<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number 1-13732
SHARED TECHNOLOGIES CELLULAR, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1386411
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 Great Meadow Road, Suite 102, Wethersfield, Connecticut 06109
(Address of principal executive office) (Zip Code)
(860) 258-2500
(Registrant's telephone number, including area code)
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 / /
The number of shares outstanding of the registrant's common stock as of August
10, 1998 was 7,406,002
<PAGE> 2
SHARED TECHNOLOGIES CELLULAR, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
PART 1 FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 30, 1998 and
December 31, 1997 3-4
Consolidated Statements of Operations for the Six Months Ended
June 30, 1998 and 1997 5
Consolidated Statements of Operations for the Three Months Ended
June 30, 1998 and 1997 6
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1998 and 1997 7-8
Notes to Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-14
PART II OTHER INFORMATION
Item 1. Legal Proceedings. 15
Item 2. Changes in Securities and Use of Proceeds. 15
Item 4. Submission of Matters to Vote of Security Holders. 16
Item 6. Exhibits and Reports on Form 8-K. 17
SIGNATURE 18
</TABLE>
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<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
Shared Technologies Cellular, Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 2,473,000 $ 294,000
Accounts receivable, less allowance for doubtful
accounts of $830,000 and $991,000 in 1998 and 1997 3,482,000 1,637,000
Carrier commissions receivable, less unearned 795,000 163,000
income
Inventories 107,000 131,000
Current portion of note receivable 107,000
Prepaid expenses and other current assets 2,587,000 127,000
----------- -----------
Total current assets 9,444,000 2,459,000
----------- -----------
TELECOMMUNICATIONS AND OFFICE EQUIPMENT,
less accumulated depreciation 986,000 985,000
----------- -----------
OTHER ASSETS:
Intangible assets, less accumulated amortization 7,228,000 7,551,000
Deposits 512,000 326,000
Note receivable, less current portion 62,000
Assets held for disposition 153,000 153,000
----------- -----------
Total other assets 7,893,000 8,092,000
----------- -----------
TOTAL ASSETS $18,323,000 $11,536,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE> 4
Shared Technologies Cellular, Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $ 524,000 $ 530,000
Accounts payable and other current liabilities 8,966,000 7,666,000
Commissions payable 167,000 166,000
Due to former parent 1,693,000 1,052,000
------------ ------------
Total current liabilities 11,350,000 9,414,000
------------ ------------
Notes payable, less current portion 7,094,000 957,000
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred Stock,$.01 par value, authorized 5,000,000
shares, no shares issued and outstanding -- --
Common Stock, $.01 par value, authorized 20,000,000 shares,
issued and outstanding 7,394,000 shares in 1998
and 7,216,000 in 1997 74,000 72,000
Capital in excess of par value 17,529,000 17,801,000
Accumulated deficit (17,724,000) (16,708,000)
------------ ------------
Total stockholders' equity (121,000) 1,165,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,323,000 $ 11,536,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
<PAGE> 5
Shared Technologies Cellular, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
For the Six Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
REVENUES $ 12,107,000 $ 12,867,000
COST OF REVENUES 7,151,000 7,258,000
------------ ------------
GROSS MARGIN 4,956,000 5,609,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,785,000 5,838,000
------------ ------------
LOSS FROM OPERATIONS (829,000) (229,000)
INTEREST EXPENSE, NET (184,000) (141,000)
------------ ------------
LOSS BEFORE INCOME TAXES (1,013,000) (370,000)
INCOME TAXES (3,000) 0
------------ ------------
NET LOSS ($ 1,016,000) ($370,000)
============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE ($0.14) ($0.07)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 7,294,000 5,061,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 6
Shared Technologies Cellular, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
REVENUES $ 7,180,000 $ 6,765,000
COST OF REVENUES 4,279,000 3,796,000
----------- -----------
GROSS MARGIN 2,901,000 2,969,000
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 2,945,000 2,970,000
----------- -----------
LOSS FROM OPERATIONS (44,000) (1,000)
INTEREST EXPENSE, NET (139,000) (68,000)
----------- -----------
LOSS BEFORE INCOME TAXES (183,000) (69,000)
INCOME TAXES 0 0
----------- -----------
NET LOSS ($183,000) ($69,000)
=========== ===========
BASIC AND DILUTED LOSS PER COMMON SHARE ($0.02) ($0.01)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 7,359,000 5,120,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
<PAGE> 7
Shared Technologies Cellular, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,016,000) ($370,000)
Adjustments to reconcile net loss to net cash
used in operating activities;
Depreciation and amortization 592,000 642,000
Common stock issued for compensation
and services 54,000 29,000
Accretion of interest on notes payable 52,000
Note receivable (5,000)
Change in assets and liabilities:
Accounts receivable (1,845,000) (425,000)
Carrier commissions receivable (632,000) (206,000)
Inventories 24,000 5,000
Prepaid expenses and other current assets (2,460,000) (33,000)
Accounts payable and other current liabilities 1,869,000 (618,000)
Commissions payable 1,000 207,000
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (3,413,000) (722,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets (172,000) (119,000)
Purchases of equipment (284,000) (109,000)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (456,000) (228,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 6,400,000
Payments on notes payable (467,000) (471,000)
Advances from former parent 72,000 953,000
Issuance of common stock 43,000 739,000
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,048,000 1,221,000
----------- -----------
NET INCREASE IN CASH 2,179,000 271,000
CASH, BEGINNING OF PERIOD 294,000 144,000
----------- -----------
CASH, END OF PERIOD $ 2,473,000 $ 415,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-7-
<PAGE> 8
Shared Technologies Cellular, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
(continued)
For the Six Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for -
Interest $118,000 $228,000
======== ========
Income taxes $ 3,000 $ 0
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Cancellation of common stock to settle
outstanding receivables (See Note 3) $367,000 $ 0
======== ========
Cashless exercise of 500,000 Common Stock warrants
into 250,519 shares of the Company's Common Stock $ 3,000 $ 0
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-8-
<PAGE> 9
Shared Technologies Cellular, Inc. and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1998 (Unaudited)
1. BASIS OF PRESENTATION. The consolidated financial statements included herein
have been prepared by Shared Technologies Cellular, Inc. ("STC" or the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect all adjustments, consisting only of normal recurring
adjustments, which are, in the opinion of management, necessary to present a
fair statement of the financial position, results of operations and cash flows
for interim periods. Certain information and footnote disclosures have been
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's December 31, 1997 report on Form 10-K. Certain reclassifications to
prior year financial statements were made in order to conform to the 1998
presentation. The consolidated financial statements included herein are not
necessarily indicative of the results for the fiscal year ending December 31,
1998.
2. LOSS PER COMMON SHARE. Effective December 31, 1997, the Company adopted
Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings
Per Share". SFAS No. 128 requires dual presentation of basic and diluted
earnings per share for all periods presented. Basic earnings per share excludes
dilution and is computed by dividing the loss available to common stockholders
by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock and then shared in
the earnings of the entity. Prior period loss information has been restated as
required by SFAS No. 128. Diluted loss per common share is the same as basic
loss per common share for the three and six month periods ended June 30, 1998
and 1997. Unexercised options to purchase 707,000 and 365,000 shares of the
Company's common stock as of June 30, 1998 and 1997, respectively, and common
stock warrants to purchase 3,453,000 and 3,127,000 shares of the Company's
common stock as of June 30, 1998 and 1997, respectively, were not included in
the computation of diluted earnings per share because their effect would have
been antidilutive as a result of the Company's losses.
3. LITIGATION. In April 1998, the Company and Summit Assurance Cellular, Inc.,
and certain of its affiliates (the "Summit Entities") and Craig Marlar, who is
an officer and director of the Summit Entities and was a director of the Company
until his resignation in April 1998, entered into a settlement of litigation
arising out of the acquisition of certain assets of the Summit Entities in April
1996, whereby the Company received from the Summit Entities 100,000 shares of
the Company's Common Stock. The stock received was in exchange for the payment
by the Company of $150,000 to a vendor on behalf of the Summit Entities, a
one-year extension of the expiration date of the warrants issued in connection
with the acquisition, the issuance to the Summit Entities of a warrant to
purchase 100,000 shares of the Company's Common Stock at an exercise price of
$5.00 per share, and forgiveness of all amounts due, including accrued interest,
on a note receivable in the principal amount of $180,000. The effect of this
transaction on the Company's results of operations was immaterial.
-9-
<PAGE> 10
4. LIQUIDITY. The Company has incurred losses during the three most recent
fiscal years, as well as the six month period ended June 30, 1998 and has a
working capital deficit of $1,906,000 at June 30, 1998. In April and May 1998,
the Company secured $6,400,000 of debt financing (See Item 2, "Changes in
Securities and Use of Proceeds").
Long-term liquidity is dependent on the
Company's ability to obtain long-term financing and attain profitable
operations.
-10-
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS:
Six Months Ended June 30, 1998 compared to Six Months Ended June 30, 1997
Revenues for 1998 were $12,107,000, compared to $12,867,000 for 1997, a decrease
of 760,000 (6%). The net loss for 1998 was $1,016,000, compared to a net loss of
$370,000 for 1997. The net loss per common share was $0.14 for 1998, compared to
$0.07 for 1997.
Revenues
The Company's cellular telephone rental operations had revenues of $6,781,000
for the six months ended June 30, 1998, compared to $7,705,000 for the same
period in 1997. The decrease in revenues of $924,000 (12%) was partially
attributable to the closure of various locations during 1997 that did not meet
established profit criteria. In addition, all of the Company's car rental
partners went through an ownership or management change in 1997 that may have
negatively impacted their ability to focus on the Company's cellular rental
program. The Company believes that, in the long term, the location closings and
the ownership and management changes at the car rental companies should have a
positive impact on both the Company's cellular rental revenues and gross margin.
The Company's debit operations had revenues of $4,530,000 for 1998, compared to
$3,679,000 for 1997. The increase in revenues of $851,000 (23%) was due to the
new end user program being marketed under the CellEase brand name. The Company
has experienced significant revenue growth from CellEase beginning in April
1998. The overall increase in the debit operations includes a significant drop
in revenues from a major distributor, due to a rate adjustment given in order to
keep the program with the distributor competitive with the CellEase program. In
addition, the distributor in the third quarter 1998 will begin to transition its
prepaid cellular service customers to the Company's CellEase end user program.
The Company's activation operations had revenues of $796,000 for 1998, compared
to $1,483,000 for 1997. The decrease of $687,000 (46%) was attributable to the
discontinuance of operations at military bases in late 1997. In addition, the
Company closed the Texas activation location in November 1997.
Gross Margin
Gross margin was 41% of revenues for 1998, compared to 44% of revenues for 1997.
The gross margin for the portable cellular rental operations improved slightly
due the closure of various unprofitable locations, as discussed above. The gross
margin for the debit operations decreased as a result of a rate adjustment given
to a major distributor and due to the end user CellEase program having a lower
margin than the distributor program. The gross margin for the activation
operations improved significantly due to a change in the product mix to more
retail activations, which generally have higher commission amounts than
activations performed at the military bases.
-11-
<PAGE> 12
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("S,G&A") were $5,785,000 for 1998,
compared to $5,838,000 for 1997, a decrease of $53,000. As a percentage of
revenues, S,G&A increased to 48% for 1998, compared to 45% for 1997. Due to the
fixed nature of many of these expenses, a decrease in revenues resulted in an
inverse effect on S,G&A, as a percentage of revenues. Therefore, the small
increase in expenses, as a percentage of revenues, was in line with the overall
6% decrease in revenues. If the anticipated increase in revenues over the
remainder of 1998 occurs, S,G&A, as a percentage of revenues, would improve
accordingly.
Interest Expense
Interest expense was $184,000 for 1998, compared to $141,000 for 1997. Interest
expense was mainly due to debt relating to acquisitions made in prior years, the
conversion of certain debt owed to the Company's former parent, Shared
Technologies Fairchild Inc., into an interest bearing note payable, and new debt
financing discussed in Part II ("Other Information"), Item 2 ("Changes in
Securities and Use of Proceeds").
Three Months Ended June 30, 1998 compared to Three Months Ended June 30, 1997
Revenues for the second quarter of 1998 were $7,180,000, compared to $6,765,000
for the second quarter of 1997, an increase of $415,000 (6%). The net loss for
1988 was $183,000, compared to a net loss of $69,000 for 1997.
Revenues
In the second quarter of 1998, the Company's cellular telephone rental
operations had revenues of $3,567,000 for 1998, compared to $4,028,000 for the
second quarter of 1997. The decrease of $461,000 (11%) was attributable to the
closure of various locations during 1997, as previously discussed.
In the second quarter, the Company's debit operations had revenues of $3,257,000
for 1998, compared to $2,021,000 for 1997. The increase of $1,236,000 (61%) was
due to the introduction of the CellEase end user program in April 1998,
partially offset by a rate adjustment given to a major distributor, as
previously discussed.
In the second quarter, the Company's activation operations had revenues of
$356,000 for 1998, compared to $716,000 for 1997. The decrease of $360,000 (50%)
was due to the closure of various retail operations at military bases in late
1997.
Gross Margin
The overall gross margin was 40% of revenues for 1998, compared to 44% of
revenues for 1997. The gross margin for the portable cellular rental operations
improved slightly due to the closure of various unprofitable locations. The
gross margin for the debit operations decreased significantly due to a rate
adjustment given to a major distributor and a lower margin from the CellEase end
user program. The gross margin for the activation operations improved
significantly due to the elimination of activations with very low margins at
military bases in late 1997.
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<PAGE> 13
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("S,G&A") decreased $25,000, from
$2,970,000 in 1997 to $2,945,000 in 1998. As a percentage of revenues, S,G&A
expenses decreased from 44% in 1997 to 41% in 1998. This decrease in expenses,
as a percentage of revenues, was attributable to the 6% increase in revenues.
Interest Expense
Interest expense was $139,000 in 1998 compared to $68,000 in 1997. Interest
expense was mainly due to debt relating to acquisitions made in prior years, the
conversion of certain debt owed to the Company's former parent into an interest
bearing note payable, and new debt financing discussed in Item 2 of Part II.
LIQUIDITY AND CAPITAL RESOURCES:
The Company had a working capital deficit of $1,906,000 at June 30, 1998,
compared to a deficit of $6,955,000 at December 31, 1997. Stockholders' equity
at June 30, 1998 was ($121,000), compared to $1,165,000 at December 31, 1997.
Net cash used in operations for the six month period ended June 30, 1998 was
$3,413,000. This was mainly due to an operating loss for the period as well as
approximately $1,200,000 paid as a line activation commission on debit phones
shipped to retailers and end users. For the six month period ended June 30,
1997, net cash used in operations was $722,000. This was primarily due to the
increase in the accounts receivable balance as a result of a significant
increase in debit billings and the timing of the receipt of those billings from
the Company's retail distributor.
Net cash used in investing activities for the six month period ended June 30,
1998 was $456,000. This was mainly attributable to the purchase of computer
equipment to handle the CellEase program and deposit requirements by carriers
for additional lines. For the six month period ended June 30, 1997, net cash
used in investing activities was $228,000. This was primarily due to the
purchase of computers and related accessories as well as deposit requirements by
carriers for additional lines.
During the six month period ended June 30, 1998, the Company received $6,400,000
of debt financing, which is described in Item 2 of Part II. The Company
continued to make required payments on its existing debt. For the six month
period ended June 30, 1997, the Company raised cash of $739,000, net of
expenses, through the sale of 250,000 Units. Each Unit consisted of one share of
the Company's common stock and one warrant to purchase an additional share of
such common stock. The Company also borrowed $953,000 from its former parent.
Management believes that ongoing operations, together with the completed debt
financing, will provide the Company with sufficient funds to finance operations
and planned expansion for at least the next 12 months, and long-term liquidity
will depend on the Company's ability to obtain long-term financing and attain
profitable operations.
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<PAGE> 14
YEAR 2000
The Company believes that its computer systems are properly adapted to avoid a
Year 2000 problem, and therefore does not anticipate any materially adverse
effect to the operations of the Company with respect to such issue. Many of the
systems used by the Company were developed internally within the last few years
and are Year 2000 compliant. The Company is currently working with outside
vendors to obtain assurances that they are Year 2000 compliant, however, there
can be no assurance that all of the Company's vendors, including carriers, will
achieve compliance on a timely basis. In the event of any such noncompliance by
vendors, an adverse effect to the Company's operations could result.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995: The Management's Discussion and Analysis may include forward-looking
statements with respect to the Company's future financial performance. These
forward-looking statements are subject to various risks and uncertainties that
could cause actual results to differ materially from those in any
forward-looking statement. Such risks and uncertainties may include, without
limitation, technological obsolescence, price and industry competition,
financing capabilities, and dependence on major customers and relationships.
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<PAGE> 15
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not involved in any litigation which, individually or in the
aggregate, if resolved against the Company would be likely to have a materially
adverse effect on the Company's financial condition, results of operations, or
cash flows. See note 3 of "Notes to Consolidated Financial Statements" with
respect to the settlement of certain litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
The Company secured certain debt financing in the principal amount of $4,000,000
from four lenders, in connection with which the Company issued warrants to
purchase an aggregate of 400,000 shares of the Company's Common Stock. Pursuant
to credit agreements entered into in April 1998, the Company borrowed $1,000,000
from Anthony D. Autorino, the Company's Chairman and Chief Executive Officer;
$500,000 from International Capital Partners, Inc ("ICP"), whose Chairman and
Chief Executive Officer, Ajit G. Hutheesing, is a director of the Company, and
whose Managing Partner, Nicholas E. Sinacori, is also a director of the Company;
$2,000,000 from Salomon Brothers Holding Company Inc. ("Salomon"); and $500,000
from a private investor. The credit agreements have a maturity date of July 1999
and a floating interest rate of 2.5% above a rate that is comparable to the
prime rate (as defined in the credit agreements). In connection therewith, the
Company issued to Mr. Autorino, ICP, Salomon and the private investor warrants
for the purchase of 100,000, 50,000, 200,000 and 50,000 shares of Common Stock,
respectively. The warrants are exercisable at $5.00 per share, and expire April
15, 2003. The warrants were issued in a nonpublic offering to sophisticated
investors pursuant to the exemption provided by Section 4(2) of the Securities
Act of 1933, as amended (the "Act"). In connection with the financing, the
Company paid a facility fee of $25,000 to ICP Investments, Inc. with respect to
the fundings by ICP and the private investor, and paid a facility fee of $50,000
to Salomon.
In May 1998, the Company issued to nine investors through a nonpublic offering,
5% convertible notes in the aggregate principal amount of $2,400,000 (the
"Notes"). The Company relied on the exemption provided by Regulation D
promulgated under the Act. Purchasers of the Notes included an affiliate of ICP,
International Capital Partners Profit Sharing Trust, which purchased a Note in
the amount of $200,000. The Notes have a term of seven years and are convertible
at any time at the option of the noteholder into shares of the Company's Common
Stock at a rate of $5.00 per share, subject to certain antidilution adjustments.
The Company has the right to force conversion of the Notes after three years, in
the event that the Company's Common Stock trades at or above $10 per share for
at least five consecutive trading days.
The Company intends to use the above-mentioned proceeds for working capital.
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<PAGE> 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Stockholders of the Company was held on May 22, 1998. Four
matters of business were held to a vote for the following purposes: (1) the
election of six directors of the Company for the ensuing annual term ("Proposal
1"); (2) the ratification of an amendment to the 1994 Stock Option Plan to
increase the number of shares of the Company's Common Stock available for awards
from 525,000 to 825,000 ("Proposal 2"); (3) the ratification of amendments to
the 1994 Director Option Plan to increase the number of shares of the Company's
Common Stock available for awards from 33,333 to 100,000, to increase the number
of shares issuable annually to non-employee directors from 2,000 to 4,000, and
to provide that the options vest pro rata at the rate of 1/12 per full month of
service ("Proposal 3"); and (4) ratification of the appointment of the Company's
auditors, Rothstein, Kass & Company P.C. ("Proposal 4"). A total of 4,964,450
votes were cast, out of a total of 7,138,601 potential votes.
Proposal 1
<TABLE>
<CAPTION>
Director FOR WITHHELD
- -------- --- --------
<S> <C> <C>
Anthony D. Autorino 4,961,650 2,800
Thomas H. Decker 4,961,650 2,800
William A. DiBella 4,961,650 2,800
Vincent DiVincenzo 4,961,650 2,800
Ajit G. Hutheesing 4,961,650 2,800
Nicholas E. Sinacori 4,961,650 2,800
</TABLE>
Proposal 2
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
4,084,430 68,883 811,137
Proposal 3
FOR AGAINST ABSTAIN
4,084,420 68,883 811,247
Proposal 4
FOR AGAINST ABSTAIN
4,961,640 2,000 810
</TABLE>
ITEM 5. OTHER INFORMATION.
On July 14, 1998, in accordance with the Company's bylaws, Bruce Carswell was
elected to the Company's Board of Directors by a vote of the current directors.
Mr. Carswell is Senior Vice President of Human Resources and Administration of
GTE Corporation, and serves on the Board of Directors of GTE.
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<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
3. (ii) Amended and Restated By-Laws of Shared Technologies Cellular,
Inc. as of April 16, 1998. (a)
4.1 Form of Credit Agreement, dated as of April 15, 1998, between
Shared Technologies Cellular, Inc. as Borrower and Salomon
Brothers Holding Company Inc. as Lender. (a)
4.2 Security Agreement, dated as of April 15, 1998 among Shared
Technologies Cellular, Inc., as Grantor, Anthony D. Autorino and
Salomon Brothers Holding Company Inc. as Lenders and Salomon
Brothers Holding Company Inc. as Collateral Agent. (a)
4.3 Pledge Agreement, dated as of April 15, 1998, by and between
Shared Technologies Cellular, Inc., as Pledgor, Anthony D.
Autorino and Salomon Brothers Holding Company Inc. as Lenders and
Salomon Brothers Holding Company Inc. as Collateral Agent. (a)
4.4 Form of Registration Rights Agreement dated as of April 15, 1998,
between Shared Technologies Cellular, Inc., and Salomon Brothers
Holding Company Inc. (a)
4.5 Form of Warrant Purchase Agreement, dated as of April 15, 1998,
between Shared Technologies Cellular, Inc., and Salomon Brothers
Holding Company Inc. (a)
4.6 Form of Shared Technologies Cellular, Inc., Common Stock Purchase
Warrant, dated April 15, 1998, in favor of Salomon Brothers
Holding Company Inc. or its registered assigns. (a)
4.7 Form of Subscription Agreement dated May 1998 between Shared
Technologies Cellular, Inc., and the Purchasers (as defined
therein), including form of Convertible Note. (a)
27. Financial Data Schedule (filed only electronically with the SEC)
(a)- Incorporated by reference from the Company's Form 10-Q for the
quarterly period ended March 31, 1998 dated and filed on May 15,
1998.
(b) REPORTS ON FORM 8-K
None
-17-
<PAGE> 18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
SHARED TECHNOLOGIES CELLULAR, INC.
Date: August 13, 1998 By: /s/ Vincent DiVincenzo
-------------------------------------
Vincent DiVincenzo
Chief Financial Officer
(Chief Accounting Officer and
Duly Authorized Officer)
-18-
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