U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission File Number 0-15362
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COMPUFLIGHT, INC.
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(Name of small business issuer in its charter)
Delaware 11-2883366
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
99 Seaview Boulevard, Port Washington, NY 11050
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(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, 516-625-0202
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
None which registered
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year (1996):$ 3,574,589
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The aggregate market value of the voting stock held by non-affiliates based
upon the average bid and asked prices of such stock as of December 31, 1996 was
$ 332,712.
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ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of common stock as of December 31, 1996
was 1,701,980 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth the positions and offices presently held
with the Company and Support by each present Director and executive officer, as
well as by each significant employee of the Company and Support, and his or her
age as of December 31, 1996:
Executive Officers and Directors
==================================== ------- ===================================
Positions and Offices Presently
Name Age Held With the Company and Support
- ------------------------------------ ------- -----------------------------------
Russell K. Thal 62 Chairman of the Board, Executive
Vice President and Director
- ------------------------------------ ------- -----------------------------------
Duncan Macdonald 37 Chief Executive Officer and Chief
Financial Officer
- ------------------------------------ ------- -----------------------------------
William Bowra 36 Chief Operating Officer and Vice
President of Business Development
- ------------------------------------ ------- -----------------------------------
Dorothy A. English 54 Executive Vice President and
Director of the Company and
Managing Director of Support
- ------------------------------------ ------- -----------------------------------
Denis L. Metherell 64 Secretary and Director
- ------------------------------------ ------- -----------------------------------
Kenneth M. Snyder 50 Director
==================================== ------- ===================================
Significant Employees
==================================== ------- ===================================
Positions and offices Presently
Name Age Held with the Company and Support
==================================== ------- ===================================
Kahal de Haan 33 Director of Functional
Architecture for Support
- ------------------------------------ ------- ===================================
Robert Dowding 29 Director of Systems Development
for Support
- ------------------------------------ ------- ===================================
Eric Johnson 54 Vice President Technical
of Support
- ------------------------------------ ------- ===================================
Robert Sosnowski 31 Director of Technical Architecture
for Support
- ------------------------------------ ------- ===================================
Michael Taylor 55 Director of Flight Operations
for Support
- ------------------------------------ ------- ===================================
Rainer Vietze 30 Director of Finance
==================================== ======= ===================================
<PAGE>
Russell K. Thal, a founder of the Company, has served as Chairman of the
Board of the Company since October 1994, Executive Vice President of the Company
since March 1996 and a Director of the Company since its formation in 1981. Mr.
Thal also served as the Company's President from 1981 to July 1995, Chief
Executive Officer from July 1995 to March 1996 and Treasurer from 1981 to
December 1993. In addition to managing the Company's operations, Mr. Thal has
been responsible for its marketing efforts. Prior to founding the Company, Mr.
Thal served as Director - Stations for New York Air from December 1980 to June
1981. From 1978 to December 1980, he was Director of Operations for Seaboard
World Airlines, and Senior Director-Military and Charter Operations for Flying
Tigers, where he was responsible for day-to-day control of operations, charter
and military operations, and fuel purchasing.
Duncan Macdonald has served as Chief Executive Officer of the Company since
March 1996 and Chief Financial Officer of the Company since July 1995 (see Item
12 hereof). From July 1994 to July 1995, Mr. Macdonald provided management
consulting services to the Company and Support in a non-officer capacity. Since
January 1992, Mr. Macdonald has also served as managing partner of Decision
Strategies Inc., a management consulting firm based in Ottawa, Ontario.
William Bowra has served as Vice President of Business Development for
Support since March 1996. Furthermore, he has served as Vice President of
Business Development and Chief Operating Officer of the Company since October
1996. From 1993 to 1996, Mr. Bowra served as the Regional Sales Manager for AT&T
Canada, a Canadian telecommunications service provider. From 1988 to 1993, Mr.
Bowra served as a Corporate Account Manager for AT&T/NCR.
Dorothy A. English has served as Executive Vice President of the Company
since July 1995 and a Director of the Company since February 1994. Mrs. English
also served as the Company's Chief Operating Officer from December 1993 to July
1994 and Chief Executive Officer from July 1994 to July 1995. She co-founded the
Company's wholly-owned subsidiary, Navtech Systems Support Inc. ("Support"), and
has served as its Managing Director since March 1996, its Treasurer since
February 1992 and a Director since 1987. Mrs. English also served as Vice
President and Secretary of Support from 1987 to February 1992, President from
February 1992 to October 1993 as well as from October 1995 to March 1996, and
Chief Operating Officer from February 1992 to October 1993.
Denis L. Metherell has served as Secretary of the Company since October
1994 and a Director of the Company since July 1994. Mr. Metherell also served as
Treasurer of the Company from November 1994 to March 1996 and Chief Financial
Officer from November 1994 to July 1995. He served as Vice President of Support
from June 1993 to July 1995 and also serves as Vice President and a Director of
AVCON Associates Inc., which leases computers to Support (see Item 12 hereof).
From 1976 to 1992, Mr. Metherell served as a technical consultant to Northwest
Airlines.
Kenneth M. Snyder has served as a Director of the Company since February
1994. Since October 1995, he has also served as a management consultant to
entities in the aviation industry and, since such date, has provided certain
consulting, advisory and corporate finance services to the Company (see Item 12
hereof). Mr. Snyder served as Vice President and Treasurer of the Company from
October 1993 to November 1994 and Chief Operating Officer from November 1994 to
July 1995. From October 1993 to October 1995, he served as President and Chief
Operating Officer of Support. Prior thereto and from 1984, Mr. Snyder served as
Vice President of American AirLease Corporation, a company engaged in the
leasing and financing of aircraft.
Kahal de Haan has served as the Director of Functional Architecture for
Support since September 1995. Prior thereto and from 1990, Mr. de Haan served as
a software engineer for Support.
Robert Dowding has served as the Director of Systems Development for
Support since September 1995. Prior thereto and from 1992, Mr. Dowding served as
a software engineer for Support. From 1990 to 1992, Mr. Dowding was a software
engineer with Navtel, Inc., a Canadian telecommunications firm.
Eric Johnson has held the position of Vice President Technical of Support
since 1987. From 1982 to 1987, Mr. Johnson owned Hangar Books, a publishing
company that specialized in the aviation field. Mr. Johnson also has fifteen
years experience as a navigator in the Royal Canadian Air Force.
Robert Sosnowski has served as the Director of Technical Architecture for
Support since September 1995. Prior thereto and from 1989, Mr. Sosnowski served
as a software engineer for Support.
Michael Taylor has served as the Director of Flight Operations for Support
since 1991. Prior to joining Support, Mr. Taylor spent seven years with
Worldways Canada where he served as training captain and check pilot. Mr. Taylor
was also a pilot for the Royal Canadian Air Force for 28 years.
Rainer Vietze, C.A., joined the Company in November 1995 as the Director of
Finance. Prior to joining the Company, Mr. Vietze worked as a manager for Doane
Raymond Chartered Accountants (the Canadian member firm of Grant Thornton
International) for the period from 1990 to 1995.
Each Director will hold office until the next Annual Meeting of
Stockholders or until his or her successor is elected and qualified. Each
executive officer will hold office until the next regular meeting of the Board
of Directors following the next Annual Meeting of Stockholders or until his or
her successor is elected or appointed and qualified.
To the Company's knowledge, based solely on a review of copies of Forms 3,
4 and 5 furnished to the Company and written representations that no other
reports were required, during the fiscal year ended October 31, 1996, all
Section 16(a) filing requirements applicable to the Company's officers,
Directors and 10% stockholders were complied with.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
(a) Summary Compensation Table
The following table sets forth certain information concerning the
compensation of all executive officers of the Company as of October 31, 1996 who
had a total salary and bonus for such year in excess of $100,000 as well as all
persons who served as Chief Executive Officer of the Company during the fiscal
year ended October 31, 1996.
<TABLE>
<CAPTION>
=========================================================================================================
Annual Compensation Long-Term Compensation
- ----------------------------------------------------------------------------------------------------------
Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common
Name and Restricted Stock
Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation Award(s) Options Payouts Compensation
- ----------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
Duncan
Macdonald, 1996 -0- -0- $106,359(1) -0- -0- -0- -0-
Chief 1995 -0- -0- $ 95,316(1) -0- 200,000 -0- -0-
Executive 1994 -0- -0- $ 16,864(1) -0- -0- -0- -0-
Officer
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Russell K 1996 $135,863 -0- $ 14,800(2)(3) -0- -0- -0- -0-
Thal, 1995 $128,808 -0- $ 14,800(2)(3) -0- -0- -0- -0-
Chairman 1994 $125,000 -0- $ 14,800(2)(3) -0- 65,000 -0- -0-
==========================================================================================================
</TABLE>
(1) Represents amounts paid as an independent advisor to the Company. See Item
12 hereof.
(2) Includes $12,000 paid by the Company as an automobile allowance.
(3) Includes $2,800 paid by the Company as an allowance for the purchase of
disability insurance.
<PAGE>
(b) Option Grants Table
The following table sets forth certain information with regard to the
grants of stock options during the fiscal year ended October 31, 1996 to the
persons named in Item 10(a) hereof:
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Shares of Percent of
Common Stock Total Options
Underlying Granted to Exercise
Options Employees in Price/ Expiration
Name Granted Fiscal Year Share Date
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Duncan Macdonald -0- -0- N/A N/A
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Russell K. Thal -0- -0- N/A N/A
================================================================================
(c) Fiscal Year-End Option Value Table
The following table sets forth certain information concerning the value as
of October 31, 1996 of unexercised options held by the persons named in Item
10(a) hereof:
================================================================================
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
October 31, 1996 at October 31, 1996
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Name Exercisable/Unexercisable Exercisable/Unexercisable
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Duncan Macdonald 200,000/-0- -0-/-0-
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Russell K. Thal 75,938/-0- -0-/-0-
================================================================================
No options were exercised by any of the named persons during the fiscal year
ended October 31, 1996.
(d) Compensation of Directors
The By-Laws of the Company provide that Directors shall be reimbursed for
travel expenses incurred in attending any meeting of the Board or any committee
thereof and each Director, except salaried officers of the Company, shall be
paid a fee for attending each meeting of the Board or any such committee as may
be fixed by the Board from time to time. No Directors' fees have been paid to
date. The By-Laws of the Company also provide, to the extent permitted by law,
for certain indemnification of its Directors.
(e) Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
See Item 12 hereof for a discussion of a certain Key Advisor Agreement
between Support and Mr. Macdonald.
Mr. Thal is employed by the Company pursuant to an employment agreement, as
amended, (the "Employment Agreement") which expires on March 31, 1999 (the
"Expiration Date") and provides for a minimum annual salary of $125,000
effective December 1, 1993, with annual cost of living increases. Pursuant to
the Employment Agreement, as amended, subject to the terms and conditions
thereof, the Company has agreed to acquire an annuity and/or universal life
insurance policy which will provide for the following: (i) Mr. Thal being the
beneficiary thereof; (ii) provided that Mr. Thal does not voluntarily terminate
his employment with the Company prior to the Expiration Date, following the
cessation of Mr. Thal's employment with the Company, the payment to him of an
aggregate of $600,000, payable in 60 equal monthly installments of $10,000 each
and (iii) a death benefit covering Mr. Thal's death through the fifth
anniversary of the Expiration Date, which face amount shall decrease to the
extent of any monthly benefits paid pursuant to (ii) above. In addition,
pursuant to the Employment Agreement, in the event of Mr. Thal's death during
the employment period, his estate would be entitled to receive payments equal to
three months salary. Further, under certain circumstances, Mr. Thal may be
entitled to receive two years severance payments upon the termination of his
employment.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The total number of shares of Common Shares outstanding as of December 31,
1996 was 1,701,980. The Common Shares are the only class of securities
outstanding. Each share is entitled to one vote. The following table sets forth
certain information regarding the Company's outstanding Common Shares
beneficially owned as of December 31, 1996 by (i) each person who is known by
the Company to own beneficially or exercise voting or dispositive control over
more than 5% of the Company's Common Stock, (ii) each present Director, (iii)
each person named in the Summary Compensation Table above, and (iv) all of the
Company's present executive officers and Directors as a group:
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Approximate
Name and Address of Number of Shares Percentage of
Beneficial Owner Beneficially Owned Outstanding Shares
=========================== ---------------------------- =======================
Dorothy A. English 1,007,766(1)(2) 59.2%
175 Columbia Street West
Waterloo, Ontario,
Canada
=========================== ---------------------------- =======================
Raymond F. English 918,766(1)(2) 51.0%
22 West McKay Crescent (3)(4)
Cochrane, Alberta,
Canada
=========================== ---------------------------- =======================
Ray English and 802,766(2)(3) 47.2%
Associates Inc.
17 Cardinal Street
Elmira, Ontario,
Canada
=========================== ---------------------------- =======================
Kenneth M. Snyder 350,000(5) 17.1%
207 Pittman Place
Carson City, Nevada
=========================== ---------------------------- =======================
Duncan Macdonald 200,000(5) 10.5%
50 O'Connor
Ottawa, Ontario,
Canada
=========================== ---------------------------- =======================
Innovation Ontario 125,000 7.3%
Corporation
56 Wellesley Street West
Toronto, Ontario, Canada
=========================== ---------------------------- =======================
Russell K. Thal 93,813(6) 5.3%
99 Seaview Boulevard
Port Washington, NY
=========================== ---------------------------- =======================
Denis L. Metherell 3,000 *
175 Columbia Street West
Waterloo, Ontario,
Canada
=========================== ---------------------------- =======================
All executive officers and 1,654,579(1)(5) 71.1%
Directors as a group (6)
(6 persons)
================================================================================
* Less than 1%
(1) Represents 802,766 shares beneficially owned by Raymond English and
Associates, Inc. ("RE&A") and 205,000 shares beneficially owned by Ms.
English. All such shares are held by Ms. English as voting trustee pursuant
to a Voting Trust Agreement which expires on the date Note (as defined and
described under "Certain Relationships and Related Transactions") payable
by RE&A to Support is satisfied in full and canceled. Does not include
16,000 shares beneficially owned by Raymond F. English, Ms. English's
husband. Ms. English disclaims beneficial interest in such shares.
(2) Such persons may be deemed parents of the Company.
(3) Includes 802,766 shares beneficially owned by RE&A, of which, the Company
has been advised, Mr. English is the Chairman, Chief Executive Officer and
sole stockholder. Such shares are held pursuant to a Voting Trust Agreement
as discussed in footnote (1) hereof.
(4) Includes 100,000 shares issuable upon exercise of currently exercisable
options.
(5) Represents shares issuable upon exercise of options that are currently
exercisable.
(6) Includes 75,938 shares issuable pursuant to currently exercisable options
and 312 shares owned by Mr. Thal's wife. This shall not be deemed an
admission that Mr. Thal is the beneficial owner of the shares owned by his
wife.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1. AVCON Associates Inc. ("AVCON")
AVCON, an entity of which Denis L. Metherell, Secretary and a Director of
the Company, is a Vice President and a Director, leased certain computer
equipment to Support. Effective January 31, 1996, the leases were terminated. On
October 31, 1996, the Company executed and delivered to AVCON a promissory note
in the principal amount of $53,000 Canadian (the "AVCON Note") to evidence
amounts due under the terminated lease agreements and outstanding as of such
date. The AVCON Note is payable on June 1, 1999 or sooner and provides for
payments as follow:
(i) interest of $795 Canadian only from December 1996 to August 1998; and,
(ii) interest and principal of $5,747 Canadian from September 1998 until
June 1999.
Subsequent to the fiscal year end, the Company entered into two new lease
agreements for certain computer equipment which call for varying payments until
August 1998. The Company believes that the lease payments, which will commence
December 1996 at $3,265 Canadian per month, are no higher than would be payable
to a nonaffiliated third party.
2. Ray English and Associates Inc. ("RE&A")
In 1993, prior to the acquisition discussed in Item 1 hereof, RE&A engaged
Support to provide certain management and marketing services in connection with
the management of the military and air traffic control ("ATC") versions of
Support's FOMS software. During such year and prior thereto, Support also
advanced funds to RE&A in order to assist RE&A in meeting its obligations. RE&A
is wholly owned by Raymond F. English, a former Chairman of the Company, who
resigned from such position on October 31, 1994 (see Item 11 hereof).
Effective July 15, 1995, RE&A executed and delivered to Support a
promissory note in the principal amount of $750,000 Canadian (the "RE&A Note")
to evidence a portion of its obligation to Support as of such date. The RE&A
Note is payable on July 15, 2005 (or sooner as provided below) and provides for
interest at the rate of 5% per annum payable annually.
Prior to the acquisition described in Item 1 hereof, RE&A was engaged in
the business of managing and marketing the military and ATC versions of the FOMS
software, especially as it related to large-scale Canadian Government traffic
management projects. As part of the acquisition transaction, the software rights
for the military and ATC versions of FOMS were transferred to the Company's
subsidiary, EAS.
Effective January 1, 1995, Support and RE&A entered into a five year
Consulting and Marketing Agreement (the "Consulting Agreement") pursuant to
which RE&A provides consulting and marketing services with regard to Support's
FOMS software. The Consulting Agreement provides for the payment to RE&A of a
base monthly fee of $11,000 Canadian as well as an additional aggregate fee of
$12,000 for certain additional services provided. The Consulting Agreement
provides further for commissions and finder's fees to RE&A for the licensing of
the FOMS software and introduction of Support to potential clients. Pursuant to
the Consulting Agreement, Support shall have the right to offset $3,500 Canadian
per month against compensation otherwise payable to RE&A thereunder as a payment
of amounts due under the RE&A Note. In addition, the Consulting Agreement
provides for the additional payment of the RE&A Note on the following basis:
(i) 15% of the first $10,000 Canadian of commissions or finder's fees
earned during a contract year;
(ii) 20% of the next $10,000 Canadian of commissions and finder's fees
earned during a contract year; and
(iii)25% of any earned commissions or finder's fees exceeding $20,000
Canadian in a contract year.
The Consulting Agreement is terminable by Support under certain
circumstances.
3. Kenneth Snyder
Effective as of October 1, 1995, the Company entered into a one year Key
Advisor Agreement (the "Snyder Key Advisor Agreement") with Kenneth Snyder
pursuant to which Mr. Snyder has been retained to provide certain consulting,
advisory and corporate finance services. Subsequent to the year end, Mr. Snyder
exercised his right under the Snyder Key Advisor Agreement to extend the
expiration date for a period of six months. The Company shall have the right to
extend the term of the Snyder Key Advisor Agreement further for a period of six
months. Pursuant to the Snyder Key Advisor Agreement, Mr. Snyder is entitled to
receive a base monthly fee of $11,000 as well as, under certain circumstances,
certain finders fees with respect to equity and/or debt financings (such fee,
with respect to any particular transaction, to equal the lesser of 5% of the
financing proceeds or $75,000 Canadian). During the fiscal year, Mr. Snyder
requested, and was granted, a six month unpaid sabbatical from his duties, and
accordingly, all notification and expiration dates were adjusted by six months.
4. Duncan Macdonald
Effective as of June 1, 1996, Support entered into a two year Key Advisor
Agreement (the "Macdonald Key Advisor Agreement") with Duncan Macdonald pursuant
to which Mr. Macdonald has been retained to serve as Chief Executive Officer of
the Company. Pursuant to the Macdonald Key Advisor Agreement, Mr. Macdonald is
entitled to receive a base weekly fee of $2,500 Canadian. In addition, a bonus
of $5,000 Canadian per fiscal quarter is payable during the term of the
agreement. Mr. Macdonald has agreed to expend at least 75% of his working time
in the fulfillment of his duties under the Macdonald Key Advisor Agreement. Mr.
Macdonald shall have the right to extend the term of the Macdonald Key Advisor
Agreement for a period of six months.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: February 28, 1997 COMPUFLIGHT, INC.
By: /s/ Duncan Macdonald
--------------------
Duncan Macdonald,
Chief Executive Officer
