<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
COMMISSION FILE NO. 0-10552
----------------------------
SCHERER HEALTHCARE, INC.
(Exact name of registrant as specified in its Charter)
DELAWARE 59-0688813
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 INTERSTATE NORTH PARKWAY, S.E., SUITE 305, ATLANTA, GEORGIA 30339
(Address of principal executive offices, including Zip Code)
(770) 933-1800
(Registrant's telephone number, including area code)
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 the number of shares of each of the issuer's classes of Common Stock,
as of the latest practicable date:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AS OF JULY 27, 1999
----------------------------- -------------------------------
<S> <C>
Common Stock, $0.01 par value 4,336,234
</TABLE>
<PAGE>
SCHERER HEALTHCARE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
NUMBER PART I. FINANCIAL INFORMATION NUMBER
- ------ ------
<S> <C>
1 Financial Statements:
Condensed Consolidated Balance
Sheets as of June 30, 1999 and
March 31, 1999........................................................................... 3
Condensed Consolidated Statements
of Operations for the Three Months
Ended June 30, 1999 and 1998............................................................. 5
Condensed Consolidated Statements
of Cash Flows for the Three Months
Ended June 30, 1999 and 1998............................................................. 6
Notes to Condensed Consolidated
Financial Statements..................................................................... 7
2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations............................................................................ 8
PART II. OTHER INFORMATION
6 Exhibits and Reports on Form 8-K......................................................... 11
SIGNATURES............................................................................... 12
Index to Exhibits........................................................................ 13
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCHERER HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,362,000 $ 5,433,000
Accounts receivable, less allowance for doubtful
accounts of $301,000 and $293,000, respectively 4,296,000 3,721,000
Current maturities of notes receivable 123,000 174,000
Inventories 213,000 200,000
Prepaid and other 181,000 215,000
-------------- ---------------
Total current assets 8,175,000 9,743,000
-------------- ---------------
PROPERTY AND EQUIPMENT 7,895,000 7,786,000
Less accumulated depreciation (3,883,000) (3,674,000)
-------------- ---------------
Net property and equipment 4,012,000 4,112,000
-------------- ---------------
OTHER ASSETS
Intangibles, net 1,469,000 1,484,000
Cost in excess of net assets acquired, net 2,195,000 2,222,000
Investments, at market value 10,338,000 8,914,000
Other investments, at cost 650,000 650,000
Deferred income taxes 329,000 329,000
Other 200,000 197,000
Net assets of discontinued operations 348,000 326,000
-------------- ---------------
Total other assets 15,529,000 14,122,000
-------------- ---------------
TOTAL ASSETS $ 27,716,000 $ 27,977,000
-------------- ---------------
-------------- ---------------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
SCHERER HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 691,000 $ 1,083,000
Accrued expenses 1,487,000 1,499,000
Current maturities of debt obligations 215,000 235,000
Income taxes payable 100,000 85,000
Other 78,000 78,000
------------- -------------
Total current liabilities 2,571,000 2,980,000
------------- -------------
LONG-TERM DEBT, net of current maturities 296,000 351,000
------------- -------------
OTHER LIABILITIES 366,000 378,000
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Convertible preferred stock - $.01 par value,
2,000,000 shares authorized;
22,162 shares issued and outstanding at June 30, 1999 - -
(22,775 at March 31, 1999)
Common stock - $.01 par value, 12,000,000 shares authorized; 4,715,596
shares issued at June 30, 1999
(4,713,641 at March 31, 1999);
4,336,234 shares outstanding at June 30, 1999
(4,334,279 at March 31, 1999) 47,000 47,000
Capital in excess of par value 21,857,000 22,349,000
Retained earnings 5,612,000 4,905,000
Less treasury stock, at cost (3,033,000) (3,033,000)
------------- -------------
Total stockholders' equity 24,483,000 24,268,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,716,000 $ 27,977,000
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
SCHERER HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
June 30,
---------------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
NET SALES $ 4,070,000 $ 3,729,000
--------------- ---------------
COSTS AND EXPENSES
Cost of goods sold 2,340,000 2,102,000
Selling, general and administrative 1,209,000 1,146,000
--------------- ---------------
Total costs and expenses 3,549,000 3,248,000
--------------- ---------------
OPERATING INCOME 521,000 481,000
OTHER INCOME
Interest income 188,000 173,000
Other, net 20,000 19,000
--------------- ---------------
Total other income 208,000 192,000
--------------- ---------------
INCOME BEFORE INCOME TAXES 729,000 673,000
PROVISION FOR INCOME TAXES 22,000 11,000
--------------- ---------------
NET INCOME $ 707,000 $ 662,000
--------------- ---------------
--------------- ---------------
Basic earnings per common share $ 0.16 $ 0.15
--------------- ---------------
--------------- ---------------
Diluted earnings per common share $ 0.16 $ 0.14
--------------- ---------------
--------------- ---------------
Weighted average common shares outstanding - basic 4,335,632 4,318,505
--------------- ---------------
--------------- ---------------
Weighted average common shares outstanding - diluted 4,547,075 4,582,285
--------------- ---------------
--------------- ---------------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
SCHERER HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
June 30,
--------------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 707,000 $ 662,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 319,000 307,000
Other noncash charges and credits, net 10,000 6,000
Changes in operating assets and liabilities:
Accounts receivable (583,000) (334,000)
Inventories (13,000) (18,000)
Prepaid and other 34,000 27,000
Income taxes, net 15,000 (51,000)
Accounts payable and accrued expenses (404,000) (324,000)
Other liabilities (12,000) (32,000)
----------- -----------
Net cash provided by operating activities of continuing operations 73,000 243,000
Net operating activities of discontinued operations (22,000) (69,000)
----------- -----------
Net cash provided by operating activities 51,000 174,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (160,000) (275,000)
Purchase of long-term investments (1,919,000) -
Decrease in notes receivable 51,000 46,000
Other investing activities, net (19,000) (53,000)
----------- -----------
Net cash used for investing activities (2,047,000) (282,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayment of borrowings (75,000) (47,000)
Exercise of stock options - 28,000
----------- -----------
Net cash used for financing activities (75,000) (19,000)
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS (2,071,000) (127,000)
CASH AND CASH EQUIVALENTS, beginning of period 5,433,000 6,868,000
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 3,362,000 $ 6,741,000
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
SCHERER HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
The accompanying unaudited condensed consolidated financial statements of
Scherer Healthcare, Inc. and its subsidiaries (the "Company") include all
adjustments that, in the opinion of management, are necessary for a fair
presentation of the results for the period indicated. Quarterly results of
operations are not necessarily indicative of annual results. These statements
should be read in conjunction with the consolidated financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1999.
Certain fiscal 1999 amounts have been reclassified to conform with the fiscal
2000 presentation.
NOTE 2.
The components of inventory at June 30, 1999 and March 31, 1999 consisted of the
following:
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
------------- --------------
<S> <C> <C>
Finished products $ 54,000 $ 43,000
Containers, packaging, and raw materials 207,000 205,000
LIFO reserve (48,000) (48,000)
------------ ------------
Total $ 213,000 $ 200,000
------------ ------------
------------ ------------
</TABLE>
Inventories are stated at the lower of net realizable value or cost using the
last-in, first-out ("LIFO") method.
NOTE 3.
Debt and obligations under capital leases at June 30, 1999 and March 31, 1999
consisted of the following:
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
------------- --------------
<S> <C> <C>
Obligations under capital leases, due in varying
installments through fiscal 2003 $ 511,000 $ 586,000
Less current maturities (215,000) (235,000)
----------- ------------
Long-term debt $ 296,000 $ 351,000
----------- ------------
----------- ------------
</TABLE>
NOTE 4.
The Company has investments in long-term high-grade marketable securities
composed primarily of government and corporate fixed income bonds. These
marketable securities are classified as available-for-sale and are being carried
at fair market value based on quoted market prices. The net unrealized holding
gains or losses on these investments are reported under capital in excess of par
value.
The amortized cost and fair market value of the Company's marketable securities
are as follows:
<TABLE>
<CAPTION>
Net
Amortized unrealized Fair market
Cost loss value
------------- ------------- -------------
<S> <C> <C> <C>
JUNE 30, 1999
Municipal bonds $ 9,360,000 $ (423,000) $ 8,937,000
Corporate bonds 1,217,000 (79,000) 1,138,000
Preferred stocks 298,000 (35,000) 263,000
------------- ------------- -------------
Total $ 10,875,000 $ (537,000) $ 10,338,000
------------- ------------- -------------
------------- ------------- -------------
MARCH 31,1999
Municipal bonds $ 7,444,000 $ (2,000) $ 7,442,000
Corporate bonds 1,217,000 (10,000) 1,207,000
Preferred stocks 298,000 (33,000) 265,000
------------- ------------- -------------
Total $ 8,959,000 $ (45,000) $ 8,914,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The municipal bonds mature ranging from 2 years to 29 years and the corporate
bonds mature ranging from 10 years to 25 years.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains, in addition to historical information,
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended, which represent the Company's expectations or beliefs. When
used in this report, the words "may," "could," "should," "would," "believe,"
"anticipate," "estimate," "expect," "intend," "plan" and similar expressions are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, certain of which are beyond
the Company's control. The Company cautions that various factors, including the
factors described in the Company's filings with the Securities and Exchange
Commission, as well as general economic conditions, changes in applicable laws
and regulations, industry trends, a dependence upon and/or loss of key
employees, vendors or customers, the loss of strategic product shipping
relationships, customer demand, product availability, competition (including
pricing and availability), concentrations of credit risks, distribution
efficiencies, capacity constraints and technological difficulties could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements of the Company. Reference is made to this report as
well as the Company's most recent Annual Report on Form 10-K and other reports
filed with the Securities and Exchange Commission for other factors that could
affect the forward-looking statements. Any forward-looking statement speaks only
as of the date of this report and the Company undertakes no obligation to update
any forward-looking statement or statements to reflect events or circumstances
after the date on which such statements is made or to reflect the occurrence of
an unanticipated event. New factors emerge from time to time, and it is not
possible for the Company to predict all of such factors. Further, the Company
cannot assess the impact of each such factor on its business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
RESULTS OF OPERATIONS
NET SALES AND OPERATING INCOME (LOSS).
The following table sets forth, for the periods indicated, the net sales and
operating income (loss) for each segment of the business of the Company and its
subsidiaries:
<TABLE>
<CAPTION>
Three months ended June 30,
---------------------------------
1999 1998
----------- -----------
<S> <C> <C>
NET SALES:
Waste Management Services Segment $ 3,678,000 $ 3,414,000
Consumer Healthcare Products Segment 392,000 315,000
----------- -----------
Company Totals $ 4,070,000 $ 3,729,000
----------- -----------
----------- -----------
OPERATING INCOME (LOSS):
Waste Management Services Segment $ 555,000 $ 513,000
Consumer Healthcare Products Segment 164,000 113,000
Corporate (198,000) (145,000)
----------- -----------
Company Totals $ 521,000 $ 481,000
----------- -----------
----------- -----------
</TABLE>
The Company's net sales increased 9% to $4,070,000 for the first quarter of
fiscal 2000 from $3,729,000 for the first quarter of fiscal 1999. The Company's
operating income increased 8% to $521,000 for the first quarter of fiscal 2000
from $481,000 during the same period in fiscal 1999. The Company's cost of goods
sold increased to 58% of net sales for the quarter ended June 30, 1999 from 56%
of net sales for the quarter ended June 30, 1998. Selling, general and
administrative expenses decreased to 30% of net sales for the first quarter of
fiscal 2000 from 31% for the first quarter of fiscal 1999. The primary reasons
for these changes are discussed below.
The results of operations of the Company are dependent upon the results of
operations of each of its subsidiaries operating in the Company's individual
business segments. Set forth below is a discussion of the results of operations
of each of these segments.
8
<PAGE>
WASTE MANAGEMENT SERVICES SEGMENT
Net sales in the Company's Waste Management Services Segment, which operates
through Bio Systems Partners, Bio Waste Systems, Inc., and Medical Waste
Systems, Inc. (collectively, "Bio Systems"), increased 8% to $3,678,000 for the
first quarter of fiscal 2000 from $3,414,000 for the first quarter of fiscal
1999. As in the past few years, the sales growth is primarily due to securing
new hospital contracts for Bio Systems' core business of providing "sharps"
(including sharp-edged medical waste such as scalpels, syringes, and needles)
disposal services which utilize cost effective reusable containers. In fiscal
1999, Bio Systems expanded its disposal services to include certain laboratory
waste and surgical fluid waste. Net sales for laboratory and surgical fluid
waste increased $42,000 to $90,000 in the first quarter of fiscal 2000, as
compared to $48,000 in the first quarter of fiscal 1999. Bio Systems intends to
continue to actively pursue the laboratory and surgical fluid waste disposal
market although the market is relatively small compared to sharps disposal.
Primarily as a result of the increase in net sales, Bio Systems' operating
income increased 8% to $555,000 for the quarter ended June 30, 1999 from
$513,000 for the quarter ended June 30, 1998. Bio Systems' cost of goods sold
increased to 60% of net sales for the first quarter of fiscal 2000 from 58% of
net sales for the first quarter of fiscal 1999. Selling, general and
administrative expenses decreased to 25% of net sales for the quarter ended June
30, 1999 from 27% of net sales during the same period in fiscal 1999.
CONSUMER HEALTHCARE PRODUCTS SEGMENT
Net sales for the Consumer Healthcare Products Segment, which operates through
Scherer Laboratories, Inc. ("Scherer Labs"), increased 24% to $392,000 for the
first quarter of fiscal 2000 from $315,000 during the same period in fiscal
1999. In the first quarter of fiscal 1999, Scherer Labs' largest customer
reduced its sales orders for Scherer Labs' two core products which severely
impacted Scherer Labs' operating results. In the first quarter of fiscal 2000,
Scherer Labs' regained a significant portion of its lost sales volume with this
customer. As a result, in the first quarter of fiscal 2000, Scherer Labs' had a
42% increase in sales orders for its topical analgesic product that provides
relief from insect bites.
As a result of the increase in net sales, Scherer Labs' operating income
increased 45% to $164,000 for the first quarter of fiscal 2000 from $113,000 for
the first quarter of fiscal 1999. Additionally, as a result of performing all of
its shipping functions internally, Scherer Lab's reduced its warehouse and
distribution costs and expenses in the first quarter of fiscal 2000, as compared
to the first quarter of fiscal 1999. Prior to the second quarter of fiscal 1999,
these services were performed on a contract basis with a public warehouse.
CORPORATE
The Company's operating expenses in the Corporate Segment increased to $198,000
for the quarter ended June 30, 1999 from $145,000 for the quarter ended June 30,
1998. Certain administrative, accounting, management oversight and payroll
services are performed by the Company's Corporate office. The Corporate
operating expenses include the salaries and wages of the personnel who perform
these functions (including the Company's executive officers) rent expense, and
professional accounting and legal fees. The increase in the Corporate operating
expenses is primarily due to an increase in legal fees incurred during the first
quarter of fiscal 2000 associated with certain litigation. Additionally,
beginning April 1999, the Company began paying a salary to Robert P. Scherer,
Jr., the Company's Chairman of the Board, President and Chief Executive Officer.
Prior to April 1999, the Company did not provide salary compensation for Mr.
Scherer's services. The Company does not allocate any revenues to the Corporate
level.
OTHER INCOME.
The Company's interest income increased to $188,000 for the first quarter of
fiscal 2000 from $173,000 for the first quarter of fiscal 1999. The increase is
a result of the Company's additional investment in long-term high-grade
marketable securities (see Note 4 to the accompanying Notes to Condensed
Consolidated Financial Statements included elsewhere herein) in the fourth
quarter of fiscal 1999 and the first quarter of fiscal 2000.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $3,362,000 at June 30, 1999, a
decrease of $2,071,000 from March 31, 1999. However, in April 1999, the Company
invested, using cash on hand, $1,919,000 in long-term high-grade marketable
securities resulting in a reduction in cash and cash equivalents. With the
investment in marketable securities in April 1999, the balance, at fair market
value, of the Company's long-term investments was $10,338,000 at June 30, 1999,
as compared to $8,914,000 at March 31, 1999. As a result of the investment in
marketable securities in April 1999, the Company's working capital decreased to
$5,604,000 at June 30, 1999 from $6,763,000 at March 31, 1999. The Company's
long-term debt decreased slightly to $296,000 at June 30, 1999 from $351,000 at
March 31, 1999. The primary reasons for these changes are discussed below.
CASH FLOWS FROM OPERATING ACTIVITIES.
The Company's cash provided by operating activities from continuing operations
totaled $73,000 for the first quarter of fiscal 2000, as compared to $243,000
for the first quarter of fiscal 1999. Bio Systems' operations used cash of
$81,000 for the first quarter of fiscal 2000, as compared to providing cash of
$122,000 for the first quarter of fiscal 1999. This change is primarily due to
the timing of collection of its accounts receivable and payment of accounts
payable. Scherer Labs' cash provided from operating activities increased
slightly to $90,000 for the quarter ended June 30, 1999 from $85,000 for the
quarter ended June 30, 1998. Primarily due to the timing of income tax payments,
cash provided by operations in the Corporate Segment increased to $64,000 for
the first quarter of fiscal 2000 from $36,000 for the first quarter of fiscal
1999.
CASH FLOWS FROM INVESTING AND FINANCING ACTIVITIES.
The Company's investing activities used cash of $2,047,000 during the quarter
ended June 30, 1999, as compared to $282,000 during the quarter ended June 30,
1998. In April 1999, the Company increased its investment in marketable
securities by $1,919,000 when it made an additional investment in fixed income
government bonds. The Company's marketable securities are composed of municipal
bonds, corporate bonds and preferred stocks and mature over periods ranging from
2 years to 29 years. See Note 4 of the accompanying Notes to Condensed
Consolidated Financial Statements included elsewhere herein.
As a result of the repayment of capital lease obligations associated with Bio
Systems' vehicles, the Company's cash used for financing activities increased to
$75,000 for the first quarter of fiscal 2000 from $19,000 for the first quarter
of fiscal 1999.
Management of the Company believes that its current cash on hand and its current
cash flow is sufficient to maintain its current operations. The Company
continues to evaluate its long-term options with regard to the use of its
remaining cash on hand.
YEAR 2000 ISSUES.
Like many other companies, the year 2000 computer issue creates risks for the
Company. If internal systems do not correctly recognize and process date
information beyond the year 1999, there could be an adverse impact on the
Company's operations. There are two other related issues which could also lead
to incorrect calculations or failures: (i) some systems' programming assigns
special meaning to certain dates, such as 9/9/99, and (ii) the fact that the
year 2000 is a leap year. The Company has developed a plan to modify its
information technology for the year 2000 and during fiscal 1999 began replacing
critical data processing systems at its corporate headquarters as well as at Bio
Systems. The Company completed its conversion to the new equipment and software
at its corporate headquarters in fiscal 1999 and Bio Systems is currently
converting its systems and expects to complete the conversion in the second
quarter of fiscal 2000. The third party vendors that supplied the new hardware
and software have informed the Company that the new systems and software are
year 2000 compliant. The Company currently expects that its review of other
systems will be substantially completed by the second quarter of fiscal 2000 at
a cost not material to the Company's business, financial condition or results of
operations. As of June 30, 1999, the Company incurred approximately $65,000 in
replacing and converting the Company's data processing systems and it
anticipates it will incur less than $25,000 in future periods to complete the
replacement and conversion process.
10
<PAGE>
The Company believes that its most reasonably likely worst case year 2000
scenarios would relate to problems with the systems of third parties rather than
with the Company's internal systems or its products. It is clear that the
Company has the least ability to assess and remediate the year 2000 problems of
third parties and the Company believes the risks are greatest with
infrastructure (e.g. electricity supply, water and sewer service),
telecommunications, transportation supply chains and suppliers of materials.
Similarly, the failure of the Company's hospital and other healthcare provider
customers to be year 2000 compliant could have an adverse impact on the Company.
While the Company is taking steps that it believes to be reasonable and prudent
to assess the year 2000 readiness of third parties with whom the Company does
business, the failure of any of these third parties to correct a material year
2000 problem could result in an interruption in, or a failure of, certain normal
business activities or operations. Due to the general uncertainty inherent in
the year 2000 problem, resulting in part from the uncertainty of the year 2000
readiness of third party suppliers and customers, the Company is unable to
determine at this time whether the consequences of year 2000 failures will have
a material impact on the Company's results of operations, liquidity, or
financial condition. Readers are cautioned that forward-looking statements
contained in this year 2000 update should be read in conjunction with the
Company's disclosures regarding forward looking statements.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10 Property Lease between Bio Systems Partners and Owners of
210 Sherwood Avenue, Farmingdale, New York
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
SCHERER HEALTHCARE, INC.
(Registrant)
Date: August 16, 1999 /s/ Robert P. Scherer, Jr.
--------------------------
Robert P. Scherer, Jr.
Chairman, Chief Executive Officer and President
Date: August 16, 1999 /s/ Gary W. Ruffcorn
--------------------
Gary W. Ruffcorn
Vice President and Chief Financial Officer
12
<PAGE>
SCHERER HEALTHCARE, INC.
INDEX OF EXHIBITS
The following exhibits are being filed with this report.
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
10 Property Lease between Bio Systems Partners and
Owners of 210 Sherwood Avenue, Farmingdale, New York 14
27 Financial Data Schedule
(included only in EDGAR filing) 22
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Exhibit 10. Property Lease Between Bio Systems Partners and Owners of 210 Sherwood Ave
This Lease, dated the day of October, 1998
Between Owners of 210 Sherwood Ave. (A Partnership)
Parties hereinafter referred to as the Landlord, and
Bio Systems Partners, 210 Sherwood Ave., Farmingdale, NY 11735
hereinafter referred to as the Tenant,
WITNESSETH: That the Landlord hereby demises and leases unto the Tenant, and the Tenant hereby hires and takes
from the Landlord for the term and upon the rentals hereinafter specified, the premises
described as follows, situated in the of County
of and State of
Premises 210 Sherwood Ave.
Farmingdale, New York
Term The term of this demise shall be for Three (3) Years * SEE
RIDER #30. beginning July 15, 1999 and ending July 14, 2002.
Rent The rent for the demised term shall be Eighty nine thousand five hundred eight dollars ($89,508.00), Per Annum
plus such increases and additional rent as specified in rider.
Payment The said rent is to be payable monthly in advance on the fifteenth day of each calendar month for the term
of Rent hereof, in installments as follows:
Monthly: Seven Thousand Four Hundred Fifty Nine Dollars (7,459.00 Plus Additional Rent Per
Real Estate Tax: Three Thousand Four Hundred Twenty One Dollars ($3,421.00) Rider:
Total Monthly Rent: Ten Thousand Eight Hundred Eighty Dollars ($10,880.00)
at the office of Landlord - 20 Executive Blvd., Farmingdale, NY 11735 or as may be otherwise directed by the
Landlord in writing. As for Rent Reserved for remaining term of lease and additional rent - refer to rider
annexed hereto.
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:
Peaceful FIRST.-The Landlord covenants that the Tenant, on paying the said rental and performing the covenants and
Possession conditions in this Lease contained, shall and may peaceably and quietly have, hold and enjoy the demised
premises for the term aforesaid.
Purpose SECOND.-The tenant covenants and agrees to use the demised premises as a Factory and Office and only for lawful
purposes permitted under the applicable local zoning ordinances as well as under any applicable laws or
statutes.
and agrees not to use or permit the premises to be used for any other purpose without the prior written consent
of the Landlord endorsed hereon. The Landlord represents that the current certification of occupancy permits
factory and office usage.
Default in THIRD.-The Tenant shall, without any previous demand therefor, pay to the Landlord, or its agent, the said
Payment of rent at the times and in the manner above provided. In the event of the non-payment of said rent, or any
Rent instalment thereof, at the times and in the manner above provided, and if the same shall remain in default for
ten days after becoming due, or if the Tenant shall be dispossessed for non-payment of rent, or if the leased
Abandonment premises shall be deserted or vacated, the Landlord or its agents shall have the right to and may enter the
of Premises said premises as the agent of the Tenant, either by force or otherwise, without being liable for any
prosecution or damages therefor, and may relet the premises as the agent of the Tenant, and receive the rent
Re-entry and therefor, upon such terms as shall be satisfactory to the Landlord, and all rights of the Tenant to
Reletting by repossess the premises under this lease shall be forfeited. Such re-entry by the Landlord shall not operate to
Landlord release the Tenant from any rent to be paid or covenants to be performed hereunder during the full term so this
lease. For the purpose of reletting, the Landlord shall be authorized to make such repairs or alterations in or
Tenant Liable to the leased premises as may be necessary to place the same in good order and condition. The Tenant shall be
for Deficiency liable to the Landlord for the cost of such repairs or alterations, and all expenses of such reletting. If the
sum realized or to be realized from the reletting is insufficient to satisfy the monthly or term rent provided
in this lease, the Landlord, at its option, may require the Tenant to pay such deficiency month by month, or
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Lien of Landlord may hold the Tenant in advance for the entire deficiency to be realized during the term of the reletting. The
to Secure Tenant shall not be entitled to any surplus accruing as a result of the reletting. The Landlord is hereby
granted a lien, in addition to any statutory lien or right to distrain that may exist, on all personal property
of the Tenant in or upon the
Performance demised premises, to secure payment of the rent and to take possession of any furniture, fixtures or other
Attorney's Fees personal property of the Tenant found in or about the premises, and sell the same at public or private sale
and to apply the proceeds thereof to the payment of any monies becoming due under this lease, the tenant
hereby waiving the benefit of all laws exempting property from execution, levy and sale on distress or
judgment. The Tenant agrees to pay, as additional rent, all attorney's fees and other expenses incurred by the
Landlord in enforcing any of the obligations under this lease.
Sub-letting and FOURTH.-The Tenant shall not sub-let the demised premises nor any portion thereof, nor shall this lease be
Assignment assigned by the Tenant without the prior written consent of the Landlord endorsed hereon. Which may not
unreasonably be withheld.
Condition of FIFTH.-The Tenant has examined the demised premises, and accepts them in their present condition (except as
Premises, Repairs otherwise expressly provided herein) and without any representations on the part of the Landlord or its
agents as to the present or future condition of the said premises. The Tenant shall keep the demised premises
in good condition, and shall redecorate, paint and renovate the said premises as may be necessary to keep them
Alterations and in repair and good appearance. The Tenant shall quit and surrender the premises at the end of the demised term
Improvements in as good condition as the reasonable use thereof will permit. The Tenant shall not make any alterations,
additions, or improvements to said premises without the prior written consent of the Landlord. All erections,
Sanitation, alterations, additions and improvements, whether temporary or permanent in character, which may be made upon
Inflammable the premises either by the Landlord or the Tenant, except furniture or movable trade fixtures installed at the
Materials expense of the Tenant, shall be the property of the Landlord and shall remain upon and be surrendered with the
premises as a part thereof at the termination of this Lease, without compensation to the Tenant. The Tenant
further agrees to keep said premises and all parts thereof in a clean and sanitary condition and free from
Sidewalks trash, inflammable material and other objectionable matter. If this lease covers premises, all or a part of
which are on the ground floor, the Tenant further agrees to keep the sidewalks in front of such ground floor
portion of the demised premises clean and free of obstructions, snow and ice. (See Rider)
Mechanics' SIXTH.-In the event that any mechanics' lien is filed against the premises as a result of alterations,
Liens additions or improvements made by the Tenant, the Landlord, at its option, after thirty days' notice to the
Tenant, may terminate this lease and may pay the said lien, without inquiring into the validity thereof, and
the Tenant shall forthwith reimburse the Landlord the total expense incurred by the Landlord in discharging
the said lien, as additional rent hereunder.
Glass SEVENTH.-The Tenant agrees to replace at the Tenant's expense any and all glass which may become broken in and
on the demised premises. Plate glass and mirrors, if any, shall be insured by the Tenant at their full
insurable value in a company satisfactory to the Landlord. Said policy shall be of the full premium type, and
shall be deposited with the Landlord or its agent.
Liability of EIGHTH.-The Landlord shall not be responsible for the loss of or damage to property, or injury to persons,
Landlord occurring in or about the demised premises, by reason of any existing or future condition, defect, matter or
thing in said demised premises or the property of which the premises are a part, or for the acts, omissions or
negligence of other persons or tenants in and about the said property. The Tenant agrees to indemnify and save
the Landlord harmless from all claims and liability for losses of or damage to property, or injuries to persons
occurring in or about the demised premises.
Services and Tenant shall pay for all services and utilities.
Utilities The Landlord shall not be liable for any interruption or delay in any of the above services for any reason.
Right to Inspect TENTH.-The Landlord, or its agents, shall have the right to enter the demised premises at reasonable hours in
and Exhibit the day or night to examine the same, or to run telephone or other wires, or to make such repairs, additions
or alterations as it shall deem necessary for the safety, preservation or restoration of the improvements, or
for the safety or convenience of the occupants or users thereof (there being no obligation, however, on the
part of the Landlord to make any such repairs, additions or alterations), or to exhibit the same to
prospective purchasers and put upon the premises a suitable "For Sale" sign. For three months prior to the
expiration of the demised term, the Landlord, or its agents, may similarly exhibit the premises to prospective
tenants, and may place the usual "To Let" signs thereon.
Damage by Fire, ELEVENTH.-In the event of the destruction of the demised premises or the building containing the said
Explosion, The premises by fire, explosion, the elements or otherwise during the term hereby created, or previous thereto,
Elements or or such partial destruction thereof as to render the premises wholly untenantable or unfit for occupancy, or
Otherwise should the demised premises be so badly injured that the same cannot be repaired within ninety days from the
happening of such injury, then and in such
</TABLE>
<PAGE>
<TABLE>
<S> <C>
case the term hereby created shall, at the option of the Landlord, cease and become null and void from the
date of such damage or destruction, and the Tenant shall immediately surrender said premises and all the
Tenant's interest therein to the Landlord, and shall pay rent only to the time of such destruction, in which
event the Landlord may enter and re-possess the premises thus discharged from this lease and may remove all
parties therefrom. Should the demised premises be rendered untenantable and unfit for occupancy, but yet be
repairable within ninety days from the happening of said injury, the Landlord may enter and repair the same
with reasonable speed, and the rent shall not accrue after said injury or while repairs are being made, but
shall recommence immediately after said repairs shall be completed. But if the premises shall be so slightly
injured as not to be rendered untenantable and unfit for occupancy, then the Landlord agrees to repair the
same with reasonable promptness and in that case the rent accrued and accruing shall not cease or determine.
The Tenant shall immediately notify the Landlord in case of fire or other damage to the premises.
Observation of TWELFTH.-The Tenant agrees to observe and comply with all laws, ordinances, rules and regulations of the
Laws, Ordinances, Federal, State, County and Municipal authorities applicable to the business to be conducted by the Tenant in
Rules and the demised premises. The Tenant agrees not to do or permit anything to be done in said premises, or keep
Regulations anything therein, which will increase the rate of fire insurance premiums on the improvements or any part
thereof, or on property kept therein, or which will obstruct or interfere with the rights of other tenants,
or conflict with the regulations of the Fire Department or with any insurance policy upon said improvements
or any part thereof. In the event of any increase in insurance premiums resulting from the Tenant's occupancy
of the premises, or from any act or omission on the part of the Tenant, the Tenant agrees to pay said
increase in insurance premiums on the improvements or contents thereof as additional rent.
Signs THIRTEENTH.-No sign, advertisement or notice shall be affixed to or placed upon any part of the demised
premises by the Tenant, except in such manner, and of such size, design and color as shall be approved in
advance in writing by the Landlord.
Subordination FOURTEENTH.-This lease is subject and is hereby subordinated to all present and future mortgages, deeds of
to Mortgages trust and other encumbrances affecting the demised premises or the property of which said premises are a part.
and Deeds of The Tenant agrees to execute, at no expense to the Landlord, any instrument which may be deemed necessary or
Trust desirable by the Landlord to further effect the subordination of this lease to any such mortgage, deed of
trust or encumbrance.
Sale of Premises FIFTEENTH.-N/A.
Rules and SIXTEENTH.-The rules and regulations regarding the demised premises, affixed to this lease, if any, as well as
Regulations of any other and further reasonable rules and regulations which shall be made by the Landlord, shall be observed
Landlord by the Tenant and by the Tenant's employees, agents and customers. The Landlord reserves the right to rescind
any presently existing rules applicable to the demised premises, and to make such other and further reasonable
rules and regulations as, in its judgment, may from time to time be desirable for the safety, care and
cleanliness of the premises, and for the preservation of good order therein, which rules, when so made and
notice thereof given to the Tenant, shall have the same force and effect as if originally made a part of this
lease. Such other and further rules shall not, however, be inconsistent with the proper and rightful enjoyment
by the Tenant of the demised premises.
Violation of SEVENTEENTH.-In case of violation by the Tenant of any of the covenants, agreements and conditions of this
Covenants, lease, or of the rules and regulations now or hereafter to be reasonably established by the Landlord, and upon
Forfeiture of failure to discontinue such violation within ten days after notice thereof given to the Tenant, this lease
Lease, Re-entry shall thenceforth, at the option of the Landlord, become null and void, and the Landlord may re-enter without
by Landlord further notice or demand. The rent in such case shall become due, be apportioned and paid on and up to the day
of such re-entry, and the Tenant shall be liable for all loss or damage resulting from such violation as
Non-waiver aforesaid. No waiver by the Landlord of any violation or breach of condition by the Tenant shall constitute or
of Breach be construed as a waiver of any other violation or breach of condition, nor shall lapse of time after breach
of condition by the Tenant before the Landlord shall exercise its option under this paragraph operate to
defeat the right of the Landlord to declare this lease null and void and to re-enter upon the demised premises
after the said breach or violation.
Notices EIGHTEENTH.-All notices and demands, legal or otherwise, incidental to this lease, or the occupation of the
demised premises, shall be in writing. If the Landlord or its agent desires to give or serve upon the Tenant
any notice or demand, it shall be sufficient to send a copy thereof by registered mail, addressed to the
Tenant at the demised premises, or to leave a copy thereof with a person of suitable age found on the
premises, or to post a copy thereof upon the door to said premises. Notices from the Tenant to the Landlord
shall be sent by registered mail or delivered to the Landlord at the place hereinbefore designated for the
payment of rent, or to such party or place as the Landlord may from time to time designate in writing.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Bankruptcy, NINETEENTH.-It is further agreed that if at any time during the term of this lease the Tenant shall make any
Insolvency, assignment for the benefit of creditors, or be decreed insolvent or bankrupt according to law, or if a
Assignment for receiver shall be appointed for the Tenant, then the Landlord may, at its option, terminate this lease,
Benefit of exercise of such option to be evidenced by notice to that effect served upon the assignee, receiver, trustee
Creditors or other person in charge of the liquidation of the property of the Tenant or the Tenant's estate, but such
termination shall not release or discharge any payment of rent payable hereunder and then accrued, or any
liability then accrued by reason of any agreement or covenant herein contained on the part of the Tenant, or
the Tenant's legal representatives.
Holding Over TWENTIETH.-In the event that the Tenant shall remain in the demised premises after the expiration of the term
by Tenant of this lease without having executed a new written lease with the Landlord, such holding over shall not
constitute a renewal or extension of this lease. The Landlord may, at its option, elect to treat the Tenant as
one who has not removed at the end of his term, and thereupon be entitled to all the remedies against the
Tenant provided by law in that situation, or the Landlord may elect, at its option, to construe such holding
over as a tenancy from month to month, subject to all the terms and conditions of this lease, except as to
duration thereof, and in that event the Tenant shall pay monthly rent in advance at the rate provided herein
as effective during the last month of the demised term.
Eminent TWENTY-FIRST.-If the property or any substantial part thereof wherein the demised premises are located shall
Domain, be taken by public or quasi-public authority under any power of eminent domain or condemnation, this lease, at
Condemnation the option of the Landlord, shall forthwith terminate and the Tenant shall have no claim or interest in or to
any award of damages for such taking. Provided that such taking shall have a material effect on tenant's
business.
Security TWENTY-SECOND.-The Tenant has this day deposited with the Landlord the sum of $15,464.18 as security for the
full and and faithful performance by the Tenant of all the terms, covenants and conditions of this lease upon
the Tenant's part to be performed, which said sum shall be returned to the Tenant after the time fixed as the
expiration of the term herein, provided the Tenant has fully and faithfully carried out all of said terms,
covenants and conditions on Tenant's part to be performed. In the event of a bona fide sale, subject to this
lease, the Landlord shall have the right to transfer the security to the vendee for the benefit of the Tenant
and the Landlord shall be considered released by the Tenant from all liability for the return of such
security; and the Tenant agrees to look to the new Landlord solely for the return of the said security, and it
is agreed that this shall apply to every transfer or assignment made of the security to a new Landlord. The
security deposited under this lease shall not be mortgaged, assigned or encumbered by the Tenant without the
written consent of the Landlord.
Arbitration TWENTY-THIRD.-Any dispute arising under this lease shall be settled by arbitration. Then Landlord and Tenant
shall each choose an arbitrator, and the two arbitrators thus chosen shall select a third arbitrator. The
findings and award of the three arbitrators thus chosen shall be final and binding on the parties hereto.
Delivery of TWENTY-FOURTH.-No rights are to be conferred upon the Tenant until this lease has been signed by the Landlord,
Lease and an executed copy of the lease has been delivered to the Tenant.
Lease TWENTY-FIFTH.-The foregoing rights and remedies are not intended to be exclusive but as additional to all
Provisions Not rights andremedies the Landlord would otherwise have by law.
Exclusive
TWENTY-SIXTH.-All of the terms, covenants and conditions of this lease shall inure to the benefit of and be
Lease Binding binding upon the respective heirs, executors, administrators, successors and assigns of the parties hereto.
on Heirs, However, in the event of the death of the Tenant, if an individual, the Landlord may, at its option, terminate
Successors, Etc. this lease by notifying the executor or administrator of the Tenant at the demised premises.
TWENTY-SEVENTH.-This lease and the obligation of Tenant to pay rent hereunder and perform all of the other
covenants and agreements hereunder on part of Tenant to be performed shall in nowise be affected, impaired or
excused because Landlord is unable to supply or is delayed in supplying any service expressly or impliedly to
be supplied or is unable to make, or is delayed in making any repairs, additions, alterations or decorations
or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with the National Emergency declared
by the President of the United States or in connection with any rule, order or regulation of any department or
subdivision thereof of any governmental agency or by reason of the conditions of supply and demand which have
been or are affected by the war.
TWENTY-EIGHTH.-This instrument may not be changed orally.
</TABLE>
<PAGE>
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and seals
the day and year first above written.
Flushing Operating Corp.
Witness: HAROLD J. WHITE (SEAL)
-----------------------------
Landlord
By /s/ HAROLD J. WHITE
- --------------------------- ----------------------------
/s/ WILLIAM SWEENEY (SEAL)
- --------------------------- ----------------------------
Tenant
President, Bio Systems
GUARANTY
In consideration of the execution of the within lease by the
Landlord, at the request of the undersigned and in reliance of this guaranty,
the undersigned hereby guarantees unto the Landlord, its successors and
assigns, the prompt payment of all rent and the performance of all of the
terms, covenants and conditions provided in said lease, hereby waiving all
notice of default, and consenting to any extensions of time or changes in the
manner of payment or performance of any of the terms and conditions of the
said lease the Landlord may grant the Tenant, and further consenting to the
assignment and the successive assignments of the said lease, and any
modifications thereof, including the sub-letting and changing of the use of
the demised premises, all without notice to the undersigned. The undersigned
agrees to pay the Landlord all expenses incurred in enforcing the obligations
of the Tenant under the within lease and in enforcing this guaranty.
Witness: (SEAL)
---------------------------------- ---------------------------
(SEAL)
- ------------------------------------------ ---------------------------
Date:
-------------------------------------
LEASE
Owners of 210 Sherwood Ave.
Landlord
to
210 Sherwood Ave.
Farmingdale, New York
Tenant
Premises leased:
From: JULY 15, 1999
-------------
To: JULY 14, 2002
--------------
ASSIGNMENT AND ACCEPTANCE OF ASSIGNMENT
For value received the undersigned Tenant hereby assigns all of
said Tenant's right, title and interest in and to the within lease from and
after unto
heirs, successors, and assigns, the demised premises to be used and occupied
for
and for no other purpose, it being expressly agreed
that this assignment shall not in any manner relieve the undersigned assignor
from liability upon any of the covenants of this lease.
<PAGE>
Witness: (SEAL)
---------------------------------- ---------------------------
(SEAL)
- ------------------------------------------ ---------------------------
Date:
-------------------------------------
In consideration of the above assignment and the written consent
of the Landlord thereto, the undersigned assignee, hereby assumes and agrees
from and after to make all payments and to perform all covenants
and conditions provided in the within lease by the Tenant therein to be made
and performed.
Witness: (SEAL)
---------------------------------- ---------------------------
(SEAL)
- ------------------------------------------ ---------------------------
Date:
-------------------------------------
CONSENT TO ASSIGNMENT
The undersigned Landlord hereby consents to the assignment of the
within lease to on the express conditions that the original Tenant
, the assignor, herein, shall remain liable for the prompt
payment of the rent and the performance of the covenants provided in the said
lease by the Tenant to be made and performed, and that no further assignment
of said lease or sub-letting of any part of the premises thereby demised
shall be made without the prior written consent of the undersigned Landlord.
-----------------------------------
Landlord
Date: By
---------------------------------- ----------------------------------
<PAGE>
RIDER TO AND FORMING PART OF LEASE BETWEEN
OWNERS OF 210 SHERWOOD AVENUE AND BIO SYSTEMS PARTNERS
29. REAL ESTATE TAXES
As and for additional rent hereunder, the Tenant shall pay to the
Landlord the amount of $2.43 per square foot which shall accrue at the yearly
rate of $41,052.00, payable monthly at the rate of $3,421.00 for the base
real estate taxes now existing on the property. Tenant shall continue to pay
the aforesaid amount on a monthly basis until notified by Landlord of a
change in the real estate tax amount. In the event of any change, landlord
shall present to Tenant a photostatic copy of the bill rendered therefor by
the appropriate taxing authority, and in that event the amount to be paid
hereunder shall be adjusted accordingly to reflect such increase or decrease.
Additionally, as and for additional rent hereunder, the Tenant shall pay any
and all assessments, whether special or general, which may be levied or
assessed upon the demised premises at any time during the term herein
demised. The amount of each such assessment, if any, shall be paid by the
Tenant to the Landlord as additional rent hereunder within fifteen (15) days
after the Landlord shall give notice to the Tenant of the amount of such
assessment, together with a photostatic copy of the notice or bill issued by
the taxing authority for such assessment.
30. TERM OF THE LEASE
The term of the lease shall be for a period of three (3) years,
commencing on the 15th day of July 15, 1999 and ending on the 14th day of
July, 2002, provided however, that subject to the following provisions, the
Lessee may terminate this lease effective at any time following the first
twelve (12) months of the lease term by so notifying the Lessor in writing of
its intention to so terminate. The effective date of any such termination of
this lease by the Lessee to the Lessor shall be effective six (6) months
following the date such notification is received by the Lessor, further
provided that such notification may not occur sooner than twelve (12) months
following the commencement date of the lease. In no event shall any such date
of termination be effective sooner than eighteen (18) months following the
commencement date of this lease.
31. RENTAL FOR REMAINDER OF TERM
Tenant shall pay as net rent an amount that shall be determined each
year as follows:
COST OF LIVING INCREASE:
As additional rent, the Tenant shall pay an increase
of 2% for cost of living annually beginning with year July 15,
1999 and ending July 14, 2002. The addition shall be paid
monthly starting July 15, 2000.
32. EXTENSION OF TERM
Provided the Tenant is in occupancy of the premises and is not in
default under the terms and conditions of this Lease, the Tenant shall have
the option to renew this Lease for Three (3) additional 3-year terms. Tenant
must inform the Landlord in writing at least six (6) months prior to the
expiration date of the then current term. During such renewal term, all of
the provisions of this Lease shall remain in full force and effect except
that there shall be no right of renewal and the rental during such renewal
period shall be as follows:
During each year of the renewal period the rent shall be determined
as provided for in Paragraph 31 of this Rider, as well as any additional rent
provided for in this Rider.
33. SALE OF PREMISES
In the event the Landlord decides to sell the premises, the Tenant
will be given the right to first refusal.
34. ALTERATIONS AND IMPROVEMENTS
Supplementing Paragraph 5, Tenant shall have the right to make
improvements and alterations to the premises at its sole cost and expense and
subject to Landlord's approval which will not be unreasonably withheld. In
particular, but without further limitation, the Tenant shall have the right
to add a new loading dock and drive-in-door in the rear of the building. The
new dock, however, shall conform to the now existing dock for aesthetic
purposes. Landlord further agrees that Tenant may fence the entire property
or any part thereof. In addition, Tenant shall have the right to install
vents and fans on the roof. The aforementioned alterations as well as others
that may be made during Tenant's demise of the premises shall, at the
expiration of Tenant's term, become the property of the Landlord.
<PAGE>
35. ENVIRONMENTAL COMPLIANCE
Tenant agrees to indemnify and hold Landlord harmless for all
violations issued by applicable environmental agencies issued as a result of
Tenant's occupancy of the premises. Additionally, tenant agrees to perform
generally accepted testing on the premises prior to Tenant's vacating the
premises showing that Tenant has not caused any harmful or unlawful discharge
of hazardous substances. Tenant also agrees to perform satisfactory testing
on the cesspool and sewer drains prior to Tenant's vacating the premises
showing that the cesspool and sewer drains are in satisfactory operation
condition, and if not, Tenant shall repair same.
In the event that tests performed by the Tenant show that Tenant has
caused hazardous discharges onto the premises, tenant shall, prior to
vacating the premises, remove said discharges from the premises in accordance
with the applicable laws and regulations regarding such removal. In the event
that Tenant fails to perform such removal, Tenant agrees to reimburse
Landlord for the costs of the removal by Landlord or its agents. This clause
shall survive Tenant's occupancy and is binding upon Tenant's successors and
assigns, whether corporate or individual and if individual to be binding upon
his heirs, executors or administrators.
Tenant further agrees not to use the storm drains, but to maintain
and clean them. Tenant agrees not to discharge any waste, hazardous,
infectious, or otherwise into the storm drains.
Landlord agrees to be responsible or the hold tenant harmless from
any violations issued by the applicable environmental agencies pertaining to
the condition of the premises prior to tenants original occupancy on November
15, 1988.
36. INSURANCE
Tenant shall, at its own cost and expense, procure and maintain
during the entire term of this agreement, public liability insurance from a
reputable company licensed to do business in the State of New York, which
policy shall be in the sum of $500,000 as to a single person and $1,000,000
as to a single occurrence and $1,000,000 property damage, and shall name both
Landlord and Tenant as insured thereby. Said policy shall be evidenced by a
certificate or binder deposited with the Landlord within fifteen (15) days of
the commencement of the term of this Lease.
In the event that the premiums for the insurance policy carried by
the Landlord with respect to the property herein demised shall be increased
by reason of any use to which the Tenant shall put the demised premises
hereunder, then and in that event, the Tenant will pay the entire amount of
such increased premiums. Landlord shall deliver to Tenant a photostatic copy
of its bill for insurance premiums evidencing such increase. Tenant shall
pay, within fifteen (15) days of the delivery to it of the photostatic copy
herein referred to Landlord as additional rent the increase in premiums.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,362
<SECURITIES> 0
<RECEIVABLES> 4,597
<ALLOWANCES> (301)
<INVENTORY> 213
<CURRENT-ASSETS> 8,175
<PP&E> 7,895
<DEPRECIATION> (3,883)
<TOTAL-ASSETS> 27,716
<CURRENT-LIABILITIES> 2,571
<BONDS> 296
0
0
<COMMON> 47
<OTHER-SE> 24,436
<TOTAL-LIABILITY-AND-EQUITY> 27,716
<SALES> 4,070
<TOTAL-REVENUES> 4,070
<CGS> 2,340
<TOTAL-COSTS> 3,549
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 729
<INCOME-TAX> 22
<INCOME-CONTINUING> 707
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 707
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.16
</TABLE>
