<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
or
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ____________________
Commission file number: 001-12189
IMAGE GUIDED TECHNOLOGIES, INC.
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
COLORADO 84-1139082
--------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5710-B FLATIRON PARKWAY, BOULDER, CO 80301
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(303) 447-0248
---------------------------------------------------
(Registrant'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 Securities Exchange Act of 1934 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
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,114,112 shares of common
stock, no par value, were outstanding on October 31, 1997.
Transitional Small Business Disclosure Format (check one); Yes No X
--- ---
<PAGE>
Table of Contents
Part Item Page
- ---- ---- ----
I FINANCIAL INFORMATION
1. Financial Statements
Balance Sheet -- September 30, 1997 1
Statements of Operations -- Three Months and
Nine Months Ended September 30, 1997 and 1996 2
Statements of Cash Flows -- Nine Months Ended
September 30, 1997 and 1996 3
Notes to Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation
Financial Condition and Results of Operations 4
Liquidity and Capital Resources 6
Forward-Looking Statements 6
Other Matters 9
II OTHER INFORMATION
1. Legal Proceedings 10
2. Changes in Securities and Use of Proceeds 10
3. Defaults Upon Senior Securities 11
4. Submission of Matters to a Vote of Security Holders 11
5. Other Information 11
6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IMAGE GUIDED TECHNOLOGIES, INC.
BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,729,000
Accounts receivable, net of allowance for doubtful accounts
of $71,000 at September 30, 1997 986,000
Inventories, net 416,000
Other current assets 96,000
-----------
Total current assets 6,227,000
Property and equipment, net of accumulated depreciation of
$232,000 at September 30, 1997 363,000
Other assets 16,000
-----------
Total assets $ 6,606,000
-----------
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 281,000
Accrued liabilities 224,000
Current portion of capital lease obligation 40,000
-----------
Total current liabilities 545,000
Capital lease obligation 73,000
-----------
Total liabilities 618,000
-----------
Commitments and contingencies
Shareholders' equity
Common Stock, no par value; 10,000,000 shares authorized;
3,114,112 shares issued and outstanding at September 30, 1997 8,771,000
Accumulated deficit (2,783,000)
-----------
Total shareholders' equity 5,988,000
-----------
Total liabilities and shareholders' equity $ 6,606,000
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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IMAGE GUIDED TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue $1,333,000 $1,165,000 $3,829,000 $2,912,000
Cost of goods sold 556,000 555,000 1,670,000 1,289,000
---------- ---------- ---------- ----------
Gross profit 777,000 610,000 2,159,000 1,623,000
---------- ---------- ---------- ----------
Operating expenses:
Research and development 372,000 155,000 786,000 456,000
Selling and marketing 163,000 162,000 481,000 386,000
General and administrative 300,000 172,000 825,000 496,000
---------- ---------- ---------- ----------
Total operating expenses 835,000 489,000 2,092,000 1,338,000
---------- ---------- ---------- ----------
Operating income (loss) (58,000) 121,000 67,000 285,000
Other income (expense):
Interest and other expense (1,000) (22,000) (12,000) (66,000)
Interest and other income 64,000 3,000 188,000 9,000
---------- ---------- ---------- ----------
Net Income $ 5,000 $ 102,000 $ 243,000 $ 228,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share $0.00 $0.07
Weighted average common shares
outstanding 3,520,069 3,549,047
Pro forma earnings per share $0.04 $0.10
Pro forma weighted average
common shares outstanding 2,333,850 2,324,943
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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IMAGE GUIDED TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1997 1996
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 243,000 $ 228,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 106,000 63,000
Write-off of fixed assets 8,000 ---
Provision for doubtful accounts 14,000 26,000
Allowance for inventory obsolescence 48,000 2,000
Changes in operating assets and liabilities:
Accounts receivable (478,000) (161,000)
Inventories (47,000) (196,000)
Other current assets 9,000 (4,000)
Deposits --- (17,000)
Accounts payable (113,000) 194,000
Accrued liabilities (69,000) 10,000
---------- ----------
Net cash provided by (used in) operating activities (279,000) 145,000
---------- ----------
INVESTING ACTIVITIES:
Additions to property and equipment (195,000) (127,000)
---------- ----------
Net cash used in investing activities (195,000) (127,000)
---------- ----------
FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock --- 337,000
Deferred public offering costs (275,000)
Common stock repurchases (26,000) ---
Principal payments on capital leases (11,000) ---
---------- ----------
Net cash provided by (used in) financing activities (37,000) 62,000
---------- ----------
Net increase (decrease) in cash and cash equivalents (511,000) 80,000
Cash and cash equivalents at beginning of period 5,240,000 32,000
---------- ----------
Cash and cash equivalents at end of period $4,729,000 $ 112,000
---------- ----------
---------- ----------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $9,000 $9,000
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
Equipment acquired under capital lease --- $126,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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IMAGE GUIDED TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying financial statements of Image Guided Technologies, Inc.
(the "Company") are unaudited. However, in the opinion of management, such
statements reflect all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation. Interim results of operations
are not necessarily indicative of results for the full year.
Certain reclassifications of the 1996 financial information have been made
in order to conform to current year presentation.
2. Inventories
Inventories are comprised of the following at September 30, 1997:
Raw materials $214,000
Work-in-process 141,000
Finished goods 120,000
--------
475,000
Less allowance for obsolescence (59,000)
--------
$416,000
--------
--------
3. Earnings per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS No. 128, which is effective for periods ending after December 15,
1997, requires changes in the computation, presentation, and disclosure of
earnings per share. All prior period earnings per share data must be restated
to conform with the provisions of SFAS No. 128. If the provisions of SFAS No.
128 had been adopted on January 1, 1997, the basic earnings per share for the
three and nine months ended September 30, 1997 would be $0.00 and $0.08,
respectively, and the diluted earnings per share for the three and nine months
ended September 30, 1997 would be $0.00 and $0.07, respectively. The pro forma
basic earnings per share for the three and nine months ended September 30, 1996
would be $0.06 and $0.14, respectively, and the pro forma diluted earnings per
share for the three and nine months ended September 30, 1996 would be $0.04 and
$0.10, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion of the results of operations and financial
condition should be read in conjunction with the financial statements and notes
thereto.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Revenue increased by $168,000, or approximately 14%, to $1,333,000 for
the three months ended September 30, 1997, as compared to $1,165,000 for the
three months ended September 30, 1996. This increase was primarily due to
greater demand for the Company's FlashPoint-Registered Trademark- 5000 and
Pixsys-TM- 5000 products.
Cost of goods sold was relatively unchanged at $556,000 for the three
months ended September 30, 1997, compared to $555,000 for the three months
ended September 30, 1996. Cost of goods sold as a percentage of revenue
decreased to 42% for the three months ended September 30, 1997, as
4
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compared to 48% for the three months ended September 30, 1996. The decrease
in cost of goods sold as a percentage of revenue was attributable to changes
in the mix of products sold.
Research and development expenses increased by $217,000, or approximately
140%, to $372,000 for the three months ended September 30, 1997, compared to
$155,000 for the three months ended September 30, 1996. This increase was
principally due to the addition of engineering personnel and related expenses,
increased testing of products to meet regulatory requirements and to product
development.
Selling and marketing expenses were relatively unchanged at $163,000 for
the three months ended September 30, 1997, as compared to $162,000 the three
months ended September 30, 1996.
General and administrative expenses increased by $128,000, or
approximately 74%, to $300,000 for the three months ended September 30, 1997,
as compared to $172,000 for the three months ended September 30, 1996. This
increase was primarily attributable to the additional expenses necessary for a
public company, increased salaries, and to additional personnel and associated
costs.
Operating income (loss) decreased by $179,000 to $(58,000) for the three
months ended September 30, 1997 compared to operating income of $121,000 for
the three months ended September 30, 1996. This decrease was primarily
attributable to additional personnel and related expenses, increased testing of
products, product development, and to the expenses necessary to operate as a
public company.
Net other income (expense) increased by $82,000 to $63,000 for the three
months ended September 30, 1997 from $(19,000) for the three months ended
September 30, 1996. This change was primarily due to interest income on net
proceeds from the initial public offering (the "IPO").
As a result of the foregoing, the Company recognized net income of $5,000
for the three months ended September 30, 1997, compared to net income of
$102,000 for the three months ended September 30, 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Revenue increased by $917,000, or approximately 31%, to $3,829,000 for the
nine months ended September 30, 1997, as compared to $2,912,000 for the nine
months ended September 30, 1996. This increase was primarily due to greater
demand for the Company's FlashPoint 5000 and Pixsys 5000 products.
Cost of goods sold increased by $381,000, or approximately 30%, to
$1,670,000 for the nine months ended September 30, 1997, compared to $1,289,000
for the nine months ended September 30, 1996. This increase in cost of goods
sold was attributable to increased sales volume. Cost of goods sold as a
percentage of revenue was unchanged at 44% for the nine months ended
September 30, 1997 and September 30, 1996.
Research and development expenses increased by $330,000, or approximately
72%, to $786,000 for the nine months ended September 30, 1997, compared to
$456,000 for the nine months ended September 30, 1996. This increase was
principally due to the addition of engineering personnel and related expenses,
to increased testing of product to meet regulatory requirements and to product
development.
Selling and marketing expenses increased by $95,000, or approximately 25%,
to $481,000 for the nine months ended September 30, 1997, as compared to
$386,000 for the nine months ended September 30, 1996. This increase was
primarily attributable to the addition of personnel and related expenses, as
well as expanded marketing activities to generate increases in revenue.
General and administrative expenses increased by $329,000, or
approximately 66%, to $825,000 for the nine months ended September 30, 1997, as
compared to $496,000 for the nine months ended September 30, 1996. This
increase was primarily attributable to the additional expenses necessary for a
public company, increased salaries, and to additional personnel and associated
costs.
Operating income decreased by $218,000 to $67,000 for the nine months
ended September 30, 1997 compared to operating income of $285,000 for the nine
months ended September 30, 1996. This
5
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decrease was primarily attributable to additional personnel and related
expenses, increased testing of products, product development, and to the
expenses necessary to operate as a public company.
Net other income (expense) increased by $233,000 to $176,000 for the nine
months ended September 30, 1997 from $(57,000) for the nine months ended
September 30, 1996. This change was primarily due to interest income on net
proceeds from the IPO and to interest expense incurred in 1996 in connection
with funds borrowed by the Company and paid off with a portion of the IPO
proceeds.
As a result of the foregoing, net income increased to $243,000 for the
nine months ended September 30, 1997, compared to net income of $228,000 for
the nine months ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had working capital of $5,682,000,
compared to working capital of $5,571,000 at December 31, 1996. The
improvement in working capital was primarily the result of increases in
accounts receivable and decreases in accounts payable and accrued liabilities.
During the nine months ended September 30, 1997, $279,000 in cash was used
in operating activities, principally by increased accounts receivable and
decreased accounts payable and accrued liabilities, all partially offset by net
income. The Company used $195,000 in cash for investing activities during the
nine month period ended September 30, 1997 to purchase property and equipment.
Also during the nine month period ended September 30, 1997, $37,000 in cash was
used in financing activities for principal payments on a capital lease and for
payments to repurchase shares of the Company's common stock.
On October 24, 1996, Image Guided Technologies, Inc. closed on its IPO of
1,437,500 shares of common stock, including a 187,500 share over-allotment
purchase by the IPO underwriter at the IPO price of $5.00 per share. The
offering resulted in gross proceeds of $7,187,500. Aggregate offering cost was
approximately $1,500,000. The shares were offered pursuant to a Registration
Statement on Form SB-2 filed with the Securities and Exchange Commission. A
portion of the proceeds was used to retire approximately $889,000 of 11%
secured notes and related interest.
FORWARD-LOOKING STATEMENTS
The Company may, in discussions of its future plans, objectives and
expected performance in periodic reports filed by the Company with the
Securities and Exchange Commission (or documents incorporated by reference
therein) and in written and oral presentations made by the Company, include
projections or other forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act
of 1934, as amended. Such projections and forward-looking statements are based
on assumptions which the Company believes are reasonable, but are by their
nature inherently uncertain. In all cases, there can be no assurance that such
assumptions will prove correct or that projected events will occur, and actual
results could differ materially from those projected. Some of the important
factors that could cause actual results to differ from any such projections or
other forward-looking statements follow.
LIMITED HISTORY OF PROFITABILITY AND POTENTIAL FLUCTUATIONS IN OPERATING
RESULTS. Prior to its fiscal year ending December 31, 1996, the Company had
experienced significant operating losses. Its accumulated deficit was
$2,783,000 at September 30, 1997 and $3,026,000 at December 31, 1996. While
the Company was profitable for the quarter ended September 30, 1997, there can
be no assurance that the Company will consistently generate sufficient revenues
to attain profitability on an annual basis. In addition, because the Company
generally ships its products on the basis of purchase orders, operating results
in any quarter are highly dependent on orders booked and shipped in that
quarter and, accordingly, may fluctuate materially from quarter to quarter.
The Company's operating expense levels are based on the Company's internal
forecasts of future demand and not on firm customer orders. Failure by the
Company to achieve these internal forecasts could result in expense levels
which are inconsistent with actual revenues. Moreover, the Company's quarterly
results may also be affected by fluctuating demand for the Company's products,
declines in the average selling prices for its products, and by increases in
the costs of the components and subassemblies acquired by the Company from
vendors.
6
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DEPENDENCE ON A FEW CUSTOMERS. Of the Company's customer base, relatively
few are large. None of these large customers has entered into any long term
minimum purchase agreements with the Company. The loss of, or substantial
diminution of purchases from the Company by, any of these customers could have
a material adverse effect on the Company.
THE COMPANY'S DEPENDENCE ON A SINGLE TYPE OF PRODUCT. All the Company's
revenues are derived from sales of its optical localizers (including parts).
Although the Company is currently seeking to expand the markets for its
localizers, there can be no assurance that it will be successful.
THE UNCERTAINTY OF MARKET ACCEPTANCE FOR THE COMPANY'S PRODUCT. The
market for optical localizers has only recently begun to develop. The market
for optical localizers may continue to develop or may develop more slowly than
the Company anticipates or cease altogether. Demand for optical localizers
could be affected by numerous factors outside the Company's control, including,
among others, market acceptance by medical and industrial customers, changes in
governmental regulation and the introduction of new or superior competing
technologies.
TECHNOLOGICAL CHANGE IN THE MEDICAL INDUSTRY AND IN THE COMPANY'S PRODUCT.
There can be no assurance that the Company's competitors will not succeed in
developing or marketing products or technologies that are more effective and/or
less costly and which render the Company's products obsolete or non-
competitive. In addition, new technologies and procedures could be developed
for medical and other industries that replace or reduce the value of the
Company's products. The Company's success will depend in part on its ability
to respond quickly to technological changes through the development and
improvement of its products. The Company believes that a substantial amount of
capital will be required to be allocated to such activities in the future.
THE RISK OF PATENT INFRINGEMENT CLAIMS BROUGHT AGAINST THE COMPANY'S
CUSTOMERS. There are a number of patents that utilize a localizer as part of
their claimed inventions, several of which relate to the medical industry. One
of the patents relating to the medical industry is the patent granted to St.
Louis University (the "SLU Patent"), and subsequently licensed to Surgical
Navigation Technologies, Inc. In general, the SLU Patent covers a particular
technique for determining the position of a surgical probe within a patient's
body on an historical image of that body. The Company is not in a position to
evaluate whether its customers may be infringing the SLU Patent or any of the
other patents. If any infringement claim is brought or threatened against any
of the Company's customers, it could have a material adverse effect on orders
of the Company's products from these customers.
THE COMPANY'S ABILITY TO PROTECT ITS INTELLECTUAL PROPERTY RIGHTS. The
Company has one patent that covers a use of its FlashPoint optical localizer
and one patent on a method for instrument identification. In addition, the
Company relies on a combination of trade secret and copyright laws, together
with nondisclosure agreements to protect its know-how and proprietary rights.
There can be no assurance that such measures will provide adequate protection
for the Company's intellectual property rights, that disputes with respect to
the ownership of its intellectual property rights will not arise, that the
Company's trade secrets or proprietary technology will not otherwise become
known or be independently developed by competitors or that the Company can
otherwise meaningfully protect its intellectual property rights. Furthermore,
there can be no assurance that others will not develop similar products or
software, duplicate the Company's products or software or that third parties
will not assert intellectual property infringement claims against the Company.
The Company believes that the manufacture and sale of its FlashPoint localizer
does not infringe the SLU Patent, since a localizer is only a component part in
the system patented by SLU and since the Company's FlashPoint localizer has
substantial non-infringing uses. Moreover, there can be no assurance that any
patent owned by, or issued to, the Company will not be invalidated,
circumvented or challenged (including, without limitation, on the basis of the
SLU Patent or other patents), or that the rights granted thereunder will
provide meaningful competitive advantages to the Company.
Litigation may be necessary to protect the Company's intellectual property
rights and trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity (including, without limitation, claims brought by parties whose
technology, such as those which may be the basis of the SLU Patent, utilizes a
localizer). Such litigation could result in substantial costs and diversion of
resources, regardless of the outcome of the litigation. If any claims are
asserted against the Company, the Company may be required to obtain a license
under a third party's intellectual property rights. However, such a license
may not be available on reasonable terms or at all.
7
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COMPETITION BY EXISTING COMPETITORS AND POTENTIAL NEW ENTRANTS INTO THE
MARKETPLACE. The Company's primary competitor in the medical market currently
is Northern Digital Inc. In addition, companies with substantially greater
financial, technical, marketing, manufacturing and human resources, as well as
name recognition, than the Company may also enter the market. Competitors may
be able to respond more quickly to new or emerging technologies and changes in
customer requirements and to devote substantially greater resources to the
development, marketing and sale of their products than the Company. The
Company's customers may develop their own localizers to ensure control over
their localizer technology, to be able to differentiate their product or for
other reasons. Furthermore, such competitors may develop technology other than
that based on infrared optics that is more effective or economical than the
technology of the Company in localizing a point in space.
REGULATION BY THE FDA. Noncompliance with applicable requirements of the
US Food and Drug Administration (the "FDA") can result in, among other things,
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, failure of the government to grant premarket
clearance or premarket approval for medical devices, withdrawal of marketing
approvals and criminal prosecution. The FDA also has the authority to request
repair, replacement or refund of the cost of any medical device.
There can be no assurance that the Company's customers have complied or
will be able to comply with all applicable FDA market clearance requirements,
including those which may arise from the incorporation of the Company's
FlashPoint product into the customer's product. Moreover, there can be no
assurance that the FDA will not require, or change its interpretations or
regulations so as to require, the Company to obtain 510(k) clearance for its
FlashPoint localizer apart from or in addition to any market clearances
obtained by its medical device customers.
In addition, international sales of medical devices are subject to foreign
regulatory requirements, which vary from country to country.
THE RISK OF PRODUCT LIABILITY CLAIMS. The Company faces an inherent
business risk of exposure to product liability claims in the event that the use
of its products is alleged to have resulted in adverse effects. To date, no
product liability claims have been asserted against the Company. The Company
maintains a product liability and commercial general liability insurance policy
with coverage of $1,000,000 per occurrence and an annual aggregate maximum
coverage of $2,000,000 ($1,000,000 for lawsuits outside the United States,
Canada and Puerto Rico). The Company's product liability and general liability
policy is provided on an occurrence basis and is subject to annual renewal.
There can be no assurance that liability claims will not exceed the coverage
limits of such policy or that such insurance will continue to be available on
commercially reasonable terms or at all. If the Company does not or cannot
maintain sufficient liability insurance, its ability to market its products
could be significantly impaired.
POSSIBLE CHANGES TO GOVERNMENT REGULATIONS GOVERNING HEALTH CARE. The
health care industry is undergoing fundamental changes as a result of
political, economic and regulatory influences. In the United States,
comprehensive programs have been proposed that seek to increase access to
health care for the uninsured, control the escalation of health care
expenditures within the economy and use health care reimbursement policies to
help control the federal deficit. The Company anticipates that Congress and
state legislatures will continue to review and assess alternative health care
delivery systems and methods of payment and public debate of these issues will
likely continue. Due to uncertainties regarding the outcome of reform
initiatives and their enactment and implementation, the Company cannot predict
which, if any, of such reform proposals will be adopted or when they might be
adopted. Other countries are also considering health care reform. Significant
changes in health care systems could have a substantial impact on the manner in
which the Company conducts its business.
THE COMPANY'S DEPENDENCE ON KEY MANAGEMENT AND TECHNICAL PERSONNEL AND ITS
ABILITY TO ATTRACT NEW PERSONNEL. The Company's success depends in significant
part on the continued contribution of certain key management and technical
personnel, including: Paul L. Ray, Chairman of the Board and Chief Executive
Officer; Robert E. Silligman, President and Chief Operating Officer; Waldean
Schulz, Vice President, Technology and Secretary; and Jeffrey J. Hiller, Vice
President, Finance and Chief Financial Officer. The loss of services of any of
these individuals could have a material adverse effect on the Company. The
Company's growth and profitability also depend on its ability to attract and
retain other management and technical personnel.
8
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OTHER MATTERS
The Company anticipates greater spending on research and development and
selling and marketing activities for the foreseeable future. This spending
could adversely effect operating income.
9
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company filed an SB-2 registration statement with the SEC effective
October 21, 1996. The commission file number assigned to this registration is
1-12189. This offering was underwritten by Hampshire Securities Corporation
and closed on October 21, 1996. The Company registered shares of Common Stock
and underwriter's Warrants (Warrants to purchase up to 125,000 shares of Common
Stock). All shares of Common Stock registered (except for the shares
underlying the underwriter's Warrants) and the underwriter's Warrants were
sold.
The following table lists information regarding the Company's securities
titled Common Stock, no par value (except for the shares underlying the
underwriter's Warrants):
For the account
For the account of any selling
of the issuer security holder(s)
--------------- ------------------
Amount registered 1,437,500 none
Aggregate price of
offering amount registered $7,188,000 none
Amount sold 1,437,500 none
Aggregate offering price
of amount sold $7,188,000 none
The following table lists an estimate of the amount of expenses incurred
in connection with the issuance and distribution of the securities registered:
Direct or indirect payments to others*
--------------------------------------
Underwriting discounts and commissions $ 719,000
Finder's Fees ---
Expenses paid to or for underwriters 250,000
Other expenses 532,000
----------
Total expenses $1,501,000
----------
----------
* There were no direct or indirect payments to directors, officers, or to
persons owning ten percent or more of any class of equity securities of the
Company.
The net offering proceeds to the Company after the total expenses above
were approximately $5,687,000.
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The following table lists an estimate of the amount of net offering
proceeds used from October 21, 1996 through September 30, 1997 for the
following purposes:
Direct or indirect payments to others*
--------------------------------------
Construction of plant, building and
facilities $ ---
Purchase and installation of machinery
and equipment 117,000
Purchase of real estate ---
Acquisition of other business(es) ---
Repayment of indebtedness 889,000
Working capital 1,610,000
Short-term temporary investments 1,491,000
Research and development 901,000
Marketing and technical support 679,000
* There were no direct or indirect payments to directors, officers, or to
persons owning ten percent or more of any class of equity securities of the
Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Document
------- -----------------------
27.1 Financial Data Schedule.
- ---------------------
(b) Form 8-K Reports
The Company filed no reports on Form 8-K during the quarter ended
September 30, 1997.
11
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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,
thereunto duly authorized.
IMAGE GUIDED TECHNOLOGIES, INC.
(Registrant)
By: /s/ Paul L. Ray
----------------------------------
November 13, 1997 Paul L. Ray
Chairman of the Board and
Chief Executive Officer
By: /s/ Jeffrey J. Hiller
----------------------------------
November 13, 1997 Jeffrey J. Hiller
Vice President and Chief
Financial Officer
(Principal Accounting Officer)
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