SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-KSB/A-1 Annual or Transitional Report
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 0-17580
FIRETECTOR INC.
(Exact name of Small Business Issuer in its charter)
Delaware 11-2941299
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
262 Duffy Avenue, Hicksville, New York 11801 (Address of
principal executive offices) (zip code)
Issuer's telephone number, including area code: (516) 433-4700
Securities registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements be reference in Part III of this Form 10-KSB ( )
State issuer's revenues for its most recent fiscal year: $14,299,000
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the average bid and ask prices for the Registrant's
Common Stock, $.001 par value per share, as of December 18, 1998 was $712,383.
As of January 15, 1998, the Registrant had 1,571,000 shares of Common Stock
outstanding.
Documents Incorporated by Reference: None
<PAGE>
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The Directors and Executive Officers of the Company are as follows:
DATE SERVICE
NAME AGE OFFICE COMMENCED
Daniel S. Tamkin 39 Chairman, Chief October 1990
Executive Officer,
General Counsel,
Director, and
Audit Committee
Joseph Vitale 52 President, Chief May 1994
Operating Officer
and Director
John A. Poserina 58 Treasurer, Vice January 1997
President, Chief
Financial Officer,
Secretary and
Director
Dennis P. McConnell 45 Director and January 1997
Audit Committee
Henry Schnurbach 45 Director and October 1988
Audit Committee
Mr. Tamkin has a J.D. degree from New York University School of Law and an
A.B. degree from Columbia University. Mr. Tamkin has been Chief Executive
Officer since March 15, 1996, prior to which Mr. Tamkin was Vice President and
General Counsel of the Company from October 1990. Also since October 1990, Mr.
Tamkin has been a Vice President of Mirtronics and Executive Vice President of
Forum Financial Corporation, a Toronto based merchant banking organization
controlled by a Director of Mirtronics. Since November 1992, Mr. Tamkin has been
a director of Unicap Commercial Corporation, an Ontario corporation which is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"). Mr.
Tamkin was associated with Varet & Fink P.C. from 1986 to October 1990 and from
October 1990 to January, 1993 was Counsel to that firm. Mr. Tamkin is presently
Counsel to Dolgenos Newman & Cronin LLP, counsel to the Company.
Mr. Vitale has been President of the Company since March 15, 1996. Mr.
Vitale has been active in the fire/communications industry with Casey Systems
Inc. ("Casey") since 1982. Mr. Vitale has been President of Casey since 1993 and
has held the positions of Director of Engineering, Vice President - Engineering
and Executive Vice President. Mr. Vitale holds a Bachelor of Science degree in
Engineering from C.W. Post College and a Master of Science degree in Electrical
Engineering from New York University.
Mr. Poserina joined the Company as Treasurer, Vice President, Chief
Financial Officer and Director as of January 1, 1997. From December 1995 until
he joined the Company, Mr. Poserina was an independent financial consultant.
Also, from July 1996 to September 1996, Mr. Poserina was Chief Financial Officer
of Happiness Express Inc. Mr. Poserina was Chief Financial Officer of Dorne and
Margolin Inc. from November 1994 to December 1995. Prior to that, Mr. Poserina
spent 15 years as Vice President, Treasurer and Chief Financial Officer of
Chryon
<PAGE>
Corporation, a NYSE listed company registered under the Exchange Act. Mr.
Poserina holds a Bachelor of Science in accounting from the University of Rhode
Island and is a Certified Public Accountant.
Mr. McConnell is a partner at Dolgenos Newman & Cronin LLP, counsel to the
Company. Prior to Dolgenos Newman & Cronin, he was associated with Varet & Fink
P.C. from 1989 to March 1993. Mr. McConnell has a J.D. degree from New York Law
School.
Mr. Schnurbach has a Bachelor of Commerce degree from Sir George Williams
University and is a Certified Management Accountant in Ontario. Since October
1991, Mr. Schnurbach has been Chief Executive Officer of Cantab./Polyair
Incorporated, a manufacturer of specialty covers and packaging materials.
There are no family relationships between any Director or Executive Officer
of Firetector and any other Director or Executive Officer of Firetector.
Directors hold office for a period of one year from the Annual Meeting of
Stockholders at which they are elected or until their successors are duly
elected and qualified. Officers are appointed by the Board of Directors and hold
office at the will of the Board. There is no nominating, or compensation
committee of the Board of Directors nor is there any committee performing
similar functions.
The Registrant is not aware of any Section 16(a) filing deficiences. In
making these statements, the Company has relied on the written representations
of its directors and officers and copies of the reports that they and 10%
holders have filed with the Commission.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or accrued by the Company for services rendered to it for each
of the three fiscal years ended September 30, 1998, as to Daniel S. Tamkin, the
Company's present Chief Executive Officer, Joseph Vitale, the Company's
President and Chief Operating Officer, and John A. Poserina, the Company's Chief
Financial Officer and Secretary; none of the Company's other Executive Officers
had aggregate remuneration in excess of $100,000.
[The remainder of this page intentionally left blank.]
<PAGE>
SUMMARY COMPENSATION TABLE
LONG
ANNUAL COMPENSATION TERM COMPENSATION
All Other
Year Salary ($) Bonus($) Other($) Option/SAR Compensation
- - -----------------------------------------------------------------------------
Daniel S. Tamkin
1998 $70,000 -- 6,600
1997 $65,000 -- 6,300 (1) --
1996 $69,000 -- -- --
Joseph Vitale
1998 $98,000 - 6,200 --
1997 $90,000 15,000 6,000 (2) --
John A. Poserina
1998 $113,000 6,600 --
1997 $ 92,000 15,000 6,300 (3) --
- ------
(1) Options to purchase 1,667 shares of Common Stock, at a price of $1.00 per
share, were issued to Mr. Tamkin in August, 1997.
(2) Options to purchase 4,167 shares of Common Stock, at a price of $1.00 per
share, were issued to Mr. Vitale in August, 1997, and options to purchase 3,792
shares of Common Stock, at a price of $1.00 per share, were issued to him in
1996.
(3) Options to purchase 9,167 shares of Common Stock, at a price of $1.00 per
share, were issued to Mr. Poserina in 1997.
The above stock option information reflects the effect of a one for three (1:3)
reverse split of the Common Stock effected in September 1998 and the repricing
of the exercise price to $1.00 per share.
- -----------
In December 1995, the Board of Directors voted to institute a 401(k) plan
for nonunion employees to be effective January 1, 1996. The plan includes a
profit sharing provision based on a determination of the Board of Directors.
During fiscal 1997, the Board of Directors approved a payment totaling $22,500
for participants of the union and non-union 401(k) plans. There was no payment
approved for these plans for fiscal 1998.
Directors do not receive any compensation for their service.
Out-of-pocket expenses for travel, meals and miscellaneous expenses incurred in
the course of the Director's activities on behalf of the Company are reimbursed
at cost.
On April 30, 1997, the Company and its shareholders adopted a
nonqualified stock option plan ("1997 Plan"), which expires September 30, 2002,
except as to options then outstanding under the 1997 Plan. Under the 1997 Plan,
the Board of Directors may grant options to eligible employees at exercise
prices not less than 100% of the fair market value of the common shares at the
time the option is granted. The number of shares of Common Stock that may be
issued shall not exceed an aggregate of up to 10% of its issued and outstanding
shares from time to time. Options vest at a rate of 20% per year commencing one
year after date of grant. Issuances under the 1997 Plan are to be reduced by
options outstanding under a 1990 nonqualified stock option plan (replaced by the
1997 Plan). Effective September 30, 1998, all outstanding employee stock options
were reset to an exercise price of $1.00 per share.
<PAGE>
The Company currently has issued and outstanding options to purchase 72,958
shares of Common Stock at an exercise price of $1.00 per share, to certain of
its officers, Directors and employees. See Item 11, "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's outstanding Common Stock at
January 15, 1999 of (i) each beneficial owner of more than five percent of the
Common Stock, (ii) each of the Company's Directors, and (iii) all Officers and
Directors of the Company as a group.
Common Stock Beneficially Owned At January 15, 1999
Number of Shares Percent of Shares
--------------------------------------
Mirtronics Inc.(1) 993,211 46.6%
Gentera Capital Corporation(2) 166,667 7.8%
Daniel S. Tamkin (3) 122,733 5.8%
Joseph Vitale (4, 5) 12,125 nil
Henry Schnurbach (2, 5) 3,667 nil
John A. Poserina (4, 5) 9,167 nil
Dennis P. McConnell (5, 6) 1,667 nil
All Executive Officers and
Directors as a Group (5 Persons) 149,359 7.0%
- ----------
(1) Includes 310,000 shares of Common Stock issuable upon conversion of
debt owed to Mirtronics and convertible into shares of Common Stock. See ITEM
12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS". Address is 106 Avenue
Road, Toronto, Ontario.
(2) Includes 133,333 shares of Common Stock issuable upon exercise of
presently exercisable options. Address is 106 Avenue Road, Toronto, Ontario.
(3) Includes 102,733 shares of Common Stock issuable upon exercise of
presently exercisable options. Address is 96 Spring Street, New York, NY.
(4) Address is 262 Duffy Avenue, Hicksville, NY.
(5) Issuable upon exercise of presently exercisable options.
(6) Address is 96 Spring Street, New York, NY.
- -------
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In consideration of collateral support for a previous credit facility
for the Company and various loans over several years, the Company had granted to
Mirtronics options to purchase the Company's Common Stock. Mirtronics had the
right to acquire up to an aggregate of 613,333 shares of common stock at an
exercise price of $.90 per share, a portion of which were held for the benefit
of the Company's Chairman. These options were to expire on December 31, 1998. In
addition, the Company had previously entered into a Debt/Equity Agreement with
Mirtronics, that provided for the retirement of debt and the issuance to
Mirtronics of 225,000 shares of Preferred Stock, which could also be converted
into 450,000 shares of common stock (675,000 and 1,350,000 respectively, before
giving effect to the one for three reverse split).
<PAGE>
In February 1998, the Company and Mirtronics reached an agreement to
reorganize the options, convertible debt and preferred stock held by Mirtronics
so as to reduce the potential dilution of these securities by 366,667 shares of
common stock. Under this agreement, Firetector redeemed the $675,000 of
Convertible Preferred Stock and $170,000 of convertible debt for an aggregate
price of $845,000. These securities were convertible into 563,333 shares of
common stock. In satisfaction thereof, Firetector issued a $620,000 Convertible
Note with interest at 10% (payable upon demand and convertible into 413,333
shares of common stock at a conversion price of $1.50 per share until December
31, 2002), and a $225,000 Note (without a convertible feature), with interest at
10%, payable upon demand. The foregoing notes are limited as to repayment based
upon covenant requirements and borrowing availability under the terms of the
Company's Credit Facility. Also in connection with this reorganization,
Mirtronics exercised 613,333 options for common stock for an aggregate
consideration of $552,000 and Firetector simultaneously repurchased and retired
216,667 of the newly issued shares for $552,000.
In September 1998, the Company entered into a Debt Matching Agreement
with Mirtronics whereby an aggregate of $508,619 due by Mirtronics to Firetector
was applied to reduce the notes payable and interest due by Firetector to
Mirtronics. As a consequence of this debt matching agreement, the $225,000
Non-Convertible note with interest of $13,870 was satisfied in full and the
$620,000 Convertible Note with interest of $38,219 was reduced to a new balance
of $392,973. In addition, the right to convert this note into 413,333 shares of
common stock was surrendered in consideration for a new warrant to purchase
310,000 shares of common stock (the "1998 warrants"). These 1998 warrants were
exercisable at anytime until December 31, 2003 at an exercise price of $1.02 per
share.
In consideration of collateral support for the Company's Credit
Facility in 1994, the Company granted Genterra Capital Corporation, an Ontario
Corporation, ("GCC", formerly known as First Corporate Capital Inc.) options for
166,667 unregistered shares of the Company's common stock at $.90 per share
through December 31, 1999. In July 1996, GCC exercised 33,334 of these options
at $.90 per share. An officer of GCC is also a director of Mirtronics.
In 1985, Casey entered into a royalty agreement with Joseph Vitale,
prior to his becoming the President and Chief Operating Officer of the Company.
The agreement pays Mr. Vitale a royalty on certain systems marketed and serviced
by Casey. In fiscal year ended September 30, 1998, Casey paid $86,108 pursuant
to the terms of the agreement.
Management believes each of the foregoing transactions was entered into on
terms at least as favorable as could be obtained from unrelated parties
negotiating at arms-length.
Daniel S. Tamkin, Chairman, Chief Executive Officer and General Counsel of
Firetector, is also an officer of a company controlled by a Director of
Mirtronics, Firetector's largest stockholder. Mr. Schnurbach, a Director of the
Company, is a Director of Mirtronics.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FIRETECTOR INC.
(Registrant)
By: /s/ JOHN A. POSERINA
-----------------------
John A. Poserina,
Chief Financial Officer, Secretary
and Director
Dated: January 29, 1999
