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, 1999
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
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TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3391820
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(State or other jurisdiction (I.R.S. Employer Identification No.)
or organization)
22681-22687 Old Canal Road, Yorba Linda, CA 92887-4608
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (714) 974-7676
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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 $.01 per share.
to Section 12(g) of the Act:
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 October 25, 1999 was $2,162,889.
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: $4,512,274
The number of shares of common stock, $.01 par value, outstanding as of October
28, 1998 was 598,734.
Transitional small business disclosure format Yes |_| No |X|
<PAGE>
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 55 1987 President and Chief Executive Officer
Martin S. Fawer 65 1987 Chief Financial Officer and Treasurer
Deborah J. Schrader 52 1987 Secretary
Malcolm Baca 57 ---- Executive Vice President and Chief
Operating Officer
Jeff Hanser 41 ---- Senior Vice President
Bruce L. Blackford 51 ---- Senior Vice President
David Lerner 44 1999 Director
</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. Since July 1997, he has been the
Chief Executive Officer of PFS Trader Tools LLC. For more than the five
preceding years, Mr. Fawer was 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.
2
<PAGE>
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.
David Lerner became a director of the Company in 1999. For more than the
past five years he has been a partner at Morrison Cohen Singer & Weinstein, LLP,
general counsel to the Company.
Martin S. Fawer, Robert E. Schrader and Deborah J. Schrader are directors
of Zing. As of October 28, 1999, 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
David Lerner 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) 1999 $80,000 --- ---
Chief Executive Officer and President 1998 $80,000 --- ---
1997 $80,000 --- ---
Malcolm A. Baca 1999 $243,066 --- $1,918
Executive Vice President and 1998 $216,560 --- $1,374
Chief Operating Officer 1997 $188,713 --- $1,374
Bruce L. Blackford 1999 $197,731 $100,000 $1,680
Senior Vice President 1998 $160,423 --- ---
Jeff Hanser 1999 $197,731 $100,000 $1,382
Senior Vice President 1998 $160,423 --- ---
David Pooler 1999 $112,711 --- ---
Vice President
</TABLE>
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(1) Other compensation represents annual life insurance premiums paid on
behalf of the officer listed.
3
<PAGE>
(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 year ended June 30,
1997.
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. Options to purchase 9,600 shares were granted at an exercise price of
$5.75 per share, of which options for 3,000 shares were granted to a director.
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.
Compensation of Officers and Employees
The Company does not maintain a compensation committee of the board of
directors. All executive officers compensation in the 1999 fiscal year was the
result of the implementation of agreements negotiated in prior years.
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.
4
<PAGE>
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 expired April 30, 1999, and he continues to be employed by the
Company without a written agreement but on the same terms as applied previously.
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 non-commissioned
members of management, which contribution is matched by the Company.
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 25, 1999, 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:
5
<PAGE>
Amount of
Common Stock Percent
Name Title Beneficially Owned Of Class
---- ----- ------------------ --------
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. 72,576 12.12%
Deborah S. Schrader Secretary and Director 72,576 12.12%
Martin S. Fawer Chief Financial Officer 3,968 *
Bruce L. Blackford Senior Vice President 22,452 3.75%
Jeff Hanser Senior Vice President 22,452 3.75%
David Lerner Director -0- *
All officers and 176,831 29.4%
directors on a group
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* less than one percent
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Interest in Certain Transactions of Directors, Officers
and Principal Holders of Voting Securities
As of October 25, 1999, Mr. Schrader beneficially owned 1,152,711 shares
of the common stock of Zing Technologies, Inc., which had been the parent of the
Company until 1997, constituting approximately 47.89% of the issued and
outstanding shares of Zing. Mr. Schrader, Deborah J. Schrader (Mr. Schrader's
wife) and Mr. Fawer are directors of the Company and of Zing 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 and the
Indemnification Agreement with Zing, described below.
Zing has guaranteed repayment by the Company of its obligations under the
Company's $1.5 million credit facility with a commercial bank, which guaranty
expires on July 1, 2000. 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 paid Morrison Cohen Singer & Weinstein, LLP, of which David
Lerner, a director of the Company, is a partner, $190,387 for legal services
rendered to the Company in the 1999 fiscal year or years prior.
The Company paid Martin Fawer an aggregate of $30,000 for services
rendered to the Company on a part-time basis during the 1999 fiscal year.
6
<PAGE>
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)(1)
3.2 Form of By-laws (amended/restated)(1)
4 Common Stock Certificate(1)
10.1 Malcolm Baca Employment Contract(1)
10.2 Robert E. Schrader Employment Contract(1)
10.4 Indemnification Agreement(1)
10.6 Amended and Restated Option Plan(4)
10.7 Escrow and Distribution Agreement(1)
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.(2)
10.9 Option Agreement dated September 22, 1997 between the Company and
Jeff Hanser.(2)
10.10 Option Agreement dated September 22, 1997 between the Company and
Bruce L. Blackford.(2)
10.11 Employment Agreement dated as of September 1, 1997 between the
Company and Jeff Hanser.(2)
10.12 Employment Agreement between the Company and Bruce L. Blackford
dated as of September 1, 1997.(2)
10.13 Credit Agreement between the Company and Fleet Bank
dated August 28, 1997.(2)
10.14 Commercial Purpose Master Note from the Company in favor of
Fleet Bank dated August 28, 1997.(2)
10.15 Security Agreement between Fleet Bank and the Company
dated August 28, 1997.(2)
10.16 Standard Industrial/Commercial Multi-Tenant Lease
between Pacific Gulf Properties, Inc. and the Company
dated August 11, 1997.(3)
10.17 Letter Agreement dated April 21, 1998 with Arrow/Zeus Electronics(5)
11 Statement Re: Computation of Per Share Earnings.(6)
27 Financial data schedule(6)
99.1 Letter Agreement, dated July 7, 1995 between Transition Analysis
Component Technology, Inc. and Arrow Electronics, Inc.(1)
99.2 Form of License Agreement and Rider to Agreement, dated May 19, 1993
between Transition Analysis Component Technology, Inc. and Arrow
Electronics, Inc.(1)
(b) Reports on Form 8-K - Not Applicable
7
<PAGE>
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(1) Incorporated by reference from the Company's Registration Statement on
Form SB-1 (No. 333-20709).
(2) Previously filed as an exhibit to Registrant's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1997.
(3) Previously filed with Amendment No. 1 to the Registrant's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1997.
(4) Previously filed with the Registrant's Form 10-QSB for the fiscal quarter
ended December 31, 1997
(5) Previously filed with the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1998.
(6) Previously filed with the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1999.
8
<PAGE>
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 28th day of October,
1999.
Transition Analysis Component Technology, Inc.
By: /s/ Martin S. Fawer
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Martin S. Fawer
Chief Financial Officer and Treasurer
