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, 2000
----------------------------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from to
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Commission file number 000-28301
ID TECHNOLOGIES CORPORATION
----------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
North Carolina 56-1866233
------------------------------------ -----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
920 Main Campus Drive / Suite 400
Raleigh, North Carolina 27606
(Address of Principal Executive Offices)
(919) 424-3722
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and
Former Fiscal Year, if Changed Since Last Report)
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
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State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: The issuer had 8,936,514
shares of common stock outstanding as of October 1, 2000.
Transitional Small Business Disclosure Format (check one):
Yes No X
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<PAGE>
FORM 10-QSB INDEX
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Item 2. Management's Plan of Operation.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements. Any statements
contained in this Form 10-QSB that are not statements of historical fact are
intended to be and are hereby identified as forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. ID
Technologies Corporation, a North Carolina corporation (the "Company" or
"IDTEK") cautions readers that forward-looking statements involve known and
unknown risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performance and underlying
assumptions and other statements which are other than statements of historical
facts.
Without limiting the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "estimate," "continue" or comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, and actual results may
differ materially depending on a variety of factors, many of which are not
within the Company's control. These factors include, but are not limited to,
economic conditions generally and in the industries in which the Company may
participate; competition within the Company's chosen industry, including
competition from much larger competitors; technological advances; and failure by
the Company to successfully develop potential products and/or business
relationships and strategic alliances. In addition to other factors and matters
discussed elsewhere herein, the following are important factors that, in the
view of the Company, could cause actual results to differ materially from those
discussed in the forward-looking statements: ability of the Company to obtain
acceptable forms and amounts of financing to fund current and future operations,
research and development and acquisitions; competition; the Company's operating
losses; the Company's ability to commercially develop its proposed products; the
Company's ability to attract, hire and retain employees and management
personnel; and the Company's ability to regain control over the development and
exploitation of its technology. The Company disclaims any intent or obligation
to update these forward-looking statements, whether as a result of new
information, future events or otherwise.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ID Technologies Corporation
(A Development Stage Company)
Balance Sheets
September 30, December 31,
2000 1999
(Unaudited) (Audited)
----------- -----------
Assets
Cash and cash equivalents $ 333,323 $ 62,986
Notes receivable 3,270 3,270
Prepaid expenses 8,280 150
----------- -----------
Total current assets 344,873 66,406
Equipment, net 1,320 1,884
Patents, net 14,574 17,562
----------- -----------
Total Assets $ 360,767 $ 85,852
=========== ===========
Liabilities and Shareholders' Deficit
Accounts payable and accrued liabilities $ 154,218 $ 122,260
Note Payable to Protek 25,987 -
Note payable to shareholder 49,217 -
Convertible debt, net of discount of
$72,800 and $171,000
at September 30, 2000
and December 31, 1999, respectively 327,200 129,000
----------- -----------
Total current liabilities 556,622 251,260
Deferred Revenue 182,062 93,000
Long term convertible debt, net
of discount of $23,204 and $34,166
at September 30, 2000 and
December 31, 1999, respectively 161,796 150,834
Shareholders' deficit:
Series A Preferred stock, $.001 par
value; 300,000 shares authorized;
no shares issued and outstanding - -
Common stock, no par value,
50,000,000 shares authorized;
8,936,514 and 8,277,583 shares
issued and outstanding at
September 30, 2000 and
December 31, 1999, respectively 282,953 282,953
Additional paid-in capital 3,880,630 3,390,859
Deficit accumulated during
the developmental stage (4,703,296) (4,083,054)
----------- -----------
Total shareholders' deficit (539,713) (409,242)
----------- -----------
Total liabilities and sharehholders' deficit $ 360,767 $ 85,852
=========== ===========
<PAGE>
<TABLE>
<CAPTION>
ID Technologies Corporation
(A Development Stage Company)
Statements of Operations
Period from
Inception (March 16,
9 months ended 9 months ended 1994) through
September 30, 2000 September 30, 1999 September 30, 2000
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- ------------
<S> <C> <C> <C>
License revenue $ - $ - $ 92,000
Research and development 40,270 204,000 703,938
Selling, general and
administrative expenses 354,079 335,943 3,774,251
----------- ----------- ------------
Loss from Operations (394,349) (539,943) (4,386,189)
Other Income & Expense:
Interest income - contractual 95 1,000 2,252
Amortization of debt discount on
convertible debentures (187,162) (6,050) (253,866)
Interest expense (38,826) (11,758) (65,493)
----------- ----------- ------------
(225,893) (16,808) (317,107)
----------- ----------- ------------
Net Loss $ (620,242) $(556,751) $(4,703,296)
=========== =========== ============
Basic and diluted loss per common share $ (.07) $ (.07)
=========== ===========
Weighted average number of
Common shares outstanding 8,374,139 8,243,315
=========== ===========
</TABLE>
3 months ended 3 months ended
September 30, 2000 September 30, 1999
(Unaudited) (Unaudited)
----------- -----------
License revenue $ - $ -
Research and development 30,270 68,000
Selling, general and
administrative expenses 127,163 142,423
----------- -----------
Loss from Operations (157,433) (210,423)
Other Income & Expense:
Interest income - contractual 95 -
Amortization of debt discount on
convertible debentures (65,854) (3,654)
Interest expense (15,245) (8,204)
----------- -----------
(81,004) (11,858)
----------- -----------
Net Loss $ (238,437) $ (222,281)
=========== ===========
Basic and diluted loss per common share $ (.03) $ (.03)
=========== ===========
Weighted average number of
common shares outstanding 8,450,679 8,378,279
=========== ===========
<PAGE>
<TABLE>
<CAPTION>
ID Technologies Corporation
(A Development Stage Company)
Statement of Shareholders' Equity (Deficit)
Period from inception (March 16, 1994) through September 30, 2000
Deficit
Additional Accumulated
Paid-in During
Shares Amount Capital Development Total
------ ------ ------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balance at March 16, 1994 - $ - $ - $ - $ -
Issuance of common shares
for cash and noncash
consideration 1,595,200 366 33 - 399
Net loss - - - (123) (123)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1994 1,595,200 366 33 (123) 276
Issuance of common shares
for cash and noncash
consideration 404,800 - 101 - 101
Net loss - - - (2,263) (2,263)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1995 2,000,000 366 134 (2,386) (1,886)
Issuance of common shares
for cash and noncash
consideration 6,000,000 - 1,500 - 1,500
Net loss - - - (29,889) (29,889)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1996 8,000,000 366 1,634 (32,275) (30,275)
Issuance of common shares
for cash, net of
issuance costs 153,333 282,587 - -
282,587
Capital contribution in form
of research and
development services - - 201,405 - 201,405
Stock based compensation - - 1,333,600 - 1,333,600
Net loss - - - (1,684,313) (1,684,313)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 8,153,333 282,953 1,536,639 (1,716,588) 103,004
Issuance of common shares
for cash, net of
issuance costs 22,500 - 45,000 -
45,000
Capital contribution in form
of research and
development services - - 192,319 -
192,319
Stock based compensation - - 933,425 - 933,425
Net loss - - - (1,426,725) (1,426,725)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 8,175,833 $ 282,953 $ 2,707,383 $(3,143,313) $ (152,977)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deficit
Additional Accumulated
Paid-in During
Shares Amount Capital Development Total
------ ------ ------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of warrants in connection
with convertible debt - - 271,870 - 271,870
Capital contribution in form
of research and
development services - - 269,441 - 269,441
Issuance of common shares
for noncash consideration 101,750 - 142,165 - 142,165
Net loss - - - (939,741) (939,741)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 8,277,583 282,953 3,390,859 (4,083,054) (409,242)
Capital contribution in form
of research and
development services - - 40,270 -
40,270
Issuance of common shares
for noncash consideration 115,987 - 76,050 -
76,050
Issuance of common shares
for cash 542,944 - 295,451 - 295,451
Issuance of options
in connection with
convertible debt - - 78,000 -
78,000
Net Loss - - - (620,242)
----------- ----------- ----------- ----------- -----------
(620,242)
Balance at September 30, 2000 8,936,514 $ 282,953 $ 3,880,630 $(4,703,296) $ (539,713)
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ID Technologies Corporation
(A Development Stage Company)
Statements of Cash Flows Period from
Inception (March 16,
9 months ended 9 months ended 1994) through
September 30, 2000 September 30, 1999 September 30, 2000
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (620,242) $ (556,751) $(4,703,296)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 564 368 1,955
Amortization 2,988 2,990 13,329
Deferred revenue 89,062 - 182,062
Stock based compensation - - 2,267,025
Noncash marketing expenses - 4,165 49,165
Noncash development expenses 40,270 204,000 705,064
Noncash professional fees 76,050 - 214,050
Discount on convertible debentures 187,162 6,050 253,866
Change in operating assets and liabilities:
Notes receivable - 10,000 (3,270)
Prepaids and Deposits (8,130) - (8,280)
Accounts payable and accrued liabilities 31,958 30,389 154,218
----------- ----------- -----------
Net cash used in operating activities (200,318) (298,789) (874,112)
Cash flows from investing activities:
Patent costs - - (27,903)
Purchase of equipment - - (3,275)
----------- ----------- -----------
Net cash used in investing activities - - (31,178)
Cash flows from financing activities:
Proceeds from note payable to shareholder 100,000 65,460 202,750
Payment of note payable to shareholder (50,783) (108,210) (153,533)
Proceeds from Notes Payable-Protek 25,987 - 25,987
Proceeds from sale of common stock 295,451 - 578,409
Proceeds from sale of convertible debt 100,000 565,000 665,000
Payment on convertible debt - (80,000) (80,000)
----------- ----------- -----------
Net cash provided by financing activities 470,655 442,250 1,238,613
----------- ----------- -----------
Increase in cash and cash equivalents 270,337 143,461 333,323
Cash and cash equivalents, beginning of period 62,986 8,254 -
----------- ----------- -----------
Cash and cash equivalents, end of period $ 333,323 $ 151,715 $ 333,323
=========== =========== ===========
</TABLE>
<PAGE>
ID Technologies Corporation
(A Development Stage Company)
Notes to Financial Statements
September 30, 2000
(Unaudited)
1. Management's Opinion
These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
Form 10-KSB for the fiscal year ended December 31, 1999.
2. License Agreements
On August 10, 2000, IDTEK issued an exclusive license for detention systems to
Bob Barker Company, Inc. Bob Barker Company paid IDTEK $89,062 for this license
and the license agreement requires Bob Barker Company to pay IDTEK a 10% royalty
on sales of detention systems utilizing the Company's technology. The initial
$89,062 license fee is recorded as deferred revenue. The revenue will be
recognized over 13.5 years, the remaining life of the patent, on a straight line
basis beginning in October 2000 in accordance with contract terms. The Bob
Barker Company, Inc. also purchased 375,000 shares of IDTEK common stock for
$210,938.
3. Debt Discount Amortization
Debt discount amortization expense is a non-cash charge to account for the value
of the stock warrants and options granted debt holders. The debt discount
amortization expense for the nine months ended September 30, 2000 was $187,162,
of which $171,000 related to the Centennial Venture Partners (CVP) warrants
valued at $228,000. These warrants are fully amortized as of September 30, 2000.
Without the debt discount amortization, the net loss for the nine months ended
September 30, 2000 would be $433,080, as compared to a net loss of $620,242, as
reported.
4. Protective Technologies, Inc.
On May 2, 2000, the Board of Directors announced agreement in principal to
purchase Protective Technologies Incorporated (Protek). In conjunction with the
acquisition, the Company received a good faith deposit of $100,000. The
transaction did not commence and was cancelled on August 2, 2000. IDTEK returned
the deposit to Protek in the form of a 120 day promissory note for $25,987 and
137,062 shares of IDTEK common stock valued at $74,013. The promissory note
bears interest at a rate of prime, plus 1%, with interest due and payable with
the principal payment on December 31, 2000.
<PAGE>
5. Convertible Debt
On September 18, 2000, IDTEK issued a six month convertible note in the
principal amount of $100,000 and bearing interest at 9% per annum. The holder
had the right during the term of the note to convert, in whole or in part, the
$100,000 principal into 200,000 shares of IDTEK common stock. The beneficial
conversion feature embedded in this agreement was valued at $78,000, which is
recorded as a debt discount and is being amortized over the life of the
agreement. Debt discount interest expense is a non-cash expense. The
amortization for the nine month period ended September 30, 2000 is $5,200.
6. Interest Payable
The Company issued $185,000 of convertible debentures in April through June of
1999 which carry a 12% annual interest rate payable annually. The first interest
payment was due June 2000. The debenture holders responded to a written request
to convert their interest receivable into common shares of the Company at their
then current fair market value of $0.60 per share. Those who elected to receive
the interest payment in cash were paid on October 1, 2000 and those who elected
to receive shares in lieu of cash received their shares in October, 2000.
7. Related Party Transactions
The money raised by the sale of IDTEK common stock to Centennial Venture
Partners (CVP) was for the purpose of hiring an outside consultant to perform
services for IDTEK. The consultant is an employee of a member of the IDTEK
board. The consultant was paid $10,000 for his services. All services were
performed by September 30, 2000 and were recorded as consulting expenses. CVP
made the cash payment to the consultant and was reimbursed by IDTEK in stock as
disclosed in note 8.
8. Shareholders' Equity (Deficit)
In March and April 2000, the Company issued 115,987 shares of common stock,
valued at $76,050, in exchange for professional services. IDTEK realized
$221,438 through the sale of common stock in the third quarter representing
$210,938 paid by Bob Barker Company, Inc. for its 375,000 shares which it
purchased in conjunction with its license agreement (see note 2) and $10,500 of
consulting services received through Centennial Venture Partners for 30,882
shares of IDTEK common stock (see note 7).
9. Subsequent Events
On September 24, 1999, the Company issued a $300,000 convertible debenture to
Centennial Venture Partners. The convertible debenture, by its terms, became
payable on demand on or after September 24, 2000. On October 16, 2000,
Centennial Venture Partners called the debenture and the Company paid it in
full, together with accrued interest of $26,600, on October 25, 2000.
On October 30, 2000, a $100,000 convertible note that was issued September 18,
2000 at 9% interest with an option to purchase 200,000 shares at $0.50 per share
(see Note 5) was settled through the issuance of 250,000 shares of voting common
stock and an option to purchase an additional 250,000 shares at $0.40 per share
over a period of 2 years. The original option to purchase 200,000 shares at
$0.50 per share was cancelled in conjunction with the settlement.
<PAGE>
In-Q-Tel has issued a non-binding letter of intent to invest $400,000 in IDTEK.
On October 20, 2000, IDTEK entered into a binding agreement with PROTEK which
cancelled the nonexclusive license agreement granted to PROTEK on March 30, 1999
and granted PROTEK five individual exclusive licenses in the fields of medical,
medical insurance, private credit, gaming, and mass transit. The medical,
medical insurance and private credit exclusive licenses require PROTEK to make
royalty payments to the Company equal to 5% of PROTEK's sales of products in
these fields and the gaming and mass transit licenses require PROTEK to make
royalty payments to the Company equal to 7% of PROTEK's sales of products in
these categories. At present, the Company does not yet have a saleable product
so no royalties will be earned in the near future, if at all.
On or about October 25, 2000, the Company borrowed $50,000 from a financial
institution, with principal due six months after the borrowing and bearing
interest at 12% per annum. This borrowing was personally guaranteed by each of
the Company's Chairman and Chief Executive Officer.
Item 2. Management's Plan of Operation.
The Company is engaged in the development of biometric technologies,
know-how, and products for licensing worldwide. The Company holds the patent for
a card, panel, or substrate allowing "on-board" storage and authentication
(identification) of fingerprints. The Company estimates the size of the
potential market for such products to be 1/10 trillion dollars. The applications
for this technology are many and varied: from welfare cards to loyalty/medical
records/personal information cards to controlling the use of firearms to one
user.
The development and production of this biometric technology is managed
by the Company's scientific partner, Information Resources Engineering ("IRE")
of Baltimore, Maryland. IRE is a leading provider of network and internet
security systems and technologies. IRE is a shareholder of the Company, owning
13.7% of the Company's outstanding common stock. IRE also holds a Company
license with rights to the internet, computer network, banking and treasury
fields worldwide.
A prototype card was completed at the end of the Company's 1999 fiscal
year, as well as a comprehensive manufacturing plan to build a single-chip
production card at a cost below $20. The non-recurring engineering cost (NRE)
will be paid by IRE to the production card maker at a cost of approximately $1.7
million.
Presently, the Company has initial licenses in place with IRE, PROTEK,
Power^Up Marketing Corporation, BrentScott Associates and Revolution Labs which
are expected to yield $800,000 in initial license fees, collectively, when the
Company's card begins production. Production is expected to begin in 2001.
The Company believes it has to be the first-to-market leader with the
following competitive advantages:
<PAGE>
o A biometric fingerprint card with storage and a power source (lithium
battery) on board.
o A biometric fingerprint card not requiring an independent power source.
o A biometric fingerprint card safe-guarding personal privacy (a government
or corporate-based database system is unnecessary).
o A biometric fingerprint card with 113 m.p.s of computing power (the power
of a Palm Pilot).
The biometric fingerprint card is essentially a standalone computer on a card
protected by the Lane foundation patent: United States Patent Number 5,623,552
issued on April 22, 1997.
The Company has been a developmental-stage company with nominal
revenues since its inception. Losses were $1,426,725 in 1998, $939,741 in 1999,
$556,571 in the nine months ended September 30, 1999 and $620,242 in the nine
months ended September 30, 2000.
As of November 1, 2000, the Company had approximately $7,000 in cash.
The Company needs to raise at least $250,000 to fund current year operations and
at least an additional $550,000 to fund the Company's operations until the time
the Company believes its product under development will begin to generate
sufficient revenues to fund operations, which the Company expects to occur in
the last quarter of 2001. As of November 1, the Company had cash of
approximately $7,000. Accordingly, the Company has an immediate need for cash.
There is no assurance that the Company will be able to raise this or any
additional amount which becomes required.
With the Company's policy of contracting out development and
concentrating on licensing of its intellectual property, the Company does not
plan to purchase any equipment or buy or rent plant(s) in the next year.
Nonetheless, when and if at least $800,000 is raised, the Company intends to
hire a high-level engineer to oversee the Company's multi-development card
projects and assist the Company's licensees with their particular biometric
applications.
Results of Operations
The following discussion provides an analysis of the Company's results
of operations and liquidity and capital resources. This should be read in
conjunction with the financial statements of the Company and notes thereto. The
operating results of the periods presented were not affected by inflation.
Comparison of Nine Months Ended September 30, 2000 and 1999:
There was no license or royalty revenue for the nine months ended
September 30, 2000 or 1999. ID Technologies sold a license to Bob Barker Company
for an initial license fee of $89,062 during the third quarter of 2000, but this
will be recorded as license revenue over the remaining 13.5-year term of the
patent underlying the license. Other one time license fee payments are
predicated primarily on the Company (or its contract partners) being able to
produce a $20 cost biometric fingerprint production card. Royalty payments are
predicated on the sale of the cards to end-users by the licensees.
<PAGE>
The research and development expenses are a non-cash entry in both
periods, which mirrors exactly IRE's research and development cash expenses for
the development of the biometric fingerprint card. IRE's research and
development cost for the card was $40,270 for the nine months ended September
30, 2000 compared to $204,000 for the nine months ended September 30, 1999. Even
though IRE, the Company's development partner and 13.7% shareholder, is
responsible for and incurred this expense, ID Technologies must record the
expense since the Company receives the benefits from IRE's research.
Selling, general, and administrative expenses during the nine months
ended September 30, 2000 were $354,079, up 5% from the $335,943 of such expenses
in the prior year period due to an increase in insurance costs and commissions
paid to issue short term debt and a license agreement.
Amortization of debt discount on convertible debentures was $187,162 in
the first nine months of 2000 compared to $6,050 in the first nine months of the
1999 fiscal year. This is a non-cash expense to amortize the value of options
and warrants associated with the $485,000 of convertible debt obtained in 1999
and the $100,000 of convertible debt obtained third quarter 2000.
Interest expense was $38,826 in the first nine months of 2000, up from
the $11,758 recorded in the first nine months of 1999. This represents the
accrued interest of 12% on $185,000 convertible debentures issued in mid-1999,
8% interest on $300,000 convertible debentures issued in September 1999, 14.5%
on $50,000 note payable issued June 2000, prime plus 1% on $25,987 note payable
issued August 2000, and 9% on $100,000 convertible note issued September 2000.
The debt outstanding in the first nine months of 1999 was the $185,000
convertible debentures issued mid-1999 and a small note from a shareholder.
The Company's net operating loss for the nine months ended September
30, 2000 was $394,349, down 27% from the net operating loss of $539,943 for the
nine months ended September 30, 1999. The Company is delaying the necessary
development and marketing expenditures until it obtains additional financing
that will provide working capital.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not involved in any pending legal proceeding.
Item 2. Changes in Securities and Use of Proceeds.
On August 2, 2000, the Company settled a dispute with PROTEK concerning
its payment to the Company of a $100,000 earnest deposit in connection with a
potential acquisition with the Company which was terminated. The parties
disagreed as to whether the Company was entitled to retain this deposit. To
settle that disagreement, on August 2, 2000 the Company issued to PROTEK a
promissory note in the principal amount of $25,987 bearing interest at prime,
plus 1% and payable December 31, 2000 and 137,062 shares of the Company's common
stock having a fair market at the time of issuance, based on the market price of
the stock at that time, of $74,013.
<PAGE>
On August 10, 2000, the Company sold 375,000 shares of the Company's
common stock to Bob Barker Company, Inc. for a cash payment of $210,938. The Bob
Barker Company purchased the shares in the Company in connection with its
purchase of an exclusive license for detention systems from the Company.
On or about September 30, 2000, the Company issued to CVP 30,882 shares
of the Company's common stock, with a value based on the stock's market price at
the time of the issuance of $10,500, to reimburse CVP for the $10,000 cash
payment it made to a consultant of the Company to pay for services rendered by
the consultant to the Company, with the remaining $500 representing
consideration to CVP for making the cash payment.
On September 18, 2000, the Company issued a $100,000 six month
convertible note to a purchaser which was convertible into 200,000 shares of the
Company's common stock. On October 30, 2000, the Company and the holder of the
convertible note, settled the note in full through the Company's issuance to the
holder of 250,000 shares of the Company's common stock and a two year option to
purchase an additional 250,000 shares of the Company's common stock at an
exercise price of $0.40 per share.
The Company relied on Section 4(2) of the Securities Act of 1933, as
amended, for the securities registration exemption in each of these placements
since each involved a privately negotiated transaction with a sophisticated
investor, each of whom had a pre-existing business relationship with the Company
and/or its affiliates.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
---------
Exhibit
No. Description
------- -----------
3.1 Articles of Incorporation, together with all
amendments thereto. (Incorporated herein by
reference to Exhibit 2.01 of the Company's Form
10-SB filed as of November 30, 1999.)
3.2 Bylaws. (Incorporated herein by reference to
Exhibit 2.02 of the Company's Form 10-SB filed as
of November 30, 1999.)
4.1 Form of Debenture Purchase Agreement by and among
the Company and purchasers of the Company's 12%
Convertible Subordinated Debentures due 2002.
(Incorporated herein by reference to Exhibit 3.01
to the Company's Form 10-SB filed as of November
30, 1999.)
4.2 Form of 12% Convertible Subordinated Debenture Due
2002. (Incorporated herein by reference to Exhibit
3.02 to the Company's Form 10-SB filed as of
November 30, 1999.)
4.3 Registration Rights Agreement, dated as of December
31, 1997, between the Company and Hutchison & Mason
PLLC. (Incorporated herein by reference to Exhibit
3.04 to the Company's Form 10-SB filed as of
November 30, 1999.)
4.4 Stock Purchase Agreement, dated as of August 1,
1997, by and among the Company, Li-Pei Wu and
William F. Lane (as agent for certain sellers),
together with Addendum to Stock Purchase Agreement
of even date therewith. (Incorporated herein by
reference to Exhibit 3.04 to the Company's Form
10-SB filed as of November 30, 1999.)
4.5 Convertible Debenture, dated September 24, 1999,
made by the Company in favor of Centennial Venture
Partners, LLC ("CVP"). (Incorporated herein by
reference to Exhibit 3.05 to the Company's Form
10-SB filed as of November 30, 1999.)
4.6 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (450,000
shares). (Incorporated herein by reference to
Exhibit 3.06 to the Company's Form 10-SB filed as of
November 30, 1999.)
4.7 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (150,000
shares). (Incorporated herein by reference to
Exhibit 3.07 to the Company's Form 10-SB filed as of
November 30, 1999.)
4.8 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (200,000
shares). (Incorporated herein by reference to
Exhibit 3.08 to the Company's Form 10-SB filed as of
November 30, 1999.)
4.9 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (up to
$500,000). (Incorporated herein by reference to
Exhibit 3.09 to the Company's Form 10-SB filed as of
November 30, 1999.)
4.10 Investor Rights Agreement, dated as of September 24,
1999, by and among the Company and certain holders
of its capital stock. (Incorporated herein by
reference to Exhibit 3.10 to the Company's Form
10-SB filed as of November 30, 1999.)
4.11 Shareholders Agreement, dated September 24, 1999, by
and among the Company and certain shareholders and
investors. (Incorporated herein by reference to
Exhibit 3.11 to the Company's Form 10-SB filed as of
November 30, 1999.)
10 License Agreement with Bob Barker Company, Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ID TECHNOLOGIES CORPORATION
BY /S/ J. Phillips L. Johnston
------------------------------------------
DATE: November 14, 2000 J. Phillips L. Johnston, President and CEO
/S/ William F. Lane
------------------------------------------
DATE: November 14, 2000 William F. Lane, Chairman and Treasurer
(Principal Financial Officer)
