February 5, 1999
BIOCONTROL TECHNOLOGY, INC. PROXY
2275 Swallow Hill Road THIS PROXY IS SOLICITED ON
Pittsburgh, PA 15220 BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Report to Shareholders,
Notice of the Annual Meeting of Shareholders and the Biocontrol
Technology, Inc. Proxy Statement, hereby appoint(s) David E.
Staudenmaier proxy of the undersigned (with full power of
substitution) to attend the above Annual Meeting and all adjournments
thereof (the "Annual Meeting") and there vote all shares of Common
Stock of Biocontrol Technology, Inc. (the "Company") that the
undersigned would be entitled to vote, if personally present with
regard to all matters which may come before the Annual Meeting,
including the items set forth below. To cast a vote in connection
with the following items, please check the box next to the appropriate
response.
1. Approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of
common stock to 975,000,000.
| | FOR | | AGAINST | | ABSTAIN
2. Ratification of the selection by the Board of Directors of
Thompson Dugan, P.C. as the Company's independent
public accountants.
| | FOR | | AGAINST | | ABSTAIN
3. The election of six directors:
NOMINEES: FOR WITHHOLD
(All nomineeslisted except AUTHORITY
as marked to the contrary) to vote for all nominees
David L. Purdy | | | |
Fred E. Cooper | | | |
Glenn Keeling | | | |
Stan Cottrell | | | |
Anthony J. Feola | | | |
Paul W. Stagg | | | |
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, draw a line through such nominee's name.
4. In his discretion upon the transaction of other business as may
properly come before the Annual Meeting.
| | FOR | | AGAINST | | ABSTAIN
The undersigned hereby revokes all previous proxies for the
Annual Meeting, acknowledges receipt of the Report to Shareholders,
Notice of the Annual Meeting and Proxy Statement furnished therewith
and ratifies all that the said proxies may do by virtue hereof.
This proxy when properly executed will be voted in the manner
specified herein. If no specification is made, this proxy will be
voted in favor of Item 1, 2 and 3 and the authority provided by Item
4 will be deemed granted.
Please sign exactly as name appears below. Joint owners should
each sign personally. If signing in any fiduciary or representative
capacity, give full title as such. For shares held by a corporation,
please affix corporate seal.
Date:
________________________________
________________________________
Signature
_________________________________
Sign, date and return this proxy
immediately in the enclosed envelope to
Chase-Mellon Shareholder Services
NOTE: ONLY BONA FIDE SHAREHOLDERS WILL BE ADMITTED TO THE ANNUAL
SHAREHOLDERS MEETING; PHOTO IDENTIFICATION AND PROOF OF OWNERSHIP AS
OF THE RECORD DATE WILL BE REQUIRED FOR ADMITTANCE.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
PRELIMINARY PROXY STATEMENT
PURSUANT TO SECTION 14A OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
BIOCONTROL TECHNOLOGY, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2) or Item 22 (a)(2) of Schedule 14a
[ ] $500 per each party to the controversy pursuant to Exchange Act
rules 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated
and state how it was determined):
4) Proposed maximum aggregate value of the transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
BIOCONTROL TECHNOLOGY, INC.
2275 SWALLOW HILL ROAD
PITTSBURGH, PA 15220
February __, 1999
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders to
be held on March 31, 1999 at the Holiday Inn, Washington, PA.
The accompanying Notice of Annual Meeting and Proxy Statement
provide information about the matters to be acted upon by the
shareholders. The Proxy Statement also contains information about the
Board of Directors and its nominees.
The Board of Directors appreciates your continued support and
urges you to vote FOR the items presented.
Sincerely,
Fred E. Cooper
CEO
PRELIMINARY
BIOCONTROL TECHNOLOGY, INC.
2275 Swallow Hill Road
Pittsburgh, PA 15220
Telephone 412-349-1811
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 31, 1999
The Annual Meeting (the "Annual Meeting") of Stockholders of
Biocontrol Technology, Inc., a Pennsylvania corporation (the
"Company"), will be held at the Holiday Inn, Washington, Pennsylvania,
on March 31, 1999 at 9:00 a.m., local time, for the following purpose:
1. To amend the Company's Articles of Incorporation, as
amended, to increase the number of authorized shares to
975,000,000, as set forth in the Proxy Statement.
2. To ratify the selection of Thompson Dugan, P.C. as the
Company's independent public accountants.
3. To elect members to the Board of Directors, as set forth in
the Proxy Statement.
By Order of the Board of Directors
___________________________________
David E. Staudenmaier, Secretary
Date: February__, 1999
PLEASE NOTE: ONLY BONA FIDE STOCKHOLDERS WILL BE ADMITTED TO THE
ANNUAL SHAREHOLDERS MEETING; PHOTO IDENTIFICATION AND PROOF OF
OWNERSHIP AS OF THE RECORD DATE WILL BE REQUIRED FOR ADMITTANCE.
Those stockholders who are unable to attend the Annual Meeting in
person are respectfully urged to indicate their choices, execute and
return the enclosed proxy card at their earliest convenience to Proxy
Tabulation Dept., Chase Mellon Shareholder Services, 450 West 33rd
Street, 15th Floor, New York, New York 10001. Promptness in returning
the enclosed proxy card will be appreciated. Proxies must be returned
no later than March 30, 1999. Proxies may be revoked by the
Stockholder before it is voted at the Annual Meeting by either:
written notice to the Secretary, by submission of a Proxy bearing a
later date, or by attending the Annual Meeting and voting in person.
PRELIMINARY
Biocontrol Technology, Inc.
The Bourse, Building 2500, Second Floor
2275 Swallow Hill Road | Pittsburgh, PA 15220
(412) 429-0673 FAX (412) 279-1367
BIOCONTROL TECHNOLOGY, INC.
The approximate mailing date of this Proxy Statement
is February ___, 1999
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
March 31, 1999
The accompanying proxy and a copy of Annual Report on Form 10-K is
furnished by Biocontrol Technology, Inc. (the "Company") in connection
with the solicitation of proxies by the Board of Directors on all
matters and may be revoked by the Shareholder at any time before it is
voted by giving written notice to the Secretary of the Company or by
executing and delivering a proxy with a later date. The expense of
this solicitation is to be borne by the Company, and the Company will
reimburse persons holding stock in their name or in the names of their
nominees for the expenses incurred in sending proxies and proxy
materials to their principals.
The Company had outstanding 426,218,213 shares of common stock, par
value $.10 per share, as of December 31, 1998, the date for
determining the security holders of record entitled to vote at the
meeting (the "Record Date"). Each share of common stock is entitled
to one vote in all matters brought before the Shareholders, without
cumulative voting.
DESCRIPTION OF SECURITIES
BICO's authorized capital currently consists of 600,000,000 shares of
common stock, par value $.10 per share and 500,000 shares of
cumulative preferred stock, par value $10.00 per share. As of
December 31, 1998, there were 426,218,213 shares of common stock and
zero shares of preferred stock outstanding. In addition, there were
$2,825,000 of the Company's 4% Convertible Debentures outstanding as
of December 31, 1998.
Preferred Stock
The Articles of Incorporation of BICO authorize the issuance of a
maximum of 500,000 shares of non-voting cumulative convertible
preferred stock, and authorize the Board of Directors of BICO to
divide such class of preferred stock into series and to fix and
determine the relative rights and preferences of the shares.
As of December 31, 1998, the Company had zero outstanding shares of
preferred stock.
Common Stock
Holders of common stock are entitled to one vote per share on all
matters submitted to a vote of shareholders, but are not entitled to
cumulate their votes in the election of directors. Accordingly, the
holders of over 50% of the outstanding common stock voting for the
election of directors, could elect the entire slate of the Board of
Directors of BICO, and the holders of the remaining common stock would
not be able to elect any member to the Board of Directors. As of
December 31, 1998, there were 426,218,213 shares of common stock
outstanding.
In the event of liquidation or dissolution of BICO, holders of the
common stock are entitled to receive on a pro rata basis all assets of
BICO remaining after satisfaction of all liabilities including
liquidation preferences granted to holders of the preferred stock of
BICO.
Convertible Debentures
As of December 31, 1998, the Company had outstanding $ 2,825,000 in
Convertible Debentures, which are due between August 10, 1999 and
December 23, 1999. Such debentures are convertible beginning ninety
days from issuance into shares of common stock. Additional
information is set forth in the accompanying Form 10-K.
Dividends
The Company has not paid cash dividends on its common stock or
preferred stock (with the exception of a cash dividend on its
preferred stock in 1983, and a common stock dividend on its preferred
stock in 1988) since its inception, and cash dividends are not
presently contemplated at any time in the foreseeable future. The
Company anticipates that any excess funds generated from operations in
the foreseeable future will be used for working capital and for
investment in research and new product development, rather than to pay
dividends.
In accordance with the Company's Articles of Incorporation, cash
dividends are restricted under certain circumstances. Holders of
common stock are entitled to cash dividends only when and if declared
by the Board of Directors out of funds legally available for payment
thereof. Any such dividends are subject to the prior right of holders
of the Company's preferred stock to receive any accrued but unpaid
dividends. Further, common stock dividends may be paid only to the
extent the net assets of BICO exceed the liquidation preference of any
outstanding preferred stock.
Employment Agreement Provisions Related to Changes in Control
BICO has entered into agreements (the "Agreements") with Fred E.
Cooper, David L. Purdy, Anthony J. Feola, Glenn Keeling, and two non-
executive officer employees. The Agreements provide that in the event
of a "change of control" of BICO, BICO is required to issue to Mr.
Cooper and Mr. Purdy shares of common stock equal to five percent
(5%), to issue to Mr. Feola four percent (4%), to issue Mr. Keeling
three percent (3%), and to issue the two non-executive officer
employees two percent (2%) each of the outstanding shares of common
stock of the Company immediately after the change in control. In
general, a "change of control" is deemed to occur for purposes of the
Agreement: (i) when 20% or more of BICO's outstanding voting stock is
acquired by any person, (ii) when one-third (1/3) or more of BICO's
directors are not Continuing Directors (as defined in the Agreements),
or (iii) when a controlling influence over the management or policies
of BICO is exercised by any person or by persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
Warrants
As of December 31, 1998, there were outstanding warrants to purchase
8,911,662 shares of the Company's common stock at exercise prices of
between $0.25 and $4.03 per share. These warrants are held by members
of the Company's Scientific Advisory Board, certain employees,
officers, directors, loan guarantors, lenders and consultants.
The holders of warrants are not entitled to vote, to receive dividends
or to exercise any of the rights of the holders of shares of common
stock for any purpose until such warrants have been duly exercised and
payment of the exercise price has been made.
SOLICITATION OF PROXIES AND VOTING PROCEDURES
The enclosed Proxy is solicited on behalf of the Board of Directors.
The expenses of solicitation, including the cost of preparing,
handling, printing and mailing the Notice of Annual Meeting, Proxy and
Proxy Statement, the aggregate of which is estimated to be
approximately $80,000, has been or will be paid by the Company. The
Company will pay Chase Mellon Shareholder Services, its Registrar and
Transfer Agent, for its assistance in the solicitation of proxies and
will reimburse brokers and other persons holding shares in their names
or those of their nominees for their expenses for sending Proxy
materials to principals and obtaining their proxies.
Shareholders are urged to specify their choice, date, sign and return
the enclosed proxy in the enclosed envelope. Prompt response is
helpful and your cooperation will be appreciated.
Each share of common stock outstanding as of the Record Date is
entitled to one vote on each matter submitted to the stockholders for
a vote at the Meeting. The matters submitted to a vote at the meeting
will be decided by the vote of a majority of all votes cast in person
or by proxy at the meeting. Abstentions will be treated as shares
present and entitled to vote for purposes of determining the presence
of a quorum, but will not be considered as votes cast in determining
whether a matter has been approved by the stockholders. If a broker
or other record holder or nominee indicates on a proxy that it does
not have authority as to certain shares to vote on a particular matter
(commonly referred to as "broker non-votes"), those shares will not be
considered as present and entitled to vote with respect to that
matter.
Proxies may be revoked prior to voting by either: written notice to
the Secretary; submission of a proxy bearing a later date; or by
attending the Meeting and voting in person.
Transfer Agent
Chase-Mellon Shareholder Services in New York, New York acts as the
Company's Registrar and Transfer Agent for its common and preferred
stock. The Company acts as its own warrant registrar transfer agent.
INCREASE IN NUMBER OF AUTHORIZED SHARES
The Company's Articles of Incorporation, as amended, authorize the
issuance of 600,000,000 shares of common stock, par value $.10 per
share. As of December 31, 1998 there were 426,218,213 shares
outstanding, and currently exercisable warrants to purchase 8,911,662
shares of common stock. As of December 31, 1998, the Company had
outstanding $2,825,000 in subordinated convertible debentures, as
described in the accompanying Form 10-K. Assuming a conversion at
$.06 per share,47,083,333 shares would be issued. Such shares could
be issued with existing authorized shares, even if the increase is not
approved by shareholders.
All outstanding shares of the Company's common stock are issued fully
paid and nonassessable. All additional shares of common stock will be
fully paid and nonassessable. All the shares of common stock will be
equal to each other with respect to liquidation rights and dividend
rights and there are no preemptive rights to purchase any additional
shares of common stock.
In the event of liquidation, dissolution or winding up of the Company,
holders of the common stock are entitled to receive on a pro rata
basis all assets remaining after satisfaction of all liabilities
including liquidation preferences granted to holders of the preferred
stock of the Company.
Holders of common stock are entitled to cash dividends only when and
if declared by the Board of Directors out of funds legally available
for payment thereof, and subject to the prior right of holders of the
Company's preferred stock to receive any accrued but unpaid dividends.
Further, common stock dividends may be paid only to the extent the net
assets exceed the liquidation preference of any outstanding preferred
stock. The Company has not paid any cash dividends on its common
stock since its inception and no cash dividends on the common stock
are contemplated at any time in the foreseeable future.
The Board of Directors of the Company unanimously approved a
resolution to propose that the shareholders increase the number of
authorized shares of common stock to 975,000,000 by amending the
Company's Articles of Incorporation.
Although the Company currently has no specific plans to issue
additional shares, if such an increase is approved, the Board of
Directors may, without additional shareholder approval, authorize the
sale of such additional shares in order to raise additional capital to
fund the Company's operations and research and development projects.
The Board will authorize management to use any such funds raised to
fund existing or new research and development projects as management
determines is in the best interest of the Company.
Management does not believe that, until full-scale manufacturing of
the Noninvasive Glucose Sensor begins, or the sale of the Company's
other products generates meaningful revenues, the Company presently
has alternative means to raise additional funds. Because the market
price for the stock has remained low it has been necessary to sell
more shares than originally anticipated in order to raise sufficient
capital; therefore, the authorization of additional shares is
necessary.The proposal to increase the number of authorized shares is
part of management's long-term plan to continue funding the Company's
existing and future research and development projects, and to fund
manufacturing start-up of the Noninvasive Glucose Sensor. Any future
sale of additional shares, whether in a public or private offering,
will dilute the holdings of existing shareholders. The Company has no
current specific plans for any proceeds received from the future sale
of the additional shares, but may use any such proceeds to continue
funding existing research and development projects, manufacturing, and
future projects which are deemed by management to be in the best
interest of the Company. Such projects are subject to risks, and
there can be no assurances that any current or future project will be
successful or result in commercially viable products.
Although shareholders approved a reverse stock split of up to one for
twenty in June, 1998, the Company has no current plans to conduct a
reverse stock split.
The Company's common stock now trades on the Nasdaq Electronic
Bulletin Board, since its delisting from the small-cap market. The
risk exists that, since its delisting, the Company's common stock
trading volume and price will decrease.
The Board of Directors recommends shareholder approval of the proposal
to amend the Company's Articles of Incorporation to increase the
number of authorized shares of common stock to 975,000,000. The
affirmative vote of the holders of a majority of the common stock
entitled to vote at the Annual Meeting is necessary to approve the
amendment. If not otherwise specified, properly executed proxies will
be voted in favor of the amendment.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.
RATIFY THE SELECTION OF THOMPSON DUGAN AS INDEPENDENT PUBLIC
ACCOUNTANTS
The Board has reappointed Thompson Dugan, P.C. as its independent
public accountants.
Effective January 25, 1995, upon a determination by the Board of
Directors, the Company engaged Thompson Dugan, P.C. as its independent
auditors and accountants to replace Grant Thornton LLP. Thompson
Dugan, P.C. also serves as the independent auditors and accountants
for Diasense, replacing Grant Thornton LLP. Neither company had any
disagreements with Thompson Dugan, P.C. or Grant Thornton LLP on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. A representative of
Thompson Dugan, P.C. will not be present at the Annual Meeting to
answer questions.
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL.
ELECTION OF DIRECTORS
The Board of Directors currently consists of six directors. At the
Meeting, six directors will be elected to hold office (subject to
death, resignation or removal) until such director's successor is
elected. Each of the nominees has consented to serve as a director.
A brief summary of each director's principal occupation and business
affiliations and certain other information follows. Holders of common
stock are entitled to one vote per share on all matters submitted to a
vote of shareholders, but are not entitled to cumulate their votes in
the election of directors. Accordingly, the holders of over 50% of
the outstanding common stock voting for any directors could determine
the outcome of such vote, and the holders of the remaining common
stock would not be able to change the outcome of the vote.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
Director
Nominee Age Since Position
David L. Purdy 70 1972 President, Chairman of the
Board, Treasurer, Director
Fred E. Cooper 52 1989 Chief Executive Officer,
Executive Vice President, Director
Anthony J. Feola 50 1990 Senior Vice President, Director
Glenn Keeling 47 1991 Vice President, Director
Stan Cottrell 55 1998 Director
Paul W. Stagg 51 1998 Director
______________________________
DAVID L. PURDY, 70 is President, Chairman of the Board, Treasurer and
a director of the Company. Mr. Purdy has been a director and Chairman
of the Board since its organization in 1972 and is considered the
organizer and founder of the Company; he devotes 60% of his time to
the business of the Company, and 40% of his time to Diasense. He has
also served as President of the Company from 1972 through December
1990, with the exception of five months in 1980, when he served as
Chairman and full-time Program Director of the Company's implantable
medicine dispensing device program with St. Jude Medical, Inc., and
from October 1, 1987 through July 15, 1988, when he served as Chairman
and Director of Research and Development for the Company. Prior to
founding the Company, he was employed by various companies in the
medical technology field, including Arco Medical, Inc. Mr. Purdy is
also an officer and director of Diasense and Coraflex.
FRED E. COOPER, 52, is the Chief Executive Officer, Executive Vice
President and a director of the Company; he devotes approximately 60%
of his time to the business of the Company, and 40% to Diasense.
Prior to joining the Company, Mr. Cooper co-founded Equitable
Financial Management, Inc. of Pittsburgh, PA, a company in which he
served as Executive Vice President until his resignation and
divestiture of ownership in August 1990. In 1972, Mr. Cooper founded
Cooper Leasing Corp., Pittsburgh, Pennsylvania, a company specializing
in equipment and venture financing. Mr. Cooper was appointed Chief
Executive Officer in January 1990. He is also an officer and director
of Diasense and Barnacle Ban, and a director of Petrol Rem and
Coraflex.
ANTHONY J. FEOLA, 50, rejoined the Company as its Senior Vice
President in April, 1994, after serving as Diasense's Vice President
of Marketing and Sales from January, 1992 until April, 1994. Prior to
January, 1992, he was the Company's Vice President of Marketing and
Sales. Prior to joining the Company in November 1989, Mr. Feola was
Vice President and Chief Operating Officer with Gateway Broadcasting
in Pittsburgh in 1989, and National Sales Manager for Westinghouse
Corporation, also in Pittsburgh, from 1980 until 1989. He was elected
a director of the Company in February 1990, and also serves as a
director of Diasense, Coraflex, Petrol Rem and Barnacle Ban.
GLENN KEELING, 47, joined the Board of Directors in April 1991. Mr.
Keeling currently is a full-time employee of BICO in the position of
Vice President of Marketing; his primary responsibilities during 1994
through 1997 have been the management and operation of IDT's Whole-
Body Extracorporeal Hyperthermia project. From 1976 through 1991, he
was a Vice President in charge of new business development at
Equitable Financial Management, Inc., a regional equipment lessor.
His responsibilities included initial contacts with banks and
investment firms to open new lines of business referrals in connection
with financing large equipment transactions. He is also President and
a director of IDT.
STAN COTTRELL, 55, was appointed to the Board of Directors in 1998.
Mr. Cottrell is the Chairman and Founder of Cottrell Associates
International, Inc., which provides international business
development, brokerage, specialty marketing and promotional services.
He is a former director of marketing for Inhalation Therapy Services
and was employed by Boehringer Ingelheim, Ltd. as a national product
manager. Mr. Cottrell is a world ultra-distance runner and the author
of several books.
PAUL W. STAGG, 51, was appointed to the Board of Directors in 1998.
Mr. Stagg is the marketing manager for the Wholesale Division of First
Financial Resources, Inc., where he is responsible for marketing,
underwriting, sorting and coordination various types of financing for
institutional investors. Prior to his current position, he was
District Distrubutor of Marketing for Ginger Mae, a division of United
Companies of Baton Rouge, LA.
Pursuant to the disclosure requirements of Item 405 of Regulation S-K
regarding timely filings required by Section 16(a) of the Securities
and Exchange Act, the Company represents the following. Based solely
on its review of copies of forms received and written representations
from certain reporting persons, the Company believes that all of its
officers, directors and greater than ten percent beneficial owners
complied with applicable filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Employment Relationships
The Board of Directors of the Company approved employment agreements
on November 1, 1994 for its officers, David L. Purdy, Fred E. Cooper,
Anthony J. Feola and Glenn Keeling (See "Employment Agreements").
David L. Purdy, President, Treasurer and a director of the Company, is
a director of Diasense and Coraflex. He is also the chairman and
Chief Scientist of Diasense, and the President and Treasurer of
Coraflex. Mr. Purdy devotes 60% of his time to BICO, and 40% to
Diasense. In addition to his salary paid by BICO, Mr. Purdy was paid
$87,500 and $100,000 by Diasense in 1997 and 1996, respectively.
Fred E. Cooper, Chief Executive Officer, Executive Vice President and
a director of the Company, is a director of Diasense, Coraflex,
Petrol Rem, and Barnacle Ban. He is also the President of Diasense,
and Barnacle Ban. Mr. Cooper devotes approximately 60% of his time to
BICO and 40% to Diasense. In addition to his salary and bonus paid by
BICO, he was paid $150,000 by Diasense in 1996 and 1997. Anthony J.
Feola, Senior Vice President and a director of the Company, is also a
director of Diasense, Coraflex, Petrol Rem, and Barnacle Ban. Glenn
Keeling, Vice President and a director of the Company, was employed on
January 1, 1992 as BICO's manager of product development. Mr.
Keeling is also the President and a director of IDT. Gary Keeling,
the brother of Glenn Keeling, resigned as an officer and director of
Diasense in August, 1997.
Property
Three of the Company's current executive officers and/or directors and
two former directors of the Company are members of the nine-member 300
Indian Springs Road Real Estate Partnership (the "Partnership") which
in July 1990, purchased the Company's real estate in Indiana,
Pennsylvania, and each has personally guaranteed the payment of lease
obligations to the bank providing the funding. The five members of
the Partnership who are also current or former officers and/or
directors of the Company, David L. Purdy, Fred E. Cooper, Glenn
Keeling, Jack H. Onorato and C. Terry Adkins, each received warrants
on June 29, 1990 to purchase 100,000 shares of the Company's common
stock at an exercise price of $.33 per share until June 29, 1995
(those warrants still outstanding as of the original expiration date
were extended until June 29, 1999). Mr. Adkins, who was a director at
the time of the transaction, resigned from the Board of Directors on
March 30, 1992. Mr. Keeling, who was not a director at the time of
the transaction, joined the Board of Directors on May 3, 1991; Mr.
Onorato, who was not a director at the time of the transaction, was a
BICO director from September 1992 until April 1994.
In all instances where warrants were issued in connection with the
transactions set forth above, the exercise price of the warrants was
equal to or above the current quoted market price of the Company's
common stock on the date of issuance.
In April 1992, Diasense purchased an office condominium located at the
Bourse Office Park, Virginia Manor, Building 2500, Second Floor,
Pittsburgh, Pennsylvania 15220 for $190,000. The Company has entered
into a lease with Diasense and pays rent in the amount of $3,544 per
month, plus one-half of the utilities.
Warrants
The following paragraphs, along with the notes to the financial
statements, include disclosure of the warrants which were granted to
executive officers and directors of the Company from 1995 through
1997. These warrants were accounted for in accordance with Accounting
Principles Board Opinion 25 (based on the spread, if any, between the
exercise price and the quoted market price of the stock on the date
that the warrants were granted). No value was recorded for these
warrants since they were all granted at exercise prices which were
equal to or above the current quoted market price of the stock on the
date issued. (See, Note J to the Financial Statements). In 1995 and
1996, the Company extended warrants granted in 1990 and 1991, which
were scheduled to expire in 1995 and 1996, until 1998-2000. Because
the exercise price of the warrants, which remained unchanged, was less
than the market price of the common stock on the dates of the
extensions, charges were made against operations. (See, Form 10-K
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS", and Note J to the Financial Statements).
On August 26, 1996, the Board of Directors approved the granting of
warrants to purchase 100,000 shares of common stock at $1.48 per
share to Glenn Keeling, an officer and director of the Company.
Loans
On October 1, 1990, the Board of Directors approved a $75,000 loan
from the Company to Fred E. Cooper. Mr. Cooper signed a Promissory
Note promising to pay the principal amount plus twelve percent (12%)
simple interest. Mr. Cooper repaid $66,500 of the $75,000 principal
balance during 1991. During 1991, the Company granted loans to Fred
E. Cooper in the aggregate amount of $57,400. Mr. Cooper signed
Promissory Notes promising to pay the principal amounts upon demand
plus ten percent (10%) simple interest. In January 1992, the Company
granted a loan to Fred E. Cooper in the amount of $25,000. Mr. Cooper
signed a Promissory Note promising to pay the principal amount upon
demand plus ten percent (10%) simple interest. In 1997, the Companies
granted loans to Fred E. Cooper aggregating $ 158,000; Mr. Cooper
signed promissory notes promising to pay the principal amounts upon
demand plus 8.25% simple interest. In 1998, the Company granted loans
to Fred E. Cooper aggregating $275,000; Mr. Cooper signed a promissory
note promising to pay the principal amount upon demand plus 8.25%
simple interest. The aggregate balance of the loans as of December
31, 1998, including accrued interest, was $ 631,940.
In November 1997, the Companies granted a loan to Anthony J. Feola in
the amount of $50,000. Mr. Feola signed a promissory note promisingto
pay the principal amount upon demand plus 8.25% simple interest. In
February 1998, the Company granted a loan to Anthony J. Feola in the
amount of $185,000. Mr. Feola signed a promissory note promising to
pay the principal upon demand plus 8.25% simple interest. The
aggregate balance of the loans as of December 31, 1998, including
accrued interest, was $252,179.
In December 1991, the Company granted a loan to Glenn Keeling in the
amount of $5,000. Mr. Keeling signed a Promissory Note promising to
pay the principal amount upon demand plus ten percent (10%) simple
interest. In December 1996, the Company granted a loan to Glenn
Keeling in the amount of $50,000. Mr. Keeling signed a promissory
note promising to pay the principal amounts upon demand plus 8.25%
simple interest. In November, 1997, the Company granted a loan to
Glenn Keeling in the amount of $20,000. Mr. Keeling signed a
promissory note promising to pay the principal upon demand plus 8.25%
simple interest. In February 1998, the Company granted a loan to
Glenn Keeling in the amount of $190,000. Mr. Keeling signed a
promissory note promising to pay the principal upon demand plus 8.25%
simple interest. The aggregate balance of the loans as of December
31, 1998, including accrued interest, was $ 292,810.
In September 1995, the Company granted a loan in the amount of
$250,000 to Allegheny Food Services in the form of a one-year
renewable note bearing interest at prime rate as reported by the Wall
Street Journal plus one percent (1%). Interest and principal payments
have been made on the note, and as of December 31, 1998, the balance
was $200,000. Joseph Kondisko, a former director of Diasense, is a
principal owner of Allegheny Food Services.
Each of the loans made to officers or directors and their affiliates
was made for a bona fide business purpose. All future loans to
officers, directors and their affiliates will be made for bona fide
business purposes only.
Intercompany Agreements
Management of the Company believes that the agreements between BICO
and Diasense, which are summarized below, were based upon terms which
were as favorable as those which may have been available in comparable
transactions with third parties. However no unaffiliated third party
was retained to determine independently the fairness of such
transactions.
License and Marketing Agreement. Diasense acquired the exclusive
marketing rights for the Noninvasive Glucose Sensor and related
products and services from BICO in August 1989 in exchange for
8,000,000 shares of its common stock. That agreement was canceled
pursuant to a Cancellation Agreement dated November 18, 1991, and
superseded by a Purchase Agreement dated November 18, 1991. The
Cancellation Agreement provides that BICO will retain the 8,000,000
shares of Diasense common stock which BICO received pursuant to the
License and Marketing Agreement.
Purchase Agreement. BICO and Diasense entered into a Purchase
Agreement dated November 18, 1991 whereby BICO conveyed to Diasense
its entire right, title and interest in the Noninvasive Glucose Sensor
and its development, including its extensive knowledge, technology and
proprietary information. Such conveyance includes BICO's patent
received in December 1991.
In consideration of the conveyance of its entire right in the
Noninvasive Glucose Sensor and its development, BICO received
$2,000,000. In addition, Diasense may endeavor, at its own expense,
to obtain patents on other inventions relating to the Noninvasive
Glucose Sensor. Diasense also guaranteed BICO the right to use such
patented technology in the development of BICO's proposed implantable
closed-loop system, a related system in the early stages of
development.
In December 1992, BICO and Diasense executed an amendment to the
Purchase Agreement which clarified terms of the Purchase Agreement.
The amendment defines "Sensors" to include all devices for the
noninvasive detection of analytes in mammals or in other biological
materials. In addition, the amendment provides for a royalty to be
paid to Diasense in connection with any sales by BICO of its proposed
closed-loop system.
Research and Development ("R&D") Agreement. Diasense and BICO entered
into an agreement dated January 20, 1992 in connection with the
research and development of the Noninvasive Glucose Sensor. Pursuant
to the agreement, BICO will continue the development of the
Noninvasive Glucose Sensor, including the fabrication of prototypes,
the performance of clinical trials, and the submission to the FDA of
all necessary applications in order to obtain market approval for the
Noninvasive Glucose Sensor. BICO will also manufacture the models of
the Noninvasive Glucose Sensor to be delivered to Diasense for sale
(See, "Manufacturing Agreement"). Upon the delivery of the completed
models, the research and development phase of the Noninvasive Glucose
Sensor will be deemed complete.
Diasense has agreed to pay BICO $100,000 per month for indirect costs
beginning April 1, 1992, during the 15 year term of the agreement,
plus all direct costs, including labor. BICO also received a first
right of refusal for any program undertaken to develop, refine or
improve the Noninvasive Glucose Sensor, and for the development of
other related products. In July 1995, BICO and Diasense agreed to
suspend billings, accruals of amounts due and payments pursuant to the
R&D Agreement pending the FDA's review of the Sensor.
Manufacturing Agreement. BICO and Diasense entered into an agreement
dated January 20, 1992, whereby BICO will act as the exclusive
manufacturer of the Noninvasive Glucose Sensor and other related
products. Diasense will provide BICO with purchase orders for the
products and will endeavor to provide projections of future quantities
needed. The original Manufacturing Agreement called for the products
to be manufactured and sold at a price to be determined in accordance
with the following formula: Cost of Goods (including actual or 275% of
overhead, whichever is lower) plus a fee of 30% of Cost of Goods. In
July 1994, the formula was amended to be as follows: Costs of Goods
Sold (defined as BICO's aggregate cost of materials, labor and
associated manufacturing overhead) + a fee equal to one third (1/3) of
the difference between the Cost of Goods Sold and Diasense's sales
price of each Sensor. Diasense's sales price of each Sensor is
defined as the price paid by any purchaser, whether retail or
wholesale, directly to Diasense for each Sensor. Subject to certain
restrictions, BICO may assign its manufacturing rights to a
subcontractor with Diasense's written approval. The term of the
agreement is fifteen years.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company
for the fiscal years ended December 31, 1998, 1997 and 1996, of those
persons who were, at December 31, 1997 (i) the Chief Executive
Officer, and (ii) the other most highly compensated executive officers
of the Company whose remuneration exceeded $100,000 (the "Named
Executives").
SUMMARY COMPENSATION TABLE
==============================================================================
Annual Compensation | (1)Long Term Compensation
- ------------------------------------------------------------------------------
| Awards
Name and | Securities
Principal (2) | Underlying (2) All other
Position Year Salary($) Bonus($) Other($) | Warrants(#) Compensation
==============================================================================
David L. |
Purdy , 1998 $166,802 $0 $0 | 0 $0
President, 1997 $241,667 $0 $0 | 0 $0
Treasurer (4) 1996 $400,000 $0 $0 | 0 $0
- ------------------------------------------------------------------------------
Fred E. 1998 $556,173 $0 $0 | 0 $0
Cooper, 1997 $592,000 $0 $0 | 0 $0
CEO (5) 1996 $592,000 $0 $0 | 0 $0
- ------------------------------------------------------------------------------
Anthony J. 1998 $326,912 $0 $0 | 0 $0
Feola , Sr. 1997 $300,000 $0 $0 | 0 $0
Vice Pres.(6) 1996 $300,000 $0 $0 | 350,000 (3) $0
- ------------------------------------------------------------------------------
Glenn 1998 $180,003 $0 $0 | 0 $0
Keeling, VP 1997 $200,000 $0 $0 | 0 $0
(7) 1996 $200,000 $0 $0 | 100,000(8) $0
==============================================================================
(1) The Company does not currently have a Long-Term Incentive Plan
("LTIP"), and no payouts were made pursuant to any LTIP during
the years 1998, 1997, or 1996. The Company did not award any
restricted stock to the Named Executives during any year,
including the years 1998, 1997 or 1996. The Company did not
award any warrants, options or Stock Appreciation Rights ("SARs")
to the Named Executives during the years ended December 31, 1998,
1997 or 1996; however, the Company did extend warrants owned by
the Named Executives, which would have expired during 1996 (See
Note 3, below). The Company has no retirement, pension or profit-
sharing programs for the benefit of its directors, officers or
other employees.
(2) During the year ended December 31, 1998, the Named Executives
received medical benefits under the Company's group insurance
policy, including disability and life insurance benefits. The
aggregate amount of all perquisite compensation was less than 10%
of the total annual salary and bonus reported for each Named
Executive.
(3) During 1996, the Company extended warrants previously issued to
the Named Executives which would have otherwise expired.
Although the extensions were in connection with warrants already
held by the Named Executives, they are shown in the table set
forth above as "awards" for executive compensation disclosure
purposes because at the time of the extension, the exercise price
of the warrants (which remained unchanged) was less than the
"market price" of the common stock
(4) In November, 1994, Mr. Purdy's employment agreement was
renegotiated to provide for an annual salary of $250,000
effective November1, 1994 through October 31, 1999. All other
terms of the contract remained substantially the same (See,
"Employment Agreemen,ts"). During 1995, Mr. Purdy's salary was
increased by $50,000. In 1996, 1997 and 1998, Mr. Purdy was paid
$87,500, $100,000 and $100,000 by Diasense. Mr. Purdy is paid a
salary by the Company based on his employment contract. Amounts
paid to Mr. Purdy by Diasense are determined by the Diasense
Board of Directors based upon services performed on its behalf.
(5) In November, 1994, Mr. Cooper's employment agreement was
renegotiated to provide for an annual salary of $250,000
effective November 1, 1994 through October 31, 1999. All other
terms of the contract remained substantially the same (See,
"Employment Agreements"). In addition, in 1998, 1997 and 1996,
Mr. Cooper was paid $84,000, $96,000, and $96,000, respectively
by both Petrol Rem and IDT, both of which are subsidiaries of
BICO. In 1998, 1997, and 1996, Mr. Cooper was paid $177,542,
$150,000, and $150,000 in salary by Diasense, respectively.
Mr. Cooper is paid a salary by the company based on his
employment agreement. Amounts paid to Mr. Cooper by Diasense,
Petrol Rem and IDT are determined by the Boards of Directors of
those companies based upon services performed on their behalf.
(6) In April, 1994, Mr. Feola's employment agreement with Diasense
was assigned to BICO when he left Diasense to rejoin BICO as its
Senior Vice President. In November, 1994, Mr. Feola's employment
agreement was renegotiated, provides for an annual salary of
$200,000 and is effective November 1, 1994 through October 31,
1999. All other terms of the contract remained substantially the
same (See, "Employment Agreements"). During 1998, 1997, and
1996, Mr. Feola's salary was increased by $27,000, $50,000 and
$50,000 per year respectively.
(7) In November, 1994, Mr. Keeling entered into an employment
agreement with the Company which provides for an annual salary of
$150,000 effective November 1, 1994 through October 31, 1999
(See, "Employment Agreements"). During 1996 and 1995, Mr.
Keeling's salary was increased by $25,000 per year.
(8) On August 26, 1996, Mr. Keeling was granted warrants to purchase
100,000 shares of the Company's common stock at a price of $1.48
per share (the market price as of that date) until August 26,
2001.
Option/Warrant/SAR Grants in Last Fiscal Year
No options, warrants or SARs were granted or extended to the Named
Executives during 1998.
AGGREGATED OPTION/WARRANT/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/WARRANT/SAR VALUE TABLE
=========================================================================
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs 12/31/98 ($)
at 12/31/98 (#)
Shares Value
Acquired on Realized ($) Exercisable Exercisable/
Exercise (2) Unexercisable(3) Unexercisable (4)
Name (#)(1)
- -------------------------------------------------------------------------------
David L. 0 $ 0 767,200 $ 0
Purdy (5) (9)
- -------------------------------------------------------------------------------
Fred E. 0 $ 0 300,000 $ 0
Cooper (6) (9)
- -------------------------------------------------------------------------------
Anthony J. 0 $ 0 550,000 $ 0
Feola (7) (9)
- -------------------------------------------------------------------------------
Glenn 0 $ 0 100,000 $ 0
Keeling (8) (9)
===============================================================================
__________________
(1) This figure represents the number of shares of common stock
acquired by each named executive officer upon the exercise of
warrants.
(2) The value realized of the warrants exercised was computed by
determining the spread between the market value of the underlying
securities at the time of exercise minus the exercise price of
the warrant.
(3) All warrants held by the Named Executives are currently
exercisable.
(4) The value of unexercised warrants was computed by subtracting the
exercise price of the outstanding warrants from the closing sales
price of the Company's common stock on December 31, 1998 as
reported by Nasdaq ($.06).
(5) Includes warrants to purchase: 187,200 shares of common stock at
$.25 per share until April 24, 1995 (extended until April 24,
1999); 500,000 shares of common stock at $.25 per share until May
1, 1995 (extended until May 1, 1999); and 80,000 shares of common
stock at $.33 per share until June 29, 1995 (extended until June
29, 1999) (See, "Warrants").
(6) Includes warrants to purchase: 300,000 shares of common stock at
$.25 per share until May 1, 1995 (extended until May 1, 1999)
(See, "Warrants").
(7) Includes warrants to purchase: 100,000 shares of common stock at
$.25 per share until May 1, 1995 (extended until May 1, 1999);
100,000 shares of common stock at $.25 per share until November
26, 1995 (extended until November 26, 1999); and 350,000 shares
of common stock at $.50 per share until October 11, 1996
(extended until October 11, 1999) (See, "Warrants").
(8) Includes warrants to purchase: 100,000 shares of common stock at
$1.48 per share until August 26, 2001.
(9) Because the market price as of December 31, 1998 was less than
the exercise price of the warrants, such warrants were not in-the-
money.
Employment Agreements
BICO has entered into employment agreements (the "Agreements") with
its Named Executives Fred E. Cooper, David L. Purdy, Anthony J. Feola
and Glenn Keeling effective November 1, 1994, pursuant to which they
are currently entitled to receive annual salaries of $250,000,
$300,000, $300,000 and $200,000 respectively, which are subject to
review and adjustment. The initial term of the Agreements with
Messrs. Cooper and Purdy expires on October 31, 1999, and continues
thereafter for additional three-year terms unless any of the parties
give proper notice of non-renewal. The initial term of the Agreements
with Messrs. Feola and Keeling expires on October 31, 1999, and
continues thereafter for additional two-year terms unless either of
the parties give proper notice of non-renewal. The Agreements also
provide that in the event of a "change of control" of BICO, BICO is
required to issue the following shares of common stock, represented by
a percentage of the outstanding shares of common stock of the Company
immediately after the change in control: five percent (5%) to Mr.
Cooper and Mr. Purdy; four percent (4%) to Mr. Feola; and three
percent (3%) to Mr. Keeling. In general, a "change of control" is
deemed to occur for purposes of the Agreements (i) when 20% or more of
BICO's outstanding voting stock is acquired by any person, (ii) when
one-third (1/3) or more of BICO's directors are not Continuing
Directors (as defined in the Agreement), or (iii) when a controlling
influence over the management or policies of BICO is exercised by any
person or by persons acting as a group within the meaning of Section
13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
In addition, in the event of a change in control within the term of
the Agreements or within one year thereafter, Messrs. Cooper, Purdy,
Feola and Keeling are entitled to receive severance payments in
amounts equal to: 100% of their most recent annual salary for the
first three years following termination; 50% of their most recent
annual salary for the next two years; and 25% of their most recent
salary for the next five years. BICO is also required to continue
medical insurance coverage for Messrs. Cooper, Purdy, Feola and
Keeling and their families during such periods. Such severance
payments will terminate in the event of the employee's death.
In the event that either Mr. Purdy or Mr. Cooper becomes disabled, as
defined in their Agreements, he will be entitled to the following
payments, in lieu of salary, such payments to be reduced by any amount
paid directly to him pursuant to a disability insurance policy
provided by the Company or its affiliates: 100% of his most recent
annual salary for the first three years; and 70% of his most recent
salary for the next two years. In the event that either Mr. Feola or
Mr. Keeling becomes disabled, as defined in their Agreements, he will
be entitled to the following payments, in lieu of salary, such
payments to be reduced by any amount paid directly to him pursuant to
a disability insurance policy provided by the Company or its
affiliates: 100% of his most recent annual salary for the first year;
and 70% of his most recent salary for the second year.
The Agreements also generally restrict the disclosure of certain
confidential information obtained by Messrs. Cooper, Purdy, Feola and
Keeling during the term of the Agreements and restricts them from
competing with BICO for a period of one year in specified states
following the expiration or termination of the Agreements.
In addition to the Employment Agreements described above, BICO also
entered into employment agreements with two of its non-executive
officer employees effective November 1, 1994. The terms of such
agreements are similar to those described for Messrs. Feola and
Keeling above, with the following amendments: the term of one
agreement is from November 1, 1994 through October 31, 2002, and is
renewable for successive two-year terms; the term of the other
agreement is from November 1, 1994 through October 31, 1999, and is
renewable for successive two-year terms; the annual salaries are in
the event of a "change in control", BICO is required to issue both
employees shares of common stock equal to two percent (2%) of the
outstanding shares of the common stock of the Company immediately
after the change in control.
REPORT ON EXECUTIVE OFFICER COMPENSATION
The Company has no Compensation Committee which determines executive
compensation for 1998. The Company is discussing the formation of a
Compensation Commitee made up of its outside directors. During 1998,
the Named Executive Officers' salaries are determined by their
employment contracts, which are negotiated and approved by the Board
of Directors. Raises in salaries and bonuses are recommended by the
CEO and approved by the Board of Directors. The CEO bases his
recommendations on a number of subjective factors which include each
executive officer's scope of responsibility and accountability within
the Company, and each individual's performance and service to the
Company.
Deductibility of Executive Compensation Expense Under Federal Tax Laws
When awarding compensation to its executives, the Board of Directors
has considered the impact of recently enacted provisions of the
Internal Revenue Code of 1986, as amended, that in certain
circumstances disallow compensation deductions in excess of $1 million
for any year with respect to the Company's Named Executives ("Section
162(m)"). While the Company does not expect that these provisions
will limit its tax deductions for executive compensation in the near
term, in the future, the Board may determine to adopt a compensation
program which does not satisfy the conditions of Section 162(m) if in
the Board's judgment, after considering the additional costs of not
satisfying Section 162(m), such program is appropriate.
Submitted by the Board of Directors as of December 31, 1998
David L. Purdy
Fred E. Cooper
Anthony J. Feola
Glenn Keeling
Paul W. Stagg
Stan Cottrell
Compare 5-Year Cumulative Total Return
Among Biocontrol Technology ("BICO"),
Market Index and SIC Code Index
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth the indicated information as of
December 31, 1998 with respect to each person who is known by the
Company to be the beneficial owner of more than five percent (5%) of
the outstanding common stock, each director of the Company, and all
directors and executive officers of the Company as a group. The table
excludes disclosure of entities such as Cede & Co. and other companies
which would reflect the ownership of entities who hold stock on behalf
of shareholders.
As of December 31, 1998 there were 426,218,213 shares of the Company's
common stock outstanding. The first column sets forth the common
stock currently owned by each person or group, excluding currently
exercisable warrants for the purchase of common stock. The second
column sets forth the percentage of the total number of shares of
common stock outstanding as of December 31, 1998 owned by each person
or group, excluding exercisable warrants. The third column sets forth
the total number of shares of common stock which each named person or
group has the right to acquire, through the exercise of warrants,
within sixty (60) days, plus common stock currently owned. The fourth
column sets forth the percentage of the total number of shares of
common stock outstanding as of December 31, 1998 which would be owned
by each named person or group upon the exercise of all of the warrants
held by such person or group together with common stock currently
owned, as set forth in the third column. Except as otherwise
indicated, each person has the sole power to vote and dispose of each
of the shares listed in the columns opposite his name.
Amount and Nature Percent of
Name and Address of of Beneficial Percent of Ownership with Class with
Beneficial Owner Ownership(1) Class (2) Warrants (3) Warrants(4)
David L. Purdy (5) 400,140 * 1,167,340(6) *
300 Indian Springs Road
Indiana, PA 15701
Fred E. Cooper 776,200 * 1,076,200(7) *
Building 2500, 2nd Floor
2275 Swallow Hill Rd.
Pittsburgh, PA 15220
Anthony J. Feola 354,000 * 904,000(8) *
Building 2500, 2nd Floor
2275 Swallow Hill Rd.
Pittsburgh, PA 15220
Glenn Keeling 138,500 * 238,500(9) *
200 Julrich Drive
McMurray, PA 15317
All directors and 1,668,840 * 3,386,040(10) *
executive officers
as a group (4 persons)
* Less than one percent
________________________
(1) Excludes currently exercisable warrants set forth in the third
column and detailed in the footnotes below.
(2) Represents current common stock owned by each person, as set
forth in the first column, excluding currently exercisable
warrants, as a percentage of the total number of shares of common
stock outstanding as of December 31, 1998.
(3) Includes ownership of all shares of common stock which each named
person or group has the right to acquire, through the exercise of
warrants, within sixty (60) days, together with the common stock
currently owned.
(4) Represents total number of shares of common stock owned by each
person, as set forth in the third column, which each named person
or group has the right to acquire, through the exercise of
warrants within sixty (60) days, together with common stock
currently owned, as a percentage of the total number of shares of
common stock outstanding as of December 31, 1998. For computation
purposes, the total number of shares of common stock outstanding
as of December 31, 1998 has been increased by the number of
additional shares which would be outstanding if the person or
group owned the number of shares set forth in the third column.
(5) Does not include shares held by Mr. Purdy's adult children. Mr.
Purdy disclaims any beneficial interest to shares held by members
of his family.
(6) Includes currently exercisable warrants to purchase the
following: 187,200 shares of common stock at $.25 per share until
April 24, 1995 (extended until April 24, 1999); 80,000 shares of
common stock at $.33 per share until June 29, 1995 (extended
until June 29, 1999); and 500,000 shares of common stock at $.25
per share until May 1, 1995 (extended until May 1, 1999) pursuant
to Mr. Purdy's previous employment agreement. In addition, Mr.
Purdy is entitled to certain shares of Common Stock upon a change
of control of BICO as defined in his employment agreement (See,
"Employment Agreements").
(7) Includes currently exercisable warrants to purchase the
following: 300,000 shares of common stock at $.25 per share until
May 1, 1995 (extended until May 1, 1999) pursuant to Mr. Cooper's
previous employment agreement. In addition, Mr. Cooper is
entitled to certain shares of Common Stock upon a change of
control of BICO as defined in his employment agreement (See,
"Employment Agreements").
(8) Includes currently exercisable warrants to purchase the
following: 100,000 shares of common stock at $.25 per share
until November 26, 1995 (extended until November 26, 1999);
100,000 shares of common stock at $.25 per share until May 1,
1995 (extended until May 1, 1999) pursuant to Mr. Feola's
previous employment agreement; and 350,000 shares of common stock
at $.50 per share until October 11, 1996 (extended until October
11, 1999). In addition, Mr. Feola is entitled to certain shares
of Common Stock upon a change of control of BICO as defined in
his employment agreement (See, "Employment Agreements").
(9) Includes currently exercisable warrants to purchase 100,000
shares of common stock at $1.48 per share until August 26, 2001.
In addition, Mr. Keeling is entitled to certain shares of Common
Stock upon a change of control of BICO as defined in his
employment agreement (See, "Employment Agreements").
(10) Includes shares of common stock, including stock currently owned,
available under currently exercisable warrants as set forth
above.
FINANCIAL AND OTHER INFORMATION
For additional information, including Financial Information, Financial
Statements and corresponding notes, and Management's Discussion and
Analysis of Financial Condition and Results of Operations, please
review the Company's Form Annual Report on Form 10-K, the Company's
Form S-VA Registration Statement, as well as the Company's Quarterly
Reports on Form 10-Q, which are available at no charge from the
Company or on-line from the SEC's EDGAR system at www.sec.gov.
Information about the Company is also available on its website at
www.bico.com. For information, please contact Diane McQuaide, the
Company's Investor Relations Representative at:
2275 Swallow Hill Road
Bldg. 2500, 2nd Floor
Pittsburgh, PA 15220
(412) 429-0673
SHAREHOLDER PROPOSALS
All shareholder proposals to be presented at the next Annual Meeting
of the Company must be received by the Company at its principal
executive offices by December 31, 1999 for inclusion in the proxy
materials relating to the next Annual Meeting.
OTHER MATTERS
The management of the Company does not know of any other matters that
are to be presented for action at the meeting. Should any other
matter come before the meeting, however, the person named in the
enclosed Proxy shall have discretionary authority to vote all shares
represented by valid proxies with respect to such matter in accordance
with his judgement.
By Order of the Board of Directors
______________________________
David E. Staudenmaier, Secretary
