As filed with the Securities and Exchange Commission on October 13, 1998
Registration No. 333-39775
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3 ON FORM S-2
TO
REGISTRATION STATEMENT
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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COLORADO 84-0868815
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 WEST FORSYTHE STREET, SUITE 803
JACKSONVILLE, FLORIDA 32202
(904) 346-1319
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
G. STEPHEN CARREKER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
200 WEST FORSYTHE STREET, SUITE 803
JACKSONVILLE, FLORIDA 32202
(904) 346-1319
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Copy to:
Lester R. Woodward, Esq.
Davis, Graham & Stubbs LLP
Suite 4700
370 Seventeenth Street
Denver, Colorado 80202
(303) 892-9400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time
to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed
Amount to be offering price maximum aggregate Amount of
Title of securities to be registered registered(1)(2) per unit(3) offering price(3) registration fee(4)
<S> <C> <C> <C> <C>
Common Stock, no par value per share 6,993,380 shares $1.0134 $7,087,415 $162.06
</TABLE>
(1)The shares offered hereby include the resale of up to 2,750,000 shares of
Common Stock issuable upon conversion by certain of the Selling Stockholders,
with no additional proceeds to the Company, of 700 shares of the Company's
Series A 6% Cumulative Convertible Preferred Stock ("Preferred Stock"). As
described further herein, the number of shares issuable upon any conversion
of Preferred Stock is subject to adjustment and could be materially lesser or
greater than 2,750,000 shares depending upon factors that cannot be predicted
by the Company at this time, including, among others, the future market price
of the Common Stock. The number of such shares registered for resale under
this Registration Statement represents an estimate by the Company of the
number of shares to be initially registered, and is not intended to
constitute a projection as to the future market price of the Common Stock or
of the number of shares which may ultimately issue upon any conversion of the
Preferred Stock.
(2)Pursuant to Rule 416 under the Securities Act of 1933, this Registration
statement also registers additional shares of Common Stock which may issue
pursuant to the exercise of warrants or the conversion of Preferred Stock as
adjusted to prevent dilution of such warrants or Preferred Stock in the event
of stock splits, stock dividends or similar transactions.
(3)Calculated solely for purposes of determining the registration fee payable
pursuant to Rule 457, and is based upon the sum of the product of warrants
for 5,000 shares times their respective exercise prices, and an aggregate
offering price of $544,452 pursuant to Rule 457(c) for 1,583,859 shares being
offered by Selling Stockholders, based upon the average of the high and low
sales prices of the Company Common Stock on October 8, 1998, as reported on
the OTC Bulletin Board. Includes the maximum aggregate offering price of
$6,538,063 for the shares registered in the initial filing of this
Registration Statement with the Commission on November 7, 1997 and the
Amendment No. 2 to this Registration Statement filed with the Commission on
September 1, 1998.
(4)A filing fee of $1,682.85, calculated at rates in effect pursuant to Section
6(b) of the Securities Act of 1933 prior to November 28, 1997, was paid upon
the initial filing of this Registration Statement with the Commission to
register 4,004,303 shares of Common Stock. An additional filing fee of
$290.48 with respect to an additional 1,400,218 shares was paid with the
filing of Amendment No. 2 to this Registration Statement The filing fee of
$162.06 with respect to the additional 1,588,859 shares is being paid with
the filing of this Registration Statement.
------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION, DATED OCTOBER ___, 1998
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
6,993,380 SHARES OF COMMON STOCK OFFERED BY THE SELLING STOCKHOLDERS
This Prospectus relates to 6,993,380 shares of the common stock, no par
value (the "Common Stock") of Integrated Spatial Information Solutions, Inc., a
Colorado corporation (the "Company") (formerly DCX, Inc.) (collectively the
"Stockholder Securities") offered by the stockholders of the Company named under
"Selling Stockholders" (the "Selling Stockholders"). The Stockholder Securities
include 1,223,493 shares of Common Stock issuable upon exercise of warrants
issued by the Company (collectively the "Warrant Shares").
3,998,380 of the Selling Stockholder Securities are being offered by the
former shareholders of PlanGraphics, Inc. ("PlanGraphics"), a wholly-owned
subsidiary of the Company, certain consultants engaged by the Company in
connection with the transaction by which PlanGraphics became a Company
subsidiary, and by other consultants, affiliates and investors of PlanGraphics
and the Company. The remaining 2,750,000 and 245,000 Stockholder Securities are
being offered respectively by Austost Anstalt Schaan and Balmore Funds S.A., the
investors in the Company's August 1998 private placement (the "Private
Placement") of 700 shares of its Series A 6% Cumulative Convertible Preferred
Stock ("Preferred Stock"), and by The Ridgefield Group and Libra Finance, S.A.,
placement agents for the Private Placement, pursuant to warrants to purchase up
to 245,000 shares of Common Stock.
As described more fully herein at "Risk Factors-Private Placement;
Conversion of Preferred Stock; Dilution; Mandatory Redemption," the Preferred
Stock is convertible into a presently indeterminate number of shares of Common
Stock. No shares of Preferred Stock have as of yet been converted. As of the
date of this Prospectus, the Company has issued and received payment for only
700 of the 2,000 shares of Preferred Stock offered in the Private Placement. The
remaining shares of Preferred Stock were to be issued in two additional
installments of 825 and 475 shares, respectively, upon satisfaction of certain
conditions such as the registration of the shares of Common Stock underlying
such Preferred Stock, the Company's maintaining its listing on the NASDAQ
SmallCap Market, and the Common Stock maintaining a market value of $.87 or
greater per share at specified times, unless waived by the investors. Because of
market conditions, the trading price of the Common Stock, and the Company's
delisting from NASDAQ, discussed below, the remaining Private Placement shares
will not issue and the second and third tranches of Private Placement funds
being held in escrow in connection therewith have been returned to the Private
Placement investors. Consequently, the Private Placement consists solely of the
previously completed offering of 700 shares of Preferred Stock.
As to the Private Placement, this Registration Statement relates solely to
the shares of Common Stock issuable upon any conversion of 700 shares of
Preferred Stock, based generally upon a conversion price of eighty percent (the
Preferred Stock maximum discount rate upon conversion,
<PAGE>
as discussed in greater detail below) of the closing price of the Common Stock
on October 8, 1998, and the 245,000 shares of Common Stock issuable upon
exercise of warrants sold by the Company in connection with the Private
Placement. The exact number of shares of Common Stock issuable upon conversion
will be determined by a number of factors including, among others, whether all
Preferred Stock dividends have been paid, and the then-current market price of
the Common Stock. In this regard, the number of shares which would issue upon
any conversion of Preferred Stock will increase to the extent the delisting of
the Common Stock from NASDAQ and any associated decrease in the liquidity of the
Common Stock create downward price pressure on the Common Stock. Further, while
the Company is unaware of any such intentions, it is possible that the holders
of Preferred Stock could engage in short sales of the Common Stock prior to any
conversion of the Preferred Stock, potentially resulting in a reduction in the
trading price of the Common Stock and an increase in the number of shares of
Common Stock issuing upon such conversion. Investors should note then, that the
number of shares of Common Stock which may issue upon conversion of the
Preferred Stock may be materially less or greater than 2,750,000 shares and this
number does not constitute a projection by the Company as to the future market
price of its Common Stock or the number of shares of Common Stock which will
ultimately issue upon any conversion of Preferred Stock.
On September 4, 1998, NASDAQ notified the Company that the Common Stock
would be delisted effective that day due to the Company's inability to comply
with the terms of the Nasdaq Listing Qualifications Panel for the Company to
maintain it's listing on the NASDAQ Small Cap Market. In particular, the Company
was unable to meet the timetable established by the Panel for the closing of the
second and third tranches of the Private Placement and the corresponding
disbursement of proceeds to the Company. The Company's current listing on the
Over-the-Counter ("OTC") Bulletin Board may reduce the liquidity of the Common
Stock, thereby creating an inhibiting effect upon the Company's ability to raise
capital through equity offerings. To the extent the Company is unable to satisfy
its working capital needs by other means, the Company's ability to remove the
going concern qualification to its financial statements, discussed more fully
below in "Risk Factors-Accumulated Deficit; Operating Expenses; Continuation as
a Going Concern," will therefore be adversely effected.
Stockholder Securities may be sold from time to time in transactions
(which may include block transactions) on the OTC Bulletin Board, in negotiated
transactions, or by a combination of such methods of sale at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The holders of
Stockholder Securities may effect such transactions by selling Stockholder
Securities to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
holders of Stockholder Securities and/or the purchasers of Stockholder
Securities for whom such broker-dealers may act as agent or to whom they may
sell as principal or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions).
The Warrant Shares have issued or may issue under certain warrants issued
by the Company as compensation for services, in connection with other business
transactions, or issued in connection
-2-
<PAGE>
with the Private Placement. These consist of: one warrant issued to Transition
Partners Limited to acquire up to 111,260 shares, exercisable in full at an
exercise price of $1.00 per share, exercisable until January 14, 2002, as
compensation for certain financial and management advisory services to the
Company, and one warrant issued to Transition Partners Limited to acquire up to
243,596 shares, at exercise prices ranging from $1.00 to $2.125 per share, and
which are not yet fixed as to 66,552 of these warrant shares and which therefore
may as to such shares be exercisable above or below the $1.00 to $2.125 range
per share, exercisable upon and to the extent of the issuance of additional
shares of Common Stock by the Company pursuant to the anti-dilution provisions
of the consulting agreement between Transition Partners Limited and the Company,
exercisable until January 14, 2002; one warrant issued to Copeland Consulting
Group, Inc., a company owned by Gene R. Copeland, a Managing Director of
Transition Partners Limited, to purchase up to 111,260 shares, exercisable in
full at an exercise price of $1.00 per share, exercisable until January 14,
2002, as compensation for the financial and management advisory services
provided to the Company by Transition Partners Limited, and one warrant issued
to Copeland Consulting Group, Inc. to acquire up to 243,596 shares, at exercise
prices ranging from $1.00 to $2.125 per share, and which are not yet fixed as to
66,552 of these warrant shares and which therefore may as to such shares be
exercisable at per share prices above or below the $1.00 to $2.125 range per
share, exercisable upon and to the extent of the issuance of additional shares
of Common Stock by the Company pursuant to the anti-dilution provisions of the
consulting agreement between Transition Partners Limited and the Company,
exercisable until January 14, 2002; warrants issued to Spencer Edwards, Inc. to
purchase up to 120,000 shares, exercisable in full at an exercise price of $2.25
per share, exercisable until June 30, 1999, as compensation for certain
financial advisory services; warrants issued to Coretech, Ltd. to acquire up to
36,281 shares, exercisable in full at an exercise price of $1.875 per share,
exercisable through November 8, 1998, for services in connection with an equity
offering by the Company; warrants issued to Gerald Alexander to purchase up to
97,500 shares, exercisable in full at an exercise price of $1.875 per share,
exercisable through August 1, 2000, for services in connection with an equity
offering by the Company; warrants issued to The Ridgefield Group to purchase up
to 52,500 shares, exercisable in full at an exercise price of $.75 per share,
exercisable through August 19, 2001, issued as placement agent compensation in
the Private Placement; warrants issued to Libra Finance, S.A. to purchase up to
52,500 shares exercisable in full at an exercise price of $.75 per share,
exercisable through August 19, 2001, issued as placement agent compensation in
the Private Placement; warrants issued to the investors in the Private Placement
to purchase up to 140,000 shares, exercisable in full at an exercise price of
$.7875 per share, exercisable through August 19, 2001, which warrants were
assigned by the investors to Libra France S.A.; warrants issued to Jeffrey A.
Holtz to purchase up to 5,000 shares, exercisable in full as of their grant date
through August 17, 2001 at an exercise price of $.98 per share, issued in
connection with the private placement by the Company with Mr. Holtz of 28,571
shares of Common Stock in 1998; and warrants issued to Human Vision Corporation
to purchase up to 5,000 shares, exercisable in full as of their grant date
through August 17, 2001 at an exercise price of $.98 per share, issued in
connection with the private placement by the Company with Human Vision
Corporation of 28,571 shares of Common Stock in 1998.
This offering will terminate on a date determined pursuant to an agreement
between the Company and each Selling Stockholder. See "Selling Stockholders" and
"Sale of Shares."
-3-
<PAGE>
None of the proceeds from the sale of the Stockholder Securities by the
Selling Stockholders will be received by the Company. The Company has generally
agreed to bear all expenses (other than selling commissions and fees and
expenses of counsel or other out-of-pocket expenses incurred by the Selling
Stockholders, except as to the Private Placement Selling Stockholders, for whom
the Company is paying legal fees of one counsel representing all of such Selling
Stockholders) in connection with the registration and sale of the Stockholder
Securities. The Company has agreed to indemnify certain Selling Stockholders
against specified liabilities, including liabilities under the Securities Act of
1933, as amended (the "Act"). See "Selling Stockholders" and "Sale of Shares."
The Common Stock is traded on the OTC Bulletin Board under the symbol
"ISSS."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Proceeds to Selling
Price to Public(1) Commissions Stockholders
- ------------------------------------------------------------------------------
Proceeds to Selling
Stockholder Securities...... Stockholders
- ---------------------- ------------
Per Share................... (2) N/A (2)
Total....................... (2) N/A (2)
(1) Total offering expenses to be borne by the Company are approximately
$73,436.00.
(2) Amounts cannot be determined, since price to the public may be the market
price prevailing at the time of sale, a price related to such market price
or a negotiated price. The closing price of the Company's Common Stock on
the OTC Bulletin Board on October 8, 1998 was $.34375 per share.
The date of this Prospectus is October __, 1998.
-4-
<PAGE>
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION........................................................6
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................6
THE OFFERING.................................................................8
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS..............................9
RISK FACTORS................................................................10
THE COMPANY ................................................................20
USE OF PROCEEDS.............................................................20
SELLING STOCKHOLDERS........................................................20
SALE OF SHARES..............................................................24
RECENT DEVELOPMENTS.........................................................24
LEGAL MATTERS...............................................................25
EXPERTS ................................................................25
-5-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy and information statements and other information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 as well as of the following Regional
Offices; Northwestern Atrium Center, Citicorp Center, Chicago, Illinois 60661;
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of any
such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. The Commission also
maintains a website at http:\\www.sec.gov that contains reports, proxy and
information statements and other information.
This Prospectus is, without charge, accompanied by and must be read in
conjunction with the Company's most recently filed Annual Report on Form 10-KSB
and Quarterly Report on Form 10- QSB.
------------------
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Integrated Spatial Information
Solutions, Inc. (formerly DCX, Inc.) with the Commission are incorporated by
reference in this Prospectus:
(1) Annual Report on Form 10-KSB for the year ended September 30, 1997,
filed with the Commission on January 13, 1998;
(2) Annual Report on Form 10-KSB/A for the year ended September 30,
1997, filed with the Commission on May 21, 1998;
(3) Annual Report on Form 10-KSB/A for the year-ended September 30,
1996, filed with the Commission on January 23, 1998;
(4) Current Report on Form 8-K, dated September 22, 1997, filed with the
Commission on October 7, 1997;
(5) Current Report on Form 8-K, dated October 8, 1997, filed with the
Commission on October 23, 1997;
(6) Current Report on Form 8-K, dated October 14, 1997, filed with the
Commission on October 27, 1997;
(7) Current Report on Form 8-K/A, dated September 22, 1997, filed with
the Commission on November 6, 1997;
-6-
<PAGE>
(8) Current Report on Form 8-K/A, dated October 8, 1997, filed with the
Commission on November 6, 1997;
(9) Current Report on Form 8-K, dated November 3, 1997, filed with the
Commission on November 18, 1997;
(10) Quarterly Report on Form 10-QSB for the quarter ended December 31,
1997, filed with the Commission on February 19, 1998;
(11) Quarterly Report on Form 10-QSB/A for the quarter ended December 31,
1997, filed with the Commission on March 27, 1998;
(12) Current Report on Form 8-K dated March 26, 1998, filed with the
Commission on April 7, 1998;
(13) Quarterly Report on Form 10-QSB for the quarter ended March 31,
1998, filed with the Commission on May 15, 1998;
(14) Current Report on Form 8-K, dated June 26, 1998, filed with the
Commission on July 10, 1998;
(15) Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998,
filed with the Commission on August 14, 1998;
(16) Current Report on Form 8-K, dated August 13, 1998, filed with the
Commission on August 20, 1998; and
(17) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed March 3, 1986
(File No. 0-14273).
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the oral or written request of such person, a
copy of any document incorporated in this Prospectus by reference, except
exhibits to such information unless such exhibits are also expressly
incorporated by reference herein. Requests for such information should be
directed to Integrated Spatial Information Solutions, Inc., 200 West Forsythe
Street, Suite 803, Jacksonville, Florida 32202, Attention: Corporate Secretary,
telephone (904) 346-1319.
-7-
<PAGE>
THE OFFERING
Common Stock Offered by the
Selling Stockholders.................The Selling Stockholders, who are
identified under "Selling Stockholders,"
are offering 6,993,380 shares of
Common Stock, issued or to be issued by
the Company upon conversion of Preferred
Stock or exercise of warrants issued in
the Private Placement, in or in
connection with its acquisition
of PlanGraphics, Inc., or in connection
with other business transactions by
PlanGraphics or the Company.
Securities Outstanding...............As of October 8, 1998, approximately
11,683,337 shares of Common Stock,
authorized or outstanding warrants and
options to purchase approximately
6,630,335 shares of Common
Stock, and 700 authorized and outstanding
shares of the Company's Series A 6%
Cumulative Convertible Preferred Stock.
-8-
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes and incorporates by reference statements that are
not purely historical and are "forward-looking statements" within the meaning of
Section 27A of the Act and Section 21E of the Exchange Act, including statements
regarding the Company's expectations, hopes, beliefs, intentions or strategies
regarding the future. All statements other than statements of historical fact
included in or incorporated by reference in this Prospectus, including without
limitation, expected growth of the domestic and global geographic information
systems markets, beliefs regarding the strength of the Company's market position
with respect to new or contemplated business strategies and activities,
expectations regarding availability and marketability of new digital imaging
products and proceeds, anticipated growth in the Company's revenue and
profitability, cash operating costs and certain significant expenses, and
potential acquisitions of, or strategic partnering with, other geographic
information system providers, are forward-looking statements. Factors that could
cause actual results to differ materially include, among others, the entry of
new companies into the geographic information system business, unanticipated
competition from new strategic alliances in the industry, increased price
competition from software manufacturers and their affiliated vendors, user
shifts toward more standardized, off the shelf products and a decreased reliance
on custom design software services, shifts in governmental policy on the
availability of government- owned data and data procurement platforms to
commercial and other public sector users, difficulties in hiring and retaining
sufficient numbers of professional and other skilled personnel, the failure of
year 2000 compliance efforts by the Company, its suppliers and customers, or
governmental or other public or private entities, force majeure events,
accidents, and general domestic and international economic and political
conditions and other factors described in this Prospectus and in the Company's
annual reports on Form 10-KSB, quarterly reports on Form 10-QSB and current
reports on Form 8-K, as they may be amended from time to time, filed with the
Securities and Exchange Commission. Many of such factors are beyond the
Company's ability to control or predict. All forward-looking statements included
or incorporated by reference in this Prospectus are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update such forward-looking statements. Although the Company
believes that the assumptions and expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct or that the Company will take any actions that may
presently be planned. Certain important factors that could cause actual results
to differ materially from the Company's expectations are disclosed under the
"Risk Factors" section of this Prospectus. All subsequent written or oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by such factors.
-9-
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk, including,
but not limited to, the risk factors described below. Each prospective investor
should carefully consider the following risk factors inherent in and affecting
the business of the Company before making an investment decision. Investment
risks inherent in the geographic information systems industry are discussed
below as risks associated with an investment in the Company by virtue of its
ownership of PlanGraphics, and because the geographic information systems
business is the principal business focus of both PlanGraphics and the Company.
References in "Risk Factors" to the Company refer both to the Company and to
PlanGraphics, unless the context requires otherwise.
ACCUMULATED DEFICIT; OPERATING EXPENSES; CONTINUATION AS A GOING CONCERN.
As reflected in the financial statements set forth in the Company's Quarterly
Report on 10-QSB for the quarter ended June 30, 1998 and the financial
statements accompanying its Annual Report on Form 10-KSB for the year ended
September 30, 1997, the Company as of June 30, 1998 had a working capital
deficit of approximately $573,321 and has incurred net losses from continuing
operations of $953,065 and $679,477 for the years ended September 30, 1997 and
1996, respectively, and $1,735,961 for the nine months ended June 30, 1998. The
Company also incurred net losses from discontinued operations of $1,598,313 and
$374,177 for the years ended September 30, 1997 and 1996, respectively, and
$42,215 for the nine months ended June 30, 1998. As a result, the Company stated
in its report on the financial statements for the fiscal year ended September
30, 1997, that these conditions raise substantial doubt about the Company's
ability to continue as a going concern. The opinion of the Company's independent
auditors delivered in connection with the Company's financial statements for
fiscal 1997 also contains an explanatory paragraph relative to the going concern
uncertainty. In addition to concerted efforts to control operating costs,
management of the Company has pursued additional funding in both the debt and
equity markets in order to meet working capital requirements and to provide for
possible additional acquisitions. See "Risk Factors-Private Placement;
Conversion of Preferred Stock; Dilution; Mandatory Redemption" immediately
below. In addition, the Company has negotiated the extension to July, 2001 of a
balloon payment obligation of PlanGraphics on a certain note payable, and has
signed a letter of commitment with a major lending institution for a $3 million
revolving line of credit, to be secured by the Company's accounts receivable.
There can be no assurance, however, that the Company will be able to obtain
sufficient additional capital, or that the Company's profits, if any, will be
sufficient to cover the operating expense and capital requirements of the
Company. The Company estimates that, as of the date of this Prospectus and
assuming no reduction in operating expenses, additional working capital of
approximately $2,000,000 would be required to remove the present going concern
contingency.
PRIVATE PLACEMENT; CONVERSION OF PREFERRED STOCK; DILUTION; MANDATORY
REDEMPTION. The discussion which follows summarizes all material features of the
Private Placement, but is qualified in its entirety by the Articles of Amendment
to the Articles of Incorporation ("Certificate of Designations") and form of
Subscription Agreement ("Subscription Agreement") with respect to the Preferred
Stock, previously filed by the Company with the Commission, to which Investors
should refer for a complete description of the matters discussed in summary form
below.
-10-
<PAGE>
Private Placement. On August 19, 1998, the Company entered into
Subscription Agreements for the private placement of up to 2,000 shares of its
Series A 6% Cumulative Convertible Preferred Stock, par value $.001 per share
("Preferred Stock") to two unaffiliated entities (the "Private Placement") for a
total price of $2,000,000. A total of 700 shares and $700,000 of offering
proceeds, less commissions, costs and an escrow reserve, were disbursed, and a
total of $1,300,000 in proceeds were deposited into an escrow account. Because
of the Company's delisting from the NASDAQ SmallCap Market, general market
conditions and the trading price of the Common Stock, the Company was required
to return the $1,300,000 in escrow to the Private Placement investors. As a
result, the Private Placement consists solely of the 700 shares of Preferred
Stock previously sold.
In connection with the Private Placement, the Company's Board of Directors
designated 1,000,000 shares of the Company's authorized but unissued preferred
stock as Series A 6% Cumulative Convertible Preferred Stock, $.001 par value per
share. The Preferred Stock has no voting rights, other than pursuant to
applicable law. Holders of Preferred Stock are entitled to preferential and
cumulative cash dividends out of funds of the Company legally available
therefor, at the rate of 6% simple interest per annum calculated on each share
of Preferred Stock held at the stated value of $1,000 per share value subject to
adjustment for stock dividends, combinations or splits with respect to such
shares, such dividends to be payable quarterly when, as and if declared. The
dividend payments may be made in kind in shares of Preferred Stock at the
discretion of the Board at the rate of one share of Preferred Stock for each
$1,000 of payable dividends. Holders of Preferred Stock have a preferential
right as against holders of Common Stock to receive the stated value of the
Preferred Stock in the event of any liquidation of the Company.
The Company agreed to file a registration statement with the Commission to
register the sale of the Common Stock issuable upon conversion of the Preferred
Stock and upon exercise of the warrants issued to the investors and placement
agents in the Private Placement as described on the cover page of this
Prospectus.
In connection with the Private Placement, the Company has agreed that for
the 120-day period following the effective date of a registration statement
registering Common Stock underlying the Preferred Stock it will not, other than
pursuant to option plans in place or option and warrant agreements issued and
outstanding as of the closing of the Private Placement, or under other
circumstances agreed to by the Private Placement investors, engage in a public
or private offering of any equity, debt or other securities convertible into
Common Stock without the consent of the investors. In addition, under the
Subscription Agreement, the Company has granted the investors, for a period of
120 days following the effective date of the registration statement, the right
of first refusal to acquire the shares or debt otherwise being offered by the
Company in any permitted equity or debt offering.
Conversion of Preferred Stock; Dilution. The holders of shares of
Preferred Stock have the right after sixty days from the respective closing date
of the Private Placement, August 19, 1998, to convert the shares of Preferred
Stock into shares of Common Stock. The conversion price of the Preferred Stock
is equal to the lesser of: (i) 105% of the average of the closing bid price of
the
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Common Stock for the five trading days immediately preceding the date of the
closing under the Subscription Agreement for the Preferred Stock; or (ii) 20%
below the average of the three lowest closing bid prices for the ten trading
days immediately preceding the conversion of the respective shares of Preferred
Stock, subject to certain anti-dilution adjustments in the event of stock
dividends, splits, reorganizations or other changes to the Common Stock, and
subject to downward adjustment in the event that prior to the conversion of all
of the Preferred Stock the Company issues shares of Common Stock, including upon
the exercise of options or warrants issued after August 19, 1998, at a price per
share below the then-current Preferred Stock conversion price. Shares of
Preferred Stock are subject to mandatory conversion two years from their
issuance date. The value of the Preferred Stock upon conversion is the Stated
Value plus accrued and unpaid Preferred Stock dividends. Assuming all dividends
are paid at the time of conversion, the number of shares of Common Stock that
may be issued upon conversion of the 700 shares of Preferred Stock is at least
748,183 shares, and at the closing price of the Common stock on October 8, 1998,
would be at least 2,545,455 shares, but the exact number is not fixed because
the conversion price takes into account the closing bid prices for the Common
Stock immediately prior to the time of conversion. In this regard, the number of
shares which would issue upon any conversion of Preferred Stock will increase to
the extent the delisting of the Common Stock from NASDAQ and any associated
decrease in the liquidity of the Common Stock create downward price pressure on
the Common Stock. Further, while the Company is unaware of any such intentions,
it is possible that the holders of Preferred Stock could engage in short sales
of the Common Stock prior to any conversion of the Preferred Stock, potentially
resulting in a reduction in the trading price of the Common Stock and an
increase in the number of shares of Common Stock which issue upon any such
conversion. In the event the Company does not timely deliver certificates
evidencing shares of Common Stock upon any conversion, the Company is required
to pay late fees to the Preferred Stockholder requesting conversion.
Mandatory Redemption. If this Registration Statement is not declared
effective by the Commission within 90 days following September 1, 1998, the
investors are entitled to liquidated damages. If this Registration Statement is
not declared effective within 150 days following September 1, 1998, the stated
6% dividend rate on the Preferred Stock increases to 15% from and after the
occurrence of such event, and at the option of the holder, the outstanding
shares of Preferred Stock must be redeemed by the Company at $1,000 per share
plus accrued dividends, plus interest on this redemption amount calculated at
the rate of 8% per annum for the period for which the investor has held such
shares. In addition, pursuant to the terms of the Subscription Agreement and the
Certificate of Designations, the Company may also be required to redeem on
demand, at the original sales price plus accrued dividends and an annualized 8%
premium, the number of Preferred Shares previously sold if the Company is
otherwise in default under the Subscription Agreement or the Certificate of
Designations, including among other conditions of default, any default on its
obligation to pay Preferred Stock dividends, or any inability to maintain the
listing of the Common Stock on the OTC Bulletin Board. Also, in the event the
Company is unable to issue Common Stock upon any conversion of Preferred Stock,
the Company is obligated to redeem those shares of Preferred Stock by paying to
the Preferred Stockholder the value of the Common Stock it would have otherwise
received, based upon the then-current trading price of the Common Stock. There
can be no assurance that this Registration Statement will be timely declared
effective by the
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Commission or that the Company will not trigger other conditions of default
under the Subscription Agreements, and the Company may therefore be required to
redeem previously issued shares of Preferred Stock. The Company does not
presently retain the cash or other liquid assets which would be sufficient to
fund the full amount that may be necessary for any such redemption, and any
mandatory redemption would have a material adverse effect upon the Company.
DILUTION; POSSIBLE CHANGE IN CONTROL. The purchasers of the shares of
Common Stock offered hereby will experience immediate and substantial dilution
in the net tangible value of their shares of Common Stock in the event of the
conversion of Preferred Stock. The conversion of Preferred Stock will result in
the issuance of Common Stock at discounts from future market prices, which could
result in substantial dilution to existing holders of Common Stock and a
reduction of the value of the Common Stock. The Subscription Agreement does
prohibit the conversion of Preferred Shares by any single Private Placement
investor in a number that would at any time result in such investor holding at
any given time more than 9.99% of the then-outstanding shares of Common Stock.
However, the conversion of all the Preferred Stock over time, and following
successive conversions of Preferred Stock, and associated sales of Common Stock,
could nonetheless result in the issuance of shares constituting nearly 20% of
the outstanding Common Stock and could conceivably result in a change in control
of the Company.
RISKS RELATING TO PENNY STOCKS. Because the Common Stock has been delisted
from the NASDAQ SmallCap Market and the trading price of the Common Stock is
less than $5.00 per share, trading in the Common Stock is subject to the
requirements of certain rules promulgated under the Exchange Act, which require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a penny stock (generally, any non-NASDAQ equity security that
has a market price of less than $5.00 per share, subject to certain exceptions).
Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally defined as an investor with a net worth in excess of
$1,000,000 or annual income exceeding $200,000 individually or $300,000 together
with a spouse). For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to the sale. The
broker-dealer also must disclose the commissions payable to the broker-dealer,
current bid and offer quotations for the penny stock and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Such information must be
provided to the customer orally or in writing before or with the written
confirmation of trade sent to the customer. Monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stock held in the account and
information on the limited market in penny stocks. The additional burdens
imposed upon broker-dealers by such requirements may discourage broker-dealers
from effecting transactions in the Common Stock which could significantly limit
the market liquidity of the Common Stock and the ability of purchasers in this
offering to sell the Common Stock in the secondary market.
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LIQUIDITY; CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL FINANCING. The
Company has combined capital obligations under leases and debt instruments of
approximately $70,000 per month. While the Company believes that it has
sufficient cash reserves and future cash flow to meet its obligations in the
near term, there can be no assurance that the Company will be able to meet
growing working capital needs in the future. As discussed above, the Company has
obtained a signed commitment letter for $3 million revolving credit facility, to
be secured by the Company's accounts receivable. However, this transaction has
not yet been completed, and any inability to obtain needed capital could have a
material adverse effect on the Company and its presently contemplated strategic
growth strategies. Additional equity financing may involve substantial dilution
to the interests of the Company's then-existing shareholders.
COMPANY'S INTENTIONS REGARDING SEEKING PROTECTION UNDER BANKRUPTCY LAWS.
The Company presently has no plans to seek protection under the federal
bankruptcy laws. Notwithstanding the Company's recent delisting and the
attendant inhibitory effect on the Company's ability to raise capital through
equity offerings, the Company believes that its fundamental business plan is
sound and continues to pursue its long standing objectives for growth and
diversification within the geographical information systems industry. While the
Company's cash needs are not yet being fully serviced through continuing
operations, the Company's net income has steadily improved during the
recently-concluded fiscal year. Moreover, the Company has obtained a signed
commitment letter with a major lending institution for a $3 million working
capital credit facility, to be secured by the Company's accounts receivable. In
the event of a leveling off or reversal in the Company's upward trend in net
income, together with a confirmed inability to secure any sources for working
capital, the Company could seek protection under the bankruptcy laws. If any
such action were to proceed to a liquidation of the Company, the holders of
Common Stock would not realize any assets upon distribution in that the
Company's tangible assets do not currently exceed its liabilities.
LIMITATION ON USE OF NET OPERATING LOSS CARRYFORWARD. Any change in
ownership of the Company's voting stock, including the issuance by the Company
of Common Stock underlying the Preferred Stock and the warrants described on the
cover page of this Prospectus, which exceeds 50% during any three-year period,
will reduce the Company's ability to utilize federal net operating loss
carryforwards ("NOLs") which were approximately $5.78 million at June 30, 1998.
Section 382 of the Internal Revenue Code of 1986, as amended provides that, if
an "ownership change" occurs with respect to the Company, the ability to use
NOLs to offset future taxable income of the Company is limited annually to the
product of the market value of the Company immediately prior to the ownership
change times the long-term tax exempt rate determined by the Treasury
Department. Certain portions of the Company's and PlanGraphic's NOLs are limited
under Section 382. The Company has recorded a valuation allowance equal to the
deferred tax asset amount relating to the NOLs.
REAL PROPERTY; MORTGAGE OBLIGATIONS. The Company remains obligated on a
twelve-month real property mortgage covering its former aircraft component
assembly manufacturing facility and site, which it has leased to a third party,
currently on a month-to-month lease. The current lessee holds an option to
purchase the property, and has given the Company conditional
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notice of its exercise of the purchase option. In the event the lessee does not
purchase the property, the Company will remain obligated on the mortgage until
such time as it can find a buyer for the property or the note on the property is
repaid. In addition, the Company remains responsible under the lease for certain
structural and mechanical repair obligations with respect to the facility. The
mortgage is secured by a lien on the real property and by an assignment of the
lease to the Company's lender. Any default by the lessee on its lease
obligations or failure to purchase the property, and the inability of the
Company to secure another tenant or sell the property in a timely manner at an
acceptable price, could have a material adverse effect on the Company.
Additionally, PlanGraphics is committed to a long-term capital lease on its main
office facility, requiring annual lease payments of approximately $320,000.
While the Company believes its cash reserves and cash flow are sufficient to
satisfy these lease obligations in the near term, any inability of the Company
to remain current on its lease payments may result in the loss of this office
facility, which could have a material adverse effect on the Company.
OUTSTANDING INDEBTEDNESS; PAST DUE INDEBTEDNESS. In order to satisfy
capital requirements and finance the Company's operations, the Company has
incurred a certain amount of indebtedness. As of the date of this Prospectus,
the Company holds approximately $250,000 in trade payables which are outstanding
beyond their stated term. The Company has received no notification of default or
action to collect on any of these payables, and the Company anticipates
servicing these payables with the proceeds of additional equity or debt
financing which it is currently pursuing. While the Company believes that it
will be able to successfully obtain sufficient working capital to meet its
obligations in the near term, it cannot be assured of attaining consistent
positive net income and is subject to the risk that its cash flow may be
inadequate to make required payments on its indebtedness and capital expenses. A
portion of the value of the Company's assets has been pledged, and the accounts
receivable of the Company may be pledged, as collateral to secure Company debt.
There can be no assurance that the Company will continue to be able to make
required payments on its indebtedness and leases in the future.
YEAR 2000 ISSUES. The Company has completed its review of the extent to
which its own computer systems and hardware, and non-information technology
equipment, are capable of operating on and after January 1, 2000 without error
or other deficiency ("Year 2000 Compliance"), and believes that the Year 2000
will not have a material impact upon its own software, hardware and
non-information technology equipment. Updates and upgrades which are required
are underway, the Company believes that these will be completed prior to the end
of its fiscal year 1999. To date, the Company has incurred minimal capital
expenditures to investigate and remediate Year 2000 Compliance problems. The
Company's review has also included an analysis of its material suppliers and
customers as to the Year 2000 compliance of their systems and equipment, and the
Company has set in motion an effort to obtain written assurances from these
suppliers and customers regarding their Year 2000 Compliance status. The
Company's contingency plan in the event of any customer Year 2000 Compliance
problems is to offer direct consulting and programming services to remediate the
problem. Suppliers to the Company consist of database software developers, and
geographic information system providers. The Company believes that its customers
would require database construction and development services to continue during
any period in which supplier products experience Year 2000 issues. The Company
also believes that the various satellite, airborne and
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ground-based sources of data provided to the Company are presently or will
timely be Year 2000 Compliant. The Company's contingency plan in the event
material suppliers are not Year 2000 Compliant is to assist customers in
developing alternate means of obtaining the decision-making guidance previously
provided by non-functioning or unavailable data or database products. However,
there can be no assurance that the failure of the Company and/or its material
customers and suppliers to timely attain Year 2000 Compliance will not
materially reduce Company revenues, or that these failures and/or the impacts of
broader compliance failures by telephone, mail, data transfer or other utility
or general service providers or government or private entities will not have a
material adverse effect upon the Company.
DEPENDENCE ON PRINCIPAL CLIENTS. The consulting business is inherently
subject to the aggregation of a substantial amount of business around one client
or a small number of significant clients. In the current fiscal year
approximately 35% of the Company's revenues will be derived in the aggregate
from contracts with five individual clients, out of a total pool of
approximately 135 clients. While only one client currently accounts for 10% or
more of the Company's revenues per period, the sudden loss of one or more of
these significant clients could have a material adverse effect on the Company.
DEPENDENCE ON GOVERNMENT CONTRACTS. The Company is significantly dependent
upon local, state and foreign government contracts for the provision of its
services. In each of fiscal years 1997 and 1996, government contracts
represented approximately 30% of the Company's gross revenue. Government
contracts are entirely dependent upon the applicable budgeting process and
procurement decisions of the various government agencies and entities. There can
be no assurance that government contracting revenues will remain stable.
COMPETITION. The market for geographic information system advisory and
implementation services is highly competitive. The Company competes with a
number of companies engaged in offering similar services. These include in-house
services offered by engineering firms, and consulting services offered by
software and hardware developers and their affiliates below cost, who can then
recover these losses in follow-on hardware and software sales and support
services. Many of these firms, developers and manufacturers, individually or
with their affiliates, possess substantially greater financial, marketing,
personnel and other resources than the Company. In addition, several of the
Company's competitors who are not themselves hardware or software manufacturers
have established strategic relationships with manufacturers, permitting them to
compete effectively with the Company on the basis of price as to certain
products. Because of their greater resources, some of the Company's competitors
may be able to respond more quickly to new or emerging technologies and changes
in client requirements. Further, as the market for geographic information
systems and related services grows, software and hardware designers and
manufacturers will be incentivized to sell products with increased
standardization and interoperability. Any price- driven trend toward these more
limited but standardized systems could reduce demand for the more sophisticated
and customized, but more costly, services provided by the Company. While the
Company believes that it competes effectively on the basis of breadth and depth
of expertise, independence, and response sensitivity and timeliness, there can
be no assurance that the Company will be able to compete successfully in the
future.
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INTERNATIONAL SALES AND SERVICES. The Company derives a portion of its
revenue from international projects, and the Company anticipates that this will
continue into the foreseeable future. Inherent in all international operations
are risks of unanticipated changes in host country regulation, shifts in
currency exchange rates, differences in personnel communication and management
protocols, unexpected changes in the international economic and political
environments, shifts in international markets, and difficulties in protecting
proprietary products. There can be no assurance that the Company will be able,
due to these or other reasons, to increase or sustain its current levels of
revenue from international operations, or that such operations will be or remain
profitable. Changes in international business conditions could have an adverse
effect on the Company's business and results of operations.
PROPRIETARY TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS. The Company regards
as proprietary certain of its developed software applications, and attempts to
protect these with a combination of copyright, trademark and trade secret laws,
employee and third party non-disclosure agreements, and other methods of
protection. As in any attempt to protect proprietary matters, despite
precautions it may be possible for unauthorized third parties to copy certain
portions of the Company's products or reverse engineer or obtain and use
information the Company regards as proprietary. There can be no assurance that
the Company's intellectual property rights can be successfully asserted in the
future or will not be invalidated, circumvented or challenged. In addition, the
laws of some foreign countries do not protect proprietary rights to the same
extent as do the laws of the Unites States. Any misappropriation of the
Company's intellectual property could have an adverse effect on the Company's
business and results of operations. Furthermore, regardless of the degree of
caution exercised by the Company, there can be no assurance that third parties
will not assert infringement claims against the Company in the future with
respect to current or future products. Any such assertion could require the
Company to enter into royalty arrangements or engage in costly litigation.
NEW PRODUCTS AND TECHNOLOGICAL CHANGE. The geographic information systems
industry is characterized by extremely rapid technological change, evolving
industry standards and client expectations, and frequent new product
introductions. These conditions will require continuous expenditures by the
Company on product research, testing and training to sustain the Company's level
of expertise in and reputation for broad based and objective advisory services.
There can be no assurance that the Company will successfully manage the pace of
technological change and new product introduction, or sustain the level of
training and/or additional hiring required to maintain full product fluency in
the marketplace.
BUSINESS PARTNERS. The Company maintains strategic relationships with
substantially all of the major software manufacturers in the geographic
information systems industry. Several of these manufacturers offer similar
services to those of the Company, and may have interests adverse to those of the
Company in bidding for a particular project. There can be no assurance that
these business relationships will be maintained, or that strategic alliances or
business combinations between or among the Company's competitors will not cause
realignments among developers, manufacturers and vendors which are materially
injurious to the Company.
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<PAGE>
LITIGATION. The Company has established a litigation reserve of $521,000
in relation to a contract dispute which arose in 1988 under a federal government
contract for the manufacture by the Company of certain aircraft wiring harness
assemblies. While the Company believes that this dispute may settle and that any
settlement amount will not exceed its established reserve, there can be no
assurance that the settlement will occur, will be on terms favorable to the
Company, or that the amounts reserved will be adequate to satisfy any Company
liability under this contract. An unfavorable outcome of this litigation could
have an adverse effect on the Company.
DEPENDENCE UPON KEY AND ADDITIONAL PERSONNEL. The success of the Company
may be significantly dependent upon the efforts of certain key personnel of the
Company, including G. Stephen Carreker, its Chief Executive Officer and
Chairman, John C. Antenucci, its President and founder of PlanGraphics, Robin
Vail, its Chief Financial Officer, Frederick G. Beisser, its Vice President -
Finance and Administration, J. Gary Reed, PlanGraphics' Chief Operating Officer,
and other officers. Although the Company has entered into employment agreements
with Messrs. Carreker, Antenucci, Beisser and Reed, and certain other officers,
managers and key technical personnel, the loss of the services of any of these
officers or certain other key employees could have a material adverse effect on
the Company. PlanGraphics maintains keyman life insurance policies with respect
to Mr. John C. Antenucci and Ms. Joyce Rector, Senior Vice President for Human
Relations and Resources. The success of the Company is also dependent upon its
ability to retain existing personnel and to hire and train additional qualified
personnel, including competent engineers and technicians. There can be no
assurance that the Company will be able, for financial reasons or otherwise, to
retain or hire such personnel.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS. Of the approximately
11,683,337 shares of Common Stock outstanding as of October 8, 1998, in addition
to the Stockholder Securities offered hereby, approximately 978,302 shares are
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"). As of the date of this
Prospectus, 323,660 of such shares are eligible for sale under Rule 144 under
the Act. The Company has also registered for sale to the public approximately
2,169,321 shares of Common Stock, outstanding or issuable upon the exercise of
certain options, issued to consultants, directors or officers, as well as the
shares issuable upon the exercise of options granted under the Company's 1991
Stock Option Plan and 1995 Stock Incentive Plan. In addition, the Company
anticipates registering in the near term the issuance of up to 4,000,000 shares
of Common Stock issuable pursuant to its recently adopted Equity Incentive Plan,
of which approximately 1,822,289 shares of Common Stock are subject to
outstanding stock options. Also, the conversion of all of the shares of
Preferred Stock would result in the issuance of a minimum of approximately
748,263 shares of Common Stock. As discussed above, this number of shares may
materially increase based upon a number of factors, including, among others, the
future market price of the Common Stock. The Preferred Stock itself retains
certain anti-dilution features whereby the conversion price is reduced
proportionately in the event of sales by the Company of shares of Common Stock
at a price less than the then-current conversion price. Sales of a substantial
number of shares of Common Stock in the public market following this offering,
or the perception that such sales could occur or the issuance of shares of
Common Stock upon exercise of the Company's outstanding options and warrants or
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upon the conversion of the Preferred Stock could adversely affect the market
price of the Common Stock.
AUTHORIZED OR OUTSTANDING OPTIONS AND WARRANTS. As of October 8, 1998,
there were outstanding stock options to purchase approximately 4,761,922 shares
of Common Stock at exercise prices ranging from $.58 to $4.25 per share and
authorized or outstanding warrants to purchase approximately 1,868,413 shares of
Common Stock at exercise prices of $.75 to $2.25 per share. To the extent that
the outstanding stock options and warrants are exercised, dilution to the
interest of the Company's stockholders will occur. Moreover, the terms upon
which the Company will be able to obtain additional equity capital may be
adversely affected since the holders of the outstanding options and warrants can
be expected to exercise them at a time when the Company would, in all
likelihood, be able to obtain any needed capital on terms more favorable to the
Company than those provided in the outstanding options and warrants.
ANTI-DILUTION RIGHTS. In conjunction with employee agreements entered into
by the Company with each of Messrs. Carreker, Beisser, Antenucci, and Reed,
respectively during the Company's fiscal year ended September 30, 1997, the
Company granted these executive officers employee stock options to acquire a
number of shares equal to in the aggregate approximately 22.5% of the
outstanding shares of Common Stock as of the date of each employment agreement,
vesting subject to the terms of their respective employment agreement. In
conjunction with these option grants the Company also granted each executive the
right to receive additional options to acquire shares of Common Stock as and to
the extent of any additional issuances of shares of Common Stock, in order to
preserve for each executive for the term of their employment and the immediately
subsequent one year period the option to acquire the proportional share of the
outstanding Common Stock represented by their stock option when it was granted.
In addition, the Company granted during fiscal year 1997 five-year warrants to
Transition Partners, Ltd. and Copeland Consulting Group, Inc. with an identical
anti-dilution feature to preserve the right for these entities to each acquire
up to two and one-half percent (2.5%) of the outstanding shares of Common Stock.
Any additional options or warrants which are to issue under these arrangements
by virtue of additional issuances of Common Stock are issued by the Company
quarterly at the trading price of the Common Stock on such quarterly issuance
date.
VOLATILITY OF PRICE OF COMMON STOCK. The market price of the Company's
Common Stock has been, and may in the future be, highly volatile. Factors such
as the Company's operating results and announcements of technological
innovations or new products or contracts by the Company or its competitors, as
well as changes in the geographic information systems industry, could have a
significant impact on the market price of the Company's Common Stock. Further,
in recent years, the securities markets have experienced a high level of price
and volume volatility and the market prices of securities for many companies
have experienced wide fluctuations which have not necessarily been related to
the operating performance of such companies.
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<PAGE>
THE COMPANY
The Company was organized under the laws of the State of Colorado on
December 8, 1981. During the past three years the Company has been engaged in
the business of the custom design and manufacture of aircraft electronic
interconnect assemblies, principally under contracts for Department of Defense
acquisition programs or for military aircraft maintenance support. The Company's
principal business as of the date of this Prospectus, through its wholly-owned
subsidiary, PlanGraphics, Inc., is the development and sale of geographic
information products for local, state and foreign governments, gas, electric and
telephone utilities, and other commercial entities. PlanGraphics, Inc. is a
Maryland corporation and was incorporated in 1979.
Integrated Spatial Information Solutions, Inc. is located at 200 West
Forsythe Street, Suite 803, Jacksonville, Florida 32202 and its telephone
number is 904-346-1319.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Stockholders of the Common Stock offered hereby.
SELLING STOCKHOLDERS
The following table shows the names of the Selling Stockholders and the
number of Stockholder Securities owned beneficially by each of them, or their
nominees, as of October 8, 1998, and the number of Stockholder Securities which
may be offered pursuant to this Prospectus. This information is based on Company
records, or information provided by the Selling Stockholders or their
representatives. Except as set forth in footnote below, shares beneficially
owned by Selling Stockholders after this offering consist entirely of shares
obtainable upon exercise of options or the vesting of performance shares under
various employee benefit plans of Company, and may or may not be obtainable by
the applicable Selling Stockholder within 60 days following the date of this
Prospectus. Specific terms of such options and performance shares are set forth
in footnote below as to officers of the Company or PlanGraphics. Because the
Selling Stockholders may offer all, some or none of the Stockholder Securities
which they hold, the number of Stockholder Securities or the percentage of the
Company's outstanding Common Stock that will be held by the Selling Stockholders
upon termination of such offering is entirely speculative. See "Sale of
Securities."
<TABLE>
<CAPTION>
TOTAL OF SHARES SHARES OFFERED FOR
BENEFICIALLY OWNED STOCKHOLDER'S TOTAL OF SHARES BENEFICIALLY
SELLING STOCKHOLDERS PRIOR TO OFFERING ACCOUNT OWNED AFTER OFFERING
- -------------------------- ------------------ ------------------- ----------------------------
SHARES SHARES NUMBER PERCENTAGE
--------------- --------------- --------- ------------
<S> <C> <C> <C> <C>
Austost Anstalt Schaan/1/ 1,375,000 1,375,000 * *
Balmore Funds S.A./2/ 1,375,000 1,375,000 * *
The Ridgefield Group/3/ 52,500 52,500 * *
Libra Finance, S.A./4/ 192,500 192,500 * *
John C. Antenucci/5/ 1,913,881 1,186,476 727,405 6.2%
Hugh N. Archer 18,360 18,360 * *
</TABLE>
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<TABLE>
<CAPTION>
TOTAL OF SHARES SHARES OFFERED FOR
BENEFICIALLY OWNED STOCKHOLDER'S TOTAL OF SHARES BENEFICIALLY
SELLING STOCKHOLDERS PRIOR TO OFFERING ACCOUNT OWNED AFTER OFFERING
- -------------------------- ------------------ ------------------- ----------------------------
SHARES SHARES NUMBER PERCENTAGE
--------------- --------------- --------- ------------
<S> <C> <C> <C> <C>
Black & Veatch Holding Company/6/ 608,715 608,715 * *
Scott E. Boocher 93,194 93,194 * *
William G. Brooner 10,417 10,417 * *
Kaye N. Brothers 1,751 1,139 612 *
Vickie C. Bunker 3,761 3,761 * *
James R. Cannistra 25,119 18,632 6,487 *
Charles A. Cmeyla 38,897 33,879 5,018 *
Dwight Coppock 46,910 46,910 * *
Peter L. Croswell 124,457 71,991 52,466 *
Stu Davis 12,239 12,239 * *
Patricia A. Edelen 2,756 2,144 612 *
Robert W. Finkle 53,397 1,849 51,548 *
Maurice E. Foley 32,752 32,752 * *
Rich Goodden 5,790 772 5,018 *
Al Hanks 12,240 12,240 * *
Marina Havan-Orumieh 28,220 772 27,448 *
Edward T. Hedges 6,879 6,879 * *
Charles D. Howard/7/ 158,938 158,938 * *
Michael J. Kevany/8/ 259,290 96,194 163,096 1.4%
Dave Koehler 393 393 * *
Rosanne Kruzich 4,285 4,285 * *
Dennis M. Kunkle 84,923 83,699 1,224 *
Jeffrey M. Laird 3,061 3,061 * *
Thomas Lenzen 1,530 1,530 * *
Minna Li 45,749 4,201 41,548 *
Anna L. Metcalf 51,489 1,838 49,651 *
Margaret T. Norman 613 613 * *
Quarterdeck Investment
Partners, Inc./9/ 157,871 157,871 * *
Cindy Popolillo 27,988 1,274 26,714 *
Amy J. Purves 14,299 8,057 6,242 *
Joyce Rector/10/ 178,446 73,429 105,018 *
J. Gary Reed/11/ 483,911 943 482,968 4.1%
Paul Reisner 393 393 * *
David A. Riddle 613 613 * *
Leann S. Rodgers 7,249 6,637 612 *
Ralph Silver 6,120 6,120 * *
Soberekon K. Simon-Ogan 4,285 4,285 * *
J. Woodson Smith 31,549 919 30,630 *
Ann F. Wingrove 15,298 15,298 * *
First Capital Partners, Inc. 50,000 50,000 * *
FBO Joel Rosenberg/12/
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
TOTAL OF SHARES SHARES OFFERED FOR
BENEFICIALLY OWNED STOCKHOLDER'S TOTAL OF SHARES BENEFICIALLY
SELLING STOCKHOLDERS PRIOR TO OFFERING ACCOUNT OWNED AFTER OFFERING
- -------------------------- ------------------ ------------------- ----------------------------
SHARES SHARES NUMBER PERCENTAGE
--------------- --------------- --------- ------------
<S> <C> <C> <C> <C>
First Capital Partners, Inc. 50,000 50,000 * *
FBO Richard A. Sarkisian
W. Terrance Schreier/13/ 354,856 354,856 * *
Copeland Consulting Group, Inc./13/ 354,856 354,856 * *
Spencer Edwards, Inc./14/ 120,000 120,000 * *
Coretech, Ltd./15/ 36,281 36,281 * *
SKB Corporation/16/ 74,033 74,033 * *
Gerald Alexander/17/ 97,500 97,500 * *
Jeffrey A. Holtz/18/ 228,571 33,571 195,000 1.7
Human Vision Corporation/19/ 33,571 33,571 * *
</TABLE>
* Reflects less than one percent (1%) of the outstanding shares of Common
Stock as of October 8, 1998.
1 Private Placement investor. Represents shares which may be offered for resale
upon any conversion of up to 350 shares of Preferred Stock by this Selling
Stockholder. As discussed in this Registration Statement at "Risk
Factors--Private Placement; Mandatory Redemption," the number of shares
ultimately acquired and offered by this Selling Stockholder upon conversion
of the Preferred Stock may be materially lesser or greater based upon factors
not now known, including the future market price of the Common Stock.
2 Private Placement investor. Represents shares which may be offered for resale
upon any conversion of up to 350 shares of Preferred Stock which may be
acquired by this Selling Stockholder. As discussed in this Registration
Statement at "Risk Factors--Private Placement; Mandatory Redemption," the
number of shares ultimately acquired and offered by this Selling Stockholder
upon conversion of the Preferred Stock may be materially lesser or greater
based upon factors not now known, including the future market price of the
Common Stock.
3 Served as placement agent in the Private Placement. Consists of 52,500 shares
of Common Stock obtainable upon exercise warrants at $.75 per share,
exercisable within 60 days following the date of this prospectus. These
warrants were issued as placement agent compensation.
4 Served as placement agent in the Private Placement. Consists of 52,500 shares
of Common Stock obtainable upon exercise of warrants at $.75 per share, and
140,000 shares obtainable upon exercise of warrants at $.7875 per share, all
exercisable within 60 days following the date of this prospectus. The 52,500
warrants were issued as placement agent compensation; the 140,000 warrants
were issued in the Private Placement and were assigned by the Private
Placement investors to Libra Finance S.A.
5 President and founder of PlanGraphics, Inc., and President and Vice Chairman
of the Board of Directors of the Company. Includes options for 422,704 shares
at prices ranging from $1.25 to $2.125 per share exercisable within 60 days
following the date of this Prospectus, and up to 317,338 performance shares
which vest more than 60 days of the date of this Prospectus.
6 Black & Veatch Holding Company is a strategic partner of PlanGraphics, Inc.,
and until September 22, 1997, owned 18% of the outstanding capital stock of
PlanGraphics, Inc.
7 Previously a Vice President of PlanGraphics, Inc.
8 Senior Vice President of PlanGraphics, Inc. Includes options for 50,000
shares at $1.75 per share exercisable within 60 days of the date of this
Prospectus, and options for 3,060 shares at $.58 per share, 10,036 shares at
$1.00 per share and 100,000 shares at $1.75 per share exercisable more than
60 days of the date of this Prospectus.
9 Quarterdeck Investment Partners, Inc. has provided investor communications
and development services for PlanGraphics, Inc.
10 Senior Vice President for Human Relations and Resources of PlanGraphics,
Inc. Includes options for 40,000 shares at $1.75 per share exercisable
within 60 days following the date of this Prospectus, and options for up to
60,000 shares at $1.75 per share and options for 5,018 shares at $1.00 per
share not exercisable within 60 days of the date of this Prospectus.
11 Chief Operating Officer of PlanGraphics, Inc. and a Director of the Company.
Includes options for 281,768 shares at prices ranging from $1.25 to $2.125
per share exercisable within 60 days following the date of this Prospectus,
and options for 5,018 shares at $1.00 per share and up to 204,284 performance
shares, all of which vest more than 60 days of the date of this Prospectus.
12 A principal of First Capital Partners, Inc., First Capital Partners, Inc. has
been a financial advisor to Integrated Spatial Information Solutions, Inc.
13 Total Shares figures include shares registered hereunder obtainable upon the
exercise of warrants issued to Transition Partners Limited ("TPL") as to W.
Terrance Schreier, and to Copeland Consulting Group, Inc. ("CCGI"),
respectively, including 243,596 shares granted in satisfaction of certain
antidilution rights to each of TPL and CCGI of which approximately 177,044
shares for each of TPL and CCGI, respectively, are exercisable within 60 days
of the date of this Prospectus. TPL, of which W. Terrance Schreier is the
principal, was
-22-
<PAGE>
retained by the Company on January 15, 1997 to provide management and
financial advisory services to the Company, and assisted the Company in its
acquisition of PlanGraphics, Inc. Gene R. Copeland, a Managing Director of
TPL, is the principal of CCGI.
14 Spencer Edwards, Inc. has provided capital formation advisory services for
Integrated Spatial Information Solutions, Inc. 15 Coretech, Ltd. is an
affiliate of an entity which served as placement agent for an equity
offering by Integrated Spatial Information Solutions, Inc. pursuant to
Regulation S under the Act.
16 SKB Corporation is a previous supplier to Integrated Spatial Information
Solutions, Inc.
17 Gerald Alexander is a principal of an entity which served as placement agent
for an equity offering by Integrated Spatial Information Solutions, Inc.
pursuant to Regulation S under the Act.
18 Consists of 28,571 shares acquired from the Company in a separate private
placement in 1998, and 5,000 shares obtainable upon exercise of warrants at
$.98 per share, exercisable within 60 days following the date of this
Prospectus, issued in connection with this placement.
19 Mr. Gary Murray, a director of the Company, is President of Human Vision
Corporation. Consists of 28,571 shares acquired from the Company in a
separate private placement in 1998, and 5,000 shares obtainable upon exercise
of warrants at $.98 per share exercisable within 60 days following the date
of this Prospectus, issued in connection with this placement.
-23-
<PAGE>
SALE OF SHARES
The sale of shares by the Selling Stockholders may be effected from time
to time in transactions (which may include block transactions) on the OTC
Bulletin Board, in negotiated transactions, or a combination of such methods of
sale at fixed prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling Stockholder Securities to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of Stockholder
Securities for whom such broker-dealers may act as agent or to whom they sell as
principal or both (which compensation as to a particular broker-dealer might be
in excess of customary commissions). The Selling Stockholders and any
broker-dealers that act in connection with the sale of the Stockholder
Securities hereunder might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Act and any commissions received by them and any profit on
the resale of Stockholder Securities as principals might be deemed to be
underwriting discounts and commissions under the Act. The Company has agreed to
indemnify certain of the Selling Stockholders against certain liabilities,
including liabilities under the Act.
Pursuant to its agreement with certain of the Selling Stockholders, the
Company is obligated to maintain the effectiveness of the Registration Statement
of which this Prospectus forms a part (the "Registration Statement"). Pursuant
to this agreement, the Offering contemplated hereby will terminate with respect
to the Stockholder Securities upon the earlier of (i) the date all of the
Stockholder Securities are sold by the Selling Stockholders; or (ii) five years
from the effective date of the Registration Statement of which this Prospectus
forms a part.
To the extent required by applicable law, this Prospectus will be
supplemented to summarize the terms of any sales through dealers, together with
any discounts, commissions or concessions allowed to such dealers in connection
therewith. No sale or distributions other than as described herein may be
effected until after this Prospectus shall have been appropriately amended or
supplemented.
RECENT DEVELOPMENTS
The Company on August 19, 1998 completed the private placement of 700
shares of its Series A 6% Convertible Preferred Stock. For a summary of the
placement, its terms and conditions, and the risks and benefits of this
placement, please refer to the cover page of this Prospectus and the section of
this Prospectus entitled "Risk Factors--Private Placement; Conversion of
Preferred Stock; Dilution; Mandatory Redemption."
The Company has also recently obtained a signed letter of commitment from
a major lending institution for a $3 million revolving line of credit, to be
secured by the Company's accounts receivable. For additional references to this
potential source of working capital financing, please see the sections of this
Prospectus entitled "Risk Factors-- "Accumulated Deficit; Operating Expenses;
Continuation as a Going Concern," "Liquidity; Capital Requirements; Need for
-24-
<PAGE>
Additional Financing," and "Company's Intentions Regarding Seeking Protection
Under Bankruptcy Laws."
LEGAL MATTERS
The legality of the Stockholder Securities was passed upon for the Company
by Davis, Graham & Stubbs LLP, Denver, Colorado.
EXPERTS
The consolidated financial statements of Integrated Spatial Information
Solutions, Inc. incorporated by reference in this Prospectus have been audited
by BDO Seidman, LLP, independent certified public accountants, to the extent and
for the periods set forth in their report incorporated herein by reference
(which contains an explanatory paragraph regarding the Company's ability to
continue as a going concern) and are incorporated herein in reliance upon such
report given upon the authority of said firm as experts in accounting and
auditing.
The financial statements of PlanGraphics, Inc. included in this Prospectus
and in the Registration Statement have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the period set
forth in their report (which contains an explanatory paragraph regarding the
Company's ability to continue as a going concern) appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such report
given upon the authority of said firm as experts in accounting and auditing.
-25-
<PAGE>
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
6,993,380 SHARES OF COMMON STOCK
OFFERED BY THE SELLING STOCKHOLDERS
----------------
PROSPECTUS
----------------
October __, 1998
No person is authorized to give any information or to make any
representations not contained in this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
the information contained herein is correct as of any time subsequent to the
date hereof.
-26-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table shows all expenses of the issuance and distribution of
the securities offered hereby:
SEC Registration Fee...................................... $ 2,135.39
State Qualification Expenses.............................. $ 5,000
Printing Expenses......................................... $ 100
Legal Fees and Expenses................................... $ 50,000
Accountants' Fees and Expenses............................ $ 15,000
Transfer Agent and Registrar Fees......................... $ 200
Miscellaneous Expenses.................................... $ 1,000
Total................................................... $73,435.39
All amounts listed above, except for the SEC registration fee, are
estimates and none are being borne by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Articles of Incorporation of the Company provides as
follows:
"The Corporation shall indemnify any and all of its directors,
officers, employees, authorized agents or former directors or officers or
any person who may have served at its request as a director or officer of
another corporation in which it owns shares of capital stock or of which
it is a creditor, against expenses actually and necessarily incurred by
them to the fullest extent permitted under Colorado Corporate Code, in
connection with the defense of any action, suit or proceeding in which
they or any of them, are made parties, or a party, by reason of being or
having been directors or officers of the Corporation, or of such other
corporation, except in relation to matters to which any such director or
officer or former director or person shall be adjudged in such action,
suit or proceeding to be liable for gross negligence or willful misconduct
in the performance of duty. Such indemnification shall not be deemed
exclusive of any other rights to which those indemnified may be entitled,
under any By-Law agreement, vote of shareholders or otherwise.
In addition no officer, director, employee or authorized agent shall
be personally liable for any injury to person or property arising out of a
tort committed by an employee unless such officer or director was
personally involved in the situation giving rise to the litigation or
unless such officer or director committed a criminal offense. The
protection afforded hereby shall not restrict other common law protection
and rights that an officer or director may have. This Article shall not
restrict the Corporation's right to eliminate or limit
II-1
<PAGE>
the personal liability of a director to the Corporation or to its
shareholders for monetary damages for breach of fiduciary duty as a
director, and the personal liability of directors to the Corporation and
to us shareholders for monetary damages shall be eliminated or limited, to
the full extent permitted by the Colorado Corporation Code, except for
monetary damages for any breach of the director's duty of loyalty to the
Corporation or to its shareholders, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, acts
specified in Section 7-5-114 of the Colorado Corporation Code, or any
transaction from which the director derived an improper personal benefit.
Nor shall the liability of a director of the Corporation be eliminated or
limited to the Corporation or to its shareholders for monetary damages for
any act or omission occurring prior to the effective date of this
Article."
Article VI of the Bylaws of the Company provides as follows:
"Each Director and Officer of this Corporation, and each person who
shall serve at its request as a Director or Officer of another corporation
in which this Corporation owns shares of capital stock or of which it is a
creditor, whether or not then in office, and his personal representatives,
shall be indemnified by the Corporation against all costs and expenses
actually and necessarily incurred by him in connection with the defense of
any action, suit or proceeding in which he may be involved or to which he
may be made a party by reason of his being or having been such Director or
Officer, except in relation to matters as to which he shall be finally
adjudged in such action, suit or proceeding to be liable for negligence of
misconduct in the performance of duty. Such costs and expenses shall
include amounts reasonably paid in settlement for the purpose of
curtailing the costs of litigation, but only if the Corporation is advised
in writing by its counsel that in his opinion the person indemnified did
not commit such negligence or misconduct. The foregoing right of
indemnification shall not be exclusive of other rights to which he may be
entitled as a matter of law or by agreement."
Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
Exhibits
4.1 Amended and Restated Articles of Incorporation./1/
4.2 Articles of Amendment to the Articles of Incorporation./2/
4.3 Articles of Amendment to the Articles of Incorporation./3/
4.4 Specimen Stock Certificate./4/
5.1 Opinion and Consent of Davis, Graham & Stubbs LLP./6/
13.1 Annual Report on Form 10-KSB/A for the fiscal year ended
September 30, 1998/7/
13.2 Quarterly Report on Form 10-QSB for the quarter ended June 30,
1998/8/
23.1 Consents of BDO Seidman, LLP.
23.2 Consent of Davis, Graham & Stubbs LLP - See Exhibit 5.1./6/
24 Power of Attorney to Sign Registration Statement./5/
- --------------------
1 Filed as an exhibit to the Company's definitive Proxy Statement, dated
May 3, 1991 and incorporated herein by reference.
2 Filed as an exhibit to the Company's Current Report on Form 8-K dated
November 12, 1996, and incorporated herein by reference.
3 Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 13, 1998, and incorporated herein by reference.
4 Filed as an exhibit to the Company's Registration Statement on Form S-18
(Registration No. 33-1484), as filed with the Commission on November 12,
1985, and incorporated herein by reference.
5 See page II-5. 6 To be filed by amendment.
7 Filed with the Commission on May 21, 1998 and incorporated herein by
reference. 8 Filed with the Commission on August 14, 1998 and incorporated
herein by reference.
Financial Statements
AUDITED FINANCIAL STATEMENTS OF PLANGRAPHICS, INC. FOR THE PERIOD
OCTOBER 1, 1996 THROUGH SEPTEMBER 22, 1997.+
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARY UNAUDITED
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR YEAR ENDED
SEPTEMBER 30, 1997.
II-3
<PAGE>
+ Filed with Amendment No. 2 to the Registration Statement on Form S-3
(No. 333-39775) and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement to (a) include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Act"), (b) reflect in the
prospectus any facts or events which, individually or together, represent a
fundamental change in the information in the Registration Statement, and (c)
include any additional or changed material information with respect to the plan
of distribution disclosed in the Registration Statement; (2) that, for the
purpose of determining any liability under the Act, each such post-effective
amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
B. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jacksonville, State of Florida, on the 8th day
of October, 1998.
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
By: /S/ FREDERICK G. BEISSER
-------------------------------------------
Frederick G. Beisser
Vice President-Finance and Administration
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints G. Stephen Carreker and Frederick G.
Beisser and each or any of them, his or her true and lawful attorney-in-fact and
agents, with full power of substitution and resubstitution, for him or her in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-2, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, or their
or his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chief Executive Officer, and Chairman
/S/ STEPHEN CARREKER of the Board of Directors October 8, 1998
- --------------------------
G. Stephen Carreker
President and Vice-Chairman of the
/S/ JOHN C. ANTENUCCI Board of Directors October 8, 1998
- --------------------------
John C. Antenucci
Vice President-Finance and
/S/ FREDERICK G. BEISSER Administration and a Director (Principal October 8, 1998
- -------------------------- Financial and Accounting Officer)
Frederick G. Beisser
</TABLE>
II-5
<PAGE>
- -------------------------- Director October 8, 1998
Jeanne M. Anderson
/S/ J. GARY REED Director October 8, 1998
- --------------------------
J. Gary Reed
/S/ RAYMUND E. O'MARA Director October 8, 1998
- --------------------------
Raymund E. O'Mara
/S/ GARY S. MURRAY Director October 8,1998
- --------------------------
Gary S. Murray
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
4.1 Amended and Restated Articles of Incorporation./1/
4.2 Articles of Amendment to the Articles of Incorporation./2/
4.3 Articles of Amendment to the Articles of Incorporation./3/
4.4 Specimen Stock Certificate./4/
5.1 Opinion and Consent of Davis, Graham & Stubbs LLP./6/
13.1 Annual Report on Form 10-KSB/A for the fiscal year ended
September 30, 1998/7/
13.2 Quarterly Report on Form 10-QSB for the quarter ended June 30,
1998/8/
23.1 Consents of BDO Seidman, LLP.
23.2 Consent of Davis, Graham & Stubbs LLP - See Exhibit 5.1./6/
24 Power of Attorney to Sign Registration Statement./5/
- --------------------
1 Filed as an exhibit to the Company's definitive Proxy Statement, dated May 3,
1991 and incorporated herein by reference.
2 Filed as an exhibit to the Company's Current Report on Form 8-K dated
November 12, 1996, and incorporated herein by reference.
3 Filed as an exhibit to the Company's Current Report on Form 8-K dated August
13, 1998, and incorporated herein by reference.
4 Filed as an exhibit to the Company's Registration Statement on Form S-18
(Registration No. 33-1484), as filed with the Commission on November 12,
1985, and incorporated herein by reference.
5 See page II-5.
6 To be filed by amendment.
7 Filed with the Commission on May 21, 1998 and incorporated herein by
reference.
8 Filed with the Commission on August 14, 1998 and incorporated herein by
reference.
II-7
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Integrated Spatial Information Solutions, Inc.
Jacksonville, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated January
9, 1998, relating to the consolidated financial statements of Integrated Spatial
Information Solutions, Inc. appearing in the Company's Annual Report on Form
10-KSB for the year ended September 30, 1997. Our report contains an explanatory
paragraph regarding the Company's ability to continue as a going concern.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/S/BDO SEIDMAN, LLP
Denver, Colorado
October 8, 1998
<PAGE>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
PlanGraphics, Inc.
Frankfort, Kentucky
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated December
12, 1997, relating to the financial statements of PlanGraphics, Inc. appearing
in this Registration Statement. Our report contains an explanatory paragraph
regarding PlanGraphics' ability to continue as a going concern.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/S/BDO SEIDMAN, LLP
Denver, Colorado
October 8, 1998
<PAGE>
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR YEAR ENDED SEPTEMBER 30, 1997
The accompanying unaudited pro forma consolidated statement of operations
gives effect to the acquisition by Integrated Spatial Information Solutions,
Inc. - formerly known as DCX, Inc. (the "Company") of 100% of the outstanding
common stock of PlanGraphics, Inc. pursuant to the agreement between the
parties, and to the issuance of 2,631,145 shares of the Company's common stock,
and is based on the estimates and assumptions set forth herein under the
purchase method of accounting. The unaudited pro forma information has been
prepared utilizing the historical financial statements and notes thereto, which
are incorporated by reference or are included herein. The unaudited pro forma
financial data does not purport to be indicative of the results which actually
would have been obtained in the future. The unaudited pro forma financial
statements should be read in conjunction with the financial statements.
The balance sheet is presented on a consolidated basis in the Company's
10-KSB financial statements at September 30, 1997. The accompanying unaudited
pro forma statement of operations has been derived from the statement of
operations of the Company and PlanGraphics for the year ended September 30,
1997, and such information has been adjusted to give effect to the proposed
acquisition as if the proposed acquisition had occurred as of the beginning of
the period presented.
<TABLE>
<CAPTION>
Integrated
Spatial
Information Pro Forma Consolidated
PlanGraphics, Inc. Solutions, Inc. Adjustments Pro Forma
<S> <C> <C> <C> <C>
Revenue $ 8,204,236 -- $ 8,204,236
Salaries and employee benefits 5,225,909 799,161 6,025,070
Direct contract costs 1,207,715 -- 1,207,715
Other operating expenses 2,474,279 732,737 367,859 a 3,574,875
---------------------------------------------------------------------------
Total operating costs 8,907,903 1,531,898 367,859 10,807,659
---------------------------------------------------------------------------
Operating income (loss) (703,666) (1,531,898) (367,859) (2,603,423)
Other income (311,734) 300,325 (11,409)
---------------------------------------------------------------------------
Loss from continuing operations $ (1,015,400) $ (1,231,573) $ (367,859) $(2,614,832)
Preferred stock dividends (9,674)
Deemed preferred stock dividends (892,592)
--------------
Net loss attributable to common (3,517,098)
stockholders
Loss per common share:
loss attributable to common
stockholders (0.48)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Weighted average number of shares of 7,345,496
common stock outstanding
</TABLE>
Integrated Spatial Information Solutions, Inc. and Subsidiary
Notes to Pro Forma Consolidated Financial Statements
a. To record the amortization of goodwill over a 15 year period.
b. The audited financial statements for DCX, Inc. and PlanGraphics, Inc. are not
comparable to the pro forma statements above. The DCX, Inc. statements include
only eight days of activity for PlanGraphics, Inc., whereas the financial
statements for PlanGraphics are for the period October 1, 1996 to September 22,
1997.
