SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1996 Commission File No. 0-1738
GENERAL KINETICS INCORPORATED
(Exact Name of Registrant as specified in its Charter)
Virginia 54-0594435
(State of Incorporation) (IRS Employer Identification No.)
14130-C Sullyfield Circle, Chantilly, VA 20151
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (703)-802-9300
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of Each Class Name of Exchange on which Registered
Common Stock with par value of 25 cents American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has 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
* (Further amendment required to previously filed Form 8-K to add audit
report regarding acquisition financial statements)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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-K or any amendment to this Form 10-K[ ].
<TABLE>
<S> <C>
Aggregate market value of the voting stock held by non-affiliates $1,496,330**
of the Registrant as of September 25, 1996
** (Executive officers, directors, ESOP and Gutzwiller and Partner, A.G. were considered
affiliates, solely for purposes of this item.)
The number of shares outstanding of Registrant's Common Stock,
.25 par value as of September 25, 1996, was 6,508,925
</TABLE>
<PAGE>
Explanatory Note
For Part III of the Registrant's Form 10-K for the fiscal
year ended May 31, 1996, the Registrant proposed incorporating
by reference certain portions of its Proxy Statement to be
filed with the Securities and Exchange Commission not later
than 120 days after the end of the Registrant's 1996 fiscal
year. The Proxy Statement will not be filed within the 120 day
period and this amendment is being filed by the Registrant
before the expiration of the 120 day period to report the
information required by Part III of Form 10-K.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS DURING YEAR ENDED MAY 31, 1996
<TABLE>
<CAPTION>
Name and Positions Business Experience Director
with the Company Age During the Last Five Years Since
<S> <C>
Robert K. Gardner 48 Mr. Gardner resigned as a member of the
Board of Directors of the Company effective March, 1994
September 1, 1996. Mr. Gardner has been the (resigned
principal of Robert K. Gardner & Associates September 1996)
for seventeen years. Robert K. Gardner &
Associates is a consulting business that
provides planning and marketing services for
development stage technology companies
serving industrial and government markets.
Mr. Gardner also served as Vice President
and General Manager of the
Secure Communications Division of the
Company through May 1995. Mr. Gardner was a
member of Class III of the Board of
Directors.
Larry M. Heimendinger 50 Mr. Heimendinger has acted as the Chairman March, 1994
Chairman of the Board of the Board of Directors of the Company
since he was elected to that position in
March of 1994. In accordance with the
Amended and Restated Bylaws of the Company,
Mr. Heimendinger has been performing the
duties of the President and chief executive
officer through his position as Chairman of
the Board and will continue to do so until
such time as a replacement for President and
chief executive officer is elected and qualified.
From 1989 through 1992, Mr. Heimendinger
was President and chief operating officer of
Nantucket Corp., a privately held software
company which was purchased in 1992 by Computer
Associates International, a company also involved
in software development. After that acquisition
and until sustaining a serious accident in
September, 1992, Mr. Heimendinger was associated
with Computer
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<PAGE>
Associates International, most recently as
its Director of Product Strategy. For
several years through 1988, Mr. Heimendinger
was the President and CEO of Origin, Inc., a
company that produced and marketed personal
computer software for the banking industry.
Mr. Heimendinger is the author of dBase IV
and Clipper, books published by Brady Books,
and is a computer industry conference and
seminar speaker worldwide. Mr. Heimendinger
is a member of Class I of the Board of
Directors.
Marc E. Cotnoir 47 Mr. Cotnoir has been an independent March, 1994
consultant, providing business and strategic
planning support and systems engineering
consulting, for a wide range of clients
since 1988. Prior to 1988, Mr. Cotnoir had
extensive experience, both within private
industry and in the U.S. Air Force, with
computer and communications technology.
Mr. Cotnoir was a member of Class II of the
Board of Directors and is now designated as
a member of Class III of the Board of
Directors.
Richard J. McConnell 32 Mr. McConnell has been the President of March, 1994
Square Systems, Inc., a research and
development firm specializing in advanced
software systems, since 1986. Mr. McConnell
has been involved in research and
development in the computer software
industry since 1981. Mr. McConnell is a
member of Class II of the Board of
Directors.
</TABLE>
Four meetings of the Board of Directors were held during
the year ended May 31, 1996 ("fiscal year 1996"). The Board of
Directors has established a standing Audit and Compensation
Committee, as well as a Strategic Planning and a Financial
Operations Committee. The Audit Committee, which met once in
fiscal year 1996, consisted of Messrs. Larry Heimendinger, Marc
Cotnoir and Richard McConnell. The Audit Committee reviews all
financial matters related to the Company's operations,
recommends to the Board of Directors independent auditors for
selection by the Company, discusses with the Company's
independent auditors the scope and results of audits and
approves and reviews any non-audit services performed by such
independent auditors.
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<PAGE>
The Compensation Committee, which met once in fiscal year
1996, consisted of Messrs. Larry Heimendinger and Marc Cotnoir.
The Compensation Committee reviews and establishes compensation
for the officers of the Company and administers the
compensation and benefits plans of the Company for officers of
the Company.
All present directors attended at least 75 percent of the
meetings of the Board of Directors and Committees on which they
served during fiscal year 1996.
EXECUTIVE OFFICERS AND CERTAIN
SIGNIFICANT EMPLOYEES OF THE COMPANY
The names, ages, and positions of the executive officers
of the Company are listed below.
<TABLE>
<CAPTION>
Name Age Position
<S> <C>
Larry M. Heimendinger 50 Chairman of the Board (performing
duties of President)
Shirl Lakeway, Jr. 39 Vice President and General Manager of
Food Technology Corporation, a
subsidiary of the Company
Richard E. Munczenski 54 Vice President and General Manager
Sandy B. Sewitch 39 Chief Financial Officer
</TABLE>
Larry M. Heimendinger has acted as the Chairman of the
Board of Directors since March of 1994 and, in accordance with
the Amended and Restated Bylaws of the Company, he has been
performing the duties of the President and chief executive
officer through his position as Chairman of the Board and will
continue to do so until a replacement for President and chief
executive officer is elected and qualified.
Shirl Lakeway, Jr., Vice President and General Manager of
Food Technology Corporation, a wholly owned subsidiary of the
Company, joined the Company in 1986.
Richard E. Munczenski, Vice President and General
Manager, joined the Company in August of 1969.
Sandy B. Sewitch, Chief Financial Officer, joined the
Company in April 1993.
The officers of the Company hold office at the discretion
of the Board of Directors of the Company.
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<PAGE>
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 officers, and
persons who beneficially own more than 10% of its Common Stock,
to file with the Securities and Exchange Commission and the
American Stock Exchange reports of ownership and changes in
ownership of the Company's equity securities. Officers,
directors and greater than 10% shareholders are also required
to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of
such reports furnished to the Company, during the fiscal year
ended May 31, 1996, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10%
shareholders were complied with, except certain inadvertent
filing delinquencies which have since been corrected, as set
forth below:
Under Rule 16a-3(f) every person who at any time during
the fiscal year was subject to Section 16 is required to file a
Form 5 within 45 days after fiscal year end, unless all
transactions otherwise required to be reported on Form 5 have
been reported before the due date of such form. Mr. Munczenski
did not timely make a report with respect to stock options
which were granted to him during the last fiscal year under the
Company's 1994 Stock Option Plan. During fiscal year 1996,
Messrs. Heimendinger, Cotnoir, McConnell and Gardner did not
timely report the respective stock options granted to them
under the Company's 1994 Nonemployee and Directors Stock Option
Plan in the last fiscal year. It is the Company's understanding
that on or about the date of this report, these Section 16(a)
reporting delinquencies will have been corrected.
ITEM 11
EXECUTIVE COMPENSATION
The information under this heading relates to the chief
executive officer and the one former executive officer of the
Company who received in excess of $100,000 in compensation for
fiscal 1996. The information is presented in compliance with
the rules and regulations of the Securities and Exchange
Commission applicable to those companies, such as General
Kinetics Incorporated, that meet the definition of a "small
business issuer".
Executive officers are appointed each year by the Board
of Directors at its annual meeting following the annual meeting
of shareholders and serve for one year or until their
successors are chosen and qualify in their stead. There are no
family relationships among the executive officers, or any
arrangement or understanding between any officer and any person
pursuant to which the officer was elected.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name and Principal Fiscal Other Annual Number of All Other
Position(1) Year Salary Bonus Compensation Options Compensation
<S> <C>
Larry M. Heimendinger(2) 1996 $ 0 $ 0 $ 0 12,500 $ 0
Chairman of the Board 1995 0 0 0 187,500 0
1994 0 0 0 0 0
Robert K. Gardner(3) 1996 0 0 100,800 10,000 0
Vice Chairman of the 1995 120,000 0 3,500 71,666 0
Board 1994 29,000 0 62,500 0 0
</TABLE>
(1) No executive officer of the Company serving at the end of fiscal
year 1996 received compensation in excess of $100,000 in value
for fiscal year 1996. Information concerning Mr. Gardner is
included because he, or a company of which he is a principal,
received remuneration of $82,000 in fiscal 1996 for consulting
services rendered to the Company during which time he also
served as Vice Chairman of the Board and received a monthly
retainer of $1,500 for such services. From March 1994 through
May 1995 Mr. Gardner was Vice President and General Manager of
the Secure Communications Division of the Company.
(2) Larry Heimendinger serves as the Company's Chairman of the
Board, for which he has received no salary compensation since
being elected to that position in March 1994. Since the
resignation of the Company's former President, in March 1994,
the Company has no current President. In accordance with the
Company's Bylaws, until a new President is elected and
qualified, the Company's Chairman of the Board performs the
duties of that office.
(3) Mr. Gardner served as the Company's Vice Chairman of the Board
prior to his resignation in September 1996. As a director, he
received a monthly retainer of $1,500 during fiscal 1996. He, or
a company of which he is a principal, also received an aggregate
of $82,000 in consulting fees for consulting services to the
Company during fiscal 1996. Prior to that time Mr. Gardner was
Vice President and General Manager of the Secure Communications
Division of the Company from March 1994 through May 1995 for
which he received $120,000 in annual salary. During fiscal 1994
he received an aggregate of $62,500 in consulting fees prior to
becoming a director and officer in March, and $29,000 in salary
subsequent to that date.
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<PAGE>
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS
DURING FISCAL YEAR 1996
<TABLE>
<CAPTION>
Potential of Realizable
Percent Value at assumed annual
of Total rates of stock price
Options appreciation for
Number of Granted to options term
Options Employees Exercise Expiration
Name of Executive Officer Granted in FY 1996 Price Date 5% 10%
<S> <C>
Larry M. Heimendinger 12,500 (1) 17.7% (2) .375 6/1/06 2,962 7,450
Robert K. Gardner 10,000 (1) 14.1% (2) .375 6/1/06 2,370 5,960
</TABLE>
(1) 50% of such options have vested and are currently
exercisable. An additional 25% will vest on November 30,
1996 and the remaining 25% on May 31, 1997.
(2) Neither Mr. Heimendinger nor Mr. Gardner is an employee
of the Company. However, for purposes of the calculation
of the percentages, their options have been included in
the aggregate total employee options granted.
FY-1996 OPTIONS EXERCISE AND FY-1996 YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
Value of Unexercised
Number of Number of Options In-The-Money Options
Shares At End-FY 1996 At End-FY 1996
Acquired Unexercis- Unexercis-
Name of Executive Officer On Exercise Exercisable able Exercisable able
<S> <C>
Larry M. Heimendinger 0 68,750 131,250 6,250 6,250
Robert K. Gardner 0 43,333 38,333 35,000 5,000
</TABLE>
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<PAGE>
COMPENSATION OF DIRECTORS
Each nonemployee director other than Mr. Heimendinger has
received a monthly retainer of $1,500 since November 1994. Mr.
Gardner received a monthly retainer of $500 while he was an
officer of the Company through May 1995, and received the
monthly retainer of $1,500 after that time until his
resignation in September 1996.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
As of September 26, 1996, approximately 51.2% percent of
the Company's outstanding Common Stock was believed to be
beneficially owned by Gutzwiller & Partner AG ("Gutzwiller").
The following table sets forth the beneficial ownership of
Common Stock as of September 26, 1996 of Gutzwiller, the only
person or entity believed by the Company to be the beneficial
owner of more than 5 percent of such class of securities.
<TABLE>
<CAPTION>
Percent of
Name and Address of Shares of Common Stock Outstanding
Beneficial Owner Beneficially Owned* Common Stock
<S> <C>
Gutzwiller & Partner AG 3,331,700 51.2%
Schindlerstrasse 26
CH-8035 Zurich/Switzerland
</TABLE>
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* Based on information provided by Gutzwiller, a Swiss
investment advisory firm. As of September 26, 1996,
Gutzwiller has reported that it has the power to vote, and
discretionary power to dispose of, 3,331,700 shares of Common
Stock issued and outstanding as of the record date. It is
the Company's understanding that Gutzwiller has discretionary
authority to dispose of or convert Convertible Debentures of
the Company which are convertible into 18,100,000 shares of
Common Stock, and would have the power to vote or dispose of
the 18,100,000 shares of Common Stock issuable upon
conversion thereof. After such a conversion, Gutzwiller
would hold 21,431,700 shares which would represent 87.1% of
the then outstanding Common Stock. This calculation does not
include 100,000 shares held of record by BAB General
Consultants for the benefit of Dr. August Schubiger, a
director of and attorney for Gutzwiller, or 100,000 shares
held of record by Gutzwiller for the benefit of an
unaffiliated third party.
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<PAGE>
The following table sets forth the beneficial ownership
of Common Stock as of September 25, 1996 of each of the current
directors and other directors who served during the past fiscal
year and each of the executive officers named in the Summary
Compensation Table below.
<TABLE>
<CAPTION>
Shares of Percentage of
Common Stock Outstanding
Name Beneficially Owned(1) Common Stock
<S> <C>
Mark E. Cotnoir 55,000 *
Robert K. Gardner 43,333 *
Larry M. Heimendinger 68,750 *
Richard J. McConnell 55,000 *
All Directors and
Executive Officers as a
group (eight persons) 283,641 4.4%
</TABLE>
(1) Beneficial ownership also includes shares of Common Stock which
may be acquired within 60 days of September 25, 1996, through
the exercise of warrants, options, or otherwise, as follows:
Mr. Cotnoir, 55,000 shares; Mr. Gardner, 43,333 shares; Mr.
Heimendinger, 68,750 shares; Mr. McConnell, 55,000 shares; and
all Directors and Officers as a group, 270,505 shares. Does not
include currently unallocated shares held by the ESOP of which
Mr. Heimendinger is a trustee. Additionally, each of Messrs.
Cotnoir and McConnell were granted options to purchase 100,000
shares, Mr. Heimendinger was granted an option to purchase
125,000 shares and Mr. Gardner was granted an option to
purchase 33,333 shares, each of which options will only vest if
the stock price reaches certain stipulated multiples of base
price of $1.0026 (for ten consecutive trading days).
* Indicates less than 1 percent.
ITEM 13
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
During 1996, the Company made payments to Square Systems, Inc.,
whose president, Richard J. McConnell, is a director of the Company,
in connection with its work with respect to certain research and
development activities. Total charges for the Company were
approximately $123,500 through May 31, 1996. Of that amount, $30,000
was attributable to software development work in connection with a
facsimile product of the Company's Secure Communications Division,
and the balance was attributable to work in connection with a
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<PAGE>
contemplated new joint venture with a company formed by Larry M.
Heimendinger and Mr. McConnell. Funds advanced by the Company in that
connection, to be reflected in its interest in such joint venture
going forward, included an additional $4,300 in payments to third
parties; certain as yet unallocated expenses remain to be allocated
between the Company and the joint venture.
During 1996, the Company made payments to Robert K.
Gardner, or a company of which he is a principal, in connection with
consulting services rendered to the Company by Mr. Gardner. Total
amounts paid in respect of such services were $82,000 in fiscal 1996
during which time Mr. Gardner also served as Vice Chairman of the
Board.
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<PAGE>
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 singed on its behalf by the undersigned, thereunto duly
authorized.
GENERAL KINETICS INCORPORATED
By: /s/ Larry M. Heimendinger
Larry M. Heimendinger, Chairman of the Board
(Principal Executive Officer)
Date: September 26, 1996
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