SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
Commission File No. 1-11182
BIO-IMAGING TECHNOLOGIES, INC.
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(Exact Name of Small Business Issuer 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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(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 June 30, 1999:
Class Number of Shares
- ----- ----------------
Common Stock, $.00025 par value 7,773,878
Transitional Small Business Disclosure Format (check one):
Yes: No: X
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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TABLE OF CONTENTS
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Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements...................................... 1
CONSOLIDATED BALANCE SHEETS
as of June 30, 1999 (unaudited) and
September 30, 1998............................................. 2
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended June 30, 1999 and 1998
(unaudited).................................................... 3
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1999 and 1998
(unaudited).................................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30, 1999 and 1998
(unaudited).................................................... 5
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)......................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 9
Results of Operations.......................................... 10
Liquidity and Capital Resources................................ 14
PART II OTHER INFORMATION
Item 5. Other Information......................................... 17
Item 6. Exhibits and Reports on Form 8-K.......................... 18
SIGNATURES ............................................................... 19
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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.
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
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(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 424,788 $ 1,527,330
Accounts receivable, net......................... 1,434,687 626,376
Prepaid expenses and other current assets........ 109,978 84,747
----------- -----------
Total current assets........................... 1,969,453 2,238,453
Property and equipment, net........................ 1,243,593 1,543,434
Other assets ...................................... 208,305 32,235
----------- -----------
Total assets................................... $ 3,421,351 $ 3,814,122
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred revenue................................. $ 510,010 $ 522,605
Accounts payable................................. 159,398 142,071
Accrued expenses and other current liabilities... 337,214 261,063
Current maturities of long-term debt............. 70,577 49,956
----------- -----------
Total current liabilities...................... 1,077,199 975,695
Long-term debt..................................... 65,223 26,808
----------- -----------
Total liabilities.............................. 1,142,422 1,002,503
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Stockholders' equity:
Preferred stock - $.00025 par value; authorized
3,000,000 shares, 416,667 shares 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 June 30, 1999 and September 30,
1998............................................ 1,944 1,944
Additional paid-in capital....................... 9,231,497 9,231,497
Accumulated deficit.............................. (6,954,616) (6,421,926)
----------- -----------
Stockholders' equity........................... 2,278,929 2,811,619
----------- -----------
Total liabilities and stockholders' equity..... $ 3,421,351 $ 3,814,122
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
June 30,
----------------------------------
1999 1998
---- ----
<S> <C> <C>
Project revenues................................. $ 3,185,245 $ 2,930,463
------------ ------------
Cost and expenses:
Cost of revenues............................. 1,871,242 1,478,528
General and administrative expenses.......... 905,345 1,120,269
Sales and marketing expenses................. 749,196 800,257
Research and development expenses............ 173,299 194,729
Non-recurring charges........................ -- 597,000
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Total cost and expenses.......................... 3,699,082 4,190,783
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Loss from operations............................. (513,837) (1,260,320)
Interest income - net............................ 11,147 71,434
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Net loss......................................... (502,690) (1,188,886)
Dividends on preferred stock..................... 30,000 30,000
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Net loss applicable to common stock.............. $ (532,690) $ (1,218,886)
============ ============
Basic loss per common share...................... $ (0.07) $ (0.16)
============ ============
Weighted average number of common
shares......................................... 7,773,878 7,771,672
============ ============
Diluted loss per common share.................... $ (0.07) $ (0.16)
============ ============
Weighted average number of common and dilutive
common equivalent shares....................... 7,773,878 7,771,672
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
June 30,
----------------------------------
1999 1998
---- ----
<S> <C> <C>
Project revenues................................. $ 1,032,485 $ 866,552
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Cost and expenses:
Cost of revenues............................. 676,454 515,807
General and administrative expenses.......... 256,850 356,173
Sales and marketing expenses................. 267,668 274,160
Research and development expenses............ 56,918 55,420
Non-recurring charges........................ -- 38,864
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Total cost and expenses.......................... 1,257,890 1,240,424
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Loss from operations............................. (225,405) (373,872)
Interest (expense) income - net.................. (1,971) 21,803
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Net loss......................................... (227,376) (352,069)
Dividends on preferred stock..................... 10,000 10,000
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Net loss applicable to common stock.............. $ (237,376) $ (362,069)
============= =============
Basic loss per common share...................... $ (0.03) $ (0.05)
============= =============
Weighted average number of common
shares......................................... 7,773,878 7,773,878
============= =============
Diluted loss per common share.................... $ (0.03) $ (0.05)
============= =============
Weighted average number of common and dilutive
common equivalent shares....................... 7,773,878 7,773,878
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
June 30,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................... $ (502,690) $ (1,188,886)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization......................... 409,468 423,339
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable.......... (808,311) 363,798
(Increase) decrease in prepaid expenses and other
current assets...................................... (25,231) 1,757
Decrease in other assets............................ 930 34,841
Decrease in deferred revenue........................ (135,060) (159,875)
Increase (decrease) in accounts payable............. 17,327 (2,188)
Increase in accrued expenses and other current
liabilities....................................... 21,151 257,574
----------- -----------
Net cash used in operating activities............... (1,022,416) (269,640)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment..................... (96,627) (198,585)
Cash paid for business acquisition...................... (2,535) --
----------- -----------
Net cash used in investing activities............... (99,162) (198,585)
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Cash flows from financing activities:
Payments under equipment lease obligations.............. (50,964) (74,249)
Dividends paid on preferred stock....................... (40,000) (40,285)
Proceeds from notes payable............................. 110,000 --
Proceeds from exercise of stock options................. -- 15,899
----------- -----------
Net cash provided by (used in) financing activities. 19,036 (98,635)
----------- -----------
Net decrease in cash and cash equivalents................. (1,102,542) (566,860)
Cash and cash equivalents at beginning of period.......... 1,527,330 2,367,658
----------- -----------
Cash and cash equivalents at end of period................ $ 424,788 $ 1,800,798
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest................ $ 5,995 $ 1,619
=========== ===========
Equipment purchased under capital lease obligation...... $ -- $ 75,595
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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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 June 30, 1999, the results of its operations for the
three-month and nine-month periods ended June 30, 1999 and 1998 and its cash
flows for the nine-month periods ended June 30, 1999 and June 30, 1998.
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-month and nine-month periods ended June 30, 1999 and 1998
exclude the impact of preferred stock and options and warrants as they are
antidilutive.
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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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:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
June 30, June 30,
------------------------------ -----------------------------
1999 1998 1999 1998
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net loss......................... $ (502,690) $(1,188,886) $ (227,376) $ (352,069)
Dividends on preferred stock..... 30,000 30,000 10,000 10,000
---------- ---------- ---------- ----------
Net loss applicable
to common stock - basic........ $ (532,690) $(1,218,886) $ (237,376) $ (362,069)
---------- ---------- ---------- ----------
Dilutive dividends on preferred
stock.......................... -- -- -- --
---------- ---------- ---------- ----------
Net loss applicable
to common stock - diluted...... $ (532,690) $(1,218,886) $ (237,376) $ (362,069)
---------- ---------- ---------- ----------
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,771,672 7,773,878 7,773,878
Basic loss per common share...... $ (0.07) $ (0.16) $ (0.03) $ (0.05)
========== ========== ========== ==========
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,771,672 7,773,878 7,773,878
Common share equivalents of
outstanding stock options
and warrants................... -- -- -- --
Common share equivalents of
dilutive outstanding
preferred stock................ -- -- -- --
---------- ---------- ---------- ----------
Total shares..................... 7,773,878 7,771,672 7,773,878 7,773,878
---------- ---------- ---------- ----------
Diluted loss per common share.... $ (0.07) $ (0.16) $ (0.03) $ (0.05)
========== ========== ========== ==========
</TABLE>
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 2 - Other Assets:
In May 1999, the Company acquired the operations of Bona Fide, Ltd. ("Bona
Fide") in a transaction accounted for as a purchase. Tangible assets acquired
were $10,000 and liabilities assumed were $187,465, resulting in goodwill of
$180,000. The liabilities assumed primarily represent deferred revenue of
$122,000 which the Company expects to recognize as project revenues over the
duration of the client contracts which were assumed by the Company in the
acquisition. Goodwill is being amortized using a straight-line method over five
years. In addition to the amount paid at closing, additional payments for the
acquisition may be made based on certain revenues being achieved for the
twelve-month period ending on the first anniversary of the closing date. Such
amount may not exceed $50,000. The acquisition was not material to the Company's
consolidated financial position or results of operations.
Note 3 - Non-recurring Charges:
The Company recorded non-recurring charges in Fiscal 1998 consisting of (i)
costs associated with a proxy contest and related litigation and (ii)
restructuring and severance expenses related to the elimination of two former
business divisions and the resignation in December 1997 of a former executive
officer.
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<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. In addition, with the
acquisition of Bona Fide in May of 1999, the Company also provides dual energy
x-ray absorptiometry ("DEXA") quality assurance and quality control ("QA/QC") to
the pharmaceutical and medical device industry for studies requiring bone
densitometry as well as trials involving body composition measurements. Although
the Company experienced a loss for the nine-month and three-month periods ended
June 30, 1999, the Company's project revenues increased as compared to the same
periods last year. Project revenues were generated from 32 clients encompassing
59 projects, including five clients encompassing 13 projects for Bona Fide, for
the nine months ended June 30, 1999 as compared to 24 clients encompassing 41
projects for the same period last year.
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 nine months. In addition, the contracts under which the Company is
engaged to perform services typically cover a period of 12 to 36 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 fiscal year ended September 30, 1998. As of June
30, 1999, the Company believes that these efforts are beginning to yield
positive results. No assurance can be made that the Company's project revenues
will increase to levels required to achieve profitability.
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.
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<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, realized return from the Company's marketing efforts 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 revenues due to the
variability in size, scope and duration of projects, regulatory delays, clinical
study results which lead to reductions or cancellations of projects, the risks
associated with integrating the business of Bona Fide with and into the Company,
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
Nine months ended June 30, 1999 and 1998
----------------------------------------
Project revenues for the nine months ended June 30, 1999 and 1998 were
approximately $3,185,000 and $2,930,000, respectively, an increase of
approximately $255,000, or 8.7%. Project revenues in the nine months ended June
30, 1999 and 1998 were derived from 32 clients encompassing 59 projects,
including five clients encompassing 13 projects for Bona Fide, and 24 clients
encompassing 41 projects, respectively. Two clients represented approximately
29.7% of the Company's project revenues for the nine months ended June 30, 1999.
For the comparable period last year, two clients represented approximately 50.2%
of the Company's project revenues with one European client representing 27.2%,
or $796,000, of project revenues. The increase in project revenues is primarily
a result of the increase in the number of clients and projects for which the
Company was engaged to perform services. This increase resulted primarily from
the increase in the Company's sales and marketing efforts over the past year.
The Company's scope of work in both periods included medical imaging core
laboratory services and image-based information management services.
Cost of revenues for the nine months ended June 30, 1999 and 1998 were
comprised of professional salaries and benefits and allocated overhead. Cost of
revenues for the nine months ended June 30, 1999 and 1998 were approximately
$1,871,000 and $1,479,000, respectively, an increase of approximately $392,000,
or 26.5%. This increase is primarily attributable to an increase in staffing
levels required for project related tasks for the nine months ended June 30,
1999 as compared to the same period in the prior year.
The difference between project revenues and cost of revenues for the nine
months ended June 30, 1999 decreased as a percentage to project revenues
compared to the nine months ended June 30, 1998. This is primarily due to a
higher gross profit margin generated from work performed on the one European
client, which represented 27.2% of project revenues for the nine months ended
June 30, 1998, compared to the gross profit margin generated from work
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<PAGE>
performed on the Company's other clients for the nine months ended June 30,
1999. The higher gross margin during the nine months ended June 30, 1998 also
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
increased its staffing levels during the nine months ended June 30, 1999 to
support its existing contracts and in anticipation of future business.
General and administrative expenses in each of the nine months ended June
30, 1999 and 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
$905,000 in the nine months ended June 30, 1999 and approximately $1,120,000 in
the nine months ended June 30, 1998. The decrease during the nine months ended
June 30, 1999 of approximately $215,000, or 19.2%, from the nine months ended
June 30, 1998, 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 three months ended December 31, 1997.
Sales and marketing expenses in each of the nine months ended June 30, 1999
and 1998 were comprised of direct sales and marketing costs, professional
salaries and benefits and allocated overhead. Sales and marketing expenses were
approximately $749,000 in the nine months ended June 30, 1999 and approximately
$800,000 in the nine months ended June 30, 1998. The decrease during the nine
months ended June 30, 1999 of approximately $51,000, or 6.4%, from the nine
months ended June 30, 1998, resulted primarily from the decrease in personnel
costs associated with the Senior Vice President of Sales and Marketing incurred
in the three months ended December 31, 1997. The executive officer that held
that position was appointed President and Chief Executive Officer after the
three months ended December 31, 1997. These personnel costs are reflected in
general and administrative expenses for the nine months ended June 30, 1999.
Research and development expenses in each of the nine months ended June 30,
1999 and 1998 consisted of professional salaries and benefits and overhead
charged to research and development projects. Research and development expenses
during the nine months ended June 30, 1999 and 1998 were approximately $173,000
and $195,000, respectively. The decrease during the nine months ended June 30,
1999 of approximately $22,000, or 11.3%, from the nine months ended June 30,
1998, resulted primarily from a decrease in resources dedicated to research and
development projects. Research and development expenses in each of the nine
months ended June 30, 1999 and 1998 primarily focused on the formulation, design
and testing of product and process alternatives.
During the nine months ended June 30, 1998, the Company recorded
non-recurring charges of approximately $597,000 consisting of (i) costs of
approximately $320,000 associated with a proxy contest and related litigation
and (ii) restructuring and severance expenses of $277,000 related to the
elimination of two former business divisions and the resignation in December
1997 of a former executive officer.
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<PAGE>
In February 1998, the Company and a shareholder group engaged in a proxy
contest in an effort to, among other things, elect members of the Company's
Board of Directors at the Annual Meeting of Stockholders held on February 27,
1998. In connection with such proxy contest and the related litigation, the
Company expended approximately $320,000 in the nine months ended June 30, 1998.
In the nine months ended June 30, 1998, the Company recorded restructuring
and severance expenses of $277,000. This amount consists of restructuring
expenses of $105,000 and severance expenses of $172,000.
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 nine months ended
June 30, 1998.
In a separate matter, two executive officers of the Company resigned in
December 1997. The Company entered into a separation agreement with one such
former executive officer. The Company agreed to pay such former executive
officer $127,000 in connection with the separation agreement. The Company has
not entered, and does not expect to enter, into an agreement with the other
executive officer who resigned in December 1997. As a result of these
resignations, the Company recorded severance expenses of approximately $172,000.
Such expenses have been reflected in non-recurring charges for the nine months
ended June 30, 1998.
Total cost and expenses in each of the nine months ended June 30, 1999 and
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 $3,699,000 in the nine months
ended June 30, 1999 and approximately $3,594,000 (excluding non-recurring
charges of approximately $597,000) in the corresponding period in fiscal 1998.
Such increase of approximately $105,000, or 2.9%, is primarily attributable to
an increase in staffing levels for project related tasks offset by 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 $11,000 during the nine months ended
June 30, 1999, resulted from interest earned on cash balances, offset, in part,
by interest expense incurred in conjunction with equipment lease obligations.
The Company earned less interest income in the nine months ended June 30, 1999
than in the nine months ended June 30, 1998 due to lower cash balances
maintained during the fiscal 1999 period. Net interest income was approximately
$71,000 in the nine months ended June 30, 1998.
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<PAGE>
The Company's net loss for the nine months ended June 30, 1999 was
approximately $503,000, while the Company had net loss of approximately
$1,189,000 in the nine months ended June 30, 1998. The Company's net loss for
the nine months ended June 30, 1999 was attributable primarily to insufficient
project revenue to support the infrastructure of the Company.
Three Months Ended June 30, 1999 and 1998
-----------------------------------------
Project revenues for the quarters ended June 30, 1999 ("Third Quarter of
Fiscal 1999") and 1998 ("Third Quarter of Fiscal 1998") were approximately
$1,032,000 and $867,000, respectively, an increase of approximately $165,000, or
19.0%. Project revenues in the Third Quarter of Fiscal 1999 and Fiscal 1998 were
derived from 26 clients encompassing 49 projects, including five clients for 13
projects for Bona Fide, and 20 clients encompassing 29 projects, respectively.
Two clients represented approximately 32.1% of the Company's project revenues
for the Third Quarter of Fiscal 1999. For the Third Quarter of Fiscal 1998, two
clients represented approximately 58.0% of the Company's project revenue. The
increase in project revenues is primarily a result of the increase in the number
of clients and projects for which the Company was engaged to perform services.
This increase resulted primarily from the increase in the Company's sales and
marketing efforts over the past year. The Company's scope of work in both
periods included medical imaging core laboratory services and image-based
information management services.
Cost of revenues in each of the Third Quarter of Fiscal 1999 and Fiscal
1998 were comprised of professional salaries and benefits and allocated
overhead. Cost of revenues for the Third Quarter of Fiscal 1999 and Fiscal 1998
were approximately $676,000 and $516,000, respectively, an increase of
approximately $160,000, or 31.0%. This increase is primarily attributable to an
increase in staffing levels required for project related tasks for the three
months ended June 30, 1999 as compared to the same period in the prior year.
The difference between project revenues and cost of revenues decreased as a
percentage to project revenues for the Third Quarter of Fiscal 1999 compared to
the Third Quarter of Fiscal 1998. This was primarily due to an increase in
staffing levels to support the Company's existing contracts and in anticipation
of future business and the mix of services the Company was engaged to perform.
General and administrative expenses in each of the Third 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
$257,000 in the Third Quarter of Fiscal 1999 and approximately $356,000 in the
Third Quarter of Fiscal 1998. The decrease of approximately $99,000, or 27.8%,
is primarily attributable to less professional services associated with general
corporate matters.
Sales and marketing expenses in each of the Third Quarter of Fiscal 1999
and Fiscal 1998 remained relatively consistent and were comprised of direct
sales and marketing costs, professional salaries and benefits and allocated
overhead. Sales and marketing expenses were approximately $268,000 in the Third
Quarter of Fiscal 1999 and approximately $274,000 in the Third Quarter of Fiscal
1998, a decrease of approximately $6,000, or 2.2%.
-13-
<PAGE>
Research and development expenses in each of the Third Quarter of Fiscal
1999 and Fiscal 1998 remained relatively consistent and were comprised of
professional salaries and benefits and overhead charged to research and
development projects. Research and development expenses were approximately
$57,000 in the Third Quarter of Fiscal 1999 and approximately $55,000 in the
Third Quarter of Fiscal 1998, an increase of approximately $2,000, or 3.6%.
Research and development expenses in each of the Third Quarter of Fiscal 1999
and Fiscal 1998 primarily focused on the formulation, design and testing of
product and process alternatives.
In February 1998, the Company and a shareholder group engaged in a proxy
contest in an effort to, among other things, elect members of the Company's
Board of Directors at the Annual Meeting of Stockholders held on February 27,
1998. In connection with such proxy contest and the related litigation, the
Company expended approximately $39,000 in the Third Quarter of Fiscal 1998. This
cost is reflected in non-recurring charges.
Total cost and expenses in each of the Third 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 $1,258,000 in the Third
Quarter of Fiscal 1999 and approximately $1,202,000 in the Third Quarter of
Fiscal 1998 (excluding non-recurring charges of approximately $39,000). Such
increase of approximately $56,000, or 4.7%, is primarily due to an increase in
staffing levels required for project related tasks provided by the Company in
the Third Quarter of Fiscal 1999.
Net interest expense of approximately $2,000 during the Third Quarter of
Fiscal 1999, resulted from interest expense incurred in conjunction with
equipment lease obligations offset by interest earned on cash balances. The
Company earned less interest income in the Third Quarter of Fiscal 1999 than in
the Third Quarter of Fiscal 1998 due to lower cash balances maintained during
the Fiscal 1999 period. Net interest income was approximately $22,000 in the
Third Quarter of Fiscal 1998.
The Company's net loss for the Third Quarter of Fiscal 1999 and the Third
Quarter of Fiscal 1998 were approximately $227,000 and $352,000, respectively.
These net losses were attributable primarily to insufficient project revenue to
support the infrastructure of the Company.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had cash and cash equivalents of
approximately $425,000. Working capital at June 30, 1999 was approximately
$892,000.
Net cash used in operating activities for the nine months ended June 30,
1999 was approximately $1,022,000. Such use of cash reflects the net loss for
the nine months ended June 30, 1999 and changes in certain of the Company's
operating assets and liabilities. Accounts receivable increased by approximately
$808,000 during the nine months ended June 30, 1999 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.
-14-
<PAGE>
For the nine months ended June 30, 1999, the Company invested approximately
$107,000 in capital and leasehold improvements. The Company currently
anticipates that capital expenditures for the balance of Fiscal 1999 will
approximate $50,000. 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. In June 1999, 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, 1999 through and including June 30,
1999.
In March 1999, the Company received financing of $110,000 secured by
certain equipment. The loan is payable in 36 monthly installments, commencing
April 1999, including interest of 10.24%.
The Company anticipates that its cash and cash equivalents as at June 30,
1999, 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 achieve profitability on an annual basis in the near future. The
continuation of operating losses, the Company's ability to gain new client
contracts, the variability of the timing of milestone payments on existing
client contracts and other changes in the Company's operating assets and
liabilities may have a material adverse affect on the Company's future
liquidity. In connection therewith, the Company may need to raise additional
capital in the foreseeable future from equity or debt sources in order to
implement its business, sales or marketing plans, take advantage of
unanticipated opportunities (such as more rapid expansion, acquisitions of
complementary businesses or the development of new services), to react to
unforeseen difficulties (such as the decrease in the demand for the Company's
services or the timing of revenues due to a variety of factors previously
discussed) or to otherwise respond to unanticipated competitive pressures. There
can be no assurance that additional financing will be available, if at all, on
terms acceptable to the Company.
European Monetary Union
On January 1, 1999, eleven of the fifteen member countries of the European
Union set fixed conversion rates between their existing legacy currencies and
the euro. As such, these participating countries have agreed to adopt the euro
as their common legal currency. The eleven participating countries will issue
sovereign debt exclusively in euro and will redenominate outstanding sovereign
debt. The legal currencies will continue to be used as legal tender through
January 1, 2002, at which point the legacy currencies will be canceled and euro
bills and coins will be used for cash transactions in the participating
countries.
In April 1999, the Company entered into a contract with an international
client which is denominated in euro. The Company currently does not believe that
the euro conversion will have a material impact on the Company's financial
condition or results of operations. There can be no assurance, however, that
such euro conversion will not adversely affect the Company's business, financial
condition, results of operations or cash flows.
-15-
<PAGE>
Year 2000 Compliance
The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from the
application of computer programs which have been written using two digits,
rather than four, to define the applicable year of business transactions. The
Company has completed its review of the potential impact of Year 2000 issues and
does not anticipate any significant costs, problems or uncertainties associated
with becoming Year 2000 compliant.
The Company's management information systems department has reviewed and
tested the Company's internal business systems, including operating systems and
internal software, 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 supplier of the Company's current financial and accounting software has
informed the Company that such software is Year 2000 compliant. Further, the
Company relies upon various vendors, financial institutions, utility companies,
telecommunications service companies, delivery service companies and other
service providers who are outside of the Company's control. While the Company
has surveyed some, but not all of it's major vendors, there is no assurance that
such parties will not suffer a Year 2000 business disruption, which could have a
material adverse effect on the Company's financial condition and results of
operations.
To date, the Company has not incurred any material expenditures in
connection with identifying or evaluating Year 2000 compliance issues. Most of
its expenses have related to the opportunity cost of time spent by employees of
the Company evaluating its systems and Year 2000 compliance matters generally.
The Company has not developed a Year 2000-specific contingency plan. If
Year 2000 compliance issues are discovered, the Company then will evaluate the
need for contingency plans relating to such issues.
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.
-16-
<PAGE>
PART II. OTHER INFORMATION.
---------------------------
ITEM 5. OTHER INFORMATION.
ACQUISITION
In May 1999, the Company acquired the operations of Bona Fide, Ltd. ("Bona
Fide") in a transaction accounted for as a purchase. Bona Fide provides dual
energy x-ray absorptiometry ("DEXA") quality assurance and quality control
("QA/QC") to the pharmaceutical and medical device industry for studies
requiring bone densitometry as well as trials involving body composition
measurements. Tangible assets were acquired and liabilities were assumed
resulting in goodwill of $180,000. In addition to the amount paid at closing,
additional payments for the acquisition may be made based on certain revenues
being achieved for the twelve-month period ending on the first anniversary of
the closing date. Such amount may not exceed $50,000. The acquisition was not
material to the Company's consolidated financial position or results of
operations.
-17-
<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.
-18-
<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: August 16, 1999 By:/s/ Mark L. Weinstein
-------------------------------------
Mark L. Weinstein, President and Chief
Executive Officer
(Principal Executive Officer)
DATE: August 16, 1999 By:/s/ Robert J. Phillips
-------------------------------------
Robert J. Phillips, Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
-19-
<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 JUNE 30, 1999 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 424,788
<SECURITIES> 0
<RECEIVABLES> 1,494,687
<ALLOWANCES> 60,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,969,453
<PP&E> 4,542,174
<DEPRECIATION> 3,298,581
<TOTAL-ASSETS> 3,421,351
<CURRENT-LIABILITIES> 1,077,199
<BONDS> 65,223
0
104
<COMMON> 1,944
<OTHER-SE> 2,276,881
<TOTAL-LIABILITY-AND-EQUITY> 3,421,351
<SALES> 0
<TOTAL-REVENUES> 3,185,245
<CGS> 0
<TOTAL-COSTS> 1,871,242
<OTHER-EXPENSES> 1,827,840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,147)
<INCOME-PRETAX> (502,690)
<INCOME-TAX> 0
<INCOME-CONTINUING> (502,690)
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<EPS-BASIC> (0.07) <F1>
<EPS-DILUTED> (0.07) <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>
