FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-16335
BIO-MEDICAL AUTOMATION, INC.
(Name of Small Business Issuer as Specified in its Charter)
Colorado 84-0922701
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(State or other juris- (IRS Employer
diction of incorpora- Identification No.)
tion or organization)
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Issuer's telephone number, including area code: (203) 894 - 9755
Securities registered under Section 12(g) of the Exchange Act:
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 in response to Item 405 of Regulation S-K 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. [X]
The Issuer's revenues for fiscal year ended December 31, 2001, were $8,335.
The aggregate market value of the Registrant's voting stock held, as of March 25, 2002, by non-affiliates of the Registrant was $481,762.
As of March 25, 2002, Registrant had 813,028 shares of its $0.10 par value common stock outstanding.
PART I
ITEM 1. BUSINESS.
Bio-Medical Automation, Inc. was incorporated as a Colorado corporation on October 13, 1983 under the name OZO Diversified Automation, Inc. In March 1999, in connection with the sale of substantially all of the Company's assets the Company changed its name to Bio-Medical Automation, Inc. ("BMA" or the "Company").
On March 9, 1999, the Company completed the sale of substantially all of its assets to JOT Automation, Inc. (the "JOT Transaction"). As a result of the JOT Transaction, the Company's historical business, the depaneling and routing business, is considered to be a "discontinued operation" and, consequently, provides no benefit to persons seeking to understand the Company's financial condition or results of operations.
Following the JOT Transaction the Company devoted its efforts to the development of a prototype micro-robotic device (the "micro-robotic device") to manipulate organic tissues on an extremely small scale. Due to the inability to complete the micro-robotic device, the Company has determined that it will no longer pursue the sale or development of its micro-robotic device and, as of June 30, 2000, the capitalized costs related to the patent underlying the micro-robotic device have been written off by the Company. The Company has never derived any revenues from the micro-robotic device and the Company does not expect that it will ever derive any revenues from this technology.
The Company's management is currently seeking to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company has not identified a viable operating entity for a merger, acquisition, business combination or other arrangement, and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
The Company anticipates that the selection of a business opportunity will be a complex process and will involve a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to depressed economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principle shareholders, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all shareholders and other factors.
In some cases, management of the Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and consent, or because of a requirement of state law to do so.
In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, management's objective will be to obtain long-term capital appreciation for the Company's shareholders. There can be no assurance that the Company will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
You should carefully consider the risks described below before making an investment decision concerning the common stock of the Company. The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
The Company has limited resources and has had no revenues from operations for the fiscal years ended December 31, 2001 and December 31, 2000. On March 9, 1999, the Company sold substantially all of its assets and essentially ceased all operations. Currently, the sole source of revenue for the Company is interest income. The Company will only earn revenues through the acquisition of or merger with a target company (an "Acquisition"). There can be no assurance that any target company (a "Target"), at the time of the Company's consummation of an Acquisition of the Target, or at any time thereafter, will derive any material revenues from its operations or operate on profitable basis. The current assets of the Company, may not be sufficient to fund any Acquisitions. Based on the Company's limited resources, the Company may not be able to effectuate its business plan and consummate an Acquisition. There can be no assurance that determinations ultimately made by the Company will permit the Company to achieve its business objectives.
The Company has had only nominal revenues to date and will be entirely dependent upon its limited available financial resources to implement its business plan. The Company cannot ascertain with any degree of certainty the capital requirements for the execution of its business plan. In the event that the Company's limited financial resources prove to be insufficient to implement its business plan, the Company will be required to seek additional financing. In addition, in the event of the consummation of an Acquisition, the Company may require additional financing to fund the operations or growth of the Target.
There can be no assurance that additional financing will be available on acceptable terms, or at all. To the extent that additional financing proves to be unavailable when needed, the Company would, in all likelihood, be compelled to abandon plans for Acquisitions, and would have minimal capital remaining to pursue other Targets. The failure by the Company to secure additional financing, if needed, could also have a material adverse effect on the continued existence of BMA. The Company has no arrangements with any bank or financial institution to secure financing and there can be no assurance that any such arrangement, if required or otherwise sought, would be available on terms deemed to be commercially acceptable and in the best interests of the Company.
While there currently are no limitations on the Company's ability to borrow funds, the limited resources of the Company and limited operating history will make it difficult to borrow funds. The amount and nature of any borrowings by the Company will depend on numerous considerations, including the Company's capital requirements, the Company's perceived ability to meet debt service on any such borrowings and the then prevailing conditions in the financial markets, as well as general economic conditions. There can be no assurance that debt financing, if required or sought, would be available on terms deemed to be commercially acceptable by and in the best interests of the Company. The inability of the Company to borrow funds required to effect or facilitate an Acquisition may have a material adverse effect on the Company's financial condition and future prospects. Additionally, to the extent that debt financing ultimately proves to be available, any borrowings may subject the Company to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest. Furthermore, a Target may have already incurred borrowings and, therefore, the Company will be subjected to all the risks inherent thereto.
The Company expects to encounter intense competition from other entities having business objectives similar to those of the Company. Many of these entities, including venture capital partnerships and corporations, blind pool companies, large industrial and financial institutions, small business investment companies and wealthy individuals, are well-established and have extensive experience in connection with identifying and effecting Acquisitions directly or through affiliates. Many of these competitors possess greater financial, technical, human and other resources than the Company and there can be no assurance that the Company will have the ability to compete successfully. The Company's financial resources will be limited in comparison to those of many of its competitors. This inherent competitive limitation may compel the Company to select certain less attractive acquisition prospects. There can be no assurance that such prospects will permit the Company to achieve its stated business objectives.
In the event that the Company succeeds in effecting an Acquisition, the Company will, in all likelihood, become subject to intense competition from competitors of the Target. In particular, certain industries which experience rapid growth frequently attract an increasingly large number of competitors, including competitors with greater financial, marketing, technical, human and other resources than the initial competitors in the industry. The degree of competition characterizing the industry of any prospective Target cannot presently be ascertained. There can be no assurance that, subsequent to a consummation of an Acquisition, the Company will have the resources to compete effectively in the industry of the Target, especially to the extent that the Target is in a high growth industry.
The Company may effectuate an Acquisition with a Target whose business operations or even headquarters, place of formation or primary place of business are located outside the United States. In such event, the Company may face the significant additional risks associated with doing business in that country. In addition to the language barriers, different presentations of financial information, different business practices, and other cultural differences and barriers that may make it difficult to evaluate such a Target, ongoing business risks may result from the internal political situation, uncertain legal systems and applications of law, prejudice against foreigners, corrupt practices, uncertain economic policies and potential political and economic instability that may be exacerbated in various foreign countries.
Steven N. Bronson is the Chairman, C.E.O. and President of the Company. The ability of the Company to successfully carry out its business plan and to consummate any Acquisitions will be dependent upon the efforts of Mr. Bronson and the Company's directors. Notwithstanding the significance of Mr. Bronson, the Company has not obtained any "key man" life insurance on his life. The loss of the services of Mr. Bronson could have a material adverse effect on the Company's ability to successfully achieve its business objectives. If additional personnel are required, there can be no assurance that the Company will be able to retain such necessary additional personnel.
Mr. Bronson beneficially owns and controls 664,667 shares of common stock of the Company, including options to purchase 120,000 shares of common stock, representing approximately 72.0% of the issued and outstanding shares of common stock and approximately 72.0% of the voting power of the issued and outstanding shares of common stock of the Company. In the election of directors, stockholders are not entitled to cumulate their votes for nominees. Accordingly, as a practical matter, Mr. Bronson may be able to elect all of the Company's directors and otherwise direct the affairs of the Company.
Mr. Bronson is not required to commit his full time to the affairs of the Company. Mr. Bronson will have conflicts of interest in allocating management time among various business activities. As a result, the consummation of an Acquisition may require a greater period of time than if Mr. Bronson devoted his full time to the Company's affairs. However, Mr. Bronson will devote such time as he deems reasonably necessary to carry out the business and affairs of the Company, including the evaluation of potential Targets and the negotiation and consummation of Acquisitions and, as a result, the amount of time devoted to the business and affairs of the Company may vary significantly depending upon, among other things, whether the Company has identified a Target or is engaged in active negotiation and consummation of an Acquisition.
The Company's Certificate of Incorporation authorizes the issuance of 5,000,000 shares of common stock. As of March 25, 2002 the Company had approximately 813,028 shares of common stock issued and outstanding and approximately 4,186,972 authorized but unissued shares of common stock available for issuance. Although the Company has no commitments as of this date to issue its securities, the Company will, in all likelihood, issue a substantial number of additional shares in connection with or following an Acquisition. To the extent that additional shares of common stock are issued, the Company's stockholders would experience dilution of their ownership interests in the Company. Additionally, if the Company issues a substantial number of shares of common stock in connection with or following an Acquisition, a change in control of the Company may occur which may affect, among other things, the Company's ability to utilize net operating loss carry forwards, if any. Furthermore, the issuance of a substantial number of shares of common stock may adversely affect prevailing market prices, if any, for the common stock and could impair the Company's ability to raise additional capital through the sale of its equity securities. The Company may use consultants and other third parties providing goods and services. These consultants or third parties may be paid in cash, stock, options or other securities of the Company. The Company may in the future need to raise additional funds by selling securities of the Company which may involve substantial additional dilution to the investors.
BMA's Articles of Incorporation authorizes the designation and issuance of 1,000,000 shares of preferred stock (the "Preferred Stock"), with such designations, powers, preferences, rights, qualifications, limitations and restrictions of such series as the Board, subject to the laws of the State of Colorado, may determine from time to time. Accordingly, the Board is empowered, without stockholder approval, to designate and issue Preferred Stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock. In addition, the Preferred Stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change of control. Although we do not currently intend to designate or issue any shares of Preferred Stock, there can be no assurance that we will not do so in the future. It is likely however, that following a merger, new management may issue such preferred stock, and it is possible that one or more series of preferred stock will be designated and/or issued in order to effectuate a merger or financing. As of this date, we have no outstanding shares of Preferred Stock and we have not designated the rights or preferences of any series of preferred stock.
The Company may form one or more subsidiary entities to effect an Acquisition and may, under certain circumstances, distribute the securities of subsidiaries to the stockholders of the Company. There cannot be any assurance that a market would develop for the securities of any subsidiary distributed to stockholders or, if it did, any assurance as to the prices at which such securities might trade.
The Company presently does not expect to pay dividends. The payment of dividends, if any, will be contingent upon the Company's revenues and earnings, if any, capital requirements, and general financial condition. The payment of any dividends will be within the discretion of the Company's then Board of Directors. The Company presently intends to retain all earnings, if any, to implement its business plan, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.
The Company's Certificate of Incorporation provides for the indemnification of its officers and directors to the fullest extent permitted by the laws of the State of Colorado. It is possible that the indemnification obligations imposed under these provisions could result in a charge against the Company's earnings and thereby affect the availability of funds for other uses by the Company.
Federal and state tax consequences will, in all likelihood, be major considerations for the Company in consummating an Acquisition. The structure of an Acquisition or the distribution of securities to stockholders may result in taxation of the Company, the Target or stockholders. Typically, these transactions may be structured to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. The Company intends to structure any Acquisition so as to minimize the federal and state tax consequences to both the Company and the Target. Management cannot assure that an Acquisition will meet the statutory requirements for a tax-free reorganization, or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes, which may have an adverse effect on both parties to the transaction.
The regulatory scope of the Investment Company Act of 1940, as amended (the "Investment Company Act"), which was enacted principally for the purpose of regulating vehicles for pooled investments in securities, extends generally to companies engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities. The Investment Company Act may, however, also be deemed to be applicable to a company which does not intend to be characterized as an investment company but which, nevertheless, engages in activities which may be deemed to be within the definitional scope of certain provisions of the Investment Company Act. The Company believes that its anticipated principal activities, which will involve acquiring control of an operating company, will not subject the Company to regulation under the Investment Company Act. Nevertheless, there can be no assurance that the Company will not be deemed to be an investment company. If the Company is deemed to be an investment company, the Company may become subject to certain restrictions relating to the Company's activities, including restrictions on the nature of its investments and the issuance of securities. In addition, the Investment Company Act imposes certain requirements on companies deemed to be within its regulatory scope, including registration as an investment company, adoption of a specific form of corporate structure and compliance with certain burdensome reporting, record keeping, voting, proxy, disclosure and other rules and regulations. In the event of the characterization of the Company as an investment company, the failure by the Company to satisfy such regulatory requirements, whether on a timely basis or at all, would, under certain circumstances, have a material adverse effect on the Company.
This document contains certain forward looking statements that involve risks and uncertainties. We use words such as "anticipate," "believe," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. These statements are only predictions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this document. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described on the preceding pages and elsewhere in this document.
We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to predict accurately or over which we have no control. The risk factors listed above, as well as any cautionary language in this document, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this document could have a material adverse effect on our business, operating results, financial condition and stock price.
ITEM 2. PROPERTIES
On February 1, 2001, the Company relocated its principal offices from 900 Third Avenue, Suite 201, New York, New York 10022 to 10 South Street, Suite 202, Ridgefield, Connecticut 06877. The Company currently utilizes a portion of the premises occupied by the President of the Company, as its corporate office, at no charge to the Company. The value of the rent for the use of this office was nominal.
Prior to February 1, 2001, for its principal offices the Company utilized a portion of the premises occupied by Catalyst Financial LLC, a full service brokerage, investment banking and consulting firm, located at 900 Third Avenue, Suite 201, New York, New York 10022. Mr. Bronson is the principal and owner of Catalyst Financial LLC. The Company did not pay any rent on these offices during the period January 1, 2001 through January 31, 2001 and for the fiscal year ended December 31, 2000.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or of which any of its property is the subject as of the date of this report and there were no such proceedings during the fiscal years ended December 31, 2001 and December 31, 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders during the fourth quarter of the year ended December 31, 2001.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) MARKET INFORMATION. The Company's common stock is quoted on the OTC (Over-The-Counter) Bulletin Board and traded under the symbol ("BMAI"). The following table sets forth the range of high and low closing bid prices for the Company's common stock for the periods indicated. These prices represent reported transactions between dealers that do not include retail markups, markdowns or commissions, and do not necessarily represent actual transactions.
Year/Fiscal Period High Bid ($) Low Bid ($) ------------------ ------------ ----------- 2001 First Quarter 1.50 1.00 Second Quarter 2.25 1.26 Third Quarter 2.10 1.90 Fourth Quarter 2.15 1.77 2000 First Quarter 1.34375 0.625 Second Quarter 1.125 0.75 Third Quarter 1.50 1.125 Fourth Quarter 1.50 1.00 |
(b) HOLDERS. As of March 25, 2002, the Company had approximately 663 holders of record of its $0.10 par value common stock.
(c) DIVIDENDS. The Company has not declared cash dividends on its common stock since its inception, and the Company does not anticipate paying any dividends in the foreseeable future. There are no contractual restrictions on the Company's ability to pay dividends.
The following information relates to sales of unregistered securities by the Company during the fiscal year ended December 31, 2001. All of these sales of securities were made in reliance upon an exemption from the registration provisions of the Securities Act of 1933 set forth in Sections 4(2), 4(6) and/or 3(b) thereof and the rules and regulations under the Securities Act of 1933, including Regulation D, as transactions by an issuer not involving any public offering and/or sales to a limited number of purchasers who were acquiring such securities for their own account for investment purposes and not with a view to the resale or distribution thereof.
On November 13, 2001, the Company authorized the issuance of 5,000 shares of common stock to Leonard Hagan as consideration for the services he rendered to the Company as a director. The shares issued to Leonard Hagan had a fair market value of $9,100. The shares issued to Leonard Hagan are restricted securities and were issued pursuant to Section 4 (2) of the Securities Act of 1933.
On November 13, 2001, the Company authorized the issuance of 5,000 shares of common stock to Kenneth Schwartz as consideration for the services he rendered to the Company as a director. The shares issued to Kenneth Schwartz had a fair market value of $9,100. The shares issued to Kenneth Schwartz are restricted securities and were issued pursuant to Section 4 (2) of the Securities Act of 1933.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which the Company's management believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report.
Except for historical information contained herein, the statements in this report are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements when you see words such as "expect," "anticipate," "estimate," "may," "believe," and other similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Actual results could differ materially from those projected in the forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially, from forecasted results. These and other risks are described elsewhere herein and in the Company's other filings with the Securities and Exchange Commission, namely the Company's Form 10-KSB for the year ended December 31, 2000.
Bio-Medical Automation, Inc. was incorporated as a Colorado corporation on October 13, 1983 under the name OZO Diversified Automation, Inc. On March 9, 1999, the Company completed the sale of substantially all of its assets to JOT Automation, Inc. (the "JOT Transaction"). In connection with the JOT Transaction the Company changed its name to Bio-Medical Automation, Inc. ("BMA" or the "Company").
Following the JOT Transaction the Company devoted its efforts to the development of a prototype micro-robotic device (the "micro-robotic device") to manipulate organic tissues on an extremely small scale. Due to the inability to complete the micro-robotic device, the Company has determined that it will no longer pursue the sale or development of its micro-robotic device and, as of June 30, 2000, the capitalized costs related to the patent underlying the micro-robotic device have been written off by the Company. The Company has never derived any revenues from the micro-robotic device and the Company does not expect that it will ever derive any revenues from this technology.
Currently, the Company has suspended all operations, except for necessary administrative matters relating to the timely filing of periodic reports as required by the Securities Exchange Act of 1934. Accordingly, during the the year ended December 31, 2001, the Company has earned no revenues from operations.
The Company's plan of operation is to seek to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company has not identified a viable operating entity for a merger, acquisition, business combination or other arrangement, and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
The Company anticipates that the selection of a business opportunity will be a complex process and will involve a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to depressed economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous companies seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principle shareholders, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all shareholders and other factors.
In some cases, management of the Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and consent, or because of a requirement of state law to do so.
In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, management's objective will be to obtain long-term capital appreciation for the Company's shareholders. However, there can be no assurance that the Company will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
The Company may need additional funds in order to complete a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there can be no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there can be no assurance that the Company will be able to complete a merger, acquisition or other arrangement by and between the Company and a viable operating entity.
During the year ended December 31, 2001 ("Fiscal 01"), the Company earned no revenues from operation and generated interest income of $8,335, compared to no revenues from continuing operations and interest income in the amount of $5,559 for the year ended December 31, 2000 ("Fiscal 00").
During Fiscal 01, the Company incurred expenses of $101,108, a decrease of $12,851 compared to expenses of $113,959 for Fiscal 00.
For Fiscal 01 the Company incurred a net loss of $92,773 compared to a net loss of $108,400 for Fiscal 00.
During Fiscal 01, the Company satisfied its working capital needs from cash on hand at the beginning of the year and cash generated from interest income during the year. As of December 31, 2001, the Company had working capital of $336,194. While this working capital will satisfy the Company's immediate financial needs, it may not be sufficient to provide the Company with sufficient capital to finance a merger, acquisition or business combination between the Company and a viable operating entity. The Company may need additional funds in order to complete a merger, acquisition or business combination between the Company and a viable operating entity. There can be no assurances that the Company will be able to obtain additional funds if and when needed.
The Company's future financial condition will be subject to its ability to arrange for a merger, acquisition or a business combination with an operating business on favorable terms that will result in profitability. There can be no assurance that the Company will be able to do so or, if it is able to do so, that the transaction will be on favorable terms not resulting in an unreasonable amount of dilution to the Company's existing shareholders.
The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity.
Consequently, the Company's current financial condition continues to be entirely dependent upon management's ability to successfully arrange for a merger, acquisition or other arrangement by and between the Company and a viable operating entity.
ITEM 7. FINANCIAL STATEMENTS
See Financial Statements on pages F-1 through F-14.
ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the name, age and position of each of our directors, executive officers and significant employees as of December 31, 2001. Each director will hold office until the next annual meeting of our stockholders or until his or her successor has been elected and qualified. Our executive officers are appointed by, and serve at the discretion of, the Board of Directors.
Name Age Position ------------------ ----- ----------------------------------------------- Steven N. Bronson 36 Chairman, Chief Executive Officer and President Leonard Hagan 50 Director Kenneth Schwartz 46 Director |
Steven N. Bronson has served as a director of the Company since March 25, 2000. Mr. Bronson is also the President of Catalyst Financial LLC, a privately held full service securities brokerage and investment banking firm. During the period of 1991 through September 23, 1998, Mr. Bronson was the Co-Founder and President of Barber & Bronson Incorporated, a full service securities brokerage and investment banking firm. In addition, Mr. Bronson is an officer and director of 4net Software, Inc., a publicly traded corporation. Additionally, Mr. Bronson has been a member of NIBA since 1991 and served as a board member from 1993 to 1996.
Leonard Hagan has served as a director of the Company since March 25, 2000.
Mr. Hagan is a certified public accountant and for the past eight years has been
a partner at Hagan & Burns CPA's, PC in New York. Mr. Hagan received a Bachelors
of Arts degree in Economics from Ithaca College in 1974, and earned his Masters
of Business Administration degree from Cornell University in 1976.
Mr. Hagan is registered as the Financial and Operations Principal for the
following broker-dealers registered with the Securities and Exchange Commission:
Adelphia Capital LLC, Magna Securities Corp., Mallory Capital Group, LLC,
Institutional Edge, LLC and Danske Securities (US), Inc. Mr. Hagan is also a
director of 4net Software, Inc., a publicly traded corporation.
Dr. Kenneth Schwartz has served as a director of the Company since March 25, 2000. Dr. Schwartz has been self-employed as a dentist in New York, New York. Dr. Schwartz received his Bachelor of Sciences from Brooklyn College in 1977 and earned his D.D.S. from New York University College of Dentistry in 1982.
No director, executive officer, promoter or control person of the Company has, within the last five years: (i) had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) been convicted in a criminal proceeding or is currently subject to a pending criminal proceeding (excluding traffic violations or similar misdemeanors); (iii) been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (iv) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission (the "Commission") or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended or vacated. There are no family relationships among any directors and executive officers of the Company.
Committees of the Board of Directors
During the fiscal year ended December 31, 2001, the Board of Directors held 3 meetings. In view of the Company's lack of operations, during the year ended December 31, 2001, the Board of Directors did not have any Committees. During the fiscal year ended December 31, 2001, all of the directors then in office attended 100% of the total number of meetings of the Board of Directors and the Committees of the Board of Directors on which they served.
Audit Committee
On March 26, 2002, the Board of Directors appointed an Audit Committee. The functions of the Audit Committee are to recommend to the Board of Directors the appointment of independent auditors for the Company and to analyze the reports and recommendations of such auditors. The committee also monitors the adequacy and effectiveness of the Company's financial controls and reporting procedures. The Audit Committee consists of Messrs. Schwartz and Hagan. The Audit Committee does not meet on a regular basis, but only as circumstances require.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely upon a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2001, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with.
ITEM 10. EXECUTIVE COMPENSATION.
Summary Compensation Table(1)
The following summary compensation table sets forth information concerning the annual and long-term compensation earned by our chief executive officer and each of the other most highly compensated executive officers (collectively, the "Named Executive Officers").
Name/Position Fiscal year Annual Salary Stock Grants Option Grants
--------------------------------------------------------------------------------
Steven N. Bronson
CEO and President 2001 $48,000(2) 0 0
2000 $48,000(3) 0 0
1999 0 0 0
|
Alvin L. Katz(4) 2001 0 0 0
2000 0 0 0
1999 0 0 0
----------------------
|
(1) The Columns designated by the SEC for the reporting of certain bonuses, long term compensation, including awards of restricted stock, long term incentive plan payouts, and all other compensation have been eliminated as no such bonuses, awards, payouts, grants or compensation were awarded during any fiscal year covered by the table.
(2) On March 30, 2001, the Company issued Mr. Bronson 38,400 shares of common stock (valued at $1.25 per share on the date of issuance) in lieu of his annual salary of forty-eight thousand dollars ($48,000) for the period of March 25, 2001 through March 24, 2002.
(3) On May 5, 2000, the Board of Directors authorized the issuance of 64,000 shares of BMA common stock (valued at $.75 per share on the date of issuance) to its President, in lieu of his annual salary of forty-eight thousand dollars ($48,000) for the period of March 25, 2000 through March 24, 2001.
(4) Alvin L. Katz became CEO on November 1, 1999. Mr. Katz resigned his position with the Company on March 25, 2000. Mr. Katz was paid no salary during the years ended December 31, 2000 and December 31, 1999.
Other Plans. The Company does not currently have any bonus, profit sharing, pension, retirement, stock option, stock purchase, or other remuneration or incentive plans in effect.
Long Term Incentive Plan. The Company has no long-term incentive plan.
In fiscal year ended December 31, 2001, no cash compensation was paid to our directors for their services as directors. However, on November 13, 2001, the Company issued 5,000 shares of the Company's common stock each to Leonard Hagan and Kenneth Schwartz, the Company's independent directors, for their services to the Company.
On March 24, 2001, the Company entered into an Employment Agreement with Steven N. Bronson, the President of the Company. The terms of such Employment Agreement include the following:
A copy of Mr. Bronson's Employment Agreement is attached as an Exhibit to the Company's for 10-QSB for the quarter ended March 31, 2001 and is incorporated by reference. On March 30, 2001, the Company issued Mr. Bronson 38,400 shares of common stock in lieu of his annual salary of forty-eight thousand dollars ($48,000).
On March 26, 2002, the Board of Directors authorized the renewal of Mr. Bronson's employment agreement with the Company for another 1 year term.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of March 25, 2002, certain information regarding the beneficial ownership of the common stock outstanding by (i) each person who is known to the Company to own 5% or more of the common stock, (ii) each director of the Company, (iii) certain executive officers of the Company and (iv) all executive officers and directors of the Company as a group. Unless otherwise indicated, each of the stockholders shown in the table below has sole voting and investment power with respect to the shares beneficially owned. Unless otherwise indicated, the address of each person named in the table below is c/o Bio-Medical Automation, Inc., 10 South Street, Suite 202, Ridgefield, Connecticut 06877.
Number of Percent
Name and Address Company Position Shares owned of class
---------------- ---------------- ------------ --------
Steven N. Bronson Chairman, CEO 664,647(2)(3) 72.0%
and President
Kenneth Schwartz Director 22,500(4) *
Leonard Hagan Director 5,000 *
|
(1) As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days.
(2) Includes options and warrants to purchase 120,000 shares of BMA common stock at exercise prices ranging at $1.125 per share to $1.25 per share. These options and warrants are set to expire between June 24, 2002 and February 15, 2003.
(3) This amount does not include 30,000 shares of BMA common stock owned by Mr. Bronson's spouse. Mr. Bronson expressly disclaims beneficial ownership of the shares owned by his spouse.
(4) This amount includes 17,500 shares of common stock owned by Dr. Schwartz's spouse, and Dr. Schwartz expressly disclaims beneficial ownership of the shares owned by his spouse.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Steven N. Bronson is the President of Catalyst Financial LLC f/k/a Catalyst Financial Corp. ("Catalyst"), a full service securities brokerage and investment banking firm. Since March 25, 1999, the Company has utilized a portion of the premises occupied by Catalyst as its executive offices. Due to the reduced level of the Company's operations, Catalyst has, until further notice, waived the payment of rent by the Company. No rent was paid by the Company to Catalyst during the fiscal year ended December 31, 2001.
Steven N. Bronson is the owner and principal of Catalyst Financial LLC ("Catalyst Financial"), a full service securities brokerage, investment banking and consulting firm. The Company entered into a Mergers and Acquisitions Advisory Agreement, dated as of November 13, 2001, with Catalyst Financial (the "M&A Advisory Agreement"). Pursuant to the M&A Advisory Agreement, Catalyst Financial agreed to provide consulting services to the Company in connection with the Company's search for prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. For the services rendered pursuant to the M&A Advisory Agreement, Catalyst Financial is entitled to receive a fee in the amount of five percent (5%) of the total consideration of the specific transaction (the "M&A Fee"). The maximum amount of the M&A Fee is $500,000 for any single transaction. The term of the Mergers and Acquisitions Advisory Agreement is three years. A copy of the M&A Advisory Agreement is attached as an exhibit hereto and is incorporated herein by reference.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS:
Independent Auditors' Report
Balance Sheet--As of December 31, 2001
Statements of Operations--Years Ended December 31, 2000, and 2001 and Cumulative Amounts from January 1, 2000 through December 31, 2001
Statements of Stockholders' Equity--Years Ended December 31, 2000, and 2001
Statements of Cash Flows for the Years Ended December 31, 2000, and 2001 and Cumulative Amounts from January 1, 2000 through December 31, 2001
Notes to Financial Statements
(b) 8-K REPORTS:
No Current Reports on Form 8-K were filed by the Company during the fourth quarter of the year ended December 31, 2001.
(c) EXHIBITS:
3.1 Articles of Incorporation, incorporated by reference to Registration Statement No. 33-13074-D as Exhibit 3.1
3.2 Amended Bylaws adopted June 1, 1987, incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 1987 as Exhibit 3.2.
3.4 Articles of Amendment to Restated Articles of Incorporation dated March 7, 1991. Incorporated by reference to Annual Report on Form 10-K for fiscal year ended December 31, 1990 as Exhibit 3.4.
3.5 Articles of Amendment to Restated Articles of Incorporation dated March 17, 1999, incorporated by reference to Form 8-K reporting an event of March 9, 1999.
10.1 OEM Purchase Agreement dated January 15, 1990, between the Company and Ariel Electronics, Inc. incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 1989 as Exhibit 10.16.
10.2 Form of Convertible Promissory Note, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.2.
10.3 Form of Non-Convertible Promissory Note, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.3.
10.4 Form of Note Purchaser Warrant Agreement and Warrant, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.4.
10.5 Form of Promissory Note, 4/1/96.
10.6 Form of Security Agreement, 4/1/96.
10.7 Form of Common Stock Purchase Warrant, 4/1/96.
10.8 Form of Promissory Note, 7/1/96.
10.9 Form of 4/1/96 Promissory Note Extension, 10/17/96.
10.10 Form of Common Stock Purchase Warrant, 10/10/96.
10.11 Asset Purchase Agreement with JOT incorporated by
reference to Form 8-K reporting an event of November 4, 1998,
and amendment thereto incorporated by reference to Form 8-K
reporting an event of December 15, 1998
10.12 Stock Purchase Agreement, between Bio-Medical Automation,
Inc. and Steven N. Bronson, incorporated by reference to the
Current Report on Form 8-K filed on April 6, 2000.
10.13 Employment Agreement between Bio-Medical Automation, Inc.
and Steven N. Bronson, dated as of March 24, 2001,
incorporated by reference to Quarterly Report on Form 10-QSB
for the quarter ended March 31, 2001.
10.14 Mergers and Acquisitions Advisory Agreement, dated as of
November 13, 2001, between Bio-Medical Automation, Inc. and
Catalyst Financial LLC. A copy of the Mergers and Acquisitions
Advisory Agreement is attached hereto and incorporated herein
by reference.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: March 28, 2002
BIO-MEDICAL AUTOMATION, INC.,
a Colorado corporation
By: /s/ Steven N. Bronson
-------------------------------------
Steven N. Bronson, CEO and President
Principle Executive Officer as
Registrant's duly authorized officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, 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/ Steven N. Bronson /s/ Kenneth Schwartz --------------------------------- ---------------------------------- Steven N. Bronson Kenneth Schwartz President, Chief Executive Director Officer and Chairman March 28, 2002 of the Board of Directors Principal Executive Officer March 28, 2002 /s/ Leonard Hagan --------------------------------- Leonard Hagan Director March 28, 2002 |
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditor's Report F - 2
Balance Sheet
December 31, 2001 F - 3
Statements of Operations
Years Ended December 31, 2000 and 2001
and Cumulative Amounts from January 1, 2000 to December 31, 2001 F - 4
Statements of Stockholders' Equity
Years Ended December 31, 2000 and 2001 F - 5
Statements of Cash Flows
Years Ended December 31, 2000 and 2001
and Cumulative Amounts from January 1, 2000 to December 31, 2001 F - 6 -- F - 7
Notes to Financial Statements F - 8 -- F - 14
|
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
BIO-MEDICAL AUTOMATION, INC.
We have audited the accompanying balance sheet of Bio-Medical Automation, Inc. (a development stage company) as of December 31, 2001 and the related statements of operations, stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2001 and cumulative amounts from January 1, 2000 to December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly, in all material respects, the financial position of Bio-Medical Automation, Inc. as of December 31, 2001 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2001 and cumulative amounts from January 1, 2000 to December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company sold substantively all of the assets and related operations of its operating segment in 1999. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainly.
Wheeler Wasoff, P.C.
Denver, Colorado
February 28, 2002
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 2001
ASSETS
CURRENT ASSETS
Cash $ 341,611
Interest receivable - officer 2,262
-----------
Total Current Assets 343,873
-----------
$ 343,873
===========
|
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 7,679
-----------
Total Current Liabilities 7,679
-----------
|
STOCKHOLDERS' EQUITY (Notes 3 & 5)
Preferred stock - $.10 par value; authorized - 1,000,000 shares
Issued - none --
Common stock - $.10 par value; authorized - 5,000,000 shares
Issued and outstanding - 813,028 shares 81,303
Capital in excess of par value 1,464,884
Note receivable - officer (50,000)
Stock issued for deferred compensation (11,000)
Accumulated (deficit) (947,820)
(Deficit) accumulated during the development stage (201,173)
-----------
336,194
-----------
$ 343,873
===========
|
The accompanying notes are an integral part of these financial statements.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
Amounts from
Years Ended January 01, 2000
December 31, to December 31,
2000 2001 2001
REVENUES
Interest income $ 5,559 $ 8,335 $ 13,894
--------- --------- ---------
OPERATING EXPENSES
General and administrative 95,235 101,108 196,343
Write-off of patent 18,724 -- 18,724
--------- --------- ---------
113,959 101,108 215,067
--------- --------- ---------
NET (LOSS) $(108,400) $ (92,773) $(201,173)
========= ========= =========
NET (LOSS) PER COMMON SHARE
Basic and Diluted $ (0.16) $ (0.12) $ (0.28)
========= ========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
Basic and Diluted 684,461 777,444 731,415
========= ========= =========
|
The accompanying notes are an integral part of these financial statements.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000 AND 2001
Deficit
Accumulated
Common Stock Capital During
in Excess Note Deferred Accumulated Development
Shares Amount of Par Value Receivable Compensation Deficit Stage
-------- --------- ----------- ----------- ----------- ----------- -----------
Balance, January 1, 2000 643,128 $ 64,313 $ 1,312,049 $ -- $ -- $ (947,820) $ --
Issuance of common stock to officer for
deferred compensation, valued at $.75 64,000 6,400 41,600 -- (48,000) -- --
per share
Deferred compensation earned -- -- -- -- 37,000 -- --
Net (loss) -- -- (108,400)
-------- --------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2000 707,128 70,713 1,353,649 -- (11,000) (947,820) (108,400)
Issuance of common stock to officer for
deferred compensation, valued at $1.25
per share 38,400 3,840 44,160 -- (48,000) -- --
Deferred compensation earned
-- -- -- -- 48,000 -- --
Issuance of common stock for services,
valued at $1.82 per share 10,000 1,000 17,200 -- -- -- --
Exercise of common stock warrants for
cash at $.75 per share 7,500 750 4,875 -- -- -- --
Exercise of common stock warrants at
$1.00 per share 50,000 5,000 45,000 (50,000) -- -- --
Net (loss) -- -- -- -- -- -- (92,773)
-------- --------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 2001 813,028 $ 81,303 $ 1,464,884 $ (50,000) $ (11,000) $ (947,820) $ (201,173)
======== ========= =========== =========== =========== =========== ===========
|
The accompanying notes are an integral part of these financial statements.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
Years Ended Amounts from
December 31, January 1, 2000 to
2000 2001 December 31, 2001
CASH FLOWS FROM OPERATING ACTIVITES
Net (loss) $(108,400) $ (92,773) $(201,173)
Adjustment to reconcile net (loss) to net cash(used) by operating
activities
Stock issuance for salary 37,000 48,000 85,000
Stock issuance for professional services -- 18,200 18,200
Write-off of patent 18,724 -- 18,724
Changes in assets and liabilities
(Increase) in interest receivable -- (2,262) (2,262)
(Decrease) increase in accounts payable and accrued expenses (11,794) 4,080 (7,714)
--------- --------- ---------
Net cash (used) by operating activities (64,470) (24,755) (89,225)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash (used) in investing activities -- -- --
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of common stock warrants -- 5,625 5,625
--------- --------- ---------
Net cash (used) by financing activities -- 5,625 5,625
--------- --------- ---------
NET (DECREASE) IN CASH (64,470) (19,130) (83,600)
CASH, BEGINNING OF PERIODS 425,211 360,741 425,211
--------- --------- ---------
CASH, END OF PERIODS $ 360,741 $ 341,611 $ 341,611
========= ========= =========
|
The accompanying notes are an integral part of these financial statements.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2000 AND 2001 AND
CUMULATIVE AMOUNTS FROM JANUARY 1, 2000 TO DECEMBER 31, 2001
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the year ended December 31, 2000 the Company issued 64,000 shares of common stock, valued at $48,000, to its President as salary for the period March 2000 to March 2001.
During the year ended December 31, 2001, the Company:
o Issued 38,400 shares of common stock, valued at $48,000, to its President as salary for the period March 2001 to March 2002.
o Issued 10,000 shares of common stock, valued at $18,200, to two Board of Directors members for compensation.
o The Company's President exercised warrants to acquire 50,000 shares of the Company's common stock at $1.00 per share by entering into a promissory note in the amount of $50,000 due March 30, 2003, with interest at 6% payable semi-annually.
The accompanying notes are an integral part of these financial statements.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Bio-Medical Automation, Inc. (the Company) was incorporated under the laws of the State of Colorado on October 13, 1983. The Company had been engaged in the design, manufacture and marketing of robotic workstations for the electronics industry, including routing and depaneling workstations predominately to entities in North America and the Pacific Rim. In November 1998 the Company entered into an Asset Purchase Agreement (the "JOT Agreement") with JOT Automation, Inc. (JOT) a wholly owned Texas subsidiary of JOT Automation Group OYJ, a Finnish corporation. Pursuant to the agreement, the Company sold JOT all of its assets relating to its depaneling and routing business in exchange for $920,000 and the assumption of the operating liabilities related to the Company's business assets. The sale was completed on March 9, 1999.
Subsequent to the sale to JOT, the Company's sole continuing operation was the continuation of research and development activities on a prototype micro-robotic device to manipulate organ tissues on an extremely small scale. The Company had filed for a patent application for the device. As of December 31, 1999 the Company's research and development activities for the device were suspended, pending assessment of the economic benefit of continuing research and development activities or sale of the patent, as well as assessment of other corporate opportunities. In June 2000 the Company determined not to pursue further development or sale of the proto-type device and has written-off the associated patent costs.
Commencing January 1, 2000, the Company is considered a development stage company as defined by Statement of Financial Accounting Standards (SFAS) No.7, as it has no principal operations nor revenue from any source.
INCOME TAXES
The Company has adopted the provisions of SFAS 109, "Accounting for Income Taxes". SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, the deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
(LOSS) PER COMMON SHARE
Basic (loss) per common share is calculated by dividing net (loss) by the weighted average number of common shares outstanding during the year. Diluted income per common share is calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive convertible equity instruments consisting of warrants and options. There is no difference in the calculation of basic and diluted loss per share for 2000 and 2001. Convertible equity instruments are not considered in the calculation of loss per share, as their inclusion would be antidilutive.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers as cash equivalents all highly liquid investments with a maturity of three months or less at the time of purchase. On occasion, the company has cash in banks in excess of federally insured amounts. At December 31, 2001, there were no cash equivalents.
USE OF 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
SHARE BASED COMPENSATION
In October 1995, SFAS 123, "Accounting for Stock-Based Compensation" was issued. This new standard defines a fair value based method of accounting for an employee stock option or similar equity instrument. This statement gives entities a choice of recognizing related compensation expense by adopting the new fair value method or to continue to measure compensation using the intrinsic value approach under Accounting Principles Board (APB) Opinion No. 25. The Company has elected to utilize APB 25 for measurement; and will, pursuant to SFAS 123, disclose supplementally the pro forma effects on net income and earnings per share of using the new measurement criteria.
PATENT COSTS
The Company had applied for a patent from the U.S. Patent Office for a micro-robotic device under development. The costs associated with obtaining this patent were capitalized and were to be amortized over the life of the patent of seventeen years upon issuance of the patent.
The patent was the Company's sole asset of continuing operations. In 1999, the Company incurred research and development costs associated with development of the micro-robotic device underlying the patent and had, as of December 31, 1999, continued to assess the economic benefit of continuing research and development activities or sale of the patent.
In February 2000, the Company entered into an agreement with a shareholder which resulted in a change in control of the Company. The agreement specified that the Company owns certain intellectual property consisting of the patent application and a related Technology License Agreement. In June 2000, the Company decided not pursue further research and development or sale of the patent and has written-off the capitalized costs.
The Company has adopted SFAS 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed of", which requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of SFAS 121 has not had an impact on the Company's financial statements.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE
The carrying amount reported in the balance sheet for cash, note receivable, accounts payable and accrued liabilities approximates fair value because of the immediate or short-term maturity of these financial instruments.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash accounts at one financial institution. The Company periodically evaluates the credit worthiness of financial institutions, and maintains cash accounts only in large high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. At December 31, 2001, cash in excess of federally insured amounts was approximately $241,000.
NEW TECHNICAL PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141 "Business Combinations" and SFAS 142 "Goodwill and Other Intangible Assets". SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for under the purchase method. For all business combinations for which the date of acquisition is after June 30, 2001, SFAS 141 also establishes specific criteria for the recognition of intangible assets separately from goodwill and requires unallocated negative goodwill to be written off immediately as an extraordinary gain rather than deferred and amortized. SFAS 142 changes the accounting for goodwill and other intangible assets after an acquisition. The most significant changes made by SFAS 142 are: 1) goodwill and intangible assets with indefinite lives will no longer be amortized; 2) goodwill and intangible assets with indefinite lives must be tested for impairment at least annually; and 3) the amortization period for intangible assets with finite lives will no longer be limited to forty years. The Company does not believe that the adoption of these statements will have a material effect on its financial position, results of operations or cash flows.
In June 2001, the FASB also approved for issuance SFAS 143, "Asset Retirement Obligations." SFAS 143 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including (1) the timing of the liability recognition, (2) initial measurement of the liability, (3) allocation of assets retirement cost to expense, (4) subsequent measurement of the liability and (5) financial statement disclosure. SFAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The provisions of SFAS 143 are effective for financial statements issued for fiscal years beginning after June 15, 2002. The adoption of SFAS 143 is not expected to have a material effect on the Company's financial position, results of operations or cash flows.
In August 2001, the FASB also approved SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 replaces SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The new accounting model for long-lived assets to be disposed of by sale applies to all long-lived assets, including discontinued operations, and replaces the provisions of APB Opinion No. 30, "Reporting Results of Operations-Reporting the Effects of Disposal of a Segment of a Business," for the disposal of segments of a business. SFAS 144 requires that those long-lived assets be measured at the lower of carrying
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS 144 also broadens the reporting of discontinued operations to include all components of an entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction. The provisions of SFAS 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. The adoption of SFAS 144 is not expected to have a material effect on the Company's financial position, results of operations, or cash flow.
NOTE 2 - BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern which contemplates the realization of assets and extinguishment of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has accumulated a deficit of $947,820 through December 31, 1999 and has incurred a deficit since reentering the development stage effective January 1, 2000 of $201,173. As discussed in Note 1, the Company, in 1999, sold all of its assets relating to its historical line of business and abandoned, in 2000, its efforts in the research and development of a micro-robotic device. As of December 31, 2001, the Company has no principal operations or revenue producing activities. These factors indicate that the Company may be unable to continue in existence. The Company's financial statements do not include any adjustments related to the to the carrying value of assets or the amount and classification of liabilities that might be necessary should the Company be unable to continue in existence. The Company's ability to establish itself as a going concern is dependent on its ability to merge with another entity or acquire revenue producing activities.
NOTE 3 - STOCKHOLDERS' EQUITY
COMMON STOCK
In 2000, the Company issued 64,000 shares of common stock, valued at $48,000 ($.75 per share) to its President as compensation for services to be rendered to the Company for a one year period commencing March 25, 2000. At December 31, 2000, deferred compensation related to the unearned portion of the shares issued was $11,000.
In 2001 the Company issued 38,400 shares of common stock, valued at $48,000 ($1.25 per share) to its President as compensation for services to be rendered to the Company for a one year period commencing March 25, 2001. At December 31, 2001, deferred compensation related to the unearned portion of the shares issued was $11,000.
In 2001, the President of the Company (i) exercised warrants for 50,000 shares of the common stock at $1.00 per share for a note in the amount of $50,000 (Note 5) and (ii) exercised warrants for 7,500 shares of common stock for cash at $.75 per share.
In 2001, the Company issued an aggregate 10,000 shares of common stock (5,000 shares to each of two members of the Board of Directors) for services, valued at $1.82 per share.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - STOCKHOLDERS' EQUITY (CONTINUED)
Common shares issued for non-cash consideration are valued at the trading price of the Company's common stock as of the date the shares were approved for issuance.
WARRANTS
At December 31, 2000, the Company had warrants outstanding to purchase shares of the company's common stock as follows:
o 100,000 shares at $1.00 per share, expiring April 1, 2001; issued in 1996 in conjunction with short-term borrowings.
o 15,000 shares at $.75 per share, expiring October 1, 2001; issued in conjunction with granting an extension on the due date of short-term borrowings.
During 2001, warrants were exercised by the Company's President to
acquire 7,500 shares for cash at $.75 per share, and 50,000 shares at
$1.00 per share for a promissory note in the amount of $50,000 (Note
5). The remaining 57,500 warrants expired.
OPTIONS
The status of outstanding options granted by the Company is as follows:
No. Weighted Avg
of Exercise Price
Shares
Options Outstanding - January 1, 2000 145,000 $ 1.15
(145,000 exercisable) -------
Granted in 2000 -
-------
Options Outstanding - December 31, 2000 145,000 $ 1.15
(145,000 exercisable)
Granted in 2001 -
-------
Options Outstanding - December 31, 2001 145,000 $ 1.15
(145,000) exercisable) ------- -------
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The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants: dividend yield of 0%; expected volatility of 15.83%; discount rate of 6.0%; and expected life of 5 years. No options were exercised or forfeited during 2000 or 2001.
At December 31, 2001 the number of options exercisable was 145,000, the weighted average exercise price of these options was $1.15, the weighted average remaining contractual life of the options was .6 years and the exercise price was $1.13 to $1.25 per share.
NOTE 4 - INCOME TAXES
At December 31, 2001, the Company has net operating loss carryforwards totaling approximately $870,000 that may be offset against future taxable income through 2021 and research and development credits of approximately $69,000 through 2013. Due to the change in control of the Company in March 2000, the Company's ability to realize the tax benefits from the net operating losses and research and development credits prior to that date may be significantly limited.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS.
NOTE 4 - INCOME TAXES (CONTINUED)
The Company has fully reserved the tax benefits of these operating losses and credits because the likelihood of realization of the tax benefits cannot be determined. These carryforwards and credits are subject to review by the Internal Revenue Service. The approximately $168,000 tax benefit of the loss carryforward has been offset by a valuation allowance of the same amount. Of the total tax benefit of the loss carry forward, $1,800 is applicable to 2001.
Temporary differences between the time of reporting certain items for financial and tax reporting purposes are not considered significant by management of the Company.
There is no current or deferred tax expense for the years ended December 31, 2000 and 2001.
NOTE 5 - RELATED PARTY TRANSACTIONS
In May 2000, the Board of Directors authorized the issuance of 64,000 shares of common stock (valued at $.75 per share) to the President of the Company in leiu of a salary of $48,000. At December 31, 2000, the President had earned $37,000, and the balance of $11,000 was earned during 2001.
In 2000 the Company paid its former President/ Director and its former Chief Financial Officer $11,919 for services provided to the Company prior to the change in control in March 2000.
In March 2001, the Company issued 38,400 shares of common stock (valued at $1.25 per share) to the President of the Company in lieu of a salary of $48,000. At December 31, 2001, the President had earned $37,000 and the balance of $11,000 is recorded as deferred compensation.
In March 2001, the Company loaned the President $50,000 at 6.0%, uncollateralized, due March 30, 2003, to exercise warrants to purchase 50,000 shares of the Company's common stock at $1.00 per share.
In November 2001, the Company issued 5,000 shares of common stock (valued at $1.82 per share) to each of two members of the Board of Directors as compensation for services.
During 2001 the Company incurred approximately $6,600 in professional fees to a firm managed by a member of the Board of Directors.
In November 2001, the Company entered into a Mergers and Acquisitions Advisory Agreement with Catalyst Financial LLC ("Catalyst"), an entity whose owner and principal is the President of the Company. Under the terms of the agreement, Catalyst will earn a fee, as outlined in the agreement, in the event the Company completes a merger. The agreement is for a three year period, terminating November, 2004. As of December 31, 2001, no merger had been completed under the agreement.
BIO-MEDICAL AUTOMATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS.
NOTE 6 - SEGMENT REPORTING
In June 1997, SFAS 131, "Disclosure about Segments of an Enterprise and Related Information" was issued, which amends the requirements for a public enterprise to report financial and descriptive information about its reportable operating segments. Operating segments, as defined in the pronouncement, are components of an enterprise about which separate financial information is available that is evaluated regularly by the Company in deciding how to allocate resources and in assessing performance. The financial information is required to be reported on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to segments. The Company has no reportable segments at December 31, 2000 and 2001.
NOTE 7 - COMPREHENSIVE INCOME
There are no adjustments necessary to net income (loss) as presented in the accompanying statements of operations to derive comprehensive income in accordance with SFAS 130, "Reporting Comprehensive Income".
Exhibit 10.14
MERGERS AND ACQUISITIONS ADVISORY AGREEMENT
THIS MERGERS AND ACQUISTIONS ADVISORY AGREEMENT is made as of the 13th day of November, 2001, by and between Bio-Medical Automation, Inc., a Colorado corporation, having an address at 10 South Street, Suite 202, Ridgefield, Connecticut 06877 (hereinafter referred to as the "Company"), and Catalyst Financial LLC, a New York limited liability company, having an address at 10 South Street, Ridgefield, Connecticut 06877 (hereinafter referred to as the "Consultant").
RECITALS
WHEREAS, the Company is publicly traded company engaged in seeking out and identifying prospective target companies for mergers, acquisitions, business combinations, and similar transactions, and if investigation warrants to negotiate and complete such a transaction with the target company; and
WHEREAS, the Consultant is an investment banking firm and licensed broker dealer. The Company desires to engage the Consultant to identify prospective target companies for mergers, acquisitions, business combinations, or similar transactions, and to advise the Company in connection with the negotiations and financial structure of such transactions.
NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties hereto agree as follows:
1. Term. The term of this Agreement shall be for three (3) years commencing on November 13, 2001 and terminating on November 12, 2004 (the "Term"). However, this Agreement may be terminated by either party on thirty (30) days written notice.
2. Mergers & Acquisitions Consulting Services. During the Term of the Agreement, the Consultant shall provide consulting services to the Company in connection with the Company's identifying and investigating prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. The services to be provided by the Consultant include but are not limited to, (i) preparing a document concerning the Company which can be presented to prospective target companies, (ii) identifying and investigating companies which may be acquisition candidates for the Company, (iii) meeting with prospective target companies on behalf of the Company, (iv) analyzing and evaluating prospective target companies, and (v) advising the Company as to how to structure and finance transactions.
3. Fee for Services. In the event that the Company completes a merger, acquisition business combination or similar transaction, as a result of an introduction made by the Consultant, during the Term of this Agreement or within one (1) year from the termination, for any reason, of this Agreement, then the Company hereby agrees to pay the Consultant a fee (the "M&A Fee") equal to 5% of the gross consideration. The M&A Fee payable to the Consultant pursuant to this Agreement shall not exceed five hundred thousand dollars ($500,000).
The M&A Fee set forth above shall be due and payable by the Company to the Consultant in cash on the closing date of the subject transaction.
For purposes of this Agreement, "consideration" shall mean the value of the transaction described herein and shall include the aggregate value of all cash, securities, and other property and consideration of every kind, including but not limited to assumption and forgiveness of indebtedness, the amount received under the terms of an "earn-out" provision, rights to receive periodic payments and all other rights that may be at any time either (i) transferred or contributed to the Company, its affiliates or shareholders in connection with an acquisition of equity or assets thereof, or (ii) transferred or contributed by the Company, its affiliates or shareholders in any transaction involving an investment in or acquisition of any third party, or acquisition of the equity or assets thereof, by the Company or any affiliate thereof, or (iii) transferred or contributed by the Company, its affiliates or shareholders and any other parties entering into any joint venture or similar joint enterprise or undertaking with the Company or any affiliate thereof. The aggregate value of all such cash, securities and other property shall be the aggregate fair market value thereof as determined jointly by the Consultant and the Company, or by an independent appraiser jointly selected by the Consultant and the Company. The cost of such independent appraiser shall be borne entirely by the Company.
4. Expenses. The Company shall reimburse the Consultant for its out-of-pocket expenses in connection with the services to be performed hereunder; provided however, that expenses are approved in writing by the Company.
5. Representations of the Company. The Company hereby represents and warrants that any and all information supplied hereunder to the Consultant in connection with any and all services to be performed hereunder by the Consultant for and on behalf of the Company shall be, to the best of the Company's knowledge, true, complete and correct as of the date of such dissemination and shall not fail to state a material fact necessary to make any of such information not misleading. The Company hereby acknowledges that the ability of the Consultant to adequately provide services as described herein is dependent upon the prompt dissemination of accurate, correct and complete information to the Consultant. The Company further represents and warrants hereunder that this
Agreement has been, or will be, duly and validly authorized by all requisite corporate action; that the Company has the full right, power and capacity to execute, deliver and perform its obligations hereunder; and that this Agreement, upon execution and delivery of the same by the Company, will represent the valid and binding obligation of the Company and shall be enforceable by the Consultant in accordance with its terms. The representations and warranties set forth herein shall survive the termination of this Agreement.
6. Indemnification.
(a) the Company hereby agrees to indemnify, defend and hold harmless the Consultant, its officers, directors, principals, employees, partners, consultants, affiliates, and shareholders, and their successors and assigns from and against any and all claims, damages, losses, liability, deficiencies, actions, suits or proceedings (collectively the "Losses") arising out of or resulting from: (i) any breach of a representation, or warranty by the Company contained in this Agreement; or (ii) any activities or services performed hereunder by the Consultant, unless such Losses were the result of the intentional misconduct or gross negligence of the Consultant or were the result of any information supplied by the Consultant; or (iii) any and all costs and expenses (including reasonable attorneys' and paralegals' fees) related to the foregoing, and as more fully described below. The Consultant hereby agrees to indemnify, defend and hold harmless the Company, and its officers, directors and shareholders, and their successors and assigns from and against any and all Losses arising out of or resulting from (i) the intentional misconduct or gross negligence of the Consultant, unless such Losses were the result of any information supplied by the Company; or (ii) any and all costs and expenses (including reasonable attorneys' and paralegals' fees) related to the foregoing, and as more fully described below.
(b) If the Consultant or the Company (in each case, the "Indemnified Party") receives written notice of the commencement of any legal action, suit or proceeding with respect to which the Company or the Consultant (in each case, the "Indemnifying Party") is or may be obligated to provide indemnification pursuant to this Section 7, the Indemnified party shall, within thirty (30) days of the receipt of such written notice, give the Indemnifying Party written notice thereof (a "Claim Notice"). Failure to give such Claim Notice within such thirty (30) day period shall not constitute a waiver by the Indemnified Party of its right to indemnity hereunder with respect to such action, suit or proceeding if the Indemnifying Party is not materially adversely affected by such delay. Upon receipt by the Indemnifying Party of a Claim Notice from the Indemnified Party with respect to any claim for indemnification which is based upon a claim made by a third party ("Third Party Claim"), the Indemnified Party may assume the defense of the Third Party Claim with counsel of its own choosing, as described below. The Indemnifying Party and the Indemnified party shall cooperate with each other in the defense of the Third Party Claim and shall furnish such records, information and testimony and attend all such conferences, discovery proceedings, hearings, trial and appeals as may be
reasonably required in connection therewith. The Indemnified Party shall have the right to employ its own counsel in any such action, but the fees and expenses of such counsel shall be at the expense of the Indemnifying Party unless the Indemnifying Party shall not have promptly employed counsel to assume the defense of the Third Party Claim, in which event such fees and expenses shall be borne solely by Indemnifying Party. The Indemnifying Party shall not satisfy or settle any Third Party Claim for which indemnification has been sought and is available hereunder, without the prior written consent of the Indemnified Party unless such claim can be settled entirely for cash and the Indemnified Party shall be given a full release from all parties in connection therewith. If the Indemnifying Party shall fail with reasonable promptness either to defend such Third Party Claim or to satisfy or settle the same, the Indemnified Party may defend, satisfy or settle the Third Party Claim at the expense of the Indemnifying Party and the Indemnifying Party shall pay to the Indemnified Party the amount of any such Loss within ten (10) days after written demand therefore. The indemnification provisions hereunder shall survive the termination of this Agreement.
7. Confidentiality. The Consultant agrees that all non-public information
pertaining to the prior, current or contemplated business of the Company are
valuable and confidential assets of the Company. Such information shall include,
without limitation, information relating to customer lists, bidding procedures,
intellectual property, patents, trademarks, trade secrets, financing techniques
and sources and such financial statements of the Company as are not available to
the public. The Consultant, its officers, directors, employees, agents and
shareholders shall hold all such information in trust and confidence for the
Company and shall not use or disclose any such information for other than the
benefit of the Company's business and shall be liable for damages incurred by
the Company as a result of the use or disclosure of such information by the
Consultant, its officers, directors, employees, agents or shareholders for any
purpose other than the benefit of the Company's business, either during the term
of the attached Agreement or after the termination or expiration thereof, except
(i) where such information is publicly available or later becomes publicly
available other than through a breach of this Agreement, or (ii) where such
information is subsequently lawfully obtained by the Consultant from a third
party or parties who are not under an obligation of confidentiality to the
Company, or (iii) if such information is known to the Consultant prior to the
execution of this Agreement, or (iv) as may be required by law. These
confidentiality obligations shall service termination of this Agreement.
8. Independent Contractor. It is expressly understood and agreed that the Consultant shall, at all times, act as an independent contractor with respect to the Company and not as an employee or agent of the Company, and nothing contained in this Agreement shall be construed to create a joint venture, partnership, association or other affiliation, or like relationship, between the parties. It is specifically agreed that the relationship is and shall remain that of independent parties to a contractual relationship and that the Consultant shall have no right to bind the Company in any manner. In no event shall either party be liable for the debts or obligations of the other except as
otherwise specifically provided in this Agreement.
9. Amendment. No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is evidence by a written instrument, executed by the party against which such modification, waiver, amendment, discharge or change is sought.
10. Notices. All notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or transmitted by facsimile transmission or on the third calendar day after being mailed by the United States registered or certified mail, return receipt requested, postage prepaid, to the addresses herein above first mentioned or to such other address as any party hereto shall designate to the other for such purpose in the manner hereinafter set forth.
11. Severability. The invalidity, illegality or unenforceability of any provision or provisions of this Agreement will not affect any other provision of this Agreement, which will remain in full force and effect, not will the invalidity, illegality or unenforceability of a portion of any provision of this Agreement affect the balance of such provision. In the event that nay one or more of the provisions contained in this Agreement or any portion thereof shall for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in accordance with the laws of the State of Delaware, without application of the principles of conflicts of laws.
13. Binding Nature. The terms and provision of this Agreement shall be binding upon and inure to the benefit of the parties, and their respective successors and assigns.
14. Counterparts. This Agreement may be executed in any number of counterparts, including facsimile signatures, which shall be deemed as original signatures. All executed counterparts shall constitute one Agreement, notwithstanding that all signatories are not signatories to the original or the same counterpart.
15. Entire Agreement. This Agreement contains all of the understanding and agreements of the parties with respect to the subject matter discussed herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
BIO-MEDICAL AUTOMATION, INC. CONSULTANT
By: By:
------------------------------- -------------------------------
Leonard Hagen, Director Steven N. Bronson, President
Bio-Medical Automation, Inc. Catalyst Financial LLC
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