-----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, EOUMmvNdTPBFfKjYV1GugmfzwdoWcTlFWUeUyQ1cA4Ch1Cv2E9LieO3i5UtG2bX3 iNIGMKITmZV2OcIs910vJw== 0000891618-99-002327.txt : 19990518 0000891618-99-002327.hdr.sgml : 19990518 ACCESSION NUMBER: 0000891618-99-002327 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSTANT VIDEO TECHNOLOGIES INC CENTRAL INDEX KEY: 0000865753 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 841141967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-35580 FILM NUMBER: 99627876 BUSINESS ADDRESS: STREET 1: 500 SANSOME ST STE 503 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4153914455 MAIL ADDRESS: STREET 1: 500 SANSOME ST STREET 2: STE 503 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FORMER COMPANY: FORMER CONFORMED NAME: CATALINA CAPITAL CORP/DE/ DATE OF NAME CHANGE: 19600201 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED 03/31/99 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended MARCH 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from _______, 19___ to ______, 19___. Commission File Number: 33-35580-D INSTANT VIDEO TECHNOLOGIES, INC. -------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) DELAWARE 84-1141967 -------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Identi- Incorporation or Organization) fication Number) 500 SANSOME STREET, SUITE 503 SAN FRANCISCO, CALIFORNIA 94111 ------------------------------- Address of Principal Executive Offices, Including Zip Code (415) 391-4455 -------------- (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 Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO There were 9,225,527 shares of the Issuer's $.00001 par value common stock outstanding as of May 12, 1999 1 2 INSTANT VIDEO TECHNOLOGIES, INC. FORM 10-Q MARCH 31, 1999 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION..................................................................3 ITEM 1. FINANCIAL STATEMENTS................................................................3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........................................................................8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........................9 PART II - OTHER INFORMATION....................................................................10 ITEM 1. LEGAL PROCEEDINGS..................................................................10 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS..........................................10 ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................................................10 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................10 ITEM 5. OTHER INFORMATION..................................................................10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................11 SIGNATURES.....................................................................................12
2 3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements INSTANT VIDEO TECHNOLOGIES, INC. Condensed Consolidated Balance Sheets March 31, 1999 and December 31, 1998
ASSETS MARCH 31, DECEMBER 31, 1999 1998 ------------ ------------ Current assets: Cash and cash equivalents $ 2,655,311 $ 2,212,141 Prepaid expenses and other current assets 148,695 26,053 Receivable - Series B Convertible Preferred Stock -- 810,000 ------------ ------------ Total current assets 2,804,006 3,048,194 ------------ ------------ Property and equipment, net 383,728 184,616 Other assets 16,812 16,812 ------------ ------------ Total assets $ 3,204,546 $ 3,249,622 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 14,801 $ 22,736 Accounts payable 643,308 252,044 Accrued expenses 57,577 181,484 ------------ ------------ Total current liabilities 715,686 456,264 ------------ ------------ Stockholders' equity: Preferred stock, $.00001 par value, 20,000,000 shares authorized: Series A, 2,025,000 shares issued and outstanding in 1999 and 1998, respectively 20 20 Series B, 2,476,609 shares issued and outstanding in 1999 and 1998, respectively 25 25 Common stock, $.00001 par value, 100,000,000 shares authorized; 9,218,727 and 7,940,966 shares issued and outstanding in 1999 and 1998, respectively 92 79 Additional paid-in capital 28,519,387 27,251,399 Accumulated deficit (26,030,664) (24,458,165) ------------ ------------ Total stockholders' equity 2,488,860 2,793,358 ------------ ------------ Total liabilities and stockholders' equity $ 3,204,546 $ 3,249,622 ============ ============
See accompanying notes to condensed consolidated financial statements. 3 4 INSTANT VIDEO TECHNOLOGIES, INC. Condensed Consolidated Statements of Operations For the Three Months Ended March 31, 1999 and 1998
1999 1998 ------------ ------------ Costs and expenses: Research and development $ 460,902 $ 130,521 Sales and marketing 448,818 45,055 General and administrative 669,401 304,893 ------------ ------------ Total costs and expenses 1,579,121 480,469 ------------ ------------ Loss from operations (1,579,121) (480,469) ------------ ------------ Other income (expense): Interest expense (365) (155,867) Other, net 6,987 -- ------------ ------------ Total other income net 6,622 (155,867) ------------ ------------ Net loss (1,572,499) (636,336) Accumulated deficit, beginning of the year (24,458,165) (8,779,320) ------------ ------------ Accumulated deficit, end of quarter $(26,030,664) $ (9,415,656) ============ ============ Basic and diluted net loss per common share $ (0.18) $ (0.11) ============ ============ Shares used in per share computation 8,532,685 5,791,465 ============ ============
See accompanying notes to condensed consolidated financial statements 4 5 INSTANT VIDEO TECHNOLOGIES, INC. Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1999 and 1998
1999 1998 ----------- ----------- Cash flows from operating activities: Net loss $(1,572,499) $ (636,336) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 28,887 9,674 Warrant expense issued with debt -- 77,500 Interest expense issued with debt -- 65,000 Stock option compensation 30,501 156,850 Changes in operating assets and liabilities: (Increase) decrease in prepaid expenses and other current (122,642) 10,098 assets Decrease in receivable - Series B Convertible Preferred 810,000 -- Stock Increase in accounts payable 391,264 39,184 Increase (decrease) in accrued expenses (123,907) 19,112 (Decrease) in accrued interest -- (29,349) ----------- ----------- Net cash used in operating activities (558,396) (288,267) ----------- ----------- Cash flows from investing activities: Purchases of property and equipment, net (227,999) (21,625) ----------- ----------- Net cash used in investing activities (227,999) (21,625) ----------- ----------- Cash flows from financing activities: Proceeds from sale of common stock -- 300,000 Proceeds from debt -- 1,059,519 Exercise of warrants for common stock 1,237,500 -- Repayment of debt (7,935) (537,243) ----------- ----------- Net cash provided by financing activities 1,229,565 822,276 ----------- ----------- Increase in cash and cash equivalents 443,170 512,384 Cash and cash equivalents, beginning of year 2,212,141 20,551 ----------- ----------- Cash and cash equivalents, end of quarter $ 2,655,311 $ 532,935 =========== ===========
See accompanying notes to condensed consolidated financial statements 5 6 INSTANT VIDEO TECHNOLOGIES, INC. Condensed Consolidated Statements of Cash Flows, Continued For the Three Months Ended March 31, 1999 and 1998
1999 1998 ---------------- ------ Supplemental disclosure of cash flow information: Cash paid for interest $ 365 15,868 ================ ====== Supplemental schedule of non-cash financing activities: In a series of cashless exercises, a financial institution exercised 250,000 warrants to purchase 226,140 shares of the Company's common stock at $1.00 per share during 1999. This same institution also exercised 31,250 warrants to purchase 26,122 shares of the Company's common stock at $1.60 per share During 1999, a contractor received 499 shares for services resulting in $4,054 compensation expense to the Company During 1999, and 1998, the Company granted stock options to various consultants and employees, which resulted in compensation expense of $26,447 and $156,850 respectively During 1999, a holder of the Company's Series A (formerly Series F) convertible Preferred Stock, exercised a warrant issued with that stock to purchase 200,000 shares of the Company's common stock at $1.50 per share The $300,000 subscription receivable associated with that exercise has been deducted from additional paid-in capital
See accompanying notes to condensed consolidated financial statements. 6 7 INSTANT VIDEO TECHNOLOGIES, INC. Notes to Condensed Consolidated Financial Statements (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS Instant Video Technologies, Inc. ("IVT" or the "Company") is an independent provider of client/server network software for the delivery of video and audio information over networks. IVT's Burstware(R) suite of software products enables companies to transmit video and audio files at faster-than-real-time speed. The result is full-motion video and CD-quality audio to the end-user. The Company's software incorporates its portfolio of patented intellectual property to achieve this result. BASIS OF PRESENTATION The accompanying financial statements include the accounts of Instant Video Technologies, Inc. and its wholly-owned subsidiary, Explore Technology, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation. INTERIM FINANCIAL INFORMATION The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions for Form 10-Q and Article 10 of Regulation S-X. In the Company's opinion, the financial statements include all adjustments, consisting of normal recurring adjustments, which the Company considers necessary to fairly state the Company's financial position and the results of operations and cash flows. The balance sheet at December 31, 1998, has been derived from the audited financial statements at that date but does not include all of the necessary informational disclosures and footnotes as required by generally accepted accounting principles. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included with the Company's 1998 annual report on Form 10-KSB and other documents filed with the Securities and Exchange Commission. The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for any other interim period or for a full fiscal year. (2) NET LOSS PER SHARE Basic and diluted net loss per share is computed using the weighted average number of common shares outstanding. Because their effects would be anti-dilutive, stock options to acquire 4,421,543 shares and warrants to acquire 569,297 shares of common stock at a weighted average exercise price of $2.55 and $1.62, respectively, have been excluded from the computation of diluted earnings per share for the quarter ended March 31, 1999. In 1998, anti-dilutive stock options to acquire 513 shares of common stock with a weighted average exercise price of $.90 have been excluded from the computation of diluted earnings per share for the quarter. (3) COMPREHENSIVE INCOME The Company has no component of comprehensive income other than its reported amounts of net loss applicable to holders of common stock. (4) SEGMENT DISCLOSURES We have adopted the provisions of Statement of Financial Accounting Standards No. 131, "Disclosures about segments of an enterprise and related information". The Company operates in one segment and accordingly has provided only the required enterprise wide disclosure. 7 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS Certain information in this Report includes forward-looking statements within the meaning of applicable securities laws that involve substantial risks and uncertainties including, but not limited to, market acceptance of the Company's products and new technologies, the sufficiency of financial resources available to the Company, economic, competitive, governmental and technological factors affecting the Company's operations, markets, services, and prices, and other factors described in this Report and in prior filings with the Securities and Exchange Commission. The Company's actual results could differ materially from those suggested or implied by any forward-looking statements as a result of such risks. The Company's headquarters is located in San Francisco, California, with offices in Detroit, Michigan, and Phoenix, Arizona. The Company expects to increase its sales offices in 1999 with additional locations in the United States and Europe. The Company's prospects must be considered and evaluated in light of the risks, operating and capital expenditures required, and uncertainty of economic conditions that may impact its customers. Emerging companies are characterized by a high degree of market and financial risk and investors should take this into account in their evaluation of financial results and future prospects. To achieve and sustain profitability, the Company must successfully launch, market, and establish its software products, successfully develop new products and services, meet the demands of its customers, respond quickly to changes in its markets, attract and retain qualified employees, and control expenses and cash usage. The Company believes that period-to-period comparisons of its operating results, including its revenues, cost of sales, gross margins, expenses, and capital expenditures may not necessarily provide meaningful results and should not be relied upon as indications of future performance. The Company does not believe that its historical growth rates are indicative of future growth or trends. The Company has incurred significant losses since its inception, and as of March 31, 1999, it had an accumulated deficit of $26,030,664. There can be no assurance that the Company will achieve or sustain profitability and the Company believes that it will continue to incur net losses in 1999. Results of Operations The Company had no revenue nor cost of revenue for the three months ended March 31, 1999 and 1998. The Company recently completed commercial release of its Burstware(R) suite of products but has not yet begun shipping its products to customers. Costs and expenses during the three months ended March 31, 1999, totaled $1,579,121 as compared to $480,469 during the three months ended March 31, 1998. The $1,098,652 increase was due to a $330,381, or 253% increase in Research & Development expenditures, a $403,763 or 896% increase in Sales & Marketing, as well as a $364,508, or 120% increase in General and Administrative Expense. The increased costs were primarily related to increased personnel, as well as a targeted advertising campaign. The Company had a net loss from operations of $1,579,121 during the three months ended March 31, 1999, as compared to $480,469, a 229% increase over the same three months in 1998. The increased loss resulted from the increased expenditures discussed above. Other income, net was $6,622, as compared to $155,867 net expense for the three months ended March 31, 1999 and 1998, respectively. This $162,489 decrease was principally due to the $155,502 decrease in interest expense associated with debt converted to equity or that was retired during the first quarter of 1998. 8 9 Liquidity and Capital Resources As of March 31, 1999, the Company had working capital of $2,088,320 as compared to $2,591,930 at December 31, 1998. This $503,610 decrease was due to a $244,188 reduction in current assets, an increase in current liabilities of $259,422, and the Company's net loss for the quarter, partially offset by the $1,237,500 proceeds from the exercise of warrants to purchase the Company's common stock. Net cash used in operating activities totaled $558,396 during the three months ended March 31, 1999, as compared to net cash used in operating activities of $228,267 during the three months ended March 31, 1998. Net cash used in investing activities during the three month period ended March 31, 1999 totaled $227,999 as compared to $21,625 during the three month period ended March 31, 1998. Cash flow provided by financing activities during the three month period ended March 31, 1999 totaled $1,229,565 as compared to $822,276 during the same period in 1998. This increase was primarily as a result of $1,237,500 proceeds from the exercise of warrants to purchase common stock associated with the Company's Class A Preferred Stock, and the collection of an $810,000 receivable related to a sale of the Company's Class B Convertible Preferred Stock. The Company retired no debt in 1999, while it retired $537,243 during the three months ended March 31, 1998. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not Applicable 9 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings No change from legal proceedings reported in the Company's December 31, 1998 Form 10KSB. Item 2. Changes in Securities. Since January 1, 1999, the Company has sold unregistered securities as follows: During the three months ended March 31, 1999, the holders of the Company's Series A (formerly Series F) convertible Preferred Stock exercised warrants issued with that stock to purchase 1,025,000 shares of the Company's common stock at $1.50 per share, resulting in cash proceeds of $1,237,500 and a $300,000 stock subscription receivable to the Company. In a series of cashless exercises, a financial institution exercised 250,000 warrants to purchase 226,140 shares of the Company's common stock at $1.00 per share. This same institution also exercised 31,250 warrants to purchase 26,122 shares of the Company's common stock at $1.60 per share. Two employees received options to purchase 9,621 shares of common stock at prices of $2.19 and $2.91 per share in exchange for services rendered, resulting in compensation expense of $26,448 to the Company. A contractor received 499 shares of common stock for services resulting in $4,054 of compensation expense to the Company. Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information On April 14, 1999, the Company's stockholders adopted the 1998 and 1999 stock option plans by written consent. Additionally, the stockholders voted to increase the aggregate number of shares issuable under the 1992, 1998 and 1999 plans. Effective April 15, 1999, Eric Hall resigned as Interim Chief Financial Officer. On May 11, 1999, the Company's Board of Directors appointed Charles Swan as Interim Chief Financial Officer. The Company is searching for a permanent Chief Financial Officer. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits.
Exhibit Description Location Sequential No. ----------- -------- Page No - --- ------- 27 Financial Data Schedule Attached
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended March 31, 1999. 10 11 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INSTANT VIDEO TECHNOLOGIES, INC. Date: May 14, 1999 By: /s/ Richard Lang ----------------------------------- Richard Lang, Chairman, Chief Executive Officer and President By: /s/ Charles Swan ----------------------------------- Chief Financial Officer 11 12 INDEX TO EXHIBITS
Exhibit Number Description - ------ ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED CONSOLIDATED BALANCE SHEETS AND UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 2,655,311 0 0 0 0 2,804,006 474,186 90,458 3,204,546 715,686 0 0 45 92 2,488,833 3,204,546 0 0 0 0 1,579,121 0 365 (1,572,499) 0 (1,572,499) 0 0 0 (1,572,499) (0.18) (0.18)
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