hill, New Jersey, based provider
of Web-design, programming and hosting services, in exchange for
176,944 shares of the Company's common stock. The Company has also
reserved 23,216 common shares for issuance in connection with the
DesignFX combination, pending the final calculation of defined
financial data. The foregoing summary of the Membership Interest
Purchase Agreement is qualified in its entirety by reference to
the Membership Interest Purchase Agreement attached as an exhibit
to the Report on Form 8-K.
The financial statements required by Items 7(a) and 7(b) of Form
8-K will be filed by amendment as soon as practicable and within
60 days after the required filing date of the Report.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
IBS INTERACTIVE, INC.
Date: November 13, 1998 By: /S/ NICHOLAS R. LOGLISCI, JR.
----------------------------------
Nicholas R. Loglisci, Jr.
President and Chief Operating Officer
(Principal Executive Officer)
Date: November 13, 1998 By: /S/ JEFFREY E. BRENNER
----------------------------------
Jeffrey E. Brenner
Sr. Vice President, Finance and
Administration (Principal Financial and
Accounting Officer)
14
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
27 Financial Data Schedule for the nine-month period
ended September 30, 1998.
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's unaudited Condensed Interim Balance Sheet and unaudited Condensed
Interim Statements of Operations and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 6,071
<SECURITIES> 0
<RECEIVABLES> 2,351
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0
0
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