<PAGE>
UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended April 30, 2000
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from to
Commission File Number 0-3255
JAYARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1864519
(State or jurisdiction of incorporation or organization) (IRS EIN)
300 Plaza Drive, Vestal, New York 13850
(Address of principal executive office) (Zip Code)
Telephone number, including area code: (607) 729-9331
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, par value $.01 per share
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the Registrant is $135,609 as of July 3, 2000.
The number of shares outstanding of Registrant's Common Stock is
2,766,396 as of July 3, 2000.
<PAGE>
PART I
Item 1. Business
General
Jayark Corporation ("Jayark" or "the Company") conducts its operations
through three wholly owned subsidiaries, AVES Audiovisual Systems,
Inc. ("AVES"), MED Services Corp. ("Med") and Fisher Medical
Corporation ("Fisher"), each of which constitute a business segment
for financial reporting purposes.
AVES distributes and rents a broad range of audio, video and
presentation equipment, and supplies. Its customer base includes
businesses, churches, hospitals, hotels and educational institutions.
The warehousing, sales and administrative operations of AVES are
located in Houston, Texas.
Med finances the manufacture, sale and rental of medical equipment.
It had no customers in fiscal 2000 and one customer in fiscal 1999,
Vivax Medical Corporation, a company that manufactures, sells and
rents durable medical equipment to hospitals, nursing homes and
individuals. The administrative operations of Med are located in
Vestal, New York.
Fisher is in the process of developing, manufacturing medical supplies
and equipment for distribution to hospitals, nursing homes and
individuals. The production, warehousing and sales operations of
Fisher are located in Torrington, Connecticut with administrative
operations in Patterson, New York.
The Company was originally incorporated in New York in 1958. In 1991,
the Company changed its state of incorporation to Delaware. In July
1998 the Company amended its Certificate of Incorporation increasing
its authorized Common Stock to 30,000,000 shares and decreasing the
par value of its Common Stock from $.30 to $.01 per share. In
December 1999 the Company filed a Certificate of Amendment to provide
for a one for ten reverse stock split. On January 7, 2000 each ten
(10) issued and outstanding shares of Common Stock of the Corporation,
par value $.01 per share, were automatically converted into one (1)
validly issued, fully paid and non assessable share of Common Stock of
the Corporation, par value $.01 per share. All per share and weighted
average share amounts have been restated to reflect this reverse stock
split.
Recent Events
At a meeting of shareholders held on November 22, 1999, the
shareholders approved an amendment to Jayark's Certificate of
Incorporation providing a one for ten reverse stock split. On
December 2, 1999, the Company filed a Certificate of Amendment with
the Delaware Secretary of State to effect the one for ten reverse
stock split. On January 7, 2000, the "Effective Time" or "Record
Date", each ten (10) issued and outstanding shares of Common Stock of
the Corporation, par value $.01 per share, were automatically
converted into one (1) validly issued, fully paid and nonassessable
share of Common Stock of the Corporation, par value $.01 per share.
To avoid the existence of fractional shares of common stock,
stockholders who would otherwise have been entitled to receive
fractional shares of common stock equal to one-half or more received
one whole share. No shares or scrip were issued to holders in respect
of any fraction less then one-half.
On January 5, 2000, the Company, through a newly formed, wholly owned
subsidiary, Fisher Medical Corporation ("Fisher"), entered into an
Asset Purchase Agreement with Fisher Medical, LLC ("LLC"), a company
<PAGE>
that develops, manufactures and distributes medical supplies and
equipment for hospitals, nursing homes and individuals. Under the
terms of the agreement, Fisher purchased all of the assets of LLC for
cash of $215,000. The acquisition resulted in goodwill of $82,415,
which is being amortized on a straight-line basis over 20 years. This
acquisition has been accounted for under the purchase method of
accounting. Fisher financed this purchase from the Company's existing
$1,250,000 revolving line of credit.
Additionally, Fisher entered into Employment Agreements with the two
principals of LLC to continue developing, manufacturing and
distributing medical products of Fisher. In consideration for the
Employment Agreements, the two principals also entered into Non-
Disclosure and Non-Competition Agreements.
Fisher also entered into a five-year (with a five year renewal option)
Technology License Agreement with LLC, which conveyed the technology
developed by Trlby Innovative LLC of Torrington, Connecticut
("Trlby"). Under a 20-year Product Development and Technology
Transfer Agreement ("Agreement"), Trlby has and will continue to
develop certain medical supply products for LLC. In consideration for
this November 1999 Agreement, Trlby receives consulting fees of
$42,000 per year and a royalty of 5% of net sales,
subject to minimum amounts, from any products developed by them. The
minimum royalties consist of $24,000 for the first full calendar year
following the date of the first commercial introduction of the
product, $36,000 for the succeeding calendar year and $48,000 for each
calendar year thereafter.
Under the terms of the Fisher Medical LLC Technology License
Agreement, in addition to all royalties and fees due Trlby, Fisher
will pay a royalty of 5% of gross income to LLC during the five-year
term of the Technology License Agreement. The option to renew this
agreement for an additional five years requires Fisher to pay a fee of
20% of cumulative after tax earnings for any products developed and
sold during the initial five-year term of the Technology License
Agreement.
If Fisher can develop, manufacture and distribute medical supplies and
equipment, the income and cash flow could have a material affect on
the operating results of Jayark. There can be no assurances that the
Company will be successful in this venture.
Description of AVES' Business
Products
AVES distributes and rents a broad range of audio, video and
presentation equipment, and supplies. Among the items distributed are
video, filmstrip and slide projectors; projection screens and lamps;
video cameras and camcorders; laser videodisk, video projection, TV
monitors and receivers; video recorders; still imaging systems; public
address systems, microphones and headsets; tape recorders, record
players, cassette recorders, and related accessories and supplies.
Some of the items sold (such as blank audio cassettes, headsets and
cassette recorders, duplicating equipment and supplies, laminating
film and equipment for document protection) are either assembled by
AVES or purchased from private label and other sole source suppliers
and distributed under the "AVES" and/or "LAMCO" names. AVES also
distributes the products of brand name manufacturers such as RCAT,
GET, Mitsubishi, Elmo, Panasonic, Sanyo, Fujitsu, Videotek, Hitachi,
Pioneer, Leitch, Quasar, Telex Corporation, Kodak, Dukane, Sharp,
Sony, 3M Brand, Luxor and various other brand names. Brand name and
"house" brand products account for approximately 98% and 2% of AVES
product sales, respectively. The Company also offers repair services,
audio visual consulting & design, engineering, installation and
servicing of audiovisual systems to businesses, churches, hospitals,
hotels and educational institutions.
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Raw Materials
The sources and availability of raw materials are not significant for
an understanding of AVES' business since competitive products are
obtainable from alternative suppliers. AVES carries an inventory of
merchandise for resale and for rental operations that is adequate to
meet the rapid delivery requirements (frequently same day shipments)
of its distribution business.
Patents
There are no patents, trademarks, licenses, franchises or concessions
that are material to AVES business.
Sales
AVES currently distributes and rents its products in the United
States, primarily by means of catalogs, direct mail, telephone orders
and a field sales force. AVES exhibits at various regional shows to
expose its products to an interested audience. AVES' sales are not
seasonal, although sales to schools typically are higher from April
through July than at other times during the year.
Customers
In fiscal 2000, 79% of AVES' revenue was derived from sales to schools
and other educational institutions. The remaining 21% of revenues
came from sales to businesses (20%) and rental of AVES equipment (1%).
In fiscal 1999, 74% of AVES' revenue was derived from sales to schools
and other educational institutions. The remaining 26% of revenues
came from sales to businesses (24%) and rental of AVES equipment (2%).
In fiscal 1998, 72% of revenue came from sales to schools and
educational institutions, while 25% came from sales to businesses and
3% came from rentals. No one customer accounted for more than 10% of
revenues for any of the years ended April 30, 2000, 1999 or 1998.
Backlog
The amount of unfilled sales orders of AVES at April 30, 2000, was
$953,100, as compared with $1,040,000, at April 30, 1999, and $904,000
at April 30, 1998. The amount of unfilled sales orders is not a
material measure of AVES' operations.
Competition
The Company believes that AVES is one of the most diversified national
audio visual purveyors in the United States, given the different types
of services and products offered. AVES' principal means of
competition are its aggressive pricing, technical expertise, quick
delivery and the broad range of product lines and brands available
through its distribution channels.
Employees
At April 30, 2000, AVES had 22 employees.
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Description of Med's Business
Products / Services
Med is currently pursuing additional opportunities in the medical
field, but had no products, sales or services during fiscal 2000. For
the fiscal year ending April 30, 1999 Med financed the manufacture,
sale and rental of durable medical equipment by Vivax, a company that
manufactures, sells and rents this equipment to hospitals, nursing
homes and individuals.
Raw Materials
The sources and availability of raw materials are currently not
applicable to Med's business.
Patents
There are no patents, trademarks, licenses, franchises or concessions
that are material to Med's business.
1999 Transactions
In November 1998 Med terminated its Purchase and Sale, Distribution,
and Custody Agreements with Vivax. Under the terms of the Purchase
and Sale Agreement, dated June 17, 1998, Med purchased certain medical
equipment from Vivax for cash of $579,700 and a $144,925 unsecured
promissory note due in five years. Med then entered into a
Consignment Agreement with Vivax whereby this medical equipment was
consigned to Vivax to rent through its distribution network. In
consideration of Vivax renting and maintaining the Med equipment,
Vivax was entitled to a range of forty-eight to sixty-seven percent of
the rental proceeds, based upon the equipment rented. Vivax had an
option to purchase the medical equipment from Med after the twenty-
fourth, thirty-six and forty-eighth month of the consignment period.
Med, under the Purchase and Sale Agreement had an option, through
October 31, 1999 to purchase an additional $2,475,000 of medical
equipment from Vivax.
Customers
During the fiscal year ending April 30, 2000, Med had no customers and
for the year ending April 30, 1999, Vivax was Med's only customer.
Backlog
Med does not currently have any backlog orders.
Description of Fisher's Business
Products / Services
Fisher is in the process of developing and manufacturing medical
supplies and equipment for distribution to hospitals, nursing homes
and individuals.
Raw Materials
The sources and availability of raw materials are currently not
applicable to Fisher's business.
<PAGE>
Patents, Trademarks, and Licenses
Fisher entered into a five-year (with a five year renewal option)
Technology License Agreement with Fisher Medical LLC, which conveyed
the technology developed by Trlby Innovative LLC of Torrington,
Connecticut ("Trlby"). Under a 20-year Product Development and
Technology Transfer Agreement ("Agreement"), Trlby has and will
continue to develop certain medical supply products for LLC. In
consideration for this November 1999 Agreement, Trlby receives
consulting fees of $42,000 per year and a royalty of
5% of net sales, subject to minimum amounts, from any products
developed by them. The minimum royalties will consist of $24,000 for
the first full calendar year following the date of the first
commercial introduction of the product, $36,000 for the succeeding
calendar year and $48,000 for each calendar year thereafter.
Under the terms of the Fisher Medical LLC Technology License
Agreement, in addition to all royalties and fees due Trlby, Fisher
will pay a royalty of 5% of gross income to LLC during the five-year
term of the Technology License Agreement. The option to renew this
agreement for an additional five years requires Fisher to pay a fee of
20% of cumulative after tax earnings for any products developed and
sold during the initial five-year term of the Technology License
Agreement.
Sales
There are currently no sales in Fisher.
Customers
There are currently no customers of Fisher.
Backlog
Fisher does not currently have any backlog orders.
Employees
At April 30, 2000, Fisher had eight employees.
Item 2. Properties
The Company's Corporate office is located in Vestal, New York.
Corporate administrative functions are conducted from approximately
2,000 square feet. There is currently no lease obligation or rental
expense for this space, as the property is owned by a related party.
AVES is located in Houston, Texas. AVES' business is conducted from
approximately 13,000 square feet; 5,500 of which are used for office,
sales and demonstration purposes and 7,500 for warehouse purposes.
The current lease term expires on April 30, 2001. The current rental
is $5,200 per month.
The Fisher office is located in Patterson, New York and uses
approximately 500 square feet for administrative purposes. The
current lease term expires on January 31, 2002 and the current rental
is $430 per month. Fisher's operations are located in Torrington,
Connecticut. Fisher's business is conducted from approximately 16,000
square feet; 2,500 of which are used for office, sales and
demonstration purposes, 2,000 for warehouse purposes and 11,500 for
production purposes. The current lease term expires on August 31,
2004 and the current rental is $2,500 per month.
<PAGE>
Item 3. Legal Proceedings
None
Item 4. Submission Of Matters To A Vote Of Security Holders
At the Annual Meeting of Shareholders held on November 22, 1999,
pursuant to the Notice of Annual Meeting of the Shareholders and Proxy
Statement dated October 26, 1999, Arthur G. Cohen and Jeffrey P.
Koffman were elected to the Board of Directors with 19,974,196 shares
voted FOR and 11,813 shares WITHHELD, the appointment of BDO Seidman,
LLP as independent public accountants for the Company for the fiscal
year ending April 30, 2000 was approved with 19,677,938 shares voted
FOR, 5,863 shares voted AGAINST and 2,208 shares WITHHELD, and an
amendment to the Company's Certificate of Incorporation to effect a
one for ten reverse stock split of the issued and outstanding shares
of common stock was approved with 19,634,325 shares voted FOR, 48,743
shares voted AGAINST and 2,941 shares WITHHELD. The above share
amounts are shown as they were prior to the reverse stock split.
PART II
Item 5. Market For Registrant's Common Stock And Related Stockholder
Matters
Effective July 10, 1997, the Company's Common Stock was delisted due
to the Company's non-compliance with the NASDAQ's minimum capital and
surplus requirement. Bid quotations for the Company's Common Stock
may be obtained from the "pink sheets" published by the National
Quotation Bureau, and the Common Stock is traded in the over-the-
counter market.
The following table presents the quarterly high and low trade prices
of the Company's common stock for the periods indicated, in each
fiscal year as reported by NASDAQ. As of July 3, 2000, there were
approximately 809 stockholders of record of common stock.
The Company has not paid any dividends on its common stock during the
last five years and does not plan to do so in the foreseeable future.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
2000 Common Stock Trade Price 1999 Common Stock Trade Price
High Low High Low
First Quarter 1.25 .47 .94 .94
Second Quarter 1.41 .47 .94 .16
Third Quarter 1.56 .47 .78 .63
Fourth Quarter 1.02 .81 .63 .47
</TABLE>
The above prices have been restated to reflect the reverse stock
split.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Results of Operations:
Years Ended April 30, 2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- -----------
Net Revenues $13,197,866 $15,288,215 $13,604,558 $12,638,072 $11,856,148
Earnings (Losses) from
Continuing Oper $330,978 $445,805 $75,992 ($264,372) ($284,390)
Earnings (Losses) from
Discontinued Oper $209,676 $0 $0 ($5,794,839) ($6,900,857)
Net Earnings(Losses)$540,654 $445,805 $75,992 ($6,059,211) ($7,185,247)
Basic and Diluted Earnings
(Loss) per share from
Continuing Oper* $.12 $.24 $.08 ($.30) ($.36)
Basic and Diluted Earnings
(Loss) per share from
Discontinued Oper* $.08 $-- $-- ($6.58) ($8.81)
Weighted Average Shares
Outstanding* 2,766,360 1,836,661 922,120 880,253 783,399
At April 30,
Balance Sheet Information:
Total Assets $3,239,126 $2,779,891 $2,634,964 $2,754,072 $8,327,357
Long Term
Obligations $1,278,571 $1,424,229 $3,446,021 $3,407,207 $1,972,020
Working Capital
(Deficit) $378,953 $370,914 $157,069 ($7,003) ($233,256)
Stockholders' Equity
(Deficit) $(145,619) $(685,523) ($2,925,566) ($3,001,558) $2,585,541
</TABLE>
* Per share and weighted average share amounts have been restated to
reflect reverse stock split.
Item 7. Management's Discussion and Analysis Of Financial Condition
And Results Of Operations
Comparison of Fiscal Year Ended April 30, 2000 With Fiscal Year Ended
April 30, 1999
Net Revenues
Consolidated Revenues of $13,198,000 decreased $2,090,000, or 13.7%,
from fiscal 1999. The decrease was primarily the result of a
$1,990,000 decrease in AVES' sales. This reduction was due to a
decrease in direct sales as compared to the prior year due to a number
of one time sales opportunities in the prior year, the dramatic drop
in cost of video equipment over the past year, and the hesitation of
AVES' broadcast customers to invest in new broadcast equipment at this
time, when this well educated customer base knows that there is new
digital equipment under development. In addition to the decrease at
AVES, Med reported zero sales as compared to $100,000 in prior year
rental sales, as a result of the November 1998 termination of its
distribution agreements with Vivax Medical Corporation.
Cost of Revenues
Consolidated Cost of Revenues of $10,870,000 decreased $2,129,000, or
16.4%, from the prior fiscal year due to the decrease in revenues.
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Gross Margin
Consolidated Gross Margin of $2,328,000 was 17.6% of revenues, as
compared with $2,290,000, or 15.0%, for the same period last year.
The Company experienced lower unit sales with higher profit margins,
due to a number of one time sales opportunities with lower margins in
the prior year, that resulted in a gross margin comparable to the
prior year, despite the decrease in revenues.
Selling, General and Administrative Expense
Consolidated Selling, General and Administrative Expenses of
$1,898,000 increased $144,000, or 8.2%, as compared with the prior
reporting year. This increase was due to the addition of $195,000 in
operating expenses for the new subsidiary Fisher Medical Corporation.
AVES' spending increased $28,000 as compared to the prior year with
increases in depreciation expense and travel expense offset with
decreases in payroll costs. Corporate spending decreased $48,000,
primarily due to a reduction in the President's salary along with
decreases in professional fees as compared to last year. Med's
expenses decreased $32,000 from the prior year primarily as a result
of decreased professional fees.
Operating Income
Consolidated Operating Income of $431,000 decreased $105,000, or
19.6%, from last year's operating income of $536,000. This decrease
is primarily a result of increased operating expenses for the new
subsidiary Fisher Medical Corporation.
Interest Expense
Consolidated Interest Expense of $96,000 decreased $187,000 or 66.0%
as compared with the same period last year. This decrease was
primarily a result of the decrease in subordinated debt and notes
payable attributed to the conversion of debt in conjunction with the
Rights Offering which expired on October 30, 1998.
Gain on Sale of Assets
Consolidated Gain on Sale of Assets of $8,000 in the current year
resulted from the sale of a Company auto versus a gain of $203,000 in
the prior year which resulted from the termination of Med's Purchase
and Sale, Distribution and Custody Agreements with Vivax.
Pre Tax Earnings
Pre Tax Earnings of $342,000 for the fiscal year ended April 30, 2000
decreased $114,000, or 25.0%, as compared with the same period last
year. This decrease was experienced due to the gain on sale of assets
recognized in the prior year along with increased operating expenses
incurred for the new subsidiary Fisher Medical Corporation. These
decreases to earnings, as compared to the prior year, were partially
offset by a decrease in interest expense in the current year.
Provision for Income Taxes
Provision for Income Taxes of $11,000 for the fiscal year ended April
30, 2000, increased $1,000, or 10%, as compared with $10,000 for the
same period last year.
Income from Continuing Operations
Income from Continuing Operations of $331,000, decreased $115,000, or
25.8%, as compared to the prior year.
<PAGE>
Income from Discontinued Operations
Income from Discontinued Operations of $210,000 in the current year is
a result of the reversal of accruals relating to a discontinued
division in 1997 and the liquidation of a business acquired in June
1995.
Consolidated Net Income
Consolidated Net Income of $541,000 for the fiscal year ended April
30, 2000 increased $95,000, or 21.3%, as compared to net income of
$446,000 for the same period last year.
Comparison of Fiscal Year Ended April 30, 1999 With Fiscal Year Ended
April 30, 1998
Net Revenues
Consolidated Revenues of $15,288,000 increased $1,684,000, or 12.4%,
from fiscal 1998. The increase was the result of a $1,584,000
increase in AVES' sales and the addition of $100,000 in rental income
from the new subsidiary, Med.
Cost of Revenues
Consolidated Cost of Revenues of $12,999,000 increased $1,553,000, or
13.6%, from the prior fiscal year as a result of the increase in
revenues.
Gross Margin
Consolidated Gross Margin of $2,290,000 was 15.0% of revenues, as
compared with $2,159,000, or 15.9%, for the same period last year.
Selling, General and Administrative Expense
Consolidated Selling, General and Administrative Expenses of
$1,754,000 increased $37,000, or 2.2%, as compared with the prior
reporting year. This increase was due to $66,000 in expenses for the
new subsidiary, Med, and a $6,000 increase in Corporate spending.
AVES decreased spending by $35,000 which partially offset the
increases experienced by Med and Corporate. Although expenses at
Corporate were up from the prior year, this $6,000 increase was a
result of a difference in miscellaneous tax expense of $60,000. Taxes
in the current year were $6,000 versus a credit of $54,000 in the
prior year. The prior year's credit was a result of miscellaneous tax
refunds received. Corporate recognized an overall decrease in
spending of $54,000 in all other expense categories due to their
continued efforts to reduce costs. The savings at AVES were
attributable to reductions in payroll expenses.
Operating Income
Consolidated Operating Income of $536,000 increased $94,000, or 21.3%,
from last year's operating income of $442,000. This increase was
directly related to the increase in sales.
<PAGE>
Interest Expense
Consolidated Interest Expense of $283,000 decreased $83,000 or 22.6%
as compared with the same period last year. This decrease was
primarily a result of the decrease in subordinated debt and notes
payable attributed to the conversion of debt in conjunction with the
Rights Offering which expired on October 30, 1998. As compared with
the prior period, subordinated debt was down $787,000, with an
interest rate reduction on the $613,000 in remaining principal from
12% to 8%, and notes payable decreased $1,000,000 due to the exchange
of equity for debt. The resulting decline in interest was partially
offset by higher interest experienced from increased borrowing levels
on the Company's line of credit.
Gain (Loss) on Sale of Assets
Consolidated Gain on Sale of Assets of $203,000 resulted from the
termination of Med's Purchase and Sale, Distribution and Custody
Agreements with Vivax.
Pre Tax Earnings
Pre Tax Earnings of $456,000 for the fiscal year ended April 30, 1999
increased $380,000, or 500.0%, as compared with the same period last
year. This increase was due to higher revenues, decreased interest
expense, and the $203,000 gain on sale from Med's termination of its
agreements with Vivax. These increases were partially offset by a
slight increase in selling, general and administrative expenses.
Provision for Income Taxes
Provision for Income Taxes of $10,000 for the fiscal year ended April
30, 1999 as compared with $0 for the same period last year.
Net Income (Loss)
Consolidated Net Income of $446,000 for the fiscal year ended April
30, 1999 as compared with $76,000 for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2000, consolidated open lines of credit available to the
Company for borrowing, were $881,000 as compared with $1,250,000 at
April 30, 1999. It is the opinion of the Company's management that
operating expenses, as well as obligations coming due during the next
fiscal year, will be met primarily by cash flow generated from
operations and from available borrowing levels.
Working Capital
Working capital was $379,000 at April 30, 2000, compared with $371,000
at April 30, 1999.
Net cash provided by operating activities was $646,000 in 2000 as
compared with $321,000 in 1999.
Cash flows used in investing activities during the year ended April
30, 2000 were $548,000 primarily due to the purchase acquisition of
the assets of Fisher Medical LLC along with increases in property and
equipment relating to the new Fisher Medical Corporation subsidiary.
Net cash provided of $68,000 in 1999 was a result of the sale of
assets relating to the Med subsidiary.
<PAGE>
Cash provided by financing activities of $223,000 for the fiscal year
ended April 30, 2000 is a result of borrowings on the Company's line
of credit. Cash used in financing activities of $418,000 in 1999 was
due to payment on the Company's line of credit and principal payments
on notes payable to related parties. The majority of the common stock
issued in conjunction with the Rights Offering was subscribed using
conversion of debt. Consequentially, there was little to no cash
provided by the transaction.
The Company had no material commitments for capital expenditures as of
April 30, 2000.
At a meeting of shareholders held on November 22, 1999, the
shareholders approved an amendment to Jayark's Certificate of
Incorporation providing a one for ten reverse stock split. On
December 2, 1999, the Company filed a Certificate of Amendment with
the Delaware Secretary of State to effect the one for ten reverse
stock split. On January 7, 2000, the "Effective Time" or "Record
Date", each ten (10) issued and outstanding shares of Common Stock of
the Corporation, par value $.01 per share, were automatically
converted into one (1) validly issued, fully paid and nonassessable
share of Common Stock of the Corporation, par value $.01 per share.
To avoid the existence of fractional shares of common stock,
stockholders who would otherwise have been entitled to receive
fractional shares of common stock equal to one-half or more received
one whole share. No shares or scrip were issued to holders in respect
of any fraction less then one-half.
On January 5, 2000, the Company, through a newly formed, wholly owned
subsidiary, Fisher Medical Corporation ("Fisher"), entered into an
Asset Purchase Agreement with Fisher Medical, LLC ("LLC"), a company
that develops, manufactures and distributes medical supplies and
equipment for hospitals, nursing homes and individuals. Under the
terms of the agreement, Fisher purchased all of the assets of LLC for
cash of $215,000. The acquisition resulted in goodwill of $82,415
which is being amortized on a straight-line basis over 20 years. This
acquisition has been accounted for under the purchase method of
accounting. Fisher financed this purchase from the Company's existing
$1,250,000 revolving line of credit.
Additionally, Fisher entered into Employment Agreements with the two
principals of LLC to continue developing, manufacturing and
distributing medical products of Fisher. In consideration for the
Employment Agreements, the two principals also entered into Non-
Disclosure and Non-Competition Agreements.
Fisher also entered into a five-year (with a five year renewal option)
Technology License Agreement with LLC, which conveyed the technology
developed by Trlby Innovative LLC of Torrington, Connecticut
("Trlby"). Under a 20-year Product Development and Technology
Transfer Agreement ("Agreement"), Trlby has and will continue to
develop certain medical supply products for LLC. In consideration for
this November 1999 Agreement, Trlby receives consulting fees of
$42,000 per year and a royalty of 5% of net sales,
subject to minimum amounts, from any products developed by them. The
minimum royalties consist of $24,000 for the first full calendar year
following the date of the first commercial introduction of the
product, $36,000 for the succeeding calendar year and $48,000 for each
calendar year thereafter.
Under the terms of the Fisher Medical LLC Technology License
Agreement, in addition to all royalties and fees due Trlby, Fisher
will pay a royalty of 5% of gross income to LLC during the five-year
term of the Technology License Agreement. The option to renew this
agreement for an additional five years requires Fisher to pay a fee of
20% of cumulative after tax earnings for any products developed and
sold during the initial five-year term of the Technology License
Agreement.
<PAGE>
If Fisher can develop, manufacture and distribute medical supplies and
equipment, the income and cash flow could have a material affect on
the operating results of Jayark. There can be no assurances that the
Company will be successful in this venture.
Impact of Inflation
Management of the Company believes that inflation has not
significantly impacted either net sales or net earnings during the
year ended April 30, 2000.
Effect of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities". In
May 1999, the FASB voted to delay the effective date of FAS 133 by one
year. The Company will be required to adopt FAS 133 for transactions
entered into for quarters in the fiscal year beginning after June 15,
2000. SFAS 133 requires that all derivative instruments be recorded
on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated
as part of the hedge transaction and the type of hedge transaction.
The ineffective portion of all hedges will be recognized in earnings.
The Company does not expect this standard to have a significant impact
on future financial statement disclosures.
Year 2000
The Company used both internal and external resources to identify,
correct, upgrade or replace and test its IT systems and embedded chip
equipment for year 2000 compliance. To date, the Company has not
experienced any material adverse consequences associated with the Year
2000 date change. The Company is not aware of any remaining
significant problems related to Year 2000 issues but is continuing to
monitor the status of suppliers and vendors. There can be no
assurance that the Company, or one of the entities it does business
with, will not experience a Year 2000 problem that could have a
material adverse effect on the Company.
Item 7A. Market Risk
None
Item 8. Financial Statements And Supplementary Data
The Report of Independent Certified Public Accountants, Financial
Statements and Notes to Consolidated Financial Statements filed as a
part of this report are listed in the accompanying Index to Financial
Statements and Schedules.
Item 9. Change In and Disagreement With Accountants on Accounting And
Financial Disclosure
None
<PAGE>
PART III
Item 10. Directors And Executive Officers Of The Registrant
Set forth below is a list of the directors, executive officers and key
employees of the Company and their respective ages as of June 30,
2000, and, as to directors, the expiration date of their current term
of office:
<TABLE>
<CAPTION>
CURRENT DIRECTORS
<S> <C> <C> <C> <C>
Term Director
Name Age Expires Position Presently Held Since
--------------------------------------------------------------------------------
David Koffman 41 2000 Chairman, President, Chief Executive 1983
Officer and Director
Frank Rabinovitz 57 2000 Executive Vice President, Chief 1989
Operating Officer, Director and
President of AVES
Robert C. Nolt 52 2001 Chief Financial Officer and Director 1998
Arthur G. Cohen 71 1999 Director 1990
Jeffrey P. Koffman 34 2002 Director 1999
</TABLE>
David L. Koffman was elected President and Chief Executive Officer of
the Company in December 1988. Prior to that time, he served as
Director and Vice President of the Company for over seven years.
Frank Rabinovitz was elected Executive Vice President, Chief Operating
Officer and Director of the Company in 1989. In addition, he is the
President of the Company's audiovisual subsidiary and has served in
this capacity for more than thirteen years, as well as in various
other executive and management capacities since 1980.
Robert C. Nolt is Chief Financial Officer and Director of the Company.
In addition, Mr. Nolt is Chief Financial Officer of Binghamton
Industries, Inc., a company controlled by the principal shareholders
of the Company. Prior to joining the Company, Mr. Nolt was Vice
President of Finance of RRT-Recycle America, Inc. Mr. Nolt is a
Certified Public Accountant with over 27 years of experience in the
Accounting field and has served in a number of executive positions.
Before joining RRT in 1993, Mr. Nolt was Chief Financial Officer for
the Vestal, NY based Ozalid Corporation.
Arthur G. Cohen has been a real estate developer and investor for more
than nine years. Mr. Cohen is a Director of Baldwin and Arlen, Inc.
Burton I. Koffman and Richard E. Koffman are parties to an agreement
with Arthur G. Cohen pursuant to which they have agreed to vote their
shares in favor of the election of Mr. Cohen to the Board of Directors
of the Company.
Jeffrey P. Koffman was elected Director of the Company in 1999. Mr.
Koffman has served as a Director of Apparel America, Inc. since June
1995 and Executive Vice-President of Apparel America, Inc. from June
1994 to February 1996. Mr. Koffman was appointed President of Apparel
America, Inc. in February 1996. Apparel America, Inc. filed for
protection from its creditors under Chapter 11 in 1998. Mr. Koffman
served as a financial analyst with Security Pacific from 1987 to 1989.
In 1989, Mr. Koffman became Vice-President of Pilgrim Industries and
in 1990, he became the President of that Company. From 1994 to
present, Mr. Koffman has served in an executive capacity with Tech
Aerofoam Products.
<PAGE>
Information Concerning Operations of the Board of Directors
The Executive Committee of the Board of Directors consists of Mr.
David L. Koffman (Chair) and Mr. Frank Rabinovitz. The function of
the Executive Committee is to exercise the powers of the Board of
Directors to the extent permitted by Delaware law. As a rule, the
Executive Committee meets to take action with respect to matters
requiring Board of Directors approval and which cannot await a regular
meeting of the Board or the calling of a special meeting. Under
Delaware law and the Company's By-laws, both the Board and Executive
Committee can act by unanimous written consent to all members.
The Stock Option Committee of the Board of Directors was created to
administer the Company's 1981 Incentive Stock Option Plan, as amended,
pursuant to resolution adopted November 24, 1981, giving it authority
to exercise powers of the Board with respect to the Plan. The Stock
Option Committee consists of Mr. Frank Rabinovitz and Mr. Robert Nolt.
The Audit Committee of the Board of Directors was created in 1991 to
administer and coordinate the activities and results of the annual
audit of the Company by independent accountants and to comply with
NASDAQ listing requirements. The Audit Committee is comprised of Mr.
Frank Rabinovitz and Mr. Robert Nolt.
The Compensation Committee of the Board of Directors was created in
1993 to administer and review compensation structure, policy and
levels of the Company. The Compensation Committee is composed of Mr.
Frank Rabinovitz and Mr. David Koffman.
Item 11. Executive Compensation
Set forth in the following table is certain information relating to
the approximate remuneration paid by the Company during the last three
fiscal years to the chief executive officer and each of the most
highly compensated executive officers whose total compensation
exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1,2,3)
<S> <C> <C> <C>
Annual
Compensation
Year Salary Bonus
David L. Koffman 2000 $ 81,000 --
Chairman, President 1999 141,750 --
and Chief Executive Officer 1998 162,000 --
Frank Rabinovitz 2000 $162,000 $50,000
Director, Executive Vice President, Chief 1999 162,000 50,000
Operating Officer, President of AVES 1998 162,000 50,000
</TABLE>
(1) Does not include the value of non-cash compensation to the named
individuals, which did not exceed the lesser of $50,000 or, 10% of
such individuals' total annual salary and bonus. The Company provides
a vehicle to each of the named executives for use in connection with
Company business but does not believe the value of said vehicles and
other non-cash compensation, if any, exceeds the lesser of $50,000 or
10% of the individual's total annual salary and bonus.
(2) The Company has entered into Split Dollar Insurance Agreements
with David L. Koffman and Frank Rabinovitz, pursuant to which the
Company has obtained insurance policies on their lives in the
approximate amounts of $5,743,400 and $497,700, respectively. The
premium is paid by the Company. Upon the death of the individual, the
<PAGE>
beneficiary named by the individual is entitled to receive the
benefits under the policy. The approximate amounts paid by the
Company during the fiscal year ended April 30, 2000 for this insurance
coverage were $0 and $25,373, respectively. Such amounts are not
included in the above table.
(3) The Company has accrued Mr. Koffman's 2000, 1999 and 1998 salary,
however, he has deferred payment until such time as the Company's
working capital position improves.
The following table sets forth-certain information relating to the
value of stock options at April 30, 2000:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Unexercised Value of Unexercised In-
Options at Fiscal Year End The-Money Options at
Fiscal Year End
-------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----- ----------- ------------- ---------- --------------
Frank Rabinovitz 10,000 0 $0 0
</TABLE>
Based on the $0.81 per share closing bid price of the common
stock on the NASDAQ Stock Exchange on April 30, 2000
Effective November 24, 1981 and approved at the annual stockholders
meeting in 1982, the 1981 Incentive Stock Option Plan (ISOP) was
adopted. An amendment to the ISOP was adopted on December 11, 1989.
This amendment increased the number of incentive stock options that
can be granted from 15,000 shares to 60,000 shares. The ISOP provides
for the granting to key employees and officers of incentive stock
options, as defined under current tax laws. The stock options are
exercisable at a price equal to or greater than the market value on
the date of the grant. No stock options were granted during the
fiscal year ended April 30, 2000.
Effective September 15, 1994 and approved at the annual stockholders
meeting in 1994, the 1994 NonEmployee Director Stock Option Plan (the
"Director Plan") was adopted and 20,000 shares of the Company's common
stock reserved for issuance under the Director Plan. The Director
Plan provides for the automatic grant of nontransferable options to
purchase common stock to nonemployee directors of the Company; on the
date immediately preceding the date of each annual meeting of
stockholders in which an election of directors is concluded, each
nonemployee then in office will receive options exercisable for 500
shares (or a pro rata share of the total number of shares still
available under the Director Plan). No option may be granted under
the Director Plan after the date of the 1998 Annual Meeting of
Stockholders.
Options issued pursuant to the Director Plan are exercisable at an
exercise price equal to not less than 100% of the fair market value
(as defined in the Director Plan) of shares of common stock on the day
immediately preceding the date of the grant. Options are vested and
fully exercisable as of the date of the grant. Unexercised options
expire on the earlier of (i) the date that is ten years from the date
on which they were granted, (ii) the date which is three calendar
months from the date of the termination of the optionee's directorship
for any reason other than death or disability (as defined in the
Director Plan), or (iii) one year from the date of the optionee's
disability or death while serving as a director.
The Director Plan became effective immediately following the 1994
Annual Meeting of Shareholders. Each nonemployee director in office
on the date immediately preceding the date of each year's annual
meeting will receive options exercisable for 500 shares of common
stock.
<PAGE>
During fiscal year ended April 30, 2000, no director options were
granted to nonemployee directors.
Report of the Compensation Committee of the Board of Directors on
Executive Compensation
Except pursuant to its ISOP and the Director Plan, the Company does
not have any formal annual incentive program, cash or otherwise, nor
does it make annual grants of stock options. Cash bonuses and stock
options, including bonuses and options paid to executive officers,
have generally been awarded based upon individual performance,
business unit performance and corporate performance, in terms of cash
flow, growth and net income as well as meeting budgetary, strategic
and business plan goals.
The Company is committed to providing a compensation program that
helps attract and retain the best people for the business. The
Company endeavors to achieve symmetry of compensation paid to a
particular employee or executive and the compensation paid to other
employees or executives both inside the Company and at comparable
companies.
The remuneration package of the Chief Executive Officer includes a
percentage bonus based on the Company's profitable performance.
Item 12. Security Ownership Of Certain Beneficial Owners And
Management
The following table sets forth as of July 3, 2000, the holdings of the
Company's Common Stock by those persons owning of record, or known by
the Company to own beneficially, more than 5% of the Common Stock, the
holdings by each director or nominee, the holdings by certain
executive officers and by all of the executive officers and directors
of the Company as a group.
<TABLE>
<CAPTION>
PRINCIPAL STOCKHOLDERS
<S> <C> <C> <C>
Amount and Nature
of Beneficial Note % of
Name and Address of Beneficial Owner Ownership (1) Class
------------------------------------ ----------------- ----- -----
David L. Koffman
300 Plaza Drive, Vestal,NY 13850 1,283,033 46.4%
Vulcan Properties, Inc.
505 Eighth Ave Suite 300, New York, NY 10018 292,189 10.6%
Burton I. Koffman
300 Plaza Drive, Vestal, NY 13850 185,819 2,3 6.7%
Ruthanne Koffman
300 Plaza Drive, Vestal, NY 13850 183,065 6.6%
Jeffrey P. Koffman
150 East 52nd Street, New York, NY 10022 146,102 5.3%
Frank Rabinovitz
6116 Skyline Drive, Houston, TX 77057 68,426 2.5%
Robert C. Nolt
300 Plaza Drive, Vestal, NY 13850 10,000 0.4%
All Directors & Exec Officers as a group 1,507,561 54.5%
</TABLE>
1.All shares are owned directly by the individual named, except as
set forth herein. Includes actual shares beneficially owned and
Employee and Director Stock Options exercisable within 60 days. David
L. Koffman and Jeffrey P. Koffman are sons of Burton I. Koffman.
Ruthanne Koffman is the wife of Burton I. Koffman.
<PAGE>
2.Excludes 3,700 shares owned by a charitable foundation of which
Burton I. Koffman is President and Trustee.
3.Includes 53,700 shares owned as tenants in common by brothers
Richard E. Koffman and Burton I. Koffman.
Item 13. Certain Relationships And Related Transactions
Except as noted share amounts are reported as they were prior to the
reverse stock split.
In September 1998, the Company offered to each stockholder, the right
to purchase, pro rata, two shares of Common Stock at a price of $.10
per share. The Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in order to register such
rights to purchase Common Stock, under the Securities Act of 1933, as
amended.
The Rights Offering expired on October 30, 1998. The total offering
of 18,442,398 shares was fully subscribed with 111,600 shares
purchased with cash and the balance subscribed by conversion of debt.
The Company issued the new shares in November 1998. The conversion of
debt to stock in conjunction with the Rights Offering resulted in a
$1,000,000 reduction in notes payable to related parties, a $761,000
reduction in subordinated debt, and a $72,000 reduction in accrued
interest. The end result was $1,794,000 of equity enhancement.
The Koffman Group, which consists of David Koffman, Chairman of the
Board of Directors and President of the Company, Burton Koffman,
Richard Koffman, Milton Koffman, Jeffrey Koffman, Sara Koffman,
Ruthanne Koffman, Elizabeth Koffman, Steven Koffman, and three
entities controlled by members of the Koffman family, agreed to
acquire all shares not purchased by other stockholders on Primary
Subscription. As a result, adjusted to reflect the reverse stock
split, the Koffman Group beneficially owns 2,044,158 shares of Common
Stock, which represents approximately 74% of the Common Stock
outstanding.
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-
K
(a) Documents filed as part of this report:
1. And 2. Financial Statements.
The Report of Independent Certified Public Accountants,
Financial Statements and Notes to Consolidated Financial
Statements which are filed as a part of this report are listed
in the Index to Financial Statements.
Note - no financial statement schedules were required to be
filed.
3. Exhibits, which are filed as part of this report, are
listed in the accompanying Exhibit Index.
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JAYARK CORPORATION
By:
/s/ David L. Koffman Chairman of the Board and Director July 21, 2000
DAVID L. KOFFMAN
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the date indicated.
/s/ David L. Koffman Chairman of the Board, President,
DAVID L. KOFFMAN Chief Executive Officer and Director July 21, 2000
/s/ Frank Rabinovitz Executive Vice President, Chief
FRANK RABINOVITZ Operating Officer and Director July 21, 2000
/s/ Robert C. Nolt Chief Financial Officer and Director July 21, 2000
ROBERT C. NOLT
/s/ Arthur G. Cohen Director July 21, 2000
ARTHUR G. COHEN
/s/ Jeffrey P. Koffman Director July 21, 2000
JEFFREY P. KOFFMAN
<PAGE>
JAYARK CORPORATION AND SUBSIDIARIES
Index Page
-------------------------------------------------------------------------------
Consolidated Financial Statements:
Report of Independent Certified Public Accountants 21
Balance Sheets - April 30, 2000 and 1999 22
Statements of Operations - For the years ended April 30, 2000, 1999 and 1998 23
Statements of Stockholders' Deficit -
For the years ended April 30,2000, 1999 and 1998 24
Statements of Cash flows - For the years ended April 30, 2000, 1999 and 1998 25
Notes to Consolidated Financial Statements 26-35
<PAGE>
Report of Independent Certified Public Accountants
To the Shareholders and Directors
Jayark Corporation
Vestal, New York
We have audited the accompanying consolidated balance sheets of Jayark
Corporation and Subsidiaries as of April 30, 2000 and 1999, and the
related consolidated statements of operations, changes in
stockholders' deficit, and cash flows for each of the three years in
the period ended April 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these 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 audit
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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of
the financial statements. 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 financial position
of Jayark Corporation and Subsidiaries as of April 30, 2000 and 1999,
and the results of their operations and their cash flows for each of
the three years in the period ended April 30, 2000 in conformity with
generally accepted accounting principles.
BDO Seidman, LLP
New York, New York
July 10, 2000
<PAGE>
Jayark Corporation and Subsidiaries
Consolidated Balance Sheets
April 30, 2000 and 1999
<TABLE>
<CAPTION>
<S> <C> <C>
4/30/00 4/30/99
------- -------
Assets
Current Assets
Cash and Cash Equivalents $530,540 $209,724
Accounts Receivable-Trade, less allowance for doubtful
accounts of $76,000 and $59,000, respectively 1,384,212 1,818,214
Inventories 480,460 337,914
Other Current Assets 89,915 46,247
------- -------
Total Current Assets 2,485,127 2,412,099
Non Current Assets
Property & Equipment, less accumulated
depreciation and amortization 433,761 120,410
Goodwill and Other Intangibles less accumulated
amortization of $518,000 and $485,000, respectively 320,238 247,382
------- -------
Total Non-Current Assets 753,999 367,792
------- -------
Total Assets $3,239,126 $2,779,891
======= =======
Liabilities
Current Liabilities
Notes Payable & Line of Credit $368,954 $0
Current Portion of Long Term Debt 161,332 161,332
Accounts Payable 492,375 689,209
Accrued Expenses 50,000 253,796
Accrued Salaries 445,640 392,420
Accrued Interest 504,510 504,510
Other Current Liabilities 83,363 39,918
------- -------
Total Current Liabilities 2,106,174 2,041,185
Long Term Debt 1,278,571 1,424,229
------- -------
Total Liabilities 3,384,745 3,465,414
======= =======
Stockholders' Deficit
Common Stock of $.01 Par Value, Authorized 30,000,000
Shares, Issued: 2,773,860 Shares 27,739 27,739
Treasury Stock, at cost, 7,500 shares (750) --
Additional Paid-In Capital 12,598,980 12,598,980
Deficit (12,771,588) (13,312,242)
------- -------
Total Stockholders' Deficit (145,619) (685,523)
------- -------
Total Liabilities & Stockholders' Deficit $3,239,126 $2,779,891
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
Jayark Corporation and Subsidiaries
Consolidated Statements of Operations
For the Years Ended April 30, 2000, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 1999 1998
--------- --------- ---------
Net Revenues $13,197,866 $15,288,215 $13,604,558
Cost of Revenues 10,869,794 12,998,508 11,445,669
--------- --------- ---------
Gross Margin 2,328,072 2,289,707 2,158,889
Selling, General and Administrative 1,897,502 1,754,169 1,717,242
--------- --------- ---------
Operating Income 430,570 535,538 441,647
Other Income (Expense):
Net Interest Expense (96,248) (283,165) (365,655)
Gain on Sale of Assets 7,800 203,432 --
--------- --------- ---------
Pre Tax Earnings 342,122 455,805 75,992
Provision for Income Taxes 11,144 10,000 --
--------- --------- ---------
Income from Continuing Operations 330,978 445,805 75,992
--------- --------- ---------
Income from Discontinued Operations 209,676 -- --
--------- --------- ---------
Net Income $540,654 $445,805 $75,992
========= ========== =========
Basic and Diluted Earnings per
Common Share:
Continuing Operations $.12 $.24 $.08
Discontinued Operations $.08 $-- $--
--------- --------- ---------
Net Income $.20 $.24 $.08
========= ========== =========
Weighted Average Common Shares:
Basic and Diluted 2,766,360 1,836,661 922,120
========= ========== =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
Jayark Corporation and Subsidiaries
Consolidated Statements of Stockholders' Deficit
For the Years Ended April 30, 2000, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Common Paid In Treasury Total
Stock Capital Deficit Stock Deficit
-------- -------- -------- -------- --------
Balance at April 30, 1997 276,711 10,555,770 (13,834,039) -- (3,001,558)
Net Income -- -- 75,992 -- 75,992
-------- -------- -------- -------- --------
Balance at April 30, 1998 276,711 10,555,770 (13,758,047) -- (2,925,566)
Decreased Par Value to
$.01 from $.30 per Share (267,415) 267,415 -- -- --
Issue of 1,844,240
shares in Offering 18,443 1,775,795 -- -- 1,794,238
Net Income -- -- 445,805 -- 445,805
-------- -------- -------- -------- --------
Balance at April 30, 1999 27,739 12,598,980 ( 13,312,242) -- (685,523)
Purchase of Treasury Stock -- -- -- (750) (750)
Net Income -- -- 540,654 -- 540,654
-------- -------- -------- -------- --------
Balance at April 30, 2000 $27,739 $12,598,980 $(12,771,588) $(750) $(145,619)
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
Jayark Corporation and Subsidiaries
Consolidated Statement of Cash Flows
For the Years Ended April 30, 2000, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 1999 1998
-------- -------- --------
Cash Flows From Operating Activities:
Net Income $540,654 $445,805 $75,992
Adjustments to Reconcile Earnings to Cash From Operating Activities:
Depreciation and Amortization
of Property and Equipment 82,550 109,353 79,542
Amortization of Goodwill and Other Intangibles 32,498 21,360 21,360
Miscellaneous Write Off -- (26,027) --
Gain on Disposition of Assets (7,800) (203,432) --
Changes In Assets and Liabilities, net of
acquisition of Fisher in 2000:
(Increase) Decrease in Accounts Receivable Net 434,001 (94,381) 114,752
(Increase) Decrease in Inventories (102,991) (66,350) 141,282
Increase in Other Current Assets (28,663) (8,924) (14,474)
Decrease in Accounts Payable (196,834) (134,417) (24,141)
Increase (Decrease) in Accrued Expenses (203,796) 56,605 (272,387)
Increase in Accrued Salaries 53,221 93,687 192,202
Increase in Accrued Interest -- 183,239 168,000
Increase (Decrease) in Other Liabilities 43,445 (55,503) (96,093)
-------- -------- --------
Net Cash Provided By Operating Activities 646,285 321,015 386,035
Cash Flows From Investing Activities:
Purchase of Assets -- (724,625) --
Sale of Assets 7,800 884,925 --
Purchases of Property and Equipment (320,377) (91,987) (51,636)
Business Acquisition, net of cash acquired (215,000) -- --
Purchases of Intangibles (20,438) -- --
-------- -------- --------
Net Cash Provided By (Used In) Investing Act. (548,015) 68,313 (51,636)
Cash Flows From Financing Activities:
Payment of Long Term Debt -- -- (8,702)
Proceeds From Issuance of Notes Payable 368,955 -- 46,021
Payments of Notes Payable
& Subordinated Debentures (145,659) (379,622) (200,000)
Purchase of Treasury Stock (750) -- --
Proceeds From Issuance of Common Stock -- 11,160 --
Costs Paid for Issuance of Common Stock -- (50,000) --
-------- -------- --------
Net Cash Provided By (Used In) Financing Act. 222,546 (418,462) (162,681)
Net Incr (Decr) in Cash and Cash Equivalents 320,816 (29,134) 171,718
Cash & Cash Equivalents at Beginning of Year 209,724 238,858 67,140
-------- -------- --------
Cash & Cash Equivalents at End of Year $530,540 $209,724 $238,858
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
Notes to Consolidated Financial Statements
April 30, 2000, 1999 and 1998
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Jayark
Corporation and its wholly owned subsidiaries (the "Company"). All
material intercompany profits, transactions and balances have been
eliminated.
Inventories
Inventories comprise finished goods and are stated at the lower of
cost (first in, first out method) or market value.
Property and Equipment, Depreciation and Amortization
Property and equipment are recorded at cost. Depreciation and
amortization are computed using the straight-line method over the
estimated useful lives of the assets, ranging from approximately 3 to
20 years. On sale or retirement, the cost of assets sold or retired
and related accumulated depreciation or amortization is eliminated
from the accounts and any resulting gain or loss is included in
operations. Maintenance and repairs are expensed as incurred;
expenditures for major renewals and betterments are capitalized and
amortized by charges to operations.
Intangibles
The accounts of purchased companies are included in the consolidated
financial statements from the dates of acquisition. The excess of
cost over the fair value of net assets of businesses acquired is being
amortized using the straight-line method over a 20 to 40-year period
commencing with the dates of acquisition.
The cost of patents obtained for some of the Company's products are
being amortized over the life of the patent.
Revenue Recognition
Revenues are recorded when products are shipped. Allowances are
recorded for estimated returns and losses.
Income Taxes
The Company follows the asset and liability method required by
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 109 in accounting for income taxes. Deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
<PAGE>
The effect of deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. Deferred tax assets are reduced by a valuation
allowance when there is uncertainty as to the ultimate realization of
the asset.
Earnings per Share
In the third quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings per Share", which
requires the presentation of both basic and diluted earning per share
on the face of the Statements of Operations and the restatement of all
prior periods earnings per share amounts. Assumed exercise of options
are not included in the calculation of diluted earnings per share for
the fiscal years ended April 30, 2000, 1999 and 1998 since the effect
would be antidilutive due to the option price being greater than the
average market price. Accordingly, basic and diluted net earnings per
share do not differ for any period presented.
The following table summarizes securities that were outstanding as of
April 30, 2000, 1999 and 1998 but not included in the calculation of
diluted net earnings per share because such shares are antidilutive.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the year ending April 30, 2000 1999 1998
-------------------------------------------------------------------
Stock Options 10,500 10,500 24,250
Convertible Subordinated Debentures -- -- 93,333
Warrants -- -- 416,667
</TABLE>
Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers
all highly liquid investments with original maturities of three months
or less to be cash equivalents.
Use of Estimates
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.
Long-Lived Assets
Long-lived assets, such as property, equipment, and goodwill are
evaluated for impairment when events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable
through the estimated undiscounted future cash flows from the use of
these assets. When any such impairment exists, the related assets
will be written down to their fair value. This policy is in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed
Of", which was adopted on May 1, 1996. No write-downs have been
necessary through April 30, 2000.
Stock-Based Compensation
The Company uses the intrinsic value method for accounting for stock
compensation plans, as permitted by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", which
<PAGE>
was adopted on May 1, 1996. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price
of the Company's stock at the date of the grant over the amount the
employee must pay to acquire the stock.
Effect of new accounting pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities". In
May 1999, the FASB voted to delay the effective date of FAS 133 by one
year. The Company will be required to adopt FAS 133 for transactions
entered into for quarters in the fiscal year beginning after June 15,
2000. SFAS 133 requires that all derivative instruments be recorded
on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated
as part of the hedge transaction and the type of hedge transaction.
The ineffective portion of all hedges will be recognized in earnings.
The Company does not expect this standard to have a significant impact
on future financial statement disclosures.
(2) Business
The Company operates in three reportable business segments as follows:
The Company's audio-visual subsidiary, AVES Audio Visual Systems, Inc.
("AVES"), distributes and
rents a broad range of audio, video and presentation equipment, and
supplies to businesses, churches, hospitals, hotels and educational
institutions
MED Services Corp. ("Med") finances the manufacture, sales and rental
of medical equipment. It had one customer in fiscal 1999, Vivax
Medical Corporation, a company that manufactures, sells and rents
durable medical equipment to hospitals, nursing homes and individuals.
Fisher Medical Corporation ("Fisher") is in the process of developing
and manufacturing medical supplies and equipment. Its customer base
includes hospitals, nursing homes and individuals.
For the years ended April 30, 2000, 1999 and 1998, the net assets, net
revenues and net income of the Company are attributable primarily to
the operations of AVES. However, in the current year the acquisition
of Fisher (Note 15) resulted in net revenues of $0 and a net loss of
approximately $195,000 for the four months since acquisition.
Fisher's net assets at April 30, 2000 are approximately $47,000.
(3) Related Party Transactions
The Company has a subordinated note (Note 7) with a related party
amounting to $201,113 and $232,228 at April 30, 2000 and 1999,
respectively. The annual interest rate was reduced from 12% to 8% on
November 1, 1998. The new note provides for interest payments due
quarterly beginning January 31, 1999 and annual principal payments in
the amount of $23,228 starting December 31, 1999 with the balance due
on December 31, 2004. Interest expense relating to subordinated notes
payable to related parties was $16,213, $49,224 and $95,485 in 2000,
1999 and 1998, respectively.
The Company had a long term note payable to a related party amounting
to $895,858 and $972,298 at April 30, 2000 and 1999, respectively.
The interest rate on the $895,858 is 7.5%. The maturity date of the
note has been extended to December 31, 2004. Interest expense
relating to this note for the years ended April 30, 2000, 1999 and
1998 was $64,438, $134,986 and $172,139, respectively.
<PAGE>
Accrued interest to related parties for the years ended April 30, 2000
and 1999 was $323,223.
Accrued salaries for the years ended April 30, 2000 and 1999, are for
one of the Company's executive officers.
(4) Property and Equipment
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
April 30, April 30,
2000 1999
--------- ---------
Machinery and equipment $202,435 $28,048
Furniture and fixtures 110,414 48,601
Leasehold improvements 86,728 12,290
Automobiles and trucks 182,098 182,862
Rental and demonstration equipment 181,017 157,939
--------- ---------
Total property and equipment 762,692 429,740
Less accumulated depreciation and amortization 328,931 309,330
--------- ---------
Net property and equipment $433,761 $120,410
========= =========
</TABLE>
(5) Lines of Credit
In March 1997, AVES negotiated a line of credit with BSB Bank & Trust,
Binghamton, New York. In January 2000, the $1,250,000 line of credit
was renewed and divided between AVES and Med. The line of credit now
permits AVES to borrow up to an aggregate of $750,000 and Med up to an
aggregate of $500,000. Med's line is due and payable on January 31,
2001, and has an annual interest rate of 8.75%. Med's line is
guaranteed by AVES. AVES' line of credit is due and payable on March
1, 2001, and has an annual interest rate of 8.75% annually. AVES'
line of credit is secured by their accounts receivable and inventory.
There are no financial covenants associated with the lines of credit.
At April 30, 2000 and 1999, $368,954 and $0, respectively, were
outstanding on the above lines of credit in total.
(6) Long Term Debt
Long term debt is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Year ended April 30, 2000 1999
---------- ---------
Notes Payable to Related Parties (Note 3) $895,858 $972,298
Subordinated Debentures (Notes 3 and 7) 544,045 613,263
---------- ---------
Total Long Term Debt 1,439,903 1,585,561
Less: Current Maturities of Long Term Debt 161,332 161,332
---------- ---------
Long Term Debt, excluding current maturities $1,278,571 $1,424,229
========== =========
</TABLE>
(7) Subordinated Debentures
On December 19, 1989, the Company issued $2,000,000 of 12% convertible
subordinated debentures to affiliates of the Company due December
1995, and later extended to December 1999. Through April 30, 1998,
the Company had retired $600,000 of debentures. The conversion of
debt to stock in conjunction with the common stock Rights Offering
(Note 13), resulted in a $761,000 reduction in subordinated
<PAGE>
debentures. On November 1, 1998, new notes were issued for the
remaining $613,263 in subordinated debt reducing the annual interest
rate from 12% to 8%. The new notes provide for interest payments due
quarterly beginning January 31, 1999 and annual principal payments in
the amount of $61,332 starting December 31, 1999 with the balance due
on December 31, 2004. The new subordinated debenture agreements have
no conversion rights. As of April 30, 2000, there was $544,045
outstanding on the subordinated debentures.
(8) Income Taxes
Income tax expense (benefit) attributable to income before income
taxes consists of:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year ended April 30, Current Deferred Total
------------------------------------------------------
2000 $11,144 $0 $11,144
1999 $10,000 $0 $10,000
1998 $0 $0 $0
</TABLE>
At April 30, 2000, the Company had, for federal tax reporting
purposes, net operating loss carryforwards of approximately
$11,100,000, expiring in years through 2013.
The actual tax expense (benefit) differs from the "expected" tax
expense (computed by applying the U.S. Corporate rate of 34%) in each
of the 3 years ended April 30, 2000 primarily as a result of valuation
allowances against potential deferred tax assets. In fiscal 2000
alternative minimum tax of $11,144 was incurred due to utilization of
net operating loss carryforwards.
Deferred tax assets were approximately $4,100,000 and $5,160,000 as of
April 30, 2000 and 1999, respectively, arising primarily as a result
of net operating losses. Valuation allowances of $4,100,000 and
$5,160,000 as of April 30, 2000 and 1999, respectively, offset the
deferred tax assets, resulting in net deferred tax assets of $0 as of
April 30, 2000 and 1999.
(9) Leases
The Company has several operating leases that expire at various dates
ranging through August 2004. Future minimum lease payments related to
operating leases are detailed as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ending April 30, Operating leases
---------------------------------------
2001 $101,650
2002 48,140
2003 48,000
2004 48,000
2005 16,000
---------------------------------------
Total minimum lease payments $261,790
</TABLE>
Total rental expense for operating leases was $74,490, $62,430 and
$72,559 for the years ended April 30, 2000, 1999, and 1998,
respectively.
<PAGE>
(10) Stock Options
At April 30, 2000, the Company had two stock options plans which are
described below. The Company applies APB Opinion 25 - "Accounting for
Stock Issued to Employees", and related Interpretations in accounting
for the plans. In terms of APB Opinion 25, when the exercise price of
the Company's employee stock options equals the market price of the
underlying stock on the date of the grant, no compensation cost is
recognized.
The Company's Incentive Stock Option Plan ("ISOP"), as amended, allows
for the granting of 60,000 shares of the Company's common stock. The
ISOP provides for the granting to key employees and officers of
incentive stock options, as defined, under current tax laws. The
stock options are exercisable at a price equal to or greater than the
market value on the date of the grant.
Option activity under the ISOP is as follows (adjusted to reflect
reverse stock split):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Stock Option - ISOP Options Exercise Price Range Weighted Average
---------------------------------------------------------------------
Outstanding 4/30/97 24,250 $4.38 - $10.50 $5.00
Granted --
Exercised --
Terminated/Expired --
---------------------------------------------------------------------
Outstanding 4/30/98 24,250 $4.38 - $10.50 $5.00
Granted --
Exercised --
Terminated/Expired (13,750) -- $5.50
---------------------------------------------------------------------
Outstanding 4/30/99 10,500 $4.38 $4.38
Granted --
Exercised --
Terminated/Expired --
---------------------------------------------------------------------
Outstanding 4/30/00 10,500 $4.38 $4.38
Exercisable at year end:
April 30, 1998 24,250 $4.38 - $10.50 $5.00
April 30, 1999 10,500 $4.38 $4.38
April 30, 2000 10,500 $4.38 $4.38
Available for future grants:
April 30, 1998 35,750
April 30, 1999 49,500
April 30, 2000 49,500
</TABLE>
The following summarizes information regarding stock options
outstanding at April 30, 2000.
Number Outstanding at 4/30/99 10,500
Weighted Average remaining contractual life (years) 3.6
Weighted Average Exercise Price $4.38
<PAGE>
Effective September 17, 1994 and approved at the annual stockholders'
meeting in 1994, the 1994 Non-Employee Director Stock Option Plan (the
"Director's Plan") was adopted and 20,000 shares of the Company's
Common Stock reserved for issuance under the Director's Plan. The
Director's Plan provides for the automatic grant of nontransferable
options to purchase common stock to nonemployee directors of the
Company, on the date immediately preceding the date of each annual
meeting of stockholders in which an election of directors is
concluded. Each nonemployee director then in office will receive
options exercisable for 500 shares (or a pro rata share of the total
number of shares still available under the Director's Plan). No
option may be granted under the Director's Plan after the date of the
1998 annual meeting of stockholders.
Options issued pursuant to the Director's Plan are exercisable at an
exercise price equal to not less than 100% of the fair market value
(as defined in the Director's Plan) of shares of Common Stock on the
day immediately preceding the date of the grant. Options are vested
and fully exercisable as of the date of the grant. Unexercised
options expire on the earlier of (i) the date that is ten years from
the date on which they were granted, (ii) the date which is three
calendar months from the date of the termination of the optionee's
directorship for any reason other than death or disability (as defined
in the Director's Plan), or (iii) one year from the date of the
optionee's disability or death while serving as a director.
Option activity under the Plan is as follows (adjusted to reflect
reverse stock split):
<TABLE>
<S> <C> <C> <C> <C>
Exercise Weighted Options
Stock Option - ISOP Options Price Range Average Exercisable
-------------------------------------------------------------------------
Outstanding 4/30/97 2,500 $4.90 $4.90 2,500
Granted --
Terminated/Expired --
-------------------------------------------------------------------------
Outstanding 4/30/98 2,500 $4.90 $4.90 2,500
Granted --
Terminated/Expired (2,000)
-------------------------------------------------------------------------
Outstanding 4/30/99 500 $4.90 $4.90 500
Granted --
Terminated/Expired --
-------------------------------------------------------------------------
Outstanding 4/30/99 500 $4.90 $4.90 500
-------------------------------------------------------------------------
</TABLE>
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock - Based Compensation", requires the Company to
provide pro forma disclosure of net income (loss) and earnings (loss)
per as if the optional fair value method had been applied to determine
compensation costs for the Company's Stock option plans. Since no
options were granted in the years ended April 30, 2000, 1999 and 1998,
no pro forma disclosures are applicable.
(11) Financial Instruments
The carrying amounts of financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and notes payable
approximated fair value as of April 30, 2000 due to the short maturity
of these items. The fair value of the convertible debentures is not
reasonably determinable.
(12) Common Stock
In July 1998 the Company amended its Certificate of Incorporation
increasing its authorized Common Stock to 30,000,000 shares and
decreasing the par value of its Common Stock from $.30 to $.01 per
share.
<PAGE>
At a meeting of shareholders held on November 22, 1999, the
shareholders approved an amendment to Jayark's Certificate of
Incorporation providing a one for ten reverse stock split. On
December 2, 1999, the Company filed a Certificate of Amendment with
the Delaware Secretary of State to effect the one for ten reverse
stock split. On January 7, 2000, the "Effective Time" or "Record
Date", each ten (10) issued and outstanding shares of Common Stock of
the Corporation, par value $.01 per share, were automatically
converted into one (1) validly issued, fully paid and nonassessable
share of Common Stock of the Corporation, par value $.01 per share.
To avoid the existence of fractional shares of common stock,
stockholders who would otherwise have been entitled to receive
fractional shares of common stock equal to one-half or more received
one whole share. No shares or scrip were issued to holders in respect
of any fraction less then one-half. All per share and weighted
average share amounts have been restated to reflect this reverse stock
split.
(13) Common Stock Rights Offering
During fiscal 1999 the Company issued to its shareholders rights to
purchase shares of the Company's $.01 par value Common Stock. The
subscription price of $.10 per share was good for an aggregate of up
to 18,442,398 shares prior to the reverse stock split. The Common
Stock could have been purchased either with cash or by tendering to
the Company debt of the Company in a principal amount equal to the
subscription price.
The primary shareholders of the Company chose to participate in the
offering and as such all offered shares were issued. In lieu of cash,
these shareholders tendered debt of the Company in exchange for the
shares. As a result of these transactions, the Company effectively
extinguished approximately $1,000,000 of notes payable to related
parties (Note 3), $761,000 of subordinated debentures (Note 7) and
$72,000 of accrued interest.
The shareholders who participated in the offering were primarily
related parties and as such the resulting gains and losses from the
extinguishment of debt were recorded as additional paid in capital in
the Statement of Stockholders' Deficit.
<PAGE>
(14) Statement of Cash Flows
<TABLE>
<CAPTION
<S> <C> <C> <C>
Year Ended April 30, 2000 1999 1998
-----------------------------------------------------------------------------
Interest Paid $120,159 $142,939 $87,626
Taxes Paid 33,001 -- --
Non-Cash Transactions Relating to Financing:
Extinguishment of notes payable to related parties
in exchange for Common Stock of the Company $-- $1,000,000 $--
Reduction of convertible subordinated debentures
in exchange for Common Stock of the Company -- 760,710 --
Interest previously accrued exchanged for
Common Stock of the Company -- 72,370 --
In Conjunction with business transactions, the
Company used cash as follows:
Fair Value of assets acquired, excluding cash $215,000 $-- $--
Less liab assumed and created upon acquisition -- -- --
-----------------------------------------------------------------------------
Net cash paid $215,000 $-- $--
</TABLE>
(15) Business Acquisition
On January 5, 2000, the Company entered into an Asset Purchase
Agreement with Fisher Medical, LLC ("LLC"), a company that develops,
manufactures and distributes medical supplies and equipment for
hospitals, nursing homes and individuals. Under the terms of the
agreement, Fisher purchased all of the assets of LLC for cash of
$215,000. The acquisition resulted in goodwill of $82,415 which is
being amortized on a straight-line basis over 20 years. This
acquisition has been accounted for under the purchase method of
accounting.
Additionally, Fisher entered into Employment Agreements with the two
principals of LLC to continue developing, manufacturing and
distributing medical products of Fisher. In consideration for the
Employment Agreements, the two principals also entered into Non-
Disclosure and Non-Competition Agreements.
Fisher also entered into a five-year (with a five year renewal option)
Technology License Agreement with LLC, which conveyed the technology
developed by Trlby Innovative LLC of Torrington, Connecticut
("Trlby"). Under a 20-year Product Development and Technology
Transfer Agreement ("Agreement"), Trlby has and will continue to
develop certain medical supply products for LLC. In consideration for
this November 1999 Agreement, Trlby receives consulting fees of
$42,000 per year and a royalty of 5% of net sales,
subject to minimum amounts, from any products developed by them. The
minimum royalties consist of $24,000 for the first full calendar year
following the date of the first commercial introduction of the
product, $36,000 for the succeeding calendar year and $48,000 for each
calendar year thereafter.
Under the terms of the Fisher Medical LLC Technology License
Agreement, in addition to all royalties and fees due Trlby, Fisher
will pay a royalty of 5% of gross income to LLC during the five-year
<PAGE>
term of the Technology License Agreement. The option to renew this
agreement for an additional five years requires Fisher to pay a fee of
20% of cumulative after tax earnings for any products developed and
sold during the initial five-year term of the Technology License
Agreement.
If Fisher can develop, manufacture and distribute medical supplies and
equipment, the income and cash flow could have a material affect on
the operating results of Jayark. There can be no assurances that the
Company will be successful in this venture.
(16) Discontinued Operations
In fiscal 2000, the Company wrote-off accrued expenses in the amount
of $209,676, related to the abandonment of the Company's investment in
LCL International Traders, Inc. in 1996 and the discontinuance of
Rosalco, Inc. in 1997. Accordingly, the amount has been classified as
income from discontinued operations.
<PAGE>
Exhibit Index
3(1) Certificate of Incorporation of the Company. Incorporated
herein by reference to the Company's
Proxy Statement for its 1991 Annual Meeting of Shareholders,
Exhibit B thereto.
3(2) Bylaws of the Company. Incorporated herein by reference to
the Company's Proxy Statement
for its 1991 Annual Meeting of Shareholders, Exhibit C thereto.
4(1) Specimen Certificate of Common Stock, par value $0.30 per share,
incorporated herein by
reference from Registration Statement on Form S-1, File Number 2-
18743, Exhibit 4 thereto.
4(2) 12% Convertible Subordinated Debenture due 1994,
incorporated herein by reference to the
Report on Form 8-K filed January 4, 1990, Exhibit 28(a) thereto.
4(3) Registration rights agreement dated as of December 20, 1989, by
and between the Company and
Rosalco, Inc., incorporated herein by reference to the Report on
Form 8-K filed January 4, 1990, Exhibit 28(c) thereto.
10(1)*1981 Incentive Stock Option Plan, as amended as of December
15, 1989, incorporated herein by
reference to the Annual Report on Form 10-K for the year ended
April 30, 1990, Exhibit 10(1)
thereto.
10(2) Notes and Loan and Security Agreements (Inventory & Accounts
Receivable) each dated as of
January 20, 1992, between Jayark Corporation, AVES Audio Visual
Systems, Inc., Rosalco, Inc.,
Rosalco Woodworking, Inc., Diamond Press Company, and State
Street Bank & Trust Company
of Boston, Massachusetts, incorporated herein by reference from
the Annual Report on Form
10-K for the year ended April 30, 1992, Exhibit 10(3) thereto.
10(3) Letter Agreement dated December 6, 1989, among Arthur Cohen,
Burton I. Koffman, and
Richard E. Koffman. Incorporated herein by reference to the
Annual Report on Form 10-K for
the year ended April 30, 1990, Exhibit 10(3) thereto.
10(4) Indemnity escrow Agreement dated as of December 20, 1989, by
and between the Company,
Rosalco, Inc. and certain individuals named therein, incorporated
herein by reference to the
Report on Form 8-K filed January 4, 1990, Exhibit 28(c) thereto.
10(5) Factoring Agreements dated as of February 7, 1992, by and
between the Company, Pilgrim Too
Sportswear, Inc., J.F.D. Distributors, Inc., and others named
therein, and Barclays Commercial
Corporation, incorporated herein by reference to the Annual
Report on Form 10-K for the year
ending April 30, 1992, Exhibit 10(10) thereto.
10(6) Diamond Press Asset Sale and Purchase Agreement dated as of
November 23, 1992 by and
between the Company and Harstan, Inc., incorporated herein by
reference to the Company's
Form 8-K, as amended, as of November 23, 1992, Exhibit 2 thereto.
<PAGE>
10(7) Asset Sale and Lease Termination Agreement, by and between
Pilgrim Too Manufacturing
Company, Inc., New Images, Inc., Victor Freitag, Jr. and wife
Gilbert R. Freitag, and Robert E.
Skirboll and wife Robin T. Skirboll, dated as of April 2, 1993;
Asset Purchase Agreement by and
between the Company, Pilgrim Too Sportswear, Inc., Pilgrim Too
Manufacturing Company, Inc.
Stage II Apparel Corp., Shambuil Ltd., and Pilgrim II Apparel
Corp., dated as of April 2, 1993;
both incorporated herein by reference to the Company's Form 8-K
as of April 2, 1993, Exhibits
thereto.
10(8) Amendment to certain Notes and Loan and Security Agreements
each dated as of January 20,
1992, incorporated herein by reference from the Annual Report on
Form 10-K for the year ended
April 30, 1993, Exhibit 10(8) thereto.
10(9) Amendment to certain Notes and Loan and Security Agreements
each dated as of December 31,
1993, incorporated herein by reference from the Annual Report on
Form 10-K for the year ended
April 30, 1994, Exhibit 10(9) thereto.
10(10)Asset Purchase Agreement, dated June 5, 1995, among LIB-Com
Ltd., Liberty Bell Christmas,
Inc., Ivy Mar Co., Inc., Creative Home Products, Inc., and
Liberty Bell Christmas Realty, Inc. as
the sellers and LCL International Traders, Inc. as the buyer,
incorporated herein by reference
from the Company's report on Form 8-K dated June 27, 1995,
Exhibit 2(a) thereto.
10(11)Asset Purchase Agreement, dated June 5, 1995, between Award
Manufacturing Corporation as
the seller, and LCL International Traders, Inc., as the buyer,
incorporated herein by reference
from the Company's report on Form 8-K dated June 27, 1995,
Exhibit 2(b) thereto.
10(12)Guarantee Agreement, dated June 5, 1995, by Award
Manufacturing Corporation in favor of
LCL International Traders, Inc., incorporated herein by reference
from the Company's report on
Form 8-K dated June 27, 1995, Exhibit 2(c) thereto.
10(13)Guarantee Agreement, dated June 5, 1995, by LIB-Com Ltd.,
Liberty Bell Christmas, Inc., Ivy
Mar Co., Inc., Creative Home Products, Inc., and Liberty Bell
Christmas Realty, Inc. in favor of
LCL International Traders, Inc., incorporated herein by reference
from the Company's report on
Form 8-K dated June 27, 1995, Exhibit 2(d) thereto.
10(14)Promissory Note of LCL International Traders, Inc., due July
29, 1998, payable to the order of
Commerzbank AG, Hong Kong Branch, incorporated herein by
reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 2(e) thereto.
10(15)Confirmation Letter Agreement dated June 22, 1995, among
Citibank, N.A., Commerzbank AG,
Bayerische Vereinsbank AG, LCL International Traders, Inc., and
Jayark Corporation,
incorporated herein by reference from the Company's report on
Form 8-K dated June 27, 1995,
Exhibit 2(f) thereto.
10(16)Factoring Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT
Group/Commercial Services, Inc., incorporated herein by reference
from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 99(a) thereto.
10(17)Inventory Security Agreement dated June 23, 1995, between
LCL International Traders, Inc. and
the CIT Group/Commercial Services, Inc., incorporated herein by
reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 99(b) thereto.
<PAGE>
10(18)Letter Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT
Group/Commercial Services, Inc., incorporated herein by reference
from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 99(c) thereto.
10(19)Letter Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT
Group/Commercial Services, Inc., Liberty Bell Christmas, Inc.,
Ivy Mar Co., Inc., and Creative
Home Products, Inc., incorporated herein by reference from the
Company's report on Form 8-K
dated June 27, 1995, Exhibit 99(d) thereto.
10(20)Amendment to certain Notes and Loan and Security Agreements
each dated as of December 31,
1994, incorporated herein by reference from the Annual Report on
Form 10-K for the year ended
April 30, 1995, Exhibit 10(20) thereto.
10(21)Loan and Security Agreements dated April 29, 1996 between
Rosalco, Inc., and State Street
Bank & Trust Company of Boston, Massachusetts.
10(22)Loan and Security Agreements dated April 29, 1996 between
AVES Audio Visual Systems, Inc.,
and State Street Bank & Trust Company of Boston, Massachusetts.
10(23)First amendment to Loan and Security Agreements dated as of
September 19, 1996 between
Rosalco, Inc. and State Street Bank & Trust Company of Boston,
Massachusetts.
10(24)Agreement of Extension of Maturity of 12% Convertible
Subordinated Debentures dated April
30, 1990.
10(25)Forbearance and Modification Agreement dated March 12, 1997,
between Jayark Corporation,
Rosalco, Inc., AVES Audio Visual Systems, Inc., David L.
Koffman, and State Street Bank and
Trust Company of Boston, Massachusetts.
10(26)Stock Pledge Agreement dated March 12, 1997, between Jayark
Corporation and State Street Bank and Trust Company of Boston,
Massachusetts.
10(27)Subordination Agreement dated March 12, 1997, between Jayark
Corporation, Rosalco, Inc.,
AVES Audio Visual Systems, Inc., David L. Koffman, and
State Street Bank and Trust Company
of Boston, Massachusetts.
10(28)Revolving Note dated March 12, 1997 between Jayark Corporation
and A-V Texas Holding, LLC.
10(29)Stock Pledge Agreement dated March 12, 1997 between Jayark
Corporation and A-V Texas
Holding, LLC.
10(30)Stock Warrant to purchase 3,666,667 shares of common stock
dated March 12, 1997 between
Jayark Corporation and A-V Texas Holding, LLC.
10(31)Commercial Security Agreement dated February 18, 1997, between
AVES Audio Visual Systems, Inc. and BSB Bank and Trust Company.
10(32)Promissory Note dated February 18,1997, between AVES Audio
Visual Systems, Inc. and BSB
Bank and Trust Company.
<PAGE>
10(33)Commercial Guaranty dated February 18, 1997, between AVES
AudioVisual Systems, Inc., David L. Koffman and BSB Bank and
Trust Company.
10(34)Subordinated Promissory Note date March 12, 1997 between
Rosalco, Inc. and Jayark Corporation.
10(35)Second Forbearance and Modification Agreement dated June 1,
1997, between State Street Bank
and Trust Company of Boston, Massachusetts, Rosalco, Inc.,
and Jayark Corporation.
10(36)Stock Warrant to purchase 500,000 shares of common stock dated
March 12, 1997 between
Jayark Corporation and A-V Texas Holding, LLC.
10(37)Certificate of Amendment of The Certificate of Incorporation of
Jayark Corporation dated
July 10, 1998.
10(38)Purchase and Sale Agreement dated June 1, 1998, between Vivax
Medical Corporation and MED Services Corp.
10(39)Distribution Agreement dated June 1, 1998, between MED Services
Corp. and Vivax Medical Corporation.
10(40)Revolving Line of Credit Grid Promissory Note dated August 7,
1998, between MED Services Corp. and Atlantic Bank of New York.
10(41)Security Agreement dated August 7, 1998, between MED Services
Corp. and Atlantic Bank of New York.
10(42)Amendment to certain 12% Convertible Subordinated Debentures
dated April 30, 1990.
10(43)Amendment to certain Note dated March 12, 1997 between Jayark
Corporation and A-V Texas Holding, LLC.
10(44)Asset Purchase Agreement dated January 5, 2000, between
Fisher Medical LLC and Fisher Medical Corporation.
10(45)Technology License dated January 5, 2000, between Fisher
Medical LLC and Fisher Medical Corporation.
10(46)Employment Agreement dated January 5, 2000, between Fisher
Medical Corporation and Stephen Fisher, Jr.
10(47)Non-Disclosure and Non-Competition Agreement dated January
5, 2000, between Fisher Medical Corporation and Stephen Fisher,
Jr.
10(48)Employment Agreement dated January 5, 2000, between Fisher
Medical Corporation and Stephen Fisher, Sr.
10(49)Non-Disclosure and Non-Competition Agreement dated January
5, 2000, between Fisher Medical Corporation and Stephen Fisher,
Sr.
<PAGE>
[ARTICLE] 5
[CIK] 0000053260
[NAME] JAYARK CORPORATION
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-2000
[PERIOD-START] MAY-01-1999
[PERIOD-END] APR-30-2000
[CASH] 530,540
[SECURITIES] 0
[RECEIVABLES] 1,460,212
[ALLOWANCES] (76,000)
[INVENTORY] 480,460
[CURRENT-ASSETS] 2,485,127
[PP&E] 762,692
[DEPRECIATION] 328,931
[TOTAL-ASSETS] 3,239,126
[CURRENT-LIABILITIES] 2,106,174
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 27,739
[OTHER-SE] (173,358)
[TOTAL-LIABILITY-AND-EQUITY] 3,239,126
[SALES] 13,197,866
[TOTAL-REVENUES] 13,197,866
[CGS] 10,869,794
[TOTAL-COSTS] 10,869,794
[OTHER-EXPENSES] 1,889,702
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 96,248
[INCOME-PRETAX] 342,122
[INCOME-TAX] 11,144
[INCOME-CONTINUING] 330,978
[DISCONTINUED] 209,676
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 540,654
[EPS-BASIC] .20
[EPS-DILUTED] .20
</TABLE>
