<PAGE>

                                                                   EXHIBIT 10.12

Letter of Understanding between the Scott Group ("Scott Group") and Integrated
Business Systems & Services, Inc. ("IBSS") dated October 2, 2003.

Following is the scope of work and the compensation that the Scott Group and
IBSS agree to as the terms for their mutual work together.

                           STATEMENT OF WORK FOR IBSS

                  FINANCIAL AND BUSINESS DEVELOPMENT CONSULTING

OVERVIEW

It has taken millions of dollars and many years to envision and build the next
major software breakthrough in the world -- IBSS's Synapse. The solution is
ready for the market. The next phase of work is to greatly increase Company
visibility, fiscal performance, share price, and trading volume by rapidly:

     -    augmenting management expertise

     -    bringing in new money to relieve debt and fund growth while increasing
          market valuation

     -    developing a focused, common-sense plan to drive perceptional changes
          both internally and externally

     -    generating highly-positive company and product visibility and
          perception with influencers and decision-makers in the banking and
          investment communities

     -    developing predictable, revenue-generating activities to improve
          credibility and valuation

     -    forge strategic relationships to generate sales and make Synapse the
          solution of choice and ultimately, a de facto standard

To accomplish this, a number of things should happen:

     -    current investor group needs to renegotiate the terms of their note;
          there will be no outside interest in the public aspects of this
          company as long as a "death spiral" exists

     -    development of the software development kit must be completed

     -    the product should be marketed and/or licensed with/to a number of
          referenceable and credible strategic-partners

<PAGE>

     -    the work of deploying the solution to referenceable customers must be
          accelerated

     -    clearer, simpler and more reliable messages must be created and
          communicated to the marketplace with particular attention paid to the
          banking and investment communities; communications should be
          supplemented through a variety of additional activities, including the
          services of a quality IR/PR firm

THE SCOTT GROUP

The Group proposes to

     1.   Establish, manage and facilitate the needed interest and attention
          from the banking and investment communities by establishing key
          strategic relationships and opportunities and ensuring the continuous
          flow of contact and information to the proper channels.

     2.   Supplement these activities by bringing to bear its expertise in
          creating strategic alliances, business customers and marketing
          communications to ensure IBSS and Synapse success in bringing to the
          computing industry the transformation they were created to deliver.

Toward that end, in addition to working within the banking, investment and other
relative communities to generate and sustain awareness for creating greater
liquidity, the Scott Group will provide services that will primarily consist of
working with the IBSS management team, and as appropriate it's board, to:

     -    Accelerate development of strategic and business partnerships.

     -    Assist in refining, and where necessary, developing image and
          positioning documents, events and presentations that will promote an
          awareness and adoption of IBSS solutions.

     -    Assist in developing a comprehensive plan for operations and as
          needed, technical support of customers and partners.

PROJECT SCOPE AND OBJECTIVE

     -    Establish the necessary activities and relationships for IBSS to be
          recognized by the investment and banking communities as a properly
          financed, liquid, and industry-valued technology solution company.

     -    Assist IBSS management in the identification and recruitment of
          Business and Strategic Partners.

     -    As needed, assist IBSS management in renegotiating any key agreements,
          contracts and/or situations as needed.

<PAGE>

     -    Collaborate with IBSS management and outside sources to create and
          execute marketing materials and other communication vehicles.

PROJECT ASSUMPTIONS

     -    Product is being developed to production quality and will be wrapped
          sufficiently for System Integrators, partners, customers, and others
          to develop and deploy applications.

     -    IBSS is currently able to install and implement technology and
          solution in customer sites.

     -    Demand will exist within Corporate IT, System Integrators and
          Independent Software Vendors for this type of product.

     -    Partner/customer and legal agreement documentation exists.

     -    Preliminary product pricing and discount schedules for
          partners/customers exist.

     -    Scott Group has a meaningful set of personal contacts in the banking,
          investment, technology, and service industries to be targeted and the
          experience needed for rapid implementation.

IBSS RESPONSIBILITIES

     -    Equip the Scott Group with sufficient knowledge and understanding of
          both IBBS and Synapse.

     -    Collaborate with The Scott Group and provide personnel to introduce,
          explain, discuss, and demonstrate the technology/product(s) as
          appropriate.

     -    Provide product, demo and collateral material.

     -    Provide partners/customers with adequate product education and support
          through their initial application development and deployment process.

     -    Employ a mutually acceptable IR/PR firm to begin to manifest a market
          presence.

SCOTT GROUP RESPONSIBILITIES

     -    Develop a program ensuring that IBSS is introduced to and recognized
          by the banking and investment communities as a strong, properly
          financed and liquid public entity.

<PAGE>

     -    Create and sustain relationships with the leaders and influencers in
          the business, financial, and academic communities. The perceived and
          actual scope of the company improves with the association of
          recognized companies and industry influencers.

     -    Get the Company and product line the proper scope of visibility needed
          for success in the current financial environment. The outside world
          needs to have a broader understanding of IBSS's solutions,
          capabilities and activities.

     -    Collaborate with IBSS to identify and recruit partners to
          purchase/license/market IBSS technology and products.

     -    Create a corporate "persona", with the objective of gaining active,
          productive and visible partners.

     -    Augment the internal business development division with an emphasis on
          keeping the public machine well oiled and backed by fact.

IBSS AND SCOTT GROUP JOINT ACTIVITY

     -    Define criteria for attractive target partners/customers.

     -    Identify target partners/customers

     -    Define criteria and necessary materials for successful completion of
          all project tasks.

     -    Work as a team to accomplish the jointly defined goals together.

FOR MORE INFORMATION PLEASE CONTACT THE SCOTT GROUP:

STEVEN SCOTT                    or                   EMILY SHAIN
781-297-7236 (direct)                                617-848-5932 (direct)
617-448-1300 (cell)                                  617-686-8684 (cell)

<PAGE>

Scott Group Agreement

For the preceding Statement of Work the following remuneration terms will be
applicable:

Money Terms

The Scott Group will be paid the following money fees on a monthly basis:

$7,500 per month starting Oct. 1, 2003 until $350,000 net capital is raised and
received by IBSS.

$10,000 per month after $350,000 has been raised until $1,000,000 net new money
has been raised and received by IBSS and
$15,000 per month after $1,000,000 has been raised and received by IBSS.

The term of the agreement is for one year and it is renewable. There is a 30 day
cancellation notice after January 31, 2004.

Stock Grants

In addition to the cash paid there will also be stock grants made on the
conditions and schedules below.

In total an amount of 1,000,000 shares could be granted at a valued price of 13
cents. (This is the closing stock price on the day of the agreement (October 2,
2003.) A 1099 form will be generated for the value at 13 cents for any stock
granted under this agreement.

The stock will be granted on the occurrence of the following events:

125,000 shares will be granted on Oct. 2, 2003. These shares will be restricted
from resell before Oct. 1, 2004.

12,500 shares will be granted per month beginning Nov. 1, 2003 for 10 months or
until the agreement is cancelled if prior to September 1, 2004. These shares
will be restricted from being sold until April 1, 2005.

500,000 shares will be granted on June 30, 2004 if the price of the stock has
averaged 60 cents per share for the prior 90 days (April 1 - June 30). These
shares will be restricted from being sold until April 1, 2005.

250,000 shares will be granted on Oct. 1, 2004 if the company has generated $16
million in sales and averaged 60 cents per share for the prior 6 months (April
1, 2004 - Sept. 30, 2004). If shares have averaged $2.00 per share for the six
months the $16 million in sales requirement is waved. These shares will be
restricted from being sold until April 1, 2005.

<PAGE>

The dates and the conditions for receiving the shares can be extended or
modified by IBSS so long as they are not less favorable then the conditions
listed above.

Dated: October 2, 2003

Integrated Business Systems & Services, Inc.

By /s/ George E. Mendenhall
   --------------------------------

Title Chief Executive Officer

Date October 2, 2003

The Scott Group

By /s/ Steven Scott
  --------------------------------

Title Principal

Date October 2, 2003