SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT")
For the Fiscal Year Ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ____________
Commission file number: 33-15097-D
SYNAPTIX SYSTEMS CORPORATION
(Name of small business issuer in its charter)
Colorado 84-1045715
(State or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
3050 Post Oak Boulevard, Suite 1080 Houston, Texas 77056
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 355-8940
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 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 days. Yes X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year $0 .
The aggregate market value of the voting common equity held by
non-affiliates of the registrant as of October 9, 1998 was $56,932,186 based on
13,801,742 shares at a price of $4.125.
State the number of shares outstanding of $.003 par value Common Stock
of the registrant at October 9, 1998: 14,589,518.
DOCUMENTS INCORPORATED BY REFERENCE
The proxy statement for the 1998 Annual Meeting of Shareholders of the
registrant is incorporated by reference into Part III of Form 10-KSB.
Transitional Small Business Disclosure Format (check one): Yes___ No X
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The following table sets forth the name, principal occupation, age and
the year in which the individual first became a director for each nominee, and
all persons nominated or chosen to become directors, together with all positions
and offices with the Company held by each such person and term or period during
which each nominee has served, for election as a director at the Annual Meeting
of Shareholders to be held on December 16, 1998.
Name and Principal Served as a
Occupation Age Director Since
Peter C. Vanucci, Chairman of the Board, 50 February 1998
President and Chief Executive Officer (1)
Edward S. Fleming, President and Director (2) 43 December 1996
Edward F. Feighan, Director (3) 50 August 1998
J. Thomas McManamon 54 May 1998
(1) Mr. Vanucci was elected to serve as Chairman of the Board and Chief
Executive Officer effective as of February 15, 1998. Since 1990, Mr.
Vanucci held the position of President and a Director of Wexford, Inc.,
which specializes in business and property evaluation, ad valorem tax
consulting, real estate development and financial consulting. From 1986
to 1990, Mr. Vanucci held the position of President and Chief Operating
Officer of Capital Development.
(2) Mr. Fleming has held the position of President since May 1998. Prior to
that time, Mr. Fleming held the positions of Acting President since
October 1997, in addition to his position as Vice President, Chief
Financial Officer, and Director. Mr. Fleming was elected to serve as
Vice President and Chief Financial Officer on December 23, 1996. From
1993 to the present, Mr. Fleming has held the position of Geologic
Science Advisor to the Astronaut Office, Johnson Space Center, and was
primarily responsible for the planning, coordination and evaluation of
military and civilian manned space observations of the Earth, including
the management of all Army personnel assigned to the Space Center. He
has an extensive background in systems administration of the SUN and
UNIX programs, as well as experience in a wide variety of sophisticated
remote sensing software packages. Prior to 1993, Mr. Fleming held a
succession of various leadership positions of national and military
prominence while serving as an officer in the United States Army for
more than 20 years.
(3) Mr. Feighan was elected to serve as a director in August 1998. Mr.
Feighan is currently the managing Partner of Alliance, Limited, a
Cleveland, Ohio-based firm specializing in mergers and acquisitions and
merchant banking services. From November 1996 to December 1997, Mr.
Feighan served as the founding President, CEO and Director of Century
Business Services, Inc. (formerly International Alliance Services,
Inc.) Throughout most of 1998, Mr. Feighan served as Senior Vice
President of Century. Mr. Feighan is currently the managing Partner of
Alliance, Limited, a Cleveland, Ohio-based firm specializing in mergers
and acquisitions and merchant banking services. From November 1996 to
December 1997, Mr. Feighan served as the founding President, CEO and
Director of Century Business Services, Inc. (formerly International
Alliance Services, Inc.) During his tenure, the publicly-owned Century
undertook a strategic redirection to become one of the country's
fastest growing business services companies. Throughout most of 1998,
Mr. Feighan served as Senior Vice President of Century. Century has
recently been recognized as the best growth company in Ohio by the
Cleveland Plain Dealer. Mr. Feighan continues to provide consulting
services to Century. From 1993 to 1996, Mr. Feighan was a principal in
Alliance Holding Corporation, a privately owned specialty insurance
business. The Alliance companies provided niche market insurance
underwriting for businesses nationwide. Alliance merged its operating
entities into Century Business Services in 1996. Mr. Feighan served 20
consecutive years in elected office beginning in 1972. He served as a
State Representative for six years, a Cuyahoga County Commissioner for
four years,
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and as a Member of the United States House of Representatives for 10
years. Congressman Feighan has been recognized as a leading authority
on foreign policy and international trade and finance.
(4) Mr. McManamon was elected to serve as a director in May , 1998. Mr.
McManamon has held the position of Director - Science, Engineering,
Mathematics and Aerospace Academy for the Cuyahoga Community College since
January 1995. From 1992 to 1995, Mr. McManamon was a Financial Consultant
with the firm of Butcher & Singer.
Meetings of the Board of Directors
Attendance at Board Meetings.
During the last fiscal year, the Board of Directors of the Company held
7 meetings. The Board of Directors consisted of three directors during the last
fiscal year ended June 30, 1998. In October 1998, the board of directors
established three standing committees: Executive Committee, Audit Committee and
Compensation Committee. Each director attended at least 75% of the meetings of
the board of directors..
Standing Committees.
In October, 1998, the board voted to establish three standing
committees. The standings committees consist of a Audit Committee, Executive
Committee and Compensation Committee. No director serves as a member of the
Board of Directors of any other company with a class of securities registered
under the Securities Act of 1934, as amended, or which is registered as an
investment company under the Investment Company Act of 1940.
Audit Committee
The Audit Committee which is composed of Edward F. Feighan and J.
Thomas McManamom, was formed in October 1998. The Audit Committee meets with key
management and the independent public accountants to review the internal
controls of the Company and to review its financial reporting. The Audit
Committee also recommends to the Board of Directors the appointment of the
independent public accountants to serve as auditors in examining the financial
statements of the Company. The Audit Committee is charged with the
responsibility of reviewing and overseeing all material transactions and
material proposed transactions between the Company and one or more of its
directors or executive officers, or their affiliates, with a view to assuring
that all such transactions will be (a) on terms no less favorable to the Company
than would be available with unaffiliated third parties and (b) ratified by a
majority of independent directors who have no interest in such transactions.
Executive Committee
The Executive Committee which is composed of Edward Feighan and Peter
C. Vanucci, was formed in October 1998.. The Executive Committee has the
authority to exercise all powers of the Board of Directors in the management of
the business and affairs of the Company during intervals between meetings of the
board of directors, except that it has no authority to propose amendments to the
Restated Certificate of Incorporation, adopt an agreement of merger or
consolidation, recommend to the stockholders the sale, lease or exchange of all
or substantially all of the Company's assets or its dissolution, or amend the
Bylaws.
Compensation Committee
The Compensation Committee which is composed of Edward F. Feighan, J.
Thomas McManamon and Peter C. Vanucci and was formed in October 1998. The
Compensation Committee (a) makes recommendations to the Board of Directors
concerning the election of the Company's officers, (b) reviews the employee
compensation and benefit plans and sets the compensation for officers of the
Company (c) awards bonuses to officers of the company, (d) assumes
responsibility for all broad-based compensation and benefit programs of the
Company and (e) administers the Employee Stock Option Plan.
Compensation of Directors
In October 1997, two directors were granted an option to purchase the
common stock of the Corporation at an option price of $.20 per share. Mr.
Fleming was granted an option to purchase up to 350,000 shares of common stock,
and Mr. Walz was granted an option to purchase up to 200,000 shares of common
stock. The grant of 200,000 shares of common stock to Mr.
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Walz was in consideration for services rendered as a non-employee director for
the period December 1996 through October 1997. In May 1998, Mr. Fleming was
granted an additional option to purchase up to 150,000 shares of common stock.
Mr. Walz resigned in February 1998.
Non-employee directors will be reimbursed for reasonable expenses
incurred in connection with any meetings.
OFFICERS
The executive officers of Synaptix Systems Corporation, together with
the years in which such Officers were named to their present office, are as
follows:
<TABLE>
<CAPTION>
Year Named to
Name Age Position Held with Company Present Position
- ---- --- -------------------------- ----------------
<S> <C> <C> <C>
Peter C. Vanucci 50 Chairman and Chief Executive Officer March 1998
Edward S. Fleming 43 President October 1997
Virginia M. Lazar(1) 47 Executive Vice President and Corporate May 1998
Secretary
Alan W. Harvey(2) 38 Chairman, President and Chief Executive December 1996 to October
Officer 1997
</TABLE>
(1) Ms. Lazar was appointed to serve as Executive Vice President and Corporate
Secretary effective as of May 15, 1998. Since 1995 Ms. Lazar has held the
position of President, Corporate Administrative Services, Inc., and for the
prior 17 years, Ms. Lazar served as an officer of Petrominerals
Corporation, and since 1987, held the position of Corporate Secretary of
Petrominerals Corporation, and an officer and director of its subsidiaries.
(2) Mr. Harvey resigned as a director and officer of the Company on October
17, 1997. Mr. Harvey was elected to serve as Chairman of the Board,
President and Chief Executive Officer effective as of December 23,
1996.
The executive officers serve at the pleasure of the board of directors.
ITEM 11. EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by, or paid to, the Company's
executive officers during the fiscal year ended June 30, 1998 and for the period
through October 31,1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal Other Annual All other
Position Year Salary Bonus Compensation Compensation
($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Peter C. Vanucci(1) 1998 57,292(1) - - -
Chairman and Chief - - -
Executive Officer
Edward S. Fleming(2) 1998 - - - -
Virginia M. Lazar(3) 1998 41,250(3) - - -
Executive Vice President
and Corporate Secretary
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Alan W. Harvey(4) 1997 10,596 - - -
Chairman, President and
Chief Executive Officer
</TABLE>
(1) Mr. Vanucci has accrued his salary for the fiscal year ended June 30,
1998 and for the subsequent period through November 1, 1998. Mr.
Vanucci was granted an option to purchase up to 1,000,000 shares of the
Company's common stock at a price of $.50 per share in May 1998.
(2) Edward S. Fleming is not a full-time employee, and therefore, no salary
is being accrued for Mr. Fleming at this time. Mr. Fleming was granted
an option to purchase up to 350,000 shares of the Company's common
stock at a price of $.20 per share in October 1997; and, was granted an
additional option to purchase up to 150,000 shares of the Company's
common stock at a price of $.50 per share in May 1998.
(3) Ms. Lazar has accrued her salary for the fiscal year ended June 30,
1998, and for the subsequent period through November 1, 1998. Ms. Lazar
was granted an option to purchase up to 500,000 shares of the Company's
common stock at a price of $.50 per share in May 1998.
(4) Mr. Harvey terminated his employment in October 1997. Mr. Harvey's salary
is for the period July 1, 1997 through October 31, 1998.
Other Compensation of Executive Officers
During fiscal 1998, the Company provided travel and entertainment
expenses to its executive officers and key employees. The aggregate amount of
such compensation, as to any executive officer or key employee, did not exceed
the lesser of $25,000 or 10% of the cash compensation paid to such executive
officer or key employee, nor did the aggregate amount of such other compensation
exceed 10% of the cash compensation paid to all executive officers or key
employees as a group.
Employee Stock Incentive Stock Option and Non-Statutory Stock Option Plan
The Company has adopted an Incentive Stock Option Plan and a
Non-Statutory Stock Option Plan (together, the "Option Plan"), and has
registered the stock reserved for the plan pursuant to a Registration Statement
on Form S-8, filed with the Securities and Exchange Commission. The Option Plan
provides that the Company may award stock options to employees, including
non-employee directors of the Company. The Company intends to make such awards
to employees in order to induce qualified persons to accept employment with the
Company, and to reward key personnel of the Company in lieu of cash bonuses. A
total of four million shares of the Company's Common Stock has been reserved for
issuance pursuant to the Compensation Plan. Of this amount, three million shares
have been awarded to Alan W. Harvey, and were exercised immediately. During the
fiscal year ended June 30,1998, a total of two million two hundred thousand
shares were granted to employees and directors. All of the shares under the Plan
have been issued.
Employee Stock Compensation Plan
The Company has adopted an Employee Stock Compensation Plan (the
"Compensation Plan"), and has registered the stock reserved for the plan
pursuant to a Registration Statement on Form S-8, filed with the Securities and
Exchange Commission. The Compensation Plan provides that the Company may issue
stock awards to employees, including consultants who have provided bona fide
services to the Company not connected to any financing activities. The Company
intends to make such awards to employees and consultants for services rendered
on behalf of the Company, in lieu of cash payments otherwise owing to these
individuals, and to make future awards as the Board of Directors determines in
order to induce qualified persons to accept employment with the Company, and to
reward key personnel of the Company in lieu of cash bonuses. A total of four
million shares of the Company's Common Stock has been reserved for issuance
pursuant to the Compensation Plan. In May 1997, the Company issued 3,750,000
shares of common stock pursuant to this Plan for services rendered and expenses
paid. During the fiscal period ended June 30, 1998, the Company issued 250,000
shares of the Company's common stock pursuant to this plan for services rendered
and expenses paid.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grant of
options under the Company's 1997 Non-Statutory Stock Option Plan and Incentive
Stock Option Plan during the fiscal year ended June 30, 1998, and subsequent to
fiscal year end.
<TABLE>
<CAPTION>
Percent of
Number of total options
Securities granted to Market
underlying options employees in Exercise or Price on Expiration Grant Date
Name granted fiscal year base price Grant Date Date Value(1)
-------- --------------------------------- ----------- --------
(#) (%) ($/Share) ($/Share)
<S> <C> <C> <C> <C> <C> <C>
Peter C. Vanucci 1,000,000 43% $.50 $1.00 5/1/2002 $1,000,000
Edward S. 350,000 22% $.20 $3.50 5/1/2002 $1,225,000
Fleming 150,000 $.50 $1.00 5/1/2002 $350,000
Virginia M. 500,000 22% $.50 $1.00 5/1/2002 $500,000
Lazar
Edward F. 100,000 4% $.50 $3.00 5/1/2002 $300,000
Feighan
Mark F. Walz 200,000 9% $.20 $3.50 5/1/2002 $700,000
</TABLE>
(1) The options shown were exercised immediately upon grant, and prior to
commencement of trading in the Company's stock.
Aggregated Option Exercises in Last Fiscal Year and FYE Option Values
<TABLE>
<CAPTION>
Number of securities Value of unexercised
Shares underlying unexercised in-the-money options
acquired Value options at fiscal year-end at fiscal year-end
Name on Exercise Realized Exercisable/unexercisable Exercisable/unexercisable
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Mark F. Walz 50,000(1) $134,375 150,000 $243,750
</TABLE>
(1) The options shown were exercised in July 1998.
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of November 3, 1998 by
each person or entity known to the Company to own beneficially 5% or more of the
outstanding shares of Common Stock, and all directors and executive officers as
a group.
<TABLE>
<CAPTION>
Amount and Percent of Total
Name and Address of Nature of Percent of Outstanding
Title of Class Beneficial Owner Beneficial Interest Class Voting Securities
- ---------------------- ---------------------------- ------------------- ------------- -----------------
<S> <C> <C> <C> <C>
$.003 par value Peter C. Vanucci(1) 1,000,000(D) 6.9% 6.9%
common stock 8221 Brecksville Road
Bldg. 3, Suite 207
Brecksville, Ohio 44141
$.003 par value Flinders Finance Company 1,303,928 8.9 8.9%
common stock P.O. Box 1360
League City, Texas 775748
$.003 par value Virginia M. Lazar(2) 596,750(D) 4.1% 4.1%
common stock 3050 Post Oak Boulevard
Suite 1080
Houston, Texas 77056
$.003 par value Edward S. Fleming(3) 500,000(D) 3.4% 3.4%
common stock 3050 Post Oak Boulevard
Suite 1080
Houston, Texas 77056
$.003 par value Edward F. Feighan(4) 150,000(D) 1.0% 1.0%
common stock 3050 Post Oak Boulevard
Suite 1080
Houston, Texas 77056
$.003 par value Tropicana International, Inc. 750,000 5.1% 5.1%
common stock 957 Nasa Road 1 - Suite 113
Houston, Texas 77058
$.003 par value Youngstown Worldwide Ltd. 750,000 5.1% 5.1%
common stock 403 Nasa Road 1 - Suite 293
Webster, Texas 77598
$.003 par value Mark F. Walz 150,000 1.0% 1.0%
common stock 13131 Almeda Road
Houston, Texas 77045
All executive officers 2,146,750 14.7% 14.7%
and directors as a
group(4)
</TABLE>
Unless otherwise indicated in the footnotes below, each person has sole
voting and dispositive power over the shares indicated.
(1) Mr. Vanucci was granted an option in May 1998 to purchase up to 1,000,000
shares of the Corporation's common stock at a price of $.50 per share.
(2) Ms. Lazar was granted an option in May 1998 to purchase up to 500,000
shares of the Corporation's common stock at a price of $.50 per share. Ms.
Lazar beneficially holds 96,750 shares of the Corporation's common stock.
(3) Mr. Fleming was granted an option in October 1997 to purchase up to 350,000
shares of the Corporation's common stock at a price of $.20 per share. In
May 1998, Mr. Fleming was granted an option to purchase and additional
150,000 shares of the Corporation's common stock.
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(4) Mr. Feighan was granted an option in August 1998 to purchase up to
100,000 shares of the Corporation's common stock at a price of $.50 per
share. Mr. Feighan purchased 50,000 shares of the Corporation's common
stock in August 1998.
(5) Mr. Walz, a former director, was granted an option in October 1997 to
purchase up to 200,000 shares of the Corporation's common stock. Mr.
Walz exercised his option and purchased 50,000 shares in July 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
Since December 1996, Corporate Administrative Services, Inc., has
rendered services to the Company in connection with corporate securities
compliance and corporate governance. Ms. Lazar, President of Corporate
Administrative Services, Inc., received compensation in the form of stock for
services rendered, which consisted of 169,750 shares of the common stock of the
Company. In addition, Corporate Administrative Services, Inc. forgave fees due
and payable in the amount of $80,000 for the fiscal year ended June 30, 1998.
No executive officer, director, stockholder known to the Company to
own, beneficially or of record, more than 5% of the Company's Common Stock, or
any member of the immediate family of any of those persons has engaged since the
beginning of the Company's last fiscal year ended June 30, 1998,or proposes to
engage in the future, in any transaction or series of similar transactions with
the Company, directly or indirectly through a separate entity, in which the
amount involved exceeded or will exceed $60,000.
No director of the Company has served during the last fiscal or
currently serves as a partner or executive officer of any investment banking
firm that performed services for the Company during the last fiscal year ended
June 30, 1998, or that the Company proposes to have perform services during the
current year. The Company knows of no other relationship between any director
and the Company substantially similar in nature and scope to those described
above.
Certain Business Relationships
There are no employees other than the executive officers disclosed
above who make, or are expected to make, significant contributions to the
business of the Registrant, the disclosure of which would be material.
Indebtedness of Management
During the Company's last fiscal year, no executive officer, director,
any member of the immediate family or any of those persons, any corporation or
organization for which any of those persons serve as an executive officer or
partner or which they own directly or indirectly 10% or more of its equity
securities, or any trust or other estate in which any of the Company's executive
officers or directors have a substantial beneficial interest or for which they
serve as a trustee or in a similar capacity, has owed the Company at any time
since the beginning of its last fiscal more than $60,000.
Termination and Change In Control Arrangements
The Company has no compensatory plan or arrangement with respect to its
Executive Officers that would result from the resignation, retirement or
termination of any Executive Officer's employment with the Company, from a
change in control of the Company, or from a change in an Executive Officer's
responsibilities following a change in control of the Company.
Identification of Certain Significant Employees.
There are no employees who have made or are expected to make,
significant contributions to the business of the Company, the disclosure of
which would be material.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
SYNAPTIX SYSTEMS CORPORATION
(Registrant)
By: /s/ Peter C. Vanucci
Peter C. Vanucci
Chairman and Chief Executive Officer
Dated: October 29, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in their capacities indicated and on the dates indicated.
Name Title Date
/s/ Peter C. Vanucci Chairman, Chief Executive October 29, 1998
Peter C. Vanucci Officer & Director
/s/ Edward S. Fleming President & Director October 29, 1998
Edward S. Fleming
/s/ Edward F. Feighan Director October 29, 1998
Edward F. Feighan
/s/ J. Thomas McManamon Director October 29, 1998
J. Thomas McManamon
9
