UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
Mark One
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
For the Transition period from to
Commission File Number 0-18204
AJAY SPORTS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 39-1644025
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(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1501 E. Wisconsin Street
Delavan, Wisconsin 53115 (414) 728-5521
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(Address of Principal Executive Offices (Registrant's Telephone Number,
including Zip Code) 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, $.01 par value Units (each consisting of
5 shares of Common Stock and 2 Warrants)
Common Stock Purchase Warrants
Series C 10% Cumulative Convertible Preferred Stock
Indicate by check mark whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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.
Yes X No
Indicate by checkmark 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 the 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 voting stock held by nonaffiliates as of
April 7, 1997 was $1,598,711. The number of shares outstanding of the
Registrant's $.01 par value common stock at April 7, 1997 was 23,274,039.
Documents Incorporated by Reference
None
<PAGE>
9
PART III
Item 10. Directors and Executive Officers of the registrant
The Registrant's directors are as follows:
Positions and 1st Yr. As
Name Age Offices with Company
Director
Anthony B. Cashen 62 Director 1993
Robert R. Hebard 44 Director 1989
Thomas W. Itin 62 Chairman of the Board 1993
Robert D. Newman 55 Director 1994
Clarence H. Yahn 60 Director 1994
Anthony B. Cashen. Mr. Cashen has served as Secretary, Treasurer and
Director of LBO Capital Corp., since inception. He is currently a Managing
Partner in Lamalie Amrop International, a management consulting and executive
recruiting firm located in New York City. Previously, Mr. Cashen had been
an officer and Principal of the investment firms of A. G. Becker, Inc. and
Donaldson, Lufkin and Jenrette, Inc. He serves as Director of PW
Communications and Imucell Corporation, both of which are publicly-held
companies. Mr. Cashen is also President of the Sagamore Institute. He
received his MBA from the Johnson Graduate School of Management at Cornell
University, and his B.S. degree from Cornell University.
Robert R. Hebard. Mr. Hebard has served as Secretary of the Company since
September of 1990. He is currently Chairman of the Board and President of
Enercorp, Inc., a publicly traded business development company under the
Investment Company Act of 1940, as amended. In 1993, Mr. Hebard was also named
Chief Executive Officer, Chief Financial Officer, and Treasurer of CompuSonics
Video Corporation, a publicly held company. From December 1993 to August 1994
Mr. Hebard served as Director of Kimbro Imaging Systems, Inc. From June 1986 to
January 1992 he was First Vice President/Director of Product Management for
Comerica Bank and from February 1992 to October 1992 was Director of Retail
Marketing for the merged Comerica/Manufacturers Bank. Mr. Hebard is also
currently serving as Vice President of Woodward Partners, Inc., a real estate
development company in suburban Detroit, Michigan. He received his MBA from
Canisius College and his B.S. degree from Cornell University.
Thomas W. Itin. Mr. Itin was elected Chairman of the Board and President of
the Company in June of 1993. Mr. Itin has served as Chairman of the Board,
Chief Executive Officer and Chief Operating Officer of LBO Capital Corp.
since its inception, and is the Company's largest single stockholder. Mr.
Itin has been Chairman, President and Owner of TWI International, Inc.
("TWI") since he founded the firm in 1967. Mr Itin also is the Owner and
Principal Officer of Acrodyne Corporation since 1962. Mr. Itin is Chairman,
President, Treasurer, Chief Executive Officer, and Chief Operating Officer of
Williams Controls, Inc., a publicly held corporation from March 1989 to the
present. Mr. Itin was a co-founder of Roadmaster Industries, Inc. (now
known as RMI Sports Group, Inc.) in 1987 and served as a Director thereof
from October 1987 until June 1993. From December 1987 until October 1993,
Mr. Itin was an Officer and Director of CompuSonics Video Corporation, a
publicly held company. He received his B.S. degree from Cornell University
and his MBA from New York University.
<PAGE>
Robert D. Newman. Mr. Newman became a Director of the Company in August
1994. Mr. Newman has served as General Manager of Leisure Life, Inc., a
wholly owned subsidiary of the Company since August 1994. Mr. Newman
founded Leisure Life, Inc. in October, 1990 and has served as President since
its inception, until its purchase by the Company in August 1994. Mr. Newman
was President and Chief Executive Officer of Stone Mountain Millworks from
1985 to 1989. Mr. Newman served as Director of Product Development for Gold
Medal, Inc. from 1989 to October 1990. He attended Northern Illinois
University.
Clarence H. Yahn. Mr. Yahn became a Director of the Company in September
1994, and has served as Director of Ajay Leisure Products, Inc. a wholly
owned subsidiary of Ajay Sports, Inc. since September 1993 and as Ajay
Leisure's President since January 1994. Mr. Yahn is on the Board of
Directors of Leisure Life, Inc., a subsidiary of the Company. In 1988, Mr.
Yahn joined Gold Medal, Inc. as its President. Prior to joining Ajay
Leisure Products, Mr. Yahn served as Chief Executive Officer of Melnor, Inc.
a consumer durables company from 1992 to 1993. He received his B.S. degree
in mathematics and physics from the University of Wisconsin and received a
Masters in International Business from the American Graduate School of
International Management.
Robert R. Hebard is the son-in-law of Thomas W. Itin. Other than this
relationship there are no other family relationships between any director or
executive officers.
The Directors of the Company are not compensated for their services as
directors, but are reimbursed for reasonable costs incurred on behalf of the
Company.
Executive Officers of the Company
The following table sets forth, as of April 1, 1996, the names and ages of the
Company's executive officers including all positions and offices held by each
such person. These officers are elected to hold office for one year or until
their respective successors are duly elected and qualified.
Name Age Position
Thomas W. Itin 62 Principal Executive Officer
Clarence H. Yahn 60 President of Ajay Leisure Products, Inc.
and Leisure Life, Inc. (Subsidiaries)
Duane R. Stiverson 55 Chief Financial Officer and Principal
Accounting Officer of Ajay Sports, Inc.,
Ajay Leisure Products, Inc., Leisure Life,
Inc. and Palm Springs Golf, Inc.
For information regarding Mr. Yahn and Mr. Itin, see their biographies above.
Duane R. Stiverson has been Chief Financial Officer since July 19, 1994.
Prior to joining the Company, Mr. Stiverson was the Vice President of
Operations for VariQuest Technologies, Inc. and held that position since
1991. From 1987 to 1990, Mr. Stiverson was Vice President of Materials for
the Ambrosia Chocolate Company. From 1978-1987 he was the Vice President of
Finance for Ambrosia, and from 1976-78 was its Controller. Mr. Stiverson
held various controller and corporate finance positions with the Bendix
Corporation. Mr. Stiverson has a Bachelor of Science from the University of
Nebraska and was later awarded a Master of Business Administration from
Michigan State University.
Item #11 Executive Compensation
Summary of Cash and Certain Other Compensation
The following table shows, for the years ending December 31, 1996, 1995 and
1994, the cash compensation paid by the Company and its subsidiaries, as well as
certain other compensation paid or accrued for those years, to each of the
executive officers of the Company who received compensation from all capacities
in which they serve:
<PAGE>
Summary Compensation Table
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Annual Long-Term
Compensation Compensation
Securities
Name and Principal Position Year Salary Underlying
Options (# Shares)
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Thomas W. Itin 1996 $ 1 -
Director and Principal 1995 $ 1 -
Executive Officer of the 1994 $ 1 -
Company, and Director and
Principal Executive Officer
of Ajay Leisure Products, Inc.
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- --------------------------------------------------------------------------------
Clarence H. Yahn 1996 $100,000 200,000
Director of the Company and 1995 $104,875 -
President of Ajay Leisure 1994 $101,000 350,000
Products
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Employment Contracts
The Company has an employment agreement with Mr. Itin under which he served as
the President and Chief Executive Officer of the Company at a salary of $1 per
year during the years ended December 31, 1994, 1995 and 1996. This agreement
expired on December 31, 1996 and Mr. Itin's compensation for 1997 is to be
determined by the Board based on Mr. Itin's contribution to the success of the
Company in 1994, 1995 and 1996.
Common Stock Options
During the year ended December 31, 1996, common stock options were granted in
the amount of 225,000 shares to executive officers, none of which became
exercisable during 1996.
Option Grants in 1996
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Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities %of Total Exercise Expira- Price Appreciation
Underlying Options Granted or Base tion for Option Term
Name Options to Employees in Price Date
Granted(#) Fiscal Year ($/Sh) 5%($) 10% ($)
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Thomas W. 0 0 N.A. N.A. N.A. N.A.
Itin
CEO
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Clarence H. 200,000 28.6% $.40 12/20/01 $(8,000) $10,000
Yahn
President,
Ajay
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<PAGE>
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Aggregated Option Exercises in 1996 and December 31, 1996 Option Values
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Number of Securities Value of Unexercised
Shares Underlying in-the-Money
Acquired Value Unexercised Options/FY-End
Name on Realized Options/FY-End (#) ($)
Exercise ($)
($) Exercisable/Unexercisable Exercisable/Unexercisable
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Thomas W. 0 0 0 0 - -
Itin
CEO
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Clarence H. 0 0 350,000 200,000 $0 $0
Yahn
President,
Ajay
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Further Information
Item #12 Security Ownership of Certain Beneficial Owners and Management
The table below sets forth, as of March 1, 1997, the number of shares of Common
Stock beneficially owned by each director and executive officer (named in the
Summary Compensation Table) of the Company individually, all officers and
directors as a group, and all beneficial owners of more than five percent of the
Common Stock. The following stockholders have sole voting and investment power
with respect to their holdings unless otherwise footnoted.
Number of Shares Percentage
Name and Address Beneficially Owned of Class (1)
Thomas W. Itin 13,281,225 (2)(3) 46.2%
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322
Williams Controls Industries, Inc. 15,228,520 (4) 44.3%
14100 S.W. 72nd Avenue
Portland, OR 97224
TICO 8,676,540 (5) 32.2%
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322
Acrodyne Profit Sharing Trust 2,773,471 (6) 11.2%
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322
Robert R. Hebard 1,928,797 (7) 8.3%
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322
Enercorp, Inc. 1,893,797 8.1%
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322
<PAGE>
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Number of Shares Percentage
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Name and Address Beneficially Owned of Class (1)
- ---------------- ------------------ ------------
LBO Capital Corp. 1,680,000 (8) 7.2%
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322
Robert D. Newman 1,026,000 (9) 4.4%
215 4th Avenue North
P. O. Box 60
Baxter, TN 38544
Clarence H. Yahn 534,000 (10) 2.2%
1501 E. Wisconsin Street
Delavan, WI 53115
Duane R. Stiverson 95,000 (11) 0.4%
1501 E. Wisconsin Street
Delavan, WI 53115
Anthony B. Cashen 15,000 (12) 0.1%
Lamalie Amrop International
200 Park Avenue, Suite 3100
New York, NY 10166
All officers and directors as a group
(six persons) 16,880,022 57.5%
(1) Where persons listed on this table have the right to obtain additional
shares of Common Stock through the exercise of outstanding options or
warrants or the conversion of convertible securities within 60 days from
March 1, 1997 these additional shares are deemed to be outstanding for the
purpose of computing the percentage of Common Stock owned by such persons,
but are not deemed to be outstanding for the purpose of computing the
percentage owned by any other person. Percentages are based on 23,274,039
shares outstanding.
(2) Mr. Itin may be deemed to be a "control person" of the Company. Includes
Common Stock and shares of Common Stock issuable upon the exercise of
presently exercisable warrants and the conversion of presently convertible
Preferred Stock beneficially owned by Mr. Itin's spouse and affiliates of
Mr. Itin as follows:
TICO 5,000,040 Common Stock
First Equity Corporation 151,214 Common Stock
Acrodyne Profit Sharing Trust 2,773,471 Common Stock and Warrants
LBO Capital Corp. 1,680,000 Common Stock and Warrants
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9,604,725
TICO (12,500 shares of Series B
Preferred Stock convertible at one
share for 294.12 shares of
Common Stock) 3,676,500 Preferred Stock Conversion
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13,281,225
<PAGE>
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Mr. Itin disclaims beneficial ownership in the securities owned by LBO
Capital Corp. and First Equity Corporation in excess of his pecuniary
interest. See Note 3 below with regard to securities owned by
Williams Controls, the beneficial ownership of which is disclaimed by
Mr. Itin.
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(3) Does not include 4,117,647 Common Shares and 11,110,873 options owned by
Williams Controls, Inc. Mr. Itin is Director and Principal Executive
Officer and 26.0% beneficial owner of Williams Controls, Inc. Even though
Mr. itin is a director of Williams Controls, he abstains from voting on
matters pertaining to the Company in meetings of the directors of Williams
Controls. If the shares and warrants owned by Williams Controls were
included, the number of shares beneficially owned would be 28,509,745 and
the percentage of class would be 71.5%.
(4) Includes 11,110,873 shares of Common Stock issuable upon the exercise
of outstanding stock options. See "Certain Relationships and Related
Transactions."
(5) Includes 3,676,500 shares of Common Stock issuable upon conversion of
12,500 shares of presently convertible Series B Preferred Stock, at a rate
of 294.12 shares of Common Stock for every one share of preferred stock.
TICO is a Michigan partnership of which Mr. Itin is the Managing Partner.
(6) Includes 1,597,00 shares of Common Stock issuable upon exercise of
options. Mr. Itin is trustee and beneficiary of Acrodyne Profit
Sharing Trust.
(7) Includes the following Common Stock and shares of Common Stock issuable
upon the conversion of presently convertible Preferred Stock owned by
Enercorp, Inc., a Colorado corporation of which Mr. Hebard is Chairman of
the Board of Directors and President:
Common Stock 1,864,706
2,000 shares of Series C Preferred Stock convertible at
one share for 14.5 shares of Common Stock 29,091
---------
1,893,797
(8) Includes 200,000 shares of Common Stock issuable upon exercise of
warrants. LBO Capital Corp. Is a Colorado corporation of which Mr.
Itin is a 51% shareholder, Chairman of the Board of Directors, and
President.
(9) Includes 200,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(10) Includes 350,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(11) Includes 45,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(12) Includes 5,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
Compliance with Section 16(a) of the
Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and 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
("SEC"). Officers, directors and greater than ten-percent stockholders are
required by the SEC regulation to furnish the Company with copies of Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations of the reporting person,
the Company has determined that all required reports have been timely filed
during the year, except for one shareholder, Williams Controls, Inc., which
filed a late report involving a transaction in July 1995. In addition, director
Anthony B. Cashen and former director Stan Intihar filed late reports relating
to automatic stock option grants on October 31, 1994 and May 24, 1995 under the
Company's 1994 Stock Option Plan.
<PAGE>
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Item #13 Certain Relationships and Related Transactions
- -------------------------------------------------------------------------------
Wiliams Controls, Inc. ("Williams") owns 4,117,647 shares of the Company's
common stock and holds options to purchase up to an additional 11,110,873 shares
of the Company's common stock exercisable through August 1, 1999 at prices
ranging between $.34 and $.50 per share, all of which presently are exercisable.
Williams acquired these shares and options in connection with a joint venture
agreement entered into in 1994 as amended in 1995, under which Williams made
interim financing available to the Company until it entered into a credit
facility with its current lender. As a condition to the bank making the loan,
Williams was required to guaranty the obligations of the Company thereunder. In
return for Williams' guaranty, the Company pays Williams a guaranty fee of
one-half of one percent of the outstanding loan amount. During 1996, the Company
paid Williams $60,411 under this arrangement. The Chairman of the Board, Chief
Executive Officer and President of the Company also holds the same positions
with Williams and is a significant stockholder in both companies.
<PAGE>
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Form 10-K/A Amendment No. 1 to
be signed on its behalf by the undersigned, thereunto duly authorized.
AJAY SPORTS, INC.
DATE: April 30, 1997 BY \s\Duane R. Stiverson
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Duane R. Stiverson, Chief
Financial Officer and
Principal Accounting Officer
