Form 10-KSB Amendment No. 1

10KSB/A 1 d10ksba.htm FORM 10-KSB AMENDMENT NO. 1 Form 10-KSB Amendment No. 1

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB/A

Amendment No. 1

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2005

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-49819

DICKIE WALKER MARINE, INC.

(Name of small business issuer as specified in its charter)


Delaware		33-0931599
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1405 South Coast Highway Oceanside, CA		92054
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number, including area code: (760) 450-0360

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 par value

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act 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 ¨

Check if there is no disclosure of delinquent filers pursuant 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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x

Issuer’s revenues for the fiscal year ended September 30, 2005 were $1,705,973.

At December 30, 2005, 5,848,678 common shares (issuer’s only class of voting stock) were outstanding. The aggregate market value of the 4,367,448 common shares of the registrant held by nonaffiliates on that date (based upon the bid price on the Pink Sheets) was $349,396.

The following items of Dickie Walker Marine, Inc.’s Annual Report on Form 10-KSB for the fiscal year ended September 30, 2005 are hereby amended. Each item is set forth in its entirety, as amended.

PART III.

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance with Section 16(a) of the Exchange Act

The following individuals were directors and executive officers as of December 31, 2005.

GERALD W. MONTIEL, Chairman of the Board, Chief Executive Officer, President, Chief Marketing Officer

Age: 58

Gerald W. Montiel is our founder and has served as our Chairman of the Board and Chief Executive Officer since our inception in October 2000, and our Chief Financial Officer since our inception until February 2002. Mr. Montiel has served as our Chief Marketing Officer since February 2002. He was appointed President in November 2003. In 1987, Mr. Montiel co-founded Ashworth, Inc., the largest branded golf apparel company in the United States, and served as its President and Chief Executive Officer from its inception until 1995, and as Chairman of the Board from its inception until his retirement from Ashworth in 1998. Ashworth was recognized in 1994 and 1995 as one of America’s 100 fastest-growing companies by Fortune magazine. In 1973, Mr. Montiel founded World of Arts and Crafts Stores, a 14-store retail chain that merged with Michael’s Arts and Crafts Stores in 1984. Mr. Montiel served on Michael’s Board of Directors from 1984 to 1985. Mr. Montiel graduated from Colorado State University with a Bachelor of Arts with an emphasis in Marketing. He was recognized as its Honored Alumni of the Year in 1994.

W. BRENT ROBINSON, Director

Age: 60

W. Brent Robinson was elected as a director in February 2002. Mr. Robinson has over 30 years of experience in the retail industry, specializing in retail store chain development, operations and management. Since 1999, Mr. Robinson has been Chairman and Chief Executive Officer of Virtual Habitat, Incorporated which designs, sells, installs and maintains entertainment systems for residential and commercial use. From 1993 to 1999, he was President and Chief Executive Officer of The Store Group, a retail advisory group for retailers, wholesalers, manufacturers and catalog companies. From 1990 to 1992, Mr. Robinson was a vice president of Blockbuster Video. Mr. Robinson was Vice President of The Limited, Inc. and of Abercrombie & Fitch from 1989 to 1990. Mr. Robinson was a regional manager for the Lerners Shops from 1987 to 1989, and a regional manager for The Limited Stores from 1985 to 1987.

Raymond W. Grimm, Jr., Director

Age: 60

Raymond W. Grimm, Jr. was elected as a director in December 2005. Mr. Grimm is the chairman and chief executive officer of FemOne, Inc., a nutritional and weight loss products and cosmetics company, and has served in that capacity since the company’s inception in 2002. Mr. Grimm is also a founder and the chief executive officer of Biopro Technology, Inc., a nutritional and wellness products company, and has served in that capacity since the inception of the company in 2004. Mr. Grimm co-founded and was the President of Bodywise International, Inc., a nutritional supplements company, from it inception in 1989 until 2002.

TODD W. SCHMIDT, Chief Financial Officer

Age 62

Todd W. Schmidt was appointed Chief Financial Officer in July 2003. From May 2002 until that time he acted as a financial consultant to us. Mr. Schmidt has nearly 30 years experience as a chief financial officer of four

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companies. From 1996 to 2002 he was Vice President Finance of ENCAD, Inc., a publicly-traded inkjet printer company. From 1990 to 1995 he served as Vice President Finance and Administration for Biosym Technologies, Inc., a computer-aided molecular modeling software company. He has also served as Vice President Finance and Administration at Immunetech Pharmaceuticals, Inc. from 1983 to 1990 and IVAC Corporation from 1976 to 1981. He is a certified public accountant and earned a Bachelor of Science in Industrial Engineering and an MBA, both from Northwestern University.

Audit Committee Financial Expert

The Board has an audit committee consisting of Messrs. Robinson and Grimm. The Board of Directors has determined that each of the members of the Audit Committee is independent as defined by the listing standards of the NASD, Section 301 of the Sarbanes-Oxley Act of 2002, and Rule 10A-3 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). The Board of Directors also has determined that each of the members of the Audit Committee is able to read and understand financial statements, and that Mr. Grimm, who is the Chairman, has financial management experience and is an audit committee financial expert, as defined by the rules of the Securities and Exchange Commission (the “SEC”). In reaching such determinations, the Board of Directors considered the financial, accounting, business and occupational experience of each Audit Committee member.

Section 16(a) Beneficial Ownership reporting Compliance

Section 16(a) of the Securities Act of 1934 requires our directors and executive officers and persons who beneficially own more than 10% of the company’s stock to file reports of ownership and subsequent changes with the Securities and Exchange Commission. Based only on a review of copies of such reports and written representations delivered to the Company by such persons, the Company believes that Mr. Grimm filed one late report comprised of a Form 3.

Code of Ethics

Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, we have adopted a code of ethics that applies to all employees and directors of the company. A copy of the code of ethics can be obtained without charge by written request to Investor Relations, Dickie Walker Marine, Inc., 1405 South Coast Highway, Oceanside, California, 92054.

Item 10. Executive Compensation

The following table sets forth the compensation paid by us to our Chief Executive Officer and other executive officers for the years ended September 30, 2005, 2004 and 2003.

Summary Compensation Table


Name and Principal Position	Year	Annual Compensation							Long-Term Compensation
Name and Principal Position	Year	Salary ($)		Bonus ($)		Other Annual Compen- sation ($) Other			Awards Securities Underlying Options (#)⁽¹⁾
Gerald W. Montiel	2005	$	88,000	$	—	$	—
Chief Executive Officer,	2004	$	91,000	$	—	$	—
Current President,	2003	$	100,000	$	—	$	—
Chief Marketing Officer

Julia B. Knudsen⁽⁷⁾	2005	$	—	$	—	$	—
Former President,	2004	$	60,667	$	—	$	700	⁽²⁾
Chief Operating Officer, Chief Financial Officer	2003	$	103,000	$	—	$	4,200	⁽²⁾

Sandra L. Evans⁽⁸⁾	2005	$	—	$	—	$	—
Former Vice President of	2004	$	53,333	$	—	$	1,750	⁽²⁾
Distribution, Former Secretary	2003	$	79,475	$	2,000	$	4,200	⁽²⁾⁾	10,000

Eric M. Montiel⁽³⁾	2005	$	71,105	$	—	$	11,998	⁽⁵⁾	45,000
Former Vice President-Sales,	2004	$	93,333	$	—	$	4,200	⁽²⁾	35,000
Former Secretary	2003	$	78,473	$	—	$	16,709	⁽⁶⁾	35,000

Todd W. Schmidt⁽⁴⁾	2005	$	95,833	$	—	$	4,200	⁽²⁾	60,000
Current Chief Financial Officer	2004	$	97,667	$	—	$	4,200	⁽²⁾	35,000
	2003	$	15,700	$	—	$	67,367	⁽⁴⁾	35,000

⁽¹⁾	All awards reported under this column were stock options issued under the 2002 Equity Incentive Plan.

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⁽²⁾	Amounts paid for car allowance.

⁽³⁾	Mr. Montiel became Vice President of Sales in December 2002 and resigned on July 31, 2005. Stock options totaling 70,000 shares expired upon Mr. Montiel’sresignation.

⁽⁴⁾	Mr. Schmidt became Chief Financial Officer in July 2003. Prior to that time he was a financial consultant to the Company. Includes $700 for car allowance and $66,667 for consulting services in 2003.

⁽⁵⁾	Represents $8,398 reimbursement for relocation expense and $3,600 paid for car allowance.

⁽⁶⁾	Represents $13,209 reimbursement for relocation expense and $3,500 paid for car allowance.

⁽⁷⁾	Ms. Knudsen resigned from the Company effective November 14, 2003. Ms. Knudsen’s stock options expired upon her resignation.

⁽⁸⁾	Ms. Evans resigned from the Company effective February 29, 2004. Ms.Evans’ stock options expired upon her resignation.

Option Grants in Fiscal 2005

The following table sets forth information concerning stock option grants during fiscal 2005 to our named executive officers. All options granted in fiscal 2005 were issued under the 2002 Equity Incentive Plan. In general, the options vest and become exercisable over a four-year period, with 25% vesting on after one year and the remainder vesting monthly in equal increments over the following three years. Options granted in fiscal year 2005 vested immediately. The options have a term of ten years, subject to earlier termination under certain circumstances related to termination of employment.

In general, under our Equity Incentive Plan the exercise price of the options may be paid:

•

by cash or check,

•

in shares of common stock held for the requisite period necessary to avoid a charge to the company’s earnings for financial reporting purposes and valued at fair market value on the exercise date, or

•

through a cashless exercise procedure involving a same-day sale of the purchased shares.

The Compensation Committee may grant stock appreciation rights in tandem with option grants under the 2002 Equity Incentive Plan. No stock appreciation rights were granted to any of the named executive officers during fiscal 2004.

Option Grants in Fiscal 2005 Table


	Individual Grants
Name	Number of Securities Underlying Options Granted (#)	% of Total Options Granted to Employees in Fiscal Year ⁽²⁾		Exercise Price ($/Share)		Expiration Date
Eric M. Montiel⁽¹⁾	45,000	23.3	%	$	1.20	04/26/2015
Todd W. Schmidt⁽¹⁾	60,000	31.1	%	$	1.20	04/26/2015

⁽¹⁾	Options granted in fiscal 2005 vest immediately.

⁽²⁾	In fiscal 2005, all employees as a group received stock options amounting to a total of 193,000 shares.

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Option Exercises and Holdings

The following table sets forth certain information with respect to the number and value of unexercised stock options held by our named executive officers as of September 30, 2005. No stock options or stock appreciation rights were exercised by the officers during fiscal 2005.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

Name

Shares

Acquired

Exercise

Value

Realized

Number of Securities

Underlying Unexercised

Options

at September 30, 2005

Value of Unexercised
in-the-Money Options at

September 30, 2005⁽¹⁾

Exercisable

Unexercisable

Exercisable

Unexercisable

Todd W. Schmidt

—

N/A

111,771

18,229

—

⁽¹⁾

Value is based on the difference between the option exercise price and the fair market value at September 30, 2005 ($0.19 per share, determined on the basis of the closing selling price per share of common stock as reported in the Pink Sheets), multiplied by the number of shares underlying the option.

Compensation of Directors

While we do not pay cash compensation to our directors, they are reimbursed for expenses they incur in attending meetings of the Board or Committees of the Board. In April 2005, Mr. Robinson was granted an option to purchase 35,000 shares at $1.20 per share and Mr. Lefkovits, a former director was granted an option to purchase 15,000 shares at $1.20 per share. These options vested immediately.

Employment Agreement

Under an employment agreement dated February 1, 2002, and renewed for one year as of February 1, 2005, Gerald W. Montiel serves as our Chairman of the Board, Chief Executive Officer and Chief Marketing Officer. Under the agreement, Mr. Montiel earns a minimum base salary of $100,000 per year, beginning October 1, 2002. He may be awarded bonuses at the discretion of the Board of Directors. He is entitled to the employee benefits we offer to all of our employees. If Mr. Montiel’s employment is terminated for any reason other than (i) by Mr. Montiel’s voluntary resignation, (ii) by his death, disability or normal retirement or (iii) by us for cause, Mr. Montiel will be entitled to severance compensation equal to one year’s salary. During the term of this agreement Mr. Montiel agreed to protect our confidential information, to refrain from competing with us, and to assign to us all rights in intellectual property developed by him during the term of his employment.

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information as of September 30, 2005 relating to the beneficial ownership of common stock by (i) each stockholder known to own beneficially more than five percent of the outstanding shares of our common stock, (ii) each director, (iii) each named executive officer, and (iv) all our current executive officers and directors as a group. This table is based upon information supplied by our directors and our named executive officers, principal stockholders and Schedules 13D and 13G filed with the Securities and Exchange Commission, (“SEC”). Unless otherwise indicated, the individual stockholders named in the table have sole

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voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Applicable ownership is based on 4,301,806 shares of common stock outstanding on September 30, 2005, and calculated pursuant to SEC Rule 13d-3(d)(1), which includes the number of shares acquirable within 60 days.


Name and Address of Beneficial Owner	Owned at September 30, 2005		Percent of Class
Gerald W. Montiel 1405 South Coast Highway Oceanside, CA 92054	1,264,000	⁽¹⁾	29.4	%

Norman Lefkovits, Jr. 41700 Pacific Coast Highway Malibu, CA 90265	235,625	⁽²⁾	5.4	%

Raymond W. Grimm, Jr. P. O. Box 8501 Rancho Santa Fe, CA 92067	12,500	⁽³⁾	0.3	%

W. Brent Robinson 3734 Promontory Street San Diego, CA 92109	64,104	⁽⁴⁾	1.5	%

Todd W. Schmidt 1405 South Coast Highway Oceanside, CA 92054	119,791	⁽⁵⁾	2.7	%

All executive officers and directors as a group (four persons)	1,460,395		32.67	%

⁽¹⁾	Includes 1,256,000 shares held by Montiel Family, LLC. Gerald W. Montiel is the Managing Partner of Montiel Family, LLC and claims beneficial ownership of these shares.

⁽²⁾	Includes 33,125 shares issuable upon exercise of stock options.

⁽³⁾	Includes 12,500 shares held by the Grimm Family Trust. Mr. Grimm is a trustee of the Grimm Family Trust.

⁽⁴⁾	Includes 61,874 shares issuable upon exercise of stock options.

⁽⁵⁾	Includes 119,791 shares issuable upon exercise of stock options.

Equity Incentive Plan

The description that follows is an overview of the material provisions of the Equity Incentive Plan (the “Plan”). Under the Plan, we may grant to our designated employees, officers, directors, advisors and independent contractors incentive stock options, nonqualified stock options, restricted stock and stock appreciation rights. By encouraging stock ownership, we seek to motivate Plan participants by allowing them an opportunity to benefit from any increased value of our company which their effort, initiative, and skill help produce.

General

Up to 750,000 shares of common stock are authorized for issuance under the terms of the plan. No more than 250,000 shares may be granted to any individual in any three-year period. If options granted under the Plan expire or are terminated for any reason without being exercised, or shares of restricted stock are forfeited, the shares of common stock underlying such grant will again be available for purposes of the Plan.

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Administration of the Plan

The Compensation Committee determines which individuals will receive grants, the type, size and terms of the grants, the time when the grants are made and the duration of any applicable exercise or restriction period, including the criteria for vesting and the acceleration of vesting, and the total number of shares of common stock available for grants.

Eligibility for participation

Grants may be made to employees, officers, directors, advisors and independent contractors of the Company and its subsidiaries, including any non-employee member of the board of directors.

Options

Incentive stock options may be granted only to officers and directors who are employees. Nonqualified stock options may be granted to employees, officers, directors, advisors and independent contractors. The exercise price of an option will be determined by the Compensation Committee and may be equal to, greater than, or less than the fair market value but in no event less than 50% of the fair market value of a share of common stock at the time of grant; provided that:

•

the exercise price of an incentive stock option must be equal to or greater than the fair market value of a share of common stock on the date of grant, and

•

the exercise price of an incentive stock option granted to an employee who owns more than 10% of the issued and outstanding common stock must not be less than 110% of the fair market value of the underlying shares of common stock on the date of grant.

Although not a provision of the Plan, the Compensation Committee will not grant stock options to officers, directors, employees, promoters, 5% stockholders or affiliates with an exercise price of less than 85% of the fair market value of the stock.

The Compensation Committee determines the term of each option, which may not exceed ten years from the date of grant, except that the term of an incentive stock option granted to an employee who owns more than 10% of the common stock may not exceed five years from the date of grant. The Compensation Committee may accelerate the exercisability of any or all outstanding options at any time for any reason.

Restricted stock

The Compensation Committee determines the number of shares of restricted stock granted to a participant and may subject any grant to performance requirements, vesting provisions, transfer restrictions and other restrictions and conditions as the Compensation Committee may determine in its sole discretion. The restrictions shall remain in force during a restricted period set by the Compensation Committee.

Stock appreciation rights

The Compensation Committee may grant a participant the right to receive, in cash or stock, the amount of any appreciation in the value of our stock over the exercise price of the stock appreciation right, which is set by the committee at the time of grant. The Compensation Committee has the same discretion to determine the terms of stock appreciation rights, including exercise price and vesting schedule that it has in the case of nonqualified stock options.

Termination of employment

If a participant leaves our employment, other than because of retirement, death or disability, the participant will forfeit any stock options or stock appreciation rights that are not yet vested, and any restricted stock for which the restrictions are still applicable, unless the participant remains as a non-employee director, advisor or independent contractor. Options granted in fiscal year 2005 are not subject to forfeiture if a participant leaves our employment.

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Amendment and termination of the Plan

The Compensation Committee may amend or terminate the Plan at any time, except that it may not make any amendment that requires stockholder approval as provided in Rule 16b-3 of the Exchange Act or Section 162(m) of the Internal Revenue Code without stockholder approval. The Plan will terminate on the day immediately preceding the tenth anniversary of its effective date, unless terminated earlier by the Compensation Committee.

New Plan Benefits

Stock incentive awards under the Plan are discretionary, so no future awards are determinable at this time.

Item 12. Certain Relationships and Related Transactions

License Agreement

We have been granted the exclusive and unlimited right to use the name, image and likeness of the Dickie Walker vessel in connection with the sale of our products and for our business generally. This right was granted under a license agreement between Gerald W. Montiel and us. The agreement was effective as of February 1, 2002 and has a 99-year term. Under the agreement, we have a right of first refusal to purchase the Dickie Walker vessel at fair market value. We also have the exclusive right to establish and protect trademarks that use the vessel’s name, image, structure or likeness. The agreement is binding on all subsequent owners of the vessel. We may terminate the agreement upon notice to Mr. Montiel, but he may terminate the agreement only in the event of a material breach by us. This agreement was approved by a majority of our disinterested directors who had access, at our expense, to our legal counsel or independent legal counsel.

Reimbursement Agreement

Mr. Montiel also has agreed to make the vessel available to us for corporate events, photo shoots and promotions pursuant to an agreement between Mr. Montiel, dated February 1, 2002 and us. Under the agreement we reimburse Mr. Montiel for expenses incurred in connection with our use of the vessel, including cost of crew, fuel, docking fees and maintenance. We are entitled to use the vessel a minimum of 60 days per year. The agreement has a 99-year term but may be terminated by us on 30 days’ notice. This agreement was approved by a majority of our disinterested directors. For the years ended September 30, 2005, 2004 and 2003, the Company paid approximately $48,000, $45,000 and $36,000, respectively, in connection with this arrangement.

Loan from Gerald W. Montiel

On March 2, 2005, Mr. Montiel loaned us a total of $53,902.07, the proceeds of which were used to pay off leases on embroidery machines. The note is payable on demand and accrues interest at 8.0% per annum. This loan was repaid on November 2, 2005.

Item 14. Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed for professional services rendered by Mendoza Berger & Company LLP for the audit of our annual financial statements for fiscal 2005 was $26,030. Ernst & Young LLP, our prior principal accountants resigned on September 14, 2005. The aggregate fees billed for professional services rendered by Ernst & Young LLP for the audit of our annual financial statements for fiscal 2004 and the review of our financial statements included in our Forms 10-QSB for fiscal 2005 and fiscal 2004 were $25,801 and $71,778, respectively.

Audit Related Fees

Audit related fees include billings for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, and are not reported as Audit Fees. The aggregate fees billed for audit related services during fiscal 2005 and fiscal 2004 were $5,372 and $3,000, respectively. These services consisted of assistance and consultation by Ernst & Young in responding to a questions arising from a review by the Securities and Exchange Commission of the Company’s periodic filings in fiscal 2005 and assistance and consultation in the preparation and filing of Form S-8 in fiscal 2004.

Tax Fees

The aggregate fees billed for tax services, including tax planning and preparation during fiscal 2005 and fiscal 2004 were $0 and $0, respectively.

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All Other Fees

In fiscal 2005, Ernst & Young LLP billed the Company $4,500 for work performed in review of the Company’s Form S-4 and $2,400 for work performed in the review of the Company’s Form 8-K reporting the resignation of Ernst & Young as the Company’s principal accountants. The Company did not engage Ernst & Young LLP on any other matters not otherwise included in the above categories in fiscal 2004.

Audit Committee Pre-Approval Policy

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services include audit and audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, in Oceanside, State of California, on January 24, 2006.


DICKIE WALKER MARINE, INC.

By		/s/ Gerald W. Montiel
		Gerald W. Montiel, President

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