United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB/A Amendment 1
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission file number 000-21725
March 31, 1998
The Translation Group, Ltd.
(Name of small business issuer in its charter)
Delaware 23-3382869
(State or other jurisdiction of (I.R.S. Employ.Ident. No.)
incorporation or organization)
332C Haddon Avenue 08108
Westmont, NJ (Zip Code)
(Address of principal executive offices)
Issuer's telephone number: (609) 858-6614
Securities registered under Section 12(b) of the Exchange Act:
Securities registered under Section 12(g) of the Exchange Act:
Common stock, $.001 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
____.
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. { }
Issuer's revenues for its most recent fiscal year: $ 6.4 million
Aggregate market value of the voting stock held by non-affiliates of
registrant (based on average of the bid and asked price on June 30, 1998) $13.7
million. See "Market of the Registrant's Common Stock and Related Stockholder
Matters."
The number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 2,278,340 ( includes 138,000 to be
issued) shares of common stock, par value $ .001 per share, as of June 30, 1998
Transitional Small Business Disclosure Format: Yes ___; No X
<PAGE>
Item 10. Executive Compensation.
EMPLOYMENT AGREEMENTS
The Company has a five year written employment contract with its Chief Executive
Officer for an annual base salary of $104,000 during each of the five years
thereof, plus annual cost of living adjustments. This agreement also (i)
contains restrictions on competing with the Company for two years following
termination of employment, (ii) provides for severance payments in the event of
termination without cause by the Company in an amount equal to the aggregate
amount of payments due under the term of the Agreement (without regard to
extensions), but in no event less than one year's compensation, (iii) provides
that the Company will purchase a life insurance policy naming as beneficiary a
person chosen by the officer in an amount equal to 2.5 times his salary and (iv)
provides for a car or a car allowance. The Company also has similar agreements
with the president of its foreign subsidiary, and also with its former
chairperson and chief operating officer, which is in the process of being
challenged. See Note 9, Notes to Consolidated Financial Statements and "Business
Litigation". The Company also has an oral agreement with the president of its
American subsidiary for a salary in the base amount of $104,000 per year.
EXECUTIVE COMPENSATION
The following table summarizes the total compensation of the principal executive
officers of the Company at rates in excess of $100,000 for the fiscal years
ending March 31, 1998 and March 31, 1997.
SUMMARY COMPENSATION TABLE
Name Annual Compensation
Principal Position Year Ended Salary Other Stock
March 31 Options(#)
Charles D. Cascio 1998 $106,775 $19,188(ii None
President & CEO 1997(i) $ 87,000 N/A 100,000
---- -------- ---------- -------
Theodora Landgren 1998 $106,775 $ 9,000(ii None
Chief Operating 1997 $104,000 N/A 100,000
-------- ---------- -------
Officer
(i) From May 10, 1996 to March 31, 1997.
(ii) consists of car allowance and related expenses ($11,975), medical
reimbursement ($3,241) and life insurance premium ($3,902)
(iii) consists of car allowance and related expenses
STOCK OPTION PLAN
In October of 1996, the Board of Directors and stockholders of the
Company adopted a Stock Option Plan (the "Option Plan") as an incentive for, and
to encourage share ownership by, the Company's officers, directors and other key
employees and/or consultants and potential management of possible future
acquired companies. The Option Plan provides that options to purchase a maximum
of 2,500,000 shares of Common stock (subject to adjustment in certain
circumstances) may be granted under the Option Plan. The Option Plan also allows
for the granting of stock appreciation rights ("SARs") in tandem with, or
independently of, stock options. Any SARs granted will not be counted against
the 2,500,000 share limit.
The purpose of the Option Plan is to make options (both "incentive
stock options" within the meaning of Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code"), and non-qualified options) and "stock
appreciation rights" (with non-qualified options only) available to certain
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officers, directors and other key employees and/or consultants of the Company in
order to give such individuals a greater personal interest in the success of the
Company and, in the case of employees, an added incentive to continue and
advance in their employment.
The Plan is currently administered by the majority vote of a committee
(the "Committee") appointed by the Board of Directors and comprised of at least
two members of the Board who, in the case of the Option Plan, are not eligible
to receive options, other than pursuant to a formula, it being intended that
such plan shall qualify under Rule 16b-3 as promulgated pursuant to the
Securities Exchange Act of 1934, as amended. The Committee designates those
persons to receive grants under the Plan and determines the number of options to
be granted and the price payable for the shares of Common stock thereunder. The
price payable for the shares of Common stock under each option is fixed by the
Committee at the time of the grant, but, for incentive stock options, must be
not less than 100% (110% if the person granted such option owns more than 10% of
the outstanding shares of Common stock) of the fair market value of Common stock
at the time the option is granted, and 85% of such price for non-qualified stock
options. The above notwithstanding, the Company intends shortly to amend the
Option Plan so it will conform to the recent revisions of Rule 16b-3.
SeeNote 8- Stock Options and Warrants, Notes to Consolidated Financial
Statements, relative to the granting of options during the year ended March 31,
1998, unexercised options held as of the end of the fiscal year, options
exercised and options forfeited during the year.
COMPENSATION OF DIRECTORS
Directors of the Company are not compensated for their services, in that
capacity. See "Executive Compensation - Employment Agreements" for descriptions
of other agreements between the Company and certain of its directors.
Section 16(a) Beneficial Ownership Reporting Compliance.
Based solely upon a review of the Company's files, it appears that during the
fiscal year ended March 31, 1998, Messrs. Wussler and Grau failed to file a Form
3; Mr. Cascio failed to timely file a Form 4 and Mr. Grau failed to file a Form
4. The Company has reviewed this matter with counsel and is in the process of
implementing procedures to prevent future occurrences.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial ownership of
the Company's Common stock, as of June 30, 1998, (a) each person known by the
Company to own beneficially more than five percent of the Company's outstanding
shares of Common stock, (b) each director and executive officer of the Company
who owns shares and (c) all directors and executive officers of the Company as a
group. Unless otherwise indicated, all shares of Common stock are owned by the
individual named as sole record and beneficial owner with exclusive power to
vote and dispose of such shares.
<PAGE>
COMMON STOCK
OWNED PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OF CLASS
Names and Address (1) _________________ __________________
- ---------------------
Theodora Landgren 485,000 19.57%
(2)(3)
Charles D. Cascio 365,000 14.73%
(2)(4)
Richard J.L. Herson 73,000 3.17%
(5)
Gary M. Schlosser 30,000 1.30%
(6)
Julius Cherny 200,000 8.07%
(6)
James W. Grau 6,660 .29%
(7)
Edouard Prisse 238,000 10.45%
(1)(8)
All Executive Officers and
Directors as a Group(9) 1,397,660 47.52%
(1) Uses the Company's address at 332C Haddon Avenue, Westmont, NJ
08108.
(2) Includes 100,000 currently exercisable warrants and 100,000 currently
vested stock options.
(3) Does not include an additional 112,500 shares of Common Stock held in a
Voting Trust under which she has sole voting control until December 2,
1998. With such shares she controls 24.11% of the Common Stock.
(4) Does not include an aggregate of 144,000 shares owned by his adult
independent children. Mr. Cascio disclaims beneficial ownership of such
shares.
(5) Includes 26,000 currently exercisable stock options.
(6) Consists of currently exercisable stock options.
(7) Consists of currently exercisable warrants.
(8) Does not include an additional 100,000 shares of Common Stock he
will receive provided Word House meets certain earnings milestones.
(9) Includes 662,660 shares of currently exercisable stock options and
warrants. Does not include 815,000 stock options granted to executive
officers and directors. See Note 8, Stock Options and Warrants, above.
Item 12. Certain Relationships and Related Transactions.
The Company has an exclusive license agreement with Dr. Julius Cherny, President
of BTS, and a Director of the Company, for the worldwide rights to an automated
machine translation system for which Dr. Cherny has filed a patent application
and an agreement to deliver an automated machine translation system and other
related software tools. The Company has entered into written employment
<PAGE>
agreements with certain of its officers. See "Business - System Acquisitions and
Developments."
Business-
As part of the Company's January 1996 transaction with BTS, as a shareholder of
BTS, Ms. Landgren received a pro rata amount of stock in the Company, amounting
to 677,500 shares of Common stock, which has since been reduced to 385,000
shares by accounting for her give-back to the Company of 292,500 shares and
which was further reduced to 285,000 shares by the sale by the Underwriters of
100,000 shares on her behalf as part of the IPO. As a prerequisite for the
Underwriter entering into this transaction with the Company, it required that
not more than 1,226,000 (post-Reverse Split) shares of Common stock be
outstanding. In order to meet this limit an aggregate of 665,000 shares of
Common stock were returned to the Company by various stockholders including Ms.
Landgren (292,500 shares), Mr. Cascio and his family members (300,000 shares)
and Mr. Herson (7,500 shares). In an attempt to compensate such people for their
loss, on May 24, 1996, the Company granted 100,000 warrants, to each of Ms.
Theodora Landgren and Mr. Charles Cascio. These warrants are identical in all
respects of the 1,840,000 Warrants that were sold by the Company.
See Note 6- Related Party Transactions, Notes to Consolidated Financial
Statements regarding transactions with Michael Cascio, Esquire, son of the
Company's CEO, loans to Theodora Landgren and Charles Cascio and payments to
directors, Richard J.L. Herson and James Grau.
<PAGE>
SIGNATURES
In accordance with 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.
THE TRANSLATION GROUP, Ltd.
By: /s/CHARLES D. CASCIO
Charles D. Cascio
President
Dated: August 7, 1998
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
Signature Title Date
/s/ CHARLES D. CASCIO President, Chief Executive August 13, 1998
CHARLES D. CASCIO Officer and Director
/s/ JULIUS CHERNY Chief Financial Officer and August 13, 1998
JULIUS CHERNY Director
THEODORA LANDGREN Director __________________
/S/ RICHARD J.L. HERSON Director and Employee August 13, 1998
RICHARD J.L. HERSON
GARY M. SCHLOSSER Director __________________
/s/ JAMES W. GRAU Director August 13, 1998
JAMES W. GRAU
ROBERT WUSSLER Director __________________
<PAGE>
THIS LETTER OF UNDERSTANDING IS MADE AS OF THIS 6th day of April, 1998,
by and between the Bureau of Translation Services, Inc., (hereinafter called
"BTS") and Felician College (hereinafter called "Felician College").
OBJECTIVE
To provide a pipeline of trained certified translators/desktop publishers ready
for employment in a rapidly expanding industry.
BACKGROUND
A compelling argument has been made by BTS to both the New Jersey Commissioner
of Labor and to the administration of Felician College that the need for
approximately five-thousand (5000) trained certified translators/desktop exists
in the burgeoning translation industry in New Jersey. In December 1997 and again
in January 1998, Mark Boyd, the Assistant Commissioner of Labor, visited
Felician College to discuss how the development of a certificate training
program in this industry would contribute toward a strategically important
agenda in the State's economic plan, i.e., providing New Jersey citizens
opportunities to participate in a growing industry by establishing an incubator
for the translation/desktop publishing industry.
ALLIANCE
The parties propose the development of a certificate training program in New
Jersey that contributes to the economic development of New Jersey through a
public/private alliance among New Jersey, BTS and Felician College wherein New
Jersey will fund the alliance, Felician College will provide facilities and
educational training, and BTS will provide consultation services as well as
actively participate in the placement and employment of the certificate training
program graduates through a translation network exclusive to BTS.
STUDENT PROFILE AND SELECTION
BTS shall use its hands-on knowledge of the translation industry to identify
eligible candidates and Felician College will pre-qualify candidates for
academic fitness. BTS and Felician College will develop in concert appropriate
recruitment materials with emphasis placed upon creating a selection process
that maximizes a candidate's chances of both academic and vocational success.
Said recruitment materials will be forwarded to the appropriate advisors at
county workforce centers where the State Department of Labor has developed an
expeditious referral plan to assist in the general recruitment of the
candidates.
Potential candidates will be directly recruited by Felician College and BTS, as
well as be referred to Felician College and BTS by the appropriate advisors at
county workforce centers. Felician College and BTS will identify eligible and
academically fit students. Candidates who qualify for admission into the
Certificate Training Program will generally be adults who possess basic computer
skills, are familiar with word processing, in excellent command of a foreign
language, and possess verbal and written idiomatic fluency with English.
Those candidates who qualify for admission into the Certificate Training
Program and also qualify under the Job Training Partnership Act (JPTA), will be
referred to the JTPA Coordinator at the Bergen County Technical School Workforce
Center for processing. Qualified applicants who are not eligible under the JTPA
will be welcome as private students.
<PAGE>
EDUCATIONAL PLAN
The Felician College Office of Continuing Education in conjunction with BTS will
develop a certificate program consisting of three core courses and one elective.
Students must complete four out of a possible five courses to earn a
certificate. The courses will be delivered initially in the face-to-face mode
and incorporate distance learning delivery components after appropriate
development.
The first certificate training program will be a pilot program wherein the
faculty will be volunteers from BTS's staff who meet the criteria for Felician
College Continuing Education Adjunct Faculty. After the pilot phase is over, two
Felician College instructors who have been trained by BTS's staff in the pilot
phase will coordinate and staff all future certificate training programs.
ACTIVITIES
(Felician) Provide facilities and instruction leading toward a certificate in
Translation Services with Continuing Education Units (CEU's); Assessment;
Pre-Placement Support;
(BTS) Consulting services to Felician College; Internship wherein BTS will
employ successful and eligible candidates for one-half the regular rate
currently paid to translators; BTS will use its bests efforts in the placement
and employment of the graduates as independent translators.
Instruction
Students will receive 120 hours (12 CEU's) of sequential instruction, on weekday
evenings and Saturday mornings, over two 10-week trimesters, for a total of 120
hours as follows:
Trimester One
Fundamentals of Translation (40 hours)
Project Managing & Editing (20 hours)
Trimester Two
Use of Translation Tools (40 hours)
Computer Concepts or Environmental Concepts (20 hours each)
Competency Assessment
Students will receive a total of five hours of assessment in the form of
midpoint (two hours) and end- point (three hours) comprehensive tests to
evaluate progress and skill level.
Pre-Placement Support/Post Placement Follow-up
Students will be monitored throughout the project by an advisor who will track
their progress, provide intervention where necessary, and act as a liaison with
BTS for internships and placement. The Advisor will also track post placement
activities for 90 days after internships.
<PAGE>
Paid Internship
During their second trimester, successful and eligible students will be assigned
material to translate under the guidance and supervision of translators from BTS
wherein the students will be paid one-half the going hourly rate for
translators.
Placement
Students who have successfully completed the instruction phase of the
Translation Project and who have successfully completed an internship with BTS,
will receive a Certificate in Translation Services from Felician College. In
addition, BTS will use its bests efforts in the placement and employment of the
graduates as independent translators through a translation network exclusive to
BTS.
FACULTY
Felician Faculty Training Two qualified instructors will be selected to
train as adjuncts for the Translation Project. The training will be in two
stages: * 12 hours of lecture and practicum conducted by BTS trainers over two
consecutive Saturdays. * And 60 hours of observation of classes in session
during the pilot phase. BTS trainers will conduct the lecture and practicum at
no cost to the Project. Faculty training will be scheduled for September 1998
unless the Department of Labor and Felician College can finalize outstanding
logistical issues before April 15, 1998 at which time the faculty-training
schedule could be advanced to May 1998.
PROJECTED SCHEDULE*
Trimester One (September-December 1998)
Fundamentals of Translation; From Theory to Practice Tue/Thur,6:30-8:30 p.m
Project Managing and Editing Wednesday 6:30-8:30 p.m.
Trimester Two (January, 1999-April 1999)
Use of Translation Tools Saturday, 8:30 a.m.-12:30 p.m.
Computer Concepts & Terminology Friday, 6:30 p.m.-8:30 p.m.
Environmental Concepts & Terminology Friday, 6:30 p.m.-8:30 p.m.
*Felician College reserves the right to cancel undersubscribed courses upon two
weeks notice to all involved parties.
**If logistical issues between Department of Labor and Felician College are
finalized before April 15, 1998, it is possible that Trimester One start-up
could be advanced to May 1998.
CURRICULUM
1. Fundamentals of Translation; From Theory to Practice
Topics: Understanding Communication, Function of Language, Linguistic Theory,
Notion of Language Localization, Machine Translation Systems, Version Control
<PAGE>
2. Project Management & Editing
Topics: Communications, Terminology, Scheduling / Project Life Cycle
Review Process, Proofreading, Desktop Publishing
Planning Documents (WBS, Gantt Charts, PERT Charts, CPM, Milestone Charts)
Management Tools (Microsoft Project, Lotus Notes)
3. Use of Translation Tools
A. Consistency and Localization
Programming languages and localization tools
(Transit, TM/2, TRADOS Workbench, DejaVu, etc.)
B. Integration of word processing and localization tools
Word Processing Packages:
(Framemaker, Word for Windows, Word Perfect,
Page Maker, SGML, Graphic User Interface, etc.)
C. Integration of Help processing packages and localization tools
D. Glossary Resources
E. Customized Style Guides
4. Computer Concept & Terminology
(Curricula to be developed)
5. Environmental Concepts & Terminology
(Curricula to be developed)
Cost for instruction: $4,000/stu.
EFFECT
It is the intent of the parties that the provisions herein are subject to final
approval by empowered Officers of Felician College and of BTS.
BTS. Felician College
By: /s/ Luis M. Garcia -Barrio Ph.D. By: /s/ Ann Lippel
Vice President Director-Continuing Education
Date: April 6, 1998 Date: April 7, 1998
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