SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - KSB/A/1
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Fiscal Year Ended June 30, 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
1-8232
NBI, INC.
State of Incorporation IRS Employer I.D. Number
Delaware 84 - 0645110
1880 Industrial Circle, Suite F
Longmont, Colorado 80501
(303) 684-2700
Securities registered pursuant Name of each exchange
to section 12(b) of the Act: None on which registered: N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.01 par value)
Series A Cumulative Preferred Stock ($.01 par value)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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. [ X
] YES [ ] NO
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
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Revenues from continuing operations for the year ended June 30, 1999 were
$14,721,000.
The aggregate market value of voting stock held by non-affiliates of the
registrant is approximately $6,830,000 as of market close on August 19, 1999.
Common stock ($.01 Par Value): 8,103,320 shares outstanding as of August 19,
1999.
Documents incorporated by reference: None
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS
The Bylaws of the Company specify that the Board of Directors shall consist of
three directors, however, only two seats are currently filled and there is one
vacancy on the Board. It is not presently contemplated that such vacancy will
be filled. Each director is elected to serve for a term of one year and until
his successor is duly elected and qualified.
The Directors of the Company are as follows:
Jay H. Lustig Chairman of the Board and Chief Executive Officer;
Director since February 1992
Martin J. Noonan Managing Director; Director since April 1994
JAY H. LUSTIG, age 44, has been Chairman of the Board since February 1992 and
Chief Executive Officer since October 1993, although he began acting in the
capacity of Chief Executive Officer in September 1992. Mr. Lustig has also
been President of J.H.L. Holdings, Inc., an investment management firm, since
1989, and President of Equibond, Inc., a securities broker-dealer and member
of the National Association of Securities Dealers, Inc., since 1995. In
addition, he is Chairman of the Board of National Bancshares Corporation of
Texas, a four-bank holding company headquartered in San Antonio, Texas.
MARTIN J. NOONAN, age 47, has been with the Company for thirteen years and has
been Managing Director of NBI, Inc. since June 1993 with the responsibility
for managing the day-to-day activities within the Company. He has also been
President of L.E. Smith Glass Company, a wholly-owned subsidiary of NBI, since
October 1997. In addition, he was General Manager of the systems integration
operation from June 1992 to June 1994 and Director of Marketing from September
1986 to June 1992. Mr. Noonan is also a licensed stock broker for Equibond,
Inc.
EXECUTIVE OFFICERS
JAY H. LUSTIG is the Chairman of the Board and Chief Executive Officer of the
Company (the "Named Officer"). He has been on the Board since February 1992.
Mr. Lustig has performed the functions of a chief executive officer since
September 25, 1992, but only assumed the title of Chief Executive Officer on
October 1, 1993, the effective date of his employment agreement with the
Company. Prior to October 1, 1993, Mr. Lustig received no compensation for
performing the functions of the chief executive officer.
MARTIN J. NOONAN has been with the Company for thirteen years and has been
Managing Director of NBI, Inc. since June 1993 with the responsibility for
managing the day-to-day activities within the Company. He has also been
President of L.E. Smith Glass Company, a wholly-owned subsidiary of NBI, since
October 1997. In addition, he was General Manager of the systems integration
operation from June 1992 to June 1994, and Director of Marketing from
September 1986 to June 1992. He has been on the Board of Directors since
April 1994. Mr. Noonan is also a licensed stock broker for Equibond, Inc.
MARJORIE A. COGAN has been Chief Financial Officer of the Company since
October 1997, with responsibility for managing the accounting and finance
functions of the Company. She has also been Secretary of the Company since
May 1993 and was previously Corporate Controller of the Company from May 1993
until October 1997. Ms. Cogan has been with NBI for twelve years; prior to
joining NBI, Ms. Cogan was an auditor with a Denver-based CPA firm for four
years. Ms. Cogan graduated from Regis University summa cum laude with a
bachelor's degree in accounting and business administration and obtained her
CPA license in 1983.
MORRIS D. WEISS has been Senior Vice President and General Counsel since April
1997 with responsibilities for overseeing and managing the legal affairs of
the Company. Prior to joining the Company, Mr. Weiss was a partner with the
law firm of Weil, Gotshal & Manges, LLP from January 1994 until April 1997,
and had been an associate at such firm since October 1985. In addition, Mr.
Weiss has been General Counsel of Equibond, Inc. since April 1997, and Senior
Vice President and General Counsel of National Bancshares Corporation of Texas
since April 1997.
<PAGE>
The Company has no other executive officers as defined under the Securities
Exchange Act of 1934.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") requires
the Company's officers and directors, and persons who beneficially own more
than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes all forms required by Section
16(a) during the fiscal year ended June 30, 1999 were timely filed.
ITEM 10. EXECUTIVE COMPENSATION
Following is information regarding the compensation of the Company's CEO and
Managing Director (the "Named Executive Officers"). The Company has no other
executive officers whose total annual salary and bonus exceeded $100,000.
The summary compensation table following contains information regarding the
compensation of the Named Executive Officers for services rendered in all
capacities during fiscal years 1999, 1998 and 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Other Annual
Fiscal Salary Bonus Compensation
Name and Principal Position Year ($) ($) ($)
<S> <C> <C> <C> <C>
Jay H. Lustig, 1999 $ 60,000 -- $ 6,475(1)
Chief Executive Officer 1998 $ 60,000 -- $ 6,475(1)
1997 $ 60,000 $ 22,000 --
Martin J. Noonan, 1999 $ 90,000 $ 15,000 --
Managing Director 1998 $ 90,000 -- --
1997 $ 90,000 -- --
Long Term Compensation
Restricted Securities Underlying All Other
Stock Awards Options Compensation
Name and Principal Position ($) (#) ($)
<S> <C> <C> <C>
Jay H. Lustig, -- -- --
Chief Executive Officer -- 400,000(2) --
-- -- --
Martin J. Noonan, -- -- --
Managing Director -- -- --
-- 100,500(3) --
<FN>
(1) Value of personal use of company vehicle.
(2) During fiscal 1998, the expiration date of these options was extended to October 1, 2003, with no
change in the exercise price or other terms of the options. These options were originally granted under
the terms of his employment agreement, and were scheduled to expire on October 1, 1998.
(3) During fiscal 1998, the expiration date of these options was extended to August 27, 2002, with no
change in the exercise price or other terms of the options. These options were originally granted under
the Company's employee stock option plan and were scheduled to expire on August 27, 1997.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to the Named Executive Officers during the fiscal year
ended June 30, 1999.
<PAGE>
The following table shows that the Named Executive Officers did not exercise
any stock options during the fiscal year ended June 30, 1999 and states the
number of shares covered by both exercisable and non-exercisable stock options
as of June 30, 1999. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of Common Stock.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities
Shares Acquired Underlying Unexercised
on Exercise Value Realized Options at FY-End (#)
Name (#) ($) Exercisable/Unexercisable
- ----------------- ---------------- --------------- -------------------------
<S> <C> <C> <C>
Jay H. Lustig -- -- 400,000(2) 0
Martin J. Noonan -- -- 100,500(3) 0
Value of Unexercised In-the-
Money Options at FY-End ($)
Exercisable/Unexercisable
Name (1)
- ----------------- ----------------------------
<S> <C>
Jay H. Lustig $ 79,500 $ 0
Martin J. Noonan $ 59,169 $ 0
<FN>
(1) Based on the closing stock price as of June 30, 1999 of the
underlying shares of common stock of $.96875 per share, less the per share
exercise price of $.77 for J. Lustig and the per share exercise price of $.38
for M. Noonan.
(2) Includes 400,000 shares underlying options issued during fiscal 1994
in conjunction with the Named Officer's employment agreement. During fiscal
1998, the expiration date of these options was extended to October 1, 2003.
(3) Consists of 100,500 shares issuable upon exercise of options. During
fiscal 1998, the expiration date of these options was extended to August 27,
2002.
</TABLE>
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive a fee of $1,000 per
regular meeting, $500 per telephonic meeting, $500 per committee meeting
(except when attended in conjunction with a Board meeting) and reimbursement
of expenses incurred in attending meetings. No directors' fees were incurred
during fiscal 1999, as all directors were also employees of the Company.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company entered into an employment agreement effective October 1, 1993,
with Jay H. Lustig (the "CEO Agreement"). Pursuant to the terms of the CEO
Agreement, Mr. Lustig became an employee and Chief Executive Officer of the
Company as of October 1, 1993. Under the terms of this agreement, the Company
pays Mr. Lustig an annual salary of $60,000.
Mr. Lustig's position as CEO of the Company is a part-time position to which
he is required to dedicate no less than one-third of normal executive business
hours. In addition to Mr. Lustig's salary, the CEO Agreement provides that
the Company will pay Mr. Lustig an annual bonus of 10% of the Company's
pre-tax profits, if any, derived from all sources, but only to the extent such
10% figure exceeds Mr. Lustig's base salary. Mr. Lustig remains eligible for
such bonus for twelve months after his termination from the position of CEO.
The Company has accrued, but not paid a $22,000 bonus for fiscal year 1997,
under the terms of this agreement. No other amounts have been paid or accrued
under the terms of this agreement, since its inception.
In addition to the salary and bonus described above, the CEO Agreement
required that Mr. Lustig be granted a non-qualified stock option to purchase
400,000 shares of the Company's common stock at an exercise price of $.77 per
share. Such price was approximately 400% of certain historic trading levels
of the Company's common stock. This option was effective as of October 1,
1993, was fully vested as of October 1, 1997 and is still outstanding. On
January 13, 1998, the Company extended the expiration date of these options to
October 1, 2003.
<PAGE>
The CEO Agreement runs for one year terms which automatically renew on July
1, unless terminated in writing by a majority of the Board of Directors prior
to such renewal date. As there was no action to terminate the CEO Agreement,
it automatically renewed for an additional one year term on July 1, 1999.
Effective April 7, 1997, the Company entered into a consulting agreement with
Morris D. Weiss. The agreement is for an initial term of three years and
automatically renews for successive one year periods unless one of the parties
elects not to extend the agreement. The agreement provides for Mr. Weiss to
be paid an annual consulting fee of $75,000 and requires the Company to grant
Mr. Weiss a stock option on terms similar to those available to other senior
executives. During fiscal year 1998, Mr. Weiss was granted an option to
acquire 100,500 shares of common stock.
ITEM 11. BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock, as of September 30, 1999 by (i)
persons, including groups, known to the Company to own beneficially more than
five percent (5%) of the outstanding common stock of the Company, (ii) each
director and nominee for director, (iii) each Named Officer and (iv) all
executive officers and directors as a group. A person is deemed to be a
beneficial owner of common stock that can be acquired by such person within 60
days from September 30, 1999, upon the exercise of warrants or options.
<TABLE>
<CAPTION>
Amount and Nature Total as
Name and Address of Beneficial Percent
Beneficial Owner Ownership of Class
<S> <C> <C>
Jay H. Lustig 1,874,565 (1) 19.86%
P.O. Box 505
Belle Vernon, PA 15012
Martin J. Noonan 100,500 (2) 1.23%
1880 Industrial Circle, Suite F
Longmont, CO 80501
Hakatak Enterprises, Inc. 928,645 11.46%
PO Box 1623
Pacific Palisades, CA 90272
Harry J. and Patricia S. Brown 961,000 11.86%
16079 Mesquite Circle
Fountain Valley, CA 92708
Transamerica Occidental Life
Insurance Co. 445,029 5.49%
1150 Olive Street
Los Angeles, CA 90015
All Executive Officers and Directors 2,115,890(3) 21.89%
as a Group (4 persons)
<FN>
(1) Includes 400,000 shares issuable upon exercise of options and 935,000 shares issuable upon
exercise of warrants. Also includes 324,565 shares owned by an investment partnership in which he has
an ownership interest and as to which he has sole voting and investment power.
(2) Consists of 100,500 shares issuable upon exercise of options.
(3) Includes 626,125 shares issuable upon exercise of options and 935,000 shares issuable upon
exercise of warrants.
</TABLE>
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1995, the Company entered into an agreement to acquire 80% of the
outstanding stock of Krazy Colors, Inc., a small children's paint
manufacturing company, effective as of January 1, 1995. Prior to this
agreement the Company's Chief Executive Officer (CEO), Jay H. Lustig, owned
55% of the outstanding stock of the manufacturer. Under the purchase
agreement, the Company paid $288,000 in cash for the stock, including $158,000
paid to NBI's CEO. In addition, the sellers are eligible to receive
continuing annual royalty payments equal to a specified percentage of annual
gross margin. No royalties were incurred by the Company during the fiscal
years ended June 30, 1999 and 1998 and no royalties are expected to be earned
in the future due to the Company's discontinuance of this operation in fiscal
1999. In conjunction with the purchase agreement, the sellers were issued
warrants to purchase a total of 1.7 million shares of NBI's common stock,
including warrants to purchase 935,000 shares issued to the Company's CEO, at
a price of $.89 per share. These warrants are exercisable through December 31,
2002.
During fiscal 1999 and 1998, the Company utilized Equibond, Inc., a securities
broker-dealer, which is 100% owned by its CEO, to execute certain transactions
on its behalf. However, NBI uses another unrelated company to act as
custodian and clearing firm for its investment assets. Gross revenues earned
by Equibond related to investment transactions by NBI in fiscal 1999 and 1998,
totaled $10,000 and $1,000, respectively, on purchase and sale transactions
totaling $19,216,000 and $1,250,000, respectively, before fees.
During fiscal 1998, the Company borrowed $100,000 from its CEO for working
capital needs. The borrowings are subject to the terms of a revolving line of
credit. In September 1999, Willowbrook Properties borrowed $155,000 from its
CEO to fund development costs incurred on Phase I of its land development
project. The borrowings are subject to the terms of a promissory note
payable. Both the line of credit and the promissory note payable provide for
interest to be paid at the rate of ten percent per annum and are due and
payable in full on December 31, 1999.
The Company's CEO has personally guaranteed a $500,000 letter of credit for
the benefit of the Commonwealth of Pennsylvania, Department of Transportation,
required in order for Willowbrook Properties to commence certain road
improvements mandated by the Pennsylvania Department of Transportation in
conjunction with Phase I of its land development project. In addition, in
conjunction with the Company's efforts to obtain construction financing for
Phase I of the development, Mr. Lustig had committed to personally guarantee
the repayment of such construction financing and to guarantee the completion
of Phase I of the development.
The Company believes that these transactions were in its best interests, were
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties and were in connection with bona fide business
purposes of the Company. As a matter of policy, any future transactions
between the Company and any of its executive officers, directors or principal
stockholders will be subject to these same standards and will be approved by a
majority of the disinterested members of the Board of Directors.
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 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.
NBI, INC.
October 28, 1999 By: /s/ Marjorie A. Cogan
Marjorie A. Cogan
Chief Financial Officer, Secretary
