UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
Commission File Number 0-22709
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
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(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3391820
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(State or other jurisdiction or organization) (I.R.S. Employer Identification No.)
22681-22687 Old Canal Road, Yorba Linda, CA 92687
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(Address of principal executive officers) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (714) 974-7676
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Securities registered pursuant Common Stock, par value
to Section 12(g) of the Act: $.01 per share.
Check 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 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:___
The aggregate market value of the voting common stock held by non-affiliates of
the registrant, computed by reference to the average of bid and asked price of
the stock as of September 24, 1998 was $1,869,369.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $3,483,000
The number of shares of common stock, $.01 par value, outstanding as of
September 28, 1998 was 598,734.
Transitional small business disclosure format Yes ____ No |X|
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ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all Directors and Executive Officers of the
Company, their positions with the Company, their term of office and their
business background are set forth below.
<TABLE>
<CAPTION>
Director of
Name Age TACTech Since Position
- ---- --- -------------- --------
<S> <C> <C> <C>
Robert E. Schrader 53 1987 President and Chief Executive Officer
Martin S. Fawer 63 1987 Chief Financial Officer and Treasurer
Deborah J. Schrader 50 1987 Secretary
Malcolm Baca 55 ---- Executive Vice President and Chief
Operating Officer
Jeff Hanser 39 ---- Senior Vice President
Bruce L. Blackford 49 ---- Senior Vice President
</TABLE>
Robert E. Schrader, has been President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its incorporation in
1987. He is the husband of Deborah J. Schrader. He is the founder of Zing
Technologies, Inc. ("Zing"), and has been its President, Chief Executive Officer
and Chairman of the Board of Directors since its incorporation in 1969. He
expects to devote approximately 25% of his business time to the affairs and
operations of the Company.
Martin S. Fawer, has been the Chief Financial Officer and Treasurer of the
Company since March 1995; and from June 1, 1987 to March 1995 he was Vice
President and Assistant Treasurer of the Company. He is also the Chief Financial
Officer, Treasurer and a director of Zing. For more than five years, Mr. Fawer
has been a principal of The Fawer Group, P.C., and its predecessors, certified
public accountants. He expects to devote approximately 10% of his business time
to the affairs and operations of the Company.
Deborah J. Schrader, has been Secretary of the Company since its
incorporation in 1987. She has also been the Secretary and a director of Zing
since its incorporation in 1969. She is the wife of Robert E. Schrader.
Malcolm Baca, has been Vice President and Treasurer from 1987 to March
1995; and Executive Vice President and Chief Operating Officer since March 1995.
Jeff Hanser, has been Senior Vice President of the Company since September
1997. He has also served as Executive Vice President and Chief Financial Officer
of Research Analysis Corporation ("RAC"), a recently acquired wholly owned
subsidiary of the Company, from 1992 to 1994 and has been its President and
Chief Executive Officer since 1994 up to the time of the RAC acquisition by the
Company. Mr. Hanser has over 15 years of experience in the design and
implementation of major Configuration and Systems Management for the United
States Navy and Air Force.
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Bruce Blackford, has been Senior Vice President of the Company since
September 1997. He has also served as President and Chief Executive Officer of
RAC from 1992 to 1994, and has been its Executive Vice President and Chief
Financial Officer since 1994 up to the time of the RAC acquisition by the
Company. Mr. Blackford has been a director of RAC since its inception in 1983.
Martin S. Fawer, Robert E. Schrader and Deborah J. Schrader are directors
of Zing. As of October 19, 1998, except for the foregoing, no director of the
Company is a director of any other company with a class of securities registered
pursuant to Section 12 of the Exchange Act, or any company registered as an
Investment Company under the Investment Company Act of 1940. Other than Robert
E. Schrader and Deborah J. Schrader, who are married to each other, there is no
family relationship among any members of the Board of Directors or the officers
of the Company.
Section 16 Compliance
Malcolm A. Baca did not timely file his initial Form 3.
ITEM 10 - EXECUTIVE COMPENSATION
The following table shows, for the three most recent fiscal years ended
June 30, the cash compensation paid or accrued for those years to the Chief
Executive Officer and to the one executive officer (other than the Chief
Executive Officer) whose aggregate annual salary and bonus paid in compensation
for services rendered in all the capacities in which he served exceeded $100,000
for the Company's last fiscal year:
<TABLE>
<CAPTION>
All Other
Name and Principal Position Fiscal Year Salary Bonus Compensation(1)
- --------------------------- ----------- ------ ----- ---------------
<S> <C> <C> <C> <C>
Robert E. Schrader (2) 1998 $80,000 -- --
Chief Executive Officer and President 1997 $80,000 -- --
1996 --- -- --
Malcolm A. Baca 1998 $216,560 -- $1,374
Executive Vice President and 1997 $188,713 -- $1,374
Chief Operating Officer 1996 $178,269 -- $1,374
Bruce L. Blackford 1998 $160,423 -- --
Senior Vice President
Jeff Hanser 1998 $160,423 -- --
Senior Vice President
</TABLE>
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(1) Other compensation represents annual life insurance premiums paid on behalf
of the officer listed.
(2) Although no compensation was directly paid by the Company to Mr. Schrader
during the fiscal year ending June 30, 1996, (1) effective July 1, 1996 Robert
E. Schrader became entitled to and received an annual salary of $80,000 pursuant
to an employment agreement discussed below under "Employment Contracts,
Termination of Employment and Change-In-Control Arrangements" and (2) prior to
June 30, 1997, Mr. Schrader was compensated by Zing which was receiving
management fees from the Company for services rendered by Mr. Schrader to the
Company. Management fees in the amount of $75,000 were paid by the Company to
Zing in the fiscal years ended June 30, 1996 and June 30, 1997.
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Grant of Options
An aggregate of 26,200 options have been granted at an exercise price
of $4.00 per share pursuant to the Company's 1997 Option Plan, as amended
November 3, 1997. None of the options were granted to Named Executive Officers
or to directors. Additionally, options to purchase 44,904 shares of Company
Common Stock in the aggregate were issued in the Company acquisition of RAC to
Messrs. Hanser and Blackford.
Compensation of Directors
The Company does not pay directors for their services as directors. The
Company may, in the future, pay directors who are not officers or employees for
their services as directors plus a fee for committee meetings attended.
Employment Contracts, Termination of Employment
and Change-in-Control Arrangements
Mr. Robert E. Schrader has an employment agreement with the Company,
the term of which expires on June 30, 2000. Mr. Schrader's agreement entitles
him to a salary of $80,000 per annum. Mr. Schrader has no contractual
entitlement to any bonus. Pursuant to the employment agreement, Mr. Schrader has
agreed to serve as the Company's Chief Executive Officer, President and Chairman
of the Board of Directors on a part-time basis. In the event that a Change in
Control (as defined in the employment agreement) of the Company occurs, Mr.
Schrader may terminate his employment. In such event, Mr. Schrader is required
to extend the duration of the non-competition agreements set forth in the
employment agreement to the third anniversary of such Change of Control. In
consideration for the extension of his agreement not to compete with the Company
after such Change of Control which results in the termination of the term of his
employment agreement, Mr. Schrader will be entitled to receive a lump sum
payment equal to the amount of the remaining base salary he would be entitled to
under his employment agreement had it not been so terminated, plus $250,000.
Pursuant to such employment agreement, Mr. Schrader is required only to provide
part time services to the Company, but not less than 10 business hours per week.
Mr. Malcolm A. Baca has an employment agreement with the Company under
which he will devote full-time efforts on behalf of the Company. The term of Mr.
Baca's employment expires April 30, 1999. Mr. Baca's agreement entitles him to a
base salary of $120,000 per annum, plus five percent (5%) of the Company's
collected revenues, except that on revenues attributable to another commissioned
member of the Company's management, Mr. Baca's commission is two and one half
percent (2 1/2%). In all events, Mr. Baca's compensation cannot exceed $350,000
per annum subject to increase based upon the National Consumer Price Index. All
commissions to Mr. Baca are subject to his required contribution of one-half of
one percent (1/2%) of the Company's collected revenues to a bonus pool fund for
the benefit of noncommissioned members of management, which contribution is
matched by the Company. In the event Mr. Baca is terminated without good cause,
the Company is obligated to continue to pay compensation to Mr. Baca through
April 30, 1999. Mr. Baca's agreement also prohibits Mr. Baca from selling any of
his shares of Common Stock during the one year period after the June 30,1997.
After the expiration of such one year period, Mr. Baca is not permitted to sell
in excess of 25% of his shares of Company Stock until the expiration of two
years after June 30, 1997.
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The Company has engaged Mr. Martin S. Fawer on a part-time basis to
perform supervisory financial and strategic analysis services. See "Certain
Relationships and Related Transactions" below.
Each of Mr. Blackford and Mr. Hanser have entered into an employment
agreement on identical terms and conditions with the Company for a term of three
years. Under their respective employment agreements, each has agreed to serve as
a Senior Vice President of the Company. Pursuant to the agreements, each of Mr.
Blackford and Mr. Hanser is entitled to a salary of $193,000 per annum, and is
eligible to receive an incentive bonus of up to$100,000 annually. The annual
bonus is based on the Company achieving certain targeted sales goals.
Each of Messrs. Blackford's and Hanser's employment agreement provides
that if his employment is terminated without cause (or, as a result of death or
disability), he will be entitled to receive base salary up to the date of such
termination (and, subject to the Company's option, salary for up to one year
following termination without cause in exchange for which the term of the
non-competition agreement in his employment agreement shall continue for such
one year period), and a pro rata portion of his annual bonus (if any) based on
the number of days of employment in the then current contract year.
Additionally, the vesting of options granted to each of Messrs. Blackford and
Hanser by the Company in connection with the RAC transaction will accelerate
under certain circumstances including, without limitation, if his employment is
terminated without cause or, if his employment is terminated as a result of
death or disability, and if a change of control (as described in such option
agreements) occurs.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of October 19, 1998, information
concerning beneficial ownership of voting securities of the Company by any
executive officers of the Company and each person who is known by management to
own beneficially more than 5% of any class of such securities:
<TABLE>
<CAPTION>
Amount of
Common Stock Percent
Name Title Beneficially Owned Of Class
---- ----- ------------------ --------
<S> <C> <C>
Stacy J. Schrader Shareholder 109,169 18.23%
Robert M. Schrader Shareholder 109,168 18.23%
Malcolm Baca Executive Vice 55,383 9.25%
President
Robert E. Schrader President and C.E.O. 12,094 2.00%
Martin S. Fawer Chief Financial Officer 5,968 1.00%
Bruce L. Blackford Senior Vice President 22,452 3.75%
Jeff Hanser Senior Vice President 22,452 3.75%
</TABLE>
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ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Interest in Certain Transactions of Directors, Officers
and Principal Holders of Voting Securities
As of October 19, 1998, Mr. Schrader owned 1,152,711 shares of Zing
Common Stock constituting approximately 43.34% of the issued and outstanding
shares of Zing Common Stock (assuming the issuance of shares issuable (and not
yet issued) as of June 30, 1997 in connection with the purchase of the minority
ownership in Zing's Omnirel subsidiary); and Mr. Martin Fawer owned 14,856
shares of Zing Common Stock, constituting less than one percent (1%) of the
issued and outstanding shares of Zing Stock. Mr. Schrader, Deborah J. Schrader
(Mr. Schrader's wife) and Mr. Fawer are directors of the Company and thus have
an indirect interest in the various agreements and arrangements between Zing and
the Company including the Zing guaranty of the Company's credit facility, the
Indemnification Agreement with Zing and the management services to be provided
to the Company by certain employees of Zing.
Zing guaranteed repayment by the Company of its obligations under the
Company's $1.5 million credit facility with a commercial bank. Pursuant to the
Indemnification Agreement, among other things, the Company and Zing have entered
into certain agreements with respect to the indemnification of certain
liabilities arising from the operation of their respective businesses. The
Company will engage certain Zing employees (with the permission of Zing) who
will provide management services to the Company. Management of the Company
anticipates that the aggregate cost of such services will not exceed $100,000
per year.
On December 17, 1996, Zing advanced $100,000 to Mr. Baca for personal
uses unrelated to the Company in exchange for Mr. Baca's secured promissory
note. The promissory note, which matured on June 29, 1997, was secured by a
first priority security interest in all of his shares of Company Stock. $46,000
was repaid on such note in 1997, $43,000 in fiscal year 1998, and the remaining
principal balance of $11,000 was paid on July 2, 1998.
ITEM 13 - EXHIBITS LIST AND REPORTS ON FORM 8-K
The following exhibits are filed with this report, and this list
constitutes the exhibit index.
(a) Exhibits List.
Exhibit No. Description
- ----------- -----------
3.1 Form of Certificate of Incorporation (amended/restated - Delaware)*
3.2 Form of By-laws (amended/restated)*
4 Common Stock Certificate*
10.1 Malcolm Baca Employment Contract*
10.2 Robert E. Schrader Employment Contract*
10.4 Indemnification Agreement*
10.6 Amended and Restated Option Plan****
10.7 Escrow and Distribution Agreement*
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10.8 Merger Agreement and Plan of Reorganization among the Company,
Research Analysis Corporation, Research Technology Analysis Corp.,
Bruce L. Blackford and Jeff Hanser, dated as of September 1, 1997.**
10.9 Option Agreement dated September 22, 1997 between the Company and
Jeff Hanser.**
10.10 Option Agreement dated September 22, 1997 between the Company and
Bruce L. Blackford.**
10.11 Employment Agreement dated as of September 1, 1997 between the
Company and Jeff Hanser.**
10.12 Employment Agreement between the Company and Bruce L. Blackford
dated as of September 1, 1997.**
10.13 Credit Agreement between the Company and Fleet Bank
dated August 28, 1997.**
10.14 Commercial Purpose Master Note from the Company in favor of
Fleet Bank dated August 28, 1997.**
10.15 Security Agreement between Fleet Bank and the Company
dated August 28, 1997.**
10.16 Standard Industrial/Commercial Multi-Tenant Lease
between Pacific Gulf Properties, Inc. and the Company
dated August 11, 1997.***
10.17 Letter Agreement dated April 21, 1998 with Arrow/Zeus
Electronics*****
11 Statement Re: Computation of Per Share Earnings. (See Note 1 to
Financial Statements on Page 20 of this Report).*****
27 Financial data schedule*****
99.1 Letter Agreement, dated July 7, 1995 between Transition Analysis
Component Technology, Inc. and Arrow Electronics, Inc.*
99.2 Form of License Agreement and Rider to Agreement, dated May 19, 1993
between Transition Analysis Component Technology, Inc. and Arrow
Electronics, Inc.*
(b) Reports on Form 8-K - Not Applicable
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* Incorporated by reference from the Company's Registration Statement on
Form SB-1 (No. 333-20709).
** Previously filed as an exhibit to Registrant's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1997.
*** Previously filed with Amendment No. 1 to the Registrant's Annual Report
on Form 10-KSB for the fiscal year ended June 30, 1997.
**** Previously filed with the Registrant's Form 10-QSB for the fiscal
quarter ended December 31, 1997
***** Previously filed with the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1998.
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SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on the 23rd day of
October, 1998.
Transition Analysis Component Technology, Inc.
By: Martin S. Fawer
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Martin S. Fawer
Chief Financial Officer and Treasurer
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