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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from to
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Commission File No. 0-19420
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Credit Depot Corporation
------------------------
(Name of small business issuer in its charter)
Delaware 58-1909265
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Wachovia Center, Gainesville, Georgia 30501
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, including Area Code (770) 531-9927
--------------
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
N/A N/A
Securities registered under Section 12(g) of the Exchange Act:
Common Stock $.001 par value
----------------------------
(Title of Class)
Check whether the 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. Yes X No
--- ---
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B 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. [X]
Issuer's revenues for its most recent fiscal year: $5,918,460
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As of September 30, 1997, 4,072,761 shares of Common Stock, $.001 par value,
were outstanding. The aggregate market value of the common stock held by
non-affiliates of the registrant as of such date was approximately $2,300,000*.
*Excludes 740,336 shares of common stock deemed to be held by officers and
directors, and stockholders whose ownership exceeds five percent of the shares
outstanding at August 31, 1997. Exclusion of shares held by any person should
not be construed to indicate that such person possesses the power, direct or
indirect, to direct or cause the direction of the management or policies of the
registrant, or that such person is controlled by or under common control with
the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Information required to be filed as Part III of the Form 10-KSB which initially
indicated would be filed in the Registrant's Proxy Statement are included in
this amendment to the Form 10-KSB and are hereby incorporated into the original
Form 10-KSB as filed.
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PART III
ITEM 10. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Chief Executive Officer and
Chief Operating Officer. No other executive officer of the Company received
compensation in excess of $100,000 for services rendered during the fiscal years
ended June 30, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Name and Annual
Principal Position Year Salary($) Compensation(1) SARs (#)
- ------------------ ---- --------- --------------- --------
<S> <C> <C> <C> <C>
Gerald F. Sullivan 1997 $127,000 $6,731 0
President and Chief 1996 $100,000 $6,731 10,000
Executive Officer 1995 $ 97,500 $6,660 25,000
Ralph J. DeBee 1997 $118,125 $6,450 100,000
Vice-President & Chief
Operating Officer
</TABLE>
(1) Includes payments for leased vehicle provided to the employee.
The following table sets forth certain information with respect to
individual grants of stock options made during the fiscal year ended June 30,
1997, to the above named executive officers:
OPTION/STOCK APPRECIATION RIGHT ("SAR") GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-----------------
% of Total
Options/SARs
Options/ Granted to Exercise
SARs Employees in of Base Expiration
Name Granted(#) Fiscal Year Price ($/Sh) Date
- ---- ---------- ----------- ------------ ----
<S> <C> <C> <C> <C>
Gerald F. Sullivan 0 NA NA NA
President and Chief
Executive Officer
Ralph J. DeBee 100,000 30.00% $2.75 7/25/2007
Vice-President & Chief
Operating Officer
</TABLE>
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The following table sets forth certain information with respect to each
exercise of stock options during the fiscal year ended June 30, 1997, by the
above named executive officer and the number and value of unexercised options
held by the named executive officers as of June 30, 1997:
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at June 30, at June 30,
Shares 1997 (#) 1997 (#)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Gerald F. Sullivan 0 0 348,750/11,250 $-0- /$-0-
President and Chief
Executive Officer
Ralph J. DeBee 0 0 34,000/66,000 $-0- /$-0-
Vice-President & Chief
Operating Officer
</TABLE>
STOCK OPTION PLANS
In October 1990, the Company adopted the 1990 Stock Option Plan (the
"1990 Plan") covering 250,000 shares of the Company's Common Stock, $.001 par
value, pursuant to which officers, Directors and key employees of the Company
are eligible to receive incentive and/or non-qualified stock options. In March
1992, the Company amended the 1990 Plan and increased the number of shares
reserved under the 1990 Plan from 250,000 shares to 400,000 shares. In January
1993, subject to shareholder approval which was obtained in May 1993, the Board
of Directors adopted the 1993 Stock Option Plan (the "1993 Plan") covering
250,000 shares of the Company's Common Stock $.001 par value, pursuant to which
officers, directors and key employees of the Company are eligible to receive
incentive and/or non-qualified stock options. In December 1993, the Company
amended the 1993 Plan and increased the number of shares reserved for issuance
thereunder by 350,000 shares, from 250,000 shares to 600,000 shares. In December
1995, the Company amended the 1993 Plan and increased the number of shares
reserved for issuance thereunder by 250,000 shares, from 950,000 shares to
1,200,000 shares. In December 1996, the Company amended the 1993 Plan and
increased the number of shares reserved for issuance thereunder by 400,000
shares, from 1,200,000 shares to 1,600,000 shares of Common Stock. The 1990 Plan
expires on October 15, 2000 and the 1993 Plan expires on January 20, 2003.
The 1990 Plan and the 1993 Plan (collectively, the "Plans") are
administered by a committee of the Board of Directors consisting of Messrs.
Dunlap, Brunet and Hemingway. The selection of participants, allotment of
shares, determination of price and other conditions of purchase of any options
granted are determined by the Board or any such committee at its sole
discretion. The purpose of the Plans is to attract and retain persons
instrumental to the success of the Company. Incentive stock options granted
under the Plans are exercisable for a period of up to 10 years from the date of
grant at an exercise price which is not less than the fair market value of the
Common Stock on the date of the grant, except that the term of an incentive
stock option granted under the Plans to a stockholder owning more than 10% of
the outstanding shares of Common Stock may not be less than 110% of the fair
market value of the Common Stock on the date of the grant nor for more than five
years.
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COMPENSATION OF DIRECTORS
Directors do not receive any compensation for serving as directors or
attending meetings. Mr. Dunlap and Mr. Brunet received compensation of $60,000
and $90,000, respectively, for services rendered as consultants to the Company
during the fiscal year ended June 30, 1997.
Each of the directors who is not an employee of the Company and is a
director on January 31, is eligible for automatic grants of options to purchase
5,000 shares per year at the fair market value of such shares at such date,
which options are exercisable for a period of ten years.
In December 1995, ten year options to purchase 25,000 shares at $3.50 per
share, which options are exercisable immediately, were granted to Mr. Dunlap in
accordance with the Plans. In September 1995, ten year options to purchase
40,000 shares at $3.50 per share, which options are exercisable immediately,
were granted to each of Mr. Hemingway and Mr. Williams in accordance with the
Plans. In January 1996, ten year options to purchase 5,000 shares at $4.00 per
share, which options are immediately exercisable, were granted to each of the
outside Directors of the Company in accordance with the Plans. Also in January
1996, a ten year option to purchase 10,000 shares at $4.00 per share , which
option is exercisable immediately, was granted to Mr. Sullivan. In July 1996,
the Board granted a ten year option to purchase 45,000 shares at $2.75 per share
, which option is exercisable immediately, to Mr. Brunet, who accepted the role
of Chairman of the Board. In October 1996 the Board granted ten year options to
purchase 15,000 shares at $3.50 per share, which options are exercisable
immediately, to each of Mr. Munoz and Mr. Thomas, new Directors of the Company.
On July 25, 1996, the Company's Board of Directors approved a repricing
of all outstanding stock options which had been granted at an exercise price in
excess of $4.00 per share to $3.50 per share, compared to the then fair market
value of $2.75 on the date of repricing. The following options previously
granted to directors were repriced: 10 year options granted between January 1993
and September 1995 to acquire 720,000 shares of Common Stock at exercise prices
ranging from $4.25 to $10.00 per share, with a weighted average exercise price
of $6.17 per share.
REPORT OF THE COMPENSATION COMMITTEE ON REPRICING OF OPTIONS
The Company's stock option plans have been utilized to provide directors,
executives and other key employees with increased motivation and incentive to
exert their best efforts on behalf of the Company through the opportunity to
benefit from appreciation in the value of the Common Stock. Due to a decline in
the price of the Common Stock in the year ended June 30, 1996, certain options
outstanding under the Company's various stock option plans were exercisable at
prices which were significantly in excess of the then current market value of
the Common Stock. In order to restore the incentive value to such options, the
Compensation Committee and the Board of Directors approved the repricing of
options held by officers, directors, and employees.
On July 25, 1996, each option outstanding under the Plans, including
options held by Directors and Executive Officers of the Company, with an
exercise price exceeding $4.00 was canceled and reissued with an exercise price
equal to $3.50 per share, compared to the then current market price of $2.75 per
share. Options to purchase 1,151,000 shares of Common Stock at exercise prices
ranging from $4.25 to $10.00 per share, with a weighted average exercise price
of $6.11 per share were repriced. All other terms and conditions of these
options remained the same. The options which were repriced included 350,000
options held by Jerry Sullivan, the President and Chief Executive Officer of the
Company that had a weighted average exercise price of $6.29 per share.
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This report is submitted by the Company's Compensation Committee:
Craig J. Brunet
Samuel Scott Hemingway
Joel C. Williams, Sr.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), requires the Company's executive officers, Directors and
persons who beneficially own more than 10% of a registered class of the
Company's equity securities to file with the Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Such executive officers, Directors, and greater than
10% beneficial owners are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms filed by such reporting persons.
To the Company's knowledge, there were no reports not filed in a timely
manner under Section 16(a) of the Securities Exchange Act.
EMPLOYMENT AGREEMENTS
In January 1996, Gerald F. Sullivan, President, Chief Executive Officer,
and a Director of the Company, entered into a two-year employment agreement
automatically renewing for successive one-year periods with the Company which
provides for a base annual salary of $100,000. In October 1996, the Board
modified the base annual salary to $136,000. Mr. Sullivan is also being provided
with a leased vehicle with monthly lease payments of $565.
In October 1997, Ralph J. DeBee, Jr., Chief Operating Officer, and
Charles D. Farrahar, Chief Financial Officer, entered into employment agreements
with the same terms as described above for Mr. Sullivan, except at base annual
salaries of $150,000 and $100,000, respectively.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding ownership of Common
Stock for (i) each person known by the Company to own beneficially five percent
or more of the outstanding shares of the Company's Common Stock, (ii) each
director of the Company, (iii) each of the executive officers of the Company,
and (iv) all officers and directors of the Company as a group as of September
19, 1997. As a result of a Conversion Offer to holders of 10% Secured Notes and
9% Preferred Stock, the number of shares of outstanding Common Stock
beneficially owned by principal shareholders of the Company will be increased.
Set forth below in the "As Adjusted" column is the number of shares of Common
Stock that beneficial owners of 5% of the Common Stock will beneficially own
after giving effect to the Conversion Offer. The number of shares owned does not
reflect the effect of a one-for-five reverse stock split.
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<TABLE>
<CAPTION>
Name and Address Shares Beneficially Owned(1)
of Beneficial Owner -----------------------------------------------
or Identity of Group Number Percent of Class As Adjusted(2)
- -------------------- ------ ---------------- --------------
<S> <C> <C> <C>
Gerald F. Sullivan (3) 355,000 (12) 8.02 *
Craig J. Brunet (3) 160,000 (13) 3.78 *
Samuel R. Dunlap, Jr. (3) 399,064 (14) 8.92 *
Joel C. Williams (3) 90,000 (15) 2.16 *
Samuel Scott Hemingway (3) 125,000 (16) 2.98 *
Carlos R. Munoz (3) 20,000 (17) .48 *
John C. Thomas, Jr. (3) 167,584 (18) 3.95 *
Donald S. Sigler 383,688 8.61 *
3242 Dunlap Drive
Gainesville, Georgia 30506
Greenwich Capital Products, Inc. 300,000 (19) 6.86 *
600 Steamboat Road
Greenwich, CT. 06830
NewSouth Special Equities, L.P. 920,000 (20) 18.43 *
1000 Ridgeway Loop Rd
Memphis, Tennessee 38117
Jackt Holdings Corp. (4) 300,000 (21) 6.86 *
Ranier Heubach (5) 551,250 (22) 11.92 1,746,635
VPM Verwaltungs AG (6) 854,639 (23) 17.34 1,993,101
Kingsley & Company (7) 393,750 (24) 8.82 1,247,596
Muico & Company (8) 315,000 (25) 7.18 998,077
Arkansas Teachers Retirement
System (10) 360,000 (27) 8.12 1,800,000
Michigan Municipal Employee
Retirement System (10) 800,000 (28) 16.42 4,000,000
Lancer Partners, LP 660,000 (29) 13.95 3,300,000
237 Park Avenue New York
NY 10017
The Intergroup Corporation (35) 870,000 (30) 17.60 *
Portsmouth Square (35) 350,000 (31) 7.91 *
</TABLE>
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<TABLE>
<CAPTION>
Name and Address Shares Beneficially Owned(1)
of Beneficial Owner -----------------------------------------------
or Identity of Group Number Percent of Class As Adjusted(2)
- -------------------- ------ ---------------- --------------
<S> <C> <C> <C>
Santa Fe Financial(35) 870,000 (32) 17.60 *
E. H. Arnold 500,000 (33) 10.93
c/o Taglich Brothers,D'Amadeo
& Wagner 100 Wall Street
New York, NY 10005
Thieme Fonds International(11) 1,881,250 (34) 31.60 *
2 Place de Metz L-1930
Luxembourg
All executive officers and
directors as a group (9 persons) 1,516,648 (36) 27.13 *
</TABLE>
- -----------------
* Less than 1%
(1) Except as otherwise indicated, each of the parties has sole voting and
investment power over the shares owned.
(2) Adjusted to give effect to the conversion of all 9% Preferred Stock and/or
Secured Notes held by such beneficial owner; an "*" indicates no change in
beneficial ownership.
(3) c/o Credit Depot Corporation, 700 Wachovia Center, Gainesville, Georgia
30501.
(4) c/o Promena AG, Rheinstrasse 81, CH-4133 Pratteln 1, Switzerland.
(5) Unterberstrasse 104, A-5084, Grossgrnain, Salzburg, Austria.
(6) Therwilerstrasse 10, CH-4103 Bottmingen, Switzerland.
(7) c/o Quintus Trust, Mr. Charles T. Collis Sr. & Mr. Werner Hoffer, TTEE,
Coyers, Dill & Pearman, Clarendon House, Church Street, Hamilton, Bermuda
(8) c/o Putnam Investments, One Post Office Square, 11 FL, Boston, MA 02109.
(10) c/o KCM, 10829 Olive Blvd., St. Louis, MO 63141-7739.
(11) c/o Thieme Consulting, Inc. 1370 Avenue of the Americas, New York,
New York
10019, Attention: Heiko Thieme. Heiko Thieme is the President of Thieme
Fonds International.
(12) Includes Common Stock issuable on exercise of options to purchase 293,750
shares of Common Stock under the Company's 1990 Stock Option Plan and the
1993 Plan (collectively, the "Plans") exercisable within 60 days and
options to purchase 55,000 shares of Common Stock that have been granted
outside the Plans exerxisable within 60 days. Does not include 11,250
shares issuable on exercise of options of Common Stock issuable on
exercise of options which are not exercisable within 60 days.
(13) Includes Common Stock issuable on exercise of options to purchase 155,000
shares of Common Stock under the Plans exercisable within 60 days.
(14) Includes Common Stock issuable on exercise of options to purchase 85,000
shares of Common Stock under the Plans exercisable within 60 days.
(15) Includes Common Stock issuable on exercise of options to purchase 90,000
shares under the Plans exercisable within 60 days.
(16) Includes Common Stock issuable on exercise of options to purchase 125,000
shares of Common Stock under the Plans exercisable within 60 days.
(17) Includes Common Stock issuable on exercise of options to purchase 20,000
shares of Common Stock under the Plans exercisable within 60 days.
(18) Includes Common Stock issuable on exercise of options to purchase 85,000
shares of Common Stock under the Plans exercisable within 60 days and
options to purchase 45,000 shares of Common Stock
that have been granted outside the Plans exercisable within 60 days.
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(19) Represents immediately exercisable warrants to purchase 300,000 shares of
Common Stock.
(20) Represents 920,000 shares of Common Stock issuable upon the conversion of
a 10% convertible warehouse line.
(21) Represents 300,000 shares of Common Stock issuable upon the conversion of
convertible participations and warrants.
(22) Represents 551,250 shares of Common Stock issuable upon the conversion of
9% Preferred Stock and warrants.
(23) Represents 525,000 shares of Common Stock issuable upon the conversion of
9% Preferred Stock, and 329,639 shares issuable on exercise of immediately
exercisable warrants.
(24) Represents 393,750 shares of Common Stock issuable upon the conversion of
9% Preferred Stock and warrants.
(25) Represents 315,000 shares of Common Stock issuable upon the conversion of
9% Preferred Stock.
(27) Represents 360,000 shares of Common Stock issuable upon conversion of 10%
convertible debt.
(28) Represents 800,000 shares of Common Stock issuable upon the conversion of
10% convertible debt.
(29) Represents 660,000 shares of Common Stock issuable upon the conversion of
10% convertible debt.
(30) Represents 870,000 shares of Common Stock issuable upon conversion of 11%
Series B Convertible Preferred Stock and warrants.
(31) Represents 350,000 shares of Common Stock issuable upon conversion of 11%
Series B Convertible Preferred Stock and warrants.
(32) Represents 870,000 shares of Common Stock issuable upon conversion of 11%
Series B Convertible Preferred Stock and warrants.
(33) Represents 500,000 shares of Common Stock issuable upon conversion of 10%
secured promissory note and warrants.
(34) Represents 1,750,000 shares of Common Stock issuable upon conversion of
10% secured promissory notes and exercise of warrants and 131,250 shares
issuable upon conversion of 9% Preferred Stock and exercise of warrants.
(35) 2121 Avenue of the Stars, Suite 2020, Los Angeles, CA 90067.
(36) Includes 930,250 shares of Common Stock issuable upon exercise of options
under the Plan exercisable within 60 days. Does not include 123,500 shares
issuable on exercise of options to purchase Common Stock not exercisable
within 60 days.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 16, 1993, the Company obtained a $6,000,000 mortgage warehouse
line of credit from Transamerica Consumer Receivable Funding, Inc. The line
matured on June 16, 1995, and was not renewed. The Company paid Mr. Dunlap
$45,000 upon closing for his assistance in obtaining the credit facility.
On October 3, 1994, the Company advanced $65,000 to Mr. Sigler, the then
Chairman of the Board, which was rolled into an existing advance, and Mr. Sigler
provided the Company with a promissory note for $74,750. The note, which bore
interest at the rate of 11% per annum, was due on May 20, 1996 and was repaid.
In March 1996, the Company advanced Mr. Sigler $100,000 which is presently
outstanding and is secured by 50,000 shares of Company's Common Stock owned by
Mr. Sigler.
On August 15, 1994, the Company advanced $100,000 to Mr. Dunlap, at an
interest rate of 11%. The principal and interest was due on May 20, 1996, and is
secured by warrants to purchase 75,000 shares of EntreMed, Inc., a publicly
traded pharmaceutical company. In August 1997, the Company extended the maturity
date on the advance to November 30, 1999, and entered into a consulting
agreement with Mr. Dunlap for a term of approximately two years. Compensation
due pursuant to the consulting agreement will be used to offset the principal
and interest due on the advance.
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The Company is currently conducting discussions with Heiko Thieme, the
President of Thieme Fonds, International, the beneficial owner of a 31.6% of the
Common Stock of the Company, concerning Mr. Thieme's serving as a director or
Chairman of the Board of the Company. The election of Mr. Thieme to either of
these positions is subject to the approval of the Board of Directors and there
can be no assurance that Mr. Thieme will be elected to either of such positions.
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SIGNATURES
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In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 27th day of October, 1997.
CREDIT DEPOT CORPORATION
By: /s/ Gerald F.Sullivan
-----------------------------
Gerald F. Sullivan, President
In accordance with the Exchange Act, this report has been signed below by
the following on behalf of the registrant and in capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerald F. Sullivan President, Chief Executive October 27, 1997
- ------------------------- Officer and Director
Gerald F. Sullivan
/s/ Charles D. Farrahar Chief Financial Officer October 27, 1997
- ------------------------- and Vice President
Charles D. Farrahar
</TABLE>
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