SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-KSB
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ______
Commission File No. 0-16341
ADVA INTERNATIONAL INC.
(Name of Small Business Issuer in its Charter)
Delaware 16-1284228
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
6 Woodcross Drive,
Columbia, South Carolina 29212
(Address of Principal Executive Offices) (Zip Code)
(803) 407-3044
Issuer's Telephone Number, Including Area Code)
Securities Registered Under Section 12(b) of the Exchange Act
Title of Each Class Name of Each Exchange on Which Registered
None None
Securities Registered Under Section 12(g) of the Exchange Act
Common Stock, $.01 par value
(Title of class)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the Issuer was
required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X ] No [ ]
Check here if disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of the Issuer's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The Issuer's total revenues for its most recent fiscal year were
$ 0
The aggregate market value, as of September 28, 2000, of voting
stock held by non-affiliates was approximately $393,011.
The number of outstanding shares of common equity on September
28, 2000 was 716,277
Transitional Small Business Disclosure format (check one):
Yes [ ] No [ X ]
Total pages =45 Exhibit Index Appears on Page 21
ADVA INTERNATIONAL INC.
INDEX
Item Page
PART I 1. Description of Business 2
2. Description of Property 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of 8
Security Holders
PART II 5. Market for Common Equity 8
and Related Stockholder Matters
6. Management's Discussion and Analysis 9
7. Financial Statements 13
8. Changes in and Disagreements with 13
Accountants on Accounting
and Financial Disclosure
PART III 9. Directors, Executive Officers, Promoters 13
and Control Persons; Compliance with
Section 16(a) of the Exchange Act
10. Executive Compensation 14
11. Security Ownership of Certain Beneficial 18
Owners and Management
12. Certain Relationships and Related 19
Transactions
PART IV 13. Exhibits, List and Reports on Form 8-K 21
Item 1. DESCRIPTION OF THE BUSINESS
ADVA International Inc. ("ADVA", the "Registrant" or the "Company"),
prior to selling its assets on May 11, 1999 under paragraph 363 US11 of the
bankruptcy code, operated under the name Advanced Medical Products, Inc. The
Company developed, assembled and marketed medical diagnostic equipment and
software primarily for use in physicians' offices. Holter monitors (24 hour
electrocardiogram monitors) and ambulatory blood pressure (ABP) instruments
provided most of the Company's revenues. From May 12, 1999 until the present,
the Registrant has had no operations. On June 17, 2000, ADVA entered into a
definitive agreement of Stock Exchange to acquire all of the outstanding
shares of common stock of Global Information Group USA, Inc. ("GIG"), which
will make GIG a wholly owned subsidiary of ADVA and the operations of GIG will
essentially become the operations of ADVA. GIG develops and markets 3D solid
modeling, animation and rendering software that runs on the LINUX Operating
System.
For the two fiscal years ended June 30, 2000 and June 30, 1999, the
Registrant generated revenues of $ 0 and $2,159,548 respectively, and incurred
a net loss of $94,788 and net income of $322,283, respectively. The net
income for the fiscal year ended June 30, 1999 included a gain on
restructuring of debt, through the federal bankruptcy court, in the amount of
$887,052.
The Registrant was incorporated under the laws of the State of Delaware
on September 3, 1986, and in June 1987, successfully concluded an initial
public offering of its Common Stock, providing net proceeds to the Registrant
of approximately $2,034,000. Effective September 13, 1989, the Registrant
reverse split its outstanding Common Stock at the rate of one share for every
100 shares, and re-capitalized so as to authorize the issuance of a total of
5,000,000 shares of Common Stock, $.01 par value. In September 1992, the
Company amended its Certificate of Incorporation to create a class of stock
consisting of 4,000 shares of redeemable Class A Preferred Stock, and sold
2,000 of such shares, for $2,000,000, to Nishimoto Sangyo Company, Ltd. In
1996 and 1997, Nishimoto Sangyo purchased 217 additional shares of preferred
stock, and 300,000 shares of common stock, paid in satisfaction of $319,000 in
unpaid dividends and interest. In 1996, South Carolina Pipeline Corporation,
a subsidiary of SCANA Corporation ("SCANA"), purchased 160 shares of preferred
stock in exchange for $160,000 in unpaid rent. In 1996, the Company amended
its certificate of incorporation, increasing the authorized common stock to
7,000,000 shares.
During the Registrant's fiscal 1996, Carolina Medical Inc. purchased
from the Company a total of 2,150,000 shares, or 42.1%, of the Company's then
issued and outstanding common stock for $430,000. In November 1997, Carolina
Medical purchased an additional 850,000 common shares for $263,500 which
increased that company's ownership in the Registrant's common stock to
3,000,000 shares or 50.3% of the total outstanding. In May 1998, Carolina
Medical purchased 2,217 shares of the Company's preferred stock, including
unpaid dividends totaling $149,694, and 300,000 shares of common stock from
Nishimoto, and purchased 160 shares of the Company's preferred stock from
SCANA. These transactions increased Carolina Medical's ownership in the
Company's securities to 55.3% of the common stock and 100% of the preferred
stock outstanding. Carolina Medical Inc., a North Carolina corporation, was
merged with and into CMI of Minnesota, ("CMI"), a Minnesota corporation. On
July 23, 1998, Biosensor Corporation, a Minneapolis corporation, acquired all
of the outstanding shares of CMI of Minnesota, pursuant to a Plan of
Reorganization and Agreement by and between CMI and Biosensor. On May 23,
1999 stockholders of Biosensor Corporation voted to change the name of
Biosensor Corporation to Biotel Inc.
On March 23, 1999, Advanced Medical Products, Inc. filed a motion with
the Federal Bankruptcy Court, District of South Carolina, for an order
authorizing the sale of all assets, including equipment, inventory, and
accounts receivable, outside the ordinary course of business, free and clear
of all liens and encumbrances and other interests, pursuant to 11 U.S.C.
Section 363 of the bankruptcy code.
On May 3, 1999, the United State Bankruptcy Court entered an order
approving the Disclosure Statement filed on March 23, 1999, and on May 11,
1999, pursuant to a court order entered on May 10, 1999, Advanced Medical
Products, Inc. sold all assets, including equipment, inventory, and accounts
receivable, outside the ordinary course of business, free and clear of all
liens and encumbrances and other interests, pursuant to 11 U.S.C. Section 363
of the bankruptcy code. Biosensor Corporation purchased the assets and
assumed all of the secured debt, employee and commission liabilities, and all
customer warranty and service liabilities of Advanced Medical Products, Inc.
As of May 11, 1999 the Company ceased operations. Filings have been
maintained with the Securities and Exchange Commission and the Company's
common stock has continued to trade on the NASDAQ Bulletin Board.
On January 21, 2000, the Board of Directors of the Company, believing
that it is in the best interest of the stockholders to pursue opportunities to
merge a private company into the Company, authorized by unanimous consent the
appointment of a committee made up of two members of the Company's Board, one
of whom is also an officer and director of Biotel Inc., who now owns 46% of
the issued and outstanding common stock of the Company, the chief financial
officer of Biotel, and an outside member who is also an outside director of
Biotel, (the "Committee") for the purpose of seeking potential reverse
merger candidates, reviewing information, negotiating terms of a stock sale
and merger or a share exchange, and presenting recommendations to the
Company's Board for approval. Whereas the Company has no financial resources
to pay employees, directors, advisors or consultants for services, the Board
approved the "2000 Consulting Plan", authorizing the issuance of common
stock of the Company to members of the Committee, and to one or more outside
consultants to assist the committee with the process, as compensation in lieu
of cash for these services.
On February 29, 2000, in accordance with the vote of the majority of the
shares of common stock of Advanced Medical Products Inc., a Certificate of
Amendment of the Certificate of Incorporation was filed with the Secretary of
State of Delaware changing the name of Advanced Medical Products, Inc. to ADVA
International Inc., effecting a one share for ten shares reverse split of all
of the common stock issued and outstanding, and authorizing the Company to
issue up to 20,010,000 shares, of which 20,000,000 shares shall be common
stock, all of which shall have a par value of $0.001, amounting in the
aggregate to $20,000, and 4,000 shares shall be Class A Preferred Stock all of
which shall have no par value, and 6,000 shares of Class B Preferred Stock all
of which shall have no par value. The common stock trading symbol on the
NASDAQ Bulletin Board for the Company was changed to "ADII". All references
to shares and per share data in this Form 10KSB give retroactive effect to all
reverse splits and re-capitalizations discussed herein.
On March 13, 2000, the Company filed a Registration Statement on Form S-
8 with the Securities and Exchange Commission registering 120,000 shares of
common stock to be used for the purpose of "stock in lieu of cash
compensation" to consultants under the "2000 Consulting Plan". On March
24, 2000, one hundred twenty thousand (120,000) shares of the Company's common
stock were issued, 60,000 shares to the four members of the Committee formed
by the Company's Board, and 60,000 shares to an outside consulting firm, for
services performed under the 2000 Consulting Plan. These shares were valued at
$0.65 a share for financial reporting purposes. Of the $94,788 loss reported
for fiscal year 2000, $78,000 was the value of shares issued for consulting
services as stock in lieu of cash compensation; the balance was previously
unrecorded priority claims.
On June 17, 2000, ADVA International Inc. entered into a definitive
agreement of Stock Exchange to acquire all of the outstanding shares of common
stock of Global Information Group USA, Inc. ("GIG") in exchange for
12,468,750 common shares of ADVA, or 94.57% of the total capital stock
outstanding after giving effect to the transaction. The existing stockholders
of ADVA will own the remaining approximate 5.4%. As a result of the
transaction GIG will become a wholly owned subsidiary of ADVA. Shareholders
of GIG who are not officers or directors of GIG or the Company will be
entitled to one demand registration right, and all GIG shareholders and Biotel
Inc., the Company's largest shareholder prior to the transaction, will be
entitled to certain piggy-back registration rights. The present officers of
the Company will resign at Closing and Anthony E. Mohr, President of GIG, will
be appointed President and Chief Executive Officer of the Company. The
Company, through a resolution approved by its board of directors, set the
number of directors of the Company at six, with three designees of GIG to be
appointed as directors, along with the three present directors, to serve until
the next election of directors.
GIG develops and markets applications software that runs on the LINUX
Operating System. The current GIG software is believed to be the only complete
3D solid modeling, animation and rendering system currently available on the
LINUX OS and is used by Digital Media professionals in the production of film
and video special effects; animation; Computer Aided Design (CAD) and
scientific visualization; website and print graphics; game development; and
virtual television. The LINUX OS is "open-source" software distributed free
on the Internet and developed, debugged and improved by an international
community of programmers in cooperation with companies such as VA Linux,
RedHat, SGI, IBM and many other major concerns in the computer industry. The
application software market targeted by GIG is the high volume/low price
segment of the computer market where users are rapidly embracing LINUX as a
robust, stable and lower cost alternative to both UNIX and MS Windows.
The United States Bankruptcy Court for the District of South Carolina
issued an order on May 5, 2000 approving a modification to the confirmed Plan
of Reorganization of Advanced Medical Products, Inc., debtor-in-possession,
which deletes the provisions for dissolution of the corporation and the
extinguishment of the existing shares of ADVA stock, and substitutes
provisions stating that the corporation will continue its existence and the
existing shares of stock will remain valid. The court re-opened the case and
issued the order approving and amending the Plan of Reorganization in order
that a $300,000 transaction fee, to be funded by GIG at Closing, could be
realized for the benefit of creditors of Advanced Medical Products, Inc. and
the payment of certain transaction related expenses.
PRODUCTS
The Company's products, prior to May 11, 1999 when its operations ceased,
included various solid state electronic medical diagnostic devices supported by
several proprietary "Windows" based software programs that run on personal
computers. These products were sold under the Advanced Medical Products name.
Ambulatory ECG (Holter) Monitor
An electrocardiogram ("ECG") is a primary source of diagnostic
information for the physician as it has the capability to non-invasively
(without puncture or incision of the skin or insertion of an instrument into
the body) record and detect electrical events of the heart, including
arrhythmia's (disorders of the cardiac rhythm) and/or symptomatic or
asymptomatic (without symptoms) ischemia (the interruption of blood supply and
oxygen to the heart, caused by the blockage of coronary arteries). An
ambulatory (a diagnostic technique where the patient is monitored while
engaging in normal activities) ECG monitor consists of electrodes which are
taped to the patient's chest and connected by cables to a monitor which records
up to 24 hours of ECG information transmitted from the electrodes. The ECG
monitor stores the information received, and, when connected to a computer
and/or external printer, can be stored for future use, displayed on a viewing
monitor and/or printed, or transmitted electronically to a remote site for
interpretation by a specialist.
Ambulatory Blood Pressure Monitor
The Company also marketed a family of diagnostic devices incorporating an
ambulatory blood pressure monitor (the "ABP Monitor"). The ABP Monitor records
up to 24 hours of blood pressure data, including systolic, diastolic and mean
arterial pressures and pulse rate in a solid state recorder. Results recorded
by the ABP Monitor are capable of being printed out in a tabular format on a
printer or displayed on a viewing monitor.
The Company offered both a stand-alone ABP monitor and combined ECG
Holter and ABP Monitor. The Company has received FDA pre-marketing clearance
to market the ABP Monitor. The stand-alone blood pressure monitoring procedure
is not generally reimbursable under many existing government-sponsored
reimbursement programs. The ECG Holter procedure performed simultaneously with
the blood pressure procedure, utilizing the Company's combined ECG Holter and
ABP Monitor, is currently reimbursable under existing reimbursement guidelines
recommended by HCFA. The various ECG monitoring systems produced and marketed
by the Company were designed to produce a concise printout of the recorded
information. Each system consists of a monitor, weighing approximately six
ounces and powered by two "triple A" 1.5 volt batteries, a printer, which is a
standard computer printer with certain modifications, computer software,
connecting cables and, in certain models, a personal computer and laser printer
(if desired by the customer).
The Company introduced in 1997 a new software product called "MICRO
ANALYST I" for use with the Company's Holter and ambulatory blood pressure
monitors. This software operates on a PC under the "Windows" or "Windows 95"
operating systems. The Company has FDA pre-marketing authorization to market
its family of ambulatory ECG (Holter) monitoring systems. Procedures utilizing
technology of the type incorporated in its family of ambulatory ECG systems are
currently reimbursable under guidelines recommended by the Health Care
Financing Administration ("HCFA"), and under most private third-party
reimbursement programs.
SALES AND MARKETING
Prior to selling its assets and ceasing operatons, the Company marketed
its products through an in-house network consisting of marketing persons,
regional sales managers and territorial sales assistants. Marketing personnel
utilized on-going direct mail campaigns and selected trade shows to create
awareness and generate leads for its sales force. Sales personnel were
compensated primarily on a commission basis (and, in certain cases, by salary
plus commission). The Company also marketed its products in the U.S. through
independent manufacturers' representatives.
The Company had focused its marketing efforts toward office-based,
primary care physicians, using direct mail and telemarketing to create
awareness and generate interest in the Company's products. The Company sold
its products internationally through foreign distributors.
RESEARCH AND DEVELOPMENT
The Company conducted research and development activities in order to
enhance existing products and develop proposed products. For the two fiscal
years ended June 30, 2000 and June 30, 1999, the Company incurred research and
development expenditures of $0 and $121,583 respectively.
ASSEMBLY AND SHIPPING
The Company's ECG monitors and its ABP Monitors consisted of solid state
electronic components and circuit boards, electrical cables and computer
software programs. Some components are standard items, while others were
manufactured to the Company's specifications. The Company during fiscal 1999,
out-sourced most of its manufacturing in order to further reduce in-house fixed
costs. Operations at the Company's facilities included assembly, quality
control, servicing, and shipping.
COMPETITION
The Company's products faced competition from a variety of professionally
accepted and recognized diagnostic systems. Competition is based on product
characteristics (including reliability and performance efficiency), price,
warranty terms and service. Numerous companies produce medical electronic
equipment, many of which had substantially greater financial resources and
personnel than the Company. The Company also competed with commercial
services, which provide ambulatory ECG and ABP monitoring services to
individual physicians, physicians' group practices and hospitals. The Company
believes that its principal competitors in the office ambulatory ECG market
were Rozin, Burdick, Biosensor and Q-Med, Inc.; and in the ambulatory blood
pressure market were Spacelabs, Inc., and Welch Allyn.
PATENTS AND TRADEMARKS
Management does not believe that the technology incorporated into its ECG
monitors, ABP Monitors and other products was amenable to patent protection
because such technology is not new, but rather represents innovative uses for
existing technology.
EMPLOYEES
Since May 12, 1999 the Company has had no employees. The Company,
prior to selling its assets and ceasing operations on May 11, 1999, employed 15
full-time persons consisting of its President, two Vice Presidents, a sales and
marketing staff of 4, a manufacturing staff of 4 persons, 1 service person and
1 quality control person, 1 product development engineer, and 1 administrative
person. The Company also employed part-time persons and outside consultants
from time to time.
Item 2. DESCRIPTION OF PROPERTY
The Company was a party to a lease agreement (the "Lease") with T & L A
Partnership (the "Landlord"), pursuant to which the Company had leased a 10,080
square foot building located at 6 Woodcross Drive, Columbia, South Carolina
29212. This Lease was for a term of five years, which commenced on November 1,
1996. As of May 12, 1999 Biotel Inc. assumed all of the Company's obligations
under this lease.
Item 3. LEGAL PROCEEDINGS
The Chapter 11 bankruptcy estate of the Registrant has been fully
administered, except for distribution of any funds that could be realized for
the benefit of creditors of Advanced Medical Products, Inc., Debtor in
Possession, and the payment of certain transaction related expenses, from
transaction fees realized at Closing from an Agreement of Stock Exchange to
acquire all of the outstanding shares of common stock of Global Information
Group USA, Inc.
There are no material pending legal proceedings to which the Registrant
is a party or of which any of its property is subject, nor is the Company aware
of any material proceedings to which any officer, director or affiliate of the
Registrant or beneficial owner of more than 5% of Registrant's outstanding
securities, or any associate of any such persons, is a party adverse to the
Registrant or has a material interest adverse to the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Registrant's Common Stock, $.001 par value, is traded in the over-
the-counter (OTC) market under the symbol ADII. The Company's Common Stock was
de-listed from NASDAQ Small Cap trading commencing February 2, 1995, due to the
Company's inability to meet NASDAQ capital and surplus requirements. Since
that date, the Company's common stack has been traded on the electronic
bulletin board, and until March 2000, traded under the symbol ADVA.
Set forth below is the range of high and low bid information for the
Registrant's Common Stock for the two preceding fiscal years as reported from
the OTC Bulletin Board and reflect daily bid prices. These quotations
represent prices between dealers, do not reflect retail mark-up, mark-down or
commissions, and may not represent actual market transactions.
High Bid Low Bid
Third Calendar Quarter, 1998 1.30 0.80
Fourth Calendar Quarter, 1998 0.80 0.70
First Calendar Quarter, 1999 0.90 0.20
Second Calendar Quarter, 1999 0.70 0.10
Third Calendar Quarter, 1999 0.80 0.10
Fourth Calendar Quarter, 1999 3.10 0.50
First Calendar Quarter, 2000 3.00 2.06
Second Calendar Quarter, 2000 3.25 1.19
As of September 29, 2000, there were approximately 1,874 record holders of
the Registrant's outstanding Common Stock. The Registrant has never paid any
cash dividends on its Common Stock and does not anticipate paying cash
dividends on its common stock in the foreseeable future.
On February 29, 2000, in accordance with the vote of the majority of the
shares of common stock of Advanced Medical Products Inc., a Certificate of
Amendment of the Certificate of Incorporation was filed with the Secretary of
State of Delaware changing the name of Advanced Medical Products, Inc. to ADVA
International Inc., effecting a one share for ten shares reverse split of all
of the common stock issued and outstanding, and authorizing the Company to
issue 20,010,000 shares, of which 20,000,000 shares shall be common stock, all
of which shall have a par value of $0.001, amounting in the aggregate to
$20,000, and 4,000 shares shall be Class A Preferred Stock all of which shall
have no par value, and 6,000 shares of Class B Preferred Stock all of which
shall have no par value. The common stock trading symbol on the NASDAQ
Bulletin Board for the Company was changed to "ADII" in March 2000. All
references to shares and per share data in this Annual Report give retroactive
effect to all reverse splits and re-capitalizations discussed herein.
On March 13, 2000, the Company filed a Registration Statement on Form S-8
with the Securities and Exchange Commission registering 120,000 shares of
common stock to be used for the purpose of "stock in lieu of cash
compensation" to consultants under the "2000 Consulting Plan". On March
24, 2000, one hundred twenty thousand (120,000) shares of the Company's common
stock were issued, 60,000 shares to the four members of the Committee formed
by the Company's Board and 60,000 shares to an outside consulting firm, for
services performed under the 2000 Consulting Plan. These shares were valued at
$0.65 a share for financial reporting purposes.
On June 17, 2000, ADVA International Inc. entered into a definitive
agreement of Stock Exchange to acquire all of the outstanding shares of common
stock of Global Information Group USA, Inc. ("GIG") in exchange for
12,468,750 common shares of ADVA, or 94.57% of the total capital stock
outstanding after giving effect to the transaction. The existing stockholders
of ADVA will own the remaining approximate 5%. As a result of the transaction
GIG will become a wholly owned subsidiary of ADVA. Shareholders of GIG who
are not officers or directors of GIG or the Company will be entitled to one
demand registration right, and all GIG shareholders and Biotel Inc., the
Company's largest shareholder prior to the transaction, will be entitled to
certain piggy-back registration rights.
Item 6. Management's Discussion and Analysis
FORWARD-LOOKING STATEMENTS
This and other sections of this report contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which represent the Company's expectations concerning future events,
including the effects on the market price of the Common Stock of the
Definitive Agreement of Stock Exchange to acquire all of the outstanding
shares of common stock of Global Information Group USA, Inc. ("GIG") entered
into by the Registrant on June 17, 2000, which, if the stock exchange is
completed, will make GIG a wholly owned subsidiary of ADVA and the operations
of GIG will essentially become those of ADVA. No assurance can be given that
the transaction contemplated by this agreement will be successfully concluded,
or if concluded, that GIG will be successful in implementing its business
strategy to develop and market applications software that runs on the LINUX
Operating System.
By their very nature, forward-looking statements are subject to known
and unknown risks and uncertainties relating to the Company's and other
parties' future performance that may cause actual results to differ materially
from those expressed or implied in such forward-looking statements. The
Company does not undertake and assumes no obligation to update any forward-
looking statement that may be made herein or from time to time by or on behalf
of the Company.
The following discussion should be read in conjunction with the
accompanying Financial Statements, including the notes thereto, appearing
elsewhere herein.
RESULTS OF OPERATIONS
Fiscal 2000 Compared to Fiscal 1999
The Company ceased operations in May of 1999 and had no operations and
no sales for the twelve months ended June 30, 2000. There were no selling,
general and administrative expenses, except for those consulting expenses paid
with stock in lieu of cash for consultant services (under the "2000
Consulting Plan") in connection with seeking a suitable share exchange or
reverse merger partner for the Company. Of the $94,788 loss reported for
fiscal year 2000, $78,000 was the value of shares issued for consulting
services as stock in lieu of cash compensation. The remaining $16,788 loss
reported for fiscal year 2000 was from adjustments to the remaining priority
claims after bankruptcy that had not been recognized as expense in the income
statement for fiscal year 1999.
Net sales were $2,159,548 in fiscal 1999, made up primarily of sales of
medical devices to office based physicians in the U.S.
Gross margins were 47% in fiscal 1999, resulting in gross profits in 1999
of $1,019,804.
Selling, general and administrative expenses were $1,300,647 or 60% of
sales in 1999.
Research and development costs for fiscal 1999 were $121,583 or 6% of
sales.
Interest expense was $76,069 in fiscal 1999.
The net loss from operations for the approximately ten and one half
months of fiscal 1999 prior to the sale of the Company's assets on May 11, 1999
was $466,460.
All operations ceased prior to July 1, 1999. Current liabilities on
June 30, 2000 consisted of the obligation of the Debtor in Possession to
distribute $ 39,770 to administrative expenses of the bankruptcy and certain
priority claims for which there are no funds currently available. Cash on June
30, 2000 was $107, which was the undistributed portions of the $68,000 cash
paid to the Company on May 11, 1999 for its assets.
Fiscal 1999 Compared to Fiscal 1998
Net sales declined 2% to $2,159,548 in fiscal 1999 from $2,191,812 in
fiscal 1998. Sales of medical devices to office based physicians in the
Company's major markets, the U.S., Europe and Japan, have continued to be
adversely impacted by changes taking place in the health care industry,
particularly the continuing moves toward "managed care" and "capitation of
costs". Many physician practices have been sold to hospitals or managed care
groups and capital equipment expenditures by health care providers have been
reduced substantially over the past few years.
The Company's domestic sales were up in 1999 compared to 1998 but
international sales were down, with sales to Nishimoto Sangyo, the Company's
distributor in Japan down more than 25% at $60,885 and sales to Kontron
Instruments, the Company's distributor in Europe prior to their filing
administrative receivership in December down 40% at $143,883. Lower
international sales effected profits to a greater degree than did higher
domestic sales because of the substantially lower sales and marketing costs to
the Company on international sales through distributors.
Gross margins were improved to 47% in fiscal 1999 from 38% in 1998
resulting in gross profits in 1999 of $1,019,804 compared to $836,723 in fiscal
1998. This was primarily the result of higher percentage of sales going to
domestic customers where gross margins are higher than with international
distributors. Selling, general and administrative expenses of $1,300,647 or
60% of sales were higher by $291,360 in fiscal 1999, mostly due to higher
commissions and other selling expenses on the higher domestic sales. Research
and development costs for fiscal 1999 of $121,583 were 6% of sales and were
lower than in 1998 by $33,408.
Interest expense was lower, reduced from $114,135 in fiscal 1998 to
$76,079 in fiscal 1999 as a result of reduced borrowing available to the
Company from its lending sources.
The net loss from operations for the approximately ten and one half
months of fiscal 1999 prior to the sale of the Company's assets on May 11th was
$466,460 compared to a loss of $446,563 in fiscal 1998. All operations ceased
prior to June 30, 1999.
Cash at June 30, 1999 was $64,073, which was the undistributed portion s
of the $68,000 cash paid to the Company on May 11, 1999 for its assets.
LIQUIDITY AND CAPITAL RESOURCES
The Company ceased operations as of May 11, 1999. The cash available on
June 30, 2000 of $107 was insufficient to meet administrative and priority
claims. The Company had total assets of $64,073 and total liabilities of
$86,948 following the May 11, 1999 sale of its assets free and clear of all
liens and encumbrances and interests pursuant to 11 U.S.C. 363(b)(1) of the
federal bankruptcy code.
The United States Bankruptcy Court for the District of South Carolina
issued an order on May 5, 2000 approving a modification to the confirmed Plan
of Reorganization of Advanced Medical Products, Inc., debtor-in-possession,
which deletes the provisions for dissolution of the corporation and the
extinguishment of the existing shares of ADVA stock, and substitutes
provisions stating that the corporation will continue its existence and the
existing shares of stock will remain valid. The court re-opened the case and
issued the order approving and amending the Plan of Reorganization in order
that a $300,000 transaction fee, to be funded by GIG at Closing, could be
realized for the benefit of creditors of Advanced Medical Products, Inc. and
the payment of certain transaction related expenses. The Chapter 11
bankruptcy estate of the Registrant has been fully administered, except for
distribution of such transaction fee, if received. The Agreement of Stock
Exchange entered into on June 17, 2000. to acquire all of the outstanding
shares of common stock of Global Information Group USA, Inc. ("GIG"),
includes the provision that a $300,000 transaction fee be paid by GIG at
closing. These funds would be distributed by Advanced Medical Products, Inc.
Debtor in Possession, first to pay certain transaction costs, second to pay
remaining priority claims, and the remainder to be distributed pro rata to
unsecured creditors of the debtor in possession. If the proposed transaction
closes, and if a $300,000 fee if paid to Advanced Medical Products, Inc.,
Debtor in Possession, it is currently estimated that approximately $.60 on the
dollar would be available for distribution to the unsecured creditors.
Item 7. Financial Statements
Financial information required by this Item is attached to this Report
beginning on page F-1. See also Item 13.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There have been no changes in or disagreements with accountants (within
the meaning of Rule 12b-2) .during the Registrant's two most recent fiscal
years or in any subsequent interim period.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The current directors and executive officers of the Registrant are as
follows:
Name Age Position and Term of Service
George L. Down 60 President since October 1997.
Vice President since April 1996.
Director since September 1986
C. Roger Jones 62 Director since January 1996
Ronald G. Moyer 64 Vice President and Director since October 1997;
President from January 1996 until October 1997
Deborah Riente 44 Secretary since August 1992
George L. Down is President and a Director of the Company. Prior to his
position as President beginning in October 1997, Mr. Down was Vice President of
Sales and Marketing for the Company. Until December 1992, and for more than
the preceding five years, he served as the president of Design Realizations,
Ltd. ("DRL"), a closely held corporation founded by Mr. Down, where he
performed design and packaging services for a variety of companies, including
the Company. Mr. Down received a B.S. in Industrial Design degree from
Syracuse University in 1964.
C. Roger Jones, was C.E.O of Carolina Medical until January 2000 and has
served as President and Chief Operating Officer of Carolina Medical since
1985. From 1970 to 1985, he was Vice President of Sales & Marketing. He was
with Carolina Medical since 1961. He has served as Chairman for Eagle Golf
Ball Company, Inc. since 1988.
Ronald G. Moyer is the Vice President and Chairman of the Board of the
Company, and from January 1996 until October 1997, he served as President of
the Company. Since 1992 he has been the Chief Executive Officer and Chairman
of Biotel Inc and Carolina Medical Inc., From 1991 to 1992 he served as
Director of M & A for Dominion Holdings Group. From 1989 to 1991 he served as
Executive Vice President and Chief Operating Officer of CXR Corporation. Prior
to that time since 1969 he was the President, Chief Executive Officer and
Chairman of the Board of Digilog, Inc. He received an MS in Aerospace
Engineering from Drexel University in 1963 and completed the Harvard Business
School Small Corporation Management Program in 1981.
Deborah Riente served as Vice President of Corporate Administration.
From July 1991 until July 1992, Ms. Riente was employed as the Company's Human
Resources Manager, and from 1987 to July 1991, served as an administrative
assistant for the Company
The Company does not compensate its Directors for serving as such, but
are and will be reimbursed for their reasonable out-of-pocket expenses incurred
in their capacities as members of the Board of Directors.
Item 10. Executive Compensation
The following table discloses certain summary information concerning the
compensation paid for services rendered in all capacities to the Company for
the two fiscal years in the period ended June 30, 2000,, to the Company's Chief
Executive Officer and its four most highly compensated executive officers other
than the Chief Executive Officer, whose total annual salary and bonus were in
excess of $100,000 (each, a "Named Executive Officer"):
SUMMARY COMPENSATION TABLE
Annual Compensation
Long-Term Compensation/Awards
Name/position Fiscal Year Other
Annual Comp. All Other
Ended 6/30 Salary Bonus
.($) Options Compensation
George W. Down, Pres. 2000 -0- -0- -0- -
0- $ 6,500*
1999 $ 77,661 -0- -0- -
0- -0-
* The value of 10,000 shares of the Company's common stock issued in
lieu of cash compensation for services.
There were no grants of stock options during the fiscal year ended June
30, 2000.
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended June 30, 2000 by the Named Executive
Officer and the value of unexercised options held by the Named Executive
Officer as of June 30, 2000:
Aggregated Option Exercises in Fiscal 2000and Fiscal Year-End Option Values
Value
Shares Acq. Realized Exerc./ Exercisable/ # of Unexerc.
On Exerc.(#) (A)($) Unexerc.(#) Unexerc.(B)($) Unexerc. In-the-Money
Options Options
at FY- atFY-
End(#) End($)
George
L. Down -0- -0- -0- -0- -0- -0-
President
(A) Market value of securities underlying options on the exercise date, less
the exercise price of such options.
(B) Market value of securities underlying "in the money" options at June
30, 2000, less the exercise price of such options.
On March 13, 2000, following the affectivity of the reverse stock split,
the Company filed a Registration Statement on Form S-8 with the Securities and
Exchange Commission registering up to 120,000 shares of common stock to be
used for the purpose of "stock in lieu of cash compensation" to consultants
under the "2000 Consulting Plan". On March 24, 2000, one hundred twenty
thousand (120,000) shares of the Company's common stock were issued, 60,000
shares to the four members of the Committee formed by the Company's Board and
60,000 shares to an outside consulting firm, for services performed under the
2000 Consulting Plan. These shares were valued at $0.65 a share for financial
reporting purposes.
Employment Agreements
There were no employment agreements in effect on June 30, 2000 or June 30,
1999.
Section 401(k) Plan
During fiscal 1993, the Company's Board of Directors established a
defined contribution profit sharing plan pursuant to Section 401(k) of the Code
[the "401(k) Plan"]. The 401(k) Plan was administered by F.P. Kessler, Jr. and
Associates, of East Syracuse, New York, in conjunction with The New England of
Boston, Massachusetts. The 401(k) Plan permitted eligible employees to make
voluntary contributions to the 401(k) Plan up to an annual maximum dollar
amount of $10,000. The Company could contribute a discretionary matching
contribution on the basis of a $.25 contribution by the Company for each $1.00
contribution by the employee, up to a maximum of 4% of the aggregate employee
contribution. Benefits under the 401(k) Plan were to be distributed upon
retirement, disability, death or termination of employment. Each participant's
share of the Company's contribution vested beginning after three full years of
service, at the rate of 20% after each of the third through seventh years of
service, at which time the participant became fully vested. During the fiscal
year 2000 the Company made no matching contributions pursuant to the 401(k)
Plan. Prior to the end of fiscal year 2000 the 401(k) Plan was closed and all
funds in the plan were distributed.
Limitation on Liability of Directors; Indemnification
The Company's Certificate of Incorporation provides that a director of
the Company will not be personally liable to the Company or its shareholders
for monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence. However, this provision
does not eliminate or limit the liability of a director of the Company (i) for
breach of the director's duty of loyalty to the Company or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law (relating to unlawful payment of dividends or
unlawful stock repurchases or redemptions), (iv) for gaining a financial profit
of other personal advantage to which he or she was not entitled, or (v) for
breaches of a director's responsibilities under the Federal securities laws.
The Company's by-laws provide that the Company shall indemnify its
officers, directors, employees and agents, to the extent permitted by the
General Corporation Law of Delaware.
Stock Option Plan
On January 26, 1987, the Board of Directors of the Company adopted a
Stock Option Plan pursuant to Section 422A (now renumbered Section 422) of the
Internal Revenue Code of 1986 (the "Code"). The Stock Option Plan was amended
on April 10, 1987, and was amended and restated on November 6, 1992. The
amended and restated Stock Option Plan (the "Plan") was approved by the
Stockholders on December 16, 1992. A description of the Plan is set forth
below. Such description is qualified in its entirety by reference to the full
text of the Plan, a copy of which is available upon written request to the
Company.
The Plan has two administration groups, one for non-qualified and one for
qualified stock options. Non-qualified Stock Option Committee members are Mr.
Moyer, and Mr. Down. Qualified Stock Option Committee members are Mr. Moyer,
and Mr. Jones. Unless otherwise approved by the Company's stockholders,
members of the Committee are eligible to receive options only pursuant to
Section 5(b) of the Plan, which establishes a formula for the exercise of such
options. Options granted under the Plan may be qualified (incentive options
within the meaning of Section 422 of the Code) or non-qualified. Stock
purchased pursuant to the exercise of an incentive option is subject to repur-
chase by the Company at the option price thereof in the event of the
termination of employment for any reason of such optionee/purchaser within one
year of the exercise of such option. Pursuant to Stock Option Agreements
between the Company and optionees of incentive options granted under the Plan,
the Company has a right of first refusal to purchase shares issued upon the
exercise of options during the five year period commencing on the date of
exercise. The maximum term of any option under the Plan is ten years and the
per share option price of incentive options may not be less than 100% of the
fair market value of the Company's Common Stock on the date the incentive
option is granted. However, incentive stock options granted to persons owning
more than 10% of the voting Common Stock of the Company may not have a term in
excess of five years or an option price per share less than 110% of the fair
market value of the Common Stock on the date of the grant.
Subject to the foregoing, each Committee determines who shall have
options under the Plan, the number of shares of Common Stock that may be
purchased under each option, the option exercise price and the term of each
option. The Committee may impose additional restrictions and limitations on
the rights of optionees, consistent with the Plan. In the event the Company's
Common Stock is not publicly traded at the time of grant of the option, the
Committee shall make a good faith determination of fair market value. Options
shall be exercisable at such times and in such amounts as the Committee
determines upon the granting thereof. Except as otherwise set forth,
information set forth herein concerning options refers to both qualified and
non-qualified options. Decisions of the Committee are final.
Options granted under the Plan are not transferable other than by will or
by the laws of descent and distribution. A total of 750,000 shares may be
issued upon exercise of options granted under the Plan. The Plan will
terminate on November 5, 2002, or on such earlier date as the Board of
Directors may determine. Any option outstanding at the termination date will
remain outstanding until it expires or is exercised in full, whichever first
occurs.
As of June 30, 2000, there were no options to purchase shares of Common
Stock outstanding under the Plan. During fiscal 2000, no options to purchase
shares were granted, no options were exercised, and all options were
terminated.
Compensation Committee
During the fiscal year ended June 30, 1996, the Company initiated a
Compensation Committee of outside directors. Mr. Ankney was Chairman and Mr.
Heiden was a member. The Compensation Committee administered the Company's
salary, cash bonus, qualified stock option plan and other compensation plans
for the Company's employees and officers. Since the resignations of Mr..
Ankney and Mr. Heiden from the Board there has not been a Compensation
Committee. As of May 12, 1999, all employees of the Company became employees
of Biotel Inc. Pursuant to the terms of the Plan the employee stock options
expired 90 days after the date of employee terminations.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of September 29, 2000 certain information
concerning beneficial ownership of the Company's Common Stock by (i) each
person known to the Company to own 5% or more of the Company's Common Stock,
(ii) each director of the Company and (iii) all directors and officers of the
Company as a group.
Amount and Nature Percent of
Name and Address of Beneficial Ownership (1) Class
Ronald G. Moyer 360,000 (2) 50.3%
6 Woodcross Drive
Columbia, SC 29212
BIOTEL Inc. 330,000 (2) 46.1%
6 Woodcross Drive
Columbia, SC 27021
C. Roger Jones 330,000 (3) 46.1%
3050 Briarcliffe Rd.
Winston-Salem, NC 27106
George L. Down 36,576 (4) 5.1%
6 Woodcross Drive
Columbia, SC 29212
Officers and Directors as 401,868 56.1%
a Group (of 4 persons)(5)
(1) As used herein, the term beneficial ownership with respect to a security
is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or
direct the vote) and/or sole or shared investment power (including the power to
dispose or direct the disposition of) with respect to the security through any
contract, arrangement, understanding, relationship or otherwise, including a
right to acquire such power(s) during the next 60 days.
(2) Ronald G. Moyer has sole dispositive power over 30,000 shares and may be
deemed the beneficial owner of 330,000 shares owned by Biotel Inc. through his
control over the voting power of those shares as Chairman, Chief Executive
Officer, and shareholder of Biotel Inc
(3) C. Roger Jones is deemed the beneficial owner of 330,000 shares owned by
Biotel Inc. through his control over the voting power of those shares as
Director and shareholder of Biotel Inc
(4) Includes 8,647 shares owned of record by the Helen L. Down Trust (Helen
Down is the mother of Mr. Down) for which Mr. Down serves as trustee, and 1,208
shares owned of record by members of Mr. Downs family.
(5) Includes 5,292 shares beneficially owned by the Secretary of the Company.
Item 12. Certain Relationships and Related Party Transactions
During the Registrant's fiscal 1996, Carolina Medical Inc., a privately
held medical device manufacturer, purchased from the Company a total of
2,150,000 shares, or 42.1%, of the Company's then issued and outstanding
common stock for $430,000. In November 1997, Carolina Medical purchased an
additional 850,000 common shares for $263,500 which increased that company's
ownership in the Registrant's common stock to 3,000,000 shares or 50.3% of the
total outstanding. In May 1998, Carolina Medical purchased 2,217 shares of
the Company's preferred stock, including unpaid dividends totaling $149,694,
and 300,000 shares of common stock from Nishimoto, and purchased 160 shares of
the Company's preferred stock from SCANA. These transactions increased
Carolina Medical's ownership in the Company's securities to 55.3% of the
common stock and 100% of the preferred stock outstanding. In July 1998, the
Company's board approved a plan to sell the Company's MICROS QV product line to
Carolina Medical in exchange for all of the 2,377 shares of Preferred Stock in
the Company (having a face value of $2,377,000), and the unpaid dividends of
$162,981. In October 1998 the Plan that had been approved by both companies'
Boards was completed, and all of the shares of the Company's Preferred Stock
issued and outstanding were retired.
Carolina Medical Inc., a North Carolina corporation, was merged with and
into CMI of Minnesota, ("CMI"), a Minnesota corporation. On July 23, 1998,
Biosensor Corporation, a Minneapolis corporation, acquired all of the
outstanding shares of CMI of Minnesota, pursuant to a Plan of Reorganization
and Agreement by and between CMI and Biosensor. CMI also owned Braemar, Inc.,
a North Carolina corporation operating in Minneapolis, MN that develops,
manufactures and markets tape recording devices for ambulatory ECG monitoring
devices, digital Holter monitors and event recorders. For accounting purposes,
this transaction became effective July 1, 1998. Because the former
stockholders of CMI effectively controlled the company after the transaction,
the transaction was recorded as a "reverse acquisition", whereby CMI was
deemed to have acquired Biosensor. The net assets of Biosensor acquired were
recorded at fair market value. The historical financial statements of
Biosensor prior to the acquisition became those of CMI. Subsequent to July 1,
1998, the financial statements of Biosensor include the operations of the
combined companies, including Carolina Medical, Braemar, and Advanced Medical
Products, Inc. On May 23, 1999 stockholders of Biosensor Corporation voted to
change the name of Biosensor Corporation to Biotel Inc.
On March 23, 1999, Advanced Medical Products, Inc. filed a motion with
the Federal Bankruptcy Court, District of South Carolina, for an order
authorizing the sale of all assets, including equipment, inventory, and
accounts receivable, outside the ordinary course of business, free and clear
of all liens and encumbrances and other interests, pursuant to 11 U.S.C.
Section 363 of the bankruptcy code. On May 3, 1999, the United State
Bankruptcy Court entered an order approving the Disclosure Statement filed on
March 23, 1999, and on May 11, 1999, pursuant to a court order entered on May
10, 1999, the Company sold all of its assets, including equipment, inventory,
and accounts receivable, outside the ordinary course of business, free and
clear of all liens and encumbrances and other interests, pursuant to 11 U.S.C.
Section 363 of the bankruptcy code. Biosensor Corporation purchased the
Company's assets and assumed all of the secured debt, employee and commission
liabilities, and all customer warranty and service liabilities of Advanced
Medical Products, Inc. As of May 11, 1999 the Company ceased operations, and
on Nov 10, 1999 a Final Decree was issued closing the case. On May 5, 2000,
after the case was reopened, the court issued an order authorizing
modifications to the Confirmed Plan to provide that the Company will continue
its corporate existence and that the existing shares of stock will remain
valid. The Company's filings with the Securities and Exchange Commission have
been maintained current, and its common stock has continued to trade on the
NASDAQ Bulletin Board.
On January 21, 2000, the Board of Directors of the Company, believing
that it is in the best interest of the stockholders to pursue opportunities to
merge a private company into the Company, authorized by unanimous consent the
appointment of a committee made up of two members of the Company's Board, one
of whom is also an officer and director of Biotel Inc., the chief financial
officer of Biotel, and an outside member who is also an outside director of
Biotel, (the "Committee") for the purpose of seeking potential reverse
merger candidates, reviewing information, negotiating terms of a stock sale
and merger or a share exchange, and presenting recommendations to the
Company's Board for approval. Whereas the Company has no financial resources
to pay employees, directors, advisors or consultants for services, the Board
approved the "2000 Consulting Plan", authorizing the issuance of common
stock of the Company to members of the Committee, and to one or more outside
consultants to assist the committee with the process, as compensation in lieu
of cash for these services.
On March 13, 2000, the Company filed a Registration Statement on Form S-
8 with the Securities and Exchange Commission registering 120,000 shares of
common stock to be used for the purpose of "stock in lieu of cash
compensation" to consultants under the "2000 Consulting Plan". On March
24, 2000, one hundred twenty thousand (120,000) shares of the Company's common
stock were issued, 60,000 shares to the four members of the Committee formed
by the Company's Board and 60,000 shares to an outside consulting firm, for
services performed under the 2000 Consulting Plan. Issuance of these shares
reduced Biotel's ownership in the Company to 46%. These newly issued shares
were valued at $0.65 a share for financial reporting purposes.
On June 17, 2000, ADVA International Inc. entered into a definitive
agreement of Stock Exchange to acquire all of the outstanding shares of common
stock of Global Information Group USA, Inc. ("GIG") in exchange for
12,468,750 common shares of ADVA, or 94.57% of the total capital stock
outstanding after giving effect to the transaction. The existing stockholders
of ADVA will own the remaining approximate 5%. As a result of the transaction
GIG will become a wholly owned subsidiary of ADVA. Shareholders of GIG who
are not officers or directors of GIG or the Company will be entitled to one
demand registration right, and all GIG shareholders and Biotel Inc., the
Company's largest shareholder prior to the transaction, will be entitled to
certain piggy-back registration rights. The present officers of the Company
will resign at Closing and Anthony E. Mohr, President of GIG, will be
appointed President and Chief Executive Officer of the Company. The Company,
through a resolution approved by its board of directors, set the number of
directors of the Company at six, with three designees of GIG to be appointed
as directors, along with the three present directors, to serve until the next
election of directors.
Item 13. Exhibits, List and Reports on Form 8-K
(a) The following Exhibits are filed by reference as part of this Report:
3.1 Articles of Incorporation, as amended(1)
3.2 By-Laws(2)
4.1 Specimen Common Stock Certificate(3)
10.5 Advanced Medical Products Stock Option Plan(4)
10.11 Advanced Medical Products 401(k) Plan(5)
10.26 Plan of Reorganization approved June 29, 1999 by the Federal
Bankruptcy Court, District of SC (6)
10.27 Final Report in Chapter 11 Proceeding (7)
10.28 Name Change and One Share for Ten Reverse Stock Split (8)
(1) Reference is made to Exhibit 10.15 to the Registrant's Report on Form 8-K
dated January 12, 1996, which is hereby incorporated by reference.
(2) Reference is made to Exhibit 10.16 to the Registrant's Report on Form 8-K
dated October 23, 1998, which is hereby incorporated by reference.
(3) Reference is made to Exhibit 10.17 to the Registrant's Report on Form 10-
KSB for the year ended June 30, 1996, which is hereby incorporated by
reference.
(4) Reference is made to Exhibit 10.22 to the Registrant's Report on Form 10-
KSB for the year ended June 30, 1996, which is hereby incorporated by
reference.
(5) Reference is made to Exhibit 10.25 to the Registrant's Report on Form 10-
KSB for the year ended June 30, 1996, which is hereby incorporated by
reference.
(6) Reference is made to Exhibit 10.26 to the Registrant's Report on Form 8-
K filed on October 18, 1999 which is hereby incorporated by reference.
(7) Reference is made to Exhibit 10.27 to the Registrant's Report on Form 8-K
filed on October 18, 1999, which is hereby incorporated by reference.
(8) Reference is made to Exhibit 10.28 to the Registrant's Report on Form 8-K
filed on March 13, 2000 which is hereby incorporated by reference.
(b) Reports on Form 8-K:
The following Form 8-K Reports were filed with the Securities and
Exchange Commission during the fiscal year 2000 covered by this Form 10KSB,
and are incorporated herein by reference.
Date Form 8K Was Filed Subject Matter
March 13, 2000 Certificate of Amendment to
the Certificate of Incorporation
regarding name change to ADVA International
Inc., a one share for ten shares reverse
stock split, and authorization of additional
common and preferred stock.
April 14, 2000 Letter of Intent of Stock Exchange between
ADVA International Inc. and Global
Information Group U.S.A. Inc.
June 19, 2000 Definitive Agreement of Stock Exchange
between ADVA International Inc. and Global
Information Group, U.S.A. Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant had duly caused this report to be signed
on its behalf, by the undersigned, thereunto duly authorized.
ADVA INTERNATIONAL INC.
By:/s/ GEORGE L. DOWN
George L. Down, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Title Date
/s/RONALD G. MOYER Vice President and Director 9/28/00
Ronald G. Moyer
/s/GEORGE L. DOWN President and Director 9/28/00
George L. Down
/s/C. ROGER JONES Director 9/28/00
C. Roger Jones
The Registrant has not furnished its 2000 annual report or proxy
materials to securities holders. The Registrant intends to make such
information available to security holders, and to furnish copies thereof to the
Commission, in accordance with applicable rules and regulations.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant had duly caused this report to be signed
on its behalf, by the undersigned, thereunto duly authorized.
ADVA INTERNATIONAL INC.
By:
George L. Down, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Title Date
Vice President and Director 9/28/00
Ronald G. Moyer
President and Director 9/28/00
George L. Down
Director 9/28/00
C. Roger Jones
The Registrant has not furnished its 2000 annual report or proxy
materials to securities holders. The Registrant intends to furnish such
information to security holders, and to furnish copies thereof to the
Commission, in accordance with applicable rules and regulations.
ADVA International Inc.
Financial Statements
Years Ended June 30, 2000 and 1999
ADVA International Inc.
Financial Statements
Years Ended June 30, 2000 and 1999
ADVA International Inc.
Contents
INDEPENDENT AUDITOR'S REPORT F-3
Financial Statements
Balance Sheets F-4
Statements of Operations F-5
Statements of Changes in Stockholders' Equity (Deficit) F-6
Statements of Cash Flows F-7-F-8
Notes to Financial Statements F-9-F-18
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
ADVA International Inc.
Columbia, South Carolina
We have audited the accompanying balance sheets of ADVA International Inc. as
of June 30, 2000 and 1999, and the related statements of operations, changes
in stockholders' equity (deficit), and cash flows for the 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 audits.
We conducted our audits 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 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 financial position of ADVA International Inc. as of
June 30, 2000 and 1999, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
McGladrey & Pullen, LLP
Charlotte, North Carolina
September 26, 2000
ADVA International Inc.
Balance Sheets
June 30, 2000 and 1999
June 30, 2000 1999
Assets (Notes 2 and 5)
Cash $ 107 $ 64,073
Total assets $ 107 $ 64,073
Liabilities and Stockholders' Equity (Deficit)
(Notes 2, 5 and 10)
Liabilities subject to compromise (Notes 2 and 3) $ 39,770 $ 86,948
Total liabilities 39,770 86,948
Commitments and contingencies (Notes 4, 9 and 11)
Stockholders' equity (deficit) (Note 8):
Class A preferred stock, no par value;
authorized 4,000 shares; issued none - -
Class B preferred stock, no par value;
authorized 6,000 shares; issued none - -
Common stock:
$.001 par value; authorized 20,000,000
shares; issued and outstanding 716,277
shares in 2000 716 -
$.01 par value; authorized 7,000,000 shares;
issued and outstanding 5,962,495 shares in
1999 - 59,625
Additional paid-in capital 4,950,377 4,813,468
Accumulated deficit (4,990,756) (4,895,968)
Total stockholders' equity (deficit) (39,663) (22,875)
Total liabilities and stockholders' equity
(deficit) $ 107 $ 64,073
See notes to financial statements.
ADVA International Inc.
Statements of Operations
Years Ended June 30, 2000 and 1999
Year Ended June 30, 2000 1999
Net sales (Note 5) $ - $2,159,548
Cost of sales (Note 5) - 1,139,744
Gross profit - 1,019,804
Costs and expenses:
Selling, general and administrative 94,788 1,300,647
Research and development - 121,583
Loss from operations (94,788) (402,426)
Non-operating income (expense)
Interest - (76,079)
Other - 12,045
- (64,034)
Loss before reorganization items and
extraordinary item (94,788) (466,460)
Reorganization items (Note 2):
Professional fees - 88,377
Administrative fees - 9,932
- 98,309
Loss before extraordinary item (94,788) (564,769)
Extraordinary item, gain on restructuring of debt
(Notes 2, 6 and 7) - 887,052
Net income (loss) $ (94,788) $ 322,283
Net income (loss) applicable to common shares $ (94,788) $ 322,283
Basic and diluted net earnings (loss) per share $ (.15) $ .54
Weighted average common shares outstanding 628,798 596,250
See notes to financial statements.
ADVA International Inc.
Statements of Changes in Stockholders' Equity (Deficit)
Years Ended June 30, 2000 and 1999
Additional
Preferred Common Stock Paid-in Accumulated
Stock Shares Total Capital Deficit Total
Balance,
June 30,
1998 $2,289,410 5,962,495 $59,625 $2,486,209 $(5,218,251) $(383,007)
Sale of product line
and inventory in
exchange for the
preferred stock and
forgiveness of the
accrued unpaid
dividends (Note 10)
(2,289,410) - - 2,327,259 - 37,849
Net income - - - - 322,283 322,283
Balance,
June 30,
1999 - 5,962,495 59,625 4,813,468 (4,895,968) (22,875)
Change in common
stock par value
to $.001 per share
(Note 10) - - (53,663) 53,663 - -
One-for-ten reverse
stock split
(Note 10) - (5,366,245) (5,366) 5,366 - -
Stock issued for
consulting services
- 120,000 120 77,880 - 78,000
Net loss - - - - (94,788) (94,788)
Balance,
June 30,
2000 $ - 716,250 $ 716 $4,950,377 $(4,990,756) $(39,663)
See notes to financial statements.
ADVA International Inc.
Statements of Cash Flows
Years Ended June 30, 2000 and 1999
Year Ended June 30, 2000 1999
Cash flows from operating activities:
Net income (loss) $ (94,788) 322,283
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating
activities:
Depreciation and amortization - 113,157
Provision for doubtful accounts - 173,170
Loss on disposal of fixed assets - 2,145
Consulting fees satisfied with issuance of
common stock 78,000 -
(Increase) decrease in:
Accounts receivable - (163,753)
Inventories - (7,138)
Other assets - 8,892
Increase (decrease) in:
Accounts payable (47,178) (204,610)
Accrued wages and commissions - 26,803
Accrued expenses - 1,661
Net cash (used in) provided by operating activities
before reorganization items (63,966) 272,610
Operating cash flows from reorganization items:
Cash received from buyer of net assets in
connection with the Chapter 11 proceeding - 68,000
Extraordinary item, gain on restructuring debt - (887,052)
Professional and administrative fees for services
in connection with the Chapter 11 proceeding - 98,309
Net cash (used in) reorganization items - (720,743)
Net cash (used in) operating activities (63,966) (448,133)
Cash flows used in investing activities:
Capitalization of product software costs - (9,044)
Net cash used in investing activities - (9,044)
See notes to financial statements.
ADVA International Inc.
Statements of Cash Flows
Years Ended June 30, 2000 and 1999
Year Ended June 30, 2000 1999
Cash flows from financing activities:
Payments on notes payable and long-term debt $ - $(164,100)
Advances from related entities - 603,263
Net cash provided by financing activities - 439,163
Net decrease in cash and equivalents (63,966) (18,014)
Cash, beginning of year 64,073 82,087
Cash, end of year $ 107 $ 64,073
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ - $ 84,964
Supplemental Schedule of Non-Cash Investing and
Financing
Activities:
Consulting fees paid by issuance of common stock $ 78,000 $ -
Sale of product line and inventory in exchange
for preferred stock and forgiveness of accrued
unpaid dividends:
Inventory $ - $ (125,132)
Dividend payable - 162,981
Preferred stock - 2,289,410
Paid-in capital - (2,327,259)
$ - $ -
See notes to financial statements.
ADVA International Inc.
Notes to Financial Statements
1. Nature of Business, Ownership and Significant Accounting Policies
The Company, prior to selling its assets on May 12, 1999, pursuant to
a Plan of Reorganization under Chapter 11 of the federal bankruptcy laws,
developed, manufactured (through subcontractors), assembled and marketed
medical diagnostic equipment and software primarily for use in physicians'
offices throughout the United States and Europe.
On March 23, 1999, the Company, under the Advanced Medical Products Inc.
name (the "Debtor") filed petitions for relief under Chapter 11 of the
federal bankruptcy laws in the United States Bankruptcy Court. Under Chapter
11, certain claims against the Debtor in existence prior to filing of
the petitions for relief under the federal bankruptcy laws are stayed while
the Debtor continues business operations as debtor-in-possession.
Under the Plan of Reorganization, the Debtor was authorized to sell
all personal property, outside the ordinary course of business to Biosensor
Corporation, owner of Carolina Medical Inc. who owned 55.3% of the
common stock of Advanced Medical Products Inc. Biosensor Corporation
assumed all indebtedness of Advanced Medical Products Inc.,
except for the general unsecured debts. Advanced Medical Products Inc.
continued to operate as debtor-in-possession, pending sale of the assets.
As of May 11, 1999, the Company ceased operations. (See Note 2)
Since May 12, 1999, the Company has had no operations. On
February 29, 2000, the Company changed its name from Advanced Medical Products
Inc. to ADVA International Inc.
Use of Estimates in Preparing Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
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.
Inventories
Inventory was stated at the lower-of-cost determined by the first-in,
first-out (FIFO) method or market.
Furniture, Equipment,and Depreciation
Furniture and equipment were stated at cost less accumulated depreciation.
Depreciation was provided using the straight-line method for financial
reporting purposes and accelerated methods for income tax purposes over
the estimated useful lives of the related assets ranging from 3 to 8 years.
Depreciation expense amounted to approximately $82,000 in 1999.
Revenue Recognition
Product was shipped directly to the Company's customers. Revenue on
these sales was recognized when the product was shipped.
Service Contracts
Amounts billed to customers for service contracts were recognized as income
over the term of the agreements and the associated costs were recognized
as they were incurred.
Warranty
The products previous manufactured by the Company were sold with a one-year
warranty. The Company accrued warranty costs based upon historical
experiences and current conditions. The Company also offered an extended
warranty to its customers, under which revenues were initially deferred and
recognized to match the expected related costs incurred over the extended
warranty period. Expense for work performed under the extended
warranties were recognized as incurred.
Product Development Costs
Costs associated with the development of new products and changes to
existing products were charged to operations as incurred (except Product
Software Costs).
Product Software Costs
The Company capitalized certain costs related to the development of
computer software once technological feasibility of the software had been
established. These costs, which were reported at the lower of unamortized
cost or net realizable value, were amortized principally using the
straight-line method, over the estimated useful economic life of the
software, generally 36 months. Amortization expense amounted to approximately
$31,000 in 1999.
Income Taxes
The Company accounted for income taxes under the liability method, whereby
deferred tax assets and liabilities were based on the temporary differences
between the financial statement and tax bases of assets and liabilities
as measured by the enacted tax rates which were anticipated to be in effect
when these temporary differences reverse. The deferred tax provision was
the result of the net change in the deferred tax assets and liabilities.
A valuation allowance was established when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
would not be realized.
Net Income (Loss) Per Share
The Company has adopted Statement of Financial Accounting Standards
No. 128 (SFAS No. 128), Earnings Per Share, which requires presentation on
the face of the statement of operations, both basic and fully diluted
earnings per share. Basic per share amounts are computed, generally, by
dividing net income or loss by the weighted-average number
of common shares outstanding. Diluted per share amounts assume the
conversion, exercise, or issuance of all potential common stock instruments
unless the effect is antidilutive, thereby reducing a loss or increasing
the income per common share. As described in Note 8, at June 30, 1999, the
Company had options outstanding to purchase a total of 602,500 shares
of common stock, at a weighted-average price of approximately $.2439. The
inclusion of those potential common shares in the calculation of
diluted income per share would have an antidilutive effect. Therefore,
basic and diluted income per share amounts are the same in 1999.
On February 29, 2000, the Company completed a one-for-ten reverse stock
split of all the common stock issued and outstanding, changed the number of
authorized shares, and reduced the par value from $.01 per share to $.001
per share.
All information with respect to weighted average common shares and
earnings per common shares have been adjusted to give retroactive effect
to these transactions.
Advertising
The Company expensed the production costs of advertising, the first time
advertising took place, except for direct response advertising which was
capitalized and amortized over its expected period of future benefits.
Direct response advertising consisted primarily of brochures and distribution
of brochures that include response cards for the Company's products.
The capitalized costs of the direct response advertising were amortized over a
six month period from the date that the production costs were incurred.
2. Plan of Reorganization
On March 23, 1999, the Company under the Advanced Medical Products Inc.
name (the "Debtor") filed petitions for relief under Chapter 11 of the federal
bankruptcy laws in the United States Bankruptcy Court. Under Chapter 11,
certain claims against the Debtor in existence prior to filing of the petitions
for relief under the federal bankruptcy laws are stayed while the Debtor
continues business operations as debtor-in-possession. The remaining
unpaid claims are reported in the June 30, 2000 and 1999 balance sheet as
"liabilities subject to compromise." Additional claims (liabilities
subject to compromise) may arise subsequent to the filing date resulting
from rejection of executory contracts, including leases, and from the
determination by the Court (or agreed to by parties in interest) of
allowed claims for contingencies and other disputed amounts. Claims secured
against the Debtor's assets ("secured claims") are also stayed, although
the holders of such claims have the right to move the Court for relief from
the stay. Secured claims are secured primarily by liens on the
Debtor's assets.
On June 29, 1999, the Bankruptcy Court confirmed the Company's plan of
reorganization. The confirmed plan provided for the following:
Biosensor Corporation, who owned 55.3% of the common stock of the Company,
purchased the assets and assumed all of the secured debt, employee and
commission liabilities, and all customer warranty and service liabilities
of the Company. In addition, Biosensor made a payment of $68,000 toward
administrative expenses and the amount owed by the Company for certain
priority claims and administrative expenses, and for distribution to
outside unsecured creditors. Biosensor and its affiliates agreed not to
participate in the distribution of payments toward unsecured claims.
Biosensor's unsecured claims exceeded unsecured claims by all
nonaffiliated creditors combined. Biosensor had been funding the losses
incurred by Advanced Medical Products Inc. and indicated its
inability to continue doing so.
As a result of the above transaction, the Company recognized a gain
of $887,052 on restructuring of debt. This gain has been recognized as an
extraordinary item in the accompanying statements of operations. There
was no tax effect attributable to this gain.
Upon the final approval of the Company's plan of reorganization, the
Company under the Advanced Medical Products Inc. name ceased operating as a
debtor-in-possession.
On May 5, 2000, the United States Bankruptcy Court issued an order
approving a modification to the confirmed Plan of Reorganization of the Company
under the Advanced Medical Products Inc. name as debtor-in-possession,
which deletes the provisions for dissolution of the corporation. The court re-
opened the case and issued this order to accommodate the stock exchange
as described in Note 10. Under the stock exchange agreement, the Company will
receive a $300,000 transaction fee which will be used for payment of
certain expenses, with the balance to be paid to priority claims and unsecured
creditors of Advanced Medical Products, Inc.
3. Liabilities Subject to Compromise
Liabilities subject to compromise as of June 30, 2000 and 1999 consist
of the following:
June 30, 2000 1999
Priority tax claims $ 39,770 $ 23,707
Professional fees and
Administrative expenses - 63,241
$ 39,770 $ 86,948
4. Leases
The Company leased its facility under a five year lease agreement
which will expire October 31, 2001. As of May 12, 1999, Biosensor
Corporation assumed all of the Company's obligations under this lease.
The Company also leased equipment under agreements with varying
monthly payment amounts. The terms of the leases ranged from 36 to 60 months.
Rent expense under these operating leases amounted to approximately
$91,000 in 1999.
5. Related Parties
The following related party transactions occurred by and between the
Company and Biosensor and its subsidiaries.
The Company purchased approximately $376,000 of finished goods from
Braemar, a wholly-owned subsidiary of Biosensor in 1999. In addition,
approximately $88,000 of receivables from Braemar were offset against
additional overdue amounts owed by the Company to Braemar. The balance due of
approximately $210,000 remained due to Braemar by the Company under
the Plan of Reorganization filed under Chapter 11.
The Company had purchased approximately $145,000 of inventory from
Biosensor. The Company has not paid Biosensor for these inventory purchases.
At various times during 1999, Biosensor extended cash advances and loans
to the Company to enable the Company to meet payroll and other time critical
cash needs. These advances and loans, which were not evidenced by notes,
totaled approximately $248,000. The entire amount of the inventory
purchases, advances and loans remained due to Biosensor by the Company under
the Plan of Reorganization fileld under Chapter 11.
Biosensor and its subsidiaries agreed not to participate in distributions of
payments toward unsecured claims, although their claims exceeded
unsecured claims by all nonaffiliated creditors combined. Biosensor and
subsidiaries claims totaled approximately $603,000.
6. Notes Payable and Long-Term Debt
As of June 30, 2000 and 1999, the Company had no outstanding notes
payable or long-term debt. Pursuant to the Plan of Reorganization filed under
Chapter 11, the Company sold all its assets to Biosensor and Biosensor assumed
all of the secured debt of the Company.
7. Income Taxes
The components of net deferred taxes were as follows:
June 30, 2000 1999
Deferred tax assets:
General business tax credits $ 170,115 $ 170,115
Operating loss carryforwards 1,492,906 1,455,937
1,663,021 1,626,052
Less valuation allowance (1,663,021) (1,626,052)
$ - $ -
The Company has total net operating loss carryforwards of approximately
$3.8 million available at June 30, 2000, which may be offset
against future taxable income through 2014. The eventual utilization
of these tax loss carryforwards will be limited due to the changes in
the ownership of the Company. As a result of uncertainties regarding the
Company's ability to realize its deferred tax assets, valuation
allowances equal to the entire amount of such net assets have been recorded
at June 30, 2000 and 1999. No income tax expense is reflected in the
statement of operations due to the utilization of loss carryforwards.
8. Stock Options
The Company had reserved 750,000 shares of authorized common stock for
issuance pursuant to the terms of an Incentive Stock Option Plan.
Stock options are granted at prices not less than 100% of the fair market
value of common shares at the date of the grant and expire five years from
the date of grant. On May 12, 1999, all employees of the Company were
terminated and became employees of Biosensor. Pursuant to the terms of the
Incentive Stock Option Plan, the employee stock options expired 90 days after
the date of employee termination. Stock option activity during 1999 is
as follows:
Exercise Price
Number shares Weighted average
per share Total
Outstanding at
June 30, 1999 602,500 $ .2439 $ 146,925
During 2000, no options to purchase shares were granted or exercised and
all options were terminated. As of June 30, 2000, there were no
outstanding options to purchase of common stock under the plan.
9. Commitments and Contingencies
The Company has product liability insurance under a blanket policy that
covers Biotel and its subsidiaries. The nature and extent of liability
for product defect is uncertain. There are no known product liability
claims and management presently believes that there is no material risk
of loss to the Company from product liability claims against the Company.
As of May 12, 1999, Biosensor Corporation assumed all of the Company's
product liabilities.
During 1993, the Securities and Exchange Commission (SEC) commenced a private
investigation of the Company's accounting and record keeping practices
to determine if violations of Federal securities laws have occurred. On
September 5, 1996, the SEC accepted an offer of settlement whereby the
Company, the Company's former President, and the Company's former Vice
President, without admitting or denying any wrongdoing, signed a consent
decree to cease and desist from committing or causing any
violations and any future violations of certain sections of the Securities
and Exchange Act. The cease and desist order provided for in the Order
took effect on the date of the entry of the Commission's Order.
10. Capital Stock Transactions
In July 1998, the Company's board approved a plan to sell the Company's
MICROS QV product line to Carolina Medical Inc., a majority holder of the
Company's common stock, in exchange for all the 2,377 shares of Preferred
Stock in the Company (having a face value of $2,377,000), and the unpaid
dividends of $162,981. In October 1998, the Plan that had been
approved by both Companies' Boards was completed, and all of the shares of the
Company's Preferred Stock were retired.
Additionally, in July 1998, Carolina Medical Inc. was merged into and
with CMI of Minnesota (CMI). CMI also owns Braemar, Inc., a North Carolina
corporation with operations in Minnesota. On July 23, 1998, all of
outstanding shares of CMI were acquired by Biosensor Corporation (Biosensor)
pursuant to a Plan of Reorganization and Agreement by and between CMI
and Biosensor, dated May 29, 1998. Because the former shareholders of CMI
effectively control Biosensor after the transaction, the transaction will be
recorded as a "reverse acquisition" whereby CMI was deemed to
have acquired Biosensor. On May 23, 1999, the stockholders of Biosensor
voted to change the name of Biosensor Corporation to BIOTEL, Inc.
On February 29, 2000, in accordance with the vote of the majority of
the shares of common stock of the Company, an amendment of the Certificate of
Incorporation was filed with the Secretary of State of Delaware changing
the name of Advanced Medical Products Inc. to ADVA International Inc.,
effecting a one share for ten share reverse split of all the
common stock issued and outstanding, and authorizing the Company to issue
20,010,000 shares, of which 20,000,000 shares shall be common stock,
all for which shall have a par value of $0.001, and 4,000 shares shall
be Class A Preferred Stock all of which shall have no par value, and 6,000
shares of Class B Preferred Stock all of which shall have no par value.
On March 24, 2000, the Company issued 120,000 shares of common stock
for consulting services performed in seeking potential reverse merger
candidates. Whereas the Company had no financial resources to pay for
services, the Company issued 60,000 shares of common stock for four members
of a Committee formed by the Company's Board and 60,000 shares to an
outside consulting firm for services performed. The fair market value of
these shares were determined to be $0.65 a share, therefore, the
amount of consulting fees charged to expense on the statement of
operations for 2000 was $78,000.
On June 17, 2000, the Company entered into a definitive agreement of
Stock Exchange to acquire all the outstanding shares of common stock of
Global Information Group USA, Inc. ("GIG") in exchange for 12,468,750
common shares of the Company, or approximately 95% of the total number
of common shares outstanding after giving effect to the transaction.
The remaining 716,250 common shares, approximately 5%, will continue to
be held by the existing stockholders of the Company. As a result of the
transaction, GIG will become a wholly-owned subsidiary of the Company and
operations of GIG will essentially become those of the Company.
GIG develops and markets applications software that runs on the LINUX
Operating System.
In addition, GIG will pay the Company a $300,000 transaction fee,
which shall be used by the Company to pay creditors of the Company
under the Advanced Medical Products Inc. name as debtor-in-possession.
11. Employee Benefits
The Company had a defined contribution 401(k) plan covering
substantially all employees. Participants may contribute up to 15%
of their annual compensation to the plan. The Company had the
discretion to match 25% of a participant's contribution up to 4% of salary.
There were no Company contributions for the year ended June 30, 1999. On
May 12, 1999, all employees of the Company were terminated and became
employees of Biosensor.
In June 2000, the 401(k) plan was closed and all funds in the plan
were distributed.
