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, 2002 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 14, 2002 $261,437*
(* 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 31, 2002 was 6,718,925
Documents Incorporated by Reference
-----------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Directors of the Company
Name and Positions Business Experience Director
With the Company Age During The Last Five Years since
------------------ --- -------------------------- --------
Larry M. Heimendinger 57 Mr. Heimendinger has served as the March, 1994
Chairman of the Board Chairman of 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
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 Corporation (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 has spoken at
computer industry conferences and
seminars worldwide. Mr.
Heimendinger is a member of Class
I of the Board of Directors.
Thomas M. Hacala 57 Mr. Hacala has been the President February, 1998
of Seating 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 53 Mr. Cotnoir has been an independent March, 1994
consultant, providing business and
strategic planning support and systems
engineering consulting, for a wide
range of clients since 1988. Mr.
Cotnoir also served as Vice President
for Marketing, Sales, and Service for
VideoSite Incorporated from September
1997 to July 1998. Prior to 1988,
Mr. Cotnoir worked extensively, 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.
-2-
Richard J. McConnell 42 Mr. McConnell has been the President of March, 1994
Square Systems, Corp., a research and
development firm specializing in
advanced software systems, since
1986. Mr. McConnell is also a founder
of Link2It Corporation (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.
All directors hold office until the next annual meeting of shareholders and
until their successors have been duly elected and qualified or until their
earlier death, resignation or removal.
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 60 Vice President and General Manager
Sandy B. Sewitch 45 Chief Financial Officer
Larry M. Heimendinger has served as the Chairman of the Board of Directors
since March of 1994. Also since March 1994, through his position as Chairman of
the Board, in accordance with the Amended and Restated Bylaws of the Company,
Mr. Heimendinger has been performing the duties of President and Chief Executive
Officer. He will continue to perform such duties 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 has served as the Chief Financial Officer of the Company
since April 1993, when he joined the Company.
The officers of the Company hold office at the discretion of the Board of
Directors of the Company.
There are no family relationships among the executive officers or directors
of the Company, and there is no arrangement or understanding between any
director and any other person pursuant to which such director was elected.
-3-
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 the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Company's equity securities. Officers, directors and greater than 10%
shareholders 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, 2002, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% shareholders 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, 2002. 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, and there is no
arrangement or understanding between any officer and any other person pursuant
to which such officer was selected as an officer.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------------------ ---------------------------
Name and Principal Other Annual Number All Other
Position Year Salary Bonus Compensation of Options Compensation
------------------- ---- ------ ----- ------------ ---------- ------------
Larry M. Heimendinger(1) 2002 $ 0 $ 0 $ 0 12,500 $ 0
Chairman of the Board 2001 0 0 0 12,500 0
2000 0 0 0 12,500 0
Sandy B. Sewitch(2) 2002 $108,000 $ 0 $ 4,800 0 $ 0
Chief Financial Officer 2001 108,000 10,000 4,800 0 0
2000 108,000 7,500 4,800 0 0
Richard E. Munczenski(3) 2002 $113,000 $ 42,000 $ 1,300 0 $ 0
VP and General Manager 2001 113,000 37,000 0 0 0
2000 96,500 40,000 0 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. 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 Amended and Restated Bylaws, until a new
President is elected and qualified, the Company's Chairman performs the
duties of that office.
-4-
(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 for approximately three months of fiscal 2002. Prior to March
2002, Mr. Munczenski was provided with a company leased car which was
used substantially exclusively for company business during the
remainder of fiscal 2002, fiscal 2001 and fiscal 2000.
Options and Stock Appreciation Rights
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS
DURING FISCAL YEAR 2002
Percent of Potential of Realizable Value
Total at assumed annual rate of
Number Options stock price appreciation
of Granted to for options term
Name of Executive Options Employees in Exercise Expiration -----------------------------
Officer Granted FY 2002 Price Date 5% 10%
----------------- ------- ------------ -------- ---------- ------ ------
Larry M. Heimendinger 12,500(1) 26.3%(2) $.05 6/01/12 $1,018 $1,621
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, 2003.
(2) Although, pursuant to his position as Chairman of the Board of the
Company, Mr. Heimendinger is currently performing the duties of
President and Chief Executive Officer, he is not an employee of the
Company. However, for purposes of the calculation of the percentages in
the foregoing table, his options have been included in the aggregate
total employee options granted.
Option Exercise and Holdings
FY-2002 OPTIONS EXERCISE AND FY-2002 YEAR-END VALUE TABLE
Number of Options In-the-Money Options
Number of At End-FY 2002 At End-FY 2002
Name of Executive Shares Acquired -------------- --------------
Officer on Exercise Exercisable Unexercisable Exercisable Unexercisable
------- ----------- ----------- ------------- ----------- -------------
Larry M. Heimendinger 0 142,750 139,625 0 0
Sandy B. Sewitch 0 12,500 0 0 0
Richard E. Munczenski 0 45,277 0 0 0
-5-
Pension and Long Term Incentive Plan Awards
None.
Compensation of Directors
Each non-employee director of the Company other than Mr. Heimendinger has
received a monthly retainer of $1,500 since November 1994.
Employment Contracts and Termination of Employment and Change of Control
Agreements
None.
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table sets forth certain information as of August 31, 2002
as to the security ownership of those persons known to the Company to be the
beneficial owners of more than five percent of the outstanding shares of the
Company's Common Stock and of each of the Company's directors and named
executive officers and all of the Company's directors and named executive
officers as a group:
Shares of Common Stock Percentage of Outstanding
Name Beneficially Owned (1) Common Stock
----------------------------------- -------------------------- -------------------------
Rabo Investment Management Ltd. 17,485,000 (2) 77.7% (2)
Marc E. Cotnoir 115,000 1.7
Richard J. McConnell 115,000 1.7
Thomas M. Hacala 72,500 *
Larry M. Heimendinger 142,750 2.1
Sandy B. Sewitch 4,541 *
Richard E. Munczenski 54,801 *
All Directors and Named Executive
Officers as a group (six persons) 504,592 7.5%
* Indicates less than one percent of the outstanding shares of the
Company's Common Stock
(1) Beneficial ownership as reported in the above table has been determined
in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended, and includes shares of the Company's Common Stock
which may be acquired within 60 days of August 31, 2002 through the
exercise of warrants, options,
-6-
or other convertible securities, as follows: Rabo Investment
Management Ltd., 15,770,000 shares (see footnote 2 below) Mr. Cotnoir,
115,000 shares; Mr. McConnell, 115,000 shares; Mr. Hacala, 72,500
shares; Mr. Heimendinger, 142,750 shares; Mr. Munczenski, 40,277
shares; and all directors and named executive officers as a group,
485,527 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).
(2) Based on information provided by Rabo Investment Management Ltd. (f/k/a
Gutzwiller & Partner, A.G., the "Manager") in a Schedule 13D/A filed
with the SEC on November 9, 2001. The Manager reported that it may be
deemed to be the beneficial owner of an aggregate of 1,715,000
outstanding shares of the Company's Common Stock, including (x) 242,700
shares purchased by the Manager of which the Manager is the economic
beneficial owner and holds sole voting and dispositive power and (y)
1,472,300 shares held in client accounts. The Manager also indicated
that it may be deemed to be the beneficial owner of 1% convertible
debentures of the Company having an aggregate principal amount of
$7,885,000, including (a) $585,000 which were purchased by the Manager
of which the Manager is the economic beneficial owner and holds sole
voting and dispositive power, and (b) $7,300,000 held in client
accounts managed by the Manager on behalf of various clients who hold
beneficial economic ownership thereof and of which the Manager holds
voting and dispositive power. The debentures are convertible into
15,770,000 shares of Common Stock. After such a conversion, the Manager
would be deemed to be the beneficial owner of 17,485,000 shares, which
would represent 77.7% of the Company's then outstanding Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
At May 31, 2002, the Company held approximately 5.7% of the outstanding
common stock of Link2It Corporation, a company formed by Larry Heimendinger and
Richard McConnell, both members of the Company's Board of Directors. Such equity
securities were originally received by the Company prior to 1998 in
consideration of, among other things, amounts advanced by the Company to or on
behalf of Link2It, LLC, which merged into Link2It Corporation in January 2001.
The Company accounts for its holdings of Link2It Corporation's common stock
using the cost method. The Company has assigned no value to this investment due
to its speculative nature.
In August 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 agreement, which
was negotiated at arms' length and approved by a 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. A new
factoring agreement, on similar terms, was entered into in April 2002. Interest
expense related to the factoring agreement was $30,500 in fiscal 2002.
-7-
SIGNATURE
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 27, 2002
-8-