UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from
_______________________ to _____________________________ Commission
file number: 001-16123
NEWTEK CAPITAL, INC.
New York 11-3504638
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
100 Quentin Roosevelt Boulevard Suite 408 Garden City NY 11530
-------------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 390-2260
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Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, par value $0.02 per share
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(Title of class)
Securities Registered Pursuant to Section 12(g) of the Act:
None
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, 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
or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year:
$23,800,186
The aggregate market value of the voting stock held by non-affiliates
of the registrant, computed by reference to the price at which the common equity
was sold on March 18, 2002, was approximately $16,362,558.
As of April 30, 2002 there were 24,698,542 shares issued and
outstanding of the registrant's Common Stock, par value $0.02 per share.
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PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth each director, including the named
current executive officers, such person's name, age, the year such person first
became a director and the number of shares and percentage of Common Stock
beneficially owned.
ELECTED BENEFICIALLY PERCENT
NAME AGE (1) DIRECTOR OWNED (2) OF CLASS (2)
---- ------- --------- -------------------- ------------
John Cox 65 2000 55,000 (3) *
Jeffrey G. Rubin 34 1999 5,705,117 (4) 23.10%
Steven A. Shenfeld 42 2000 55,000(3) *
Jeffrey M. Schottenstein 61 2001 50,000 (3) *
Barry Sloane 42 1999 5,719,118 (4) 23.16%
Brian A. Wasserman 36 1999 5,696,917 (3)(4) 23.07%
All Executive Officers and
Directors as a Group (6 persons)............. 17,271,152 69.95%
* Less than 1 percent.
(1) At December 31, 2001.
(2) At April 30, 2002. For purposes of this table and the table under "Security
Ownership of Certain Beneficial Owners," in accordance with Rule 13d-3 under the
Exchange Act, a person is considered to "beneficially own" any shares of Common
Stock (a) over which he has or shares voting or investment power, or (b) as to
which he has the right to acquire beneficial ownership at any time within 60
days of April 30, 2002. As used herein, "voting power" is the power to vote or
direct the vote of shares, and "investment power" is the power to dispose or
direct the disposition of shares. Includes options to purchase Common Stock
which are exercisable within 60 days of April 30, 2002. See "-- Directors'
Compensation - 2000 Stock Incentive and Deferred Compensation Plan."
(3) Represents or includes options to purchase shares exercisable within 60 days
of April 30, 2002.
(4) Includes, respectively, 915,418, 914,218, 924,318 shares held by irrevocable
trusts for the minor children or other family members of Messrs. Rubin, Sloane
and Wasserman, as to which each person disclaims beneficial ownership.
Listed below is certain information about the principal occupations of
each director and executive officer. Unless otherwise noted, all such persons
have held these positions for at least five years.
John Cox Mr. Cox was Associate Administrator for Financial Assistance
at the Small Business Administration. In this capacity, Mr. Cox was the Agency's
senior management official in charge of all SBA Business Loans nationwide. Mr.
Cox was responsible for all policy development and implementation, licensing of
lenders that participated in SBA lending, all lending activity amounting to
approximately $10 billion per year and collection activity for a portfolio of
approximately $33 billion. Mr. Cox was the senior agency program official for
the agency's securitization program and was responsible for oversight of finance
programs including the review of all lenders, and SBA field offices. Mr. Cox is
presently a principal in JRC Consulting, Inc.
During his 30-year career with the SBA, Mr. Cox was instrumental in the
formation of the small business incubator industry and was awarded the Founders
Award in 1998 by the National Business Incubation Association. Mr. Cox was also
the recipient of several SBA agency awards including two Presidential Awards for
Excellence in Government Service, one presented by President Bush and the other
by President Clinton.
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Mr. Cox obtained an associate degree in accounting and finance from
Pierce College of Accounting and Finance. Mr. Cox is a graduate of the National
School of Commercial Lending, University of Oklahoma and the Graduate School of
Commercial Lending at the University of Oklahoma.
Jeffrey G. Rubin Mr. Rubin is currently an executive officer of each of
the eight Company-sponsored capcos. He has also since January 1998 been an
executive officer of The Whitestone Group, LLC. In June 1994, Mr. Rubin founded,
financed and participated in the day-to-day management of Optical Dynamics
Corporation, formally known as Fastcast Corporation, an early stage technology
company. Mr. Rubin also served as an officer of the company and a member of the
board of directors until December 1997. From January 1992 through January 1998,
Mr. Rubin served as a private venture capitalist From September 1989 through
January 1994, Mr. Rubin served as Vice President of American European
Corporation, an import/export company, and participated in management in various
capacities.
Steven A. Shenfeld Mr. Shenfeld has been a general partner and senior
managing director of Amroc Investments LLC since December 1999. Since December
1999, Mr. Shenfeld has also been a general partner of Avenue Capital Management,
LLC, a Texas Pacific Group affiliate. Mr. Shenfeld has been in the investment
banking and asset management business for 18 years. From April 1996 through
October 1999, Mr. Shenfeld worked for BancBoston Robertson Stephens where he was
on the management committee and ran the Debt Capital Markets. Mr. Shenfeld was
also a Board Member of BancBoston's Section 20 broker dealer. Mr. Shenfeld has
extensive experience in capital markets and investment banking and has managed
investment businesses including high yield securities, leveraged finance,
private placements, asset securitization and investment grade corporates. From
April 1991 through March 1996, Mr. Shenfeld was Head of Sales and Trading in
Global Finance at Bankers Trust Securities. Previously, Mr. Shenfeld worked for
Donaldson, Lufkin, and Jenrette and Salomon Brothers.
Mr. Shenfeld is involved in many charitable organizations and has
served on the boards of various organizations, including Seeds of Peace, New
Leadership United Jewish Appeal, and The Leukemia Society of New York. Mr.
Shenfeld has a MBA in finance from the University of Michigan and a BA in
economics from Tufts University.
Jeffrey M. Schottenstein For the past 30 years, Mr. Schottenstein has
specialized in the investment and restructuring of diverse companies. He has
served as a director of Schottenstein Investment, a diversified investment
holding company with $650 million in assets, Vice President of Schottenstein
Store's Value City Stores Division (NYSE: VCD) and Chief Executive Officer of
Schottenstein Realty Company, which specializes in the investment and
restructuring of companies. Mr. Schottenstein has been involved in the
capitalization and restructuring of numerous retail enterprises, including
Weiboldts' Department Stores, Chicago, IL, Strauss Auto Parts, New York, NY,
Valley Fair Discount Stores, New Jersey, Steinbach Stores and others. Along with
his investors, Mr. Schottenstein acquired Bell Supply Company, a retail oil and
gas equipment supply company based in Kilgore, TX, and Omni Exploration Company,
at the time the first successful Chapter 11 reorganization of an oil and gas
service company in the United States.
Barry Sloane Mr. Sloane has been an executive officer of each of the
eight Company-sponsored capcos, since their initial formation in January 1998.
He has been since January 1998 an executive officer of The Whitestone Group,
LLC. He has been since January 1995 the President of the Sloane Organization,
LLC, an investment banking, consulting and advisory firm based in New York City.
From September 1993 through July 1995, Mr. Sloane was a Managing
Director of Smith Barney, Inc. While there, he directed the Commercial and
Residential Real Estate Securitization Unit and, prior to that, he was national
sales manager for institutional mortgage and asset backed securities sales. From
April 1991 through September 1993, he was founder and President of Aegis Capital
Markets, a consumer loan origination and securitization business which was
eventually taken public with the name of "Aegis Consumer Funding." From October
1988 through March 1991, Mr. Sloane was Senior Vice President of Donaldson,
Lufkin and Jenrette, where he was responsible for directing sales of
mortgage-backed securities. From August 1982 to September 1988 Mr. Sloane was a
senior mortgage security sales person and trader for Bear Stearns, L.F.
Rothschild, E.F. Hutton and Paine Webber.
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Brian A. Wasserman Mr. Wasserman is currently Chief Executive Officer
of each of the eight Company-sponsored capcos. He has since December 1997 been
an executive officer of The Whitestone Group, LLC.
From December 1997 until December 1999, Mr. Wasserman was the general
partner of two private venture capital limited partnerships with very diverse
public and private investments. The partnerships had in excess of $30,000,000 in
partners' capital and investment holdings. From April 1992 through December
1997, Mr. Wasserman acted as an investment consultant/analyst for these
partnerships. From December 1997 until December 1999, Mr. Wasserman was also an
investment consultant/analyst for two other private venture capital partnerships
with very diverse public and private investments. These partnerships had in
excess of $20,000,000 of partners' capital and investment holdings.
From March 1996 until March 2000, Mr. Wasserman founded and was the
Chief Financial Officer of First Lawrence Capital Corp., an investment banking
firm specializing in mergers and acquisitions for small to medium-sized emerging
companies. From December 1997 until November 1999, Mr. Wasserman served on the
board of directors of Heuristic Development Group (now know as Virtual
Communities Inc.), a company which engaged in the development, marketing, sale
and licensing of the Intellifit System, a computerized system which generates
personalized exercise prescriptions.
From April 1992 through September 1997, Mr. Wasserman was the Treasurer
of Engex, Inc., a closed-end mutual fund which makes early stage venture capital
investments in both public and private companies. The fund generally invests in
high technology, biotechnology and early stage pharmaceutical companies. From
April 1992 through December 1997, Mr. Wasserman acted as chief financial officer
of D.H. Blair Investment Banking Corp., a New York Stock Exchange and NASD
member firm, which is an investment banking and merchant banking firm which
specializes in public offerings and private placements of early stage and
emerging new companies. From September 1987 through April 1992, Mr. Wasserman
was an audit/tax manager and a staff investment analyst for
PricewaterhouseCoopers LLP. Mr. Wasserman is a Certified Public Accountant in
the state of New York and a member of the American Institute of Certified Public
Accountants and the New York State Society of Certified Public Accountants.
4
Item 10. EXECUTIVE COMPENSATION
Outside Director Compensation
The Company's non-employee directors each received 15,000 options for
the purchase of Common Stock for their services and are reimbursed for their
out-of-pocket expenses associated with attending board meetings. The stock
options vest ratably over three years.
Executive Compensation
The information set forth below describes the components of the total
compensation of the Company's Chief Executive Officer and its two other
executive officers for services rendered in all capacities during the years
ended December 31, 2000 and 2001.
Summary Compensation Table
Long-Term
Compensation
------------
Annual Compensation Awards
------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary(1) Bonus Options/SARs Compensation(2)
--------------------------- ---- --------- ----- ------------ ---------------
($) ($) (#) ($)
--- --- --- ---
--- --- --- ---
Barry Sloane, Chairman, CEO 2001 $250,000 -- -- $2,860
and Secretary 2000 $300,000 -- -- $2,860
Jeffrey G. Rubin 2001 $250,000 -- -- $1,380
President and CIO 2000 $300,000 -- -- $1,380
Brian A. Wasserman 2001 $250,000 -- -- $1,380
Treasurer and CFO 2000 $300,000 -- -- $1,380
(1) Prior to September 20, 2000, these individuals did not receive any salary
from the Company or the Company's subsidiaries.
(2) Represents the amount of premium paid by the Company on term life insurance
for the named executive for the periods shown. None of the named individuals
have any interest in the cash surrender value of the respective insurance
policies, nor is there any understanding or agreement whereby the individuals
are to be given any such interest.
Employment Agreements
The Company has entered into separate employment agreements with:
o Barry Sloane, as Chairman and Chief Executive Officer;
o Jeffrey G. Rubin, as President and Chief Investment Officer; and
o Brian A. Wasserman, as Treasurer and Chief Financial Officer.
Barry Sloane, as Chairman and Chief Executive Officer, is responsible
for implementing the policies adopted by the Company's board of directors.
Jeffrey G. Rubin, as President and Chief Investment Officer is responsible for
overseeing all of the Company's operations. Brian A. Wasserman, as Treasurer and
Chief Financial Officer, is responsible for overseeing the Company's financial
operations.
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Each employment agreement provides for:
o a two year term at an annual base salary of $300,000;
o an automatic one-year extension on the agreement's commencement
anniversary date, unless either party provides written notice 90
days before the expiration date;
o an annual 10% increase in base salary, the payment of which has
been waived by each officer, respectively;
o at least one annual salary review by the board of directors;
o participation in a discretionary bonus plan;
o retirement and medical plans, customary fringe benefits, vacation
and sick leave; and
o $2 million of split-dollar life insurance coverage.
Each agreement contains a noncompetition provision that requires the
employee to devote substantially his full business time and efforts to the
performance of the employee's duties under the agreement. The employee is not
prohibited, however, from:
o serving on the boards of directors of, and holding offices or
positions in, companies or organizations which, in the opinion of
the board of directors, will not present conflicts of interest
with the Company; or
o investing in any business dissimilar from the Company's or, solely
as a passive or minority investor, in any business.
The Company may terminate an employee's employment for "just cause" as
defined in the agreement, and upon the termination, no severance benefits are
available. If the Company terminates an employee without just cause, the
employee will be paid within 10 days of the termination a sum equal to 2.99
times the average annual compensation he received during the five-year period
immediately prior to the date of his termination. If the employee voluntary
terminates his employment for "good reason" as defined in the agreement, or the
employee's employment terminates during the term of the agreement due to death,
disability, or retirement after age 62, the employee will be entitled to a
continuation of his salary and benefits from the date of termination through the
remaining term of the agreement. The employee is able to voluntarily terminate
his agreement by providing 60 days' written notice to the board of directors, in
which case the employee is entitled to receive only his compensation, vested
rights, and benefits up to the date of termination.
Each employment agreement contains provisions stating that in the event
of the employee's involuntary termination of employment in connection with, or
within one year after, any change in control of the Company, the employee will
be paid within 10 days of the termination a sum equal to 2.99 times the average
annual compensation he received during the five-year period immediately prior to
the date of change in control. "Control" generally refers to the acquisition, by
any person or entity, of the ownership or power to vote more than 25% of the
Company's voting stock, or the control of the election of a majority of
directors or the exercise of a controlling influence over the Company's
management or policies.
Each employment agreement also provides for a similar lump sum payment
to be made in the event of the employee's voluntary termination of employment
within 30 days of a change in control, or within 90 days thereafter, of certain
specified events following any change in control, whether approval by the Board
of Directors or otherwise which have not been consented to in writing by the
employee including:
o requiring the employee to move his personal residence or perform
his principal executive functions more than 90 miles from the
employee's primary office;
o failing to maintain existing employee benefit plans, including
material vacation, fringe benefits, and retirement plans;
o assigning duties and responsibilities to the employee which are
other than those normally associated with his position;
o materially diminishing the employee's authority and responsibility;
and
o failing to elect or re-elect the employee to the Company's board of
directors.
Each agreement provides that within three business days of a change in
control, the Company shall fund, or cause to be funded, a trust in an amount
equal to 2.99 times the average annual compensation the employee received during
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the five-year period immediately prior to the date of change in control. These
provisions may have an anti-takeover effect by making it more expensive for a
potential acquirer to obtain control of the Company. If the Company loses a
legal dispute as to the employment agreement, the Company will reimburse the
employee's legal and other expenses.
Cash Bonus Plan
The Company has established the Newtek Capital, Inc. Cash Bonus Plan
for the purpose of providing its employees with incentive compensation in the
form of cash bonuses. All full-time employees are eligible to receive cash
bonuses under the plan. If an employee's employment is terminated for "cause" as
defined in the plan, then the employee shall be ineligible to receive a bonus,
and an employee whose employment otherwise terminates shall be eligible for a
bonus that fiscal year, prorated to the number of days the employee was employed
by the Company during its fiscal year. The Compensation Committee administers
the plan. Bonuses are paid at the discretion of the Compensation Committee or
the full Board of Directors. The aggregate amount of bonuses payable for any
fiscal year are established by the Board of Directors and are based in part on
the Company's pre-tax net profit for that fiscal year.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 30, 2002, the beneficial
ownership of Common Stock by (i) each person who is known by the Company to own
more than 5% of the outstanding shares of Common Stock. This information is
based on filings with the SEC or information furnished to the Company by such
persons.
Name and Address Amount and Nature
of Beneficial Owner (1) of Beneficial Ownership (2) Percent of Class
----------------------- --------------------------- ----------------
Jeffrey G. Rubin 4,789,699 19.39%
Barry Sloane 4,804,900 19.45%
Brian A. Wasserman 4,757,299 19.26%
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(1) Unless otherwise stated, the address of each person listed is c/o Newtek
Capital, Inc., 100 Quentin Roosevelt Blvd., Suite 408, Garden City, New York
11530.
(2) At April 30, 2002. For purposes of this table and the table under "Security
Ownership of Certain Beneficial Owners," in accordance with Rule 13d-3 under
the Exchange Act, a person is considered to "beneficially own" any shares of
Common Stock (a) over which he has or shares voting or investment power, or
(b) as to which he has the right to acquire beneficial ownership at any time
within 60 days of April 30, 2002. As used herein, "voting power" is the power to
vote or direct the vote of shares, and "investment power" is the power to
dispose or direct the disposition of shares.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than 10% stockholders
are required to furnish the
Company with copies of all such reports. Based solely on its review of
copies of such reports received by it, or written representations from certain
reporting persons that no annual report of change in beneficial ownership is
required, the Company believes that during the year ended December 31, 2001,
with the one exception noted, all such filing requirements were complied with.
Director Shenfeld failed to timely file an ownership report for the award of
options acquired, but all required reports have been filed as of the date
hereof.
Related Party Transactions
During the years ended December 31, 2001 and 2000, the Company obtained
financial consulting services from the firm of Janover Rubenroit, in the amounts
7
of $157,000 and $144,000, respectively. Two partners of Janover Rubinroit are
related to one of the Company's directors as father-in-law and brother-in-law,
and they collectively hold approximately 49 percent of the ownership of Janover
Rubinroit.
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SIGNATURES
In accordance with Section 13 of 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NEWTEK CAPITAL, INC.
Date: April 30, 2002 By: /s/ Barry Sloane
--------------------------------------
Barry Sloane
(Chairman and Chief Executive Officer)
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