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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 Commission File No. 000-27582
SPEEDUS.COM, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 13-3853788
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
140 58th Street, Suite 7E, Brooklyn, NY 11220
(Address of Principal Executive Offices)
(718) 567-4300
(Registrant's telephone number)
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 is not contained herein, and will not be contained, to the
best of the 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 Registrant's Common Stock held by
non-affiliates of the Registrant was $140,500,000 on March 24, 2000, based on
the closing trade price of the Common Stock on the NASDAQ National Market system
on that date.
The number of shares of Common Stock outstanding as of March 24, 2000 was
20,004,838.
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DOCUMENTS INCORPORATED BY REFERENCE
None.
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<PAGE>
SPEEDUS.COM, Inc.
The Registrant hereby amends its Annual Report on Form 10-K for the year
ended December 31, 1999 to furnish the item listed below.
FORM 10-K/A
AMENDMENT NO. 1
TABLE OF CONTENTS
PART III
Item 10 Directors and Executive Officers of the Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management
Item 13 Certain Relationships and Related Transactions
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The table below sets forth the names, ages and titles of the persons who
were directors and/or executive officers of the Company as of March 31, 2000.
Name Age Position
- ------------------------------ ------ -------------------------------
Shant S. Hovnanian........... 40 Chairman of the Board of
Directors, President, Chief
Executive Officer and Chief
Financial Officer
Vahak S. Hovnanian........... 68 Director
Matthew J. Rinaldo........... 68 Director
Catherine Petrossian......... 40 Director
Michael Bacon................ 34 Executive Vice President of Operations
Shant S. Hovnanian has served as our Chairman of the Board of Directors,
President and Chief Executive Officer since October 1995 and as Chief Financial
Officer since June 1998. He has also served as Chief Executive Officer and a
member of the Board of Representatives of SPEEDUSNY since July 1993. Mr.
Hovnanian formerly served as Chief Executive Officer of CellularVision
Technology & Telecommunications, L.P. ("CT&T") from 1993 to 1995 and continues
to serve on its Board of Representatives. From June 1980 until January 1991, Mr.
Hovnanian served as Executive Vice President of the V. S. Hovnanian Group (the
"Hovnanian Group"), consisting of home building operations, real estate
development and utility companies. In 1995, Mr. Hovnanian served as a U.S.
Delegate to the World Radio Conference of the International Telecommunications
Union in Geneva, Switzerland. Mr. Hovnanian is the son of Mr. Vahak S.
Hovnanian.
Vahak S. Hovnanian has served as a Director since October 1995 and as a
member of the Board of Representatives of SPEEDUSNY and CT&T since July 1993.
Mr. Hovnanian has served as a principal of Suite 12 and CellularVision Capital
Corporation since 1986 and 1988, respectively, and as Chairman of the Board and
President of the Hovnanian Group since 1968. Mr. Hovnanian is the father of Mr.
Shant S. Hovnanian.
Matthew J. Rinaldo has served as a Director since February 1996.
Congressman Rinaldo was President of International CellularVision Association
("ICVA"), a Local Multipoint Distribution Service ("LMDS") trade association
from 1993 until its dissolution in 1999. He served as Chairman of the Advanced
Telecommunications Institute of the Stevens Institute of Technology from 1993 to
1996. He was elected to the U.S. House of Representatives in 1973 and re-elected
until his retirement in 1993. During his term in the House of Representatives,
he was the ranking Republican member of the Telecommunications and Finance
Subcommittee of the House Energy and Commerce Committee. Congressman Rinaldo has
been the recipient of numerous honors and awards.
Catherine Petrossian has served as a Director since July 1999. Ms.
Petrossian has been a partner at the law firm of Sheridan & Petrossian LLP since
1997 where she concentrates in real estate and civil litigation. From 1993 to
1996, she served as an Assistant District Attorney for the County of Nassau and
from 1992 to 1993 worked for a U.S. District Judge in the Southern District of
New York. From 1988 to 1992, Ms. Petrossian was in private practice and
concentrated in Real Estate and Civil litigation. From 1986 to 1988, Ms.
Petrossian was an associate at a Manhattan law firm that concentrated in real
estate law. Ms. Petrossian is admitted to practice in the Courts of New York
State and the United States District courts for the Southern and Eastern
Districts of New York and in the Courts of the State of New Jersey and the
United States District Court for the District of New Jersey.
Michael Bacon has served as Executive Vice President of Operations since
June 1999. Prior to joining us, Mr. Bacon was employed by Booz Allen & Hamilton,
a leading international management and technology consulting firm, since 1996.
From 1994 to 1996, Mr. Bacon was with Deloitte & Touche Consulting. In
consulting, he led teams that recommended or implemented the establishment of
and improvement in service operations in a variety of industries, including the
telecommunications industry.
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Mr. Bacon previously worked for three years at International Business Machines
in marketing and sales and for two years with General Electric Company where he
developed information systems.
ITEM 11. EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended December 31, 1999,
1998 and 1997, the cash compensation we paid, as well as certain other
compensation paid or accrued for those years, to each of the most highly
compensated executive officers of the Company in 1999 (the "Named Executive
Officers") in all capacities in which they served. See Employment Agreements.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------
Other
Annual Securities All Other
Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation Options(#) sation
- --------------------------- ---- ------ ----- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Shant S. Hovnanian ........ 1999 $250,000 $ -- $-- 250,000 $ --
Chairman of the Board of 1998 250,000 -- -- 5,400 --
Directors, President, Chief 1997 250,000 -- -- -- --
Executive Officer and Chief
Financial Officer
Michael Bacon ............. 1999 $ 80,208 $ 18,750 $-- 100,000 $ --
Executive Vice President 1998 -- -- -- -- --
1997 -- -- -- -- --
</TABLE>
Stock Option Grants Table
The following table sets forth information concerning individual grants of
options to purchase Common Stock made to Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise Annual Rates of Stock
Options Employees or Base Expiration Price Appreciation for
Name Granted in fiscal year Price Date Option Term
---- ------- -------------- ----- ---- ------------------------
5% 10%
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shant S. Hovnanian 250,000 54.1% $4.84 6/11/09 $ 761,000 $1,928,000
Michael Bacon .... 100,000 21.6 3.59 6/1/09 226,000 572,000
</TABLE>
For additional information regarding stock option grants to employees in
1999, see the Company's Annual Report on Form 10-K, "Notes to Consolidated
Financial Statements--Note 5, Stockholders' Equity."
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Aggregate Stock Option Exercise Table
The following table sets forth information regarding the number and value
of unexercised Options that were held by the Named Executive Officers as of
December 31, 1999. None of the Named Executive Officers exercised any options
during 1999.
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Number of Unexercised
Shares Options Value of Unexercised
Acquired Value Exercisable/ In-the-Money Options
Name on Exercise Realized Unexercisable Exercisable/Unexercisable
- -------------------------- ----------- -------- ------------- -------------------------
<S> <C> <C> <C> <C>
Shant S. Hovnanian........ 0 $0 255,400/0 $21,000/0
Michael Bacon............. 0 0 25,000/75,000 30,000/89,000
</TABLE>
For additional information regarding stock option granted in 1999, see the
Company's Annual Report on Form 10-K, "Notes to Consolidated Financial
Statements--Note 5, Stockholders' Equity".
Director Compensation
Our Directors who are not officers or employees ("Non-Employee Directors")
receive an annual fee of $5,000 and $500 per Board meeting and Board committee
meeting attended. Upon the consummation of our initial public offering in
February 1996, each Non-Employee Director was granted an option to purchase
5,000 shares of Common Stock. Upon their initial election to the Board, new
Non-Employee Directors are granted options to purchase 5,000 shares of Common
Stock that are fully vested and immediately exercisable. Upon the date of each
annual meeting, Non-Employee Directors are granted options to purchase an
additional 1,000 shares of Common Stock that are fully vested and immediately
exercisable. Our Directors of the Company who are officers or employees do not
receive any additional compensation for serving on the Board or on any Board
committee.
Employment Agreements
We have entered into an employment agreement with Mr. Shant S. Hovnanian
in October 1995. The agreement provides that Mr. Hovnanian will act as our
President and Chief Executive Officer and will devote substantially all of his
working time and efforts to our affairs. Under this agreement, Mr. Hovnanian may
devote such working time and efforts to CT&T and its affiliates as the due and
faithful performance of his obligations under the agreement permits. The
agreement has a one-year term and provides for an annual salary of $250,000,
effective February 7, 1996. Upon the expiration of the initial employment term
on February 7, 1997, the agreement provides for automatic extensions on a
month-to-month basis, unless terminated by either party upon 30 days advance
written notice. Mr. Hovnanian is continuing to serve as Chairman, President and
Chief Executive Officer pursuant to the terms of this employment agreement.
We have entered into an employment agreement effective June 1, 1999 with
Mr. Michael Bacon. The agreement provides that Mr. Bacon will act as our
Executive Vice President. The agreement, which has no term, provides for an
annual salary of $137,500, subject to periodic review, and bonuses aggregating
$37,500 and an increase in annual salary to $175,000 based on the executive's
attainment of certain performance goals. Under this agreement, Mr. Bacon was
granted 100,000 options to purchase shares of our stock at the market value as
of the effective date of the agreement. 25,000 options become exercisable each
six months after June 1, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND
DIRECTORS
The following table sets forth information as of March 31, 2000 with
respect to the beneficial ownership of our stock by (i) each person known by us
to be the beneficial owner of more than 5% of the Common Stock; (ii) each person
serving as a director or director nominee of the Company; (iii) each of our
executive officers, and (iv) all of our directors and executive officers as a
group. Unless otherwise
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indicated, all shares are owned directly and the indicated owner has sole voting
and dispositive power with respect thereto.
Common Stock
Beneficially
Owned (1)
----------------------
Beneficial Owner Number Percent
- ---------------------------------------- ----------- -------
Shant S. Hovnanian (2)(3) ........................ 3,885,554 19.4%
Vahak S. Hovnanian (4)(5) ........................ 2,866,655 14.3
Matthew J. Rinaldo (4) ........................... 31,000 .2
Catherine Petrossian (6) ......................... 16,000 .1
Michael Bacon (7) ................................ 25,000 .1
NEXTLINK Communications, Inc. (8) ............... 2,000,000 10.0
All Directors and Executive Officers
as a group (total 5 persons) .................. 6,824,209 34.1%
* Less than 1% of the outstanding Common Stock
(1) Pursuant to the regulations of the Securities and Exchange Commission
(the "Commission"), shares are deemed to be "beneficially owned" by a person if
such person directly or indirectly has or shares (i) the power to vote or
dispose of such shares, whether or not such person has any pecuniary interest in
such shares, or (ii) the right to acquire the power to vote or dispose of such
shares within 60 days, including any right to acquire through the exercise of
any option, warrant or right.
(2) Includes options to purchase 255,400 shares of Common Stock pursuant
to the Stock Incentive Plan, which are fully vested and exercisable.
(3) Includes 100,000 shares of Common Stock owned by Mr. Shant S.
Hovnanian's minor child, Vahak Willem Hovnanian, for which Mr. Hovnanian, as
custodian, has sole voting power.
(4) Includes options to purchase 25,000 shares of Common Stock pursuant to
the Stock Incentive Plan, which are fully vested and exercisable, including
options for 10,000 shares of Common Stock that will be automatically granted
upon election to the Board at the 2000 Annual Meeting.
(5) Includes 55,431 and 22,175 shares of Common Stock which Mr. Vahak S.
Hovnanian is required to sell upon the exercise of outstanding warrants at a per
share exercise price of $13.16 and $11.28, respectively. It also includes
100,000 shares of Common Stock which Mr. Hovnanian donated to The Vahak and
Paris Hasmig Foundation, Inc. which Mr. Hovnanian controls, as well as 312,655
shares of Common Stock given to his wife, Paris Hasmig Hovnanian.
(6) Includes options to purchase 16,000 shares of Common Stock pursuant to
the Stock Incentive Plan, which are fully vested and exercisable, including
options for 16,000 shares of Common Stock that will be automatically granted
upon election to the Board at the 2000 Annual Meeting.
(7) Includes options to purchase 25,000 shares of Common Stock pursuant to
Mr. Bacon's employment agreement, which are fully vested and exercisable.
(8) Pursuant to a Stock Purchase Agreement dated as of June 13, 1999, the
Company is required to use its best efforts to cause a NEXTLINK representative
to be elected to the Company's Board. To date, NEXTLINK has not exercised this
right.
Stockholders Agreements.
Bell Atlantic Corporation has the right to appoint one director (the "Bell
Atlantic Nominee") to the Board, so long as Bell Atlantic shall hold at least 1%
of the shares of Common Stock outstanding on a fully diluted basis. To date,
Bell Atlantic has not exercised this right.
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ITEM 13. Certain Relationships and Related Transactions
CT&T License Agreement. Shant S. Hovnanian, our Chairman of the Board,
President and Chief Executive Officer, Vahak S. Hovnanian, a Director of the
Company, and Bernard B. Bossard, a former Director and officer of the Company,
are 80% controlling owners of CT&T. We have operated our super high-speed
broadband wireless network under a technology license from CT&T. See Item 1.
Business -- 'Intellectual Property' and 'Risk Factors' for additional
information on the Founders' agreement in principle to contribute their 80% in
CT&T to us.
Reserved Channel Rights Agreement. The Founders are parties to an
agreement with SPEEDUSNY, pursuant to which they have the nontransferable right
to require SPEEDUSNY to make available 60 MHz of continuous spectrum per
polarization in the spectrum awarded by the Federal Communications Commission
("FCC") for the purpose of providing certain programming (other than telephony,
two-way voice or data communication services) developed by them. The Founders
have agreed to terminate this agreement as a result of the CT&T transaction.
VisionStar, Inc. Shant S. Hovnanian, our Chairman of the Board, President
and Chief Executive Officer, is the sole stockholder of VisionStar, a company
that holds a license from the FCC, granted in May 1997, to construct, launch and
operate a telecommunications satellite operating in the radio frequency range of
28 GHz, which is commonly referred to as the Ka-band, positioned over the
continental United States. If VisionStar constructs and launches a satellite and
begins providing service, we might purchase services from it, and any such
transaction might involve a conflict of interest for Mr. Hovnanian.
According to the FCC order granting the license, VisionStar proposes to
offer broadband services covering the nation and in urban areas in conjunction
with broadband service operators such as LMDS operators. These broadband
services may include high-speed Internet access, high-speed data services, video
teleconferencing distance learning and video programming.
In 1998, we received an offer from Mr. Hovnanian to convey to us all of
the outstanding shares of VisionStar, together with related patent application
rights for reimbursement of his verifiable VisionStar-related out-of-pocket
expenses. Through a special committee of the Board of Directors, the Company had
been considering Mr. Hovnanian's offer. At a meeting of the Board of Directors
in August 1998, the Board voted 2-1 against Mr. Hovnanian's offer, with Mr.
Hovnanian voting against the offer as a result of an earlier representation that
he would vote in the same manner as Mr. Bossard, who voted against the offer
based on his belief that the VisionStar satellite license was already an asset
of the Company and that VisionStar and Mr. Hovnanian held the asset in trust for
the Company. Thereafter, the Board and Mr. Hovnanian have had additional
discussions concerning the acquisition of VisionStar.
In May 1999, Mr. Bossard changed his previous position on the Company's
ownership of VisionStar and commenced a lawsuit in New York State court against
Mr. Hovnanian and VisionStar alleging that, among other things, insofar as Mr.
Hovnanian procured the Ka-band satellite license for his own company,
VisionStar, he breached the partnership agreement among Shant S. Hovnanian,
Vahak S. Hovnanian and Mr. Bossard, which Mr. Bossard claims entitles him to a
free one-third interest in VisionStar arising from the partnership agreement. In
the lawsuit, Mr. Bossard claims that VisionStar represented in its application
to the FCC that the Ka-band license would be used in conjunction with CT&T's
technology. Mr. Bossard is requesting that the court grant him one-third of the
value of VisionStar and its Ka-band license and that the court impose a
constructive trust on the shares and assets of VisionStar, including the Ka-band
license. We are not a party to this lawsuit, either as a plaintiff or a
defendant.
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International CellularVision Association ("ICVA"). SPEEDUSNY has had an
agreement with the International CellularVision Association ("ICVA") to fund,
along with all other members of ICVA, operating expenses of ICVA. SPEEDUSNY
funded $15,000, $209,000 and $264,000 for the years ended December 31, 1999,
1998 and 1997, respectively. The Company had also subleased certain office space
for ICVA on a month-to-month basis which is included in the foregoing totals.
Congressman Matthew J. Rinaldo, a director of the Company, served as President
of ICVA. ICVA was dissolved in 1999.
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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, in New York, New York
on May 1, 2000.
SPEEDUS.COM, Inc.
s/s Shant S. Hovnanian
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Shant S. Hovnanian
President, Chief Executive Officer and
Chairman of the Board of Directors
s/s Angela M. Vaccaro
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Angela M. Vaccaro
Controller and Chief Accounting Officer
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