U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
(Mark One)
[x] Annual Report Under Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1997
OR
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
Commission file number 0-17574
CODED COMMUNICATIONS CORPORATION
(Name of Small Business Issuer in Its Charter)
Delaware 33-0580412
(State or Other Jurisdiction of ) (I.R.S. Employer
Incorporation or Organization Identification No.)
1939 Palomar Oaks Way, Carlsbad, California 92009
(Address of Principal Executive Offices) (Zip Code)
(760) 431-1945
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
(Title of class)
Check whether issuer (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. [x] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will 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. [ ]
The Registrant's revenues for its most recent fiscal year were $13,271,000.
As of March 23, 1998, the aggregate value of common stock held by
non-affiliates of the Registrant was $2,764,000 based on the closing bid
price as reported by the OTC Electronic Bulletin Board. The number of shares
of common stock outstanding on March 23, 1998 was 76,568,112.
DOCUMENTS INCORPORATED BY REFERENCE
The following document is incorporated by reference into Part III of this
Annual Report on Form 10-KSB: Definitive Proxy Statement for the 1998 Annual
Meeting of Shareholders.
EXPLANATORY NOTE
This amendment No. 1 to Form 10-KSB is being filed by the registrant for
information required by Part III, Items 9, 10, 11 and 12. This information,
initially incorporated by reference in the registrant's Form 10-KSB for the
year ended December 31, 1997, is filed by amendment because registrant's
definitive proxy statement will not be filed within 120 days of the
registrant's year end. This Form 10-KSB/A amends Part III of the Company's
original Form 10-KSB filing only, and all other portions of the Company's
original 10-KSB filing remains in effect.
CODED COMMUNICATIONS CORPORATION
1997 FORM 10-KSB/A-1 ANNUAL REPORT
TABLE OF CONTENTS
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act........... 1
Item 10. Executive Compensation...................................... 3
Item 11. Security Ownership of Certain Beneficial Owners and
Management.................................................. 6
Item 12. Certain Relationships and Related Transactions.............. 7
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
<TABLE>
Set out below are the names of, and certain information with respect to, the
Directors all of whom are also nominees, and Executive Officers of the
Company.
<CAPTION>
<S> <C> <C>
Name Age Position Held With Company
Directors and Nominees:
Hugo R. Camou (1) (2) (3) 41 Chief Executive
Officer and Chairman of the Board
John Wiggins 46 President, Chief Operating Officer
and Director
Fernando Molina (1) (3) 57 Director
Miguel Vildosola (2) 33 Director
Executive Officers:
Fernando Pliego 57 Executive Vice President Finance
Steven Borgardt 45 Vice President Finance
and Chief Financial Officer
Richard Carrine 54 Vice President Manufacturing
</TABLE>
____________________________
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Stock Option Committee
Hugo R. Camou was appointed as the Company's Chief Executive Officer on
February 17, 1998 and the Chairman of the Board of Directors on September 19,
1996. Mr. Camou is the Chairman of the Board, CEO and controlling
shareholder of ISA Corporativo S.A. de C.V. Since 1988, Mr. Camou founded
and/or co-founded all of the companies comprising ISA. Mr. Camou holds a
degree in mathematics and physics from the Instituto Poletecnico Nacional in
Mexico. Prior to founding ISA, Mr. Camou taught computer science and
mathematics for undergraduate and graduate university programs in Mexico.
John Wiggins was appointed to the Board of Directors on February 13, 1998
and assumed the additional responsibilities of President on February 17,
1998. John Wiggins joined the Company in April 1994, and was appointed
Chief Operating Officer in June 1996. Mr. Wiggins has over 12 years
experience in sales and software applications support of mobile data
communications systems. Prior to joining the Company in 1994, Mr. Wiggins
served in various sales and engineering management positions over a twelve
year period with Motorola Inc. Mr. Wiggins holds a Bachelors of Science
degree in Computer Science from Knightsbridge University in the U.K.
Fernando Molina has served as a Director of the Company since September 19,
1996. Mr. Molina is the Executive Vice President of Grupo Embotellador
Mexicano, S.A. de C.V., the largest Pepsi Cola bottling plant and distributor
in Mexico. He also serves on the Board of Directors of Banco Nacional de
Mexico and Consorcio Azucarero Escorpion. Mr. Molina is a public accountant
with a degree from the ITAM University.
Miguel Vildosola has served as a Director of the Company since September 19,
1996. Mr. Vildolso is the President of Corporacion Digital MV, S.A. de
C.V., a data telecommunications services and equipment company located in
Mexicali, Mexico. Prior to joining Corporacion Digital, Mr. Vildosola was
Manager of Strategic Planning for Kenworth Mexicana. Mr. Vildosola has a
Masters degree in Management Information Systems from Instituto Technologico
y de Estudios Superiores de Monterrey (ITESM).
Fernando Pliego was appointed Executive Vice President of Finance on February
17, 1998. Mr. Pliego served as a Director of the Company from September 1996
to May 1997. Over the past five years, Mr. Pliego served in various senior
management positions with affiliates of ISA Corporativo S.A. de C.V. Mr.
Pliego has more than twenty years of experience in telecommunications in
Mexico. Mr. Pliego holds a degree in Chemical Engineering from the
Universidad Nacional Autonoma de Mexico.
Steven Borgardt was appointed the Company's Vice President Finance and Chief
Financial Officer in August 1993. Mr. Borgardt served as a Director of the
Company from September 13, 1995 to September 19, 1996. From September 1981
through August 1993, Mr. Borgardt served as the Vice President Finance or
Chief Financial Officer for the Company's wholly-owned subsidiary, Decom
Systems, Inc. ("Decom"). Mr. Borgardt holds a Bachelor of Science degree in
Accounting from San Diego State University and he is a Certified Public
Accountant in California.
Richard Carrine was appointed the Company's Vice President Manufacturing in
August 1993. Prior to August 1993, he served as Decom's Vice President
Manufacturing and Operations and in similar positions since September 1976.
Interest of Management and Insiders in Material Transactions
None of the directors or officers of the Company, nor any person who
beneficially owns, directly or indirectly, shares carrying more than 10% of
the voting rights attached to all outstanding shares of Common Stock, nor any
associate or affiliate of the foregoing persons has any material interest,
direct or indirect, in any transaction since the commencement of the
Company's last completed fiscal year or in any proposed transaction which,
in either case, has or will materially affect the Company, except as
disclosed in this Proxy Statement.
There are no family relationships between any of the directors or executive
officers of the Company.
Information About The Board of Directors and Committees of the Board
In 1997, the Board of Directors held 6 meetings. No director attended
less than 75% of such meetings. Non-employee directors are entitled to
receive an annual grant of options to purchase shares of Common Stock
under the Company's 1992 Option Plan. Directors who are also officers
of the Company or its subsidiaries receive no additional compensation for
their services as directors. All directors are reimbursed for their expenses
incurred to attend meetings.
The standing committees of the Board of Directors are the Compensation
Committee, Audit Committee and Stock Option Committee. The principal
duties of the Compensation Committee are to determine and review all
compensation of directors and officers of the Company, and to report to
the Board of Directors of the Company. The principal duties of the Audit
Committee are to advise and assist the Board of Directors in evaluating
the performance of the Company's independent auditors, including the scope
and adequacy of the auditor's examination, and to review with the auditors
the accuracy and completeness of the Company's financial statements and
procedures. The principal duty of the Stock Option Committee is to
determine grants of stock options under the Company's option plan.
Subsequent to August 1997, non-employee members of the Board of Directors
are to receive a fee of $1,000 for every board meeting attended by the
director. Messrs. Molina and Vildosola each earned but were not paid $3,000
in meeting fees in 1997. Effective with election to the board in 1998, all,
non-employee directors will also receive an annual retainer fee of $5,000.
There were no Compensation Committee meetings held in 1997 and the Audit
Committee held one meeting in 1997. All of the members of the Audit
Committee attended the meeting. The Stock Option Committee held no formal
meetings in 1997, however, options to purchase shares of Common Stock under
the 1992 Option Plan were granted from time to time throughout 1997 by the
Stock Option Committee.
ITEM 10. EXECUTIVE COMPENSATION AND BENEFITS
The compensation and benefits program of the Company is designed to attract,
retain, and motivate employees to operate and manage the Company for the best
interests of its shareholders.
Executive compensation is designed to provide incentives for those senior
members of management who are responsible for the Company's goals and
achievements. The compensation policy calls for base salaries, with the
opportunity for bonuses to reward outstanding performance, and a stock option
program.
Summary Compensation Table
<TABLE>
The following table and notes show the compensation provided to the Chief
Executive Officer and the other executive officers, who served as such at
the end of 1997, and whose annual compensation exceeded $100,000.
<CAPTION>
Long-Term
Compensation
Annual Compensation Stock Option All Other
Name and Position Year Salary($) Bonus($) Other($)(1) Shares(#) Compensation ($)(6)
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick.............. .1997 161,532 50,000 --- 3,000,000 ---
Chief Executive Officer
And President (2)
John A. Robinson, Jr. (3). . .1997 140,083 --- --- --- 1,960
President, Decom Systems 1996 134,083 25,000 --- 1,615,000 1,156
1995 128,842 --- --- 215,000 ---
John Wiggins (4)........... ..1997 125,450 25,000 33,800(5) --- 1,630
Chief Operating Officer 1996 133,450 25,000 16,000(5) 1,500,000 997
1995 114,692 --- --- 15,000 ---
Steven Borgardt............. .1997 125,000 25,000 --- --- 1,971
Vice President Finance 1996 102,080 25,000 --- 1,005,000 901
and Chief Financial Officer 1995 95,576 --- --- 175,000 ---
Richard Carrine............. .1997 110,000 25,000 --- --- 1,730
Vice President Manufacturing 1995 93,650 25,000 --- 1,015,000 817
1995 91,153 --- --- 175,000 ---
</TABLE>
____________________
(1) In the interest of attracting and retaining qualified personnel, the
Company provides executive officers with certain other benefits, which
may include relocation allowances, automobile allowances, insurance
and other benefits. Unless otherwise noted, the cost of providing
such personnel benefits did not exceed, as to any individual named
above, the lesser of $25,000 or 10% of the total annual salary
reported for the executive officer.
(2) Mr. Gary L. Luick was appointed chief executive officer and president
on March 3, 1997. Mr. Luick resigned on February 17, 1998. All
stock options granted to Mr. Luick were terminated in 1998.
(3) Includes compensation in 1995 as Chief Operating Officer through
March 13, 1995; as Chief Executive Officer from March 13, 1995
through March 3, 1997; and as President of Decom subsequent
to March 3, 1997.
(4) Includes compensation in 1996 as Chief Operating Officer and
Vice President Engineering; and in 1995 as Vice President Engineering.
Mr. Wiggins was appointed president on February 17, 1998.
(5) Housing allowance for executive officer's relocation to San Diego,
California, which is paid to the executive officer on a monthly basis.
(6) Company matching contributions to 401(k) savings plan.
Employment Agreements
In February 1997, the Company entered into an employment agreement with
Mr. Gary L. Luick, the Company's chief executive officer and president.
Under the terms of the three year agreement, Mr. Luick was to receive an
initial base salary of $200,000 per year and a bonus in 1997 to be not less
than $50,000. In the event the employment agreement was terminated by the
Company for good cause, as defined in the agreement, Mr. Luick was to receive
a severance benefit equal to 25% of his base salary. In the event the
employment agreement was terminated by the Company for any reason other than
good cause, then Mr. Luick was entitled to receive the greater of
(i) 100% of his annual base salary or (ii) the balance of the obligations
payable to Mr. Luick over the remaining term of the contract. In addition,
Mr. Luick was granted an option to purchase 3,000,000 shares of common stock
under the Company's 1992 Stock Option Plan. The exercise price was $.33 per
share or the approximate fair market value per share on the date of grant.
In Febrruary 1998, Mr. Luick resignedas chief executive officer and
president, and he was removed from the board of directors by written consent
action of the Company's majority shareholders, ISA Investments Corporation.
In February 1998, Mr. Luick and the Company entered into a Separation and
Release Agreement under which Mr. Luick received a lump sum payment of
$225,000, released the Company from any further obligations or claims, and
forfeited all rights to vested and unvested employee stock options.
Mr. Robinson entered into a letter agreement with ISA in 1996 pursuant to
which ISA has committed to cause the Company to retain the services of
Mr. Robinson in an executive position for three years. Mr. Robinson's
current base salary is $140,000. Mr. Robinson could be discharged only if
he is convicted of a felony. In April 1998, Mr. Robinson resigned as
president of Decom. Mr. Robinson is to be paid his monthly salary through
September 1999, or the expiration date of his employment agreement.
Messrs. Wiggins, Borgardt and Carrine entered into employment agreements with
the Company in 1996 providing initial base salaries of $125,000, $125,000 and
$110,000, respectively. The term of each agreement is three years. The
agreements provide each officer an opportunity to earn an annual incentive
bonus of 30% of base salary, under a plan to be approved annually by the
Board of Directors. If the agreements are terminated by the Company without
cause or following a change of control, as those terms are defined in the
agreements, Messrs. Wiggins, Borgardt and Carrine are to receive the greater
of (i) 100% of their annual salary or (ii) the salary payable over the
remaining term of their contract. If the agreement is terminated by the
executive officer, the executive officer can, under defined circumstances,
receive 25% of his then current base salary as a severance benefit. The
agreements also provide, on a case by case basis, additional benefits such as
paid life insurance, and housing relocation and automobile allowances. The
value of these benefits, for any one executive officer, does not exceed 25% of
his annual base salary, except that Mr. Wiggins is entitled to receive an
annual housing allowance of $33,600. Effective February 17, 1998, Mr.
Wiggins was appointed as the Company's president in addition to his
responsibilities as chief operating officer. Mr. Wiggins salary was
increased, effective February 17, 1998, to $210,000 per year.
Stock Options Granted During Fiscal Year
There were no stock option grants made to executive officers in the year ended
December 31, 1997.
Stock Options Exercised During the Fiscal Year and Year-End Value of
Unexercised Options
<TABLE>
The following table sets forth information about stock options held by the
Company's named executive officers individually, as of December 31, 1997.
<CAPTION>
Aggregated Option Exercises in Last
Fiscal Year and FY-End Option Values
Shares Acquired Value Number of Value of Unexercised
On Realized Unexercised Options In-the Money Options($)
Name Exercise () ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick(1 -- -- -- 3,000,000 (1) $ -- $ --
John A. Robinson, Jr. -- -- -- 1,830,000 -- --
John Wiggins -- -- -- 1,515,000 -- --
Steven Borgardt -- -- -- 1,180,000 -- --
Richard Carrine -- -- -- 1,190,000 -- --
</TABLE>
________________
(1) Mr. Luick resigned in February 1998 and all options to purchase shares of
Common Stock were canceled.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the securities laws of the United States, the Company's directors,
officers and any person holding more than 10% of outstanding shares of
Common Stock are required to report their initial ownership of Common Stock
and any subsequent changes in ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established, and
the Company is required to disclose in this proxy statement any failure to
file these reports on a timely basis. Based solely on a review of the copies
of such forms furnished to the Company or written representations from
reporting persons, the Company believes that during the period from
January 1, 1997 to December 31, 1997, its directors, officers and greater
than 10% beneficial owners complied with the Section 16(a) filing
requirements, except that Mr. Vildosola filed his Form 3, Initial Statement
of Beneficial Ownership of Securities late; and Mr. Camou and ISA Investments
Corporation failed to file a Form 4, Statement of Changes in Beneficial
Ownership.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information with respect to (i) each
person who, as of April 24, 1998, is known to the Company to be the
beneficial owner of more than 5% of any class of its Common Stock, (ii) each
director of the Company and (iii) all directors and executive officers as
a group.
<CAPTION>
Shares of Common Stock Percent of
Name and Address (6 ) Position With Company Beneficially Owned Class
Directors and Executive Officers:
<S> <C> <C> <C>
Hugo R. Camou (1) Chief Executive Officer 54,272,767 (1) 70.9%
and Chairman of the Board
John Wiggins. (2) President, Chief Operating
Officer and Director 1,515,000 (2) 1.9%
Fernando Molina Director -- --%
Miguel Vildosola Director 2,375,000 (3) 3.1%
All directors and executive -- 66,097,657 (4) 80.3%
officers as a group (7 persons)
Other Shareholders:
ISA Investments Corporation 54,272,767 (1) 70.9%
Orizaba No. 182 Col. Rima
C.P. 06700 Mexico DF (4)
Renaissance Capital Partners II, LTD. 11,229,316 (5) 11.8%
8080 North Central Expressway
Dallas, Texas 75206 (5)
</TABLE>
_________________________
(1) Mr. Camou was appointed chief executive officer on February 17, 1998.
Shares include 54,272,767 shares of Common Stock held directly by ISA
Investments Corporation. ISA and Mr. Camou and his immediate family
are the majority shareholders of ISA Investments Corporation. Mr.
Camou is the majority shareholder of ISA.
(2) Mr. Wiggins was appointed president on February 17, 1998. Shares
include options to purchase 1,515,000 shares of Common Stock
exercisable within 60 days of April 24, 1998. Mr. Wiggins was
appointed to the Board of Directors on February 13, 1998.
(3) Shares held by Viga Holdings, Ltd. in which Mr. Vildosola claims a
beneficial interest. Mr. Vildosola is the controlling shareholder
of Viga Holdings, Ltd.
(4) Shares include options to purchase 5,715,000 shares of Common Stock
exercisable within 60 days of April 24, 1998, and 54,272,767 shares
of Common Stock beneficially owned by Mr. Camou (See Note 1).
(5) Shares include 1,333,500 shares of Common Stock issuable upon the
conversion of Series A preferred stock, 7,636,991 shares of Common
Stock issuable upon conversion of Series B preferred stock, and
1,244,240 shares of Common Stock issuable upon conversion of the
6% Term Note. The $311,060 principal amount 6% Term Note, which
matures March 1, 1999, is convertible into shares of Common Stock
at a price of $.25 per share.
(6) For purposes of this Proxy Statement, the address of Messrs. Camou,
Wiggins, Molina and Vildosola is 1939 Palomar Oaks Way, Carlsbad,
CA 92009.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1997, affiliates of ISA placed orders
for their third-party customers with the Company in the approximate amount
of $5,000,000. Mr. Hugo Camou, the Company's chief executive officer and
the chairman of the board of directors, is the controlling shareholder of ISA.
The Company believes that the orders from ISA customers were accepted on
terms not less favorable to the Company than could have been obtained from
other third-party customers.
SIGNATURES
In accordance with the Exchange Act, the registrant has caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
By Order of the Board of Directors
Hugo R. Camou
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated:
Signature Title Date
/s/ Hugo R. Camou Chief Executive Officer April 29, 1998
Hugo R. Camou and Director
/s/ John Wiggins President and Director April 29, 1998
John Wiggins
/s/ Fernando Pliego Executive Vice President Finance April 29, 1998
Fernando Pliego
/s/Steven E. Borgardt Vice President Finance and Chief April 29, 1998
Steven E. Borgardt Financial Officer (Chief
Accounting Officer)
Director
Fernando Molina
/s/ Miguel Vildosola Director April 29, 1998
Miguel Vildosola
