<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED January 31, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-17500
VERSUS TECHNOLOGY, INC.
- - --------------------------------------------------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Delaware 22-2283745
- - ------------------------------- --------------------------
(State or other jurisdiction of (I. R. S. Employer
Incorporation or Organization) Identification Number)
2600 Miller Creek Road
Traverse City, Michigan 49684
---------------------------------------
(Address of principal executive offices)
616-946-5868
-----------------------------
Registrant's telephone number
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
twelve 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 No X
---- ----
Number of shares of Common Stock, par value $.01 per share,
outstanding as of January 31, 1997: 38,123,674.
Transitional small business disclosure format:
Yes No x
------ ------
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VERSUS TECHNOLOGY, INC.
Index
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements:
Consolidated Balance Sheets as of
January 31, 1997 (Unaudited) and
October 31, 1996 3-4
Consolidated Statements of Operations
for the three months ended
January 31, 1997 and 1996 (Unaudited) 5
Consolidated Statements of Cash Flows for
the three months ended January 31, 1997
and 1996 (Unaudited) 6-7
Notes to Consolidated Financial Statements 8-13
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-15
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 16-17
Item 2 - Changes in Securities 17
Item 6 (a) - Exhibits 17
Item 6 (b) - Reports on Form 8-K 17
Signatures 18
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VERSUS TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
- - ------
JANUARY 31, OCTOBER 31,
1997 1996
(UNAUDITED)
------------ -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4,069,000 $ 4,931,000
Accounts receivable,
net of allowance for doubtful
accounts of $53,000 at January
31, 1997 and October 31, 1996 323,000 154,000
Notes receivable, net 52,000 32,000
Inventories - purchased parts
and assemblies 137,000 145,000
Prepaid expenses and other
current assets 33,000 80,000
------------ ------------
TOTAL CURRENT ASSETS 4,614,000 5,342,000
------------ ------------
NOTES RECEIVABLE, net - 19,000
PROPERTY AND EQUIPMENT, net
of accumulated depreciation
of $167,000 and $155,000 301,000 270,000
SOFTWARE DEVELOPMENT COSTS,
net of accumulated amortization
of $31,000 and $12,000 569,000 588,000
GOODWILL, net of accumulated
amortization of $65,000 and
$26,000 2,274,000 2,313,000
PATENTS AND OTHER INTANGIBLE ASSETS,
net of accumulated amortization
of $185,000 and $170,000 1,781,000 255,000
--------- ------------
$ 9,539,000 $ 8,787,000
=========== ============
</TABLE>
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LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1997 1996
------------ -------------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 465,000 $ 748,000
Accounts payable, PTFM 500,000 -
Accrued expenses 89,000 135,000
Deferred revenue-customer
advance payments 1,000 16,000
Note payable - current portion 344,000 367,000
------------ -----------
TOTAL CURRENT LIABILITIES 1,399,000 1,266,000
------------ -----------
TOTAL LIABILITIES 1,399,000 1,266,000
------------ -----------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value;
50,000,000 shares authorized;
38,123,674 and 36,543,573
shares issued and outstanding 382,000 366,000
Additional paid-in capital 32,876,000 31,910,000
Accumulated deficit (24,926,000) (24,532,000)
------------ -----------
Unearned compensation (192,000) ( 223,000)
------------ -----------
TOTAL SHAREHOLDERS'
EQUITY 8,140,000 7,521,000
------------ -----------
$ 9,539,000 $ 8,787,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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VERSUS TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
NET SALES 391,000 35,000
COST OF SALES 190,000 29,000
----------- -----------
GROSS PROFIT 201,000 6,000
----------- -----------
OPERATING EXPENSES
Research and development 98,000 160,000
Sales, general and
administrative 486,000 187,000
Litigation defense costs,
settlements & judgments 45,000 61,000
----------- -----------
629,000 408,000
----------- -----------
LOSS FROM OPERATIONS ( 428,000) ( 402,000)
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 46,000 23,000
Interest expense ( 5,000) ( 1,000)
Other, net ( 7,000) ( 5,000)
----------- -----------
34,000 17,000
----------- -----------
NET LOSS ( 394,000) $( 385,000)
=========== ===========
NET LOSS PER SHARE ( .01) (.02)
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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VERSUS TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
---------------------------
1997 1996
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $( 394,000) $( 385,000)
--------- --------
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and amortization 85,000 15,000
Change in unearned compensation 13,000 -
Loss on sale of equipment 7,000 -
Changes in operating assets
and liabilities:
Accounts receivable ( 169,000) 24,000
Inventories 8,000 ( 19,000)
Prepaid expenses
and other current assets 22,000 31,000
Accounts payable and other
liabilities ( 288,000) ( 30,000)
Accrued expenses ( 47,000) ( 37,000)
Deferred revenues
- customer advance payments ( 15,000) ( 9,000)
--------- ---------
Total adjustments ( 384,000) ( 25,000)
Net cash used in operating -------- ---------
activities ( 778,000) ( 410,000)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Changes in note receivable ( 1,000) -
Payment of costs associated
with acquisition of license to
intellectual property ( 10,000) -
Additions to property and
equipment ( 58,000) ( 39,000)
Proceeds from sale of equipment 8,000 -
Additions to deferred charges
and other assets - ( 60,000)
---------- ---------
NET CASH PROVIDED BY
INVESTING ACTIVITIES ( 61,000) ( 99,000)
--------- ---------
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable ( 23,000) ( 20,000)
Purchase of treasury stock - ( 85,000)
---------- --------
NET CASH PROVIDED BY (USED
IN) FINANCING ACTIVITIES ( 23,000) ( 105,000)
---------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ( 862,000) 614,000
Cash and cash equivalents,
beginning of period 4,931,000 1,998,000
Cash and cash equivalents, ----------- ---------
end of period 4,069,000 1,384,000
=========== =========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
(Notes 8 and 10)
Cash paid during the quarter for
interest 5,000 782
=========== ========
</TABLE>
During the first quarter of fiscal 1997:
The Company acquired a license to intellectual property from Precision Tracking
FM, Inc. for consideration of 1,600,000 shares of common stock, valued for
accounting purposes at $1,000,000, and $500,000 recorded as an accounts
payable, PTFM at the end of the first quarter of fiscal 1997. Expenses related
to the acquisition totaling $15,000 were capitalized, of which $5,000 was
accrued, and $25,000 of prepaid royalties were re-classified from prepaid
expenses to intellectual properties to be amortized over 10 years.
The Company repurchased non-vested Employee Incentive Stock from terminated
employees at par value, pursuant to the Incentive Restricted Stock Bonus Plan,
canceling the unearned compensation of $18,000 related to these shares.
See accompanying notes to consolidated financial statements.
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VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1997
(UNAUDITED)
================================================================================
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements, which are for
interim periods, do not include all disclosures provided in the annual
consolidated financial statements. They should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained in the
Annual Report on Form 10-KSB for the year ended October 31, 1996 of Versus
Technology, Inc. and subsidiary (the Company) , as filed with the Securities
and Exchange Commission. The October 31, 1996 balance sheet was derived from
audited consolidated financial statements, but does not include all disclosures
required by generally accepted accounting principles.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position as of
January 31, 1997, and the results of operations and cash flows for the three
months ended January 31, 1997 and 1996. The results of operations for the three
months ended January 31, 1997, are not necessarily indicative of the results to
be expected for the full year.
NOTE 2 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
Olmsted Engineering, Co., its wholly-owned subsidiary, since August 26, 1996,
the date of acquisition. Upon consolidation, all significant intercompany
accounts, transactions and stockholdings have been eliminated.
NOTE 3 EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is based on the weighted average number of shares of
common stock outstanding during each period. The Company has not included the
effects of options and warrants in
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its calculation of weighted average shares outstanding due to their
anti-dilutive effect. The resulting weighted average shares outstanding were
36,550,700 and 18,910,697 for the three months ended January 31, 1997 and 1996,
respectively.
NOTE 4 NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This new
statement requires the Company to review long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. If it is determined that an impairment
loss has occurred based on expected future cash flows, then the loss should be
recognized in the statement of operations and certain disclosures regarding the
impairment should be made in the financial statements. The Company's adoption
of SFAS No. 121, during the three months ended January 31, 1997, had no
material impact on the Company's financial position or results of operations.
In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation", was
issued. SFAS No. 123 allows companies to continue to account for their stock
option plans in accordance with APB Opinion No. 25 but encourages the adoption
of a new accounting method to record compensation expense based on the
estimated fair value of employee stock options. Companies electing not to
follow the new fair value based method are required to provide expanded
footnote disclosures, including pro forma net income and earnings per share,
determined as if the company had applied the new method. The Company was
required to adopt SFAS No. 123 prospectively beginning November 1, 1996.
Management has continued to account for its stock option plans in accordance
with APB Opinion 25 and will provide supplemental disclosures in its year-end
financial statements as required by SFAS No. 123, beginning in 1997. No
additional disclosures are required on an interim basis.
NOTE 5 ACQUISITION
As described more fully in Note 3 to the Consolidated Financial Statements
included in the Form 10-KSB for the year ended October 31, 1996, on August 26,
1996, the Company issued 6,379,889 shares of its common stock, valued for
accounting purposes at $.50 per share, and paid $65,000 in cash, in exchange
for all of the outstanding common stock and preferred stock of Olmsted
Engineering, Co. (Olmsted). The purchase price amounted to $3,255,000. For
accounting purposes, the price was determined based upon a contemporaneous sale
of restricted common stock at
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$.50 per share.
The acquisition has been accounted for using the purchase method of accounting,
and accordingly, the purchase price has been allocated to the assets purchased
and the liabilities assumed based upon the estimated fair values at the
acquisition date, and the results of Olmsted's operations have been included in
the Company's financial statements from the date of acquisition. The excess of
the purchase price over the fair values of the net assets acquired was
$2,339,000 and has been recorded as goodwill, which is being amortized on a
straight-line basis over 15 years.
While the acquisition occurred on August 26, 1996, the following pro forma
information reflects operations for the three months ended January 31, 1996 as
if the acquisition took place on November 1, 1995. The pro forma information
includes adjustments for depreciation based on the fair value of the property
and equipment acquired, intercompany transactions, the amortization of
intangibles arising from the transaction and the shares issued in the
acquisition. The pro forma financial information is not necessarily indicative
of what the actual consolidated results might have been if the acquisition had
taken place on November 1, 1995.
Pro forma results for three months ended January 31, 1996:
<TABLE>
<S> <C>
Net sales $ 126,000
Net loss (434,000)
Net loss per common share (.02)
</TABLE>
NOTE 6 NOTES PAYABLE
Term Note
On August 1, 1995, the Company signed a note payable to one of its law
firms for $449,000 as partial payment of fees billed. The note bears interest
at a specified bank's prime rate, 8.25% at January 31, 1997, and requires
monthly installments of $10,000 each, including interest, commencing on
December 1, 1995, with a balloon payment for the remaining balance due on
January 1, 1997. The note, amounting to $344,000 and $367,000 at January 31,
1997 and October 31, 1996, respectively, is secured by a portion of the
Company's patents and intellectual property. Approximately $150,000 of
additional fees to the same law firm are included in accounts payable at
January 31, 1997 and October 31, 1996. The Company made an additional monthly
installment payment of $10,000 in January, 1997. Management intends to dispute
the amount and terms of payment of the remaining unpaid balances. Any
adjustment of the unpaid balance will be recognized in the period in which the
Company is released from its obligation.
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NOTE 7 CONTINGENCIES
Litigation
The following is a summary of the material litigation in which the Company
is currently engaged.
A suit was filed in November 1996, and a nearly identical suit was
filed in January, 1997 against the Company alleging that the Company allowed
certain warrants to expire which the plaintiffs held that the plaintiffs were
damaged by the warrants' expiration. The plaintiffs also allege that the
Company breached the warrant agreement pursuant to which the warrants were
issued to the plaintiff and claim that the sale by the Company of restricted
stock in late 1993 required a downward adjustment of the exercise price of the
warrants under the warrant agreement. Each sole named plaintiff alleges this
action should be tried as a class action, and alleges he is an appropriate
representative of the class. The plaintiffs further allege their claims are
substantially identical to the claims made by the plaintiff in prior litigation
of similar nature which resulted in a judgment upheld on appeal during 1996 for
$195,000, which involved only 300,000 of the 2,233,800 Class A warrants at
issue. Apparently, the plaintiffs believe the Company has a liability for each
of the remaining warrants identical to the per warrant liability the Company
had for the 300,000 warrants in the 1996 judgment. Due to the recent filing of
these suits, any loss potential is not determinable at this time. However, the
Company disputes the material allegations of the complaints and intends to
vigorously defend itself against these matters.
In January 1997, a suit was filed by a former employee of the Company alleging
wrongful discharge. The termination occurred prior to the Company's current
President and Chief Executive Officer assuming that position. The Company
disputes the central allegations of the Complaint. The Company believes that
should any judgment be rendered against the Company in this matter, it will be
less than $200,000.
NOTE 8 SHAREHOLDERS' EQUITY
STOCK ISSUANCE
As of January 31, 1997, 1,600,000 restricted shares of common stock, valued for
accounting purposes at $1,000,000, were issued to Precision Tracking FM, Inc.
(PTFM) in consideration of a License Agreement for the Company to become a
licensee of PTFM's patents and other intellectual property rights related to
infrared tracking technology. The Company has entered into a Registration
Rights Agreement with PTFM with respect to these shares (see Note 10).
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NOTE 9 RELATED PARTY TRANSACTIONS
The President and Chief Executive Officer of the Company was also the Chief
Executive Officer, a member of the Board of Directors and a stockholder of
Olmsted which was acquired by the Company effective August 26, 1996.
Olmsted provided a number of resources to the Company for the period ended
January 31, 1996 including research and development, pass-through billings, use
of office space and development of a business plan. Related party billings for
the period ended January 31, 1996 totaled $277,000.
The Company believes that services provided by Olmsted were negotiated at arm's
length at the fair value of goods and services received.
The Company and Olmsted moved their principal operating facilities in December
1996 to a building which is beneficially owned by the Company's President. The
Company and Olmsted have entered into separate five-year lease agreements
calling for aggregate annual rents of $111,000, increasing 4% annually after
the first year. The Company and Olmsted have made combined non-refundable
contributions to leasehold improvements amounting to $104,000. Rent expense
for the quarter ended January 31, 1997 amounted to $21,000, of which $12,000
applied to the lease of the new facility from December 20, 1996 to January 31,
1997.
NOTE 10 ACQUISITION OF INTELLECTUAL PROPERTY
As of January 31, 1997, the Company and PTFM signed an Agreement (License
Agreement) for the Company to become the exclusive licensee of PTFM`s patents
and other intellectual property rights related to infrared tracking technology
for ten years, and non-exclusive thereafter. PTFM has previously been a
supplier of infrared components to the Company.
Concurrent with executing the License Agreement, a short-term (one year)
Engineering and License Agreement (Engineering Agreement) was entered into by
the parties to assist the Company in the technology transfer and to support the
Company in use and development of the technology.
In consideration of the License Agreement, based on negotiations between the
parties, the Company agreed to pay $500,000 in cash and 1.6 million restricted
shares of the Company's common stock.
Under the Engineering Agreement, the Company is required to reimburse PTFM for
expenses incurred in providing the services covered by the agreement. Such
expense reimbursement payments
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are estimated at $40,000 per month during the one year term, with
additional reimbursement of authorized expenses as applicable.
The total amount capitalized at January 31, 1997, to be amortized over the
10-year exclusivity period of the agreement, amounted to $1,540,000, including
costs of the transaction. This includes prepaid PTFM royalty costs of $25,000
which were reclassified to "patents and other intangible assets".
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
General
Versus Technology, Inc. (Versus) and its wholly-owned subsidiary, Olmsted
Engineering co. (Olmsted), collectively referred to as "the Company" operate in
two business segments: security; and systems design and engineering. All
Company operations are located in one facility in Traverse City, Michigan.
Versus develops and markets products using infrared technology for the health
care industry and other markets located throughout North America. These
products permit the instantaneous identification and tracking of the location
of people and equipment, can be used to control access and permit instantaneous
two-way communication. Versus also develops, markets and integrates cellular
products for the security industry.
Versus acquired Olmsted in August 1996. Olmsted writes and maintains complex
software programs for the computer-aided design and computer-aided
manufacturing (CAD/CAM) industry. It sells its own software under the ACU.CARV
name, resells third party software, and provides systems support services
throughout North America. It receives monthly maintenance and enhancement fees
from customers in order to receive technical support and semi-annual releases.
Olmsted also provides software programming services to Versus.
The following discussion and analysis focuses on the significant factors which
affected the Company's consolidated financial statements during first quarter
of fiscal 1997, with comparisons to first quarter of fiscal 1996 where
appropriate. It also discusses the Company's liquidity and capital resources.
The discussion should be read in conjunction with the consolidated financial
statements and related notes included elsewhere in this Form 10-QSB.
The following table sets forth selected financial data for the Company for the
two fiscal quarters:
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<TABLE>
<CAPTION>
(in thousands except per share amounts)
THREE MONTHS ENDED JANUARY 31, 1997 1996
________________________________________________________________
<S> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales $ 391 $ 35
Net loss ( 394) ( 385)
Net loss per common share (.01) (.02)
Weighted average number of common
shares outstanding 36,550,700 18,910,697
BALANCE SHEET DATA: JANUARY 31,1997 OCTOBER 31,1996
Working capital $3,215,000 $4,076,000
Total assets 9,539,000 8,787,000
Total liabilities 1,399,000 1,266,000
Shareholders' equity 8,140,000 7,521,000
</TABLE>
Results of Operations
- - ---------------------
Three Months Ended January 31, 1997 and January 31, 1996
- - --------------------------------------------------------
Total sales for the first quarter of fiscal 1997 of $391,000 were $356,000
above sales of $35,000 for the corresponding quarter in fiscal 1996. This
increase is primarily due to significant growth in sales of the infrared
tracking systems and Olmsted sales included in the first quarter 1997 that were
not included in the first quarter of 1996 (part of the acquisition). Of the
total sales in the first quarter of fiscal 1997, approximately 45% were
attributable to infrared tracking system sales, 48% to Olmsted sales, and 7% to
cellular Sales. The Company is continuing its development and marketing of
infrared products and expects this product line to be the Company's primary
focus in fiscal 1997. The Company's marketing staff has now been developed,
and a distributor agreement has been established, which provide a foundation
for future marketing and sales efforts.
Cost of sales as a percentage of sales in the first quarter of fiscal 1997
decreased to 49% from 83% for the same quarter in fiscal 1996. This change was
attributable to the increase in infrared sales and the inclusion of Olmsted
sales in first quarter fiscal 1997, both of which had a higher gross profit
margin.
The Company's selling, general and administrative expenses for the first
quarter of fiscal 1997 increased $299,000, or 109%, over the first quarter of
fiscal 1996. This increase was primarily due to the Company's acquisition of
Olmsted in August 1996, and the inclusion of the expenses for Olmsted's
operations in the consolidated financial statements in 1997. Research and
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development expenses for the first quarter of fiscal 1997 were $98,000 compared
to $160,000 for the first quarter of fiscal 1996. The Company's acquisition of
Olmsted, the Company's primary source of research and development for the IR
Tracking System in the first quarter of fiscal 1996, resulted in significantly
reduced research and development costs in the first quarter of fiscal 1997.
In the first quarter of fiscal 1997, other income, net increased 17,000, or
100%, from 1996 levels due primarily to the increase in interest earned on the
proceeds from the August 1996 private placement.
Liquidity and Capital Resources
- - -------------------------------
During the three months ended January 31, 1997, the Company relied on cash
balances from the most recent private placement offering in August 1996, which
generated net proceeds of $5.2 million. The Company believes that the
combination of the above working capital and cash generated from operations
should be sufficient to meet projected cash needs over the next nine (9)
months.
As previously discussed, as of January 31, 1997, the Company and PTFM signed an
Agreement (License Agreement) for the Company to become the exclusive licensee
of PTFM`s patents and other intellectual property rights related to infrared
tracking technology for ten years, and non-exclusive thereafter. PTFM has
previously been a supplier of infrared components to the Company.
Concurrent with executing the License Agreement, a short-term (one year)
Engineering and License Agreement (Engineering Agreement) was entered into by
the parties to assist the Company in the technology transfer and to support the
Company in use and development of the technology.
In consideration of the License Agreement, based on negotiations between the
parties, the Company agreed to pay $500,000 in cash and 1.6 million restricted
shares of the Company's common stock.
Under the Engineering Agreement, the Company is required to reimburse PTFM for
expenses incurred in providing the services covered by the agreement. Such
expense reimbursement payments are estimated at $40,000 per month during the
one-year term, with additional reimbursement of authorized expenses as
applicable.
<TABLE>
<CAPTION>
Significant liquidity factors are as follows:
January 31, October 31,
1997 1996
---- ----
<S> <C> <C>
Current ratio 3.30:1 4.2:1
Quick ratio 3.18:1 4.0:1
</TABLE>
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PART II - OTHER INFORMATION
- - ---------------------------
Item 1 - Legal Proceedings
- - ------
The following is a summary of the material litigation in which the Company
is currently engaged.
1. Theodore London et al v. Versus Technology, Inc.
Complaint filed: November, 1996
Court: Supreme Court of the State of New York
Index No.: 96-120758
Jack Lazarus, et al. v. Versus Technology, Inc.
Complaint filed: January 21, 1997
Court: Supreme Court of the State of New York
Index No.: 97600295
Plaintiffs in these nearly identical actions allege that Versus allowed
certain warrants to expire which the Plaintiffs held and that the Plaintiffs
were damaged by the warrants' expiration. Plaintiffs also allege that the
Company breached the Warrant Agreement pursuant to which the warrants were
issued to Plaintiffs and claim that the sale by the Company of restricted stock
in late 1993 required a downward adjustment of the exercise price of the
warrants under the Warrant Agreement. The Plaintiffs allege this action should
be tried as a class action, and allege that they are appropriate
representatives of the class. Plaintiffs further allege their claims are
substantially identical to the claims made by another plaintiff in prior
litigation, which involved only 300,000 of the 2,233,800 Class A warrants.
Apparently, the Plaintiffs believe the Company has a liability for each of the
remaining warrants identical to the per warrant liability the Company had for
the 300,000 warrants relating to the prior litigation. Each plaintiff seeks
certification as a class action. The Company disputes the material allegations
of the Complaints and intends to vigorously defend itself against this matter.
2. Josaphat Plater-Zybeck, Jr. v. Versus Technology, Inc.
Complaint filed: January 24, 1997
Court: United States District Court for the Eastern
District of Pennsylvania
Civil Action No. 97-CV-519
This action was filed by a former employee of the company alleging
wrongful discharge. The termination occurred prior to the Company's current
President and Chief Executive Officer assuming that position. The Company
disputes the central
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allegations of the Complaint. The Company believes that should any
judgment be rendered against the Company in this matter, it will be less than
$200,000.
Item 2 - Changes in Securities
As of January 31, 1997, 1,600,000 restricted shares of common stock were issued
to PTFM, a former supplier of components, in consideration of a License
Agreement for the Company to become a licensee of certain PTFM patents and
other intellectual property rights related to infrared tracking technology.
The Company has agreed to enter into a Registration Rights Agreement with PTFM
with respect to these shares. The Company relied on the exemption afforded by
Section 4(2) of the 1933 Securities Act as amended, in issuance of these shares
without registration, as it constituted a sale to one entity that was
completely familiar with the Company's principal business and who was given
copies of the Company's 1934 act filing prior to purchase.
Item 6 (a) Exhibits
Exhibit 27 - Financial Data Schedule
Exhibit 99 (1) - Press Release - Version 2.5 of Nightingale
Infrared Tracking System released
Exhibit 99 (2) - Press Release - Foote Hospital Upgrades Infrared
Tracking System
Exhibit 99 (3) - Press Release - VA Medical Center in Ann Arbor
installs Nightingale Infrared Tracking System
Item 6(b) - Reports on Form 8-K
Form 8-K, Item 2 - January 31, 1997
The Company announced the signing of a License Agreement with PTFM for the
Company to become the exclusive licensee of PTFM`s patents and other
intellectual property rights related to infrared tracking technology for a ten
year period, and non-exclusive thereafter, and the signing of a short-term (one
year) Engineering and License Agreement entered into by the parties to assist
the Company in the technology transfer and to support the Company in use and
development of the technology.
17
<PAGE> 18
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.
VERSUS TECHNOLOGY, INC.
----------------------------------------
(Registrant)
By: GARY T. GAISSER
----------------------------------------
Gary T. Gaisser
Officer President and Chief Executive Officer
By: DEBRA A. BOYER
----------------------------------------
Debra A. Boyer
Chief Financial Officer,
and Principal Accounting Officer
March 21, 1997
18
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<PAGE> 1
exhibit 99.1
------------
Exhibit 99 (1) Press Release - Version 2.5 of Nightingale Infrared Tracking
System released
================================================================================
NEWS RELEASE
================================================================================
VERSUS TECHNOLOGY RELEASES VERSION 2.5 OF THE NIGHTINGALE INFRARED TRACKING
SYSTEM RELEASED
TRAVERSE CITY, Mich., March 3/PRNewswire/-- Versus Technology, Inc. (NASDAQ
Bulletin Board: VSTI) announced:
Versus Technology, Inc. is pleased to announce that it has released Version 2.5
of its Nightingale system, an infrared (IR) based resource management and asset
tracking system.
The Nightingale system is used to locate and track key facility assets and
resources, including: personnel, patients, equipment, and patient equipment
alarms. The system is designed to accomplish two major functions: the first is
to allow patients and staff more freedom while receiving and administering
treatment, and the second is to help facilities manage their equipment and
other resources.
Nightingale Version 2.5 runs in Windows 95 and has been designed with an open
architecture for easy integration. The system has been enhanced to allow
customizable communication (COM) badges that provide users the ability to
easily configure the interaction between badges. This increases the
communication options among employees, thus increasing their efficiency. A
phone list option has been added to the interactive floorplan which gives an
alphabetical listing of all badges (COM and equipment) and their position for
ease of transferring calls.
Versus Technology, Inc. markets infrared tracking systems for all industries
and portable security systems. For additional information, please call
616o946o5868 or FAX 616o946o6775.
- - -0- 3/3/97
/CONTACT: Gary T. Wittbrodt, 616-946-5868, of Versus Technology, Inc./(VSTI)
20
<PAGE> 1
exhibit 99.2
------------
Exhibit 99 (2) - Press Release - Foote Hospital Upgrades Infrared
Tracking System
================================================================================
NEWS RELEASE
================================================================================
INCREASED EFFICIENCY GENERATED BY THE NIGHTINGALE INFRARED (IR) LOCATING
SYSTEM LEADS FOOTE HOSPITAL TO UPGRADE THEIR SYSTEM.
TRAVERSE CITY, Mich., February 24/PRNewswire/--Versus Technology, Inc. (NASDAQ
Bulletin Board: VSTI) announced:
Pleased with its increase in efficiency since the installation of the
Nightingale locating system, Foote Memorial Hospital, in Jackson, Michigan, has
upgraded their system to the latest Windows version.
Dr. Anderson, Director of Radiology at Foote, saw the need for implementing the
Nightingale system primarily for phone call forwarding in the Radiology
department. "I can't imagine how we functioned before," stated Dr. Anderson.
"Part of quality is availability." The Radiology department handles a daily
average of 950 incoming phone calls for doctors and technicians, many
concerning test results which need to be communicated immediately to the
appropriate staff person. By using the Nightingale system, the phone operator
can immediately determine the location of a doctor or technician in the
facility and forward the call directly to that location.
Quick response to customer calls and increased communication among hospital
staff have been the primary benefits from the Nightingale system. "It's a
matter of efficiency to be there to handle customer service calls; otherwise,
they will take their business some place else," confirmed Dr. Anderson.
Staff personnel wear COM badges that emit an infrared signal to sensors
installed throughout the facility. The sensors gather the location
information and display the "real time" location of all badged personnel onto a
display monitor and corresponding room list.
The Nightingale system can be used to track key facility assets and resources
including: personnel, patients, equipment, and patient equipment alarms. The
system is designed to accomplish two major functions: the first is to increase
communication, thus allowing patients and staff more freedom while receiving
and administering treatment, and the second is to help facilities manage their
equipment and other resources.
Versus Technology, Inc. markets infrared tracking systems and portable security
systems. For additional information, please call (616) 946-5868 or FAX (616)
946-6775.
- - -0- 2/24/97
/CONTACT: Gary T. Wittbrodt, 616-946-5868, of Versus Technology, Inc./(VSTI)
21
<PAGE> 1
exhibit 99.3
------------
Exhibit 99 (3) - Press Release - VA Medical Center in Ann Arbor installs
Nightingale Infrared Tracking System
================================================================================
NEWS RELEASE
================================================================================
VA MEDICAL CENTER IN ANN ARBOR INSTALLS NIGHTINGALE - AN IR TRACKING SYSTEM FOR
PATIENT FLOW ANALYSIS AND EQUIPMENT TRACKING
TRAVERSE CITY, Mich., February 5/PRNewswire/--Versus Technology, Inc. (Nasdaq
Bulletin Board: VSTI) announced:
The VA Medical Center in Ann Arbor, Michigan has installed the Nightingale
infrared (IR) tracking system from Versus Technology, Inc.
"Patient flow, as well as the location and movement of equipment, will be
monitored by the system", according to Mr. Chuck Brown, Chief of Information
Resources Management for the VA in Ann Arbor. Mr. Brown has taken the
initiative to add the very latest in infrared technology to the VA's Ambulatory
Care Unit. Mr. Brown was searching for new technology to analyze the
efficiencies within the hospital and needed specific data to support positive
changes in ambulatory care. Using Versus' Nightingale tracking system, he will
be able to look at the unit's floorplan on his computer screen and see where
every important piece of equipment is located and at which care center a
patient is currently being treated.
For analysis, the tracking system's Report Generation Package will produce all
the critical information needed in the form of pie graphs and detailed charts
to empower the Medical Center with the tools to increase efficiency and provide
better patient care.
Based in Traverse City, Versus Technology is an acknowledged leader in infrared
tracking systems and related wireless products. For additional information,
please call (616) 946-5868 or FAX (616) 946-6775.
- - -0- 2/5/97
/CONTACT: Gary T. Wittbrodt, 616-946-5868, of Versus Technology, Inc./(VSTI)
23
