<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the fiscal year ended: Commission File Number:
September 30, 1995 0-13615
-------------------------- -----------------------
CELLCOM CORP.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 06-1106964
- ------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
520 South Fourth Street, Las Vegas, Nevada 89101
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(702) 896-8898
------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
-------------------------------------
(Title of class)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by the Section 13 or 15(d) of the securities Exchange Act of 1934
during the preceding 12 months (or such period that the Registrant was required
to file such reports), and (2) has been subject to the filing requirements for
at least the past 90 days.
X Yes 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-KSB or any amendment to
this Form 10-KSB.
X
---
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS FOR THE LAST FIVE YEARS
Indicate by check mark whether Registrant has filed all documentation and
reports required to be filed by Section 12, 13 or 15(b) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
X Yes No
--- ---
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant as of December 6, 1995 was $115,586. On such
date, the closing price of the Company's Common Stock was $.01.
The registrant had 11,558,605 shares of Common Stock outstanding as of December
6, 1995.
<PAGE> 2
PART I.
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
Cellcom Corp., which was incorporated in the State of Delaware on
October 26, 1983 (hereinafter the "Registrant" or the "Company"), was engaged in
the purchase and resale of cellular telephone service through July 28, 1992 at
which time the Company sold substantially all of its assets as described below.
Cellular telephone service is access to a cellular telephone system through the
assignment of an individual mobile telephone number, which enables the
subscriber to make local and long distance telephone calls. The Company obtained
such service from local cellular telephone system operators ("Cellular
Carriers") who have received licenses from the Federal Communications Commission
to construct and operate cellular telephone systems in specific geographical
areas. The Company purchased the service in accordance, where applicable, with
the Cellular Carriers' wholesale tariffs filed with the local regulatory
agencies and resold the service to its subscribers according to the Company's
retail rates, or retail tariffs, if required by state regulatory agencies. As a
reseller of cellular telephone service, the Company did not have a license to
construct, operate or own a cellular telephone system.
Prior to 1992, the Company experienced declining working capital, net
operating losses, negative cash flow and an increased rate of customer
deactivations in certain markets. Consequently, Management and the Board of
Directors concluded that it was in the best interest of the Company to enter
into the sale described below and contemporaneously seek protection from its
creditors under the United States Bankruptcy Code.
On April 16, 1992, the Company and its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code. On
July 28, 1992, the Company sold substantially all of its assets to Nationwide
Cellular Service, Inc. ("Nationwide"). The sale was consummated after receiving
the requisite approvals from the bankruptcy court and governmental regulatory
agencies. In connection with the sale, Nationwide assumed the secured
indebtedness to the Company's senior secured creditor, Cellular Carriers and
customer security deposits on July 28, 1992. Prior to the closing of the sale
and pursuant to an Option Agreement between Nationwide and the Company's senior
subordinated noteholders dated April 15, 1992, Nationwide issued 702,007 shares
of its common stock to Cellcom's senior subordinated noteholders in exchange for
the senior subordinated notes and warrants issued by Cellcom and in connection
with the sale, such notes and warrants were canceled. At July 28, 1992, the
closing price of Nationwide's common stock on Nasdaq was $6.75. The Company
received $2,300,000 from the sale in cash plus $800,000 for postpetition
bankruptcy costs to be paid by the Company.
On August 20, 1993, the Company filed a Modified Consolidated Plan of
Reorganization (the "Plan") with the Bankruptcy Court. The "Post Confirmation
Order" was dated and notice was given on October 7, 1993. The Plan called for a
consolidation of the Company and its subsidiaries and for the Company to
continue to pursue collection of contingent assets. Pursuant to the terms of the
Plan, the Company has settled all administrative, secured and priority claims.
All funds remaining after these distributions have been distributed among the
unsecured creditors and the Company, with the Company remaining responsible for
collection expenses.
As of September 30, 1995, all administrative, secured and priority
claims were settled in the amount of $479,000. In addition, the Company
distributed $418,133 to the unsecured creditors and $415,000 to the reorganized
Company. All distributions to the unsecured creditors have been made with the
exception of the recovery of the net operating loss benefit. Under the terms of
the settlement, the unsecured creditors are entitled to one quarter of the tax
savings from the net operating loss utilization.
2
<PAGE> 3
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
During the last three fiscal years, the Company was engaged in only one
industry segment, the resale of cellular telephone service and the sale of
cellular telephone equipment and accessories.
(C) NARRATIVE DESCRIPTION OF BUSINESS
OPERATIONS
As described above, on April 16, 1992, the Company and each of its
subsidiaries filed voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York.
The Company currently has no operations. It is principally engaged in
controlling its assets (principally cash) and administering its liabilities and
bankruptcy claims. The Company has been, and is, in the process of evaluating
potential business opportunities which could be attained by merger or
acquisition. If the Company embarks on a new business venture, no assurance can
be given regarding the future success of such a business due to all the
attendant costs and risks associated with starting or acquiring a new business.
EMPLOYEES
The Company currently has one employee.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
The Company does not have any foreign operations or sales.
ITEM 2. PROPERTIES
On November 27, 1995, the Company entered a lease for 1,500 square feet
at 6273 South Industrial Road, Las Vegas, Nevada. This facility is leased under
a one year contract at a monthly rental rate of $1,017.
ITEM 3. LEGAL PROCEEDINGS
Other than the aforementioned bankruptcy proceedings, the Company is not
a party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal year 1995.
3
<PAGE> 4
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The Company's common stock is traded in the over-the-counter market.
The following table sets forth the high and low closing prices for the Company's
common stock for the periods indicated, as reported by brokers and dealers
making a market in the common stock:
<TABLE>
<CAPTION>
Fiscal 1995 Fiscal 1994
---------------------------- ----------------------------
Quarter High Low High Low
------ ------ ------ ------
<S> <C> <C> <C> <C>
First $ 0.07 $ 0.02 $ 0.19 $ 0.01
Second $ 0.04 $ 0.01 $ 0.19 $ 0.03
Third $ 0.035 $ 0.01 $ 0.10 $ 0.04
Fourth $ 0.03 $ 0.01 $ 0.08 $ 0.03
</TABLE>
The aforesaid quotations do not represent actual transactions and do
not include retail mark-ups, mark-downs or commissions.
(b) As of December 6, 1995, there were 755 holders of record of the
Company's common stock.
(c) The Company has not paid any dividends on its common stock since
its inception.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF CONTINUING OPERATIONS
LIQUIDITY , CAPITAL RESOURCES AND RESULTS FROM CONTINUING OPERATIONS
The Company has sufficient cash to pay its current and anticipated
operating expenses. During the fiscal year ended September 30, 1995, the company
incurred administrative expenses of $115,000. The Company has a net operating
loss carryforward ("NOL") of approximately $9 million for both financial
reporting and income tax purposes. The Company expects to use this NOL to offset
earnings in potential business opportunities. If the Company embarks on a new
business venture, no assurance can be given regarding the future success of such
a business due to all the attendant costs and risks associated with starting or
acquiring a new business.
See Item 1(a) above, General Development of Business, regarding the
Company's bankruptcy filing and the sale of substantially all of its assets and
the assumption and cancellation of substantially all its liabilities.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information required by Item 8 is included elsewhere in this
report (see Part IV, Item 14).
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
4
<PAGE> 5
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names of the directors and executive officers
of the Company along with certain information relating to business experience of
each of the listed directors and officers.
<TABLE>
<CAPTION>
Name Age Position With Company
---- --- ---------------------
<S> <C> <C>
Jay H. Brown 54 Chairman, Chief Executive Officer
and President
William S. Taylor 34 Executive Vice President,
Secretary and Director
Raymond Soard 73 Director
David A. Obal 31 Chief Financial Officer
and Director
</TABLE>
Directors are elected until the next annual meeting of stockholders or
until their successors are duly elected and qualified. Officers serve at the
discretion of the Board of Directors. The Board of Directors does not have
Audit, Compensation or Nomination committees.
Jay H. Brown has been Chairman, Chief Executive Officer and President
since the Company's formation in October 1983, and devoted substantially all of
his time to the Company's business affairs from February 1, 1989 through July
31, 1992. Since August 1992, he has worked as a management consultant for
Nationwide Cellular Service, Inc. and has practiced law in Las Vegas, Nevada.
Raymond Soard has been a Director of the Company since its formation.
From October 1983 to November 1989, he served as Secretary/Treasurer of the
Company. Since October 1989, he has worked as an electronics consulting
engineer. From September 1986 to October 1989, he served as President of
Citivision Inc., a corporation engaged in satellite master antennae cable
television in Las Vegas, Nevada. From April 1962 to January 1984, he was
employed by Central Telephone Company, Las Vegas, Nevada in various executive
positions.
William S. Taylor has been a Director of the Company since June 1989. He
also serves as Executive Vice President and Secretary. Mr Taylor was employed by
the Company from 1984 through May 31, 1992 in various sales and marketing
capacities. Since June 1992, Mr. Taylor has operated as a cellular and office
product wholesaler in New Jersey. Mr. Taylor currently holds the position of
officer and director of Electronics Communication Corp. He is a member of the
Radio Club of America.
David A. Obal has been a Director and Chief Financial Officer of the
Company since February 8, 1994. From October 1993 through February 1994, he was
employed by the Company as Finance Manager. From October 1992 through September
1993, he was retained by the Company as a consultant. Between July 1988 and
October 1992, he held various finance positions with the Company.
Except with respect to the Company's bankruptcy filing, during the past
five years, no Director or Executive Officer of the Registrant has been involved
in any legal proceedings which is material to an evaluation of the ability or
integrity of such Director or Executive Officer.
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's Officers, Directors and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and ten percent shareholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the
5
<PAGE> 6
Company's copies of such forms received or written representations from certain
reporting persons that no Form 5's were required for those persons, the
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the aggregate compensation paid by the
Company to the Chief Executive Officer. No executive officer of the Company
received total compensation in excess of $100,000 during the last three years:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------- --------------------------------------------
Awards Payouts
-------- -------------------------
Other Restricted Long-Term
Name and Annual Stock Option Incentive All Other
Principal Position Year Salary$ Bonus$ Compensation Awards SARs Payouts Compensation
- ------------------ ---- ------ ------ ------------ ------ ---- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jay H. Brown 1995 0 0 0 0 0 0 0
Chairman, Chief 1994 0 0 0 0 0 0 0
Executive Officer 1993 0 0 0 0 0 0 0
and President
</TABLE>
The Company does not have any long-term incentive compensation plans.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information as of the date of
this report, with respect to the beneficial ownership (as defined in Rule 13d-3
under the Securities and Exchange Act of 1934) of shares of common stock, the
Company's sole voting securities, by each person known to the Company to be the
beneficial owner of 5% or more of the Company's Common Stock, by each director
and by all officers and directors as a group.
<TABLE>
<CAPTION>
Title of Name and Address Nature of % of
Class of Beneficial Owner Ownership Amount Class(1)
- -------- ------------------- --------- ------ --------
<S> <C> <C> <C> <C>
Common Jay H. Brown Record and 2,598,441 22.5%
Stock 520 South Fourth St. Beneficial
Las Vegas, NV 89101
Common Raymond Soard Record and 999 (2) .. (3)
Stock 14 Crescent Circle Beneficial
Las Vegas, NV 89102
Common William S. Taylor Record and 99,999 .. (3)
Stock C/O Free Trade Beneficial
4 Madison Avenue
Fairfield, NJ 07004
Common David Obal Record and 25,000 (4) .. (3)
Stock 2675 Windmill Pkwy. Beneficial
Henderson, NV 89014
Common Joseph W. Namath Record and 1,333,332 (5) 11.5%
Stock and James Walsh Beneficial
300 East 51st Street
New York, NY 10022
Common All Officers and Record and 2,724,439 23.6%
Stock Directors as a Beneficial
Group (consisting
of 4 persons)
</TABLE>
6
<PAGE> 7
- -----------------------
(1) All percentages are based on a total of 11,558,605 shares outstanding
as of December 6, 1995.
(2) Includes 333 shares owned by Mr. Soard's wife and 333 shares held
jointly with Mr. Soard's wife.
(3) Represents less than 1%.
(4) Represents 25,000 currently exercisable incentive stock options.
Excludes 75,000 incentive stock options which are not currently
exercisable.
(5) Includes 666,666 shares of Common Stock owned of record by Joseph W.
Namath and 666,666 shares of Common Stock owned of record by James
Walsh. The Company has been advised by Messrs. Namath and Walsh that
for the purposes of Section 16(a) of the Securities Exchange Act of
1934, each beneficially owns the shares owned of record by the other.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended, September 30, 1994, the Company granted
100,000 incentive stock options to David Obal, a Director and officer of the
Company. During the fiscal year ended, September 30, 1995, the Company paid
$33,000 in salary to David Obal, the Chief Financial Officer and a Director.
7
<PAGE> 8
PART IV.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. The financial statements and schedules listed in the
accompanying index to financial statements are filed as a part of
this Form 10-K report.
2. Exhibits.
2.1 Certificate of Incorporation of the Company (incorporated herein
by reference to the Company's Registration Statement on Form S-18,
File No. 2-88633-NY, effective March 16, 1984).
2.2 Amendments to the Certificate of Incorporation of the Company
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ended September 30, 1990).
2.3 By-Laws of the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-18, File No. 2-88633-NY,
effective March 16, 1984).
10.1 The Company's 1985 Incentive Stock Option Plan, as amended
(incorporated by reference to the Company's Registration Statement on
Form S-8, File No. 33-30985, which became effective on September 29,
1989).
10.2 Asset Purchase Agreement dated April 15, 1992 by and among
Cellcom Acquisition Corp., Cellcom Corp., Cellcom Telephone Company,
Inc. and certain affiliated companies (incorporated by reference to
the Company's current Report on Form 8-K dated April 29, 1992).
10.3 Bankruptcy Court Order dated May 29, 1992 approving the sale of
substantially all of the assets of the Company under an Asset
Purchase Agreement pursuant to 11 U.S.C. 363 (b) and (f).
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ending September 30, 1992).
10.4 Transition Assistance Agreement dated July 28, 1992 between
Nationwide Cellular Service, Inc. and Cellcom Corp. (incorporated by
reference to the Company's annual report on Form 10-K for the fiscal
year ending September 30, 1992).
10.5 Assumption Agreement dated July 28, 1992 by Nationwide Cellular
Service, Inc. (incorporated by reference to the Company's annual
report on Form 10-K for the fiscal year ending September 30, 1992).
10.6 Letter Agreement dated July 28, 1992 between Nationwide Cellular
Service, Inc. and Cellcom Corp. related to certain Subscriber Taxes
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ending September 30, 1992).
10.7 Release Agreement dated July 28, 1992 between Congress Financial
Corporation and Cellcom Corp., et al. (incorporated by reference to
the Company's annual report on Form 10-K for the fiscal year ending
September 30, 1992).
10.8 Assumption and Assignment Agreements of Executory Contract
between Nationwide Cellular Service, Inc. and Los Angeles SMSA Ltd.
Partnership dated July 27, 1992 (incorporated by reference to the
Company's annual report on Form 10-K for the fiscal year ending
September 30, 1992).
10.9 Assumption and Assignment of Executory Contract Agreements
between Nationwide Cellular Service, Inc. and Los Angeles Telephone
Company dated July 24, 1992 and July 27, 1992 (incorporated by
reference to the Company's annual report on Form 10-K for the fiscal
year ending September 30, 1992).
8
<PAGE> 9
10.10 Assumption and Assignment of Executory Contract Agreements
between Nationwide Cellular Service, Inc. and Bay Area Cellular
Telephone Company dated July 24, 1992 and July 27, 1992 (incorporated
by reference to the Company's annual report on Form 10-K for the
fiscal year ending September 30, 1992).
10.11 Assumption and Assignment of Executory Contracts Agreement
between Nationwide Cellular Service, Inc. and Cellular Telephone
Company dated July 24, 1992 and July 27, 1992 (incorporated by
reference to the Company's annual report on Form 10-K for the fiscal
year ending September 30, 1992).
10.12 Assumption and Assignment of Executory Contract Agreements
among Nationwide Cellular Service, Inc., New York SMSA Limited
Partnership and Boston CGSA dated July 24, 1992 and July 27, 1992
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ending September 30, 1992).
10.13 Debtor's Modified Consolidated Plan of Reorganization dated
August 20, 1993 (incorporated by reference to the Company's annual
report on Form 10-K for the fiscal year ending September 30, 1993).
10.14 Notice of (i) Order Confirming Debtor's Modified Consolidated
Plan of Reorganization, and (ii) Discharge of Debts dated October 7,
1993 (incorporated by reference to the Company's annual report on
Form 10-K for the fiscal year ending September 30, 1993).
21 Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
(b) Reports on Form 8-K
None
9
<PAGE> 10
CELLCOM CORP. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated Financial Statements:
Consolidated Balance Sheet as of September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 12
Consolidated Statements of Operations for the Years Ended September
30, 1995 and September 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Consolidated Statements of Changes in Stockholders' Deficit for the
Years Ended September 30, 1995 and September 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . 14
Consolidated Statements of Cash Flows for the Years Ended September
30, 1995 and September 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
10
<PAGE> 11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Cellcom Corp.
We have audited the accompanying consolidated balance sheet of Cellcom Corp. (a
Delaware corporation) and subsidiaries as of September 30, 1995 and the related
consolidated statements of operations, changes in stockholders' (deficit) and
cash flows for each of the two years in the period ended September 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cellcom Corp. and subsidiaries
as of September 30, 1995 and the results of their operations and their cash
flows for each of the two years in the period ended September 30, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
November 10, 1995
11
<PAGE> 12
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
================================================================================
(Dollar amounts in thousands except for per share amounts)
<TABLE>
<CAPTION>
ASSETS 1995
- ------------------------------------ --------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 225
--------
Accounts receivable 1
Prepaid expenses 3
TOTAL CURRENT ASSETS $ 229
========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable 19
Taxes payable 53
--------
TOTAL CURRENT LIABILITIES 72
--------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; 100,000,000
shares authorized and 11,558,605 shares
issued and outstanding 12
Additional paid-in capital 10,989
Accumulated deficit (10,844)
--------
TOTAL STOCKHOLDERS' EQUITY 157
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 229
========
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12
<PAGE> 13
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
================================================================================
(Dollar amounts in thousands except for per share amounts)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ 115 $ 178
Reorganization item - professional fees 11 73
Interest Income (39) (8)
Miscellaneous income (18) (138)
----------- -----------
OPERATING LOSS BEFORE EXTRAORDINARY ITEM (69) (105)
EXTRAORDINARY ITEM:
Gain from forgiveness of
debts in bankruptcy 0 5,327
----------- -----------
NET INCOME (LOSS) $ (69) $ 5,222
=========== ===========
NET INCOME (LOSS) PER SHARE:
FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY ITEM $ (.01) $ (.01)
EXTRAORDINARY ITEM .00 .46
----------- -----------
NET INCOME (LOSS) PER SHARE $ (.01) $ .45
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 11,558,605 11,558,605
=========== ===========
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13
<PAGE> 14
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
================================================================================
(Dollar amounts and number of shares in thousands)
<TABLE>
<CAPTION>
ADDI-
TIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES PAR VALUE CAPITAL DEFICIT TOTAL
------ --------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1993 11,559 12 10,989 (15,997) (4,996)
Net Income -- -- -- 5,222 5,222
------ --- ------ ------- ------
BALANCE, SEPTEMBER 30, 1994 11,559 12 10,989 (10,775) 226
Net Loss -- -- -- 69 69
------ --- ------ ------- ------
BALANCE, SEPTEMBER 30, 1995 11,559 12 10,989 (10,844) 157
====== === ====== ======= ======
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
<PAGE> 15
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
================================================================================
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (69) $ 5,222
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Changes in operating assets and liabilities:
Decrease in restricted cash -- 146
Decrease in accounts receivable 356 358
Decrease in prepaids and other current assets -- 1
Decrease in accounts payable (191) (2,309)
Decrease in accrued expenses -- (571)
Decrease in taxes payable -- (3,645)
------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 96 (798)
------------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 96 (798)
------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 129 927
------------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 225 $ 129
==================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
INTEREST RECEIVED $ 39 $ 8
======= =======
REORGANIZATION EXPENSES PAID $ 11 $ 73
======= =======
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15
<PAGE> 16
CELLCOM CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial
statements include the accounts of Cellcom Corp. and its subsidiaries
which comprise the "Company." All significant intercompany accounts and
transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS - All highly liquid instruments with
original maturities of three months or less are considered cash
equivalents.
INCOME (LOSS) PER SHARE CALCULATIONS - Per share amounts have
been calculated based on 11.6 and 11.6 million weighted average number of
common shares outstanding for the years ended September 30, 1995 and
1994, respectively. The effects of common stock equivalents are not
considered because they are anti-dilutive.
INCOME TAXES - The Company's policy is to provide for deferred
income taxes resulting from differences in the timing of amounts reported
for financial accounting and income tax purposes. Since the Company has a
net operating loss carryforward, no deferred income taxes have been
recorded.
RECLASSIFICATIONS - Certain reclassifications have been recorded
in prior years financial statements to conform with current year
presentation.
2. PETITION FOR RELIEF UNDER CHAPTER 11
On April 16, 1992, the Company filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code (the "Petitions") in the
United States Bankruptcy Court for the Southern District of New York (the
"Court"). The Company's existing Directors and officers remained
responsible for the Company's business and assets, subject to supervision
by the Court. Under Chapter 11, certain claims against the Company in
existence prior to the filing of the Petitions under the federal
bankruptcy laws were stayed while the Company continued business
operations as a debtor-in-possession. These claims were reflected in the
accompanying consolidated balance sheets as "liabilities subject to
compromise." Additional claims (liabilities subject to compromise) arose
subsequent to April 16, 1992 resulting from rejection of executory
contracts, including leases, and from the determination by the Court (or
as agreed to by parties in interest) of allowed claims for contingencies
and other disputed amounts. Claims secured against the Company's assets
("Secured Claims") were also stayed, although the holders of such claims
were those secured by substantially all of the Company's assets and by
the outstanding capital stock of the subsidiaries of Cellcom Corp.
The Company received approval from the Court to pay or otherwise honor
certain of its prepetition obligations, including employee wages,
customer claims and agent commissions. The Court approved a
Debtor-in-Possession loan agreement, which provided that an existing
creditor was permitted to continue lending funds to the Company during
the postpetition period through July 28, 1992 under terms substantially
the same as those contained in the original loan agreement. In exchange,
this creditor was granted senior security interests and liens upon
substantially all of the Company's assets. Pursuant to a debt covenant,
all cash receipts from subscribers were forwarded to the Company's senior
secured creditor. The Court established several dates by which creditors
were allowed to file claims against the Company with the Court.
Prepetition and postpetition liabilities reflect those amounts previously
reported to the Court pending the final disposition by the Court of all
claims.
On August 20, 1993, the Company filed a Modified Consolidated Plan of
Reorganization (the "Plan") with the Bankruptcy Court. The "Post
Confirmation Order" was dated and notice was given on October 7, 1993.
The Plan called for a consolidation of the Company and its subsidiaries
and the Company will
16
<PAGE> 17
continue to pursue collection of contingent assets. Pursuant to the terms
of the Plan, the Company has settled all administrative, secured and
priority claims. All funds remaining after these distributions have been
distributed among the unsecured creditors and the Company with the
Company remaining responsible for the collection expenses.
The Company has no operations. It is principally engaged in controlling
its assets (principally cash) and administering its liabilities and
bankruptcy claims. The Company is in the process of evaluating potential
business opportunities which could be attained by merger or acquisition.
In Management's opinion, if the Company embarks on a new business
venture, no assurance can be given regarding the future success of such a
business due to all the attendant costs and risks associated with
starting or acquiring a new business.
3. INCOME TAXES
In fiscal year 1994, the Company adopted the provisions of SFAS No. 109
"Accounting for Income Taxes." The impact of adopting the new standard
was not material to the consolidated financial statements of the Company
for the year ended September 30, 1994. Prior to 1994, the Company
accounted for income taxes in accordance with Accounting Principles Board
Opinion No. 11.
SFAS No. 109 requires the recognition of deferred tax assets, net of
applicable reserves, related to net operating loss carryforwards and
certain temporary differences. The standard requires recognition of a
deferred tax asset to the extent that realization of such asset is more
likely than not; otherwise, a valuation allowance is applied. As of
September 30, 1995, the Company determined that its deferred tax asset,
primarily its net operating loss carryforward of $9 million, did not
satisfy the recognition criteria set forth in the standard and
accordingly, a valuation allowance was recorded to fully reserve the
deferred tax asset.
The tax loss carryforward expires during the years 2001 through 2006. The
Internal Revenue Code of 1986 as amended (the "Code"), imposes
substantial limitations under certain circumstances on the use of
carryforwards upon the occurrence of an "ownership change" (as defined in
Section 382 of the Code). An "ownership change" can result from issuances
of equity securities by the Company, purchases of the Company's
securities in the secondary market or a combination of the foregoing.
4. SALE OF ASSETS
During the year ended September 30, 1995, the Company sold its minority
interest in Pascagoula Cellular Services for $13,585. During the year
ended September 30, 1994, the Company sold its minority interests in
Burlington Cellular, Inc. and St. Cloud Cellular Telephone Company, Inc.
for $31,000. The Company continues to hold a minority interest in
Alexandria Cellular License Corporation.
5. COMMITMENTS AND CONTINGENCIES
The Company entered into a one-year lease on November 27, 1995 for the
office located at 6273 South Industrial Road, Las Vegas, Nevada. The
monthly rental is $1,017. Rent expense for fiscal years 1995 and 1994 was
$12,000 and $17,000, respectively.
As of September 30, 1995, the Company had accrued reserves and interest
for certain unpaid, disputed and other tax matters related to various
taxing authorities. These amounts are included in current liabilities in
the financial statements.
17
<PAGE> 18
6. STOCKHOLDERS' EQUITY (DEFICIT)
The Company had an incentive stock option plan, which expired in 1995.
The plan called for up to 1,217,186 shares of its common stock to be
issued at an exercise price equal to or greater than fair market value at
the date of grant to key employees of the Company.
A summary of stock option transactions is as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Options outstanding-beginning of year 100,000 --
Granted -- 100,000
Exercised -- --
Canceled or Lapsed -- --
------- -------
Options outstanding-end of year 100,000 100,000
======= =======
</TABLE>
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation". The statement provides that companies which maintain stock
option plans either account for stock options using the determined fair
market value as compensation cost or to continue under the provisions of
APB No. 25. If a company continues to follow APB No. 25, then the company
must provide pro forma disclosure showing the impact of the cost using
the fair market value approach. The statement is effective for fiscal
years beginning after December 15, 1995. Management anticipates based on
current circumstances that this statement will not have a material impact
on the Company's financial position or results of operations.
18
<PAGE> 19
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.
Dated: December 29, 1995 CELLCOM CORP.
By: /s/ Jay H. Brown
-----------------------
Jay H. Brown, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons of the Registrant in the
capacities and the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Jay H. Brown
- -------------------------------
Jay H. Brown President December 29, 1995
Executive Officer
and Director
/s/ Raymond Soard
- -------------------------------
Raymond Soard Director December 29, 1995
/s/ William S. Taylor
- -------------------------------
William S. Taylor Executive Vice December 29, 1995
President,Secretary
and Director
/s/ David A. Obal
- -------------------------------
David A. Obal Chief Financial Officer December 29, 1995
and Director
</TABLE>
19
<PAGE> 20
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
- -------- -----------
2.1 Certificate of Incorporation of the Company (incorporated herein
by reference to the Company's Registration Statement on Form S-18,
File No. 2-88633-NY, effective March 16, 1984).
2.2 Amendments to the Certificate of Incorporation of the Company
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ended September 30, 1990).
2.3 By-Laws of the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-18, File No. 2-88633-NY,
effective March 16, 1984).
10.1 The Company's 1985 Incentive Stock Option Plan, as amended
(incorporated by reference to the Company's Registration Statement on
Form S-8, File No. 33-30985, which became effective on September 29,
1989).
10.2 Asset Purchase Agreement dated April 15, 1992 by and among
Cellcom Acquisition Corp., Cellcom Corp., Cellcom Telephone Company,
Inc. and certain affiliated companies (incorporated by reference to
the Company's current Report on Form 8-K dated April 29, 1992).
10.3 Bankruptcy Court Order dated May 29, 1992 approving the sale of
substantially all of the assets of the Company under an Asset
Purchase Agreement pursuant to 11 U.S.C. 363 (b) and (f).
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ending September 30, 1992).
10.4 Transition Assistance Agreement dated July 28, 1992 between
Nationwide Cellular Service, Inc. and Cellcom Corp. (incorporated by
reference to the Company's annual report on Form 10-K for the fiscal
year ending September 30, 1992).
10.5 Assumption Agreement dated July 28, 1992 by Nationwide Cellular
Service, Inc. (incorporated by reference to the Company's annual
report on Form 10-K for the fiscal year ending September 30, 1992).
10.6 Letter Agreement dated July 28, 1992 between Nationwide Cellular
Service, Inc. and Cellcom Corp. related to certain Subscriber Taxes
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ending September 30, 1992).
10.7 Release Agreement dated July 28, 1992 between Congress Financial
Corporation and Cellcom Corp., et al. (incorporated by reference to
the Company's annual report on Form 10-K for the fiscal year ending
September 30, 1992).
10.8 Assumption and Assignment Agreements of Executory Contract
between Nationwide Cellular Service, Inc. and Los Angeles SMSA Ltd.
Partnership dated July 27, 1992 (incorporated by reference to the
Company's annual report on Form 10-K for the fiscal year ending
September 30, 1992).
10.9 Assumption and Assignment of Executory Contract Agreements
between Nationwide Cellular Service, Inc. and Los Angeles Telephone
Company dated July 24, 1992 and July 27, 1992 (incorporated by
reference to the Company's annual report on Form 10-K for the fiscal
year ending September 30, 1992).
<PAGE> 21
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.10 Assumption and Assignment of Executory Contract Agreements
between Nationwide Cellular Service, Inc. and Bay Area Cellular
Telephone Company dated July 24, 1992 and July 27, 1992 (incorporated
by reference to the Company's annual report on Form 10-K for the
fiscal year ending September 30, 1992).
10.11 Assumption and Assignment of Executory Contracts Agreement
between Nationwide Cellular Service, Inc. and Cellular Telephone
Company dated July 24, 1992 and July 27, 1992 (incorporated by
reference to the Company's annual report on Form 10-K for the fiscal
year ending September 30, 1992).
10.12 Assumption and Assignment of Executory Contract Agreements
among Nationwide Cellular Service, Inc., New York SMSA Limited
Partnership and Boston CGSA dated July 24, 1992 and July 27, 1992
(incorporated by reference to the Company's annual report on Form
10-K for the fiscal year ending September 30, 1992).
10.13 Debtor's Modified Consolidated Plan of Reorganization dated
August 20, 1993 (incorporated by reference to the Company's annual
report on Form 10-K for the fiscal year ending September 30, 1993).
10.14 Notice of (i) Order Confirming Debtor's Modified Consolidated
Plan of Reorganization, and (ii) Discharge of Debts dated October 7,
1993 (incorporated by reference to the Company's annual report on
Form 10-K for the fiscal year ending September 30, 1993).
21 Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
27 Financial Data Schedule
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of Incorporation
----------------------
Name Incorporation
- ---------------------------------------------------------- ----------------------
<S> <C>
Cellcom Telephone Company, Inc. Delaware
Car-Tel Systems Corp. New Jersey
Cellcom Cellular Corp. Delaware
Cellular Dynamics Telephone Company of Connecticut Connecticut
Cellular Dynamics Telephone Company of Boston, Inc. Delaware
Cellular Dynamics Telephone Company of Los Angeles, Inc. California
Cellular Dynamics Telephone Company of San Francisco, Inc. California
Cellular Dynamics Telephone Company of Maryland, Inc. Maryland
Cellular Dynamics Telephone Company, Inc. Nevada
Racehorse Cell-Fone Corp. Delaware
Cellular Dynamics Telephone Company of San Diego, Inc. California
Cellcom Management Company, Inc. Delaware
</TABLE>
20
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report in this 10-K, into the Company's previously filed
Registration Statements on Form S-8, File No. 33-30985.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
November 10, 1995
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 225
<SECURITIES> 0
<RECEIVABLES> 1
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 229
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 229
<CURRENT-LIABILITIES> 72
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 145
<TOTAL-LIABILITY-AND-EQUITY> 229
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 108
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (39)
<INCOME-PRETAX> (69)
<INCOME-TAX> 0
<INCOME-CONTINUING> (69)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (69)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
