-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tua96fCh+jxnHE7ZLpjjijhQ2Vzsj8/0nCP/meElPeA1J8WTJFMhXL9VlFPbG8y2 RwjhT4UA/g1jm0cwntUg8A== 0001050502-99-000299.txt : 19990518 0001050502-99-000299.hdr.sgml : 19990518 ACCESSION NUMBER: 0001050502-99-000299 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRATED SPATIAL INFORMATION SOLUTIONS INC /CO/ CENTRAL INDEX KEY: 0000783284 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 840868815 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14273 FILM NUMBER: 99628638 BUSINESS ADDRESS: STREET 1: 200 WEST FORSYTH STREET STREET 2: SUITE 800 CITY: JACKSONVILLE STATE: FL ZIP: 32202 BUSINESS PHONE: 9043461319 MAIL ADDRESS: STREET 1: 200 WEST FORSYTH ST. STE 800 STREET 2: PO BOX 569 CITY: JACKSONVILLE STATE: FL ZIP: 32202 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED SPATIAL INFORMATION SYSTEMS INC DATE OF NAME CHANGE: 19980710 FORMER COMPANY: FORMER CONFORMED NAME: DCX INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DOUGLAS COUNTY INDUSTRIES INC DATE OF NAME CHANGE: 19860109 10QSB 1 FORM 10-QSB 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 March 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 (State or other jurisdiction of (I.R.S. Employer - ------------------------------- ---------------- incorporation or organization) Identification No.) 13119 Professional Drive, Jacksonville, FL 32225 ------------------------------------------------ (Address of principal executive offices) (Zip Code) (904) 220-4747 -------------- (Registrant's telephone number, including area code) -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No 11,496,571 Common Shares were outstanding as of March 31, 1999. Number of pages in this report is 13. 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 9 Part II Other Information 12 Signature Page 13 2 Part 1 Financial Statements Integrated Spatial Information Solutions, Inc., and Subsidiary Condensed and Consolidated Balance Sheet (Unaudited) March 31, 1999 -------------- Assets Current: Cash and Cash Equivalents $ 281,180 Accounts receivable (net of allowance) 2,058,728 Land and building, held for resale, net 1,067,144 Restricted cash 100,000 Prepaid expenses and other 135,136 ------------ Total current assets 3,642,188 ------------ Property and Equipment: Land and building under capital lease - related party 1,866,667 Equipment and furniture 477,995 Leased assets 289,234 ------------ 2,633,896 Less accumulated depreciation (546,212) ------------ Net property and equipment 2,087,684 ------------ Other Assets Goodwill, net of accumulated amortization 4,792,403 Other 82,795 ------------ Total other assets 4,875,198 ------------ $ 10,605,070 ------------ See accompanying notes to financial statements 3 Integrated Spatial Information Solutions, Inc., and Subsidiary Condensed and Consolidated Balance Sheet (Unaudited) March 31, 1999 -------------- Liabilities and Stockholders' Equity Current liabilities: Notes payable - current portion $ 893,281 Obligations under capital leases - related party - current 153,906 Accounts payable 954,627 Accrued expenses 724,227 Deferred revenue 196,740 Client prepayment 237,914 ------------ Total current liabilities 3,160,695 ------------ Long-term liabilities: Notes payable, less current maturities 314,032 Obligations under capital leases - related party 1,878,355 ------------ Total long-term liabilities 2,192,387 ------------ Total liabilities 5,353,082 ------------ Commitments and Contingencies Stockholders' Equity Cumulative convertible preferred stock, $.001 par value, 20,000,000 shares authorized, 590 shares issued and outstanding 1 Common stock, no par value, 2,000,000,000 shares authorized, 11,958,123 shares issued and outstanding 12,635,423 Additional paid-in capital 3,760,549 Accumulated deficit (11,143,985) ------------ Total stockholders' equity 5,251,988 ------------ $ 10,605,070 ------------ See accompanying notes to financial statements 4
Integrated Spatial Information Solutions, Inc., and Subsidiary Condensed and Consolidated Statements of Operations (Unaudited) Six months ended Three months ended March 31, March 31, ---------------------------- --------------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Revenues $ 3,965,879 $ 3,674,381 $ 1,910,811 $ 1,873,452 Cost of sales Salaries and employee benefits 2,558,684 2,481,372 1,255,311 1,209,978 Direct contract costs 630,267 621,424 281,569 296,373 Other operating costs 1,229,879 1,744,672 595,521 921,531 ------------ ------------ ------------ ------------ Total costs and expenses 4,418,830 4,847,468 2,132,401 2,427,882 ------------ ------------ ------------ ------------ Operating loss (452,951) (1,173,087) (221,590) (554,430) Other income (expense): Interest expense (289,784) (198,653) (158,424) (103,947) Other income 1,264 77,099 761 120,613 Gain on litigation settlement 414,312 -- 414,312 -- ------------ ------------ ------------ ------------ Total other income (expense) 125,792 (121,554) 256,649 16,666 ------------ ------------ ------------ ------------ Net income (loss) from continuing operations (327,159) (1,294,641) 35,059 (537,764) Income (loss) from discontinued operations -- (41,802) -- 68,157 ------------ ------------ ------------ ------------ Net income (loss) (327,159) (1,336,443) 35,059 (469,607) ------------ ------------ ------------ ------------ Preferred stock dividends (24,482) (14,910) (12,241) -- Deemed preferred stock dividends -- (83,333) -- -- ------------ ------------ ------------ ------------ Income (loss) attributable to common stockholders $ (351,641) $ (1,434,686) $ 22,818 $ (469,607) ------------ ------------ ------------ ------------ Basic income (loss) per common share: Income (loss from continuing operations attributable to common stockholders (.03) (.14) -- (.05) Income (loss) from discontinued operations -- -- -- (.04) ------------ ------------ ------------ ------------ Income (loss) attributable to common stockholders (.03) (.15) -- (.04) ------------ ------------ ------------ ------------ Weighted average number of shares of common stock outstanding 11,694,988 9,395,562 11,932,481 10,481,942 ------------ ------------ ------------ ------------ Diluted income (loss) per common share: Income (loss) from continuing operations attributable to common stockholders (.03) (.14) -- (.05) Income (loss) from discontinued operations -- -- -- (.04) ------------ ------------ ------------ ------------ Income (loss) attributable to common stockholders (.03) (.15) -- (.04) ------------ ------------ ------------ ------------ Weighted average number of shares of common stock outstanding 11,694,988 9,395,562 20,003,219 10,481,942 ------------ ------------ ------------ ------------ See accompanying notes to financial statements 5
Integrated Spatial Information Solutions, Inc., and Subsidiary Condensed and Consolidated Statements of Cash Flow (Unaudited) For the Six months ended March 31, ---------------------------------- 1999 1998 ---- ---- Operating activities: Net loss $ (327,159) $(1,336,443) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization 403,455 384,941 Stock options and warrants issued for services performed 19,886 255,824 Gain on litigation settlement (414,312) -- Gain on sale of assets and miscellaneous (11,304) -- Decrease in land and building held for resale (16,378) -- Write off accumulated depreciation due to discontinued operations -- (129,002) Decrease in accounts receivable 509,995 188,466 Decrease in accrued settlement liability (64,685) (42,003) Decrease in other assets 40,778 54,291 Increase (decrease) in accounts payable 272,747 (506,618) Decrease in accrued expenses (134,097) (209,907) Increase (decrease) in deferred revenue 83,694 (132,035) Increase in client prepayments 237,914 -- ----------- ----------- Net cash generated (used) by operating activities 600,534 (1,472,486) ----------- ----------- Investing activities: Purchase (disposition) of equipment (31,436) 2,445 Receipt from sale of assets -- 1,100,000 ----------- ----------- Net cash (used) provided by investing activities (31,436) 1,102,445 ----------- ----------- Financing activities: Payments on checks written against future deposits (207,650) (106,332) Proceeds of borrowings 60,000 -- Payment of debt (195,313) (4327,151) Issuance of common stock -- 138,643 Issuance of convertible preferred stock -- 212,500 ----------- ----------- Net cash used by financing activities (342,963) (182,340) ----------- ----------- Net increase (decrease) in cash 226,135 (552,381) Cash and cash equivalents, beginning of period 55,045 582,326 ----------- ----------- Cash and cash equivalents, end of period $ 281,180 $ 29,945 =========== =========== See accompanying notes to financial statements 6
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 March 31, 1999, the consolidated results of its operations for the six-month periods ended March 31, 1999, and 1998 and statements of cash flows for the six-month periods then ended. The accounting policies followed by the Company are set forth in the annual report of September 30, 1998, filed on Form 10-KSB, as amended, and the audited consolidated financial statements therein with the accompanying notes thereto. While management believes the procedures followed in preparing these consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year. The consolidated results of operations for the three and six-month period ended March 31, 1999, are not necessarily indicative of the results to be expected for the full year ending September 30, 1999. (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, 1998. (3) Provision for Income Taxes At the beginning of the fiscal year the Company had net operating loss carryforwards of $6.0 million with expirations through 2018. At March 31, 1999, the amount of the net operating loss carryforward balance is estimated at $6.4 million. The Company expects to incur a minimal amount of alternative minimum tax for the fiscal year. Since the Company is unable to determine that deferred tax assets exceeding tax liabilities are more likely than not to be realized, it will record a valuation allowance equal to the excess deferred tax assets at fiscal year end. (4) Litigation During the quarter, the Company and the Defense Logistics Agency settled the appeal of reprocurement costs for a deminimis amount. As a result, after consideration of related legal costs, the Company has reduced the previously recorded reserve and recorded income of $414,312. (See also Item 3, Legal Matters, and Note 5, Litigation, to the financial statements in Form 10-KSB, as amended, for September 30, 1998.) (5) Lease Obligations The Company leases various equipment as well as facilities under capital leases that expire through the year 2011 as noted in Note 7 to the Financial Statements in Form 10-KSB, as amended, September 30, 1998. 7 (6) Subsequent Events On April 9, 1999 the Company completed the sale of its real property in Franktown, Colorado. 7. Accounting for Preferred Stock Convertible at a Discount to the Market. The prior year statement of operations gives effect for a discount of 25% of the common stock which would result and be deemed to be additional dividend to the holders of the Company's 6% convertible preferred stock sold on October 14, 1997. That convertible preferred stock was convertible into common stock at a 25% discount to the five day average market price of the common stock immediately preceding the conversion date which was lower than the five day average market price at the date of placement. This difference, $83,333 for the prior year first quarter, on the first possible date of conversion is an imputed discount and is deemed to be additional dividend available to the holders of the preferred stock which reduced prior year first quarter income available to common stock shareholders. Accordingly, it was deducted from cumulative net income to arrive at net income attributable to common shareholders. All of the convertible preferred stock from the October 1997 placement has since been converted into common stock. 8. Earnings Per Share. Earnings per share are calculated in accordance with the provisions of Statement of Financial Accounting Standard No. 128 --"Earnings per Share" (SFAS Nor. 128). SFAS No. 128 provides for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per share includes no dilution for unissued shares and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution attributable to the potential issue of additional securities that could share in the earnings of an entity and known as fully diluted earnings per share. No computation of diluted loss per share is displayed when such computation would result in a reduced net loss per share for a period. Calculation of basic and diluted earnings per share for the periods presented are displayed below:
Six Months Ended Three Months Ended ----------------------------- ----------------------------- March 1999 March 1998 March 1999 March 1998 ---------- ---------- ---------- ---------- Basic Earnings (loss) per common share: Numerator: Income (loss) from continuing operations $ (327,159) $ (1,294,641) $ 35,069 $ (537,784) Income (loss) from dis- continued operations -- (41,802) -- 68,157 Preferred stock dividends (24,482) (14,910) (12,241) -- Deemed preferred stock dividends -- (83,333) -- -- ------------ ------------ ------------ ------------ Income (loss) attributable to common shareholders $ (351,641) $ (1,434,686) $ 22,818 $ (469,607) ============ ============ ============ ============ Denominator: Weighted average common shares outstanding 11,094,988 9,395,562 11,932,481 10,481,942 ============ ============ ============ ============ Per share amounts: Income (loss) from continuing operations $ (0.03) $ (0.14) $ -- $ (0.05) Income (loss) from dis- continued operations -- -- -- 0.01 ------------ ------------ ------------ ------------ 8 Basic earnings (loss) $ (0.03) $ (0.15) $ -- $ (0.04) ============ ============ ============ ============ Diluted earnings (loss) per common share: Numerator Income (loss) from continuing operations $ (327,159) $ (1,294,641) $ 35,069 $ (537,784) Income (loss) from dis- continued operations -- (41,802) -- 68,157 ------------ ------------ ------------ ------------ Income (loss) attributable to common shareholders $ (351,641) $ (1,434,686) $ 22,818 $ (469,607) ============ ============ ============ ============ Denominator: Weighted average common shares outstanding 11,094,988 9,395,562 11,932,481 10,481,942 Effect of dilutive securities: Stock options -- -- 4,672,096 -- Warrants -- -- 1,495,416 -- Conversion of convertible preferred stock outstanding -- -- 1,903,226 -- ------------ ------------ ------------ ------------ Weighted average of common Shares and assumed conver- sions outstanding 11,694,988 9,395,562 20,003,219 10,481,942 ============ ============ ============ ============ Per share amounts: Income (loss) from continuing operations $ (0.03) $ (0.14) $ -- $ (0.05) Income (loss) from dis- continued operations -- -- -- 0.01 ------------ ------------ ------------ ------------ Income (loss) attributable to common shareholders $ (0.03) $ (0.15) $ -- $ (0.04) ============ ============ ============ ============
PART 1, ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OPERATIONS Forward-Looking Statements. This quarterly report contains certain forward-looking statements that describe the future business, prospects, actions and possible results of Integrated Spatial Information Solutions, Inc. (the "Company") and the expectations of the Company and its management which are not historical facts and therefore constitute forward-looking statements as contemplated in the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth. As a result, there also can be no assurance that the forward-looking statements included herein will prove to be accurate or that the objectives and plans of the Company will be achieved. Financial Condition: Liquidity. Cash increased $226,135 to a total of $281,180 from $55,045 at September 30, 1998. The increase was primarily from increased cash generated from operations. Presently, the Company has working capital of approximately $481,493 versus negative working capital of $1,493,458 a year prior. The primary reason for this improvement is the reclassification of $1,076,371 to current assets representing the Company's real property in Franktown, Colorado in light of the lessee's exercise of his purchase option. The Company and the lessor completed the transaction subsequent to the end of this reporting period. In addition, renegotiation of a note resulting in $314,032 reclassified to long term liabilities and the net effect of the litigation settlement eliminating $414,312 of a previously recorded reserve further improved working capital. 9 The Company's current ratio of total current assets to current liabilities increased to 1.15:1 from .60:1 a year ago although it represented a slight decrease from 1.20:1 at September 30, 1998. As a result of losses from operations and limited working capital, the Company's ability to timely meet payment due dates could be in question. Management's plan to continue the operation of the Company includes: negotiation of an asset based line of credit, the negotiation of a credit facility for additional acquisition and operating capital needs; and raising funds through additional debt or equity instruments, of which there can be no assurance. The Company further believes it will experience increased cashflows from new contract awards on which revenue producing work has begun; and that it will curb the cost of operations coupled with an additional contingency plan to generate further cost reductions and improved cash flows to insure the viability of the Company. Capital Resources. During the fourth quarter of the prior fiscal year the Company sold a total of 700 shares of convertible preferred stock in a private offshore transaction which resulted in net funding of approximately $463,000. On February 9, 1999 the Company was verbally advised by a representative of the lending institution the institution was withdrawing its previous commitment letter for a line of credit . The Company is in discussions with two other institutions for asset based source of working capital. The Company has established strong relations with investment banking entities. Accordingly, management believes it may be able to secure a credit facility large enough to support its near term acquisition program and required working capital. The Company's long-term liquidity requirements may be significant in order to implement its acquisition plans. There can be no guarantee sufficient funds can be secured to achieve these plans. Results of Operations: First Half of Fiscal Year 1999 Revenue for the first half of FY 1999 amounted to $3,965,879 and was generated entirely by the Company's operating subsidiary whose primary activity is in the area of geographic information systems. This revenue reflects an increase of 8% over the first half of the prior fiscal year. Total consolidated costs and expenses reached $4,418,830 or 122.2% of revenue. Approximately $759,463 of this amount was related to parent company general and administrative costs, down from $1,079,840 during the prior year period. Of the parent company amount, approximately $196,000 represented acquisition amortization expense. The remainder was related to the subsidiary's GIS operations and reflects a significant decrease from the costs for the same period of the prior year. The decline in GIS related costs resulted from management actions to control costs in response to the current level of revenue generation. Interest expense increased over that of the prior year by $91,131 as a result of increased interest costs related to the Company's Franktown real property, which has been subsequently sold (see Note 6, Subsequent Events, above). Accordingly, interest expense is expected to decrease in the ensuing quarter. There were no transactions from discontinued operations during the period Second Quarter of Fiscal Year 1999 Revenue of $1,910,811 for the second quarter of FY 1999 resulted entirely from the Company's operating subsidiary, PlanGraphics, Inc., engaged in geographic information systems activities. This level of current quarter revenue represents an increase of two percent over the same period of the prior year. 10 The Company's total costs and expenses were $2,132,401 or 111.6% of revenue. This represented a decrease of $295,481 from the prior year; an improvement of 12.2 %. This amount reflects approximately $386,010 in reductions to other operating costs and a 5% reduction to direct contract costs. These reductions are partially offset by slight increases in salaries and employee benefits. The operating loss decreased by $332,840 to $221,590 from last fiscal year's second quarter total of $554,430 reflecting management's efforts to improve operations. Interest expense increased over that of the prior year by $54,477 as a result of an increased rate of interest connected with the new mortgage on the Company's former manufacturing facility. Other income decreased from the prior year amount reflecting the absence of certain nonrecurring credits. There were no transactions from discontinued operations during the period. First Half of Fiscal Year 1998 Revenue for the first half of FY 1998 amounted to $3,674,381 and was generated entirely by the Company's GIS operating subsidiary and is not comparable with restated revenue of nil for the first half of the prior fiscal year. This level of revenue reflected a decline of about 27% from the subsidiary's revenue for the same period of the prior year. This decline from the subsidiary's prior year level of operations for the same period resulted from the winding down of a significant long-term contract and a delay in the commencement of work on replacement contract activity. Total consolidated costs and expenses reached $4,847,471 or 131.9% of revenue. Approximately $1,079,840 was related to parent company general and administrative costs and was not comparable to reported costs for the prior year which resulted from discontinued operations of the Company. Of this amount, approximately $257,363 was related to actions resulting from acquisition activities; and $196,000 of acquisition amortization expenses were also recorded. The balance was related to GIS operations and reflected a decrease from the costs for the same period, a year prior which were not publicly reported. The decline in GIS related costs resulted from management actions to reduce staffing and operating costs in response to the temporary decline in revenue. Interest expense increased over that of the prior year by $128,889 as a result of the interest costs added from the GIS subsidiary acquired late in the fourth quarter of FY 1997. However, trend analysis of both parent and subsidiary interest expenses for the current period compared to interest expenses for the same period of FY 1997 reveals a decrease of 78% for the parent company due to certain leased manufacturing equipment costs no longer occurring because of the divestiture of manufacturing assets and due to the retirement of the SBA-held note and a decrease of about 15% in subsidiary generated interest expenses resulting from retirement of certain debt. Other expense increased over the prior year total primarily due to acquisition expenses. Discontinued operations total reflected a decrease in expenses related to the discontinued manufacturing operations. Second Quarter of FY 1998. Revenue for the second quarter of FY 1998 amounted to $1,873,452 and was generated entirely by the Company's GIS operating subsidiary and was not comparable with restated revenue of nil for the second quarter of the prior fiscal year (Fiscal year 1997). This level of quarterly revenue reflects a decline of approximately 25% from the subsidiary's revenue for the same period of the prior year. This decline from the subsidiary's prior year level of operations for the same quarter resulted from the winding down of a significant long-term contract and a delay in the commencement of work on replacement contract activity. It was, however, a very slight increase over the previous quarter revenue. 11 Total consolidated costs and expenses for the Company reached $2,427,882 or 129.6% of revenue. Approximately $314,100 was related to parent company general and administrative costs and was not comparable to reported costs for the prior year which resulted from discontinued operations of the Company. Of this amount, approximately $125,000 was related to actions resulting from acquisition activities and $98,000 was attributable to amortization of acquisition expenses. The balance, $1,965,000, was related to GIS operations and reflected a decrease from the costs for the same period of the prior year prior and were not publicly reported. The decline in GIS related costs resulted from management actions to reduce staffing and operating costs in response to the temporary decline in revenue. Interest expense had increased over that of the prior year by $64,333 as a result of the interest costs added from the GIS subsidiary acquired late in the fourth quarter of FY 1997. However, trend analysis of both parent company interest ($6,452) and subsidiary interest ($88,254) for the current quarter compared to interest expenses for the same period of FY 1997 reveals a decrease of 78% for the parent company due to certain leased equipment costs no longer occurring because of the divestiture of manufacturing assets and due to the retirement of SBA-held note and a decrease of 15% in subsidiary generated interest expenses resulting from retirement of certain debt. Other expense increased over the prior year total primarily due to acquisition related expenses. Discontinued operations total reflects a decrease in expenses related to the discontinued manufacturing operations. Contract Backlog The Company's has reported a backlog of GIS contracts and work assignments totaling approximately $6.5 million compared to $8.0 million of uncompleted work in the backlog for the prior year. PART II- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See Note 4. ITEM 2. CHANGES IN SECURITIES During the current quarter, a holder of convertible preferred stock submitted 100 shares of preferred stock for which the Company issued 461,552 shares of common stock in exchange. The holder has 590 shares of convertible preferred stock remaining. 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. 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8K. Exhibits filed since the beginning of the current quarter: Exhibit 10.6 Executive Employment Agreement between the Company and Robert S. Vail, filed as part of Form 10-KSB on January 13, 1999. Reports on Form 8-K filed since the beginning of the current quarter: Not applicable. 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: May 16, 1999 /S/ Fred Beisser ------------ ----------------- Frederick G. Beisser Vice President-Finance & Administration, Secretary & Treasurer and Principal Financial Accounting Officer 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS SEP-30-1999 JAN-01-1999 MAR-31-1999 281,180 0 2,058,728 0 0 3,642,188 2,633,896 (546,212) 10,605,070 3,160,095 0 0 0 12,635,423 (7,383,436) 10,605,070 0 3,965,879 0 4,418,830 0 0 (289,784) (327,129) (327,129) (327,129) 0 0 0 (327,159) (.03) (.03)
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