UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
(X)ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended: June 30, 2002
( )TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934[NO FEE REQUIRED]
For the transition period N/A to N/A
Commission File number: 0-24974
DiaSys Corporation
Exact name of small business issuer as specified in its charter
DELAWARE 6-1339248
State or other jurisdiction of incorporation or organization)(IRS Employer ID#)
81 West Main Street, Waterbury, CT 06702
_____________________________________________________________________________
(Address of principal executive offices)
(203) 755-5083
_____________________________________________________________________________
(Issuer's Telephone number including area code)
None
____________________________________________________________________________
(Former name, address and/or fiscal year if changed from last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the 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 XX NO
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. ______
Registrant's revenues for the most recent fiscal year were $ 1,968,597.
As of October 24, 2002, the aggregate market value of the registrant's
voting stock held by non-affiliates was $3,768,125 based upon an average
closing price of $0.56 for the five trading days immediately prior thereto.
As of October 24, 2002, the Registrant had 10,674,971 shares of common stock
EXPLANATORY NOTE: This Amendment No. 1 to our Form 10-KSB for the fiscal year
ended June 30, 2002 (File No. 0-24974), initially filed with the Securities and
Exchange Commission on September 30, 2002, is filed to include the information
required by Part III of Form 10-KSB.
DIASYS
INDEX TO ANNUAL REPORT ON FORM 10-KSB/A FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION
YEAR ENDED JUNE 30, 2002
ITEMS IN FORM 10-KSB
Page
PART III.
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 1
Item 10. EXECUTIVE COMPENSATION 2
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 5
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 7
Item 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K 7
ITEM 9 Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act:
Set forth below is certain information as of October 24, 2002 regarding
the directors and officers of the Company. The term of all directors
expires at the Company's next annual meeting of stockholders, which will
be held on a date to be scheduled.
Name Age Company Position
Todd M. DeMatteo 45 President, CEO, Director
Conard R. Shelnut 68 Secretary, Director
Robert P. Carroll 71 Director
Dr. Robert H. Engel 66 Director
Stuart M. Robbins 59 Director
Anthony P. Towell 71 Director
Diane J. Sentner 48 Director of Finance and
Administration, Chief Financial
Officer and Assistant Secretary
Todd M. DeMatteo is a co-founder, the President, Chief Executive Officer,
Director of DiaSys Europe Ltd., and a Director of the Company. He has been
active with the Company since inception. From 1988 to 1991, Mr. DeMatteo was
Vice President and General Manager of Oracle Industries, a private company
that manufactured and distributed proprietary medical and industrial laboratory
equipment. After returning the company to profitability, Mr. DeMatteo
successfully negotiated its acquisition by American Trading and Product Company
of Baltimore, Maryland. For more than five years prior thereto, Mr. DeMatteo
held several key management positions with Data Switch Corporation, a National
Market System NASDAQ company, where his most recent title was Vice
President - OEM and Distributor Operations. Mr. DeMatteo holds a law degree
from Qunnipiac Law School and is a member of the bar in the
State of Connecticut.
Conard R. Shelnut, Corporate Secretary and a Director, is also co-founder of
the Company. After more than 30 years in corporate management positions
throughout the United States and Asia, Mr. Shelnut established GPL, Ltd.
a consulting firm, which advises United States manufacturers in export
management, marketing, and sales for Pacific Asia. Prior to that, Mr. Shelnut
served as Vice President of National Sales and Vice President of Asia for T-Bar
Inc. (AMEX: TBR), a manufacturer of electronic matrix switches. Mr. Shelnut
served as Group Vice President for Korea, Director of International Marketing,
Senior Advanced Program Manager and other key management positions during more
than 20 years with Litton Industries (NYSE: LIT). As captain in the United
States Air Force Reserve, Mr. Shelnut served as a Navigator in the Strategic
Air Command (SAC). He speaks Mandarin Chinese, and as an electrical engineer,
taught avionics in China.
Robert P. Carroll joined the Company's Board of Directors in February, 1994.
He is also a Director of DiaSys Europe Ltd. Mr. Carroll is a senior
level management consultant for large-scale computer manufacturers and
system integrators. From 1977 until his retirement in 1998, Mr. Carroll
held several senior management positions with Unisys Corporation (NYSE: UIS)
and most recently as Vice President of Federal Systems. From 1951 to 1977
Mr. Carroll was a member of the United States Air Force assigned to
information systems, retiring with the rank of Colonel.
Robert H. Engel, Ph.D. joined the Company's Board of Directors in February,
1994. From 1993 to present, Dr. Engel has been Director of Advanced
Systems Development with Park City Solutions (formerly Chi Laboratory
Systems, Inc.), a national laboratory consulting firm. From 1977 to 1993,
Dr. Engel was employed by Damon Clinical Laboratories, acquired by
Quest Diagnostics (Quest/SmithKline Beecham Clinical Laboratories; NYSE: DGX),
most recently as the Vice President, Technical Affairs. From 1971 to 1977,
Dr. Engel was employed by Quest/SmithKline Beecham Clinical Laboratories.
From 1968 to 1971, Dr. Engel was a Senior Marine Biochemist at Batelle
Memorial Institute (Duxbury, MA); and, from 1962 to 1968 he was a
Research Biochemist at Lederle Laboratories, a division of American
Cyanamid Inc. (Pearl River, NY). Dr. Engel holds a Ph.D.
in biochemistry from Yale University.
Stuart M. Robbins joined the Company's Board of Directors in September, 2001.
He is also a Director and the Chairmen of the Board of Sound View Technology
Group Inc. (NASDAQ: SNDV), an investment-banking firm. From 1984 to 2000
Mr. Robbins held several key positions with Donald, Lufkin & Jenrette (DLJ).
Mr. Robbins most recent position with DLJ was Managing Director of Global
Equities in which he managed their equities business consisting of over
1,500 employees, operating in 24 offices worldwide and serving clients in
nearly 50 countries. He was also a member of DLJ's Board of Directors
and had previously directed the company's research department. Prior to
joining DLJ in 1984, Mr. Robbins held analyst and management positions
with Mellon Bank, Parker Hunter, C.S. McKee and Paine Webber. As a
former Institutional Investor All-Star Analyst, he was ranked among the
nation's top 3 retail analysts for 11 consecutive years. Mr. Robbins research
work was widely published and he is well known throughout the
institutional investor community.
Anthony P. Towell joined the Company's Board of Directors in October, 1999
and is also Director of DiaSys Europe Ltd. He is a director of
Windswept Environmental Remediation, Inc. (NASDAQ: WEGI.OB), and served
on the Board of AmeriData Technologies Inc. until its sale to
General Electric Capital in 1996. Mr. Towel was also a Director of
Worksafe Inc.( OTC: WRKS.PK) which is in Chapter 7 bankruptcy proceedings.
Prior to retirement, Mr. Towell held various senior management positions with
Royal Dutch Shell, including that of Managing Director of the Shell Group
in Columbia, Vice President of Shell International Trading Company London,
and Director of Asiatic Petroleum in New York. Mr. Towell was born in the
United Kingdom and was awarded the Military Cross for his outstanding
service in Korea.
Diane J. Sentner, the Company's Director of Finance and Administration,
Chief Financial Officer and Assistant Secretary, joined the Company on
April 9, 2001. From 1995 to 2001 Ms. Sentner was the Controller for
Kamatics Corporation, a $50.0M+ division of Kaman. As Controller,
she was responsible for all facets of accounting and finance and reported
directly to the Division President. For seven years prior thereto,
Ms. Sentner held the Manager of Financial Accounting position with
Kaman Aerospace Corporation. From 1977 to 1988 Ms. Sentner,held various
accounting and financial reporting positions at Textron Lycoming.
Ms. Sentner holds a Bachelor of Science degree in Accounting and
an MBA in Finance.
There are no family relationships by, and among, any Director, Executive
Officer, or person nominated, or chosen, by the registrant to become a
Director or Executive Officer of the Company.
Item 10 Executive Compensation
The following table sets forth information with respect to the Chief
Executive Officer and our one officer who received in excess of
$100,000 in compensation in any of the prior three fiscal years.
Summary Compensation Table
Annual Compensation Long-Term Compensation
Name and Other Annual Number of Shares
Principal Position Year Salary Bonus Compensation Underlying Options
Todd M.DeMatteo 2002 $250,000 n/a n/a 75,000(5)
President,CEO 2001 $212,500 $80,000(1)$29,464(1)(2) 50,000(4)
2000 $175,000 $38,113 $20,000(1) 100,000(3)
Diane J. Sentner 2002 $100,000 n/a n/a 10,000(6)
CFO
(1) Represents incentive compensation earned by Mr. DeMatteo in years 1999 and
2000 under the terms of his employment agreement in connection with
the establishment of the Allegiance Healthcare Plan Agreement, expansion
of business relationships between the Company and Hua Sin Science
Co., Ltd. in Guangzhou, China and achievement of certain other objectives.
(2) Represents incentive compensation earned by Mr. DeMatteo in 2001 under
the terms of an employee agreement effective January 1, 2000 in connection with
the establishment of a strategic cooperative selling plan with Bayer
Corporation.
(3) Represents 50,000 shares under the 1993 Incentive Stock Option Plan
and 50,000 shares under the Nonqualified Plan.
(4) Represents 50,000 shares under the 2000 Incentive Stock Option Plan.
(5) Represents 50,000 shares under the 2000 Incentive Stock Option Plan
and 25,000 shares under the Non Qualified Plan.
(6) Represents 10,000 shares under the 2000 Incentive Stock Option Plan.
Stock Option Grants During 2002
The following table sets forth information with respect to grants of options
pursuant to the Company's Incentive Stock Option Plans to the named Executive
Officers. No stock appreciation rights were granted during such fiscal year.
% of Total Potential Realizable
Options Options Exercise Value at Assumed Rate
Granted Granted To or Base of Stock Price
# Employees in Price Expiration Appreciation (1)
Name Fiscal Year ($/sh) Date 5%($) 10%($)
Todd M. DeMatteo 75,000 20% $1.20 02/01/12 $56,600 143,500
Diane J. Sentner 10,000 3% $1.20 02/01/12 $7,500 $19,100
Conard R.Shelnut 10,000 3% $1.20 02/01/12 $ 7,500 $19,100
20,000 5% $0.75 02/25/12 $ 9,400 $23,900
(1) The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option pricing model.
Aggregated Option Exercises in Last Fiscal Year and Year-end Option Value
The following table sets forth information with respect to the Named Officers
concerning the exercise of stock options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
_______________________________________________________________________________
Number of Value of Unexercisable
Shares Unexercised in-the-money Options
Acquired Value Options at Year-End at Year-End (1)
Name On Exercise Realized (Exercisable/ (Exercisable/
Unexercisable) Unexercisable)
Todd M. DeMatteo 0 0 50,000/175,000 0/0
Diane J. Sentner 0 0 0/30,000 0/0
Conard R.Shelnut 0 0 130,000/70,000 0/0
(1) Represents the difference between the closing price of DiaSys Common
Stock on June 30, 2002 and the exercise price of the options.
EQUITY COMPENSATION PLAN INFORMATION
Number of Weighted Number of
Plan Category securities to be average exercise securities
Issued upon exercise price of outstanding remaining avail-
of outstanding options options, able for future
warrants and rights warrants and rights issuance
Equity compensation
plans approved by 1,412,000 $3.24 1,088,000
security holders
Equity compensation
plans not approved by - - -
security holders
Total 1,412,000 $3.24 1,088,000
Employment Agreements
The Company has an employment agreement with its President/Chief Executive
Office. The Agreement: (i) is for a one-year term effective January 1,
2002, renewable upon the mutual consent of the parties; (ii) requires that
Mr. DeMatteo devote substantially all of his professional time to performing
the duties defined in his agreement or as such duties may from time to time
be modified by the Company; (iii) contains provisions for termination of
Mr. DeMatteo the employee for "Cause" and "Without Cause"; (iv) entitles
the employee to participate in any and all employee benefits programs and/or
plans sponsored by the Company including, but not limited to, stock option
plans, stock bonus plans, profit sharing plans and other such programs as and
if adopted; and, (v) as a condition to employment, requires that the employee:
(a) keep in confidence and trust all Proprietary Information of the Company;
(b) will not use or disclose the Proprietary Information of the Company or
anything related to it without the prior written consent of the Company;
and, (c) pledge and warrant that during the term of employment with the
Company, such employee will not engage in any activity, employment,
consultation, or otherwise which directly or indirectly competes with the
business of the Company. In addition, in the event that Mr. DeMatteo is
terminated due to an acquisition, merger, or other change in control of
the Company, he is entitled to receive severance compensation in an amount
equal to two and one-half times the amount of compensation received
in the twelve (12) month period immediately preceding the effective date of
such change. Through the term of the agreement, Mr. DeMatteo's base
compensation is fixed at $250,000 per year. He will also be entitled to a
bonus of One Hundred Thousand Dollars if the Company exceeds $3.5 million
in revenue for the twelve (12)month period ended December 31, 2002.
Item 11 Security Ownership of Certain Beneficial Owners and Management:
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
Directors, certain officers and persons holding ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
Common Stock and other equity securities of the Company. Directors, officers
and greater than ten percent shareholders are required to furnish the Company
with copies of all Section 16(a) form that they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports
were required during the fiscal year ended June 30, 2002, all Section 16(a)
filing requirements applicable to officers, directors and greater than ten
percent (10%) beneficial owners have been met except as follows:
On January 15, 2001, Mr. Waggoner notified the Company by telefax and
Federal Express that his ownership position of 1,415,710 common shares was
reduced to 1,396,910 such shares through the unlawful and/or unauthorized
sale of 18,800 shares from his account.
On January 16, 2001, the Company, through its general counsel firm, recommended
that Mr. Waggoner update his SEC filings accordingly.
On September 17, 2001, the Company, by e-mail, asked Mr. Waggoner to provide
copies of Forms 3, 4 or 5 with regard to Mr. Waggoner's ownership position in
the Company.
On September 21, 2001, Mr. Waggoner, through his attorney, notified the Company
that Mr. Waggoner's position had been reduced to 450,000 common shares through
the unlawful and/or unauthorized sale of approximately 1,000,000 shares by
persons unaffiliated with Mr. Waggoner.
On September 25, 2001, the Company, through its general counsel firm, again
recommended that Mr. Waggoner bring his SEC filings current on this matter.
On December 12, 2001, the Company, by e-mail, asked Mr. Waggoner to confirm the
correct number of shares he, directly or beneficially, owned as such
information was required to discharge the Company's reporting obligations
in its Proxy Statement and attending documents.
On January 31, 2002, Mr. Waggoner, through his attorney, reported to the
Company's general counsel firm that Mr. Waggoner was in the process of
filing an amended 13D with the Securities and Exchange Commission, but that
Mr. Waggoner would be unable to file an SEC Form 4 as he did not know the
dates his DiaSys stock was converted.
On February 22, 2002, the Company, through its general counsel firm, asked
Mr. Waggoner's counsel for proof that Waggoner's 13D was filed.
On February 28, 2002, the Company, by e-mail, again asked Mr. Waggoner to
file his 13D.
On June 10, 2002, the Company turned the matter and a copy of its
correspondence file over to the Enforcement Division of the Securities
and Exchange Commission.
The Company does not know Mr. Waggoner's actual stock position in the
Company, nor the number of late reports nor the number of transactions
that have not been reported on a timely basis.
PRINCIPAL SHAREHOLDERS
The following tables set forth, as of September 30,2002, the number of
shares beneficially owned:(i) by each person known by the Company
to be a beneficial owner of more than five percent (5%) of the outstanding
shares of Common Stock; (ii) by each Director of the Company; and, (iii)
by all executive officers and Directors of the Company as a group. Unless
otherwise indicated, each of the following persons has sole voting and
investment powers with respect to the shares of Common Stock set forth
opposite their respective names.
Ownership of common stock by management
The following table gives information concerning the beneficial ownership
of Common Stock as of September 30,2002 by all: (a) Directors; (b) each
of the executive officers named in the compensation table; (c) all
Directors and Executive Officers as a group; and, (d) persons who, to
the best knowledge of the Company's management as derived from schedules
13D and 13G, beneficially owned more than five percent of the Common Stock:
Name , Position and Address of
Beneficial Owners (1) Position Ownership(2) Percent Of Class
Todd M. DeMatteo President/CEO 730,313 (3) 6.56%
Conard R. Shelnut Director/Secretary 318,954 (4) 2.87%
Anthony P. Towell Director 47,147 (5) 0.42%
Stuart M. Robbins Director 379,100 3.41%
Robert H. Engel, Ph.D. Director 167,147 (4) 1.50%
Robert P. Carroll Director 146,259 (4) 1.31%
Diane J.Sentner CFO/Assistant 22,288 0.20%
Secretary
All Directors and officers
as a group (7 persons) 1,811,208 (3,4,5) 16.28%
Morris Silverman N/A 2,275,694 (6) 20.5%
(1) c/o the Company, 81 West Main Street, Waterbury, Connecticut 06702-2115
(2) For the purposes of the above table and the following notes, the Common
Stock shown as "beneficially owned" includes all securities which pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, may be deemed
to be "beneficially owned" including, without limitation, all securities which
the "beneficial owner" has the right to acquire within 60 days, as for example
through the exercise of any option, warrant or right, the conversion of
convertible securities or pursuant to the power to revoke a trust
discretionary account or similar arrangement.
(3) Includes options to purchase 50,000 shares of the Company's common stock
pursuant to one or more of the Company's Incentive and/or Non-Qualified stock
option plans.
(4) Includes options to purchase 130,000 shares of the Company's common stock
pursuant to one or more of the Company's Incentive and/or Non-Qualified stock
option plans.
(5) Includes options to purchase 10,000 shares of the Company's common stock
pursuant to one or more of the Company's Incentive and/or Non-Qualified stock
option plans.
(6) Includes warrants to purchase 117,188 shares of the Company's common
stock exercisable at $0.88 per share.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September of 2001, the Company found reason to believe that Mr. Paul
Reardon, the Managing Director of DiaSys Europe Limited, was engaging
in competitive practices in violation of his employment agreement and the
Share Purchase Agreement between the Company and the shareholders
of Intersep.Subsequently, the Company discovered evidence which strongly
suggested that Mr. Reardon was attempting to divert the business of DiaSys
Europe to HealthTest Limited, a Company which Mr. Reardon was a Director
and a participant in further breach of contract. The evidence further
suggested that Mr. Reardon assisted HealthTest to obtain the customer,
distributor, and supplier lists of DiaSys Europe, and permitted HealthTest
to operate from the premises of DiaSys Europe. On November 13, 2001, following
a meeting called to review these improprieties with Mr. Reardon, Mr. Reardon
was immediately discharged from employment FOR CAUSE, and the Company served
injunctive court orders on HealthTest Limited, Mr. Reardon, and two past
employees of the DiaSys Europe Limited (the "Respondents").
The Company temporarily installed Mr. Robert P. Carroll, a Director of
the Company, in England as interim acting Managing Director, and in
January 2002, hired Mr. Reardon's replacement. Mr. Carroll received
$43,660 for his services in this connection.
Item 13. Exhibits, List and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 2002.