-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rj8kihoi8LXfNVl/lVdNy3iiWknd+u1kqWlTZ+NDWti6YOoV98gy+tF99fkAcElT BNgdSpz5uIU9THLgMnKu6g== 0001013993-00-000050.txt : 20000515 0001013993-00-000050.hdr.sgml : 20000515 ACCESSION NUMBER: 0001013993-00-000050 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTELLECTUAL TECHNOLOGY INC CENTRAL INDEX KEY: 0000859914 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 841130227 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-29138 FILM NUMBER: 629215 BUSINESS ADDRESS: STREET 1: 10639 ROSELLE STREET STREET 2: SUITE B CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 619-552-00 MAIL ADDRESS: STREET 1: 303 EAST 17TH AVE STREET 2: STE 800 CITY: DENVER STATE: CO ZIP: 80203 FORMER COMPANY: FORMER CONFORMED NAME: BRIDGESTONE CORP DATE OF NAME CHANGE: 19930328 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2000 Commission file number: 0-29138 INTELLECTUAL TECHNOLOGY, INC. (Exact name of small business issuer as specified in its charter) Delaware 84-1130227 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization ) 1945 Camino Vida Roble, Suite O, Carlsbad, California 92008 (Address of principal executive offices) (760) 929-9789 (Issuer's telephone number) Check whether the issuer (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 May 1, 2000, 10,000,000 shares of common stock, par value $0.00001 per share, were outstanding. Transitional Small Business Disclosure Format (check one): Yes --- No -X- INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheet, March 31, 2000 1 Statements of Operations and Accumulated Deficit (Unaudited) for the three month periods ended March 31, 2000 and 1999 2 Statements of Cash Flows (Unaudited) for the three months ended March 31, 2000 and 1999 3 Notes to financial statements 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 5-6 PART II. OTHER INFORMATION 7 Signatures 8 Intellectual Technology, Inc. Balance Sheet March 31, 2000 (unaudited) ASSETS Current Assets Cash and cash equivalents $ 596,236 Certificate of deposit 113,232 Accounts receivable 736,486 Inventory 288,187 Deferred tax asset 10,000 Prepaid expenses 220,034 ------- Total current assets 1,964,175 Property & Equipment Contract equipment 5,999,070 Equipment - non-contract, office, furniture and improvements 53,275 --------- 6,052,345 Less: Accumulated depreciation 4,970,510 --------- 1,081,835 Other Assets Patents and organization costs, net of accumulated amortization 251,615 Deferred tax asset 56,700 Due from related party 37,212 Other non-current assets 56,759 Total assets $ 3,448,296 LIABILITIES AND STOCKHOLERS' EQUITY Current Liabilities Accounts payable $ 217,569 Income taxes payable 39,148 Accrued expenses 68,025 Notes payable 1,312,173 Due to related party 18,516 Accrued interest payable 7,624 Total current liabilities 1,663,055 Other Liabilities Long-term debt, net of current portion 557,590 Due to related party - long term 143,308 700,898 Stockholders' Equity Preferred stock, $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding - Common stock, $0.00001 par value, 20,000,000 shares authorized, 10,000,000 shares issued and outstanding 100 Additional paid-in capital 1,186,250 Accumulated deficit (102,007) 1,084,343 Total liabilities and stockholders' equity $ 3,448,296 The accompanying notes are an integral part of the financial statements. 1 Intellectual Technology, Inc. STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (unaudited) For the three months ended March 31, ---------------------- 2000 1999 ------------ ------------- REVENUES Sales, net $ 1,942,360 $ 1,796,855 COST OF REVENUES Depreciation and amortization 457,762 608,036 Material costs 348,658 252,495 Maintenance and other cost of sales 268,987 185,022 ------------ ------------- Total cost of revenues 1,075,407 1,045,553 ------------ ------------- Gross profit 866,953 751,302 OPERATING EXPENSES Selling, general and administrative 301,907 281,640 Research and development 28,700 131,018 Depreciation and amortization 110,224 76,151 ------------ ------------- Total operating expenses 440,831 488,809 ------------ ------------- Income from operations 426,122 262,493 OTHER INCOME (EXPENSE) Interest income 6,105 241 Interest expense (71,038) (205,213) ------------ ------------- Net income before income taxes 361,189 57,521 Income taxes (138,933) (5,759) ------------ ------------- NET INCOME 222,256 51,762 Accumulated deficit Balance, beginning of period (324,263) (2,675,295) ------------ ------------- Balance, end of period $ (102,007) $ (2,623,533) ============ ============= INCOME PER SHARE - BASIC $ 0.02 $ 0.01 ============ ============= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 10,000,000 10,000,000 ============ ============= The accompanying notes are an integral part of the financial statements. 2 Intellectual Technology, Inc. STATEMENTS OF CASH FLOWS (Unaudited) For the three months ended March 31, ---------------------- 2000 1999 ------------ ------------- CASH FLOWS FROM OPERATING ACTIVITIES $ 502,767 $ (187,237) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-contract equipment (1,067) (6,617) Investment in contract costs and equipment (1,215) (355,045) ------------ ------------- Net cash used by investing activities (2,282) (361,662) CASH FLOWS FROM FINANCING ACTIVITES New borrowings - 974,630 Debt repayments (409,972) (448,547) Loan fees - (102,000) ------------ ------------- Net cash provided (used) by financing activities (409,972) 424,083 ------------ ------------- NET INCREASE (DECREASE) IN CASH 90,513 (124,816) CASH AND CASH EQUIVALENTS, beginning of period 505,723 184,757 ------------ ------------- CASH AND CASH EQUIVALENTS, end of period $ 596,236 $ 59,941 ============ ============= The accompanying notes are an integral part of the financial statements. 3 Intellectual Technology, Inc. NOTES TO FINANCIAL STATEMENTS (unaudited) 1. Management's representation of interim financial information The accompanying financial statements have been prepared by Intellectual Technology, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments which, in the opinion of management, as necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. These financial statements should be read in conjunction with the audited financial statements at December 31, 1999. 2. Significant post-quarter financing In April 2000, the Company obtained a $100,000 line of credit at prime plus 2%. Any borrowings under this agreement will become due in April 2001. 4 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements contained in this report, including statements concerning the Company's future cash and financing requirements, and other statements contained herein regarding matters that are not historical facts, are forward looking statements; actual results may differ materially from those anticipated. Plan of Operations The Company designs, manufactures, and leases systems for the automated preparation and dispensing of motor vehicle registration forms and license plate decals. Effective November 1, 1996, the Company commenced a lease contract with the State of Indiana. Prior to that date, the Company was engaged principally in research and development of its products and generated only limited operating revenues. Subsequently, the Company has entered into contracts to supply equipment and material to the State of Maryland, and has entered into a five year contract with South Dakota. Liquidity and Capital Resources The following is a summary of the Company's cash flows from operating, investing, and financing activities: Three months ended March 31, (rounded) 2000 1999 Operating Activities $ 503,000 $ (187,000) Investing Activities (2,000) (362,000) Financing Activities (410,000) 424,000 Net effect on cash $ 91,000 $ (125,000) Cash flows provided by operations increased from $(187,000) in 1999 to $503,000, an increase of $690,000 due to (1) timing in the collection of accounts receivable $866,000; (2) acceleration of payment of accounts payable ($334,000); (3) reduction in inventory levels $223,000 and (4) other items netting to a decrease in cash flows of ($65,000). The Company is committed to spend another $460,000 by the end of the year to complete installation of contract equipment. Under the Company's current financing arrangement, receivables from all contracts have been assigned to the note holder. The amount of monthly cash flow from the contracts is remitted net to the Company after debt service is satisfied. Management projects that this arrangement will continue to generate positive monthly cash flows through at least the third quarter of 2000, and that such cash flows will be sufficient to support operations and the Company's sales effort for the coming year. In April 2000, the Company obtained a $100,000 line of credit at prime plus 2%. Any borrowings under this agreement will become due in April 2001. 5 Results of Operations For ease in presenting the financial data, figures have been rounded to the nearest thousand. For the three months ended March 31, 2000, contract revenues increased from $1,797,000 to $1,942,000, an increase of 8%. The increase was directly related to an additional state contract (7%), expiration of a contract(-4%) and the additional number of transactions processed by ITI's equipment (5%). Gross profit increased 9% from $751,000 (41.8% of sales) to $867,000 (44.6% of sales) as a result of higher sales volume. The gross profit percentage increased due to: (1) decreased contract depreciation due to certain soft contract costs being amortized through a initial contract period that expired in October 1999(10.2%); (2) higher maintenance costs due to aging equipment and software changes, updates and enhancements (-5.1%); (3) reduction in property taxes as a result of state legislation(1.1%); (4) rescission of a royalty agreement(0.5%); and (5) higher material costs (-3.9%). Operating expenses decreased 10% from $489,000 in 1999 to $441,000 in 1999, a decrease of $48,000. Selling, general and administrative expenses increased from $281,000 to $302,000, an increase of $21,000 primarily due to (1) Higher general & administrative expenses ($11,000); (2) cost of living adjustments to payroll and new hires ($51,000); and (3) decreased marketing expenses related to efforts to obtain additional state contracts(-$41,000). Patent amortization increased from $70,000 in 1999 to $108,000 in 2000 due to revaluation in the remaining useful lives of the patents offset by a rescission of patent purchase agreement. Research and development decreased from $131,000 in 1999 to $29,000 in 2000 because: (1) the Company spent more efforts in improving and adapting existing Company products to recent customer needs; and (2) research and development efforts were taken over by existing employees rather than subcontracting to outside vendors. The Company will continue to engage in research and development of additional applications of its products in related areas and new product development. Interest expense decreased from $205,000 in 1999 to $71,000 in 2000, reflecting the pay down of equipment financing. Interest expense on a patent decreased by $80,000 due to the rescission of a patent purchase agreement. 6 PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 3. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 27 - Financial Data Schedule, filed herewith electronically (b) Reports on Form 8-K None SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTELLECTUAL TECHNOLOGY, INC. By: /S/ Craig Litchin Acting Principal Financial Officer Date: May 12, 2000 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND STATEMENTS OF LOSS AND ACCUMULATED DEFICIT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10QSB FOR THE QUARTER ENDED MARCH 31, 2000. 3-MOS DEC-31-2000 MAR-31-2000 596,236 0 736,486 0 288,187 1,964,175 6,052,345 4,970,510 3,448,296 1,663,055 0 0 0 100 1,084,243 3,448,296 1,942,360 1,942,360 1,075,407 440,831 0 0 64,933 361,189 138,933 222,256 0 0 0 222,256 0.02 0.02
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