SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A
AMENDMENT NO. 1 TO FORM 10-KSB
[X] Annual Report Under Section 13 or 15 (d) of the Securities Exchange Act
of 1934. For the Fiscal Year Ended June 30, 1998.
[ ] Transition Period Under Section 13 or 15 (d) of the Securities
Exchange Act of 1934. For the transition period from ___ to ___.
Commission File Number: 0-15692
TOTAL RESEARCH CORPORATION
(Name of Small Business Issuer in Its Charter)
Delaware 22-2072212
- ----------------------------------------- ------------------------------------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
Princeton Corporate Center
5 Independence Way
Princeton, New Jersey 08543-5305
(Address of Principal Executive Offices)
Issuer's Telephone Number, Including Area Code: (609) 520-9100
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
(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 there is no 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 the 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.
The issuer's revenues for the fiscal year ended June 30, 1998, were $34,057,084.
The aggregate market value of the voting and non-voting stock common equity of
the registrant held by non-affiliates as of October 27, 1998, was approximately
$18,000,000 based on the average bid and asked prices for such common equity as
reported on the Nasdaq SmallCap Market.
The number of shares of Common Stock outstanding as of October 27, 1998, was
11,406,299.
DOCUMENTS INCORPORATED BY REFERENCE: None.
<PAGE>
Amendment No. 1
to the Form 10-KSB filed by
Total Research Corporation on September 28, 1998
The following items were omitted from the Form 10-KSB filed by Total
Research Corporation on September 28, 1998, and such Form 10-KSB is hereby
amended to include Part III as hereinafter set forth:
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and Executive Officers
The following table provides certain information as of October 27,
1998, about each of the Company's directors and executive officers.
<TABLE>
<CAPTION>
Director
Name Age Since Position(s) with Company
---- --- ----- ------------------------
<S> <C> <C> <C>
Albert Angrisani 49 1994 President, Chief Executive Officer and Director
Lorin Zissman 68 1975 Chairman Emeritus of the Board of Directors
Eric Zissman 34 -- Chief Financial Officer and Treasurer
Richard G. Morrow, Jr. 39 -- Vice President, Controller and Secretary
Roger Thomas 53 1994 President - Strategic Marketing Services and Director
Terri Flanagan 37 -- President - Customer Loyalty Division
Patti Hoffman 49 -- President - U.S. Regional Offices Division
Mark Nissenfeld, Ph.D. 41 -- President - Global Health Care Division
David Brodsky 61 1998 Chairman of the Board of Directors
Anthony Galli 71 1990 Director
George Lindemann 62 1998 Director
Howard Shecter 55 1998 Director
J. Edward Shrawder 57 1993 Director
</TABLE>
2
<PAGE>
The business experience, principal occupation, employment and certain
other information concerning each of the Company's directors and executive
officers is set forth below.
Albert Angrisani has been President and Chief Executive Officer since
July 1998. From April 1998 to July 1998, Mr. Angrisani was a consultant to the
Company and acted in a capacity similar to that of a chief executive officer.
From January 1993 to April 1998, Mr. Angrisani was the President of
Princeton-Potomac Management Company, a consulting and financial services
company.
Lorin Zissman, the founder of the Company, became Chairman Emeritus of
the Board of Directors in April 1998. Mr. Zissman served as Chairman of the
Board of Directors and Chief Executive Officer of the Company from its founding
in 1975 to April 1998.
Eric Zissman, the son of Lorin Zissman, has been Chief Financial
Officer and Treasurer of the Company since October 1996. Mr. Zissman joined the
Company in 1988 and served as Vice President - Accounting from June 1993 to
October 1996.
Richard G. Morrow, Jr., has been Vice President and Controller of the
Company since July 1996. He became Secretary of the Company in September 1997.
From January 1993 to April 1996, Mr. Morrow was a financial analyst at
Rhone-Poulenc-Rorer, an international pharmaceutical company.
Roger Thomas has been the President of the Strategic Marketing Services
division of the Company since July 1996. He has been a director of the Company
since November 1994. From 1993 to November 1994, Mr. Thomas was Managing
Director of British Marketing Services, a United Kingdom market research firm.
From November 1994 to July 1996, he was Managing Director of Total
Research-Europe, the Company's European division.
Terri Flanagan became President of the Customer Loyalty division of the
Company in July 1996. Ms. Flanagan joined the Company in 1983 and served as
Senior Vice President from June 1993 to July 1996.
Patti Hoffman has been President of U.S. Regional Offices division of
the Company since June 1996. Ms. Hoffman joined the Company in February 1995 as
Vice President-Human Resources. Prior to that time, Ms. Hoffman was an
independent human resources consultant.
Mark Nissenfeld, Ph.D., became President of the Global Health Care
division of the Company in July 1996. Dr. Nissenfeld joined the Company in June
1993 as Research Director of the Company and Managing Director of the Global
Health Care division.
David Brodsky has been Chairman of the Board of Directors of the
Company since July 1998. Mr. Brodsky has been a private investor during the past
five years.
3
<PAGE>
Anthony Galli has been a director of the Company since October 1990.
Mr. Galli has been the principal of Galli Associates, a public relations
consulting firm, since January 1997. Prior to that time, he was Vice President
and General Manager of the New Jersey/Delaware office of Hill & Knowlton, a
public relations firm.
George Lindemann became a director of the Company in July 1998. Mr.
Lindemann has been Chairman of the Board of Directors and Chief Executive
Officer of Southern Union Company since February 1990. He has been President and
a director of Cellular Dynamics, Inc., the managing general partner of Activated
Communications Limited Partnership, a private investment business, since May
1982.
Howard L. Shecter has been a director of the Company since July 1998.
Since 1973, Mr. Shecter has been a partner in the law firm of Morgan, Lewis &
Bockius LLP. Mr. Shecter served as a managing partner of Morgan, Lewis & Bockius
LLP from 1979 to 1983 and was the Chairman of the Executive Committee of that
firm in 1985. Mr. Shecter is also a director of Safeskin Corporation.
J. Edward Shrawder became a director of the Company in November 1993.
He has been the Chief Financial Officer of Kent Research, a marketing research
firm located in Illinois, since 1993.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who
beneficially own more than ten percent (10%) of the Company's Common Stock to
report their ownership of and transactions in the Company's Common Stock to the
Securities and Exchange Commission and the Nasdaq SmallCap Market. Copies of
these reports are also required to be supplied to the Company. The Company
believes, based solely on a review of the copies of such reports received by the
Company, that during fiscal 1998 all applicable Section 16(a) reporting
requirements were complied with, except for the late filing of a report on Form
4 for each of Lorin Zissman, Eric Zissman and Richard G. Morrow, Jr.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation earned, whether paid or
deferred, by the Company's chief executive officer, its former chief executive
officer and its other five most highly compensated executive officers during the
fiscal year ended June 30, 1998 (collectively, the "Named Executive Officers"),
for services rendered in all capacities to the Company during the fiscal years
ended June 30, 1996, 1997 and 1998.
4
<PAGE>
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
Annual Compensation Securities All Other
Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) Options (#) ($)
- --------------------------- ---- ---------- --------- ----------- ---
<S> <C> <C> <C> <C> <C>
Albert Angrisani 1998 175,000(2) 43,900 -
President and Chief 1997 120,000(2) 40,000 335,000(4) -
Executive Officer (1) 1996 41,925(2) 35,000 185,000 -
Lorin Zissman 1998 260,000 26,000 - 67,598(5)
Chairman Emeritus(3) 1997 208,000 40,000 - 35,950(5)
1996 208,000 - - 35,966(5)
Eric Zissman 1998 120,000 32,900 - 17,066(6)
Chief Financial Officer and 1997 100,000 40,000 250,000(4) 4,075(7)
Treasurer 1996 74,000 25,000 50,000 3,014(7)
Patti Hoffman 1998 120,000 32,800 - 4,140(7)
President - U.S. Regional 1997 100,000 40,000 250,000(4) 4,229(7)
Offices division 1996 81,600 25,000 55,000 1,478(7)
Mark Nissenfeld, Ph.D. 1998 120,000 32,000 - 4,140(7)
President - Global 1997 110,000 40,000 250,000(4) 4,750(7)
Health Care division 1996 90,000 45,000 50,000 4,206(7)
Terri Flanagan 1998 120,000 6,000 - 3,695(7)
President - Customer 1997 100,000 40,000 250,000(4) 4,218(7)
Loyalty division 1996 100,000 - - 2,990(7)
Roger Thomas 1998 130,000 30,000 - 20,426(8)
President - Strategic 1997 125,000 40,000 250,000(4) 13,175(9)
Marketing Services division 1996 120,000 7,875 - 13,025(9)
</TABLE>
- ----------------------------
(1) Mr. Angrisani formally assumed the responsibilities of President and Chief
Executive Officer of the Company on July 1, 1998. Prior to that time, Mr.
Angrisani was a consultant to Company and from April 1998 to July 1, 1998,
he acted in a similar capacity to a chief executive officer.
(2) Represents fees paid to Mr. Angrisani in his capacity as a consultant to
the Company.
(3) Mr. Zissman has been Chairman Emeritus since April 1998. Prior to that
time, Mr. Zissman served as Chief Executive Officer and Chairman of the
Board of Directors of the Company.
(4) The Company granted 250,000 stock options to each of Mr. Angrisani, Eric
Zissman, Ms. Hoffman, Dr. Nissenfeld, Ms. Flanagan and Mr. Thomas upon the
execution of their respective employment agreements with the Company during
fiscal 1997. Such stock options vest in June 1999, provided that certain
corporate performance goals are met.
(5) Represents premiums paid by the Company on a life insurance policy for the
benefit of the estate of Mr. Zissman and the Company's match on employee
401(k) contributions. For fiscal 1998, it also represents payment for
accrued but unused vacation days.
(6) Represents the Company's match on employee 401(k) contributions and payment
for accrued but unused vacation days.
(7) Represents the Company's match on employee 401(k) contributions.
(8) Represents housing and automobile allowance paid to Mr. Thomas.
(9) Represents automobile allowance paid to Mr. Thomas.
5
<PAGE>
Option Grants
The Company did not grant stock options to any of the Named Executive
Officers during the fiscal year ended June 30, 1998.
Aggregated Option Exercises and Year-End Option Values
Shown below is information relating to the exercise of stock options
during the fiscal year ended June 30, 1998, for each of the Company's Named
Executive Officers and the year-end value of unexercised options held by each of
the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying in-the-money
Shares Unexercised Options at
Acquired on Value Options at Year-End Fiscal Year-End (1)
Name Exercise Realized (Exercisable/Unexercisable) (Exercisable/Unexercisable)
---- -------- -------- --------------------------- ---------------------------
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Angrisani, Albert - - 13,333/506,667 32,083/1,389,792
Flanagan, Theresa 25,000 28,125 0/250,000 0/703,125
Hoffman, Patti - - 60,000/250,000 153,438/703,125
Nissenfeld, Mark - - 50,000/250,000 131,250/703,125
Thomas, Roger - - 50,000/250,000 148,435/703,125
Zissman, Eric 8,771 31,250 50,000/250,000 131,250/703,125
Zissman, Lorin 38,517 205,625 0/0 0/0
</TABLE>
- -----------------------
1) Market value of underlying shares of Common Stock, based on the average of
the high and low sales price ($3.625), on June 30, 1998, minus the
aggregate exercise price.
Director Compensation
Directors who are employees of the Company receive no cash compensation
for serving on the Board of Directors. Non-employee directors are reimbursed for
their out-of-pocket expenses in attending Board meetings. Each director receives
50,000 stock options upon joining the Board of Directors and 10,000 stock
options at the end of each year of service on the Board of Directors. See also
"Certain Relationships and Related Transactions."
Employment Agreements
The Company has an employment agreement with Albert Angrisani, pursuant
to which he serves as President and Chief Executive Officer of the Company for a
three year term ending June 30, 2001, at an annual salary of $175,000, subject
to adjustment by the Executive Committee of the Board of Directors in fiscal
years 2000 and 2001.
6
<PAGE>
Mr. Angrisani is also entitled to receive a bonus of up to $125,000 per annum
based upon the Company's financial performance. If Mr. Angrisani's employment is
terminated by Company for any reason other than Cause (as defined therein) or
disability or following a Change in Control (as defined therein), or Mr.
Angrisani terminates his employment for Good Reason (as defined therein), then
the Company is obligated to pay him a lump sum cash severance payment of
$1,000,000, in addition to continuing to provide all employee benefits to Mr.
Angrisani and his family for the remainder of the Term (as defined therein) and
all options held by Mr. Angrisani would vest immediately. Mr. Angrisani has
agreed not to engage in a Competing Business (as defined therein) during the
Term and for a period of one year thereafter, subject to certain exceptions. Mr.
Angrisani's employment agreement provides for three non-collateralized annual
loans of $100,000 each from the Company. The entire principal and interest on
such loans will be due on June 30, 2001; provided, that the entire amount may
forgiven under certain circumstances described in Mr. Angrisani's employment
agreement.
The Company has entered into an employment agreement with each of Eric
Zissman, Terri Flanagan, Patti Hoffman, Mark Nissenfeld and Roger Thomas,
pursuant to which each serves as an executive officer of the Company for a two
and one-half year term ending June 30, 1999. Each agreement, as amended by the
Compensation Committee of the Board of Directors in November 1997, provides that
the applicable executive officer's annual base salary is $130,000 for the period
from July 1, 1998 through June 30, 1999 and that such executive officer will be
entitled to receive an annual bonus based upon the Company's financial
performance. Each of such executive officers is entitled to participate in all
benefit plans offered by the Company. Each such executive officer has agreed not
to solicit any of the Company's clients or employees for a period of two years
following the termination of his or her respective employment agreement. Each
such executive officer was granted 250,000 stock options under the respective
employment agreements. Such stock options vest on June 30, 1999; provided, that
if any of such executive officer's employment is terminated for performance or
cause, such executive officer's options shall not vest at all and if any of such
executive officer's employment is terminated for any reason other than
performance or cause, such executive officer's options shall vest immediately.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information, as of October 27, 1998,
concerning the Common Stock of the Company beneficially owned by (1) each
director and executive officer of the Company and (2) all directors and
executive officers as a group.
7
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Shares Beneficially Owned Percent of
Outstanding Shares
<S> <C> <C>
Albert Angrisani(1) 43,333 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Lorin Zissman 2,077,617 18.2%
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Eric Zissman 126,937 1.1%
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Richard G. Morrow, Jr.(2) 12,600 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Roger Thomas(3) 200,000 1.8%
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Theresa Flanagan 29,000 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Patti Hoffman 42,000 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Mark Nissenfeld, Ph.D. 29,842 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
David Brodsky(4) 578,961 5.0%
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
8
<PAGE>
Anthony Galli(5) 44,333 *
c/o Galli Associates
P.O. Box 7175
Princeton, New Jersey 08543
George L. Lindemann(6) 283,050 2.5%
c/o Southern Union Company
767 Fifth Avenue, 50th Floor
New York, New York 10153
Howard Shecter(7) 303,050 2.6%
c/o Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
J. Edward Shrawder(8) 112,111 *
c/o Kent Research
1716 Livingston Street
Evanston, Illinois 60201
All directors and executive officers as a group (13 3,867,834 32.6%
persons) (9)
</TABLE>
- --------------------
* Less that 1%
(1) Includes 28,333 shares subject to options exercisable within 60 days.
(2) Includes 12,500 shares subject to options exercisable within 60 days.
(3) Includes 50,000 shares subject to options exercisable within 60 days.
(4) Includes 120,000 shares subject to options exercisable within 60 days.
(5) Includes 24,333 shares subject to options exercisable within 60 days.
(6) Includes 90,000 shares subject to options exercisable within 60 days.
(7) Includes 90,000 shares subject to options exercisable within 60 days.
(8) Includes 43,333 shares subject to options exercisable within 60 days.
(9) Includes an aggregate of 443,166 shares subject to options exercisable
within 60 days.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1998, the Company entered into an agreement (the "Purchase
Agreement") with a number of investors (the "Purchasers"), including Messrs.
Brodsky, Lindemann and Shecter, pursuant to which the Company sold 1,000,000
shares of common stock at $2.25 per share and issued options to purchase an
aggregate of 250,000 options of Common Stock at an exercise price of $2.25 per
option (exercisable for 5 years). The Purchase Agreement contemplates that for a
period of five years following the Closing Date (as defined therein), subject to
certain provisions thereof, the Purchasers will, on a best efforts basis, assist
in providing or arranging for others to provide up to $25,000,000 in equity
financing, or debt financing to the extent such
9
<PAGE>
financing exceeds $5,000,000 in the aggregate, for the Company to complete
acquisitions and/or projects approved by the Board of Directors of the Company,
the form of the financing to be as determined by the Board of Directors of the
Company and to be on terms at least as favorable as the Company could obtain
from other sources not affiliated with the Purchasers; provided that such
covenant states that it shall not be deemed to constitute an obligation to
directly provide or underwrite financing for the Company. Under certain
circumstances described in the Purchase Agreement, failure to obtain specified
amounts of such financing during specified time periods may affect the
Purchasers' rights thereunder. In connection with the transactions contemplated
by the Purchase Agreement, Mr. Brodsky was named Chairman of the Board of
Directors of the Company and Messrs. Lindemann and Shecter were elected as
directors of the Company.
The Company has arrangements with David Brodsky and Howard Shecter
whereby Mr. Brodsky will receive $75,000 during fiscal 1999 and Mr. Shecter will
receive $50,000 during fiscal 1999 in consideration for their services relating
to acquisitions by the Company.
See "Executive Compensation--Employment Agreements" for a description
of the Company's employment contracts with its executive officers.
10
<PAGE>
Signatures
----------
In accordance with Section 13 or 15 (d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TOTAL RESEARCH CORPORATION
Dated: November 2, 1998 By: /s/ ALBERT ANGRISANI
----------------- ------------------------
ALBERT ANGRISANI, President and Chief
Executive Officer
