SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BIOSPECIFICS TECHNOLOGIES CORP.
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the 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>
BIOSPECIFICS TECHNOLOGIES CORP.
35 Wilbur Street
Lynbrook, New York 11563
May 29, 1998
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
of BioSpecifics Technologies Corp., which will be held at the Holiday Inn Crowne
Plaza, 104-04 Ditmars Boulevard, East Elmhurst, New York 11369 on July 15, 1998
at 11:30 A.M. local time.
The Notice of the Annual Meeting and Proxy Statement, which are
attached, provide information concerning the matters to be considered at the
meeting. In addition, the general operations of the Company will be discussed
and stockholders will be afforded the opportunity to ask questions.
We would appreciate your signing and returning your proxy in the
enclosed envelope as soon as possible, whether or not you plan to attend the
meeting. Please sign, date and return the enclosed proxy in the self-addressed,
postage prepaid envelope. If you do not return the signed proxy, your vote
cannot be counted. We value your opinion and encourage you to participate in
this year's annual meeting by voting your proxy.
Your vote is important. Accordingly, you are urged to mark, sign and
return the accompanying proxy card whether or not you plan to attend the
meeting.
Very truly yours,
Edwin H. Wegman
Chairman of the Board
<PAGE>
BIOSPECIFICS TECHNOLOGIES CORP.
35 Wilbur Street
Lynbrook, New York 11563
___________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 15, 1998
___________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
BioSpecifics Technologies Corp. (the "Company") will be held at the Holiday Inn
Crowne Plaza, 104-04 Ditmars Boulevard, East Elmhurst, New York 11369 on July
15, 1998 at 11:30 A.M. local time, for the following purposes:
1. To elect two directors of the Company for the ensuing three
years, and until their successors shall be duly elected and
qualified; and
2. To transact such other business as may properly come before
the meeting, or any or all adjournments thereof.
The transfer books will not be closed for the Annual Meeting. Only
stockholders of record at the close of business on May 22, 1998 will be entitled
to notice of, and to vote at, the meeting and any adjournments thereof.
YOU ARE URGED TO READ THE ATTACHED PROXY STATEMENT, WHICH CONTAINS
INFORMATION RELEVANT TO THE ACTION TO BE TAKEN AT THE MEETING. YOU ARE CORDIALLY
INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY CARD AND
MAIL IT PROMPTLY IN THE ENCLOSED ADDRESSED, POSTAGE PREPAID ENVELOPE (FOR USE IN
THE UNITED STATES). YOU MAY REVOKE YOUR PROXY IF YOU SO DESIRE AT ANY TIME
BEFORE IT IS VOTED AND MAY VOTE IN PERSON AT THE MEETING EVEN THOUGH YOU HAVE
RETURNED A PROXY CARD.
By Order of the Board of Directors,
Albert Horcher
Secretary
Lynbrook, New York
May 29, 1998
<PAGE>
BIOSPECIFICS TECHNOLOGIES CORP.
35 Wilbur Street
Lynbrook, New York 11563
___________________
PROXY STATEMENT
___________________
Annual Meeting of Stockholders
to be held July 15, 1998
This Proxy Statement and the enclosed form of proxy are furnished in
connection with solicitation of proxies by the Board of Directors of
BioSpecifics Technologies Corp. (the "Company") to be used at the Annual Meeting
of Stockholders of the Company to be held at the Holiday Inn Crowne Plaza,
104-04 Ditmars Boulevard, East Elmhurst, New York 11369 on July 15, 1998 and any
adjournments thereof ("Annual Meeting"). The matters to be considered at the
meeting are set forth in the attached Notice of Meeting.
The Company intends to send the proxy materials and the 1998 Annual
Report to Stockholders on or about June 12, 1998.
INFORMATION CONCERNING SOLICITATION AND VOTING
Outstanding Shares Entitled to Vote
On May 22, 1998, there were outstanding 4,886,096 shares of common
stock, $.001 par value per share, of the Company ("Common Stock"), the record
holders of which, on that date, are entitled to one vote for each share of such
stock.
Solicitation of Proxies
The solicitation of proxies in the enclosed form is made on behalf of
the Company and the cost of this solicitation is being paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
direct communication using the services of directors, officers and regular
employees of the Company at nominal cost. Banks, brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
expenses incurred in sending proxy material to beneficial owners of the Common
Stock.
Record Date; Revocability of Proxies
The Board of Directors has fixed the close of business on May 22, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
The proxy will be voted (or withheld from voting) in accordance with
any specifications made. Unless otherwise specified in the proxy, shares
represented by proxy will be voted "FOR" election of the nominees listed herein.
A proxy may be revoked by giving notice to the Secretary of the Company in
person, or by written notification actually received by the Secretary, at any
time prior to its being exercised or by attending the meeting and voting in
person.
<PAGE>
Quorum; Voting
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of the Common Stock authorized
to vote constitutes a quorum for the transaction of business at the Annual
Meeting. If a quorum should not be present, the Annual Meeting may be adjourned
from time to time until a quorum is obtained.
Each unrevoked proxy card properly signed and received prior to the
close of the meeting will be voted as indicated. Unless otherwise specified on
the proxy, the shares represented by a signed proxy card will be voted "FOR"
Item 1 on the proxy card and will be voted at the discretion of the persons
named as proxies on other business that may properly come before the meeting.
Concerning the election of directors, by checking the appropriate box on your
proxy card you may: (a) vote "FOR" each of the director nominees; or (b)
withhold authority to vote for any of the director nominees. Stockholders may
vote by either completing and returning a signed proxy card prior to the
meeting, voting in person at the meeting or submitting a signed proxy card at
the meeting.
If a proxy card indicates an abstention or a broker non-vote on a
particular matter, the shares represented by such proxy will be counted as
present for quorum purposes. If a quorum is present, an abstention will have the
effect of a vote against the matter and broker non-votes will have no effect.
The election of directors requires a plurality vote of those shares
voted at the meeting with respect to the election of directors. "Plurality"
means that the individuals who receive the largest number of votes cast "FOR"
are elected as directors. Consequently, any shares not voted "FOR" a particular
nominee (whether as a result of a direction to withhold authority or a broker
non-vote) will not be counted in such nominee's favor. All other matters to be
voted on will be decided by the affirmative vote of a majority of the shares
present or represented at the meeting and entitled to vote. On any such matter,
an abstention will have the same effect as a negative vote, but because shares
held by brokers will not be considered entitled to vote on matters as to which
the brokers withhold authority, a broker non-vote will have no effect on the
vote.
Ownership of Equity Securities
To the Company's knowledge, the table that follows sets forth the
beneficial ownership of shares of Common Stock as of May 22, 1998 of (i) those
persons or groups known to the Company to beneficially own more than 5% of the
Common Stock, (ii) each director and nominee of the Company, (iii) each
executive officer whose compensation exceeded $100,000 (each, a "named executive
officer") in fiscal 1997, and (iv) all directors and executive officers of the
Company as a group. The information is determined in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), based on information furnished by the persons listed or contained in
filings made by them with the Securities and Exchange Commission. Unless
indicated below, the stockholders listed possess sole voting and investment
power with respect to their shares and the business address of each stockholder
is c/o BioSpecifics Technologies Corp., 35 Wilbur St., Lynbrook, New York 11563.
2
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name of of Common Stock Percent of
Beneficial Owner Beneficially Owned Class
- ---------------- ------------------ -----
<S> <C> <C>
Edwin H. Wegman (1) 2,440,692 49.9%
Harold Stern (2) 65,456 1.3%
Thomas L. Wegman (3) 71,244 1.4%
Paul A. Gitman, MD. (4) 55,500 1.0%
Henry Morgan (5) 50,528 1.0%
Sherman C. Vogel (6) 18,528 *
Rainer Friedel (7) 42,500 *
Albert Horcher(8) 28,200 *
Directors and executive officers as a 2,772,648 55.2%
group (8 persons)
- ------------------------------------
(*) Less than 1%.
(1) Includes 1,949,327 shares of Common Stock owned by The S.J. Wegman Company, a partnership of which
Edwin H. Wegman is the sole general partner. Includes 120,000 shares beneficially owned by The
Isabel H. Wegman Rev. Trust. Includes options to purchase 7,950 shares of Common Stock which are
currently exercisable. Edwin H. Wegman is the father of Thomas L. Wegman.
(2) Mr. Stern resigned his positions of Executive Vice President and Director effective July 1, 1997. He
continues to work for the Company in a more limited capacity.
(3) Includes 7,300 shares of Common Stock held by Thomas L. Wegman's wife and child. Includes options to
purchase 36,500 shares of Common Stock which are currently exercisable. Thomas L. Wegman is a son of
Edwin H. Wegman.
(4) Includes 16,500 shares of Common Stock held by Dr. Gitman's wife and children. Includes options to
purchase 10,000 shares of Common Stock which are currently exercisable. Dr. Gitman's business
address is c/o Long Island Jewish Medical Center, 270-05 76th Ave., New Hyde Park, New York 11040.
(5) Includes 8,000 shares of Common Stock held by Garrubbo and Morgan, a partnership of which Mr. Morgan
is a general partner owning a 50% equity position. Mr. Morgan disclaims beneficial ownership of
4,000 of such shares. Includes options to purchase 10,000 shares of Common Stock which are currently
exercisable. Mr. Morgan's business address is c/o Morgan, Melhuish, Monaghan, Arvidson, Abrutyn &
Lisowski, 651 West Mt. Pleasant Avenue, Livingston, New Jersey 07039-1873.
(6) Includes 8,528 shares of Common Stock held by S&J Investments, a partnership of which Mr. Vogel is a
general partner owning a 25% equity position. Mr. Vogel disclaims beneficial ownership of 6,396 of
such shares. Includes options to purchase 10,000 shares of Common Stock which are currently
exercisable. Mr. Vogel's business address is 700 Park Avenue, New York, New York 10021.
(7) Includes options to purchase 42,500 shares of Common Stock which are currently exercisable.
(8) Includes options to purchase 16,000 shares of Common Stock which are currently exercisable.
3
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of which
currently serves for a term of three years, with only one class of directors
being elected in each year. The term of office of the second class of directors,
presently consisting of Sherman C. Vogel and Henry Morgan, will expire on the
date of this year's annual meeting, the term of office of the third class of
directors, presently consisting of Edwin H. Wegman and Rainer Friedel , will
expire in 1999, and the term of the first class of directors, presently
consisting of Thomas L. Wegman and Dr. Paul A. Gitman, will expire in 2000. In
each case, barring death, resignation or removal, each director serves from the
date of his election until the end of his term and until his successor is
elected and qualified.
Two persons will be elected at the Annual Meeting to serve as director
for a term of three years. The Company has nominated Sherman C. Vogel and Henry
Morgan as candidates for election. Unless authority is withheld, the proxies
solicited by management will be voted "FOR" the election of these nominees. In
case a nominee becomes unavailable for election to the Board of Directors, an
event which is not expected, the persons named as proxies, or their substitutes,
shall have full discretion and authority to vote or refrain from voting for any
other candidate in accordance with their judgment. The election of directors
requires a plurality vote of those shares voted at the meeting. Each nominee has
informed the Company that he will serve if elected.
The Board of Directors recommends that the stockholders vote "FOR"
each nominee for election to the Board of Directors.
Information Concerning Nominees for Director
The nominees for director have the positions with the Company and
principal occupations set forth in the table below.
<TABLE>
<CAPTION>
Age at Position With the Company Term
Name May 22, and Principal Occupation Director Since Expires
1998
- ---- ------- ------------------------- -------------- -------
<S> <C> <C> <C> <C>
Henry Morgan 77 Director; Senior partner of the law 1990 1998
firm Morgan, Melhuish, Monaghan,
Arvidson, Abrutyn & Lisowski
Sherman C. Vogel 74 Director; Private investor 1990 1998
</TABLE>
Henry Morgan has had the positions with the Company, principal
occupation and certain directorships set forth in the table above for the past
five years. Sherman Vogel has held the position with the Company for the past
five years and was Chairman of the Board of Synergy Group Inc. prior to August
1995.
Information Concerning Continuing Directors
Each of the directors named in the following table will continue in
office after the Annual Meeting and until his term expires in the year indicated
and his successor is elected and qualified.
<TABLE>
<CAPTION>
Age at Position With the Company Term
Name May 22, and Principal Occupation Director Since Expires
1998
- ---- ------- ------------------------- -------------- -------
<S> <C> <C> <C> <C>
Edwin H. Wegman 78 Chairman of the Board and President 1990 1999
Dr. Rainer Friedel 56 Director; Managing Director of 1995 1999
Biospecifics Pharma GmbH, the
Company's German subsidiary
("Pharma")
Thomas L. Wegman 43 Director, Executive Vice President 1994 2000
Dr. Paul A. Gitman 57 Director; Director, Quality and 1990 2000
Resource Management, Long Island
Jewish Medical Center
</TABLE>
4
<PAGE>
Edwin H. Wegman has had the positions with the Company, principal
occupation and certain directorships set forth in the table above for the past
five years, and has held similar positions with the Company's subsidiaries,
Advance Biofactures Corporation ("ABC-New York") and Advance Biofactures of
Curacao ("ABC-Curacao"), for the past five years
Dr. Rainer Friedel has been a director of the Company since November
1995 and managing director of BioSpecifics Pharma since January 1, 1996. Since
January 1994, Dr. Friedel has served as Chief Executive Officer of GBM
Technology Transfer and Technology Risk Assessment, GmbH and, since June 1993,
has served as an independent pharmaceutical management consultant. Prior to May
1993, Dr. Friedel was the Chief Executive Officer of Lichtwer Pharma GmbH. The
Company and Dr. Friedel have entered into an employment agreement effective
January 1, 1998 pursuant to which Dr. Friedel has agreed to devote all of his
working capacity to the Company and its subsidiaries in Germany and the United
States. Dr. Friedel is to receive a salary of $175,000 and options to purchase
up to 17,500 shares of Common Stock per annum. Dr. Friedel is entitled to one
year's notice of the Company's termination of the employment agreement.
Thomas L. Wegman was Secretary and Treasurer of the Company from
inception to July 1997, at which time he assumed his current position. In
addition, he has held for the past five years similar positions with the
Company's subsidiaries, ABC-New York and ABC-Curacao.
Dr. Gitman has been Vice President, Clinical Care and Resource
Management at Long Island Jewish Medical Center since January 1, 1995 and prior
thereto was an independent physician engaged in the practice of internal
medicine with Spellman Mykoff & Gitman, MD., P.C..
Executive Officers
In addition to the officers named above, the Company employs Albert
Horcher as its Secretary, Treasurer, and Principal Financial and Chief
Accounting Officer. Mr. Horcher, a certified public accountant, has served in
these positions since July 1997 and is 38 years old. From February 1991 to July
1997, he served as the Company's Controller and Principal Financial and Chief
Accounting Officer. In addition, he has held for the past five years similar
positions with the Company's subsidiaries, ABC-New York and ABC-Curacao.
Executive officers are elected annually by the Board of Directors and serve at
the discretion of the Board.
Board Meetings and Committees
The Board held four meetings during the last fiscal year. All
directors attended each meeting. The Board does not have nominating or
compensation committees. The Board has established an Audit Committee consisting
of Sherman Vogel and Henry Morgan, a Stock Option Committee consisting of Dr.
Paul A. Gitman and Henry Morgan which administers the Company's 1991 Stock
Option Plan (the "1991 Plan"), the Company's 1993 Stock Option Plan (the "1993
Plan"), and the Company's 1997 Stock Option Plan (the "1997 Plan"), and an
Executive Committee consisting of Edwin H. Wegman and Thomas L. Wegman. The
function of the Audit Committee is to (i) recommend selection of the Company's
independent accountants, (ii) review with the independent accountants the
results of their audits, (iii) review with the independent accountants and
management the Company's financial reporting and operating controls and the
scope of audits, (iv) review all budgets of the Company and its subsidiaries and
(v) make recommendations concerning the Company's financial reporting,
accounting practices and policies and financial, accounting and operating
controls and safeguards and review matters relating to the relationship between
the Company and its auditors. The function of the Executive Committee is, except
for certain matters reserved to the Board, to exercise all of the powers of the
Board in the management of the business of the Company during intervals between
Board meetings, if necessary. The Audit, Stock Option and Executive Committees
did not meet during the 1998 fiscal year.
5
<PAGE>
Executive Compensation
Officers
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to the Company's named
executive officers for the fiscal years indicated. There are no other officers
who received in excess of $100,000 during the fiscal year ended January 31,
1998. The Company's executive officers also serve in the same capacities in
ABC-New York. Salaries of the executive officers are paid by the Company's
subsidiary, ABC-New York. The officers serve in their respective capacities
until the annual board of directors meeting to be held immediately following the
Annual Meeting.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term All Other
Compensation Compensation
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Number Number of
of Securities All Other
Name and Principal Salary Bonus Other Options Underlying Compensation ($)
Position Fiscal ($) ($) Annual Options
Year Compen-
sation (1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edwin H. Wegman 1998 373,861 - - 83,500 83,500 -
President 1997 356,375 - - 1,800 1,800 -
1996 350,000 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Harold Stern 1998 135,480 - - - - -
Executive 1997 183,156 - - 900 900 -
Vice President (2) 1996 182,360 -- -- 1,800 1,800 --
- ---------------------------------------------------------------------------------------------------------------------------------
Thomas L. 1998 157,028 - - 4,000 4,000
Wegman 1997 130,893 - - 700 700 -
Executive 1996 119,376 -- - 1,200 1,200 --
Vice President
- ---------------------------------------------------------------------------------------------------------------------------------
Rainer Friedel 1998 151,226 - - 17,500 17,500 -
Managing Director 1997 116,886 - - 15,000 15,000 -
1996 33,333 - - 10,000 10,000 -
- ---------------------------------------------------------------------------------------------------------------------------------
Albert Horcher 1998 105,436 - - 2,000 2,000 -
Secretary and 1997 97,395 - - 500 500 -
Treasurer 1996 93,571 - - 8,500 8,500 -
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes perquisites and other personal benefits aggregating less than
the lesser of $50,000 or 10% of the total annual salary and bonus
reported for such person.
(2) Mr. Stern resigned his positions of Executive Vice President and
Director effective July 1, 1997. He continues to work for the Company
in a more limited capacity.
The following table contains information concerning the grants of
stock options to the named executive officers of the Company during the fiscal
year ended January 31, 1998.
6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Percentage of Total
Options/SARs Options/SARs
Name Granted Granted to Employees Exercise or Base
(#)(1)(2) in Fiscal Year (%) Price Per Share Expiration Date
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Edwin H. Wegman 80,000 60.0(3) $6.05 7/16/02
3,500 3.3 $4.95 10/15/02
- -----------------------------------------------------------------------------------------------------------------------
Thomas L. Wegman 1,000 1.0 $3.88 2/26/07
1,500 1.0 $4.50 10/15/07
1,500 1.0 $4.38 01/14/08
- -----------------------------------------------------------------------------------------------------------------------
Rainer Friedel 17,500 13.3 $4.38 1/14/08
- -----------------------------------------------------------------------------------------------------------------------
Albert Horcher 1,000 0.75 $4.50 10/15/07
1,000 0.75 $4.38 01/14/08
- -----------------------------------------------------------------------------------------------------------------------
(1) All outstanding options are currently exercisable, except Edwin H. Wegman's, which are exercisable in four
equal annual installments.
(2) Granted for service as an employee.
(3) During fiscal 1997, options granted to Edwin H. Wegman in 1991 to purchase up to 80,000 shares of Common Stock
at $3.30 per share expired. These options were granted to replace those options.
The 1991 Plan was ratified at the annual meeting of stockholders in July 1992, the 1993 Plan was ratified at
the annual meeting of stockholders in July 1994, and the 1997 Plan was ratified at the annual meeting of stockholders in
July 1997.
The following table sets forth information concerning each exercise of stock options during the 1998 fiscal
year by each of the named executive officers, along with the year-end value of unexercised options.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at Fiscal Year-End
Options at Fiscal Year End (#) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Name Shares Value
Acquired on Realized
Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edwin H. Wegman(1) - - 7,950 85,550 400 900
- ---------------------------------------------------------------------------------------------------------------------------------
Thomas L. Wegman - - 36,500 - 50,000 -
- ---------------------------------------------------------------------------------------------------------------------------------
Rainer Friedel 42,500 34,000 -
- ---------------------------------------------------------------------------------------------------------------------------------
Albert Horcher 16,000 17,200 -
- ---------------------------------------------------------------------------------------------------------------------------------
Directors
Each of the three outside directors received $4,500 for attending the Board meetings in fiscal 1998.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers, directors and persons who beneficially own more than
ten percent of the Common Stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission.
These reporting persons also are required to furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on its review of the copies of such forms furnished to it, the Company believes that all Section
16(a) reporting requirements were complied with during the fiscal year ended January 31, 1998, except as follows below:
Paul A. Gitman did not file the required Form 4 on a timely basis when he became the beneficial owner of 6,000 additional common
shares on May 22, 1997.
</TABLE>
7
<PAGE>
CERTAIN TRANSACTIONS
The S.J. Wegman Company owns Wilbur Street Corporation ("WSC"), which
has leased to ABC-New York a building serving as a manufacturing facility and
headquarters in Lynbrook, New York for over 30 years. The building also serves
as the Company's administrative headquarters. Edwin H. Wegman, the Company's
Chairman of the Board and President, is the President of WSC and the sole
general partner of The S.J. Wegman Company, a partnership. The lease ran month
to month at an annual rate of $90,000 and $78,000 during the fiscal years ended
January 31, 1998 and 1997, respectively. On January 30, 1998, WSC and the
Company entered into a triple net lease agreement which provides for an annual
rent starting at $125,000, which can increase annually by the amount of annual
increase in the Consumer Price Index for the greater New York metropolitan
region. The lease term is 7 years, expiring January 31, 2005. The Company
believes that the terms of this lease are reasonable and the rent charged is no
greater than that which would be charged by an unaffiliated landlord for
comparable facilities, based on appraisals of the property. The Company
subleases the remainder of the space subject to such lease, to an unaffiliated
entity for $24,000 per year, pursuant to a verbal lease agreement.
On January 30, 1998, Edwin H. Wegman repaid a promissory note
representing indebtedness he incurred during the 1994 and 1995 fiscal years, and
other borrowings, totaling $424,817, and interest of $68,183. The promissory
note (the "1995 Promissory Note") was executed on January 30, 1995 in favor of
ABC-New York in the amount of $286,376. The 1995 Promissory Note bore interest
at prime plus 1% and was due and payable on January 30, 1998. The 1995
Promissory Note was secured by 50,000 shares of Common Stock owned by him. In
addition to the 1995 Promissory Note, on August 20, 1991, in order to evidence
previous borrowings, Mr. Wegman executed a promissory note made payable to
ABC-New York in the principal amount of $56,820. The note is payable upon demand
and bears 9% interest that commenced to accrue on August 20, 1991.
The Company entered into a one year consulting agreement with Stephen
A. Vogel (the "consultant") effective October 10, 1997. The agreement provides
that the consultant provide the Company with such advice, service, consultation,
and assistance as the Company seeks with respect to the Company's financial
matters and provide such other services as the Board of Directors requests. The
agreement provides for a consulting fee of $10,000 per month and an option to
purchase 100,000 shares of the Company's common stock at $5.00 per share, which
options shall not be exercisable until the one year anniversary of the agreement
and will only be exercisable for a 3 month period after the one year
anniversary, except as otherwise provided therein. The agreement also provides
for the consultant to receive fees if certain events occur as a result of the
consultant's actions or recommendations. The Company will reimburse the
consultant for out of pocket and other expenses incurred in connection with
rendering services. During the fiscal year ended January 31, 1998, the Company
recorded selling, general and administrative expenses of $56,275 relating to
this agreement, comprised of $36,275 in consulting fees and $20,000 for the
estimated value of the options granted for the fiscal year. Mr. Vogel is a son
of Sherman C. Vogel, a member of the Company's board of directors.
INDEPENDENT ACCOUNTANTS
The Company intends to use KPMG Peat Marwick LLP as its independent
auditors for the 1999 fiscal year. A representative of KPMG Peat Marwick LLP is
expected to be present at the meeting, will have the opportunity to make a
statement if he or she chooses and is expected to be available to respond to
appropriate questions.
1999 STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual
Meeting to be held following the end of 1999 fiscal year for inclusion in the
proxy statement must be received at the Company's offices by January 29, 1999.
8
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OTHER MATTERS
The Board of Directors knows of no matter which will be presented for
consideration at the meeting other than the matters referred to in this Proxy
Statement. Should any other matter properly come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote such proxy in
accordance with their best judgment.
By Order of the Board of Directors,
Albert Horcher
Secretary
Lynbrook, New York
May 29, 1998
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