SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 Commission
File Number:
May 31, 2000 1-13360
Cornerstone Internet Solutions Company
(Name of Small Business Issuer as Specified in its Charter)
Delaware 22-3272662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
584 Broadway, Suite 509
New York, NY 10012
(Address of principal executive offices) (Zip Code)
(212) 343-9143
(Issuer's telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Exchange Act:
Common Stock, par value $.01 per share
Securities Registered pursuant to Section 12(g)of the Exchange Act: None
Check whether the Issuer (1) has 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 pursuant to Item 405 of Regulation S-B
is not contained herein, and will not 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.
[ X ]
Revenues for the Fiscal year ended May 31, 2000 were $2,867,230.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing price of the Common Stock on August 24, 2000,
was approximately $23,539,056. As of August 24, 2000, the Registrant had
outstanding 25,108,326 shares of Common Stock.
<PAGE>
Item 9 Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
Executive Officers and Directors
The executive officers and directors of Cornerstone Internet Solutions Company
(the "Company") as of September 30, 2000 are as follows:
Name Age Position
Andrew Gyenes 64 Chairman of the Board
Kenneth Gruber 48 Executive Vice President and Chief Financial
and Accounting Officer
David Rowe 34 President of B2Bgalaxy.com, Inc.
Rino Bergonzi 54 Director
Peter Gyenes 55 Director
Harrison Weaver 68 Director
Andrew Gyenes has been Chairman of the Board since January 1994, and was Chief
Executive Officer of the Company from January 1994 to December 1997. He was
President of the Company from January 1994 through May 1994. Mr. Gyenes has been
Chairman of the Board of the Company's subsidiary, B2Bgalaxy.com, Inc.
("B2Bgalaxy"), since March 1999. For more than five years before joining the
Company, Mr. Gyenes was Vice President of Gyenes & Co., a computer software
consulting company, and Marketing Manager of Ann-Mar Manufacturing, Inc.
("Ann-Mar"), a family owned textile company. Mr. Gyenes continued in such
positions on a part-time basis through January 1995, and since January 1995, has
been a consultant to Ann-Mar. Most of Mr. Gyenes' career has been in the
computer industry, including positions with Warner Communications (last serving
as an Assistant Vice President responsible for Worldwide Information Systems),
with IBM Corporation (last serving as Eastern Regional Manager for Scientific
Systems at Service Bureau Corporation, a former wholly-owned IBM subsidiary),
and with Western Union (last serving as Assistant Vice President of Data
Processing).
Kenneth Gruber has been Executive Vice President and Chief Financial Officer of
both the Company and B2Bgalaxy, since January 2000. From January 1999 until
January 2000, Mr. Gruber was employed by the Oracle Corporation, where he was
engaged in marketing and sales of ERP and CRM Applications. Between November
1994 and January 1999, Mr. Gruber held several positions at the Company,
including Chief Financial Officer and Secretary. Prior to joining the Company,
Mr. Gruber was employed by Children's Television Workshop ("CTW") since 1984,
and served as CTW's Vice President and Chief Financial Officer from 1993 until
November 1994, as CTW's Vice President of Finance and Administration from 1989
to 1993, and as Vice President of Finance from 1988 to 1989.
David Rowe has been President of B2Bgalaxy, since June 2000. From May 1999
through June 2000, Mr. Rowe was B2Bgalaxy's Chief Operating Officer. From April
1998 to April 1999, Mr. Rowe was a Vice President of Development of the
Company's subsidiary, marchFIRST Cornerstone ("marchFIRST"). Before joining
marchFIRST, Mr. Rowe had been affiliated with New Technology Partners ("NTP")
where he managed a variety of e-commerce web site development projects. Prior to
NTP, Mr. Rowe spent close to 10 years in the financial services area where he
held the positions of Vice President of Systems and Technology at Financial
Times Information, and Director of Technical Services at Interactive Data.
Rino Bergonzi has served as a director of the Company since January 1995. Since
November 1993, Mr. Bergonzi has served as Vice President and Division Executive
of Corporate Information Technology Services at AT&T, and has 25 years of
experience in the information services field that includes working for such
companies as Western Union, United Parcel Service Information Services and EDS
Corp. Mr. Bergonzi is a director of QueryObject Systems Corporation, a public
company which develops and markets proprietary business intelligence solutions.
Peter Gyenes has served as a director of the Company since January 1995. Mr.
Peter Gyenes was appointed Chief Executive Officer of Informix Corporation
("Informix") in July 2000. He had served as an Informix board member since the
acquisition of Ardent Software, Inc. ("Ardent"), formerly VMARK Software, Inc.,
by Informix in March 2000. Mr. Peter Gyenes served as Chairman, Chief Executive
Officer, and President of Ardent at the time of the acquisition, and prior to
that time had served as Executive Vice President, International Operations and
Worldwide Sales since August 1996. From May 1996 to August 1996, he served as
Executive Vice President of International Operations of Ardent. Mr. Gyenes
served as President and Chief Executive Officer of Racal InterLan, Inc., a
leading supplier of local area networking products, from May 1995 to May 1996.
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<PAGE>
Since January 1986, he has also served as a director of Axis Computer Systems,
Inc. From January 1994 to April 1995 he was President of the Americas Division
of Fibronic International, Inc. and from August 1990 to December 1993, Vice
President and General Manager of Data General Corporation's international
operations and mini-computer business unit. Mr. Peter Gyenes has also held
management, marketing, sales and technical positions with Encore Computer, Prime
Computer, Xerox and IBM. Mr. Peter Gyenes is the brother of Andrew Gyenes,
Chairman of the Board of the Company.
Harrison Weaver has been a director of the Company since December 1993. He was a
Vice President of the Company from December 1993 through May 1994. Mr. Weaver
was a Director and Officer of The Continuum Group, Inc. ("Continuum"). In
September 1995 Continuum applied for protection under Chapter 11 of the United
States Bankruptcy Code. In 1999, Continuum came out of bankruptcy. Mr. Weaver is
the founder and President of Weaver Associates, a diversified printing concern
located in Cranford, New Jersey, which has been in business for over 25 years.
He served for thirteen years as President of the New Jersey State Opera,
becoming President Emeritus in 1987. Mr. Weaver has received many distinguished
achievement awards, including the Governor's Award Medal for outstanding
contributions to the Arts for the State of New Jersey in 1978.
Item 10 Executive Compensation
The following table sets forth, for fiscal 2000, 1999 and 1998, all compensation
awarded to, earned by or paid to Andrew Gyenes, the Chairman of the Board, and
Edward Schroeder, former President and Chief Executive Officer of the Company,
the only executive officers of the Company whose salary and bonus exceeded
$100,000 with respect to the fiscal year ended May 31, 2000 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Long Term
Compensation
Awards
Securities
Name and Principal Other Annual Underlying
position Fiscal Year Salary($) Bonus ($) Compensation Options(#) (3)
-------- --------- --------- ------------ -------------- ----------------
<S> <C> <C> <C> <C> <C>
Andrew Gyenes 2000 $156,250 $8,417(1) 100,000
Chairman of the Board 1999 $125,000 $10,851(1)
1998 $125,000 $10,500(1)
Edward Schroeder 2000 $195,833(2) $51,250 $11,963(1) 125,000
Former President and CEO 1999 $120,000 $30,000 $10,882(1) 100,000
1998 $85,500(2) $41,250 $4,676(1) 300,000
</TABLE>
(1) Represents payments by the Company for a leased automobile and related
insurance and amounts paid by the Company toward health insurance premiums.
(2) Mr. Schroeder's employment commenced September 15, 1997, and ended May 31,
2000.
(3) Grants of stock options for B2Bgalaxy Common Stock are not included.
Stock option grants in last fiscal year
The following table provides further information with respect to the options
granted in fiscal 2000 to Mr. Gyenes and Mr. Schroeder under the Company's 1994
Incentive and Non-Qualified Stock Option Plan. Options granted to purchase
B2Bgalaxy common stock are not included in this table.
3
<PAGE>
STOCK OPTION TABLE
<TABLE>
<CAPTION>
% of Total
Number of Options
Securities Granted to
Name and Principal Underlying Employees in Exercise Expiration
Position Option Fiscal Year Base Price Date
-------- ------ ----------- ---------- ----
<S> <C> <C> <C> <C> <C>
Andrew Gyenes
Chairman of the Board 100,000 17% $6.50 1/5/05
Edward Schroeder
Former President and Chief Executive 125,000 21% $2.00 6/1/04
Officer
</TABLE>
Stock Acquired on Exercise and Fiscal Year End Option Values
No options were exercised by the Named Executive Officers during fiscal 2000.
The following table shows, for the Named Executive Officers, the number of
shares covered by both exercisable and unexercisable employee stock options as
of May 31, 2000 and the values for the "in-the-money" options which represent
the positive spread between the exercise price of any outstanding stock option
and the price of the Common Stock as of May 31, 2000, which was $1.25.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised in-the-
Unexercised Options at FY End (#) Money Options at FY-End($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C>
Andrew Gyenes 911,111/88,889 $0/$0
Edward Schroeder 346,528/178,472 $10,389/$8,311
</TABLE>
Item 11 Security Ownership of Certain Beneficial Owners and Management
The following table sets forth beneficial ownership (as it relates to
dispositive power) of the Company's Common Stock as of July 31, 2000 for (a)
each stockholder known by the Company to be the beneficial owner of five percent
or more of the outstanding Common Stock, (b) each director and current Executive
Officer of the Company individually, and (c) all directors and executive
officers as a group. Except as otherwise indicated in the footnotes below, (x)
the Company believes that each of the beneficial owners of the Common Stock
listed in the table, based on information furnished by such owner, has sole
investment and voting power with respect to such shares, and (y) where no
address is indicated, the address of the beneficial owner is the address of the
principal executive offices of the Company.
4
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Name and Address of Beneficial Owner Number of Shares (1) % of Class
---------------------------------------------------------------------------------------
<S> <C> <C>
Andrew Gyenes 939,222(2) 3.7%
Harrison Weaver 27,000(3) *
Rino Bergonzi 30,000(4) *
Peter Gyenes 48,150(5) *
David Rowe 122,366(6) *
Kenneth Gruber 12,361(7) *
All directors and executive officers as a group 1,169,099(8) 4.5%
</TABLE>
-----------------------
* less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes any person who,
directly or indirectly, through any contract, arrangement, understanding
or otherwise, has or shares voting or investment power with respect to
securities. Shares of Common Stock issuable upon the exercise of options,
warrants and convertible notes currently exercisable or convertible, or
exercisable or convertible within 60 days are deemed outstanding for
computing the percentage ownership of the person holding such options or
warrants or convertible notes but are not deemed outstanding for computing
the percentage ownership of any other person.
(2) Consists of 922,222 shares of Common Stock issuable upon exercise of
presently exercisable options, 10,000 shares owned by the AnnMar
Manufacturing Inc. Employee Pension Plan as trustee, and 7,000 shares
owned jointly by Mr. Gyenes and his wife.
(3) Consists of 25,000 shares of Common Stock issuable upon exercise of
presently exercisable options granted pursuant to the Company's 1995 Stock
Option Plan for Outside Directors (the "Outside Directors' Plan") and
2,000 shares owned by Mr. Weaver.
(4) Consists of 30,000 shares of Common Stock issuable upon exercise of
presently exercisable options granted pursuant to the Outside Directors'
Plan.
(5) Consists of 8,150 shares of Common Stock owned by Mr. Peter Gyenes, 30,000
shares of Common Stock issuable upon exercise of presently exercisable
options granted pursuant to the Outside Directors' Plan, and 10,000 shares
owned by the AnnMar Manufacturing Inc. Employee Pension Plan as trustee.
(6) Consists of shares of Common Stock issuable upon the exercise of presently
exercisable options.
(7) Consists of 2,778 shares of Common Stock issuable upon the exercise of
presently exercisable options and 9,583 shares owned by Mr. Gruber.
(8) Consists of 36,733 shares of Common Stock and presently exercisable
options to purchase 1,132,366 shares of Common Stock.
Item 12 Certain Relationships and Related Transactions
In February 2000, B2Bgalaxy consummated a private placement of common stock. The
purchase price per share was $2.80. Andrew Gyenes purchased 35,000 shares in
such private placement.
5
<PAGE>
The above transaction resulted from arms-length negotiations and was approved by
the independent members of the Company's Board of Directors who did not have an
interest in the transaction. The Company believes that the terms of such
transaction were on terms that were no less favorable than were available from
unaffiliated third parties. Future and ongoing transactions with affiliates of
the Company, if any, will be on terms believed by the Company to be no less
favorable than are available from unaffiliated third parties and will be
approved by a majority of the independent members of the Company's Board of
Directors who do not have an interest in the transaction.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment to Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.
CORNERSTONE INTERNET SOLUTIONS COMPANY, INC.
Date: September 28, 2000 By: /s/ KENNETH GRUBER
--------------------------------
Kenneth Gruber, Executive Vice
President and Chief Financial
and Accounting Officer
