sec document

10-K/A 1 form10ka04670_03312003.htm sec document

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K/A

(Mark One)

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

For the fiscal year ended March 31, 2003

[ ] 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 0-23926

GEOWORKS CORPORATION
--------------------
(Exact Name of Registrant as Specified in Its Charter)

Delaware 94-2920371
---------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

300 Crescent Court, Suite 1110, Dallas, Texas 75201
--------------------------------------------- ------------
(Address of principal (Zip Code)
executive office)

(214) 661-7479
--------------
(Registrant's Telephone Number, Including Area Code)

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

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

Common Stock, par value $.001 per share
---------------------------------------
(Title of Class)

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. [ X ] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not 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-K
or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2). [ ] Yes [X] No

The aggregate market value of the Registrant's common stock held by
non-affiliates, based upon the closing sale price of the common stock on July
22, 2003, as reported on the OTCBB, was approximately $2,460,359. Shares of the
Registrant's common stock held by each executive officer and director and by
each person who owns 10% or more of the outstanding common stock, based on
Schedule 13D or G filings, have been excluded since such persons may be deemed
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

As of July 22, 2003, there were 29,859,808 shares of the
Registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Documents Incorporated by Reference: None

Geoworks Corporation (the "Company" or "Geoworks") hereby amends
Items 10 through 13 of its Form 10-K for the fiscal year ended March 31, 2003,
as filed with the Securities and Exchange Commission on June 30, 2003, to
disclose the information originally anticipated to be incorporated by reference
from the Company's definitive proxy statement pursuant to Regulation 14A of the
General Rules and Regulations under the Securities Exchange Act of 1934.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

BIOGRAPHICAL INFORMATION FOR DIRECTORS

The names of the members of the Board of Directors (the "Board") of Geoworks
Corporation (the "Company") as of July 22, 2003, and certain information about
them are set forth below.

Director
Name Age Position with the Company Since
---- --- ------------------------- -----

Mark E. Schwarz 42 Chief Executive Officer, President and Director May 2003

Steve W. Mitchell 41 Director April 2002

Steven J. Pully 43 Executive Vice President, General Counsel, May 2003
Secretary and Director

MARK E. SCHWARZ. Mr. Schwarz joined the Board in May 2003. As of May 2003 until
the present, Mr. Schwarz has been serving as the Company's President and Chief
Executive Officer. Since 1993, Mr. Schwarz has served, directly or indirectly
through entities he controls, as the sole general partner of Newcastle Partners,
L.P. ("Newcastle"), a private investment firm. Since 2000, he has also served as
the Chief Executive Officer of Newcastle Capital Management, L.P., a private
investment management firm. From 1995 until 1999, Mr. Schwarz was also a Vice
President of Sandera Capital Management, L.L.C., a private investment firm
associated with the Lamar Hunt family. Mr. Schwarz presently serves as Chief
Executive Officer and Chairman of the Board of Hallmark Financial Services,
Inc., a property and casualty insurance company. Mr. Schwarz also presently
serves as a director of Bell Industries, Inc., a company primarily engaged in
providing computer systems integration services; Nashua Corporation, a
manufacturer of specialty papers, labels and printing supplies; Pizza Inn, Inc.,
an operator and franchisor of pizza restaurants; SL Industries, Inc., a
developer of power systems used in a variety of aerospace, computer, datacom,
industrial, medical, telecom, transportation and utility equipment applications;
WebFinancial Corporation, a banking and specialty finance company, and Pinnacle
Frames and Accents, Inc., a private company engaged in mass production of
picture frame products.

STEVE W. MITCHELL. Mr. Mitchell joined the Board in April 2002. From April 2002
through April 30, 2003, Mr. Mitchell served as the Company's President, Chief
Executive Officer and Director. Mr. Mitchell joined the Company in November 2000
as Vice President of Human Resources. From January 1999 to April 2002, Mr.
Mitchell served as chief operating officer for Aureal Inc., a semiconductor and
software firm specializing in 3-D audio for the PC industry. From June 1993 to
November 1998, Mr. Mitchell held various management positions at Nextel
Communications, a telecommunications company, where he was involved in driving
and supporting the rapid growth of the company and was responsible for
integration efforts with several acquisitions. Mr. Mitchell also had management
recruiting responsibilities at Pacific Gas and Electric and Management
Recruiters International. Mr. Mitchell holds a B.A. in English from the
California State University at Hayward.

STEVEN J. PULLY. Mr. Pully joined the Board in May 2003. Since June 2003, Mr.
Pully has served as the Company's Secretary, Executive Vice President and
General Counsel. Mr. Pully is the president of Newcastle Capital Management,
L.P., a private investment management firm; and is currently a director of Pizza
Inn Inc., an operator and franchisor of pizza restaurants and a director and
chief executive officer of privately-held Pinnacle Frames and Accents, Inc., a
company engaged in mass production of picture frame products. Prior to becoming
affiliated with Newcastle Capital Management, L.P. in late 2001, from May 2000
to December 2001, Mr. Pully was a managing director in the mergers and
acquisitions department of Banc of America Securities and from January 1997 to
May 2000 was a senior managing director at Bear Stearns. Prior to becoming an
investment banker, Mr. Pully practiced securities and corporate law at Baker &
Botts. Mr. Pully is a CPA and a member of the Texas Bar. He graduated with a
BSBA from Georgetown University and a J.D. from The University of Texas.

On January 2003, the following directors of the Company resigned from the Board:
Mr. John B. Balousek, Mr. Frank S. Fischer, Mr. Stephen T. Baker and Mr. James
M. Judge. In connection with these resignations and recognizing that the Company
was no longer required to comply with Nasdaq's continued listing standards as a
result of the delisting of the Company's common stock from the Nasdaq National
Market System and the Nasdaq SmallCap Market, the Board deemed it was advisable
and in the best interest of the Company and its stockholders to terminate the
Compensation and Audit Committees of the Board and to conduct all businesses of
the Board at the Board level. Board members Mr. David J. Domeier and Mr. David
L. Grannan resigned from the Board April 30, 2003.

Effective as of April 30, 2003, in connection with the sale of our common stock
to Newcastle (the "Stock Sale") and Mark E. Schwarz, Mr. Mitchell agreed to step
down from his position as President and Chief Executive Officer of the Company.
Mr. Mitchell continues to serve on the Board and is acting as the financial
expert on the Board because of his professional experience and knowledge of the
books and records of the Company.

BIOGRAPHICAL INFORMATION FOR OTHER EXECUTIVE OFFICERS

The following table sets forth the name, age and position of the other executive
officer of the Company as of July 22, 2003 of the Company. The Company's
executive officers are appointed by and serve at the discretion of the Board.

Name Age Position
---- --- --------

John P. Murray 34 Vice President and Chief Financial
Officer

JOHN P.MURRAY has been Chief Financial Officer of the Company since May 2003.
Mr. Murray also serves as the Chief Financial Officer of Newcastle Capital
Management, L.P. a private investment management firm which is an affiliate of
Newcastle Partners, L.P. From January 1998 until June 2001, Mr. Murray served as
a partner at Speer & Murray, Ltd, a Dallas based accounting firm. From October
1991 until November 1995, Mr. Murray served as an accountant with Ernst & Young,
LLP. Mr. Murray has been a Certified Public Accountant since January 1992.

Following the Stock Sale, Timothy J. Toppin resigned as Vice President and Chief
Financial Officer of the Company.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
Securities and Exchange Commission ("SEC"). Such officers and directors and 10%
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during the fiscal year ended March 31, 2003, there was compliance with the
Form 3, Form 4 and Form 5 filing requirements applicable to its officers,
directors and 10% stockholders.

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth annual compensation received for services
rendered to the Company, for the last three fiscal years ended March 31, 2001,
2002 and 2003 by each of the Chief Executive Officer and each of the following
executive officers (collectively, the "Named Executive Officers") who served
with the Company during the fiscal year ended March 31, 2003 (the "Last Fiscal
Year").

SUMMARY COMPENSATION TABLE

Long-Term
Compensation
Annual Compensation Awards

Number of
Securities
Underlying
401(k) Matching Number of
Name and Principal Position Year Salary ($) Bonus ($) (1) Contributions ($) Options (#) (2)
--------------------------- ----- ---------- ------------- ----------------- ---------------

Steve W. Mitchell (3) 2003 $ 180,707 $ 60,000 $ 0 525,000
President and Chief Executive Officer 2002 $ 145,000 $ 29,084 $ 3,756 150,000
2001 $ 58,834 $ 16,962 $ 0 0

James Given (4) 2003 $ 125,019 $ 30,000 $ 0 337,500
Vice President and General Counsel 2002 $ 125,000 $ 24,093 $ 3,332 150,000
2001 $ 0 $ 0 $ 0 0

Timothy J. Toppin (5) 2003 $ 153,672 $ 60,000 $ 0 337,500
Vice President, Chief Financial Officer 2002 $ 145,000 $ 29,380 $ 2,323 150,000
2001 $ 132,396 $ 22,213 $ 1,838 176,800

(1) Includes regular cash bonuses earned for the Last Fiscal Year, whether
accrued or paid.

(2) Each of Messrs. Mitchell, Given, and Toppin was granted 500,000, 250,000
and 250,000 of stock options, with an exercise price of $.11 per share,
respectively, in June 2002. Messrs. Given's and Toppin's stock options
expire July 29, 2003.

(3) Mr. Mitchell joined the Company in November 2000 as Vice President of
Human Resources. Mr. Mitchell was promoted to President and Chief
Executive Officer and joined the Board in April 2002. Effective April 30,
2003 in connection with the Stock Sale, Mr. Mitchell agreed to step down
from his position as President and Chief Executive Officer. He continues
to serve on the Board.

(4) Effective April 30, 2003, in connection with the Stock Sale, Mr. Given
resigned as Vice President and General Counsel.

(5) Mr. Toppin was promoted from Controller to Vice President and Chief
Financial Officer in September 2000. Effective April 30, 2003, in
connection with the Stock Sale, Mr. Toppin resigned as Chief Financial
Officer.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information with respect to stock options
awarded to each of the Named Executive Officers during the Last Fiscal Year. In
accordance with the rules of the Securities and Exchange Commission, also shown
below is the potential realizable value over the term of the options (the period
from the grant date to the expiration date) based on assumed rates of stock
appreciation of 5% and 10%, compounded annually and rounded to the nearest
dollar. These amounts are based on certain assumed rates of appreciation and do
not represent the Company's estimate of future stock price performance. Actual
gains, if any, on stock option exercises will be dependent on the common stock's
future price performance. If the stock price does not increase above the
exercise price at the time of exercise, realized value to the Named Executive
Officers from these options will be zero.

Individual Grants Potential Realizable
--------------------------------------------------------- Value at Assumed
Number of Annual Rate of
Securities % of Total Stock Price
Underlying Options Appreciation for
Options Granted to Exercise Option Term
Granted Employees Price Per Expiration --------------------------------
Name (1) in Fiscal 2003 Share Date 5% 10%
---- --- -------------- ----- ---- --------------- -------------

Steve W. Mitchell 500,000 17.36% $.11 06/11/2012 $ 89,589.20 $142,655.84
James Given 250,000 8.68% $.11 06/11/2012 $ 44,794.60 $ 71,327.92
Timonthy J. Toppin 250,000 8.68% $.11 06/11/2012 $ 44,794.60 $ 71,327.92

(1) Each of these options were issued to the Named Executive Officer and have
a ten-year term and vest at a rate of 1/12th of the option per month over
12 months beginning June 11, 2002. Messrs. Given's and Toppin's options
expire as of July 29, 2003 as a result of their resignation on April 30,
2003.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table provides information with respect to the Named Executive
Officers' unexercised options at March 31, 2003.

Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Fiscal Options at Fiscal
Year-End Year-End
Shares ----------------------------------- ------------------------------------
Acquired on Value
Name Exercise (#) Realized ($) (1) Exercisable (#) Unexercisable (#) Exercisable (#) Unexercisable (#)
---- ------------ ---------------- --------------- ----------------- --------------- -----------------

Steve W. Mitchell -- $ -- 525,000 125,000 $ 0 $ 0
James Given -- $ -- 337,500 12,500 $ 0 $ 0
Timothy J. Toppin -- $ -- 337,500 62,500 $ 0 $ 0

(1) No options were exercised by Named Executive Officers during the Last
Fiscal Year.

The Company does not have any Long Term Incentive Plans.

EMPLOYMENT CONTRACTS, TERMS OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

In May 2003, in accordance with the Company's severance policy and employment
agreements, Messrs. Mitchell, Toppin and Given were paid $85,000, $72,500 and
$60,000, respectively, as a result of the changes in the Board and management
that resulted from the Stock Sale.

CHIEF EXECUTIVE OFFICER COMPENSATION

As Chief Executive Officer, Mr. Schwarz currently has no annual salary. Mr.
Schwarz is entitled, at the discretion of our Board, to performance bonuses
which may be based upon a variety of factors and to participate in the stock
incentive plans and other bonus plans adopted by us based on his performance and
the Company's performance.

CHANGE IN CONTROL ARRANGEMENTS

Each of the new options granted on June 11, 2002 provides that 50% of the
unvested portion of the option will vest in full upon a Change of Control (as
defined below) and the remainder of the option will vest in full in the event
that the optionee's employment with the Company is terminated upon the Change of
Control.

As defined in each of the new options, "Change of Control" means:

o A merger or consolidation in which securities possessing more
than 50% of the total combined voting power of the Company's
outstanding securities are transferred to one or more persons
who were not stockholders of the Company immediately before
such merger or consolidation; or

o The sale, transfer or other disposition of all or
substantially all of the Company's assets.

A transaction shall not constitute a Change of Control if its sole purpose is to
change the Company's state of incorporation or to create a holding company that
will be owned in substantially the same proportions by the persons who held the
Company's securities immediately before such transaction.

DIRECTOR COMPENSATION

The Company provides cash compensation of $1,000 per quarter to each of its
non-employee directors for service as directors and has reimbursed their travel
expenses for attending meetings. Non-employee directors are also eligible to
receive discretionary stock option grants under the Company's 1994 Stock Plan.
During the Last Fiscal Year, the Company's non-employee directors (Mr. Balousek,
Mr. Fischer, Mr. Baker, Mr. Judge, Mr. Domeier, and Mr. Grannan) received
discretionary stock option grants. Each non-employee director received 50,000
options each exercisable for one share of common stock with an exercise price of
$.11 each. During Last Fiscal Year, none of these options were exercised. All of
these options shall expire as of July 29, 2003.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As previously discussed, as a result of the delisting of the Company's common
stock from the Nasdaq National Market System and the Nasdaq SmallCap Market, and
the resignation of four members of the Board in January 2003, the Board deemed
it was advisable and in the best interest of the Company and its stockholders to
terminate the Compensation Committee of the Board and to conduct all businesses
of the Board at the Board level.

During Last Fiscal Year, except for Mr. Mitchell, no member of the Board was an
executive officer (within the meaning of the federal securities law) or employee
of the Company. None of the members of the Board at any time during the Last
Fiscal Year and no executive officer of the Company is or has served on the
board of directors or compensation committee of any other company that has or
has had one or more of its executive officers serve as a member of the Board.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's common stock as of July 22,
2003, by (a) each stockholder who is known by the Company to beneficially own
more than 5% of the Company's common stock, (b) the Company's Chief Executive
Officer and the four other most highly compensated executive officers (based on
salary and bonus during the Last Fiscal Year) who were serving as executive
officers at the end of the Last Fiscal Year (the "Named Executive Officers"),
(c) each director/nominee of the Company, and (d) all current directors and
executive officers of the Company as a group. To the Company's knowledge, except
as otherwise indicated in the footnotes to this table, each person has sole
voting and investment power with respect to all shares shown as beneficially
owned by them, subject to community property laws where applicable. The
percentages in the column entitled "Percentage of Common stock Outstanding" were
determined using 29,859,808 shares of common stock, the number of outstanding
shares of common stock on July 22, 2003.

Shares Beneficially Percentage of Common stock
Beneficial Owner Owned Outstanding
---------------- ----- -----------

Newcastle Partners, L.P. 3,788,952 12.69%
Mark E. Schwarz (1) 7,477,905 25.04%
James Given (2) 337,500 1.12%
Steve W. Mitchell (3) 665,000 2.18%
Timothy J. Toppin (4) 337,500 1.12%
Steven J. Pully (5) 0 0
John P. Murray (5) 0 0
All directors and executive officers 8,142,905 26.69%
as a group (4 persons)(6)

(1) Includes 3,788,952 shares owned by Newcastle Partners, LP, for which Mr.
Schwarz disclaims beneficial ownership. Mr. Schwarz is the sole general
partner of Newcastle Partners, L.P., directly or indirectly through
entities he controls.

(2) Represents 337,500 shares issuable upon the exercise of options that were
exercisable as of July 22, 2003 and expire July 29, 2003.

(3) Includes 650,000 shares issuable upon the exercise of options that were
exercisable as of July 22, 2003.

(4) Represents 337,500 shares issuable upon the exercise of options that were
exercisable as of July 22, 2003 and expire July 29, 2003.

(5) Excludes 3,788,952 shares owned by Newcastle Partners, LP, for which each
of Mr. Pully and Mr. Murray disclaims beneficial ownership.

(6) Includes 650,000 shares issuable upon exercise of options that were
exercisable as of July 22, 2003. Includes 3,788,952 shares owned by
Newcastle Partners, LP, for which each of Mr. Murray, Mr. Pully and Mr.
Schwarz disclaims beneficial ownership.

DISCLOSURE WITH RESPECT TO THE COMPANY'S EQUITY COMPENSATION PLANS

The following table gives information about the existing equity compensation
plans as of March 31, 2003, including, the 1994 Stock Plan, the 1996
Supplemental Plan (the "1996 Plan") and the 1997 Supplemental Plan for UK
Employees (the "UK Plan"), collectively referred to as the "Plans".

--------------------------------------------------------------------------------------------------------------------

(a) (b) (c)
--------------------------------------------------------------------------------------------------------------------
Number of securities remaining
Number of securities to Weighted-average exercise available for future issuance
be issued upon exercise price of outstanding under equity compensation plans
of outstanding options, options, (excluding securities reflected in
Plan Category warrants and rights warrants and rights column (a))
---------------------------------------------------------------------------------------------------------------------
Plan Approved by 2,015,892 $1.18 3,643,555
Stockholders
---------------------------------------------------------------------------------------------------------------------
Plans Not Approved 1,828,331 $0.95 1,946,774
by Stockholders
---------------------------------------------------------------------------------------------------------------------
Total 3,844,223 $1.07 5,590,329
---------------------------------------------------------------------------------------------------------------------

THE 1996 PLAN AND THE UK PLAN

In 1996 and 1997, the Board approved the 1996 Plan and the UK Plan (the
"Non-Stockholder Approved Plans"), respectively. These Plans were not required
to be and were not approved by the Company's stockholders. The purpose of the
Non-Stockholder Approved Plans is to attract and retain the best available
personnel for positions of substantial responsibility and to provide additional
incentives. Under the 1996 Plan, grants may be made to officers, employees or
consultants of the Company. Grants may not be made under the 1996 Plan to
members of the Company's Board. Under the UK Plan, grants may be made to
employees or consultants of the Company. Grants may not be made under the UK
Plan to members of the Company's Board. Each of the Non-Stockholder Approved
Plans authorizes the grant of non-qualified stock options with terms not to
exceed ten years from the date of grant. Historically, options granted under the
Non-Stockholder Approved Plans vested ratably over a four-year period beginning
at the grant date and expired ten years from the date of grant; however, as a
result of the grants made in June 2002, all of the outstanding options under the
Non-Stockholder Approved Plans vest over a twelve-month period beginning on the
date of grant. The Board may amend or terminate the Non-Stockholder Approved
Plans without stockowner approval, but no amendment or termination of either of
the Non-Stockholder Approved Plans may adversely affect any award previously
granted under the plan without the written consent of the award recipient.

ITEM 13. CERTAIN TRANSACTIONS

The Company has entered into indemnification agreements with each of its
directors and executive officers. These agreements require the Company to
indemnify such individuals to the fullest extent permitted by Delaware law for
certain liabilities to which they may become subject as a result of their
affiliation with the Company. As a matter of policy, all transactions between
the Company and any of its officers, directors or principal stockholders are
approved by a majority of the disinterested members of the Board, on terms no
less favorable to the Company than could be obtained from unaffiliated third
parties and must serve the bona fide business purposes of the Company.

SIGNATURES

Pursuant to the requirements 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.

Date: July 29, 2003

GEOWORKS CORPORATION

By: /s/ Mark E. Schwarz
------------------------------------
Mark E. Schwarz
President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

Signature Title Date

/s/ Mark E. Schwarz
----------------------- President, Chief Executive Officer, July 29, 2003
Mark E. Schwarz and Director (Principal Executive
Officer)

/s/ Steven J. Pully
----------------------- Director and Secretary July 29, 2003
Steven J. Pully

/s/ Steve W. Mitchell*
----------------------- Director July 29, 2003
Steve W. Mitchell

/s/ John P. Murray
----------------------- Chief Financial Officer July 29, 2003
John P. Murray (Principal Financial Officer)

* Power of Attorney: 6/30/2003

/s/ Mark E. Schwarz
-------------------
Mark E. Schwarz