SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
Commission File No. 1-11182
BIO-IMAGING TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 11-2872047
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
830 Bear Tavern Road, West Trenton, New Jersey 08628-1020
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(Address of Principal Executive Offices) (Zip Code)
(609) 883-2000
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(Registrant's Telephone Number,
Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $.00025 par Boston Stock Exchange
value per share
Securities registered under Section 12(g) of the Exchange Act:
None
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Check whether the Registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities 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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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |X|
State Registrant's revenues for fiscal year ended September 30, 1997:
$5,544,693
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: $6,015,775 at November 30, 1997 based on the
average bid and asked prices on that date.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of November 30, 1997:
Class Number of Shares
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Common Stock, $.00025 par value 7,773,878
Transitional Small Business Disclosure Format
Yes: No: X
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The following documents are incorporated by reference into the Annual
Report on Form 10-KSB: Portions of the Registrant's definitive Proxy Statement
for its 1998 Annual Meeting of Stockholders are incorporated by reference into
Part III of this Report.
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TABLE OF CONTENTS
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Item Page
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PART I 1. Business...............................................1
2. Properties.............................................9
3. Legal Proceedings......................................9
4. Submission of Matters to a Vote of Security Holders....9
PART II 5. Market for the Company's Common Equity and Related
Stockholder Matters...................................10
6. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................12
7. Financial Statements..................................15
8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................15
PART III 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16 (a) of the
Exchange Act..........................................16
10. Executive Compensation................................16
11. Security Ownership of Certain Beneficial Owners
and Management........................................16
12. Certain Relationships and Related Transactions........16
13. Exhibits, List and Reports on Form 8-K................17
SIGNATURES.........................................................18
EXHIBIT INDEX......................................................20
FINANCIAL STATEMENTS..............................................F-1
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PART I
ITEM 1. BUSINESS.
General
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Bio-Imaging Technologies, Inc. ("Bio-Imaging Technologies" or the
"Company") is a biomedical information services company that provides medical
image processing, digital image management and clinical data management services
and software applications to the pharmaceutical, biotechnology and medical
device industries. The Company specializes in the processing and analysis of
medical images and in the data-basing and regulatory submission of medical
images and related text, quantitative data and document-based information from
human clinical trials.
The Company has developed proprietary processes and software for
conducting clinical studies in which medical imaging modalities are used to
evaluate the efficacy and safety of pharmaceuticals, biologics or medical
devices. The Company's digital image processing and computer analysis techniques
enable it to make highly precise measurements and biostatistical inferences
about drug or device effects. The resulting data enable the Company's clients,
and their regulatory reviewers (primarily the U.S. Food and Drug Administration,
the "FDA") to evaluate product efficacy and safety. In addition, the Company has
developed specialized computer services and software applications that enable
radiologists and other medical specialists involved in clinical trials to review
medical image data in an entirely digital format.
The Company believes that it is at an early stage of market penetration
and is directing its marketing and sales efforts towards those clinical
development areas that have the highest current reliance upon medical imaging.
These areas include oncology, central nervous system, musculoskeletal and
cardiovascular therapeutics and diagnostics.
In February 1997, the Company opened its European office and core
laboratory in Leiden, the Netherlands. The Company manages its services for
European based clinical trials from this laboratory. The information services
offered by the European operations encompass a full array of medical imaging
core laboratory and digital management services.
The Company was incorporated in Delaware in 1987 under the name Wise
Ventures, Inc. The Company's name was changed to Bio-Imaging Technologies, Inc.
in 1991. The address of the Company's principal executive offices is 830 Bear
Tavern Road, West Trenton, New Jersey, 08628, and its telephone number is
609-883-2000.
Business Areas
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Medical Imaging Core Laboratory Services
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Bio-Imaging Technologies is a leading provider of medical imaging core
laboratory services exclusively for commercial clinical development purposes.
The Company's imaging core laboratory facilities provide centralized image data
collection, processing, analysis and
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archival services for clinical trials conducted worldwide. The imaging core
laboratories are designed for high-volume processing of analog (film) and
digital image data in a secure environment that complies with regulatory
guidelines for clinical data management.
Imaging data are received by the core laboratories from clinical trial
sites, typically major academic or community hospitals. The Company has
developed procedures for data tracking and quality control that it believes to
be of significant value to its clients. The Company's core laboratories contain
specialized hardware and software for translation of digital data or
digitization of films, so that all data can be standardized, regardless of
source. The Company believes its ability to handle most commercially available
image file formats is a valuable technical asset and important competitive
advantage in gaining new business for large global multi-center clinical trials.
The Company is able to perform production-scale image analyses on its
clients' data using internally developed or specially configured software. The
Company is able to measure key indicators of drug efficacy in different organs
and disease states. The image analysis results derived in the core laboratory
are transferred to databases that can be transmitted electronically to the
Company's clients, or integrated directly into the Company's Bio/ImageBase(R)
package for regulatory submission on the client's behalf.
Image-Based Information Management Services
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The Company provides a variety of clinical information management services
enhanced by computer software applications that are designed to accommodate the
unique requirements and large volume of medical image data. Bio-Imaging
Technologies' information management services focus on providing specialized
solutions for improving the quality, speed and flexibility of image data
management for clinical trials. The Company's Computer Assisted Masked Reading
("CAMR") system offers numerous advantages over conventional film-based medical
image reading systems, including increased reading speed, greater
standardization of image reading, and reduced error in the capture of reader
interpretations.
Using the Company's CAMR system, medical specialists can review medical
image data from clinical trials in digital format. The CAMR system can display
all modalities of imaging data regardless of source equipment. In addition, the
system can display either translated digital data or digitized films. Such image
reviews are often required during clinical trials to evaluate patients' response
to therapy, or to determine if patients qualify to be entered into studies. By
using the CAMR system to read and evaluate image data, medical specialists can
achieve greater reading speed than is possible with film, and can perform
evaluations in a more objective, reproducible manner. The Company has three CAMR
systems at each of its facilities. The Company is also developing the systems
and processes that will allow remote CAMR systems to be located on the premises
of the individual medical specialists who are chosen to perform the analysis.
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The Company has developed a proprietary image database software
application, called Bio/ImageBase(R), that enables the Company's clients to
submit their medical images and related clinical data to the FDA in a digital
format. Using data stored on CD-ROM disks, Bio/ImageBase(R) can allow clients
and their FDA medical reviewers to review medical images and related clinical
data. The Company believes that Bio/ImageBase(R) offers the potential to
decrease review time and result in faster regulatory approvals and reduced
time-to-market for new drugs, biologics and medical devices.
The Company's Bio/ImageBase(R) software has been installed at several
client sites and on certain computer systems at the FDA. The Company has been
using its Bio/ImageBase(R) software to submit medical images and related data to
the FDA since mid-1993. In March 1996, Bio/ImageBase(R) was cited in the FDA's
1996 Computer-Assisted Product License Application Guidance Manual as an
acceptable database for submission of imaging data.
Other Services
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The Company provides expert technical consulting, training and end-user
support services. For clinical trial projects, the Company's experts assist in
imaging trials design and in the evaluation of hospital sites that will
participate in studies. The Company also consults with clients regarding
regulatory issues involved in the design, execution, analysis and submission of
imaging trials.
In October 1996, the Company established two new business units, the
Marketing Information Services Division (the "MISD") and the Data Management and
Information Systems Division (the "DMISD"). The MISD focuses on development and
sales of medical imaging-oriented, laptop computer-based sales and marketing
support presentation software and databases. The DMISD will focus on providing
clinical database management services and products. Both business units are
currently in the product development phase. The Company has determined to focus
its resources on its core business areas while continuing to evaluate the
marketability of these two new business units.
Target Markets
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The Company's primary target market includes pharmaceutical, biotechnology
and medical device companies whose clinical development pipelines include drugs,
biologics or devices that are typically evaluated by medical imaging methods.
This target market includes the top 50 international pharmaceutical companies as
well as over 100 biotechnology companies with products currently in the clinical
development pipeline.
Classes of drugs which fall within Bio-Imaging Technologies' marketing
focus include:
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Cancer Therapeutics
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Over 390 new therapies are currently under development by various
pharmaceutical companies for the treatment of cancer. For solid tumor studies,
medical imaging modalities are used to determine the response of treated and
untreated tumors. These medical images are evaluated by medical specialists
during the course of oncology clinical trials to determine not only the extent
of disease, but also changes in tumor size over time.
In March 1996, the FDA announced new guidelines, aimed at accelerating
access to new drugs, for the review and approval of new cancer therapies. These
new regulatory guidelines place greater emphasis on shrinkage of tumors as an
early indicator of anti-tumor efficacy. Bio-Imaging Technologies believes that
these new FDA guidelines may continue to have a favorable impact on its business
as pharmaceutical and biotechnology companies may have an increased need for
specialized medical imaging services to conduct their oncology clinical trials.
Central Nervous System Therapeutics
-----------------------------------
Currently, there are over 240 drugs in development by various
pharmaceutical companies for treatment of diseases and conditions of the central
nervous system, most of which are evaluated with the aid of medical imaging.
Most later-stage clinical trials for these serious and costly conditions involve
the subjective or objective evaluation of medical image data. The Company
believes that its central nervous system clinical trials business may increase
as more therapies progress through the research pipeline.
Bio-Imaging Technologies has become a leader in medical imaging services
for the clinical evaluation of a new class of drugs, called neuroprotectants, to
treat ischemic stroke. Furthermore, Bio-Imaging is among the first academic and
commercial research groups conducting stroke studies with new imaging technology
called functional magnetic resonance imaging ("MRI").
Diagnostic Imaging Agents
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Bio-Imaging Technologies has played an important role working with its
clients in the development of diagnostic imaging agents which are designed to
diagnose disease conditions more quickly and accurately in their development in
order to facilitate earlier and more accurate treatment. The Company's
experience in this area ranges from new diagnostics for gastrointestinal,
abdominal, breast and brain tumor imaging, to new diagnostics for cardiovascular
disease, infectious disease, peripheral vascular disease, Alzheimer's Disease
and Parkinson's Disease.
Musculoskeletal Therapeutics
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Musculoskeletal clinical trials, such as those focused on arthritis and
osteoporosis, include radiologic evaluation of the bones and joints to determine
drug efficacy. The Company believes that demand among drug developers for its
digital imaging technology and services will increase as new classes of
biotechnology-derived drugs enter and progress through the clinical development
pipeline.
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Cardiovascular Therapeutics
---------------------------
Currently, there are over 180 drugs in development by various
pharmaceutical companies for the diagnosis and treatment of cardiovascular
diseases and conditions which are evaluated with the aid of medical imaging. The
Company's services can play an important role in the development of new in vivo
diagnostic agents for the detection and treatment of these conditions.
Market Trends
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The Company believes that demand for its services and technologies should
grow because of a variety of favorable regulatory, technological and market
trends:
o The beneficial impact of FDA initiatives to streamline the regulatory
submission and review process are beginning to be realized. The FDA is
investing in new information technology and has begun the process of
formulating and disseminating guidelines for submission of electronic
data, including medical images. The Company expects submission of image
data to be a requirement in key areas such as solid tumor oncology trials.
o Restructuring and downsizing in the pharmaceutical industry has resulted
in increased outsourcing of certain research and data management
activities. Currently, over $4 billion in research services are outsourced
to contract clinical research organizations and universities. Industry
estimates place growth of outsourcing between 20% to 30% per year.
o The pharmaceutical industry has identified information management as a key
to competitive advantage, and is investing in new technology to solve data
management challenges. Companies are incorporating digital images into
their information infrastructure and need specialized expertise for the
unique requirements of digital image data.
o Digital technologies for data acquisition and management are rapidly
penetrating the radiology community.
o New classes of drugs to treat conditions traditionally evaluated by
imaging are entering or progressing through the clinical development
pipeline, leading to increased demand for medical imaging-related
services.
o The biotechnology drug development pipeline is maturing. Consequently,
more biologics are entering or progressing through the clinical
development process, leading to an increased demand for medical
imaging-related research services.
o An increase in the use of digital medical images in clinical trials,
especially for important drug classes such as neurologic, muskuloskeletal,
cardiovascular and
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oncologic therapeutics and diagnostic imaging agents may require
processing, analysis, data management and submission services.
Research and Development
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The Company's research and development efforts are focused on a variety of
inter-related services and products geared toward the evolving needs of the
clinical development marketplace. Increases in microprocessor speed, data
storage capacity and imaging hardware performance are driving the gradual
changeover of medical imaging from film-based to digital data. Related
improvements in software performance, network bandwidth and telecommunications
technology have created entirely new products and services for the transmission
of medical image data. Bio-Imaging Technologies anticipates that many of the
positive changes that these new imaging technologies are bringing to the
healthcare system in general will have a particularly important impact on the
drug and medical device development process. This impact may be especially
important in the area of clinical information management.
Drawing upon its core medical imaging technology and clinical development
expertise, Bio-Imaging Technologies is developing services and software tools
that will enable client companies to manage, integrate and evaluate their data
in more useful and meaningful ways. As a common theme throughout its research
and development efforts, the Company is drawing upon the power of computers and
medical imaging to communicate complex clinical information visually. As a
central tenet of its research and development efforts, the Company pursues
opportunities that are strongly related to its current business and which are
clearly supported by current client demand. The Company's research and
development efforts will focus on broadening its information management,
data-basing and networking capabilities for the linkage of
clinical-trials-related medical images to other clinical data.
Patents, Trade Secrets and Licenses
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Proprietary protection for the Company's computer-imaging programs,
processes and know-how is important to its business. The Company relies upon
trade secrets, know-how and continuing technological innovation to develop and
maintain its competitive position. To date the Company has sought trademark and
copyright protection for certain computer software programs and is seeking
patent protection for its other proprietary technology where applicable.
Bio-Imaging Technologies requires all employees, consultants and contractors to
execute confidential disclosure agreements as a condition of employment or
engagement by the Company. There can be no assurance, however, that the Company
can limit unauthorized or wrongful disclosures of trade secret information. In
addition, to the extent the Company relies on trade secrets and know-how to
maintain its competitive technological position, there can be no assurance that
others may not develop independently the same or similar techniques.
Government Regulation
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The research and development, manufacture and marketing of drugs and
medical devices are subject to stringent regulation by the FDA in the United
States and by comparable authorities
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in other countries. In addition, regulations imposed by other federal
agencies, as well as state and local authorities, may impact such research
and development, manufacturing and marketing.
The FDA has established mandatory procedures and safety standards which
apply to the clinical testing, manufacturing and marketing of drugs and medical
devices. These procedures and safety standards include, among other things, the
completion of adequate and well-controlled human clinical trials to establish
the safety and efficacy of the drug or device for its recommended conditions or
use. The Company advises its clients in the execution of clinical trials and
other drug and device developmental tasks. The Company does not administer drugs
to or utilize medical devices on patients.
The success of the Company's business is dependent upon acceptance by the
FDA and other regulatory authorities which review the data and analyses
generated by the Company's imaging techniques in the evaluation of the safety
and efficacy of new drugs and devices. The FDA has accepted the data and
analyses generated by the Company's imaging techniques to date. The FDA has
formal guidelines which encourage the use of "surrogate measures," through
submission of digital image data, for evaluation of drugs to treat
life-threatening or debilitating conditions. There can be no assurance, however,
that the FDA or other regulatory authorities will accept the data or analyses
generated by the Company in the future and, even assuming acceptance, there can
be no assurance that the FDA or other regulatory authorities will not require
the application of imaging techniques to numbers of patients and over time
periods substantially similar to those required of traditional safety and
efficacy techniques.
Recent changes in the FDA's policy for the evaluation of therapeutic
oncology agents can have a positive impact on the time to market of such
therapeutics. According to the guidelines announced on March 29, 1996, approval
times for new cancer therapies can be shortened if evidence of tumor shrinkage
is verifiable and demonstrable through the use of objective measurement
techniques. These guidelines place much greater reliance on the use of medical
image data to demonstrate objective tumor shrinkage. In addition, in March 1997,
the FDA announced new guidelines aimed at accelerating all therapeutic
categories through the use of surrogate markers such as imaging endpoints. The
Company believes the FDA's initiatives to streamline and accelerate the
submission and review process of therapeutic agents may have a favorable impact
on the Company's business.
The Company believes that its ability to achieve continued and sustainable
growth will be materially dependent upon, among other factors, the continued
stringent enforcement of the comprehensive regulatory framework by various
government agencies. Any significant change in these regulatory requirements or
the enforcement thereof, especially relaxation of standards, could adversely
affect the Company's prospects.
Competition
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As a favorable sign of growth in the clinical trials-related medical
imaging services business, the Company continues to experience an increase in
competition from academic research centers and new commercial competitors.
During the past year, major conventional contract research organizations have
either started or acquired divisions to address the need for
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medical imaging services as it relates to clinical trials. Academically-oriented
imaging laboratories continue as the Company's primary competition. As
competition increases, Bio-Imaging will add value-added services and undertake
marketing and sales programs to differentiate its services based on clinical
trial experience, therapeutic experience and imaging experience. Competition in
the Company's industry has resulted in additional pressure being placed on
price, service, quality, professional reputation and technology. There can be no
assurance that the Company's competitors or clients will not develop and utilize
technology similar or superior to that utilized by the Company. Any such
competition could have a material adverse impact on the Company. The Company's
competitive position also depends upon its ability to attract and retain
qualified personnel and develop and preserve proprietary technology, processes
and know-how. As part of its overall strategy, Bio-Imaging Technologies will
monitor competitive developments and will evaluate appropriate defensive
mechanisms.
Marketing and Sales
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Bio-Imaging Technologies markets and sells its services and software
products directly to its target market through its staff. At the present time,
the Company believes that the complexity of its technology and applications
requires the use of a dedicated sales force. The Company's Marketing and Sales
consists of a Senior V.P. of Marketing and Sales, a Director of Client Technical
Services, three Regional Managers of Client Technical Services, a Director of
Clinical Services, Europe and a Manager, Business Development.
The Company's selling efforts are focused on North America and Western
Europe. Sales efforts currently are directed from the Company's headquarters in
New Jersey. The Company began a European-based sales effort in 1997 and
anticipates adding to its sales force during 1998. In 1998, the Company expects
to launch other business development initiatives targeted at potential clients
in its major service areas. The Company will evaluate appropriate co-marketing
activities to augment its own business development efforts.
Significant Clients
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During fiscal 1997, two clients, including one European-based client,
accounted for approximately 47% of the Company's consolidated project revenue.
The one European-based client represented approximately 34% of such revenue
while the other client represented approximately 13% of such revenue. These
contracts are terminable by the Company's clients at any time and for any
reason. Loss of any of these clients or a reduction in services provided to
these clients would have a material adverse effect on the Company's business,
financial condition and results of operations.
Employees
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As of September 30, 1997, the Company had 34 full-time employees, six of
whom are officers of the Company, and four part-time employees.
Of the Company's full-time employees as of September 30, 1997, six were
engaged in sales and marketing, 22 were engaged in client related projects and
in-house research and
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development and six were engaged in administration and management. A significant
number of the Company's management and professional employees have had prior
experience within the clinical research, drug development and pharmaceutical
industries. Bio-Imaging Technologies believes that it has been successful in
attracting skilled and experienced personnel; however, competition for such
personnel is intensifying. None of the Company's employees are covered by
collective bargaining agreements and the Company has experienced low turnover
among its employees. All of the Company's employees are covered by
confidentiality and non-competition agreements. The Company cannot provide
assurances as to the enforceability of such agreements. Bio-Imaging Technologies
has entered into an employment contract with one of its key officers. See "Item
10. Executive Compensation." Bio-Imaging Technologies considers relations with
its employees to be good.
The Company had several management changes during 1997. Richard S. Mink
resigned as Senior Vice President and General Manager of the MISD in April 1997.
In addition, in April 1997, the Company appointed Anthony P. Nowicki, Senior
Vice President and General Manager of the DMISD, to manage the MISD. On April
21, 1997, Andrew Reiter was elected to Vice President and Managing Director of
the Company's European operations. On June 18, 1997, Donald W. Lohin was elected
Chairman of the Board and Dr. James J. Conklin was named Chairman Emeritus. On
August 11, 1997, Mark L. Weinstein was elected to Senior Vice President, Sales
and Marketing.
ITEM 2. PROPERTIES.
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The Company leases approximately 9,100 square feet of office space in West
Trenton, New Jersey. The lease expires November 30, 1998 and provides for a base
rent of approximately $9,400 per month through that date. The Company also
leases approximately 4,000 square feet of office space in Leiden, the
Netherlands. The lease expires February 14, 2000 and provides for a base rent of
approximately $4,700 per month with an annual inflation increase. The Company
believes that these facilities will be adequate for its needs for the
foreseeable future, but continuously evaluates its property needs.
ITEM 3. LEGAL PROCEEDINGS.
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There is no material litigation pending to which the Company is a party or
to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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None.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
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Since June 18, 1992, the Common Stock has been traded on the Nasdaq
SmallCap Market under the symbol BITI.
The following table sets forth the high and low sales bid quotations for
the Common Stock for each of the quarters since the quarter ended December 31,
1995 as reported on the Nasdaq SmallCap Market. Such quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
Quarter Common
Ended Stock
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High Low
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December 31, 1995............ 0.875 0.50
March 31, 1996............... 0.875 0.50
June 30, 1996................ 1.75 0.50
September 30, 1996........... 1.313 0.938
December 31, 1996............ 1.625 1.0625
March 31, 1997............... 2.125 1.25
June 30, 1997................ 1.5625 1.0625
September 30, 1997........... 1.875 1.0625
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Since June 18, 1992, the Common Stock also has been listed on the Boston
Stock Exchange ("BSE") under the symbol BIT.
The following table sets forth the high ask and low bid quotations for the
Common Stock for each of the quarters since the quarter ended December 31, 1995
as reported on the BSE.
Quarter Common
Ended Stock
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High Low
---- ---
December 31, 1995............ 1.125 0.50
March 31, 1996............... 0.875 0.50
June 30, 1996................ 1.688 0.50
September 30, 1996........... 1.438 0.813
December 31, 1996............ 1.875 0.9375
March 31, 1997............... 2.375 1.25
June 30, 1997................ 1.75 1.0625
September 30, 1997........... 1.875 1.00
As of November 30, 1997, the approximate number of holders of record of
the Common Stock was 103 and the approximate number of beneficial holders of the
Common Stock was
1,024.
The Company has neither paid nor declared dividends on its Common Stock
since its inception and does not plan to pay dividends on its Common Stock in
the foreseeable future. Any earnings which the Company may realize will be
retained to finance the growth of the Company. However, the Company's issued and
outstanding shares of Series A Preferred Stock (the "Preferred Stock") provide
the holders thereof to certain dividends rights. Such holders are entitled to
receive cumulative dividends, in an annual amount per share equal to 8.0% of the
preferential amount, as defined in the Company's certificate of designation
(currently the preferential amount is $1.20 and the annual dividend per share of
outstanding Preferred Stock is $0.096). Such preferential amount may from time
to time be adjusted in certain circumstances. In November 1996, the Company paid
to the holders of its Preferred Stock an aggregate amount of $21,222 which
amount represented accrued cumulative dividends for the period from December 21,
1995 through and including June 30, 1996. In January 1997, the Company paid to
the holders of its Preferred Stock an aggregate amount of $20,000 which amount
represented accrued cumulative dividends for the period from July 1, 1996
through and including December 31, 1996. In September 1997, the Company paid to
the holders of its Preferred Stock an aggregate amount of $20,000 which amount
represented accrued cumulative dividends for the period from January 1, 1997
through and including June 30, 1997.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
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Results of Operations
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The Company attributes its improved performance for fiscal 1997 primarily
to the increase in project revenue. The Company believes that demand for its
services and technologies will continue to grow as the use of digital
technologies for data acquisition and management increases in the radiology and
drug development communities. In addition, the United States Food and Drug
Administration is gaining experience with electronic submissions and is
continuing to develop guidelines for computerized submission of data, including
medical images. Furthermore, the increased use of digital medical images in
clinical trials, especially for important drug classes such as neurologic and
oncologic therapeutics and diagnostic image agents, should generate large
amounts of image data that will require processing, analysis, data management
and submission services. There can be no assurance, however, that demand for the
Company's services and technologies will experience continued or sustainable
growth or that additional revenue generating opportunities will be realized by
the Company.
Certain statements included in the Form 10-KSB, including, without
limitation, statements regarding the anticipated growth in the markets for the
Company's services, the continuation of the trends favoring outsourcing of
biomedical information technology services by pharmaceutical and biotechnology
companies and trends favoring the use of such information technologies by the
United States Food and Drug Administration, the anticipated growth of the
Company's business, the information concerning existing client contracts, the
timing of the development and implementation of the Company's new service
offerings and the utilization of such services by the Company's clients, and
trends in future operating performance, are forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
The factors discussed herein and expressed from time to time in the Company's
filings with the Securities and Exchange Commission could cause actual results
and developments to be materially different from those expressed in or implied
by such statements.
Years Ended September 30, 1997 and 1996
---------------------------------------
Total project revenue for the years ended September 30, 1997 and 1996 was
approximately $5,545,000 and $3,657,000, respectively, an increase of
approximately $1,888,000 or 52%. Project revenue in fiscal 1997 was derived from
22 clients and revenue in fiscal 1996 was derived from 20 clients. Revenue for
the year ended September 30, 1997 was higher than revenue for the year ended
September 30, 1996 primarily as a result of revenue generated by the Company's
one European-based client and to a lesser extent new projects that the Company
was engaged to perform work. The Company's scope of work in both fiscal years
included medical imaging core laboratory services and image-based information
management services. In addition, especially during the third and fourth
quarters of fiscal 1997, the Company completed a higher volume of work on
several projects which encompassed high revenue tasks within the image-based
information management services. The Company generated approximately $1,888,000,
or 34%, of project revenue for the year ended September 30, 1997
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from the one European-based client. Revenue for the year ended September 30,
1996 included a one-time recognition by the Company of $192,000 in revenue and
earnings resulting from the termination by the Company of a co-marketing
agreement with Covance Inc.
Project costs of approximately $1,938,000 during the year ended September
30, 1997 were comprised of professional salaries and benefits and allocated
overhead. Project costs for fiscal 1996 were approximately $1,284,000. The
increase during the year ended September 30, 1997, of approximately $654,000, or
51%, from fiscal 1996, resulted primarily from the increase in resources applied
by the Company to perform the increased scope of projects for which the Company
was engaged to perform work, including the Company's European clinical services
laboratory.
The gross margin percentages during the years ended September 30, 1997 and
1996 were 65%. Without the revenue and gross profit from the termination of the
co-marketing agreement referred to above, the gross margin percentage was 65%
and 63% for the year ended September 30, 1997 and the year ended September 30,
1996, respectively. Such increase is attributable primarily to an increase in
efficiency related to the performance of project-related activities and the
increased mix of information management services which yielded higher margins
partially offset by reduced pricing for certain services.
General and administrative expenses for the year ended September 30, 1997
and the year ended September 30, 1996 consisted primarily of professional
salaries and benefits, depreciation and amortization, professional and
consulting services, office rent and corporate insurance. General and
administrative expenses were approximately $1,789,000 for the year ended
September 30, 1997 and approximately $1,259,000 for the year ended September 30,
1996. The increase for the year ended September 30, 1997 of approximately
$530,000 or 42%, from the corresponding fiscal 1996 period, resulted primarily
from expenses incurred in support of operational growth of the Company and in
connection with the establishment and initial operations of the MISD, the DMISD
and the Company's European clinical services laboratory. As of September 30,
1997, the operations of the MISD and DMISD had not realized any revenue.
Sales and marketing expenses of approximately $834,000 during the year
ended September 30, 1997 were comprised of direct sales and marketing costs,
professional salaries and benefits and allocated overhead. Sales and marketing
expenses for fiscal 1996 were approximately $624,000. The increase during the
year ended September 30, 1997, of approximately $210,000, or 34%, from fiscal
1996, resulted primarily from the increase in personnel and resources dedicated
to sales and marketing efforts.
Research and development expenses during the year ended September 30, 1997
and 1996, were approximately $246,000 and $134,000, respectively. In each
period, research and development expenses consisted of professional salaries and
benefits and overhead charged to research and development projects. The increase
in such expenses during the year ended September 30, 1997 of approximately
$112,000, or 84%, from fiscal 1996, resulted primarily from an increase in
resources dedicated to research and development projects. Research and
-13-
<PAGE>
development expenses in fiscal 1997 and 1996 focused on the design and coding of
image display and image analysis software required to increase the efficiency of
the Company's imaging laboratory operations. In addition, in fiscal 1997,
research and development expenses also included developmental work on the
product line for the MISD business unit. There was approximately $43,000 of
capitalized computer software development costs in the year ended September 30,
1997 and approximately $100,000 of computer software development costs were
capitalized in the year ended September 30, 1996. Such costs were capitalized
after technological feasibility had been demonstrated in accordance with FASB
Statement No. 86. Such capitalized amounts are amortized commencing with the
product introduction on a straight-line basis utilizing the estimated economic
useful life of the product. The Company may capitalize certain development costs
in the future, as appropriate.
The Company's total operating expenses were approximately $4,807,000 in
fiscal 1997 and $3,300,000 in fiscal 1996, an increase of approximately
$1,507,000 or 46%. Total operating expenses during the years ended September 30,
1997 and 1996 consisted primarily of general and administrative expenses, sales
and marketing expenses, project costs, and research and development expenses.
Net interest income of approximately $53,000 during the year ended
September 30, 1997, resulted from interest earned on cash balances, offset in
part by interest expense incurred in conjunction with equipment lease
obligations. The Company earned greater interest income in the year ended
September 30, 1997 than in the year ended September 30, 1996 due to higher cash
balances. Net interest income was approximately $25,000 in fiscal 1996.
The Company's net income for the year ended September 30, 1997 was
approximately $791,000 while the Company had net income of approximately
$382,000 in fiscal 1996. The Company's net income for fiscal 1997 resulted
primarily from increased revenue in the Company's clinical trials services
business, including revenue generated from its European clinical services
laboratory and from continued efforts to improve operating efficiencies. The
Company's net income for fiscal 1996 resulted primarily from project-related
services performed by the Company and the recognition of revenue by the Company
resulting from the termination by the Company of the co-marketing agreement
referred to above.
Liquidity and Capital Resources
- -------------------------------
At September 30, 1997, the Company had cash and cash equivalents of
approximately $2,368,000. On June 18, 1997, GKN Securities Corp. ("GKN") and its
designees exercised underwriter's purchase options ("UPOs") to purchase 630,000
shares of Common Stock at an exercise price of $1.00 per share, after giving
effect to certain anti-dilution provisions of the UPOs. The Company received
aggregate net proceeds of approximately $600,000 as a result of such exercise of
the UPOs. On September 25, 1997, Investment Partners of America exercised
833,334 warrants at $.63 per share, after giving effect to certain anti-dilution
provisions of the warrants. The Company received aggregate net proceeds of
approximately $525,000 as a result of such exercise of the warrants.
-14-
<PAGE>
In November 1996, the Company paid to the holders of its Preferred Stock an
aggregate amount of $21,222 which amount represented accrued cumulative
dividends for the period from December 21, 1995 through and including June 30,
1996. In January 1997, the Company paid to the holders of its Preferred Stock an
aggregate amount of $20,000 which amount represented accrued cumulative
dividends for the period from July 1, 1996 through and including December 31,
1996. In September 1997, the Company paid to the holders of its Preferred Stock
an aggregate amount of $20,000 which amount represented accrued cumulative
dividends for the period from January 1, 1997 through and including June 30,
1997.
Working capital at September 30, 1997 was approximately $2,848,000.
The Company had, as of September 30, 1997, invested approximately
$3,853,000 in capital and leasehold improvements, of which approximately
$565,000 had been funded through capital leases. The Company currently
anticipates that capital expenditures for the next fiscal year will approximate
$750,000. These expenditures represent additional upgrades in the Company's
networking, data storage and core laboratory capabilities along with similar
capital requirements for its European operations.
The Company anticipates that its cash as at September 30, 1997 will be
sufficient to fund working capital needs and capital requirements through fiscal
1998.
Existing Contracts
- ------------------
During fiscal 1997, the Company signed approximately $6,158,000 in new
project contracts. As of November 30, 1997, the Company had entered into
contracts with 14 companies to provide services in the aggregate amount of
approximately $7,550,000 through February, 1999, of which services valued at
approximately $2,730,000 remain to be completed. Such contracts are subject to
termination by the Company or its clients at any time or for any reason and,
therefore, revenue generated by the Company may not meet initial contract
values.
ITEM 7. FINANCIAL STATEMENTS.
- ------------------------------
The financial statements required to be filed pursuant to this Item 7
are included in this Annual Report on Form 10-KSB. A list of the financial
statements filed herewith is found at "Item 13. Exhibits, List, and Reports
on Form 8-K."
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
---------------------------------------------------------------
None.
-15-
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
-------------------------------------------------------------
The information relating to the Company's directors, nominees for election
as directors and executive officers under the headings "Election of Directors"
and "Executive Officers" in the Company's definitive proxy statement for the
1998 Annual Meeting of Stockholders is incorporated herein by reference to such
proxy statement.
ITEM 10. EXECUTIVE COMPENSATION.
- --------------------------------
The discussion under the heading "Executive Compensation" in the Company's
definitive proxy statement for the 1998 Annual Meeting of Stockholders is
incorporated herein by reference to such proxy statement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------------------------------------------------------------------------
The discussion under the heading "Security Ownership of Certain Beneficial
Owners and Management" in the Company's definitive proxy statement for the 1998
Annual Meeting of Stockholders is incorporated herein by reference to such proxy
statement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
The discussion under the heading "Certain Relationships and Related
Transactions" in the Company's definitive proxy statement for the 1998 Annual
Meeting of Stockholders is incorporated herein by reference to such proxy
statement.
-16-
<PAGE>
ITEM 13. EXHIBITS, LIST, AND REPORTS ON FORM 8-K.
- --------------------------------------------------
(a) (1) Financial Statements.
Reference is made to the Index to Financial Statements on Page F-1.
(a) (2) Financial Statement Schedules.
None.
(a) (3) Exhibits.
Reference is made to the Index to Exhibits on Page 20.
(b) Reports on Form 8-K.
On July 3, 1997, the Company filed a report on Form 8-K relating the
exercise by GKN Securities Corp. and certain of its designees of options
to purchase 630,000 shares of Common Stock of the Company.
On October 8, 1997, the Company filed a report on Form 8-K relating
the exercise by Investment Partners of America, L.P. and certain of its
designees of warrants to purchase 833,334 shares of Common Stock of the
Company.
-17-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized this 18th day of
December, 1997.
BIO-IMAGING TECHNOLOGIES, INC.
By: /s/Donald W. Lohin
--------------------------------
Donald W. Lohin, Chairman of the
Board, President and Chief
Executive Officer
-18-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Donald W. Lohin Chairman of the Board, December 18, 1997
- --------------------------- President and Chief
Donald W. Lohin Executive Officer and Director
(principal executive
officer)
/s/James J. Conklin, M.D. Chairman Emeritus, December 18, 1997
- --------------------------- Chief Scientific Officer
James J. Conklin, M.D. and Director
/s/Robert J. Phillips Vice President and Chief December 18, 1997
- --------------------------- Financial Officer
Robert J. Phillips (principal financial and
accounting officer)
/s/Jeffrey H. Berg, Ph.D. Director December 18, 1997
- ---------------------------
Jeffrey H. Berg, Ph.D.
/s/Harris Koffer, Pharm.D. Director December 18, 1997
- ---------------------------
Harris Koffer, Pharm.D.
Director
- ---------------------------
Charles C. Harwood, Jr.
/s/Jeffrey S. Hurwitz, Esq. Director December 18, 1997
- ---------------------------
Jeffrey S. Hurwitz, Esq.
/s/James A. Taylor, Ph.D. Director December 18, 1997
- ---------------------------
James A. Taylor, Ph.D.
-19-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No. Description of Exhibit
- ------- ----------------------
3.1 Restated Certificate of Incorporation of the Company. (Incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-1 (File Number 33-47471) which became effective on June
18, 1992.) (Amendments incorporated by reference to Exhibit 3.1 to
the Company's Annual Report on Form 10-K for the year ended
September 30, 1993 and to Exhibit 3.1 to the Company's Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1995.)
3.2 By-Laws of the Company. (Incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-1 (File Number
33-47471) which became effective on June 18, 1992.)
4.1 Specimen Common Stock Certificate. (Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-1
(File Number 33-47471) which became effective on June 18, 1992.)
4.2 Registration Agreement dated October 13, 1994 between the Company
and Corning Pharmaceuticals Services Inc., now Covance, Inc.
("Covance") (Incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated October 13, 1994.)
4.3 Form of Warrant dated October 13, 1994 between the Company and
Covance.(Incorporated by reference to Exhibit 4.2 to the Company's
Current Report on Form 8-K dated October 13, 1994.)
4.4 Purchase Agreement for Units of Convertible Preferred Stock and
Warrants dated December 8, 1995 between Investment Partners of
America, L.P., as Purchaser, and the Company, including material
exhibits (including the Certificate of Designation for the
Convertible Preferred Stock). (Incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K dated December 22,
1995.)
10.1 Lease between Mountain View Office Park and the Company.
(Incorporated by reference to (i) Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (File Number 33-47471) which
became effective on June 18, 1992, (ii) Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1992, (iii) Exhibit 10.1 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1994,
and (iv) Exhibit 10.1 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended September 30, 1995), as amended effective
September 5, 1996 (Incorporated by Reference to Exhibit 10.1 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1996).
-20-
<PAGE>
Exhibit
No. Description of Exhibit
- ------- ----------------------
10.2* 1991 Stock Option Plan. (Incorporated by reference to Exhibit 10.6
to the Company's Registration Statement on Form S-1 (File Number
33-47471) which became effective on June 18, 1992.)
10.3* 401(k) Plan. (Incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement on Form S-1 (File Number 33-47471)
which became effective on June 18, 1992.)
10.4 Amended and Restated Exclusive License Agreement between the
Company and Loats Associates, Inc. ("LAI") (Incorporated by
reference to Exhibit 10.8 to the Company's Registration Statement
on Form S-1 (File Number 33-47471) which became effective on June
18, 1992.) See Exhibit 10.15 for Amendment to License Agreement.
10.5 Form of Employee's Invention Assignment, Confidential Information
and Non-Competition Agreement. (Incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992.)
10.6 Amendment dated June 21, 1994 to the Amended and Restated License
Agreement between LAI and the Company. (Incorporated by reference
to Exhibit 10.2 to the Company's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1994.)
10.7 Voting Agreement dated October 13, 1994 between the Company, Dr.
James J. Conklin and Covance.(Incorporated by reference to Exhibit
10.1 to the Company's Current Report on Form 8-K dated October 13,
1994.)
10.8 Stock Purchase Agreement dated October 13, 1994 between the Company
and Covance. (Incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated October 13, 1994.)
10.9 Master Lease Agreement dated April 25, 1994 by and between the
Company and Wasco Funding Corp. and schedules thereto dated May 9,
1995 and August 31, 1995. (Incorporated by reference to Exhibit
10.24 to the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1995.)
10.10* Employment Agreement including Invention Assignment and
Confidential Information Agreement dated January 30, 1996, by and
between the Company and Donald W. Lohin. (Incorporated by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1996.)
-21-
<PAGE>
Exhibit
No. Description of Exhibit
- ------- ----------------------
10.11 Consulting Agreement by and between the Company and Investment
Partners Capital & Management Corp. dated June 26, 1996.
(Incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30,
1996.)
10.12 Purchase Agreement for Units of Convertible Preferred Stock and
Warrants dated December 8, 1995 between Investment Partners of
America, L.P., as Purchaser and the Company, including material
exhibits. (Incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated December 22, 1995.)
10.13 Master Clinical Services Agreement between the Company and Bracco
S.p.A. dated January 1, 1997. (Incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1997.)
21.1 List of Subsidiaries of Registrant.
23.1 Consent of Goldstein Golub Kessler & Company, P.C.
27.1 Financial Data Schedule for the year ended September 30, 1997.
- ----------
* A management contract or compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 13(a) of Form 10-KSB.
(b) Financial Statement Schedules
None
-22-
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
CONTENTS
- --------------------------------------------------------------------------------
Independent Auditor's Report F-2
Consolidated Financial Statements:
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Consolidated Financial Statements F-7 - F-15
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Bio-Imaging Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Bio-Imaging
Technologies, Inc. and Subsidiaries as of September 30, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bio-Imaging
Technologies, Inc. and Subsidiaries as of September 30, 1997 and 1996, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
October 9, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
Bio-Imaging Technologies, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
September 30, 1997 1996
- ------------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents (Note 1) ................................... $ 2,367,658 $ 1,377,633
Restricted cash (Note 3) ............................................. -- 60,000
Accounts receivable, net of allowance for doubtful accounts of $20,000
and $60,000 in 1997 and 1996, respectively (Notes 1 and 6) ........ 1,214,052 879,183
Prepaid expenses and other current assets ............................ 88,518 12,460
- ------------------------------------------------------------------------------------------------------
Total current assets ................................................. 3,670,228 2,329,276
Property and Equipment, net (Notes 1, 2 and 3) ....................... 1,669,678 1,198,943
Deferred Income Tax Asset, net of valuation allowance of $1,800,000
and $2,100,000 in 1997 and 1996, respectively (Note 7) ............ -- --
Other Assets ......................................................... 67,076 5,852
- ------------------------------------------------------------------------------------------------------
Total Assets ......................................................... $ 5,406,982 $ 3,534,071
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Deferred revenue (Note 1) ............................................ $ 414,360 $ 635,562
Accounts payable ..................................................... 81,832 74,180
Accrued expenses and other current liabilities ....................... 239,351 268,000
Current maturities of long-term debt (Note 3) ........................ 87,084 91,382
- ------------------------------------------------------------------------------------------------------
Total current liabilities ............................................ 822,627 1,069,124
Long-term Debt (Note 3) .............................................. 12,794 99,878
- ------------------------------------------------------------------------------------------------------
Total liabilities .................................................... 835,421 1,169,002
- ------------------------------------------------------------------------------------------------------
Commitments (Note 5)
Stockholders' Equity (Note 4):
Preferred stock - $.00025 par value; authorized 3,000,000
shares, issued 416,667 shares ($500,000 liquidation preference) ... 104 104
Common stock - $.00025 par value; authorized 18,000,000 shares,
issued and outstanding 7,753,878 and 5,968,550 shares in 1997
and 1996, respectively ............................................ 1,939 1,493
Additional paid-in capital ........................................... 9,215,603 7,739,688
Accumulated deficit .................................................. (4,646,085) (5,376,216)
- ------------------------------------------------------------------------------------------------------
Stockholders' equity ................................................. 4,571,561 2,365,069
- ------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity ........................... $ 5,406,982 $ 3,534,071
======================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended September 30, 1997 1996
- ----------------------------------------------------------------------------
Project revenue (Notes 1, 6 and 8) ........... $ 5,544,693 $ 3,657,320
Project costs ................................ 1,937,872 1,284,180
- ----------------------------------------------------------------------------
Gross profit ................................. 3,606,821 2,373,140
General and administrative expenses .......... 1,788,548 1,258,556
Sales and marketing expenses ................. 834,092 623,512
Research and development expenses ............ 246,240 133,766
- ----------------------------------------------------------------------------
Income from operations ....................... 737,941 357,306
Interest income .............................. 68,232 48,514
Interest expense (Note 3) .................... (14,820) (23,696)
- ----------------------------------------------------------------------------
Net income ................................... 791,353 382,124
Dividends on preferred stock (Note 4) ........ 40,000 31,038
- ----------------------------------------------------------------------------
Net income applicable to common stock ........ $ 751,353 $ 351,086
============================================================================
Net income per common share (Note 1) ......... $ .10 $ .06
============================================================================
Weighted average number of common and common
equivalent shares outstanding (Note 1) .... 7,590,484 6,183,735
============================================================================
See Notes to Consolidated Financial Statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Bio-Imaging Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Additional
Preferred Stock Common Stock Paid-in Accumulated Stockholders'
Shares Amount Shares Amount Capital Deficit Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 30, 1995 ............ -- -- 5,889,350 $ 1,473 $ 7,217,129 $(5,758,340) $ 1,460,262
Issuance of preferred stock
through private placement
transaction (Note 4) .......... 416,667 $ 104 -- -- 433,229 -- 433,333
Stock options exercised
(Note 4) ...................... -- -- 14,200 4 14,446 -- 14,450
Issuance of common stock to
employees' savings plan
(Note 5) ...................... -- -- 65,000 16 74,884 -- 74,900
Net income .................... -- -- -- -- -- 382,124 382,124
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at
September 30, 1996 ............ 416,667 104 5,968,550 1,493 7,739,688 (5,376,216) 2,365,069
Stock options exercised
(Note 4) ...................... -- -- 245,275 61 283,099 -- 283,160
Warrants exercised (Note 4) ... -- -- 1,463,334 366 1,124,634 -- 1,125,000
Issuance of common stock to
employees' savings plan
(Note 5) ...................... -- -- 76,719 19 68,182 -- 68,201
Dividends on preferred stock .. -- -- -- -- -- (61,222) (61,222)
Net income .................... -- -- -- -- -- 791,353 791,353
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at September
30, 1997 ...................... 416,667 $ 104 7,753,878 $ 1,939 $ 9,215,603 $(4,646,085) $ 4,571,561
===================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
Bio-Imaging Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended September 30, 1997 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income .............................................................. $ 791,353 $ 382,124
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ......................................... 651,775 533,773
(Reduction of) provision for losses on accounts receivable ............ (40,000) 35,000
Stock contribution to employees' savings plan (Note 5) ................ 68,201 74,900
Changes in operating assets and liabilities:
Increase in accounts receivable ..................................... (294,869) (416,317)
(Increase) decrease in prepaid expenses and other current assets .... (76,058) 28,005
(Increase) decrease in other assets ................................. (61,224) 2,335
Decrease in deferred revenue ........................................ (221,202) (19,271)
Increase (decrease) in accounts payable ............................. 7,652 (11,204)
(Decrease) increase in accrued expenses and other current liabilities (28,649) 143,562
- -------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ............................... 796,979 752,907
- -------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment ................................... (1,122,510) (400,353)
Decrease in restricted cash ........................................... 60,000 60,000
- -------------------------------------------------------------------------------------------------------
Net cash used in investing activities ................................... (1,062,510) (340,353)
- -------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Repayment of loan payable ............................................. -- (86,852)
Payments under equipment lease obligations ............................ (91,382) (100,536)
Dividends paid to preferred stockholders .............................. (61,222) --
Net proceeds from private placement of preferred stock (Note 4) ....... -- 433,333
Proceeds from exercise of stock options ............................... 283,160 14,450
Proceeds from exercise of warrants .................................... 1,125,000 --
- -------------------------------------------------------------------------------------------------------
Net cash provided by financing activities ............................... 1,255,556 260,395
- -------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents ............................... 990,025 672,949
Cash and cash equivalents at beginning of year .......................... 1,377,633 704,684
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year ................................ $ 2,367,658 $ 1,377,633
=======================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest ................................ $ 14,820 $ 23,696
=======================================================================================================
Supplemental schedule of noncash investing
and financing activities:
Equipment purchased under capital lease obligations ................... $ -- $ 59,381
=======================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------
The accompanying consolidated financial statements include the accounts of
Bio-Imaging Technologies, Inc. ("BIT") and its wholly owned subsidiaries, Oxford
Bio-Imaging Research, Inc. and Bio-Imaging Technologies Holding B.V.
(collectively the "Company"). All significant intercompany transactions and
balances have been eliminated.
During 1997, Bio-Imaging Technologies Holding B.V. was incorporated in the
Netherlands as a holding company for its wholly owned subsidiary, Bio-Imaging
Technologies, B.V. ("BIT B.V.").
The Company is a biomedical information technology and service company which
provides medical image processing, digital image and clinical data management
services and software applications to the biotechnology and pharmaceutical
industries located in the United States and Europe. The Company specializes in
the processing and analysis of medical images, and in the data-basing and
regulatory submission of medical images, related text, quantitative data and
document-based information obtained from clinical trials.
Project revenue is recognized when services are performed and the related costs
are incurred. Deferred revenue is recorded when cash is received prior to the
performance of services. Unbilled receivables are billed upon the completion of
milestones as defined in specific contracts. Accounts receivable include
approximately $644,000 and $647,000 of unbilled receivables at September 30,
1997 and 1996, respectively.
The Company capitalizes software development costs after technological
feasibility has been determined and ceases capitalization at such time as the
end product is available for general release to the public. The establishment of
technological feasibility and the ongoing assessment of recoverability of
capitalized software development costs require considerable judgment by
management with respect to certain external factors including, but not limited
to, anticipated future revenue, estimated economic life and changes in software
and hardware technologies. At September 30, 1997, management has estimated an
economic useful life of 30 months and is amortizing these costs on a
straight-line basis over this period. The amortization period is reviewed
annually by management.
Depreciation of property and equipment is provided for by the straight-line
method over the estimated useful lives of the respective assets. Amortization of
leasehold improvements is provided for over the related lease term.
F-7
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Net income per common share is calculated based upon the weighted average number
of common shares and dilutive common equivalent shares outstanding. For the
years ended September 30, 1997 and 1996, the weighted average number of common
and common equivalent shares amounted to 7,590,484 and 6,183,735, respectively.
In March 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings Per Share ("SFAS 128"), which is effective for financial statements
with fiscal years ending after December 15, 1997. Pro forma Earnings per Common
Share computed in accordance with SFAS 128 are as follows:
Year ended September 30, 1997 1996
- -----------------------------------------------------------
Basic earnings per share.............. $ .12 $ .06
Diluted earnings per share ........... $ .10 $ .06
The Company maintains substantially all of its cash in one financial
institution. To the extent that such cash exceeds the maximum insurance level,
it is uninsured.
The Company has defined cash equivalents as highly liquid investments with an
original maturity of three months or less.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles which require the use of estimates by
management.
For comparability, certain 1996 amounts have been reclassified, where
appropriate, to conform to the financial statement presentation used in 1997.
In June 1997, Financial Accounting Standards Board issued SFAS No. 130,
Reporting Comprehensive Income ("SFAS 130") and SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information ("SFAS 131"), which are
effective for financial statements with fiscal years beginning after December
15, 1997. Management has not determined the effect, if any, the adoption of SFAS
130 and SFAS 131 will have on its financial position or results of operations.
F-8
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
2. PROPERTY AND EQUIPMENT
- --------------------------
Property and equipment, at cost, consists of the following:
Estimated
September 30, 1997 1996 Useful Life
- -----------------------------------------------------------------------------
Imaging equipment................ $ 2,975,461 $ 2,026,010 5 years
Equipment under capital leases... 565,319 565,319 5 years
Furniture and fixtures........... 227,877 131,471 7 years
Leasehold improvements........... 84,060 50,843 Term of lease
Computer software costs.......... 143,436 100,000 30 months
- -----------------------------------------------------------------------------
3,996,153 2,873,643
Less accumulated depreciation
and amortization................. (2,326,475) (1,674,700)
=============================================================================
$ 1,669,678 $ 1,198,943
=============================================================================
Accumulated depreciation related to equipment acquired under capital leases
amounted to approximately $401,000 and $288,000 at September 30, 1997 and 1996,
respectively.
Accumulated amortization related to computer software costs amounted to
approximately $59,000 and $17,000 at September 30, 1997 and 1996, respectively.
3. LONG-TERM DEBT
- ------------------
Long-term debt consists of equipment lease obligations. The equipment lease
obligations are payable in monthly installments ranging from $1,691 to $5,277,
including interest at rates ranging from 8.78% to 10.46%, through April 1999.
The debt is collateralized by the related equipment. During 1997, additional
collateral consisting of a certificate of deposit, bearing interest at 5.13%,
was released by the lessor.
Aggregate maturities of long-term debt at September 30, 1997 are as follows:
Year ending September 30,
- ------------------------------------------------------
1998....................... $ 87,084
1999....................... 12,794
======================================================
$ 99,878
======================================================
F-9
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
4. STOCKHOLDERS' EQUITY
- ------------------------
In June 1992, the Company completed a public offering of 1,000,000 units at $5
per unit. Each unit consisted of one share of common stock and one Class G
warrant entitling the holder to purchase one share of common stock at an
exercise price of $5.50. The warrants expired during June 1996. The Company
received approximately $3,736,000 after deducting underwriting discounts and
expenses of the offering of approximately $1,264,000.
In addition, in June 1992, the Company issued purchase options to the
underwriter of the Company's public offering. The purchase options entitled the
holders to purchase, in aggregate, 100,000 units of the Company. Each unit
consisted of one share of common stock of the Company and one Class G redeemable
common stock purchase warrant. The purchase options were initially exercisable
at $7.00 per unit and contained certain anti-dilution provisions. After the
effect of these provisions, the Company was obligated to issue 699,999 shares of
common stock upon the exercise of these units at an adjusted price of $1.00 per
share. On June 18, 1997, 630,000 of these units were exercised with the balance
of the units expiring on that date. Upon such exercise, the Company received
gross proceeds of $630,000.
In December 1991 and June 1992, the Company's Board of Directors and
stockholders, respectively, approved the adoption of the Bio-Imaging
Technologies, Inc. Stock Option Plan. In January 1995 and 1997, the Company
amended this plan to provide for the granting of options to key employees,
directors and consultants to purchase an aggregate of not more than 1,800,000
and 2,400,000 shares, respectively, of the Company's common stock. Each option
is exercisable into one share of common stock. Options granted pursuant to the
plan, to be granted at prices not less than fair value at the date of grant,
consist of qualified incentive stock options, as defined in the Internal Revenue
Code, and nonqualified options.
F-10
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The following table summarizes the transactions pursuant to the Company's stock
option plan for the two-year period ended September 30, 1997:
Number of Weighted Average
Options Exercise Price
- ------------------------------------------------------------------------------
Unexercised options outstanding at
September 30, 1995......................... 1,194,500 $ 1.90
Options granted............................ 406,500 0.69
Options canceled........................... (85,300) 1.08
Options exercised.......................... (14,200) 1.02
- ------------------------------------------------------------------------------
Unexercised options outstanding at
September 30, 1996......................... 1,501,500 1.63
Options granted............................ 529,000 1.29
Options canceled........................... (300,225) 2.56
Options exercised.......................... (245,275) 1.15
==============================================================================
Unexercised options outstanding at
September 30, 1997......................... 1,485,000 $ 1.40
==============================================================================
Approximately 943,000 and 1,192,000 options are exercisable at September 30,
1997 and 1996, respectively, at a weighted average exercise price of $1.58 and
$1.85, respectively.
The Company has elected, in accordance with the provisions of SFAS No. 123,
Accounting for Stock-Based Compensation ("SFAS 123"), to apply the current
accounting rules under APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for its stock options and,
accordingly, has presented the disclosure-only information as required by SFAS
123. If the Company had elected to recognize compensation cost based on the fair
value of options granted at the grant date as prescribed by SFAS 123, the
Company's net income (loss) and earnings (loss) per common stock for the years
ended September 30, 1997 and 1996 would approximate the pro forma amounts
indicated in the following table:
<TABLE>
<CAPTION>
Year ended September 30, 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Net income applicable to common stock - as reported.......... $ 751,353 $ 351,086
Net income (loss) applicable to common stock - pro forma... $ 176,635 $ (246,361)
Net income per common share - as reported.................... $ 0.10 $ 0.06
Net income (loss) per common share - pro forma............... $ 0.02 $ (0.04)
(No tax effect given to pro forma data.)
</TABLE>
F-11
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
At September 30, 1997, by range of exercise prices, the number of shares
represented by outstanding options and warrants with their weighted average
exercise price and weighted average remaining contractual life, in years, and
the number of shares represented by exercisable options and warrants with their
weighted average exercise price are as follows:
Weighted Average
- --------------------------------------------------------------------------------
Outstanding Exercisable
Exercise Price Shares Price Life Shares Price
- --------------------------------------------------------------------------------
$ 0.63 - $ 1.44 1,971,095 $ 0.90 5.4 1,429,293 $ 0.83
$ 4.13 - $ 4.69 152,000 4.60 4.7 152,000 4.60
The weighted average fair value of options and warrants granted in 1997 and 1996
were $1.09 and $0.46 respectively. The fair value of each option granted is
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions:
Grants for the year ended September 30, 1997 1996
- -------------------------------------------------------------------
Risk-free interest rate..................... 5.5% 6.0%
Expected dividend yield..................... 0.0% 0.0%
Expected volatility......................... 1.09 1.08
Expected life............................... 6.00 6.00
On October 13, 1994, the Company and Covance Inc., formerly Corning
Pharmaceutical Services, Inc., consummated the purchase by Covance Inc. of (i)
2,355,000 shares of the Company's common stock, $.00025 par value (ii) a warrant
to purchase 250,000 shares of common stock with an initial exercise price of
$1.25 per share and (iii) a warrant to purchase 250,000 shares of common stock
with an initial price of $1.50 per share (the "Warrants") for an aggregate
purchase price of $1,819,500. The Warrants expire on October 13, 1998 and are
subject to adjustment to protect against dilution in the event of certain
transactions. The exercise price of the Warrants is subject to price adjustment,
as defined. After the effect of the anti-dilution provisions, the Company is
obligated to issue 571,428 shares of common stock upon the exercise of these
warrants at an adjusted exercise price of $.63.
In November 1994, the Company issued to Loats Associates, Inc. 50,000 shares of
the Company's common stock which have certain piggyback registration rights
pursuant to the terms of a license agreement. No expense was incurred and no
payments were made to the licensor in 1997 and 1996.
F-12
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
On December 14, 1995, the Company reserved 3,850,000 shares of the Company's
common stock for issuance upon conversion of the Preferred Stock and exercise of
the warrants issued to Investment Partners of America, L.P. ("IPA") (see below).
On December 21, 1995, IPA purchased (i) 416,667 shares of the Company's
preferred stock, (ii) one five year warrant to purchase 416,667 shares of the
Company's common stock at an initial exercise price of $1.50 per share and (iii)
one five year warrant to purchase 416,667 shares of the Company's common stock
at an initial exercise price of $2.50 per share for an aggregate purchase price
of $500,000 pursuant to a purchase agreement dated December 8, 1995 ("Purchase
Agreement"). Costs associated with this transaction amounted to approximately
$67,000 and reduced paid-in capital at the transaction date. The Purchase
Agreement provided for a minimum investment of $750,000 and a maximum investment
of $1,500,000 from IPA. On September 25, 1997, IPA exercised these warrants at
an adjusted exercise price of $.63, after giving effect to the anti-dilution
provisions. As a result, the Company received gross proceeds of $525,000.
On June 26, 1996, the Company and IPA terminated the Purchase Agreement. In
conjunction with this termination, the Company issued to IPA, one five-year
warrant to purchase 66,667 shares of the Company's common stock at an initial
exercise price of $1.05 per share, the fair market value of the Company's common
stock at date of issuance. Additionally, the Company entered into a two-year
consulting agreement with Investment Partners Capital and Management Corp., a
related investment entity of IPA, for a nonrefundable fee of $30,000 which has
been expensed by the Company as of September 30, 1996. The exercise price of
this warrant issued to IPA is subject to adjustment to protect against dilution
in the event of certain transactions and has certain piggyback registration
rights. As of September 30, 1997, the adjusted exercise price of the warrant is
$.63.
The 8% convertible cumulative preferred stock is convertible into common stock
of the Company on a one-for-one share basis subject to adjustment to protect
against dilution in the event of certain transactions. Conversion may occur in
whole or in part during the first five-year period from the date of issuance at
the option of the holder. The Company may require a full conversion at any time
after five years from date of issuance. The preferred stock has certain
piggyback registration rights.
The Company is required to pay semiannual dividends on preferred stock at the
rate of $.10 per share per annum, and as when declared by the Board of
Directors. Dividends are payable in cash or in the Company's common stock. At
September 30, 1997, preferred dividends in arrears aggregated approximately
$10,000 or $.02 per share of the preferred stock.
F-13
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The preferred stockholders are entitled to vote on all matters submitted to the
vote of the common stockholders and are included in determining quorums and
voting results.
5. COMMITMENTS
- ---------------
The Company has entered into noncancelable operating leases for office
facilities which expire through February 2000.
Future minimum aggregate rental payments on the noncancelable portion of the
lease are as follows:
Year ending September 30,
1998............................. $ 170,000
1999............................. 75,000
2000............................. 21,000
- -------------------------------------------------------
$ 266,000
=======================================================
Rent expense charged to operations for the years ended September 30, 1997 and
1996 amounted to approximately $210,000 and $139,000, respectively.
On December 17, 1991, the Company adopted the Bio-Imaging Technologies, Inc.
Employees' Savings Plan (the "401(k) Plan"), a defined contribution plan with a
cash or deferred arrangement. Under the terms of the 401(k) Plan, eligible
employees may elect to reduce their annual compensation up to 15%, subject to an
annual limit prescribed by the Internal Revenue Service. During June 1997, the
401(k) Plan was amended to limit discretionary Company matching contributions to
cash. Previously, the Company could make discretionary matching contributions in
cash or common stock.
The Company made matching contributions to the account of the 401(k) Plan of
76,719 and 65,000 shares of its common stock during September 1997 and September
1996, respectively. These shares were newly issued shares previously reserved in
November 1994.
The Company's matching contributions to the 401(k) Plan for the years ended
September 30, 1997 and 1996 amounted to approximately $81,000 and $75,000,
respectively.
F-14
<PAGE>
Bio-Imaging Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company has an employment contract with an officer which expires January 30,
1998. The amount due under this contract is approximately $58,000. Additionally,
the contract provides for the granting of options to purchase 250,000 shares of
the Company's common stock at fair market value at the date of grant. Options to
purchase 50,000 shares of the Company's common stock vested immediately, with
the balance vesting in equal amounts over five years from the date of grant.
6. MAJOR CUSTOMERS
- -------------------
At September 30, 1997, two customers accounted for approximately 45% and 16% of
accounts receivable.
At September 30, 1996, four customers accounted for approximately 32%, 25%, 12%
and 11% of accounts receivable.
For the year ended September 30, 1997, revenue from two major customers
accounted for approximately 34% and 13% of project revenue.
For the year ended September 30, 1996, revenue from three major customers
accounted for approximately 22%, 18% and 12% of project revenue.
7. INCOME TAXES
- ----------------
The Company has net operating loss carryforwards of approximately $4,500,000
which expire in various years through 2011. The deferred income tax assets at
September 30, 1997 and 1996 represent the tax effect of the net operating loss
carryforwards. Due to the uncertainty regarding the ultimate amount of income
tax benefits to be derived from the net operating loss carryforwards, the
Company has recorded valuation allowances against the entire deferred tax asset.
8. FOREIGN OPERATIONS
- ----------------------
For the year ended September 30, 1997, the Company recognized approximately 38%
of project revenue from foreign customers.
BIT B.V. maintains an office in the Netherlands. For the year ended September
30, 1997, BIT B.V. recognized approximately $679,000 of project revenue from
services provided to unaffiliated customers. For the year ended September 30,
1997, net income from operations was approximately $10,000.
At September 30, 1997, identifiable operating assets of BIT B.V. approximated
$545,000.
F-15
Subsidiaries
- ------------
Oxford Bio-Imaging Research, Inc., a New Jersey corporation and
wholly-owned subsidiary of the Company (inactive)
Bio-Imaging Technologies Holding B.V., a corporation organized under the
laws of the Netherlands and wholly-owned subsidiary of the Company
Bio-Imaging Technologies, B.V., a corporation organized under the laws of
the Netherlands and wholly-owned subsidiary of Bio-Imaging Technologies
Holding B.V.
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statements of Bio-Imaging Technologies, Inc. (i) on Form S-8 (relating to the
Company's 1991 Stock Option Plan) filed on March 17, 1995 (Registration No.
33-90412), (ii) on Form S-8 (relating to the Company's 1991 Stock Option Plan)
filed on January 17, 1994 (Registration No. 33-74152), (iii) on Form S-8
(relating to the Company's 1991 Stock Option Plan) filed on March 3, 1997
(Registration No. 33-22661), (iv) on Form S-3 declared effective March 8, 1994
(Registration No. 33-75370), and (v) on Form S-3 declared effective April 18,
1997 (Registration No. 33-25477) of our report dated October 9, 1997 on our
audits of the consolidated financial statements of Bio-Imaging Technologies,
Inc. and Subsidiaries as of September 30, 1997 and 1996 and for the years then
ended, which reports are included in this Annual Report on Form 10-KSB.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
December 16, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information for the year ended
September 30, 1997 extracted from the registrant's annual report on Form
10-KSB and is qualified in its entirety by reference to such Form 10-KSB.
</LEGEND>
<CIK> 0000822418
<NAME> Bio-Imaging Technologies, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,367,658
<SECURITIES> 0
<RECEIVABLES> 1,234,052
<ALLOWANCES> 20,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,670,228
<PP&E> 3,996,153
<DEPRECIATION> 2,326,475
<TOTAL-ASSETS> 5,406,982
<CURRENT-LIABILITIES> 822,627
<BONDS> 12,794
0
104
<COMMON> 1,939
<OTHER-SE> 4,569,518
<TOTAL-LIABILITY-AND-EQUITY> 5,406,982
<SALES> 0
<TOTAL-REVENUES> 5,544,693
<CGS> 0
<TOTAL-COSTS> 1,937,872
<OTHER-EXPENSES> 2,868,880
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (53,412)
<INCOME-PRETAX> 791,353
<INCOME-TAX> 0
<INCOME-CONTINUING> 791,353
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 791,353
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
