<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1998
1-12571
-------
(Commission File No.)
INTELLICELL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4467726
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
9314 ETON AVENUE, CHATSWORTH, CALIFORNIA 91311
----------------------------------------------
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (818) 709-2300
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Each Exchange Which Registered
-------------- --------------------------------------
COMMON STOCK, $0.01 PAR VALUE BOSTON STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
--------------
WARRANTS TO PURCHASE COMMON STOCK
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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: [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's common stock held by
non-affiliates as of March 26, 1999 was approximately $10,229,000 (based on
the closing sales price of such stock as of such date on the Nasdaq SmallCap
Market on March 26, 1999). No other capital stock is outstanding.
As of March 26, 1999 there were 6,915,902 shares of the registrant's Common
Stock outstanding.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers, directors, and key employee of the Company as of March 26, 1999:
<TABLE>
<CAPTION>
Name Age Position
- --------------------------- --- ----------------------------------------------
<S> <C> <C>
Executive Officers and Directors:
Ben Neman.................. 41 Chairman of the Board and President
John Swinehart............. 42 Chief Executive Officer and Director
Stephen Jarrett............ 45 Executive Vice President of Sales and Director
Michael Hedge.............. 43 Executive Vice President
David Kane................. 36 Chief Financial Officer
Michael King............... 35 Vice President of Marketing and Business
Development
Vinay Sharma(1)(2)......... 51 Director
J. Sherman Henderson(1)(2). 54 Director
Mark M. Laisure............ 29 Director
Key Employee:
Meir Abramov............... 29 Vice President
</TABLE>
(1) Member of the Audit Committee
(2) Member of the committee administering grants to executive officers under
the Company's stock option plans.
Ben Neman, a founder of the Company, has been Chairman and President of
the Company since its inception in January 1991 and served as the Company's
Chief Executive Officer from the Company's inception through November 1998.
From September 1983 to January 1991, Mr. Neman was the owner and President of
Car Tronics of California, a company engaged in the retail sale of cellular
and other automotive electronic consumer products.
John Swinehart was appointed as Chief Executive Officer and a director
of the Company in November 1998. Mr. Swinehart has also served as President
and Chief Financial Officer of Biltmore Homes, a midwestern homebuilder and
developer, since March 1996. From 1986 to March 1996, Mr. Swinehart served as
Vice President of Allied Broadcast Equipment, an international broadcast-
equipment distribution company. In 1980, Mr. Swinehart received his certified
public accountant certificate.
Stephen Jarrett became Executive Vice President of the Company in
January 1998 and a director of the Company in March 1998. From 1994 to
January 1998, Mr. Jarrett served as Western Zone Regional Sales Manager for
Sony Wireless.
Michael Hedge was appointed Executive Vice President in January 1998.
From 1987 to 1997, Mr. Hedge was employed by Cellstar Corporation, a leader
in telecommunications distribution. He served in various roles at Cellstar,
including Vice President of U.S. Sales and Marketing and as a director.
David Kane was appointed Chief Financial Officer of the Company in
August 1998. Prior to joining the Company, Mr. Kane was Chief Financial
Officer of Grand Havana Enterprises from January 1997 to February 1998. From
July 1995 to
1
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November 1996, Mr. Kane was the Director of Finance for Virgin Records
America. From May 1994 to June 1995, Mr. Kane was the controller of Hemdale
Home Video. Prior to such time, Mr. Kane was a certified public accountant
with Arthur Andersen & Co.
Michael King was appointed Vice President of Marketing and Business
Development in January 1998. Prior to joining Intellicell, Mr. King served
in key positions at leading telecommunications companies, most recently as
Accessory Strategic Director for Philips Consumer Communications. Prior to
joining Phillips, Mr. King acted as Director of Marketing at Cellstar
Corporation.
Vinay Sharma has been a director of the Company since October 1996. Mr.
Sharma has been a partner with the law firm Sharma & Herron since March 1992.
Mr. Sharma received his Masters in Business Administration in June 1974 and
Juris Doctor degree in May 1982 from the University of California at Berkeley.
J. Sherman Henderson has been a director of the Company since February
1998. Since 1993, Mr. Henderson has been President and CEO of UniDial
Communications, a long-distance phone service reseller and full service
distributor of telecommunications products and service founded by Mr.
Henderson.
Mark M. Laisure was appointed as a director of the Company in November
1998. Since 1995, Mr. Laisure has been a Vice President of Shields & Company,
an investment brokerage firm. In addition, Mr. Laisure has acted as a
consultant to (a) Inktomi Corporation, a developer and marketer of network
information and infrastructure applications, since June 1996, (b) Milcom, a
technology development company which invests in new technology companies,
since September 1997, (c) Stat Health Care, a provider of emergency room
management services, since June 1991, and (d) Starstruck Records since August
1995. From 1994 to 1995, Mr. Laisure was a senior investment manager at Paine
Webber.
In addition to the Company's executive officers and directors, Meir
Abramov is a key employee of the Company. Mr. Abramov joined the Company in
1993 and serves as a Vice President of the Company in charge of purchasing
and large account sales.
Directors serve until the next annual meeting or until their successors
are elected and qualified, or appointed. Officers are elected by and serve at
the discretion of the Board of Directors. There are no family relationships
among the officers or directors of the Company.
ARRANGEMENTS AND UNDERSTANDINGS WITH DIRECTORS
- ----------------------------------------------
In connection with a private placement of notes in November 1998 (the
"Note Offering"), the Company agreed to appoint two persons designated by the
investors in the Note Offering to the Company's Board of Directors. In
November 1998, the Company increased the size of the Board to six and
appointed John Swinehart and Mark M. Laisure (the persons designated by the
investors in the Note Offering) to the Board of Directors.
The Company also formed an advisory committee to the Board of Directors
in connection with the Note Offering. This committee has no formal powers or
responsibilities but assists the Board of Directors in providing strategic
planning for the Company. Members of this committee receive no compensation
for service on such committee. The current members of this
2
<PAGE>
committee are Mark M. Laisure, John Swinehart, Alan
Bluestine, Ben Neman, Stephen Jarrett, Paul Skjodt and David Kane.
The Company agreed, until December 17, 1999, if so requested by Sands
Brothers & Co., Ltd. ("Sands"), the representative of the underwriters of the
Company's initial public offering and the Company's financial advisor, to
nominate and use its best efforts to elect a designee of Sands as a director
or, at Sands' option, as a non-voting advisor to the Company's Board of
Directors. Sands exercised its right to designate Alan M. Bluestine, a
managing director of Sands, as a non-voting advisor to the Company's Board of
Directors on June 6, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers, and persons who own more
than 10% 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 (the "Commission"). Officers, directors and greater than
10% stockholders are required by the Commission's regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely upon a
review of the copies of the forms furnished to the Company and the
representations made by the reporting persons to the Company, the Company
believes that during the year ended December 31, 1998, its directors,
officers and 10% stockholders complied with all filing requirements under
Section 16(a) of the Exchange Act, with the exception of the following:
Stephen Jarrett made two late filings reporting four transactions, Michael
King made one late filing reporting one transaction, Michael Hedge made one
late filing reporting one transaction, Paul Skjodt made one late filing
reporting one transaction, Mark M. Laisure made two late filings reporting
one transaction, John Swinehart made two late filings reporting one
transaction, David Kane made two late filings reporting two transactions, J.
Sherman Henderson made one late filing reporting three transactions, and
Vinay Sharma made one late filing reporting four transactions.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth the compensation for the years ended
December 31, 1996, 1997 and 1998 paid by the Company to its chief executive
officers and to one other executive officer of the Company who received
compensation in excess of $100,000 for the year ended December 31, 1998 (the
"named executive officers"). No other executive officers received
compensation exceeding $100,000 during the last fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long-Term
Compensation
Annual Compensation(1) Awards
---------------------- ------------
Other Securities
Name and Annual Underlying
Principal Position Fiscal Year Salary($) Bonus Compensation Options (#)
------------------ ----------- --------- ----- ------------ -----------
<S> <C> <C> <C> <C> <C>
Ben Neman 1998 70,170 -- -- --
Chairman of the Board, 1997 72,000 -- -- --
President, and Chief 1996 72,000 -- -- 12,000(4)
Executive Officer(2)
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
John Swinehart 1998 5,210 -- -- 200,000(5)
Chief Executive Officer
and Director(3)
Stephen Jarrett 1998 115,000 20,000 -- 100,000(6)
Executive Vice President
</TABLE>
- ------------
(1) The compensation described in this table does not include medical
insurance, retirement benefits and other benefits received by the executive
officers which are available generally to all employees of the Company and
perquisites and other personal benefits received by these executive officers
of the Company, the value of which does not exceed the lesser of $50,000 or
10% of the executive officer's cash compensation in the table.
(2) Mr. Neman served in the capacity of Chief Executive Officer only through
November 1998.
(3) Mr. Swinehart became Chief Executive Officer in November 1998.
(4) The options have an exercise price of $5.50 per share and vest one-third
each year for three years.
(5) The options have an exercise price of $1.00 per share. Of these
options, 5/6 were immediately exercisable and 1/6 were to vest upon exercise
of the warrants issued upon the conversion of the notes offered in the
November 1998 private placement. These warrants were exercised in full in
March 1999 making all of these options currently exercisable.
(6) The options were granted in two separate grants of options to purchase
50,000 shares of common stock. The first grant was made with an exercise
price of $4.375, a ten year expiration, and vesting one-third each year for
three years. These options were later repriced to $1.00. The second grant
was made with an exercise price of $0.375 per share, a five year expiration,
and vesting one-third each year for three years.
STOCK OPTION GRANTS AND EXERCISES IN 1998
- -----------------------------------------
The following table sets forth the grants of stock options to the named
executive officers during 1998.
<TABLE>
<CAPTION>
Option Grants During 1998
-------------------------
Percentage
of Total
Number of Options Potential Realizable Value at
Securities Granted to Assumed Annual Rates of Stock Price
Underlying Employees Exercise Appreciation for Option Term(3)
Options During Price Per Expiration ------------------------------------
Name Granted 1998 Share Date 0% 5% 10%
- ---- ---------- ---------- --------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ben Neman.......... 0 -- -- -- -- -- --
John Swinehart(1).. 200,000 50% $1.00 10/14/08 $50,000 $207,224 $448,436
Stephen Jarrett(2). 50,000 12.5% $1.00 1/08/08 $168,750(4) $306,321(4) $517,381(4)
50,000 12.5% $0.375 10/14/03 $43,750 $61,018 $81,907
</TABLE>
- -----------
(1) The options have an exercise price of $1.00 per share and were granted
on October 14, 1998. Of these options, 5/6 were immediately exercisable and
1/6 were to vest upon exercise of the warrants issued upon the conversion of
the notes offered in the November 1998 private placement. These warrants
were exercised in full in March 1999, making all of these options currently
exercisable.
(2) The options were granted in two separate grants of options to purchase
50,000 shares of common stock. The first grant was made on January 9, 1998
with an exercise price of $4.375, a ten year expiration, and vesting
one-third each year for three years. These options were later repriced to
$1.00. The second grant was made on October 14, 1998 with an exercise price
of $0.375 per share, a five year expiration, and vesting one-third each year
for three years.
(3) Potential realizable values are computed by multiplying the number of
shares of common stock subject to a given option by closing market price on
the date of grant for a share of common stock, assuming that the aggregate
stock value derived from that calculation compounds at the annual 5% or 10%
rate shown in the table for the entire five or ten-year term of the option
and subtracting from that result the aggregate option exercise price. The 5%
and 10% assumed annual rates of stock price appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future common stock prices.
(4) Although these options were granted at the fair market value of $4.375 on
January 8, 1998, these numbers assume that the exercise price was $1.00 on
January 8, 1998 in order to reflect the value of the repricing.
There were no stock options exercised by Messrs. Neman, Swinehart or
Jarrett during 1998.
4
<PAGE>
The following table sets forth information concerning the value of
unexercised stock options held by the named executive officers as of December
31, 1998:
<TABLE>
<CAPTION>
Aggregated Fiscal Year-End Option Values
----------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-the-Money Options At
Held At Fiscal Year-End(#) Fiscal Year-End ($) (1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ben Neman 8,000 4,000 $0 $0
John Swinehart 200,000 0 $400,000 $0
Stephen Jarrett 16,667 83,333 $43,751 $187,499
</TABLE>
- -----------
(1) Based on the difference between the exercise price and the fair market
value (the closing price of $3.00 reported by the Nasdaq SmallCap Market on
December 31, 1998).
DIRECTOR COMPENSATION
- ---------------------
Directors do not currently receive any cash compensation for serving on
the Board of Directors. Directors are eligible to participate in the
Company's stock option plans. The Company granted J. Sherman Henderson and
Vinay Sharma each options to purchase 100,000 shares of common stock with an
exercise price of $3.81. These options were later repriced to an exercise
price of $1.00. The Company also granted options to purchase 200,000 shares
of common stock to Mark M. Laisure with an exercise price of $1.00.
EMPLOYMENT AGREEMENTS
- ---------------------
The Company entered into a three-year employment agreement with Ben
Neman, the Company's then Chairman of the Board, Chief Executive Officer and
President, effective December 1996, which was automatically renewable and
provided for an annual base salary of $72,000 per year and bonus as
determined by the Board of Directors. The agreement provided that in the
event of termination without cause or as a result of a change in control, Mr.
Neman would receive a severance payment equal to his base compensation
through the term of the agreement. In November 1998, the Company entered into
a new employment agreement with Mr. Neman (the "Neman Agreement") that
superseded the prior employment agreement. Pursuant to the Neman Agreement,
Mr. Neman will serve as the Chairman of the Board and President of the
Company, but will no longer serve as its Chief Executive Officer. Mr. Neman
will receive an annual salary of $72,000 and may receive bonuses as
determined by the Board of Directors. The term of the Neman Agreement will
expire in November 2001; provided, however, that the Neman Agreement may be
earlier terminated by the Company under certain circumstances. Upon a
termination without cause as defined in the Neman Agreement, the Company will
make a severance payment to Mr. Neman of $500,000.
The Company entered into a two-year employment agreement with Stephen
Jarrett, effective January 1998, for employment as Vice President of Business
Development with automatic renewals for successive one year periods, unless
either party gives notice otherwise. Under the agreement, Mr. Jarrett will
receive a salary of $120,000 per year and incentive bonuses/commissions based
on quantity purchase criteria.
5
<PAGE>
STOCK OPTION PLANS
- ------------------
In October 1996, the Company adopted the 1996 Stock Option Plan, as
amended (the "1996 Plan"), and in February 1998 the Company adopted the 1998
Stock Option Plan, as amended (the "1998 Plan"), pursuant to which 460,000
and 540,000 shares of common stock, respectively, are currently authorized
for issuance upon the exercise of options designated as either (1) options
intended to constitute incentive stock options under the Internal Revenue
Code of 1986, as amended or (2) non-qualified options. Under the 1996 Plan
and the 1998 Plan, incentive stock options may be granted to employees and
officers of the Company. Non-qualified options may be granted to consultants,
directors (whether or not they are employees), employees or officers of the
Company.
REPRICING OF OPTIONS
- --------------------
The following table sets forth certain information concerning the
repricing of the options of any executive officer during the last ten fiscal
years:
<TABLE>
<CAPTION>
Ten-Year Option Repricings
Length
Number of of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at New Remaining at
Options Time of Time of Exercise Date of
Name Date Repriced(#) Repricing($) Repricing Price Repricing
- --------------- ----- ------------ ------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Jarrett 10/14/98 50,000 1.25 $4.375 $1.00 9.2 years
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
During the fiscal year ended December 31, 1998, the full Board of
Directors decided all matters related to compensation, with the exception of
the grant of options to executive officers under the Company's stock option
plans. Vinay Sharma and J. Sherman Henderson are the members of the
committee administering these grants under the stock option plans. During
1998, two directors participated in deliberations on executive compensation
while they also served as executive officers: Ben Neman (Chairman of the
Board, President and Chief Executive Officer until November 1998) and James
Bunting (Chief Operating Officer, Executive Vice President and director until
March 1998). There are no interlocks between the Company and other entities
involving the Company's executive officers and directors who served as
executive officers or board members of other entities.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
- ----------------------------------------------------------
The full Board of Directors decided all matters related to the
compensation of the executive officers of the Company, except for grants of
options to executive officers under the Company's stock option plans that
were made after formation of a committee to oversee such grants. The current
Board of Directors consists of Ben Neman, John Swinehart, Vinay Sharma, Stephen
6
<PAGE>
Jarrett, J. Sherman Henderson and Mark M. Laisure. Messrs. Swinehart and
Laisure became directors in November 1998, Mr. Jarrett became a director in
March 1998 and Mr. Henderson became a director in February 1998. Mr. Neman
serves as the Chairman of the Board and President of the Company. Mr.
Swinehart serves as the Chief Executive Officer of the Company. Mr. Jarrett
serves as Executive Vice President of the Company.
The Company entered into a three-year employment agreement with Ben
Neman, the Company's then Chairman of the Board, Chief Executive Officer and
President, effective December 1996 (the "1996 Agreement"). Mr. Neman's
compensation for 1997 was governed by such agreement, which agreement was
superseded by a new three-year employment agreement in November 1998. Under
the 1996 Agreement, Mr. Neman received an annual salary of $72,000 per year
and such bonus as determined by the Board of Directors. In determining the
salary and bonus for the Chief Executive Officer, the Board of Directors
based its decisions upon the performance of the Company, as well as a review
of the performance of the Chief Executive Officer. During 1998, the Company
performed substantially below its performance during 1997, and the Board of
Directors did not award any bonus to Mr. Neman for 1998. Mr. Neman did not
participate in any decisions by the Board of Directors concerning his
compensation.
The Company entered into a three-year employment agreement with James
Bunting, the Company's then Chief Operating Officer and Executive Vice
President, effective July 1996. Mr. Bunting's compensation for 1998 was
governed by agreement, which provided for an annual salary of $70,000 per
year and such bonus as determined by the Board of Directors. In determining
the salary and bonus for the Chief Operating Officer, the Board of Directors
based its decisions upon the performance of the Company, as well as a review
of the performance of the Chief Operating Officer. During 1998, the Company
performed substantially below its performance during 1997, and the Board of
Directors did not award Mr. Bunting any bonus for 1998. Mr. Bunting did not
participate in any decisions by the Board of Directors concerning his
compensation. In March 1998, Mr. Bunting's employment as Chief Operating
Officer and Executive Vice President terminated and he resigned from the
Board of Directors.
The Company entered into a three-year employment agreement with John C.
Snyder II, the Company's then Chief Financial Officer and Vice President,
effective April 1997. Mr. Snyder's compensation for 1997 was governed by such
agreement, which provided for an annual salary of $70,000 per year and an
annual bonus of $50,000. In providing for this salary and bonus for the Chief
Financial Officer, the Board of Directors based its decisions upon the market
rate of compensation for chief financial officers in similarly situated
companies and upon the experience and qualifications of Mr. Snyder. In March
1998, Mr. Snyder's employment as Chief Financial Officer terminated.
The Company entered into a two-year employment agreement with Stephen
Jarrett, effective January 1998, for employment as Vice President of Business
Development with automatic renewals for successive one year periods, unless
either party gives notice otherwise. Under the agreement, Mr. Jarrett will
receive a salary of $120,000 per year and incentive bonuses/commissions based
on quantity purchase criteria. The repricing of the exercise price for
50,000 of Mr. Jarrett's options on October 14, 1999 from $4.375 to $1.00 was
intended to provide an appropriate incentive to Mr. Jarrett, because the
Board of Directors believed his salary was below the comparable industry
level.
The Company believes that equity ownership by executive officers
provides incentive to build stockholder value and aligns the interests of
executive
7
<PAGE>
officers with the interests of stockholders. Upon the hiring of executive
officers and other key employees, the Board of Directors will typically
recommend stock option grants to those persons under the Company's stock
option plans, subject to applicable vesting periods. Thereafter, the Board of
Directors will consider awarding grants on a periodic basis. The Board of
Directors believes that these additional grants will provide an incentive for
executive officers to remain with the Company. Generally, options will be
granted at the market price of the common stock on the date of grant and,
consequently, will have value only if the price of the common stock increases
over the exercise price. In determining the size of the periodic grants, the
Board of Directors will consider various factors, including the amount of any
prior option grants, the executive's or employee's performance during the
current fiscal year and his or her expected contributions during the
succeeding fiscal year.
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction to publicly held companies for compensation exceeding $1 million
paid to certain of the corporation's executive officers. However,
compensation which qualifies as "performance-based" is excluded from the $1
million limit if, among other requirements, the compensation is payable upon
attainment of pre-established, objective performance goals under a plan
approved by the stockholders.
The compensation paid to the Company's executive officers for the year
ended December 31, 1998 fiscal year did not exceed the $1 million limit per
officer, nor is it expected that the compensation to be paid to the Company's
executive officers for 1999 will exceed that limit. Because it is very
unlikely that the cash compensation payable to any of the Company's executive
officers in the foreseeable future will approach the $1 million limit, the
Board of Directors has decided at this time not to take any action to limit
or restructure the elements of cash compensation payable to the Company's
executive officers. The Board of Directors will continue to monitor the
compensation levels potentially payable under the Company's cash compensation
programs, but intends to retain the flexibility necessary to provide total
cash compensation in line with competitive practice, the Company's
compensation philosophy and the Company's best interests.
The foregoing report on executive compensation is provided by the Board
of Directors: Ben Neman, John Swinehart, Vinay Sharma, Stephen Jarrett, J.
Sherman Henderson and Mark M. Laisure.
PERFORMANCE GRAPH
- -----------------
The chart below sets forth a line graph comparing the performance of
the Company's common stock against Nasdaq Market Index and the Media General
Financial Service's Electronics Wholesale Index ("MG Group Index") for the
period from December 18, 1996 (the date on which the market price of the
Company's shares was first quoted by the Nasdaq SmallCap Market following the
Company's initial public offering) through December 31, 1998. The indices
assume that the value of an investment in the Company's common stock and each
index was 100 on December 18, 1996 and that dividends, if any, were
reinvested.
[GRAPHIC OMITTED]
8
<PAGE>
<TABLE>
<CAPTION>
12/18/96 12/31/96 12/31/97 12/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Intellicell Corp. 100.00 111.32 75.47 45.28
- --------------------------------------------------------------------------------
MG Group Index 100.00 100.00 108.94 89.74
- --------------------------------------------------------------------------------
Nasdaq Market Index 100.00 100.00 122.32 172.52
- --------------------------------------------------------------------------------
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of March 26, 1999, by
(i) each person who is known by the Company to own beneficially more than 5%
of the Company's outstanding common stock; (ii) each named executive officer;
(iii) each of the Company's directors; and (iv) all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Name and Address(1) Ownership Ownership(10)
- ------------------------------------------- ---------------- ------------
<S> <C> <C>
Ben Neman................................... 1,816,764(2) 26.2%
John Swinehart............................... 200,000(3) 2.8%
Stephen Jarrett............................. 16,667(4) 0.2%
Vinay Sharma................................ 100,000(5) 1.4%
J. Sherman Henderson........................ 120,000(6) 1.7%
Mark M. Laisure............................. 200,000(7) 2.8%
Paul Skjodt................................. 1,116,667(8) 15.7%
All executive officers and directors
as a group (9 persons)..................... 2,453,431(9) 31.7%
</TABLE>
- -----------
(1) Unless otherwise indicated, the address of each stockholder is c/o the
Company at 9314 Eton Avenue, Chatsworth, California 91311.
(2) Includes 217,000 shares of outstanding common stock, which are
transferable to Meir Abramov (Vice President of the Company), upon the
exercise of stock options granted to Mr. Abramov by Mr. Neman. Includes
8,000 shares issuable upon the exercise of currently exercisable stock
options, and excludes 4,000 shares issuable upon the exercise of stock
options, which will not be exercisable within 60 days of March 26, 1999.
(3) Includes 200,000 shares issuable upon the exercise of currently
exercisable stock options.
(4) Includes 16,667 shares issuable upon the exercise of currently
exercisable stock options, and excludes 83,333 shares issuable upon the
exercise of stock options, which will not be exercisable within 60 days of
March 26, 1999.
(5) Includes 100,000 shares issuable upon the exercise of currently
exercisable stock options.
(6) Includes 100,000 shares issuable upon the exercise of currently
exercisable stock options, and excludes 10,000 shares issuable upon the
exercise of warrants, which will not be exercisable within 60 days of March
26, 1999. Mr. Henderson's address is 9931 Corporate Campus Drive,
Louisville, Kentucky 40223.
9
<PAGE>
(7) Includes 200,000 shares issuable upon the exercise of currently
exercisable stock options.
(8) Includes 200,000 shares issuable upon the exercise of currently
exercisable stock options. Mr. Skjodt's address is 25 West 9th Street,
Indianapolis, Indiana 96204.
(9) Includes 824,667 shares issuable upon the exercise of currently
exercisable options and warrants, and excludes 297,333 shares issuable upon
the exercise of stock options and warrants, which will not be exercisable
within 60 days of March 26, 1999.
(10) Based on 6,915,902 shares of common stock outstanding on March 26, 1999.
Shares issuable pursuant to currently exercisable stock options or warrants
are added to the number of outstanding shares for the purpose of calculating
each individual's percentage of ownership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Cellular Specialists, a company controlled by Mr. Neman's brother, is a
customer of the Company. For the year ended December 31, 1998, the Company
sold $307,696 of wireless products to this Company. As of March 15, 1999,
$119,000 remains unpaid and is over 300 days past due.
Digicell International Inc. ("Digicell"), a company controlled by two
of Mr. Neman's cousins, is a customer and a supplier to the Company. For the
year ended December 31, 1998, the Company sold to Digicell $1,577,000 and
purchased from Digicell $817,000 of cellular products on terms no less
favorable to the Company than could be obtained from an unaffiliated third
party.
Vinay Sharma, a director of the Company, is a partner with the law firm
Sharma & Herron, one of the Company's attorneys. The Company paid the firm
approximately $28,518 during the year ended December 31, 1998, for legal
services rendered. In March 1998, options to purchase an aggregate of 100,000
shares of common stock at $3.81 per share were granted to Mr. Sharma under
the 1998 stock option plan and later repriced to $1.00 per share. At the
time, options to purchase 50,000 shares of common stock (3,000 shares at
$5.00 granted in 1996, and 47,000 shares at $8.25 granted in 1997) under the
1996 stock option plan were canceled.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment no. 1 to
the annual report to be signed on its behalf by the undersigned, thereunto
duly authorized.
INTELLICELL CORP
Dated: April 29, 1999
By: /s/ MICHAEL HEDGE
----------------------------
Michael Hedge
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ MICHAEL HEDGE Chief Executive Officer, Director April 29, 1999
- -----------------------
Michael Hedge
/s/ JOHN SWINEHART Chief Operating Officer and April 29, 1999
- ---------------------- Chairman of the Board
John Swinehart
/s/ STEPHEN R. JARRETT Director April 29, 1999
- ----------------------
Stephen R. Jarrett
/s/ DAVID M. KANE Chief Financial Officer (Principal April 29, 1999
- --------------------- Financial and Accounting Officer)
David M. Kane
Director
- ------------------------
J. Sherman Henderson
/s/ VINAY SHARMA Director April 29, 1999
- ----------------------
Vinay Sharma
/s/ MARK M. LAISURE Director April 29, 1999
- ----------------------
Mark M. Laisure
11
