<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required] For the fiscal year ended December 31, 1995.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from ______________to_____________
COMMISSION FILE NUMBER: 0-27704
DIGITAL DATA NETWORKS, INC.
(Name of small business issuer in its charter)
WASHINGTON 91-1426372
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3102 MAPLE AVENUE, SUITE 230
DALLAS, TEXAS 75201
(Address of principal executive offices) (Zip Code)
(214) 969-7200
(Registrant's telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE COMMON STOCK PURCHASE WARRANTS
(Title of class) (Title of class)
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 [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [ X ]
The issuer's revenues for its most recent fiscal year were $498,000.
The aggregate market value of the voting stock held by non-affiliates of the
issuer on March 26, 1996 was $13,755,399.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 26, 1996, 2,027,047
shares of Common Stock and 1,840,000 Common Stock Purchase Warrants were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: 1) The exhibits required by Item 13, Part
III are incorporated by reference from the Registrant's registration statement
Form SB-2 (File No. 33-95744-D).
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Following is a brief summary of the business background and experience of
the Company's directors:
RONALD P. ERICKSON, Chairman of the Board of Directors of Digital Data Networks
since 1990. Mr. Erickson, a Seattle-based attorney and businessman, is
currently a principal in GlobalVision, LLC, an international strategic
consulting and corporate finance company, with which he was been associated
since 1994. From 1984 to 1994, Mr. Erickson was a director of Egghead Software,
Inc., having served in several senior management positions, including, Chairman,
Vice-Chairman and acting President and CEO. From December 1991 to July 1995, Mr.
Erickson was also a principal of RES, a consulting firm assisting small emerging
growth companies. Age 51. Member of Audit Committee.
DONALD B. SCOTT, JR., President of Digital Data Networks. Mr. Scott has been a
director and President of the Company since March 1993, and was the Company's
Acting President from December 1992 to March 1993. From 1991 through 1992, Mr.
Scott was actively involved with RES, a consulting firm which assisted small
emerging growth companies, and where he was a principal. Prior to RES, Mr.
Scott held various positions with Wall Street investment banking firms,
including Paine Webber and E.F. Hutton. Age 41.
JAMES F. BIAGI, JR., Partner in the Seattle law firm of Monahan & Biagi,
specializing in tax, corporate and security matters. Mr. Biagi has been
Secretary and a director of the Company since its inception in 1988. Prior to
Monahan & Biagi, Mr. Biagi had been a partner with Monahan & Robinson from 1989
through 1995. Age 39. Member of Audit Committee.
RICHARD F. RUTKOWSKI, Chief Operating Officer of MicroVision, Inc., a developer
of virtual reality technology. Mr. Rutkowski has been a director and Treasurer
of the Company since 1995. From December 1992 to November 1994, Mr. Rutkowski
was Vice President of Lone Wolf, Inc., a company engaged in the development of
high speed digital networking technology. Prior to Lone Wolf, from December 1991
to July 1995, Mr. Rutkowski was a principal of RES, a consulting firm assisting
small emerging growth companies. Age 40. Member of Audit Committee.
Information regarding the executive officers of the Company is as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Ronald P. Erickson 51 Chairman of the Board of Directors
Donald B. Scott, Jr. 41 President and Director
James F. Biagi, Jr. 39 Secretary and Director
Richard F. Rutkowski 40 Treasurer and Director
Richard J. Boeglin 38 Vice President, Finance and Operations and
Chief Financial Officer
Susan E. Hassel 49 Vice President, Sales
</TABLE>
<PAGE>
Ronald P. Erickson has been Chairman of the Board since 1992. For additional
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information see business background and experience for directors above.
Donald B. Scott, Jr. has been President and a Director of the Company since
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March 1993, and served as the Company's Acting President from December 1992
through March 1993. For additional information see business background and
experience for directors above.
James F. Biagi, Jr. has been Secretary and a Director of the Company since its
- -------------------
inception in 1988. For additional information see business background and
experience for directors above.
Richard F. Rutkowski has been Treasurer and a Director of the Company since
- --------------------
January 1995. For additional information see business background and experience
for directors above.
Richard J. Boeglin has been Vice President of Finance and Operations and the
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Chief Financial Officer since April 1995. He has been with the Company since
1991. He has ten years of management experience, including direct management of
transit system design, development and installation. From 1987 to 1991, Mr.
Boeglin worked in the outdoor advertising industry. He has a BS from Indiana
University, where he received a degree in Marketing and Management.
Susan E. Hassel has been Vice President of Sales since she started with the
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Company in April 1992. She has fourteen years of sales and marketing experience.
From 1985 until 1991, Ms. Hassel was the Director of Sales and Marketing for The
Relocation Center, a relocation counseling company in Dallas, Texas. Ms. Hassel
has a BS in Education from the University of Cincinnati.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file initial
reports of ownership and reports of changes in ownership with the Securities and
Exchange Commission (the "SEC"). Such persons are required by SEC regulations
promulgated pursuant to the Exchange Act to furnish the Company with copies of
all Section 16(a) report forms they file with the SEC.
The Company's registration statement under Section 12 of the Exchange Act
became effective February 13, 1996. Based solely on its review of the copies of
report forms received by it with respect to initial filings from reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been timely complied with in accordance
with Section 16(a) of the Exchange Act.
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ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth certain information regarding cash and non-cash
compensation paid by the Company during each of the Company's last three fiscal
years to the Company's Chief Executive Officer and the only other most highly
compensated executive officer of the Company whose annual compensation exceeded
$100,000 (the "Named Persons").
<TABLE>
<CAPTION>
Annual Compensation Long-Term
------------------- Compensation
Awards All
Name and Fiscal Securities Other
Executive Position Year Salary Bonus Underlying Options Compensation
- ---------------------- ------ ---------- ------- ---------------------- -------------
<S> <C> <C> <C> <C> <C>
Donald B. Scott, Jr. 1995 $120,000 $0 44,723 $74,558 (1)
President 1994 $ 17,000 $0 4,920 $ 0
1993 $ 30,000 $0 0 $ 0
Susan Hassel 1995 $114,790 $0 559 $ 0
V.P. Sales 1994 $ 95,982 $0 11,182 $ 0
1993 $ 75,065 $0 1,119 $ 0
</TABLE>
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(1) Wages owed for 1994 and 1993 salaries that were not previously paid.
The following table sets forth information with respect to options granted to
the Named Persons during the fiscal year ended December 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
Number of % of Total Options
Securities Granted to
Underlying Employees in Exercise or Base
Name Options Granted Fiscal Year Price Per Share Expiration Date
---- --------------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Donald B. Scott 44,723 60 $5.00 March 9, 2000
President
Susan Hassel 559 1 $8.94 May 5, 2000
V.P., Sales
</TABLE>
The following table sets forth information with respect to options
exercised by the Named Persons during 1995 and the value of unexercised options
held by the Named Persons at the end of fiscal 1995.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities
Underlying
Unexercised
Options at Value of Unexercised
Fiscal In-the-Money Options
Shares Acquired Value Year-End At Fiscal Year-End
Name on Exercise Realized Exercisable Exercisable (1)
---- ----------------- ---------- ----------- ---------------------
<S> <C> <C> <C> <C>
Donald B. Scott 0 0 118,769 $317,307
President
Susan Hassel 0 0 12,856 0
V.P., Sales
</TABLE>
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(1) The value of unexercised options is based on the initial public offering
price of $5.00 per share, on February 13, 1996.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of May 3, 1996, by (i)
each person or entity who beneficially owns 5% or more of the Common Stock, (ii)
each director, (iii) the Chief Executive Officer and the next four highest
compensated officers whose compensation exceeds $100,000, and (iv) all officers
and directors of the Company as a group. Unless otherwise noted, the persons and
entities named below have sole voting and investment power with respect to such
shares.
Name of Total Beneficial Ownership Percent of Class Beneficially
Beneficial Owner (including options) Owned as of May 3, 1996
- ---------------- -------------------------- -----------------------------
Ronald P. Erickson,
Chairman of the Board 28,699 (1) 1.4%
Donald B. Scott, Jr.,
President 128,912 (2) 6.4%
James F. Biagi, Jr.,
Secretary 55,497 (3) 2.7%
Richard F. Rutkowski,
Treasurer 20,020 (4) 1.0%
Susan E. Hassel,
V.P. Sales 13,975 (5) .7%
All Executive Officers
and Directors 262,757 (6) 13.0%
as a group (6 persons)
_______________________
(1) Includes options to purchase 13,541 shares within 60 days of this
proxy statement.
(2) Includes options to purchase 118,769 shares within 60 days of this
proxy statement.
(3) Includes options to purchase 39,611 shares within 60 days of this
proxy statement.
(4) Includes options to purchase 2,042 shares within 60 days of this proxy
statement.
(5) Includes options to purchase 12,856 shares within 60 days of this
proxy statement.
(6) Includes options to purchase 200,794 shares within 60 days of this
proxy statement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1994, the Company advanced to Mr. Scott $59,000, which was an
unsecured non-interest bearing receivable. During 1995, the receivable was
repaid in consideration for compensation earned during the 1995 period.
The Company paid $225,000 to Sunrise Systems, Inc. in February and March
1996 from the proceeds of its public offering for its software license. Paul
Miller and Henry Appleton are members of the Company's advisory board and
principals of Sunrise Systems, Inc., the Company's principal electronic
equipment supplier and systems integrator.
The Company paid Lawrence Stumbaugh $150,000 from the proceeds of its
public offering in February and April 1996 to retire indebtedness incurred in
1991 when Mr. Stumbaugh was a director and Chairman of the Executive Committee.
In December 1994, Bruce S. Glant, a former director of the Company and
currently an Advisory Director, filed a lawsuit against the Company for payment
of a demand note in the principal amount of approximately $53,000 plus interest.
The lawsuit was subsequently withdrawn pursuant to a Settlement Agreement dated
as of April 21, 1995, and Mr. Glant was repaid through monthly installments and
from proceeds of the public offering.
<PAGE>
In January 1995, James F. Biagi, Jr., Secretary and a director, Ronald P.
Erickson and Richard F. Rutkowski, directors, exchanged $119,829 of outstanding
5% promissory notes of the Company with accrued interest for 8,933 shares of
Common Stock at $13.42 per share. In November 1995, Mr. Biagi exchanged $19,095
of a 5% demand note with accrued interest for 4,774 shares at $4.00 per share.
The Company believes that the foregoing transactions with its officers and
directors were on terms no less favorable than could have been obtained from
independent third parties. All future transactions with such persons will also
be on terms no less favorable than could be obtained from independent third
parties and will be approved by a majority of the independent, disinterested
directors.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIGITAL DATA NETWORKS, INC.
(Registrant)
By: /s/ Ronald P. Erickson
-----------------------------------
Ronald P. Erickson, Chairman of the Board
(Principal Executive Officer)
Date: May 10, 1996
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signatures Capacity Date
- ---------- -------- ----
/s/ Ronald P. Erickson Chairman of the Board, May 10, 1996
- ------------------------- Director, (Principal Executive
Ronald P. Erickson Officer)
/s/ Donald B. Scott President and Director May 10, 1996
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Donald B. Scott
/s/ James F. Biagi, Jr. Secretary and Director May 10, 1996
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James F. Biagi, Jr.
/s/ Richard F. Rutkowski Treasurer and Director May 10, 1996
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Richard F. Rutkowski
/s/ Richard J. Boeglin Vice President, May 10, 1996
- ------------------------- Finance and Operations
Richard J. Boeglin (Principal Financial and
Accounting Officer)
