-----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, Mvh365ka3sexxNCtAFCZ7O0eO/l5vgktIR5mK2yKG4zW67Qzn8laAszJvHRfC9Fp TsWO8H1padkfeVc0CzXzRg== 0001021432-01-500040.txt : 20010514 0001021432-01-500040.hdr.sgml : 20010514 ACCESSION NUMBER: 0001021432-01-500040 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20010511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIK PIX INC CENTRAL INDEX KEY: 0000806513 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 330210056 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-30443 FILM NUMBER: 1630233 BUSINESS ADDRESS: STREET 1: 7500 VILLAGE DR STE F CITY: BUENA PARK STATE: CA ZIP: 90621 BUSINESS PHONE: 7145228255 MAIL ADDRESS: STREET 1: 7500 VILLAGE DRIVE SUITE F CITY: BURENA PARK STATE: CA ZIP: 90621 10QSB 1 dosexhibit.txt EXHIBIT 3.1 CONSULTING AGREEMENT AGREEMENT effective as of the 14th day of March 2000, between Quality Photographic Imaging, Inc., (the "Company" or "QPI"), 7050 Village Drive, Suite F, Buena Park, CA 90821, a Nevada corporation and GB Consulting Attn: Gerry Berg, P.O. Box 231729, Encinitas CA 92024 ("Consultant"). WHEREAS, the Company desires that Consultant provide consulting services mainly in the areas of Merge and Acquisition and Administrative consulting services to the Company pursuant hereto and Consultant is agreeable to providing such services. NOW THEREFORE, In consideration of the premises and the mutual promises set forth herein, the parties hereto agree as follows: 1. For a period of six months (8) from the date hereof (the "Consulting Period"), Consultant shall serve as a consultant to the Company on matters pertaining to various corporate matters as may be assigned by the Executive Officers of the Company. 2. During the Consulting Period, the Company shall be entitled to Consultant's services for reasonable times when and to the extent requested by, and subject to the direction of, the Executive Officers of the Company. 3. Consultant's services shall be rendered from his offices unless otherwise requested for those services to be rendered at the Company's offices or elsewhere. Reasonable travel and other expenses necessarily incurred by Consultant outside of San Diego County to render services at locations other than his office or the Company's offices shall be reimbursed by the Company promptly upon receipt of proper statements with regard to the nature and amount of those expenses. Those statements shall be furnished to the Company weekly at the end of each month of the Consulting Period during which any of those expenses are incurred. Expenses shall be paid by Company within ten (10) days of receipt. 4. For all services Consultant may render to the Company during the Term of this Agreement, including services as an officer, or member of any committee of the Company, Consultant will be compensated with a common stock option of 400,000 shares of QPI's common stock at an option/warrant price of $0.20 per share of common stock. This warrant will be registered with the Company's next registration statement. Consultant shall also be compensated five percent (5%) of all proceeds received by the Company that Consultant introduced to the Company over the first $275,000 raised by the Company. 5. It is the express intention of the parties that Consultant is an independent contractor and not an employee, agent, joint venture partner of Company. Nothing in this agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between Consultant and Company or any employee or agent of Consultant. Both parties acknowledge that Consultant is not an employee for state or federal tax purposes. Consultant shall retain the right to perform services for others during the term of this Agreement. CONSULTANT IS NOT A REGISTERED BROKER DEALER OR ASSOCIATED PERSON OF SUCH, AND IS NOT PURPORTING TO ACT IN ANY CAPACITY REQUIRING REGISTRATION AS A BROKER DEALER OR ASSOCIATED PERSON. 7. Obligations of Consultant -Tools and Instrumentalities 7.01. Company will supply all tools and instrumentalities required to perform the services under this agreement. Consultant is not required to purchase or rent any equipment or services from Company. 7.02. Assignment. Neither this agreement nor any duties or obligations under this agreement may be assigned by Consultant without the prior written consent of Company. 7.03. State and Federal Taxes. As Consultant is not Company's employee, Consultant is responsible for paying all required state and federal taxes. In particular; Company will not withhold FICA (Social Security) from Consultant's payments; Company will not make state or federal unemployment insurance contributions on behalf of Consultant; Company will not withhold state or federal income tax from payment to Consultant; Company will not make disability insurance contributions on behalf of Consultant; Company will not obtain workers' compensation insurance on behalf of Consultant. 8. Obligations of Company 8.01. Cooperation of Company. Company agrees to comply with all reasonable requests of Consultant (and provide access to all documents reasonably) necessary to the performance of Consultant's duties under this agreement. 9. Termination of Agreement. Termination on Occurrence of Stated Events 901. This agreement shall immediately terminate automatically on the occurrence of the following events: 1. Bankruptcy or insolvency of either party; 2. Sale of the business of either party. 9.02. Termination by Company or Consultant. This agreement may be terminated after the initial one year upon thirty (30) days written notice by either Company or Consultant. 10. General Provisions 10.1 Notices. Any notices to be given hereunder by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepared with return receipt requested. Mailed notices shall be addressed to the parties at the addresses appearing In the introductory paragraph of this agreement, but each party may change the address by written notice In accordance with this paragraph. Notices delivered personally will be deemed communicated as of actual receipt; mailed notices will be deemed communicated as of two days after mailing. 10.02. Entire Agreement of the Parties. This agreement supersedes any and all agreements, either oral or written, between the parties hereto with respect to the rendering of services by Consultant for Company and contains all the covenants and agreements between the parties with respect to the rendering of such services in any manner whatsoever. Each party to this agreement acknowledges that no representations, inducements, promises, or agreements orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, or promise not contained in this agreement shall be valid or binding. Any modification of this agreement will be effective only if it is in writing signed by the party to be charged. 10.03 Partial Invalidity. If any provision In this agreement Is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions will nevertheless continue in full force without being Impaired or invalidated in any way. 10.04 Attorneys Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this agreement, the prevailing party will be entitled to reasonable attorneys fees, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which that party may be entitled. 10.05 Governing Law. This agreement will be governed by and construed in accordance with the laws of the State of California. 11. Proprietary Information 11.01. The written, printed, graphic, or electronically recorded materials furnished by Company for use by Consultant are Proprietary Information and are the property of Company. Proprietary Information includes, but is not limited to, pricing information, specific customer requirements, customer and potential customer lists, and information on Company's employees, agent, or divisions. 11.02. Consultant shall maintain in confidence and shall not, directly or indirectly, disclose or use, either during or after the term of this Agreement, any Proprietary Information, confidential information, or know-how belonging to Company, whether or not it is in written or permanent form, except to the extent necessary to perform the Services. On termination of Consultants services to the Company, or at the request of Company before termination, Consultant shall deliver to Company all material in Consultant's possession relating to Company's business. The obligations on Proprietary information extend to information belonging to customers and suppliers of Company about whom Consultant may have gained knowledge as a result of performing the Services. 11.03. Consultant shall not, during the term of this Agreement and for a period of one year immediately after the termination of this Agreement, or any extension of it, for any reason, either directly or indirectly (a) call on, solicit, or take away any of Company's customers or potential customers about whom Consultant became aware as a result of Consultants Services to the Company, either for Consultant or for any other person or entity; or (b) solicit or take away or attempt to solicit or take away any of Company's employees or Consultants either for Consultant or for any other person or entity. Executed In Buena Park, California, as of March 14, 2000. gb Consulting: By: /s/ Gerry Berg Quality Photographic Imaging, Inc. A Nevada Corporation By: /s/ John Capie, President EX-1 2 march00q4.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10QSB X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR TRANSITION 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 0-26407 QUIK PIX, INC. (Exact name of registrant as specified in its charter) Nevada 33-0198595 (State or other jurisdiction IRS Employer of incorporation or organization) Identification No.) 7050 Village Drive Buena Park, California 90621 (Address of principal executive offices (zip code) 714/522-8255 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the last 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 No X Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding at March 31, 2000 Common Stock, par value $0.001 9,897,305 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS QUIK PIX INC. AND SUBSIDIARY Page 3 Independent Accountants' Report 4 Consolidated Balance Sheets as of March 31, 2000 (unaudited) and September 30, 1999. 5 Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2000 and 1999 (unaudited) 6 Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2000 7 Notes to Consolidated Financial Statements as of March 31, 2000 (unaudited) INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors of: Quik Pix, Inc. and Subsidiary We have reviewed the accompanying consolidated balance sheet, statements of operations and cash flows of Quik Pix, Inc. and Subsidiary as of March 31, 2000 and for the three month and six month periods then ended. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company's working capital deficiency of $517,237, stockholders' deficiency of $1,453,325, net loss from operations of $515,060 and cash used in operations of $386,908 raise substantial doubt about its ability to continue as a going concern. Management's Plan in regards to these matters is also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. WEINBERG & COMPANY, P.A. Boca Raton, FL February 8, 2001 QUICK PIX, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2000 AND SEPTEMBER 30, 1999 ASSETS
March 31, 2000 Sept. 30, 1999 (unaudited) -------------- -------------- CURRENT ASSETS Cash $ 40,277 $ 3,615 Trade accounts receivable, net 270,158 208,040 Inventories 30,000 30,000 Prepaids 443,667 8,097 ---------- --------- Total Current Assets 784,102 249,752 ---------- --------- PROPERTY & EQUIPMENT NET - - ---------- --------- OTHER ASSETS Goodwill, net 232,276 305,499 Multi-image technology, net 15,960 16,800 Other receivables - 4,000 Deposits 5,186 5,335 ---------- -------- Total Other Assets 253,422 331,634 ---------- -------- TOTAL ASSETS $1,037,524 $581,386 =========== ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Accounts payable and accrued expenses $ 678,871 $ 635,090 Accrued interest 473,957 453,940 Payroll payable 50,863 49,284 Income tax payable - 1,600 Current portion of long term debt 97,648 74,000 ---------- --------- Total Current Liabilities 1,301,339 1,213,914 ---------- --------- Long-term liabilities 1,189,510 1,264,737 ---------- --------- TOTAL LIABILITIES 2,490,849 2,478,651 ---------- --------- STOCKHOLDERS' DEFICIENCY Common stock, $0.001 par value, 50,000,000 shares authorized, 9,897,305 and 6,003,462 shares issued and outstanding 9,897 6,003 Additional paid-in capital 1,180,709 225,603 Accumulated deficit (2,643,931) (2,128,871) ---------- --------- Total Stockholders'Deficiency (1,453,325) (1,897,265) ---------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $1,037,524 $ 581,386 ========== =========
See accompanying notes to consolidated financial statements. QUICK PIX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
Three months ended Mar. 31, Six months ended Mar. 31, 2000 1999 2000 1999 ---------- ---------- --------- --------- Sales $ 251,911 $ 339,677 $ 489,909 $ 719,188 Cost of goods sold 217,168 277,485 397,457 572,828 ---------- ---------- --------- --------- Gross profit 34,743 62,192 92,452 146,360 ---------- ---------- --------- --------- Expenses: Selling, general and administrative 426,124 218,565 561,286 372,878 ---------- ---------- --------- --------- Loss from operations (391,381) (156,373) (468,834) (226,518) ---------- ---------- --------- --------- Other income(expense) Interest income 6 3,919 7 4,257 Interest (expense) (22,195) (25,505) (46,233) (59,551) ---------- ---------- --------- --------- Net other interest income (expense) (22,189) (21,586) (46,226) (55,294) ---------- ---------- --------- --------- Net loss $(413,570) $(177,959) $(515,060) $(281,812) =========== =========== ========== ========== Net loss per share $(0.05) $(0.03) $(0.07) $(0.05) ========== =========== ========== ======== Weighted average number of shares outstanding basic and diluted 8,658,333 6,033,462 7,604,772 6,003,462 ========= ========== ========= =========
See accompanying notes to consolidated financial statements. QUICK PIX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
2000 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (515,060) $ (281,812) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 74,064 135,845 Stock based compensation 40,333 - Provision for doubtful accounts 4,000 - Changes in assets and liabilities: (Increase) in accounts receivable (62,118) (21,584) Decrease (increase) in prepaid expense 8,097 (343) (Increase) in other receivables - (4,000) Increase in accounts payable and accrued expenses 42,180 37,141 Increase in accrued interest 20,017 30,756 Increase in payroll payable 1,579 62,628 ---------- ---------- Net Cash Used In Operating Activities (386,908) (41,369) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in deposits 149 (1,555) ----------- ---------- Net cash provided by (used in) investing activities 149 (1,555) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans payable - 49,298 Proceeds from private placement, net of offering cost 475,000 - Repayment of notes payable and capital leases (51,579) - ---------- ---------- Net cash provided by financing activities 423,421 49,298 ---------- ---------- INCREASE IN CASH AND CASH EQUIVALENTS 36,662 6,374 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 3,615 3,965 --------- -------- CASH AND CASH EQUIVALENTS - END OF PERIOD $40,277 $10,339 ========= ======== CASH PAID FOR INTEREST $26,218 $28,795 ========= ========
See accompanying notes to consolidated financial statements. QUICK PIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2000 (UNAUDITED) NOTE 1 BASIS OF PRESENTATION The accompanying un-audited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations. It is management's opinion, however, that all adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. For further information, refer to the financial statements and footnotes included in the Company's Form 10-K filed on April 14, 2000 and Form 8-K filed on April 21, 2000. NOTE 2 RECAPITALIZATION On March 21, 2000, pursuant to an agreement and plan of reorganization (the "Acquisition") the Company acquired all the outstanding shares of common stock of Baroque Corporation, a Delaware Corporation, from the shareholder thereof in exchange for an aggregate of 410,510 shares of common stock of the Company. As a result, Baroque became a wholly-owned subsidiary of the Company. The Acquisition was effective on March 22, 2000 and was intended to qualify as a reorganization within the meaning of Section 368(A)(1)(b) of the Internal Revenue Code of 1986, as amended. Upon effectiveness of the Acquisition, pursuant to 12g- 3(a) of the General Rules and Regulations of the Securities and Exchange Commission, the Company became the successor issuer to Baroque for reporting purposes under the Securities and Exchange Act of 1934. The reorganization was treated as a recapitalization of the Company with the $411 par value of the common stock issued charged to additional paid-in capital (See Note 4). NOTE 3 INVENTORY Inventory is stated at the lower of cost (first in first out method) or market and consists primarily of new film and other photo processing stock. NOTE 4 EQUITY During the six months ended March 31, 2000, the Company issued 3,893,843 shares of common stock for proceeds of $475,000. Also, the Company issued 410,510 shares under a plan of reorganization (See Note 2). Pursuant to a six-month consulting agreement dated March 14, 2000 between the Company and a consultant, 400,000 stock options were granted for future services to be performed over a six-month period from the contract date. The fair value of these options aggregated $484,000 and was credited to additional paid-in capital for the six months ended March 31, 2000 (See Note 6). As of March 31, 2000 the Company charged $40,333 to operations for services rendered and the balance of $443,667 was recorded as a prepaid expense. For financial statement purposes, the fair market value of each stock option granted during the six months ended March 31, 2000 was estimated on the date of grant using the Black-Scholes Model in accordance with Statement No. 123 using the following weighted average assumptions: expected dividend yield 0%, risk-free interest rate of 6.12%, volatility of 432% and expected term of one year. NOTE 5 GOING CONCERN As reflected in the accompanying financial statements, the Company has had continuing losses, and at March 31, 2000, had a working capital deficiency of $517,237, a stockholders' deficiency of $1,453,325, net loss from operations of $515,060 and cash used in operations of $386,908. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company anticipates an increase in revenues during 2001 and intends to continue raising additional capital during 2001. Management believes that actions presently taken to improve its future operations and obtain additional funding provide the opportunity for the Company to continue as a going concern. NOTE 6 SUBSEQUENT EVENTS During April 2000, the Company issued 400,000 common shares upon the exercise of the stock options which were previously granted in March of 2000. The issuance of these shares were for cash, valued at $0.20 per share the quoted trading price on the agreement date, which aggregated $80,000 (See Note 4). Subsequent to March 31, 2000, the Company entered into an agreement with Imaging Technologies Corporation ("ITEC") whereby effective December 1, 2000, ITEC will assume the current liabilities of Quik Pix and the Company will issue 37,500,000 shares of restricted stock to ITEC. In addition, the convertible debenture holders of the Company will cancel such debentures and all related interest in exchange for an aggregate total of 500,000 shares of restricted common stock of ITEC. As of the date of issuance of these financial statements, the agreement has not received shareholder approval, and therefore a closing has not occurred. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is intended to provide an analysis of the Company's financial condition and should be read in conjunction with the Company's financial statements and the notes thereto. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. The matters discussed in this section that are not historical or current facts deal with potential future circumstances and developments. Such forward-looking statements include, but are not limited to, the development plans for the growth of the Company, trends in the results of the Company's development, anticipated development plans, operating expenses and the Company's anticipated capital requirements and capital resources. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which the forward-looking statements are based are reasonable, it can give no assurance that such expectations and assumptions will prove to be correct. The Company's actual results could differ materially from the results discussed in the forward-looking statements. GENERAL Quik Pix, Inc, also doing business as QPI, is a publicly held company, located in Buena Park, California. The Company was incorporated on November 4, 1980 and was subsequently purchased by a group of investors in August, 1986. In November, 1987, Quik Pix merged with Redwood Financial, Inc., a publicly traded Nevada corporation. The Company has specialized in the state of the art photography products, primarily for the advertising and industrial users of such products. For the most part, these products are used in trade shows, industrial displays, fast food displays, and increasingly, in commercial advertising. The methodology used in producing products has evolved over time from standard film-oriented input to that of digital input. The Company's products are high quality. In August 1999, the Company received a license from John Capezzuto to use his United States patented Photomotion process. The Photomotion process allows for up to five images to be combined on a single presentation transparency. The product has received generally favorable acceptance in its markets during the past two years. Sales growth, however, has been slower than originally expected, although sales have begun to increase over the past several months. Management is optimistic that the financial results for the next year will improve. Pursuant to an agreement and plan of reorganization (the "Acquisition Agreement"), Quik Pix, Inc. ("Quik Pix" or the "Company") acquired all the outstanding shares of common stock of Baroque Corporation ("Baroque"), a Delaware corporation, from the shareholder thereof in an exchange for an aggregate of 410,510 shares of common stock of Quik Pix (the "Acquisition"). As a result, Baroque became a wholly-owned subsidiary of Quik Pix. The Acquisition was effective on March 22, 2000 and was intended to qualify as a reorganization within the meaning of Section 368(A)(1)(b) of the Internal Revenue Code of 1986, as amended. Upon effectiveness of the Acquisition, pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities and Exchange Commission, Quik Pix became the successor issuer to Baroque for reporting purposes under the Securities Exchange Act of 1934. The consideration exchanged pursuant to the Acquisition was negotiated between Baroque and Quik Pix. In evaluating the Acquisition, Baroque used criteria such as the value of assets of Quik Pix, Quik Pix's ability to compete in the market place, Quik Pix's anticipated business operations, and Quik Pix management's experience and business plan. In evaluating Baroque, Quik Pix placed a primary emphasis on Baroque's status as a reporting company under Section 12(g) of the Securities Exchange Act of 1934, as amended, and Baroque's facilitation of Quik Pix's becoming a reporting company under the Act. Quik Pix filed a Current Report on Form 8-K on March 22, 2000 reflecting the Acquisition. A copy of the Acquisition Agreement was filed as an exhibit to the Form 8-K. The Company has limited finances and requires additional funding in order to accomplish its growth objectives and marketing of its products and services. There is no assurance that Quik Pix will have revenues in the future or that it will be able to secure other funding necessary for its future growth and expansion. There is also no assurance that Quik Pix's technology will perform as intended or that potential customers will show sufficient interest in the Company's product and related services. There is no assurance that Quik Pix will be successful in development or marketing of its product or in generating any meaningful revenues from operations. SUBSEQUENT EVENT On December 11, 2000, the Company entered into an agreement (the "Purchase Agreement") with Imaging Technologies Corporation, a Delaware corporation ("ITEC"), whereby ITEC will assume the liabilities of the Company as they were on December 1, 2000, which liabilities are estimated to be approximately $1,300,000 exclusive of certain outstanding convertible debentures. In the event that ITEC is unable to pay such liabilities a creditor can still pursue remedies against the Company. Pursuant to the Purchase Agreement, the Company will issue 37,500,000 shares of its restricted common stock to ITEC. In addition, in a separate transaction, the convertible debenture holders of the Company have agreed, subject to approval of the Purchase Agreement, to cancel such debentures together with all related accrued interest in exchange for an aggregate total of 500,000 shares of restricted common stock of ITEC. The Purchase Agreement also requires that John Capezzuto assign to the Company his rights to United States patent no. 5,782,026. As of the date of this Report, the agreement with ITEC has not received approval from the shareholders of the Company, and therefore a closing has not occurred. The Company intends to hold a special shareholder's meeting to approve the terms of the Purchase Agreement. Brian Bonar, ITEC's Chief Executive Officer, and Christopher McKee, ITEC's President and Chief Operating Officer, are both directors of the Company; however, the Company believes that the terms of the Purchase Agreement were negotiated as an arm's length transaction. RESULTS OF OPERATIONS Revenues for the three and six months ended March 31, 2000 were $251,911 and $489,909, respectively, compared to $339,677 and $719,188 for the three and six months ended March 31, 1999, a decrease of $87,766 or 25.8%, and $229,279 or 31.8%, respectively. The decrease was primarily attributable to lower than expected growth in the Company's business and the photographic industry as a whole. Cost of sales was $217,168 (86% of products sold) and $397,457 (81% of products sold), for the three and six months ended March 31, 2000, respectively, compared to $277,485 (82% of products sold) and $572,828 (80% of product sold), respectively, for the three and six months ended March 31, 1999. Selling, general and administrative expenses were $426,124 and $561,286 for the three and six months ended March 31, 2000, respectively, an increase of 95% and 51%, respectively, from $218,565 and $372,878 for the three and six months ended March 31, 1999.The increase was primarily attributable to costs associated with the acquisition of Baroque. (See Note 4 to the Consolidated Financial Statements.) The net losses for the three and six months ended March 31, 2000 were $413,570 and $515,060, respectively, compared to net losses of $177,959 and $281,812, respectively, for the three and six months ended March 31, 1999. The primary reason for the increase in the current period loss was the increase in operating expenses coupled with decreased sales. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents at March 31, 2000 were $40,277 compared to $3,615 at September 30, 1999. This increase in cash was primarily attributable to cash received from the sale of stock. Accounts receivable increased to $270,158 at March 31, 2000 from $208,040 at September 30, 1999. The increase was due primarily to increased sales at the end of the period, which would be collectible in the following quarter. Inventory at March 31, 2000 was unchanged from of September 30, 1999. The Company generally builds products to suit customer orders and generally does not build inventories. Total current assets increased to $784,102 at March 31, 2000 from $249,752 at September 30, 1999, due primarily to an increase in prepaid expenses. (See Note 4 to the Consolidated Financial Statements.) Other assets decreased to $253,422 at March 31, 2000 from $331,634 at September 30, 1999 attributable to the amortization of goodwill of $73,223. The combination of accounts payable and accrued expenses increased to $678,871 at March 31, 2000 from $635,090 at September 30, 1999. This increase was primarily attributable to a slowing of payments made by the Company due to cash flow concerns. The Company may seek to raise additional capital through the issuance of either public or private equity securities to finance anticipated future growth. While there can be no assurance that future financing will be available, or available on terms acceptable to the Company, the Company may seek to raise additional capital through the issuance of either public or private debt or equity securities to finance future acquisitions. Debt financing may require the Company to pledge assets as collateral. Equity financing may result in dilution to stockholders. Failure to arrange additional financing could affect the Company's ability to continue to expand its operations. The Company has not paid dividends on its common stock, but has reinvested its earnings to support its working capital and expansion requirements. The Company intends to continue to utilize its earnings in the development and expansion of the business and does not expect to pay cash dividends in the foreseeable future. PART 2 OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES Pursuant to an agreement and plan of reorganization (the "Acquisition Agreement"), Quik Pix, Inc. ("Quik Pix" or the "Company") acquired all the outstanding shares of common stock of Baroque Corporation ("Baroque"), a Delaware corporation, from the shareholder thereof in an exchange for an aggregate of 410,510 shares of common stock of Quik Pix (the "Acquisition"). As a result, Baroque became a wholly-owned subsidiary of Quik Pix. The Acquisition was effective on March 22, 2000 and was intended to qualify as a reorganization within the meaning of Section 368(A)(1)(b) of the Internal Revenue Code of 1986, as amended. Upon effectiveness of the Acquisition, pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities and Exchange Commission, Quik Pix became the successor issuer to Baroque for reporting purposes under the Securities Exchange Act of 1934. The consideration exchanged pursuant to the Acquisition was negotiated between Baroque and Quik Pix. In evaluating the Acquisition, Baroque used criteria such as the value of assets of Quik Pix, Quik Pix's ability to compete in the market place, Quik Pix's anticipated business operations, and Quik Pix management's experience and business plan. In evaluating Baroque, Quik Pix placed a primary emphasis on Baroque's status as a reporting company under Section 12(g) of the Securities Exchange Act of 1934, as amended, and Baroque's facilitation of Quik Pix's becoming a reporting company under the Act. The Company had 8,503,462 shares of common stock issued and outstanding prior to the Acquisition and 8,913,972 shares issued and outstanding following the Acquisition. The Company filed a Current Report on Form 8-K on March 22, 2000 reflecting the Acquisition. A copy of the Acquisition Agreement was filed as an exhibit to the Form 8-K. During the three months ended March 31, 2000, the Company issued 1,393,843 shares of its common stock for proceeds to the Company of $250,000. On March 14, 2000, the Company entered into a consulting agreement whereby the Company granted the consultant an option to purchase 400,000 shares of the Company's common stock exercisable at $.20 per share. 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 8K (A) Exhibits 2.1. Agreement and Plan of Reorganization between Quik Pix, Inc. and Baroque Corporation filed as an exhibit to the Form 8-K filed March 22, 2000 (file no. 0- 26407), and incorporated herein by reference thereto. 3.1 Consulting Agreement between the Company and GB Consulting, dated March 14, 2000. (B) Reports on Form 8K Quik Pix filed a Current Report on Form 8-K on March 22, 2000 reflecting the acquisition of Baroque Corporation. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QUIK PIX, INC. By: /s/ John Capezzuto, President and Chief Executive Officer By: /s/ Ed Youngman Chief Financial Officer Dated: May 11, 2001 -----END PRIVACY-ENHANCED MESSAGE-----