U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended September 30, 1996
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from _____to _____
Commission File Number 0-25148
COIN BILL VALIDATOR, INC.
(Name of small business issuer in its charter)
New York 11-2974651
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425B Oser Avenue, Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (516) 231-1177
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 per share
(Title of Class)
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 pursuant to Item 405 of Regulation
S-B is not contained in this form, 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. [ ]
For the fiscal year ended September 30, 1996 the revenues of the registrant
were: $16.693 million.
The aggregate market value of the Common Stock of the registrant held by
nonaffiliates of the registrant, based on the average bid and asked prices on
December 17, 1996, was approximately $27,757,813.
As of December 23, 1996, the registrant had a total of 2,750,000 Common
Shares outstanding.
Transitional Small Business Disclosure Format (check one):
Yes _____ No X
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
The following table sets forth the certain information with respect to the
current directors and executive officers of the Company.
Principal Occupation
Name or Employment Age
- ---- ------------- ---
Stephen Katz Chairman of the Board of Directors and 53
Chief Executive Officer of the Company
William H. Wood President and Director of the Company 54
Henry Kayser Vice President, Chief Financial and 57
Accounting Officer and Director of the
Company
Edward Seidenberg Secretary and Director of the Company 39
Henry B. Ellis (1) Director of the Company and Private 47
Investor
Richard Gerzof (1) Director of the Company and Private 52
Investor
Jay Goldberg (1) Director of the Company and Private 55
Investor
Joan Vogel Director of the Company and Private 55
Investor
Michael Walsh Vice President of Engineering of the 41
Company
Robert W. Nader Vice President, Production/Market 37
Development of the Company
- ----------
(1) Member of the Compensation and Audit Committees
Stephen Katz has been Chairman of the Board of Directors since September
1996 and Chief Executive Officer and a director of the Company since May 1996.
Mr. Katz served as Vice Chairman of the Board of Directors from May 1996 until
September 1996. From September 1984 until September 1995, Mr. Katz was Chairman
of the Board and Chief Executive Officer and from September 1984 until September
1993, President, of Nationwide Cellular Service, Inc. Since 1992, Mr. Katz has
been Chairman of the Board and Chief Executive Officer of Cellular Technical
Services Company, Inc., a publicly held company engaged in developing software
for the cellular telephone industry.
William H. Wood has been President of the Company since January 1993 and
served as Chief Executive Officer of the Company from April 1993 to May 1996. He
has been a director of the Company since May
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1993. From January 1990 until January 1993 he held various executive positions
at Maytag Corp./Dixie Narco Division, including Director of Product Development
(January 1990 to June 1990), Vice President, Engineering and Technical Resources
(July 1990 to April 1992), and Vice President, Gaming and OEM Business (May 1992
to January 1993). From July 1990 to January 1993 he was also a corporate officer
of Maytag Corp. with responsibilities in its Dixie Narco Division.
Henry Kayser has been Vice President, Chief Financial and Accounting Officer
and a director of the Company since October 1994 and the Secretary of the
Company from October 1994 until January 1997. For more than five years prior to
October 1994 he was an accountant and financial consultant in private practice
providing services to various clients, including the Company.
Edward Seidenberg has been Secretary of the Company since January 1997 and
a director of the Company since July 1996. For more than five years prior
thereto, he had been Vice President and Chief Financial Officer of Nationwide
Cellular Service, Inc.
Henry B. Ellis has been a director of the Company since July 1996. Since
1992, Mr. Ellis has acted as President and Chief Executive Officer of Bassett
California Company, a family owned real estate holding company located in El
Paso, Texas. From June 1992 to February 1994 Mr. Ellis served as Chairman of the
Board and Chief Executive Officer of Grayson County State Bank located in
Sherman, Texas. Since 1992, Mr. Ellis has served as a member of the Board of
Directors of Bluebonnet Savings Bank, a savings and loan institution located in
Dallas, Texas.
Richard E. Gerzof has been a director of the Company since its inception.
Mr. Gerzof has been a partner of Sun Harbor Manor, a nursing home, since 1974.
He has also been a licensed real estate broker since 1982 and was a partner or
principal in Sonom Realty Co., a property management and construction firm, from
1974 through 1992. He was also a partner in TFTS Restaurant, Inc., a restaurant,
from 1985 to 1992, and has been a partner in Frank's Steaks, a restaurant, since
1993.
Jay Goldberg has served as a director of the Company since July 1996. Since
July 1996, Mr. Goldberg has been Chief Executive Officer of two technical
consulting firms, Opcenter, LLC and Lexstra, Inc. Since August 1991, Mr.
Goldberg has served as director of Cellular Technical Services Company, Inc., a
publicly held company engaged in developing software for the cellular telephone
industry. Mr. Goldberg had been Chairman of the Board, since November 1990, and
President and Chief Executive Officer from August 1990 until January 1994, of
Image Business Systems Inc., a company previously engaged in image processing
that has been inactive since August 1994.
Joan Vogel has been a director of the Company since January 1996 and from
January 1996 to September 1996 served as the Company's Chairperson of the Board
of Directors. From 1989 to 1994 she was director of Young Sport, Inc. a
children's sportswear company.
Michael Walsh has been a Vice President of Engineering of the Company since
April 1990. From December 1987 until April 1990 he was a Systems Engineer at
Aerospace Technologies, Inc. which provides consulting services with respect to
computer systems integration with responsibility for specification of that
corporation's main product line utilizing 386 microprocessor-based high
performance systems.
Robert W. Nader has been Vice President, Production/Market Development of
the Company since January 1995. From September 1991 through December 1994 he was
Engineering Manager at Hardware for United Gaming, Inc., a manufacturer and
route operator of electronic gaming machines. From July 1991 through September
1991 he was a design specialist in the Air Defense Systems Division of General
Dynamics, Inc.
The Board of Directors has a Compensation Committee and an Audit Committee,
each of which is presently comprised of Messrs. Ellis, Gerzof and Goldberg. The
Compensation Committee reviews and recommends to the Board of Directors the
compensation and benefits of all officers of the Company, reviews
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general policy matters relating to the compensation and benefits of employees of
the Company and administers the issuance of stock options to the Company's
officers, employees, directors and consultants. The Audit Committee meets with
management and the Company's independent auditors to determine the adequacy of
internal controls and other financial reporting matters.
The terms of each director expire at the 1997 Annual Meeting of
Shareholders ("Annual Meeting"). Officers are elected annually and serve at the
direction of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of Forms 3 and 4 and amendments thereto furnished
to the Company with respect to its most recent fiscal year, the Company believes
that during the fiscal year ending September 30, 1996, all filing requirements
applicable to executive officers, directors and 10% shareholders have been
complied with except, that, a Form 4 was filed late in connection with two
reported sales of Common Stock made by Joan Vogel and the Joseph Vogel Revocable
Trust (the "Trust") in July and August 1996. In connection with the foregoing
sales, a Form 4 was filed late with respect to purchases of Common Stock made by
Edward Seidenberg from the Trust occurring in July and August 1996.
Item 10. Executive Compensation
The following table summarizes the compensation earned for the last three
fiscal years by the Company's Chief Executive Officer and each other executive
officer of the Company who received compensation in excess of $100,000 for
services rendered in all capacities to the Company for the fiscal year ended
September 30, 1996 (the "Named Executive Officers").
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<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-----------------------------------------------
Securities
Underlying
Name and Principal Position Fiscal Year Salary Bonus Options
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen Katz 1996 $ 77,884 200,000
Chairman of the Board and
Chief Executive Officer
William H. Wood 1996 200,000
President
1995 193,269 25,000
1994 154,808 $13,462
Michael Walsh 1996 125,481 4,000
Vice President of Engineering
1995 125,000
1994 100,000
Henry Kayser 1996 129,568
Vice President and Chief Financial
and Accounting Officer
1995 101,200
1994 11,538
Robert W. Nader 1996 111,961 4,000
Vice President, Production & Market
Development
1995 77,692 15,000
</TABLE>
Summary of the 1996 Stock Option Plan
The Company's 1996 Stock Option Plan (the "Plan") currently authorizes the
granting of options to purchase up to 450,000 shares of Common Stock subject to
adjustment as described below. The adoption of the Plan is subject to approval
by the shareholders at the Annual Meeting. The Plan provides for the grant of
"incentive stock options" ("Incentive Stock Options") as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), and for options
not qualifying as Incentive Stock Options ("Non-Qualified Stock Options"). Any
person, including, but not limited to, employees, directors and, to a lesser
extent, consultants, attorneys and other independent contractors of the Company,
including those of the Company's subsidiaries, if any, believed by the Plan's
Compensation Committee to have contributed to the success of the Company, are
eligible to be granted Non-Qualified Stock Options under the Plan. Incentive
Stock Options may be granted only to employees of the Company or any subsidiary
of the Company.
The Plan is currently administered by a Compensation Committee (the
"Committee") consisting of members of the Board of Directors, appointed by the
Board of Directors. The Committee will determine, among other things, the
persons to whom options will be granted, the type of options to be granted, the
number of shares subject to each option and the share price. The Committee will
also determine the term of each option, the restrictions or limitations thereon,
and the manner in which each such option may be exercised. The Committee
currently consists of Messrs. Ellis, Gerzof and Goldberg. Unless sooner
terminated, no options may be granted under the Plan after March 18, 2006.
Under the Plan the maximum number of shares that may be covered by stock
options granted to any employee during any taxable year is 200,000 shares.
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All options granted pursuant to the Plan are nontransferable by the
optionee during his lifetime. All options granted under the Plan, will, unless a
shorter term is established by the Committee, expire if not exercised within ten
years of the grant (five years in the case of Incentive Stock Options granted to
an eligible employee owing stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or parent or subsidiary of
the Company immediately before the grant ("10% Shareholder")), and under certain
circumstances set forth in the Plan, may be exercised within 30 days following
termination of employment (one year in the event of death of the optionee).
Options may be granted to optionees in amounts and at such prices as may be
determined, from time to time, by the Committee. The exercise price of an
Incentive Stock Option will not be less than the fair market value of the shares
underlying the Incentive Stock Option on the date the Incentive Stock Option is
granted, provided, however, that the exercise price of an Incentive Stock Option
granted to a 10% Shareholder may not be less than 110% of such fair market
value. The exercise price of Non-Qualified Stock Options will not be less than
the fair market value of the shares underlying the Non-Qualified Stock Option on
the date the Non-Qualified Stock Option is granted.
The Plan contains anti-dilution provisions authorizing appropriate
adjustments in certain circumstances. Shares of Common Stock subject to options
which expire without being exercised or which are cancelled as a result of the
cessation of employment are available for future grants. The Committee may
grant individual options under the Plan with more stringent provisions than
those specified in the Plan.
Any stock options granted shall become exercisable in such amounts, at such
intervals and upon such terms and conditions as the Committee shall provide.
Stock options granted under the Plan are exercisable until the earlier of (i) a
date set by the Committee at the time of grant or (ii) the close of business on
the day before the tenth anniversary of the stock options' date of grant (the
day before the fifth anniversary in the case of an Incentive Stock Option
granted to a 10% Shareholder). Notwithstanding the foregoing, no options may be
granted after March 18, 1006 under the Plan.
The following table sets forth information as to all grants of options to
each of the Named Executive Offices during fiscal 1996.
<TABLE>
<CAPTION>
Option Grants in Fiscal Year 1996
Individual Grants
----------------------------------------------------------------------------------
Number of Securities % of Total Options
Underlying Granted to Employees Exercise
Name Options Granted in fiscal 1996 Price Expiration Date
---- --------------- -------------- ----- ---------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen Katz 100,000(1) 32.6 $ 6.00 3/18/01
100,000(2) 32.6 6.60 3/18/01
Michael Walsh 4,000(3) 1.3 7.5625 5/21/06
Robert W. Nader 4,000(3) 1.3 7.5625 5/21/06
</TABLE>
- ----------
(1) The option was awarded at the fair market value of the Company's Common
Stock at March 19, 1996, the date of the award, and becomes exercisable in
cumulative annual installments of 33-1/3% per year on each of the first
three anniversaries of the grant date. The option is exercisable over a
five-year period.
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(2) The option was awarded, subject to shareholder approval of the Plan, at
110% of the fair market value of the Company's Common Stock at March 19,
1996, the date of the award, and becomes exercisable in cumulative annual
installments of 33-1/3% per year on each of the first three anniversaries
of the grant date. The option is exercisable over a five-year period.
(3) The option was awarded, subject to shareholder approval of the Plan, at the
fair market value of the Company's Common Stock at May 22, 1996, the date
of the award, and becomes exercisable in cumulative annual installments of
20% per year on each of the first five anniversaries of the grant date. The
option is exercisable over a ten-year period.
The following table sets forth information with respect to the exercised
stock options held by the Named Executive Officers during fiscal 1996. As noted
below, no options were exercised by the Named Executive Officers during fiscal
1996.
<TABLE>
<CAPTION>
Aggregated Fiscal Year End Option Values
------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired September 30, 1996 September 30, 1996
on Exercise Value Exercisable Unexercisable Exercisable
Name (#) Realized Unexercisable(1)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Katz 0 0 0 200,000 0 $690,000
William H. Wood 0 0 10,000 15,000 0 0
Michael Walsh 0 0 0 4,000 0 8,750
Robert W. Nader 0 0 6,000 13,000 0 8,750
</TABLE>
- -----------------
(1) The closing price of the Company's Common Stock as reported on the
NASDAQ National Market on September 30, 1996 was $9.75 per share. Value
is calculated by multiplying (a) the difference between the closing
price and the option exercise price by (b) the number of shares of
Common Stock underlying the option.
Compensation of Directors
Messrs. Gerzof, Goldberg and Ellis each were granted options to purchase
2,500 shares of Common Stock at a price of $9.00 per share, subject to
shareholder approval of the Plan, for attending Board meetings during the fiscal
year ended September 30, 1996.
Employment Agreements
In May 1996, the Company entered into an agreement with Stephen Katz
providing for his employment as Vice Chairman of the Board of Directors and
Chief Executive Officer on a year to year basis. In September 1996, Mr. Katz was
elected Chairman of the Board of Directors. The agreement provides that Mr. Katz
shall be paid a salary at the rate of $150,000 per year, all fringe benefits
offered by the Company and shall receive options to purchase an aggregate of
200,000 shares of Common Stock
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under the Company's 1994 and 1996 Stock Option Plans. Such options shall vest at
the rate of 33-1/3% per year beginning one year after the date of employment.
In January 1993, the Company entered into an agreement with William H. Wood
providing for his employment as President for a five-year term expiring on
January 31, 1998. The agreement provides for a base salary of $150,000 per year
for the first year of the term, $175,000 for the second year and $200,000 for
the final three years of the term. The agreement also provides for participation
in all employee benefit plans, the use of an automobile and certain other fringe
benefits.
In August 1993, the Company entered into an employment agreement with
Michael Walsh, providing for his employment as Vice President of Engineering for
a four-year term expiring on September 30, 1997. The agreement provides for base
salary of $100,000 per year with an automatic increase to $110,000 per year
following any 13-week period in which the Company average validator sales exceed
1,000 units per week. The agreement also provides for participation in all
employee benefit plans and certain other fringe benefits.
In December 1994, the Company entered into an employment agreement with
Robert W. Nader providing for his employment as Vice President Product/Market
Development for a three-year term commencing in January 1995. The agreement
provides for base salaries of $100,000 for the first year of the term, $110,000
for the second year and $120,000 for the final year of the term. The agreement
also provides for participation in all employee benefit plans of the Company,
and certain other fringe benefits, including the payment of a $12,000 relocation
allowance and the grant of a five-year option to purchase 15,000 shares of
Common Stock exercisable at $11.00 per share.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of January 15, 1997
with respect to the beneficial ownership of the Company's Common Stock by each
shareholder known by the Company to be the beneficial owner of more than 5% of
its outstanding Common Stock, by each director of the Company, by each of the
Named Executive Officers and by the directors and executive officers of the
Company as a group:
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<PAGE>
Percentage
Amount and of
Nature of Outstanding
Beneficial Shares
Name and Address(1) Ownership(2) Owned
- ------------------- ------------ -----
Stephen Katz .......................... 472,520(3) 17.18%
Joan Vogel ............................ 322,020(4) 11.71%
Odyssey Financial Company ............. 200,000 7.27%
Richard E. Gerzof ..................... 206,009 7.41%
William H. (Bill) Wood ................ 137,908(5) 4.98%
Michael Walsh ......................... 78,995 2.87%
Edward Seidenberg ..................... 50,000 1.82%
Henry Kayser .......................... 45,998 1.67%
Jay Goldberg .......................... 20,000 *
Robert W. Nader ....................... 9,000(6) *
Henry B. Ellis ........................ 1,000 *
All directors and executive officers as
a group (ten persons) ................ 1,343,450(7) 48.43%
- ----------
* Less than 1%
(1) The addresses of the persons named in this table are: Messrs. Katz, Wood,
Seidenberg, Walsh, and Nader, c/o Coin Bill Validator, Inc., 425-B Oser
Avenue, Hauppauge, New York, 11788, Ms. Vogel, 400 East 56th Street, Apt.
#33H, New York, New York 10022; Odyssey Financial Company, c/o Stephen
Katz, 20 East Sunrise Highway, Valley Stream, New York 11581; Mr. Gerzof,
161 Sportsman Avenue, Freeport, New York 11520; Mr. Goldberg, 1 East 72nd
Street, Apt. #44, New York, New York 10023; Mr. Ellis, 303 Texas Avenue
#15, El Paso, Texas 79901; Mr. Kayser, 25 Andover Drive, Deer Park, New
York 11729.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from January 15, 1997 upon the
exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from January 15, 1997 have been exercised.
Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
(3) Includes 10,000 shares owned of record by Mr. Katz and 200,000 shares owned
of record by Odyssey Financial Company, a partnership of which Mr. Katz is
Managing General Partner. Also includes 163,520 owned of record by the
Joseph Vogel Revocable Trust and 99,000 shares owned of record by Joan
Vogel all of which are currently being held in a Voting Trust of which
Stephen Katz is voting trustee and possesses sole voting power pursuant to
a Voting Trust Agreement dated May 23, 1996.
(4) Includes 186,520 shares beneficially owned by the Joseph Vogel Revocable
Trust, of which Ms. Vogel is a trustee and beneficiary.
(5) Includes 15,000 shares which may be purchased under immediately exercisable
options.
(6) Represents shares which may be purchased under immediately exercisable
options.
(7) Includes 24,000 shares which may be purchased under immediately exercisable
options.
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Item 12. Certain Relationships and Related Transactions.
None.
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SIGNATURE
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 this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Coin Bill Validator, Inc.
By:/s/ Stephen Katz
----------------------------
Stephen Katz
Chairman of the Board and
Chief Executive Officer
Date: January 24, 1997
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