LANCER ORTHODONTICS, INC.
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 20, 1995
AND INFORMATION STATEMENT
The 1995 Annual Meeting of Shareholders of Lancer Orthodontics, Inc. (The
`Company'') will be held at 10:00 a.m. Pacific Daylight Savings Time on Friday,
October 20, 1995, at Biomerica, Inc.'s Corporate Offices, 1533 Monrovia Avenue,
Newport Beach California 92663.
The purposes of the meeting are:
1.To elect a Board of Directors of the Company for the ensuing year.
2.To transact such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.
All shareholders of record at the close of business on September 8, 1995,
are entitled to notice of and to vote at the meeting. The Company is not
actively soliciting proxies, therefore, no proxy card accompanies this notice.
By Order of the Board of Directors
/s/ Douglas D. Miller
Douglas D. Miller
President and Chief Operating Officer
San Marcos, California
September 15, 1995
LANCER ORTHODONTICS, INC.
253 PAWNEE STREET
SAN MARCOS, CALIFORNIA 92069
1995 ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 20, 1995
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
The Annual Meeting of Shareholders of Lancer Orthodontics, Inc. (The
`Company'') will be held at 10:00 a.m. Pacific Daylight Savings Time on October
20, 1995, at Biomerica, Inc.'s Corporate Offices, 1533 Monrovia Avenue, Newport
Beach, California 92663 for the purposes set forth on the accompanying Notice of
Annual Meeting of Shareholders. This Information Statement is being mailed on
or about September 15, 1995, to shareholders of the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record as of the close of business on September 8,
1995, are entitled to vote at the meeting. On such record date, the Company had
outstanding 14,656,551 shares of Common Stock, without par value and 370,483
shares of Series D Preferred Stock with the same voting rights as Common Stock
(cumulatively `The Stock''). Holders of record of The Stock are entitled to
one vote for each share held. Shareholders have cumulative voting, pursuant to
which a shareholder may multiply the number of shares owned by the number of
Directors to be elected and cast a total number of votes equal to the resulting
product for any one candidate, or distribute the total number of votes in any
proportion among as many candidates as the shareholder desires. However, a
shareholder may not cumulate his or her votes for a candidate unless such
candidate's name has been placed in nomination prior to the voting and unless
the shareholder has given notice at the meeting, prior to voting, of his or her
intention to cumulate his or her votes. If any shareholder gives such notice,
all shareholders may then cumulate their votes.
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth the names and certain other information as
of September 8, 1995, as to the Company's Common Stock beneficially owned by
each Director or nominee and by all Directors and Executive Officers as a group:
Amount and
Nature of
Name and Address (1) Beneficial Percent of
Title of Class of Beneficial Owner Ownership (2) Class (7)
----------------- -------------------- ------------- -------------
No par common stock Joseph H. Irani 3,502,373 (3) 19.5%
No par common stock Zackary Irani -- --
No par common stock Douglas D. Miller 456,900 (4) 2.5%
No par common stock Robert Orlando 125,000 (5) 0.7%
No par common stock Roger Wolk 1,652,858 9.2%
No par common stock All executive officers
and directors
as agroup (8 persons) 6,023,831 (6) 33.5%
(1) Mr. J. Irani's address is 51 Coronado Point, Laguna Niguel CA 92677; Mr. Z.
Irani's address is 3101 1/2 Broad Street, Newport Beach CA 92663; Mr.
Millers's address is 24711 La Vida Drive, Laguna Niguel CA 92677; Dr.
Orlando's address is 947 West 30th Street, Los Angeles CA 92034; Dr. Wolk's
address is 28 Malibu Colony Drive, Malibu CA 90265.
(2) Except as otherwise indicated and subject to applicable community property
and similar statutes, the persons listed as beneficial owners of the shares
have sole voting and dispositive power with respect to such shares, except
for Mr. J. Irani. See Note 3 below.
(3) Includes 400,000 and 729,167 shares of Common Stock which may be purchased
or acquired by Mr. J. Irani pursuant to stock options and warrants,
respectively, also includes 19,394 shares in the name of Mr. J. Irani's
minor sons, and also includes 54,075 shares in the name of Mr. J. Irani's
wife. Also see `Security Ownership by Certain Beneficial Owners Other
Than Officers and Directors'.
(4) Includes 450,000 shares of Common Stock which may be purchased or acquired
by Mr. Miller pursuant to a stock option.
(5) Includes 100,000 shares of Common Stock which may be purchased by Dr.
Orlando pursuant to stock options. Also see `Security Ownership by
Certain Beneficial Owners Other Than Officers and Directors'.
(6) Includes 1,225,000 and 729,167 shares which may be purchased or acquired
pursuant to stock options and warrants, respectively.
(7) The denominator used in the Percent of Class column is 17,977,201, which
consists of 14,656,551 issued and outstanding shares of Common Stock,
370,483 issued and outstanding shares of Series D Preferred Stock, and
2,902,167 shares of Common Stock subject to the following rights to acquire
beneficial ownership of Common Stock, options to purchase 1,546,000 shares
of Common Stock, and warrants to purchase 1,404,167 shares of Common Stock.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS (OWNING 5% OR MORE OF A CLASS OF
SECURITIES) OTHER THAN OFFICERS AND DIRECTORS
Amount and
Name and Nature of
Address (1) of Beneficial Percent of
Title of Class Beneficial Owner Ownership Class (5)
-------------- ---------------- ------------- --------------
No Par Common Stock Biomerica, Inc. 5,095,725 (2) 28.3%
No Par Common Stock Merrill Bothamley 976,733 (3) 5.4%
Series D Preferred Stock Charles Smith 370,483 (4) 2.1%
(1) Biomerica, Inc.'s address is 1533 Monrovia Avenue, Newport Beach CA 92663;
Mr. Bothamley's address is 1030 North State Street, Chicago IL 60610; Dr.
Smith's address is 505 Sauk Path, Oakbrook IL 60521.
(2) Includes 508,333 shares of Common Stock which may be purchased or acquired
by Biomerica, Inc. Pursuant to stock options and warrants. Mr. J. Irani is
President, CEO and a Director of Biomerica, Dr. Orlando is a Director of
Biomerica, and Mr. Z. Irani is the Vice President, Business Development of
Biomerica.
(3) Includes 166,667 shares of Common Stock which may be purchased or acquired
by Mr. Bothamley pursuant to a warrant.
(4) Dr. Smith owns all the outstanding shares of the Series D Preferred Stock.
The Series D Preferred Stock has the same voting rights as the No Par
Common Stock.
(5) See Item 7 under Beneficial Ownership of the Company's Securities (above).
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
ITEM NO. 1
ELECTION OF DIRECTORS
The Directors to be elected at the meeting will hold office until the next
annual meeting or until their successors shall be elected and qualified.
The Board of Directors has nominated the following five persons to serve as
Directors until the next annual meeting of shareholders or until their
successors have been duly elected and qualified.
Name Age Position
------------ --- ------------------------------
Joseph H. Irani 68 Chairman of the Board, Chief Executive
Officer, Secretary, Treasurer, and Director
Zackary Irani 29 Director
Douglas D. Miller 56 President, Chief Operating Officer, and
Director
Robert Orlando 57 Director
Roger Wolk 53 Director
Mr. Z. Irani is Mr. J. Irani's nephew. There are no other family
relationships between any Executive Officers and Directors of the Company.
The following is a summary of the Directors' experiences with the Company
and their other business experience:
Mr. J. Irani has been a Director of the Company since July 20, 1988. Mr.
Irani was elected Chairman of the Board effective October 29, 1992, Chief
Executive Officer effective November 11, 1991, and Secretary, Treasurer of the
Company effective May 21, 1990, and was President of the Company from October
22, 1990 until January 13, 1992. Mr. Irani has been the President, Chief
Executive Officer, and a Director of Biomerica since 1971. Biomerica owns 28.3%
of the Company's Common Stock. Mr. Irani also serves as Chairman and as a
Director of Allergy Immuno Technologies, Inc., a publicly held corporation
controlled by Biomerica.
Mr. Z. Irani has been a Director of the Company since October 29, 1992.
Mr. Irani has been the Vice President, Business Development of Biomerica since
July, 1994. Mr. Irani had been Business Development Manager of Biomerica since
1988. Mr. Irani also serves as a Director of Allergy Immuno Technologies, Inc.,
a corporation controlled by Biomerica.
Mr. Miller has been a Director of the Company since January 13, 1992. Mr.
Miller was elected President of the Company effective January 13, 1992. Prior
to joining the Company, Mr. Miller was employed for 9 years at `A'' Company as
Director, Worldwide Business Development and, prior to that, Director, Domestic
and International Sales. `A'' Company is a major manufacturer of orthodontic
products.
Dr. Orlando has been a Director of the Company since July 20, 1988. Dr.
Orlando is an professor of pathology and has served as Chief Pathologist of
Whittier Hospital in Whittier, California, since 1981 and of Beverly Hospital in
Montebello, California, since 1991. Dr. Orlando has also been a professor at
the Southern California College of Optometry in Fullerton, California, since
1972. Dr. Orlando is a Director of Biomerica,, which owns 28.3% of the
Company's Common Stock, and he also is a Director of Allergy Immuno
Technologies, Inc., a publicly held corporation controlled by Biomerica.
Dr. Wolk was a member of the Board of Directors from December 9, 1991
through October 29, 1993, and since November 4, 1994. Dr. Wolk has been a
practicing orthodontist since 1970 and is a private investor.
None of the Directors or principal executive officers have been involved in
any legal proceedings which would have a material bearing on their ability or
integrity as a Director or Officer of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met seven times during the fiscal year ended May 31,
1995, (the `1995 Fiscal Year''). In 1979, the Board of Directors of the
Company created an Executive Committee, which is vested with all the authority
of the Board of Directors of the Company, except as restricted by the Company's
Bylaws and the California General Corporation Law. The Executive Committee is
presently composed by Messrs J. Irani, Z. Irani, and Miller. The Executive
Committee did not meet during the 1995 Fiscal Year.
The Audit Committee is presently composed of Messrs J. Irani and Z. Irani
and Dr. Orlando. The Audit Committee met once with the auditors during the 1995
Fiscal Year.
The Executive Compensation Committee is composed of Messrs J. Irani,and Z.
Irani and Dr. Orlando. The Executive Compensation Committee did not meet in
Fiscal 1995.
Each outside Director is to be paid $500 for each Board or Committee
meeting attended and $200 for each telephonic meeting.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report was prepared at the direction of the Compensation Committee of
the Board of Directors (the `Committee'') which is comprised entirely of non-
employed, independent members of the Company's Board of Directors. It is the
Committee's responsibility to review, recommend, and approve changes to the
Company's compensation policies and programs as they related to the chief
executive officer and other executive officers.
The primary responsibility of the Company's chief executive officer and
other executive officers is to ensure the long-term health and growth of the
Company. The Committee determines the compensation of all executive officers
based on its assessment of the Company's financial and non-financial
performance. Factors included in the review are increase in cash flow, sales
growth, earnings per share, shareholder value, and new products.
Compensation of the Company's executive officers is reviewed annually, or
as necessary, based upon management responsibilities and financial performance.
Changes proposed are evaluated and approved by the Committee on an individual
basis. The Committee considers three components, base salary, profit sharing,
and stock options in its review of executive compensation.
Base salary for all employees is managed through the Company's salary
administration program. Responsibility and complexity of the position as well
as external market factors are used to determine base salary levels. Increases
in base salary are governed by guidelines covering three factors; merit or an
individual's performance, market parity or the salary level in the competitive
market, and promotions or increases in responsibility. The Committee does not
use financial performance factors of the Company in establishing base salary.
The Company's profit sharing plan is variable compensation based on cash
flow, sales growth, earnings growth, shareholder value, and new products of the
Company and is used to focus all employees attention on the profits and
productivity of the Company. There were no profit sharing awards made during or
for fiscal 1995.
The Company's stock option plan is also variable compensation based on the
market appreciation of the Company's Common Stock and is designed to increase
employee ownership of the Company's stock. Stock options are also considered a
long-term plan designed to link executive and employee rewards with shareholder
value over a period of time. The Company can make stock option grants at any
time, at the discretion of the Board of Directors. Options are granted at no
less than 100% of market price on the day of the grant. Options have no value
unless the price of the Company's stock increases.
The foregoing report has been furnished by the Compensation Committee
consisting of Messrs J. Irani and Z. Irani and Dr. Orlando.
EXECUTIVE COMPENSATION
The following table presents, for each of the last three fiscal years, the
annual compensation earned by the Chief Executive Officer. Neither the Chief
Executive Officer nor any other officer of the Company earned in excess of
$100,000 during any of the last three fiscal years.
SUMMARY COMPENSATION TABLE
Options (Number Fair Market Value
Name and Principal Position Year Salary(1) of Shares(2) at Time of Grant
--------------------------- ---- ------ -----------------------------------
Joseph H. Irani
Chairman of the Board, 1995 $2,300 -- --
Chief Executive Officer, 1994 $2,300 400,000 $75,000
Secretary and Treasurer 1993 $5,000 160,000(cancelled) $40,000
(1) Amount shown represents directors fees. There were no other forms of
compensation earned or paid during the last three fiscal years.
(2) The Company's Board of Directors approved a new Stock Option Plan during
Fiscal 1993, terminated the old Stock Option Plan, and cancelled all
outstanding options, both issued under the old plan and those issued
outside the old plan. The options issued in Fiscal 1994 replace those
issued in prior years, all of which have been cancelled.
STOCK OPTIONS
No stock options were granted to the Company's Chief Executive Officer
during fiscal 1995.
OPTIONS EXERCISES AND FISCAL YEAR END VALUES
The following table presents information for the named officer in the
Summary Compensation Table with respect to options exercised during Fiscal 1995
and unexercised options held as of the end of the fiscal year.
<TABLE>
<CAPTION>
Shares Number of Unexercised In The Money Options
Acquired on Value Options at Fiscal Year End at Fiscal Year End (1)
Name Exercises Realized Exercisable Unexercisable Exercisable Unexercisable
--------------- ------------ -------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph H. Irani None None 400,000 None None (2) None
</TABLE>
(1) Based on closing price for the last business day of the fiscal year.
(2) Exercise price exceeds closing price of stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Committee are Messrs J. Irani and Z. Irani and Dr.
Orlando. Mr. J. Irani has served as the Company's Chief Executive Officer since
November 1, 1991. Mr. J. Irani also served as President of the Company from
October 22, 1990 through January 13, 1992. The Securities and Exchange
Commission requires that Mr. J. Irani's participation on the Committee be
characterized as `insider participation'' based upon his serving as Chief
Executive Officer. The Company's Board of Directors believes Mr. J. Irani's
participation on the Committee provides continuity and specific knowledge about
individual performances and that no conflicts of interest exist.
SECTION 16 COMPLIANCE
The rules of the Securities and Exchange Commission require disclosure of
late Section 16 filings by the Company's directors and officers. To the best of
the Company's knowledge and belief, there were no late filings under Section 16
by or for any of the Company's directors, officers, and major shareholders
during Fiscal 1995.
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Corbin & Wertz as the Company's
independent auditors for the fiscal year ended May 31, 1995. A representative
of Corbin & Wertz is expected to attend the meeting with the opportunity to make
a statement and/or respond to appropriate questions from shareholders present at
the meeting.
OTHER INFORMATION
PROPOSALS FOR 1995 MEETING
Any shareholder who desires to submit a proposal for inclusion in the proxy
materials or information statements relating to the 1996 Annual Meeting of
Shareholders, must deliver the proposal to the Company no later than May 31,
1996. The Company requires that the proposal be in writing and not exceed 500
words.
OTHER BUSINESS
Management does not intend to bring any other matters before the meeting
and has not been informed of such an intention by any other persons.
ANNUAL REPORT
The Annual Report of the Company for the Fiscal Year ended May 31, 1995, is
enclosed with this Information Statement. The Annual Report is not incorporated
into this Information Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Douglas D. Miller
Douglas D. Miller
