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, 2000
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _____________ to ______________.
Commission File Number 0-027073
INTRACO SYSTEMS, INC.
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
Nevada 87-0381511
--------------------------------------- ----------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
3998 FAU Boulevard, Suite 210
Boca Raton, FL 33431
-------------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (561) 367-0600
--------------
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 [ ]
State the number of shares outstanding of each of the Issuer's classes
of common equity, as of the latest practical date: At November 13, 2000, there
were outstanding 17,386,250 shares of Common Stock, $.01 par value per share.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
TABLE OF CONTENTS
PAGE
PART I
Item 1. Financial Statements:
Condensed Balance Sheet as of September 30, 2000 (Unaudited)........1
Condensed Statements of Operations for the Three and Nine
Months ended September 30, 2000 and 1999 (Unaudited)...........3
Condensed Statements of Cash Flows for the Nine Months ended
September 30, 2000 and 1999 (Unaudited)........................4
Notes to Condensed Financial Statements.............................5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..........................................7
PART II
Item 1. Legal Proceedings..................................................12
Item 2. Changes In Securities and Use of Proceeds..........................12
Item 3. Defaults Upon Senior Securities....................................12
Item 4. Submission of Matters to a Vote of Security Holders................12
Item 5. Other Information..................................................12
Item 6. Exhibits and Reports on Form 8-K...................................12
Signatures...................................................................14
i
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTRACO SYSTEMS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $1,316,780
Accounts receivable, net 785,624
Inventory 56,197
Prepaid expenses 81,779
----------
Total current assets 2,240,380
----------
Property and equipment, net 1,026,794
Other assets:
Due from related party 6,907
Goodwill, net 178,996
Deposits 18,184
License agreement, net 18,667
----------
Total other assets 222,754
----------
Total assets $3,489,928
==========
See accompanying notes to condensed financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
INTRACO SYSTEMS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities:
Accounts payable $ 416,363
Deferred revenue 143,030
Accrued expenses 227,799
Customer deposits 31,458
Capital lease payable 9,830
Stock issuance cost payable 254,840
-----------
Total current liabilities 1,083,320
-----------
Capital lease payable 23,885
-----------
Stockholders' equity:
Series A convertible redeemable preferred stock, $0.001 par
value, 2,500,000 shares authorized and 396,500 shares issued
and outstanding, 7%
cumulative, with a $1.00 per share preference value 397
Series B convertible redeemable preferred stock,
$0.001 par value, 1,700,000 shares authorized and 972,400
shares issued and outstanding, with a $1.00 per share
preference value and $.997 for subscriptions
over $100,000 972
Common stock, $0.001 par value, 100,000,000 shares
authorized, 17,386,250 shares issued and outstanding 17,386
Additional paid-in capital 7,290,741
Accumulated deficit (4,953,773)
Outstanding stock options 27,000
-----------
Total stockholders' equity 2,382,723
-----------
Total liabilities and stockholders' equity $ 3,489,928
===========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
INTRACO SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Systems/networks $ 1,156,616 $ 209,726 $ 3,860,396 $ 1,597,149
Service contracts 108,318 114,030 496,887 426,078
------------ ------------ ------------ ------------
Total revenues 1,264,934 323,756 4,357,283 2,023,227
------------ ------------ ------------ ------------
Cost of revenues:
Systems/networks 1,155,623 178,864 3,327,462 1,201,129
Service contracts 87,191 38,855 299,762 246,346
------------ ------------ ------------ ------------
Total cost of revenues 1,242,814 217,719 3,627,224 1,447,475
------------ ------------ ------------ ------------
Gross profit 22,120 106,037 730,059 575,752
General and administrative 1,513,739 619,841 3,677,193 1,381,038
------------ ------------ ------------ ------------
Loss from operations (1,491,619) (513,804) (2,947,134) (805,286)
------------ ------------ ------------ ------------
Interest income 53,937 8,487 82,568 27,647
Interest expense (636) (12,753) (14,312) (31,094)
Other income 5,074 -- 9,408 --
------------ ------------ ------------ ------------
Loss before income taxes (1,433,244) (518,070) (2,869,470) (808,733)
Provision (benefit) for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (1,433,244) $ (518,070) $ (2,869,470) $ (808,733)
============ ============ ============ ============
Net loss per share (basic and diluted) (0.08) (0.04) (0.18) (0.07)
============ ============ ============ ============
Weighted average number of shares
outstanding and to be issued 17,191,684 11,830,739 16,124,235 11,830,739
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
INTRACO SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------------------------------------------
For the nine months
ended september 30,
---------------------------
2000 1999
----------- ------------
Cash flows from operating activities:
Net loss $(2,869,470) $ (808,733)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 134,765 17,308
Issuance of common stock for services 8,190 --
Changes in assets and liabilities
(Increase) decrease in:
Inventory (39,519) 35,899
Accounts receivable (250,202) (136,075)
Interest receivable -- (25,208)
Note receivable - related party -- 74,963
Prepaid expenses 4,616 81,024
Due from related party (6,907) 46,480
Due from shareholder --
Security deposits (3,120) (4,245)
Increase (decrease) in:
Accounts payable (609,589) 444,076
Deferred revenue (22,464) (24,917)
Customer deposits 27,558 (152,173)
Accrued expenses 227,799 43,656
----------- -----------
Net cash (used) by operating activities $(3,398,343) $ (407,945)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (894,123) (97,118)
Purchase of license agreement (50,000) --
----------- -----------
Net cash (used) by investing activities (944,123) (97,118)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of stock, net 5,664,616 957,517
Dividends paid (26,907) (1,092)
Repayment of long-term debt (130,188) (196,351)
Costs associated with recapitalization -- (283,153)
----------- -----------
Net cash provided by financing activities 5,507,521 476,921
----------- -----------
Net increase in cash 1,165,055 (28,142)
Cash at beginning of period 151,725 32,245
----------- -----------
Cash at end of period $ 1,316,780 $ 4,103
=========== ===========
See accompanying notes to condensed financial statements.
4
<PAGE>
INTRACO SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
================================================================================
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and Article 310 of Regulation S-B. Accordingly, they do not include
all of the information and footnotes required for complete financial statements.
In the opinion of management, all adjustments necessary for a fair presentation
of the results for the interim periods presented have been included. Such
adjustments consist of normal recurring accruals and other adjustments.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statements for the year ended December 31,
1999. Operating results for the nine months ended September 30, 2000, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000.
It is recommended that the accompanying condensed financial statements be read
in conjunction with the financial statements and notes thereto included
elsewhere in this filing.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
SEPTEMBER 30,
2000
-----------
Leasehold improvements $ 57,908
Equipment 1,190,236
Furniture and fixtures 22,260
-----------
Total property and equipment 1,270,404
Less: accumulated depreciation (243,610)
-----------
Property and equipment, net $ 1,026,794
===========
Depreciation expense for the nine months ended September 30, 2000 was $101,243.
NOTE 3 - STOCKHOLDERS' EQUITY
In April of 1999, CTE, a public shell, acquired all of the outstanding common
stock of the Company. For accounting purposes, the acquisition has been treated
as an acquisition of CTE by the Company and as a recapitalization of the
company. The exchange ratio of common shares was one-for-one. The estimated fair
market value of the net assets acquired was $1,005. As a result of the
recapitalization, the Company is now authorized to issue 100,000,000 shares of
common stock.
In March of 2000, the Company sold approximately 160,000 shares of $0.001 par
value common stock to an investor at a cost of $1.25 per share with 30,000
warrants exercisable at $0.75 per warrant. The Company sold approximately
3,475,000 units for $1.50 per unit; each unit consists of one share of common
stock and one warrant exercisable at $1.50 per warrant. Fees associated with the
offerings consisted of cash, warrants, and common stock. The warrants were
issued to the outside investors and considered a cost of raising capital.
5
<PAGE>
INTRACO SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
================================================================================
NOTE 3 - STOCKHOLDERS' EQUITY, continued
In accordance with the original purchase agreement, in June 2000, Intraco issued
an additional 50,000 shares of restricted common stock as consideration in
acquiring the assets of Page Telecomputing. The transaction resulted in
additional goodwill of $98,400, which will be amortized over 15 years. The
common stock was valued at the fair market value on the date of issuance.
During the nine months ended September 30, 2000, Intraco issued 198,560 shares
of restricted common stock as payment of fees and issued 95,115 shares of
restricted common stock to one employee and five former employees in connection
with the exercise of stock options.
During the nine months ended September 30, 2000, preferred stock holders
converted 388,000 shares of preferred stock to common stock.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The following discussion regarding Intraco Systems, Inc. (the
"Company" or "Intraco") and its business and operations contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements consist of any statement other
than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative or other variations thereof or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward-looking statements, including no history of profitable operations,
competition, dependence on key personnel and other factors discussed under the
section titled "Management's Discussion and Analysis or Plan of Operations --
Factors That May Affect Future Results" in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1999. The Company does not have a policy
of updating or revising forward-looking statements and thus it should not be
assumed that silence by management over time means that actual events are
occurring as estimated in such forward-looking statements.
The following discussion and analysis should be read in conjunction
with the financial statements appearing as Item 1 to this Report. These
financial statements reflect the operations of the Company for the nine months
and three months ended September 30, 2000 and 1999.
RESULTS OF OPERATIONS
GENERAL
Intraco is an information technology, data and voice service provider.
Intraco is in the process of shifting its business focus from the direct sale of
computer products and services to be installed on customer premises to providing
speech recognition, voice activated telephone products and services delivered
from Intraco data centers for recurring monthly fees. Management believes that
Intraco's competitive advantage lies in its ability to combine in-house
expertise with leading speech recognition technologies available from third
parties, including voice browsers and natural language engines, to create
comprehensive commercial solutions. Intraco plans to deliver these advanced
technology services to small and midsize businesses and branch offices of larger
companies. Ultimately, these services will voice-enable a wide range of
applications such as websites, e-commerce, auctioning, paging, e-mail and
unified messaging.
Intraco is currently seeking to execute an aggressive growth strategy
that includes both internal growth through product, sales and marketing
expansion and external growth through mergers, acquisitions, joint ventures and
similar transactions. Intraco is currently planning to acquire
telecommunications, internet service provider and network systems integration
areas. Additionally, Intraco, through relationships it has established with
Motorola, Microsoft, Nuance,
7
<PAGE>
Lernout, Hauspie and Phone Systems, will incorporate new products and
technologies into its system. These new products and technologies include phone
access to Internet websites and voice-recognition-driven auto-attendant
products.
By year-end 2000, Intraco will require additional funding to cover
current operations and to continue the implementation of its business plan. For
this, Intraco anticipates that it will require approximately $5 million. The
Company may need additional funds as its customer base increases and the
equipment necessary to provide these services increases accordingly. Management
expects to raise these additional funds by private investment and possible
public offerings in the second quarter of 2001. Intraco cannot guarantee,
however, that additional capital will be available in the amount required, on
terms acceptable to it, and at the time required by it.
Intraco was incorporated in Florida in March 1990. In April 1999, it
completed a share exchange with Custom Touch Electronics, Inc., a Nevada
corporation ("CTE"), with no material operations whose common stock traded on
the OTC Bulletin Board. Pursuant to this share exchange, outstanding shares of
Intraco capital stock were exchanged for 10,531,500 CTE shares. Thereafter, CTE
changed its name to Intraco Systems, Inc.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
REVENUES. Revenues increased 115% to $4,357,283 for the nine months
ended September 30, 2000 from $2,023,227 for the nine months ended September 30,
1999. This increase was due to a $2,263,247 increase in systems/networks
revenues. Systems/networks revenues accounted for approximately 89% of revenues
in the 2000 period compared to approximately 79% for the corresponding period in
1999.
COST OF REVENUES. Cost of revenues increased 149.2% to $3,627,224 for
the nine months ended September 30, 2000 from $1,447,475 for the nine months
ended September 30, 1999. Cost of systems/networks revenues were $3,327,462, or
86.2%, of systems/networks revenues for the nine months ended September 30,
2000, compared to $1,201,129, or 75.2%, of systems/networks revenues for the
corresponding period in 1999. Cost of service contracts were $299,762, or 60.3%,
of service contract revenues for the nine months ended September 30, 2000,
compared to $246,346, or 57.8%, for the corresponding period in 1999. The
increase in the cost of revenues is mainly due to the decrease in the margins as
a result of the margin pressure on hardware being experienced throughout the
industry, Intraco expects margins to improve as a greater proportion of sales
come from its newer product offerings. These products include computer
telephony, speech recognition and information technology outsourcing. Although
there can be no assurance that this strategy will prove successful, management
believes it is necessary for Intraco's long-term viability.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the nine months ended September 30, 2000 were
$3,677,193, compared to $1,381,038 for the nine months ended September 30, 1999,
an increase of $2,296,155, or 166.3%. Of the dollar increase, $1,506,429
represented increased payroll and commission costs in
8
<PAGE>
connection with the hiring of additional personnel to begin entering new markets
and to deliver the new products and services; $74,700 represented recruiting
fees in connection with the hiring of sales and engineering personnel; $79,820
represented increased professional fees; $114,126 represented increased public
relations costs in connection with engaging a public relations firm; $56,197
represented increased advertising expenses; $95,868 represented increased
directors and officers, health and workers' compensation insurance costs; and
$117,457 reflects increased levels of depreciation and amortization due to
capital expenditures; and $63,327 represented increased service charges for the
new data center. The remaining increase was attributable to additional selling,
general and administrative expenses.
INTEREST INCOME. Interest income, net of interest expense, increased
by $71,703 to $68,256 for the nine months ended September 30, 2000 as compared
to net interest expense of $3,447 for the nine months ended September 30, 1999,
reflecting the interest earned on deposits and the repayment of long-term debt.
NET LOSS. As a result of the foregoing, Intraco reported a net loss of
$2,869,470 for the nine months ended September 30, 2000 compared to a net loss
of $808,733 for the nine months ended September 30, 1999, an increase of
$2,060,737.
ACCOUNTS RECEIVABLE. Accounts receivable increased $724,127, or 1072%,
to $791,681 for the period ended September 30, 2000 from $67,554 for the period
ended September 30,1999. This increase was primarily due to the substantial
increase in revenues. As of September 30, 2000, 65% of the accounts receivable
were current as compared to 52% as of September 30, 1999.
ACCOUNTS PAYABLE. Accounts payable decreased $ 360,189, or 46.3%, to
$416,363 for the period ended September 30, 2000 from $776,552 for the period
ended September 30, 1999. The decrease was due to the use of the net proceeds
from Intraco's private offering in March 2000 to pay down outstanding trade
payables. Intraco was able to reduce accounts payable to a current status. As a
result of prior credit issues, we are required to maintain current payment terms
with our vendors.
PROPERTY AND EQUIPMENT. Property and equipment increased $983,047, or
342%, to $1,270,404 for the period ended September 30, 2000 from $287,357 for
the period ended September 30, 1999. The increase was due to the investment in
additional equipment to support provide our new speech and telecommunication
services.
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1999
REVENUES. Revenues increased 291% to $1,264,934 for the three months
ended September 30, 2000 from $323,756 for the three months ended September 30,
1999. This increase was primarily due to a $946,890 increase in systems/networks
revenues. Systems/networks revenues accounted for approximately 91.4% of
revenues in the 2000 period compared to approximately 64.8% for the
corresponding period in 1999.
9
<PAGE>
COST OF REVENUES. Cost of revenues increased 471% to $1,242,814 for
the three months ended September 30, 2000, from $217,719 for the three months
ended September 30, 1999. Of the dollar increase, $117,000 represents an
adjustment to inventory. The cost of revenues in the prior period was
understated by this adjustment. For the three months ended September 30, 2000
the cost of systems/networks were $1,155,623, or 99.9%, including the inventory
adjustment, and $1,038,623, or 89.8%, excluding the inventory adjustment, of
systems/networks revenue compared to $178,864, or 85.3%, of systems/networks
revenue for the corresponding period in 1999. Cost of service contracts were
$87,191, or 80.5%, of service contract revenue for the three months ended
September 30, 2000, compared to $38,855, or 34.1%, for the corresponding period
in 1999. The increases in the cost of revenues is mainly due to decrease in the
margins as a result of the margin pressure on hardware being experienced
throughout the industry, Intraco expects this situation to improve as a greater
proportion of sales come from its newer product offerings.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended September 30, 2000 were
$1,513,739, compared to $619,841 for the three months ended September 30, 1999,
an increase of $893,898, or 144.2%. Of the dollar increase, $566,259 represented
increased payroll and commission costs in connection with the hiring of
additional personnel to prepare Intraco to enter new markets and to deliver the
new products and services; $21,017 represented increased professional fees;
$57,321 represented increased public relations costs in connection with engaging
a public relations firm; $64,522 reflects increased levels of depreciation and
amortization due to capital expenditures; and $63,327 represent increased
network service charges for the new data centers. The remaining increase was
attributable to additional selling, general and administrative expenses.
INTEREST INCOME. Interest income, net of interest expense, increased
by $57,567 to $53,301 for the three months ended September 30, 2000 as compared
to net interest expense of $4,266 for the three months ended September 30, 1999,
reflecting the interest earned on deposits and the repayment of long-term debt.
NET LOSS. As a result of the foregoing, Intraco reported a net loss of
$1,433,244 for the three months ended September 30, 2000, compared to a net loss
of $518,070 for the three months ended September 30, 1999, an increase of
$915,174.
LIQUIDITY AND CAPITAL RESOURCES
Intraco has incurred significant losses and has substantial negative
cash flow from operations. Intraco's independent auditors have included a
footnote in their annual report for the year ended December 31,1999, which
expresses concern about Intraco's ability to continue as a going concern unless
sales increase and/or additional investment capital is raised. Intraco expects
significant operating losses to continue at least during the first half of 2001.
Intraco received approximately $5.4 million from equity private placements
during the first half of 2000. Intraco will require additional funding to cover
current operations and the implementation of its business plan by year end 2000.
Intraco is actively seeking additional financing, which may be either debt or
equity financing. There can be no assurance that any additional financing will
be raised or if raised, on favorable terms.
10
<PAGE>
At September 30, 2000, Intraco's current assets totaled $2,240,380 and
current liabilities totaled $1,083,320. Intraco had long-term liabilities of
$23,885 at September 30, 2000. Management is seeking to raise additional
investment capital, both for working capital as well as to finance its growth
and acquisition strategy. Although there can be no assurance that management
will be successful in securing the needed capital, management is in discussion
with potential investors.
Intraco had $1,316,780 in cash on hand at September 30, 2000, compared
to $151,725 at December 31, 1999. Operating activities for the nine months ended
September 30, 2000 used cash of $3,398,343 primarily due to an increase in
accounts receivable of $250,202 in support of increased revenues, the payment of
trade payables of $609,589 and the net loss of $2,869,470. Net cash used in
investing activities was $944,123, reflecting the purchase of fixed assets and
licensing agreements. Financing activities provided cash in the amount of
$5,507,521 primarily due to issuance of capital stock of $5,664,616, which was
partially offset by repayment of $130,188 of long-term debt.
Intraco intends to pursue expansion and acquisition plans, which may
include the opening of additional facilities, both domestically and
internationally, as well as the acquisition of additional facilities and/or
companies. The success and timing of any such plans and required capital
expenditures are unpredictable. Intraco has no current arrangements with respect
to any possible acquisitions or material capital expenditures. Funding for such
plans may be obtained through the issuance of additional equity and /or through
additional borrowings and through profits from operations. Intraco cannot make
any assurances that such funding would become available for such plans. Also,
because Intraco is operating at a loss, it will need to secure additional
funding to continue existing operations. No assurance can be made that such
funding will be forthcoming and if forthcoming, be available at reasonable
rates.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 29, 1999, Banker's Leasing Association ("Banker's") filed a
suit against Intraco and Jack Berger in the Circuit Court of the Fifteenth
Judicial Circuit in and for Palm Beach County, Florida for breach of a master
lease agreement and personal guaranty related to computer equipment, software
and services leased by Intraco for the amount of $71,608. Intraco filed a
counterclaim based on Banker's failure to provide services agreed to in the
lease and breach of fiduciary duty. Banker's has answered Intraco's counterclaim
and has now filed suit against AIM Solutions, Inc. ("AIM"), as successor to
Enterprises Solutions Group, Inc., the third party responsible for setting up
the computer equipment and software and providing services. In its answer, AIM
has denied Banker's allegations and has raised affirmative defenses. Discovery
has not yet commenced.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In August 2000, Intraco issued 36,487 shares of restricted common
stock to two former employees upon the employees' exercise of stock options
granted to the employees under Intraco's stock option plan in connection with
their employment with Intraco. Intraco did not receive any proceeds from the
exercise of the options because the Optionholders used the cashless exercise
method. The shares were issued pursuant to an exemption from registration under
Sections 3(a)(9) and 4(2) of the Securities Act. Intraco did not pay any fees or
commissions in connection with these issuances.
From February 2000 to September 2000, Intraco issued 388,000 shares of
common stock to preferred shareholders who converted a like number of shares of
preferred stock. The shares were issued pursuant to an exemption from
registration under Section 3(a)(9) of the Securities Act.
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:
12
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
------------------------- ---------------------------------------------------
27 Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K:
Intraco did not file any current reports on Form 8-K for the quarter
ended September 30, 2000.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on behalf by the
undersigned thereunto duly authorized.
INTRACO SYSTEMS, INC.
Dated: November 14, 2000 By: /s/ JACK BERGER
------------------------------------
Jack Berger
President
14
