================================================================================
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarterly Period ended January 31, 2000
or
( ) Transition Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
Commission File Number: 1-12687
IFS International Holdings, Inc.
(formerly IFS International, Inc.)
(Exact name of small business issuer as specified in its charter)
Delaware 13-3393646
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
Rensselaer Technology Park, 300 Jordan Road
Troy, NY 12180
(Address of principal executive offices)
(518) 283-7900
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes (X) No ___
State the number of shares outstanding of each of the issuer's classes of common
equities as of the latest practicable date.
Common Stock, $.001 par value, 3,945,546 shares outstanding as of March 15, 2000
================================================================================
<PAGE>
IFS International Holdings, Inc. and Subsidiaries
QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Consolidated Unaudited Financial Statements
Consolidated Balance Sheets
January 31, 2000 (unaudited) and April 30,1999...............................2-3
Consolidated Statements of Operations,
three months and nine months ended January 31, 2000 and 1999 (unaudited).......4
Consolidated Statements of Cash Flows,
nine months ended January 31, 2000 and 1999 (unaudited)........................5
Notes to Consolidated Financial Statements (unaudited).......................6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...............................8-10
Part II. Other Information
Item 1. Legal Proceedings....................................................11
Item 2. Changes in Securities................................................11
Item 3. Defaults Under Senior Securities ....................................11
Item 4. Submission of Matters to a Vote of Security Holders..................11
Item 5. Other Information....................................................11
Item 6. Exhibits and Reports on Form 8-K.....................................11
<PAGE>
Part I. Financial Information
Item 1. Consolidated Unaudited Financial Statements
IFS International Holdings, Inc. and Subsidiaries
(Formerly IFS International, Inc.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
January 31, April 30,
2000 1999
(unaudited)
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $2,137,012 $1,326,708
Trade accounts receivable, net 1,727,449 2,225,665
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,878,752 751,616
Other current assets 532,964 553,597
Inventory 71,586 133,699
----------------- -----------------
Total current assets 6,347,763 4,991,285
----------------- -----------------
PROPERTY, EQUIPMENT AND IMPROVEMENTS, net 2,468,089 2,571,461
----------------- -----------------
OTHER ASSETS
Capitalized software costs, net 1,523,508 1,269,660
Excess of cost over fair value of net assets of business acquired, net 1,243,648 324,260
Other 175,465 129,161
----------------- -----------------
Total other assets 2,942,621 1,723,081
----------------- -----------------
$11,758,473 $9,285,827
================= =================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
IFS International Holdings, Inc. and Subsidiaries
(Formerly IFS International, Inc.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
January 31, April 30,
2000 1999
(unaudited)
-------------------- ---------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
current liabilities
<S> <C> <C>
Current maturities of long term debt $385,643 $362,174
Accounts payable 772,004 682,675
Accrued compensation and related liabilities 804,947 478,635
Other accrued expenses 687,857 790,115
Billings in excess of costs and estimated
earnings on uncompleted contracts 25,588 237,089
Deferred revenue and customer deposits 893,828 774,146
-------------------- ---------------------
Total current liabilities 3,569,867 3,324,834
-------------------- ---------------------
LONG-TERM DEBT, less current maturities 2,922,606 2,133,392
-------------------- ---------------------
shareholders' equity
Preferred stock, $.001 par value; 25,000,000 shares
Authorized, no shares issued and outstanding - -
Common Stock $.001 par value; 50,000,000 shares
Authorized, 3,845,551 and 2,780,485 shares issued and outstanding 3,844 2,770
Additional paid-in capital 9,591,413 8,415,328
Accumulated deficit (4,312,995) (4,583,841)
Accumulated other comprehensive loss (16,261) (6,656)
-------------------- ---------------------
Total shareholders' equity 5,266,001 3,827,601
-------------------- ---------------------
$11,758,473 $9,285,827
==================== =====================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
IFS International Holdings, Inc. and Subsidiaries
(Formerly IFS International, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
Nine Nine Three Three
Months Months Months Months
Ended Ended Ended Ended
January 31, 2000 January 31, 1999 January 31, 2000 January 31, 1999
------------------ ----------------- ------------------ ------------------
Revenues:
<S> <C> <C> <C> <C>
Software license and installation contract fees $6,030,175 $3,971,387 $2,566,527 $1,022,894
Service and maintenance revenue 2,844,286 2,657,742 1,046,203 864,543
Hardware sales 1,218,146 935,407 259,213 303,152
------------------ ----------------- ------------------ ------------------
10,092,607 7,564,536 3,871,943 2,190,589
------------------ ----------------- ------------------ ------------------
Cost of Revenues:
Software license and installation contract fees 1,829,010 552,249 878,523 242,180
Service and maintenance revenue 983,418 721,500 378,266 285,033
Hardware sales 287,445 168,232 72,758 54,509
------------------ ----------------- ------------------ ------------------
Gross profit 6,992,734 6,122,555 2,542,396 1,608,867
------------------ ----------------- ------------------ ------------------
Operating expenses:
Research and development 870,824 1,150,398 383,911 323,330
Salaries 2,745,106 2,026,635 1,050,529 658,397
Rent and occupancy 461,273 294,005 153,950 117,794
Selling, general and administrative 2,153,622 1,993,110 682,047 711,555
Other 359,870 324,965 139,067 112,383
------------------ ----------------- ------------------ -----------------
6,590,695 5,789,113 2,409,504 1,923,459
------------------ ----------------- ------------------ ------------------
Income (loss) from operations 402,039 333,443 132,892 (314,592)
Other income (expense):
Interest expense (211,505) (109,483) (73,087) (35,245)
Interest income 62,713 72,737 24,776 18,208
Other 17,441 (78) 820 (21,181)
------------------ ----------------- ------------------ ------------------
Income (loss) before income taxes 270,688 296,619 85,401 (352,810)
Provision for income taxes - - - -
------------------ ----------------- ------------------ ------------------
Net income (loss) $270,688 $296,619 $85,401 $(352,810)
================== ================== ================== =================
------------------ ----------------- ------------------ ------------------
Basic income (loss) per common share .08 .24 .02 (.26)
------------------ ------------------ ------------------ -----------------
Weighted average common shares outstanding 3,194,122 1,247,000 3,845,551 1,339,000
------------------ ------------------ ------------------ -----------------
Diluted income (loss) per common share .08 .11 .02 (.13)
------------------ ----------------- ------------------ ------------------
Weighted average common and common equivalent
shares outstanding 3,442,683 2,760,000 4,094,112 2,746,000
------------------ ----------------- ------------------ ------------------
See notes to consolidated financial statements.
</TABLE>
<PAGE>
IFS International Holdings, Inc. and Subsidiaries
(Formerly IFS International, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
Nine months ended Nine months ended
January 31, 2000 January 31, 1999
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $270,688 $296,619
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization 617,627 575,898
Amortization of discount on notes payable 10,050 -
Changes in assets and liabilities:
Inventory 62,113 (6,596)
Trade accounts receivable, net 498,216 (310,420)
Costs, estimated earnings and billings on uncompleted contracts (1,338,637) (155,516)
Other current assets (16,572) (326,248)
Accounts payable 89,329 (102,600)
Accrued expenses 251,711 (140,373)
Deferred revenue and customer deposits 119,682 87,156
-------------------- --------------------
Net cash provided by (used in) operating activities 564,207 (82,080)
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Equipment purchases (40,555) (137,242)
Investment - (113,204)
Purchase of NCI Holdings Inc., net of cash acquired
Acquisition of minority interest - (36,661)
Capitalized software and license costs (646,388) (572,986)
-------------------- --------------------
Net cash used in investing activities (686,943) (860,093)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long term debt (31,166) (50,654)
Proceeds from notes payable 965,000 -
Proceeds from issuance of stock 8,811 39,657
-------------------- --------------------
Net cash provided by (used in) financing activities 942,645 (10,997)
-------------------- --------------------
Effect of exchange rate changes on cash (9,605) (4,326)
-------------------- --------------------
Increase (decrease) in cash and cash equivalents 810,304 (957,496)
Cash and cash equivalents:
Beginning of year 1,326,708 2,102,807
-------------------- --------------------
End of period $2,137,012 $1,941,645
==================== ====================
Supplemental Disclosures of Cash Flows Information
- ------------------------------------------------------------------------------------ -------------------- --------------------
Cash paid during the nine months for:
Interest $102,730 $91,305
==================================================================================== ==================== ====================
Supplemental Disclosures of Cash Flows Information of Non-Cash Investing and
Financing Activities
- ------------------------------------------------------------------------------------ -------------------- --------------------
Common stock issued in exchange for legal services - $72,000
==================================================================================== ==================== ====================
Common stock issued in connection with NCI acquisition $1,009,647 $62,456
==================================================================================== ==================== ====================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
IFS International Holdings, Inc. and Subsidiaries
(Formerly IFS International, Inc.)
Notes to Consolidated
Financial Statements (Unaudited)
Note 1
Presentation of Interim Financial Statements
The accompanying consolidated financial statements include the accounts of IFS
International Holdings, Inc., a Delaware Corporation, and its wholly-owned
operating subsidiaries, IFS International, Inc., a New York Corporation, Network
Controls International, Inc., a North Carolina Corporation and Global Insight
Group, LTD a corporation organized and existing under the laws of the United
Kingdom. All significant intercompany accounts and transactions have been
eliminated. The consolidated balance sheet as of January 31, 2000, the
consolidated statements of operations for the three months and nine months ended
January 31, 2000 and 1999 and the consolidated statements of cash flows for the
nine months ended January 31, 2000 and 1999 have been prepared by IFS, without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial condition,
results of operations and cash flows at January 31, 2000 and for all periods
presented have been made.
On December 6, 1999, our stockholders voted in favor of the corporate name
change to IFS International Holdings, Inc.
IFS adopted Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS No. 130") during 1999. Comprehensive income (loss)
of IFS includes net income (loss), adjusted for the change in foreign currency
translation adjustments. The net effect of income taxes on comprehensive income
(loss) is immaterial. Total comprehensive income (the sum of net income and the
change in foreign currency translation adjustment amounts) was $261,083 and
$292,293 for the nine months ended January 31, 2000 and 1999, respectively.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in our annual report on Form 10-KSB for
the fiscal year ended April 30, 1999. The results of operations for the period
ended January 31, 2000 are not necessarily indicative of the operating results
for the full year.
Note 2
Acquisitions
Global Insight Group LTD
On December 6th 1999, we entered into a Stock Purchase Agreement to acquire all
of the outstanding shares of Global Insight Group LTD ("GIG") and its three
operating subsidiaries. The consideration is payable entirely in shares of the
IFS' common stock. The transaction is structured to provide for a minimal
payment of three shares of the our common stock at closing, with substantially
the entire consideration to be determined based on the future financial
performance of the companies acquired.
In addition to the three shares issued at the closing, the purchase price has
two components.
1). So-called `Buy-Out' which is measured by multiplying the net earnings of GIG
for calendar year 2000 (determined in accordance with generally accepted
accounting principles, but with certain special adjustments set forth in the
Stock Purchase Agreement) by four (4) and by issuing to the sellers (the current
shareholders of GIG) common stock of the IFS equal to the amount so computed.
The agreement provides a collar (lower limit and upper limit) on the price at
which the common shares will be valued. The purpose of setting forth the collar
is to prevent undue dilution to the our existing shareholders in the event of a
temporary drop in the price of the common shares during the computation period.
2). For the two calendar years of 2001 and 2002, the earnings of GIG will be
computed in the same fashion. The earnings in each years will be reduced by 50%,
and the amount so calculated will then be paid (year-by-year) by issuing
additional shares of common stock of IFS. The procedures for calculating the
share price and the collar provisions likewise apply to the issuance of shares
at the completion of each of the three years after the closing.
If and when the total number of shares paid to the sellers exceeds a value of
$1.2 million, then the formula under paragraph (2) above changes from 50% of
earnings to 30% of earnings, which has the effect of reducing the number of
shares that IFS would be called upon to issue.
Network Controls International, Inc.
On January 30, 1998, the merger of a wholly owned subsidiary of IFS with and
into NCI Holdings, Inc. ("Holdings") was consummated pursuant to a Plan and
Merger Agreement, dated January 30, 1998 (the "Merger Agreement"). Holdings
owned approximately 94% of the issued and outstanding shares of capital stock of
NCI, which develops and markets software products for bank automation. On June
1, 1998 NCI was merged into Holdings and Holdings subsequently changed its name
to Network Controls International, Inc.
We acquired all of the outstanding shares of capital stock of Holdings in
exchange for $1.11 million, consisting of $840,000 in cash and approximately
$238,000 representing the fair market value of 87,094 shares of preferred stock.
Costs incurred in connection with the acquisition approximated $102,000. In
accordance with provisions of the acquisition agreement, we initially recorded
the issuance of preferred shares at an amount which considered an allowance for
equity deficiencies of NCI. Pursuant to the acquisition agreement, additional
common shares may be issued if the consolidated pre-tax profits of NCI exceeds
certain levels during each of the three years ending April 30, 1999, 2000 and
2001 and during the three year period ending April 30, 2001. These issuances, if
any will be treated as additional purchase costs. The acquisition was accounted
for as a purchase and the operating results of NCI were included in the
consolidated financial statements commencing February 1, 1998.
In July 1998, we acquired the remaining outstanding shares of capital stock of
NCI for cash and stock valued at approximately $35,000.
In August 1998, the Board of Directors voted in favor of waiving the equity
deficiencies clause in the Merger Agreement and allowances for preferred shares
were reversed.
In October, 1999, pursuant to the terms of the merger agreement, we issued
1,051,716 shares of our common stock to Per Olof Ezelius, one of our directors
and president of our NCI subsidiary, for the financial performance of NCI during
the fiscal year ended April 30, 1999. The shares were issued as additional
contingent consideration pursuant to the terms of the plan and merger agreement
dated January 30, 1998. Mr. Ezelius may receive additional contingent shares in
future years based on the financial performance of NCI through fiscal year 2001
pursuant to the plan and merger agreement.
Note 3
Earnings Per Share
Effective April 30, 1998, IFS adopted Statement of Financial Accounting
Standards No. 128 ("SFAS 128"), Earnings Per Share ("EPS"). SFAS 128 establishes
standards for computing and presenting EPS. The statement replaced the
presentation of Primary EPS with a presentation of Basic EPS, and Fully Diluted
EPS with Diluted EPS.
<PAGE>
Note 4
Private Placement
On July 6, 1999, we sold $1,000,000 of convertible promissory notes. The notes
are due in July 2001 and accrue interest at 10% per year. Interest does not
accrue for a given month if the value weighted average stock price for the
previous month, was at or above $3 per share or 90% of the lowest daily value
weighted average stock prices over a specified period from 15 to 30 days prior
to conversion. The purchasers received warrants to purchase an aggregate of
100,000 shares of our common stock at an exercise price of $3.07 per share
subject to dilution. One investor and another company received $75,000 of
additional convertible promissory notes and additional warrants to purchase an
aggregate of 100,000 shares of our common stock. The proceeds of the note and
warrant placement, after placement fees, were $965,000.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The statements below and certain other statements contained in this quarterly
report on Form 10-QSB are based on current expectations. Such statements are
forward looking statements that involve a number of risks and uncertainties.
Factors that could cause actual results to differ materially include the
following (i) general economic conditions, (ii) competitive market influences,
(iii) the development of the capacity to accommodate additional and larger
contracts, (iv) adapting TPII software products to meet the demands of larger
EFT systems, (v) continued acceptance of our software products by a significant
number of new customers, (vi) our continued relationship with computer
manufacturers, (vii) acceptance of NCI Business Centre (TM) by a significant
number of new customers.
Introduction
We are engaged in the business of developing, marketing, automating and
supporting software for the EFT market. Our revenues have resulted from the
licensing of its family of TPII software products and from revenue from NCI. The
preparation of functional specifications, customization and installation of TPII
software products and the training by IFS of the financial institution's
personnel in the use of the TPII software products takes an average of six to
twelve months, depending upon the timing of installation and final acceptance of
the EFT System by the customer. Completion of an NCI license agreement typically
takes an average of two to six months. IFS' customers generally pay 30% to 50%
of the project costs including licensing fees upon execution of the licensing
agreement and also make progress payments prior to acceptance. NCI customers
typically pay the license fees upon installation of the product. IFS recognizes
revenue under the percentage of completion method for software installation
contracts. The percentage of completion method is measured by estimates of the
progress towards completion as determined by costs incurred. NCI recognizes
software license revenue upon installation and hardware revenues upon shipment.
We also derive recurrent revenues from furnishing certain maintenance services
to its customers for its products. We may also receive additional revenues for
additional training of customer personnel and consulting services (collectively
"service revenues"). With respect to revenues for maintenance services, we
generally receive annual payments at the beginning of the contract year. Such
payments are reflected as deferred revenues and are recognized ratably during
such year.
Results of Operations
Total revenues of $3,871,943 for the quarter ended January 31, 2000 represent an
increase of $1,681,354 or 76.8%, over total revenues of $2,190,589 for the
quarter ended January 31, 1999. Total revenues of $10,092,607 for the nine
months ended January 31, 2000 represent an increase of $2,528,071 or 33.4%, over
total revenues of $7,564,536 for the nine months ended January 31, 1999. The
increase in total revenues is primarily a result of an increase in software
license and installation contract fees.
Software license and installation contract fees increased by $1,543,633 or
150.9% to $2,566,527 during the three months ended January 31, 2000 as compared
to $1,022,894 for the three months ended January 31, 1999. Software license and
installation contract fees increased by $2,058,788 or 51.8% to $6,030,175 during
the nine months ended January 31, 2000 as compared to $3,971,387 for the nine
months ended January 31, 1999. The increase is primarily a result of sales of
the our latest product TP-CMS.
Revenues from licensing of software products and hardware sales in countries
outside the United States accounted for 68% of total revenues for the three
months ended January 31, 2000 as compared to 86.6% for the three months ended
January 31, 1999. Revenues from licensing of software products and hardware
sales in countries outside the United States accounted for 85% of total revenues
for the nine months ended January 31, 2000 as compared to 72.8% for the nine
months ended January 31, 1999. The increase as a percentage of total revenues
resulted primarily from the increase in revenues outside the United States
generated by IFS. We expect total revenues from foreign countries to be a
significant portion of its revenues in the future.
Gross profit, as expressed as a percentage of total revenues, decreased to 65.7%
for the quarter ended January 31, 2000, as compared to 73.4% for the quarter
ended January 31, 1999. Gross profit, as expressed as a percentage of total
revenues, decreased to 69.2% for the nine months ended January 31, 2000, as
compared to 80.9% for the nine months ended January 31, 1999. Gross profit
expressed as a percentage of total revenues decreased primarily as a result of
royalties associated with distributors of TPII and TP-CMS as well as development
costs associated with TP-CMS. These type of direct costs did not exist in the
corresponding period.
The excess of cost over fair value of assets acquired in the NCI acquisition is
approximately $1.2 million at January 31, 2000. This amount is being amortized
on a straight line basis over eight years. Amortization expense for the three
month periods ended January 31, 2000 and 1999 was $51,819 and $12,699
respectively. Amortization expense for the nine month periods ended January 31,
2000 and 1999 was $90,258 and $36,099 respectively. The increase in amortization
expense is related to the additional goodwill associated with the issuance of
earn out shares pursuant to the merger agreement with NCI.
Software costs capitalized for the quarter ended January 31, 2000 were
approximately $228,000 as compared to approximately $239,000 for the quarter
ended January 31, 1999. Software costs capitalized for the nine months ended
January 31, 2000 were approximately $646,000, as compared to approximately
$573,000 for the nine months ended January 31, 1999. Capitalized software costs
relate to costs incurred with respect to electronic funds transfer software
technology and the NCI Business Centre(TM) product. Such capitalized costs are
being amortized on a straight line basis over the estimated five year marketing
lives of the software.
Net income was $85,401 for the quarter ended January 31, 2000, as compared to a
net loss of $352,810 for the quarter ended January 31, 1999. Net income was
$270,688 for the nine months ended January 31, 2000, as compared to net income
of $296,619 for the nine months ended January 31, 1999. The increase in net
income for the quarter resulted primarily from an increase in gross profit
attributed to additional software license and installation contract fees net of
an increase in operating expenses.
We have net operating loss carryforwards of approximately $3,800,000 as of April
30, 1999. Pursuant to the Tax Reform Act of 1986 and subsequent legislation,
utilization of these carryforwards may be limited due to the ownership change
provisions as enacted by the Tax Reform Act of 1986 and subsequent legislation.
TP-CMS is IFS' newest addition to the our product portfolio. TP-CMS has recently
been installed at its first location and is being marketed worldwide. The
product is an open architecture payment card management solution for credit,
debit, electronic purse cards and biometric identification. Incorporating the
latest technologies available for information management, TP-CMS enables IFS to
provide a complete migration of a bank's payment card systems to
state-of-the-art solutions. Presently, there are several financial institutions
who have contracted to have TP-CMS implemented in conjunction with TPII. We
believe that if the product is accepted by the EFT industry it could contribute
significantly to the results of operations. However, we can not provide any
assurance that the product will be successful and can not estimate the impact,
if any, on earnings.
LIQUIDITY AND CAPITAL RESOURCES
Our primary source of funds has historically been its operating revenue. Our
working capital increased from $1,666,451, at April 30, 1999 to $2,777,896 at
January 31, 2000, primarily due to the net increase in costs and estimated
earnings in excess of billings on uncompleted contracts.
We believe that anticipated cash flow from operations and the availability of a
$600,000 line of credit will be sufficient to finance our working capital
requirements for the foreseeable future. Our estimate is based upon its ability
to obtain licensing agreements through our IFS subsidiary as currently
projected. We may need additional financing if these revenues are not received.
However, since a portion of TPII software contracts are not paid until
acceptance by the customer and, as a result, we are required to fund a portion
of the costs of configuration and installation of such products from available
capital, any substantial increase in the number of installations or delay in
payment could create a need for additional financing. In such event, there can
be no assurance that additional financing will be available on terms acceptable
to us, or at all.
QUARTER TO QUARTER SALES AND EARNING VOLATILITY
Quarterly revenues and operating results have fluctuated and will fluctuate as a
result of a variety of factors. We can experience long delays (i.e., between
three to twelve months) before a customer executes a software licensing
agreement. These delays are primarily due to extended periods of software
evaluation, contract review and the selection of the computer system. In
addition following execution of the agreement, the preparation of functional
specifications, customization and installation of software products and the
training by IFS of the financial institution's personnel in the use of the TPII
software products take an average of six to twelve months, depending upon the
timing of installation and final acceptance of the EFT System by the customer.
Accordingly, our revenues may fluctuate dramatically from one quarter to
another, making quarterly comparisons extremely difficult and not necessarily
indicative of any trend or pattern for the year as a whole. Additional factors
effecting quarterly results include the timing of revenue recognition of advance
payments of license fees, the timing of the hiring or loss of personnel, capital
expenditures, operating expenses and other costs relating to the expansion of
operations, general economic conditions and acceptance and use of EFT.
INFLATION
We have not experienced any meaningful impact on its sales or costs as the
result of inflation.
YEAR 2000
We believe that we have successfully completed its Year 2000 activities. No
events or issues occurred that have had a material effect on our results of
operations or financial position.
We did not experience any computer programming failures related to Year 2000
that had a material effect on business operations. We are not aware of any
significant problems experienced by our customers regarding the Year 2000 which
resulted in financial difficulties for them.
The estimated costs of the Year 2000 issues did not have a significant impact
IFS' results of operations, liquidity or capital resources.
<PAGE>
IFS International Holdings, Inc. and Subsidiaries
(Formerly IFS International, Inc.)
Part II - Other Information
Item 1 - Legal Proceedings
We are not a party to any pending material legal proceedings.
Item 2 - Changes in Securities
None
Item 3 - Defaults Under Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
Signature
In accordance with 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.
Date: March 16, 2000
IFS International Holdings, Inc. (Formerly IFS International, Inc.)
By:
/s/ David L. Hodge
-----------------------------
David L. Hodge
President and Chief Executive Officer
/s/ John P. Singleton
-----------------------------
John P. Singleton
Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JAN-31-2000
<CASH> 2,137,045
<SECURITIES> 0
<RECEIVABLES> 1,727,449
<ALLOWANCES> 42,010
<INVENTORY> 71,586
<CURRENT-ASSETS> 6,347,763
<PP&E> 4,420,550
<DEPRECIATION> 1,952,461
<TOTAL-ASSETS> 11,758,473
<CURRENT-LIABILITIES> 3,569,867
<BONDS> 0
0
0
<COMMON> 3,844
<OTHER-SE> 5,262,157
<TOTAL-LIABILITY-AND-EQUITY> 11,758,473
<SALES> 10,092,607
<TOTAL-REVENUES> 10,172,761
<CGS> 3,099,873
<TOTAL-COSTS> 9,690,568
<OTHER-EXPENSES> 131,351
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 211,505
<INCOME-PRETAX> 270,688
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
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<NET-INCOME> 270,688
<EPS-BASIC> .08
<EPS-DILUTED> .08
</TABLE>
