SECURITES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended April 30, 1998 Commission File No. 0-8512
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MONARCH AVALON, INC.
(Name of small business issuer in its charter)
DELAWARE 410-254-9200 52-1073628
(State or other jurisdiction (Issuer's telephone (I.R.S. Employer
of incorporation or number, including Identification No.)
organization) area code)
4517 Harford Road 21214
Baltimore, Maryland (Zip code)
(Address of principal executive offices)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.25 par value
(Title of each class)
Check whether the issuer (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
twelve 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 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 the 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. [ X ]
The issuer's revenues for the fiscal year ended April 30, 1998 are
$8,231,000.
As of July 15, 1998, the aggregate market value of the Issuer's common
stock held by non-affiliates was $1,484,966.
As of July 15, 1998, the number of shares outstanding of the Issuer's
common stock was 1,619,820.
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Transitional small business disclosure format (check one):
Yes [ ] No [ X ]
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PART I
Information required in Part I, Items 1-4, is incorporated by reference to
the Company's Annual Report on Form 10-KSB as filed with the Securities
and Exchange Commission on July 29, 1998.
<PAGE>
PART II
Information required in Part II, Items 5-8, is incorporated by reference to
the Company's Annual Report on Form 10-KSB as filed with the Securities and
Exchange Commission o0n July 29, 1998.
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
DIRECTORS AND OFFICERS
The address of each of the Directors and officers of the Company is c/o
Monarch Avalon, Inc., 4517 Harford Road, Baltimore, MD 21214.
Name, Age, Director Principal Occupation(s) and
Since Business Experience During
Past 5 Years
A. Eric Dott, Age 1970 Chairman of the Board of
71 the Company since 1990.
Mr. Dott is the father of
Jackson Y. Dott, President
of the Company.
Jackson Y. Dott, 1987 President, Treasurer and
Age 40 Chief Executive Officer at
the Company since 1990.
Mr. Dott is the son of A.
Eric Dott, Chairman of the
Company.
David F. Gonano, 1996 Certified Public
Age 51 Accountant, Tax Partner of
Wolpoff and Company, LLP
since 1992, Personal
Financial Specialist.
Helen Delich 1995 President of Helen Bentley
Bentley Age 74 and Associates, Inc. since
1995; Consultant for The
Port of Baltimore since
1995; Member of the U.S.
House of Representatives
from 1985-1995.
Steven M. Szekely, N/A Executive Vice President of
Age 74 the Company since 1979 and
Secretary of the Company
since 1990.
Marshall Chadwell, N/A Chief Financial Officer of
Age 58 the Company since 1996;
Controller of the Company
since 1995. Served as
Business Manager of Wesley,
Inc. from 1991 to 1995.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Act") requires that the Company's Directors and executive officers, and persons
who own more than 10% of the Company's outstanding Common Stock, file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership and
reports of change in ownership of the Common Stock of the Company. The same
persons are also required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, all required filing requirements under Section
16(a) of the Securities Exchange Act of 1934, were filed in fiscal year 1998.
<PAGE>
Item 10. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or allocated to the
chief executive officer for services rendered to the Company in all capacities
during the years ended April 30, 1996, 1997 and 1998. Compensation paid to each
other executive officer of the Company did not exceed $100,000 in any such year.
Summary Compensation Table
Annual Long-Term
Compensation Compensation
Awards
Securities
Name and Year Salary Underlying
Principal ($) Options
Position
Jackson Y. Dott 1998 59,800 40,000(1)
Chief Executive 1997 43,100 40,000(2)
Officer 1996 43,100 40,000(3)
______________________
(1) This option will expire on September 30, 1998.
(2) This option expired without exercise on September 30, 1997.
(3) This option expired without exercise on September 30, 1996.
STOCK OPTION EXERCISES AND HOLDINGS
The following table includes the number of shares covered by all remaining
unexercised stock options held by the Company's Chief Executive Officer as of
April 30, 1998, segregated on both an exercisable and unexercisable basis. Also
reported is the value for "in-the-money" options which represents the difference
between the exercise price of any such remaining unexercised options and the
year-end market price of the Common Stock.
Aggregated Option Exercises In Fiscal Year Ended April 30, 1998
and Fiscal Year-End Option Values
Number of Unexercised Value of Unexercised In-the-
Options at FY-End Money Options at FY-End (2)
Name Shares
Acquired
on Value
Exercise Realized
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
Jackson Y.
Dott 0 0 40,000 0 $10,000 $0
(1) This option will expire on September 30, 1998.
(2) Based on the closing price of the Common Stock on the Nasdaq National
Market as of April 30, 1998.
Option Grants In Fiscal Year Ended April 30, 1998
(Individual Grants)
% of
Number of Total Options
Securities Granted to Exercise Market Price
Underlying Employees in Price on Date of Experiation
Options Fiscal Year (S/Share) Grant Date
Name Granted
Jackson Y. Dott 40,000 33.3% $2.00 1 7/8 9/30/98
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of August 28, 1998 by (i) each person that is
known by the Company to beneficially own or exercise voting or dispositive
control over 5% or more of the outstanding shares of Common Stock; (ii) each
Director; and (iii) all Directors as a group. Except as otherwise indicated in
the footnotes to the table, the persons named below have sole voting and
disposition power with respect to the shares beneficially owned by such persons.
In general, a person is deemed to be a "beneficial owner" of a security if that
person has or shares the power to vote or direct the voting of such security, or
the power to dispose or direct the disposition of such security. A person is
also deemed to be a beneficial owner of any securities of which the person has
the right to acquire beneficial ownership within 60 days.
Name and Address of Amount and Nature of Percen
Beneficial Owner Beneficial Ownership t of
Class
(1)
HIAC XII Corp. 712,019 (2)(3) 41.4%
1027 Newport Avenue,
Pawtucket, RI 02862
Hasbro, Inc. 721,019 (3)(4) 41.4%
1027 Newport Avenue
Pawtucket, RI 02862
Jackson Y. Dott 467,529 (5) 28.2%
Monarch Avalon, Inc.
4517 Harford Road
Baltimore, Md 21214
A. Eric Dott 253,490 (6) 14.9%
Monarch Avalon, Inc.
4517 Harford Road
Baltimore, Md 21214
Helen Delich Bentley 43,080 (5) 2.6%
Monarch Avalon, Inc.
4517 Harford Road
Baltimore, Md 21214
David F. Gonano 40,000 (5) 2.4%
Monarch Avalon, Inc.
4517 Harford Road
Baltimore, Md 21214
All Directors and 804,099 (7) 44.2%
Executive Officers as a
group (4 persons).
_________________
(1) The calculation of percent of class is based on the number of shares of
Common Stock outstanding as of [ ], 1998 assuming exercise of the
currently exercisable options held by such nominee.
(2) Power to vote with respect to certain matters and power to restrict
disposition may be deemed to be shared with Jackson Y. Dott, with respect
to 467,529 of such shares, and A. Eric Dott, with respect to 253,490 of
such shares, pursuant to Voting Agreement and Irrevocable Proxy. HIAC XII
Corp. disclaims beneficial ownership of such shares.
(3) Includes shares issuable on the exercise of options to purchase 80,000
shares held by A. Eric Dott and options to purchase 40,000 shares held by
Jackson Y. Dott with respect to which voting power may be deemed to be
shared with HIAC XII Corp. and Hasbro, Inc. pursuant to the Voting
Agreement and the Irrevocable Proxy. HIAC XII Corp. and Hasbro, Inc. have
no right to require the exercise of the options held by Mr. E. Dott and Mr.
J. Dott.
(4) HIAC XII Corp. is an indirect wholly owned subsidiary of Hasbro, Inc.
Accordingly, shares that may be deemed to be owned by HIAC XII Corp. may be
deemed to be owned by Hasbro, Inc. Hasbro, Inc. disclaims beneficial
ownership of such shares.
(5) Includes 40,000 shares purchasable upon the exercise of a currently
exercisable option.
(6) Includes 80,000 shares purchasable upon the exercise of a currently
exercisable option.
(7) Included in the shares beneficially owned are 200,000 shares purchasable by
the Directors and executive officers as a group upon exercise of currently
exercisable options held by them.
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
Mr. A. Eric Dott is the joint owner with his wife of certain real property
located in Baltimore, Maryland comprising approximately 32,000 square feet and
utilized as offices and plant by the Company under a lease expiring in FY 1999
and subject to renewal on an annual basis through 2001. The lease calls for
an annual net rental of $107,131.20 through June, 2001. The management of
the Company believes that the terms of its lease with the Dotts are
comparable to those which would be obtainable in leases with non-affiliated
parties.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
Information required in Part III, Item 13, is incorporated by reference
to the Company's Annual Report on Form 10-KSB as filed with the
Securities and Exchange Commission on July 29, 1998.
<PAGE>
S I G N A T U R E S
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.
MONARCH AVALON, INC.
By: /s/ A. Eric Dott
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A. Eric Dott, Chairman
and Director
DATE: August 28, 1998
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<PAGE>
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.
Date August 28, 1998 /s/ Jackson Y. Dott
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Jackson Y. Dott, President
(Principal Executive Officer),
Treasurer and Director
Date August 28, 1998 /s/ David F. Gonano
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David F. Gonano, Director
Date August 28, 1998 /s/ Helen Delich Bentley
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Helen Delich Bentley, Director
Date August 28, 1998 /s/ Steven M. Szekely
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Steven M. Szekely, Executive
Vice-President and Secretary
Date August 28, 1998 /s/ A. Eric Dott
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A. Eric Dott, Chairman and
Director
Date August 28, 1998 /s/ Marshall Chadwell
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Marshall Chadwell, Controller
(Principal Financial Officer),
Principal Accounting Officer
