SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
AMENDMENT NO. 2 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Commission File Number: 0-18267
Noise Cancellation Technologies, Inc.
(Exact name of registrant as specified
in its charter)
Delaware 59-2501025
(State or other jurisdiction of (IRS Employer
incorporation organization) Identification No.)
1025 West Nursery Road, Linthicum, MD 21090
(Address of principal executive office) (Zip Code)
(410) 636-8700
(Registrant's telephone number, including area code)
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Set forth below is certain information for the three fiscal years ended
December 31, 1996, 1995 and 1994 relating to compensation received by the
Company's Chief Executive Officer and all executive officers of the Company
other than the Chief Executive Officer (collectively the "Named Executive
Officers") whose total annual salary and bonus for the fiscal year ended
December 31, 1996, exceeded $100,000 for services rendered in all capacities.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Other Restricted Options
Annual Stock Warrants All Other
Name and Position Year Salary($) Bonus($) Compensation Awards SARS(#) Compensation
- ----------------- ---- -------- -------- ------------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jay M. Haft 1996 $ 64,000 (1) $ - $ - $ - 200,000 $ -
Chairman (1) 1995 110,000 - - - 937,000 (2)(8) -
1994 30,000 - - 8,750 (3) 165,000 -
Michael J. Parrella 1996 120,000 106,885 15,348 - 475,000 5,218 (5)
President (1) 1995 90,833 47,168 6,395 - 1,622,000 (4)(8) -
1994 195,000 - 9,458 - 75,000 3,858 (5)
Stephen J. Fogarty 1996 105,833 - - - - -
Senior Vice President; 1995 104,434 10,083 - - 391,400 (6)(8) -
Chief Financial Officer 1994 110,000 - - - - -
Irene Lebovics 1996 105,000 - - - - -
Senior Vice President; 1995 88,000 - - - 533,850 (7)(8) -
President, NCT Hearing 1994 107,250 - - - - -
Products
Jeffrey Zeitlin 1996 110,000 - - - 275,000 -
Senior Vice President 1995 - - - - - -
Operations 1994 - - - - - -
- ----------------
</TABLE>
(1)Mr. Haft was elected Chairman of the Board and relinquished the title of
Chief Executive Officer on July 17, 1996. Prior thereto, and from November
15, 1994, Mr. Haft served as Co-Chairman of the Board and Chief Executive
Officer. Mr. Haft also served as President from November 15, 1994, to July
6, 1995, when Mr. Parrella, who had served as Executive Vice President from
November 15, 1994, to July 6, 1995, was elected President. Mr. Parrella
also had served as President until November 15, 1994.
(2)Excludes options and warrants to purchase 585,000 shares of the Company's
common stock forfeited under the "Exchange Program" described in footnote (8)
below, and other activity for a net new grant of 402,000 options and warrants
all of which were exercisable at December 31, 1996.
(3)Consists of 5,000 restricted shares of the Company's common stock granted to
Mr. Haft on May 11, 1994 pursuant to the Company's Stock Incentive Plan (the
"Incentive Plan") valued at $1.75 per share, the market price of the common
stock on that date. As of December 31, 1996, Mr. Haft held 10,000 restricted
shares of common stock which were worth $4,060 based on the market price of
the common stock on that date.
(4)Excludes options and warrants to purchase 1,385,000 shares of the Company's
common stock forfeited under the "Exchange Program" described in footnote (8)
below, and other activity for a net new grant of 237,000 options and warrants
all of which were exercisable at December 31, 1996.
(5)Consists of the annual premiums for a $2 million personal life insurance
policy paid by the Company on behalf of Mr. Parrella.
(6)Excludes options to purchase 316,400 shares of the Company's common stock
forfeited under the "Exchange Program" described in footnote (8) below, and
other activity for a net new grant of 75,000 all of which are exercisable at
December 31, 1996.
(7) Excludes options and warrants to purchase 507,600 shares of the Company's
common stock forfeited under the "Exchange Program" described in footnote (8)
below, and other activity for a net new grant of 26,250 all of which are
exercisable at December 31, 1996.
(8)On November 8, 1995, the Company received an offer from a Canadian
institutional investor to purchase 4,800,000 shares of the Company's common
stock at a price of $0.75 per share, the fair market value of such shares on
that date. At that time virtually all of the Company's authorized capital of
100,000,000 shares of common stock was issued and outstanding or reserved for
issuance upon the exercise of outstanding warrants and options to purchase
common stock of the Company. Therefore, in order to make sufficient shares
available to effect the sale of 4,800,000 shares of common stock to such
investor, the Company adopted a program (the "Exchange Program"), to be
partially implemented through the Incentive Plan and the Company's Option
Plan for Certain Directors (the "Directors Plan") and partially outside such
plans, under which all directors, officers, certain active consultants (all
of whom were former directors or officers of the Company) and all current
employees were given the right to exchange presently owned warrants and
options that had shares of common stock reserved for issuance upon their
exercise (respectively, "Old Warrants" and "Old Options") for new warrants
and options which initially, and until the requisite corporate action was
taken to increase the authorized capital of the Company and reserve the
required number of shares of common stock for issuance upon their exercise,
would not have any shares of common stock reserved for issuance upon their
exercise (respectively, "New Warrants" and "New Options"). The exercise price
of the New Warrants and New Options was established at $0.75 per share, the
fair market value of the Company's common stock on November 8, 1995, the date
the Exchange Program was adopted, and exchanges were to be effected starting
with the Old Warrants and Old Options having the highest exercise prices and
proceeding in descending order of exercise prices until sufficient shares of
common stock became available for the Company to implement the sale of common
stock to the Canadian investor. If possible, no exchanges were to be made
which would involve Old Warrants or Old Options having an exercise price
below $0.75 per share, and, in fact, no such exchanges were required. The
exercise prices of the Old Warrants and Old Options exchanged for New
Warrants and New Options ranged from a high of $5.09 per share to $0.75 per
share.
The consideration to the participants in the Exchange Program for
exchanging Old Warrants and Old Options that had shares of common stock of
the Company reserved for issuance upon their exercise at exercise prices
above $0.75 per share for New Warrants and New Options initially having no
shares reserved for issuance upon their exercise was the reduction in the
exercise price. With respect to Old Warrants and Old Options having an
exercise price of $0.75 per share that were exchanged for New Warrants and
New Options that did not have shares reserved for issuance upon their
exercise, such consideration was provided by a provision in the Exchange
Program that granted the holders of such Old Warrants and Old Options New
Warrants and New Options having the right to purchase 115% of the shares
available for purchase upon the exercise of the Old Warrants and Old Options
exchanged.
The New Warrants and New Options became fully vested upon the surrender
and forfeiture of Old Warrants and Old Options to purchase a corresponding
number of shares (as adjusted in accordance with the foregoing formula in the
case of those having a $0.75 per share exercise price). However, the New
Warrants and New Options would not become exercisable until: (i) approval by
the Company's stockholders of an amendment to the Certificate of
Incorporation increasing the authorized capital by an amount of additional
shares of common stock at least sufficient to provide the number of shares
needed to be reserved to permit the exercise of all New Warrants and New
Options, and (ii) the completion of such further corporate action including
amendments to the Incentive Plan and the Directors Plan that may be necessary
or appropriate in connection with the implementation of the Exchange Program.
Such stockholder approval and further corporate action were obtained and
completed on July 17, 1996, and August 14, 1996, respectively. The expiration
dates of the New Warrants and New Options are the same as the expiration
dates of the Old Warrants and Old Options exchanged except that if such
expiration date occurred prior to the date on which the New Warrants or New
Options become exercisable, the expiration date for such New Warrants or New
Options would be ninety (90) days following the date on which such New
Warrants and New Options become exercisable. In all other respects, the terms
and conditions of the New Warrants and New Options are the same as the terms
and conditions of the Old Warrants and Old Options exchanged.
Under the Exchange Program, 4,800,249 shares of the Company's common stock
were made available for issuance to the Canadian institutional investor and
it was necessary in order to make the New Warrants and New Options fully
exercisable for the Company to take the appropriate corporate action to
reserve 5,055,499 shares of the Company's common stock for issuance upon
their exercise which action was completed following the above described
increase in the Company's authorized capital.
<PAGE>
Stock Options and Warrants
The following tables summarize the Named Executive Officers' stock option and
warrant activity during 1996.
<TABLE>
<CAPTION>
Options and Warrants Granted in 1996
Percent
of Total
Options
and Potential Realized Value at
Shares Warrants Assumed Annual Rates of
Underlying Warrants Exercise Stock Price Appreciation for
Options Granted to Price Option and Warrant Term (4)
Employees Per Expiration ----------------------------
Name Granted in 1996 Share Date 5% 10%
---- ------- ---------- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jay M. Haft (1) 200,000 11.7% $0.6563 1/22/03 $ 53,436 $ 124,529
Michael J. Parrella (2) 475,000 27.8% 0.6563 1/22/03 126,911 295,755
Jeffrey Zeitlin (3) 275,000 16.1% 0.6563 1/23/03 73,475 171,227
- --------------
</TABLE>
(1)Options to purchase 200,000 shares granted to Mr. Haft were granted pursuant
to the Incentive Plan and are fully vested.
(2)Options to purchase 475,000 shares granted to Mr. Parrella were granted
pursuant to the Incentive Plan and are fully vested.
(3)Options to purchase 275,000 shares granted to Mr. Zeitlin were granted
pursuant to the Incentive Plan and are fully vested.
(4)The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by the SEC and, therefore, are not intended to
forecast possible future appreciation if any, of the stock price.
<PAGE>
<TABLE>
<CAPTION>
1996 Aggregated Options and Warrant Exercises and
December 31, 1996 Option and Warrant Values
Number of Shares
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Number of and Warrants at and Warrants at
Shares December 31,1996 December 31, 1996
Acquired Value ----------------------------- -----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jay M. Haft - $ - 1,207,000 - $ - $ -
Michael J. Parrella - - 2,736,456 - 2,697 -
Stephen J. Fogarty - - 233,200 - - -
Irene Lebovics - - 492,550 - - -
Jeffrey Zeitlin - - 275,000 - - -
</TABLE>
Compensation Arrangements with Certain Officers and Directors
On February 1, 1996, the Compensation Committee awarded Mr. Parrella an
incentive bonus equal to 1% of the cash received by the Company upon the
execution of the agreement or other documentation evidencing transactions with
unaffiliated parties (other than certain parties involved in transactions then
in negotiation) or otherwise received at the closing of said transactions which
occur subsequent to January 1, 1996.
On July 11, 1995, in order to enable the Company to obtain 1,100,000
authorized but unissued shares of common stock to sell to an investor in a
private placement to raise additional working capital, Mr. Parrella forfeited
options to purchase 500,000 shares of the Company's common stock. Three other
directors, Messrs. Haft, McCloy and Oolie, also forfeited options to purchase
respectively 50,000; 500,000 and 50,000 shares of the Company's common stock for
the same reason. In recognition of the on-going efforts of Mr. Parrella on
behalf of the Company and the fact that his cash compensation had been
significantly reduced the prior year, the Company agreed that if the private
placement was successfully concluded and Mr. Parrella agreed to work for the
Company through 1996 (without any obligation on the part of the Company to
employ him for any given period), Mr. Parrella would be granted options to
purchase 500,000 shares of common stock under the Incentive Plan. Of this
amount, 250,000 options would become vested and exercisable immediately. The
other 250,000 options would become vested and exercisable either on December 31,
1996 provided Mr. Parrella was employed by the Company on that date or on such
earlier date if the price of the Company's common stock as traded on the NASDAQ
Stock Market had maintained a price of $1.25 per share or above for the previous
45 days. On December 12, 1995 the Option Committee granted Mr. Parrella options
to purchase 500,000 shares of common stock subject to the foregoing terms and
conditions. The exercise price of such options is $0.6563 per share, the fair
market value of the Company's common stock on the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In October 1990, the Company's Board of Directors authorized the issuance of
warrants to acquire 420,000 shares of common stock to each of Messrs. McCloy,
Parrella and Oolie and Ms. Lebovics, exercisable through September 30, 1994, at
$.375 per share, being the market price of the Company's common stock on the
date of such authorization, based upon each such person's commitment to extend
his or her personal guarantee on a joint and several basis with the others in
support of the Company's attempt to secure bank or other institutional
financing, the amount of which to be covered by the guarantee would not exceed
$350,000. No firm commitment for any such financing has been secured by the
Company and at present no such financing is being sought. However, each of such
persons' commitment to furnish said guarantee continues in full force and
effect.
In 1989, the Company established a joint venture with Environmental Research
Information, Inc., ("ERI") to jointly develop, manufacture and sell (i) products
intended for use solely in the process of electric power generation,
transmission and distribution and which reduce noise and/or vibration resulting
from such process, (ii) personal quieting products sold directly to the electric
utility industry and (iii) products that reduce noise and/or vibration emanating
from fans and fan systems (collectively, "Power and Fan Products"). In 1991, in
connection with the termination of this joint venture, the Company agreed, among
other things, during the period ending February 1996, to make payments to ERI
equal to (i) 4.5% of the Company's sales of Power and Fan Products and (ii)
23.75% of fees derived by the Company from its license of Power and Fan Products
technology, subject to an overall maximum of $4,500,000. Michael J. Parrella,
President of the Company, was Chairman of ERI at the time of both the
establishment and termination of the joint venture and owns approximately 12% of
the outstanding capital of ERI. In addition, Jay M. Haft, Co-Chairman, and Chief
Executive Officer of the Company, shares investment control over an additional
24% of the outstanding capital of ERI. The Company believes that the respective
terms of both the establishment of the joint venture with ERI and its
termination were comparable to those that could have been negotiated with other
persons or entities. During the fiscal year ended December 31, 1996, the Company
was not required to make any such payments to ERI under these agreements.
In 1993, the Company entered into three Marketing Agreements with QuietPower
Systems, Inc. ("QSI") (until March 2, 1994, "Active Acoustical Solutions,
Inc."), a company which is 33% owned by ERI and 2% owned by Mr. Haft. Under the
terms of one of these Marketing Agreements, QSI has undertaken to use its best
efforts to seek research and development funding for the Company from electric
and natural gas utilities for applications of the Company's technology to their
industries. In exchange for this undertaking, the Company has issued a warrant
to QSI to purchase 750,000 shares of Common Stock at $3.00 per share. The last
sale price for the Common Stock reported on the NASDAQ National Market System on
May 15, 1993, the date of the Marketing Agreement, was $2.9375. The warrant
becomes exercisable as to specific portions of the total 750,000 shares of
Common Stock upon the occurrence of defined events relating to QSI's efforts to
obtain such funding for the Company. When such defined events occur, the Company
will record a charge for the amount by which the market price of the Common
Stock on such date exceeds $3.00 per share, if any. The warrant remains
exercisable as to each such portion from the occurrence of the defined event
through October 13, 1998. As of December 31, 1994, contingencies had been
removed against 525,000 warrants resulting in a 1993 non-cash charge of
$120,250. This Marketing Agreement also grants to QSI a non-exclusive right to
market the Company's products that are or will be designed and sold for use in
or with equipment used by electric and/or natural gas utilities for non-retrofit
applications in North America. QSI is entitled to receive a sales commission on
any sales to a customer of such products for which QSI is a procuring cause in
obtaining the first order from such customer. In the case of sales to utility
company customers, the commission is 6% of the revenues received by the Company.
On sales to original equipment manufacturers for utilities, the commission is 6%
on the gross revenue NCT receives on such sales from the customer in the first
year, 4% in the second year, 2% in the third year and 1% in the fourth year, and
.5% in any future years after the fourth year. QSI is also entitled to receive a
5% commission on any research and development funding it obtains for NCT, and on
any license fees it obtains for the Company from the license of the Company's
technology. The initial term of this Agreement is three years renewable
automatically thereafter on a year-to-year basis unless a party elects not to
renew.
Under the terms of the second of the three Marketing Agreements, QSI is
granted a non-exclusive right to market the Company's products that are or will
be designed and sold for use in or with feeder bowls throughout the world,
excluding Scandinavia and Italy. Under this Marketing Agreement, QSI is entitled
to receive commissions similar to those payable to end user and original
equipment manufacturer customers described above. QSI is also entitled to
receive the same 5% commission described above on research and development
funding and technology licenses which it obtains for the Company in the feeder
bowl area. The initial term of this Marketing Agreement is three years with
subsequent automatic one-year renewals unless a party elects not to renew.
Under the terms of the third Marketing Agreement, QSI is granted an exclusive
right to market the Company's products that are or will be designed and sold for
use in or with equipment used by electric and/or natural gas utilities for
retrofit applications in North America. QSI is entitled to receive a sales
commission on any sales to a customer of such products equal to 129% of QSI's
marketing expenses attributable to the marketing of the products in question,
which expenses are to be deemed to be the lesser of QSI's actual expenses or 35%
of the revenues received by the Company from the sale of such products. QSI is
also entitled to receive a 5% commission on research and development funding
similar to that described above. QSI's exclusive rights continue for an
indefinite term provided it meets certain performance criteria relating to
marketing efforts during the first two years following product availability in
commercial quantity and minimum levels of product sales in subsequent years. In
the event QSI's rights become non-exclusive, depending on the circumstances
causing such change, the initial term then becomes either three or five years
from the date of this Marketing Agreement, with subsequent one-year automatic
renewals in each instance unless either party elects not to renew. During the
fiscal year ended December 31, 1996, the Company was not required to pay any
commissions to QSI under any of these Marketing Agreements.
The Company has also entered into a Teaming Agreement with QSI under which
each party agrees to be responsible for certain activities relating to
transformer quieting system development projects to be undertaken with utility
companies. Under this Teaming Agreement, QSI is entitled to receive 19% of the
amounts to be received from participating utilities and the Company is entitled
to receive 81%. During the fiscal year ended December 31, 1996, the Company made
no payments to QSI for project management services.
In March 1995, the Company entered into a Master Agreement with QSI under
which QSI was granted an exclusive worldwide license under certain NCT patents
and technical information to market, sell and distribute transformer quieting
products, turbine quieting products and certain other products in the utility
industry. Under the Master Agreement, QSI is to fund development of the products
by the Company and the Company is to manufacture the products. However, QSI may
obtain the right to manufacture the products under certain circumstances include
NCT's failure to develop the products or the failure of the parties to agree on
certain development matters. In consideration of the rights granted under the
Master Agreement, QSI is to pay the Company a royalty of 6% of the gross
revenues received from the sale of the products and 50% of the gross revenues
received from sublicensing the rights granted to QSI under the Master Agreement
after QSI has recouped 150% of the costs incurred by QSI in the development of
the products in question. The Company is obligated to pay similar royalties to
QSI on its sale of the products and the licensing of rights covered under the
Master Agreement outside the utility industry and from sales and licensing
within the utility industry in the Far East. In addition to the foregoing
royalties, QSI is to pay an exclusivity fee to the Company of $750,000; $250,000
of which QSI paid to the Company in June 1994. The balance is payable in equal
monthly installments of $16,667 beginning in April 1995. QSI's exclusive rights
become non-exclusive with respect to all products if it fails to pay any
installment of the exclusivity fee when due and QSI loses such rights with
respect to any given product in the event it fails to make any development
funding payment applicable to that product. The Master Agreement supersedes all
other agreements relating to the products covered under the Master Agreement,
including those agreements between the Company and QSI described above.
Immediately following the execution to the Master Agreement, the Company and
QSI entered into a letter agreement providing for the termination of the Master
Agreement at the Company's election if QSI did not pay approximately $500,000 in
payables then owed to the Company by May 15, 1995.
In April 1995, the Company and QSI entered into another letter agreement
under which QSI agreed to forfeit and surrender the five year warrant to
purchase 750,000 shares of the Company's common stock issued to QSI under the
first Marketing Agreement described above. In addition, the $500,000 balance of
the exclusivity fee provided for under the Master Agreement was reduced to
$250,000 to be paid in 30 monthly installments of $8,333 each and the payment of
the indebtedness to be paid under the letter agreement described in the
preceding paragraph was revised to be the earlier of May 15, 1996, or the date
of closing of a financing of QSI in an amount exceeding $1.5 million, whichever
first occurs. Such indebtedness is to be evidenced by a promissory note, non
payment of which is to constitute an event of termination under the Master
Agreement.
On May 21, 1996, the Company and QSI entered into another letter agreement
extending the time by which the payments from QSI to the Company under the April
1995 letter agreement described above were to be made. Under the letter the
payment of certain arrearages in the payment of the exclusivity fee was to be
made not later than June 15, 1996, with the balance continuing to be payable by
monthly payments of $8,333 and as provided in the May 1995 letter agreement. In
addition the payment of the other indebtedness owed by QSI to the Company was to
be paid by a payment of $25,000 at the time QSI obtained certain anticipated
financing with the balance paid by monthly payments of $15,000 each. Default in
QSI's timely payment of any of the amounts specified in the May 21, 1996 letter
agreement was to cause the immediate termination of the Master Agreement and all
rights granted to QSI thereunder.
On April 9, 1997, the Company and QSI entered into another letter agreement
revising the payment schedule set forth in the May 21, 1996 letter agreement
applicable to the payment of the indebtedness owed to the Company by QSI other
than the unpaid portion of the exclusivity fee. Under the revised schedule, the
full amount of such indebtedness is to be paid by an initial payment of $125,000
on or before April 21, 1997, and a second payment of $200,000 upon the closing
of a proposed financing in June 1997 or on January 1, 1998, whichever first
occurs. The Company is also entitled to receive 15% of any other financing
obtained by QSI in the interim as well as interest at the rate of 10% per annum
on the unpaid amount of such indebtedness from July 1, 1997. The letter
agreement also provides for the continuation of QSI's payment of the exclusivity
fee in accordance with the earlier letter agreements as well as the payment of
$11,108 by April 21, 1997, for headset products sold by the Company to QSI in
1996. In the event of a default in QSI's timely payment of any of the amounts
specified in the April 9, 1997 letter agreement, the Company has the right to
cause the termination of the Master Agreement and all rights granted by QSI
thereunder upon 10 days notice of termination to QSI.
As of April 30, 1997, QSI has paid all installments due and payable for the
exclusivity fee and, other than as described above, owes no other amounts to the
Company.
The Company believes that the terms of its agreements with QSI are comparable
to those that it could have negotiated with other persons or entities.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of March 31, 1997, information concerning
the shares of common stock beneficially owned by each person who, to the
knowledge of the Company, is the holder of 5% or more of the common stock of the
Company, each Director, and each Named Executive Officer, and all executive
officers and Directors of the Company as a group. Except as otherwise noted,
each beneficial owner has sole investment and voting power with respect to the
listed shares.
Amount and Nature Approximate
of Beneficial Percentage of
Name of Beneficial Owner Ownership (1) Class (1)
- ------------------------ ----------------- -------------
John J. Mccloy 3,651,591 ( 2) 3.18%
Michael J. Parrella 2,749,789 ( 3) 2.38%
Jay M. Haft 1,251,891 ( 4) 1.10%
Sam Oolie 925,194 ( 5) 0.82%
Irene Lebovics 1,288,067 ( 6) 1.14%
Stephen J. Fogarty 233,200 ( 7) 0.21%
Jeffrey C. Zeitlin 275,000 ( 8) 0.24%
All Executive Officers
and Directors as a 11,213,867 ( 9) 9.28%
Group (10 persons)
Carole Salkind 5,285,000 (10) 4.63%
Her Majesty The Queen,
Province of Alberta, 11,250,000 (11) 9.43%
Canada
Kingdon Capital 13,660,930 (12) 12.11%
Management Corporation
- ----------
(1) Assumes the exercise of currently exercisable outstanding options or
warrants to purchase shares of common stock. The percent of class ownership
is calculated separately for each person based on the assumption that the
person listed on the table has exercised all options and warrants shown for
that person, but that no other holder of options or warrants has exercised
such options or warrants.
(2) Includes 1,085,325 shares issuable upon the exercise of currently
exercisable warrants and 850,000 shares issuable upon the exercise of
currently exercisable options.
(3) Includes 1,311,956 shares issuable upon the exercise of currently
exercisable warrants and 1,424,500 shares issuable upon the exercise of
currently exercisable options.
(4) Includes 218,500 shares issuable upon the exercise of currently exercisable
warrants, 10,000 restricted shares and 988,500 shares issuable upon the
exercise of currently exercisable options.
(5) Includes 25,000 restricted shares and 48,913 shares issuable upon the
exercise of currently exercisable warrants and 250,000 shares issuable upon
the exercise of currently exercisable options.
(6) Includes 291,300 shares issuable upon the exercise of currently exercisable
options and 201,250 shares issuable upon the exercise of currently
exercisable warrants.
(7) Consists of 233,200 shares issuable upon the exercise of currently
exercisable options.
(8) Consists of 275,000 shares issuable upon the exercise of currently
exercisable options.
(9) Includes 2,910,944 shares issuable to 3 executive officers and Directors of
the Company upon the exercise of currently exercisable warrants, 5,096,635
shares issuable to 6 executive officers and Directors of the Company upon
the exercise of currently exercisable options and 35,000 restricted shares
issued to 2 Directors of the Company.
(10) Carole Salkind's address is 801 Harmon Cove Towers, Secaucus,
New Jersey 07094.
(11) Her Majesty The Queen, Province of Alberta, Canada's address is Room 530,
Terrace Building, 9515 107th Street, Edmondton, Alberta T5K 2C3, Canada.
(12) Kingdon Capital Management Corporation's address is 152 West 57th Street,
New York, New York 10019.
<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 amendment to report to
be signed on its behalf by the undersigned, thereunto duly authorized.
NOISE CANCELLATION TECHNOLOGIES, INC.
/s/ JEFFREY C. ZEITLIN
-------------------------------------------
Jeffrey C. Zeitlin
Senior Vice President, Operations, and
Chief Financial Officer
April 30, 1997
