SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-KSB / A
|X| Annual Report pursuant to Section 13 or 15(d) of the
Securities Act of 1934 (fee required)
For the fiscal year ended December 31, 1995, or
| | Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (no fee required)
For the transition period from ____________ to ______________.
Commission File No. 0-12575
ARIZONA INSTRUMENT CORPORATION
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(Name of small business issuer as specified in its charter)
Delaware 86-0410138
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4114 East Wood Street, Phoenix, AZ 85040
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (602) 470-1414
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
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.
|X| Yes | | No
As of February 29, 1996, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $15,434,603. The aggregate market value is
computed with reference to the average bid and asked prices. Shares of Common
Stock held by each officer and director and by each person who owns 10% or more
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily conclusive.
| | Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or
any amendment to this Form 10-KSB.
As of February 29, 1996, 6,498,780 shares of Common Stock ($.01 par value) were
outstanding.
<PAGE>
Arizona Instrument Corporation (the "Company") hereby amends its Report
on Form 10-KSB for the year ended December 31, 1995 by adding thereto Items 9,
10, 11, and 12, as set forth below.
Item 9. Directors, Executive Officers, Promoters and Control Persons.
The names of the directors and executive officers, and certain
information about them, are set forth below.
Director
Name Age Principal Occupation Since
- ---- --- -------------------- -----
Walfred R. Raisanen 61 Chairman of the Board, 1981
Vice President - Research
and Development, and Treasurer
of the Company
S. Thomas Emerson 55 Chairman of Xantel Corporation 1989
John P. Hudnall 45 President and Chief Executive 1988
Officer of the Company
Quinn Johnson 51 President of Horizon 1992
Engineering and Testing,
Inc., a wholly-owned
subsidiary of the Company
Richard Long 67 Marketing and Management 1987
Consultant
Patricia Onderdonk 45 President, Onderdonk & Haynes, Inc. 1992
Vice President of Marketing,
Optical Disk Corporation
Stanley H. Weiss 53 Director and President 1993
Terrell, Weiss & Sugar, Ltd.
Walfred R. Raisanen has been the Chairman of the Board of Directors
since the Company's inception in January 1981. From 1981 until 1986 he was the
President and Treasurer of the Company. Mr. Raisanen was re-elected Treasurer in
1991 and also serves as Vice President of Research and Development. From June
1976 until January 1981 he was President and a Director of Motorola Process
Control, Inc., the predecessor to the Company.
S. Thomas Emerson, Ph.D. has been Chairman of Xantel Corporation, a
private company engaged in computer communications, since August 1992. Dr.
Emerson was Chairman of Syntellect Incorporated, a manufacturer of voice
response systems from 1984 to April 1992. Prior to founding Syntellect in 1984,
Dr. Emerson was a founder of Periphonics Corporation of Bohemia, New York where
he served for 14 years in various executive capacities.
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<PAGE>
John P. Hudnall came to the Company in 1985 as Chief Financial Officer.
He became President and Chief Executive Officer in 1986 and a Director in 1988.
Mr. Hudnall's background spans 22 years in industry, with positions in
production, sales, finance and systems, including a position as Chief Financial
Officer for Inter-Tel, Inc., an independent telephone company.
Quinn Johnson became President of Horizon Engineering & Testing, Inc.,
a wholly-owned subsidiary of the Company ("Horizon"), in September 1992 upon the
acquisition by the Company of Horizon's predecessor. Mr. Johnson founded
Horizon's predecessor in 1990. Prior to forming Horizon's predecessor, Mr.
Johnson founded and served since 1983 as president of a company engaged in
general construction, paving and civil engineering. Previously, Mr. Johnson was
a construction manager for Northern Industries of Eagar, Arizona; a project
manager for the U.S. Forest Service; and a structural engineer for Fluor Corp.
of Los Angeles, California. Mr. Johnson's employment agreement provides that the
Company shall nominate him for, and support his election to, the Company's Board
of Directors.
Richard Long has been involved in the private sector of the
telecommunications industry for over 20 years. He has been both President and
Chairman the trade association representing suppliers, contractors and
manufacturers in the private sector and has acted as a spokesman before Congress
and regulatory bodies during that time.
Patricia Onderdonk has been Vice President of Marketing for Optical
Disk Corporation of Santa Fe Springs, California since mid-1994, a company
engaged in developing and manufacturing high-density CD-ROMs. Previously, she
co-founded Onderdonk & Haynes, Inc. in 1986 and became President of the
marketing and communication consulting firm focused on technology-based
customers. Ms. Onderdonk's background spans 19 years of marketing and
communications experience with positions in account and general management,
including the position of Vice President and General Manager for Regis McKenna,
Inc., a high-technology marketing and public relations firm.
Stanley H. Weiss has been president and director of Terrell, Weiss &
Sugar, Ltd., an accounting firm in Chicago, Illinois since September 1990. Mr
Weiss served as the firm's secretary-treasurer from October 1981 until September
1990 and has been a principal of the firm since December 1978. As a practicing
certified public accountant since 1974, Mr. Weiss has been actively involved in
consulting with entrepreneurs and managers in the areas of income taxes,
business planning, financial controls and employee incentives.
Compliance with Section 16(a) Reporting Requirements
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than 10% of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose any failure to file by
these dates. All of these filing requirements were satisfied during the year
ended December 31, 1995, except Quinn Johnson reported on a Form 4 dated July
14, 1995 a sale of securities on June 14, 1995 and Patricia Onderdonk reported
on a Form 4 dated April 25, 1996 for a purchase of securities on November 22,
1995. Additionally, the Company has not received copies of ownership reports
from Bridge Capital Investors II, which beneficially owned greater than 10% of
the Company's outstanding Common Stock during 1995, and thus has no information
regarding whether such reports have been filed or filed on a timely basis with
the Commission. In making these disclosures, the Company has relied solely on
written representations of its directors and executive officers and copies of
the reports that they have filed with the Commission.
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<PAGE>
Item 10. Executive Compensation
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and each of the two other
executive officers who were serving as an executive officer at the end of fiscal
1995 and whose salary and bonus aggregated at least $100,000 for services
rendered to the Company during fiscal 1995.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------- -----------------------------
Pay-
----
Awards outs
---------------------- ----
Other Re- Securities
Annual stricted Underlying LTIP
Compen- Stock Options/ Pay- All Other
sation Awards SARs outs Compen-
Name and Principal Position Year Salary($) Bonus ($) (#) (#) ($) sation($)
- ------------------------------- ---- --------- ----- -------- -------- ---------- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John P. Hudnall, CEO 1995 154,400 0 5,400(1) 0 120,000(2) 0 1,518(3)
1994 153,226 0 5,400(1) 0 0 0 1,425(3)
1993 143,000 0 5,400(1) 0 95,480(4) 0 1,354(3)
Walfred Raisanen, Chairman 1995 147,262 0 0 0 100,000(2) 0 3,771(3)
1994 135,009 26,460 0 0 0 0 3,329(3)
1993 124,000 0 0 0 35,480(4) 0 2,974(3)
Quinn Johnson, President 1995 127,561 0 0 0 60,000(2) 0 2,869(3)
Horizon Engineering & 1994 129,190 0 0 0 0 0 2,721(3)
Testing 1993 129,029 15,427 0 0 11,480(4) 0 2,606(3)
</TABLE>
(1) Automobile allowance.
(2) No SARs were granted. Represents 24,520, 52,760 and 48,520 new option
grants to Messrs. Hudnall, Raisanen and Johnson, respectively. All
remaining options shown in this table as granted in 1995 represent
repricing of options granted in prior years.
(3) Life insurance premium payments.
(4) No SARs were granted. All options shown in this table as granted in
1993 represent the repricing of options granted in prior years.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
The following table sets forth information about stock option grants
during the last fiscal year to the executive officers named in the Summary
Compensation Table.
Individual Grants
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Number of % of Total
Securities Option/SARs
Underlying Granted
Options/SARs to Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Pricing ($/Sh) Date
- ------------------- ----------- ----------- --------------- ----------
John P. Hudnall 120,000(2) 18.0% $ .92 5/5/2005
Walfred R. Raisanen 100,000(2) 15.0% $ .92 5/5/2005
Quinn Johnson 60,000(2) 9.0% $ .92 5/5/2005
(1) No SARs are outstanding.
(2) Vest in five equal annual installments beginning 5/5/96.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUE TABLE (1)
The following table sets forth information with respect to the
executive officers named in the Summary Compensation Table concerning the number
and value of options outstanding at the end of the last fiscal year. None of the
executive officers named in the Summary Compensation Table exercised options
during the last fiscal year.
Value of Unexercised in-the-
Number of Unexercised Money Options/SARs at
Options/SARs at FY-End(3) FY End ($)(2)
------------------------- -------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ----------- ------------- ----------- -------------
John P. Hudnall 0 120,000 0 129,600
Walfred Raisanen 0 100,000 0 108,000
Quinn Johnson 0 60,000 0 64,800
(1) No SARs are outstanding.
(2) Effective May 5, 1995, the exercise price of all employee options was
reduced to $.92 per share.
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<PAGE>
Employment/Change of Control Arrangements
Effective November 5, 1992, the Company entered into a five-year
employment agreement with Walfred R. Raisanen pursuant to which Mr. Raisanen
agreed to serve as Vice President of Research and Development for a base annual
salary of $120,000, which is to be adjusted annually for cost-of-living
increases. Mr. Raisanen is also entitled to participate in any benefit
arrangements available to executive officers of the Company. Upon termination of
the employment agreement by the Company without cause, Mr. Raisanen is entitled
to receive a cash payment equal to the compensation due him over the balance of
the term of the employment agreement, and to participate in applicable benefit
programs for the balance of the term of the employment agreement.
Effective June 3, 1993, the Company entered into a three-year
employment agreement with its President and Chief Executive Officer, John P.
Hudnall. The agreement provides for a base annual salary of $143,000, which is
to be adjusted annually for cost-of-living increases. Mr. Hudnall is also
entitled to participate in any benefit arrangements available to executive
officers of the Company. Upon termination of the employment agreement by the
Company without cause, Mr. Hudnall is entitled to receive an amount equal to the
compensation due him over the balance of the term of the employment agreement,
and to participate in applicable benefit programs for the balance of the term of
the employment agreement.
For information regarding the employment agreement of Quinn Johnson, an
executive officer of a subsidiary of the Company, see "Item 12. Certain
Relationships and Related Transactions."
Compensation of Directors
Outside directors are currently paid $1,000 plus expenses per Board or
committee meeting attended. Pursuant to the 1991 Stock Option Plan, non-employee
directors are automatically granted options exercisable for 2,500 shares at the
market price on the date of grant upon joining the Board and on each January 1
thereafter. The options become exercisable six months after grant and expire two
years after termination of Board service. Directors who are employees are only
paid their expenses (if any) for attendance of meetings.
Item 11. Security Ownership of Certain Beneficial Owners and Management
As of April 19, 1996 the following table sets forth the beneficial
ownership of Common Stock of the Company by each director and director nominee
who owns shares, by each executive officer named in the Summary Compensation
Table set forth herein, by all directors and executive officers as a group, and
by each person known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock:
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<PAGE>
Shares of Common Stock Beneficially Owned
-----------------------------------------
Name and Address Number of Shares Percent of Total
- ---------------- ---------------- ----------------
Walfred R. Raisanen(1) 176,400 2.6%
S. Thomas Emerson(1) 35,000 (2)
John P. Hudnall(1) 29,521 (2)
Quinn Johnson(1) 62,001 (2)
Richard Long (1) 32,000 (2)
Patricia Onderdonk 16,000 (2)
Stanley Weiss(1) 35,000 (2)
All directors and executive
officers as a group (1)(3)(9 persons) 432,118 6.2%
(1) Includes shares issuable upon exercise of options which are currently
exercisable or become exercisable within 60 days of April 19, 1996 as
applicable for each of the following individuals:
Raisanen 20,000 shares
Emerson 15,000 shares
Hudnall 24,000 shares
Johnson 12,000 shares
Long 15,000 shares
Onderdonk 12,500 shares
Weiss 10,000 shares
(2) Less than one percent.
(3) Includes 42,000 shares issuable upon exercise of options (in addition
to shares issuable upon exercise of options indicated in note 1).
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<PAGE>
Item 12. Certain Relationships and Related Transactions
Bridge Agreements. On July 6, 1989, the Company entered into an
agreement (the "Note Agreement") with Bridge Capital Investors II ("Bridge II").
Pursuant to the Note Agreement as amended through September 2, 1992, Bridge II
held 12% convertible subordinated notes in the principal amount of $3,000,000
with a maturity date of June 30, 1996 and a warrant to purchase up to 115,000
shares of the Company's Common Stock at an exercise price of $1.00 per share. As
a result of common stock issued in conjunction with the acquisition of Horizon
on September 30, 1992 and related financing and other transactions, the notes
became convertible into 847,937 shares of common stock at $3.54 per share. The
Note Agreement further provided that the Company would have the right to prepay
the notes at any time if prepayment were accompanied by the issuance of warrants
to purchase Common Stock at the rate of 200,000 warrants for each $1,000,000 of
principal which is prepaid.
In November 1995, the Company prepaid the remaining principal balance
of the notes payable to Bridge II. In connection with the prepayment, Bridge II
waived all rights to receive any additional warrants under its loan agreement
with the Company. The Company had also made a scheduled principal payment of
$375,000 on April 30, 1995 and a $616,667 principal payment on October 31, 1995.
Merger Agreement. On September 30, 1992, Horizon Engineering and
Testing, Inc. was merged (the "Merger") into a wholly-owned subsidiary of the
Company pursuant to an Agreement of Merger (the "Merger Agreement").
Shareholders of Horizon received cash consideration of $190,000 and shares of
the Company's Common Stock. Quinn Johnson held 90% of the outstanding stock of
Horizon at the time of the Merger and received 529,328 shares of Common Stock in
connection with the Merger. The Company agreed to register the shares of the
Company's Common Stock issued pursuant to the Merger Agreement under applicable
federal and state securities laws at any time after April 1, 1993 upon the
request of holders of 25% of such shares and to keep such registration effective
through September 30, 1995. Mr. Johnson has agreed to indemnify Horizon and the
Company against certain liabilities in connection with the Company's acquisition
of Horizon, and has placed 49,030 shares of the Company's Common Stock in escrow
in connection therewith.
Non-competition Agreement. Pursuant to a Non-Competition Agreement
dated September 30, 1993, and in consideration of a cash payment of $350,000,
Mr. Johnson agreed to refrain from competing with Horizon until the later of
September 30, 1998 or two years after leaving the employment of Horizon, subject
to earlier termination under certain circumstances.
Employment Agreement. Mr. Johnson serves as President of Horizon
pursuant to an Employment Agreement dated September 30, 1992. The Employment
Agreement provides for a base salary of $125,000 over its four-year term, with
annual adjustments tied to increases in the Consumer Price Index. The Employment
Agreement also provides for an annual bonus equal to (i) 15% of Horizon's pretax
profit (as defined) with respect to pretax profit representing up to 15% of
Horizon's gross revenues; and (ii) 20% of Horizon's pretax profit on that
portion of the pretax profit in excess of 15% of gross revenues, with a maximum
bonus over the term of the four-year agreement equal to $700,000. Upon
termination of the Employment Agreement by the Company without cause, Mr.
Johnson is entitled to receive (i) the difference between $700,000 and bonus
payments prior to termination; plus (ii) an amount equal to the then-applicable
annual base salary.
Stock Registration. Pursuant to registration rights previously granted,
the Company filed a shelf registration statement with the Securities and
Exchange Commission ("SEC") relating to 3,781,003 shares of its Common Stock
issued in connection with private placements in September 1992 and November 1993
and in connection with the acquisition of Horizon in September 1992. Also
included in the
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<PAGE>
registration are 209,000 shares of Common Stock issuable upon the exercise of
warrants issued to Cruttenden & Co., Inc. ("Cruttenden") and its assignees in
connection with Cruttenden's activities as placement agent for the November 1993
private placement. The registration statement was declared effective by the SEC
in February 1994. The Company has agreed that it will maintain the effectiveness
of the registration statement (i) until November 1996, with respect to the
shares issued in the November 1993 private placement; (ii) until September 1995,
with respect to the shares issued in the September 1992 private placement and
the Horizon acquisition; and (iii) until two years after exercise, with respect
to shares issuable upon exercise of the warrants referred to above. The
registration statement as originally filed included 465,001 shares beneficially
owned by Quinn Johnson, a director and executive officer of the Company, which
shares were acquired by Mr. Johnson in connection with the acquisition of
Horizon by the Company in September 1992. In connection with the registration,
Mr. Johnson agreed that his registered and other sales of the Company's Common
Stock shall not exceed the volume limitations set forth in Rule 144 under the
Securities Act of 1933, as amended, subject to certain exceptions. The
registration statement also includes 20,000 shares and 20,000 shares
beneficially owned by S. Thomas Emerson and Stanley Weiss, directors of the
Company, which shares were acquired in the November 1993 private placement. The
Company and the holders of the shares of Common Stock included in the
registration have agreed to indemnify each other against certain liabilities.
Other. During September 1993, the Company loaned $45,000 to Walfred R.
Raisanen, a director and executive officer of the Company. The loan bears
interest at 10% per annum, is collateralized by 15,000 shares of the Company's
Common Stock and $30,000 of the cash value of a life insurance policy covering
Mr. Raisanen, and is due August 1996.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ARIZONA INSTRUMENT CORPORATION
Date: April 25, 1996 By: /s/ Scott Carter
-----------------------------
Scott Carter, Vice President and
Chief Financial Officer
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