-----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, WyqYhcrxSdgzYCr3LjJukeX6Jy6Yxb8KkqIDUW3jOJg5cubuZIatac/388UtEx7G tZhYL0lrvD/moWBBP20Bsg== 0000950115-96-001520.txt : 19961031 0000950115-96-001520.hdr.sgml : 19961031 ACCESSION NUMBER: 0000950115-96-001520 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19961030 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICAL TECHNOLOGY & INNOVATIONS INC /FL/ CENTRAL INDEX KEY: 0000847464 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AMUSEMENT & RECREATION SERVICES [7900] IRS NUMBER: 650278549 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-01950 FILM NUMBER: 96650664 BUSINESS ADDRESS: STREET 1: 3125 NOLT RD CITY: LANCASTER STATE: PA ZIP: 17601 BUSINESS PHONE: 7178926770 MAIL ADDRESS: STREET 1: 3125 NOLT ROAD CITY: LANCASTER STATE: PA ZIP: 17601 10KSB/A 1 FORM 10-KSB/A ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-KSB/A (Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required) For the fiscal year ended June 30, 1996 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the transition period from____________ to____________ Commission File Number: 33-27610-A MEDICAL TECHNOLOGY & INNOVATIONS, INC. (Name of small business issuer in its charter) Florida 59-2954561 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 17601 3125 Nolt Road, Lancaster, PA (Zip Code) (Address of principal executive offices) (717) 892-6770 (Issuer's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, no par value (Title of each class) Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [ ] Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] The issuer's revenues for its most recent fiscal year were $696,185. The aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold or the average bid and asked prices of such stock as of August 30, 1996 was approximately $13.3 million. As of June 30, 1996 12,147,299 shares of Common Stock, no par value, of the registrant were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: None. ================================================================================ PART I. Item 1. Description of Business General Medical Technology & Innovations, Inc., f/k/a SouthStar Productions, Inc. (the "Company") was incorporated in the state of Florida in January 1989. The Company operates through its wholly-owned subsidiary, Medical Technology, Inc. ("MTI"). MTI was incorporated in the state of Iowa in April 1993. The Company acquired control of MTI in October of 1995 under the terms of a Share Exchange Plan ("the Plan") with SouthStar Productions, Inc. ("SouthStar"). For information regarding the terms of the Plan thereto, refer to the "business combination" note to the consolidated financial statements on Page 15 of this Form 10-KSB/A. The Company manufactures and distributes the MTI Photoscreener(TM), which is a specialized Polaroid-type instant film camera designed to detect conditions that lead to amblyopia ("lazy eye") and other eye disorders. The MTI Photoscreener(TM) The MTI Photoscreener(TM) is designed to take a photograph of a child's eye and detect factors which can lead to amblyopia (lazy eye), including strabismus (misalignment of the eye), cataracts (cloudy lenses), and asymmetric or other abnormal refractive errors, including myopia (nearsightedness), hyperopia (farsightedness), and astigmatism. The MTI Photoscreener(TM) consists of a single flash placed close to the center of the lens of the subject's eye to accentuate the "red eye" appearance of a subject for diagnostic purposes. By placing the flash close to the lens aperture, abnormal refractive errors of the eye are imaged as white crescents in the red eye reflex, a process scientifically known as "photo refraction". The MTI Photoscreener(TM) consists of approximately 40 components, plus screws and fasteners. Major components include molded plastic parts, optic lenses, printed circuit boards, an instant film back, a strobe flash, optic mirrors, a battery pack, a power supply, and a battery charger. Marketing and Distribution The Company markets the MTI Photoscreener(TM) domestically and internationally through a combination of direct sales representatives and independent distributors. The Company markets the MTI Photoscreener(TM) to pediatricians, public health and education departments, preschools, day care centers, family and general physicians, eye doctors, hospitals, volunteer organizations, managed care and health maintenance organizations, and national eye care chains. The MTI Photoscreener(TM) is relatively inexpensive with a list price of approximately $3,000. Discounts to independent distributors range from 25% to 40% of the sales generated therefrom. Competition The vision screening business has attracted several companies, both domestic and foreign. Although other vision screening devices currently exist and are on the market, the Company believes the MTI Photoscreener(TM) has competitive advantages over all other such devices. These advantages include instant film capability, relatively low cost, portability, ease of interpretation and use. Although the Company believes its product has advantages over competing products, no assurances can be made that current competitors or new entrants into the market will not develop more competitive products. Such potential competitors, would most likely have considerably more financial resources than the Company. 1 Patents and Trademarks In 1993, the Company obtained rights to U.S. Patent No. 4,989,968 for a photoscreening camera system, which is now known as the MTI Photoscreener(TM). The above patent was initially granted to Dr. Howard Freedman and subsequently assigned to the Company. The Company has filed patent applications in Canada, Europe, and Japan. The Company has filed a U.S. trademark application for the mark "MTI Photoscreener(TM)," which was published in The Official Gazette on July 9, 1996. Government Regulation Certain aspects of the Company's business, principally the manufacture and sale of the MTI Photoscreener(TM) are subject to regulation by the U.S. Food and Drug Administration (FDA) as a medical device. The Company has received a 510(k) clearance to market the MTI Photoscreener(TM). The Company believes that it has completed all necessary governmental processes to market the MTI Photoscreener(TM). However, if the FDA should determine the Company has not complied with its regulations, the FDA has the authority to order the Company to cease production of its products and recall products already sold. Employees As of June 30, 1996, the Company employed 17 full-time employees. This compares with the employment of 11 full-time employees at June 30, 1995. None of the Company's employees are represented by a labor union, and the Company considers its employee relations to be good. Item 2. Description of Properties The Company's principal executive and administrative offices are located in Lancaster, Pennsylvania. The Lancaster, Pennsylvania facility is owned by the Company, and its acquisition was financed with approximately a $230,000 mortgage. The Company's principal manufacturing operations were conducted in Cedar Falls, Iowa. In August of 1996, the Company moved its manufacturing facility to Waterloo, Iowa. The Company believes that its properties are well-maintained, and its manufacturing equipment is in good operating condition and sufficient for current production. Item 3. Legal Proceedings As of June 30, 1996, MTI was a party to the following pending legal proceedings: 1. Black Hawk County Economic Development Committee, Inc. v. Medical Technology, Inc., filed May 17, 1996 in the Iowa District Court in and for Black Hawk County. 2. Iowa Department of Economic Development v. Medical Technology, Inc. and Jeremy Feakins, filed June 17, 1996 in the Iowa District Court in and for Polk County. Both petitions allege MTI is in default of certain loan obligations and the unpaid balances thereon, together with accrued interest and costs are due and payable immediately. To avoid protracted litigation on the above matters, the Company settled both of the above proceedings in July 1996 by repaying the principal balance of the above loans without interest. MTI and the Company are also parties to other pending legal proceedings in the ordinary course of their business. The Company does not expect these legal proceedings to have a material adverse effect on the Company's financial condition. 2 Item 4. Submission of Matters to a Vote of Security Holders The following items were considered and acted upon at the Company's 1996 annual meeting of stockholders which was held April 26, 1996: 1. The following directors were elected, along with their respective votes received: Director Term Votes For Votes Against - -------- ---- --------- ------------- John Behrmann 1 yr. 7,345,864 0 Matthew Crimmins 1 yr. 7,345,864 0 Tom Penaluna 2 yrs. 7,345,864 0 William Scott 2 yrs. 7,345,864 0 Jeremy Feakins 3 yrs. 7,345,864 0 Steven Gill 3 yrs. 7,345,864 0 George Hartman 3 yrs. 7,345,864 0 2. The Share Exchange Plan between Medical Technology, Inc. (MTI) and SouthStar Productions, Inc. (SouthStar), a $1.0 million private placement, settlement of and restructuring of various debt obligations of MTI, filing of all S-8 Registration Statements, employment contracts with the officers of the corporation, which include a maximum of 2.0 million stock options at $1.50 per share, exercisable over three (3) years, and provide for severance allowances upon a change in control of the corporation, and relocation of the corporate offices to Lancaster, Pennsylvania were ratified by a vote of 7,345,864 in favor, and no votes against. 3. Simon Lever & Company was ratified as the independent certified public accountants by a vote of 7,345,864 in favor, and no votes against. 4. The Medical Technology & Innovations 1996 stock option plan, which allows the Board of Directors to grant up to 3.0 million options, was approved by a vote of 7,266,859 in favor, with no votes against, and 79,005 abstentions. 5. Restated articles of incorporation providing for an increase in the amount of authorized stock, eliminating or limiting the personal liability of directors to the corporation for monetary damages for breach of fiduciary duty as a director to the extent permitted by Florida law, and authorizing the corporation to indemnify the officers, directors, employees, and agents of the Company against any contingency or peril as may be determined to be in the best interest of the Company and in conjunction therewith, to procure, at the Company's expense, policies of insurance was approved by a vote of 7,345,864 votes in favor, and no votes against. 6. A change of the Company's fiscal year from January 31 to June 30 was approved by a vote of 7,345,864 in favor, and no votes against. 7. The Company was authorized to, at its option, with respect to the issuance of fractional shares to (1) pay cash equal to the established fair market value of the undivided interest or to issue script of the Company thereto, was approved by a vote of 7,266,859 in favor, with no votes against, and 79,005 abstentions. 8. The Company was authorized to issue 100,000 shares of $100 par value preferred stock with such designation, preferences, rights, qualifications, limitations, or restrictions as shall be provided in a resolution adopted by the Board of Directors was approved by a vote of 7,345,864 in favor, and no votes against. 3 PART II. Item 5. Market for Common Equity and Related Stockholder Matters The Company's common stock is listed on the Over the Counter Electronic Bulletin Board under the symbol "MTEN." Prior to October 1995, the Company's common stock was neither listed nor traded on any market. The following table sets forth the range of the high and low bid prices for the common stock during the periods indicated, and represents interdealer prices, which do not include retail mark-ups and mark-downs, or any commission to the broker-dealer, and may not necessarily represent actual transactions. Quarter Ending High Low December 31, 1995 3.375 1.125 March 31, 1996 3.125 1.688 June 30, 1996 4.000 2.625 As of June 30, 1996, there were approximately 640 recordholders of common stock. Such amounts do not include common stock held in "nominee" or "street" name. The Company has not paid cash dividends on its common stock since its inception. At the present time, the Company's anticipated working capital requirements are such that it intends to follow a policy of retaining any earnings in order to finance the development of its business. Item 6. Management's Discussion and Analysis or Plan of Operation This analysis should be read in conjunction with the consolidated financial statements and notes thereto. See "Items 7 and 13 financial statements, and exhibits and reports on Form 8-K." Results of Operations Fiscal Year Ended June 30, 1996 as Compared to 1995. Revenue for fiscal year 1996 decreased by 19.5% or approximately $169,000 primarily as a result of decreased product sales of the MTI Photoscreener(TM), which decreased from 541 units in 1995 to 412 units in 1996. The decrease in unit sales was attributable to (1) the move of the Company's headquarters from Iowa to Pennsylvania, (2) management's efforts concurrently to raise approximately $1.0 million in a private placement to fund its marketing and distribution efforts, and (3) a shortage of funds to support a credible sales and marketing effort. Gross profits declined from 33.5% of revenues in 1995 to 23.1% of revenues in 1996. This was primarily attributable to higher overhead costs per unit due to the decrease in unit sales as material costs remained fairly constant from year to year. Operating expenses increased from $983,000 to $2,055,000. The increase in operating expenses was attributable to (1) increased marketing and advertising efforts, (2) an increase in wages, (3) an increase in interest expense, and (4) an increase in general and administrative expense. After completing the $1.0 million private placement, the Company continued in its plans on expanding its marketing efforts to increase the sales and awareness of its primary product, the MTI Photoscreener(TM). This was accomplished primarily through retaining a public relations firm and direct mailings. The increase in wages between June 30, 1995 and 1996 was attributable to (1) the grant of 140,000 shares of the Company's common stock to three executives valued at $297,500 and (2) the expansion of MTI's sales force. The Company plans to expand its sales force to a total of ten regional sales managers, who will be strategically located and assigned specific territories that will cover the continental U.S. 4 Interest expense increased from approximately $64,000 to approximately $111,000. The majority of this increase was due to interest expense attributable to $275,000 12% subordinated convertible notes issued in May of 1995. General and administrative expenses increased from $477,000 to $860,000. The increase was attributable to several reasons, including increased publication expenses, expenses of the Company's reverse merger and Regulation D offering, increased travel expenses, and the establishment of an investor public relations program. In May of 1996, the Company entered into a purchase agreement to acquire the assets of Steridyne Corporation (Steridyne), a Florida corporation, which is a manufacturer of a variety of clinical and retail medical products, including thermometer sheaths and probe covers, digital and glass thermometers, and gel anti-decubitus products. Steridyne's revenues for its most recent fiscal year ending September 30, 1995 were approximately $3.3 million (unaudited). Steridyne, prior to the acquisition, had one sales manager. The Company intends to utilize its ten regional sales managers to distribute Steridyne's products. Liquidity and Capital Resources At June 30, 1996, the Company had cash of $273,942 as compared to $65,833 at June 30, 1995. At June 30, 1996, the ratio of current assets to current liabilities was 0.95 to 1.0 as compared to 0.41 to 1.0 at June 30, 1995. The increase was primarily the result of a 1.0 million private placement in December 1995 and January 1996 and the exercise of stock options by a financial public relations consultant. These funds have been and will be used primarily for increased marketing efforts, expansion of the Company's sales force and repayment of certain debts. In the fourth quarter of 1996, the Company settled a dispute with a significant shareholder and creditor. The settlement agreement consisted of returning the above shareholder's original investment of $250,000 in return for 1,316,750 shares of stock and repaying the funds originally loaned to the Company under the terms of the Convertible Venture Agreement. The Company's primary capital commitment at June 30, 1996, consists of its purchase obligation of Steridyne. The terms of the asset purchase agreement with Steridyne require the Company to pay the former Steridyne shareholders approximately $3.5 million in cash and the assumption of $1.3 million of liabilities subject to a financing contingency. For the last few years, the Company has financed its operations primarily through private sales of securities and revenues from the sale of its products. Since June 1993, the Company has received net proceeds of approximately $3.0 million from private sale of equity securities. The Company may raise additional capital through private and/or public sales of securities in the future. 5 Item 7. Financial Statements Index to Consolidated Financial Statements: Page ---- Report of independent auditors for the years ended June 30, 1996 and 1995................................................7 Consolidated balance sheets as of June 30, 1996 and 1995....................8 Consolidated income statements for the years ended June 30, 1996 and 1995................................................9 Consolidated statements of stockholders' equity for the years ended June 30, 1996 and 1995...............................................10 Consolidated statements of cash flows for the years ended June 30, 1996 and 1995...............................................11 Notes to consolidated financial statements.................................12 6 INDEPENDENT AUDITORS' REPORT To the Board of Directors Medical Technology & Innovations, Inc. Lancaster, Pennsylvania We have audited the accompanying consolidated balance sheets of Medical Technology & Innovations, Inc. and subsidiary as of June 30, 1996 and 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Medical Technology & Innovations, Inc. and subsidiary as of June 30, 1996 and 1995, and consolidated results of their operations and their consolidated cash flows for the years then ended in conformity with generally accepted accounting principles. As discussed in Note 16 to the consolidated financial statements, subsequent to the issuance of the 1996 consolidated financial statements and our report thereon dated September 11, 1996, we discovered that the consolidated financial statements did not reflect certain transactions involving the issuance of stock for services. The consolidated financial statements have been restated to reflect these transactions. In our original report we expressed an unqualified opinion on the 1996 and 1995 consolidated financial statements, and our opinion on the revised financial statements, as expressed herein, remains unqualified. /s/ SIMON LEVER & COMPANY Lancaster, Pennsylvania September 11, 1996, except for Note 16 as to which the date is October 21, 1996 7 Medical Technology & Innovations, Inc. Consolidated Balance Sheets June 30
Assets ------ 1996 1995 ----------- ----------- Current Assets: Cash $ 273,942 $ 65,833 Accounts Receivable, less allowances of $30,000 and $9,500, respectively 330,439 116,029 Inventory 148,010 99,374 Prepaid Expenses 164,466 8,035 ----------- ----------- Total Current Assets 916,857 289,271 Fixed Assets: Property & Equipment 483,907 205,896 Less: Accumulated Depreciation (141,494) (81,125) ----------- ----------- Fixed Assets, net 342,413 124,771 Other Assets: Intangible and Other Assets 7.970 4,961 ----------- ----------- Other Assets, net 7,970 4,961 Total Assets $ 1,267,240 $ 419,003 =========== =========== Liabilities and Stockholders' Equity ------------------------------------ Current Liabilities: Accounts Payable $ 188,979 $ 186,876 Accrued Liabilities 98,625 145,806 Current Maturities of Long-Term Debt 680,000 365,800 ----------- ----------- Total Current Liabilities 967,604 698,482 Long-Term Debt, Net of Current Maturities 1,021,997 1,010,844 ----------- ----------- Total Liabilities 1,989,601 1,709,326 Stockholders' Equity: Common Stock, no par value, authorized 700,000,000 Shares, outstanding 12,147,299 and 11,205,036 Shares, respectively 4,147,140 1,435,407 Preferred Stock, authorized 100,000,000 shares $1,000 par value, 12%, noncumulative, Outstanding 56 and 56 shares, respectively 56,000 56,000 $100 par value, none issued Treasury Stock, at cost (250,000) Accumulated Deficit (4,675,501) (2,781,730) ----------- ----------- Total Stockholders' Equity (722,361) (1,290,323) Total Liabilities and Stockholders' Equity $ 1,267,240 $ 419,003 =========== ===========
The accompanying notes are an integral part of the financial statements. 8 Medical Technology & Innovations, Inc. Consolidated Income Statements For the Years Ended June 30 (Restated) 1996 1995 ----------- ----------- Revenues $ 696,185 $ 865,136 Cost of Goods Sold 535,148 575,177 ----------- ----------- Gross Profit 161,037 289,959 Operating Expenses: Advertising 224,029 67,263 Wages 775,762 281,839 Leases 48,318 31,921 Royalties 35,554 61,384 Interest 111,153 63,544 General and Administrative 859,992 477,087 ----------- ----------- Total Operating Expenses 2,054,808 983,038 Net Loss ($1,893,771) ($ 693,079) =========== =========== Earnings (Loss) per common share: Net Loss ($ .159) ($ .062) The accompanying notes are an integral part of the financial statements. 9 Medical Technology & Innovations, Inc. Consolidated Statements of Stockholders' Equity For the Years Ended June 30
Total Common Common Preferred Treasury Accumulated Stockholders' Shares Stock Stock Stock Deficit Equity ----------- ----------- ------------ ------------ ----------- ----------- Balance at June 30, 1994 10,564,256 $ 1,070,406 $ 56,000 ($2,088,651) ($ 962,245) Issuance of common stock 640,780 365,001 365,001 Net loss (693,079) (693,079) ----------- ----------- ------------ ------------ ----------- ----------- Balance at June 30, 1995 11,205,036 1,435,407 56,000 (2,781,730) (1,290,323) Issuance of common stock 1,306,409 1,147,076 1,147,076 Exercise of stock options 735,084 1,102,427 1,102,427 Stock issued for services 217,520 462,230 462,230 Purchase of treasury shares (1,316,750) ($ 250,000) (250,000) Net loss (Restated) (1,893,771) (1,893,771) ----------- ----------- ------------ ------------ ----------- ----------- Balance at June 30, 1996 12,147,299 $ 4,147,140 $ 56,000 ($ 250,000) ($4,675,501) ($ 722,361) ----------- ----------- ------------ ------------ ----------- -----------
The accompanying notes are an integral part of the financial statements. 10 Medical Technology & Innovations, Inc. Consolidated Statements of Cash Flows For the Years Ended June 30
(Restated) 1996 1995 ----------- ----------- Cash flows from operating activities: Net Loss ($1,893,771) ($ 693,079) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and Amortization 60,522 66,422 Increase in Accounts Receivable (214,410) (89,451) (Increase) Decrease in Inventory (48,636) 18,553 Increase in Prepaid Expenses (156,431) (8,035) (Decrease) Increase in Accounts Payable (47,234) 14,823 Increase in Accrued Liabilities 2,156 51,909 Stock issued for services 462,230 ----------- ----------- Net cash used in operating activities (1,835,574) (638,858) Cash flows from investing activities: Purchase of fixed assets (278,011) (25,074) Increase in Intangible Asset (3,162) (1,503) ----------- ----------- Net cash used in investing activities (281,173) (26,577) Cash flows from financing activities: Proceeds from issuance of stock, net 1,147,076 365,001 Proceeds from exercise of stock options, net 1,102,427 Acquisition of Treasury Stock (250,000) Proceeds from issuance of notes payable 538,458 350,000 Repayment of notes payable (213,105) (11,643) ----------- ----------- Net cash from financing activities 2,324,856 703,358 ----------- ----------- Net increase in cash 208,109 37,923 Cash at beginning of year 65,833 27,910 ----------- ----------- Cash at end of year $ 273,942 $ 65,833 ----------- ----------- Supplemental Disclosures: Cash paid during the year for interest 58,000 61,000
The accompanying notes are an integral part of the financial statements. 11 Medical Technology & Innovations, Inc. Notes to Consolidated Financial Statements 1. Organization. Medical Technology & Innovations, Inc. (the Company), f/k/a SouthStar Productions, Inc., is a Florida corporation engaged in the design, manufacture, and distribution of medical screening devices for medical professionals primarily involved in vision screening through its wholly-owned subsidiary, Medical Technology, Inc. (MTI). The Company derives substantially all of its revenues from the MTI PhotoscreenerTM, which is a patented product. The patent on the MTI PhotoscreenerTM expires in 2008. 2. Summary of Significant Accounting Policies. a. Principles of Consolidation. The consolidated financial statements include the Company and its wholly-owned subsidiary. All significant intercompany items have been eliminated. b. Reclassifications. Certain amounts in the prior years' consolidated financial statements have been reclassified to conform with the current year presentation. c. Revenue Recognition. Revenue from product sales are recognized at the time product is shipped. d. Inventories. Inventories are stated at the lower of cost or market, with cost determined under the first-in, first-out (FIFO) method. e. Property and Equipment. Property and equipment are stated on the basis of cost less accumulated depreciation. The Company provides for depreciation over the estimated useful lives of property and equipment using the straight-line method. f. Intangible and Other Assets. Intangible and other assets are amortized on a straight-line basis over their estimated remaining lives. g. Income Taxes. Deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. h. Advertising. Advertising costs are expensed as incurred. i. Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. Inventories. Inventories consisted of the following at June 30, 1996 and 1995: 1996 1995 -------- -------- Raw materials $ 41,364 $ 29,571 Work in process 62,929 16,156 Finished Goods 43,717 53,647 -------- -------- $148,010 $ 99,374 ======== ======== 12 4. Fixed Assets. Fixed assets consisted of the following at June 30, 1996 and 1995: 1996 1995 -------- -------- Plant equipment $176,134 $116,135 Land 200,000 0 Computer equipment and software 54,454 48,489 Furniture, fixtures, and improvements 53,319 41,272 -------- -------- $483,907 $205,896 ======== ======== 5. Long-Term Debt. Long-Term Debt consisted of the following at June 30, 1996 and 1995:
1996 1995 ----------- ----------- 12% subordinated convertible notes, due May 1998 $ 310,750 $ 277,750 8.5% note, due February 1, 1999, interest payable monthly, secured by a mortgage 234,000 0 11.25% note, due February 1999, principal and interest payable monthly, secured by substantially all of the assets of the Company, except for the Company's patent, and guaranteed by the Company's President and major stockholder 170,982 211,296 Convertible Venture agreement, royalties payable quarterly at the rate of 5.0% of sales paid in full in 1996 0 140,339 7.0% notes, due 1998, principal and interest payable monthly, secured by substantially all of the assets of the Company, except for the Company's patent, and guaranteed by the Company's President and major stockholder 130,500 131,261 11.25% note, due March 2001, principal and interest payable monthly, secured by substantially all of the assets of the Company, except for the Company's patent and guaranteed by the Company's President and major stockholder 126,862 125,000 10.0% convertible note, due March 2001, interest payable quarterly 93,799 84,908 10.0% convertible note, due March 2002, interest payable quarterly 86,814 78,584 Secured notes payable, due various dates, interest payable various at 0% to 8% 74,465 76,362 Unsecured notes payable, due various dates, interest payable various at 0% to 10% 473,825 251,144 ----------- ----------- Total notes payable 1,701,997 1,376,644 Less: amounts due in one year (680,000) (365,800) ----------- ----------- $ 1,021,997 $ 1,010,844 =========== ===========
The 12% subordinated convertible notes due May 1998 are convertible into 526,700 shares of the Company's common stock adjusted for certain antidilutive events upon the earlier of (1) May 1, 1998, (2) an initial public offering of the Company's Common Stock, or (3) the sale of all or substantially all of the assets of the Company. 13 The 10.0% convertible note, due March 2001, and the 10.0% convertible note, due March 2002, are convertible into 158,010 shares and 131,675 shares respectively adjusted for certain antidilutive events upon the earlier of (1) March 1, 1997 and March 1, 1998, respectively, (2) an initial public offering of the Company's Common Stock, or (3) the sale of all or substantially all of the assets of the Company. The amount of long-term debt maturing in each of the next five fiscal years is $680,000 in 1997, $385,600 in 1998, $321,300 in 1999, $27,700 in 2000, and $105,800 in 2001. 6. Lease Expense. The Company leases various equipment and office space under operating lease agreements. Future minimum annual rentals for subsequent fiscal years are as follows at June 30, 1996: Fiscal Lease Year Payments ---- -------- 1997 $20,100 1998 13,900 1999 6,000 7. Earnings(Loss) Per Share. Earnings(loss) per common share is computed by dividing net income(loss) by the weighted average number of common shares and common share equivalents outstanding. The average number of shares used to compute primary earnings per share was 11,887,775 and 11,161,512 for the fiscal years ended June 30, 1996 and 1995 respectively. The difference between primary and fully diluted earnings (loss) per share was not material in either year. 8. Income Taxes. The Company did not incur any income tax expense for its fiscal years ending June 30, 1996 and 1995 respectively. As of June 30, 1996 the Company has sustained approximately $4.0 million in net operating losses (NOLs) for tax purposes. These NOLs will expire in various amounts if not utilized between 2004 and 2011 and are subject to limitations should the ownership of the Company significantly change. The deferred tax asset resulting from the above NOL carryforwards has not been recorded in the accompanying financial statements since management believes a valuation allowance is necessary to reduce the deferred tax asset. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. 9. Royalty Agreement. The Company is the owner of a patent on a photoscreening device from which it derives substantially all of its revenues. The terms of the royalty agreement require the Company to pay a royalty to the inventor of six percent (6.0%) of net photoscreener sales. The amount of royalties incurred by the Company were $35,600 and $42,100 for its fiscal years ending June 30, 1996 and 1995 respectively under this agreement. 10. Stock Option Plans. In October of 1995 officers of the Company were granted options to acquire up to 2.0 million shares of common stock at an exercise price of $1.50 per share. The options are exercisable over a three year period commencing with the quarter ending June 30, 1996 and are reduced 40,000 shares per calendar quarter per participant in the event of termination of employment. In December of 1995 the Company granted options to a financial and investor relations consultant to acquire 1.5 million shares of the Company's common stock at an exercise price of $1.50 per share. The options are exercisable over a one year period. In April of 1996 the Company's shareholders approved the 1996 Stock Option Plan, which allows the board of directors to grant up to 3.0 million options. No options have been granted under the 1996 Stock Option Plan. The following is a summary of stock option transactions: 14 1996 ---------- Outstanding, beginning of year 0 Options granted 3,500,000 Options exercised (735,084) Options cancelled (9,936) ---------- Outstanding, end of year 2,754,980 Exercisable, end of year 914,980 11. Related Party Transactions. The Company and its wholly-owned subsidiary have had transactions with various entities, certain of whose principals are also officers or directors of the Company or MTI. MTI received accounting services from a firm in which one of its partners was one of MTI's directors. Fees incurred by MTI for such services totalled approximately $23,400 for the year ended June 30, 1995. Amounts due for such services, which are included in the balance sheets, at June 30, 1996 and 1995 were $11,600 and $45,800, respectively. MTI received legal services from a firm in which one of its partners was one of MTI's directors. Fees incurred by MTI for such services totalled approximately $11,000 for the year ended June 30, 1995. Amounts due for such services, which are included in the balance sheets, at June 30, 1996 and 1995 were $1,500 and $16,600, respectively. During its fiscal year ending June 30, 1996 the Company borrowed approximately $108,000 from its President and major stockholder, which amount is included in the balance sheet at June 30, 1996. 12. Business Combination. On October 2, 1995 the Company acquired all the outstanding shares of MTI by exchanging 10,263,733 shares of the Company's common stock for all of the outstanding stock of MTI. After the acquisition, MTI shareholders owned 88% of the fully diluted common stock of the Company. This acquisition, commonly referred to as a reverse merger, was accounted for using the pooling of interests method of accounting. Therefore, the Company's consolidated financial statements and information reported for periods prior to the merger have been restated to include MTI for the periods presented. Prior to the merger the Company was not actively conducting business and had no net assets on October 2, 1995. 13. Fair Value of Financial Instruments. The estimated fair values of the Company's financial instruments as of June 30, 1996 and 1995 are as follows: 1996 1995 ----------------------- ----------------------- Carrying Fair Carrying Fair Amount Value Amount Value Accounts Receivable $ 330,439 $ 330,439 $ 116,029 $ 116,029 Accounts Payable 139,642 139,642 186,876 186,876 Accrued Expenses 147,962 147,962 145,806 145,806 Long-term debt 1,701,997 1,701,997 1,376,644 1,376,644 The estimated fair value of long-term debt approximates the carrying amount based upon the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of accounts receivable, accounts payable, and accrued expenses approximates their carrying amount. 14. Major Customers. For the years ended June 30, 1996 and 1995, the Company had major customers, that accounted for more than 10% of sales as follows: 1996 1995 -------- -------- No. of Customers 3 2 Revenues $253,000 $492,000 Accounts Receivable 72,000 17,000 15 15. Geographic Area Information. The Company sells its products both domestically and internationally. All international transactions are conducted in U.S. currency. Information concerning operations by principal geographic area was as follows:
United Asia/ States Pacific Europe Consolidated ------ ------- ------ ------------ June 30, 1996 Revenues $ 525,185 $ 154,000 $ 17,000 $ 696,185 Net Earnings(Loss) (1,521,272) (335,467) (37,032) (1,893,771) Identifiable Assets 1,185,240 69,000 13,000 1,267,240
International sales did not exceed more than 10% of sales during the year ended June 30, 1995. 16. Restated Financial Statements. Subsequent to the issuance of the Company's financial statements, management discovered that certain transactions involving the issuance of common stock for services had inadvertently been excluded. The inclusion of these items in the restated financial statements based upon their fair market value on the date of issuance had the effect of increasing the net loss for 1996 by $377,230 ($.031 per share). 17. Subsequent Events (Unaudited). In August of 1996 the Company acquired the net assets of Steridyne Corporation, a Florida Corporation (hereinafter Steridyne), for approximately $4.8 million. This acquisition will be accounted for by the purchase method of accounting. Accordingly, the purchase price will be allocated to assets acquired and liabilities assumed based upon their estimated fair values. Prior to the acquisition, Steridyne was a Subchapter S Corporation with a fiscal year ending September 30. Steridyne's net revenues for its fiscal year ending September 30, 1995 and income before officer/shareholder salaries were approximately $3.3 million and $400,000 respectively. In July of 1996 the Company raised approximately $6.2 million in a stock offering, consisting of 8% convertible Series A Preferred Stock. The Series A Preferred Stock is convertible into approximately 2.8 million shares of common stock. The holders of Series A Preferred Stock and the placement agent also received warrants to acquire approximately 3.1 million shares of common stock at approximately $2.73 per share. In July of 1996 the Company entered into a three year operating lease for the rental of a commercial building with a monthly lease payment of $2,300. 16 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure On April 26, 1996, the Company engaged Simon Lever & Company as its independent accountant. The decision of the Company was recommended by the Company's board of directors and approved by its shareholders. The Company's former independent accountant, who was a sole practitioner, did not contain an adverse opinion or disclaimer of opinion nor was it modified as to uncertainty, audit scope, or accounting principles. Additionally, there were no disagreements between the Company and the former independent accountant. PART III. Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act
POSITION WITH DATE ELECTED TERM OF NAME COMPANY DIRECTOR OFFICE AGE Jeremy Feakins Director, Chief Executive Officer, and President April 1996 3 years 43 Steven Gill Director, Executive Vice President, and Chief Financial Officer April 1996 3 years 36 George Hartman Senior Vice President of Sales and Marketing April 1996 3 years 52 William Scott Director April 1996 1 year 64 Thomas Penaluna Director April 1996 2 years 47 John Behrmann Director April 1996 1 year 61 Matthew Crimmins Director April 1996 1 year 63
BUSINESS EXPERIENCE OF DIRECTORS Mr. Feakins was elected to the Board in April of 1996. Since 1989, he has served as President of Medical Technology, Inc. (MTI) and in October 1995, became the President and Chief Executive Officer of Medical Technology & Innovations, Inc. From 1980 to 1986, he was the Managing Director of Craft Master, Limited, a South African corporation, which was a manufacturer and exporter of point of purchase display systems. Mr. Feakins received his degree in accounting and computer studies from the Royal Naval College, Ipswich, Suffolk, England. Mr. Behrmann has been a director since April 1996. Mr. Behrmann is a director of First American Health Concepts, Inc., a public company in the optical insurance business and owner and operator of Evergreen Industries, Inc., a company with interests in commercial deer farming and real estate. He is also a stockholder and chairman of the board of Preston Reynolds & Co., Inc., an investment banking firm with special emphasis on the oil and gas industry and a stockholder and director of Redstone Resources, Inc., a company engaged in natural gas exploration. Mr. Behrmann was formerly a Senior Vice President, Chief Financial Officer, and director of Dentsply International, Inc., a health care company, is a C.P.A and holds a B.S. degree in Commerce and Finance from Bucknell University, Lewisburg, Pennsylvania. Mr. Crimmins has been a director since April 1996. From 1965 to 1995, he was with Polaroid Corporation where he held a number of executive positions with responsibility in many functional areas including, commercial, technical, and manufacturing operations. He was a Senior Director of Polaroid at retirement. Mr. Crimmins received a B.S. (Physics) degree from Holy Cross, a M.S. (Electrical Engineering) degree from Northeastern, and a M.B.A. from Boston College. 17 Mr. Gill was elected to the Board in April 1996. Prior to becoming with the Company, he was an attorney engaged in the private practice of law. He is a member of Iowa State Bar. He is also a C.P.A., and from 1983 to 1989, he was an accountant and worked for Price Waterhouse, Arthur Andersen, and Motorola. Mr. Gill received his B.B.A. (Accounting), M.A. (Accounting), and J.D. degrees from the University of Iowa. Mr. Gill serves as Executive Vice President and Chief Financial Officer of the Company. Mr. Hartman was elected to the Board in April 1996. Since October 1995, he has served as Senior Vice President of Sales and Marketing. From 1987 to 1995, he was a with the Jay Group and held a number of executive positions, including National Sales Manager and Vice President of Sales and Marketing. Mr. Hartman received his undergraduate degree from Juniata College. Mr. Penaluna has been a director since April 1996 and is currently President and Chief Executive Officer of Credit Bureau Enterprises. He is also President and Chief Executive Officer of Paragon Solutions, Inc., a medical billing service company, and a director of Valichek, Inc. Mr. Penaluna received his undergraduate and graduate degrees from Mankato State University. Mr. Scott was elected to the Board in April 1996. He is a Professor of Ophthalmology at the Iowa College of Medicine. Mr. Scott is a graduate of the University of Iowa. BUSINESS EXPERIENCE OF SIGNIFICANT OFFICER Robert Ballheim joined the Company in May 1993 as Executive Vice President of Engineering. From 1967 to 1993, he was with Chamberlain Manufacturing Corporation where he held a number of executive positions, including Director of the Ammunition Development Group, Vice President and General Manager, R & D Division, and Vice President, Engineering, Waterloo Division. Mr. Ballheim received his B.S. degree in mathematics from the University of Northern Iowa. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than ten percent of its Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission (SEC). Officers, directors, and greater than ten-percent stockholders are required by SEC regulation to furnish the Company with copies of all ownership forms they file. Based solely on its review of the copies of such form received by it, or based upon representations that no Form 5 was required, Messrs Feakins, Ballheim, Gill, Hartman, Penaluna, and Scott did not timely file Forms 3, 4, or 5 for the fiscal year ending June 30, 1996 as follows: Name No. of Late Reports No. of Late Transactions. - ---- ------------------- ------------------------- Jeremy Feakins 3 2 Robert Ballheim 3 2 Steven Gill 2 1 George Hartman 3 2 Tom Penaluna 2 0 William Scott 1 0 Item 10. Executive Compensation SUMMARY COMPENSATION TABLE The following table sets forth information concerning the compensation of the Company's Executive Officers whose compensation exceeded $100,000 for the fiscal year ending June 30, 1996. 18
- --------------------------------------------------------------------------------------------------------------------------------- Name and Principal Fiscal Annual Compensation Long-Term Compensation All Other Position Year Compensation - --------------------------------------------------------------------------------------------------------------------------------- Salary Bonus Other Annual Awards Payouts Compensation - --------------------------------------------------------------------------------------------------------------------------------- Restricted Options/SARs LTIP Stock Award(s) Payouts - --------------------------------------------------------------------------------------------------------------------------------- J. Feakins, 1996 $123,000 0 $212,500 500,000 0 0 President and Chief Executive Officer (1) - --------------------------------------------------------------------------------------------------------------------------------- R. Ballheim, 1996 87,000 0 42,500 500,000 0 0 Executive Vice President of Engineering - ---------------------------------------------------------------------------------------------------------------------------------
- ---------- 1. Mr. Feakins is furnished with an automobile for business and personal use. The compensation specified in the preceding table does not include the value of non-business use as the amount is not material. STOCK OPTION GRANTS IN LAST FISCAL YEAR (Individual Grants)
Name # of Shares Common Stock % of Total Options Granted to Exercise of Base Price ($/share) Expiration Date Underlying Options Employees in Fiscal Year Granted (1) J. Feakins 500,000 25% $1.50 (2) R. Ballheim 500,000 25% $1.50 (2) S. Gill 500,000 25% $1.50 (2) G. Hartman 500,000 25% $1.50 (2)
- ---------- 1. Options become exercisable at the rate of 40,000 per calendar quarter, commencing June 30, 1996 for 11 quarters with 60,000 in the 12th quarter. Options not yet exercisable in the event of cessation of employment are forfeited by the individual participant unless there is a change of control of the Company. In which event, all options granted are immediately exercisable. The number of options granted to Mr. Hartman are dependent upon achieving certain sales targets and may be reduced, but not below 20,000 per calendar quarter. 2. The expiration dates for the options granted are two (2) years from the date the options become exercisable. AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED JUNE 30, 1996 AND FISCAL YEAR END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------------------- Name # of Shares Acquired Value Realized # of Shares of Common Exercisable/Un- Value of Unexercised on Exercise Stock Underlying exercisable in-the-money Options Unexercised Options @ Exercisable/Un- Fiscal Year End exercisable - --------------------------------------------------------------------------------------------------------------------------------- J. Feakins 0 0 500,000 40,000/460,000 60,000/690,000 - --------------------------------------------------------------------------------------------------------------------------------- R. Ballheim 0 0 500,000 40,000/460,000 60,000/690,000 - --------------------------------------------------------------------------------------------------------------------------------- S. Gill 0 0 500,000 40,000/460,000 60,000/690,000 - --------------------------------------------------------------------------------------------------------------------------------- G. Hartman 0 0 490,064 30,064/460,000 45,096/690,000 - ---------------------------------------------------------------------------------------------------------------------------------
19 1996 STOCK OPTION PLAN In April of 1996, the Company's Shareholders approved the 1996 Stock Option Plan, which allows the Board of Directors to grant up to 3.0 million options. No options have been granted under the 1996 Stock Option Plan. Item 11. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information concerning all persons known to the Company to be the beneficial owners of more than 5% of the Company's Common Stock, (ii) the ownership interest of each director and nominee, and (iii) by all directors and executive officers as a group calculated as of June 30, 1996.
AMOUNT AND NATURE PERCENT OF NAME POSITION OF BENEFICIAL OWNERSHIP(1) OWNERSHIP - --------- ------------- -------------------------- ------ Jeremy Feakins Director, Chief Executive 5,410,461 shs 44.54% Officer, and President Robert Ballheim Executive Vice President 125,837 shs 1.04% of Engineering John Behrmann Director 0 0.00% Matthew Crimmins Director 0 0.00% Steven Gill Director, Executive 40,000 shs 0.33% Vice President and Chief Financial Officer George Hartman Director and Senior Vice 35,064 shs 0.29% President of Sales and Marketing Thomas Penaluna Director 92,172 shs(2) 0.75% William Scott Director 0 0.00% All Executive Directors and Officers as a Group 5,703,534 46.95%
- ---------- 1. Includes options exercisable within 60 days from June 30, 1996. 2. Includes 92,172 shares owned by a partnership in which Mr. Penaluna is a partner. Item 12. Certain Relationships and Related Transactions From November 1995 to May 1996, Jeremy Feakins, President, Chief Executive Officer, and Director loaned the Company approximately $108,000. The above loan was an unsecured promissory note and was non-interest bearing. The above-described loan was repaid by the company in July 1996. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: 3.1 Articles of Incorporation of SouthStar Productions, Inc., n/k/a Medical Technology & Innovations, Inc. [Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-18 (File No. 33-27610-A), filed March 17, 1989] 3.2 Amendment to the Articles of Incorporation for SouthStar Productions, Inc., which changed its name to Medical Technology & Innovations, Inc. [Incorporated by reference to the Company's Current Report on Form 8-K for an event on September 21, 1995] 3.3 Restated Articles of Incorporation for Medical Technology & Innovations, Inc.[Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed September 20 30, 1996] 3.4 By-laws [Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-18 (File No. 33-27610-A), filed March 17, 1989] 10.1 Share Exchange Plan between SouthStar Productions, Inc. and Medical Technology, Inc. [Incorporated by reference to the Company's Current Report on Form 8-K for an event on August 21, 1995] 10.2 Asset purchase agreement for the purchase and sale of certain assets of Steridyne Corporation [Incorporated by reference to the Company's Current Report on Form 8-K for an event on July 31, 1996] 10.3 Medical Technology & Innovations, Inc. 1996 Stock Option Plan. [Incorporated by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed September 30, 1996] 10.4 SouthStar Productions, Inc. Stock Purchase Plan 1995a (Financial Public Relations Consulting Agreement) [Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File No. 33-27610-A), filed August 23, 1995] 10.5 Medical Technology & Innovations, Inc. 1996b Stock Purchase Plan (Consulting Agreement) [Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File No. 33-27610-A), filed April 22, 1996] 10.6 Form of Employment Agreement, Covenant not to Compete, and Stock Option Agreement between the Company and key employees. [Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-KSB (File No. 33-27610-A), filed September 30, 1996] 10.7 Purchase Agreement dated January 31, 1996 between the Company and Glenn and Ruth Schultz. [Incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-KSB (File No. 33- 27610-A), filed September 30, 1996] 16.1 Letter on change in certifying accountant [Incorporated by reference to the Company's Current Report on Form 8-K for an event on April 26, 1996] 21.0 Subsidiary of the Company. Medical Technology, Inc., an Iowa corporation 23.1 Consent of Simon Lever & Company. 24.1 Form of Power of Attorney as indicated on Page 22 of this Form 10-KSB. 27.1 Financial Data Schedules. (b) Reports on Form 8-K. On May 1, 1996, the Company filed a current report on Form 8-K for an event of April 26, 1996, disclosing (1) in Item 4 thereof, a change of the Company's certifying accountant, (2) in Item 5 disclosing the election of individuals who will serve as directors of the Company, (3) disclosing in Item 8 a change of the Company's fiscal year from January 31 to June 30. 27 Financial Data Schedule 21 Signatures In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AND BY: BY: /s/ JEREMY P. FEAKINS /s/ STEVEN GILL ----------------------------- ----------------------------------- Jeremy P. Feakins, President Steven Gill, Executive Vice and Chief Executive Officer President, Chief Financial Officer, and Secretary Date: October 30, 1996. In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ JEREMY P. FEAKINS /s/ STEVEN GILL - --------------------------------- ----------------------------------- Jeremy P. Feakins, President Steven Gill, Executive Vice and Chief Executive Officer, President, Chief Financial Officer, Chairman, and Director Secretary, and Director /s/ GEORGE H. HARTMAN, III /s/ JOHN BEHRMANN* - --------------------------------- ----------------------------------- George H. Hartman, III, Sr. Vice John Behrmann, Director President of Sales and Marketing, and Director /s/ TOM PENALUNA* - --------------------------------- ----------------------------------- Matthew Crimmins, Director Tom Penaluna, Director - --------------------------------- William Scott, Director - ---------- * Pursuant to Power of Attorney Date: October 30, 1996. 22 LIMITED POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that John R. Behrmann has made, constituted and appointed, and by these presents does make, constitute and appoint Steven Gill, as true and lawful attorney for me and in my name, place and stead giving and granting unto my said attorney above-named, full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as I might or could do if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that he, my said attorney, or his substitute shall lawfully do or cause to be done by virtue hereof as follow: TO SIGN ON MY BEHALF, MEDICAL TECHNOLOGY AND INNOVATIONS, INC.'S, FORM 10-KSB-A FOR THE FISCAL YEAR ENDING JUNE 30, 1996. IN WITNESS THEREOF, I have hereunto set my hand and seal this ________ day of October, 1996. Sealed and delivered in the presence of: - ----------------------------- --------------------------- John R. Behrmann - ----------------------------- STATE OF ________________ COUNTY OF _______________ BE IT KNOWN that on October _____, 1996 before me, a Notary Public, in and for the State of __________, duly commissioned and sworn, personally appeared John R. Behrmann to me personally known and known to me to be the person described in and who executed the within Power of Attorney and who acknowledged the within Power of Attorney, to be his Act and Deed. IN WITNESS WHEREOF, I have hereunto set my name and official seal the day and year last above written. ------------------------------------ NOTARY PUBLIC My Commission Expires: EX-23.1 2 CONSENT OF SIMON LEVER & COMPANY INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in the Registration Statement of Medical Technology & Innovations, Inc. on Form S-8 (No. 33-27610-A) of our report dated September 11, 1996, except for Note 16 as to which the date is October 21, 1996, on the consolidated financial statements of Medical Technology & Innovations, Inc. and subsidiary appearing in the Annual Report on Form 10-KSB/A of Medical Technology & Innovations, Inc. for the year ended June 30, 1996. By /s/ Simon Lever & Company -------------------------------- Simon Lever & Company Lancaster, Pennsylvania October 29, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 YEAR JUN-30-1996 JUL-1-1995 JUN-30-1996 274 0 360 30 148 917 484 141 1,267 968 1,022 0 56 4,147 (4,926) 1,267 696 696 535 535 1,944 0 111 (1,894) 0 (1,894) 0 0 0 (1,894) (.159) (.159)
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