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EX-31.2 - ZANETT INC | v183004_ex31-2.htm |
EX-31.1 - ZANETT INC | v183004_ex31-1.htm |
EX-32.2 - ZANETT INC | v183004_ex32-2.htm |
EX-32.1 - ZANETT INC | v183004_ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-K/A
(AMENDMENT
NO.1)
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
Fiscal Year Ended: December 31, 2009
OR
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from _________ to _________
Commission
File Number: 1-32589
ZANETT,
INC.
(Exact
name of registrant as specified in its Charter)
Delaware
|
56-4389547
|
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
|
Incorporation
or Organization)
|
Identification
No.)
|
635
Madison Avenue, 15th Floor, New York, NY
|
10022
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(212)583-0300
(Registrant's
telephone number, including area code)
Securities
registered under to Section 12(g) of the Act:
Common
Stock, par value $0.001
(Title of
Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or
Section 15(d) of the Act. Yes ¨ No x
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 whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes ¨ 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 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
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨ Accelerated
filer ¨ Non-accelerated
filer ¨ Smaller
reporting company x
Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act. Yes ¨ No x
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates as of June 30, 2009 was $3,752,974 based on the closing price of
the Registrant's common stock on such date of $.43 as reported by the Nasdaq
Capital Market.
There
were 8,848,016 shares of common stock outstanding as of April 29,
2010.
DOCUMENTS
INCORPORATED BY REFERENCE
We are
filing this Amendment No. 1 (this “Amendment”) to our Annual Report on Form 10−K
for the fiscal year ended December 31, 2009 (the “2009 10−K”), which was
originally filed with the Securities and Exchange Commission (the “SEC”) on
March 31, 2010 (the “Original Filing”). We are amending the 2009 10−K
to include the information required by Items 10 through 14 of Part III of Form
10−K. We had originally intended to incorporate this information by
reference from our definitive proxy statement, which we had anticipated filing
by April 30, 2010, in accordance with General Instruction G(3) to Form
10−K. Since we do not expect to file our definitive proxy statement
by April 30, 2010, we are hereby filing this Amendment to include the required
information.
Part III of the 2009 10−K is hereby
amended and restated in its entirety with Part III set forth
below. In addition, we are filing new certifications by our principal
executive officer and principal financial officer as exhibits to this Amendment
under Item 15 of Part IV hereof. This Amendment does not change our
previously reported financial statements or the other financial disclosures
contained in the Original Filing. Except for the addition of the Part
III information and the filing of the certifications, no other changes have been
made to the 2009 10−K. Except as stated herein, this Amendment does
not reflect events occurring after the filing of the 2009 10−K and no attempt
has been made in this Amendment to modify or update other disclosures as
presented in the 2009 10−K.
ZANETT,
INC.
ANNUAL
REPORT ON FORM 10-K
FOR THE
FISCAL YEAR ENDED
DECEMBER
31, 2009
TABLE OF
CONTENTS
PAGE
|
||
PART
III
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||
Item
10.
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Directors
and Corporate Governance
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3
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Item
11.
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Executive
Compensation
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7
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
9
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
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12
|
Item
14.
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Principal
Accounting Fees and Services
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12
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Item
15.
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Exhibits,
Financial Statement Schedules
|
13
|
2
PART
III
Item
10. Directors and Corporate Governance
Listed
below is biographical information for our directors.
Leonard Goldstein, 60 – Served
as director since April 2005.
Mr.
Goldstein brings over 25 years of diversified technology and financial
experience to the investment community. From 2004 to 2009, he was the
Chief Information Officer (“CIO”)responsible for all technology decisions at
Atticus Capital LP, a large long/short equity driven hedge fund based in New
York City. From 2001 to 2003, he was the Chief Information Officer of Pequot
Capital Management, a premier hedge fund and venture capital group based in
Westport, Connecticut and New York City, NY. He was responsible for
overall technology strategy, evaluation, implementation and
operations.
Prior to
Pequot, he served as the CIO of IntraLinks, responsible for all aspects of
technology including: Research & Development, ASP Hosting
Services, Operations, Information Security, Infrastructure and CRM/ERP
systems. As a founding partner, he was instrumental in growing
IntraLinks to a major player in the area of digital
collaboration. Prior to IntraLinks, he was a Vice President in the
Investment Research Department at Goldman, Sachs & Company; responsible for
the development, implementation and operation of a large scale Internet based
research delivery system known as the ResearchXpresssm.
Mr.
Goldstein has his doctorate and masters degrees in engineering from Brooklyn
Polytechnic Institute and New York University. In considering Mr.
Goldstein as a director of the Company, the Board of Directors considered his
experience as an executive in various technology fields, his background in the
investment community, and his sophisticated knowledge of financial
matters.
Claudio M. Guazzoni, 47 -
Served as director since October 2000.
Mr.
Guazzoni is Chairman & Chief Executive Officer of Zanett, Inc., which he
co-founded in 2000. He served as Zanett’s President from 2000 to 2006, and was
appointed Chief Executive Officer in 2006. Prior to co-founding
Zanett, he co-founded The Zanett Securities Corporation in 1993, a merchant bank
which was involved with numerous startup and early stage investments in
technology and life sciences companies. At The Zanett Securities Corporation,
Mr. Guazzoni was instrumental in the success and initial public offering of
several young technology companies. In considering Mr. Guazzoni as a director
and Chairman, the Board of Directors considered the financial and deal
structuring experience Mr. Guazzoni gained from his previous work as an
investment banker and recent past experience as a fund manager as well as the
specific knowledge of the Company and the industry he has developed as a
co-founder and executive officer over the past decade.
L. Scott Perry, 62 - Served as
director since March 2001.
Mr. Perry
is currently the President and a member of the board of directors of GPXS
Holding Ltd. (“GPXS”), an Amsterdam-based wireless applications and services
company which develops software and hosted services for wireless devices and
applications. He also heads the software group of GPXS and serves on
the board of directors of GPXS Services AG, a subsidiary of GPXS, as well as on
the advisory board of Mobile Tribe, a mobile social network technology company
and the boards of directors, audit and compensation committees of a number of
other companies and nonprofit organizations. Mr. Perry is an advisor to an early
stage mobile payments company in formation and has served as chairman of INEA, a
corporate performance management software company, and chairman of Smartserv, a
public wireless applications firm.
3
Mr. Perry
is an expert on the evolving structure of the service provider industry from
communication services to managed services to software as services business
models. Before working for GPXS, Mr. Perry co-founded Cobblers Hill
Group, a consultancy firm providing strategy, business development and
operational process leadership, analysis and recommendations to early stage
companies and larger companies. He has also worked as AT&T Vice President
and corporate officer, with leadership roles in strategy/business development,
new services marketing and sales and for 15 years at IBM as a senior executive
with assignments in general management, marketing, and sales
management.
Mr. Perry
holds a bachelor’s degree in Civil Engineering from Cornell University and a
Masters in Management from Stanford University. He was a Sloan Fellow at the
Stanford University Graduate School of Business. The Board of
Directors considered Mr. Perry’s experience in various technology fields, his
knowledge of the Company based on service as a director for nine years, and his
experience advising small and early stage companies in nominating him as a
director of the Company.
Charles T. Johnstone, 58 –
Served as director since May 2008.
Mr.
Johnstone brings over 30 years of advertising and marketing experience to the
investment community. From 1994 to 2000, he was the President and
Chief Executive Officer of CTJ Enterprises, a corporate gift
company.
Prior to
CTJ, he served as Executive Vice-President at Showtown
Publications. Prior to Showtown he was the New York advertising
director for Colonial Homes Magazine at Hearst Corporation. Prior to Hearst he
was an account executive at BBDO Advertising. Mr. Johnstone studied at Babson
College.
Mr.
Johnstone is currently retired and living in New York City. The Board
of Directors considered Mr. Johnstone’s experience as an executive of companies
in various fields and his management and leadership skills in nominating him as
a director of the Company.
INFORMATION
ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF
DIRECTORS
All
members of the Board with the exception of Mr. Guazzoni are independent as
defined by the Nasdaq listing standards. Mr. Guazzoni is the Company’s Chief
Executive Officer and Chairman of the Board of Directors. We believe
combining the roles of Chief Executive Officer and Chairman in Mr. Guazzoni
provides an effective bridge between management and the Board of Directors,
which facilitates the efficient execution by management of the strategic goals
developed by the Board of Directors and the exchange of information between the
Board of Directors and the Company’s employees. Because every
Director except Mr. Guazzoni is independent, the Audit Committee is composed
solely of independent directors. Although the Board has not
established separate compensation and nominating committees, compensation and
nomination decisions are made by the independent directors (as defined by the
Nasdaq listing standards), and the Board does not believe it is necessary to
establish the position of lead independent director. If the positions
of Chairman and Chief Executive Officer were separated at this time, we believe
the Company’s leadership structure could be less efficient and effective without
providing any additional benefit that is not already provided by the existing
corporate governance structure.
4
Our Board
of Directors ultimately oversees the Company’s risk
management. However, our management is primarily responsible for the
day-to-day-risk management process. Our Board of Directors receives
updates regarding specific risks facing the Company from our Chief Executive
Officer, who is also Chairman, and works with management, typically through the
Chief Executive Officer, to manage risks as they arise. Our Audit
Committee also monitors risks relating to accounting matters, financial
reporting and legal and regulatory compliance, and advises the Board of
Directors of any risks that arise. We believe this approach
effectively addresses risks facing the Company.
AUDIT
COMMITTEE
In March
2001, the Board of Directors established an Audit Committee, which is composed
of three non-employee independent directors. The Audit Committee,
which has adopted a formal charter that can be found on the Company’s website at
www.zanett.com, assists the Board of Directors in fulfilling its oversight
responsibilities relating to the quality and integrity of the Company's
accounting, auditing, and reporting practices. The members of the Audit
Committee for 2009 were Messrs. Church, Goldstein and Perry. Mr.
Church declined to stand for re-election as a director at the 2010 annual
meeting. The Board has decided that Mr. Johnstone will fill the
absence on the Audit Committee created by Mr. Church’s departure, effective
immediately following the 2010 annual meeting. The Audit Committee
conducted a meeting on March 29, 2010 to review and discuss the 2009
consolidated financial statements with management and the Company's independent
auditors and to review and approve the Company's Annual Report on Form 10-K
prior to the Company filing it with the Securities and Exchange Commission (the
"SEC"). The Audit Committee also met quarterly with management and
its independent auditors during the last three quarters of 2009 to review the
Company's quarterly reports on Form 10-Q prior to their
issuance. During 2010, the Audit Committee will continue to meet
quarterly to review the Company's financial statements and SEC
reports.
All
members of the Audit Committee are independent committee members as defined by
the Nasdaq listing standards and pursuant to Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act. For 2009, the Board of Directors determined that Mr.
Church is a "financial expert," as defined in Item 407(d)(5) of Regulation S-K
promulgated by the SEC. The Board of Directors has determined that
Mr. Goldstein meets such criteria as well, and will serve as the Audit Committee
financial expert upon Mr. Church’s departure following the 2010 annual
meeting.
COMPENSATION
COMMITTEE
The Board
of Directors has not established a separate committee to perform the functions
traditionally associated with a compensation committee and does not have any
compensation committee charter. We believe that the complete input of
the Board of Directors is appropriate in setting executive compensation, and the
independent members of the Board of Directors (as defined by the Nasdaq listing
standards) set the compensation of our executive officers. Mr.
Guazzoni is not present when the Board of Directors makes decisions regarding
his compensation. The Board of Directors has reviewed our
compensation polices and practices for executive officers as well as employees
and we do not believe our policies and practices create risks that are
reasonably likely to have a material adverse effect on the Company.
5
MEETINGS
OF THE BOARD OF DIRECTORS
During
2009, the Board of Directors held four meetings. During 2009, each director
attended at least 75% of the meetings of the Board and, if applicable, the Audit
Committee.
DIRECTOR
NOMINATIONS
The Board
of Directors has not established a separate committee to perform the functions
traditionally associated with a nominating committee and does not have any
nominating committee charter. We believe that the complete input of the Board is
appropriate in selecting potential nominees to the Board, and therefore have not
established a separate nominating committee. Such functions are currently
performed by the independent members of the Board of Directors (as defined by
the Nasdaq listing standards), acting as a whole. While we have not established
a formal policy relating to diversity, the Board of Directors seeks to create a
Board of Directors that is strong in its collective diversity of skills and
experience with respect to finance, leadership, business operations and industry
knowledge. The Board of Directors considers on an annual basis the current
composition of the Board of Directors in light of characteristics of
independence, age, skills, experience and availability of service to the Company
of its members and of anticipated needs. When the Board of Directors reviews a
potential new candidate, the Board of Directors looks specifically at the
candidate’s qualifications in light of the needs of the Board of Directors at a
given point in time. In nominating director candidates, the Board of Directors
strives to endorse directors that exhibit high standards of ethics, integrity,
commitment and accountability. In addition, all nominations attempt to ensure
that the Board of Directors shall encompass a range of talent, skills and
expertise sufficient to promote sound guidance with respect to our operations
and activities.
Any
shareholder who intends to present a proposal for consideration at Zanett's next
annual meeting of shareholders intended to occur on or about May 19, 2011 must
submit such shareholder's proposal in writing to Zanett at its executive offices
on or before March 19, 2011 in order to have Zanett consider the inclusion of
such proposal in Zanett's Proxy Statement and form of proxy relating to such
annual meeting. Reference is made to Rule 14a-8 under the Exchange Act for
information concerning the content and form of such proposal and the manner in
which such proposal must be made. A notice of a shareholder proposal submitted
outside the processes of Rule 14a-8 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is considered untimely after March 21, 2011 and
Zanett's proxy for its 2011 annual meeting of shareholders may confer
discretionary authority to vote on such matter without any discussion of such
matter in the proxy statement for such meeting. Nominations
for election to the Board of Directors at Zanett's next annual meeting may be
made only in writing by a shareholder entitled to vote at such annual meeting
and must be addressed to the Secretary, Zanett, Inc., 635 Madison Avenue, 15th
Floor, New York, NY 10022 who will forward such information to the Board of
Directors. Nominations must be received by the Secretary on or before December
31, 2010 and must be accompanied by the written consent of the nominee.
Nominations should also be accompanied by a description of the nominee's
business or professional background and otherwise contain the information
required by Schedule 14A of the Exchange Act.
6
CODE OF
BUSINESS CONDUCT AND ETHICS
Our Board
of Directors has adopted a Code of Ethics applicable to our Chief Executive
Officer, Chief Financial Officer, executive officers, and employees. A current
copy of the Code of Ethics is posted on our website, http://www.zanett.com,
under the heading “Investors.” Any future amendments to or waivers from the Code
of Ethics that apply to our principal executive officer, principal financial
officer, principal accounting officer or controller or persons performing
similar functions, and relate to any element of the code of ethics definition
enumerated in paragraph (b) of Item 406 of Regulation S-K of the SEC, will be
posted on our website.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the timely filing of reports of ownership and
changes in ownership with the Securities and Exchange Commission by Zanett’s
directors, certain of its officers and persons who own more than ten percent
(10%) of Zanett’s Common Stock. Based solely on its review of Forms 3
and 4 and amendments thereto filed during its most recent fiscal year and Forms
5 and amendments there to furnished to it with respect to its most recently
completed fiscal year, as well as any written representation received by the
Company from the reporting person regarding no Form 5 filing being required, the
Company believes that filings under Section 16(a) for the fiscal year 2009 were
timely made.
Item 11.
Executive Compensation
EXECUTIVE
COMPENSATION
During
the fiscal years ended December 31, 2009 and December 31, 2008, executive
officers received compensation for services provided to the Company, as detailed
in the table below.
Summary Compensation
Table
Name and Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Total
|
||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(j)
|
||||||||||||||||
Claudio
Guazzoni
|
||||||||||||||||||||||
Chief
Executive Officer
|
2009
|
260,530 | 195,000 | 102,667 | - | 558,197 | ||||||||||||||||
and
Director
|
2008
|
260,562 | 350,000 | 9,333 | - | 619,895 | ||||||||||||||||
Dennis
Harkins
|
||||||||||||||||||||||
President
and Chief
|
2009
|
200,000 | 175,000 | 64,167 | - | 439,167 | ||||||||||||||||
Financial
Officer
|
2008
|
200,126 | 250,000 | 5,833 | - | 455,959 | ||||||||||||||||
Chuck
Deskins
|
||||||||||||||||||||||
President
ZCS
|
2009
|
172,000 | 162,274 | 44,917 | - | 379,191 | ||||||||||||||||
2008
|
175,000 | 96,235 | 4,083 | - | 275,318 |
Employment
Agreements
The
Company has an employment arrangement with the Chief Executive Officer of the
Company, Mr. Guazzoni, providing for successive one-year terms until cancelled
by either the Company or Mr. Guazzoni. Compensation will be
determined by the officer and the Company on an annual basis and may consist of
a combination of cash compensation and grants of incentive stock options and/or
restricted stock awards. For the years ended December 31, 2003, 2004 and 2005,
the Company agreed to a base annual compensation of $110,000. For the
years ended December 31, 2007 and 2006, Mr. Guazzoni took a salary of $
10,530. For the years ended December 31, 2008 and 2009, Mr. Guazzoni
took a salary of $260,562 and $260,530, respectively.
7
The
Company does not have employment agreements with any of its other executive
officers.
Outstanding Equity Awards at
Fiscal Year-End
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
|
Number
of Securities
Underlying
Unexercised
Options
|
Option
Exercise
Price
|
Option
Expiration
|
Number
of
Shares
or
Units
of
Stock
that
Have
Not
|
Market
Value
of
Shares or
Units
of Stock
that
Have Not
|
|||||||||||||||
Name
|
Exercisable
|
(#)
Unexercisable
|
($)
|
Date
|
Vested
|
Vested
|
|||||||||||||||
(a)
|
(b)
|
(c)
|
(e)
|
(f)
|
(#)
|
($)
|
|||||||||||||||
Claudio
Guazzoni
|
|||||||||||||||||||||
Chief
Executive Officer
|
- | 62,500 | (1) | 5.00 |
10/17/2011
|
160,000 | 86,400 | ||||||||||||||
and
Director
|
- | *25,000 | (1) | 5.36 |
11/6/2011
|
||||||||||||||||
Dennis
Harkins
|
|||||||||||||||||||||
President
and Chief
|
|||||||||||||||||||||
Financial
Officer
|
- | 62,500 | (1) | 5.00 |
10/17/2011
|
100,000 | 54,000 | ||||||||||||||
Chuck
Deskins
|
|||||||||||||||||||||
President
ZCS
|
- | 25,000 | (1) | 5.00 |
10/17/2011
|
70,000 | 37,800 |
*
These
options were granted to Mr. Guazzoni for his service as chairman of the
Company’s Board of Directors.
(1)
Options
vest and become immediately exercisable upon the Company reaching $250,000,000
in revenue.
Stock Options and Stock
Awards Granted During Fiscal Year Ended December 31, 2009
There
were no options or shares granted in 2009.
Director
Compensation
Zanett
did not pay its directors any compensation, in cash or equity awards or
otherwise, in 2009 and therefore the Director Compensation table has not been
included herein.
Zanett
does not pay cash fees or retainers to any of our directors. The Board of
Directors has established a practice of granting each new non-employee director
options under the Zanett, Inc. Incentive Stock Plan to purchase up to 25,000
shares of the Company's common stock with an exercise price equal to market
price at the time of the grant; however, it did not grant options to Mr.
Johnstone upon his election as a director in 2008. The options
granted according to this practice are exercisable immediately but the
underlying shares are initially unvested. The vesting for the shares underlying
these initial option grants is as follows:
Mr.
Church’s shares vested one third each on September 1, 2005, September 1, 2006
and September 1, 2007. Mr. Goldstein’s shares vested one third each
on April 21, 2006, April 21, 2007 and April 21, 2008. Mr. Perry’s
shares vested one-third each on August 1, 2002, August 1, 2003 and August 1,
2004. Any shares obtained through the exercise of these options are
subject to a repurchase feature until.
Zanett
also may grant, from time to time, additional options to its Board of Directors
as compensation for their services, as determined by the entire Board of
Directors. On November 6, 2006 all directors were issued options to purchase
25,000 shares of the Company’s stock with an exercise price of $5.36 per
share. These shares and options will vest and become immediately
exercisable upon the Company reaching $250,000,000 in revenue. Under FASB ASC
TOPIC 718 the Company has incurred no expense for these options because the
occurrence of the vesting event is not probable. As the occurrence of this event
becomes probable an expense will be recorded.
8
On
November 11, 2008, Zanett granted an aggregate of 220,000 restricted shares of
common stock to Mr. Guazzoni (160,000 shares), Mr. Goldstein (130,000 shares)
and Mr. Johnstone (30,000), and options to purchase an aggregate of 120,000
shares of common stock to Mr. Church (75,000 shares) and Mr. Perry (45,000
shares). The restricted stock vested on November 11,
2009. The options have an exercise price of $0.70 per share, and the
shares and options also vested and become immediately exercisable on November
11, 2009.
As
of April 30, 2010 none of the directors have exercised any of their
options.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The
following table shows, as of April 30, 2010, the Common Stock owned beneficially
by (i) each director of the Company, (ii) each Executive Officer, (iii) all
directors and Executive Officers as a group, and (iv) each person known by the
Company to be the “beneficial owner” of more than five percent (5%) of such
Common Stock. Each of the shareholders listed has sole voting and investment
power with respect to the shares indicated as beneficially owned, unless
otherwise indicated.
Beneficial
ownership is determined in accordance with the rules of the SEC. Generally, a
person has beneficial ownership of shares if the individual has the power to
vote and/or dispose of shares. This power can be sole or shared, and direct or
indirect. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of Common Stock that could be
issued upon the exercise of outstanding options and warrants held by that person
that are currently exercisable or exercisable within 60 days of the date hereof
are considered outstanding. These shares, however, are not considered
outstanding when computing the percentage ownership of each other person. Except
as indicated in the footnotes to this table and pursuant to applicable community
property laws, each stockholder named in the table has sole voting and
dispositive power with respect to the shares set forth opposite such
stockholder’s name.
9
Beneficial Ownership of Common Stock
|
||||||||
Name, Addresses and
Title of Beneficial
Owner (1)
|
Number Shares of
Beneficially Owned
(2)(11)
|
Percentage
of Class (2)
|
||||||
Claudio
M. Guazzoni
Chief
Executive Officer
and
Director
|
2,109,204 | (3) | 24.1 | % | ||||
William
H. Church
|
25,000 | (4) | - | |||||
Leonard
G. Goldstein
Director
|
55,000 | (5) | - | |||||
L.
Scott Perry
Director
|
25,000 | (6) | - | |||||
Charles
Johnstone
Director
|
30,000 | (7) | - | |||||
Dennis
Harkins
President/CFO
Zanett
|
100,000 | (8) | 1.1 | % | ||||
Chuck
Deskins
President,
Zanett Commercial Services
|
70,000 | (9) | - | |||||
David
Rincon
c/o
Zanett
4080
McGinnis Ferry Rd
Building
200, Ste 120
Alpharetta,
GA 30005
|
663,200 | 7.6 | % | |||||
Bruno
Guazzoni
|
2,430,711 | 27.8 | % | |||||
All
Directors and
Executive
Officers
as
a Group (7 persons)
|
2,489,204 | (10) | 28.5 | % |
- Less
than 1%
(1) Except
as noted in the table above, the address for all persons listed is c/o Zanett,
Inc., 635 Madison Avenue, New York, NY 10022.
(2) The
percentage of class based upon 8,738,833 shares of common stock issued and
outstanding (or deemed to be issued and outstanding) as of the Record Date,
calculated in accordance with Rule 13d-3 of the Exchange Act. The
number of shares beneficially owned also includes shares owned by (i) a spouse,
minor children or by relatives sharing the same home, (ii) entities owned or
controlled by the named person and (iii) other persons if the named person has
the right to acquire such shares within 60 days by the exercise of any right or
option. Unless otherwise noted, shares are owned of record and
beneficially by the named person.
(3) On
November 11, 2008 Mr. Guazzoni was issued 160,000 restricted shares of the
Company’s stock. These shares vested on November 11, 2009, and are included in
the table. On November 6, 2006 Mr. Guazzoni was issued options to
purchase 62,500 shares of the Company’s stock with an exercise price of $5.00
per share. These shares and options will vest and become immediately
exercisable upon the Company reaching $250,000,000 in revenue. On November 6,
2006 Mr. Guazzoni was issued options to purchase 25,000 shares of the Company’s
stock with an exercise price of $5.36 per share. The foregoing options are not
included in the number in this table.
10
(4) On
November 11, 2008 Mr. Church was issued options to purchase 75,000 shares of the
Company’s stock with an exercise price of $0.70 per share. These shares and
options vested on November 11, 2009, and are included in the
table. On November 6, 2006 Mr. Church was issued options to purchase
25,000 shares of the Company’s stock with an exercise price of $5.36 per
share. These shares and options will vest and become immediately
exercisable upon the Company reaching $250,000,000 in revenue. The foregoing
options are not included in this number. On August 25, 2004, Mr. Church was
issued options to purchase 25,000 shares of the Company’s Common Stock with an
exercise price of $15.28 per share. These options, included in the
table, were exercisable immediately but the underlying shares became fully
vested over time. Pursuant to the terms of his option grants and
because Mr. Church is not standing for re-election at the 2010 annual meeting,
Mr. Church’s unvested options terminate immediately following the 2010 annual
meeting and Mr. Church’s vested options terminate 90 days following the 2010
annual meeting.
(5) On
November 11, 2008 Mr. Goldstein was issued 30,000 shares of restricted Common
Stock of the Company. These shares vested on November 11, 2009, and
are included in the table. On November 6, 2006 Mr. Goldstein was
issued options to purchase 25,000 shares of the Company’s stock with an exercise
price of $5.36 per share. These shares and options will vest and
become immediately exercisable upon the Company reaching $250,000,000 in
revenue. The foregoing options are not included in this number. On April 21,
2005, Mr. Goldstein was issued options to purchase 25,000 shares of the
Company’s Common Stock with an exercise price of $13.20 per
share. These options, included in the table, were exercisable
immediately but the underlying shares became fully vested over
time. Any shares obtained through the exercise of these options are
subject to a lock-up agreement that precludes the sale of the shares until April
21, 2010, except as otherwise provided in such agreement.
(6) On
November 11, 2008 Mr. Perry was issued options to purchase 45,000 shares of the
Company’s stock with an exercise price of $0.70 per share. These shares and
options vested on November 11, 2009. On November 6, 2006 Mr. Perry
was issued options to purchase 25,000 shares of the Company’s stock with an
exercise price of $5.36 per share. These shares and options will vest
and become immediately exercisable upon the Company reaching $250,000,000 in
revenue. The foregoing options are not included in this number. On November 17,
2001, Mr. Perry was issued options to purchase 25,000 shares of the Company’s
common stock with an exercise price of $8.00 per share. These
options, included in the table, were exercisable immediately but the underlying
shares became fully vested over time.
(7) On
November 11, 2008 Mr. Johnstone was issued 30,000 restricted shares of the
Company’s Common Stock. These shares vested on November 11,
2009.
(8) On
November 11, 2008 Mr. Harkins was issued 100,000 restricted shares of the
Company’s stock. These shares vested on November 11, 2009, and are included in
the table. On November 6, 2006 Mr. Harkins was issued options to purchase
62,500 shares of the Company’s stock with an exercise price of $5.00 per
share. These shares and options will vest and become immediately
exercisable upon the Company reaching $250,000,000 in revenue. The
foregoing options are not included in this table.
(9) On
November 11, 2008 Mr. Deskins was issued 70,000 restricted shares of the
Company’s stock. These shares vested on November 11, 2009, and are included in
the table. On November 6, 2006 Mr. Deskins was issued options to
purchase 25,000 shares of the Company’s stock with an exercise price of $5.00
per share. These shares and options will vest and become immediately
exercisable upon the Company reaching $250,000,000 in revenue. The
foregoing options are not included in this table.
(10) Includes
75,000 vested shares of the Company’s Common Stock issuable upon the exercise of
options.
11
(11) The
Company issued a convertible note in the principal amount of $7,131,983 to
Rockport Investments Ltd., which is convertible into shares of the Company’s
common stock. Assuming immediate conversion at the initial conversion
price ($1.99) with no interest accrued and no cash repayment, the convertible
note could be converted into 3,583,911 shares of common
stock. Assuming repayment of all principal and interest under the
convertible note in common stock at maturity at the threshold conversion price
($0.10), the maximum number of shares that could be issued would be
99,699,463. Rockport Investment Ltd. may, at its option, reset the
conversion price once per calendar year to the greater of (a) the average of the
closing sales price of the Common Stock during the preceding 20 consecutive
trading day period and (b) $0.10, and the conversion price is also subject to
adjustment in the event of dilutive issuances by the Company or the Company’s
issuance of options, warrants or other rights to purchase Common Stock or
convertible securities (subject to certain exceptions). Therefore,
the number of shares over which Rockport Investments Ltd. has beneficial
ownership are not assumed as outstanding for purposes of calculating the
beneficial ownership in this table and is subject to the conversion mechanisms
exercised under the convertible note and the closing sales price of the
Company’s common stock, among other things, and cannot be definitively
determined as of the date of filing of this Form 10-K/A.
Item 13.
Certain Relationships, Related Transactions and Director
Independence
RELATED
PARTY TRANSACTIONS
In 2009
and 2008, the Company was party to a sublease arrangement for its New York City
office with an entity related to the CEO of the Company. Rent
income of $66,000 was recognized in the year ended December 31, 2008 and
reserved against general and administrative expenses in 2009.
As a
policy, all transactions involving the Company and any related parties are
reviewed by the President, CFO and CEO for approval. Additionally, all related
party transactions are reviewed at each regular quarterly meeting of the Board
of Directors as we review with, and highlight for, the Board of Directors any
changes occurring during the quarter.
Information
relating to the independence of our directors is set forth in this Form 10-K/A
under the heading “Information about the Board of Directors and Committees of
the Board of Directors.”
Item 14.
Principal Accountant Fees and Services
AUDIT
RELATED MATTERS AND INFORMATION REGARDING THE COMPANY’S REGISTERED PUBLIC
ACCOUNTING FIRM
Audit
Fees
The
aggregate fees for professional services rendered by AP&M in connection with
its audit of Zanett's annual consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2009, reviews of the
consolidated interim financial statements included in our Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30,
2009 and reviews of other filings or registration statements under the
Securities Act of 1933 and Securities Exchange Act of 1934, as amended, were
$207,000.
12
The
aggregate fees for professional services rendered by AP&M in connection with
its audit of Zanett's annual consolidated financial statements included in Form
10-K for the year ended December 31, 2008, reviews of the consolidated interim
financial statements included in our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2008, June 30, 2008 and September 30, 2008 and reviews
of other filings or registration statements under the Securities Act of 1933 and
Securities Exchange Act of 1934, as amended were $240,000.
All Other
Fees
There
were no fees billed (including audit-related fees or tax fees) by AP&M for
the years ended December 31, 2009 and 2008 for professional services rendered
other than those described above under “Audit Fees”.
Pre-Approval
of Services
The Audit
Committee historically has separately pre-approved the audit, audit-related, tax
and other services to be provided to the Company by the Company’s independent
auditor.
Item 15.
Exhibits, Financial Statement Schedules
31.1
|
Certification
by the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a).
|
31.2
|
Certification
by the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a).
|
32.1
|
Certification
by the Chief Executive Officer pursuant to Section
1350.
|
32.2
|
Certification
by the Chief Financial Officer pursuant to Section
1350.
|
13
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) or 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.
ZANETT,
INC.
|
|
BY:
/s/ Claudio M. Guazzoni
|
|
Claudio
M. Guazzoni
|
|
Chief
Executive Officer
|
|
(Principal
Executive Officer)
|
|
Date:
March 31, 2010
|
14