UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________ .
Commission file number 0-14273
INTEGRATED SPATIAL INFORMATION SOLUTIONS, INC.
----------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 84-0868815
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1597 Cole Boulevard, Suite 300B, Golden, CO 80401
-------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(303) 274-8708
--------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
12,013,190 Common Shares were outstanding as of June 30, 1999.
Number of pages in this report is 23.
<PAGE>
Table of Contents
Part I Financial Information 3
Consolidated Balance Sheet 3
Consolidated Statement of Operations 5
Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 7
Management Discussion and Analysis 10
Part II Other Information 13
Signature Page 14
Exhibits:
Services Agreement 15
Consulting Agreement 19
2
<PAGE>
Part 1
Financial Statements
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Balance Sheet
(Unaudited)
June 30, 1999
-------------
Assets
Current:
Cash and Cash Equivalents $ 283,297
Accounts receivable (net of allowance) 1,907,928
Restricted cash 100,000
Prepaid expenses and other 120,890
-----------
Total current assets 2,412,115
-----------
Property and Equipment:
Land and building under capital lease - related party 1,866,667
Equipment and furniture 540,660
Leased assets 289,234
-----------
2,696,561
Less accumulated depreciation (643,967)
-----------
Net property and equipment 2,052,594
-----------
Other Assets
Goodwill, net of accumulated amortization 4,691,117
Other 82,795
-----------
Total other assets 4,773,912
-----------
$ 9,238,621
===========
See accompanying notes to financial statements
3
<PAGE>
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Balance Sheet
(Unaudited)
June 30, 1999
-------------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable - current portion $ 217,894
Obligations under capital leases - related party - current 154,882
Accounts payable 661,367
Accrued expenses 605,297
Deferred revenue 54,372
Client prepayment 158,209
------------
Total current liabilities 1,852,021
------------
Long-term liabilities:
Notes payable, less current maturities 257,888
Obligations under capital leases - related party 1,845,080
------------
Total long-term liabilities 2,102,968
------------
Total liabilities 3,954,989
------------
Commitments and Contingencies
Stockholders' Equity
Cumulative convertible preferred stock,
$.001 par value, 20,000,000 shares authorized,
590 shares issued and outstanding 1
Common stock, no par value, 2,000,000,000
shares authorized, 12,013,190 shares issued
and outstanding 12,700,961
Additional paid-in capital 3,721,718
Accumulated deficit (11,139,048)
------------
Total stockholders' equity 5,283,632
------------
$ 9,238,621
============
See accompanying notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Statements of Operations
(Unaudited)
Nine months ended Three months ended
June 30, June 30,
-------------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 6,216,323 $ 5,891,818 $ 2,250,444 $ 2,217,437
Cost of sales
Salaries and employee benefits 3,791,035 3,738,619 1,232,351 1,257,247
Direct contract costs 1,086,308 966,088 456,041 344,664
Other operating costs 1,878,304 2,725,769 648,425 981,097
------------ ------------ ------------ ------------
Total costs and expenses 6,755,647 7,430,476 2,336,817 2,583,008
------------ ------------ ------------ ------------
Operating loss (539,324) (1,538,658) (86,373) (365,571)
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (359,120) (311,396) (69,336) (112,743)
Other income (expense) 246 114,093 (1,018) 26,634
Gain on sale of assets 173,905 -- 173,905
Gain on litigation settlement 414,312 -- -- --
------------ ------------ ------------ ------------
Total other income (expense) 229,343 (197,303) 103,551 (86,109)
------------ ------------ ------------ ------------
Net income (loss) from continuing operations (309,981) (1,735,961) 17,178 (451,680)
Income (loss) from discontinued operations -- (42,215) -- (413)
------------ ------------ ------------ ------------
Net income (loss) (309,981) (1,778,176) 17,178 (452,093)
------------ ------------ ------------ ------------
Preferred stock dividends (36,723) (14,910) (12,241) --
Deemed preferred stock dividends -- (83,333) -- --
------------ ------------ ------------ ------------
Income (loss) attributable to common stockholders ($ 346,704) ($ 1,876,419) $ 4,937 ($ 452,093)
============ ============ ============ ============
Basic income ( loss) per common share:
Income (loss from continuing operations
attributable to common stockholders (.03) (.18) -- (.04)
Income (loss) from discontinued operations -- -- -- --
------------ ------------ ------------ ------------
Income (loss) attributable to common stockholders (.03) (.19) -- (.04)
------------ ------------ ------------ ------------
Weighted average number of shares of common stock outstanding 11,786,734 9,863,072 11,970,226 11,441,759
============ ============ ============ ============
Diluted income ( loss) per common share:
Income (loss from continuing operations
attributable to common stockholders (.03) (.18) -- (.04)
Income (loss) from discontinued operations -- -- -- --
------------ ------------ ------------ ------------
Income (loss) attributable to common stockholders (.03) (.19) -- (.04)
============ ============ ============ ============
Weighted average number of shares of common stock outstanding 11,786,734 9,863,072 20,553,452 11,441,759
============ ============ ============ ============
See accompanying notes to financial statements
5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Statements of Cash Flow
(Unaudited)
For the Nine months ended June 30, 1999 1998
- ---------------------------------- ---- ----
Operating activities:
<S> <C> <C>
Net loss $ (309,981) $(1,778,176)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 596,123 580,982
Stock options and warrants issued for services performed 45,211 412,577
Gain on litigation settlement (414,312) --
Gain on sale of assets (173,905) --
Decrease in land and building held for resale 1,083,522 --
Write off accumulated depreciation due to discontinued operations -- (129,002)
Decrease (increase) in accounts receivable 660,795 (8,905)
Decrease in accrued settlement liability (64,685) (42,003)
Decrease in other assets 55,024 64,892
Decrease in accounts payable (20,513) (598,490)
Decrease in accrued expenses (253,027) (179,347)
Decrease in deferred revenue (58,674) (14,475)
Increase in client prepayments 158,209 --
----------- -----------
Net cash generated (used) by operating activities 1,303,787 (1,691,947)
----------- -----------
Investing activities:
Purchase of equipment (94,301) (57,722)
Book value of assets sold (1,091,843) --
Receipt from sale of assets 1,254,126 1,104,125
----------- -----------
Net cash (used) provided by investing activities 67,982 1,046,403
----------- -----------
Financing activities:
Payments on checks written against future deposits (207,650) (269,587)
Proceeds of borrowings 60,000 --
Payment of debt (959,144) (464,873)
Dividends on preferred stock (36,723) --
Issuance of common stock -- 758,174
Issuance of convertible preferred stock -- 212,500
----------- -----------
Net cash used by financing activities (1,143,517) 236,214
----------- -----------
Net increase (decrease) in cash 228,252 (409,330)
Cash and cash equivalents, beginning of period 55,045 582,326
----------- -----------
Cash and cash equivalents, end of period $ 283,297 $ 172,996
=========== ===========
See accompanying notes to financial statements
6
</TABLE>
<PAGE>
Integrated Spatial Information Solutions, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Condensed Consolidated Financial Statements
The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. The Company believes that the
disclosures are adequate to make the information presented not misleading. In
the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's consolidated financial
position as of June 30, 1999, the consolidated results of its operations for the
nine-month periods ended June 30, 1999, and 1998 and statements of cash flows
for the nine-month periods then ended.
The accounting policies followed by the Company are set forth in the annual
report of September 30, 1998, filed on Form 10-KSB, as amended, and the audited
consolidated financial statements therein with the accompanying notes thereto.
While management believes the procedures followed in preparing these
consolidated financial statements are reasonable, the accuracy of the amounts
are in some respects dependent upon the facts that will exist, and procedures
that will be accomplished by the Company later in the year.
The consolidated results of operations for the three and nine-month period ended
June 30, 1999, are not necessarily indicative of the results to be expected for
the full year ending September 30, 1999.
(2) Accounts Receivable
Accounts receivable contains amounts computed under the cost-to-cost method to
determine percentage of completion as described in the Form 10-KSB for September
30, 1998.
(3) Provision for Income Taxes
At the beginning of the fiscal year the Company had net operating loss
carry-forwards of $6.0 million with expirations through 2018. At June 30, 1999,
the amount of the net operating loss carry-forward balance is estimated at $6.4
million. The Company expects to incur a minimal amount of alternative minimum
tax for the fiscal year. Since the Company is unable to determine that deferred
tax assets exceeding tax liabilities are more likely than not to be realized, it
will record a valuation allowance equal to the excess deferred tax assets at
fiscal year end.
(4) Litigation
Subsequent to the end of the quarter, former consultants to the Company,
Transition Partners Limited, a Colorado Corporation, filed a claim for an amount
in excess of $2 million on July 16, 1999 in District Court for Boulder County,
Colorado, alleging, inter alia, breach of contract, nonpayment of certain
services provided, misrepresentation and wrongful termination of a contractual
arrangement. The Company believes the claim is without merit and intends to put
forth a vigorous defense against the alleged claims. (See also Item 1, Legal
Proceedings, below.)
(5) Lease Obligations
The Company leases various equipment as well as facilities under capital leases
that expire through the year 2011 as noted in Note 7 to the Financial Statements
in Form 10-KSB, as amended, September 30, 1998.
7
<PAGE>
(6) Subsequent Events
Dispute with Former Executive. On July 1, 1999 the Board of Directors terminated
Mr. Stephen Carreker as Chairman and Chief Executive Officer under the
provisions of his employment agreement allowing termination for cause. As
previously reported on Form 8-K, dated July 1, 1999, the Company subsequently
filed a civil action against Mr. Carreker. The Company's complaint, filed on
July 2, 1999, in the District Court of Denver, Colorado, alleges that Mr.
Carreker made false statement to, and concealed information from, the Board of
Directors and other regarding the Company's operations. The Company seeks
compensatory and punitive damages in unspecified amounts as well as pre- and
post-judgement interest and award of legal cost, expense and attorneys' fees.
Through his attorney, Mr. Carreker has asserted that he is entitled to severance
compensation, bonus payment, and has rights to stock options for both vested and
non-vested performance stock option grants as if he were terminated for reasons
other than death, disability, cause, voluntary resignation or expiration of the
term of his agreement. Mr. Carreker has filed a demand for arbitration pursuant
to his employment contract with the American Arbitration Association. The
Company intends to vigorously contest all claims asserted by Mr. Carreker,
including claims regarding the alleged rights to performance related stock
option grants for which performance goals were not met. Nothing in this report
should be construed to limit or otherwise affect the Company's claims against
Mr. Carreker, including claims with respect to his entitlement to certain equity
grants and alleged bonus payments.
Agreement with New Chairman. Effective July 6, 1999 the Company entered into an
Agreement for Services with Mr. Gary S. Murray wherein he is retained as the
Chairman of the Board of Directors. The term of the Agreement begins July 1,
1999 and ends the earlier of June 30, 2001 or the date upon which he is not
elected as a Director or is removed as a Director. Annual base compensation for
Mr. Murray is set at $50,000, payable in equal monthly installments of the
Company's common stock priced at the average price for the five business days
preceding the date of the Agreement, or $0.2906, and options to purchase 175,000
shares per annum of the Company's common stock at $0.31 per share vesting in
quarterly installments and exercisable for three years from the date of the
Agreement. In addition, Mr. Murray received incentive options to acquire 688,235
shares of the Company's common stock fully vested and immediately exercisable at
an exercise price of $0.2906 per share. He exercised the stock options and on
July 13, 1999 submitted payment to the Company. The Company has agreed to file a
registration statement with the Securities and Exchange Commission as soon as
practicable to register the public sale of the common stock underlying the
options granted under the Agreement. Common stock held by the Chairman, even
though registered, will be subject to the SEC Rule 144 restrictions imposed on
affiliates of the Company. The rights and duties under the Agreement are not
assignable, except that Mr. Murray may assign options issuable to an entity of
which he owns more than 50% of the voting power and such entity which has
received the options may assign them to Mr. Murray. The Agreement for Services
is made a part of this report as Exhibit 10.7 and appears at page 15.
Related Party Agreement with HumanVision LLC. Mr. Murray is the principal owner
and executive officer of HumanVision LLC, an organization that entered into a
consulting agreement with the Company on July 6, 1999. The agreement ends upon
the earlier of June 30, 2001; the date upon which Mr. Murray is not elected as a
Director or is removed as a Director; and the date upon which he does not own
more than 50% of the voting power of HumanVision. Under the agreement,
HumanVision will provide certain services related to developing and implementing
actions to increase shareholder value through articulation of a vision for the
Company, identifying and reviewing merger and acquisition candidates, obtaining
capital (debt or equity) to finance mergers and acquisitions, and recruiting and
evaluating candidates for senior executive and director position. Compensation
for these services consists of performance options in two quantities of 322,581
each to acquire common stock of the Company at an exercise fee of $0.31 per
share if the market capitalization of the Company exceeds $30 million for the
first quantity and $60 million for the second quantity for 20 of 30 consecutive
business days at any time prior to June 30, 2002. The Company will issue each
performance option granted within 30 days of the date the respective performance
goal is achieved and the option will be exercisable for a period of three years
from the date of issue. The Company is obligated to register the public sale of
the underlying common stock as soon as practicable after the options become
exercisable. The agreement also provides for a success fee of 1.5% of the
transaction value in the event the Company successfully completes a merger with
8
<PAGE>
or into another entity or completes any acquisition of stock or assets during
the term of the agreement. The fee, which applies only to those activities
outside the normal course of business and only to entities other than existing
subsidiaries of the Company, is to be paid in the currency of the applicable
transaction for which it is earned. The Consulting Services Agreement is made a
part of this report as Exhibit 10.8 and appears at page 20.
7. Accounting for Preferred Stock Convertible at a Discount to the Market.
The prior year statement of operations gives effect to a discount of 25% of the
common stock which would result and be deemed to be additional dividend to the
holders of the Company's 6% convertible preferred stock sold on October 14,
1997. That convertible preferred stock was convertible into common stock at a
25% discount to the five day average market price of the common stock
immediately preceding the conversion date which was lower than the five day
average market price at the date of placement. This difference, $83,333 for the
prior year first quarter, on the first possible date of conversion is an imputed
discount and is deemed to be additional dividend available to the holders of the
preferred stock which reduced prior year first quarter income available to
common stock shareholders. Accordingly, it was deducted from cumulative net
income to arrive at net income attributable to common shareholders. All of the
convertible preferred stock from the October 1997 placement has since been
converted into common stock.
8. Earnings Per Share.
Earnings per share are calculated in accordance with the provisions of Statement
of Financial Accounting Standard No. 128 --"Earnings per Share" (SFAS Nor. 128).
SFAS No. 128 provides for the calculation of "Basic" and "Diluted" earnings per
share. Basic earnings per share includes no dilution for unissued shares and is
computed by dividing income or loss available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution attributable to the potential
issue of additional securities that could share in the earnings of an entity and
known as fully diluted earnings per share. No computation of diluted loss per
share is displayed when such computation would result in a reduced net loss per
share for a period.
Calculation of basic and diluted earnings per share for the periods presented
are displayed below:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
June 1999 June 1998 June 1999 June 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Basic Earnings (loss) per common share:
Numerator:
Income (loss) from
continuing operations $ (309,981) $ (1,735,961) $ 17,178 $ (451,680)
Income (loss) from dis-
continued operations -- (42,215) -- (413)
Preferred stock dividends (36,723) (14,910) (12,241) --
Deemed preferred
stock dividends -- (83,333) -- --
------------ ------------ ------------ ------------
Income (loss) attributable to
common shareholders $ (346,704) $ (1,876,419) $ 4,937 $ (452,093)
============ ============ ============ ============
Denominator:
Weighted average common
shares outstanding 11,786,734 9,863,072 11,970,226 11,441,759
============ ============ ============ ============
Per share amounts:
Income (loss) from
continuing operations $ (0.03) $ (0.18) $ -- $ (0.04)
Income (loss) from dis-
continued operations -- -- -- --
------------ ------------ ------------ ------------
Basic earnings (loss) $ (0.03) $ (0.15) $ -- $ (0.04)
============ ============ ============ ============
Table continues on next page.
9
<PAGE>
Nine Months Ended Three Months Ended
June 1999 June 1998 June 1999 June 1998
--------- --------- --------- ---------
Diluted earnings (loss) per common share:
Numerator
Income (loss) from
continuing operations $ (309,981) $ (1,735,961) $ 17,178 $ (451,680)
Income (loss) from dis-
continued operations -- (42,215) -- (413)
------------ ------------ ------------ ------------
Income (loss) attributable to
common shareholders $ (346,704) $ (1,876,419) $ 4,937 $ (452,093)
============ ============ ============ ============
Denominator:
Weighted average common
shares outstanding 11,786,734 9,863,072 11,970,226 11,441,759
Effect of dilutive securities:
Stock options -- -- 4,397,930 --
Warrants -- -- 1,493,039 --
Conversion of convertible
preferred stock outstanding -- -- 2,672,257 --
------------ ------------ ------------ ------------
Weighted average of common
Shares and assumed conver-
sions outstanding 11,786,734 9,863,072 20,553,452 10,4441,759
============ ============ ============ ============
Per share amounts:
Income (loss) from
continuing operations $ (0.03) $ (0.18) $ -- $ (0.04)
Income (loss) from dis-
continued operations -- -- -- --
------------ ------------ ------------ ------------
Income (loss) attributable to
common shareholders $ (0.03) $ (0.19) $ -- $ (0.04)
============ ============ ============ ============
</TABLE>
PART 1, ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OPERATIONS
Forward-Looking Statements. This quarterly report contains certain
forward-looking statements that describe the future business, prospects, actions
and possible results of Integrated Spatial Information Solutions, Inc. (the
"Company") and the expectations of the Company and its management which are not
historical facts and therefore constitute forward-looking statements as
contemplated in the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
set forth. As a result, there also can be no assurance that the forward-looking
statements included herein will prove to be accurate or that the objectives and
plans of the Company will be achieved.
Financial Condition:
- --------------------
Liquidity. Cash increased $228,252 to a total of $283,297 from $55,045 at
September 30, 1998. The increase was primarily from increased cash generated
from operations.
At June 30, 1999 the Company has working capital of approximately $560,000
versus negative working capital of $573,000 a year prior. The principal reasons
for this improvement are the sale of the Company's real property in Franktown,
Colorado, the favorable settlement of litigation with the federal government and
a private placement of preferred stock in August 1998. The sale of the real
10
<PAGE>
property resulted in additional current assets of approximately $174,000 and the
litigation was settled for $414,000 less than the amount reserved in previously
issued financial statements with a positive impact on working capital of a like
amount. The preferred stock sale resulted in $463,000 of additional current
assets.
The Company's current ratio of total current assets to current liabilities
increased to 1.30:1 from .60:1 a year ago and 1.20:1 at September 30, 1998.
As a result of losses from operations and limited working capital, the Company's
ability to timely meet payment due dates could be in question. Management's plan
to continue the operation of the Company includes: negotiation of an asset based
line of credit, the negotiation of a credit facility for additional acquisition
and operating capital needs; negotiation of more manageable payment schedules
with preferred vendors and service providers, and raising funds through
additional debt or equity instruments, of which there can be no assurance. The
Company further believes it will experience increased cashflows from new
contract awards on which revenue producing work has begun; and that it will be
able to reduce the cost of operations and improve cash flows to insure the
viability of the Company.
Capital Resources. During the fourth quarter of the FY 1998 the Company sold 700
shares of convertible preferred stock in a private offshore transaction which
resulted in net funding of approximately $463,000.
On February 9, 1999 the Company was advised by a representative of a lending
institution that the institution was withdrawing its previous commitment letter
for a line of credit. The Company is in discussions with other possible sources
for an asset based source of working capital. Accordingly, management believes
it will be able to secure a credit facility large enough to support its near
term working capital requirements.
The Company's long-term liquidity requirements may be significant in order to
implement its acquisition plans. The Company has established strong relations
with investment banking entities and management believes it may be able to
secure equity and credit facilities to support its acquisition program. There
can be no guarantee sufficient funds can be secured to achieve these plans.
Results of Operations:
- ----------------------
Nine Months of Fiscal Year 1999
- -------------------------------
Revenue for the first nine months of FY 1999 aggregated $6,216,000, an increase
of 5.5% over the first nine months of FY 1998, and was generated entirely by the
Company's operating subsidiary whose primary activity is in the area of
geographic information systems.
Total consolidated costs and expenses were $6,756,000 or 108.7% of revenue.
Approximately $887,000 of this amount was related to parent company general and
administrative costs, down from $1,582,000 during the prior year period.
Included in parent company expenses is approximately $294,000 of amortization of
goodwill resulting from the acquisition of its operating subsidiary. The
remaining $5,869,000 is related to the subsidiary's GIS operations and is
essentially unchanged from the costs incurred for the same period during the
prior year.
Interest expense increased over that of the prior year by $48,000 as a result of
higher interest costs related to the Company's Franktown property, which sold in
April 1999. Accordingly, interest expense is expected to decrease in the ensuing
quarters.
Other income decreased by $114,000 as the Franktown facility ceased generating
rent income in June, 1998 when the lessor initiated negotiations to purchase the
facility pursuant to an option to purchase the land and building. The
consummation of the sale of the Franktown facility resulted in a gain of
$174,000 during the period.
Settling litigation with the federal government resulted in a gain of $414,000
in the period.
11
<PAGE>
There were no transactions from discontinued operations during the period.
Third Quarter of Fiscal Year 1999
- ---------------------------------
Revenue of $2,250,000 for the third quarter of FY 1999 resulted entirely from
the Company's operating subsidiary, PlanGraphics, Inc., engaged in geographic
information systems activities. This level of current quarter revenue represents
an increase of 1.5% over the same period of the prior year.
The Company's total costs and expenses were $2,337,000 or 103.8% of revenue.
This represented a decrease of $247,000 from the prior year, an improvement of
9.5 %. Salaries and employee benefits remained essentially unchanged, direct
contract costs increased by $111,000 (approximately 33%) and other operating
costs decreased by $333,000 (approximately 33%). Expenses at the parent company
were about $245,000 lower than the comparable period in the prior year while
expenses remained essentially flat at the subsidiary level.
The operating loss decreased by $280,000 to $86,000 from last fiscal year's
third quarter of $366,000 reflecting management's efforts to improve operations.
Interest expense decreased by $44,000 as a result of the sale (and payment of
the related mortgage) of the Company's Franktown facility and the continuing
reduction of debt at the subsidiary.
Other income decreased by $27,000 reflecting the absence of rent income from the
Franktown facility. The sale of the Franktown facility resulted in a gain of
$174,000 in the current period.
There were no transactions from discontinued operations during the period.
Nine Months of Fiscal Year 1998
- -------------------------------
Revenue for the nine months of FY 1998 amounted to $5,892,000 and was generated
entirely by the Company's operating subsidiary in geographic information systems
and is not comparable with restated revenue of nil for the first half of the
prior fiscal year. This level of current period revenue reflects a decline of
about 12% from the subsidiary's revenue for the same period of the prior year.
This decline from the subsidiary's prior year level of operations for the same
quarter resulted from the winding down of a significant long-term contract and a
delay in the commencement of work on replacement contract activity.
Concurrently, the Company's operating subsidiary generated net profits in each
of the months during the current quarter.
Total consolidated costs and expenses reached $7,430,000 or 126.1% of revenue.
Approximately $2,344,000 was related to parent company general and
administrative costs and is not comparable to reported costs for the prior year
which resulted from discontinued operations of the Company. Of this amount,
approximately $375,000 was related to actions resulting from acquisition
activities; and $294,000 of acquisition amortization expenses were also
recorded. The balance was related to GIS operations and reflected a decrease of
approximately 10% from the costs for the same period a year prior which were not
publicly reported. The decline in GIS related costs resulted from management
actions to reduce operating costs in response to the temporary decline in
revenue.
Interest expense increased over the prior year by $210,000 as a result of the
interest costs added from the GIS subsidiary acquired late in the fourth quarter
of FY 1997. However, trend analysis of both parent and subsidiary interest
expenses for the current period compared to interest expenses for the same
period of FY 1997 reveals a decrease of 27% for the parent company due to
certain leased manufacturing equipment costs no longer occurring because of the
divestiture of manufacturing assets; the retirement of the SBA-held note; and a
decrease of about 15% in subsidiary generated interest expenses resulting from
retirement of certain debt.
Insurance proceeds and other income decreased from prior year totals because the
prior year totals included receipt of proceeds amounting to $400,000 from keyman
life insurance policies carried on a former officer and director of the Company.
No such proceeds were received during the nine months of fiscal 1998.
12
<PAGE>
Discontinued operations total reflects a small increase in expenses related to
the discontinued manufacturing operations.
Third Quarter of FY 1998.
- -------------------------
Revenue for the third quarter of FY 1998 amounted to $2,217,000 and was
generated entirely by the Company's operating subsidiary in geographic
information systems and is not comparable with restated revenue of nil for the
third quarter of the prior fiscal year (Fiscal year 1997). This level of current
quarter revenue reflects an increase of approximately 13% from the subsidiary's
revenue for the same period of the prior year.
Total costs and expenses reached $2,583,000 or 116.5% of revenue. Approximately
$365,000 was related to parent company general and administrative costs and is
not comparable to reported costs for the prior year which resulted from
discontinued operations of the Company. Of this amount, approximately $223,000
was related to actions resulting from acquisition activities; and another
$98,000 of acquisition amortization expenses were recorded also. The balance was
primarily related to GIS operations and reflected a slight increase from costs
for the same period a year prior which were not publicly reported. The increase
in GIS related costs resulted from increased compensation, increased proposal
costs and subcontracting costs.
Interest expense increased over that of the prior year by $81,000 as a result of
the interest costs added from the GIS subsidiary acquired late in the fourth
quarter of FY 1997. However, trend analysis of both parent company interest
($23,000) and subsidiary interest ($148,000) for the current quarter compared to
interest expenses for the same period of FY 1997 reveals a decrease of 27% for
the parent company due to certain leased equipment costs no longer occurring
because of the divestiture of manufacturing assets and due to the retirement of
the SBA-held note and a decrease of about 10% in subsidiary generated interest
expenses resulting from retirement of certain debt.
Discontinued operations total reflects a decrease in expenses related to the
discontinued manufacturing operations.
Contract Backlog
- ----------------
The Company's has reported a backlog of GIS contracts and work assignments
totaling approximately $6.1 million compared to $7.7 million of uncompleted work
in the backlog for the prior year. Management believes the decrease in backlog
and work assignments is principally related to timing issues in sales cycles.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Former consultants to the Company, Transition Partners Limited, a Colorado
Corporation, filed a claim for an amount in excess of $2 million on July 16,
1999 in District Court for Boulder County, Colorado. The claim alleges, inter
alia, breach of contract, nonpayment for certain services provided,
misrepresentation and wrongful termination of a contractual arrangement. The
Company believes the claim is without merit and intends to put forth a vigorous
defense against the alleged claims. (See also Note 4 to the Financial
Statements.)
13
<PAGE>
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K.
a. Index of Exhibits.
The following list of exhibits is made a part of this report and the
exhibits are attached to this report.
Exhibit 10.7 Agreement for Services between the Company and Gary S.
Murray, dated July 6, 1999.
Exhibit 10.8 Consulting Services Agreement between the Company and
HumanVision LLC, dated July 6, 1999.
b. Reports on Form 8-K filed since the beginning of the current quarter:
Current Report on Form 8-K, dated July 1, 1999 reporting the Company had
established a record date of July 30, 1999 for shareholders eligible to vote at
the annual shareholders' meeting on September 2, 1999; the appointment of a new
chairman; and a civil action taken against a former officer of the Company.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Integrated Spatial Information Solutions, Inc.
Dated: August 4, 1999
/S/ Fred Beisser
----------------
Frederick G. Beisser
Vice President-Finance & Administration,
Secretary & Treasurer and Principal Financial
Accounting Officer
14
AGREEMENT FOR SERVICES
This agreement ("Agreement") is made effective July 6, 1999, between Integrated
Spatial Information Solutions, Inc., a Colorado corporation (the "Company") and
Gary S. Murray (the "Executive").
In consideration of the mutual benefits and obligations in this Agreement,
and intending to be legally bound, the Company and Executive agree as follows:
1. OFFICE AND DUTIES
a. Executive shall be retained as the Chairman of the Board of Directors of
the Company. The Executive shall have the duties specified in the Bylaws of the
Company, and such other duties as may be assigned by the Board of Directors from
time to time.
b. Executive agrees to devote as much of his time and effort as reasonably
necessary to the performance of the duties of the office. Executive may have
interests in other business that do not compete with the Company or its
subsidiaries, and may render services for such other business interests,
provided such service does not prevent Executive from performing his duties
under this Agreement.
c. The Company agrees to nominate Executive for election as a member of the
Board of Directors at each meeting of stockholders for the election of Directors
during his employment as Chairman.
2. TERM OF SERVICES
The term of services as Chairman of the Board of Directors shall begin July
1, 1999 and end upon the earlier of (a) June 30, 2001, and (b) the date upon
which he is not elected as a Director or is removed as a Director.
3. COMPENSATION
The Company shall compensate Executive for services as Chairman as follows:
a. Base Compensation. The annual base compensation payable to Executive
upon commencement of this Agreement shall be:
(1) $50,000, payable in equal monthly installments in shares of the
Company's common stock. The common stock shall be priced at $.2906 per
share, which is the five day average immediately prior to the date of
this Agreement; and
(2) Options to purchase 175,000 shares per annum of the Company's common
stock. The Options will be issued under the Company's Equity
Compensation Plan, vested in quarterly installments, exercisable for 3
years from the date of this Agreement at the price of $.31 per share.
b. Incentive Options. In recognition of the importance of the position, and
the challenges accepted by him, Executive shall receive an Incentive Bonus
consisting of a stock option grant to purchase 688,235 shares of the Company's
common stock fully vested and immediately exercisable. The Incentive Options are
exercisable at $.2906 per share, which is the five day average price immediately
prior to the date of this agreement.
15
<PAGE>
c. Registration. The Company agrees to file a registration statement with
the Securities and Exchange Commission as soon as practicable to register the
public sale of the common stock underlying the stock options granted under this
Agreement.
d. Reimbursement. The Company shall reimburse Executive for all reasonable
out of pocket expenses incurred by Executive in connection with performance of
his duties upon submission of vouchers, subject to such guidelines and policies
as may be promulgated by the Company.
4. TRADE SECRETS AND CONFIDENTIAL INFORMATION
a. As a material inducement to the Company to enter into this Agreement and
to pay Executive the compensation stated in this Agreement, Executive covenants
and agrees that Executive shall not, at any time, directly or indirectly, use,
disseminate, or disclose for any purposes other than for the purposes of the
Company's business, any of the Company's confidential information or trade
secrets, unless such disclosure is compelled in a judicial proceeding. Upon
termination of this employment, all documents, records, notebooks, and similar
repositories of records containing information relating to any trade secrets or
confidential information then in the Executive's possession or control, whether
prepared by him or by others, shall be left with the Company or returned to the
Company upon its request. This section shall not restrict the Executive from
using his General Knowledge (the ideas, concepts, know-how and other industry
information that is part of his common knowledge) from pursuit of livelihood
subsequent to any termination of this Agreement.
b. During the term of this Agreement and for a period of one (1) year
following the termination of the Agreement, the Executive shall not pursue
business opportunities with or serve as a Consultant or member of the staff in
any capacity to any other companies with whom the Company has had a primary or
subcontractor role during the prior year of employment, without the prior
written permission of the Company. For one year following termination of
employment, the Executive confirms that he will not, without prior written
consent, perform work that the Company or any of its subsidiaries holds in
backlog or is pursing at the time of termination, whether by independent
contract, through a competitor, or by direct employment with client or prospect.
c. This covenant of non-disclosure has been negotiated and agreed to by and
between the Company and Executive with the full knowledge of and pursuant to the
Colorado Trade Secrets Act and is deemed by both parties to be fair and
reasonable.
5. INDEMNIFICATION
So long as Executive is not found by a court of law to be guilty of a
willful and material breach of this Agreement, or to be guilty of gross
misconduct, he shall be indemnified from and against any and all losses,
liability, claims and expenses, damages, or causes of action, proceeding or
investigations, or threats thereof (including reasonable attorney fees and
expenses of counsel satisfactory to and approved by Executive) incurred by
Executive, arising out of, in connection with, or based upon Executive's
services and the performance of his duties pursuant to this Employment
Agreement, or any other matter contemplated by this Employment Agreement,
whether or not resulting in any such liability subject to such limitations as
are provided by the Colorado Business Corporations Act; and Executive shall be
reimbursed by the Company as an when incurred for any reasonable legal and other
16
<PAGE>
damage, liability, action proceeding, investigation or threat thereof, or
producing evidence, producing documents or taking any other action in respect
thereto (whether or not Executive is a defendant in or target of such action,
proceeding or investigation), subject to such limitations as are provided by the
Colorado Business Corporations Act.
6. OTHER MATTERS
a. Successors. The rights and duties of a party hereunder shall not be
assignable by that party; provided, however, that this Agreement shall be
binding upon and inure to the benefit of any successor of the Company, and any
such successor shall be deemed substituted for the Company under the terms of
this Agreement. The term successor shall include any person, firm, corporation
or other business entity which at any time, by merger, purchase or otherwise,
acquires all or substantially all of the assets or business of the Company.
Executive may assign Options issuable under paragraph 3a(2) to an entity of
which the Executive owns more than 50% of the voting power ("Permitted
Transferee"), provided that any options assigned by the Executive shall be void
if the Executive ceases to own more than 50% of the voting power of the entity
holding such options. A Permitted Transferee may transfer such Options to the
Executive at any time prior to the expiration of the Options.
b. Entire Agreement. With respect to the matters specified herein, this
Agreement contains the entire agreement between the parties and supersedes all
prior oral and written agreements, understandings and commitments between the
parties. This Agreement shall not affect the provisions of any other
compensation, retirement or other benefits program of the Company to which
Executive is a party or of which he is a beneficiary. No amendments to this
Agreement may be made except through a written document signed by both parties.
c. Validity. In the event that any provision of this Agreement is held to
be invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the Agreement.
d. Paragraphs and Headings. Paragraphs and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
e. Notice. Any notice or demand required or permitted to be given under
this Agreement shall be made in writing and shall be deemed effective upon the
personal delivery thereof is delivered or, if by express delivery service, 24
hours after placing in the control of the express delivery service; or if
mailed, 48 hours after having been deposited in the United States mail, postage
prepaid, and addressed to the respective party as follows:
To the Company: Integrated Spatial Information Solutions, Inc.
Attention: President
112 East Main Street, Frankfort, KY 40601-2314
To the Executive: Garry S. Murray
6305 Ivy Lane, Suite 410, Greenbelt, MD 20770
Either party may change the address to which such notices are to be
addressed by giving the other party notice in the manner set forth in this
Agreement.
f. Attorney's Fees and Costs. In any action at law or in equity to enforce
any of the provisions or rights under this Agreement, the unsuccessful party to
such litigation, as determined by the Court in a final judgment or decree, shall
17
<PAGE>
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such parry or parties (including without
limitation such costs, expenses and fees on any appeals), and if such successful
party or parties shall recover judgment in any such action or proceeding, such
costs, expenses and attorneys' fees shall be included a part of such judgment.
Notwithstanding the foregoing provision, in no event shall the successful party
or parties be entitled to recover any amount from the unsuccessful party for
costs, expenses and attorneys' fees that exceed the unsuccessful party's costs,
expenses and attorneys' fees in connection with the action or proceeding.
g. Applicable Law and Dispute Resolution. To the full extent controllable
by stipulation of the parties, this Agreement shall be interpreted under
Colorado law. All disputes arising out of this Agreement will be settled by
binding arbitration in Denver, Colorado, under the rules of the American
Arbitration Association.
Integrated Spatial Information Solutions, Inc.
/s/ John C. Antenucci /s/ Gary S. Murray
- --------------------- ------------------
By: John Antenucci, President By: Gary S. Murray
18
CONSULTING SERVICES AGREEMENT
This consulting services agreement ("Agreement") is made effective July 6, 1999,
between Integrated Spatial Information Solutions, Inc., a Colorado corporation
(the "Company") and HumanVision, LLC, a Maryland limited liability company (the
"Consultant").
WHEREAS, the Company seeks to increase shareholder value through growth in
revenues and earnings, and
WHEREAS, the Company desires to utilize the experience and services of the
Consultant to achieve its goals because the Consultant, through its principal
executive officer, has experience in developing and implementing actions to
increase shareholder value,
THEREFORE, In consideration of the mutual benefits and obligations in this
Agreement, and intending to be legally bound, the Company and Consultant agree
as follows:
1. RETENTION OF CONSULTANT
a. The Company retains the Consultant to provide the services specified in
this Agreement, and agrees to pay the Consultant the compensation specified in
this Agreement for such services. The Consultant agrees to assign Gary S. Murray
("Murray"), its principal executive officer, to undertake all of the requested
services.
b. Consultant agrees to direct and permit Murray to devote as much of his
time and effort as reasonably necessary to the performance of the duties
required by this Agreement. Consultant may have interests in other business that
do not compete with the Company or its subsidiaries, and may render services for
such other business interests, provided such service does not prevent Consultant
from performing his duties under this Agreement.
2. CONSULTING PERIOD
a. The term of this Agreement shall begin July 6, 1999 and end upon the
earlier of: (1) June 30, 2001; (2) the date upon which Murray is not elected as
a Director or is removed as a Director of the Company; and (3) the date upon
which Murray does not own more than 50% of the voting power of the Consultant.
b. In recognition of the fact that the results of Consultant's efforts may
not be manifested until after the services are rendered, the right to
compensation specified in paragraph 4a shall expire on the earlier of (1) June
30, 2002, and (2) 12 months after the termination of this Agreement.
3. DUTIES OF CONSULTANT
a. Consultant shall provide the following professional services to the
Company:
(1) Assist the Company in defining and articulating a vision for the
Company within a three year time horizon;
(2) Assist the Company in identifying and reviewing prospective merger and
acquisition candidate firms;
(3) Participate in the due diligence review of prospective merger and
acquisition candidate firms;
(4) Participate in the negotiation of agreements with prospective merger
and acquisition candidate firms and the owners/shareholders;
19
<PAGE>
(5) Assist the Company in obtaining capital (debt and/or equity) to
finance merger and acquisition activity;
(6) Assist the Company in recruiting and evaluating candidates for senior
executive and director positions; and
(7) Such other matters as may be assigned by the Board of Directors and
accepted by the Consultant from time to time.
b. Consultant shall deliver reports to the Company's Board of Directors,
from time to time and as requested, and keep the Board advised of the services
and activities performed by the Consultant under this Agreement.
4. COMPENSATION The Company shall compensate Consultant for services under
this Agreement as follows:
a. Performance Option. In order to promote goals that may increase
shareholder value, the Consultant shall be eligible to receive Performance
Options as follows:
(1) The Consultant is granted options to purchase 322,581 shares of the
Company's common stock at $.31 per share (which is the per share
market price on the date of this Agreement); provided such options are
only exercisable if the Company's market capitalization exceeds $30
million on 20 of 30 consecutive business days at any time prior to
June 30, 2002;
(2) In addition to the Options in paragraph 4a(1), the Consultant is
granted options to purchase 322,581 shares of the Company's common
stock at $.31 per share; provided such options are only exercisable if
the Company's market capitalization exceeds $60 million on 20 of 30
consecutive business days at any time prior to June 30, 2002;
(3) Each Performance Option shall be issued within 30 days following the
date the respective performance goal is achieved, and shall be
exercisable for a period of 3 years from the date of issue;
(4) For purposes of this Agreement, market capitalization on any given day
shall be equal to the number of common shares issued and outstanding
times the average of the per share closing bid and ask prices for the
common stock as reported on the primary market where the common stock
is traded; and
(5) The Company agrees to file a registration statement with the
Securities and Exchange Commission, as soon as practicable after the
options become exercisable, to register the public sale of the common
stock underlying the Performance Options granted under this Agreement.
b. Success Fee. In the event the Company successfully completes any merger
with or into another entity (other than an existing subsidiary of the Company),
or any acquisition of stock or assets (other than in the ordinary course of
business and other than with an existing subsidiary of the Company) during the
term of this Agreement, the Company will pay the Consultant a success fee equal
to one and one-half percent (1.5%) of the transaction value. The success fee
shall be paid in the currency of the deal unless otherwise agreed. For example,
if the Company issues securities in the transaction, the success fee will be
paid to Consultant by the issue of the corresponding amount of such securities.
The transaction value shall be the cost of the transaction as reflected on the
financial records of the Company, or the total dollar value received by all
shareholders of the Company in the case of a merger into another entity.
20
<PAGE>
c. Reimbursement. The Company shall reimburse Consultant for all reasonable
out of pocket expenses incurred by Consultant in connection with performance of
the assigned duties upon submission of vouchers, subject to such guidelines and
policies as may be promulgated by the Company.
5. TRADE SECRETS AND CONFIDENTIAL INFORMATION
a. As a material inducement to the Company to enter into this Agreement and
to pay Consultant the compensation stated in this Agreement, Consultant
covenants and agrees that: (1) Consultant shall hold any of the Company's
confidential information or trade secrets in a confidential manner; and (2)
Consultant shall not, at any time, directly or indirectly, use, disseminate, or
disclose for any purposes other than for the purposes of the Company's business,
any of the Company's confidential information or trade secrets, unless such
disclosure is compelled in a judicial proceeding. Upon termination of this
Agreement, all documents, records, notebooks, and similar repositories of
records containing information relating to any trade secrets or confidential
information then in the Consultant's possession or control, whether prepared by
it or by others, shall be left with the Company or returned to the Company upon
its request. This section shall not restrict the Consultant from using its
General Knowledge (the ideas, concepts, know-how and other industry information
that is part of its common knowledge) from pursuit of business subsequent to any
termination of this Agreement.
b. For one year following termination of employment, the Consultant
confirms that it will not, without prior written consent, perform work that the
Company or any of its subsidiaries holds in backlog or is pursing at the time of
termination, whether by independent contract, through a competitor, or by direct
employment with client or prospect.
c. This covenant of non-disclosure has been negotiated and agreed to by and
between the Company and Consultant with the full knowledge of and pursuant to
the Colorado Trade Secrets Act and is deemed by both parties to be fair and
reasonable.
6. INDEMNIFICATION
So long as Consultant is not found by a court of law to be guilty of a
willful and material breach of this Agreement, or to be guilty of gross
misconduct, it shall be indemnified from and against any and all losses,
liability, claims and expenses, damages, or causes of action, proceeding or
investigations, or threats thereof (including reasonable attorney fees and
expenses of counsel satisfactory to and approved by Consultant) incurred by
Consultant, arising out of, in connection with, or based upon Consultant's
services and the performance of its duties pursuant to this Agreement, or any
other matter contemplated by this Agreement, whether or not resulting in any
such liability, subject to such limitations as are provided by the Colorado
Business Corporations Act. Consultant shall be reimbursed by the Company as an
when incurred for any reasonable legal and other damage, liability, action
proceeding, investigation or threat thereof, or producing evidence, producing
documents or taking any other action in respect thereto (whether or not
Consultant is a defendant in or target of such action, proceeding or
investigation), subject to such limitations as are provided by the Colorado
Business Corporations Act.
7. OTHER MATTERS
a. Successors. The rights and duties of a party hereunder shall not be
assignable by that party; provided, however, that this Agreement shall be
binding upon and inure to the benefit of any successor of the Company, and any
such successor shall be deemed substituted for the Company under the terms of
this Agreement. The term successor shall include any person, firm, corporation
or other business entity which at any time, by merger, purchase or otherwise,
acquires all or substantially all of the assets or business of the Company.
21
<PAGE>
b. Entire Agreement. With respect to the matters specified herein, this
Agreement contains the entire agreement between the parties and supersedes all
prior oral and written agreements, understandings and commitments between the
parties. No amendments to this Agreement may be made except through a written
document signed by both parties.
c. Validity. In the event that any provision of this Agreement is held to
be invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the Agreement.
d. Paragraphs and Headings. Paragraphs and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
e. Notice. Any notice or demand required or permitted to be given under
this Agreement shall be made in writing and shall be deemed effective upon the
personal delivery thereof is delivered or, if by express delivery service, 24
hours after placing in the control of the express delivery service; or if
mailed, 48 hours after having been deposited in the United States mail, postage
prepaid, and addressed to the respective party as follows:
To the Company: Integrated Spatial Information Solutions, Inc.
Attention: President
112 East Main Street, Frankfort, KY 40601-2314
To the Consultant: HumanVision, LLC.
Attention: Garry S. Murray
6305 Ivy Lane, Suite 410, Greenbelt, MD 20770
Either party may change the address to which such notices are to be
addressed by giving the other party notice in the manner set forth in this
Agreement.
f. Attorney's Fees and Costs. In any action at law or in equity to enforce
any of the provisions or rights under this Agreement, the unsuccessful party to
such litigation, as determined by the Court in a final judgment or decree, shall
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such parry or parties (including without
limitation such costs, expenses and fees on any appeals), and if such successful
party or parties shall recover judgment in any such action or proceeding, such
costs, expenses and attorneys' fees shall be included a part of such judgment.
Notwithstanding the foregoing provision, in no event shall the successful party
or parties be entitled to recover any amount from the unsuccessful party for
costs, expenses and attorneys' fees that exceed the unsuccessful party's costs,
expenses and attorneys' fees in connection with the action or proceeding.
22
<PAGE>
g. Applicable Law and Dispute Resolution. To the full extent controllable
by stipulation of the parties, this Agreement shall be interpreted under
Colorado law, without application of choice of law principles. All disputes
arising out of this Agreement will be settled by binding arbitration in Denver,
Colorado, under the rules of the American Arbitration Association.
Integrated Spatial Information Solutions, Inc. HumanVision, LLC
/s/ John C. Antenucci /s/ Gary S. Murray
- --------------------- ------------------
By: John Antenucci, President By: Gary S. Murray, President
23
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 283,297
<SECURITIES> 0
<RECEIVABLES> 1,907,928
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,412,115
<PP&E> 2,696,561
<DEPRECIATION> (643,967)
<TOTAL-ASSETS> 9,238,621
<CURRENT-LIABILITIES> 1,852,021
<BONDS> 0
1
0
<COMMON> 12,700,961
<OTHER-SE> (7,417,330)
<TOTAL-LIABILITY-AND-EQUITY> 9,238,621
<SALES> 0
<TOTAL-REVENUES> 6,216,323
<CGS> 0
<TOTAL-COSTS> 6,755,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 359,120
<INCOME-PRETAX> 309,981
<INCOME-TAX> 309,981
<INCOME-CONTINUING> 309,981
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 309,981
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
