SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K\A
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File No. 0-12595
MicroENERGY, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 36-3262274
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
350 Randy Road
Carol Stream, Illinois 60188
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (708) 653-5900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirement 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 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. [ ]
Item 1 BUSINESS
MicroENERGY, Inc., was incorporated in Delaware on November
30, 1983. The Company designs and manufactures highfrequency power
supplies and DC-to-DC converters for OEM customers who are engaged in
the telecommunications, computer, and instrumentation segments of the
electronics industry. The Company currently offers single and
multiple output switching power supplies and DC-to-DC converters in
the power output range of 25 watts to 800 watts. All of the Company's
products are customized to satisfy the unique requirements of each
customer's application.
A power supply is a component of electrically-powered
products which converts alternating current ("AC"), the
generally-available form of electricity, into direct current ("DC"),
which is required for electronic circuits to function. A DC-to-DC
converter converts direct current of one value into direct current of
another value. The power supply or converter regulates the DC voltage
to a constant so as to make the performance of electronic circuits
predictable. A conventional linear power supply regulates the DC
output by throwing-off excess input power as heat. A switching power
supply regulates the DC output by briefly turning off the input power
when the voltage becomes excessive. In this way the switching power
supply saves energy and operates more efficiently than a linear power
supply.
Because of emerging technology, the size and growth of the
market, and the unique design requirements of each customer, the
market is fragmented. There are approximately 300 companies which
identify switching power supplies in their product line portfolio, and
no company dominates the market. Switchers are divided in two basic
market categories: standardized switchers and custom designs. The
Company competes only in the custom-design market at this time. In
that market the principal method of competing is by emphasis on design
ability, manufacturing quality, and timely delivery. Regarding the
manufacturing quality, the Company in August 1995, subjected its
quality system to audit, and at that time achieved ISO 9001
registration.
MicroENERGY's product/market strategy began with the
development of AC-to-DC products in the 75 to 300 watt output range.
Later in 1984 the Company added DC-to-DC converters to its product
line. The switching frequencies at which the transformers operate
range from 80 Khz-250 Khz depending on the application. The generic
product series are modifiable to meet a wide variety of specific
customer requirements.
The Company's Research and Development effort is located in
Longwood Florida. The Company's research and development efforts
include advancing the state-of-the-art in the design of power
supplies, meeting current customers technological requirements and the
methods employed in manufacturing such power supplies. For the
immediate future, the Company's research and development will continue
to focus on these items. During the fiscal year ended June 30, 1995
the Company spent $949,002 on Company-sponsored research and
development. During the fiscal years ended June 30, 1994 and 1993,
the Company spent $920,391 and $1,246,965 on Company-sponsored
research and development. The Company has no material patents, but
does rely on trade secret protection.
The Company principally markets its products through
independent manufacturers representatives. At the present time, the
Company's products are offered by nine representatives, whose
territories include all or part of thirty-six states. In fiscal 1995
the Company had one customer who was responsible for over 10% of the
Company's sales. This customer, AT&T Global Information Systems,
accounted for approximately 28% of the total sales. The principal
focus of the Company's marketing efforts continues to be to expand the
customer base, so as to make the Company less dependent on a small
group of customers.
In the fiscal year ended June 30,1995, export sales amounted
to approximately 36% of the Company's total revenues, compared to 38%
in 1994 and 24% in 1993. All export sales are denominated in US $.
Due to the custom nature of the products exported and the time
involved in developing these products, short-term foreign currency
fluctuations have no adverse impact. Any long-term strengthening of
the dollar may have an adverse impact on the Company's revenues.
As of July 7, 1995, MicroENERGY had a backlog of released
orders of $4,043,000. These orders constitute a firm commitment to
take delivery of the Company's product. Delivery of products and
receipt of revenues from these production orders will extend well into
the current fiscal year. MicroENERGY had a backlog of released orders
of $4,673,000, in the prior year.
The raw materials for the Company's products are primarily
standardized components which are readily available from an adequate
number of suppliers. Those raw materials which must be customized for
the Company are also readily available from a number of qualified
component manufacturers. During fiscal 1989, the Company acquired all
of the capital stock of Tru-Way, Inc., an Illinois corporation engaged
in the business of manufacturing fabricated metal parts used in the
Company's principal product.
The Company currently has 207 full-time employees (including
161 production employees), two of whom are officers of the Company.
During the remainder of fiscal 1995 the Company expects no substantial
increases in the Company's non-direct labor force.
The company expects no negative effect from current
environmental laws or regulations.
Item 3 LEGAL PROCEEDINGS
The Company is not engaged in any material pending legal
proceedings.
Item 4 SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security
holders during its last fiscal year.
Item 10 DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT
<TABLE>
<S> <C> <C>
Name, Age
and Positions Business Experience
and Offices During past 5 Years
Held With and Principal Director
Registrant Occupations Since
Robert G. Gatza, 1983-Present: President 1983
Age 53 and Chief Executive
Chairman of the Board, Officer of MicroEnergy.
President
Robert J. Fanella, 1983-Present: Chief 1987
Age 45 Financial Officer of
Executive Vice Presi- MicroEnergy.
dent, Secretary,
Treasurer, Director
George M. Bradshaw 1983-Present: 1988
Age 49, Practicing Attorney
Director in areas of corporate
law, real estate, and
commercial law.
/TABLE
<PAGE>
Employment Agreements
On February 1, 1996, the Company terminated its existing
employment agreements with Robert G. Gatza and Robert J. Fanella, and
substituted new employment agreements. The 1996 employment agreements
are substantially identical to each other. The agreements provide for
full-time employment and include a covenant that the officer will not
compete with the Company for one year after his employment terminates.
The agreements terminate on January 31, 2000. They provide that each
officer will be paid a salary determined by the Board, but that his
annual salary shall be no less than his average salary for the
preceding two years.
Compliance With Section 16(a) of the Exchange Act
During the 1995 fiscal year no directors,
officers or beneficial owners of more than 10 percent of the Company's
common stock failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act.
Item 11 EXECUTIVE COMPENSATION
The first table on the following page sets forth all
compensation awarded to, earned by, or paid by the Company to the
following persons for service rendered in all capacities during
each of the fiscal years ended June 30, 1995 ,1994, and 1993:
(1) the Registrant's Chief Executive Officer (CEO), and (2) each
of the other executive officers whose total salary and bonus for
the fiscal year ended June 30, 1995 exceeded $100,000.
The second and third tables set forth certain
information regarding stock options awarded to those same
individuals during the year ended June 30, 1995 (Table 2) and
those held at June 30, 1995 (Table 3). The value of unexercised
in-the-money options is based upon the difference between the
closing bid price for the Common Stock and the exercise price of
the options on June 30, 1995.
<PAGE>
TABLE 1
SUMMARY COMPENSATION
($'s IN 000's)
<TABLE>
Annual Compensation Awards Payouts
--------------------- ------------------ ---------
Restrict Options
Name & Other Stock Shares LTIP All Oth
Principal Fiscal Salary Bonus Comp Awards in 000's Payouts Comp *
Position Year $ $ $ $ (# ofShs) $ $
========= ======== ====== ====== ====== ====== ======== ======= ======
<C> <C> <C> <C> <C> <C> <C> <C>
Robert G.
Gatza
CEO 1995 $210.0 $0 $0 $0 21,000 $0 $1.5
1994 $212.8 $0 $0 $0 0 $0 $2.1
1993 $209.0 $0 $0 $0 0 $0 $2.1
Robert J.
Fanella 1995 $203.8 $0 $0 $0 14,000 $0 $1.5
1994 $204.3 $0 $0 $0 0 $0 $2.0
1993 $201.1 $0 $0 $0 0 $0 $2.0
</TABLE>
Note: * Represents Company match of 401K
<PAGE>
TABLE 2
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
<C> <C> <C> <C> <C> <C>
Percent
of Total
Options
Number of Granted
Securities to
underlying Employees Exercise
Options in Fiscal Price Expiration 5% 10%
Name Granted # Year ($/SH) Date $ $
Robert G.
Gatza 21,000,000 60% $.00125 12/31/01 3,297 14,673
Robert J.
Fanella 14,000,000 40% $.00125 12/31/01 2,198 9,782
/TABLE
<PAGE>
TABLE 3
AGGREGATED FISCAL YEAR OPTION VALUES
<TABLE>
Number of Securities Underlying Value of Unexercised
Unexercised Options at Fiscal in-the-money Options at
Year-End (#) Fiscal Year-End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
<C> <C>
Robert G. Gatza 13,000,000 Exercisable $ 0
21,000,000 Unexercisable $141,750
Robert J. Fanella 6,700,000 Exercisable $ 0
14,000,000 Unexercisable $ 94,500
/TABLE
<PAGE>
Compensation Plans
The Company has no compensation plans, other than 401K and
life and medical plans which are available to all employees.
Restricted Stock Grant Program
On May 19, 1989, the shareholders of the Company adopted a
Restricted Stock Grant Program (the "Program"), pursuant to which
21,000,000 shares of common stock were reserved for issuance. On
July 3, 1989, the reserved shares were issued to two "Grantees",
namely Robert G. Gatza (12,500,000 shares)and Robert J. Fanella
(6,500,000 shares). Messrs. Gatza and Fanella are the Company's
officers and directors.
The shares issued under the terms of the Program are
subject to the following restrictions:
1. The shares granted under the Program cannot be sold,
assigned, pledged, transferred or hypothecated in any
manner, by operation of law or otherwise, other than by writ or
the laws of descent and distribution, and shall not be subject to
execution, attachment or similar process. This restriction shall
lapse, with respect to 3 1/3% of the number of shares granted
under the Program, and those shares will become unrestricted
stock, on the last day of the Company's 1996 fiscal year. The
restriction shall lapse with respect to each additional 3 1/3% of
such number of shares on the last day of each successive fiscal
year of the Company, until the final year which will have
13 1/3%.
2. The restriction shall also lapse as to all shares
granted to a Grantee on the first to occur of (i) the termination
of that Grantee's employment with the Company by reason of his
disability, (ii) the Grantee's death, (iii) termination of the
Grantee's employment by the Company without good reason, or (iv)
a change of control of the Company. The Program defines "Change
of Control" as an acquisition by a person or group of more than
50% of the Company's outstanding shares, a transfer of the
Company's property to an entity of which the Company does not own
at least 50%, or the election of directors constituting a
majority of the Board who have not been approved by the existing
Board.
3. Shares which have not become unrestricted under the
circumstances referred to in Item 1 or Item 2 above shall be
forfeited to the Company upon termination of the Grantee's
employment with the Company.
4. During any tax year in which a Grantee realizes taxable
income by reason of the lapse of the restrictions on the shares
granted under the Program, the Company shall pay to such Grantee
a "Gross-Up Bonus" in cash equal to the aggregate of (i) the
additional federal, state and local income taxes incurred by
Grantee as a result of realization of such taxable income, and
(ii) the federal, state and local income tax incurred by the
Grantee as a result of the Gross-Up Bonus. In no event shall the
Gross-Up Bonus exceed the aggregate of (i) the amount of the tax
deduction for which the Company receives a benefit for the tax
year of the Company beginning during the tax year of the Grantee
in which he realizes taxable income by virtue of the lapse of the
restrictions referred to in Item 1 above, and (ii) the amount of
the tax deduction for which the Company receives a benefit for
such tax year of the Company by virtue of the Gross-Up Bonus.
Incentive Stock Option Plans
On December 6, 1984 the shareholders of the Company
approved the 1984 Incentive Stock Option Plan and the 1985
Incentive Stock Option Plan; and on February 24,1992 the share
holders of the Company approved the 1992 Incentive Stock Option
Plan. Options granted under the Plans are intended to qualify as
"incentive stock options", as defined in Section 422A of the
Internal Revenue Code. The 1984 and 1985 plans expired with
options for 2,785,000 shares outstanding. A total of 2,000,000
shares of common stock are reserved for issuance upon exercise of
options granted under the 1992 Plan. Options for a total of
3,000,000 shares have been granted to employees of the Company
under the 1984 and 1985 Plans. Options for 215,000 shares have
been exercised to date at an average purchase price of $.09. No
options have been issued to any person who is currently an
officer or director of the Company. The average exercise price
of the options which are outstanding is $.015.
Other Compensation
The two persons who were officers of the Company during
the last fiscal year did not receive non-cash compensation
exceeding in aggregate 10 percent of their aggregate cash
compensation.
Compensation of Directors
During the fiscal year ended June 30, 1995, the Company
paid no fees or other cash compensation to directors for service
on the Board. Mr. George M. Bradshaw, a member of the Board of
Directors, received $26,978 for legal services rendered to the
Company.
On November 12, 1990, the Board of Directors granted to
George M. Bradshaw, a member of the Board of Directors, a non-
qualified option to purchase up to 2,000,000 shares of the
Company's common stock at any time prior to November 12, 2000.
The purchase price for the shares will be $.033 per share, which
was 105% of the market bid price for the Company's common stock
on the date of grant.
<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.
MicroENERGY, INC.
(Registrant)
By /s/ Robert G. Gatza
Robert G. Gatza
President
Date: March 15, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
/s/ Robert G. Gatza
Robert G. Gatza
President (Principal Executive Officer), Director
Date: March 15, 1996
/s/ Robert J. Fanella
Robert J. Fanella
Treasurer (Principal Financial Officer)
(Principal Accounting Officer), Director
Date: March 15, 1996
