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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended June 30, 1998
Commission file number: 0-21006
INFU-TECH, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3127689
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
910 Sylvan Avenue
Englewood Cliffs, N.J. 07632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 567-4600
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ X ]
As of September 22, 1998 the aggregate market value of the voting stock held by
non-affiliates of the registrant was $4,873,999.
As of September 22, 1998, 3,262,571 shares of the registrant's common stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART III
Item 10. Directors and Executive Officers.
Directors Served on
the Board of
Directors
Name Age Since
Jack Rosen.......................52......................1988
Joseph Rosen.....................47......................1988
Israel Ingberman.................52......................1988
Joseph Giglio....................57......................1992
Bruce Slovin.....................62......................1992
Carl D. Glickman.................72......................1992
Jack Rosen has served as the chief executive officer (the President,
Chairman of the Board or both) and as a Director of the Company since 1992, of
Kuala Healthcare, Inc. ("KUAL") since its incorporation in 1981 and of KUAL's
subsidiaries from their respective dates of incorporation, the first of which
was in 1976. Mr. Rosen is also the President and a Director of CompreMedx
Corporation ("CompreMedx"), an 89.1%-owned subsidiary of KUAL. He first became
involved in the health care field in September 1971 when he became a director of
Garden State Health Care Center of East Orange, New Jersey. He is actively
engaged, together with Joseph Rosen and Israel Ingberman, who are officers and
directors, and along with Jack Rosen, are the three principal stockholders of
the Company (the "Principal Stockholders"), in a variety of enterprises,
including real estate development and hotel ownership (the "Rosen-Ingberman
Enterprises"). Jack Rosen is the brother of Joseph Rosen.
Joseph Rosen has served as a Vice President and as a Director of KUAL
since its incorporation in 1981 and as a director and officer of all its
subsidiaries (including CompreMedx) from their respective dates of
incorporation. He became an Assistant Secretary of the Company in March 1983. He
first became involved in the health care field in October 1974 with the
organization of Jayber, Inc., which operates a nursing home in West Orange, New
Jersey and now is a subsidiary of the Company. He is actively engaged, together
with the other Principal Stockholders, in the Rosen-Ingberman Enterprises and
with Israel Ingberman in nursing home ownership and management ("R-I nursing
homes"). He is the brother of Jack Rosen.
Israel Ingberman has served as Secretary, Treasurer and as a Director
of KUAL since its incorporation in 1981 and as a director and officer of all its
subsidiaries (including CompreMedx) from their respective dates of
incorporation. He first became involved in the health care field in October 1974
with the organization of Jayber, Inc. He is actively engaged, together with the
other Principal Stockholders, in the Rosen-Ingberman Enterprises and in the R-I
nursing homes with Joseph Rosen.
Joseph M. Giglio has been a director of KUAL since January 1983. He
became a director of the Company in July 1992. Since September 1996, he has been
serving as Executive Professor at the Graduate School of Business at
Northeastern University. Since December 1993, he has been serving as the
Chairman of Apogee Research, Inc., an infrastructure consulting firm. From
December 1993 until August 1994, he was the Senior Advisor to the First
Southwest Company. From April 1992 to November 1993, he was an Executive Vice
President of Smith Barney & Co. And from June 1991 to April 1992, he was a
Managing Director of that firm. From January 1990 to June 1991, he was the
President of Chase Municipal Securities, Inc., an affiliate of The Chase
Manhattan Bank, N.A. From August 1988 through December 1989, Mr. Giglio was a
Senior Vice President at Chase Securities, Inc. in the Municipal Finance
Division. For more than five years prior to joining Chase, Mr. Giglio was the
Senior Managing Director of the Public Finance Department at Bear Stearns & Co.,
Inc. Mr. Giglio served as Chairman of the National
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Council on Public Works Improvement, which released its final report, "Fragile
Foundation," in February 1988. Mr. Giglio chaired the U.S. Senate Budget
Committee's Private Sector Advisory Panel on Infrastructure Financing. He serves
on the board of directors of The Hudson Institute. Mr. Giglio has served as an
Associate Professor of Finance at New York University. He is a graduate of
Rutgers University, and holds a Master of Public Administration degree from New
York University and a Master's degree in Business from Columbia University.
Carl D. Glickman has been a director of KUAL since August 1989. He
became a Director of the Company in July 1992. Since 1953, he has been the
president of The Glickman Organization, a real estate ownership and management
company. In addition, Mr. Glickman is a director of Bear Stearns Companies, Inc.
(an investment banking company), Jerusalem Economic Corporation (an Israeli real
estate company), Alliance Tyre and Rubber Co. (an Israeli tire manufacturer),
Lexington Corporate Properties, Inc. (a real estate investment trust), and
Office Max, Inc. (an office supply retailer).
Bruce Slovin has been a Director of KUAL since June 1988. He became a
Director of the Company in July 1992. Mr. Slovin is a graduate of Harvard Law
School and Cornell University. Since 1980, he has been president and a director
of MacAndrews & Forbes Group, Inc., an industrial holding company. Since 1985,
he has been president and a director of Revlon Group Incorporated, a consumer
products holding company. In addition, Mr. Slovin is a director of Andrews Group
Incorporated (industrial holding company), M&F Worldwide Corp., (producer of
licorice extract and other flavoring agents), and Cantel Industries, Inc.
(distributor of medical equipment).
Item 11. Executive Compensation.
Executive officers of the Company who are also officers of KUAL, other
than Jack Rosen, receive annual compensation from KUAL and receive no annual
compensation from the Company. Services of these officers are included in the
services provided to the Company by KUAL, for which it receives a management
fee.
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The following table sets forth the annual compensation paid by the
Company or KUAL (including annual compensation paid by KUAL for services not
related to the Company), and the long-term compensation paid by the Company,
during the years ended June 30, 1998, 1997 and 1996, to the chief executive
officer of the Company and to each of the other executive officers of the
Company at that date whose annual salary and bonus from the Company and KUAL
during 1997 totalled more than $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ ------
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Name and Principal Salary Bonus sation Award(s) SARs Payouts sation
Position(1) Year ($)(2) ($)(2) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jack Rosen 1998 400,000 792,100 100,000
Chairman of the Board 1997 368,000 150,000 200,000
and Chief Executive 1996 300,000 None None None -- None None
Officer
Pritpal Virdee 1998 155,700 -- 10,000
Executive Vice President 1997 137,000 7,000 10,000
1996 130,000 -- None None 2,500 None None
</TABLE>
(1) Officers devoted 100% of their time to the Company, except Mr. Rosen
(who devoted approximately 33% of his time) to the Company. Mr. Rosen
assumed the office of President on June 1, 1996.
(2) Since August 1992, Mr. Rosen had been employed part-time by the
Company. His annual salary paid by the Company was $100,000 until
November 1996 and $150,000 thereafter. The bonus paid by the Company
was $108,000 in 1998 and $75,000 in 1997, with the balance paid by
KUAL. The remainder of his working time is devoted to his duties as
Chairman of KUAL.
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Directors' Compensation
Each director who does not otherwise receive a salary from the Company
receives a director's fee of $5,000 per year. Under Infu-Tech's 1996 Stock
Option Plan, each member of the committee which awards options to Infu-Tech
officers (Joseph Giglio, Carl Glickman and Bruce Slovin) received an option to
purchase 10,000 shares when the Plan was adopted and receives an option to
purchase 5,000 shares each year after that. During February, 1998, the
Compensation Committee approved a grant of stock options to Joseph Rosen and
Israel Ingberman to purchase 5,000 shares as of March 31, 1998.
Option Plans
The following table sets forth certain information with regard to
options granted during 1998 to the Company's chief executive officer and its
other executive officer whose salary and bonus from the Company and Kuala
Healthcare, Inc. ("KUAL") formerly named Continental Health Affiliates, Inc.,
during 1998 totalled more than $100,000:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
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Potential Value at Assumed Annual
Rates of Stock Price Appreciation For
Individual Grants Option Term
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Percent of Total
Number of Options/SARs
Securities under Granted to
option/SARs Employees in Exercise of Base
Name Granted (#) Fiscal Year% Price ($/Sh) Expiration Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jack Rosen 100,000 46.8% 5.38 01/26/03 $148,650 $328,450
Pritpal Virdee 2,500 1.2% 3.00 11/03/07 4,700 11,950
7,500 3.5% 6.125 02/02/08 28,900 73,275
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The following table sets forth certain information with regard to
exercises of options and SARs held at June 30, 1998.
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Unexercised Value of Unexercised in-the-
Options/SARs at Fiscal Money Options/SARs at
Year-End* Fiscal Year End ($)**
Shares Acquired on Exercisable(E)/ Exercisable(E)/
Name Exercise (#) Value Realized ($) Unexercisable(U) Unexercisable(U)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jack Rosen -- -- 230,000(E) $378,750(E)
100,000(U) 74,500(U)
Pritpal Virdee -- -- 22,500(E) 50,265(E)
7,500(U) 0(U)
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</TABLE>
* The Corporation has not granted any SARs.
** Based upon the amount by which the market price of the Company's Common
Stock on June 30, 1998 ($6.125 per share) exceeded the exercise price
of the options.
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Compensation Committee Interlocks and Insider Participation
During the year-ended June 30, 1998, the Company's Compensation
Committee reviewed and approved the compensation of the Chairman of the Board.
Compensation of the Company's senior executive officers, other than its Chairman
of the Board and Chief Executive Officer, was set by the Chairman of the Board.
All the members of the Company's Board of Directors are also directors
of KUAL. Also, three of the members of the Company's Board of Directors are
officers of KUAL. Transactions between the Company and KUAL during the year
ended June 30, 1998 were as follows:
Prior to the initial public offering of the Company's Common Stock,
completed on December 31, 1992, all the Company's capital stock was owned by
KUAL and the Company was operated as a wholly owned subsidiary of KUAL. This
included KUAL's making available to the Company services of KUAL's senior
management and financial, accounting, legal and other administrative personnel.
In connection with the initial public offering of the Company's Common
Stock, the Company and KUAL entered into a Management and Non-Competition
Agreement under which, until September 30, 1997, (I) KUAL will provide to the
Company services of a chief financial officer, a general counsel and other
senior executives, other than a chief executive officer (which will be Jack
Rosen or another person paid by the Company) and a principal accounting officer
(which, if different from the chief financial officer, will be a person paid by
the Company), (ii) neither KUAL nor the Company will make any loans to the other
of them, (iii) all other transactions between the Company and KUAL will be on
terms determined by the Board of Directors of the Company to be no less
favorable to the Company than the terms which would be available from unrelated
parties, (iv) KUAL will not directly or indirectly engage in the business of
providing infusion therapy to patients at home or in nursing homes or similar
long term care facilities (other than those owned or operated by KUAL or
subsidiaries) and (v) the Company will not directly or indirectly operate
nursing homes or similar long term care facilities. The Company pays KUAL a
management fee under the agreement equal to 1.6% of the Company's revenues.
KUAL's liability for providing services to the Company will be limited to losses
resulting from willful malfeasance, bad faith or gross negligence. The Company
will indemnify KUAL and its officers, employees and agents, for losses resulting
from the provision of services under the agreement, except when there is an
adjudication that the loss resulted from the indemnified person's willful
misfeasance, bad faith or gross negligence. During 1998 the management fee
charged to the Company by KUAL totalled $423,000. On August 8, 1998, the term of
the Management and Non-Competition Agreement was extended to September 30, 2000.
During fiscal 1998, among the nursing homes with which the Company does
business were five facilities which were owned or managed by KUAL and two
facilities which are owned by companies controlled by KUAL's Principal
Stockholders. During 1998, the Company's sales to the nursing homes owned or
managed by KUAL totalled $437,000. At June 30, 1998, the Company's accounts
receivable from those nursing homes totalled $1,545,000. During 1998, the
Company realized revenues of $230,389 or 4.2% of the Company's total contract
services revenues, from the sale of products and services to residents of the
five nursing homes owned or managed by KUAL and the two nursing homes owned by
companies controlled by KUAL's Principal Stockholders.
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Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table contains information concerning the ownership of
the Company's Common Stock at September 22, 1998 by each person known to the
Company to be a beneficial owner of more than 5% of any class of the Company's
voting security, by the Company's directors, by each of the executive officers
of the Company who is among the five most highly compensated executive officers
of the Company in 1998 and by directors and executive officers as a group are as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Amount and Nature of
Title of Class Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Kuala Healthcare, Inc. 1,870,000 57.3%
910 Sylvan Avenue shares
Englewood Cliffs, NJ 07632
Common Stock Joseph Giglio 35,000 (a) (b)
Executive Professor shares
Northeastern University
Graduate School of Business
312 Hayden Hall
Boston, MA 02115
Common Stock Jack Rosen 330,000(a) 10.1%
910 Sylvan Avenue shares
Englewood Cliffs, NJ 07632
Common Stock Joseph Rosen 15,000(a) (b)
910 Sylvan Avenue shares
Englewood Cliffs, NJ 07632
Common Stock Israel Ingberman 15,000(a) (b)
910 Sylvan Avenue shares
Englewood Cliffs, NJ 07632
Common Stock Carl D. Glickman 35,000 (a) 1.1%
1140 Leader Building shares
526 Superior Avenue East
Cleveland, OH 44114
Common Stock Bruce Slovin 35,000 (a) 1.1%
35 E. 62nd Street shares
New York, NY 10021
Common Stock Pritpal Virdee 30,000 (a) (b)
910 Sylvan Avenue shares
Englewood, NJ 07632
Common Stock All directors and executive 495,000(a) 15.2%
officers as a group (7 persons) shares
</TABLE>
- ----------
(a) Consists entirely of shares which may be purchased on exercise of
options which were exercisable within 60 days after September 30, 1998.
(b) Less than 1%.
At September 30, 1998 Jack Rosen, who is the chief executive officer
and a director of the Company, and Joseph Rosen and Israel Ingberman, who are
directors of the Company, beneficially owned 16.8%, 9.1% and 8.5%, respectively,
of the outstanding common stock of KUAL. Other directors and executive officers
of the Company beneficially owned, in total, an additional 3.8% of the
outstanding common stock of KUAL.
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On September 22, 1998 Cede & Co. owned of record 1,367,880 shares of
the Company's Common Stock, constituting 41.9% of the outstanding Common Stock.
The Company understands those shares were held beneficially for members of the
New York Stock Exchange, some of whom may in turn have been holding shares
beneficially for customers.
Item 13. Certain Relationships and Related Transactions
Transactions between the Company and its Board of Directors are
described under "Compensation Committee Interlocks and Insider Participation."
Filing of Reports
To the best of the Company's knowledge, no director, executive officer
or beneficial owner of more than 10% of the Company's stock failed to file on a
timely basis reports required by Section 16(a) of the Securities Exchange Act of
1934, as amended, with regard to the year ended June 30, 1998.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amended Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
INFU-TECH, INC.
Date: October, 1998 By: /S/ JACK ROSEN
-----------------------
Jack Rosen
Principal Executive Officer
