U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 1999
_______________________________________________
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
_______________________________________________
Commission file number 0-3344
_____________________
ASTROSYSTEMS, INC.
____________________________________________________________________________
(Name of small business issuer in its charter)
Delaware 13-5691210
________________________________________________ ____________________
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
1220 Market Street, Suite 603, Wilmington, DE 19801
________________________________________________ ____________________
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number (302) 652-3115
_______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
___________________ _________________________
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
_______________________________________
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is 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. YES....X.... NO..........
The Registrant's revenues for fiscal year ended June 30, 1999 were $0.
The aggregate market value of the Registrant's Common Stock held by
nonaffiliates of the Registrant is $6,805,403 (as of September 15, 1999).
(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 Securities Exchange Act after the
distribution of securities under a plan confirmed by a court.
YES... NO ..N/A..
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of the Registrant's Common Stock is
5,933,576 (as of September 15, 1999).
DOCUMENTS INCORPORATED BY REFERENCE
None
When used herein, the words "believe," "anticipate," "think,"
"intend," "will be," "expect" and similar expressions identify
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are not guarantees of
future action and involve certain risks and uncertainties discussed
herein, which could cause actual occurrences to differ materially from
those in the forward-looking statements. Readers are cautioned not to
place undue reliance on the forward-looking statements which speak only
as of the date hereof. Readers are also urged to carefully review and
consider the various disclosures made by Astrosystems, Inc. which
attempt to advise interested parties of the factors which affect it,
including, without limitation, the disclosures made under the caption
"Management's Discussion and Analysis or Plan of Operation" in Item 6
hereof.
PART I
Item 1. Description of Business.
________________________
(a) Business Development.
_____________________
(1) General. Prior to February 7, 1996, Astrosystems, Inc.
(the "Company") had three operating divisions: Behlman Electronics,
Inc. ("Behlman"), a wholly-owned subsidiary of the Company which
produced commercial AC power supplies, the Defense Electronics Division
which designed and manufactured power conversion devices and the
Industrial Automation Division which produced industrial control
products.
Since its inception, the Company's primary business had been
in defense electronics. The Company's revenues decreased every year
since fiscal year 1992 from $18,100,000 in the fiscal year ended June
30, 1992 to $12,300,000 in the fiscal year ended June 30, 1995. The
decline was primarily due to a continuing decline in defense budgets and
severe price competition from lower cost geographical areas and
corporate consolidations. In addition, high fixed overhead costs
necessitated by defense contracts coupled with a declining business base
were tending to make the Company non-competitive. The Company attempted
to offset this decline by increasing sales for its commercial and
industrial products and, although the results showed some promise, they
were not expected to be sufficient.
In view of the decline described above, the Board of Directors
(the "Board") considered various alternatives for maximizing the
Company's value and decided that a planned liquidation was in the best
interest of the stockholders. In the opinion of the Board, the
Company's common stock historically had traded at a discount from the
net value of its assets and the liquidation would allow the Company to
distribute its real tangible value. A Plan of Complete Liquidation and
Dissolution (the "Plan") for the Company was therefore submitted to the
stockholders and approved on February 2, 1996. Pursuant to the Plan,
the Company consummated the sale of the assets of its three operating
divisions, as described below (see "Asset Purchase Agreements").
Since February 2, 1996, the Company has been engaged in
implementing the Plan. Some of its ongoing activities have been: 1)
implementing the asset purchase agreements (see "Asset Purchase
Agreements" below); 2) relocating the Company to Delaware; 3)
distributing benefit plan funds; 4) completing open contracts and
collecting accounts receivable; 5) engaging in negotiations, litigation
and other methods of dispute resolution regarding final price
determination for the asset sales; 6) engaging a new auditor; 7)
determining and implementing an initial distribution to stockholders; 8)
seeking to realize stockholder value for the solar cell license and
AstroPower, Inc. assets (see "Solar Cell Assets" below) and 9)
preparing federal and state tax returns, SEC filings and additional
federal and state filings necessary for the dissolution process.
On June 30, 1997, the Company declared an initial cash
distribution of $5.00 per share to stockholders of record as of August
15, 1997. On September 8, 1997, the distribution was made. No date has
been set for further distributions. Under the terms of the Plan, the
Company has until February 2, 2000 to complete the liquidation by making
distributions directly to its stockholders or to a liquidating trust.
(2) Asset Purchase Agreements. Effective February 6, 1996,
pursuant to a certain Asset Purchase Agreement dated as of January 11,
1996 (the "Orbit Agreement") by and among the Company, Behlman, Orbit
International Corp. ("Orbit") and Cabot Court, Inc. ("Cabot"), a
wholly-owned subsidiary of Orbit, the Company sold to Cabot certain
assets of its Defense Electronics Division and Behlman sold to Cabot
certain of its assets for an aggregate purchase price of $3,706,700.
The purchase price was made subject to adjustment based upon a valuation
of the transferred inventory and equipment as of the closing date.
The value of certain inventory items under the Orbit Agreement
was disputed along with a number of other items such as warranty costs.
During the fiscal year ended June 30, 1999, all such matters were
resolved.
Effective February 7, 1996, pursuant to an Asset Purchase
Agreement of such date by and between the Company and North Atlantic
Instruments, Inc. ("North Atlantic"), the Company sold to North
Atlantic certain assets of its Industrial Automation Division for a
purchase price of $704,500. Based upon a valuation of the transferred
inventory and equipment as of the closing date, the purchase price was
later adjusted to approximately $596,700.
(3) Solar Cell Assets. In 1983, the Company acquired a 16-
year license (the "License") from the University of Delaware covering
a new process for the manufacture of solar cells. In connection with
the acquisition of the License, the Company issued a $20,000,000
nonrecourse note (the "Note"), originally due in 1993 and bearing
interest at the rate of 14% per year. The Note is secured by the
Company's rights under the License and is to be paid prior to its due
date solely on the basis of 4% of sales of products developed by this
process, subject to certain minimum quarterly payments of $11,250 to
$12,500. The Company made quarterly payments of $11,250 to $12,250
during the fiscal years ended June 30, 1999 and 1998 respectively. An
amendment to the License extended its term to 2006; concurrently, the
due date of the Note was extended to May 1999. At June 30, 1999, the
Company is in default of the Note; however, it has not received any
communication from the University of Delaware in connection with the
default. The Company, for financial reporting purposes, has not recorded
the Note.
The Company owned 1,193,750 shares of AstroPower, Inc. common
stock as of February 12, 1998. On such date, AstroPower, Inc.
successfully completed an initial public issue and its stock is
currently listed on the NASDAQ National Market (symbol APWR). During
the fiscal year ended June 30, 1999, the Company sold 525,000 shares at
an average price of $10.14 per share. As of June 30, 1999, the Company
determined that the fair market value of its remaining 668,750 shares
was $10,232,000 ($15.30 per share). The Company retained an outside
independent appraiser to assist management in adjusting AstroPower,
Inc.'s quoted market value ($17.50 at June 30, 1999) to fair value after
considering statutory restrictions limiting sales by the Company of its
holdings in AstroPower, Inc. and other factors. As the Company has a
zero basis in this stock, any sale or transfer will result in a
corporate tax based on the value of the stock at that time. Provision
for such taxes has been made in Deferred Income Taxes based on the
estimated fair market value.
(4) Other Matters. The Company is a corporation originally
incorporated in the State of New York in 1959. In April, 1987, the
Company changed its state of incorporation to Delaware.
(b) Business of Issuer. Since February 2, 1996, the Company's
sole business has been the implementation of its Plan of Complete
Liquidation and Dissolution.
(1) Special Features of Government Contracts. In accordance
with the asset purchase agreements governing the asset sales, certain
government contracts previously awarded to the Company were novated to
the purchasers. Under the standard terms of the novation agreements,
the Company remains jointly liable with the purchasers for performance
under these contracts. In addition, a number of contracts were not
novated and the Company subcontracted performance under these contracts
to the purchaser of its defense-related assets. Management does not
believe that the final results of these transactions will have a
material effect on the Company's Net Assets in Liquidation.
(2) Solar Cell License. The Company has a license covering
a process for the manufacture of solar cells (see "Solar Cell Assets"
under Item 1(a) above). However, the University of Delaware has the
right to cancel the license for non-payment of the nonrecourse note
which became due May 1999.
(3) Environmental Regulation Compliance. The Company is of
the belief that compliance with federal, state and local provisions
which have been enacted or adopted regulating the discharge of materials
into the environment, or otherwise relating to the protection of the
environment, will have no material effect on the Company's assets.
(4) Number of Employees. The Company currently has four
employees, three of whom are full time employees. Management believes
its relations with its employees are good. No employees are represented
by a collective bargaining agreement.
Item 2. Description of Property.
________________________
The Company's office is located in Wilmington, Delaware, where
the Company occupies approximately 1,100 square feet of usable space.
The premises were leased from an unaffiliated party through May 31,
1999 at an annual rental of approximately $23,000, which includes common
area maintenance and real estate taxes. Although the Company does not
presently have a lease, it believes it will be able to either negotiate
an additional term to the lease or move its premises in an orderly way.
Item 3. Legal Proceedings.
__________________
There are no material pending legal proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders.
____________________________________________________
On June 15, 1999, the Company held an annual meeting of
stockholders at which a board of five directors was elected and the
appointment of Grant Thornton LLP as the Company's independent auditors
for the fiscal year ended June 30, 1999 was ratified. The number of
affirmative votes and negative votes with regard to the foregoing were
as follows:
Election of Directors
_____________________
Voted for Withheld Proxy
Nominee Election to vote for Election
_________________________ _________ ____________________
Seymour Barth 3,799,849 51,762
Gilbert H. Steinberg 3,799,849 51,762
Elliot J. Bergman 3,799,849 51,762
Elliot D. Spiro 3,812,149 39,462
Walter Steinberg 3,799,849 51,762
Ratification of Auditors
________________________
For: 3,844,787 Against: 2,122 Abstain: 4,702
PART II
Item 5. Market for Common Stock and Related Stockholder Matters.
________________________________________________________
(a) The Company's common stock is traded in the over-the-
counter market (symbol: ASTZ). The following table sets forth the
quarterly high and low bid prices for the last two fiscal years. The
quotations set forth below represent interdealer quotations (which
exclude retail markups, markdowns and commissions) and do not
necessarily reflect actual transactions.
Bid
_____
Quarterly Period High Low
________________ ____ ___
July 1997 - September 1997 5 3/4 1/4
October 1997 - December 1997 1 3/8 1/4
January 1998 - March 1998 2 1/2 1 1/4
April 1998 - June 1998 2 3/8 2
July 1998 - September 1998 2 5/16 2 1/8
October 1998 - December 1998 2 5/8 2 1/4
January 1999 - March 1999 3 5/64 2 1/2
April 1999 - June 1999 3 2 5/8
The high bid quotation set forth above for the period July
1997 to September 1997 represents the high bid prior to payment by the
Company of the liquidating distribution on September 8, 1997, as
discussed below, and does not reflect market prices following the
distribution.
(b) The number of stockholders of record of the Company's common
stock, par value $.10 per share, as of September 15, 1999 was 795.
(c) On June 30, 1997, the Company declared an initial liquidating
distribution of $5.00 per share in cash to stockholders of record as of
August 15, 1997. The distribution was paid on September 8, 1997.
Although the Company has not established a firm timetable for additional
liquidating distributions to stockholders, the Company will, subject to
exigencies inherent in winding up the Company's business, make such
distributions consistent with maximizing stockholder value. The actual
amount and timing of, and record date for, all additional distributions
will be determined by the Board of Directors, in its sole discretion,
and will depend in part upon the Board's determination as to whether
particular assets are to be distributed in kind or otherwise disposed
of, and the amounts deemed necessary by the Board to pay or provide for
all the Company's liabilities and obligations.
Item 6. Management's Discussion and Analysis or Plan of Operation.
__________________________________________________________
The Board of Directors adopted, and the stockholders approved
on February 2, 1996, a Plan of Complete Liquidation and Dissolution (the
"Plan") of the Company. See "Plan of Complete Liquidation and
Dissolution" below. Since that date, the Company has been operating
under the Plan and its financial reporting is being made in accordance
with the liquidation basis of accounting. Therefore, the following
discussion relates to financial statements presented on a liquidation
basis since statements presented on a going concern basis are no longer
material to stockholder value.
Liquidity, Capital Resources and Impact of Inflation.
_____________________________________________________
On March 26, 1996, the Company announced a Board of Directors
authorization for the repurchase of up to 500,000 shares of Common Stock
to be made from time to time through open market and privately
negotiated transactions (in addition to the 500,000 shares previously
authorized on October 23, 1993). To date, 676,404 shares have been
repurchased. No shares were repurchased during fiscal years 1999 or
1998.
The repurchase authorization remains in force and the Company
will, from time to time, repurchase shares in accordance with applicable
law when it is consistent with maximizing stockholder distributions
under the Plan.
On June 30, 1997, the Company declared an initial liquidating
distribution of $5.00 per share in cash to stockholders of record as of
August 15, 1997. The distribution was paid on September 8, 1997.
Although the Company has not established a firm timetable for additional
liquidating distributions to stockholders, the Company will, subject to
exigencies inherent in winding up the Company's business, make such
distributions consistent with maximizing stockholder value. The actual
amount and timing of, and record date for, all additional distributions
will be determined by the Board of Directors, in its sole discretion,
and will depend in part upon the Board's determination as to whether
particular assets are to be distributed in kind or otherwise disposed
of, and the amounts deemed necessary by the Board to pay or provide for
all the Company's liabilities and obligations.
Statement of Net Assets in Liquidation.
_______________________________________
Pursuant to the Plan, the Company consummated the sales of the
assets of its three operating units (Military Division, Behlman
Electronics subsidiary and Industrial Automation Division) as of
February 7, 1996. The exact amount of the proceeds to the Company of
such sales was dependent upon a final fixed asset and inventory
valuation. The value of certain inventory items was disputed. As of
June 30, 1999, all such matters were resolved.
The Company owned 1,193,750 shares of AstroPower, Inc. common
stock as of February 12, 1998. On such date, AstroPower, Inc.
successfully completed an initial public issue and its stock is
currently listed on the NASDAQ National Market (symbol APWR). During
the fiscal year ended June 30, 1999, the Company sold 525,000 shares at
an average price of $10.14 per share. As of June 30, 1999, the Company
determined that the fair market value of its remaining 668,750 shares
was $10,232,000 ($15.30 per share). The Company retained an outside
independent appraiser to assist management in adjusting AstroPower,
Inc.'s quoted market value ($17.50 at June 30, 1999) to fair value after
considering statutory restrictions limiting sales by the Company of its
holdings in AstroPower, Inc. and other factors. As the Company has a
zero basis in this stock, any sale or transfer will result in a
corporate tax based on the value of the stock at that time. Provision
for such taxes has been made in Deferred Income Taxes based on the
estimated fair market value.
The Company has set aside, as Accrued expenses/contingency
reserve, an amount believed to be adequate for payment of all expenses
and other known liabilities as well as likely and quantifiable
contingent obligations, including potential tax obligations. Any
portion of the contingency reserve which the Company determines is no
longer required will be made available for distribution to its
stockholders. In the event that the Accrued expenses/contingency
reserve account is not adequate for payment of the Company's expenses
and liabilities, each stockholder could be held liable for pro rata
payments to creditors in an amount not to exceed the stockholder's prior
distributions from the Company. The Company therefore has adopted a
conservative policy in retaining sufficient assets to insure against any
unforeseen and non-quantifiable contingencies.
Statement of Changes in Net Assets in Liquidation.
__________________________________________________
From June 30, 1998 to June 30, 1999 there was an increase in
Net Assets in Liquidation of $5,644,000. This increase was primarily due
to the net effect of the sale of AstroPower, Inc. stock and the
increased valuation of the remaining AstroPower, Inc. stock.
Plan of Complete Liquidation and Dissolution.
_____________________________________________
On February 2, 1996, the stockholders of the Company approved
a Plan of Complete Liquidation and Dissolution for the Company.
Pursuant to the Plan, the Company has sold its three operating units and
intends to sell such of its remaining assets as are not to be
distributed in kind to its stockholders. The Company intends to provide
for payment of all expenses, liabilities and obligations of the Company
and liquidate via distributions to stockholders.
On June 30, 1997, the Board declared an initial liquidating
distribution of $5.00 per share to stockholders of record as of August
15, 1997, which was paid September 8, 1997. The Board has not yet
established the precise amount of any further distributions pursuant to
the Plan. The actual amount and timing of, and record date for, all
such distributions will be determined by the Board of Directors, in its
sole discretion, and will depend in part upon the Board's determination
as to whether particular assets are to be distributed in kind or
otherwise disposed of, and the amounts deemed necessary by the Board to
pay or provide for all the Company's liabilities and obligations.
Year 2000 Issue.
________________
The Year 2000 issue is the result of computer programs using
a two-digit format as opposed to four digits to indicate the year. Such
computer systems will be unable to interpret dates beyond 1999, which
could cause a system failure or other computer errors, leading to
disruptions in operations. The Year 2000 issue will not have a material
effect on the Company's financial position.
Item 7. Financial Statements.
_____________________
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
____
Report of Independent Certified Public Accountants F-2
Financial Statements
Consolidated Statements of Net Assets (Liquidation Basis)
as of June 30, 1999 and 1998 F-3
Consolidated Statements of Changes in Net Assets
(Liquidation Basis) for the Years Ended
June 30, 1999 and 1998 F-4
Notes to Consolidated Financial Statements
(Liquidation Basis) F-5 - F-16
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Astrosystems, Inc.
We have audited the accompanying consolidated statements of net assets
(liquidation basis) of Astrosystems, Inc. (a Delaware corporation) and its
subsidiaries (the "Company") as of June 30, 1999 and 1998, and the related
consolidated statements of changes in net assets (liquidation basis) for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As described in Note A to the financial statements, the stockholders of
Astrosystems, Inc. approved a plan of liquidation on February 2, 1996, and
the Company sold its operating businesses shortly thereafter. As a result,
the Company has changed its basis of accounting for periods subsequent to
February 2, 1996 from a going concern basis to a liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, its consolidated net assets in liquidation as of June
30, 1999 and 1998, and the changes in its consolidated net assets in
liquidation for the years then ended, in conformity with generally accepted
accounting principles applied on the bases described in the preceding
paragraph.
GRANT THORNTON LLP
Melville, New York
September 15, 1999
F-2
Astrosystems, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF NET ASSETS
(LIQUIDATION BASIS)
June 30, June 30,
ASSETS 1999 1998
______ ___________ ___________
Cash and cash equivalents $18,032,000 $14,459,000
U.S. Government securities 978,000 978,000
Investment in AstroPower, Inc. 10,533,000 6,448,000
Loans to officers 1,186,000 1,186,000
Other assets 180,000 1,056,000
__________ __________
30,909,000 24,127,000
LIABILITIES
Deferred income taxes 10,976,000 8,015,000
Accrued expenses/contingency reserve 2,283,000 4,106,000
__________ __________
Net assets in liquidation $17,650,000 $12,006,000
========== ==========
Number of common and common equivalent
shares outstanding 5,933,576 5,826,800
========== ==========
Net assets in liquidation per share $2.97 $2.06
==== ====
The accompanying notes are an integral part of these statements.
Astrosystems, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(LIQUIDATION BASIS)
Year ended Year ended
June 30, June 30,
1999 1998
__________ __________
Net assets in liquidation - beginning of period $12,006,000 $ 5,497,000
Increase in estimated liquidation values
of net assets over liabilities 5,644,000 6,509,000
__________ __________
Net assets in liquidation - end of period $17,650,000 $12,006,000
========== ==========
The accompanying notes are an integral part of these statements.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE A - BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
_____________________________________________
A Plan of Complete Liquidation and Dissolution (the "Plan") was adopted by
the Company's Board of Directors on October 26, 1995 and approved by the
holders of a majority of the Company's outstanding shares of common stock
on February 2, 1996. The Plan provides for: (1) the payment of or
provision for all of the Company's liabilities and obligations, (2) the
distribution to the Company's stockholders in kind or of the proceeds from
sale or other disposition of all of the Company's assets, (3) the transfer
of any remaining assets to a liquidating trust by February 2, 2000, if
applicable, and (4) the dissolution of the Company.
The Board of Directors is currently unable to predict the precise amount
or timing of any future distributions pursuant to the Plan. The actual
amount and timing of, and record date for, all distributions will be
determined by the Board of Directors, in its sole discretion, and will
depend in part upon the Board's determination as to whether particular
assets are to be distributed in kind or otherwise disposed of, and the
amounts deemed necessary by the Board to pay or provide for all the
Company's liabilities and obligations. See Note F - Liquidating
Distribution.
The Company has adopted the liquidation basis of accounting for all
periods subsequent to February 2, 1996. Under the liquidation basis of
accounting, assets are stated at their estimated net realizable values and
liabilities are stated at their anticipated settlement amounts.
Therefore, historical financial information, prior to February 2, 1996, is
not comparable to the liquidation period financial information.
The Company has set aside, as accrued expenses/contingency reserve, an
amount believed to be adequate for payment of all expenses and other known
liabilities, as well as likely and quantifiable contingent obligations,
including potential tax obligations. A portion of the accrued expenses/
contingency reserve is a reserve for other contingencies, aggregating
$1,350,000 at June 30, 1999 and 1998, respectively, which will be made
available for distribution to stockholders when the Company determines it
is no longer required. In the event that the reserve for other
contingencies is not adequate for payment of the Company's expenses and
liabilities, each stockholder could be held liable for pro rata payments
to creditors in an amount not to exceed the stockholder's prior
distributions from the Company.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE A (continued)
______
The valuation of assets and liabilities necessarily requires many
estimates and assumptions, and there are substantial uncertainties in
carrying out the provisions of the Plan. The actual value of any
liquidating distributions will depend upon a variety of factors including,
among others, the actual market prices of any securities distributed in
kind, the proceeds from the sale of any of the Company's assets and the
actual timing of distributions. The valuations presented in the
accompanying consolidated statements of net assets in liquidation
represent estimates, based on present facts and circumstances, of the
estimated realizable values of assets, net of liabilities and estimated
costs associated with carrying out the provisions of the Plan. The actual
values and costs could be higher or lower than the amounts recorded.
A summary of other significant accounting policies applied in the
preparation of the accompanying consolidated financial statements follows:
1. Principles of Consolidation
___________________________
The consolidated financial statements include the accounts of the
Company and its subsidiaries. Material intercompany transactions and
account balances have been eliminated in consolidation.
2. Cash Equivalents
________________
Cash equivalents consist of the Company's investments in money market
funds.
3. U.S. Government Securities
__________________________
The Company holds investments in U.S. Government securities which
consist of United States Treasury Notes which are reported at fair
value. As these securities mature, the Company is not reinvesting the
funds. At June 30, 1999 and 1998, there is one United States Treasury
Note outstanding with a face amount of $1,000,000 which matures on
March 31, 2001.
4. Income Taxes
____________
Deferred income taxes are recognized for temporary differences between
the financial statement and income tax bases of assets and liabilities
and loss carryforwards for which income tax benefits are expected to be
realized in future years. The effect on deferred taxes of a change in
tax rates is recognized in income in the period that includes the
enactment date.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE A (continued)
______
5. Net Assets in Liquidation Per Share
Net assets in liquidation per share is based upon the weighted average
number of shares outstanding during the year, which is in accordance
with Financial Accounting Standards Board Statement No. 128, "Earnings
Per Share."
6. Use of Estimates
________________
The preparation of financial statements in conformity with generally
accepted accounting principles applied on the liquidation basis
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE B - INVESTMENT IN ASTROPOWER, INC.
_______________________________________
The Company owned 668,750 and 1,193,750 shares of the common stock of
AstroPower, Inc. at June 30, 1999 and 1998, respectively. Such investment
was accounted for on the equity method and, accordingly, the Company
recorded its share in the losses of this entity as a reduction of its
investment. This investment was fully written down to zero in prior
years.
On February 12, 1998, AstroPower, Inc. successfully completed an initial
public issue and the stock is currently listed on the NASDAQ National
Market (symbol APWR). In connection with the initial public issue, the
Company entered into an agreement with the underwriter not to sell or
otherwise transfer any of its stock for six months after the date of the
issue. During the fiscal year ended June 30, 1999, the Company sold
525,000 shares at an average price, net of commissions, of $10.14 per
share.
The Company determined that the fair value of its investment in
AstroPower, Inc. was approximately $15.75 and $5.40 per share as of June
30, 1999 and 1998, respectively. The Company retained an outside
independent appraiser to assist management in adjusting AstroPower, Inc.'s
quoted market value ($17.50 and $8.375 at June 30, 1999 and 1998,
respectively) to fair value after considering such factors as the
Company's agreement with the underwriter, statutory restrictions limiting
sales by the Company of its holdings in AstroPower, Inc. and other
factors. As the Company had a zero basis in this stock, any sale or
transfer will result in a corporate tax based on the value of the stock at
that time. A provision for such taxes has been made in Deferred Income
Taxes based on the current estimated fair value.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE B (continued)
______
Subsequent to June 30, 1999, the Company sold an additional 80,000 shares
of AstroPower, Inc. stock at an average price, net of commissions, of
$17.00 per share. At September 15, 1999, AstroPower, Inc.'s quoted market
value was $13.69 per share.
NOTE C - LOANS TO OFFICERS
__________________________
Loans to officers of the Company aggregated $1,186,000 at June 30, 1999
and 1998, respectively, and bear interest at the rate of approximately 6%
per annum.
NOTE D - OTHER ASSETS
_____________________
Other assets consist of the following:
June 30, June 30,
1999 1998
________ ________
Accounts receivable - net $225,000
Due from purchasers of assets (Note H) 589,000
Prepaid insurance $ 11,000 15,000
Accrued interest and dividends 16,000 16,000
Long-term investment (1) 135,000 185,000
Other 18,000 26,000
_______ _________
$180,000 $1,056,000
======= =========
(1) The long-term investment represents an investment in a limited
partnership and is recorded at its fair value.
NOTE E - ACCRUED EXPENSES/CONTINGENCY RESERVE
_____________________________________________
Accrued expenses at June 30, 1999 and 1998 include estimates of costs to
be incurred in carrying out the Plan. The actual costs could vary
significantly from the related provisions due to uncertainty related to
the length of time required to complete the Plan and complexities and
contingencies which may arise.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE E (continued)
______
Existing and estimated liabilities at June 30, 1999 and 1998 consist of:
1999 1998
__________ __________
Accounts payable, accrued expenses
and miscellaneous $ 537,000 $1,933,000
Minimum payments on nonrecourse
Obligation 50,000
Shutdown costs and estimated operating
costs (including compensation) to
administer the Plan through dissolution 970,000 1,542,000
Estimated interest income (370,000) (345,000)
Estimated tax benefit of losses
through dissolution (204,000) (424,000)
Reserve for other contingencies 1,350,000 1,350,000
_________ _________
$2,283,000 $4,106,000
========= =========
Accounts payable, accrued expenses and miscellaneous consist of deferred
compensation payable to the officers of the Company and other accrued
liabilities.
The Company has set aside, as reserve for other contingencies, an amount
believed to be adequate for payment of likely and quantifiable contingent
obligations, including potential tax obligations. Any portion of the
reserve for other contingencies which the Company determines is no longer
required will be made available for distribution to its stockholders. In
the event that the reserve for other contingencies account is not adequate
for payment of the Company's expenses and liabilities, each stockholder
could be held liable for pro rata payments to creditors in an amount not
to exceed the stockholder's prior distributions from the Company.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE F - LIQUIDATING DISTRIBUTION
_________________________________
Pursuant to the Plan, the Company will distribute pro rata to the
Company's stockholders all of its remaining property and assets, including
the proceeds of any sale, exchange or disposition, except such property or
assets as are required for paying or making provision for the claims and
obligations of the Company. Such distributions may occur all at once or in
a series of distributions and may be in cash or in kind, in such manner,
and at such time or times, as the Board of Directors may determine.
On June 30, 1997, the Board of Directors declared a liquidating
distribution to holders of record of the Company's common stock on August
15, 1997, in the amount of $5.00 per share. This liquidating distribution
was paid on September 8, 1997.
NOTE G - CHANGES IN NET ASSETS IN LIQUIDATION
_____________________________________________
Changes in net assets in liquidation represent changes since adoption of
the Plan of Complete Liquidation and Dissolution on February 2, 1996. The
changes in the estimated liquidation values of net assets over liabilities
are as follows:
June 30, June 30,
1999 1998
________ ________
Adjustments to accounts payable $1,061,000
Proceeds from exercise of stock options 2,070,000
Additional interest earned on cash
and cash equivalents $ 739,000 667,000
Change in the estimate of shutdown costs (933,000) (289,000)
Change in valuation of AstroPower, Inc. stock 6,921,000 6,448,000
Change in the estimate of tax benefit (3,178,000) (3,415,000)
Realized gain on sale of AstroPower, Inc. stock 2,487,000
Change in final inventory value for
sale of assets (393,000)
Change in the estimate of contingent liabilities (100,000)
Other adjustments 1,000 67,000
_________ _________
Increase in estimated liquidation
values of net assets over
liabilities $5,644,000 $6,509,000
========= =========
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE H - SALE OF OPERATING ASSETS
_________________________________
As of February 7, 1996, all of the Company's operating assets were sold to
two purchasers. The purchase prices were subject to adjustment based upon
a final valuation of the transferred inventory and equipment. Pursuant to
one of the purchase agreements, $1,000,000 of the purchase price of
$3,706,700 was being held in escrow to provide for indemnification claims
that may be asserted against the Company. At June 30, 1998, the amount
held in escrow was reduced to approximately $512,000. All remaining
amounts held in escrow were settled during the year ended June 30, 1999.
The proceeds from the sale of assets to one purchaser was dependent upon
the final asset and inventory valuation which was the subject of ongoing
arbitration. In January 1999, the arbitrator issued a decision on the
inventory adjustment dispute and the parties exchanged general releases.
The arbitrator's decision resulted in a reduction of approximately
$440,000 in the proceeds from the sale of these assets.
NOTE I - CONTINGENCIES AND COMMITMENTS
______________________________________
1. The Company leases office space in Wilmington, Delaware, and was
obligated for minimum annual rentals of $21,000 through May 31, 1999,
the end of the lease term. Subsequent to year-end, the Company
received notification that it is in default of the lease terms. The
Company believes that it will be able to either negotiate an additional
term to the lease or move its premises in an orderly way.
Rent expense was approximately $23,000 per annum during the years ended
June 30, 1999 and 1998.
2. Employment contracts with the officers of the Company provide for
minimum annual total compensation of approximately $748,000. In the
event of death or disability of the Company's principal officers while
employed, the contracts call for payments of 50% of compensation paid
in the preceding fiscal year for the three years following such event.
In June 1996, each of the Company's officers was given three years'
notice, as required by the employment agreements, of the termination of
his employment agreement with the Company. In June 1999, the Company's
Board of Directors resolved that the officers continue to receive
annual compensation pursuant to the terms of their employment contracts
subject to termination of the employment of each of them on 30 days'
notice.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE I (continued)
______
3. In accordance with the asset purchase agreements governing the asset
sales, certain government contracts previously awarded to the Company
were novated to the purchasers. Under the standard terms of the
novation agreements, the Company remains jointly liable with the
purchasers for performance under these contracts. In addition, a
number of contracts were not novated and the Company has subcontracted
performance under these contracts to the purchaser of its defense-
related assets. Management does not believe that the final results of
these transactions will have a material effect on the value of the net
assets in liquidation.
4. The Company is a party to various litigations that arose in the
ordinary course of its prior business. On the basis of information
furnished by counsel and others, management believes that none of these
litigations will have a material effect on the value of the net assets
in liquidation.
5. In 1983, the Company acquired a sixteen-year license from the
University of Delaware covering a new process for the manufacture of
solar cells. In connection with the acquisition of the aforementioned
license, the Company issued a $20,000,000 nonrecourse note originally
due in 1993 and bearing interest at 14% per annum. The note is secured
by the Company's rights under the license and is to be paid prior to
its due date solely on the basis of 4% of sales of products developed
by this process, subject to certain minimum quarterly payments of
$11,250 to $12,500. An amendment to the license agreement extended the
term of the license agreement to 2006 as well as extended the due date
of the note to May 1999. At June 30, 1999, the Company is in default
of this note; however, it has not received any communications from the
University of Delaware in connection with the default. The Company
made quarterly payments of $12,500 during the years ended June 30, 1999
and 1998, respectively.
The Company, for financial reporting purposes, has not recorded the
note and has provided for expected payments pursuant to the license
agreement. No payments based on sales were required to be made through
June 30, 1999.
6. The Company has a profit-sharing plan which provides benefits upon
retirement, death, incapacity or separation of eligible employees.
There were no profit-sharing expenses for the years ended June 30, 1999
and 1998, respectively.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE I (continued)
______
7. The Company maintains a Retirement Savings Plan which allows
participants to make contributions by salary reductions pursuant to
Section 401(k) of the Internal Revenue Code of 1986. The Company is
obligated to make contributions (either in cash or Company stock) equal
to 50% of the employees' contribution. At June 30, 1998, the Company
owed the Retirement Savings Plan approximately $14,250 for past
contributions which was to be paid with shares of its common stock.
Approximately 106,800 shares were transferred to the Retirement Savings
Plan during the year ended June 30, 1999. Employees vest immediately
in their contribution and in the Company's contribution. There were no
employee or employer contributions for the fiscal year ended June 30,
1999.
NOTE J - STOCK OPTIONS AND OTHER STOCK TRANSACTIONS
___________________________________________________
The Company's 1991 Stock Option Plan provides for the granting of options
to purchase up to 1,500,000 shares of its common stock to eligible
employees, nonemployee directors, consultants and advisors. The fair
value and pro forma effects on the Company's net assets in liquidation and
net assets in liquidation per share are not presented, as the fair value
of the options granted (determined pursuant to Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation")
has no effect on the liquidation basis consolidated financial statements.
A summary of stock option activity related to the Company's stock option
plan is as follows:
Weighted
Number Option average Number of
of price exercise shares
shares per share price exercisable
_______ _____________ ________ ___________
Outstanding at June 30, 1997 40,000 $2.88 - $4.00 $3.04 40,000
======
Exercised (40,000) 2.88 - $4.00 3.04
Outstanding at June 30, 1998 -
======
Outstanding at June 30, 1999 -
======
On September 10, 1996, the Company granted its two outside directors 4,000
options to purchase shares of the Company's common stock at an option
price of $3.50 per share. These options were not granted pursuant to the
Company's stock option plan. These options were exercised in July 1997.
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE J (continued)
______
At June 30, 1997, there were outstanding 676,765 nonincentive stock
options, which options were granted other than pursuant to the Company's
stock option plan. These options had a weighted-average exercise price of
$2.88 and were exercised in July 1997.
In March 1996, the Company announced that its Board of Directors
authorized the purchase of up to 500,000 shares of its common stock, under
a stock repurchase program. (This repurchase program was in addition to
the 500,000 shares previously authorized on October 23, 1993.) The
purchases may be made by the Company from time to time on the open market
at the Company's discretion. There were no purchases of common stock
during the years ended June 30, 1999 and 1998.
NOTE K - TAXES ON INCOME
________________________
All income tax accounts have been restated to reflect the liquidation
basis of accounting. Upon any distribution of its property to its
stockholders, the Company will generally recognize a gain or loss as if
the distributed property were sold to the stockholders at its fair market
value. The Company will provide stockholders and the Internal Revenue
Service with a statement of the amount of cash distributed to its
stockholders and its best estimate as to the value of any property
distributed to them during the year. There can be no assurance that the
Internal Revenue Service will not challenge the tax characterization of
any such distribution, including such valuation. As a result of such a
challenge, the amount of gain or loss recognized by the Company and/or its
stockholders might be changed.
In addition, the Company's income tax returns for certain years remain
subject to examination. Accordingly, additional assessments of income
taxes are possible.
The deferred tax liability is as follows:
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE K (continued)
______
June 30, June 30,
1999 1998
__________ __________
Deferred tax liability
Difference between financial reporting
and tax bases of University of
Delaware note $13,054,000 $12,361,000
AstroPower, Inc. stock 3,686,000 2,257,000
__________ __________
16,740,000 14,618,000
__________ __________
Deferred tax (asset)
Utilization of net operating loss
carryforward (5,565,000) (5,860,000)
Utilization of compensation deduction (135,000) (651,000)
Other (64,000) (92,000)
__________ __________
(5,764,000) (6,603,000)
__________ __________
Net deferred tax liability $10,976,000 $ 8,015,000
========== ==========
Deferred taxes result from temporary differences in the recognition of
revenue and expense for tax and financial reporting purposes. The
principal sources of these differences were net operating loss
carryforwards, compensation expenses and amortization and accrued interest
relating to the license from the University of Delaware (see Note I). In
addition, during the fourth quarter of fiscal 1998, the Company adjusted
deferred taxes to reflect actual compensation expense associated with
employee stock options.
At June 30, 1999, the Company had available net operating loss
carryforwards for income tax reporting purposes as follows:
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(LIQUIDATION BASIS)
June 30, 1999 and 1998
NOTE K (continued)
______
Net operating Expiring in
loss year ending
Period ended carryforwards June 30,
____________ _____________ ___________
June 30, 1990 $ 441,000 2005
June 30, 1991 3,252,000 2006
June 30, 1993 596,000 2008
June 30, 1994 605,000 2009
June 30, 1995 525,000 2010
June 30, 1996 7,662,000 2011
June 30, 1997 240,000 2012
June 30, 1998 2,579,000 2018
$15,900,000
==========
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
_________________________________________________
Inapplicable
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Securities Exchange Act.
_____________________________________________________________
Year Became Positions held
Name a Director Age with Registrant
___________________ ___________ ___ _______________
Seymour Barth 1959 71 President and Director
Gilbert H. Steinberg 1964 68 Vice President, Treasurer
and Director
Elliot J. Bergman 1964 73 Vice President, Secretary
and Director
Walter A. Steinberg 1989 72 Director
Elliot D. Spiro 1994 70 Director
The term of each Director extends until the next annual
meeting of the Company's stockholders and until his successor is elected
and qualified.
Seymour Barth has served as President of the Company since
1964 and as a Director of the Company since its inception in 1959.
Gilbert H. Steinberg has served as a Director, Vice President
and Treasurer of the Company since 1964.
Elliot J. Bergman has served as a Director, Vice President and
Secretary of the Company since 1964.
Walter A. Steinberg has been an independent engineering
consultant for more than the past five years and has served as a
Director of the Company since 1989.
Elliot D. Spiro has served as Chairman and Chief Executive
Officer of Branch Insurance Agency, a property/casualty and financial
services insurance agency, for more than the past five years and has
served as a Director of the Company since 1994.
There is no family relationship among any of the Company's
Directors and executive officers.
Section 16(a) Beneficial Ownership Reporting Compliance.
________________________________________________________
To the Company's knowledge, based on a review of written
representations that no reports were required, during the fiscal year
ended June 30, 1999, all Section 16(a) filing requirements applicable to
the Company's officers, Directors and 10% stockholders were complied
with.
Item 10. Executive Compensation.
_______________________
(a) Summary Compensation Table.
___________________________
Annual Compensation Long-Term Compensation
___________________ __________________________
Awards Payouts
__________________________
Shares
Name and Principal Underlying All Other
Position Year Salary Bonus Options Compensation
__________________ ____ ______ _____ __________ _____________
Seymour Barth 1999 $310,807 0 0 0
President 1998 $310,807 0 0 0
1997 $310,807 0 0 $71,088(1)
Elliot Bergman 1999 $218,716 0 0 0
Vice President & 1998 $218,716 0 0 0
Secretary 1997 $218,716 0 0 $69,545(1)
Gilbert Steinberg 1999 $218,716 0 0 0
Vice President & 1998 $218,716 0 0 0
Treasurer 1997 $218,716 0 0 $69,340 (1)
(1) Includes 35,591 shares contributed by the Company to the
accounts of each of Messrs. Barth, Bergman and G. Steinberg
for Fiscal 1997 pursuant to the terms of its 401(k) Plan.
Also includes $66,342, $64,799 and $64,594 for Messrs. Barth,
Bergman and G. Steinberg, respectively, in connection with
the exercise of certain stock options at the Company's
request.
(b) Option Grants Table.
____________________
Inapplicable.
(c) Aggregated Option Exercises in Last Fiscal Year.
________________________________________________
Inapplicable.
(d) Compensation of Directors.
__________________________
Messrs. W. Steinberg and Spiro are entitled to receive $5,000
per year for their services as a Director plus an additional $750 for
each meeting of the Board attended in person and $100 per meeting
attended by conference telephone. No other Directors receive
compensation for their services as such. On June 15, 1999, Messrs. W.
Steinberg and Spiro were awarded special compensation of $10,000 each.
(e) Employment Contracts and Termination of Employment and
Change-in-Control Arrangements.
______________________________________________________
Employment Agreements
_____________________
In April 1994, the Company entered into employment agreements
with each of Messrs. Barth, G. Steinberg and Bergman which provided for,
among other things, the following: (i) minimum annual compensation of
$304,116 for Mr. Barth and $214,008 for each of Messrs. G. Steinberg and
Bergman (effective September 5, 1994, the annual compensation payable to
Messrs. Barth, G. Steinberg and Bergman was increased to $310,807,
$218,716 and $218,716, respectively); (ii) a term ending upon the
earliest to occur of the following: (a) the employee's death or
incapacity; (b) "cause," as defined in the employment agreement; (c)
at the election of the Company, upon not less than three years' prior
written notice to the employee; or (d) at the election of the employee,
upon not less than six months' prior written notice to the Company; and
(iii) in the event the employee's employment shall terminate as a result
of death or incapacity, the Company would be obligated to make annual
payments to the employee or his estate or representative for a period of
three years in an amount equal to 50% of the compensation paid or
payable to the employee with respect to the fiscal year immediately
preceding the fiscal year in which his employment terminated.
In June 1996, each of Messrs. Barth, G. Steinberg and Bergman
was given three years' notice, as required by the employment agreements,
of the termination of his employment agreement with the Company.
On June 15, 1999, the Company agreed to continue the
compensation of Messrs. Barth, G. Steinberg and Bergman on a month-to-
month basis, subject to 30 days' notice of termination.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
_______________________________________________________________
The following table sets forth, to the knowledge of the
Company, certain information regarding the Company's outstanding common
stock beneficially owned as of September 15, 1999 (i) by 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) by each of the Company's Directors, and (iii) by all executive
officers and Directors as a group:
Approximate
Name and Number of Shares Percentage of
Address of and Nature of Outstanding
Beneficial Owner Beneficial Ownership Shares
____________________ ____________________ _____________
Seymour Barth....... 1,545,635 (1)(2) 26.0%(1)(2)
1220 Market Street
Suite 603
Wilmington, Delaware
Gilbert H. Steinberg 1,185,491 (1) 20.0% (1)
1220 Market Street
Suite 603
Wilmington, Delaware
Elliot J. Bergman... 1,070,598 (1)(3) 18.0% (1)(3)
1220 Market Street
Suite 603
Wilmington, Delaware
Morris Barth,....... 335,849 (4) 5.7% (4)
c/o Astrosystems, Inc.
1220 Market Street
Suite 603
Wilmington, Delaware
Elliot D. Spiro..... 12,100 *
71 South Central Avenue
Valley Stream, New York
Walter A. Steinberg. 2,000 *
111 Eddy Drive
Huntington Station, New York
All Directors and..... 3,458,684 (1)(2)(3) 58.3% (1)(2)(3)
executive officers
as a group (5 persons)
* Less than 1%
(1) Includes for each of Messrs. Barth, G. Steinberg and Bergman
178,570 shares over which they have voting power as trustees
under the Company's 401(k) and profit-sharing plans (including
61,208, 58,817 and 57,119 shares allocated to the accounts of
Messrs. Barth, G. Steinberg and Bergman, respectively).
(2) Includes 250,000 shares held in trust for the benefit of Mr.
Barth's family, as to which trust Mr. Barth serves as co-
trustee. Excludes 110,000 shares held in trust for the
benefit of Mr. Barth's children, as to which shares Mr. Barth
disclaims any beneficial interest.
(3) Includes 225,000 shares held in various trusts for the benefit
of Mr. Bergman's family, as to which trusts Mr. Bergman serves
as co-trustee.
(4) Includes 300,000 shares held in various trusts for the benefit
of the descendants of Seymour Barth, as to which trusts Morris
Barth serves as co-trustee.
Item 12. Certain Relationships and Related Transactions.
_______________________________________________
In June 1996, Messrs. Barth, G. Steinberg and Bergman
exercised stock options and each was loaned $912,498, payable, with
interest at the rate of 6% per annum, on December 31, 1997 or earlier
demand by the Company, for use in the exercise. The exercise of these
options resulted in tax benefits to the Company. Each of Messrs. Barth,
G. Steinberg and Bergman was later loaned an additional $292,515,
payable, with interest at the rate of 6% per annum, on December 31, 1997
or earlier demand by the Company, in connection with the aforementioned
exercise of stock options.
In July, 1997, each of the above mentioned individuals was
further loaned $644,733, payable, with interest at the rate of 6% per
annum, on September 30, 1997 or earlier demand by the Company, for use
in the exercise of additional stock options, the exercise of which
resulted in additional tax benefits to the Company.
All of the above loans, including interest thereon, were
repaid to the Company in full as of September 29, 1997.
In December, 1997, the above named individuals were loaned
amounts in connection with tax obligations arising from the prior
exercise of stock options, as follows: $432,803 to Mr. Barth, $395,019
to Mr. Bergman and $358,183 to Mr. G. Steinberg, in each case payable,
with interest at the rate of 6% per annum, on demand by the Company.
Item 13. Exhibits, List and Reports on Form 8-K.
_______________________________________
(a) Exhibits:
(2) Plan of Complete Liquidation and Dissolution - incorporated
by reference to Exhibit A to Proxy Statement of the Company
dated January 12, 1996 with respect to Annual Meeting of
Stockholders held February 2, 1996 (File No. 0-3344).
(3)(a) Certificate of Incorporation and Certificate of Amendment
thereto - incorporated by reference to Exhibit 3(a) to
the Company's Annual Report on Form 10-KSB for its fiscal
year ended June 30, 1993 (File No. 0-3344).
(b) Bylaws - incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-KSB for its fiscal year
ended June 30, 1993 (File No. 0-3344).
(10)(a) Lease with regard to AstroPower, Inc., Delaware premises -
incorporated by reference to Exhibit 10 to the Company's
Annual Report on Form 10-K for its fiscal year ended June
30, 1990 (File No. 0-3344).
(b) 1991 Stock Option Plan - incorporated by reference to
Exhibit A to the Company's definitive Proxy Statement dated
December 12, 1990 (File No. 0-3344).
(c) Settlement Agreement with Internal Revenue Service -
incorporated by reference to Exhibit 10 to the Company's
Annual Report on Form 10-K for its fiscal year ended June
30, 1991 (File No. 0-3344).
(d) Employment Agreement dated as of April 18, 1994 between the
Company and Seymour Barth - incorporated by reference to
Exhibit 10 to theCompany's Annual Report on Form 10-KSB for
its fiscal year ended June 30, 1994 (File No. 0-3344).
(e) Employment Agreement dated as of April 18, 1994 between the
Company and Elliot Bergman - incorporated by reference to
Exhibit 10 to the Company's Annual Report on Form 10-KSB
For its fiscal year ended June 30, 1994 (File No. 0-3344).
(f) Employment Agreement dated as of April 18, 1994 between the
Company and Gilbert H. Steinberg - incorporated by
reference to Exhibit 10 to the Company's Annual Report on
Form 10-KSB for its fiscal year ended June 30, 1994
(File No. 0-3344).
(g) Asset Purchase Agreement dated as of January 11, 1996 by
and among the Company, Behlman Electronics, Inc., Orbit
International Corp. and Cabot Court, Inc. - incorporated by
reference to Exhibit B to Proxy Statement of the Company
dated January 12, 1996 with respect to Annual Meeting of
Stockholders held February 2, 1996 (File No. 0-3344).
(21) Subsidiaries of the Company.
(27) Financial Data Schedule
(b) Reports on Form 8-K:
____________________
No report on Form 8-K was filed by the Company during the quarter
Ended June 30, 1999.
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.
ASTROSYSTEMS, INC.
BY: /S/
____________________
Seymour Barth,
President
October 4, 1999
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
President, Principal Executive
/S/ Officer and Director October 4, 1999
_____________________
Seymour Barth
Vice President, Secretary
/S/ and Director October 4, 1999
_____________________
Elliot J. Bergman
Vice President, Treasurer,
Principal Financial and
Accounting Officer and October 4, 1999
/S/ Director
______________________
Gilbert Steinberg
/S/ Director October 4, 1999
______________________
Elliot D. Spiro
/S/ Director October 4, 1999
_____________________
Walter Steinberg
EXHIBIT 21
SUBSIDIARIES
NAME STATE OF INCORPORATION
____ ______________________
Astrosub, Inc. Delaware
AstroPower, Inc. (1) Delaware
(1) Registrant owns 6.0% of outstanding common stock
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000008065
<NAME> ASTROSYSTEMS, INC.
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1998
<PERIOD-START> JUL-01-1998 JUL-01-1997
<PERIOD-END> JUN-30-1999 JUN-30-1998
<CASH> 18,032 14,459
<SECURITIES> 978 978
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<CURRENT-ASSETS> 30,909 24,127
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<TOTAL-ASSETS> 30,909 24,127
<CURRENT-LIABILITIES> 2,283 4,106
<BONDS> 0 0
0 0
0 0
<COMMON> 5,934 5,827
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