-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jelr2ewa4GXxv4NupzknCW9uK9cnWnPcNhm1Ru3587skin4ko/4or51oLIjQ+ot9 r+5yexE9j0ejPZxl6mn5Tg== 0000836429-00-000001.txt : 20000203 0000836429-00-000001.hdr.sgml : 20000203 ACCESSION NUMBER: 0000836429-00-000001 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALLEY FORGE SCIENTIFIC CORP CENTRAL INDEX KEY: 0000836429 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 232131580 STATE OF INCORPORATION: PA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-10382 FILM NUMBER: 513919 BUSINESS ADDRESS: STREET 1: 136 GREENTREE RD STE 100 CITY: OAKS STATE: PA ZIP: 19456 BUSINESS PHONE: 6106667500 MAIL ADDRESS: STREET 1: 136 GREEN TREE ROAD STREET 2: STE 100 CITY: OAKS STATE: PA ZIP: 19456 10-K/A 1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended September 30, 1999. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ____________________ to ________________ Commission File Number: 001-10382 VALLEY FORGE SCIENTIFIC CORP. (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2131580 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 136 Green Tree Road, Oaks, Pennsylvania 19456 (Address of principal executive offices and zip code) Telephone: (610) 666-7500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on which Registered Common Stock, no par value Boston Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO _____ INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OR REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. X THE AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT, COMPUTED BY REFERENCE TO THE CLOSING BID AND ASK PRICES AS REPORTED BY THE NASDAQ SYSTEM ON DECEMBER 22, 1999 AS $19,031,065. AT DECEMBER 22, 1999 THERE WERE 8,217,309 SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING. 2 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The directors and executive officers of the Company are as follows: Director Name Age Position(s) Since - ---- --- ----------- ----- Jerry L. Malis (1) 67 Chairman of the Board and President 1980 Thomas J. Gilloway 62 Executive Vice President, Secretary, 1984 Treasurer and Director Leonard I. Malis 80 Director 1989 Bruce A. Murray (1) 63 Director 1992 Bernard H. Shuman 75 Vice President and Director 1994 Robert H. Dick (1) 56 Director 1997 (1) Member of the Audit Committee Jerry L. Malis has served as President or Vice-President and a Director of the Company since its inception in March 1980. As of June 30, 1989, Mr. Malis was elected as Chairman of the Board of the Company. He has published over fifty articles in the biological science, electronics and engineering fields, and has been issued twelve United States patents. Mr. Malis coordinates and supervises the development, engineering and manufacturing of the Company's products and is in charge of the daily business operations of the Company. He devotes substantially all his business time to the business of the Company. Thomas J. Gilloway has been Executive Vice President and a Director of the Company since December 1984, and as of June 30, 1989 was appointed Secretary and Treasurer of the Company. From the Company's inception in March 1980 to December 21, 1984, Mr. Gilloway served in capacities as a Vice-President and Treasurer. Mr. Gilloway received his undergraduate degree from LaSalle University in 1959 and his graduate degree from Temple University in 1963. Prior to his involvement with the Company, Mr. Gilloway was employed in a marketing capacity for Scott Paper Company, C.R. Bard, Inc., and CheckPoint Systems as Director of Marketing. He is involved with marketing, regulatory and contract administration matters for the Company and currently devotes approximately half of his time to the business of the Company. Leonard I. Malis, M.D., a consultant to the Company since its inception in March 1980, has been a director since June 30, 1989. Dr. Malis was Professor and Chairman of the Department of Neurosurgery at Mount Sinai School of Medicine, New York, New York, from 1971 until 1993, and is currently Professor and Chairman Emeritus at Mount Sinai School of Medicine. Dr. Malis designed and built the first commercial bipolar coagulator in 1955, and his original units were the standard in neurosurgery for many years. Dr. Malis has been issued five United States patents and has designed and trademarked over one hundred instruments. He has published over one hundred articles in medical journals and reviews and is the author of a textbook on neurosurgery. Bruce A. Murray has been a director of the Company since October 14, 1992. He is a Managing Member of The Change Management Group, LLC, a management consulting company; and a Principal of Adair & Murray Associates, Inc., a management consulting company. From 1991 to May 1993, he was a senior consultant with the management consulting firm of Rath and Strong. From 1984 to August 1991, Mr. Murray held positions within the Pfizer Hospital Products Group, as Director of Engineering-Surgical Products, Corporate Vice President - Research and Development, and Senior Vice President and Business Manager - Surgical Products. He has also held senior management positions with Valleylab, Inc., Picker Corporation Electronics Division, Ball Brothers Research Corporation and IIT Research Institute. Mr. Murray received both his B.S. in Engineering and his M.B.A. from the Illinois Institute of Technology, and is an adjunct instructor in business strategies at the University of Colorado. -2- 3 Bernard H. Shuman has been a director and Vice President of the Company since September 1, 1994. Mr. Shuman is currently Vice President-Technology. Prior to September 1, 1994, Mr. Shuman served as President and director of Diversified Electronic Corporation ("Diversified"), a specialty electronics manufacturer which merged into the Company on August 31, 1994. Robert H. Dick has been a director of the Company since 1997. He is the principal of R. H. Dick & Company, Inc., an investment banking firm. From April 1996 to 1998, he was a partner in Boles & Company, an investment banking firm. He was President, CEO and CFO of two Boles & Company clients: BioMagnetic Therapy Systems, Inc. (from September 1995 to April 1996) and Pharmx, Inc. (from May 1994 to May 1995). From April 1987 to May 1994, Mr. Dick served as Vice President-International for Codman & Shurtleff, Inc., a Johnson & Johnson subsidiary, where he was responsible for new business development and sales and marketing in non-U.S. markets. Mr. Dick has also held other business development and sales and marketing positions with Codman & Shurtleff, Inc., and product management positions with USCI Surgical Products, a division of C.R. Bard. Jerry L. Malis and Dr. Leonard I. Malis are brothers. The Company's executive officers are elected annually by the Company's directors and shall continue to serve until their successors are elected and qualified. ITEM 11. EXECUTIVE COMPENSATION. The following table sets forth the compensation paid by the Company to its executive officers for the three fiscal years ended September 30, 1999. SUMMARY COMPENSATION TABLE Name and Fiscal Year Salary (1) Number of Shares of Principal Position Common Stock Underlying Options Granted - ------------------------------------------------------------------------------------------------------------ Jerry L. Malis, 1999 $188,222 --- President 1998 188,949 --- 1997 179,951 --- Thomas J. Gilloway, 1999 $100,013 --- Executive Vice President 1998 161,278 --- 1997 153,598 --- Bernard H. Shuman 1999 $105,000 --- Vice President -Technology 1998 105,000 --- 1997 105,000 --- (1) Non-cash compensation did not exceed the lesser of $50,000 or 10% of the cash compensation for the named individual.
-3- 4 Effective July 1, 1994, the Company entered into employment agreements with Jerry L. Malis, President, and Thomas J. Gilloway, Executive Vice President, for a term of 63 months expiring on September 30, 1999. The agreements provide for annual base salaries to Mr. Malis and Mr. Gilloway of $148,720 and $126,940, respectively, in 1994, with annual base salary increases of 10% commencing on October 1, 1994. For the year ending September 30, 1998, Messrs. Malis and Gilloway waived their right to a full 10% increase of base salary, opting to reduce the annual base salary increase from 10% to 5% for 1998, and for the year ending September 30, 1999 they waived their right to the 10% increase of base salary. The reduction of Mr. Gilloway's base salary for the year ended September 30, 1999 was due to his being employed on a half-time basis effective January 1, 1999. On September 30, 1999, the Company extended the term of the employment agreements for an additional year effective October 1, 1999, under which Messrs. Malis and Gilloway are to receive an annual base salary of $198,950 and $90,000, respectively. The agreements provide that Messrs. Malis and Gilloway may each receive such other cash and stock bonuses as may be determined from time to time by the Board of Directors. The employment agreements may be terminated for cause. In addition, the agreements provide that in the event of a change of control (as defined in the Securities Exchange Act of 1934) of the Company, the employee may terminate his employment for "good reason" and shall be entitled to receive a payment equal to the lesser of (i) 2.99 times the employee's average annual compensation (including bonuses, if any) during the three years preceding the date of termination; or (ii) the compensation payable for the remaining term of the agreement. The term "good reason" includes the assignment to the employee of duties inconsistent with the employee's then position, a relocation of the Company's office more than 30 miles from the Company's present offices, a failure of the Company to continue in effect any benefit or compensation plan, depriving the employee of any fringe benefit, or the failure of any successor entity to assume the employment agreement. On August 31, 1994, the Company entered into an employment agreement with Bernard H. Shuman, Vice President-Technology, for a term of 59 months ending on July 31, 1999. The agreement provided for an annual salary to Mr. Shuman of $50,000 for the period from September 1, 1994 to July 31, 1995, and a salary of $105,000 for each twelve month period thereafter. The agreement provides that Mr. Shuman may receive additional compensation and benefits as may be determined from time to time by the Board of Directors. The agreement provides for certain death and disability benefits. The employment agreement may be terminated for cause. Although the employment agreement has not been extended, the Company continues to provide compensation to Mr. Shuman on an annual basis of $105,000. DIRECTORS' COMPENSATION Directors of the Company do not receive any compensation for their services as members of the Board of Directors, but Directors who are not officers of the Company are entitled to reimbursement for expenses incurred in connection with their attendance at meetings and are entitled to participate in the Company's Stock Option Plan. In November 1998, each director who was not an employee of the Company (except Leonard I. Malis) received a grant of stock options to purchase 2,000 shares of Common Stock pursuant to the Company's Stock Option Plan. 401(K) PLAN AND PROFIT-SHARING PLAN Effective January 1, 1990, the Company adopted a 401(k) Plan and Profit Sharing Plan that covers full-time employees who have attained age 21 and have completed at least one year of service with the Company. Under the 401(k) Plan, an employee may contribute an amount up to 25% of his compensation to the 401(k) Plan on a pre-tax basis not to exceed $10,000 per year (adjusted for cost of living increases). Amounts contributed to the 401(k) Plan are non-forfeitable. -4- 5 Under the Profit Sharing Plan, a participant in the plan participates in the Company's contributions to the Plan as of December 31 in any year, with allocations to individual accounts based on annual compensation. An employee does not fully vest an interest in the plan until completion of three years of employment. The Board of Directors determines the Company's contributions to the plan on a discretionary basis. The Company has not made any contributions to date. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth as of December 31, 1999, certain information with respect to the beneficial ownership of Common Stock, by each person known to the Company to own beneficially 5% or more of the outstanding Common Stock, by each director and nominee, and by all officers and directors as a group. Amount of Name and Address of Beneficial Percentage Beneficial Owners (1) Ownership Owned - ---------------------- ---------- ---------- Jerry L. Malis (2)(3) 1,282,276 15.3% Thomas J. Gilloway(2)(7) 1,001,375 12.0% Dr. Leonard I. Malis(2)(8) 882,242 10.7% Bernard H. Shuman(2)(4) 126,467 1.5% Bruce A. Murray(2)(5) 13,500 * Robert H. Dick(2)(6) 4,000 * All officers and directors as a group (6 persons) 3,309,860 38.6% - ------------------ * less than 1% (1) Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. (2) The mailing address of Messrs. Malis, Gilloway, Shuman, Murray and Dick and Dr. Malis, directors of the Company, is 136 Green Tree Road, P.O. Box 1179, Oaks, Pennsylvania 19456-1179. (3) Includes 150,000 shares issuable to Mr. Malis subject to options exercisable currently or within 60 days. (4) Includes 25,000 shares issuable to Mr. Shuman subject to options exercisable currently or within 60 days and includes 101,467 shares held in The Bernard H. Shuman Living Trust, a trust in which Mr. Shuman holds voting and dispositive control. (5) Includes 13,500 shares issuable to Mr. Murray subject to options exercisable currently or within 60 days. (6) Includes 4,000 shares issuable to Mr. Dick subject to options exercisable currently or within 60 days. (7) Includes 150,000 shares issuable to Mr. Gilloway subject to options exercisable currently or within 60 days and includes 250,000 shares held in the Gilloway Family, L.P., a limited partnership in which Mr. Gilloway is a general partner and possesses voting and dispositive control. (8) Includes 400,000 shares held in the Leonard and Ruth Malis Family, L.P., a limited partnership in which Dr. Malis is a general partner and possess voting and dispositive control. -5- 6 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Since the late 1960's, Dr. Leonard I. Malis, a director of the Company, on an individual basis, has been a party to royalty arrangements with Codman & Shurtleff, Inc., formerly known as Johnson & Johnson Professional, Inc., a principal customer of the Company. Dr. Malis has developed and in the future may develop passive hand instruments for Codman & Shurtleff, Inc. with no pecuniary benefits to the Company. The Company has entered into a five year lease commencing on July 1, 1995 for approximately 4,200 square feet of office and warehouse space at a base monthly rent of $4,618 with GMM Associates, a Pennsylvania general partnership, whose partners are Jerry L. Malis, Thomas J. Gilloway and Leonard I. Malis, principal shareholders, directors and/or officers of the Company. The related expense for this lease for the year ended September 30, 1999 was $55,707. The Company believes the rental payments reflect fair rental value for the space. For fiscal 1999, the Company paid legal fees and costs in the amount of $81,314 to Hale & Schenkman, a law firm in which the son-in-law of Jerry L. Malis is a partner. In fiscal 1998, the Company retained R. H. Dick & Company, Inc.,an investment banking and business consulting company, owned by Robert H. Dick, a director of the Company, to perform investment banking and business consulting services for the Company. -6- 7 SIGNATURES Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 26th day of January, 2000. VALLEY FORGE SCIENTIFIC CORP. BY: /s/ Jerry L. Malis ----------------------------- Jerry L. Malis, President -7- -----END PRIVACY-ENHANCED MESSAGE-----