U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
Commission File No. 1-11182
BIO-IMAGING TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 11-2872047
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
826 Newtown-Yardley Road, Newtown, Pennsylvania 18940-1721
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(267) 757-1360
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
830 Bear Tavern Road, West Trenton, New Jersey 08628-1020
- --------------------------------------------------------------------------------
(Former Address, If Changed Since Last Report)
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 January 31, 2000:
Class Number of Shares
- ----- ----------------
Common Stock, $.00025 par value 7,773,878
Transitional Small Business Disclosure Format (check one):
Yes: No: X
----- -----
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
TABLE OF CONTENTS
-----------------
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.................................... 1
CONSOLIDATED BALANCE SHEETS
as of December 31, 1999 (unaudited) and
September 30, 1999........................................... 2
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1999 and 1998
(unaudited).................................................. 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 1999 and 1998
(unaudited).................................................. 4
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)....................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 7
Results of Operations........................................ 8
Liquidity and Capital Resources.............................. 10
PART II OTHER INFORMATION
Item 5. Other Information....................................... 13
Item 6. Exhibits and Reports on Form 8-K........................ 14
SIGNATURES ........................................................ 15
- i -
<PAGE>
PART I. FINANCIAL INFORMATION.
------------------------------
ITEM 1. FINANCIAL STATEMENTS.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission, although Bio-Imaging Technologies, Inc. (the
"Company") believes that such financial disclosures are adequate to assure that
the information presented is not misleading in any material respect. The
following consolidated financial statements should be read in conjunction with
the year-end consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended September 30,
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.
-1-
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
-------------- --------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 352,947 $ 412,903
Accounts receivable, net.......................... 1,131,251 1,237,746
Prepaid expenses and other current assets......... 147,112 138,127
----------- -----------
Total current assets............................ 1,631,310 1,788,776
Property and equipment, net......................... 1,253,565 1,180,254
Other assets ....................................... 178,973 179,624
----------- -----------
Total assets.................................... $ 3,063,848 $ 3,148,654
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 230,101 $ 134,685
Accrued expenses and other current liabilities.... 214,121 254,565
Deferred revenue.................................. 584,187 541,933
Current maturities of long-term debt.............. 110,236 69,800
----------- -----------
Total current liabilities....................... 1,138,645 1,000,983
Long-term debt...................................... 169,117 81,511
----------- -----------
Total liabilities............................... 1,307,762 1,082,494
----------- -----------
Stockholders' equity:
Preferred stock - $.00025 par value; authorized
3,000,000 shares, issued and outstanding 416,667
shares ($500,000 liquidation preference)......... 104 104
Common stock - $.00025 par value; authorized
18,000,000 shares, issued and outstanding
7,773,878 shares at December 31, 1999 and
September 30, 1999............................... 1,944 1,944
Additional paid-in capital........................ 9,231,497 9,231,497
Accumulated deficit............................... (7,477,459) (7,167,385)
----------- -----------
Stockholders' equity............................ 1,756,086 2,066,160
----------- -----------
Total liabilities and stockholders' equity...... $ 3,063,848 $ 3,148,654
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
-2-
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
December 31,
----------------------------------
1999 1998
---- ----
<S> <C> <C>
Project revenues................................. $ 1,077,954 $ 824,292
----------- -----------
Cost and expenses:
Cost of revenues............................. 705,413 560,761
General and administrative expenses.......... 318,144 376,967
Sales and marketing expenses................. 349,827 241,317
----------- -----------
Total cost and expenses.......................... 1,373,384 1,179,045
----------- -----------
Loss from operations............................. (295,430) (354,753)
Interest (expense) income - net.................. (4,644) 8,929
----------- -----------
Net loss......................................... (300,074) (345,824)
Dividends on preferred stock..................... 10,000 10,000
----------- -----------
Net loss applicable to common stock.............. $ (310,074) $ (355,824)
=========== ===========
Basic and diluted loss per common share.......... $ (0.04) $ (0.05)
=========== ===========
Weighted average number of common
shares and dilutive common equivalent shares... 7,773,878 7,773,878
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
December 31,
---------------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................. $ (300,074) $ (345,824)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization............................ 124,504 137,908
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable............. 106,495 (197,327)
Increase in prepaid expenses and other current assets.. (8,985) (17,584)
Decrease in other assets............................... 651 930
Increase in accounts payable........................... 95,416 11,759
(Decrease) increase in accrued expenses and other
current liabilities................................. (30,444) 128,687
Increase (decrease) in deferred revenue................ 42,254 (140,829)
----------- -----------
Net cash provided by (used in) operating activities.... 29,817 (422,280)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment........................ (45,222) (21,305)
----------- -----------
Net cash used in investing activities.................. (45,222) (21,305)
----------- -----------
Cash flows from financing activities:
Payments under equipment lease obligations................. (24,551) (14,369)
Dividends paid to preferred stockholders................... (20,000) (20,000)
----------- -----------
Net cash used in financing activities.................. (44,551) (34,369)
----------- -----------
Net decrease in cash and cash equivalents.................... (59,956) (477,954)
Cash and cash equivalents at beginning of period............. 412,903 1,527,330
----------- -----------
Cash and cash equivalents at end of period................... $ 352,947 $ 1,049,376
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest................... $ 5,022 $ 1,694
=========== ===========
Supplemental schedule of noncash investing and financing
activities:
Equipment purchased under capital lease obligation......... $ 152,593 $ --
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
-4-
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 1 - Basis of Presentation:
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
September 30, 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 December 31, 1999 and the results of its operations and
its cash flows for the three months ended December 31, 1999 and 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 months ended December 31, 1999 and 1998 excludes the impact
of options (1,192,370 as of December 31, 1999 and 1,268,750 as of December 31,
1998) and warrants (66,667 as of December 31, 1999 and 1998) as they are
antidilutive.
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.
-5-
<PAGE>
BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
-----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
Note 3 - Financing:
In December 1999, the Company entered into an accounts receivable
purchase agreement with a bank, whereby, the Company may assign up to $500,000
of eligible accounts receivable to the bank. 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. No amounts have been assigned to the bank through December 31, 1999. From
January 20, 2000 to February 10, 2000, the Company assigned accounts receivable
of approximately $387,000 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.
Note 4 - Reclassification:
Certain reclassifications have been made to the December 31, 1998
statement of operations in order to conform to the current period presentation.
-6-
<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 December 31, 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.
Although the Company experienced a loss for the three months ended December 31,
1999, the Company's project revenues increased as compared to the same period in
the fiscal year ended September 30, 1999. Project revenues were generated from
29 clients encompassing 52 projects for the three months ended December 31, 1999
as compared to 17 clients encompassing 29 projects for the same period in Fiscal
1999.
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 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.
-7-
<PAGE>
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
Three Months Ended December 31, 1999 and 1998
---------------------------------------------
Project revenues for the quarters ended December 31, 1999 ("First
Quarter of Fiscal 2000") and 1998 ("First Quarter of Fiscal 1999") were
approximately $1,078,000 and $824,000, respectively, an increase of
approximately $254,000, or 30.8%. The increase in project revenues is primarily
a result of the increase in the Company's sales and marketing efforts initiated
in the fiscal year ended September 30, 1998. Project revenues for the First
Quarter of Fiscal 2000 was derived from 29 clients encompassing 52 projects and
project revenues for the First Quarter of Fiscal 1999 was derived from 17
clients encompassing 29 projects. Project revenues generated from the Company's
client base continue to be highly concentrated. However, in the First Quarter of
Fiscal 2000, the Company's client base was less concentrated where two clients
represented approximately 34.6% of the Company's project revenues, while for the
comparable period last year, four clients represented approximately 65.3% of the
Company's project revenues. The Company's scope of work in both periods included
primarily medical imaging core laboratory services and image-based information
management services.
Cost of revenues in each of the First Quarter of Fiscal 2000 and Fiscal
1999 were comprised of professional salaries and benefits and allocated
overhead. Cost of revenues for the First Quarter of Fiscal 2000 and Fiscal 1999
were approximately $705,000 and $561,000, respectively, an increase of
approximately $144,000, or 25.7%. This increase is primarily attributable to an
increase in staffing levels required for project related tasks for the First
Quarter of Fiscal 2000 as compared to the First Quarter of Fiscal 1999.
-8-
<PAGE>
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 increase in this percentage difference in the First
Quarter of Fiscal 2000 from the comparable period in Fiscal 1999 resulted
primarily from a higher increase in project revenues as compared to a lesser
increase in project related costs.
General and administrative expenses in each of the First 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 $318,000 in the First Quarter of Fiscal 2000 and approximately
$377,000 in the First Quarter of Fiscal 1999. The decrease during the First
Quarter of Fiscal 2000 of approximately $59,000, or 15.6%, from the
corresponding Fiscal 1999 quarter, is primarily attributable to less
professional services associated with general corporate matters.
Sales and marketing expenses in each of the First 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 $350,000 in the First Quarter of Fiscal 2000 and approximately
$241,000 in the First Quarter of Fiscal 1999. The increase during the First
Quarter of Fiscal 2000 of approximately $109,000, or 45.2%, from the
corresponding Fiscal 1999 quarter, resulted primarily from expenses associated
with the appointment of a Vice President of Business Development in October 1999
along with an increase in the Company's marketing efforts.
Total cost and expenses in each of the First 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 $1,373,000 in the First Quarter of Fiscal 2000 and approximately
$1,179,000 in the corresponding quarter in Fiscal 1999. Such increase of
approximately $194,000, or 16.5%, 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.
Net interest expense of approximately $5,000 during the First Quarter of
2000, resulted from 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 First Quarter of 1999 due to
higher cash balances maintained during the Fiscal 1999 period. Net interest
income was approximately $9,000 in the First Quarter of Fiscal 1999.
The Company's net loss for the First Quarter of 2000 was approximately
$300,000, while the Company had a net loss of approximately $346,000 in the
First Quarter of 1999. The Company's net loss for the First Quarter of 2000 was
attributable primarily to insufficient project revenue to support the
infrastructure of the Company.
-9-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company had cash and cash equivalents of
approximately $353,000. Working capital at December 31, 1999 was approximately
$493,000.
Net cash provided by operating activities was approximately $30,000
which includes changes in certain of the Company's operating assets and
liabilities and the net loss for the three months ended December 31, 1999. The
net loss of approximately $300,000 was offset by approximately $125,000 of
depreciation and amortization expense, a decrease in accounts receivable of
approximately $106,000 during the First Quarter of Fiscal 2000 primarily as a
result of a decrease in unbilled receivables during such period and an increase
in accounts payable of approximately $95,000. 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 three months ended December 31, 1999, the Company invested
approximately $45,000 in capital and leasehold improvements. The Company
currently anticipates that capital expenditures for the remainder of the Fiscal
2000 will approximate $200,000. 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 a bank, whereby, the Company may assign up to $500,000
of eligible accounts receivable to the bank. 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. No amounts have been assigned to the bank through December 31, 1999. From
January 20, 2000 to February 10, 2000, the Company assigned accounts receivable
of approximately $387,000 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 a 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. 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
position. At such time, the bank may consider permitting further advances
pursuant to the loan agreement. At December 31, 1999, the Company had no
borrowings under the line of credit.
-10-
<PAGE>
In February 2000, the Company entered into an equipment lease obligation
consisting of monthly installments of $3,258, which includes interest at a rate
of 10.53%, through January 2003. The debt is collateralized by the related
equipment
The Company anticipates that its cash and cash equivalents as at
December 31, 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 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.
-11-
<PAGE>
YEAR 2000 COMPLIANCE
The Company's management information systems department has reviewed and
tested the Company's internal business systems for Year 2000 compliance. The
Company believes that, based on the results of such review and testing, the
Company's internal business systems, including its computer systems, are Year
2000 compliant. In addition, the Company receives imaging data derived from the
computer systems of its clients, which data or software may or may not be Year
2000 compliant. The Company currently requires its clients to represent that the
data-sets sent to the Company are Year 2000 compliant.
Although the Company has not experienced any Year 2000 problems
subsequent to January 1, 2000 relating to the Company's internal business and
computer systems or any imaging data received from its clients, failure of such
computer systems to properly address the Year 2000 problem may adversely affect
the Company's business, financial condition, results of operations or cash
flows.
The 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.
-12-
<PAGE>
PART II. OTHER INFORMATION.
---------------------------
ITEM 5. OTHER INFORMATION.
NEW U.S. IMAGE PROCESSING CENTER AND CORPORATE HEADQUARTERS
On September 22, 1999, the Company executed a lease agreement for
approximately 17,000 square feet of office space located in Newtown,
Pennsylvania. The lease is for an initial term of five years and two months and
provides for a fixed base rent of approximately $26,000 per month with an annual
inflation increase. The Company moved to its new offices on December 30, 1999.
EXECUTIVE OFFICER RESIGNATION
On January 17, 2000, Robert J. Phillips, the former Vice President,
Chief Financial Officer and Secretary of the Company, tendered his resignation
to the Company to be effective January 31, 2000. As of January 31, 2000, Mark L.
Weinstein, the current President and Chief Executive of the Company, assumed the
responsibilities of Chief Financial Officer of the Company, in addition to
serving as President and Chief Executive Officer, and he will also serve as the
principal executive and financial officer of the Company. As of January 31,
2000, Maria T. Kraus, the current Controller of the Company, was appointed
Assistant Secretary of the Company and will serve as the principal accounting
officer of the Company.
EXECUTIVE OFFICER EMPLOYMENT AGREEMENT
On January 20, 2000, the Company executed a renewed Employment Agreement
with Mr. Weinstein which became effective on February 1, 2000 for a term of two
(2) years (the "Employment Agreement"). Pursuant to the terms of the Employment
Agreement, the Company has agreed to pay Mr. Weinstein an annual base salary of
$190,000, and such base salary shall be reviewed annually by the Board of
Directors of the Company and may be subject to adjustment at the discretion of
the Board of Directors. Mr. Weinstein is also eligible to receive, in addition
to standard Company benefits and certain perquisites, bonuses and incentive
compensation, the amount of which are to be determined by the Board of Directors
of the Company in its sole discretion.
APPOINTMENT OF DIRECTOR
On January 18, 2000, David M. Stack was appointed to the Board of
Directors of the Company. From May 1995 to December 1999, Mr. Stack served as
the President and General Manager of Innovex Inc., a marketing company offering
a full range of commercial solutions to clinical research companies. From April
1993 to May 1995, Mr. Stack had been the Vice President of Business Development
and Marketing for Immunomedics, Inc., a biopharmaceutical company focused on the
development, manufacture, and commercialization of diagnostic imaging and
therapeutic products for the detection and treatment of cancer and infectious
diseases. From May 1992 to March 1993, Mr. Stack had been the Director of
Business Development and Planning for Infectious Disease, Oncology and Virology
of Roche Laboratories. Prior to that, he held various other positions with Roche
Laboratories for approximately 11 years, and was a retail pharmacist for
approximately 3 years after graduating from college.
-13-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Employment Agreement made by and between the
Company and Mark L. Weinstein dated as of
January 20, 2000.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
-14-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BIO-IMAGING TECHNOLOGIES, INC.
DATE: February 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: February 14, 2000 By:/s/ Maria T. Kraus
-------------------------------------
Maria T. Kraus, Controller
(Principal Accounting Officer)
-15-
January 20, 2000
Mark L. Weinstein, President & Chief Executive Officer
Bio-Imaging Technologies, Inc.
826 Newtown-Yardley Road
Newtown, PA 18940-1721
Dear Mark:
On behalf of the Board of Directors of Bio-Imaging Technologies, Inc., (the
Company), I am pleased to extend your employment as the Company's President and
Chief Executive Officer and provide you with the following compensation package
effective February 1, 2000 for a period of two years.
a) Base Salary. You will be paid an annual base salary of $190,000
-----------
payable in bi-weekly installments. Such base salary shall be reviewed
at the end of each 12-month period of employment and any adjustments
to be made shall be determined by the Board of Directors at that time.
b) Bonuses. You will be eligible for and may receive bonuses, the amount
-------
of which are to be determined by the Board of Directors in its sole
discretion.
c) Incentive Compensation. You will be eligible for awards from the
-----------------------
Company's incentive compensation plans on a basis commensurate with
your position and responsibility.
d) Stock Options. Upon the effective date hereof, you will be granted an
-------------
option to purchase up to 150,000 shares of Common Stock of the Company
at a purchase price equal to 100% of the fair market value of the
Common Stock or $0.63, whichever is greater, on the date of the grant,
which options shall vest as follows: 37,500 on the date hereof and
37,500 on each of the first, second and third anniversary of the date
of the grant. This stock option grant is in addition to existing stock
option grants.
e) Expenses. Subject to and in accordance with the Company's policies and
--------
procedures, you are hereby authorized to incur, and, upon presentation
of itemized accounts, shall be reimbursed for any and all reasonable
and necessary business-related expenses, which expenses are incurred
by you on behalf of the Company.
<PAGE>
g) Benefits. You and your dependents shall be included in any and all
--------
plans, programs and policies which provide benefits for employees and
their dependents. Such plans, programs and policies may include health
care insurance, long-term disability plans, life insurance,
supplemental disability insurance, supplemental life insurance,
holidays and other similar or comparable benefits made available to
Company employees.
h) Absences. You will be entitled to absences because of illness or other
--------
incapacity, and such other absences, whether for holiday, personal
time, or for any other purpose, as set forth in the Company's
employment manual or current policies and procedures, as the case may
be. You will be entitled to four weeks per year of vacation time, to
be taken consistent with the policies of the Company and the effective
discharge of your duties. You will also have the right to accumulate
such vacation time from year to year as specified by current Company
policies and procedures.
You will continue to be subject to all of the Company's other policies and
procedures, including, without limitation, the requirement that you execute a
copy of the attached form of (1) Invention Assignment and Confidentiality
Agreement and (2) Non-Competition Agreement. Eighteen (18) months into this
two-year agreement, the Board of Directors will give an initial indication in
writing of their intended actions as it relates to your employment status at the
end of the two-year term. Your employment relationship with the Company may be
terminated by the Company upon your death, disability (defined as 180 days of
disability in a one-year period, whether or not such days are continuous) or for
cause (as hereinafter defined). For purposes of this letter, "cause" is defined
as:
"The Company may terminate the Employee's employment hereunder for
cause immediately and with prompt notice to the Employee, which cause
shall be determined in good faith solely by the Board of Directors.
'Cause' for termination shall include, but is not limited to, the
following conduct of the Employee:
(1) Material breach of any provision of this Agreement by the Employee,
which breach shall not have been cured by the Employee within thirty
(30) days of receipt of written notice of said breach;
(2) Misconduct as an employee of the Company, including but not limited
to: (i) misappropriating any funds or property of the Company; (ii)
attempting to willfully obtain any personal profit from any
transaction in which the Employee has an interest which is adverse to
the interests of the Company; or (iii) any other act or omission which
substantially impairs the Company's ability to conduct its ordinary
business in its usual manner;
(3) Unreasonable neglect or refusal to perform the duties assigned to the
Employee under or pursuant to this Agreement;
(4) Conviction of a felony; or
(5) Any other act or omission which subjects the Company or any of its
subsidiaries to substantial public disrespect, scandal or ridicule."
Page 2 of 3
<PAGE>
Notwithstanding the term of this letter agreement, if you are terminated
other than for cause or upon death or disability, you will be paid severance
equal to six months salary at your then current annual salary.
You will also have the option to lease a car to be reimbursed by the
Company following any profitable quarter but you would be responsible for lease
payment in any quarter where profitability is not maintained. In no case shall
reimbursement exceed $500 per month.
If you agree with the stated provisions, please sign and date both copies
enclosed and return one copy to me. I will copy other Board members and
Corporate Counsel. When you sign this document, please provide a copy to Maria
Krauss for her information as well.
Sincerely,
James A. Taylor, Ph.D.
/s/ James A. Taylor 1/20/00 /s/ Mark L. Weinstein 1/20/00
- ----------------------- ------- ----------------------- -------
James A. Taylor, Ph.D. Date Mark L. Weinstein Date
Page 3 of 3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED INTERIM FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANT'S FORM 10-QSB
FOR THE PERIOD ENDED DECEMBER 31, 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> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 352,947
<SECURITIES> 0
<RECEIVABLES> 1,196,251
<ALLOWANCES> 65,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,631,310
<PP&E> 2,760,277
<DEPRECIATION> 1,506,712
<TOTAL-ASSETS> 3,063,848
<CURRENT-LIABILITIES> 1,138,645
<BONDS> 169,117
0
104
<COMMON> 1,944
<OTHER-SE> 1,754,038
<TOTAL-LIABILITY-AND-EQUITY> 3,063,848
<SALES> 0
<TOTAL-REVENUES> 1,077,954
<CGS> 0
<TOTAL-COSTS> 705,413
<OTHER-EXPENSES> 667,971
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,644
<INCOME-PRETAX> (300,074)
<INCOME-TAX> 0
<INCOME-CONTINUING> (300,074)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (300,074)
<EPS-BASIC> (0.04) <F1>
<EPS-DILUTED> (0.04) <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>
