U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
or
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 001-12189
IMAGE GUIDED TECHNOLOGIES, INC.
-------------------------------
(Exact name of small business issuer as
specified in its charter)
COLORADO 84-1139082
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5710-B FLATIRON PARKWAY, BOULDER, CO 80301
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(303) 447-0248
--------------
(Registrant'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 _____
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,106,024 shares of common
stock, no par value, were outstanding on July 30, 1997.
Transitional Small Business Disclosure Format (check one); Yes _____ No __X__
Table of Contents
PART ITEM PAGE
- ---- ---- ----
I FINANCIAL INFORMATION
1. Financial Statements
Balance Sheet -- June 30, 1997 1
Statements of Operations -- Three Months and Six Months
Ended June 30, 1997 and 1996 2
Statements of Cash Flows -- Six Months Ended June 30, 1997
and 1996 3
Notes to Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation
Financial Condition and Results of Operations 4
Liquidity and Capital Resources 6
Forward-Looking Statements 6
Other Matters 9
II OTHER INFORMATION
1. Legal Proceedings 10
2. Changes in Securities 10
3. Defaults Upon Senior Securities 10
4. Submission of Matters to a Vote of Security Holders 10
5. Other Information 10
6. Exhibits and Reports on Form 8-K 10
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IMAGE GUIDED TECHNOLOGIES, INC.
BALANCE SHEET
JUNE 30, 1997
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,799,000
Accounts receivable, net of allowance for doubtful accounts of
$66,000 at June 30, 1997 948,000
Inventories, net 426,000
Other current assets 80,000
-----------
Total current assets 6,253,000
Property and equipment, net of accumulated depreciation of
$194,000 at June 30, 1997 350,000
Other assets 16,000
-----------
Total assets $ 6,619,000
-----------
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 269,000
Accrued liabilities 223,000
Current portion of capital lease obligation 36,000
-----------
Total current liabilities 528,000
Capital lease obligation 81,000
-----------
Total liabilities 609,000
-----------
Commitments and contingencies
Shareholders' equity
Common Stock, no par value; 10,000,000 shares authorized;
3,106,024 shares issued and outstanding at June 30, 1997 8,798,000
Accumulated deficit (2,788,000)
-----------
Total shareholders' equity 6,010,000
-----------
Total liabilities and shareholders' equity $ 6,619,000
-----------
-----------
The accompanying notes are an integral part of these financial statements.
1
IMAGE GUIDED TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Revenue $1,324,000 $1,011,000 $2,496,000 $1,747,000
Cost of goods sold 560,000 455,000 1,114,000 734,000
---------- ---------- ---------- ----------
Gross profit 764,000 556,000 1,382,000 1,013,000
---------- ---------- ---------- ----------
Operating expenses:
Research and development 222,000 160,000 414,000 300,000
Selling and marketing 157,000 109,000 318,000 225,000
General and administrative 270,000 192,000 525,000 324,000
---------- ---------- ---------- ----------
Total operating expenses 649,000 461,000 1,257,000 849,000
---------- ---------- ---------- ----------
Operating income 115,000 95,000 125,000 164,000
Other income (expense):
Interest and other expense (8,000) (20,000) (12,000) (44,000)
Interest and other income 56,000 4,000 125,000 6,000
---------- ---------- ---------- ----------
Net Income $ 163,000 $ 79,000 $ 238,000 $ 126,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share $ 0.05 $ 0.07
Weighted average common shares
outstanding 3,568,178 3,576,169
Pro forma earnings per share $ 0.04 $ 0.06
Pro forma weighted average
common shares outstanding 2,006,957 2,241,588
The accompanying notes are an integral part of these financial statements.
2
IMAGE GUIDED TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
-------------------------
1997 1996
---------- ----------
OPERATING ACTIVITIES:
Net income $ 238,000 $ 126,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 68,000 41,000
Write-off of fixed assets 8,000 ---
Provision for doubtful accounts 9,000 17,000
Allowance for inventory obsolescence 30,000 (3,000)
Changes in operating assets and liabilities:
Accounts receivable (435,000) (72,000)
Inventories (40,000) (177,000)
Other current assets 26,000 (82,000)
Deposits --- (12,000)
Accounts payable (125,000) 18,000
Accrued liabilities (69,000) (10,000)
---------- ----------
Net cash used in operating activities (290,000) (154,000)
---------- ----------
INVESTING ACTIVITIES:
Additions to property and equipment (144,000) (77,000)
---------- ----------
Net cash used in investing activities (144,000) (77,000)
---------- ----------
FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock --- 337,000
Principal payments on capital leases (7,000) ---
---------- ----------
Net cash provided by (used in) financing activities (7,000) 337,000
---------- ----------
Net increase (decrease) in cash and cash equivalents (441,000) 106,000
Cash and cash equivalents at beginning of period 5,240,000 32,000
---------- ----------
Cash and cash equivalents at end of period $4,799,000 $ 138,000
---------- ----------
---------- ----------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $6,000 $5,000
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
Equipment acquired under capital lease --- $126,000
The accompanying notes are an integral part of these financial statements.
3
IMAGE GUIDED TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements of Image Guided Technologies, Inc.
(the "Company") are unaudited. However, in the opinion of management, such
statements reflect all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation. Interim results of operations
are not necessarily indicative of results for the full year.
Certain reclassifications of the 1996 financial information have been made
in order to conform to current year presentation.
2. INVENTORIES
Inventories are comprised of the following at June 30, 1997:
Raw materials $272,000
Work-in-process 111,000
Finished goods 89,000
--------
472,000
Less allowance for obsolescence (46,000)
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$426,000
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3. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS
No. 128, which is effective for periods ending after December 15, 1997, requires
changes in the computation, presentation, and disclosure of earnings per share.
All prior period earnings per share data must be restated to conform with the
provisions of SFAS No. 128. If the provisions of SFAS No. 128 had been adopted
on January 1, 1997, the basic earnings per share for the three and six months
ended June 30, 1997 would be $0.05 and $0.08, respectively, and the diluted
earnings per share for the three and six months ended June 30, 1997 would be
$0.05 and $0.07, respectively. The pro forma basic earnings per share for the
three and six months ended June 30, 1996 would be $0.06 and $0.09, respectively,
and the pro forma diluted earnings per share for the three and six months ended
June 30, 1996 would be $0.04 and $0.06, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion of the results of operations and financial
condition should be read in conjunction with the financial statements and notes
thereto.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Revenue increased by $313,000, or approximately 31%, to $1,324,000 for the
three months ended June 30, 1997, as compared to $1,011,000 for the three months
ended June 30, 1996. This increase was primarily due to greater demand for the
Company's FlashPoint-Registered Trademark- 5000 and Pixsys-TM- 5000 products.
Cost of goods sold increased by $105,000, or approximately 23%, to $560,000
for the three months ended June 30, 1997, compared to $455,000 for the three
months ended June 30, 1996. Cost of goods sold as a percentage of revenue
decreased to 42% for the three months ended June 30, 1997, as compared to 45%
for the three months ended June 30, 1996. The increase in cost of goods sold
was attributable to increased sales volume and the decrease in cost of goods
sold as a percentage of revenue was attributable to changes in the mix of
products sold.
4
Research and development expenses increased by $62,000, or approximately
39%, to $222,000 for the three months ended June 30, 1997, compared to $160,000
for the three months ended June 30, 1996. This increase was principally due to
the addition of engineering personnel and related expenses, increased testing of
products to meet regulatory requirements and to increased product development.
Selling and marketing expenses increased by $48,000, or approximately 44%,
to $157,000 for the three months ended June 30, 1997, as compared to $109,000
for the three months ended June 30, 1996. This increase was primarily
attributable to the addition of personnel and related expenses, as well as
expanded marketing activities to facilitate increases in revenue.
General and administrative expenses increased by $78,000, or approximately
41%, to $270,000 for the three months ended June 30, 1997, as compared to
$192,000 for the three months ended June 30, 1996. This increase was primarily
attributable to the additional expenses necessary for a public company,
increased salaries, and to additional personnel and associated costs.
Operating income increased by $20,000 to $115,000 for the three months
ended June 30, 1997 compared to operating income of $95,000 for the three months
ended June 30, 1996. This increase was primarily attributable to the mix of
products sold.
Net other income (expense) increased by $64,000 to $48,000 for the three
months ended June 30, 1997 from $(16,000) for the three months ended June 30,
1996. This change was primarily due to interest income on net proceeds from the
initial public offering (the "IPO").
As a result of the foregoing, net income increased to $163,000 for the
three months ended June 30, 1997, compared to net income of $79,000 for the
three months ended June 30, 1996.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Revenue increased by $749,000, or approximately 43%, to $2,496,000 for the
six months ended June 30, 1997, as compared to $1,747,000 for the six months
ended June 30, 1996. This increase was primarily due to greater demand for the
Company's FlashPoint 5000 and Pixsys 5000 products.
Cost of goods sold increased by $380,000, or approximately 52%, to
$1,114,000 for the six months ended June 30, 1997, compared to $734,000 for the
six months ended June 30, 1996. Cost of goods sold as a percentage of revenue
increased to 45% for the six months ended June 30, 1997, as compared to 42% for
the six months ended June 30, 1996. This increase in cost of goods sold was
attributable to increased sales volume and the increase in cost of goods sold as
a percentage of revenue was attributable to increased costs associated with
improvements in the reliability and durability of certain components, as well as
changes in the mix of products sold.
Research and development expenses increased by $114,000, or approximately
38%, to $414,000 for the six months ended June 30, 1997, compared to $300,000
for the six months ended June 30, 1996. This increase was principally due to
the addition of engineering personnel and related expenses, to increased testing
of product to meet regulatory requirements and to increased product development.
Selling and marketing expenses increased by $93,000, or approximately 41%,
to $318,000 for the six months ended June 30, 1997, as compared to $225,000 for
the six months ended June 30, 1996. This increase was primarily attributable to
the addition of personnel and related expenses, as well as expanded marketing
activities to generate increases in revenue.
General and administrative expenses increased by $201,000, or approximately
62%, to $525,000 for the six months ended June 30, 1997, as compared to $324,000
for the six months ended June 30, 1996. This increase was primarily
attributable to the additional expenses necessary for a public company,
increased salaries, and to additional personnel and associated costs.
Operating income decreased by $39,000 to $125,000 for the six months ended
June 30, 1997 compared to operating income of $164,000 for the six months ended
June 30, 1996. This decrease was primarily attributable to increased costs
associated with improvements in the reliability and durability of certain
components and to changes in the mix of products sold.
5
Net other income (expense) increased by $151,000 to $113,000 for the six
months ended June 30, 1997 from $(38,000) for the six months ended June 30,
1996. This change was primarily due to interest income on net proceeds from the
IPO and to interest expense incurred in 1996 in connection with funds borrowed
by the Company and paid off with a portion of the IPO proceeds.
As a result of the foregoing, net income increased to $238,000 for the six
months ended June 30, 1997, compared to net income of $126,000 for the six
months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had working capital of $5,725,000,
compared to working capital of $5,571,000 at December 31, 1996. The improvement
in working capital was primarily the result of increases in accounts receivable
and decreases in accounts payable and accrued liabilities.
During the six months ended June 30, 1997, $290,000 in cash was used in
operating activities, principally by increased accounts receivable and decreased
accounts payable and accrued liabilities, all partially offset by net income.
The Company used $144,000 in cash for investing activities during the six month
period ended June 30, 1997 to purchase property and equipment. Also during the
six month period ended June 30, 1997, $7,000 in cash was used in financing
activities for principal payments on a capital lease.
On October 24, 1996, Image Guided Technologies, Inc. closed on its IPO of
1,437,500 shares of common stock, including a 187,500 share over-allotment
purchase by the IPO underwriter at the IPO price of $5.00 per share. The
offering resulted in gross proceeds of $7,187,500. Aggregate offering cost was
approximately $1,500,000. The shares were offered pursuant to a Registration
Statement on Form SB-2 filed with the Securities and Exchange Commission. A
portion of the proceeds was used to retire approximately $889,000 of 11% secured
notes and related interest.
FORWARD-LOOKING STATEMENTS
The Company may, in discussions of its future plans, objectives and
expected performance in periodic reports filed by the Company with the
Securities and Exchange Commission (or documents incorporated by reference
therein) and in written and oral presentations made by the Company, include
projections or other forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act
of 1934, as amended. Such projections and forward-looking statements are based
on assumptions which the Company believes are reasonable, but are by their
nature inherently uncertain. In all cases, there can be no assurance that such
assumptions will prove correct or that projected events will occur, and actual
results could differ materially from those projected. Some of the important
factors that could cause actual results to differ from any such projections or
other forward-looking statements follow.
LIMITED HISTORY OF PROFITABILITY AND POTENTIAL FLUCTUATIONS IN OPERATING
RESULTS. Prior to its fiscal year ending December 31, 1996, the Company had
experienced significant operating losses. Its accumulated deficit was
$2,788,000 at June 30, 1997 and $3,026,000 at December 31, 1996. While the
Company was profitable for the quarter ended June 30, 1997, there can be no
assurance that the Company will consistently generate sufficient revenues to
attain profitability on an annual basis. In addition, because the Company
generally ships its products on the basis of purchase orders, operating results
in any quarter are highly dependent on orders booked and shipped in that quarter
and, accordingly, may fluctuate materially from quarter to quarter. The
Company's operating expense levels are based on the Company's internal forecasts
of future demand and not on firm customer orders. Failure by the Company to
achieve these internal forecasts could result in expense levels which are
inconsistent with actual revenues. Moreover, the Company's quarterly results
may also be affected by fluctuating demand for the Company's products, declines
in the average selling prices for its products, and by increases in the costs of
the components and subassemblies acquired by the Company from vendors.
DEPENDENCE ON A FEW CUSTOMERS. The Company currently has six significant
customers: GE Medical Systems, Carl Zeiss, Elekta IGS, Radionics Software
Applications, Brewco and Spinex Medical Technologies. None of these customers
has entered into any long term minimum purchase agreements with the Company.
The loss of, or substantial diminution of purchases from the Company by, any of
these customers could have a material adverse effect on the Company.
6
THE COMPANY'S DEPENDENCE ON A SINGLE TYPE OF PRODUCT. All the Company's
revenues are derived from sales of its optical localizers. Although the Company
is currently seeking to expand the markets for its localizers, there can be no
assurance that it will be successful.
THE UNCERTAINTY OF MARKET ACCEPTANCE FOR THE COMPANY'S PRODUCT. The market
for optical localizers has only recently begun to develop. The market for
optical localizers may continue to develop or may develop more slowly than the
Company anticipates or cease altogether. Demand for optical localizers could be
affected by numerous factors outside the Company's control, including, among
others, market acceptance by medical and industrial customers, changes in
governmental regulation and the introduction of new or superior competing
technologies.
TECHNOLOGICAL CHANGE IN THE MEDICAL INDUSTRY AND IN THE COMPANY'S PRODUCT.
There can be no assurance that the Company's competitors will not succeed in
developing or marketing products or technologies that are more effective and/or
less costly and which render the Company's products obsolete or non-competitive.
In addition, new technologies and procedures could be developed for medical and
other industries that replace or reduce the value of the Company's products.
The Company's success will depend in part on its ability to respond quickly to
technological changes through the development and improvement of its products.
The Company believes that a substantial amount of capital will be required to be
allocated to such activities in the future.
THE RISK OF PATENT INFRINGEMENT CLAIMS BROUGHT AGAINST THE COMPANY'S
CUSTOMERS. There are a number of patents that utilize a localizer as part of
their claimed inventions, several of which relate to the medical industry. One
of the patents relating to the medical industry is the patent granted to St.
Louis University (the "SLU Patent"), and subsequently licensed to Surgical
Navigation Technologies, Inc. In general, the SLU Patent covers a particular
technique for determining the position of a surgical probe within a patient's
body on an historical image of that body. The Company is not in a position to
evaluate whether its customers may be infringing the SLU Patent or any of the
other patents. If any infringement claim is brought or threatened against any
of the Company's customers, it could have a material adverse effect on orders of
the Company's products from these customers.
THE COMPANY'S ABILITY TO PROTECT ITS INTELLECTUAL PROPERTY RIGHTS. The
Company has one patent that covers a use of its FlashPoint optical localizer and
one patent on a method for instrument identification. In addition, the Company
relies on a combination of trade secret and copyright laws, together with
nondisclosure agreements to protect its know-how and proprietary rights. There
can be no assurance that such measures will provide adequate protection for the
Company's intellectual property rights, that disputes with respect to the
ownership of its intellectual property rights will not arise, that the Company's
trade secrets or proprietary technology will not otherwise become known or be
independently developed by competitors or that the Company can otherwise
meaningfully protect its intellectual property rights. Furthermore, there can
be no assurance that others will not develop similar products or software,
duplicate the Company's products or software or that third parties will not
assert intellectual property infringement claims against the Company. The
Company believes that the manufacture and sale of its FlashPoint localizer does
not infringe the SLU Patent, since a localizer is only a component part in the
system patented by SLU and since the Company's FlashPoint localizer has
substantial non-infringing uses. Moreover, there can be no assurance that any
patent owned by, or issued to, the Company will not be invalidated, circumvented
or challenged (including, without limitation, on the basis of the SLU Patent or
other patents), or that the rights granted thereunder will provide meaningful
competitive advantages to the Company.
Litigation may be necessary to protect the Company's intellectual property
rights and trade secrets, to determine the validity and scope of the proprietary
rights of others or to defend against claims of infringement or invalidity
(including, without limitation, claims brought by parties whose technology, such
as those which may be the basis of the SLU Patent, utilizes a localizer). Such
litigation could result in substantial costs and diversion of resources,
regardless of the outcome of the litigation. If any claims are asserted against
the Company, the Company may be required to obtain a license under a third
party's intellectual property rights. However, such a license may not be
available on reasonable terms or at all.
COMPETITION BY EXISTING COMPETITORS AND POTENTIAL NEW ENTRANTS INTO THE
MARKETPLACE. The Company's primary competitor in the medical market currently
is Northern Digital Inc. In addition, companies with substantially greater
financial, technical, marketing, manufacturing and human resources, as well as
name recognition, than the Company may also enter the market. Competitors may
be able to respond more quickly
7
to new or emerging technologies and changes in customer requirements and to
devote substantially greater resources to the development, marketing and sale
of their products than the Company. The Company's customers may develop
their own localizers to ensure control over their localizer technology, to be
able to differentiate their product or for other reasons. Furthermore, such
competitors may develop technology other than that based on infrared optics
that is more effective or economical than the technology of the Company in
localizing a point in space.
REGULATION BY THE FDA. Noncompliance with applicable requirements of the
US Food and Drug Administration (the "FDA") can result in, among other things,
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, failure of the government to grant premarket
clearance or premarket approval for medical devices, withdrawal of marketing
approvals and criminal prosecution. The FDA also has the authority to request
repair, replacement or refund of the cost of any medical device.
There can be no assurance that the Company's customers have complied or
will be able to comply with all applicable FDA market clearance requirements,
including those which may arise from the incorporation of the Company's
FlashPoint product into the customer's product. Moreover, there can be no
assurance that the FDA will not require, or change its interpretations or
regulations so as to require, the Company to obtain 510(k) clearance for its
FlashPoint localizer apart from or in addition to any market clearances obtained
by its medical device customers.
In addition, international sales of medical devices are subject to foreign
regulatory requirements, which vary from country to country.
THE RISK OF PRODUCT LIABILITY CLAIMS. The Company faces an inherent
business risk of exposure to product liability claims in the event that the use
of its products is alleged to have resulted in adverse effects. To date, no
product liability claims have been asserted against the Company. The Company
maintains a product liability and commercial general liability insurance policy
with coverage of $1,000,000 per occurrence and an annual aggregate maximum
coverage of $2,000,000 ($1,000,000 for lawsuits outside the United States,
Canada and Puerto Rico). The Company's product liability and general liability
policy is provided on an occurrence basis and is subject to annual renewal.
There can be no assurance that liability claims will not exceed the coverage
limits of such policy or that such insurance will continue to be available on
commercially reasonable terms or at all. If the Company does not or cannot
maintain sufficient liability insurance, its ability to market its products
could be significantly impaired.
POSSIBLE CHANGES TO GOVERNMENT REGULATIONS GOVERNING HEALTH CARE. The
health care industry is undergoing fundamental changes as a result of political,
economic and regulatory influences. In the United States, comprehensive
programs have been proposed that seek to increase access to health care for the
uninsured, control the escalation of health care expenditures within the economy
and use health care reimbursement policies to help control the federal deficit.
The Company anticipates that Congress and state legislatures will continue to
review and assess alternative health care delivery systems and methods of
payment and public debate of these issues will likely continue. Due to
uncertainties regarding the outcome of reform initiatives and their enactment
and implementation, the Company cannot predict which, if any, of such reform
proposals will be adopted or when they might be adopted. Other countries are
also considering health care reform. Significant changes in health care systems
could have a substantial impact on the manner in which the Company conducts its
business.
THE COMPANY'S DEPENDENCE ON KEY MANAGEMENT AND TECHNICAL PERSONNEL AND ITS
ABILITY TO ATTRACT NEW PERSONNEL. The Company's success depends in significant
part on the continued contribution of certain key management and technical
personnel, including: Paul L. Ray, Chairman of the Board and Chief Executive
Officer; Robert E. Silligman, President and Chief Operating Officer; Waldean
Schulz, Vice President, Technology and Secretary; and Jeffrey J. Hiller, Vice
President, Finance and Chief Financial Officer. The loss of services of any of
these individuals could have a material adverse effect on the Company. The
Company's growth and profitability also depend on its ability to attract and
retain other management and technical personnel.
8
OTHER MATTERS
In June 1997, the Company entered into a three-year product sales agreement
with Nu-Tech, Inc. (d.b.a. Brewco 360DEG. Collision Repair Systems) of Central
City, Kentucky, one of its current significant customers. Under the terms of
this agreement, Brewco must purchase a minimum number of units per year to
maintain its preferred pricing of the Pixsys optical localizer. This agreement
does not guarantee any specific number of units to be purchased by Brewco.
The Company anticipates greater spending on research and development and
selling and marketing activities for the foreseeable future. This spending
could adversely effect operating income.
9
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
The Annual Meeting of Shareholders of Image Guided Technologies, Inc. was
held on April 24, 1997. The first matter voted on by the shareholders was the
election of the Board of Directors, with the following results: Paul L. Ray,
2,707,496 votes for and 4,200 votes withheld; Waldean A. Schulz, 2,710,696 votes
for and 1,000 votes withheld; Ray L. Hauser, 2,710,696 votes for and 1,000 votes
withheld; Clifford F. Frith, 2,710,696 votes for and 1,000 votes withheld; David
G. Sengpiel, 2,707,496 votes for and 4,200 votes withheld; Robert T. Hamilton,
2,707,496 votes for and 4,200 votes withheld; and William O'Connor, 2,706,496
votes for and 5,200 votes withheld.
The second matter considered was the adoption of the Image Guided
Technologies, Inc. 1997 Stock Option Plan. Results of the voting were 2,110,843
votes for, 23,120 votes against, 1,250 votes abstained and 576,483 broker non
votes.
The last matter considered was the ratification of the appointment of Price
Waterhouse LLP as auditors for the Company for the fiscal year ending
December 31, 1997. Results of the voting were 2,708,196 votes for, 2,000 votes
against and 1,500 votes abstained.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
10.21 OEM Agreement Between Nu-Tech, Inc. and the Company dated
6/7/97.***
10.22 Escrow Agreement in Relation with the OEM Agreement Between
Nu-Tech, Inc. and the Company.***
27.1 Financial Data Schedule.
- -------------------------
***The Company has applied for confidential treatment with respect to portions
of this exhibit.
(b) Form 8-K Reports
The Company filed no reports on Form 8-K during the quarter ended June 30,
1997.
10
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
IMAGE GUIDED TECHNOLOGIES, INC.
(Registrant)
By: /s/ PAUL L. RAY
-----------------------------------
August 14, 1997 Paul L. Ray
Chairman of the Board and Chief
Executive Officer
By: /s/ JEFFREY J. HILLER
-----------------------------------
August 14, 1997 Jeffrey J. Hiller
Vice President and Chief Financial Officer
(Principal Accounting Officer)
11