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 Quarter Ended April 30, 1998
( ) 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
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 X No
Number of shares of Common Stock, par value $.01 per share,
outstanding as of June 12, 1998: 38,362,875.
Transitional small business disclosure format:
Yes_____ No__X__
VERSUS TECHNOLOGY, INC.
Index
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Consolidated Balance Sheets as of April 30, 1998
(Unaudited) and October 31, 1997
Consolidated Statements of Operations for the
three and six months ended April 30, 1998 and 1997
(Unaudited)
Consolidated Statement of Cash Flows for the six
months ended April 30, 1998 and 1997 (Unaudited)
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART OTHER INFORMATION
II
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 4 Submission of Matters to a Vote of Security
Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
Signatures
VERSUS TECHNOLOGY, INC.
Consolidated Balance Sheets
April 30, 1998 October 31,1997
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 928,000 $ 1,871,000
Accounts receivable, net of
allowance for doubtful
accounts of $67,000 and
$52,000 at April 30, 1998 and 311,000 431,000
October 31, 1997
Notes receivable, net 13,000 15,000
Inventories - purchased parts
and assemblies 148,000 171,000
Prepaid expenses and other
current assets 116,000 113,000
--------------- --------------
Total Current Assets 1,516,000 2,601,000
--------------- --------------
Property and Equipment, net
of accumulated depreciation
of $126,000 and $89,000 267,000 283,000
Software Development Costs,
net of accumulated
amortization of $125,000 and 475,000 513,000
$87,000
Goodwill, net of accumulated
amortization of $260,000 and
$182,000 2,079,000 2,157,000
Patents and Other Intangible
Assets, net of accumulated
amortization of $431,000 and
$344,000 1,534,000 1,621,000
--------------- --------------
$ 5,871,000 $ 7,175,000
--------------- --------------
April 30, 1998 October 31, 1997
(Unaudited)
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable $ 88,000 $ 308,000
Accrued expenses 289,000 159,000
Deferred revenue-customer
advance payments 164,000 356,000
Note payable - current 120,000 123,000
portion
--------------- --------------
Total Current Liabilities 661,000 946,000
Note payable, less current
portion 20,000 83,000
--------------- --------------
Total Liabilities 681,000 1,029,000
--------------- --------------
Shareholders' Equity
Common stock, $.01 par value;
50,000,000 shares authorized;
38,362,875 and 38,271,579
shares issued and outstanding 384,000 383,000
Additional paid-in capital 33,104,000 33,074,000
Accumulated deficit (28,087,000) (27,142,000)
Unearned compensation ( 211,000 ) ( 169,000 )
--------------- --------------
Total Shareholders' Equity 5,190,000 6,146,000
$ 5,871,000 $ 7,175,000
--------------- --------------
See accompanying notes to consolidated financial statements.
VERSUS TECHNOLOGY, INC.
Consolidated Statement of Operations
(Unaudited)
Three Months Ended April 30, Six Months Ended April 30,
1998 1997 1998 1997
Revenues $ 655,000 $ 295,000 $ 1,253,000 $ 686,000
Operating
expenses:
Cost of
revenues 337,000 237,000 676,000 550,000
Research and
Development 42,000 158,000 147,000 256,000
Sales and
Marketing 313,000 230,000 597,000 391,000
General and
Administrative 434,000 554,000 882,000 801,000
----------- ----------- ------------ --------------
1,126,000 1,179,000 2,302,000 1,998,000
Loss From ( 471,000) ( 884,000) (1,049,000) (1,312,000)
Operations
Other Income
(Expense)
Interest income 14,000 39,000 35,000 85,000
Interest expense - ( 9,000) - ( 14,000)
Other, net - 1,000 - ( 6,000)
------------- ----------- ------------- -------------
14,000 31,000 35,000 65,000
------------- ----------- ------------- -------------
Net Loss $ ( 457,000) $ (853,000) $ (1,014,000) $ (1,247,000)
------------- ----------- ------------- -------------
Basic and Diluted
Net Loss Per Share $( .01 ) $ ( .02 ) $ ( .03 ) $ ( .03 )
------------ ------------ ------------- -------------
See accompanying notes to consolidated financial statements.
VERSUS TECHNOLOGY, INC.
Consolidated Statements of Cash Flow
(Unaudited)
Six Months Ended April 30
1998 1997
Cash flows from operating
activities:
Net Loss $ ( 1,014,000) $ ( 1,247,000)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 240,000 206,000
Amortization of unearned
compensation 55,000 25,000
Director compensation 2,000 -
Loss on sale of equipment - 7,000
Changes in operating assets
and liabilities:
Accounts receivable 120,000 ( 135,000)
Inventories 23,000 9,000
Prepaid expenses and other
current assets ( 3,000) ( 52,000)
Accounts payable and other
liabilities ( 220,000) ( 332,000)
Accrued expenses 130,000 145,000
Deferred revenues - customer
advance payments ( 192,000) ( 13,000)
--------------- --------------
Net cash used in operating
activities ( 859,000) ( 140,000)
Cash flows from investing
activities:
Changes in notes receivable 2,000 ( 1,000)
Payment for acquisition of
license to Intellectual
Property and associated costs - ( 265,000)
Additions to property and
equipment ( 21,000) ( 75,000)
Proceeds from sale of - 8,000
Equipment
--------------- --------------
Net cash provided by
investing activities ( 19,000) ( 333,000)
Cash flows from financing
activities:
Issuance of Common Stock 1,000 -
Payments on notes payable ( 66,000) ( 23,000)
--------------- --------------
Net cash used in financing
activities ( 65,000) ( 23,000)
--------------- --------------
Net decrease in cash and cash
equivalents ( 943,000) ( 1,743,000)
Cash and cash equivalents,
beginning of period 1,871,000 4,931,000
--------------- --------------
Cash and cash equivalents,
end of period $ 928,000 $ 3,188,000
--------------- --------------
Supplemental disclosures of
cash flow information
Cash paid during the period
for interest $ 5,000 $ 7,000
--------------- --------------
During the first six months of fiscal 1998:
The Company issued additional non-vested Employee Incentive
Restricted Stock and repurchased similar stock from terminated
employees, all at par value, pursuant to the 1996 Incentive
Restricted Stock Bonus Plan. Unearned compensation of $102,000
was recorded for the stock issued and unearned compensation of
$5,000 related to the repurchased shares was cancelled.
The Company also issued Non Qualified Stock Options to directors
valued at $0.34 per option for accounting purposes. The options
vest after one year and are exercisable at $0.515 per share.
During the six months ended April 30, 1998 $2,000 was recorded as
earned compensation for the grant of these options.
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
April 30, 1998
(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 of
Versus Technology, Inc. (Versus) and subsidiary (the Company)
contained in the Annual Report on Form 10-KSB for the fiscal year
ended October 31, 1997, as filed with the Securities and Exchange
Commission. The October 31, 1997 balance sheet contained herein
was derived from audited consolidated financial statements, but
does not include all disclosures required by generally accepted
accounting principles as found in the Company's Annual Report on
Form 10-KSB referenced above.
In the opinion of Management, the accompanying unaudited
consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to
present fairly the financial position as of April 30, 1998, the
results of operations for the three months and six months ended
April 30, 1998 and 1997 and cash flows for the six months ended
April 30, 1998 and 1997. The results of operations for the three
and six months ended April 30, 1998 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 Versus and the accounts of Olmsted Engineering Co., its wholly
owned subsidiary. Upon consolidation, all significant
intercompany accounts and transactions are eliminated.
Note 3 Basic and Diluted Earnings (Loss) Per Share
In February 1997, the FASB issued SFAS No. 128, Earnings Per
Share. SFAS No. 128 simplifies the standards for computing
earnings per share (EPS) and makes them comparable to
international EPS standards. The statement requires the
presentation of both "basic" and "diluted" EPS on the face of the
statement of operations with a supplementary reconciliation of
the numerators and denominators used in the calculations. SFAS
No. 128 is effective for financial statements issued for periods
ended after December 15, 1997, including interim periods; earlier
application was not permitted. Implementation of SFAS No. 128
had no effect on EPS for the three and six months ended April 30,
1998 and 1997.
Basic earnings (loss) per share is based on the weighted
average number of shares of common stock outstanding. The
Company has not included the effects of options, warrants and the
outstanding shares under its Employee Incentive Restricted Stock
Plan in its calculation of diluted earnings (loss) per share due
to their anti-dilutive effect. The resulting weighted average
shares outstanding were 38,025,106 and 37,890,106 for the three
months ended April 30, 1998 and 1997 respectively and 38,025,106
and 37,085,686 for the six months ended April 30, 1998 and 1997,
respectively.
Note 4 New Accounting Standards
In June 1997, the FASB issued SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information, which
supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise. SFAS No. 131 establishes standards for the
way that public companies report information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim
financial statements issued to the public. It also establishes
standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 defines
operating segments as components of a company about which
separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance. SFAS No. 131
is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for
earlier years to be restated. Management has not fully evaluated
the impact, if any, this standard may have on future financial
statement disclosures. Results of operations and financial
position, however, will be unaffected by implementation of this
standard.
Note 5 Reclassifications
Certain reclassifications have been made to 1997 balances to
conform to classifications used in 1998.
Note 6 Acquisition of Intellectual Property
As of January 31, 1997, the Company and Precision Tracking
FM, Inc. ("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
locating technology for ten years, and nonexclusive thereafter.
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.
Under the Engineering Agreement, the Company was required to
reimburse PTFM up to $480,000 for expenses incurred in providing
the services covered by the agreement. The Company's obligation
under the agreement ended in January 1998, and at April 30, 1998,
the Consolidated Financial Statements include $30,000 in accrued
amounts payable on this contract. The balance will be paid to
PTFM upon delivery of certain documentation related to services
provided under the agreement.
Note 7 Contingencies
Litigation
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 and 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 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. Each sole named plaintiff alleges this action
should be tried as a class action, and alleges he is an
appropriate representative of the class. Plaintiffs further
allege their claims are substantially identical to the claims
made by the plaintiff in the Special Situations Fund III
litigation which was concluded in fiscal 1996. In that action,
which involved only 300,000 of the 2,233,800 Class A warrants at
issue, a judgment of approximately $195,000 was awarded against
the Company by the trial court and upheld on appeal. Apparently
the plaintiffs in this action believe the Company has a liability
for each of the remaining warrants identical to the per warrant
liability the Company was found to have for the 300,000 warrants
relating to the Special Situations Fund III litigation. The
court has consolidated the two cases. The Company disputes the
material allegations of the complaints. The Company's legal
counsel has filed a motion to dismiss the complaints on the
grounds that the plaintiffs were not warrant holders on the date
of the alleged breach of the warrant agreement and to dismiss the
action as being without merit because the plaintiffs have not
alleged and cannot prove that they or other warrant holders
suffered any damages. Management and legal counsel believe the
Company's defense will be found to have merit thus resulting in
no liability of the Company to the plaintiffs.
Note 8 Restricted Stock Bonus Plan
During the six months ended April 30, 1998 the Company
issued an additional 97,000 and re-purchased 5,724 shares of the
Company's common stock issued pursuant to the 1996 Employee
Incentive Restricted Stock Bonus Plan. Net earned compensation
for the three and six months ended April 30, 1998 amounted to
$31,000 and $55,000 respectively.
Note 9 Related Party Transactions
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
nonrefundable contributions to leasehold improvements amounting
to $130,000, in accordance with terms of the lease agreements.
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:
data collection and processing; and systems design and
engineering. All Company operations are located in one facility
in Traverse City, Michigan.
Infrared Locating ("IR Locating") systems are the primary
products of the Company. These products permit the automatic,
accurate registry of essential management and business processes
and can be used to monitor and locate people and equipment and/or
control access to secured areas and record events associated with
these activities. The system consists of compact badges, sensors
and receivers and a central processing computer. Badges can be
attached to people and equipment. Each badge transmits a unique
identifying code, which is received and validated by sensors
located in each room or zone, sent to the central processing
computer which locates each badge, determines its status (i.e.,
condition, environment, etc.) and provides users with a graphical
display on an ordinary computer monitor. Other user programmable
features include directed pages, sequenced and time dictated
"hunting" of substitute individuals, telephone call forwarding,
equipment usage logs, and door openings/closings. Two-way
communication is possible by the addition of ordinary speaker
components. The entire system is based on the Company's patented
technology involving the transmission and reception of infrared
light for use in locating multiple subjects in several areas.
The Company's primary method of distribution of the IR product is
through resellers who install the product. Currently, the
healthcare market is primarily targeted for penetration due to
the technology's initial success there and the existing interest
that has developed.
Under the Olmsted name, the Company sells and maintains the
ACUCARV product line, which consists of a wide range of
manufacturing software. Versus also develops, markets and
integrates cellular products for the security industry.
The following discussion and analysis focuses on the
significant factors which affected the Company's consolidated
financial statements during the three - and six - month periods
ended April 30, 1998, with comparisons to 1997 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.
Results of Operations
Three Months Ended April 30, 1998 and 1997
During the second quarter of fiscal 1998 the Company
continued to develop the IR reseller channel expanding its
network into Canada with its first installation in a Canadian
medical facility. CAD/CAM revenues and margins benefited from
the introduction of the ACUCARV for Windows product. The
efforts expended in fiscal 1997 to develop contract manufacturers
for IR components are being demonstrated in quality and timely
delivery of product and lower costs. To ensure future quality
and sound manufacturing processes the Company initiated a plan to
obtain ISO certification and anticipates completion of this
process by the second quarter of fiscal 1999.
Second quarter revenues were $655,000 or 222% of the fiscal
1997 level of $295,000. Infrared sales of $427,000 were 557%
above the same period fiscal 1997 level of $65,000. The
increased revenues came from the reseller network (90%) and
inside and Marquette Medical Systems sales efforts. CAD/CAM
revenues were $228,000 or 99% of the $230,000 revenues generated
for the same three-month period in fiscal 1997.
Cost of revenues as a percentage of revenues in the second
quarter of fiscal 1998 decreased to 51% from 80% for the same
quarter in fiscal 1997. This decrease is attributable to the
increased revenue levels and lower IR component manufacturing
costs as larger production runs allow more economical order
quantities.
Research and development expenses at $42,000 were $116,000
lower than the three months ended April 30, 1997. 1997 expenses
reflect additional costs expended in the technology transfer from
Precision Tracking.
Selling and marketing expenses for the second quarter of
fiscal 1998 increased to $313,000 or 36% higher than the three
months ended April 30, 1997. The increased expenses reflect
increased sales staff and stepped up marketing efforts.
General and administrative expenses of $434,000 were 22%
below the $554,000 level for the three months ended April 30,
1997. The second quarter of fiscal 1997 reflected additional
charges for legal and professional expenses incurred but not
recorded in the first quarter of fiscal 1997.
In the second quarter of fiscal 1998, other income, net
decreased $17,000, or 44%, from 1997 levels due primarily to the
decrease in interest earned on lower cash levels.
Six Months Ended April 30, 1998 and 1997
First half revenues were $1,253,000 or 83% above the fiscal
1997 level of $686,000. Infrared sales of $801,00 were 232%
above the same period fiscal 1997 level of $241,000. IR revenues
for 1998 already exceed the entire year 1997 level of $644,000 by
24%. The increased revenues came from the reseller network (70%)
and the balance from inside and Marquette Medical Systems sales
efforts. CAD/CAM revenues were $452,000, slightly ahead of the
$445,000 revenues generated for the same six-month period in
fiscal 1997.
Cost of revenues as a percentage of revenues in the first
six months of fiscal 1998 decreased to 54% from 80% for the same
period in fiscal 1997. This decrease is attributable to the
increased revenue levels and lower IR component manufacturing
costs as larger production runs allow more economical order
quantities.
Research and development expenses of $147,000 were $109,000
lower than the first half of fiscal 1997. 1997 expenses included
additional costs expended in the technology transfer from
Precision Tracking.
Selling and marketing expenses for the six months ended
April 30, 1998 increased to $597,000 or 53% higher than the same
period in fiscal 1997. The increased expenses reflect increased
sales staff and stepped up marketing efforts.
General and administrative expenses of $882,000 were 10%
higher than the $801,000 level for the same period in fiscal
1997.
In the first half of fiscal 1998, other income, net
decreased $30,000, or 46%, from 1997 levels due to the decrease
in interest earned on lower cash levels.
Liquidity and Capital Resources
In May 1998 the Company and Marquette Medical Systems
("Marquette") entered into an amended marketing agreement.
Marquette agreed to purchase 50 IR Locating systems from the
Company in exchange for non-exclusive marketing status. Payments
under the contract are non-refundable and systems are being
shipped and billed at the minimum rate of 4 systems ($140,000)
per month. The total amount to be billed under the agreement is
$1,750,000.
During the three and six months ended April 30, 1998, the
Company relied on cash balances from the 1996 private placement
offering which generated net proceeds of $5.2 million. The
Company believes that the combination of its existing working
capital and cash generated from operations should be sufficient
to meet projected cash needs over the next six (6) months.
SAFE HARBOR PROVISION
This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements are subject to a number of important risks and
uncertainties that could cause actual results to differ
materially including, but not limited to, economic, competitive,
governmental and technological factors affecting the Company's
markets, products, services and prices. The Company undertakes
no obligation to update, amend or clarify forward-looking
statements, whether as a result of new information, future events
or otherwise.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
There has been no material change in litigation from that
disclosed in the Company's Annual Report on Form 10-KSB for the
year ended October 31, 1996.
Item 2 - Changes in Securities and Use of Proceeds
(a) The Shareholders of the Company approved an Amendment to the
Certificate of Incorporation to increase the authorized common
stock from 50,000,000 to 75,000,000 shares and to authorize
15,000,000 shares of undesignated shares of preferred stock.
(b) The issuance in the future of shares of preferred stock
having rights and preferences different from the common stock may
effect the rights of common shareholders, when and if issued.
(c) During the quarter no unregistered sales of securities were
made.
(d) Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
The following directors were elected at the 1998 Annual
Meeting of Shareholders of Versus Technology, Inc. held on Friday
April 24, 1998: Samuel Davis, Julian C. Schroeder and Gary T.
Gaisser. Elliot Eisenberg retired from the board with the
expiration of his last term of office.
Total shares voted were 32,770,589 (85%). The tabulation of
votes was as follows:
FOR WITHHELD/AGAINST
Samuel Davis 32,687,916 82,673
Julian C. Schroeder 32,637,916 132,673
Gary T. Gaisser 32,686,216 84,373
At that same meeting the shareholders also approved motions
to amend the Company's Certificate of Incorporation approving an
increase of 25,000,000 million shares of authorized common stock
and the creation of a preferred shares category with an initial
authorization of 15,000,000 preferred shares. The tabulation of
results was:
FOR WITHHELD/AGAINST
Common Stock Amendment 31,814,089 956,500
Preferred Stock Amendment 21,536,598 996,500
Item 5 - Other Information
At the April 24, 1998 Board of Directors meeting Mr. Samuel
Davis was appointed Chairman of the Board. Mr. David Gray and
Mr. Anthony Low-Beer were also appointed to the Company's Board
of Directors.
The Company's by-laws provide that directors may be
compensated as the Board of Directors may from time to time
determine. Previously, each outside director was awarded 30,000
shares of the Company's Common Stock and inside directors (i.e.,
those employed by the Company) received 15,000 shares. At its
April 24, 1998 meeting, the Board unanimously agreed to alter the
compensation arrangements. Each outside director was awarded
73,000 options on the Company's Common Stock and inside directors
(i.e., those employed by the Company) will receive 36,000
options. The options awarded vest after one year and are
exercisable over a five year period at a price of $0.515 per
share , which was the then current fair market value.
The Board also approved compensation, in the form of stock
options, for independent directors for special projects based on
the recommendation of the President and CEO and one other
disinterested director. These options would be exercisable over
five years at a price equal to the average of the bid and asked
price upon the date of the grant. The Board will not grant more
than 500,000 options for special projects' compensation in any
one year.
Item 6 Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
Exhibit 99 (a) Press Release - Versus Technology, Inc. First
Quarter Results Release
Exhibit 99 (b) Press Release - Versus Technology, Inc. adds to
Board/Annual Meeting Synopsis
Exhibit 99 (c) Press Release - New Marketing Agreement with
Marquette Medical Systems
Exhibit 99 (d) Press Release - Versus Technology, Inc. adds
Cleocom to its list of Resellers opening
Canadian Healthcare Market
There were no reports on Form 8-K during the six months
ended April 30, 1998.
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: /S/ GARY T. GAISSER
Gary T. Gaisser
President and Chief Executive Officer
By: /S/ ROBERT BUTLER
Robert Butler
Controller and Chief Accounting
Officer
June 12, 1998
Exhibit 99 (a) Press Release - Versus Technology, Inc. First
Quarter Results Release
VERSUS TECHNOLOGY REPORTS FIRST QUARTER RESULTS
Record Net Sales, Continued Investment in Infrared Locating
Market, Highlight Quarter
TRAVERSE CITY, Michigan, March 30, 1998 - Versus Technology,
Inc. (OTC:VSTI) today announced the results of its first quarter
ended January 31, 1998, marked by its continued investments to
capitalize on the emerging infrared locating market.
The Traverse City, Mich.- based developer and manufacturer
of proprietary infrared (IR) locating systems for hospitals,
correctional facilities, government facilities and other
organizations reported record net sales of $598,000 in its fiscal
1998 first quarter, compared with $391,000 in the same period in
fiscal 1997. Revenues increased to 153% over last year's numbers
as a result of increased penetration of Versus Technology's IR
locating systems into the health care market, due to its expanded
reseller network and increased direct sales and marketing
efforts.
The Company posted a net loss of $557,000, or $0.01 per
share, in the most recent first quarter, compared with a net loss
of $394,000, or $0.01 per share, in the same period last year.
The loss reflects increased sales and marketing costs related to
Versus Technology's infrared locating business.
"We are beginning to realize the rewards of our investments
in targeting the infrared locating market, as evidenced by our
best-ever quarter of sales since the merger of Versus and its
subsidiary Olmsted Engineering Co.," said Gary Gaisser, Versus
Technology, Inc.'s president and chief executive officer. "We
are committed to this emerging industry as it represents a clear
growth opportunity for the Company. The technology we have
developed allows us to expand our systems beyond the health care
market, and we are committing resources to ensure we maintain our
leadership position."
Gaisser added that recent orders for Versus Technology's
infrared locating systems include a major health care facility,
Cedars-Sinai Medical Center, Beverly Hills, CA (through Zettler
Systems) and Los Alamos National Laboratories, New Mexico, a high
security government facility. The Company's infrared locating
technology is currently being developed for other markets as
well, including financial institutions, professional service
providers and manufacturers.
For the first quarter ended January 31, 1998, Versus
Technology's gross profit as a percentage of sales grew to 43%,
compared with 20% in the prior year period. This reflects added
sales and installations of the Company's infrared locating
systems.
"Our operating efficiencies are improving as seen in our
margin expansion," Gaisser said. "These gains, coupled with the
increased acceptance of our infrared technology in the health
care industry and resulting higher sales, continue to move us
toward profitability."
Versus Technology's locating systems use infrared light,
similar to the technology employed in remote controls for
televisions, to identify the precise location of people and
equipment. The Company's software systems also record this
information, providing a simple and efficient method to collect
real-time data to evaluate and maximize the productivity of
personnel and facilities.
The locating systems rely on a network of infrared sensors
installed throughout a facility. Small, lightweight badges worn
by people and attached to equipment transmit a code to these
sensors, creating a means to detect their current and precise
location within the building. This instantaneous identification
and information tool produces a graphical display and generates
reports on Versus' software platforms to track equipment usage
patterns, evaluate traffic flow and provide monitoring for health
and safety purposes.
"The applications are enormous for any organization needing
to locate people or equipment, opening the door to a variety of
markets for our IR products," said Henry J. Tenarvitz, executive
vice president of operations for Versus Technology. "We intend
to continue to invest in research and development to capitalize
on new opportunities."
Versus Technology, Inc. (http://www.versustech.com) is the
innovator in infrared locating technology, which offers real-time
locating and two-way communication capabilities. The systems,
currently in application in hospitals, corporate facilities,
government facilities and other complexes, locate personnel or
equipment for improved workflow. The Company also develops,
markets and integrates cellular products for the security
industry, and has a wholly owned subsidiary, Olmsted Engineering
Co., which provides technical manufacturing and engineering
software primarily for the mold, die and pattern making
industries.
Exhibit 99 (b) Press Release - Versus Technology, Inc. adds to
Board/Annual Meeting Synopsis
VERSUS TECHNOLOGY STRENGTHENS BOARD, NAMES CHAIRMAN
Shareholders Approve New Financing Plan for Future Product
Development and Growth
TRAVERSE CITY, Michigan, May 7, 1998 - Versus Technology,
Inc. (OTC:VSTI) announced at its recent annual meeting the
addition of David L. Gray, C.P.A. and Anthony B. Low-Beer to its
board of directors. The board of directors also named Samuel
Davis as chairman of the board.
The Traverse City, Michigan-based developer and manufacturer
of proprietary infrared (IR) locating systems for hospitals,
government facilities and other organizations said the board
appointments fill one seat vacated by the retirement of Elliot
Eisenberg and added a new seat, bringing Versus' board membership
to five.
Chairman Davis, 66, joined the Versus Technology board in
August 1997. He is former president and CEO of Mount Sinai
Hospital in New York City and currently is senior director of the
Delta Consulting Group, Inc., focusing on helping clients manage
strategic change in healthcare organizations. Davis is a
clinical professor at the School of Public Health at Columbia
University and a Distinguished Service Professor at the Mount
Sinai School of Medicine.
Gray, 49, is president of Tortola Enterprises, Inc., a
consulting firm that provides business management services to a
diverse group of domestic and international operating businesses.
Gray's work primarily includes finance, mergers and acquisitions
and corporate strategy and restructurings. Previously, Gray was
employed with Sara Lee Bakery Company for 12 years, most recently
as president of domestic and international operations, following
a career in public accounting with Arthur Andersen. Gray
currently sits on the board of Gordon Food Service, Inc., a
prominent food service distribution firm, and several other
consumer products, financial services and energy companies.
Low-Beer, 55, has been a Wall Street research analyst and
portfolio manager for more than 25 years, working for such firms
as Lord, Abbett & Co., Neuberger & Berman, M. Kimelman, L.F.
Rothschild and Mitchell Securities. He currently is a
professional investor, money manager and analyst domiciled at the
New York City-based investment advisory firm Brimberg & Co. Low-
Beer is a three-time Institutional Investor All-Star Analyst and
has covered a variety of industries and segments including
transportation, special situations and healthcare-related issues.
Low-Beer holds a Master's and Ph.D. in economics from Columbia
University.
"We are extremely pleased to be able to attract individuals
of the caliber and expertise of David Gray and Tony Low-Beer to
our board," said Gary Gaisser, Versus Technology president and
CEO. "Likewise, the appointment of Sam Davis as chairman will be
critical to the growth of Versus Technology as we tap his vast
healthcare administration experience to grow our share of this
emerging market."
Gaisser continued, "The complementary skills offered by our
board members support our efforts to build a strong team of
individuals both at the board and management levels. They will
all serve critical roles in setting the long-term course for
Versus Technology, ensuring we fully capitalize on the expected
explosive growth of the healthcare information systems market and
other opportunities for our infrared locating technology."
Other highlights of Versus Technology's annual meeting
included:
Versus reported on its results of operations in fiscal 1997,
which were marked by the Company's acquisition of a license for
certain intellectual property and a healthcare reseller customer
base from Precision Tracking FM, Inc. (PTFM); a 338% increase in
net sales to over $1.5 million; and new product developments that
establish the Company among the leaders in the infrared locating
industry.
Versus Technology unveiled its next generation locating
badge. The new instantaneous subject identification and
information gathering tool is a step beyond Versus' current
infrared locating systems, which provide real-time location of
personnel and equipment. The prototype technology is believed to
be the first of its kind in existence.
"A more detailed and descriptive announcement of this
landmark innovation will be issued in the near future as we
finalize the product's development stage and prepare to
offer it to customers," said Gaisser.
Shareholders approved the authorization of an additional 25
million shares of common stock and 15 million shares of preferred
stock for use in financing Versus Technology's aggressive growth
strategy. The Company, which previously used stock to finance
its acquisitions of Olmsted Engineering Co. and the intellectual
property of PTFM, said the additional share authorization
provides it the resources to speed up its growth and product
development efforts to remain on the leading edge of infrared
locating and the $18 billion healthcare information systems
market.
Versus Technology, Inc. (http://www.versustech.com) is the
leading innovator in infrared locating technology, which offers
real-time locating and two-way communication capabilities. The
systems, currently in application in hospitals, corporate
facilities, government facilities and other complexes, monitor
the precise location of personnel or equipment for health and
safety purposes and for improved workflow. The Company also
develops and markets manufacturing and engineering software
primarily for the mold, die and pattern making industries through
its wholly owned subsidiary, Olmsted Engineering Co.
Exhibit 99 (c) Press Release - New Marketing Agreement with
Marquette Medical Systems
VERSUS TECHNOLOGY ANNOUNCES AGREEMENT WITH MARQUETTE MEDICAL
Marketing Agreement Strengthens Distribution of Versus' Infrared
Locating System
TRAVERSE CITY, Michigan, May 18, 1998 - Versus Technology,
Inc. (OTC:VSTI) announced today that it has entered into a new
marketing agreement with Marquette Medical Systems (NASDAQ:MARQ)
to sell Versus' infrared locating systems to the acute care
hospital market. The one-year agreement provides $1.75 million
in revenue for Versus.
The Traverse City, Michigan-based developer and manufacturer
of proprietary infrared (IR) locating systems for hospitals,
government facilities and other organizations said the agreement
gives Marquette non-exclusive marketing rights of Versus'
product. In addition to the expected revenue, the agreement
offers Versus additional product exposure and the opportunity for
incremental revenue based on sales generated by this leading
manufacturer of medical electronics equipment and systems.
"We are excited to build on our relationship with Marquette
Medical Systems as we work together to continue to grow our
presence in the healthcare information systems and equipment
market," said Gary Gaisser, Versus Technology, Inc.'s president
and chief executive officer. "This agreement represents
significant revenue for our Company and a positive extra step in
our relationship with Marquette."
"We believe our proprietary infrared locating technology
will help Marquette to continue to grow while allowing us the
opportunity to further expand our reseller channel so that we can
reach beyond our base of direct customers," Gaisser added.
The new marketing agreement between Versus Technology and
Marquette Medical Systems continues a relationship that began in
June 1996 when Marquette became the first reseller of Versus'
infrared locating technology. The agreement announced today
continues Marquette's non-exclusive right to market Versus'
proprietary infrared locating technology under the brand name
IntelliMotion. Marquette has implemented the IntelliMotion
system within several medical installations, including Baylor
University Medical Center in Dallas, Brigham and Women's Medical
Center in Boston and St. Vincent's Hospital in Cleveland.
"The reseller distribution channel is an important part of
our sales and marketing efforts and will be instrumental as we
introduce new healthcare applications for our infrared locating
technology," said Henry J. Tenarvitz, executive vice president of
operations for Versus Technology. "An example will be our
planned launch of Versus' next generation locating badge.
Marquette and our entire network of resellers will have access to
this product and will provide an invaluable sales and marketing
function that will support the successful launch of this
product."
Marquette Medical Systems, Inc., headquartered in Milwaukee,
Wisc., is a leading manufacturer of medical electronics equipment
and systems for diagnostic cardiology, patient monitoring and
integration of clinical information. Additional information is
available at the company's web site at http://www.mei.com.
Versus Technology, Inc. (http://www.versustech.com) is the
leading innovator in infrared locating technology, which offers
real-time locating and two-way communication capabilities. The
systems, currently in application in hospitals, corporate
facilities, government facilities and other complexes, monitor
the precise location of personnel or equipment for health and
safety purposes and for improved workflow.
The information provided in this press release may include
forward-looking statements relating to future events, such as the
development of new products, the commencement of production, or
the future financial performance of the Company. Actual results
may differ from such projections and are subject to certain risks
including, without limitation, risks arising from: changes in
the rate of growth of the infrared location industry, increased
competition in the industry, delays in developing and
commercializing new products, adequacy of financing and other
factors described in the Company's most recent Annual Report on
Form 10-K filed with the Securities and Exchange Commission which
can be reviewed at http://www.sec.gov.
Exhibit 99 (d) Press Release - Versus Technology, Inc. adds
Cleocom to its list of Resellers opening
Canadian Healthcare Market
VERSUS TECHNOLOGY ADDS CLEOCOM, INC. TO LIST OF RESELLERS
Agreement Opens Canadian Healthcare Market for Versus' Infrared
Locating System
TRAVERSE CITY, Michigan, May 21, 1998 - Versus Technology,
Inc. (OTC:VSTI) today announced a marketing agreement with
Canadian healthcare systems supplier Cleocom, Inc. to sell
Versus' products to the healthcare market in Canada.
Versus Technology, the Traverse City, Michigan-based
developer and manufacturer of infrared (IR) locating systems for
hospitals, government facilities and other organizations, said
its association with Nepean, Ontario-based Cleocom, Inc.
represents its first international sales agreement and brings its
network of reseller customers to six. Versus currently sells its
infrared locating systems directly to hospitals and through a
network of healthcare resellers.
"Our new relationship with Cleocom is significant for a
number of reasons: it associates us with a company that is
committed to innovative alternatives and growth opportunities for
our infrared locating systems, provides us added exposure and
distribution and gives Versus access to Canada's government-
controlled medical system," said Gary Gaisser, Versus Technology
president and CEO. "We are very pleased to be teaming with
Cleocom and look forward to growing with them as leaders in the
medical information systems market."
Versus said the first installation of its infrared locating
system with Cleocom was completed this month at the Enfant Jesus
Hospital in Quebec City. The system provides real-time
information for locating people and equipment in certain areas of
the hospital. Enfant Jesus is a leading university teaching
center hospital affiliated with Laval University of Quebec City -
one of North America's oldest universities.
"Cleocom is taking a fresh perspective to marketing the
Versus locating system and we are excited about the potential,"
Gaisser added. "We expect this relationship to be long term and
look forward to their help in bringing new products, like our
next generation locating badge, to the healthcare market."
The new marketing agreement between Versus Technology and
Cleocom follows a recent agreement in the U.S. with Marquette
Medical Systems (NASDAQ:MARQ). Versus also currently sells its
IR locating systems to medical technology resellers Dukane
Corporation, Rauland-Borg Corporation and Zettler Systems, Inc.
"Strengthening and expanding our reseller relationships are
key ingredients in our growth strategy," said Henry J. Tenarvitz,
executive vice president of operations for Versus Technology.
"Associating with an aggressive, international company like
Cleocom is a good strategic fit for Versus, and we look forward
to drawing on their expertise in the Canadian healthcare market."
Versus Technology, Inc. (http://www.versustech.com) is a
leading innovator in infrared locating technology, which offers
real-time locating and two-way communication capabilities. The
systems, currently in application in hospitals, corporate
facilities, government facilities and other complexes, monitor
the precise location of personnel or equipment for health and
safety purposes and for improved workflow.
Headquartered in Nepean, Ontario, Cleocom, Inc. is a leading
supplier of electronic components and systems for the healthcare
industry. Cleocom's products are marketed primarily in Canada.
Safe Harbor Statement:
The information provided in this press release may include
forward-looking statements relating to future events, such as the
development of new products, the commencement of production, or
the future financial performance of the Company. Actual results
may differ from such projections and are subject to certain risks
including, without limitation, risks arising from: changes in
the rate of growth of the infrared location industry, increased
competition in the industry, delays in developing and
commercializing new products, adequacy of financing and other
factors described in the Company's most recent annual report on
Form 10-K filed with the Securities and Exchange Commission,
which can be reviewed at http://www.sec.gov.
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