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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(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 000-21813
Texas Equipment Corporation
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(Exact name of registrant as specified in its charter)
Nevada 62-1459870
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1305 Hobbs Hwy, Seminole, Texas 79360
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (915) 758-3643
Securities registered under Section 12(b) of the Exchange Act:
Title of each Class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered under Section 12(g) of the Exchange Act:
Title of each class
-------------------
Common Stock, $.001 par value
Indicate by check mark whether registrant (1) has 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
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Paul J. Condit 64 President, Director, Chief Executive Officer
John T. Condit 33 Secretary, Treasurer, Director
E.A. Milo Mattorano 52 Vice President, Chief Financial Officer
</TABLE>
Paul J. Condit is President, Chief Executive Officer and a Director. He has
a B.S. degree from Oklahoma State University and has been in the farm equipment
business for over 23 years. Mr. Condit owned and operated a predecessor company
and has managed the Company and served the Company in his current capacities
since its inception in 1987.
John Condit, the son of Paul J. Condit I, serves as a Director and
Secretary of the Company and served the Company in his current capacities since
its inception in 1987. He obtained a BBA degree from Texas Tech University in
1986. Since May 1988 he has been President of Domicile Property Management,
Inc., a real estate acquisition and management firm, in San Antonio, Texas.
E.A. Milo Mattorano has served as the Company's Chief Financial Officer and
a Vice President since December 15, 1997. Prior to joining the Company, from
January 1995 until December 1997, Mr. Mattorano served as Vice President and
Chief Financial Officer of Lasertechnics, Inc., a manufacturer of laser markers
and plastic card printers. From October 1989 to December 1994, Mr. Mattorano
served as Executive Vice President of Finance of Insilco Corporation, a
conglomerate of manufacturing companies in various industries. Mr. Mattorano is
a CPA and worked in the audit department of Deloitte & Touche for six years from
1974 to 1980. Mr. Mattorano is a graduate of Adams State College with a degree
in Business Administration and Accounting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") requires each director and executive officer of the
Company, and each person who owns more than 10% of a registered class of the
Company's equity securities to file by specific dates with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
change in ownership of Common Stock and other equity securities of the
Company. Officers, directors and 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. The Company is required to report in this report any failure of its
directors and executive officers to file by the relevant due date any of these
reports during the Company's fiscal year.
To the Company's knowledge, all Section 16(a) filing requirements
applicable to the Company's officers, directors, and 10% stockholders were
complied with.
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ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid by the Company during the last three fiscal years to the executive officers
of the Company and its subsidiaries who served during the fiscal year ended
December 31, 1997 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------------- COMPENSATION
-------------
NAME AND PRINCIPAL OTHER ANNUAL NUMBER OF SECURITIES
POSITION YEAR SALARY BONUS COMPENSATION UNDERLYING OPTIONS (#)
- -------------------------------- --------- -------------- -------------- ------------------ --------------------------
<S> <C> <C> <C> <C> <C>
Paul J. Condit 1997 $ 120,101 $ -- $ -- 218,540
President and Chief Executive 1996 43,535 180,260 -- --
Officer 1995 29,740 3,014(1)
--
John T. Condit 1997 -- -- -- 218,540
Secretary, Treasurer 1996 -- -- -- --
and Director 1995 -- -- -- --
E.A. Milo Mattorano 1997 5,384 (2) -- -- 300,000
Vice President and Chief 1996 -- -- -- --
Financial Officer 1995 -- -- -- --
Jonathan Braun (3) 1997 243,750 -- -- --
President; Marinex Subsidiary 1996 255,833 -- -- --
and Director 1995 26,667 -- -- --
</TABLE>
(1) Represents compensation from the TECI Employee Stock Ownership
Plan at $1.00 per share.
(2) Mr. Mattorano began employment on December 15, 1997.
(3) Mr. Braun resigned from the board and President of Marinex
subsidiary in August 1997 in connection with litigation
between Mr. Braun and the Company. See "ITEM 3. LEGAL
PROCEEDINGS."
Employment Contracts with Executive Officers
The Company and E.A. Milo Mattorano are parties to an employment
agreement, which provides for an indefinite period of employment at a minimum
annual base salary of $140,000, subject to increase by the Board of Directors.
The agreement also provides for the payment to Mr. Mattorano of up to one times
his annual salary in the event he is terminated after a change in control (as
defined in the employment agreement) and, if he
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is terminated without cause the agreement provides for the payment of 25% of
his annual salary. The employment agreement also provides for cash bonuses of
(i) $5,000 for each additional Deere dealership that is purchased by the
Company; (ii) up to $15,000 based on the increase in net income in fiscal
year 1998 compared to fiscal year 1997; and (iii) one half of one percent of
new capital received by the Company. 300,000 Common Stock options were also
granted at an exercise price of $0.50. The agreement also contains
confidentiality and non-competition provisions.
The Company has no other written employment contracts with its
officers.
Option Grants
The following table sets forth information relating to stock option
grants made by the Company to each of the Named Executive Officers of the
Company during the fiscal year ended December 31, 1997. The Company has no plans
that provide for the granting of stock appreciation rights.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS VALUE AT ASSUMED
UNDERLYING GRANTED TO EXERCISE ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES PRICE EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED IN 1997 PER SHARE DATE OPTION TERM
---- ---------- ---------- --------- ---------- ------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Paul J. Condit 218,540(1) 18.6% $0.375 12/31/02 $ 34,865 $ 43,995
John T. Condit 218,540(1) 18.6% $0.375 12/31/02 34,865 43,995
E.A. Milo Mattorano 300,000(2) 25.5% $0.50 12/15/02 95,721 120,788
Jonathan Braun -- -- -- -- -- --
</TABLE>
(1) Five-year options granted in connection with the personal
guarantee by Mr. Paul J. Condit and Mr. John T. Condit of the
Company's floor plan with Deere and bank debt.
(2) Five-year options issued in connection with Mr. Mattorano's
employment agreement with the Company.
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Aggregate Option Exercises and Fiscal Year-End Option Value
The following table sets forth information relating to the exercise of
common stock options by each of the Named Executive Officers of the Company,
during the fiscal year ended December 31, 1997 and the value of such
individuals' unexercised common stock options as of December 31, 1997.
AGGREGATE OPTION EXERCISES IN 1997 AND
DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
----------------- --------------------
NUMBER OF SHARES # $
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ------------- -------------
#
<S> <C> <C> <C> <C> <C> <C>
Paul J. Condit -- -- 218,540 -- $ 81,952 $ --
John T. Condit -- -- 218,540 -- 81,952 --
E.A. Milo Mattorano -- -- -- 300,000 -- 75,000
Jonathan Braun -- -- -- -- -- --
</TABLE>
(1) Based upon the closing bid price of $0.75 at December 31, 1997
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the number of shares of Common Stock
beneficially owned as of April 9, 1998 for (a) each person known by the Company
to be the beneficial owner of more than 5% of the Company's Common Stock (the
only outstanding securities of the Company), (b) each current director of the
Company, (c) each of the Named Executive Officers of the Company and (d) all
directors and executive officers as a group. Except as otherwise indicated, the
persons or entities set forth in the table below have sole investment and voting
power with respect to all shares shown as beneficially owned, subject to
community property laws, where applicable. The business address of each director
and each current executive officer is c/o Texas Equipment Corporation, 1305
Hobbs Highway, P.O. Box 790, Seminole, Texas, 79360.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
-------------- ------------------- --------- ----------------
<S> <C> <C> <C>
Common Stock Paul J. Condit I 218,540 (1) --*
Common Stock John T. Condit 5,835,207 (1) 22.8%
Common Stock Paul J. Condit II. 5,835,207 (1) 22.8%
Common Stock Jeffery E. Condit 5,835,206 (1) 22.8%
Common Stock Jonathan Braun 292,706 1.2%
Common Stock All directors and
executive officers as
a group (2 persons) 6,053,747 23.7%
* Denotes percentage ownership of less than 1%.
(1) Includes, in each case, the right to acquire 218,540 shares of Common Stock pursuant to options.
</TABLE>
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In 1997 the Company recorded a non-cash charge of $288,211 in
connection with the personal guarantee by the Condit family of approximately $15
million of accounts payable to Deere & Company, and of a $3.3 million credit
facility at the Company's bank. These required guarantee arrangements were paid
in the form of five-year options to acquire up to 874,162 shares of Common Stock
with an option price of $0.375, and were paid pursuant to a continuing agreement
which contemplates a guarantee fee, payable in stock options of up to 6% of the
average annual outstanding guarantee balance. The Company believes that this
transaction was made on terms no less favorable to the Company than could have
been obtained from an unaffiliated third party.
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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 report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: April 29, 1998
TEXAS EQUIPMENT CORPORATION
By: /s/ Paul J. Condit
-----------------------------
Paul J. Condit
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- -----
<S> <C> <C>
Chairman of the Board, President, Chief April 29, 1998
/s/ Paul J. Condit Executive Officer and Director (principal
- ------------------------ executive officer)
Paul J. Condit
/s/ John T. Condit Director and Secretary April 29, 1998
- ------------------------
John T. Condit
/s/ E.A. Milo Mattorano Vice President, Chief Financial Officer, April 29, 1998
- ------------------------ and Chief Accounting Officer (principal
E.A. Milo Mattorano financial and accounting officer)
</TABLE>
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