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 June 30, 2000
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)
826 Newtown-Yardley Road, Newtown, Pennsylvania 18940-1721
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(Address of Principal Executive Offices)
(267) 757-1360
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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, 2000:
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, 2000 and
September 30, 1999 (unaudited).................................. 2
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended June 30, 2000 and 1999
(unaudited)..................................................... 3
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2000 and 1999
(unaudited)..................................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30, 2000 and 1999
(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.......................................... 16
Item 6. Exhibits and Reports on Form 8-K........................... 16
SIGNATURES ............................................................. 17
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<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,
1999.
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
-----------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 134,464 $ 412,903
Accounts receivable, net.......................... 2,208,906 1,237,746
Prepaid expenses and other current assets......... 218,066 138,127
----------- -----------
Total current assets............................ 2,561,436 1,788,776
Property and equipment, net......................... 1,382,961 1,180,254
Other assets ....................................... 227,746 179,624
----------- -----------
Total assets.................................... $ 4,172,143 $ 3,148,654
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred revenue.................................. $ 1,690,003 $ 541,933
Accounts payable.................................. 322,798 134,685
Accrued expenses and other current liabilities.... 231,842 254,565
Notes payable..................................... 294,689 -
Current maturities of long-term debt.............. 146,364 69,800
----------- -----------
Total current liabilities....................... 2,685,696 1,000,983
Long-term debt...................................... 207,655 81,511
----------- -----------
Total liabilities............................... 2,893,351 1,082,494
----------- -----------
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 June 30, 2000 and September 30,
1999............................................. 1,944 1,944
Additional paid-in capital........................ 9,231,497 9,231,497
Accumulated deficit............................... (7,954,753) (7,167,385)
----------- -----------
Stockholders' equity............................ 1,278,792 2,066,160
----------- -----------
Total liabilities and stockholders' equity...... $ 4,172,143 $ 3,148,654
=========== ===========
</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,
------------------------------------
2000 1999
---- ----
<S> <C> <C>
Project revenues................................. $ 4,105,911 $ 3,185,245
------------- -------------
Cost and expenses:
Cost of revenues............................. 2,705,862 1,871,242
General and administrative expenses.......... 963,965 1,078,644
Sales and marketing expenses................. 1,138,621 749,196
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Total cost and expenses.......................... 4,808,448 3,699,082
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Loss from operations............................. (702,537) (513,837)
Interest (expense) income - net.................. (54,831) 11,147
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Net loss......................................... (757,368) (502,690)
Dividends on preferred stock..................... 30,000 30,000
------------- -------------
Net loss applicable to common stock.............. $ (787,368) $ (532,690)
============= =============
Basic and diluted loss per common share.......... $ (0.10) $ (0.07)
============= =============
Weighted average number of common
shares and dilutive common equivalent shares... 7,773,878 7,773,878
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
June 30,
------------------------------------
2000 1999
---- ----
<S> <C> <C>
Project revenues.................................... $ 1,565,412 $ 1,032,485
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Cost and expenses:
Cost of revenues................................ 1,053,363 676,454
General and administrative expenses............. 342,553 313,768
Sales and marketing expenses.................... 442,215 267,668
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Total cost and expenses............................. 1,838,131 1,257,890
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Loss from operations................................ (272,719) (225,405)
Interest expense - net.............................. (34,475) (1,971)
-------------- --------------
Net loss............................................ (307,194) (227,376)
Dividends on preferred stock........................ 10,000 10,000
------------- -------------
Net loss applicable to common stock................. $ (317,194) $ (237,376)
============= =============
Basic and diluted loss per common share............. $ (0.04) $ (0.03)
============= =============
Weighted average number of common
shares and dilutive common equivalent shares...... 7,773,878 7,773,878
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
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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,
-------------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................. $ (757,368) $ (502,690)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization............................ 400,371 409,468
Changes in operating assets and liabilities:
Increase in accounts receivable........................ (971,160) (808,311)
Increase in prepaid expenses and other current assets.. (79,939) (25,231)
(Increase) decrease in other assets.................... (48,122) 930
Increase (decrease) in deferred revenue................ 1,148,070 (135,060)
Increase in accounts payable........................... 188,113 17,327
(Decrease) increase in accrued expenses and other
current liabilities.................................... (12,723) 21,151
----------- ------------
Net cash used in operating activities.................. (132,758) (1,022,416)
----------- ------------
Cash flows from investing activities:
Purchases of property and equipment........................ (296,214) (96,627)
Cash paid for business acquisition......................... - (2,535)
----------- ------------
Net cash used in investing activities.................. (296,214) (99,162)
----------- ------------
Cash flows from financing activities:
Payments under equipment lease obligations and notes
payable.................................................. (643,699) (50,964)
Dividends paid to preferred stockholders................... (40,000) (40,000)
Proceeds from notes payable................................ 834,232 110,000
----------- ------------
Net cash provided by financing activities.............. 150,533 19,023
----------- ------------
Net decrease in cash and cash equivalents.................... (278,439) (1,102,542)
Cash and cash equivalents at beginning of period............. 412,903 1,527,330
----------- ------------
Cash and cash equivalents at end of period................... $ 134,464 $ 424,788
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest..................... $ 48,377 $ 5,995
=========== ===========
Supplemental Schedule of noncash investing and financing
activities:
Equipment purchased under capital lease obligations........ $ 306,864 $ --
=========== ==========
</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, 1999.
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, 2000, the results of its operations for the
three-month and nine-month periods ended June 30, 2000 and 1999 and its cash
flows for the nine-month periods ended June 30, 2000 and June 30, 1999.
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 exclude the impact of preferred stock and options (1,445,775 as of June
30, 2000 and 1,374,465 as of June 30, 1999) and warrants (66,667 as of June 30,
2000 and June 30, 1999) as they are antidilutive.
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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:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
June 30, June 30,
---------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss......................... $ (757,368) $ (502,690) $ (307,194) $ (227,376)
Dividends on preferred stock..... 30,000 30,000 10,000 10,000
---------- ---------- ---------- ----------
Net loss applicable
to common stock - basic........ $ (787,368) $ (532,690) $ (317,194) $ (237,376)
---------- ---------- ---------- ----------
Dilutive dividends on preferred
stock.......................... -- -- -- --
---------- ---------- ---------- ----------
Net loss applicable
to common stock - diluted...... $ (787,368) $ (532,690) $ (317,194) $ (237,376)
---------- ---------- ---------- ----------
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,773,878 7,773,878 7,773,878
Basic loss per
common share................... $ (0.10) $ (0.07) $ (0.04) $ (0.03)
========== ========== ========== ==========
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,773,878 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 7,773,878 7,773,878 7,773,878
---------- ---------- ---------- ----------
Diluted loss per
common share................... $ (0.10) $ (0.07) $ (0.04) $ (0.03)
========== ========== ========== ==========
</TABLE>
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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 Convertible 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.
Note 3 - Financing:
In December 1999, the Company entered into an accounts receivable purchase
agreement with Silicon Valley Bank (the "Bank"), whereby, the Company may assign
up to $500,000 of eligible accounts receivable to the Bank. In March 2000, the
Bank increased the eligible accounts receivable to $1,000,000. The Bank, in
turn, would advance the Company up to 80% of the assigned accounts receivable
amount. Upon collection by the Bank, the balance of the assigned accounts
receivable would be remitted to the Company net of the Bank's finance charges
and administration fees. For the nine months ended June 30, 2000, the Company
assigned accounts receivable in total of approximately $1,145,000 to the Bank.
At June 30, 2000, the Company had a payable balance of approximately $295,000 to
the Bank. A 1.00% administrative fee of the face amount of the assigned
receivable was charged by the Bank along with a 1.75% finance charge per month
of the average daily account balance outstanding.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Bio-Imaging Technologies, Inc. ("Bio-Imaging" or 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 for
all modalities which consist of computerized tomography ("CT"), magnetic
resonance imaging ("MRI"), x-rays, dual energy x-ray absorptiometry ("DEXA"),
position emission tomography single photon emission computerized tomography
("PET SPECT") and ultrasound. 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'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 twelve 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, beginning in the fiscal year ended
September 30, 1998, the Company increased its sales and marketing efforts. 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. Although the Company experienced a
loss for the nine months ended June 30, 2000, the Company's project revenues
increased as compared to the same period in the fiscal year ended September 30,
1999 ("Fiscal 1999"). Project revenues were generated from 38 clients
encompassing 79 projects for the nine months ended June 30, 2000 as compared to
32 clients encompassing 59 projects for the same period in Fiscal 1999. This
represents an increase of 18.8% in clients and an increase of 33.9% in projects
for the nine months ended June 30, 2000 as compared to the same period in Fiscal
1999. The Company's contracted/committed backlog was approximately $13,500,000
as of June 30, 2000 as compared to approximately $13,400,000 as of March 31,
2000, approximately $12,300,000 as of December 31, 1999 and approximately
$7,054,000 as of September 30, 1999. Contracted/committed backlog as of August
9, 2000 was approximately $17,300,000. Contracted/committed backlog is the
amount of revenue that remains to be earned on signed and agreed to contracts.
Such contracts are subject to termination by the Company or its clients at any
time or for any reason.
The Company believes that demand for its services and technologies will
grow during the long-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
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<PAGE>
Food and Drug Administration ("FDA") 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
anti-inflammatory, 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,
sustain growth, or that additional revenue generating opportunities will be
realized by the Company.
Certain matters discussed in this 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, duration and cancellation 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
Nine Months Ended June 30, 2000 and 1999
----------------------------------------
Project revenues for the nine months ended June 30, 2000 and 1999 were
approximately $4,106,000 and $3,185,000, respectively, an increase of
approximately $921,000 or 28.9%. Project revenues in the nine months ended June
30, 2000 and 1999 were derived from 38 clients encompassing 79 projects and 32
clients encompassing 59 projects, respectively. Two clients represented
approximately 30.7% of the Company's project revenues for the nine months ended
June 30, 2000. For the comparable period last year, two clients represented
approximately 29.7% of the Company's 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.
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<PAGE>
Cost of revenues for the nine months ended June 30, 2000 and 1999 were
comprised of professional salaries and benefits and allocated overhead. Cost of
revenues for the nine months ended June 30, 2000 and 1999 were approximately
$2,706,000 and $1,871,000, respectively, an increase of approximately $835,000
or 44.6%. This increase is attributable to an increase in staffing levels
required for project related tasks for the nine months ended June 30, 2000 and
in anticipation of work to be performed on new contracts as compared to the same
period in the prior year.
The difference between project revenues and cost of revenues may fluctuate
as a percentage of project revenues based on the utilization of staff and the
mix of services provided by the Company to its clients during the comparable
periods. The decrease in this percentage in the nine months ended June 30, 2000
from the comparable period in Fiscal 1999 resulted from a lower increase in
project revenues as compared to higher project related costs which was primarily
attributable to the Company increasing its staffing levels during the nine
months ended June 30, 2000 to support its existing contracts and in anticipation
of future business.
General and administrative expenses in each of the nine months ended June
30, 2000 and 1999 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
$964,000 in the nine months ended June 30, 2000 and approximately $1,079,000 in
the nine months ended June 30, 1999. The decrease during the nine months ended
June 30, 2000 of approximately $115,000, or 10.7%, from the corresponding Fiscal
1999 period, is primarily attributable to less professional services associated
with general corporate matters.
Sales and marketing expenses in each of the nine months ended June 30, 2000
and 1999 were comprised of direct sales and marketing costs, professional
salaries and benefits and allocated overhead. Sales and marketing expenses were
approximately $1,139,000 in the nine months ended June 30, 2000 and
approximately $749,000 in the corresponding Fiscal 1999 period. The increase
during the nine months ended June 30, 2000 of approximately $390,000, or 52.1%,
from the corresponding Fiscal 1999 period, resulted from an increase in the
Company's expenses associated with increased marketing efforts, conferences
attendance and the appointment of a Vice President of Business Development in
October 1999.
Total cost and expenses in each of the nine months ended June 30, 2000 and
1999 consisted primarily of cost of revenues, general and administrative
expenses and sales and marketing expenses. The Company's cost and expenses were
approximately $4,808,000 in the nine months ended June 30, 2000 and
approximately $3,699,000 in the corresponding period in Fiscal 1999. Such
increase of approximately $1,109,000, or 30.0%, is due primarily to an increase
in the Company's sales and marketing efforts along with an increase in staffing
levels required for project related tasks offset by a decrease in professional
services associated with general corporate matters.
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<PAGE>
Net interest expense of approximately $55,000 during the nine months ended
June 30, 2000, resulted from interest expense incurred in the assignment of
accounts receivable and interest expense incurred in connection with long-term
debt and equipment lease obligations offset in part by interest earned on cash
balances. The Company had interest income in the nine months ended June 30, 1999
due to higher cash balances maintained during the Fiscal 1999 period offset in
part by interest expense incurred in connection with equipment lease
obligations. Net interest income was approximately $11,000 in the nine months
ended June 30, 1999.
The Company's net loss for the nine months ended June 30, 2000 was
approximately $757,000, while the Company had net loss of approximately $503,000
in the nine months ended June 30, 1999. The Company's net loss for the nine
months ended June 30, 2000 was attributable primarily to insufficient project
revenue to support the infrastructure of the Company.
Three Months Ended June 30, 2000 and 1999
-----------------------------------------
Project revenues for the quarters ended June 30, 2000 ("Third Quarter of
Fiscal 2000") and 1999 ("Third Quarter of Fiscal 1999") were approximately
$1,565,000 and $1,032,000, respectively, an increase of approximately $533,000
or 51.6%. Project revenues in the Third Quarter of Fiscal 2000 and Fiscal 1999
were derived from 33 clients encompassing 60 projects and 26 clients
encompassing 49 projects, respectively. Two clients represented approximately
39.5% of the Company's project revenues for the three months ended June 30,
2000. For the comparable period last year, two clients represented approximately
32.1% of the Company's 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 in each of the Third Quarter of Fiscal 2000 and Fiscal
1999 were comprised of professional salaries and benefits and allocated
overhead. Cost of revenues for the Third Quarter of Fiscal 2000 and Fiscal 1999
were approximately $1,053,000 and $676,000, respectively, an increase of
approximately $377,000 or 55.8%. This increase is attributable to an increase in
staffing levels required for project related tasks for the Third Quarter of
Fiscal 2000 and in anticipation of work to be performed on new contracts as
compared to the Third Quarter of Fiscal 1999.
The difference between project revenues and cost of revenues may fluctuate
as a percentage of project revenues based on the utilization of staff and the
mix of services provided by the Company to its clients during the comparable
periods. The decrease in this percentage in the Third Quarter of Fiscal 2000
from the Third Quarter of Fiscal 1999 resulted from a lower increase in project
revenues as compared to higher project related costs which was primarily
attributable to the Company increasing its staffing levels during the three
months ended June 30, 2000 to support its existing contracts and in anticipation
of future business.
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<PAGE>
General and administrative expenses in each of the Third Quarter of Fiscal
2000 and Fiscal 1999 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
$343,000 in the Third Quarter of Fiscal 2000 and approximately $314,000 in the
Third Quarter of Fiscal 1999. The increase of approximately $29,000, or 9.2%, is
primarily attributable to relocation costs associated with the Vice President of
Operations.
Sales and marketing expenses in each of the Third Quarter of Fiscal 2000
and Fiscal 1999 were comprised of direct sales and marketing costs, professional
salaries and benefits and allocated overhead. Sales and marketing expenses were
approximately $442,000 in the Third Quarter of Fiscal 2000 and approximately
$268,000 in the Third Quarter of Fiscal 1999. The increase during Third Quarter
of Fiscal 2000 of approximately $174,000, or 64.9%, from the Third Quarter of
Fiscal 1999, resulted from an increase in the Company's expenses associated with
increased marketing efforts, conferences attendance and the appointment of a
Vice President of Business Development in October 1999.
Total cost and expenses in each of the Third Quarter of Fiscal 2000 and
Fiscal 1999 consisted primarily of cost of revenues, general and administrative
expenses and sales and marketing expenses. The Company's cost and expenses were
approximately $1,838,000 in the Third Quarter of Fiscal 2000 and approximately
$1,258,000 in the Third Quarter of Fiscal 1999. Such increase of approximately
$580,000, or 46.1%, is primarily due to an increase in the Company's sales and
marketing efforts along with an increase in staffing levels required for project
related tasks offset by a decrease in professional services associated with
general corporate matters.
Net interest expense of approximately $34,000 during the Third Quarter of
Fiscal 2000, resulted from interest expense incurred in the assignment of
accounts receivable and interest expense incurred in conjunction with long-term
debt and equipment lease obligations. Net interest expense was approximately
$2,000 in the Third Quarter of Fiscal 1999 resulting from interest expense
incurred in connection with equipment lease obligations offset in part by
interest earned on cash balances.
The Company's net loss for the Third Quarter of Fiscal 2000 was
approximately $307,000 as compared to approximately $227,000 in the Third
Quarter of Fiscal 1999. The Company's net loss for the Third Quarter of Fiscal
2000 was primarily attributable to insufficient project revenue to support the
infrastructure of the Company. The Company increased staffing levels during the
Third Quarter of Fiscal 2000 in anticipation of work to be performed on new
contracts signed in the Third Quarter of Fiscal 2000.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had cash and cash equivalents of
approximately $134,000. The working capital deficit at June 30, 2000 was
approximately $124,000.
Net cash used in operating activities was approximately $133,000 which
includes changes in certain of the Company's operating assets and liabilities
and the net loss for the nine months ended June 30, 2000. The net loss of
approximately $757,000 and the increase in accounts payable of approximately
$971,000 was offset by approximately $400,000 of depreciation and amortization
expense and an increase in accounts payable of approximately $1,148,000.
Accounts receivable increased primarily as a result of the timing difference
between billings and cash receipts at June 30, 2000.
For the nine months ended June 30, 2000, the Company invested approximately
$296,000 in capital and leasehold improvements. The Company currently
anticipates that capital expenditures for the remainder of Fiscal 2000 will be
approximately $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 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 July 1, 1999 through and including December 31,
1999. In June 2000, 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, 2000 through and including June 30,
2000.
In December 1999, the Company entered into an accounts receivable purchase
agreement with Silicon Valley Bank ("Silicon Valley Bank" or the "Bank"),
whereby, the Company may assign up to $500,000 of eligible accounts receivable
to the Bank. In March 2000, the Bank increased the eligible accounts receivable
to $1,000,000. The Bank, in turn, would advance the Company up to 80% of the
assigned accounts receivable amount. Upon collection by the Bank, the balance of
the assigned accounts receivable would be remitted to the Company net of the
Bank's finance charges and administration fees. For the nine months ended June
30, 2000, the Company assigned accounts receivable of approximately $1,145,000
to the Bank. At June 30, 2000, the Company had a payable balance of
approximately $295,000 to the Bank. At August 9, 2000, the Company had a payable
balance of approximately $372,000 to the Bank. A 1.00% administrative fee of the
face amount of the assigned receivable was charged by the Bank along with a
1.75% finance charge per month of the average daily account balance outstanding.
In August 1999, the Company entered into an agreement with Silicon Valley
Bank for a revolving line of credit of up to $500,000 collateralized by the
Company's assets. Interest is payable at 1.50% over the Bank's prime rate of
interest. The agreement requires the Company, among other things, to maintain
minimum levels of tangible net worth and certain minimum financial ratios. In
October 1999, the Bank notified the Company that it would not make any advances
under the existing line of credit until the Company provides sufficient evidence
satisfactory to the Bank of an improvement in the Company's operating, financial
and liquidity
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<PAGE>
position. At such time, the Bank may consider permitting further advances
pursuant to the loan agreement.
In December 1999, February 2000 and April 2000, the Company entered into
equipment lease obligations consisting of monthly installments of $4,961, $3,258
and $1,878, respectively, which includes interest rates of 10.52%, 10.53% and
13.75%, through November 2002, January 2003 and February 2003. The debt is
collateralized by the related equipment.
The Company anticipates that its cash and cash equivalents as at June 30,
2000, 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 and together with the risks associated with 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.
The Company's 2000 and 2001 operating plans contain assumptions regarding
revenue and expenses. The achievement of the operating plan depends heavily on
the timing of work performed by the Company on existing projects and the ability
of the Company to gain and perform work on new projects. Delays in the timing of
work performed by the Company on existing projects or the inability of the
Company to gain and perform work on new projects could have an adverse impact on
the Company's ability to execute its operating plan and maintain adequate cash
flow. In the event actual results do not meet the operating plan, the Company's
management believes it could execute contingency plans to mitigate such effects.
Such plans include additional financing, to the extent available, through the
revolving line of credit agreement and accounts receivable purchase agreement
discussed above. In addition, in December 1999, the members of the Board of
Directors of the Company, in their individual capacities, committed up to an
aggregate amount totaling $100,000 in the form of a short-term loan, through
October 1, 2000, if needed by the Company. Considering the cash on hand and
based on the achievement of the operating plan and management's actions taken to
date, management believes it has the ability to continue to generate sufficient
cash to satisfy its operating requirements in the normal course of business.
However, no assurance can be given that sufficient cash will be generated from
operations. The Company's cash balance was approximately $134,464 and $251,000
as of June 30, 2000 and August 9, 2000, respectively.
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<PAGE>
PART II. OTHER INFORMATION.
--------------------------
ITEM 5. OTHER INFORMATION.
Effective as of July 1, 2000, the Board of Directors increased the total
number of directors that constitutes the entire Board of Directors from six (6)
directors to seven (7) directors. In addition, effective as of July 1, 2000, the
Board of Directors elected Dr. Allan E. Rubenstein, M.D. to fill such vacancy
created by increasing the size of the Board of Directors. Dr. Rubenstein is
board-certified in neurology and neuroimaging, and he is currently the Chairman
of the Board of both The Cooper Companies, a NYSE listed medical products
company, and University HeartScan, LLC, which is opening the first comprehensive
ultrafast CT cardiac screening program in Manhattan. Dr. Rubenstein is also a
Clinical Associate Professor of Neurology at Mount Sinai/NYU Medical Center in
New York City. Previously, Dr. Rubenstein was the founder and CEO of a privately
held medical imaging company which he sold in 1987.
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.
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<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 14, 2000 By: /s/ Mark L. Weinstein
--------------------------------
Mark L. Weinstein, President,
Chief Executive Officer and
Chief Financial Officer
(Principal Executive Officer and
Principal Financial Officer)
DATE: August 14, 2000 By: /s/ Maria T. Kraus
------------------------------
Maria T. Kraus, Controller
(Principal Accounting Officer)
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