<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 31, 1999
IBS INTERACTIVE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-24073 13-3817344
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
2 RIDGEDALE AVENUE, SUITE 350, CEDAR KNOLLS, NEW JERSEY 07927
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (973) 285-2600
================================================================================
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
This Form 8-K/A amends the Current Report on Form 8-K filed on April
15, 1999 to incorporate Item 7.
As announced in its press release of Thursday, April 1, 1999, on March
31, 1999, IBS Interactive, Inc. ("IBS") entered into an Exchange Agreement (the
"Agreement") with Spectrum Information Systems, Inc., an Alabama corporation
("Spectrum"), and all of Spectrum's stockholders. Spectrum is a full-service
provider of network and systems integration solutions based in Madison, Alabama.
Pursuant to the terms of the Agreement, IBS acquired all of the issued and
outstanding shares of Spectrum in exchange for $3,200,000 or 145,456 (subject to
certain adjustments) unregistered shares of IBS Common Stock, par value $.01 per
share, valued by the parties at $22.00 per share. IBS intends to continue the
existing operations of Spectrum without any material changes.
The foregoing summary of the Acquisition Agreement is qualified in its
entirety by reference to the Acquisition Agreement, a copy of which is attached
hereto as an exhibit.
1
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Item 7 is hereby amended to state as follows:
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
1. Audited financial statements of Spectrum Information Systems,
Inc. as of and for the years ended December 31, 1998 and 1997,
which includes the following:
a. Balance Sheets;
b. Statements of Operations;
c. Statements of Accumulated Deficit;
d. Statements of Cash Flows; and
e. Notes to Financial Statements.
2. Unaudited condensed financial statements of Spectrum Information
Systems, Inc. as of March 31, 1999 and for the three-month
periods ended March 31, 1999 and 1998, which includes the
following:
a. Condensed Balance Sheet;
b. Condensed Statements of Operations;
c. Condensed Statements of Cash Flows; and
d. Notes to the Unaudited Condensed Financial Statements.
(b) PRO FORMA FINANCIAL INFORMATION.
1. Pro forma unaudited financial information of IBS Interactive,
Inc. ("IBS"), which includes the following:
a. Pro Forma Unaudited Condensed Statement of Operations
for the year ended December 31, 1998;
b. Pro Forma Unaudited Condensed Statement of Operations for
the year ended December 31, 1997; and
c. Notes to Pro Forma Unaudited Condensed Financial Statements.
(c) EXHIBITS.
2
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
PAGE
Report of Independent Certified Public Accountants....................4
Report of Independent Certified Public Accountants....................5
Balance Sheets as of December 31, 1998 and 1997.......................6
Statements of Operations for the years ended
December 31, 1998 and 1997..........................................7
Statements of Accumulated Deficit for the years
ended December 31, 1998 and 1997....................................8
Statements of Cash Flows for the years
ended December 31, 1998 and 1997....................................9
Notes to Financial Statements...................................10 - 14
3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Spectrum Information Systems, Inc.
We have audited the accompanying balance sheet of Spectrum Information Systems,
Inc. as of December 31, 1998, and the related statements of operations,
accumulated deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spectrum Information Systems,
Inc. as of December 31, 1998, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Woodbridge, New Jersey
May 26, 1999
4
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Spectrum Information Systems, Inc.
We have audited the accompanying balance sheet of Spectrum Information Systems,
Inc., as of December 31, 1997, and the related statements of operations and
accumulated deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Out
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the estimates made by management,
as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spectrum Information Systems,
Inc., as of December 31, 1997 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ Barfield, Murphy, Shank & Smith, P.C.
Barfield, Murphy, Shank & Smith, P.C.
Birmingham, Alabama
May 13, 1999
5
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
December 31, 1998 1997
- --------------------------------------------------------------------------------
ASSETS
Current:
Cash $ 54,708 $ 10,091
Accounts receivable ($0 allowance for
doubtful accounts in 1998 and 1997) 65,126 121,411
Inventory and supplies 9,381 -
Prepaid expenses and other current assets 260 621
- --------------------------------------------------------------------------------
Total current assets 129,475 132,123
Fixed assets, net 37,694 10,535
Other assets 4,025 4,408
- --------------------------------------------------------------------------------
Total Assets $ 171,194 $ 147,066
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 188,079 $ 4,421
Accrued expenses 239,783 5,802
Notes payable - current 31,509 49,069
- --------------------------------------------------------------------------------
Total current liabilities 459,371 59,292
Note payable - long-term 52,182 -
- --------------------------------------------------------------------------------
Total liabilities 511,553 59,292
Stockholders' deficit:
Common stock 500 500
Additional paid-in capital 28,389 28,289
Contributed capital 160,000 160,000
Accumulated deficit (529,248) (101,015)
- --------------------------------------------------------------------------------
Total stockholders' equity (deficit) (340,359) 87,774
- --------------------------------------------------------------------------------
Total liabilities and stockholders'
equity (deficit) $ 171,194 $ 147,066
================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
YEAR ENDED DECEMBER 31, 1998 1997
-------------------------------------------------------------------------------
Revenues $1,674,158 $411,145
Cost of revenues 1,404,878 389,606
-------------------------------------------------------------------------------
Gross profit 269,280 21,539
Selling, general and administrative expenses 653,025 121,177
-------------------------------------------------------------------------------
Operating loss (383,745) (99,638)
Other income, net 10,228 2,100
Interest expense (45,401) (1,945)
-------------------------------------------------------------------------------
Net loss $ (418,918) $ (99,483)
================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
STATEMENTS OF ACCUMULATED DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
YEAR ENDED DECEMBER 31, 1998 1997
-------------------------------------------------------------------------------
Accumulated deficit, beginning of year $ (101,015) $ -
Net loss (418,918) (99,483)
Distributions to stockholders (9,315) (1,532)
-------------------------------------------------------------------------------
Accumulated deficit, end of year $(529,248) $(101,015)
===============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
YEAR ENDED DECEMBER 31, 1998 1997
-------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $(418,918) $ (99,483)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 29,747 19,563
Non-cash compensation - 160,000
Changes in operating assets and liabilities:
Accounts receivable 56,285 (121,411)
Inventory and supplies (9,381) -
Prepaid expenses and other current assets 361 (621)
Other assets - (4,485)
Accounts payable 183,658 4,421
Accrued expenses 233,981 5,802
-------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 75,733 (36,214)
-------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (24,062) (30,021)
-------------------------------------------------------------------------------
Cash flows from financing activities:
Repayments of notes payable (37,939) (21,031)
Borrowings 40,100 70,100
Capital contributions 100 28,789
Distributions to stockholders (9,315) (1,532)
-------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (7,054) 76,326
-------------------------------------------------------------------------------
Increase in cash 44,617 10,091
Cash, beginning of year 10,091 -
-------------------------------------------------------------------------------
Cash, end of year $ 54,708 $ 10,091
===============================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 2,800 $ 1,900
===============================================================================
Non-cash investing and financing activities:
In 1998, the Company incurred liabilities of $32,461 to purchase fixed assets.
===============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1. ORGANIZATION AND Spectrum Information Systems, Inc. (the "Company")
NATURE OF was organized in January 1997 as an Alabama
BUSINESS Corporation. The Company principally develops,
markets and installs fiber optic networks and
information systems.
2. SUMMARY OF REVENUE RECOGNITION
SIGNIFICANT
ACCOUNTING Revenue is recognized as services are rendered to
POLICIES clients. In the event that there are significant
performance obligations yet to be fulfilled arising
from service and maintenance projects, revenue
recognition is deferred until such conditions are
removed.
INCOME TAXES
The stockholders have elected, under the applicable
provisions of the Internal Revenue Code and applicable
state code, to report their respective results of
operations for federal and state income tax purposes
as an "S" Corporation. Under those regulations, the
stockholders individually received the income tax
benefit of their respective share of the Company's net
loss. Accordingly, the Company has not recorded a
provision or benefit for federal and state income
taxes for the years ended December 31, 1998 and 1997.
FINANCIAL INSTRUMENTS AND CONCENTRATIONS
Financial instruments which potentially subject the
Company to credit risk consist primarily of a
concentration of unsecured trade accounts receivables.
The Company performs ongoing credit evaluations of its
customers and generally does not require collateral on
accounts receivable.
FIXED ASSETS
Fixed assets are stated at cost, reduced by a reserve
for accumulated depreciation and amortization.
Depreciation is provided under the straight line
method based upon the following useful lives:
-------------------------------------------------------
Computer equipment 3 years
Vehicles 5 years
Furniture and fixtures 7 years
Leasehold improvements Lease term
-------------------------------------------------------
10
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying values reported in the accompanying
balance sheets for accounts receivable, accounts
payable and notes payable approximate fair value
because of the short-term maturity and variable
interest rates of these financial instruments.
USE OF ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principles 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 these
estimates. Significant estimates used by the Company
include the useful lives ascribed to fixed assets and
the assumptions utilized in developing liabilities on
warranty costs.
3. FIXED ASSETS Major classes of fixed assets, net, consist of the
following:
DECEMBER 31, 1998 1997
-------------------------------------------------------
Computer equipment $ 25,917 $21,961
Vehicles 36,624 6,412
Furniture and fixtures 4,793 -
Leasehold improvements 4,652 517
Other 14,035 1,131
-------------------------------------------------------
86,021 30,021
Less: Accumulated
depreciation and
amortization 48,327 19,486
-------------------------------------------------------
$ 37,694 $10,535
-------------------------------------------------------
4. ACCRUED EXPENSES At December 31, 1998 and 1997, accrued expenses
was comprised of the following:
1998 1997
-------------------------------------------------------
Payroll and payroll taxes $ 99,512 $ 4,052
Employee benefits 34,556 -
Warranty 90,000 -
Other 15,715 1,750
-------------------------------------------------------
$239,783 $ 5,802
-------------------------------------------------------
11
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
5. LONG-TERM DEBT Long-term debt is as follows:
AND FINANCING
ARRANGEMENTS
(SEE NOTE 11)
DECEMBER 31, 1998 1997
------------------------------------------------------
Notes payable, due in
aggregate monthly
installments of $2,241,
accruing interest
ranging from 8.25% to
12% through November
2003, secured in
equipment and vehicles $ 83,691 $49,069
Less: Current portion 31,509 49,069
------------------------------------------------------
$ 52,182 $ -
------------------------------------------------------
The aggregate maturities of long-term debt at December
31, 1998 are as follows:
Year ended December 31,
-------------------------------------------------------
1999 $31,509
2000 18,629
2001 15,356
2002 9,690
2003 8,507
-------------------------------------------------------
$83,691
-------------------------------------------------------
FACTORING AGREEMENT
In 1998, the Company entered into an agreement with a
bank to factor defined accounts receivable. The
Company incurs a charge of 3% on the face value of the
factored accounts receivable. The bank does not have
recourse against the Company on uncollectible amounts.
The related financing charge totaled $42,608 for the
year ended December 31, 1998. Such agreement was
terminated on March 31, 1999.
6. STOCKHOLDERS' CAPITAL CONTRIBUTIONS
EQUITY (DEFICIT)
The stockholders contributed $100 and $28,789 of cash
for the years ended December 31, 1998 and 1997,
respectively.
12
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
COMPENSATION
During the year ended December 31, 1997, the Company's
stockholders did not receive cash compensation for
services rendered. The Company recognized a non-cash
compensation charge of $160,000 ($80,000 classified in
"Cost of revenues" and $80,000 in "Selling, general
and administrative expenses") for the estimated value
ascribed to such services. Such values were derived,
in part, from the stockholders' compensation levels
for the year ended December 31, 1998. The Company
increased its contributed capital in 1997 for the
amount of this charge.
7. BENEFIT PLAN Effective January 1, 1998, the Company adopted a
Savings Incentive Match Plan in which employees
may contribute up to $6,000 in 1998. The Company
matches 100% of each employee's contribution up to a
maximum of 3% of the employee's salary. The Company's
contribution for the year ended December 31, 1998
totaled $10,283.
8. MAJOR CUSTOMERS Two clients accounted for 24% and 15% of the Company's
revenues for the year ended December 31, 1998. One
customer accounted for 70% of the Company's net
accounts receivable at December 31, 1998.
9. COMMITMENTS The Company leases its administrative office
under an operating lease, which expires in
October 1999. Future net minimum annual rental
payments under the non-cancelable lease is $27,500.
Rent expense for the years ended December 31, 1998 and
1997 totaled $30,000 and $5,000, respectively.
10. YEAR 2000 The Company could be adversely affected if its
(UNAUDITED) computer systems, or those used by suppliers or
customers, do not properly process and calculate
date-related information and data from the period
surrounding and including January 1, 2000. This is
commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and
various devices and services utilized in the Company's
business. At this time, because of the complexities
involved in this issue, management cannot provide
assurances that the Year 2000 issue will not have an
effect on the Company's operations.
13
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
11. SUBSEQUENT EVENTS On March 31, 1999, the stockholders sold the
outstanding shares of the Company to IBS Interactive,
Inc. ("IBS") in exchange for 145,456 shares of IBS
common stock. The final determination of shares to be
issued is contingent upon the defined financial
position of the Company at closing.
Outstanding notes payable of $83,691 as of December
31, 1998 were repaid on March 31, 1999.
14
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
CONDENSED BALANCE SHEET
(UNAUDITED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Current:
Cash $ 138,000
Accounts receivable, net 319,000
Other current assets 13,000
- --------------------------------------------------------------------------------
Total current assets 470,000
Fixed assets, net 56,000
Other assets 4,000
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 530,000
================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 340,000
Due to IBS Interactive, Inc. 410,000
- --------------------------------------------------------------------------------
Total current liabilities 750,000
- --------------------------------------------------------------------------------
Stockholders' deficit:
Common stock 1,000
Additional paid-in capital 31,000
Contributed capital 160,000
Accumulated deficit (412,000)
- --------------------------------------------------------------------------------
Total Stockholders' Deficit (220,000)
- --------------------------------------------------------------------------------
Total liabilities and stockholders' deficit $ 530,000
================================================================================
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
15
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 1998
- --------------------------------------------------------------------------------
Revenues $672,000 $341,000
Cost of revenues 472,000 248,000
- --------------------------------------------------------------------------------
Gross profit 200,000 93,000
Selling, general and administrative expenses 79,000 47,000
- --------------------------------------------------------------------------------
Operating income 121,000 46,000
Other expense (income), net 4,000 (3,000)
- --------------------------------------------------------------------------------
Net income $117,000 $ 49,000
================================================================================
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
16
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 1998
- --------------------------------------------------------------------------------
Cash flows provided by operating activities $192,000 $177,000
Cash flows used in investing activities (25,000) (22,000)
Cash flows used in financing activities (84,000) (27,000)
- --------------------------------------------------------------------------------
Net increase in cash 83,000 128,000
Cash, at beginning of period 55,000 10,000
- --------------------------------------------------------------------------------
Cash, at end of period $138,000 $138,000
================================================================================
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
17
<PAGE>
SPECTRUM INFORMATION SYSTEMS, INC.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION The accompanying condensed financial
statements as of March 31, 1999 and for the
three months ended March 31, 1999 and 1998
are unaudited but, in the opinion of
management of Spectrum Information Systems,
Inc. (the "Company"), contain all
adjustments necessary to present fairly the
financial position at March 31, 1999, the
results of operations for the three months
ended March 31, 1999 and 1998, and cash
flows for the three months ended March 31,
1999 and 1998. These adjustments are of a
normal recurring nature.
Certain information and footnote disclosures
normally included in financial statements
that have been prepared in accordance with
generally accepted accounting principles
have been condensed or omitted pursuant to
the rules and regulations of the Securities
and Exchange Commission, although management
of the Company believes that the disclosures
contained in these financial statements are
adequate to make the information presented
therein not misleading. For further
information, refer to the Company's
financial statements and notes thereto for
the years ended December 31, 1998 and 1997.
The results of operations for the three
months ended March 31, 1999 are not
necessarily indicative of the results of
operations to be expected for the full
fiscal year ending December 31, 1999.
2. BUSINESS COMBINATION In March 1999, all of the shareholders of
the Company sold their ownership interests
to IBS Interactive, Inc. ("IBS") in exchange
for 145,456 shares of IBS common stock. The
final determination of shares to be issued
is contingent upon the defined financial
position of the Company at closing and the
resolution of specific matters. No
adjustments arising from this business
combination have been reflected in the
accompanying unaudited condensed financial
statements as of and for the three months
ending March 31, 1999.
18
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
1. Pro forma unaudited financial information of IBS Interactive,
Inc. ("IBS"), which includes the following:
a. Pro Forma Unaudited Condensed Statement of Operations
for the year ended December 31, 1998;
b. Pro Forma Unaudited Condensed Statement of Operations for
the year ended December 31, 1997;
c. Notes to Pro Forma Unaudited Condensed Financial Statements.
19
<PAGE>
IBS INTERACTIVE, INC.
PRO FORMA UNAUDITED CONDENSED FINANCIAL STATEMENTS
The accompanying pro forma unaudited condensed statements of operations
for the years ended December 31, 1998 and 1997 are based upon the historical
financial statements of IBS, Entelechy, Inc. ("Entelechy") and Spectrum
Information Systems, Inc. ("Spectrum"), adjusted to give effect to the business
combinations of Entelechy (accounted for as a purchase) and Spectrum (accounted
for as a pooling of interests), as if such business combinations had occurred on
January 1, 1997. A pro forma unaudited condensed balance sheet and statement of
operations as of and for the three month period ended March 31, 1999 are not
presented herein since the effects of the Spectrum business combination are
reflected in the Company's consolidated financial statements included in Form
10-QSB for the period ended March 31, 1999.
The pro forma unaudited condensed statements of operations are not
necessarily indicative of the results that would have been obtained if such
business combinations had occurred on the dates indicated or for any future
period or date. The pro forma unaudited adjustments give effect to available
information and assumptions that IBS believes are reasonable. The pro forma
unaudited condensed financial information should be read in conjunction with the
historical financial statements of IBS and notes thereto included in IBS' 10-KSB
dated March 31, 1999, IBS' 10-QSB dated May 17, 1999, and this Form 8-K/A
(Amendment No. 1).
20
<PAGE>
IBS INTERACTIVE, INC.
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
IBS Spectrum
Historical Historical Pro Forma
- --------------------------------------------------------------------------------
Revenues........................ $9,805,000 $1,674,000 $11,479,000
Cost of services................ 6,438,000 1,405,000 7,843,000
---------------------------------------------
Gross profit.................... 3,367,000 269,000 3,636,000
Selling, general and
administrative.................. 3,001,000 653,000 3,654,000
Non-cash compensation expenses.. 290,000 - 290,000
Merger related expenses......... 109,000 - 109,000
Amortization of intangible assets 173,000 - 173,000
---------------------------------------------
Operating loss.................. (206,000) (384,000) (590,000)
Other income (expense), net..... 161,000 (35,000) 126,000
---------------------------------------------
Loss before income taxes........ (45,000) (419,000) (464,000)
Income tax provision............ (15,000) - (15,000)
---------------------------------------------
Net loss........................ $ (60,000) $ (419,000) $ (479,000)
=============================================
SEE ACCOMPANYING NOTES TO PRO FORMA UNAUDITED CONDENSED FINANCIAL
STATEMENTS.
21
<PAGE>
<TABLE>
<CAPTION>
IBS INTERACTIVE, INC.
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
Entelechy
Eliminations Subtotal -
IBS Entelechy & IBS & Spectrum Spectrum
Historical Historical Adjustments Entelechy Historical Adjustments Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................... $5,161,000 $366,000 $(42,000)(b) $ 5,485,000 $411,000 $ -- $ 5,896,000
Cost of services.............. 2,817,000 299,000 (42,000)(b) 3,074,000 390,000 -- 3,464,000
--------------------------------------------------------------------------------------------------
Gross profit.................. 2,344,000 67,000 -- 2,411,000 21,000 -- 2,432,000
Selling, general and 2,810,000 115,000 -- 2,925,000 121,000 -- 3,046,000
administrative................
Acquisition expenses.......... -- -- -- -- -- 50,000(a) 50,000
Amortization of intangible
assets........................ 12,000 -- 156,000(b) 168,000 -- -- 168,000
Compensation expense - Entelechy -- -- 197,000(c) 197,000 -- -- 197,000
Non-cash compensation expenses 40,000 -- -- 40,000 -- -- 40,000
---------------------------------------------------------------------------------------------------
Operating loss................ (518,000) (48,000) (353,000) (919,000) (100,000) (50,000) (1,069,000)
Other expense, net............ (92,000) (13,000) -- (105,000) -- -- (105,000)
---------------------------------------------------------------------------------------------------
Loss before income taxes...... (610,000) (61,000) (353,000) (1,024,000) (100,000) (50,000) (1,174,000)
Income tax provision.......... (84,000) -- -- (84,000) -- -- (84,000)
---------------------------------------------------------------------------------------------------
Net loss...................... $(694,000) $(61,000) $(353,000) $(1,108,000) $(100,000) $(50,000) $(1,258,000)
===================================================================================================
SEE ACCOMPANYING NOTES TO PRO FORMA UNAUDITED CONDENSED FINANCIAL STATEMENTS.
</TABLE>
22
<PAGE>
IBS INTERACTIVE, INC.
NOTES TO PRO FORMA UNAUDITED CONDENSED FINANCIAL STATEMENTS
Adjustments to reflect the Spectrum business combination, as if it had occurred
as of January 1, 1997 are as follows:
(a) Estimated costs arising from the Spectrum business combination have
been expensed in the year ended December 31, 1997.
Adjustments to reflect the Entelechy business combination, as if it had occurred
as of January 1, 1997 are as follows:
(b) Amortization of intangible assets arising from the acquisition
amounting to $156,000; such amount is amortized over an estimated
useful life of five years.
(c) Recognition of compensation expense related to the issuance of
contingent shares of IBS common stock on the first anniversary date
of the acquisition. The issuance of such shares is contingent upon
the former Entelechy stockholders remaining in the employ of IBS.
23
<PAGE>
(c) EXHIBITS.
The following exhibits are included as part of this Report:
2.1* Exchange Agreement, dated as of March 31, 1999, by and among
IBS, Dan E. Spencer, Raymond Deep, Michael Bayless, Michael
Ivey, Billy Lenox and Spectrum.
99.1* Press release of IBS, dated April 1, 1999.
--------------------
* Previously filed in the Current Report on Form 8-K filed by IBS
on April 15, 1999.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IBS INTERACTIVE, INC.
Date: June 2, 1999 By: /s/ Nicholas R. Loglisci, Jr.
--------------------------------------
Name: Nicholas R. Loglisci, Jr.
Title: President and Chief Executive Officer
25
