SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
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 number 0-17129
CLARK MELVIN SECURITIES CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-0749204
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
170 Jennifer Road, Suite 270, Annapolis, Maryland 21401
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 410-841-6422
------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units
Common Stock, $.01 par value
Common Stock Purchase Warrants
------------------------------
(Title of Class)
<PAGE>
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 twelve 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 Common Stock, $.01 par
value, held by non-affiliates of the registrant as of February 28, 1997, was
$86,218.
The number of shares of the registrant's Common Stock, $.01
par value, outstanding as of February 28, 1997, was 18,523,096.
DOCUMENTS INCORPORATED BY REFERENCE
None
2
<PAGE>
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
Page
----
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS..........................................................4
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ...............................5
CONSOLIDATED STATEMENTS OF EARNINGS...........................................6
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY......................................................................7
CONSOLIDATED STATEMENTS OF CASH FLOWS.........................................8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................................10
3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS
-----------------------------------------------
Board of Directors
Clark Melvin Securities Corporation
We have audited the accompanying consolidated statements of financial condition
of Clark Melvin Securities Corporation and subsidiaries as of December 31, 1996
and 1995 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. 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 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 and per share data
and ratios 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Clark Melvin
Securities Corporation and subsidiaries as of December 31, 1996 and 1995 and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
Grant Thornton LLP
Baltimore, Maryland
January 23, 1997
4
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ASSETS 1996 1995
----------------- -----------------
<S><C>
Cash $ 405,195 $ 265,243
Receivables
Brokers and dealers 129,376 201,123
Advisory fee 300,000 -
Employee advances 20,984 15,990
Other 79,489 74,763
Deposit with clearing broker 100,000 125,979
Other 55,008 27,430
Office equipment and leasehold improvements, net
of accumulated depreciation and amortization of
$271,073 ($327,879 in 1995) 32,148 54,426
----------- ------------
Total assets $ 1,122,200 $ 764,954
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to clearing broker $ 12,317 $ 6,095
Accounts payable and accrued liabilities 397,762 227,369
----------- ------------
Total liabilities 410,079 233,464
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock 145,000 145,000
Common stock 185,231 185,231
Additional paid-in capital 2,888,028 2,888,028
Accumulated deficit (2,471,138) (2,651,769)
Treasury stock, at cost (35,000) (35,000)
----------- ------------
Total stockholders' equity 712,121 531,490
----------- ------------
Total liabilities and stockholders' equity $ 1,122,200 $ 764,954
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31,
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1996 1995 1994
----------- ---------- ----------
<S><C>
Revenues:
Principal transactions $ 488,535 $1,128,470 $ 850,036
Commissions 1,063,243 717,477 734,740
Advisory and fee income 724,825 306,472 653,048
Interest and other income 300,977 150,395 213,482
---------- ---------- ----------
Total revenues 2,577,580 2,302,814 2,451,306
Expenses:
Compensation and benefits 1,411,957 1,384,134 1,440,221
Clearing and exchange fees 201,082 164,157 142,590
Occupancy and equipment rental 271,123 307,547 357,558
Communications 185,780 200,116 234,701
Business development 101,033 73,358 136,756
Interest 5,916 2,687 16,180
Other 209,727 161,913 395,670
---------- ---------- ----------
Total expenses 2,386,618 2,293,912 2,723,676
---------- ---------- ----------
EARNINGS (LOSS) $ 190,962 $ 8,902 $ (272,370)
========== ========== ==========
Earnings (loss) per common share $ .01 $ - $ (.01)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
1996, 1995 and 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock Common Stock
---------------- --------------- Paid-in Accumulated Treasury Subscription
Shares Amount Shares Amount Capital (Deficit) Stock Receivable Total
-------- -------- ---------- -------- ---------- ------------ --------- ---------- ---------
<S><C>
Balance at January 1, 1994 260,000 $260,000 17,332,536 $173,326 $2,815,767 $(2,361,227) $ (1,906) $(239,357) $ 646,603
Subscriptions collected - - - - - - - 113,139 113,139
Common stock issued - - 1,195,460 11,954 74,118 - - - 86,072
Retirement of common stock
held in treasury - - (4,900) (49) (1,857) - 1,906 - -
Preferred stock dividend - - - - - (14,593) - - (14,593)
Acquisition of preferred
stock for treasury - - - - - - (115,000) - (115,000)
Retirement of preferred stock (115,000) (115,000) - - - - 110,000 - (5,000)
Net loss - - - - - (272,370) - - (272,370)
-------- -------- ---------- -------- ---------- ----------- ------- --------- ---------
Balance at December 31, 1994 145,000 145,000 18,523,096 185,231 2,888,028 (2,648,190) (5,000) (126,218) 438,851
Subscriptions collected - - - - - - - 126,218 126,218
Preferred stock dividend - - - - - (12,481) - - (12,481)
Net earnings - - - - - 8,902 - - 8,902
Acquisition of preferred
stock for treasury - - - - - - (30,000) - (30,000)
-------- -------- ---------- -------- ---------- ----------- ------- --------- ---------
Balance at December 31, 1995 145,000 145,000 18,523,096 185,231 2,888,028 (2,651,769) (35,000) - 531,490
Preferred stock dividend - - - - - (10,331) - - (10,331)
Net earnings - - - - - 190,962 - - 190,962
-------- -------- ---------- -------- ---------- ----------- ------- --------- ---------
Balance at December 31, 1996 145,000 $145,000 18,523,096 $185,231 $2,888,028 $(2,471,138) $ (35,000) $ - $ 712,121
======== ======== ========== ======== ========== =========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S><C>
Increase (decrease) in cash 1996 1995 1994
---------- --------- ---------
Cash flows from operating activities
Net earnings (loss) $ 190,962 $ 8,902 $(272,370)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 27,361 44,652 51,701
Changes in operating assets:
Receivables
Clearing broker deposit 25,979 (25,979) -
Brokers and dealers 71,747 (147,872) 292,177
Employee advances (4,994) 9,661 (14,540)
Other (304,726) (64,058) 9,701
Firm trading securities - 4,800 (4,784)
Other assets (27,578) 8,380 (1,421)
Payable to clearing broker 6,222 (5,188) (6,082)
Securities sold short - - (107,950)
Accounts payable and accrued
liabilities 170,393 124,022 (3,983)
--------- --------- ---------
Net cash provided by (used in)
operating activities 155,366 (42,680) (57,551)
Cash flows from investing activities
Purchases of office equipment and leasehold
improvements (5,083) (10,936) (35,856)
--------- --------- ---------
</TABLE>
8
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (con't)
Years ended December 31,
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
1996 1995 1994
--------- --------- --------
<S><C>
Cash flows from financing activities
Collections on subscriptions receivable - 126,218 113,139
Acquisition of treasury stock - (30,000) (115,000)
Proceeds from issuance of common stock - - 84,166
Payment of dividends on preferred stock (10,331) (12,481) (14,593)
Other - - (3,094)
-------- --------- ---------
Net cash (used in) provided by
financing activities (10,331) 83,737 64,618
-------- --------- ---------
NET INCREASE (DECREASE)
IN CASH 139,952 30,121 (28,789)
Cash at beginning of year 265,243 235,122 263,911
-------- --------- ---------
Cash and at end of year $405,195 $ 265,243 $ 235,122
======== ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for interest $ 5,916 $ 2,687 $ 16,180
======== ========= =========
SUPPLEMENTAL DISCLOSURE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES
Retirement of common stock held in
treasury $ - $ - $ 1,906
</TABLE>
The accompanying notes are an integral part of these financial statements
9
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
NOTE 1 - DESCRIPTION OF BUSINESS
Clark Melvin Securities Corporation (Clark Melvin) is incorporated in
the State of Delaware. Clark Melvin is registered as both a broker/dealer
in securities and an investment adviser with the Securities and
Exchange Commission. In this capacity, it executes principal
transactions and performs underwriting and investment banking
services. Clark Melvin conducts business primarily with its clearing
broker on behalf of its customers and for its own proprietary accounts.
Clark Melvin's customers are primarily located in the mid-Atlantic region
and in Puerto Rico.
The consolidated financial statements include the accounts of Clark
Melvin and its wholly-owned subsidiaries, CineFund Management Corporation
(Cine) and CMS Credit Corporation (CMS) (collectively "the Company").
Clark Melvin conducts the primary business of the Company. Cine is
engaged in the management of Puerto Rico investment funds for which Clark
Melvin acts as the underwriting agent. CMS is inactive at December 31,
1996.
All material intercompany balances and transactions are eliminated
in consolidation.
In the normal course of its business, the Company may enter into
financial transactions where the risk of potential loss due to changes in
the market (market risk) or failure of the other party to the transaction
to perform (credit risk) exceeds the amounts recorded for the transaction.
The nature of these risks, if any, are described in the footnotes.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In accordance with industry practice, the Company records customer
transactions on a settlement date basis which is generally three business
days after the trade date. Revenues and expenses on a trade date basis are
not materially different from revenues and expenses on a settlement date
basis. The Company is exposed to risk of loss on these transactions should
customers or brokers become unable to meet the terms of their contracts.
As a result, the Company may have to purchase or sell the financial
instruments at prevailing market prices.
10
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Firm trading and investment securities are carried at market
quotations. Changes in unrealized appreciation or depreciation of such
securities are reflected in the statement of operations with interest and
other income.
In the normal course of business, the Company's customers may sell
securities short. The Company's policy is to obtain cash or securities as
collateral for customers' short positions. Subsequent market fluctuations
may require the Company to obtain additional collateral from the
customers.
Office equipment and leasehold improvements are recorded at cost.
Office equipment is depreciated using accelerated methods over useful
lives of five to seven years. Leasehold improvements are amortized
on the straight-line method over the lesser of the estimated economic
useful life of the improvements or the remaining term of the lease.
Included in other assets are organization expenses of $800 in 1996 and
1995, respectively, which have been amortized over 60 months on the
straight-line method.
In 1996, Clark Melvin acquired a noncontrolling 50% interest in Irurena
Management Company (Irurena). This investment is accounted for under the
equity method. The Company's proportionate share of the net income of
Irurena is included in the accompanying consolidated financial statements.
The net assets and revenue of Irurena were not material at December 31,
1996.
The earnings or loss per share of common stock is calculated by
dividing the net earning or loss, adjusted for the preferred stock
dividend requirement, by the weighted average number of common shares
outstanding during the year (18,523,096 in 1996 and 1995, and 17,853,375
in 1994). The effect of assuming exercise of warrants outstanding
has not been considered because the market price of the common stock
obtainable has never been higher than the exercise price.
11
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
In preparing financial statements in conformity with General Accepted
Accounting Principles (GAAP), management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenue and expenses during the reporting period.
Actual results could differ from these estimates.
NOTE 3 - RELATED PARTY TRANSACTIONS
Major stockholders are also officers of the Company. Compensation
expense for the Chairman of the Executive Committee (resigned December,
1995) was approximately $178,800 and $119,300 in 1995 and 1994,
respectively based primarily on commissions earned as a broker of the
Company. The President and CEO, also a major stockholder, earned
compensation of approximately $133,000, $117,000 and $135,800 in 1996,
1995 and 1994, respectively. A significant portion of his compensation
was based on commissions earned.
A member of the Board of Directors is a partner of a law firm that
provides legal services to the Company. Fees incurred for such services
provided during 1994 were approximately $20,000. No fees were charged
subsequently.
NOTE 4 - ADVISORY FEE RECEIVABLE
Effective October 29, 1996, the Company earned a $300,000 advisory fee
from a customer for services rendered in connection with the modification
of the customer's mortgage loan with the U.S. Department of Housing and
Urban Development (HUD).
The Company holds a promissory note for the amount of the fee payable
by its customer and expects payment upon final approval by HUD of
the transaction documentation.
12
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 5 - PAYABLE TO CLEARING BROKER
Substantially all of the clearing and depository operations for the
Company's proprietary transactions are performed by a clearing broker.
Amounts due the clearing broker at December 31, 1996 and 1995 represent
fees for services provided.
The Company has agreed to indemnify the clearing broker for losses it
may sustain as a result of the failure of the Company's customers to
satisfy their obligations in connection with securities
transactions. As of December 31, 1996, no customers of the Company
held short or unsecured positions.
NOTE 6 - COMMITMENTS
The Company conducts operations in two facilities. One lease which
expires in July, 2001, is renewable at the market rental. The other lease
expired in March, 1996; the Company continues payment at the lease
rate. Rent expense was $160,757, $153,467 and $161,412 in 1996,
1995 and 1994, respectively. The minimum annual rental commitments through
the end of the present lease term is approximately $59,000 in 1997,
$61,400 in 1998, $63,800 in 1999, $66,400 in 2000 and $33,800 in 2001.
The Company leased for $20,400 in 1994 certain office furniture from a
company owned by a relative of a major shareholder.
NOTE 7 - STOCKHOLDERS' EQUITY
The authorized shares of capital stock were as follows:
o Preferred stock, cumulative, $1.00 par value, callable; authorized
1,000,000 shares.
o Common stock, $.01 par value; authorized 40,000,000 shares.
13
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 7 - STOCKHOLDERS' EQUITY - Continued
The preferred stock is callable at par. Dividends at the annual rate of
1% over the prime rate, as determined on the date of payment, are
paid quarterly. Substantially all outstanding preferred shares are
held by related parties.
In January 1989 the Board of Directors adopted a key employee
restricted stock award plan and a stock option plan. The vesting period
is two years from the date of grant with one half of the shares vesting
after the first year. The market value of grants is charged to
compensation expense over the periods in which the employees are
providing the related services. As of December 31, 1996, twenty-two
employees had been granted 1,500,000 shares in the aggregate.
Under the stock option plan, a total of 250,000 shares of common stock
may be purchased by certain key employees and directors. Incentive
stock options and non-qualified stock options may be granted under the
plan. Discounts from options granted at exercise prices that are less
than the market value of the common stock at the date of grant are
amortized to compensation expense over the period in which the employees
are providing the related services. Options granted and outstanding under
this plan are not material at December 31, 1996.
In 1994, the Company approved a separate stock option plan for its
President and in May 1994, granted options for 1,752,500 shares of
common stock at $.05 a share. These options expire after five years.
No options were granted, exercised, forfeited or canceled in 1996 or
1995 for either plan.
At December 31, 1994, the Company had outstanding 1,391,260 common
stock purchase warrants that were exercisable at $.10 per share through
July 22, 1995 (in treasury 2,500 at December 31, 1994). These warrants
expired without being exercised.
14
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 7 - STOCKHOLDERS' EQUITY - Continued
Subscriptions receivable arose from the sale of common stock in 1991
for four notes receivables of $100,000, each maturing in 1991 through
1994, plus interest at 7%. A subscription for an additional $500,000 of
common stock was rescinded during 1993. In accordance with SEC accounting
rules, subscriptions receivable have been shown as a reduction in
stockholders' equity. All subscriptions receivable had been collected as
of December 31, 1995.
NOTE 8 - INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes". Temporary differences between
amounts reported for financial reporting purposes and income tax
purposes are insignificant. The deferred tax asset related to the
Company's loss carryforwards amounts to approximately $683,000 and
$751,000 at December 31, 1996 and 1995, respectively. The full amount
of this asset was reserved.
Net operating loss carryforwards for income tax purposes are
approximately $1,816,000 and expire between years 2005 and 2009.
Reconciliation of income taxes:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S><C>
Federal statutory income tax rate 34% 34% 34%
======== ======== ========
Income taxes (benefit) at statutory rate $ 82,500 $ 14,790 $(92,606)
Effect of net operating loss carryforward
deferred (utilized) (82,500) (14,790) 92,606
-------- -------- --------
Income tax $ - $ - $ -
======== ======== ========
</TABLE>
15
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 9 - NET CAPITAL REQUIREMENTS
As a registered broker dealer and member of the National Association of
Securities Dealers, Inc., the Company is subject to the Securities and
Exchange Commission Uniform Net Capital Rule (Rule 15c3-1) which requires
the maintenance of minimum net capital. As applied to the Company, the
Rule requires minimum net capital of $100,000.
As of December 31, 1996 the Company had net capital of $216,326, which
was $116,326 in excess of its requirement.
NOTE 10 - CONCENTRATION OF CREDIT RISK - CASH
The Company maintains its cash accounts in one financial institution in
Maryland. At times, cash balances may exceed federally insured limits. The
Company has not experienced any losses in such account and believes the
Company is not exposed to a significant credit risk.
NOTE 11 - PENDING LITIGATION
The Company is considering pursuing arbitration proceedings against a
former broker in its Puerto Rico office as a result of losses and
complaints from certain clients regarding unauthorized trading. In 1994,
the Company charged approximately $154,000 against earnings for this and
another unrelated claim as nonrecurring expenses that are included in
other expenses in the statement of operations.
Three customers have filed suits claiming damages of $542,000 in
connection with these allegations. The actual trading loss to the
plaintiffs aggregated approximately $184,000. One other party's claim was
dismissed because the plaintiff had executed an arbitration agreement.
That individual has not filed an arbitration claim and suffered no trading
loss.
16
<PAGE>
Clark Melvin Securities Corporation
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1996, 1995 and 1994
NOTE 11 - PENDING LITIGATION - Continued
Management believes it has meritorious defenses and will prevail
against all parties. However, in the interest of conservatism, it has
provided additional reserves of $10,000 and $33,000 in 1996 and 1995,
respectively against the litigation and costs associated with these suits.
17
<PAGE>
PART III
Item 10. Directors and Executive Officers.
- -------- ---------------------------------
The Board consists of five directors elected to hold office
until the next annual meeting of stockholders and until the election and
qualification of a successor. Certain information regarding the Board of
Directors is set forth below.
AURELIO EMANUELLI, 58 has served as a director of the Company
since September 1990. He has been a partner in the law firm of Fiddler, Gonzalez
and Rodriquez, specializing in real estate law, since 1974. Mr. Emanuelli was
the founder of the Puerto Rico Association of Notaries and Real Estate
Practitioners, and is a graduate of the Wharton School and University of Puerto
Rico School of Law.
JAMES FINN, 53, has served as a director of the Company
since September 1990. He has been Vice President of Marketing of Plaza
Provision Company since 1975.
GUILLERMO L. MARTINEZ, 59, has served as a director of the
Company since September 1990. He is the founder and has served as Chairman
of the Board of General Computer Corporation, a computer data base services
company, since 1970. He also serves as Chairman of the Board of Casa Cavanagh
and President and Chairman of the Board of G. C. Group, Inc.
CESAR A. MONTILLA, JR., 56, has served as Chairman of the
Board, President and Chief Executive Officer of the Company since September
1990. He served as managing director of Kidder Peabody Co., Incorporated,
supervising Miami, the Caribbean and South America, from April 1981 to October
1989. Mr. Montilla was the managing director of Merrill Lynch Capital Markets
from October 1989 to May 1990. He served as Chairman of the Board of The
Securities Corporation of Puerto Rico, the Commonwealth of Puerto Rico's
only native investment banking corporation, from 1973 to 1980.
JOAQUIN RODRIGUEZ, 54, has served as a director of the Company
since November 1996. He holds both a Bachelor and a Master of Business
Administration degree, and a Juris Doctor degree. He is the CEO and Chairman of
the Board of Centro Medico del Turabo, Inc. and HIMA since their inception in
1978. Prior to that he was a Vice President of The Securities Corporation of
Puerto Rico for approximately eight months. From November 1976 to January 1978
he was the Executive Director of the Puerto Rico Land Authority.
Committees of the Board - Board Meetings
- ----------------------------------------
The Board of Directors has an Audit Committee consisting of
Messrs. Finn and Martinez. The Board of Directors does not currently have a
nominating or compensation committee.
18
<PAGE>
The Audit Committee is primarily concerned with the
effectiveness of the audits of the Company by the Company's independent
certified public accountants. Its duties include: recommending the selection of
independent accountants; reviewing the scope of audits conducted by them, as
well as the results of their audits; and reviewing the organization and scope of
the Company's internal system of accounting and financial controls. The Audit
Committee met twice during 1996.
The Board of Directors met three times during 1996. With the
exception of Mr. Rodriguez who was appointed as a director in November 1996, no
director attended fewer than 75% of the total number of meetings of the Board
and of the Committee of which he was a member during 1996.
19
<PAGE>
Item 11. Executive Compensation.
- -------- -----------------------
Summary Compensation Table
- --------------------------
The following table sets forth certain summary information
concerning compensation paid or accrued by the Company to or on behalf of the
chief executive officer and each executive officer whose total annual salary and
bonus exceeded $100,000, with respect to 1996, 1995 and 1994.
Name and
Principal
Position Year Salary(1)($) Bonus($)
--------- ---- ------------ --------
Cesar A. 1996 $136,206 $ --
Montilla,
Chairman of 1995 $ 86,993 $ --
the Board,
President and 1994 $135,000 $ --
Chief Executive
Officer
(1) Mr. Montilla's salary includes commissions paid to Mr. Montilla as an
investment representative of $102,606 for 1996, $56,993 for 1995 and $105,000
for 1994.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -------- ---------------------------------------------------------------
The following table sets forth information regarding the ownership of
Common Stock of the Company as of March 31,1997 by (i) all stockholders known by
the Company to beneficially own more than 5% of the Common Stock, (ii) each of
the directors and nominees for director and (iii) all executive officers and
directors as a group.
Amount and
Directors and nature of beneficial Percent
Nominees for Director: ownership(1) of class
- ---------------------- -------------------- --------
Aurelio Emanuelli................ 289,997 1.6
James Finn....................... 217,483 1.2
Guillermo L. Martinez............ 434,996 2.3
Cesar A. Montilla, Jr............ 3,462,387 (2)(3) 18.7
Joaquin Rodriguez................ -- *
All directors and executive
officers as a group (5 persons) 4,404,863 (3) 23.8
20
<PAGE>
Principal Stockholders:
- -----------------------
Hector Gonzalez (4).............. 5,801,293 31.3
El Pentagono (5)................. 1,449,887 7.8
- --------------------------
* Less than one percent.
(1) Except as otherwise noted, all shares indicated are held with sole
investment and voting power.
(2) The address of Mr. Montilla is Banco Popular Center, 14th Floor, Hato
Rey, Puerto Rico 00918.
(3) Includes an option to purchase 1,752,500 shares of Common Stock at an
exercise price of $.05 per share granted to Mr. Montilla in May 1994.
The option is currently exercisable and expires on May 29, 1999.
(4) The address of Mr. Gonzalez is G.P.O. Box 4744, San Juan, Puerto Rico.
(5) The address of El Pentagono is Atalayo D-11, La Arboleda, Guaynabo,
Puerto Rico.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
Major stockholders are also officers of the Company and earn
compensation from salary and commissions. During 1996, Cesar A. Montilla,
Chairman of the Board, President and Chief Executive Officer, earned $102,606 in
commissions on securities transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- -------- -----------------------------------------------------------------
(a) The following documents are filed as a part of this report:
1. The following report and financial statements have been included under
Item 8 of this Report:
Consolidated Report of Independent Certified Public Accountants
Consolidated Statements of Financial Condition
Consolidated Statements of Earnings
Consolidated Statements of Changes in Stockholders' Equity
21
<PAGE>
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
The schedules to the financial statements for which provision is made in the
accounting regulations of the Commission are not applicable, not required or the
information is included in the financial statements or notes thereto and
therefore have been omitted.
3. Exhibits
3.1.1 Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 filed with
Registration Statement on Form S-18 (No.
33-20106A)).
3.1.2 Certificate of Correction to the Certificate of
incorporation of the Company, dated May 18, 1989
(incorporated by reference to Exhibit 3.1.2 filed
with Form 10-K for the year ended December 31, 1989).
3.1.3 Certificate of Amendment to the Certificate of
Incorporation of the Company, dated May 18, 1989
(incorporated by reference to Exhibit 3.1.3 filed
with Form 10-K for the year ended December 31, 1989).
3.1.4 Certificate of Designation dated May 18, 1989
(incorporated by reference to Exhibit 3.1.4 filed
with Form 10-K for the year ended December 31, 1989).
3.1.5 Certificate of Amendment to Certificate of
Incorporation of the Company, dated September 27,
1990 (incorporated by reference to Exhibit 3.1.5
filed with Form 10-K for the year ended December 31,
1990).
3.2 By-laws of the Company as currently in effect
(incorporated by reference to Exhibit 3.2 filed with
Registration Statement on Form S-18 (No.
33-20106A)).
10.1 Agreement of Lease dated July 24, 1987 between J.
R. Annapolis Associates and Clark Melvin
Financial Services, Inc. (incorporated by reference
to Exhibit 10.2 filed with Form 10-K for the year
ended December 31, 1988).
10.2 First Amendment of Agreement of Lease dated January
15, 1988 between J. R. Annapolis Associates and
Clark Melvin Financial
22
<PAGE>
Services, Inc. (incorporated by reference to Exhibit
10.3 filed with Form 10-K for the year ended December
31, 1988).
10.3 Second Amendment to Lease Agreement dated July 19,
1991 by and between J.R. Annapolis Associates,
Clark Melvin Financial Services, Inc. and the
Company (incorporated by reference to Exhibit
10.3 filed with Form 10-K for the year ended
December 31, 1991).
10.4 Agreement of Lease dated March 28, 1991 between
Banco Popular de Puerto Rico and the Company
(incorporated by reference to Exhibit 10.4 filed
with Form 10-K for the year ended December 31, 1991).
10.5 Clark Melvin Securities Corporation 1989 Stock
Option Plan (incorporated by reference to Exhibit
10.4 filed with Form 10-K for the year ended December
31, 1989).
10.6 Clark Melvin Securities Corporation Stock Bonus
Plan (incorporated by reference to Exhibit 10.5
filed with Form 10-K for the year ended December 31,
1989).
10.7 Stock Exchange Agreement dated August 17, 1990 by and
among Azimuth Capital Corporation, the Azimuth
Group, the Company and Lawrence T. Lewis, III
(incorporated by reference to Exhibit 10.6 filed
with Form 10-K for the year ended December 31,
1990).
21. Subsidiaries of the Company.
27. Financial Data Schedule (incorporated by
reference to Exhibit 27 filed with Form 10-KSB for
the year ended December 31, 1996).
(b) The Company did not file a report on Form 8-K for the quarter ended
December 31, 1996.
23
<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 amendment
to be signed on its behalf by the undersigned, thereunto duly authorized.
CLARK MELVIN SECURITIES CORPORATION
-----------------------------------
(Registrant)
Date: April 15, 1997
By:/s/Irene M. Harr
---------------------------
Irene M. Harr
Senior Vice President and
Chief Financial 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 in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S><C>
/s/ Cesar A. Montilla, Jr. Chairman, President, Chief April 15, 1997
- --------------------------- Executive Officer and Director
Cesar A. Montilla, Jr. (Principal Executive Officer)
/s/ Irene M. Harr Senior Vice President and Chief April 15, 1997
- --------------------------- Financial Officer (Principal
Irene M. Harr Financial and Accounting Officer)
/s/ James Finn Director April 15, 1997
- ---------------------------
James Finn
/s/ Aurelio Emanuelli Director April 15, 1997
- ---------------------------
Aurelio Emanuelli
/s/ Joaquin Rodriguez Director April 15, 1997
- ---------------------------
Joaquin Rodriguez
/s/ Guillermo L. Martinez Director April 15, 1997
- ---------------------------
Guillermo L. Martinez
</TABLE>
24
<PAGE>
EXHIBIT INDEX
3.1.1 Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 filed with
Registration Statement on Form S-18 (No.
33-20106A)).
3.1.2 Certificate of Correction to the Certificate of
incorporation of the Company, dated May 18, 1989
(incorporated by reference to Exhibit 3.1.2 filed
with Form 10-K for the year ended December 31, 1989).
3.1.3 Certificate of Amendment to the Certificate of
Incorporation of the Company, dated May 18, 1989
(incorporated by reference to Exhibit 3.1.3 filed
with Form 10-K for the year ended December 31, 1989).
3.1.4 Certificate of Designation dated May 18, 1989
(incorporated by reference to Exhibit 3.1.4 filed
with Form 10-K for the year ended December 31, 1989).
3.1.5 Certificate of Amendment to Certificate of
Incorporation of the Company, dated September 27,
1990 (incorporated by reference to Exhibit 3.1.5
filed with Form 10-K for the year ended December 31,
1990).
3.2 By-laws of the Company as currently in effect
(incorporated by reference to Exhibit 3.2 filed with
Registration Statement on Form S-18 (No.
33-20106A)).
10.1 Agreement of Lease dated July 24, 1987 between J.R.
Annapolis Associates and Clark Melvin Financial
Services, Inc. (incorporated by reference to Exhibit
10.2 filed with Form 10-K for the year ended December
31, 1988).
10.2 First Amendment of Agreement of Lease dated January
15, 1988 between J.R. Annapolis Associates and
Clark Melvin Financial Services, Inc. (incorporated
by reference to Exhibit 10.3 filed with Form 10-K for
the year ended December 31, 1988).
10.3 Second Amendment to Lease Agreement dated July 19,
1991 by and between J.R. Annapolis Associates,
Clark Melvin Financial Services, Inc. and the
Company (incorporated by reference to Exhibit
10.3 filed with Form 10-K for the year ended
December 31, 1991).
<PAGE>
10.4 Agreement of Lease dated March 28, 1991 between
Banco Popular de Puerto Rico and the Company
(incorporated by reference to Exhibit 10.4 filed
with Form 10-K for the year ended December 31, 1991).
10.5 Clark Melvin Securities Corporation 1989 Stock
Option Plan (incorporated by reference to Exhibit
10.4 filed with Form 10-K for the year ended December
31, 1989).
10.6 Clark Melvin Securities Corporation Stock Bonus
Plan (incorporated by reference to Exhibit 10.5
filed with Form 10-K for the year ended December 31,
1989).
10.7 Stock Exchange Agreement dated August 17, 1990 by and
among Azimuth Capital Corporation, the Azimuth
Group, the Company and Lawrence T. Lewis, III
(incorporated by reference to Exhibit 10.6 filed
with Form 10-K for the year ended December 31,
1990).
21. Subsidiaries of the Company.
27. Financial Data Schedule (incorporated by
reference to Exhibit 27 filed with Form 10-KSB for
the year ended December 31, 1996).
EXHIBIT 21
Subsidiaries
Cine Fund Management Corporation
CMS Credit Corporation
