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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-KSB/A
Amendment No. 1
For the Year Ended March 31, 1997
Commission File No. 0-28728
Caribbean Cigar Company
(Exact name of Small Business Issuer as Specified in its Charter)
Florida 65-0613303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6265 SW 8th Street
Miami, Florida 33144
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (305) 267-3911
Purpose of Amendment: To include the information required by Part III of the
Company's Form 10-KSB which was filed with the Securities and Exchange
Commission on June 30, 1997.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
DIRECTORS
The Board of Directors is presently comprised of six individuals,
Messrs. Kevin Doyle, Thomas R. Dilk, Eric S. Kamisher, Luciano R. Nicasio,
Carlos Torano and Alfred J. Berger, Jr.
The following table sets forth certain information concerning the
directors:
<TABLE>
<CAPTION>
Name Age Position with the Company and Year First Elected Director
---- --- ---------------------------------------------------------
<S> <C> <C>
Kevin Doyle 38 Chairman of the Board, President, Chief Executive Officer and Director,
1994
Thomas R. Dilk 51 Chief Financial Officer, Treasurer and Director, 1995
Eric S. Kamisher 38 Secretary and Director, 1996
Luciano R. Nicasio 37 Director, 1996
Carlos Torano 54 Director, 1996
Alfred J. Berger, Jr. 54 Director, 1997
</TABLE>
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Biographical information concerning the directors is set forth below.
Mr. Kevin Doyle has been president, chief executive officer and a
director of the Company since its organization in October 1994. From June 1987
through November 1995, Mr. Doyle was an air traffic controller in Miami,
Florida. From 1983 until 1994, Mr. Doyle was involved in the cigar business on a
part-time basis as a wholesaler and retailer.
Mr. Thomas R. Dilk has been chief financial officer and a director of
the Company since October 1995. From February 1991 to October 1995, Mr. Dilk was
vice president and chief financial officer for Wave Systems Corporation. For two
years prior thereto, he was a business consultant providing analytical services
to emerging growth companies. In 1981, Mr. Dilk was a founder of POP Radio
Corp., of which he was executive vice president until April 1989.
Mr. Eric S. Kamisher has been secretary and a director of the Company
since March 1996. He is of counsel to the law firm of Esanu Katsky Korins &
Siger, which is counsel to the Company. Mr. Kamisher does not receive a salary
for his duties as secretary of the Company. From 1986 through the present, Mr.
Kamisher has practiced law in New York City and Stamford, Connecticut,
specializing in the areas of corporate and securities law.
Mr. Luciano R. Nicasio has been a director of the Company since June
1996. From 1978 to June 1996, Mr. Nicasio was an officer of Bankers Trust
Company, where he most recently served as a Managing Director with Bankers Trust
New York Corporation and as Co-head of International Equities Sales and Trading
with BT Securities Corporation. Mr. Nicasio recently established a private
international investment advisory firm located in New York City, Stamford,
Connecticut and London, England.
Mr. Carlos Torano has been a director of the Company since November
1996. Mr. Torano has been in the tobacco business since the early 1970's. He
worked with Torano & Co. and later A.S.P. Enterprises, both privately held
companies, involved in the growing and processing of tobacco throughout the
world. In 1981, Mr Torano was one of the founders of Central America Tobacco
Corporation ("C.A.T."), a manufacturer and marketer of premium cigars.
Mr. Torano is currently the President and sole owner of C.A.T. In the early
1990's Mr. Torano also founded the company "Torano Cigars" which is a global
distributor of premium cigar brands.
Mr. Alfred J. Berger, Jr. has been a director of the Company since
April 1997. He has been the president of American Western Cigar Co. since 1994
and a director of DWG Cigar Co. and later to SWD Corp. since 1968. Previously,
Mr. Berger was the vice president of John Berger & Son Co. and the National
Cigar Company. Mr. Berger was also the president of American Case and Luggage
Co. from 1982 to 1994 and M. Marsh & Son Co. from 1992 to 1994.
EXECUTIVE OFFICERS
The current executive officers of the Company are set forth below.
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Kevin Doyle Chief Executive Officer, Chairman of the Board and President
Thomas R. Dilk Chief Financial Officer and Treasurer
Eric S. Kamisher Secretary
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities
(collectively, "Reporting Persons") to file reports and changes in ownership of
such securities with the Securities and Exchange Commission and the Company.
Based solely upon a review of (i) Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e), promulgated under the Exchange Act,
during the Company's fiscal year ended March 31, 1997 and (ii) Forms 5 and any
amendments thereto and/or written representations furnished to the Company by
any Reporting Persons stating that such person was not required to file a Form 5
during the Company's fiscal year ended March 31, 1997, it has been determined
that the following Reporting Persons were delinquent with respect to such
person's reporting obligations set forth in Section 16(a) of the Exchange Act by
failing to file Forms 3 in a timely manner: Kevin Doyle, Thomas R. Dilk, Eric S.
Kamisher, Luciano R. Nicasio, Carlos Torano and Michael Risley.
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ITEM 10. EXECUTIVE COMPENSATION.
DIRECTORS COMPENSATION
Directors do not currently receive fees for their services as directors
except as described under "Employment Contracts and Consulting Agreements"
below.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information with respect
to the compensation paid to the Company's Chief Executive Officer and executive
officers whose total annual salary and bonus exceeded $100,000 for the last
three fiscal years for services rendered in all capacities to the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation (Awards)
------------------- -------------------------------
Restricted Stock Options, SARs
Name and Principal Position Year Salary Bonus Awards (Dollars) (Number)
- --------------------------- ---- ---------- -------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Kevin Doyle - President, 1997 $150,000 (1) -- 70,000(2)
Chief Executive Officer and 1996 $102,000 -- -- --
Director
Thomas R. Dilk - Chief Financial 1997 $80,000 -- -- --
Officer, Treasurer and Director 1996 $33,333 -- $46,667 100,000
</TABLE>
EMPLOYMENT CONTRACTS AND CONSULTING AGREEMENTS
Mr. Doyle has a three-year employment agreement, which commenced on
January 1, 1996, pursuant to which he received a base salary of $102,000 for
1996 and $150,000 for 1997. In addition, he is eligible to receive bonuses at
the discretion of the Board of Directors. Mr. Doyle shall be entitled to
participate in any and all pension, health, deferred compensation or any other
similar plan which are made to all employees. This agreement includes several
noncompete covenants, as defined therein.
The Company has a compensation agreement with Thomas R. Dilk, pursuant
to which he receives a base salary of $80,000. As of March 31, 1996, the
Company has issued 32,000 shares of Common Stock to Mr. Dilk pursuant to this
agreement. In addition, an option to purchase 100,000 shares of Common Stock at
$1.50 per share, exercisable until November 2001 was granted.
On April 1, 1997, the Company entered into individual consulting
agreements (collectively, the "Consulting Agreements") with Alfred J. Berger,
Jr. and Lawrence D. Frutkin, pursuant to which Messrs. Berger and Frutkin
provide management, sales and consulting services on an ongoing basis to the
Company. The Consulting Agreements provide Messrs. Berger and Frutkin with
fixed compensation at an annual rate of $100,000, payable in equal monthly
installments on the last day of each month, and performance based compensation
in the form of cash and shares of the Company's common stock. In addition, Mr.
Berger, pursuant to his Consulting Agreement, was
- --------
(1) Mr. Doyle receives a bonus if he reaches certain revenue and
earnings targets. A bonus of $10,000 will be granted to Mr. Doyle per quarter in
the event that he reaches the revenue targets set forth by the Compensation
Committee of the Board of Directors. A bonus of 1.5% of the earnings of the
Company shall be issued to Mr. Doyle, if and only if a minimum earnings
threshold is reached consistent with the annual earnings target set forth by the
Compensation Committee of the Board of Directors. Mr. Doyle will also be
entitled to a company car, sick leave and vacation pay.
(2) Mr. Doyle received an option representing 70,000 shares with an
exercise date of June 2006.
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elected as a director of the Company by the Board. Unless terminated earlier,
the Consulting Agreements expire on March 31, 2000. Mr. Berger did not receive
this compensation during the last fiscal year ended March 31, 1997.
1996 LONG TERM INCENTIVE PLAN
In May 1996, the Company adopted, by action of the Board of Directors
and shareholders, the 1996 Long-Term Incentive Plan (the "Plan") to enable the
Company to attract, retain and reward key employees of the Company and its
subsidiaries and affiliates. The Plan does not have an expiration date. The Plan
is authorized for 500,000 shares of Common Stock. If shares subject to an option
under the Plan cease to be subject to such option, or if shares awarded under
the Plan are forfeited, or otherwise terminate without a payment being made to
the participant in the form of stock, such shares will again be available for
future distribution under the Plan.
Awards under the Plan may be made to key employees, including officers
and consultants to the Company, its subsidiaries and affiliates. The Plan
imposes no limit on the number of officers and other key employees to whom
awards may be made; however, no person shall be entitled to receive in any
fiscal year awards which would entitle such person to acquire more than 3% of
the number of shares of common stock outstanding on the date of grant.
The Plan is administered by a committee of no less than two
disinterested directors appointed by the Board of Directors (the "Committee").
Any member or alternate member of the Committee shall not be eligible to
receive options or stock under the Plan (except as to the automatic grant of
options to directors) or under any plan of the Company or any of its
affiliates. The Committee has broad discretion in determining the persons to
whom stock options or other awards are to be granted, the terms and conditions
of the award, including the type of award, the exercise price and term and the
restrictions and forfeiture conditions. This committee is currently comprised
of Alfred J. Berger, Jr. and Luciano R. Nicasio.
The Committee has the authority to grant the following types of awards
under the Plan: incentive or non-qualified stock options; stock appreciation
rights; restricted stock; deferred stock; stock purchase rights and/or other
stock-based awards. The Plan is designed to provide the Committee with broad
discretion to grant incentive stock-based rights.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
In June 1996, the Company adopted, by action of the Board of Directors
and shareholders, the Non-Employee Directors Stock Option Plan (the
"Non-Employee Directors Plan") to attract, retain and reward independent
directors, who are not otherwise employed by the Company or any subsidiary, for
services to the Company and its subsidiaries. The Non-Employee Directors Plan is
authorized to grant stock options to purchase up to 100,000 shares of Common
Stock.
On the date that each non-employee director is elected to the Board,
such individual shall receive stock options to purchase 5,000 shares of Common
Stock. Initial option grants under the Non-Employee Directors Plan vest upon
grant with an exercise price per share equal to the greater of the fair market
value on the date of grant or the par value of the Common Stock.
On April of each year, commencing April 1, 1997, each non-employee
director shall also receive stock options to purchase 2,500 shares of Common
Stock. These annual option grants vest 25% after each three-month period
following the grant with an exercise price per share equal to the greater of
the fair market value on the date of grant or the par value of the Common
Stock. These options have a term of ten (10) years and are exercisable as to
625 shares on the first day of July, October, January and April immediately
following the date of grant. If there is a change in control of the Company,
all outstanding stock options granted under the Non-Employee Directors Plan
shall be made in the event of a merger, consolidation, recapitalization,
reclassification, stock split, warrants or rights issuance, stock dividend or
combination of shares. As of July 1997, the following eligible directors have
received stock options pursuant to the Non-Employee Directors Plan during the
last fiscal year: Eric S. Kamisher, Luciano R. Nicasio and Carlos Torano.
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The Non-Employee Directors Stock Option Plan is administered by a
committee of not less than two disinterested persons, who are appointed by the
Board of Directors.
The following table sets forth information concerning options granted
during the year ended March 31, 1997 pursuant to the Company's stock option
plans. No stock appreciation rights ("SARs") were granted.
OPTION GRANTS IN YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Percent of
Number of Total Options
Shares Granted to
Underlying Employees in Exercise Price
Name Options Granted Fiscal Year Per Share Expiration Date
---- --------------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
Kevin Doyle 70,000 22.6 $ 7.00 6/06
Thomas R. Dilk 100,000 32.3 1.50 9/05
Luciano R. Nicasio 7,500 2.4 7.00 7/06
Carlos Torano 75,000 24.1 3.50 2/06
Eric S. Kamisher 7,500 2.4 3.50 4/06
Michael Risley 50,000 16.1 7.00 6/06
</TABLE>
The Company's officers named in the Summary Compensation Table did not exercise
options or warrants during the year ended March 31, 1997. No SARs have been
granted.
The Company did not engage in any option repricing during the fiscal year.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Set forth below is information as of March 31, 1997, as to (i) the
Company's Chief Executive Officer, (ii) each executive officer whose total
annual salary and bonus exceeded $100,000 for the last fiscal year, (iii) each
person owning of record or known by the Company, based on information provided
to the Company by the persons named below, to own beneficially at least 5% of
the Company's Common Stock and (iv) all officers and directors as a group.
<TABLE>
<CAPTION>
Percent of Outstanding
Name and Address(1) Shares Common Stock
- ------------------- ------ ------------
<S> <C> <C>
Kevin Doyle 1,823,250 35.6%
6265 SW 8th Street
Miami, Florida 33144
Thomas R. Dilk 343,333(2) 6.6%
6265 SW 8th Street
Miami, Florida 33144
Michael Risley 558,250 10.9%
2665 South Bayshore Drive
Suite 701
Miami, Florida 33133
</TABLE>
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<TABLE>
Percent of Outstanding
Name and Address(1) Shares Common Stock
- ------------------- ------ ------------
<S> <C> <C>
All directors and officers as a group 2,176,083 42.5%
(six individuals owning stock or warrants)
</TABLE>
- ----------
(1) Unless otherwise indicated, each person has the sole voting and
investment power and direct beneficial ownership of the shares.
(2) Includes 100,000 shares of Common Stock issuable upon the exercise of
an option held by Mr. Dilk exercisable until November 2001.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Transactions with Management and Others
During the past two years, Thomas R. Dilk made three loans to the
Company. Two loans totaling $100,000 and one loan totaling $30,000. Such loans
were used toward the operating expenses of the Company and have been repaid by
the Company.
On April 17, 1997, pursuant to an agreement by and among the Company,
Caribbean AWC Corporation, a wholly-owned subsidiary of the Company, and
American Case & Luggage Co. d/b/a American Western Cigar Co. ("AWC"), Lawrence
D. Frutkin and Alfred J. Berger, Jr., the Company acquired assets of AWC for use
in the Company's business of manufacturing and selling cigars. The acquired
assets included AWC's cigar inventory, cigar molds, trademark rights,
intellectual property and contractual rights and obligations. Contracts assigned
to the Company pursuant to the Asset Purchase Agreement included an exclusive
supply agreement between AWC and a cigar manufacturer based in Yogyakarta,
Indonesia. The purchase price of the assets was $237,000, which represented the
net book value of the assets acquired.
The Company from time to time purchases and sells tobacco to entities
affiliated with Alfred J. Berger, Jr. and Lawrence D. Frutkin, including
American Western Cigar Company. Purchases and sales amounted to $672,736 and
$9,287, respectively for the year ended March 31, 1997.
The Company from time to time purchases and sells tobacco to entities
affiliated with Carlos Torano, including Central American Tobacco and Torano
Cigars. Purchases and sales amounted to $1,276,831 and $153,792, respectively
for the year ended March 31, 1997.
During 1996, the law firm of Esanu Katsky Korins & Siger, to which Eric
Kamisher is of counsel, provided legal services to the Company, for which it
received fees of approximately $375,000. Esanu Katsky Korins & Siger is
continuing to render legal services to the Company during the year of 1997.
On March 31, 1997, the Company satisfied an obligation to Mr. Doyle,
the founder of the Company, in the amount of $32,237, which was used for the
Company's operating expenses.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CARIBBEAN CIGAR COMPANY
Date: July 30, 1997 By: /s/Kevin Doyle
---------------
Kevin Doyle, President
In accordance with the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
Kevin Doyle* Chairman of the Board, President
- --------------- Chief Executive Officer and Director
Kevin Doyle (Principal Executive Officer)
Thomas R. Dilk* Chief Financial Officer
- ------------------ and Director (Principal Financial
Thomas R. Dilk and Accounting Officer)
Eric S. Kamisher* Director *By: /s/ Kevin Doyle
- -------------------- --------------------------
Eric S. Kamisher Kevin Doyle
Attorney-in-fact
July 30, 1997
Luciano R. Nicasio* Director
- ----------------------
Luciano R. Nicasio
Carlos Torano* Director
- -----------------
Carlos Torano
Alfred J. Berger, Jr.* Director
- -------------------------
Alfred J. Berger, Jr.
</TABLE>
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