U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 19, 1999
________________________________________________________________
3D IMAGE TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-27627 76-0265438
(State of Incorporation) (Commission File Number) (Tax Identification No.)
5172-G Brook Hollow Parkway, Norcross, Georgia 30071
(Address of principal executive offices)
Registrant's telephone number, including area code (770) 416-8848
(Former name and former address, if changed since last report)
3D IMAGE TECHNOLOGY, INC.
TABLE OF CONTENTS
ITEM PAGE
5. Other Events 2
6. Resignation of Director 3
Signatures 3
Item 5. Other Events.
The Company has been operating under a severe working capital shortage
since prior to the change of management of the Company in May 1997. Despite
every effort of management to arrange equity or debt financing for the Company
over the past twenty months, management has been unable to solve this working
capital deficit. Management has substantially cut operating costs and
increased both camera sales and processing revenues resulting in break-even
or small profits for 1998; however, the substantial outstanding liabilities
inherited from the former management, and in particular a secured $3 million
debt in default, has made it impossible to attract new capital. As
discussed at the Annual Meeting of Shareholders in July 1998 and at a Special
Meeting of Shareholders in September 1997, this working capital shortage
would result in the Company using up its supply of photo-sensitized
lenticular print material by early 1999 without any funds to manufacture new
material. The print material necessary to process and print 3D prints from
the Company's 3D cameras is not readily available and must be manufactured
for the Company using several different steps, and several different sub-
contractors.
During October and November, 1998, the Company undertook the initial steps
to manufacture new material, financing these steps out of current cash flow
from operations in the amount of approximately $100,000. The final and most
expensive step, photo-emulsion coating, was scheduled for February 1999, and a
test run of the plastic material manufactured for the Company for this purpose
was conducted at the emulsion coating facility on February 12, 1999. The
Company was notified on February 15, 1999 that the results of that test run
indicated that the emulsion coating facility would be unable to successfully
coat the plastic material in its current configuration. As a result, the
Company will have to either manufacture a new plastic base material to supply
to the emulsion coating contractor and discard the existing material, or
locate another emulsion coating facility which may be able to coat the
existing material in its current configuration. In either case, a delay of
at least 8 to 12 weeks in obtaining new material is indicated. Although a
small interim supply of material has been located which will last
approximately 4 weeks, if it can be purchased, there is a likelihood that
there will have to be an interruption to the photo-finishing of film for 4 to
8 weeks while new material is obtained. The Company already has implemented
staff reductions to minimize operating expenses while the print material
shortage continues.
While the Company is also working on other short-term solutions to the
print material issue, to avoid a temporary shut-down of its photo-finishing
operation, there is no assurance that these other possible solutions will be
effective or timely enough to avoid a shut-down. In the meantime, the Company
has ceased any further camera sales until an adequate supply of material is
obtained, so that the available supply can be devoted to film already
exposed from cameras already in the hands of consumers.
Even with a new supply of print material, the working capital shortfall
under which the Company has labored will continue and the Company must obtain
new working capital or develop some other solution to its liquidity problem.
Item 6. Resignation of Director.
At the beginning of a Special Meeting of the board of Directors of the
Company held on February 16, 1999, Mr. C. S. Kiang, who has been a director
of the Company since October 1998, announced that he was resigning as a
director, effective immediately. Mr. Kiang expressed no disagreement with any
policy of the Company or the Board of Directors and submitted no objection,
written or otherwise, to any action of the Board or of the Company. His
resignation was stated to be due to other business commitments which made it
impossible for him to continue to act as a director.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
Dated this 17th day of February, 1999.
_/s/ Bruce Herstowski__________
BRUCE A. HERSTOWSKI
President and Chief Executive Officer
_/s/ Robert J. Hipple___________
ROBERT J. HIPPLE
Chief Financial Officer
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