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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
AMENDMENT NO. 1
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year ended January 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition Period from ________________ to __________________
COMMISSION FILE NUMBER:
0-10238
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U.S. ENERGY SYSTEMS, INC.
(Name of Small Business Issuer in Its Charter)
DELAWARE 52-1216347
(State of Incorporation) (I.R.S. Employer Identification Number)
515 NORTH FLAGLER DRIVE
SUITE 702
WEST PALM BEACH, FL 33401
(561)820-9779
(Address of Principal Executive Offices and 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 Exchange Act:
Common Stock, Par Value $.01 Per Share
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for a
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
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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 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
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State issuer's revenues for its most recent fiscal year: $266,000.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of May 28, 1997:
$16,748,396.
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 X No
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State the number of outstanding shares of each of the issuer's classes
of common equity, as of May 28, 1997:
Title of Class Number of Shares Outstanding
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Common 4,334,191
Transitional Small Business Disclosure Format (check one): Yes No X
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DOCUMENTS INCORPORATED BY REFERENCE
None.
The Registrant's Annual Report on Form 10-KSB for the fiscal year ended
January 31, 1997 is hereby amended to (i) eliminate the reference to the
Registrant's Proxy Statement for its Annual Meeting of the Stockholders under
the caption "Documents Incorporated by Reference" on the cover of the Form
10-KSB and (ii) include the following information hereinafter set forth as Items
10, 11 and 12 of Part III of the Form 10-KSB.
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ITEM 10. EXECUTIVE COMPENSATION.
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SUMMARY COMPENSATION TABLE
The following table shows the total compensation paid by the Company
during the fiscal years ended January 31, 1997, 1996, and 1995 to Mr. Richard H.
Nelson, the Company's President and Chief Executive Officer. There were no other
executives of the Company who received total compensation in excess of $100,000
during any of such years.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------- ------------
Securities
Fiscal Underlying
Name and Principal Position Year Salary Bonus Options
- --------------------------- ---- ------ ----- ----------
<S> <C> <C> <C> <C>
Richard H. Nelson, President
and Chief Executive Officer 1997 $150,000 -- 100,000
1996 $150,000 -- --
1995 $149,850 -- --
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Number of
Securities
Underlying Percent of Total
Options/SARS Options/SARS Granted to Exercise or
Name Granted (#) Employees in Fiscal Year Base Price ($/sh) Expiration Date
- ---- ------------ ------------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Richard H. Nelson 100,000 36% $3.88/sh December 26, 2002
</TABLE>
COMPENSATION OF DIRECTORS. Inside Directors are not compensated for
attendance at meetings of the Board, although certain travel expenses relating
to attending meetings are reimbursed. Outside Directors are compensated at an
annual rate of $10,000 plus travel expenses, and must attend at least four
meetings annually. No additional compensation is given to committee members or
participants in special projects.
EMPLOYMENT CONTRACTS. Richard H. Nelson has an employment contract with
the Company to serve as its Chief Executive Officer for a term of five years
ending December 1, 2001. Mr. Nelson's contract provides for an annual salary of
$150,000 plus normal benefits. Under the terms of Mr. Nelson's employment
agreement, he may not disclose any confidential information pertaining to the
Company nor compete with the Company during the term of his employment with the
Company plus an additional two years. Mr. Nelson works for the Company
full-time.
Theodore Rosen has an employment contract with the Company to serve as
its Chairman of the Board for a term of five years ending December 1, 2001. Mr.
Rosen's contract provides for an annual salary of $60,000 plus normal benefits,
subject to upward adjustment by the Board of Directors. On December 16, 1996,
the Board of Directors approved an increase to $84,000 annually. Mr. Rosen
devotes a minimum of 40 hours per week to the Company. Under the terms of Mr.
Rosen's employment agreement, Mr. Rosen agrees that he will not disclose any
confidential information pertaining to the Company nor compete with the Company
during the term of his employment with the Company plus an additional two years.
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Terrence Page has an employment contract with the Company to serve as
Vice President of Western Resources for a term of two years ending March 3,
1999. Mr. Page's contract calls for an annual salary of $90,000 plus normal
benefits. Under the terms of Mr. Page's employment agreement, Mr. Page agrees
that he will not disclose any confidential information pertaining to the Company
nor compete with the Company during the term of his employment with the Company
plus an additional two years.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
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The following table sets forth certain information as of May 28, 1997
regarding the ownership of the Company's Common Stock by (i) each Director of
the Company, (ii) each executive officer of the Company named in the Summary
Compensation Table as set forth elsewhere in this Annual Report on Form 10-KSB,
(iii) each beneficial owner of more than five percent of the Common Stock of the
Company known by management and (iv) all Directors and executive officers of the
Company, as a group, and the percentage of Common Stock beneficially held by
them on that date.
<TABLE>
<CAPTION>
Beneficial
Ownership (1)
NAME AND ADDRESS OF BENEFICIAL OWNER Shares Percentage
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<S> <C> <C>
Richard H. Nelson.................................... 132,235(2) 3.05%
Theodore Rosen....................................... 152,714(3) 3.52%
Terrence Page........................................ 0(4) 0.00%
Evan Evans........................................... 22,500(5) 0.52%
Allen J. Rothman .................................... 20,000(6) 0.46%
Todd Goodwin......................................... 50,000(7) 1.15%
Cambridge Investments Limited........................ 360,000(8) 8.31%
600 Montgomery Street
27th Floor
San Francisco, CA 94111
Special Situations Fund.............................. 675,000(9) 14.89%
153 East 53rd Street, 51st Floor
New York, NY 10022
Mellon Bank Corporation.............................. 425,000(10) 9.81%
One Mellon Bank Center
Pittsburgh, PA 15258
All officers and directors as a group (6 persons).... 377,449(2) 8.71%
(3)(4)(5)(6)(7)
</TABLE>
(1) The tabular information gives effect to the exercise of warrants or options
exercisable within 60 days of the date of this table owned in each case by the
person or group whose percentage ownership is set forth opposite the respective
percentage and is based on the assumption that no other person or group
exercises its option. The address of each of the officers and directors is 515
North Flagler Drive, Suite 702, West Palm Beach, Florida 33401.
(2) Includes 50,000 shares issuable upon exercise of a non-qualified option at
an exercise price of $3.875 per share, which becomes exercisable on June 26,
1997, but not 50,000 shares issuable upon the exercise of the same non-qualified
option, which will become exercisable on December 26, 1997.
(3) Includes 11,357 shares issuable on exercise of Warrants at an exercise
price of $4.00 per share, 60,250 shares issuable upon exercise of non-qualified
option at an exercise price of $8.00 per share which became exercisable on
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December 1, 1995, and 50,000 shares issuable upon exercise of a non-qualified
option at an exercise price of $3.875 per share, which becomes exercisable on
June 26, 1997. Does not include 50,000 shares issuable upon exercise of the
non-qualified option at an exercise price of $3.875 which will become
exercisable on December 26, 1997.
(4) Does not include 30,000 shares issuable upon exercise of a non-qualified
option at an exercise price of $4.375 per share, 50% of which will become
exercisable on April 3, 1998, and 50% on April 3, 1999.
(5) Includes 1,250 shares issuable upon exercise of non-qualified options at an
exercise price of $4.00 per share which became exercisable on January 25, 1995,
and 20,000 shares issuable upon exercise of a non-qualified option at an
exercise price of $3.875 per share, which will become exercisable on June 26,
1997. Does not include 20,000 shares issuable upon exercise of the non-qualified
option at an exercise price of $3.875 which will become exercisable on December
26, 1997.
(6) Includes 20,000 shares issuable upon exercise of a non-qualified option at
an exercise price of $4.00 per share, which will become exercisable on July 6,
1997, but does not include 20,000 shares issuable upon exercise of the same
non-qualified option, which will become exercisable on January 6, 1998.
(7) Does not include 100,000 shares issuable upon exercise of Warrants at an
exercise price of $4.00 per share which will become exercisable on December 2,
1997, nor 20,000 shares issuable upon exercise of a non-qualified option at an
exercise price of $4.00 per share, which will become exercisable on January 6,
1998. The figure does include 20,000 shares issuable upon exercise of the
non-qualified option at an exercise price of $4.00, which will become
exercisable on July 6, 1997.
(8) Based on a Schedule 13-G notice sent to the Company on December 26, 1996.
(9) Based on a Schedule 13-G notice sent to the Company on January 9, 1997.
(10) Based on a Schedule 13-G notice sent to the Company on February 12, 1997.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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The Plan of Reorganization of Cogenic Energy Systems, Inc. (the "Plan")
was originally filed and financed by Richard Nelson, who was then the sole
shareholder and sole director of Utility Systems Florida, Inc. ("USF"). The Plan
was confirmed by the bankruptcy court in March 1993. Under the Plan, 100,000
shares of the reorganized debtor were issued to Richard Nelson as the proponent
and financier of the Plan. An additional 125,000 shares (the "Merger Shares")
were issued to USF upon consummation of the Plan and upon the merger of the
reorganized debtor with USF. These Merger Shares were distributed to individuals
and companies who purchased shares of USF for purposes of providing USF with the
financing to acquire the Company and to allow the Company to continue as the
surviving corporation.
Messrs. Nelson, the President of the Company, Theodore Rosen, the
Chairman of the Company, and S. Marcus Finkle, a principal stockholder of the
Company, were participants in the Plymouth Loan (having loaned $25,000, $25,000
and $150,000 respectively), which accrued interest at the rate of 2.5% per annum
above the prime rate, and in which the lenders, other than Messrs. Nelson and
Rosen, received five-year warrants to purchase 120 shares of the Company's
Common Stock for each $1,000 loaned, which warrants are exercisable at $5.00 per
share. Messrs. Nelson, Rosen and Finkle benefited by the payment to them from
the net proceeds of the Company's public offering of its Common Stock, which
closed on December 17, 1996 (the "Offering"), of $31,000, $30,900 and $185,500,
respectively in connection with the repayment of the Plymouth Loan. Mr. Rosen,
Mr. Finkle and Guernroy Ltd., a principal Stockholder, were also holders of the
Company's Convertible Debentures in the amounts of $125,000, $50,000 and $50,000
respectively. Accrued interest on the Convertible Debentures repaid from the
proceeds of the Offering, amounted to $33,000, $13,900 and $13,200 respectively.
As part of the Debenture Conversion, the conversion rate on $875,000 of the
Convertible Debentures, which remained outstanding after the Debenture
Conversion, was be reduced to $8.00 per share from $16.00 per share and the
interest rate thereon was reduced to 9% from 18%. In addition to payment of
interest, the Company is obligated to
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pay the holders of the Convertible Debentures a pro rata share of 50% of LIPA's
share of the net revenue (net of funds required for the payment of interest)
resulting from LIPA's energy sales. Three of the 26 holders of Convertible
Debentures, representing $150,000 in principal amount, did not agree to the
interest rate reduction from 18% to 9% per annum, and such holders were paid
their principle amounts in full in February 1997.
In June 1995, the Company issued 57,500 shares of Series One Preferred
Stock to Anchor Capital Company LLC ("Anchor") under the terms of a loan by
which Anchor loaned the Company the sum of $660,000 bearing interest at the rate
of 18% per annum (the "Anchor Loan"). The Anchor Loan was cross-collateralized
(together with the Solvation Loan described below) by a first lien on all of the
assets of the Company and 97,250 shares of Common Stock owned by Messrs. Nelson
and Rosen. The purpose of the Anchor Loan was to finance the costs and expenses
of the Offering and provide other funding to the Company for various costs and
expenses. The Anchor Loan was repaid with $796,000 of the proceeds of the
Offering, which included $136,000 of accrued interest. The 57,500 shares of
Series One Preferred Stock were exchanged for 205,000 shares of Common Stock in
a preferred stock exchange which was consummated concurrently with the Offering.
In December 1995, Solvation, Inc. ("Solvation") loaned the Company
$200,000, which bore an interest rate of 10% per annum and was repaid upon the
closing of the Offering. Solvation loaned the Company an additional $50,000 in
May 1996 on the same terms and conditions (together with the $200,000 loan, the
"Solvation Loan"), which amount was also repaid upon the closing of the
Offering.
In connection with the Anchor Loan, Richard Nelson and Theodore Rosen,
the Company's President and Chairman of the Board, respectively, pledged an
aggregate of 97,250 shares of the Company's Common Stock to Anchor. (The pledge
was later extended to secure the Solvation Loan.) These shares were released
from such pledge upon repayment of the Anchor Loan and the Solvation Loan.
During 1996, the Company engaged the law firm of Robinson, Brog,
Leinwand, Greene, Genovese & Gluck P.C. for certain legal services. Mr.
Rothman, a director of the Company, is a partner in that law firm.
All transactions between the Company and its officers, directors,
principal shareholders or other affiliates have been on terms no less favorable
than those that are generally available from unaffiliated third parties. Any
such future transactions will be on terms no less favorable to the Company than
could be obtained from an unaffiliated third party on an arm's-length basis and
will be approved by a majority of the Company's independent and disinterested
directors.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act, the Issuer has duly caused this amended report to be signed on its
behalf by the undersigned, thereunto duly authorized on this 2nd day of June,
1997.
U.S. ENERGY SYSTEMS, INC.
By /s/ Seymour J. Beder
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Seymour J. Beder
Chief Financial Officer,
Chief Accounting Officer and Controller
In accordance with the Exchange Act, this amended report has been
signed below by the following persons, or their respective true and lawful
attorney-in-fact and agent, on behalf of the registrant and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
U.S. ENERGY SYSTEMS, INC.
*
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Theodore Rosen Chairman of the Board of Directors June 2, 1997
/s/ Richard H. Nelson
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Richard H. Nelson President and Chief Executive Officer June 2, 1997
/s/ Seymour J. Beder
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Seymour J. Beder Chief Financial Officer,
Chief Accounting Officer and Controller June 2, 1997
*
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Evan Evans Director June 2, 1997
*
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Allen J. Rothman Director June 2, 1997
*
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Todd Goodwin Director June 2, 1997
</TABLE>
* By Richard H. Nelson, as Attorney-in-Fact.
