UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-14072
PEN INTERCONNECT, INC.
(Exact name of small business issuer as specified in its charter)
UTAH 87-0430260
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization
2351 South 2300 West, Salt Lake City, UT 84119
(Address of Principal Executive Offices) (Zip Code)
(801) 973-6090
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Common Stock, par value $0.01 per share
Common Stock Warrants
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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 in this form, 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. X check
State issuer's revenues for its most recent fiscal year. $18,238,460
As of January 8, 1998, there were 4,147,863 shares of the Issuer's
common stock, par value $0.01, issued and outstanding. The aggregate market
value of the Issuer's voting stock held by non-affiliated of the Issuer was
approximately $8,868,000 computed at the closing quotation for the Issuer's
common stock of $2.91 as of January 8, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement for the Annual Meeting of Shareholders to
be held March 18, 1998. Certain information therein is incorporated into Part
III hereof.
1
<PAGE>
This amendment on the Form 10-KSB/A to the Company's annual report for the
fiscal year ended September 30, 1997 is being filed to include the text to Items
9 through 12 which are set forth below in their entirety.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
1 Directors and Executive Officers.
The Company's directors and executive officers, and their respective
ages and positions with the Company, are set forth below in tabular form.
Biographical information on each person is set forth following the tabular
information. There are no family relationships between any of the Company's
directors or executive officers. The Company's board of directors is currently
comprised of five members, each of whom is elected for a term of one year.
Executive officers are chosen by and serve at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
Name Age Position Year Elected
or Appointed
<S> <C> <C> <C>
James S. Pendleton 59 Chief Executive Officer; Chairman of the 1985
Board of Directors; President
Wayne R. Wright 59 Chief Financial Officer and Vice Chairman 1985
of the Board of Directors
Stephen J. Fryer 59 Senior Vice President of Marketing and 1995
Investor Relations; Director
Robert "Duke" DeForest 64 President of Pen Technology Division 1991
Alan Weaver 50 President of InCirT Technology Division 1996
C. Reed Brown 51 Vice President of International Sales; 1989
Director
James E. Harward 45 Director 1997
</TABLE>
JAMES S. PENDLETON has been Chairman of the Board of Directors, President
and Chief Executive Officer of the Company since 1985. Mr. Pendleton also serves
the Company as Operations Manager for Product Design. From 1974 to 1985, Mr.
Pendleton was President and Chief Executive Officer of PenTec Enterprises. From
1972 to 1974, he served as a Sales Manager for W. H. Bintze, an electronics
distribution company. From 1964 to 1972, Mr. Pendleton was an electronics sales
representative for Straube Associations, a company specializing in electronic
components. Prior to joining Straube Associates, Mr. Pendleton served in the
U.S. Navy as an Aviation and Electronics Specialist. Mr. Pendleton attended
Foothill College of Business Administration.
WAYNE R. WRIGHT has served as Vice Chairman of the Board of Directors
and Chief Financial Officer of the Company since 1985. From 1984 to 1985, he was
Vice President and Chief Financial Officer of PenTec Enterprises. From 1968 to
1984, he was Controller, Vice President of Operations and Division General
Manager for Beehive International, a computer peripheral company. From 1967 to
1968, Mr. Wright was the General Accounting Manager for Litton Data Systems.
From 1961 to 1968, he was employed by Beeline/Frontier Refinery as Division
Office Manager. Mr. Wright received his Bachelor of Science Degree in Accounting
and Finance from the University of Utah.
STEPHEN J. FRYER has served as a director of the Company since 1995 and
as the Senior Vice President of Marketing and Investor Relations since October
1997. Senior Vice President of Sales and Marketing from October, 1996 to
October, 1997. From 1989 to 1996, Mr. Fryer was a principal in Ventana
International, Ltd., an Irvine, California based venture capital and private
investment banking firm. Mr. Fryer graduated from the University of Southern
California in 1960 with a Bachelors Degree in Mechanical Engineering and has
spent over twenty-eight years in the computer business in the United States,
Asia and Europe.
ROBERT "DUKE" DEFOREST joined the Company in 1991 as a Vice President.
He currently serves as President of the Pen Technology Division since October
1997 prior to October
1997 he served as Vice President of Sales. From 1989 to 1991, he owned and
managed Datavault/Rocky Mtn. Sales, a company specializing in electronic sales
and electronic televaulting. From 1987 to 1989, he was employed as Senior Vice
President/Director for Forval America, Inc., a Japanese marketing company which
specializes in the high-speed modem business. From 1981 to 1987, he was
President, Chief Executive Officer and a Director of Digital Recording
Corporation, a public company which specializes in optical recording. Mr.
DeForest has also served as Senior Vice President of Operations and Vice
President of Sales and Marketing for Beehive International. He received his
Bachelor of Science Degree in Electrical Engineering from the University of
Wyoming and a Masters of Science Degree in Electrical Engineering from the
University of Utah.
ALAN WEAVER has served as President of the InCirT Technology Division
of the Company since April 1996. From September 1996 to September 1997 Mr.
Weaver was President of Pen Interconnect, Inc. From September of 1993 until
April 1, 1996 Mr. Weaver was the President of the InCirT Technology Division of
The Cerplex Group, Inc. From 1990 to September 1993, he was the President of
InCirT Technology Incorporated. Prior to joining InCirT, Mr. Weaver was
President of Curtis Electronics from 1982 to 1990, Manager of Strategic Planning
for the International Groups Product Division of Digital Equipment Corp. from
1980 to 1982, and Director of Operations for the Electronics Division of
Northern Telecom Inc. from 1977 to 1980.
C. REED BROWN has served as a director of the Company since 1989. Since
1973, he has been a practicing attorney. From 1992 to 1996 he served as Vice
President and General Counsel of Exerhealth, Inc.
JAMES E. HARWARD received his B.A. from Brigham Young University and his
J.D. from the University of California, Hastings School of Law. He was in
private practice for the following six years. For five years he was an
Administrative Law Judge for the Utah State Tax Commission after which he became
Director of Legal Affairs for the Utah State Industrial Commission. For the two
years following that, he was corporate attorney for Sinclair Oil, and since 1997
he has been President of ELM Management and Leasing. He has been a director of
the Company since February, 1997.
1 Significant Employees.
Significant employees of the Company, and their respective ages and
positions with the Company, are set forth below in tabular form. Biographical
information on each person is set forth following the tabular information. There
are no family relationships between any of the Company's directors or executive
officers, or any significant employees. Significant employees are chosen by and
serve at the discretion of the executive officers of the Company and the Board
of Directors.
<TABLE>
<CAPTION>
Name Age Position Year
Appointed
<S> <C> <C> <C>
L. Carl Rasmussen 64 Vice President of Sales and Corporate 1987
Accounts
Danieli Reni 47 President of PowerStream Technology 1997
Division
</TABLE>
L. CARL RASMUSSEN has served as Vice President of Sales and Corporate
Accounts of the Company since 1994, and previously was Director of Marketing of
the Company from 1987. From 1984 to 1987 he was a self-employed electronics
sales representative. From 1973 to 1984, he served as Director of Marketing,
Sales Manager and in other managerial positions for Beehive International, a
computer peripheral company. Mr. Rasmussen received his Bachelor of Science
Degree from the College of Engineering at Utah State University.
DANIELI RENI joined the Company in April of 1997 as President of the
PowerStream Technology Division of the Company. From 1978 to 1980 he was
self-employed as an electronic consultant engineer. From 1980 to 1981, he was a
Design Engineer for General Dynamics and from 1981 to 1984, he was Design
Engineer for Teledyne Systems. He was Project Engineer from 1984 to 1987 in the
R&D Department at Quoltron Systems and from 1987 to 1991, he was the Project
Engineer for Power Products for Apple Computer. He became President and Owner of
PowerStream Technology, Inc. in 1991 and operated the company until his
employment with the Company in 1997.
(c) Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, require the Company's executive officers and
directors, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers Automated Quotations System
and to the furnish the Company with copies thereof.
Based on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons, the Company
believes that during fiscal year 1997, all persons had complied with the filing
requirements under Section 16(a).
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
Annual Compensation
<TABLE>
<CAPTION>
Name and Principal
Position Fiscal Other Annual
Year Salary Bonus Compensation
<S> <C> <C> <C> <C>
James S. Pendleton 1997 $144,236 $6,000 $-0-*
1996 $133,500 $45,332 $-0-*
1995 $125,000 $69,278 $-0-*
Stephen J. Fryer 1997 $67,053 $45,177 $-0-*
1996 N/A N/A N/A
1995 N/A N/A N/A
Robert DeForest 1997 $76,161 $28,622 $-0-*
1996 $75,935 $17,148 $-0-*
1995 $60,000 $30,000 $-0-*
Alan Weaver 1997 $116,486 $15,450 $-0-*
1996 $59,907 $19,638 $-0-*
1995 N/A N/A N/A
</TABLE>
* The tables above do not include certain insurance, the use of a car, and other
personal benefits, the total value of which does not exceed $50,000 or 10% of
such person's salary and bonus.
2
<PAGE>
OPTION/SAR GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options Granted to Exercise
Underlying Options Employees in Price per Expiration
Name Granted Fiscal Year 1997 Share Date
---- ------- ---------------- ----- ----
<S> <C> <C> <C> <C>
James S. Pendleton 200,000 20% $1.38 2007
Stephen J. Fryer 142,500 14% 1.38 2002
Robert DeForest 25,000 2% 1.38 2007
Robert DeForest 56,000 6% 1.38 2002
Alan Weaver 180,000 18% 1.38 2002
</TABLE>
3
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL
YEAR 1997 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised In-
Underlying the-Money Options
Unexercised at Fiscal Year End
Options
Shares Exercisable /
Acquired Exercisable / Unexercised
Name on Exercise Value Realized Unexercised
<S> <C> <C> <C> <C>
James S. Pendleton -0- None 200,000/200,000 $149,000/$149,000
Stephen J. Fryer -0- None 28,500/28,500 $21,233/$21,233
Robert DeForest -0- None 53,800/53,800 $40,081/$40,081
Alan Weaver -0- None 36,000/36,000 $26,820/$26,820
</TABLE>
4
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the number of shares of the Company's
common stock beneficially owned as of January 8, 1998, (i) by each person who is
known by the Company to own beneficially more than 5% of the Company's common
stock, (ii) by each director and director nominee, (iii) by each of the
Company's named executive officers, and (iv) by all directors, director nominees
an executive officers, as a group, as reported by each such person. Unless
otherwise indicated, each stockholder's address is c/o the Company, 2351 South,
2300 West, Salt Lake City, Utah, 84119.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent of Class
Beneficial Owner of Beneficial Owner
(1)
Directors and Executive Officers
<S> <C> <C>
James S. Pendleton (2)(3) 1,035,037 23.8%
Wayne R. Wright (4) 464,901 10.5%
C. Reed Brown (5) 60,000 1.4%
Stephen J. Fryer (6) 53,000 1.3%
Robert DeForest (7) 98,800 2.4%
Alan Weaver (8) 36,000 0.9%
James E. Harward 2,000 0.0%
Holders of More Than 5%
James S. Pendleton Family Trust 1,035,037 23.8%
Virginia C. G. Pendleton Family Trust
(2)(3)
Dogwood Associates, Inc. 214,000 5.1%
5 Dogwood Lane
Lawrence, New York 11559
West End Capital Corp. Pty. Ltd. 214,000 5.1%
14 Church Street
Hawthorn, Victoria, Australia 3122
All Officers and Directors as a Group (7 1,788,080 37.3%
persons) (2)(3)(4)(5)(6)(7)(8)(9)
</TABLE>
(1) Except as noted otherwise, all shares are owned beneficially and of record.
(2) Includes 456,441 shares of Common Stock held by the James S. Pendleton
Family Trust of which Mr. Pendleton is a trustee and beneficiary, 15,144 shares
in Mr. Pendleton's account in the Company's ESOP, and 200,000 shares that are
unissued but with respect to which Mr. Pendleton has the right to acquire
beneficial ownership through the exercise of stock options within 60 days of the
date of this filing.
(3) Includes 363,452 shares of Common Stock held by the Virginia C. G. Pendleton
Family Trust. Mr. Pendleton has voting control of these shares.
(4) Includes 100,000 shares held by the Wayne R. Wright Family Trust, 50,000
shares held by the LaRae Wright Family Trust, of which Mr. Wright is a trustee
and beneficiary, 7,109 shares in Mr. Wright's account in the Company's ESOP, and
267,000 shares that are unissued but with respect to which Mr. Wright has the
right to acquire beneficial ownership through the exercise of stock options
within 60 days of the date of this filing.
(5) Includes 60,000 shares that are unissued but with respect to which Mr. Brown
has the right to acquire beneficial ownership through the exercise of stock
options within 60 days of the date of this filing.
(6) Includes 28,500 shares that are unissued but with respect to which Mr. Fryer
has the right to acquire beneficial ownership through the exercise of stock
options within 60 days of the date of this filing.
(7) Includes 53,800 shares that are unissued but with respect to which Mr.
DeForest has the right to acquire beneficial ownership through the exercise of
stock options within 60 days of the date of this filing.
(8) Includes 36,000 shares that are unissued but with respect to which Mr.
Weaver has the right to acquire beneficial ownership through the exercise of
stock options within 60 days of the date of this filing.
(9) Includes 2,000 shares that are unissued but with respect to which Mr.
Harward has the right to acquire beneficial ownership through the exercise of
stock options within 60 days of the date of this filing.
Except as set forth above, the Company knows of no beneficial owner of
five percent or more of the Company's Common Stock, and does not know of any
arrangement which may at a subsequent date result in a change of control of the
Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following information summarizes certain transactions, either
engaged in within the last two (2) years or proposed to be engaged in by the
Company and the individuals described.
In 1989, the Company loaned Mr. Pendleton $370,335, bearing interest at
10% per annum. The note was satisfied in full as of September 30, 1996. Interest
income received was $5,006 during fiscal year 1996.
During fiscal year 1995, the Company guaranteed personal indebtedness
of Mr. Pendleton in the maximum amount of $180,000. This indebtedness was paid
in full during fiscal year 1996, and the guarantee has been released.
During fiscal year 1997, the Company paid to ELM Management and
Leasing, of which Mr. Harward is the president, approximately $55,000 for
payrolling and employee benefit services.
5
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
PEN INTERCONNECT, INC.
Date: January 28, 1998 By: /s/ James S. Pendleton
-----------------------
James S. Pendleton,
CEO and Director
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Date: January 28, 1998 By: /s/ James S. Pendleton
-----------------------
James S. Pendleton,
CEO and Director
Date: January 28, 1998 By: /s/ Wayne R. Wright
--------------------
Wayne R. Wright,
CFO, Principal Accounting
Officer and Director
Date: January 28, 1998 By: /s/ James E. Harward
---------------------
James E. Harward
Director
Date: January 28, 1998 By: /s/ Stephen Fryer
------------------
Stephen Fryer,
Vice President, Director
Date: January 28, 1998 By: /s/ C. Reed Brown
------------------
C. Reed Brown
Director
6
