U.S. 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 quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ......... to ...............
Commission File No.: 33-42904
INTELLIGENT DECISION SYSTEMS, INC.
(Exact name of business issuer as specified in charter)
DELAWARE 38-3286394
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Weyhill Building, Suite 400, 2025 East Beltline Ave., SE,
Grand Rapids, Michigan 49546
(Address of Principal Executive Offices)
616-285-5830
(Issuer's Telephone No.)
No Changes
(Former name former address and former fiscal year if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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 [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date.
Title of Class: Common Stock
Shares outstanding at: May 14, 1997: 14,580,231
Transitional Small Business Disclosure Format: Yes [ ]; No [x]
<PAGE>
INTELLIGENT DECISION SYSTEMS, INC.
I N D E X
PART I FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1997 and June 30, 1996 1
Condensed Consolidated Statements of Operations
for the three months ended March 31, 1997
and March 31, 1996 2
Condensed Consolidated Statements of Operations
for the nine months ended March 31, 1997
and March 31, 1996 and cumulative amounts
since inception 3
Condensed Consolidated Statements of Cash Flows
for the nine months ended March 31, 1997
and March 31, 1996 and cumulative amounts
since inception 4
Notes to Condensed Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis or Plan
of Operation 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
Intelligent Decision Systems, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Balance Sheets
March 31, June 30,
1997 1996
------------ ------------
(unaudited)
Assets
Current Assets
Cash $ 283,906 $3,064,329
Accounts receivable (net) 137,256 53,253
Net investment in leases 457,662 143,394
Inventories 138,440 146,940
Contractual rights 204,166 251,250
Prepaid expenses 92,301 16,766
--------- ---------
Total current assets 1,313,731 3,675,932
Property and equipment 429,965 399,584
Other Assets
Contractual rights 47,451 194,445
Net investment in leases 135,303 105,590
Intellectual property 1,458,333 1,726,191
Other 160,274 158,736
--------- ---------
$3,545,057 $6,260,478
========= =========
Liabilities & Stockholders' Equity
Current Liabilities
Bank overdraft $ 0 $ 81,044
Current portion of long term debt 48,130 44,534
Notes payable 0 9,000
Accounts payable 532,060 470,946
Accrued expenses 340,509 575,033
--------- ---------
Total current liabilities 920,699 1,180,557
Long term debt 217,989 136,758
Commitments and contingencies
Stockholders' Equity
Preferred 0 2
Common 14,497 12,323
Additional paid in capital 13,318,112 12,443,319
Deficit accumulated during the
development stage (10,926,240) (7,512,481)
---------- ----------
Total stockholders' equity 2,406,369 4,943,163
---------- ----------
$ 3,545,057 $ 6,260,478
========== ==========
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
Intelligent Decision Systems, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Statements of Operations (unaudited)
Three Months Ended
March 31,
------------------------
1997 1996
--------- ---------
Revenues $ 142,786 $ 188,814
Costs of Goods and Services 341,793 199,900
--------- ---------
Gross Profit (Loss) (199,007) (11,086)
Expenses
Selling 255,848 95,288
Administration 433,535 835,018
Research & development 202,043 281,365
Depreciation & amortization 146,068 60,516
Interest expense 6,928 71,265
--------- ---------
1,044,422 1,343,452
Net loss from operations (1,243,429) (1,354,538)
Other income 16,482 17,288
--------- ---------
Net loss $(1,226,947) $(1,337,250)
========= =========
Net loss per share $(0.08) $(0.16)
==== ====
Weighted average shares outstanding 14,485,787 8,409,875
========== =========
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
Intelligent Decision Systems, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Statements of Operations (unaudited)
Nine Months Ended Cumulative
March 31, Amounts
------------------------ Since
1997 1996 Inception
--------- --------- ------------
Revenues $ 753,818 $ 353,977 $ 1,818,603
Costs of Goods and Services 1,120,547 549,702 1,668,992
--------- --------- ---------
Gross Profit (Loss) (366,729) (195,725) 149,611
Expenses
Selling 833,325 399,154 1,328,528
Administration 1,202,458 1,168,499 4,159,211
Research & development 625,801 767,564 4,620,789
Depreciation & amortization 437,060 184,618 926,784
Interest expense 17,778 184,897 351,713
--------- --------- ---------
3,116,422 2,704,732 11,387,025
Net loss from operations (3,483,151) (2,900,457) (11,237,414)
Other income (expense) 69,392 (348,354) 320,474
--------- --------- ---------
Net loss $(3,413,759) $(3,248,811) $(10,916,940)
========= ========= =========
Net loss per share $(0.25) $(0.42)
==== ====
Weighted average
shares outstanding 13,894,984 7,679,716
========== =========
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
Intelligent Decision Systems, Inc. and Subsidiaries
(a development stage company)
Condensed Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended Cumulative
March 31, Amounts
------------------------ Since
1997 1996 Inception
--------- --------- ------------
Net cash flows from
operating activities $(3,574,670) $(2,162,633) $(8,217,858)
Net cash flows from
investing activities (158,545) 522,105 (664,729)
Net cash flows from
financing activities 952,792 1,509,982 9,166,493
--------- --------- ----------
Net change in
cash and equivalents (2,780,423) (130,546) 283,906
Beginning cash and equivalents 3,064,329 620,992 0
--------- --------- ----------
Ending cash
amd equivalents $ 283,906 $ 490,446 $ 283,906
========= ========= ==========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
INTELLIGENT DECISION SYSTEMS, INC.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------
Note A -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions contained in Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ending June 30, 1997. The unaudited condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's annual report on Form 10-KSB for the year ended June 30, 1996. The
year end condensed consolidated balance sheet was derived from audited financial
statements, but does not include all disclosures by generally accepted
accounting principles.
Note B -- Accounts Receivable
Trade accounts receivable as of March 31, 1997 and as of June 30, 1996 are net
of allowances for doubtful accounts of $0 and $8,000, respectively.
Note C -- Stockholders' Equity
Changes in stockholders' equity for the nine months ended March 31, 1997 are:
<TABLE>
<CAPTION>
Common Preferred Accumulated
Shares Shares Amount Deficit Total
---------- --------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1996 12,323,332 1,631 $12,455,644 $(7,512,481) $4,943,163
Conversion of warrants 776,600 656,350 656,350
Conversion of options 33,333 41,666 41,666
Issued for services 4,000 7,313 7,313
Conversion of
preferred stock 1,359,633 (1,631)
Options issued for
services 185,816 185,816
Post-closing purchase
price adjustments (14,180) (14,180)
Loss from operations (3,413,759) (3,413,759)
---------- ----- ---------- --------- ---------
Balance at March 31, 1997 14,496,898 0 $13,332,609 $(10,926,240) $2,406,369
========== ===== ========== ========= =========
</TABLE>
5
<PAGE>
INTELLIGENT DECISION SYSTEMS, INC.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------
Note C -- Stockholders' Equity (continued)
March 31, June 30,
1997 1996
------------ ------------
Series A Preferred Stock
Par value $.001 $.001
Carrying value per share $1,000 $1,000
Shares originally authorized 1,000,000 1,000,000
Shares cancelled 1,631 0
Remaining authorized shares 998,369 1,000,000
Shares issued and outstanding 0 1,631
Common Stock
Par value $.001 $.001
Shares authorized 30,000,000 30,000,000
Shares issued and outstanding 14,496,898 12,323,332
Note D -- Earnings Per Share Computation
Earnings per share amounts are based on the weighted average number of shares
outstanding exclusive of warrants and options in view of the fact that inclusion
of these common stock equivalents would be anti-dilutive.
Note E -- Related Party Transactions
On November 14, 1996, the Company advanced $30,000 to Mid America Venture
Capital Fund, Inc., an affiliate by reason of beneficial stock ownership. On
December 30, 1996, David Horowitz, Chairman and Director of the Company and also
Chief Executive Officer of DSI, exchanged approximately 8 months of his
employment contract with DSI for cash of $56,250 which was returned to the
Company when Mr. Horowitz exercised options for 112,500 shares at $.50 per share
on December 31, 1996. On December 30, 1996, Robert Hyte, a Director of the
Company and also Chairman and Chief Operating Officer of DSI, exchanged
approximately 9 months of his employment contract with DSI for cash of $64,000
which was returned to the Company when Mr. Hyte exercised options for 128,000
shares at $.50 per share on December 31, 1996. The Company retained the related
stock certificates issued from the exercise of the options as security for the
future performance of the contracted services.
Subsequent to March 31, 1997, the Board of Directors of the Company authorized
the exchange of cash collateral for the stock certificates held as security. On
April 1, 1997, Robert Hyte provided $50,000 as cash collateral to the Company,
and, in exchange, the Company released 100,000 of the 128,000 shares which were
previously held as security.
Note F -- Commitments and Contingencies
On June 28, 1996, the Company acquired certain assets of The Neptune Group,
Inc., a leasing company. In connection with this acquisition, the Company
assumed certain liabilities of The Neptune Group, Inc. including that certain
lawsuit entitled The Neptune Group, Inc. vs. MKT, Inc. (Case No. 3 94CV-587 AWT)
filed in the United States District Court for the District of Connecticut on
April 8, 1994. This case involves claims by The Neptune Group, Inc. for a
declaratory judgment and damages for breach of contract and a counterclaim by
MKT, Inc. claiming that certain commissions were unpaid in the amount of
$753,419.50 plus interest. Without further discovery from MKT, Inc. and third
parties, the Company has no basis to estimate the possible damages on The
Neptune Group, Inc.'s claims or the outcome with respect to MKT, Inc.'s
counterclaims. Management does not believe that this legal action, when
ultimately concluded and determined, will have a material adverse effect upon
IDSI's financial condition, results of operations or liquidity.
6
<PAGE>
INTELLIGENT DECISION SYSTEMS, INC.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (Unaudited)
--------------------------------------------------------------------
Note G -- Income Taxes
No income tax provision was made for either period as losses were incurred. Net
deferred tax assets were not recorded due to the uncertainty of future earnings.
Note H -- SFAS No. 128 "Earnings Per Share"
In February, 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 128, "Earnings Per Share". This Statement simplifies
the standards for computing earnings per share, replacing the presentation of
primary earnings per share with a presentation of basic earnings per share. SFAS
No. 128 also requires dual presentation of basic and diluted earnings per share
on the face of the income statement for all entities with complex capital
structures. Basic earnings per share is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted earnings per share is computed similarly to fully
diluted earnings per share pursuant to APB Opinion No. 15, Earnings Per Share,
which is superseded by this statement. This Statement is effective for financial
statements issued for periods ending after December 15, 1997, with early
application prohibited. The Company has not yet determined the impact of this
Statement on the consolidated financial statements.
Note I -- Reclassifications
Certain amounts, as presented in prior periods, have been reclassified to
conform with the amounts presented in the three and nine months ended March 31,
1997. These reclassifications do not have an impact on net loss, as previously
reported.
7
<PAGE>
Intelligent Decision Systems, Inc.
Management's Discussion and Analysis or
Plan of Operation
For the Three and Nine Months Ended March 31, 1997 and 1996
- --------------------------------------------------------------------------------
Results of Operations
Operations for the nine months ended March 31, 1997 included further development
of the Vision(TM)(hereafter "Vision") and Focus(TM) (hereafter "Focus"), related
leasing activities and increased levels of selling effort, particularly for the
Focus system, which is marketed to physicians and physician groups. Orders
received subsequent to March 31, 1997, exceeding $500,000, are primarily for
Focus systems, specifically from group ophthalmology practices and medical
management groups.
Net revenues for the third fiscal quarter were as follows:
Three Months Ended March 31, % incr.
1997 1996 (decr.)
-------- ------- --------
Computer systems $ 99,350 $ 188,814 (47.4)
Leasing 43,436 -- n/a
-------- -------
$ 142,786 $ 188,814 (24.4)
======== =======
Computer system revenues decreased $89,464 as Vision system unit sales decreased
to 2 units from 6 units from the same period of the prior year. The Company
purchased the operations of The Neptune Group, Inc. on June 28, 1996 and, as
revenues are recorded from that date only, there were no leasing revenues for
the Company in the first nine months of fiscal 1996. Vision system sales were
less than management's expectations for the quarter.
Net revenues for the nine months ended March 31, 1997 were as follows:
Nine Months Ended March 31, % incr.
1997 1996 (decr.)
-------- ------- --------
Computer systems $ 517,621 $ 353,977 46.2
Leasing 236,197 -- n/a
-------- -------
$ 753,818 $ 353,977 113.0
======== =======
Computer system revenues increased $163,644 as Vision system unit sales
increased to 15 units from 8 units in same period of the prior year.
The total of Vision system installations at March 31, 1997 was 33 units. The
total of Focus systems installed was 7 as of the same date. Total backlog for
all systems was 2 at March 31, 1997. In general, sales of Vision systems have
fallen short of management's expectations due to delays in the completion of
product enhancements which were completed in December, 1996. Vision sales were
less for the quarter ended March 31, 1997 than those predicted by the Company's
marketing and selling agent. The Company was not involved in leasing during the
previous fiscal year.
8
<PAGE>
Intelligent Decision Systems, Inc.
Management's Discussion and Analysis or
Plan of Operation
For the Three and Nine Months Ended March 31, 1997 and 1996
- --------------------------------------------------------------------------------
Costs of goods and services sold were as follows:
Three Months Ended March 31, % incr.
1997 1996 (decr.)
-------- ------- --------
Computer systems $ 219,296 $ 199,900 9.7
Leasing 122,745 -- n/a
-------- -------
$ 341,973 $ 199,900 71.0
======== =======
Personnel costs for computer systems' customer service and technical support
increased by $111,911 over the same period in the previous year reflecting a
buildup in anticipation of expected sales of Vision, which did not occur as
rapidly as expected. This increase was offset by a decrease in hardware and
purchased software components due to lower unit sales than in the same period of
the previous year.
Leasing costs are primarily personnel costs.
Nine Months Ended March 31, % incr.
1997 1996 (decr.)
-------- ------- --------
Computer systems $ 752,095 $ 549,702 36.8
Leasing 368,452 -- n/a
-------- -------
$1,120,547 $ 549,702 103.8
======== =======
Personnel costs for computer systems' technical support and computer integration
increased to $478,492 for the nine months ended March 31, 1997 compared to
$295,039 from the same period in the prior year due primarily to an increase in
the number of customer service and technical support employees. The remainder of
costs were directly related to increases in sales of systems, hardware and
miscellaneous software.
Leasing costs consist primarily of personnel costs. Leasing costs increased with
the commencement of leasing activities in July, 1996.
9
<PAGE>
Intelligent Decision Systems, Inc.
Management's Discussion and Analysis or
Plan of Operation
For the Three and Nine Months Ended March 31, 1997 and 1996
- --------------------------------------------------------------------------------
Operating expenses were:
Three Months Ended March 31, % incr.
1997 1996 (decr.)
-------- ------- --------
Selling $ 255,848 $ 95,288 168.5
Administration 433,535 835,018 (48.1)
Research & development 202,043 281,365 (28.2)
Depreciation & amortization 146,068 60,516 41.4
Interest expense 6,928 71,265 (90.3)
-------- -------
$ 1,044,422 $ 1,343,452 (22.3)
======== =======
Selling expenses increased by $160,560 for the three months ended March 31, 1997
over the same period of the prior year due to the addition of a direct sales
force for the Focus system.
Administration expenses decreased by $401,483 due to a decrease of $644,982 in
expenses related to consulting contracts, offset by an increase in
administrative expenses for Neptune Technology Leasing Corp., which was acquired
in June, 1996.
Research and development costs were lower than the same period in the previous
year as personnel were redeployed to technical support activities from
developmental programming.
Depreciation and amortization increased due to amortization associated with
"Screenware", a proprietary computer program application generating language
that was purchased from Resource Finance Group, Ltd. on April 1, 1996.
Interest expense decreased due to the retirement of private placement debt,
which occurred during June of 1996. The remaining interest expense relates
primarily to equipment purchased via capital leases.
Other expense for the three months ended March 31, 1997 and 1996 were not
material in amount.
Total employment was 45 at March 31, 1997 an increase from 2 at March 31, 1996.
For the three months ended March 31, 1996, the Company purchased its programming
resources and administrative services from outside contractors, including
Resource Finance Group, Ltd.
10
<PAGE>
Intelligent Decision Systems, Inc.
Management's Discussion and Analysis or
Plan of Operation
For the Three and Nine Months Ended March 31, 1997 and 1996
- --------------------------------------------------------------------------------
Nine Months Ended March 31, % incr.
1996 1995 (decr.)
-------- ------- --------
Selling $ 833,325 $ 399,154 108.8
Administration 1,202,458 1,168,499 2.9
Research & development 625,801 767,564 (18.5)
Depreciation & amortization 437,060 184,618 136.7
Interest expense 17,778 184,897 (90.4)
-------- -------
$ 3,116,422 $2,704,732 15.2
======== =======
Selling expenses for the nine months ended March 31, 1997 increased by $434,171
from the same period of the prior year due to increased personnel and travel
costs associated with the establishment of a direct sales force for Focus
(totaling $577,703), offset, in part, by a reduction in advertising expenses of
$101,147.
Administration expenses increased by $33,959 due to the acquisition of the
leasing operation (an increase of $352,502), offset by decreases from consulting
arrangements pertaining to public relations and potential mergers and
acquisitions the Company has investigated.
Research and development costs were lower than the same period in the previous
year as personnel were redeployed to technical support activities from
developmental programming.
Depreciation and amortization increased due to amortization associated with
"Screenware", a proprietary computer program application generating language
that was purchased from Resource Finance Group, Ltd. on April 1, 1996.
Interest expense decreased due to the retirement of private placement debt,
which occurred during June of 1996. The remaining interest expense relates
primarily to equipment purchased via capital leases.
Other expense for the six months ended December 31, 1995 included a write-down
of Resource Finance Group, Ltd. common stock totaling $375,000. Digital
Sciences, Inc. owned one million shares of Resource Finance Group, Ltd. until
just prior to the April 1, 1996 merger of the companies.
11
<PAGE>
Intelligent Decision Systems, Inc.
Management's Discussion and Analysis or
Plan of Operation
For the Nine Months Ended March 31, 1997 and 1996
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
During the first nine months of fiscal 1997, the Company used cash of $3,574,670
in its operations. The net loss for the nine months ended March 31, 1997 was
$3,413,759. Non-cash charges to income were $396,022. Total net investment in
leases increased by $343,981 and accrued expenses, mostly related to liabilities
assumed through the acquisition of The Neptune Group, Inc., were reduced by
$234,524 via cash payments.
The Company purchased fixed assets totaling $158,545 during the nine months
ended March 31, 1997. In part, these purchases were financed by net additions to
long debt of $81,231.
Sources of cash included cash received from the exercise of warrants and options
of $698,016.
Cash and cash equivalents were $283,906 at March 31, 1997, which represented
less than one month of operating capital, assuming no increase in current and
historical sales levels. Management believes that sales will increase over the
current levels during the remainder of the fiscal year. The Company is currently
seeking financing sufficient to provide operating capital. Management believes
the Company will be able to raise additional capital and will make additional
sales sufficient to provide adequate working capital for the next twelve months
of operations. Subsequent to March 31, 1997, the Company has received orders for
Focus systems totaling over $500,000.
Commitments and Contingencies
On June 28, 1996, the Company acquired certain assets of The Neptune Group,
Inc., a leasing company. In connection with this acquisition, the Company
assumed certain liabilities of The Neptune Group, Inc. including that certain
lawsuit entitled The Neptune Group, Inc. vs. MKT, Inc. (Case No. 3 94CV-587 AWT)
filed in the United States District Court for the District of Connecticut on
April 8, 1994. This case involves claims by The Neptune Group, Inc. for a
declaratory judgment and damages for breach of contract and a counterclaim by
MKT, Inc. claiming that certain commissions were unpaid in the amount of
$753,419.50 plus interest. Without further discovery from MKT, Inc. and third
parties, the Company has no basis to estimate the possible damages on The
Neptune Group, Inc.'s claims or the outcome with respect to MKT, Inc.'s
counterclaims. The Neptune Group, Inc. has filed a Motion for Summary Judgment
whereby it is requesting among other things that the Court enter summary
judgment dismissing MKT Inc.'s counterclaims against The Neptune Group, Inc. The
motion has not yet been ruled upon by the Court. Management does not believe
that this legal action, when ultimately concluded and determined, will have a
material adverse effect upon IDSI's financial condition, results of operations
or liquidity.
12
<PAGE>
Intelligent Decision Systems, Inc.
Management's Discussion and Analysis or
Plan of Operation
For the Nine Months Ended March 31, 1997 and 1996
- --------------------------------------------------------------------------------
Subsequent Events
In April, 1997, Digital Sciences, Inc. (a wholly owned subsidiary of Intelligent
Decision Systems, Inc.) signed a letter of intent with Pioneer EyeCare, Inc.
Pioneer EyeCare, Inc. is a Physician Practice Management Corporation that
intends to acquire, as well as offer management services to, its association of
over 200 independent eye care providers. The arrangement, when completed, will
allow Pioneer to implement their electronic information strategy across its
entire network utilizing Digital Sciences, Inc.'s Focus system and technology.
Also in April, 1997 Digital Sciences, Inc. and MediPro, Inc. (a wholly owned
subsidiary of BancPro, Inc.) reached an agreement to provide health care
receivable financing to users of Vision and Focus computing systems.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-QSB, including all documents incorporated by reference, includes
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements of
historical facts included in this Form 10-QSB (and in documents incorporated by
reference), including without limitation, statements under "Management's
Discussion and Analysis or Plan of Operation" regarding the Company's financial
position, business strategy and plans and objectives of management of the
Company for future operations, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by this section.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
As reported in the Company's Form 10-KSB, The Neptune Group, Inc.
("Old Neptune") is involved in litigation with MKT, Inc. Old
Neptune has filed a Motion for Summary Judgment whereby it is
requesting among other things that the Court enter summary
judgment dismissing MKT Inc.'s counterclaims against Old Neptune.
The motion has not yet been ruled upon by the Court.
No other reportable events have occurred which would require
modification of the discussion under Legal Proceedings set forth
in the Company's Form 10-KSB Annual Report for the fiscal year
ended June 30, 1996.
Item 2. Changes in Securities:
None.
Item 3. Defaults by the Company upon its 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 filed during the quarter ended March
31, 1997.
1. The Company filed a report on Form 8-K with the
Commission on January 3, 1996 reporting a change in
the Company's principal auditors from the firm of
Wilber & Townshend, P.C. to the firm of Coopers &
Lybrand.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTELLIGENT DECISION SYSTEMS, INC.
Date: May 14, 1997 /s/ Mark A. Babin
--------------------------
Mark A. Babin
President
Chief Financial Officer
[Mark A. Babin is signing in the dual capacities as (i) the principal financial
officer, and (ii) a duly authorized officer of the Company.]
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements contained in Intelligent Decision Systems, Inc.'s Report on Form
10-QSB for the quarter ended March 31, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 283,906
<SECURITIES> 0
<RECEIVABLES> 594,918
<ALLOWANCES> 0
<INVENTORY> 138,440
<CURRENT-ASSETS> 1,313,731
<PP&E> 780,680
<DEPRECIATION> 350,715
<TOTAL-ASSETS> 3,545,057
<CURRENT-LIABILITIES> 920,699
<BONDS> 217,989
0
0
<COMMON> 13,332,609
<OTHER-SE> (10,926,240)
<TOTAL-LIABILITY-AND-EQUITY> 3,545,057
<SALES> 0
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<NET-INCOME> (3,413,759)
<EPS-PRIMARY> (.25)
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</TABLE>
