<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM _________________ TO __________________
COMMISSION FILE NUMBER 000-23415
PRINCETON VIDEO IMAGE, INC.
(Exact name of small business issuer as specified in its charter)
New Jersey 22-3062052
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
15 Princess Road, Lawrenceville, New Jersey, 08648
(Address of principal executive offices)
609-912-9400
(Issuer's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or such shorter period that the registrant is required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
The aggregate number of shares of the Issuer's common stock outstanding on
October 31, 1998 was 8,183,552.
Transitional Small Business Disclosure Format:
Yes No X
----- -----
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
PRINCETON VIDEO IMAGE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
September 30,
1998
-------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 19,410,220
Restricted marketable securities held to maturity 139,909
Trade accounts receivable 363,236
Other current assets 245,711
------------
Total current assets 20,159,076
Property and equipment, net 2,454,008
Intangible assets, net 471,668
Other assets 249,523
------------
Total assets $ 23,334,275
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,081,861
Unearned revenue 311,897
------------
Total current liabilities 1,393,758
Unearned revenue 892,255
------------
Total liabilities 2,286,013
------------
Commitments and contingencies --
Redeemable preferred stock:
Cumulative, Series A, conditionally redeemable, $4.50 par value, authorized
167,000 shares; issued and outstanding 67,600 shares at September 30, 1998,
redemption value equal to carrying value
(par plus all accrued but unpaid dividends) 408,012
Cumulative, Series B, conditionally redeemable, $5.00 par value,
authorized 93,300 shares; issued and outstanding 86,041 shares at September
30, 1998, redemption value equal to carrying value
(par plus all accrued but unpaid dividends) 550,605
------------
Total redeemable preferred stock 958,617
Shareholders' Equity:
Common stock, no par value; $.005 stated value; authorized 40,000,000
shares; 8,183,552 shares issued and outstanding at September 30, 1998 40,917
Additional paid-in capital 51,432,894
Less: Related party note receivable (824,498)
Deficit accumulated during the development stage (30,559,668)
-------------
Total shareholders' equity 20,089,645
------------
Total liabilities, redeemable preferred stock and
shareholders' equity $ 23,334,275
=============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
PRINCETON VIDEO IMAGE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative from
For the three months ended inception to
September 30, September 30,
-------------------------------
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
License fees $ 67,292 $ 57,626 1,569,041
Advertising revenue 210,654 75,177 626,151
-------------------------------- ----------------
Total revenue 277,946 132,803 2,195,192
Costs and expenses:
Selling, general and administrative 1,163,830 1,223,811 15,100,918
Research and development 443,792 445,994 11,727,436
L-VIS System costs 882,877 416,732 5,792,209
--------------------------------- -----------------
Total costs and expenses 2,490,499 2,086,537 32,620,563
Operating loss (2,212,553) (1,953,734) (30,425,371)
Interest and other financial (expense) -- -- (1,814,178)
Interest and other income 278,763 16,372 1,679,881
--------------------------------- -----------------
Net loss (1,933,790) (1,937,362) (30,559,668)
Accretion of preferred stock
dividends (11,013) (11,012) (224,213)
--------------------------------- -----------------
Net loss applicable to common stock $(1,944,803) $(1,948,374) $(30,783,881)
================================= =================
Basic and diluted net loss per share
applicable to common stock ($ 0.24) ($ 0.61)
===============================
Weighted average number of
shares of common stock
outstanding 8,181,885 3,189,305
===============================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
PRINCETON VIDEO IMAGE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative from
For the three months ended inception to
September 30, September 30,
-------------------------------
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,933,790) $(1,937,362) $(30,559,668)
Adjustments to reconcile net loss to net
cash used in operating activities
Amortization of unearned income (67,292) (57,626) (569,041)
Depreciation expense 294,024 146,646 2,086,667
Amortization of intangibles 21,568 16,734 210,058
Charges associated with option and warrant
grants and related party note receivable -- 440,250 1,531,699
Equity in net loss of affiliate -- -- 9,048
Increase (decrease) in cash resulting
from changes in:
Trade accounts receivable (169,974) (75,782) (363,236)
Other current assets (15,464) (23,231) (245,711)
Other assets 21,669 (36,343) (249,523)
Accounts payable and accrued expenses (221,694) (85,312) 1,173,292
Unearned revenue 128,200 -- 1,773,192
Miscellaneous other 1,465 6,821 144,058
-----------------------------------------------------
Net cash used in operating activities (1,941,288) (1,605,205) (25,059,165)
-----------------------------------------------------
Cash flows from investing activities:
Purchase of held-to-maturity investments -- (52,000) (5,351,555)
Proceeds from held-to-maturity investments -- -- 5,200,000
Purchases of property and equipment (201,219) (165,994) (4,573,335)
Increase in intangible assets -- (26,249) (775,834)
Investments in joint venture -- -- (9,048)
-----------------------------------------------------
Net cash provided by (used in)
investing activities (201,219) (244,243) (5,509,772)
-----------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
PRINCETON VIDEO IMAGE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative from
For the three months ended inception to
September 30, September 30,
-------------------------------
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from Bridge Financing loans -- -- 1,353,000
Repayments of Bridge Financing loans -- -- (1,353,000)
Proceeds from sale of Bridge Financing warrants, net -- -- 1,479,822
Proceeds from sales of preferred stock -- -- 734,405
Proceeds from sales of common stock, net 100 1,304,722 46,669,943
Cash advanced for related party notes receivable -- -- (169,498)
Collections of stock subscriptions receivable -- -- 1,264,485
----------------------------------------------------
Net cash provided by
financing activities 100 1,304,722 49,979,157
----------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (2,142,407) (544,726) 19,410,220
Cash and cash equivalents at beginning of
period 21,552,627 775,693 --
----------------------------------------------------
Cash and cash equivalents at end of period $19,410,220 $ 230,967 $ 19,410,220
====================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
PRINCETON VIDEO IMAGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Nature of Business and Basis of Presentation
Princeton Video Image, Inc., (the "Company"), was incorporated on July 23,
1990 in the State of New Jersey. The Company has developed and is marketing
a real-time video insertion system (the "L-VIS(TM) System") which utilizes
proprietary software and hardware to place computer-generated electronic
advertising images into television broadcasts of sporting and other events.
These electronic images range from simple corporate names or logos to
sophisticated multi-media 3-D animated productions. The L-VIS System has
been used to insert advertising images into live and pre-recorded
television broadcasts. The Company is also marketing its systems on a
worldwide basis through licensing agreements or the formation of joint
ventures.
The condensed financial statements presented herein have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article
10 of Regulation S-X and are unaudited. Reference should be made to the
Company's audited financial statements for the fiscal year ended June 30,
1998 including the footnotes thereto, included in the Company's Annual
Report on Form 10-KSB for the same fiscal year end. In the opinion of
management, the financial statements reflect all adjustments (which consist
of normal recurring accruals) necessary for a fair statement of the results
of the interim periods presented.
2. Per Share Data
In December 1997, the Company adopted Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" ("SFAS 128") to calculate net loss
per share applicable to common stock. All prior periods presented have been
retroactively restated to conform to the SFAS 128 requirements. SFAS 128
requires the presentation of basic and diluted per share amounts. Basic per
share amounts are computed by dividing net loss applicable to common stock
by the weighted average number of common shares outstanding during the
period. Diluted per share amounts are computed by dividing net loss
applicable to common stock by the weighted average number of common shares
outstanding plus the dilutive effect of common share equivalents.
Since the Company incurred net losses for all periods presented, both basic
and diluted per share calculations are the same. Accordingly, options and
warrants to purchase 2,509,637 and 2,001,454 shares of common stock that
were outstanding at September 30, 1998 and 1997, respectively, were not
included in diluted per share calculations, as their effect would be
antidilutive.
<PAGE> 7
PRINCETON VIDEO IMAGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
3. Commitments and Contingencies
Lease Agreement
In October 1997, the Company entered into a five-year operating lease
agreement for its headquarters in Lawrenceville, New Jersey. Minimum annual
lease payments under the lease will be approximately $249,000 per year.
4. New Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130") during the quarter ended
September 30, 1998. SFAS 130 establishes standards for reporting and
display of an alternative income statement and its components (revenue,
expenses, gains and losses) in a full set of general purpose financial
statements. For the three month periods ended September 30, 1998 and 1997,
the Company had no items of other comprehensive income.
The Company adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131") during the quarter ended September 30, 1998. SFAS 131 requires
that a business enterprise report certain information about operating
segments, products and services, geographic areas of operation, and major
customers in complete sets of financial statements and in condensed
financial statements for interim periods. Currently, there are no
disclosures required to be made under SFAS 131.
In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits" ("SFAS 132"). SFAS 132 changes
current financial disclosure requirements for pension and other
postretirement benefit plans. SFAS 132 does not, however, change the
measurement or recognition provisions of existing accounting standards.
Currently, there are no disclosures required to be made under SFAS 132.
5. Subsequent Events
The Company established the Amended 1993 Stock Option Plan (the "Stock
Option Plan") for the purposes of attracting and retaining the best
available personnel, to provide additional incentive to the Company's
employees and consultants and to promote the success of the Company. The
total number of shares of Common Stock authorized for issuance under the
Stock Option Plan is 1,560,000. In October 1998, the Board of Directors
approved an amendment to the Stock Option Plan to increase the number of
authorized shares to 2,160,000. This amendment, subject to shareholder
approval and ratification within one year, is being voted upon at the
Annual Meeting of Shareholders to be held on December 10, 1998.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Since its inception in 1990, the Company has devoted substantially all of
its resources to the development of the L-VIS(TM) System, an electronic
video insertion system that was designed to modify broadcasts to television
viewers by inserting electronic images, primarily advertisements. The
Company has incurred substantial operating losses since its inception. As
of September 30, 1998, the Company had an accumulated deficit of
approximately $30,560,000 and expects to incur substantial additional
losses for the foreseeable future. This deficit is the result of research
and development expenses incurred in the development and commercialization
of the L-VIS System, expenses related to field testing of the L-VIS System
and its deployment pursuant to customer contracts, operating expenses
relating to manufacturing, sales and marketing activities of the Company,
and general administrative costs.
The Company intends to continue its efforts to enhance the L-VIS System and
develop additional software applications. In order to increase its revenue
generating user base and to expand into national and international markets,
the Company plans an increase in its sales and marketing staff during the
fiscal year ending June 1999. The sales and marketing staff is responsible
not only for agreements with teams, leagues and broadcasters, but also for
promoting the L-VIS System to advertisers in order to create market
awareness. While any purchase of advertising will be done through the
rights holder or the broadcaster, the Company hopes to create advertiser
interest and demand by promoting the L-VIS System directly to potential
advertisers. Therefore, the Company expects to incur additional losses and
to experience substantial negative cash flow from operating activities
through the next 12 months or until such later time as it achieves revenues
sufficient to finance its ongoing capital expenditures and operating
expenses. The Company's ability to produce positive cash flow will be
determined by numerous factors, including its ability to reach agreements
with, and retain, customers for use of the L-VIS System.
The Company expects to generate revenue from ads sold by rights holders
that use the L-VIS System. These revenues are expected to be shared with
the rights holders. Accordingly, in order to generate revenues from the use
of the L-VIS System, the Company will need to enter into agreements with
rights holders. The agreements can take various forms, although the
agreements to date in the United States have been revenue sharing
agreements under which the Company received a percentage of the fee paid by
the advertisers. The Company realizes revenues when the advertisement runs
over the air. Due to the seasonal nature of the sporting events themselves,
the Company's revenue will fluctuate seasonally. However, this seasonality
may be mitigated by the multi-sport capabilities of the L-VIS System and
its use in non-sporting events.
In addition to the revenue arising from advertising, a second revenue
source is the strategic licensing of the L-VIS System to third parties.
These licenses may be territorial in nature or they may cover individual
major broadcast events. In the case of a territorial license, the licensee
is responsible for generating business within the
<PAGE> 9
territory and the Company will share in the business through one or more
means including royalties, license fees, and/or equity participation in the
licensee. In the case of individual events, the Company may receive a flat
fee or a fee based on revenues generated by the licensee, depending on the
nature of the license.
Results of Operations
QUARTER ENDED SEPTEMBER 30, 1998 COMPARED TO THE QUARTER ENDED SEPTEMBER
30, 1997
Revenue
Revenues include receipts from advertising use of the L-VIS System as well
as from license fees for use of the L-VIS System outside the United States.
Total revenue increased 109% from $132,803 for the quarter ended September
30, 1997 to $277,946 for the quarter ended September 30, 1998 as a result
of an increase in the number of major league baseball teams using the L-VIS
System and the amount of advertising revenues produced from each team.
Selling, General and Administrative
Selling, general and administrative expenses include selling and marketing
expenses, including salaries of sales and marketing personnel, their travel
expenses, advertising and expenses associated with customer support, and
general and administrative expenses, including salaries of support
personnel, allocated rent and operating costs, and legal and accounting
fees. Total selling, general and administrative expenses decreased 4% to
$1,163,830 for the quarter ended September 30, 1998, from $1,223,811 for
the quarter ended September 30, 1997. This decrease resulted from charges
associated with option and warrant grants issued during the three months
ended September 30, 1997, which were not present in 1998. This decrease was
partially offset by increased personnel expenses, rent and utility costs
and fees paid to investor and public relation professionals hired to
support the Company's increased focus on the sales and marketing of the
L-VIS System.
Research and Development
Research and development expenses include the costs associated with all
personnel, materials and contract personnel engaged in research and
development activities to increase the capabilities of the L-VIS System
hardware platforms, including platforms for overseas use, and to create
improved software programs for individual sports. Total research and
development expenses remained fairly constant, decreasing only marginally
to $443,792 for the quarter ended September 30, 1998 from $445,994 for the
quarter ended September 30, 1997. The Company continues to develop new
software and hardware platforms for the L-VIS System through the
integration of newly available technologies including High Definition
Television or HDTV.
L-VIS System Costs
L-VIS System costs include the costs associated with the material
production, depreciation and operational support of the L-VIS System units,
including training costs for operators and the shipping of L-VIS System
units to international and domestic
<PAGE> 10
venues. L-VIS System costs increased 112% to $882,877 for the quarter ended
September 30, 1998 from $416,732 for the quarter ended September 30, 1997.
This increase was the result of numerous factors including (i) an increase
in depreciation expense associated with the purchase of L-VIS System
components for system upgrades and newly constructed systems to be used in
football and by international licensees, (ii) an increase in personnel and
related expenses as well as higher insurance, rent and utility costs, (iii)
a shift in workload from selling, general and administrative expense to
L-VIS System costs as more time was spent building and operating the L-VIS
System, and, (iv) expenses related to the initial testing of the L-VIS
System in the broadcast of the Indianapolis Motor Speedway Corporation's
Brickyard 400 race in July 1998 and the August 1998 off-line demonstration
of the L-VIS System for cricket.
Interest and Other Income
Interest and other income increased to $278,763 from $16,372 for the
quarters ended September 30, 1998 and 1997, respectively. This increase is
due to the increase in funds available to invest from the proceeds of the
Company's initial public offering of stock in December 1997.
Net Loss
As a result of the foregoing factors, the Company's net loss decreased
slightly to $1,944,803 from $1,948,374 for the three months ended September
30, 1998 and 1997, respectively.
Year 2000 Risk Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. Beginning in the
year 2000, these date code fields need to recognize four digit entries in
order to identify correctly dates in the 21st century. If not corrected,
many computer applications could fail or create erroneous results at the
year 2000. This potential problem has been termed "Y2K".
The Company realizes that Y2K planning is essential to its continued
success. A plan has been formulated (the "Plan") to identify, correct,
implement and test all internal and external systems for full Y2K
compliance. This plan encompasses all computer hardware and software
systems, electrical and communication systems and any system or service
that may be affected by the Y2K event. In addition, the Plan covers all
external dependencies on services provided by third parties to the Company
as well as services that the Company provides to its customers.
As part of the Plan, the Company has assigned a member of the information
systems department to act as project leader, with personnel from each of
the other Company departments assisting. The Plan has been divided into the
following six phases:
1) Identification of systems and services affected by the Y2K event and
submission of such a list to the Y2K project leader. This includes
communication and satellite lines, computers manufactured by third
parties as well as specialized and embedded hardware designed by the
Company as well as all building systems (i.e. electric, heating,
telephone, and security systems). All software used by the Company
including third party operating systems, office automation software,
<PAGE> 11
accounting software, connectivity software and all software produced
by the Company both internally and for use by our customers.
2) Development of a testing, checking and certification mechanism for all
systems and services identified in phase 1 above. If testing by
Company personnel is not possible, written certification will be
requested from the manufacturer of the system or provider of the
services as to their state of readiness for the year 2000.
3) Testing of systems and services according to a time line prepared by
the project leader and documentation of the results. Any system that
is identified as being non-compliant with the Y2K event will be
earmarked for additional work.
4) Development and implementation of remedial plans for all systems
and/or services that were identified as non-compliant in phase 3
above.
5) Ongoing reporting of the progression of the Y2K compliance project
until full Y2K compliance is achieved.
6) Issuance of a final compliance report when all phases of the Plan have
been completed.
As of September 30, 1998, a preliminary list of all systems and services
affected by the Y2K event had been prepared. Testing and certification of
in-house computer systems and software has begun. The process of drafting
letters to third party providers of goods and services requesting
documentation as to their state of readiness has begun.
Based on the work that has been done to date on the initial stages of the
Plan, the Company believes that its current accounting and administrative
software products are Y2K compliant. Further, the Company does not
anticipate any internal Y2K issues arising from the use of its own internal
information systems, databases or programs. Based on the initial
identification of systems and services subject to the Y2K problem,
management of the Company has estimated that future costs related to Y2K
compliance for internal software, information systems, databases or
programs are expected to be less than $100,000.
The Company's proprietary L-VIS System relies on time (i.e. hour and
minute) sensitive software coding, but it is not date sensitive and is,
therefore, not believed by the management of the Company to be subject to
Y2K problems. The manufacture and use of the L-VIS System, however,
requires the cooperation of external suppliers and outside broadcasters.
The Company has begun a formal review process of the Y2K readiness of these
external suppliers and broadcasters as part of phase 1 listed above. To the
extent that it is determined that the Company's suppliers and broadcasters
are not Year 2000 compliant, the planned operations of the Company could be
significantly disrupted. This could have a material adverse effect on the
Company's business, financial condition and planned results of operations.
Management is currently unable to quantify the impact of this potential
disruption on its future earnings.
Liquidity and Capital Resources
The Company has incurred significant operating losses and negative cash
flows in each year since it commenced operations, due primarily to start-up
costs, the costs of developing the L-VIS System and the cost of building
L-VIS Systems. As a result of operating losses, the net cash used in
operating activities increased to $1,941,288 from $1,605,205 for the
quarters ended September 30, 1998, and 1997, respectively.
<PAGE> 12
This increase was due in large part to non-cash charges of $440,250 in 1997
associated with option and warrant grants. There were no such issuances
during the three months ended September 30, 1998.
Net cash used in investing activities decreased to $201,219 for the three
months ended September 30, 1998 from $244,243 for the three months ended
September 30, 1997 as the net result of several factors. The total spent on
the purchase of property and equipment actually increased as a result of
purchasing components to be used in the building of additional L-VIS
Systems and the continuing process of upgrading the existing systems to the
second generation flex-based L-VIS System. This upgrade, which was begun in
January 1998, was substantially completed by September 30, 1998. This
increase was offset, however, by the decrease in 1998 in purchases of
investments and intangibles by $52,000 and $26,429, respectively.
Net cash provided by financing activities for the three months ended
September 30, 1998 decreased to $100 from $1,304,722 for the year ago
period. The cash provided during the three months ended September 30, 1997
was due primarily to the receipt of stock subscriptions from a May 1997
Rights Offering. Cash provided by financing activities for the three months
ended September 30, 1998 was the result of the exercise of warrants issued
in connection with a Bridge Financing prior to the initial public offering
of the Company's Common Stock. There were no new issuances of stock or
warrants during the quarter ended September 30, 1998.
The net decrease in cash and cash equivalents increased to $2,142,407 from
$544,726 for the three months ended September 30, 1998 and 1997,
respectively as the cash proceeds from the Company's initial public
offering were used to fund operations without the offset of additional
funds being raised.
Since inception, the Company has financed its operations from (i) the net
proceeds of the approximately $19,700,000 from private placements of Common
Stock, warrants and redeemable preferred stock, (ii) the payment of a
$2,000,000 licensing fee, (iii) the proceeds of a bridge loan financing
which closed in October 1997, (iv) the proceeds from the initial public
offering of its Common Stock which closed in December 1997, (v) revenues
and license fees relating to use of the L-VIS System, and (vi) investment
income earned on cash balances and short term investments. The Company
believes that the net proceeds of its initial public offering, and the
income earned from the investment of those proceeds, will be sufficient to
meet its capital needs for approximately 18 months. Such capital
requirements will depend on a number of factors including the results of
its research and development programs, the Company's ability to maintain
its current customer base and attract new customers to use the L-VIS
System, acceptance of the L-VIS System technology by rightsholders,
technological advances and the status of its competitors, and the level of
resources the Company is able to allocate to the development of greater
marketing and sales capabilities. If the Company does not generate adequate
revenues, there is no assurance that it will be able to raise the
additional capital necessary to fund its operations. The Company would,
thus, be forced to substantially reduce the scale of its operations.
<PAGE> 13
Effect of Inflation
Domestic inflation has not had a significant impact on the Company's sales
or operating results. However, inflation may have an impact upon business
in a number of international markets.
Part II
Item 2 Changes in Securities and Use of Proceeds
The Company commenced an initial public offering of its common stock, no
par value on December 16, 1997 pursuant to a registration statement on Form
SB-2 (Registration No. 333-37725) (the "Registration Statement"), which was
declared effective by the Securities and Exchange Commission on December
16, 1997. From the effective date of the Registration Statement to
September 30, 1998, the approximate amount of net offering proceeds used
was $3,210,000 for repayment of indebtedness and expenses related thereto,
$3,233,000 for the manufacture of L-VIS(TM) Systems, $1,033,000 for
research and development, $1,347,000 for sales and marketing, and
approximately $1,533,000 for working capital and general corporate
purposes.
Item 5 Other Information
In April 1998, Douglas J. Greenlaw, President and Chief Executive Officer
of the Company informed the Board of Directors that he plans to step down
as President and Chief Executive Officer of the Company by the end of 1998.
The Company continues its search for a successor to Mr. Greenlaw. Brown
Williams, Chairman and Co-Founder, will continue to co-manage the Company
with Mr. Greenlaw until a successor is found. Mr. Greenlaw has advised the
Company that he will not stand for re-election to the Board of Directors at
the Company's Annual Meeting of Shareholders scheduled for December 10,
1998.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation (Incorporated by reference
to Exhibit 3.1 to the Company's Registration Statement on Form
SB-2 (Registration No. 333-37725 which became effective on
December 16, 1997.
3.2 Restated Bylaws, as amended (Incorporated by reference to Exhibit
3.1 to Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on February 11, 1998).
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the fiscal quarter
ended September 30, 1998.
<PAGE> 14
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.
Princeton Video Image, Inc.
November 16, 1998 By: /s/ Brown F Williams
------------------ --------------------------
Date Brown F Williams,
Chairman
November 16, 1998 By: /s/ Lawrence L. Epstein
------------------- ----------------------------
Date Lawrence L. Epstein,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 19,410,220
<SECURITIES> 139,909
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958,617
0
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</TABLE>
