U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) under the Securities Exchange
Act of 1934.
For the quarterly period ended September 30, 2001
------------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from to
--------- ----------
Commission file number 000-28301
---------
ID TECHNOLOGIES CORPORATION
------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
North Carolina 56-1866233
- ------------------------------------ -----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
920 Main Campus Drive / Suite 400
Raleigh, North Carolina 27606
--------------------------------------
(Address of Principal Executive Offices)
(919) 424-3722
-----------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
-------------------------------
(Former Name, Former Address and
Former Fiscal Year, if Changed Since Last Report)
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
--------------- ---------------
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: The issuer had 10,178,450
shares of common stock outstanding as of November 12, 2001.
Transitional Small Business Disclosure Format (check one):
Yes No X
--------------- ---------------
FORM 10-QSB INDEX
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Item 2. Management's Plan of Operation.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements. Any statements
contained in this Form 10-QSB that are not statements of historical fact are
intended to be and are hereby identified as forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. ID
Technologies Corporation, a North Carolina corporation (the "Company" or
"IDTEK") cautions readers that forward looking statements involve known and
unknown risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performance and underlying
assumptions and other statements which are other than statements of historical
facts.
Without limiting the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "estimate," "continue" or comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, and actual results may
differ materially depending on a variety of factors, many of which are not
within the Company's control. These factors include, but are not limited to,
economic conditions generally and in the industries in which the Company may
participate; competition within the Company's chosen industry, including
competition from much larger competitors; technological advances; and failure by
the Company to successfully develop potential products and/or business
relationships and strategic alliances. In addition to other factors and matters
discussed elsewhere herein, the following are important factors that, in the
view of the Company, could cause actual results to differ materially from those
discussed in the forward-looking statements: ability of the Company to obtain
acceptable forms and amounts of financing to fund current and future operations,
research and development and acquisitions; competition; the Company's operating
losses; the Company's ability to commercially develop its proposed products; the
Company's ability to attract, hire and retain employees and management
personnel; and the Company's ability to control the development and exploitation
of its technology. The Company disclaims any intent or obligation to update
these forward-looking statements, whether as a result of new information, future
events or otherwise.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ID Technologies Corporation
(A Development Stage Company)
Condensed Balance Sheet
September 30, 2001 December 31, 2000
(Unaudited) (Audited)
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 128,922 $ 49,311
Prepaid expenses $ 2,032 $ 7,010
----------- -----------
Total current assets $ 130,954 $ 56,321
Equipment, net $ 915 $ 1,252
Patents, net $ 26,532 $ 19,653
----------- -----------
Total assets $ 158,401 $ 77,226
=========== ==========
Liabilities and shareholders' deficit Current liabilities:
Accounts payable and accrued liabilities $ 65,212 $ 84,053
Notes payable to shareholder $ 3,022 $ 22,840
Notes payable, current $ 71,384 $ 60,618
Short term convertible debt, net of discount
of $12,242 $ 176,412 $ 0
----------- -----------
Total current liabilities $ 316,030 $ 167,511
Long term notes payable $ 26,753 $ 35,374
Long term convertible debt, net of discount
of $0 and $19,550, respectively $ 0 $ 165,450
Deferred revenue $ 370,108 $ 179,218
Shareholders' deficit:
Common stock $ 282,953 $ 282,953
Additional paid in capital $ 4,410,032 $4,236,417
Deficit accumulated during
development stage $(5,247,475) $(4,989,697)
----------- -----------
Total shareholders' deficit $ (554,490) $ 470,327)
----------- -----------
Total liabilities and shareholders' deficit $ 158,401 $ 77,226
=========== ==========
ID Technologies Corporation
(A Development Stage Company)
Condensed Statement of Operations for the nine months ended September 30, 2001
and 2000 and for the period from inception (March 16, 1994) through September 30, 2001
9 months ended 9 months ended Inception 3/16/94
Sept. 30, 2001 Sept.30, 2000 through 9/30/01
(Unaudited) (Unaudited) (Unaudited)
------------ ---------- -----------
License revenue $ 34,110 $ - $ 128,954
Royalty revenue $ 4,000 $ - $ 4,000
------------ ---------- -----------
Total revenues $ 38,110 $ - $ 132,954
Research & development $ - $ 40,270 $ 736,268
Selling, general and
administrative expenses $ 337,317 $ 354,079 $ 4,230,836
------------ ---------- -----------
Loss from operations $ (299,207) $ (394,349) $(4,834,150)
Other income and expense:
Interest income - contractual $ 1,439 $ 95 $ 4,658
Gain on disposal of asset $ - $ - $ 353
Forgiveness of debt $ 20,757 $ - $ 49,474
Standstill $ 50,000 $ - $ 50,000
Amortization of debt discount on $ (10,962) $ (187,162) $ (294,483)
convertible debentures
Interest expense $ (19,805) $ (38,826) $ (97,327)
Debt conversion expense $ - $ - $ (126,000)
------------ ---------- -----------
Net loss $ (257,778) $ (620,242) $(5,247,475)
Basic and diluted loss
per common share $ (0.03) $ (0.07)
Weighted average number 9,983,028 8,374,139
of common shares
3 months ended 3 months ended
Sept 30, 2001 Sept 30, 2000
(Unaudited) (Unaudited)
------------ ----------
License revenue $ 2,832 $ -
------------ ----------
Total revenues $ 2,832 $ -
Research and Development $ 0 $ 30,270
Selling, general and
administrative expenses $ 90,390 $ 127,163
------------ ----------
Loss from operations $ ( 87,558) $ (157,433)
Other income and expense:
Interest income - contractual $ 192 $ 95
Standstill $ 50,000 $ -
Forgiveness of debt $ - $ -
Amortization of debt discount on $ (3,654) $ (65,854)
convertible debentures
Interest expense $ (5,500) $ (15,245)
------------ ----------
Net loss $ (46,520) $ (238,437)
Basic and diluted loss
per common share $ (0.01) $ (0.03)
Weighted average number 10,090,223 8,450,679
of common shares
ID Technologies Corporation
(A Development Stage Company)
Statements of Shareholders' Equity (Deficit)
Period from inception (March 16, 1994) through September 30, 2001
DEFICIT
ADDITIONAL ACCUMULATED
PAID-IN DURING
SHARES AMOUNT CAPITAL DEVELOPMENT TOTAL
---------- ---------- ---------- ---------- ------
Balance at March 16, 1994 -- -- -- -- --
Issuance of common shares for cash and
noncash consideration 1,595,200 366 33 -- 399
Net loss -- -- -- (123) (123)
---------- ---------- ---------- ---------- ------
Balance at December 31, 1994 1,595,200 366 33 (123) 276
Issuance of common shares for cash and
noncash consideration 404,800 -- 101 -- 101
Net loss -- -- -- (2,263) (2,263)
---------- ---------- ---------- ---------- ------
Balance at December 31, 1995 2,000,000 366 134 (2,386) (1,886)
Issuance of common shares for cash and
noncash consideration 6,000,000 -- 1,500 -- 1,500
Net loss -- -- -- (29,889) (29,889)
---------- ---------- ---------- ---------- ------
Balance at December 31, 1996 8,000,000 366 1,634 (32,275) (30,275)
Issuance of common shares for cash net of
issuance costs 153,333 282,587 -- -- 282,587
Capital contribution in form of research
and development services -- -- 201,405 -- 201,405
Stock-based compensation -- -- 1,333,600 -- 1,333,600
Net loss -- -- -- (1,684,313)(1,684,313)
---------- ---------- ---------- ---------- ------
Balance at December 31, 1997 8,153,333 282,953 1,536,639 (1,716,588) 103,004
Issuance of common shares for noncash
consideration 22,500 -- 45,000 -- 45,000
Capital contribution in form of research
and development services -- -- 192,319 -- 192,319
Stock-based compensation -- -- 933,425 -- 933,425
Net loss -- -- -- (1,426,725)(1,426,725)
---------- ---------- ---------- ---------- ------
Balance at December 31, 1998 8,175,833 282,953 2,707,383 (3,143,313) (152,977)
Issuance of warrants in connection with
issuance of convertible debt -- -- 271,870 -- 271,870
Capital contribution in form of research
and development services -- -- 269,441 -- 269,441
Issuance of common shares for noncash
consideration 101,750 -- 142,165 -- 142,165
Net loss -- -- -- (939,741) (939,741)
---------- ---------- ---------- ---------- ------
Balance at December 31, 1999 8,277,583 282,953 3,390,859 (4,083,054) (409,242)
Conversion of convertible debt to equity 250,000 -- 100,000 -- 100,000
Issuance of beneficial conversion features in
connection with issuance of convertible debt -- -- 31,200 -- 31,200
Debt conversion expense -- -- 126,000 -- 126,000
Capital contribution in form of research and
development services -- -- 72,600 -- 72,600
Issuance of common shares for noncash
consideration 211,759 -- 116,148 -- 116,148
Issuance of common shares for cash 944,963 -- 399,610 -- 399,610
Net loss -- -- -- (906,644) (906,644)
---------- ---------- ---------- ---------- ------
Balance at December 31, 2000 9,684,305 282,953 4,236,417 (4,989,697) (470,327)
Issuance of common shares for noncash
consideration 65,499 -- 32,497 -- 32,497
Issuance of common shares for cash 257,556 -- 103,023 -- 103,023
Net loss -- -- -- (121,054) (121,054)
---------- ---------- ---------- ---------- ------
Balance at March 31, 2001 10,007,360 282,953 4,371,937 (5,110,751) (455,861)
Issuance of common shares for noncash
consideration 71,090 -- 23,688 -- 23,688
Net loss -- -- -- (90,203) (90,203)
---------- ---------- ---------- ---------- ------
Balance at June 30, 2001 10,078,450 282,953 4,395,625 (5,200,954) (522,376)
Issuance of common shares for noncash
consideration 55,408 -- 14,406 -- 14,406
Net loss -- -- -- (46,520) (46,520)
---------- --------- --------- -------- --------
Balance at Sept 30, 2001 10,133,858 282,953 4,410,031 (5,247,475)(554,490)
ID Technologies Corporation
(A Development Stage Company)
Condensed Statement of Cash Flows
for the nine months ended September 30, 2001 and 2000 and for the period from
inception (March 16, 1994) through Sept 30, 2001
9 months ending 9 months ending Inception 3/16/94
Sept 30, 2001 Sept 30, 2000 through 9/30/01
-------------- -------------- -------------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (257,778) $ (620,242) $(5,245,163)
Adjustments to reconcile net loss to net cash
used in operation activities:
Depreciation $ 338 $ 564 $ 2,405
Amortization $ 1,221 $ 2,988 $ 15,771
Gain on disposal of equipment $ -- $ -- $ (353)
Stock based compensation $ -- $ -- $ 2,267,025
Non-cash marketing expenses $ -- $ -- $ 49,165
Non-cash research and development expenses $ -- $ 10,000 $ 737,394
Non-cash professional fees $ 63,991 $ 76,050 $ 305,627
Non-cash interest payments $ 6,600 $ -- $ 13,530
Debt forgiveness $ (20,757) $ -- $ (49,474)
Non-cash debt conversion expense $ -- $ -- $ 126,000
Discount on convertible debentures $ 10,962 $ 181,962 $ 294,481
Change in operating assets and liabilities:
Prepaid expenses $ 4,978 $ (8,130) $ (1,840)
Accounts payable and accrued liabilities $ 1,918 $ (905) $ 91,970
Deferred revenue $ 190,890 $ 89,062 $ 370,108
----------- ----------- -----------
Net cash used in operating activities $ 2,363 $ (268,651) $(1,023,546)
Cash flows from investing activities:
Patent costs $ (8,100) $ -- $ (42,303)
Purchase of equipment $ -- $ -- $ (3,980)
Disposal of equipment $ -- $ -- $ 1,014
----------- ----------- -----------
Net cash used in investing activities $ (8,100) $ -- $ (45,269)
Cash flow from financing activities:
Proceeds from issuance of notes payable $ 10,000 $ -- $ 443,750
Payment of notes payable $ (27,674) $ 49,217 $ (242,591)
Proceeds from issuance of convertible debt $ -- $ -- $ 665,000
Payment on convertible debt $ -- $ -- $ (380,000)
Proceeds from sale of common shares $ 103,022 $ 489,770 $ 428,620
Proceeds from issuance of common shares, net $ -- $ -- $ 282,958
----------- ----------- -----------
Net cash provided by financing activities $ 85,348 $ 538,987 $ 1,197,737
Increase in cash and cash equivalents $ 79,611 $ 270,336 $ 128,922
Cash and cash equivalents, beginning of period $ 49,311 $ 62,986 $ --
Cash and cash equivalents, end of period $ 128,922 $ 333,323 $ 128,922
ID Technologies Corporation
(A Development Stage Company)
Notes to Financial Statements
September 30, 2001
(Unaudited)
1. Management's Opinion
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q of regulation S-X.
Accordingly they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting solely of normal
recurring accruals) considered necessary for a fair presentation of the
statements have been included. The interim operating results are not necessarily
indicative of the results that may be expected for a full fiscal year. The
balance sheet at December 31, 2000 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. For further information, refer to the
financial statements and accompanying footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.
2. Licenses
Global Biometrics, Inc. owned options to purchase four exclusive licenses. The
options expired unexercised on June 30, 2001.
3. Revenue
License revenue is the amortization of the Bob Barker Company license valued at
$89,062 and the Global Biometrics Inc. licenses transferred from Protek for
$75,000. The license fees are being amortized at rates of $1,895 and $937 per
quarter respectively.
4. Accounts Payable
Payables for professional services totaling $27,757 were settled in full with
payments totaling $7,000 with no additional consideration. The difference of
$20,757 was recorded as cancellation of debt.
5. Convertible Debt
The annual interest payments on private convertible debentures were paid in full
on June 30, 2001 with $3,600 paid in cash and $6,600 paid in stock at the
election of the debt holder. Those paid in stock were granted stock at the
average ask price during the month of June 2001. The holders of $100,000 private
debentures elected to defer the annual interest payment of $12,000 until
December 15, 2001. The debt holder will be paid the $12,000 plus 12% interest on
the $12,000 and may elect a stock payout in lieu of cash for the original
$12,000 interest payment. The stock price would be the average ask price for the
month of June 2001.
6. Litigation
The Company filed a lawsuit against Fingerprint Cards AB ("FPC") on April 19,
2001 in the United States District Court for the Eastern District of North
Carolina seeking, inter alia, a declaratory judgment regarding non-infringement
and unenforceability of the Lofberg patent. The complaint was amended in
September 2001 by IDTEK to also include business interference by FPC, demanding
treble damages as a result of faxing the to an IDTEK licensee of a document
alleging infringement by IDTEK. The Company is the owner of US Patent No.
5,623,552 which is presently a principal patent in biometric technology
applications involving a stand-alone, integrated card for fingerprint-based
identification and access.
Item 2. Management's Plan of Operation.
The Company is engaged in the development of biometric technologies, know-how,
and products for licensing worldwide. The Company holds the patent for a card,
panel, or substrate allowing "on-board" storage and authentication
(identification) of fingerprints with a frontier biometric market size estimated
to be multibillion dollars. The potential applications of this technology are
many and varied: from welfare cards to loyalty/medical records/personal
information cards to controlling the use of firearms.
The development and production of this biometric breakthrough was managed by the
Company's scientific partner, SafeNet of Baltimore, Maryland. SafeNet is a
leading provider of network and Internet security systems and technologies.
SafeNet is a holder of approximately 12% of the Company's common stock and holds
a Company license in the fields of Internet, computer network, banking and
treasury fields worldwide which SafeNet sublicensed in perpetuity to Global
Biometrics in the fourth quarter of 2000.
A prototype 8 chip card was completed in April 2001, as well as a comprehensive
manufacturing plan by SafeNet, to build a single-chip production card at a cost
below $20 in future years.
The non-recurring engineering cost (NRE) to reduce the technology to a single
chip will be the responsibility of engineering supply firms, including Global
Biometrics and other engineering firms. These development costs are estimated at
approximately $1,700,000.
Global Biometrics purchased the engineering development rights from SafeNet in
November 2000 for $1,400,000. IDTEK or its suppliers have the right to develop
biometric fingerprint cards. Currently, IDTEK has no plans to develop its own
biometric fingerprint card.
Presently, the Company has initial licenses in place with SafeNet, Global
Biometrics, Power^Up, Bob Barker Company and BrentScott, which are expected to
yield $400,000 in additional license fees when card production begins.
Production is currently expected to begin in 2002. The licenses to Bob Barker
Company, SafeNet and Global Biometrics are paid in full. The options Global
Biometrics had for four additional licenses expired unexercised on June 30,
2001. The Company will attempt to sell those licenses to other interested
parties, but makes no assurances that it will be able to do so.
On August 6, 2001, the Company entered into a teaming agreement with GRC
International ("GRCI"), an AT&T subsidiary, to provide leading-edge biometrics
technologies development, systems integration, and fielding. GRCI will be
responsible for bidding and system integration of products deploying the
Company's technology.
The Company believes it has to be the first-to-market leader with the following
competitive advantages:
- - A biometric fingerprint card with storage and a power source (lithium
battery) on board.
- - A biometric fingerprint card which will not require an independent
power source.
- - A biometric fingerprint card safeguarding personal privacy (a
government or corporate database system is unnecessary).
- - A biometric fingerprint card with 113 mps of computing power (the power
of a Palm Pilot).
The Company's biometric fingerprint card is essentially a stand-alone computer
on a card protected by the Lane Foundation patent: United States Patent Number
5,623,552 issued on April 22, 1997 with an enforceable life until August 15,
2015. Another biometric patent was filed in February 2001.
The Company has been a development stage company with nominal revenues since its
inception. Losses were $1,684,313 in 1997, $1,426,725 in 1998, $939,741 in 1999,
$906,644 in 2000 and $257,778 in the first nine months of 2001.
As of September 30, 2001, the Company had approximately $129,000 in cash and
cash equivalents. Currently, the Company has a cash burn rate of $20,000 per
month.
With the Company's current policy of contracting out development and
concentrating on licensing of intellectual property and marketing, the Company
does not plan to purchase any equipment or buy or rent plant(s) in the next
year, other than possibly computers.
Results of Operations
The following discussion provides an analysis of the Company's results of
operations and liquidity and capital resources. This should be read in
conjunction with the financial statements of the Company and notes thereto. The
operating results of the periods presented were not significantly affected by
inflation.
Comparison of Nine Months Ended September 30, 2001 and 2000:
License revenue for the first nine months of 2001 was $34,110 as compared
to zero for the same period of 2000. The license revenue is comprised of a
$25,000 license transfer fee from SafeNet to sublicense in perpetuity the
license to Global Biometrics and $9,110 of amortization of the Bob Barker and
Global Biometrics' licenses. No new license agreements were sold during the
third quarter. Royalty revenue for the nine months ended September 30, 2001 was
$4,000 as compared to zero for the same period of 2000. The royalty payments
recorded during the period are for SafeNet sales to a British government agency
that uses the Company's technology. Royalty payments are predicated on the sale
price of the cards to end-users by licensees.
The research and development expenses are a non-cash entry in prior years,
which mirrors exactly SafeNet's research and development cash expenses for the
development of the biometric fingerprint card. SafeNet did not incur any
research and development costs in the nine months ended September 30, 2001
compared to $10,000 for the nine months ended September 30, 2000. Even though
SafeNet, the Company's former development partner and holder of approximately
12% of the Company's capital stock, was responsible for and incurred this
expense, the Company records the expense because the Company receives the
benefits from SafeNet's research.
The development of the card is now being done by Global Biometrics, which
purchased the development rights from SafeNet in November 2000 for $1,400,000.
Other card engineering firms are also developing a fingerprint card.
Selling, general, and administrative expenses during the nine months ended
September 30, 2001 were $337,317, down 4.7% from the $354,079 of such expenses
in the prior year period. The variance is primarily due to decreases in
professional fees and financing expenses.
Amortization of debt discount on convertible debentures was $10,962 in the
first nine months of 2001 compared to $187,162 in the first nine months of 2000.
This is a non-cash expense to amortize the value of options and warrants
associated with the $485,000 of convertible debt issued by the Company in 1999.
The Company paid off $300,000 of the debt in the fourth quarter of 2000, thus
the $57,000 per quarter of amortization related to that debt was not recorded in
the first nine months of 2001.
Interest expense was $19,805 in the first nine months of 2001, down from
$38,826 in the first nine months of 2000. The interest is 12% on $185,000
convertible debentures issued in April through June of 1999 and 14% on a $50,000
note payable issued June 2000. In the first nine months of 2000, the Company was
also liable for $300,000 in convertible debentures with an 8% interest rate.
These debentures were repaid with interest in the fourth quarter of 2000.
The Company's net operating loss for the nine months ended September 30,
2001 was $299,205, down 24.1% from the net operating loss of $394,349 for the
nine months ended September 30, 2000.
Recent Developments
IDTEK and Global Biometrics entered into a 60 day standstill for Global
Biometrics to consider the acquisition of IDTEK. The $50,000 standstill fee was
forfeited to IDTEK when the standstill agreement expired without an agreement on
October 26, 2001.
IDTEK borrowed $60,000 at prime plus 2% interest from J. Phillips L. Johnston,
the Chief Executive Officer and William F. Lane, Chairman, which amounts are due
November 26, 2001.
On October 31, 2001, J. Phillips L. Johnston, the Chief Executive Officer,
agreed to accept the Company's stock in lieu of salary. Expenses and health
insurance of $687 per month continue to be paid by the Company. The average
trade price during the first month of each quarter determines the quarterly
payment in stock. The price per share cannot be less than $.26.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
The Company filed a lawsuit against Fingerprint Cards AB ("FPC") on
April 19, 2001 in the United States District Court for the Eastern District of
North Carolina seeking, inter alia, a declaratory judgment regarding
non-infringement and unenforceability of the Lofberg patent. The complaint was
amended in September 2001 by IDTEK to also include business interference by FPC,
demanding treble damages as a result of faxing the to an IDTEK licensee of a
document alleging infringement by IDTEK.
The Company is not involved in any other material pending legal
proceeding adverse to the Company.
Item 2. Changes in Securities and Use of Proceeds.
The Company issued 160,569 shares of common stock in payment for
$63,991 of professional services at various market prices averaging $0.40 per
share. The Company also issued 31,428 common shares to private debenture holders
in lieu of $6,600 in interest payments due in June 2001.
The Company relied on the securities registration exemption provided by
Section 4(2) of the Securities Act of 1933, as amended, in connection with these
stock issuances since these were privately negotiated transactions with
individuals who each had an existing business relationship with the Company.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the nine
months ended September 30, 2001.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(A) EXHIBITS.
Exhibit
No. Description
- -------- -----------
3 Articles of Incorporation, together with all
amendments thereto, filed as Exhibit 2.01 to the
Registrant's Form 10-SB filed as of November 30, 1999,
filed with the SEC, which is incorporated herein by
reference to such Form 10-SB.
3.1 Bylaws, filed as Exhibit 2.02 to the Registrant's Form
10-SB filed as of November 30, 1999, filed with the
SEC, which is incorporated herein by reference to such
Form 10-SB.
4 Form of Debenture Purchase Agreement by and among the
Company and purchasers of the Company's 12%
Convertible Subordinated Debentures due 2002, filed as
Exhibit 3.01 to the Registrant's Form 10-SB filed as
of November 30, 1999, filed with the SEC, which is
incorporated herein by reference to such Form 10-SB.
4.1 Form of 12% Convertible Subordinated Debenture Due
2002, filed as Exhibit 3.02 to the Registrant's Form
10-SB filed as of November 30, 1999, filed with the
SEC, which is incorporated herein by reference to such
Form 10-SB.
4.2 Registration Rights Agreement, dated as of December
31, 1997, between the Company and Hutchison & Mason
PLLC, filed as Exhibit 3.04 to the Registrant's Form
10-SB filed as of November 30, 1999, filed with the
SEC, which is incorporated herein by reference to
such Form 10-SB.
4.3 Stock Purchase Agreement, dated as of August 1, 1997,
by and among the Company, Li-Pei Wu and William F.
Lane (as agent for certain sellers), together with
Addendum to Stock Purchase Agreement of even date
therewith, filed as Exhibit 3.04 to the Registrant's
Form 10-SB filed as of November 30, 1999, filed with
the SEC, which is incorporated herein by reference to
such Form 10-SB.
4.4 Convertible Debenture, dated September 24, 1999, made
by the Company in favor of Centennial Venture
Partners, LLC, filed as Exhibit 3.05 to the
Registrant's Form 10-SB filed as of November 30, 1999,
filed with the SEC, which is incorporated herein by
reference to such Form 10-SB ("CVP").
4.5 Common Stock Purchase Warrant, dated, September 24,
1999, made by the Company in favor of CVP (450,000
shares), filed as Exhibit 3.06 to the Registrant's
Form 10-SB filed as of November 30, 1999, filed with
the SEC, which is incorporated herein by reference to
such Form 10-SB.
4.6 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (150,000
shares), filed as Exhibit 3.07 to the Registrant's
Form 10-SB filed as of November 30, 1999, filed with
the SEC, which is incorporated herein by reference to
such Form 10-SB.
4.7 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (200,000
shares), filed as Exhibit 3.08 to the Registrant's
Form 10-SB filed as of November 30, 1999, filed with
the SEC, which is incorporated herein by reference to
such Form 10-SB.
4.8 Common Stock Purchase Warrant, dated September 24,
1999, made by the Company in favor of CVP (up to
$500,000), filed as Exhibit 3.09 to the Registrant's
Form 10-SE filed as of November 30, 1999, filed with
the SEC, which is incorporated herein by reference to
such Form 10-SB.
4.9 Investor Rights Agreement, dated as of September 24,
1999, by and among the Company and certain holders of
its capital stock, filed as Exhibit 3.10 to the
Registrant's Form 10-SB filed as of November 30, 1999,
filed with the SEC, which is incorporated herein by
reference to such Form 10-SB.
4.10 Shareholders Agreement, dated September 24, 1999, by
and among the Company and certain shareholders and
investors, filed as Exhibit 3.11 to the Registrant's
Form 10-SB filed as of November 30, 1999, filed with
the SEC, which is incorporated herein by reference to
such Form 10-SB.
4.11 Form of Warrant to Purchase Common Stock issued by
the Company to various investors in 2000.
10 License Agreement, dated October 1, 1999, between the
Company and BrentScott Associates, LLC, filed as
Exhibit 6.01 to the Registrant's Form 10-SB filed as
of November 30, 1999, filed with the SEC, which is
incorporated herein by reference to such Form 10-SB.
10.1 Patent License Agreement, dated July 30, 1997, between
the Company and Information Resource Engineering,
Inc., filed as Exhibit 6.02 to the Registrant's Form
10-SB filed as of November 30, 1999, filed with the
SEC, which is incorporated herein by reference to such
Form 10-SB.
10.2 License Agreement, dated October 31, 1999, between the
Company and Revolution Labs, Inc. ("Revolution"),
together with the agreement among the Company,
Revolution and Protective Technologies, Inc.
("Protek") regarding the potential purchase by Protek
of Revolution's fields of license, filed as Exhibit
6.03 to the Registrant's Form 10-SB filed as of
November 30, 1999, filed with the SEC, which is
incorporated herein by reference to such Form 10-SB.
10.3 Agreement, dated March 30, 1999, among Safe Guard
Corporation, Protek, Secure Card International, Inc.,
International Biometrics Incorporated, Tele-Guard,
Inc. and the Company, filed as Exhibit 6.04 to the
Registrant's Form 10-SE filed as of November 30,
1999, filed with the SEC, which is incorporated
herein by reference to such Form 10-SB.
10.4 License Agreement dated February 2, 1999 between the
Company and Power^Up Marketing Corporation, filed as
Exhibit 6.05 to the Registrant's Form,10-SB filed as
of November 30, 1999, filed with the SEC, which is
incorporated herein by reference to such Form 10-SB.
10.5 Debenture Purchase Agreement, dated September 24,
1999, between the Company and certain purchasers,
filed as Exhibit 6.06 to the Registrant's Form 10-SB
filed as of November 30, 1999, filed with the SEC,
which is incorporated herein by reference to such Form
10-SB.
10.6 1999 Stock Option Plan, filed as Exhibit 6.07 to the
Registrant's Form 10-SB filed as of November 30, 1999,
filed with the SEC, which is incorporated herein by
reference to such Form 10-SB.
10.7 Form of Incentive Stock Option Agreement, filed as
Exhibit 6.08 to the Registrant's Form 10-SB filed as
of November 30, 1999, filed with the SEC, which is
incorporated herein by reference to such Form 10-SB.
10.8 Employment Agreement between the Company and
CEO/President Mr. J. Phillips L. Johnston, dated
November 9, 1999 filed as Exhibit 10.8 to the
Registrant's Form 10-KSB for the year ended December
31, 1999 which is incorporated herein by reference to
such Form 10-KSB.
10.9 License Agreement with Bob Barker Company, Inc. filed
as Exhibit 10 to the Registrant's Form 10-QSB for the
quarter ended September 30, 2000, which is
incorporated herein by reference to such Form 10-QSB.
10.10 License Agreement between the Company and Protective
Technology, Inc. dated October 24, 2000 filed as
Exhibit 10.10 to the Registrant's Form 10K-SB for the
fiscal year ending December 31, 2000 filed with the
SEC, which is incorporated by reference to such Form
10K-SB.
10.11 Amended and Restated License Agreement dated February
2001 between the Company and Protective Technologies,
Inc. filed as Exhibit 10.11 to the Registrant's Form
10K-SB for the fiscal year ending December 31, 2000
filed with the SEC, which is incorporated by
reference to such Form 10K-SB.
10.12 Amended and Restated License Agreement dated
February, 2001 between the Company and Protective
Technologies, Inc. filed as Exhibit 10.12 to the
Registrant's Form 10K-SB for the fiscal year ending
December 31, 2000 filed with the SEC, which is
incorporated by reference to such Form 10K-SB.
10.13 Amended and Restated License Agreement dated
February, 2001 between the Company and Protective
Technologies, Inc. filed as Exhibit 10.13 to the
Registrant's Form 10K-SB for the fiscal year ending
December 31, 2000 filed with the SEC, which is
incorporated by reference to such Form 10K-SB.
10.14 Amended and Restated License Agreement dated
February, 2001 between the Company and Protective
Technologies, Inc. filed as Exhibit 10.14 to the
Registrant's Form 10K-SB for the fiscal year ending
December 31, 2000 filed with the SEC, which is
incorporated by reference to such Form 10K-SB.
10.15 Amended and Restated License Agreement dated
February, 2001 between the Company and Protective
Technologies, Inc. filed as Exhibit 10.15 to the
Registrant's Form 10K-SB for the fiscal year ending
December 31, 2000 filed with the SEC, which is
incorporated by reference to such Form 10K-SB.
10.16 Amended and Restated License Agreement dated
February, 2001 between the Company and Protective
Technologies, Inc. filed as Exhibit 10.16 to the
Registrant's Form 10K-SB for the fiscal year ending
December 31, 2000 filed with the SEC, which is
incorporated by reference to such Form 10K-SB.
10.17 Teaming Agreement dated August 1, 2001 between the
Company and GRC International, Inc.
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ID TECHNOLOGIES CORPORATION
BY /S/ J. Phillips L. Johnston
------------------------------------------
DATE: November 14, 2001 J. Phillips L. Johnston, President and CEO
/S/ William F. Lane
------------------------------------------
DATE: November 14, 2001 William F. Lane, Chairman and Treasurer
(Principal Financial Officer)