UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended April 30, 2002
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 0-3255
JAYARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1864519
(State of incorporation) (IRS Employer Identification No.)
300 Plaza Drive, Vestal, New York 13850
(Address of principal executive offices (Zip Code)
Telephone number, including area code: (607) 729-9331
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, par value $.01 per share
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
Shorter period that the registrant was required to file such reports),
and (2)has been subject to such filing requirements for the past 90
days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (section 229.405 of this chapter) 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. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant is $100,788 as of June 6, 2002.
The number of shares outstanding of Registrant's Common Stock is
2,766,396 as of June 6, 2002.
PART I
Item 1. Business
General
Jayark Corporation ("Jayark" or "the Company") conducts its operations
through three wholly owned subsidiaries, AVES Audiovisual Systems, Inc.
("AVES"), MED Services Corp. ("Med") and Fisher Medical Corporation
("Fisher"), each of which constitute a separate business segment for
financial reporting purposes. Effective October 1, 2001, the Company
approved the merger of Fisher Medical Corporation ("Fisher"), a
formerly wholly owned subsidiary, with Fisher Medical LLC.
AVES distributes and rents a broad range of audio, video and
presentation equipment, and supplies. Its customer base includes
businesses, churches, hospitals, hotels and educational institutions.
The warehousing, sales and administrative operations of AVES are
located in Sugar Land, Texas (a suburb of Houston).
Med finances the manufacture, sale and rental of medical equipment.
Its customer base in fiscal 2002 included companies that sell and
rent durable medical equipment to hospitals, nursing homes and
individuals. Med had no customers in fiscal 2001 or 2000. The
administrative operations of Med are located in Vestal, New York.
Effective October 1, 2001, the Company approved the merger of this
formerly wholly owned subsidiary, Fisher Medical Corporation
("Fisher") with Fisher Medical LLC. As a result, the Company has
relinquished control of Fisher and has deconsolidated Fisher
effective October 1, 2001. Operations at Fisher consist of
developing, manufacturing and distributing therapeutic support
surfaces. The Fisher support surface system is used for the
prevention and treatment of pressure ulcers, treatment of burn
and trauma patients and pain management. The products are
marketed to hospitals, nursing homes and home health care.
The production, warehousing, sales and administrative operations
of Fisher are located in Torrington, Connecticut.
The Company was originally incorporated in New York in 1958. In
1991, the Company changed its state of incorporation to Delaware.
In July 1998, the Company amended its Certificate of Incorporation
increasing its authorized Common Stock to 30,000,000 shares and
decreasing the par value of its Common Stock from $.30 to $.01 per
share. In December 1999, the Company filed a Certificate of
Amendment to provide for a one for ten reverse stock split. In
January 2000, each ten (10) issued and outstanding shares of
Common Stock of the Corporation, par value $.01 per share, were
automatically converted into one (1) validly issued, fully paid
and non assessable share of Common Stock of the Corporation,
par value $.01 per share. All per share and weighted average
share amounts have been restated to reflect this reverse stock split.
Description of AVES' Business
Products / Services
AVES distributes and rents a broad range of audio, video and
presentation equipment, and supplies. Among the items distributed
are LCD, DLP, video and slide projectors; projection screens and
lamps; video cameras and camcorders; laser videodisk, video
projection, TV monitors and receivers; DVD and video players/
recorders; still imaging systems; public address systems,
microphonesand headsets; tape recorders, record players,
cassette recorders, and related accessories and supplies.
AVES distributes the products of brand name manufacturers
such as RCA(tm), GE(tm), Mitsubishi, Elmo, Panasonic, Sanyo,
Fujitsu, Videotek, Pioneer, Leitch, Quasar, Telex, Samsung,
Kodak, Dukane, Sharp, Sony, 3M Brand, Canon and various other
brand names. The Company also offers repair services,
audiovisual consulting & design, engineering, installation
and servicing of audiovisual systems to businesses, churches,
hospitals, hotels and educational institutions.
Raw Materials
The sources and availability of raw materials are not significant
for an understanding of AVES' business since competitive products
are obtainable from alternative suppliers. AVES carries an
inventory of merchandise for resale and for rental operations
that is adequate to meet the rapid delivery requirements (frequently
same day shipments) of its distribution business.
Patents
There are no patents, trademarks, licenses or franchises that are
material to AVES' business.
Sales
AVES currently distributes and rents its products in the United
States, primarily by means of catalogs, direct mail, telephone
orders and a field sales force. AVES participates in various
regional trade shows to exhibit its products to an interested
audience. AVES' sales are not seasonal, although sales to schools
typically are higher from April through July than at other times
during the year.
Customers
In fiscal 2002, 84% of AVES' revenue was derived from sales to
schools and other educational institutions. The remaining 16%
of revenues came from sales to businesses (15%) and rental of
AVES equipment (1%). In fiscal 2001, 81% of AVES' revenue was
derived from sales to schools and other educational institutions.
The remaining 19% of revenues came from sales to businesses
(18%) and rental of AVES equipment (1%). In fiscal 2000,
79% of AVES' revenue was derived from sales to schools and other
educational institutions. The remaining 21% of revenues came
from sales to businesses (20%) and rental of AVES equipment (1%).
No one customer accounted for more than 10% of revenues during
fiscal 2002, 2001 or 2000.
Backlog
The amount of unfilled sales orders of AVES at April 30, 2002, was
$374,570, as compared with $1,058,300 at April 30, 2001, and $953,100
at April 30, 2000. This decrease in backlog is partially due to the
nation's economic slowdown. However, the amount of unfilled sales
orders is variable and largely dependent on timing and thus is not
a material measure of AVES' operations.
Competition
The Company believes that AVES is one of the most diversified national
audiovisual purveyors in the United States, given the different types
of services and products offered. AVES' principal means of competition
are its aggressive pricing, technical expertise, quick delivery and
the broad range of product lines and brands available through its
distribution channels.
Employees
At April 30, 2002, AVES had 15 full time employees.
Description of Med's Business
Products / Services
Med continues to explore distribution channels for specialty medical
equipment. During fiscal 2002, Med financed the manufacture, sale
and rental of durable medical equipment to companies that sell and
rent durable medical equipment to hospitals, nursing homes and
individuals. Med did not have any sales or services during fiscal
2001 and 2000.
Raw Materials
The sources and availability of raw materials are not significant for
an understanding of Med's business since replacement materials are
available from alternative suppliers. Med believes that their current
raw material inventory is generally adequate to meet projected demand.
Patents
There are no patents, trademarks, licenses or franchises that are
material to Med's business.
Sales
During fiscal 2002, Med had sales to companies that sell and rent
durable medical equipment to hospitals, nursing homes and individuals
Backlog
Med does not currently have any backlog orders.
Description of Fisher's Business
Effective October 1, 2001, the Company approved the merger of this
formerly wholly owned subsidiary, Fisher Medical Corporation
("Fisher") with Fisher Medical LLC. As a result, the Company has
relinquished control of Fisher and has deconsolidated Fisher
effective October 1, 2001 and is accounting for its investment
in Fisher under the equity method.
Fisher is a developer, manufacturer and distributor of therapeutic
support surfaces. The Fisher support surface system is used for
the prevention and treatment of pressure ulcers, treatment of burn
and trauma patients and pain management. The products are marketed
to hospitals, nursing homes and home health care. Fisher distributes
its products nationwide through Durable Medical Equipment ("DME") and
Home Medical Equipment ("HME") dealers. Sales are primarily to the
long-term care (nursing home) industry and home care. Fisher has two
customers who act as master distributors. One for the long-term care
industry and another for the retail market.
Item 2. Properties
The Company's Corporate office is located in Vestal, New York.
Corporate administrative functions are conducted from
approximately 200 square feet of office space. There is
currently no lease obligation or rental expense for this
space, as the property is owned by a related party and the
related interest expense would be diminutive.
AVES is located in Sugar Land, Texas. AVES' business is
conducted from approximately 14,400 square feet; 4,000 of
which are used for office, sales and demonstration purposes
and 10,400 for warehouse purposes. The current lease term
expires on September 30, 2011. The rental payments are $7,500
per month.
Item 3. Legal Proceedings
None
Item 4. Submission Of Matters To A Vote Of Security Holders
At the Annual Meeting of Shareholders held on December 17, 2001, pursuant
to the Notice of Annual Meeting of the Shareholders and Proxy Statement
dated October 23, 2001, Robert C. Nolt was elected to the Board of
Directors with 2,276,540 shares voted FOR and 2,066 shares WITHHELD
and the appointment of KPMG LLP as independent public accountants
for the Company for the fiscal year ending April 30, 2002 was approved
with 2,274,335 shares voted FOR, 785 shares voted AGAINST and 3,486
shares WITHHELD.
PART II
Item 5. Market For Registrant's Common Stock And Related Stockholder Matters
Effective July 10, 1997, the Company's Common Stock was delisted due
to the Company's non-compliance with the NASDAQ's minimum capital and
surplus requirement. Bid quotations for the Company's Common Stock
may be obtained from the "pink sheets" published by the National
Quotation Bureau, and the Common Stock is traded in the
over-the-counter market.
The following table presents the quarterly high and low trade prices
of the Company's common stock for the periods indicated, in each
fiscal year as reported by NASDAQ. As of June 6, 2002, there were
approximately 795 stockholders of record of common stock.
The Company has not paid any dividends on its common stock during
the last five years and does not plan to do so in the foreseeable
future.
2002 Common Stock Trade Price 2001 Common Stock Trade Price
_____________________________ _____________________________
High Low High Low
_____________________________ _____________________________
First Quarter .46 .35 .81 .25
Second Quarter .45 .28 2.81 .55
Third Quarter .30 .22 1.44 .75
Fourth Quarter .50 .30 .75 .35
Item 6. Selected Financial Data
Results of Operations:
Years Ended April 30, 2002 2001 2000 1999 1998
_______________________________________________________________________________
Net Revenues $11,415,537 $12,886,491 $13,197,866 $15,288,215 $13,604,558
_______________________________________________________________________________
Income (Loss) from
Continuing Operations ($99,329) ($500,714) $330,978 $445,805 $75,992
_______________________________________________________________________________
Income (Loss) from
Discontinued Operations $-- $-- $209,676 $-- $--
_______________________________________________________________________________
Net Income (Loss) ($99,329) ($500,714) $540,654 $445,805 $75,992
_______________________________________________________________________________
Basic and Diluted Earnings
(Loss) per share from
Continuing Operations* ($.04) ($.18) $.12 $.24 $.08
_______________________________________________________________________________
Basic and Diluted Earnings
(Loss) per share from
Discontinued Operations* $-- $-- $.08 $-- $--
_______________________________________________________________________________
Weighted Average Shares
Outstanding* 2,766,396 2,766,396 2,766,396 1,836,661 922,120
_______________________________________________________________________________
At April 30,
Balance Sheet Information:
Total Assets $2,884,057 $3,757,353 $3,239,126 $2,779,891 $2,634,964
_______________________________________________________________________________
Long Term
Obligations $2,194,629 $2,082,881 $1,278,571 $1,424,229 $3,446,021
_______________________________________________________________________________
Working Capital $1,324,977 $974,094 $359,120 $370,914 $157,069
_______________________________________________________________________________
Stockholders'
Deficit ($484,207) ($646,333) ($145,619) ($685,523)($2,925,566)
_______________________________________________________________________________
*Per share and weighted average share amounts have been restated to
reflect reverse stock split.
Item 7. Management's Discussion and Analysis Of Financial Condition And
Results Of Operations
Fisher Divestiture
In January 2000, the Company, through a newly formed, wholly
owned subsidiary, Fisher Medical Corporation ("Fisher"), entered
into an Asset Purchase Agreement with Fisher Medical LLC ("LLC"),
a developmentstage developer, manufacturer, and distributor of
medical supplies and equipment for hospitals, nursing homes and
individuals. Under the termsof the agreement, Fisher purchased all
of the assets of LLC for cash of $215,000. LLC remained the owner
of certain intellectual property utilized in Fisher's medical
products line. The owner of LLC was Steve Fisher who also
became a member of the board of directors of the Company.
Fisher also negotiated a five-year technology license with
LLC, which conveyed certain technology rights developed by
Trlby Innovative LLC of Torrington, Connecticut. The
acquisition was accounted for under thepurchase method of
accounting.
Fisher continued to develop medical supply products with the
Financing provided by the Company. The Company initially
utilized its existing working capital and lines of credit
to fund Fisher's development efforts. The development time
horizon exceeded the projected investment horizon as determined
by the Company. Due to the need for additional funding for
this development, the Company endeavored to infuse additional
capital into Fisher with a private placement of preferred stock.
In late 2000, The Company sold approximately $429,500 of newly
issued Fisher Medical preferred stock. The Company continued
to seek new capital via the preferred stock offering to various
potential investors in 2001.
In September 2001, the Company received a proposal from
Alberdale LLC to provide a $500,000 bridge loan to Fisher, which
is convertible, Under certain conditions, to Fisher common stock.
In addition to the bridge loan, Alberdale was proposing to offer
a new series of preferred stock for equity financing to continue
the operations of Fisher. As a condition to this refinancing,
Alberdale required that Jayark contribute 50% of its Fisher
Medical Corporation common stock to the new refinanced entity,
as well as provide an option for Alberdale to purchase the
remaining 50% common interest the Company would hold in Fisher
at predetermined amounts ranging from approximately $915,000
to $1,464,000 for periods not exceeding 15 months.
On October 1, 2001 the Company approved the merger of its wholly
owned subsidiary, Fisher Medical Corporation with Fisher Medical LLC,
the owner of the intellectual property utilized in Fisher's medical
products line. Pursuant to the merger agreement, the Company assigned
50% of its common equity holdings in Fisher Medical Corporation to the
sole member of Fisher Medical LLC, Dr. Stephen Fisher. Dr. Fisher
serves as President of Fisher Medical Corporation and as a Director
of the Company. As a result of this transaction, the Company has
effectively relinquished its control of Fisher Medical Corporation;
however given its continuing 50% common stock ownership interest, the
Company will account for its investment on the equity method
prospectively commencing October 1, 2001. The Company has no future
obligations to fund any deficits of the merged entity or any deficits
of the merged entity or any commitments to provide future funding.
As of October 1, 2001, the Company had invested approximately
$1,248,000 of cash in Fisher and incurred net losses as 100% owner
of approximately $1,509,000; therefore the Company's net investment
and advance position at the date of the divestiture was a negative
balance of approximately $261,000. In connection with the transaction,
the Company received from the merged entity a five-year $525,715
promissory note, which represents a portion of the aforementioned
advances the Company had made during its 100% ownership period. The
note is secured by all assets of the company except the intellectual
property. There can be no assurances that the merged entity will be
successful in completing the development of its products or in the
raising of the additional working capital required. Additionally,
since the merged entity has minimal liquidation value, the note is
deemed not to be collectible. Accordingly, the Company has not
assigned any value to this note and has recognized its divestiture
of its net investment of $261,455 at October 1, 2001 as an increase
in additional paid in capital, which reduces the investment in Fisher
to zero. The Company has not recognized its 50% share of losses of
the merged entity in the post transaction period of October 1 to
January 31, 2002 as its investment is reflected as zero.
The net liabilities of Fisher at October 1, 2001 deconsolidated as
a result of the divestiture are as follows:
Accounts Receivable - Trade $31,350
Inventories 85,001
Other Current Assets 16,134
Property, Plant & Equipment, Net 361,418
Goodwill 90,432
Patent, Net 57,546
Accounts Payable and Accrued Expenses (295,817)
Accrued Salaries (177,415)
Other Current Liabilities (604)
Preferred Stock (429,500)
________
($261,455)
==========
In connection with the transaction, the Company was granted warrants
to purchase 47,190 shares of common stock of the merged entity at $10
per share, which expire in three years.
As the Company has relinquished its control of Fisher, it has
effectively deconsolidated Fisher as of October 1, 2001 and reflected
its recorded excess losses as additional paid-in-capital. As the
Company experienced no historical successes as 100% owner, and has
no tangible evidence of its historical investment recoverability, it
has reflected its equity investment position at zero. In the event
the merged entity is successful in the future, the Company would
record its 50% interest in the earnings, if any, to the extent that
they exceed equity losses not otherwise recorded, and could experience
subsequent gains resulting from the repayment of the note receivable,
if such amounts are collected, and from the proceeds of the Alberdale
buyout option, if exercised. However, as described above, due to the
uncertainties over the ultimate recoverability of the note or the
exercise of the option, no value has been assigned to either.
The following unaudited pro forma financial information presents the
combined results of operations of the Company as if the divestiture
of Fisher had taken place as of May 1, 1999. The unaudited pro forma
information has been prepared by the Company based upon assumptions
deemed appropriate and takes into consideration the elimination of
Fisher operating activities included in the consolidated statements
of operations for the periods presented herein.
2002 2001 2000
____________________________________
Net Revenues $11,381,126 $12,857,841 $13,197,866
Net Income $260,380 $304,061 $735,274
====================================
Net Income per Common Share -
Basic and Diluted $.09 $.11 $.27
====================================
The unaudited pro forma information presented herein are shown for
illustrative purposed only and are not necessarily indicative of the
future financial position or future results of operations of the
Company and does not necessarily reflect the results of operations
that would have occurred had the transaction been in effect for the
periods presented. The unaudited pro forma information should be
read in conjunction with the historical consolidated financial
statements and related notes of the Company.
As of April 30, 2002, the $500,000 Alberdale LLC bridge loan to
Fisher provided by Hobart Associates II, LLC (Hobart) was in default
and the Company's $525,715 five-year promissory note to Fisher was
also in default. Both notes provided for the acceleration of the
notes and the transfer of the secured assets to the note holders upon
an event of default. In order to avoid liquidation of Fisher, Hobart
and the Company proposed a restructuring program for Fisher. On
June 3, 2002 Stephen Fisher Sr. (President of Fisher), Fisher, Hobart
and the Company entered into the Fisher Medical Restructuring Agreement
(the Agreement). Under the terms of the Agreement, Hobart and the
Company formed a new corporation, Unisoft International Corporation
("UIC"). UIC will assume the international rights for sale and
marketing of Fisher's Unisoft mattress and all associated products,
designs, and all rights related thereto, as well as certain employees
and their obligations. As part of the agreement, UIC will commit to
a supply contract with Fisher with a guaranteed minimum order quantity.
In addition, UIC must assume the Fisher promissory notes payable to
Hobart and the Company. The Company will also contribute its 500,000
shares of common stock of Fisher and Hobart will contribute $250,000
to UIC, resulting in both the Company and Hobart owning approximately
36% of UIC. The Company's 36% interest is comprised of 100,000 shares
of common stock and 60,000 shares of Super Voting Series A Preferred
Stock. Each share of Series A Preferred Stock provides for 5 shares
of voting rights for each share of common stock. Hobart and UIC have
an option to purchase approximately 95% of Jayark's interest in UIC for
approximately $800,000 for a one-year period. Alberdales LLC's option
to purchase 50% of Jayark's common interest in Fisher was converted in
20,000 shares of UIC common stock under the restructuring.
There can be no assurances that the new entity will be successful in
selling and marketing the Unisoft internationally or the raising of the
additional working capital required to sustain the business. The Company
has no future obligations to fund any deficits of the new entity or any
commitments to provide funding. Due to the uncertainties over the
ultimate recoverability of its investment in UIC, no value has been
assigned.
Comparison of Fiscal Year Ended April 30, 2002 With Fiscal Year Ended
April 30, 2001
During the first quarter of fiscal 2002 (effective May 1, 2001), the
Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Intangible Assets", which supercedes APB Opinion No. 17,
"Intangible Assets". SFAS No. 142 eliminates the current requirement
to amortize goodwill and indefinite-lived intangible assets, addresses
the amortization of intangible assets with a defined life and addresses
the impairment testing and recognition of goodwill and intangible
assets. The following information describes the impact that the
adoption of SFAS No. 142 had on net income (loss) and net income
(loss) per common share for the fiscal years ending April 30:
2002 2001 2000
______________________________________
Net Income (Loss) ($99,329) ($500,714) $540,654
Add Back: Goodwill Amortization -- $26,068 $22,734
______________________________________
Adjusted Net Income (Loss) ($99,329) ($474,646) $563,388
======================================
Net Income (Loss) per Common Share ($.04) ($.18) $.20
Goodwill Amortization $-- $.01 $.01
______________________________________
Adjusted Net Income (Loss) ($.04) ($.17) $.21
======================================
There was no goodwill acquired or any goodwill impairment losses
recognized during the fiscal year ended April 30, 2002.
Net Revenues
Consolidated Revenues of $11,416,000 decreased $1,471,000, or 11.4%,
from fiscal 2001. The decrease was primarily the result of a
$1,485,000 decrease in AVES' sales. The decreased sales at AVES
were due partially to the nation's economic slowdown resulting in
decreased budgets for many of our customers causing them to look to
more inexpensive products and, or, purchase fewer quantity of
products. This was coupled with the fact that there has been a
continued price decline in video equipment and the Company did
not win some large contractual school bids that were won in the
prior year. Med had sales of $8,000 versus $0 in fiscal 2001
and Fisher had increased sales of $6,000 prior to the divestiture.
Cost of Revenues
Consolidated Cost of Revenues of $9,430,000 decreased $1,407,000,
or 12.9%, from the prior fiscal year. This was a result of the
decrease in revenues.
Gross Margin
Consolidated Gross Margin of $1,986,000 was 17.4% of revenues, as
compared with $2,050,000, or 15.9%, for the same period last year.
The increase in gross margin percentage was primarily the result
of decreases in the costs of video products at AVES, which were
sold at pre-established higher selling prices.
Selling, General and Administrative Expense
Consolidated Selling, General and Administrative Expenses of
$1,983,000 decreased $440,000, or 18.1%, as compared with the
prior reporting year. Fisher's expenses decreased $484,000 due
to five months of expenses in fiscal 2002 versus twelve months
in fiscal 2001, as a result of the October 1, 2001 divestiture
transaction. AVES' expenses decreased $132,000 due to decreased
payroll expenses, decreased amortization expenses due to the
adoption of SFAS No. 142 described above, and increased
miscellaneous income, partially offset by increased rental expense.
Corporate's expenses increased $168,000 partially due to $90,000
of intersegment management fees charged to Fisher in the prior
year which offset overall selling, general and administrative
expenses at the Corporate level. In addition, Corporate had
increased payroll, travel, insurance and printing expenses. Med's
expenses increased $8,000 due to travel expenses associated with the
exploration of new product markets.
Operating Income (Loss)
Consolidated Operating Income of $3,000 increased $376,000, or 100.7%,
from last year's operating loss of $373,000. Due to the October 1,
2001 divestiture transaction, Fisher's operating loss decreased
$494,000 as the Company incurred only five months of loss in fiscal
2002 versus twelve months in fiscal 2001. AVES' operating income
increased $52,000 due to decreased selling, general and administrative
expenses, Corporate's operating loss increased by $168,000 due to
increased expenses discussed above, and Med's operating loss increased
$2,000.
Interest Expense
Consolidated Interest Expense of $115,000 decreased $25,000 or 17.8%
as compared with the same period last year. This decrease was a result
of decreased outstanding balances and decreased interest rates on the
Company's outstanding line of credit, combined with increased interest
income.
Gain on Sale of Assets
Consolidated Gain on Sale of Assets of $14,000, as compared to $1,000
in fiscal 2001, resulting from the sale of a Company auto at AVES.
Income (Loss) Before Income Taxes
Loss Before Income Taxes of $99,000 for the fiscal year ended
April 30, 2002 decreased $413,000, as compared with the same period
last year. Overall change in loss before income taxes was a result
of those fluctuations noted above.
Income Taxes
Income Taxes of $1,000 were incurred at Med for state income tax
expenses in fiscal 2002. The income tax benefit of $11,000 in
fiscal 2001 represents a reversal of the prior year tax accrual.
Consolidated Net Income (Loss)
Consolidated Net Loss of $99,000 for the fiscal year ended
April 30, 2002 decreased $401,000, as compared to net loss of
$501,000 for the same period last year. This decrease was due
to a $535,000 improvement in the bottom line as a result of the
Company including only five months of Fisher losses in the
current year, versus twelve months in 2001, due to the October 1,
2001 divestiture transaction; combined with a $61,000 improvement
at AVES and offset by $178,000 decrease at Corporate and a $17,000
decrease at Med.
Comparison of Fiscal Year Ended April 30, 2001 With Fiscal Year
Ended April 30, 2000
Net Revenues
Consolidated Revenues of $12,886,000 decreased $312,000, or 2.4%,
From fiscal 2000. The decrease was the result of a $340,000 decrease
in AVES' sales. The decrease at AVES was primarily due to a decrease
in the selling price and cost of video equipment, partially offset
by the Company's success at winning some larger contractual school
bids in fiscal 2001. Fisher reported $29,000 in initial sales of a
specialty medical product introduced to the market for evaluation,
testing and trials.
Cost of Revenues
Consolidated Cost of Revenues of $10,837,000 decreased $33,000, or
less than 1.00%, from the prior fiscal year. This was a result of
lower selling prices at AVES only partially offset by lower unit
costs.
Gross Margin
Consolidated Gross Margin of $2,050,000 was 15.9% of revenues, as
compared with $2,328,000, or 17.6%, for the same period last year.
The decrease was due to lower profit margins at AVES as compared
to the prior year as a result of lower selling prices only partially
offset by decreases in costs of products.
Selling, General and Administrative Expense
Consolidated Selling, General and Administrative Expenses of
$2,423,000 increased $527,000, or 27.8%, as compared with the
prior reporting year. This increase was due to the addition of
$562,000 in operating expenses for Fisher. These expenses were
the result of continued research, development and production of
specialty medical products for introduction to the market for
evaluation, testing and trials. Fisher operated for 12 months
in fiscal 2001 versus 4 months in fiscal 2000. AVES' spending
decreased $16,000 as compared to the prior year. Med's expenses
decreased $22,000 from the prior year primarily as a result of
decreased professional fees. Corporate spending increased by $3,000.
Operating Income (Loss)
Consolidated Operating Loss of $373,000 decreased $805,000, or 186.3%,
from last year's operating income of $432,000. Fisher had an increased
operating loss of $548,000 due to continued research and development
efforts, AVES operating income decreased $276,000 as a result of reduced
revenues and margins, Corporate's operating loss increased $3,000 and
Med's operating loss decreased $22,000 as a result of decreased spending.
Interest Expense
Consolidated Interest Expense of $140,000 increased $42,000 or 42.9% as
compared with the same period last year. This increase was the result
of an increase in the outstanding balance on the Company's line of
credit primarily due to funds used for Fisher.
Gain on Sale of Assets
Consolidated Gain on Sale of Assets of $1,000, as compared to $8,000
in fiscal 2000, resulting from the sale of a Company auto in the prior
year.
Income (Loss) Before Income Taxes
Loss Before Income Taxes of $512,000 for the fiscal year ended
April 30, 2001 decreased $854,000, or 249.6%, as compared with the
same period last year. This increased loss was primarily due to
$730,000 increased loss at Fisher due to research, development and
production activities. AVES' earnings decreased $251,000, Corporate's
loss decreased $92,000 and Med's loss decreased $35,000.
Income Taxes
Income Tax Benefit of $11,000 for the fiscal year ended April 30, 2001,
represents a reversal of the prior year tax accrual.
Income (Loss) from Continuing Operations
Loss from Continuing Operations of $501,000 decreased $832,000,
or 251.3%, as compared to income of $331,000 in the prior year.
Income from Discontinued Operations
Income from Discontinued Operations of $210,000 in the prior year
was a result of the reversal of accruals relating to a discontinued
division in 1997 and the liquidation of a business acquired in
June 1995.
Consolidated Net Income (Loss)
Consolidated Net Loss of $501,000 for the fiscal year ended
April 30, 2001 decreased $1,041,000, or 192.6%, as compared
to net income of $541,000 for the same period last year. This
is primarily a result of $730,000 increased loss recognized at
Fisher due to research, development and production activities,
combined with $251,000 decreased income at AVES as a result
of lower revenues and margins. Corporate's loss increased
$95,000 due to the income from discontinued operations
recognized in the prior year and Med experienced a $35,000
decreased loss as compared to the prior year.
Critical Accounting Policies and Significant Estimates
The methods, estimates and judgments the Company uses in
applying their most critical accounting policies has a
significant impact on the results reported in our consolidated
financial statements. The U.S. Securities and Exchange
Commission has defined the most critical accounting policies
as the ones that are most important to the portrayal of the
Company's financial condition and results, and requires the
Company to make their most difficult and subjective judgment,
often as a result of the need to make estimates of matters
that are inherently uncertain. Based on this definition,
the Company's most critical policies include: valuation of
accounts receivables, which impact selling, general and
administrative expense; valuation of inventory, which
impacts cost of sales and gross margin; the assessment of
recoverability of goodwill, which impactswrite-offs of
goodwill and; accounting for income taxes, which impacts
the valuation allowance and the effective tax rate.
The Company reviews estimates including, but not limited to,
the allowance for doubtful accounts, inventory reserves and
income tax valuations on a regular basis and makes
adjustments based upon historical experiences,
current conditions and future expectations. The reviews
are performed regularly and adjustments are made as
required by current available information. The Company
believes these estimates are reasonable, but actual results
could differ from these estimates.
We value inventories at the lower of cost or market on a
first-in-first-out basis. The recoverability of inventories
is based upon thetypes and levels of inventory held, forecasted
demand, pricing, competition and changes in technology.
The Company's accounts receivable represent those amounts,
which have been billed to ourcustomers but not yet collected.
The Company analyzes various factors, including historical
experience, credit-worthiness of customers and current
market and economic conditions. The allowance
for doubtful accounts balance is established based
on the portion of those accounts receivable, which are deemed
to be potentially uncollectible. Changes in judgments on these
factors could impact the timing of costs recognized.
The Company records valuation allowances to reduce deferred
tax assets when it is more likely than not that some portion
of the amount may not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of
future taxable income during those periods in which temporary
differences become deductible. The Company considers the
scheduled reversal of deferred tax liabilities, projected
future income and tax planning in making this assessment.
As a result of this assessment, the Company feels that a
valuation allowance for the entire deferred tax asset balance
at April 30, 2002 is required. The Company evaluates the
need for valuation allowances on a regular basis and adjusts
as needed. These adjustments, when made, would have
an impact on the Company's financial statements in the
period that they were recorded.
Goodwill is tested annually for impairment by the Company
at the reporting unit level, by comparing the fair value of
the reporting unit with its carrying value. Valuation methods
for determining the fair value of the reporting unit include
reviewing quoted market prices and discounted cash flows.
If the goodwill is indicated as being impaired (the fair
value of the reporting unit is less than the carrying amount),
the fair value of the reporting unit is then allocated
to its assets and liabilities in a manner similar to a
purchase price allocation in order to determine the implied
fair value of the reporting unit goodwill. This implied
fair value of the reporting unit goodwill is then compared
with the carrying amount of the reporting unit goodwill
and, if it is less, the Company would then recognize an
impairment loss. The preparation of future cash flows requires
significant judgments and estimates with respect to future
revenues related to the asset and the future cash outlays
related to those revenues. Actual revenues and related cash
flows or changes in anticipate revenues and related cash
flows could result in changes in this assessment and result
in an impairment charge. The use of different assumptions
could increase or decrease the related impairment charge.
Liquidity and Capital Resources
At April 30, 2002, consolidated open lines of credit available
to the Company for borrowing, were $951,000 as compared with
$751,000 at April 30, 2001. It is the opinion of the
Company's management that operating expenses, as well as
obligations coming due during the next fiscal year, will
be met primarily by cash flow generated from operations and
from available borrowing levels.
Working Capital
Working capital was approximately $1,325,000 at April 30, 2002,
Compared with 974,000 at April 30, 2001.
Net cash provided by operating activities was $345,000 in 2002 as
Compared with $125,000 in 2001. This is primarily a result of
decreased net losses and decreased inventory levels partially
offset by decreased accounts payable and accrued expenses.
Cash flows used in investing activities were $112,000 in 2002
compared with $316,000 used in 2001. The difference is a result
of decreased purchases of property and equipment in the current
year.
Cash used in financing activities of $200,000 for 2002 as compared
to cash provided by financing activities of $495,000 in 2002. This
was the result of payments on the Company's line of credit in the
current year as compared to borrowings on the Company's line of
credit in 2001 and proceeds from the issuance of Fisher Medical
Corporation Senior 8% Cumulative Convertible Preferred Stock in 2001.
The Company had no material commitments for capital expenditures as
of April 30, 2002.
The Company continues to be obligated under notes payable to
related parties aggregating $1,374,993. The related parties
and corresponding outstanding obligations include David Koffman,
Chairman of the Board of Directors and President of the Company
($201,113), AV Texas Holding LLC, an entity controlled by members
of the Koffman family ($850,000) and CCB Associates, LP, an
entity with indirect control by a Board Member ($323,830).
The current portion of the related notes aggregated $161,332,
with an additional principal payment of $161,332 due in
December 2003. The remaining balance on these related notes
Matures in December 2004 at which time the entire remaining
unpaid principal balance, aggregating $1,052,329, plus accrued
interest is due.
At a meeting of shareholders held in November 1999, the
shareholdersapproved an amendment to Jayark's Certificate of
Incorporation providing a one for ten reverse stock split. In
December 1999, the Company filed a Certificate of Amendment
with the Delaware Secretary of State to effect the one for
ten reverse stock split. In January 2000, each ten (10)
issued and outstanding shares of Common Stock of the Corporation,
par value $.01 per share, were automatically converted into one
(1) validly issued, fully paid and nonassessable share of
Common Stock of the Corporation, par value $.01 per share.
To avoid the existence of fractional shares of common stock,
stockholders who would otherwise have been entitled to receive
fractional shares of common stock equal to one-half or more
received one whole share. No shares or scrip were issued to
holders in respect of any fraction less then one-half. All
per share and weighted average share amounts have been restated
to reflect this transaction.
Contractual Obligations and Commercial Commitments
Accounting standards require disclosure concerning a registrant's
obligations and commitments to make future payments under contracts,
such as debt and lease agreements, and under contingent commitments,
such as debt guarantees. The Company's obligations and commitments
are as follows:
Less than 2-3 4-5 After
Total 1 Year Years Years 5 Years
________________________________________________________________________
Contractual Obligations Payments Due by Period
________________________________________________________________________
Long Term Debt -
Related Parties $1,374,993 $161,332 $1,213,661 $-- $--
Operating Lease $847,500 $90,000 $180,000 $180,000 $397,500
Accrued Interest -
Related Parties $636,696 $-- $636,696 $-- $--
_________________________________________________________________________
Other Commercial
Commitments Amount of Commitment Expiration Per Period
_________________________________________________________________________
Lines of Credit $299,000 $299,000 $-- $-- $--
Impact of Inflation
Management of the Company believes that inflation has not
Significantly impacted either net sales or net income during the
year ended April 30, 2002.
Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board (FASB)
Issued Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations" (SFAS No. 143).
SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143
is required for adoption for fiscal years beginning after
June 15, 2002. The Company has reviewed the provisions of
SFAS No. 143, and believes that upon adoption, the Statement
will not have a significant effect on its consolidated
financial statements.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment of Disposal of
Long-Lived Assets." SFAS No. 144 addresses financial accounting
and reporting for the impairment of long-lived assets and for long-
lived assets to be disposed of. SFAS No. 144 is required for
adoption for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years. The Company has
reviewed the provisions of SFAS No. 144, and believes that upon
adoption, the Statement will not have a significant effect on
its consolidated financial statements.
In April 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections" (SFAS No. 145).
SFAS No. 145 is required for adoption for fiscal years beginning
after May 15, 2002, with early adoption of the provisions
related to the rescission of Statement 4 encouraged. The Company
has reviewed the provisions of SFAS No. 145, and believes that
upon adoption, the Statement will not have a significant effect
on its consolidated financial statements.
Item 7A. Market Risk
None
Item 8. Financial Statements And Supplementary Data
The Independent Auditors' Reports, Consolidated Financial Statements
and Notes to Consolidated Financial Statements filed as a part of
this report are listed in the accompanying Index to Consolidated
Financial Statements.
Item 9. Change In and Disagreement With Accountants on Accounting And
Financial Disclosure
The Jayark Corporation Board of Directors and Audit Committee approved
KPMG LLP (KPMG) as its independent public accountants for the fiscal
years ending April 30, 2002 and 2001. KPMG replaced BDO Seidman LLP
(BDO) which resigned as the Company's principal independent auditors
on November 13, 2000 (date of resignation). During the past five
years,up to and including the date of resignation, BDO's audit report
of the financial statements of the Company did not contain an adverse
or disclaimer of opinion, nor has the report been qualified or modified
as to uncertainty, audit scope, or accounting principles. During the
past five years, there were no disagreements between the Company and
BDO on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not
resolved to the satisfaction of BDO, would have caused BDO to make
reference to the subject matter of the disagreement or disagreements.
The resignation of BDO was subsequently disclosed in Form 8K/A, dated
December 5, 2000.
PART III
Item 10. Directors And Executive Officers Of The Registrant
Set forth below is a list of the directors, executive officers and
key employees of the Company and their respective ages as of June 30,
2002, and, as to directors, the expiration date of their current
term of office:
CURRENT DIRECTORS
Term Director
Name Age Expires Position Presently Held Since
_______________________________________________________________________
David Koffman 43 2004 Chairman, President, Chief 1983
Executive Officer & Director
_______________________________________________________________________
Frank Rabinovitz 59 2004 Executive Vice President, 1989
Chief Operating Officer,
Director and President of AVES
_______________________________________________________________________
Robert Nolt 54 2005 Chief Financial Officer and 1998
President
_______________________________________________________________________
Arthur G. Cohen 73 2002 Director 1990
_______________________________________________________________________
Jeffrey P.Koffman 36 2002 Director 1999
________________________________________________________________________
Richard Ryder 56 2004 Director 2001
________________________________________________________________________
Stephen Fisher 56 2004 President of Fisher Medical 2001
Corporation and Director
________________________________________________________________________
Paul Garfinkle 61 2004 Director 2001
________________________________________________________________________
David L. Koffman was elected President and Chief Executive Officer
of the Company in December 1988. Prior to that time, he served as
Director and Vice President of the Company for over eight years.
Frank Rabinovitz was elected Executive Vice President, Chief Operating
Officer and Director of the Company in 1989. In addition, he is the
President of the Company's audiovisual subsidiary and has served in
this capacity for more than fifteen years, as well as in various other
executive and management capacities since 1980.
Robert C. Nolt is Chief Financial Officer and Director of the Company.
In addition, Mr. Nolt is Chief Financial Officer of Binghamton
Industries, Inc., a company controlled by the principal shareholders
of the Company. Prior to joining the Company, Mr. Nolt was Vice
President of Finance of RRT-Recycle America, Inc. Mr. Nolt is a
Certified Public Accountant with over 29 years of experience in the
Accounting field and has served in a number of executive positions.
Before joining RRT in 1993, Mr. Nolt was Chief Financial Officer
for the Vestal, NY based Ozalid Corporation.
Arthur G. Cohen has been a real estate developer and investor for more
than eleven years. Mr. Cohen is a Director of Baldwin and Arlen, Inc.
Burton I. Koffman and Richard E. Koffman are parties to an agreement
with Arthur G. Cohen pursuant to which they have agreed to vote their
shares in favor of the election of Mr. Cohen to the Board of Directors
of the Company.
Jeffrey P. Koffman was elected Director of the Company in 1999.
Mr. Koffman has served as a Director of Apparel America, Inc. since
June 1995 and Executive Vice-President of Apparel America, Inc. from
June 1994 to February 1996. Mr. Koffman was appointed President of
Apparel America, Inc. in February 1996. Apparel America, Inc. filed
for protection from its creditors under Chapter 11 in 1998.
Mr. Koffman served as a financial analyst with Security Pacific from
1987 to 1989. In 1989, Mr. Koffman became Vice-President of Pilgrim
Industries and in 1990, he became the President of that Company. From
1994 to present, Mr. Koffman has served in an executive capacity with
Tech Aerofoam Products.
Richard Ryder was elected Director of the Company in 2001. Dr. Ryder
has been a practicing physician in the Binghamton, NY area for the
past 24 years. He is board certified in cardiology and internal
medicine. Dr. Ryder is a graduate of Wake Forest University Medical
School and pursued his cardiology training at Georgetown University.
Stephen Fisher, Sr. was elected Director of the Company in 2001.
Mr. Fisher is the President of Fisher Medical Corporation, a former
wholly owned subsidiary of the Company. Prior to joining the Company,
he was the principal and co-founder of Fisher Medical LLC. He was
CEO and Chairman of Vivax Medical Corporation from 1996 until he
resigned in 1998 to start Fisher Medical LLC. From 1991 to 1996 he
was President of Aztech Corporation, a firm specializing in business
development, mergers and acquisitions and technology licensing. Prior
thereto, he was President of Material Systems, Ltd., an engineering
and management consulting firm. He was an INCRA Fellow at Carnegie-
Mellon University and an Assistant Professor of engineering and
conducted research at West Virginia Institute of Technology and
Virginia Polytechnic Institute.
Paul Garfinkle was elected Director of the Company in 2001.
Mr. Garfinkle is currently a business consultant, having retired
from BDO Seidman, LLP, where he had been employed for 36 years
and was an audit partner for 26 years.
Information Concerning Operations of the Board of Directors
The Executive Committee of the Board of Directors consists of
Mr. David L. Koffman (Chair) and Mr. Frank Rabinovitz. The
function of the Executive Committee is to exercise the powers
of the Board of Directors to the extent permitted by Delaware
law. As a rule, the Executive Committee meets to take action
with respect to matters requiring Board of Directors approval
and which cannot await a regular meeting of the Board or the
calling of a special meeting. Under Delaware law and the
Company's By-laws, both the Board and Executive Committee can
act by unanimous written consent to all members.
The Stock Option Committee of the Board of Directors administers
the Company's 2001 Stock Option Plan, giving it authority to
exercise powers of the Board with respect to the Plan. The Stock
Option Committee consists of Mr. Robert Nolt (Chair), Mr. Jeffrey
Koffman, Mr. Paul Garfinkle and Dr. Richard Ryder.
The Audit Committee of the Board of Directors consists of Mr. Paul
Garfinkle (Chair), Dr. Richard Ryder and Mr. Arthur Cohen. The
Audit Committee was created in 2001 to administer and coordinate
the activities and results of the annual audit of the Company by
independent accountants and to comply with NASDAQ listing
requirements.
The Compensation Committee of the Board of Directors was created in
1993 to administer and review compensation structure, policy and
levels of the Company. The Compensation Committee is composed of
Mr. Jeffrey Koffman (Chair), Dr. Richard Ryder and Mr. Paul Garfinkle.
Item 11. Executive Compensation
Set forth in the following table is certain information relating to
the approximate remuneration paid by the Company during the last
three fiscal years to the chief executive officer and each of the
most highly compensated executive officers whose total compensation
exceeded $100,000.
SUMMARY COMPENSATION TABLE (1,2,3,4)
Annual Compensation
____________________
Year Salary Bonus
----- -------- --------
David L. Koffman 2002 $81,000 $--
Chairman, President and 2001 $81,000 $--
Chief Executive Officer 2000 $81,000 $--
Frank Rabinovitz 2002 $162,000 $50,000
Director, Executive Vice 2001 $187,000 $62,000
President, Chief Operating Officer, 2000 $162,000 $50,000
President of AVES
(1) Does not include the value of non-cash compensation to the named
individuals, which did not exceed the lesser of $50,000 or, 10% of
such individuals' total annual salary and bonus. The Company
provides a vehicle to each of the named executives for use in
connection with Company business but does not believe the value
of said vehicles and other non-cash compensation, if any, exceeds
the lesser of $50,000 or 10% of the individual's total annual
salary and bonus.
(2) The Company has entered into Split Dollar Insurance Agreements with
David L. Koffman and Frank Rabinovitz, pursuant to which the Company
has obtained insurance policies on their lives in the approximate
amounts of $5,743,400 and $497,700, respectively. The premium is
paid by the Company. Upon the death of the individual, the
beneficiary named by the individual is entitled to receive the
benefits under the policy. The approximate amounts paid by the
Company during the fiscal year ended April 30, 2001 for this
insurance coverage were $36,000 and $25,373, respectively. Such
amounts are not included in the above table.
(3) The Company has accrued Mr. Koffman's fiscal 2002, 2001 and 2000
salary, however, he has deferred payment until such time as the
Company's working capital position improves.
The Company's 2001 Stock Option Plan allows for the granting of 250,000
shares of the Company's common stock. The Plan provides for the granting
to employees and to others who are in a position to make significant
contribution to the success of the Company and its subsidiaries. The
options granted may be either incentive stock options as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or options
that are not incentive options, or both. The exercise price of each
option shall be determined by the Board but, in the case of an incentive
option, shall not be less than 100% (110% in the case of an incentive
option granted to a ten-percent stockholder) of the fair market value
of the stock subject to the option on the date of grant; nor shall the
exercise price of any option be less, in the case of an original issue
of authorized stock, than par value.
Options shall be exercisable during such period or periods as the Board
may determine, but in no case after the expiration of Ten years (Five
years in the case of an incentive option granted to a "ten percent
stockholder" from the date of grant.) In the discretion of the Board,
options may be exercisable (i) in full upon grant or (ii) over or after
a period of time conditioned on satisfaction of certain Company,
division, group, office, individual or other performance criteria,
including the continued performance of services to the Company or its
subsidiaries.
Unexercised options expire on the earlier of (i) the date that is ten
years from the date on which they were granted (five years in the case
of an Incentive Option granted to a "ten percent stockholder"),
(ii) the date of the termination of an option holder for any reason
other than termination not for cause, death or disability (as
defined in the Stock Option Plan), or (iii) the earlier of one
year, or the expiration date of such option, from the date of the
optionee's disability or death. There were 180,000 stock options
outstanding at April 30, 2002.
Report of the Compensation Committee of the Board of Directors on
Executive Compensation
Except pursuant to its 2001 Stock Option Plan, the Company does not
have any formal annual incentive program, cash or otherwise, nor
does it make annual grants of stock options. Cash bonuses and stock
options, including bonuses and options paid to executive officers,
have generally been awarded based upon individual performance,
business unit performance and corporate performance, in terms of
cash flow, growth and net income as well as meeting budgetary,
strategic and business plan goals.
The Company is committed to providing a compensation program that
Helps attract and retain the best people for the business. The
Company endeavors to achieve symmetry of compensation paid to a
Particular employee or executive and the compensation paid to other
Employees or executives both inside the Company and at comparable
companies.
The remuneration package of the Chief Executive Officer includes a
percentage bonus based on the Company's profitable performance.
Item 12. Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth as of June 6, 2002, the holdings of the
Company's Common Stock by those persons owning of record, or known by
the Company to own beneficially, more than 5% of the Common Stock, the
holdings by each director or nominee, the holdings by certain executive
officers and by all of the executive officers and directors of the
Company as a group.
PRINCIPAL STOCKHOLDERS
Amount and Nature of Note % of
Name and Address of Beneficial Owner Beneficial Ownership (1) Class
___________________________________________________________________________
David L. Koffman
300 Plaza Drive, Vestal, NY 13850 1,263,033 45.7%
___________________________________________________________________________
Vulcan Properties, Inc.
505 Eighth Avenue Suite 300
New York, NY 10018 292,189 10.6%
___________________________________________________________________________
Burton I. Koffman
300 Plaza Drive, Vestal, NY 13850 185,819 2,3 6.7%
___________________________________________________________________________
Ruthanne Koffman
300 Plaza Drive, Vestal, NY 13850 183,665 6.6%
___________________________________________________________________________
Jeffrey P. Koffman
150 East 52nd Street, New York, NY 10022 148,402 5.4%
___________________________________________________________________________
Frank Rabinovitz
12610 W. Airport Blvd. Suite 150,
Sugar Land, TX 77478 68,426 2.5%
___________________________________________________________________________
Richard Ryder
15 Campbell Road, Binghamton, NY 13905 24,000 0.9%
___________________________________________________________________________
Robert C. Nolt
300 Plaza Drive, Vestal, NY 13850 10,000 0.4%
___________________________________________________________________________
All Directors & Executive Officers
as a Group 1,513,861 54.7%
===========================================================================
1. All shares are owned directly by the individual named, except as set
forth herein. David L. Koffman and Jeffrey P. Koffman are sons of
Burton I. Koffman. Ruthanne Koffman is the wife of Burton I. Koffman.
2. Excludes 4,200 shares owned by a charitable foundation of which
Burton I. Koffman is President and Trustee.
3. Includes 53,700 shares owned as tenants in common by brothers
Richard E. Koffman and Burton I. Koffman.
Item 13. Certain Relationships And Related Transactions
Except as noted share amounts are reported as they were prior to the
reverse stock split.
In September 1998, the Company offered to each stockholder, the right
to purchase, pro rata, two shares of Common Stock at a price of $.10
per share. The Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in order to register such
rights to purchase Common Stock, under the Securities Act of 1933,
as amended.
The Rights Offering expired on October 30, 1998. The total offering
of 18,442,398 shares was fully subscribed with 111,600 shares purchased
with cash and the balance subscribed by conversion of debt. The Company
issued the new shares in November 1998. The conversion of debt to stock
in conjunction with the Rights Offering resulted in a $1,000,000
reduction in notes payable to related parties, a $761,000 reduction in
subordinated debt, and a $72,000 reduction in accrued interest. The
end result was $1,794,000 of equity enhancement.
The Koffman Group, which consists of David Koffman, Chairman of the
Board of Directors and President of the Company, Burton Koffman, Richard
Koffman, Milton Koffman, Jeffrey Koffman, Sara Koffman, Ruthanne Koffman,
Elizabeth Koffman, Steven Koffman, and two entities controlled by members
of the Koffman family, beneficially owns 2,046,658 shares of Common
Stock, which represents approximately 74% of the Common Stock outstanding
at April 30, 2002.
The Company continues to be obligated under notes payable to related
parties aggregating $1,374,993. The related parties and corresponding
outstanding obligations include David Koffman, Chairman of the Board of
Directors and President of the Company ($201,113), AV Texas Holding LLC,
an entity controlled by members of the Koffman family ($850,000) and CCB
Associates, LP, an entity with indirect control by a Board Member
($323,830). The current portion of the related notes aggregated
$161,332,with an additional principal payment of $161,332 due in
December 2003.The remaining balance on these related notes matures
in December 2004 at which time the entire remaining unpaid principal
balance, aggregating $1,052,329, plus accrued interest is due.
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-K
(a) Documents filed as part of this report:
1. And 2. Consolidated Financial Statements.
The Independent Auditors' Reports, Consolidated Financial Statements and
Notes to Consolidated Financial Statements which are filed as a part of
this report are listed in the Index to Consolidated Financial Statements.
Note - no financial statement schedules were required to be filed.
3. Exhibits, which are filed as part of this report, are
listed in the accompanying Exhibit Index.
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JAYARK CORPORATION
By:
/s/ David L. Koffman Chairman of the Board and Director July 17, 2002
DAVID L. KOFFMAN
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 date indicated.
/s/ David L. Koffman Chairman of the Board, President, July 17, 2002
DAVID L. KOFFMAN Chief Executive Officer and Director
/s/ Frank Rabinovitz Executive Vice President, Chief July 17, 2002
FRANK RABINOVITZ Operating Officer and Director
/s/ Robert C. Nolt Chief Financial Officer & Director July 17, 2002
ROBERT C. NOLT
/s/ Arthur G. Cohen Director July 17, 2002
ARTHUR G. COHEN
/s/ Jeffrey P. Koffman Director July 17, 2002
JEFFREY P. KOFFMAN
/S/ Richard Ryder Director July 17, 2002
RICHARD RYDER
/s/ Stephen Fisher, Sr. Director July 17, 2002
STEPHEN FISHER, SR.
/s/ Paul Garfinkle Director July 17, 2002
PAUL GARFINKLE
JAYARK CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements Page
Independent Auditors' Reports 23-24
Consolidated Balance Sheets as of April 30, 2002 and 2001 25
Consolidated Statements of Operations for the Years Ended
April 30, 2002, 2001 and 2000 26
Consolidated Statements of Stockholders' Deficit for the Years Ended
April 30, 2002, 2001 and 2000 27
Consolidated Statements of Cash Flows for the Years Ended
April 30, 2002, 2001 and 2000 28
Notes to Consolidated Financial Statements 29-42
Independent Auditors' Report
To the Shareholders and Directors
Jayark Corporation:
We have audited the accompanying consolidated balance sheets of
Jayark Corporation and subsidiaries as of April 30, 2002 and 2001,
and the related consolidated statements of operations, stockholders'
deficit, and cash flows for the years then ended. 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 audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Jayark Corporation and subsidiaries as of April 30, 2002 and 2001,
and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted
in the United States of America.
As discussed in Note 2 to the consolidated financial statements,
effective May 1, 2001, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets.
/s/ KPMG LLP
June 25, 2002
Syracuse, New York
Independent Auditors' Report
To the Shareholders and Directors
Jayark Corporation
We have audited the accompanying consolidated statements of
operations, changes in stockholders' deficit, and cash flows
of Jayark Corporation for the year ended April 30, 2000. 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 audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 presentation
of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of Jayark
Corporation's and Subsidiaries' operations and their cash flows for
the year ended April 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.
/s/ BDO Seidman, LLP
New York, New York
July 10, 2000
Jayark Corporation and Subsidiaries
Consolidated Balance Sheets
April 30, 2002 and 2001
2002 2001
____________________
Assets
Current Assets:
Cash and Cash Equivalents $866,971 $834,145
Accounts Receivable - Trade, less allowance
for doubtful accounts of $109,028 and
$100,363, in 2002 and 2001, respectively 1,197,823 1,318,732
Inventories (Note 3) 393,612 670,320
Other Current Assets 40,206 42,202
____________________
Total Current Assets 2,498,612 2,865,399
Property, Plant & Equipment, net (Note 4) 180,783 542,204
Goodwill (Note 2) 204,662 295,094
Patent, net -- 54,656
____________________
Total Assets $2,884,057 $3,757,353
====================
Liabilities
Current Liabilities:
Borrowings Under Lines of Credit (Note 5) $299,000 $499,060
Current Portion of Long Term Debt - Related
Parties (Note 6) 161,332 161,332
Accounts Payable and Accrued Expenses 440,589 862,442
Accrued Salaries (Note 10) 187,684 295,143
Other Current Liabilities 85,030 73,328
____________________
Total Current Liabilities 1,173,635 1,891,305
Long Term Debt - Related Parties, excluding
current portion (Note 6) 1,213,661 1,213,661
Deferred Compensation (Note 10) 344,272 338,272
Accrued Interest - Related Parties
(Notes 6 and 10) 636,696 530,948
____________________
Total Liabilities 3,368,264 3,974,186
____________________
8% Cumulative Convertible Preferred Stock of
Subsidiary (Note 8) -- 429,500
____________________
Concentrations, Commitments And Contingencies (Notes 11 and 12)
Stockholders' Deficit
Common Stock of $.01 Par Value, Authorized
30,000,000 Shares; issued 2,773,896 Shares 27,739 27,739
Additional Paid-In Capital 12,860,435 12,598,980
Accumulated Deficit (13,371,631)(13,272,302)
Treasury Stock, at cost, 7,500 shares
in 2002 and 2001 (750) (750)
______________________
Total Stockholders' Deficit (484,207) (646,333)
______________________
Total Liabilities & Stockholders' Deficit $2,884,057 $3,757,353
======================
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statements of Operations
Years Ended April 30, 2002, 2001 and 2000
2002 2001 2000
Net Revenues $11,415,537 $12,886,491 $13,197,866
Cost of Revenues 9,429,755 10,836,632 10,869,794
___________________________________
Gross Margin 1,985,782 2,049,859 2,328,072
Selling, General and Administrative
(Note 10) 1,983,095 2,422,739 1,895,922
___________________________________
Operating Income (Loss) 2,687 (372,880) 432,150
Other Income (Expense):
Interest Expense, Net (115,148) (140,134) (97,828)
Gain on Sale of Assets 13,900 1,156 7,800
__________________________________
Income (Loss) Before Income Taxes (98,561) (511,858) 342,122
Income Taxes (Note 9) 768 (11,144) 11,144
__________________________________
Income (Loss) from Continuing
Operations (99,329) (500,714) 330,978
__________________________________
Income from Discontinued Operations
(Note 13) -- -- 209,676
__________________________________
Net Income (Loss) ($99,329) ($500,714) $540,654
==================================
Basic and Diluted Income (Loss) per Common Share:
Continuing Operations ($.04) ($.18) $.12
Discontinued Operations $-- $-- $.08
__________________________________
Net Income (Loss) per Common Share ($.04) ($.18) $.20
==================================
Weighted Average Common Shares: 2,766,396 2,766,396 2,766,396
==================================
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statements of Stockholders' Deficit
Years Ended April 30, 2002, 2001 and 2000
Common Additional Accumulated Treasury Total
Stock Paid-In Deficit Stock Stockholders
Capital Deficit
_____________________________________________________
Balance at April 30, 1999 $27,739 $12,598,980 ($13,312,242) $-- ($685,523)
Purchase of Treasury Stock -- -- -- (750) (750)
Net Income -- -- 540,654 -- 540,654
_____________________________________________________
Balance at April 30, 2000 27,739 12,598,980 (12,771,588) (750) (145,619)
Net Loss -- -- (500,714) -- (500,714)
_____________________________________________________
Balance at April 30, 2001 27,739 12,598,980 (13,272,302) (750) (646,333)
Gain from Divestiture of
Fisher (Note 12) -- 261,455 -- -- 261,455
Net Loss -- -- (99,329) -- (99,329)
_____________________________________________________
Balance at April 30, 2002 $27,739 $12,860,435 $13,371,631 ($750) ($484,207)
=====================================================
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended April 30, 2002, 2001 and 2000
2002 2001 2000
___________________________________
Cash Flows From Operating Activities:
Net Income (Loss) ($99,329) ($500,714) $540,654
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By
Operating Activities:
Depreciation and Amortization of Property,
Plant and Equipment 121,649 182,191 91,533
Amortization of Goodwill and Patent 1,203 16,739 32,498
Gain on Disposition of Assets (13,900) (1,156) (7,800)
Provision for Doubtful Accounts 8,665 24,363 17,000
Changes In Assets and Liabilities, Net of
Divestiture of Fisher (Note 12):
Accounts Receivable - Trade 80,894 41,118 417,001
Inventories 191,707 (209,693) (83,158)
Other Current Assets (14,138) 47,713 (28,663)
Accounts Payable and Accrued Expenses (126,036) 320,067 (400,630)
Accrued Salaries and Deferred Compensation 75,956 187,775 53,221
Accrued Interest - Related Parties 105,748 26,437 --
Other Liabilities 12,306 (10,035) 43,445
_________________________________
Net Cash Provided by Operating Activities 344,725 124,805 675,101
_________________________________
Cash Flows From Investing Activities:
Proceeds from Sale of Assets 13,900 1,156 7,800
Purchases of Plant and Equipment (121,646) (270,801) (349,193)
Purchase of Fisher Medical, LLC, net of
cash acquired (Note 12) -- -- (215,000)
Purchases of Patent (4,093) (46,251) (20,438)
_________________________________
Net Cash Used In Investing Activities (111,839) (315,896) (576,831)
Cash Flows From Financing Activities:
Net Borrowings (Payments) Under Lines of
Credit (200,060) 130,106 368,955
Payments of Long Term Debt - Related Parties -- (64,910) (145,659)
Proceeds From Issuance of 8% Cumulative Convertible
Preferred Stock of Subsidiary (Note 8) -- 429,500 --
Purchase of Treasury Stock -- -- (750)
_________________________________
Net Cash Provided By (Used In) Financing
Activities (200,060) 494,696 222,546
_________________________________
Net Increase in Cash and Cash Equivalents 32,826 303,605 320,816
Cash and Cash Equivalents at
Beginning of Year 834,145 530,540 290,724
_________________________________
Cash and Cash Equivalents at End of Year $866,971 $834,145 $530,540
=================================
Supplemental Disclosures:
Cash Paid During the Year for:
Interest $26,029 $140,969 $120,159
================================
Taxes $768 $-- $33,001
================================
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements
April 30, 2002, 2001 and 2000
(1) Summary of Significant Accounting Policies
Operations
The Company conducted its operations through three wholly owned
subsidiaries in fiscal years 2002, 2001 and 2000. AVES AudioVisual
Systems, Inc. ("AVES"), Med Services Corporation ("Med") and Fisher
Medical Corporation ("Fisher"), each of which constituted a separate
business segment for financial reporting purposes. AVES distributes
and rents a broad range of audio, video and presentation equipment.
Med finances the manufacture, sale and rental of medical equipment.
As discussed in Note 12, the Company relinquished control of Fisher
and has deconsolidated Fisher effective October 1, 2001 and is
accounting for its investment in Fisher under the equity method.
Prior to the divestiture, Fisher developed, manufactured and
distributed therapeutic support surfaces used in hospitals,
nursing homes and home health care.
Principles of Consolidation
The consolidated financial statements include the accounts of Jayark
Corporation and its wholly owned subsidiaries (the "Company"). All
intercompany balances and transactions have been eliminated in
consolidation.
Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market value. Cost
is determined by using the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of
plant and equipment is calculated using the straight-line method
over the estimated useful lives of the assets. Amortization of
leasehold improvements is calculated on a straight-line basis over
the lesser of the lease term or estimated useful lives of the
improvements. The useful lives of these assets and lease terms of
the leasehold improvements range from approximately 3 to 20 years.
At the time of sale or retirement, the costs and accumulated
depreciation or amortization of such assets are removed from the
respective accounts, and any resulting gain or loss is reflected
in operations. Maintenance and repairs are charged to operations
as incurred, and expenditures for major renewals and betterments
are capitalized and amortized by charges to operations.
Income Taxes
The Company utilizes the asset and liability method of accounting
for income taxes. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
The effect of deferred tax assets and liabilities of a change
in tax rates is recognized in the period that includes the
enactment date. Deferred tax assets are reduced by a valuation
allowance when there is uncertainty as to the ultimate realization
of the asset.
Income (Loss) Per Common Share
Basic income (loss) per common share is based on the weighted average
number of common shares outstanding. Diluted income (loss) per common
share is based on the weighted average number of common shares
outstanding, as well as dilutive potential common shares, which,
in the Company's case comprise shares issuable under the stock
option plan described in Note 7. The treasury stock method is used
to calculate dilutive shares which reduces the gross number of
dilutive shares by the number of shares purchasable from the
proceeds of the options assumed to be exercised.
Outstanding stock options, assumed to be exercised, aggregating
180,000, 0 and 10,500 at April 30 2002, 2001 and 2000, respectively,
are not included in the calculation of diluted income (loss) per
common share for the fiscal years since the effects would be
antidilutive due to the option price being greater than the
average market prices. Accordingly, basic and diluted net
income (loss) per common share do not differ for any periods
presented.
Revenue Recognition
The Company generally recognizes revenues at the time products are
shipped to customers provided that persuasive evidence of an
arrangement exists, the sales price is fixed or easily determinable,
collectibility is reasonably assured and title and risk of loss have
passed to the customer. Rental revenue is recognized over the rental
period and service revenue is recognized when services are performed.
Estimated allowances for returns and doubtful accounts are recorded
in the period such returns and losses are determined.
Long-Lived Assets
Prior to the adoption of SFAS 142, as discussed in Note 2, long-lived
assets, such as property, plant and equipment, goodwill and other
intangibles were evaluated for impairment when events or changes in
circumstances indicate that the carrying amount of the assets may not
be recoverable through the estimated undiscounted future cash flows
from the use of these assets. When such impairment existed, the
related assets were written down to their fair value.
Upon adoption of SFAS 142, effective May 1, 2001, goodwill is
Tested annually for impairment at the reporting unit level, by
comparing the fair value of the reporting unit with its carrying
value. Valuation methods for determining the fair value of the
reporting unit include reviewing quoted market prices and discounted
cash flows. If the goodwill is indicated as being impaired, the fair
value of the reporting unit is then allocated to its assets and
liabilities in a manner similar to a purchase price allocation in
order to determine the implied fair value of the reporting unit
goodwill. This implied fair value of the reporting unit goodwill
is then compared with the carrying amount of the reporting unit
goodwill, and if it is less, the Company would then recognize an
impairment loss. No impairment losses were recorded through
April 30, 2002.
Stock Based Compensation
The Company accounts for its stock option plan in accordance with the
provisions of APB Opinion No. 25 "Accounting for Stock Issued to
Employees," and related interpretations. As such, compensation expense
is measured on the date of grant and recognized over the vesting period
only if the current market price of the underlying stock exceeds the
exercise price. The Company has adopted Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock Based
Compensation," which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the
date of grant. Alternatively, SFAS 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income disclosures for employee stock option grants
made in 1995 and future years as if the fair value based method
defined in SFAS No. 123 had been applied. The Company has elected
to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosures stipulated by SFAS No. 123.
Research and Development Costs
Research and development costs are charged to expense as incurred.
Research and development expense was $305,639, $655,245 and
$173,818 in fiscal 2002, 2001 and 2000, respectively, and is
recorded within selling, general and administrative expenses.
Financial Instruments
The Company's financial instruments, which include cash and cash
equivalents, accounts receivable, accounts payable, borrowings
under lines of credit, and long term debt are stated at cost which
approximates fair value at April 30, 2002 and 2001.
Concentrations
For the years ended April 30, 2002, 2001 and 2000 approximately 84%,
81% and 79% of the Company's consolidated net revenues relate to AVES'
sales to schools and other educational institutions.
Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations" (SFAS No. 143). SFAS No. 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs. SFAS No. 143 is required for adoption for fiscal
years beginning after June 15, 2002. The Company has reviewed the
provisions of SFAS No. 143, and believes that upon adoption, the
Statement will not have a significant effect on its consolidated
financial statements.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment of Disposal of
Long-Lived Assets." SFAS No. 144 addresses financial accounting
and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of. SFAS No. 144 is required
for adoption for fiscal years beginning after December 15, 2001
and interim periods within those fiscal years. The Company has
reviewed the provisions of SFAS No. 144, and believes that upon
adoption, the Statement will not have a significant effect on its
consolidated financial statements.
In April 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections" (SFAS No. 145). SFAS
No. 145 is required for adoption for fiscal years beginning after
May 15, 2002, with early adoption of the provisions related to the
rescission of Statement 4 encouraged. The Company has reviewed the
provisions of SFAS No. 145, and believes that upon adoption, the
Statements will not have a significant effect on its consolidated
financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
Reclassifications
Certain amounts have been reclassified to conform with the fiscal
2002 presentation.
(2) Adoption of Accounting Pronouncements
In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 141, "Business Combinations" which supersedes APB
Opinion No. 16, "Business Combinations". SFAS No. 141 eliminates
the pooling-of-interests method of accounting for business combinations
and modifies the application of the purchase accounting method. The
elimination of the pooling-of-interests method is effective for
transactions initiated after June 30, 2001. The remaining provisions
of SFAS No. 141 are effective for transactions accounted for using
the purchase method that are completed after June 30, 2001. The
Company adopted SFAS No. 141 during the first quarter of fiscal 2002
(effective May 1, 2001). Adoption of the Statement did not have an
impact on the Company, as the Company has not historically had pooling-
of-interest transactions and had not initiated any business combinations
after June 30, 2001.
During the first quarter of fiscal 2002 (effective May 1, 2001), the
Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Intangible Assets", which supercedes APB Opinion No. 17,
"Intangible Assets". SFAS No. 142 eliminates the current requirement to
amortize goodwill and indefinite-lived intangible assets, addresses the
amortization of intangible assets with a defined life and addresses the
impairment testing and recognition of goodwill and intangible assets.
The following information describes the impact that the adoption of
SFAS No. 142 had on net income (loss) and net income (loss) per common
share for the fiscal years ending April 30:
2002 2001 2000
______________________________
Net Income (Loss) ($99,329) ($500,714) $540,654
Add Back: Goodwill Amortization -- $26,068 $22,734
______________________________
Adjusted Net Income (Loss) ($99,329) ($474,646) $563,388
==============================
Net Income (Loss) per Common Share
- Basic and Diluted ($.04) ($.18) $.20
Goodwill Amortization $-- $.01 $.01
______________________________
Adjusted Net Income (Loss) ($.04) ($.17) $.21
==============================
(3) Inventories
Inventories are summarized as follows:
April 30, 2002 April 30,2001
________________________________
Raw Materials $172,081 $201,877
Work In Process 2,032 22,660
Finished Goods 219,499 445,783
________________________________
$393,612 $670,320
================================
(4) Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
April 30, 2002 April 30,2001
_________________________________
Machinery and Equipment $ 46,438 $413,419
Furniture and fixtures 76,571 117,665
Leasehold improvements 18,215 109,662
Automobiles and trucks 197,615 182,098
Rental and demonstration equipment 222,652 230,481
_________________________________
Total property and equipment 561,491 1,053,327
Less Accumulated depreciation
And amortization 380,708 511,123
_________________________________
Net property and equipment $180,783 $542,204
================================
(5) Borrowings Under Lines of Credit
The Company has two lines of credit which are split between the AVES
and Med subsidiaries. The AVES line of credit is secured by the
related accounts receivable and inventories, and provides for borrowings
up to $750,000 through September 30, 2002. The Med line of credit is
guaranteed by AVES, and provides for borrowing up to $500,000 through
September 30, 2002. The borrowings under the lines of credit bear
interest at prime, which was 4.75% and 7.5% at April 30, 2002 and 2001,
respectively. The Company had $951,000 and $750,940 available under
the lines of credit at April 30, 2002 and 2001, respectively.
There are no financial covenants associated with the lines of credit.
(6) Long-term Debt - Related Parties
Long-term debt with related parties is summarized as follows:
2002 2001
_____________________
Subordinated note payable due December 2004;
quarterly interest payments at fixed interest
rate of 7.5% $850,000 $850,000
Subordinated notes payable due December 2004;
quarterly interest payments at fixed interest
rate of 8% $524,993 $524,993
_____________________
$1,374,993 $1,374,993
Less: Current Installments 161,332 161,332
_____________________
$1,213,661 $1,213,661
=====================
The Company has an $850,000 unsecured subordinated note payable to
a related party. The note requires annual principal payments of
$100,000 due on December 31. The note matures in December 2004,
at which time the entire unpaid principal balance plus accrued
interest is due. Due to the Company's cash flow position, unpaid
principal aggregating $150,000 has been waived until the maturity
date of the note. Interest expense on the note payable aggregated
$63,750, $67,852 and $64,438 in fiscal 2002, 2001 and 2000,
respectively. Cash paid for interest on the note was $0, $51,915
and $64,438 in 2002, 2001 and 2000, respectively.
Additionally, the Company has an aggregate $524,993 of unsecured
subordinated notes to related parties. These notes require combined
annual principal payments of $61,332 due on December 31. The notes
mature in December 2004, at which time the entire unpaid principal
balance plus accrued interest is due. Due to the Company's cash flow
position, unpaid principal aggregating $95,724, has been waived until
the maturity date of the notes. Interest expense on the subordinated
notes aggregated $41,998, $43,142 and $45,680 in fiscal 2002, 2001
and 2000, respectively. Cash paid for interest on the subordinated
notes was $0, $32,642 and $45,680 in 2002, 2001 and 2000, respectively.
Accrued interest - related parties in the consolidated balance sheets
includes unpaid interest on the subordinated notes to related parties,
and $397,463 of unpaid interest relating to certain debentures converted
to equity in fiscal 1999. The unpaid interest relating to the historical
debentures was waived by the holders of these notes until December 2004.
The aggregate maturities of all long-term debt for the fiscal years
subsequent to April 30, 2002 are summarized as follows:
2003 $161,332
2004 $161,332
2005 $1,052,329
___________
$1,374,993
===========
(7) Stock Options
In fiscal 2001, the Company adopted the 2001 Stock Option Plan (Plan)
which allows for the granting of 250,000 options to purchase shares
of the Company's common stock. The Plan provides for the granting
to employees and to others who are in a position to make significant
contributions to the success of the Company and its subsidiaries.
The options granted may be either incentive stock options (ISO's) as
defined in Section 422 of the Internal Revenue Code of 1986, as
amended, or options that are not incentive options (NSO's), or both.
The exercise price of each option shall be determined by the Board but,
in the case of an incentive stock option, shall not be less than 100%
(110% in the case of an incentive stock option granted to a ten-percent
stockholder) of the fair market value of the stock subject to the option
on the date of grant; nor shall the exercise price of any stock option
be less, in the case of an original issue of authorized stock, than par value.
Stock options shall be exercisable during such period or periods as the
Board may determine, but in no case after the expiration of ten years
(five years in the case of an incentive stock option granted to a ten
percent stockholder) from the date of grant. At the discretion of the
Board, options may be exercisable (i) in full upon grant or (ii) over
or after a period of time conditioned on satisfaction of certain
Company, division, group, office, individual or other performance
criteria, including the continued performance of services to the
ompany or its subsidiaries.
Unexercised stock options expire on the earlier of (i) the date that
is ten years from the date on which they were granted (five years in
the case of an incentive stock option granted to a ten percent
stockholder), (ii) the date of the termination of an option holder
for any reason other than termination not for cause, death or
disability (as defined in the Plan), or (iii) the earlier of one
year, or the expiration date of such option, from the date of
the optionee's disability or death.
During fiscal 2002, the Company granted 187,500 stock options under
this Plan. Information relating to option activity under this Plan
are summarized as follows:
Shares
________________________________
ISO
______________________ Option Weighted Average
Employee Director Total Price Exercise Price
___________________________________________________________________________
Outstanding at
April 30, 2001 -- -- -- -- --
___________________________________________________________________________
Issued 107,500 80,000 187,500 $.50 $.50
Cancelled (7,500) -- (7,500) -- --
___________________________________________________________________________
Outstanding at
April 30, 2002 100,000 80,000 180,000 $.50 $.50
===========================================================================
Shares Exercisable at
April 30, 2002 100,000 80,000 180,000 $.50 $.50
===========================================================================
Shares available for Grant at
April 30, 2002 70,000
=======================================================
SFAS No. 123, Accounting for Stock Based Compensation, requires the use
of option valuation models to provide supplemental information regarding
options granted after 1995. Proforma information regarding net income
(loss) and net income (loss) per common share shown below was determined
as if the Company has accounted for its stock options under the fair
value method of that Statement.
In order to disclose the proforma net income (loss) related to the stock
options, the fair value of the stock options was estimated at the date
of grant using the Black-Scholes option pricing model with the following
assumptions: expected option life of 3 years; risk-free interest rate of
4.0%; volatility factors of the Company's common stock of 198.19%; and
an expected dividend yield of 0%. Stock based compensation costs would
have increased both loss before income taxes and net loss after income
taxes by $56,904 and would have increased net loss per common share by
$.02 in fiscal 2002, if the fair value of the options granted in the
current year had been recognized as compensation expense on a straight-
line basis over the vesting period of the grant.
(8) Preferred Stock of Subsidiary
In October 2000, the Company authorized 20,000 shares of Fisher
Medical 8% Senior Cumulative Convertible Preferred Stock. The
preferred stock has a stated value of $150 per share, which was
subsequently amended to $100 per share. The preferred shares are
redeemable by the Company at any time at a redemption price of
$100 per share. The preferred shares are voting and each share
is convertible into an equal number of Fisher Medical Corporation
common stock shares on a one to one basis. In the event of a
voluntary or involuntary liquidation, dissolution or winding up
of the Company, the holders of preferred stock are entitled to
distribution or payment, before any distributions or payments
to holders of common stock. The holders of preferred shares are
entitled to receive, when declared by the Board of Directors,
out of funds legally available for that purpose, cumulative
semi-annual dividends at the rate of 8% per annum, commencing
on April 30, 2001. As of April 30, 2001 the Company had issued
4,295 shares of Fisher Medical Senior Cumulative Convertible
Preferred Stock for $429,500. As discussed in Note 12, the
Company relinquished control of Fisher and has deconsolidated
Fisher effective October 1, 2001.
(9) Income Taxes
Income tax expense (benefit) consist of the following:
Current Deferred Total
_______________________________
Year Ended April 30, 2002
Federal $-- $-- $--
State $768 $-- $768
_______________________________
$768 $-- $768
===============================
Year Ended April 30, 2001
Federal ($11,144) $-- ($11,144)
State -- -- --
________________________________
($11,144) $-- ($11,144)
================================
Year Ended April 30, 2000
Federal $11,144 $-- $11,144
State -- -- --
________________________________
$11,144 $-- $11,144
================================
A reconciliation of the expected consolidated income tax expense
(benefit), computed by applying the U.S. Federal corporate income
tax rate of 34% to income (loss) before income taxes, to income
tax expense (benefit), is as follows:
2002 2001
______________________
Expected tax benefit ($33,511) ($174,032)
State income taxes net of Federal Benefit 507 --
Change in valuation allowance 20,000 166,754
Non-deductible expenses 1,746 7,271
Effect of graduated Federal income tax rates 11,750 --
Over accrual of prior year taxes -- ($11,144)
Other, net 276 7
______________________
$768 ($11,144)
======================
Actual income tax expense (benefit) for 2000 differs from the amount
computed by applying the U.S. Federal corporate income tax rate of
34% to pre tax income (loss), primarily as a result of valuation
allowances netted against potential deferred tax assets.
The tax effects of temporary differences that give rise to the
deferred tax assets and deferred tax liabilities at April 30,
are as follows:
2002 2001
_____________________
Deferred tax assets:
Allowance for doubtful accounts $37,000 $34,000
Allowance for obsolete inventories/unicap costs 12,000 16,000
Property, plant and equipment, principally due
to differences in depreciation 41,000 40,000
Accrued compensation 147,000 143,000
Net operating loss carryforwards and
tax credits 3,834,000 3,818,000
_____________________
Total gross deferred tax assets 4,071,000 4,051,000
Less valuation allowance (4,071,000) (4,051,000)
_____________________
Net deferred tax assets $-- $--
=====================
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. As a result
of this assessment, management has recorded a valuation allowance
amounting to the entire deferred tax asset balance at April 30, 2002
and 2001.
At April 30, 2002, the Company has net operating loss carryforwards
for Federal tax purposes of approximately $11,000,000, which are
available to offset future taxable income, if any, through 2020.
(10) Related Party Transactions
At April 30, 2002 and 2001, the Company had accrued unpaid wages
aggregating $431,469 and $419,272, respectively. The unpaid wages
relate to salary deferral by the President of the Company for prior
services rendered. The terms of the salary deferral is such that the
President of the Company has agreed to defer his salary until which
time the working capital position of the Company improves. Based
upon the intent of the parties, the Company has reflected $87,197 and
$81,000 as a current liability within accrued salaries in the
consolidated balance sheet at April 30, 2002 and 2001, respectively,
and reflected $344,272 and $338,272 as a long-term liability (deferred
compensation) in the consolidated balance sheet at
April 30, 2002 and 2001, respectively.
During fiscal 2001, the President of the Fisher subsidiary waived his
rights to his fiscal 2001 salary which aggregated $120,000. As the
President of the Fisher subsidiary does not have an equity ownership
interest in the Company, the Company has reflected this amount as a
reduction of compensation expense in selling, general and
administrative expenses in the consolidated statements of operations.
In fiscal 1999, the Company's President exchanged debt for common stock
of the Company. At the time of conversion, the unpaid interest on the
original debt, which aggregated $107,047, was waived by the President
until such time as the Company's working capital position improves.
At April 30, 2002, the waived interest balance of $107,047 is
reflected as a long-term liability based upon the intent of the
parties and is displayed in accrued interest - related parties
in the consolidated balance sheet.
(11) Commitments
The Company is obligated under a non-cancelable operating lease
agreement that expires in September 2011. Future minimum lease
payments related to this lease is as follows:
2003 $90,000
2004 90,000
2005 90,000
2006 90,000
2007 and thereafter $487,500
________
$847,500
========
Rental expense for operating leases was $105,547, $101,185 and
$74,490 for the years ended April 30, 2002, 2001, and 2000,
respectively.
(12) Divestiture of Fisher
In January 2000, the Company, through a newly formed, wholly owned
subsidiary, Fisher Medical Corporation (Fisher), entered into an
Asset Purchase Agreement with Fisher Medical LLC (LLC), a
development stage developer, manufacturer, and distributor of
medical supplies and equipment for hospitals, nursing homes and
individuals. Under the terms of the agreement, Fisher purchased
all of the assets of LLC for cash of $215,000. LLC remained the
owner of certain intellectual property utilized in Fisher's
medical products line. The owner of LLC was Steve Fisher who
also became a member of the board of directors of the Company.
Fisher also negotiated a five-year technology license with LLC,
which conveyed certain technology rights developed by Trlby
Innovative LLC of Torrington, Connecticut. The acquisition was
accounted for under the purchase method of accounting.
Fisher continued to develop medical supply products with the
financing provided by the Company. The Company initially utilized
its existing working capital and lines of credit to fund Fisher's
development efforts. The development time horizon exceeded the
projected investment horizon as determined by the Company. Due
to the need for additional funding for this development, the
Company endeavored to infuse additional capital into Fisher with
a private placement of preferred stock. As discussed in Note 8,
in 2000, the Company sold $429,500 of newly issued Fisher Medical
preferred stock. The Company continued to seek new capital via
the preferred stock offering to various potential investors in 2001.
In September 2001, the Company received a proposal from Alberdale
LLC to provide a $500,000 bridge loan to Fisher, which is
convertible, under certain conditions, to Fisher common stock.
In addition to the bridge loan, Alberdale was proposing to offer
a new series of preferred stock for equity financing to continue
the operations of Fisher. As a condition to this refinancing,
Alberdale required that Jayark contribute 50% of its Fisher Medical
Corporation common stock to the new refinanced entity, as well as
provide an option for Alberdale to purchase the remaining 50%
common interest the Company would hold in Fisher at predetermined
amounts ranging from approximately $915,000 to $1,464,000 for
periods not exceeding 15 months.
On October 1, 2001 the Company approved the merger of its wholly
owned subsidiary, Fisher Medical Corporation with Fisher Medical LLC,
the owner of the intellectual property utilized in Fisher's medical
products line. Pursuant to the merger agreement, the Company
assigned 50% of its common equity holdings in Fisher Medical
Corporation to the sole member of Fisher Medical LLC, Dr. Stephen
Fisher. Dr. Fisher serves as President of Fisher Medical Corporation
and as a Director of the Company. As a result of this transaction,
the Company has effectively relinquished its control of Fisher
Medical Corporation; however given its continuing 50% common stock
ownership interest, the Company will account for its investment on
the equity method prospectively commencing October 1, 2001. The
Company has no future obligations to fund any deficits of the merged
entity or any commitments to provide future funding.
As of October 1, 2001, the Company had invested approximately
$1,248,000 of cash in Fisher and incurred net losses as 100%
owner of approximately $1,509,000; therefore the Company's net
investment and advance position at the date of the divestiture
was a negative balance of approximately $261,000. In connection
with the transaction, the Company received from the merged
entity a five-year $525,715 promissory note, which represents a
portion of the aforementioned advances the Company had made
during its 100% ownership period. The note is secured by all
assets of the company except the intellectual property. There
can be no assurances that the merged entity will be successful
in completing the development of its products or in the raising
of the additional working capital required. Additionally, since
the merged entity has minimal liquidation value, the note is deemed
not to be collectible. Accordingly, the Company has not assigned
any value to this note and has recognized its divestiture of its
net investment of $261,455 at October 1, 2001 as an increase in
additional paid in capital, which reduces the investment in
Fisher to zero. The Company has not recognized its 50% share of
losses of the merged entity in the post transaction period of
October 1 to January 31, 2002 as its investment is reflected as zero.
The net liabilities of Fisher at October 1, 2001 deconsolidated as
a result of the divestiture are as follows:
Accounts Receivable - Trade $31,350
Inventories 85,001
Other Current Assets 16,134
Property, Plant & Equipment, Net 361,418
Goodwill 90,432
Patent, Net 57,546
Accounts Payable and Accrued Expenses (295,817)
Accrued Salaries (177,415)
Other Current Liabilities (604)
Preferred Stock (429,500)
________
($261,455)
==========
In connection with the transaction, the Company was granted
warrants to purchase 47,190 shares of common stock of the merged
entity at $10 per share, which expire in three years.
As the Company has relinquished its control of Fisher, it has
effectively deconsolidated Fisher as of October 1, 2001 and
reflected its recorded excess losses as additional paid-in-capital.
As the Company experienced no historical successes as 100% owner,
and has no tangible evidence of its historical investment
recoverability, it has reflected its equity investment position
at zero. In the event the merged entity is successful in the
future, the Company would record its 50% interest in the earnings,
if any, to the extent that they exceed equity losses not otherwise
recorded, and could experience subsequent gains resulting from the
repayment of the note receivable, if such amounts are collected,
and from the proceeds of the Alberdale buyout option, if exercised.
However, as described above, due to the uncertainties over the
ultimate recoverability of the note or the exercise of the option,
no value has been assigned to either.
The following unaudited pro forma financial information presents
the combined results of operations of the Company as if the
divestiture of Fisher had taken place as of May 1, 1999. The
unaudited pro forma information has been prepared by the Company
based upon assumptions deemed appropriate and takes into
consideration the elimination of Fisher operating activities
included in the consolidated statements of operations for the
periods presented herein.
2002 2001 2000
___________________________________
Net Revenues $11,381,126 $12,857,841 $13,197,866
Net Income $260,380 $304,061 $735,274
===================================
Net Income per Common Share
- Basic and Diluted: $.09 $.11 $.27
===================================
The unaudited pro forma information presented herein are shown
for illustrative purposed only and are not necessarily indicative
of the future financial position or future results of operations
of the Company and does not necessarily reflect the results of
operations that would have occurred had the transaction been in
effect for the periods presented. The unaudited pro forma
information should be read in conjunction with the historical
consolidated financial statements and related notes of the Company.
As of April 30, 2002, the $500,000 Alberdale LLC bridge loan to
Fisher provided by Hobart Associates II, LLC (Hobart) was in
default and the Company's $525,715 five-year promissory note to
Fisher was also in default. Both notes provided for the
acceleration of the notes and the transfer of the secured assets
to the note holders upon an event of default. In order to avoid
liquidation of Fisher, Hobart and the Company proposed a
restructuring program for Fisher. On June 3, 2002 Stephen
Fisher Sr. (President of Fisher), Fisher, Hobart and the
Company entered into the Fisher Medical Restructuring Agreement
(the Agreement). Under the terms of the Agreement, Hobart
and the Company formed a new corporation, Unisoft International
Corporation ("UIC"). UIC will assume the international rights
for sale and marketing of Fisher's Unisoft mattress and all
associated products, designs, and all rights related thereto,
as well as certain employees and their obligations. As part
of the agreement, UIC will commit to a supply contract with
Fisher with a guaranteed minimum order quantity.
In addition, UIC must assume the Fisher promissory notes
payable to Hobart and the Company. The Company will also
contribute its 500,000 shares of common stock of Fisher and
Hobart will contribute $250,000 to UIC, resulting in both the
Company and Hobart owning approximately 36% of UIC. The
Company's 36% interest is comprised of 100,000 shares of common
stock and 60,000 shares of Super Voting Series A Preferred Stock.
Each share of Series A Preferred Stock provides for 5 shares of
voting rights for each share of common stock. Hobart and UIC
have an option to purchase approximately 95% of Jayark's interest
in UIC for approximately $800,000 for a one-year period.
Alberdales LLC's option to purchase 50% of Jayark's common
interest in Fisher was converted in 20,000 shares of UIC common
stock under the restructuring.
There can be no assurances that the new entity will be successful
in selling and marketing the Unisoft internationally or the
raising of the additional working capital required to sustain
the business. The Company has no future obligations to fund
any deficits of the new entity or any commitments to provide
funding. Due to the uncertainties over the ultimate
recoverability of its investment in UIC, no value has been assigned.
(13) Discontinued Operations
In fiscal 2000, the Company wrote-off accrued expenses in the
amount of $209,676, related to the abandonment of the Company's
investment in LCL International Traders, Inc. in 1996 and the
discontinuance of Rosalco, Inc. in 1997. Accordingly, the amount
has been classified as income from discontinued operations in the
consolidated statements of operations.
(14) Segment and Related Information
The Company operated in three reportable business segments during
fiscal 200, 2001 and 2002 as follows:
The Company's audio-visual subsidiary, AVES Audio Visual Systems,
Inc. ("AVES"), distributes and rents a broad range of audio, video
and presentation equipment, and supplies to businesses, churches,
hospitals, hotels and educational institutions
MED Services Corp. ("Med") finances the manufacture, sales and
rental of medical equipment.
As discussed in Note 12, the Company relinquished control of Fisher
Medical Corporation ("Fisher") and has deconsolidated Fisher
effective October 1, 2001 and is accounting for its investment in
Fisher under the equity method. Prior to the deconsolidation,
Fisher developed, manufactured and distributed therapeutic support
surfaces to hospitals, nursing homes and home health care.
The following table reflects the results of the segments consistent
with the Company's internal financial reporting process. The
following results are used in part, by management, both in
evaluating the performance of, and in allocating resources to,
each of the segments.
CORPORATE
AND
AVES FISHER MED UNALLOCATED CONSOLIDATED
________________________________________________________
Year Ended April 30,2002
Net Revenues $11,372,588 $34,411 $8,538 $-- $11,415,537
Depreciation & Amortization 60,753 56,114 5,985 -- 122,852
Operating Income (Loss) 686,578 (367,724) (12,968) (303,199) 2,687
Interest (Expense) Income 45,382 (21,985) (6,828) (131,717) (115,148)
Net Income (Loss) 565,860 (389,709) (20,563) (254,917) (99,329)
Year Ended April 30, 2001
Net Revenues $12,857,841 28,650 -- -- 12,886,491
Depreciation and Amortization 92,407 100,875 5,648 -- 198,930
Operating Income (Loss) 643,030 (862,053) (10,761) (134,096) (372,880)
Interest (Expense) Income 49,243 (62,723) 6,691 (133,345) (140,134)
Net Income (Loss) 504,428 (924,775) (4,070) (76,297) (500,714)
Year Ended April 30, 2000
Net Revenues $13,197,866 -- -- -- 13,197,866
Depreciation and Amortization 101,276 20,802 1,953 -- 124,031
Operating Income (Loss) 910,715 (194,620) (32,706) (251,239) 423,150
Interest (Expense) Income 24,744 -- (6,691) (115,881) (97,828)
Net Income (Loss) 755,459 (194,620) (39,398) 19,213 540,654
Total Identifiable Assets at
April 30, 2002 $2,355,952 -- 227,764 300,341 2,844,057
Goodwill at April 30, 2002 204,662 -- -- -- 204,662
Total Identifiable Assets at
April 30, 2001 $2,630,383 712,105 232,545 182,320 3,757,353
Goodwill at April 30, 2001 204,662 90,432 -- -- 295,094
Intersegment transactions include a management fee between Corporate
and Fisher for the year ended April 30, 2002 and 2001 of $30,000 and
$120,000, respectively.
(15) Quarterly Financial Data (Unaudited)
The following table sets forth certain unaudited quarterly financial
information for the years ended April 30, 2002 and 2001:
2002 Quarter Ended
July 31 October 31 January 31 April 30
_______________________________________________
Net Revenues $3,716,702 $3,017,302 $2,233,040 $2,448,493
===============================================
Cost of Revenues 3,101,171 2,564,396 1,812,437 1,951,751
===============================================
Net Income (Loss) (74,152) (103,532) 7,895 70,460
===============================================
Basic and Diluted Net
Income (Loss) per
Common Share: ($.03) ($.04) $.00 $.03
===============================================
2001 Quarter Ended
July 31 October 31 January 31 April 30
----------------------------------------------
Net Revenues $3,928,080 $3,063,945 $2,808,090 $3,086,376
==============================================
Cost of Revenues $3,357,328 $2,524,915 $2,360,408 $2,593,981
==============================================
Net Loss ($124,451) ($113,772) ($246,802) ($15,689)
===============================================
Basic and Diluted Net
Loss per Common Share: ($.04) ($.04) ($.09) ($.01)
===============================================
Exhibit Index
3(1) Certificate of Incorporation of the Company. Incorporated
herein by reference to the Company's Proxy Statement for its 1991
Annual Meeting of Shareholders, Exhibit B thereto.
3(2) Bylaws of the Company. Incorporated herein by reference to
the Company's Proxy Statement for its 1991 Annual Meeting of
Shareholders, Exhibit C thereto.
4(1) Specimen Certificate of Common Stock, par value $0.30 per
share, incorporated herein by reference from Registration Statement
on Form S-1, File Number 2-18743, Exhibit 4 thereto.
4(2) 12% Convertible Subordinated Debenture due 1994, incorporated
herein by reference to the Report on Form 8-K filed January 4, 1990,
Exhibit 28(a) thereto.
4(3) Registration rights agreement dated as of December 20, 1989, by
and between the Company and Rosalco, Inc., incorporated herein by
reference to the Report on Form 8-K filed January 4, 1990, Exhibit
28(c) thereto.
10(1)* 1981 Incentive Stock Option Plan, as amended as of
December 15, 1989, incorporated herein by reference to the Annual
Report on Form 10-K for the year ended April 30, 1990, Exhibit 10(1)
thereto.
10(2) Notes and Loan and Security Agreements (Inventory & Accounts
Receivable) each dated as of January 20, 1992, between Jayark
Corporation, AVES Audio Visual Systems, Inc., Rosalco, Inc.,
Rosalco Woodworking, Inc., Diamond Press Company, and State
Street Bank & Trust Company of Boston, Massachusetts, incorporated
herein by reference from the Annual Report on Form 10-K for the
year ended April 30, 1992, Exhibit 10(3) thereto.
10(3) Letter Agreement dated December 6, 1989, among Arthur Cohen,
Burton I. Koffman, and Richard E. Koffman. Incorporated herein by
reference to the Annual Report on Form 10-K for the year ended
April 30, 1990, Exhibit 10(3) thereto.
10(4) Indemnity escrow Agreement dated as of December 20, 1989, by
and between the Company, Rosalco, Inc. and certain individuals
named therein, incorporated herein by reference to the Report on
Form 8-K filed January 4, 1990, Exhibit 28(c) thereto.
10(5) Factoring Agreements dated as of February 7, 1992, by and
between the Company, Pilgrim Too Sportswear, Inc., J.F.D.
Distributors, Inc., and others named therein, and Barclays
Commercial Corporation, incorporated herein by reference to
the Annual Report on Form 10-K for the year ending April 30, 1992,
Exhibit 10(10) thereto.
10(6) Diamond Press Asset Sale and Purchase Agreement dated as
of November 23, 1992 by and between the Company and Harstan, Inc.,
incorporated herein by reference to the Company's Form 8-K, as
amended, as of November 23, 1992, Exhibit 2 thereto.
10(7) Asset Sale and Lease Termination Agreement, by and between
Pilgrim Too Manufacturing Company, Inc., New Images, Inc.,
Victor Freitag, Jr. and wife Gilbert R. Freitag, and Robert E.
Skirboll and wife Robin T. Skirboll, dated as of April 2, 1993;
Asset Purchase Agreement by and between the Company, Pilgrim Too
Sportswear, Inc., Pilgrim Too Manufacturing Company, Inc.
Stage II Apparel Corp., Shambuil Ltd., and Pilgrim II Apparel
Corp., dated as of April 2, 1993; both incorporated herein by
reference to the Company's Form 8-K as of April 2, 1993, Exhibits
thereto.
10(8) Amendment to certain Notes and Loan and Security Agreements
each dated as of January 20, 1992, incorporated herein by
reference from the Annual Report on Form 10-K for the year ended
April 30, 1993, Exhibit 10(8) thereto.
10(9) Amendment to certain Notes and Loan and Security Agreements
each dated as of December 31, 1993, incorporated herein by
reference from the Annual Report on Form 10-K for the year
ended April 30, 1994, Exhibit 10(9) thereto.
10(10) Asset Purchase Agreement, dated June 5, 1995, among
LIB-Com Ltd., Liberty Bell Christmas, Inc., Ivy Mar Co., Inc.,
Creative Home Products, Inc., and Liberty Bell Christmas
Realty, Inc. as the sellers and LCL International Traders, Inc.
as the buyer, incorporated herein by reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 2(a) thereto.
10(11) Asset Purchase Agreement, dated June 5, 1995, between
Award Manufacturing Corporation as the seller, and LCL International
Traders, Inc., as the buyer, incorporated herein by reference from the
Company's report on Form 8-K dated June 27, 1995, Exhibit 2(b) thereto.
10(12) Guarantee Agreement, dated June 5, 1995, by Award
Manufacturing Corporation in favor of LCL International Traders,
Inc., incorporated herein by reference from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 2(c) thereto.
10(13) Guarantee Agreement, dated June 5, 1995, by LIB-Com Ltd.,
Liberty Bell Christmas, Inc., Ivy Mar Co., Inc., Creative Home
Products, Inc., and Liberty Bell Christmas Realty, Inc. in favor
of LCL International Traders, Inc., incorporated herein by
reference from the Company's report on Form 8-K dated June 27, 1995,
Exhibit 2(d) thereto.
10(14) Promissory Note of LCL International Traders, Inc.,
due July 29, 1998, payable to the order of Commerzbank AG, Hong
Kong Branch, incorporated herein by reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 2(e) thereto.
10(15) Confirmation Letter Agreement dated June 22, 1995,
among Citibank, N.A., Commerzbank AG, Bayerische Vereinsbank AG,
LCL International Traders, Inc., and Jayark Corporation,
incorporated herein by reference from the Company's report on
Form 8-K dated June 27, 1995, Exhibit 2(f) thereto.
10(16) Factoring Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT Group/Commercial Services,
Inc., incorporated herein by reference from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 99(a) thereto.
10(17) Inventory Security Agreement dated June 23, 1995,
between LCL International Traders, Inc. and the CIT Group/Commercial
Services, Inc., incorporated herein by reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 99(b) thereto.
10(18) Letter Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT Group/Commercial Services,
Inc., incorporated herein by reference from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 99(c) thereto.
10(19) Letter Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT Group/Commercial Services,
Inc., Liberty Bell Christmas, Inc., Ivy Mar Co., Inc., and
Creative Home Products, Inc., incorporated herein by reference
from the Company's report on Form 8-K dated June 27, 1995,
Exhibit 99(d) thereto.
10(20) Amendment to certain Notes and Loan and Security
Agreements each dated as of December 31, 1994, incorporated herein
by reference from the Annual Report on Form 10-K for the year
ended April 30, 1995, Exhibit 10(20) thereto.
10(21) Loan and Security Agreements dated April 29, 1996 between
Rosalco, Inc., and State Street Bank & Trust Company of Boston,
Massachusetts.
10(22) Loan and Security Agreements dated April 29, 1996
between AVES Audio Visual Systems, Inc., and State Street Bank
& Trust Company of Boston, Massachusetts.
10(23) First amendment to Loan and Security Agreements
dated as of September 19, 1996 between Rosalco, Inc. and
State Street Bank & Trust Company of Boston, Massachusetts.
10(24) Agreement of Extension of Maturity of 12% Convertible
Subordinated Debentures dated April 30, 1990.
10(25) Forbearance and Modification Agreement dated March 12,
1997, between Jayark Corporation, Rosalco, Inc., AVES Audio
Visual Systems, Inc., David L. Koffman, and State Street Bank
and Trust Company of Boston, Massachusetts.
10(26) Stock Pledge Agreement dated March 12, 1997, between
Jayark Corporation and State Street Bank and Trust Company of
Boston, Massachusetts.
10(27) Subordination Agreement dated March 12, 1997, between Jayark
Corporation, Rosalco, Inc., AVES Audio Visual Systems, Inc.,
David L. Koffman, and State Street Bank and Trust Company
of Boston, Massachusetts.
10(28) Revolving Note dated March 12, 1997 between Jayark
Corporation and A-V Texas Holding, LLC.
10(29) Stock Pledge Agreement dated March 12, 1997 between
Jayark Corporation and A-V Texas Holding, LLC.
10(30) Stock Warrant to purchase 3,666,667 shares of common
stock dated March 12, 1997 between Jayark Corporation and A-V
Texas Holding, LLC.
10(31) Commercial Security Agreement dated February 18, 1997,
between AVES Audio Visual Systems, Inc. and BSB Bank and
Trust Company.
10(32) Promissory Note dated February 18,1997, between AVES
Audio Visual Systems, Inc. and BSB Bank and Trust Company.
10(33) Commercial Guaranty dated February 18, 1997, between
AVES AudioVisual Systems, Inc., David L. Koffman and BSB Bank
and Trust Company.
10(34) Subordinated Promissory Note date March 12, 1997 between
Rosalco, Inc. and Jayark Corporation.
10(35) Second Forbearance and Modification Agreement dated
June 1, 1997, between State Street Bank and Trust Company of
Boston, Massachusetts, Rosalco, Inc., and Jayark Corporation.
10(36) Stock Warrant to purchase 500,000 shares of common stock
dated March 12, 1997 between Jayark Corporation and A-V Texas
Holding, LLC.
10(37) Certificate of Amendment of The Certificate of Incorporation
of Jayark Corporation dated July 10, 1998.
10(38) Purchase and Sale Agreement dated June 1, 1998, between
Vivax Medical Corporation and MED Services Corp.
10(39) Distribution Agreement dated June 1, 1998, between MED Services
Corp. and Vivax Medical Corporation.
10(40) Revolving Line of Credit Grid Promissory Note dated
August 7, 1998, between MED Services Corp. and Atlantic Bank
of New York.
10(41) Security Agreement dated August 7, 1998, between MED
Services Corp. and Atlantic Bank of New York.
10(42) Amendment to certain 12% Convertible Subordinated Debentures
dated April 30, 1990.
10(43) Amendment to certain Note dated March 12, 1997 between
Jayark Corporation and A-V Texas Holding, LLC.
10(44) Asset Purchase Agreement dated January 5, 2000,
between Fisher Medical LLC and Fisher Medical Corporation.
10(45) Technology License dated January 5, 2000, between
Fisher Medical LLC and Fisher Medical Corporation.
10(46) Employment Agreement dated January 5, 2000, between
Fisher Medical Corporation and Stephen Fisher, Jr.
10(47) Non-Disclosure and Non-Competition Agreement dated
January 5, 2000, between Fisher Medical Corporation and Stephen
Fisher, Jr.
10(48) Employment Agreement dated January 5, 2000, between
Fisher Medical Corporation and Stephen Fisher, Sr.
10(49) Non-Disclosure and Non-Competition Agreement dated
January 5, 2000, between Fisher Medical Corporation and Stephen
Fisher, Sr.
10(50) Amendment to Employment Agreement dated August 25, 2000,
between Fisher Medical Corporation and Stephen Fisher, Sr.
10(51) Amendment to Employment Agreement dated August 25, 2000,
between Fisher Medical Corporation and Stephen Fisher, II.
10(52) Articles of Merger of Fisher Medical Corporation and
Fisher Medical LLC effective October 1, 2001
10(53) Agreement and Plan of Merger of Fisher Medical LLC with
and into Fisher Medical Corporation effective October 1, 2001.