FORM 10-KSB/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from
Commission File Number 000-18448
AMERICAN CONSOLIDATED LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2624130
(State of other jurisdiction of
incorporation or organization) (I. R. S. Employer Identification No.)
1640 North Market Drive
Raleigh, North Carolina 27609
(Address of principal executive office, including zip code)
Registrant's telephone number, including area code (919) 872-0744
Securities registered under section 12 (b) of the Exchange Act:
Title of each class Name of exchange on which registered
Common Stock, $.05 par value Not Applicable
Securities registered under section 12(g) of the Exchange Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act
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. [ X ]
Issuer's revenues for the year ended December 31, 1996 were
$7,858,315
The aggregate market value of the voting stock of the registrant
held by nonaffiliates as of April 25, 1997 was $671,259.
The number of shares of the registrant's common stock outstanding
on April 25, 1997 was 3,978,081.
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT
Certain information concerning the Company's directors is
set forth below. Each director shall serve until the next Annual
Meeting of the Company's shareholders or until his successor is
duly elected and qualified.
<TABLE>
<S> <C> <C>
Position with the Company; Principal Occupation
Name, Age for past five years; Other directorships Director Since
Joseph A. Arena Chief Executive Officer (1993-1994, 1996- 1993-94, 96
49 present); Chairman of the Board of Directors
(1993-1994); Director of Finance (1991-1993);
Chief Operating Officer and Chief Financial
Officer, Quantum Solutions, Inc., Austin, Texas,
(1994-1996) (training and education)
Thomas P. Dickerson Chairman of the Board of Directors (1996- 1990
47 present); General Partner, Tullis-Dickerson
Partners, the general partner of Tullis-Dickerson
Capital Focus, L.P. (1986-present) (venture
capital); President, Tullis-Dickerson & Co., Inc.
(health care investment firm) (1990-present)
James L.L. Tullis General Partner, Tullis-Dickerson Partners, the 1990
50 general partner of Tullis-Dickerson Capital Focus,
L.P. (1986-present) (venture capital); Chairman
of the Board and Chief Executive Officer, Tullis-
Dickerson & Co., Inc. (health care investment
firm) (1990-present); Director, Acme - United,
Inc.; Director, Physician Sales & Service, Inc.
Joan P. Neuscheler General Partner, Tullis-Dickerson Partners, the 1993
38 general partner of Tullis-Dickerson Capital Focus,
L.P. (1992-present) (venture capital); Chief
Financial Officer, Tullis-Dickerson & Co., Inc.
(health care investment firm) (1989-present);
Director, QuadraMed, Inc.
</TABLE>
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<TABLE>
<S> <C> <C>
Position with the Company; Principal Occupation
Name, Age for past five years; Other directorships Director Since
Timothy Buono Senior Vice President, Health Partners, Inc. 1997
41 (1996-present); Vice President - Development,
Health Partners, Inc. (1994-1996); Director -
Business Development - Occupational Health
Resources (1993); Associate, Tullis-Dickerson &
Co., Inc. (1990-1993)
</TABLE>
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
Name Position with the Company
Thomas P. Dickerson Chairman of the Board
Joseph A. Arena Chief Executive Officer
Jimmy Gray O'Neal President and Chief Operating Officer
Kenneth C. Kirkham Chief Financial Officer
Jimmy Gray O'Neal. Mr. O'Neal has served as President and
Chief Operating Officer of the Company since April 1996. He was
the founder of Carolina Contact Lens, Inc. ("CCL") and has been
its President since its establishment in 1973. CCL was purchased
by the Company in December 1994 and is now a wholly-owned
subsidiary of the Company. Mr. O'Neal is 52 years old.
Kenneth C. Kirkham. Mr. Kirkham has been the Chief Financial
Officer of the Company since April 1996. From 1994 to 1996, he
was the Chief Financial Officer of Bono's Bar-B-Q & Grill, a
chain of 33 restaurants. From 1992 to 1994 he was Senior Vice
President-Finance for Ford Consumer Finance. Mr. Kirkham is 39
years old.
Information about the other executive officers is given above.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors, its
executive officers, and any persons holding more than 10 percent
of the Company's stock are required to report their ownership of
the Company's stock, as well any 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 report herein any failure during fiscal year 1996 to file such
reports in
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a timely fashion. All of these filing requirements were
satisfied by its directors, officers and 10 percent shareholders.
In making this statement, the Company has relied on the written
representations of its directors, officers and 10 percent
shareholders.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth annual compensation amounts for
each of the last three fiscal years, as indicated by the
applicable table headings, for both individuals who served as
Chief Executive Officer of the Company during fiscal 1996 (the
"Named Executive Officers"). Wayne Upham Smith served as Chief
Executive Officer of the Company until April 11, 1996 when Joseph
A. Arena was named to the position. Annual Compensation, columns
(c), (d) and (e), includes base salary and bonus earned during
the year covered and, if applicable, other annual compensation
not properly categorized as salary or bonus. No executive
officer of the Company received compensation for the year ended
December 31, 1996 in excess of $100,000.
Summary Compensation Table
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
Annual Compensation Awards Payouts
Securities
Other Restricted Under- All
Annual Stock lying LTIP Other
Name and Fiscal Salary Bonus Compensation Award(s) Options/ Payouts Compen-
Principal Position Year ($) ($) ($) ($)(3) SARs ($) sation
(#) ($)
Joseph A. Arena, 1996 78,151 0 0 0 340,000 0 0
Chief Executive Officer 1995 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0
Wayne Upham Smith, 1996 18,269 28,334 (1) 0 0 0 0 8,333 (2)
Former Chief Executive 1995 87,212 14,166 (1) 0 0 55,000 0 0
Officer 1994 34,327 0 0 0 0 0 0
(1) A bonus in the amount of $42,500 was awarded in 1995, of which $14,166 was paid in
1995 and $28,334 was paid in 1996.
(2) Paid as part of a severance package upon the termination of Mr. Smith's employment
with the Company on April 11, 1996.
</TABLE>
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Stock Options
The following table shows stock options granted to the Named
Executive Officers during fiscal 1996.
<TABLE>
<S> <C> <C> <C> <C>
Option Grants in Last Fiscal Year (1)
Percent of Total
Options Granted to
Employees in Fiscal
Name Options Granted (#) Year Exercise Price ($/sh) Expiration Date
Joseph A. Arena 15,000 1.6% $.25 May 1, 2006
75,000 8.2% (2) May 1, 2006
250,000 27.4% $.75 May 1, 2006
(1) Options granted under the Company's 1994 Incentive and Non-Statutory Stock Option Plan.
(2) The price of these options is to be negotiated between Mr. Arena and the Company at the time of exercise.
</TABLE>
The following table shows the number of shares subject to
unexercised options held by the Named Executive Officers as of
fiscal year-end. The table divides such unexercised options into
those that were exercisable as of fiscal year-end and those that
were not. On December 31, 1996, the end of the fiscal year, the
closing sales price of the Company's Common Stock was $1.00 per
share.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
<TABLE>
<S> <C> <C> <C> <C>
Number of Unexercised Options Value of Unexercised in-
Shares Acquired on Options at Fiscal Year-End the-money Options at
Name Exercise (#) Value Realized ($) (#) Fiscal Year-End ($)
Exercisable/Unexercisable Exercisable/Unexercisable
Joseph A. Arena -0- -0- 90,000/250,000 11,250/62,500 (1)
(1) The value of the 75,000 share option with an exercise price to be negotiated at the time of
exercise as described above under the heading "Option Grants in Last Fiscal Year" is not
included inasmuch as the value of such option is not determinable.
</TABLE>
Employment Agreements and Termination of Employment Arrangements
On August 15, 1994, the Company entered into a three-year
employment agreement with Wayne Upham Smith. The agreement
provided for an initial base salary of $85,000 per year with
annual bonuses of up to 50% of his base salary based in part on
the trading price of the Company's Common Stock and in part on
performance, as determined by the Compensation Committee of the
Company's Board of Directors. Mr. Smith's employment with the
Company
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was terminated on April 11, 1996. Upon the termination of
Mr. Smith's employment, the Company agreed to pay approximately
$36,000 for bonus amounts due, accrued vacation and unpaid wages,
and in addition, the Company agreed to purchase from Mr. Smith
300,000 shares of the Company's Common Stock for $150,000, such
payment to be made in twenty quarterly installments of $7,500.
On April 11, 1996, the Company entered into a one-year
employment agreement with Joseph A. Arena, such agreement to be
automatically renewed on each anniversary of the agreement
thereafter unless either party gives notice of its intent to
terminate the agreement at least 90 days prior to such anniversary
date. The agreement provides that Mr. Arena is to serve as the
Chief Executive Officer and as a director of the Company.
Pursuant to the agreement, he is to receive an annual salary
payable at the annual rate of $125,000, may receive a bonus of up
to 33.33% of his salary based on both his individual performance
and the Company's performance and may participate in those benefit
plans of the Company available to other executives. In addition,
Mr. Arena was granted options to purchase 250,000 shares of the
Company's Common Stock, such options to vest in 25% increments on
each successive anniversary date of the agreement. The agreement
also contains a covenant not to compete and a term defining the
Company's property rights. The agreement may be terminated by the
Company with or without cause or upon Mr. Arena's death or
disability or voluntarily by either party upon 90 days notice. If
Mr. Arena is terminated without cause, which shall include
termination because of death or disability, then he is entitled to
his base salary for the six-month period immediately following
such termination. In addition, whether terminated with or without
cause, Mr. Arena shall forfeit all unvested options granted under
the agreement, shall have ninety days after such termination to
exercise all vested options and shall cease to be a member of the
Board of Directors of the Company.
Directors' Compensation
Directors, whether or not employees of the Company, are not
compensated for any services provided as a director, for serving
on any committee of the Board of Directors or for special
assignments. Directors that must travel to attend board meetings
are reimbursed for their expenses incurred to do so.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding
those persons known by
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management to hold beneficially at least 5% of the outstanding
shares of Common Stock.
<TABLE>
<S> <C> <C>
Name and address of Amount and Nature
Beneficial Owner of Beneficial Ownership Percentage
Tullis-Dickerson Capital Focus, L.P. 3,730,395 (a) 81.7%
One Greenwich Plaza, Greenwich, CT 06830
James L.L. Tullis (b) (b)
One Greenwich Plaza, Greenwich, CT 06830
Thomas P. Dickerson (b) (b)
One Greenwich Plaza, Greenwich, CT 06830
Joan Neuscheler (b) (b)
One Greenwich Plaza, Greenwich, CT 06830
(a) Includes 3,038,730 shares owned by Tullis-Dickerson Capital Focus, L.P.,
warrants to purchase 586,670 shares, 35,714 shares held by Tullis-Dickerson & Co.,
Inc., 40,251 shares held by James L.L. Tullis, 20,126 shares held by Thomas P.
Dickerson and 8,904 shares held by Joan Neuscheler, each of whom may be deemed an
affiliate of Tullis-Dickerson Capital Focus, L.P.
(b) See footnote (a) above. Mr. Tullis, Mr. Dickerson and Ms. Neuscheler are
general partners of Tullis-Dickerson Partners, the general partner of Tullis-Dickerson
Capital Focus, L.P., and each may be deemed an affiliate of Tullis-Dickerson Capital
Focus, L.P.
</TABLE>
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES
FOR DIRECTOR AND CHIEF EXECUTIVE OFFICER
The following table sets forth certain information as of
April 30, 1997 with respect to the beneficial ownership of the
Company's Common Stock by its directors, nominees for director,
and the individuals who served as the Company's chief executive
officer during any part of the fiscal year ended December 31,
1996.
Name of Amount and Nature
Beneficial Owner of Beneficial Ownership Percentage
Joseph A. Arena 172,500 (a) 4.2%
Thomas P. Dickerson 3,730,395 (b) 81.7%
James L.L. Tullis 3,730,395 (b) 81.7%
Joan P. Neuscheler 3,730,395 (b) 81.7%
Timothy Buono -0- 0%
Wayne Upham Smith -0- 0%
All executive officers
and directors as a group (7 persons) 3,969,561 (c) 83.6%
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(a) Includes currently exercisable options to purchase 152,500 shares
(b) Includes 3,038,730 shares owned by Tullis-Dickerson Capital Focus
L.P., warrants to purchase 586,670 shares, 35,714 shares held by
Tullis-Dickerson & Co., Inc., 40,251 shares held by James L.L.
Tullis, 20,126 shares held by Thomas P. Dickerson and 8,904 shares
held by Joan Neuscheler, each of whom may be deemed an affiliate
of Tullis-Dickerson Capital Focus L.P.
(c) Includes currently exercisable options to purchase 152,500 shares
and warrants to purchase 586,670 shares
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Thomas P. Dickerson, Chairman of the Board of the Company,
and James L.L. Tullis and Joan P. Neuscheler, directors of the
Company, are general partners in Tullis-Dickerson Partners, the
general partner of Tullis-Dickerson Capital Focus, L.P. ("TD
Capital"), an entity to which the Company was indebted in the
amount of $60,000 as of January 1, 1995 as a result of various
loans and other transactions between the two parties. In
connection with a loan made by TD Capital to the Company in
September 1991, TD Capital received a warrant to acquire 100,000
shares of the Company's Common Stock at a price of $.75 per share,
which warrant was exercised on March 31, 1995, with the exercise
price paid by a $55,000 reduction of the outstanding indebtedness
and forgiveness of $20,000 of accrued and unpaid interest.
Accordingly, on December 31, 1995, the outstanding principal
balance of TD Capital's original loan to the Company was $5,000.
This loan was repaid in full on June 28, 1996.
In December 1994, TD Capital made a loan to the Company,
separate and distinct from that discussed above, in the amount of
$800,000 with interest payable quarterly at 15.25% and repayment
of the principal due on September 30, 1997. Because the principal
and interest remained unpaid after June 15, 1995, TD Capital has
the option to convert the Note into shares of the Company's Common
Stock of the Company at the rate of one share for each $1.00 of
principal and interest unpaid until maturity, and one share for
each $.50 of principal and interest unpaid thereafter.
The Company received additional financing from TD Capital
during November and December 1995 and January and February 1996 in
the amounts of $167,000, $100,000, $395,000 and $50,000,
respectively. Such additional funds were consolidated into a
single note payable in installments in varying amounts beginning
on June 30, 1996 and concluding on August 5, 1996. Interest on
the consolidated note is payable at 13.5% until maturity and 19.5%
thereafter. Such consolidated note has not yet been paid. In
connection with the consolidated note, TD Capital received and
subsequently exercised warrants to purchase 199,503 shares of
Common Stock at a price of $.10 per share. A portion of the
interest owed by the Company to TD Capital was used to offset the
cost to TD Capital of exercising the warrants.
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During 1996, TD Capital continued to advance funds to the
Company on the same terms and conditions as the note discussed
above. TD Capital advanced $490,833 under these terms and
conditions from June through December 31, 1996. For these
additional advances, TD Capital received a warrant to purchase
550,000 shares of the Company's common stock at $.25 per share,
such warrant to expire at 2001. As of December 31, 1996, the
Company owed TD Capital an aggregate amount of $2,298,196,
comprised of principal indebtedness of $1,865,309, accrued
interest of $363,714 and $69,173 in reimbursable expenses.
All of Company's indebtedness to TD Capital is secured by
substantially all inventories and property and equipment, though
TD Capital did subordinate its entire security interest to
Fidelity Funding on June 28, 1996. In addition, the Company's
agreements with TD Capital prohibit it from paying any dividends.
The Company and Tullis-Dickerson & Co., Inc. ("TD & Co.")
entered into an agreement dated August 15, 1994, whereby the
Company pays to TD & Co. a financial advisory fee of $3,000 per
month, plus $9,000 per quarter for any quarter that the Company
exceeds its internal cumulative cash flow projections for that
calendar quarter. TD & Co. terminated these fees effective November
30, 1996. Prior to such termination, the Company paid such fees in
the amount of $33,000 in 1996 and $36,000 in 1995. In May 1995, the
Company issued 15,954 shares of the Company's common stock to James
L.L. Tullis and Thomas P. Dickerson, as assignees of TD & Co., in
satisfaction of outstanding invoices for consulting services
rendered during 1994 and 1995, including ongoing assistance with the
Company's operations, the development of strategy, the hiring of
personnel, the streamlining of operations, the coordination between
facilities of the Company, and the development of management
reporting systems. At the time of the issuance of the stock in
payment for such services, the bid price for the Company's stock was
$1.13 for a value of $18,000. In July 1996, the Company issued
29,615 shares of the Company's common stock to James L.L. Tullis,
14,808 shares to Thomas P. Dickerson and 8,904 shares to Joan E.
Neuscheler, as assignees of TD & Co., in satisfaction of outstanding
invoices for consulting services rendered during 1995 and 1996, such
services being similar to those described above. At the time of the
issuance of the stock in payment for such services, the bid price
for the Company's stock was $1.625 for a value of $86,656. Messrs.
Tullis and Dickerson and Ms. Neuscheler are the sole shareholders,
directors and principal officers of TD & Co.
The Company leases from Jimmy Gray O'Neal, President and Chief
Operating Officer of the Company, an approximately 6,000 square foot
building located in Raleigh, North Carolina from which originates
the Company's manufacturing and distribution operations. The lease
agreement between the Company and Mr. O'Neal provides for (i) a term
of five years commencing in December 1994 and (ii) monthly payments
of $5,000.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
AMERICAN CONSOLIDATED LABORATORIES, INC.
Date: April 30,1997 By: /s/ Joseph A. Arena
Joseph A. Arena
Chief Executive Officer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature Title Date
/s/ Joseph A. Arena Chief Executive Officer April 30, 1997
Joseph A. Arena
/s/ Thomas P. Dickerson Chairman of the Board April 30, 1997
Thomas P. Dickerson
/s/ Kenneth C. Kirkham Chief Financial Officer April 30, 1997
Kenneth C. Kirkham (Principal Accounting Officer)
/s/ James L.L. Tullis Director April 30, 1997
James L.L. Tullis
/s/ Joan P. Neuscheler Director April 30, 1997
Joan P. Neuscheler
/s/ Timothy M. Buono Director April 30, 1997
Timothy M. Buono
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