U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------- ------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
Commission File No. 1-11182
BIO-IMAGING TECHNOLOGIES, INC.
----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 11-2872047
------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
830 Bear Tavern Road, West Trenton, New Jersey 08628-1020
------------------------------------------------------------------------
(Address of Principal Executive Offices)
(609) 883-2000
---------------------------
(Issuer's Telephone Number,
Including Area Code)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes: X No:
---- ----
State the number of shares outstanding of each of the Issuer's classes of
common stock, as of December 31, 1998:
Class Number of Shares
- ----- ----------------
Common Stock, $.00025 par value 7,773,878
Transitional Small Business Disclosure Format (check one):
Yes: No: X
---- ----
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
TABLE OF CONTENTS
-----------------
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements............................... 1
CONSOLIDATED BALANCE SHEETS
as of December 31, 1998 (unaudited) and
September 30, 1998..................................... 2
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1998 and 1997
(unaudited)............................................ 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 1998 and 1997
(unaudited)............................................ 4
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)................................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 8
Results of Operations.................................. 9
Liquidity and Capital Resources........................ 12
PART II OTHER INFORMATION
Item 5. Other Information.................................. 14
Item 6. Exhibits and Reports on Form 8-K................... 15
SIGNATURES ................................................... 16
- i -
<PAGE>
PART I. FINANCIAL INFORMATION.
------------------------------
ITEM 1. FINANCIAL STATEMENTS.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission, although Bio-Imaging Technologies, Inc. (the
"Company") believes that such financial disclosures are adequate to assure that
the information presented is not misleading in any material respect. The
following consolidated financial statements should be read in conjunction with
the year-end consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended September 30,
1998.
The results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire fiscal year.
- 1 -
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31, September 30,
1998 1998
--------------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents.................. $ 1,049,376 $ 1,527,330
Accounts receivable, net................... 823,703 626,376
Prepaid expenses and other current assets.. 102,331 84,747
---------- ----------
Total current assets...................... 1,975,410 2,238,453
Property and equipment, net.................. 1,426,831 1,543,434
Other assets ................................ 31,305 32,235
---------- ----------
Total assets.............................. $ 3,433,546 $ 3,814,122
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred revenue........................... $ 381,776 $ 522,605
Accounts payable........................... 153,830 142,071
Accrued expenses and other current
liabilities............................... 379,750 261,063
Current maturities of long-term debt....... 45,442 49,956
---------- ----------
Total current liabilities................. 960,798 975,695
Long-term debt............................... 16,953 26,808
---------- ----------
Total liabilities......................... 977,751 1,002,503
---------- ----------
Stockholders' equity:
Preferred stock - $.00025 par value;
authorized 3,000,000 shares, 416,667
issued and outstanding ($500,000
liquidation preference)................... 104 104
Common stock - $.00025 par value;
authorized 18,000,000 shares,
7,773,878 shares issued and outstanding
at December 31, 1998 and
September 30, 1998........................ 1,944 1,944
Additional paid-in capital................. 9,231,497 9,231,497
Accumulated deficit........................ (6,777,750) (6,421,926)
---------- ----------
Stockholders' equity...................... 2,455,795 2,811,619
---------- ----------
Total liabilities and stockholders'
equity.................................... $ 3,433,546 $ 3,814,122
========== ==========
See Notes to Consolidated Financial Statements
- 2 -
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
For the Three Months Ended
December 31,
----------------------------
1998 1997
---- ----
Project revenues......................... $ 824,292 $ 1,118,096
---------- ----------
Cost and expenses:
Cost of revenues..................... 560,761 504,503
General and administrative expenses.. 317,399 468,759
Sales and marketing expenses......... 241,317 276,934
Research and development expenses.... 59,568 72,656
Non-recurring charges................ - 150,000
---------- ----------
Total cost and expenses.................. 1,179,045 1,472,852
---------- ----------
Loss from operations..................... (354,753) (354,756)
Interest income - net.................... 8,929 26,698
---------- ----------
Net loss................................. (345,824) (328,058)
Dividends on preferred stock............. 10,000 10,000
---------- ----------
Net loss applicable to common stock...... $ (355,824) $ (338,058)
=========== ==========
Basic loss per common share.............. $ (0.05) $ (0.04)
=========== ==========
Weighted average number of common
shares................................. 7,773,878 7,767,285
=========== ==========
Diluted loss per common share............ $ (0.05) $ (0.04)
=========== ==========
Weighted average number of common and
dilutive common equivalent shares........ 7,773,878 7,767,285
=========== ==========
See Notes to Consolidated Financial Statements
- 3 -
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
For the Three Months Ended
December 31,
----------------------------
1998 1997
---- ----
Cash flows from operating activities:
Net loss ........................................ $ (345,824) $ (328,058)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 137,908 164,914
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable.... (197,327) 389
Increase in prepaid expenses and other
current assets................................ (17,584) (24,054)
Decrease in other assets...................... 930 9,140
Decrease in deferred revenue.................. (140,829) (31,810)
Increase (decrease) in accounts payable....... 11,759 (32,169)
Increase in accrued expenses and other
current liabilities........................... 128,687 76,698
---------- ---------
Net cash used in operating activities......... (422,280) (164,950)
---------- ---------
Cash flows from investing activities:
Purchases of property and equipment.............. (21,305) (28,591)
---------- ---------
Net cash used in investing activities......... (21,305) (28,591)
---------- ---------
Cash flows from financing activities:
Payments under equipment lease obligations....... (14,369) (31,466)
Dividends paid on preferred stock................ (20,000) -
Net proceeds from exercise of options to
purchase common stock......................... - 15,899
---------- ---------
Net cash used in financing activities......... (34,369) (15,567)
---------- ---------
Net decrease in cash and cash equivalents.......... (477,954) (209,108)
Cash and cash equivalents at beginning of period... 1,527,330 2,367,658
---------- ---------
Cash and cash equivalents at end of period......... $ 1,049,376 $ 2,158,550
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest......... $ 1,694 $ 2,246
========== ==========
See Notes to Consolidated Financial Statements
- 4 -
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 1 - Basis of Presentation:
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
September 30, 1998.
In the opinion of the Company's management the accompanying unaudited
consolidated financial statements contain all adjustments, consisting solely of
those which are of a normal recurring nature, necessary to present fairly its
financial position as of December 31, 1998 and the results of its operations and
its cash flows for the three months ended December 31, 1998 and 1997.
Interim results are not necessarily indicative of results for the full
fiscal year.
Basic loss per common share was calculated based upon the net loss
available to common stockholders divided by the weighted average number of
shares of common stock outstanding during the period. Diluted loss per common
share for the three months ended December 31, 1998 and 1997 exclude the impact
of options and warrants as they are antidilutive.
- 5 -
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 1 - Basis of Presentation: (continued)
The computation of basic loss per common share and diluted loss per common
share were as follows:
Three Months Ended
December 31,
--------------------------
1998 1997
----------- -----------
Net loss.......................... $ (345,824) $ (328,058)
Dividends on preferred stock...... 10,000 10,000
---------- ----------
Net loss applicable
to common stock - basic........ (355,824) (338,058)
Dilutive dividends on
preferred stock................ - -
---------- ----------
Net loss applicable
to common stock - diluted...... $ (355,824) $ (338,058)
---------- ----------
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,767,285
========== ==========
Basic loss per
common share................... $ (0.05) $ (0.04)
========== ==========
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,767,285
Common share equivalents of
outstanding stock options
and warrants................... - -
Common share equivalents of
dilutive outstanding
preferred stock................ - -
---------- ----------
Total shares...................... 7,773,878 7,767,285
========== ==========
Diluted loss per common share..... $ (0.05) $ (0.04)
========== ==========
- 6 -
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 2 - Stockholders' Equity:
The Company has 416,667 shares of Series A Preferred Stock (the "Preferred
Stock") outstanding. The Preferred Stock provides for (i) voting rights on an
as-converted to Common Stock basis, with standard protective provisions; (ii) a
liquidation preference of $1.20 per share; (iii) anti-dilution protection and
price protection provisions; (iv) cumulative dividends of $0.096 per share per
annum, payable out of funds legally available for the payment of dividends and
only upon declaration of dividends by the Board of Directors of the Company; and
(v) registration rights with respect to the shares of Common Stock issuable upon
conversion of the Preferred Stock. Dividends are payable in cash or in the
Company's Common Stock at the Company's discretion.
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. The Company expects that any earnings which the Company
may realize and which are not paid as dividends to holders of Preferred Stock
will be retained to finance the growth of the Company.
- 7 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
The Company is a pharmaceutical contract service organization providing
services that support the product development process of the pharmaceutical,
biotechnology and medical device industries. The Company specializes in
assisting its clients in the design and management of the medical-imaging
component of clinical trials. The Company provides services which include the
processing and analysis of medical images and the data-basing and regulatory
submission of medical images, quantitative data and text. The Company
experienced a loss for the three months ended December 31, 1998 as a result of
insufficient project revenues to support the infrastructure of the Company.
Although the Company's client base remained at 17 clients as compared to the
same period in the prior year, the revenues generated from such clients remain
highly concentrated.
The Company's sales cycle (the period from the presentation by the Company
to a potential client to the engagement of the Company by such client) is
generally approximately nine months. In addition, the contracts under which the
Company is engaged to perform services typically cover a period of 12-24 months
and the volume and type of services performed by the Company generally vary
during the course of a project. In an effort to expand its client base, obtain
additional contracts and generate additional revenues, the Company increased its
sales and marketing efforts during the last fiscal year. As of December 31,
1998, the Company believes that the results of these efforts have not yet been
fully realized given the lengthy sales cycle and the nature and timing of the
services to be provided by the Company on current and prospective contracts. No
assurance can be made that the Company's project revenues will increase to
levels required to achieve and maintain profitability.
Despite lower project revenues for the three months ended December 31, 1998
as compared to the three months ended December 31, 1997, the Company believes
that demand for its services and technologies will grow during the longer term
as the use of digital technologies for data acquisition and management increases
in the radiology and drug development communities. The Company also believes
that there is a growing recognition within the bio-pharmaceutical industry
regarding the use of an independent centralized core laboratory for analysis of
medical imaging data that is derived from clinical trials and the rigorous
regulatory requirements relating to the submission of this data. 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,
generate large amounts of image data that will require processing, analysis,
data management and submission services. Due to several factors, including,
without limitation, an increase in competition, there can be no assurance that
demand for the Company's services and technologies will grow, or sustain growth,
or that additional revenue generating opportunities will be realized by the
Company.
- 8 -
<PAGE>
Certain matters discussed in the Form 10-QSB are "forward-looking
statements" intended to qualify for the safe harbors from liability established
by the Private Securities Litigation Reform Act of 1995. In particular, the
Company's statements regarding the demand for the Company's services and
technologies, growing recognition for the use of independent centralized core
laboratories, trends toward the outsourcing of imaging services in clinical
trials and increased use of digital medical images in clinical trials are
examples of such forward-looking statements. The forward-looking statements
include risks and uncertainties, including, but not limited to, the timing of
projects due to the variability in size, scope and duration of projects,
regulatory delays, clinical study results which lead to reductions or
cancellations of projects, and other factors, including general economic
conditions and regulatory developments, not within the Company's control. 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. The forward-looking statements are made only as of the date
of this filing and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
RESULTS OF OPERATIONS
Three Months Ended December 31, 1998 and 1997
---------------------------------------------
Project revenues for the quarters ended December 31, 1998 ("First Quarter
of Fiscal 1999") and 1997 ("First Quarter of Fiscal 1998") were approximately
$824,000 and $1,118,000, respectively, a decrease of approximately $294,000 or
26.3%. Project revenues in each of the First Quarter of Fiscal 1999 and Fiscal
1998 were derived from 17 clients. Project revenues generated from the Company's
client base continue to be highly concentrated. Four clients represented
approximately 65.3% of the Company's project revenues for the three months ended
December 31, 1998. For the comparable period last year, two clients represented
approximately 58.3% of the Company's project revenues of which one European
client represented 43.6% or $487,000 of project revenues. The decrease in
project revenues is primarily a result of a decrease in the work performed by
the Company on existing contracts, including work for such European client
during the First Quarter of Fiscal 1999 as compared to the First Quarter of
Fiscal 1998. The Company's scope of work in both periods included primarily
medical imaging core laboratory services and image-based information management
services.
Cost of revenues in each of the First Quarter of Fiscal 1999 and Fiscal
1998 were comprised of professional salaries and benefits and allocated
overhead. Cost of revenues for the First Quarter of Fiscal 1999 and Fiscal 1998
were approximately $561,000 and $505,000, respectively, an increase of
approximately $56,000 or 11.1%. This increase is primarily attributable to an
increase in staffing levels required to support the mix of services provided by
the Company in the First Quarter of Fiscal 1999 as compared to the First Quarter
of Fiscal 1998.
The difference between project revenues and cost of revenues for the First
Quarter of Fiscal 1999 decreased as a percentage to project revenues compared to
the First Quarter of 1998. This is primarily due to a higher gross profit margin
generated from work performed on the one
- 9 -
<PAGE>
European client, which represented 43.6% of project revenues in the First
Quarter of Fiscal 1998, compared to the gross profit margin generated from work
performed on the Company's other clients in the First Quarter of Fiscal 1999.
The higher gross margin during the First Quarter of Fiscal 1998 resulted from
the mix of services and the fees associated with the work performed by the
Company for this European client. In addition, the Company maintained staffing
levels to support its existing contracts and in anticipation of future business.
General and administrative expenses in each of the First Quarter of Fiscal
1999 and Fiscal 1998 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
$317,000 in the First Quarter of Fiscal 1999 and approximately $469,000 in the
First Quarter of Fiscal 1998. The decrease during the First Quarter of Fiscal
1999 of approximately $152,000 or 32.4%, from the corresponding Fiscal 1998
quarter, resulted primarily from the elimination of expenditures in support of
the former Marketing Information Services Division (the "MISD") and Data
Management and Information Systems Division (the "DMISD") and personnel costs
associated with former executive officers who resigned in December 1997. Such
personnel costs were independent of the expenditures that supported the former
MISD and DMISD divisions. This decrease was offset, in part, by personnel costs
associated with the appointment of a new President and Chief Executive Officer
after the First Quarter of Fiscal 1998.
Sales and marketing expenses in each of the First Quarter of Fiscal 1999
and Fiscal 1998 were comprised of direct sales and marketing costs, professional
salaries and benefits and allocated overhead. Sales and marketing expenses were
approximately $241,000 in the First Quarter of Fiscal 1999 and approximately
$277,000 in the First Quarter of Fiscal 1998. The decrease during the First
Quarter of Fiscal 1999 of approximately $36,000, or 13.0%, from the
corresponding Fiscal 1998 quarter, resulted primarily from the decrease in
personnel costs associated with the Senior Vice President of Sales and Marketing
incurred in the First Quarter of Fiscal 1998. The executive officer who held
that position was appointed President and Chief Executive Officer after the
First Quarter of Fiscal 1998. These personnel costs are reflected in general and
administrative expenses for the First Quarter of Fiscal 1999.
Research and development expenses in each of the First Quarter of Fiscal
1999 and Fiscal 1998 consisted of professional salaries and benefits and
overhead charged to research and development projects. Research and development
expenses during the First Quarter of Fiscal 1999 and 1998 were approximately
$60,000 and $73,000, respectively. The decrease during the First Quarter of
Fiscal 1999 of approximately $13,000, or 17.8%, from the corresponding Fiscal
1998 quarter, resulted primarily from a decrease in resources dedicated to
research and development projects. Research and development expenses in each of
the First Quarter of Fiscal 1999 and Fiscal 1998 primarily focused on the
formulation, design and testing of product and process alternatives.
- 10 -
<PAGE>
During the First Quarter of Fiscal 1998, the Company recorded non-recurring
charges of $150,000. This amount consists of restructuring expenses of $105,000
and severance expenses of $45,000.
In December 1997, the Company terminated two business divisions, the MISD
and the DMISD, which were established in October 1996. These divisions did not
meet the Company's expectations and the Company believed that its resources were
better focused on its core clinical trials service business. The Company
incurred restructuring charges of approximately $105,000 which consisted of (i)
$38,000 of severance costs paid to the former Senior Vice President and General
Manager of the MISD and (ii) $67,000 related to the write-off of assets and
costs associated with the termination of the MISD and DMISD. Each of these
charges has been reflected in non-recurring charges for the First Quarter of
Fiscal 1998.
In a separate matter, two executive officers of the Company resigned in
December 1997. As a result of these resignations, the Company recorded severance
expenses of approximately $45,000 as of December 31, 1997. Such expenses have
been reflected in non-recurring charges for the First Quarter of Fiscal 1998.
Total cost and expenses in each of the First Quarter of Fiscal 1999 and
Fiscal 1998 consisted primarily of cost of revenues, general and administrative
expenses, sales and marketing expenses and research and development expenses.
The Company's cost and expenses were approximately $1,179,000 in the First
Quarter of Fiscal 1999 and approximately $1,323,000 in the corresponding quarter
in Fiscal 1998 (excluding non-recurring charges of $150,000). Such decrease of
approximately $144,000 or 10.9% is due primarily to the elimination of
expenditures in support of the former MISD and DMISD divisions and personnel
costs associated with former executive officers who resigned in December 1997.
Such personnel costs were independent of the expenditures that supported the
former MISD and DMISD divisions.
Net interest income of approximately $9,000 during the First Quarter of
1999, 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 First Quarter of 1998 than in the
First Quarter of Fiscal 1999 due to higher cash balances maintained during the
Fiscal 1998 period. Net interest income was approximately $27,000 in the First
Quarter of Fiscal 1998.
The Company's net loss for the First Quarter of 1999 was approximately
$346,000, while the Company had a net loss of approximately $328,000 in the
First Quarter of 1998. The Company's net loss for the First Quarter of 1999 was
attributable primarily to insufficient project revenue to support the
infrastructure of the Company.
- 11 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998, the Company had cash and cash equivalents of
approximately $1,049,000. Working capital at December 31, 1998 was approximately
$1,015,000.
Net cash used in operating activities for the three months ended December
31, 1998 was approximately $422,000. Such use of cash reflects the net loss for
the three months ended December 31, 1998 and changes in certain of the Company's
operating assets and liabilities. Accounts receivable increased by approximately
$197,000 during the three months ended December 31, 1998 as a result of an
increase in unbilled receivables during such period. Unbilled receivables are
recorded for revenue recognized to date that is currently unbillable pursuant to
contractual terms. Amounts become billable upon the achievement of milestones or
in accordance with predetermined payment schedules. Deferred revenue decreased
by approximately $141,000 as a result of a decline in advance payments that the
Company received on signed contracts during the three months ended December 31,
1998. In addition, accrued expenses and other current liabilities increased by
approximately $129,000 due primarily to an increase in expenses associated with
the Company's European operations.
As of December 31, 1998 all of the Company's project contracts, including
contracts with international clients, have been denominated in United States
dollars.
For the three months ended December 31, 1998, the Company invested
approximately $21,000 in capital and leasehold improvements. The Company
currently anticipates that capital expenditures for the balance of Fiscal 1999
will approximate $150,000. 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.
In December 1998, 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, 1998 through and including December 31,
1998. For future dividend obligations, see "Note 2 -Notes to Consolidated
Financial Statements."
The Company anticipates that its cash and cash equivalents as at December
31, 1998, together with anticipated cash from operations, will be sufficient to
fund current working capital needs and capital requirements for at least the
next twelve months. There can be no assurance, however, that the Company's
operating results will return to profitability in the future or that the
continuation of such trends will not adversely affect the Company's future
liquidity requiring the need for the Company to raise additional capital.
- 12 -
<PAGE>
YEAR 2000 COMPLIANCE
Historically, certain computer programs have been written using two digits
rather than four to define the applicable year, which could result in the
computer recognizing a date using "00" as the year 1900 rather than the year
2000. This, in turn, could result in major system failures or miscalculations,
and is generally referred to as the "Year 2000 Problem". The Company has
assessed its state of readiness with respect to the Year 2000 Problem. The
Company's management information systems department has reviewed and tested the
Company's internal business systems for Year 2000 compliance. The Company
believes that, based on the results of such review and testing, the Company's
internal business systems, including its computer systems, are Year 2000
compliant. The Company does not anticipate any material future expenditures
relating to the Year 2000 compliance of its internal systems. There can be no
assurance, however, that the Year 2000 Problem will not adversely affect the
Company's business, financial condition, results of operations or cash flows.
In addition, the Company receives imaging data derived from the computer
systems of its clients, which data or software may or may not be Year 2000
compliant. Although the Company is currently taking steps to address the impact,
if any, of the Year 2000 Problem relating to the data received from its clients,
failure of such computer systems to properly address the Year 2000 Problem may
adversely affect the Company's business, financial condition, results of
operations or cash flows. The Company currently requires its clients to
represent that the data-sets sent to the Company are Year 2000 compliant.
The Year 2000 disclosures discussed above are based on numerous
expectations which are subject to uncertainties. Certain risk factors which
could have a material adverse effect on the Company's results of operations and
financial condition include but are not limited to: failure to identify critical
systems which will experience failures, errors in the remediation efforts,
inability to obtain new replacements for non-compliant systems or equipment,
general economic downturn relating to Year 2000 failures in the U.S. and in
other countries, failures in global banking systems and capital markets, or
extended failures by public and private utility companies or common carriers
supplying services to the Company.
- 13 -
<PAGE>
PART II. OTHER INFORMATION.
---------------------------
ITEM 5. OTHER INFORMATION.
CONDITIONAL LISTING ON THE NASDAQ SMALLCAP MARKET
On August 25, 1998, the Company received notification from Nasdaq that the
Company's Common Stock was trading below the minimum bid price requirement of
$1.00 required for continued listing on The Nasdaq SmallCap Market. As a result,
the Company had until November 25, 1998 for its Common Stock to trade at or
above the minimum requirement for at least 10 consecutive trading days. This
notification was based on review of the Company's Common Stock trading history
with respect to the closing bid price for the previous thirty consecutive
trading days from the date of notification. The Company's Common Stock did not
regain compliance before November 25, 1998. Therefore, on November 23, 1998, the
Company requested a hearing, by written submission, from Nasdaq and further
requested a stay of any termination proceeding pending the outcome of such
hearing. Such hearing was held on January 14, 1999.
On January 25, 1999, the Nasdaq Hearing Panel granted the Company an
exception from the minimum bid price requirement until March 1, 1999 in order to
allow the Company the opportunity to effectuate a reverse stock split of its
Common Stock. The Company's Board of Directors has recommended that the
Stockholders approve a proposal to provide the Board of Directors the authority
to amend the Company's Certificate of Incorporation, as amended, to effect, by
March 1, 1999, a reverse stock split, whereby the Company would issue one new
share of Common Stock in exchange for up to four outstanding shares of Common
Stock. After March 1, 1999, the Company must evidence a closing bid price at or
above $1.00 per share for a minimum of ten consecutive trading days. In order to
fully comply with the terms of this exception, the Company must be able to
demonstrate compliance with all requirements for continued listing on The Nasdaq
SmallCap Market. In the event the Company is deemed to have met the terms of the
exception, it shall continue to be listed on The Nasdaq SmallCap Market.
However, if the Company fails to comply with the terms of the exception, the
Company's Common Stock will be delisted from The Nasdaq SmallCap Market.
Accordingly, effective January 27, 1999 and for the duration of the exception,
the trading symbol of the Company's Common Stock will be changed from BITI to
BITIC. There can be no assurance, however, that the proposed reverse stock
split, if effected, will result in the Company's continued listing on the Nasdaq
SmallCap Market.
In the event that Company's Common Stock ceases to be listed on The Nasdaq
SmallCap Market, the Company believes that its Common Stock would continue to be
quoted and traded in either the OTC Bulletin Board or on the over-the-counter
market. However, the Company believes that the marketability of its Common Stock
would be negatively impacted if moved to either the OTC Bulletin Board or the
over-the-counter market. A decrease in the marketability of the Company's Common
Stock may cause a decline in the Company's stock price.
- 14 -
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
- 15 -
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BIO-IMAGING TECHNOLOGIES, INC.
DATE: February 12, 1999 By:/s/ Mark L. Weinstein
------------------------------
Mark L. Weinstein, President and Chief
Executive Officer
(Principal Executive Officer)
DATE: February 12, 1999 By:/s/ Robert J. Phillips
------------------------------
Robert J. Phillips, Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED INTERIM FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANT'S FORM 10-QSB
FOR THE PERIOD ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000822418
<NAME> Bio-Imaging Technologies, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,049,376
<SECURITIES> 0
<RECEIVABLES> 888,703
<ALLOWANCES> 65,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,975,410
<PP&E> 4,456,849
<DEPRECIATION> 3,030,018
<TOTAL-ASSETS> 3,433,546
<CURRENT-LIABILITIES> 960,798
<BONDS> 16,953
0
104
<COMMON> 1,944
<OTHER-SE> 2,453,747
<TOTAL-LIABILITY-AND-EQUITY> 3,433,546
<SALES> 0
<TOTAL-REVENUES> 824,292
<CGS> 0
<TOTAL-COSTS> 560,761
<OTHER-EXPENSES> 618,284
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,929)
<INCOME-PRETAX> (345,824)
<INCOME-TAX> 0
<INCOME-CONTINUING> (345,824)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (345,824)
<EPS-PRIMARY> (0.05) <F1>
<EPS-DILUTED> (0.05) <F2>
<FN>
<F1> -- This amount represents Basic Earnings per Share in accordance with the
requirements of Statement of Financial Accounting Standards No. 128 - "Earnings
per Share."
<F2> -- This amount represents Diluted Earnings per Share in accordance with the
requirements of Statement of Financial Accounting Standards No. 128 - "Earnings
per Share."
</FN>
</TABLE>
