UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
COMMISSION FILE NUMBER: 1-14190
INTELLIGENT MEDICAL IMAGING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 65-0136178
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
4360 NORTHLAKE BOULEVARD, SUITE 214, PALM BEACH GARDENS, FLORIDA 33410
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 627-0344
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 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 AUGUST 12, 1996, THERE WERE OUTSTANDING 10,802,904 SHARES OF
COMMON STOCK, PAR VALUE $.01, OF THE REGISTRANT.
<PAGE>
INTELLIGENT MEDICAL IMAGING, INC.
QUARTER ENDED JUNE 30, 1996
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
BALANCE SHEETS AS OF JUNE 30, 1996 AND 3
DECEMBER 31, 1995
STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS 4
ENDED JUNE 30, 1996 AND 1995.
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS 5
ENDED JUNE 30, 1996 AND 1995
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 10
SIGNATURES 11
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTELLIGENT MEDICAL IMAGING, INC.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
----------------- ------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $17,973,876 $75,821
Accounts receivable 373,840 182,000
Investments available for sale 12,591,813 -
Inventory 1,962,407 1,655,181
Prepaid expenses 123,366 3,606
----------------- ------------------
Total current assets 33,025,302 1,916,608
Property and equipment, net 1,037,920 686,266
Other assets 60,355 102,456
----------------- ------------------
$34,123,577 $2,705,330
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Current liabilities:
Note payable in default $- $500,000
Accounts payable 525,429 1,034,467
Accrued salaries and benefits 275,106 204,238
Accrued interest payable - 139,478
Other accrued liabilities 90,699 105,000
Due to officers and related party - 105,000
Customer advance - 150,000
Current portion of capitalized lease obligation 36,200 36,200
Current portion of long-term notes payable - 4,000
Current portion of long-term notes payable to related parties - 507,926
----------------- ------------------
Total current liabilities 927,434 2,786,309
Capitalized lease obligation 78,048 94,114
Long-term notes payable - 156,000
Long-term notes payable to related parties - 131,032
Due to officers and related party - 762,897
Commintments and contingencies
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Preferred stock, $.01 par value-authorized 2,000,000 shares;
no shares issued or outstanding - -
Common stock, $.01 par value-authorized 30,000,000 shares;
issued and outstanding, 10,799,905 shares at June 30, 1996
and 6,843,246 at December 31, 1995 107,999 68,432
Additional paid-in capital 42,370,973 7,656,290
Deferred compensation (368,130) (401,357)
3
<PAGE>
Net unrealized investment gains and (losses) (4,073)
Accumulated deficit (8,988,674) (8,548,387)
----------------- ------------------
Total stockholders' equity (capital deficiency) 33,118,095 (1,225,022)
----------------- ------------------
$34,123,577 $2,705,330
================= ==================
</TABLE>
See accompanying notes
4
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT MEDICAL IMAGING, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Product sales: $889,879 $- $3,066,082 $-
Cost of sales 485,205 - 1,709,411 -
----------------------------------------------------------------------
Gross margin 404,674 - 1,356,671 -
Operating expenses:
Selling, general and 712,118 453,230 1,256,457 980,674
administrative
Research and development 645,012 295,724 897,689 710,144
----------------------------------------------------------------------
Total operating expenses 1,357,130 748,954 2,154,146 1,690,818
----------------------------------------------------------------------
Loss from operations (952,456) (748,954) (797,475) (1,690,818)
Other income (expense):
Other - (5,963) 76,475 (5,963)
Investment and interest income 393,650 4,064 410,682 4,064
Interest expense (25,598) (2,222) (129,969) (70,171)
----------------------------------------------------------------------
Other income (expense) 368,052 (4,121) 357,187 (72,070)
Net loss $(584,404) $(753,075) $(440,287) $(1,762,888)
======================================================================
Loss per common share $(0.05) $(0.11) $(0.05) $(0.26)
======================================================================
Weighted average common
shares outstanding 10,687,173 6,858,266 9,000,278 6,851,471
======================================================================
</TABLE>
See accompanying notes
5
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT MEDICAL IMAGING, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1995
------------------ -----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(440,287) $(1,762,888)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 109,054 84,842
Services exchanged for common stock 33,227 63,666
Changes in operating assets and liabilities
Accounts receivable (191,840) -
Inventory (454,322) (709,815)
Prepaid expenses (119,760) (5,369)
Other assets 42,101 (42,367)
Accounts payable (509,038) (98,760)
Accrued salaries and benefits 70,868 (56,639)
Accrued interest payable (139,478) (39,100)
Other accrued liabilities (14,301) -
Due to related party (867,897) -
Customer advance (150,000) -
------------------ -----------------
Net cash used in operating activities (2,631,673) (2,566,430)
INVESTING ACTIVITIES
Purchases of property and equipment (313,612) (118,760)
Purchase of investments available for sale (12,591,813) -
------------------ -----------------
Net cash used in investing activities (12,905,425) (118,760)
FINANCING ACTIVITIES
Proceeds from long-term notes payable 60,000
Repayment of long-term notes payable and
capitalized lease obligations (736,066) (233,874)
Repayments of notes payable to related parties (338,958) (139,225)
Advances from factor 2,216,614 -
Repayments to factor (2,216,614) -
Proceeds from sale of common stock 34,450,177 2,363,033
------------------ -----------------
Net cash provided by financing activities 33,435,153 1,989,934
Net increase (decrease) in cash and cash
equivalents 17,898,055 (695,256)
Cash and cash equivalents at beginning of period 75,821 1,494,481
------------------ -----------------
Cash and cash equivalents at end of period $17,973,876 $799,225
================== =================
SUPPLEMENTAL INFORMATION
Interest paid $236,602 $37,702
================== =================
Notes payable and notes payable to related
6
<PAGE>
parties converted to common stock $300,000 $930,000
================== =================
Inventory transferred to property and equipment $147,096 $-
================== =================
</TABLE>
See accompanying notes
7
<PAGE>
INTELLIGENT MEDICAL IMAGING, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. These financial statements, footnotes and discussions should be read
in conjunction with audited financial statements and related footnotes in the
registration statement on Form S-1 filed by Intelligent Medical Imaging, Inc.
(the "Company") with the Securities and Exchange Commission. Operating results
for the three- and six-month periods ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
2. INVESTMENTS AVAILABLE FOR SALE
Investments available for sale consist of asset backed securities,
corporate bonds and U.S. Government agency bonds. Management determines the
proper classifications of investments in obligations with fixed maturities and
marketable equity securities at the time of purchase and reevaluates such
designations as of each balance sheet date. At June 30, 1996, all securities
were designated as available for sale. Accordingly, these securities are stated
at fair market value, with unrealized gains and losses reported in a separate
component of stockholders' equity. Realized gains and losses on sales of
investments, as determined on a specific identification basis, are included in
the statements of operations.
Investment securities available for sale at June 30, 1996, are summarized as
follows:
<TABLE>
<CAPTION>
Unrealized Market
Cost Gains (Losses) Value
----------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Securities
maturing in 1 year or less 1,556,621.56 (2,926.45) 1,555,811.56
Accrued interest-U.S. Government bonds 1,828.81
Corporate bonds
maturing in 1 year or less 6,978,682.07 (5,379.47) 6,970,302.60
Accrued interest-Corporate bonds 132,591.70
Asset backed securities
maturing in 2 year or less 3,926,961.58 4,233.16 3,931,277.90
----------------------------------------------------------
Total investments available for sale 12,462,265.21 (4,072.76) 12,591,812.57
==========================================================
</TABLE>
3. INVENTORY
The components of inventory consist of the following:
June 30, December 31,
1996 1995
---------------- -----------------
Raw materials $1,247,796 $817,064
Work in process 519,729 838,117
Finished goods 194,882 -
---------------- -----------------
$1,962,407 $1,655,181
================ =================
8
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
June 30, December 31,
1996 1995
---------------- -----------------
Furniture, fixtures and office
equipment $252,334 $157,617
Computer and development
equipment 1,225,574 859,583
---------------- -----------------
1,477,908 1,017,200
Accumulated depreciation (439,988) (330,934)
---------------- -----------------
$1,037,920 $686,266
================ =================
5. INITIAL PUBLIC OFFERING
On March 27, 1996 the Company completed an initial public offering of
3,450,000 shares of common stock at a price of $11.00 per share. The net
proceeds to the Company from the sale of such common stock were approximately
$34,000,000 after deducting underwriting commissions of approximately $2,700,000
and offering expenses of approximately $900,000, and are to be used primarily
for research and development of Micro21 System enhancements and additional
procedures, repayment of accrued liabilities and existing and anticipated
indebtedness and working capital and general corporate purposes. Prior to June
30, 1996, the Company repaid $2,216,614 advanced under the Company's factoring
arrangement, paid $450,000 of accrued bonuses to Messrs. Tyce Fitzmorris,
President, CEO and Chairman of the Company, Eric Espenhahn, Vice President -
Product Development and Jaime Pereira, Vice President - Engineering; $868,711 of
notes payable to related parties and accrued interest, and $650,621 of notes
payable and accrued interest.
On January 16, 1996, Intelligent Medical Imaging, Inc. ("IMI Delaware") was
formed for the purpose of changing the Company's state of incorporation from
Florida to Delaware. Also on January 16, 1996, the Board of Directors declared a
three-for-one stock split, effective upon the merger described below, on IMI
Delaware's common stock in the form of a 200 percent stock dividend, payable
January 18, 1996, to shareholders of record on January 18, 1996. Effective
January 17, 1996, IMI Florida was merged into IMI Delaware. IMI Delaware has
30,000,000 shares of $.01 par value common stock and 2,000,000 shares of $.01
par value preferred stock authorized for issuance. IMI Delaware and its
predecessor IMI Florida are referred to herein as the "Company."
The financial statements have been restated to reflect the newly authorized
shares and to give retroactive recognition to the stock split in prior periods
by reclassifying from additional paid-in capital to common stock, the par value
of the additional shares arising from the split.
6. NOTES PAYABLE
As of March 31, 1996, the Company was no longer in default on its note
payable to XL Vision. On April 1, 1996, $348,525 was paid to XL Vision in
settlement of the full amount outstanding.
7. COMMITMENTS AND CONTINGENCIES
In August 1995, the Company entered into an exclusive sales and
distribution agreement with Coulter (the "Coulter Agreement") which was amended
in January 1996. Through March 31, 1996, Coulter was committed to purchase a
certain minimum number of Micro21 Systems for approximately $4,000,000 of which
$1,400,000 was earned by the Company in 1995 and the balance was earned during
1996. Subsequent to March 31, 1996, the Company is committed to deliver a
certain minimum number of systems at a specified sales price through August 31,
2000, provided that the Micro21 System meets "market requirements," as to the
first contract year ending August 31, 1996 and subject to modification by mutual
agreement due to market conditions for subsequent periods through August 31,
2000.
9
<PAGE>
The Coulter Agreement specifies that Coulter will place these systems with
end users. The Company and Coulter will share revenue earned from end users
after Coulter receives certain minimum payments. To date, Coulter has placed 18
Micro21 Systems with end users and four of these systems have been purchased or
leased from Coulter by end users.
Under the terms of the Coulter Agreement, the Company has agreed to license
its proprietary software and technology to Coulter. Coulter also has rights to
negotiate distribution rights for any new in vitro diagnostic products the
Company develops including any new applications for the Micro21 System.
The Company can terminate the Coulter Agreement in the event that Coulter
fails to make the minimum required purchases, and Coulter can terminate the
Agreement if the Micro21 System fails to meet "market requirements." The parties
can each terminate the Coulter Agreement under certain other circumstances,
including the breach by the other party of the Coulter Agreement.
Under the Coulter Agreement, Coulter has a right of first offer in the
event that the Company intends to engage in a sale of the Company or certain
other specified transactions involving a change in control of the Company.
Coulter also has the right to match any unsolicited offer by a third party to
purchase the Company or engage in certain other transactions involving a change
in control of the Company. The Coulter Agreement further provides that the
Company is required to indemnify Coulter for any injury to person or property
resulting from the design or manufacture of the Micro21 System. The Company is
required to maintain product liability insurance with a minimum coverage of $5
million with respect to any such injury.
On December 28, 1995, the Company entered into a factoring agreement with a
commercial factoring company (the "Factor") in which the Factor agreed to
purchase a minimum of $3,000,000 of the Company's Coulter receivables, with
recourse, over the six-month term of the agreement for 80% of the net amount of
the Coulter receivables. The processing fee charged by the Factor was 1.15% of
the face amount of each invoice for each 15-day period that the invoice remained
unpaid. The factoring agreement was terminated July 6, 1996. Through June 30,
1996, the Company received advances of approximately $2,216,000 on approximately
$2,775,000 of Coulter accounts receivable. These advances were repaid prior to
June 30, 1996. At December 31, 1995, no receivables were purchased by the Factor
under this Agreement.
The Company has been notified that its product may infringe patents issued
to two other parties. No infringement claim has been asserted against the
Company in one of these matters; however, the Company is a party to legal
proceedings regarding the other matter. In management's opinion, based upon
knowledge of facts and the advice of patent counsel, the ultimate resolution of
the infringement claims described above are not expected to have a material
adverse effect on the Company's financial condition or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company has developed and is marketing the Micro21(TM) System, an
intelligent, automated microscope system, for diagnostic use in hospital,
commercial reference and physician group laboratories. The Micro21 System is
designed to automate a broad range of manual microscopic procedures, potentially
enabling the clinical laboratory to
10
<PAGE>
reduce costs and exposure to liabilities, enhance analytical accuracy and
consistency, increase the productivity of medical technologists and improve
patient care.
In August 1995, the Company entered into an exclusive worldwide
distribution agreement (the "Coulter Agreement") with Coulter Corporation
("Coulter") for sales, marketing and service of the Micro21 System. Coulter is a
leading producer of automated laboratory equipment and the world's largest
provider of cellular analysis systems.
To date, the Micro21 System has been placed with 18 hospital laboratories
(none for longer than one year) in connection with the testing of the Micro21
System for evaluation pursuant to issued purchase orders. To date, four of these
systems had been purchased or leased by end users.
The Company has concentrated its efforts primarily on the development of
the Micro21 System and is dependent on the successful commercialization of this
product to generate revenues. The success of the Micro21 System is dependent
upon many variables, including its acceptance as a reliable, accurate and
cost-effective tool for microscopic analysis as well as on the Company's
manufacturing capacity and the Company's and Coulter's marketing efforts. The
Company is dependent on its relationship with Coulter for a variety of reasons
and termination of the Coulter Agreement would have a material adverse effect on
the Company.
RESULTS OF OPERATIONS
Product sales were $889,879 for the second quarter of 1996 compared with $0
for the second quarter of 1995 an increase of $889,879. Product sales were
$3,066,082 for the six months ended June 30, 1996 compared to $0 for the six
months ended June 30, 1995, an increase of $3,066,082. The increase was
primarily due to sales of the Micro21 System to Coulter. The Company began
selling the Micro21 System to Coulter in August 1995.
Cost of sales was $485,205 for the second quarter of 1996 compared with $0
for the second quarter of 1995 an increase of $485,205. Cost of sales was
$1,709,411 for the six months ended June 30, 1996 compared to $0 for the six
months ended June 30, 1995, an increase of $1,709,411. The increase was
primarily due to sales of the Micro21 System to Coulter. The Company began
manufacturing the Micro21 System for Coulter in August 1995.
Selling, general and administrative expenses were $712,118 for the second
quarter of 1996 compared with $453,230 for the second quarter of 1995 an
increase of $258,888 or 57%. Selling, general and administrative expenses have
continued to increase because of the continued growth of the Company and the
need for additional personnel. Selling, general and administrative expenses were
$1,256,457 for the six months ended June 30, 1996 compared to $980,674 for the
six months ended June 30, 1995, an increase of $275,783 or 28%. The increase was
primarily due to increases in staffing and business development expenses.
Research and development expenses were $645,012 for the second quarter of
1996 compared with $295,724 for the second quarter of 1995 an increase of
$349,288 or 118%. Research and development expenses have increased due to
resources being utilized in the development of new procedures, technologies and
products. Research and development expenses were $897,689 for the six months
ended June 30, 1996 compared to $710,144 for the six months ended June 30, 1995,
an increase of $187,545 or 26%. The increase was primarily due to the Company's
development of new procedures and new products for the Micro21. Research and
development expenses are expected to increase as new procedures, technologies
and products are developed.
Other income was $0 for the second quarter of 1996 compared to an expense
of $5,963 for the second quarter of 1995. Other income was $76,475 for the six
months ended June 30, 1996 compared to an expense of $5,963 for the six months
ended June 30, 1995, an increase of $82,438. The increase was due to a gain
recognized in connection with a discount negotiated on a note payable to a third
party.
Interest income was $393,650 for the second quarter of 1996 compared with
$4,064 for the second quarter of 1995 an increase of $389,586. Interest income
was $410,682 for the six months ended June 30, 1996 compared to $4,064 for the
six months ended June 30, 1995, an increase of $406,618. The increase was
primarily due to interest earned on the proceeds of the Company's initial public
offering which closed on March 27, 1996.
11
<PAGE>
Interest expense was $25,598 for the second quarter of 1996 compared with
$2,222 for the second quarter of 1995 an increase of $23,376. Interest expense
was $129,969 for the six months ended June 30, 1996 compared to $70,171 for the
six months ended June 30, 1995, an increase of $59,798. The increase was
primarily due to interest incurred on advances received from a factor prior to
completion of the initial public offering, and to satisfy the terms and
conditions as specified in the factoring agreement.
LIQUIDITY AND CAPITAL RESOURCES
On March 27, 1996, the Company completed an initial public offering,
selling 3,450,000 shares of common stock at $11.00 per share, resulting in
approximately $34,000,000 in net proceeds to the Company. In the six months
ended June 30, 1996, cash, cash equivalents and investments increased
$30,489,868, primarily due to net cash provided by proceeds from the initial
public offering. At June 30, 1996 the Company had paid all long term notes
payable and all notes payable to related parties.
In May 1996 the Company employed investment advisors to manage the cash
assets of the Company subject to specific restrictions and limitations. The
advisors are allowed to buy, sell, exchange and otherwise trade in any stocks,
bonds and other securities consistent with the Company's objectives. The
specific restrictions and limitations limit the advisors to investments
characterized as investment grade only and of maturities no longer than two
years. These investments are classified as available for sale.
Cash and cash equivalents consist of cash and liquid investments with a
maturity of 90 days or less. Investments available for sale consist of asset
backed securities, corporate bonds and U.S. Government agency bonds. Management
determines the appropriate classification of debt securities at the time of
purchase and re-evaluates such designation as of each balance sheet date.
Unrealized holding gains and losses on securities classified as available for
sale are reported as a separate component of shareholders' equity.
Net cash used in operating activities of $2,631,673 was primarily due to
increasing inventories, reduction of accounts payable, payments on notes payable
and payments on debt and notes payable to related parties
Net cash used in investing activities of $12,905,425 was primarily the
result of purchases of additional computer and development equipment and
leasehold improvements to the corporate offices and purchases of investments.
Net cash provided by financing activities of $33,435,153 was primarily the
result of proceeds from the sale of common stock in the initial public offering.
Cash was used to pay notes payable and accrued interest.
At June 30, 1996 the Company had a net operating loss carryforward ("NOL")
of approximately $5,600,000 available for income tax purposes that expire in the
year 2010. Section 382 of the Internal Revenue Code, as amended ("Section 382"),
limits the amount of federal taxable income that may be offset by pre-existing
NOLs of a corporation following a change in ownership ("Ownership Change") of
the corporation. A portion of the Company's NOLs (approximately $3,000,000) are
currently subject to these limitations because the Company experienced an
Ownership Change on June 30, 1995 due to the issuance of common stock. Of the
Company's limited NOLs, no more than $500,000 per year may be utilized through
1999. Subsequent to 1999, such amounts will no longer be limited by Section 382.
The Company believes that the net proceeds of the initial public offering,
together with projected cash flow from operations, will be sufficient to meet
the Company's liquidity and capital requirements for at least two years,
although no assurance exists that the Company will not require additional
capital prior to the end of such period.
---------------------------------------------
Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company cautions
that a number of important factors could cause the Company's actual results for
1996 and beyond to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company.
12
<PAGE>
Forward-looking statements involve a number of risks and uncertainties
including, but not limited to, uncertainty of widespread market acceptance of
the Micro21 System, uncertainty of pricing, the Company's dependency on its
relationship with Coulter for sales, marketing and service of its products,
reliance on certain single source suppliers; unanticipated fluctuations in
operating results; the Company's ability to protect its trade secrets and
proprietary technology (including the outcome of the Company's litigation with
International Remote Imaging Systems, Inc.); competition and technical change in
the industry in which the Company is engaged; product liability and the ability
of the Company to obtain adequate insurance therefor; uncertainty of third party
reimbursement and health care reform policies; and government regulation. The
Company cannot assure that it will be able to anticipate or respond timely to
changes in any of the factors listed above, which could adversely affect the
operating results in one or more fiscal quarters. Results of operations in any
past period should not be considered indicative of the results to be expected
for future periods. Fluctuations in operating results may also result in
fluctuations in the price of the Company's common stock.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
LIST OF EXHIBITS DESCRIPTION
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
14
<PAGE>
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.
INTELLIGENT MEDICAL IMAGING, INC.
Date: August 14, 1996 By: /S/ TYCE M. FITZMORRIS
----------------------
Tyce M. Fitzmorris, President and Chief
Executive Officer
Date: August 14, 1996 By: /S/ GENE M. COCHRAN
----------------------
Gene M. Cochran, Chief Financial Officer
15
<TABLE>
<CAPTION>
EXHIBIT 11
INTELLIGENT MEDICAL IMAGING, INC.
COMPUTATION OF NET LOSS PER SHARE
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $(584,404) $(753,075) $(440,287) $(1,762,888)
======================================================================
Weighted average common shares outstanding 10,687,175 4,346,958 9,000,278 4,343,163
Shares related to Staff Accounting Bulletin 83:
Stock options and warrants granted 468,345 - 468,345
Issuance of common stock 2,039,963 - 2,039,963
----------------------------------------------------------------------
Average common shares, outstanding 10,687,175 6,855,266 9,000,278 6,851,471
======================================================================
Per share amounts $(0.05) $(0.11) $(0.05) $(0.26)
======================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 17,973,876
<SECURITIES> 12,591,813
<RECEIVABLES> 373,840
<ALLOWANCES> 0
<INVENTORY> 1,962,407
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0
0
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</TABLE>
