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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________________ to ______________________
Commission file number 1-10285
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BIOMAGNETIC TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
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(Full title of the plan)
Biomagnetic Technologies, Inc.
9727 Pacific Heights Blvd., San Diego, California 92121-3719
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(Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office)
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BIOMAGNETIC TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
Index To Financial Statements
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Page
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Report of Independent Public Accountants 2
Statements of Net Assets Available for Benefits 3
at September 30, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits 4
for the years ended September 30, 1999, 1998 and 1997
Notes to Financial Statements 5
Signatures 8
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee and Participants of Biomagnetic Technologies,
Inc. 1992 Employee Stock Purchase Plan:
We have audited the accompanying statements of net assets available for
benefits of Biomagnetic Technologies, Inc. 1992 Employee Stock Purchase Plan
(the Plan) as of September 30, 1999 and 1998 and the related statements of
changes in net assets available for benefits for each of the three years in
the period ended September 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as
of September 30, 1999 and 1998, and the changes in net assets available for
benefits for each of the three years in the period ended September 30, 1999
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company has historically reported net losses and
negative cash flows from operations and has short-term liquidity concerns that
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note C. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ARTHUR ANDERSEN LLP
San Diego, California
November 24, 1999
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BIOMAGNETIC TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
September 30,
1999 1998
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<S> <C> <C>
Cash and cash equivalents $ 78,091 $ 39,104
Participant contributions receivable - 3,086
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Net assets available for benefits $ 78,091 $ 42,190
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</TABLE>
See accompanying notes to financial statements
3
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BIOMAGNETIC TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Years Ended September 30,
1999 1998 1997
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<S> <C> <C> <C>
Participant contributions $68,688 $77,277 $146,175
Interest income 1,186 3,229 6,087
Benefits paid to participants (33,973) (182,046) (102,963)
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Net increase (decrease) in net assets
available for benefits 35,901 (101,540) 49,299
Net assets available for benefits:
Beginning of year 42,190 143,730 94,431
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End of year $78,091 $42,190 $143,730
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</TABLE>
See accompanying notes to financial statements
4
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BIOMAGNETIC TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE A. PLAN DESCRIPTION
In January 1992, the shareholders approved the establishment of the Biomagnetic
Technologies, Inc. 1992 Employee Stock Purchase Plan (the "Plan") under Section
423 of the Internal Revenue Code. The Plan is intended to provide eligible
employees with the opportunity to acquire an equity interest in Biomagnetic
Technologies, Inc. (the "Company") through the acquisition of purchase rights,
implemented in a series of purchase periods. The Plan is administered by a
committee of two or more members of the Company's board of directors, (the "Plan
Administrator"), as appointed by such board.
Generally, employees are eligible for participation in the Plan in the calendar
quarter following their first 90 days of continuous employment with the Company.
After enrollment, payroll deductions are made to acquire shares under the Plan
up to a maximum of the lesser of 15% of base salary or $25,000 per calendar
year. Participants are fully vested at all times in the portion of their account
attributable to their contributions. A participant may purchase a maximum of
40,000 shares during any one purchase period. In addition, each participant is
limited to purchases of $25,000 worth of the Company's stock when combined with
any other Company stock purchase plan during any calendar year. Under no
circumstances shall a purchase right be granted under the Plan to any Eligible
Employee if such individual would immediately after the grant, own more than 5%
of the total combined voting power of the Company.
The purchase price of the shares is the lesser of 85% of the fair market value
of the shares on the date the purchase right is granted or 85% of the fair
market value of the shares on the date the purchase period ends. The purchase
rights may be terminated by the participant at any time. The balance in the
participant's account, including accrued interest, which is credited to the
participant's account based on the participant's contributions proportionate to
the total contributions of all participants, will be returned to the participant
upon such termination. In addition, if the participant's employment is
terminated, any outstanding purchase rights are terminated and the balance in
the payroll deduction account will be returned to the participant. If the
participant dies or is permanently disabled, the participant's estate or the
participant has the option to receive the balance in the payroll deduction
account or purchase the shares at the end of the purchase period.
The Plan provides for automatic purchase of shares from the funds deducted from
the participant's pay and earnings thereon at the end of the purchase period,
subject to a pro-rata allocation if the Stock Purchase Plan is oversubscribed.
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The Plan will terminate upon the earlier of (i) December 31, 2001, (ii) sale of
all shares available for issuance or, (iii) termination by the Company
immediately following the close of any purchase period. The total number of
shares authorized for future purchases under the Plan is 635,949 at September
30, 1999. There were no issuances of common stock for the purchase period ending
March 31, 1998. The next purchase period is from April 1, 1998 to March 31,
2000.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Plan financial statements are prepared on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
VALUATION OF INVESTMENTS
Investments consist of U.S. Government treasury securities that are stated at
fair value based on quoted market prices. The Plan's investments are held in a
Company administered bank account and all investment decisions are directed by
the Plan Administrator.
INVESTMENT INCOME
Income from investments is recorded on the accrual basis. In accordance with the
policy of stating investments at fair value, changes in net unrealized
appreciation or depreciation in the fair value of investments are reflected in
the statement of changes in net assets available for benefits in the year in
which such a change in value occurs.
ADMINISTRATIVE EXPENSES OF THE PLAN
All expenses incurred in the administration of the Plan are paid by the Company.
CONTRIBUTIONS
Contributions to the Plan originate from after-tax payroll deductions of the
participants.
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BENEFITS PAID
Benefits paid represent the cost to the participants of the stock acquired as
well as any cash payouts due to terminations or elections by the participants.
INCOME TAXES
The Plan Administrator believes that the Plan was established under, and is
operated in compliance with, Section 423 of the Internal Revenue Code.
Therefore, the Plan Administrator believes the Plan and earnings of the Plan are
tax exempt as of the financial statement date.
NOTE C. OPERATIONS AND CAPITAL RESOURCES OF THE COMPANY
The Company incurred net losses of $7,464,000, $4,968,000, and $5,242,000 in
fiscal 1999, 1998 and 1997, respectively. The Company had negative cash flows
from operations of $8,602,000, $5,520,000, and $2,032,000 in fiscal 1999, 1998
and 1997, respectively. At September 30, 1999, the Company has an accumulated
deficit of $98,286,000, net capital of $4,106,000 and working capital of
$3,273,000. Management anticipates that capital and working capital requirements
in fiscal 2000 will substantially exceed cash projected to be generated by
operations. Historically, the Company has used proceeds from private placements
of stock and debt offerings to fund its operating and capital requirements.
Based on its current operating plans, revenue expectations, expected capital
expenditures, expected working capital requirements and existing capital
resources, the Company anticipates that it will be able to fund operations
through the second quarter of fiscal 2000. The realization of the Company's
operating plans is dependent upon its ability to successfully close a number
of Magnes 2500 WH system sales in the current highly competitive market for
the limited number of systems being purchased worldwide. There can be no
assurance that sufficient sales of the Company's Magnes systems will be
achieved in order to realize the current operating plans. Even if the Company
meets its operating plan, the Company must continue to fund its operating
needs, and is currently considering a number of financing alternatives, such
as corporate partnerships and the sale of equity or debt securities. There
can be no assurance that such financing will be available on terms acceptable
to the Company, if at all.
Participants should refer to the Company's filing on Form 10-K for its year
ended September 30, 1999 for a complete presentation of the Company's financial
position and results of operations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee of Biomagnetic Technologies, Inc. 1992 Employee Stock
Purchase Plan has duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
BIOMAGNETIC TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
By:/s/ D. Scott Buchanan Date: December 20, 1999
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D. Scott Buchanan
Biomagnetic Technologies, Inc.
1992 Employee Stock Purchase
Plan Administrative Committee
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants , we hereby consent to the incorporation by
reference of our report included in this Form 11-K, into Biomagnetic
Technologies, Inc.'s previously filed Form S-8 No. 33-60743, No. 33-61057, No.
33-32260, No. 33-33179 and No. 33-68136.
/s/ ARTHUR ANDERSEN LLP
San Diego, California
December 20, 1999
