<PAGE>
As filed with the Securities and Exchange Commission on March 28, 1996.
FILE NO. 33-46319
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_________________________________________________
MICRO BIO-MEDICS, INC.
(Exact name of registrant as specified in charter)
_________________________________________________
New York 5047 13-2692560
- --------------- --------- ---------------
(State or other (standard industrial (I.R.S. employer
jurisdiction of classification code) identification
incorporation) number)
_________________________________________________
Micro Bio-Medics, Inc.
846 Pelham Parkway
Pelham Manor, New York 10803
(Address of principal executive offices
and principal place of business)
Registrant's telephone number - (914) 738-8400
___________________________________________________
Micro Bio-Medics, Inc.
846 Pelham Parkway
Pelham Manor, New York 10803
(Name and address of agent for service)
Agent's telephone number - (914) 738-8400
___________________________________________________________
Copies of all communications, including all communications
sent to the agent for service, should be sent to:
Steven Morse Esq.
Lester Morse P.C.
111 Great Neck Road
Great Neck, N.Y. 11021
(516) 487-1446
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
check the following box. /X/
<PAGE>
MICRO BIO-MEDICS, INC.
CROSS-REFERENCE SHEET TO PROSPECTUS ON FORM S-2
<TABLE>
<CAPTION>
Information Required
to be Included in Prospectus Location in Prospectus
---------------------------- --------------------------
<S> <C> <C>
Item 1. Outside Front Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . Outside front cover page
Item 2.
(a) Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside front cover pages
(b) Reports to Security Holders . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(c) Incorporation by Reference. . . . . . . . . . . . . . . . . . . . . . . . . Inside front cover pages
(d) Stabilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(e) Delivery of Prospectus by Dealers . . . . . . . . . . . . . . . . . . . . . Not applicable
(f) Enforcement of Civil Liabilities Against
Foreign Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(g) Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside front Cover Pages
Item 3.
(a) Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary
(b) Address and Telephone Number. . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary
(c) Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Considerations
(d) Ratio of Earnings to Fixed Charges. . . . . . . . . . . . . . . . . . . . . Not applicable
Item 4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Use of Proceeds
Item 5. Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . . Not applicable
Item 6. Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dilution
Item 7. Selling Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
Item 8. Plan of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . Outside front Cover Page
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and Plan of Distribution
Item 9. Description of Securities to
be Registered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Description of Securities
Item 10. Interests of named Experts and Counsel. . . . . . . . . . . . . . . . . . . Experts and Counsel
Item 11. Information with Respect to the Company . . . . . . . . . . . . . . . . . . Prospectus Summary,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalization, Business,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management, Certain
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transactions, Security
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ownership of Certain
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beneficial Owners and
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Description of Securities
Item 12. Incorporation of Certain Information
by Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incorporation by
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reference
Item 13. Disclosure of Commission Policy on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Compensation -
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Indemnification
</TABLE>
i
<PAGE>
PROSPECTUS
MICRO BIO-MEDICS, INC.
APPROXIMATELY 891,265 COMMON SHARES AND 138,138 UNDERWRITER'S WARRANTS
Micro Bio-Medics, Inc. (the "Company" or "Micro") granted to all holders of
its outstanding common stock ("Common Stock") of record on March 31, 1992
("Record Date"), in those states where qualified, or exempt from qualification,
the nontransferable right ("Rights") to subscribe for Units at $9.00 per Unit on
the basis of one Unit for every four shares of Common Stock owned on the Record
Date. See "Results of Rights Offering." Each Unit consisted of two shares of
the Company's Common Stock and three Series 1 Redeemable Common Stock Purchase
Warrants (the "Series 1 Warrant(s)"). Each Series 1 Warrant originally
purchased one share of Common Stock at an exercise price of $8.00 per share
until lowered to $6.00 per share by the Board of Directors in August 1993. As a
result of the October/November 1993 issuance of $3,000,000 of convertible
debentures, which triggered the anti-dilution provisions contained in the Series
1 Warrant, every Series 1 Warrant exercised at a price of $6.00 will purchase
1.047 shares of the Company's Common Stock. The Series 1 Warrants are
exercisable at any time until June 18, 1996 and are callable by the Company upon
30 days prior written notice, at any time during the exercise period at $.05 per
Warrant provided the high bid price for the shares of the Company's Common Stock
is at least $11.00 per share on each day during the thirty (30) trading day
period immediately preceding the date of the written notice. See "Description
of Securities." This Prospectus relates to approximately 650,615 shares
issuable upon exercise of the Company's 621,026 issued and outstanding publicly
held Series 1 Warrants.
On June 19, 1992, the Company sold to Royce Investment Group, Inc.
("Royce") for $.0001 per Warrant, Warrants to purchase 46,046 Units (the
"Underwriter's Unit Warrants"). The Underwriter's Unit Warrants are exercisable
at $11.25 per Unit until June 19, 1997. As a result of the October/November
1993 issuance of $3,000,000 of convertible debentures which triggered the anti-
dilution provisions contained in the Underwriter's Unit Warrants, the Units that
may be purchased by the holder of the Underwriter's Unit Warrants contain 2.094
shares of Common Stock and three Warrants that are identical to the Series 1
Warrants (the "Underwriter's Warrants") sold pursuant to the rights offering
described above, except that the Underwriter's Warrants that are issuable upon
exercise of the Underwriter's Unit Warrants are not callable, were not
exercisable until June 19, 1993 and are exercisable at $10.00 per 1.047 shares
of the Company's Common Stock. This Prospectus relates to the 46,046 Units
(i.e. 96,420 shares of Common Stock and 138,138 Underwriter's Warrants) issuable
upon exercise of the Underwriter's Unit Warrants including the 144,631 shares of
Common Stock issuable upon exercise of the Underwriter's Warrants.
No fractional shares of Common Stock will be issued on the exercise of
Series 1 Warrants. Fractional shares less than 1/2 of one share will be
disregarded. Fractional shares of 1/2 or greater will be rounded to the nearest
whole share. The Company reserves the right to pay cash in lieu of fractional
shares based upon the base current market price (i.e. high bid price) of the
Common Stock on the last business day prior to the day of exercise.
THE COMPANY'S SECURITIES ARE SPECULATIVE IN THAT THEY INVOLVE CERTAIN RISKS.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF MATTERS WHICH SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THESE SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OR REGULATORY AUTHORITY OF ANY
STATE. FURTHERMORE, THE FOREGOING COMMISSIONS AND AUTHORITIES HAVE NOT PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH __, 1996
<PAGE>
Warrant holders who desire to exercise their Warrants should execute the
Subscription Form contained in the back of the Warrant and submit same together
with a certified check or bank draft made payable to "Micro Bio-Medics, Inc." to
the transfer agent, American Stock Transfer & Trust Co., 40 Wall Street, New
York, New York 10005. Under certain circumstances, the Company has agreed to
pay Royce Investment Group, Inc. a commission for the solicitation of Series 1
Warrants as described under "Description of Securities." All expenses of this
offering, estimated to be $10,000, are being paid by the Company.
Holders of the Underwriter's Unit Warrants who desire to exercise these
Warrants should execute the Purchase Form contained in the Underwriter's Unit
Warrant and submit same together with a certified check or bank check made
payable to Micro Bio-Medics, Inc. to the Company at its principal executive
office at 846 Pelham Parkway, Pelham Manor, New York 10803.
The Company's Common Stock is traded in the over-the-counter market in the
National Market System under the NASDAQ symbol "MBMI." On March 1, 1996, the
reported last sales prices per share for the Common Stock as reported on NASDAQ
was $14.00. See "Certain Market Information."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER, SOLICITATION OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
SEE "INVESTMENT CONSIDERATIONS" REGARDING THE COMPANY'S OBLIGATION TO HAVE A
CURRENT AND EFFECTIVE REGISTRATION STATEMENT ON FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance with
those requirements files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.D. 20549
or at its regional offices located at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. This Prospectus,
2
<PAGE>
which constitutes part of a Registration Statement filed by the Company with the
Commission under the Securities Act of 1933, as amended, (the "Securities Act")
omits certain of the information contained in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and its securities.
Statements contained herein concerning provisions of documents are necessarily
summaries of such documents, and each statement is qualified in its entirety by
reference to the copy of the complete document filed with the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following document(s) filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(1) The Company's annual report on Form 10-K for the fiscal year ended
November 30, 1995, as amended.
Any statement contained in the foregoing document incorporated by reference
shall be deemed to be modified or superseded for the purposes of this
Prospectus, to the extent that a statement herein modifies, supersedes or
replaces such incorporated statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will furnish, without charge, to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of the filings
with the Commission enumerated above, excluding exhibits thereto (unless those
exhibits are specifically incorporated by reference into the document(s) which
this Prospectus is incorporated). Requests should be directed to Micro Bio-
Medics, Inc., 846 Pelham Parkway, Pelham Manor, New York 10803, Attention:
Shareholder Communications, telephone number (914) 738-8400.
3
<PAGE>
TABLE OF CONTENTS
Page
----
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Management's Discussion and Analysis of
Financial Condition and Results of Operation . . . . . . . . . . . . . . . .13
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Security Ownership of Certain Beneficial Owners
and Management and Others. . . . . . . . . . . . . . . . . . . . . . . . . .43
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .45
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Results of the Rights Offering . . . . . . . . . . . . . . . . . . . . . . . .52
Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . F-1
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in or incorporated into
this Prospectus. Unless otherwise indicated, the information in this Prospectus
assumes no exercise of the outstanding options, Series 1 Warrants or the
Underwriter's Warrants. All share and per share amounts give retroactive effect
to a one-for-three reverse stock split effective on the close of business on
June 28, 1991. (Since no fractional shares were issued in connection with such
split, all amounts were rounded up to the nearest whole share).
THE COMPANY
Micro Bio-Medics, Inc. (the "Company" or "Micro") is a New York company
which was incorporated in 1971. The Company distributes medical supplies to
physicians and hospitals in the New York metropolitan area, as well as to health
care professionals in the sports medicine, emergency medicine, school health,
industrial safety, government and laboratory markets nationwide.
THE OFFERING
Micro granted to all holders of its outstanding common stock ("Common
Stock") of record on March 31, 1992 ("Record Date"), in those states where
qualified, or exempt from qualification, the nontransferable right ("Rights") to
subscribe for Units at $9.00 per Unit on the basis of one Unit for every four
shares of Common Stock owned on the Record Date. See "Results of Rights
Offering." Each Unit consisted of two shares of the Company's Common Stock and
three Series 1 Redeemable Common Stock Purchase Warrants (the "Series 1
Warrant(s)"). Each Series 1 Warrant originally purchased one share of Common
Stock at an exercise price of $8.00 per share until lowered to $6.00 per share
by the Board of Directors in August 1993. As a result of the October/November
1993 issuance of $3,000,000 of convertible debentures, which triggered the anti-
dilution provisions contained in the Series 1 Warrant, every Series 1 Warrant
exercised at a price of $6.00 will purchase 1.047 shares of the Company's Common
Stock. See "Description of Securities." This Prospectus relates to
approximately 650,215 shares issuable upon exercise of the Company's 621,026
issued and outstanding publicly held Series 1 Warrants.
5
<PAGE>
On June 19, 1992, the Company sold to Royce Investment Group, Inc.
("Royce") for $.0001 per Warrant, Warrants to purchase 46,046 Units (the
"Underwriter's Unit Warrants"). The Underwriter's Unit Warrants are exercisable
at $11.25 per Unit until June 19, 1997. As a result of the October/November
1993 issuance of $3,000,000 of convertible debentures which triggered the anti-
dilution provisions contained in the Underwriter's Unit Warrants, the Units that
may be purchased by the holder of the Underwriter's Unit Warrants contain 2.094
shares of Common Stock and three Warrants that are identical to the Series 1
Warrants (the "Underwriter's Warrants") sold pursuant to the rights offering
described above, except that the Underwriter's Warrants that are issuable upon
exercise of the Underwriter's Unit Warrants are not callable, were not
exercisable until June 19, 1993 and are exercisable at $10.00 per 1.047 shares
of the Company's Common Stock. This Prospectus relates to the 46,046 Units
(i.e. 96,420 shares of Common Stock and 138,138 Underwriter's Warrants) issuable
upon exercise of the Underwriter's Unit Warrants including the 144,631 shares of
Common Stock issuable upon exercise of the Underwriter's Warrants.
Common Stock outstanding
as of March 1, 1996 4,172,755 shares
Common Stock to be
outstanding assuming
exercise of all
Series 1 Warrants (1) 4,823,370 shares (approximately)
Use of Proceeds To be added to the Company's working capital and
to be used for general corporate purposes
including reducing the outstanding balance under a
revolving loan agreement or possible acquisitions.
NASDAQ/NMS Symbol MBMI - Common Stock (2)
________________
(1) Does not include the following: (i) the possible exercise of the
Underwriter's Unit Warrants and Underlying Underwriter's Warrants to
purchase a maximum of 241,051 shares, (ii) outstanding stock options
granted to officers, directors, employees and consultants covering
approximately 1,678,968 shares, and (iii) 187,500 shares issuable upon
conversion of certain Debentures.
(2) See "Investment Consideration - Lack of Public Market for Units and Series
1 Warrants" and "Market Information."
6
<PAGE>
Selected Financial Information
<TABLE>
<CAPTION>
AS AT AND FOR THE YEARS ENDED NOVEMBER 30,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES $119,873,764 $121,604,461 $73,951,410 $61,629,435 $50,739,534
COST OF GOODS SOLD 94,307,143 94,923,689 56,347,353 47,287,409 38,561,458
------------ ------------ ----------- ----------- -----------
GROSS PROFIT 25,566,621 26,680,772 17,604,057 14,342,026 12,178,076
------------ ------------ ----------- ----------- -----------
EXPENSES:
Selling, shipping and warehouse 14,511,793 14,421,280 8,521,021 6,852,670 5,760,276
General and administrative 7,901,052 8,581,615 6,525,488 5,015,128 4,303,953
Interest and financing costs - net 1,238,887 1,044,257 502,329 289,355 425,694
Non-recurring items:
Provision for consolidation of facilities - - - - 483,000
------------ ------------ ----------- ----------- -----------
Total expenses 23,651,732 24,047,152 15,548,838 12,157,153 10,972,923
------------ ------------ ----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,914,889 2,633,620 2,055,219 2,184,873 1,205,153
PROVISION FOR INCOME TAXES 806,000 952,000 853,000 962,000 537,000
------------ ------------ ----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 1,108,889 1,681,620 1,202,219 1,222,873 668,153
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
INCOME TAXES PRIOR TO 1994 - (60,000) - - -
------------ ------------ ----------- ----------- -----------
NET INCOME $ 1,108,889 $ 1,621,620 $ 1,202,219 $ 1,222,873 $ 668,153
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ .25 $ .37 $ .30 $ .41 $ .37
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
INCOME TAXES PRIOR TO 1994 - (.01) - - -
------------ ------------ ----------- ----------- -----------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ .25 $ .36 $ .30 $ .41 $ .37
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
AVERAGE NUMBER OF SHARES USED TO COMPUTE EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE 5,121,634(*) 4,896,518(*) 4,734,746(*) 3,481,415(*) 1,784,986
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
DIVIDENDS PAID NONE NONE NONE NONE NONE
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
WORKING CAPITAL $29,965,266 $ 30,141,450 $ 20,965,370 $15,819,417 $11,793,261
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
LONG-TERM DEBT (net of current maturities) $17,270,062 $ 19,381,239 $ 9,584,684 $9,410,079 $8,022,054
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
TOTAL ASSETS $51,135,712 $ 54,461,087 $ 32,784,324 $27,934,060 $19,488,491
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
STOCKHOLDERS' EQUITY $21,064,152 $ 18,067,056 $ 16,193,524 $10,461,736 $5,822,407
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
STOCKHOLDERS' EQUITY PER SHARE $4.11(*) $3.69(*) $3.42(*) $3.01(*) $3.26
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TANGIBLE BOOK VALUE PER SHARE $3.14(*) $2.92(*) $3.13(*) $2.72(*) $2.69
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
(*) Includes additional shares assuming conversion of stock options and
warrants utilizing the modified treasury stock method. For the other years,
outstanding stock options and warrants have not been included since their
effect would be antidilutive or immaterial.
All references to shares and per share data have been restated for 1991
due to a reverse stock split on June 28, 1991.
7
<PAGE>
INVESTMENT CONSIDERATIONS
The securities offered hereby are speculative and involve a high degree of
risk. Therefore, each prospective investor should consider very carefully the
various risks and speculative factors inherent in and affecting the business of
the Company prior to the making of an investment in the Company. Purchase of
the Company's securities are not recommended for investors who do not have
sufficient financial means to sustain the loss of their entire investment.
Among the risks involved in an investment in the Company are the following:
1. SUBSTANTIAL INDEBTEDNESS. MBM's operating activities require MBM to
incur substantial indebtedness and MBM is, therefore, subject to the risks
associated with significant leverage, including the risks that interest rates
may fluctuate and cash flow may not be adequate to make required payments on
indebtedness. At February 28, 1996, MBM owed approximately $12,000,000 under
MBM's revolving loan agreement to its principal lender. The debt is
collateralized by accounts receivable and inventory (the "Assets"). In
connection with the loan agreement, MBM has agreed to certain restrictions
relating to limitations on its indebtedness and liens, and has agreed to
maintain specified financial ratios and covenants. The loan prohibits MBM from
paying any cash dividends and restricts capital distributions or redemptions and
purchases or retirements of any of MBM's capital stock except in limited
circumstances. If for any reason, MBM were unable to meet such obligations as
they become due, such lender could terminate the credit facility, demand payment
of the loan and elect to foreclose on MBM's assets, which would have a material
adverse effect on MBM's operations. See "Business of MBM - Revolving Credit
Agreement."
2. DEPENDENCE UPON FINANCING. MBM is dependent on the financing of its
operations under a credit facility which expires in November, 1996 to meet
differences in timing of cash flow resulting from the extension of credit on
MBM's receivables and receipt of payments from customers. MBM's terms of sale
require payment of invoices within 30 days. Although in some cases discounts
are given for prompt payment, the average collection period on its accounts
receivable during the fiscal years ended November 30, 1995, November 30, 1994
and November 30, 1993 were approximately 78 days, 79 days and 78 days,
respectively. In the event that MBM is unable to continue to obtain financing
from its principal lender or alternative sources of financing, or if able to do
so but not on favorable terms, MBM's ability to operate profitably would be
materially adversely affected. See "Business of MBM - Revolving Credit
Agreement."
3. REGULATORY REQUIREMENTS. The manufacturers of many products sold by
MBM are required to obtain U.S. Food and Drug Administration ("FDA") approval
for such products, failing such approval, sales of such products cannot
lawfully be made. MBM's assembly, warehousing and distribution procedures are
subject to the Good Manufacturing Practices regulation of the FDA. MBM has
8
<PAGE>
registered itself with the FDA and has renewed said registration annually. Said
registration permits MBM to distribute supplies and medical devices. The
Caligor Division, among its various activities, operates as a wholesaler and
retailer of prescription drugs and medical devices in the State of New York.
The practice of pharmacy at the wholesale and retail level is regulated by
federal, state and local statutes, rules and regulations. MBM is duly licensed
to permit its Caligor Division to operate as wholesalers and retailers in
prescription drugs and medical devices in the State of New York. No assurances
can be given that MBM's activities will be able in the future to comply with all
applicable federal, state and local regulations. In such event, MBM's
operations may be materially affected adversely by the failure to comply with
such laws or the costs to comply with such laws may impair MBM's profitability.
See "Business of MBM - Regulatory Requirements."
4. COMPETITION. MBM, in all phases of its activities, experiences
competition from other manufacturers and distributors of products in the same
categories as those of MBM, as well as from wholesale and retail pharmacies,
selling to the same general markets as those of MBM. Additionally, the Caligor
Division's services are subject to competition from similar service
organizations. Many of MBM's competitors have far greater resources than MBM
and, in addition, many larger and better financed firms not presently in MBM's
lines of business may conceivably enter these lines of business in the future.
Moreover, most of MBM's markets are serviced by hospital and surgical supply
dealers, athletic retailers, pharmacies and equipment repair firms. There can
be no assurance that MBM will be able to compete successfully in the future with
its present or future competitors. See "Business of MBM - Competition."
5. LACK OF DIVIDENDS. MBM has not paid any dividends since its inception
and intends to follow a policy of retaining all of its earnings, if any, to
finance the development and continued expansion of its business. There can be
no assurance that dividends will ever be paid by MBM. Additionally, under the
terms of its revolving loan agreement with its principal lender, MBM may not pay
dividends without such lender's consent. See "Description of MBM Securities."
6. DILUTION. Persons exercising the Series 1 Warrants, Underwriter's
Unit Warrants and Underwriter's Warrants will experience an immediate and
substantial dilution in the net tangible book value of their investment. See
"Dilution."
7. USE OF PROCEEDS AT THE DISCRETION OF MANAGEMENT. The net proceeds of
this offering, if any, will be used to temporarily reduce the balance
outstanding under the Company's bank line-of-credit which may then be drawn upon
for all general corporate purposes including, without limitation, for a possible
acquisition(s). At February 28, 1996, the Company does not have agreements for
any material acquisition that may be deemed probable. Accordingly, the
expenditure of these funds will be at
9
<PAGE>
the discretion of Management. See "Use of Proceeds" and "Investment
Consideration - Dependence on Financing."
8. EFFECT OF SERIES 1 REDEEMABLE WARRANTS - COMPANY'S RIGHT TO REDEEM
WARRANTS. For the life of the outstanding Series 1 Redeemable Warrants, the
holders will have, at a nominal cost, the opportunity to profit from a rise in
the market price of the Company's Common Stock, and the exercise of such
Warrants could result in a dilution of their investment since the net tangible
book value of their shares of Common Stock after exercise is expected to be less
than the exercise price of such Warrants. Furthermore, the holders of such
Warrants might be expected to exercise them at a time when the Company would, in
all likelihood, be able to obtain any needed capital by a new offering of
securities on terms more favorable than those provided in the Warrants.
However, no assurances can be given that the Company will not redeem the
Warrants at a time when the holders of such Warrants are financially unable to
exercise such Warrants.
9. POTENTIAL FUTURE SALES OF COMMON STOCK. An estimated 550,000 shares
of the Company's issued and outstanding Common Stock are "restricted securities"
as that term is defined under Rule 144 promulgated under the Securities Act of
1933. In general, under Rule 144, a person who has satisfied a two-year holding
period may, under certain circumstances, sell within any three-month period a
number of shares which does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly trading volume in shares during the
four calendar weeks immediately prior to such sale. Rule 144 also permits,
under certain circumstances, the sale of shares without any quantity or other
limitation by a person who is not an affiliate of the Company and who has
satisfied a three-year holding period. Future sales of such shares made under
Rule 144 may have an adverse effect on the then prevailing market price, if any,
of the Common Stock and adversely affect the Company's ability to obtain future
financing in the capital markets as well as create a potential market overhang.
See "Description of Securities."
10. SERIES 1 WARRANTS - REQUIREMENT OF CONTINUING REGISTRATION. The
Company must have a current and effective registration statement on file with
the Securities and Exchange Commission in order for a warrant holder to be able
to exercise his Series 1 Warrants. The Warrant Agreement relating to the Series
1 Warrants contains certain provisions requiring the Company to file for, and
endeavor to secure, such current and effective registration of the shares of
Common Stock issuable upon exercise of such Warrants so long as there is a
reasonable likelihood of exercise. Various state securities laws relating to
qualification of securities for sale in such states may also be applicable.
Necessarily, there can be no assurance that the Company will, at all times
during the life of the Series 1 Warrants, be able to secure or maintain such
registration or qualification; and in the event it is unable to do so, the
Series 1 Warrants will not be exercisable and will be valueless. If the Company
is unable to qualify the shares of Common Stock underlying the Series 1 Warrants
10
<PAGE>
for sale in particular states, Warrant holders in those states will have no
choice but to sell their Series 1 Warrants or let them expire. See "Description
of Securities."
11. EFFECT OF ISSUANCE OF COMMON STOCK UNDERLYING OUTSTANDING OPTIONS,
SERIES 1 WARRANTS, UNDERWRITER'S UNIT WARRANTS AND UNDERWRITER'S WARRANTS. The
Company has granted options to purchase shares of Common Stock. As of February
28, 1996, there are outstanding options to acquire approximately 1,678,968
shares of Common Stock granted to key employees, officers and directors of the
Company. The Company has filed a Registration Statement on Form S-8 to register
shares of the Company's Common Stock underlying such options. Possible or actual
sales of the Company's Common Stock issuable upon exercise of the aforesaid
options, Underwriter's Unit Warrants, Underwriter's Warrants and/or the Series 1
Warrants may have a depressive effect upon the price of the Company's Common
Stock.
11
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For fiscal 1995, net sales decreased 1.4%. The decrease in net sales for
the fiscal 1995 resulted in MBM's downsizing of unprofitable divisions acquired
from Clark Surgical Corp. ("Clark") during the prior year. For fiscal 1994 net
sales increased 64.4% as compared with the prior year. This increase in sales
resulted from MBM's acquisition of Clark and its continuing effort to increase
market penetration and sales volume on the existing customer base and the
addition of new customers. During 1995, 1994 and 1993, the introduction of new
products, changing prices and inflation had no material impact on MBM's
operations.
Net income for fiscal 1995 was .9% of net sales versus 1.3% of net sales in
fiscal 1994 versus 1.6% of sales in fiscal 1993. Net income before the
cumulative effect of accounting change in fiscal 1994 was 1.4% of net sales
versus 1.6 % of net sales in fiscal 1993. The decrease for fiscal 1995 versus
fiscal 1994 was due to increased interest rates charged by financial
institutions, the downsizing of unprofitable divisions acquired from Clark
Surgical Corp. during the prior year, a decrease in the overall consolidated
gross profit percentage and an increase in the effective income tax rate for
1995. The decrease for fiscal 1994 versus fiscal 1993 was due primarily to
costs associated with the acquisition of Clark, the expansion of MBM's hospital
and physician sales forces and increases in the interest rates charged by
financial institutions.
GROSS PROFIT/OPERATING EXPENSES
Gross profit for fiscal 1995 was 21.3% of net sales versus 21.9% of net
sales in fiscal 1994. The decrease in gross profit was a result of changes in
MBM's product mix. Gross profit for fiscal 1994 was 21.9% of net sales versus
23.8% of net sales in fiscal 1993. The decrease in gross profit was a result of
increased sales to hospitals and changes in MBM's product mix. Selling,
shipping and warehouse and general and administrative expenses expressed as a
percent of net sales decreased .2% for fiscal 1995 as compared to fiscal 1994.
Selling, shipping and warehouse and general and administrative expenses
expressed as a percent of net sales decreased 1.4% for fiscal 1994 as compared
to fiscal 1993.
12
<PAGE>
INTEREST AND FINANCING COSTS (NET OF INTEREST INCOME)
Interest expense net of interest income expressed as a percent of net sales
increased .1% for fiscal 1995 when compared to the prior year as a result of
increases in the interest rates charged by financial institutions. Interest
expense net of interest income expressed as a percent of net sales increased .2%
for fiscal 1994 as compared to the comparable period of the prior year, as a
result of increases in accounts receivable and increases in interest rates
charged by financial institutions.
LIQUIDITY AND CAPITAL RESOURCES
During the past three fiscal years, MBM continued to meet its cash needs
via cash flow from operations and borrowings. During fiscal 1995, 1994 and
1993, MBM had an average of approximately $10,500,000, $11,000,000 and
$4,000,000 respectively, of unused credit lines available each month over its
normal operating requirements.
Management believes that its working capital of approximately $30,000,000
at November 30, 1995 provides sufficient liquidity for its short and long-term
requirements and that MBM's long-term liquidity is not materially effected by
any restrictive covenants contained in MBM's Revolving Credit Agreement.
Further, Management believes that MBM should not experience a problem in
connection with the maintenance of such covenants and that its $25,000,000 line
of credit provides MBM with the resources it reasonably expects to require to
meet its cash commitments through fiscal 1996.
For fiscal 1995 MBM generated cash flow from operating activities. A
decrease in accounts payable and an increase in prepaid expenses over and above
decreases in accounts receivable and inventory contributed to MBM's generation
of cash. During fiscal 1995, MBM's financing activities used cash as a result
of repayments of the bank loan under its long-term credit agreement. For fiscal
1995, MBM used cash in investing activities to make capital expenditures and
payments of net assets.
For fiscal 1994, MBM generated cash flow from operating activities. An
increase in accounts payable over and above increases in inventory, accounts
receivable and prepaid expenses contributed to MBM's generation of cash. During
fiscal 1994, MBM's financing activities used cash as a result of repayments of
the bank loan under its long-term credit agreement. For fiscal 1994 MBM used
cash in investing activities to make capital expenditures and payments of net
assets. During fiscal 1994, MBM acquired the business and certain assets of
Clark through an increase in MBM's line-of-credit and the use of same.
For fiscal 1993, MBM used cash for operating activities. An increase in
accounts receivable, inventory, prepaid expenses and a decrease in accrued
expenses and accounts payable contributed to MBM's use of cash. During fiscal
1993, MBM's financing activities
13
<PAGE>
generated cash flow as a result of the net proceeds from the exercise of Series
1 Warrants and the sale of Debentures. For fiscal 1993, MBM used cash in
investing activities to make capital expenditures.
Between August and September 1993, MBM received approximately $4,000,000 in
gross proceeds from the exercise of Warrants. In November 1993, MBM completed
the private sale and issuance of its 7% convertible subordinated Debentures due
October 30, 2003. Net proceeds from the issuance of the Debentures with a face
value of $3 million was approximately $2.7 million. These proceeds combined
with borrowings under MBM's line of credit were used on December 1, 1993 to
purchase the assets of Clark at a purchase price of approximately $16,500,000.
The Debentures are immediately convertible into shares of Common Stock at the
rate of $8.00 per share until October 28, 2003, subject to adjustment in certain
events. In September 1995, $1,500,000 of Debentures were converted into 187,500
shares of MBM's Common Stock.
14
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
AS AT AND FOR THE YEARS ENDED NOVEMBER 30,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES $119,873,764 $121,604,461 $73,951,410 $61,629,435 $50,739,534
COST OF GOODS SOLD 94,307,143 94,923,689 56,347,353 47,287,409 38,561,458
------------ ------------ ----------- ----------- -----------
GROSS PROFIT 25,566,621 26,680,772 17,604,057 14,342,026 12,178,076
------------ ------------ ----------- ----------- -----------
EXPENSES:
Selling, shipping and warehouse 14,511,793 14,421,280 8,521,021 6,852,670 5,760,276
General and administrative 7,901,052 8,581,615 6,525,488 5,015,128 4,303,953
Interest and financing costs - net 1,238,887 1,044,257 502,329 289,355 425,694
Non-recurring items:
Provision for consolidation of facilities - - - - 483,000
------------ ------------ ----------- ----------- -----------
Total expenses 23,651,732 24,047,152 15,548,838 12,157,153 10,972,923
------------ ------------ ----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,914,889 2,633,620 2,055,219 2,184,873 1,205,153
PROVISION FOR INCOME TAXES 806,000 952,000 853,000 962,000 537,000
------------ ------------ ----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 1,108,889 1,681,620 1,202,219 1,222,873 668,153
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
INCOME TAXES PRIOR TO 1994 - (60,000) - - -
------------ ------------ ----------- ----------- -----------
NET INCOME $ 1,108,889 $ 1,621,620 $ 1,202,219 $ 1,222,873 $ 668,153
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ .25 $ .37 $ .30 $ .41 $ .37
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR
INCOME TAXES PRIOR TO 1994 - (.01) - - -
------------ ------------ ----------- ----------- -----------
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ .25 $ .36 $ .30 $ .41 $ .37
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
AVERAGE NUMBER OF SHARES USED TO COMPUTE EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE 5,121,634(*) 4,896,518(*) 4,734,746(*) 3,481,415(*) 1,784,986
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
DIVIDENDS PAID NONE NONE NONE NONE NONE
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
WORKING CAPITAL $29,965,266 $ 30,141,450 $ 20,965,370 $15,819,417 $11,793,261
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
LONG-TERM DEBT (net of current maturities) $17,270,062 $ 19,381,239 $ 9,584,684 $9,410,079 $8,022,054
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
TOTAL ASSETS $51,135,712 $ 54,461,087 $ 32,784,324 $27,934,060 $19,488,491
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
STOCKHOLDERS' EQUITY $21,064,152 $ 18,067,056 $ 16,193,524 $10,461,736 $5,822,407
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
STOCKHOLDERS' EQUITY PER SHARE $4.11(*) $3.69(*) $3.42(*) $3.01(*) $3.26
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TANGIBLE BOOK VALUE PER SHARE $3.14(*) $2.92(*) $3.13(*) $2.72(*) $2.69
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
(*) Includes additional shares assuming conversion of stock options and
warrants utilizing the modified treasury stock method. For the other years,
outstanding stock options and warrants have not been included since their
effect would be antidilutive or immaterial.
All references to shares and per share data have been restated for 1991
due to a reverse stock split on June 28, 1991.
15
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company assuming the exercise of all
of the Series 1 Warrants (of which no assurances can be given in this regard)
are estimated to be approximately $3,726,156 before deducting estimated offering
expenses payable by the Company of $10,000. Such net proceeds (combined with
any proceeds received from the exercise of the Underwriter's Unit Warrants and
Underwriter's Warrants) will be used to temporarily reduce the balance
outstanding under the Company's bank line-of-credit which may then be drawn upon
for all general corporate purposes including, without limitation, for possible
acquisition(s). At February 29, 1996, the Company does not have agreements for
any material acquisition that may be deemed probable. Accordingly, the
expenditure of these funds will be at the discretion of Management. See
"Investment Considerations - Dependence on Financing and "Investment
Considerations - Use of Proceeds at the Discretion of Management."
MARKET INFORMATION
The Company's Common Stock is quoted on the National Association of
Securities Dealers' Automated Quotation System National Market System
("NASDAQ/NMS") under the symbol "MBMI." The Company's Series 1 Warrants may be
quoted in the "pink sheets" published by National Quotation Bureau, Inc. The
Company does not intend to qualify the Series 1 Warrants for trading on NASDAQ.
During the period December 1, 1993 to November 30, 1995, the Company's Series 1
Warrants were unpriced.
The following table reflects the high and low sales prices for the
Company's Common Stock for the periods indicated as reported by the National
Association of Securities Dealers, Inc. ("NASD") from its NASDAQ system:
<TABLE>
<CAPTION>
COMMON STOCK
-------------
QUARTER ENDED
---------------------------------------------------------------------------------------------
February 28 May 31 August 31 November 30
High Low High Low High Low High Low
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year Ended
November 30, 1995 10 9-7/16 12-5/8 9-5/16 13-7/8 11-1/4 14 12
Fiscal Year Ended
November 30, 1994 13 8 10-3/4 9-1/8 10 9-1/2 10 9-1/2
</TABLE>
The over-the-counter market quotations reported above reflect inter-dealer
prices, without retail markup, markdown or commission.
16
<PAGE>
As of March 1, 1996 at 4:00 P.M. Eastern Standard Time, the last sale price
of the Common Stock in the over-the-counter market was $14.00.
Management has been advised by its transfer agent (American Stock Transfer
& Trust Company) that the approximate number of record holders of the Company's
Common Stock, as of March 1, 1996, the record date, was approximately 790. No
cash dividends have been paid by the Company on its Common Stock and no such
payment is anticipated in the foreseeable future.
17
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
November 30, 1995:
<TABLE>
<CAPTION>
Amount
-----------
<S> <C>
Long term-debt, net of current
maturities $17,270,062
-----------
Stockholders' equity
Preferred Stock, $1.00 par value;
authorized 1,000,000 shares,
no shares issued
Common Stock, $.03 par value,
7,000,000 authorized
3,878,804 shares outstanding 116,364
Capital in excess of par value 12,407,257
Retained earnings 8,541,695
Less: cost of 1,167 shares of
Common Stock in treasury (1,164)
-----------
Total stockholders' equity 21,064,152
-----------
Total capitalization $38,334,214
-----------
-----------
</TABLE>
(1) Does not include the following: (i) the possible exercise of the
Underwriter's Warrants issued in 1992 to Royce Investment Group, Inc. to
purchase a maximum of 241,051 shares, (ii) outstanding stock options
granted to officers, directors, employees and consultants covering
approximately 1,678,968 shares, or (iii) 187,000 shares issuable upon
conversion of certain Debentures.
DILUTION
Persons exercising the Series 1 Warrants will incur an immediate and
substantial dilution of the net tangible book value per share of their
investment. As of November 30, 1995, the Common Stock of the Company had a net
tangible book value of approximately $16,074,079 or $4.15 per share based upon
3,877,637 shares outstanding at that date. Without taking into account any other
changes in the Company's net tangible book value after November 30, 1995 other
than those resulting from the assumed exercise of Series 1 Warrants (of which no
assurances can be given in this regard) at an average exercise price of $5.73
per share, the pro forma net tangible book value of the Company's Common Stock
as of November 30, 1995 would be approximately $19,790,235 or $4.37 per share
for the Company's then stockholders and an immediate dilution of $1.36 per share
to the persons exercising the Series 1 Warrants. The following table
illustrates the per share dilution on the basis discussed in the immediately
preceding paragraph:
18
<PAGE>
<TABLE>
<CAPTION>
Table I - Dilution
<S> <C> <C>
Exercise Price per share $5.73
Net tangible book value per
share before offering $4.15
Increase in net tangible book value
per share attributable to the shares
offered .22
-------
Pro forma net tangible book value
per share after offering (1) 4.37
-------
Dilution to new investors 1.36
-------
-------
</TABLE>
______________
(1) After deduction of $10,000 of estimated offering expenses to be paid by the
Company.
The foregoing table does not reflect the possible exercise or conversion of
the following: (i) Underwriter's Unit Warrants and/or Underwriter's Warrants to
purchase a maximum of 241,051 shares, (ii) outstanding stock options granted to
officers, directors, employees and consultants covering approximately 1,372,369
shares and (iii) certain Debentures covering a maximum of 187,500 shares
issuable upon conversion of same. Persons exercising the Underwriter's Unit
Warrants and/or Underwriter's Warrants will experience substantial and immediate
dilution in the net tangible book value of their investment.
BUSINESS
OVERVIEW
Micro Bio-Medics, Inc. (the "Company" or "MBM") is a New York company which
was incorporated in 1971. The Company distributes medical supplies to
physicians and hospitals in the New York metropolitan area, as well as to health
care professionals in the sports medicine, emergency medicine, school health,
industrial safety, government and laboratory markets nationwide. The Company
depends upon the continued supply of the products it distributes, however, it
does not depend upon any single source. The Company has neither encountered nor
does it anticipate any difficulty in obtaining the necessary products. No one
customer has accounted for more than 10% of the Company's revenues during the
fiscal years ended November 30, 1995, November 30, 1994 and November 30, 1993.
CALIGOR DIVISION
The Company's Caligor Division is a physician supplier in the New York
metropolitan area, serving over 12,000 physicians and laboratories. It also
serves local hospitals, nursing homes and industrial medical departments.
Caligor provides its physicians with a comprehensive selection of supplies
and related services. The division's estimated 50,000 supplies range from
bandages and pharmaceuticals to sophisticated
19
<PAGE>
diagnostic equipment, while the services range from equipment repair to the
complete design and installation of new offices, waiting rooms, exam rooms and
laboratories.
The Caligor division through Caligor Physicians & Hospital Supply Corp., a
wholly owned subsidiary of the Company, also operates a pharmacy in Manhattan
to serve local physicians and their patients. In addition, the Caligor Division
supplies independent clinical labs, hospital labs, and physician in-office labs
with diagnostic equipment, test kits, reagents and disposables.
Over the past few years, the Caligor Division has been able to acquire a
number of smaller distributors, resulting in significant economies of scale and
improved operating efficiencies. Caligor has increased its market share in
these new territories with the same combination of sales force support, direct
mail, catalogs and telemarketing sales that it uses in existing territories.
Caligor is the Company's largest division in terms of annual sales.
Revenues during fiscal 1995 were approximately $98,300,000 or 82% of the
Company's total revenues for the same period as compared to $101,000,000 or
83.1% of total revenues for the comparable period of fiscal 1994, as compared to
$55,100,000 or 74.6% of the total revenues for the comparable period of fiscal
1993. The Company's revenues since 1993 have dramatically increased as a result
of the Company's acquisition of the business and assets from Clark Surgical and
sales and marketing efforts aimed at the acquired and existing customer base.
MBM DIVISION
The MBM Division distributes sports medicine supplies, school nurse
supplies, medical equipment and rehabilitation equipment to over 10,000 schools,
colleges, municipalities, emergency medical units and professional sports teams
around the country, including many of the major and minor league baseball,
basketball, football and hockey teams. Revenues derived from municipalities and
school districts are derived from competitive bidding.
Like the Caligor Division, MBM Division serves its customers with a
comprehensive line of supplies and services, ranging from the delivery of
athletic tape to an NFL team on the road to the complete design, furnishing and
stocking of a training room, sports medicine clinic, or school nurse office.
MBM Division markets its product line primarily via three catalogs which it
distributes to customers and prospective customers each year. These catalogs
are supported by direct mail, telemarketing, professional journal advertising,
national and local trade show exhibitions, and an inside sales and customer
service staff.
The seasonal buying habits of the Company's school and athletic customers
is concentrated between the months of June and
20
<PAGE>
September of each year. Although the Company's marketing expenses relating to
such customers are incurred throughout the year, the Company has experienced no
problem in meeting its cash requirements as a result of its working capital and
extension of credit under its Revolving Credit Agreement.
Revenues derived from the MBM Division during fiscal 1995 were
approximately $18,800,000 or 15.7% of the Company's total revenues for the same
period as compared with approximately $18,100,000 or 14.9% of total revenues for
fiscal 1993 and $16,500,000 or 22.3% total revenues for fiscal 1993. Revenues
increased as a result of greater market penetration.
HEALER PRODUCTS DIVISION
The Company's Healer Products Division is an assembler and wholesaler of
first aid kits and private label medical products. These products, in turn, are
marketed by the Company's other divisions, and sold to numerous outside markets
through a network of commissioned sales agents. The first aid and medical kits
are produced in a variety of forms and sizes, but are generally designed for use
in government, industry, schools, emergency medical organizations, hospitals,
homes and recreational facilities.
The Healer Products Division also produces specialized kits for volunteer
ambulance corps, emergency squads, corporate offices, construction operations,
restaurants, retail stores, boats, athletic activities, motor vehicles, and
sales promotion purposes as well as for specific medical problems such as
burns, poisoning, insect stings, traumatic accidents, obstetrical emergencies
and eye injuries.
Many of the products contained in the kits are generic and are marketed
under the Company's private label. The use of private-label generic products
permits attractive pricing for the Company and its customers and creates a
consistent, positive brand image among customers.
Revenues derived from the Healer Products Division during fiscal year 1995
were approximately $2,700,000 representing 2.3% of the Company's total revenues
as compared with $2,459,000 representing 2.0% of total revenues for fiscal 1994
and as compared to $2,300,000 representing 3.1% of total revenues for fiscal
1993. Revenues increased as a result of increased market penetration and the
addition of more independent commission sales representatives.
ACQUISITION OF STONE MEDICAL SUPPLY CORPORATION
Pursuant to an Agreement for Merger and Reorganization dated November 2,
1995 among MBM, Diagnostic Leasing Corp. ("DLC"), Stone Medical Supply
Corporation ("Stone"), a distributor of physician and podiatry supplies and
equipment, and Andrew D. Stone, Stone was merged into DLC with DLC as the
surviving corporation on January 18, 1996. The Company issued approximately
280,696 shares of its
21
<PAGE>
Common Stock in exchange for the outstanding shares of Stone. Subsequent to the
merger, DLC changed its name to Stone Medical Supply Corporation.
ACQUISITION OF MID COUNTY MEDICAL SUPPLY CO., INC.
On March 27, 1995, MBM acquired certain assets and customer accounts of Mid
County Medical Supply Co., Inc., a distributor of physician and hospital
supplies, for approximately $500,000. The purchase price was allocated based
upon the fair market value of the assets at the date of acquisition. The
operations of Mid County Medical Supply Co., Inc., have been combined into the
Caligor Division.
ACQUISITION OF JOSEPH WEINTRAUB, INC.
On June 1, 1994, MBM acquired certain assets and customer accounts of
Joseph Weintraub, Inc., a distributor of physician and hospital supplies for
approximately $1,100,000. The purchase price was allocated based upon the fair
market value of the assets at the date of acquisition. The operations of Joseph
Weintraub Inc. have been combined into the Caligor Division.
ACQUISITION OF CLARK SURGICAL CORP.
On November 19, 1993, MBM Hospital Supply Corp., a wholly owned subsidiary
of MBM entered into an agreement with Clark Surgical Corp. ("Clark") to acquire
from Clark substantially all of the assets and customer accounts subject to
certain specific liabilities and obligations arising out of the contracts and
personal property leases acquired (the "Agreement"). This transaction closed on
December 1, 1993 and was accounted for as a purchase.
The purchase price for all the assets was approximately $16,500,000. The
purchase price was based upon the book value of the inventory, accounts
receivable and fixed assets purchased by MBM Hospital plus $1 million for
Clark's goodwill as described in the Agreement. MBM also issued to certain
persons warrants to purchase an aggregate of 40,000 shares of MBM's Common Stock
at a purchase price of $8.00 per share, subject to MBM's right to terminate the
unvested portion of the Warrants upon certain conditions at the sole discretion
of the Board of Directors. The Warrants vested 20% at closing and the balance
was scheduled to vest in four equal annual amounts on the anniversary date of
the Closing Date. However, the unvested portion of the Warrants to purchase
32,000 shares have been terminated.
The Agreement also provided for the execution of agreements not to compete
with Alfred S. Bretan and Burt Wexler, the sole shareholders of Clark
(hereinafter referred to as the "Shareholders"). The agreements not to compete
provide for the payment of $2.725 million in cash over a seven year period.
22
<PAGE>
The operations of MBM Hospital Supply Corp. have been combined into the
various divisions of MBM.
ACQUISITION OF HARRISBURG SURGICAL SUPPLY, INC.
On March 29, 1993, MBM acquired Harrisburg Surgical Supply, Inc., a
distributor of physician and nursing home supplies servicing the eastern
Pennsylvania, Philadelphia and Baltimore metropolitan markets. The
consideration paid consisted of a combination of $600,000 in cash and 71,229
shares of MBM's Common Stock for an aggregate purchase price of approximately
$1,200,000. The operations of Harrisburg Surgical Supply, Inc. have been
combined into the Caligor Division.
REVOLVING CREDIT AGREEMENT
MBM has entered into a Credit Agreement with Chase Manhattan Bank N.A.
("Chase") to act as agent of and as a participant in a $25 million secured
revolving credit facility for MBM. Fleet Bank of New York ("Fleet") also acted
as a participant in the Credit Agreement. Chase's and Fleet's commitment under
the Credit Agreement is limited to $15 million and $10 million, respectively.
All references to MBM include MBM and its subsidiaries.
The Credit Agreement, as amended, which expires on February 15, 1999,
provides for a three year secured revolving credit in an amount which shall not
exceed the lesser of (a) $25,000,000 or (b) the borrowing base as defined in the
Credit Agreement.
The Credit Agreement provides for MBM to pay interest on loans made under
the facility at the rate of 1/4 of 1% over the Banks periodic base rate unless
MBM elects to pay based upon an alternative formula at the time of each
borrowing. MBM has been borrowing primarily by utilizing LIBOR, at the
prevailing rate plus 1.75%. The prevailing rate varies based upon the term of
the LIBOR. Upon request by MBM, the Banks may, at their option, create banker
acceptances under the facility. On June 7, 1995, MBM entered into a three year
interest rate swap agreement with Chase for $10,000,000. It is management's
intent to match the agreement's terms as to principal amounts and repricing
maturities in order to reduce MBM's interest rate risk on its revolving loans.
Effectively, the agreement serves to limit the net interest rate charged on
MBM's first $10,000,000 of revolving loans to 8.75%. However, MBM would receive
no further interest rate benefit once the applicable interest rate falls below
7.05%.
The Credit Agreement is subject to several conditions and financial
covenants such as the following:
- WORKING CAPITAL: MBM shall maintain a Consolidated Working Capital of
no less than $10,500,000 as of the end of each fiscal quarter.
- INTEREST COVERAGE RATIO: MBM shall maintain a ratio of Consolidated
EBITA (earnings before interest, taxes and
23
<PAGE>
amortization) to Consolidated Interest Expense, measured at the end of
each fiscal quarter for a period comprised of such fiscal quarter and
the three immediately preceding fiscal quarters, of not less than 2.50
to 1.00.
- CURRENT RATIO: MBM shall maintain a ratio of Consolidated Current
Assets to Consolidated Current Liabilities of not less than 1.20 to
1.0, calculated at each fiscal quarter end.
- LEVERAGE RATIO: MBM shall maintain a ratio of (a)(i) total
liabilities of MBM and its Consolidated Subsidiaries less (ii)
Approved Subordinated Debt divided by (b)(i) net worth of MBM and its
Consolidated Subsidiaries plus (ii) Approved Subordinated Debt less
(iii) intangible assets of MBM and its Consolidated Subsidiaries, as
of the end of each fiscal quarter of MBM of not more than 2.75 to
1.00.
- TANGIBLE NET WORTH: MBM shall maintain a Consolidated Tangible Net
Worth, calculated at the end of each fiscal year, of no less than
$400,000 more than the Consolidated Tangible Net Worth for the
respective immediately preceding fiscal year.
The Credit Agreement provides, among other things that, (1) MBM shall not
declare or pay any dividends or make any distribution of assets to stockholders,
except that MBM may declare dividends and make distributions solely in the
Common Stock of MBM, (2) MBM shall not purchase any of its capital stock now or
hereafter outstanding which purchase shall, when aggregated with all other such
purchases, exceed $250,000 (excluding certain purchases as set forth in the
Credit Agreement relating to MBM's shares that were issued in connection with
MBM's purchase of Harrisburg Health Care, Inc.), (3) MBM shall not lease,
assign, transfer or dispose of assets other than in the ordinary course of
business, (4) MBM shall not change its fiscal year, (5) MBM shall not incur any
debt other than the following: debt owed to the Banks under the facility;
existing debt disclosed to and approved by the Banks; approved subordinated
debt; debt between MBM and a subsidiary; accounts payable to trade creditors
incurred in the ordinary course of business; commercial letters of credit issued
for the account of MBM by other than the Banks in amount not to exceed in the
aggregate at any time the principal sum of $500,000; and such other debt as
provided for in the Credit Agreement.
REGULATORY REQUIREMENTS
The manufacturers of many products sold by MBM are required to obtain U.S.
Food and Drug Administration ("FDA") approval for such products, failing such
approval, sales of such products cannot lawfully be made. MBM's assembly,
warehousing and distribution procedures are subject to the Good Manufacturing
Practices regulation of the FDA. MBM has registered itself with the FDA and
24
<PAGE>
has renewed said registration annually. Such registration permits MBM to
distribute supplies and medical devices.
The Caligor Division, among its various activities, operates as a
wholesaler and retailer of prescription drugs and medical devices in the State
of New York. The practice of pharmacy at the wholesale and retail level is
regulated by federal, state and local statutes, rules and regulations. MBM is
duly licensed to permit its Caligor Division to operate as wholesalers and
retailers in prescription drugs and medical devices in the State of New York.
In the future, should MBM expand such activities, it will have to comply with
all applicable federal, state and local rules.
COMPETITION
MBM, in all phases of its activities, experiences competition from other
manufacturers and distributors of products in the same categories as those of
MBM, as well as from wholesale and retail pharmacies, selling to the same
general markets as those of MBM. Additionally, the Caligor Division's services
are subject to competition from similar service organizations. Many of MBM's
competitors have far greater resources than MBM and, in addition, many larger
and better financed firms not presently in MBM's lines of business may
conceivably enter these lines of business in the future. However, most of MBM's
markets are serviced by hospital and surgical supply dealers, athletic
retailers, pharmacies and equipment repair firms. MBM believes that its
purchasing power, quick service including next day delivery where possible,
competitive pricing and marketing expertise enable it to compete favorably with
such firms although it continues to experience significant competition from
other firms which are better established and have substantially greater
financial resources than MBM.
EMPLOYEES
At November 30, 1995, MBM employed 297 full-time employees, including 118
sales and customer service persons, 92 warehouse and shipping workers, 59
clerical workers 7 delivery persons, 6 computer programmers, 2 pharmacists, 7
purchasing agents and 6 senior management officers. MBM usually employs
seasonal summer employees during peak sales volume periods. MBM's employees are
not covered under any collective bargaining agreements and there have been no
work stoppages. Management believes MBM has satisfactory employee relations at
all levels.
FACILITIES
In 1992, MBM consolidated its various Mount Vernon facilities described
below into one central location consisting of approximately 88,000 square feet
of assembly and storage space and 20,000 square feet of office space in a 31
year old industrial building at 846 Pelham Parkway, Pelham Manor, New York.
This location's facilities are leased from a non-affiliated entity and are in
good condition and sprinklered. MBM leased these premises
25
<PAGE>
pursuant to a lease which expires on July 31, 2007. MBM pays an annual rent of
approximately $468,000, with certain additional sums based upon property tax
costs.
The Pelham Manor, New York facilities are equipped to house the assembly
processing, customer service, warehousing and shipping requirements of all MBM's
divisions to the extent located at these facilities. It contains an order
picking conveyor system, fork lifts, large numbers of pallet racks and shelving,
manually operated material handling equipment, packaging equipment, assembly
equipment (tables, benches and conveyers), engraving machinery (for medical
equipment), and conventional office equipment, including an electronic data
processing system used to facilitate all areas of MBM's business.
MBM leases for its Caligor Division approximately 5,000 square feet of
space at 1226 Lexington Avenue, New York, New York, under a lease which expires
on April 30, 2000, for which it presently pays an annual rental of approximately
$49,000 per annum, together with additional sums for heat, utilities and
property tax costs. This location contains a store front facility fully
equipped to operate as a wholesale and retail pharmacy, and a basement storage
facility.
MBM leases for its MBM division approximately 4,290 square feet of space at
211 Harbor Way, South San Francisco, California under a lease which expires on
January 31, 2000 for which it pays an annual rental of approximately $30,000.
This location's facilities are in good condition with approximately 1,000 square
feet being devoted to office space and the balance to warehouse space.
MBM also leases approximately 3,100 square feet of space in Jacksonville,
Florida, under a lease which expires June 30, 1997. The annual rental under the
lease is approximately $17,300.
MBM leases for its Caligor Division approximately 120,000 square feet of
warehouse space including offices and warehouse dock at 300 Michael Drive,
Syosset, New York. The building is fully sprinklered and alarmed. MBM leases
these facilities pursuant to a lease which expires on March 31, 1997, with an
option to renew until April 29, 2001. MBM pays an annual rent of $240,000 with
certain additional sums based upon property tax costs, insurance and utilities.
In February 1996, MBM leased for its Caligor Division approximately 82,000
square feet of space in the Bronx, New York, under a lease which expires in
January, 2001. The annual rent is approximately $200,000. The space will be
used by Caligor's Hospital Division for its stockless distribution operations.
The premises are in good condition, sprinklered and alarmed.
All of MBM's facilities are adequate for MBM's present needs. In the event
that additional facilities are needed, Management believes that such facilities
can be obtained at a reasonable cost.
26
<PAGE>
Stone's executive and sales offices and its storage facilities were
located at 2487 North Jerusalem Road, East Meadow, New York 11550, containing
approximately 13,800 square feet. Stone purchased the aforesaid premises on
July 13, 1984, for the sum of $200,000. A first mortgage was obtained from
Citibank, N.A., in the principal amount of $175,000, payable over twenty years
at the monthly rate of $730, plus interest on the unpaid balance. On March 15,
1985, the Job Development Authority of the State of New York (the "JDA") made
an additional loan on the premises for alterations in the sum of $149,000,
replacing temporary financing. MBM is actively attempting to sell the property.
None of MBM's leases are with related parties. Additionally, MBM now owns
1 automobile and 2 trucks and leases 2 station wagons, 5 trucks and 10
automobiles, all of which are utilized for business purposes.
LEGAL PROCEEDINGS
There are no material legal proceedings pending against the Company.
27
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Directors and Executive Officers of the Company are as follows:
Name Age Title
---- --- -----
Bruce J. Haber 43 President, Chief
Executive Officer
and Director
Marvin Caligor 65 Consultant, Director
Renee Steinberg 73 Secretary and
Director
K. Deane Reade, Jr. 54 Director
Louis Buther 42 Vice President
Ernest W. Nelson 41 Vice President
Michael J. Levy 58 Vice President
Stuart F. Fleischer 43 Vice President-
Finance, Principal
Financial and
Accounting Officer
Gary L. Butler 53 Treasurer, Assistant
Secretary
Bruce J. Haber is serving as President and a Director of MBM. Mr. Haber
was elected to the position of President in December, 1983; has served as a
Director of MBM since September, 1981; and, from that date, until his election
as President of MBM, served as Executive Vice-President of MBM. Prior to his
affiliation with MBM, Mr. Haber served from 1977 to August, 1981 as a Vice-
President of Commercial Credit Business Services, Inc., New York. Mr. Haber
holds a Bachelor of Science degree from the City College of New York and a
Master of Business Administration from Baruch College in New York. Mr. Haber is
a full-time employee of MBM.
Louis Buther has been a Vice-President of MBM since December, 1983. He has
served as Vice-President of MBM's wholly-owned subsidiary Caligor Physicians and
Hospital Supply Corp. since May, 1983 and from March 1, 1982 to April, 1983,
served as its Sales Manager. Mr. Buther also served as Sales Manager for the
Caligor business from 1980 until its acquisition and prior thereto served it in
the capacity of a licensed pharmacist and pharmacist intern. Mr. Buther holds
an Associate Arts Science degree in Chemistry from Bronx Community College and a
Bachelor of Science degree in Pharmacy from Long Island University. Mr. Buther
is a full-time employee of MBM.
28
<PAGE>
Ernest W. Nelson has been a Vice-President of MBM since December, 1983.
From January, 1982 until his election as a Vice-President, he was employed by
MBM as a Sales Representative and then promoted to the position of National
Sales Manager for MBM's MBM division. Prior thereto, Mr. Nelson was employed
from June, 1981, to December, 1981, as a Sales Representative for United States
Lines and, from July, 1976, to June, 1981, as an Athletic Trainer and Associate
Professor at Columbia University, New York City. Mr. Nelson holds a Bachelor of
Science degree from Central Connecticut State University and a Master of Arts
degree from Columbia University. Mr. Nelson is a full-time employee of MBM.
Michael Levy joined MBM in 1990 as Vice President of the Healer Products
Division. Prior to joining MBM, Mr. Levy served as a Management Consultant in
the women's apparel industry from 1987 to 1990. He was Senior Vice President of
Rudco Industries, Inc., a financial forms manufacturer from 1975 to 1987 and
held two management positions in the hardware industry from 1960 to 1975. Mr.
Levy is a full-time employee of MBM.
Stuart F. Fleischer has been Vice President of Finance, Principal Financial
and Accounting Officer since April 1995. Stuart Fleischer joined the Company in
March 1995. From February 1986 through March 1995, Mr. Fleischer served as a
Senior Vice President and Chief Financial Officer of Communications Diversified,
a promotional marketing entity. From June 1974 through January 1986, he worked
on the audit staff at Price Waterhouse. Mr. Fleischer is a Certified Public
Accountant and holds a Bachelor of Science degree from Lehigh University. Mr.
Fleischer is a full-time employee of the Company.
Gary L. Butler has been Treasurer of MBM and has served at various times as
an executive officer in other capacities since December, 1983. From March 1,
1982 until December, 1983, Mr. Butler served as the Controller of MBM's wholly-
owned subsidiary, Caligor Physicians and Hospital Supply Corp., and, prior
thereto, served in such capacity with the Caligor business from May, 1975 until
its acquisition by MBM. From December, 1984 to the present, Mr. Butler has
served as Treasurer of Caligor Physicians & Hospital Supply Corp. Mr. Butler
holds a Bachelor of Science degree from New York University. Mr. Butler is a
full-time employee of MBM.
Marvin S. Caligor, a Director of MBM since March 1, 1982, when Caligor
Physicians and Hospital Supply division of Health-Chem Corporation was acquired
by MBM. Mr. Caligor also served as Senior Vice-President of MBM from March,
1982 until December, 1987. Since December, 1987, Mr. Caligor has been employed
by MBM as a consultant on a part-time basis. From 1969 until its acquisition by
MBM, Mr. Caligor was President of the division and an officer and director of
Health-Chem Corporation. Mr. Caligor is a licensed pharmacist and holds a
Bachelor of Science in Pharmacy from Columbia University.
Renee Steinberg has served as Secretary and a Director of MBM for more than
the past 5 years and has not been associated with any firm other than MBM and
its subsidiaries during such period.
29
<PAGE>
Mrs. Steinberg received a Bachelor of Science degree from Cornell University and
is a founder of MBM.
K. Deane Reade, Jr. has been a Director of MBM since July, 1987. Mr. Reade
is Managing Director of John Hancock Capital Growth Management, Inc. and a
General Partner of Gramercy Hills Partners, L.P. In addition, Mr. Reade is a
director of Bangert, Dawes, Reade, Davis & Diose, Inc., a private investment
banking firm with offices in New York and San Francisco. As a founder of
Bangert, Dawes, Reade, Davis & Diose, Inc., he served as president since its
establishment in 1975. Mr. Reade is a graduate of Rutgers University. He is a
director of American/Elgen, Inc. (Irvington, New Jersey); Myers Industries, Inc.
(Lincoln, Illinois); Wundies Industries Inc. (New York, New York), Zimpro
Environmental, Inc. (Rothchild, Wisconsin), U. S. Souvenir, Inc. (Honolulu,
Hawaii) and Trail Blazers Camps, Inc. (New York, N.Y.) a 100 year old social
service organization with a year round educational program for disadvantaged
children from the Metropolitan New York - New Jersey area.
Directors are elected at the annual meeting of stockholders and hold office
until the following annual meeting. The terms of all officers expire at the
annual meeting of directors following the annual stockholders meeting. Subject
to their contract rights to compensation, if any, officers may be removed,
either with or without cause, by the Board of Directors, and a successor elected
by a majority vote of the Board of Directors, at any time.
In October, 1987, the Company established an Executive Compensation
Committee with Renee Steinberg as Chairman and Bruce Haber and K. Deane Reade as
members and an Audit Committee with K. Deane Reade as Chairman and Bruce Haber
and Marvin Caligor as members. The Compensation Committee has the power to
review compensation of the Company's executive officers, including salaries, the
granting of stock options and other forms of compensation for executive officers
whose salaries are within the purview of the Board of Directors. In some cases,
the Compensation Committee may make recommendations to the entire Board of
Directors for its approval or, itself exercise the powers and authority of the
Board of Directors to designate compensation.
The Audit Committee has the power to (i) select the independent certified
public accountant, (ii) satisfy itself on behalf of the Board that the external
and internal auditing procedures assure reliable and informative accounting and
financial reporting, (iii) have meetings with management, or with the auditors,
or with both management and auditors, to review the scope of the auditor's
examination, audit reports and the Corporation's internal auditing procedures
and reviews, (iv) monitor policies established to prohibit unethical,
questionable, or illegal activities by those associated with the Corporation;
and (v) review the compensation paid to the auditors through annual audit and
non-audit fees and the effect on the independence of the auditors in relation
thereto, and it may exercise the powers and authority of the Board of Directors
to implement changes in connection with the foregoing or, at its option, may
make recommendations to the entire Board of Directors for its approval.
30
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table provides a summary compensation table with respect to
the compensation of MBM's Chief Executive Officer (CEO) and the executive
officers other than the CEO who are serving as executive officers at the end of
fiscal 1995 whose total annual salary and bonus, if any, exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Number of Payouts sation
Position Year Salary ($) Bonus ($) ($) ($) Options ($) ($)
(1) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 222,577 144,131 -0- -0- 70,000 -0- 40,431
Bruce J. Haber 1994 209,385 199,097 -0- -0- 70,000 -0- 40,848
CEO, 1993 191,846 154,594 -0- -0- 35,000 -0- 25,799
- ------------------------------------------------------------------------------------------------------------------------------------
1995 115,885 50,874 -0- -0- 17,500 -0- 1,150
Louis Buther 1994 114,058 89,365 -0- -0- 17,500 -0- 1,766
Vice President 1993 107,363 62,603 -0- -0- 15,000 -0- 1,581
- ------------------------------------------------------------------------------------------------------------------------------------
1995 85,654 40,890 -0- -0- 15,000 -0- 1,217
Ernest Nelson 1994 85,346 46,445 -0- -0- 10,000 -0- 1,228
Vice President 1993 82,056 39,000 -0- -0- 15,000 -0- 1,340
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The restricted stock awards are based upon the dollar value of restricted
stock, calculated by multiplying the closing market price of the
Registrant's unrestricted stock on the date of grant by the number of
shares awarded on that date.
(2) Includes contributions to MBM's 401(K) Plan and in the case of Bruce Haber,
all other compensation includes insurance premiums paid for a whole life
policy which Mr. Haber is allowed to designate the beneficiary and
directors fees.
31
<PAGE>
During the past three fiscal years, MBM has not granted stock appreciation
rights. In addition, MBM does not have a defined benefit or actuarial plan.
See Section 401(k) or deferred retirement plan regarding the cash or deferred
retirement plan pursuant to Section 401(k) of the Code. Directors currently
receive $16,000 annual compensation for their services as directors, $4,000 for
services on each Audit and Compensation Committee and are eligible to receive
stock options.
OPTION GRANTS TABLE
The information provided in the table below provides information with
respect to individual grants of stock options during fiscal 1995 of each of the
executive officers named in the summary compensation table above. MBM did not
grant any stock appreciation rights during 1995.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
Potential
Realizable Value at
Assumed Annual
Individual Grants Rates of Stock Price
Appreciation
for Option Term (2)
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of
Total
Options/
Granted to
Options Employees Exercise Expira-
Granted in Fiscal Price tion
Name (#)(3) Year (1) ($/Sh) Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Haber 70,000 34.7 9.625 2/28/05 423,850 1,052,730
Louis Buther 17,500 8.7 9.625 2/28/05 105,963 263,183
Ernest Nelson 15,000 7.4 9.625 2/28/05 90,825 225,585
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N/A - Not Applicable.
(1) The percentage of total options granted to employees in fiscal year is
based upon options granted to officers, directors and employees.
(2) The potential realizable value of each grant of options assumes that the
market price of MBM's Common Stock appreciates in value from the date of
grant to the end of the option term at annualized rates of 5% and 10%,
respectively, and after subtracting the exercise price from the potential
realizable value.
(3) All options are exercisable at any time until the expiration date.
32
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The information provided in the table below provides information with
respect to each exercise of stock option during fiscal 1995 by each of the
executive officers named in the summary compensation table and the fiscal year
end value of unexercised options.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options at FY-End (#) Options
Shares Acquired Value Exercisable/ at Fy-End($)
on Realized Unexercisable Exercisable/
Name Exercise (#) ($)(1) Unexercisable(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bruce Haber -0- -0- 733,333/1,667 5,726,580/17,920
Louis Buther -0- -0- 150,333/-0- 1,111,323/-0-
Ernest Nelson -0- -0- 103,666/-0- 754,115/-0-
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(1) The aggregate dollar values in column (c) and (e) are calculated
by determining the difference between the fair market value of the Common
Stock underlying the options and the exercise price of the options at
exercise or fiscal year end, respectively. In calculating the dollar value
realized upon exercise, the value of any payment of the exercise price is
not included.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three board members, namely, Bruce J. Haber, the Company's the Chief
Executive Officer ("CEO"), Renee Steinberg, the Company's Secretary, and K.
Deane Reade, Jr. This Committee is responsible for reviewing, determining and
recommending to the Board the annual salary, bonuses, stock option grants, stock
awards and other compensation of the executive officers of the Company.
The report describes the policies and rationales of the Committee in
establishing the principal components of executive compensation in 1995. The
Committee's review and determination of executive compensation includes
consideration of the following factors: (a) compensation surveys of similar size
companies, (b) past and future performance contributions of each executive
officer, (c) the performance of the Company, both separately and relative to
similar size companies, (d) historical compensation levels and (e)
recommendations of independent board members with respect to compensation
competitiveness.
33
<PAGE>
Under the direction of the Committee, the Company has developed a
compensation strategy designed to compensate its executives on a competitive
basis relative to performance and comparable to other companies of similar size.
The program is intended to (a) reward executives for long-term strategic
management and the enhancement of shareholder value, (b) facilitate the
Company's short- and long-term planning process and (c) attract and retain key
executives critical to the long-term success of the Company.
Compensation for each of the Named Executives consists of a fixed base
salary and variable components, including both short- and long-term incentive
compensation in the form of bonuses, stock option grants and stock awards. An
annual salary and performance incentive plan for each of the Company's executive
officers, other than the CEO, based on the above-described considerations and
the Company's compensation strategy, has been developed and prepared under the
direction of the CEO and approved by the Committee. Subject to the CEO's
contractual rights in his employment contract, the Committee reviews and fixes
the CEO's compensation based on similar data as well as an assessment of his
past and future contributions in leading the Company toward its objectives.
Based on the Company's profitable operations over the past nine years, the
Committee believes that the Company's executive management is dedicated to its
corporate objectives of achieving significant improvements in long-term
financial and operating performance. The executive compensation program
outlined below is designed to implement this strategy by rewarding management
for achieving these objectives.
BASE SALARY. The Company's base salary is designed to recognize the
sustained and cumulative effect on long-term results that its executives have
demonstrated. The base salary is a remuneration for services provided and is
fixed at levels which are competitive with amounts paid to executives at
comparable companies.
SHORT-TERM INCENTIVES. Short-term incentives in the form of annual
bonuses are paid to each of the Executives named in the summary compensation
table to recognize performance that is related to the achievement of key
financial and operating objectives that have been established for a fiscal year.
Since short-term incentives should generally reflect one year contributions, the
size of the payments may vary considerably from year to year, depending on
performance. At the beginning of each year, performance goals for the purposes
of determining annual incentive compensation are established in each of the
Company's divisions as well as in certain staff departments. These goals are
objective, measurable and controllable by the responsible executive.
LONG-TERM INCENTIVES. The Committee recognizes that long-term incentive
compensation is a substantial component of the total pay package linking
executive pay and corporate performance. At the Company, long-term incentive
compensation in the form of equity
34
<PAGE>
based compensation is intended to link the interests of its executives with the
interests of the Company's shareholders. The payment of stock option grants and
stock grant awards are designed to be issued to executives when the Company has
provided the shareholders with an acceptable return on their investment over a
prolonged period of time.
CHIEF EXECUTIVE OFFICER'S 1995 COMPENSATION. As more specifically set forth
in the Summary of Compensation table, Mr. Haber earned during fiscal 1995, an
annual salary of $222,577 (computed at the rate of $225,000 per annum) and an
annual bonus of $144,131 equal to 7% of the Company's income before deducting
taxes and the amount of his bonus in accordance with his employment contract.In
addition, Mr. Haber received options to purchase 70,000 shares of the Company's
Common Stock at the then current fair market value at the time of grant.
In determining Mr. Haber's 1995 compensation, the Committee considered the
factors applied to the compensation of all executive officers as discussed
above. The Committee decided that, based on these criteria, the Company's
performance was successful. The Committee decided that Mr. Haber's total 1995
compensation package reflects the Company's overall performance based on the
creation of shareholder value, cash flow, and net income and that his annual
bonus which was based upon the terms of his employment contract, compares to
that paid to CEO's of similar sized companies.
The foregoing report has been approved by all members of the Committee.
Renee Steinberg, Chairperson
K. Deane Reade, Jr.
Bruce J. Haber
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total shareholder return on its Common Stock with
the cumulative shareholder return of (1) a broad equity market index, and (2) a
published industry index or peer group for the past five years. Such chart
compares the performance of the Company's Common Stock with (1) the NASDAQ Stock
Market Index and (2) a group of public companies each of whom are listed in the
peer group machinery, equipment and supplies and assumes an investment of $100
on December 1, 1990 in each of the Company's Common Stock, the stock comprising
the NASDAQ Stock Market index and the stocks of the machinery, equipment and
supplies.
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COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
MICRO BIO MEDICS, INC
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
PRODUCED ON 01/26/96 INCLUDING DATA TO 11/30/95
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EMPLOYMENT AND CONSULTING AGREEMENTS
As of April 1, 1995, MBM has a five year Employment Agreement with Bruce J.
Haber subject to an automatic one year extension on April of each year
commencing April 1, 1996, unless either party elects not to extend the contract
after giving the other party at least 180 days prior written notice. Pursuant
to this agreement, Mr. Haber has agreed to devote his full time and efforts to
the business of MBM and to serve as MBM's President and Chief Executive Officer.
Mr. Haber is currently receiving a base salary of $240,750 per annum which
compensation is increased annually by at least $5,000 per annum until the
termination of the agreement, subject to additional increases at the discretion
of the Board of Directors. Mr. Haber is also entitled to be paid each year an
annual bonus for the most recently completed fiscal year equal to no less than
7% of MBM's income before income taxes and Mr. Haber's bonus. Mr. Haber
received a whole-life policy covering his life, presently in the sum of
$2,000,000 and the use of a Company motor vehicle. In the event Mr. Haber's
employment agreement is terminated for any reason other than his willful
misconduct, then Mr. Haber shall be entitled, as liquidated damages, to an
amount of money equal to the greater of $2,000,000 or the sum of five years
compensation. In the event there is a dispute as to the amount of liquidated
damages payable to Mr. Haber, then on the termination date MBM shall be required
to pay into an interest bearing escrow account, the sum of $4,000,000 less the
amount of liquidated damages paid to Mr. Haber which is not in dispute.
Mr. Haber will continue to receive his full compensation during the continuation
of any dispute.
If there is a substantial change in the management of MBM, wherein any
Board of Directors that may be elected becomes opposed to, or acts contrary to,
the policy of the Board of Directors now in control of MBM and, as a result
thereof, Mr. Haber, in his sole discretion, finds it difficult for him to work
harmoniously and effectively with any such Board of Directors of MBM, or the
Board of Directors of MBM shall determine that Mr. Haber shall not be the
President and Chief Executive Officer of MBM, or Mr. Haber shall not be elected
as a member of the Board of Directors of MBM, then, in any of such events, Mr.
Haber shall have the absolute right and option to resign upon giving MBM 60 days
written notice of his intention to do so. Upon such resignation, Mr. Haber
shall be entitled to the liquidated damages and expenses as set forth above in
consideration of Mr. Haber's agreement not to compete with MBM for a period of
one year following his resignation. Pursuant to Mr. Haber's employment
agreement, MBM is obligated to provide to Mr. Haber indemnification for any
claim or lawsuit which may be asserted against him when acting in his capacity
as an officer and director of MBM provided said indemnification is not in
violation of any federal or state law, rule or regulations.
On January 1, 1988, Mr. Caligor commenced serving MBM as a part-time
consultant at an annual cash compensation of $100,000. Mr. Caligor's consulting
contract which originally provided for a
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termination date of December 31, 1990 was extended by MBM's Board of Directors
and currently terminates on December 31, 1996.
STOCK OPTION PLANS
An Incentive Stock Option Plan (the "1982 Incentive Plan") was adopted by
the Board of Directors and stockholders on February 24, 1982 and terminated on
February 24, 1992 as to the granting of new options. The 1982 Plan provided
that an aggregate of 166,666 shares of MBM's Common Stock were issuable, subject
to adjustment in the event of changes in the capital structure of MBM.
Employees of MBM were eligible for selection as participants. During fiscal
1995, 1994 and 1993, 11,300 shares, 12,666 shares and 15,333 shares,
respectively, of MBM's Common Stock were issued at exercise prices ranging from
$2.25 per share to $4.00 per share. As of February 29, 1996, MBM has 90,367
options outstanding under the 1982 Plan at exercise prices ranging from $2.25
per share to $4.00 per share.
On April 14, 1989, the Board of Directors adopted and the shareholders
later approved a 1989 Non-qualified Stock Option Plan, (the "1989 Plan"), in
order to attract and retain qualified employees, officers and directors. Under
the 1989 Plan, options to purchase a maximum of 416,666 shares of Common Stock
may be granted to employees, officers and directors of MBM. If any options
granted under the 1989 Plan expire or terminate for any reason without having
been exercised in full, the unpurchased shares shall become available for
further options pursuant to the 1989 Plan. The 1989 Plan also provides that no
options may be granted after April 13, 1999. The 1989 Plan is administered by
the Board of Directors of MBM or by a Stock Option Committee appointed by the
Board which consists of not less than three directors. The maximum term of any
option under the Plan is ten years. The Board of Directors or Committee
appointed by the Board determines which employee, officer or director shall have
options under the 1989 Plan, the number of shares of Common Stock that may be
purchased under each option, the option price and all other provisions of the
respective option agreements (which need not be identical), including but not
limited to provisions concerning the time or times when, and the extent to
which, the options may be exercised and any limitations upon the transferability
of such shares. Each option granted under the 1989 Plan is non-transferable, may
be exercised only if the participant has been continuously a director,
consultant or employee of MBM. However, in the case of death, the lawful heirs
and/or beneficiaries of a deceased optionee may exercise such options for a
period of six months after the optionee's death. As of November 30, 1995, MBM
had outstanding options under the 1989 Plan to purchase an aggregate of 400,567
shares of MBM's Common Stock at exercise prices from $2.25 per share to $4.00
per share to various officers and members of the Board of Directors. As of
November 30, 1995, substantially all of these options are exercisable. During
fiscal 1995, 1994 and 1993, 4,333 shares, 4,000 shares and 4,333 shares,
respectively, of MBM's Common Stock were issued at exercise prices ranging from
$2.25 to $4.00 per share.
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On January 28, 1992, the Board of Directors of MBM adopted a Stock Option
Plan (the "1992 Plan") which was approved by stockholders on September 17, 1992.
The 1992 Plan, as amended, covers 1,350,000 shares of Common Stock which the
Board of Directors have increased to 1,850,000 shares, subject to stockholder
approval at the upcoming annual meeting of stockholders. The 1992 Plan
authorizes the issuance of the options covered thereby as either "Incentive
Stock Options" within the meaning of the Internal Revenue Code of 1986, as
amended, or as "Non-Statutory Stock Options." Persons eligible to receive
options under the 1992 Plan includes employees, directors, officers, consultants
or advisors, provided that bona fide services shall be rendered by consultants
or advisors and such services must not be in connection with the offer or sale
of securities in a capital raising transaction; however, only employees are
eligible to receive an Incentive Option. The 1992 Plan also provides that no
options may be granted after January 27, 2002.
The 1992 Plan is administered by MBM's Board of Directors or a stock option
committee consisting of three members of the Board which has the authority to
determine the persons to whom options shall be granted, whether any particular
option shall be an Incentive Option or a Non-Statutory Option, the number of
shares to be covered by each option, the time or times at which options will be
granted or may be exercised and the other terms and provisions of the Options.
An Optionee of a Stock Option who terminates his employment with MBM, other than
by reason of his death or disability, may not exercise his Option. The lawful
heirs or beneficiaries of a deceased Optionee may exercise Stock Options for a
maximum period of six months after the Optionee's death, so long as the Option
has otherwise not expired. All Stock Options are non-transferable except by
will or the laws of descent and distribution. The 1992 Plan also provides that:
(i) the exercise price of options granted thereunder is not less than 100% (or
in the case of an Incentive Option, 110% if the optionee owns 10% or more of the
outstanding voting securities of MBM) of the fair market value of such shares on
the date of grant, as determined by the Board or Stock Option Committee, and
(ii) no option by its terms may be exercised more than ten years (five years in
the case of an Incentive Option, where the optionee owns 10% or more of the
outstanding voting securities of MBM) after the date of grant. Any options
which are canceled or not exercised within the option period become available
for future grants.
The 1992 Plan will (a) upon the occurrence of an Acquisition Event (as
defined in the 1992 Plan), at the election of an optionee, permit each optionee
to exercise all or any portion of such optionee's exercisable Options by
borrowing from MBM, and MBM shall be obligated to loan such optionee an amount
equal to the aggregate exercise price of such Options intended to be exercised
by such optionee. Such optionee shall use the proceeds of such loan to exercise
such Options. Such optionee shall issue to MBM a promissory note made by such
optionee in a principal amount equal to the amount of such loan. The optionee
will pledge to MBM to secure the repayment of such loan all shares of Common
Stock issued
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to the optionee upon exercise of Options pursuant to this paragraph. At the
time of such loan, such loan shall have a rate of interest and such loan and
pledge shall have such additional terms and conditions all as determined by the
Board of a Committee thereof; (b) upon the occurrence of a Change of Control, as
defined in the 1992 Plan, which Change of Control is not approved by a vote of
at least eighty percent (80%) of the directors that constitute the Board
immediately prior to the occurrence of such Change of Control, terminate all
Options as of the time immediately prior to the occurrence of such Change of
Control and the respective optionees shall surrender all of their unexercised
Options for cancellation by MBM and, upon such surrender, the optionee shall
receive (1) the cash, securities or other consideration he would have received
had he been entitled to exercise, and had he exercised, such Option or Options
immediately prior to such Change of Control and had he disposed of his shares
issuable upon such exercise in connection with such Change of Control (subject
to required deductions and withholdings), minus (2) an amount of cash or fair
market value of securities or other such consideration equal to the exercise
price of such Option or Options surrendered. (i) The foregoing shall not apply
to all incentive stock options granted prior to the June 23, 1995, the date of
stockholder approval of such provisions, (ii) any non-statutory stock option
granted prior to June 23, 1995 where a written consent is required to be
obtained from the optionee whose rights have been adversely affected and such
consent is not obtained from the optionee, or (iii) any Option whatsoever where
an event of default would be created under MBM's then-existing institutional
loan(s) and such event of default is not waived prior to such occurrence or
cured pursuant to the terms of said loan agreements. As of February 29, 1996,
MBM has under the 1992 Plan Incentive and Non-Statutory Stock Options
outstanding to purchase 1,133,700 shares of MBM's Common Stock at exercise
prices ranging from $4.00 per share to $12.25 per share. During fiscal 1995,
22,800 shares of MBM's Common Stock were issued at exercise prices ranging from
$4.00 to $6.75 per share.
SECTION 401(k) OR DEFERRED RETIREMENT PLAN
Effective December 1, 1985, MBM initiated a cash or deferred retirement
plan pursuant to Section 401(k) of the Code (the "Plan"). All employees are
eligible to enroll and to receive benefits under the Plan, beginning February 1,
1986, the commencement date of the plan. Employees can elect to contribute up
to 20% of their compensation to the Plan and MBM will make matching
contributions in an amount equal to 20% of the amount of the Participant's
contribution that is not in excess of 5% of compensation.A Participant shall at
all times have a one hundred (100%) percent vested interest in his contribution
Account. Any distributions to be made under the Plan to a Participant will
begin not later than the 60th day after the latest of the close of the Plan year
in which (a) the Participant attains his normal retirement age (i.e. 59-1/2), or
(b) the date the Participant terminates his employment with MBM, or (c) such
later date pursuant to his written election. Prior to retirement, Plan savings
may be
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payable upon an employee's death (payable to his or her designated beneficiary),
disability (as defined in the Plan) or termination by MBM. Plan savings are
payable, at the Plan Administrator's option, in either one lump sum or in
installments. The Participant may be consulted prior to making such
determination. For the fiscal years ended November 30, 1995, 1994 and 1993,
MBM's matching contributions amounted to $62,200, $29,985 and $24,687,
respectively.
INDEMNIFICATION
The Business Corporation Law of the State of New York provides for
indemnification of officers and directors under certain circumstances against
reasonable expenses, including attorney fees, actually and necessarily incurred
in connection with the defense of an action brought against him by reason of his
being a director or officer. Bruce Haber, President of the Company, has an
employment contract with the Company which provides for indemnification for any
claim or lawsuit which may be asserted against him in acting in such capacity
for the Company provided said indemnification is not in violation of any federal
or state law, rule or regulation.
MBM's Certificate of Incorporation, as amended, also contains a provision
eliminating the liability of a director to the Company or its stockholders for
monetary damages for any breach of duty in such capacity, provided that this
provision shall not eliminate or limit liability of any director if a judgment
or other final adjudication adverse to him establishes that his acts or
omissions were made in bad faith or involved intentional misconduct or a knowing
violation of law or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled or that his acts violated
Section 719 of the New York Business Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, MBM has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by MBM of expenses incurred or paid by
a director, officer or controlling person of MBM in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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CERTAIN TRANSACTIONS
On March 31, 1993, MBM issued 72,376 shares, later adjusted to 71,229
shares, as part of the consideration to acquire Harrisburg Surgical Supply
Incorporated from an unaffiliated third party. Mr. Haber had the right to vote
these shares until the transfer of these shares to an unrelated third party
which took place on March 31, 1995.
In November 1993, MBM completed the sale in a private placement offering of
$3,000,000 of its 7% Convertible Subordinated Debentures Due October 30, 2003.
K. Deane Reade, Jr. purchased $130,000 of the Debentures and may be deemed to
have a beneficial ownership in an additional $70,000 purchased in the private
placement.
On January 18, 1996, MBM issued 280,696 shares in connection with its
acquisition of Stone Medical Supply Corporation, 161,452 shares of which are
owned by Andrew Stone. Mr. Stone has agreed for a period of ten years from
January 18, 1996 to vote his MBM shares in accordance with directions of Bruce
J. Haber or if Mr. Haber dies, becomes disabled or unable to give directions,
then in accordance with directions of the MBM Board of Directors, until such
time as such shares are transferred to an unrelated third party.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND OTHERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by all persons known by the Company to
be beneficial owners of more than 5% of its Common Stock and all executive
officers and directors, both individually and as a group. For purposes of
calculating the amount of beneficial ownership and the respective percentages,
the number of shares of Common Stock which may be acquired by a person within
sixty days of March 1, 1996 are considered outstanding, but shall not be deemed
to be outstanding for the purpose of computing the percentage of Common Stock
owned by any other person.
Amount
and Nature Approximate
Name and Address of of Beneficial Percent
Beneficial Owner (1) Ownership (1) of Class (2)
- -------------------- ------------- ------------
Renee Steinberg (3)(12)
20080 Boca West Drive
Apt. 458
Boca Raton, FL 33434 140,668 3.4
Bruce J. Haber (4) 923,834 18.6
Louis Buther (5) 181,667 4.2
Marvin S. Caligor (11) 106,083 2.5
Ernest W. Nelson (6) 121,834 2.8
Gary Butler (7) 19,500 *
K. Deane Reade, Jr.(8)(10)
One Madison Ave. Suite 25A
Box 20
New York, NY 10010 194,519 4.5
Michael Levy (12) 6,000 *
Stuart F. Fleischer (13) 20,000 *
All executive officers
and directors as a group
(nine persons) (9) 1,759,105 31.8
____________________
* Represents less than one percent of the outstanding Common Stock.
(1) Unless otherwise indicated, all shares are directly owned and investing
power is held by the persons named. All addresses, except as otherwise
noted, are c/o of Micro Bio-Medics, Inc., 846 Pelham Parkway, Pelham Manor,
NY10803.
(2) Based upon 4,172,755 shares of Common Stock outstanding on March 1, 1996
after giving effect to the January 18, 1996 acquisition of Stone Medical
Supply Corporation through the issuance of 280,696 shares. The foregoing
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does not include the possible issuance of shares in connection with the
exercise or conversion of outstanding warrants, options or debentures.
(3) May be deemed to be a "founder" or "parent" of MBM for purposes of the
Securities Act of 1933, as amended. Includes options to purchase 27,334
shares granted to Renee Steinberg.
(4) Includes options to purchase 805,000 shares granted to Mr. Haber. A non-
executive officer of MBM has agreed for a period of ten years from January
18, 1996, unless such shares are transferred to an unrelated third party,
to vote such shares in accordance with the directions of Bruce J. Haber, or
if Mr. Haber dies, becomes disabled or is unable to give such directions,
then in accordance with the directions of the board of directors of MBM.
The amount of shares included in Mr.Haber's beneficial ownership does not
include such non-executive officer's shares. If such non-executive
officer's shares are deemed beneficially owned by Mr. Haber, then Mr. Haber
may be deemed to beneficially own 1,085,286 shares (21.2%).
(5) Includes options to purchase 165,333 shares granted to Mr. Buther.
(6) Includes options to purchase 113,666 shares granted to Mr. Nelson.
(7) Includes options to purchase 13,166 shares granted to Mr. Butler.
(8) Includes shares owned under certain retirement trusts and profit sharing
plans.
(9) Includes options to purchase 1,356,499 shares granted to officers and
directors, 25,000 shares issuable upon exercise of Debentures and 20,021
shares issuable upon exercise of 19,122 Series 1 Warrants. The amount of
shares owned by all executive officers and directors as a group does not
include 161,452 shares of Common Stock which may be deemed beneficially
owned by Bruce Haber as discussed in footnote 4. In the event that such
161,452 shares were deemed beneficially owned by Mr. Haber, then the amount
of shares beneficially owned by all executive officers and directors as a
group would be 1,925,000 representing 34.0% of MBM's outstanding shares.
(10) Includes options to purchase 128,333 shares. Also includes 7,853 shares
issuable upon exercise of 7,500 Series 1 Warrants and 25,000 shares
issuable upon conversion of certain Debentures.
(11) Includes options to purchase 74,667 shares granted to Mr. Caligor and
12,168 shares issuable upon exercise of 11,622 Series 1 Warrants.
(12) Includes options to purchase 6,000 shares granted to Mr. Levy.
(13) Includes options to purchase 20,000 shares granted to Mr. Fleischer.
The Company does not know of any arrangement or pledge of its securities by
persons now considered in control of the Company that might result in a change
of control of the Company.
DESCRIPTION OF SECURITIES
CAPITAL STOCK
The authorized capital stock of the Company consists of 7,000,000 shares of
Common Stock, par value $.03 per share and 1,000,000 shares of Preferred Stock,
$1.00 per share. At MBM's upcoming Annual Meeting, MBM's shareholders will be
asked to approve an increase in the number of authorized Common Shares to
20,000,000.
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COMMON STOCK
Holders of shares of the Company's Common Stock are entitled to one vote
per share on all matters to be voted upon by the stockholders and are not
entitled to cumulative voting for the election of directors. As a result,
holders of a majority of shares are able to elect all of the directors standing
for election and to control the Company. Holders of shares of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor
subject to the rights of Preferred Stockholders, if any. However, it is the
present intention of the Company not to pay any cash dividends and to reinvest
earnings, if any, of the Company.The Company also has restrictions with its
principal lender on the payment of dividends. See "Dividend Policy" below.In
the event of liquidation, dissolution or winding up of the Company, the holders
of shares of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities and the preferences of Preferred Stockholders, if
any. Shares of common Stock have no preemptive, conversion or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock.
PREFERRED STOCK
The Preferred Stock is issuable in one or more series and the Board is
authorized to fix the number of shares of Preferred Stock constituting each
series and, as to each series, the dividend rate, the time of payment and
relative priority of such dividends, whether such dividends are to be cumulative
or non-cumulative, the redemption rights and prices, the amount payable upon the
liquidation, dissolution or winding up of the Company, the conversion and voting
rights, the sinking fund requirements, and such other designations, preferences
or special rights or qualifications, limitations or restrictions as may be
permitted by law. The authority of the Board to issue Preferred Stock and to
determine the designations, preferences and certain rights of one or more series
of Preferred Stock of the Company could be used in a manner calculated to
prevent the removal of Management, and make more difficult or discourage a
change in control of the Company.
Shareholders of the Company do not have any preemptive rights with respect
to any Preferred Stock which might be issued.No Preferred Stock has been issued
as of the date of this Prospectus and the Company has no plans to issue such
Preferred Stock in the near future.
SERIES 1 WARRANTS
Each Series 1 Warrant originally purchased one share of Common Stock at an
exercise price of $8.00 per share until lowered to $6.00 per share by the Board
of Directors in August 1993. As a result of the October/November 1993 issuance
of $3,000,000 of convertible debentures, which triggered the anti-dilution
provisions contained in the Series 1 Warrant, every Series 1 Warrant exercised
at a price of $6.00 will purchase 1.047 shares of the Company's Common Stock.
The Series 1 Warrants are exercisable
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at any time until June 18, 1996 and are callable by the Company upon 30 days
prior written notice, at any time during the exercise period at $.05 per Warrant
provided the high bid price for the shares of the Company's Common Stock is at
least $11.00 per share on each day during the thirty (30) trading day period
immediately preceding the date of the written notice.
No fractional shares of Common Stock will be issued on the exercise of
warrants. Fractional shares less than 1/2 of one share will be disregarded.
Fractional shares of 1/2 or greater will be rounded to the nearest whole share.
The Company reserves the right to pay cash in lieu of fractional shares based
upon the base current market price (i.e. high bid price) of the Common Stock on
the last business day prior to the day of exercise.
The holders of the Warrants do not have any of the rights, privileges or
liabilities of stockholders of the Company prior to the exercise of Warrants.
The exercise price of the Warrants and the number of shares issuable upon
exercise of the Warrants are subject to anti-dilution adjustment to protect
against sales of Common Stock below the higher of the exercise price or the then
existing market price, stock dividends, stock splits, mergers,
recapitalizations, or any similar events.
The foregoing brief description of the Warrants does not purport to be
complete and is qualified in its entirety by reference to the terms of the
Warrant Agreement and Warrant Certificates, the forms of which have been filed
as exhibits to the Registration Statement of which this Prospectus is a part.
The Company has agreed to pay to Royce Investment Group, Inc., (Royce") a
commission of up to five (5%) percent of the exercise price of the Series 1
Warrants for each Series 1 Warrant exercised provided (i) at least one year has
elapsed from June 19, 1992, (ii) the market price for the Common Stock is
greater than the exercise price of the Series 1 Warrants and (iii) Royce had
solicited the holder to exercise such Series 1 Warrants with such solicitation
being confirmed in writing by each holder. The commission is further conditioned
upon the Series 1 Warrant Agent being furnished by Royce with a certificate
stating that:
(a) the Warrants exercised were not held in a discretionary account;
(b) Royce did not within the time period specified in Rule 10b-6 under the
Securities Exchange Act of 1934, as amended, immediately preceding the
solicitation of the exercise of the Warrant or the date of such
exercise, bid for or purchase the Common Stock of the Company or any
securities of the Company immediately convertible into or exchangeable
for the Common Stock (including the Warrants) or otherwise engage in
any activity that would be prohibited by said Rule 10b-6, with one
engaged in a distribution of the Company's securities; and
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(c) in connection with the solicitation, Royce disclosed compensation it
would receive upon exercise of the Warrants.
SEC Rule 10b-6 would prohibit Royce from acting as a market maker for the
Company's securities for the period beginning two or nine business days prior to
any solicitation of the exercise of the Warrants or distribution of the
Underwriter's Unit Warrants and/or underlying securities, until (a) the later of
the termination of such solicitation activity or the termination of any right
that Royce may have to receive a fee for the exercise of such Warrants following
such solicitation and (b) the completion of the distribution of the
Underwriter's Unit Warrants and/or underlying securities.
POTENTIAL FUTURE SALES OF COMMON STOCK PURSUANT TO RULE 144
An estimated 550,000 shares of the Company's issued and outstanding Common
Stock are "restricted securities" as that term is defined under Rule 144
promulgated under the Securities Act of 1933. In general, under Rule 144, a
person who has satisfied a two-year holding period may, under certain
circumstances, sell within any three-month period a number of shares which does
not exceed the greater of 1% of the then outstanding shares of Common Stock or
the average weekly trading volume in shares during the four calendar weeks
immediately prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity or other limitation by a
person who is not an affiliate of the Company and who has satisfied a three-year
holding period. Future sales of such shares made under Rule 144 may have an
adverse effect on the then prevailing market price, if any, of the Common Stock
and adversely affect the Company's ability to obtain future financing in the
capital markets as well as create a potential market overhang.
DIVIDEND POLICY
The Company has not previously paid any dividends since its inception and
intends to follow a policy of retaining all of its earnings, if any, to finance
the development and continued expansion of its business. There can be no
assurance that dividends will ever be paid by the Company. Additionally, under
the terms of its revolving loan agreement with its principal lender, the Company
may not pay dividends without such lender's consent.
TRANSFER AGENT
The Transfer Agent for the Common Stock, and Warrant Agent for the
Company's Series 1 Warrants is American Stock Transfer & Trust Company, 40 Wall
Street, New York, NY.
UNDERWRITER'S WARRANTS
On June 19, 1992, the Company sold to Royce Investment Group, Inc.
("Royce") for $.0001 per Warrant, Warrants to purchase 46,046
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Units (the "Underwriter's Unit Warrants"). The Underwriter's Unit Warrants are
exercisable at $11.25 per Unit until June 19, 1997. As a result of the
October/November 1993 issuance of $3,000,000 of convertible debentures which
triggered the anti-dilution provisions contained in the Underwriter's Unit
Warrants, the Units that may be purchased by the holder of the Underwriter's
Unit Warrants contain 2.094 shares of Common Stock and three Warrants that are
identical to the Series 1 Warrants (the "Underwriter's Warrants") sold pursuant
to the rights offering described above, except that the Underwriter's Warrants
that are issuable upon exercise of the Underwriter's Unit Warrants are not
callable, were not exercisable until June 19, 1993 and are exercisable at $10.00
per 1.047 shares of the Company's Common Stock. This Prospectus relates to the
46,046 Units (i.e. 96,420 shares of Common Stock and 138,138 Underwriter's
Warrants) issuable upon exercise of the Underwriter's Unit Warrants including
the 144,631 shares of Common Stock issuable upon exercise of the Underwriter's
Warrants.
During the Warrant Exercise Term, the holders of the Underwriter's Warrants
are given at nominal cost, the opportunity to profit from a rise in the market
price of the Company's securities. To the extent that the Underwriter's
Warrants are exercised, dilution to the interests of the Company's stockholders
may occur. Further, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holders of the
Underwriter's Warrants can be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain any needed capital on terms
more favorable to the Company than those provided in the Underwriter's Warrants.
Any profit realized by the Underwriter on the sale of the Underwriter's Warrants
or the underlying securities may be deemed additional underwriting compensation.
The Company has agreed, for a period of four (4) years commencing June 19, 1993,
that on any occasion that it files a new Registration Statement within such
period (except on Form S-8 or any other inappropriate form) it will include in
each such filing the Underwriter's Warrants and/or underlying securities to the
extent permitted by the then applicable rules and regulations of the Commission,
at the request of any holder or holders of such Underwriter's Warrants and/or
underlying securities at no expense to them.
Further, the Company has agreed to qualify or register the Underwriter's
Warrants and/or the underlying securities once at its own expense during the
four (4) year period commencing June 19, 1993, upon request of the Underwriter
or its specific duly authorized designee or the holders of at least 50% of the
Underwriter's Warrants and/or underlying securities together with the consent of
the Underwriter or its specific duly authorized designee.
48
<PAGE>
DESCRIPTION OF DEBENTURES
7% DEBENTURES
GENERAL
In October and November 1993, the Company issued $3,000,000 of its
unsecured and unregistered 7% Debentures, $1,500,000 of which is currently
outstanding. In 1995, $1,500,000 of such Debentures were converted into
$187,500 shares.Each 7% Debenture is a subordinated obligation of the Company,
payable on October 30, 2003 and bearing interest at the rate of 7% per annum,
payable in equal semi-annual amounts on the 30th day of April and October
commencing April 30, 1994, at which time interest accrued, if any, on all
Debentures from their respective dates of issuance will be paid.
CONVERSION
Each Debenture is convertible into shares of the Company's Common Stock,
$.03 par value, at the option of its holder at the rate of $8.00 per share,
subject to adjustment as provided below, until the earlier of October 28, 2003
or the date which is at least 30 calendar days after the date of notification by
the Company of its election to redeem the Debentures.
The conversion price of the Debentures is subject to adjustment in certain
specific events such as subdivision or combinations of Common Stock, dividends
payable in Common Stock and, in some cases, issuances of Common Stock at a price
below the higher of the current market price or conversion price. Adjustment is
required to be made for interest accrued on Debentures submitted for conversion
but no adjustment is required to be made for cash dividends on Common Stock to
be issued upon such conversion. The Company shall not be required to issue
fractions of shares of Common Stock upon any conversion, but shall make
adjustments therefor in cash.
In case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of
outstanding shares of Common Stock of the class issuable upon conversion of the
Debentures) or in case of any sale or conveyance to another corporation of the
property of the Company as an entity or substantially as an entity, the Company,
or such successor or purchasing corporation, as the case may be, shall provide
that the holder of each Debenture then outstanding shall have the right
thereafter to convert such Debenture into the kind and amount of shares of stock
and other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock of the Company into which such Debenture might have been converted
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance.
49
<PAGE>
REDEMPTION PROVISIONS
Commencing in November, 1995, the Debentures are redeemable at the option
of the Company, in whole and not in part, at the redemption prices set forth
herein by giving written notice to the holders to that effect at least 30
calendar days prior to the redemption date. However, the Company has agreed not
to redeem the Debentures at any time unless the Company is current in filing all
reports required under the Federal Securities Laws.
The redemption prices of the Debentures for redemption at the option of the
Company (expressed in percentages of principal amount) are as follows for the
indicated 12-month periods commencing two years from the date hereof: Year
three - 105%, year four - 104%, year five - 103%, year six - 102%, year
seven - 101%, and thereafter at 100% until the maturity date of the Debentures.
Since the final closing date was November 4, 1993 then between November 4, 1995
and November 3, 1996, hereinabove referred to as year three, the redemption
price is 105% of the principal amount of the Debentures decreasing to 104% on
November 4, 1996, 103% on November 4, 1997, 102% on November 4, 1998, 101% on
November 4, 1999 and 100% on and after November 4, 2000 until maturity on
October 30, 2003.)
SUBORDINATION OF DEBENTURES
The payment of the principal of and interest on the Debentures is
subordinated, in the event of any distribution of assets of the Company upon
any dissolution, winding up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency, reorganization or receivership
proceedings or upon any assignment for benefit of creditors or any other
marshalling of the assets or liabilities of the Company or otherwise), in
right of payment to the prior payment in full of all Senior Indebtedness.
The Debentures, however, in all respects, shall rank equally with, or prior
to (as the case may be), all existing and future indebtedness of the Company
that is not Senior Indebtedness. The term "Senior Indebtedness" shall mean
the principal of, and premium (if any) on, and interest on all indebtedness
of the Company (other than the Debentures), whether outstanding on the date
of this Debenture or hereafter created for money borrowed by the Company or
other monetary obligations of the Company (whether the same be evidenced by
bonds, notes or debentures - other than the Debentures - or evidenced by a
letter of credit, loan agreement or an indenture or similar instrument) from,
owing to, or guaranteed to, banks, trust companies, leasing companies,
insurance companies or other institutional lenders and any renewal, extension
refunding, amendment or modifications of any such Senior Indebtedness,
including without limitation of the foregoing, purchase money mortgages,
mortgages made or given or guaranteed by the Company as mortgagor or
guarantor, and assumed or guaranteed mortgages, upon property, but excluding
any indebtedness to trade creditors or suppliers on open account for work,
labor, services and materials and excluding any indebtedness which by the
terms of the instrument creating or evidencing the same is stated to be not
superior in right of payment to the Debentures.During the continuation of any
default in the payment of principal or interest on any Senior
50
<PAGE>
Indebtedness, no payment of principal or interest may be made by the Company on
the Debentures. The Debentures contain no limitation on the amount of Senior
Indebtedness or other indebtedness that may be issued or incurred. However, the
Company will not incur indebtedness that is senior to the Debentures other than
Senior Indebtedness. By reason of the described subordination, in the event of
insolvency, creditors of the Company, other than holders of Senior Indebtedness
or of the Debentures, may recover less, ratably, than the holders of Senior
Indebtedness, but may recover more, ratably, than the holders of the Debentures
upon any distribution of assets of the Company.
MODIFICATION OF DEBENTURES
Sixty-Five (65%) percent of the holders, by amount, of the Debentures may
consent to change any terms covering the Debentures, except those terms related
to:
- subordination
- interest rate
- payment dates
- maturity date
- conversion rate
which may be changed only by unanimous vote of the Debenture holders. The
Debentures and shares of Common Stock issuable upon conversion of the Debentures
are restricted securities and may be sold only in compliance with applicable
securities laws.
PLAN OF DISTRIBUTION
Warrant holders who desire to exercise their Warrants should execute the
Subscription Form contained in the back of the Warrant and submit same together
with any appropriate check made payable to "Micro Bio-Medics, Inc." to the
transfer agent, American Stock Transfer & Trust Co., 40 Wall Street, New York,
New York 10005. The Company will pay Royce Investment Group, Inc. solicitation
fees for the exercise of its Warrants if certain conditions are met. See
"Description of Securities Series 1 Warrants." All expenses of this offering,
estimated to be $10,000, are being paid by the Company.
Holders of the Underwriter's Unit Warrants who desire to exercise these
Warrants should execute the Purchase Form contained in the Underwriter's Unit
Warrant and submit same together with a certified check or bank check made
payable to Micro Bio-Medics, Inc. to the Company at its principal executive
office at 846 Pelham Parkway, Pelham Manor, New York 10803.
RESULTS OF THE RIGHTS OFFERING
During the offering period of the Rights Offering, shareholders of the
Company subscribed to purchase 20,729 Units and the Underwriter purchased
439,736 Units pursuant to the Standby Agreement.
51
<PAGE>
COUNSEL
The legality of the securities offered hereby will be passed upon for the
Company by Lester Morse P.C., 111 Great Neck Road, Suite 420, Great Neck, NY
11021. Members of Lester Morse's family own Debentures convertible into less
than 1% of the Company's issued and outstanding shares of Common Stock.
EXPERTS
The audited financial statements for fiscal 1995, 1994 and 1993 included
herein and elsewhere in the Registration Statement have been included herein and
in the Registration Statement in reliance upon the report of Miller Ellin & Co.,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
52
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
INDEX
FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report F-2
Consolidated Balance Sheets
November 30, 1995 and 1994 F-3 - F-4
Consolidated Statements of Income
Years Ended November 30, 1995, 1994 and 1993 F-5
Consolidated Statements of Cash Flows
Years Ended November 30, 1995, 1994 and 1993 F-6 - F-7
Consolidated Statements of Changes in
Stockholders' Equity
Years Ended November 30, 1995, 1994 and 1993 F-8
Notes to Consolidated Financial Statements F-9 - F-19
FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts F-20
Exhibit 11 - Earnings Per Share Calculation F-21
Schedules other than those referred to above have been
omitted as the conditions requiring their filing are not
presented or the information has been presented
elsewhere in the financial statements
Separate financial statements and schedules of
Micro Bio-Medics, Inc. (Parent) have been omitted
since the conditions for omission have been met
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Micro Bio-Medics, Inc.
Pelham Manor, New York
We have audited the accompanying consolidated balance sheets of Micro Bio-
Medics, Inc. and Subsidiaries as of November 30, 1995 and 1994, and the related
consolidated statements of income, cash flows, and changes in stockholders'
equity for each of the three years in the period ended November 30, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Micro
Bio-Medics, Inc. and Subsidiaries as of November 30, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1995, in conformity with generally
accepted accounting principles.
We have also audited Schedule II and Exhibit 11 for the years ended November 30,
1995, 1994 and 1993 included in the 1995 annual report of Micro Bio-Medics, Inc.
and Subsidiaries on Form 10-K. In our opinion, such schedules present fairly
the information required to be set forth therein.
MILLER, ELLIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
January 31, 1996
F-2
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,817,285 $ 3,333,345
Accounts receivable, less allowance for
doubtful accounts of $674,210 in 1995
and $650,000 in 1994 (Note 5) 25,657,607 26,780,044
Inventory (Note 5) 12,318,756 15,449,465
Deferred income taxes (Note 6) 485,500 518,362
Prepaid expenses and other current assets 657,768 771,026
Prepaid income taxes 471,710 -
----------- -----------
Total current assets 42,408,626 46,852,242
PROPERTY, PLANT AND EQUIPMENT - at cost,
net of accumulated depreciation and amortization
of $3,616,134 in 1995 and $2,852,004 in 1994
(Notes 2, 3 and 5) 3,477,807 3,453,607
INTANGIBLE ASSETS, net of accumulated amortization
of $1,061,323 in 1995 and $769,088 in 1994
(Notes 2 and 4) 4,990,073 3,793,654
OTHER ASSETS 259,206 361,584
----------- -----------
$51,135,712 $54,461,087
----------- -----------
----------- -----------
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-3
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NOVEMBER 30,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5) $479,195 $437,970
Accounts payable 10,297,403 13,760,015
Accrued expenses and sundry liabilities (Note 7) 1,666,762 1,581,341
Due to seller (Note 2) - 931,466
----------- -----------
Total current liabilities 12,443,360 16,710,792
LONG-TERM DEBT, net of current maturities (Note 5) 17,270,062 19,381,239
DEFERRED INCOME TAXES (Note 6) 358,138 302,000
----------- -----------
Total liabilities 30,071,560 36,394,031
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY (Notes 5 and 9):
Preferred stock $1.00 par value:
Authorized - 1,000,000 shares,
no shares issued -
Common stock $.03 par value:
Authorized - 7,000,000 shares
Issued - 3,878,804 shares in 1995
and 3,595,409 shares in 1994 116,364 107,862
Capital in excess of par value 12,407,257 10,527,552
Retained earnings 8,541,695 7,432,806
Less: Cost of 1,167 shares of common
stock in treasury (1,164) (1,164)
----------- -----------
Total stockholders' equity 21,064,152 18,067,056
----------- -----------
$51,135,712 $54,461,087
----------- -----------
----------- -----------
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-4
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
NET SALES $119,873,764 $121,604,461 $73,951,410
COST OF GOODS SOLD 94,307,143 94,923,689 56,347,353
------------ ------------ -----------
GROSS PROFIT 25,566,621 26,680,772 17,604,057
------------ ------------ -----------
OPERATING EXPENSES:
Selling, shipping and warehouse 14,511,793 14,421,280 8,521,021
General and administrative 7,901,052 8,581,615 6,525,488
Interest and financing costs (net of interest
income of approximately $172,600 in 1995,
$173,000 in 1994 and $198,500 in 1993) 1,238,887 1,044,257 502,329
------------ ------------ -----------
Total operating expenses 23,651,732 24,047,152 15,548,838
------------ ------------ -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,914,889 2,633,620 2,055,219
PROVISION FOR INCOME TAXES (Note 6) 806,000 952,000 853,000
------------ ------------ -----------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 1,108,889 1,681,620 1,202,219
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES PRIOR TO 1994 - (60,000) -
------------ ------------ -----------
NET INCOME $ 1,108,889 $ 1,621,620 $ 1,202,219
------------ ------------ -----------
------------ ------------ -----------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (Note 10) $.25 $.37 $.30
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES
PRIOR TO 1994 - (.01) -
---- ---- ----
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $.25 $.36 $.30
---- ---- ----
---- ---- ----
NUMBER OF SHARES USED IN COMPUTING
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE (Note 10) 5,121,634 4,896,518 4,734,746
------------ ------------ -----------
------------ ------------ -----------
DIVIDENDS PER COMMON SHARE NONE NONE NONE
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-5
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,108,889 $1,621,620 $1,202,219
---------- ---------- ----------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Cumulative effect of accounting change - 60,000 -
Depreciation and amortization 1,056,365 952,109 666,589
Provision for losses on accounts receivable 24,210 268,551 321,526
Deferred income taxes 89,000 (96,000) (59,930)
Changes in assets and liabilities, net of
effect of asset acquisitions (Note 2):
Accounts receivable 1,098,227 (1,055,450) (1,000,255)
Inventory 3,130,709 (2,506,516) (310,553)
Prepaid expenses and other current assets 113,258 (265,042) (75,031)
Prepaid income taxes (471,710) - -
Other assets (7,622) (15,604) 86,723
Accounts payable (3,462,612) 8,441,961 (651,390)
Accrued expenses and sundry liabilities 85,421 255,913 (25,286)
Income taxes payable - - (270,284)
---------- ---------- ----------
1,655,246 6,039,922 (1,317,891)
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,764,135 7,661,542 (115,672)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of warrants 300,601 126,409 3,831,104
Net borrowings (repayments) under revolving loan agreements (150,000) (3,224,695) (3,350,000)
Net proceeds from issuance of debentures - - 2,725,000
Repayments of long-term debt (419,952) (380,085) (623,128)
Exercise of employee stock options 197,606 125,503 107,975
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (71,745) (3,352,868) 2,690,951
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for certain net assets of businesses acquired (931,466) (2,718,009) (590,490)
Capital expenditures (788,330) (713,484) (236,705)
Payments for intangible assets (1,488,654) (1,027,851) (204,173)
Proceeds from sale and leaseback of equipment - - 425,736
Note receivable - 1,000,000 (1,000,000)
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (3,208,450) (3,459,344) (1,605,632)
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (516,060) 849,330 969,647
CASH - beginning of year 3,333,345 2,484,015 1,514,368
---------- ---------- ----------
CASH - end of year $2,817,285 $3,333,345 $2,484,015
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-6
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $1,424,000 $1,217,000 $ 700,000
---------- ---------- ----------
---------- ---------- ----------
Income taxes $ 948,000 $1,214,000 $1,157,000
---------- ---------- ----------
---------- ---------- ----------
ASSETS ACQUIRED FOR DEBT - capital leases,
which are not reflected in the above statements $ - $ 202,658 $ 489,004
---------- ---------- ----------
---------- ---------- ----------
NET ASSETS OF A BUSINESS ACQUIRED
FOR ISSUANCE OF COMMON STOCK
which is not reflected in the above statements $ - $ - $ 590,490
---------- ---------- ----------
---------- ---------- ----------
BUSINESS ACQUIRED FOR ISSUANCE OF
LONG-TERM DEBT which is not
reflected in the above statements $ - $4,217,981 $ -
---------- ---------- ----------
---------- ---------- ----------
DEBENTURES CONVERTED INTO COMMON
STOCK $1,390,000 $ - $ -
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-7
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
$.03 PAR VALUE EXCESS OF RETAINED TREASURY
------------------------
SHARES AMOUNT PAR VALUE EARNINGS STOCK
--------- -------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
BALANCES AT
NOVEMBER 30, 1992 2,763,959 $ 82,918 $5,771,015 $4,608,967 $1,164
Shares issued for stock options 25,967 779 107,196 - -
Shares issued for exercise
of warrants 674,297 20,229 3,810,875 - -
Shares issued for purchase
of net assets (Note 2) 71,229 2,137 588,353 - -
Net income - - - 1,202,219 -
--------- -------- ----------- ---------- -------
BALANCES AT
NOVEMBER 30, 1993 3,535,452 106,063 10,277,439 5,811,186 1,164
Shares issued for exercise
of warrants 29,057 872 125,537 - -
Shares issued for stock options 30,900 927 124,576 - -
Net income - - - 1,621,620 -
--------- -------- ----------- ---------- -------
BALANCES AT
NOVEMBER 30, 1994 3,595,409 107,862 10,527,552 7,432,806 1,164
Shares issued for conversion
of debentures (Note 5) 187,500 5,625 1,384,375 - -
Shares issued for stock options 45,133 1,354 196,252 - -
Shares issued for exercise
of warrants 50,762 1,523 299,078 - -
Net income - - - 1,108,889 -
--------- -------- ----------- ---------- -------
BALANCES AT
NOVEMBER 30, 1995 3,878,804 $116,364 $12,407,257 $8,541,695 $1,164
--------- -------- ----------- ---------- -------
--------- -------- ----------- ---------- -------
</TABLE>
The notes to consolidated financial statements are made a part hereof.
F-8
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONCENTRATION OF CREDIT RISK
Micro Bio-Medics, Inc. (the "Company") and its subsidiaries are engaged in
the distribution, at wholesale, of emergency medical service products and
the assembly and distribution of first-aid and medical kits and school and
athletic medical supplies. The Company distributes medical supplies to
physicians and hospitals in the New York metropolitan area, as well as to
health care professionals in sports medicine, industrial safety, and
government and laboratory markets nationwide. The foregoing operations are
all considered as one business segment. Historically, the Company has not
experienced significant losses related to receivables from any individual
customers or group of customers in any industry or geographic area.
CASH
The Company maintains various bank accounts and at times, balances may be
in excess of the FDIC insurance limit. At November 30, 1995 and 1994, the
amounts in excess of FDIC insurance limits were approximately $2,200,000
and $2,800,000, respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries, which are all wholly-owned. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
INVENTORY
Inventory is valued at the lower of cost (first-in, first-out method) or
market, and consists of finished goods.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
Property, plant and equipment are being depreciated primarily on the
straight-line basis over the estimated useful lives of the individual
classes of assets.
INTANGIBLES
Computer programming costs are being amortized over five years using the
straight-line method.
The excess of the purchase price paid over the net assets of businesses
acquired is being amortized over fifteen to forty years using the straight-
line method.
The Company evaluates the recoverability of goodwill and other intangible
assets and if there is a decline in related profitability it will recognize
an impairment of value if appropriate.
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" which will require the determination by the
Company of whether the carrying amount of an asset is recoverable and if an
impairment loss should be recognized. SFAS No. 121 is effective for fiscal
years beginning after December 15, 1995 and management believes that such
adoption will not significantly impact the Company's consolidated financial
statements.
F-9
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109
(SFAS No. 109), "Accounting for Income Taxes," which requires the use of
the liability method of accounting for income taxes. The liability method
measures deferred income taxes by applying enacted statutory rates in
effect at the balance sheet date to the differences between the tax bases
of assets and liabilities and their reported amounts in the financial
statements.
REVENUE RECOGNITION
The Company recognizes revenues when its products are shipped.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
NOTE 2 - ACQUISITIONS
Prior to fiscal year ended November 30, 1992, the Company entered into
several acquisitions.
Effective March 29, 1993, the Company acquired Harrisburg Surgical Supply,
Inc., a distributor of physician and nursing home supplies. The
consideration paid consisted of a combination of approximately $600,000 in
cash and 71,229 shares of the Company's common stock for an aggregate
purchase price of $1,180,900. The purchase price was allocated based upon
the fair market value of the assets at the date of acquisition.
F-10
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 2 - ACQUISITIONS (CONTINUED)
On December 1, 1993, a subsidiary of the Company purchased certain net
assets and customer accounts of Clark Surgical Corp. ("Clark") subject to
certain specific liabilities and obligations under existing contracts and
leases. Clark was a major distributor of physician, hospital and
veterinary supplies in the New York Metropolitan area and Southern Florida.
The purchase price as adjusted was approximately $16,500,000 consisting of
inventory of approximately $5,000,000, accounts receivable of approximately
$10,200,000, property and equipment of approximately $300,000 and goodwill
of $1,000,000. The Company borrowed approximately $14,200,000 under its
existing bank line of credit to finance this acquisition and made payments
during the year ended November 30, 1994 of approximately $1,000,000. The
remaining balance of approximately $1,000,000 was paid in November 1995.
In addition, the Company agreed to pay the two former stockholders of Clark
an aggregate of $2,725,000 in cash, payable over a seven year period ending
December 31, 2000 for their agreement not to compete for a period of twenty
years. As part of the acquisition of Clark's assets, which is included
above, the Company issued 40,000 warrants at an exercise price of $8.00 to
these two stockholders with 20% exercisable immediately and the remainder
contingent upon certain conditions being met. Effective November 29, 1994,
these warrants were canceled.
Effective June 1, 1994, the Company acquired certain assets and customer
accounts of Joseph Weintraub, Inc., a distributor of physician and hospital
supplies for approximately $1,100,000. The purchase price was allocated
based upon the fair market value of the assets at the date of acquisition.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
COST
-----------------------
NOVEMBER 30,
------------------------ ESTIMATED
1995 1994 USEFUL LIFE
---------- ---------- -------------
(Years)
<S> <C> <C> <C>
Furniture, fixtures and
equipment (*) $5,716,810 $5,015,884 5 - 8
Transportation equipment 93,419 72,026 5
Leasehold improvements 1,283,712 1,217,701 Life of lease
---------- ----------
7,093,941 6,305,611
Less: Accumulated depreciation
and amortization 3,616,134 2,852,004
---------- ----------
$3,477,807 $3,453,607
---------- ----------
---------- ----------
</TABLE>
(*) Equipment held under capital leases amounted to approximately
$2,249,000 as of November 30, 1995 and 1994.
Depreciation expense totalled approximately $764,000, $717,000 and $584,000
for the years ended November 30, 1995, 1994 and 1993, respectively.
F-11
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 4 - INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Excess cost of acquisitions over net
tangible assets acquired $3,997,570 $3,743,840
Agreements not to compete (Notes 2 and 12) 1,607,183 467,857
Deferred computer programming costs 446,643 351,045
---------- ----------
6,051,396 4,562,742
Less: Accumulated amortization 1,061,323 769,088
---------- ----------
$4,990,073 $3,793,654
---------- ----------
---------- ----------
</TABLE>
Amortization expense amounted to approximately $292,000, $235,000 and
$82,000 for the years ended November 30, 1995, 1994 and 1993, respectively.
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
Capitalized leases (collateralized by
equipment with an aggregate cost of
approximately $2,249,000) payable in
various installments through fiscal
2001; interest at 6.5% to 11.75%
or varies with changes in prime rate $1,426,384 $1,788,511
Bank loans (i) 14,500,000 14,650,000
7% convertible subordinated debentures,
due October 30, 2003 (ii) 1,500,000 3,000,000
Obligation related to acquisition (Note 2):
Joseph Weintraub, Inc. - $24,660 payable
quarterly to June 1999; interest at 7% 322,873 380,698
----------- -----------
17,749,257 19,819,209
Less: Current maturities 479,195 437,970
----------- -----------
$17,270,062 $19,381,239
----------- -----------
----------- -----------
</TABLE>
F-12
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 5 - LONG-TERM DEBT (CONTINUED)
The non-current portion of long-term debt at November 30, 1995 is payable
as follows:
YEAR ENDING NOVEMBER 30,
------------------------
1997 $ 464,180
1998 322,228
1999 14,792,180
2000 158,008
2001 33,466
Subsequent 1,500,000
-----------
$17,270,062
-----------
-----------
(i) On November 19, 1993, the Company refinanced its $12,500,000 revolving loan
agreement with Chase Manhattan Bank, N.A. and entered into a revolving loan
agreement with Chase Manhattan Bank, N.A. to act as agent of and as a
participant in a $25,000,000 secured credit facility. Fleet Bank of New
York also acted as a participant in the loan agreement. Chase's and
Fleet's commitment under the loan agreement is limited to $15,000,000 and
$10,000,000, respectively. The loan agreement expires on February 15,
1999. The loan bears interest at the bank's prime rate plus 1/4%, except
for Eurodollar loans. As of November 30, 1995, $12,300,000 of the
$14,500,000 revolving loan outstanding was utilized for Eurodollar loans at
an average interest rate of 7-1/2%. The debt is collateralized by accounts
receivable and inventory. In connection with the loan agreement, the
Company has agreed to certain restrictions relating to its indebtedness and
liens, and has agreed to maintain specified financial ratios and covenants.
The loan agreement prohibits the Company from paying any dividends and
restricts capital distributions or redemptions and purchases or retirements
of any of the Company's capital stock. There are also restrictions as to
investments, acquisitions, capital expenditures and payments to related
parties. A commitment fee equal to 1/8% per annum will be charged on the
unused portion of the loan. The loan may be repaid at any time.
On June 7, 1995, the Company entered into a zero cost three year interest
rate swap agreement with Chase for $10,000,000. It is management's intent
to match the agreement's terms as to principal amounts and repricing
maturities in order to reduce the Company's interest rate risk on its
revolving loans. Effectively, the agreement serves to limit the net
interest rate charged on the Company's first $10,000,000 of revolving loans
to 8-3/4%. However, the Company would receive no further interest rate
benefit once the applicable interest rate falls below 7.05%.
(ii) In November 1993, the Company completed the private sale and issuance of
its 7% convertible subordinated Debentures (the "Debentures") due
October 30, 2003. Net proceeds from the issuance of the Debentures with a
face value of $3,000,000 were approximately $2,700,000. The offering fees
are being amortized over a life of ten years.
The Debentures are immediately convertible into shares of common stock at
the rate of $8.00 per share until October 28, 2003, subject to adjustment
under certain circumstances. Interest is payable semi-annually on the 30th
day of April and October and commenced on April 30, 1994. Commencing in
November 1995, the Debentures are redeemable at the option of the Company,
in whole and not in part, at the redemption prices set forth below,
provided that the Company is current in filing all required reports
pursuant to Federal Securities Laws. The Debentures are subordinated to
all existing and future indebtedness of the Company for money borrowed from
institutional lenders.
The redemption prices of the Debentures for redemption at the option of the
Company (expressed in percentages of principal amount) are as follows for
the indicated twelve month periods commencing two years from the closing
date: year three - 105%, year four - 104%, year five - 103%, year six -
102%, year seven - 101%, and thereafter at 100% until the maturity date of
the Debentures.
On September 28, 1995, $1,500,000 of the Debentures were converted into
187,500 shares of the Company's common stock.
F-13
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 6 - INCOME TAXES
The Company and its subsidiaries file consolidated income tax returns.
Provision for income taxes comprised the following:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Currently payable:
Federal $508,000 $745,000 $654,000
State and local 209,000 303,000 259,000
Deferred:
Federal 72,000 (77,000) (36,000)
State and local 17,000 (19,000) (24,000)
-------- -------- --------
$806,000 $952,000 $853,000
-------- -------- --------
-------- -------- --------
</TABLE>
The difference between the statutory United States federal income tax rate
and the effective income tax rate is as follows:
YEARS ENDED NOVEMBER 30,
----------------------------
1995 1994 1993
-------- -------- --------
Statutory federal income tax rate 34.0 34.0 34.0
Current year state and local taxes
(net of federal tax effect) 7.9 7.0 7.6
Other .2 (4.9) (.1)
---- ---- ----
42.1% 36.1% 41.5%
---- ---- ----
---- ---- ----
The net current and non-current components of deferred income taxes
recognized in the balance sheet at November 30, are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Net current assets $485,500 $518,362
Net non-current liabilities 358,138 302,000
-------- --------
Net asset $127,362 $216,362
-------- --------
-------- --------
</TABLE>
The components of the net deferred tax asset as of November 30, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Accounts receivable allowances $283,080 $269,362
Inventory - uniform capitalization 189,420 232,000
Other 13,000 17,000
-------- --------
485,500 518,362
Deferred tax liability:
Depreciation and amortization 358,138 302,000
-------- --------
Net deferred tax asset $127,362 $216,362
-------- --------
-------- --------
</TABLE>
F-14
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 7 - ACCRUED EXPENSES
Accrued expenses and sundry liabilities consist of:
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
Compensation $660,638 $816,875
Freight-out 356,795 128,500
Interest 85,069 97,366
Consolidation of facilities - 7,336
Commissions 166,871 86,083
Insurance 110,250 31,069
Other 287,139 414,112
---------- ----------
$1,666,762 $1,581,341
---------- ----------
---------- ----------
</TABLE>
NOTE 8 - COMMITMENTS AND CONTINGENCIES
RETIREMENT PLAN
The Company's 401(k) deferred retirement plan is available to all eligible
employees and provides for matching contributions by the Company equal to
20% of the amount of the participants' contributions that are not in excess
of 5% of compensation. For the years ended November 30, 1995, 1994 and
1993, the Company's matching contributions were approximately $62,000,
$30,000 and $25,000, respectively.
EMPLOYMENT/CONSULTING CONTRACTS
The Company entered into an employment agreement with its Chief Executive
Officer and a consulting agreement with a director, terminating on March
31, 2000 and December 31, 1996, respectively. The current aggregate annual
compensation under these contracts is approximately $325,000. The Chief
Executive Officer's contract provides for annual increments of $5,000 and,
if terminated prior to expiration, payments equal to the greater of
$2,000,000 or the sum of five years' salary, based upon the rate of
compensation then in effect, plus five times the last annual bonus
received.
For the years ended November 30, 1995, 1994 and 1993, bonuses of $144,000,
$199,000 and $155,000, respectively, were paid under the employment
contract.
SELF-INSURANCE
The Company acts as a self-insurer for its employees' health insurance up
to a maximum of $50,000 per covered individual. The Company is liable up
to a maximum of $460,000 for the year. Claims, including estimates for
charges incurred but not reported, are charged to operations during the
year in which they occur. As of November 30, 1995, 1994 and 1993, the
liability for claims incurred but not submitted amounted to $75,000,
$75,000 and $112,000, respectively.
F-15
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
LEASES
The approximate aggregate minimum annual rental commitments under long-term
operating leases in effect at November 30, 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING OFFICE, WAREHOUSE TRANSPORTATION
NOVEMBER 30, AND SALES EQUIPMENT TOTAL
------------ ----------------- -------------- ----------
<S> <C> <C> <C>
1996 $954,000 $110,000 $1,064,000
1997 763,000 103,000 866,000
1998 710,000 65,000 775,000
1999 788,000 45,000 833,000
2000 741,000 31,000 772,000
Thereafter 5,362,000 - 5,362,000
---------- -------- ----------
$9,318,000 $354,000 $9,672,000
---------- -------- ----------
---------- -------- ----------
</TABLE>
Certain leases contain escalation clauses which increase the rents for
various operating expenses and fluctuations in property taxes.
Rent expense comprised the following:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Office, warehouse and sales $1,141,700 $1,392,046 $1,019,534
Transportation equipment 117,417 85,555 102,241
---------- ---------- ----------
$1,259,117 $1,477,601 $1,121,775
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The Company leases certain equipment under capital leases. The
following is a schedule by years of approximate future minimum lease
payments under the capitalized leases together with the present value
of the net minimum lease payments at November 30, 1995:
<TABLE>
<CAPTION>
YEAR ENDING NOVEMBER 30,
-----------------------
<S> <C>
1996 $ 445,000
1997 445,000
1998 254,000
1999 243,000
2000 231,000
----------
Total minimum lease payments 1,618,000
Less: Amount representing interest at 6.5% to 9% 227,000
----------
$1,391,000
----------
----------
</TABLE>
F-16
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 9 - STOCK OPTIONS AND WARRANTS
OPTIONS
Under various plans, the Company may grant stock options to directors,
officers and employees. The options must be granted at exercise prices of
not less than fair market value and expire within ten years from the date
of grant. Transactions under the various stock option and incentive plans
for the periods indicated were as follows:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at beginning of year 1,372,368 1,244,767 1,102,833
Add (deduct):
Granted 207,000 180,500 183,500
Terminated (42,667) (22,000) (15,600)
Exercised (45,133) (30,899) (25,966)
---------- ---------- ----------
Outstanding at end of year 1,491,568 1,372,368 1,244,767
---------- ---------- ----------
---------- ---------- ----------
Remaining shares reserved for
issuance 387,632 51,965 210,465
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Options outstanding at November 30, 1995, 1994 and 1993 ranged in price
from $2.25 to $10.25. Options exercised ranged in price from $2.25 to
$6.75 in 1995, 1994 and 1993.
WARRANTS
The Company has approximately 630,000 Series 1 warrants which are
outstanding from its public offering of non-transferable rights in 1992.
The warrants are exercisable at $6.00 per 1.047 shares at any time until
June 18, 1996. The total net proceeds from the exercise of all warrants
from inception through November 30, 1995 were approximately $4,500,000.
NOTE 10 - EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
EQUIVALENT SHARE
Earnings per common and common equivalent share are based on the weighted
average number of common shares and common equivalent shares outstanding
during the period. The modified treasury stock method was utilized to
calculate the dilutive effect of the options and warrants upon the earnings
per share data. Fully diluted earnings per common and common equivalent
share were the same as for the primary calculation.
F-17
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 11 - FINANCIAL INSTRUMENTS
The amounts at which cash, accounts receivable, accounts payable and other
current liabilities are presented in the balance sheets approximate their
fair value due to their short maturities. The following table presents the
carrying amount and fair value at November 30, 1995 and 1994 for long-term
debt:
<TABLE>
<CAPTION>
1995 1994
-----------------------------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Long-term debt $17,270,000 $17,762,000 $19,381,000 $19,841,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The fair value of long-term debt has been determined based on discounted
cash flow using a market rate of interest at the balance sheet date as
applicable to comparable debt.
NOTE 12 - SUBSEQUENT EVENT
On November 2, 1995, a wholly-owned subsidiary of the Company entered into
an agreement for merger and reorganization with Stone Medical Supply
Corporation ("Stone"), a distributor of physician and podiatry supplies and
equipment, and its chief executive. The Company will attempt to acquire by
merger all of Stone's $.01 par value common stock outstanding of
approximately 3,432,000 shares in exchange for the issuance of up to
280,697 shares of the Company's $.03 par value common stock (valued at
$11.50 per share) at a conversion ratio of .0818 to 1.00. It is
contemplated that a tax-free merger will result and this transaction will
be accounted for as a purchase. In addition, the Company entered into two
non-competition agreements with two former executives of Stone with a total
anticipated consideration of $1,750,000; $583,333 was paid in November
1995, $333,333 is to be paid nine months later, $100,000 per annum for five
years and the remaining $333,333 is subject to a final determination of the
executive's liability to the Company in connection with certain
indemnification obligations.
At a special meeting of shareholders of Stone held on January 18, 1996, the
agreement of merger and reorganization was ratified and approved.
The excess of the purchase price over the estimated fair value of the net
assets acquired of approximately $2,600,000 will be amortized on a
straight-line basis over fifteen years.
F-18
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
NOTE 12 - SUBSEQUENT EVENT (CONTINUED)
The following presents a condensed pro forma consolidated balance sheet of
the Company at November 30, 1995 (Unaudited), giving effect to the Stone
acquisition as if it had occurred on that date.
<TABLE>
<S> <C>
ASSETS
Current assets $45,485,195
Property, plant and equipment - net 4,137,861
Intangible assets - net 7,349,131
Other assets 533,206
-----------
$57,505,393
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $15,598,622
Long-term debt 17,436,465
Other long-term liabilities 376,138
Stockholders' equity 24,094,168
-----------
$57,505,393
-----------
-----------
</TABLE>
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition had occurred at the beginning of the
periods presented and does not purport to be indicative of what would have
occurred had the acquisition actually been made as of such date or of
results which may occur in the future:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30.
----------------------------
1995 1994
------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales $132,138,966 $131,785,174
Net income $ 341,528 $ 1,115,292
Earnings per common and common
equivalent share $.09 $.23
</TABLE>
F-19
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
----------- ---------- ----------- --------
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO END OF
OF YEAR OPERATIONS DEDUCTIONS* YEAR
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
DESCRIPTION
Allowance for Doubtful Accounts
Year ended November 30, 1993 $300,000 $321,526 $21,526 $600,000
Year ended November 30, 1994 600,000 268,551 218,551 650,000
Year ended November 30, 1995 650,000 96,000 71,790 674,210
</TABLE>
*Deductions represent accounts written off, net of recoveries of accounts
written off in prior years.
F-20
<PAGE>
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES
EXHIBIT 11 - STATEMENT RE:
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
PRIMARY EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE
EARNINGS
Income before cumulative effect of accounting change $1,108,889 $1,681,620 $1,202,219
MODIFIED TREASURY STOCK METHOD
Incremental income after the application of assumed
proceeds toward repurchase of 20% of the outstanding
common shares at the average market price, the reduc-
tion of debt and the balance of funds invested in US
government securities, net of applicable income taxes 191,461 146,222 223,048
---------- ---------- ----------
Adjusted earnings $1,300,350 $1,827,842 $1,425,267
---------- ---------- ----------
---------- ---------- ----------
SHARES
Weighted average number of common shares
outstanding 3,690,092 3,551,732 2,995,536
Additional shares assuming conversion of:
Stock options and warrants utilizing the
modified treasury stock method 1,431,542 1,344,786 1,739,210
---------- ---------- ----------
Number of common and common equivalent shares 5,121,634 4,896,518 4,734,746
---------- ---------- ----------
---------- ---------- ----------
Earnings per common and common equivalent share
before cumulative effect of accounting change $.25 $.37 $.30
---- ---- ----
---- ---- ----
</TABLE>
Fully diluted earnings per common and common equivalent share were the same.
F-21
<PAGE>
PART II
Information not required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
Legal Fees, Accounting Fees,
Copying Costs and Miscellaneous
Expenses $10,000 *
--------
Total $10,000 *
--------
--------
_______________
* Estimated
Item 15. Indemnification of Officers and Directors
The Business Corporation Law of the State of New York provides for
indemnification of officers and directors under certain circumstances against
reasonable expenses, including attorney fees, actually and necessarily incurred
in connection with the defense of an action brought against him by reason of his
being a director or officer. Bruce Haber, President of the Company, has an
employment contract with the Company which provides for indemnification for any
claim or lawsuit which may be asserted against him in acting in such capacity
for the Company provided said indemnification is not in violation of any federal
or state law, rule or regulation.
The Certificate also contains a provision eliminating the liability of a
director to the Company or its stockholders for monetary damages for any breach
of duty in such capacity, provided that this provision shall not eliminate or
limit liability of any director if a judgment or other final adjudication
adverse to him establishes that his acts or omissions were made in bad faith or
involved intentional misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled or that his acts violated Section 719 of the New York
Business Corporation Law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense
<PAGE>
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
1 Revised Standby Underwriting Agreement*
1(A) Financial Consulting Agreement*
3 Articles of Incorporation, as amended*
3(A) By-Laws*
4 Specimen of Common Stock*
4(A) Series 1 Common Stock Purchase Warrant*
4(B) Warrant Agreement*
4(C) Revised Underwriter's Unit Purchase Warrant*
4(D) Revised Form of Rights to purchase Units and Letter of Transmittal*
5 Opinion re: legality*
10 Employment Agreement of Bruce Haber dated February 11, 1992
(incorporated by reference to Exhibit 10(C) included
in the Company's Form 10-K for the fiscal year ended
November 30, 1991)
10(A) Contract with Marvin Caligor (incorporated by reference to Exhibit
10.2 included in the Company's Form S-18 Registration Statement, File
No. 2-89795-NY)
10(B) Amendments to Caligor's Agreement (incorporated by reference to
Exhibit 10(D) included in the Company's Form 10-K for the fiscal year
ended November 30, 1991)
10(C) New lease for Pelham Manor, New York (incorporated by reference to
Exhibit 10(B) included in the Company's Form 10-K for the fiscal year
ended November 30, 1991)
II-2
<PAGE>
10(D) Credit Agreement dated November 18, 1993 among Micro Bio-Medics,
Inc., the Bank's signatory thereto, and the Chase Manhattan, N.A. as
agent (incorporated by reference to Exhibit 10.1 included in the
Company's Form 8-K dated November 19, 1993)
10(E) First Amendment to Credit Agreement dated August 1, 1994 (incorporated
by reference to Exhibit 10(a)(1) included in the Company's Form 10-K
for the fiscal year ended November 30, 1994)
10(F) Second Amendment to Credit Agreement dated December 1, 1994
(incorporated by reference to Exhibit 10(a)(2) included in the
Company's Form 10-K for the fiscal year ended November 30, 1994)
10(F.1) Form of Third Amendment to Credit Agreement dated as of December 1,
1995 (incorporated by reference to Exhibit 10(F.1) included in the
Company's Form 10-K for the fiscal year ended November 30, 1995)
10(G) Asset Purchase Agreement dated November 19, 1993 by and between MBM
Hospital supply Corp. and Clark Surgical Corp. (incorporated by
reference to Exhibit 10.2 included in the Company's Form 8-K dated
November 19, 1993)
10(H) Amendments 1-4 to Asset Purchase Agreement dated November 19, 1993 by
and between MBM Hospital Supply Corp. and Clark Surgical Corp.
(incorporated by reference to Exhibit 10(b)(1) included in the
Company's Form 10-K for the fiscal year ended November 30, 1993)
10(I) Lease for the Company's facilities located in Syosset, New York by and
between the Company and Lin Pac, Inc. dated December 8, 1994
(incorporated by reference to Exhibit 10(c)(2) included in the
Company's Form 10-K for the fiscal year ended November 30, 1994)
10(J) Amendment dated December 23, 1993 to Bruce Haber's Employment
Contract (incorporated by reference to Exhibit 10(e) included in the
Company's Form 10-K for the fiscal year ended November 30, 1993)
10(K) 1982 Incentive Stock Option Plan of Registrant (incorporated by
reference to Exhibit 10.4 included in the Company's Form S-18
Registration Statement, File No. 2-89795-NY)
10(L) 1989 Non-Qualified Stock Option Plan (incorporated by reference to
Exhibit 28 included in the Company's Form 10-K for the fiscal year
ended November 30, 1989)
II-3
<PAGE>
10(M) 1992 Incentive and Non-Statutory Stock Option Plan (incorporated by
reference to Exhibit 28(A) included in the Company's Form 10-K for the
fiscal year ended November 30, 1991)
10(M)(i) Subscription Agent Agreement *
10(N) Agreement for Merger and Reorganization dated as of November 2, 1995
(incorporated by reference to Exhibit 10(N) included in the Company's
Form S-4 Registration Statement, File No. 33-64399)
10(O) Noncompetition, Indemnification and Release Agreement of Andrew D.
Stone dated as of November 2, 1995 (incorporated by reference to
Exhibit 10(O) included in the Company's Form S-4 Registration
Statement, File No. 33-64399)
10(P) Noncompetition Agreement of Lyudmila Stone dated as of November 2,
1995 (incorporated by reference to Exhibit 10(P) included in the
Company's Form S-4 Registration Statement, File No. 33-64399)
10(Q) Form of Escrow Agreement (incorporated by reference to Exhibit 10(Q)
included in the Company's Form S-4 Registration Statement, File No.
33-64399)
10(R) Employment Agreement of Andrew D. Stone dated as of November 2, 1995
(incorporated by reference to Exhibit 10(R) included in the Company's
Form S-4 Registration Statement, File No. 33-64399)
10(S) Form of Put and Call Agreement (incorporated by reference to Exhibit
10(S) included in the Company's Form S-4 Registration Statement, File
No. 33-64399)
10(T) Management Agreement dated as of November 2, 1995 (incorporated by
reference to Exhibit 10(T) included in the Company's Form S-4
Registration Statement, File No. 33-64399)
10(U) Amendment to Bruce Haber Employment Agreement dated as of December 23,
1993 (incorporated by reference to Exhibit 10(U) included in the
Company's Form S-4 Registration Statement, File No. 33-64399)
10(V) Amendment to Bruce Haber Employment Agreement dated as of April 1,
1995 (incorporated by reference to Exhibit 10(V) included in the
Company's Form S-4 Registration Statement, File No. 33-64399)
10(W) Amendments to 1992 Incentive and Non-Statutory Stock Option Plan
(incorporated by reference to Exhibit 10(W) included in the Company's
Form S-4 Registration Statement, File No. 33-64399)
II-4
<PAGE>
10(X) Consent of Chase Manhattan Bank dated as of November 2, 1995
(incorporated by reference to Exhibit 10(X) included in the Company's
Form S-4 Registration Statement, File No. 33-64399)
10(Y) Amendment to Bruce J. Haber's Employment Agreement dated March 12,
1996**
11 Statements re: computation of per share earnings (included in Notes to
Consolidated Financial Statements and Schedules thereto)
13 Registrant's Form 10-K for the fiscal year ended November 30, 1995, as
amended (incorporated by reference to the Form 10-K for the fiscal
year ended November 30, 1995, as amended)
21 Subsidiaries of Registrant (incorporated by reference to Exhibit 21
included in the Company's Form S-4 Registration Statement, File No.
33-64399)
23 Consent of Counsel (contained in Exhibit 5) *
23(A) Consent of Miller, Ellin & Co.**
27 Financial Data Schedule (incorporated by reference to
Form 10-K for the fiscal year ended November 30, 1995).
__________________
* Previously filed.
** Filed herewith.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-2 and has duly caused this Post-Effective
Amendment to the Form S-2 Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Pelham Manor, State
of New York on the 22nd day of March, 1996.
MICRO BIO-MEDICS, INC.
By:/s/ Bruce J. Haber
---------------------------
Bruce J. Haber, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Titles Date
---------- ------ ----
/s/ Bruce J. Haber President,
- ----------------------- Principal Executive
Bruce J. Haber Officer and Director* March 22, 1996
/s/ Marvin S. Caligor
- -----------------------
Marvin S. Caligor Director* March 22, 1996
Vice President
/s/ Stuart F. Fleischer of Finance, Principal
- ----------------------- Financial and
Stuart F. Fleischer Accounting Officer March 22, 1996
/s/ Renee Steinberg
- ----------------------- Secretary and
Renee Steinberg Director* March 22, 1996
/s/ K. Deane Reade, Jr.
- -----------------------
K. Deane Reade, Jr. Director* March 22, 1996
* Bruce J. Haber, Marvin S. Caligor, Renee Steinberg and K. Deane Reade, Jr.
constitute all of the members of the Board of Directors of the Registrant.
II-6
<PAGE>
[MILLER. ELLIN & COMPANY LETTERHEAD]
INTERNATIONAL PLAZA
750 LEXINGTON AVENUE. NEW YORK. N.Y. 10022-1200
----
(212) 760-9100
----
FAX (212) 760-2727
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in the Prospectus constituting part of
this Registration Statement in Post-Effective Amendment No. 4 to Form S-2 of
Micro Bio-Medics, Inc. ("Micro") of our report dated January 31, 1996, relating
to the 1995 financial statements and supplemental schedule of Micro and to the
reference to our firm under the heading "Experts."
/s/ Miller, Ellin & Company
MILLER, ELLIN & COMPANY
March 25, 1996
