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, 1999
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
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ZING TECHNOLOGIES, INC.
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 747-7474
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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 October 25, 1999 was $7,302,839.
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 $25,362,000.
The number of shares of common stock, $.01 par value, outstanding as of October
25, 1999 was 2,406,837.
Transitional small business disclosure format Yes |_| No |X|
1
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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.
Director
of Zing
Name, Age, Position with the Company, Experience, Other Directorships Since
- --------------------------------------------------------------------- -----
JOHN F. CATRAMBONE, 59, has been President and Chief Executive Officer 1986
of Omnirel LLC, a manufacturer of power hybrid semiconductor devices
since 1985. Omnirel has been a subsidiary of the Company since June
1991.
MARTIN S. FAWER, 65, became Chief Financial Officer and Treasurer in 1984
February 1988. 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. Since
July 1997, he has been the Chief Executive Officer of PFS Trader Tools,
LLC. For more than the five preceding years, Mr. Fawer was a principal
of The Fawer Group, P.C. and its predecessors, certified public
accountants.
LAURENCE W. HIGGITT, 52, retired, had been employed by Stephen Rose 1985
& Partners, Limited, investment bankers, in London, England from 1984
until 1999 and had 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, 52, has been Secretary of the Company since its 1969
incorporation. 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, 55, is the founder of the Company and has been 1969
President and 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, 61, has been a member of the law firm of Morrison 1988
Cohen Singer & Weinstein, LLP and its predecessor for more than the
past five years. Morrison Cohen Singer & Weinstein, LLP serves as
general counsel to the Company.
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 1999
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
Annual Compensation
-----------------------
Name and All Other
Principal Position Year Salary Bonus Compensation(1)
- ------------------ ---- ------ ----- ---------------
Robert E. Schrader 1999 $260,000 $120,000 $1,800
President, Chief Executive Officer 1998 $250,000 $100,000 $1,800
and Chairman of the Board 1997 $225,000 $25,000 $1,800
John F. Catrambone(2) 1999 $175,000 $146,250 $6,126
President of Omnirel Corporation 1998 $154,166 $101,250 $5,334
1997 $150,000 $121,000 $1,049,829
Martin S. Fawer 1999 $120,000 -- $9,600
Chief Financial Officer 1998 $112,500 -- $9,600
1997 $75,000 $86,000 $9,600
- ----------
(1) The amounts reflect the following payments of annual life insurance
premiums in the 1997 Fiscal Year, 1998 Fiscal Year and 1999 Fiscal Year: $1,800
in each such year on behalf of Mr. Robert E. Schrader; and $4,579, $5,334 and
$6,126 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 1997 Fiscal Year,
1998 Fiscal Year and 1999 Fiscal Year include (i) $15,300 in each year
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 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 $1,045,250 resulting from the issuance of the Company's
common stock in exchange for Mr. Catrambone's options to purchase shares of the
Company's Omnirel subsidiary common stock in connection with the Company's
acquisition of all minority interests in its Omnirel subsidiary on June 30,
1997. As a result, the Company incurred a pretax charge against earnings equal
to the value of the shares issued in exchange for the options held.
The above amounts do not include certain personal benefits, which do not
exceed, as to any executive officer identified above, 10% of his total Annual
Compensation.
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GRANTS OF WARRANTS
During the 1998 Fiscal Year, no warrants, options or stock appreciation
rights in the Company were granted to any Named Executive Officer.
AGGREGATED WARRANT EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END WARRANT VALUES
<TABLE>
<CAPTION>
Number of Unexercised
Shares Options/SARs at FY-End(#) Value of Unexercised In-the Money
Acquired on Value ----------------------------- Options/SARs at FY-End ($)
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 1999 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 1999 Fiscal Year and at the end of the 1999 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 1999 Fiscal Year were
Martin S. Fawer, Laurence W. Higgitt and Henry A. Singer. Henry A. Singer, a
director of the Company during the 1999 Fiscal Year, is a partner of Morrison
Cohen Singer & Weinstein, LLP, counsel to the Company. The amount paid to such
firm in the 1999 Fiscal Year was less than 5% of such firm's gross revenues.
4
<PAGE>
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 1999 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 1999 Fiscal Year. In reviewing
executive compensation issues, the Committee concurred in management's decision
to increase Mr. Schrader's 1999 Fiscal Year base salary by $10,000 over the
level of his Fiscal Year 1998 base salary and to increase his bonus by $20,000.
Mr. Fawer's compensation was unchanged. Mr. Fawer abstained from deliberations
and discussions regarding his compensation.
In setting Mr. Schrader's base salary for the 1999 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 1999 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 operating
results in the 1998 fiscal year, Mr. Catrambone was awarded a bonus of $146,250
which was paid in the 1999 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 October 28, 1999 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 47.89%
72 Haight Crossroad
Chappaqua, NY 10514
Robert P. Schrader 600,000 24.92%
1998 Grantor Retained
Annuity Trust
72 Haight Crossroad
Chappaqua, NY 10514
Security Ownership of Management
The following table sets forth, as at October 28, 1999 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 1999 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 8.70%
- --------------------------------------------------------------------------------
Laurence W. Higgitt 3,000 *
- --------------------------------------------------------------------------------
Henry A. Singer 3,000(1) *
- --------------------------------------------------------------------------------
Deborah J. Schrader 552,711(2) 22.96%
- --------------------------------------------------------------------------------
Robert E. Schrader 1,152,711(3) 47.89%
- --------------------------------------------------------------------------------
All Officers and Directors
as a Group (6 persons,
including two such persons
who own no shares individually) 1,368,211 56.85%
- --------------------------------------------------------------------------------
- ----------
(*) Represents less than 1% of the shares outstanding.
(1) Represents shares owned by Morrison Cohen Singer & Weinstein, LLP.
(2) Represents beneficial ownership of the shares owned by Mr. Schrader. No
shares held directly.
(3) Includes 600,000 shares beneficially owned by a trust of which Mr.
Schrader is trustee.
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<PAGE>
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.
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, $90,520 for legal services
rendered to the Company in the 1999 Fiscal Year of years prior. 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.
The Company has guaranteed repayment by Transition Analysis Component
Technology, Inc., a former subsidiary, its obligations under TACTech's $1.5
million credit facility with a financial restitution. The facility expires on
July 1, 2000. Robert E. Schrader is a shareholder of TACTech. Mr. and Mrs.
Schrader and Mr. Fawer are directors of TACTech. Mr. Singer is a partner of
David Lerner, a director of TACTech.
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 28th day of October,
1999.
Zing Technologies, Inc.
By: /s/ Martin S. Fawer
-------------------------------------
Martin S. Fawer
Chief Financial Officer and Treasurer
