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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______
Commission File No. 0-21081
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.)
8305 NW 27th Street, Suite 111
Miami, Florida 33122
(Address of principal executive offices) (Zip Code)
Registrant'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 July 14, 1998.
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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 three individuals, Messrs.
Edward C. Williams, Kevin Doyle, and Curtis Zimmerman.
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>
Edward C. Williams 37 Chairman of the Board, President, Chief Executive Officer, Chief Financial
Officer, Treasurer, Secretary and Director, 1997
Kevin Doyle 39 Executive Vice President and Director, 1994
Curtis Zimmerman 40 Director, 1998
</TABLE>
Biographical information concerning the directors is set forth below.
Mr. Edward C. Williams has been president, chief executive officer since June
1998. Prior to that, he was the chief financial officer since September 1997. He
has been a director since November 1997. From December 1996 to September 1997,
he served as president and chief executive officer of Williams Financial Group,
Inc., a financial and business consulting firm. Mr. Williams was vice president
- - finance of DenAmerica Corp. from April 1996 to July 1996, and he was chief
financial officer of American Family Restaurants, Inc. from February 1993 to
March 1996, when American Family Restaurants, Inc. merged with DenWest
Restaurant Corp. Both of such corporations operated restaurants. From 1987 until
January 1993, Mr. Williams was employed by KPMG Peat Marwick, most recently as a
senior manager.
Mr. Kevin Doyle has been executive vice president since March 31, 1998. Prior to
that, he was 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. Curtis Zimmerman has been a Director of the Company since January 1998.
Since 1987, Mr. Zimmerman has been a partner and principle of the Zimmerman
Agency, Inc., an advertising agency. Prior to that he was a partner at Pringle
Dixon & Pringle where he was employed since 1979.
EXECUTIVE OFFICERS
The current executive officers of the Company are set forth below.
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Edward C. Williams Chief Executive Officer, Chairman of the Board, President, Chief Financial Officer,
Secretary and Treasurer
Kevin Doyle Executive Vice President
</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, 1998 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, 1998, 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 and Forms 4 in a timely manner: Edward C. Williams, Kevin Doyle
and Curtis Zimmerman.
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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" 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 ending March 31, 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>
Edward C. Williams - President, 1998 $ 54,167 -- -- 187,500
Chief Financial Officer and Director
Kevin Doyle - Executive Vice 1998 $ 150,000 -- -- --
President and Director 1997 $ 150,000 -- -- 70,000
1996 $ 102,000 -- -- --
</TABLE>
EMPLOYMENT CONTRACTS
The Company has employment agreements with Mr. Edward C. Williams and Mr. Kevin
Doyle. The employment agreement with Mr. Williams, effective April 1, 1998,
provides for his employment as Chief Financial Officer of the Company until
March 31, 2001, subject to automatic renewal for successive one-year periods
unless either the Company or Mr. Williams has given prior notice of non-renewal.
The employment agreement further provides Mr. Williams with an annual base
salary of $100,000 per year plus performance bonuses and annual increases, if
any, as determined by the Company's Board of Directors. The Company also agreed
to grant Mr. Williams an option to purchase 187,500 shares of its common stock
at an exercise price of $0.01 per share. The option is immediately exercisable
and expires in March 2008. Under his employment agreement, Mr. Williams is
entitled to participate in or receive benefits under all employee and executive
benefit plans or arrangements and perquisites of employment, including, but not
limited to, health and disability insurance coverage, life insurance, deferred
compensation and pension benefits and personal financial, investment, legal or
tax advice, subject to the same terms and conditions as apply to other senior
officers of the Company. Mr. Williams is entitled to receive a severance payment
over a 12-month period of (i) one and one-half times his current salary
including bonus and benefit payments ("Current Salary") if his employment
agreement is terminated as a result of a "constructive termination" in
connection with a "change of control" (as defined in the agreement generally to
mean a merger, consolidation or transfer of the Company's assets pursuant to
which the surviving corporation or the transferee does not agree to be bound by
the terms of the agreement, or any person becomes the holder of 50% or more of
the voting power of the Company), or (ii) one time his Current Salary as a
result of election of either party not to renew the agreement, or (iii) an
amount equal to the greater of (a) the base salary over the remaining term of
the agreement or (b) his Current Salary if his agreement is terminated as a
result of a "termination without cause". In addition, in the event Mr. Williams'
agreement is terminated as a result of a "termination without cause" or
"constructive termination," any and all stock options held by Mr. Williams will
immediately become vested and exercisable.
The employment agreement with Mr. Doyle, effective April 1, 1998, provides for
his employment as Executive Vice President of the Company until March 31, 2001,
subject to automatic renewal for successive one-year periods unless either the
Company or Mr. Williams has given prior notice of non-renewal. The employment
agreement further provides Mr. Williams with an annual base salary of $150,000
per year plus performance bonuses and annual increases, if any, as determined by
the Company's Board of Directors. The benefit and severance provisions in Mr.
Doyle's agreement are the same as those set forth above in Mr. Williams'
agreement, except that his severance amount in the event of a change of control,
as defined above, would be two times his Current Salary. In addition, in the
event Mr. Williams' agreement is terminated as a result of a "termination
without cause" or "constructive termination," any and all stock options held by
Mr. Williams will immediately become vested and exercisable
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
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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 Curtis Zimmerman.
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 1998,
the following eligible directors have received stock options pursuant to the
Non-Employee Directors Plan during the last fiscal year: Curtis Zimmerman.
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, 1998 pursuant to the Company's stock option plans. No stock
appreciation rights ("SARs") were granted.
OPTION GRANTS IN YEAR ENDED MARCH 31, 1998
<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>
Edward C. Williams 187,500 45.3 $ 0.75(1) 3/08
Curtis Zimmerman 5,000 1.2 1.00 1/08
</TABLE>
(1) Subsequent to March 31, 1998, the Company agreed to reduce the exercise
price on the options to $0.01 per share.
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The following table sets forth information as to options held by the executive
officers named in the Summary Compensation Table.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 1998 AND
FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options at Fiscal Options at Fiscal
Year End Year End
Shares
Acquired Value Exercisable/ Exercisable/
Name Upon Exercise Realized Unexercisable Unexercisable
- ---- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Edward C. Williams -- -- 187,500 62,578(1)
Kevin Doyle -- -- 70,000 --
</TABLE>
(1) Based upon the difference between $0.34375, the closing sales bid price of
the Company's common stock on July 28, 1998, and $0.01, the exercise price.
The Company's officers named in the Summary Compensation Table did not exercise
options or warrants during the year ended March 31, 1998. 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
Common
Name and Address(1) Shares Stock
- ------------------- ------------ -----------
<S> <C> <C>
Edward C. Williams 302,046(2) 4.5%
Kevin Doyle 1,684,250(3) 25.8%
8305 NW 27th Street
Suite 111
Miami, Florida 33122
Michael Risley 516,650 7.9%
1050 Sevilla Avenue
Coral Gables, Florida 33134
All directors and executive officers as a group(2)(3) 1,991,296 29.6%
(three persons)
</TABLE>
- -------------------
(1) Unless otherwise indicated, each person has the sole voting and investment
power and direct beneficial ownership of the shares.
(2) Includes 187,500 shares of Common Stock issuable upon the exercise of an
option held by Mr. Williams exercisable until March 2008.
(3) Includes 70,000 shares of Common Stock issuable upon the exercise of an
option held by Mr. Doyle exercisable until June 2006.
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Transactions with Management and Others
In June 1997, certain of the Company's directors loaned the Company $250,000.
The loans were repaid in September 1997 from the proceeds of the Finova Credit
Facility together with interest in the amount of $5,000, calculated at a rate of
8% per annum.
As of March 31, 1998, the Company's chief financial officer had loaned the
Company a total of $70,000 in exchange for $70,000 of the Company's series 9%
subordinated notes bearing interest at a rate 9% per annum and repayable in 60
days. In connection with the series 9% subordinated notes, the Company has
issued the chief financial officer 20,000 shares of Common Stock.
As of March 31, 1997, the Company had loaned $58,314 to an officer and various
employees of the Company. Approximately $34,000 was collateralized by stock and
the remaining balance was unsecured.
The Company from time to time purchased and sold tobacco to entities affiliated
with a former member of the Board of Directors of the Company. Purchases and
sales were approximately $0 and $257,000 and $1,032,000 and $154,000,
respectively, for the years ended March 31, 1998 and 1997.
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 29, 1998 By: /s/Edward C. Williams
Edward C. Williams, 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>
Edward C. Williams* Chairman of the Board, President
Chief Executive Officer and Director
(Principal Executive Officer)
Edward C. Williams* Chief Financial Officer
and Director (Principal Financial
and Accounting Officer)
Kevin Doyle* Executive Vice President and Director
Curtis Zimmerman* Director
*By: /s/ Edward C. Williams
Edward C. Williams
Attorney-in-fact
July 29, 1998
</TABLE>
