UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
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 number 0-14328
ZING TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
New York 13-2650621
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
115 Stevens Avenue, Valhalla, NY 10595
-------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 747-7474
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value.
-----------------------------
Check 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 past 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
--- ---
The aggregate market value of the voting common stock held by non-affiliates of
the registrant, computed by reference to the average of bid and asked price of
the stock as of September 3, 1998 was $8,371,456.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. X
---
State issuer's revenues for its most recent fiscal year. $21,773,000
The number of shares of common stock, $.01 par value, outstanding as of
September 23, 1998 was 2,414,613.
Transitional small business disclosure format Yes No X
--- ---
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ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all Directors and Executive Officers of the
Company, their positions with the Company, their term of office and their
business background are set forth below.
<TABLE>
<CAPTION>
Director of
Name, Age, Position with the Company, Experience, Other Directorships Zing Since
- --------------------------------------------------------------------- -----------
<S> <C>
JOHN F. CATRAMBONE, 58, has been President and Chief Executive Officer of Omnirel 1986
LLC, a manufacturer of power hybrid semiconductor devices since 1985. Omnirel has
been a subsidiary of the Company since June 1991.
MARTIN S. FAWER, 64, became Chief Financial Officer and Treasurer in February 1988. 1984
From October 1984 to January 1988 Mr. Fawer was Treasurer of the Company. He is also a
director and serves as the Chief Financial Officer and Treasurer of Transition Analysis
Component Technology, Inc. and Omnirel, both subsidiaries of the Company. For more
than five years, Mr. Fawer has been a principal of The Fawer Group, P.C. and its
predecessors, certified public accountants.
LAURENCE W. HIGGITT, 53, has been employed by Stephen Rose & Partners, Limited, 1985
investment bankers, in London, England since 1984 and has been on its Board of Directors
since 1985. Prior to 1984, he was a fund manager for Lazard Brothers & Co. Ltd., merchant
bankers, London, England.
DEBORAH J. SCHRADER, 51, has been Secretary of the Company since its incorporation. 1969
She is also the Secretary and a director of Transition Analysis Component Technology, Inc.,
a subsidiary of the Company. She is the wife of Robert E. Schrader.
ROBERT E. SCHRADER, 54, is the founder of the Company and has been President and 1969
Chief Executive Officer since its incorporation in 1969. Prior to organizing the Company,
Mr. Schrader was an account executive with a division of Lafayette Radio Corporation, a
district sales manager of Arrow Electronics, Inc. and held purchasing manager positions
with two electronic equipment manufacturers. He is also a director and vice-president of
Transition Analysis Component Technology, Inc. and Omnirel LLC, each a subsidiary
of the Company. He is the husband of Deborah J. Schrader.
HENRY A. SINGER, 60, has been a member of the law firm of Morrison Cohen Singer & 1988
Weinstein, LLP and its predecessor for more than the past five years. Morrison Cohen Singer &
Weinstein, LLP serves as general counsel to the Company.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities (the "10% Stockholders"), to file reports of ownership on Form 3 and
reports of changes in ownership on Form 4 or Form 5 with the Securities Exchange
Commission. Executive officers, directors and the 10% Stockholders are required
to furnish the Company with copies of such reports. Based solely on its review
of the copies of such forms received by the Company, or written representations
that no other reports are required, the Company believes that during the 1997
Fiscal Year, the Company's executive officers, directors and 10% Stockholders
complied with the applicable Section 16(a) filing requirements.
2
<PAGE>
ITEM 10 - EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth a summary for the last three (3)
fiscal years of the cash compensation paid by the Company and its subsidiaries
as well as certain other compensation paid or accrued for those years, to the
Chief Executive Officer and the only two executive officers of the Company whose
total annual salary and bonus exceeded $100,000 in the 1998 Fiscal Year (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Name and ----------------------- All Other
Principal Position Year Salary Bonus Compensation(1)
- ------------------ ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Robert E. Schrader 1998 $250,000 $100,000 $1,800
President, Chief Executive Officer and 1997 $225,000 $ 25,000 $1,800
Chairman of the Board 1996 $150,000 $165,000 $1,800
John F. Catrambone(2) 1998 $154,166 $101,250 $5,334
President of Omnirel Corporation 1997 $150,000 $121,000 $1,049,829
1996 $213,275 $121,000 $4,684
Martin S. Fawer 1998 $112,500 -- $9,600
Chief Financial Officer 1997 $ 75,000 $86,000 $9,600
1996 $ 75,000 $49,000 $9,600
</TABLE>
(1)The amounts reflect the following payments of annual life insurance premiums
in the 1996 Fiscal Year, 1997 Fiscal Year and 1998 Fiscal Year: $1,800 in each
such year on behalf of Mr. Robert E. Schrader; and $4,684, $4,579, and $5,334,
respectively, on behalf of Mr. John F. Catrambone. Mr. Fawer receives an annual
automobile allowance of $9,600. See also footnote number 2 below with respect to
Mr. John F. Catrambone and the 1998 Fiscal Year.
(2)The bonus amounts for Mr. Catrambone in each of the 1996 Fiscal Year, 1997
Fiscal Year and 1998 Fiscal Year include (i) $18,900, $15,300 and $15,300,
respectively, representing interest imputed at 9% per annum on the $250,000
interest free loan provided by the Company to Mr. Catrambone for the purchase of
the Company's common stock ($80,000 of this loan was repaid in the 1996 Fiscal
Year) and (ii) an annual bonus awarded pursuant to his employment agreement. The
"All Other Compensation" amount in the 1997 Fiscal Year for Mr. Catrambone
includes $1,045,250 resulting from the issuance of the Company's common stock in
exchange for Mr. Catrambone's options to purchase shares of the Company's
Omnirel subsidiary common stock in connection with the Company's acquisition of
all minority interests in its Omnirel subsidiary on June 30, 1997. As a result,
the Company incurred a pretax charge against earnings equal to the value of the
shares issued in exchange for the options held.
The above amounts do not include certain personal benefits, which do
not exceed, as to any executive officer identified above, 10% of his total
Annual Compensation.
3
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GRANTS OF WARRANTS
During the 1998 Fiscal Year, no warrants, options or stock
appreciation rights in the Company were granted to any Named Executive Officer.
AGGREGATED WARRANT EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END WARRANT VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-Money
Shares Options/SARs at FY-End(#) Options/SARs at FY-End(#)
Acquired on Value -------------------------- ---------------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable(1) Unexercisable
- ------------------------------- ---------------- ---------------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
None
</TABLE>
COMPENSATION OF DIRECTORS
The Company pays each director who is not an officer or employee of the
company (other than Henry A. Singer) $4,000 per year for his services as a
director plus $250 for each Board of Directors meeting attended and for each
Committee meeting attended if not held on the same day as a Board meeting. Mr.
Singer does not receive such fee, since the firm of which he is a partner is
paid its customary legal fees for Mr. Singer's attendance and participation.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
John Catrambone has an employment agreement with the Company's Omnirel
subsidiary. The agreement, the term of which is set to expire on June 30, 2000,
provides for a base salary of $175,000 per year and an incentive bonus linked to
a set of performance criteria determined annually by Omnirel's Board of
Directors and subject to percentage limitations of Mr. Catrambone's base salary
(90% for the 1998 Fiscal Year). Mr. Catrambone was also loaned $300,000 by the
Company in connection with the purchase of Omnirel by the Company, such loan was
repaid from Mr. Catrambone's annual guaranteed bonus which bonus is no longer a
part of Mr. Catrambone's compensation. The Company has guaranteed the base
compensation payments under such employment agreement to Mr. Catrambone. The
Company also loaned Mr. Catrambone $250,000, without interest, to purchase
shares of the Company's common stock. Such loan, which is due in June, 2001, is
secured by the stock so purchased by Mr. Catrambone. No principal repayments
were made during the 1998 Fiscal Year and at the end of the 1998 Fiscal Year
there was a principal balance of $170,000 remaining on such note.
Mr. Schrader does not have an employment agreement with the Company and his
compensation is set by the Compensation Committee subject to the approval of the
Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the 1998 Fiscal Year were
Martin S. Fawer, Laurence W. Higgitt and Henry A. Singer. Henry A. Singer, a
director of the Company during the 1998 Fiscal Year, is a partner of Morrison
Cohen Singer & Weinstein, LLP, counsel to the Company. The amount paid to such
firm in the 1998 Fiscal Year was less than 5% of such firm's gross revenues.
4
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for reviewing levels and methods of
executive compensation and making recommendations to the Board of Directors.
Such recommendations were made in the past primarily based upon comparisons of
executive compensation in other comparable companies engaged in the distribution
of high reliability electronic components.
The comparable companies which were reviewed by the Compensation Committee in
the 1998 Fiscal Year included only in part those companies which are included in
the Dow Jones Semiconductors and Related Index. The other comparable companies
chosen were based upon those having a more comparable size to that of the
Company. When the bonuses described below are included in total annual
compensation, the compensation levels for the Company's executives are above the
average range of compensation of these comparable companies.
The Compensation Committee met once in the 1998 Fiscal Year. In reviewing
executive compensation issues, the Committee concurred in management's decision
to set Mr. Schrader's 1998 Fiscal Year base salary at the level of his Fiscal
Year 1997 base salary plus the $25,000 bonus paid in Fiscal Year 1997 in respect
of Fiscal Year 1996; to increase Mr. Fawer's base salary to $120,000 and to pay
Mr. Schrader a bonus of $100,000 in respect of the 1997 Fiscal Year payable in
accordance with the Company's normal payroll practices. Mr. Fawer abstained from
deliberations and discussions regarding his compensation.
In setting Mr. Schrader's base salary for the 1998 Fiscal Year, the
Compensation Committee noted that Mr. Schrader was responsible for the Company's
investment portfolio. Furthermore, it was difficult to determine base salary for
Mr. Schrader since he is the chief executive officer of what essentially is a
holding company.
The Zing Technologies, Inc. Compensation Committee
Martin S. Fawer
Laurence W. Higgitt
Henry A. Singer
With respect to Mr. Catrambone, the Omnirel Board of Directors (with Mr.
Catrambone abstaining) established performance criteria for his incentive bonus
in accordance with his employment agreement. Such performance criteria include
the amount of increase in Omnirel's pre-tax profit and the amount of reduction
in Omnirel's indebtedness to the Company. The amount of the bonus, in each case,
is based upon the percentage of the goal achieved. During the 1998 Fiscal Year,
Mr. Catrambone was given a specific mandate to increase Omnirel's pre-tax
profits and to use the corresponding increase in cash flows to better manage
Omnirel's balance sheet by reducing its debt. As a result of Omnirel's achieving
certain performance objectives established by Omnirel's Board for the 1997
Fiscal Year, Mr. Catrambone received his full $121,000 performance bonus under
his employment agreement in the 1998 Fiscal Year, of which amount $101,250 was
paid during the 1998 Fiscal Year.
Omnirel LLC Board of Directors
Robert E. Schrader
Martin S. Fawer
John F. Catrambone
5
<PAGE>
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Security Holders
The following table sets forth, as at September 30, 1998 information
concerning the beneficial ownership of voting securities of the Company by each
person who is known by management to own beneficially more than 5% of any class
of such securities:
Name and Address Amount Benefi- Percent of
Title of Class of Beneficial Owner cially Owned Class
- -------------- ------------------- --------------- ----------
Common Robert E. Schrader 1,152,711 47.74 %
72 Haight Crossroad
Chappaqua, NY 10514
Security Ownership of Management
The following table sets forth, as at October 15, 1998 information
concerning the beneficial ownership of voting securities of the Company by all
current directors individually, by the Chief Executive Officer and the executive
officers of the Company whose total annual salary and bonus exceeded $100,000 in
the 1998 Fiscal Year, and by all directors and officers as a group:
Amount of
Common Stock Percent
Beneficially Owned of Class
------------------ ---------
John F. Catrambone 209,500 8.68%
Laurence W. Higgitt 3,000 *
Henry A. Singer 3,000(1) *
Deborah J. Schrader 1,152,711(2) 47.74%
Robert E. Schrader 1,152,711 47.74%
All Officers and Directors
as a Group (6 persons,
including two such persons
who own no shares individually) 1,368,211 56.66%
- -----------------
(*) Represents less than 1% of the shares outstanding.
(1) Represents shares owned by Morrison Cohen Singer & Weinstein, LLP.
(2) Beneficial ownership of Mr. Schrader's shares only. No shares held
directly.
Robert E. Schrader, Deborah J. Schrader and Martin S. Fawer are directors
of Transition Analysis Component Technology, Inc. No other director is a
director of any company with a class of securities registered pursuant to
Section 12 of the Act or of any company registered as an Investment Company
under the Investment Company Act of 1940. Other than Robert E. Schrader and
Deborah J. Schrader, who are married to each other, there is no family
relationship among any of the members of the Board of Directors or the officers
of the Company.
6
<PAGE>
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company paid Morrison Cohen Singer & Weinstein, LLP, of which Henry A.
Singer, a director of the Company, is a partner, $229,175 for legal services
rendered to the Company in the 1998 Fiscal Year. In June, 1995, the Company
advanced $112,000 to Mr. Fawer which advance is repayable from any bonuses Mr.
Fawer receives from the Company. In the 1998 Fiscal Year, Mr. Fawer repaid the
$29,000 balance of such advance. In the 1998 Fiscal Year, the Company loaned
$103,465 to Mr. Catrambone, the proceeds of which were used to pay taxes
resulting from the sale by Mr. Catrambone to the Company of his options to
purchase stock in the Company's Omnirel subsidiary in exchange for Company
common stock. In connection therewith, Mr. Catrambone delivered a promissory
note which is secured by shares of his Company common stock and carries interest
at the rate of 6.65% per annum.
7
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized on the 23 day of October,
1998.
Zing Technologies, Inc.
By: Martin S. Fawer
-----------------------------
Martin S. Fawer
Chief Financial Officer and Treasurer
8
