SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995
Commission File Number 0-21816
INFINITE MACHINES CORP.
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(Exact name of registrant as specified in its charter)
Delaware 52-1490422
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
923 Incline Way, #9, P.O. Box 8219, Incline Village, NV 89452
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (702) 831-4680
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Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
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None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
(Title of class)
Common Stock Purchase Warrants
(Title of class)
The Issuer hereby amends its Annual Report on Form 10-KSB for the year ended
December 31, 1995 to include the information required by Part III, Items 10, 11
and 12.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that all Section 16(a) filing requirements
applicable to its officers and directors were complied with.
The following table, together with the accompanying footnotes, sets forth
information, as of June 1, 1995, regarding stock ownership of all persons known
by the Company to own beneficially 5% or more of the Company's outstanding
Common Stock, all directors and nominees, and all directors and executive
officers of the Company as a group.
Name of Shares of Common Stock Percentage
Beneficial Owner(1) Beneficially Owned(2) of Class(3)
- ---------------- ---------------------- -----------
Carle C. Conway 2,078,169(4) 32.6%(5)
Clifford G. Brockmyre 616,869(6) 10.4%(5)
Robert J. Sherwood 7,500(7) * (5)
James R. Rowe 5,000(8) * (5)
All executive officers 2,714,205(9) 41.7%(10)
and directors as a
group (5 persons)
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* less than 1%
(1) The mailing address for Carle C. Conway and Clifford G. Brockmyre is P.O.
Box 8219, Incline Village, Nevada 89452 and 1 Industrial Drive South,
Lan-Rex Industrial Park, Smithfield, Rhode Island 02917, respectively.
(2) Unless otherwise indicated below, each director, executive officer and each
5% stockholder has sole voting and investment power with respect to all
shares beneficially owned.
(3) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock which an individual or group has a right to acquire within 60
days pursuant to the exercise of options or warrants or upon the conversion
of securities are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person shown in the table.
(4) Includes (i) 53,719 shares issuable upon exercise of a currently
exercisable outstanding warrant, (ii) 104,258 shares owned by Mr. Conway's
daughter, as to which he disclaims beneficial ownership, (iii) 434,736
shares issuable upon conversion of outstanding promissory notes of the
Company held by Mr. Conway, (iv) 66,489 owned by a trust established for
Mr. Conway's daughter of which Mr. Conway's wife is the trustee, which
shares Mr. Conway disclaims beneficial ownership of and (v) 750,000 shares
held in escrow pursuant to the terms of an Escrow Agreement between Mr.
Conway and H.J. Meyers & Co., Inc.
(5) Assumes that all currently exercisable options or warrants or convertible
notes owned by this individual have been exercised.
(6) Includes 57,143 shares issuable upon conversion of an outstanding
promissory note of the Company held by Mr. Brockmyre's wife as to which
shares Mr. Brockmyre disclaims beneficial ownership and 50,000 shares
subject to currently exercisable options.
(7) Includes 7,500 shares subject to currently exercisable options or warrants.
(8) Includes 5,000 shares subject to currently exercisable options or warrants
(9) Includes 681,254 shares subject to currently exercisable options, warrants
or convertible notes.
(10) Assumes that all currently exercisable options or warrants owned by members
of the group have been exercised.
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<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Summary Compensation Table below includes, for each of the fiscal years
ended December 31, 1995, 1994 and 1993, individual compensation for services to
the Company and its subsidiaries paid to: (1) the Chief Executive Officer; and
(2) the other most highly paid executive officers of the Company in Fiscal 1995
whose salary and bonus exceeded $100,000 (together, the "Named Executives").
Annual Compensation Long-Term All
------------------- Compensation Other
Name and Principal Position Year Actual Deferred Options Compensation
- --------------------------- ---- ------ -------- ------- ------------
Carle C. Conway 1995 $150,000 -- -- --
Chairman of the Board 1994 $150,000
and Chief Executive Officer 1993 $105,577 -- -- --
Clifford J. Brockmyre 1995 $140,000 -- -- --
President and Chief Operating 1994 $ 70,000* -- -- --
Officer
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* Mr. Brockmyre joined the Company in July 1994.
Employment Agreements
The Company has an employment agreement with Carle C. Conway, its Chairman
and Chief Executive Officer, for a term expiring on May 31, 1998 which provides
for an annual base salary of $150,000 and various benefits. The agreement also
provides, among other things, that, if Mr. Conway is terminated other than for
cause (which is defined to include conviction of a crime involving moral
turpitude, engaging in activities competitive with the Company, divulging
confidential information, dishonesty or misconduct detrimental to the Company or
breach of a material term of the agreement), the Company will pay to him a lump
sum amount equal to the greater of $150,000 or the salary payable over the
unexpired term of the employment agreement. The Company owns a key-man life
insurance policy in the amount of $1 million on the life of Mr. Conway.
In connection with the acquisition of HGG Laser Fare, Inc. in July, 1994,
the company entered into an employment agreement with Clifford G. Brockmyre,
pursuant to which Mr. Brockmyre is employed as Chief Executive Officer and
President of Laser Fare. The agreement expires on December 31, 1998 and provides
for an annual salary at the rate of $140,000, subject to increases in the
discretion of the Company's Board of Directors. In addition to the compensation
provided under the agreement, Mr. Brockmyre is eligible to participate in the
Company's bonus plan. Additionally, Mr. Brockmyre is eligible for other bonuses
as determined in the sole discretion of the Board of Directors. The agreement
also provides, among other things, that, if Mr. Brockmyre is terminated other
than for cause, the Company will pay to him a lump sum amount equal to the
lesser of $140,000 or a severance payment not to exceed the amount due annually.
Stock Option Plans
In December 1991, the Board of Directors and stockholders of the Company
adopted a stock option plan, which was amended in April 1993 (the "1993 Stock
Option Plan"). In April 1994, the Board of Directors adopted the 1994 Stock
Option Plan which was approved and adopted by the Company's stockholders at the
1994 Annual Meeting of Stockholders. In June 1995 the Board of Directors adopted
the 1995 Stock Option Plan which was approved by the Company's stockholders at
the 1995 Annual Meeting of Stockholders. The 1993, 1994 and 1995 Stock Option
Plans are collectively referred to herein as the "Option Plans". The 1993, 1994
and 1995 Option Plans provide for the grant to employees, officers and
consultants of options to purchase up to 250,000, 225,000 and 255,000 shares of
Common Stock, respectively, consisting of both "incentive stock options" within
the meaning of Section 422 of the United States Internal Revenue Code of 1986
(the "Code") and non-qualified options. The Option
3
<PAGE>
Plans are intended to qualify under Rule 16b-3 of the Securities Exchange Act of
1934. Incentive stock options are issuable only to employees of the Company,
while non-qualified options may be issued to non-employees, consultants, and
others, as well as to employees of the Company.
The Option Plans are administered by the Compensation Committee of the
Board of Directors, which determines those individuals who shall receive
options, the time period during which the options may be partially or fully
exercised, the number of shares of Common Stock that may be purchased under each
option, and the option price. The members of this committee are ineligible to
receive options under the Option Plans.
The per share exercise price of an incentive or non-qualified stock option
may not be less than the fair market value of the Common Stock on the date the
option is granted. The aggregate fair market value (determined as of the date
the option is granted) of the shares of Common Stock for which incentive stock
options are first exercisable by any individual during any calendar year may not
exceed $100,000. No person who owns, directly or indirectly, at the time of the
granting of an incentive stock option to him, more than 10% of the total
combined voting power of all classes of stock of the Company shall be eligible
to receive any incentive stock options under the Option Plans unless the option
price is at least 110% of the fair market value of the Common Stock subject to
the option, determined on the date of grant. Non-qualified options are not
subject to this limitation.
No incentive stock option may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the option will be exercisable only by him or her. In the event of
termination of employment other than by death or disability, the optionee will
have three months after such termination during which to exercise the option.
Upon termination of employment of an optionee by reason of death or permanent
total disability, the option remains exercisable for one year thereafter to the
extent it was exercisable on the date of such termination. No similar limitation
applies to non-qualified options.
In April 1993, the Board of Directors and stockholders of the Company
adopted a non-discretionary non-employee directors' stock option plan (the
"Directors' Plan") that provides for the grant to non-employee directors of
non-qualified options to purchase up to 50,000 shares of Common Stock. Pursuant
to the Directors' Plan, each new non-employee director of the Company is
automatically granted, upon becoming a director, an option to purchase 2,500
shares of Common Stock at the fair market value of such shares on the grant
date. Each option vests one year from the date of grant. In addition, each
non-employee director shall automatically be granted an option to purchase 2,500
shares at the fair market value of such shares on the date of grant, on the last
day of each fiscal year during which he serves as a director of the Company.
Such options shall vest one year from the date of grant.
Options under the Option Plan and Directors' Plan must be granted within 10
years from the effective date of each respective plan. Incentive stock options
granted under the plans cannot be exercised more than 10 years from the date of
grant, except that incentive stock options issued to greater than 10%
stockholders are limited to five year terms. All options granted under the plans
provide for the payment of the exercise price in cash or by delivery to the
Company of shares of Common Stock already owned by the optionee having a fair
market value equal to the exercise price of the options being exercised, or by a
combination of such methods of payment. Therefore, an optionee may be able to
tender shares of Common Stock to purchase additional shares of Common Stock and
may theoretically exercise all of his stock options without making any
additional cash investment.
Any unexercised options that expire or that terminate upon an optionee's
ceasing to be affiliated with the Company become available once again for
issuance. As of May 8, 1996, the Company had outstanding non-qualified options
to purchase an aggregate of 10,000 shares of Common Stock to Robert J. Sherwood
and 7,500 shares of Common Stock to James R. Rowe under the Directors' Plan.
These options are exercisable at prices ranging from $1.88 to $2.75 per share.
4
<PAGE>
Option Grants to Named Executives During 1995 Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Number of Securities Percent of Total
Underlying Options/Granted to Employees
Name Options/Granted (#) in Fiscal Year Exercise Price ($/Sh) Expiration Date
---------------- ------------------- -------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Carle C. Conway 75,000 20.5% $1.44 7/7/95
Clifford J. Brockmyre 115,000 31.5% $1.58 7/7/95
</TABLE>
No options were exercised by any Named Executive during the year ended
December 31, 1995.
Director Compensation
The Company does not pay a fee to directors for services rendered as
directors. Each director is reimbursement for travel expenses incurred in
connection with attendance at meeting of the Board of Directors and its
committees.
CERTAIN TRANSACTIONS
Between December 1994 and January 1996, the Company borrowed an aggregate
of $710,495 for working capital from Carle C. Conway, a stockholder, officer and
director of the Company. The loans are evidenced by three-year promissory notes
which mature from December 1997 through January 1998, and bear interest at the
rate of 10% per annum. The notes are convertible at the discretion of the holder
into shares of Common Stock at a conversion price ranging from $1.13 to $2.00
per share.
In April 1995, the Company borrowed $100,000 for working, capital from
Shelia Brockmyre, the wife of Clifford G. Brockmyre an officer director and
principal stockholder of the Company. The loan is evidenced by a three-year
promissory note which matures in April 1998 and bears interest at the rate of
10% per annum. The note is convertible at the discretion of the holder into
shares of Common Stock at the conversion price of $1.75 per share, subject to
adjustment.
In March 1995, the Company borrowed $125,000 for working capital from a
trust established for Mr. Conway's daughter, of which Mr. Conway's wife is the
trustee. The loan was evidenced by a three-year promissory note which matures in
March 1998 and bears interest at the rate of 10% per annum. The note was
converted into 66,489 shares of Common Stock on March 27, 1996.
The Company believes the foregoing transactions which involved affiliates
were on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. As a matter of policy, in order to reduce the
risks of self-dealing or a breach of the duty of loyalty to the Company, all
transactions between the Company and any of its officers, directors or principal
stockholders are for bona fide purposes and are approved by a majority of the
disinterested members of the Board of Directors.
5
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
INFINITE MACHINES CORP.
By:/s/ Daniel Landi
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Daniel Landi, Chief Financial and Accounting Officer
Dated: May 10, 1996
