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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A-2
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
Page numbered in accordance with Rule 0-3(b). Page 1 of 13.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 0-10329
AW COMPUTER SYSTEMS, INC.
(Name of Small Business Issuer in its Charter)
New Jersey 22-1991981
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
9000A Commerce Parkway, Mt. Laurel, New Jersey 08054
(Address of principal executive offices) (Zip Code)
609-234-3939
Issuer's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Shares, par value $.01 per share
(Title of Class)
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 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 ninety days.
Yes No X
Check if there is no 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 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 ]
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No N/A X
Issuer's revenues for its most recent fiscal year: $3,424,341
As of October 1, 1996, the aggregate market value (based on the average closing
bid and asked quotations on the OTC Electronic Bulletin Board) of the 5,306,633
Class A Common Shares held by non-affiliates of the Company was $9,286,608 and a
total of 6,602,067 Class A Common Shares of the Company were issued and
outstanding.
<PAGE>
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PART III
Registrant hereby adds Items 9 through 13 relating to the Form 10-KSB for the
year ended December 31, 1995 and dated October 1, 1996 on the following pages.
<PAGE>
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Item 9. Directors, Executive Officers, Promoters, and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors.
The following table sets forth information with respect to the
Company's incumbent directors and all persons nominated to become
directors:
<TABLE>
<CAPTION>
Director Age Current positions with the Company and principal
occupations during past five years
<S> <C> <C>
Charles J. McMullin 46 Chairman of the Board of Directors since August 1996,
(1)(3) Chief Operating Officer since April 1995, Executive Vice
President from April 1994 to April 1995, and Director of
the Company since October 1994. Vice President of
Somerset Kensington Capital Co., Inc., a private
investment firm, from December 1993 to May 1994. Vice
Chairman and Chief Executive Officer of Vertex
Electronics, Inc., an electronics assembly and
distribution company, from October 1990 to December 1993.
Charles Welch(1) 57 Chief Executive Officer and President of the Company since
December 1994, President of the Company from May 1986 to
December 1994, and Director since 1973. Founder of the
Company.
Frank A. Cappiello 70 Director of the Company since August 1996. President of
(2)(3) McCullough, Andrews & Cappiello, an investment counseling
firm since prior to 1990. Founder and Principal of
Closed-End Fund Advisors, Inc., an investment management
firm. Chairman of a group of no-load mutual funds
including the Cappiello-Rushmore Growth Fund, the
Cappiello-Rushmore Utility Income Fund, the
Cappiello-Rushmore Engineering Growth Fund and the
Cappiello-Rushmore Gold Funds since prior to 1990.
Patricia Sunseri 57 Director of the Company since August 1996. Vice President
of Mylan Laboratories, Inc., a NYSE-listed pharmaceutical
company, since prior to 1990.
Vincent Vidas 65 Director of the Company since August 1996. President and
Chief Executive Officer of SEMCOR, INC., a private
technologies engineering and management consulting firm,
since prior to 1990.
</TABLE>
(1)Member of the Executive Committee of the Board of Directors.
(2)Member of the Compensation Committee of the Board of Directors.
(3)Member of the Audit Committee of the Board of Directors.
<PAGE>
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons
who own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in
ownership of Class A Common Shares of the Company. Officers, directors
and greater than ten percent shareholders are required by SEC
regulation 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 Forms 3, 4 and 5 furnished to the Company and written
representations that no other reports were required during 1995, all
Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied
with.
<PAGE>
Page numbered in accordance with Rule 0-3(b). Page 5 of 13.
Item 10. Executive Compensation
Summary Compensation
The following table sets forth a summary of the aggregate compensation
earned for services rendered in all capacities to the Company during
the years 1993 through 1995 by the Chief Executive Officer, and by
each of the three other most highly compensated executive officers
earning over $100,000 in 1995 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation1
---------------------------------------
Awards Payouts
--------------------- ---------
Other Long
Annual Restricted Term
Name and Fiscal Compen- Stock Number of Incentive All Other
Principal Position Year Salary Bonus sation2 Awards Options Payouts Compensation3
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles J. McMullin 1995 $140,0005 --- $ 7,750 --- 25,000 --- $2,152
Chairman and Chief 1994 $ 93,333 --- $ 5,167 --- 60,000 --- $2,692
Operating Officer
Charles Welch 1995 $168,1506 --- $15,400 --- 10,000 --- $3,105
President and Chief 1994 $168,150 --- $18,490 --- --- --- $2,500
Executive Officer 1993 $160,988 $72,693 $21,592 --- --- --- $2,160
P. Michael Lutze 1995 $126,8007 --- $16,450 --- 12,500 ---
Vice President 1994 $126,800 --- $12,302 --- --- --- ---
1993 $121,265 $10,000 $18,473 --- --- --- ---
Nicholas Ambrus4 1995 $137,924 --- $13,900 --- 10,000 --- ---
Former Chairman 1994 $ 98,176 --- $15,890 --- --- --- ----
1993 $161,140 $72,693 $37,225 --- --- --- $4,398
</TABLE>
______________
(1) During three years, 1993 through 1995, no Named Officer received stock
appreciation rights, restricted stock awards or Long-Term Incentive Plan
payouts.
(2) Other Annual Compensation includes the following:
For Mr. McMullin: in 1995, $7,750 automobile benefit and in 1994, $5,167
automobile benefit.
For Mr. Welch: in 1995, $6,150 gain on exercise of options and $9,250
automobile benefit; in 1994, $9,250 automobile benefit and $9,240 Company
contribution to his 401(k) account; and in 1993, $12,598 automobile
benefit and $8,994 Company contribution to his 401(k) account.
For Mr. Lutze: in 1995, $8,200 gain on exercise of options and $8,250
automobile benefit; in 1994, $8,250 automobile benefit and $4,052 Company
contribution to his 401(k) account; and in 1993, $10,102 automobile
benefit and $8,371 Company contribution to his 401(k) account.
For Mr. Ambrus: in 1995, $6,150 gain on exercise of options and $7,750
automobile benefit; in 1994, $7,750 automobile benefit and $8,140 Company
contribution to his 401(k) account; and in 1993, $18,609 of gain on
exercise of options, $9,622 automobile benefit, and $8,994 Company
contribution to his 401(k) account.
(3) All Other Compensation is comprised of life insurance premiums paid on
behalf of the respective individuals.
(4) Mr. Ambrus resigned as Chairman in August 1996.
(5) Includes $13,125 of deferred salary.
(6) Includes $15,998 of deferred salary.
(7) Includes $11,888 of deferred salary.
<PAGE>
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STOCK OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
Options Percent of Total
Name and Granted Options Granted Exercise Expiration
Principal Position (2) To Employees Price Date
<S> <C> <C> <C> <C>
Charles J. McMullin 25,000 9.2% $1.00 6-27-2000
Chairman and Chief
Operating Officer
Charles Welch 10,000 3.7% $1.00 6-27-2000
President and Chief
Executive Officer
P. Michael Lutze 12,500 4.6% $1.00 6-27-2000
Vice President
</TABLE>
Exercise of Stock Options and Aggregate Outstanding Stock Options at December
31, 1995 The following table sets forth information concerning stock options
which were exercised during 1995 by the Chief Executive Officer and the other
Named Officers and the amounts of their respective unexercised options as of
December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTIONS
<TABLE>
<CAPTION>
Number of
Shares Value of
Underlying In-the-Money
Options Options
Number of at 12/31/95 at 12/31/95
Name and Shares Acquired on Value Exercisable/ Exercisable/
Principal Position Exercise Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Nicholas Ambrus 15,000 $6,150 20,000/-- --/--
Former Chairman
P. Michael Lutze 20,000 $8,200 14,000/-- --/--
Senior Vice President
Charles J. McMullin -- -- 20,000/40,000 --/--
Chairman and Chief
Operating Officer
Charles Welch 15,000 $6,150 20,000/-- --/--
President and Chief
Executive Officer
</TABLE>
Compensation of Directors During 1995, two non-employee directors, Messrs.
Hannon and Schroeter, received 15,000 shares each as compensation for their
services as directors. Messrs. Hannon and Schroeter resigned from the Board of
Directors in August 1996.
<PAGE>
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Bonus Plans
The Board of Directors adopted a bonus plan for Mr. Welch under which
a varying percentage of the Company's net profits in a particular year
are paid as an annual bonus if certain profit objectives established
by the Board of Directors for that year are achieved. Under the plan
now in effect, Mr. Welch would receive 2.5% of the first $99,999 of
the Company's annual pre-tax profit, 3.75% of the next $100,000 of the
Company's annual pre-tax profit and 5% of the Company's annual pre-tax
profit in excess of $199,999. No bonus was paid under this plan for
1995.
On April 25, 1994, the Company and Charles J. McMullin entered into an
employment agreement that provides for a term of employment of three
years at a salary of $140,000 and a cash bonus of 1.25% of the first
$99,999 of the net income of the Company before charges for officers'
bonuses and income taxes ("EBOBAT"), 1.875% of the next $100,000 of
EBOBAT and 2.5% of EBOBAT in excess of $200,000. No bonus was paid
under this plan for 1995.
Since the organization of the Company in 1973, it has been the policy
of the Company to award an annual bonus to the Company's officers and
employees. The amount of the bonus awarded to an officer or employee
in a particular year is discretionary and has been dependent upon the
officer's or employee's level of performance during the year, his
length of service with the Company, and the Company's earnings during
the year. No discretionary bonuses were paid in 1995. Under the
Company's current discretionary bonus arrangement, Messrs. McMullin
and Welch are not eligible for discretionary bonuses. The Company may
award discretionary bonuses for 1996 and subsequent years.
Employment Agreements
The Company has entered into an agreement with Mr. McMullin providing
for his employment in an executive capacity from April 25, 1994
through April 24, 1997 at an annual minimum base salary of $140,000.
If the employment of Mr. McMullin is terminated by the Company prior
to the end of his employment term without cause, the Company will
continue to pay Mr. McMullin his salary until the end of such term,
his death, or his employment with another organization, at which time
the Company shall be only obligated to pay Mr. McMullin the difference
between his compensation from the new employer and his
current compensation. During 1995, Mr. McMullin deferred receipt of
$13,125 of salary.
The Company has entered into an agreement with Mr. Welch providing for
his employment in an executive capacity from October 1, 1995 through
September 30, 1998, at an annual minimum base salary of $168,150. The
agreement requires that this minimum base salary be adjusted annually
during the second and third years of the contract to reflect the
average percentage salary increase awarded other senior and executive
employees of the Company during the preceding twelve months. If the
employment of Mr. Welch is terminated by the Company prior to the end
of his employment term without cause, the Company will continue to pay
Mr. Welch his salary until the end of such term, or the date on which
he begins competing with, or begins working for an organization which
competes with the Company. During 1995, Mr. Welch deferred receipt of
$15,998 of salary.
<PAGE>
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The Company has entered into an agreement with Mr. Lutze providing for
his employment in an executive capacity from February 15, 1996 through
February 14, 1999 at an annual minimum base salary of $126,800. If the
employment of Mr. Lutze is terminated by the Company prior to the end
of his employment term without cause, the Company will continue to pay
Mr. Lutze his salary until the end of such term, his death, or his
employment with another organization, at which time the Company shall
be only obligated to pay Mr. Lutze the difference between his
compensation from the new employer and his current compensation.
During 1995, Mr. Lutze deferred receipt of $11,888 of salary.
On March 1, 1993, Mr. Ambrus entered into a Supplemental Employment
and Retirement Agreement with the Company, providing for his phased
withdrawal from active involvement in daily management activities.
Effective December 31, 1993, Mr. Ambrus ceased to serve as Chief
Executive Officer of the Company. Mr. Nicholas Ambrus retired as
Chairman and as a member of the Board of Directors in August 1996. In
July 1996, Mr. Ambrus entered into a seven year consulting agreement
with the Company which provides for a monthly retainer of $4,675 and
the use of a Company automobile through December 31, 1998. The
agreement also provides that, effective August 1, 2003, and continuing
until January 31, 2008, the Company will pay Mr. Ambrus a retirement
benefit of $4,675 per month.
<PAGE>
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Item II Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the beneficial ownership of the
Company's Class A Common Shares by: (i) each director of the Company;
(ii) each officer named in the Summary Compensation Table elsewhere
herein; (iii) to the Company's knowledge, each person owning more than
5% of the Company's Class A Common Shares; and (iv) the executive
officers and directors of the Company as a group. Unless otherwise
noted, each person listed below is the record owner of, and has sole
voting and investment power over, the Class A Common Shares which such
person beneficially owns. For purposes of this table, a person or
group of persons is deemed to be the beneficial owner of any shares
that such person has the right to acquire within sixty days.
<TABLE>
<CAPTION>
Name And Address Percent of
Of Beneficial Owner Class A
Number of Class A Common Shares
Common Shares Beneficially
Beneficially Owned Owned
<S> <C> <C>
Charles J. McMullin
19 Normandie Lane 397,000(1) 5.8%
Raritan, NJ 08869
Charles Welch
1904 Woodhollow Drive 802,360(2) 11.9%
Marlton, NJ 08053
P. Michael Lutze
117 Lamplighter Court 84,500(3) 1.3%
Marlton, NJ 08053
Frank A. Cappiello
Greenspring Station, Suite 250 87,500(4) 1.4%
10751 Falls Road
Lutherville, MD 21093
Patricia Sunseri
1030 Century Building 87,500(5) 1.4%
130 Seventh Street
Pittsburgh, PA 15222
Vincent G. Vidas
730 Lippincott Avenue 372,574(6) 5.6%
Moorestown, NJ 08057
</TABLE>
CONTINUED ON FOLLOWING PAGE
Page numbered in accordance with Rule 0-3(b). Page 10 of 13.
Ownership of Shares (Continued)
<TABLE>
<S> <C> <C>
Charles Welch
1904 Woodhollow Drive 777,360(7) 15.6%
Marlton, NJ 08053
Mylan Laboratories, Inc.
1030 Century Building 1,250,000 18.9%
130 Seventh Street
Pittsburgh, PA 15222
Winn-Dixie Stores, Inc.
5050 Edgewood Court 486,773(8) 9.6%
Jacksonville, FL 32254-3699
All current executive directors as a group
(six persons including the above 1,704,010 32.2%
individuals)
</TABLE>
(1) Includes 261,000 shares which Mr. McMullin has the right to acquire within
60 days pursuant to options and warrants.
(2) Includes 121,000 shares which Mr. Welch has the right to acquire within 60
days pursuant to options and warrants.
(3) Includes 26,500 shares which Mr. Lutze has the right to acquire within 60
days pursuant to options.
(4) Includes 62,500 shares which Mr. Cappiello has the right to acquire within
60 days pursuant to options.
(5) Includes 62,500 shares which Ms. Sunseri has the right to acquire within 60
days pursuant to options.
(6) Includes 62,500 shares which Mr. Vidas has the right to acquire within 60
days pursuant to options.
(7) Includes 76,000 shares which Mr. Ambrus has the right to acquire within 60
days pursuant to options and warrants, and 8,000 shares beneficially owned
pursuant to a letter agreement with Mr. Lutze.
(8) Includes 236,773 shares which Winn-Dixie Stores, Inc. has the right to
acquire within 60 days pursuant to warrants.
<PAGE>
Page numbered in accordance with Rule 0-3(b). Page 11 of 13.
Item 12. Certain Relationships and Related Transactions.
On September 20, 1996, the Company consummated the private placement
of 1,678,023 Class A Common Shares to a limited number of qualified
investors, including certain officers and directors of the Company, as
listed in the table below. The price per share was $1.00, or an
aggregate consideration of $1,678,023. The proceeds of the private
placement will be used to finance on-going operations and the
development of new products. The securities sold in this private
transaction are not registered for public sale under the Securities
Act of 1933 or any state securities law. The purchasers were granted
certain registration rights commencing on or after September 1, 1997.
<TABLE>
<CAPTION>
Officer/Director Title Number of
Class A Common Shares
<S> <C> <C>
Charles J. McMullin Chairman of the Board 40,000
Charles Welch CEO/President 25,000
Charles F. Trapp Vice President 60,000
P. Michael Lutze Vice President 35,000
Patricia Sunseri Director 25,000
Frank A. Cappiello Director 25,000
</TABLE>
On April 27, 1995, the Company sold 394,000 units, each unit
consisting of one Class A Common Share and a Warrant to purchase one
additional Class A Common Share. The purchase price of each unit was
$.55, or an aggregate consideration of $216,700. The units were sold
to seven individuals, including certain officers and directors of the
Company, as listed in the table below. The warrants are exercisable
for five years from the date of issuance at an exercise price of $2.00
per share. The proceeds were used to finance on-going operations and
the development of new products The units were offered and sold to the
individuals in reliance on an exemption for non-public offerings
afforded by the Securities Act of 1933.
<TABLE>
<CAPTION>
Officer/Director Title Number of Units
<S> <C> <C>
Charles J. McMullin Chief Operating Officer 96,000
Charles Welch CEO/President 46,000
Nicholas Ambrus Former Director 46,000
Richard Schroeter Former Director 55,000
</TABLE>
<PAGE>
Page numbered in accordance with Rule 0-3(b). Page 12 of 13.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on 8-K.
On September 30, 1996, the Company filed a current report on Form
8-K with the Securities and Exchange Commission. Disclosure was
made on Item 5 of said report with respect to the private
placement of 1,678,023 Class A Common Shares effected by the
Company on September 20, 1996. (See Item 12 above)
<PAGE>
Page numbered in accordance with Rule 0-3(b). Page 13 of 13.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AW COMPUTER SYSTEMS, INC.
(Registrant)
By:/s/Charles Welch
Charles Welch
CEO/President
Dated: October 4, 1996
