[IBSS LOGO]

1601 Shop Road
Suite E
Columbia, South Carolina 29201

April 27, 2004

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders to be held at 10:00 a.m. on June 10, 2004, at the Company’s principal executive offices in Columbia, South Carolina. We look forward to greeting personally those shareholders who are able to attend.

The accompanying formal Notice of Meeting and Proxy Statement describe the matters on which action will be taken at the meeting.

Whether or not you plan to attend the meeting on June 10, it is important that your shares be represented. To ensure that your vote is received and counted, please sign, date and mail the enclosed proxy at your earliest convenience. Your vote is important regardless of the number of shares you own.

VOTING YOUR PROXY IS IMPORTANT

PLEASE SIGN AND DATE YOUR PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE

INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.

NOTICE OF MEETING

Columbia, SC
April 27, 2004

     The Annual Meeting of Shareholders of Integrated Business Systems and Services, Inc. will be held at the Company’s principal executive offices located at 1601 Shop Road, Suite E, Columbia, South Carolina on Thursday, June 10, 2004, at 10:00 a.m., for the following purposes as described in the accompanying Proxy Statement:

     Only holders of record of the Company’s common stock at the close of business on April 16, 2004 will be entitled to vote at the meeting.

     Whether or not you plan to attend the meeting, you are urged to complete, sign, date and return the enclosed proxy promptly in the envelope provided. Returning your proxy does not deprive you of your right to attend the meeting and to vote your shares in person.

Important Note: To vote shares of common stock at the Annual Meeting (other than in person at the meeting), a shareholder must return a proxy. The return envelope enclosed with the proxy card requires no postage if mailed in the United States of America.

INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.

PROXY STATEMENT

April 27, 2004

GENERAL

Introduction

     The 2004 Annual Meeting of Shareholders of Integrated Business Systems and Services, Inc. (“IBSS” or the “Company”) will be held on Thursday, June 10, 2004 at 10:00 a.m., at the Company’s principal executive offices (the “Annual Meeting”), for the purposes set forth in the accompanying notice. IBSS’ principal executive offices are located at Suite E, 1601 Shop Road, Columbia, South Carolina, 29201. Only holders of record of common stock of IBSS, no par value, at the close of business on April 16, 2004 (the “Record Date”) will be entitled to notice of, and to vote at, such meeting. This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors to be used at such meeting, and at any and all adjournments thereof, and is first being sent to shareholders on or about the date hereof. Proxies in the accompanying form, properly executed and duly returned and not revoked, will be voted at the meeting (including adjournments). Where you make a specification by means of the ballot provided in the proxies regarding any matter presented at the Annual Meeting, such proxies will be voted in accordance with your specification. If you make no specification, proxies will be voted (i) in favor of the selection of Scott McElveen LLP as the principal independent auditors of IBSS for the year 2004, (ii) in favor of amending IBSS’ Articles of Incorporation to increase the number of authorized shares of common stock to 200,000,000, and (iii) in favor of amending IBSS’ 2001 Stock Incentive Plan.

     Proxies should be sent to Pacific Corporate Trust Company, Tenth Floor, 625 Howe Street, Vancouver, British Columbia V6C 3B8, Canada, Facsimile Number (604) 689-8144.

     This Proxy Statement is being furnished by IBSS to its shareholders of record as of April 16, 2004 in connection with the upcoming Annual Meeting.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

     The following table sets forth certain information regarding ownership of IBSS’ common stock as of April 16, 2004, by (i) each person or entity known to IBSS who beneficially owns five percent or more of the common stock, (ii) each director of IBSS, (iii) each executive officer of IBSS (including the Chief Executive Officer), and (iv) all directors and executive officers of IBSS as a group. Except as otherwise indicated below, each person named in the table has sole voting and investment power with respect to the securities beneficially owned by them as set forth opposite their name.

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For additional information concerning options granted to the Company’s executive officers, see “Executive Compensation” below. For additional information concerning securities issued under equity compensation plans, see “Equity Compensation Plan Information” below.

Number of Shares Outstanding and Voting

     IBSS currently has authorized under its Articles of Incorporation 100,000,000 shares of common stock, of which 26,984,681 shares are currently issued and outstanding and entitled to be voted at the Annual Meeting. At the meeting, holders of common stock will have one vote per share for an aggregate total of 26,984,681 votes. A quorum being present, the actions proposed in the items referred to in the accompanying Notice of Meeting will become effective if a majority of the votes cast by shares entitled to vote is cast in favor thereof, with the exception of the proposal to amend the Articles of Incorporation. An amendment to the Articles of Incorporation, in order to be approved by the Company’s shareholders, requires approval by two-thirds of the votes entitled to be cast on the amendment. Abstentions and broker non-votes will not be counted in determining the number of shares voted for any proposal, but will be counted for purposes of determining the presence of a quorum. For purposes of the proposal to amend the Articles of Incorporation, abstentions and broker non-votes will have the effect of a vote against the proposal.

Revocation of Proxy

     Shareholders who execute proxies may revoke them at any time before they are exercised by delivering a written notice to Stuart E. Massey, Secretary of IBSS, either at the Annual Meeting or prior to the meeting date at the Company’s offices at 1601 Shop Road, Suite E, Columbia, South Carolina 29201, by executing and delivering a later-dated proxy, or by attending the meeting and voting in person.

Expenses of Solicitation

     The Company pays the cost of solicitation of proxies, including the cost of assembling and mailing this Proxy Statement and the enclosed materials. In addition to mailings, proxies may be solicited personally, by telephone or electronically, by corporate officers and employees of the Company without additional compensation. The Company intends to request brokers and banks holding stock in their names or in the names of nominees to solicit proxies from customers owning such stock, where applicable, and will reimburse them for their reasonable expenses of mailing proxy materials to customers.

2005 Shareholder Proposals

     For shareholder proposals intended to be presented at the 2005 Annual Meeting of Shareholders to be eligible for inclusion in our proxy statement and the form of proxy for such meeting, they must be received by us at our principal executive offices in Columbia, South Carolina no later than December 28, 2004. To be eligible for inclusion in our proxy statement and the form of proxy for such

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meeting, you must also comply with the requirements of the proxy rules under the Securities and Exchange Act of 1934, as amended, including Rule 14a-8 of Regulation 14A of that Act.

     Regarding shareholder proposals intended to be presented at the 2005 Annual Meeting but not included in our proxy statement, shareholders must give us advance notice of their proposals to be considered timely under our bylaws. For your notice to be considered timely, it must be given to and received by the Secretary of the Company, either by personal delivery or by United States mail, postage prepaid, return receipt requested, at our principal executive offices at least 90 days in advance of the 2005 Annual Meeting. Your notice must set forth as to each matter you propose to bring before the annual meeting each of the following: (a) a description of the business that you desire to be brought before the annual meeting, including the specific proposal(s) you desire to be presented, and the reasons for conducting such business at the annual meeting; (b) your name and your record address as it appears on the stock records maintained by our stock transfer agent; (c) the class and number of shares of our common stock that you own of record as of the record date for the annual meeting, if such date has been made publicly available, or as of a date within 10 days of the effective date of your notice if the record date has not been made publicly available; (d) the class and number of shares of our common stock that you hold beneficially, but not of record, as of the record date for the annual meeting, if such date has been made publicly available, or as of a date within 10 days of the effective date of your notice if the record date has not been made publicly available; and (e) any interest you have in the business described in your notice as set forth above in item (a) of this paragraph.

     Shareholders desiring to make proposals to be presented at an annual meeting are directed to these requirements as more specifically set forth in our Bylaws, a copy of which is available upon request to our Corporate Secretary at the address of our principal executive offices. All such proposals for which timely notice is not received in the manner described above will be ruled out of order at the meeting resulting in the proposal’s underlying business not being eligible for transaction at the meeting.

Shareholder Communications to the Board

     Shareholders and other parties interested in communicating with our board of directors as a group, may do so by writing to the Chairman of the Board at “Integrated Business Systems and Services, Inc., 1601 Shop Road, Suite E, Columbia, South Carolina 29201.” Communications intended for non-management directors should be directed to the Chairman of the Audit and Risk Management Committee at the address above. The Company’s Secretary will review all such correspondence and will make such correspondence available regularly to the Board. Any concerns relating to accounting, internal controls or auditing matters will be immediately brought to the attention of the members of the Company’s Audit and Risk Management Committee for consideration in accordance with established procedures.

BOARD OF DIRECTORS

Directors and Officers of IBSS

     Directors of IBSS are elected at its Annual Meetings of Shareholders to serve staggered terms of three years and until their successors are elected and qualified. The Board of Directors of IBSS (the “Board”) currently consists of seven (7) directors seats, of which five are filled and two are vacant. After the 2004 Annual Meeting, the Board will consist of four (4) directors with three (3) vacancies. The term of Ms. Dollie Cole expires at the Annual Meeting, and Ms. Cole is not standing for reelection. The terms of Messrs. George E. Mendenhall and Carl Joseph Berger, Jr. expire at the 2005 Annual Meeting; and the terms of Messrs. Stuart E. Massey and Richard D. Pulford expire at the 2006 Annual Meeting.

     No individuals have been nominated for election as directors at the Annual Meeting. As a result, three vacancies will exist on the Board of Directors following the Annual Meeting. Pursuant to the Company’s Bylaws and applicable South Carolina corporate law, the four directors who will serve following the Annual Meeting will have the authority prior to the next annual shareholder’s meeting to elect individuals to fill one, two or all of these three vacancies. Management is currently in the process of identifying suitable candidates for election to fill such vacancies.

     Based on the representations made by Mr. Berger in his director questionnaire, and discussions between Mr. Berger and the Board, the Board has, in its business judgment, determined that Mr. Berger does not have a material relationship with the Company other than serving on the Board. As such, the Board has determined that Mr. Berger is “independent” as defined in Rule 4200(a)(15) of the NASD’s listing standards and current SEC regulations. The Board makes regular determinations as to director independence under applicable SEC and NASD definitions.

     The name, age, present principal occupation or employment and the material occupations, positions, offices or employments for at least the past five years of each IBSS director and executive officer are set forth below.

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     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.

     Stuart E. Massey, 44, has served as Executive Vice President of the Company since September 2001 and as a director of the Company since April 1991. Prior to that time, he had served as Vice President of Engineering. Mr. Massey also serves as the Secretary of the Company. His responsibilities include the day-to-day management and coordination of large projects, including the continuing maintenance of the Synapse software configuration tool. Before joining the Company, among other things, Mr. Massey managed the implementation of an inter-bank financial transaction switch for automated teller machine and point-of-sale systems and assisted in the design of financial transaction processing software products for Applied Communications, Inc. Mr. Massey’s experience in 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.

     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 Arts degree from the University of Georgia majoring in accounting.

     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. Ms. 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, Ms. 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 National Academy of Science, the President’s Club of the University of Michigan, and Michigan State Chancellor’s Club — Oakland University. Ms. Cole is not standing for reelection at the Annual Meeting.

     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

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Administration degree in Finance. CSI and Mr. Pulford are parties to a sales representative and marketing agreement dated September 16, 2003 (the “CSI Sales Agreement”) with the Company that provides for certain payments to Mr. Pulford for his services as a sales representative for the Company. See “Certain Relationships and Related Transactions” for more information regarding the CSI Sales Agreement.

Committees of the Board of Directors and Meetings

     The Board 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 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 90 days prior to the annual meeting, unless the Company notifies the shareholders otherwise. See “General — 2005 Shareholder Proposals.”

     Audit and Risk Management Committee. The Audit and Risk Management Committee is composed of Mr. Berger. Mr. Berger has been determined to be “independent” as defined in Rule 4200(a)(15) of the NASD’s listing standards. The Audit and Risk Management Committee does not have a “financial expert,” as defined in Item 401(e)(2) of Regulation S-B promulgated by the SEC, 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 the retention of independent auditors, approval of audit and non-audit services and fees of the Company’s 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. This committee met a total of four times during 2003.

     The following is the Audit and Risk Management Committee Report for the year ended December 31, 2003:

Audit And Risk Management Committee Report

     One of the primary functions of the Audit and Risk Management Committee is 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 internal accounting and auditing procedures. The Audit and Risk Management Committee reviewed and discussed the audited financial statements for the year ended December 31, 2003 with management and the independent auditors, Scott McElveen, LLP. Management represented to the Audit and Risk Management Committee that the Company’s financial statements were prepared in accordance with generally accepted accounting principles, and the Audit and Risk Management Committee reviewed and discussed the financial statements with management and the independent accountants. The discussions with Scott McElveen, LLP also included the matters required by Statement on Auditing Standards No. 61 (Communication with Audit Committees).

     Scott McElveen, LLP provided to the Audit and Risk Management Committee the written disclosures and the letter regarding its independence as required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). This information was discussed with Scott McElveen, LLP.

     Based on the discussions with management and Scott McElveen, LLP, and the Audit and Risk Management Committee’s review of the representations of management and the report of Scott McElveen, LLP, the Audit and Risk Management Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-KSB that was filed with the Securities and Exchange Commission for the year ended December 31, 2003.

     Submitted by the Audit and Risk Management Committee of the Company’s Board of Directors.

     Carl Joseph Berger, Jr.

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

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executive compensation policies and practices, reviewing salaries and bonuses for certain officers of the Company, administrating the Company’s stock option and incentive plans, making recommendations to the Board of Directors with respect to the participation in such plans by directors, officers and employees of, and consultants to the Company, and the extent of that participation, and considering such other matters as may from time to time be referred to the Compensation and Human Resources Committee by the Board of Directors. No directors of the Company who are also executive officers of the Company participate in the deliberations by such committee concerning the compensation of such executive officers. This committee met a total of four times during 2003.

     During 2003, there were six meetings of the Board of Directors of IBSS, with all directors attending at least 75% of all Board and Committee meetings. We do not have any policy regarding director attendance at Annual Meetings of shareholders, and we did not retain a record of directors’ attendance at any of our past Annual Meetings.

SELECTION OF INDEPENDENT AUDITORS

     The Audit and Risk Management Committee has selected the firm of Scott McElveen, LLP to serve as the principal independent auditors of the Company for the year 2004. Scott McElveen, LLP has acted in such capacity for the Company since 1996. This selection is submitted for ratification by the shareholders at the Annual Meeting.

     Representatives of Scott McElveen, LLP will attend the Annual Meeting. They will have an opportunity to make a statement if they so desire, and to respond to appropriate questions.

Principal Accounting Firm Fees and Services

     The following table shows the aggregate fees billed to the Company by Scott McElveen, LLP for the years ended December 31, 2003 and 2002:

     (1) Audit Fees: This fee category consists of services for the audit of our annual financial statements, review of our quarterly financial statements, and services normally provided by the independent auditors in connection with statutory and regulatory filings including: services associated with SEC registration statements, other documents filed with the SEC, and documents issued in connection with securities offerings (e.g., comfort letters and consents); and advice on audit and accounting matters that arose during the audit or review of our financial statements.

     (2) Audit-Related Fees: This fee category consists of assurance and related services by Scott McElveen, LLP that are reasonably related to performing the audit and review of our financial statements and are not reported above under “Audit Fees.” The services for these fees include other accounting and consultation related to certain third party contracts.

     (3) Tax Fees: This fee category consists of professional services rendered by Scott McElveen, LLP for tax return preparation, tax compliance and tax planning and advice.

     The Audit and Risk Management Committee has considered whether the non-audit services provided were compatible with maintaining the principal auditor’s independence, and believes that such services and related fees, due to, among other things, the nature and scope of the services provided and the fact that different Scott McElveen, LLP personnel provided audit and non-audit services, have not impaired the independence of the Company’s principal auditors. All services provided by Scott McElveen, LLP in 2003 were pre-approved by the Audit and Risk Management Committee.

     Generally, before an independent auditor is engaged by the Company to render audit or non-audit services, the engagement is approved early each calendar year by the Audit and Risk Management Committee. Any subsequent changes in audit, audit-related, tax, or other services to be provided by the independent auditor due to changes in scope of work, terms, conditions, or fees of the engagement must be pre-approved by the Audit and Risk Management Committee. Requests or applications to provide services that require specific approval by the Audit and Risk Management Committee will be submitted to the Audit and Risk Management Committee by both the independent auditor and the chief financial officer of the Company and must be consistent with applicable SEC regulations and NASD listing standards regarding auditor independence.

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PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION

     At the Annual Meeting, the Board will seek approval of an amendment to Section 3 of IBSS’ Articles of Incorporation (the “Articles”) to increase the authorized common stock of IBSS to 200,000,000 shares.

     The Articles currently authorized the issuance of 100,000,000 shares of common stock (of which 26,984,681 shares are currently outstanding and 64,374,040 shares have been reserved for issuance pursuant to the exercise of common stock purchase options and warrants). If the proposed amendment to the Articles is approved by the shareholders, then Section 3 of the Articles will be amended to provide 200,000,000 authorized shares of common stock, no par value. The increase in authorized capital pursuant to the Articles amendment would enhance the ability of the Board to engage in future sales of equity securities or acquisitions without IBSS incurring the additional costs and delays attendant to the obtaining of further shareholder approval. Any future issuance of shares by the Company is subject to final authorization by the Board. The Company has no current plan utilizing the increased shares of common stock should the proposed Articles amendment be approved. The Board recommends the approval of the proposed amendment to the Articles.

PROPOSED AMENDMENT TO THE 2001 STOCK INCENTIVE PLAN

     The Board has approved an amendment to the IBSS 2001 Stock Incentive Plan (the “2001 Plan”) to increase the authorized number of shares of IBSS’ common stock issuable under the 2001 Plan from 1,200,000 to 16,200,000 (the “Plan Amendment”), subject to shareholder approval. The Plan Amendment is being proposed to make ample shares available for a number of stock options that have been granted, subject to shareholder approval of an increase in the number of shares issuable under the 2001 Plan, and also to provide sufficient opportunity for future grants under the 2001 Plan. No other amendments to the 2001 Plan are proposed for shareholder approval.

     The 2001 Plan was originally adopted by the Board effective as of February 23, 2001 and approved by the Company’s shareholders on May 18, 2001. The 2001 Plan is intended to provide the Company with maximum flexibility to meet its evolving needs in providing stock-based incentives and rewards to officers, directors and employees of the Company, and to consultants and advisors to the Company, who are and have been in a position to contribute materially to improving the Company’s profits. The enhanced employment incentives available through the 2001 Plan are expected to promote the interests of the Company and its shareholders by allowing the Company to continue to attract and retain key officers and employees. The 2001 Plan is intended to provide award recipients with incentives to contribute to the Company’s growth and success and align their interests with those of the Company’s shareholders.

     The following is a summary of the Plan Amendment and the 2001 Plan, but it is qualified by reference to the full text of the amended and restated 2001 Plan, a copy of which has been submitted with this Proxy Statement to the SEC and can be obtained on the SEC’s website at www.sec.gov.

Plan Amendment

     The 2001 Plan currently provides that an aggregate of 1,200,000 shares of the Company’s common stock is available for issuance under the 2001 Plan. The Board has amended the 2001 Plan, subject to shareholder approval, to increase the maximum number of shares available for issuance from 1,200,000 to 16,200,000. As of April 16, 2004, a total of 477,625 shares of common stock have been issued or are subject to outstanding awards under the 2001 Plan, leaving a total of 722,375 shares available for future issuance (taking into account the cancellation of previously granted options, but without giving effect to the Plan Amendment). Stock options to purchase an additional 13,425,000 shares have been granted, subject to stockholder approval of the Plan Amendment, leaving 2,297,375 shares available for future grant if the Plan Amendment is approved.

Administration

     The Board of Directors has designated the Board’s Compensation and Human Resources Committee (the “Committee”) to serve as the administrator of the 2001 Plan. The Committee will be responsible to the Board for the operation of the 2001 Plan and will make recommendations to the Board with respect to potential recipients of awards under the 2001 Plan. The Committee also may designate and recommend the type and size of awards and determine the terms, restrictions and conditions of awards. The interpretation and construction by the Committee of any provisions of the 2001 Plan or of any award granted under the 2001 Plan are final.

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Eligibility

     Each officer, director and employee of the Company or any of its subsidiaries is eligible to participate in the 2001 Plan, as selected by the Committee. The Committee also may grant awards under the 2001 Plan from time to time to persons serving as consultants or advisors to the Company or any of its subsidiaries. As of April 16, 2004, there are approximately 30 directors, employees and consultants who potentially could be considered eligible for the 2001 Plan.

Types of Awards

     Awards under the 2001 Plan may be granted in the form of incentive stock options that qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), nonstatutory stock options, stock appreciation rights and restricted stock. Each type of award is discussed in more detail below.

Shares Subject to the 2001 Plan

     A total of 1,200,000 shares of the Company’s common stock is presently reserved for awards under the 2001 Plan. If the shareholders approve the Plan Amendment, the number of total reserved shares will increase from 1,200,000 to 16,200,000. On April 13, 2004, the reported last sale price of the common stock on the Over-the-Counter Bulletin Board was $0.35 per share.

     If an award under the 2001 Plan expires or is forfeited or cancelled for any reason, the shares of common stock subject to such award will be available for further awards under the 2001 Plan.

     The number of shares reserved for issuance under the 2001 Plan will be adjusted in the event of a change in the capital stock structure of the Company affecting the common stock (in connection with a merger, consolidation, recapitalization, reclassification, combination, stock dividend, stock split or other relevant change), and the Committee is authorized to adjust terms of awards under the 2001 Plan in the event of a change in the capital stock in order to prevent dilution or enlargement of awards under the 2001 Plan.

Stock Options

     Stock options give the recipient an opportunity to purchase shares of common stock from the Company at a designated exercise price. Stock options may be granted under the 2001 Plan in the form of either incentive stock options (also referred to as “ISOs”) intended to qualify under Section 422 of the Code or nonstatutory stock options (also referred to as “NSOs”). Incentive stock options can be granted only to employees of the Company and subsidiary corporations. Consequently, non-employee directors and consultants and advisors to the Company are not eligible for ISOs.

     The exercise price of options granted under the 2001 Plan is determined at the discretion of the Committee, but, in the case of an ISO, the exercise price per share may not be less than the fair market value per share of the common stock on the date the option is granted and, in the case of a NSO, the exercise price may not be less than 50% of such fair market value. In the case of incentive stock options granted to any holder on the date of grant of more than 10% (directly or by attribution through relatives or entities in which the holder has an ownership interest) of the total combined voting power of all classes of stock of the Company or a parent or subsidiary corporation (a “10% Stockholder”), the exercise price per share may not be less than 110% of the fair market value of a share of common stock on the grant date. Under the 2001 Plan, fair market value generally is based on the last sale price reported on the over-the-counter trading system on which the common stock is traded.

     The Committee will establish the time period within which options must be exercised, but this period cannot exceed ten years from the grant date of the option or, in the case of incentive stock options granted to a 10% stockholder, five years from the grant date of the option. Options may expire before the end of the option period if the option holder’s service with the Company terminates. Stock options will be exercisable at such time or times and subject to such restrictions as determined by the Compensation Committee. To the extent that the fair market value of incentive stock options (determined based on the fair market value on the grant date) that become exercisable for the first time in a calendar year exceeds $100,000, such options generally will be deemed nonstatutory stock options.

     Unless otherwise provided by the Company or the Committee, the exercise price of options granted under the 2001 Plan may be paid by cash or check, by a note payable to the Company, secured by the shares acquired upon exercise, or by “cashless exercise” whereby the number of shares actually issued upon exercise is reduced by a formula set forth in the 2001 Plan, by delivery of shares of common stock or by any combination of these forms of payment.

     Except as otherwise provided below, upon termination of a participant’s service with the Company and its subsidiaries, an option terminates upon the earliest to occur of (1) the full exercise of the option, (2) the expiration of the option by its terms, and (3)

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the date three months following the date of employment termination (or one year in the case of termination due to the death or permanent and total disability of a participant). During the foregoing three-month (or if applicable, one-year) period, the option may be exercised only to the extent it was exercisable at the time the participant’s service terminated. However, if a participant’s service is terminated for cause (as defined in the 2001 Plan), the participant’s options immediately expire and no longer can be exercised.

     Options may not be transferred other than by will or the laws of descent and distribution and options generally may be exercised during the lifetime of the option holder only by the option holder.

Stock Appreciation Rights

     Stock appreciation rights (or “SARs”) allow a recipient to receive upon exercise an amount equal to the excess of the then fair market value of the shares of common stock with respect to which the SARs are being exercised over the SAR price assigned by the Committee. This amount may be payable in cash, shares of common stock or a combination thereof, as determined by the Committee. The SAR price is established at the date of grant of the SAR at the discretion of the Committee, but, in the case of an SAR issued in tandem with an ISO, the SAR price may not be less than the fair market value of the common stock on the date the SAR is granted, and, in the case of all other SARs, the SAR price may not be less than 50 percent of such fair market value. For this purpose, fair market value generally is based on the last sale price reported on the over-the-counter trading system on which the common stock is traded.

     SARs may be granted in tandem with stock options or independently. The Committee will establish the time period within which SARs must be exercised, but this period cannot exceed ten years from the grant date of the SARs. SARs may expire before the end of the exercise period if the recipient’s service with the Company and its subsidiaries ends. SARs will be exercisable at such time or times and subject to such restrictions as determined by the Committee. The Committee may provide that the exercise of either options or SARs that are granted in tandem will result in the termination of the other to the extent of the number of shares of common stock with respect to which such options or SARs are exercised.

     If an individual’s service with the Company and its subsidiaries terminates, SARs then held by such individual will terminate on the same terms and conditions that apply to stock options as described above, unless otherwise provided by the Committee.

     SARs generally may not be transferred other than by will or the laws of descent and distribution and SARs generally may be exercised during the lifetime of the recipient only by the recipient.

Restricted Stock

     Restricted stock is an award of shares of the Company’s common stock that is subject to restrictions and such other terms and conditions as the Committee determines. The Committee will determine the type of restrictions applicable to the award, which can include restrictions based on the occurrence of a specific date or the achievement of performance or other criteria. The Committee may at any time waive such restrictions or accelerate such dates. The Committee also will determine the purchase price, if any, to be paid for the restricted stock. Restricted stock generally may not be transferred until all restrictions applicable to the award have lapsed or been satisfied.

     If a participant who holds shares of restricted stock terminates service for any reason (including death) prior to the lapse or waiver of any restrictions, then the shares are forfeited to the Company for no payment. Prior to the lapse of any restrictions on shares of restricted stock, the participant has certain rights of a shareholder with respect to the shares, including voting and dividend rights, subject only to the conditions and restrictions generally applicable to the restricted stock or specifically set forth in any applicable award agreement.

Change in Control

     Unless otherwise specifically prohibited by the terms of any award or under any applicable laws, rules or regulations, upon the occurrence of a “change in control” of the Company, each outstanding option and SAR that is not otherwise exercisable will become immediately and fully exercisable, and any restrictions imposed on restricted stock will lapse. Under the 2001 Plan, the term “change in control” is defined in the 2001 Plan, but generally includes (1) the acquisition by any third party or group of 25% or more of the outstanding common stock; (2) a significant change in the composition of a majority of the Board over a two-year period; (3) a tender offer to acquire control of the outstanding voting stock of the Company; or (4) shareholder approval of the liquidation of the Company, the sale of substantially all of the assets of the Company, or the merger, consolidation or reorganization of the Company where the voting securities of the Company prior to such event do not continue to constitute at least 75% of the voting securities of the surviving entity.

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Amendment, Suspension or Termination

     No awards may be granted under the 2001 Plan after February 23, 2011. However, the Board may amend, suspend or terminate the 2001 Plan sooner, except that an amendment may be subject to shareholder approval to the extent that it increases the number of shares of common stock that may be issued under the 2001 Plan (other than as permitted under the 2001 Plan), changes the class of individuals eligible for the 2001 Plan or is necessary to comply with the Code, the Securities Exchange Act of 1934, as amended, securities exchange listing requirements or other legal or regulatory requirements.

2001 Plan Benefits

     Set forth below is information with respect to options that have been granted under the 2001 Plan in 2003, all of which are conditioned upon stockholder approval of the Plan Amendment.

New Plan Benefits
2001 Stock Incentive Plan

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Federal Income Tax Consequences

     The following is a brief summary of certain federal income tax consequences that apply with respect to awards that may be granted under the 2001 Plan. This summary is based on current laws and regulations that may change in the future. This summary is general in nature and is not intended to be complete. The summary does not describe a number of special tax rules, including any foreign, state or local tax consequences, wage withholding requirements or various other rules that could apply to a particular individual or to the Company under certain circumstances.

Nonstatutory Stock Options

     The grant of nonstatutory stock options has no federal income tax consequences to the Company or the option holder. Upon the exercise of a nonstatutory stock option, the option holder will recognize ordinary income equal to the excess of the fair market value of the acquired shares on the date of exercise over the exercise price paid for the shares. The Company generally will be allowed a federal income tax deduction equal to the same amount that the option holder recognizes as ordinary income. In the event of the disposition of the acquired shares of common stock, any additional gain (or loss) generally will be taxed to the option holder as either short-term or long-term capital gain (or loss) depending on how long the shares were held.

Incentive Stock Options

     The grant and exercise of incentive stock options have no federal income tax consequences to the Company. The grant and exercise of incentive stock options generally have no ordinary income tax consequences to the option holder. However, upon the exercise of an incentive stock option, the option holder has to treat the excess of the fair market value on the date of exercise over the exercise price as an item of tax adjustment for alternative minimum tax purposes, which may result in alternative minimum tax liability. In order to receive ISO tax treatment, the option holder must be an employee of the Company at the time of grant of the ISO and can exercise it no later than three months after termination of employment (subject to the terms of the option which may provide for earlier expiration).

     If the option holder retains the shares of common stock acquired upon the exercise of an incentive stock option for at least two years following the grant date of the option and one year following exercise of the option, the subsequent disposition of such shares will ordinarily result in long-term capital gains or losses to the option holder equal to the difference between the amount realized on disposition of the shares and the exercise price. The Company will not be entitled to any deduction in such case. If the holding period requirements described above are not met, the option holder will recognize ordinary income upon disposition of the common stock equal to the excess of the fair market value of the shares on the date of exercise (or, if less, the amount received on disposition of the shares) over the exercise price. The Company will be entitled to a corresponding tax deduction in the same amount. Any additional gain (or loss) realized by the option holder on the disposition of the common stock will be taxed as short-term or long-term capital gain (or loss), as applicable.

Stock Appreciation Rights

     The grant of SARs has no federal income tax consequences to the Company or the recipient. Upon the exercise of SARs, the recipient will recognize ordinary income equal to the amount of cash received and the fair market value of any shares of common stock received. The Company generally will be allowed a federal income tax deduction equal to the same amount that the recipient recognizes as ordinary income.

Restricted Stock

     There generally should not be any federal income tax consequences to the Company or the recipient upon the grant of restricted stock. The recipient normally will recognize ordinary income when shares of the restricted stock vest (which means that the shares are no longer subject to a substantial risk of forfeiture) or become transferable, whichever occurs first. However, a recipient instead may elect to recognize ordinary income at the time the restricted stock is granted by making an election under Section 83(b) of the Code within 30 days after the grant date. In either case, the recipient will recognize ordinary income equal to the fair market value of such shares of stock at the time the income is recognized (reduced by the amount, if any, the recipient paid for the stock) and the Company generally will be entitled to a corresponding tax deduction (subject to limitations under Section 162(m) of the Code). If the recipient subsequently disposes of the shares of common stock, any additional gain (or loss) should be eligible for short-term or long-term capital gain tax treatment, depending on how long the shares were held after the ordinary income was recognized. If a recipient makes an “83(b) election” and then forfeits the shares of common stock, the recipient normally will not be entitled to any tax deduction or refund with respect to the tax already paid.

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EQUITY COMPENSATION PLAN INFORMATION

     The following table sets forth information regarding the shares of IBSS’ common stock issuable under all of IBSS’ equity compensation plans as of December 31, 2003:

2002 Stock Option Plan

     The Company’s 2002 Stock Option Plan (the “2002 Plan”) became effective as of August 1, 2002. The 2002 Plan has not been approved by the Company’s shareholders. The terms of the 2002 Plan are somewhat similar to the terms of the 2001 Stock Incentive Plan (as described above), but only nonstatutory stock options (options that do not qualify as incentive stock options under Section 422 of the Code) may be awarded under the 2002 Plan.

     The 2002 Plan allows the grant of nonstatutory stock options to employees (including officers) and directors of the Company as well as persons serving as consultants or advisors to the Company. The exercise price of options granted under the 2002 Plan is determined at the sole discretion of the Committee. The Compensation Committee will establish the time period within which options must be exercised, but this period cannot exceed ten years from the grant date of the option. Stock options will be exercisable at such time or times and subject to such restrictions as determined by the Compensation Committee. Unless otherwise provided by the Committee, the exercise price of options granted under the 2002 Plan may be paid by cash or check, by a note payable to the Company, secured by the shares acquired upon exercise, or by “cashless exercise” whereby the number of shares actually issued upon exercise is reduced by a formula set forth in the 2002 Plan, by delivery of shares of common stock or by any combination of these forms of payment.

     The total number of shares of the Company’s common stock that have been reserved for issuance under the 2002 Plan is 939,756. As of December 31, 2003, options to purchase a total of approximately 791,247 shares of common stock were outstanding and 148,509 options were exercised under the 2002 Plan. No options can be granted under the 2002 Plan after August 1, 2012.

     The 2002 Plan was initiated to compensate employees who received wage cuts in 2002 and 2003. The initial grants were for a six month wage cut for all staff and the Compensation Committee approved the options initially for six months. In February 2003,

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the Compensation Committee approved an additional grant to all employees for another six months of wage cuts. It is not anticipated at this time by management or the Compensation Committee that any additional options will be awarded under this plan.

Individual Equity Compensation Arrangements

     Warrants and non-qualified stock options were issued from May 2000 to October 2003 related to employment and outside consulting services. These warrants and options, which are reflected in column (a) of the foregoing table, are exercisable into an aggregate of approximately 527,482 shares and are fully vested. The warrants and options expire at various dates ranging from December 2004 to September 2011. The material features of these individual arrangements are summarized as follows:

     Under the terms of the CSI Sales Agreement with CSI and Mr. Pulford, Mr. Pulford could be entitled to purchase up to 1,000,000 shares of Common Stock if he elects to receive payment of sales commissions earned by him in stock options rather than cash. All of these potentially issuable shares are reflected in column (c) of the table under the heading “Equity Compensation Plan Information.” In the event that Mr. Pulford earns such commissions and elects to receive payment in stock options, the options would be exercisable at $0.14 per share (which was the then market price of a share of Common Stock on September 16, 2003), and would vest at the rate of 1 share for each net dollar of revenue that Mr. Pulford directly or indirectly contributes to the Company’s gross revenue as a result of his sales efforts. For more information about the CSI Sales Agreement, see “Certain Relationships and Related Transactions.”

     Under the terms of an Amended and Restated Statement of Work for IBSS dated as of October 2, 2003 between the Company and The Scott Group, The Scott Group is entitled to receive up to 1,000,000 shares of Common Stock in exchange for certain services to the Company. Of these 1,000,000 shares of common stock, 125,000 shares were granted on October 2, 2003 and are restricted from resale before October 1, 2004, and another 50,000 shares were granted in February 2004 and are restricted until April 2005. The 175,000 restricted shares that have been granted are reflected in column (a) with the remaining 825,000 potentially issuable shares reflected in column (c) of the table under the heading “Equity Compensation Plan Information.” 12,500 shares are to be granted monthly to The Scott Group beginning on November 1, 2003 for 10 months or until the agreement is cancelled, if prior to September 1, 2004. The remaining 750,000 shares will be granted to The Scott Group only upon the occurrence of certain conditions outside the control of The Scott Group.

     Under a service agreement dated October 25, 2003 (the “Service Agreement”) between the Company and Elite Financial Communications Group, LLC (“Elite”), Elite is entitled to receive, as partial compensation for certain services provided to the Company, up to 200,000 shares of common stock upon its exercise of a common stock purchase warrant dated October 28, 2003, which shares are reflected in column (a) of the table under the heading “Equity Compensation Plan Information.” Under the terms of

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the warrant, Elite has the right to exercise the option to convert the 200,000 on the following schedule of vesting and exercise prices: 50,000 shares vest on October 28, 2003 at $0.30 per share, 50,000 shares vest on the 91st day of the warrant at $0.35 per share, 50,000 shares vest on the 181st day of the warrant at $0.40 per share, and 50,000 shares vest on the 271st day of the warrant at $0.45 per share. The term of the options is five years.

DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

Directors of IBSS

     For information with respect to the Board of Directors of IBSS, see “Board of Directors.”

Executive Officers of IBSS

     Messrs. George E. Mendenhall, Ph.D., Stuart E. Massey and Donald R. Futch are the executive officers of IBSS. Each executive officer serves as such until his successor is elected and qualified. No executive officer of IBSS was selected pursuant to any arrangement or understanding with any person other than IBSS. For further information with respect to Messrs. Mendenhall, Massey and Futch as officers of IBSS, see “Board of Directors.”

Code of Business Conduct and Ethics

     The Board has not yet adopted a code of ethics that applies to our officers, including our chief executive officer, chief financial officer and chief accounting officer. The Board is presently in the process of formulating such a code suitable for the Company. Once a code of ethics is adopted by the Board, a copy will be posted on our website at www.ibss.com. Upon adoption of a code of ethics, we plan to post any amendments to the code, as well as any waivers that are required to be disclosed by the rules of the SEC, on our website.

EXECUTIVE COMPENSATION

Compensation of Officers

     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.

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

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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, subject to stockholder approval of the Plan Amendment, 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 under the 2002 Plan in connection with the Company’s decision to make across the board salary cuts for executive officers and employees in 2003.

     The new employment agreement with Mr. Mendenhall provides for accelerated vesting of all unvested options upon a change of control of the Company and permits the Company to terminate Mr. Mendenhall’s employment with or without cause. In the event that the Company does so with cause, 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) 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, subject to stockholder approval of the Plan Amendment, 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 under the 2002 Plan in connection with the Company’s decision to make across the board salary cuts for executive officers and employees in fiscal year 2003.

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     The new employment agreement with Mr. Massey provides for accelerated vesting of all unvested options upon a change of control of the Company and permits the Company to terminate Mr. Massey’s employment with or without cause. In the event that the Company does so with cause, 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, subject to stockholder approval of the Plan Amendment, 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 under the 2002 Plan in connection with the Company’s decision to make across the board salary cuts for executive officers and employees in 2003.

     The new employment agreement with Mr. Futch provides for accelerated vesting of all unvested options upon a change of control of the Company and permits the Company to terminate Mr. Futch’s employment with or without cause. In the event that the Company does so with cause, 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, (ii) 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.

     McMaster Agreement. On June 30, 2003 the Company terminated its prior employment agreement 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.

Director Compensation

     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.

     In addition to reimbursement of such costs and expenses, members of the Board of Directors are granted stock options in connection with their initial appointment to serve as a member of the Board of Directors and in connection with their service on committees of the Board of Directors. During the fiscal year ended December 31, 2003, 250,000 stock options were granted to Mr. Berger for his service as both chair and co-chair of several Board committees, 200,000 options were granted to Ms. Cole for her Board committee service and 200,000 stock options were granted to Mr. Pulford for his Board committee service, each such director’s option grant is subject to shareholder approval at the Annual Meeting. An additional 50,000-share purchase option granted to Mr. Pulford in 2003, for his initial appointment to the Board, vests with respect to 50% of the options six months after grant with the remaining options vesting one year after grant. All other stock options granted to members of the Board in 2003 will vest on October 1, 2005. The exercise price of all options granted to directors in 2003 is equal to the closing sales price of the Common Stock on the date of the respective option grant, which was $0.14 per share. The term of each option is five years. Since Ms. Cole will no longer serve on the Board after the Annual Meeting, her unvested options will terminate at that time.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company is party to the CSI Sales Agreement with Mr. Pulford and his affiliate, CSI. Under the terms of the CSI 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 CSI 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 renew 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 a term or provision of the CSI 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 is the right to receive certain commissions based on the amounts collected by the Company that are a direct result of Mr. Pulford’s sales efforts. In the event that Mr. Pulford earns such commissions, he may elect to receive payment of the commissions in either (i) cash or (ii) the grant of stock options or restricted stock grants. Should Mr. Pulford elect to receive the commissions in stock options, he could be entitled 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 that could be granted to Mr. Pulford in the event he elects to receive any commissions earned by him will vest at the rate of 1 share for each net dollar of revenue that Mr. Pulford directly or indirectly contributes to the Company’s gross revenue as a result of his sales efforts. Net revenue is defined under the Sales Agreement 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 CSI 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 CSI Sales Agreement (or September 16, 2008) or (ii) a “change in control” of the Company (as defined in the CSI 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 CSI 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 “Executive Compensation.”

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires IBSS’ executive officers, directors and persons who own more than ten percent (10%) of IBSS’ common stock to file initial reports of ownership and changes in ownership with the SEC. Additionally, SEC regulations require that IBSS identify any individuals for whom one of the referenced reports was not filed on a timely basis during the most recent fiscal year or prior fiscal years. To IBSS’ knowledge, based solely on a review of reports furnished to it, all Section 16(a) filing requirements applicable to its executive officers, directors and more than 10% beneficial owners were complied with, except for the following transactions, which should have been reported on Form 4 but were subsequently reported on Form 5 Annual Statement of Changes on Beneficial Ownership where each Form 5 was also inadvertently filed late:

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OTHER MATTERS

     In the event that any matters other than those referred to in the accompanying Notice should properly come before and be considered at the Annual Meeting, it is intended that proxies in the accompanying form will be voted thereon in accordance with the judgment of the person or persons voting such proxies.

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INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
Columbia, South Carolina

P R O X Y

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints George E. Mendenhall and Stuart E. Massey as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and vote, as designated below, all the shares of the common stock of Integrated Business Systems and Services, Inc. held of record by the undersigned on April 16, 2004 at the Annual Meeting of Shareholders to be held on June 10, 2004 or any adjournment thereof.

1. SELECTION OF AUDITORS

To ratify the selection of Scott McElveen LLP as the principal independent auditors of IBSS for the year 2004 (Mark only one of the following boxes).

o FOR

o AGAINST

o ABSTAIN

2. AMENDMENT TO ARTICLES OF INCORPORATION

To approve an amendment to the Company’s Articles of Incorporation to increase the Company’s authorized common stock to 200,000,000 shares (Mark only one of the following boxes).

o FOR

o AGAINST

o ABSTAIN

3. 2001 STOCK INCENTIVE PLAN AMENDMENT

To approve the amendment of the Company’s 2001 Stock Incentive Plan to increase the number of shares available for issuance thereunder to 16,200,000 shares (Mark only one of the following boxes).

o FOR

o AGAINST

o ABSTAIN

In their discretion, the Proxies are authorized to vote upon such other business as may properly come before this meeting. In the absence of any instructions from the undersigned, the Proxies will vote “For” Item 1, “For” Item 2 and “For” Item 3.

PLEASE MARK, SIGN BELOW, DATE AND RETURN THIS
PROXY PROMPTLY IN THE ENVELOPE FURNISHED.

Please sign exactly as name appears below.

When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.