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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
(MARK ONE)
[X] AMENDMENT NO. 1 TO ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF
1934 FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 0-10238
U.S. ENERGY SYSTEMS, INC.
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(NAME OF REGISTRANT IN ITS CHARTER)
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Delaware 52-1216347
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
515 N. Flagler Drive
Suite 702
West Palm Beach, FL 33401 (561)820-9779
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Securities registered pursuant to Section 12(b) of the Act: None.
Securities Registered pursuant to Section 12(g) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $.01 per share Nasdaq SmallCap Market
Warrants Nasdaq SmallCap Market
Check whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 [ ]
Check if 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 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].
Revenue for the Fiscal Year ended January 31, 2000: $4,715,000.
The aggregate market value of the Common Stock held by nonaffiliates
computed by reference to the average bid and asked price of the Common Stock of
the registrant as of May 26, 2000 was approximately $21,000,000.
Check whether issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act. [X].
As of May 26, 2000 the number of outstanding shares of the registrant's
Common Stock was 6,214,538.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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PART III
ITEM 10. EXECUTIVE COMPENSATION
The following table shows the total compensation paid by the Company
during the fiscal years ended January 31, 2000, 1999 and 1998 to Mr. Nelson, the
Company's former President and Chief Executive Officer and Mr. Nevins, the
Company's Executive Vice President. There were no other executives of the
Company who received total compensation in excess of $100,000 during any of such
years.
SUMMARY COMPENSATION TABLE
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ANNUAL COMPENSATION LONG TERM COMPENSATION
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NAME AND YEAR ENDED SECURITIES
PRINCIPAL POSITION JANUARY 31 SALARY BONUS UNDERLYING OPTIONS/SARS (#)
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RICHARD H. NELSON, 2000 $165,000 102,050
President and Chief 1999 $162,500(1) -- 40,000
Executive Officer 1998 $150,000 -- 50,000
HOWARD NEVINS, Executive 2000 $100,000 50,000
Vice President 1999 $100,000 -- 40,000
1998 $ 49,457(2) -- 100,000
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(1) Mr. Nelson's annual base salary was increased from $150,000 to $165,000
on April 1, 1998. Under the terms of Mr. Nelson's employment agreement,
his salary is paid for one year after his death.
(2) Mr. Nevins' employment contract with the Company commenced as of August
23, 1997, and provides for an annual salary of $100,000.
The following table sets forth certain information with respect to all
options to purchase shares of Common Stock of the Company granted to the named
executive officers during the fiscal year ended January 31, 2000.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
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PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE
NAME GRANTED (#) FISCAL YEAR ($/SH) EXPIRATION DATE
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<S> <C> <C> <C> <C>
Richard H. Nelson 100,000 $2.875 1/24/2001
2,050 $2.875 1/24/2001
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102,050 16.12%
Howard Nevins 50,000 7.90% $2.875 7/5/2009
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TERMS OF OPTIONS
Stock options to Messrs. Nelson and Nevins were granted in 1999 under
the Company's 1998 Executive Incentive Compensation Plan (the "1998 Plan"). All
options granted in 1999 to Messrs. Nelson and Nevins, as well as to the other
executive officers and directors of the Company, under the 1999 Plan are
qualified, incentive stock options, expire 10 years from the date of grant, and
were immediately exercisable upon the date of grant.
The following table shows stock option exercises during the fiscal year
ended January 31, 2000 by the named executive officers. In addition, this table
describes the number of unexercised options and the value of unexercised
in-the-money options at January 31, 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND JANUARY 31, 2000 OPTION/SAR VALUE
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NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT JANUARY 31, 2000(#) AT JANUARY 31, 2000 ($) (1)
SHARES ACQUIRED ----------------------------------- ---------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------- ---------------- ------------------ ----------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Richard H. Nelson 0 0 241,025/51,025 $500,815/$85,977
Howard A. Nevins 0 0 165,000/25,000 $330,525/$42,125
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(1) Represents the difference between market price of the Company's Common
Stock and the exercise price of the options at January 31, 2000. Such
amounts may not necessarily be realized. Actual values which may be
realized, if any, upon any exercise of such options will be based on the
market price of the Common Stock at the time of any such exercise and thus
are dependent upon future performance of the Common Stock.
COMPENSATION OF DIRECTORS
Outside directors are compensated at an annual rate of $10,000 plus
travel expenses, and must attend at least four meetings annually. Employee
directors are not compensated for attendance at meetings of the Board, although
some travel expenses relating to attending meetings are reimbursed. No
additional compensation is given to committee members or participants in special
projects.
EMPLOYMENT AGREEMENTS
Mr. Rosen entered into an amended employment agreement with us on March
31, 1998, to serve as our Chairman of the Board of Directors until March 31,
2001, which term automatically extends for
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additional one-year periods beginning on the second anniversary of the agreement
and on each anniversary thereafter. Mr. Rosen's agreement currently provides for
an annual salary of $87,500, plus benefits. If Mr. Rosen is terminated without
cause during the term of his employment, as defined in the agreement, or if Mr.
Rosen resigns because his salary or benefits are decreased or he is demoted
within three years after we experience a change in control, as defined in the
employment agreement, he is entitled to severance pay equal to approximately
three times his base salary. Under the terms of Mr. Rosen's employment
agreement, he may not disclose any confidential information pertaining to our
business nor compete with us during the term of his employment and for an
additional two years thereafter.
Mr. Nevins entered into an employment agreement with us on August 4,
1997, to serve as the Executive Vice President for a term of three years ending
August 4, 2000. Mr. Nevins' contract provides for an annual salary of $100,000
plus benefits, and an initial grant of options to purchase 100,000 shares of our
common stock at $2.50 per share. Provision is also made for incentive
compensation in addition to the base salary and options. Under the terms of Mr.
Nevins' employment agreement, Mr. Nevins agrees that he will not disclose any
confidential information pertaining to our business nor compete with us during
the term of his employment and for an additional two years thereafter, but in no
event, earlier than August 4, 2002.
The employment contract for Richard Nelson, our former Chief Executive
Officer and President, provided that in case of death, his $165,000 salary would
be paid to his survivor, and the health insurance covering his family would be
continued, for a one year period. Such benefits will continue through January
2001.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock
owned as of April 30, 2000 (i) by each director and nominee, (ii) by each
executive officer of the Company, (iii) by those persons known to the Company to
beneficially own 5% or more of the outstanding shares of Common Stock of the
Company, and (iv) by all directors and officers of the Company as a group.
Unless otherwise indicated, the address of each of the beneficial owners
identified below is c/o U.S. Energy Systems, Inc., 515 North Flagler Drive,
Suite 702, West Palm Beach, Florida 33401.
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AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP PERCENT OF CLASS
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Lawrence I. Schneider.................................. 1,482,739(1) 20.31%
Theodore Rosen......................................... 418,757(2) 6.40%
Howard A. Nevins....................................... 431,000(3) 7.02%
Seymour J. Beder....................................... 156,192(4) 2.47%
Evan Evans............................................. 142,500(5) 2.29%
Allen J. Rothman....................................... 166,000(6) 2.64%
Henry Schneider........................................ 1,118,405(7) 15.31%
Asher Fogel............................................ 90,000(8) 1.42%
Richard T. Brandt II................................... 40,000(9) *
Energy Systems Investors, LLC.......................... 1,000,000(10) 16.10%
927 Fifth Avenue
New York, New York 10021
Cambridge Investments Limited.......................... 360,000(11) 5.82%
600 Montgomery Street
27th Floor
San Francisco, CA 94111
All officers and directors as a group (9 persons)...... 3,050,407 34.80%
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* Indicates less than 1%.
(1) Includes 100,000 shares issuable upon exercise of options at an exercise
price of $2.875 per share, 40,000 shares issuable upon exercise of options
at an exercise price of $2.50 per share, 46,800 shares issuable upon
exercise of options at an exercise price of $2.9375 per share and 250,000
shares of Series A Preferred Stock, currently convertible into 1,000,000
shares of common stock, which is owned by Energy Systems Investors, LLC,
and 27,778 shares of Series A Preferred Stock, currently convertible into
111,112 shares of common stock, which is owned by Mr. Schneider directly.
Lawrence I. Schneider and Henry Schneider are members and managers of
Energy Systems Investors, LLC; Rita Schneider is a member of Energy
Systems Investors, LLC. Henry Schneider is the son of Lawrence Schneider.
(2) Includes 100,850 shares issuable upon exercise of options at an exercise
price of $2.875 per share, 50,000 shares issuable upon exercise of options
at an exercise price of $2.031 per share, and 200,250 shares issuable upon
exercise of options at an exercise price of $2.031 per share, 11,357
shares issuable upon exercise of warrants at an exercise price of $4.00
per share and 79.545 shares of Series B Preferred Stock currently
convertible into 21,875 shares of common stock.
(3) Includes 50,000 shares issuable upon exercise of options at an exercise
price of $2.875 per share, and 140,000 shares issuable upon exercise of
options at an exercise price of $2.50 per share.
(4) Includes 50,550 shares issuable upon exercise of options at an exercise
price of $2.875 per share, 85,000 shares issuable upon exercise of options
at an exercise price of $2.50 per share, and 15,000 shares issuable upon
exercise of options at an exercise price of $2.031 per share.
(5) Includes 50,000 shares issuable upon exercise of options at an exercise
price of $2.875 per share, 81,250 shares issuable upon exercise of options
at an exercise price of $2.50 per share, and 10,000 shares issuable upon
exercise of options at an exercise price of $2.031 per share.
(6) Includes 75,000 shares issuable upon exercise of options at an exercise
price of $2.875 per share, 80,000 shares issuable upon exercise of options
at an exercise price of $2.50 per share, and 10,000 shares issuable upon
exercise of options at an exercise price of $2.031 per share.
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(7) Includes 75,700 shares issuable upon exercise of options at an exercise
price of $2.875 per share, 40,000 shares issuable upon exercise of options
at an exercise price of $2.50 per share and 250,000 shares of Series A
Preferred Stock, currently convertible into 1,000,000 shares of common
stock, which is owned by Energy Systems Investors, LLC. Henry Schneider
and Lawrence Schneider are members and managers of Energy Systems
Investors LLC. Henry Schneider is the son of Lawrence Schneider.
(8) Includes 50,000 shares issuable upon exercise of options at an exercise
price of $2.875 per share, and 40,000 shares issuable upon exercise of
options at an exercise price of $2.50 per share.
(9) Includes 40,000 shares issuable upon exercise of options at an exercise
price of $2.25 per share.
(10) Includes 250,000 shares of Series A Preferred Stock, currently convertible
into 1,000,000 shares of common stock. Lawrence I. Schneider and Henry
Schneider are members and managers of Energy Systems Investors, LLC.
(11) Based on a Schedule 13-D sent to us in December 1996.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lawrence I. Schneider is a manager and member of Energy Systems
Investors, LLC, the entity which was granted an option to purchase up to 888,888
shares of our Series A Preferred Stock at our 1998 annual meeting of
stockholders. Mr. Schneider is a member of our Board of Directors and chairman
of its Executive Committee. Appointment to these positions was a condition of
the Energy Systems Investors' initial purchase of 250,000 shares of our Series A
Preferred Stock. Henry Schneider, our Vice President and a Director, is also a
manager and a member of Energy Systems Investors. His appointment to the
positions as Vice President and Director were made following, but not as a
condition to, this financing.
In addition, the Board of Directors agreed to pay Mr. Lawrence
Schneider a fee of $275,000 for his substantial efforts in connection with the
pending acquisition of Steamboat 2 and 3. Mr. Schneider received 187,234 shares
of our restricted common stock in December 1999 in lieu of such cash payment and
options to acquire 46,800 shares of common stock at an exercise price of $2.9375
per share.
Howard Nevins, Executive Vice President and a Director, was the former
President and Director of American Enviro-Services, Inc., an Indiana corporation
with which we merged in August 1997. As part of this AES merger, Mr. Nevins
received 240,000 shares of our common stock and options to purchase 100,000
shares of our common stock. Mr. Nevins was also appointed to our Board of
Directors in connection with the merger.
The law firm of Robinson, Brog, Leinwand, Green, Genovese & Gluck P.C.,
of which Allen J. Rothman, one of our directors, is a partner, provides us with
legal services from time to time. For the fiscal year ended January 31, 2000, we
paid such firm approximately $103,800 in legal fees and expenses.
In November 1999, we entered into a four-month agreement with a
consulting company affiliated with Lawrence I. Schneider, President, Chief
Executive Officer and a Director, Henry Schneider, Vice-President and Director
and Asher Fogel, a member of our Board of Directors. The agreement provided for
the consultant to provide advisory and investment banking services in exchange
for a fee of 7.5% of the face amount of financing received by us and warrants to
purchase our common stock at an exercise price of $2.25. The number of warrants
would be an amount equal to 10% of the total dollar amount raised. The
consultant would also receive a fee for any mergers arranged by the Consultant.
The agreement expired in February 2000.
All transactions between us and our officers, directors, principal
stockholders or other affiliates have been on terms no less favorable than those
that are generally available from unaffiliated third parties. Any future
affiliate transactions will be on terms no less favorable to us than could be
obtained from an unaffiliated third party on an arm's-length basis and will be
approved by a majority of our independent and disinterested directors.
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On May 10, 2000, a total of 24,069 shares of the Company's Common Stock
were issued to Energy Systems Investors, LLC and Lawrence I. Schneider in
connection with the anti-dilution clause in the original contract with Mr.
Schneider. The clause provided that if any non-operational, extraordinary or
non-recurring event affecting the Company's equity in an amount greater than
$500,000 occurred within 24 months of their investment in the Company's Series A
Preferred Stock, and which arose from a pre-existing situation, shares of common
stock would be issued under a formula specified in the agreement. The settlement
of our lawsuit with Enviro Partners LP and Energy Management Corporation for
$900,000 was such an event, and the calculation resulted in the issuance of
21,662 shares to Energy Systems Investors, LLC and 2,407 shares to Mr.
Schneider.
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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 report to be signed on its behalf
by the undersigned, thereunto duly authorized.
U.S. ENERGY SYSTEMS, INC.
May 30, 2000 By: /s/ Seymour J. Beder
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Seymour J. Beder
Chief Financial and Accounting Officer
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SIGNATURE TITLE DATE
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** Chairman of the Board May 30, 2000
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Theodore Rosen
**
------------------------------------------- President and Chief Executive Officer May 30, 2000
Lawrence I. Schneider (Principal Executive Officer)
/s/ Seymour J. Beder Chief Financial Officer May 30, 2000
------------------------------------------- (Principal Financial and Accounting Officer)
Seymour J. Beder
** Executive Vice President and Director May 30, 2000
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Howard Nevins
** Vice President and Director May 30, 2000
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Henry Schneider
** Vice President and Director May 30, 2000
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Asher E. Fogel
** Director May 30, 2000
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Allen J. Rothman
** Director May 30, 2000
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Evan Evans
** Director May 30, 2000
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Richard T. Brandt II
** Director May 30, 2000
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Burton Joel Ahrens
** Director May 30, 2000
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Stanleigh G. Fox
** By /s/ Seymour J. Beder
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Seymour J. Beder
Attorney-in-Fact
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