U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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:
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State the number of shares outstanding of each of the Issuer's classes
of common stock, as of March 31, 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 March 31, 2000 (unaudited) and
September 30, 1999.............................................. 2
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended March 31, 2000 and 1999
(unaudited)..................................................... 3
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2000 and 1999
(unaudited)..................................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31, 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 4. Submission of Matters to a Vote of Security Holders........ 16
Item 6. Exhibits and Reports on Form 8-K........................... 17
SIGNATURES................................................................ 18
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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
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CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
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(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents...................... $ 82,144 $ 412,903
Accounts receivable, net....................... 1,788,503 1,237,746
Prepaid expenses and other current assets...... 146,243 138,127
------------ ------------
Total current assets......................... 2,016,890 1,788,776
Property and equipment, net...................... 1,338,544 1,180,254
Other assets .................................... 180,935 179,624
------------ ------------
Total assets................................. $ 3,536,369 $ 3,148,654
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred revenue............................... $ 618,548 $ 541,933
Accounts payable............................... 377,553 134,685
Accrued expenses and other current liabilities. 209,460 254,565
Notes payable.................................. 393,505 -
Current maturities of long-term debt........... 133,202 69,800
------------ ------------
Total current liabilities.................... 1,732,268 1,000,983
Long-term debt................................... 208,115 81,511
------------ ------------
Total liabilities............................ 1,940,383 1,082,494
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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 March 31, 2000 and
September 30, 1999............................ 1,944 1,944
Additional paid-in capital..................... 9,231,497 9,231,497
Accumulated deficit............................ (7,637,559) (7,167,385)
------------ ------------
Stockholders' equity......................... 1,595,986 2,066,160
------------ ------------
Total liabilities and stockholders' equity... $ 3,536,369 $ 3,148,654
============ ============
</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 OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
March 31,
-----------------------------------
2000 1999
---- ----
<S> <C> <C>
Project revenues................................. $ 2,540,499 $ 2,152,760
------------- -------------
Cost and expenses:
Cost of revenues............................. 1,652,499 1,194,788
General and administrative expenses.......... 621,412 764,876
Sales and marketing expenses................. 696,406 481,528
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Total cost and expenses.......................... 2,970,317 2,441,192
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Loss from operations............................. (429,818) (288,432)
Interest (expense) income - net.................. (20,356) 13,118
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Net loss......................................... (450,174) (275,314)
Dividends on preferred stock..................... 20,000 20,000
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Net loss applicable to common stock.............. $ (470,174) $ (295,314)
============= =============
Basic and diluted loss per common share.......... $ (0.06) $ (0.04)
============= =============
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 OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-----------------------------------
2000 1999
---- ----
<S> <C> <C>
Project revenues.................................. $ 1,462,545 $ 1,328,468
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Cost and expenses:
Cost of revenues.............................. 947,086 634,027
General and administrative expenses........... 303,268 387,909
Sales and marketing expenses.................. 346,579 240,211
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Total cost and expenses........................... 1,596,933 1,262,147
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(Loss) income from operations..................... (134,388) 66,321
Interest (expense) income - net................... (15,712) 4,189
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Net (loss) income................................. (150,100) 70,510
Dividends on preferred stock...................... 10,000 10,000
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Net (loss) income applicable to common stock...... $ (160,100) $ 60,510
============== =============
Basic and diluted (loss) income per common share.. $ (0.02) $ 0.01
============== =============
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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<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
March 31,
--------------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................. $ (450,174) $ (275,314)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization........................... 258,159 273,774
Changes in operating assets and liabilities:
Increase in accounts receivable....................... (550,757) (925,427)
Increase in prepaid expenses and other current assets. (8,116) (48,275)
(Increase) decrease in other assets................... (1,311) 930
Increase (decrease) in deferred revenue............... 76,615 (118,740)
Increase in accounts payable.......................... 242,868 18,287
(Decrease) increase in accrued expenses and other
current liabilities................................... (62,933) 105,333
------------ ------------
Net cash used in operating activities................. (495,649) (969,432)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment....................... (164,585) (48,223)
------------ ------------
Net cash used in investing activities................. (164,585) (48,223)
------------ ------------
Cash flows from financing activities:
Payments on equipment lease obligations and notes payable. (282,539) (31,695)
Dividends paid to preferred stockholders.................. (20,000) (20,000)
Proceeds from notes payable............................... 632,014 110,000
------------ ------------
Net cash provided by financing activities............. 329,475 58,305
------------ ------------
Net decrease in cash and cash equivalents................... (330,759) (959,350)
Cash and cash equivalents at beginning of period............ 412,903 1,527,330
------------ ------------
Cash and cash equivalents at end of period.................. $ 82,144 $ 567,980
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.................... $ 19,862 $ 2,298
============ ============
Supplemental Schedule of noncash investing and financing
activities:
Equipment purchased under capital lease obligations....... $ 251,864 $ --
============ ============
</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 March 31, 2000, the results of its operations for the
three-month and six-month periods ended March 31, 2000 and 1999 and its cash
flows for the six-month periods ended March 31, 2000 and March 31, 1999.
Interim results are not necessarily indicative of results for the full
fiscal year.
Basic earnings (loss) per common share was calculated based upon the net
loss available to common stockholders divided by the weighted average number of
shares of common stock outstanding during the period. Diluted loss per common
share for the three months ended March 31, 2000 and six months ended March 31,
2000 and 1999 exclude the impact of preferred stock and options (1,430,775 as of
March 31, 2000 and 1,312,560 as of March 31, 1999) and warrants (66,667 as of
March 31, 2000 and March 31, 1999) 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) earnings per common share and diluted
(loss) earnings per common share were as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net (loss) income................ $ (450,174) $ (275,314) $ (150,100) $ 70,510
Dividends on preferred stock..... 20,000 20,000 10,000 10,000
---------- ---------- ---------- ----------
Net (loss) income applicable
to common stock - basic........ $ (470,174) $ (295,314) $ (160,100) $ 60,510
---------- ----------- ----------- -----------
Dilutive dividends on preferred
stock.......................... -- -- -- --
---------- ---------- ---------- ----------
Net (loss) income applicable
to common stock - diluted...... $ (470,174) $ (295,314) $ (160,100) $ 60,510
---------- ---------- ---------- ----------
Denominator:
Weighted average number of
common shares.................. 7,773,878 7,773,878 7,773,878 7,773,878
Basic (loss) earnings
per common share............... $ (0.06) $ (0.04) $ (0.02) $ 0.01
========== ========== ========== ==========
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) earnings per
common share............... $ (0.06) $ (0.04) $ (0.02) $ 0.01
=========== ========== ========== ==========
</TABLE>
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 2 - Stockholders' Equity:
The Company has 416,667 shares of Series A Preferred Stock (the "Preferred
Stock") outstanding. The Preferred Stock provides for (i) voting rights on an
as-converted to Common Stock basis, with standard protective provisions; (ii) a
liquidation preference of $1.20 per share; (iii) anti-dilution protection and
price protection provisions; (iv) cumulative dividends of $0.096 per share per
annum, payable out of funds legally available for the payment of dividends and
only upon declaration of dividends by the Board of Directors of the Company; and
(v) registration rights with respect to the shares of Common Stock issuable upon
conversion of the Preferred Stock. Dividends are payable in cash or in the
Company's Common Stock at the Company's discretion.
The Company has neither paid nor declared dividends on its Common Stock
since its inception and does not plan to pay dividends on its Common Stock in
the foreseeable future. The Company expects that any earnings which the Company
may realize and which are not paid as dividends to holders of Preferred Stock
will be retained to finance the growth of the Company.
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 six months ended March 31, 2000, the Company
assigned accounts receivable in total of approximately $632,000 to the Bank. At
May 12, 2000, the Company had a payable balance of approximately $85,000 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. As of
March 31, 2000, 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 six months ended March 31, 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
33 clients encompassing 70 projects for the six months ended March 31, 2000 as
compared to 25 clients encompassing 39 projects for the same period in Fiscal
1999. This represents an increase of 32.0% in clients and an increase of 79.5%
in projects for the six months ended March 31, 2000 as compared to the same
period in Fiscal 1999. The Company's contracted/committed backlog was
approximately $13,400,000 as of March 31, 2000 as compared to approximately
$12,300,000 as of December 31, 1999 and approximately $7,054,000 as of September
30, 1999. 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 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 Food and Drug Administration ("FDA")
is gaining experience with electronic submissions and is
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<PAGE>
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 and duration of projects, regulatory delays, clinical
study results which lead to reductions or cancellations of projects, and other
factors, including general economic conditions and regulatory developments, not
within the Company's control. The factors discussed herein and expressed from
time to time in the Company's filings with the Securities and Exchange
Commission could cause actual results and developments to be materially
different from those expressed in or implied by such statements. The
forward-looking statements are made only as of the date of this filing and the
Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.
RESULTS OF OPERATIONS
Six Months Ended March 31, 2000 and 1999
----------------------------------------
Project revenues for the six months ended March 31, 2000 and 1999 were
approximately $2,540,000 and $2,153,000, respectively, an increase of
approximately $387,000 or 18.0%. Project revenues in the six months ended March
31, 2000 and 1999 were derived from 33 clients encompassing 70 projects and 25
clients encompassing 39 projects, respectively. One client represented
approximately 18.5% of the Company's project revenues for the six months ended
March 31, 2000. For the comparable period last year, two clients represented
approximately 34.4% 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 six months ended March 31, 2000 and 1999 were
comprised of professional salaries and benefits and allocated overhead. Cost of
revenues for the six months ended March 31, 2000 and 1999 were approximately
$1,652,000 and $1,195,000, respectively, an increase of approximately $457,000
or 38.2%. This increase is attributable to an increase in staffing levels
required for project related tasks for the six months ended March 31, 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 difference in the six months ended
March 31, 2000 from the comparable period in Fiscal 1999 resulted from a lower
increase in project revenues as compared to a higher increase in project related
costs. In addition, the Company increased its staffing levels during the six
months ended March 31, 2000 to support its existing contracts and in
anticipation of future business.
General and administrative expenses in each of the six months ended March
31, 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
$621,000 in the six months ended March 31, 2000 and approximately $765,000 in
the six months ended March 31, 1999. The decrease during the six months ended
March 31, 2000 of approximately $144,000 or 18.8%, 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 six months ended March 31, 2000
and 1999 were comprised of direct sales and marketing costs, professional
salaries and benefits and allocated overhead. Sales and marketing expenses were
approximately $696,000 in the six months ended March 31, 2000 and approximately
$482,000 in the corresponding fiscal 1999 period. The increase during the six
months ended March 31, 2000 of approximately $214,000, or 44.4%, from the
corresponding fiscal 1999 period, resulted from an increase in the Company's
marketing efforts and from expenses associated with the appointment of a Vice
President of Business Development in October 1999.
Total cost and expenses in each of the six months ended March 31, 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 $2,970,000 in the six months ended March 31, 2000 and
approximately $2,441,000 in the corresponding period in Fiscal 1999. Such
increase of approximately $529,000, or 21.7%, 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 $20,000 during the six months ended
March 31, 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 offset in part by interest earned on cash
balances. The Company had interest income in the six months ended March 31, 1999
due to higher cash balances maintained during the Fiscal 1999 period. Net
interest income was approximately $13,000 in the six months ended March 31,
1999.
The Company's net loss for the six months ended March 31, 2000 was
approximately $450,000, while the Company had net loss of approximately $275,000
in the six months ended March 31, 1999. The Company's net loss for the six
months ended March 31, 2000 was attributable primarily to insufficient project
revenue to support the infrastructure of the Company.
Three Months Ended March 31, 2000 and 1999
------------------------------------------
Project revenues for the quarters ended March 31, 2000 ("Second Quarter of
Fiscal 2000") and 1999 ("Second Quarter of Fiscal 1999") were approximately
$1,463,000 and $1,328,000, respectively, an increase of approximately $135,000,
or 10.2%. Project revenues in the Second Quarter of Fiscal 2000 and Fiscal 1999
were derived from 30 clients encompassing 56 projects and 23 clients
encompassing 34 projects, respectively. Three clients represented approximately
37.4% of the Company's project revenues for the three months ended March 31,
2000. For the comparable period last year, five clients represented
approximately 71.5% 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 Second Quarter of Fiscal 2000 and Fiscal
1999 were comprised of professional salaries and benefits and allocated
overhead. Cost of revenues for the Second Quarter of Fiscal 2000 and Fiscal 1999
were approximately $947,000 and $634,000, respectively, an increase of
approximately $313,000 or 49.4%. This increase is attributable to an increase in
staffing levels required for project related tasks for the Second Quarter of
Fiscal 2000 and in anticipation of work to be performed on new contracts as
compared to the Second 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 difference in the Second Quarter of
Fiscal 2000 from the Second Quarter of Fiscal 1999 resulted from a lower
increase in project revenues as compared to a higher increase in project related
costs. In addition, the Company increased its staffing levels during the three
months ended March 31, 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 Second 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
$303,000 in the Second Quarter of Fiscal 2000 and approximately $388,000 in the
Second Quarter of Fiscal 1999. The decrease of approximately $85,000, or 21.9%,
is primarily attributable to less professional services associated with general
corporate matters.
Sales and marketing expenses in each of the Second 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 $347,000 in the Second Quarter of Fiscal 2000 and approximately
$240,000 in the Second Quarter of Fiscal 1999. The increase during Second
Quarter of Fiscal 2000 of approximately $107,000, or 44.6%, from the Second
Quarter of Fiscal 1999, resulted from an increase in the Company's marketing
efforts and from expenses associated with the appointment of a Vice President of
Business Development in October 1999.
Total cost and expenses in each of the Second Quarter of Fiscal 2000 and
Fiscal 1999 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 $1,597,000 in the Second
Quarter of Fiscal 2000 and approximately $1,262,000 in the Second Quarter of
Fiscal 1999. Such increase of approximately $335,000, or 26.5%, is primarily 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.
Net interest expense of approximately $16,000 during the Second 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 offset in part by interest earned on cash
balances. The Company had interest income in the Second Quarter of Fiscal 1999
due to higher cash balances maintained during the three months ended March 31,
1999. Net interest income was approximately $4,000 in the Second Quarter of
Fiscal 1999.
The Company's net loss for the Second Quarter of Fiscal 2000 was
approximately $150,000, while the Company had net income of approximately
$71,000 in the Second Quarter of 1999. The Company's net loss for the Second
Quarter of Fiscal 2000 was attributable primarily to insufficient project
revenue to support the infrastructure of the Company. The Company increased
staffing levels during the Second Quarter of Fiscal 2000 in anticipation of work
to be performed on new contracts signed in the Second Quarter of Fiscal 2000.
-13-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had cash and cash equivalents of
approximately $82,000. Working capital at March 31, 2000 was approximately
$285,000.
Net cash used in operating activities was approximately $496,000 which
includes changes in certain of the Company's operating assets and liabilities
and the net loss for the six months ended March 31, 2000. The net loss of
approximately $450,000 was offset by approximately $258,000 of depreciation and
amortization expense and an increase in accounts payable of approximately
$243,000. In addition, accounts receivable increased by approximately $551,000
primarily as a result of an increase in unbilled receivables for the six months
ended March 31, 2000. Unbilled receivables are recorded as revenue recognized to
date that has not been billed. Certain amounts become billable upon the
achievement of milestones or in accordance with predetermined payment schedules.
For the six months ended March 31, 2000, the Company invested approximately
$165,000 in capital and leasehold improvements. The Company currently
anticipates that capital expenditures for the remainder of the Fiscal 2000 will
approximate $100,000. 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 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 six months ended March
31, 2000, the Company assigned accounts receivable of approximately $632,000 to
the Bank. At March 31, 2000, the Company had a payable balance of approximately
$411,000 to the Bank. At May 12, 2000, the Company had a payable balance of
approximately $85,000 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 collaterized 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. At
March 31, 2000, the Company had no borrowings under the line of credit. In
October 1999, the Bank notified the Company that it would not make any advances
under the
-14-
<PAGE>
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 position. At such time, the Bank may consider permitting further
advances pursuant to the loan agreement.
In December 1999 and in February 2000, the Company entered into equipment
lease obligations consisting of monthly installments of $4,961 and $3,258,
respectively, which includes interest rate of 10.53%, through November 2002 and
January 2003. The debt is collateralized by the related equipment.
The Company anticipates that its cash and cash equivalents as at March 31,
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 operating plan contains 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. As of May 12, 2000, the Company's cash balance was approximately
$212,000.
-15-
<PAGE>
PART II. OTHER INFORMATION.
--------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The Annual Meeting of Stockholders of the Company (the "Meeting") was
held on February 25, 2000.
(b) The following is a list of all of the Directors of the Company who were
elected at the Meeting and whose term of office continued after the
Meeting:
Mark L. Weinstein
Jeffrey H. Berg, Ph.D.
Marc Berger
David E. Nowicki, D.M.D.
David M. Stack
James A. Taylor, Ph.D.
(c) There were present at the Meeting, in person or by proxy, 6,953,560
shares of Common Stock out of a total number of 7,773,878 shares of
Common Stock and 416,667 shares of Preferred Stock, out of a total
number of 416,667 shares of Preferred Stock, in each case, issued and
outstanding and entitled to vote at the Meeting. The holders of shares
of Common Stock and Preferred Stock voted together as a single class on
all matters presented at the Meeting.
(d) The results of the vote of the stockholders taken at the Meeting by
ballot and by proxy as solicited by the Company on behalf of the Board
of Directors were as follows:
(i) The results of the vote taken at the Meeting for the election of
the nominees for the Board of Directors of the Company were as
follows:
Nominee For Withheld
--------------------------- ------------- -----------------
Mark L. Weinstein 7,905,755 69,000
Jeffrey H. Berg, Ph.D. 7,905,755 69,000
Marc Berger 7,905,755 69,000
David E. Nowicki, D.M.D. 7,905,755 69,000
David M. Stack 7,905,755 69,000
James A. Taylor, Ph.D. 7,905,755 69,000
(ii) A vote was taken on the proposal to ratify the appointment of
Arthur Andersen LLP as independent auditors of the Company for
the fiscal year ending September 30, 2000. The results of the
vote taken at the Meeting with respect to such appointment were
as follows:
For Against Abstain
--------------- ------------- -------------
7,911,055 45,300 18,400
-16-
<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.
-17-
<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: May 15, 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: May 15, 2000 By: /s/ Maria T. Kraus
------------------------------------------
Maria T. Kraus, Controller
(Principal Accounting Officer)
-18-
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<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 MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000822418
<NAME> Bio-Imaging Technologies, Inc.
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
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