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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For The Fiscal Year Ended December 31, 1998
Commission File Number 1-12230
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ADVANCED DEPOSITION TECHNOLOGIES, INC.
(Name of Small Business Issuer as specified in Its charter)
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Delaware 04-2865714
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation)
580 MYLES STANDISH INDUSTRIAL PARK
TAUNTON, MASSACHUSETTS 02780
(Address of principal executive offices)
Issuer's Telephone Number: (508) 823-0707
Securities Registered Under Section 12(b) Of The Exchange Act:
<TABLE>
<CAPTION>
Name of Each Exchange on
Title of Each Class which Registered
------------------- -------------------------
<C> <S>
Common Stock Boston Stock Exchange
</TABLE>
Securities Registered Under To Section 12(g) Of The Exchange Act: None
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 [_] NO [X]
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 the 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 had revenue of approximately $23,501,000 in its most recent
fiscal year.
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, (without admitting that any person whose shares are not included
in determining such value is an affiliate) based upon the average closing bid
and asked prices of the Common Stock on March 29, 1999 was approximately
$6,296,082.
The number of shares outstanding of the Registrant's Common Stock as of
March 29, 1999 was 4,278,919.
Transitional Small Business Disclosure Format: Yes [_] No [X]
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Advanced Deposition Technologies, Inc.
Part III, Items 9-12 to the Advanced Deposition Technologies, Inc. Annual
Report on Form 10-KSB, filed with the Securities and Exchange Commission on
April 15, 1999 for the fiscal year ended December 31, 1998 is hereby deleted
and replaced with Part III, Items 9-12 included in this Amendment No. 1.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The following table sets forth as to the present directors of the Company
and each executive officer of the Company: (i) name, (ii) age, (iii) present
positions with the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Glenn J. Walters........ 44 Chief Executive Officer, Treasurer and Chairman of the Board
Alexander P. Boxall..... 46 President and Director
Joseph Keller........... 58 Controller
Richard Rollins......... 62 Vice President, Corporate Manufacturing
Richard W. Cowen........ 47 Vice President, Microwave Sales and Marketing
John J. Moroney......... 45 Director
Charles R. Buffler...... 65 Director
Robert M. Pozzo......... 72 Director
</TABLE>
Glenn J. Walters, Chief Executive Officer, Treasurer and Chairman of the
Board. Mr. Walters co-founded the Company in 1983 and has served as its
Treasurer and a Director since the Company's incorporation in 1985, and as its
Chief Executive Officer since March 1996. Mr. Walters served as the Company's
President from 1985 to April 1999. From July 1991 to the present, Mr. Walters
has served on the Board of Governors of the International Microwave Power
Institute, a non-profit trade association, and as President of the Microwave
Food Technology and Applications section of this association. In addition, Mr.
Walters is also a member of the Board of the Society of Vacuum Coaters, Svc.
Mr. Walters has been the primary inventor of all of the Company's technology.
Alexander P. Boxall, President and Director. Mr. Boxall has served as a
Director of the Company since December 1997 and as President of the Company
since April 1, 1999. Mr. Boxall also currently serves as Managing Director of
DNA-ADTECH, the Company's majority-owned subsidiary, a position he has held
since December 1997. Prior to that, Mr. Boxall was a co-principal and co-
managing director of DNA-ADTECH (formerly known as Alexander Boxall, S.A.)
from 1979 to December 1997. Mr. Boxall is also co-principal and director of
several capacitor distribution companies in Europe.
Joseph Keller, Controller. Mr. Keller has served as Controller of the
Company since January 1999. Prior to that he was the Controller and Chief
Financial Officer of the MicroSpring Company, a medical products manufacturer
of coronary devices and springs from January 1996 to January 1999. From
November 1994 to August 1995, Mr. Keller served as Controller of Radionics,
Inc., a neurological device and software company. Prior to that, Mr. Keller
held similar positions with Mentor O & 0, Inc., a manufacturer of diagnostic
and surgical equipment and instruments from March 1985 to August 1994.
Richard Rollins, Vice President, Corporate Manufacturing. Mr. Rollins has
served as Vice President, Corporate Manufacturing of the Company since October
1998. Prior to that he served as Vice President of Operations of DNA-ADTECH
from February 1998 to October 1998. Mr. Rollins also served as Vice President-
Engineering at Aerovox-Mexico, a manufacturer of capacitors, from November
1995 to January 1998 and as President of High Energy Corporation, a
manufacturer of capacitors from 1991 to October 1995.
Richard W. Cowen, Vice President, Microwave Sales and Marketing. Mr. Cowen
has served as Vice President, Microwave Sales and Marketing of the Company
since March 1997. Prior to that he served as a Marketing Manager for the
Company's microwave products from February 1995 through February 1997 and as a
Product Manager for the Company from February 1994 through January 1995.
John J. Moroney, Director. Mr. Moroney has served as a Director of the
Company since May 1995. He also served as Chief Operating Officer of the
Company from April 1997 to October 1998. Since October 1998, Mr. Moroney has
served as Vice President of Sales (East) at Digital Market, Inc., a interface
software manufacturer. From 1992 to February 1997, Mr. Moroney served as
Director of New England Operations of Fourth Shift, Inc., a publicly traded
supplier of manufacturing and accounting software.
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Charles R. Buffler, Director. Dr. Buffler has served as a Director of the
Company since October 1993. From 1993 to the present, Dr. Buffler has served
as the Vice President of the Microwave Research Center, a privately held
company which specializes in microwave consulting, design and engineering.
Robert M. Pozzo, Director. Mr. Pozzo has served as a Director of the Company
since 1986. He is currently retired. From 1985 to 1991, Mr. Pozzo served as a
venture advisor to Zero Stage Capital Corp., a venture capital company.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and Directors, and persons who beneficially
own more than ten percent (10%) of the Common Stock, to file initial reports
of beneficial ownership on Form 3 and reports of changes in beneficial
ownership on Forms 4 and 5 with the Securities and Exchange Commission (the
"SEC") and any national securities exchange on which the Company's securities
are registered. Executive officers, Directors and greater than ten percent
(10%) beneficial owners are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
Directors, the Company believes that all Section 16(a) filing requirements
applicable to its executive officers, Directors and greater than ten percent
(10%) beneficial owners were complied with for the year ended December 31,
1998, with the exception of the following: Glenn J. Walters failed to file a
timely Form 4 to report the purchase of the following: (i) 3,000 shares of
Common Stock of the Company on July 1, 1998, (ii) 3,000 shares of Common Stock
of the Company on July 2, 1998, (iii) 1,000 shares of Common Stock of the
Company on July 6, 1998, and (iv) 2,000 shares of Common Stock of the Company
on July 31, 1998; however Mr. Walters has subsequently reported these
transactions on a Form 4 filed in September 1998.
Item 10. Executive Compensation
Compensation of Executive Officers
The following table sets forth the compensation paid to Mr. Glenn Walters,
the Company's Chief Executive Officer, Treasurer and Chairman of the Board and
the other executive officers of the Company who earned more than $100,000 in
salary and bonus in 1998 (together with Mr. Walters, the "Named Executive
Officers"), with respect to services rendered to the Company during the years
ended December 31, 1998, December 31, 1997 and December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation(1)
------------- ---------------
Securities
Underlying All Other
Name and Principal Position Year Salary Options(#) Compensation
- --------------------------- ---- -------- --------------- ------------
<S> <C> <C> <C> <C>
Glenn J. Walters, Chief
Executive Officer,............. 1998 $131,538 0 $29,271(2)
Treasurer and Chairman of the
Board.......................... 1997 141,286 100,000 30,545(3)
1996 138,289(4) 25,527(5)
Richard Rollins, Vice President,
Corporate Manufacturing(6)..... 1998 120,577 0 0
John J. Moroney, Chief Operating
Officer(7)..................... 1998 101,154 0 9,205(8)
</TABLE>
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(1) The Company did not grant any restricted stock awards or stock
appreciation rights or make any long-term incentive plan payouts during
fiscal years 1996, 1997 or 1998.
(2) Consists of premiums paid by the Company for life insurance for 1998 for
Mr. Walters in the amount of $5,966. This amount also consists of a
benefit allowance in the amount of $23,305. Mr. Walters had the right to
purchase benefits with the foregoing allowance in his discretion.
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(3) Consists of premiums paid by the Company for life insurance for 1997 for
Mr. Walters in the amount of $3,964. This amount also consists of a
benefit allowance in the amount of $26,581. Mr. Walters had the right to
purchase benefits with the foregoing allowance in his discretion.
(4) Approximately $20,000 of Mr. Walters salary was deferred for the fiscal
year 1996. Although earned in 1996, Mr. Walters received such payment in
1997.
(5) Consists of premiums paid by the Company for life insurance for 1996 for
Mr. Walters in the amount of $4,971. This amount also consists of a
benefit allowance in the amount of $20,556. Mr. Walters had the right to
purchase benefits with the foregoing allowance in his discretion.
(6) Mr. Rollins was appointed as Vice President, Corporate Manufacturing in
October 1998.
(7) Mr. Moroney resigned as the Company's Chief Operating Officer in October
1998. He did not earn more than $100,000 in any prior year.
(8) Consists of a benefit allowance in the amount of $9,205. Mr. Moroney had
the right to purchase benefits with the foregoing allowance in his
discretion.
OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
No stock options were granted during the fiscal year 1998 to the Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL-YEAR-END OPTION VALUES
The following table summarizes for the Named Executive Officers unexercised
stock options held at December 31, 1998. The value of unexercised in-the-money
options at the fiscal year end is the difference between the exercise price
and the fair market value of the underlying stock on December 31, 1998 the
last business day of the fiscal year. The closing price of the Company's
Common Stock as reported by the Nasdaq Stock Market on such date was $1.34 The
Named Executive Officers did not exercise any stock options during the year
ended December 31, 1998.
<TABLE>
<CAPTION>
Value of
Unexercised
Number of In-The-Money
Unexercised Options at
Options at Fiscal Year
Fiscal Year End End(1)
---------------- ---------------
Name Vested Unvested Vested Unvested
- ---- ------- -------- ------ --------
<S> <C> <C> <C> <C>
Glenn J. Walters............................... 100,000 0 $ 0 $ 0
Richard Rollins................................ 0 0 N/A N/A
John J. Moroney................................ 26,500 50,000 0 0
</TABLE>
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(1) These values have not been and may never be realized. Actual gains, if
any, on exercise will depend on the value of the Common Stock on the date
of sale of any shares acquired upon exercise of the option. The Named
Executive Officers do not hold any stock options, exercisable or
unexercisable, at exercise prices below the fair market value of the
Common Stock on December 31, 1998 as reported by the Nasdaq Stock Market.
Such options are not "in the money" and their value is, therefore, zero.
Compensation of Directors
The Company pays each non-employee Director $500 per year and $200 for each
meeting of the Board of Directors that he attends. Non-employee directors are
also awarded formula options under the Company's 1994 Formula Stock Option
Plan (the "1994 Plan"). Under the 1994 Plan, each non-employee Director, upon
first being elected or appointed to the Board of Directors, receives an option
to purchase 1,500 shares of the Company's Common Stock. The 1994 Plan also
provides for an annual grant of an option to purchase 1,000 shares of the
Company's Common Stock to each continuing non-employee Director following each
annual meeting of stockholders, provided that the Director has attended,
during the Company's fiscal year immediately preceding the grant, at least 75%
of the meetings of the Board of Directors and the Committees on which the
Director has served. All automatic option grants to non-employee Directors
have a term of ten years, an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant, and fully vest one year from
the date of grant, subject to the Director's continued service as a Director
on such date.
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Employment Contracts, Termination of Employment and Change in Control
Arrangements
Effective as of July 1, 1993, the Company entered into an employment and
non-competition agreement (the "Employment Agreement") with Mr. Glenn Walters,
the initial term of which expired on December 31, 1996. Mr. Glenn Walters
serves as the principal executive officer of the Company. The Employment
Agreement was renewed in accordance with its terms for an additional one-year
term that expires on December 31, 1999. The Employment Agreement provides for
an initial base salary of no less than $125,000 per annum plus annual base
salary increases and such other bonuses as may be determined by the Company's
Board of Directors as well as benefits offered to the Company's employees
generally. The Employment Agreement also provides that Mr. Walters' base
salary shall not be less than 10% of his base salary in the prior year. Mr.
Glenn Walters is also entitled to the use of a Company-leased car and
severance benefits equal to 200% of his base salary, payable in a lump sum if
(i) the Company or a substantial portion of the Company is acquired without
the Board of Directors' approval, (ii) his employment is terminated without
cause, (iii) his base salary is reduced without his consent, (iv) there is a
substantial change in his position or authority within the Company without his
consent, (v) there is a change in his principal place of employment from the
greater Boston, Massachusetts area without his consent, or (vi) the Employment
Agreement is not renewed without his consent.
The Employment Agreement provides for a renewal for successive one-year
periods after the expiration of the initial term and contains a provision
prohibiting Mr. Walters from competing with the Company, absent the Company's
prior written approval, for a two-year period following the termination of his
employment.
In February 1999, the Company's Board of Directors approved an incentive
plan for a term of one year for Mr. Walters providing for the payment to Mr.
Walters of (i) a five percent commission on all new sales of microwave bags
and laminated products and (ii) a fifteen percent commission on all new cash
license fees, including any royalties paid during the term of the incentive
plan. The incentive plan provides that the total commissions paid to Mr.
Walters shall not exceed $150,000.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of April 1, 1999
concerning the ownership of Common Stock by (i) each stockholder who is known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) each Named Executive Officer (as defined in Item 10
herein), Director and Director Nominee, and (iii) all Directors and executive
officers as a group. Except as otherwise indicated, the stockholders listed in
the table have sole voting and investment powers with respect to the shares
indicated.
<TABLE>
<CAPTION>
Number of
Shares Percentage
Beneficially of
Name and Address(1) Owned Class(2)
- ------------------- ------------ ----------
<S> <C> <C>
Glenn J. Walters(3)................................... 751,893 17.1%
Alexander Boxall(4)................................... 325,150 7.6
John J. Moroney(5).................................... 51,500 1.2
Charles R. Buffler(6)................................. 4,500 *
Robert M. Pozzo(7).................................... 107,558 2.5
Gordon E. Walters(8).................................. 223,647 5.1
37 Fort Hill Lane
Duxbury, MA 02322
All Directors and executive officers as a group (8
persons) (9)......................................... 1,261,601 28.1
</TABLE>
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* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
(1) The address for these individuals, other than Mr. Gordon E. Walters, is
c/o Advanced Deposition Technologies, Inc., 580 Myles Standish Boulevard,
Myles Standish Industrial Park, Taunton, Massachusetts 02780.
(2) The number of shares of Common Stock issued and outstanding on April 1,
1999 was 4,296,529 shares. The calculation of percentage ownership for
each listed beneficial owner is based upon the number of shares of Common
Stock issued and outstanding on April 1, 1999, plus shares of Common Stock
subject to options held by such persons on April 1, 1999 and exercisable
within 60 days thereafter. Shares of Common Stock
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that a person has the right to acquire within 60 days of April 1, 1999,
pursuant to the exercise of options are deemed to be outstanding for the
purpose of computing the percentage ownership of such person, but are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown in the table.
(3) Consists of 497,393 shares owned directly by Mr. Walters, 100,000 shares
subject to currently exercisable options, 94,500 shares owned directly by
Mr. Walter's wife and 60,000 shares owned by the Walter's Family
Children's Trust for the benefit of Mr. Walter's minor children, of which
Mr. Walters is a co-trustee with his wife. Mr. Walters disclaims
beneficial ownership of the 60,000 shares held by the Walter's Family
Children's Trust and the 94,500 shares owned directly by his wife.
(4) Consists of 280,000 shares of Common Stock held by Mr. Boxall and 45,150
shares of Common Stock held by DNA Export, S.A., an entity owned and
controlled by Mr. Boxall. In addition, this amount excludes the 598,198
shares of Common Stock to be purchased by DNA Export, S.A in connection
with the Exchange Agreement. See "Certain Relationships and Related
Transactions."
(5) Consists of 51,500 shares of Common Stock subject to currently exercisable
options.
(6) Consists of 4,500 shares of Common Stock subject to currently exercisable
options.
(7) Includes 19,000 shares of Common Stock subject to currently exercisable
options.
(8) Consists of 60,000 shares of Common Stock subject to currently exercisable
options owned directly by Mr. Walters, and 163,647 shares of Common Stock
owned jointly by Mr. Walters and his wife. This information is based
solely upon a Schedule 13G filed with the Securities and Exchange
Commission on February 11, 1999.
(9) Includes 1,000 shares of Common Stock held by Richard W. Cowen, Vice
President of Microwave Sales and Marketing and 20,000 shares of Common
Stock subject to a currently exercisable option held by Mr. Cowen. See
also footnotes 3 through 7 above.
Item 12. Certain Relationships and Related Transactions
In December 1997, the Company purchased (the "ABSA Acquisition") 65% of the
capital stock of Alexander Boxall, S.A. ("ABSA"), a corporation organized
under the laws of Spain. ABSA manufactures and distributes AC capacitor
components for lighting and motors. The Company purchased 50% of the capital
stock of ABSA from Pedro Nunez-Barranco Guembe and the remaining 15% from
Alexander Peter Boxall. In connection with this transaction, the Company
issued 280,000 shares of its Common Stock to Mr. Boxall in exchange for his
15% interest in ABSA. Upon the closing of the ABSA Acquisition, Mr. Boxall
became a director of the Company in December 1997 and President of the Company
in April 1999. ABSA was subsequently renamed DNA-ADTECH.
In March 1999, the Company entered into an agreement with DNA Export, S.A.,
a corporation organized under the laws of Spain, to purchase certain shares of
capital stock of DNA-ADTECH held by DNA Export, S.A. (the "Exchange
Agreement"). This transaction brings the Company's total equity ownership in
DNA-ADTECH to 81%. As consideration for the additional equity position in DNA-
ADTECH, the Company will issue 598,198 shares of Common Stock. After this
transaction, Mr. Boxall and affiliated entities will own a total of 923,348
shares, or approximately 19% of the Company's Common Stock and will continue
to own 19% of DNA-ADTECH. The Exchange Agreement is subject to stockholder
approval. The Company intends to submit the Exchnage Agreement for such
approval at the Company's 1999 Annual Meeting of Stockholders. Mr. Boxall owns
and controls DNA Export, S.A.
In addition, Alexander Boxall has agreed that in the event that the Company
is unable to pay the amounts outstanding under a promissory note issued to
Pedro Nunez Barranco Guembe in connection with the acquisition of his shares
of DNA-ADTECH on or before maturity without compromising the Company's plan
for growth, Alexander Boxall will pay off the entire balance and will give the
Company an additional period of one year to repay the balance. Mr. Boxall will
have the right at any time after January 1, 2001 through March 1, 2001, to
convert all or part of the outstanding balance into shares of Common Stock at
a purchase price per share equal to the average sales price of the Common
Stock for the month of December 2000, subject to a $3.50 per share minimum. If
Mr. Boxall does not elect to convert the outstanding balance, the Company may
elect after January 31, 2001 to redeem such amount for shares of Common Stock
at a redemption price equal to the average sales price of the Common Stock for
the twenty business days preceding the date of redemption.
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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.
Advanced Deposition Technologies, Inc.
/s/ Glenn J. Walters
By______________________________________
Glenn J. Walters
Chief Executive Officer and Treasurer
Date: April 30, 1999
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