<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 June 30, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ---- to ----
Commission file number 001-12127
INTEGRATED TECHNOLOGY USA, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 22-3136782
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
107 West Tryon Ave, Teaneck, New Jersey 07666
(Address of Principal Executive Offices)
201-837-8000
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d)of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 6,034,708 shares of common
stock outstanding as of July 30, 1997
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
INTEGRATED TECHNOLOGY USA, INC.
FORM 10-QSB FOR THE QUARTER ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheet as of June 30, 1997 (unaudited)............................3
Condensed Consolidated Statements of Operations for the Three Months and Six
Months Ended June 30, 1996 and 1997 (unaudited).................................................4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1997 (unaudited)..............................................................5
Notes to Condensed Consolidated Financial Statements (unaudited)................................6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................................11
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders............................................14
Item 6 Exhibits and Reports on Form 8-K...............................................................15
Signatures.....................................................................................15
</TABLE>
<PAGE>
3
Integrated Technology USA, Inc.
Part I
Condensed Consolidated Balance Sheet Financial Information
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited)
<S> <C>
Assets
Current Assets
Cash and cash equivalents...................................................................... $ 12,176,130
Accounts receivable (net of allowance for doubtful accounts of approximately $10,820 and
reserves for sales returns of approximately $35,015)........................................... 82,583
Inventories.................................................................................... 202,536
Prepaid expenses and other current assets...................................................... 146,032
Total current assets.................................................................. 12,607,281
Fixed assets, net.............................................................................. 197,423
Security deposits.............................................................................. 39,282
------
Total assets.......................................................................... $ 12,843,986
==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable............................................................................... $ 265,378
Accrued expenses............................................................................... 168,206
Customer deposits.............................................................................. 17,281
------
Total current liabilities............................................................. 450,865
Provision for severance payments........................................................................ 118,513
-------
Total liabilities.................................................... 569,378
-------
Commitments and Contingencies (Note 5)
Stockholders' equity
Preferred stock $.01 par value, 5,000,000 shares authorized; none issued and outstanding....... ---
Common stock, $.01 par value; 40,000,000 shares authorized; 6,068,212 shares issued and
outstanding ................................................................................. 61,192
Additional paid-in capital..................................................................... 21,692,453
Treasury stock, at cost, 107,048 shares........................................................ (217,500)
Accumulated deficit............................................................................ (9,435,263)
Cumulative translation adjustment.............................................................. 173,726
-------
Total stockholders' equity............................................................ $ 12,274,608
----------
Total liabilities and stockholders' equity............................................ $ 12,843,986
==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
4
Integrated Technology USA, Inc.
Condensed Consolidated Statement of Operations
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1997 1996 1997
--------- --------- --------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales......................................................... $98,673 $114,342 $208,462 $377,292
Cost of products sold............................................. 52,602 50,249 112,822 190,025
--------- --------- --------- -----------
Gross profit............................................. 46,071 64,093 95,640 187,267
--------- --------- --------- -----------
Operating expenses
Selling, general and administrative...................... 501,792 812,318 816,300 1,570,363
Research and development, net............................ 108,057 118,857 151,499 244,357
--------- --------- --------- -----------
Total costs and expenses........................ 609,849 931,175 967,799 1,814,720
--------- --------- --------- -----------
Loss from operations............................ (563,778) (867,082) (872,159) (1,627,453)
Interest income (expense)................................ (67,287) 162,432 (76,998) 312,897
--------- --------- --------- -----------
Net loss........................................ $(631,065) $(704,650) $(949,157) $(1,314,556)
========= ========= ========= ===========
Net loss per share....................................... $ (.20) $ (.12) $ (.30) $ (.22)
Weighted average shares outstanding...................... 3,132,214 6,030,849 3,132,214 6,038,274
========= ========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
5
Integrated Technology USA, Inc.
Condensed Consolidated Statement of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1996 1997
-------- -----------
(Unaudited)
<S> <C> <C>
Cash flows used for operating activities
Net loss................................................................... $(949,157) $(1,314,556)
Adjustments to reconcile net loss to net cash used for operating activities
Deprecation and amortization...................................... 25,239 37,045
Amortization of loan discount..................................... 33,300 ---
Non-cash compensation expense..................................... 135,403 ---
Changes in assets and liabilities
Accounts receivable............................................... 27,832 152,910
Inventories....................................................... 116,899 3,644
Deferred financing costs......................................... (25,000) ---
Customer deposits................................................. 17,450 17,281
Other assets...................................................... 13,222 (30,623)
Accounts payable.................................................. (134,045) (116,728)
Accrued expenses and other liabilities............................ 206,711 (140,740)
-------- -----------
Net cash used for operating activities................... (532,146) (1,391,767)
-------- -----------
Cash flows used for investing activities
Capital expenditures....................................................... (2,914) (89,708)
-------- -----------
Net cash used for investing activities................... (2,914) (89,708)
-------- -----------
Cash flows from financing activities
Increase in bank overdraft................................................. 31,028 ---
Proceeds from bridge financing, net of expenses............................ 465,000 ---
Purchase of treasury stock................................................. --- (52,500)
Net cash provided by (used for) financing activities.............. 496,028 (52,500)
-------- -----------
Effect of exchange rate changes on cash............................................. 33,834 ---
Net decrease in cash and cash equivalents........................................... (5,198) (1,533,975)
Cash and cash equivalents, beginning of period...................................... 33,473 13,710,105
-------- -----------
Cash and cash equivalents, end of period............................................ $28,275 $12,176,130
======== ===========
Cash paid during the period for interest............................................ $1,704 ---
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
6
Integrated Technology USA, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. Organization
Integrated Technology USA, Inc. (the "Company") was incorporated in
1990. The Company designs, develops and markets products for emerging
computer-related markets: primarily the transmission of voice
communications over the Internet and computer/telephone integration. To
date the Company has generated revenues from the sale of its products,
CompuPhone 2000 (and a predecessor product) and CompuNet 2000 (the
"products"). The Company currently outsources substantially all of its
manufacturing and assembly requirements.
2. Summary of Significant Accounting Policies
Basis of presentation
The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, I.T.I. Innovative
Technology, Ltd. ("Innovative") and CompuPrint Ltd. ("CompuPrint"),
both of which are incorporated and conduct business in Israel. All
significant intercompany transactions and account balances have been
eliminated in consolidation.
Effective January 1, 1997, the Company changed the functional currency
of its Israeli subsidiaries from the New Israeli Shekel to the U.S.
dollar. Changes in economic facts and circumstances necessitated such
change in the functional currency. Accordingly, pursuant to the
requirements of Statement of Financial Accounting Standards No. 52,
Foreign Currency Translation, the U.S. dollar translated amounts of
Innovative's and CompuPrint's nonmonetary assets, primarily fixed
assets and security deposits, at December 31, 1996 became the
accounting basis for those assets at January 1, 1997 and for subsequent
periods. In addition, the $173,726 cumulative translation adjustment at
December 31, 1996 accumulated in stockholders' equity prior to this
change in functional currency will remain as a separate component of
stockholders' equity. Had the Company not changed the functional
currency of its Israeli subsidiaries, consolidated net loss for the
three and six months ended June 30, 1997 would have been increased by
$250,070 (approximately $0.04 per share) and $360,680 (approximately
$0.06 per share), respectively.
The condensed consolidated interim financial statements included herein
have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission with respect
to Form 10-QSB. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to such rules and
<PAGE>
7
Integrated Technology USA, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- -------------------------------------------------------------------------------
regulations. In the opinion of management, such financial statements
reflect all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair statement of the results for the
interim periods presented and to make such financial statements not
misleading. It is suggested that these interim financial statements be
read in conjunction with the consolidated financial statements and the
notes thereto included in the Company's 1996 Annual Report on Form
10-KSB. The results of operations for the interim periods presented are
not necessarily indicative of the results expected for any future
interim period or the year ending December 31, 1997.
Revenue recognition and warranties
Revenues are recognized on shipment of the products. For products
shipped on consignment, revenues are recognized when the products are
sold by the consignee. The Company provides for estimated returns on
all sales.
The Company provides purchasers of CompuPhone 2000 and CompuNet 2000
with certain warranties. The Company covers the potential costs
associated with such warranties by obtaining corresponding warranties
from the contract manufacturer that manufactures CompuPhone 2000 and
CompuNet 2000 for the Company.
Inventory
Inventory is valued at the lower of cost or market and is principally
comprised of CompuPhone 2000 and CompuNet 2000 units. Cost is
determined by the first-in, first-out method.
Net loss per share
Net loss per share is computed using the weighted average number of
common shares outstanding and dilutive common share equivalents. Common
shares issued, and options and warrants granted, by the Company during
the twelve months preceding the Company's Initial Public Offering (the
"IPO") have been included in the calculation of common and common
equivalent shares outstanding as if they were outstanding for all
periods presented using the treasury stock method and an estimated
initial public offering price prior to the IPO. Options and warrants
granted prior to the aforementioned twelve month period and subsequent
to the IPO have been included in the calculation of common and common
equivalent shares outstanding when dilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 128, Earnings per Share ("FAS
128"), which requires the presentation of basic
<PAGE>
8
Integrated Technology USA, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
earnings per share in a company's financial statements for reporting
periods ending subsequent to December 15, 1997. Early adoption of FAS
128 is not permitted. The adoption of FAS 128 is not expected to have a
material impact on the Company's consolidated financial statements.
As of June 30, 1997, the Company had outstanding warrants and options
to purchase 3,360,082 and 1,126,567 shares, respectively, of common
stock which are not included in the calculation of earnings per share
for the six months ended June 30, 1997 and would not be included in
such calculation under the guidance prescribed by FAS 128, due to the
anti-dilutive nature of these instruments.
Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported
amount of revenues and expenses during the reported period. Actual
results could differ from these estimates.
Concentration of Credit Risk
Financial instruments which subject the Company to concentration of
credit risk consist principally of trade receivables.
3. Accrued Expenses
Accrued expenses are summarized as follows:
<TABLE>
<S> <C>
Accrued payroll and benefits................................................ $ 57,200
Accrued professional fees.................................................... 56,700
Other........................................................................ 54,306
------
$ 168,206
=======
</TABLE>
4. 1996 Stock Option Plan
In May 1997, the Company's Board of Directors and Stockholders approved
an amendment to the Company's 1996 Stock Option Plan (the "Stock Option
Plan") pursuant to which the aggregate number of stock options
authorized for issuance under the Stock Option Plan was increased from
833,333 to 1,129,000. All officers, directors and employees of the
Company and other persons who perform services for the Company are
eligible to participate in the
<PAGE>
9
Integrated Technology USA, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- -------------------------------------------------------------------------------
Stock Option Plan. Some or all of the options may be "Incentive stock
options" within the meaning of the Internal Revenue Code of 1986, as
amended. As of June 30, 1997, the Company has granted options to
purchase approximately 774,166 shares under the Stock Option Plan,
including an aggregate of approximately 630,001 options to executive
officers and directors of the Company.
5. Commitments, Contingencies and Other Matters
Outstanding Purchase Commitments
At June 30, 1997, the Company had outstanding purchase orders for its
new wireless printing product amounting to approximately $610,000 for
delivery in 1997. In addition, the Company had outstanding purchase
orders for its keyboard products amounting to approximately $575,000.
Leases
The Company leases all of its facilities under operating lease
agreements. The facilities leased in the second quarter of 1997 include
a facility in Jerusalem, Israel which is leased until May 31, 2000. The
facility in Teaneck, New Jersey is leased until January 31, 1999. Both
leases have a renewal option for an additional two years.
6. Stock Repurchase Plan
In April 1997, the Board of Directors authorized the Company to
repurchase shares of the companies common stock for an aggregate cost
not to exceed $1,000,000. As of June 30, 1997, the Company had
repurchased 50,000 shares for an aggregate cost of $52,500.
7. Subsequent Event
On July 23, 1997, the Company's Board of Directors adopted a
stockholder rights plan (the "Plan") and pursuant to the Plan declared
a dividend of one common stock purchase right (a "Right") for each
outstanding share of the Company's common stock, to be made to the
Company's stockholders of record as of the close of business on August
4, 1997. The Plan is designed to deter coercive takeover tactics,
including the accumulation of shares in the open market or through
private transactions, and to prevent an acquirer from gaining control
of the Company without offering a fair price to all of the Company's
stockholders. Each Right entitles the holder to purchase from the
Company one-quarter of one share of the Company's common stock at a
price of $1.50, subject to certain antidilution provisions. Generally,
the Rights will only be exercisable after the Distribution Date which
is the earlier of (i) ten days following the acquisition by a person or
group of affiliated or associated persons (an
<PAGE>
10
"Acquiring Person") of beneficial ownership of 15% or more (25% in the
case of a person that is currently a 15% holder) of the outstanding
shares of the Company's common stock (the "Acquisition Date") or (ii)
ten business days following the commencement of a tender offer or
exchange offer that would result in an Acquiring Person obtaining
beneficial ownership of 15% or more of the outstanding shares of the
Company's common stock. In the event that a person or groupof persons
becomes an Acquiring Person, then, subject to certain exceptions set
forth in the Plan, each holder of a Right is entitled to receive, upon
exercise, shares of the Company's common stock (or in certain
circumstances, cash, property or other securities of the Company)
having a current market value, as defined in the Plan (the "Market
Value"), equal to two times the Right's then current exercise price. In
addition, in the event that the Company is acquired in a merger or
consolidation and the Company is not the surviving corporation or 50%
or more of the Company's assets or earning power is sold or transferred
following the Acquisition Date, then, subject to certain exceptions set
forth in the Plan, each holder of a Right is entitled, upon exercise,
to receive common stock of the acquiring company having a Market Value
equal to two times the Right's then current exercise price. At any time
until ten days following the Acquisition Date, the Company may redeem
the Rights in whole, but not in part, at a nominal amount. The Rights
expire on July 23, 2007. The Company has initially reserved for
issuance upon exercise of the Rights one quarter of one share for each
share of its common stock currently outstanding.
8. Disclosure of Effect of Adoption of FAS 130
In June 1997, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 130, Reporting Comprehensive Income ("FAS
130"), which requires the presentation of the components of
comprehensive income in a company's financial statements for reporting
periods beginning subsequent to December 15, 1997. Comprehensive income
is defined as the change in a company's equity during a financial
reporting period from transactions and other circumstances from
nonowner sources (including cumulative translation adjustments, minimum
pension liabilities and unrealized gains/losses on available for sale
securities). The adoption of FAS 130 is not expected to have material
impact on the Company's consolidated financial statements.
<PAGE>
11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited Condensed Consolidated Financial Statements and related Notes thereto
of Integrated Technology USA, Inc.(the "Company"), included herein and the
Consolidated Financial Statements and related Notes thereto included in the
Company's 1996 Annual Report on Form 10-KSB
The following discussion includes statements that are forward-looking
in nature. Whether such statements ultimately prove to be accurate depends upon
a variety of factors that may affect the business and operations of the Company.
Certain of these factors are discussed under the caption Item 1 - "Description
of Business-Factors that May Influence Future Results and Accuracy of
Forward-Looking Statements" included in the Company's 1996 Annual Report on Form
10-KSB.
General
The Company has to date generated revenues from two products: (i)
CompuPhone 2000, which the company developed for the computer/telephone
integration market, and (ii) CompuNet 2000, which the Company developed for the
Internet Telephony market. The Company has also developed a relatively
low-priced product that enables wireless printing from a laptop computer. The
Company is seeking to commence the commercial introduction of this product in
the late third to early fourth quarter of 1997, although there can be no
assurance that such introduction will not be delayed by various circumstances,
including, among others, manufacturing or shipping delays or unforseen technical
problems.
The Company has made only limited sales of its products to date. The
Company is seeking to increase its sales through advertising and marketing.
There can be no assurance, however, that the Company will be successful in this
regard or that any of the Company's products will achieve market acceptance (or
sufficient market acceptance to make the product profitable). The Company is
also evaluating the possibility of expanding its business and/or diversifying
into new businesses through acquisitions.
Effective January 1, 1997, the Company changed the functional currency
of its Israeli subsidiaries from the New Israeli Shekel to the U.S. dollar.
Changes in economic facts and circumstances necessitated such change in the
functional currency. The $173,726 cumulative translation adjustment at December
31, 1996 accumulated in stockholders' equity prior to this change in functional
currency will remain as a separate component of stockholders' equity. Had the
Company not changed the functional currency of its Israeli subsidiaries,
consolidated net loss for the three and six months ended June 30, 1997 would
have been increased by $250,070 (approximately $0.04 per share) and $360,680
(approximately $0.06 per share), respectively.
<PAGE>
12
Results of Operations
Net Sales. Net sales in the second quarter of 1997 were $114,000
representing an increase of approximately 16% over net sales of $99,000 in the
second quarter of 1996. Net sales in the first six months of 1997 were $377,000
representing an increase of approximately 81% over net sales of $208,000 in the
first six months of 1996. These increase primarily reflected (i) increased unit
sales in the first quarter, (ii) $17,000 of net sales in the second quarter of
1997 from sales of CompuNet 2000 and headsets to customers other than Gemini
Industries, Inc.("Gemini") and (iii) shipment of 600 units of CompuNet 2000 to
Gemini in the first quarter of 1997, which completed the delivery of units
contemplated by a purchase commitment entered into by Gemini in 1996.
The number of CompuPhone 2000 units sold (i) increased to 3,703 units
in the first six months of 1997 compared with 2,614 units in the first six
months of 1996 and (ii) decreased to 1,146 units in the second quarter of 1997
compared with 1,195 units in the second quarter of 1996. International sales of
CompuPhone 2000 accounted for 43% of the CompuPhone 2000 units sold in the first
six months of 1997, compared with 27% in the first six months of 1996, and 12%
of CompuPhone 2000 units sold in the second quarter of 1997 compared with 43% in
the second quarter of 1997. The Company had very limited sales of CompuNet 2000
in the second quarter of 1997, and at present the Company's marketing effort is
primarily focused on CompuPhone 2000.
Gross Profit. Gross profit margin in the three and six months ended
June 30, 1997 was 56% and 50%, respectively, compared with 47% and 46%,
respectively, in the three and six months ended June 30, 1996. In view of the
Company's limited sales, the Company believes that the improvement in the
Company's gross profit margin is not meaningful.
SG&A. Selling, General and Administrative expense ("SG&A") for the
three and six months ended June 30, 1997 was $311,000 and $754,000 higher than
in the three and six months ended June 30, 1996 respectively. Such increase
primarily reflected (i) additional marketing and advertising expenses, (ii) the
hiring of additional personnel (including a chief operating officer), (iii)
compensation increases to certain employees and (iv) costs associated with being
a public company that the Company began to incur following the completion of an
initial public offering in October 1996.
R&D, Net. Research and development expense ("R&D"), net, for the three
and six months ended June 30, 1997 was $11,000 and $93,000 higher than in the
three and six months ended June 30, 1996, respectively. This increases primarily
reflected (i) the hiring of additional personnel and (ii) increased research and
development activities related to preparing to commence production of CompuShare
2000.
Liquidity and Capital Resources
The Company has had only limited revenues to date and, as a result, has
had negative cash flow from operations during each year since it commenced
operations and during the first six months of 1997. The amount of cash used by
the Company for operating activities was $1,392,000 during the first six months
of 1997.
<PAGE>
13
As of June 30, 1997, the Company had cash and cash equivalents of
approximately $12.2 million (including approximately $610,000 of restricted cash
that has been pledged as collateral for a letter of credit in such amount
securing certain purchase commitments of the Company relating to its wireless
printing product). The Company estimates that its cash on hand and cash
generated from operations will be sufficient to fund the cash requirements
relating to its existing business for at least the next 12 months, although
there can be no assurance of this. However, the Company may determine to expand
or diversify through acquisitions, in which event additional financing may be
required. If additional financing is required, there can be no assurance that
the Company will be able to obtain such additional financing on terms acceptable
to the Company and at the times required by the Company, or at all. The Company
does not have any bank or other lines of credit available to it at present.
On April 17, 1997, the Board of Directors authorized the Company to
repurchase shares of the Company's common stock from time to time for an
aggregate cost not to exceed $1,000,000. As of June 30, 1997, the Company had
repurchased 50,000 shares at an aggregate cost of $52,500.
Disclosure of Effect of Adoption of New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 128, Earnings per Share ("FAS 128"), which
requires the presentation of basic earnings per share in a company's financial
statements for reporting periods ending subsequent to December 15, 1997. Early
adoption of FAS 128 is not permitted. The adoption of FAS 128 is not expected to
have a material impact on the Company's consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 130, Reporting Comprehensive Income ("FAS 130"),
which requires the presentation of the components of comprehensive income in a
company's financial statements for reporting periods beginning subsequent to
December 15, 1997. Comprehensive income is defined as the change in a company's
equity during a financial reporting period from transactions and other
circumstances from nonowner sources (including cumulative translation
adjustments, minimum pension liabilities and unrealized gains/losses on
available for sale securities). The adoption of FAS 130 is not expected to have
material impact on the Company's consolidated financial statements.
<PAGE>
14
Part II
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on May 29, 1997. The
holders of 3,700,828 shares were present either in person or by proxy. There
were no broker non-votes at the meeting. The following three matters were voted
on and approved at such meeting:
1. The election of eight members to the Board of Directors of the
Company (constituting the entire Board).
For Withheld
--- --------
Alan P. Haber 3,682,928 17,900
Barry L Eisenberg 3,672,928 27,900
Simon M. Kahn 3,682,928 17,900
Bernard S. Appel 3,682,928 17,900
Nicole R. Kubin 3,682,928 17,900
Morton L. Landowne 3,672,928 27,900
Morris J. Smith 3,682,928 17,900
William Spier 3,672,928 27,900
2. An amendment to the Company's 1996 Stock Option Plan to increase
the number of shares subject thereto.
For Against Abstain
--- ------- -------
3,588,204 105,824 6,800
3. The ratification of the appointment of Price Waterhouse LLP as the
Company's independent auditors for the fiscal year ending December 31, 1997.
For Against Abstain
--- ------- -------
3,554,913 1,700 1,400
<PAGE>
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are furnished with this report:
11.1 Statement re: computation of per share earnings
27.1 Financial Data Schedule
(b) The Registrant filed one report on form 8-K during the quarter
ended June 30, 1997. The date of this report was May 11, 1997, and Item
5 was reported.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
INTEGRATED TECHNOLOGY USA, INC.
By: Simon Kahn
-----------------------------
Simon Kahn
Chief Financial Officer
(signing both on behalf of the registrant and in his capacity as Principal
Financial and Principal Accounting Officer)
Dated: August 13, 1997
<PAGE>
16
Integrated Technology USA, Inc. Exhibit 11.1
Earnings per share
<TABLE>
<CAPTION>
Period Days Shares Weighted Weighted Avg. Net Net Loss
Outstanding Outstanding Outstanding Shares Shares Loss Per Share
----------- ----------- ----------- ------ ------ ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Three Months
Ended June 30, 1996
- --------------------
Balance at 4/1/96 4/1/96-6/30/96 91 2,930,178 266,646,198 2,930,178
1995/96 cheap
warrants/options 4/1/96-6/30/96 (A) 91 202,036 18,385,276 202,036
------- -------
3,132,214 3,132,214 (631,065) (0.20)
--------- ---------
Six Months Ended
June 30, 1996
- ----------------
Balance at 1/1/96 1/1/96-6/30/96 181 2,930,178 530,362,218 2,930,178
1995/96 cheap
warrants/options 1/1/96-6/30/96 (A) 181 202,036 36,568,516 202,036
------- -------
3,132,214 3,132,214 (949,157) (0.30)
Three Months Ended
June 30, 1997
- ------------------
Balance at 4/1/97 4/1/97-4/23/97 23 6,068,212 139,568,876 1,533,724
After repurchase of
certain shares 4/23/97-6/30/97 68 6,018,212 409,238,416 4,497,125
--------- ---------
6,018,212 6,030,849 (704,650) (0.12)
--------- ---------
Six Months Ended
June 30, 1997
- ----------------
Balance at 1/1/97 1/1/97-4/23/97 113 6,005,179 678,585,227 3,749,090
After repurchase of
certain shares 4/23/97-6/30/97 68 5,955,179 404,952,172 2,237,305
Exercise of
Stock Options 1/20/97-6/30/97 161 38,032 6,123,152 33,830
Exercise of
Bridge Warrants 2/5/97-6/30/97 145 16,667 2,416,715 13,352
Exercise of
Bridge Warrants 3/20/97-6/30/97 102 8,334 850,068 4,697
----- -----
6,018,212 6,038,274 (1,314,556) (0.22)
--------- ---------
(A) Computed using the treasury stock method and an estimated offering price of $7 per share
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such consolidated financial statements and notes.
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,176,130
<SECURITIES> 0
<RECEIVABLES> 128,418
<ALLOWANCES> 45,835
<INVENTORY> 202,536
<CURRENT-ASSETS> 12,607,281
<PP&E> 426,696
<DEPRECIATION> 229,273
<TOTAL-ASSETS> 12,843,986
<CURRENT-LIABILITIES> 450,865
<BONDS> 0
<COMMON> 61,192
0
0
<OTHER-SE> 12,213,416
<TOTAL-LIABILITY-AND-EQUITY> 12,843,986
<SALES> 377,292
<TOTAL-REVENUES> 377,292
<CGS> 190,025
<TOTAL-COSTS> 190,025
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (312,897)
<INCOME-PRETAX> (1,314,556)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,314,556)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> 0.00
</TABLE>
