SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT of 1934
FOR QUARTER ENDED August 31, 1995 COMMISSION FILE
NUMBER 0-16664
______________________________
GENETIC LABORATORIES WOUND CARE, INC.
State of Incorporation: Minnesota
I.R.S. Employer Identification No: 41-1604048
Executive Offices: 2726 Patton Road, St. Paul, MN 55113
Telephone Number: (612) 633-0805
______________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No_____
______________________________
On August 31, 1995, there were 2,385,100 shares of the
Registrant's $.01 par value common stock outstanding.
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
GENETIC LABORATORIES WOUND CARE, INC.
BALANCE SHEETS
(Unaudited)
ASSETS
<CAPTION>
August 31, May 31
1995 1995
__________ __________
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $584,505 $295,830
Receivables
Trade, less allowance 298,709 277,541
Other 0 10,787
Inventories 344,696 429,105
Prepaid expenses 66,277 29,141
__________ __________
Total current assets 1,294,187 1,042,404
__________ __________
PROPERTY AND EQUIPMENT
Production equipment
and tooling 59,093 59,093
Office equipment 132,492 132,492
__________ __________
191,585 191,585
Less accumulated depreciation
and amortization 163,522 159,990
__________ __________
28,063 31,595
__________ __________
OTHER ASSETS, net 10,991 11,952
__________ __________
$1,333,241 $1,085,951
========== ==========
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $171,575 $132,368
Accrued expenses 78,874 65,804
Income taxes payable 62,800 9,800
__________ __________
Total current liabilities 313,249 207,972
__________ __________
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 23,852 23,261
Additional paid-in capital 640,821 625,186
Retained earnings 355,319 229,532
__________ __________
1,019,992 877,979
__________ __________
$1,333,241 $1,085,951
========== ==========
</TABLE>
<TABLE>
GENETIC LABORATORIES WOUND CARE, INC.
STATEMENT OF OPERATIONS
(unaudited)
<CAPTION>
Three Months Ended
August 31,
1995 1994
<S> <C> <C>
Net revenues $646,156 $557,928
Cost of revenues 269,028 208,838
__________ __________
Gross profit 377,128 349,090
Operating expenses 356,915 279,918
__________ __________
Income from operations 20,213 69,172
Interest income 2,361 858
Other income 164,213 0
__________ __________
Income before taxes 186,787 70,030
Provision for taxes 61,000 23,000
__________ __________
Net income $125,787 $47,030
========== ==========
Per common share data
Net income $.05 $.02
========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 2,577,350 2,344,020
========== ==========
</TABLE>
<TABLE>
GENETIC LABORATORIES WOUND CARE, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Three Months Ended
August 31,
1995 1994
__________ __________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $125,787 $47,030
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation and amortization 4,493 5,641
Changes in current assets
and liabilities
Receivables (10,381) (4,488)
Inventories 84,409 (52,946)
Prepaid expenses (37,136) (17,026)
Accounts payable 39,207 (18,329)
Accrued expenses 13,070 5,931
Income taxes payable 53,000 16,000
Net cash provided by (used in)
operating activities 272,449 (18,187)
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment 0 (8,704)
__________ __________
Net cash used in investing activities 0 (8,704)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issuance of common stock 16,226 0
__________ __________
Net cash used in financing activities 16,226 0
__________ __________
Net increase (decrease) in cash
and cash equivalents 288,675 (26,891)
CASH and CASH EQUIVALENTS
Beginning 295,830 259,171
__________ __________
Ending $584,505 $232,280
========== ==========
GENETIC LABORATORIES WOUND CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. Basis of Presentation
The interim financial statements are unaudited but in the opinion
of management, reflect all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the
Company's financial position as of August 31, 1995, and the
results of its operations and its cash flow for the three months
ended August 31, 1995 and 1994. The results of operations for any
interim period are not necessarily indicative of the results to
be expected for the full year. These statements are condensed and
therefore do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. These financial statements should be read
in conjunction with the financial statements and notes thereto
contained in the Company's Form 10-KSB or Annual Report for the
year ended May 31, 1995.
ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net Revenues:
Net revenues were $646,156 for the three months ended August 31,
1995 compared to $557,928 for the three months ended August 31,
1994, an increase of 15.8%. Domestic sales increased 9% comparing
the three months ended August 31, 1995 to the three months ended
August 31, 1994. Sales of Suture Strip wound closure strips were
up 22% compared to the corresponding quarter. Suture Strip wound
closure strips sales were 70% of net revenues for the three
months ended August 31, 1995 compared to 66% of net revenues for
the three months ended August 31, 1994. Sales to international
customers accounted for 21% of net revenues for the three months
ended August 31, 1995 compared to 17% for the three months ended
August 31, 1994.
Included in net revenues are royalties of $12,259 for the three
months ended August 31, 1994 and there are no royalties for the
three months ended August 31, 1995. Royalty income has ceased.
Cost of Revenues:
Cost of revenues were $269,028, 41.6% of net revenues, for the
three months ended August 31, 1995 compared to $208,838, 37.4% of
net revenue for the three months ended August 31, 1994. The
increase in cost of revenues was primarily the result of
increases in costs of product components and the increase in
sales to international customers whose margins are less than
domestic customers.
Operating Expenses:
Operating expenses were $356,915, 55% of net revenues, for the
three months ended August 31, 1995 compared to $279,918, 50% of
net revenues, for the three months ended August 31, 1994.
Approximately $46,000 of the increase was due to planned
increases in product promotional activities.
Other Income:
On June 26, 1995 the Company sold its rights, title and interest
in a royalty agreement with Bio-Vascular, Inc. for $164,213. The
royalty agreement was due to terminate in July 1996. Royalty
revenues of $56,237 and $50,351 were earned under the royalty
agreement for the years ended May 31, 1995 and 1994,
respectively.
Liquidity and Capital Resources:
At August 31, 1995 the Company had working capital of $980,938
and a working capital ratio of 4.1 to 1 compared to working
capital of $834,432 and a working capital ratio of 5.0 to 1 on
May 31, 1995.
The Company has a revolving line of credit with a local bank in
the amount of $75,000. Outstanding balances on the line of credit
at August 31, 1995 and May 31, 1995 were $0.
The Company expects that is will be able to fund its working
capital requirements for the year through internally generated
funds.
Major Supplier:
As reported in the Company's November 30, 1994 10QSB a major
supplier will discontinue production of an essential component
material used in the Company's wound closure strips and fastener
products. The Company immediately began identifying alternatives
for the discontinued component material. The Company has
qualified an alternative component material for one of its
fastener products, Cath-Strip. The Company expects to qualify
another alternative component material for the remaining fastener
products and wound closure strips before the product inventory
levels are affected.
Major Customers:
For the three months ended August 31, 1995 one customer accounted
for approximately 16% of net revenue. This same customer
accounted for 18.5% of net revenues for the year ended May 31,
1995.
FINANCIAL STATEMENTS
The interim financial statements are unaudited but in the opinion
of the management, reflect all adjustment necessary for a fair
presentation of results for such periods. The results of
operations for any interim period are not necessarily indicative
of results for the full year.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits
10.5 Executive Agreement with Arthur A. Beisang
10.6 Executive Agreement with Dr. Robert Ersek
10.7 Executive Agreement with H. James Thompson
27 Financial Data Schedule
B) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GENETIC LABORATORIES WOUND CARE, INC.
October 6, 1995
By: /s/ Arthur A. Beisang
_____________________________
Arthur A. Beisang
Chief Executive Officer
Exhibit 10.5
EXECUTIVE AGREEMENT
THIS AGREEMENT IS MADE this 1st day of July, 1995 between
Genetic Laboratories Wound Care, Inc., a Minnesota corporation
(hereinafter called the "Company"), and Arthur A. Beisang the
Executive and Chief Executive Officer (hereinafter called the
"Executive").
1. DUTIES:
The Company hereby employs the Executive as Chief
Executive Officer (CEO) of the Company. His powers and
duties in that capacity to be such as may be determined
by the Company's Board of Directors are described below.
During the term of this Agreement, the Executive may also
serve in such other offices of the Company which he may
be elected or appointed to by the Board of Directors.
Although the Executive will spend the majority of his
working time in the employ of the Company, the company
recognizes that the Executive is simultaneously employed
by other companies, and that the Executive has agreed to
sell his interest in any cardiovascular products
developed in the future to Bio-Vascular Inc., for five
percent (5%) royalties on the net sales of any such
product or invention. The Company shall pay to the
Executive a base salary in bi-weekly installments as set
forth in paragraph 3 hereof.
2. TERM:
This Agreement shall be effective from the date hereof
through June 30, 1998, and may be terminated prior to
said expiration date only upon the occurrence of one or
more of the following events:
A. By mutual written agreement of the Company and the
Executive;
B. By the Executive at any time upon at least 60
days' prior written notice to the Company;
C. Immediately upon the Executive's death;
D. By the Executive, upon occurrence of any of the
Material Employment Changes events as set forth in
Section 9 hereof, which termination shall require
the Company to pay the Severance Payment set forth
therein; or
E. At the Company's option upon the Executive's
conviction of a felony arising out of any acts or
omissions of the Executive committed during the
term of this Agreement.
3. COMPENSATION
As his base monetary compensation for his services to the
Company during the term of this Agreement, in whatever
capacity rendered, the Company shall pay to the
Executive, in bi-weekly installments, the sum of $66,000
per year plus, a bonus plan and deferred compensation.
This compensation may be increased annually, on the
anniversary date of this Agreement, during the term
hereof at a rate equal to the increase in the consumer
price index issued by the United States Department of
Labor, with July 1, 1995 acting as the base index equal
to 100 unless otherwise mutually agreed upon by the
Executive and the Company. Additional compensation based
upon the pre-tax profits of the Company may be paid
annually to the Executive as incentive pay, as determined
by the Board of Directors Compensation Committee.
4. VACATION:
The Executive shall be entitled to six (6) weeks of
vacation during each year. Said vacations to be taken at
the Executive's discretion.
5. BENEFITS:
A. The Company shall maintain a medical insurance
program for all employees and the Company shall be
responsible for all premiums for the Executive and
his spouse. In the event of termination for any
reason, the Executive and his spouse shall be
included in the Company's medical and dental
insurance plans by the Executive making monthly
payments equal to that incurred by the Company for
its employees in their current medical and dental
insurance plan;
B. Term life insurance in an amount at least equal to
and comparable to the Executive's life insurance
policy presently in force with policy ownership
and proceeds payable as the Executive shall
designate;
C. Disability insurance commensurate with such
Executive insurance presently in force, with
policy ownership payable as designated by the
Executive;
D. A monthly automobile allowance to be mutually
agreed upon by the parties.
6. ARBITRATION:
Any controversy or claim arising out of, or related to
this Agreement, or the breach thereof, shall be settled
by arbitration in accordance with the rules of the
American Arbitration Association and judgment upon the
award rendered may be entered in any court having
jurisdiction thereof. This Agreement shall by and
construed in accordance with the laws of the State of
Minnesota.
7. NOTICE:
Any notice required to be given pursuant to the
provisions of the Agreement shall be in writing and
delivered personally or by registered or certified mail.
8. COVENANT NOT TO COMPETE:
The Executive agrees that during his employment by the
Company and for a period of one year after termination of
the Employment Period he shall not, without prior written
consent of the Company, directly or indirectly and
whether as principal or as agent, officer, director,
employee, consultant, or otherwise, alone or in
association with any other person, carry on, be engaged,
concerned, or take part in, render services to, or own,
share in the earnings of or invest in the stocks, bonds
or other securities of any company engaged in the
Employer's current business or reasonably contemplated
business activities provided, however, that the Executive
may invest in stocks, bonds, or other securities of any
Similar Business (but without otherwise participating in
such Similar Business) if: (i) such stocks, bonds, or
other securities are publicly traded; (ii) his investment
does not exceed, in the case of any class of the capital
stock of any one issuer, 1% of the issued and outstanding
shares, or in the case of bonds or other securities, 1%
of the aggregate principal amount thereof issued and
outstanding; and (iii) such investment would not prevent,
directly or indirectly, the transaction of business by
the Company.
9. MATERIAL EMPLOYMENT CHANGES:
The Executive shall be entitled to terminate his
employment upon at least five days prior written notice
to the Company upon the occurrence of any of the
following events: (i) a change in majority ownership or
control of the Executive which occurs as the result of a
merger; a sale of all or substantially of the Executive's
assets; or the acquisition of a majority of the Company's
outstanding stock by a single party or a group acting in
concert; (ii) any attempted termination of the
Executive's employment by the Company prior to expiration
or not in accordance with any termination event as set
forth in Section 2; or (iii) any material diminution of,
or any adverse change occurs in the terms or conditions
of the Executive's employment duties, responsibilities or
authority, except for any isolated, unsubstantial,
inadvertent matter not occurring in bad faith, which is
remedied by the Company within 30 days of receipt of
notice by the Executive. In the event of such
termination by the Executive, the Company shall
immediately pay the Executive and without discount or
offset a Severance Payment equal to the gross base
compensation otherwise payable to the Executive over the
remaining term of the Agreement under Section 2. The
Executive's rights under this Section 9 shall not limit
any other rights he has in the event of a breach of any
provision of this Agreement by the Company.
10. RESEARCH AND INVENTIONS:
This Agreement recognizes that the Executive is
simultaneously employed by more than one company.
Therefore, the Company recognizes that the Executive is,
and intends to remain, an Executive in other public and
private companies, and has entered into other employment
agreements, as such. The Executive has a history of
successful medical inventions and products and the
parties agree that the Executive's base and incentive pay
is directly related to his Executive duties, and not for
research leading to the invention of new products or
patents. Further, the Executive and the Company
recognize the Executive's right to sell and assign such
rights to corporate entities including the Company and
companies other than the Company.
11. ASSIGNMENT:
This Agreement shall inure to the benefit of, and shall
be binding upon the Company, its successors, or assigns.
In witness whereof the parties have hereunto executed
this Agreement.
12. EXPENSES:
The Company will reimburse the Executive for reasonable
business expenses incurred on behalf of the Company.
IN WITNESS WHEREOF, THE parties have hereunto executed this
Agreement.
ATTEST: GENETIC LABORATORIES
WOUND CARE, INC.
/s/ Arthur A. Beisang /s/ John H. Olson
_______________________ _______________________
Arthur A. Beisang John H. Olson
Chief Executive Officer Director Compensation
Committee
Member
Exhibit 10.6
EXECUTIVE AGREEMENT
THIS AGREEMENT IS MADE on this 1st day of July, 1995 between
Genetic Laboratories Wound Care, Inc., a Minnesota Corporation
(hereinafter called the "Company") and Dr. Robert A. Ersek
(Medical Director) (hereinafter called the "Executive").
1. DUTIES:
The Company hereby employs the Executive as the Medical
Director of the Company. His powers and duties in that
capacity to be such as may be determined by the Company's
Board of Directors are described below. During the term
of this Agreement, the Executive may also serve in such
other offices of the Company which he may be elected or
appointed to by the Board of Directors. Although the
Executive will spend the majority of his working time in
the employ of the Company, the company recognizes that
the Executive is simultaneously employed by other
companies, and that the Executive has agreed to sell his
interest in any cardiovascular products developed in the
future to Bio-Vascular Inc., for five percent (5%)
royalties on the net sales of any such product or
invention. The Company shall pay to the Executive a base
salary in bi-weekly installments set forth in Section 3
hereof.
2. TERM:
This Agreement shall be effective from the date hereof
through June 30, 1998, and may be terminated prior to
said expiration date only upon the occurrence of one or
more of the following events:
A. By mutual written agreement of the Company and the
Executive;
B. By the Executive at any time upon at least 60 days
prior written notice to the Company;
C. Immediately upon the Executive's death;
D. By the Executive, upon occurrence of any of the
Material Employment Changes events as set forth in
Section 9 hereof, which termination shall require
the Company to pay the Severance Payment set forth
therein; or
E. At the Company's option upon the Executive's
conviction of a felony arising out of any acts or
omissions of the Executive committed during the
term of this Agreement.
3. COMPENSATION
As his base monetary compensation for his services to the
Company during the term of this Agreement, in whatever
capacity rendered, the Company shall pay to the
Executive, in bi-weekly installments, the sum of $28,000
per year plus, a bonus plan and deferred compensation.
This compensation may be increased annually, on the
anniversary date of this Agreement, during the term
hereof at a rate equal to the increase in the consumer
price index issued by the United States Department of
Labor, with July 1, 1995 acting as the base index equal
to 100, unless otherwise mutually agreed upon by the
Executive and the Company. Additional compensation based
upon the pre-tax profits of the Company may be paid
annually to the Executive as incentive pay, as determined
by the Board of Directors Compensation Committee.
4. VACATION:
The Executive shall be entitled to six (6) weeks of
vacation during each year. Said vacations to be taken at
the Executive's discretion.
5. BENEFITS:
A. Fully paid family coverage (subject to applicable
deductible amounts and limitations) under the
Company's current group medical and dental plans
or such comparable coverage as may be selected in
the future;
B. Term life insurance in an amount at least equal to
and comparable to the Executive's life insurance
policy presently in force with policy ownership
and proceeds payable as the Executive shall
designate as required by state and federal law;
C. Disability insurance commensurate with such
Executive insurance presently in force, with
policy ownership payable as designated by the
Executive;
6. ARBITRATION:
Any controversy or claim arising out of, or related to
this Agreement, or the breach thereof, shall be settled
by arbitration in accordance with the rules of the
American Arbitration Association and judgment upon the
award rendered may be entered in any court having
jurisdiction thereof. This agreement shall be governed
by and construed in accordance with the laws of the State
of Minnesota.
7. NOTICE:
Any notice required to be given pursuant to the
provisions of the Agreement shall be in writing and
delivered personally or by registered or certified mail.
8. COVENANT NOT TO COMPETE:
The Executive agrees that during his employment by the
Company and for a period of one year after termination of
the Employment Period he shall not, without prior written
consent of the Company, directly or indirectly and
whether as principal or as agent, officer, director,
employee, consultant, or otherwise, alone or in
association with any other person, carry on, be engaged,
concerned, or take part in, render services to, or own,
share in the earnings of or invest in the stocks, bonds
or other securities of any company engaged in the
Employer's current business or reasonably contemplated
business activities provided, however, that the Executive
may invest in stocks, bonds, or other securities of any
Similar Business (but without otherwise participating in
such Similar Business) if: (i) such stocks, bonds, or
other securities are publicly traded; (ii) his investment
does not exceed, in the case of any class of the capital
stock of any one issuer, 1% of the issued and outstanding
shares, or in the case of bonds or other securities, 1%
of the aggregate principal amount thereof issued and
outstanding; and (iii) such investment would not prevent,
directly or indirectly, the transaction of business by
the Company.
9. MATERIAL EMPLOYMENT CHANGES:
The Executive shall be entitled to terminate his
employment upon at least five days prior written notice
to the Company upon the occurrence of any of the
following events: (i) a change in majority ownership or
control of the Executive which occurs as the result of a
merger; a sale of all or substantially of the Executive's
assets; or the acquisition of a majority of the Company's
outstanding stock by a single party or a group acting in
concert; (ii) any attempted termination of the
Executive's employment by the Company prior to expiration
or not in accordance with any termination event as set
forth in Section 2; or (iii) any material diminution of,
or any adverse change occurs in the terms or conditions
of the Executive's employment duties, responsibilities or
authority, except for any isolated, unsubstantial,
inadvertent matter not occurring in bad faith, which is
remedied by the Company within 30 days of receipt of
notice by the Executive. In the event of such
termination by the Executive, the Company shall
immediately pay the Executive and without discount or
offset a Severance Payment equal to the gross base
compensation otherwise payable to the Executive over the
remaining term of the Agreement under Section 2. The
Executive's rights under this Section 9 shall not limit
any other rights he has in the event of a breach of any
provision of this Agreement by the Company.
10. RESEARCH AND INVENTIONS:
This Agreement recognizes that the Executive is
simultaneously employed by more than one company.
Therefore, the Company recognizes that the Executive is,
and intends to remain, an Executive in other public and
private companies, and has entered into other employment
agreements, as such. The Executive has a history of
successful medical inventions and products and the
parties agree that the Executive's base and incentive pay
is directly related to his Executive duties, and not for
research leading to the invention of new products or
patents. Further, the Executive and the Company
recognize the Executive's right to sell and assign such
rights to corporate entities including the Company and
companies other than the Company.
11. ASSIGNMENT:
This Agreement shall inure to the benefit of, and shall
be binding upon the Company, its successors, or assigns.
In witness whereof the parties have hereunto executed
this Agreement.
12. EXPENSES:
The Company will reimburse the Executive for reasonable
business expenses incurred on behalf of the Company.
IN WITNESS WHEREOF, THE parties have hereunto executed this
Agreement.
ATTEST: GENETIC LABORATORIES
WOUND CARE, INC.
/s/ Dr. Robert A. Ersek /s/ John H. Olson
_______________________ _______________________
Robert A. Ersek, M.D. John H. Olson
Medical Director Director Compensation
Committee
Member
Exhibit 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT IS MADE this 1st day of July, 1995 by and
between Genetic Laboratories Wound Care, Inc., a Minnesota
Corporation (hereinafter the "Company") and H. James Thompson
(President) (hereinafter called the "Executive").
1. Duties. The Company hereby employs the Executive as
President of the Company, his powers and duties in that
capacity to be such as may be determined by the Board of
Directors. During the term of this Agreement, the
Executive may also serve in such other offices of the
Company to which he may be elected or appointed by the
Board of Directors. The duties of the Executive shall
include: the implementation of corporate polices and
implementation of Company contract in the areas of
manufacturing, sales, marketing, in compliance with
appropriate governmental regulatory agencies having
jurisdiction over the Company's activities worldwide.
2. Compensation. As his base monetary compensation for his
executive services to the Company during the term of
this Agreement, in whatever capacity rendered, the
Company shall pay to the Executive, in bi-weekly
installments, the sum of $86,000 per year. This
compensation may be increased annually, on the
anniversary date of this Agreement, during the term
hereof at a rate equal to the increase in the consumer
price index issued by the United States Department of
Labor, with July 1, 1995 acting as the base index equal
to 100, unless otherwise mutually agreed upon by the
Executive and the Company. Additional compensation
based upon the pre-tax profits of the Company may be
paid annually to the Executive as incentive pay, as
determined by the Board of Directors Compensation
Committee.
3. Term. The term of this Agreement shall extend through
June 30, 1998, except as hereinafter provided.
A. With cause, the Company on three days' written
notice to the Executive may terminate this
Agreement, and thereupon the Company shall be
obligated to pay the Executive his regular
compensation up to the 30th day following the date
of termination. The term "with cause" shall be
defined only as the Executive's fraudulent
activity or the commission of a felony or other
offense involving moral terpitude or immoral
conduct by the Executive on behalf of, or in
connection with Company activities.
B. If the Executive is absent from his employment by
reason of illness or any other incapacity for more
than six consecutive weeks, the Company shall
thereafter pay him 50% of his regular base
compensation until the Executive is able to
reassume his duties. If his absence continues for
six consecutive months, this Agreement shall
automatically terminate without notice, but the
Company shall be obligated to pay the Executive
50% of his regular compensation through the date
of such termination.
C. The Executive may terminate this Agreement at
anytime upon 60 days' notice to the Company, and
the Company shall be obligated to pay him his
regular compensation up to the date of
termination.
4. Benefits.
A. Fully paid family coverage (subject to applicable
deductible amounts and limitations) under the
Company's current group medical and dental plans
or such comparable coverage as may be selected in
the future;
B. Term life insurance in an amount at least equal to
and comparable to the Executive's life insurance
policy presently in force with policy ownership
and proceeds payable as the Executive shall
designate;
C. Disability insurance commensurate with such
Executive insurance presently in force, with
policy ownership payable as designated by the
Executive;
D. A monthly automobile allowance to be mutually
agreed upon by the parties.
5. Vacations. The Executive shall be entitled to four
weeks' vacation during each year. Said vacation to be
taken at the Executive's discretion.
6. Expenses. The Company shall reimburse the Executive for
all authorized items of traveling, entertainment, and
miscellaneous expenses incurred while away on business
from the principal office of the Company or the office
to which he is assigned, but reimbursement shall be made
only for those items on a signed itemized list of such
expenditures.
7. Covenant not to Disclose. The Executive shall
not at any time during or after the termination
of the employment period knowingly reveal,
divulge or make known to any person (other than
the Company) or use for his own account any
customer lists, trade secrets or formula, or
secret or confidential information used by the
Company prior to or during the term of his
employment by the Company and made known
(whether with the knowledge and permission of
the Company, whether developed, devised or
otherwise created in whole or in part by the
efforts of the Executive and whether a matter of
public knowledge unless as a result of
authorized disclosure) to the Executive by
reason of his employment by the Company. The
Executive shall retain all such knowledge and
information which he may acquire or develop
during this employment by the Company concerning
such lists, secrets, formula and information in
trust for the sole benefit of the Company.
8. Covenant to Report. The Executive shall promptly
communicate and disclose to the Company all information
concerning the business or affairs of the Company
obtained by him in the course of his employment by the
Company. All written materials, records and documents
made by the Executive or coming into possession during
the employment period concerning the business or affairs
of the Company shall be the sole property of the Company
and, upon termination of the employment period or upon
the request of the Company during the employment period,
the Executive shall promptly deliver the same to the
Company. The Executive agrees to render to the Company
such reports of the activities undertaken by the
Executive or conducted under the Executive's direction
pursuant hereto during the employment period as the
Company may reasonably request.
9. Legality. The parties covenant and agree that the
provisions contained herein are reasonable and are not
known or believed to be in violation of any federal or
state law or regulation. In the event a court of
competent jurisdiction finds any provision contained
herein to be illegal or unenforceable, such court may
modify such provision to make it valid and enforceable.
Such modification shall not affect the remainder of this
Agreement which shall continue at all times to be valid
and enforceable.
10. Arbitration. Any controversy or claim arising out
of, or relating to, this Agreement of the breach
thereof, shall be settled by arbitration in
accordance with the rules then obtaining of the
American Arbitration Association, and judgement upon
the award rendered may be entered in any court having
jurisdiction thereof. The Agreement shall be
governed by and construed in accordance with the laws
of the state of Minnesota.
11. Notice. Any notice required to be given pursuant to
the provisions of the Agreement shall be in writing
and be sent registered mail to the parties at the
following addresses:
Company: Genetic Laboratories Wound Care, Inc.
2726 Patton Road
St. Paul, Minnesota 55113
Executive: H. James Thompson
13625 Henna Court
Apple Valley, Minnesota 55124
12. Assignment. This Agreement shall inure to the benefit
of, and shall be binding upon, the Company, its
successors, or assigns.
IN WITNESS WHEREOF, THE parties have hereunto executed this
Agreement.
ATTEST: GENETIC LABORATORIES
WOUND CARE, INC.
/s/ H. James Thomspon /s/ Arthur A. Beisang
_______________________ _______________________
H. James Thompson Arthur A. Beisang
President Chief Executive Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the August
31, 1995 10QSB and is qualified in its entirety by reference to such financial
statements
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 584,505
<SECURITIES> 0
<RECEIVABLES> 298,709
<ALLOWANCES> 0
<INVENTORY> 344,696
<CURRENT-ASSETS> 1,294,187
<PP&E> 191,585
<DEPRECIATION> 163,522
<TOTAL-ASSETS> 1,333,241
<CURRENT-LIABILITIES> 313,249
<BONDS> 0
<COMMON> 23,852
0
0
<OTHER-SE> 996,140
<TOTAL-LIABILITY-AND-EQUITY> 1,333,241
<SALES> 646,156
<TOTAL-REVENUES> 646,156
<CGS> 269,028
<TOTAL-COSTS> 356,915
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 186,787
<INCOME-TAX> 61,000
<INCOME-CONTINUING> 125,787
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,787
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
