<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K SB
CURRENT REPORT
Pursuant to Section 13 of 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest reported) May 30, 1998
--------------------------------------
Bio-Lok International Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-24566-A 63-0317138
- --------------------------------------------------------------------------------
State or other jurisdiction (Commission (IRS Employer
Of incorporation) file number) Identification No.)
312 S. Military Trail, Deerfield Beach, FL 33442
- --------------------------------------------------------------------------------
(Address of Principal executive offices)
Registrant's telephone number, including area code (954) 698-9998
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Forwarded herewith are the following reports:
10-K SB for October 31,1997 with 1997 Annual Report attached
10-Q SB for the Quarter ended January 31, 1998
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Bio-Lok International Inc.
-----------------------------------
(Registrant)
Date: May 30, 1998 /s/ Ingo K. Kozak, VP
-----------------------------------
(Signature)*
<PAGE> 4
FORM 10-K SB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal Year ending OCTOBER 31, 1997
OR
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Transition period from ________ to _________
COMMISSION FILE NUMBER 33-24566-A
----------
BIO-LOK INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-0317138
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
312 S. MILITARY TRAIL, DEERFIELD BEACH, FLORIDA 33442
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 698-9998
----------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, $.01 par value Traded on the Over-the-
Counter market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES XX NO .
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
YES XX NO .
------ ------
<PAGE> 5
Continued
Aggregate market value of the Registrant's voting stock held by non-affiliates,
based upon the closing price of said stock per the Over-the-Counter supplemental
Pink Sheets on October 31, 1997 ($.01 per share which is equal to par value) was
$ 94,061.
As of October 31, 1997, the Registrant had 34,742,870 Common Stock shares
outstanding, at a $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Minutes of Shareholders Meeting of Annual Meeting dated April 9,
1997, are incorporated by reference into Part I of this Report.
Portions of the Audited Statement for fiscal year ended October 31, 1997, are
incorporated by reference into Part II, III, and IV of this Report.
<PAGE> 6
PART I
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
Bio-Lok International Inc. (p/k/a American BioDental Corporation) was originally
organized on October 6, 1987 as Colfax, Inc., a Delaware corporation. The
company had changed its name in 1988 to Minimatic Implant Technology, Inc.; in
1995 to American BioDental Corporation; and, again in August 1996 to Bio-Lok
International Inc (hereinafter "Bio-Lok"). The corporation was originally
established for the purpose of acquiring companies with long-term growth
potential. In 1988 Colfax Inc. via a reverse merger acquired Minimatic, Inc.
Minimatic, Inc. was a Florida corporation which began doing business in February
1987, was incorporated June 9, 1987, assumed and purchased all operating and
manufacturing activities of Minimatic Components, Inc., was established to
manufacture dental implant parts and other products as a subcontractor, and to
develop its own line of dental implants with the intent to market same.
Additionally, Minimatic, Inc.'s name was changed to Minimatic Implant
Technology, Inc. (hereinafter "Minimatic") in 1995.
From 1987 to 1991 Bio-Lok via Minimatic developed its dental implant product
line while still acting as a subcontractor for numerous entities manufacturing
dental implants and blade implant products, industrial parts, etc.. Since 1991
the dominant portion of Bio-Lok and its subsidiary company's business has been
directed towards its own proprietary dental implant product line and
specifically the development, improvement of, and marketing/distribution of the
dental implant product line.
On April 2, 1996, the Board of Directors voted and directed its officers to
place the company under the protection of a Chapter XI Bankruptcy -
Reorganization. Prior to this date Bio-Lok (parent company) had directed and
placed its wholly owned subsidiary Minimatic Implant Technology, Inc. effective
January 10, 1996 under the protection of a Chapter XI Bankruptcy. A Plan of
Reorganization was approved by the Court on February 12, 1997, and on January
23, 1998, the Filing was closed and discharged.
At an August 1996 Board of Directors meeting and per Proxy issued to
stockholders reference the Annual Meeting held on 7/30/96, both the stockholders
and the Board approved the combining of both corporations. The corporations are
in the process and will with the finalization of the Chapter XI Reorganization
Bankruptcy be merged. The surviving entity is Bio-Lok International Inc.
(hereinafter either or both entities "Bio-Lok" or the "Company").
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
No segmentation of business activity is completed on a financial reporting
basis. Domestic and international market activity for Bio-Lok is maintained on a
segregated basis only for sales results.
(C) NARRATIVE DESCRIPTION OF BUSINESS
Bio-Lok is a manufacturer of precision dental implants, related prosthetics and
devices, associated tools, and irrigation drills for the dental market. Bio-Lok
via predecessor entities and management has been involved in the design,
development, and manufacture of dental products for over 20 years. The Company
manufactures its own product line and has received 510(k) registrations from the
FDA for required products sold.
Presently, the Company is completing its ISO 9001, EN 46001, MDD 93/42/EEC and
CE mark certification.
The business of Bio-Lok consists of the development and management, searching
for and acquiring other entities which complement the Company market activities,
and the development of other products - dental orthopedic.
<PAGE> 7
BIO-LOK INTERNATIONAL INC.
PRINCIPAL PRODUCTS, MARKETS AND DISTRIBUTION
Bio-Lok's principal products consists of a line of dental implants, their
prosthetic components, tools, devices and irrigated spade drills. The dental
implants are the foundation upon which natural looking teeth are placed via a
sound and lasting prosthesis. Dental implants are small anchor (root form)
shaped like screws or cylinders which when placed become an artificial
replacement of the natural roots, are made out of bio-compatible titanium, and
are placed into the maxilla and mandible of a patient. Many of the implants have
various coatings or treatments (Hydroxylapatite, Titanium Plasma Sprayed, or are
treated via a remedial blasted material - RBM, etc.) which are bonded to the
implant to enhance the bonding and bone growth process -improve
osseointegration.
Dental implant systems are placed by trained dentists, oral surgeons,
periodontists, implantologists, etc.. Implants can have a high success rate if
placed properly and expertly, and with proper oral care and regular dental
visits have lasted as long as 20 years and may last a lifetime.
The dental products Bio-Lok manufactures and markets are as follows:
- 3.45mm Platform - Micro-Lok Screw Implant 3.45mm body to head with 15mm
delivery mount;
- Micro-Lok Cylinder Implant 3.45mm body to 4.00mm head;
- 4.00 mm Platform - Micro-Lok Screw Implant 3.75mm body to 4.00mm head;
- Micro-Lok Screw Implant 4.00mm body to 4.00mm head;
- Micro-Lok Cylinder Implant 3.3mm body to 4.00mm head;
- Micro-Lok Cylinder Implant 4.0mm body to 4.00mm head;
- Micro-Lok Classic Cylinder Implant 3.3mm body to
4.00mm head;
- Micro-Lok Classic Cylinder Implant 4.0mm body to
4.00mm head;
- 5.00 mm Platform - Micro-Lok Screw Implant 4.75mm body to 5.0mm head then
cuff back to 4.0mm;
- Micro-Lok Screw Implant 4.75mm body to 5.0mm head;
- Micro-Lok Cylinder Implant 5.0mm body to 5.0mm head;
- Micro-Lok Classic Cylinder Implant 5.00mm body to
5.0mm head then cuff back to 4.0mm;
- Micro-Lok Classic Cylinder Implant 5.0mm body to
5.0mm head.
- an extensive line of prosthetic abutments providing a practitioner
ease of identifying options available for completion of any
prosthesis;
- all necessary tooling and devices for both placement of the implants
and for completion of a prosthesis;
- a large selection of four(4) fluted (longitudinal cutting surfaces)
spade drills, pilot drills, fissure bur, countersinks and
counterbores.
RAW MATERIALS AND FACILITIES
The material used in manufacturing the dental products is titanium alloy
(ASTMB348 Grade 5 [Ti 6AL4V]), which is inert to body tissue and bone, and is an
alloy which has the unique ability to form a permanent biological bond with
living tissue after being placed.
As of August, 1996, Bio-Lok located and operates out of a 7,200 sq. ft. plant
and office facility located in Deerfield Beach, Florida.
COMPETITION
The corporation's competition consists of a number of entities - approximately
10 major competitors and numerous minor others. The major competitors are
Nobelpharma/Branemark, Paragon Implant Co., Calcitek, Steri-Oss, Implant
Innovations Inc. (3I), Lifecore Biomedical, and ImplaMed, etc. Other small
companies exist and sporadically enter the marketplace but are not considered
competition to the company.
To compete and overcome the competitor advantages in the marketplace Bio-Lok
offers a product designed and manufactured in-house; a product line which is the
"State of the Art" based on today's technology - having incorporated into the
system unique patented designs
<PAGE> 8
consisting of journals and seals which provide strength and fit to the product
line, and representing a complete and broad product line. Due to these factors
Bio-Lok anticipates to be able to penetrate the existing dental implant
marketplace and gain market share as it completes the development and
implementation of its marketing objectives.
OTHER INFORMATION RELATING TO THE BUSINESS
TRADEMARKS AND PATENTS.
The company has filed trademarks for the Company and its dental implant product
line - logo, tradename, company name, and etc.
The company owns a number of patents. The patents were obtained by other
individuals but have been fully transferred and assigned to the Company. Many of
these inventions, during the development stage, had been proto-typed by company;
therefore the company has full shop-rights to the patents. Patents filed to date
are:
(1) Utility Patent Application, for the dental implant system detailing
the journal means;
(2) Utility Patent Application, for the Multi-fluted (four fluted) Dental
Irrigation Drill;
(3) Design Application for Patent, for the Multi-fluted (four fluted)
Dental Irrigation Drill;
(4) A patent application for the thread design incorporated into the screw
type implants;
(5) A patent application filed for the Analog Torque Wrench;
(6) A patent application filed for a Dental Implant - knurled.
RESEARCH AND DEVELOPMENT.
Product research is being completed continually on the existing product line and
new ideas and concepts. New products will be and are being brought to market as
clinical evaluations, studies and testing is completed. In 1997 a new Micro-Lok
cylinder and a 3.45mm body screw and cylinder implant was brought to market.
ENVIRONMENTAL LAWS.
Environmental laws do not impact the company except for waste products/materials
created and/or generated by manufacturing processes. These waste products are
being recycled according to and in compliance with federal, state, and local
environmental protection laws. Compliance by the Registrant with federal, state
and local environmental protection laws has not in the past and is not expected
in the future to have an effect on capital expenditures, liquidity, earnings or
its competitive position.
EMPLOYEES.
At fiscal year ended October 31, 1997 the Registrant employed 20 individuals.
None of the employees are affiliated with unions and the Registrant considers
its relations with its employees to be good.
PROPERTIES.
Registrant owns no properties. The principal executive offices and manufacturing
facility of the Registrant are located in Florida and are leased. The facilities
are considered to be in good condition, fully utilized, and capacity is adequate
for the needs of the business.
MISCELLANEOUS.
At the Annual Stockholders Meeting held on April 9, 1997, the Board of Directors
authorized was increased from 5 to 8 member (note - the By-Laws of the
Corporation authorized that up to nine (9) individuals can sit on the Board).
EXECUTIVE OFFICERS OF THE REGISTRANT.
Following is a list of the names and ages of all the Executive Officers of the
Registrant, indicating all positions and offices with the Registrant held by
each such person, and each such person's principal occupations or employment's
during the past five years. Each such person has been elected to serve until the
next annual election of officers of the Registrant scheduled for March, 1998.
<PAGE> 9
<TABLE>
<CAPTION>
POSITIONS AND OFFICES HELD AND PRINCIPAL OCCUPATIONS OR EMPLOYMENT DURING
NAME AND AGE FIVE YEARS
---------------------------------------- ---------------------------------------------------------------
<S> <C>
Bruce L. Hollander (59) Chief Executive Officer, and President effective 12/13/95;
positions held outside of the company - Director of BioLok
Partners, Inc.; President & CEO Lion Wines & Spirits, Inc.,
1992 - 1995; President & CEO B.L.Hollander & Associates, Inc.,
1982 - 1992.
Ingo K. Kozak (56) Director, CFO and Treasurer, Secretary and Vice President - Finance
effective 8/95; previously Director and Vice President - Finance
effective 2/94 to 7/95; prior positions held outside of the company
- Director and President of KM Consulting, Inc. from 1987 - 1993.
At the Annual Meeting held 4/9/97 the following Directors were re-elected to the Board of Directors of the company:
Bruno Pletscher (49) Director; Presently Managing Director of PDS International Inc.
and Director of Pro-Health Limited both Nassau, Bahamas
companies; Financial Controller from 10/94 to 5/95 of Corona
Holiday Ltd.; Financial Controller and Director of Ask/Ingress
Ltd. from 1992 to 1994.
Neil Smith (56) Director; Past Co-Chairman and CFO of Express Shade,
Inc. of Greensboro, NC; past President and CEO of Florida
Orthopedics, Inc. of Miami Lakes, FL and Partner &
Director of Consulting Operations of Deloitte & Touche.
Harold H. Weisman, Esq. (63) Director; Attorney at Law - specializing in contract law;
former Assistant U.S. Attorney for Mass.; former Staff Attorney
for New England Power Systems.
At a special Board of Directors Meeting held after the Annual Stockholders Meeting the following individuals were elected to open
seats on the Board of the Company until the next Annual Stockholders Meeting:
Peter Baronoff Chairman and CEO of Sun Capital, Inc.; past Chairman of Omni
International, Inc.; Director of BioLok Partners, Inc.
Carl Sadowsky Doctor of Medicine
Steve Sadaka ----------n/a-------------
On August 12, 1997 at a monthly Board of Directors meeting the resignation of Mr. Steve Sadaka as a Director was accepted and the
following individual was nominated and elected to his vacant seat on the Board until the next Annual Stockholders Meeting:
Howard Koslow President, COO and CFO of Sun Capital, Inc.; former COO of
Florida Growth Capital Inc.; former VP/Controller of Olympia
York Companies (USA).
</TABLE>
ITEM 2. PROPERTIES
For information concerning material properties of the Registrant and its
subsidiaries, see the information under the sub-caption "Properties" under the
caption "Other Information Relating to the Business" in Section (c) of Item I
above.
<PAGE> 10
ITEM 3. LEGAL PROCEEDINGS
(1) On February 12, 1997, the Plan of Reorganization for the Company was
approved by its creditors and accepted by the Court. Under the settlement
all law suits and counter law suits where closed and included in the final
Plan of Reorganization structure.
2) No other significant legal proceedings exist.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Only matters put to a vote of Security Holders for 1997 where voted on and are
detailed in minutes of the Annual Meeting held at American BioDental Corporation
p/k/a Minimatic Implant Technology, Inc.'s offices on April 9, 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Registered Common Stock is traded in the Over-the-Counter market and listed at
times in the Supplemental Pink Sheets as a trade is reported.
ITEM 6. SELECTED FINANCIAL DATA
The information is provided under the section titled "Independent Auditors'
Report" for the year ended October 31, 1997 and is incorporated by reference
into this Report and attached hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The attached certified independent auditor report which was completed for fiscal
year ending October 31, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Annual Report to Shareholders for the year ended October 31, 1997, is
incorporated by reference into this Report:
Independent Auditors' Report for year ended October 31, 1997
Consolidated Balance Sheets - October 31, 1997 and October 31, 1996
Consolidated Statement of Operations, Shareholders' Equity and Cash
Flows - October 31, 1997, October 31, 1996, and October 31, 1995
Consolidated Statement of Cash Flow for years 1997, 1996, 1995
Notes to the Consolidated Financial Statements
(b) No supplementary data is being reported.
<PAGE> 11
BIO-LOK INTERNATIONAL INC.
(in thousands of dollars)
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
----------- -----------
<S> <C> <C>
BALANCE SHEET:
Current assets............................ $1,677 $1,542
Noncurrent assets ........................ 335 431
Current liabilities ...................... 573 1,895
Noncurrent liabilities ................... 643 76
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------
Oct. 31, Oct. 31, Oct. 31,
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
INCOME STATEMENT:
Net Sales ...................... $ 1,406 $ 1,583 $ 1,373
Gross Profit ................... 950 580 589
Sales Expense .................. 310 360 761
General & Admin. Exp ........... 636 530 663
Other Inc./Exp ................. (47) (83) (79)
Gain ref. XI Proceedings ....... 777 -- --
Net income ..................... 734 6 (913)
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
The firm of M.A.Cabrera & Company, P.A. and Larow and Clay, P.A. have been
retained as corporate auditors for the completion of all certified annual audits
and quarterly reviews for 1997.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information as to the Directors of the Registrant set forth under the
sub-caption "Board of Directors" appearing under the caption "Election of
Directors" on page 1 through 5 of the Proxy Statement relating to the Annual
Meeting of Shareholders held on April 9, 1997, is incorporated by reference into
this Report. The information as to the Executive Officers of the Registrant is
included in Part I hereof under the caption "Executive Officers of the
Registrant" in reliance upon General Instruction G to Form 10-K and Instruction
3 to Item 401(b) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
The information relating to director and executive officers' compensation, is
incorporated by reference, and is set forth under the caption "Compensation of
Directors" and "Summary Compensation Table" on page 5 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on April 22, 1998.
<PAGE> 12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information relating to executive officers' compensation, is incorporated by
reference, and is set forth under the caption "Secured Ownership of Certain
Beneficial Owners" and reflected on page 4 of the Proxy Statement relating to
the Annual Meeting of Shareholders to be held on April 22, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CONSULTING SERVICES
Bio-Lok is negotiating with a number of clinicians to provide continued
consulting, collaboration, and clinical services and advise.
CONTRACTS
None at present.
RE-ORGANIZATION AND RE-STRUCTURING
On January 10, 1996 the Board of Directors voted and placed the wholly owned
subsidiary Minimatic under protection of Chapter XI Bankruptcy Re-organization.
This was completed to protect the company from creditors and attempt to settle
lawsuits outstanding.
On April 2, 1996 the Board of Directs voted and placed Bio-Lok (p/k/a American
BioDental Corporation) also under the protection of a Chapter XI Bankruptcy
Re-organization. It was completed to also protect the entity from its creditors
and the lawsuits outstanding.
On February 12, 1997, the Plan of Reorganization for both companies was approved
by creditors and accepted by the Court. The File was subsequently closed on
January 23, 1998.
On March 1, 1997, the two companies (Bio-Lok International Inc. and Minimatic
Implant Technology, Inc.) were merged and the surviving entity was Bio-Lok
International Inc.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) LIST OF FINANCIAL STATEMENTS
The following Bio-Lok International Inc. certified Independent Auditor Report
also utilized as the Annual Report of Shareholders for the year ended October
31, 1997, are incorporated by reference into this Report by Item 8 hereof.
Independent Auditors' Report for year ended October 31, 1997
Consolidated Balance Sheets - October 31, 1997 and October 31, 1996
Consolidated Statement of Operations, Shareholders' Equity and Cash Flows -
October 31, 1997, October 31, 1996, and October 31, 1995
Consolidated Statement of Cash Flow for years 1997, 1996, 1995
Notes to the Consolidated Financial Statements
<PAGE> 13
(A)(2) LIST OF FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedules (numbered in accordance
with Regulation S-X) of American BioDental Corporation are included in this
Report:
Schedule V - Property, Plant and Equipment for the three years ended
October 31, 1997, page 12 of this Report.
Schedule VI - Accumulated Depreciation of Property, Plant and Equipment for
the three years ended October 31, 1997, page 13 of this Report.
Schedule VII - Guarantees of Securities of Other Issuers as of October 31,
1997, page 13 of this Report.
Schedule VIII - Valuation and Qualifying Accounts for the three years ended
October 31, 1997, page 13 of this Report.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, or are inapplicable, or the information called for therein
is included elsewhere in the financial statements or related notes thereto
contained or incorporated by reference herein.
(A)(3) LIST OF EXHIBITS: (NUMBERED IN ACCORDANCE WITH ITEM 601 OF
REGULATION S-K)
EXHIBIT
NUMBERS DESCRIPTION
------- -----------
-- NONE --
COMPENSATORY PLANS OR ARRANGEMENTS
13 Annual Report to Shareholders which includes the
Independent Auditors' Report for the Registrant for
the year ended October 31, 1997. Except for those
portions of such Annual Report to Shareholders
expressly incorporated by reference into this Report,
such Annual Report to Shareholders is furnished
solely for the information of the Securities and
Exchange Commission and shall not be deemed a "filed"
document.
- ----------
* Document has heretofore been filed with the Commission and is incorporated
by reference and made a part hereof.
The Registrant agrees to furnish, upon request of the Commission, a copy of all
constituent instruments defining the rights of holders of long-term debt of the
Registrant and its consolidated subsidiary.
(B) REPORTS ON FORM 8-K
March 3, 1997 Merger of Minimatic Implant Technology, Inc. into
Bio-Lok International Inc.
<PAGE> 14
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED OCTOBER 31, 1997
(in thousands)
<TABLE>
<CAPTION>
CO. A COL. B COL. C COL. D COL. E COL. F
-------------- -------- -------- ----------- ----------------- --------
BALANCE AT OTHER CHANGES-BALANCE
BEGINNING ADDITIONS RETIREMENTS ADD (DEDUCT) AT END
CLASSIFICATION OF PERIOD AT COST OR SALE DESCRIBE(1) OF PERIOD
-------------- -------- -------- ----------- ----------------- --------
<S> <C> <C> <C> <C> <C>
Year ended Oct. 31, 1997
Equip. Cap. Leases ......... $ -0- $ -0- $ 0 $ 0 $ -0-
Tooling Equipment .......... 70,793 1,360 72,153
Office Equipment ........... 30,121 7,896 38,017
Machinery & Equip. ......... 578,426 92,243 670,669
Vehicle .................... -0- 15,408 15,408
Computer Equipment ......... 137,353 10,159 147,512
Leasehold Improv. .......... 52,937 3,276 56,213
-------- -------- --------- -------- --------
Total ................. $869,630 $130,342 $ -0- $ -0- $999,972
======== ======== ========= ======== ========
Year ended Oct. 31, 1996
Equip. Cap. Leases ......... $ 5,450 $ -0- $ -0- $ 5,450 $ -0-
Tooling Equipment .......... 70,793 -0- 70,793
Office Equipment ........... 33,609 -0- 3,488 30,121
Machinery & Equip. ......... 583,737 -0- 5,311 578,426
Computer Equipment ......... 136,470 883 137,353
Leasehold Improve. ......... -0- 52,937 52,937
-------- -------- --------- -------- --------
Total ................. $824,609 $ 53,820 $ 8,799 $ -0- $869,630
======== ======== ========= ======== ========
Year ended Oct. 31, 1995
Equip. Cap. Leases ......... $ 5,450 $ -0- $ -0- $ -0- $ 5,450
Tooling Equipment .......... 69,391 1,402 70,793
Office Equipment ........... 22,177 11,432 33,609
Machinery & Equip. ......... 576,768 6,969 583,737
Computer Equipment ......... 4,908 131,562 136,470
-------- -------- --------- -------- --------
Total ................. $678,694 $145,915 $ -0- $ -0- $824,609
======== ======== ========= ======== ========
</TABLE>
<PAGE> 15
SCHEDULE VII - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT
AND EQUIPMENT
For the three years ended October 31, 1997
<TABLE>
<CAPTION>
CO. A COL. B COL. C COL. D COL. E COL. F
- ------------------------- ---------- ---------- ----------- ------------ --------
ADDITIONS
CHARGED OTHER
BALANCE AT TO COSTS CHANGES- BALANCE
BEGINNING AND RETIREMENTS ADD (DEDUCT) AT END
CLASSIFICATION OF PERIOD EXPENSES OR SALES DESCRIBE(1) OF PERIOD
- ------------------------- ----------- ---------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Year ended Oct. 31, 1997 $ 639,486 $ 39,133 $ -0- $ -0- $ 678,619
All Machinery & Equip.
Year ended Oct. 31, 1996 558,818 89,237 -0- (8,569) 639,486
All Machinery & Equip.
Year ended Oct. 31, 1995 480,532 78,286 -0- -0- 558,818
All Machinery & Equip.
</TABLE>
(1) Adjustments to depreciation due to scrapped and sold equipment.
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
October 31, 1997
- --- NONE TO REPORT ---
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
For the three years ended October 31, 1997
<TABLE>
<CAPTION>
CO. A COL. B COL. C COL. D COL. E
- ------------------------- ---------- ---------- ----------- ---------------------------
ADDITIONS
CHARGED TO ---------------------------
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COST AND ACCOUNTS DEDUCTIONS AT END
CLASSIFICATION OF PERIOD EXPENSES - DESCRIBE - DESCRIBE OF PERIOD
- ------------------------- ----------- ---------- ------------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts, current and long-term:
Year ended Oct. 31, 1997 $ 30,741 $ 12,940 $ -0- $ 21,073 (1) $22,397
Year ended Oct. 31, 1996 32,335 -0- -0- 1,594 (1) 30,741
Year ended Oct. 31, 1995 13,395 18,940 -0- -0- 32,335
</TABLE>
- ----------
(1) Write off against reserve account.
<PAGE> 16
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.
BIO-LOK INTERNATIONAL INC.
(Registrant)
By /s/ Bruce L. Hollander
-------------------------------------
Bruce L. Hollander
Chief Executive Officer and President
February 28, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
SIGNATURE TITLE
--------- -----
/s/ Bruce L. Hollander
- ------------------------------ Chief Executive Officer and
Bruce L Hollander President
/s/ Ingo K. Kozak
- ------------------------------ Chief Executive Officer and
Ingo K. Kozak Director, CFO and VP - Finance
By /s/ Ingo K. Kozak
-------------------------------------
Ingo K. Kozak
Secretary of Bio-Lok International Inc.
Attachment: 1997 Annual Report
<PAGE> 17
BIO-LOK INTERNATIONAL INC.
ANNUAL REPORT
AS OF OCTOBER 31, 1997
<PAGE> 18
BIO-LOK INTERNATIONAL INC.
ANNUAL REPORT
AS OF OCTOBER 31, 1997
(MICROLOK LOGO)
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Highlights 1
Letter to Shareholders from the President 2
Business Review 4
Financial Review 6
Financial Statements
Consolidated Balance Sheets F-7
Consolidated Statements of Operations F-8
Consolidated Statement of Stockholders' Equity F-9
Consolidated Statements of Cash Flows F-10
Notes to Consolidated Financial Statements F-11 to F18
Independent Auditor's Report F-19
Management Information
Select Financial Data 20
Market Information for Common Stock 21
Office of the Chairman, Board of Directors and Corporate Officers 22
Corporate Information 23
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
($ in thousands, except % Increase
per share amounts 1997 1996 (Decrease)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales ....................................... $ 1,406 $ 1,583 (11)%
Income before income taxes & extra ordinary items (28) 6 --
Net Income (loss) ............................... 734 6 --
Cash provided from operations ................... 3 (2) --
Capital expenditures ............................ (193) (99) --
Working capital ................................. 4 1 --
Shareholders' equity ............................ 796 (239) 433 %
Per share:
Net income (loss) .......................... $ .02 $ -- --
Book value ................................. .02 (1.71) --
Dividends declared ......................... -0- -0- --
Return on average equity ........................ .04 -0- --
</TABLE>
Page 1
<PAGE> 20
LETTER TO SHAREHOLDERS FROM THE PRESIDENT
Dear Shareholders:
Fiscal Year 1997 was a difficult year for Bio-Lok. Even though our Plan of
Reorganization was accepted by the Federal Court in February 1997, because of
actions beyond our control, the finalization of the Chapter 11 was not recorded
until January 1998, a full year later. During this time all our credit
references reflected Bio-Lok still being in Chapter 11 and all of our vendors
and customers remained suspicious of our company's financial stability. Today we
still are under a "cloud" because many people do not recognize that all the
lawsuits that were filed against our company in 1994, 1995 and 1996, were
settled in the Chapter 11 negotiations. There is no litigation that remains open
from the past. None!
Bio-Lok has been and continues to pursue domestic market penetration. So far we
have had little positive results. All of our major competitors have a direct
sales force. Bio-Lok does not have the working capital to support the
development of its own sales force and has been trying to develop relationships
with distributors and manufacturer reps to market and sell our products. This
process is slower than we anticipated and we believe, is partially caused by the
situation discussed above, as well as, peoples natural resistance to change. We
will continue to develop this approach to the market.
On the brighter side we continue to be successful in our international marketing
efforts. All our international distributors seem healthy and are growing. It is
the expansion of the international market that has maintained our marginal
corporate profitability. New distributors were added during the year in South
Korea, Romania, Chile, Mexico and Venezuela. We will continue to pursue new
international accounts since this is our primary source of income.
Fiscal Year 1997 included the development of internal controls, disciplines and
training required for us to be ISO 9001 and CE mark certified. This is a
mandatory certification to ship any product into the EEC after June 15, 1998.
Our audit was completed in March of this year and we anticipate our clearance
within weeks. The purchase of our first new machine, a Nomura NN 16 CII
automatic CNC Turning Center was accomplished. This machine makes dental
implants 100% completely machined. In the past, implants had operations on three
different machines with three different operators.
A smaller diameter implant was added to our product line. The 3.45mm diameter
platform system is completely in stock and is selling well. Recently, the
"Silhouette" line of large diameter tapered implants was also added; three
lengths, with a minimum inventory investment. Bio-Lok has the broadest and
deepest line of implants offered by any manufacturer in the world.
Bio-Lok is an extremely small public company. Now that we are financially
stable, we must seek merger and acquisition candidates. To do this, the Board Of
Directors has requested a restructuring of the company's common stock. The Board
recently enacted a 10 for 1 reverse split. This reduced our issued and
outstanding shares to approximately 4,000,000. This has no effect on the total
value of your stock holdings since you still own the same percentage of the
company as you did prior to the reverse split. We are now asking for your
Page 2
<PAGE> 21
approval to increase the authorized number of shares from 5,000,000 to
30,000,000. The sole purpose of this increase is to be positioned to buy another
company for stock. We cannot accomplish this without the additional shares being
authorized.
I believe that we are extremely fortunate to have a cadre of dedicated employees
that have worked very hard for you during trying times. I am very proud of each
and every person. We are still the "best kept secret" in implant dentistry - but
this is our year to change that!
Thank you for your continued confidence and support.
Sincerely,
/s/ Bruce L. Hollander
Bruce L. Hollander
President & CEO
Page 3
<PAGE> 22
BUSINESS REVIEW
Bio-Lok International Inc. ("BioLok" or the "Company") is a manufacturer,
distributor and marketer of medical device products. Bio-Lok's product line
consists of its proprietary Dental Implant Product Line which is comprised of
dental implants (screws and cylinders), their prosthetics, tools, devices, kits
and irrigated spade drills.
Micro-Lok Screw Implant--(PICTURE)
(PICTURE)-- New Micro-Lok Cylinder Implant
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL RESULTS OF OPERATIONS AND
CONDITION.
The company since, emerging from the Chapter XI filing and adoption of its Plan
of Reorganization has maintained a break-even for 1997. The Plan of
Reorganization was approved by the creditors and by the Court on February 13,
1997, subsequently, in January 1998, the file was closed. The Company has met
the Plan of Reorganization and is moving forward in the development of both the
domestic and international marketplace. The first advertising has been run and a
new catalog will be issued shortly, along with new promotional literature. We
are starting to address the market in a more sound and positive manner.
SALES AND PROFITS. [1997 VS. 1996] Net Revenues for 1997 decreased by 11% or
$177,036. The reduction in sales is due to the continued loss of sales realized
for the domestic market. The domestic market decrease was due to the
re-structuring of the marketing/sales operations in late 1996 and the extended
time the company had to operate under the Chapter XI.
Gross Profit for the year was $950,206 and reflected a decrease of $29,322 from
1996. The decrease is solely attributable to the decrease in sales and the
development of the Micro-Lok 3.45mm platform.
Selling expenses totaled $309,869 for the year and reflected a 14% decrease or
$50,578 of lower costs incurred. The decrease was primarily due to the
restructuring of the sales operations initiated in 1996. As of the 4th fiscal
quarter these costs have been increasing as new staffing and directions where
implemented.
General and administrative expenses increased for the period by $105,868 an
increase of 20%. The increase in expenses was attributable to costs incurred for
obtaining ISO 9001 and the CE Mark certification, higher insurance costs, and
service costs incurred under a revolving credit financing arrangement. The ISO
9001 and CE Mark certification had to be completed to insure that the company
could continue to sell its products in the EEC.
Other income and extraordinary items in total affected the results of the
company dramatically. The impact for the current year was solely attributable to
the Chapter XI and subsequent adoption of the Plan of Reorganization. Under the
restructuring and Plan of Reorganization the Company realized over $729,000 of
forgiveness of creditor debt.
Page 4
<PAGE> 23
Net Income for the period was $734,169 The increase over prior year was
primarily due to the gains realized from recording the impact of the Plan of
Reorganization approved by the Court for the Chapter XI filing. Adjusting for
the extraordinary gain net income for the period would have totaled
approximately $10,000, basically a break-even.
SALES AND PROFITS. [1996 VS. 1995] Net Revenues for 1996 totaled $1,582,618 and
was $209,844 or 15% over prior years results. The higher sales results are due
to an increase in international sales growth and coverage.
Gross Profit for the year was $979,528 an increase of $390,627 or 66% over prior
years results. This improved result is due to a cut back of staff and an
inventory write-down recorded in prior period.
Selling expenses totaled $360,447 for the year and were more than 50% below
costs incurred in the prior year. This reduction is primarily due to the
reduction of the work force in the beginning of the year, limiting travel
expenditures, and controlling marketing costs during the Chapter XI.
General and administrative expenses also decreased from prior year by $132,834
to $529,811. The reductions are primarily attributed to a reduction in staff and
salaries of select employees.
Net income for the year totaled $6,370 compared to a loss of $912,889 for the
prior year. The return to being a profitable entity is primarily due to a
continued increase in sales, staff reduction at all levels of operation and
improved cost controls along with sound management controls having been
implemented.
MANAGEMENT'S REVIEW.
Bio-Lok's products are sold through out the United States and internationally.
The engineering and technical aspects of the implant system, the patented
features, along with the extensiveness of its prosthetics, tools, devices and
drills are its strengths and provide the Company a competitive advantage in the
marketplace. In 1997 the company added a implant platform to its product line
and modified a number of prosthetic abutments to better fit the clinicians
needs.
The company emerged from the Chapter XI with the approval by the Court in
February 1997 and the adoption of the Plan of Reorganization by March 1997.
Subsequently, the file was terminated and closed in January 1998. Due to the
extended time before the file was closed both credit relationships and growth of
sales activities did not improve for 1997.
1998 OUTLOOK.
The future for the company looks excellent. The company has an excellent dental
product line which offers a broad selection of dental implants and prosthetic
armamentarium. shapeType202fFlipH0fFlipV0lTxid458752fFilled0fLine0Page 5 Page 5
With the close of the Chapter XI file the company expects that both credit and
sales activities will show a continued upward trend. To this extent,
news-letters and promotional efforts are being utilized to inform the
marketplace as to Bio-Lok's status and activities. With an aggressive marketing
effort direct to the end market (clinicians) and soliciting of new distributors
for both the United States and internationally, sales growth can and is expected
to be achieved.
Page 5
<PAGE> 24
FINANCIAL REVIEW
- --------------------------------------------------------------------------------
The information contained in this financial review should be read in conjunction
with the consolidated financial information provided on pages F-8 to F-19 of
this Annual Report.
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
SALES. Net sales for the period was $1.4. The results reflected a slight
reduction from prior year which is attributable to the company continuing to
have to operate under a Chapter XI umbrella. Overall, the international market
increased by 10% and the domestic market reflected a continued decrease for the
year due to the continued Chapter XI.
COSTS AND EXPENSES. Costs and expenses increased for the year and the increase
was a direct result of starting to staffing sales operations, contracting for
and completing requirements for obtaining our ISO 9001 and CE Mark
certification, and advertising, marketing costs incurred.
NET INCOME. The results for the year demonstrated basically a break even if
extraordinary items due to the implementation of the Plan of Reorganization are
eliminated. Adjusted Net Income though modest totaling $10 thousand.
TAX RATE. No tax provision were realized for 1997, and all benefits realized
from the Plan of Reorganization was applied against prior tax losses realized.
(See also Note K - Income Taxes detailed in the Notes to Financial Statements
included herewith).
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES. At October 31, 1997, Bio-Lok had approximately
$4,000 of cash on-hand and $1,104,000 of working capital compared to $660 and
$(594,182) in 1996. The financial condition of the company improved considerably
during the 1997, due to a $250,000 capital infusion and the adoption of the Plan
of Reorganization. The Plan approved is detailed under Note A - Summary of
Significant Accounting Policies in the Notes to Financial Statements included
herewith).
INVESTING ACTIVITIES. Capital expenditures for 1997 totaled $198,000. $145,000
was for the purchase of a new CNC turning center.
DIVIDEND. No dividends were declared or paid for the year 1996 to any
shareholders - common or preferred stock.
IMPACT OF INFLATION AND FOREIGN EXCHANGE. None. All foreign sales are conducted
in US dollars and international Distributors are to remit all moneys in US
dollars.
OTHER. See Note A - Summary of Significant Accounting Policies. Organization.
Page 6
<PAGE> 25
BioLok International Inc.
BALANCE SHEETS
October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
ASSETS ---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 3,642 $ 660
Accounts receivable - trade 489,941 572,886
Inventories 1,163,045 946,000
Prepaid expenses and other 20,676 22,126
---------- ----------
Total current assets 1,677,304 1,541,672
PROPERTY, PLANT AND EQUIPMENT - Net 321,353 230,144
INVESTMENT IN OGD -- 188,648
DEPOSITS 14,122 12,572
---------- ----------
$2,012,779 $1,973,036
========== ==========
LIABILITIES AND STOCKHOLDERS'EQUITY
LIABILITIES NOT SUBJECT TO COMPROMISE (1996 only)
Current
Revolving loan $ 246,738 $ --
Note payable -- 13,756
Trade accounts payable 140,761 94,527
Accrued expenses 15,092 30,801
Current portion of long-term liabilities 170,699 25,833
---------- ----------
573,290 164,917
Long-term debt, less current portion 643,437 75,689
---------- ----------
1,216,727 240,606
LIABILITIES SUBJECT TO COMPROMISE (1996 only)
Subordinated debt (previously classified as preferred stock) -- 50,000
Notes payable -- 665,739
Pre-petiton trade accounts payable -- 356,656
Note payable - Shareholder -- 150,000
Due to shareholder -- 179,167
Accrued expenses and other liabilities -- 569,375
-- 1,970,937
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES -- --
STOCKHOLDERS'EQUITY
Common stock; 50,000,000 shares authorized; $.Ol par value;
34,742,870 shares issued and outstanding in 1997 and
13,953,913 shares issued and outstanding in 1996 347,429 139,539
Additional paid in capital 1,649,497 1,556,997
Accumulated deficit (1,200,874) (1,935,043)
---------- ----------
796,052 (238,507)
---------- ----------
$2,012,779 $1,973,036
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE> 26
BioLok International Inc.
STATEMENTS OF OPERATIONS
For the years ended October 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
SALES - net $ 1,405,582 $ 1,582,618 $1,372,774
COST OF SALES 455,376 603,090 783,873
----------- ----------- ----------
GROSS PROFIT 950,206 979,528 588,901
EXPENSES
General and administrative 635,679 529,811 662,645
Selling 309,869 360,447 760,547
----------- ----------- ----------
945,548 890,258 1,423,192
----------- ----------- ----------
Earnings (Loss) from operations 4,658 89,270 (834,291)
OTHER INCOME (EXPENSE)
Other income 5,226 10,912 14,504
Interest (52,677) (6,582) (28,174)
Debt forgiveness -- -- 373,479
Non - operating expenses -- (87,230) (438,398)
----------- ----------- ----------
(47,451) (82,900) (78,589)
----------- ----------- ----------
Earnings (Loss) before income taxes and
extraordinary item (42,793) 6,370 (912,880)
Income taxes (benefit) (14,500) -- --
----------- ----------- ----------
Earnings (Loss) before extraordinary items (28,293) 6,370 (912,880)
Extraordinary items
Gain on debt forgiveness in connection with
Chapter Xi proceedings (less applicable income
taxes of $264,000) 512,962 -- --
Utilization of net operating loss carry forward to
offset income taxes 249,500 -- --
----------- ----------- ----------
NET EARNINGS (LOSS) $ 734,169 $ 6,370 $ (912,880)
=========== =========== ==========
Earnings (loss) per share
Earnings (Loss) before extraordinary items $ -- $ -- $ (0.09)
Extraordinary items 0.04 -- --
----------- ----------- ----------
Net earnings (loss) per share $ 0.04 $ -- $ (0.09)
=========== =========== ==========
Weighted average shares outstanding 17,316,348 12,403,492 9,738,528
----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE> 27
BioLok International Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
For the years ended October 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Preferred Stock Preferred Stock
Class A Class B Common Stock
Shares Amount Shares Amount Shares Amount
------- -------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances - November 1, 1994 50,000 $ 50,000 1,079,792 $ 1,079,792 6,153,913 $ 61,539
Shares issued for consulting services -- -- -- -- 300,000 3,000
Shares retired - former officer -- -- (1,079,792) (1,079,792) -- --
Sale of shares - private placement -- -- 500,000 500,000 4,000,000 40,000
Net loss for the year -- -- -- -- -- --
------- -------- ---------- ----------- ----------- --------
Balances - October 31, 1995 50,000 50,000 500,000 500,000 10,453,913 104,539
Conversion of preferred stock for
common stock -- -- (500,000) (500,000) 1,000,000 10,000
Preferred shares reclassified as
subordinated debt (50,000) (50,000) -- -- -- --
Shares issued for compensation -- -- -- -- 1,500,000 15,000
Shares issued to subsidiary in connection
with Chapter XI proceedings -- -- -- -- 1,000,000 10,000
Net earnings for the year -- -- -- -- -- --
------- -------- ---------- ----------- ----------- --------
Balances - October 31, 1996 -- -- -- -- 13,953,913 139,539
Sale of common stock -- -- -- -- 15,750,000 157,500
Issuance of stock in connection
with Chapter XI proceedings -- -- -- -- 188,957 1,890
Issuance of stock in settlement of
litigation - approved by Court -- -- -- -- 1,000,000 10,000
Issuance of common stock to Directors,
Clinicians and Employees -- -- -- -- 3,850,000 38,500
Net earnings for the year -- -- -- -- -- --
------- -------- ---------- ----------- ----------- --------
Balances - October 31, 1997 -- -- -- -- $34,742,870 $347,429
======= ======== ========== =========== =========== ========
<CAPTION>
Additional
Paid-in Accumulated
Capital Deficit Total
---------- ----------- -----------
<S> <C> <C> <C>
Balances - November 1, 1994 $ 106,997 $(1,028,533) $ 269,795
Shares issued for consulting services -- -- 3,000
Shares retired - former officer -- -- (1,079,792)
Sale of shares - private placement 960,000 -- 1,500,000
Net loss for the year -- (912,880) (912,880)
---------- ----------- -----------
Balances - October 31, 1995 1,066,997 (1,941,413) (219,877)
Conversion of preferred stock for
common stock 490,000 -- --
Preferred shares reclassified as
subordinated debt -- -- (50,000)
Shares issued for compensation -- -- 15,000
Shares issued to subsidiary in connection
with Chapter XI proceedings -- 10,000
Net earnings for the year -- 6,370 6,370
---------- ----------- -----------
Balances - October 31, 1996 1,556,997 (1,935,043) (238,507)
Sale of common stock 92,500 -- 250,000
Issuance of stock in connection
with Chapter XI proceedings -- -- 1,890
Issuance of stock in settlement of
litigation - approved by Court -- -- 10,000
Issuance of common stock to Directors,
Clinicians and Employees -- -- 38,500
Net earnings for the year -- 734,169 734,169
---------- ----------- -----------
Balances - October 31, 1997 $1,649,497 $(1,200,874) $ 796,052
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-9
<PAGE> 28
BioLok Intematonal Inc.
STATEMENTS OF CASH FLOWS
For the years ended October 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings (Loss) before extraordinary items $ (28,293) $ 6,370 $(912,880)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities-
Depreciation 102,183 89,018 78,838
Valuation of shares for services at $.Ol par value -- 25,000 --
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable 82,945 (177,760) (85,423)
(Increase) decrease in inventories (217,045) 16,993 170,241
(Increase) decrease in prepaid and other 1,450 (17,126) 15,256
(increase) decrease in deposits (1,550) (10,670) (1,570)
Increase (decrease) in accounts payable
and accruals (343,545) 89,640 146,788
--------- --------- ---------
Subtotal (403,855) 21,465 (588,750)
Extraordinary Items 762,462 -- --
Adjustment to reconcile cash provided by
extraordinary items (762,462) -- --
--------- --------- ---------
Net cash (used) by operations (403,855) 21,465 (588,750)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (193,392) (53,371) (146,467)
Investment in OGD -- (45,398) (143,250)
--------- --------- ---------
Net cash (used) by investing activities (193,392) (98,769) (289,717)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 250,000 -- 423,208
Net proceeds - revolving note payable 246,738 -- --
Proceeds from note payable and capital lease 150,748 -- 126,225
Repayments of long-term obligations (47,257) (18,676) (11,294)
Proceeds - other notes payable -- 94,498 536,966
Net proceeds from (payments to) - shareholder note -- -- (199,152)
--------- --------- ---------
Net cash provided by financing activities 600,229 75,822 875,953
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 2,982 (1,482) (2,514)
Cash, beginning of year 660 2,142 4,656
--------- --------- ---------
Cash, end of year $ 3,642 $ 660 $ 2,142
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW OPERATION:
Cash paid during the year for interest $ 52,677 $ 6,582 $ -
========= ========= =========
Effects of Chapter XI proceedings
having no cash effect:
Issuance of stock without cash consideration $ 50,390
=========
Investment in OGD eliminated in bankruptcy $ 188,648
=========
Increase in Long-term debt $ 595,368
=========
</TABLE>
The accompanying notes are an integral part of these statements.
F-10
<PAGE> 29
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reorganization and Bankruptcy Proceedings
The Company and its former subsidiary (subsequently combined, see
below) filed petitions under Chapter 11 of the Bankruptcy laws in 1996.
On February 12, 1997, the Company's plan of reorganization was approved
by its creditors and accepted by the Court. Liabilities were
restructured to be paid over a twelve to seventy-two month period. The
unsecured liabilities have been discounted at a market rate of 9.0% in
accordance with generally accepted accounting principles. Creditors
also received shares of common stock in the Company valued at par value
of $13,880. The aggregate gain recognized by the Company was $776,962
less a tax effect of $264,000 or $512,962 ($.03 per share). Effective
January 1998, Chapter 11 proceedings have been closed and discharged.
Organization
The corporation was originally incorporated (Delaware) on October 6,
1987 as Colfax Inc.; subsequently, in 1988, the corporation's name was
changed to Minimatic Implant Technology, Inc. ("M.I.T.") in 1995, the
named was changed again to American BioDental Corporation ("ABDC") and
finally in 1996 to BioLok International Inc.. On June 9, 1988, the
corporation was acquired through a reverse acquisition by the
shareholders of Minimatic, Inc. a Florida corporation. The acquisition
was accounted for as a purchase. As a result of the reverse
acquisition, the former Minimatic, Inc. shareholders became the
controlling shareholders of BioLok International Inc..
Until 1997, BioLok International Inc. conducted its business through
its wholly-owned subsidiary Minimatic, Inc., whose name was also
changed in 1995 to Minimatic Implant Technology, Inc. (both herein
referred to as the "Company"), who manufactures and distributes
domestically and internationally its own line of dental implants,
prosthetics, components, tools, irrigation drills and dental devices.
Effective March 1, 1997, the Articles and Plan of Merger of Minimatic
Implant Technology, Inc. into BioLok International Inc. was approved
and implemented by the Board of Directors and the Officers of the
Company respectively. The merger of the subsidiary into its parent was
accomplished to reduce costs and reporting requirements.
Principles of Consolidation
In 1996, the consolidated financial statements include the accounts of
BioLok International Inc. and M.I.T., OGD is recorded on an investment
basis only. All significant inter-company accounts and transactions
have been eliminated.
As a result of the combination described above, the 1997 financial
statements are not consolidated.
F-11
<PAGE> 30
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE A - CONTINUED
Revenue Recognition
Revenue attributable to the manufacturing and subsequent distribution
operation described above is recorded when the goods are shipped by the
Company.
Accounts Receivable
Accounts receivable is stated on a net, net basis (net of reserve for
losses). Reserve for losses for 1997 and 1996 were $22,397 and $30,741
respectively.
Inventories
Inventories are stated at the lower of average cost (first-in, first-out) or
market.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Depreciation is charged to
operations over the estimated useful lives of the related assets and is
computed using the straight-line method for financial statement
purposes and various accelerated methods for income tax purposes.
Repairs and maintenance are charged to operations when incurred.
Betterment's and purchases are capitalized. When fixed assets are sold
or otherwise disposed of, the asset accounts and related accumulated
depreciation accounts are relieved, and any gain or loss is included in
non-operation activity.
The estimated useful lives of property and equipment are as follows:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Tooling Equipment 5
Office Equipment 5
Machinery and Equipment 5-10
Computer Equipment 5
Vehicles 5
</TABLE>
F-12
<PAGE> 31
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE A - CONTINUED
Estimates
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 and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing the net income
(loss) by the weighted average number of common shares outstanding
during the period.
Income Taxes
Effective November 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under
Statement No. 109, the liability method is used in accounting for
income taxes. Under this method, deferred tax assets and liabilities
are determined based differences between financial reporting and tax
bases of assets and liabilities. The effect of this adoption was to
reclassify the fiscal 1994 extraordinary tax benefit resulting from
utilization of operating loss carryforwards to operating income.
NOTE B - INVENTORIES
Inventories consisted of the following at October 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Raw Materials $ 31,748 $ 5,000
Work in Process 445,340 341,424
Finished Goods 650,957 564,576
Consumable Tools 35,000 35,000
---------- ----------
$1,163,045 $ 946,000
========== ==========
</TABLE>
F-13
<PAGE> 32
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at October 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Tooling Equipment $ 72,153 $ 70,793
Office Equipment 38,017 30,121
Machinery and Equipment 670,669 578,426
Computer Equipment 147,512 137,353
Vehicles 15,408 --
Leasehold improvements 56,213 52,937
-------- --------
999,972 869,630
Less: Accumulated Depreciation 678,619 639,486
-------- --------
$321,353 $230,144
======== ========
</TABLE>
NOTE D - REVOLVING LOAN
On April 28, 1997, the Company entered into a Revolving Loan and Security
Agreement with Capital Business Credit, a division of Capital Factors. The
Company pledged all its assets as security for the revolving loan arrangement.
The loan was for a $500,000 line of credit and as of October 31, 1997, the
outstanding loan balance totaled $246,738.
NOTE E - LONG-TERM LIABILITIES
Long-term liabilities at October 31, 1997 and 1996 consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Principal balance outstanding on an
equipment lease payable at $2,826.84
per month including interest at 9.0%
(fully secured by computer equipment) $ 75,689 $101,522
Equipment note payable at $2,245 per month
including interest at 9.75% - fully secured
by manufacturing equipment 128,601 --
Obligations to creditors under the
plan of reorganization dated February 12, 1997
payable approximately $12,725 per month and
approximately $14,000 per month effective
April, 1998 including imputed interest at 9% 591,816 --
</TABLE>
F-14
<PAGE> 33
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE E - CONTINUED
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Other 18,030 --
-------- --------
$814,136 $101,522
======== ========
Amounts due within one year $170,699 $ 25,833
======== ========
</TABLE>
The maturities of long-term liabilities at of October 31, 1997 are as follows:
<TABLE>
<CAPTION>
Due year ended
October, 31 Amount
----------- ------
<S> <C>
1998 $170,699
1999 170,045
2000 168,781
2001 166,242
2002 119,534
2003 18,835
--------
$814,136
========
</TABLE>
NOTE F - NOTE PAYABLE - SHAREHOLDER
A stockholder/officer had advanced the Company funds for operations totaling
$150,000 at October 31, 1996. This amount was compromised as a result of the
Chapter 11 proceedings.
NOTE G - DUE TO SHAREHOLDER
As of October 31, 1995, officer's salary of $192,865 had been accrued, but not
paid. A payment of $13,699 was made during 1996 reducing the balance to
$179,167. This amount was compromised as a result of the Chapter 11 proceedings.
NOTE H - ACCRUED EXPENSES
At October 31, 1996, accrued expenses which were compromised as a result of the
Chapter 11 proceedings, consist of the following:
<TABLE>
<CAPTION>
October 31, 1996
----------------
<S> <C>
Accrued Royalties/Commissions $ 25,656
Accrued Expenses - Clinician/Consultant 90,026
Accrued Expenses - Other 263,406
Accrued Payroll Taxes 190,287
--------
$569,375
========
</TABLE>
F-15
<PAGE> 34
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE H - CONTINUED
Payroll taxes were not compromised as to amount but are being paid on an
extended basis as part of the overall obligations to creditors. See Note E.
NOTE I - STOCKHOLDERS' EQUITY
Current Stockholders' Equity outstanding is as follows:
Preferred Stock
Effective June 20, 1996, the only preferred stock authorized was 50,000
shares of cumulative convertible preferred stock - Class A. However,
all preferred stock has been exchanged for common and or reclassified
as loans.
Common Stock
Effective June 1996, the authorized Common Stock was increased from
15,000,000 to 50,000,000 shares.
Other
On February 5, 1996, the Board of Directors had issued 500,000 shares
of common stock as per agreement as a sign-on bonus in joining the
Company to its President.
On January 5, 1996 the Board of Directors had authorized and
subsequently issued on May 25, 1996, 2,000,000 shares of common stock
to Minimatic Implant Technology, Inc. as Debtor in Position for Chapter
XI settlement negotiations and to other employees for services and
activity during the normal course of business over the past six months
and more.
On March 21, 1997, the Board of Directors had issued 1,388,957 shares
of common stock to creditors under the settlement agreement of the
Chapter XI. In turn, 1,200,000 shares of common stock were turned in by
a stockholder as specified in a lawsuit settlement agreement as an
offset to the shares issued to creditors. All unsecured creditors
received one (1) share of common stock for each dollar ($) not repaid
under the settlement agreement. The Chapter XI Plan of Reorganization
called for a pay-out of 30% on each unsecured debtors claim.
On March 21, 1997, the Board of Directors has issued 1,000,000 shares
of common stock in settlement of two (2) lawsuits which settlements had
been approved by the court as a part of the Chapter XI Plan of
Reorganization.
F-16
<PAGE> 35
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE I - CONTINUED
The Board of Directors has authorized on March 11, 1997, and finally
issued on June 6, 1997, 3,650,000 shares of common stock to Directors,
officers, employees and outside individuals for support of the Company
over the past; and, on September 4, 1997, the Board of Directors
approved and had issued on October 1, 1997, 100,000 shares each to two
clinicians for support and services provided to the Company over the
past two years.
On April 9, 1997, the Board of Directors had approved a Purchase
Agreement with BioLok Partners, inc., a Florida corporation. Under the
agreement BioLok Partners, Inc. was to provide to the Company an equity
infusion of $250,000, obtain a $500,000 line of credit and provide the
services of Mr. Bruce L. Hollander as its President and CEO for the
ensuing five (5) years via an employment agreement, in exchange the
Company is to provide to BioLok Partners, Inc. 51% or 15,750,000 shares
of common stock as of the signing of the agreement. The purchase
agreement was finally entered into May 30, 1997, and the Board of
Directors has issued on October 1, 1997, 15,750,000 shares of common
stock after all requirements under the agreement had been met.
NOTE J - COMMITMENTS
The Company leases office space pursuant to an operating lease, which expires
August 30, 2001. The lease generally provides for fixed monthly rental payments
of $5,142.18 which includes operating expenses and sales tax (base rental is
$3,780.92). Rent expense for the year ended October 31, 1997, 1996 and 1995
amounted to $60,131, $51,106 and $42,571 respectively. At October 31, 1997, the
future minimum rental payments under the current operating lease were as
follows:
<TABLE>
<CAPTION>
Minimum Lease
October 31, Rental
----------- ------
<S> <C>
1998 $ 45,371
1999 45,371
2000 45,371
2001 37,809
--------
$173,922
========
</TABLE>
NOTE K - INCOME TAXES
The Components of the net deferred tax asset are as follows:
F-17
<PAGE> 36
BioLok International Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1997 and 1996
NOTE K - CONTINUED
<TABLE>
<CAPTION>
October 31,
----------------------
1997 1996
----- -----
<S> <C> <C>
Deferred Tax Liability:
Depreciation $ (2,500) $ (9,600)
Deferred Tax Assets:
Net Operating Loss Carry forward 345,000 605,000
--------- ---------
342,500 595,400
Valuation allowance (342,500) (595,400)
--------- ---------
Net Deferred Tax $ -- $ --
========= =========
</TABLE>
At October 31, 1997, the Company has elected to carry forward net operating
losses for federal and state income tax purposes of approximately $1,015,000,
which are available to reduce future taxable income. The following details the
net operating loss carry forwards at October 31, 1997 and expiration dates:
<TABLE>
<CAPTION>
Years Amount
------
<S> <C>
2010 $1,015,000
----------
$1,015,500
==========
</TABLE>
NOTE L - COMMITMENTS AND CONTINGENT LIABILITIES
A suite for breach of contract an non-payment was filed against the Company in
1993 by a Clinician who was under contract with the Company as a consultant and
collaborator. The Company has filed a counter suit for breach of contract,
misrepresentation, and non-performance under "the contract. Amounts accrued as
of October 31, 1996 and 1995 is $115,682, pending the outcome of the trial. A
patent infringement suit was filed in Federal Court by the Clinician in the
- -first case herein in 'i995. The case is being defended due to shop rights and
may come to trial late 1996. Subsequent events have led to full agreement
between the Clinician and Company which was approved by the Bankruptcy Court and
included as a part of the final plan of reorganization adopted.
In May 1996, the Company filed a lawsuit against a former officer and director
pertaining to a complaint to set aside preferential or fraudulent transfer and
for other relief. Subsequently, the former officer and director filed a counter
suit against the Company for damages and repayment of debt obligations. The
differences between the former officer and director and the Company have been
settled via an agreement and approved by the Bankruptcy Court and included as a
part of the final plan of reorganization adopted.
A suit for breach of contract and non-payment was filed against the Company in
1993 by an entity and individual who had a Master Distribution Agreement with
the Company. The Company filed a counter suit for breach of contract. Amounts
accrued as of October 31, 1997 and 1996 is $117,012. The case went to trial and
the Company lost and a judgment for approximately $212,015 was granted which was
subsequently compromised under the settlement of the Chapter 11.
F-18
<PAGE> 37
M.A. CABRERA & COMPANY P.A.
Certified Public Accountants & Consultants
2 S. University Drive, Suite 330
Plantation, Florida 33324-3307
954/476-2008 800/226-1660
Fax 954/475-0809
INDEPENDENT AUDITORS' REPORT
To Board of Directors
BioLok International Inc.
We have audited the accompanying balance sheets of BioLok International Inc. as
of October 31, 1997 and 1996 and the related statements of operations,
stockholders' equity and cash flows for the years ended October 31, 1997, 1996
and 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our 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 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 BioLok International Inc. as of
October 31, 1997 and 1996 and the results of its operations and its cash flows
for the years ended October 31, 1997, 1996 and 1995 in conformity with generally
accepted accounting principles.
M. A. Cabrera & Company, P.A.
Plantation, Florida
January 9, 1998
F-19
<PAGE> 38
MANAGEMENT INFORMATION
================================================================================
SELECT FINANCIAL DATA
================================================================================
The following represents selected consolidated financial data regarding Bio-Lok
International Inc. and Subsidiary operating results and financial position as of
October 31, for financial comparison.
HISTORICAL RESULTS
<TABLE>
<CAPTION>
as of October 31,
($ in thousands except --------------------------------------------------------------------------------------------------
per share amounts) 1997 1996 1995 1994 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Operating Results
NET SALES ................... $ 1,406 $ 1,583 $ 1,373 $ 1,089 $ 1,351 $ 1,271 $ 771 $ 1,166 $ 1,233
Cost of Goods Sold .......... 455 603 784 128 544 518 799 919 1,074
GROSS PROFIT ................ 950 980 589 961 807 753 (28) 247 159
Selling Expenses ............ 310 360 760 483 )
General & Administrative .... 636 530 663 693 ) 491 510 400 506
583
Other Income & Extraordinary
Items (loss) ...... 729 (84) (79) 14 13 45 24 0 0
NET INCOME .................. 734 6 (913) (234) 303 288 (452) (261) (424)
Net Income per share ........ $ .04 $ -- $ (.09) $ (.04) $ .05 $ .04 $ (--) $ (--) $ (--)
PROFITABILITY RATIOS
As a percent of sales:
Gross Profit ........... 67.6% 61.9 % 42.9 % 88.3 % 59.7 % 59.2 % (3.6)% 21.1 % 12.9%
Net Income (loss) ...... 52.2 -0- (66.5) (21.5) 22.4 22.7 (58.6) (22.4) (34.4)
Return on average equity .... 141.9 (--) (--) (--) 64.0 180.0 (--) (--) (--)
Return on average invested
capital (1) .......... 94.0 (--) (--) (--) 45.0 125.3 (--) (--) (--)
FINANCIAL CONDITION
Current Assets .............. $ 1,677 $ 1,542 $ 1,365 $ 1,468 $ 970 $ 699 $ 356 )
Net Fixed Assets ............ 231 230 266 198 266 243 337 ) n/a
Total Assets ................ 2,013 1,973 1,776 1,666 1,236 948 696 )
Current Liabilities ......... 573 2,136 1,866 1,357 563 521 662 )
Long Term Debt .............. 643 76 130 39 48 106 34 )
Shareholders' Equity ........ 796 (239) (220) 270 625 321 0 )
Current Ratio ............... 2.9 .7 .7 1.1 1.7 1.3 .5
Long-term debt to equity .... .8% (.3)% (.6)% 14.6% 7.7% 33.0% (--)%
OTHER DATA
Working Capital ............. $ 1,104 $ (594) $ (501) $ 111 $ 406 $ 178 $ 307 )
Cash flow from operations ... 4 21 (589) (217) 176 150 n/a )
Capital expenditures ........ (194) (97) (290) 19 103 8 0 ) n/a
Depreciation and amortization 102 89 79 87 80 77 75 )
Number of employees ......... 20 17 25 26 13 13 18 )
</TABLE>
- --------------------------------------------------------------------------------
(1) Net income plus after-tax interest expense divided by average long-term
debt and equity.
Page 20
<PAGE> 39
COMPARATIVE QUARTERLY RESULTS FOR 1996 TO 1995. ($ in thousands)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Fourth Quarter Ending October 31,
Net Sales .................................... $ 304 $ 339
Gross Profit ................................. 206 234
Return from Operations ....................... (57) (11)
Net Income ................................... (59) (36)
Total Assets ................................. 2,013 1,973
Third Quarter Ending July 31,
Net Sales .................................... $ 403 $ 439
Gross Profit ................................. 256 268
Return from Operations ....................... 1 55
Net Income ................................... 103 25
Total Assets ................................. 1,972 1,992
Second Quarter Ending April 30,
Net Sales .................................... $ 395 $ 428
Gross Profit ................................. 268 232
Return from Operations ....................... 37 23
Net Income ................................... 688 -0-
Total Assets ................................. 1,941 1,942
First Quarter Ending January 31,
Net Sales .................................... $ 304 $ 377
Gross Profit ................................. 220 246
Return from Operations ....................... 24 16
Net Income ................................... 2 17
Total Assets ................................. 1,923 1,876
</TABLE>
MARKET INFORMATION FOR COMMON STOCK
COMMON STOCK DATA
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Dividends declares per share ..... -0- -0- -0- -0- -0- -0-
Average shares o/s (thousands) .. 17,316 12,403 9,739 6,661 6,492 6,005
Year-end book value per share .... $ .02 $ .14 $ .17 $ .27 $ .10 $ .05
Number of shareholders at
year-end ......................... 562* 480* 456* 418* 420* 416*
</TABLE>
*Note - does not include shareholders identified via stock held
by a Brokerage Firm.
The Company's common stock is listed on the over-the-counter supplemental Pink
Sheets. Very little stock trading activity was registered during 1997; hence, no
composite stock price range can be reported for 1997 and 1996.
Page 21
<PAGE> 40
OFFICE OF THE CHAIRMAN
Peter Baronoff - Chairman of the Board
Bruce L. Hollander - Director and Chief Executive Officer
Ingo K. Kozak - Director, Chief Financial Officer and Secretary
BOARD OF DIRECTORS
<TABLE>
<S> <C>
Peter Baronoff,(1) Chairman of the Board
Bio-Lok International Inc.
Carl H. Sadowsky(1) Vice-Chairman of the Board
Doctor of Medicine
Bruce L. Hollander,(1*)(2*)(3) Chief Executive Officer
Bio-Lok International Inc.
Ingo K. Kozak,(1)(3*) Chief Financial Officer, and Secretary
Bio-Lok International Inc.
Bruno Pletscher,(2) Managing Director - PDS International Ltd.
Director - Pro-Health Ltd.
Executive Partner - Caribo Management Group Ltd.
Neil Smith,(2) Retired. Past Co-Chairman and Chief Financial Officer
Express Shade, Inc.
Harold Weisman, Attorney at Law
Howard B. Koslow Chief Financial Officer
Sun Capital, Inc.
</TABLE>
- -------------
Number denotes committee membership: (1) Executive Committee, (2) Compensation
and Employee Benefits Committee, (3) Finance Committee, and * Chairperson for
each committee.
OPERATING OFFICERS AND CORPORATE STAFF
Bruce L. Hollander - President
Ingo K. Kozak - Vice President - Finance
Patricio Nilo - Director International Sales
Page 22
<PAGE> 41
CORPORATE INFORMATION
HEADQUARTERS AND OFFICES
312 S. Military Trail, Deerfield Beach, Florida 33442; (954) 698-9998
TRANSFER AGENT AND REGISTRAR
Interwest Transfer Company, P.O. Box 17136, Salt Lake City, Utah 84117; tele.
(801) 272 - 9294. Notices regarding changes of address and inquiries regarding
lost dividend checks, lost or stolen stock certificates and transfer of stock
should be directed to the transfer agent.
COMMON STOCK
The common stock of Bio-Lok International Inc. is traded under the symbol BLII
on the over-the-counter market. The stock is quoted periodically in the
supplemental Pink Sheets.
INDEPENDENT ACCOUNTANTS
Lorow & Clay, P.A., Miami Lakes, Florida 33014 and M.A. Cabrera & Company P.A.,
Plantation, Florida 33324.
SEC FORM 10-K SB
A copy of the company's Annual Report on Form 10-K SB may be obtained free of
charge by contacting Mr. Ingo K. Kozak, Corporate Secretary, at Bio-Lok
International Inc., 312 S. Military Trail, Deerfield Beach, Florida 33442 (tele.
(954) 698 - 9998).
SHAREHOLDERS RELATIONS
For shareholders information please contact the Secretary or President of the
corporation at (954) 698 - 9998.
FINANCIAL RELATIONS
For financial information please contact the Treasurer or President of the
corporation at (954) 698-9998.
ANNUAL MEETING
The Annual Meeting of Shareholders will be held at 4:00 PM on Wednesday, April
22, 1998, at the headquarters of the corporation at 312 S. Military Trail,
Deerfield Beach, Florida 33442; unless otherwise notified via PROXY Statement to
be mailed.
AFFIRMATIVE ACTION
Bio-Lok International Inc. is an equal opportunity employer. Bio-Lok also
supports affirmative action programs for minorities and women, including the
economic development of business, education and training, and recruiting.
Page 23
<PAGE> 42
FORM 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JANUARY 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________
Commission File No. 33-245-66-A
BIO-LOK INTERNATIONAL INC.
--------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 65-0317138
(State or other jurisdiction of (IRS Employee
incorporation or organization) Identification No.)
312 S. MILITARY TRAIL
DEERFIELD BEACH, FLORIDA 33442
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code (954) 698-9998
----------------------
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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
-----
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the latest practicable date.
<TABLE>
<CAPTION>
Class of Common Stock Outstanding at January 31, 1998
--------------------- -------------------------------
<S> <C>
$.01 par value 34,742,870 shares
</TABLE>
<PAGE> 43
BIO-LOK INTERNATIONAL INC.
Index
Part I. Financial Information
<TABLE>
<CAPTION>
Page #
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Statements of Income for
Three months ended January 31, 1998 and 1997 3
Condensed Balance Sheets for
January 31, 1998 and October 31, 1997 4
Condensed Statements of Cash Flows for
Three months ended January 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statement 6
Item 2. Management's Discussion and Analysis of Financial 7
Results of Operations 7
Financial Condition 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 7
</TABLE>
2
<PAGE> 44
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIO-LOK INTERNATIONAL INC.
Condensed Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
----------------------------
1998 1997
------------ ------------
('000's) ('000's)
<S> <C> <C>
Net Sales $ 365 $ 304
Cost of Goods Sold 108 84
------------ ------------
GROSS PROFIT 257 220
Selling 87 69
Admin. & General Exp 151 127
------------ ------------
238 196
------------ ------------
Operating Income 19 24
Interest Expense 24 0
Other Income/Expenses (3) 22
------------ ------------
21 22
------------ ------------
Income before Taxes (4) 2
Income Taxes 0 0
------------ ------------
NET INCOME $ (4) $ 2
============ ============
Net Income Available to
Common Share Owners $ -0- $ 2
============ ============
Net Income per Common Share $ -0- $ -0-
============ ============
Dividends per Common Share $ -0- $ -0-
============ ============
Average Common Shares
Outstanding 34,742,870 13,953,913
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 45
BIO-LOK INTERNATIONAL INC.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
January 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS ('000's) ('000's)
Current Assets
Cash $ 2 $ 4
Accounts Receivable (Net) 524 490
Inventory 1,197 1,163
Other Current Assets 0 20
------- -------
Total Current Assets 1,723 1,677
Net Machinery & Equipment 304 321
Other Assets 40 14
------- -------
TOTAL ASSETS $ 2,067 $ 2,013
======= =======
LIABILITIES & EQUITY
Current Liabilities
Revolving Loan $ 288 $ 247
Accounts Payable 151 141
Accrued Expenses 0 15
Current Portion of LTD 171 171
Other Current Payable 67 0
------- -------
Total Current Liabilities 677 574
------- -------
Long Term Debt 598 643
------- -------
1,275 1,217
Equity
Common Stock - authorized
50,000,000, par value $.01;
outstanding 34,742,870 and
34,742,870 shares respectively; 347 347
Paid-in Capital 1,650 1,649
Retained Earnings (1,201) (1,201)
Retained Earnings - CY (4) 0
------- -------
Total Equity 792 796
------- -------
TOTAL LIABILITIES & EQUITY $ 2,067 $ 2,013
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 46
BIO-LOK INTERNATIONAL INC.
Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
--------------------
1998 1997
---- ----
(000,s) (000's)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ (4) $ 2
Depreciation 21 24
Net Change in Operating Assets (62) 37
Net Change in Operating Liabilities 93 (49)
---- ----
Net Cash Provided by Operating 48 14
---- ----
FROM INVESTING ACTIVITIES:
Property, Plant & Equipment (4) (3)
---- ----
Net Cash Used for Investing Activities (4) (3)
---- ----
FROM FINANCING ACTIVITIES:
Increase in Long Term Debt (46) (3)
---- ----
Net Cash Used for Financing Activities (46) (3)
---- ----
NET INCREASE (DECREASE) IN CASH $ (2) $ 8
Cash - Beginning of Period 4 1
---- ----
Cash - End of Period $ 2 $ 9
==== ====
Interest Paid $-0- $-0-
Income Taxes Paid $-0- $-0-
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 47
BIO-LOK INTERNATIONAL INC.
Notes to Condensed Financial Statement
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The financial statements represent the accounts of Bio-Lok International Inc.
("Bio-Lok") (f/k/a American BioDental Corporation).
NOTE B - NATURE OF BUSINESS
Bio-Lok is a manufacturer and distributor, both domestic and internationally, of
precision dental implants, related prosthetics and devices, associated tools,
and irrigated drills to the dental market. The Company markets its product line
direct to the end user and via distributors.
Revenues are attributable to the manufacturing operation, distribution
agreements negotiated, marketing efforts of the Company, and are recorded as a
receivable due when the goods are shipped.
NOTE C - INVENTORIES
Inventories are stated at the lower of average or market cost. Inventories at
January 31, 1997 and October 31, 1996 consisted of the following:
<TABLE>
<CAPTION>
January 31, 1998 October 31, 1997
------------------ -----------------
<S> <C> <C>
Raw Materials & Supplies $ 24,017 $ 31,748
Consumable Tools 35,000 35,000
Work in Process 380,996 445,340
Finished Goods 756,934 650,957
------------ ------------
$ 1,196,947 $ 1,163,045
------------ ------------
</TABLE>
The inventory increase for the quarter was $33,902 and reflected the increased
build up of new products for the Micro-Lok Implant System - i.e. new cylinder
implant, and new implant platform and related prosthetics.
NOTE D - SUMMARIZED INCOME STATEMENT DATA OF BIO-LOK INTERNATIONAL INC.
At January 31, 1998, the income statement represents Bio-Lok. For 1997 the
summarized income statement consists of Bio-Lok and its wholly owned subsidiary
Minimatic Implant Technology, Inc. The subsidiary was merged into Bio-Lok
effective March 1997.
NOTE E - CHANGE IN BUSINESS ACTIVITY
In January 1996, ABDC's (n/k/a Bio-Lok) Directors recommended and the Directors
of Minimatic approved and placed Minimatic into bankruptcy - Chapter XI
reorganization. Additionally, effective April 10, 1996, American BioDental
Corporation was also placed under the protection of a Chapter XI filing. The
Directors filed the bankruptcy to protect Minimatic and ABDC from outstanding
legal lawsuits and delayed payments of debtors both secured and unsecured.
Effective February 12, 1997, the Plan of Reorganization filed by the Companies
was approved by the Court. The Companies have operated under the Plan of
Reorganization successfully and the Chapter XI file was closed January 23, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
VOLUME
Net volume (sales/revenues) for the quarter increased by 20% over the comparable
quarter prior year. The increase was due to a continued strong demand in
international sales.
6
<PAGE> 48
COST OF GOODS SOLD AND GROSS PROFIT
Cost of goods sold and gross profit margins as related to net sales decreased by
10% over the comparable quarter prior year. The increase in cost of goods sold
is a direct result added costs having been incurred in bringing a new CNC
machine on-line.
SELLING, ADMINISTRATIVE & GENERAL EXPENSES
Selling expenses have increased by 6% over the comparable period prior year due
to staff additions and increased marketing costs being incurred in building the
domestic market.
Administrative and General expenses reflected no change over the same period
prior year. The Company has been able to maintain its costa as a percent of
sales.
NET INCOME
Net income for the quarter was a loss of $4K compared to a profit of $2K for the
comparable period prior year. The lower net income is attributable to the
interest expenses being incurred as a result of the recapitalization of debt of
the Plan of Reorganization.
FINANCIAL CONDITION
NET CASH FLOW PROVIDED BY OPERATIONS
Cash flow provided decreased slightly for the period. Cash flow is continually
effected by the slow growth in domestic sales and the costs incurred for the
marketing efforts spent.
FINANCING
No new financing activities has been entered into for the quarter.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K: NONE
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BIO-LOK INTERNATIONAL INC.
(Registrant)
Date: March 14, 1998 By /s/ Ingo K. Kozak
---------------------------
Ingo K. Kozak
Chief Financial Officer and
Vice President - Finance
