UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ---------- TO ------------
COMMISSION FILE NUMBER 0-17878
---------------
VISION TEN, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 33-0340338
--------------------------- ----------------------------
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
180 BROAD STREET, CARLSTADT, NEW JERSEY 07072
(Address of Principal Executive Offices)
201-935-3000
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
ON WHICH REGISTERED
- NONE-
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
<PAGE>
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer 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 disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of issuer'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. X
Issuer's revenues for its most recent fiscal year ended December 31, 1999
$97,694
Aggregate market value of the issuer's Common Stock, $.01 par value
held by non affiliates, computed on the basis of $.02 per share (the closing bid
price of such stock on December 31, 1999): $ 58,154.
The number of shares of the issuer's Common Stock, $.01 par value,
outstanding as of December 31, 1999, was 15,303,796.
2
<PAGE>
PART I
ITEM 1. BUSINESS
BUSINESS DEVELOPMENT
Vision Ten, Inc., a Delaware corporation organized in 1989 (the
"Company"), is engaged in the medical film digitizing business. The
Company currently manufactures and markets a single product,
specifically a medium priced, full-fidelity, full-featured solid state
film digitizer.
On May 19, 1994, the Company had approximately 53% of its outstanding
capital stock acquired by Cybernetics Products, Inc. ("CPI"), a
corporation engaged in the development, manufacturing and marketing of
products and systems utilized in the electronics, printed circuit
board, electronic imaging and photography markets, in exchange for
approximately 185,000 shares of CPI's common stock, of which the
Company received approximately 105,000 shares (the "CPI Acquisition").
In connection with the CPI Acquisition, the Company granted CPI an 18
month option (the "Option") exercisable at $.10 per share to acquire
such additional number of shares of the Company's Common Stock as
would then be required to provide the holder thereof with beneficial
ownership of 80% of the Company's outstanding capital stock. The
Option expired on November 18, 1996.
On March 28, 1996, ("The Partnership") through a reduction in
intercompany indebtedness between Oxberry, LLC, a New Jersey company
owned by ("The Partnership") and Dr. Thumim, and The Company, acquired
9,956,936 shares of The Company's common stock giving it approximately
81% ownership of The Company. See Item 12 "Security Ownership of
Certain Beneficial Owners and Management" and Item 13 "Certain
Relationships and Related Transactions".
On April 3, 1995, the shares of the Company's outstanding capital
stock owned by CPI were sold together with the Option referred to
above to Alfred I. Thumim as nominee for a limited partnership formed
as the Thumim Family Partnership L. P. (the "Partnership") for
$103,000 in addition to the assumption of certain liabilities (the
Stock Sale). Alfred I. Thumim is the President and Chief Executive
Officer of the Company and sole General Partner of the Partnership.
BUSINESS OF ISSUER
IMAGING TECHNOLOGY
Medical diagnostic imaging systems are based upon the ability of
energy waves to penetrate human tissue and to be detected by either
photographic film or electronic devices for presentation of an image
on a video monitor.
When a digitizer captures an X-ray film image it uses a sensor, such
as a charged-coupled device ("CCD"), to break the image being scanned
into a series of pixels (dots), which are then converted to digital
signals and sent to a computer's memory. The more pixels into which
the image is divided, the more accurate the scanned image will appear
when viewed on a monitor, and the more effective image enhancement can
be to the viewer.
The Company's third generation CCD 12-bit film digitizer is the medium
used to transfer high quality X-ray film images to a video monitor for
diagnostic and clinical review.
3
<PAGE>
The uniqueness of the Company's X-ray film digitizer resides in its
patented techniques for its diffuse film illumination light source and
an accurate density measurement of 3.5, which meets the industry
acceptable requirement for faithful reproduction of X-ray films. This
patented capability affords the Company the opportunity to favorably
compete with more expensive laser digitizers.
PRINCIPAL PRODUCTS
X-RAY FILM DIGITIZER: The Company, in the latter half of 1992,
extracted the X-ray film digitizer component from its Rita!(R) system
and began to engineer and manufacture a high resolution X-ray film
digitizer to be marketed as an original equipment manufacture ("OEM")
product for inclusion in other companies' medical and industrial X-ray
imaging computer systems.
The digitizer produced by the Company is capable of digitizing an
entire chest-sized X-ray film (14"x17") at what management believes,
based upon its experience in the marketplace and upon discussions with
customers, is one of the highest resolution digitizers commercially
available today: 3,373 by 4,000 pixels over a 14"x17" film. The
digitizer is capable of sensing each pixel's light level and
translating it into one of approximately 4,096 levels of gray for each
pixel, representing changes in film density from approximately 0.0 to
3.5+ to correspond with the dynamic range of the majority of X-ray
films in the medical market. Image quality is comparable to the laser
scanning processes. Management believes this technology also offers
many unique advantages, including speed of scanning, spot size, cost
to acquire, and cost to maintain.
PRINCIPAL MARKETS
The markets in which the Company's product is used are principally
teleradiology, telemedicine and X-ray archival and storage. In the
teleradiology and telemedicine markets the scanner's ability to
convert the image on an X-ray or mammogram to digital data is used to
transmit the data over communication channels to remote computers for
use by radiologists and medical consultants. The ability of the
scanner to convert the X-rays and mammogram to digital form is also
used to store these images on a variety of electronic media devices
for quick retrieval by computer systems. These markets are growing and
are competitive with the current emphasis of making the delivery of
medical services more efficient and cost effective using computer
technology.
GOVERNMENT REGULATION
The Company's X-ray film digitizer is subject to Federal regulations
monitored and enforced by the United States Food and Drug
Administration ("FDA"). The film digitizer is considered a Class II
device under the Medical Devices Amendment of 1976 to the Food, Drug
and Cosmetic Act, which means the digitizer is substantially
equivalent to products already on the market for FDA regulatory
purposes. Companies who manufacture Class II devices are subject to
pre-marketing notification requirements. These requirements include
annual registration, listing of devices, maintenance of good
manufacturing practices, labeling, prohibitions against misbranding
and adulteration, and notification of injuries. Management believes
these requirements will not materially affect the operations of the
Company. The Company believes it has complied with all FDA pre-market
notification requirements related to the X-ray film digitizer.
MANUFACTURING AND SOURCES OF SUPPLY
Manufacturing efforts, with respect to the Company's X-ray film
digitizer, consist mostly of assembly of standard industry items
available from multiple sources including an affiliate, Oxberry LLC,
which has a fully integrated manufacturing facility and
Company-designed components manufactured by outside service firms. The
Company has not experienced any significant delays with regard to
availability or supply of any parts or components. Management believes
there are many source firms that could manufacture the
Company-designed components. The Company has no employees and receives
assembly labor as
4
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well as engineering personnel and software consultants on an "as
needed" basis from an affiliate, Oxberry LLC, owned by the Partnership
and General Partner, Alfred I. Thumim. See "Business Development"
above.
PROPRIETARY PROTECTION
The Company presently holds two patents for significant components of
its X-ray film digitizer. There can be no assurance the Company's
products will not infringe upon any patents or rights of others.
MARKETING AND SALES
Utilizing its own commissioned marketing and sales personnel, the
Company markets its digitizers to OEMs' and system integrators. To
meet customer requirements, the Company provides such potential
customers with film digitizers for an evaluation period of
approximately 30 to 90 days. At the end of the evaluation period, the
digitizer is either returned or purchased. It has been the experience
of the Company that a majority of the digitizers are purchased,
integrated with the OEM's technology and forms the start of a
continuing relationship.
The Company generally warrants its products for one year with warranty
service, if required, performed by personnel from an affiliate,
Oxberry LLC.
Two customers accounted for approximately 92% and 69% of the Company's
sales during the years ended December 31, 1999 and 1998, respectively.
COMPETITION
In the primary markets in which the Company sells X-ray film
digitizers, the major competitors are the Truvel division of The Vidar
Corporation and Lumisys, Inc., both of which have greater financial
and managerial resources than does the Company.
Management believes the principal competitive factors for its product
are price, image quality, maintenance costs, reliability and speed of
the equipment as compared to the other competing products currently
available in the marketplace. Management believes the Company's
digitizer is currently positioned to compete favorably in each of the
aforementioned respects.
RESEARCH AND DEVELOPMENT
To further enhance its existing products and technologies, the Company
utilizes the personnel resources of an affiliate, Oxberry LLC.
Emphasis is placed upon improved design of the Company's current
product and introduction of new products.
ENVIRONMENTAL REGULATION COMPLIANCE
Compliance with federal, state and local provisions regulating the
discharge of materials into the environment, or otherwise relating to
the protection of the environment, does not have any material effect
upon the capital expenditures, earnings or competitive position of the
Company.
5
<PAGE>
EMPLOYEES
At December 31, 1999, there were no employees of the Company. The
company utilizes trained and qualified employees on an "as needed"
basis from an affiliate, Oxberry LLC.
ITEM 2. DESCRIPTION OF PROPERTY
As a result of the CPI Acquisition, the Company's manufacturing
operation was relocated to Carlstadt, NJ in April 1994, with Oxberry
LLC. The Company utilizes the manufacturing and administrative support
of Oxberry LLC on an "as needed" basis.
LOCATION PRINCIPAL FUNCTION SQUARE FOOTAGE OWNERSHIP
Carlstadt, NJ Engineering and Manufacturing 2,000 (1) Leased
(1) Leased by Oxberry LLC from Alfred I. Thumim, the President and
Chief Executive Officer of the Company, General Partner of the
Partnership and owner together with ("The Partnership") and Oxberry
LLC. The annual rental expense allocated to the Company in connection
with its use of this leased space, approximated $8,000 which The
Company believes this rental is comparable to that which could be
obtained from an unaffilated third party. This amount is part of the
advances making up the intercompany indebtedness due from The Company
to Oxberry, LLC. See Item 13 "Certain Relationships and Related
Transactions".
Prior to December 1996 the Company leased 200 square feet of a
facility located in Los Angeles, CA for it's sales and marketing
operations for monthly rent payments of $400. This lease was cancelled
in November 1996 and the Company moved it's sales and marketing
operations into the Carlstadt, NJ location.
ITEM 3. LEGAL PROCEEDINGS
------ -----------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------ ---------------------------------------------------
None
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------ ---------------------------------------------------------
The Company's Common Stock and Common Stock Purchase Warrants
("Warrants") are traded sporadically on the OTC Bulletin Board under
the symbols "VTEN" and VTENW", respectively. Trading in the Company's
Common Stock and Warrants on the NASDAQ - Small Capital Market
commenced on November 7, 1991. Effective April 23, 1993, the Company's
securities were placed on the OTC Bulletin Board because the Company
6
<PAGE>
no longer met the minimum asset and stockholders' equity maintenance
requirements. Prior to November 1991, the Common Stock was not
publicly traded. High and low bid information for the Common Stock and
the Warrants as reported by the OTC Bulletin Board for specified
quarterly periods for the last two years are set forth below (the bid
quotations represent prices quoted by dealers and do not include
retail mark-ups, mark-downs or commissions and may not represent
actual transactions):
BID
COMMON STOCK HIGH LOW
1999
1st Quarter .07 .01
2nd Quarter .07 .01
3rd Quarter .07 .01
4th Quarter .05 .01
1998
1st Quarter .02 .01
2nd Quarter .03 .01
3rd Quarter .03 .01
4th Quarter .03 .01
At December 31, 1998, there were approximately 366 record holders of
the Company's Common Stock. The Company has neither declared nor paid
any dividends on its shares of Common Stock since inception. Any
decisions as to the future payment of dividends will depend on the
earnings and financial position of the Company and such other factors
as the Board of Directors deems relevant. The Company anticipates it
will retain earnings, if any, in order to finance expansion of its
operations.
ITEM 6. SELECTED FINANCIAL DATA
The following table presents condensed financial data of the Company
for the periods indicated: (in thousands)
$ Increase % Increase
1999 1998 (DECREASE) (DECREASE)
---- ---- ---------- ---------
Total revenues: $ 98 $255 (157) (61%)
Cost of sales 204 416 (212) (51%)
Selling, general and
administrative 37 39 (2) (5%)
Research and
development 0 18 (18) (100%)
NET LOSS $(143) $(218) $75 45%
------ ------ --- ----
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Vision Ten, Inc., a Delaware corporation organized in 1989 (the
"Company"), is engaged in the medical film digitizing business. The
Company currently manufactures and markets a single product,
specifically a medium priced, full-fidelity, full-featured solid state
film digitizer.
On May 19, 1994, the Company had approximately 53% of its outstanding
capital stock acquired by Cybernetics Products, Inc. ("CPI"), a
corporation engaged in the development, manufacturing and marketing of
products and systems utilized in the electronics, printed circuit
board, electronic imaging and photography markets, in exchange for
approximately 185,000 shares of CPI's common stock, of which the
Company received approximately 105,000 shares (the "CPI Acquisition").
In connection with the CPI Acquisition, the Company granted CPI an 18
month option (the "Option") to acquire such additional number of
shares of the Company's Common Stock as would then be required to
provide the holder thereof with beneficial ownership of 80% of the
Company's outstanding capital stock. The Option, exercisable
immediately upon grant at a price of $.10 per share, was to expire on
November 18, 1995.
On April 3, 1995, the shares of the Company's outstanding capital
stock owned by CPI were sold together with the Option to Alfred I.
Thumim as nominee for a limited partnership to be formed as the Thumim
Family Partnership L. P. (the Partnership), an entity controlled by
the President and Chief Executive Officer of the Company, for $103,000
in addition to the assumption of certain liabilities.
On March 28, 1996, ("The Partnership") through a reduction in
intercompany indebtedness between Oxberry, LLC, a New Jersey company
owned by ("The Partnership") and Dr. Thumim, and The Company, acquired
9,956,936 shares of The Company's common stock giving it approximately
81% ownership of The Company. See Item 12 "Security Ownership of
Certain Beneficial Owners and Management" and Item 13 "Certain
Relationships and Related Transactions".
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED
TO YEAR ENDED DECEMBER 31, 1998
Revenues for the year ended December 31, 1999 were $97,694 compared to revenues
of $255,643 for the corresponding period in 1998. The decline in revenues is a
direct result of a reduction in the marketplace for film x-rays which affected
the demand for the Company's medical film digitizing products.
Cost of sales for the year ended December 31, 1999 were $204,278 or 209% of
revenue, compared with $416,997 or 163% of revenues for the corresponding period
in 1998. The increase in cost of sales percentage in 1999 compared to 1998 is
primarily a result of the removal of old style inventory for which there is no
demand.
Selling, general and administrative expenses for the year ended December 31,
1999 were $37,195 compared to $39,189 for the corresponding period in 1998. The
reduction of these expenses is attributable to the Company's reduction in
selling and administrative personnel and facility costs.
8
<PAGE>
Research and development expenses for the year ended December 31, 1999 were
zero, compared to $18,000 for the corresponding year in 1998. The reduction of
this expense is attributable to the Company's temporary reduction in engineering
personnel, while it examines the marketplace for new products.
For the reasons set forth above, net loss for the year ended December 31, 1999
was $143,779, compared to a net loss of $218,540 for the corresponding period in
1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash flow is the collection of
customer's accounts receivables and cash flow from operations. Such
sources of cash have been sufficient to fund the Company's cash flow
needs to date. Additionally, the Company has received the benefit of
shared services from an affiliate, Oxberry LLC. Allocations for
salaries, rent, telephone and utilities were based upon an agreed upon
percentage. Approximately $ 0 and $132,000. were allocated by the
affiliate for the years ended December 31, 1999 and 1998 respectively.
To the extent required, the Company's Chief Executive officer was
committed to fund operations to the extent that operating cash flows
are not sufficient in 2000.
ITEM 8. FINANCIAL STATEMENTS
Response to this item is submitted as a separate section to this
report.
<PAGE>
VISION TEN, INC.
----------------
INDEX TO FINANCIAL STATEMENTS
PAGE NO.
Independent Auditors' Report.................................................F-2
Balance Sheet - December 31, 1999............................................F-3
Statements of Operations for the years ended
December 31, 1999 and 1998...................................................F-4
Statement of Stockholders' Equity for the years ended
December 31, 1999 and 1998...................................................F-5
Statements of Cash Flows for the years ended
December 31, 1999 and 1998...................................................F-6
Notes to Financial Statements........................................ F-7 to F-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
Vision Ten, Inc.
We have audited the accompanying balance sheet of Vision Ten, Inc. as of
December 31, 1999 and the related statements of operations, changes in
stockholders' deficit and cash flows for the years ended December 31, 1999 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 financial statements referred to above present fairly,
in all material respects, the financial position of Vision Ten, Inc. as of
December 31, 1999 and the results of its operations and its cash flows for the
years ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.
/s/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
March 10, 2000
New York, New York
F-2
<PAGE>
DECEMBER 31, 1999
ASSETS
CURRENT ASSETS:
Cash $ 7,479
Accounts receivable, less allowance for
doubtful accounts of $153,000 21,653
Inventories 117,712
-------------
TOTAL CURRENT ASSETS 146,844
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 62,607
Advance from affiliate 199,068
-------------
TOTAL CURRENT LIABILITIES 261,675
-------------
NOTE PAYABLE TO STOCKHOLDER 650,000
-------------
STOCKHOLDERS' DEFICIT:
Common Stock, $.01 par value,
authorized 20,000,000 shares,
15,303,796 issued and outstanding 152,310
Additional paid-in-capital 7,848,269
Accumulated deficit (8,765,410)
-------------
TOTAL STOCKHOLDERS' DEFICIT (764,831)
-------------
$ 146,844
=============
See notes to financial statements.
F-3
<PAGE>
VISION TEN, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31,
---------------------------------
1999 1998
--------------- -------------
REVENUES $ 97,694 $ 255,643
COST OF GOODS SOLD 204,278 416,997
-------------- -------------
GROSS LOSS (106,584) (161,354)
-------------- -------------
OPERATING EXPENSES:
Selling and marketing expenses 33,078 29,726
General and administrative expenses 4,117 9,460
Product development - 18,000
-------------- -------------
37,195 57,186
-------------- -------------
TOTAL OPERATING EXPENSES 37,195 57,186
-------------- -------------
LOSS FROM OPERATIONS (143,779) (218,540)
-------------- -------------
NET LOSS $ (143,779) $ (218,540)
============== =============
NET LOSS PER COMMON SHARE:
Net loss per common share - basic $ (0.01) $ (0.01)
============== =============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 15,303,796 15,303,796
============== =============
See notes to financial statements.
F-4
<PAGE>
VISION TEN, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock Additional
----------------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
----------------------------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 15,303,796 $ 152,310 $ 7,848,269 $ (8,403,091) $ (402,512)
Net loss - - - (218,540) (218,540)
-------------- ------------- --------------- ---------------- ----------------
Balance at December 31, 1998 15,303,796 $ 152,310 $ 7,848,269 $ (8,621,631) $ (621,052)
Net loss (143,779) (143,779)
-------------- ------------- --------------- ---------------- ----------------
Balance at December 31, 1999 15,303,796 $ 152,310 $ 7,848,269 $ (8,765,410) $ (764,831)
============== ================ =============== ================ ================
</TABLE>
See notes to financial statements.
F-5
<PAGE>
VISION TEN, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (143,779) $ (218,540)
---------------- ----------------
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 65,383 (2,291)
Decrease in other receivable - 32,200
Decrease (increase) in inventories 149,336 42,820
Increase (decrease) in accounts payable and accrued expenses (74,578) 124,300
---------------- ----------------
TOTAL ADJUSTMENTS 140,141 197,028
---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (3,638) (21,512)
---------------- ----------------
CASH FLOW FROM FINANCING ACTIVITIES:
Advances from affiliates 2,357 18,161
---------------- ----------------
NET DECREASE IN CASH (1,281) (3,351)
CASH, beginning of year 8,760 12,110
---------------- ----------------
CASH, end of year $ 7,479 $ 8,760
================ =================
</TABLE>
See notes to financial statements.
F-6
<PAGE>
VISION TEN, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1. THE COMPANY
Vision Ten, Inc., a Delaware corporation organized in 1989 (the
"Company"), is engaged in the medical film digitizing business. The
Company currently manufactures and markets a single product,
specifically a medium priced, full-fidelity, full-featured solid state
film digitizer.
2. SIGNIFICANT ACCOUNTING POLICIES
A. INVENTORIES - Inventories, consisting of raw materials and
finished goods are stated at lower of cost (first-in, first-out
basis) or market.
B. FURNITURE AND EQUIPMENT - Property and equipment are stated at
cost. Depreciation and amortization are provided principally by
the straight-line method based on the estimated useful lives of
the assets.
C. REVENUE RECOGNITION - The Company generally records revenue from
the sale of its product at the time of shipment.
D. RESEARCH AND DEVELOPMENT - Research and development costs are
charged to operations in the period incurred.
E. CASH AND CASH EQUIVALENTS - Cash and cash equivalents includes
cash on hand and on deposit and highly liquid debt instruments
with original maturities of three month or less.
F. INCOME TAXES - As a result of changes in control of the Company
which occurred during 1994 and again in 1995, the amount of the
Company's net operating losses that may be utilized for federal
income tax purposes in the aggregate and in any one year, has
been substantially reduced. Operating losses of approximately
$6,000,000 generated through December 31, 1995 are subject to the
aforementioned limitations. Net operating losses incurred since
January 1, 1996 of $244,000 are not subject to such reductions.
For financial reporting purposes, the deferred tax asset related
to such net operating losses has been fully offset by a valuation
allowance as there can be no certainty such net operating losses
will be fully utilized.
F-7
<PAGE>
G. EARNINGS PER SHARE - Basic earnings per share has been calculated
based upon the weighted average number of common shares
outstanding. The Company had no common stock equivalents
outstanding during the period, therefore diluted earnings per
share has not been provided.
H. ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported amount
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
I. FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of
cash, accounts receivable, accounts payable and accrued expenses
approximate their fair values due to the short-term maturities of
these assets and liabilities.
J. STOCK OPTIONS - Statement of Financial Accounting Standards No.
123 ("SFAS 123"), "Accounting for Stock Based Compensation"
permits companies to choose to follow the accounting prescribed
by SFAS No. 123 for securities issued to employees, or to
continue to follow the accounting treatment prescribed by
Accounting Principles Board Opinion No. 25 ("APB No. 25") along
with the additional disclosure required under SFAS No. 123 if a
company elects to continue to follow APB No. 25. The Company has
adopted the disclosure-only option of SFAS No. 123, however
required disclosures are not applicable for the year ended
December 31, 1999 and 1998.
3. NOTE PAYABLE TO SHAREHOLDERS
On May 19, 1994 the Company had approximately 53% of its outstanding
capital stock acquired by Cybernetics Products, Inc. ("CPI"), a
corporation engaged in the development, manufacturing and marketing of
products and systems utilized in the electronics, printed circuit
board, electronic imaging and photography markets. On April 3, 1995,
the shares of the Company's outstanding capital stock owned by CPI was
sold to Alfred I. Thumin as nominee for a limited partnership formed as
the Thumin Family Partnership L.P. Subsequent to the CPI Acquisition, a
$650,000 note payable was assigned to CPI. In connection with the Stock
Sale, the $650,000 non - interest bearing note has been assigned by CPI
to Alfred I. Thumin, as nominee, for a limited partnership formed as
the Thumin Partnership L.P. The holder of the note will not pursue
collection of the note prior to January 1, 2001.
4. RELATED PARTY TRANSACTIONS
Pursuant to a management agreement in place between the Company and an
affiliate, the Company was allocated expenditures related to salaries,
rent, telephone, and utilities by the
F-8
<PAGE>
affiliate. The salary allocation was based on the estimated time
incurred by employees of the affiliate on behalf of the Company.
Allocations for rent, telephone, and utilities were based on an agreed
upon percentage. There were no allocations made to the Company for year
ended December 31, 1999 while approximately $148,000 were allocated by
the affiliate to the Company for the year ended December 31, 1998.
5. MAJOR CUSTOMERS
Two customers accounted for approximately 45% and 44% of the Company's
sales during the years ended December 31, 1999 and 1998, respectively.
F-9
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The current executive officers and directors of the Company are as
follows:
Director
NAME AGE POSITION SINCE
Alfred I. Thumim 60 Director and Chief 7/18/94
Executive Officer
Robert L. Doretti 56 Director 5/6/92
Jack Lahav 51 Director 8/1/96
Dr. Leo Dagi 51 Director 8/1/96
Officers are elected annually by the Board of Directors. The background of each
executive officer and director of the Company is as follows:
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Dr. Alfred I. Thumim was elected Chief Executive Officer and Director of
the Company in July 1994. Additionally, Dr. Thumim has served as a Vice
President of CPI since August 1989 until March of 1995. He has been President
and CEO of Oxberry LLC since March 1995 and is the General Partner of The Thumim
Family Partnership L.P. which owns approximately 81% of The Company. See Item 12
"Security Ownership of Certain Beneficial Owners and Management" and Item 13
"Certain Relationships and Related Transactions".
Robert L. Doretti has been a director of the Company since May 1992 and was
President of the Company from May 1992 to November 1994. Mr. Doretti is
President and Chief Executive Officer of the Thinking Machine Corp. which filed
a Chapter 11 Bankruptcy Petition on August 17, 1994. Prior to 1992, Mr. Doretti
was an independent consultant with Doretti & Associates.
M r. Jack Lahav has been director of the Company since August 1996. Mr.
Lahav was President of Remarkable from 1980 to 1995, a business to business
direct mail company which provided simple organization solutions to fit all
aspects of business/time management. In the last five years, Mr. Lahav played a
key role in the launching of several high-tech start-ups, highlighted by the
successful introductory of the pioneer internet telephone company - Vocaltech,
to Wall Street.
Dr. Teodoro Dagi has been a director of the Company since August 1996 and
currently holds the following academic appointments: Clinical Professor of
Surgery (Neurosurgery), the Medical College of Georgia, Augusta, GA , Associate
Clinical Professor of Surgery - The Uniformed Services University of the Health
Sciences, Bethesda, MD, and Senior Research Fellow - Kennedy Institute,
Georgetown University, Washington, D.C.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities ("insiders"), to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC").
Insiders are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on review of the copies of such
forms furnished to the Company, the Company believes that during 1995 all
Section 16(a) filing requirements applicable to its insiders were complied with.
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended
December 31, 1999, 1998, and 1997 of the Company's current and former
chief executive officer and the Company's next four most highly
compensated executive officers whose salary and bonus exceeded
$100,000.
NAME AND PRINCIPLE
POSITION
Annual Compensation
LONG-TERM COMPENSATION
YEAR SALARY AWARDS OPTIONS
Alfred I. Thumim 1999 None --
President and CEO 1998 None --
1997 None --
Robert L. Doretti 1999 None --
Director 1998 None --
1997 None --
(1) On March 31, 1994, approximately 53% of the issued and outstanding
capital stock of each of the Company was acquired by CPI (the "CPI
Acquisition"). Each of Dr. Thumim and Messrs. Drier and Levangie were
executive officers of CPI who received no additional compensation for
their service to the Company except for Dr. Thumim who was granted an
option which was immediately exercisable to purchase 200,000 shares of
the Company's Common Stock at an exercise price of $0.04 per share.
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(2) Mr. Doretti served as President of the Company until May 19, 1994. Mr.
Doretti was the principal executive officer of the Company until the
appointment of Dr. Thumim in July 1994. See Item 13 "Certain Relationships
and Related Transactions".
DIRECTORS' COMPENSATION
The Corporation has no standard arrangement pursuant to which its Directors
are compensated in their capacity as directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 12, 1996, the names and
beneficial owners of shares of Common Stock of The Company by (I) each
director individually itemized, (ii) each named executive officer
disclosed in the "Summary of Compensation Table", and (iii) all
directors and executive officers as a group without naming them. Except
as otherwise indicated, each person named has sole investment and
voting power with respect to the securities shown.
POST THUMIM ACQUISITION
NAME NUMBER OF SHARES PERCENT OF CLASS
Alfred I. Thumim 13,577,000 81%
ROBERT L. DORETTI -- --
Executive Officers and
Directors (4 persons) 13,577,000 (1) 81%
(1) Includes (I) 100,000 shares of Common Stock owned directly, and (ii)
13,277,000 shares of Common Stock owned by The Thumim Family Partnership LP,
which Dr. Thumim is sole General Partner.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE COMPANY
On March 31, 1994, CPI acquired approximately 53% of the issued and
outstanding capital stock of the Company together with an option to
acquire such number of additional shares of newly issued common stock
of the Company as would be required to provide CPI with ownership of
80% of the capital stock of the Company. Subsequent to the CPI
Acquisition, Messrs. Drier and Levangie and Dr. Thumim, each executive
officers of CPI, became directors of the Company. In connection with
the CPI Acquisition, Mr. Doretti entered into a new employment
agreement with the Company pursuant to which Mr. Doretti was granted
options to purchase 60,000 shares of CPI common stock. Additionally,
Mr. Levangie became the chief Financial Officer of the Company and Dr.
Thumim became the Chief Executive Officer. See Item 10, "DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT"
ACQUISITION BY THUMIM FAMILY PARTNERSHIP, L.P.
On April 3, 1995, pursuant to a Purchase and Sale Agreement
made as of March 25, 1995 by and between CPI and Oxberry LLC., Dr.
Thumim, the Chief Executive Officer and a director of the Company, as
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nominee for a limited partnership to be formed as the Thumim Family
Partnership, L.P. (the "Partnership"), acquired from CPI all of the
securities issued or granted by the Company which were owned by CPI.
Such securities included 3,420,064 shares of Common Stock and the
Option. The consideration paid for the Common Stock and Option was
$102,602.
On March 28, 1996 The Company issued 3,121,300 shares of its Common
Stock in the name of the Thumim Family Partnership LP through a
reduction of intercompany indebtedness due to Oxberry LLC for services
and advances provided by Oxberry LLC to the Company. The indebtedness
at March 28, 1996 was $185,000 and was converted at a rate of $.015 per
share. ("The Partnership" ) is owned by Dr. Alfred I. Thumim who is the
sole General Partner and Oxberry LLC which is owned by ("The
Partnership") and Dr. Thumim. The additional shares owned by The Thumim
Family Partnership LP gives it an approximate 81% ownership of the
Company.
12
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PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
EXHIBIT NUMBER
DESCRIPTION OF EXHIBIT
2+ Stock Purchase Agreement by and among Vision Ten, Inc., Tennity
Group and Cybernetics Products, Inc., dated March 30, 1994
2a** Purchase and Sale Agreement, dated March 25, 1995, between
Cybernetics Products, Inc. and Oxberry LLC.
3a* Certificate of Incorporation, as amended
3b* Bylaws
4a* Specimen Common Stock Certificate
4b* Specimen Common Stock Purchase Warrant
4c* Form of Warrant Agreement between the Company and American Stock
Transfer & Trust Company
4d* Form of Warrant Agreement between the Company and Thomas James
Associates, Inc. (the "Representative")
10a* Lease between the Company and The Park Beyond The Park, dated
December 1, 1988
10b* Key Employee Agreement between the Company and Richard K.
Gerlach, dated March 31, 1989
10c* 1989 Employee Stock Option Plan
10d(1)* Line of Credit Agreement with Security Pacific National Bank for
$500,000, dated March 11, 1991
10d(2)* Letter from Security Pacific National Bank indicating agreement
to convert the balance on the line of credit to a five-year term
loan, dated October 24, 1991
10e* Memorandum of Agreement between the Tennity Group and the
Company, dated April 11, 1990
10f* Corporate Refinancing Agreement between the Company, The Tennity
Group, Greg Shannon, Sue Shannon and Richard Gerlach, dated
October 26, 1990
10g(1)* Note payable to Greg Shannon in the amount of $250,000, dated
March 31, 1989
10g(2)* Note payable to Greg Shannon in the amount of $100,000, dated
August 1, 1989
10g(3)* Note payable to Sue Shannon in the amount of $100,000, dated June
8, 1989
<PAGE>
10g(4)* Note payable to Sue Shannon in the amount of $113,000, dated
August 1, 1989
10g(5)* Note payable to Richard Gerlach in the amount of $8,000, dated
October 18, 1989
10g(6)* Note payable to Richard Gerlach in the amount of $12,000, dated
November 8, 1989
10g(7)* Note payable to Richard Gerlach in the amount of $60,000, dated
November 17, 1989
10g(8)* Note payable to Richard Gerlach in the amount of $80,000, dated
December 30, 1989
10g(9)* Note payable to Richard Gerlach in the amount of $8,500, dated
December 31, 1989
10h(1)* Warrant to purchase 11,679 shares of Common Stock at $.86 per
share issued to Greg Shannon, dated March 31, 1989
10h(2)* Warrant to purchase 11,679 shares of Common Stock at $.86 per
share issued to Gary Birdsong, dated March 31, 1989
10h(3)* Four warrants to purchase an aggregate of 43,835 shares of Common
Stock at $12.84 per share issued to Greg and Sue Shannon, dated
from March 31, 1989 to August 1, 1989
10h(4)* Ten warrants to purchase an aggregate of 28,548 shares of Common
Stock at $12.84 per share issued to Richard Gerlach, dated from
September 26, 1989 to February 1, 1991
10h(5)* Warrants to purchase 1,090 shares of Common Stock at $12.84 per
share issued to Spectrum Ten, dated January 3, 1990
10h(6)* Warrant to purchase 29,197 shares of Common Stock at $2.57 per
share issued to Marilyn Tennity, as trustee, dated March 1, 1991
10h(7)* Warrant to purchase 29,197 shares of Common Stock at $2.57 per
share issued to Greg and Susan Shannon, dated March 1, 1991
10i* Pre-market notification letter from the Food and Drug
Administration, dated December 22, 1989
10j(1)* International Distributor Agreement between the Company and
International Business Group, Ltd. for sales in Spain, dated July
13, 1990
10j(2) International Distributor Agreement between the Company and
International Business Group, Ltd. for sales in Italy, dated July
13, 1990
<PAGE>
10j(3)* Dealership Agreement between the Company and Laser Lines, Ltd.,
dated August 17, 1990
10j(4)* Dealership Agreement between the Company and E. G. Baldwin &
Associates, Inc., dated September 17, 1990
10j(5)* Dealership Agreement between the Company and R-ray of Georgia,
dated November 28, 1990
10j(6)* Dealership Agreement between the Company and Kansas City X-ray
Corporation, dated September 19, 1990
10j(7)* Dealership Agreement between the Company and SBI, Inc., dated
October 30, 1990
10k(1)* License Agreement between the Company and Truvel Corporation,
dated March 1, 1989
10k(2)* Amendment to License Agreement with Truvel, dated July 17, 1987
10l* Deferred Compensation Agreements between the Company and its
employees, dated September 27 and 28, 1990
10m* Consent of Diagnostic Imaging, dated August 23, 1991
10n* Consent of the American Medical Association
10o* Consent of the American Hospital Association
10p* Consent of Robert S. First, Inc.
10q(1)* Note payable to Pacific Business Capital Corporation in the
amount of $200,000, dated September 19, 1991
10q(2)* Loan Agreement between the Company and Pacific Business Capital
Corporation, dated September 19, 1991
10r* Form of Financial Consulting Contract between the Company and the
Representative
28a* Form of Agreement between the Representative and certain of the
Company's officers, directors, and stockholders with respect to
transferability of shares
28b* Form of Escrow Agreement among the Company, American Stock
Transfer & Trust Company and certain
stockholders of the Company
27 Financial Data Schedule
b. Reports on Form 8-K
* Incorporated by reference to the exhibits of the Company's
Registration Statement on Form S-1 (File No. 33-41780).
** Incorporated by reference to the current report Form 8-K filed on
April 10, 1995, by Cybernetics Products, Inc.
+ Incorporated by reference to the 1993 annual report on Form
10-KSB filed by Cybernetics Products, Inc. on March 31, 1994.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the issuer caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, July 7, 2000.
VISION TEN, INC.
By:/S/Dr. Alfred I. Thumim
Dr. Alfred I. Thumim
Chief Executive Officer
In accordance with the Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the issuer in the capacities
indicated on July 7, 2000.
Signatures Title
By: /s/ Alfred I. Thumim Director, Chief Executive Officer
Alfred I. Thumim (Principal Executive Officer)
By: /s/ Thomas A. Carpenter Chief Financial Officer
Thomas A. Carpenter
