UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission File No. 1-11109
LUKENS MEDICAL CORPORATION
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(Name of small business issuer in its charter)
Delaware 22-2429965
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation)
3820 Academy Parkway North NE
Albuquerque, New Mexico 87109
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including are code (505) 342-9638
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Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
- ---------------------------- -----------------------------------------
Common Stock, $.01 par value Pacific Stock Exchange
Securities registered under Section 12 (g) of the Exchange Act:
Common Stock, $.01 par value
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(Title of Class)
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 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 the 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 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. [ ]
<PAGE>
State issuer's revenues for its most recent fiscal year: $8,618,863.
State 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 price of such stock, as of March 25, 1998: $7,002,820. In
determining the market value of voting stock held by non-affiliates, share of
Common Stock of the registrant beneficially owned by directors, officers and
holders or more than 10% of the outstanding shares of Common Stock of the
registrant have been excluded. The determination of affiliate status is not
necessarily a conclusive determination for other persons.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of March 1, 1998: 3,043,359 shares of Common Stock, $.01 par
value.
2
<PAGE>
The undersigned Registrant hereby amends the following items of its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1997, as set forth
in the pages attached hereto:
Item 9 - Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Item 10 - Executive Compensation.
Item 11 - Security Ownership of Certain Beneficial Owners and Management.
Item 12 - Certain Relationships and Related Transactions.
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<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position(s) with the Company
------------------- --- -----------------------------------------------------
<S> <C> <C>
John H. Robinson 75 Director
Robert S. Huffstodt 39 President, Chief Executive Officer
and Director
Robert L. Priddy 51 Chairman of the Board of Directors
John P. Holmes 60 Director
Michael E. Sobieski 44 Chief Financial Officer and Vice President of Finance
Gary K. Porter 39 Vice President, Sales and Marketing
</TABLE>
JOHN H. ROBINSON, a director of the Company since April 17, 1995, is a
private investor. From 1993 through 1997, Mr. Robinson was an executive officer
and director of Commonwealth Associates Management Company, Inc., the sole
general partner of Commonwealth Associates, an investment banking firm in New
York. Prior to that time, Mr. Robinson was President, Chairman and Chief
Executive Officer of The Harper Group, a freight forwarding company. Mr.
Robinson is also currently a director of LBU, Inc.
ROBERT S. HUFFSTODT, has been President and Chief Executive Officer of the
Company since November 4, 1994 and a director of the Company since November
1992. He also served as Chairman of the Board from March 1, 1995 through July 6,
1995. Mr. Huffstodt joined the Company as Controller in October 1983.
ROBERT L. PRIDDY, a director of the Company since March 1, 1995, has been
Chairman of the Board since December 1997. Mr. Priddy is a private investor.
Since June 1993, Mr. Priddy has been on the Board of Directors of Airtran
Holdings, formerly known as ValuJet, Inc. Since June 1997, Mr. Priddy has been
on the Board of Directors of AccuMed International.
JOHN P. HOLMES, a director of the Company since January 1998, and is
currently President of John P. Holmes & Company, Inc., a merchant banking firm.
He is a former chairman of the Management Committee of Oppenheimer & Company.
Mr. Holmes is also currently a director of Penn Octane Corporation.
MICHAEL E. SOBIESKI, joined the Company as Chief Financial Officer and Vice
President of Finance in December 1997. Prior to that time, Mr. Sobieski was
corporate controller of Cotrell Ltd., a medical device company, from February
1997 through November 1997. During 1996, Mr. Sobieski was engaged in an
entrepreneurial venture. From 1974 through February 1996, Mr. Sobieski held
various financial support positions at Storage Technology Corporation.
4
<PAGE>
GARY K. PORTER, JR. joined the Company in 1994 and has been Vice President
of Sales and Marketing since 1995. Prior to joining the Company, Mr. Porter was
a manager in the Sales and Marketing Department of Deknatel, Inc.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Based on the Company's
review of reports filed by Directors, Executive Officers and 10% shareholders of
the Company on Forms 3, 4 and 5 pursuant to Section 16 of the Securities and
Exchange Act of 1934, all such reports were filed on a timely basis during
fiscal year 1997 except that (I) Mr. Robinson failed to timely file two reports
on Form 4 to report the acquisition of certain warrants from the Company, (ii)
Mr. Priddy failed to timely file two reports on Form 4 to report the aquisition
of certain warrants from the Company and one report on Form 4 to report the sale
of certain shares of the Company's Common Stock, (iii) Mr. Holmes failed to
timely file a report on Form 3 to report his appointent to the Board of
Directors of the Company, (iv) Mr. Huffstodt failed to timely file a report on
Form 4 to report the exercise of certain employee stock options and (v) Mr.
Sobieski failed to timely file a report on Form 3 to report his appointment as
Chief Financial Officer of the Company. All such delinquent reports have been
filed.
ITEM 10. EXECUTIVE COMPENSATION
The following summary compensation table sets forth information with
respect to the aggregate compensation paid and accrued by the Company for
services rendered in all capacities to the Company during the years ended
December 31, 1995, 1996, and 1997 for the Company's Chief Executive Officer (the
"Named Executive Officer"). No other Executive Officer of the Company received
annual compensation from the Company in excess of $100,000 for the year ended
December 31, 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Other Options Compensation(1)
- --------------------------- ---- ------ ----- ----- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Huffstodt, ........ 1997 $163,350 -0- -0- 100,000 $ 4,750
President and Chief Executive 1996 $148,500 -0- -0- 30,000 $ 4,455
Officer ..................... 1995 $135,000 -0- -0- 45,000 $ 4,050
</TABLE>
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(1) Represents Company contributions to 401(k) Plan.
EMPLOYMENT AGREEMENT. On January 10, 1995, the Company entered into a new
employment agreement with Robert S. Huffstodt, the Company's President and Chief
Executive Officer. The Employment Agreement has a term of three years and
automatically renews for successive one-year terms thereafter unless notice to
not renew is provided not less than six months prior to the end of such term.
Mr. Huffstodt is currently paid a salary of $163,350 per annum with increases to
be provided subject to annual review by the Board and based upon a cost of
living adjustment and the net income of the Company. Mr. Huffstodt was granted
options to purchase 15,000 shares of Common Stock (which vest in equal
installments over a four-year period) in connection with the Employment
Agreement and is entitled to receive a bonus of up to 35% of his base salary
based upon the Company achieving certain performance targets established jointly
by Mr. Huffstodt and the Board. Mr. Huffstodt has also agreed to certain
confidentiality provisions and not to directly or indirectly engage in a
competing business or solicit the Company's customers or employees for two years
from the termination of his employment with the Company.
5
<PAGE>
1992 STOCK OPTION PLAN. In March 1992, the Company adopted the 1992 Stock
Option Plan (the "Plan") which currently covers 850,000 shares of the Company's
Common Stock, pursuant to which officers, directors and key employees of the
Company are eligible to receive incentive and/or non-qualified stock options.
The Plan, which expires on March 10, 2002, is administered by the Compensation
Committee. Options granted under the Plan are exercisable for a period of up to
10 years from the date of grant at an exercise price which is not less than the
fair market value of the Common Stock on the date of the grant, except that the
term of an incentive stock option granted under the Plan to a stockholder owning
more than 10% of the outstanding Common Stock may not exceed five years and its
exercise price may not be less than 110% of the fair market value of the Common
Stock on the date of the grant. A total of 751,325 shares of Common Stock are
presently subject to outstanding options under the plan.
The following table sets forth information with respect to grants of stock
options during the year ended December 31, 1997 to the Named Executive Officer:
<TABLE>
<CAPTION>
OPTION GRANTS IN THE LAST FISCAL YEAR
Number of Percent of Total
Securities Options Granted to
Underlying Options Employees in Exercise or
Name Granted Fiscal Year Base Price Expiration Date
- ---- ------------------ ------------------ ----------- ---------------
<S> <C> <C> <C> <C>
Robert S. Huffstodt 50,000(1) 30.4 % $5.00 01/01/02
50,000(2) 30.4 % $6.25(3) 02/21/01
</TABLE>
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(1) Vest in equal monthly installments over a four-year period beginning
January 2, 1997.
(2) Vest in equal monthly installments over a four-year period beginning March
21, 1997.
(3) Originally issued at an exercise price of $8.25 per share and subsequently
repriced to $6.25 per share.
The following table sets forth information with respect to each exercise of
stock options during the year ended December 31, 1997 and the value of
unexercised options at that date for the Named Executive Officer.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUE TABLE
Number of
Securities
Underlying
Unexercised Value of Unexercised
Options/SARs at In-the-Money
FY-End Options/SARs at FY-
Shares Acquired Exercisable/ End Exercisable/
Name on Exercise Value Received Unexercisable Unexercisable
- ---- --------------- -------------- --------------- --------------------
<S> <C> <C> <C> <C>
Robert S. Huffstodt 22,846 $67,885 60,313/114,687 $2,735/$0
</TABLE>
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<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Set forth below is information concerning stock ownership of
all persons known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock of the Company, based on information provided
to the Company, each Director of the Company, the Named Executive Officer and
all Executive Officers and Directors of the Company as a group as of March 31,
1998:
<TABLE>
<CAPTION>
Name and Address of Nature and Amount of
Beneficial Owner Beneficial Ownership (1) Percentage of Class
---------------- ------------------------ -------------------
<S> <C> <C>
John H. Robinson 927,000(2) 26.1%
RJH Enterprises
260 Townsend Street, 2nd Floor
San Francisco, CA 94107
Robert L. Priddy 493,300(3) 15.2%
3435 Kingsboro Road #1601
Atlanta, GA 30326
Robert S. Huffstodt 85,349(4) 2.7%
Lukens Medical Corporation
3820 Academy Parkway North NE
Albuquerque, NM 87109
John P. Holmes 119,500(5) 3.8%
John P. Homes & Company, Inc.
P.O. Box 428
Shelter Island Heights, NY 11965
All officers and directors as a group 1,646,749(6) 42.7%
(6 persons)
</TABLE>
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(1) Unless otherwise indicated below, the persons in the above table have sole
voting and investment power with respect to shares of Common Stock
beneficially owned by them.
(2) Includes immediately exercisable warrants to purchase 450,000 shares of
Common Stock. Includes currently exercisable options to purchase 6,000
shares of Common Stock.
(3) Includes immediately exercisable warrants to purchase 50,000 shares of
Common Stock and currently exercisable options to purchase 106,000 shares
of Common Stock.
(4) Includes options exercisable within 60 days to purchase 77,292 shares of
Common Stock.
(5) Includes immediately exercisable options to purchase 50,000 shares of
Common Stock. The shares of Common Stock are owned by John P. Holmes &
Company, Inc., a company controlled by Mr. Holmes.
(6) See footnotes 2 through 5 hereof.
7
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 13, 1995, the Company entered into an agreement with John H.
Robinson, a director of the Company, whereby Mr. Robinson (i) loaned $400,000 to
the Company (the "April Loan"), (ii) agreed to purchase, at the Company's
request at any time prior to March 31, 1996, up to $500,000 of the Company's
Common Stock at the market price at the time of such investment, and (iii) was
issued 400,000 five-year warrants to purchase Common Stock at an exercise price
of $1.10 per share. The April Loan bears interest at the rate of 8% per annum,
and all principal and interest accrued during the term thereof is deferred and
payable on April 15, 1999. Proceeds of the April Loan were used to reduce the
Company's outstanding indebtedness under its line of credit with its lending
bank by $350,000 and the remainder was used for general corporate purposes. On
September 11, 1995, Mr. Robinson loaned the Company an additional $250,000 to
partially finance the payoff of certain capitalized leases in respect of
equipment (the "Buyout Loan"). The Buyout Loan bears interest at the rate of 8%
per annum and all principal and interest accrued during the term thereof is
deferred and payable in October, 1999. On March 5, 1996, Mr. Robinson loaned the
Company $400,000 to fund a portion of the purchase price relating to the
Company's acquisition of three product lines from Ulster Scientific, Inc. (the
"Acquisition Loan"). The Acquisition Loan bears interest at the rate of 10% per
annum and all principal and interest accrued during the term thereof is deferred
and payable on September 5, 2000. Repayment of the April Loan, the Buyout Loan
and the Acquisition Loan are subordinated to the Company's line of credit with
its lending bank. At the request of the Company's lending bank, the previous
maturity dates thereunder were extended for two additional years to the maturity
dates reflected above.
As of March 1, 1996, the Company entered into a consulting agreement with
John H. Robinson, a director of the Company. Such consulting agreement has a
term of one year and thereafter automatically renews for additional one-year
periods unless previously canceled by either party. Mr. Robinson is entitled to
receive approximately $50,000 per year pursuant to the terms of such consulting
agreement. Such consulting agreement is terminable by either party at any time
after the first year upon 60 days' prior written notice. Mr. Robinson's
consulting agreement is still in effect.
On February 28, 1997, the Company entered into an agreement with John H.
Robinson and Robert L. Priddy, each a director and substantial stockholder of
the Company, whereby Messrs. Robinson and Priddy loaned the Company an aggregate
of $1,000,000. Such loans bear interest at the rate of 10% per annum, are
repayable on or before January 1, 1999 and are subordinated to the Line of
Credit. In connection therewith, Messrs. Robinson and Priddy were each issued
warrants to purchase 15,000 shares of Common Stock at an exercise price of $6.25
per share, and warrants to purchase an additional 35,000 shares of Common Stock
at $6.25 per share.
8
<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.
LUKENS MEDICAL CORPORATION
By: /s/ Robert S. Huffstodt
------------------------------
Robert S. Huffstodt, President
Date: April 29, 1998
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.
<TABLE>
<CAPTION>
SIGNATURE AND TITLE DATE
<S> <C>
/s/ Robert S. Huffstodt April 29, 1998
- -------------------------------------------------------------------
Robert S. Huffstodt
President and Chief Executive Officer (Principal Executive Officer)
/s/ Michael Sobieski April 29, 1998
- -------------------------------------------------------------------
Michael Sobieski
Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
/s/ John H. Robinson April 29, 1998
- -------------------------------------------------------------------
John H. Robinson
Director
/s/ Robert L. Priddy April 29, 1998
- -------------------------------------------------------------------
Robert L. Priddy
Chairman of the Board of Directors
/s/ John P. Holmes April 29, 1998
- -------------------------------------------------------------------
John P. Holmes
Director
</TABLE>
9
