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 December 31, 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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1597 Cole Boulevard, Suite 300B
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(Address of principal executive offices)
(Zip Code)
(303) 274-8708
--------------
(Registrant's telephone number, including area code)
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(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
14,004,487 Common Shares were outstanding as of December 31, 1999.
Number of pages in this report is 18.
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Table of Contents
Part I, Financial 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 8
Part II Other Information 10
Signature Page 11
Exhibit 4.11 Form of Warrant 12
2
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Part 1
Financial Statements
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Balance Sheets
December 31 September 30
1999 1999
(Unaudited) (Audited)
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Assets
Current:
Cash and Cash Equivalents $ 82,766 $ 373,825
Accounts receivable (net of allowance) 2,081,857 1,923,412
Restricted cash 25,000 25,000
Prepaid expenses and other 143,690 122,500
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Total current assets 2,333,313 2,444,737
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Property and Equipment:
Land and building under capital
lease - related party 1,866,667 1,866,667
Equipment and furniture 662,609 574,292
Leased assets 255,602 255,600
- --------------------------------------------------------------------------------
2,784,878 2,696,559
Less accumulated depreciation (825,017) (735,728)
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Net property and equipment 1,959,860 1,960,831
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Other Assets
Goodwill, net of accumulated amortization 4,586,211 4,676,192
Other 81,995 74,844
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Total other assets 4,667,206 4,751,036
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$ 8,960,379 $ 9,156,604
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See accompanying notes to financial statements
3
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<TABLE>
<CAPTION>
Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Balance Sheets
December 31 September 30
1999 1999
(Unaudited) (Audited)
- -----------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current:
<S> <C> <C>
Notes payable - current portion $ 278,073 $ 222,584
Obligations under capital
leases - related party - current 81,922 144,868
Accounts payable 764,280 480,024
Accrued expenses 326,725 593,448
Deferred revenue 239,711 108,588
Accrued payroll costs and vacation 522,310 643,423
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Total current liabilities 2,213,021 2,192,935
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Long-term Liabilities
Notes payable, less current maturities 148,268 200,496
Obligations under capital leases - related party 1,780,844 1,815,594
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Total long-term liabilities 1,929,112 2,016,090
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Total liabilities $ 4,146,133 4,209,025
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Commitments and Contingencies
Stockholders' Equity
Cumulative convertible preferred stock,
$.001 par value, 20,000,000 shares authorized,
590 shares issued and outstanding 1 1
Common stock, no par value, 2,000,000,000
shares authorized, 14,004,487 and 13,482487 shares
issued and outstanding at December 31, and
September 30, 1999, respectively 13,247,879 13,096,830
Additional paid-in capital 3,731,788 3,737,594
Accumulated deficit (12,161,246) (11,886,846)
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Total stockholders' equity 4,818,246 4,947,879
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$ 8,960,379 $ 9,156,604
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See accompanying notes to financial statements
4
</TABLE>
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Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Statements of Operations
(Unaudited)
Three Months Ended December 31, 1999 1998
- --------------------------------------------------------------------------------
Revenues $ 1,806,145 $ 2,043,168
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Costs and expenses:
Salaries and employee benefits 458,429 1,303,275
Direct contract costs 1,018,418 348,700
Other operating costs 537,864 635,570
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Total costs and expenses 2,014,710 2,287,645
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Operating income (loss) (208,565) (244,477)
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Other Income (expense):
Interest expense (73,102) (130,142)
Other income 15,942 595
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Total other income (expense) (57,160) (129,547)
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Net loss from continuing operations (265,725) (374,024)
Loss from discontinued operations -- --
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Net loss (265,725) (374,024)
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Preferred stock dividends (8,850) (12,241)
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Net loss attributable to
common stockholders $ (274,575) $ (388,265)
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Basic and diluted loss per common share:
Loss from continuing operations attributable to
common stockholders $ (0.02) $ (0.03)
Loss attributable to common stockholders (0.02) (0.03)
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Weighted average number of shares of
common stock outstanding 13,340,118 11,462,223
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See accompanying notes to financial statements
5
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Integrated Spatial Information Solutions, Inc., and Subsidiary
Condensed and Consolidated Statements of Cash Flow
(Unaudited)
Three Months Ended December 31, 1999 1998
- --------------------------------------------------------------------------------
Operating Activities
Net loss $(265,725) $(374,024)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 181,483 206,910
Stock options and warrants issued for
services performed 5,291 15,236
Sale of assets (1,213)
Changes in operating assets:
(Increase) decrease in accounts receivable (154,188) 472,814
Decrease in accrued settlement liability -- (832)
(Increase) decrease in other assets (32,556) 7,526
Increase (decrease) in accounts payable 284,255 108,954
Decrease (increase) in accrued expenses (309,191) (238,101)
Increase (decrease) in deferred revenue 131,082 39,268
Increase in deposits (67,266) --
- --------------------------------------------------------------------------------
Net cash generated (used) by operating activities (238,609) 237,751
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Investing Activities
Purchase of equipment (88,317) (23,543)
Accumulated depreciation adjustment (3,286)
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Net cash (used) provided by investing activities (88,317) (26,829)
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Financing Activities
Payments on checks written against future deposits -- (207,650)
Proceeds from borrowing -- 60,000
Payments on debt (94,435) (106,086)
Issuance of common stock 156,041 --
Payments on stock repurchase liability (25,738) --
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Net cash provided (used) by financing activities 35,836 (253,736)
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Net decrease in cash (291,058) (42,814)
Cash and cash equivalents, beginning of period 373,825 55,045
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Cash and cash equivalents, end of period $ 82,766 $ 12,231
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See accompanying notes to financial statements
6
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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 December 31, 1999, the consolidated results of its operations for
the three-month periods ended December 31, 1999, and 1998 and statements of cash
flows for the three-month periods then ended.
The accounting policies followed by the Company are set forth in the annual
report of September 30, 1999, filed on Form 10-KSB and the audited consolidated
financial statements in it with the accompanying notes. 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-month period ended December
31, 1999, are not necessarily indicative of the results to be expected for the
full year ending September 30, 2000.
(2) Accounts Receivable
Accounts receivable contain amounts computed under the cost-to-cost method to
determine percentage of completion as described in the Form 10-KSB for September
30, 1999.
(3) Provision for Income Taxes
At the beginning of the fiscal year the Company had net operating loss
carryforwards of $8.4 million with expirations through 2019. At December 31,
1999, the amount of the net operating loss carryforward balance is estimated at
$8.7 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
During the current period the Company settled the arbitration action brought by
its former Chairman and Chief Executive Officer as reported in Note 10 to the
financial statements in Form 10-KSB for September 30, 1999 filed with the
Securities and Exchange Commission on December 29, 1999. All costs associated
with the settlement were recorded as of September 30, 1999. (See also Item 3,
Legal Matters to the financial statements in Form 10-KSB for September 30,
1999.)
7
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(5) Lease Obligations
The Company leases various equipment as well as facilities under capital leases
that expire through the year 2004 as noted in Note 7 to the Financial Statements
in Form 10-KSB September 30, 1999.
(6) Subsequent Events
Convertible Preferred Stock. In January, 2000, the holders of Series A, 6%
Cumulative Convertible Redeemable Preferred Stock converted 55 shares into
common stock in accordance with the issue agreement. Accordingly, the Company
issued 591,980 shares of its common stock in exchange.
(8) Net Loss Per Common Share.
The Company has adopted Statement of Financial Accounting Standard ("SFAS") No.
128 issued by the Financial Accounting Standards Board. SFAS No. 128 provides
for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings
per share includes no dilution and is computed by dividing loss attributable to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, in order to disclose
fully diluted earnings per share, when appropriate.
As the Company incurred net losses in both three month periods ending December
31, none of its outstanding options or warrants were included in the computation
of diluted earnings per share as their effect would be anti-dilutive. The total
of warrants and options outstanding at December 31, 1999 and December 31, 1998
were 6,941,201 and 6,499,727, respectively.
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 decreased $290,519 to a total of $82,766 from $373,825 at
September 30, 1998. The decrease was primarily due to the net operating loss for
the quarter and the liquidation of specific accrued expenses.
Presently, the Company has working capital of approximately $124,864 versus
working capital of $352,678 a year prior. The primary reason for this decrease
was the scheduled reduction of $220,784 in long term notes payable balances.
The Company's current ratio of total current assets to current liabilities
decreased slightly to 1.06:1 from 1.11:1 a year ago and at September 30, 1999.
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: raising funds through
additional debt or equity instruments, of which there can be no assurance; the
negotiation of a credit facility for acquisition requirements; expected
increased cashflows from new contracts awards; and constraining the cost of
operations coupled with an additional contingency plan to generate further cost
reductions and improved cash flows.
8
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Capital Resources. During this period the Company's operating subsidiary
successfully negotiated and received a $1.2 million asset based line of credit
to provide flexibility in managing cash flows. In addition the Company initiated
a limited private offering to officers and directors of the Company and its
subsidiary during the current period. As of the filing of this report $213,000
has been generated from the offering. In addition, because of its efforts to
establish strong relations with investment banking entities, the Company
believes, based upon its current business and acquisiton strategies, it will be
able to secure funding required for its acquisition program and increased
operations.
The Company's long-term liquidity requirements may be significant in order to
implement its plans. There can be no guarantee such funds can be secured.
Results of Operations:
First Quarter of Fiscal Year 2000
Revenue for the first quarter of FY 2000 reached $1,806,145 and resulted
entirely from the Company's operating subsidiary, PlanGraphics, Inc., geographic
information systems activities. This level of current quarter revenue reflects
an decrease of 11.6% from the same period of the prior year. Management believes
that revenue generation was constrained by customer concerns about possible last
minute Year 2000 problems causing them to hold pending orders in abeyance until
the new calendar year began.
The Company's total costs and expenses amounted to $2,014,710 or 111.5% of
revenue, a reduction of 11.8% from the prior year. Total costs and expenses were
reduced by $272,935 from the prior year total, a result of overhead reduction at
the parent company.
The operating loss decreased by $35,912 to $208,565 from last fiscal year's
first quarter total of $244,477, reflecting management's efforts to reduce costs
wherever possible.
Interest expense decreased from that of the prior year by $57,040 as a result of
reduced amounts of interest bearing notes as compared to the prior year period.
Other income increased from prior year total as a result of ancillary revenue
generation at the subsidiary.
First Quarter of Fiscal Year 1999
Revenue for the first quarter of FY 1999 reached $2,043,168 and resulted
entirely by the Company's operating subsidiary, PlanGraphics, Inc., geographic
information systems activities. This level of first quarter revenue reflected an
increase of 11.8% over the same period of the prior year. The increase over the
prior year level of operations for the same quarter resulted from the expansion
of contract activity.
The Company's total costs and expenses reached $2,287,645 or 119.6% of revenue,
an improvement of $131,944 over the prior year. This amount reflected
approximately $187,574 in reductions to other operating costs and was offset by
slight increases in salaries and employee benefits and from increased direct
contract costs.
The operating loss decreased by $373,523 to $244,477 from last fiscal year's
first quarter total of $618,660, reflecting management's efforts to improve
operations.
Interest expense increased over that of the prior year by $35,436 as a result of
two factors, the payment of a line of credit origination fee and increased rate
of interest connected with the new mortgage on the Company's former
manufacturing facility, increased interest attributable to lease financing at
the operating subsidiary. Other expense decreased $103,171 from the prior year
amount primarily due the absence of certain consulting fees and acquisition
expenses.
Other income also decreased from prior year totals by $16,207 reflecting
nonrecurring forgiveness of debt in the 1997 first quarter.
9
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Contract Backlog
The Company's has reported a backlog of GIS contracts and work assignments
amounting to approximately $4.6 million. The year prior there was $9.0 million
of uncompleted work in the backlog.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 4.
ITEM 2. CHANGES IN SECURITIES
During the current period the Company and continuing through the filing date of
this report sold 852,000 shares of the Company's common stock in a limited
private offering that raised $213,000. The offering consisted of $1,000 units
each of which included 4,000 shares of common stock and three-year warrants to
purchase 2,000 shares of common stock at $0.50 per share. The resulting shares
from the offering have not been registered with the Securities and Exchange
Commission the resulting shares of stock are subject to the restrictions in Rule
144.
Subsequent to the current quarter, holders of convertible preferred stock
submitted 55 shares of Series A 6% Convertible Redeemable Preferred Stock for
conversion into common stock. The Company issued 591,980 shares of its common
stock in exchange.
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.
Exhibits filed since the beginning of the current quarter:
Exhibit 3.2d Articles of Amendment to the Articles of Incorporation of
Integrated Spatial Information Solutions, Inc. filed as part of Form 10-KSB on
December 29, 1999.
Exhibit 4.11 Form of Warrant issued pursuant to limited private offering of
December 20, 1999 and filed on page 12 of this report.
Reports on Form 8-K filed since the beginning of the current quarter:
Not applicable.
10
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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: February 14, 2000
/S/ Fred Beisser
----------------
Frederick G. Beisser
Vice President-Finance & Administration,
Secretary & Treasurer and
Principal Financial Accounting Officer
11
Exhibit 4.11
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED
UNTIL (i) A REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
STOCK PURCHASE WARRANT CERTIFICATE
----------------------------------
Integrated Spatial Information Solutions, Inc, a Colorado corporation (the
"Company") issues this WARRANT as of the 1st day of February, 2000 (the "Date of
Issuance"), to
_______________________________ (the "Holder").
1. Issuance of Warrant, Term.
(a) For and in consideration of services rendered and to be rendered
by the Holder to the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to the Holder the right
to purchase at the Exercise Price (as hereinafter defined)
___________ shares of Common Stock of the Company (the "Common
Stock")
as set forth herein, all subject to adjustment and upon the terms
and conditions contained herein, together with the other
appurtenant rights, powers and privileges hereinafter described.
(b) This Warrant shall be exercisable at any time and from time to
time in whole or in part until the third (3rd) anniversary of the
Date of Issuance.
2. Exercise Price. The exercise price per share for which all or any of the
shares of Common Stock of the Company (collectively, the "Warrant Shares") may
be purchased pursuant to the terms of this Warrant shall be $0.50 (the "Exercise
Price").
3. Exercise.
(a) This Warrant may be exercised by the Holder hereof on a cashless
(net) basis or on a cash basis (but only on the conditions hereinafter set
forth) as to all or any increment or increments of the Warrant Shares upon
delivery of written notice of intent to exercise to the Company at the
Company's address set forth below its signature below or the address most
recently reported in filing with the Securities and Exchange Commission by
the Company, together with this Warrant and cash or check payable to the
Company for the aggregate Exercise Price of the Warrant Shares so purchased
(the "Purchase Price"), except as provided in the following sentence. The
Holder may, at its option, elect to pay some or all of the Purchase Price
payable upon an exercise of this Warrant by canceling a portion of this
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Warrant exercisable for such number of the Warrant Shares as is determined
by dividing (i) the total Purchase Price payable in respect of the number
of Warrant Shares being purchased upon such exercise by (ii) the excess of
the Fair Market Value (as defined below) per share of Common Stock as of
the date of exercise over the Purchase Price per share. Upon exercise of
this Warrant, the Company shall as promptly as practicable, and in any
event within fifteen (15) days thereafter, execute and deliver to the
Holder of this Warrant a certificate or certificates for the total number
of Warrant Shares for which this Warrant is being exercised in such names
and denominations as are requested by such Holder. If this Warrant shall be
exercised with respect to less than all of the Warrant Shares, the Holder
shall be entitled to receive a new Warrant covering the number of Warrant
Shares in respect of which this Warrant shall not have been exercised,
which number shall be equal to the number of the outstanding shares of the
Company's Common Stock, as of the close of business on the date of final
exercise of the Warrant, which would cause the Holder to own the Warrant
Percentage of the shares of Common Stock of the Company calculated on a
fully diluted basis, minus the number of shares of the Company's Common
Stock issued upon earlier exercise(s) of the Warrant. The Company covenants
and agrees that it will pay when due any and all state and federal issue
taxes which may be payable in respect of the issuance of this Warrant or
the issuance of any Warrant Shares upon exercise of this Warrant.
(b) For purposes of this Warrant, "Common Stock" means the Common
Stock of the Company, and all other securities of any class of classes
(however designated) of the Company the holders of which have the right,
without limitation as to amount, after payment on any securities entitled
to a preference on dividends or other distributions upon any dissolution or
winding up, either to all or to a share of the balance of payments upon
such dissolution, liquidation or winding up.
(c) For purposes of this Warrant, "Fair Market Value" shall mean, with
respect to each share of Common Stock as of a particular date:
(A) If the Common Stock is traded on a securities exchange or
market or over-the-counter, then the fair market value per share
of the Common Stock shall be the average of the closing price of
the Common Stock on such exchange or market for the twenty (20)
business days ending five (5) business days prior to the date for
which the Fair Market Value is being determined; or
(B) If the Common Stock is not traded on a securities exchange or
market or over-the-counter, then as determined by the Company's
Board of Directors in good faith, in which event neither the
Board of Directors of the Company nor any appraiser shall take
into account or otherwise make any discount in respect of (i) any
restrictions on the transfer of shares of Common Stock of the
Company or this Warrant, (ii) any minority interest, (iii) any
lack of liquidity of shares of Common Stock of the Company or
this Warrant due to the fact that there may be no public or
private market for such shares or this Warrant, or (iv) the
voting status of this Warrant or any share of Common Stock of the
Company, whether under the Articles of Incorporation or Bylaws of
the Company, by agreement or otherwise. In determining the Fair
Market Value of the Common Stock as of a particular date, the
Company's Board of Directors (or the appraisers, as the case may
be) shall appraise the value of the Company as of such date and
the Fair Market Value of each share shall be the Fair Market
Value of the Company divided by the number of shares of Common
Stock of the Company on a fully diluted basis as of such date,
13
<PAGE>
taking into account only in the money options, warrants and
convertible securities and adding to Fair Market Value the
exercise price and conversion price of such in the money options,
warrants and convertible securities.
4. Covenants and Conditions. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Warrant Shares have been registered under
the Securities Act or any state securities laws ("Blue Sky Laws"). This Warrant
has been acquired for investment purposes and not with a view to distribution or
resale and may not be pledged, hypothecated, sold, made subject to a security
interest, or otherwise transferred without (i) an effective registration
statement for such Warrant under the Securities Act and such applicable Blue Sky
Laws, or (ii) an opinion of counsel reasonably satisfactory to the Company that
registration is not required under the Securities Act or under any applicable
Blue Sky Laws. Transfer of the Warrant Shares issued upon the exercise of this
Warrant shall be restricted in the same manner and to the same extent as the
Warrant and the certificates representing such Warrant Shares shall bear
substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE OFFERED, SOLD OR
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY, REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
THE SHARES SUBJECT TO THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER PURSUANT TO THE TERMS OF THAT STOCK PURCHASE WARRANT DATED AS
OF FEBRUARY 1, 2000, AND ISSUED BY THE COMPANY. COPIES OF THE STOCK
PURCHASE WARRANT MAY BE OBTAINED FROM THE COMPANY'S SECRETARY.
(b) The Company covenants and agrees that all Warrant Shares that may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable. The
Company shall at all times reserve and keep available for issuance upon the
exercise of this Warrant such number of authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of this Warrant.
(c) The Holder hereof and the Company agree to execute such other documents
and instruments as counsel for the Company reasonably deems necessary to effect
the compliance of the issuance of this Warrant and any Warrant Shares issued
upon exercise of this Warrant with applicable federal and state securities laws.
In furtherance of the foregoing, the Holder represents and warrants:
(i) The Holder has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to the
Company so that the Holder is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its own
interests;
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<PAGE>
(ii) The Holder is acquiring this Warrant, and will acquire the
Warrant Shares, for investment for its own account and not with a view to,
or for resale in connection with, any distribution thereof. The Holder
understands that this Warrant has not been, and the Warrant Shares will not
be, registered under the Securities Act or any Blue Sky Laws by reason of
exemptions from the registration provisions of the Securities Act and such
Blue Sky Laws that depend upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Holder's representations;
(iii) The Holder is familiar with the provisions of Rule 144 under the
Act which permits the limited resale of restricted securities, subject to
the satisfaction of certain conditions;
(iv) The Holder has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management
and the opportunity to review the Company's facilities, financial
statements and any other documents requested by the Holder. The Holder has
also had an opportunity to ask questions of officers of the Company, which
were answered to its satisfaction; and
5. Transfer of Warrant. Subject to the provisions of Paragraph 4, this
Warrant or the Warrant Shares may be transferred, in whole or in part, to any
person or business entity, by presentation of the Warrant or the Warrant Shares
to the Company with written instructions for such transfer; provided, however,
that the Company shall have the right to refuse to transfer any portion of this
Warrant to any person who directly competes with the Company or is affiliated
with any such competitor. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the form hereof in the
name of the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses in connection with the
preparation, issuance and delivery of Warrants under this Paragraph 5.
6. Warrant Holder Not Shareholder; Rights Offering. This Warrant does not
confer upon the Holder hereof, as such, any right whatsoever as a shareholder of
the Company. Notwithstanding the foregoing, in the event the Company should
offer to all the Company's shareholders the right to purchase any securities of
the Company, then all of the Warrant Shares shall be deemed for such purpose to
be outstanding and owned by the Holder as of the subscription date and the
Holder shall be entitled to participate in such rights offering as if it were a
shareholder.
7. Adjustment.
(a) The number of Warrant Shares purchasable hereunder are subject to
adjustment from time to time, as follows:
(i) If the Company at any time subdivides its Common Stock, the number
of Warrant Shares issuable pursuant to this Warrant will be proportionately
increased. If the Company at any time combines its Common Stock, the number
of Warrant Shares issuable pursuant to this Warrant will be proportionately
decreased.
(ii) If the Company at any time pays a dividend payable in, or make
any other distribution (except any distribution specifically provided for
in the foregoing subsections (i)) of Common Stock, then the number of
15
<PAGE>
Warrant Shares issuable pursuant to this Warrant will be adjusted, from and
after the date of determination of stockholders entitled to receive such
dividend or distribution of stockholders to that number of Warrant Shares
determined by multiplying the number of Warrant Shares issuable immediately
prior to such date of determination by a fraction (i) the numerator of
which will be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution, calculated on a fully
diluted basis as provided in Section 1(c) of this Warrant, and (ii) the
denominator of which will be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, calculated
on a fully diluted basis as provided in Section 1(c) of this Warrant.
(iii) The number of shares reserved for issuance pursuant to this
Warrant will automatically be adjusted without further action by the
Company in the event of any adjustment of the number of Warrant Shares
issuable pursuant to this Warrant.
(b) In the event of a merger, consolidation, recapitalization, combination
or exchange of Common Stock occurring after the date hereof pursuant to which
the Company is not the surviving entity (an "Acquisition"), the Company
covenants that it will obtain from the acquiring entity, as a condition to the
closing of such transaction or event, the right for the Holder to exchange this
Warrant, at its sole option and in lieu of exercise hereof, for a warrant to
purchase the equivalent number of shares of the equivalent class of shares of
the acquiring entity on a fully diluted basis. The period of exercise of such
new warrant shall be equal to the remaining duration of the exercise period of
this Warrant. If, as a result of such Acquisition, the shareholders of the
Company immediately prior to such Acquisition own at least a majority of the
shares of voting capital stock, assuming full exercise or conversion of all
securities exercisable for or convertible into such voting capital stock,
outstanding after such Acquisition and are entitled upon liquidation to receive
a majority of the assets of the surviving entity, then the method of calculating
the number of Warrant Shares set forth in Paragraph 1 hereof shall remain
unaffected; otherwise, this Warrant shall, after such Acquisition, permit the
Holder to purchase that percentage of Warrant Shares or other consideration of
the acquiring entity which the Holder would be entitled to receive as a result
of such merger, consolidation, recapitalization, combination or exchange of
shares if this Warrant had been exercised in full immediately prior to such
merger, consolidation, recapitalization, combination or exchange of shares (or
the record date, if any, for such transaction or event) for the same aggregate
exercise price as provided for in this Warrant.
8. Notices. Any and all notices, elections or demands permitted or required
to be made under this Agreement shall be in writing, signed by the party giving
such notice, election or demand and shall be delivered personally, telecopied,
telexed, or sent by certified mail or nationally recognized courier service
(such as UPS or Federal Express), to the other party at the address set forth
below, or at such other address as may be supplied in writing and of which
receipt has been acknowledged in writing. The date of personal delivery,
telecopy or telex or one business day after delivery to such courier service or
two business days after mailing, as the case may be, shall be the date of such
notice, election or demand. For the purposes of this Agreement:
16
<PAGE>
The address of
Holder is: Name
Street
City, State, Zip Code
The address of
the Company is: Integrated Spatial Information Solutions, Inc.
1597 Cole Boulevard, Suite 300B
Golden, CO 80401
Attention: Secretary
11. Amendment and Waiver. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited. or omit to perform any act herein required to be performed by
it, only if the Company has obtained the prior written consent of the Holder.
12. Descriptive Headings; Governing Law. The descriptive headings of the
several paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. ALL QUESTIONS CONCERNING THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE
OF COLORADO WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISIONS OR RULE (WHETHER OF THE STATE OF COLORADO OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF COLORADO.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
"COMPANY":
Integrated Spatial Information Solutions, Inc.
By: ____________________________________
Frederick G. Beisser, Vice President --
Finance & Administration
"HOLDER":
By: ______________________________________
Name: First I. Lastname
17
<PAGE>
SUBSCRIPTION FORM
(To be executed by the Registered Holder in order to exercise Warrants)
The undersigned Registered Holder hereby irrevocably elects to exercise
____________ Warrants represented by this Warrant Certificate, and to purchase
the shares of Common Stock issueable upon the exercise of such Warrants, and
requests that certifiecates for such shares be issued in the name of:
Name:_____________________________________________________
SSAN or Taxpayer ID: _____________________________________
Signature: _________________________________ Dated: ______
Address: _________________________________________________
Signature Guaranteed:
Signatures must correspond to the name as written upon the face of this Warrant
Certificate in every particular without alteration or enlargement or any change
whatsoever. Signatures must be guaranteed by a STAMP program participant
normally expected to be a commercial bank or trust company or a member firm o
the New York Stock Exchange, American Stock Exchange, Pacific Stock Exchange or
Midwest Stock Exchange.
- --------------------------------------------------------------------------------
TRANSFER FORM
(To be executed by the Registered Holder in order to transfer Warrants)
I hereby sell, assign and transfer ______________ of the warrants represented by
this Warrant Certificate to the below named person, and hereby irrevocably
constitute and appoint Integrated Spatial Information Solutions, Inc., or the
Warrant Agent, if appointed, with full power of substitution, Attorney to
tgransfer this Warrant Certificate on the books of the Company.
Name of Transferee: _____________________________SSAN or TID: __________________
Address of Transferee: _________________________________________________________
Name of Registered Holder: ______________________SSAN or TID: __________________
Signature of Registered Holder: _______________________Dated: __________________
Registered Holder Address: _____________________________________________________
Signature Guarantee:
Signatures must correspond to the name as written upon the face of this Warrant
Certificate in every particular without alteration or enlargement or any change
whatsoever. Signatures must be guaranteed by a STAMP program participant
normally expected to be a commercial bank or trust company or a member firm o
the New York Stock Exchange, American Stock Exchange, Pacific Stock Exchange or
Midwest Stock Exchange.
18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-2000
<CASH> 82,766
<SECURITIES> 0
<RECEIVABLES> 2,081,857
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,333,313
<PP&E> 2,784,878
<DEPRECIATION> (825,017)
<TOTAL-ASSETS> 8,960,379
<CURRENT-LIABILITIES> 2,213,021
<BONDS> 0
1
0
<COMMON> 13,247,879
<OTHER-SE> (8,429,458)
<TOTAL-LIABILITY-AND-EQUITY> 8,960,379
<SALES> 0
<TOTAL-REVENUES> 1,806,145
<CGS> 0
<TOTAL-COSTS> 2,014,710
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,102
<INCOME-PRETAX> 265,725
<INCOME-TAX> 0
<INCOME-CONTINUING> 265,725
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 265,725
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
