UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.

1601 Shop Road
Suite E
Columbia, South Carolina 29201
(803) 736-5595 (Telephone)
(803) 736-5639 (Facsimile)
(Address and telephone number of principal executive offices and principal place of business)

George E. Mendenhall
Chief Executive Officer
Integrated Business Systems and Services, Inc.
1601 Shop Road
Suite E
Columbia, South Carolina 29201
(803) 736-5595 (Telephone)
(803) 736-5639 (Facsimile)
(Name, address and telephone number of agent for service)

Copy to:

R. Douglas Harmon, Esq.
Parker, Poe, Adams & Bernstein L.L.P.
Suite 3000
Three Wachovia Center
401 South Tryon Street
Charlotte, North Carolina 28202
(704) 335-9020 (Telephone)
(704) 335-4485 (Facsimile)

Approximate date of proposed sale to the public:
From time to time after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                                        

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                                         

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

     The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

     The information in this prospectus is not complete and may be changed. This prospectus is included in the registration statement that was filed by Integrated Business Systems and Services, Inc. with the Securities and Exchange Commission. The selling shareholders may not sell these securities until the registration statement is declared effective by the Securities and Exchange Commission. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

54,088,448 Shares of Common Stock

Integrated Business Systems and Services, Inc.

     This prospectus relates to the resale of up to 54,088,448 shares of the Common Stock of Integrated Business Systems and Services, Inc. (the “Company”), including up to 45,144,585 shares of our Common Stock issuable upon the exercise of warrants by certain persons who are, or will become, shareholders of the Company. The selling shareholders may sell one or more of the securities offered hereunder from time to time in the principal market on which shares of our Common Stock are traded at the prevailing market price or in negotiated transactions and this registration statement will allow them to do so. The Company is not selling any shares in connection with this offering and will not receive any proceeds from this offering, except for proceeds from the sale of shares under the Equity Line (as defined below) and to the selling shareholders upon exercise of certain warrants. The Company will bear all expenses of registration of the securities offered hereunder.

     In connection with capital raising activities in the fourth quarter of 2003 and early 2004, the Company issued to Generation Capital Associates, Inc. (“GCA”) 1,250,000 shares of our Common Stock and common stock purchase warrants which are convertible into 1,000,000 shares of Common Stock. In addition, the Company entered into an equity line of credit (the “Equity Line”) with Dutchess Private Equities Fund, L.P. (“Dutchess”). Under the terms of the Equity Line, the Company may require that Dutchess purchase, pursuant to a series of puts in stated amounts and at stated times, up to $10,000,000 of Common Stock over a period of 36 months from the date that this registration statement is declared effective by the United States Securities and Exchange Commission (“Commission”).

     Dutchess is an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the sale of shares of Common Stock under the Equity Line. Dutchess will pay the Company 95% of the market price of our Common Stock. We have paid Dutchess a one-time legal fee of $5,000. Dutchess is entitled to certain other payments, as more fully described in the section below entitled “Dutchess Equity Line of Credit”.

     We have engaged US Euro Securities, Inc., a registered broker-dealer, to advise the Company in connection with the Equity Line (the “Placement Agent”). Pursuant to a placement agent agreement dated January 30, 2004, the Company will pay to the Placement Agent 1% of the gross aggregate proceeds from each put with Dutchess (subject to an aggregate fee limit of $10,000). The Placement Agent is not participating in this offering.

     Investing in our Common Stock involves a high level of investment risk. You should carefully consider the information and risks set forth in the section of this prospectus entitled “Risk Factors” beginning on page 6 below before deciding to purchase the shares of Common Stock offered hereunder.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

     This prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”). Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industry and economies in which we operate and other information that is not historical information. You can identify a forward-looking statement by our use of the words “anticipate,” “estimate,” “expect,” “intend,” “plan,” “may,” “will,” “continue,” “believe,” “objective,” “projection,” “forecast,” “goal,” and similar expressions. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements.

     There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this prospectus. We do not undertake any obligation to revise these forward-looking statements to reflect future events or circumstances. Presently known Risk Factors, beginning on page 6 of this prospectus, which could impact our forward-looking statements, include, but are not limited to, the following factors:

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PROSPECTUS SUMMARY

     This prospectus summary highlights information more fully described elsewhere in this prospectus. Because it is a summary, it is not complete and does not contain all the information that is important to you in deciding whether to invest in the Company. You should read the entire prospectus carefully, including the documents incorporated by reference into this prospectus and the other documents to which this prospectus refers. As used in this prospectus, all references to the “Company,” “IBSS,” “we,” “our,” “us,” and similar references shall refer to Integrated Business Systems and Services, Inc.

Integrated Business Systems and Services, Inc.

     Integrated Business Systems and Services, Inc., which was incorporated in 1990, is a Columbia, South Carolina-based national provider of Synapse™, a ground-breaking new software technology. Synapse™ is a complete framework and methodology used to create, implement and manage a wide variety of dynamic, distributed, networked, and real-time enterprise applications, quickly and efficiently. Global enterprises utilizing Synapse™ leverage the power of its single, flexible framework to enjoy tremendous time and cost advantages in the development, deployment, and on-going management of customized applications.

     Enabled by Synapse™ to take competitive advantage of cutting-edge technologies such as wireless networking, mobile computing and radio frequency identification (“RFID”), IBSS brings solutions to customers for mission-critical applications in manufacturing, distribution, healthcare, finance, insurance, retail, education, and government.

     IBSS’ emphasis as a company is on helping businesses mitigate risk as they introduce new software products, extend their existing software applications and systems, or improve the way they do business. The IBSS value proposition provides three valuable assets to our customers:

     The Company’s above described value-based proposition enables the Company to carefully tailor its services and software to a customer’s unique set of needs and to rapidly produce solutions specific to those needs. This value-based proposition has been and will continue to be the Company’s most important competitive advantage. This advantage would not have been possible if it were not for the Company’s key asset - Synapse™, a platform and framework for dynamic, distributed, real-time software applications.

GCA Financing

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securities purchase agreement, dated December 24, 2003, between the Company and GCA, a common stock purchase warrant with GCA, dated December 30, 2003, and two separate letter agreements with GCA, dated December 24, 2003 and January 13, 2004.

     Under the terms of the stock purchase agreement with GCA, the Company sold to GCA 1,250,000 shares (the “GCA Shares”) of Common Stock. Under the terms of the stock purchase warrant issued to GCA, the Company granted to GCA (or its permitted assignee(s)) warrants to purchase up to 1,000,000 shares of Common Stock pursuant to two common stock purchase warrants, one for 937,500 shares of Common Stock and another for 62,500 shares of Common Stock (collectively, the “GCA Warrants”). In exchange for the GCA Shares and GCA Warrants, GCA paid $250,000 to the Company on December 31, 2003 (the “Purchase Price”). The Company is currently using these proceeds as short-term operating capital.

     Under the terms of the GCA Warrants, GCA is entitled to purchase from the Company at any time until December 31, 2008, up to 1,000,000 fully paid and nonassessable shares of Common Stock (collectively, the “GCA Warrant Shares”), for an aggregate purchase price of $400,000 (the “Aggregate Warrant Price”). The exercise price for each warrant granted to GCA is $0.40 per share (the “Per Share Warrant Price”) and is subject to adjustment under the GCA Warrants. The Company is contractually obligated to register the GCA Shares and GCA Warrant Shares offered in this prospectus by filing this registration statement and to bear all expenses relating to the filing. In addition, the Company must pay to GCA two types of fees in connection with the filing. The first fee (the “Filing Fee”) is an annual amount equal to 8% of the Purchase Price and is payable during the period from January 6, 2004 to the date the Commission declares the registration statement effective (the “Filing Period”). The Filing Fee is pro-rated on a daily basis and is payable in arrears on the last day of every calendar quarter during the Filing Period (each, a “Payment Date”), beginning on March 31, 2004. The second fee (the “Late Fee”) is an annual amount equal to 25% of the Purchase Price and is payable for every calendar day that the registration statement is not declared effective by the Commission after May 5, 2004. The Late Fee is similarly pro-rated on a daily basis and payable on each Payment Date. At the sole option of the Company, it may pay either or both fees in cash or in shares of Common Stock. In addition, the Per Share Warrant Price shall be reduced by $0.05 for the first month or part thereof of such late filing and/or late effectiveness and $0.03 per month for each month or part thereof after the first month. In no event shall the Per Share Warrant Price be reduced to less than $0.05 per share.

Dutchess Equity Line of Credit

     Following the GCA Financing, the Company, as part of its initial capital raising activities in 2004, entered into an investment agreement dated January 21, 2004 for an equity line of credit (the “Equity Line”) with Dutchess Private Equities, L.P., a Delaware limited partnership (“Dutchess”). Under the terms of the Equity Line, we may periodically sell shares of Common Stock, solely at the Company’s option, to Dutchess to raise capital to fund our working capital needs. The periodic sale of shares is known as a put (each, a “Put”). Under a Put, we may request an advance to draw down a portion of the Equity Line by delivering a written Put notice (“Put Notice) to Dutchess of draw down of a portion of the Equity Line (the date on which such Put notice is delivered to Dutchess is the “Put Date”). A closing will be held seven business days after the Put Date, at which time we will deliver shares of Common Stock and Dutchess will pay the Purchase Price (as defined below).

     Each Put will contain an amount of Common Stock proposed to be sold to Dutchess (the “Put Amount”) equal to either (at the Company’s discretion): (i) 200% of the average daily volume (U.S. Market only) of the Common Stock for the 10 trading days prior to the Put Date, multiplied by the average of the three daily closing best bid prices of Common Stock immediately preceding the Put Date, or (ii) $20,000. In no event will the Put Amount be more than $1,000,000 with respect to any single Put.

     The purchase price (“Purchase Price”) for each share of Common Stock subject to a Put is 95% of the lowest best bid price of Common Stock during the period beginning on a Put Date and ending on and including the date that is five trading days after such Put Date (the “Pricing Period”). Following Dutchess’ receipt of a Put Notice, Dutchess will be required to purchase from the Company during the related Pricing Period that number of shares of Common Stock having an aggregate Purchase Price equal to the lesser of (i) the Put Amount set forth in the Put Notice, and (ii) 20% of the aggregate trading volume of the Common Stock during the applicable Pricing Period multiplied by 95% of the lowest best bid prices of the Common Stock during the specified Pricing Period, provided such shares bear no restrictive legend and are not subject to stop transfer restrictions. The Equity Line also contains a floor provision, which permits the Company (in its discretion) to withdraw that portion of the Put Amount if the closing bid price of Common Stock during the applicable Pricing Period with respect a Put Notice is less than

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75% of the lowest closing best bid prices of the Common Stock for 15 trading days prior to each Put Notice Date or less than $0.48, in any case.

     We may request advances under the Equity Line once the underlying shares are registered with the Commission. Thereafter, we may continue to request advances until Dutchess has advanced $5 million.

The Offering

     The offering of securities under this prospectus relates to the sale of our Common Stock by certain persons who are, or will become, shareholders of the Company. These selling shareholders consist of:

     Pursuant to the terms of the Equity Line, we may, at our sole discretion, periodically issue and sell directly to Dutchess shares of our Common Stock up to aggregate proceeds of $10,000,000. However, we are registering only 5,000,000 shares of Common Stock for resale by Dutchess pursuant to this prospectus, and our current plan is to limit sales up to an aggregate of not more than 5,000,000 shares to Dutchess. Dutchess may then resell such shares pursuant to this registration statement. As such, Dutchess will be an “underwriter” within the meaning of the Securities Act.

     The shareholders listed in the section below entitled “Selling Shareholders” who are offering the shares of Common Stock described above are doing so pursuant to this registration statement under Rule 415 of the Securities Act. As such, the Company may sell the shares of Common Stock currently held by the selling shareholders on a continued or delayed basis. The shares will not be sold prior to the effective date of this registration statement. The shares shall be sold on or after the effective date of this registration statement at the most current price per share for a share of Common Stock as quoted on the Over-the-Counter Bulletin Board Regulated Quotation System (the “OTCBB”) on the date of any such sale.

     We have engaged US Euro Securities, Inc., a registered broker-dealer, to advise the Company in connection with the Equity Line (the “Placement Agent”). Pursuant to a placement agent agreement dated January 30, 2004, the Company will pay to the Placement Agent 1% of the gross aggregate proceeds from each put with Dutchess (subject to an aggregate fee limit of $10,000). The Placement Agent is not participating in this offering.

Corporate Information

     Our common stock is listed on the OTCBB under the symbol “IBSS.OB”.

     Our principal executive offices are located at 1601 Shop Road, Suite E, Columbia, South Carolina 29201. Our telephone number is (803) 736-5595.

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RISK FACTORS

     An investment in shares of our Common Stock offered herein represents a high degree of risk. There are a number of risk factors, including those specified below, which may, either now or anytime in the future, have an adverse effect on our business, operating results and financial condition. As such, you should carefully consider the risk factors below in evaluating our Company and its business and the offering outlined herein. An investment in these securities should only be considered by a person who can assume such risks, as well as the risk of loosing all or a portion of their investment. As a consequence of these risk factors, the other information contained in this registration statement, and the risks discussed in our other periodic filings with the Commission, our actual results could differ materially from those contemplated by any forward-looking statements contained in this registration statement.

RISKS RELATED TO OUR COMPANY

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Moreover, if we successfully market our products in new vertical markets, we expect that customers in some of those new vertical markets are likely to have different requirements and may require us to change our product design or features, sales methods, support capabilities or pricing policies. Any failure by us to successfully address any new vertical markets will have an adverse effect on our results of operations.

     We have a large accumulated deficit, we expect future losses, and we may never achieve or maintain profitability.

     If expenditures related to our sales and marketing activities are not accompanied or shortly followed by increased revenue, our quarterly and annual operating losses could be greater than expected until we are able to delay or reduce expenditures.

     Many factors, including the factors described in this prospectus, may result in our incurring losses for 2004. We need to increase our quarterly revenues and control our quarterly expenses in order to obtain profitability.

     If we do not retain our key management personnel and attract and retain other highly skilled employees, our business will suffer.

     Our future success depends on the skills, experience and performance of our senior management team, other key personnel and advisors, and their ability to operate effectively, both individually and as a group. Each of our key employees is bound by an employment agreement with the Company. Although we maintain “key man” insurance in the amount of $1 million on the lives of each of George E. Mendenhall, Ph.D., Chairman and Chief Executive Officer, and Stuart E. Massey, Executive Vice President, recovery under such insurance may not be adequate to compensate us for the full impact resulting from the death of either of these officers. If any of our existing senior management or other key research, engineering and development or sales and marketing personnel were to leave the Company, it would be difficult to replace them, and our business would be materially harmed. If we are able to achieve our anticipated sales growth, our success will also depend on our ability to recruit, retain and motivate additional highly skilled sales, marketing and engineering personnel. We believe we will face significant competition for individuals with the skills required to develop, market and support our products and services. If we fail to recruit and retain sufficient numbers of these highly skilled employees our ability to compete will be significantly harmed, and our business will suffer.

     If we do not effectively compete with new and existing competitors, our revenues and operating margins will decline.

     The market for our products is intensely competitive, evolving, and subject to rapid technological change. We expect the intensity of competition to increase in the future. As a result of increased competition, we may have to reduce the prices of our products and services, and we may experience reduced gross margins and loss of market share, any one of which could significantly reduce our future revenues and operating results. Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, product development and marketing resources, as well as better name recognition and larger customer bases than we do. These competitors may be able to develop products comparable or superior to those offered by us, or adapt more quickly than we can to new technologies, evolving industry trends or customer requirements. They are also positioned to devote greater resources to the development, promotion and sale of their products than we are. Accordingly, we may not be able to compete effectively in our markets, and competition may intensify and harm our business and its operating results. If we are not successful in developing enhancements to existing products and new

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products in a timely manner, garnering customer acceptance or generating average licensing prices, our gross margins may decline and cause our business and operating results to suffer

     Variations in the time it takes us to sell our products may cause fluctuations in our operating results.

     Our customers generally consider a wide range of factors before committing to purchase our products, including product benefits, the ability to operate with existing and future computer systems, the ability to accommodate increased transaction volumes, and product reliability. Some of our customers are addressing these factors for the first time when they consider whether to buy our products and services. As a result, we or other parties must educate potential customers on the use and benefits of our products and services. In addition, the purchase of our products generally involves a significant commitment of capital and other resources by a customer. This commitment often requires significant technical review, assessment of competitive products, and approval at a number of management levels within a customer’s organization.

     The length of our sales cycles may vary based on the industry in which the potential customer operates, and is difficult to predict for any particular license transaction. Because of the number of factors influencing our sales process, the period between our initial contact with a new customer and the time when we are able to recognize revenue from that customer varies widely in length. Our sales cycles typically range from one to six months. For larger opportunities with new customers, however, these cycles may be longer. The length and variability of our sales cycles makes it difficult to predict whether particular sales will be concluded in any given quarter. If one or more of our license transactions are not consummated in a given quarter, our results of operations for that quarter may be below our expectations and the expectations of analysts and investors which would be likely to cause a decline in our stock price.

     Significant unanticipated fluctuations in our actual or anticipated quarterly revenues and operating results may cause us not to meet securities analysts’ or investors’ expectations and may result in a decline in our stock price.

     Our quarterly operating results have fluctuated significantly in the past and may vary significantly in the future. Moreover, as a result of the evolving nature of the markets in which we compete, it is difficult to accurately forecast our revenue in any given period. Accordingly, we believe that period-to-period comparisons of our historical results of operations are not necessarily meaningful and should not be relied upon as indications of sustainable trends or other future performance. If our revenues, operating results or earnings are below the levels expected by investors or securities analysts, our stock price is likely to decline.

     In addition, we expect to experience significant fluctuations in our future quarterly revenues and operating results as a result of many factors specific to our operations, including:

     Our revenues and operating results depend upon the volume and timing of customer orders and payments, and the date of product delivery. New software licensing, service and maintenance contracts may not result in revenues in the quarter in which the contracts are signed, and we may not be able to predict accurately when revenues from these contracts will be recognized. We realize substantially higher gross margins on our license revenues as compared to our services and maintenance revenues. Consequently, our profit margins for any particular quarter will be highly dependent on the mix of license, service and maintenance revenues in that quarter. If we cannot generate new customer orders, or our customers delay or cancel their orders in a particular quarter, these factors will have a material adverse effect on our revenues, and more significantly on a percentage basis, on our net income or loss in that quarter.

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     Defects in our software products could diminish demand for our products and expose us to costly liability that would adversely affect our operating results.

     The Synapse™ software products we offer are internally complex. Complex software may contain errors or defects, particularly when first introduced or when new versions or enhancements are released. Although we conduct extensive testing, we may not discover software defects that affect our current or new products or enhancements until after they are sold. Although we have not experienced any material software defects to date, any errors or defects that may be discovered could result in:

     In addition, our license and service agreements with our customers typically contain provisions designed to limit our exposure to potential product liability claims. It is possible, however, that the limitation of liability provisions contained in our license and service agreements may not be effective as a result of existing or future federal, state or local laws, ordinances or judicial decisions. Although we have not experienced any product liability claims to date, sale and support of our products entails the risk of such claims, which could be substantial in light of our customers’ use of many of our products in mission-critical applications. We do not maintain product liability insurance. If a claimant brings a product liability claim against us, it could have a material adverse effect on our business, results of operations and financial condition.

RISKS RELATED TO OUR INDUSTRY

     If we fail to adapt to the rapid technological change that characterizes our markets, we could lose market share, or our products could become obsolete.

     The market for our software products and services is characterized by:

     The introduction of products embodying new technologies, the emergence of new industry standards, or changes in customer requirements could render some or all of our existing products obsolete and unmarketable. Moreover, decreases in the cost of existing competing products or services could enable our current or potential customers to fulfill their own needs for transaction processing and integration systems and services in a more cost-efficient manner than through the purchase of our products and services. As a result, our success depends upon our ability to respond to changing customer requirements and to enhance existing products and services to keep pace with technological developments and emerging industry standards. We have invested significantly in technology, and we anticipate that it will be necessary for us to continue to do so. Failure to develop and introduce enhancements to our existing products and services in a timely manner in response to changing market conditions or customer requirements will materially and adversely affect our business, results of operations and financial condition.

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     If we fail to adequately protect our proprietary rights, we may lose these rights and our business may be seriously harmed.

     Our success depends upon our proprietary technology. To establish and protect our proprietary rights, we rely primarily on a combination of:

     As part of our confidentiality procedures, we enter into non-disclosure agreements with our employees upon hiring them, and with our customers and strategic partners when we enter into license, service and maintenance agreements with respect to our software, documentation and other proprietary information. Despite these precautions, third parties could copy or otherwise obtain and use our products or technologies without authorization, or develop similar technologies independently. It is difficult for us to police unauthorized use of our products. Because of this difficulty in determining the extent to which piracy of our software products may exist, software piracy remains a persistent problem. Expensive litigation may be necessary in the future to enforce our intellectual property rights. Moreover, effective protection of intellectual property rights is unavailable or limited in certain foreign countries. While we believe that our products and technologies are protected against infringement, as a practical matter, existing laws may afford only limited protection. Consequently, the protection of our proprietary rights may not be adequate, and our competitors could independently develop similar technologies, duplicate our products, reverse-engineer, or design around the intellectual property rights we hold.

     Our products may infringe upon the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.

     The commercial success of our business depends upon our products not infringing any intellectual property rights of others and upon no claims for infringement being made against us. We have conducted periodic patent searches to determine whether or not we may be infringing the patent or trademark rights of any third parties. We have also applied for patent protection of our proprietary Synapse™ software. Because patent applications in the United States are not publicly disclosed until the patent is issued, applications of which we are not aware may have been filed which are similar to our software products. Consequently, we may be subject to legal proceedings and claims from time to time in the ordinary course of our business, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us or our licensees in connection with their use of our products. Intellectual property litigation is expensive and time-consuming, and could divert our management’s attention away from running our business. If we were to discover that any of our products violated the intellectual property rights of others, we would have to obtain licenses from these parties in order to continue marketing our products without substantial re-engineering. We might not be able to obtain the necessary licenses on acceptable terms or at all. If we could not obtain such licenses, we might not be able to re-engineer our products successfully or in a timely manner. We believe that we are not infringing any intellectual property rights of third parties, but there can be no assurance that such infringement will not occur. If we fail to address any infringement issues successfully, we will be forced to incur significant costs and could be prevented from selling our products.

OTHER RISKS

     The price of our Common Stock may fluctuate significantly and may be negatively affected by factors beyond our ability to control or predict.

     The price of our Common Stock is subject to the volatility generally associated with Internet, middleware, software, and technology stocks in general, and may also be affected by broader market trends unrelated to our or our competitors’ operating performances. Our stock price and the stock prices of many other companies in the technology and emerging growth sectors have historically experienced wide fluctuations, including rapid rises and declines in stock prices that have often been unrelated to the operating performance of such companies. These

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downward trends and fluctuations are typically the result of the combination of general economic, political and market conditions, most recently including recessions, the threat of terrorist activities, and concerns over the accuracy of financial reporting by several large publicly traded corporations. These factors are beyond our ability to control or predict. We can provide no assurance that these downward trends and the events giving rise to them will not continue for the foreseeable future, or that they will not materially adversely affect the market price of our Common Stock.

     The number of our shares of Common Stock that are or may become eligible for sale in the near future may cause the market price for our common stock to decline significantly, even if our business is doing well.

     Of the issued and outstanding shares of Common Stock, 2,565,326 shares were held by members of management and may be publicly sold only pursuant to the volume and manner of sale restrictions of Rule 144 under the Securities Act of 1933. Approximately 8,943,863 of the outstanding shares are restricted securities issued under federal and state exemptions from registration and may not be publicly sold. All of these shares are being registered pursuant to the registration statement of which this prospectus is a part. Once these restricted shares, or the shares issuable pursuant to outstanding options, warrants and convertible debt, become eligible for resale under Rule 144, or their resale is otherwise registered by us with the Commission, if the holders of these shares sell substantial amounts of their shares into the public market during a short period of time, or if those shareholders are perceived by the market as intending to sell them, our stock price may decline significantly. The issuance of the shares being offered hereunder will also result in dilution to our shareholders, and may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we deem appropriate.

     Our Common Stock is deemed to be “penny stock,” which may make it more difficult for investors to sell their shares due to suitability requirements.

     Our Common Stock is deemed to be “penny stock” as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as amended. These requirements may reduce the potential market for our Common Stock by reducing the number of potential investors. This may make it more difficult for investors in our Common Stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline. Penny stocks are stock:

     Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.

     Failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new products could reduce our ability to compete and result in lower revenues.

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     Even if we are successful in realizing our expected 2004 objectives, we expect that we will still require additional third party financing in the future to implement our growth strategies and achieve our long-term objectives. In light of the recent downward trends experienced by the capital markets, we cannot be certain that we will be able to obtain additional debt or equity financing on favorable terms, or at all. If we obtain additional equity financing, our shareholders may experience significant dilution of their ownership interests and the per share value of our Common Stock could decline. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness or that force us to maintain specified liquidity or other ratios, any of which could harm our business. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

Our failure to do any of these things could result in lower revenues and could seriously harm or result in the discontinuation of our operations.

     Anti-takeover provisions in our Articles and state corporate laws could discourage or prevent a takeover, even if an acquisition of our company would be beneficial to our shareholders.

     In addition, the South Carolina Business Combination Act, the South Carolina Control Share Acquisition Act and the vesting terms of our stock option plans may discourage, delay or prevent a change in control of our company.

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USE OF PROCEEDS

     This prospectus relates to shares of our Common Stock that may be offered and sold from time to time by selling shareholders. Although we will not receive any proceeds from the sale of shares of Common Stock held by the selling shareholders in this offering, we will receive the proceeds from sales of shares of our Common Stock to Dutchess under the Equity Line. This registration statement is intended to satisfy the Company’s contractual obligations with its selling shareholders to register these securities. In addition, we have agreed with the selling shareholders to pay the all expenses of registration of the securities offered herein under federal and state securities laws.

     For illustrative purposes, we have set forth below our intended use of the process for the range of net proceeds indicated below to be received under the Equity Line. The table below assumes estimated offering expenses of $85,000.

DILUTION

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     The offering price of our Common Stock is based on the then-existing market price. In order to give prospective investors an idea of the dilution per share they may experience, we have prepared the following table showing the dilution per share at various assumed offering prices:

DUTCHESS EQUITY LINE OF CREDIT

     None of the Company’s officers, directors, insiders, affiliates or other related parties may sell any shares of Common Stock during the Pricing Period. Seven business days after each Put Notice Date, Dutchess is obligated to close each Put (each, a “Closing”). During the period (the “Open Period”) from the trading day immediately following the date that the Commission declares this registration statement to be effective and ending on the earlier to occur of (i) the date which is 36 months from such effective date or (ii) termination of the investment agreement with Dutchess for the Equity Lirne, the Company may not submit another Put Notice until after the previous Closing has been completed.

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     The Equity Line also contains specific conditions applicable to both the Company’s ability to deliver a Put to Dutchess and Dutchess’ obligations to purchase shares under each Put. Such conditions include, among other things, that the Commission shall declare this registration statement to be effective, that the Company’s Common Stock is not suspended from trading on its principal market, and that the Company has complied with certain representations and covenants in the investment agreement and registration rights agreement with Dutchess. In addition to conditions, the Equity Line also contains certain late payments payable by the Company to Dutchess in the event that the Company fails to deliver the shares purchase under a Put to Dutchess in a timely manner. Both the investment agreement and registration rights agreement with Dutchess are attached as exhibits to the registration statement for which this prospectus is a part.

     There is an inverse relationship between the price of a share of our Common Stock and the proceeds to the Company. This means that as our stock price declines, we would be required to issue a greater number of shares under the Equity Line for a given advance. This inverse relationship is demonstrated by the following table, which assumes that 5,000,000 shares of Common Stock are to be issued under the Equity Line at a price per share of $1.50, $1.00, $.75 and $.45:

     The issuance of shares under the Equity Line may result in a change of control in certain situations. That is, in the event that the Company were to sell to Dutchess the maximum amount of $10,000,000 available under the Equity Line at the minimum purchase price of $.45 per share, then the Company would issue 22,222,222 shares of Common Stock to Dutchess. If all or a significant block of these shares are held by one or more stockholders working together, then such stockholder or stockholders would have enough shares to assume control of the Company by electing its or their own directors.

     Proceeds generated from sales of Common Stock under the Equity Line will be used in the manner set forth in the “Use of Proceeds” section of this prospectus. We cannot predict the total amount of proceeds to be raised under the Equity Line because we have not determined the total amount of the advances we intend to draw under the Equity Line.

     We expect to incur expenses of approximately $85,000 in connection with this registration statement, consisting primarily of professional fees. In connection with the Equity Line, we paid a legal fee to Dutchess of $5,000. The Company will also pay to the Placement Agent an additional fee of 1% of the gross aggregate proceeds

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from each put delivered by the Company to Dutchess under the Equity Line (subject to an aggregate fee limit of $10,000).

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Shares of our Common Stock are traded on the OTCBB under the symbol “IBSS.OB”. The following table sets forth the high and low bid prices per share of our Common Stock for the indicated periods.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     Overview

     IBSS’ proprietary Synapse™ technology enables better security because it is not susceptible to the same hacker activities related to viruses which currently plague today’s commodity technologies. In addition to a new level of control and security, IBSS, by owning and controlling its own technology with which it creates on-line applications, can offer its customers a flexible business relationship that can entertain custom extensions, unique licensing arrangements and certain exclusivities in a customer’s vertical market.

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     The above described value proposition enables IBSS to respond to a customer’s unique set of needs and allows IBSS working with the customer to rapidly produce solutions specific to those needs. This is the Company’s primary advantage that has allowed it to succeed over the years where other technology companies have failed. This advantage would not be possible if it were not for the Company’s key asset- Synapse™, a platform and framework for dynamic, distributed, real-time software applications.

     With Synapse™, IBSS creates customer specific solutions quickly and easily without the need to rely on any other vendors’ technologies, thus dramatically lowering the risks and costs of providing these solutions and eliminating dependence on third-party software technology components or licensing to support development, integration and deployment of these solutions.

     The fact that IBSS does not have to rely on vendors like Microsoft, Oracle, IBM, or others for the development architecture and framework, or pay run-time license fees for deployment of its applications, gives IBSS a unique competitive advantage in the market place by virtue of increased business leverage and control, added financial security and licensing and pricing flexibility.

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intensive, rather than hardware intensive, projects. Our gross margin for hardware sales for 2003 was approximately 31%, as compared with 22% in 2002.

     Revenues

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     Cost of Revenue

     Operating Expenses

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     Bad debt expense decreased to $51,126 from $232,292 in 2001. During our spinoff of WilCam Systems, LLC, as detailed above, we elected to increase the reserve applied to the note receivable from WilCam Systems, LLC, resulting in a charge to bad debt expense of $232,292 in 2001 and an additional $50,000 in 2002.

     Liquidity and Capital Resources

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DESCRIPTION OF BUSINESS

     General Overview

     Further, IBSS’ proprietary Synapse™ technology reduces customer vulnerability to the types of hacker and virus threats to which more ubiquitous, commodity technologies are prone. By owning and controlling its own technology with which to create on-line applications, IBSS can offer its customers a flexible business relationship that can entertain custom extensions, unique licensing arrangements and certain exclusivities in the customers’ vertical market.

     The value-based proposition, described above, enables IBSS to carefully tailor its services and software to respond to a customer’s unique set of needs and to rapidly produce solutions specific to those needs. This is IBSS’s main competitive advantage, allowing it to succeed over the years where other technology companies have failed. This advantage would not have been possible if it were not for the Company’s key asset — Synapse™ a platform and framework for dynamic, distributed, real-time software applications.

     With Synapse™, IBSS creates customer specific solutions quickly and easily without the need to rely on any other vendors’ technologies, thus dramatically lowering the risks and costs of providing these solutions. In addition, Synapse™ also eliminates dependence on third-party software technology components or licensing to support development, integration and deployment of these solutions.

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     Synapse™ provides a framework and methodology for creating, implementing and managing a wide variety of dynamic distributed, networked and real-time enterprise applications, quickly and efficiently, across multiple locations (such as headquarters and field offices). This flexible, connectable, logical IBSS software platform is especially valuable when automating transaction oriented business processes. The Synapse™ framework combined with IBSS’ methodology greatly simplifies the integration of disparate systems and the incorporation of emerging technologies, like wireless and auto-ID, where a lack of standards or protocols and the constant introduction of new devices are the norm. Synapse™ delivers time and cost savings in the development, deployment and on-going management of customized applications. IBSS continues to enhance the product, most recently introducing Synapse™ Composer, a powerful, simplified management tool, and Synapse™ Thin Web, a powerful, high performance thin client which can be configured from within Synapse™.

                    The Synapse™ Technology

     The Synapse™ platform and framework is designed to be the glue in heterogeneous environments, easily interacting with and extending disparate and best-of-breed applications and operating environments, database management systems, and legacy applications. The Company believes that one of the greatest challenges for information technology (“IT”) organizations is the fact that today’s technologies do not adequately address the complexity inherent in aggregating applications from distributed systems, networks, and devices. Software developers describe how their applications are distributed directly within the Synapse™ model, and never have to resort to another language or tool.

                    Synapse™Advantages

     Synapse™-based applications provide the following advantages to organizations in monitoring, maintaining and integrating their business systems, applications and processes, both internally and with their external electronic relationships:

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     Existing Synapse™ Licensed Offerings

     As noted above, our objective is to become the nation’s vendor-of-choice among businesses seeking the most advanced and cost-effective systems tracking and integration solutions. We are currently focusing our marketing of our Synapse™-based offerings through the following three modules:

     Synapse for Manufacturing™

     Synapse for Manufacturing™ provides on-line process management for manufacturing shop floor environments. This application utilizes our proprietary on-line transaction processing configuration environment to provide maximum configurability, maintainability and efficiency for our customers’ systems. The system is designed so that a manufacturing or industrial analyst can configure the unique processes and process requirements of a manufacturing facility without the typical costs and development time associated with the application programming required of competing MES applications.

     Synapse for Manufacturing™ is based on a “bill of operations” concept and can be configured to provide detailed shop floor management for any specific manufacturing facility, in many cases without requiring the customer to modify its manufacturing shop floor methodologies or procedures. As a result, customers are able to achieve a return on their IT investment more quickly than by using other MES systems. Other MES applications are based on current application development tools to achieve “configurable” shop floor applications specific to individual manufacturing industries such as electronics, food processing or pharmaceuticals. Synapse for Manufacturing™ is designed to allow a manufacturing industrial analyst to configure MES applications for any manufacturing industry, effectively eliminating the need to also involve traditional computer programmers for custom software development.

     Synapse Integrated Development Environment™ with The Synapse Composer™

     Synapse Composer™ is a next generation software application development tool. Synapse Composer™ enables the developer to see all of the functional components of the customer’s software applications in a single view. Armed with this unified view of the customer’s entire system, the customer can use Synapse Composer™ in

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one unified and complete development environment to create, troubleshoot and modify every dimension of its software applications, all in real time, and all while the customer’s systems are up and running.

     Synapse Enterprise Application Server™

     The Synapse Enterprise Application Server™ provides a complete runtime framework for the efficient execution, integration and management of wireless on line transaction processing applications. It is capable of performing all of an organization’s wireless and automatic identification software functions within one productive framework.

     The Synapse Enterprise Application Server™ is a platform on which customers deploy their particular Synapse™ based solutions for their wireless, mobile data, and automatic identification and tracking application needs. Synapse Enterprise Application Server ™ provides operating platform, database, network, and device services all within a single integrated framework. This allows customers the maximum capability to manage all of their enterprise wireless and other on-line transaction processing (“OLTP”) needs from within a single software framework, assuring maximum efficiency when creating applications for dynamic, distributed, OLTP solutions.

     Customer Support

     Customer support is provided for all of our maintenance customers. IBSS customer support is staffed by experienced IBSS professionals focused on resolving problems and assuring that our customers are satisfied. Our Customer Support Center is available 24 hours a day, 7 days a week.

     Consulting Services and the Synapse™ Methodology

     Project scope

     Business Requirements Analysis

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     Application Design

     Application Development and Configuration

     Implementation

     Project Management

Customer Education and Training

     We offer comprehensive training courses for our customers and partners with the goal of ensuring each customer’s success with our software applications. Training is also available for third-party consultants. Services include project team training classes, end-user training classes and consulting services.

     Sales and Marketing

     The Company also offers a range of licensing packages, including server licensing, concurrent user licensing, and licenses for vertical and advanced option components and offers both OEM (Synapse™ Inside) and reseller relationships

     The Company markets and licenses its software products in North America primarily through its direct sales and marketing and business development organization. Our growth strategy focuses on working with businesses that will not only use our technology and services in new and profitable ways, but will also be deploying the resulting solution to their supply chain or for resale to their vertical market.

     Our Sales and Growth Strategies

     Expand and Leverage Strategic Relationships. We intend to access new markets and distribution channels by continuing to establish and leverage business relationships customers who bring new vertical market expertise, where IBSS can help them build and deploy a new product for their use and for resale in their vertical market where they have expertise. As a result, we expect to enhance our customer base, cultivate additional market expertise, and achieve our growth objectives more quickly and cost-effectively.

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     Target Vertical Markets with Industry Focused Solutions. We believe that we have a competitive edge in providing e-business solutions to organizations requiring the rapid creation of new applications or more efficient handling of the frequent changes or adjustments to their existing systems and applications, as well as the integration of those systems and applications. Our belief is a function of the demonstrated ability of Synapse™ to provide these dynamic solutions more quickly and at a lower cost than our competition.

     We have currently developed and have implemented these solutions for organizations in such diverse marketplaces as textile and apparel manufacturing, airport special services, furniture manufacturing, commercial printing, and automotive. Accordingly, we have specifically focused our business development efforts in these targeted industries where we believe our Synapse™ products provide us with the greatest competitive advantages. We expect to benefit significantly from the vertical market potential offered by each of these targeted industries, and we intend to dedicate more sales and marketing resources to establish more strategic alliances to penetrate these industries.

     Enhance the Synapse™ Product and Technology Leadership. We believe that in Synapse™ and its related suite of products, we have developed the broadest, most comprehensive and most cost-effective e-business solution to address the needs of an organization in a dynamic business environment. We have filed a patent application on our basic Synapse™ technology. We intend to continue investing in research and development to enhance the capability of Synapse™ to provide solutions that will enable our customers’ operations to be more efficient and extend their organizations more rapidly and cost effectively. Currently, our development efforts are focused on continuing to enhance the performance and configuration productivity capabilities of Synapse™.

     Consistent with revenue growth, our objective is to expand upon our experienced team of developers and engineers and further enhance our corporate culture to foster innovation in the product development, application configuration and design areas. Furthermore, we are constantly assessing available opportunities to achieve synergies through the acquisition of complementary technologies or businesses that we believe will further our growth strategy.

     Leverage Customer Base through Network Effect. We intend to provide the best possible service to our installed base of customers in order to expand the use of our Synapse™ products within our customers’ organizations. The strategic importance of the Synapse™ products to our customers is expected to provide what we believe will become the foundation for our preferred access to additional projects within their organizations. This visibility to our customers’ senior management, combined with our focused implementation and service approach, is expected to facilitate the rapid adoption and deployment of the Synapse products throughout the customer’s enterprise.

     Furthermore, as our customers deploy the use of the Synapse™ products throughout their extended organizations, including their supply chains and electronic markets, their customers, suppliers and partners will be exposed to the robust scope of the functionality provided by the Synapse™ products in the context of the exchange of mission-critical business information. We believe that this exposure, which will allow non-customer participants in the supply chain to benefit from the Synapse™ solution first-hand, should enable us to create a powerful network effect in the acceleration of industry recognition and adoption of our Synapse™ products. Therefore, we are focused on this positioning to leverage our opportunities across multiple target markets in order to grow our revenue base.

     Research and Development

     Intellectual Property

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in the process of obtaining all related patent rights to our core technology, the Synapse™ model, in the United States and internationally.

     Competition and Markets

     During the last ten years, businesses have invested heavily in enterprise applications to automate and improve the efficiency of their internal business processes. In parallel, there has been a shift from in-house custom development of mission-critical applications to the purchase of packaged applications and related services from third-party vendors. These applications have spread throughout the business world addressing many highly strategic business functions, including resource planning, supply chain management, customer relationship management, sales force automation, business decision support and e-commerce. In this new corporate environment, a single business process can require access to data and information from many distinct applications, none of which is designed to communicate seamlessly and in real-time with the others.

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     In summary, we believe that the primary competitive factors which affect the market for our products and services include product function and features; quality of service offered; performance and cost; ease of implementation; the “time-to-benefit” factor (the time period from identification of technology need or “fix” to delivery of the application solution); quality of customer support services; customer training and documentation; a project and implementation methodology which mitigates risk and product reputation. The relative weight of each of these factors is customer-specific. Although we believe that our products and services carry a unique value proposition, with respect to each of these factors, we must continue to invest in our business to maintain our position against current and future competition.

     Employees

DESCRIPTION OF PROPERTY

     The Company does not own any real property. With regards to leased real property, the Company is party to an office lease agreement for the lease of its corporate headquarters. Under that certain lease agreement dated October 8, 2002 (“Lease”) with Pinebelt, LLC, a South Carolina limited liability company (“Landlord”), the Company leases 7,400 useable square feet of office space at the Ten Oaks Office Center, a 57,000 square foot office center located in Columbia, South Carolina. The Company leases the office space for a period of 120 calendar months and the current term of the Lease will expire on January 31, 2013. Under the terms of the Lease, the Company obligated to pay to Landlord base rental of $36,000 per calendar year, payable in equal monthly installments of $3,000 each. The Lease provides for common area maintenance (“CAM”) charges, which the Company is obligated to pay its pro-rata share of. CAM charges are adjustable and are currently at least $1.00 per annual gross square foot of the leased property (or $0.083 per monthly gross square footage). The Lease also provided for a $50,000 security deposit, the first $10,000 of which was payable on or before December 15, 2002, the second $10,000 of which was payable on or before January 15, 2003, and four installments of $7,500 each were due every 30 calendar days after January 15, 2003. The Company is obligated to indemnify Landlord for usual and customary costs and liabilities, including claims arising from the Company’s use of the leased property and breach or default in performances by the Company of any of its obligations under the Lease.

MANAGEMENT

     The executive officers and directors of the Company, and their respective ages and positions as of March 31, 2004, are as follows:

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the industrial automation industry includes the design of a variety of computer control systems, such as airport lighting, industrial machine tool control, inventory control and shop floor control systems. Mr. Massey received a Bachelor of Science degree in Electrical and Computer Engineering from the University of South Carolina in 1986.

     George E. Mendenhall, Ph.D., 66, has served as Chairman of the Board and Chief Executive Officer of the Company since September 2001. Prior to that time, he had served since January 1998 as Vice President of Application Development of the Company and since May 1995 as Executive Vice President of the Company. He initially became an employee of the Company in February 1994, serving as the Director of Industrial Consulting. He has served as a director of the Company since May 1995. Dr. Mendenhall has conducted academic research and taught economics and other courses at Indiana University and Indiana Institute of Technology. In addition, he has published articles concerning research and evaluation techniques, and has been quoted in such periodicals as Computer World and Industry Week. Before joining the Company, Dr. Mendenhall provided consulting services and computer systems to various large manufacturing companies on an independent basis and, from 1990 through February 1994, provided consulting services to the Company. From 1984 until 1989, Dr. Mendenhall was the President of Synergistic Business Infrastructures Corporation, a computer systems integrator based in Fort Wayne, Indiana that specialized, among other things, in the conceptualization, design and implementation of manufacturing shop floor systems, data collection systems and material tracking systems. Dr. Mendenhall received a Bachelor of Science degree in Economics from Manchester College in 1960 and a Master of Arts degree and a Ph.D. from Indiana University in 1968 and 1978, respectively.

     Donald R. Futch, 53, has served as Vice President of Business Development of the Company since April 13, 1999. Prior to that date, he served as Vice President of Operations since joining the Company in January 1998. Mr. Futch is responsible for developing corporate strategic relationships and indirect distribution channels. Mr. Futch has over 20 years of marketing and technical management experience in the computer technology industry working with companies including Electronic Merchant Services, Telequest and Unysis. Prior to joining the Company, Mr. Futch was employed with AT&T as a regional data specialist and data sales executive. He has extensive experience in product development in the transaction processing industry and holds a patent in transaction processing for telecommunications based home banking. Mr. Futch has a Masters of Business Administration degree with an emphasis in Marketing Research from the University of South Carolina.

     Carl Joseph Berger, Jr., 67, has served as a director of the Company since June 1998. He retired in 1997 from Springs Industries, Inc., a leading manufacturer and marketer of home furnishings, after serving for eight years as Corporate Director for Electronic Data Interchange. During his thirty years with Springs Industries, Inc., Mr. Berger served the company in various positions, including Director of Distribution. Prior to his service with Springs Industries, Inc., he worked in various positions with Milliken and Company and M. Lowenstein Corporation where he served as General Product Manager with Wamsutta Mills in New York. He has served on numerous boards and committees, including the District Three School Board in Rock Hill, South Carolina, where he served for eleven years as Board Treasurer. Mr. Berger received his Masters of Business Administration degree from Winthrop University and a Bachelor of Science degree from the University of Georgia majoring in accounting.

     Richard D. Pulford, 58, has served as a director of the Company since October 3, 2002. He has served as President of Corporate Strategies, Inc., (“CSI”), since he founded CSI in 1981. CSI provides investment banking services in the Great Lakes region of the United States. The primary focus of CSI has been in the technology arena. Under Mr. Pulford’s direction, CSI has been a contributor in equity capital fund-raising endeavors for technology start-up companies. Mr. Pulford also operates in a sales consultant capacity in the automotive industry for a variety of technology companies, and has provided such services in the past for the Company. Prior to forming CSI, Mr. Pulford owned and operated a consulting practice specializing in financing acquisition transactions for operating companies. Mr. Pulford also held positions in the marketing field after receiving his Masters of Business Administration degree in Finance.

     Dollie A. Cole, 73, has served as a director of the Company since December 5, 2002. She has been involved for many years in the leadership of several business, charitable and civic organizations. Dr. Cole is Chairman of the Dollie Cole Corporation, a venture capital and industrial consulting firm. She serves on the Board of Directors of HPSC, Inc. (AMEX:HDR), a leading national provider of capital to healthcare professionals. In addition to these business activities, Dr. Cole also serves as Vice Chairman of the Smithsonian Institution’s National Air and Space Museum, Past Chairman of the National Corvette Museum, Vice President of the Pegasus School for Abused Boys, and serves or has served on the boards of the 100 Club of Central Texas, Project HOPE — the World Health Organization, the National Captioning Institute for the Hearing Impaired, the President’s Circle of the

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National Academy of Science, the President’s Club of the University of Michigan, and Michigan State Chancellor’s Club — Oakland University.

     Mr. Pulford is a party to a sales representative and marketing agreement with the Company that provides for certain payments to Mr. Pulford for his services as a sales representative for the Company. See the section of this prospectus below entitled “Certain Related Party Transactions.”

     The directors of the Company who are executive officers of the Company are not separately compensated for serving as directors of the Company. All directors of the Company are reimbursed by the Company for all out-of-pocket costs and expenses reasonably incurred by them in the discharge of their duties as directors, including out-of-pocket expenses incurred in attending meetings of the Board of Directors and its committees. Non-employee directors receive discretionary annual grants of stock options.

     The Board of Directors has established the following two standing committees of the Board: the Audit and Risk Management Committee and the Compensation and Human Resources Committee.

     The Board of Directors has not established a separate committee to perform the functions traditionally associated with a nominating committee. Such functions are currently performed by the Board of Directors acting as a whole. The Board of Directors will consider nominees recommended by the shareholders for election as directors at any annual meeting of the Company, provided the nomination is made in writing and properly identifies the shareholder making the nomination as a shareholder of record entitled to vote at such meeting; includes the consent of the nominees to serve, if elected, and the representation of the nominating shareholder to appear in person or by proxy to nominate the identified nominees; provides pertinent information concerning the nominee’s background, experience and any arrangement or understanding between the nominating shareholder and the nominee pursuant to which the nomination is made; and is delivered to the Secretary of the Company no later than ninety days prior to the annual meeting, unless the Company notifies the shareholders otherwise.

     The Audit and Risk Management Committee is composed of Mr. Berger, Mr. Pulford and Ms. Cole. Each of Mr. Berger and Ms. Cole have been determined to be independent as defined in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended. The Audit and Risk Management Committee does not have a “financial expert,” as defined in Item 401(e)(2) of Regulation S-B under the Securities Act, because the Company has been unable to identify a suitable potential director meeting those qualifications. Under the guidance of a written charter adopted by the Board of Directors, the Audit and Risk Management Committee is responsible for recommending to the Board of Directors the retention of independent auditors, reviewing the scope of the annual audit undertaken by the Company’s independent auditors and the progress and results of their work, and reviewing the financial statements of the Company and its general accounting and auditing procedures.

     The Compensation and Human Resources Committee is composed of Mr. Berger, Mr. Pulford and Ms. Cole. The functions of the Compensation and Human Resources Committee include reviewing and approving

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (1) Beneficial ownership reflected in the table is determined in accordance with the rules and regulations of the Commission and generally includes voting or investment power with respect to the securities. Except as otherwise specified, each of the shareholders named in the above referenced table has indicated to us that the shareholder has sole voting and investment power with respect to all shares of Common Stock beneficially owned by that shareholder.

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2004 through 5:00 p.m. eastern standard time on December 31, 2006. See “Description of Securities – Debt Securities” and “Selling Shareholders.”

     (4) The address for this beneficial owner is 1601 Shop Road, Suite E, Columbia, SC 29201.

     (5) Shares indicated as being owned include 2,184,874 shares issuable upon the exercise of common stock purchase options.

     (6) Shares indicated as being owned include 2,229,152 shares issuable upon the exercise of common stock purchase options.

     (7) The address for this beneficial owner is 1085 Riverside Trace, Atlanta, Georgia 30328-3642.

     (8) Shares indicated as being owned include 1,000,000 shares issuable upon exercise by GCA of two separate common stock purchase warrants, one for 937,500 shares and the other for 62,500 shares of Common Stock. As discussed above, these warrants were issued to GCA in connection with the GCA Financing.

     (9) Shares indicated as being owned include 125,000 shares issuable upon the exercise of common stock purchase options.

     (10) Shares indicated as being owned include 488,736 shares issuable upon the exercise of common stock purchase options.

     (11) Shares indicated as being owned include 75,000 shares are issuable upon the exercise of common stock purchase options.

     (12) Shares indicated as being owned include 5,211,628 shares issuable upon the exercise of common stock purchase options.

EXECUTIVE COMPENSATION

     Summary Compensation Table

     The table below summarizes all compensation awarded to, earned by, or paid to our executive officers by any person for all services rendered in all capacities to us for the fiscal period ended December 31, 2003.

     (1) Pursuant to the terms of the new employment agreements (referenced below in the section of this prospectus entitled “Executive Compensation”) for each of the above named executive officers, one stock option is exercisable or convertible into one share of Common Stock of the Company. Consequently, each executive officer

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shall receive a number of securities underlying the stock options equal to the number of stock options granted during this period.

Option/SAR Grants in Last Fiscal Year
(Individual Grants)

     (2) The 5,037,255 stock options referenced above that were granted to Mr. Mendenhall in 2003 were granted in more than one grant. 5,000,000 were granted pursuant to the new employment agreement with Mr. Mendenhall dated October 1, 2003 (discussed below) and the remainder were granted as part of the Company’s 2003 salary cuts. Of the initial grant of 5,000,000 shares, 2,000,000 vested on October 1, 2003 and 3,000,000 will vest on October 1, 2005. The remaining 37,255 shares vested on August 15, 2003 and were granted in exchange for the Company’s decision to cut $5,066.67 of salary due and owing to Mr. Mendenhall from March 2003 to August 2003.

     (3) The 5,037,255 stock options referenced above that were granted to Mr. Massey in 2003 were granted in more than one grant. 5,000,000 were granted pursuant to the new employment agreement with Mr. Massey dated October 1, 2003 (discussed below) and the remainder were granted as part of the salary cuts discussed below. Of the initial grant of 5,000,000 shares, 2,000,000 vested on October 1, 2003, and 3,000,000 will vest on October 1, 2005. The remaining 37,255 shares vested on August 15, 2003 and were granted in exchange for the Company’s decision to cut $5,066.67 of salary due and owing to Mr. Massey from March 2003 to August 2003.

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The remaining 31,863 shares vested on August 15, 2003 and were granted in exchange for the Company’s decision to cut $5,066.67 of salary due and owing to Mr. Futch from March 2003 to August 2003.

     The current terms of the new employment agreements (see section of this prospectus below entitled “Employment Agreements”) for each of the three above referenced executive officers of the Company provide that the exercise prices for the stock options granted in 2003 are subject to adjustments contemplated with respect to options granted under the Company’s 2001 Stock Incentive Plan (the “Stock Plan”). Such adjustments include, without limitation, subsequent stock splits, stock dividends, recapitalizations, or similar events. Many of these types of adjustments could cause the exercise price for each stock option above to be lowered in certain situations. In the event that the exercise price were lowered as a result of such adjustments, the named executive would receive an added economic benefit by being able to receive a share of Common Stock upon exercise of a stock option at an exercise price less than that originally received under the terms of the Stock Plan and the new employment agreements with the Company’s executive officers.

Aggregated Option/SAR Exercises in Last
Fiscal Year and Fiscal Year End Option/SAR Values

     Employment Agreements

     Mendenhall Agreement. The Company was party to an employment agreement with George E. Mendenhall, Ph.D., dated January 1, 1997, as amended September 1, 1997 and January 1, 1999. The prior January 1, 1997 employment agreement has been superceded by a new employment agreement between the Company and Mr. Mendenhall dated October 1, 2003.

     Under the terms of the new employment agreement, Mr. Mendenhall is employed by the Company for a period of four years ending on December 31, 2007. The term is to be automatically renewed for additional term of one year each, unless the Company decides to elect not to renew within 180 days prior to expiration of the then current term. Mr. Mendenhall receives several forms of performance and non-performance based compensation. His non-performance based compensation includes annual base compensation of $152,000, eligibility for an annual bonus, participation in the Company’s existing benefit programs for executive officers, reimbursement of reasonable expenses, and a grant of 5,000,000 stock options convertible into Common Stock at the exercise price of $0.14 per share. 2,000,000 of these stock options are fully vested as of October 1, 2003. The remaining 3,000,000 of these stock options vest on October 1, 2005. The remainder of Mr. Mendenhall’s options for fiscal year 2003, or 37,255 options, were granted as penny stock options in connection with the Company’s decision to make across the board salary cuts for executive officers and employees in 2003 (see the section of this prospectus above entitled “Executive Compensation”).

     The new employment agreement with Mr. Mendenhall provides for accelerated vesting of all unvested options upon a change of control of the Company (as defined in the agreement) and permits the Company to terminate Mr. Mendenhall’s employment with or without cause. In the event that the Company does so with cause (as defined in the agreement), Mr. Mendenhall forfeits a variety of compensation and other benefits enumerated in the agreement (excluding vested stock options). In the event the Company does so without cause, the Company is required to pay to Mr. Mendenhall (i) all accrued and unpaid salary, bonuses and all unreimbursed expenses, (iii) severance compensation equal to 18 months of base salary at the rate of base salary in effect immediately preceding the date of termination but not less than $152,000 per year, (iii) all unvested stock options referenced above, and (iv)

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all other employee benefits granted in the agreement that are received by Mr. Mendenhall at the time of termination. Finally, the new employment agreement obligates Mr. Mendenhall to certain confidentiality and non-competition covenants.

     Massey Agreement. The Company was also party to an employment agreement with Stuart E. Massey dated December 31, 1996, and amended September 1, 1997. The prior employment agreement with Mr. Massey has been superceded by a new employment agreement between the Company and Mr. Massey dated October 1, 2003.

     Under the terms of the new employment agreement, Mr. Massey is employed by the Company for a period of four years ending on December 31, 2007. The term is to be automatically renewed for additional term of one year each, unless the Company decides to elect not to renew within 180 days prior to expiration of the then current term. Mr. Mendenhall receives several forms of performance and non-performance based compensation. His non-performance based compensation includes annual base compensation of $152,000, eligibility for an annual bonus, participation in the Company’s existing benefit programs for executive officers, reimbursement of reasonable expenses, and a grant of 5,000,000 stock options convertible into Common Stock at the exercise price of $0.14 per share. 2,000,000 of these stock options are fully vested as of October 1, 2003. The remaining 3,000,000 of these stock options vest on October 1, 2005. The remainder of Mr. Massey’s options for fiscal year 2003, or 37,255 options, were granted as penny stock options in connection with the Company’s decision to make across the board salary cuts for executive officers and employees in fiscal year 2003 (see the section of this prospectus above entitled “Executive Compensation”).

     The new employment agreement with Mr. Massey provides for accelerated vesting of all unvested options upon a change of control of the Company (as defined in the agreement) and permits the Company to terminate Mr. Massey’s employment with or without cause. In the event that the Company does so with cause (as defined in the agreement), Mr. Massey forfeits a variety of compensation and other benefits enumerated in the agreement (excluding vested stock options). In the event the Company does so without cause, the Company is required to pay to Mr. Massey (i) all accrued and unpaid salary, bonuses and all unreimbursed expenses, (iii) severance compensation equal to 18 months of base salary at the rate of base salary in effect immediately preceding the date of termination but not less than $152,000 per year, (iii) all unvested stock options referenced above, and (iv) all other employee benefits granted in the agreement that are received by Mr. Massey at the time of termination. Finally, the new employment agreement obligates Mr. Massey to certain confidentiality and non-competition covenants.

     Futch Agreement. The Company was also party to an employment agreement with Donald R. Futch dated January 1, 1999. The prior employment agreement with Mr. Futch has been superceded by a new employment agreement between the Company and Mr. Futch dated October 1, 2003.

     Under the terms of the new employment agreement, Mr. Futch is employed by the Company for a period of four years ending on December 31, 2007. The term is to be automatically renewed for additional term of one year each, unless the Company decides to elect not to renew within 180 days prior to expiration of the then current term. Mr. Futch receives several forms of performance and non-performance based compensation. His non-performance based compensation includes annual base compensation of $115,000, eligibility for an annual bonus, participation in the Company’s existing benefit programs for executive officers, reimbursement of reasonable expenses, and a grant of 800,000 stock options convertible into Common Stock at the exercise price of $0.14 per share. 300,000 of these stock options are fully vested as of October 1, 2003. The remaining 200,000 stock options vest on October 1, 2005. The remainder of Mr. Futch’s options for fiscal year 2003, or 31,863 options, were granted as penny stock options in connection with the Company’s decision to make across the board salary cuts for executive officers and employees in 2003 (see the section of this prospectus above entitled “Executive Compensation”).

     The new employment agreement with Mr. Futch provides for accelerated vesting of all unvested options upon a change of control of the Company (as defined in the agreement) and permits the Company to terminate Mr. Futch’s employment with or without cause. In the event that the Company does so with cause (as defined in the agreement), Mr. Futch forfeits a variety of compensation and other benefits enumerated in the agreement (excluding vested stock options). In the event the Company does so without cause, the Company is required to pay to Mr. Futch (i) all accrued and unpaid salary, bonuses and all unreimbursed expenses, (iii) severance compensation equal to 18 months of base salary at the rate of base salary in effect immediately preceding the date of termination but not less than $115,000 per year, (iii) all unvested stock options referenced above, and (iv) all other employee benefits granted in the agreement that are received by Mr. Futch at the time of termination. Finally, the new employment agreement obligates Mr. Futch to certain confidentiality and non-competition covenants.

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     McMaster Agreement. On June 30, 2003 the Company terminated its prior employment with William S. McMaster dated May 30, 2000 in connection with Mr. McMaster’s tender of his resignation. At the time this employment agreement was terminated, the Company owed Mr. McMaster $250,651.37 in deferred wages and accrued interest thereon. The Company is currently making monthly payments to Mr. McMaster of these deferred wages (and interest) in the amount of $9,548.62 each.

CERTAIN RELATED PARTY TRANSACTIONS

     The Company is party to a sales representative and marketing agreement with one of its directors, Richard D. Pulford, dated September 16, 2003 (the “Sales Agreement”). Under the terms of the Sales Agreement, Mr. Pulford is to act as an exclusive sales representative with respect to certain of the Company’s customers and a non-exclusive sales representative with respect to others and must use his best efforts to market the Company’s products worldwide in order to generate sales revenues. Mr. Pulford cannot market or sell any products that are competitive with those sold by the Company. Mr. Pulford is also obligated to perform other services for the Company, including, but not limited to, coordinating the efforts if the Company’s sales staff in working with existing clients, introducing specified customers and vendors of the Company to other customers and vendors to explore synergistic relationships, introducing financial resources to the Company’s customers, strategic partners, customers, and vendors where such financing will be directly beneficial to the Company, and searching for corporate partnering or acquisition opportunities for the Company.

     The term of the Sales Agreement is for 10 years from its date and may be renewed for successive additional renewal periods of two years each, unless one party delivers a notice not to renewal within 90 days of the expiration of the then existing term. The Company is permitted to terminate Mr. Pulford upon written notice for breach of an term or provision of the Sales Agreement, but must provide him 30 days in which to cure any such breach. Mr. Pulford is obligated to indemnify the Company for specified losses that result from alleged misrepresentations or other actions and the Company has a right to audit and inspect the accounts and records generated by Mr. Pulford’s as a result of his sales and marketing activities.

     In exchange for these services, the Company granted to Mr. Pulford three forms of compensation. The first are stock options to purchase up to 1,000,000 shares of Common Stock at an exercise price of $0.14 per share, which was the then market price of a share of Common Stock on September 16, 2003. The stock options granted to Mr. Pulford vest at the rate of 1 share for each net dollar of revenue that Mr. Pulford directly on indirectly adds to the Company’s gross revenue. Net revenue is defined as license revenue, service revenue, maintenance revenue, and hardware revenue minus the cost of the hardware as well as net income that might be added to the Company’s net income by acquisition.

     The second is a non-refundable monthly cash advance of $10,000 per month (which is taken only out of the Company’s excess cash) (each, a “Draw Payment”). Each Draw Payment is applied against future commissions and the aggregate of all Draw Payment cannot exceed $175,000 in the aggregate over the term of the Sales Agreement.

     The third is a delayed signing bonus, which provides that the Company is to pay to Mr. Pulford on the earlier of (i) the 5th anniversary of the Sales Agreement (or September 16, 2008) or (ii) a “change in control” of the Company (as defined in the Sales Agreement), a lump sum in the amount of $175,000, less the amount of all Draw Payments actually paid to Mr. Pulford.

     In addition to the Sales Agreement, the Company entered into several transactions in fiscal year 2003 pursuant to which it issued to members of its Board of Directors stock options as compensation for their service on the board and various committees thereof. For more detail on these issuances, see the section above of this prospectus entitled “Management.”

DESCRIPTION OF SECURITIES

     All material provisions of our capital stock are summarized in this prospectus. However the following description is not complete and is subject to applicable South Carolina law and to the provisions of our Articles and

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bylaws (“Bylaws”). Copies of our Articles and Bylaws were filed as an exhibit to our Form 1-A currently on file with the Commission. Both the Articles and Bylaws are referenced on the Exhibit Index attached hereto.

     Capital Stock

     Holders of Common Stock of the Company have the voting rights equating to one vote per outstanding shares of Common Stock on all matters upon which shareholders are entitled to vote. Holders of Common Stock have no cumulative voting rights with respect to the election of directors or conversion, preemptive or other subscription rights. However, holders of Common Stock but are entitled to have dividend, distribution, and liquidation rights granted by South Carolina law or declared by resolution or resolutions of the Board from time to time out of funds legally available. We have never paid any cash dividends on our Common Stock and, given the Company’s current financial condition, our management has no plans to declare cash dividends in the foreseeable future. Accordingly, this investment may be inappropriate for you if you need dividend income from an investment in the Shares.

     Holders of common stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock.

     All of the Shares offered hereby, when issued in exchange for the consideration paid as set forth in this Prospectus or converted upon proper exercise of the Warrants, as the case may be, will be fully paid and nonassessable. Our directors, at their discretion, may borrow funds without your prior approval, which potentially further reduces the liquidation value of the Shares offered hereunder.

     Finally, holders of Common Stock have no right to acquire additional shares of Common Stock based upon the percentage of our Common Stock you own when we sell more shares of our Common Stock to other investors. This is because we do not provide our stockholders with any anti-dilution or preemptive rights to subscribe for or to purchase any additional shares offered by us in the future. The absence of these rights could, upon our sale of additional shares of Common Stock to other investors, result in a dilution of the percentage ownership that you hold as a result of your purchasing the Shares offered in this prospectus.

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     Warrants

     The GCA Warrants entitle GCA to purchase from the Company at any time until December 31, 2008, up to 1,000,000 GCA Warrant Shares (one for 937,500 shares and the other for 62,500 shares of Common Stock), which are fully paid and nonassessable shares of Common Stock. The Aggregate Warrant Price of $375,000 (which represents the cost of purchasing all of the GCA Warrant Shares) was computed under the terms of the GCA Financing as $0.40 per share (the “Per Share Warrant Price”), which is the exercise or strike price for converting one Warrant into one Warrant Share (or one share of Common Stock). Under the terms of the Warrants, the Aggregate Warrant Price is not subject to adjustment. However, the Per Share Warrant Price is subject to adjustment for, among other things, subsequent dilutive issuances by the Company and other adjustments for certain dividends, distributions, subdivisions, recombinations, reclassifications, reorganizations, consolidations, mergers or sales of assets. The terms of the GCA Warrants also provide that the holder shall not be permitted to exercise the warrants to the extent that any such exercise would cause the holder to become a beneficial owner of more than 5% of the Company’s outstanding Common Stock.

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     Anti-Takeover Protections.

     Various provisions in our Articles, our Bylaws and in the South Carolina corporation statutes could deter and make it more difficult for a third party to bring about a merger, sale of control, or similar transaction involving the Company without approval of our board of directors, even if the transaction would be beneficial to our shareholders. These anti-takeover provisions make it less likely that a change in control will occur and tend to perpetuate existing management. The Company’s current anti-takeover provisions currently include:

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     In addition, the South Carolina Business Combination Act, the South Carolina Control Share Acquisition Act and the vesting terms of our stock option plans may discourage, delay or prevent a change in control of our company.

PLAN OF DISTRIBUTION

     The selling shareholders and any of their respective pledgees, donees, assignees, and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the OTCBB or any stock exchange, market, or trading facility on which shares of our Common Stock are traded or in private transactions with third parties. These sales may be at fixed or negotiated prices. The selling shareholders may use one or more of the following methods when selling shares:

     The selling shareholders may also sell under Rule 144 under the Securities Act of 1933, as amended, if available rather than under this prospectus. The selling shareholders shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.

     The selling shareholders may also engage in short sales against the box, puts, and calls and other transactions in our securities and may sell or deliver shares in connections with these trades.

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     Pursuant to the Equity Line with Dutchess, we may periodically sell shares of Common Stock to Dutchess to raise capital to fund our working capital needs. The periodic sale of shares to Dutchess is known as a Put. Under a Put, we may request an advance to draw down a portion of the Equity Line by delivering a Put Notice to Dutchess of draw down of a portion of the Equity Line. A closing will be held seven business days after the Put Date, at which time we will deliver shares of Common Stock and Dutchess will pay the Purchase Price (as defined below). We may request advances under the Equity Line once the underlying shares are registered with the Commission pursuant to this registration statement. Thereafter, we may continue to request advances until Dutchess has advanced $10,000,000.

     Each Put will contain an amount of Common Stock to be sold to Dutchess equal to either (at the Company’s discretion): (i) 200% of the average daily volume (U.S. Market only) of the Common Stock for the 10 trading days prior to the Put Date multiplied by the average of the three daily closing best bid prices of Common Stock immediately preceding the Put Date or (ii) $20,000. In no event will the Put Amount be more than $1,000,000 with respect to any single Put.

     The Purchase Price for each share of Common Stock subject to a Put is 95% of the lowest best bid price of Common Stock during the period beginning on a Put Date and ending on and including the date that is five trading days after such Put Notice Date (the “Pricing Period”), with a net floor price of $.45. Following Dutchess’ receipt of a Put Notice, Dutchess will be required to purchase from the Company during the related Pricing Period that number of shares of Common Stock having an aggregate Purchase Price equal to the lesser of (i) the Put Amount set forth in the Put Notice, and (ii) 20% of the aggregate trading volume of the Common Stock during the applicable Pricing Period multiplied by 95% of the lowest best bid prices of the Common Stock during the specified Pricing Period, provided such shares bear no restrictive legend and are not subject to stop transfer restrictions. The Equity Line also contains a floor provision, which permits the Company (in its discretion) to withdraw that portion of the Put Amount if the closing bid price of Common Stock during the applicable Pricing Period with respect a Put Notice is less than 75% of the lowest closing best bid prices of the Common Stock for 15 trading days prior to each Put Notice Date or less than $0.45.

     Under the provisions of Section 2(a)(11) of the Securities Act, Dutchess is deemed, as a matter of law, to be a “underwriter” with respect to the sale of Common Stock under the Equity Line. As of the date of this prospectus, Dutchess does not have a material relationship with the Company.

     Under the terms of the Equity Line, the Company is obligated to indemnify Dutchess against certain losses and liabilities. The terms of the registration rights agreement relating to the Equity Line provides that the Company is to indemnify Dutchess against, among other things, certain losses, claims, and other liabilities arising as a result of claims that are made based upon, among other things, any untrue statement or alleged untrue statement of material fact (or omission of a material fact) contained in the final prospectus filed by the Company with the Commission or in this registration statement (or post-effective amendment or state blue sky filings), and any violation by the Company of the Securities Act, the Securities Exchange Act of 1934, or state blue sky laws.

     Similarly, the terms of the investment agreement relating to the Equity Line provide that the Company and Dutchess are to indemnify each other against, among other things, certain losses, claims, and other liabilities arising out of any misrepresentation or breach of a representation in the investment agreement or any document contemplated thereby, any cause of action, any breach of a covenant, agreement, or obligation of Dutchess or the Company contained in the investment agreement or any documents contemplated thereby, and any cause of action, suit, or claim brought by a third party against Dutchess or the Company arising out of the execution and delivery of the investment agreement or any document contemplated thereby.

     This prospectus relates to the offer and sale of the shares by certain of the Company’s selling shareholders. These securities were issued by the Company to the selling shareholders identified above in a private placement under one or more exemptions from registration under federal and state securities laws. This prospectus has been prepared in connection with registering the future sale of shares of Common Stock by the selling shareholders. We have undertaken to register the sale of the shares by the selling shareholders as required by the terms of the existing agreements between the Company and several of the selling shareholders. Although we have registered the shares for sale under the terms of these agreements, the registration of such securities does not necessarily mean that any of the securities will be offered or sold by the selling shareholders.

     Although we will not receive any proceeds from the sale of shares of Common Stock held by the selling shareholders in this offering (other than Dutchess, as described above), we will receive proceeds from the sale of

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     At the time a particular offer to sell the securities is made, a prospectus supplement, if required, will be distributed by the Company that will set forth the name and names of any dealers or agents and any commissions and other terms constituting compensation from the selling shareholders, or their transferee(s), and any other required information. The securities may be sold from time to time at varying prices determined at the time of sale or at negotiated prices.

     In order to comply with the securities laws of certain states, if applicable, some of the securities offered hereunder may be sold only through registered or licensed brokers or dealers. In addition, in some states, the securities may not be sold unless they have been registered or qualified for sale in that state or an exemption from that state’s registration or qualification requirement is available and is complied with.

     The securities offered hereunder may also be sold in one or more of the following transactions: (a) block transactions (which may involve crosses) in which a broker-dealer may sell all or a portion of the securities as agent but may position and resell all or a portion of the block as principal to facilitate the transaction; (b) purchases by any such broker-dealer as principal, and resale by such broker-dealer for its own account pursuant to a prospectus supplement; (c) ordinary brokerage transactions and transactions in which any such broker-dealer solicits purchasers; (d) sales “at the market” to or through a market maker or into an existing trading market, on an exchange or otherwise, for such shares; and (e) sales in other ways not involving market makers or established trading markets, including direct sales to purchasers. In effecting sales, broker-dealers engaged by the selling shareholder may arrange for other broker-dealers to participate.

SELLING SHAREHOLDERS

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     * Less than 1%.

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LEGAL PROCEEDINGS

     We are not currently involved in any material legal proceedings.

EXPERTS

     The validity of the issuance of the shares of Common Stock offered under this prospectus will be passed upon for us by Parker, Poe, Adams & Bernstein L.L.P. of Charlotte, North Carolina.

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WHERE TO FIND MORE INFORMATION ABOUT IBSS

     We have filed with the Securities and Exchange Commission a registration statement on Form SB-2 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all the information set forth in the registration statement, as permitted by the rules and regulations of the Commission. For further information with respect to us and the securities offered by this prospectus, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document that we have filed as an exhibit to the registration statement are qualified in their entirety by reference to the exhibits for a complete statement of their terms and conditions. The registration statement and other information may be read and copied at the Commission’s Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

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F-1

Integrated Business Systems and Services, Inc.
Balance Sheets
December 31,

The accompanying notes are an integral part of these financial statements.

F-2

Integrated Business Systems and Services, Inc.
Statements of Operations
for the years ended December 31,

The accompanying notes are an integral part of these financial statements.

F-3