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, 1999 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-A Sullyfield Circle, Chantilly, VA 20151
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (703) 802-4848
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock with par value of 25 cents per share
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.
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YES X NO
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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 [ ].
Aggregate market value of the voting stock held by non-affiliates $ 408,496*
of the Registrant as of August 24, 1999
(* Executive officers, directors, and Registrant's ESOP were
considered affiliates, solely for purposes of this item.)
The number of shares outstanding of Registrant's Common Stock,
$.25 par value as of August 31, 1999, was 6,718,925
Documents Incorporated by Reference
None
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS AT MAY 31, 1999
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Name and Positions Business Experience Director
With the Company Age During The Last Five Years since
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Larry M. Heimendinger 55 Mr. Heimendinger has acted as the Chairman of the Board of March, 1994
Chairman of the Board Directors of the Company since he was elected to that position
in March of 1994. In accordance with the Amended and Restated
(Class I) 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. Mr. Heimendinger is
also a founder of Link2It, LLC (See Certain Relationships and
Related Transactions). Mr. Heimendinger previously served as
President and chief operating officer of Nantucket Corp., a
privately held software company, and after that company's
acquisition by Computer Associates International was associated
with Computer Associates, most recently as its Director of
Product Strategy. Before joining Nantucket, 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 Advanced
d Base IV and Advanced Clipper, books published by Brady Books,
and is a computer industry conference and seminar speaker
worldwide.
Thomas M. Hacala 54 Mr. Hacala has been the President of Seating Technology , a February,
(Class I) marketing and consulting company specializing in the 1998
Asian/European office furniture industry, since 1991. Mr.
Hacala is a member of Class I of the Board of Directors.
Marc E. Cotnoir 50 Mr. Cotnoir has been an independent consultant, providing March,
business and strategic planning support and systems engineering 1994
consulting, for a wide range of clients since 1988. Mr.
Cotnoir was Vice President for Marketing, Sales, and Service
for VideoSite Incorporated from September 1997 to July 1998.
Prior to 1988, Mr. Cotnoir had extensive experience,
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both within private industry and in the U.S. Air Force, with March,
computer and communications technology. Mr. Cotnoir is a 1994
member of Class II of the Board of Directors.
Richard J. McConnell 39 Mr. McConnell has been the President of Square Systems, Corp.,
a research and development firm specializing in advanced
software systems, since 1986. Mr. McConnell is also a founder
of Link2It, LLC (See Certain Relationships and Related
Transactions). Mr. McConnell has been involved in research and
development in the computer software industry since 1981. Mr.
McConnell is a member of Class III of the Board of Directors.
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EXECUTIVE OFFICERS AND CERTAIN
SIGNIFICANT EMPLOYEES OF THE COMPANY
The names, ages, and positions of the executive officers of
the Company are listed below.
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Name Age Position
- ---- --- --------
Larry M. Heimendinger 55 Chairman of the Board
(performing duties of President
and chief executive officer)
Richard E. Munczenski 57 Vice President and General Manager
Sandy B. Sewitch 42 Chief Financial Officer
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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.
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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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, 1999, 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 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. During
fiscal year 1999, Messrs. Heimendinger, Cotnoir, McConnell, and Hacala 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 these Section 16(a) reporting delinquencies
have since been corrected.
ITEM 11. EXECUTIVE COMPENSATION
The information under this heading relates to the chief
executive officer, chief financial officer, and vice president for fiscal year
1998. 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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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
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NAME AND PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION NUMBER OF OPTIONS COMPENSATION
- ------------------- ---- ------ ----- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry M. Heimendinger(1) 1999 $ 0 $ 0 $ 0 12,500 $ 0
Chairman of the Board 1998 0 0 0 12,500 0
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1997 0 0 0 12,500 0
Sandy B. Sewitch (2) 1999 $ 108,000 $ 0 $4,800 0 $ 0
Chief Financial Officer 1998 101,958 0 4,800 0 0
1997 93,500 0 4,800 0 0
Richard E. Munczenski(3) 1999 $95,000 $15,000 $2,450 0 $0
Vice President 1998 90,843 20,000 4,200 0 0
1997 85,000 15,906 4,200 0 0
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(1) 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 not had a President.
In accordance with the Company's Bylaws, until a new President is
elected and qualified, the Company's Chairman performs the duties of
that office.
(2) The "Other Annual Compensation" for Sandy Sewitch includes a car
allowance of $4,800 for each year listed.
(3) The "Other Annual Compensation" for Richard Munczenski includes a car
allowance of $4,200 for 1997 and 1998, and $2,450 for seven months of
fiscal 1999. Thereafter, Mr. Munczenski was provided with a company
leased car which was used substantially exclusively for company
business during the remainder of fiscal 1999.
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS
DURING FISCAL YEAR 1999
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PERCENT OF POTENTIAL OF REALIZABLE
TOTAL VALUE
NUMBER OPTIONS AT ASSUMED ANNUAL RATE OF
OF GRANTED TO STOCK PRICE APPRECIATION
NAME OF EXECUTIVE OPTIONS EMPLOYEES IN FOR OPTIONS TERM
OFFICER GRANTED FY 1999 EXERCISE EXPIRATION ------------------------------
- ----------------- ------- ------------ PRICE DATE 5% 10%
--------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larry M. Heimendinger 12,500(1) 26.3% (2) .15 6/01/09 $1,175 $2,988
Sandy B. Sewitch 0 --- --- --- --- ---
Richard E. Munczenski 0 --- --- --- --- ---
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(1) 75% of such options have vested and are currently exercisable. The
remaining 25% will vest on May 31, 2000.
(2) Mr. Heimendinger is not an employee of the Company. However, for
purposes of the calculation of the percentages, his options have been
included in the aggregate total employee options granted.
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FY-1999 OPTIONS EXERCISE AND FY-1999 YEAR-END VALUE TABLE
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VALUE OF UNEXERCISED
NUMBER OF OPTIONS IN-THE-MONEY OPTIONS
AT END-FY 1999 AT END-FY 1999
NUMBER OF ------------------ --------------
NAME OF EXECUTIVE SHARES ACQUIRED
OFFICER ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Larry M. Heimendinger 0 106,250 128,125 0 0
Sandy B. Sewitch 0 12,500 0 0 0
Richard E. Munczenski 0 45,277 0 0 0
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COMPENSATION OF DIRECTORS
Each nonemployee director other than Mr. Heimendinger has
received a monthly retainer of $1,500 since November 1994.
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The Company understands that shares of its Common Stock and
Convertible Debentures, which in past years have been reported as beneficially
owned by Gutzwiller or its successor, are held by Gutzwiller or its successor as
nominee only for various underlying owners, none of which is a beneficial owner
of five percent of more of the Company's Common Stock. As of May 31, 1999,
clients of Gutzwiller or its successor had invested approximately $3 million in
equity of the Company, and approximately $9.0 million in convertible debentures
of the Company, which are convertible into 18,000,000 shares of Common Stock.
As of September 28, 1999, no person or entity is believed by the
Company to be the beneficial owner of more than 5 percent of such class of
securities.
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The following table sets forth the beneficial ownership of
Common Stock as of September 28, 1998 of each of the current directors and each
of the executive officers named in the Summary Compensation Table below:
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Shares of Common Stock Percentage of Outstanding
Name Beneficially Owned (1) Common Stock
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<S> <C> <C>
Marc E. Cotnoir 85,000 1.3
Richard J. McConnell 85,000 1.3
Thomas M. Hacala 42,500 *
Larry M. Heimendinger 106,250 1.6
Sandy B. Sewitch 17,041 *
Richard E. Munczenski 59,801 *
All Directors and named Executive
Officers as a group (six persons) 395,592 5.9%
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(1) Beneficial ownership also includes shares of Common Stock which may be
acquired within 60 days of September 28, 1999, through the exercise of
warrants, options, or otherwise, as follows: Mr. Cotnoir, 85,000
shares; Mr. Heimendinger, 106,250 shares; Mr. McConnell, 85,000 shares;
Mr. Hacala, 42,500 shares; Mr. Sewitch, 12,500 shares; Mr. Munczenski,
45,277 shares; and all Directors and named Executive Officers as a
group, 376,527 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, and Mr. Heimendinger was granted an option to purchase
125,000 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
In consideration of, among other things, amounts advanced and
expenses allocated by the Company in connection with a contemplated joint
venture with Link2It, LLC ("Link2It"), a company formed by Larry M. Heimendinger
and Richard J. McConnell.through January 21, 1997, in the total amount of
approximately $205,500, the Company received a common membership
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interest in Link2It representing 10% of the total and a convertible preferred
membership interest in Link2It with a face amount of $112,500 convertible into
9% of the total membership interests (subject to adjustment under certain
circumstances as described below). In addition, the Company provided Link2It
with $150,000 reflected in convertible promissory notes due one year from the
date of issuance and bearing interest at 9 1/4% per annum. An additional
$100,000, of which $25,000 was released, was provided to become available upon
the satisfaction of certain agreed upon conditions. In January 1998, the Company
extended the due date of all of the promissory notes to January 21, 1999 and,
among other things, its obligation to fund additional amounts was substantially
terminated. In January 1999, the Company again extended the repayment period to
January 21, 2000, in consideration of a complete release from any remaining
funding obligation and the issuance of warrants to acquire additional common
membership interest in Link2It. Due to the delays in the introduction of
Link2It's proprietary products into the marketplace and the extended repayment
period of the loans, the accompanying financial statements at May 31, 1999
include a valuation reserve of $87,500 with respect to the notes.
In each case, Link2It's obligation with respect to advances
from the Company is evidenced in a convertible promissory note convertible into
additional common membership interests in Link2It at the rate of 1% of the
aggregate interests for each $12,500 principal amount of the note so converted
(subject to adjustment under certain circumstances described below). In the
event of further investment in Link2It by independent third-party investors the
conversion price at which both the note and the preferred membership interest
described above are convertible into common membership interests in Link2It
shall be subject to adjustment to such lesser percentage as the principal or
face amount so converted could have then purchased at a purchase price
proportionate to the lowest price actually paid for membership interests by such
an independent third-party investor less a discount of 15%. Prior to such an
adjustment, the Company's aggregate common membership interest in Link2It,
assuming advances in the total amount available, and conversion in full of both
the promissory notes evidencing such advances and its preferred membership
interest, would represent 39% of the total.
Link2It is engaged in the development of certain proprietary
products and services in the area of telecommunications and facsimile
transmission. Link2It has announced that it plans to introduce a line of
products that will enable organizations to integrate their standard fax machines
into corporate network environments, intranets, and the Internet.
The terms of the Company's investment in Link2It were approved
by Board of Directors of the Company as a whole.
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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 signed on
its behalf by the undersigned, thereunto duly authorized.
GENERAL KINETICS INCORPORATED
By: /s/ Larry M. Heimendinger
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Larry M. Heimendinger, Chairman of the Board
(Principal Executive Officer)
Date: September 28, 1999
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