TCEC TransCoastal Corporation (CE)

COMMON STOCK SHARES BENEFICIALLY OWNED

Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership				Percent of Class				Percent of Voting Power
Don Crosbie, Director			0				0				*
J. R. Schellenberg (1) Kohlrainstrasse 1 Kusnacht Switzerland CH-8700			2,845,206				8.0				*
Elmira United  Corporation Swiss Tower – 16 th Floor Panama Republic of Panama			17,999,466				50.5				*
All our directors and executive officers as a group (1 person)			0				0				*

PREFERRED STOCK SHARES BENEFICIALLY OWNED

Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership				Percent of Class				Percent of Voting Power
Stuart G. Hagler, Director, CEO			1,025,574				27.6				27.3
W.A. Westmoreland, Director, President-Operations			1,019,592				27.4				27.1
David May, Director, President-Acquisitions			1,007,667				27.1				26.8
Judson F. Hoover, CFO			14,956				*				*
All our directors and executive officers as a group (4 persons)			3,067,789				82.2				81.2

IDENTIFICATION OF DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth the name, age and present occupation or employment, material occupations, positions, offices or employment for the past five years, of the directors, executive officers and key employees of the Company as of the date hereof.

 

NAME	AGE	POSITION
Don Crosbie	69	President, ANC Holdings, LLC and Chairman of the Board of Directors.
Stuart G. Hagler	49	Chief Executive Officer, Director Designee
W.A. Westmorland	51	President-Operations, Director Designee
David May	49	President-Acquisitions, Director Designee
Judson  F. Hoover	55	Chief Financial Officer

 

 

The following is certain summary information with respect to our executive officers and directors. The biographies of Messrs. Hagler, Westmoreland and May are described above.

DON CROSBIE was recently appointed President, Chief Executive Officer of our Subsidiary, ANC Holdings, LLC. He is our former President and current Chairman of the Board positions he has held since October 2002. From July 2001 until October 2002, Mr. Crosbie was President and CEO of Xactimed, a claims processing and clearinghouse company serving the hospital market. In the year he was at Xactimed, it experienced a dramatic turnaround, with revenue growing 150% over the prior year and an operating profit was achieved as compared to a significant operating loss for the prior year.  From September 2000 to July 2001, Mr. Crosbie served as CFO and President of North American Operations of Blue Wave Systems, a high density DSP board supplier to the telecom infrastructure market, including media gateways and 2 ½ and 3 G wireless. He joined Blue Wave with a corporate strategic direction to identify and complete a sale of the company. This was accomplished in July 2001 with the sale of the company to Motorola for $125 million. The breadth of Mr. Crosbie’s experience led the board to believe this individual is qualified to serve on the board of directors.

 
 

 

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Judson “Rick” F. Hoover Chief Financial Officer. Prior to his recent appointment with Claimsnet Mr. Hoover from December 2004 to March 2007 served as Chief Financial Officer for Ness Energy International, a publicly traded oil and gas company with operations in Texas and Israel.  From June 2007 to June 2009, he served as Controller for Union Drilling, Inc., another publicly traded oil field services company, and from March 2011 to September 2012 he served as Chief Financial Officer for Sun River Energy, a publically traded independent oil and gas company. Mr. Hoover joined TransCoastal as Chief Financial Officer in January, 2013.

Mr. Hoover is a licensed CPA from the State of Colorado. Mr. Hoover has a B.S. in Accounting and a Masters Degree in Taxation from the University of Colorado at Denver.

Messrs. Hagler, Westmoreland, May and Hoover are our executive officers. The Company’s officers are appointed by our board of directors and do not currently have employment, severance or change of control agreements with the Company. It is anticipated however that the Board will be considering employment agreements with the Company's new executive officers within the near future.   The officers are employed on an “at will” basis and may be removed by our board of directors in accordance with the Company’s Bylaws and the provisions of the Delaware General Corporation Law.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .

On April 29, 2013, the Company issued an unsecured promissory note upon receipt of $25,000 from J.R. Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payment equal to the principal and accrued and unpaid interest on the note are due on demand with seven days written notice.

On March 27, 2013, the Company issued an unsecured promissory note upon receipt of $20,000 from Schellenberg, a related party.  The note bears interest at the rate of 1.75% per annum.  Payment equal to the principal and accrued and unpaid interest on the note and due on demand with written notice.

On September 7, 2012, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payment equal to the principal and accrued and unpaid interest on the note are due on demand with seven days written notice.

On April 26, 2012, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payment equal to the principal and accrued and unpaid interest on the note are due on demand with seven days written notice.

 

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On February 8, 2012, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payment equal to the principal and accrued and unpaid interest on the note are due on demand with seven days written notice.

On January 17, 2012, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payment equal to the principal and accrued and unpaid interest on the note are due on demand with seven days written notice.

 

On November 30, 2011, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

On October 31, 2011, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

On September 29, 2011, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

On September 27, 2011, the Company entered into Amendment Number 2 to that certain Unsecured Promissory Note by and between Claimsnet and Novinvest Associated S.A. dated September 9, 2010. Pursuant to the amendment, effective September 9, 2011, the Due Date on Unpaid Principal and Interest was changed to September 9, 2013. All other terms of the original agreement remain in effect.

On August 29, 2011, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

On July 27, 2011, the Company issued an unsecured promissory note upon receipt of $25,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

On May 3, 2011, the Company issued an unsecured promissory note upon receipt of $40,000 from National Financial Corporation, a related party. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

 

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On March 2, 2011, the Company issued an unsecured promissory note upon receipt of $15,000 from Mr. Thomas Michel, a director. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

On March 2, 2011, the Company issued an unsecured promissory note upon receipt of $15,000 from Schellenberg. The note bears interest at the rate of 1.75% per annum.  Payments equal to the principal and accrued and unpaid interest on the note are due on demand.

The Agreement provides that Company will sell the Claimsnet Subsidiary to the Debt Holders in exchange for the cancellation by the Debt Holders of outstanding indebtedness owed to the Debt Holders by the Company.  The Debt Holders are expected to be Thomas Michel, a former director of the Company, and NFC and Schellenberg, who are principal stockholders of the Company.

       All of the foregoing transactions involving related parties were on terms believed to be at least as favorable to us as obtainable from unaffiliated third parties and approved by a majority of our independent and disinterested directors.  Additionally, all future transactions with related parties will be similarly on terms believed to be at least as favorable to us as obtainable from unaffiliated third parties and approved by a majority of our independent and disinterested directors.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of the Company’s Common Stock, to file reports of ownership and changes in ownership with the SEC.  The SEC has designated specific due dates for such reports, and the Company must identify in this Schedule 14F those persons who did not timely file such reports.

Based solely upon review of Forms 3 and 4 and amendments thereto, and any written representations furnished to the Company pursuant to Rule 16a-3(e) of the Exchange Act, the Company believes that, during the fiscal year ended December 31, 2012, its directors and officers, and persons who beneficially own more than 10% of its Common Stock, complied with all applicable filing requirements.  We have notified all known beneficial owners of more than 10% of Company Common Stock of their requirement to file annual reports with the SEC.

 

GOVERNANCE OF THE COMPANY

Structure . Our business is managed under the direction of our Board. Our Board is divided into two classes.  The Class I directors are currently Mr. Crosbie and subject to taking office pursuant to Rule 14f, Mr. May.  Also subject to taking office in accordance with Rule 14f are the Class II director designees Messrs. Hagler and Westmoreland. Each director is elected for a term of two years, except when the election by the Board to fill a vacancy, in which case the director’s term expires at the next annual meeting of stockholders.

 

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Our general policy is for all major decisions to be considered by the Board as a whole. The Board performs its oversight function through meetings of its members. The directors are expected to attend all meetings of the Board, and to devote the time needed to fulfill their responsibilities. During our fiscal year ended December 31, 2012 (“fiscal 2012”), Directors held five meetings. All persons who were directors during fiscal 2012 attended at least 75% of the total of Board meetings. Although our Bylaws allow for the formation of committees, at present we do not have any separately standing committees and our entire board of directors acts as our committees.

Family Relationships   These are no family relationships between or among any of our directors and executive officers .

Director Independence . Our Board currently has no independent members as all are employed by the Company or its subsidiaries. The Company is currently searching for independent board candidates. The Board has determined that each of its non-management members must meet the criteria for independence under the NASDAQ objective standards.

Board Leadership . Under our Bylaws, the Board may appoint one of its members as Chairman to preside at meetings of the Board and the stockholders. These functions are separate from the day-to-day management role of the CEO, but may be performed by the same person. Mr. Crosbie has served as our Chairman of the Board as well as CEO since October 2002. The Board believes this leadership structure furthers its oversight objectives and capabilities by taking advantage of Mr. Crosbie’s operating experience and perspective in setting priorities and addressing critical issues. Business that comes before the Board is managed more thoroughly and more efficiently through the CEO serving also as Chairman of the Board. Based on these advantages and the strong personal history Mr Crosbie brings to the Board, the Board does not believe any corporate governance benefit would be achieved for the Company or its stockholders by requiring its Chairman to be an independent director.

Risk Management Oversight . Our risk management program is overseen by the full Board as an integral part of its strategic planning to identify and address the operational, financial, personnel, technological and regulatory risks inherent in our business. The independent directors receive periodic updates from senior management to broaden their understanding of our risk identification, management and mitigation strategies. In addition, the Board meets periodically with management to discuss major financial risk exposures and the steps being taken to monitor and control those exposures. Our management regularly evaluates these controls and updates the Board on their status and effectiveness.

 

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Communications . As a general policy, our management speaks for the Company. Members of our Board meet periodically with our auditors, with and without participation by management. Stockholders or other parties interested in communicating with the non-management directors as a group or with the Board may contact us by writing to Investor Relations Administration at our corporate office located at 17304 Preston Road, Suite 700, Dallas, Texas 75252 or by using the contact procedures provided on our website, at www.claimsnet.com . The Board has delegated responsibility for initial review of stockholder communications to the Company’s Secretary. In accordance with the Board’s instructions, the Secretary will forward the communication to the director or directors to whom it is addressed, except for communications that are: (1) advertisements or promotional communications; (2) solely related to complaints by vendors or customers with respect to ordinary course of business issues; or (3) clearly unrelated to our business, industry, management or Board matters. In addition, the Secretary will make all communications available to each member of the Board, at the Board’s next regularly scheduled meeting.

Committees . At present, we do not have a separately standing audit committee and our entire board of directors acts as our audit committee. None of the members of our Board meet the definition of “audit committee financial expert” as defined in Item 407(d) of Regulation S-K promulgated by the SEC. We have not retained an audit committee financial expert because we do not believe that we can do so without undue cost and expense. Moreover, we believe that the present members of our Board, taken as a whole, have sufficient knowledge and experience in financial affairs to effectively perform their duties.

At present, we do not have a separately standing compensation committee and our entire Board acts as our compensation committee. Management approves all compensation decisions of non-management employees as ordinary course of business issues. The Board approves all management compensation decisions. Our directors do not receive any compensation for serving on our Board. We believe that management and the present members of our Board, taken as a whole, have sufficient knowledge and experience to effectively perform their duties.

At present, we do not have a separately standing nominating committee and our entire Board acts as our nominating committee. We have not retained a standing nominating committee because until the Agreement we have not needed to replace any existing directors or, except pursuant to the Agreement, add to the number of directors as a whole. We believe that the present members of our Board, taken as a whole, have sufficient knowledge and experience to effectively perform their duties. The Board will consider qualified nominees recommended by stockholders, who may submit recommendations through a written notice as described under “Governance of the Company – Communication” above. To be considered by the Board for nomination as a director for election at our next annual meeting, a stockholder nomination: (1) must be submitted in writing at least 30 days prior to the annual meeting of stockholders; (2) must contain a statement by the stockholder that such stockholder holds, and has continuously held for at least a year before the nomination, at least 1% of the shares of Common Stock and that such stockholder will continue to hold at least that number of shares through the date of the annual meeting of stockholders; and (3) must be accompanied by a description of the qualifications of the proposed candidate and a written statement form the proposed candidate that he or she is willing to be nominated and desires to serve, if elected. Nominees for director who are recommended by the Company’s stockholders will be evaluated in the same manner as any other nominee for director.

 

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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the compensation paid or accrued by us for services rendered in all capacities during the years ended December 31, 2012 and 2011 by Chief Executive Officer and each of our most highly compensated executive officers and key employees whose compensation exceeded $100,000 during the year ended December 31, 2012.

SUMMARY COMPENSATION TABLE

NAME AND PRINCIPAL POSITION		YEAR				SALARY  $				ALL OTHER  COMPENSATION  $ (1)				TOTAL  $
Don Crosbie			2012			$	146,000			$	1,460			$	147,460
CEO			2011			$	138,138			$	1,381			$	139,519
Gary Austin			2012			$	135,000				-			$	135,000
VP - Operations			2011			$	129,731				-			$	129,731
K. Scott Spurlock			2012			$	140,175				-			$	140,175
VP - Development			2011			$	138,581				-			$	138,581

(1)            Company match on employee contributions to the Company’s 401(k) plan.

In 2011 and 2012, none of our executive officers or key employees received, nor do we have any arrangement to pay, any bonus stock awards, option awards, non-equity incentive compensation, or other compensation other than as noted in the table above.

All options previously granted by the Company were cancelled as of May 9, 2013.

DIRECTOR COMPENSATION

During the year ended December 31, 2012, directors neither received nor accrued compensation for their services as directors other than reimbursement of expenses relating to attending meetings of the Board.

 

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1997 STOCK OPTION PLAN

In April 1997, our Board and stockholders adopted the 1997 Stock Option Plan (the “1997 Plan”). The 1997 Plan provides for the grant of options to purchase up to 1,307,692 shares of Common Stock to our employees, officers, directors, and consultants. Options may be either "incentive stock options" or non-qualified options under the Federal tax laws. Incentive stock options may be granted only to our employees, while non-qualified options may be issued to non-employee directors, consultants, and others, as well as to our employees.

The 1997 Plan is administered by "disinterested members" of the Board or the compensation committee, who determine, among other things, the individuals who shall receive options, the period during which the options may be exercised, the number of shares of Common Stock issuable upon the exercise of each option, and the option exercise price.

Subject to some exceptions, the exercise price per share of Common Stock subject to an incentive option may not be less than the fair market value per share of Common Stock on the date the option is granted. The per share exercise price of the Common Stock subject to a non-qualified option may be established by the Board, but shall not be less than 85% of the fair market value per share of Common Stock on the date the option is granted. The aggregate fair market value of Common Stock for which any person may be granted incentive stock options which first become exercisable in any calendar year may not exceed $100,000 on the date of grant.

No stock option may be transferred by an optionee other than by will or the laws of descent and distribution, and, during the lifetime of an optionee, the option will be exercisable only by the optionee. In the event of termination of employment or engagement other than by death or disability, the optionee will have no more than three months after such termination during which the optionee shall be entitled to exercise the option to the extent exercisable at the time of termination, unless otherwise determined by the Board.  Upon termination of employment of an optionee by reason of death or permanent and total disability, the optionee's incentive stock options remain exercisable for one year to the extent the options were exercisable on the date of such termination. Options may not be granted under the 1997 Plan beyond a date ten years from the effective date of the 1997 Plan. Subject to some exceptions, holders of incentive stock options granted under the 1997 Plan cannot exercise these options more than ten years from the date of grant. Options granted under the 1997 Plan generally provide for the payment of the exercise price in cash and may provide for the payment of the exercise price by delivery to us of shares of Common Stock already owned by the optionee having a fair market value equal to the exercise price of the options being exercised, or by a combination of these methods.

 

Any unexercised options that expire or that terminate upon an employee's ceasing to be employed by us become available again for issuance under the 1997 Plan. As of December 31, 2012, there were outstanding options to purchase an aggregate of 400,000 shares at an exercise price of $.35 per share and 907,692 shares remain available for option grants.

 

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The following table summarizes and combines the stock option activity under the 1997 Plan and the Directors’ Plan through December 31, 2012. Please note that all of the options granted below have now been cancelled effective May 9, 2013 and the Company currently has no outstanding options or warrants and is presented here for historical purposes only:

 

		NUMBER OF SHARES				PER SHARE EXERCISE PRICE				WEIGHTED AVERAGE EXERCISE PRICE
Outstanding options-December 31, 2010			700,676			$	0.30-1.25			$	0.40
Granted			-				-				-
Expired and/or Cancelled			30,000				0.50-1.25				1.13
Outstanding options-December 31, 2011			670,676			$	0.30-0.60			$	0.36
Granted			-				-				-
Expired and/or Cancelled			270,676				0.30-0.60				0.38
Outstanding options-December 31, 2012			400,000			$	0.35			$	0.35
Options exercisable-December 31, 2012			400,000			$	0.35			$	0.35

Outstanding options as of December 31, 2012, had a weighted average remaining contractual life of approximately 1.2 years. Vested options had a weighted average remaining contractual life of 1.2 years as of December 31, 2012. At December 31, 2012, 907,692 shares remain available for option grant under the Company’s 1997 Plan. There were no options available for grant under the Company’s Directors’ Plan. There was no intrinsic value for unvested and vested options at December 31, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CLAIMSNET.COM, INC.
	By:	/s/ Stuart G. Hagler
		Stuart G. Hagler,
		Chief Executive Officer

 

Dated:  May 17, 2013

 

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