-----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, JVZtef50THtAWs5HHWc0KTZib19s7jkpyFJvUV88MNh/PLp1cpbqr8C2oRcy/ZdT km3X0Zh5n9Z3J84VXvGU7g== 0001013993-97-000022.txt : 19970521 0001013993-97-000022.hdr.sgml : 19970521 ACCESSION NUMBER: 0001013993-97-000022 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970520 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTELLECTUAL TECHNOLOGY INC CENTRAL INDEX KEY: 0000859914 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 841130227 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29138 FILM NUMBER: 97611953 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, 1997 Commission file number: 33-33092-D INTELLECTUAL TECHNOLOGY, INC. (Exact name of small business issuer as specified in its charter) Colorado 84-1130227 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 10639 Roselle Street Suite B San Diego, CA 92121 (Address of principal executive offices) (619) 552-0001 (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 19, 1997, 10,000,000 shares of common stock, par value $0.0005 per share, were outstanding. Transitional Small Business Disclosure Format (check one): Yes --- No -X- INDEX Page Number PART I. FINANCIAL INFORMATION Item I. Financial Statements Balance Sheet, March 31, 1997 3 Statements of Operations and Accumulated Deficit (Unaudited) for the three months ended March 31, 1997 4 Statements of Cash Flows (Unaudited) for the three months ended March 31, 1997 and 1996 5 Notes to financial statements 6 Item 2. Management's Discussion and Analysis or Plan of Operations 7-8 PART II. OTHER INFORMATION 8 Signatures 9 2 Intellectual Technology, Inc. BALANCE SHEET March 31, 1997 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 7,537 Accounts receivable 468,069 Deposits 19,003 Inventory 110,717 Prepaid consulting fees 50,000 ---------- Total current assets 655,326 PROPERTY AND EQUIPMENT Vehicle registration equipment 663,600 Office and administrative equipment 60,726 -------- 724,326 Accumulated depreciation 153,358 ------- 570,968 Vehicle registration equipment installations in progress 1,870,620 --------- Total fixed assets, net 2,441,588 OTHER ASSETS Patent, net of accumulated amortization 4,452,372 Organization and start-up costs, net 356,620 Contract acquisition costs, net 85,644 Deferred loan fees 54,667 Deferred NCR contract fees, net 346,813 --------- Total other assets 5,296,116 --------- TOTAL ASSETS $ 8,393,030 ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 1,330,993 Accrued liabilities 65,473 Notes payable - related parties 1,354,140 Notes payable - other 1,163,107 Accrued interest 47,970 ----------- Total current liabilities 3,961,683 OTHER LIABILITIES Due to related party 4,000,000 STOCKHOLDERS' EQUITY Preferred stock, $0.00001 par value; 20,000,000 shares authorized; no shares issued and outstanding - Common stock, $0.0005 par value; 500,000,000 shares authorized; 10,000,000 shares issued and outstanding at March 31, 1997. 5,000 Additional paid-in capital 1,185,250 Accumulated deficit (758,903) --------- Total stockholders' equity 431,347 --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,393,030 ========= The accompanying notes are an integral part of the financial statements. 3 Intellectual Technology, Inc. STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (Unaudited) For the three months ended March 31, 1997 1996 Sales, net $ 612,996 $ - Cost of sales 300,386 - ---------- -------- Gross profit 312,610 - OPERATING EXPENSES Selling, general and administrative expense 143,854 50,055 Research and development 7,853 19,141 Rent 5,679 - Interest expense 80,218 173 Depreciation and amortization 104,687 - Start-up costs capitalized - (46,588) ------- ------- Total expenses 342,291 22,781 ------- ------- NET LOSS (29,681) (22,781) ======= ======= Accumulated deficit Balance, beginning of period (729,222) (468,500) ------- ------- Balance, end of period $ (758,903) $ (491,281) ======= ======= NET LOSS PER SHARE $ (NIL) $ (NIL) ======= ======= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,007,746 9,000,000 ========= ========= The accompanying notes are an integral part of the financial statements. 4 Intellectual Technology, Inc. STATEMENTS OF CASH FLOWS (Unaudited) For the three months ended March 31, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES $ (499,632) $ (24,094) CASH FLOWS FROM INVESTING ACTIVITIES Investment in patent costs 161 - Investment in vehicle registration equipment, software, and installation 217,714 189 ------- ------- Net cash used by investing activities (217,875) (189) CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions 6,900 75,700 New borrowings 975,000 - Repayment of debt (211,964) - Loan fees paid (61,500) - -------- ------- Net cash provided by financing activities 708,436 75,700 -------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 1,929 51,417 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,608 2,906 -------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,537 $ 54,323 ======= ======= The accompanying notes are an integral part of the financial statements. 5 Intellectual Technology, Inc. NOTES TO FINANCIAL STATEMENTS March 31, 1997 (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, are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. 2. Business combination with Bridgestone Corp. Effective March 12, 1997, the shareholders of Image Technology, Inc., a Nevada corporation, ("ITI Nevada") exchanged 100% of the outstanding common stock of ITI Nevada for 450,000,000 shares of Bridgestone, Corp. in a transaction accounted for as a reverse acquisition. As a result of this transaction, the shareholders of ITI Nevada became the majority holders of Bridgestone Corp.,and ITI Nevada became a wholly owned subsidiary of Bridgestone Corp. In April, 1997, Bridgestone Corp. changed its name to Intellectual Technology, Inc. and effected a 1 for 50 reverse stock split. All share and per share amounts, unless otherwise indicated, reflect this one for 50 reverse split. All references to the Company in this document refer to Intellectual Technology, Inc. and its wholly owned subsidiary, Image Technology, Inc. The transaction has been accounted for as a recapitalization of the private company. 3. Development stage activities Since its inception in 1992, ITI Nevada has been engaged in the research, development, design and promotion of its products. Until the November, 1996, the Company was a development stage enterprise as defined in SFAS No. 7, having generated virtually no operating revenues from such activities. 4. Significant new borrowings During the first quarter of 1997, the Company issued the following new borrowings: 12% promissory note, face amount $150,000, secured by equipment, inventory, accounts receivable, tangible and intangible assets, due April 14, 1997. Default interest rate is set at 18%. $150,000 15% installment note to NCR, face amount $500,000, secured by all unencumbered property, payable monthly at $100,000 through August 1, 1997. This note represents the balance of the 1998. NCR initial phase contract commitment 500,000 22.84% promissory note, face amount $820,000, secured by pledge of accounts receivable, payable monthly at $100,000 through November 30, 1997 820,000 8% unsecured advances from related party, payable on demand 155,400 8% unsecured advances from unrelated party, payable on demand 5,000 -------- $ 1,630,400 ========= 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION 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 in the forward looking statements. PLAN OF OPERATIONS Since its inception in 1992 until the first quarter of 1997, the Company has been in the development stage and has been engaged primarily in the design, development and promotion of systems for the automated preparation and dispensing of motor vehicle registration forms. Effective November 1, 1996, ITI Nevada entered into an Equipment Lease, Support, and Maintenance Agreement ("the Indiana Contract") with the Indiana Bureau of Motor Vehicles Commission (the "BMVC") which provides for the BMVC to lease from ITI both self-service terminals and stand alone printers. ITI is required to install a group of 11 self-service terminals and 96 stand-alone printers. The equipment contained in this initial group is projected to produce a total of 1.4 million vehicle registrations annually. The BMVC has also committed to lease an additional 25 self-service terminals and 195 stand alone printers, which equipment is to be installed by ITI by November 1, 1997. The Indiana contract is priced on a per-transaction basis with the Company receiving between $0.85 and $1.22 per transaction. The contract extends for a period of three years, subject to an option to renew on the part of the BMVC for an additional year. To assist it in performing its obligations under the Indiana Contract, ITI Nevada entered into a Subcontractor agreement with NCR ("the NCR Agreement") which requires the Company to provide the printers, printing media, facilities management, printer installation, billing and self-service terminal provisioning aspects of the Indiana Contract. As part of this contract, the Company is requiring NCR to provide the self service terminals, program management, software development, maintenance, and self-service terminal installation ("NCR Services"). The Company will pay NCR approximately $1,800,000 for its participation in the initial phase of the Indiana contract (consisting of NCR services to 11 self-service terminals and 96 stand alone printers). The Company will be billed separately for NCR services with respect to the additional 25 terminals and 195 printers requested by the BMVC. In addition, the Company will be billed separately on a quarterly basis for maintenance provided by NCR. As of March 31, 1997, a total of 0 self service terminals and 96 stand alone printers had been installed and were operational. For the remainder of the calendar year, the Company will be concentrating on the completion of its installation the 195 stand alone printers and 36 self services terminal called for by the Indiana Contract. The Company has also entered into an agreement to sell the State of Maryland a total of 11 stand alone printers, 11 kiosks, and associated media products, similar to those provided under lease to the state of Indiana. The Company continues to pursue agreements for the sale or lease of its products with other jurisdictions. The Company may engage in research and development of additional applications of its products in related areas such as driver records, voter registrations, tax payments, electronic benefit vouchers, driver's license extensions and similar areas. The Company currently has 7 full time employees and one part time employee, of which four are in administration, two in marketing, and two in operations. The company anticipates expanding its marketing and operating personnel later in 1997. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (continued) LIQUIDITY AND CAPITAL RESOURCES During the first quarter of 1997, the Company received a total of $506,700 in revenue from the Indiana contract, representing approximately 415,000 transactions. It has been billed a total of $1.2 million by NCR, of which $700,000 has been paid and the remaining $500,000 has been converted to a note which is payable in monthly installments of $100,000 per month. An additional $600,000 will be payable to NCR prior to November 1, 1997. In order to sustain the level of capital outlay to continue to deliver stand alone printers and self service terminals under lease arrangements, to repay its investment notes and to increase its sales and marketing efforts, the Company will be required to secure additional financing. It is anticipated that the additional terminals and printers requested by the State of Indiana will require approximately $2,600,000 in capital outlay, and that these costs will generally be payable early in the contract. The Company will recover these costs on a per-transaction basis over four years. In addition to obligations to its general creditors and to NCR under the NCR agreement, the Company has incurred approximately $ 2.5 million in outstanding debt financing for its development stage activities through March 31, 1997. Of this amount, $938,000 is delinquent by the terms of the note instrument. The Company's monthly cash flow for debt service totals approximately $215,000. For the quarter ended March 31 1997, the Company incurred approximately $144,000 in selling, general and administrative costs. Current expansion plans in the marketing department would add $50,000 per quarter to this amount. The Company purchased its patents from an affiliated entity through the issuance of debt of $4,000,000. This amount, originally payable in May 1997, has been extended to May 1, 1999. PART II. OTHER INFORMATION 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 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 8 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. Date: May 20, 1997 INTELLECTUAL TECHNOLOGY, INC. BY: /S/ Janice L. Welch Secretary/Treasurer/Principal Financial Officer 9 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, 1997. 3-MOS DEC-31-1996 MAR-31-1997 7537 0 468069 0 110717 655326 2594946 153358 8393030 3961683 0 0 0 5000 1185250 8393030 612996 612996 300386 654901 0 0 80218 (29681) 0 (29681) 0 0 0 (29681) (0) (0)
-----END PRIVACY-ENHANCED MESSAGE-----