UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER
IMAGE TECHNOLOGY LABORATORIES, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-53531373
------------------------------- -----------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION)
167 SCHWENK DRIVE, KINGSTON, NEW YORK 12401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(845) 338-3366
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 |_|
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock outstanding as of June 30, 2001 was
11,075,612.
PART I
Item 1. Financial Statements.
Image Technology Laboratories, Inc.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
PAGE
Condensed Balance Sheets
June 30, 2001 (Unaudited) and December 31, 2000 F-2
Condensed Statements of Operations
Six and Three Months Ended June 30, 2001 and 2000 and Period from
January 1, 1998 (Date of Inception) to June 30, 2001 (Unaudited) F-3
Condensed Statement of Changes in Stockholders' Equity
Six Months Ended June 30, 2001 and Period from January
1, 1998 (Date of Inception) to June 30, 2001 (Unaudited) F-4
Condensed Statements of Cash Flows
Six Months Ended June 30, 2001 and 2000 and Period from
January 1, 1998 (Date of Inception) to June 30, 2001 (Unaudited) F-5
Notes to Condensed Financial Statements (Unaudited) F-6/7
F-1
* * *
Image Technology Laboratories, Inc.
(A Development Stage Company)
Condensed Balance Sheets
June 30, 2001 and December 31, 2000
June December
ASSETS 30, 2001 31, 2000
------ ---------- ------------
(Unaudited)
Current assets - cash and cash equivalents $ 466,543 $ 725,105
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 6,911 $ 20,663
Accrued compensation payable to stockholders 341,118 297,945
Notes payable to stockholders 5,200 5,200
----------- -----------
Total liabilities 353,229 323,808
----------- -----------
Stockholders' equity:
Preferred stock, par value $.01 per share; 5,000,000 shares
authorized; 1,500,000 shares issued and outstanding 15,000 15,000
Common stock, par value $.01 per share; 50,000,000 shares
authorized; 11,075,612 and 10,962,862 shares issued and
outstanding 110,756 109,628
Additional paid-in capital 1,501,252 1,451,404
Common stock subscription receivable (10,000) (10,000)
Unearned compensation (225,000) (300,000)
Deficit accumulated in the development stage (1,278,694) (864,735)
----------- -----------
Total stockholders' equity 113,314 401,297
----------- -----------
Totals $ 466,543 $ 725,105
=========== ===========
See Notes to Condensed Financial Statements.
F-2
Image Technology Laboratories, Inc.
(A Development Stage Company)
Condensed Statements of Operations
Six and Three Months Ended June 30, 2001 and 2000
and Period From January 1, 1998
(Date of Inception) to June 30, 2001
(Unaudited)
SIX MONTHS THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- --------------------------
2001 2000 2001 2000 CUMULATIVE
----------- ------------ ------------ ---------- ----------
Revenues $ -- $ -- $ -- $ -- $ --
Research and development
expenses 319,908 300,000 168,144 150,000 953,706
General and administrative
expenses 94,051 96,795 72,752 16,067 324,988
------------ ------------ ------------ ------------ ------------
Net loss $ (413,959) $ (396,795) $ (240,896) $ (166,067) $ (1,278,694)
============ ============ ============ ============ ============
Basic net loss per share $ (.03) $ (.04) $ (.02) $ (.02)
============ ============ ============ ============
Basic weighted average shares
outstanding 12,450,823 9,522,816 12,471,774 9,838,750
============ ============ ============ ============
See Notes to Condensed Financial Statements.
F-3
Image Technology Laboratories, Inc.
(A Development Stage Company)
Condensed Statement of Changes in Stockholders' Equity
Six Months Ended June 30, 2001
and Period from January 1, 1998
(Date of Inception) to June 30, 2001
(Unaudited)
PREFERRED STOCK COMMON STOCK ADDI- COMMON
--------------- ------------ TIONAL STOCK
NUMBER OF NUMBER OF PAID-IN SUBSCRIPTION
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE
------ ------ ------ ------ ------- ----------
Issuance of shares effective as of
January 1, 1998 to founders 7,288,750 $ 72,887 $ (51,637)
Net loss
--------- ------------ ------------
Balance, December 31, 1998 7,288,750 72,887 (51,637)
Net loss
--------- ------------ ------------
Balance, December 31, 1999 7,288,750 72,887 (51,637)
Issuance of preferred stock
in exchange for services 1,500,000 $ 15,000 435,000
Issuance of common stock in
exchange for services 250,000 2,500 72,500
Sales of units of common stock
and warrants through private
placement, net of expenses,
in February 2000 799,729 7,997 171,923
Subscription for units of
common stock and warrants
through private placement 33,333 333 9,667 $ (10,000)
Sales of units of common stock
and warrants through public
offering completed in October
2000, net of expenses 2,591,050 25,911 813,951
Amortization of unearned
compensation
Net loss
------------------------------------------------------------------------------------------
Balance, December 31, 2000 1,500,000 15,000 10,962,862 109,628 1,451,404 (10,000)
Issuance of common stock upon
exercise of warrants 112,750 1,128 49,848
Amortization of unearned
compensation
Net loss
------------------------------------------------------------------------------------------
Balance, June 30, 2001 1,500,000 $ 15,000 11,075,612 $ 110,756 $ 1,501,252 $ (10,000)
==========================================================================================
DEFICIT
ACCUMULATED
IN THE TOTAL
UNEARNED DEVELOPMENT STOCKHOLDERS'
COMPENSATION STAGE EQUITY
---------------------------------------------
Issuance of shares effective as of
January 1, 1998 to founders $ 21,250
Net loss $ (18,407) (18,407)
------------ ------------
Balance, December 31, 1998 (18,407) 2,843
Net loss (733) (733)
------------ ------------
Balance, December 31, 1999 (19,140) 2,110
Issuance of preferred stock
in exchange for services $ (450,000)
Issuance of common stock in 75,000
exchange for services
Sales of units of common stock
and warrants through private
placement, net of expenses,
in February 2000 179,920
Subscription for units of
common stock and warrants
through private placement
Sales of units of common stock
and warrants through public
offering completed in October
2000, net of expenses 839,862
Amortization of unearned
compensation 150,000 150,000
Net loss (845,595) (845,595)
------------------------------------------
Balance, December 31, 2000 (300,000) (864,735) 401,297
Issuance of common stock upon
exercise of warrants 50,976
Amortization of unearned
compensation 75,000 75,000
Net loss (413,959) (413,959)
------------------------------------------
Balance, June 30, 2001 $ (225,000) $ (1,278,694) $ 113,314
==========================================
See Notes to Condensed Financial Statements.
F-4
Image Technology Laboratories, Inc.
(A Development Stage Company)
Condensed Statements of Cash Flows
Six Months Ended June 30, 2001 and 2000
and Period from January 1, 1998
(Date of Inception) to June 30, 2001
(Unaudited)
SIX MONTHS
ENDED JUNE 30,
--------------------------
2001 2000 CUMULATIVE
------------- ----------- ----------
Operating activities:
Net loss $ (413,959) $ (396,795) $(1,278,694)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization of unearned compensation 75,000 75,000 225,000
Common stock issued for services 75,000 75,000
Amortization of capitalized software costs 2,186
Changes in operating assets and liabilities:
Prepaid professional fees (60,000)
Other current assets (45)
Accrued compensation payable to stockholders 43,173 200,000 341,118
Accounts payable and accrued expenses (13,752) 6,911
----------- ----------- -----------
Net cash used in operating activities (309,538) (106,840) (628,479)
----------- ----------- -----------
Investing activities - software costs capitalized (4,966) (2,186)
----------- -----------
Financing activities:
Proceeds from issuance of notes payable to
stockholders 100 5,200
Proceeds from issuance of common stock 50,976 72,226
Net proceeds from private placement of units
of common stock and warrants 185,000 1,024,782
Payments of deferred private placement costs (5,000)
----------- ----------- -----------
Net cash provided by financing activities 50,976 185,100 1,097,208
----------- ----------- -----------
Net increase (decrease) in cash (258,562) 73,294 466,543
Cash, beginning of period 725,105 24 --
----------- ----------- -----------
Cash, end of period $ 466,543 $ 73,318 $ 466,543
=========== =========== ===========
See Notes to Condensed Financial Statements.
F-5
Image Technology Laboratories, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Note 1 - Unaudited interim financial statements:
In the opinion of management, the accompanying unaudited
condensed financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position of Image Technology Laboratories,
Inc. (the "Company") as of June 30, 2001, its results of
operations for the six and three months ended June 30, 2001 and
2000, changes in stockholders' equity for the six months ended
June 30, 2001 and cash flows for the six months ended June 30,
2001 and 2000 and the related cumulative amounts for the period
from January 1, 1998 (date of inception) to June 30, 2001.
Certain terms used herein are defined in the audited financial
statements of the Company as of December 31, 2000 and for the
years ended December 31, 2000 and 1999 and period from January
1, 1998 (date of inception) to December 31, 2000 (the "Audited
Financial Statements") included in the Company's Annual Report
on Form 10-KSB previously filed with the Securities and
Exchange Commission (the "SEC"). Pursuant to rules and
regulations of the SEC, certain information and disclosures
normally included in financial statements prepared in
accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted from
these financial statements unless significant changes have
taken place since the end of the most recent fiscal year.
Accordingly, the accompanying unaudited condensed financial
statements should be read in conjunction with the Audited
Financial Statements and the other information included in the
Form 10-KSB.
The results of operations for the six and three months ended
June 30, 2001 are not necessarily indicative of the results of
operations for the full year ending December 31, 2001.
Note 2 - Earnings (loss) per share:
The Company presents basic earnings (loss) per share and, if
appropriate, diluted earnings per share in accordance with the
provisions of Statement of Financial Accounting Standards No.
128, "Earnings per Share" ("SFAS 128").
The rights of the Company's preferred and common stockholders
are substantially equivalent. The Company has included the
1,500,000 preferred shares from the date of their issuance in
the weighted average number of shares outstanding in the
computation of basic loss per share for the six and three
months ended June 30, 2001 and 2000 in accordance with the "two
class" method of computing earnings (loss) per share set forth
in SFAS 128.
Since the Company had net losses for the six and three months
ended June 30, 2001, the assumed effects of the exercise of
3,000,000 options and 3,561,362 and 1,083,062 warrants
outstanding at June 30, 2001 and 2000, respectively, would have
been anti-dilutive.
F-6
Image Technology Laboratories, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
Note 3 - Exercise of warrants:
During the six months ended June 30, 2001, warrantholders
exercised 58,750 warrants and received 58,750 shares of common
stock at a price of $.50 per share or $29,375 and also
exercised 54,000 warrants and received 54,000 shares of common
stock at a price of $.40 per share or $21,600. As of June 30,
2001, 3,561,362 warrants are outstanding.
* * *
F-7
Item 2. Management's discussion and Analysis of Financial Condition and Results
of operations
OVERVIEW
The following is a discussion of certain factors affecting Image
Technology Laboratories, Inc.'s results of operations, liquidity, and capital
resources. You should read the following discussion and analysis in conjunction
with Image Technology Laboratories, Inc.'s unaudited condensed financial
statements and related notes which are included elsewhere in this filing.
Image Technology Laboratories, Inc. was incorporated on December 5,
1997 and commenced operations on January 1, 1998. We are in the process of
developing software to manage the entire practice of radiology, including the
scheduling of patient examinations, display of images on workstations,
generation of worklists for all members of the enterprise, production and
distribution of illustrated radiologic reports, and billing for the services
provided.
At the heart of the system are software modules referred to as the
WorkLoadExecutive and WorkLoadRouter. This software equitably distributes the
work to be done, and ensures its timely completion. Images are displayed for the
radiologist on a proprietary, multimonitor workstation controlled with a unique
touchscreen controller. The combination of the backoffice software and the
versatile workstation increase the accuracy and efficiency of diagnosis. Such
software is applicable to any setting of a radiology practice, including
hospitals and free standing imaging centers.
RESULTS OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2001 COMPARED
TO THE SIX AND THREE MONTHS ENDED JUNE 30, 2000
REVENUES:
As of June 30, 2001, we had not generated any revenues from
operations and, accordingly, we were still in the development stage. We do not
expect to generate any revenues from our planned operations before the end of
the third quarter of 2001.
RESEARCH AND DEVELOPMENT EXPENSES;
During the six and three months ended June 30, 2001, the Company
incurred research and development expenses of $319,908 and $168,144,
respectively, as compared to $300,000 and $150,000 in the comparable prior
periods. These expenses consisted primarily of compensation to the Company's
three founders under their employment contracts. In addition, $75,000 and
$37,500 of these expenses in both the six and three month period ending June 30,
2001 and 2000, were attributable to compensation associated with the issuance of
the shares of preferred stock to the founders, a non-cash charge.
GENERAL AND ADMINISTRATIVE EXPENSES:
During the Six months ended June 30, 2001, General and Administrative
Expenses was approximately $94,000 as compared to $97,000 during the six months
ended June 30, 2000. Although the General and Administrative expenses are
comparable for the periods, the Company's spending has increased while it is
building its infrastructure. During the first quarter of 2000, the Company
incurred a $75,000 charge for legal services, which was associated with the
issuance of common stock for services, a non-cash charge.
During the Three months ended June 30, 2001, General and
Administrative Expenses increased by approximately $57,000 to approximately
$73,000 from approximately $16,000 for the three months ended June 30, 2000. The
increase was primarily associated with approximately $38,000 more in
professional fees being incurred and as well as $29,000 in compensation during
the three months ended June 30, 2001 as compared to the three months ended June
30, 2000.
NET LOSS:
As a result of the aforementioned, the Company incurred a loss of
approximately $414,000 ($.03 per share) and approximately $241,000 ($.02 per
share) for the six and three months ended June 30, 2001, respectively, as
compared to approximately $397,000 ($.04 per share) and approximately $166,000
for the six and three months ended June 30, 2000. The loss was based on the
basic weighted average shares outstanding of 12,450,823 and 12,471,774 for the
six and three months ended June 30, 2001, respectively, as compared to 9,522,816
and 9,838,750 for the comparable prior period.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE SAFE HARBOR PROVISIONSOF THE
PRIVATE SECURITIES REFORM ACT OF 1995
The statements contained in the section captioned Management's
Discussion and Analysis of Financial Condition and Results of Operations which
are not historical are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
represent the Company's present expectations or beliefs concerning future
events. The Company cautions that such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
uncertainty as to the Company's future profitability, the uncertainty as to the
demand for the Internet virtual communities; increasing competition; the ability
to hire, train, and retain sufficient qualified personnel; the ability to obtain
financing on acceptable terms to finance the Company's growth.
PART II
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. There are no
reportable events relating to this item
.
Item 5. Other Information. There are no reportable events relating to this item
.
Item 6. Exhibits and Reports on Form 8-K.
(A) Not applicable.
(B) None
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 hereunto duly authorized.
IMAGE TECHNOLOGY LABORATORIES,
INC.
Date: Aug 10, 2001 /S/ DAVID RYON
--------------
David Ryon, CEO and President