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, 2000
( ) 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 of Incorporation) (I. R. S. Employer Identification Number)
2600 Miller Creek Road, Traverse City, Michigan 49684
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (231) 946-5868
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 ( )
As of June 8, 2000 the issuer had outstanding 39,025,094 shares of
common stock, par value $.01 per share.
Transitional small business disclosure format: Yes ( ) No ( X )
VERSUS TECHNOLOGY, INC.
Index to Form 10-QSB
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Consolidated Balance Sheets as of April 30, 2000
(Unaudited) and October 31, 1999
Consolidated Statements of Operations for the three
and six months ended April 30, 2000 and 1999
(Unaudited)
Consolidated Statements of Cash Flows for the six
months ended April 30, 2000 and 1999 (Unaudited)
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II OTHER INFORMATION
Item 2 Changes in Securities and Use of Proceeds
Item 4 Submission of Matters to a Vote of Security Holders
Item 6 Exhibits and Reports on Form 8-K
Signatures
VERSUS TECHNOLOGY, INC.
Consolidated Balance Sheets
(Unaudited)
April 30, October 31,
2000 1999
------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ 866,000 $ 2,395,000
Accounts receivable, net of
allowance for doubtful
accounts of $47,000 and
$28,000 968,000 564,000
Costs and estimated earnings in
excess of billings on
uncompleted contracts (Note 8) 176,000 -
Inventories - purchased parts and
Assemblies 390,000 402,000
Prepaid expenses and other
current assets 141,000 98,000
------------- -------------
Total Current Assets 2,541,000 3,459,000
------------- -------------
Property and Equipment, net of
accumulated depreciation of
$306,000 and $259,000 598,000 450,000
Software Development Costs, net
of accumulated amortization of
$275,000 and $238,000 325,000 362,000
Goodwill, net of accumulated
amortization of $572,000 and
$494,000 1,767,000 1,845,000
Patents and Other Intangible
Assets, net of accumulated
amortization of $877,000 and
$769,000 1,113,000 1,221,000
Deferred Financing Costs, net of
accumulated amortization of
$22,000 and $11,000 86,000 97,000
------------- -------------
$ 6,430,000 $ 7,434,000
============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable $ 390,000 $ 500,000
Accrued expenses 229,000 204,000
Deferred revenue-customer advance
payments 51,000 49,000
------------- -------------
Total Current Liabilities 670,000 753,000
Long-Term Debt 3,000,000 3,000,000
------------- -------------
Total Liabilities 3,670,000 3,753,000
------------- -------------
Shareholders' Equity
Common stock, $.01 par value;
75,000,000 shares authorized;
38,685,201 and 38,510,671
shares issued and outstanding 387,000 385,000
Additional paid-in capital 33,434,000 33,367,000
Accumulated deficit (31,006,000) (29,990,000)
Unearned compensation ( 55,000) ( 81,000)
------------- -------------
Total Shareholders' Equity 2,760,000 3,681,000
------------- -------------
$ 6,430,000 $ 7,434,000
============= =============
See accompanying notes to consolidated financial statements.
VERSUS TECHNOLOGY, INC.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended April 30, Six Months Ended April 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 1,006,000 $ 882,000 $ 1,745,000 $ 1,806,000
Operating expenses
Cost of revenues 588,000 365,000 992,000 722,000
Research and
development 191,000 163,000 342,000 332,000
Sales and marketing 382,000 386,000 754,000 708,000
General and
administrative 288,000 321,000 583,000 634,000
------------ ------------ ------------ ------------
1,449,000 1,235,000 2,671,000 2,396,000
------------ ------------ ------------ ------------
Loss From Operations ( 443,000) ( 353,000) ( 926,000) ( 590,000)
------------ ------------ ------------ ------------
Other Income (Expenses):
Interest income 17,000 3,000 47,000 9,000
Interest expense ( 64,000) - ( 130,000) -
Other (net) ( 5,000) - ( 6,000) -
------------ ------------ ------------ ------------
( 52,000) 3,000 ( 89,000) 9,000
------------ ------------ ------------ ------------
Net Loss $( 495,000) $( 350,000) $(1,015,000) $( 581,000)
============ ============ ============ ============
Basic and Diluted Net
Loss Per Share $( 0.01) $( 0.01) $( 0.03) $( 0.02)
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
VERSUS TECHNOLOGY, INC.
Consolidated Statements of Cash Flow
(Unaudited)
Six Months Ended April 30
2000 1999
------------- -------------
Operating activities:
Net Loss $( 1,015,000) $( 581,000)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation 47,000 43,000
Amortization of intangibles 234,000 221,000
Amortization of unearned
compensation 18,000 68,000
Directors' compensation 17,000 69,000
Changes in operating assets
and liabilities:
Accounts receivable ( 404,000) 124,000
Cost and estimated earnings
in excess of billings on
uncompleted contracts ( 176,000) -
Inventories 12,000 ( 75,000)
Prepaid expenses and other
current assets ( 18,000) ( 3,000)
Accounts payable ( 110,000) ( 51,000)
Accrued expenses 25,000 ( 23,000)
Deferred revenues -
customer advance payments 2,000 1,000
------------- -------------
Net cash used in operating
activities ( 1,368,000) ( 207,000)
------------- -------------
Investing activities:
Additions to property and
equipment ( 195,000) ( 25,000)
------------- -------------
Net cash provided by investing
activities ( 195,000) ( 25,000)
------------- -------------
Financing activities:
Payments on notes payable - ( 60,000)
Sale of common stock 34,000 1,000
------------- -------------
Net cash used in financing
activities 34,000 ( 59,000)
------------- -------------
Net increase (decrease) in cash
and cash equivalents ( 1,529,000) ( 291,000)
Cash and cash equivalents,
beginning of period 2,395,000 698,000
------------- -------------
Cash and cash equivalents, end of
period $ 866,000 $ 407,000
============= =============
Supplemental cash flow
information
Cash paid during the period for
interest $ 128,000 $ -
============= =============
See accompanying notes to consolidated financial statements.
During the first six months of fiscal 2000:
Versus issued 15,500 shares of additional non-vested Employee
Incentive Restricted Stock and repurchased 26,800 shares of
similar stock from terminated employees, all at par value,
pursuant to the 1996 Incentive Restricted Stock Bonus Plan.
During the same period in fiscal 1999, 152,950 shares were issued
and 18,278 shares were repurchased. Unearned compensation of
$6,400 and $56,900 was recorded for the stock issued and unearned
compensation of $10,300 and $20,800 related to the repurchased
shares was cancelled during the six months ended April 30, 2000
and 1999 respectively.
On November 4, 1999, Versus issued 50,000 shares of common stock
to an independent sales agent as prepaid commission. The shares
were valued at $0.50 per share for accounting purposes and $25,000
was recorded as prepaid commission which will be charged to
expense as commissions are earned by this agent.
On April 4, 2000, 35,000 shares of Versus' common stock were
issued to a former employee upon exercise of a stock option at
$0.41 per share. On April 27, 2000, 100,800 shares were issued
upon exercise of a warrant at $0.20 per share.
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
April 30, 2000 (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.
and subsidiary (Versus) contained in the Annual Report on Form 10-
KSB for the fiscal year ended October 31, 1999, as filed with the
Securities and Exchange Commission. The October 31, 1999 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
Versus' 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, 2000, the
results of operations for the three and six months ended April 30,
2000 and 1999 and cash flows for the six months ended April 30,
2000 and 1999. The results of operations for the three and six
months ended April 30, 2000 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 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
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 Bonus Plan in
its calculation of diluted earnings (loss) per share due to their
anti-dilutive effect. The resulting weighted average shares
outstanding were 38,286,657 and 38,025,972 for the three months
ended April 30, 2000 and 1999, respectively, and 38,264,014 and
38,025,948 for the six months ended April 30, 2000 and 1999,
respectively.
Note 4 Reclassifications
Certain reclassifications have been made to 1999 balances to
conform with classifications used in 2000.
Note 5 Change in Accounting For Stock Options Issued to Non-
employee Directors
As described in Note 5 to the consolidated financial statements
included in Versus' 1999 Annual Report on Form 10-K, Versus has
historically recorded the fair market value of stock options
issued to its non-employee Directors as compensation expense.
This method of accounting complied with the then existing
accounting pronouncements and guidance provided by the SEC's
staff. In March 2000, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of
APB Opinion No. 25" (FIN 44). Under FIN 44, stock options issued
to Versus' non-employee Directors will receive the same accounting
treatment permitted for employee stock options under APB Opinion
No. 25, "Accounting for Stock Issued to Employees," whereby no
compensation expense is recorded. Versus is not permitted to
adopt FIN 44 until July 1, 2000. Accordingly, Versus recorded the
fair value of stock options issued to non-employee Directors as
compensation expense in the accompanying consolidated financial
statements. Versus will adopt FIN 44 during the quarter ended
July 31, 2000 as a cumulative effect of a change in accounting
method as of the beginning of its fiscal year.
Had Versus previously been permitted to account for stock options
issued to its non-employee Directors in accordance with FIN 44,
compensation costs would have been reduced as follows for the
periods indicated:
April 30, 2000 April 30, 1999
-------------- --------------
Quarter ended $ 9,000 $ 39,000
Year-to-date period ended $ 17,000 $ 69,000
Note 6 Restricted Stock Bonus Plan
During the six months ended April 30, 2000 the Company issued an
additional 15,500 and re-purchased 26,800 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, 2000 amounted to $9,800 and
$17,800 respectively.
Note 7 Related Party Transactions
Versus' and Olmsted's principal operating facilities are leased
from an entity beneficially owned by Versus' President and CEO.
Rent expense for the six months ended April 30, 2000 and 1999
amounted to $62,000 and $60,000, respectively.
Note 8 Costs and Estimated Earnings on Uncompleted Contracts
As disclosed in the notes to consolidated financial statement
included in Versus' Annual Report on Form 10-K, revenue from IR
(infrared technology) sales has historically been recognized when
the related goods are shipped and all significant obligations of
Versus have been satisfied (i.e., completed contract basis). This
method of accounting has been followed because the typical direct
sale arrangement is completed in a short period of time and
financial position and results of operations do not vary
significantly from those which would result from use of the
percentage-of-completion method. Versus departs from the
completed-contract method and recognized revenues and costs on the
percentage-of-completion method for contracts not having the
features described above. For such contracts, management believes
the percentage-of-completion method recognizes the legal and
economic results of contract performance on a more timely basis.
Under this method, the percent of contract completion is
determined by comparison of costs incurred to date to estimated
total cost for each contract. This method is used because
management considers costs incurred to be the best available
measure of progress on these contracts.
As of April 30, 2000, Versus was in the process of completing a
large sales and installation contract. This contract is accounted
for on the percentage-of-completion method. The following
represents costs incurred, estimated earnings and billings to date
for the uncompleted contract at April 30, 2000. There were no
uncompleted contracts at October 31, 1999 or April 30, 1999.
April 30,
2000
----------
Costs incurred on uncompleted contracts $ 322,000
Estimated earnings 267,000
----------
589,000
Less billings to date 413,000
----------
Total $ 176,000
==========
The $176,000 net amount is included in the accompanying April 30,
2000 balance sheet under the caption: "Costs and estimated
earnings in excess of billings on uncompleted contracts."
Note 9 Business Segment Information
As disclosed in Versus' Annual Report on Form 10-KSB for the year
ended October 31, 1999, Versus adopted Statement of Financial
Accounting Standards (SFAS) No. 131, "Disclosures about Segments
of an Enterprise and Related Information" during 1999. The
accounting policies of the reportable segments are the same as
those followed for consolidated reporting purposes, except that
only direct costs are included in the computation of segment gross
margin for purposes of evaluating segment performance (i.e.,
indirect costs, such as manufacturing overhead and depreciation
and amortization, are excluded from this segment gross margin
computation).
Interim segment information is a follows:
<TABLE>
<CAPTION>
Three Months Ended April 30, Six Months Ended April 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Data collection and
processing $ 883,000 $ 736,000 $ 1,492,000 $ 1,503,000
Systems design and
engineering 123,000 146,000 253,000 303,000
------------ ------------ ------------ ------------
Consolidated total
revenues $ 1,006,000 $ 882,000 $ 1,745,000 $ 1,806,000
------------ ------------ ------------ ------------
Cost of Revenues
Data collection and
processing $( 373,000) $( 187,000) $( 584,000) $( 353,000)
Systems design and
engineering ( 76,000) ( 72,000) ( 157,000) ( 159,000)
------------ ------------ ------------ ------------
Total segment cost
of revenues ( 449,000) ( 259,000) ( 741,000) ( 512,000)
Indirect costs
Depreciation and
Amortization ( 74,000) ( 76,000) ( 152,000) ( 152,000)
Lease expense ( 8,000) ( 8,000) ( 16,000) ( 16,000)
Insurance expense ( 5,000) ( 6,000) ( 11,000) ( 11,000)
Warranty expense ( 4,000) ( 5,000) ( 9,000) ( 10,000)
Other ( 42,000) ( 11,000) ( 63,000) ( 21,000)
------------ ------------ ------------ ------------
Consolidated total
Cost of revenues $( 582,000) $( 365,000) $( 992,000) $( 722,000)
============ ============ ============ ============
Segment Gross Margin
Data collection and
processing $ 510,000 $ 549,000 $ 908,000 $ 1,150,000
Systems design and
engineering 47,000 74,000 96,000 144,000
------------ ------------ ------------ ------------
Total segment gross
margin $ 557,000 $ 623,000 $ 1,004,000 $ 1,294,000
============ ============ ============ ============
</TABLE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Company Profile
Versus Technology, Inc. and its wholly owned subsidiary, Olmsted
Engineering Co. operate in two business segments:
* data collection and processing (referred to as the IR segment)
* systems design and engineering (referred to as the CAD/CAM
segment).
Versus' operations are located in Traverse City, Michigan.
Versus develops innovative products used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
products can be integrated into existing control systems such as
nurse call systems and portal detection systems or utilized in
stand alone locating systems such as Versus' own Versus
Information System (VIS).
Systems currently using Versus' proprietary technology are
installed in hospitals, corporate facilities, government
facilities and other complexes. By monitoring the precise
location of personnel or equipment and automatically recording
events associated with their locations, Versus' technology makes
possible the automatic and accurate collection of essential
management information. Versus' technology provides real-time
asset and staff locating, automatic data collection, access/egress
control and two-way communication capabilities.
Versus' systems and components are distributed primarily through
an expanding international network of resellers who market the
Versus products as enhancements to their existing line of goods.
Versus also integrates its technology with the OEM products of its
resellers. In addition to the reseller network, Versus is also
represented in Canada by an independent sales agent.
The following discussion and analysis focuses on the significant
factors which affected Versus' consolidated financial statements
during the three- and six-months periods ended April 30, 2000,
with comparisons to 1999 where appropriate. It also discusses
Versus' 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
In fiscal 1999, Versus recorded four consecutive quarters of
revenue decreases. That trend was reversed in the first quarter
of 2000 and continued into this second quarter as revenues
increased 36% over quarter one.
In May 1998, Versus and Marquette Medical Systems entered into an
Amended Marketing Agreement under which Marquette purchased
$1,750,000 of Versus' IR products over the ensuing year. Revenues
under this contract were high margin sales items that resulted in
low cost of revenues as a percent of revenues. The impact of
these high margin items continued into the first half of fiscal
1999. As a result, comparisons of fiscal 2000 cost of revenues as
a percent of revenues to fiscal 1999 amounts are distorted. The
following table sets forth the cost of revenues as a percent of
revenues for the three and six month periods ended April 30, 2000
and 1999, respectively, after factoring out the impact of the
Marquette contract. As this table clearly demonstrates, Versus'
current cost of revenues as a percent of revenues is also trending
favorably:
Three months ended Six months ended
April 30, April 30,
2000 1999 2000 1999
------- ------- ------- -------
Cost of revenues as a
percent of revenues 58% 65% 57% 66%
During the second quarter of 2000, Versus launched its initial
security industry product offering trademarked as Eagle Eye(tm).
The reaction to this product was excellent as evidenced by the
reseller/integrator agreements signed as a result of the product
demonstrations at the ISC West (International Security Conference)
Trade Show in Las Vegas, March 14 - 16, 2000. Versus also
commenced installation of a Department of Defense installation
which is believed to be the largest infrared tracking installation
to date. The project will be completed in July 2000. Research
and development efforts emphasized the ASIC chip and related badge
improvements.
Three Months Ended April 30, 2000 and 1999
Revenues for the second quarter of 2000 were $1,006,000 marking
the second time in Versus' history (since focusing on infrared
technology) that revenues broke through the seven digit level.
Versus had previously recorded revenues of $1,074,000 in the
quarter ended October 31, 1998. Revenues in that prior period
included $523,000 on the Marquette Medical contract which expired
in May of 1999. Revenues in the quarter ended April 30, 2000 were
generated by 22 sources as compared to ten sources in the quarter
ended October 31, 1998. These results confirm our statements in
prior reports regarding diversification of the customer base.
Second quarter revenues were $1,006,000 or 14% above the fiscal
1999 level of $882,000. Infrared sales of $883,000 were 20% above
the same period fiscal 1999 level of $736,000. Reseller revenues
accounted for 44% and 98% of the total IR revenues for the three
months ended April 30, 2000 and 1999 respectively. Fiscal 2000
results include the completed portion of the major direct sale to
the Department of Defense referenced earlier. CAD/CAM revenues
were $123,000 or 16% below the $146,000 revenues generated for the
same three-month period in fiscal 1999. The largest decreases in
CAD/CAM revenues occurred in software, third party products and
maintenance.
Cost of revenues as a percentage of revenues in the second quarter
of fiscal 2000 increased to 58% from 41% for the same quarter in
fiscal 1999. The increased cost of revenues as a percentage of
revenues is due to higher installation costs (particularly on the
Department of Defense project which was subcontracted to a third
party) and the inclusion of Marquette high margin sales in the
1999 results. If the Marquette revenues and cost of revenues were
removed from the 1999 results, the cost of revenues as a percent
of revenues would be 65%.
Research and development expenses at $191,000 were $28,000 higher
than the three months ended April 30, 1999. Expenditures in 2000
were related to the development of new generation tags, the infant
tag and the perimeter alarm sentinel.
Sales and marketing expenses for the second quarter of fiscal 2000
decreased to $382,000 or 1% lower than the $386,000 for the three
months ended April 30, 1999.
General and administrative expenses of $288,000 were 10% below the
$321,000 level for the three months ended April 30, 1999. The
reduced cost is attributed to lower expense for Directors'
compensation.
In the second quarter of fiscal 2000, other income, net decreased
by $55,000 from 1999 levels. Interest income was offset by
debenture interest expense.
Six Months Ended April 30, 2000 and 1999
First half revenues were $1,745,000 or 3% below the fiscal 1999
level of $1,806,000. Infrared revenues of $1,492,000 were 1%
below the same period fiscal 1999 level of $1,503,000. Resellers
accounted for 43% of total IR revenues. Revenues in 1999 included
$826,000 on the Marquette contract which expired in May of 1999.
If the revenue attributable to that one-time contract is factored
out, the actual revenue increase in IR products is 120%. CAD/CAM
revenues were $253,000, compared to the $303,000 revenues
generated for the same six-month period in fiscal 1999. The
largest decrease for CAD/CAM revenues occurred in third party
products, maintenance and software.
Cost of revenues as a percentage of revenues in the first six
months of fiscal 2000 increased to 57% from 40% for the same
period in fiscal 1999. The increased cost of revenues as a
percentage of revenues is primarily due to higher installation
costs(particularly on the Department of Defense project which was
subcontracted to a third party) and the inclusion of Marquette
high margin sales in the 1999 results. After factoring out the
Marquette revenues and cost of revenues from 1999 results, the
cost of revenues as a percent of revenues would be 66%.
Research and development expenses of $342,000 were $10,000 higher
than the first half of fiscal 1999. Expenditures in 2000 were
related to the development of new generation tags, the infant tag
and the perimeter alarm sentinel.
Sales and marketing expenses for the six months ended April 30,
2000 increased to $754,000 or 6% higher than the same period in
fiscal 1999. The increased expenses were due to higher
advertising expenditures and payments to the independent sales
agent.
General and administrative expenses of $583,000 were 8% lower
than the $634,000 level for the same period in fiscal 1999. The
reduced cost is attributed to lower expense for Directors'
compensation.
In the first half of fiscal 2000, other income, net decreased
$98,000, from 1999 levels. Interest income was offset by
debenture interest expense.
Liquidity and Capital Resources
As of April 30, 2000 cash on hand was $866,000. Increased
receivables, which account for $528,000 of the increase in cash
consumed as compared to the prior year, reflect sales to
government agencies which typically follow a longer payment
cycle. Other longer-term receivables are the result of special
terms allowed on new product reference sites. A significant
portion of the government agency receivables was received in
early June and cash balances are again above the $1,000,000 mark.
During the six months ended April 30, 2000, Versus relied on cash
proceeds generated from a private placement of Prime Rate Secured
Convertible Debentures completed in 1999. The total decrease in
cash was $1,529,000 compared to $291,000 in the same period in
1999. Lower revenues, higher cost of revenues and cash paid for
interest were contributing factors in the cash decrease. Versus
invested $195,000 in capital assets during the first quarter of
2000 compared to $25,000 in the prior year. Of the total
increase, $153,000 was for the ASIC chip and $24,000 for computer
equipment ($12,000 for software and $12,000 for hardware). During
the first half of 1999 $60,000 of notes payable was retired.
Versus believes the combination of cash balances remaining from
the 1999 private placement of debentures, cash already generated
and to be generated from accounts receivable balances and cash
expected to be generated during fiscal 2000 from revenues will be
sufficient to meet projected cash needs for operations and new
product developments over the next six months.
Accounting Pronouncement Not Yet Adopted
In March 2000, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of
APB Opinion No. 25" (FIN 44). Under FIN 44, stock options
issued to Versus' non-employee Directors will receive the same
accounting treatment permitted for employee options. Versus will
be required to adopt FIN 44 during the quarter ended July 31,
2000. See Note 5 to the accompany consolidated financial
statements for a summary of the effects of the adoption of
FIN 44.
SAFE HARBOR PROVISION
This document may contain 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. These statements fall within the meaning of forward
looking information as defined in 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 and market growth rates,
products and their rate of commercialization, services, prices
and adequacy of financing and other factors described in the
Company's most recent annual report on Form 10-KSB filed with the
Securities and Exchange Commission, which can be reviewed at
http://www.sec.gov. 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 2 Changes in Securities and Use of Proceeds
(c) On March 10, 2000, the Board of Directors approved the sale
of 11,500 shares of Versus' common stock to two employees
under the 1996 Incentive Restricted Stock Bonus Plan (the
"Plan") at a price of $.01 per share. Under the Plan, if, on
or before three years from the date the shares were issued,
the employment of the employee by Versus terminates, the
employee must resell all or a percentage of the shares
transferred to Versus for $0.01 per share. These sales were
made pursuant to the exemption afforded by Section 4(2) -
Transactions by an issuer not involving a public offering.
The certificates representing these shares were appropriately
legended to restrict transfer.
On April 14, 2000, the Board approved a motion granting each
outside director options to purchase 88,000 shares of the
Company's common stock and inside directors (i.e., those
employed by the Company) options to purchase 44,000 shares.
The options awarded vest after one year and are exercisable
over a five-year period at a price of $0.50 per share, which
was the then current fair market value. These options were
issued pursuant to the exemption afforded by Section 4(2) -
Transactions by an issuer not involving a public offering.
On April 14, 2000, the Board approved a motion granting
Samuel Davis an option to purchase 33,500 shares of the
company's common stock. The option vests after one year and
is exercisable over a five-year period at a price of $0.155
per share. These options were issued pursuant to the
exemption afforded by Section 4(2) - Transactions by an
issuer not involving a public offering.
On April 4, 2000, 35,000 shares of Versus' common stock were
issued to a former employee upon exercise of a stock option
at $0.41 per share. On April 27, 2000, 100,830 shares were
issued upon exercise of a warrant at $0.20 per share. These
sales were made pursuant to the exemption afforded by Section
4(2) - Transactions by an issuer not involving a public
offering. The certificates representing these shares were
appropriately legended to restrict transfer.
Proceeds of the above transactions will be used as working
capital for future operations.
Item 4 Submission of Matters to a Vote of Security Holders
The following directors were elected at the 2000 Annual Meeting
of Shareholders of Versus Technology, Inc. held on Friday
April 14, 2000: Samuel Davis, Julian C. Schroeder, Gary T.
Gaisser, David L. Gray and James D. Ross.
Total shares voted were 34,993,075 (91%). The tabulation of votes
was as follows:
FOR WITHHELD/AGAINST
--------------- ---------------
Samuel Davis 32,602,384 2,384,691
Julian C. Schroeder 31,469,075 3,524,000
Gary T. Gaisser 31,469,075 3,524,000
David L. Gray 30,260,387 4,732,688
James D. Ross 32,672,875 2,320,200
Item 6 Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
Exhibit 99 (a) ACU*CARV(r) 2000 Mill and Wire run in
AutoCAD(r) 2000
(b) Versus Technology Makes a Positive Showing at
ISC West
(c) Positive Sales Trend, Security Contracts and
ASIC Chip are Highlights from Annual
Shareholders' Meeting
(d) Versus Technology Reports Second Quarter
Results: Positive Revenue Trend Continues
There were no reports on Form 8-K during the six months ended
April 30, 2000
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, thereunto duly authorized.
VERSUS TECHNOLOGY, INC.
By: /s/ Robert Butler By: /s/ Gary T. Gaisser
----------------- -------------------
Robert Butler Gary T. Gaisser
Controller and Chief President and Chief
Accounting Officer Executive Officer
(Principal Accounting (Principal Executive
Officer) Officer)
Dated: June 13, 2000
Exhibit 99 (a)
Press Release
ACU*CARV(r) 2000 Mill and Wire run in AutoCAD(r) 2000
Faster, easier to use, cost effective, full-range machining
package.
Traverse City, MI-April 3, 2000-Olmsted Engineering Co. (OEC)
announced the release of its ACU*CARV(r) 2000 NC programming
system. ACU*CARV(r) 2000 Mill Level 1 and ACU*CARV(r) 2000 Wire
EDM, run directly within AutoCAD(r) 2000 or Mechanical Desktop(r)
allowing users to machine Solids, Surfaces, Plan view/Section
view or any of these views in combination providing the tool to
maximize a machinist's time and profit.
ACU*CARV(r) 2000 runs directly within the AutoCAD(r) 2000
environment, allowing the user to program from native geometry
without the risk of loss through translation. By using the
AutoCAD(r) principles and routines, ACU*CARV(r) 2000 not only
eliminates the need to translate data but also eliminates the
problems of having to integrate another system by allowing users
to make use of their existing in-house AutoCAD(r) experience.
To maximize a programmer's time, other software systems can be
imported to AutoCAD(r) through the use of DXF, DWG, IGES, STEP,
SAT, STL, and SRF translators. AutoCAD(r)'s Mechanical Desktop(r)
runs with the ACIS 4.x platform for robust solid modeling and
surface modeling, and AutoCAD(r)'s own 3D capabilities for 3D
modeling. All of these are machinable with ACU*CARV(r) 2000
directly in the AutoCAD(r) environment.
ACU*CARV(r) 2000 also offers a fully capable Wire EDM solution
for 2 axes and 4 axes machining. The wire product allows users
to select automatic or manual synchronization methods, thus
providing full control over the finished shape. It also includes
multiple taper settings, multiple glue stops, skim cutting with
alternating direction and other features allowing full control of
the machining process.
Olmsted Engineering Company is a wholly owned subsidiary of Versus
Technology, Inc. and is an acknowledged leader and innovator in
CAM programming systems. Its proprietary software products are
used extensively in the tool and die industry. OEC systems are
currently used in businesses supplying product to the automotive,
aeronautical, medical and other fine tolerance industries. For
additional information on solutions that OEC can be provide,
please call (231) 946-3174, or see us at our WEB site at
www.acucarv.com.
Exhibit 99 (b)
Press Release
VERSUS TECHNOLOGY MAKES A POSITIVE SHOWING AT ISC WEST
Dealers Show Interest in Eagle Eye(tm) Asset Tracking Product
Traverse City, Mich., April 4, 2000 - Versus Technology, Inc.
(OTC BB: VSTI) successfully launched its new Eagle Eye(tm) asset
tracking solution at the International Security Conference (ISC)
in Las Vegas. This conference was attended by more than 9,000
security industry professionals, which included veteran security
system integrators, dealers, consultants and end users
investigating new technology to enhance existing or new security
system projects. Versus provided a live demonstration of this
product in action.
"With interest levels so high for the Eagle Eye(tm) product,
Versus is experiencing a quick acceptance of this product through
security integrators and dealers. The potential of this product
in the security industry is very encouraging," said John Hunepohl,
Versus' Director of Sales. Hunepohl, along with a panel of other
security experts, spoke at the show's seminar on "Access Tracking
and Access Control RFID (radio frequency identification)
Technology and Applications." "Response to the presentation
confirmed and validated our view that the customer demands a
locating solution that embraces multiple technologies.
Eagle Eye(tm) does that now," confirmed Hunepohl. Eagle Eye(tm)
supports HID's ProxTrak(tm), Checkpoint System's Performa(tm),
Automated Identification Technologies' Link-It(tm) and other
security systems.
"While many vendors concentrate on supplying cost-effective and
reliable RFID asset tags, Versus Technology, Inc. gives us the
missing piece, an open architecture locating solution that we can
take to our customers," stated Brenton Scott, Manager Asset
Tracking of Automated Identification Technologies. "This will
allow us to meet our goals of providing Link-It as the active tag
of choice."
With Versus' finalization of its agreement with Checkpoint
Systems, Inc. (NYSE:CKP), announced last month, many system
integration dealers took advantage of the show to review the Eagle
Eye(tm) offering. "The Versus product is head and shoulders above
the competition," stated Rick Leighton, Vice President of Sales,
Advance Electronic Solutions (AES), Exton, Penn. "AES is
aggressively exploring opportunities in asset protection and the
Versus line provides the necessary application and solution:
matching existing personnel tags to newer RFID asset tags."
"Eagle Eye(tm) is the key to effective asset management," said
Hunepohl. "Our open architecture design allows the customer to add
Eagle Eye(tm) asset tracking to existing access control systems.
As a result, we bring a feasible and cost-effective asset tracking
solution to the table immediately." In addition to a seamless
integration with access control systems, Eagle Eye's(tm) open
architecture design allows the customer to use many industry
standard asset tags and readers. "Other manufacturers are
offering solutions that embrace a specific RFID tag, but we feel
the customer should have the opportunity to choose from all
vendors," said Hunepohl. "While one tag may be the best solution
for identifying laptops, a different type may be required for file
folders. With Eagle Eye(tm), customers can track both items with a
single system."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain 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. These statements fall within the meaning of forward-
looking information as defined in 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 and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99 (c)
Press Release
Positive Sales Trend, Security Contracts and ASIC Chip
are Highlights from Annual Shareholders' Meeting
Traverse City, Mich., April 20, 2000 - Versus Technology, Inc.'s
(OTC BB: VSTI) annual shareholders' meeting held in Traverse City,
Michigan on April 14, 2000, was attended by its largest audience
to date. The meeting focused on the Company's U.S. and
international sales efforts, reviewed the successful March Eagle
Eye(tm) product launch and emphasized the impact the Company's new
Application Specific Integrated Circuit (ASIC) chip will have on
the locating industry.
"First quarter revenues met budget and the second quarter is on
target," stated Gary Gaisser, President and CEO of Versus
Technology, Inc. "By re-emphasizing support for our existing
resellers and adding new resellers to our customer base, we have
reversed the downward trend in revenues experienced in the last
half of fiscal 1999. These results combined with our strong
entrance into the security market lead me to conclude that Versus
is poised to have a record year."
During a presentation of the agreements reached with major players
in the security industry such as Checkpoint, HID, Axcess,
Automatic Identification Technologies and Motorola, Gaisser
referred to the impact he expects the Eagle Eye(tm) system will have
on the asset control industry. Versus previously announced a deal
to work with HID Corporation, a leader in the access control
industry, to develop an HID/Versus active tag for the $12 billion
radio frequency identification (RFID) segment of the security
industry. "One powerful observation we experienced during the ISC
West product launch was that other companies we expected as
competitors were actually eager to become integrators with the
Versus system," said Gaisser. "Because of this response, we
expect acceptance of the Eagle Eye(tm) solution to be fast paced and
have a strong impact on the security industry."
Versus pointed to its increased spending on research and
development as demonstrative of its commitment to continual fine-
tuning and expansion of its family of products. A prime example
of this commitment is its innovative ASIC chip set, which will
reduce the number of high-cost components in Versus' products by
33 percent. "This advancement in the manufacturing process will
enable Versus to produce higher quality products at lower costs,
allowing us to penetrate markets that were initially excluded due
to higher overall system prices," stated Henry Tenarvitz, Chief
Operating Officer of Versus. "We expect lower system costs to pave
the way for the 'smart building' of the future which we expect
will incorporate locating systems as part of a facility's standard
infrastructure," added Gaisser.
In the formal portion of the meeting, shareholders re-elected the
former Board of Directors to serve another one-year term. Those
elected were Gary Gaisser, Julian Schroeder, David Gray, James
Ross and Samuel Davis. "We are happy with the endorsement implied
in the election results and thank our investors for their
continual support," stated Gaisser. "I am proud of what our
Company has accomplished, both in product development and sales
performance. I look forward to our continued success."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is a
developer of leading-edge technology used for process improvement
in the healthcare, security, government and corporate markets.
Versus' core technology makes locating systems more precise,
security systems more intelligent, data collection routines
automatic and asset management systems more efficient. Versus'
systems, which are currently installed in hospitals, corporate
facilities, government facilities and other complexes, permit the
automatic and accurate registry of essential management and
business information. By monitoring the precise location of
personnel or equipment and automatically recording events
associated with their locations, the systems offer real-time asset
and staff locating, automatic data collection, access/egress
control and two-way communication capabilities. Versus'
proprietary locating systems are sold primarily through an
expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain 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. These statements fall within the meaning of forward-
looking information as defined in 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 and market growth rates, products
and their rate of commercialization, services, prices and adequacy
of financing and other factors described in the Company's most
recent annual report on Form 10-KSB filed with the Securities and
Exchange Commission, which can be reviewed at http://www.sec.gov.
The Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
Exhibit 99 (d)
Press Release
VERSUS TECHNOLOGY REPORTS SECOND QUARTER RESULTS
Revenues top $1,000,000 as positive revenue trend continues.
Traverse City, Michigan, June 13, 2000 -- Versus Technology, Inc
(OTC BB: VSTI) announced revenues for the second quarter of
$1,006,000, up 14% from revenues of $882,000 for the same period
in 1999. The Company also reported a net loss of $495,000 or
$0.01 per share compared to $350,000 or $0.01 per share in 1999.
"Our second quarter revenue proves we are on the right track,"
said Gary Gaisser, Versus Technology President and CEO. "Our
expanded customer base took us over the $1,000,000 quarterly
revenue mark for the second time in recent history. In fiscal
1999, we experienced four quarters of revenue decreases as we
focused on a direct sales approach to the medical market. In
November 1999, we refocused our efforts on our reseller channel
and we are happy to report sales increases in the last two
quarters. The increase from the first to the second quarter
alone was 36%. With existing backlogs we expect this trend to
continue."
Versus attributed the increased loss over the same three months
in the prior year to higher interest expense, increased R & D
costs and increased cost of revenues mainly due to a third party
installation contract. "We are continuing to focus on our product
development to ensure a continual supply of new products and
improvements in component costs and performance," said Henry
Tenarvitz, Chief Operating Officer. "The reseller channel for the
security division is developing quickly, integration with two of
our partners is already in progress with additional product
developments on the schedule."
For the six months ended April 30, 2000, revenues were down
slightly (3.4%) from $1,806,000 in 1999 to $1,745,000 in 2000.
The net loss for the first six months of fiscal 2000 increased to
$1,015,000 from $581,000 for the same period in 1999. Interest
expense and increased cost of revenues accounted for the majority
of the increased loss. "Cash reserves are adequate and
development programs are still on target. The apparent increase
in cost of revenues as a percent of revenues disappears on closer
examination," said Gaisser. "Last year's results include the
Marquette contract that resulted in high margin sales. When the
impact of this anomaly is removed, the cost of revenues as a
percent of revenues in 1999 would have been 66%. Comparing
this cost level to the 57% for 2000 emphasizes the cost
improvements we have made."
Versus Technology, Inc. (http://www.versustech.com) (Versus) is
a developer of leading-edge technology used for process
improvement in the healthcare, security, government and corporate
markets. Versus' core technology makes locating systems more
precise, security systems more intelligent, data collection
routines automatic and asset management systems more efficient.
Versus' systems, which are currently installed in hospitals,
corporate facilities, government facilities and other complexes,
permit the6 automatic and accurate registry of essential
management and business information. By monitoring the precise
location of personnel or equipment and automatically recording
events associated with their locations, the systems offer real-
time asset and staff locating, automatic data collection,
access/egress control and two-way communication capabilities.
Versus' proprietary locating systems are sold primarily through
an expanding international network of resellers who market Versus'
products as enhancements to their existing product lines. In
addition to the reseller network, Versus is also represented in
Canada by an independent sales agent.
Safe Harbor Provision
This document may contain 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. These statements fall within the meaning of forward-
looking information as defined in 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 and market growth rates, products and their rate
of commercialization, services, prices and adequacy of financing
and other factors described in the Company's most recent annual
report on Form 10-KSB filed with the Securities and Exchange
Commission, which can be reviewed at http://www.sec.gov. The
Company undertakes no obligation to update, amend or clarify
forward-looking statements, whether because of new information,
future events or otherwise.
VERSUS TECHNOLOGY, INC.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended April 30, Six Months Ended April 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 1,006,000 $ 882,000 $ 1,745,000 $ 1,806,000
Operating expenses
Cost of revenues 588,000 365,000 992,000 722,000
Research and
development 191,000 163,000 342,000 332,000
Sales and marketing 382,000 386,000 754,000 708,000
General and
administrative 288,000 321,000 583,000 634,000
------------ ------------ ------------ ------------
1,449,000 1,235,000 2,671,000 2,396,000
------------ ------------ ------------ ------------
Loss From Operations ( 443,000) ( 353,000) ( 926,000) ( 590,000)
------------ ------------ ------------ ------------
Other Income (Expenses):
Interest income 17,000 3,000 47,000 9,000
Interest expense ( 64,000) - ( 130,000) -
Other (net) ( 5,000) - ( 6,000) -
------------ ------------ ------------ ------------
( 52,000) 3,000 ( 89,000) 9,000
------------ ------------ ------------ ------------
Net Loss $( 495,000) $( 350,000) $(1,015,000) $( 581,000)
============ ============ ============ ============
Basic and Diluted Net
Loss Per Share $( 0.01) $( 0.01) $( 0.03) $( 0.02)
============ ============ ============ ============
</TABLE>
Please refer to the most recent 10-QSB filed with the Securities
and Exchange Commission for additional details.
