SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999 COMMISSION FILE NUMBER: 0-22012
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GROW BIZ INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
MINNESOTA 41-1622691
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4200 Dahlberg Drive, Minneapolis, MN 55422-4837
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (612) 520-8500
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value per share
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 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Registrant's Common Stock
on March 13, 2000, as reported on the NASDAQ SmallCap Market, was $7.0 million.
Shares of no par value Common Stock outstanding as of March 13, 2000:
5,381,119 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
The Registrant hereby amends Items 11, 12 and 13 of its Annual Report on Form
10-K filed on March 22, 2000 to read as follows:
<PAGE>
GROW BIZ INTERNATIONAL, INC. AND SUBSIDIARY
INDEX TO ANNUAL REPORT ON FORM 10-K/A
PART III PAGE
- --------------------------------------------------------------------------------
Item 11. Executive Compensation 3
Item 12. Security Ownership of Certain Beneficial Owners and Management 6
Item 13. Certain Relationships and Related Transactions 7
Signatures 8
EXHIBITS
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Exhibit 23 Consent of Independent Public Accountants
2
<PAGE>
ITEM 11: EXECUTIVE COMPENSATION.
The following table sets forth certain information regarding compensation earned
or awarded during each of the last three fiscal years to the Company's Chief
Executive Officer and the other four most highly compensated executive officers
serving as executive officers at the end of fiscal 1999 (the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ($)
----------------------------------------
LONG-TERM
---------
COMPENSATION
------------
FISCAL OTHER ANNUAL OPTION ALL OTHER
------ ------------ ------ ---------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (#) COMPENSATION
--------------------------- ---- ------ ----- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg(3) 1999 258,300 - - - 43,323(1)
Chairman of the Board and 1998 200,000 - - - 43,044
Chief Executive Officer 1997 240,000 - - - 46,283
Ronald G. Olson(3) 1999 241,700 - - - 44,154(1)
Vice Chairman 1998 300,000 - - - 42,333
1997 260,000 - - - 45,181
Ted R. Manley 1999 155,000 38,750 - 40,000 9,831(2)
President and Chief Operating 1998 147,000 - - - 6,993
Officer 1997 126,000 90,750 - 10,000 5,610
Charles V. Kanan 1999 142,000 26,625 - 20,000 7,713(2)
President Play It Again Sports 1998 137,500 43,313 - - 7,234
Division 1997 137,500 - - 5,000 6,239
David J. Osdoba, Jr. 1999 135,000 33,750 - 25,000 8,173(2)
Vice President of Finance and 1998 120,000 - - - 6,799
Chief Financial Officer 1997 100,000 40,000 - 10,000 5,497
</TABLE>
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(1) Includes premiums paid in 1999 by the Company for term life insurance
coverage and the present value of the benefit to the executive of the
remainder of the premiums for split dollar life insurance coverage paid
by the Company on behalf of the named executive as follows: Mr.
Dahlberg - $34,253 and Mr. Olson - $33,031. Also includes 401(k)
Company matching contributions and profit sharing as follows: Mr.
Dahlberg - $9,070 and Mr. Olson - $11,123.
(2) Consists of 401(k) Company matching contributions and profit sharing.
(3) In March 2000, K. Jeffery Dahlberg and Ronald G. Olson resigned their
positions with the Company.
3
<PAGE>
OPTIONS GRANTED DURING FISCAL 1999
The following table provides information relating to options granted to the
Named Executive Officers during the Company's 1999 fiscal year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ---------------
NAME GRANTED(1) FISCAL YEAR (#/SH) PRICE ($)(2) DATE 5%($)(3) 10%($)(3)
- ---- ---------- ------------------ ------------ ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg - - - - - -
Ronald G. Olson - - - - - -
Ted R. Manley 40,000 26.7% 4.25 11/17/04 46,800 103,600
Charles V. Kanan 20,000 13.3% 4.25 11/17/04 23,400 51,800
David J. Osdoba, Jr. 25,000 16.7% 4.25 11/17/04 29,250 64,750
</TABLE>
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(1) The number indicated is the number of common shares that can be
acquired upon exercise of the option. The Company has not granted any
stock appreciation rights. Each option is non-transferable, becomes
exercisable in four annual installments of 25% per year commencing on
the first anniversary of the date of grant, and provides for forfeiture
of any unvested portion upon termination of employment.
(2) Exercise prices are equal to the fair market value at the date of
grant.
(3) The assumed 5% and 10% annual rates of appreciation are hypothetical
rates selected by the Securities and Exchange Commission and are not
intended to, and do not, forecast or assume actual future stock prices.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to options exercised by the
Named Executive Officers during fiscal 1999 and the number and value of options
held at fiscal year-end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
------- ------------------ -----------------------
ACQUIRED ON VALUE YEAR-END (#) FISCAL YEAR-END ($)(1)
------------ ------ ------------ ----------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
K. Jeffrey Dahlberg - - - -
Ronald G. Olson - - - -
Ted R. Manley - - 27,500 / 52,500 -
Charles V. Kanan - - 18,750 / 31,250 -
David J. Osdoba, Jr. - - 17,750 / 43,250 -
</TABLE>
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(1) Options are "in-the-money" if the fair market value of the underlying
shares at fiscal year end is greater than the exercise price. The
amounts set forth represent the difference between the fair market
value of the common shares on December 25, 1999 and the option exercise
price multiplied by the number of shares subject to the option.
4
<PAGE>
DIRECTOR COMPENSATION
Each nonemployee director of the Company receives $500 for each board and
committee meeting attended. Effective August 23, 1993, Dennis J. Doyle and Bruce
C. Sanborn, the only nonemployee directors at the time, were each granted an
option to purchase 25,000 common shares at an exercise price of $10.00 per
share. Effective September 24, 1993, the Board of Directors adopted the Stock
Option Plan for Nonemployee Directors ("Directors Plan") which provides for an
automatic grant of an option to purchase 25,000 common shares upon the initial
election as a director. Pursuant to this Plan, Randel S. Carlock and Robert C.
Pohlad were each granted an option to purchase 25,000 common shares at an
exercise price of $15.00 per share. Effective November 21, 1995, the options
granted to Messrs. Carlock and Pohlad were canceled and replacement options to
purchase 25,000 common shares each at $10.00 per share, which was above the
market price on the effective date, were granted separate from the Directors
Plan. All options granted to nonemployee directors expired in 1999.
Each of the nonemployee director nominees will be granted an option to purchase
25,000 shares of the Company's common stock under the Directors Plan, effective
as of May 3, 2000. These options vest 20% per year and expire at the end of six
years.
COMPENSATION COMMITTEE INTERLOCKS
The 1999 Compensation Committee of the Board of Directors consists of two
nonemployee directors, Dennis J. Doyle and Bruce C. Sanborn. Prior to November
1999, Mr. Sanborn was the Chief Executive Officer of North Central Life
Insurance Company and K. Jeffrey Dahlberg, the Company's Chairman, served on the
Board of North Central Life Insurance Company.
5
<PAGE>
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SECURITY OWNERSHIP
The following table sets forth the number of shares of Common Stock beneficially
owned by (i) each person known by the Company to own 5% or more of the
outstanding shares of Common Stock, (ii) each Named Executive Officer, (iii)
each director of the Company, (iv) each director nominee and (v) all directors
and executive officers as a group. All persons named in the table have sole
voting and investment power with respect to all shares of Common Stock owned,
unless otherwise noted. The number of shares listed is as of March 24, 2000
unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
------------------ ------------------
<S> <C> <C>
K. Jeffrey Dahlberg 1,363,225(1) 25.3%
455 North Ferndale Drive
Wayzata, MN 55391
Ronald G. Olson 1,347,668(2) 25.0%
3400 Fox Street
Long Lake, MN 55356
John L. Morgan 566,600(5) 10.5%
4200 Dahlberg Drive
Minneapolis, MN 55422
Sheldon T. Fleck 680,800(3) 12.2%
1400 International Centre
900 Second Avenue South
Minneapolis, MN 55402
Kirk A. MacKenzie 210,000(6) 3.9%
Paul C. Reyelts 0 0.0%
William D. Dunlap, Jr. 0 0.0%
Mark L. Wilson 0 0.0%
Ted R. Manley 23,579(3) 0.4%
Charles V. Kanan 22,600(3) 0.4%
David J. Osdoba, Jr. 26,045(3) 0.5%
Dennis J. Doyle 15,000 0.3%
Bruce C. Sanborn 15,100(4) 0.3%
Robert C. Pohlad 0 0.0%
Randel S. Carlock 0 0.0%
All directors and executive officer as a group (10 2,154,721(3) 38.2%
persons)
</TABLE>
6
<PAGE>
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(1) Includes 279,250 shares held in trust for minor children.
(2) Includes 17,900 shares held by Mr. Olson's adult children and 111,600
shares held in trust for these children and 1,500 shares held by Mr.
Olson's wife. Mr. Olson disclaims beneficial ownership of these shares.
(3) Includes the following shares which may be acquired within 60 days
through the exercise of stock options or warrants: Mr. Manley - 22,500;
Mr. Osdoba - 23,000; Mr. Kanan - 20,000; Mr. Fleck - 200,000; and all
directors and executive officers as a group - 65,500.
(4) Includes 100 shares held by Mr. Sanborn's son. Mr. Sanborn disclaims
beneficial ownership of these shares.
(5) Includes 140,000 shares owned by Rush River LLC, in which Mr. Morgan is
a general partner, and 4,300 shares held by Mr. Morgan's wife.
(6) Includes 140,000 shares owned by Rush River LLC, in which Mr. MacKenzie
is a general partner.
CHANGE IN CONTROL
On March 22, 2000, John L. Morgan, Chief Executive Officer and a director
nominee, Kirk A. MacKenzie, a director nominee, and their associates acquired
700,000 shares of Common Stock from K. Jeffrey Dahlberg, the Company's former
Chief Executive Officer, in a private transaction at a purchase price of $7.00
per share. These shares were acquired for cash using personal funds of the
acquirers and represent 13.0% of the shares of Common Stock outstanding as of
March 24, 2000. In connection with this transaction, K. Jeffrey Dahlberg
resigned his position as Chairman and Chief Executive Officer. As a result of
the acquisition, Messrs. Morgan and McKenzie beneficially own approximately
10.5% and 3.9% of the Company's outstanding shares of Common Stock. Prior to the
acquisition, Mr. Dahlberg beneficially owned approximately 38.3% of the
Company's outstanding shares of Common Stock.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1999, two Play It Again Sports(R) franchises, two Once Upon A Child(R)
franchises and one Computer Renaissance(R) franchise, owned by relatives of K.
Jeffrey Dahlberg, paid $64,524 in royalties to the Company and purchased
$256,407 of merchandise through the Company's buying group.
In November 1999, the Company engaged Sheldon T. Fleck, a shareholder of the
Company, to act as a non-exclusive financial advisor to the Company. Under the
engagement agreement, Mr. Fleck provided services to the Company in the areas of
strategic planning and business development through February 29, 2000. On March
22, 2000, the Company issued a warrant to Mr. Fleck to purchase 200,000 shares
of the Company's common stock, exercisable immediately for a period of eight
years at an exercise price of $6.00 per share. Mr. Fleck owns approximately
12.2% of the outstanding shares of the Company's common stock as of March 24,
2000.
The Company leases from PIAS Holdings, a general partnership owned by K. Jeffrey
Dahlberg and Ronald G. Olson, certain real property which houses a Company-owned
retail store located at 3505 Hennepin Avenue, Minneapolis, Minnesota. Pursuant
to this lease, the Company is obligated to make lease payments of $5,500 per
month through September 2000. During fiscal 1999, the Company made payments of
$66,000 under this lease.
7
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GROW BIZ INTERNATIONAL, INC. AND SUBSIDIARY
By: /s/ JOHN L. MORGAN Date: May 10, 2000
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John L. Morgan
Chairman and Chief Executive Officer
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John L. Morgan and David J. Osdoba, Jr., and each
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any amendments to this Form 10-K/A, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitute or substitutes, may do or cause to
be done by virtue hereof.
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the Board of Directors and Chief
/s/ JOHN L. MORGAN Executive Officer May 10, 2000
- ---------------------------------------- (principal executive officer)
John L. Morgan
Senior Vice President of Finance and Chief
/s/ DAVID J. OSDOBA, JR. Financial Officer May 10, 2000
- ---------------------------------------- (principal financial and accounting officer)
David J. Osdoba, Jr.
Vice Chairman of the Board of Directors
- ----------------------------------------
Kirk A. MacKenzie
/s/ WILLIAM D. DUNLAP, JR. Director May 11, 2000
- ----------------------------------------
William D. Dunlap, Jr.
/s/ PAUL C. REYELTS Director May 10, 2000
- ----------------------------------------
Paul C. Reyelts
/s/ MARK L. WILSON Director May 10, 2000
- ----------------------------------------
Mark L. Wilson
</TABLE>
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K/A, into the Company's previously filed
Registration Statement File Nos. 33-85972, 33-85956, 33-79176, 33-71772,
333-3236, and 333-3066.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
May 10, 2000
