U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 ON
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR FISCAL YEAR ENDED DECEMBER 31, 1999
Commission File Number: 0-24624
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U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
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(Name of Small Business Issuer in Its Charter)
NEW YORK 13-3097642
- ----------------------------------------------- ----------------
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer
or Organization) Identification No.)
7201 WISCONSIN AVENUE
BETHESDA, MARYLAND 20814
- ----------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(301) 215-7777
--------------
(Issuer's Telephone Number, Including Area Code)
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
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 disclosure of delinquent filers in response to item 405 of Regulation
S-B is not 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[ ].
Issuer's revenues for its most recent fiscal year: $37,128,000.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, the average bid and asked
prices of such stock, as of March 22, 2000 was approximately $10,440,000.
<PAGE>
The number of shares outstanding of each of the issuer's classes of common
equity, as of March 22, 2000, was 596,563 shares of Common Stock and 193,750
shares of Class B Common Stock.
Documents Incorporated by Reference: None.
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<PAGE>
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of the Company and their present
positions with the Company are as follows:
Name Positions with the Company
- ---- --------------------------
Roberta Lipson Chairperson of the Board of Directors,
Chief Executive Officer and President
Elyse Beth Silverberg Executive Vice President, Secretary and
Director
Lawrence Pemble Executive Vice President Finance and Business
Development and Director
Robert C. Goodwin, Jr. Executive Vice President Operations, Treasurer,
Assistant Secretary, General Counsel and Director
A. Kenneth Nilsson* Director
Julius Y. Oestreicher* Director
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* Member of both the Audit and Compensation Committees.
All directors of the Company hold office until the next annual meeting
of the shareholders and until their successors have been elected and qualified.
The officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's shareholders and hold office
until their resignation, removal from office or death.
Set forth below is certain information with respect to each director:
ROBERTA LIPSON, 44, co-founded the Company in 1981. Ms. Lipson has
served as the Chairperson of the Board of Directors, Chief Executive Officer and
President since that time. From 1979 until founding the Company in 1981, Ms.
Lipson was employed in China by Sobin Chemical, Inc., a worldwide trading
company, as Marketing Manager, coordinating marketing and sales of various
equipment in China. Ms. Lipson was employed by Schering-Plough Corp. in the area
of product marketing until 1979. Ms. Lipson received a B.A. degree in East Asian
Studies from Brandeis University and an M.B.A. from Columbia University Graduate
School of Business.
ELYSE BETH SILVERBERG, 42, co-founded the Company in 1981. Ms.
Silverberg has served as the Company's Executive Vice President and Secretary
and as a Director since that time. Prior to founding the Company, from 1980 to
1981, Ms. Silverberg worked with Ms. Lipson at Sobin Chemical, Inc. and was an
intern in China with the National Council for U.S.-China Trade from 1979 to
1980. Ms. Silverberg received a B.A. degree in Chinese Studies and History from
the State University of New York at Albany.
LAWRENCE PEMBLE, 43, joined the Company in 1984 and has served as
Executive Vice President Finance and Business Development since January 1996.
From 1986 until 1996, Mr. Pemble served as Vice President of Marketing. From
1986 through April 1992 and September 1993 to the present, Mr. Pemble has also
served as a Director of the Company. Prior to joining the Company, Mr. Pemble
was employed by China Books
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<PAGE>
and Periodicals, Inc. as Manager, East Coast Center. Mr. Pemble received a B.A.
degree in Chinese Studies and Linguistics from the State University of New York
at Albany.
ROBERT C. GOODWIN, JR., 59, has served as Executive Vice President
Operations since January 1996, as Assistant Secretary since June 1995 and as
General Counsel, Treasurer and a Director of the Company since October 1992. In
addition to his other duties, from October 1992 until January 1996, Mr. Goodwin
served as Vice President of Operations for the Company. Prior to joining the
Company, Mr. Goodwin was engaged in the private practice of law from 1979 to
1992, with a specialty in international law, in Washington, D.C. and had served
as the Company's outside counsel since 1984. Prior to such employment, Mr.
Goodwin served for two years as the Assistant General Counsel for International
Trade and Emergency Preparedness for the United States Department of Energy and
for three years as the Deputy Assistant General Counsel for the Federal Energy
Administration. From 1969 until 1974, Mr. Goodwin served as an attorney-advisor
for the U.S. Department of Commerce. Mr. Goodwin received a B.A. degree from
Fordham University and a J.D. from Georgetown University Law Center.
A. KENNETH NILSSON, 67, has served as a Director of the Company since
January 1996. Since 1989, Mr. Nilsson has served as Chairman of Eureka Group,
Inc., a consulting firm he founded in 1972. Prior to 1989, Mr. Nilsson served as
Vice Chairman of Cooper Companies, Inc., and as President of Cooper
Laboratories, Inc., and President of Cooper Lasersonics, Inc. He previously
served as an executive of Max Factor & Co., Ltd. and of Pfizer International,
Inc. Mr. Nilsson received a B.A. degree in Telecommunications from the
University of Southern California and an M.A. in Political Science from the
University of California.
JULIUS Y. OESTREICHER, 70, has served as a Director of the Company
since January 1996. Mr. Oestreicher has been a partner with the law firm of
Oestreicher & Ennis, LLP and its predecessor firms for thirty years, engaged
primarily in estate, tax and business law. Mr. Oestreicher received a B.S.
degree in Business Administration from City College of New York and a J.D. from
Fordham University School of Law.
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<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the annual
compensation of the Company's chief executive officer and other most highly
compensated executive officers whose salary and bonus exceeded $100,000 during
1998 for services in all capacities to the Company during that year:
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
--------------------------------------------------------- ------------
Name and Other Shares
Principal Position Annual Underlying
Year Salary Bonus Compensation Option
---- ------ ----- ------------ ------
<S> <C> <C> <C> <C> <C>
Roberta Lipson, 1999 $160,684 $ -- $ 42,594(1) --
Chairperson on 1998 $152,300 $ -- $ 43,235(1) --
the Board, Chief 1997 $167,670 $ -- $ 26,421(1) --
Executive Officer
and President
Elyse Beth Silverberg, 1999 $154,733 $ -- $125,260(2) --
Executive Vice 1998 $146,659 $ -- $ 31,443(2) --
President and 1997 $161,460 $ -- $ 29,834(2) --
Secretary
Lawrence Pemble, 1999 $148,682 $ -- $ -- --
Executive Vice 1998 $142,369 $ -- $ -- --
President Finance 1997 $161,221 $ -- $ -- --
and Business
Development
Robert C. Goodwin, Jr 1999 $139,736 $ -- $ -- 7,000(3)
Executive Vice 1998 $125,129 $ -- $ -- 1,250
President Operations, 1997 $141,875 $ 31,203 $ -- 2,500
General Counsel,
Assistant Secretary
and Treasurer
</TABLE>
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(1) Includes tuition expense for Ms. Lipson's sons in China in the amount
of $38,164 for 1999, $40,785 for 1998, and $23,971 for 1997
(2) Includes yearly rental expense in the amount of $104,000 in 1999,
$9,600 in 1998 and $9,400 in 1997 for Ms. Silverberg's housing in China
and tuition expense in the amounts of $21,260 for 1999, $21,800 for
1998, and $20,434 for 1997 for Ms. Silverberg's son in China.
(3) All of these options represent the repricing during fiscal 1999 of
previously-issued options.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERMS
NAME OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION ----------------------
- ---- GRANTED FISCAL 1999 BASE PRICE DATE 5%($) 10%($)
------- ----------- ---------------- --------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Goodwin, Jr. 7,000 20.9% $9.15/share(1) July 13, 2009 $40,281 $102,079
</TABLE>
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(1) These options were repriced during fiscal 1999 from a price range of
between $16 and $40 per share. These options are immediately
exercisable as to 2,334 shares and are exercisable on each of July 13,
2000 and July 13, 2001 with respect to an additional 2,333 shares.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR THE MONEY OPTIONS AT END
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ----- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert C. Goodwin, Jr. 0 $0 2,334/4,666 $21,239/$42,461
</TABLE>
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(1) Based on the closing bid price per share of $18.25 on the last day of
fiscal 1999.
OPTION REPRICING
The 1994 Stock Option Plan was established as an employment incentive
to retain the persons necessary for the development and financial success of the
Company. As a result of the decline over a long period of time of the market
price of the Company's Common Stock, on July 12, 1999, the Board of Directors
determined that the Company's outstanding stock options for its employees no
longer served as intended. Pursuant to the authority granted under the 1994
Stock Option Plan, on that date the Board of Directors voted to approve the
repricing of outstanding options to employees, including 7,000 options granted
to Robert C. Goodwin, Jr. Such repricing was effected by offering to exchange
new options with an exercise price of $9.15 per share, which was 110% of the
fair market value of the Common Stock on the date of repricing, for the same
number of options then held by each optionee. The new options also were subject
to new vesting such that approximately one-third of such new options were
exercisable on each of the date of grant and the next two anniversaries thereof.
All of the repriced options had been immediately exercisable on the date of
repricing. Otherwise, such new options have identical terms and conditions as
the repriced options.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement, with each of
Mmes. Lipson and Silverberg and Messrs. Pemble and Goodwin providing for base
salaries to be subject to annual review and adjustment as determined by the
company, and which effective June 1, 1999, have been set at $167,670, $161,460,
$155,250 and
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<PAGE>
$152,040, respectively. Each such executive officer also receives additional
benefits, including those generally provided to other executive officers of the
Company. In addition, each of Mmes. Lipson and Silverberg also receives
reimbursement of expenses relating to residing in China. Each employment
agreement also contains non-competition provisions that preclude each executive
from competing with the Company for a period of two years from the date of
termination of employment unless his or her employment is terminated by the
Company without cause, as such term is defined in the employment agreements.
Each employment agreement has been automatically extended for the one-year
period ending April 30, 2000, and is subject to successive annual renewal.
The Company has obtained an individual term life insurance policy
covering Ms. Lipson in the amount of $2,000,000. The Company is the sole
beneficiary under this policy.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid for service
on the Board of Directors a retainer at the rate of $1,000 per annum and an
additional $500 for each meeting of the Board of Directors attended. The Company
also reimburses each director for reasonable expenses in attending meetings of
the Board of Directors. Directors who are also employees of the Company are not
separately compensated for their services as directors. In addition, on July 13,
2000, each director who is not an employee of the Company was granted, pursuant
to the Company's 1994 Stock Option Plan, options to purchase 4,000 shares of the
Company's Common Stock at an exercise price per share of $8.3125. Such options
have a term of ten years and are immediately exercisable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the one-year period ended December 31,
1999, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% shareholders were complied with.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information as to the ownership of
shares of the Company's Common Stock and Class B Common Stock as of April 15,
2000 with respect to (i) holders known to the Company to beneficially own more
than five percent of the outstanding Common Stock or the Class B Common Stock,
(ii) each director, (iii) the Company's Chief Executive Officer and each other
executive officer whose annual cash compensation for 1998 exceeded $100,000 and
(iv) all directors and executive officers of the Company as a group. The
following calculation takes into account the Company's one-for-eight reverse
stock split of its Common Stock and Class B Common Stock, as well as the
expiration of its Class A and Class B Warrants on August 18, 1999.
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<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership (2)(3) Percent of:
----------------- -----------
Name and Address of Common Class B Common Class B
Beneficial Shareholder(1) Stock Common Stock(4) Stock Common Stock
- ------------------------- ----- --------------- ----- ------------
<S> <C> <C> <C> <C>
Roberta Lipson 250 100,000(5) * 51.6%
Elyse Beth Silverberg 4,375 65,125 * 33.6%
Lawrence Pemble 238 18,625 * 9.6%
Robert C. Goodwin, Jr. 3,678(6) 0 * 0%
Julius Y. Oestreicher 5,250(7) 0 * 0%
A. Kenneth Nilsson 5,250(8) 0 * 0%
Steven T. Newby 123,500(9) 0 20.7% 0%
55 Quince Orchard Rd,
Suite 606
Gaithersburg, MD 20878
All Executive Officers 18,541(10) 183,750 3.0% 94.8%
and Directors as a Group
(6 persons)
</TABLE>
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* Less than 1%.
(1) Unless otherwise indicated, the business address of each person named
in the table is c/o U.S.-China Industrial Exchange, Inc., 7201
Wisconsin Avenue, Bethesda, Maryland 20814.
(2) Except as otherwise indicated, each of the parties listed has sole
voting and investment power with respect to all shares indicated below.
(3) Beneficial ownership is calculated in accordance with Regulation S-B as
promulgated by the Securities and Exchange Commission.
(4) The Class B Common Stock is entitled to six votes per share, whereas
the Common Stock is entitled to one vote per share.
(5) Includes 5,000 shares held by the Ariel Benjamin Lee Trust, of which
Ms. Lipson is a Trustee.
(6) Includes 2,334 shares that may be purchased pursuant to stock options
that are exercisable currently or within 60 days.
(7) Represents shares that may be purchased pursuant to currently
exercisable stock options. Does not include 2,500 shares of Common
Stock beneficially owned by Mr. Oestreicher's wife.
(8) Includes 4,000 shares that may be purchased pursuant to currently
exercisable stock options.
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<PAGE>
(9) The amount and nature of beneficial ownership of these shares by Steven
T. Newby is based solely on the Schedule 13G filings as submitted by
Mr. Newby.
(10) Includes an aggregate of 11,584 shares that may be purchased pursuant
to currently exercisable stock options.
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<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this Form 10-KSB/A to be signed on its behalf by the undersigned,
thereunto duly authorized.
U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
May 1, 2000 By: /s/ Robert C. Goodwin, Jr.
--------------------------
Robert C. Goodwin, Jr.
Executive Vice President and
General Counsel
