U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
Commission File Number 0-20701
Compositech Ltd.
(Name of small business issuer in its charter)
Delaware 11-2710467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 Ricefield Lane, Hauppauge, New York 11788
(Address of principal executive offices)
Issuer's telephone number: (631) 436-5200
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
Redeemable Common Stock Warrants
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [_]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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. [ ]
Issuer's revenues for fiscal year ended December 31, 1999: $794,988
As of March 28, 2000, there were 19,707,215 shares of the registrant's
Common Stock, $.01 par value outstanding. The aggregate market value of Common
Stock held by non-affiliates of the registrant, as of March 28, 2000 was
approximately $27,536,066.
Transitional Small Business Disclosure Format (check one): Yes [_] No [X}
<PAGE>
Part III of the Company's 10KSB for the year ended December 31, 1999 is
hereby amended to include the information required under Items 9, 10, 11 and 12
of Part III, as set forth below
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
The following table lists the Company's current directors and executive
officers.
Name Age Position(s) With the Company
---- --- ----------------------------
Jonas Medney 71 Director, Chairman and Chief
Executive Officer
Samuel S. Gross 73 Director, Executive Vice President,
Secretary, Treasurer and Chief
Financial Officer
Willard T. Jackson(1)(2) 72 Director
Fred E. Klimpl 65 Director
Robert W. Middleton (2) 61 Director
Heinz-Gerd Reinkemeyer (1) 62 Director
James W. Taylor (1) (2) 81 Director
----------
(1) Member of Compensation Committee
(2) Member of Audit Committee
The following table lists other management personnel:
Name Age Position(s) With the Company
---- --- ----------------------------
Richard Lucier 66 Vice President, Sales
Ralph W. Segalowitz 41 Vice President, Engineering
Kenneth J. Thompson 42 Controller
Management and Directors
Jonas Medney, Director, Chairman and Chief Executive Officer, has over 40
years of experience in the composites industry and has more than 50 patents. Mr.
Medney has been a director and Chairman of the Company since its inception in
1984. He co-founded Lamtex Industries, a public company which was a pioneer in
filament-wound composites, which was acquired by Koppers Company in 1963. He
co-founded Fiberglass Resources Corporation, a manufacturer of filament wound
epoxy pipes and conduits, with Mr. Klimpl. This company was acquired by Koch
Industries in 1983. Mr. Medney is a graduate of the Massachusetts Institute of
Technology (B.S. Mechanical Engineering).
Samuel S. Gross, Director, Executive Vice President, Secretary, Treasurer
and Chief Financial Officer, is a certified public accountant and has been
Executive Vice President and Treasurer of the Company since 1990. He had been a
consultant to the Company and a director since 1987. He was previously a partner
at Ernst & Young LLP where he was responsible for the Fiberglass Resources
Corporation account. Mr. Gross was affiliated with Ernst & Young LLP and its
predecessors for 39 years. He is a director and Secretary/Treasurer of the
National Mental Health Association, Honorary Director and former Chairman of the
Board of Directors of the Mental Health Association in New York State, Inc., and
a director and former president of Long Island Transportation Management, Inc.
Mr. Gross is a graduate of City College of New York (B.B.A.).
Richard Lucier, Vice President, Sales, has been with the Company since
1992. He was Corporate Accounts Manager with Polyclad Laminates, Inc. (Cookson
Group) from 1989 to 1992 and Senior Vice President with Fortin-Westinghouse from
1980 to 1989. Prior to that time, he was employed at Honeywell, Raytheon and
GTE. He is a graduate of Northeastern University (B.S. Mechanical Engineering).
2
<PAGE>
Ralph W. Segalowitz, Vice President, Engineering, has been with the Company
since 1990. From 1985 to 1990, he was with Robotic Vision Systems Inc., where
his final position was as a project manager responsible for automated
manufacturing systems. From 1981 to 1985, he was a product engineer with
Databit, Inc., a manufacturer of data transmission equipment. He is a graduate
of the State University of New York at Stony Brook (B.S. Mechanical Engineering
and M.S. in Industrial Management).
Kenneth J. Thompson, Controller, has been with the Company since 1996. From
1995 to 1996 he was Controller of Cameron Engineering, P.C. From 1991 to 1995 he
was with Loveshaw Corporation, most recently as Vice President, Finance. He is a
graduate of Adelphi University (B.B.A. Accounting).
Board of Directors. The Board of Directors consists of Messrs. Medney and
Gross and five outside directors: Willard T. Jackson, Fred E. Klimpl, Robert W.
Middleton, Heinz-Gerd Reinkemeyer and James W. Taylor.
Willard T. Jackson, private investor, retired in 1988 as a partner of
Brundage, Story and Rose, a New York investment counseling firm in which he
became a partner in 1969. He has been a director since January 1988. Mr. Jackson
is a graduate of Middlebury College (A.B.) and Columbia University (M.B.A.). He
is a trustee emeritus of Middlebury College.
Fred E. Klimpl, Director, has over 35 years of experience in the composites
industry and has over 25 patents. Mr. Klimpl has been a director of the Company
since its inception in 1984. He was co-inventor and a key manager in the
development and marketing of the fiberglass underground gasoline tank program
for Owens-Corning Fiberglas Corp. He was subsequently responsible for the
start-up and marketing of a fiberglass pipe business for Ciba-Geigy Corporation.
Mr. Klimpl is a graduate of Lowell University (B.S. Textile Engineering) and
Stevens Institute of Technology (M.S. Industrial Management).
Robert W. Middleton was elected as a director in March 1996 and has acted
as an investment banker to the Company in its prior financings and with respect
to the Company's initial public offering. He has been Chairman of The Middleton
Group, LLC, a firm of investment bankers associated with Gemini Financial
Corporation, since October 1998. He was Managing Director-Corporate Finance of
Trautman Wasserman & Company Incorporated, an investment banking firm, from 1993
to October 1998. From 1985 to October 1993, Mr. Middleton was, successively,
Director of Corporate Finance of Barclay Investments, Inc., and a Vice President
at C.L. King & Associates, Inc. Prior to that time, he was associated with
Fahnestock & Company from 1983 to 1985 and was a general partner from 1984-1985.
From 1974 to 1983, Mr. Middleton held various positions with Burgess & Leith,
Inc., including Senior Vice President and Director, while serving as Manager of
the New York office. He attended Princeton University. Mr. Middleton is the
designee of Trautman Wasserman & Company Incorporated to the Board pursuant to
the terms of a financing agreement.
Heinz-Gerd Reinkemeyer has been a director since 1990. He had been Director
of the Industrial Plastics Division of HT, a German manufacturer and subsidiary
of the Rutgers Group, which is an affiliate of the Veba Group. Currently, he is
a consultant for the Rutgers Group. Mr. Reinkemeyer has a degree in mechanical
engineering and from 1961 he had been with Dynamit Nobel, a manufacturer of
laminates, until it was acquired by HT in 1988. Mr. Reinkemeyer is the designee
of HT to the Board.
James W. Taylor has been a director since 1987. He is the former Chairman
of the Board of Reuter Manufacturing Inc., where he was President from 1992 to
1998. He is a certified management consultant. He was a director from 1967 to
1973 and President from 1970 to 1973 of the international management consulting
firm, Booz Allen & Hamilton. Mr. Taylor was President and a director of Bradford
Trust from 1973 to 1975. He has served as a director of Insilco Corporation,
Times Fiber Communications, Inc., The Enterprise Companies, Techalloy, Inc.,
Amphenol Inc. and Knogo Corporation. He is a life trustee of Carnegie Mellon
University. He was a trustee of Beaver College and was a vice president and
director of the Association of Consulting Management Engineers and of the
Institute of
<PAGE>
Management Consultants. He holds a B.S. from Carnegie Mellon
University.
On November 26, 1999, Pierre Laflamme, a director who was appointed by the
Quebec Investors, resigned from the Board of Directors.
As of December 31, 1999, Christopher F. Johnson resigned from his position
as President and Chief Executive Officer and from the Board of Directors to
accept a position with Park Electrochemical Corp., a manufacturer of laminates.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Compositech's
directors and executive officers, and persons who own more than 10% of
Compositech's Common Stock, to file reports of ownership and changes in
ownership of such stock with the SEC. Directors, executive officers and greater
than 10% stockholders are required by SEC regulations to furnish Compositech
with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to
Compositech or written representations that no Forms 5 were required,
Compositech believes that during 1999, its directors, executive officers and
greater than 10% stockholders complied with all Section 16(a) filing
requirements. The Form 5 filed by Jonas Medney on February 9, 2000 included the
benefical ownership of 4,166 shares of Common Stock owned by his spouse which
were inadvertently not included on the Form 3 filed by Mr. Medney as of July 1,
1996.
<PAGE>
Item 10. Executive Compensation
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or accrued by the
Company to Jonas Medney, the Company's Chairman and Chief Executive Officer and
to Samuel S. Gross, Executive Vice President, Secretary, Treasurer and Chief
Financial Officer for services rendered to the Company in all capacities during
the years ended December 31, 1999, 1998 and 1997. The table also sets forth the
compensation paid or accrued by the Company to Mr. Christopher F. Johnson, its
former President and Chief Executive Officer, who joined the Company in June
1998 and resigned in December 1999 for services rendered to the Company during
the years ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------------------------------------
Restricted Securities
Salary Bonus Stock Underlying
Name and Principal Position Year ($)(1) ($) Awards Options
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jonas Medney 1999 130,000 -- -- 37,800
Chairman and Chief Executive Officer 1998 130,000 -- -- --
1997 130,000 -- -- --
Samuel S. Gross (2) 1999 109,231 -- 40,000 23,683
Executive Vice President, Secretary, 1998 100,481 -- -- 150,000
Treasurer and Chief Financial Officer 1997 100,000 -- -- 4,000
Christopher F. Johnson(3) 1999 200,000 12,500 100,000 --
Former President and Chief Executive Officer 1998 103,846 12,500 -- 350,000
</TABLE>
- ----------
(1) Mr. Medney's salary in 1999, 1998 and 1997 includes $77,500, $130,000 and
$5,500, respectively, which had been deferred by agreement of Mr. Medney
with the Company. Mr. Gross' salary in 1999, 1998 and 1997 includes $4,231,
$73,077 and $4,231, respectively, which had been deferred by agreement of
Mr. Gross with the Company.
(2) Mr. Gross' stock award, with values of $72,520 as of the grant date of
8/01/1999 and $57,520 as of 12/31/1999, has a restriction period that ends
on August 1, 2001 and can be rescinded if he leaves the Company other than
because of disability or retirement as determined in good faith or approved
by the Board.
(3) Mr. Johnson became an Executive Officer of the Company in June 1998 and his
resignation was accepted by the Company's Board effective December 31,
1999.
<PAGE>
Salary Deferrals. As of December 31, 1999, Messrs. Medney and Gross had deferred
an aggregate of approximately $672,000 of their salaries. The salary deferrals
have been voluntarily undertaken by each of the respective persons in
consideration of the cash position of the Company. These deferred salaries can
only be paid with the prior approval of the Compensation Committee. In
recognition of their salary deferrals, on March 10, 1999, the Compensation
Committee authorized the issuance, to Messrs. Medney and Gross, of stock options
to purchase 37,800 and 23,683, respectively, shares of the Company's common
stock at $2.50 per share, the market value of the common stock on the date of
authorization. These options have ten year terms and were exercisable beginning
September 10, 1999.
1999 OPTION GRANTS
The following table sets forth information relating to options granted in
1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted To Exercise or
Options Employees in Base Expiration
Name Granted Fiscal Year Price ($/sh) Date
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jonas Medney 37,800 11% $2.50 3/10/2009
Samuel S. Gross 23,683 7% $2.50 3/10/2009
Christopher F. Johnson -- --
</TABLE>
FISCAL YEAR-END OPTION VALUES
The following table provides information concerning the value of
unexercised options held as of December 31, 1999 by the Named Executive Officers
(no options were exercised during such year). The fair market value of the
shares of Common Stock underlying such options (with an exercise price per share
ranging from $1.188 to $5.00) has been calculated based upon the December 31,
1999 closing price of the Common Stock of $1.438 per share.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-The-
Underlying Unexercised Money
Name Options at Fiscal Year-End Options at Fiscal Year-End
Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jonas Medney 79,850 --
Samuel S. Gross 312,933 100,000 $6,267 $12,533
Christopher F. Johnson 116,667 --
</TABLE>
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's voting capital stock as of April 28, 1999, by (i)
each director of the Company, (ii) each person known to the Company to be the
beneficial owner of more than 5% of the Common Stock of the Company, (iii) the
executive officers named in the Summary Compensation Table, and (iv) all
executive officers and directors as a group. Except as otherwise indicated, the
address of each person is care of Compositech Ltd., 120 Ricefield Lane,
Hauppauge, New York 11788.
Amount and Nature of Percent of
Name and Address Beneficial Ownership (1) Class (1)
---------------- ------------------------ ---------
Jonas Medney(2) 1,408,189 6.7%
Fred E. Klimpl(3) 724,827 3.4%
Willard T. Jackson(4) 608,058 2.9%
Samuel S. Gross(5) 358,972 1.7%
Robert W. Middleton(6) 37,608 *
Heinz-Gerd Reinkemeyer(7) 15,449 *
James W. Taylor(8) 19,267 *
All executive officers and directors as
a group(7 persons)(9) 3,172,370 14.4%
- ----------
* Indicates less than 1%
(1) The shares of Common Stock and voting rights owned by each person or by all
directors and executive officers as a group, and the shares included in the
total number of shares of Common Stock and votes outstanding used to
determine the percentage of shares of Common Stock and voting rights owned
by each person and such group, have been adjusted in accordance with Rule
13d-3 under the Securities Exchange Act of 1934 to reflect the ownership of
shares issuable upon exercise of outstanding options, warrants or other
common stock equivalents which are exercisable within 60 days. As provided
in such Rule, such shares issuable to any holder are deemed outstanding for
the purpose of calculating such holder's beneficial ownership but not any
other holder's beneficial ownership.
(2) Includes warrants to purchase 123,676 shares of Common Stock and options to
purchase 79,850 shares of Common Stock under the Company's stock option
plans. Includes 4,666 shares of Common Stock held by Mr. Medney's wife, as
to all of which shares Mr. Medney disclaims beneficial ownership.
(3) Includes warrants to purchase 60,572 shares of Common Stock, stock awards
of 4,938 shares and options to purchase 59,327 shares of Common Stock under
the Company's stock option plans.
(4) Includes Series A Stock convertible into 37,500 shares of Common Stock,
warrants to purchase 304,124 shares of Common Stock, stock awards of 8,934
shares and options to purchase 22,500 shares of Common Stock under the
Company's stock option plans. Includes securities held as nominee and
trustee of Trust created for the benefit of Willard T. Jackson and members
of his family.
(5) Includes warrants to purchase 3,539 shares of Common Stock, stock awards of
40,000 shares and options to purchase 312,933 shares of Common Stock under
the Company's stock option plans.
(6) Robert W. Middleton is the designee of Trautman Wasserman & Company, Inc.
on the Board. He has disclaimed beneficial ownership of all securities
owned by employees or principals of Trautman Wasserman & Company, Inc.
Includes warrants to purchase 26,432 shares of Common Stock, stock awards
of 7,843 shares and options to purchase 3,333 shares of Common Stock under
the Company's stock option plans.
(7) Includes stock awards of 7,116 shares and options to purchase 8,333 shares
of Common Stock under the Company's stock option plans.
<PAGE>
(8) Includes stock awards of 8,934 shares and options to purchase 8,333 shares
of Common Stock under the Company's stock option plans.
(9) Consists of all the shares of Series A Stock and Common Stock (or shares of
Common Stock underlying options and warrants) held by Messrs. Medney,
Gross, Klimpl, Jackson, Middleton, Reinkemeyer and Taylor as described in
notes (2)-(8) above.
Item 12. Certain Relationships and Related Transactions
In January 1999, the Company borrowed $17,500, bringing the total amount
borrowed to $456,417 under the credit facility through Credit Bancorp. The loan
is collateralized by approximately 1.7 million shares of Common Stock loaned to
the Company by two of the Company's stockholder/directors. The loan is due on
December 29, 2000 and bears interest at the rate of one percent above the one
year LIBOR rate (currently approximately 7.29%), payable quarterly. A default
would occur if the Company fails to supplement the collateral or partially repay
the loan in the event the collateral falls in value by 25% or more from the
value as of the loan date. The Company has agreed with the two directors to
issue replacement shares to them in the event of any liquidation of the
collateral by the lender and provide them with registration rights, where
necessary.
In November 1999, the SEC commenced an action against Credit Bancorp, its
principals and trustee claiming violations of the securities laws by
misappropriating stock placed as collateral. A receiver was appointed and the
receiver reported to the Company that to date only 1,122,967 of the 1,702,467
shares of the Common Stock has been located that some or all of them may be in
margin accounts. It is not known whether and to what extent the shares will be
returned. The Company believes that any loss of shares should be covered by the
insurance policies of Credit Bancorp and if the shares were misappropriated, the
principal amount of the loan may be reduced or may not be due. The litigation
may not be settled for some time and the Company may have to replace the shares
if they are not ultimately returned.
In August 1999, the Company obtained extensions on the due dates, to April
2, 2001, on 10% Secured Notes and notes payable, totaling $1,345,000, held by
Messrs. Medney, Gross and Jackson, $879,385 of deferred salaries due to officers
and $362,169 (as of December 31, 1999) in accrued interest due to officers,
stockholders and directors. In exchange for the extension of the due dates on
the notes and loans payable and the accrued interest as of December 31, 1999,
the Company issued warrants to them to purchase 169,563 shares of common stock
at an exercise price per share of $1.272, equaling the price of warrants issued
in connection with a recently concluded financing transaction. On October 23,
1998, the due dates on 10% Secured Notes and notes payable, totaling $1,495,000,
held by Messrs. Medney, Klimpl, Gross and Jackson were extended to January 2,
2000. On March 10, 1998, the due dates on 10% Secured Notes totaling $470,000
held by Messrs. Medney, Klimpl and Jackson were extended to January 2, 1999. The
notes are collateralized by a first or second priority lien on patents and
certain equipment.
On October 16, 1997, the Company formed a 50/50 joint venture with four
Quebec institutional investors (collectively, the "Quebec Investors") for the
establishment of a plant in the greater Montreal area to manufacture
Compositech's laminates. The Quebec Investors are: Societe generale de
financement du Quebec, Fonds de solidarite des travailleurs du Quebec (F.T.Q.),
Societe Innovatech du Grand Montreal and Fonds regional de solidarite Ile de
Montreal. On November 26, 1999, Pierre Laflamme, a director who was appointed by
the Quebec Investors, resigned from the Board.
As of December 31, 1999, Christopher F. Johnson resigned from his position
as President and Chief Executive Officer and from the Board of the Company to
accept a position with Park Electrochemical Corp., a manufacturer of laminates.
8
<PAGE>
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COMPOSITECH LTD.
Date: April 28, 2000 By: /S/ Jonas Medney
---------------------
Jonas Medney
Chairman and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated.
/S/ Jonas Medney April 28, 2000
-------------------------------------------
Jonas Medney
Chairman of the Board,
Chief Executive Officer and Director
(Principal Executive Officer)
/S/ Samuel S. Gross April 28, 2000
-------------------------------------------
Samuel S. Gross
Executive Vice President, Secretary,
Treasurer and Director
(Principal Financial and Accounting Officer)
/S/ Willard T. Jackson April 28, 2000
- --------------------------------------------
Willard T. Jackson, Director
/S/ Fred E. Klimpl April 28, 2000
- --------------------------------------------
Fred E. Klimpl, Director
/S/ Robert W. Middleton April 28, 2000
- --------------------------------------------
Robert W. Middleton, Director
/S/ Heinz-Gerd Reinkemeyer April 28, 2000
- --------------------------------------------
Heinz-Gerd Reinkemeyer, Director
/S/ James W. Taylor April 28, 2000
- -------------------------------------------
James W. Taylor, Director
