-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UXOzcycG1Eo8BCgjXT7mZnw+eX75BUiFd5/nKCao8fjg4u9EXL3HaAEhWFOE55K5 iUIHdQgtcGs4IKYnQk68Qw== 0000950116-01-500184.txt : 20010516 0000950116-01-500184.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950116-01-500184 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BASE TEN SYSTEMS INC CENTRAL INDEX KEY: 0000010242 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 221804206 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-07100 FILM NUMBER: 1635586 BUSINESS ADDRESS: STREET 1: ONE ELECTRONICS DR CITY: TRENTON STATE: NJ ZIP: 08619 BUSINESS PHONE: 6095867010 MAIL ADDRESS: STREET 1: ONE ELECTRONICS DR CITY: TRENTON STATE: NJ ZIP: 08619 10QSB 1 ten-q.txt 10QSB ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended March 31, 2001 Commission File No. 0-7100 BASE TEN SYSTEMS, INC. (Exact name of registrant as specified in its charter) New Jersey 22-1804206 (State of incorporation) (I.R.S. Employer Identification No.) 528 Primrose Court Belle Mead, N.J. 08502 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (609) 359-1867 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 and (2) has been subject to such filing requirements for the past 90 days. YES /x/ NO /_/ Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Title of Class Outstanding at May 1, 2001 Class A Common Stock, $5.00 par value 5,338,812 Class B Common Stock, $5.00 par value 12,623 ================================================================================ Base Ten Systems, Inc. And Subsidiaries Index
Part I. Financial Information Page Item 1. Financial Statements Consolidated Balance Sheet - March 31, 2001 (unaudited)........................................ 1 Consolidated Statements of Operations - Three months ended March 31, 2001 and 2000 (unaudited)......................................................................... 2 Consolidated Statement of Common Stock and Other Shareholders' Equity - Three months ended March 31, 2001 (unaudited)................................................ 3 Consolidated Statements of Cash Flows - Three months ended March 31, 2001 and 2000 (unaudited)......................................................................... 4 Notes to Consolidated Financial Statements..................................................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................................ 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk............................ 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K...................................................... 12
Base Ten Systems, Inc. and Subsidiaries Consolidated Balance Sheet (unaudited) (dollars in thousands, except par value) Assets
March 31, 2001 ------------ Current Assets: Cash and cash equivalents....................................... $ 1,780 Other current assets............................................. 318 Current assets of discontinued operations........................ 75 ------------ Total Current Assets........................................ 2,173 Equipment, net...................................................... 5 Other assets........................................................ 10 Non current assets of discontinued operations....................... -- ------------ Total Assets $ 2,188 ============ Liabilities, Common Stock and Other Shareholders' Equity Current Liabilities: Accounts payable................................................. $ 32 Accrued expenses................................................. 464 ------------ Total Current Liabilities................................... 496 ------------ Commitments and Contingencies Redeemable Convertible Preferred Stock: Series B Preferred Stock, $1.00 par value, 994,201 shares authorized, 0 shares issued and outstanding................... -- Common Stock and Other Shareholders' Equity (Deficit): Class A Common Stock, $5.00 par value, 27,000,000 shares authorized; 5,358,812 shares issued and 5,338,812 outstanding. 26,794 Class B Common Stock, $5.00 par value, 400,000 shares authorized; issued and outstanding 12,623 shares.......................... 63 Additional paid-in capital....................................... 68,481 Accumulated deficit.............................................. (93,406) ------------ 1,932 Accumulated other comprehensive gain............................. 41 Treasury Stock, 20,000 Class A Common Shares, at cost............ (281) ------------ Total Common Stock and Other Shareholders' Equity........... 1,692 ------------ Total Liabilities, Common Stock and Other Shareholders' Equity $ 2,188 ============
See Notes to the Consolidated Financial Statements 1 Base Ten Systems, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited) (dollars in thousands, except per share data)
Three Months Ended March 31, 2001 March 31, 2000 -------------------------------- General and administrative expenses.......................... $ (180) $ (746) Other income (expense), net.................................. 75 (280) ------------------------------- Net loss from continuing operations.......................... (105) (1,026) Discontinued operations: Loss from discontinued operations............................ -- (1,578) ------------------------------- Net loss from discontinued operations........................ -- (1,578) ------------------------------- Net loss..................................................... (105) (2,604) =============================== Basic and diluted net loss per share: Continuing operations.................................. $ (0.02) $ (0.20) Discontinued operations................................ -- (0.31) ------------------------------- Net loss per share........................................... $ (0.02) $ (0.51) =============================== Weighted average common shares outstanding - basic and diluted......................................... 5,351,000 5,118,000 -------------------------------
See Notes to the Consolidated Financial Statements 2 Base Ten Systems, Inc. and Subsidiaries Consolidated Statement of Common Stock and Other Shareholders' Equity (unaudited) (dollars in thousands)
Total Common Accumulated Stock and Class A Class B Additional Other Other Common Stock Common Stock Paid-In Accumulated Comprehensive Treasury Stock Shareholders' Shares Amount Shares Amount Capital Deficit Loss Shares Amount Equity - ------------------------------------------------------------------------------------------------------------------------------------ Balance at 5,358,812 $26,794 12,623 $ 63 $ 68,481 $(93,301) $ 34 (20,000) $(281) $ 1,790 ==================================================================================================================================== December 31, 2000 Comprehensive Income (Loss): Net loss -- -- -- -- -- (105) -- -- -- (105) Unrealized loss on securities available for sale -- -- -- -- -- -- 7 -- -- 7 --------------------------------------------------------------------------------------------------------------- Total Comprehensive Income (Loss) -- -- -- -- -- (105) 7 -- -- (98) - ------------------------------------------------------------------------------------------------------------------------------------ Balance at 5,358,812 $26,794 12,623 $ 63 $ 68,481 $(93,406) $ 41 (20,000) $(281) $ 1,692 March 31, 2001 ====================================================================================================================================
See Notes to the Consolidated Financial Statements 3 Base Ten Systems, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (dollars in thousands)
Three Months Three Months Ended Ended March 31, 2001 March 31, 2000 - ----------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net loss............................................. $ (105) $ (2,604) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Net loss from discontinued operations................ -- 1,578 Depreciation and amortization........................ 4 573 Deferred gain on sale of building.................... -- (5) Unrealized gain on investments....................... 7 -- Loss on disposition of assets........................ 34 -- Changes in operating assets and liabilities: Accounts receivable.................................. -- (232) Other current assets................................. 44 (41) Other assets......................................... -- 25 Accounts payable, accrued expenses and deferred revenue (508) 432 - -------------------------------------------------------------------------------------------------- Net Cash Used in Operating Activities......................... (524) (274) - -------------------------------------------------------------------------------------------------- Cash Flows from Investing Activities: Additions to property, plant and equipment........... -- (21) Acquisition of Almedica, net of cash required........ -- 163 - -------------------------------------------------------------------------------------------------- Net Cash Provided by (Used in) Investing Activities........... -- 142 - -------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities: Repayment of amounts borrowed........................ -- (33) Proceeds from issuance of common stock............... -- 4 - -------------------------------------------------------------------------------------------------- Net Cash (Used in) provided by Financing Activities........... -- (29) - -------------------------------------------------------------------------------------------------- Cash Flows from Discontinued Operations: Net cash used in operating activities................ -- (1,578) - -------------------------------------------------------------------------------------------------- Net Cash used in Discontinued Operations...................... -- (1,578) - -------------------------------------------------------------------------------------------------- Effect of Exchange Rate Changes on Cash....................... -- (7) - -------------------------------------------------------------------------------------------------- Net (Decrease)/Increase In Cash............................... (524) (1,746) Cash, beginning of period..................................... 2,304 5,843 - -------------------------------------------------------------------------------------------------- Cash, end of period........................................... $ 1,780 $ 4,097 - -------------------------------------------------------------------------------------------------- Supplemental Disclosures of Cash Flow Information: Cash paid during the period for interest............. $ -- $ 121
See Notes to the Consolidated Financial Statements 4 Base Ten Systems, Inc. and Subsidiaries Notes to Consolidated Financial Statements Three Months Ended March 31, 2001 (Unaudited) A. Basis of Presentation and Liquidity The financial statements of Base Ten Systems, Inc. and Subsidiaries (the "Company" or "Base Ten") have been prepared on the basis that its current operations are limited to administrative matters pending implementation of its strategy for redirection of its business within the electronics or other technology sectors. The Company has incurred significant operating losses and negative cash flows in recent years. In October 2000, Base Ten announced its decision to dispose of its remaining software operations and pursue alternative revenue generating or strategic opportunities. As described in Note G below, the Company has entered into an agreement to sell its clinical trials management software. The assets and liabilities associated with the Company's software operations have been adjusted to reflect their net realizable value upon disposition. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The consolidated interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the operating results for the full year. In management's opinion, all adjustments necessary for a fair presentation of the Company's financial position and operating results are reflected in the accompanying statements. Certain reclassifications reflecting discontinued operations have been made to prior period financial statements to conform to the current period presentation. B. Description of Business Base Ten was founded in 1966 and became publicly traded in 1968. Historically, the Company focused on designing and producing safety critical products for defense and space programs through its Government Technology Division ("GTD"). In response to declines in defense spending during the early 1990s, Base Ten sought to apply its know how in safety critical technology to develop commercial lines of business. The Company ultimately established separate divisions for its government technology ("GTD") and medical technology ("MTD") operations to address distinct challenges in those sectors. In 1997, the GTD was sold to Strategic Technology Systems, Inc. ("STS") in 1997. In October 2000, the Company entered into an Asset Purchase Agreement with ABB Automation, Inc. under which certain assets and liabilities of the Company's manufacturing execution software business ("MES") were sold for $2.0 million. Also in October 2000, the Company announced its intention to dispose of the clinical software business ("Clinical Software") and, in March 2001, entered into an agreement for the sale of the Clinical Software business to Almedica Advanced Technology LLC ("AAT"), a subsidiary of Almedica International, Inc. ("Almedica"). See Notes D and G below.. The Company owns a minority interest in uPACs LLC ("uPACs"), which developed an ultrasound archiving communications system to digitize, record and store images on CD-ROM media as an alternative to film and video storage. uPACs ceased operations in the first quarter of 2000, and the accompanying financial statements reflect no value for the investment. C. Summary of Significant Accounting Policies Risks and Uncertainties - The Company has operated for several years in the software industry, which is highly competitive and rapidly changing. The Company incurred significant losses from these operations and has determined to redirect its business pursue alternative revenue generating or strategic opportunities in the electronics or other technology sectors. The redirected business will be subject to all of the risks inherent in a technology business, including claims by current and former customers for contractual or other unfulfilled commitments, potential for significant technological changes in the industry or in customer requirements, ability to attract and retain qualified employees, dependence on key personnel, limited senior management resources, protection of intellectual property rights and potentially long sales and implementation cycles. 5 Reliance on Estimates - The preparation of financial statements in accordance with generally accepted accounting standards requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include the value of its investments in AAT and uPACs, reserves for claims by customers and vendors for contractual or other unfulfilled commitments, deferred tax asset valuation reserves and the value of assets and liabilities to be disposed of, all of which could differ from actual values. D. Acquisitions Almedica Technology Group Acquisition and Disposition - On June 11, 1999, the Company acquired all of the outstanding stock of Almedica Technology Group Inc., a wholly-owned subsidiary engaged in developing and distributing clinical studies software for the pharmaceutical industry. The stock of the subsidiary was acquired in exchange for 3,950,000 shares of the Company's Class A common stock (790,000 shares after adjustment for a reverse stock split in September 1999). At the time of the purchase, the Class A common stock traded for $0.90625 per share ($4.53125 after adjustment for the reverse stock split).The acquisition was accounted for under the purchase method of accounting. The purchase price was allocated to the assets acquired from Almedica (the "Clinical Assets") based on their estimated fair values. Management estimated the value of certain intangible assets to be $4.1 million as of the purchase date. In October 2000, Base Ten announced its decision to dispose of its Clinical Software business, including the Clinical Assets. In March 2001, the Company entered into an agreement with Almedica and AAT to contribute the Clinical Software assets to AAT in exchange for $75,000 and a 20% ownership interest in AAT. The Clinical Software assets are reflected in the accompanying financial statements at their estimated net realizable value of $75,000, with no value attributed to the interest in ATT to be received by Base Ten in the transaction. The sale of the Clinical Software assets is subject to approval by the Company's shareholders at the forthcoming annual meeting of shareholders. E. Redeemable Convertible Preferred Stock In July 2000, the holders of the Company's Series B preferred stock converted 5,000 of their shares into 250,000 shares of Class A common stock. The Company also repurchased their remaining shares of Series B preferred stock and 269,560 Class A common stock purchase warrants for approximately $1.1 million. As a result of these transactions, the Series B preferred stock was eliminated, the Shareholders' Equity section of the Company's balance sheet increased by approximately $17.9 million and a gain of $11.7 million was recorded on the repurchase of the Series B preferred stock. F. Net Income (Loss) Per Share The Company calculates earnings per share in accordance with the provisions of Statement of Financial Accounting Standard No. 128, "Earnings Per Share" ("FAS 128"). FAS 128 requires the Company to present Basic Earnings Per Share, which excludes dilution, and Diluted Earnings Per Share, which includes potential dilution. The following table sets forth a reconciliation of the numerators and denominators used to calculate income (loss) per share in the Consolidated Statements of Operations. 6 (dollars in thousands, except per share data) - -------------------------------------------------------------------------------- Three Months Ended March 31, 2001 March 31, 2000 - -------------------------------------------------------------------------------- Loss per common share-basic: Net loss from continuing operations $ (105) $ (1,026) Net loss from discontinued operations -- $ (1,578) - -------------------------------------------------------------------------------- Net loss to common shareholders (numerator) $ (105) $ (2,604) - -------------------------------------------------------------------------------- Weighted average shares - basic (denominator) 5,351,000 5,118,000 - -------------------------------------------------------------------------------- Net loss per common share-basic $ (0.02) $ (0.51) - -------------------------------------------------------------------------------- Loss per common share - diluted: Net loss from continuing operations $ (105) $ (1,026) Net loss from discontinued operations -- $ (1,578) - -------------------------------------------------------------------------------- Net loss to common shareholders (numerator) $ (105) $ (2,604) - -------------------------------------------------------------------------------- Weighted average shares 5,351,000 5,118,000 Effect of dilutive options / warrants -- -- - -------------------------------------------------------------------------------- Weighted average shares-fully diluted 5,351,000 5,118,000 (denominator) - -------------------------------------------------------------------------------- Net loss per common share-diluted $ (0.02) $ (0.51) - -------------------------------------------------------------------------------- Stock options, warrants and rights would have an anti-dilutive effect on earnings per share for the periods ended March 31, 2001 and 2000 and, therefore, were not included in the calculation of diluted earnings per share. G. Discontinued Operations Sale of MES Software to ABB On October 10, 2000, the Company entered into an Asset Purchase Agreement with ABB Automation Inc. ("ABB"). Under the terms of the Agreement, ABB purchased the assets relating to the Company's MES business for $2.0 million. Assets transferred to ABB as part of the transaction included patents, copyrights, trademarks and tradenames, data, contracts, accounts receivable, employees, equipment and software deployed in the Company's MES business. Sale of Base Ten Systems NV to Kris Adriaenssens The Company entered into an agreement, effective on November 1, 2000, with Kris Adriaenssens, a consultant to Base Ten, under which Mr. Adriaenssens received 100% of the shares of Base Ten Systems NV, the Company's Belgian subsidiary, in exchange for consulting services. At the time of the transaction, the subsidiary had no operations or employees. The assets of the subsidiary at the sale date consisted primarily of office equipment and automobiles, and its liabilities primarily included leases of office space, equipment and automobiles. Sale of Clinical Software to Almedica Advanced Technology LLC In March 2001, Base Ten signed an agreement, subject to shareholder approval, to sell its Clinical Software business to AAT. See Note D above. The following table presents the results of operations for it's the Company's discontinued product lines for the three months ended March 31, 2001 and 2000: 7 (dollars in thousands, except per share data) Three months Three months ended March 31, ended March 31, 2001 2000 ----------------------------------- License and related revenue.............. $ -- $ 122 Services and related revenue............. -- 849 ----------------------------------- -- 971 ----------------------------------- Cost of revenues......................... -- 1,134 Research and development................. -- 530 Selling and marketing.................... -- 658 General and administrative............... -- 418 Other (income) expense................... -- (191) ----------------------------------- -- 2,549 ----------------------------------- Loss from discontinued operations........ -- (1,578) ----------------------------------- H. Income Taxes The Company has net operating loss carryforwards for federal income tax purposes of approximately $77 million which expire in the years 2005 through 2020. A 100% valuation allowance has been provided against this deferred tax asset. There is no provision for deferred or current income taxes for the three months ended March 31, 2001 and 2000. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Base Ten was engaged for its first quarter century in development and manufacturing of safety critical software components for defense and aerospace markets. In response to declines in defense spending during the early 1990s, the Company sought ways to apply its safety critical know how to commercial applications for healthcare and other regulated industries. The Company ultimately established divisions for its government technology ("GTD") and medical technology ("MTD") operations to address distinct challenges in those sectors. MTD operations were initially focused on development of pharmaceutical manufacturing execution systems ("MES") designed to address increasing cost containment and compliance pressures in that sector. Base Ten later identified the clinical trials market as an additional opportunity to apply its core technology, ultimately developing clinical trials management software ("Clinical Software") designed to support supplies management and compliance with traceability requirements. In 1997, the Company opted to concentrate on its MTD products both though internal development and acquisitions. At year end, as part of this strategy, Base Ten completed the sale of its GTD assets and a related management restructuring. During the last three years, substantial resources were marshaled in MTD operations to refine, expand and deploy the Company's commercial software offerings. Despite the perceived potential for its MES offerings, Base Ten encountered unanticipated difficulties integrating its MES software with the wide variety of legacy computer systems deployed in pharmaceutical manufacturing facilities. Its inability to overcome these obstacles by standardizing its MES products and providing migration paths resulted in project termination by a major customer during the first quarter of 2000. Although Base Ten reallocated resources to other projects requiring less substantial customization, it continued to encounter problems in MES integration with customer legacy systems. Base Ten also encountered various technological and marketing difficulties in the introduction of its Clinical Software offerings, including two partially developed software suites acquired from Almedica International, Inc. ("Almedica") in June 1999. Neither the internally developed nor acquired offerings generated adequate sales to cover associated development and marketing expenses. As a result, the Company's operating losses aggregated $48.5 million during the last three years. In view of these limitations, the Company anticipates that the Clinical Software business, if retained, would continue to operate at a loss. Redirection of Business In response to Base Ten's limited financial, technical and marketing resources available to commercialize its Clinical Software products, the Company announced its decision in October 2000 to discontinue MES operations and pursue revenue generating or strategic opportunities in sectors requiring less capital resources, technological development and time to market uncertainties. Areas of opportunity could include electronic component subcontracting or other markets currently under served where demand can be expected to exceed supply during the foreseeable future. While the Company also believes its realigned board of directors and senior management team brings the skills and experience to implement its business redirection, successful execution of that strategy will ultimately depend not only on factors within its control, including technical competence, high quality workmanship and timely delivery at reasonable prices, but also on general economic conditions, availability of skilled technicians and other factors partially or entirely beyond its control. As part of its business redirection, the Company sold its MES assets for $2 million in October 2000. The purchaser also agreed to employ members of the MES staff and assume the Company's unsatisfied commitments under MES related license agreements. Base Ten has further reduced its work force through a staff reduction plan and attrition. The Company has also sold or closed its operations in Trenton and Parsippany, New Jersey, California, England and Belgium, resulting in the elimination of annual rent obligations aggregating approximately $830,000. In addition, during March 2001, Base Ten entered into an agreement with Almedica and its wholly owned limited liability company ("Almedica LLC") to contribute the Clinical Software assets to Almedica LLC in exchange for $75,000 and a 20% ownership interest in Almedica LLC. The sale of the Clinical Software assets is subject to approval by the Company's shareholders at the forthcoming annual meeting of shareholders. 9 Results of Continuing Operations General. In view of the Company's determination in the fourth quarter of 2000 to dispose of its MES and Clinical Software businesses and pursue other revenue generating or strategic opportunities, its consolidated financial statements included in this Report account separately for continuing operations comprised of general overhead, rent and other infrastructure costs not attributable to discontinued operations. Three Months Ended March 31, 2001 and 2000. The Company incurred losses from continuing operations aggregating $105,000 in the first quarter of 2001 and $1,026,000 in the corresponding quarter of 2000. The losses were primarily from general and administrative expenses allocable to continuing operations, which decreased to $180,000 in the first quarter of 2001 from $746,000 in the same quarter last year. The decrease resulted from reductions of $217,000 in outside professional services, $170,000 in office expenses and $150,000 in personnel and related costs. Results of continuing operations also reflect other income of $75,000 in the first quarter of 2001 versus $280,000 of other expenses in the prior period primarily from foreign exchange losses and interest on capital leases. Results of Discontinued Operations General. The consolidated financial statements of the Company included in this Report account for its MTD business as discontinued operations in view of the sales of its MES and Clinical Software assets. Accordingly, all items of income and expense attributable to the software operations for all periods presented in the consolidated financial statements are aggregated and identified on a net basis as gain or loss from discontinued operations. Individual items of income and expense from discontinued operations are set forth in Note G to the consolidated financial statements accompanying this Report. Three Months Ended March 31, 2001 and 2000. The Company ceased all revenue generating operations at the end of 2000. Accordingly, it recognized no gain or loss from discontinued operations for the three months ended March 31, 2001. During the quarter ended March 31, 2000, the Company incurred a loss from discontinued operations of $1,578,000. The loss in the first quarter of 2000 was comprised of (1) $1,134,000 in costs of revenues, (2) research and development costs of $530,000, (3) sales and marketing expenses of $658,000 and (4) general and administrative charges of $418,000. These expenses were partially offset by revenue of $970,000 and other income of $191,000. Liquidity and Capital Resources General. The financial statements of the Company have been prepared on the basis that its current operations will be discontinued. The Company has incurred significant operating losses and negative cash flows in recent years. In view of the Company's determination to dispose of its Clinical Software business and pursue revenue generating or strategic opportunities, its consolidated financial statements included in this Report account for the assets and liabilities associated with its software operations based on their net realizable value upon disposition. The expected value for the Company's Clinical Software business reflect the terms of its agreement with Almedica. There can be no assurance that, in the event of liquidation, the Company would realize the recorded value for all of its assets. Liquidity. The Company's working capital increased from $1,675,000 at December 31, 2000 to $1,679,000 at March 31, 2001. As part of the planned redirection of its business, Base Ten entered into agreements during the first quarter of 2001 for the termination of lease obligations for offices and facilities in New Jersey and Belgium. Capital Resources. In July 2000, holders of the 5,000 shares of the Company's Series B preferred stock converted their shares into 250,000 shares of Class A common stock. In addition, the Company purchased the remaining shares of Series B Preferred Stock, as well as 269,560 warrants to purchase Class A Common Stock, for approximately $1.1 million. As a result of these transactions, the Series B preferred stock was eliminated, and the shareholders' equity section of the Company's balance sheet increased by approximately $17.9 million. 10 In December 2000, the Company's Class A common stock was delisted from the Nasdaq SmallCap Market for failure to meet its $1.00 minimum bid requirement. In addition to reduced liquidity in the outstanding common stock and related risks to Base Ten's shareholders, the Company's ability to finance the planned redirection of its business through equity transactions could be substantially impaired. Forward Looking Statements This Report includes forward looking statements within the meaning of Section 21E of the Securities Exchange Act relating to the Company's prospects, plans and objectives. Those statements are generally prefaced by words like "believe," "plan," "expect" or "anticipate." All forward looking statements involve various degrees of risk and uncertainty. Factors that may cause actual and anticipated results to differ materially include the risks that (1) the Company's planned redirection of its business may fail to reverse its history of losses; (2) general economic or business conditions may be less favorable than expected; (3) conditions in the financial markets may prevent the Company from raising the capital needed to execute its business plan for contract manufacturing operations; and (4) other factors mentioned elsewhere in this Report may adversely affect the Company's financial performance and the market value of its common stock. Item 3: Quantitative and Qualitative Disclosures About Market Risk Not applicable. 11 Part II. Other Information Item 6: Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Number: Exhibit ------- ------- 3 Amended and Restated By-Laws of the Company (as of April 9, 2001) (b) Reports on Form 8-K: None Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 15, 2001 Base Ten Systems, Inc. (Registrant) By: Edward J. Klinsport ------------------------------------- Edward J. Klinsport President and Chief Executive Officer (Principal Executive Officer) By: Kenneth W. Riley ------------------------------------- Kenneth W. Riley Chief Financial Officer (Principal Financial Officer) 12 EX-3 2 ex-3.txt EX-3 Exhibit 3 - Amended and Restated By-Laws (as of April 9, 2001) BASE TEN SYSTEMS, INC. BY-LAWS ARTICLE I - OFFICERS Section 1. The Corporation shall maintain its principal office at One Electronics Drive, Trenton. New Jersey. The Corporation may also, have offices in such other places, in the United States or elsewhere, as the Board of Directors may, from time to time, appoint or as the business of the Corporation may require. ARTICLE II - SEAL Section 1. The seal of the Corporation shall be circular in form and shall have the name of the Corporation on the circumference and the words and numerals "Incorporated New Jersey 1966" in the center. ARTICLE III - MEETING OF STOCKHOLDERS Section 1. Meetings of the stockholders of the Corporation shall be held at the principal office of the Corporation in the State of New Jersey, or at such other place within or without the State of New Jersey as may, from time to time be designated by its Board of Directors. (As amended March 15, 1994.) Section 2. The Annual Meeting of the Stockholders of the Corporation shall take place each year on or before the last day of the eighth month after the close of the fiscal year on such specific date and at such time and place as shall be fixed by resolution of the Board of Directors. The Annual Meeting shall be called to order between the hours of 9 a.m. and 5 p.m. Any business which may properly be brought before the meeting of the Stockholders may be considered and transacted at the Annual Meeting. (As amended April 9, 2001.) Section 3. Special meetings of the Stockholders may be called by the Chairman of the Board, the President, or by a majority of the Board of Directors, or by holders of record of not less than one-fourth of the stock having voting power of the Corporation entitled to vote at such special meeting. Section 4. Written notice of all meetings of the Stockholders shall be mailed to or delivered to each stockholder entitled to vote thereat at least ten days prior to the meeting. Such notice shall state in general terms the purposes for which the meeting is to be held. Section 5. Every shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting may authorize another person or persons to act for him by a proxy which shall be executed in writing by the shareholder or his agent. Section 6. Subject to the requirements of law, only those persons shall be entitled to vote at any meeting in whose names entitled to vote stand on the corporation's stock records on the record date for voting fixed in accordance with Article VII of these By-Laws. 13 When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which express provision of the statutes or of the Certificate of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Each stockholder shall at every meeting of the stockholders be entitled to such votes in person or by proxy as he may be empowered to cast by the Certificate of Incorporation. Section 7. A quorum for the transaction of business at any meeting shall be comprised of the presence, in person or by proxy, of the holders of the majority of the voting power. If, however, any business comes before the meeting requiring approval (under applicable law or the Certificate of Incorporation) of the holders of any class of capital stock voting as a separate class, then the presence in person or by proxy, of the holders of a majority of the outstanding shares of that class is necessary to transact that business. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 8. The Chairman presiding at any meeting of stockholders shall have power, in his discretion, to appoint one or more persons to act as inspectors or tellers, to receive, canvass and report the votes cast by the stockholders at such meeting; but no candidate for the office of Director shall be appointed as inspector or teller at any meeting for the election of Directors. Section 9. The Chairman of the Board of Directors of the Corporation, and, in his absence, the President shall preside at all meetings of the stockholders; and, in the absence of the Chairman of the Board of Directors and the President, the vote of a majority of the stock having voting power, present or represented by proxy, shall elect a Chairman. Section 10. The Secretary of the Corporation shall act as Secretary of all meetings of the stockholders; and, in his absence, the Chairman shall appoint a person to act as Secretary of the meeting. ARTICLE IV - BOARD OF DIRECTORS Section 1. The property, business and affairs of the Corporation shall be managed and controlled by its Board of Directors. The number of Directors which shall constitute the whole Board shall not be less than three or more than ten. (As amended February 1, 1993.) Within such limits, the number of Directors shall be determined by resolution of the Board of Directors. The Directors shall be elected at the annual shareholders' meetings, except as provided in the second paragraph of this Article. Directors need not be shareholders. The Directors shall be divided into three classes, each consisting of one-third of such Directors as nearly as may be. At the annual shareholders' meeting 1978, one class of such Directors shall be elected for a one-year term, one class for a two-year term, and one class for a three-year term. At each succeeding annual shareholders meeting beginning in 1979, successors to the class of directors whose term expires at such annual meeting shall be elected for a three-year term. If the number of such Directors is changed, an increase in such Directors shall be apportioned among the classes so as to maintain the classes as nearly equal in number as possible, and any additional Director of any class shall hold office for a term which shall coincide with the remaining term of such class. A Director shall old office until the annual meeting for the year in which his term expires and until his success shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification, or removal from office. Directors may be removed by the shareholders only for cause, in accordance with the law. Section 2. If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any Director, or otherwise, or any new directorship is created by an increase in the authorized number of Directors, a majority of the Directors then in office, though less than a quorum, may choose a successor or successors, or fill the newly created directorship. Any Director elected to fill a vacancy shall have the same remaining term as that of his predecessor. Section 3. The Board of Directors may hold meetings and keep the books of the Corporation outside the State of New Jersey. But, unless otherwise specified in the notice of the meeting, all meetings of the Board of Directors shall be held at the principal office of the Corporation in the State of New Jersey. Section 4. A meeting of the newly elected Board of Directors, of which no notice shall be necessary provided a majority of the whole Board shall be present, shall be held immediately following the Annual Meeting of the Stockholders or immediately following any adjournment thereof at which the Board of Directors shall have been elected for the ensuing year for the purpose of the organization of the newly elected Board, and the appointment of officers for the ensuing year, and for the transaction of such other business as may conveniently and properly be brought before such meeting. 14 Section 5. Regular meetings of the Board of Directors shall be held at such times and places as shall, from time to time, be fixed by resolution adopted by the Board and no notice of such regular meetings need be given. Section 6. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President or by any two Directors. Section 7. Written notice of the time, place and purposes of any special meeting of the Board of Directors shall be given to the Directors by the Secretary at least five days before the meeting, if mailed, or at least two days if delivered personally or by telegram. It shall be the duty of the Secretary, notwithstanding notice thereof be not required, also to give like notice in like manner of the time and place of regular meetings of the Board. Section 8. A majority of the whole Board of Directors shall constitute a quorum at any meeting of the Board. Every act or decision done or made by a majority of the directors present at a meeting of the Board duly held, at which a quorum is present, shall be the act of the Board of Directors. Section 9. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the board shall individually or collectively consent to such action. Such written consent or consents to such action shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. Section 10. Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 11. The Board of Directors shall have power to fix compensation to Directors for attendance upon meetings of the Board of committees thereof. Traveling expenses of members incurred in attendance thereon may be paid by the Corporation with the approval of the Board of Directors. Section 12. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. Any such committee to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority to: a. make, alter or repeal any by-law of the Corporation; b. elect or appoint any director, or remove any office or director; c. submit to shareholders any action that requires shareholders' approval; or d. amend or repeal any resolution theretofore adopted by the board which by its terms is amended or repealable only by the board. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meeting and report the same to the Board of Directors when required. (Adopted January 7, 1981.) 15 ARTICLE V - OFFICERS Section 1. The officers of the Corporation shall be a Chairman of the Board or Co-Chairman of the Board, a President, a Vice President, a Secretary, a Treasurer and such other assistant and/or subordinate officers as the Board may from time to time appoint. Any two or more offices may be held by the same person. (As amended October 13, 1997.) Section 2. The officers shall be chosen by the Board of Directors to hold office for one year and until their successors shall be elected for appointed and shall qualify. Any officer chosen by the Board of Directors may be removed from office at any time by the affirmative vote of two-thirds of the whole Board of Directors. Section 3. The Chairman or Co-Chairman of the Board shall preside at all meetings of the Board of Directors, if present, and in general perform all duties incidental to the office of the Chairman of the Board, and shall perform such other duties as may be prescribed, from time to time, by the Board of Directors. In the event that there are then Co-Chairman of the Board, then the duties incidental to the office of the Chairman of the Board and the other duties prescribed for the Chairman of the Board by these By-Laws or by the Board of Directors, shall be allocated between and performed by such Co-Chairmen as the Board of Directors shall from time to time determine. Subject to the immediately foregoing sentence of this Section 3, whenever in these By-Laws a reference is made to the Chairman of the Board of Directors, such reference shall, if there are then Co-Chairmen of the Board, be deemed a reference to each of such Co-Chairmen. (As amended October 13, 1997.) Section 4. The President shall be the principle executive officer in charge of the administration and operations of the Corporation. He shall exercise such duties as customarily pertain to the office of President and shall have general and active management of the administration and operations, subject to the supervision and control of the Board of Directors, and he shall perform such other duties as may be described, from time to time, by the Board of Directors. Section 5. In the absence of the President of the Corporation or in the event of his death or inability or refusal to act, the Vice President shall perform the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions on the President. When there is more than one Vice President, each of them shall so service in the capacity of the President in the order designated at the time of their election or, in the absence of any designation at the time of their election, in the order of their election. The Vice President or Vice Presidents shall perform such other duties as, from time to time, may be assigned by the President or by the Board of Directors. Section 6. The Treasurer shall be the chief financial and accounting officer and shall have general custody of the corporate funds and securities and general supervision of the collection and disbursement of funds of the Corporation and of the accounts of the Corporation. The Treasurer shall render to the President and the Board of Directors, whenever the same shall be required, an account of all his transactions as Treasurer and of the financial condition of the Corporation. He shall, if required by the Board of Directors, give bond for the faithful performance of his duty in such sum and with such surety as may be approved by the Board of Directors. Section 7. The Secretary shall attend meetings of the Stockholders and Board of Directors and record the same in the Minute Book of the Corporation. He shall cause notice to be given of meetings of the Stockholders and of the Board of Directors. He shall have custody of the corporate seal and general charge of the records, documents, and papers of the Corporation not pertaining to the performance of the duties vested in other officers, and shall have such other powers and duties as generally pertain to the office of Secretary. He shall be sworn to the faithful discharge of his duties. 16 Section 8. The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors and/or the Executive Committee. All checks or other orders for the payment of money shall be signed by the Chairman of the Board, the President, any Vice President, the Treasurer, or such other person or agent as may from time to time be thereunto authorized by the Board of Directors and/or the Executive Committee, with such countersignature, if any, as may be required by the Board of Directors and/or the Executive Committee. Before checks or other orders for the payment of the funds of the Corporation are issued, vouchers therefore shall duly be certified as correct in accordance with the practice of the Corporation. Section 9. The Chairman of the Board, the President, any Vice President, the Treasurer, or such other officer or officers as may from time to time be authorized by the Board of Directors or the Executive Committee, shall have power to sign and execute on behalf of the Corporation, deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation. Section 10. The Board of Directors may delegate the powers or duties of any officer, in case of his absence or disability, to another officer or a director for the time being. Section 11. In case any office shall become vacant, the Board of Directors shall have the power to fill such vacancy. Section 12. The Chairman of the Board, the President, any Vice President, the Treasurer, or such other officer or person as shall be authorized by the Board of Directors or the Executive Committee, shall have power of authority on behalf of the Corporation to attend and to vote at any meeting of the stockholders of any corporation in which this Corporation may hold stock, and may exercise on behalf of this Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, and shall have power and authority to execute and deliver proxies and consents on behalf of this Corporation in connection with the exercise by this Corporation of the rights and powers incident to the ownership of such stock. ARTICLE VI - STOCK CERTIFICATES; TRANSFER AGENTS Section 1. Certificates for stock of the Corporation shall be in such form as the Board of Directors may, from time to time, prescribe and shall be signed by the President or a Vice President and by the Treasurer, the Secretary, or Assistant Secretary or shall bear the facsimile signatures of such officers. The Board of Directors shall have power to appoint one or more transfer agents and/or registrars for the transfer and/or registration of certificates of stock of any class, and may require that stock certificates shall be countersigned and/or registered by one or more of such transfer agents and/or registrars. Section 2. Shares of capital stock of the Corporation shall be transferable on the books of the Corporation by the holder of record thereof in person or by duly authorized attorney, and upon the surrender of such certificates properly endorsed. Section 3. In case any certificates for the capital stock of the Corporation shall be lost, stolen or destroyed, the Corporation may require such proof of the fact and such indemnity to be given as shall be deemed necessary or advisable by it. Section 4. The Corporation shall be entitled to treat the holder of record of any shares of stock as the holder thereof, in fact, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law. 17 ARTICLE VII - CLOSING TRANSFER BOOKS, ETC. Section 1. The Board of Directors shall have power to close the stock transfer books of the Corporation for a period not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders, or the date of the payment of any dividend or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting, or entitled to receive payment of any such dividends, or any such allotment or rights, or to exercise the rights in respect to any such change, conversion or exchange of capital stock, and in such case only stockholders of record on the date so fixed shall be entitled to such notice of and vote at such meeting, or to receive payment of such dividend or allotment or rights, or exercise such rights as the case may be, and notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. Section 2. If the transfer books have not been closed or no date has been fixed as a record date for the determination of the stockholders entitled to vote, as herein provided, no share of stock shall be voted on at any election of directors, after the first election, which has been transferred on the books of the Corporation within sixty (60) days next preceding such election of Directors. ARTICLE VIII - FISCAL YEAR Section 1. The fiscal year of the Corporation shall commence on the first day of January and end on the 31st day of December in each calendar year. The Board of Directors shall have the power to fix, and from time to time, change the fiscal year of the Corporation. (As amended February 3, 2000.) ARTICLE IX - MISCELLANEOUS Section 1. Any notice required to be given to any stockholder, Director or officer under the provisions of these By-Laws or otherwise shall (subject to the provisions of law and of the Certificate of Incorporation of the Corporation) be deemed to be sufficiently given if such notice be written or printed and be deposited in the post office addressed to such stockholder, director or officer at his address as the same appears on the books of record of the Corporation, or such notice may be sent by telegram, and the mailing of such notice or posting of such telegram or radiogram, as the case may be, shall constitute due notice. Section 2. Any notice required to be given under the provisions of these By-Laws or otherwise may (subject to the provisions of law and the Certificates of Incorporation of this Corporation) be waived by the stockholder, director or officer to whom such notice is required to be given. Section 3. At any meeting of stockholder or directors of the Corporation, if less than a quorum be present, the vote of a majority of the stock having voting power present or represented by proxy, shall nevertheless have power to adjourn such meeting. ARTICLE X - INDEMNIFICATION; INSURANCE Section 1. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement to the maximum extent permitted by law, and shall advance expenses incurred by such person in any such action to the maximum extent permitted by law in accordance with the procedures provided by applicable law. Section 2. To the extent, according to standards and in such manner as the Board of Directors may direct pursuant to and in accordance with applicable law in the particular case, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the Corporation) by reason of the fact that he is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement. 18 Section 3. The indemnification provided by this Article X shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be director, officer, employee or agent and shall insure to the benefit of the heirs, executors and administrators of such person. Section 4. The Corporation, acting by its Board of Directors, shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article X. Nothing in this Section 4 shall obligate the Corporation to indemnify any person to any extent other than as provided in Sections 1, 2, 3 and 4 of this Article X. ARTICLE XI - AMENDMENT OF BY-LAWS Section 1. The Board of Directors shall have power, subject to the reserved power of the stockholders to alter or repeal the same, to make and alter the By-laws of the Corporation. 19 -----END PRIVACY-ENHANCED MESSAGE-----