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, 1998
[ ] 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 (I.R.S. Employer Identification No)
of 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. $17,091,432
As of December 16, 1998, there were 6,068,481 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 $8,396,384 computed at the closing quotation for the Issuer's
common stock of $1.563 as of January 11, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement for the Annual Meeting of Shareholders to be
held in 1999.
<PAGE>
This amendment on the Form 10-KSB/A to the Company's annual report for
the fiscal year ended September 30, 1998 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
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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 six 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.
Name Age Position
James S. Pendleton 60 Chief Executive Officer;
Chairman of Board of Directors
Stephen J. Fryer 60 President, Chief Operating
Officer and Director
Robert Albrecht 45 Vice President and Chief
Financial Officer
Wayne R. Wright 60 Director; Vice Chairman of
the Board of Directors
C. Reed Brown 52 Director
James E. Harward 46 Director
Milton Haber 75 Director
Danieli Reni 47 Vice President of
Engineering; President of
PowerStream Division
James S. Pendleton has been Chairman of the Board of Directors 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.
<PAGE>
Stephen J. Fryer has served as President and Chief Operating Officer of
the Company since 1998 and as a director of the Company since 1995. 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 Albrecht has served as the Vice-President and Chief Financial
Officer of the Company since 1998. He was most recently Controller for a 60
million dollar public SLC company, and also was the Controller for Laidlaw Waste
Industry Company, in charge of internal audits and analysis of business
acquisitions. Mr. Albrecht has his Master Degree from Brigham Young University
and is a Certified Public Accountant.
Wayne R. Wright has served as Vice Chairman of the Board of Directors
since 1985. From 1985 to 1998, he was Chief Financial Officer of the Company.
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.
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.
Milton Haber has been the CFO of Airline Management Corporation since
1996 and is a private investor. From 1949 through 1983 Mr. Haber was a business
consultant, small business owner and a private investor. He attended Brooklyn
College from 1946 through 1948 after serving in the United States Air Force
during World War II.
Danieli Reni joined the Company in April of 1997 as President of the
PowerStream Technology Division of the Company and was appointed the Vice
President of Engineering of the Company in 1998. From 1978 to 1980 he was
self-employed as an electronic engineer consultant. 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.
<PAGE>
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 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 1998, all persons had complied with the filing
requirements under Section 16(a).
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ITEM 10. EXECUTIVE COMPENSATION
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The following table shows the compensation paid by the Company to its
current Chairman and Chief Executive Officer, and the Company's other most
highly paid executive officer. None of the other executive officer's total
annual salary and bonus exceeded $100,000 for the years presented.
Summary Compensation Table
Annual Compensation
Name and Principal Position
Fiscal
Year Salary Bonus
James S. Pendleton 1998 $139,000 0
1997 $144,236 $6,000
1996 $133,500 $45,000
Stephen J. Fryer 1998 $108,000 0
1997 $67,053 $45,000
1996 N/A N/A
* 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.
<PAGE>
<TABLE>
<CAPTION>
Option/SAR Grants in Fiscal Year 1998
Number of Securities Percent of Total Exercise Price Expiration
Underlying Options Options Granted to per Share Date
Name Granted Employees in Fiscal
Year 1998
<S> <C>
James S. Pendleton 0
Stephen J. Fryer 0
Robert Albrecht 10,000
Milton Haber 5,000
Aggregated Option/SAR Exercises in Fiscal
Year 1998 and Fiscal Year End Option Values
Shares Acquired Number of Securities Value of Unexercised
Name on Exercise Value Realized Underlying In-the-Money Options
Unexercised Options at Fiscal Year End
Exercisable / Exercisable /
Unexercised Unexercised
<S> <C> <C> <C>
James S. Pendleton -0- None 200,000/200,000
Stephen J. Fryer -0- None 28,500/28,500
Robert Albrecht -0- None
</TABLE>
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
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The following table sets forth the number of shares of the Company's
common stock beneficially owned as of January 28, 1999, (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
and 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
<PAGE>
Name and Address Amount and Nature
of Beneficial Owner of Beneficial Owner
- -------------------------------------------------------------- ----------
Directors and Executive Officers (1)
James S. Pendleton (2) (3) 1,035,037
Stephen J. Fryer (4) 116,500
Robert Albrecht 10,000
Wayne R. Wright (5) 464,109
C. Reed Brown (6) 60,000
Milton Haber 5,000
James E. Harward 2,000
Holders of More than 5%
James S. Pendleton Family Trust 456,441
All Officers and Directors as a Group (7 persons)
(2) (3) (4) (5) (6) (7)
(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 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.
(5) 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.
(6) 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.
(7) 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.
<PAGE>
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The following information summarizes certain transactions, either
engaged in within the last two (2) years of 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.
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the three
months ended September 30, 1998.
(b) INDEX OF EXHIBITS
Exhibit No. Description
1. Form of Underwriter's Warrant Agreement including Form of
Underwriter's Warrant, incorporated by reference to the
Company's Registration Statement filed on Form SB-2, SEC File
No. 33-96444.
3. Articles of incorporation and By-laws, incorporated by
reference to the Company's Registration Statement filed on
Form SB-2, SEC File No. 33-96444.
10.1 Asset Purchase Agreement for the purchase of InCirT
Technology from the Cerplex Group, Inc. See Exhibit to Report
on Form 10-QSB dated June 30, 1996.
10.2 Employment Agreement between James S. Pendleton and the
Company. See Exhibit to Report on Form 10-QSB dated June 30,
1996.
10.3 Employment Agreement between Wayne R. Wright and the Company.
See Exhibit to Report on Form 10-QSB dated June 30, 1996.
<PAGE>
10.4 Employment Agreement between Robert D. Deforest Sr. and the
Company. See Exhibit to Report 10-QSB dated June 30, 1996.
10.5 Employment Agreement between Lewis Carl Rasmussen and the
Company. See Exhibit to Report on Form 10-QSB dated June 30,
1996.
10.6 Employment Agreement between Alan L. Weaver and the Company.
See Exhibit to Report on Form 10-QSB dated June 30, 1996.
10.7 Loan and Security Agreement dated February 29, 1996 between
National Bank of Canada and the Company. See 10-KSB dated
September 30, 1996.
10.8 Form of Warrant between the Registrant and JW Charles
Securities, Inc., BMC Bach International Ltd., Gordon Mundy,
Louis Centofanti and Heracles Holdings, See Registration
Statement filed on Form S-3, SEC File No. 333-60451
10.9 Asset Purchase Agreement dated March 22, 1995 between
Registratant, Insulectro, Quality Interconnect Systems,
Quintec Interconnect Systems, Quintec Industries and QIS
Electronics. See Registration Statement filed on Form SB-2,
SEC File No. 33-96444.
10.10 Real Estate Lease dated June 2, 1993 between Registrant and
The Equitable Life Insurance Society. See Registration
Statement filed on Form SB-2, SEC File No. 33-96444.
10.11 Form of 1995 Stock Option Plan. See Registration Statement
filed on Form SB-2, SEC File No. 33-96444.
10.12 Asset Purchase Agreement dated November 12, 1996 for the sale
of the San Jose Division between Touche Electronics, Inc. a
subsidiary of TMCI Electronics, Inc. and the Company. See
Exhibit to Report on Form 10-QSB dated December 31, 1996.
10.13 Loan and Security Agreement between FINOVA and the Company.
See Exhibit to Report on Form 10-KSB, dated September 30,
1997.
10.14 Employment Agreement between Stephen J. Fryer and the
Company. See Exhibit to Report on Form 10-KSB, dated
September 30, 1997.
10.15 Employment Agreement between Danieli Reni and the Company.
See Exhibit to Report on Form 10-KSB, dated September 30,
1997.
10.16 Agreement and Plan of Reorganization through Acquisition
dated April 1, 1997 between PowerStream Technology, Inc. and
the Company. See Exhibit to Report on Form 10-KSB, dated
September 30, 1997.
10.17 Finder's Agreement between the Registrant and JW Charles
Securities, Inc., dated June 2, 1998. See Registration
Statement filed on Form S-3, SEC File No. 333-60451
11. Statement re: computation of per share earnings. See Exhibit
to Report on Form 10-KSB, dated September 30, 1998.
23.1. Consent of Grant Thornton LLP. See Form 10-KSB, filed January
13, 1999
27. Financial Data Schedule
<PAGE>
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: January 28, 1999 PEN INTERCONNECT, INC.
By: /s/Stephen Fryer
--------------------
Stephen Fryer
President and Director
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated below.
Date: January 28, 1999 By:/s/Stephen Fryer
----- ---------------- -------------------
Stephen Fryer
President and Director
Date: January 28, 1999 By:/s/Robert Albrecht
----- ---------------- ---------------------
Robert Albrecht
CFO and Principal
Accounting Officer
Date: January 28, 1999 By:/s/Wayne R. Wright
----- ---------------- ---------------------
Wayne R. Wright
Director
Date: January 28, 1999 By:/s/James Harward
----- ---------------- -------------------
James Harward
Director
Date: January 28, 1999 By:/s/Milton Haber
----- ---------------- ------------------
Milton Haber
Director
