x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
DELAWARE
|
04-3005815
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
129
MORGAN DRIVE NORWOOD,
MASSACHUSETTS
|
02062 |
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
|||
(
Do not check if a smaller Reporting company)
|
PAGE
|
||
PART I
|
||
ITEM 1
|
4
|
|
ITEM 1A
|
11
|
|
ITEM 2
|
17
|
|
ITEM 3
|
17
|
|
ITEM 4
|
18
|
|
|
||
PART II
|
||
ITEM 5
|
18
|
|
ITEM 6
|
20 | |
ITEM 7
|
21
|
|
ITEM 7A
|
31 | |
ITEM 8
|
31
|
|
ITEM 9
|
31
|
|
ITEM 9A(T)
|
31
|
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ITEM 9B
|
32
|
|
|
||
PART III
|
||
ITEM 10
|
32
|
|
ITEM 11
|
37
|
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ITEM 12
|
40
|
|
ITEM 13
|
41
|
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ITEM 14
|
42
|
|
PART IV
|
||
ITEM 15
|
44
|
|
46
|
||
F-1
|
||
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F-2
|
|
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F-3
|
|
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F-4
|
|
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F-5
|
|
|
F-6
|
·
|
anticipated financing
activities;
|
·
|
anticipated strategic alliances or arrangements
with development or marketing
partners;
|
·
|
anticipated research and product development
results;
|
·
|
projected development and commercialization
timelines;
|
·
|
descriptions of plans or objectives of management
for future operations, products or
services;
|
·
|
forecasts of future economic performance;
and
|
·
|
descriptions or assumptions underlying or relating
to any of the above
items.
|
|
·
|
In Vivo
Performance: We have demonstrated in a relevant large animal model
that our microneedle system is capable of delivering formulations of
biologically active compounds, such as formulations of vaccine antigens,
intradermally. We found that some important vaccine formulations delivered
intradermally using our microneedle systems are superior to similar
formulations delivered by conventional routes, such as intramuscular
route.
|
|
·
|
Stability/Shelf
Life: We have demonstrated that our microneedle formulations appear
to improve the stability of certain biologically active compounds as
compared to liquid formulations. This advantage could provide a longer
potential shelf-life without loss of efficacy, while at the same time
reducing the cost of storage and reliance on cold chain
supply.
|
|
·
|
Controlled
Release: We have demonstrated that our formulation technology may
be tailored to modulate the release of biologically active compounds. Our
systems can be formulated either for almost instantaneous release or, if
desired, for sustained release of biologically active
compound.
|
|
·
|
Dose
Control: We have demonstrated that our proprietary microneedle
coating process appears to provide for high efficiency of drug
incorporation to minimize losses, or wasted bio-active material, so that a
precise dose of drug can be applied
reliably.
|
|
·
|
Microneedle
Design: We believe the advantages of our microneedle
array designs are that: (i) the components of our microneedles are either
excipients of approved formulations or have a history of human use (ii)
the dimensions of our micro needles can be precisely manufactured to meet
the needs of the optimal delivery depth in the skin, (iii) our design
approach utilizes manufacturing methods that can be scaled to high volume
production to meet cost goals.
|
Needs
|
Design
Advantages
|
Patient
|
|
Safety
|
-
Single use
-
Lower probability of needle sticks
-
Less chance of accidental overdose
|
Reduced
or no Pain
|
- Minimal
or no pain due to size of microneedles
- Patient
friendly and easy to use applicator
|
Ease
of Administration
|
-
Easier administration with a possibility of self-administration limits
need for doctor and hospital visits
|
Health
Insurers
|
|
Treatment
Cost of Patient
|
-
Low cost design
-
Designed for higher efficacy (vaccines) potentially reducing need for
multiple administrations
-
Self administration limits cost of doctor/hospital visits
-
Painless and easy delivery improves compliance and patient realizes the
benefits of enhanced compliance
|
Government/World
Health Organizations
|
|
Low
Treatment Cost
|
-
Low cost design
|
Long
Term Storage/ Ease of Transport
|
-
Solid-state formulation may provide extended shelf life and minimizes
reliance on refrigerated chain supply
|
Rapidly
Deployable
|
-
Easy or self-administration – no health care professionals
required
|
Disposable/No
Reuse/Contamination
|
-
Single use for no cross contamination
-
Easier to dispose
-
All of the drug is consumed; no disposal abuse
|
Pharmaceutical
Companies
|
|
Higher
Efficacy
|
-
Targeted intradermal delivery of vaccines may lead to higher immune
responses (more effective vaccines), dose sparing, and potentially new
vaccines
|
Improved
Safety/Less Side Affects
|
-
No potential for needle reuse and cross contamination
-
No gastric tract related side affects
-
Less chance of accidental overdose with the single use
design
|
Extend
Patent Life
|
-
New formulation and delivery route may extend drug patent
life
|
Release
Control
|
-
Solid-state drug formulation has potential to be customized for rapid or
prolonged release
|
Targeted
Delivery
|
-
Delivery to targeted area of skin possible
|
Platform
Design for Wide Use
|
-
Potentially suitable for vaccines, high potency large molecule drugs and
active ingredients
|
|
·
|
painless
self administration thereby avoiding the need for a hospital or doctors
visit,
|
|
·
|
simplified
storage and extended product shelf life of large molecule drugs,
and
|
|
·
|
extension
to the patent life of specific drugs through the adoption of a new
transdermal formulation protecting pharmaceutical market share and product
revenue.
|
Name
|
Affiliation
|
Area
of Expertise
|
Alexander
K. Andrianov, Ph. D.
|
Chairman
of the Scientific Advisory Board, Apogee Technology, Inc.
|
Chemistry
and Drug Delivery Formulation
|
R.
Rox Anderson, M.D.
|
Mass
General Hospital
Harvard
Medical School
Massachusetts
Institute of Technology
|
Dermatology
|
Mark
Prausnitz, Ph.D.
|
Georgia
Institute of Technology
|
Drug
Delivery Technologies
|
Hans
Wigzell, M.D., Ph.D., Professor of Hagersten
|
Royal
Swedish Academy of Sciences
Chief
Scientific Advisor to the Swedish Government
American
Society for Immunology
Finnish
Society of Sciences and Letters
Danish
Academy of Sciences and Letters
Academia
Europea
|
Immunology
|
Name
|
Age
|
Position
|
||
Herbert
M. Stein
|
80
|
President,
Chief Executive Officer and Chairman of the Board
|
||
Paul
J. Murphy
|
61
|
Chief
Financial Officer and Vice President of Finance
|
||
Alexander K.
Andrianov, Ph.D.
|
51
|
Vice
President Research and Development
|
|
· the ability
to maintain manufacturing relationships, the failure of which could result
in significant delays in product introduction due to the time necessary to
establish new relationships;
|
|
· delays in
production or shortages in product delivery as a result of production
problems at outside contractors;
|
|
· the loss of
manufacturing priority that may limit our ability to obtain products on
schedule;
|
|
· limited
control over product quality that could result in product returns and the
loss of customers;
|
|
· inability to
control manufacturing yield that could increase production costs, thereby
reducing sales potential and operating margins;
and
|
|
· lack of
access or control over new process and manufacturing technologies to
maintain product competitiveness in the
market.
|
|
· identify
emerging technological trends in our
market;
|
|
· identify
changing customer requirements;
|
|
· develop or
maintain competitive technology, including new product
offerings;
|
|
· improve the
performance, features and reliability of our products, particularly in
response to technological change and competitive
offerings;
|
|
· bring
technology to market quickly at cost-effective prices;
and
|
|
· protect our
intellectual property.
|
|
·
|
announcements
of technological innovations or new products, or competitive
developments;
|
|
·
|
investor
perceptions and expectations regarding our or our competitors’ products;
and
|
|
·
|
acquisitions
or strategic alliances by us or our
competitors.
|
Item 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
Item 5.
|
MARKET
FOR REGISTANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
|
Common stock
|
||||||||
High
|
Low
|
|||||||
2007:
|
||||||||
First
Quarter
|
1.64 | 0.98 | ||||||
Second
Quarter
|
1.34 | 0.49 | ||||||
Third
Quarter
|
0.95 | 0.50 | ||||||
Fourth
Quarter
|
1.45 | 0.30 | ||||||
2008:
|
||||||||
First
Quarter
|
0.90 | 0.28 | ||||||
Second
Quarter
|
1.01 | 0.51 | ||||||
Third
Quarter
|
1.01 | 0.55 | ||||||
Fourth
Quarter
|
0.79 | 0.38 |
Promissory Notes Due To Herbert M. Stein | |||||||||||||
Date
of Promissory Note
|
Amount
|
Maturity
Date
|
Initial
Interest Rate
|
Current
Interest Rate
|
|||||||||
December 11,
2007
|
$ | 250,000 |
March 10,
2008
|
8.00 | % | 12.00 | % | ||||||
February 21,
2008
|
100,000 |
August 19,
2008
|
8.00 | % | 12.00 | % | |||||||
March 20,
2008
|
50,000 |
September 16,
2008
|
8.00 | % | 12.00 | % | |||||||
April 1,
2008
|
50,000 |
September 28,
2008
|
8.00 | % | 12.00 | % | |||||||
May 15,
2008
|
50,000 |
November 11,
2008
|
8.00 | % | 12.00 | % | |||||||
June 16,
2008
|
35,000 |
December 13,
2008
|
8.00 | % | 12.00 | % | |||||||
June 18,
2008
|
40,000 |
December 15,
2008
|
8.00 | % | 12.00 | % | |||||||
$ | 575,000 |
Promissory Notes Due To David Spiegel | |||||||||||||
Date
of Promissory Note
|
Amount
|
Maturity
Date
|
Initial
Interest Rate
|
Current
Interest Rate
|
|||||||||
December 11,
2007
|
$ | 150,000 |
March 10,
2008
|
8.00 | % | 12.00 | % | ||||||
February 21,
2008
|
100,000 |
August 19,
2008
|
8.00 | % | 12.00 | % | |||||||
March 20,
2008
|
100,000 |
September 16,
2008
|
8.00 | % | 12.00 | % | |||||||
April 1,
2008
|
50,000 |
September 28,
2008
|
8.00 | % | 12.00 | % | |||||||
May 15,
2008
|
50,000 |
November 11,
2008
|
8.00 | % | 12.00 | % | |||||||
June 16,
2008
|
65,000 |
December 13,
2008
|
8.00 | % | 12.00 | % | |||||||
June 18,
2008
|
50,000 |
December 15,
2008
|
8.00 | % | 12.00 | % | |||||||
$ | 565,000 |
For
the Twelve-Month Period Ended
December 31,
|
(Cumulative
from Re-entering Development Stage on October 1, 2008 to
December 31,
|
|||||||||||
2008
|
2007
|
2008 | ||||||||||
Statement
of Operations Data:
|
||||||||||||
Revenue
|
$ | 85,450 | $ | 150,172 | $ | -0- | ||||||
Costs
and expenses
|
(3,939,920 | ) | (3,482,411 | ) | (917,680 | ) | ||||||
Other
Income (expenses)
|
(166,044 | ) | 127,236 | (71,695 | ) | |||||||
Net
Loss
|
$ | (4,020,514 | ) | $ | (3,205,003 | ) | $ | (989,375 | ) | |||
Shares
Outstanding
|
12,132,332 | 11,968,332 | 12,132,332 | |||||||||
Total
Assets
|
$ | 268,376 | $ | 896,971 | $ | 268,376 | ||||||
Stockholders’
deficiency
|
$ | (3,973,710 | ) | $ | (248,574 | ) | $ | (989,375 | ) | |||
Loss
per share (basic and diluted)
|
$ | (0.33 | ) | $ | (0.27 | ) | $ | (0.08 | ) |
Item 7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
For
the Fiscal Year Ended
|
||||||||
December 31,
|
||||||||
2008
|
2007
|
|||||||
Product
Revenue
|
$ | 21,951 | $ | 150,172 | ||||
Royalties
|
63,499 | - | ||||||
Total
|
$ | 85,450 | $ | 150,172 |
Promissory
Notes and Loans Due To
|
|||||||||||||
Herbert
M. Stein
|
|||||||||||||
Date
of Promissory Note
|
Amount
|
Maturity
Date
|
Initial
Interest Rate
|
Current
Interest Rate
|
|||||||||
December
11, 2007
|
$ | 250,000 |
March
10, 2008
|
8.00 | % | 12.00 | % | ||||||
February
21, 2008
|
100,000 |
August
19, 2008
|
8.00 | % | 12.00 | % | |||||||
March
20, 2008
|
50,000 |
September
16, 2008
|
8.00 | % | 12.00 | % | |||||||
April
1, 2008
|
50,000 |
September
28, 2008
|
8.00 | % | 12.00 | % | |||||||
May
15, 2008
|
50,000 |
November
11, 2008
|
8.00 | % | 12.00 | % | |||||||
June
16, 2008
|
35,000 |
December
13, 2008
|
8.00 | % | 12.00 | % | |||||||
June
18, 2008
|
40,000 |
December
15, 2008
|
8.00 | % | 12.00 | % | |||||||
July
15, 2008
|
30,000 |
January
11, 2009
|
8.00 | % | 12.00 | % | |||||||
July
28, 2008
|
50,000 |
January
24, 2009
|
8.00 | % | 12.00 | % | |||||||
August
12, 2008
|
35,000 |
February 8,
2009
|
8.00 | % | 12.00 | % | |||||||
August
27, 2008
|
35,000 |
February
23, 3009
|
8.00 | % | 12.00 | % | |||||||
September
5, 2008
|
35,000 |
March
4, 2009
|
8.00 | % | 12.00 | % | |||||||
October
27, 2008
|
25,000 |
April
25, 2009
|
8.00 | % | 12.00 | % | |||||||
February
2, 2009
|
30,000 |
August
1, 2009
|
8.00 | % | 12.00 | % | |||||||
February
17, 2009
|
10,000 |
August
16 2009
|
8.00 | % | 12.00 | % | |||||||
March
19, 2009
|
25,900 |
September
15, 2009
|
8.00 | % | 12.00 | % | |||||||
April
13, 2009
|
33,000 |
October
10, 2009
|
8.00 | % | 12.00 | % | |||||||
May
18, 2009
|
12,000 |
November
14, 2009
|
8.00 | % | 12.00 | % | |||||||
July
1, 2009
|
20,000 |
December
28, 2009
|
8.00 | % | 8.00 | % | |||||||
November
5, 2009
|
42,500 |
May
4, 2010
|
8.00 | % | 8.00 | % | |||||||
November
25, 2009
|
1,500 | ||||||||||||
10,000 | |||||||||||||
December
11, 2009
|
52,000 | ||||||||||||
December
14, 2009
|
25,000 | ||||||||||||
$ | 1,046,900 |
Promissory
Notes and Loans Due To
|
|||||||||||||
David
Spiegel
|
|||||||||||||
Date
of Promissory Note
|
Amount
|
Maturity
Date
|
Initial
Interest Rate
|
Current
Interest Rate
|
|||||||||
December
11, 2007
|
$ | 150,000 |
March
10, 2008
|
8.00 | % | 12.00 | % | ||||||
February
21, 2008
|
100,000 |
August
19, 2008
|
8.00 | % | 12.00 | % | |||||||
March
20, 2008
|
100,000 |
September
16, 2008
|
8.00 | % | 12.00 | % | |||||||
April
1, 2008
|
50,000 |
September
28, 2008
|
8.00 | % | 12.00 | % | |||||||
May
15, 2008
|
50,000 |
November
11, 2008
|
8.00 | % | 12.00 | % | |||||||
June
16, 2008
|
65,000 |
December
13, 2008
|
8.00 | % | 12.00 | % | |||||||
June
18, 2008
|
50,000 |
December
15, 2008
|
8.00 | % | 12.00 | % |
July
15, 2008
|
50,000 |
January
11, 2009
|
8.00 | % | 12.00 | % | |||||||
July
28, 2008
|
50,000 |
January
24, 2009
|
8.00 | % | 12.00 | % | |||||||
August
12, 2008
|
35,000 |
February
8, 2009
|
8.00 | % | 12.00 | % | |||||||
August
27, 2008
|
35,000 |
February
23, 3009
|
8.00 | % | 12.00 | % | |||||||
September
5, 2008
|
35,000 |
March
4, 2009
|
8.00 | % | 12.00 | % | |||||||
October
27, 2008
|
35,000 |
April
25, 2009
|
8.00 | % | 12.00 | % | |||||||
January
6, 2009
|
80,000 |
July
5, 2009
|
8.00 | % | 12.00 | % | |||||||
March
19, 2009
|
64,000 |
September
15, 2009
|
8.00 | % | 12.00 | % | |||||||
May
19, 2009
|
35,000 |
November
15, 2009
|
8.00 | % | 12.00 | % | |||||||
June
10, 2009
|
25,000 |
December
7, 2009
|
8.00 | % | 8.00 | % | |||||||
July
1, 2009
|
32,000 |
December
28, 2009
|
8.00 | % | 8.00 | % | |||||||
November
5, 2009
|
103,000 |
May
4, 2010
|
8.00 | % | 8.00 | % | |||||||
November
18, 2009
|
17,000 | ||||||||||||
December
11, 2009
|
21,000 | ||||||||||||
$ | 1,182,000 |
Promissory
Notes and Loans Due To
|
||||||||||||||
Robert
Schacter et al
|
||||||||||||||
Date
of Promissory Notes
|
Name
on Promissory Note
|
Amount
|
Maturity
Date
|
Initial
Interest Rate
|
Current
Interest Rate
|
|||||||||
September
5, 2008
|
TYJO
Corporation Money Purchase Pension Plan
|
$ | 100,000 |
March
4, 2009
|
8.00 | % | 12.00 | % | ||||||
September
5 2008
|
Mr. Robert Schacter, as Custodian
for Tyler Schacter UTMA/CA
|
20,000 |
March
4, 2009
|
8.00 | % | 12.00 | % | |||||||
September
5 2008
|
Mr. Robert Schacter, as Custodian
for Joseph Schacter UTMA/CA
|
20,000 |
March
4, 2009
|
8.00 | % | 12.00 | % | |||||||
October
27, 2008
|
TYJO
Corporation Money Purchase Pension Plan
|
100,000 |
April
25, 2009
|
8.00 | % | 12.00 | % | |||||||
January
8, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
100,000 |
July
7, 2009
|
8.00 | % | 12.00 | % | |||||||
February
2, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
50,000 |
August
1, 2009
|
8.00 | % | 12.00 | % | |||||||
February
17, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
50,000 |
August
16, 2009
|
8.00 | % | 12.00 | % | |||||||
March
19, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
50,000 |
September
15, 2009
|
8.00 | % | 12.00 | % | |||||||
April
13, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
20,000 |
October
10, 2009
|
8.00 | % | 12.00 | % | |||||||
June
10, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
25,000 |
December
7, 2009
|
8.00 | % | 8.00 | % | |||||||
November
5, 2009
|
TYJO
Corporation Money Purchase Pension Plan
|
50,000 |
May
10, 2010
|
8.00 | % | 8.00 | % | |||||||
$ | 585,000 |
Promissory
Notes and Loans Due to
|
||||||||||||||
Spiegel
et al, JAZFund and Erica Stein
|
||||||||||||||
Date
of
|
Name
on
|
Maturity
|
Initial
|
Current
|
||||||||||
Promissory
Note
|
Promissory
Note
|
Amount
|
Date
|
Interest
Rate
|
Interest
Rate
|
|||||||||
February
3, 2009
|
Leo
Spiegel
|
$ | 35,000 |
August
16, 2009
|
8.00 | % | 12.00 | % | ||||||
November
5, 2009
|
Leo
Spiegel
|
$ | 10,000 |
May
4, 2010
|
8.00 | % | 8.00 | % | ||||||
April
13, 2009
|
Spiegel
Family Limited Partnership
|
$ | 31,000 |
October
10, 2009
|
8.00 | % | 12.00 | % | ||||||
May
18, 2009
|
Spiegel
Family Limited Partnership
|
$ | 32,000 |
November
14, 2009
|
8.00 | % | 12.00 | % | ||||||
March
26, 2009
|
JAZFund
LLC
|
$ | 30,000 |
October
10, 2009
|
12.00 | % | 16.00 | % |
November
5, 2009
|
Erica
Stein
|
$ | 60,000 |
May
4, 2010
|
8.00 | % | 8.00 | % | ||||||
$ | 198,000 |
Promissory
Notes and Loans Due To
|
|||||||||||||
Others
|
|||||||||||||
Date
of Promissory Note
|
Amount
|
Maturity
Date
|
Initial
Interest Rate
|
Current
Interest Rate
|
|||||||||
July
28, 2008
|
$ | 20,000 |
January
24, 2009
|
8.00 | % | 12.00 | % | ||||||
October
27, 2008
|
6,000 |
April
25, 2009
|
8.00 | % | 12.00 | % | |||||||
January
6, 2009
|
500 |
July
6, 2009
|
8.00 | % | 12.00 | % | |||||||
February
17, 2009
|
2,000 |
August
16, 2009
|
8.00 | % | 12.00 | % | |||||||
March
19, 2009
|
500 |
September
15, 2009
|
8.00 | % | 12.00 | % | |||||||
April
13, 2009
|
500 |
October
10, 2009
|
8.00 | % | 12.00 | % | |||||||
May
19, 2009
|
500 |
November
15, 2009
|
8.00 | % | 12.00 | % | |||||||
November
30, 2009
|
2,563 | ||||||||||||
$ | 32,563 |
Item 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
|
(a)
|
Evaluation
of Disclosure Controls and Procedures. Our chief executive
officer (principal executive officer) and chief financial officer
(principal financial and accounting
officer) have reviewed and evaluated the effectiveness of the
design and operation of our disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this annual report. Based on that evaluation, our chief
executive officer and chief financial officer have concluded that our
current disclosure controls and procedures were effective to ensure that
we record, process, summarize, and report the information we must disclose
in reports that we file or submit under the Exchange Act, within the time
periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer as appropriate to allow
timely discussions regarding required
disclosures.
|
|
(b)
|
Changes
in Internal Controls. There were no changes in our internal
control over financial reporting, identified in connection with the
evaluation of such internal control that occurred during our fiscal
quarter ended December 31, 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
|
|
(c)
|
Management’s Report on Internal Control over
Financial Reporting. The management of the Company is responsible for
establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by,
or under the supervision of, the Company’s principal executive and
principal financial officers and effected by the Company’s board of
directors, management and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles. The Company’s internal control
over financial reporting includes those policies and procedures
that:
|
|
·
|
pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the
Company;
|
|
|
·
|
provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the Company;
and
|
|
|
·
|
provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial
statements.
|
Item 9B.
|
OTHER
INFORMATION.
|
Item 10.
|
DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE.
|
Name
|
Age
|
Position
with the Company
|
Term
Ending at Annual Meeting
|
|||||
Herbert
M. Stein
|
80
|
Chairman
of the Board, President and Chief Executive Officer
|
2010
|
|||||
Craig
A. Dubitsky(3)
|
43
|
Director
|
2011
|
|||||
Arthur
S. Reynolds(1), (2), (3)
|
65
|
Director
|
Until
successors are duly elected
|
|||||
Sheryl
B. Stein
|
54
|
Director
|
Until
successors are duly elected
|
|||||
Alan
W. Tuck(1), (2), (3)
|
60
|
Director
|
2011
|
(1)
|
Member
of the Audit Committee
|
(2)
|
Member
of the Compensation Committee
|
(3)
|
Member
of the Governance and Nominating
Committee
|
Name
|
Age
|
Position
with the Company
|
||||
Paul
J. Murphy
|
61
|
Chief
Financial Officer and Vice President of Finance
|
||||
Alexander
K. Andrianov
|
51
|
Vice
President Research and Development
|
|
·
business-related knowledge, skills and experience of the
nominee;
|
|
· experience
with corporate governance matters and compliance obligations of a public
company, including experience with disclosure and accounting rules and
practices;
|
|
· integrity of
the nominee;
|
|
· mix of talent
and experience and diversity of the directors as a
group;
|
|
· other
professional and business commitments of the nominee, including the number
of other boards on which the nominee serves, including public and private
boards; and
|
|
· other factors
as may be deemed to be in the best interests of the Company and its
stockholders.
|
Item
11.
|
EXECUTIVE, OFFICER, AND
DIRECTOR COMPENSATION.
|
Name
and Principal Position(1)
|
Year
|
Salary
($)
|
Option
Awards
($)(4)
|
All
Other Compensation
($)
|
Total ($) | ||||||||||||||
Herbert
M. Stein, President and Chief Executive Officer (7)
|
2008
|
$ | 236,000 | (2)(3) | $ | -0- | $ | 229,875 | (5) | $ | 465,875 | ||||||||
Paul
J. Murphy, Vice President Finance and Chief Financial
Officer
|
2008
|
$ | 128,000 | (3) | $ | 9,145 | $ | -0- | $ | 137,145 | |||||||||
Alexander
K. Andrianov, Vice President Research and Development
|
2008
|
$ | 145,000 | $ | 12,456 | $ | -0- | $ | 157,456 |
Name
and Principal Position(1)
|
Year
|
Salary
($)
|
Option
Awards
($)(4)
|
All
Other Compensation
($)
|
Total
($)
|
||||||||||||||
Herbert
M. Stein, President and Chief Executive Officer
|
2007
|
$ | 295,000 | (2) (3) | $ | -0- | $ | 280,399 | (5) | $ | 575,399 | ||||||||
Paul
J. Murphy, Vice President Finance and Chief Financial
Officer
|
2007
|
$ | 160,000 | (3) | $ | 11,474 | $ | -0- | $ | 171,474 | |||||||||
David
B. Meyers (6)
|
2007
|
170,000 | $ | 7,506 | $ | -0- | $ | 177,506 | |||||||||||
Alexander
K. Andrianov, Vice President Research and Development
|
2007
|
$ | 145,000 | $ | 10,901 | $ | -0- | $ | 155,901 |
(1)
|
Currently,
none of the officers of the Company are under employment contracts with
the exception of Mr. Herbert M.
Stein.
|
(2)
|
Mr.
Stein is compensated pursuant to an employment agreement of which the
initial term ended on January 1, 2007; the agreement is automatically
extended for additional two-year periods unless terminated by Mr. Stein or
the Board of Directors no later than 120 days prior to the end of the
initial term or any successive term. Mr. Stein is entitled to an annual
base salary, effective January 1, 2004, of $295,000 which may be increased
at the discretion of the Company’s Board of Directors, and annual bonuses
as determined by the Company’s Board of
Directors.
|
(3)
|
In
June of 2008, a majority of employees, including Mr. Stein and Mr. Murphy,
agreed to reduce their salary by twenty percent
(20%).
|
(4)
|
The
amounts in this column reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2008,
in accordance with SFAS 123(R) of awards of stock options and thus include
amounts from awards granted in and prior to 2006. Assumptions used in this
calculation are included in Part II - Item 8, Financial Statements and
Supplementary Data of the Annual Report on Form 10-K, and Notes 2 and 17
of the Financial Statements beginning on F-1 of this Annual Report on Form
10-K, contained therein.
|
(5)
|
The
Company has been assuming and will continue to assume the legal costs and
related expenses of Herbert M. Stein, in connection with the civil case in
the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach
County, Florida entitled Joseph Shamy v. Herbert M. Stein, case No.: 50
2005 CA 007719 XXXXMB. Mr. Stein reached a settlement with Mr.
Shamy in early 2009. The Company was not a party to this settlement. It is
expected that the remaining legal fees to be indemnified by the Company
will not be significant.
|
(6)
|
Mr.
Meyers was formerly our Chief Operating Officer. Mr. Meyers’
new title is Vice President, Sensor Division. As a result of
this change, Mr. Meyers is no longer subject to the reporting requirements
of Section 16 of the Securities Exchange Act of 1934, as
amended.
|
(7)
|
Mr.
Stein has not drawn cash compensation since June 30,
2009.
|
|
Option
Awards
|
||||||||||||||||
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
||||||||||||
Herbert
M. Stein
|
300,000 | -0- | -0- | $ | 0.950 |
08/17/2016
|
|||||||||||
200,000 | -0- | -0- | $ | 8.920 |
06/07/2014
|
||||||||||||
175,000 | -0- | -0- | $ | 8.650 |
03/25/2014
|
||||||||||||
200,000 | -0- | -0- | $ | 4.080 |
03/27/2013
|
||||||||||||
100,000 | -0- | -0- | $ | 2.710 |
01/21/2013
|
||||||||||||
100,000 | -0- | -0- | $ | 5.500 |
04/03/2012
|
||||||||||||
350,000 | -0- | -0- | $ | 6.300 |
12/21/2011
|
||||||||||||
100,000 | -0- | -0- | $ | 6.300 |
08/16/2011
|
||||||||||||
100,000 | -0- | -0- | $ | 6.250 |
02/12/2011
|
||||||||||||
80,000 | -0- | -0- | $ | 1.240 |
05/19/2010
|
||||||||||||
Paul
J. Murphy
|
15,000 | 10,000 | (1) | -0- | $ | 0.950 |
08/17/2016
|
||||||||||
48,000 | 12,000 | (2) | -0- | $ | 1.270 |
06/01/2015
|
|||||||||||
Alexander
K. Andrianov
|
16,000 | 24,000 | (3) | -0- | $ | 0.450 |
11/19/2017
|
||||||||||
36,000 | 24,000 | (4) | -0- | $ | 0.800 |
09/12/2016
|
(1)
|
25,000
options granted on August 17, 2006; vesting at 20% per year beginning at
the first anniversary of the grant
date.
|
(2)
|
60,000
options granted on June 1, 2005; vesting at 20% per year beginning at the
first anniversary of the grant
date.
|
(3)
|
40,000
options granted on November 19, 2007; vesting at 20% per year beginning at
the first anniversary of the grant
date.
|
(4)
|
60,000
options granted on September 12, 2006; vesting at 20% per year beginning
at the first anniversary of the grant
date.
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Option
Awards
($)
|
Total
($)
|
|||||||||
Craig
A. Dubitsky
|
$ | 5,000 | $ | 6,337 | $ | 11,337 | ||||||
Arthur
S. Reynolds
|
$ | 20,000 | $ | 9,540 | $ | 29,540 | ||||||
Sheryl
B. Stein
|
$ | 5,000 | $ | 6,337 | $ | 11,337 | ||||||
Alan
W. Tuck
|
$ | 11,000 | $ | 7,940 | $ | 18,940 |
Plan
Category
|
Number
of Securities to be Issued Upon Exercise of Outstanding
Options
|
Weighted
Average Exercise Price of Outstanding Options
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (excluding securities reflected in first
column)
|
|||||||||
Equity
Compensation Plans Approved by Security Holders(1)
|
3,068,100 | $ | 4.40 | 479,000 | ||||||||
Equity
Compensation Plans not Approved by Security Holders
|
N/A | N/A | ||||||||||
Total
|
3,068,100 | $ | 4.40 | 479,000 |
Item
12.
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
|
Shares
Beneficially Owned (1)
|
||||||||
Name
and Address**
|
Number
|
Percent
|
||||||
Herbert
M. Stein
71
Fairlee Road, Waban, MA 02468
|
3,444,674 | (2) | 28.39 | % | ||||
H.M.
Stein Associates
C/o
Herbert M. Stein
71
Fairlee Road, Waban, MA 02468
|
1,466,334 | (3) | 12.09 | % | ||||
David
Spiegel
129
Morgan Drive, Norwood, MA 02062
|
1,920,232 | (4) | 15.83 | % | ||||
Sheryl
B. Stein
150
East 57th Street, New York, NY 10022
|
900,470 | (5) | 7.42 | % | ||||
Leo
Spiegel
3720
South Ocean Boulevard
Unit
801, Highland Beach, FL 33487
|
793,386 | 6.54 | % | |||||
Alan
W. Tuck
|
327,500 | (6) | 2.70 | % | ||||
Arthur
S. Reynolds
|
86,500 | (7) | * | |||||
Paul
J. Murphy
|
63,000 | (8) | * | |||||
Alexander
K. Andrianov
|
52,000 | (9) | * | |||||
Craig
A. Dubitsky
|
40,000 | (10) | * | |||||
All
executive officers and directors as a group (7 persons)
|
4,914,144 | (11) | 33.81 | % |
*
|
Represents
beneficial ownership of less than 1% of the Company’s outstanding shares
of common stock.
|
**
|
Addresses
are given for beneficial owners of more than 5% of the Company’s
outstanding stock only.
|
(2)
|
Includes
91,100 shares of common stock owned directly by Mr. Stein, 1,705,000
shares of common stock which may be purchased by Mr. Stein upon the
exercise of fully vested options, 70,840 shares of common stock which may
be purchased by Mr. Stein upon exercise of fully vested warrants, 111,400
shares of common stock owned by Mr. Stein’s wife, and 1,466,334 shares of
common stock owned by H.M. Stein Associates
(“HMSA”).
|
(3)
|
The
partners of HMSA are Herbert M. and Renee Stein, their daughters, Erica,
Sheryl and Sharyn and Fairlee Corporation. Mr. Stein has an 8% general
partnership interest in HMSA. Mr. Stein and his wife, Renee Stein, are the
sole stockholders of Fairlee Corporation, which has a 1% general
partnership interest in HMSA. Mr. Stein disclaims beneficial ownership of
91% of such shares.
|