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 September 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 September 30, 2000: 13,031,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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 9/30/2000 12/31/1999
------ (audited)
------------ -----------
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . $ 644,630 $ 995,236
Cash in escrow . . . . . . . . . . . . . . . . - 80,000
Accounts receivable . . . . . . . . . . . . . 11,486 38,694
Due from shareholder . . . . . . . . . . . . . 0 7,611
Prepaid Expenses . . . . . . . . . . . . . . . 107,585 65,883
------------ -----------
Total current assets . . . . . . . . . . . . . 763,701 1,187,424
PROPERTY AND EQUIPMENT:
Furniture and fixtures . . . . . . . . . . . . 85,274 75,376
Computer equipment . . . . . . . . . . . . . . 593,366 461,747
Leasehold Improvements . . . . . . . . . . . . 6,655 3,323
Software . . . . . . . . . . . . . . . . . . . 62,523 54,946
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747,818 595,392
Less: Accumulated depreciation . . . . . . . . (316,215) (202,887)
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Property and equipment, net. . . . . . . . . . 431,603 392,505
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OTHER ASSETS:
Software development costs . . . . . . . . . . 955,641 226,954
Goodwill, net of accumulated amortization. . . 146,887 175,625
Other. . . . . . . . . . . . . . . . . . . . . 34,887 4,225
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Total other assets . . . . . . . . . . . . . . 1,137,415 406,804
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Total assets . . . . . . . . . . . . . . . . . $ 2,332,719 $ 1,986,733
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . $ 9,493 $ 73,546
Accrued liabilities. . . . . . . . . . . . . . 328,714 248,893
Billings in excess of costs. . . . . . . . . . 32,629 4,908
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Total current liabilities. . . . . . . . . . . 370,836 327,347
LONG-TERM LIABILITIES
Convertible notes payable. . . . . . . . . . . 1,006,000 -
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Total liabilities . . . . . . . . . . . 1,376,836 327,347
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STOCKHOLDERS' EQUITY:
Series A preferred, $.0001 par, 5,000,000
shares authorized, 1,575,865 Shares
issued and outstanding . . . . . . . . . . . 158 -
Common stock, $.0001 par value:
20,000,000 shares authorized,
13,031,000 issued and outstanding. . . . . . 1,303 1,317
Additional paid-in capital . . . . . . . . . . 4,545,672 2,681,581
Accumulated deficit. . . . . . . . . . . . . . (3,591,250) (1,023,512)
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Total stockholders' equity . . . . . . . . . . 955,883 1,659,386
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Total liabilities and stockholders' equity . $ 2,332,719 $ 1,986,733
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</TABLE>
Emagisoft Technologies - Consolidated
Income Statement
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Web site design. . . . . . . . . . . . . $ 7,905 $ 27,809 $ 69,587 $ 27,809
Hardware and software sales and support. 24,402 26,166 32,993 45,748
Internet provider services . . . . . . . 9,516 18,661 32,586 89,866
-------- -------- --------- ---------
Total Revenue . . . . . . . . . . . . 41,823 72,636 135,166 163,423
-------- -------- --------- ---------
DIRECT COSTS . . . . . . . . . . . . . . 40,042 20,477 83,573 44,266
-------- -------- --------- ---------
Gross Profit . . . . . . . . . . . . . . 1,781 52,159 51,593 119,157
-------- -------- --------- ---------
OPERATING COSTS AND EXPENSES:
Marketing & Sales . . . . . . . . . . 16,160 4,727 33,750 4,727
General and administrative . . . . . . 875,575 342,475 2,361,186 417,106
Depreciation and amortization . . . . 62,754 38,375 183,681 99,862
Total Operating Expenses . . . . . . . 954,489 385,577 2,578,617 521,695
OTHER INCOME:
Interest (income)/expense, net . . . . 33,292 (3,054) 27,663 (3,054)
LOSS BEFORE PROVISION FOR INCOME TAXES (986,000)(330,364) (2,554,687)(399,484)
PROVISION FOR INCOME TAXES . . . . . . . - - - -
-------- -------- --------- ---------
NET LOSS . . . . . . . . . . . . . . . .$(986,000)$(330,364)$(2,554,687)$(399,484)
-------- -------- --------- ----------
NET LOSS PER SHARE - BASIC AND DILUTED . $(0.08) $(0.03) $(0.19) $(0.04)
======== ======== ========= ==========
</TABLE>
Emagisoft Technologies - Consolidated
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
2000 1999
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<S> <C> <C>
Cash Flow used in Operating Activities:. . . . . . .$(2,292,673) $ (511,779)
Cash Flow used in Investing Activities: . . . . (930,793) (333,440)
Cash Flow from Financing Activities: . . . . . . . . 2,872,860 1,430,075
(Decrease)/Increase in Cash . . . . . . . . . . . . (350,606) 584,856
Cash, beginning . . . . . . . . . . . . . . . . . . 995,236 33,147
------------ ------------
Cash, ending . . . . . . . . . . . . . . . . . . . .$ 644,630 $ 618,003
============ ============
</TABLE>
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 design company. 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 debt
financing. 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. The Company has been advised by its
independent public accountants that should this situation remain unresolved at
year-end, the auditors report on those financial statements will contain a
going-concern modification.
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 13,031,000 and 10,000,000 at 9/30/00 and
9/30/99, 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
ITEM 2. PLAN OF OPERATION
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During the third 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 and international 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 stock and debt
financing. We anticipate the need for additional such private stock sales and or
debt financing 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.
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 July 6, 2000, July 14, 2000, July 27, 2000 and August 29, 2000, the
Company accepted aggregate subscriptions of $719,410, $205,760, $234,160,
And $43,000 respectively, for the purchase of 553,392, 158,277, 180,123 and
33,077 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 November 05, 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
November 05, 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
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
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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.
11/5/2000 By: /s/ Kyle E. Jones
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Date Kyle E. Jones, President, Chief Executive Officer
(Director) (Principle Executive Officer)
11/5/2000 By: /s/ Peter VanSon
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Date Peter VanSon, Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
