SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2001 Commission File No. 0-1738
GENERAL KINETICS INCORPORATED
(Exact Name of Registrant as specified in its Charter)
Virginia 54-0594435
(State of Incorporation) (IRS Employer Identification No.)
10688-D Crestwood Drive, Manassas, VA 20109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (703) 331-8033
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock with par value of $.25 per share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].
Aggregate market value of the voting stock held by
non-affiliates of the Registrant as of August 20, 2001 $ 392,156*
(* Executive officers, directors, and Registrant's ESOP were considered
affiliates, solely for purposes of this item.)
The number of shares outstanding of Registrant's Common
Stock, $.25 par value as of August 17, 2001, was 6,718,925
Documents Incorporated by Reference
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS
Name and Positions Business Experience
With the Company Age During The Last Five Years Director since
------------------ --- -------------------------- --------------
Larry M. Heimendinger 57 Mr. Heimendinger has acted as the Chairman of March, 1994
Chairman of the Board the Board of Directors of the Company since he
was elected to that position in March 1994.
Also, since March 1994, in accordance with the
Amended and Restated Bylaws of the Company, Mr.
Heimendinger has been performing the duties of
the President and Chief Executive Officer
through his position as Chairman of the Board
and will continue to do so until such time as a
replacement for President and Chief Executive
Officer is elected and qualified. Mr.
Heimendinger is also a founder of Link2It, LLC
(see "Certain Relationships and Related
Transactions"). Mr. Heimendinger previously
served as President and Chief Operating Officer
of Nantucket Corp., a privately held software
company, and after that company's acquisition by
Computer Associates International was associated
with Computer Associates, most recently as its
Director of Product Strategy. Before joining
Nantucket, Mr. Heimendinger was the President
and Chief Executive Officer of Origin, Inc., a
company that produced and marketed personal
computer software for the banking industry. Mr.
Heimendinger is the author of Advanced dBase IV
and Advanced Clipper, books published by Brady
Books, and is a computer industry conference and
seminar speaker worldwide. Mr. Heimendinger is a
member of Class 1 of the Board of Directors.
Thomas M. Hacala 56 Mr. Hacala has been the President of Seating February, 1998
Technology, a marketing and consulting company
specializing in the Asian/European office
furniture industry, since 1991. Mr. Hacala is a
member of Class I of the Board of Directors.
Marc E. Cotnoir 52 Mr. Cotnoir has been an independent consultant, March, 1994
providing business and strategic planning
support and systems engineering consulting, for
a wide range of clients since 1988. Mr. Cotnoir
was Vice President
Name and Positions Business Experience
With the Company Age During The Last Five Years Director since
------------------ --- -------------------------- --------------
for Marketing, Sales, and Service for VideoSite
Incorporated from September 1997 to July 1998.
Prior to 1988, Mr. Cotnoir had extensive
experience, both within private industry and in
the U.S. Air Force, with computer and
communications technology. Mr. Cotnoir is a
member of Class II of the Board of Directors.
Richard J. McConnell 41 Mr. McConnell has been the President of Square March, 1994
Systems, Corp., a research and development firm
specializing in advanced software systems, since
1986. Mr. McConnell is also a founder of
Link2It, LLC (see "Certain Relationships and
Related Transactions"). Mr. McConnell has been
involved in research and development in the
computer software industry since 1981. Mr.
McConnell is a member of Class III of the Board
of Directors.
EXECUTIVE OFFICERS AND CERTAIN
SIGNIFICANT EMPLOYEES OF THE COMPANY
The names, ages, and positions of the executive officers of the
Company are listed below.
Name Age Position
---- --- --------
Larry M. Heimendinger 57 Chairman of the Board
(performing duties of President
and Chief Executive Officer)
Richard E. Munczenski 59 Vice President and General Manager
Sandy B. Sewitch 44 Chief Financial Officer
Larry M. Heimendinger has acted as the Chairman of the Board of
Directors since March of 1994 and, also since March 1994, in accordance with the
Amended and Restated Bylaws of the Company, he has been performing the duties of
the President and Chief Executive Officer through his position as Chairman of
the Board and will continue to do so until a replacement for President and Chief
Executive Officer is elected and qualified.
Richard E. Munczenski joined the Company in August 1969, and has
served as Vice President and General Manager since April 1995.
Sandy B. Sewitch joined the Company as Chief Financial Officer in
April 1993.
The officers of the Company hold office at the discretion of the
Board of Directors of the Company.
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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 officers, and persons who beneficially own
more than 10% of its Common Stock, to file with the Securities and Exchange
Commission reports of ownership and changes in ownership of the Company's equity
securities. Officers, directors and greater than 10% stockholders are also
required to furnish the Company with copies of all forms they file pursuant to
Section 16(a).
To the Company's knowledge, based solely on a review of such reports
furnished to the Company, during the fiscal year ended May 31, 2001, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% stockholders were complied with.
ITEM 11. EXECUTIVE COMPENSATION
The information under this heading relates to the chief executive
officer, the chief financial officer, and the vice president and general manager
of the Company for the fiscal year ended May 31, 2001. The information is
presented in compliance with the rules and regulations of the Securities and
Exchange Commission applicable to those companies, such as General Kinetics
Incorporated, that meet the definition of a "small business issuer."
Executive officers are appointed each year by the Board of Directors
at its annual meeting following the annual meeting of shareholders and serve for
one year or until their successors are chosen and qualify in their stead. There
are no family relationships among the executive officers, or any arrangement or
understanding between any officer and any person pursuant to which the officer
was elected.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------------- -------------------------
Name and Other
Principal Annual Number of All Other
Position Year Salary Bonus Compensation Options Compensation
--------------- ---- ------ ----- ------------ --------- ------------
Larry M. 2001 $ 0 $ 0 $ 0 12,500 $ 0
Heimendinger(1) 2000 0 0 0 12,500 0
Chairman of the Board 1999 0 0 0 12,500 0
Sandy B. Sewitch(2) 2001 $108,000 $ 10,000 $ 4,800 0 $ 0
Chief Financial 2000 108,000 7,5000 4,800 0 0
Officer 1999 108,000 0 4,800 0 0
Richard E. 2000 $113,000 $ 37,000 $ 0 0 $ 0
Munczenski(3) 1999 96,500 40,000 0 0 0
VP and General Manger 1995 95,000 15,000 3,500 0 0
-------------------
(1) Larry Heimendinger serves as the Company's Chairman of the Board, for
which he has received no salary compensation since being elected to that
position in March 1994.
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Since the resignation of the Company's former President in March 1994, the
Company has not had a President. In accordance with the Company's Bylaws,
until a new President is elected and qualified, the Company's Chairman
performs the duties of that office.
(2) The "Other Annual Compensation" for Sandy Sewitch includes a car allowance
of $4,800 for each year listed.
(3) The "Other Annual Compensation" for Richard Munczenski includes a car
allowance of $3,500 for ten months of fiscal 1999. Thereafter, Mr.
Munczenski was provided with a company leased car which was used
substantially exclusively for company business during the remainder of
fiscal 1999, fiscal 2000, and fiscal 2001.
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS
DURING FISCAL YEAR 2001
Percent Potential of Realizable Value
of Total at assumed annual rate of
Options stock price appreciation
Number of Granted to for options term
Options Employees Exercise Expiration ----------------------------
Name of Exective Officer Granted in FY 2001 Price Date 5% 10%
------------------------ --------- ---------- -------- ---------- ---- -----
Larry M. Heimendinger 12,500(1) 26.3% (2) $ .08 6/01/11 $629 $2,595
Sandy B. Sewitch 0 --- --- --- --- ---
Richard E. Munczenski 0 --- --- --- --- ---
----------
(1) 75% of such options have vested and are currently exercisable. The
remaining 25% will vest on May 31, 2002.
(2) Mr. Heimendinger is not an employee of the Company. However, for purposes
of the calculation of percentages in the foregoing table, his options have
been included in the aggregate total employee options granted.
FY-2001 OPTIONS EXERCISE AND FY-2001 YEAR-END VALUE TABLE
Number of Options In-the-Money Options
Number At End-FY 2001 At End-FY 2001
of Shares --------------------- ----------------------
Name of Acquired
Executive Officer on Exercise Exerciseable Unexerciseable Exerciseable Unexerciseable
---------------------- ----------- ------------ -------------- ------------ --------------
Larry M. Heimendinger 0 130,250 128,125 0 0
Sandy B. Sewitch 0 12,500 0 0 0
Richard E. Munczenski 0 45,277 0 0 0
COMPENSATION OF DIRECTORS
Each nonemployee director of the Company other than Mr.
Heimendinger has received a monthly retainer of $1,500 since November 1994.
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ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The Company has understood that shares of its Common Stock and
convertible debentures which in fiscal years prior to 1998 had been reported as
beneficially owned by Gutzwiller & Partner, AG ("Gutzwiller") or its successor
were held by Gutzwiller or its successor as nominee only for various underlying
owners, none of which was a beneficial owner of five percent of more of the
Company's Common Stock. The Company understands that to be under review. As of
May 31, 2001, clients of Gutzwiller or its successor had invested approximately
$3 million in equity of the Company, and approximately $9.0 million in
convertible debentures of the Company, which are convertible into 18,000,000
shares of Common Stock.
As of September 28, 2001, no person or entity is believed by the
Company to be the beneficial owner of more than 5 percent of its common stock,
except to the extent noted above.
The following table sets forth the beneficial ownership of Common
Stock as of September 28, 2001 of each of the current directors and each of the
executive officers named in the Summary Compensation Table above:
Percentage of
Shares of Common Stock Outstanding
Name Beneficially Owned (1) Common Stock
------------------------ ---------------------- ------------
Marc E. Cotnoir 105,000 1.5
Richard J. McConnell 105,000 1.5
Thomas M. Hacala 62,500 *
Larry M. Heimendinger 130,250 1.9
Sandy B. Sewitch 17,041 *
Richard E. Munczenski 59,801 *
All Directors and Named
Executive Officers as a
group (six persons) 479,592 6.7%
----------
(1) Beneficial ownership also includes shares of Common Stock which may be
acquired within 60 days of September 28, 2001 through the exercise of
warrants, options, or otherwise, as follows: Mr. Cotnoir, 105,000 shares;
Mr. Heimendinger, 130,250 shares; Mr. McConnell, 105,000 shares; Mr.
Hacala, 62,500 shares; Mr. Sewitch, 12,500 shares; Mr. Munczenski, 45,277
shares; and all directors and named executive officers as a group, 460,527
shares. Additionally, each of Messrs. Cotnoir and McConnell were granted
options to purchase 100,000 shares, and Mr. Heimendinger was granted an
option to purchase 125,000 shares, each of which options will only vest if
the stock price reaches certain stipulated multiples of a base price of
$1.0026 (for ten consecutive trading days).
* Indicates less than 1 percent.
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ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
At May 31, 2000, the Company had a membership interest in and
certain notes receivable due from Link2It, LLC, a company formed by Larry
Heimendinger and Richard McConnell, both members of the Company's Board of
Directors. Such membership interests and notes were originally received by the
Company in consideration of, among other things, amounts advanced by the Company
to or on behalf of Link 2It, LLC prior to 1998. The financial statements at May
31, 2000 included a valuation reserve of $175,000, which represented the total
due under the notes receivable.
During January 2001, Link2It, LLC merged into Link2It Corporation
and completed a sale of equity securities in a private transaction. The $175,000
principal amount of the notes due to the Company was repaid in full and
recognized as "other income" on the statement of operations for the fiscal year
ended May 31, 2001 included in the Company's Annual Report on the Form 10-K
filed August 29, 2001. The Company also retained approximately 5.7% of Link2It
Corporation's currently outstanding common stock, which it accounts for using
the cost method. The Company has assigned no value to this investment due to its
speculative nature. The entire value of the Company's interest in Link2It was
assigned to the note receivable previously outstanding and repaid to the Company
in January 2001.
Subsequent to May 31, 2001, Link2It Corporation entered into a
factoring agreement with the Company, intended to supplement or replace the
Company's prior agreement with Reservoir Capital Corporation ("Reservoir"). The
new agreement, which was negotiated at arms length and approved by unanimous
vote of the Company's Board of Directors, is on terms substantially identical to
those of the Reservoir facility, but more favorable to the Company in certain
respects. At September 17, 2001, advances due to Link2It Corporation pursuant to
such factoring agreement totaled approximately $157,000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(c) Exhibits
4.8 Definitive Form of 1% Convertible Debentures due August 14, 2004
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GENERAL KINETICS INCORPORATED
By: /s/ Larry M. Heimendinger
----------------------------
Larry M. Heimendinger,
Chairman of the Board
(Principal Executive Officer)
Date: September 28, 2001
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