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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A
AMENDMENT NO. 1
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 For Fiscal Year Ended December 31, 1996
COMMISSION FILE NUMBER: 0-24058
WESTERN COUNTRY CLUBS, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1131343
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1601 N.W. EXPRESSWAY, SUITE 1610
OKLAHOMA CITY, OKLAHOMA 73118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including zip code: (405)848-0996
Securities to be registered under Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK
$.01 PAR VALUE
The undersigned Registrant amends the following items on its Annual Report on
Form 10-KSB for the year ended December 31, 1996:
Part III. Items 9, 10, 11 and 12 are included in such Annual Report
previously filed on April 15, 1997.
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WESTERN COUNTRY CLUBS, INC.
1996 FORM 10-KSB/A AMENDMENT NO. 1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<S> <C>
Part I
Part II
Part III
9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act . . . . . . . . 1
10. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 4
11. Security Ownership of Certain Beneficial Owners and Management. . 5
12. Certain Relationships and Related Transactions. . . . . . . . . . 7
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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The Items under Parts I and II, Part III-Item 13, and the Consolidated
Financial Statements are included in the Company's Form 10-KSB for the period
ending December 31, 1996, previously filed on April 15, 1997.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth the name and age of each director and
executive officer of Western Country Clubs, Inc. (the "Company"), his principal
position with the Company, and the year he became a director or officer.
<TABLE>
<CAPTION>
DIRECTOR/
OFFICER
NAME AGE SINCE POSITION
---- --- ----- --------
<S> <C> <C> <C>
James E. Blacketer 54 1996 President and Director
Ted W. Strickland 45 1996 Chief Financial Officer, Treasurer
and Director
Joe R. Love 57 1996 Director
John R. Ritter 39 1997 Director
Dominic W. Grimmett 41 1996 Vice President of Operations
and Secretary
</TABLE>
James E. Blacketer has a marketing degree from Oklahoma City University
and extensive experience in the restaurant and night club business. During the
last five years Mr. Blacketer has served as managing principal to several
hospitality entities including Yucatan Liquor Stands (Tulsa and Oklahoma City),
InCahoots (Oklahoma City, Tulsa and Wichita). Previously, he was a multiple
franchisee of Steak & Ale Restaurants and Chi Chi Restaurants chain. Mr.
Blacketer also conceived and developed a chain of Hungry Lion Steak Houses
located in the Chicago, Milwaukee and Grand Rapids, Michigan areas.
Ted W. Strickland is a 1974 graduate of Oklahoma State University and a
Certified Public Accountant with experience in marketing, financial management
and public accounting. He began his career in public accounting, employed
seven years with the firm of KPMG Peat Marwick, LLP, serving as a Senior Tax
Specialist/Staff Accountant in the Oklahoma City, Oklahoma office from 1974 to
1978; a Supervisor in the Professional Development Department and as National
Recruiter Training Coordinator, both in the New York Executive office from 1978
to 1979; and a Senior Tax Manager in the Dallas, Texas office from 1979 to
1981. Mr. Strickland was most recently Chief Financial Officer, Secretary and
Treasurer for UNICO, Inc., a publicly-owned marketing services company located
in Oklahoma City.
Joe R. Love graduated from the University of Oklahoma in 1960 with a
degree in Finance. Since 1990 he has served as Chairman of C.H. Financial
Corporation, Oklahoma City, Oklahoma, a financial services company. Mr. Love
has served as a director of First Cash, Inc., Arlington, Texas, a public
company which owns a national chain of pawn shops, since 1991. Mr. Love also
has served since 1989 as a director of Tatonka Energy Corporation, formerly
Sooner Energy Corporation, Dallas, Texas, a public company engaged in oil and
gas exploration and production.
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John R. Ritter currently serves as Vice President of Data Information
Services, Inc. a company specializing in pre-employment screening. He also is
an independent management consultant specializing in the restaurant industry,
in which he has been involved for over 15 years. From 1981 to 1994, Mr. Ritter
was employed by the McDonalds Corporation, both in the field and the corporate
offices. He last served as Senior Business Consultant, working with McDonalds
franchisees in the development of their businesses. He resides in Eureka
Springs, Arkansas.
Dominic W. Grimmett has extensive experience in the restaurant and night
club business, receiving his initial restaurant management training in 1978
with Gilbert/Robinson, Inc. (Houlihan's Old Place and Biba's) in Kansas City,
Missouri. During his career, he has served in increasing capacities as
assistant manager, general manager, Director of Operations and Vice President
for such nationally known operations as Champion Sports Bars, Washington, D.C.;
Greenstreet and Chiquita's; an Applebee's Restaurants franchisee in Houston,
Texas; and Pyramid Pizza in Kansas City. Grimmett has long-term experience in
development and implementation of marketing and promotions strategies as well
as restaurant and club operations management.
Family Relationships. There are no family relationships among any of the
Company's officers and directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons beneficially owning more than 10% of the
Company's stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and with the Company.
Based solely on a review of the reports sent to the Company, the Company
believes that each of its directors and executive officers met his Section
16(a) filing obligations during 1996, except Mr. Troy H. Lowrie, who failed to
timely report a gift of 5,000 shares on March 17, 1995, the disposition of
30,000 shares on May 15, 1995, at $2.92 per share, a disposition of 3,500
shares on August 31, 1995, at an unknown price, a gift of 75,000 shares of
Common Stock on April 9, 1996, the disposition of 30,000 shares on June 19,
1996, at $2.00 per share, the grant of 10,000 shares on July 23, 1997, from an
employee stock benefit plan, and the disposition of 10,000 shares on August 6,
1996, at $2.50 per share. The 1995 transactions were reported on Form 4's
filed in March 1996. The April and June 1996 transactions are believed to have
been reported in October 1996. The July and August 1996 transactions were
reported in November 1996.
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ITEM 10. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or to be paid by the
Company or any of its subsidiaries as well as certain other compensation paid
or accrued, during the years indicated, to the President, President and the
three other highest paid executive officers of the Company (the "named
executives") for such period in all capacities in which they served.
Summary Compensation Table
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION (1)(2) AWARDS ALL OTHER
NAME AND ----------------------------- ------------ COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) OPTIONS (#) SATION ($)
------------------ ---- -------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
James E. Blacketer, President 1996 12,000 -- -- --
Troy H. Lowrie, former 1996 3,000 -- 10,000 35,000 (3)
President 1995 36,000 -- -- --
1994 50,416 -- -- --
</TABLE>
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(1) Amounts shown include cash and non-cash compensation earned and
received by the named executives as well as amounts earned but deferred
at their election.
(2) The Company provides various perquisites to certain employees
including the named executives. In each case, the aggregate value of
the perquisites provided to a named executive did not exceed 10% of
such named executive's annual salary and bonus.
(3) Represents proceeds from the sale of 10,000 shares of the Company's
Common Stock issued as compensation in 1996.
There were no options to purchase shares of Common Stock granted to the
named executives of the Company during the year ended December 31, 1996.
Director Compensation. The Company's non-employee directors (currently
Messrs. Love and Ritter) are reimbursed for all ordinary and necessary expenses
incurred in the conduct of the Company's business, but receive no cash
compensation for their service. Under the Omnibus Equity Compensation Plan,
each director receives a one-time grant of stock options covering 0.3% of the
outstanding Common Stock (presently, 10,904 shares) when he or she is first
elected to the Board, or in the case of the current directors, upon the Omnibus
Plan's effective date. The exercise price of the options is the fair market
price at date of grant. Each of the current directors, Messrs. Blacketer,
Love, Ritter and Strickland, received a grant on April 18, 1997 (the Omnibus
Plan's effective date), of an option for 10,904 shares with an exercise price
of $1.125 per share. This grant is contingent upon approval of the Omnibus
Plan by the shareholders at the Annual Meeting.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Western's Common Stock as of April 22, 1997, by (i)
each director of Western, (ii) each named executive officer in the Summary
Compensation Table, (iii) each person known or believed by Western to own
beneficially five percent or more of the Common Stock and (iv) all directors
and executive officers as a group. Unless indicated otherwise, each person has
sole voting and dispositive power with respect to such shares.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDERS BENEFICIAL OWNERSHIP (1)
HOLDING 5% OR MORE, --------------------------------
DIRECTOR OR EXECUTIVE OFFICER NUMBER OF SHARES PERCENT
- --------------------------------- ---------------- ------------
<S> <C> <C>
Shane Investments, L.C. (2) 1,050,500 28.9
Joe Robert Love, Jr. (3) 1,050,500 28.9
James E. Blacketer (4) 863,000 23.7
Red River Concepts, Inc. (5) 800,000 22.0
Joe R. Love (6) 800,000 22.0
Dominic W. Grimmett (7) 50,000 1.4
Ted W. Strickland (7) 25,000 *
John R. Ritter 35,000 1.0
All directors and officers
as a group (5 persons) (8) 973,000 26.4
</TABLE>
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* Less than one percent.
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act
of 1934. Unless otherwise stated below, each such person has sole
voting and investment power with respect to all such shares. Under
Rule 13d-3(d), shares not outstanding which are subject to options,
warrants, rights or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but are not deemed outstanding for the
purpose of calculating the percentage owned by each other person
listed.
(2) Reflects indirect beneficial ownership of 800,000 shares owned
directly by Red River Concepts, Inc., a company owned 100% by Shane
Investments, L.C., and 250,500 shares owned directly.
(3) Reflects indirect beneficial ownership of shares owned directly by
Red River Concepts, Inc., a company owned 100% by Shane Investments,
L.C. Mr. Love is the manager and 100% owner of Shane Investments,
L.C., is an officer and director of Red River Concepts, Inc. and is the
adult son of Joe R. Love, a director of the Company.
(4) Reflects 63,000 shares owned indirectly and beneficial ownership
of shares owned directly by Red River Concepts, Inc., a company of
which Mr. Blacketer serves as an officer and a director. Mr. Blacketer
disclaims beneficial ownership of 152,000 shares owned by two adult
sons.
(5) Of the shares owned by Red River, 550,000 shares are pledged as
collateral for purchase notes payable to Mr. Troy Lowrie. See "Change
in Control" below.
(6) Reflects indirect beneficial ownership of shares owned directly by
Red River Concepts, Inc., a company of which Mr. Love serves a
director. Mr. Love disclaims beneficial ownership of shares
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owned by Shane Investments, L.C., an entity controlled by an adult son
and 122,500 shares held by a trust for the benefit of another adult son.
See "Change in Control" below.
(7) Includes options to purchase 25,000 shares held by each of Mr.
Grimmett and Mr. Strickland.
(8) Includes options to purchase 50,000 shares held by executive
officers of the Company. See note 7 above.
The business address of Messrs. Blacketer, Grimmett and Strickland is 1601
N.W. Expressway, Suite 1610, Oklahoma City, Oklahoma 73118. The business
address of Mr. Love is 1601 N.W. Expressway, Suite 1910, Oklahoma City,
Oklahoma 73118.
CHANGE IN CONTROL
Effective September 20, 1996, Red River Concepts, Inc., a Delaware
corporation ("Red River"), entered into a Stock Purchase Agreement dated as of
September 20, 1996 ("Purchase Agreement") with Mr. Troy Lowrie, the Company's
then President, director and largest shareholder, to purchase 1,300,000 shares
of the Company's Common Stock owned by Mr. Lowrie. Under the Purchase
Agreement, on October 10, 1996, Mr. Lowrie sold: (i) 200,000 shares to certain
assignees of Red River for $200,000 in cash; and (ii) 800,000 shares to Red
River for an $800,000 promissory note due the earlier of June 1, 1997, or the
effective date of a planned public offering, and secured by the 800,000 shares.
The balance of 300,000 shares were to be sold for $300,000 cash on or before
April 15, 1997.
On November 5, 1996, James E. Blacketer and Joe R. Love were elected
Directors and the former board members, other than Mr. Lowrie, resigned. James
E. Blacketer was then appointed President, Dominic W. Grimmett was appointed
Vice President of Operations and Ted W. Strickland was appointed Chief
Financial Officer and Treasurer. The Purchase Agreement also required Red
River to use its best efforts to arrange a suitable public offering for the
Company.
Under an agreement dated February 4, 1997, Mr. Lowrie resigned as a
director of the Company and agreed to divest himself of all beneficial
ownership in the Company by May 15, 1997. As part of the divestiture, Mr.
Lowrie agreed to sell 90,000 shares to a company owned by the adult sons of Mr.
Blacketer for a $75,000 promissory note due May 15, 1998, payable in two
semi-annual installments, bearing interest at eight percent per year, and
secured by the 90,000 shares. The Company agreed to hold Mr. Lowrie harmless
from loss on certain promissory notes and guarantees made in favor of the
Company and to indemnify him against certain claims until February 4, 1999.
Mr. Strickland became a Director upon Mr. Lowrie's resignation.
On April 14, 1997, the parties amended the Purchase Agreement so that (i)
Red River purchased 800,000 shares for $100,000 and a $300,000 promissory note
due July 14,1997, bearing interest at the rate of 10% per annum, secured by
550,000 shares and personally guaranteed by James E. Blacketer, Joe R. Love and
C.H. Financial Corporation, a company controlled by Mr. Love; (ii) L A F, an
Oklahoma limited partnership, purchased 137,500 shares for $68,750; (iii) the
John Michael Love Trust purchased 122,500 shares for $61,250; (iv) JEBCO,
L.L.C. purchased 30,000 shares for $15,000; and (v) Mr. Lowrie cancelled the
$800,000 note previously made by Red River. The Company has agreed to pay a
bank note with a current balance of approximately $278,000 and a note to Mr.
Lowrie with a current balance of approximately $106,000 from the proceeds of a
pending public offering; and, in the event the public offering is not closed by
June 1, 1997, the Company will begin on June 1, 1997 to make payments to the
bank of $10,000 per month and payments to Mr. Lowrie of $3,000 per month and
will pay both notes in full by December 31, 1997.
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Mr. James E. Blacketer, President and a director of the Company, is the
President and a director of Red River. Mr. Joe R. Love, a director of the
Company, is a director of Red River. JEBCO, L.L.C. is owned by the adult sons
of Mr. Blacketer. The John Michael Love Trust is a trust for the benefit of an
adult son of Mr. Love. Messrs. Blacketer and Love have no financial interest
in or control over either JEBCO or the trust and disclaim beneficial ownership
of the shares to be purchased by JEBCO or the trust. L A F is not affiliated
with the Company or its directors or officers.
Prior to the purchase of the shares from Mr. Lowrie, neither Red River,
Mr. Blacketer, Mr. Love, nor any of their affiliates, owned any voting
securities of the Company. See "Beneficial Ownership Of Directors, Officers
And Certain Shareholders".
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, WCC I, Ltd. and WCCIII, Ltd. paid International Entertainment
Consultants, Inc. ("IEC") $30,740 for payroll and support services, including
insurance and office expenses, during 1996. IEC is a corporation owned by the
sister of Troy H. Lowrie, the former President, director and largest
shareholder of the Company. These arrangements were terminated with the change
of control.
In 1995, the Company borrowed $200,000 from Mr. Lowrie, and $100,000 from
another company affiliated with Mr. Lowrie, at 12% per annum. Of the $300,000,
the $100,000 due the affiliated entity and $100,000 of the $200,000 due Mr.
Lowrie has been repaid. The Company also borrowed $493,000 from IEC, of which
$100,000 was repaid during 1995, and the remaining $393,000 was repaid during
the first six months of 1996. During 1996, the Company borrowed an additional
$100,000 from a company affiliated with Mr. Lowrie, which was repaid during the
first six months of 1996.
John E. Nichols, a director of the Company until November 1996, is an
officer and director of Dulaney National Bank. WCC I, Ltd. borrowed $600,000
from Dulaney National Bank in 1994 to purchase the Indy Club building. The
loan bears interest at prime plus 3%, and is due February 1, 2004. The balance
of the loan as of December 31, 1996, was $486,981. Mr. Nichols advised the
other directors of the Bank of his position on the Board of the Company prior
to the Bank's approval of the loan, and Mr. Nichols abstained from voting on
the loan proposal.
Titello & Associates, Inc. performed bookkeeping services for the Company,
WCC I, Ltd. and Texas of Indy during 1996 and was paid $67,736. Mary E.
Bowles, an officer of the Company until October 1996, is the office manager of
Titello & Associates, Inc. As of December 31, 1996, John T. Titello, the
principal of Titello & Associates, Inc., and his son, owned 185,592 shares of
the Company's Common Stock. These arrangements were terminated with the change
of control.
On December 16, 1996, the Company acquired Entertainment Wichita, Inc.
("EWI"), a Kansas corporation, for 400,000 shares of the Company's Common Stock
and the assumption of $150,000 in debt. EWI is the general partner and 80%
owner of InCahoots Limited Partnership, a Kansas limited partnership, which
owns and operates the Wichita Club. In connection with the transaction, a
company owned by James E. Blacketer, President and a director of the Company,
received 75,000 shares, Donald W. Grimmett, Vice President of Operations and
Secretary of the Company, received 25,000 shares and two adult sons of Mr.
Blacketer received an aggregate of 32,000 shares. Shane Investments, L.C.
received 250,500 shares of the Company's Common Stock. Shane Investments, L.C.
is also the indirect beneficial owner of 28.9% of the Company's
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outstanding Common Stock, which shares are owned directly by Red River
Concepts, Inc. The sole manager and member of Shane Investments, L.C. is Joe
Robert Love, Jr., the adult son of Joe R. Love, a director of the Company.
The merger was approved by Troy H. Lowrie, the only disinterested member
of the Board of Directors, with Messrs. Blacketer and Love abstaining from
voting. The Company's Board of Directors received an opinion from American
Business Capital Corporation ("ABCC"), which was engaged to act as the
Company's financial advisor, stating that the merger was fair, from a financial
point of view, to the holders of the Company's Common Stock. In rendering its
opinion, ABCC considered the historical financial statements of both the
Company and EWI, projections of future income from operations of both entities,
the increase in the market capitalization which might be expected as a result
of the merger, similarity of operations and the fact that cash was not required
for the purchase of EWI. See Item 11, "Beneficial Ownership Of Directors,
Officers And Certain Shareholders".
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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.
May 9, 1997 Western Country Clubs, Inc.
By: /s/ James E. Blacketer
-----------------------------
James E. Blacketer
President
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