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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended October 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From-_________to-_________
Commission File Number 0-8567
DATAMETRICS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Small Business Registrant)
Delaware 95-3545701
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
25B Hanover Road, Suite 305, Florham Park, New Jersey 07932
(Address of principal executive offices)
Registrant's telephone number, including area code: (973) 377-3900
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, .01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 pursuant to Item 405
of Regulation S-B is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ ]
State Issuer's revenues for its most fiscal year: $8,560,000
---------
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant (based on the closing price of such stock as reported by the
American Stock Exchange) on February 10, 2000 was approximately $18,997,227.
State the number of shares outstanding of the Registrant's Common Stock, as
of the latest practicable date: 18,997,227 shares of Common Stock as of February
10, 2000.
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<PAGE>
[ITEM 9]
DIRECTORS AND EXECUTIVE OFFICERS
Management is vested in our Board of Directors and officers. The Board
of Directors is divided into three classes with two members in Class I, two
members in Class II and two members in Class III. Each class is elected for a
term of three years. At each annual meeting, shareholders elect Directors to
succeed those Directors in the class whose term expires at that annual meeting.
Each newly elected Director holds office until the third succeeding annual
meeting and until the election and qualification of his or her successor. The
officers of the Company hold office at the discretion of the Board of Directors.
The Board of Directors and executive officers of the Company and their
respective ages are set forth in the table below. Also provided is a brief
description of the business experience of each Director and executive officer
during the past five years and an indication of directorships (if any) held by
each Director in other companies subject to the reporting requirements under the
Federal securities laws.
NAME AGE POSITION(S) HELD
Daniel P. Ginns 49 Chairman of the Board of Directors,
Chief Executive Officer and Secretary
Douglas S. Friedenberg 48 Director
John W. O'Leary 64 Director
Vincent J. Cahill 53 Director
Larry B. Silverman 56 Controller, Treasurer
BUSINESS EXPERIENCE
DANIEL P. GINNS has been the Chairman of the board of directors and
Chief Executive Officer of the Company since October 1996, and Secretary of the
Company since February 1997. Mr. Ginns is also a Director of StarBase
Corporation, a company whose shares are quoted on The Nasdaq SmallCap(sm)
Market. From 1989 to 1996, Mr. Ginns was President of Belmont Capital, Inc., a
management and financial advisory firm.
DOUGLAS S. FRIEDENBERG has been a director of the Company since October
1996. Mr. Friedenberg has also been President of Firebird Capital Management, a
manager of hedge funds, since 1993. From July 1991 through March 1993, Mr.
Friedenberg was the President of Unicorn Capital Management, a hedge fund
manager. Mr. Friedenberg is a Director of Stratford Acquisition Corp., a company
whose shares are listed on the OTC Bulletin Board.
JOHN W. O'LEARY has been a director of the Company since January 1999.
Mr. O'Leary was the President and Chief Executive Officer of International
Imaging Materials, Inc., a subsidiary of Paxar Corporation from 1984 to 1998. He
is Chairman of the Board of AIM(R)USA and also serves on the board of directors
of Marine Midland Bank, Rochester Region and the United Way of Rochester.
VINCENT J. CAHILL has been a Director of the Company since April 1999.
Since 1978 Mr. Cahill has been a consultant to The Colorworks, a screen printing
and graphic imaging firm. Since 1996 he has served as a consultant to IT
Strategies, a consulting company servicing the digital printing industry. Mr.
Cahill is also a member of Newhill Technologies, LLC, which has pioneered
development of digital technology for printing on ceramics and glass, and since
1998 has worked with Specialty Materials and Graphic Solutions, a firm which
imports "thermo-weldable" printing materials. Mr. Cahill has written extensively
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on digital printing and graphic imaging as a contributing editor to Impressions
Magazine and a writer for Screen Printing Magazine.
LARRY B. SILVERMAN has served as Controller and Treasurer of the
Company since December 1999. From 1991 to 1999, Mr. Silverman served as
Controller of Shima Seiki U.S.A. Inc., headquartered in Cranbury, New Jersey.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than ten percent of the
Company's common shares to file reports of ownership with the SEC and to furnish
the Company with copies of these reports. Based solely upon its review of
reports received by it, or upon written representations from certain reporting
persons that no reports were required, the Company believes that during fiscal
1999 all filing requirements were met except as set forth below:
<TABLE>
<CAPTION>
OFFICER, DIRECTOR or Number of Reports Number of Transactions Number of Failures to
BENEFICIAL OWNER Filed Late Not Timely Reported File Required Reports
- -------------------- ----------------- ---------------------- ---------------------
<S> <C> <C> <C>
Vincent J. Cahill 1(1) 1 --
Douglas Friedenberg 1 1 3(2)
Daniel P. Ginns 1 1 2(2)
Headwaters Capital -- -- 3(2),(3)
Adrien Maught 1 1 2(2)
John W. O'Leary 1(1) 1 --
William Pandos 1(1) 1 1(2)
</TABLE>
Notes:
(1) Includes late filing of Form 3.
(2) Includes failure to file a Form 5 with respect to fiscal
year end October 31, 1999.
(3) Includes failure to file a Form 3.
[ITEM 10]
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended October 31, 1999,
October 25, 1998 and October 26, 1997, the compensation earned by the current
Chief Executive Officer of the Company. There were no executive officers of the
Company who were serving as executive officers at the end of fiscal year 1999
who received total annual salary, bonus and other compensation in excess of
$100,000 during fiscal year 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUTS
------ -------
OTHER RE-STRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL COMPENSATION AWARD(S) OPTIONS AND LTIP COMPENSATION
POSITIONS YEAR SALARY BONUS(S) ($)(2) ($) WARRANTS (#) PAYOUTS($) ($)
- --------- ---- ------ -------- ------------- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Ginns, 1999 253,205 --- 32,000(3) 10,000(4) 150,000 --- ---
Chief Executive 1998 252,681 --- 32,000(3) 10,000(4) 50,000 --- ---
Officer, and 1997 261,035(1) 24,000 27,000(3) 10,000(4) --- --- ---
Chairman of the
Board of
Directors
</TABLE>
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(1) Includes related party payments of $72,250 for fees paid to Belmont
Capital Inc. for consulting services prior to becoming an employee of
the Company.
(2) Does not include perquisites to each of the Named Executive Officers
that did not exceed the lesser of $50,000 or 10% of the total salary
and bonus for such officer.
(3) Director's fees.
(4) Restricted stock awarded in lieu of fees for attendance of certain
meetings of Directors.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No Stock Option /SARs were granted to Mr. Ginns during fiscal year
1999. Certain warrants were issued to Mr. Ginns in connection with other
transactions. See note to following table.
AGGREGATE OPTION/ SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/WARRANT VALUES
The following table provides information with respect to the Named
Executive Officer regarding the exercise of options/SARs during the fiscal year
ended October 31, 1999 and unexercised options/Warrants held as of the end of
the fiscal year ended October 31, 1999. No stock appreciation rights were
granted or exercised during fiscal year 1999, or were outstanding at the end of
fiscal year 1999.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE UNEXERCISED OPTION AT OCTOBER 31, OPTIONS/WARRANTS AT OCTOBER 31,
EXERCISE (#) REALIZED 1999 (#) EXERCISABLE/UNEXERCISABLE 1999($)
NAME ($) EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Daniel P. Ginns 0 0 911,250 (1) 3,750 57,656 469
</TABLE>
Notes:
(1) Includes warrants to purchase 700,000 shares of common stock issued in
connection with Mr. Ginns' employment agreement, warrants to purchase
50,000 shares of common stock issued on October 27, 1997 as
compensation for arranging financings, warrants to purchase 150,000
shares of common stock issued in connection with bridge financing in
June 1999, and 11,250 non-qualified stock options that are presently
exercisable as of October 31, 1999 pursuant to a grant of 15,000
non-qualified stock options in October 1996, which options vest over a
period of 16 fiscal quarters.
DIRECTOR COMPENSATION
As Chairman of the Board of Directors, Daniel P. Ginns received an annual
retainer fee of $32,000. All other Directors are entitled to receive an annual
retainer fee of $12,500. In addition, each Director serving as Chairman on any
committee of the Board of Directors is entitled to receive $1,600 for each
committee meeting attendance, and all other Directors who are committee members
are entitled to receive $800 for each committee meeting attendance. Pursuant to
a written resolution of the Board of Directors, the Company has agreed to issue
10,000 shares of Common Stock to each Director in lieu of fees for committee
participation. Accordingly, the Company issued 10,000 shares to each Director
during fiscal year 1999 in lieu of fees for committee participation during each
of the fiscal year, and the Company expects to continue issuing such shares of
Common Stock in the future. These shares of Common Stock are restricted shares
and may not be offered or sold unless registered under the Securities Exchange
Act of 1933, as amended, or pursuant to an exemption therefrom.
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EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
In January 1997, we entered into an employment agreement with Mr. Ginns
to be our Chief Executive Officer. This agreement terminates on December 31,
2003, but automatically renews for five years on January 1 and July 1 of each
year so that the remaining term of each agreement will not be less than four and
one-half years from the time of renewal. Under this agreement, Mr. Ginns is paid
an initial annual base salary of $240,000, respectively. For each calendar year
commencing with the calendar year beginning January 1, 1998, the base salary
under these agreements is adjusted by the greater of 3% or the percentage change
in the Consumer Price Index for the year then ended. In addition to the base
salary, the Compensation Committee of the Board of Directors may, in its sole
discretion, pay a performance-based bonus to Mr. Ginns in any year during the
term of their respective agreements.
We have the right to terminate Mr. Ginns' employment without cause at
any time, provided, however, that Mr. Ginns each shall be entitled to payment of
his base salary for a period equal to the greater of one year from the date of
termination or the remainder of the employment agreement; and we shall continue
to provide to such executive (and each member of his immediate family) all
benefits provided by the employment agreement. In addition, upon termination in
connection with a certain change in control of the Company, Mr. Ginns each shall
be entitled to a cash payment equal to the lesser of three years' base salary or
the maximum amount which would not result in any portion of such payment being
subject to the excise tax under Section 4999 of the Internal Revenue Code.
In connection with the employment agreement, we granted Mr. Ginns
warrants to purchase up to 700,000 shares of the Company's Common Stock at a
purchase price of $2.00 per share. The warrants provide for increase in the
amount of warrants issued under certain circumstances to protect against
anti-dilution. In December 1999 we granted Mr. Ginns warrants for an additional
700,000 shares at a purchase price of $1.25, in part to relieve the Company of
the effect of some of the anti-dilution provisions. All of these warrants are
immediately exercisable and have a term of five years. Upon renewal of the
employment agreement, the five-year term of the first set of warrants is
automatically renewed, commencing with the date of the employment agreement.
We know of no arrangement among Stockholders which may result in a
change of control of the Company.
[ITEM 11]
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February , 2000 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company, and (iv) all executive officers and directors
of the Company as a group.
AMOUNT OF SHARES PERCENT OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
- ------------------------- ------------------ ------------------
Daniel P. Ginns (1) 1,700,312 (2) 8.2%
Douglas Friedenberg (1) 1,319,441 (3) 6.7%
John W. O'Leary (1) 38,750 (4) *
Vincent J. Cahill(1) 11,874 (5) *
- ------------------------ ---------------- ------------
All Executive Officers and 3,080,377 14.4%
Directors as a Group (5 People)
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Headwaters Capital (6) 2,000,000 (7) 10.1%
Robert London (8) 1,269,930 6.7%
Parker Quillen (9) 1,338,410 (10) 6.6%
*less than 1%
Notes:
(1) The addresses of each of these persons is c/o Datametrics Corporation,
25B Hanover Road, Suite 3305, Florham Park, New Jersey 07932.
(2) Includes 700,000 shares of Common Stock underlying warrants presently
exercisable at $2.00 per share; 700,000 shares of Common Stock
underlying warrants presently exercisable at $1.25 per share; 200,000
shares of Common Stock underlying warrants exercisable at $1.00 per
share; and 50,000 shares of Common Stock underlying warrants
exercisable at $1.81 per share. Also includes 11,250 shares of Common
Stock subject to non-qualified stock options presently exercisable at
$1.25 per share. Excludes 3,750 shares of Common Stock subject to
non-qualified stock options not exercisable during the next 60 days.
(3) Includes (a) 100,000 shares of Common Stock underlying warrants
presently exercisable at $2.00 per share and 50,000 shares of Common
Stock underlying warrants presently exercisable at $1.81 per share. (b)
11,250 shares of Common Stock subject to non-qualified stock options
presently exercisable at $1.25 per share but excludes 3,750 shares of
Common Stock subject to non-qualified stock options not exercisable
during the next sixty (60) days. (c) the holdings of each of the
following, as to each of which Mr. Friedenberg exercises investment
control: (i) Peter Sosnkowski IRA - 166,667 shares of Common Stock
including 50,000 shares of Common Stock underlying warrants presently
exercisable at $1.10 per share, and 100,000 shares of Common Stock
underlying convertible debentures presently convertible at $1.00 per
share; (ii) Firebird Overseas, Ltd. - 413,450 shares of Common Stock
(including 40,001 shares of Common Stock underlying warrants presently
exercisable at $1.50 per share 62,250 shares of Common Stock underlying
warrants presently exercisable at $1.10 per share, and 112,500 shares
of Common Stock underlying convertible debentures presently convertible
at $1.00 per share); (iii) Firebird Partners LP - 193,347 shares of
Common Stock; and (iv) Euro-Dutch Company - 185,905 shares of Common
Stock (including 23,334 shares of Common Stock underlying warrants
presently exercisable at $1.50 per share); (c) 150,000 shares of Common
Stock (including 25,000 shares of common stock underlying warrants
presently exercisable at $1.10 per share, and 50,000 shares of Common
Stock underlying convertible debentures presently convertible at $1.00
per share) issued to Gertrude Cohen, Mr. Friedenberg's mother, as to
which he disclaims beneficial ownership.
(4) Includes 3,449 shares of Common Stock subject to non-qualified stock
options that are presently exercisable at $1.88 per share. Excludes
11,251 shares of Common Stock subject to non-qualified stock options
not exercisable during the next 60 days.
(5) Includes 2,812 shares of Common Stock subject to non-qualified stock
options that are presently exercisable at $1.31 per share. Excludes
12,188 shares of Common Stock subject to non-qualified stock options
not exercisable during the next 60 days.
(6) The address of Headwaters Capital is 220 Montgomery Street, Suite 500,
San Francisco, California 94965.
(7) Includes 1,000,000 shares of Common Stock underlying warrants
exercisable at the lesser of $1.35 per share or a price based upon the
average market price of the shares during the 20 days preceding the
purchase.
(8) The address of Robert London is 212 Aurora Drive, Montecito, CA 93108.
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(9) The address of Mr. Quillen is c/o Quilcap Corporation, 375 Park Avenue,
Suite 1404, New York, New York.
(10) Includes the holdings of each of the following, as to each of which Mr.
Quillen exercises investment control: Little Wing LP - 711,552 shares
of common Stock underlying warrants presently exercisable at $1.50 per
share; Little Wing Too LP - 76,818 shares of Common Stock underlying
warrants presently exercisable at $1.50 per share; and Tradewinds Fund
Limited - 550,040 shares of Common Stock underlying warrants presently
exercisable at $1.50 per share.
We know of no arrangement which may result in a change in control of
the Company.
[ITEM 12]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the last two fiscal years, certain of our executive officers and
Directors have engaged in transactions with us from time to time. Except as set
forth below, these transactions involved (i) the purchase of our Common Stock
and Warrants to purchase Common Stock in connection with various private
placements on terms and conditions no different than those afforded to other
investors, or (ii) amounts not exceeding $60,000.
On July 24, 1998 and September 4, 1998, the Company received
$982,500 and $746,500 in net proceeds from the private sale of
$1,000,000 and $750,000, respectively, in aggregate principal
amount of 7% Convertible Debentures due July 24, 2001. Affiliates
of Mr. Douglas Friedenberg, a Director of the Company purchased
all of the issued Securities.
On December 30, 1998, the Company sold 1,559,734 shares of the
Company's Common Stock at $1.00 per share. Mr. Richard Love, then
a Director of the Company, purchased 200,000 of such shares, and
Mr. Robert S. London purchased 1,000,000 of such shares, which
gave him beneficial ownership of in excess of 5% of the Company's
outstanding Common Stock.
On April 14, 1999, we borrowed $50,000 from Daniel Ginns, which
principal amount was repaid in full on April 15, 1999.
On April 27, 1999, we borrowed $30,000, from a member of the
immediate family of Daniel Ginns, which principal amount was
repaid in full on April 28, 1999.
On April 20, 1999, we borrowed $50,000 from Daniel Ginns, which
principal amount was repaid in full on May 24, 1999.
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On June 15, 1999, we borrowed $50,000 from Daniel Ginns, which
principal amount was repaid in full on August 2, 1999.
In May 1999 we sold an aggregate 1,500,000 shares of Common Stock
at $1.00 per share to 3 investors for an aggregate purchase price
of $1,500,000. The investors were also issued 5-year Warrants to
purchase up to an aggregate 1,500,000 shares of the Company's
Common Stock. Headwater Capital purchased 1,000,000 of such
shares, and received 1,000,000 of such warrants, which gave it
beneficial ownership of in excess of 5% of the Company's
outstanding Common Stock.
During the fiscal year ending October 25, 1998, we paid $371,225
and $450,000 for liability and medical insurance, respectively, to
Arthur A. Watson & Co., Inc., an entity of which Stephen Gass, a
Director of the Company during fiscal 1998, is an Executive Vice
President and stockholder. Management believes that these payments
did not exceed amounts that a similarly situated computer and
office equipment manufacturing company would reasonably expend for
liability and medical insurance in an arms-length transaction. Mr.
Gass resigned from the Board of Directors of the Company in July
1998.
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SIGNATURES
Pursuant to the requirements of 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 in the City of Florham
Park, State of New Jersey, on the 28th day of February, 2000.
DATAMETRICS CORPORATION
(Registrant)
/S/ Daniel P. Ginns
-------------------------------------
Daniel P. Ginns,
Chief Executive Officer
Pursuant to the requirements of 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/ Daniel P. Ginns Chairman of the Board, February 28, 2000
- ------------------------ Chief Executive Officer
Daniel P. Ginns and Director (Principal
Executive Officer and
Principal Financial and
Accounting Officer)
/s/ Vincent J. Cahill Director February 28, 2000
- -------------------------
Vincent J. Cahill
/s/ Douglas Friedenberg Director February 25, 2000
- -------------------------
Douglas Friedenberg
9
