SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,D.C. 20549
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FORM 10-KSB/A
(To include Part III information that
was not included in initial filing of Form
10-KSB for the fiscal year ended April 30, 1996)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 0-12873
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FIRECOM,INC.
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(Exact name of Small Business Issuer in its charter)
New York 13-2934531
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
39-27 59th Street, Woodside, New York 11377
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(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code: (718) 899-6100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
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(Title of Class)
Indicate by check mark whether the Issuer (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
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 Issuer's
knowledge, in definitive proxy or information statements by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB ( x )
State issuer's revenues for its most recent fiscal
year-$14,884,000.
The aggregate market value of the voting stock held by non-
affiliates of the Issuer, based upon the average bid and asked
prices for the Registrant's Common Stock, $.01 par value per
share, as of July 15, 1996 was $3,628,494.
As of July 15, 1996, the Registrant had 4,798,009 shares of
Common Stock outstanding.
Documents Incorporated by Reference: None.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act
Name Age Office
Paul Mendez 53 Chairman of the Board, President
and Director
Howard L. Kogen 56 Executive Vice President
Antoine P. Sayour 46 Senior Vice President
Peter Barotz 67 Director
Orhan I. Sadik-Khan 66 Director
Ronald A. Levin 53 Director
Jon Brody 54 Director
Directors hold office for a period of two years from the Annual
Meeting of Shareholders at which they are elected or until their
successors are duly elected and qualified. At the 1995 Annual
Meeting, Mr. Mendez and Mr. Barotz were elected to serve until the
1997 Annual Meeting. Mr. Sadik-Khan, Mr. Brody and Mr. Levin serve
until the 1996 Annual Meeting. Two vacancies currently exist on the
Board of Directors as a result of (i) the death of a director elected
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at the 1995 Annual Meeting and (ii) the resignation of another
director designated by the holder of the Company's Series A Preferred
Stock. The holder of such Preferred Stock has the right to fill the
second vacancy. The Company's officers are appointed by the Board of
Directors and hold office at the will of the Board.
Paul Mendez was elected a Director, Chairman of the Board and
President on July 19, 1991. Since 1977 he has been employed as Vice
President of Multiplex Electrical Services, Inc., a company which is
engaged in the business of manufacturing, installing and servicing
fire alarm systems.
Howard L. Kogen joined the Company as Vice President-Sales and
Marketing in March, 1984. He was appointed Executive Vice President
and Chief Operating Officer in 1990.
Antoine P. Sayour joined the Company as Chief Engineer in 1984.
He is now Senior Vice President of the Company and President of the
Fire Service Subsidiary.
Peter Barotz was elected a director of the Company in April,
1993. Mr. Barotz, for more than the last five years, has been engaged
primarily as a private investor. Mr. Barotz has also served as
President of Panda Capital Corp., a New Rochelle, New York based
business engaged in the export business.
Orhan Sadik-Khan was elected a director of the Company in April,
1993. Mr. Sadik-Khan, for more than the last five years, has served
as a managing director of Paine Webber Incorporated and President of
ADI Corporation, a private venture capital and financial consulting
organization.
Jon Brody, for more than five years, has served as President of
Appraisal Consultants Corp., a real estate appraisal and consulting
firm headquartered in Livingston, New Jersey.
Ronald A. Levin, since 1991, has been a partner in the certified
public accounting firm of Genovese, Levin, Bartlett & Co.,("Genovese,
Levin"), Franklin Lakes, New Jersey. Prior thereto, Mr. Levin was a
partner in the certified public accounting firm of Levin, Silverberg &
Co., CPA's, P.C., a predecessor to Genovese, Levin.
There are no family relationships between any director or officer
and any other director or officer.
The Board of Directors has no committees.
The Registrant is not aware of any Section 16(a) filing
deficiencies.
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Item 10. Executive Compensation
The following table sets forth certain information with respect
to cash compensation paid or accrued by the Company, for services
rendered to the Company during the fiscal year ended April 30, 1996,
to each of the executive officers of the Company whose aggregate
remuneration exceeds $100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Name and Principal Fiscal Options/SAR
Position Year Salary Bonus Awards
------------------ ------ -------- -------- ----------
Paul Mendez 1996 $200,000 $223,731 -0-
Chairman and 1995 150,000 201,264 -0-
President (1) 1994 150,000 139,929(3) -0-
Howard L. Kogen 1996 $132,000 $ 54,203 66,000shs(2)
Executive Vice 1995 129,000 49,566 66,000shs(2)
President 1994 107,120 36,651 -0-
Antoine P. Sayour 1996 $110,430 $ 39,694 63,000shs(2)
Senior Vice President 1995 106,430 39,075 63,000shs(2)
1994 83,720 27,494 -0-
(1) Mr. Mendez has been Chairman and President since July 19, 1991.
(2) Stock Option Award
(3) Mr. Mendez's bonus amount includes $49,767 awarded and paid in
Fiscal 1994 based on results for the year ended April 30, 1993 and
$90,162 accrued as of April 30, 1994 based on Operating Income as
defined in the Employment Agreement for the year ended April 30, 1994.
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Stock Options
In 1986 the Company adopted an Incentive and Non-Qualified
Stock Option Plan(the 1986 "Plan") which provided for the granting of
not more than 350,000 shares of Common Stock. An amendment to the
"Plan" increasing the number of share to 600,000 was approved by vote
of the shareholders at the 1994 Annual Meeting. The 1986 Plan is open
to officers, directors and certain employees of the Company and will
expire on April 30, 2001. Subject to the provisions of the Plan with
respect to death, retirement and termination of employment, the
maximum period during which each Option may be exercised may be fixed
by the Board at the time each Option is granted but shall in no event
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exceed ten (10) years. The price at which shares may be purchased
upon exercise of a particular Option shall be not less than
eighty-five percent (85%) of the fair market value of such shares on
the date such Option is granted, as determined by the Board. Options
for an aggregate of 495,670 shares of Common Stock at exercise prices
ranging from $0.30 to $0.60 were outstanding under the Plan as of
April 30, 1996.
Included in the aggregate outstanding were options to
purchase 238,400 shares at $.60 per share issued during the fiscal
year ended April 30, 1995. No options were exercised during the
fiscal year.
Directors' Compensation and SAR Awards
Effective December 8, 1994, Directors of the Company who are
not also executive officers of the Company receive an annual retainer
of $12,000 plus $1,000 for each Board meeting they attend. In
addition each director, other than Mr. Mendez, is granted the right
to receive a cash payment equal to the increase in value of 20,000
shares of the Company's Common Stock from the date of their first
election or appointment to the Board, and payable upon, the earliest
to occur of various qualifying events. The Company may, at its sole
option, defer payment for a maximum of 24 months from the date of a
valid notice of exercise of these rights. The Company recorded a
liability of approximately $40,000 as of April 30, 1996 to reflect the
relevant increase as of that date.
Concurrently with the execution of Mr. Mendez' Employment
Agreement, and as additional consideration thereunder, Mr. Mendez and
the Company entered into a stock appreciation rights agreement
pursuant to which Mr. Mendez was granted the right to receive, in
cash, the appreciation value(the "Appreciation Rights") with respect
to 500,000 shares of Common Stock. The Appreciation Rights are
exercisable in pro rata installments over a five-year period and have
initial value prices("base prices") as follows: 200,000 Appreciation
Rights have a base price of $.25 per share; 100,000 Appreciation
Rights have a base price of $.50 per share; 100,000 Appreciation
Rights have a base price of $1.00 per share; and 100,000 Appreciation
Rights have a base price of $1.50 per share. Notwithstanding anything
in the above agreement, Mr. Mendez shall not be entitled to receive
any cash payment as a result of the exercise of Rights under the
Agreement prior to May 1, 1996. The Company recorded a liability of
approximately $64,000 as of April 30, 1996 to reflect the increase in
price of its Common Stock as of that date.
Employment Agreements
On December 31, 1992, Mr. Mendez and the Company entered
into an employment agreement (the "Mendez Employment Agreement") which
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provides, among other things, that Mr. Mendez, in consideration for
his services as Chairman of the Board and Chief Executive Officer of
the Company, will be paid a base salary at the rate of $150,000 per
annum and incentive compensation equal to a percentage of the annual
earnings, before interest and taxes (as adjusted by the Board of
Directors for certain extraordinary and other non-recurring events and
as more fully described in the Mendez Employment Agreement)("Adjusted
EBIT") of the Company. Generally, Mr. Mendez will be entitled to
receive an amount equal to 6% of Adjusted EBIT if the Company's
Adjusted EBIT for any fiscal year is between $500,000 and $1 million
and 8% of the Adjusted EBIT if the Company's Adjusted EBIT for any
fiscal year is greater than $1 million. In addition, Mr. Mendez is
entitled to participate, at no cost or expense to him, in all employee
benefit programs maintained by the Company to the extent that such
programs are available generally to executive officers, provided that
the aggregate annual value to Mr. Mendez of such benefits does not
exceed $30,000. To the extent that the aggregate value of such
benefits does not exceed $30,000, Mr. Mendez may elect to receive the
differential in cash or applied to other fringe benefits of his
selection.
The Mendez Employment Agreement also provides that Mr.
Mendez' employment is terminated by him for "Good Reason"(as defined
below) or by the Company without Mr. Mendez' consent and without Cause
(as defined in the Mendez Employment Agreement) and not due to death
or disability of Mr. Mendez, Mr. Mendez shall be entitled to receive
(in addition to continuation of his executive benefits) his base
salary for the greater of two full years from the date of termination
or the remainder of the Mendez Employment Agreement and whatever
incentive compensation he would otherwise been entitled to receive for
the fiscal year during which his employment is terminated. Good
Reason is defined as the occurrence, without Mr. Mendez' prior consent
of(i) a reduction in rank or an assignment of duties materially
inconsistent with Mr. Mendez' positions as Chairman of the Board and
Chief Executive Officer of the Company, without any substantial
failure of Mr. Mendez to perform such duties properly and
effectively;(ii) a reduction by the Company in Mr. Mendez' annual base
salary or a material reduction or elimination of his perquisites of
office or a substantial reduction or elimination of his aggregate
available employee benefits as in effect at December 31, 1992 or as
the same may be increased from time to time;(iii) a change in the
location at which Mr. Mendez' services are to be regularly performed
to a location out of the 30-mile radius of the Empire State Building,
New York, New York, without a comparable change for other executive
officers of the Company, or any willful, material breach by the
Company of any provision of Mr. Mendez' Employment Agreement not cured
within a period of ten business days after receipt by the Company of
written notice from Mr. Mendez of his intention to resign for Good
Reason because of such breach; or (iv) the merger or consolidation of
the Company with or into any other entity as a result of which Mr.
Mendez is reduced in rank or is assigned duties with the surviving
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entity that are materially inconsistent with his then present
position(s) with the Company. In addition. the Mendez Employment
Agreement provides that in the event of termination of Mr. Mendez'
employment thereunder due to death or disability(as defined therein),
the Company shall pay Mr. Mendez (or his estate, as the case may be)
his annual base salary for one year following his termination of
employment and whatever incentive compensation Mr. Mendez would
otherwise been entitled to receive for the fiscal year during which
his employment is terminated. The Mendez Employment Agreement expires
on December 31, 1997.
The Mendez Employment Agreement acknowledges Mr. Mendez'
beneficial ownership and involvement in Multiplex and permits Mr.
Mendez to devote reasonable periods of time to the business of
Multiplex, provided that his involvement with Multiplex' business does
not interfere with the performance of his duties and obligations under
the Mendez Employment Agreement and that Mr. Mendez at all times
complies with the guidelines for limiting conflicts of interest
between the Company and Multiplex as previously adopted by the Board
of Directors of the Company and accepted by Mr. Mendez.
On March 28, 1995, the Mendez Employment Agreement was
amended to (i) extend the term of the Agreement through April 30,
2000, (ii) increase Mr. Mendez's annual base salary to $200,000,
effective May 1. 1995, and (iii) to increase Mr. Mendez's annual
benefit value threshold from $30,000 to $37,000.
The Company entered into a new employment agreement with Mr.
Kogen effective May 1, 1994 and expiring April 30, 1999. In
consideration of his services as Executive Vice President and Chief
Operating Officer of the Company,(i) Mr. Kogen is to receive an annual
salary of $129,000 effective May 1, 1994 and (ii) is entitled to
annual increases of approximately 3% to a total of $145,000 effective
on May 1, 1998 and (iii) will receive a bonus based on the Operating
Income of the Company. Kogen's employment agreement also contains a
six month non-competition provision following the term of the
agreement or any extension thereof.
The Company entered into a new employment agreement with Mr.
Sayour effective May 1, 1994 and expiring April 30, 1999. In
consideration of his services as Senior Vice President of the
Company,(i) Mr. Sayour is to receive an annual salary of $106,430
effective May 1, 1994 and (ii) is entitled to annual increases of
approximately $4,000 per year to a total of $122,857 effective on May
1, 1998 and (iii) will receive a bonus based on the Operating Income
of the Company. Sayour's employment agreement also contains a six
month non-competition provision following the term of the agreement or
any extension thereof.
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Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth certain information as of July
12, 1996 regarding (i) the ownership of Common Stock of the Company by
each person who is known to the management of the Company to have been
the beneficial owner of more than 5% of the outstanding shares of the
Company's Common Stock, (ii) the ownership interests of each present
director, (iii) the ownership interests of the Chief Executive Officer
and other executive officers of the Company whose total annual salary
and bonus exceeded $100,000 during the fiscal year ended April 30,
1995 and (iv) the ownership interests of all directors and executive
officers of the Company as a group.
Title Position Amount and
of Name and Address of With Nature of Beneficial % of
Class Beneficial Owner Company Ownership Class
Common Firecom Holdings, LP None 500,000(1)(2) 9.4%
Shares 25 East 21st Street
$.01 New York, NY
par
value
Paul Mendez Chairman of 3,060,339(1)(2) 57.8%
25 East 21st Street the Board, (4)(6)
New York, NY Chief Executive
Officer &
Director
Norwood Venture Corp. None 1,333,333(3) 23.3%
1430 Broadway
New York, NY
Ildar Idris None 353,354(2) 7.4%
15 Horvath Strasse
Grfeling 8032,
West Germany
Helen P. May None 471,995(4) 9.8%
#15 Ayers Road
Locust Valley, NY
Estate of George W. None 442,656(5) 9.2%
May, Deceased
c/o Helen P. May, Executrix
#15 Ayers Road
Locust Valley, NY
Harry Scherzer None 514,801(6) 10.7%
25 North Cloverdale Rd.
Great Neck, NY
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Howard L. Kogen Executive Vice 166,500(7) 3.4%
President
Antoine P. Sayour Senior Vice 119,900(8) 2.4%
President
Jon Brody Director -0- --
Ronald A. Levin Director -0- --
Orhan I. Sadik- Director 51,500(2) 1.1%
Khan
Peter Barotz Director -0-(2) --
All executive officers 3,196,889(1)(2) 52.3%
and directors as a (4)(6)
group (7 persons) (7)(8)
Series Firecom Holdings, LP None 1,200(1) 100.0%
A Pre- 25 East 21st Street
ferred New York, NY
stock
$1 par
value
(1) These shares include 500,000 shares of Common Stock issuable upon
the exercise of certain outstanding warrants. Firecom Holdings,
LP also beneficially owns 1,200 shares of the Company's Series A
Preferred Stock, $1.00 par value, which has a stated capital
value of $1,197.50 per share and entitles the holders thereof to
elect one director, voting as a separate class. Firecom
Holdings, LP owns all of the issued and outstanding shares of
Series A Preferred Stock.
(2) Pursuant to a voting agreement among them, Paul Mendez, the
general partner with exclusive authority to manage the affairs of
Firecom Holdings, L.P., a Delaware limited partnership
("Holdings"), and Holdings entered into a letter agreement (the
"December 1992 Letter Agreement") with Peter S. Barotz and Orhan
I. Sadik-Khan, pursuant to which, among other things, the parties
agreed that (i) during such time as not less than 240 shares of
the Issuer's Series A Preferred Stock (the "preferred Stock")
continue to be held by Holdings, all shares of the Issuer's
Common Stock, $.01 par value per share (the "Common Stock"), held
by Naomi Barotz, Nathan Barotz and Celia Barotz (the "Barotz
Group"), Orhan Sadik-Khan, Dr. Ildar Idris, Karim Sadik-Khan,
Janette Sadik, Karen Sadik-Khan, Jan Sadik-Khan and Kadria
Sadik-Khan (the "Sadik-Khan Group") and Mr. Mendez shall be voted
so that the Board of Directors of the Issuer shall consist of six
persons elected by the holders of the Common Stock as follows:
Mr. Sadik-Khan (or his designee), Mr. Barotz (or his designee),
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Mr. Mendez and three persons designated by Mr. Mendez and that
the director appointed by the holder(s) of the Preferred Stock
will be a person designated by Mr. Mendez, (ii) the voting
agreement summarized in the immediately preceding clause(i) shall
terminate if, as of the end of any quarter (as reflected in the
Issuer's periodic reports filed with the Securities and Exchange
Commission), the Issuer has on hand $800,000 plus sufficient
additional cash and/or cash equivalents to redeem sufficient
shares of Preferred Stock so that fewer than 240 shares of
Preferred Stock would continue to be outstanding and such
redemption would not violate the terms of the Issuer's
arrangements with its lenders, (iii) neither the Barotz Group nor
the Sadik-Khan Group may transfer or otherwise dispose of any
shares of Common Stock (except as expressly permitted by the
December 1992 Agreement) without providing Mr. Mendez a right of
first refusal to purchase such shares on the same terms and
conditions, (iv) neither Mr. Mendez nor any partnership of which
he is a general partner, may transfer or otherwise dispose of any
shares of Common Stock (except as expressly permitted by the 1992
Agreement) without providing the Barotz Group and the Sadik-Khan
Group with a similar right of first refusal and (v) the December
1992 Agreement may be terminated by any party thereto if the
Issuer shall report, after December 21, 1992, losses from
operations during each of two fiscal years.
(3) Such shares include shares which may be acquired upon exercise of
warrants to purchase 916,668 shares of Common Stock. The
exercise price of the warrants is presently $.35 per share.
(4) These shares (i) include 442,656 shares of Common Stock
beneficially owned by Mrs. May as the executrix of the Estate of
George W. May, Deceased(the "Estate of George W. May"), which
shares of Common Stock have not yet been distributed by the
Estate of George W. May to Mr. George W. May's heirs and (ii)
give effect to the sale of 413,994 shares pursuant to the June
21, 1995 Stock Purchase Agreement, but not to any Option Shares.
Under the terms of the Option and Escrow Agreement, Paul Mendez
has an irrevocable proxy to vote the Option Shares until the end
of the agreement.
(5) These shares represent 442,656 shares of Common Stock
beneficially owned by Mrs. May as the executrix of the Estate of
George W. May, which shares of Common Stock have not yet been
distributed by the Estate of George W. May to Mr. George W. May's
heirs.
(6) Paul Mendez holds proxies to vote 250,694 shares of those owned
by Harry Scherzer.
(7) These shares include 19,300 shares of Common Stock beneficially
owned by Mr. Kogen with his wife as joint tenants and 147,200
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shares of Common Stock underlying presently exercisable options.
(8) These shares include 20,300 shares of Common Stock beneficially
owned by Mr. Sayour with his wife as joint tenants and 99,600
shares of Common Stock underlying presently exercisable options.
Item 12. Certain Relationships and Related Transactions
Paul Mendez, Chairman of the Board, President and Director,
is one of the general partners of Gramercy Realty Associates. Mr.
Mendez is the sole general partner of Firecom Holdings, L.P.
On June 21, 1995, the Company signed a Stock Purchase
Agreement to purchase 536,494 shares of the Company's $.01 par Value
Common Stock held by certain members of the May family (the
"Shareholders") at $.90 per share. Terms of the agreement provide for
a cash payment in the amount of $174,448.20 and a five (5) year note
in the amount of $308,396.40, bearing interest at 12% per annum.
Interest is to be paid monthly. The principal is to be paid in five
equal annual installments of $61,679.28. The Company's obligation
under the note is to be secured by a pledge by the Company to the
noteholder of 342,663 shares of the Company's Common Stock. The
Company made the first of the five annual payments of $61,679.28 in
July 1996.
At the same time, the Company and the Shareholders entered
into an Option and Escrow Agreement relative to the Option Shares.
Under the terms of this agreement, on September 1, 1998 each
Shareholder has the right, but not the obligation, to require the
Company to purchase, in whole or in part, his Option Shares at a price
of $1.10 per share. The Put Option is conditional upon the Company
meeting certain financial targets. At any time under this agreement,
the Company shall have the right, but not the obligation, to purchase
all of the Option Shares, in whole or in part, at a purchase price of
$1.25 per share. Payment for the Option Shares upon exercise of the
Put or Call Option shall be one-half (1/2) in cash and one-half (1/2)
with a five (5) year note bearing interest at prime plus 3%. The notes
issued upon purchase of the Option Shares will be secured by a pledge
by the Company of shares of its Common Stock. Upon final execution of
this agreement, the Shareholders will deliver to the Company
irrevocable proxies to permit Mr. Paul Mendez, Chairman of the
Company, to vote the Option Shares until the expiration of this
agreement.
This agreement was entered into because management believes
it represents a good value for the Company. Taking into consideration
the Company's financial condition and the thinly traded nature of the
stock, management believes that the price paid for the stock is
reasonable. The Board of Directors secured a fairness opinion from an
independent investment banker supporting the fairness of the
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transaction from the Company's point of view.
SIGNATURES
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Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRECOM, INC.
/s/ Paul Mendez
Date: August 22, 1996 By-------------------------
Paul Mendez, Chairman of
the Board, President and
Chief Executive Officer
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