<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box: [ ]
[ ] Preliminary proxy statement [ ] Confidential for
[X] Definitive proxy statement Only (as permitted by
Use of the Commission
Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN DENTAL TECHNOLOGIES, INC.
(Name of registrant as specified in its charter)
John E. Vickers, III
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
the filing fee is calculated and state how it was determined):_______
_____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:_____________________
(5) Total fee paid:________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:_____________________________________________
(2) Form, schedule or registration statement no.:_______________________
(3) Filing party:_______________________________________________________
(4) Date filed:_________________________________________________________
<PAGE> 2
AMERICAN DENTAL TECHNOLOGIES, INC.
18860 West Ten Mile Road
Southfield, Michigan 48075
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 29, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
American Dental Technologies, Inc. (the "Company") will be held at the Company's
new headquarters located at 18860 West Ten Mile Road, Southfield, Michigan, on
Friday, the 29th day of May, 1998 at 10:00 a.m. local time, for the following
purposes:
(1) to elect three directors for a term of three years;
(2) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 10,
1998 are entitled to vote at the Annual Meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. RETURNING THE
ENCLOSED PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON OR ATTEND THE
ANNUAL MEETING.
By Order of the Board of Directors,
John E. Vickers III
April 29, 1998
<PAGE> 3
AMERICAN DENTAL TECHNOLOGIES, INC.
---------------
PROXY STATEMENT
---------------
GENERAL INFORMATION
This Proxy Statement is being sent to stockholders on or about April
29, 1998, and is furnished in connection with the solicitation of proxies by the
Board of Directors (the "Board") of American Dental Technologies, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") of the Company to be held at the Company's
new headquarters located at 18860 West Ten Mile Road, Southfield, Michigan
48075, at 10:00 a.m., local time, on Friday, May 29, 1998, and at any and all
adjournments thereof, for the purposes set forth in the accompanying notice.
A proxy may be revoked at any time before it is exercised by delivering
written notice to the Secretary of the Company, executing and delivering a later
dated proxy or voting in person at the Annual Meeting. Unless revoked, the
shares represented by the proxy will be voted in accordance with the
specifications made. IF NO SPECIFICATIONS ARE MADE, SUCH SHARES WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AS PROPOSED IN THIS PROXY STATEMENT. The Board
does not intend to present any other matters at the Annual Meeting. However,
should any other matters properly come before the Annual Meeting, it is the
intention of such proxy holders to vote the proxies in accordance with their
best judgment.
The cost of solicitation of proxies by the Board will be borne by the
Company. Such solicitation will be made by mail and may also be made by
directors, officers and employees of the Company personally or by telephone,
facsimile or other electronic means, without additional compensation. In
addition, Corporate Investor Communications, Inc., a proxy soliciting firm, has
been retained by the Company to assist in the solicitation at a cost of
approximately $5,000, plus out-of-pocket expenses. Proxy materials may also be
distributed through brokers, custodians and other like parties to the beneficial
owners of common stock of the Company ("Common Stock"), and the Company will
reimburse such parties for their reasonable expenses incurred in connection
therewith.
Only holders of record of Common Stock at the close of business on
April 10, 1998 (the "Record Date") are entitled to vote at the Annual Meeting or
any adjournments thereof. As of the Record Date, there were 7,018,136 shares of
Common Stock outstanding. Each share of Common Stock entitles the owner to one
vote. The presence at the meeting in person or by proxy of a majority of the
shares of the Company's Common Stock outstanding on the Record Date will
constitute a quorum to transact business at the Annual Meeting. The election of
directors requires a plurality of the votes cast.
1
<PAGE> 4
PRINCIPAL STOCKHOLDERS OF THE COMPANY
AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Common Stock as of February 28, 1998, except as otherwise
indicated, by each current director, each director nominee, each of the
executive officers named in the Summary Compensation Table under "Executive
Compensation," all current directors and executive officers as a group, and each
person who is known by the Company to own beneficially 5% or more of the
Company's outstanding shares of Common Stock (each, a "5% Owner").
<TABLE>
<CAPTION>
Number of Percent of
Name (1) Shares (2) Class(3)
<S> <C> <C>
Ben J. Gallant 1,419,728 16.0
William D. Myers 1,178,722(4) 13.3
William D. Maroney 813,296(5) 9.1
Charles A. Nichols 798,755 9.0
Michael F. Radner 676,382 7.6
Denics Co., Ltd. 559,607 6.3
Wayne A. Johnson II 387,853(6) 4.4
John E. Vickers III 194,116 2.2
Terry D. Myers 161,128(7) 1.8
Bertrand R. Williams, Sr. 9,471 *
J. Bernard Machen 1,326 *
All current executive officers and
directors as a group (11 persons) 5,063,445 56.9
</TABLE>
*Less than one percent.
(1) The business addresses of the 5% Owners are as follows: William D. Myers,
29877 Telegraph Road, Southfield, Michigan 48034; Ben J. Gallant and
Charles A. Nichols, 5555 Bear Lane, Corpus Christi, Texas 78405; William
D. Maroney and Michael F. Radner, 18860 West Ten Mile Road, Southfield,
Michigan 48075; and Denics Co., Ltd., Yotsuya Y's Bldg., 7-6 Honshio-cho,
Shinjuku-ku Tokyo 160 Japan.
(2) The column sets forth shares of Common Stock which are deemed to be
"beneficially owned" by the persons named in the table under Rule 13d-3
of the SEC, including shares of Common Stock that may be acquired upon
the exercise of stock options or common stock purchase warrants that are
presently exercisable or become exercisable within 60 days as follows:
Ben J. Gallant - 477,864 shares; William D. Myers and spouse - 346,139
shares; William D. Maroney and spouse - 402,778 shares; Charles A.
Nichols - 301,043 shares; Michael F. Radner - 284,781 shares; Denics Co.
Ltd. - 126,843 shares; Wayne A. Johnson, II - 131,999 shares; John E.
Vickers - 63,966 shares; Terry D. Myers - 59,999 shares; Bertrand R.
Williams, Sr. - 1,638 shares; J. Bernard Machen - 1,326 shares; and all
executive officers and directors as a group - 946,652 shares.. Each of
the persons named in the table has sole voting and investment power with
respect to all shares beneficially owned by them, except as described in
the following footnotes.
(3) For purposes of calculating the percentage of Common Stock beneficially
owned, the shares issuable to each person under stock options or common
stock purchase warrants exercisable currently or within 60 days are
considered outstanding and added to the shares of Common Stock actually
outstanding.
(4) Includes 374,071 shares of Common Stock and 230,555 common stock purchase
warrants owned jointly with and/or individually by Dr. Myers' wife, Irene
Myers.
(5) Includes 316,359 shares of Common Stock and 402,777 common stock
purchase warrants owned by Mr.Maroney's wife, Aimee Maroney.
(6) Includes 37,975 shares of Common Stock owned by three family trusts for
which he is the trustee.
(7) Includes 97,283 shares of Common Stock owned by his wife, Donna Myers.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation divides the directors into
three classes, the terms of which expire as set forth below. At each annual
meeting, the stockholders of the Company will elect to three-year terms
directors to replace those directors whose terms expire at that annual meeting.
The term of office of the directors elected at this year's Annual Meeting will
continue until the 2001 annual stockholders' meeting.
The Board recommends a vote FOR the nominees for election. THE PERSONS
NAMED IN THE ACCOMPANYING FORM OF PROXY WILL VOTE FOR THE ELECTION OF THE
NOMINEES UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. If any nominee
at the time of election is unable to serve, or otherwise is unavailable for
election, and if other nominees are designated, the persons named in such proxy
will have discretionary authority to vote or refrain from voting in accordance
with their judgment on such other nominees. If any nominees are substituted by
the Board, the persons named in the accompanying form of proxy intend to vote
for such nominees. Management is not aware of the existence of any circumstance
which would render the nominees named hereunder unavailable for election. All of
the nominees are currently directors of the Company.
The Board presently consists of seven directors, two of whom are
standing for election at the Annual Meeting. Information with respect to the
nominees for election and for the other directors continuing in office is set
forth below.
<TABLE>
<CAPTION>
NOMINEES FOR DIRECTOR - WITH TERMS EXPIRING IN 2001
Name, Principal, Occupation, Business Experience Year First
During the Last Five Years and Other Current Directorships Age Became Director
<S> <C> <C>
WAYNE A. JOHNSON, II........................................................................49 1996
Mr. Johnson served as a director of Texas Airsonics, Inc. ("Texas Air") from 1984
until its acquisition by the Company in July 1996. In January 1997, Mr. Johnson
became the president and a director of 4.0 Studio, Inc., a company he founded to
establish a personalized conditioning and fitness studio in Dallas, Texas. From
August 1994 to December 1995, Mr. Johnson served as a director and as vice president
and general counsel of Racer Components, Inc. and Automotive Digital Systems, Inc.,
manufacturers and marketers of automotive specialty equipment and he continues to act
as legal counsel to such companies. From October 1992 until August 1994, Mr. Johnson
was operational manager and marketing director of King Sports, Inc., a broad based
sports marketing company focusing primarily on the auto racing industry. In April
1992, Mr. Johnson formed and until September 1992, served as president and a director
of Attorney's Cooperative Advertising, Inc., a television direct response marketing
company. Mr. Johnson served as vice president-marketing of The Beneke Company, Inc.,
a public insurance adjusting firm from January 1991 until March 1992.
JOHN E. VICKERS III........................................................................51 1996
Mr. Vickers was elected Senior Vice President - Operations in November 1996 and became
a director in July 1996. Mr. Vickers had served as Texas Air's chief financial
officer and legal counsel since June 1993. He also had various operating
responsibilities with Texas Air. From December 1991 until September 1994, Mr.
Vickers was of counsel to the law firm of Novak, Vickers and Burt. Mr. Vickers had
been engaged in the practice of law for 25 years.
INCUMBENT DIRECTORS - WITH TERMS EXPIRING IN 2000
Name, Principal, Occupation, Business Experience Year First
During the Last Five Years and Other Current Directorships Age Became Director
WILLIAM D. MARONEY.........................................................................60 1997
Mr. Maroney is a private investor. From January 1987 to December 1996, Mr. Maroney
had been in private law practice in New York, New York. Prior thereto, Mr. Maroney
was a senior tax counsel for ITT Corporation. Mr. Maroney previously served as a
director of the Company from May 1990 to May 1993. Mr. Maroney was appointed to the
Board in March 1997 to complete the term of Anthony D. Fiorillo, who resigned.
BERTRAND R. WILLIAMS........................................................................69 1990
Mr. Williams is a principal officer and, since February 1995, has been the chief
executive officer of Global Focus Marketing and Distribution ("GFMD"). GFMD sells
specialized clinical laboratory supplies and diagnostics, research and industrial
equipment. Prior to founding GFMD, Mr. Williams had been the chief executive
</TABLE>
3
<PAGE> 6
INCUMBENT DIRECTORS - WITH TERMS EXPIRING IN 2000 (CONTINUED)
<TABLE>
<S> <C> <C>
Bertrand R. Williams (continued)
officer of Rupp & Bowman Company, a marketer of high technology medical equipment and
diagnostics for more than 30 years. Since 1981, he has also been chairman of the
board and chief executive officer of Immuno Concepts, Inc., a manufacturer of immuno-
diagnostic and virology products in Sacramento, California. In June 1994, Rupp &
Bowman Company commenced bankruptcy proceedings pursuant to Chapter 11 of the federal
Bankruptcy Code to reorganize its business. In February 1995, that action, which is
still pending in the United States Bankruptcy Court in Dallas, Texas, was converted
to a proceeding under Chapter 7 of the federal Bankruptcy Code. In January 1994, Mr.
Williams commenced bankruptcy proceedings under Chapter 7 of the federal Bankruptcy
Code against Integrated Clinical Systems, a private corporation of which Mr. Williams
had been the chairman of the board of directors since December 1991. That action
had been pending in the United States Bankruptcy Court, Indianapolis, Indiana and was
concluded in July I996. Integrated Clinical Systems was dissolved and its assets
distributed to creditors.
CHARLES A. NICHOLS.......................................................................... 73 1996
Mr. Nichols was one of the founders of Texas Air and served as a director since that
company's inception in 1982 until its acquisition by the Company in July 1996. He
also served as treasurer for Texas Air from 1989 to 1996. Mr. Nichols is a pharmacist
by profession and the owner of several businesses in the Corpus Christi, Texas area,
including Southside Pharmacy, Inc., where he has been the President since 1954.
INCUMBENT DIRECTORS - WITH TERMS EXPIRING IN 1999
Name, Principal, Occupation, Business Experience Year First
During the Last Five Years and Other Current Directorships Age Became Director
WILLIAM D. MYERS, M.D...................................................................... 56 1990
Dr. Myers is one of the founders of the Company and a co-inventor of the Company's
first dental laser. He has been Chairman of the Board of the Company since January
1990. Dr. Myers has been a practicing ophthalmologist for more than 20 years and is
the founder and director of the Michigan Eyecare Institute.
BEN J. GALLANT.............................................................................. 64 1996
Mr. Gallant was appointed President and Chief Operating Officer of the Company in
September 1996 and Chief Executive Officer in November 1996. He became a director in
July 1996. Mr. Gallant was a founder of Texas Air, served as a director and chairman
of the board since that company's inception in 1982, and was elected president and
chief executive officer in 1991. He is chiefly responsible for the design and
development of the Company's KCP and industrial product lines.
</TABLE>
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1997, there were four Board meetings held. Each director
attended 75% or more of the total number of meetings of the Board and committees
of which he was a member in 1997.
The Company's Board has a Compensation Committee and an Audit
Committee. The members of each committee serve without additional compensation.
The Company's Board does not have a nominating committee or a committee serving
a similar function.
The Compensation Committee held one meeting in 1997. The current
members of the Compensation Committee, neither of whom are employees of the
Company, are Wayne A. Johnson, II and Bertrand R. Williams, Sr. The functions of
this Committee are to establish and administer the Company's executive
compensation plans and the compensation of executive management.
The Audit Committee of the Board held one meeting during the last
fiscal year. The current members of the Audit Committee, neither of whom are
employees of the Company, are Charles A. Nichols and William D. Maroney. The
functions of the Audit Committee include reviewing the adequacy of the Company's
system of internal controls and accounting practices; reviewing the scope of the
annual audit performed by the Company's independent auditors, Ernst & Young,
prior to its commencement; and reviewing the Company's annual audited financial
statements.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY
The following table provides a summary of compensation paid or accrued by
the Company and its subsidiaries during 1997, 1996 and 1995 to or on behalf of
the Company's Chief Executive Officer and each of the other executive officers,
as of December 31, 1997 who earned in excess of $100,000 in 1997 (the "Named
Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
- - -------------------------- Long Term
Compensation Awards
Annual Compensation ---------------------- All Other
Name and -------------------------- Securities Underlyhing Compensation
Principal Position Year Salary($) Bonus($) Option/SARs (#)(i) ($) (a)
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ben J. Gallant(b) 1997 225,000 27,750 75,000 5,684
Chief Executive Officer, Chief 1996 181,250(c) -- -- 53,750
Operating Officer and President 1995 -- -- -- --
Terry D. Myers 1997 150,000 18,500 50,000 --
Vice President - Research & 1996 120,004 -- 15,000 --
Clinical 1995 129,829 -- 34,999 --
John E. Vickers III(b) 1997 145,000 18,500 50,000 500
Sr. Vice President - 1996 108,000(d) -- -- --
Operations 1995 -- -- -- --
Diane M. Miller 1997 112,500 13,875 37,500 500
Chief Financial Officer 1996 100,000 -- 25,000 --
1995 91,710 -- 35,000 --
William S. Parker 1997 108,508 13,875 37,500 500
Vice President - Marketing & 1996 87,102 -- 12,500 --
Sales 1995 81,078 -- 11,250 --
</TABLE>
- - -------------------
(a) Includes $500 401(k) contribution matching and with respect to Mr.
Gallant, $5,184 for life insurance premiums.
(b) Became an officer of the Company in 1996.
(c) Includes $87,500 received as president of Texas Air through July 31, 1996
paid by Texas Air.
(d) Includes $63,000 received as chief financial officer of Texas Air
through July 31, 1996 paid by Texas Air.
OPTION GRANTS
The following table sets forth information concerning the grant of stock
options under the Company's Long-Term Incentive Plan during 1997 to the Named
Officers.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
---------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ben J. Gallant 15,000(a) 6.0 5.4375 06/19/07
30,000(b) 12.0 5.4375 06/19/07
30,000(c) 12.0 5.4375 06/19/07
Terry D. Myers 10,000(a) 4.0 5.4375 06/19/07
20,000(b) 8.0 5.4375 06/19/07
20,000(c) 8.0 5.4375 06/19/07
John E. Vickers III 10,000(a) 4.0 5.4375 06/19/07
20,000(b) 8.0 5.4375 06/19/07
20,000(c) 8.0 5.4375 06/19/07
Diane M. Miller 7,500(a) 3.0 5.4375 06/19/07
15,000(b) 6.0 5.4375 06/19/07
15,000(c) 6.0 5.4375 06/19/07
William S. Parker 7,500(a) 3.0 5.4375 06/19/07
15,000(b) 6.0 5.4375 06/19/07
15,000(c) 6.0 5.4375 06/19/07
(footnotes on next page)
</TABLE>
5
<PAGE> 8
(a) These options granted under the Long-Term Incentive Plan became
exercisable on June 20, 1997.
(b) These options granted under the Long-Term Incentive Plan become
exercisable on June 20, 2002, unless accelerated through the Company
achieving a 40% or more increase in its common stock price (to $7.6125 or
greater) for at least 15 trading days during the period of June 20, 1997
through June 1, 1998 (the "price goal"). The vesting of the options will
accelerate as follows: If the price goal is achieved prior to June 1,
1998, the options will vest in five equal semi-annual installments
beginning on the date on which the price goal is achieved.
(c) These options granted under the Long-Term Incentive Plan become
exercisable on June 20, 2002, unless accelerated through the Company
achieving laser sales in North America of at least 20 units per month for
three consecutive months during the period of June 20, 1997 through
October 1, 1998 (the "sales goal"). The vesting of the options will
accelerate as follows: If the sales goal is achieved prior to October 1,
1998, the options will vest in five equal semi-annual installments
beginning on the date on which the sales goal is achieved.
OPTION HOLDINGS
The following table provides information with respect to the unexercised
options held as of the end of 1997 by the Named Officers. The Named Officers did
not exercise any options during 1997.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs
Name Year End (#) At Fiscal Year End ($)(a)
- - -------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ben J. Gallant 15,000 60,000 -0- -0-
Terry D. Myers 59,999 40,000 45,650 -0-
John E. Vickers III 10,000 40,000 -0- -0-
Diane M. Miller 67,500 30,000 45,650 -0-
William S. Parker 31,250 30,000 17,260 -0-
</TABLE>
- - ---------------------
(a) Value was determined by multiplying the number of shares subject to an
option by the difference between the closing price of the Common Stock on
December 31, 1997 on The Nasdaq National Market and the option exercise
price.
EMPLOYMENT AGREEMENTS
Effective August 1, 1996, the Company entered into an employment
agreement with Ben J. Gallant, the Company's President, Chief Operating Officer
and Chief Executive Officer. The employment agreement provides for an annual
base salary of $225,000, maintenance of a life insurance policy, an automobile
allowance and the right to such benefits under the Company's employee benefit
plans as are available to executive management. The employment agreement has a
term of three years, but may be terminated at any time if Mr. Gallant commits a
material criminal act, fraud, dishonesty, or malfeasance with respect to the
Company or his employment. In the event (i) his employment is terminated without
cause, (ii) his duties as the President and Chief Executive Officer are
materially changed, or (iii) the Company liquidates, dissolves, merges with, or
transfers substantially all of its assets to a company which does not assume the
Company's obligations under the employment agreement, Mr. Gallant will continue
to be entitled to his base salary and health coverage through the end of the
term. Mr. Gallant has agreed not to compete with the Company during his
employment and for one year after termination.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company are entitled
to a fee of $500 for each Board meeting attended. In addition, such directors
receive an annual option grant to purchase 312 shares of Common Stock at an
exercise price equal to the market value per share on the date of grant. Such
options become exercisable in equal annual installments over four years as long
as the optionee remains a director and expire ten years after the date of grant.
6
<PAGE> 9
CERTAIN TRANSACTIONS
TEXAS AIR
On July 31, 1996, the Company acquired 100% of the outstanding stock of
Texas Air in exchange for 2,857,443 shares of Common Stock and warrants to
purchase 1,749,228 additional shares of Common Stock at $5.6414 per share for a
period commencing August 1, 1997 and ending July 31, 1999 (the "Merger
Warrants") and Texas Air became a wholly owned subsidiary of the Company. The
assets of Texas Air acquired by the Company consisted primarily of inventory,
cash, accounts receivable, a modern 21,000 square foot manufacturing facility
and related equipment located in Corpus Christi, Texas. Texas Air had the
exclusive manufacturing rights for the KCP dental systems worldwide, except for
Japan and the Pacific Rim, through 2003. The Company was the exclusive
distributor of all KCP dental products manufactured by Texas Air and had been
Texas Air's primary customer since 1991. The Texas Air subsidiary continued
operations following the acquisition and was merged into the Company, effective
December 31, 1996. The Company's purchases of KCP units and related parts from
Texas Air were $3,650,000, for the period from January 1, 1996 through July 31,
1996. Pursuant to a September 1994 manufacturing agreement, Texas Air reimbursed
the Company $1,220,000 for shared research and development, legal and marketing
costs for the period January 1 through July 31, 1996.
Texas Air was a 5% Owner of the Company before the acquisition. Messrs.
Gallant and Nichols were significant shareholders, officers and directors and
Mr. Vickers was an officer, director and shareholder of Texas Air. Following the
acquisition, Messrs. Gallant and Nichols became 5% Owners and directors, Mr.
Gallant and Mr. Vickers became executive officers, and Mr. Vickers became a
director of the Company.
DENICS
In June 1997, the Company entered into an agreement to cancel its joint
venture agreement with Denics Co., Ltd. ("Denics"), a 5% Owner, to manufacture,
market, distribute and sell dental air abrasive and laser products in the
Pacific Rim territory (excluding Japan) and to acquire Denics' rights in the
joint venture for $1,000,000. Upon cancellation of the joint venture agreement,
Denics returned 53,547 shares of the Company's common stock. Denics also agreed
not to compete for a period of ten years in the Pacific Rim territory. On June
10, 1993, the Company had agreed with Denics, to form a joint venture to
distribute dental products in certain Asian and Pacific markets. The agreement,
as amended, also granted Denics territorial manufacturing rights for all dental
laser and air abrasive products owned by the Company, in Japan. In
consideration, Denics provided the Company a $3,000,000 non-refundable prepaid
royalty deposit for future air abrasive products manufactured in Japan.
Formation of the joint venture was delayed and a revised joint venture agreement
was signed in the fourth quarter of 1996. Denics acknowledged that the Company
had fully performed all its obligations under the original agreements and that
the Company had earned the prepaid royalty. Accordingly, as of December 31,
1996, the Company recognized $2,700,000, net of foreign taxes, of related party
royalty income.
The Company had accounts receivable from Denics of $223,150 and $782,469
at December 31, 1997 and 1996, respectively. In February 1998, the Company
agreed to convert $500,000 of outstanding accounts receivable from Denics to a
note receivable with interest payable at 10.5% due in September 1998. The
Company realized $2,060,505 and $5,099,313 during the years ended December 31,
1997 and 1996, respectively, from the sale of KCP units, lasers and related
parts to Denics.
Denics was a seven percent stockholder of Texas Air prior to its
acquisition by the Company on July 31, 1996 and received 207,203 shares of
Common Stock and a Merger Warrant for 126,843 shares in exchange for the Texas
Air stock it owned.
STOCK AND OTHER TRANSACTIONS
On April 15, 1996, the Company acquired an ophthalmic excimer laser from
Dr. William Myers a principal shareholder and the Chairman of the Board of
Directors. The laser was placed in a surgical center to perform photo-refractive
keratotomy (PRK). The purchase price of the laser was approximately $525,800,
which was to be paid in two installments of restricted Common Stock together
with a warrant to purchase an equal number of shares of Common Stock at market
value, exercisable until April 1999. The first $262,900 installment of 38,945
shares, based upon the $6.75 average closing sale price of Common Stock for the
first five trading days of April 1996, together with a warrant to acquire 38,945
shares at an exercise price of $6.75 per share was made on April 15, 1996. The
second installment was due in April 1997, however, the Company determined that
this venture would not meet its anticipated performance. The second installment
of restricted Common Stock and warrants was canceled and the laser was returned
pursuant to the agreement. The Company incurred a loss of approximately $260,000
in 1996 related to this transaction.
7
<PAGE> 10
ACCOUNTANTS' REPRESENTATIVES
The Board, in accordance with the recommendation of its Audit Committee,
has appointed Ernst & Young LLP, Detroit, Michigan, as independent auditors to
audit the financial statements of the Company for the fiscal year ending
December 31, 1998. Ernst & Young has conducted the audits for the Company since
1989.
Representatives of Ernst & Young LLP, the Company's independent auditors,
are expected to be present at the Annual Meeting and will have the opportunity
to make a statement if they desire to do so. Such representatives are also
expected to be able to respond to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4, 5 and amendments thereto
furnished to the Company, except as indicated below, the Company's officers,
directors, ten percent owners and other reporting persons timely filed all
required reports for 1997 pursuant to Section 16(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). During 1997, Dr. Terry Myers, Vice
President - Research & Clinical, filed two late Form 4's to report two separate
sales of Common Stock by his wife.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the next annual
meeting of stockholders must be received by the Company no later than December
23, 1998 in order to be considered for inclusion in the Company's proxy
materials for such meeting.
By Order of the Board of Directors,
John E. Vickers III, Secretary
Southfield, Michigan
April 22, 1998
8
<PAGE> 11
PROXY
<TABLE>
<CAPTION>
<S> <C>
UNLESS AUTHORITY IS WITHHELD, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE
[X] PLEASE MARK CHOICE AS IN THIS EXAMPLE NOMINEES NAMED BELOW.
1) Election as directors of:
Wayne A. Johnson, II [ ] [ ]
For Withheld
[ ] [ ]
John E. Vickers, III For Withheld
-----------------------
Date: Mark box at right if comments or address
change has been noted on the reverse side [ ]
Please be sure to sign and date this proxy card. of this card.
- - -------------------------------------------------------------------------
Note: Please sign exactly as name(s)
appear(s) on stock records. When signing
as attorney, administrator, trustee,
guardian, administrator or corporate
officer, please so indicate.
- - ------------------------------------------------------------------------
Stockholder sign above Co-owner sign above
</TABLE>
- - ------------------------------------------------------------------------
AMERICAN DENTAL TECHNOLOGIES, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy.
Your vote counts, and you are strongly urged to exercise your right to vote your
shares.
Please mark the box on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Stockholders' Meeting which will
be held on May 29, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
American Dental Technologies, Inc.
<PAGE> 12
AMERICAN DENTAL TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF AMERICAN DENTAL TECHNOLOGIES, INC.
I (we) hereby constitute and appoint Ben J. Gallant and John E. Vickers, III,
and each of them, attorneys, agents and proxies with power of substitution to
vote all of the shares of common stock of American Dental Technologies, Inc.
("American Dental") that I am (we are) entitled to vote at the Annual Meeting of
Stockholders of ADT, to be held at the Company's new headquarters located at
18860 West Ten Mile Road, Southfield, Michigan, on May 29, 1998 at 10:00 a.m.,
local time, and at any adjournments thereof, upon all matters set forth on the
reverse side of this card, all of which are being proposed by American Dental.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED; IF NO
DIRECTION IS MADE WITH RESPECT TO A PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.
In their discretion, the proxies are also authorized to vote upon such other
matters as may properly come before the meeting, if any.
I (we) acknowledge receipt of the Notice of Annual Meeting of Stockholders, the
1998 Proxy Statement dated April 22, 1998 and the 1997 Annual Report to
stockholders and ratify all that the proxies or either of them or their
substitutes may lawfully do or cause to be done by virtue hereof and revoke all
former proxies.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_______________________________ _______________________________
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