U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT OR [ ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2000 Commission File No. 33-67766-A
EMAGISOFT TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Florida 65-0422273
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State or other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
405 Central Avenue, 2nd Floor
St. Petersburg, Florida 33701
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(Address of principal executive offices) (Zip Code)
(727) 898-0688
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(Registrant's telephone number,
including area code)
None
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(Former name and address)
Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Exchange Act 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 [ ]
As of June 30, 2000: 13,174,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PAGE 1
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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Emagisoft Technologies - Consolidated
Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS 6/30/2000 12/31/1999
------ (audited)
------------ -----------
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . $ 668,394 $ 995,236
Cash in escrow . . . . . . . . . . . . . . . . - 80,000
Accounts receivable. . . . . . . . . . . . . . 11,458 38,694
Due from shareholder . . . . . . . . . . . . . 7,611 7,611
Prepaid Expenses . . . . . . . . . . . . . . . 118,839 65,883
------------ -----------
Total current assets . . . . . . . . . . . . . 806,302 1,187,424
PROPERTY AND EQUIPMENT:
Furniture and fixtures . . . . . . . . . . . . 79,524 75,376
Computer equipment . . . . . . . . . . . . . . 525,693 461,747
Leasehold Improvements . . . . . . . . . . . . 6,655 3,323
Software . . . . . . . . . . . . . . . . . . . 61,528 54,946
------------ -----------
673,400 595,392
Less: Accumulated depreciation . . . . . . . . (304,655) (202,887)
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Property and equipment, net. . . . . . . . . . 368,745 392,505
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OTHER ASSETS:
Software development costs . . . . . . . . . . 710,655 226,954
Goodwill, net of accumulated amortization. . . 156,467 175,625
Other. . . . . . . . . . . . . . . . . . . . . 4,225 4,225
------------ ------------
Total other assets . . . . . . . . . . . . . . 871,347 406,804
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Total assets . . . . . . . . . . . . . . . . . $ 2,046,394 $ 1,986,733
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . $ 8,029 $ 73,546
Accrued liabilities. . . . . . . . . . . . . . 171,537 248,893
Billings in excess of costs. . . . . . . . . . - 4,908
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Total current liabilities. . . . . . . . . . . 179,566 327,347
LONG-TERM LIABILITIES
Convertible notes payable. . . . . . . . . . . 1,006,000 -
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Total liabilities . . . . . . . . . . . 1,185,566 327,347
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STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value:
20,000,000 shares authorized,
13,174,000 issued and outstanding. . . . . . 1,317 1,317
Series A preferred, $.0001 par, 5,000,000
shares authorized, 650,996 Shares
issued and outstanding . . . . . . . . . . . 65 -
Additional paid-in capital . . . . . . . . . . 3,451,645 2,681,581
Accumulated deficit. . . . . . . . . . . . . . (2,592,199) (1,023,512)
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Total stockholders' equity . . . . . . . . . . 860,828 1,659,386
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Total liabilities and stockholders' equity . $ 2,046,394 $ 1,986,733
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</TABLE>
PAGE 2
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Emagisoft Technologies - Consolidated
Income Statement
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Architectural and web site design. . . . $ 15,936 $ 35,763 $ 61,682 $ 61,876
Hardware and software sales and support. 1,978 52,078 8,591 79,859
Internet provider services . . . . . . . 12,162 24,198 23,070 33,750
-------- -------- --------- --------
Total Revenue . . . . . . . . . . . . 30,076 112,039 93,343 175,485
-------- -------- --------- --------
DIRECT COSTS . . . . . . . . . . . . . . 22,595 68,940 43,531 109,264
-------- -------- --------- --------
Gross Profit . . . . . . . . . . . . . . 7,481 43,099 49,812 66,221
-------- -------- --------- --------
OPERATING COSTS AND EXPENSES:
Marketing & Sales . . . . . . . . . . 13,752 - 17,590 -
General and administrative . . . . . . 753,102 59,628 1,485,610 113,713
Depreciation and amortization . . . . 61,143 41,819 120,927 41,819
Total Operating Expenses . . . . . . . 827,997 101,447 1,624,127 155,532
OTHER INCOME:
Interest income, net . . . . . . . . . (2,940) (75) (5,629) (89)
LOSS BEFORE PROVISION FOR INCOME TAXES . (817,576) (58,273) (1,568,686) (89,222)
PROVISION FOR INCOME TAXES . . . . . . . - - - -
-------- -------- --------- --------
NET LOSS . . . . . . . . . . . . . . . .$(817,576)$(58,273)$(1,568,686)$(89,222)
-------- -------- --------- --------
NET LOSS PER SHARE - BASIC AND DILUTED . $(0.06) $(0.00) $(0.12) $(0.00)
======== ======== ========= ========
</TABLE>
Emagisoft Technologies - Consolidated
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flow used in Operating Activities:. . . . . . .$(1,541,262) $ (24,838)
Cash Flow used in Investing Activities: . . . . (561,709) ( 2,423)
Cash Flow from Financing Activities: . . . . . . . . 1,776,129 -
Decrease in Cash . . . . . . . . . . . . . . . . . . (326,842) (27,261)
Cash, beginning . . . . . . . . . . . . . . . . . . 995,236 35,115
------------ ------------
Cash, ending . . . . . . . . . . . . . . . . . . . .$ 668,394 $ 7,854
============ ============
</TABLE>
PAGE 3
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Note 1. NATURE OF OPERATIONS
Emagisoft Technologies, Inc. (ETI), formerly known as Manatee American Financial
Corporation (MAFC), was incorporated under the laws of the State of Florida on
September 21, 1994. ETI and subsidiaries (collectively, the Company) is an
applications service provider (ASP) and web site designer. The Company has
developed a comprehensive and integrated set of Internet-based software tools
engineered for power and ease of use in the development, marketing and
management of commercial web sites. These products will enable customers to
create, develop, manage and maintain e-commerce web sites. As an ASP, the
Company provides customers with hardware, software and web site hosting services
necessary to engage in a fully dimensional e-commerce environment and allows
them to focus on their core competencies and still respond to changing
technologies. The Company presently operates its business through its
wholly-owned subsidiary, Emagisoft Corporation (EC), formerly known as Net
Advantage, Inc., which is located in St. Petersburg, Florida
Note 2. BASIS OF PRESENTATION
The accompanying financial statements are unaudited and have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB promulgated by the
Securities and Exchange Commission. These financial statements reflect all
adjustments, which, in the opinion of management, are necessary for a fair
presentation of financial position, results of operations and cash flows for the
periods presented. All adjustments are of a normal recurring nature. The results
of operations for interim periods are not necessarily indicative of the results
expected for a full year.
These financial statements, including the consolidated balance sheet as of
December 31, 1999, which has been derived from audited financial statements, are
presented in accordance with the requirements of Form 10-QSB and consequently
may not include all disclosures normally required by generally accepted
accounting principles or those normally made in the Company's Form 10-KSB. The
accompanying consolidated financial statements, including the condensed
consolidated statement of cash flows, and related notes should be read in
conjunction with the Company's Form 10-KSB for the fiscal year ended December
31, 1999.
Note 3. LIQUIDITY
The accompanying unaudited financial statements have been prepared assuming the
Company will continue as a going concern. Accordingly, the financial statements
do not include any adjustments that might result from the Company's inability to
continue as a going concern. Management expects to continue to generate losses
during the next 12 months and, based on the current operating budgets, does not
anticipate having sufficient cash on hand or available through current lending
arrangements to fund operations. To address this funding need, the Company's
management is seeking to raise funds through a private placement of Series A
preferred stock. Management believes that the funds generated by this
transaction will be sufficient to fund operations for at least 12 months. In the
event all the funding is not received, management believes it can revise its
operating plan to such a level that the Company will be able to fund
operations for the next 12 months. Management may seek to raise additional
capital by other equity or debt financing.
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Note 4. NET LOSS PER COMMON SHARE
Net losses per common share have been computed based upon the weighted average
number of shares of common stock outstanding during the periods. The number of
shares used in the computation is 13,174,000 and 10,827,000 at 6/30/00 and
6/30/99, respectively. As a result of the net loss reported by the company, any
assumptions of options being exercised or Series A preferred stock being
converted would have an antidilutive effect on the loss per share; therefore, no
exercise of stock options were assumed and basic and diluted loss per share
amounts are identical.
Note 5. SUBSEQUENT EVENTS
On July 6, 2000, July 17, 2000, and August 2, 2000, the Company accepted
aggregate subscriptions of $719,410, $205,760, and $234,160, respectively,
for the purchase of 553,392, 158,277 and 180,123 shares of the Companys
Series A preferred stock, respectively. The shares are non-voting and entitled
to receive annual non-cumulative dividends at a rate of 10% of the original
issue price. The shares were sold at a price per share of $1.30. Such
shares may be converted at any time by the holder into a number of
shares of common stock computed by multiplying the number the number of shares
of Series A preferred stock to be converted by $1.30 and dividing the result
by the common stock price then in effect. At August 15, 2000, no shares had been
converted.
ITEM 2. PLAN OF OPERATION
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During the second quarter of 2000, we at Emagisoft Technologies, Inc. continued
to develop our products and services in anticipation of the introduction of our
Quicksuite Internet Solution. Salaries and software development costs as well as
the build-out of our Internet platform comprised the majority of our operational
costs. Professional fees and travel expenses related to our ongoing financing
activities were substantial.
During the final stage of the development of our products and service models,
marketing and sales expenses are expected to increase substantially. We also
plan to open additional Regional Solution Support Centers to complete our
national market exposure. Our success is contingent on our completing the
development of our products and effectively implementing our sales and marketing
plan. We therefore expect to continue to incur substantial operating losses in
the foreseeable future.
Our capital requirements have been and will continue to be significant, and to
date, have exceeded our cash flow from operations. We have historically
satisfied our cash requirements with private sales of our common stock. We
anticipate the need for additional such private stock sales to satisfy our cash
needs. We believe that the funds generated by these transactions will be
sufficient to fund operations for at least 12 months. In the event not all the
funding is received, we believe we can revise our operating plan to reduce costs
to such a level that the Company will be able to fund operations for the next 12
months.
PAGE 5
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
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There are no legal proceedings pending or threatened of any type or otherwise
known to be contemplated to which the Registrant or any of its properties is
subject.
Item 2. Changes in Securities
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On April 10, 2000 and May 18, 2000, the Company obtained convertible notes in
The aggregate amount of $1,006,000, each with an annual interest rate of 8%.
Principal and accumulated interest is payable through cash or the issuance of
the Companys Series A preferred stock, at the option of the Company at the
earlier of April 09, 2001 or 30 days following the closing of the first
firm commitment, underwritten public offering of the Companys common stock,
raising gross proceeds of at least $15,000,000. In addition, at any time prior
to repayment, the Holders (as defined in the Convertible Note agreements), may
elect to convert the notes to the Companys Series A preferred stock. If Series A
preferred stock is issued to satisfy the notes, the number of shares issued
shall be equal to the sum of principal and accumulated interest divided by a
conversion price of $1.30.
Such Series A preferred shares may be converted at any time by the holder
into a number of shares of common stock computed by multiplying the number of
shares of Series A preferred stock to be converted by $1.30 and dividing the
result by the common stock price then in effect. At August 15, 2000, none of the
notes had been converted to Series A preferred shares.
On July 6, 2000, July 17, 2000, and August 2, 2000, the Company accepted
aggregate subscriptions of $719,410, $205,760, and $234,160, respectively,
for the purchase of 553,392, 158,277 and 180,123 shares of the Companys
Series A preferred stock, respectively. The shares are non-voting and entitled
to receive annual non-cumulative dividends at a rate of 10% of the original
issue price. The shares were sold at a price per share of $1.30. Such
shares may be converted at any time by the holder into a number of
shares of common stock computed by multiplying the number the number of shares
of Series A preferred stock to be converted by $1.30 and dividing the result
by the common stock price then in effect. At August 15, 2000, no shares had been
converted.
Item 3. Defaults Upon Senior Securities
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None
Item 4. Submission of Matters to a Vote of security Holders
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None
Item 5. Other Information
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On June 10, 2000, Form 211 was filed with the NASD by Public Securities, Inc., a
market maker in small cap stocks. Form 211 is an application to initiate
quotations of a companys stock on the OTC Bulletin Board Service. As of August
15, 2000 the Form 211 is still pending approval from the NASD.
Item 6. Exhibits and Reports on Form 8-K
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No Form 8-Ks were filed during the period of this 10QSB
PAGE 6
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EXHIBITS
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The exhibits listed on the accompanying index to exhibits immediately following
are filed as part of, or incorporated by reference into, this Form 10-QSB.
EXHIBIT DESCRIPTION
NO.
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2.1 Share Exchange Agreement between Manatee-American Financial Corp. and
Emagisoft Corporation dated as of October 29, 1999 (2)
2.2 Amendment to Share Exchange Agreement between Manatee-American
Financial Corp. and Emagisoft Corporation dated as of January 28, 2000
(3)
3.1 Original and Amended Articles of Incorporation of the Registrant (1)(2)
3.2 Bylaws of the Registrant (1)
3.3 Amendment to the Articles of Incorporation authorizing the issuance of
5,000,000 shares of 10 percent non-cumulative, Series A Preferred Stock
(5)
3.4 Convertible Notes dated April 10, 2000 (5)
4.1 Specimen - Common Stock Certificate (1)
10.1 Employment Contracts of Key Management of Emagisoft technologies, Inc.
(4)
10.2 Specimen - Confidential Information and Invention Assignment Agreement
for Employees (4)
10.3 Business Consulting Agreement between James S. Neader and Emagisoft
Technologies, Inc. (4)
10.4 Option Agreement for Promotional services between Gary Sheffield and
Emagisoft Technologies, Inc. (4)
10.5 Emagisoft Technologies, Inc. 1999 Employee Stock Option Plan (5)
10.6 Written Consent of 1999 Employee Stock Option Plan (5)
16.1 Letter on Change in Certifying Accountant (2)
21.1 Subsidiaries of the Registrant (4)
21.2 Stock Purchase and Sale between Net Advantage, Inc. (KNA) Emagisoft
Corporation and Interactive Media Solutions, Inc. (4)
23.1 Consent of Rachlin Cohen & Holtz LLP, Independent Auditors (2)
(1) Incorporated by reference to the Registrant's Registration Statement on
Form SB-2, as amended, File No.33-67766-A
(2) Incorporated by reference to Form 8-K of the Registrant dated
October 29, 1999
(3) Incorporated by reference to Form 8-K of the Registrant dated
January 28, 2000
(4) Incorporated by reference to Form 10-KSB of the Registrant dated
March 31, 2000
(5) Incorporated by reference to Form 10-QSB of the Registrant dated May 15,
2000
REPORTS ON FORM 8-K
----------------------
None
SIGNATURES
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 thereunto duly authorized.
EMAGISOFT TECHNOLOGIES, INC.
By: /s/ Kyle E. Jones
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Date Kyle E. Jones, President, Chief Executive Officer
(Sole Director) (Principle Executive Officer)
By: /s/ Peter VanSon
------------------------------------------
Date Peter VanSon, Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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