FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-16069
MICROLYTICS, INC.
- --------------------------------------------------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Delaware 41-1464586
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two Tobey Village Office Park, Pittsford, New York 14534
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(716) 248-9150
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
SelecTronics, Inc.
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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.
__X___ YES _____ NO
APPLICABLE ONLY TO CORPORATE REGISTRANTS:
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of December 31, 1995
- ----------------------------- -----------------------------------
Common Stock, $0.01 par value 112,722,403 shares
<PAGE>
MICROLYTICS, INC.
CONSOLIDATED BALANCE SHEETS
December 31 and March 31, 1995
(Dollars rounded to nearest thousand)
<TABLE>
<CAPTION>
Assets December 31 March 31
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash $ 912,000 $ 46,000
Accounts receivable, less allowance for
doubtful accounts of $9 and $9, respectively 300,000 64,000
Notes receivable, current position -- 463,000
Inventories, net 5,000 6,000
Prepaid royalties 38,000 42,000
Escrow account 87,000 90,000
Officer Loan 134,000 --
Other current assets 25,000 63,000
------------ ------------
Total current assets 1,501,000 774,000
Property and equipment, net 265,000 100,000
Capitalized software, net of accumulated
amortization of $9,252 and $8,892, respectively 272,000 434,000
Notes receivable; long term -- 924,000
------------ ------------
Total Assets $ 2,038,000 $ 2,232,000
============ ============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Notes payable $ 58,000 $ 100,000
Shareholder advance -- 585,000
Accounts payable 889,000 1,206,000
Accrued expenses 345,000 292,000
Royalties payable 124,000 221,000
------------ ------------
Total current Liabilities 1,416,000 2,404,000
Term Loan 200,000 200,000
Convertible Notes Payable 1,400,000 1,400,000
Deferred revenue 600,000 1,200,000
Research and development financing arrangement 68,000 106,000
------------ ------------
Total Liabilities 3,684,000 5,310,000
Stockholders' Equity (Deficit):
Common stock, $.01 par value; 125,000,000
shares authorized; 115,976,416 and 53,508,004
shares issued, respectively 1,127,000 503,000
Preferred stock, $1 par value, 5,000,000 shares
authorized; none and 2,960,854 issued,
respectively -- 2,961,000
Additional paid-in capital 18,009,000 13,179,000
Accumulated deficit (21,065,000) (20,004,000)
Treasury stock, 3,254,013 shares, respectively 283,000 283,000
------------ ------------
Total Stockholders' Equity (Deficit) (1,646,000) (3,078,000)
------------ ------------
Total Liabilities and Stockholder's
Equity (Deficit) $ 2,038,000 $ 2,232,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
MICROLYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars rounded to nearest thousand, except per share data)
(Unaudited)
For the three and nine months ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Royalty revenue $ 421,000 $ 494,000 $ 1,461,000 $ 1,447,000
Development revenue 106,000 84,000 218,000 316,000
Financing arrangement 12,000 24,000 38,000 491,000
------------- ------------- ------------- -------------
Total Revenues 539,000 602,000 1,717,000 2,254,000
Cost of revenues 411,000 396,000 1,022,000 784,000
------------- ------------- ------------- -------------
Gross profit 128,000 206,000 695,000 1,470,000
Operating expenses:
Selling, general and
administrative 448,000 477,000 1,319,000 1,559,000
Research and development 95,000 91,000 305,000 259,000
------------- ------------- ------------- -------------
Total operating expenses 543,000 568,000 1,624,000 1,818,000
------------- ------------- ------------- -------------
Income (loss) from operations (415,000) (362,000) (929,000) (348,000)
Other income (expense):
Interest income (expense), net 4,000 (26,000) (22,000) (123,000)
Income tax expense -- -- (6,000) (42,000)
Discount on Notes Receivable (138,000) -- (138,000) --
Net earnings from sale
of affiliate -- (11,000) -- 1,856,000
Other expenses -- (45,000) -- (107,000)
------------- ------------- ------------- -------------
(134,000) (82,000) (166,000) 1,584,000
Income (loss) before
extraordinary item (549,000) (444,000) (1,095,000) 1,236,000
Extraordinary gain on
extinguishment of debt -- 9,000 33,000 5,063,000
------------- ------------- ------------- -------------
Net income (loss) $ (549,000) $ (435,000) $ (1,062,000) $ 6,299,000
============= ============= ============= =============
Net income (loss) per common share:
Primary: Income (loss) before
extraordinary item: (.005) (.01) (.011) .02
Extraordinary item nil nil nil .10
------------- ------------- ------------- -------------
Net Income (Loss) (.005) (.01) (.011) .12
============= ============= ============= =============
Weighted average shares
outstanding 117,390,368 52,249,418 98,417,801 51,729,984
Fully Diluted: Income before
extraordinary item: n/a n/a n/a .01
Extraordinary item n/a n/a n/a .06
------------- ------------- ------------- -------------
Net Income n/a n/a n/a .07
============= ============= ============= =============
Weighted average shares
outstanding n/a n/a n/a 86,743,542
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
MICROLYTICS, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Dollars rounded to nearest
thousand, except share and per share data)
(Unaudited)
For the nine months ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) $(1,062) $ 6,299
Adjustments to reconcile net income to cash:
Depreciation and amortization 392 444
Amortization of deferred credits (600) (609)
Issuance of stock for services 52 2
Gain on extinguishment of debt (33) (5,063)
Undistributed earnings in affiliate -- 859
Discount on Note Receivable 138 --
Change in assets and liabilities:
(Increase) decrease in:
Escrow 3 1,013
Accounts receivable (236) (1,284)
Notes receivable 1,249 --
Inventories 1 62
Officer loan (134) --
Other assets 38 12
Prepaid royalties 4 78
(Decrease) increase in:
Accounts payable (284) (551)
Accrued liabilities 11 --
Royalties payable (97) (245)
R&D Financing (38) (466)
------- -------
Cash flows provided (used) by operating activities (596) 551
Cash flows from investing activities:
Capital expenditures (196) (72)
Additions to capitalized software (198) (285)
------- -------
Cash flows provided (used) by investing activities: (394) (357)
Cash flows from financing activities:
Shareholder advance (585) (260)
Net proceeds sale of stock 2,441 14
R&D Financing -- (24)
------- -------
Cash flows provided (used) by financing activities 1,856 (270)
Increase (decrease) in cash 866 (76)
Cash beginning of period 46 159
------- -------
Cash end of period $ 912 $ 83
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the quarter for interest $ 21 174
======= =======
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For the quarter ended December 31, 1995
NOTE 1: BASIS OF PRESENTATION
The financial statements included herein have been prepared by the
Registrant, (also referred to herein as the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. The
information furnished in the financial statements includes normal recurring
adjustments and reflects all adjustments which are, in the opinion of
management, necessary for a fair presentation of such financial statements.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Registrant believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements for the year
ended March 31, 1995 and the notes thereto included in the Registrant's Annual
Report on Form 10-KSB filed with the Securities and Exchange Commission. Dollar
amounts, except per share amounts, have been rounded to the nearest thousand.
NOTE 2: ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
December 31 March 31
(Unaudited) (Audited)
Accounts receivable $ 309,000 $ 73,000
Allowance for doubtful accounts
and returns (9,000) (9,000)
--------- ---------
$ 300,000 $ 64,000
========= =========
NOTE 3: INVENTORIES
Inventories consist of the following:
December 31 March 31
(Unaudited) (Audited)
Finished product $ 15,000 $ 15,000
Valuation allowances (10,000) (9,000)
-------- --------
$ 5,000 $ 6,000
======== ========
<PAGE>
NOTE 4: ESCROW ACCOUNT
As of March 31, 1995 and 1994, the Registrant had approximately $90,000 and
$1,100,000, respectively, in an escrow account as part of its license with
Houghton Mifflin Company ("Houghton Mifflin"), which agreement was subsequently
assigned by Houghton Mifflin to its spin-off, Inso Corporation ("Inso"),
formerly known as InfoSoft International, Inc. At December 31, 1995, the balance
in the escrow account was $87,000. The amounts withdrawn from the escrow account
were primarily used to reduce the outstanding accounts payable of the
Registrant. The remaining cash will be released when certain conditions
subsequent to the transaction have been satisfied. The Registrant anticipates
that the conditions subsequent to the transaction will be satisfied and the
remaining cash will be released from escrow in fiscal 1996.
NOTE 5: PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
December 31 March 31
(Unaudited) (Audited)
Tools, dies and moldings $ 221,000 $ 221,000
Furniture and equipment 1,223,000 1,028,000
Leasehold improvements 108,000 107,000
----------- -----------
1,552,000 1,356,000
Less: accumulated depreciation (1,287,000) (1,256,000)
----------- -----------
$ 265,000 $ 100,000
=========== ===========
NOTE 6: DEFERRED REVENUE
As of March 31, 1994, the Registrant deferred the recognition of $2 million of
revenue relating to cash received as part of the agreement between Microlytics
and Inso. The recognition of this revenue will be deferred until future periods
as earned. For the nine months ended December 31, 1995, the Registrant
recognized $600,000 of deferred revenue. In addition, as a result of the
licensing transaction, Inso will also pay Microlytics future on-going royalties
and payments for development contracts.
NOTE 7: RESEARCH AND DEVELOPMENT FINANCING AGREEMENT
In 1991, the Registrant received a nonrefundable cash receipt of $690,000 from
Speech Compression Technologies, L.P. ("SCT"), a research and development
limited partnership, under a technology purchase agreement. Under the terms of
the agreement, the limited partnership purchased the rights to certain software
from the Registrant and licensed it to the Registrant on an exclusive basis
until September of 1993. Two stockholders, Mr. Weiner and Xerox Corporation, are
also limited partners and accordingly, this agreement is accounted for as a
financing arrangement. During the nine months ended December 31, 1994, the
Company recognized $466,000 of deferred revenue related to SCT as a result of
revised revenue projections for future periods. There were no direct costs
associated with the revenue recognized under the revised projections. In
addition, the Company recognized $24,000 of deferred revenue through licensing
of the technology and offset royalty fees owed to SCT for use of its technology.
During the nine months ended December 31, 1995, $38,000 of deferred revenue has
been recognized under the agreement as offsets to royalty expense recorded for
the same periods. The agreement expired in June 1995, and was automatically
renewed for one year.
<PAGE>
NOTE 8: SALE OF AFFILIATED COMPANY AND DISCOUNTED NOTE RECEIVABLE
In December 1995, the Company discounted the remaining portion of a note
receivable due from Conway New York, Inc., a Delaware corporation ("Conway"), in
exchange for $832,000. The note was originally recorded at its net present
value, and the Company was recognizing the imputed interest as interest income
over the life of the note. The book value of the asset at the time of
discounting was $970,000. The Company recorded a loss of $138,000 as a result of
this transaction. In addition, in connection with the above-referenced
discounting, the Company waived any minimum royalty requirements for calendar
years 1996 and 1997, respectfully.
By way of background, on July 8, 1994, the Registrant entered into an agreement
to sell its forty percent (40%) partnership interest in a European joint venture
named Eurotronics Company ("Eurotronics") to Conway for $3.125 million. Prior to
that time, under the terms of certain agreements, Microlytics Technology
Company, Inc., formerly known as Microlytics ("MTC"), earned a royalty on sales
made by the joint venture, paid quarterly, and the Registrant received a
dividend equal to forty percent (40%) of the net income of the joint venture, if
any, paid annually. On July 8, 1994, MTC entered into a certain agreement with
Edmark, Inc. a Delaware corporation and a partner in Eurotronics, to modify
certain provisions of the technology and distribution license (the "Modification
Agreement") whereby, among other things, MTC will continue to receive royalties
from Eurotronics for the use of certain of MTC's technologies.
In connection with the sale, the Company received $1 million in July 1994,
$500,000 during the third quarter of fiscal 1995, and $500,000 during the second
quarter of fiscal 1996.
As a result of the above-referenced transaction, $1.856 million of net earnings
was recognized by the Company during the second and third fiscal quarters of
fiscal 1995. This amount represents the net of the aggregate purchase price of
$3.125 million less previously recorded equity earnings of $859,000, an imputed
interest discount at 8% of $256,000, and expenses related to this transaction of
$154,000.
NOTE 9: PREFERRED STOCK REDEMPTION
During the first quarter of fiscal year 1996, the Company exercised its rights
and redeemed all of the issued and outstanding shares of its preferred stock,
par value $1.00 per share. Pursuant to the provisions of the Company's
Certificate of Incorporation, as amended, the Company issued ten (10) shares of
its common stock for each such share of preferred stock redeemed. As a result,
the Company issued 29,608,540 shares of its common stock to the holders of its
preferred stock.
NOTE 10: EQUITY INFUSION
In June, 1995, the Company entered into certain Stock Purchase Agreements with
certain affiliates of Unterberg Harris (the "New Investors"), a
technology-focused investment banking firm, whereby the New Investors provided
$2.5 million of immediate capital to the Company in exchange for 31,250,000
shares of the Company's common stock. This capital will be used by the Company
in connection with the product development of MicroPages and for operating cash
flow. Pursuant to the terms and conditions of the transaction, the New
Investors, together with Xerox Corporation ("Xerox") and Renaissance Capital
Partners, Ltd. ("Renaissance"), were granted a "right of first offer". As a
result, in the event that the Company desires to issue additional shares of its
common stock in a private offering, other than in accordance with its incentive
stock option plans or pursuant to the terms and conditions of the warrants and
options currently outstanding, and such issuance would dilute the holdings of
any New Investor, Xerox or Renaissance by more than 10%, then such diluted
shareholder has the right to acquire a portion of such shares such that
immediately after the exercise of the right of first offer and the corresponding
issuance by the Company, no such dilution would have occurred to such
shareholder.
<PAGE>
PART 1. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues for the three months and nine months ended December 31, 1995 were
$539,000 and $1.7 million, respectively, or 10% and 24% less than the $602,000
and $2.3 million, respectively, for the three months and nine months ended
December 31, 1994. The year over year changes were primarily the result of the
Company's strategic change in focus to its growing MicroPages business. For the
nine months ended December 31, 1995, the Company recorded revenue of $413,000
from the MicroPages product line, as compared to $44,000 for the same period in
the prior year. One significant factor for the year over year changes was the
Company's inability to recognize certain extraordinary events that positively
influenced total revenues and net income last year. The Company recognized
$12,000 and $38,000, respectively, of deferred revenue in accordance with the
research and development financing arrangement for the three and nine months
ended December 31, 1995, as compared to $24,000 and $491,000, respectively, for
the same periods last year. The deferred revenue recorded for the three and nine
months ended December 31, 1994 were the result of revised royalty estimates.
Gross profit of $128,000 and $695,000, for the three months and nine months
ended December 31, 1995, respectively, was approximately 38% and 53% less than
the gross profit recorded in the same periods last year. Gross profit as a
percentage of revenue decreased from 34% and 65% for the three and nine months
ended December 31, 1994, to 24% and 40%, respectively, for the same periods
ended December 31, 1995. This decrease in gross profit as a percentage of
revenue was primarily attributable to the sale of the Company's 40% partnership
interest in Eurotronics in July, 1994, and the recognition of the deferred
revenue discussed above, which had no associated cost of goods sold.
Operating expenses of $543,000 and $1.6 million, for the three month and nine
month periods ended December 31, 1995, represent a decrease of 4% and 11%,
respectively, from the $568,000 and $1.8 million recorded for the same periods
last year. The continued decline in selling, general and administrative expenses
resulted from the reduction and cost controls put in place by management and the
transition to a technology-based electronic publishing company.
Loss from operations was $415,000 and $929,000 for the three and nine months
ended December 31, 1995, compared to a loss from operations of $362,000 and
$348,000, respectively, reported for the same periods last year. This
anticipated loss was the result of decreased revenues and gross profit during
the Company's strategic shift in focus to its MicroPages business.
During the three and nine months ended December 31, 1995, the Company had net
interest income of $4,000 and interest expense of $22,000, respectively, as
compared to interest expense of $26,000 and $123,000, for the same periods ended
December 31, 1994. This decrease in interest expense was primarily the result of
the $2.9 million conversion of debt to equity by two of the Registrant's
convertible debenture holders. Interest income was recorded due to the sale of
the Company's 40% partnership interest in Eurotronics in July, 1994, and the
investment of a portion of the equity infusion into the Company in June, 1995.
See Notes 8 and 10 of "Notes to Consolidated Financial Statements" for the
quarter ended December 31, 1995.
The Company recorded a loss before extraordinary item of $549,000 and $1.1
million, respectively, for the three and nine months ended December 31, 1995
compared to a loss before extraordinary item of $444,000 and gain before
extraordinary item of $1.2 million for the same periods ended December 31, 1994.
The gain before extraordinary item was primarily a result of the Company's sale
of Eurotronics which took place during the three months ended September 30,
1994.
As a result of the factors discussed above, the Company recorded a net loss for
the three and nine months ended December 31, 1995 of $549,000 and $1.1 million,
respectively, as compared to net loss of $435,000 and net income of $6.3 million
for the same periods last year. An extraordinary item reported in the first
quarter of fiscal 1995 in the amount of $5.045 million, resulting from
extinguishment of bank debt and other immaterial items, was the primary factor
contributing to a significant net income for the nine months ended December 31,
1994.
<PAGE>
Liquidity
From March 31, 1995 to December 31, 1995, the Company's working capital went
from a deficiency of $1.6 million to a surplus of $85,000. This favorable change
was primarily the result of the infusion of $2.5 million of capital due to the
Stock Purchase Agreements with certain affiliates of Unterberg Harris, along
with discounting a long term Note Receivable from the sale of the Company's 40%
partnership interest in Eurotronics. See Notes 8 and 10 of "Notes to
Consolidated Financial Statements" for the quarter ended December 31, 1995.
Although the Company shows a positive cash position, it continues to seek
additional sources of cash and working capital. These efforts include the sale
of its common stock, preferred stock, or additional long term debt, which the
Company expects would be convertible to shares of, or have warrants attached to
purchase additional shares of, the Company's common stock.
Capital Resources
During the three and nine month periods ended December 31, 1995, the Company,
through its subsidiary Microlytics Technology Company, Inc., invested $31,000
and $199,000, respectively, in capitalized software. This software provides
programming for both current and future products licensed to other companies and
used in the Company's current and future electronic products.
PART 2. - OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Partnership Purchase Agreement, dated as of July 8, 1994, by
and among the Company, Conway New York, Inc., Edmark, Inc.
and EuroDirect Marketing, Inc., filed as Exhibit 2 with the
Company's current report on Form 8-K, dated July 22, 1994,
and incorporated herein by reference.
3.1 Certificate of Incorporation of the Company, as filed with
the Office of Secretary of State of the State of Delaware on
December 20, 1989, filed as Exhibit 3.1 with the Annual
Report on Form 10-K for the year ended March 31, 1990, and
incorporated herein by reference.
3.2 Certificate of Amendment of Certificate of Incorporation of
the Company, as filed with the Office of Secretary of State
of the State of Delaware on January 23, 1990, filed as
Exhibit 3.2 with the Annual Report on Form 10-K for the year
ended March 31, 1990, and incorporated herein by reference.
3.3 Certificate of Amendment of Certificate of Incorporation of
the Company, as filed with the office of Secretary of the
State of Delaware on December 17, 1992, filed as Exhibit 3.3
to the Annual Report on Form 10-KSB for the year ended March
31, 1995, and incorporated herein by reference.
3.4 Certificate of Amendment of Certificate of Incorporation of
the Company, as filed with the Office of Secretary of State
of the State of Delaware on March 30, 1994, filed as Exhibit
3.3 with the Annual Report on Form 10-KSB for the year ended
March 31, 1994, and incorporated herein by reference.
<PAGE>
3.5 By-Laws of the Company, filed as Exhibit 3.3 with the
Annual Report on Form 10-K for the year ended March 31,
1990, and incorporated herein by reference.
4.1 Agreement and Plan of Merger, dated as of December 29, 1989,
by and among the Company, Microlytics, Inc. and Selectronics
Acquisition Corporation, filed as Exhibit 2.1 to the Annual
Report on Form 10-K for the year ended March 31, 1990, and
incorporated herein by reference.
4.2 Form of 110% Warrant, filed as Exhibit 2.2 to the Annual
Report on Form 10-K for the year ended March 31, 1990, and
incorporated herein by reference.
4.3 Form of 115% Warrant, filed as Exhibit 2.3 to the Annual
Report on Form 10-K for the year ended March 31, 1990, and
incorporated herein by reference.
4.4 Agreement and Plan of Merger, dated January 24, 1990, by and
between the Company and Selectronics, Inc., a Delaware
corporation, filed as Exhibit 2.4 to the Annual Report on
Form 10-K for the year ended March 31, 1990, and
incorporated herein by reference.
4.5 Stock Exchange Agreement, dated March 30, 1990, by and among
the Company and all of the shareholders of Xiamax
Corporation, filed as Exhibit 2.5 to the Annual Report on
Form 10-K for the year ended March 31, 1990, and
incorporated herein by reference.
4.6 Convertible Debenture Loan Agreement, and Convertible
Debenture, dated as of December 28, 1990, by and between the
Company, Microlytics, Inc. and Renaissance Capital Partners,
Ltd., filed as Exhibit 4.6 with the Annual Report on Form
10-K for the year ended March 31, 1991, and incorporated
herein by reference.
4.7 Convertible Debenture Loan Agreement, and Convertible
Debenture, dated as of October 15, 1991, by and between the
Company and Fuji Xerox Co., Ltd., filed as Exhibit 4.7 with
the Annual Report on Form 10-K for the year ended March 31,
1992, and incorporated herein by reference.
4.8 Convertible Debenture Loan Agreement, and Convertible
Debenture, dated as of March 16, 1992, by and between the
Company and Fuji Xerox Co., Ltd., filed as Exhibit 4.8 with
the Annual Report on Form 10-K for the year ended March 31,
1992, and incorporated herein by reference.
4.9 Form of Preferred Stock Certificate of Registrant, filed as
Exhibit 4.9 to the Annual Report on Form 10-KSB for the year
ended March 31, 1994, and incorporated herein by reference.
10.1 Stock Purchase Agreement, dated as of October 31, 1989,
between Microlytics, Inc. and Xerox Corporation through its
Xerox Venture Capital Fund Division, filed as Exhibit 10.1
with the Annual Report on Form 10-K for the year ended March
31, 1990, and incorporated herein by reference.
10.2 Amended Licensing Agreement, dated as of May 24, 1988,
between Microlytics, Inc. and the Company, filed as Exhibit
10.2 to the Annual Report on Form 10-K for the year ended
March 31, 1989, and incorporated herein by reference.
10.3 Joint Venture Agreement, dated as of May 24, 1988, between
Microlytics, Inc. and the Company, filed as Exhibit 10.3 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
<PAGE>
10.4 Consulting Agreement, dated as of March 20, 1989, between
the Company and Michael D. Plitman, filed as Exhibit 10.4 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.5 Consultation and Non-Competition Agreement, dated as of
August 24, 1988, between the Company and Stephen R. Nagel,
filed as Exhibit 10.6 to the Annual Report on Form 10-K for
the year ended March 31, 1989, and incorporated herein by
reference.
10.6 Research and Development Agreement, dated as of October 31,
1988, between Microlytics, Inc. and the Company, filed as
Exhibit 10.7 to the Annual Report on Form 10-K for the year
ended March 31, 1989, and incorporated herein by reference.
10.7 Purchase Option Agreement, dated October 31, 1988, between
Microlytics, Inc. and the Company, including form of
Technology Purchase Agreement, filed as Exhibit 10.8 to the
Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.8 License Option Agreement, dated October 31, 1988, between
Microlytics, Inc. and the Company, filed as Exhibit 10.9 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.9 Stock Purchase Agreement, dated February 7, 1989, between
Xerox Corporation through its Xerox Venture Capital Fund
Division and the Company, filed as Exhibit 10.10 to the
Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.10 Credit Agreement, dated April 29, 1989, by and among Xerox
Corporation through its Xerox Venture Capital Fund Division,
the Company and Stephen R. Nagel, filed as Exhibit 10.11 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.11 Revolving Credit Agreement, Security Agreement, and
Promissory Note, dated as of December 27, 1988, between the
Company and National City Bank of Minneapolis, filed as
Exhibit 10.12 to the Annual Report on Form 10-K for the year
ended March 31, 1989, and incorporated herein by reference.
10.12 Letter from National City Bank of Minneapolis, amending
Revolving Credit Agreement, Security Agreement, and
Promissory Note, filed as Exhibit 10.13 to the Annual Report
on Form 10-K for the year ended March 31, 1989, and
incorporated herein by reference.
10.13 Amendment to Revolving Credit Agreement, Revolving Note, and
Security Agreement, dated as of September 25, 1990, by and
between the Company and National City Bank of Minneapolis,
filed as Exhibit 10.13 with the Annual Report on Form 10-K
for the year ended March 31, 1992, and incorporated herein
by reference.
10.14 Settlement Agreement, dated as of June 13, 1991, by and
between the Company and National City Bank of Minneapolis,
filed as Exhibit 10.14 with the Annual Report on Form 10-K
for the year ended March 31, 1992, and incorporated herein
by reference.
10.15 Offering Basis Line of Credit Agreement, dated March 16,
1990, by and between Microlytics, Inc. and Central Trust
Company, filed as Exhibit 10.13 to the Annual Report on Form
10-K for the year ended March 31, 1990, and incorporated
herein by reference.
<PAGE>
10.16 Form of Annex to Purchase Order, filed as Exhibit 10.14 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.17 Employment Agreement, dated April 2, 1990, by and between
the Company and H. E. James Finke, filed as Exhibit 10.15 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.18 Employment Agreement, dated August 18, 1989 by and between
Microlytics and Michael L. Weiner, filed as Exhibit 10.16 to
the Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.19 Registration Rights Agreement, dated March 30, 1990, by and
among the Company and the former shareholders of Xiamax
Corporation, filed as Exhibit 10.17 to the Annual Report on
Form 10-K for the year ended March 31, 1989, and
incorporated herein by reference.
10.20 The Company's Stock Option Plan of 1988, filed as Exhibit
4.1 to the Annual Report on Form 10-K for the year ended
March 31, 1989, and incorporated herein by reference.
10.21 Form of Incentive Stock Option Agreement for the Company's
Stock Option Plan of 1988, filed as Exhibit 4.2 to the
Annual Report on Form 10-K for the year ended March 31,
1989, and incorporated herein by reference.
10.22 Stock Option Agreement between the Company and Lee Breslow,
filed as Exhibit 4.3 to the Annual Report on Form 10-K for
the year ended March 31, 1989, and incorporated herein by
reference.
10.23 Stock Option Agreement between the Company and the
non-employee directors, filed as Exhibit 4.4 to the Annual
Report on Form 10-K for the year ended March 31, 1989, and
incorporated herein by reference.
10.24 Microlytics, Inc. Incentive Stock Option Plan, filed as
Exhibit 10.22 to the Annual Report on Form 10-K for the year
ended March 31, 1990, and incorporated herein by reference.
10.25 Form of Microlytics, Inc. Incentive Stock Option Agreement,
filed as Exhibit 10.23 to the Annual Report on Form 10-K for
the year ended March 31, 1990, and incorporated herein by
reference.
10.26 The Company's Stock Option Plan of 1990, filed as Exhibit
10.24 to the Annual Report on Form 10-K for the year ended
March 31, 1990, and incorporated herein by reference.
10.27 Form of the Company's Incentive Stock Option Agreement,
filed as Exhibit 10.25 to the Annual Report on Form 10-K
for the year ended March 31, 1990, and incorporated herein
by reference.
10.28 Stock Purchase Agreement, dated as of November 28, 1990, by
and between the Company and Xerox Corporation, filed as
Exhibit 10.28 to the Annual Report on Form 10-K for the year
ended March 31, 1991, and incorporated herein by reference.
10.29 Indemnification and Mutual Representation Agreement, dated
July 29, 1991, by and between the Company and Stephen R.
Nagel, filed as Exhibit 10.29 to the Annual Report on Form
10-K for the year ended March 31, 1991, and incorporated
herein by reference.
<PAGE>
10.30 Registration Rights Agreement, dated as of December 28,
1990, by and between the Company and Renaissance Capital
Partners, Ltd., filed as Exhibit 10.30 to the Annual Report
on Form 10-K for the year ended March 31, 1991, and
incorporated herein by reference.
10.31 Joint Venture Agreement dated as of June 26, 1991, by and
between Edmark, Inc. and the Company, filed as Exhibit 10.31
to the Annual Report on Form 10-K for the year ended March
31, 1991, and incorporated herein by reference.
10.32 Technology License Agreement, dated June 26, 1991, by and
between Microlytics, Inc. and Edmark, Inc., filed as Exhibit
10.32 to the Annual Report on Form 10-K for the year ended
March 31, 1991, and incorporated herein by reference.
10.33 Basic Agreement for Distribution and Technology License
Agreement, dated as of September 18, 1991, as amended as of
March 5, 1992, by and among the Company, Microlytics, Inc.,
and Fuji Xerox Co., Ltd., filed as Exhibit 10.33 with the
Annual Report on Form 10-K for the year ended March 31,
1992, and incorporated herein by reference.
10.34 Basic Agreement for Distribution and Technology License
Agreement, dated as of March 5, 1992, by and between
Selectronics Japan Kabushiki Kaisha and Fuji Xerox Co.,
Ltd., filed as Exhibit 10.34 with the Annual Report on Form
10-K for the year ended March 31, 1992, and incorporated
herein by reference.
10.35 Settlement Agreement, dated as of June 30, 1992, by and
between the Company and Amway Corporation, filed as Exhibit
10.35 with the Annual Report on Form 10-KSB for the year
ended March 31, 1993, and incorporated herein by reference.
10.36 Amendment to the Company's Stock Option Plan of 1990, filed
as Exhibit 10.36 with the Annual Report on Form 10-KSB for
the year ended March 31, 1993, and incorporated herein by
reference.
10.37 License Agreement, dated February 23, 1994, by and among the
Company, Microlytics and Houghton Mifflin Company, filed as
Exhibit 10.37 to the Annual Report on Form 10-KSB for the
year ended March 31, 1994, and incorporated herein by
reference.
10.38 Letter Agreement, dated March 2, 1994, by and among the
Company, Microlytics and Renaissance Capital Partners, Ltd.,
filed as Exhibit 10.38 to the Annual Report on Form 10-KSB
for the year ended March 31, 1994, and incorporated herein
by reference.
10.39 Letter Agreement, dated March 2, 1994, by and among the
Company, Microlytics and Xerox Corporation, filed as Exhibit
10.39 to the Annual Report on Form 10-KSB for the year ended
March 31, 1994, and incorporated herein by reference.
10.40 Settlement Agreement, dated March 3, 1994, by and among the
Company, Microlytics and Manufacturers & Traders Trust
Company, filed as Exhibit 10.40 to the Annual Report on Form
10-KSB for the year ended March 31, 1994, and incorporated
herein by reference.
10.41 Modification Agreement, dated as of July 8, 1994, by and
between Microlytics, Inc. and Edmark, Inc., filed as Exhibit
10 with the Company's current report on Form 8-K dated July
22, 1994, and incorporated herein by reference.
<PAGE>
10.42 Settlement Agreement, dated March 9, 1995, by and among the
Company, Microlytics, Inc., and UFO Systems, Inc., filed as
Exhibit 10.42 to the Annual Report on Form 10-KSB for the
year ended March 31, 1995, and incorporated herein by
reference.
10.43 Common Stock Purchase Agreement, dated June 22, 1995, by and
among the Company, Unterberg Harris Private Equity Partners,
L.P., Unterberg Harris Private Equity Partners, C.V., and
Unterberg Harris Interactive Media Limited Partnership,
C.V., filed as Exhibit 10.43 to the Annual Report on Form
10-KSB for the year ended March 31, 1995, and incorporated
herein by reference.
10.44 Stockholder Voting Agreement, dated June 22, 1995, by and
among the Company, Xerox Corporation, Renaissance Capital
Partners, Ltd., Unterberg Harris Private Equity Partners,
L.P., Unterberg Harris Private Equity Partners, C.V., and
Unterberg Harris Interactive Media Limited Partnership, C.V.
, filed as Exhibit 10.44 to the Annual Report on Form 10-KSB
for the year ended March 31, 1995, and incorporated herein
by reference.
10.45 Termination and Release Agreement, dated as of December 27,
1995, by and among the Registrant, Microlytics Technology
Company, Inc., Edmark, Inc., and Conway New York, Inc.
22. Subsidiaries of Registrant
(b) None.
<PAGE>
SIGNATURES
In accordance with 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.
MICROLYTICS, INC.
By: /s/ Roy W. Haythorn
------------------------------------
Roy W. Haythorn,
Chairman of the Board,
President and Chief Executive Officer
By: /s/ Donald E. Riley
------------------------------------
Donald E. Riley
Director
February 13, 1996
EXHIBIT 10.45
TERMINATION AND RELEASE AGREEMENT
This Agreement is made as of December 27, 1995, by and among MICROLYTICS,
INC., a Delaware corporation formerly known as Selectronics, Inc.
("Selectronics"), MICROLYTICS TECHNOLOGY COMPANY, INC., a New York corporation
formerly known as Microlytics, Inc. and a wholly-owned subsidiary of
Selectronics, ("Microlytics"), EDMARK, INC., a Delaware corporation ("Edmark"),
and CONWAY NEW YORK INC., a Delaware corporation and a wholly-owned subsidiary
of Edmark ("Conway').
W I T N E S S E T H
WHEREAS, Selectronics, a general partner in EuroTronics Company, a New York
general partnership (the "Company"), transferred all of its interest, including
its general partnership interest, in the Company to Conway in consideration for
a purchase price of $3,125,000 (the "Purchase Price") pursuant to the terms and
subject to the conditions of that certain Partnership Purchase Agreement, dated
as of July 8, 1994 (the "Purchase Agreement"), by and among Selectronics,
Conway, Edmark and Euro Direct Marketing, Inc., a Delaware corporation and the
parent company of Edmark ("Euro Direct"), and as a result Edmark and Conway have
become the sole general partners in the Company (the "Transfer");
WHEREAS, Strafor Facom S.A., a French societe anonyme ("Strafor"), has
guaranteed to Selectronics the prompt payment when due of $2,125,000 of the
Purchase Price pursuant to a Guaranty, dated as of July 8, 1994, executed by
Strafor for the benefit of Selectronics (the "Guaranty");
WHEREAS, Conway has paid Selectronics to date $2,000,000 of the Purchase
Price pursuant to Section 3 of the Purchase Agreement, and Conway is obligated
to pay SelecTronics the remaining balance on the Purchase Price amounting to
$1,125,000 pursuant to Section 3 of the Purchase Agreement;
WHEREAS, in connection with the Transfer, Microlytics and Edmark entered
into a Modification Agreement, dated July 8, 1994, to modify, amend and
supplement that certain license agreement by and among Microlytics, Edmark and
the Company so as, among other things, to change the basis upon which royalties
shall be computed (the "Modification Agreement");
WHEREAS, Section 2.4 of the Modification Agreement provides for payment
under certain circumstances by Edmark to Microlytics of Minimum Royalty Payment
(as defined in the Modification Agreement) for each of the calendar years, 1995,
1996, and 1997;
WHEREAS, Conway, together with the Company and Edmark, desires to pay, and
Selectronics desires to accept, $831,965 in full payment of the remaining
balance on the Purchase Price and in full satisfaction of Conway's obligation
under the Purchase Agreement with respect to the Purchase Price, and in
connection therewith (i) Selectronics desires to release all of the obligations
of Strafor under the Guaranty; (ii) Microlytics desires to waive its right to
receive any Minimum Royalty Payment for each of the calendar years 1996 and
1997, and Edmark desires to accept such a waiver; and (iii) Edmark and
Microlytics desire to modify the terms and conditions respecting the Minimum
Royalty Payment for the 1995 calendar year as set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to become legally bound, agree as
follows:
<PAGE>
SECTION 1
PAYMENT
1.1 Final Payment. On or before December 29, 1995, Conway shall pay, or
cause to be paid, to Selectronics $831,965 by wire transfer to a bank account
previously designated in writing by Selectronics in full payment of the
remaining balance on the Purchase Price, in full satisfaction of Conway's
obligation under the Purchase Agreement with respect to the Purchase Price, and
in full and final settlement of all claims of whatever nature which Selectronics
may have against Conway, Euro Direct, Edmark, Strafor and the Company, jointly
and severally, arising out of the Purchase Agreement (the "Final Payment").
SECTION 2
RELEASE OF GUARANTY
2.1 Release. Effective upon the occurrence of the Final Payment, all
obligations of the Guarantor under the Guaranty shall be fully and
unconditionally released.
SECTION 3
WAIVER
3.1 Minimum Royalty Payment. Microlytics irrevocably waives all rights to
receive any Minimum Royalty Payment for each of the calendar years 1996 and
1997, and Edmark accepts such a waiver. Notwithstanding Section 2.4 of the
Modification Agreement to the contrary, if the total amount of all royalties
actually received by Microlytics pursuant to Section 2.2 of the Modification
Agreement in respect of the calendar year 1995 is less than $180,000, then
Edmark shall be obligated to pay, within 45 days following the end of such year,
to Microlytics a Minimum Royalty Payment equal to the difference between
$180,000 and such royalties.
Except as expressly modified pursuant to this Section 3.1, all other terms
and conditions of the Modification Agreement shall be the same as provided
therein, and the Modification Agreement, as amended hereby, shall remain in full
force and effect.
SECTION 4
MISCELLANEOUS
4.1 Successors. This Agreement shall be binding upon each of Selectronics
and Microlytics and their respective successors in title and shall inure to the
benefit of each of Conway and Edmark and their respective successors in title.
4.2 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but such counterparts shall together
constitute but one and the same agreement.
<PAGE>
4.3 Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the law of the State of New York.
4.4 Signatures. A signature affixed to a counterpart of this Agreement and
delivered by facsimile by or on behalf of any person or entity is intended to be
its signature and shall be valid, binding and enforceable against such person or
entity.
4.5 Headings. Titles and headings to sections hereof are inserted for
convenience of reference only and are not intended to be a part of, or to affect
the meaning or interpretation of, this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
on the date first above written.
MICROLYTICS, INC.
By: /s/ Roy W. Haythorn
------------------------------------
Name: Roy W. Haythorn
Title: Chairman of the Board,
President and Chief Executive
Officer
MICROLYTICS TECHNOLOGY
COMPANY, INC.
By: /s/ Roy W. Haythorn
------------------------------------
Name: Roy W. Haythorn
Title: Chairman of the Board,
President and Chief Executive
Officer
EDMARK, INC.
By: /s/ Michel Benarrosh
------------------------------------
Name: Michel Benarrosh
Title: President
CONWAY NEW YORK, INC.
By: /s/ Michel Benarrosh
------------------------------------
Name: Michel Benarrosh
Title:
EXHIBIT 22
The following is a list of all subsidiaries of Microlytics, Inc. (the "Company")
as of February 12, 1996:
1. Microlytics Technology Company, Inc.*, a New York
corporation, formerly known as Microlytics, Inc.
2 Selectronics Far East, Ltd., a corporation organized under
the laws of the Country of Hong Kong.
3. Selectronics Japan, a Japanese corporation.
4. MicroPages, Inc.*, a New York corporation.
*implies wholly-owned subsidiary.
In addition, Information Retrieval Technologies, Inc., a New York corporation,
is a wholly-owned subsidiary of Microlytics Technology Company, Inc.
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