SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Five Star Products, Inc.
(Name of Issuer)
Common Stock, par value $0.01 per share
-------------------------------------------------------------------------------
(Title of Class of Securities)
33831M107
(CUSIP Number)
Andrea D. Kantor, Esq.
GP Strategies Corporation
777 Westchester Avenue
White Plains, New York 10604
(914) 249-9700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 6, 2004
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box: [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the Notes)
CUSIP No. 33831M107 Page 2 of 12
1. Names of Reporting Persons
I.R.S. Identification No. of Above Persons (entities only)
GP Strategies Corporation I.D. No. 13-1926739
2. Check the Appropriate Box if a Member of a Group (See instructions)
(a) [ ] (b) [ X ]
3. SEC Use Only
4. Source of Funds (See instructions)
WC, OO
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
Number of 7. Sole Voting Power
Shares
Beneficially 9,133,417
Owned by
Each 8. Shared Voting Power
Reporting
Person 0
With
9. Sole Dispositive Power
9,133,417
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
9,133,417
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See instructions) [ ]
13. Percent of Class Represented by Amount in Row (11)
53.9%
14. Type of Reporting Person (See instructions)
CO
CUSIP No. 33831M107 Page 3 of 12
1. Names of Reporting Persons
I.R.S. Identification No. of Above Persons (entities only)
Jerome I. Feldman
2. Check the Appropriate Box if a Member of a Group (See instructions)
(a) [ ] (b) [ X ]
3. SEC Use Only
4. Source of Funds (See instructions)
PF, OO
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
USA
Number of 7. Sole Voting Power
Shares
Beneficially 184,636
Owned by
Each 8. Shared Voting Power
Reporting
Person 0
With
9. Sole Dispositive Power
184,636
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
184,636
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See instructions) [ X ]
13. Percent of Class Represented by Amount in Row (11)
1.1%
14. Type of Reporting Person (See instructions)
IN
CUSIP No. 33831M107 Page 4 of 12
1. Names of Reporting Persons
I.R.S. Identification No. of Above Persons (entities only)
Scott N. Greenberg
2. Check the Appropriate Box if a Member of a Group (See instructions)
(a) [ ] (b) [ X ]
3. SEC Use Only
4. Source of Funds (See instructions)
PF, OO
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
USA
Number of 7. Sole Voting Power
Shares
Beneficially 94,150
Owned by
Each 8. Shared Voting Power
Reporting
Person 0
With
9. Sole Dispositive Power
94,150
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
94,150
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See instructions) [ X ]
13. Percent of Class Represented by Amount in Row (11)
0.6%
14. Type of Reporting Person (See instructions)
IN
CUSIP No. 33831M107 Page 5 of 12
Item 1. Security and Issuer
The class of equity securities to which this statement relates is the
common stock, par value $.01 per share (the "Common Stock"), of Five Star
Products, Inc., a Delaware corporation (the "Company"), which has its principal
executive offices at 777 Westchester Avenue, Fourth Floor, White Plains, New
York 10604.
Item 2. Identity and Background
This statement is filed by GP Strategies Corporation, a Delaware
corporation ("GP"), Jerome I. Feldman ("Feldman"), and Scott N. Greenberg
("Greenberg"; each of GP, Feldman and Greenberg being a "Filing Person" and
collectively the "Filing Persons").
The principal business of GP is workforce development and training. The
address of the principal business of GP is 6095 Marshalee Drive, Suite 300,
Elkridge, Maryland 21075. The address of the principal office of GP is 777
Westchester Avenue, Fourth Floor, White Plains, New York 10604. During the last
five years, GP has not been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree, or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws. The information regarding directors and executive officers
of GP is set forth in Schedule I.
The business address of each of Feldman and Greenberg is c/o GP
Strategies Corporation, 777 Westchester Avenue, Fourth Floor, White Plains, New
York 10604. The present principal occupation of Feldman is Chairman and Chief
Executive Officer of GP. The present principal occupation of Greenberg is
President and Chief Financial Officer of GP. During the last five years, neither
Feldman nor Greenberg has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree, or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws. Feldman and Greenberg are each citizens of the United
States.
Item 3. Source and Amount of Funds or Other Consideration
On January 1, 1994, pursuant to a Consulting Agreement between the
Company and Feldman, the Company, which was then a wholly owned subsidiary of
GP, granted Feldman options to purchase 250,000 shares of Common Stock. At the
CUSIP No. 33831M107 Page 6 of 12
same time, GP granted Feldman options to purchase 250,000 shares of Common Stock
owned by GP. Both options expired unexercised.
On July 1, 1994, the Company granted Greenberg options to purchase
75,000 shares of Common Stock, which expired unexercised.
On August 5, 1994, GP distributed to its stockholders (the "Spin-Off")
approximately 46% of the Company, which was then called American Drug Company.
Immediately after the Spin-Off, GP owned 7,009,461 shares of Common Stock,
approximately 54% of the then outstanding shares.
In the Spin-Off, Feldman received 93,463 shares of Common Stock and
warrants to purchase 93,463 shares of Common Stock, members of Feldman's family
received 1,173 shares of Common Stock and warrants to purchase 1,173 shares of
Common Stock, and Greenberg received 4,150 shares of Common Stock and warrants
to purchase 4,150 shares of Common Stock. All such warrants expired unexercised.
Feldman disclaims beneficial ownership of the 1,173 shares of Common Stock held
by members of his family.
On August 24, 1998, GP sold 1,230,771 shares of Common Stock to the
management of GP's wholly owned subsidiary, Five Star Group, Inc. ("Five Star
Group"), after which GP owned 5,778,690 shares of Common Stock, approximately
40% of the then outstanding shares.
On September 30, 1998, Five Star Group sold substantially all of its
operating assets to the Company for approximately $16,500,000 in cash and a 8%
unsecured senior note of the Company in the principal amount of $5,000,0000 (the
"Note"). The cash proceeds of this transaction were used to repay Five Star
Group's existing short-term borrowings. Also on September 30, 1998, GP sold an
additional 918,000 shares of Common Stock to the management of Five Star Group,
after which GP owned 4,860,690 shares of Common Stock, approximately 38% of the
then outstanding shares.
On August 10, 1999, the Company changed its name to Five Star Products,
Inc.
The Note was amended in November 2001 to provide for the extension of
its maturity date until September 30, 2004. Under a separate Subordination
Agreement between GP and the banks providing the Company's $25,000,000 revolving
loan, the Company may make annual cash payments of principal to GP provided the
Company achieves certain financial performance benchmarks.
On August 2, 2002, GP exchanged $500,000 principal amount of the Note
for 2,272,727 shares of Common Stock, reducing GP's ownership of the Note to
$4,500,000 principal amount and increasing its ownership of the Common Stock to
7,133,417 shares, approximately 48% of the then outstanding shares. The
transaction valued the Common Stock at $0.22 a share, which was at a premium to
the market value at that time.
CUSIP No. 33831M107 Page 7 of 12
On August 31, 1998, GP entered into a voting agreement (the "Voting
Agreement") pursuant to which GP agreed that for a period of three years it
would vote its shares of Common Stock (i) such that not more than 50% of the
Company's directors will be officers or directors of GP and (ii) on all matters
presented to a vote of stockholders, other than the election of directors, in
the same manner and in the same proportion as the remaining stockholders of the
Company vote. On June 30, 2002, GP and the Company extended the Voting Agreement
until June 30, 2004.
On January 1, 2002, the Company granted to each of Feldman and
Greenberg options to purchase 150,000 shares of Common Stock at an exercise
price of $0.14 per share. The options vest in equal installments over a five
year period, commending on the date of grant, and expire on January 1, 2007.
On June 27, 2003, July 2, 2003, and July 7, 2003, the Company made
principal payments on the Note in the amounts of $500,000, $300,000, and
$200,000, reducing the outstanding principal amount of the Note to $3,500,000.
On October 8, 2003, GP exchanged $500,000 principal amount of the Note
for 2,000,000 shares of Common Stock, reducing GP's ownership of the Note to
$3,000,000 principal amount and increasing its ownership of the Common Stock to
9,133,417 shares, approximately 54% of the then outstanding shares.. In
consideration for GP agreeing to exchange at a price of $0.25 per share, which
was more than twice the $0.11 closing market price of the Common Stock on the
day prior to approval of the transaction, the Company agreed to terminate the
Voting Agreement between GP and the Company. This transaction may have resulted
in a change of control of the Company.
Item 4. Purpose of Transaction
On February 6, 2004, the Company commenced an offer (the "Tender
Offer") to repurchase up to 5,000,000 shares of Common Stock, at a price of
$0.21 per share, which was 38% of the closing price of the Common Stock on the
day prior to the approval of the Tender Offer. If the Company acquires 5,000,000
shares pursuant to the Tender Offer GP's percentage ownership in the Common
Stock would increase to approximately 77%.
GP and the Company have entered into an agreement (the "Agreement")
pursuant to which, provided that at least 3,750,000 shares of Common Stock are
purchased by the Company pursuant to the Tender Offer, GP will exchange for
Common Stock, as soon as legally permissible following termination of the Tender
Offer, a sufficient principal amount of the Note at the same price that the
Company is paying to its stockholders in the Tender Offer to allow GP to
increase its ownership to at least 80% of the Common Stock.
CUSIP No. 33831M107 Page 8 of 12
If GP increases its ownership to at least 80% of the Common Stock, the
Company would become, for federal tax purposes, part of the affiliated group of
which GP is the common parent. As a member of such affiliated group, the Company
would be includable in GP's consolidated federal income tax returns, its taxable
income or loss will be included as part of the taxable income or loss of the
affiliated group, and any taxable income of the Company so included may be
offset by the consolidated net operating losses of the affiliated group.
As part of the Agreement, GP and the Company also have agreed to enter
into a tax sharing agreement pursuant to which the Company will make tax sharing
payments to GP once the Company becomes a member of the consolidated group in an
amount equal to 80% of the amount of taxes it would have paid if it filed
separate consolidated tax returns for itself and its subsidiaries but did not
pay as a result of being included in the GP affiliated group. If such an
agreement had been in effect in effect for 2002 and if the Company were part of
the GP affiliated group for all of 2002, it would have made tax sharing payments
of $214,000 as compared to the tax payments of $267,000 it actually made.
In July 2002, GP announced that it was actively considering a spin-off
of certain of its non-core assets into a separate corporation named National
Patent Development Corporation ("NPDC"). If the spin-off occurs, it is
contemplated that the Note and any Common Stock owned by GP would be spun-off to
NPDC and that the Agreement would be assigned by GP to NPDC. There can be no
assurance that the spin-off will be consummated.
Except as set forth above, each Filing Person does not have any plans
or proposals of the nature described in Items (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) The aggregate number and percentage of the class of securities
identified pursuant to Item 1 beneficially owned by GP is
9,133,417 shares of Common Stock representing approximately
53.9% of the outstanding shares of Common Stock. The aggregate
number and percentage of the class of securities identified
pursuant to Item 1 beneficially owned by Feldman is 184,636
shares of Common Stock (including 90,000 shares which Feldman
has the right to acquire upon exercise of options),
representing approximately 1% of the outstanding shares of
Common Stock. Also includes 1,173 shares of Common Stock held
by members of Feldman's family, as to which shares Feldman
disclaims beneficial ownership. The aggregate number and
percentage of the class of securities identified pursuant to
Item 1 beneficially owned by Greenberg is 94,150 shares of
Common Stock (including 90,000 shares which Greenberg has the
right to acquire upon exercise of options), representing
approximately 0.55% of the outstanding shares of Common Stock.
CUSIP No. 33831M107 Page 9 of 12
Each of Feldman and Greenberg disclaims beneficial ownership
of the shares of Common Stock beneficially owned by GP, which
have been excluded from the shares of Common Stock listed
above respectively for each such Filing Person.
(b) Except as to shares for which the Filing Person disclaims
beneficial ownership, each Filing Person has the sole power to
vote or direct the vote and the sole power to dispose or to
direct the disposition of the securities reported for it or
him.
(c) Please refer to Item 3 for information with respect to
transactions in the securities which were effected during the
past sixty days by the Filing Persons.
(d) No other person has the right to receive or the power to
direct the receipt of dividends from, and the proceeds of sale
of, the securities reported herein as being beneficially owned
by each Filing Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
GP was a party to a Voting Agreement between GP and the Company. The
Voting Agreement, which by its terms would have terminated on June 30, 2004, was
terminated on October 7, 2003. Please refer to Item 3 for additional information
responsive to this item.
GP and the Company are parties to an Agreement, dated as of January 22,
2004, pursuant to which GP may exchange a portion of the principal amount of the
Note for Common Stock. Please refer to Item 3 for additional information
responsive to this item.
Item 7. Material to be Filed as Exhibits
1. Joint Filing Agreement, dated February 6, 2004, among GP Strategies
Corporation, Jerome I. Feldman, and Scott N. Greenberg
2. Voting Agreement, dated June 30, 2002, between GP and the Company.
Incorporated herein by reference to Exhibit 10.29 of GP's Form 10-K for the year
ended December 31, 2002.
3. Agreement, dated as of January 22, 2004, between GP and the Company.
Incorporated herein by reference to Exhibit 99(d) of Schedule TO filed by the
Company on February 6, 2004.
CUSIP NO. 33831M107 Page 10 of 12
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 6, 2004
GP STRATEGIES CORPORATION
BY: Scott N. Greenberg, President and
Chief Financial Officer
Jerome I. Feldman
Scott N. Greenberg
CUSIP NO. 33831M107 Page 11 of 12
Information with Respect to Executive
Officers and Directors of GP
Schedule I to Schedule 13D
The following sets forth as to each of the executive officers and
directors of GP: his or her name, his or her business address, his or her
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment is
conducted. Unless otherwise specified, the principal employer of each such
individual is GP Strategies Corporation, the business address of which is 777
Westchester Avenue, White Plains, New York 10604, and each such individual
identified below is a citizen of the United States. To the knowledge of the
Filing Persons, during the last five years, no such person has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors),
and no such person was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities law
or finding any violation with respect to such laws.
GP Strategies Corporation
Directors:
No of Shares
of Common Stock
Beneficial
Name Occupation Held
--------------------------- --------------------------- -----------------
Jerome I. Feldman Chairman of the Board and
Chief Executive Officer 184,636(1)
Scott N. Greenberg President and Chief
Financial Officer 94,150(2)
Harvey P. Eisen Chairman and Managing Member -0-
Bedford Oak Management, LLC
(asset management company)
100 South Bedford Road
Mount Kisco, NY 10549
CUSIP NO. 33831M107 Page 12 of 12
Marshall S. Geller Senior Managing Member -0-
St. Cloud Capital Partners, L.P.
(Small Business Investment Company)
10866 Wilshire Blvd. Los Angeles, CA
90024
Roald Hoffmann Professor of Chemistry -0-
Cornell University
Department of Chemistry
Ithaca, NY 14853
Bernard M. Kauderer Retired Vice Admiral - U.S. Navy -0-
7025 Ibis Place
Carlsbad, CA 92009
Mark A. Radzik Managing Director -0-
Equity Group Investments, L.L.C.
(investment company)
Two North Riverside Plaza
Chicago, IL 60606
Ogden Reid Former U.S. Congressman -0-
48 Mead Street
Waccabuc, NY 10597
Gordon Smale President -0-
Atlantic Oil Corporation
(oil and gas producer)
1825 Lawrence Street
Denver, CO 80202
Officers:
Andrea D. Kantor Vice President and General Counsel 625
(1)Includes 90,000 shares of Common Stock issuable upon exercise of currently
exercisable stock options and 1,173 shares of Common Stock held by members of
Feldman's family. Feldman disclaims beneficial ownership of the 1,173 shares
of Common Stock held by members of his family.
(2)Includes 90,000 shares of Common Stock issuable upon exercise of currently
exercisable stock options.
Jerome I. Feldman
Scott N. Greenberg