-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AOY91vChcbueRQZ0ePGpKCaMp9smf2nkb9QGk7BnuN2+5lChB7/IJEO3kEu0cikk PSAGsmpeal1KAw5epFXEug== 0001021771-00-000019.txt : 20000203 0001021771-00-000019.hdr.sgml : 20000203 ACCESSION NUMBER: 0001021771-00-000019 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAUPPAUGE DIGITAL INC CENTRAL INDEX KEY: 0000930803 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 113227864 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-13550 FILM NUMBER: 515868 BUSINESS ADDRESS: STREET 1: 91 CABOT COURT CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5164341600 MAIL ADDRESS: STREET 1: 91 CABOT COURT CITY: HAUPPAUGE STATE: NY ZIP: 11788 10-K/A 1 HAUPPAUGE DIGITAL, INC. FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A Amendment No. 1 (Mark One) (x) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1999 ------------------- ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------- -------- Commission file number 1-13550 HAUPPAUGE DIGITAL, INC. (Name of small business issuer in its charter) Delaware 11-3227864 (State or other jurisdiction of (I.R.S Employer incorporation or organization) Identification No.) 91 Cabot Court, Hauppauge, New York 11788 (Address of principal executive offices) (Zip Code) Issuer's telephone number (516) 434-1600 Securities registered pursuant to Section 12 (b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: $.01 par value Common Stock Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act of 1934 during the past twelve (12) months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past ninety (90) days. YES X NO ----- Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K 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-K or any amendment to this Form 10-K: [ ] State registrant's revenues for its most recent fiscal year: $58,601,611 The aggregate market value of the voting stock held by non-affiliates of the registrant as of December 17, 1999 was approximately $86,248,337. Non-affiliates include all shareholders other than officers, directors and 5% shareholders of the Company. Market value is based upon the price of the Common Stock as of the close of business on December 17, 1999 which was $23.50 per share as reported by NASDAQ. As of December 17, 1999, the number of shares outstanding of the Common Stock was 4,349,002 shares (exclusive of treasury shares). DOCUMENTS INCORPORATED BY REFERENCE None. PART III Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Directors and Executive Officers The following persons are the Directors and Executive Officers of the Company. Name Age(1) Officer and Positions Held Kenneth R. Aupperle 42 President, Chief Operations Officer and Director Kenneth Plotkin 48 Chairman of the Board of Directors, Chief Executive Officer, Vice- President in charge of Marketing, Secretary and Director Gerald Tucciarone 44 Chief Financial Officer and Treasurer John Casey 43 Vice-President in charge of Technology Bernard Herman 72 Director Steven J. Kuperschmid 39 Director (1) Age as of January 28, 2000. Kenneth R. Aupperle is a co-founder of the Company. He has been the Company's President and Chief Operations Officer since the Company's incorporation. Mr. Aupperle holds a BS in Electrical Engineering and an MS in Computer Science from Polytechnic University, along with additional work toward a Ph.D. Kenneth Plotkin is a co-founder of the Company. He has been the Company's Chairman of the Board of Directors and Chief Executive Officer since the Company's incorporation. Mr. Plotkin is presently Secretary of the Company and is Vice-President in charge of marketing. He holds a BS and an MS in Electrical Engineering from the State University of New York at Stony Brook. Gerald Tucciarone, prior to his employment with the Company in January, 1995, served as a Vice- President of Finance from 1985 to 1992 with Walker-Telecommunications, Inc., a manufacturer of phones and voice-mail equipment, and from 1992 to 1995, as Assistant Controller with Chadbourne and Parke. Mr. Tucciarone is a certified public accountant. John Casey has been the Company's Vice-President in charge of Technology for more than the past five years. Bernard Herman, from 1979 to 1993, was Chief Executive Officer of Okidata Corp. 3 of Mount Laurel, New Jersey, a distributor of computer peripheral products. Since then he has served as a consultant with reference to computer products. Steven J. Kuperschmid has been practicing law since 1986 and has been a partner with Certilman Balin Adler & Hyman, LLP, counsel to the Company, since January 1, 1994. Mr. Kuperschmid received his BA from New York University and JD from Fordham University School of Law. Section 16(a) Beneficial Ownership Reporting Compliance Section 16 of the Securities Exchange Act of 1934, as amended ("Section 16"), requires that reports of beneficial ownership of capital stock and changes in such ownership be filed with the Securities and Exchange Commission (the "SEC") by Section 16 "reporting persons," including directors, certain officers, holders of more than 10% of the outstanding Common Stock and certain trusts of which reporting persons are trustees. The Company is required to disclose in this Annual Report on Form 10-K each reporting person whom it knows to have failed to file any required reports under Section 16 on a timely basis during the fiscal year ended September 30, 1999 or prior fiscal years. To the Company's knowledge, based solely on a review of copies of Forms 3, 4 and 5 furnished to it and written representations that no other reports were required, during the fiscal year ended September 30, 1999, the Company's officers, Directors and 10% stockholders complied with all Section 16(a) filing requirements applicable to them except: Mr. Plotkin failed to file two reports relative to two transactions. Mr. Aupperle failed to file one report relative to one transaction. Mr. Tucciarone failed to file one report relative to one transaction. Mr. Casey failed to file two reports relative to three transactions. Mr. Herman failed to file one report relative to one transaction. Mr. Kuperschmid failed to file one report relative to one transaction. To the Company's knowledge, based solely on a review of copies of Forms 3, 4 and 5 furnished to it and written representations that no other reports were required, during the fiscal year ended September 30, 1998, the Company's officers, Directors and 10% stockholders complied with all Section 16(a) filing requirements applicable to them except: Mr. Plotkin failed to file two reports relative to four transactions. Mr. Aupperle failed to file one report relative to three transactions. Mr. Tucciarone failed to file three reports relative to two transactions. Mr. Casey failed to file one report relative to two transactions. Mr. Herman failed to file one report relative to one transaction. Mr. Kuperschmid failed to file one report relative to one transaction. To the Company's knowledge, based solely on a review of copies of Forms 3, 4 and 5 furnished to it and written representations that no other reports were required, during the fiscal year ended September 30, 1996, the Company's officers, Directors and 10% stockholders complied with all Section 16(a) filing requirements applicable to them except: Mr. Plotkin failed to file one report relative to one transaction. Mr. Aupperle failed to file one report relative to one transaction. Mr. Tucciarone failed to file one report relative to one transaction. 4 Item 11. Executive Compensation Summary Compensation Table The following table sets forth certain information for the fiscal years ended September 30, 1999, 1998 and 1997 concerning the compensation of Kenneth Plotkin, Chairman of the Board, Chief Executive Officer, Vice-President in charge of Marketing, Secretary and Director of the Company, Kenneth R. Aupperle, President , Chief Operating Officer and Director of the Company, John Casey, Vice President in charge of Technology of the Company and Gerald Tucciarone, Chief Financial Officer and Treasurer of the Company. No other Executive Officer of the Company had a combined salary and bonus in excess of $100,000 for the fiscal year ended September 30, 1999.
Annual Compensation Long Term Compensation ------------------- ---------------------- Other Annual Common Stock Underlying Name and Principal Position Year Salary Bonus Compensation Options Granted - --------------------------- ---- ------ ----- ------------ -------------------- Kenneth Plotkin 1999 $ 142,145 $ 41,848 $ 6,000(1) -0- Chairman of the Board, Chief Executive Officer, Vice- 1998 $ 120,412 -0- $ 5,500(1) 75,000 President in charge of Marketing and Director 1997 $ 94,016 -0- $ 4,800(1) -0- Kenneth R. Aupperle 1999 $ 142,145 $ 41,848 $ 6,000(1) -0- President, Chief Operations Officer and Director 1998 $ 120,412 -0- $ 5,500(1) 75,000 1997 $ 94,016 -0- $ 4,800(1) -0- John Casey 1999 $ 110,000 $ 8,471 -0- 4,000 Vice President in charge of Technology 1998 $ 110,888 -0- -0- 15,500 1997 $ 103,574 -0- -0- 4,500 Gerald Tucciarone 1999 $ 100,193 $ 8,471 -0- 8,000 Chief Financial Officer and Treasurer 1998 $ 95,600 -0- -0- 9,500 1997 $ 86,554 -0- -0- 3,500
- ------------------- (1) Represents non-cash compensation in the form of the use of a car and related expenses. 5 Option Grants in Last Fiscal Year The following table sets forth certain information concerning individual grants of stock options during the fiscal year ended September 30, 1999:
Number of Shares of Percentage of Total Common Stock Underlying Options Granted to Name Options Granted Employees in Fiscal Year Exercise Price Expiration Date - ---- ----------------------- ------------------------ -------------- --------------- Kenneth Plotkin -0- -0- N/A N/A Kenneth R. Aupperle -0- -0- N/A N/A John Casey 4,000 2% $7.88 March 22, 2009 Gerald Tucciarone 8,000 4% $7.88 March 22, 2009
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value Table The following table sets forth certain information concerning the value of options unexercised as of September 30, 1999:
Number of Shares of Common Stock Underlying Value of Unexercised In- Number of Shares of Unexercised Options at the-Money Options at Common Stock September 30, 1999 September 30, 1999 Name Acquired on Exercise Realized Value Exercisable/Unexercisable Exercisable/Unexercisable - ---- -------------------- -------------- ------------------------- ------------------------- Kenneth Plotkin -0- -0- 123,000/117,000 $2,813,625/$2,676,375 Kenneth R. Aupperle -0- -0- 123,000/117,000 $2,813,625/$2,676,375 John Casey 4,000 $ 22,640 8,000/22,000 $183,000/$503,250 Gerald Tucciarone 10,000 $217,300 2,000/20,000 $45,750/$457,500
Compensation of Directors Directors of the Company are not compensated solely for being on the Board of Directors. However, during the fiscal year ended September 30, 1999, 5,000 non-qualified options were issued to each of Messrs. Herman and Kuperschmid. See "Security Ownership of Certain Beneficial Owners and Management". It is the intention of the Company to issue non-qualified options in the future to non-employee directors. Employment Contracts; Termination of Employment and Change-in-Control Arrangements As of January 10, 1998, after the expiration of their prior employment agreements with the Company, Kenneth R. Aupperle and Kenneth Plotkin each entered into employment agreements (the "1998 Employment Agreements") with the Company to serve as President and Chief Operations 6 Officer, and Chief Executive Officer, Vice-President in charge of Marketing and Secretary, respectively. The 1998 Employment Agreements each provide for a three year term which term is automatically renewable each year unless otherwise terminated by the Board of Directors or the executive. The 1998 Employment Agreements provide for an annual base salary of $125,000 during the first year, $150,000 during the second year, and $180,000 during the third year. For each Annual Period (as defined in the 1998 Employment Agreements) thereafter, the 1998 Employment Agreements provide that compensation shall be as mutually determined between the Company and the executive, but not less than that for the preceding Annual Period. In addition, the 1998 Employment Agreements provide for a bonus to be paid as follows: an amount equal to 2% of the Company's earnings, excluding earnings that are not from operations, before reduction for interest and income taxes ("EBIT"), for each fiscal year starting with the year ended September 30, 1998, provided that the Company's EBIT for the applicable fiscal year exceeds 120% of the prior fiscal year's EBIT and if not, then 1% of the Company's EBIT. The determination of EBIT shall be made in accordance with the Company's audited filings with the Securities and Exchange Commission on its Form 10-KSB or Form 10-K. Pursuant to the 1998 Employment Agreements, on January 21, 1998, options to acquire a total of 32,500 shares of Common Stock of the Company were granted to Messrs. Aupperle and Plotkin, in equal shares, exercisable, beginning on January 21, 1999, in increments of 33 1/3% per year at $5.0875 per share. This option expires as of January 20, 2003. Also on January 21, 1998, pursuant to the 1998 Employment Agreements, options to acquire a total of 60,000 shares of Common Stock of the Company were granted to Messrs. Aupperle and Plotkin, in equal shares, exercisable, beginning on January 21, 1999, in increments of 20% per year at $4.625 per share. This option expires as of January 20, 2008. Additionally on January 21, 1998, pursuant to the 1998 Employment Agreements, options to acquire a total of 57,500 shares of Common Stock of the Company were granted to Messrs. Aupperle and Plotkin, in equal shares, exercisable, beginning on January 21, 1999, in increments of 33 1/3% per year at $5.0875 per share. This option expires as of January 20, 2003. The 1998 Employment Agreements further provide for disability benefits, term life insurance in the amount of $500,000 each for the benefit of the executives' families and the Company, a car allowance of $500 per month, reasonable reimbursement for automobile expenses, and medical insurance as is standard for executives of the Company. In the event of a Change in Control in the Company (as defined in the 1998 Employment Agreements), a one-time bonus shall be paid to the executive equal to three times the amount of the executive's average annual compensation (including salary, bonus and benefits) received by him for the thirty-six month period preceding the date of the Change of Control. Item 12. Security Ownership of Certain Beneficial Owners and Management Common Stock The following table sets forth, to the knowledge of the Company based solely upon records available to it, certain information as of January 28, 2000 regarding the beneficial ownership of the Company's Common Stock (i) by each person who the Company believes to be the beneficial owner of more than 5% of its outstanding shares of Common Stock, (ii) by each current Director, (iii) by each person listed in the Summary Compensation Table under "Executive Compensation" and (iv) by all current executive officers and Directors as a group: 7 Name of Management Person and Name and Address of Beneficial Owner Number Percent - ------------------- ------ ------- Kenneth Plotkin(1)(2) 451,150(3) 10.4% 91 Cabot Court Hauppauge, NY 11788 Kenneth R. Aupperle(1)(2) 442,610(4) 10.2% 91 Cabot Court Hauppauge, NY 11788 Laura Aupperle(1)(2) 302,550(2) 7.0% 23 Sequoia Drive Hauppauge, NY 11788 Dorothy Plotkin(1)(2) 305,950(2) 7.0% 21 Pine Hill Drive Hauppauge, NY 11788 LCO Investments Limited 235,000 5.4% c/o Richards & O'Neil, LLP 885 Third Avenue New York, NY 10022 John Casey 59,100(5) 1.4% Bernard Herman 18,000(6) * Gerald Tucciarone 9,000(7) * Steven J. Kuperschmid 5,000(8) * Directors and executive officers as a group (6 persons) 984,860(9) 22.6% - --------------------------------- * Less than one (1%) percent. (1) Laura Aupperle, wife of Kenneth R. Aupperle, beneficially owns 302,550 shares, or 7.0% of the outstanding shares of Common Stock of the Company. Dorothy Plotkin, wife of Kenneth Plotkin, beneficially owns 305,950 shares or 7.0% of the outstanding shares of Common Stock of the Company. Ownership of shares of Common Stock by each individual does not include ownership by that person's spouse which is disclaimed by the named individual. 8 (2) One presently exercisable warrant has been issued for 60,000 shares to Laddok Realty Co. ("Laddok"), of which Kenneth R. Aupperle and Kenneth Plotkin, and their wives, Laura Aupperle and Dorothy Plotkin, are partners. Each individual expressly disclaims any percentage interest in the warrant other than that which represents such partner's percentage interest in the partnership, which is equal to 15,000 shares. (3) Includes 90,000 shares of Common Stock issuable upon the exercise of currently exercisable non-qualified stock options granted on January 10, 1995 and exercisable until January 9, 2005, which options were part of an overall grant of a non-qualified stock option to purchase 150,000 shares of Common Stock at $3.15 per share. Also includes 27,000 shares of Common Stock issuable upon the exercise of currently exercisable non-qualified options and 30,000 shares of Common Stock issuable upon the exercise of currently exercisable incentive stock options. Does not include 78,000 shares of Common Stock issuable upon the exercise of currently unexercisable non-qualified stock options and 15,000 shares of Common Stock issuable upon the exercise of currently unexercisable incentive stock options. (4) Includes 90,000 shares of Common Stock issuable upon the exercise of currently exercisable non-qualified stock options granted on January 10, 1995 and exercisable until January 9, 2005, which options were part of an overall grant of a non-qualified stock option to purchase 150,000 shares of Common Stock at $3.15 per share. Also includes 21,000 shares of Common Stock issuable upon the exercise of currently exercisable non-qualified options and 30,000 shares of Common Stock issuable upon the exercise of currently exercisable incentive stock options. Does not include 78,000 shares of Common Stock issuable upon the exercise of currently unexercisable non-qualified stock options and 15,000 shares of Common Stock issuable upon the exercise of currently unexercisable non-qualified stock options. (5) Includes 12,000 shares of Common Stock issuable upon the exercise of currently exercisable incentive stock options. Does not include 18,000 shares of Common Stock issuable upon the exercise of currently unexercisable incentive stock options. (6) Includes 15,000 shares of Common Stock issuable upon the exercise of currently exercisable non-qualified stock options. (7) Includes 6,000 shares of Common Stock issuable upon the exercise of currently exercisable incentive stock options. Does not include 16,000 shares of Common Stock issuable upon the exercise of currently unexercisable incentive stock options. (8) Includes 5,000 shares of Common Stock issuable upon the exercise of currently exercisable non-qualified stock options. (9) Includes an aggregate of 326,000 shares of Common Stock issuable upon the exercise of currently exercisable incentive and non-qualified stock options. Also includes the interests of Messrs. Plotkin and Aupperle (30,000 shares of Common Stock in the aggregate) in the presently exercisable warrant described in note 2. 9 Item 13. Certain Relationships and Related Transactions The Company occupies a 25,000 square foot facility at 91 Cabot Court, Hauppauge, New York which it uses as its executive offices and for the testing, storage, and shipping of its products. The Company considers the premises to be suitable for all its needs. The building is owned by Laddok, a partnership consisting of Messrs. Aupperle and Plotkin and their wives and is leased to the Company under a lease agreement expiring on January 31, 2006 with an option of the Company to extend the lease for an additional three years. Rent is currently at the annual rate of $354,959 and will increase to $372,707 per year on February 1, 2000. The rent is payable in equal monthly installments and increases at a rate of 5% per year on February 1 of each year thereafter including during the option period. The premises are subject to two mortgages which have been guaranteed by the Company upon which the outstanding principal amount due as of September 30, 1999 was $978,655. The Company pays the taxes and operating costs of maintaining the premises. On December 17, 1996 the Board of Directors approved the issuance of warrants to Laddok in consideration of Laddok's agreement to cancel the last three years of the Company's lease and to grant an option to the Company to extend the lease for three years. The Stock Option Committee authorized the grant of a warrant to Laddok to acquire 60,000 shares at an exercise price of $3 13/16, which warrant is exercisable for a term of ten years. For a discussion regarding the employment agreements of, and stock options granted to, Messrs. Plotkin and Aupperle, see "Executive Compensation", above. 10 SIGNATURES Pursuant to the requirement 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. HAUPPAUGE DIGITAL, INC. By: /s/ Gerald Tucciarone ------------------------------------ Gerald Tucciarone, Chief Financial Officer and Treasurer 11 -----END PRIVACY-ENHANCED MESSAGE-----