UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A AMENDMENT NO. 2
(Mark One)
[X] Annual report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2005
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 0-19437
CELLULAR TECHNICAL SERVICES COMPANY, INC.
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(Name of Small Business Issuer as Specified in Its Charter)
Delaware 11-2962080
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
20 East Sunrise Highway, Suite 200, Valley Stream, NY 11581
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(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (516) 568-0100
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
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(Title of Class)
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act [ ]
Indicate by check mark whether the Registrant (1) has 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 the 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 herein in any 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 ]
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [X] No [ ]
The Issuer had no revenue for the fiscal year ended December 31, 2005.
As of October 1, 2006 there were 4,586,757 shares of Common Stock, $.001 par
value outstanding.
As of October 1, 2006 the aggregate market value of the Registrant's Common
Stock, $.001 par value, held by non-affiliates was approximately $8.7 million.
The aggregate market value of the Company's stock was calculated using $1.90,
the closing price for its Common Stock on October 1, 2006 as reported on the
over-the-counter bulletin board.
Transitional Small Business Disclosure Format Yes [ ] No [X]
INTRODUCTION
Cellular Technical Services Company, Inc. is filing this Amendment on
Form 10-KSB/A to amend its Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2005, as filed with the Securities and Exchange Commission
(the "SEC") on March 31, 2006, as amended by a filing with the SEC on April 10,
2006 (collectively, the "Original Filing"). The purpose of this Amendment is to
amend in their entirety Items 10, 11, 12, 13 and 14 of the Original Filing. This
Amendment does not otherwise update information in the Original Filing to
reflect facts or events occurring subsequent to the date of the Original Filing.
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Item 10. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table sets forth information concerning annual and long-term
compensation, paid or accrued, for the Named Executive Officers (as said term is
defined in Item 402 of Regulation S-B) for services in all capacities to the
Company during fiscal years 2005, 2004 and 2003.
Annual Compensation Long Term Compensation Awards(1)
----------------------------------------- ------------------------------------------------
Other Annual Restricted Securities All Other
Year Salary Bonus Compensation Stock Awards(2) Underlying Options Compensation
---- ------ ----- ------------ -------------- ------------------ ------------
Stephen Katz
Chairman of the Board of 2005 $ 0 $ 0 $ 0 $ 0 0 $ 0
Directors and Chief 2004 $ 0 $ 0 $ 0 $ 6,753 15,000 $ 0
Executive Officer 2003 $ 0 $ 0 $ 0 $ 59,400 0 $ 0
Kenneth Block 2005 $ 0 $ 0 $ 0 $ 0 0 $ 0
Chief Financial 2004 $ 0 $ 0 $ 0 $ 0 0 $ 0
Officer 2003 $ 0 $ 0 $ 0 $ 0 0 $ 0
1. None of the Named Executive Officers received any LTIP Payouts in 2005, 2004
or 2003.
2. The stock awards granted to Stephen Katz in 2004 and 2003 vested after one
year. The values set forth above are based on the closing prices of $0.73 and
$0.66 respectively, on the dates the plan was approved by the Compensation
Committee of the Board of Directors. The value of the grants at December 31,
2005 was $208,425.
No stock options or SARs were granted during 2005.
Aggregated Option Exercises in 2005 and Year-End Option Values
The following table sets forth information with respect to the exercise of stock
options during 2005 by the Named Executive Officers and unexercised options held
by them on December 31, 2005.
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Number of Securities Value of Unexercised
Shares Underlying Unexercised Options In-the-Money Options at
Acquired on Value at December 31, 2005 December 31, 2005
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------------ -------------------------
Stephen Katz None -- 110,650/2,750 $29,430/$2,220
Kenneth Block None -- -- --
1. There were no SAR exercises during 2005 and no SARs were outstanding at
December 31, 2005.
2. The closing price for the Company's Common Stock as reported on the Over the
Counter Bulletin Board on December 31, 2005 was $2.10 per share. Value is
calculated by multiplying; (i) the difference between $2.10 and the option
exercise price, by (ii) the number of shares of Common Stock underlying the
option.
Director Compensation
No payments were made to non-employee directors during 2005.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table and footnotes thereto set forth, as of September 26, 2006,
information with respect to the beneficial ownership of the Company's Common
Stock by: (i) each person known by the Company to beneficially own more than 5%
of the outstanding shares of Common Stock; (ii) each director of the Company;
(iii) the Named Executive Officers; and (iv) all current directors and executive
officers of the Company as a group.
Amount And Nature of
Name of Beneficial Owners Beneficial Ownership(1) Percent of Outstanding Shares
------------------------- ----------------------- -----------------------------
Phillip Frost 1,400,000(2) 30.5%
Stephen Katz 251,173(3) 5.5%
Jane Hsiao 200,000 4.4%
Richard Pfenniger 100,000 2.2%
Lawrence J. Schoenberg 76,850(4) 1.2%
Joshua J. Angel 55,850(5) 1.2%
Kenneth Block 5,000 *
All directors and executive officers
as a group (7 persons) 2,088,873(6) 45.4%
*Less than 1%
1. Unless otherwise indicated, each person or group has sole voting and
investment power with respect to such shares. For purposes of this
table, a person or group of persons is deemed to have "beneficial
ownership" of any shares which such person or group has the right to
acquire within 60 days. For purposes of computing the percent of
outstanding shares held by each person or group named above as of a
given date, any shares which such person or group has the right to so
acquire are deemed to be outstanding, but are not deemed to be
outstanding for the purpose of computing the percentage owned by any
other person or group.
2. These shares are held by Frost Gamma Investments Trust ("Frost Trust"),
of which Dr. Frost is the trustee and Frost Gamma, Limited Partnership
is the sole and exclusive beneficiary. Dr. Frost is the sole limited
partner of Frost Gamma, Limited Partnership. The general partner of
Frost Gamma, Limited Partnership is Frost Gamma, Inc. and the sole
shareholder of Frost Gamma, Inc.
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is Frost-Nevada Corporation. Dr. Frost is also the sole shareholder of
Frost Nevada Corporation. As such, Dr. Frost may be deemed the
beneficial owner of all shares owned by the Frost Trust by virtue of
his power to vote or direct the vote of such shares or to dispose or
direct the disposition of such shares owned by the Frost Trust.
3. Includes 41,273 shares held by a partnership controlled by Mr. Katz.
Also includes 110,650 shares subject to currently exercisable options,
23,000 of which are at prices lower than the market price of the
Company's Common Stock.
4. Includes 40,600 shares subject to currently exercisable options,
17,400 of which are at prices lower than the market price of the
Company's Common Stock.
5. Includes 20,600 shares subject to currently exercisable options,
17,400 of which are at prices lower than the market price of the
Company's Common Stock.
6. Includes an aggregate of 171,850 shares subject to currently
exercisable options, 57,800 of which are at prices lower than the
market price of the Company's Common Stock and 41,273 shares held by a
partnership controlled by Mr. Katz.
Equity Compensation Plan Information
The following table provides information about the Company's equity compensation
plans as of December 31, 2005.
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A B C
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Plan Category Number of securities to be Weighted average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under equity
warrants and rights rights securities compensation plans (excluding
reflected in column (A) securities reflected in
column (A))
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Equity compensation plans 174,600 $1,419,959 0
approved by security holders
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Equity compensation plans not -0- 0 0
approved by security holders
Total: 174,600 $1,419,959 0
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Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 12, 2005, the Company entered into a Securities Purchase Agreement (the
"Agreement") with certain purchasers including Frost Gamma Investments Trust
("Frost Trust"), Richard C. Pfenniger, Jr. and Jane Hsiao (collectively, the
"Purchasers"). Pursuant to the Agreement, the Company sold to the Purchasers an
aggregate of 2,100,000 shares, or 43% of the outstanding shares, of the common
stock of the Company, par value $0.001 per share (the "Common Stock"). The
purchase price for the sale of the Common Stock was $0.75 per share in cash for
an aggregate price of $1,425,000. Pursuant to the Agreement, the Company
appointed Dr. Phillip Frost, Richard C. Pfenniger, Jr. and Jane Hsiao to the
Board of Directors.
Pursuant to the Agreement, Frost Trust purchased 1,400,000 shares of Common
Stock for a cash purchase price of $1,050,000, or 32% of the outstanding shares
of Common Stock. Dr. Phillip
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Frost controls Frost Trust. Richard C. Pfenniger, Jr. purchased 100,000 shares
of Common Stock for an aggregate purchase price of $75,000 and Jane Hsiao
purchased 200,000 shares of Common Stock at an aggregate purchase price
of $150,000.
Item 13. Exhibits:
3.1 Restated Certificate of Incorporation of the Registrant, as amended (1)
3.2 Amendment to Restated Certificate of Incorporation of the Registrant (5)
3.3 By-Laws of the Registrant (1)
3.4 Amendment I to By-Laws of the Registrant, dated October 28, 1993 (3)
4.1 Specimen Certificate for Common Stock of Registrant (1)
7.1 1991 Qualified Stock Option Plan (as amended as of November 30, 1993)
(+)(2)
7.2 Amendment to 1991 Qualified Stock Option Plan dated July 11, 1996 (+)(5)
7.3 1991 Non-Qualified Stock Option Plan (as amended as of November 30, 1993)
(+)(2)
7.4 Amendment to 1991 Non-Qualified Stock Option Plan dated July 11, 1996
(+)(5)
7.5 1993 Non-Employee Director Stock Option Plan (+)(3)
7.6 Amendment to 1993 Non-Employee Director Stock Option Plan dated July 11,
1996 (+)(5)
7.7 Amendment to 1993 Non-Employee Director Stock Option Plan dated April 22,
1999 (+)(6)
7.8 1996 Stock Option Plan (+)(4)
7.9 Amendment to 1996 Stock Option Plan dated December 14, 1998 (+)(4)
7.10 2002 Stock Incentive Plan+ (7)
14.1 Code of Ethics Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002
(8)
21.1 Subsidiaries of the Registrant (9)
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23.1 Consent of Stonefield Josephson, Inc., independent auditors (9)
31.1 Rule 13a-14(a)/15d-14(a) Certification by CFO (10)
31.2 Rule 13a-14(a)/15d-14(a) Certification by CEO (10)
32.1 Section 1350 Certifications (10)
(+) Management contract or compensation plan or arrangement required to be
noted as provided in Item 14(a)(3).
(1) Incorporated by reference to Registration Statement on Form S-1 declared
effective on August 6, 1991 (File No. 33-41176).
(2) Incorporated by reference to Registration Statement on Form S-8 filed on
March 7, 1994 (File No. 33-76128).
(3) Incorporated by reference to Annual Report on Form 10-K filed on March 30,
1994 for the year ended December 31, 1993 (File No. 0-19437).
(4) Incorporated by reference to Quarterly Report on Form 10-Q filed on August
8, 1995 for the quarter ended June 30, 1995 (File No. 0-19437).
(5) Incorporated by reference to Annual Report on Form 10-K filed on March 30,
1999 for the year ended December 31, 1998 (File No. 0-19437).
(6) Incorporated by reference to Annual Report on Form 10-K filed on March 29,
2000 for the year ended December 31, 1999 (File No. 0-19437).
(7) Incorporated by reference to Proxy Statement filed April 23, 2005 (File
No.0-19437).
(8) Incorporated by reference to Annual Report on Form 10-K filed on March 30,
2004 for the year ended December 31, 2003 (File No. 0-19437).
(9) Incorporated by reference to Annual Report on Form 10-KSB filed on
March 31, 2006 for the year ended December 31, 2005 (file No. 0-19437)
(10) Filed herewith.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The firm of Stonefield Josephson, Inc. ("Stonefield"), served as the Company's
independent accountants for the years ended December 31, 2004 and 2005.
Audit Fees: Audit fees billed to the Company by Stonefield for its audit of the
Company's consolidated annual financial statements for the year ended December
31, 2005 and for its review of the financial statements included in the
Company's Quarterly Reports on Form 10-Q filed with the SEC for that year
totaled $ 1,841. Audit fees billed to the Company by Stonefield for its audit of
the Company's consolidated annual financial statements for the year ended
December 31, 2004 and for its review of the financial statements included in the
Company's Quarterly Reports on Form 10-Q filed with the SEC for that year
totaled $8,993.
Audit-Related Fees: The Company did not engage Stonefield to provide any audit
related fees to the Company during the years ended December 31, 2004 and 2005.
Tax Fees: No tax fees were billed to the Company for the years ended December
31, 2004 and 2005 by Stonefield Josephson, Inc.
All Other Fees: The Company did not engage Stonefield to provide any other
non-audit services to the Company during 2004 or 2005.
In connection with the revised standards for independence of the Company's
independent public accountants promulgated by the SEC, the Audit Committee
considered whether the provision of such services was compatible with
maintaining the independence of Stonefield Josephson, Inc. There were no such
services provided in 2004 or 2005. The Audit Committee pre-approved all fees for
2004 and 2005.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Cellular Technical Service Company, Inc.
Registrant
By: /s/ Stephen Katz
---------------------------------
Stephen Katz, Chairman of the Board of
Directors and Chief Executive Officer
Date: October 12, 2006
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