<PAGE>
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, 2000 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
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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.
YES X NO _____
---
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 $816,992*
of the Registrant as of August 23, 2000
(* 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
</TABLE>
Documents Incorporated by Reference
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None
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS AT MAY 31, 2000
<TABLE>
<CAPTION>
Name and Positions Business Experience Director
With the Company Age During The Last Five Years since
------------------------------ ----------- ---------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Larry M. Heimendinger 56 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
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. Mr. Heimendinger is a member of Class 1 of the
Board of Directors.
Thomas M. Hacala 55 Mr. Hacala has been the President of Seating Technology , a February, 1998
marketing and consulting company specializing in the
Asian/European office furniture industry, since 1991. Mr.
Hacala is a member of Class I of the Board of Directors.
Marc E. Cotnoir 51 Mr. Cotnoir has been an independent consultant, providing March, 1994
business and strategic planning support and systems engineering
consulting, for a wide range of clients since 1988.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
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, both
within private industry and in the U.S. Air Force, with
computer and communications technology. Mr. Cotnoir is a
member of Class II of the Board of Directors.
Richard J. McConnell 40 Mr. McConnell has been the President of Square Systems, Corp., March, 1994
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.
</TABLE>
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> <C>
Larry M. Heimendinger 56 Chairman of the Board
(performing duties of President
and chief executive officer)
Richard E. Munczenski 58 Vice President and General Manager
Sandy B. Sewitch 43 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.
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, 2000, 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
2000, 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 2000. 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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------- -------------------------------
Name and Principal Other Annual All Other
Position Year Salary Bonus Compensation Number of Options Compensation
--------------------------- ---- --------- ------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry M. Heimendinger(1) 2000 $ 0 $ 0 $ 0 12,500 $ 0
Chairman of the Board 1999 0 0 0 12,500 0
1998 0 0 0 12,500 0
</TABLE>
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<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------- -------------------------------
Name and Principal Other Annual All Other
Position Year Salary Bonus Compensation Number of Options Compensation
--------------------------- ---- --------- ------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sandy B. Sewitch (2) 2000 $108,000 $ 7,500 $4,800 0 $ 0
Chief Financial Officer 1999 108,000 0 4,800 0 0
1998 102,000 0 4,800 0 0
Richard E. Munczenski(3) 2000 $ 96,500 $40,000 $ 0 0 $ 0
Vice President 1999 95,000 15,000 3,500 0 0
1998 90,843 20,000 4,200 0 0
</TABLE>
(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 1998 and $3,500 for ten 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 and fiscal 2000.
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS
DURING FISCAL YEAR 2000
<TABLE>
<CAPTION>
Potential of Realizable Value
Percent of Total at assumed annual rate of
Number Options stock price appreciation
of Granted to for options term
Name of Executive Options Employees in Exercise Expiration --------------------------------
Officer Granted FY 2000 Price Date 5% 10%
-------------------- ----------- ------------- -------- ----------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Larry M. Heimendinger 12,500(1) 26.3% (2) .25 6/01/10 $1,965 $4,980
Sandy B. Sewitch 0 --- --- --- --- ---
Richard E. Munczenski 0 --- --- --- --- ---
</TABLE>
(1) 75% of such options have vested and are currently exercisable. The
remaining 25% will vest on May 31, 2001.
(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-2000 OPTIONS EXERCISE AND FY-2000 YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
Value of Unexercised
Number of Options In-the-Money Options
Number of At End-FY 2000 At End-FY 1999
Name of Executive Shares Acquired -------------------------------------- ----------------------------------
Officer On Exercise Exercisable Unexercisable Exercisable Unexercisable
------------------------- --------------- -------------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Larry M. Heimendinger 0 118,750 128,125 0 0
Sandy B. Sewitch 0 12,500 0 0 0
Richard E. Munczenski 0 45,277 0 0 0
</TABLE>
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 & Parner, AG ("Gutzwiller") or its successor, have been 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, 2000, 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, 2000, no person or entity is believed by the Company to
be the beneficial owner of more than 5 percent of its common stock.
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The following table sets forth the beneficial ownership of Common
Stock as of September 28, 2000 of each of the current directors and each of the
executive officers named in the Summary Compensation Table above:
<TABLE>
<CAPTION>
Shares of Common Stock Percentage of Outstanding
Name Beneficially Owned (1) Common Stock
------- ----------------------- --------------------------
<S> <C> <C>
Marc E. Cotnoir 95,000 1.4
Richard J. McConnell 95,000 1.4
Thomas M. Hacala 52,500 *
Larry M. Heimendinger 118,750 1.8
Sandy B. Sewitch 17,041 *
Richard E. Munczenski 59,801 *
All Directors and named Executive
Officers as a group (six persons) 438,092 6.5%
</TABLE>
(1) Beneficial ownership also includes shares of Common Stock which may be
acquired within 60 days of September 28, 2000 through the exercise of
warrants, options, or otherwise, as follows: Mr. Cotnoir, 95,000 shares;
Mr. Heimendinger, 118,750 shares; Mr. McConnell, 95,000 shares; Mr. Hacala,
52,500 shares; Mr. Sewitch, 12,500 shares; Mr. Munczenski, 45,277 shares;
and all Directors and named Executive Officers as a group, 419,027 shares.
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 a base price of $1.0026 (for
ten consecutive trading days).
* Indicates less than 1 percent.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
During fiscal 1996 and 1997, Square Systems, Corp., whose president,
Richard J. McConnell, is a director of the Company, provided consulting services
to the Company in connection with its work with respect to certain research and
development activities. Total charges to the Company for these consulting
services were approximately $123,500 through May 31, 1997. 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 contemplated joint venture
with Link2It, LLC ("Link2It"), a company formed by Larry M. Heimendinger and Mr.
McConnell. An additional $59,200 was charged to the Company by Square Systems
during fiscal 1997, between June 1 and December 31, 1996,
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<PAGE>
which was attributable to work in connection with Link2It. Additional funds
advanced by the Company in that connection include payments of $14,300 to
third parties and certain Company expenses allocated to the new venture
totaling approximately $38,500.
In consideration of, among other things, the foregoing amounts
advanced by the Company through January 21, 1997, in the total amount of
approximately $205,500, the Company received a common membership 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 initially 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 terminated. In
January 1999 and January 2000, the Company again extended the repayment period,
and such loans are now scheduled to mature on January 21, 2001, in consideration
of a complete release from any remaining funding obligation and the issuance of
warrants to acquire additional common membership interests in Link2It.
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, and without conversion of certain other indebtedness, would represent
up to 39% of the total.
The Company has agreed to certain further adjustments to the foregoing
terms to the extent required in connection with certain potential third-party
financing and the repayment of the convertible notes. However, due to delays in
the introduction of Link2It's proprietary products into the marketplace and the
extended repayment period of the loans, the Company's financial statements at
May 31, 2000 include a valuation reserve of $175,000 which represents the total
due under the note receivable.
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 the
Board of Directors of the Company as a whole.
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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 signed 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 28, 2000
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