President's Message
-------------------
To Our Sharelolders
- -------------------
In 1997 the Company continued its arrangement with Sims/Portex for the
distribution of its intermittent urinary catheter. Total sales to Sims/Portex
was approximately $700,000. The Company has introduced its own intermittent
urinary catheter in the United States and is developing its biofeedback device
for treating urinary incontinence. This will further broaden the Company's
urinary product line. The Company will complete all existing purchase orders
with Sims/Portex by June 1998.
The Company received approval to CE mark its bi-polar coagulation probe from
British Standards Institute and can CE mark its biofeedback device by
self-certification This will allow the Company to continue selling these
products in Europe.
Our workers continue to remain enthusiastic and their dedication to the
Company's ultimate success remains steadfast. Considering the situation, as
described above, the Company's outlook for 1998 and beyond is uncertain.
Our ability to continue as a viable company is dependent on our success at
generating sufficient cash flow or obtaining financing to meet our short-term
obligations, to support our working capital needs and to sustain the Company as
it strives to generate profitable revenue levels.
We again remain poised to face the challenge and look forward to continue a
strong business relationship with all our customers.
Manfred F. Dyck
President & CEO
April 15, 1998
[BIOSEARCH MEDICAL PRODUCTS, INC. LOGO]
BIOSEARCH MEDICAL PRODUCTS, INC.
-------------------------------
Notice of Annual Meeting of Shareholders
to be held June 24, 1998
-------------------------------
Somerville, New Jersey
May 8, 1998
To the Holders of Common Stock of
BIOSEARCH MEDICAL PRODUCTS, INC.:
The Annual Meeting of the Shareholders of BIOSEARCH MEDICAL PRODUCTS, INC.
will be held at the Ryland Inn, U.S. Route 22 West, Whitehouse, NJ 08876,
Wednesday, June 24, 1998, at 10:00 AM, for the following purposes, as more fully
described in the accompanying Proxy Statement:
1. To elect directors of the Company for the ensuing year.
2. To transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
The close of business on May 1, 1998 has been fixed by the Board of
Directors as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Meeting.
By Order of the Board of Directors,
Robert J. Moravsik, Secretary
You are cordially invited to attend the Meeting in person. If you do not
expect to be present, please mark, sign, and date the enclosed form of Proxy and
mail it in the enclosed return envelope, which requires no postage if mailed in
the United States, so that your vote can be recorded.
Ryland Inn
Box 284 * Route 22 West
Whitehouse, NJ 08888
(908) 534-4011
[GRAPHIC -- MAP SHOWING LOCATION OF RYLAND INN]
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about May 8,
1998 to the persons entitled to receive the accompanying Notice of Annual
Meeting of Shareholders, is provided in connection with the solicitation of
Proxies on behalf of the Board of Directors of Biosearch Medical Products, Inc.,
for use at the Annual Meeting of Shareholders to be held on June 24, 1998, and
at any adjournment or adjournments thereof, for the purposes set forth in such
Notice. The Company's executive office is located at 35 Industrial Parkway,
Somerville, New Jersey 08876.
At the close of business on May 1, 1998, the record date stated in the
accompanying Notice, the Company had outstanding 2,202,878 shares of common
stock, without par value (the "Common Stock"), each of which is entitled to one
vote with respect to each matter to be voted on at the Meeting. The Company has
no class or series of stock outstanding other than the Common Stock.
On May 1, 1998, Manfred F. Dyck, President and a director of the Company,
beneficially owned approximately 22.4% of the outstanding Common Stock of the
Company, and his wife, Ursula M. Dyck, a director of the Company, beneficially
owned an additional 1.5% of the Common Stock. Such ownership may enable such
shareholders to exercise a controlling influence over the Company's affairs.
I. ELECTION OF DIRECTORS
(Proposal I)
Five directors will be elected at the Annual Meeting of Shareholders, each
to serve for one year and until a successor shall have been chosen and
qualified. It is the intention of each of the persons named in the accompanying
form of Proxy to vote the shares represented thereby in favor of the five
nominees listed in the following table, unless otherwise instructed in such
Proxy. Each such nominee is currently serving as a director. In case any of the
nominees are unable or decline to serve, such persons reserve the right to vote
the shares represented by such Proxy for another person duly nominated by the
Board of Directors in such nominee's stead or, if no other person is so
nominated, to vote such shares only for the remaining nominees. The Board of
Directors has no reason to believe that any person named will be unable or will
decline to serve. Certain information concerning the nominees for election as
directors is set forth below. Such information was furnished by them to the
Company.
-1-
Nominees for Election
---------------------
NAME, AGE, & PRINCIPAL AMOUNT AND NATURE PERCENT OF
OCCUPATION OF BENEFICIAL OUTSTANDING
---------- OWNERSHIP OF SHARES
COMMON STOCK ------
AS OF May 1, 1998 (1)
---------------------
MANFRED F. DYCK, age 62; 492,534 (2) 22.4
President of the Company since 1975;
Director, CEO & President: Hydromer,
Inc., (developer and marketer of
polymeric complexes). Director of the
Company since 1975.
URSULA M. DYCK, age 63; 33,516 (3) 1.5
Vice President, Sales of Company from
1991 to 1996; Director: Hydromer,
Inc.; Director of the Company since
1975.
DAVID M. SCHRECK, M.D. age 44; 10,000 (4) 0.5
Chief, Department of Emergency
Medicine, Medical Director,
Muhlenberg Regional Medical Center
since 1991; also President EMO
Medical Offices in Livingston, NJ.
Director of the Company since April
1996.
FREDRICK A. PERL, MD, age 70 9,000 (4) 0.4
Attending staff, Somerset Medical
Center since 1957; Consulting staff
Obstetrics and Gynecology, Carrier
Clinic since 1959; Affiliated with
St. Peter's Medical Center, active
staff Since 1994, Director of the
Company since December 1996
-2-
NAME, AGE, & PRINCIPAL AMOUNT AND NATURE PERCENT OF
OCCUPATION OF BENEFICIAL OUTSTANDING
---------- OWNERSHIP OF SHARES
COMMON STOCK ------
AS OF May 1, 1998 (1)
---------------------
KLAUS J.H. MECKELER, M.D. age 64; 22,000 (4) 1.0
Clinical Professor of Medicine
UMDNJ, Robert Wood Johnson Medical School
Former Chief of Gastroenterology
and Director of Endoscopic Clinic
(a clinic specializing in
gastrointestinal disorders)
Somerset Medical Center, since
1966; Director of the
Company since January 1984.
- ----------
(1) Except as otherwise indicated, as of May 1, 1998, each nominee had
sole voting and investment power with respect to all shares shown in
the table as beneficially owned by such nominee.
(2) Includes an aggregate of 4,146 shares held by Mr. Dyck as custodian
for certain of his children, and includes 16,561 shares held with sole
voting and investment power by certain other of Mr. Dyck's children;
also includes 96,867 stock options in Mr. Dyck's name and 34,387
options in the name of Mr. Dyck's son Martin. Excludes shares held by
Ursula M. Dyck, his wife, individually or as custodian (see note 3
below).
(3) Includes an aggregate of 3,908 shares held by Mrs. Dyck as custodian
for certain of her children but does not include any shares held with
sole voting and investment power by certain of Mrs. Dyck's children,
as to which Mrs. Dyck disclaims beneficial ownership or shares held by
Manfred F. Dyck, her husband, individually or as custodian (see note 2
above).
(4) In January 1998 the directors voted to re-issue certain options to
account for past services as Board members and to compensate directors
for agreeing to accrue Board Member fees. Dr. Meckeler was granted
22,000 options to purchase shares as a replacement for all previous
options; Dr. Schreck was granted 10,000 options to purchase shares as
a replacement for all previous options and Dr. Perl was granted 1,000
options in addition to the 8,000 previously granted in 1997. The
options were granted at the market price on the date of grant.
No family relationship exists between any of the directors or executive
officers of the Company, except that Manfred F. Dyck and Ursula M. Dyck are
husband and wife and Martin C. Dyck who served as the Company's Vice President
of Manufacturing and now President is their son.
-3-
Board Meetings
- --------------
During the past year, the Board of Directors of the Company met ten times.
Each of the persons named above attended at least seventy-five percent (75%) of
the meetings of the Board of Directors and meetings of any committees of the
Board on which such person served which were held during the time that such
person served.
Committees in General
- ---------------------
The Board of Directors of the Company does not have a Nominating Committee
or a Compensation Committee. In June of 1989 the Company formed an Audit
Committee to oversee the auditing process and evaluate the performance of the
outside accountants. The Audit Committee met on one occasion in 1997. The Board
of Directors approved a practice in 1990 whereby the outside directors are to
approve the raises of all employees whose salaries are above $50,000 a year.
Section 16 Filing Obligations
- -----------------------------
During 1997 all directors and officers have complied with their obligation
to file the reports which are required by Section 16(a) of the Exchange Act. The
Company is not aware of any failure on the part of beneficial owners of more
then 10% of the outstanding common stock of the Company, to file timely reports.
Summary Compensation Table
- --------------------------
The following table sets forth information concerning the CEO and executive
officers of the Company whose cash compensation exceeded $100,000 as of December
31, 1997.
-4-
Long Term Compensation
Annual Compen. Awards Payouts
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award Options/Payouts sation
Position Year Salary($) Bonus($) ($) SARs(#)(2)($) ($)
--------
Manfred F. Dyck 1997 95,803 0 3,510 0 77,617 0 0
1996 192,500 0 16,760 0 0 0 0
1995 192,500 0 16,210 0 0 0 0
No other executive qualifies for inclusion in this table.
Notes:
1. On October 29, 1997 Mr. Dyck was granted 77,617 options to
purchase company stock at $0.19. This grant was vested in full.
(see Options granted.)
2. On May 5, 1998 Mr. Martin C. Dyck was appointed President of
the Company (Mr. Manfred Dyck retaining the position of Chairman
and CEO). Martin Dyck's 1997 Salary was $60,000 per year plus
other compensation of $5,000 accrued, not paid. Mr. Martin Dyck
was awarded an option to purchase 24,055 shares of the Company
stock on 10/29/97. (see Options Grants in Last Fiscal Year)
The Company has customary medical and group life insurance programs. See
"Certain Employee Benefit Arrangements" below. See also "Certain Agreements with
Directors and Executive Officers" and "Other Information Concerning Directors,
Officers, and Shareholders" below. The Company makes certain benefits not
described elsewhere herein available to its executive officers with a view to
acquiring and retaining qualified personnel and facilitating job performance.
The Company considers such benefits to be ordinary and incidental business costs
and expenses. The aggregate value of such benefits in the case of each executive
officer in the above table, which cannot be precisely ascertained, but is less
than the lesser of (a) 10% of the total salary and bonus paid to each executive
officer or (b) $50,000 as the case may be, is not included in such table.
-5-
Option Granted
- --------------
On October 29, 1997 Stock Options to purchase 200,041 shares at $0.19 were
awarded to 13 managerial and key employees including Manfred F. Dyck who
received 77,617. These options immediately vested. The options expire if the
employee resigns. It was the Company's opinion that such awards are necessary to
retain the companies experienced key employees who have not received salary
increments for the past three years.
Option Grants in Last Fiscal Year
- ---------------------------------
% of Total
Options Exercise or
Granted Base Price Expir-
Options in Per Share ation
Name Granted Fiscal Year ($/sh) Date
Manfred F. Dyck 77,617 37.3% .19 10/29/2002
Dr. Fredrick Perl 8,000 3.8% .17 2/20/2002
Other employees 122,424 58.9% .19 10/29/2002
Note: on 10/29/97 the board granted a total of 200,043 options
to purchase company stock to key employees including officers
to partial compensate these employees for not having been given
salary increases in the past three years. It is the opinion of
the board that it is in the best interest of the Company to
retain certain employees.
On 1/21/98 the Board granted 33,000 options to purchase stock
to outside directors based on total years of service to the
Company. In addition 18,000 options were granted to two more
key employees.
Aggregated Option Exercises in Last Fiscal Year
- -----------------------------------------------
and Fiscal Year End Option Status
- ---------------------------------
Number of Unexercised See note
Shares Options Held at Val.of Unexer, in the money
Acquired when Value Fisc. Year End (#) Options at Fiscal Year End ($)
Exercised(#) Realized($) Exercis- Unexercis- Exercis- Unexercis-
Name able able able able
Manfred F. Dyck, CEO, BD -- 96,867 0 $8,538 0
note: "in the money" calculation assumes a market
price of $.30 (5/1/98). Pursuant to the terms of the
option grant the shares are restricted, and may only
be sold in the marketplace pursuant to an exception to
the requirements to register such as Rule 144.
Long-Term Stock Incentive Plan Awards
- -------------------------------------
The Company did not have such a plan in effect for the fiscal year 1997
and has no present intention to establish such a plan.
-6-
Profit Sharing Retirement Plan
- ------------------------------
The Company has a "401K" Plan in effect for all of its employees. Subject
to the discretion of the Company, exercised each year, it contributes 33 1/3% of
employee contributions up to 6% to the plan. Effective May 1, 1991, the Company
has discontinued the contribution subject to further action by the Board. The
full costs of administering the plan, which includes service fees paid to an
insurance company for administering the plan and monies paid to the Company's
auditors to provide an audit report, will be borne by the Company.
Certain Agreements with Directors
- ---------------------------------
and Executive Officers
- ----------------------
Mr. Dyck has an employment agreement with the Company which provides a
minimum annual salary of $192,500, and a 6-month notice of termination. The
Company was obligated to maintain "key man" life insurance to fulfill its
obligations in part under this Agreement as long as Mr. Dyck had to guarantee
any obligation of the Company which has expired. Mr. Dyck was required to devote
at least 90% of his business time to the affairs of the Company. On January 1,
1993 the Company and Mr. Dyck agreed that his annual salary would be reduced to
$96,500 and he would be required to work on a part time basis of three days per
week. On June 4, 1994 Mr. Dyck's salary was increased to the full time amount of
$193,000 per year. In December 1994 as part of a cost reduction plan, Mr. Dyck
voluntarily agreed to a salary reduction to $150,000 per year. On February 5,
1997 Mr. Dyck presented the Board with a cost reduction program which resulted
in his salary being voluntarily reduced to $95,000/year based on a three day
work week. On 5/5/98 by consent and agreement, Mr. Dyck's salary was amended to
$150,000 accrued not paid. He agreed to be removed as President, but retained
the title of Chairman and CEO. Mr. Martin C. Dyck, son of Mr. Dyck was appointed
President.
For services rendered to the Company certain directors of the Company were
granted options to purchase Common Stock of the Company. (See "Options Granted"
above.)
Each director of the Company is entitled to receive compensation in the
amount of $750 for each meeting of the Board of Directors attended either in
person or telephonically, and $200 for each specially called telephonic
conference meeting. In December of 1996 and until further notice the Board
agreed to accrue, but not pay Directors fees.
Information Concerning Certain Shareholders
- -------------------------------------------
The shareholders (including any "group" as that term is used in Section
13(d) (3) of the Securities Exchange Act of 1934), who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than 5% of any class
of the outstanding voting securities of the Company as of May 1, 1998, each
Director of the Company who owned beneficially shares of Common Stock and all
Directors and Officers of the Company as a group, and their respective share
holdings as of such date (according to information furnished by them to the
Company), are set forth in the following table. Except as indicated in the
footnotes to the table, all of such shares are owned with sole voting and
investment power. The company has one class of shares.
-7-
NAME AND SHARES OF COMMON STOCK PERCENT
-------- ---------------------- -------
ADDRESS OWNED BENEFICIALLY AS OF OF CLASS
------- ------------------------ --------
May 1, 1998
-----------
Manfred F. Dyck 492,534 (1) 22.4
255 Holland Road
Far Hills, NJ 07931
Ursula M. Dyck 33,516 (2) 1.5
255 Holland Road
Far Hills, NJ 07931
Frederick A. Perl 9,000 (3) 0.4
951 North Mountain Ave.
Boundbrook, NJ 08805
David M. Schreck 10,000 (3) 0.5
80 Division Ave.
Summit, NJ 07901
Klaus J.H. Meckeler 22,000 (3) 1.0
720 Route 202-206
Bridgewater, NJ 08807
Steve N. Bronson 239,494 10.9
2101 W. Commercial Blvd, Suite 1500
Ft. Lauderdale, Florida 33309
All Directors and Officers 620,091 (4) 28.2
as a Group (8 persons)
(1) Includes an aggregate of 4,146 shares held by Mr. Dyck as custodian
for certain of his children and includes 16,561 shares held with sole
voting and investment power by certain of Mr. Dyck's children, also
includes 96,867 stock options in Mr. Dyck's name and 34,387 options in
the name of Mr. Dyck's son Martin. Does not include shares held by
Ursula M. Dyck, Mr. Dyck's wife, individually or as custodian (see
note 2 below).
(2) Includes an aggregate of 3,908 shares held by Mrs. Dyck as custodian
for certain of her children but does not include any shares held with
sole voting and investment power by certain of Mrs. Dyck's children,
as to which Mrs. Dyck disclaims beneficial ownership or shares held by
Manfred F. Dyck, her husband, individually or as custodian (see note 1
above)
-8-
(3) In January 1998 the directors voted to re-issue certain options to
account for past services as Board members and to compensate directors
for agreeing to accrue Board Member fees. Dr. Meckeler was granted
22,000 options to purchase shares as a replacement for all previous
options; Dr. Schreck was granted 10,000 options to purchase shares as
a replacement for all previous options and Dr. Perl was granted 1,000
options in addition to the 8,000 previously granted in 1997. The
options were granted at the market price on the date of grant.
(4) Includes 225,135 options presently held by Officers or Directors, see
"Options Granted Outside Of Stock Option Plan."
Other Information Concerning Directors,
- ---------------------------------------
Officers and Shareholders
- -------------------------
The Company, during 1997 was a party to various transactions with Hydromer,
Inc. Hydromer provides the Company with chemicals and analytical services. In
1997 the Company purchased approximately $40,000 worth of goods and services
from Hydromer and billed Hydromer for approximately $77,000 for services, out of
pocket expenses incurred in its behalf (the Company provides secretarial
services to Hydromer at $500 per month), the purchase of a curing oven for
$46,000 and rented some space at Biosearch for $19,000. This arrangement for
space was terminated in latter 1997 and the oven was removed and reinstalled at
Hydromer's production facility. The Company paid Hydromer $29,000 representing a
minimum royalty fee for a patent/know-how license concerning the Hydromer
coatings and accrued an additional $26,875 for royalties due but not paid. In
late 1997 Hydromer and Biosearch entered into a secrecy agreement whereby the
Officers of Hydromer were granted access to the non-public records of Biosearch
to explore any possible business relationships or ventures. On March 31, 1998
the Company and Hydromer entered into a contract of sale whereby, Hydromer
agreed to purchase the Company's building and land at a price of $850,000 and a
three year lease-back to the Company of 16,000 square feet (approx. 2/3rds of
the building). The parties valued the lease at $346,500. Closing is expected to
take place with 60 days.
Manfred F. Dyck and Ursula M. Dyck, both of whom are Officers or Directors
of the Company, are also directors of Hydromer. Mr. Manfred Dyck is the
President and CEO of Hydromer. In total they hold 42% (on a fully diluted basis)
of the capital stock of Hydromer. The Company believes that the terms of the
foregoing arrangement are fair and equitable to both parties.
Beginning in 1995 and until July 1997 the General Counsel of the Company
provided license services to Hydromer on a part time one day per week basis as a
Contract Administrator. In July of 1997 the relationship was increased to two
days per week. As of April 20, 1998, as part of a cost reduction plan, the
General Counsel was employed by the Company on a part time basis of 1 day per
week. The remaining 4 days are spent as the General Counsel of Hydromer. In the
event of a conflict between the Company and Hydromer, outside counsel are used.
In 1996 the Company established a medical advisory board consisting in part
of the three Directors of the Company who are M.D.'s. Directors Meckeler, Perl
and Schreck have not been compensated for the meetings attended but the Company
expects to formulate a policy in the future pertaining to advisory boards.
In June of 1997 Barber and Bronson Incorporated ("Bronson"), a company
-9-
owned in part by Mr. Steven Bronson a stockholder of the Company (see
"Information Concerning Certain Shareholders") entered into a Confidential
Information Agreement whereby Bronson agreed to keep confidential, certain
information concerning the business, financial condition, operations, prospects,
assets and liabilities of the Company and not use or transmit such information
to third parties in contravention of the U.S. Securities Laws. In March of 1998
Catalyst Financial, a company affiliated with Bronson, proposed that Bronson
would act as a placement agent for the private placement of the remaining
authorized but unissued stock of the Company and certain other contingencies not
within control of the Company; the proposed placement/finder's fees were $70,200
with a good faith deposit of $15,000 to be charged against the non-allowable
expenses and commissions. The Company took no action in respect of the offer and
it expired upon its own terms.
II. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Amper, Politziner & Mattia to serve as
independent accountants for the Company for the fiscal year ending December 31,
1997. The Board of Directors considers this firm to be eminently qualified.
A representative of Amper, Politziner & Mattia will be present at the
Meeting with the opportunity to make a statement, if such representative desires
to do so, and will be available to respond to appropriate questions.
III. OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
which may be brought before the Meeting. However, if any such matters are
properly presented for action, it is the intention of the person named in the
accompanying form of Proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
IV. MISCELLANEOUS
If the accompanying form of Proxy is executed and returned, the shares of
Common Stock represented thereby will be voted in accordance with the terms of
the Proxy, unless the Proxy is revoked. If no directions are indicated in such
Proxy, the shares represented thereby will be voted in the election of directors
IN FAVOR OF the items proposed by the Board of Directors. Any Proxy may be
revoked at any time before it is exercised. The casting of a ballot at the
Meeting by a shareholder, who may have already given a Proxy, will have the
effect of revoking the same.
All costs relating to the solicitation of Proxies will be borne by the
Company. Proxies will be solicited by the Company by mail and the Company may
pay brokers and other persons holding shares of stock in their names or those of
their nominees for their reasonable expenses in sending soliciting material to
their principals.
It is important that Proxies be returned promptly. Shareholders who do not
expect to attend the Meeting in person are urged to mark, sign, and date the
accompanying form of Proxy and mail it in the enclosed return envelope, which
requires no postage if mailed in the United States, so that their votes can be
recorded.
-10-
Shareholder Proposals
- ---------------------
Shareholder proposals intended to be presented at the 1999 Annual Meeting
of Shareholders of the Company must be received by the Company by January 20,
1999 in order to be considered for inclusion in the Company's Proxy Statement
relating to such Meeting.
-11-