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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB/A
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended June 30, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from____________ to____________
Commission File Number: 33-27610-A
MEDICAL TECHNOLOGY & INNOVATIONS, INC.
(Name of small business issuer in its charter)
Florida 59-2954561
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
17601
3125 Nolt Road, Lancaster, PA (Zip Code)
(Address of principal executive offices)
(717) 892-6770
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, no par value
(Title of each class)
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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 preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. YES [X]
No [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $696,185.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold or the average
bid and asked prices of such stock as of August 30, 1996 was approximately $13.3
million.
As of June 30, 1996 12,147,299 shares of Common Stock, no par value, of
the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
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<PAGE>
PART I.
Item 1. Description of Business
General
Medical Technology & Innovations, Inc., f/k/a SouthStar Productions, Inc. (the
"Company") was incorporated in the state of Florida in January 1989. The Company
operates through its wholly-owned subsidiary, Medical Technology, Inc. ("MTI").
MTI was incorporated in the state of Iowa in April 1993.
The Company acquired control of MTI in October of 1995 under the terms of a
Share Exchange Plan ("the Plan") with SouthStar Productions, Inc. ("SouthStar").
For information regarding the terms of the Plan thereto, refer to the "business
combination" note to the consolidated financial statements on Page 15 of this
Form 10-KSB/A.
The Company manufactures and distributes the MTI Photoscreener(TM), which is a
specialized Polaroid-type instant film camera designed to detect conditions that
lead to amblyopia ("lazy eye") and other eye disorders.
The MTI Photoscreener(TM)
The MTI Photoscreener(TM) is designed to take a photograph of a child's eye and
detect factors which can lead to amblyopia (lazy eye), including strabismus
(misalignment of the eye), cataracts (cloudy lenses), and asymmetric or other
abnormal refractive errors, including myopia (nearsightedness), hyperopia
(farsightedness), and astigmatism.
The MTI Photoscreener(TM) consists of a single flash placed close to the center
of the lens of the subject's eye to accentuate the "red eye" appearance of a
subject for diagnostic purposes. By placing the flash close to the lens
aperture, abnormal refractive errors of the eye are imaged as white crescents in
the red eye reflex, a process scientifically known as "photo refraction".
The MTI Photoscreener(TM) consists of approximately 40 components, plus screws
and fasteners. Major components include molded plastic parts, optic lenses,
printed circuit boards, an instant film back, a strobe flash, optic mirrors, a
battery pack, a power supply, and a battery charger.
Marketing and Distribution
The Company markets the MTI Photoscreener(TM) domestically and internationally
through a combination of direct sales representatives and independent
distributors. The Company markets the MTI Photoscreener(TM) to pediatricians,
public health and education departments, preschools, day care centers, family
and general physicians, eye doctors, hospitals, volunteer organizations, managed
care and health maintenance organizations, and national eye care chains. The MTI
Photoscreener(TM) is relatively inexpensive with a list price of approximately
$3,000. Discounts to independent distributors range from 25% to 40% of the sales
generated therefrom.
Competition
The vision screening business has attracted several companies, both domestic and
foreign. Although other vision screening devices currently exist and are on the
market, the Company believes the MTI Photoscreener(TM) has competitive
advantages over all other such devices. These advantages include instant film
capability, relatively low cost, portability, ease of interpretation and use.
Although the Company believes its product has advantages over competing
products, no assurances can be made that current competitors or new entrants
into the market will not develop more competitive products. Such potential
competitors, would most likely have considerably more financial resources than
the Company.
1
<PAGE>
Patents and Trademarks
In 1993, the Company obtained rights to U.S. Patent No. 4,989,968 for a
photoscreening camera system, which is now known as the MTI Photoscreener(TM).
The above patent was initially granted to Dr. Howard Freedman and subsequently
assigned to the Company.
The Company has filed patent applications in Canada, Europe, and Japan. The
Company has filed a U.S. trademark application for the mark "MTI
Photoscreener(TM)," which was published in The Official Gazette on July 9, 1996.
Government Regulation
Certain aspects of the Company's business, principally the manufacture and sale
of the MTI Photoscreener(TM) are subject to regulation by the U.S. Food and Drug
Administration (FDA) as a medical device. The Company has received a 510(k)
clearance to market the MTI Photoscreener(TM). The Company believes that it has
completed all necessary governmental processes to market the MTI
Photoscreener(TM). However, if the FDA should determine the Company has not
complied with its regulations, the FDA has the authority to order the Company to
cease production of its products and recall products already sold.
Employees
As of June 30, 1996, the Company employed 17 full-time employees. This compares
with the employment of 11 full-time employees at June 30, 1995. None of the
Company's employees are represented by a labor union, and the Company considers
its employee relations to be good.
Item 2. Description of Properties
The Company's principal executive and administrative offices are located in
Lancaster, Pennsylvania. The Lancaster, Pennsylvania facility is owned by the
Company, and its acquisition was financed with approximately a $230,000
mortgage. The Company's principal manufacturing operations were conducted in
Cedar Falls, Iowa. In August of 1996, the Company moved its manufacturing
facility to Waterloo, Iowa. The Company believes that its properties are
well-maintained, and its manufacturing equipment is in good operating condition
and sufficient for current production.
Item 3. Legal Proceedings
As of June 30, 1996, MTI was a party to the following pending legal proceedings:
1. Black Hawk County Economic Development Committee, Inc. v. Medical
Technology, Inc., filed May 17, 1996 in the Iowa District Court in
and for Black Hawk County.
2. Iowa Department of Economic Development v. Medical Technology, Inc.
and Jeremy Feakins, filed June 17, 1996 in the Iowa District Court
in and for Polk County.
Both petitions allege MTI is in default of certain loan obligations and the
unpaid balances thereon, together with accrued interest and costs are due and
payable immediately. To avoid protracted litigation on the above matters, the
Company settled both of the above proceedings in July 1996 by repaying the
principal balance of the above loans without interest.
MTI and the Company are also parties to other pending legal proceedings in the
ordinary course of their business. The Company does not expect these legal
proceedings to have a material adverse effect on the Company's financial
condition.
2
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The following items were considered and acted upon at the Company's 1996 annual
meeting of stockholders which was held April 26, 1996:
1. The following directors were elected, along with their respective votes
received:
Director Term Votes For Votes Against
- -------- ---- --------- -------------
John Behrmann 1 yr. 7,345,864 0
Matthew Crimmins 1 yr. 7,345,864 0
Tom Penaluna 2 yrs. 7,345,864 0
William Scott 2 yrs. 7,345,864 0
Jeremy Feakins 3 yrs. 7,345,864 0
Steven Gill 3 yrs. 7,345,864 0
George Hartman 3 yrs. 7,345,864 0
2. The Share Exchange Plan between Medical Technology, Inc. (MTI) and
SouthStar Productions, Inc. (SouthStar), a $1.0 million private placement,
settlement of and restructuring of various debt obligations of MTI, filing
of all S-8 Registration Statements, employment contracts with the officers
of the corporation, which include a maximum of 2.0 million stock options
at $1.50 per share, exercisable over three (3) years, and provide for
severance allowances upon a change in control of the corporation, and
relocation of the corporate offices to Lancaster, Pennsylvania were
ratified by a vote of 7,345,864 in favor, and no votes against.
3. Simon Lever & Company was ratified as the independent certified public
accountants by a vote of 7,345,864 in favor, and no votes against.
4. The Medical Technology & Innovations 1996 stock option plan, which allows
the Board of Directors to grant up to 3.0 million options, was approved by
a vote of 7,266,859 in favor, with no votes against, and 79,005
abstentions.
5. Restated articles of incorporation providing for an increase in the amount
of authorized stock, eliminating or limiting the personal liability of
directors to the corporation for monetary damages for breach of fiduciary
duty as a director to the extent permitted by Florida law, and authorizing
the corporation to indemnify the officers, directors, employees, and
agents of the Company against any contingency or peril as may be
determined to be in the best interest of the Company and in conjunction
therewith, to procure, at the Company's expense, policies of insurance was
approved by a vote of 7,345,864 votes in favor, and no votes against.
6. A change of the Company's fiscal year from January 31 to June 30 was
approved by a vote of 7,345,864 in favor, and no votes against.
7. The Company was authorized to, at its option, with respect to the issuance
of fractional shares to (1) pay cash equal to the established fair market
value of the undivided interest or to issue script of the Company thereto,
was approved by a vote of 7,266,859 in favor, with no votes against, and
79,005 abstentions.
8. The Company was authorized to issue 100,000 shares of $100 par value
preferred stock with such designation, preferences, rights,
qualifications, limitations, or restrictions as shall be provided in a
resolution adopted by the Board of Directors was approved by a vote of
7,345,864 in favor, and no votes against.
3
<PAGE>
PART II.
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's common stock is listed on the Over the Counter Electronic Bulletin
Board under the symbol "MTEN." Prior to October 1995, the Company's common stock
was neither listed nor traded on any market. The following table sets forth the
range of the high and low bid prices for the common stock during the periods
indicated, and represents interdealer prices, which do not include retail
mark-ups and mark-downs, or any commission to the broker-dealer, and may not
necessarily represent actual transactions.
Quarter Ending High Low
December 31, 1995 3.375 1.125
March 31, 1996 3.125 1.688
June 30, 1996 4.000 2.625
As of June 30, 1996, there were approximately 640 recordholders of common stock.
Such amounts do not include common stock held in "nominee" or "street" name.
The Company has not paid cash dividends on its common stock since its inception.
At the present time, the Company's anticipated working capital requirements are
such that it intends to follow a policy of retaining any earnings in order to
finance the development of its business.
Item 6. Management's Discussion and Analysis or Plan of Operation
This analysis should be read in conjunction with the consolidated financial
statements and notes thereto. See "Items 7 and 13 financial statements, and
exhibits and reports on Form 8-K."
Results of Operations
Fiscal Year Ended June 30, 1996 as Compared to 1995.
Revenue for fiscal year 1996 decreased by 19.5% or approximately $169,000
primarily as a result of decreased product sales of the MTI Photoscreener(TM),
which decreased from 541 units in 1995 to 412 units in 1996. The decrease in
unit sales was attributable to (1) the move of the Company's headquarters from
Iowa to Pennsylvania, (2) management's efforts concurrently to raise
approximately $1.0 million in a private placement to fund its marketing and
distribution efforts, and (3) a shortage of funds to support a credible sales
and marketing effort.
Gross profits declined from 33.5% of revenues in 1995 to 23.1% of revenues in
1996. This was primarily attributable to higher overhead costs per unit due to
the decrease in unit sales as material costs remained fairly constant from year
to year.
Operating expenses increased from $983,000 to $2,055,000. The increase in
operating expenses was attributable to (1) increased marketing and advertising
efforts, (2) an increase in wages, (3) an increase in interest expense, and (4)
an increase in general and administrative expense.
After completing the $1.0 million private placement, the Company continued in
its plans on expanding its marketing efforts to increase the sales and awareness
of its primary product, the MTI Photoscreener(TM). This was accomplished
primarily through retaining a public relations firm and direct mailings.
The increase in wages between June 30, 1995 and 1996 was attributable to (1) the
grant of 140,000 shares of the Company's common stock to three executives valued
at $297,500 and (2) the expansion of MTI's sales force. The Company plans to
expand its sales force to a total of ten regional sales managers, who will be
strategically located and assigned specific territories that will cover the
continental U.S.
4
<PAGE>
Interest expense increased from approximately $64,000 to approximately $111,000.
The majority of this increase was due to interest expense attributable to
$275,000 12% subordinated convertible notes issued in May of 1995.
General and administrative expenses increased from $477,000 to $860,000. The
increase was attributable to several reasons, including increased publication
expenses, expenses of the Company's reverse merger and Regulation D offering,
increased travel expenses, and the establishment of an investor public relations
program.
In May of 1996, the Company entered into a purchase agreement to acquire the
assets of Steridyne Corporation (Steridyne), a Florida corporation, which is a
manufacturer of a variety of clinical and retail medical products, including
thermometer sheaths and probe covers, digital and glass thermometers, and gel
anti-decubitus products. Steridyne's revenues for its most recent fiscal year
ending September 30, 1995 were approximately $3.3 million (unaudited).
Steridyne, prior to the acquisition, had one sales manager. The Company intends
to utilize its ten regional sales managers to distribute Steridyne's products.
Liquidity and Capital Resources
At June 30, 1996, the Company had cash of $273,942 as compared to $65,833 at
June 30, 1995. At June 30, 1996, the ratio of current assets to current
liabilities was 0.95 to 1.0 as compared to 0.41 to 1.0 at June 30, 1995. The
increase was primarily the result of a 1.0 million private placement in December
1995 and January 1996 and the exercise of stock options by a financial public
relations consultant. These funds have been and will be used primarily for
increased marketing efforts, expansion of the Company's sales force and
repayment of certain debts.
In the fourth quarter of 1996, the Company settled a dispute with a significant
shareholder and creditor. The settlement agreement consisted of returning the
above shareholder's original investment of $250,000 in return for 1,316,750
shares of stock and repaying the funds originally loaned to the Company under
the terms of the Convertible Venture Agreement.
The Company's primary capital commitment at June 30, 1996, consists of its
purchase obligation of Steridyne. The terms of the asset purchase agreement with
Steridyne require the Company to pay the former Steridyne shareholders
approximately $3.5 million in cash and the assumption of $1.3 million of
liabilities subject to a financing contingency.
For the last few years, the Company has financed its operations primarily
through private sales of securities and revenues from the sale of its products.
Since June 1993, the Company has received net proceeds of approximately $3.0
million from private sale of equity securities. The Company may raise additional
capital through private and/or public sales of securities in the future.
5
<PAGE>
Item 7. Financial Statements
Index to Consolidated Financial Statements: Page
----
Report of independent auditors for the years ended
June 30, 1996 and 1995................................................7
Consolidated balance sheets as of June 30, 1996 and 1995....................8
Consolidated income statements for the years ended
June 30, 1996 and 1995................................................9
Consolidated statements of stockholders' equity for the years ended
June 30, 1996 and 1995...............................................10
Consolidated statements of cash flows for the years ended
June 30, 1996 and 1995...............................................11
Notes to consolidated financial statements.................................12
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Medical Technology & Innovations, Inc.
Lancaster, Pennsylvania
We have audited the accompanying consolidated balance sheets of Medical
Technology & Innovations, Inc. and subsidiary as of June 30, 1996 and 1995, and
the related consolidated statements of income, stockholders' equity, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Medical Technology & Innovations, Inc. and subsidiary as of June 30, 1996 and
1995, and consolidated results of their operations and their consolidated cash
flows for the years then ended in conformity with generally accepted accounting
principles.
As discussed in Note 16 to the consolidated financial statements,
subsequent to the issuance of the 1996 consolidated financial statements and our
report thereon dated September 11, 1996, we discovered that the consolidated
financial statements did not reflect certain transactions involving the issuance
of stock for services. The consolidated financial statements have been restated
to reflect these transactions. In our original report we expressed an
unqualified opinion on the 1996 and 1995 consolidated financial statements, and
our opinion on the revised financial statements, as expressed herein, remains
unqualified.
/s/ SIMON LEVER & COMPANY
Lancaster, Pennsylvania
September 11, 1996, except for Note 16
as to which the date is October 21, 1996
7
<PAGE>
Medical Technology & Innovations, Inc.
Consolidated Balance Sheets
June 30
<TABLE>
<CAPTION>
Assets
------
1996 1995
----------- -----------
<S> <C> <C>
Current Assets:
Cash $ 273,942 $ 65,833
Accounts Receivable, less allowances of $30,000 and
$9,500, respectively 330,439 116,029
Inventory 148,010 99,374
Prepaid Expenses 164,466 8,035
----------- -----------
Total Current Assets 916,857 289,271
Fixed Assets:
Property & Equipment 483,907 205,896
Less: Accumulated Depreciation (141,494) (81,125)
----------- -----------
Fixed Assets, net 342,413 124,771
Other Assets:
Intangible and Other Assets 7.970 4,961
----------- -----------
Other Assets, net 7,970 4,961
Total Assets $ 1,267,240 $ 419,003
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities:
Accounts Payable $ 188,979 $ 186,876
Accrued Liabilities 98,625 145,806
Current Maturities of Long-Term Debt 680,000 365,800
----------- -----------
Total Current Liabilities 967,604 698,482
Long-Term Debt, Net of Current Maturities 1,021,997 1,010,844
----------- -----------
Total Liabilities 1,989,601 1,709,326
Stockholders' Equity:
Common Stock, no par value, authorized 700,000,000
Shares, outstanding 12,147,299 and 11,205,036
Shares, respectively 4,147,140 1,435,407
Preferred Stock, authorized 100,000,000 shares
$1,000 par value, 12%, noncumulative,
Outstanding 56 and 56 shares, respectively 56,000 56,000
$100 par value, none issued
Treasury Stock, at cost (250,000)
Accumulated Deficit (4,675,501) (2,781,730)
----------- -----------
Total Stockholders' Equity (722,361) (1,290,323)
Total Liabilities and Stockholders' Equity $ 1,267,240 $ 419,003
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Medical Technology & Innovations, Inc.
Consolidated Income Statements
For the Years Ended June 30
(Restated)
1996 1995
----------- -----------
Revenues $ 696,185 $ 865,136
Cost of Goods Sold 535,148 575,177
----------- -----------
Gross Profit 161,037 289,959
Operating Expenses:
Advertising 224,029 67,263
Wages 775,762 281,839
Leases 48,318 31,921
Royalties 35,554 61,384
Interest 111,153 63,544
General and Administrative 859,992 477,087
----------- -----------
Total Operating Expenses 2,054,808 983,038
Net Loss ($1,893,771) ($ 693,079)
=========== ===========
Earnings (Loss) per common share:
Net Loss ($ .159) ($ .062)
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Medical Technology & Innovations, Inc.
Consolidated Statements of Stockholders' Equity
For the Years Ended June 30
<TABLE>
<CAPTION>
Total
Common Common Preferred Treasury Accumulated Stockholders'
Shares Stock Stock Stock Deficit Equity
----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994 10,564,256 $ 1,070,406 $ 56,000 ($2,088,651) ($ 962,245)
Issuance of common stock 640,780 365,001 365,001
Net loss (693,079) (693,079)
----------- ----------- ------------ ------------ ----------- -----------
Balance at June 30, 1995 11,205,036 1,435,407 56,000 (2,781,730) (1,290,323)
Issuance of common stock 1,306,409 1,147,076 1,147,076
Exercise of stock options 735,084 1,102,427 1,102,427
Stock issued for services 217,520 462,230 462,230
Purchase of treasury shares (1,316,750) ($ 250,000) (250,000)
Net loss (Restated) (1,893,771) (1,893,771)
----------- ----------- ------------ ------------ ----------- -----------
Balance at June 30, 1996 12,147,299 $ 4,147,140 $ 56,000 ($ 250,000) ($4,675,501) ($ 722,361)
----------- ----------- ------------ ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Medical Technology & Innovations, Inc.
Consolidated Statements of Cash Flows
For the Years Ended June 30
<TABLE>
<CAPTION>
(Restated)
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Loss ($1,893,771) ($ 693,079)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and Amortization 60,522 66,422
Increase in Accounts Receivable (214,410) (89,451)
(Increase) Decrease in Inventory (48,636) 18,553
Increase in Prepaid Expenses (156,431) (8,035)
(Decrease) Increase in Accounts Payable (47,234) 14,823
Increase in Accrued Liabilities 2,156 51,909
Stock issued for services 462,230
----------- -----------
Net cash used in operating activities (1,835,574) (638,858)
Cash flows from investing activities:
Purchase of fixed assets (278,011) (25,074)
Increase in Intangible Asset (3,162) (1,503)
----------- -----------
Net cash used in investing activities (281,173) (26,577)
Cash flows from financing activities:
Proceeds from issuance of stock, net 1,147,076 365,001
Proceeds from exercise of stock options, net 1,102,427
Acquisition of Treasury Stock (250,000)
Proceeds from issuance of notes payable 538,458 350,000
Repayment of notes payable (213,105) (11,643)
----------- -----------
Net cash from financing activities 2,324,856 703,358
----------- -----------
Net increase in cash 208,109 37,923
Cash at beginning of year 65,833 27,910
----------- -----------
Cash at end of year $ 273,942 $ 65,833
----------- -----------
Supplemental Disclosures:
Cash paid during the year for interest 58,000 61,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Medical Technology & Innovations, Inc.
Notes to Consolidated Financial Statements
1. Organization. Medical Technology & Innovations, Inc. (the Company), f/k/a
SouthStar Productions, Inc., is a Florida corporation engaged in the
design, manufacture, and distribution of medical screening devices for
medical professionals primarily involved in vision screening through its
wholly-owned subsidiary, Medical Technology, Inc. (MTI). The Company
derives substantially all of its revenues from the MTI PhotoscreenerTM,
which is a patented product. The patent on the MTI PhotoscreenerTM expires
in 2008.
2. Summary of Significant Accounting Policies.
a. Principles of Consolidation. The consolidated financial statements
include the Company and its wholly-owned subsidiary. All significant
intercompany items have been eliminated.
b. Reclassifications. Certain amounts in the prior years' consolidated
financial statements have been reclassified to conform with the
current year presentation.
c. Revenue Recognition. Revenue from product sales are recognized at
the time product is shipped.
d. Inventories. Inventories are stated at the lower of cost or market,
with cost determined under the first-in, first-out (FIFO) method.
e. Property and Equipment. Property and equipment are stated on the
basis of cost less accumulated depreciation. The Company provides
for depreciation over the estimated useful lives of property and
equipment using the straight-line method.
f. Intangible and Other Assets. Intangible and other assets are
amortized on a straight-line basis over their estimated remaining
lives.
g. Income Taxes. Deferred income taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit
carryforwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
h. Advertising. Advertising costs are expensed as incurred.
i. Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
3. Inventories. Inventories consisted of the following at June 30, 1996 and
1995:
1996 1995
-------- --------
Raw materials $ 41,364 $ 29,571
Work in process 62,929 16,156
Finished Goods 43,717 53,647
-------- --------
$148,010 $ 99,374
======== ========
12
<PAGE>
4. Fixed Assets. Fixed assets consisted of the following at June 30, 1996 and
1995:
1996 1995
-------- --------
Plant equipment $176,134 $116,135
Land 200,000 0
Computer equipment and software 54,454 48,489
Furniture, fixtures, and improvements 53,319 41,272
-------- --------
$483,907 $205,896
======== ========
5. Long-Term Debt. Long-Term Debt consisted of the following at June 30, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
12% subordinated convertible notes, due May 1998 $ 310,750 $ 277,750
8.5% note, due February 1, 1999, interest payable
monthly, secured by a mortgage 234,000 0
11.25% note, due February 1999, principal and interest
payable monthly, secured by substantially all of the assets
of the Company, except for the Company's patent, and
guaranteed by the Company's President and major stockholder 170,982 211,296
Convertible Venture agreement, royalties payable
quarterly at the rate of 5.0% of sales paid in full
in 1996 0 140,339
7.0% notes, due 1998, principal and interest payable
monthly, secured by substantially all of the assets of the
Company, except for the Company's patent, and guaranteed by
the Company's President and major stockholder 130,500 131,261
11.25% note, due March 2001, principal and interest payable
monthly, secured by substantially all of the assets of the
Company, except for the Company's patent and guaranteed by
the Company's President and major stockholder 126,862 125,000
10.0% convertible note, due March 2001, interest
payable quarterly 93,799 84,908
10.0% convertible note, due March 2002, interest
payable quarterly 86,814 78,584
Secured notes payable, due various dates, interest
payable various at 0% to 8% 74,465 76,362
Unsecured notes payable, due various dates, interest
payable various at 0% to 10% 473,825 251,144
----------- -----------
Total notes payable 1,701,997 1,376,644
Less: amounts due in one year (680,000) (365,800)
----------- -----------
$ 1,021,997 $ 1,010,844
=========== ===========
</TABLE>
The 12% subordinated convertible notes due May 1998 are convertible into
526,700 shares of the Company's common stock adjusted for certain
antidilutive events upon the earlier of (1) May 1, 1998, (2) an initial
public offering of the Company's Common Stock, or (3) the sale of all or
substantially all of the assets of the Company.
13
<PAGE>
The 10.0% convertible note, due March 2001, and the 10.0% convertible
note, due March 2002, are convertible into 158,010 shares and 131,675
shares respectively adjusted for certain antidilutive events upon the
earlier of (1) March 1, 1997 and March 1, 1998, respectively, (2) an
initial public offering of the Company's Common Stock, or (3) the sale of
all or substantially all of the assets of the Company.
The amount of long-term debt maturing in each of the next five fiscal
years is $680,000 in 1997, $385,600 in 1998, $321,300 in 1999, $27,700 in
2000, and $105,800 in 2001.
6. Lease Expense. The Company leases various equipment and office space under
operating lease agreements. Future minimum annual rentals for subsequent
fiscal years are as follows at June 30, 1996:
Fiscal Lease
Year Payments
---- --------
1997 $20,100
1998 13,900
1999 6,000
7. Earnings(Loss) Per Share. Earnings(loss) per common share is computed by
dividing net income(loss) by the weighted average number of common shares
and common share equivalents outstanding. The average number of shares
used to compute primary earnings per share was 11,887,775 and 11,161,512
for the fiscal years ended June 30, 1996 and 1995 respectively. The
difference between primary and fully diluted earnings (loss) per share was
not material in either year.
8. Income Taxes. The Company did not incur any income tax expense for its
fiscal years ending June 30, 1996 and 1995 respectively. As of June 30,
1996 the Company has sustained approximately $4.0 million in net operating
losses (NOLs) for tax purposes. These NOLs will expire in various amounts
if not utilized between 2004 and 2011 and are subject to limitations
should the ownership of the Company significantly change. The deferred tax
asset resulting from the above NOL carryforwards has not been recorded in
the accompanying financial statements since management believes a
valuation allowance is necessary to reduce the deferred tax asset.
Realization of deferred tax assets is dependent upon sufficient future
taxable income during the period that deductible temporary differences and
carryforwards are expected to be available to reduce taxable income.
9. Royalty Agreement. The Company is the owner of a patent on a
photoscreening device from which it derives substantially all of its
revenues. The terms of the royalty agreement require the Company to pay a
royalty to the inventor of six percent (6.0%) of net photoscreener sales.
The amount of royalties incurred by the Company were $35,600 and $42,100
for its fiscal years ending June 30, 1996 and 1995 respectively under this
agreement.
10. Stock Option Plans. In October of 1995 officers of the Company were
granted options to acquire up to 2.0 million shares of common stock at an
exercise price of $1.50 per share. The options are exercisable over a
three year period commencing with the quarter ending June 30, 1996 and are
reduced 40,000 shares per calendar quarter per participant in the event of
termination of employment.
In December of 1995 the Company granted options to a financial and
investor relations consultant to acquire 1.5 million shares of the
Company's common stock at an exercise price of $1.50 per share. The
options are exercisable over a one year period.
In April of 1996 the Company's shareholders approved the 1996 Stock Option
Plan, which allows the board of directors to grant up to 3.0 million
options. No options have been granted under the 1996 Stock Option Plan.
The following is a summary of stock option transactions:
14
<PAGE>
1996
----------
Outstanding, beginning of year 0
Options granted 3,500,000
Options exercised (735,084)
Options cancelled (9,936)
----------
Outstanding, end of year 2,754,980
Exercisable, end of year 914,980
11. Related Party Transactions. The Company and its wholly-owned subsidiary
have had transactions with various entities, certain of whose principals
are also officers or directors of the Company or MTI.
MTI received accounting services from a firm in which one of its partners
was one of MTI's directors. Fees incurred by MTI for such services
totalled approximately $23,400 for the year ended June 30, 1995. Amounts
due for such services, which are included in the balance sheets, at June
30, 1996 and 1995 were $11,600 and $45,800, respectively.
MTI received legal services from a firm in which one of its partners was
one of MTI's directors. Fees incurred by MTI for such services totalled
approximately $11,000 for the year ended June 30, 1995. Amounts due for
such services, which are included in the balance sheets, at June 30, 1996
and 1995 were $1,500 and $16,600, respectively.
During its fiscal year ending June 30, 1996 the Company borrowed
approximately $108,000 from its President and major stockholder, which
amount is included in the balance sheet at June 30, 1996.
12. Business Combination. On October 2, 1995 the Company acquired all the
outstanding shares of MTI by exchanging 10,263,733 shares of the Company's
common stock for all of the outstanding stock of MTI. After the
acquisition, MTI shareholders owned 88% of the fully diluted common stock
of the Company. This acquisition, commonly referred to as a reverse
merger, was accounted for using the pooling of interests method of
accounting. Therefore, the Company's consolidated financial statements and
information reported for periods prior to the merger have been restated to
include MTI for the periods presented. Prior to the merger the Company was
not actively conducting business and had no net assets on October 2, 1995.
13. Fair Value of Financial Instruments. The estimated fair values of the
Company's financial instruments as of June 30, 1996 and 1995 are as
follows:
1996 1995
----------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
Accounts Receivable $ 330,439 $ 330,439 $ 116,029 $ 116,029
Accounts Payable 139,642 139,642 186,876 186,876
Accrued Expenses 147,962 147,962 145,806 145,806
Long-term debt 1,701,997 1,701,997 1,376,644 1,376,644
The estimated fair value of long-term debt approximates the carrying
amount based upon the borrowing rates currently available to the Company
for loans with similar terms and maturities. The fair value of accounts
receivable, accounts payable, and accrued expenses approximates their
carrying amount.
14. Major Customers. For the years ended June 30, 1996 and 1995, the Company
had major customers, that accounted for more than 10% of sales as follows:
1996 1995
-------- --------
No. of Customers 3 2
Revenues $253,000 $492,000
Accounts Receivable 72,000 17,000
15
<PAGE>
15. Geographic Area Information. The Company sells its products both
domestically and internationally. All international transactions are
conducted in U.S. currency. Information concerning operations by principal
geographic area was as follows:
<TABLE>
<CAPTION>
United Asia/
States Pacific Europe Consolidated
------ ------- ------ ------------
<S> <C> <C> <C> <C>
June 30, 1996
Revenues $ 525,185 $ 154,000 $ 17,000 $ 696,185
Net Earnings(Loss) (1,521,272) (335,467) (37,032) (1,893,771)
Identifiable Assets 1,185,240 69,000 13,000 1,267,240
</TABLE>
International sales did not exceed more than 10% of sales during the year
ended June 30, 1995.
16. Restated Financial Statements. Subsequent to the issuance of the Company's
financial statements, management discovered that certain transactions
involving the issuance of common stock for services had inadvertently been
excluded. The inclusion of these items in the restated financial
statements based upon their fair market value on the date of issuance had
the effect of increasing the net loss for 1996 by $377,230 ($.031 per
share).
17. Subsequent Events (Unaudited). In August of 1996 the Company acquired the
net assets of Steridyne Corporation, a Florida Corporation (hereinafter
Steridyne), for approximately $4.8 million. This acquisition will be
accounted for by the purchase method of accounting. Accordingly, the
purchase price will be allocated to assets acquired and liabilities
assumed based upon their estimated fair values. Prior to the acquisition,
Steridyne was a Subchapter S Corporation with a fiscal year ending
September 30. Steridyne's net revenues for its fiscal year ending
September 30, 1995 and income before officer/shareholder salaries were
approximately $3.3 million and $400,000 respectively.
In July of 1996 the Company raised approximately $6.2 million in a stock
offering, consisting of 8% convertible Series A Preferred Stock. The
Series A Preferred Stock is convertible into approximately 2.8 million
shares of common stock. The holders of Series A Preferred Stock and the
placement agent also received warrants to acquire approximately 3.1
million shares of common stock at approximately $2.73 per share.
In July of 1996 the Company entered into a three year operating lease for
the rental of a commercial building with a monthly lease payment of
$2,300.
16
<PAGE>
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
On April 26, 1996, the Company engaged Simon Lever & Company as its independent
accountant. The decision of the Company was recommended by the Company's board
of directors and approved by its shareholders. The Company's former independent
accountant, who was a sole practitioner, did not contain an adverse opinion or
disclaimer of opinion nor was it modified as to uncertainty, audit scope, or
accounting principles. Additionally, there were no disagreements between the
Company and the former independent accountant.
PART III.
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
<TABLE>
<CAPTION>
POSITION WITH DATE ELECTED TERM OF
NAME COMPANY DIRECTOR OFFICE AGE
<S> <C> <C> <C> <C>
Jeremy Feakins Director, Chief Executive
Officer, and President April 1996 3 years 43
Steven Gill Director, Executive
Vice President, and
Chief Financial Officer April 1996 3 years 36
George Hartman Senior Vice President of
Sales and Marketing April 1996 3 years 52
William Scott Director April 1996 1 year 64
Thomas Penaluna Director April 1996 2 years 47
John Behrmann Director April 1996 1 year 61
Matthew Crimmins Director April 1996 1 year 63
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Feakins was elected to the Board in April of 1996. Since 1989, he has served
as President of Medical Technology, Inc. (MTI) and in October 1995, became the
President and Chief Executive Officer of Medical Technology & Innovations, Inc.
From 1980 to 1986, he was the Managing Director of Craft Master, Limited, a
South African corporation, which was a manufacturer and exporter of point of
purchase display systems. Mr. Feakins received his degree in accounting and
computer studies from the Royal Naval College, Ipswich, Suffolk, England.
Mr. Behrmann has been a director since April 1996. Mr. Behrmann is a director of
First American Health Concepts, Inc., a public company in the optical insurance
business and owner and operator of Evergreen Industries, Inc., a company with
interests in commercial deer farming and real estate. He is also a stockholder
and chairman of the board of Preston Reynolds & Co., Inc., an investment banking
firm with special emphasis on the oil and gas industry and a stockholder and
director of Redstone Resources, Inc., a company engaged in natural gas
exploration. Mr. Behrmann was formerly a Senior Vice President, Chief Financial
Officer, and director of Dentsply International, Inc., a health care company, is
a C.P.A and holds a B.S. degree in Commerce and Finance from Bucknell
University, Lewisburg, Pennsylvania.
Mr. Crimmins has been a director since April 1996. From 1965 to 1995, he was
with Polaroid Corporation where he held a number of executive positions with
responsibility in many functional areas including, commercial, technical, and
manufacturing operations. He was a Senior Director of Polaroid at retirement.
Mr. Crimmins received a B.S. (Physics) degree from Holy Cross, a M.S.
(Electrical Engineering) degree from Northeastern, and a M.B.A. from Boston
College.
17
<PAGE>
Mr. Gill was elected to the Board in April 1996. Prior to becoming with the
Company, he was an attorney engaged in the private practice of law. He is a
member of Iowa State Bar. He is also a C.P.A., and from 1983 to 1989, he was an
accountant and worked for Price Waterhouse, Arthur Andersen, and Motorola. Mr.
Gill received his B.B.A. (Accounting), M.A. (Accounting), and J.D. degrees from
the University of Iowa. Mr. Gill serves as Executive Vice President and Chief
Financial Officer of the Company.
Mr. Hartman was elected to the Board in April 1996. Since October 1995, he has
served as Senior Vice President of Sales and Marketing. From 1987 to 1995, he
was a with the Jay Group and held a number of executive positions, including
National Sales Manager and Vice President of Sales and Marketing. Mr. Hartman
received his undergraduate degree from Juniata College.
Mr. Penaluna has been a director since April 1996 and is currently President and
Chief Executive Officer of Credit Bureau Enterprises. He is also President and
Chief Executive Officer of Paragon Solutions, Inc., a medical billing service
company, and a director of Valichek, Inc. Mr. Penaluna received his
undergraduate and graduate degrees from Mankato State University.
Mr. Scott was elected to the Board in April 1996. He is a Professor of
Ophthalmology at the Iowa College of Medicine. Mr. Scott is a graduate of the
University of Iowa.
BUSINESS EXPERIENCE OF SIGNIFICANT OFFICER
Robert Ballheim joined the Company in May 1993 as Executive Vice President of
Engineering. From 1967 to 1993, he was with Chamberlain Manufacturing
Corporation where he held a number of executive positions, including Director of
the Ammunition Development Group, Vice President and General Manager, R & D
Division, and Vice President, Engineering, Waterloo Division. Mr. Ballheim
received his B.S. degree in mathematics from the University of Northern Iowa.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of its Common
Stock, to file reports of ownership and changes of ownership with the Securities
and Exchange Commission (SEC). Officers, directors, and greater than ten-percent
stockholders are required by SEC regulation to furnish the Company with copies
of all ownership forms they file.
Based solely on its review of the copies of such form received by it, or based
upon representations that no Form 5 was required, Messrs Feakins, Ballheim,
Gill, Hartman, Penaluna, and Scott did not timely file Forms 3, 4, or 5 for the
fiscal year ending June 30, 1996 as follows:
Name No. of Late Reports No. of Late Transactions.
- ---- ------------------- -------------------------
Jeremy Feakins 3 2
Robert Ballheim 3 2
Steven Gill 2 1
George Hartman 3 2
Tom Penaluna 2 0
William Scott 1 0
Item 10. Executive Compensation
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of the
Company's Executive Officers whose compensation exceeded $100,000 for the fiscal
year ending June 30, 1996.
18
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name and Principal Fiscal Annual Compensation Long-Term Compensation All Other
Position Year Compensation
- ---------------------------------------------------------------------------------------------------------------------------------
Salary Bonus Other Annual Awards Payouts
Compensation
- ---------------------------------------------------------------------------------------------------------------------------------
Restricted Options/SARs LTIP
Stock Award(s) Payouts
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Feakins, 1996 $123,000 0 $212,500 500,000 0 0
President and Chief
Executive Officer (1)
- ---------------------------------------------------------------------------------------------------------------------------------
R. Ballheim, 1996 87,000 0 42,500 500,000 0 0
Executive Vice
President of
Engineering
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
1. Mr. Feakins is furnished with an automobile for business and personal use.
The compensation specified in the preceding table does not include the
value of non-business use as the amount is not material.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Name # of Shares Common Stock % of Total Options Granted to Exercise of Base Price ($/share) Expiration Date
Underlying Options Employees in Fiscal Year
Granted (1)
<S> <C> <C> <C> <C>
J. Feakins 500,000 25% $1.50 (2)
R. Ballheim 500,000 25% $1.50 (2)
S. Gill 500,000 25% $1.50 (2)
G. Hartman 500,000 25% $1.50 (2)
</TABLE>
- ----------
1. Options become exercisable at the rate of 40,000 per calendar quarter,
commencing June 30, 1996 for 11 quarters with 60,000 in the 12th quarter.
Options not yet exercisable in the event of cessation of employment are
forfeited by the individual participant unless there is a change of
control of the Company. In which event, all options granted are
immediately exercisable. The number of options granted to Mr. Hartman are
dependent upon achieving certain sales targets and may be reduced, but not
below 20,000 per calendar quarter.
2. The expiration dates for the options granted are two (2) years from the
date the options become exercisable.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED JUNE 30, 1996
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name # of Shares Acquired Value Realized # of Shares of Common Exercisable/Un- Value of Unexercised
on Exercise Stock Underlying exercisable in-the-money Options
Unexercised Options @ Exercisable/Un-
Fiscal Year End exercisable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. Feakins 0 0 500,000 40,000/460,000 60,000/690,000
- ---------------------------------------------------------------------------------------------------------------------------------
R. Ballheim 0 0 500,000 40,000/460,000 60,000/690,000
- ---------------------------------------------------------------------------------------------------------------------------------
S. Gill 0 0 500,000 40,000/460,000 60,000/690,000
- ---------------------------------------------------------------------------------------------------------------------------------
G. Hartman 0 0 490,064 30,064/460,000 45,096/690,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
1996 STOCK OPTION PLAN
In April of 1996, the Company's Shareholders approved the 1996 Stock Option
Plan, which allows the Board of Directors to grant up to 3.0 million options. No
options have been granted under the 1996 Stock Option Plan.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information concerning all persons known to the
Company to be the beneficial owners of more than 5% of the Company's Common
Stock, (ii) the ownership interest of each director and nominee, and (iii) by
all directors and executive officers as a group calculated as of June 30, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME POSITION OF BENEFICIAL OWNERSHIP(1) OWNERSHIP
- --------- ------------- -------------------------- ------
<S> <C> <C> <C>
Jeremy Feakins Director, Chief Executive 5,410,461 shs 44.54%
Officer, and President
Robert Ballheim Executive Vice President 125,837 shs 1.04%
of Engineering
John Behrmann Director 0 0.00%
Matthew Crimmins Director 0 0.00%
Steven Gill Director, Executive 40,000 shs 0.33%
Vice President and
Chief Financial Officer
George Hartman Director and Senior Vice 35,064 shs 0.29%
President of Sales and
Marketing
Thomas Penaluna Director 92,172 shs(2) 0.75%
William Scott Director 0 0.00%
All Executive
Directors and
Officers as a Group 5,703,534 46.95%
</TABLE>
- ----------
1. Includes options exercisable within 60 days from June 30, 1996.
2. Includes 92,172 shares owned by a partnership in which Mr. Penaluna is a
partner.
Item 12. Certain Relationships and Related Transactions
From November 1995 to May 1996, Jeremy Feakins, President, Chief Executive
Officer, and Director loaned the Company approximately $108,000. The above loan
was an unsecured promissory note and was non-interest bearing.
The above-described loan was repaid by the company in July 1996.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Articles of Incorporation of SouthStar Productions, Inc., n/k/a Medical
Technology & Innovations, Inc. [Incorporated by reference to Exhibit 3.1
to the Company's Registration Statement on Form S-18 (File No.
33-27610-A), filed March 17, 1989]
3.2 Amendment to the Articles of Incorporation for SouthStar Productions,
Inc., which changed its name to Medical Technology & Innovations, Inc.
[Incorporated by reference to the Company's Current Report on Form 8-K for
an event on September 21, 1995]
3.3 Restated Articles of Incorporation for Medical Technology & Innovations,
Inc.[Incorporated by reference to Exhibit 3.3 to the Company's Annual
Report on Form 10-KSB (File No. 33-27610-A), filed September
20
<PAGE>
30, 1996]
3.4 By-laws [Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-18 (File No. 33-27610-A), filed March 17,
1989]
10.1 Share Exchange Plan between SouthStar Productions, Inc. and Medical
Technology, Inc. [Incorporated by reference to the Company's Current
Report on Form 8-K for an event on August 21, 1995]
10.2 Asset purchase agreement for the purchase and sale of certain assets of
Steridyne Corporation [Incorporated by reference to the Company's Current
Report on Form 8-K for an event on July 31, 1996]
10.3 Medical Technology & Innovations, Inc. 1996 Stock Option Plan.
[Incorporated by reference to Exhibit 10.3 to the Company's Annual Report
on Form 10-KSB (File No. 33-27610-A), filed September 30, 1996]
10.4 SouthStar Productions, Inc. Stock Purchase Plan 1995a (Financial Public
Relations Consulting Agreement) [Incorporated by reference to Exhibit 4.1
to the Company's Registration Statement on Form S-8 (File No. 33-27610-A),
filed August 23, 1995]
10.5 Medical Technology & Innovations, Inc. 1996b Stock Purchase Plan
(Consulting Agreement) [Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (File No. 33-27610-A), filed
April 22, 1996]
10.6 Form of Employment Agreement, Covenant not to Compete, and Stock Option
Agreement between the Company and key employees. [Incorporated by
reference to Exhibit 10.6 to the Company's Annual Report on Form 10-KSB
(File No. 33-27610-A), filed September 30, 1996]
10.7 Purchase Agreement dated January 31, 1996 between the Company and Glenn
and Ruth Schultz. [Incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-KSB (File No. 33- 27610-A), filed
September 30, 1996]
16.1 Letter on change in certifying accountant [Incorporated by reference to
the Company's Current Report on Form 8-K for an event on April 26, 1996]
21.0 Subsidiary of the Company.
Medical Technology, Inc., an Iowa corporation
23.1 Consent of Simon Lever & Company.
24.1 Form of Power of Attorney as indicated on Page 22 of this Form 10-KSB.
27.1 Financial Data Schedules.
(b) Reports on Form 8-K.
On May 1, 1996, the Company filed a current report on Form 8-K for
an event of April 26, 1996, disclosing (1) in Item 4 thereof, a
change of the Company's certifying accountant, (2) in Item 5
disclosing the election of individuals who will serve as directors
of the Company, (3) disclosing in Item 8 a change of the Company's
fiscal year from January 31 to June 30.
27 Financial Data Schedule
21
<PAGE>
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AND
BY: BY:
/s/ JEREMY P. FEAKINS /s/ STEVEN GILL
----------------------------- -----------------------------------
Jeremy P. Feakins, President Steven Gill, Executive Vice
and Chief Executive Officer President, Chief Financial Officer,
and Secretary
Date: October 30, 1996.
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ JEREMY P. FEAKINS /s/ STEVEN GILL
- --------------------------------- -----------------------------------
Jeremy P. Feakins, President Steven Gill, Executive Vice
and Chief Executive Officer, President, Chief Financial Officer,
Chairman, and Director Secretary, and Director
/s/ GEORGE H. HARTMAN, III /s/ JOHN BEHRMANN*
- --------------------------------- -----------------------------------
George H. Hartman, III, Sr. Vice John Behrmann, Director
President of Sales and Marketing,
and Director
/s/ TOM PENALUNA*
- --------------------------------- -----------------------------------
Matthew Crimmins, Director Tom Penaluna, Director
- ---------------------------------
William Scott, Director
- ----------
* Pursuant to Power of Attorney
Date: October 30, 1996.
22
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John R. Behrmann has made, constituted and
appointed, and by these presents does make, constitute and appoint Steven Gill,
as true and lawful attorney for me and in my name, place and stead giving and
granting unto my said attorney above-named, full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as I might
or could do if personally present, with full power of substitution and
revocation, hereby ratifying and confirming all that he, my said attorney, or
his substitute shall lawfully do or cause to be done by virtue hereof as follow:
TO SIGN ON MY BEHALF, MEDICAL TECHNOLOGY AND INNOVATIONS, INC.'S,
FORM 10-KSB-A FOR THE FISCAL YEAR ENDING JUNE 30, 1996.
IN WITNESS THEREOF, I have hereunto set my hand and seal this ________ day of
October, 1996.
Sealed and delivered in the presence of:
- ----------------------------- ---------------------------
John R. Behrmann
- -----------------------------
STATE OF ________________
COUNTY OF _______________
BE IT KNOWN that on October _____, 1996 before me, a Notary Public, in
and for the State of __________, duly commissioned and sworn, personally
appeared John R. Behrmann to me personally known and known to me to be the
person described in and who executed the within Power of Attorney and who
acknowledged the within Power of Attorney, to be his Act and Deed.
IN WITNESS WHEREOF, I have hereunto set my name and official seal the
day and year last above written.
------------------------------------
NOTARY PUBLIC
My Commission Expires:
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration
Statement of Medical Technology & Innovations, Inc. on Form S-8 (No. 33-27610-A)
of our report dated September 11, 1996, except for Note 16 as to which the date
is October 21, 1996, on the consolidated financial statements of Medical
Technology & Innovations, Inc. and subsidiary appearing in the Annual Report
on Form 10-KSB/A of Medical Technology & Innovations, Inc. for the year ended
June 30, 1996.
By /s/ Simon Lever & Company
--------------------------------
Simon Lever & Company
Lancaster, Pennsylvania
October 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-1-1995
<PERIOD-END> JUN-30-1996
<CASH> 274
<SECURITIES> 0
<RECEIVABLES> 360
<ALLOWANCES> 30
<INVENTORY> 148
<CURRENT-ASSETS> 917
<PP&E> 484
<DEPRECIATION> 141
<TOTAL-ASSETS> 1,267
<CURRENT-LIABILITIES> 968
<BONDS> 1,022
0
56
<COMMON> 4,147
<OTHER-SE> (4,926)
<TOTAL-LIABILITY-AND-EQUITY> 1,267
<SALES> 696
<TOTAL-REVENUES> 696
<CGS> 535
<TOTAL-COSTS> 535
<OTHER-EXPENSES> 1,944
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111
<INCOME-PRETAX> (1,894)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,894)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,894)
<EPS-PRIMARY> (.159)
<EPS-DILUTED> (.159)
</TABLE>
