SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 2001
or
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file No. 0-12641
[OBJECT OMITTED]
IMAGING TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0021693
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
15175 Innovation Drive
San Diego, California 92128
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (858) 613-1300
Check 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 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 |_|
The number of shares outstanding of the registrant's common stock as of December
4, 2001 was 207,986,730.
PAGE
PART I - FINANCIAL INFORMATION
Notes to Consolidated Financial Statements. 2
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION 3
SIGNATURES 7
1
IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 5. RECENT ACCOUNTING PRONOUNCEMENTS
SFAS 141
In July 2001, FASB issued SFAS No. 141, "Business Combinations," which is
effective for business combinations initiated after June 30, 2001. SFAS No. 141
eliminates the pooling of interest method of accounting for business
combinations and requires that all business combinations occurring on or after
July 1, 2001 be accounted for under the purchase method. The Company does not
expect SFAS No. 141 to have a material impact on its financial statements.
SFAS 142
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which is effective for fiscal years beginning after December 15, 2001.
Early adoption is permitted for entities with fiscal years beginning after March
15, 2001, provided that the first interim financial statements have not been
previously issued. SFAS No. 142 addresses how intangible assets that are
acquired individually or with a group of other assets should be accounted for in
the financial statements upon their acquisition and after they have been
initially recognized in the financial statements. SFAS No. 142 requires that
goodwill and intangible assets that have indefinite useful lives not be
amortized but rather be tested at least annually for impairment, and intangible
assets that have finite useful lives be amortized over their useful lives. SFAS
No. 142 provides specific guidance for testing goodwill and intangible assets
that will not be amortized for impairment. In addition, SFAS No. 142 expands the
disclosure requirements about goodwill and other intangible assets in the years
subsequent to their acquisition. Impairment losses for goodwill and
indefinite-life intangible assets that arise due to the initial application of
SFAS No. 142 are to be reported as resulting from a change in accounting
principle. However, goodwill and intangible assets acquired after June 30, 2001
will be subject immediately to the provisions of SFAS No. 142. The Company does
not expect SFAS No. 142 to have a material effect on its financial statements.
Previously, the Company amortized $118 thousand of goodwill.
2
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Acquisition of Shares
Subsequent to the period ended September 30, 2001, on November 12, 2001, the
Company acquired all of the outstanding shares of SourceOne, Inc. from
Neotactix, Inc. for 10,000,000 shares of ITEC common stock. These shares will be
registered by the Company subsequent to filing of audited financial statements
related to the acquisition on Form 8-K within 60 days of this filing.
The acquisition price also included the assumption of $750,000 in payments due
SourceOne from Neotactix. ITEC paid $250,000 in cash at Closing. $200,000 of
these funds were provided by outside investors in the form of a promissory note
convertible into shares of ITEC common stock, the number of which will be
determined by a formula applied to the market price of the shares at the time
that the promissory note is converted. The balance is payable in cash or stock
on a quarterly payment schedule beginning in April 2002. The Company has agreed
to register all shares subsequent to filing of audited financial statements
related to the acquisition on Form 8-K within 60 days of this filing.
The purchase price was determined through analysis of SourceOne's recent,
unaudited financial performance. SourceOne, through September 30, 2001, had
losses of approximately $220 thousand on 6-month revenues of approximately $25
million. The total purchase price was arrived at through negotiations. The
assets of SourceOne consist of cash, accounts receivable, and pre-paid insurance
premiums.
SourceOne is a professional employer organization ("PEO") that provides
comprehensive personnel management services, including benefits and payroll
administration, health and workers' compensation insurance programs, personnel
records management, and employer liability management.
Following are pro forma financial statements reflecting the acquisition of
SourceOne. The information is derived from the audited financial statements of
the Company for the year ended June 30, 2001, and the unaudited financial
statements of SourceOne from inception in April 2001 through September 30, 2001.
The Company will report this transaction, including audited financial statements
of SourceOne, on Form 8-K.
3
PRO FORMA CONSOLIDATED BALANCE SHEETS
in thousands Sept. 30, 2001
ITEC SourceOne Pro forma Pro forma
Unaudited Unaudited (2) Adjustments ITEC (1)
ASSETS
Current assets
Cash 36 431 -- 467
Accounts receivable 574 234 -- 808
Inventories 140 -- -- 140
Prepaid expenses and other 273 195 -- 468
------- --- --- -------
Total current assets 1,023 860 -- 1,883
Goodwill, net 569 -- 531 1,100
Deposits and allowances -- 83 -- 83
Property and equipment, net 152 22 -- 174
------- --- --- -------
Total assets 1,744 965 531 3,240
======= ==== === =======
LIABILITIES AND SHAREHOLDERS'
NET CAPITAL DEFICIENCY
Current liabilities
Borrowings under bank notes payable 4,018 -- -- 4,018
Short term debt 4,606 -- -- 4,606
Accounts payable 5,498 30 -- 5,528
Accrued expenses 4,914 956 -- 5,870
------- --- -- -------
Total current liabilities 19,036 986 -- 20,022
Notes payable -- -- 500 500
------- --- --- -------
Total liabilities 19,036 986 500 20,022
------- --- --- -------
Stockholders' net capital deficiency
Series A preferred stock 420 -- -- 420
Common stock 865 -- 10 875
Common stock warrants 541 -- -- 541
Paid-in capital 69,479 -- -- 69,479
Shareholder loans (105) 200 (200) (105)
Accumulated deficit (88,492) (221) 221 (88,492)
------- --- --- -------
Total shareholders' net capital deficiency (17,292) (21) 31 (17,282)
--- --- -------
1,744 965 531 3,240
======= ==== === =======
(1) Adjusted to reflect the consolidated balance sheets of ITEC and SourceOne
(2) SourceOne Group's inception occurred at the beginning of April 2001
4
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
in thousands, except per share data Three months ended
September 30, 2001
------------------------ Pro forma Pro forma
ITEC SourceOne Adjustments ITEC (1)
-------------------------------------------------
Unaudited Unaudited(2)
Revenues
Sales of products 1,057 -- -- 1.057
Licenses and royalties 21 -- -- 21
PEO services -- 13,412 -- 13,412
------- ------ ------ -------
1,078 13,412 -- 14,490
------- ------ ------ -------
Costs and expenses
Cost of products sold 598 -- -- 598
Cost of PEO services -- 13,155 -- 13,155
Selling, general and administrative 1,413 345 -- 1,758
Research and development 72 -- -- 72
------- ------ ------ -------
2,083 13,500 -- 15,583
------- ------ ------ -------
Loss from operations (1,005) (88) -- (1,093)
------- ------ ------ -------
Other income (expense)
Interest and finance costs (177) -- -- (177)
Other -- -- -- --
------- ------ ------ -------
(177) -- -- (177)
------- ------ ------ -------
Loss before income taxes (1,182) (88) -- (1,270)
Income tax benefit (expense) -- -- -- --
------- ------ ------ -------
Net loss (1,182) (88) -- (1,270)
Preferred stock dividends -- -- -- --
------- ------ ------ -------
Net loss (1,182) (88) -- (1,270)
======= ====== ====== =======
Earnings (loss) per common share
Basic (0.01) (1.76) -- (0.01)
======= ====== ====== =======
Diluted (0.01) (1.76) -- (0.01)
======= ====== ====== =======
Weighted average of common shares 170,984 50 10,000 180,984
======= ====== ====== =======
Weighted average of common shares - diluted 170,984 50 10,000 180,984
======= ====== ====== =======
(1) Adjusted to reflect the consolidated statements of operations of ITEC and
SourceOne
(2) SourceOne Group's inception occurred at the beginning of April 2001
5
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED
Six months
in thousands, except per share data Year ended ended
June 30, 2001 Sept. 30, 2001
------------------------------- Pro forma Pro forma
ITEC SourceOne Adjustments ITEC (1)
--------------------------------------------------------
Audited Unaudited (2)
Revenues
Sales of products 2,897 -- -- 2,897
Licenses and royalties 555 -- -- 555
PEO services -- 25,083 -- 25,083
------- ------ ------ -------
3,452 25,083 -- 28,535
------- ------ ------ -------
Costs and expenses
Cost of products sold 2,742 -- -- 2,742
Cost of PEO services -- 24,605 -- 24,605
Selling, general and administrative 8,720 694 -- 9,414
Research and development 250 -- -- 250
------- ------ ------ -------
11,712 25,299 -- 37,011
------- ------ ------ -------
Loss from operations (8,260) (216) -- (8,476)
------- ------ ------ -------
Other income (expense)
Interest and finance costs (1,628) (1) -- (1,629)
Other -- 4 -- 4
------- ------ ------ -------
(1,628) 3 -- (1,635)
------- ------ ------ -------
Loss before income taxes (9,888) (213) -- (10,101)
Income tax benefit (expense) -- -- -- --
------- ------ ------ -------
Net loss (9,888) (213) -- (10,101)
Preferred stock dividends (21) -- -- (21)
------- ------ ------ -------
Net loss (9,909) (213) -- (10,122)
======= ====== ====== =======
Earnings (loss) per common share
Basic (0.08) (4.26) -- (0.07)
======= ====== ====== =======
Diluted (0.08) (4.26) -- (0.07)
======= ====== ====== =======
Weighted average of common shares 131,488 50 10,000 141,488
======= ====== ====== =======
Weighted average of common shares -
diluted 131,488 50 10,000 141,488
======= ====== ====== =======
(1) Adjusted to reflect the consolidated statements of operations of ITEC and
SourceOne
(2) SourceOne Group's inception occurred at the beginning of April 2001
6
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.
Dated: December 5, 2001
IMAGING TECHNOLOGIES CORPORATION (Registrant)
By: /s/ Brian Bonar
------------------------------
Brian Bonar
Chairman, Chief Executive Officer, and Chief Accounting Officer
7