U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended August 24, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-22265
GBI CAPITAL MANAGEMENT CORP.
-------------------------------------------------------
(Exact name of Registrant as specified in Its charter)
Delaware 65-070248
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1055 Stewart Avenue, Bethpage, New York 11714
- --------------------------------------- -------------
(Address of Principal Executive Offices) (Zip Code)
(516) 470-1000
-------------------------------------------------
(Issuer's Telephone Number, Including Area Code
The Registrant hereby amends the following items, financial statements, exhibits
or other portions of its Annual Report on Form 10-K for the fiscal year ended
August 24, 1999 as set forth in the pages attached hereto:
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
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the names, ages and positions of our
directors, each of whom became a director and was appointed to the position
indicated upon the completion of our merger with Gaines Berland on August 24,
1999. Our directors are elected annually and serve until the next annual meeting
of stockholders.
Name Age Position
- ----- --- ---------
Joseph Berland 59 Chairman of the Board, Chief Executive Officer
Richard J. Rosenstock 48 President, Chief Operating Officer
Mark Zeitchick 34 Executive Vice President
Vincent Mangone 34 Executive Vice President
Steven A. Rosen 54 __
Benjamin D. Pelton 48 __
Joseph Berland is the co-founder of Gaines Berland. He has served as
Chairman of the Board and Chief Executive Officer of Gaines Berland since
October 1983.
Richard Rosenstock joined Gaines Berland in 1986. He has served as a
director of Gaines Berland since January 1994. He has served as an executive
vice president of Gaines Berland from January 1994 until May 1998, at which time
he became president of Gaines Berland.
Mark Zeitchick joined Gaines Berland in October 1993 and since
September 1995 he has served as an executive vice president.
Vincent Mangone joined Gaines Berland as a registered representative in
October 1993 and since September 1995 he has served as executive vice president
of Gaines Berland.
Benjamin D. Pelton is an attorney and has been a partner in the law
firm of Pelton, Balland, Young, Demsky, Baskin & O'Malie, P.C. since 1978.
Steven A. Rosen is a dentist and has been the owner and senior officer
of Unique Dental Care, a corporation which operates a multi-professional dental
practice, for more than the past five years.
Other Executive Officers
Diane Chillemi, 41 years old, became our chief financial officer upon
completion of our merger with Gaines Berland on August 24, 1999. Ms. Chillemi
joined Gaines Berland in February 1997 as its director of finance and since July
1997 she has served as its chief financial officer. She served as an accounting
manager at CT Legal Information Services, a service provider to the legal
community, from September 1996 until February 1997, was a consultant to Gaines
Berland from May 1996 until September 1996, and was a financial services manager
with Darby Group Co., Inc., a manufacturer and distributor of generic drugs and
medical supplies, from July 1984 until March 1996.
Key Employees
David Thalheim, 45 years old, became our administrator and the
administrator of Gaines Berland upon completion of our merger with Gaines
Berland on August 24, 1999. Since January 1991, Mr. Thalheim has been the
president of Imperial International Group, Inc., which has rendered consulting
services to Gaines Berland since 1993. From 1977 through 1990, Mr. Thalheim
served as vice president and then president of Thalheim Expositions, Inc., an
independent trade show and exposition management company.
Michael Avella, 45 years old, joined Gaines Berland as its chief
compliance officer in March 1994 and since May 1995 has been the chief
information technology officer of Gaines Berland.
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<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially own more
than ten percent of the Company's Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. These
reporting persons are also required to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, for the fiscal year
ended August 24, 1999, no person who is a director, officer or beneficial owner
of more than ten percent of the Company's outstanding Common Stock or any other
person subject to Section 16 of the Exchange Act failed to file on a timely
basis, reports required by Section 16(a) of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the compensation for the fiscal year
ended August 24, 1999 for the Company's chief executive officer and each other
executive officer who was serving as such as of August 24, 1999 and whose
compensation exceeded $100,000 for the fiscal year ended August 24, 1999. Each
of these persons other than Mr. Frost are employees of Gaines Berland and
assumed their executive positions with us upon the consummation of our merger
with Gaines Berland on August 24, 1999. Except for the compensation paid to Mr.
Frost, the compensation indicated in the table relates to compensation paid or
accrued by Gaines Berland prior to the merger.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------- -----------------------------
Salary ($) Bonus ($) Number of All Other
Name and Principal Position Year Options(#) Compensation ($)
- ----------------------------------------------------- ----- ---------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Berland 1999 233,058 56,404 100,000 407,838 (1)
chairman of the board and chief executive officer
Richard J. Rosenstock 1999 217,672 63,761 100,000 407,838(1)
president and chief operating officer
Mark Zeitchick 1999 -0- 221,622 100,000 960,837(2)
executive vice president
Vincent Mangone 1999 -0- 221,622 100,000 958,041(3)
executive vice president
Diane Chillemi 1999 92,692 47,513 -0- -0-
chief financial officer
Richard B. Frost 1999 80,000 -0- -0- 8,000(5)
(former chairman of the board and 1998 120,000 -0- -0- 12,000(5)
chief executive officer)(4) 1997 70,000 -0- -0- 7,000(5)
</TABLE>
(Footnotes on following page)
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<PAGE>
(1) Represents override commissions payable at the rate of 1% of total retail
and institutional brokerage commissions generated by all of our offices
other than New York City and 0.8% of total commissions generated by our
New York City office.
(2) Represents $108,534 of commissions earned from customer accounts for which
Mr. Zeitchick is a designated account representative and $852,303 of
override commissions payable at the rate of to 1.75% of total retail and
institutional brokerage commissions generated by all of our offices other
than New York City and 1.25% of total commissions generated by our New
York City office, for part of the year, and at a rate of 5% of total
commissions after deduction of overrides payable to other managers for the
other part of the year.
(3) Represents $105,738 of commissions earned from customer accounts for which
Mr. Mangone is a designated account representative and $852,303 of
override commissions earned at the same rate as Mr. Zeitchick.
(4) Mr. Frost resigned as chairman of the board and chief executive officer
upon consummation of merger. The amounts indicated for Mr. Frost relate to
the periods from January 1, 1999 to August 24, 1999, and for each of the
two fiscal years ended December 31, 1998 and December 31, 1997. In
connection with our merger, we changed our fiscal year end.
(5) Represents a $1,000 per month non-accountable expense allowance.
Compensation Arrangements for Current Executive Officers
None of our executive officers at August 24, 1999 was employed pursuant to
written employment agreements effective prior to that date. In fiscal 1999, each
of Messrs. Berland and Rosenstock received salary, bonuses and commission
overrides as set forth in the Summary Compensation table above. Each of Messrs.
Zeitchick and Mangone received commissions for customer accounts for which they
were a designated account representative, commission overrides and bonuses as
set forth in the Summary Compensation table.
Messrs. Berland, Rosenstock, Zeitchick and Mangone currently are employed
by us pursuant to five-year employment agreements entered into on August 24,
1999. These agreements may be terminated by the employee upon 30 days' notice to
us. Each of these officers receive an annual base salary of $120,000, subject to
periodic increases at the discretion of our board of directors or our
Compensation Committee. The employment agreements provide that each person is
entitled to participate in our various incentive compensation plans and provided
for the grant of stock options to purchase 100,000 shares of our common stock
upon the consummation of our merger with Gaines Berland. The employment
agreements prohibit the employee from competing with us for one year after
employment terminates unless termination is by the employee for good reason or
if his employment is terminated by us without cause. The employment agreements
also provide that in the event of a change of control of our company, each
person shall be entitled to receive a severance payment equal to all
compensation due him under the remaining term of his employment agreement in a
lump sum payment.
During fiscal 1999, Diane Chillemi received a salary at the rate of
$100,000 per year and was awarded a bonus of $47,513. Effective September 1,
1999 her salary was increased to $125,000 and effective January 1, 2000, it will
be increased to $135,000. On December 13, 1999, Ms. Chillemi was granted
ten-year options to purchase 15,000 shares of common stock at an exercise price
of $3.00 per share, vesting in three equal installments on each of December 13,
2000, 2001 and 2002.
Compensation Arrangements for Former Chief Executive Officer
Richard B. Frost served as our chairman of the board and chief executive
officer until our merger with Gaines Berland on August 24, 1999. Mr. Frost was
employed under a three-year employment agreement, effective as of September 30,
1996, which provided for an annual base salary of $120,000 and provided for a
$1,000 monthly non-expense allowance. This employment agreement was terminated
upon consummation of the merger.
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<PAGE>
Compensation Arrangements for Certain Other Employees
SEC regulations require us to disclose material transactions between us
and our stockholders who beneficially own more than 5% of our outstanding common
stock. Discussed below are compensation arrangements we had or have with two
employees who were or are greater-than-5% stockholders.
David Thalheim, our administrator, is a key employee and he beneficially
owns 8.2% of our outstanding common stock. Mr. Thalheim is employed by us under
a five-year employment agreement entered into on August 24, 1999. This agreement
is substantively identical to the employment agreements which we have with
Messrs. Berland, Rosenstock, Zeitchick and Mangone and which are described
above. In accordance with his agreement, on August 24, 1999 he was granted
ten-year options to purchase 100,000 shares of common stock at an exercise price
of 4.0625, vesting in four annual installments of 24,615 shares on each of
August 24, 1999, 2000, 2001 and 2002, and in a fifth instalment of 1,540 shares
on August 24, 2003.
Mark J. Hanna, our president prior to our merger with Gaines Berland,
beneficially owned 13.6% of our outstanding common stock prior to our merger
(1.9% immediately after the merger). Mr. Hanna was formerly employed by us under
a three-year employment agreement identical to our former agreement with Mr.
Frost described above. Mr. Hanna's agreement was terminated upon consummation of
the merger. During the period January 1, 1999 through August 24, 1999, Mr. Hanna
was paid a salary of $80,000 and received $8,000 as a non-accountable expense
allowance.
Compensation Arrangements for Directors
Our directors receive no cash compensation for serving as directors,
although they are reimbursed for their costs incurred in attending meetings of
the board of directors or of the committees on which they serve. On December 13,
1999, each of Steven Rosen and Benjamin Pelton, our two non-employee directors,
were granted ten-year options to purchase 20,000 shares of common stock at an
exercise price of $3.00 per share, which options vested immediately.
Option Grants
The following table represents the stock options granted in the fiscal
year ended August 24, 1999 to the Company's executive officers identified in the
Summary Compensation table above.
<TABLE>
<CAPTION>
Options Granted in the Last Fiscal Year
---------------------------------------
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of
Securities Options Stock Price
Underlying Granted to Exercise Expiration Appreciation for
Name of Executive Options Employees Price of Date Option Term(1) ($)
Granted (#) in Fiscal Options 5% 10%
Year (%) ($)
- ----------------------------- ------------ --------- -------- ----------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Berland 100,000(2) 20 4.46875 8/23/04 71,125 207,125
Richard J. Rosenstock 100,000(2) 20 4.46875 8/23/04 71,125 207,125
Mark Zeitchick 100,000(3) 20 4.0625 8/23/09 255,750 647,750
Vincent Mangone 100,000(3) 20 4.0625 8/23/09 255,750 647,750
</TABLE>
(1) The above information concerning five per cent and ten per cent assumed
annual rates of compounded stock price appreciation is mandated by the
Securities and Exchange Commission. There is no assurance provided to any
executive officer or to any other optionee that there will be appreciation
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<PAGE>
of the stock price over the option term or that the optionee will realize
any gains with respect to the options.
(2) These options become exercisable as to 22,377 shares on each of August 24,
1999, 2000, 2001 and 2002 and as to 10,492 shares on August 24, 2003.
(3) These options become exercisable as to 24,615 shares on each of August 24,
1999, 2000, 2001 and 2002 and as to 1,540 shares on August 24, 2003.
The following table sets forth the fiscal year end option values of
outstanding options at August 24,1999 and the dollar value of unexercised,
in-the-money options for the Company's executive officers identified in the
Summary Compensation table above.
<TABLE>
<CAPTION>
AGGREGATED FISCAL YEAR END OPTION VALUES
-----------------------------------------
Number of Securities Underlying Dollar Value of Unexercised in-the-Money
Unexercised Options at Fiscal Year End: Options at Fiscal Year End
----------------------------------------- -------------------------------------------
Name Exercisable (#) Unexercisable (#) Exercisable ($) Unexercisable ($)
- ----------------- -------------- ----------------- --------------- ------------------
<S> <C> <C> <C> <C>
Joseph Berland 22,377 77,623 -0- -0-
Richard J. Rosenstock 22,377 77,623 -0- -0-
Mark Zeitchick 24,615 75,385 -0- -0-
Vincent Mangone 24,615 75,385 -0- -0-
</TABLE>
Annual Incentive Bonus Plan
On August 23, 1999 our stockholders adopted the Annual Incentive Bonus
Plan, which is a performance-based compensation plan for our executive officers
and other key employees. The plan is administered by our Compensation Committee
and is intended to comply with the regulations issued under Section 162(m) of
the Internal Revenue Code. Under this plan, bonuses are paid to participants
selected by our Compensation Committee if performance targets established by our
Compensation Committee are met within the specified performance periods. For the
fiscal year ending September 30, 2000, our Compensation Committee has determined
that participating employees will participate in a bonus pool equal to 25% of
our net income before taxes and before the accrual of compensation payable under
this plan provided that the Company achieves a return on equity before taxes at
the end of the fiscal year exceeding 10%. The maximum award payable annually to
any participant under this plan is limited to 40% of the bonus pool created and
is subject to the maximum limit of $5,000,000 for any person. Our Compensation
Committee has determined that the participants in this plan for fiscal 2000
shall be Messrs. Berland, Rosenstock, Zeitchick, Mangone and Thalheim.
Special Performance Incentive Plan
On August 23, 1999 our stockholders adopted our Special Performance
Incentive Plan. The Special Performance Incentive Plan is similar in nature to
the Annual Incentive Bonus Plan in seeking to provide performance-based
compensation within the meaning of Section 162(m) of the Internal Revenue Code.
Executive officers and key employees selected by our Compensation Committee may
receive bonuses upon reaching performance targets established by our
Compensation Committee within specific performance periods, which performance
targets may be based upon one or more selected business criteria. For each of
the five fiscal years ending September 30, 2000 through 2004, the Compensation
Committee has determined that participants are entitled to receive an incentive
award that is based on the percentage of the retail and institutional brokerage
commissions generated by our company. The plan performance requirements
established by our Compensation Committee require that the minimum average
monthly retail and institutional brokerage commissions for each fiscal year
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<PAGE>
exceed at least 70% of the average monthly retail and institutional brokerage
commissions for the prior twelve month period in order for any annual award to
be paid. If this 70% minimum threshold is not achieved, awards are still payable
under this plan if the average monthly retail and institutional brokerage
commissions for that year exceed at least 50% of the average monthly and
institutional retail brokerage commissions for any year in the prior three
years. Awards are payable monthly, based on the average monthly retail and
institutional commissions to such date. However, final awards reflecting the
performance for the last month of the fiscal year and the fiscal year overall
are not paid until all financial results for the year are reconciled and the
Compensation Committee has approved and certified that the established
performance requirements have been achieved. The maximum award payable for any
fiscal year to any participant is $5,000,000. At the present time, our
Compensation Committee has determined that Messrs. Berland, Rosenstock,
Zeitchick, Mangone and Thalheim shall participate in this plan and the incentive
awards that they receive as a percentage of retail and institutional brokerage
commissions are as follows:
<TABLE>
Participant All Offices Except New York City New York City Office
- ------------------ ---------------------------------- ----------------------
<S> <C> <C>
Joseph Berland 1.00% 0.80%
Richard J. Rosenstock 1.00% 0.80%
Mark Zeitchick 1.75% 1.25%
Vincent Mangone 1.75% 1.25%
David Thalheim 0.80% 0.50%
</TABLE>
1999 Performance Equity Plan
On August 23, 1999, our stockholders adopted the 1999 Performance Equity
Plan covering 3,000,000 shares of our common stock, under which officers,
directors, key employees and consultants of the Company are eligible to receive
incentive or non-qualified stock options, stock appreciation rights, restricted
stock awards, deferred stock, stock reload options and other stock based awards.
The Performance Equity Plan will terminate at such time no further awards may be
granted and awards granted are no longer outstanding, provided that incentive
options may only be granted until May 26, 2009. The plan is intended to comply
with the regulations issued under Section 162(m) of the Internal Revenue Code
and is administered by our Compensation Committee. To the extent permitted under
the provisions of the plan, the Compensation Committee has authority to
determine the selection of participants, allotment of shares, price, and other
conditions of awards.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of December 13, 1999,
with respect to the Common Stock ownership of (i) those persons or groups known
to beneficially own more than 5% of our voting securities, (ii) each of our
directors, (iii) each current executive officer whose compensation exceeded
$100,000 in the fiscal year ended August 24, 1999, and (iv) all of our current
directors and executive officers as a group. Beneficial ownership is determined
in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. The
information concerning the stockholders is based upon information furnished to
us by such stockholders or otherwise known to us. Except as otherwise indicated,
all of the shares of Common Stock are owned of record and beneficially and the
persons identified have sole voting and investment power with respect thereto.
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<PAGE>
<TABLE>
Amount and Nature of Percent of Class
Name of Beneficial Owner Beneficial Ownership of Voting Securities
- ------------------------ -------------------- --------------------
<S> <C> <C> <C>
Joseph Berland(1) 3,967,437(2) 21.1%
Richard J. Rosenstock(1) 3,967,437(2) 21.1%
Mark Zeitchick(1) 1,536,888(3) 8.2%
Vincent Mangone(1) 1,536,888(3) 8.2%
David Thalheim(1) 1,536,888(3) 8.2%
Diane Chillemi 21,917(4) *
Steven A. Rosen 20,000(5) *
Benjamin D. Pelton 20,000(5) *
All directors and executive officers 11,070,567(6) 58.4%
as a group (7 persons)
- --------------------
</TABLE>
* Less than 1 percent
(1) The business address for each of Messrs. Berland, Rosenstock, Zeitchick,
Mangone and Thalheim is 1055 Stewart
Avenue, Bethpage, New York 11714.
(2) Includes 22,377 shares of common stock issuable upon exercise of currently
exercisable options. Does not include 77,623 shares of common stock
issuable upon exercise of options which are not currently exercisable and
will not become exercisable within the next 60 days.
(3) Includes 24,615 shares of common stock issuable upon exercise of currently
exercisable options. Does not include 75,385 shares of common stock
issuable upon exercise of options which are not currently exercisable and
will not become exercisable within the next 60 days.
(4) Does not include 15,000 shares of common stock issuable upon exercise of
options which are not currently exercisable and will not become
exercisable within the next 60 days.
(5) Includes 20,000 shares of common stock issuable upon exercise of currently
exercisable options.
(6) Includes 133,984 shares of common stock issuable upon exercise of
currently exercisable options. See notes (2) through (5).
In connection with our merger with Gaines Berland, each of Messrs.
Berland, Rosenstock, Zeitchick, Mangone and Thalheim entered into lock-up
agreements which prohibit the sale or transfer of the shares of common stock
they received in the merger until August 23, 2001 without the prior consent of
our Board of Directors. In addition, Ms. Chillemi has entered into a similar
lock-up agreement except that the restricted period may be extended if she then
has any liability to Gaines Berland resulting from her actions.
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<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Several members of the immediate families of some of our executive
officers and directors are employed as registered representatives of Gaines
Berland. As such they receive a percentage of commissions generated from
customer accounts for which they are designated account representatives and are
eligible to receive bonuses in the discretion of management. Each is expected to
receive in excess of $60,000 in compensation in fiscal 2000. These registered
representatives are as follows:
<TABLE>
Registered Representative Relationship Officer and Director
------------------------- ------------ --------------------
<S> <C> <C> <C>
Richard Berland Brother Joseph Berland
Oscar Sonkin Father-in-law Richard Rosenstock
Richard Sonkin Brother-in-law Richard Rosenstock
Steven Zeitchick Brother Mark Zeitchick
</TABLE>
In January and February 1999, Gaines Berland loaned $129,308 to Richard
Berland. At August 24, 1999, the amount outstanding was $70,275. This loan began
accruing interest on August 25, 1999 at the rate of 6% per annum and is payable
in equal monthly installments through December 31, 2001.
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<PAGE>
SIGNATURES
In accordance with Section 3 or 15(d) of the Securities Exchange Act of
1934, the registrant cause this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: December 22, 1999 GBI CAPITAL MANAGEMENT CORP.
By:/s/ Joseph Berland
---------------------------------
Joseph Berland, Chairman and Chief
Executive Officer
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