SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20001
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File No. 0-11-50
August 31, 1996
MAMMATECH CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2181303
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
930 N.W. 8th Avenue, Gainesville, Florida 32601 (352) 375-0607
- --------------------------------------------------------------------------------
(Address including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Exchange on Which Registered
------------------- ----------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
--------------
(Title of Class)
Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes x No
----- -----
The aggregate market value of the Company's common stock held by non-affiliates
as of November 30 was $357,274 based on the average bid and asked price. As of
November 30, there were 100,352,500 shares of the Company's common stock
outstanding. Of this sum, 6,208,500 shares are treasury shares.
Total Number of Pages: 35 Exhibit Index is on Page: 34
<PAGE>
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
- --------------------------------
INTRODUCTION
- ------------
The Company owns all rights to, subject to certain minor royalties, and is
engaged in the sale of a patented breast tumor detection training system (the
"MammaCare System"). Using lifelike models of a human female breast, the
MammaCare System is designed to train women to perform effective Breast Self-
Examination ("B.S.E."). The breast models contain simulated tumors of varying
sizes, ranging from under 5mm. to over 10mm. They also contain material which
simulates the normal nodularity, or "lumpiness", that characterizes most breast
tissue.
The MammaCare System is sold in several forms, all of which contain at
least one of the Company's patented breast models. Originally, a client was
given private training after which she was provided with a take-home breast
model and other materials. Now, the customer may view a video tape developed by
the Company which teaches her the proper use of the model(s) and an extremely
thorough examination technique. The practice model is designed to permit a woman
to reinforce her B.S.E. skills periodically and serves as a comparative standard
as she palpates her own breast.
Although the patient can never determine whether a lump is benign or
malignant, detection of tumors in the size range simulated by the models is
important to early diagnosis of malignancies. Thus, the Company believes that by
training women to palpate the breast model (and their own breasts) properly, the
MammaCare System will lead to early detection of breast cancer and thus reduce
morbidity and mortality due to this disease.
The sale of take-home models, together with training in the Company's
method of B.S.E., was originally accomplished primarily through franchise and
license arrangements (collectively referred to as "Franchises") with healthcare
providers. In addition, the Company owns and operates one MammaCare Center in
Gainesville, Florida. Franchisees sell materials and provide training directly
to women, as does the Company at its own Center. To date, these franchisees have
been medical schools, hospitals, breast centers, and radiology clinics.
In recent years, development and marketing through new Franchises has been
de-emphasized because this marketing approach proved overy costly and cumbersome
for the returns it generated. The Company has therefore developed a different
marketing strategy which involves the sale of an integrated training system
known as the MammaCare Learning System (the "Learning System"). The Learning
System is available in two versions, the Professional and the Personal, and is
comprised of one (Personal) or two (Professional)
2
<PAGE>
breast models and a videotaped B.S.E. training program designed to be viewed by
women in their homes. In both cases, the skill learned is subject to ultimate
evaluation by a physician. See Item 1, "New Marketing Approach".
THE PURPOSE OF BREAST SELF-EXAMINATION
- --------------------------------------
Manual palpation has been and remains the most widely used method for
detection of breast cancer in all stages of development. The breast is an ideal
organ for physical examination because of the external location, coupled with
the softness of the tissue and its hard backing. The earlier breast cancer is
detected, diagnosed and treated, the greater the chances are for arrest of the
condition. Published studies of breast pathology have shown that 94% of all
cancerous tumors of the breast are potentially discoverable by manual
examination conducted by a properly trained person. Even though women themselves
remain the primary discoverers of breast cancer, several reports show that
B.S.E. is not widely practiced. Consequently, most breast cancers are initially
detected at a relatively advanced stage with metastasis having already occurred.
The average size tumor that women present to their physicians is about 3.5 cm.
(over one inch) in diameter. Treatment often requires a radical mastectomy (an
extensive surgical procedure which includes removal of the breast, underlying
muscle and axillary lymph nodes) followed by a course of radiation treatment
and/or chemotherapy. On the other hand, if the disease is initially detected
while the primary tumor is small ( less than 1.0 cm) and no lymph nodes are
involved, treatment often involves only removal of the tumor and a margin of
surrounding healthy tissue. Thereafter, a course of radiation treatment is often
prescribed as a precautionary measure.
In research conducted at the University of Florida under the direction of
the two principle shareholders of the Company, together with a third individual,
more than 445 women were taught to detect tumors in the model ranging from 2 to
10 mm. As a result of this training, 33 of these women (7.4%) discovered
suspicious masses and were referred to physicians. This percentage is comparable
to that expected from screening procedures involving mammography and clinical
examination.
The research was conducted at the University's Center for Ambulatory
Studies. Except for a National Cancer Institute grant made directly to the
University in 1977 and one small direct University grant, the research was not
directly sponsored by the University; instead, it was concluded at the
University's facilities under the supervision of the Company's two principle
shareholders (and a third person) as part of their normal faculty research
duties. The University released its rights to this research.
3
<PAGE>
Based upon its commercial experience with approximately 10,000 women who
have had the benefit of MammaCare training, the Company has demonstrated that
the MammaCare System can train women to detect masses as small as 0.3 cm. It has
been well documented that detection of such small masses often enables the
surgeon to provide treatment in the form of lumpectomy (see above) or some other
less extensive procedure not requiring total removal of the affected breast and
surrounding tissue.
BASIC TRAINING MODEL AND TRAINING
- ---------------------------------
The Company's basic training model is a life-like model of a human female
breast. Its covering is a thin silicone membrane which simulates human skin. The
interior of the model, also made of silicone, closely simulates that of a mature
female breast with respect to granular, glandular, adipose and connective
tissue. Implanted within the model are simulated tumors consisting of extruded
polymers whose firmness matches that of excised tumors. The model is
manufactured in different degrees of firmness and nodularity in order to offer
the trainee a model which closely resembles her own breast.
A special series of training exercises is used to instruct women in basic
palpation techniques required for manual self- examination for breast anomolies.
The basic approach is to: (1) teach the distinction between the feel of all
varieties of normal breast tissue and that of typical breast tumors, (2) teach a
method of palpation that insures contact with all depths of the trainee's own
breast tissue, and (3) teach a pattern of examination that insures palpation of
all breast tissue.
COMPANY CENTER
- --------------
The Company's Center is located in Gainesville, Florida. This Center serves
three important functions. It is the national training center established to
provide training for all franchisees, physicians, nurses, and Company personnel
who are engaged in offering MammaCare to the public. Another function of this
Center is to package and ship MammaCare Products. Finally, this facility serves
as a research center permitting the Company to undertake marketing and product
development researh.
As part of the Company's commitment to maintain the quality of its service
to both the medical profession and women who need B.S.E., the Company has
developed two training programs at the Gainesville Center. The first is a
comprehensive, one-week training program leading to certification as a MammaCare
Specialist. Specialist certification is dependent upon a demonstrated mastery of
pertinent selected biological and medical literature as well as the MammaCare
Method.
4
<PAGE>
The second training program leads to an Associate certificate. It is a
three-day training session for physicians and nurses which enables them to
instruct women in the use of the Learning System. These certification procedures
are used by the Company to control the quality of its training. It is a matter
of resolute Company policy that a woman's mastery of the MammaCare System will
only be evaluated by a physician or MammaCare Specialist. MammaCare Specialists
are empowered to train and certify MammaCare Associates at their own sites.
MARKETING OF THE COMPANY'S SYSTEM AND MODELS
- --------------------------------------------
The MammaCare System and the MammaCare Learning Systems are each sold as an
integrated whole.The Company does not permit models to be sold separately
without each woman receiving appropriate training, either through the actual
training sessions required in connection with the MammaCare System, through the
video training contained in either of the Learning Systems, or through training
provided by the Arkansas,California, Florida, and Maine Divisions of the
American Cancer Society in accordance with the Company's standards.
During the last several fiscal years, the Company has intensified its
efforts to offer MammaCare overseas. To date, the Company has had sales of
approximately $60,000 in Australia as a result of contacts made on the basis of
research performed and published by the two principals. The Company enjoys
relationships with a substantial members of the Japanese and Korean health care
industries (see p. 17 below). The Company has also developed continuing
customers in France, Germany, and Denmark and is presently exploring the
feasibility of entering into exclusive sales agreements with representatives in
Western Europe. No assurance is given that the Company will successfully
penetrate these foreign markets.
The Company has developed an extensive customer base in Canada and
anticipates increased activity in that country as the trade barriers continue to
be dismantled as a result of NAFTA. The Company has trained a number of
MammaCare Specialists who live and work in Canada and maintains close
professional ties to these individuals.
NEW MARKETING APPROACH
- ----------------------
During the Spring of 1986, the Company concluded that Centers were not
providing enough sales volume and not recruiting enough new users of the System.
After the end of 1986 fiscal year, the Company implemented a new marketing
strategy designed to encourage sales through physicians. Shortcomings with the
5
<PAGE>
prior marketing approach included the price of MammaCare (up to $125), which
generally was not covered by most health insurance carriers and the
inconvenience women found with the training at the Centers.
Under this new marketing approach, health care providers purchase the
MammaCare Professional Learning System directly from the Company for $225 each.
The Company does not generate any revenues from the use of the Learning System
by women; its sole revenues under the new marketing approach come from sales of
System and any accompanying training.
The MammaCare Professional Learning System consists of a teaching model, a
45-minute video cassette, and practice kit. The teaching model is a patented
breast model, designed to teach the difference between the feel of normal,
nodular breast tissue and the feel of small lesions. The video cassette guides
the learner through a series step-by-step exercises, first on the models, then
on her own breast tissue. This is intended to lead to mastery level proficiency
in palpation, search technique and lump detection. The practice kit contains a
"take-home" breast model, a written review manual, a reminder calendar and a
record booklet.
It is suggested that providers make the System available to their patients
to use at a set fee. A patient may purchase the practice kit portion of the
System for continued monthly reinforcement of her skills. Patients may view the
videotape either in their homes or in the provider's facility. In either case, a
patient should have her proficiency reviewed by a physician or certified
MammaCare Specialist.
By obtaining the MammaCare Learning System from their own providers,
patients are assured of receiving the full quality of MammaCare without the
inconvenience and expense of a lengthy clinic visit. Further, it is anticipated
that the cost of MammaCare to the public will be lower than historical prices
charged for this service. However, while the Company has made providers aware of
the need to keep the price of MammaCare reasonable, the providers are free to
charge whatever fee they deem appropriate for the use of the System. In light of
the fact that most health insurance policies do not reimburse patients for any
portion of their MammaCare expenses, no assurance can be given that the
physicians will set prices low enough to attract patients.
Providers who are Franchisees or licensees are permitted to purchase Kits
at a substantiasl discount. The Company's intent is for these providers to act
as distributors to other physicians and health care providers in their
respective geographic regions. Patients would then seek a proficiency evaluation
from either their physician or the Franchisee/provider. Conceivably, if
additional treatment were needed, the patient would choose the physician or
health care provider to furnish such treatment since a health care relationship
had already been established.
6
<PAGE>
A direct-to-physicians marketing approach was also developed during the
Summer of 1986 and implemented in late September of the same year. To date,
there are over 1000 physicians, hospitals and diagnostic centers throughout the
United States providing the Learning System to women. Although it is too early
to judge whether it will be more successful than the Company's earlier marketing
strategies, the Company believes that this marketing approach is superior
insofar as it eliminates certain prior deficiencies. No assurances can be given
that this new marketing approach will be successful. In any event, for the
Company to maintain profitability, MammaCare must be provided to an ever
increasing number of women.
Early in 1989, the Company introduced a companion product called the
MammaCare Personal Learning System. It contains a single breast model, a 45-min.
video tape which teaches the same skills as the videotape in the Professional
System but with reference to the single model, and assorted printed matter. This
System is being marketed directly to women and was described in the August 1989
issue of Redbook and the July-August 1991 issue of the East West Journal. The
Company is presently evaluating consumer response to this product and expects to
develop additional marketing strategies for it in the coming year. The MammaCare
Personal Learning System is sold for $69.50, making it affordable and convenient
for working women and others who are unable to schedule and keep appointments
with health care providers.
In 1993, the Company introduced a third version of MammaCare known as the
MammaCare Clinical Learning System. This system is used to train physicians and
other health care providers to conduct clinical breast examinations using the
MammaCare Method. It is being adopted by medical schools, teaching hospitals,
and a small number of HMO's who are attempting to control costs by taking
advantage of the benefits of competent manual examination of the breast as a
means of early cancer detection.
OTHER MARKETING APPROACHES
- --------------------------
It is part of the Company's overall marketing strategy to arrange for the
availability of MammaCare wherever women routinely seek health service. To this
end, the Company has sought to penetrate the institutional market and medical
departments of large corporations. Limited resources have prevented the Company
from pursuing this strategy vigorously; however, the General Electric
Corporation ("GE") has introduced the Professional Learning System into its
Fairfield, Connecticut headquarters facility where it was reportedly well
received. GE has purchased three Learning Systems for use in other facilities.
7
<PAGE>
Additionally, Pacific Bell has purchased a small number of MammaCare Personal
Learning Systems for a trial program aimed at their female employees. Results of
that trial were reported in 1991 and were judged favorable by Pacific Bell
representatives.
The Company is currently negotiating with several other large corporations
to make MammaCare available in their health care facilities. The Company
believes that the addition of the MammaCare Personal Learning System may offer a
more attractive mechanism for providing MammaCare in the workplace. There can be
no assurance, however, that either these negotiations, trial programs, or
related marketing efforts will result in sugnificant revenue for the Company.
Until recently, the Company retained a Southern California nurse
practitioner as a marketing consultant for MammaCare. This individual is
employed by a large health care concern in Beverly Hills, California and is a
nationally recognized expert on BSE. She appeared on the first ABC-TV "Home
Show" in February, 1988 where she described the MammaCare Learning System to a
nationwide audience. Her organization now uses MammaCare in all of its breast
centers under a special agreement negotiated during 1992.
Largely as a result of the efforts of this individual, the California
Division of the American Cancer Society adopted several features of MammaCare
for enhancement of their national Special Touch program. Specifically, the
Company provides its patented training models to Special Touch Facilitators who
have undergone training approved by the Company. These individuals may also
purchase the Company's Home Practice Model for use by participants in California
A.C.S. BSE training programs. In November of 1989, the California Division
received an Honors Citation for its Special Touch Program from the National
Office of the American Cancer Society. To date, the Company has shipped
approximately $40,000 worth of products to California A.C.S. chapters or
affiliated individuals under this arrangement.
Similar arrangements have been concluded with the Alaska, Arkansas,
Delaware, Florida, Georgia, Indiana, Kansas, Kentucky, Maine, Minnesota, New
York,South Carolina, South Dakota and Wisconsin Divisions of the American Cancer
Society. In additional to nominal revenues associated with the initial training
efforts, the Company received approximately $18,000 as the result of a single
purchase by the Arkansas Department of Public Health. Aggregate revenues from
the other participating ACS Divisions have now exceeded $100,000.
RESEARCH
- --------
The University of North Carolina at Chapel Hill has received a federal
grant to train all of its residents and staff physicians in the MammaCare
Method. The Company estimates that it will receive approximately $10,000 for the
8
<PAGE>
sale of breast models and consulting fees. In addition, the University of North
Carolina has received a separate $1,117,992 grant which will involve the
training of approximately 200 local physicians to upgrade the quality of
clinical breast screening in the greater Wilmington area. In addition to
mammography, this project will also involve the Company's patented MammaCare
System. This project is currently in the physician training phase and is
reportedly proceeding on schedule. Estimated model sales and consulting fees are
not anticipated to exceed $35,000.
Other institutions and organizations conducting research involving
MammaCare include Johns Hopkins University, the Fred Hutchinson Cancer Center,
the University of California at San Diego, the University of Oregon, the
University of Arkansas, the University of Vermont, the State University of New
York at Stony Brook, the Harvard Community Health Plan, the University of
Cincinnati, the University of Indiana, the Fox Chase Cancer Center, Northwestern
University, the University of West Virginia and U.S. Healthcare.
PATENTS, TRADEMARKS AND COPYRIGHTS
- ----------------------------------
The MammaCare System was invented by seven people, including the Company's
two principle shareholders, as part of research activities conducted at the
University of Florida. Subject to royalties payable to four of the co-inventors,
the Company owns all rights to and is entitled to receive all revenues from the
System. The Company's ownership interest in the patents and foreign patent
applications is as follows:
Total Sale Volume of the System Company's Percentage
- ------------------------------- --------------------
$ 1 to $ 5,000,000 97.14%
$ 5,000,001 to $ 7,500,000 97.71%
$ 7,500,001 to $10,000,000 98.29%
$ 10,000,001 and over 98.86%
- ----------------
The Company's position is that based upon reasonable expectations of the
parties, the above figures are for the life of the patent.
PATENTS
- -------
The Company is the assignee of the following patents and patent
applications directed to the Model and/or the System as indicated.
9
<PAGE>
Patent No. Issue date
or Appli- or Filing Expiration Subject
Country cation No. Date Date Matter
- ------- ---------- ---------- ----------- --------
United 4,134,218 1/16/79 1/16/96 Model and
States Methods and
Apparatus relating to
the System
United 308,914 Filed New model relating to
States 2/9/89 the system.
Canada 1,109,252 9/22/81 9/22/98 Model
Canada 1,147,951 Filed 6/14/2000 Methods and
6/14/83 Apparatus relating to
the System
United 2005894 5/26/82 10/2/98 Model
Kingdom
United 2077017 10/13/82 10/2/98 Methods and
Kingdom Apparatus relating to
the System
Germany P 2844373.4 11/11/81 10/12/98 Model, as well as
certain apparatus
relating to the System
Germany(1) Pending Filed - Division application
Application 2/25/80 of the application
P 2857496.14 which issued as
German Patent
No. P 2844373.4 and is
directed to methods
and apparatus relating
to the system
10
<PAGE>
Patent No. Issue date
or Appli- or Filing Expiration Subject
Country cation No. Date Date Matter
- ------- ---------- ---------- ----------- --------
Japan 1304322 6/15/85 10/11/98 Methods and
Apparatus relating to
the System.
Japan(2) Pending 10/26/84 - Model allowed and
224,279/84 published for
opposition. Opposition
proceeding pending.
(1) The German Patent Office has issued a notice of a decision to grant this
application. After the application is granted, it will be published for the
purpose of opposition, an interested person may oppose the granting of the
application within three months of the publication date.
(2) This application was allowed by the Japanese Patent Office and published for
opposition in September, 1985. In November, 1985, a Statement of Opposition was
filed on the ground that protection sought fro this model was overbroad and that
the Company's model is not sufficiently novel or inventive compared to other
models to support a patent. In November, 1986, the Company filed a repose
setting forth their position that the patent application defines the model in a
manner that is patentable over all of the prior models known. To date, the
Japanese Patent Office has not acted on this matter.
All of the foreign patents and patent applcations have claimed the benefit
of the filing date of the application which issued as U.S. Patent No. 4,134,218,
namely, October 11, 1977, under the Paris Convention of 1883 for the Protection
of Industrial Property. There is no assurance that any of the pending patent
applications will be issued as patents.
11
<PAGE>
TRADEMARKS
- ----------
The following chart depicts the trademarks and copyrights owned by the
Company:
Registration
Type of Mark Mark Number Status
- ------------ ---- ------------ ------
U.S. Trademark The MammaCare 1,288,296 Issued
Method & Design 7/31/84
U.S. trademark The Mammatech 1,305,388 Issued
Corporation 11/13/84
U.S. Trademark MammaKit 1,317,844 Issued
2/5/85
U.S. Trademark MammaTrainer 1,310,897 Issued
& Design 12/25/84
U.S. Trademark MammaTest 1,303,689 Issued
& Design 11/6/84
U.S. Trademark M & Design 1,310,918 Issued
12/25/84
U.S. Trademark Hand Design 1,357,256 Issued
8/27/85
U.S. Trademark MammaCare 1,445,641 Issued
6/30/87
- ---------------------------------------------------
COPYRIGHTS
- ----------
Registration
Type Name Number Effective for:
- ---- ---- ------------- --------------
Advertising What Am I TX1-199-545 75 years from
Brochure Supposed to 9/29/83
Feel?
Test Form MammaTest TX1-234-492 75 years from
12/14/83
Instructional The MammaCare TX1-259-524 75 years from
Manual Method 12/29/83
12
<PAGE>
ITEM 2. PROPERTIES
- ------- ----------
The Company's facilities house its executive offices and MammaCare Center.
Located at 930 N.W. 8th Avenue, Gainesville, Florida, the Company's offices are
approximately 2,700 square feet. Rent is $1295.25 per month plus utilities.
These facilities are adequate for the Company's current business operations. The
Company does not anticipate difficulties in obtaining additional office
facilities in Gainesville at comparable rates should operations expand
sufficiently. The Company rents these facilities from an unrelated party on a
month-to-month basis.
The Company owns a completely equipped modular factory unit that is housed
within a building owned by RTS Laboratories, Inc. (RTS), a non-affiliated
organization located in Alachua, Florida. RTS supplies personnel and
manufactures the Company's models under contract, using the Company's modular
facility, materials, and equipment.
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
There is no current or pending litigation involving the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
13
<PAGE>
PART II
-------
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK EQUITY AND RELATED
SHAREHOLDER MATTERS
- -----------------------------------------------------------------
A. Market Information. The Company's common stock is traded in the
over-the-counter market. From February 1983, through December 1985, there had
been an established trading market on NASDAQ for the Company's common stock.
However, in mid-December 1985, the Company's common stock was de-listed by
NASDAQ. The Company's common stock is currently listed in the National Quotation
Bureau "pink sheets". Throughout 1996, the bid value of the stock ranged from
$0.001 to $0.04.
The following information concerning the National Quotation Bureau price of
the Company's common stock has been received from NASDAQ and the National
Quotation Bureau.
Quarterly Period High Bid (1) Low Bid (1)
---------------- ------------ -----------
November 30, 1988 $ 0.005 $ 0.005
February 28, 1989 $ 0.01 $ 0.0025
May 31, 1989 $ 0.01 $ 0.01
August 31, 1989 $ 0.01 $ 0.004
November 30, 1989 $ 0.01 $ 0.0075
February 28, 1990 $ 0.01 $ 0.005
May 31, 1990 $ 0.01 $ 0.005
August 31, 1990 $ 0.01 $ 0.001
November 30, 1990 $ 0.01 $ 0.001
February 29, 1991 $ 0.01 $ 0.001
May 31, 1991 $ 0.01 $ 0.001
August 31, 1991 $ 0.01 $ 0.001
November 30, 1991 $ 0.01 $ 0.001
February 29, 1992 $ 0.01 $ 0.001
May 31, 1992 $ 0.01 $ 0.001
August 31, 1992 $ 0.01 $ 0.001
August 31, 1996 $ 0.01 $ 0.005
August 31, 1996 $ 0.01 $ 0.001
- -------------------------------
(1) Such over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions.
B. Holders of Common Stock. As of August 31, 1996, there were approximately
3,460 record holders of the Company's common stock with 100,352,500 shares
outstanding, of which 6,208,500 shares are treasury stock.
14
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
Summary of Consolidated Statements of Operations
------------------------------------------------
Aug 31 Aug 31 Aug 31 Aug 31 Aug 31
YEAR ENDED 1996 1995 1994 1993 1992
- ---------- ------ ---------------------------------------------
Revenues from
Operations 331,688 301,524 269,208 193,563 142,170
Net Income (Loss) 67,715 44,548 44,802 (77,479) (209,243)
Income (Loss) Per
Common Share 0.00 0.00 0.00 (0.00) (0.00)
- ----------------------------
Summary of Consolidated Balance Sheet
-------------------------------------
Aug 31 Aug 31 Aug 31 Aug 31 Aug 31
YEAR ENDED 1996 1995 1994 1993 1992
- ---------- --------------------- ------- ------- -------
Total
Assets 365,925 281,691 228,889 214,660 79,469
Total
Liabilities 98,396 81,877 73,623 125,197 91,087
Shareholder's
Equity 267,529 199,814 155,266 89,463 (11,618)
During these periods, no cash dividends were declared or paid.
- --------------------------------------------------------------------------------
15
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULT OF OPERATIONS
--------------------
Results of Operations.
----------------------
The sales data for 1996 set yet another record for the Company and extends
the trend established over the past several years. Figure 1 shows this progress
since 1987, the first year the Company sold its products directly to the medical
profession rather than through its licensed centers.
[GRAPHIC OMITTED Sales Revenues
of the Mammatech Corporation: 1987-1996]
The 1996 sales total of $331,688 represents an increase of 10.0% over the
previous year and a 23.2% increase over 1994. Export sales accounted for 5.3% of
the total, down from 9.3% in 1995.
The Company experienced a substantial increase (60.4%) in operating costs
over 1995, primarily the result of administering an SBIR Phase I grant (see
below).The increase in sales, coupled with otherwise stable operating costs,
enabled the Company to record the third consecutive operating profit in its
history.
During the year, the Company increased its customer base while continuing
to serve its established customers. A number of additional State Health
Departments purchased product from the Company in connection with Breast and
Cervical Cancer Program (BCCP) grants from the Center for Disease Control. In
particular, the Health Department of the State of Maine, in collaboration with
the Maine Division of the American Cancer Society, began implementing a state
wide breast cancer screening program using MammaCare. The Company provided
training to professionals from both orgainzations and anticipates modest
continuing sales as a result of these activities. The Company also anticipates
sales of its MammaCare Clinical Learning System to these and other BCCP
recipients although there can be no assurance that such sales will materialize.
16
<PAGE>
During the third and fourth quarters, the Company began providing
specialized training and products to medical personnel from military facilities
along the East coast. There is a commitment on the part of all three service
branches to upgrade their breast cancer screening practices for the benefit of
both female military personnel and dependents. The Company has scheduled a
number of such training sessions into the next fiscal year and anticipates
modest product sales as a result. The Company continues to hold a sales and
distribution agreement with a member of the Korean Health Care industry. At this
writing, the Company is completing production of Korean versions of some of its
training products and anticipates at least modest revenues as a result of
distribution thereof throughout Korea.
Finally, the Company sought and was awarded a Phase I grant in the amount
of $97,846 from the Small Business Innovative Research (SBIR) Program of the
National Institutes of Health. These funds enabled the Company to design,
produce, and evaluate two variations of its MammaCare Personal Learning System,
one for visually impaired women and one for the hearing impaired. The
experimental data obtained formed the basis of a Phase II proposal which is now
in the review process.
Liquidity
---------
At the close of the 1996 fiscal year, the Company's current assets totalled
$312,087 compared to $244,462 at the close of 1995. Results for the first
quarter of 1997, although not completely determined at the time of this writing,
portend no immediate decrease in this figure.
The Company continues to support its operations solely on the basis of
operating revenues and is debt free but for its note for $12,248 to an
unaffiliated supplier for its manufacturing facility. The Company's principal
goal continues to be to make MammaCare available to all women at risk for breast
cancer through affiliations with capable organizations in the health care
industry.
Capital Resources.
------------------
The Company has no material commitment for capital expenditures and there
are no known trends in its capital resources.
ITEM 8. FINANCIAL STATEMENTS - (SEE FOLLOWING PAGES)
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Mammatech Corporation
We have audited the accompanying balance sheets of Mammatech Corporation as of
August 31, 1995, and 1996, and the related statements of operations, changes in
stockholders' equity, and cash flows for each of the three years then ended.
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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mammatech Corporation as of
August 31, 1995, and 1996, and the results of its operations, and its cash flows
for each of the three years then ended, in conformity with generally accepted
accounting principles.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
October 8, 1996
18
<PAGE>
Mammatech Corporation
Balance Sheets
As of August 31, 1995 and 1996
Assets
1995 1996
----------- ------------
Current Assets:
Cash and cash equivalents $ 136,702 $ 179,651
Accounts receivable:
Trade (net of reserve of $17,945 and
$18,482) 71,505 34,287
Other 3,114 3,246
Inventory 33,141 94,903
---------- ----------
Total current assets 244,462 312,087
Property and Equipment, net 31,938 52,277
Other Assets:
Patents, trademarks and other intangibles,
net of accumulated amortization of
$59,148 and $64,376 respectively 5,291 1,561
---------- ----------
Total assets $ 281,691 $ 365,925
========== ==========
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Mammatech Corporation
Balance Sheets
As of August 31, 1995 and 1996
(Continued)
Liabilities and Stockholders' Equity
1995 1996
----------- ------------
Current Liabilities:
Accounts payable - trade $ 25,189 $ 21,594
Note payable - 3,325
Accounts payable - officers 8,630 8,630
Accrued expenses 48,058 55,624
---------- ----------
Total current liabilities 81,877 89,173
Long-term debt - 9,223
Commitments and contingencies
Stockholders' equity:
Common stock, $.0001 par value,
200,000,000 shares authorized,
100,352,500 shares issued and outstanding 10,035 10,035
Additional paid in capital 2,809,594 2,809,594
Accumulated deficit (2,471,764) (2,404,049)
---------- ----------
347,865 415,580
Treasury stock, at cost, 6,208,500
shares (148,051) (148,051)
---------- ----------
199,814 267,529
Total liabilities and stockholders' equity $ 281,691 $ 365,925
========== ==========
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Mammatech Corporation
Statements of Operations
Years Ended August 31, 1994, 1995 and 1996
1994 1995 1996
----------- ----------- ----------
Sales, net
Domestic $ 201,317 $ 273,184 $ 314,108
Export 67,891 28,340 17,580
---------- ---------- ---------
269,208 301,524 331,688
Cost of sales 74,235 99,415 103,819
---------- ---------- ---------
Gross profit 194,973 202,109 227,869
Selling, general and
administrative expenses 149,400 163,761 262,686
---------- ---------- --------
Income (loss) from operations 45,573 38,348 (34,817)
Other income and (expense):
Other income - - 97,846
Realized (loss)
on investments (5,187) - -
Interest and dividend income 4,416 6,200 4,686
--------- ---------- --------
(771) 6,200 102,532
Income before
provision for income taxes 44,802 44,548 67,715
Provision for income taxes - - -
--------- ---------- --------
Net income $ 44,802 $ 44,548 $ 67,715
========== ========== ========
Per share amounts:
Net income per share $ .00 $ .00 $ .00
========== ========== ========
Weighted average shares 100,352,500 100,352,500 100,352,500
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
Mammatech Corporation
Statement of Changes in Stockholders' Equity
For the Years Ended August 31, 1994, 1995 and 1996
Common Stock
Shares Par Value Additional Common
---------- --------- Paid In Accumulated Stock Treasury
Capital Deficit Subscriptions Stock
----------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance August 31, 1993 80,352,500 $ 8,035 $2,814,594 $(2,561,114) $ - $(172,051)
Officers' stock
subscriptions 20,000
Treasury shares issued
for compensation (23,000) 24,000
Net income for the year 44,802
----------- ------- --------- ---------- -------- --------
Balance August 31, 1994 80,352,500 8,035 2,791,594 (2,516,312) 20,000 (148,051)
Issuance of common stock
subscribed for 20,000,000 2,000 18,000 (20,000)
Net income for the year 44,548
----------- ------- --------- ---------- --------- --------
Balance August 31, 1995 100,352,500 10,035 2,809,594 (2,471,764) - (148,051)
Net income for the year 67,715
---------- ------- -------- ---------- --------- --------
Balance August 31, 1996 100,352,500 $ 10,035 $2,809,594 $(2,404,049) $ - $(148,051)
=========== ======== ========= ========== ========= ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
22
<PAGE>
Mammatech Corporation
Statements of Cash Flows
For the Years Ended August 31, 1994, 1995 and 1996
1994 1995 1996
--------- --------- ----------
Operating activities:
Net income $ 44,802 $ 44,548 $ 67,715
Adjustments to reconcile net income
to net cash:
Depreciation 2,159 3,529 12,680
Amortization 6,139 6,066 5,230
Stock subscriptions for services 20,000 - -
Treasury stock issued for services 1,000 - -
(Increase) decrease in receivables (41,968) (3,935) 37,086
(Increase) in inventory (5,120) (935) (61,762)
(Increase) in other assets (1,200) - -
(Decrease) in accounts payable (5,956) (9,905) (3,595)
(Decrease) in deposits (46,075) - -
Increase in accrued expenses 458 21,358 7,566
-------- -------- --------
Net cash provided by (used in)
operating activities (25,761) 60,726 64,920
Investing activities:
Sale of marketable securities 94,542 - -
(Investment in) maturity of
certificates of deposit (50,000) 50,000 -
Acquisition of patents - - (1,500)
Purchase of fixed assets (290) (29,070) (17,414)
-------- --------- --------
Net cash provided by (used in)
investing activities 44,252 20,930 (18,914)
Financing activities:
Repayment of officer loans - (3,200) -
Repayment of note - - (3,057)
------- --------- --------
Net cash provided by (used in)
financing activities - (3,200) (3,057)
Net increase (decrease) in cash
and cash equivalents 18,491 78,456 42,949
Beginning cash and cash equivalents 39,755 58,246 136,702
-------- -------- --------
Ending cash and cash equivalents $ 58,246 $ 136,702 $ 179,651
======== ======== ========
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Mammatech Corporation
Statements of Cash Flows
For the Years Ended August 31, 1994, 1995 and 1996
(Continued)
Supplemental cash flow information:
Cash paid for: Interest $ - $ - $ 1,107
Income taxes $ - $ - $ -
Non cash financing and investing activities:
Realized loss on marketable
securities $ (5,187) $ -
Acquisition of equipment with note $ - $ - $ 15,605
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
Mammatech Corporation
Notes to Financial Statements
August 31, 1996
Note 1. Summary of Significant Accounting Policies
A. Organization and Operations: Mammatech Corporation was incorporated on
November 23, 1981, and holds patents on a breast tumor detection training
system. The system, which consists of a breast model and a method of breast
self-examination, is marketed by the Company to individuals and healthcare
professionals.
B. Inventories: Inventories, which consist principally of finished goods, are
stated at the lower of cost or market using the first-in, first-out method.
C. Property and Equipment: Property and equipment are carried at cost.
Depreciation and amortization are computed using the straight-line method over
the estimated useful lives of the assets ranging from 3 to 8 years. When assets
are retired or otherwise disposed of, the cost and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
recognized in operations for the period. The cost of repairs and maintenance is
charged to operations as incurred and significant renewals or betterments are
capitalized.
D. Patents, Trademarks, and Copyrights: Patents, trademarks, and copyrights are
amortized using the straight-line method over their estimated useful economic
lives of 10 years. They are stated at cost less accumulated amortization.
E. Revenue recognition: The Company recognizes revenue on the sales of its
products at the time of shipment.
F. Earnings per share: Earnings per share is computed using the weighted average
number of common shares outstanding for the periods presented.
G. Cash and cash equivalents: Cash and cash equivalents, consist of cash and
term deposits with original maturities of less than 90 days.
H. Estimates: The preparation of the Company's financial statements requires
management to use estimates and assumptions. These estimates and assumptions
affect the reported amounts in the financial statements and accompanying notes.
Actual results could differ from these estimates.
I. Fair value of financial instruments: The Company's financial instruments
consist of cash and cash equivalents, receivables and payables. The carrying
amounts of such financial instruments approximate fair value because of the
short term maturity of these instruments.
25
<PAGE>
Mammatech Corporation
Notes to Financial Statements
(Continued)
Note 2. Related Party Transactions
The Company occupies office and clinic space pursuant to a month to month lease
entered into with a shareholder at a cost of $1,295 per month plus certain
common costs, which approximates fair market value. Rent expense was $12,730,
$14,780, and $14,207 for the years ended August 31, 1994, 1995, and 1996,
respectively.
During prior years two officers of the Company made advances aggregating
$11,830. During the year ended August 31, 1995 $3,200 of these advances were
repaid.
During September, 1994, the Company agreed to issue 20,000,000 shares of its
$.0001 par value common stock to two of its officers for services. The Company
recorded a $20,000 charge to operations during the year ended August 31, 1994,
related to this issuance. These shares were issued in 1995.
During April, 1994, the Company issued 500,000 shares of treasury stock to
certain employees for services. The value attributed to the services was $500
and was based upon the bid price of the Company's common stock at the time it
was issued ($.001 per share). The difference between the cost of the treasury
stock ($12,000) and the charge to operations was charged to paid in capital (see
Note 6).
During February, 1989, an officer of the Company filed a patent application for
a product representing a variation of the Company's patented models. The new
product is an important part of the Company's product line. The Company has
entered into an agreement with this officer whereby the Company would enjoy
exclusive and unrestricted use of the new product for the payment of the patent
application fees. The agreement was for a period of one year and is
automatically renewable for additional one year periods provided, however, that
either party may cancel the agreement upon one months notice after the initial
year.
Note 3. Property and Equipment
Property and equipment consists of the following, at cost, at August 31:
1995 1996
-------- --------
Furniture and equipment $159,373 $176,538
Leasehold improvements - 15,854
------- -------
159,373 192,392
Less: accumulated depreciation 127,435 140,115
$ 31,938 $ 52,277
Depreciation charged to operations was $2,159, $3,529, and $12,680 during the
years ended August 31, 1994, 1995, and 1996, respectively.
26
<PAGE>
Mammatech Corporation
Notes to Financial Statements
(Continued)
Note 4. Note Payable
At August 31, 1996 the Company had a note payable due to a vendor in the
principal amount of $12,548 with interest at 8% per annum and payable in
installments of $350 per month until paid. Maturity of this note is as follows:
1997: $3,325; 1998: $3,602; 1999: $3,901; and 2000: $1,720.
Note 5. Commitments and Contingencies
In connection with the acquisition of the patent rights for the Company's system
of breast self-examination, the Company has paid $11,787 to the University of
Florida for its release of all patent rights. In addition, 7 inventors also held
certain patent rights to the Company's process. Three of these individuals, who
are principal shareholders of the Company, contributed their rights to the
Company. The remaining 4 inventors have assigned their rights in certain models
to the Company in exchange for royalty payments to be made based on sales. The
related sales were $47,972, $59,243, and $59,243 for the years ended August 31,
1994, 1995, and 1996, respectively. The related royalty expense was $1,372,
$1,706, and $2,252 for the years ended August 31, 1994, 1995, and 1996,
respectively. The aggregate royalties payable to the inventors is as follows:
Sales Royalty
-------------------------- -------
$ 1 - $ 5,000,000 2.86%
$5,000,001 - $ 7,500,000 2.29%
$7,500,001 - $10,000,000 1.71%
Over $10,000,000 1.14%
The Company does not maintain product liability insurance related to its product
line. It is unable to estimate the risks and possible economic consequences
related to its decision not to carry this type of insurance.
Note 6. Stockholders' Equity
During April, 1994, the Company issued 1,000,000 shares of treasury stock to
certain employees (see Note 3) and a vendor for services. The value attributed
to the services was $1,000 and was based upon the bid price of the Company's
common stock at the time it was issued ($.001 per share). The difference between
the cost of the treasury stock ($24,000) and the charge to operations was
charged to paid in capital.
27
<PAGE>
Mammatech Corporation
Notes to Financial Statements
(Continued)
Note 7. Concentration of Credit Risk/Major Customers
During the year ended August 31, 1994 the Company made sales to the Pennsylvania
Department of Public Health aggregating $40,877 (15% of total sales) and Ippondo
Health Care aggregating $46,075 (17% of total sales). The balance due from the
Pennsylvania Department of Public Health was included in accounts receivable at
August 31, 1994 and was collected during 1995.
At August 31, 1996 the Company has $125,852 on deposit in an uninsured money
market account
The Company currently utilizes a single manufacturer for its products. Should
this manufacturer be unable to meet the Company's demands it feels that it would
be able to locate another suitable manufacturer or manufacturers.
Note 8. Other Income
During 1996 the Company received a federal grant in the amount of $97,846 to
develop and adapt the Company's products for use by women with vision and
hearing impairments.
Note 9. Income Taxes
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classifications of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current depending on
the periods in which the temporary differences are expected to reverse. The
Company has not recorded the deferred tax asset related to the operating loss
carryforward because it cannot reasonably estimate its ability to utilize the
loss carryforward.
At August 31, 1996, the Company had net operating loss carryforwards aggregating
approximately $2,332,000 which expire beginning as follows:
1998: $ 184,000
1999: $ 738,000 2000: $ 233,000
2001: $ 279,000 2002: $ 280,000
2003: $ 228,000 2004: $ 131,000
2005: $ 115,000 2006: $ 74,000
2007: $ 54,000 2008: $ 16,000
28
<PAGE>
Mammatech Corporation
Notes to Financial Statements
(Continued)
The amounts shown for income taxes in the statements of operations differ from
the amounts computed at federal statutory rates. The following is a
reconciliation of those differences.
Year Ended August 31,
- ---------------------
1994 1995 1996
---- ---- ----
Tax at federal statutory rates 34% 34% 34%
Surtax exemption (19) (19) (16)
Operating loss carryforward (15) (15) (18)
--- --- ---
- % - % - %
=== === ===
29
<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosure
- ------------------------------------------------------------
None
PART III
- --------
Item 10. Directors and Executive Officers of the Company
- --------------------------------------------------------
The following persons are the executive officers and directors of the
Company.
Name Age Position with the Company
- ---- --- -------------------------
Mark Kane Goldstein, Ph.D. 58 Chairman of the Board, Vice-
President and Secretary
H. S. Pennypacker, Ph.D. 59 President and Director
Mary Bailey Sellers 48 Treasurer
All directors serve until the next annual meeting of shareholders. There is
currently one vacancy on the Board of Directors.
Mark Kane Goldstein
- -------------------
Mark Kane Goldstein, Ph.D., is Chairman of the Board, Vice President and
Secretary of the Company. Dr. Goldstein provides advice concerning policy
matters and general assistance on a part-time basis. Dr. Goldstein was formerly
President and Chairman of ACTV, Gainesville, Florida, and is currently a
director of that company. ACTV is a publicly held company with diversified
interests in the television and communications businesses. From 1971 until July,
1982, Dr. Goldstein was employed by the U.S. Veterans Administration ,
Gainesville, Florida, as a research scientist. During this same period, Dr.
Goldstein also was an Associate Professor/Research Scientist at the University
of Florida, Gainesville, Florida, and Co-Director of its Center for Ambulatory
Studies.
From 1978 through May, 1984, Dr. Goldstein was a member of the City
Commission of Gainesville, Florida including 1980-81 when he served a one-year
term as Mayor.
Dr. Goldstein received a B.A. in 1961 from Muhlenberg College, an M.A. in
1962 from Columbia University and a Ph.D. in 1971 from Cornell University. All
Degrees were in Psychology.
30
<PAGE>
Henry Sutton Pennypacker, Ph.D.
- -------------------------------
Henry Sutton Pennypacker, Jr., Ph.D., is President and a director of the
Company. He is currently employed as President of the Company and as Professor
of Psychology at the University of Florida. Except for three months when he is
not teaching, Dr. Pennypacker receives no compensation from the Company. He was
employed on a full-time basis by the Company from the closing of its public
offering in February 1983 until August 16, 1987. Since closing of the Company's
public offering, Dr. Pennypacker has retained his faculty position at the
University of Florida where he supervised continuing research into the Company's
method of B.S.E. on a very limited-time basis. Dr. Pennypacker was employed
there as a Professor of Psychology from 1970 to February 1983. He was the acting
Chairman of the Department of Psychology from June 1969 to 1970 and prior
thereto was an Associate Professor and Assistant Professor. In August, 1987, Dr.
Pennypacker was required to devote more time to his faculty position at the
University of Florida in order to retain his tenure.
Dr. Pennypacker is the author or co-author of four books and over fifty
articles and book chapters dealing with various aspects of behavioral research
and behavioral medicine. He is a past President of the International Association
for Behavior Analysis, the Society for Advancement of Behavior Analysis, and the
Florida Association for Behavior Analysis. On August 10, 1990, Dr. Pennypacker
received an award from the California Division of the American Cancer Society in
recognition of his "...pioneering contribution to breast self-examination
education."
Dr. Pennypacker received a B.A. and an M.A. from the University of Montana
in 1958 and 1960, respectively, and a Ph.D. from Duke University in 1962. All
degrees were in Psychology.
Mary Bailey Sellers
- -------------------
Mary Bailey Sellers has been employed as Controller by the Company since
September 1985. She was appointed Treasurer in August 1986. From April 1978
through November 1984, she was employed by Barnett Bank of Alachua County, N.A.,
and a predecessor bank as Vice President--commercial loans. Mrs. Sellers devoted
her time to her family from December 1984 through August 1985.
Mrs. Sellers received a B.A. in English and History in 1970 from Barry
College.
31
<PAGE>
Item 11. Executive Compensation
- --------------------------------
The following table sets forth the cash remuneration paid or accrued by the
Company during the fiscal year ended August 31, 1996, to each executive officer
whose total cash compensation exceeded $60,000 and to all executive officers of
the Company as a group.
Cash Compensation Table
-----------------------
A B C
- --------------------------------------------------------------------------------
Name of individual Capacities in Cash
or number of persons which served Compensation
in a group
All executive officers All capacities $57,385
as a group
(three persons) (1)
(1) No executive officer of the Company received more than $30,260 in
compensation during the fiscal year ended August 31, 1996.
Dr. H. S. Pennypacker, Jr., President of the Company, and Dr. Mark
Goldstein received nominal compensation associated with their activities on the
research grant during the 1996 fiscal year. During 1995, the Company accrued
$18,000 in salary for Dr. Pennypacker. Mary Sellers receives a salary of $30,260
per year.
During September, 1992 the Company authorized the issuance of to H.S.
Pennypacker and M.K. Goldstein a total of 20,000,000 shares of common stock. The
Company valued these shares at $20,000. In addition, the Company accrued $20,000
in salary due to Dr. Goldstein.
During August, 1994, the Company agreed to issue 20,000,000 shares of its
$0.0001 par value common stock to two of its officers for services. The Company
recorded a $20,000 charge to its operations during the year ended August 31,
1994, related to this issuance.
During April, 1994, the Company issued 500,000 shares of treasury stock to
certain employees for services. The value attributed to the services was $500
and was based upon the bid price of the Company's common stock at the time it
was issued ($0.001 per share). The difference between the cost of the treasury
stock ($12,000) and the charge to operations was charged to paid-in capital.
All directors receive reimbursement of expenses but no fees for serving as
directors.
32
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
The following table sets forth, as of Nov. 30, 1996, the number of shares
of common stock owned both of record and beneficially by (i) all persons owning
five percent or more of the outstanding common stock of the Company; (ii) all
directors, and (iii) all officers and directors as a group:
Shares of Percentage of
Stock Owned Outstanding Shares
- --------------------------------------------------------------------------------
Mark Kane Goldstein, Ph.D. (2) 26,516,000 26.4%
930 N.W. 8th Avenue
Gainesville, Florida 32601
H. S. Pennypacker, Ph.D. 25,800,000 25.7%
930 N.W. 8th Avenue (1)(2)
Gainesville, Florida 32601
Mary Bailey Sellers 400,000 4.0%
930 N.W. 8th Avenue
Gainesville, Florida 32601
All Officers and Directors
as a group (1)(2)
- ------------------------------
(1) All shares owned by Dr. Pennypacker are owned by himself and his wife as to
which Dr. Pennypacker has shared investment and voting power.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
On February 9, 1989, Mark Kane Goldstein, an Officer and Director of the
Company, filed Patent Application Serial No. 308,914 seeking protection for a
new breast model that represents a significant variation on the Company's
patented models. The new breast model is an integral part of the Company's new
MammaCare Personal Learning System. The Company has entered into a licensing
agreement with Dr. Goldstein whereby the Company enjoys exclusive and
unrestricted use of the invention in exchange for payment of costs associated
with preparation and filing of the patent documents together with whatever
foreign patent protection the Company, in consultation with Dr. Goldstein, may
seek.
33
<PAGE>
PART V
------
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
- -------- ------------------------------------------------------------------
(a) The following documents are filed as part of this Report on Form 10-K.
Financial Statements Pages 18 to 31
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the last
quarter of the fiscal year ended August 31, 1996.
(c) Exhibit Index: None
3 Articles of Incorporation*
3.1 Articles of Amendment to Articles of Incoporation*
3.2 By-Laws*
3.3 Amendments to By-Laws*
4 Warrants*
10.1 Patent Assignment Agreements*
10.2 H. S. Pennypacker Assignment*
10.3 Mark Kane Goldstein Assignment*
----------------------------------------
* Contained in the Company's registration statement of Form S-18 filed in
October 27, 1982.
** Contained in Amendment No. 1 to the Company's registration statement on
Form S-18 filed on November 13, 1982.
*** Contained in Amendment No. 3 to the Company's registration statement on
Form S-18 filed on November 9, 1982.
34
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
MAMMATECH CORPORATION
---------------------
By: /S/ H. S. PENNYPACKER, JR.
----------------------------------------------------------------------------
H. S. Pennypacker, Jr., President
Date: November 15, 1996
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 Company and in
the Capacities and on the dates indicated.
Signature Position or Office Date
- --------- ------------------ ----
/S/ MARK KANE GOLDSTEIN
----------------------- Chairman of the Board November 15, 1996
Mark Kane Goldstein
/S/ H. S. PENNYPACKER, JR.
----------------------- President and Director November 15, 1996
H. S. Pennypacker, Jr.
/S/ MARY BAILEY SELLERS
----------------------- Treasurer November 15, 1996
Mary Bailey Sellers
35
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 179,651
<SECURITIES> 0
<RECEIVABLES> 56,015
<ALLOWANCES> 18,482
<INVENTORY> 94,903
<CURRENT-ASSETS> 312,087
<PP&E> 192,392
<DEPRECIATION> 140,115
<TOTAL-ASSETS> 365,925
<CURRENT-LIABILITIES> 89,173
<BONDS> 9,223
0
0
<COMMON> 10,035
<OTHER-SE> 405,545
<TOTAL-LIABILITY-AND-EQUITY> 365,925
<SALES> 331,688
<TOTAL-REVENUES> 434,220
<CGS> 103,819
<TOTAL-COSTS> 103,819
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 67,715
<INCOME-TAX> 0
<INCOME-CONTINUING> 67,715
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,715
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
