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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
September 30, 1996 0-27502
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HEALTH SYSTEMS DESIGN CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 94-3235734
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1330 Broadway, Oakland, California 94612
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(Address of principal executive offices) (Zip Code)
Telephone Number: (510) 763-2629
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(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. Yes X . No .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not 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. [X]
As of November 29, 1996, 6,434,666 shares of the registrant's Common
Stock were outstanding. The aggregate market value of the common stock held by
non-affiliates of the registrant on that date was approximately $8.75.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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Item 10 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended September 30, 1996 is
hereby amended in full as follows:
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
IDENTIFICATION OF DIRECTORS
The persons named below are nominees for director to
serve until the next Annual Meeting of Stockholders and until their successors
shall have been elected. The nominees constitute the present Board of
Directors.
BUSINESS EXPERIENCE DURING PAST SERVED AS
FIVE YEARS AND OTHER DIRECTOR
NOMINEES FOR DIRECTOR AGE INFORMATION SINCE
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Richard C. Auger . . . . 53 Chairman of the Board and Chief 1988
Executive Officer since 1988.
Catherine C. Roth . . . . 46 President since January 1996 and 1988
Chief Operating Officer since
April 1994. From 1988 to January
1996, Ms. Roth was the Company's
Executive Vice President.
J. Matthew Mackowski . . 42 Partner of Mackowski & Shepler, a 1992
private investment partnership
located in San Francisco. From
1986 to 1990, Mr. Mackowski was a
partner of Robertson, Stephens &
Co. (investment banking). From
1980 to 1986, Mr. Mackowski
served as Vice President of
Citicorp Venture Capital, Ltd.
(venture capital).
Arthur M. Southam, M.D. . 40 Chief Executive Officer of Health 1996
Net (a health maintenance
organization) since July 1996.
From 1993 to July 1996,
Dr. Southam was President and
Chief Executive Officer of
CareAmerica Health Plans and from
1986 to 1993 was employed at
CareAmerica Health Plans in a
number of capacities, including
Executive Vice President and
Chief Operating Officer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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 and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required
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by SEC regulation 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 that no Forms 5 were
required for those persons, the Company believes that, during the period from
March 5, 1996 to September 30, 1996 all filing requirements applicable to its
officers, directors, and greater than ten-percent beneficial owners were
complied with.
Item 11 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended September 30, 1996 is
hereby amended in full as follows:
ITEM 11 - EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation paid to the Company's Chief Executive Officer and
only other executive officers who received compensation in excess of $100,000
for services in all capacities to the Company and its subsidiaries during fiscal
1995 and 1996 is set forth below.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
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ANNUAL COMPENSATION AWARDS
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RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK AWARDS UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($) OPTIONS TION($)
- --------------------------- ------ ------------- -------- --------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
RICHARD C. AUGER 1996 $156,067 -- -- -- -- --
Chairman and Chief 1995 $137,742 -- -- -- -- --
Executive Officer
CATHERINE C. ROTH 1996 $145,011 -- -- -- -- --
President 1995 $127,809 -- -- -- -- --
RICHARD E. MALONE 1996 $118,525 -- -- -- 9,500 --
Vice President, Chief 1995 $74,553 -- -- -- 30,500 --
Financial Officer
</TABLE>
The following table sets forth certain information regarding stock
options granted during fiscal 1996 to the
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executive officers named in the foregoing Summary Compensation Table. None of
such persons received awards of stock appreciation rights during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
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<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
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NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ---- ------------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Auger -- -- -- -- -- --
Catherine C. Roth -- -- -- -- -- --
Richard E. Malone 9,500 4.5% $14.75 06/03/2006 $88,124 $223,323
</TABLE>
(1) All options granted in fiscal 1996 are exercisable in full, commencing June
3, 1998. Under the terms of the Company's Stock Option Plan, the
Compensation Committee retains discretion, subject to plan limits, to
modify the terms of outstanding options.
(2) All options were granted at fair market value at date of grant.
(3) Realizable values are reported net of the option exercise price. The
dollar amounts under these columns are the result of calculations at the 5%
and 10% rates (determined from the price at the date of grant, not the
stock's current market value) set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future appreciation, if
any, of the Company's stock price. Actual gains, if any, on stock option
exercises are dependent on the future performance of the common stock as
well as the optionholder's continued employment through the vesting period.
The potential realizable value calculation assumes that the optionholder
waits until the end of the option term to exercise the option.
The following table sets forth certain information with respect to
option exercises during 1996 and stock options held by each of the Company's
executive officers as of September 30, 1996.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
VALUE OF
SHARES NUMBER OF UNEXERCISED IN-THE-
ACQUIRED UNEXERCISED OPTIONS MONEY OPTIONS AT
ON VALUE AT FY-END(#) FY-END($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
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Richard C. Auger -- -- -- --
Catherine C. Roth -- -- -- --
Richard E. Malone 18,000 $201,600 6,500/45,500 $61,450/$367,200
Item 12 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended September 30, 1996 is
hereby amended in full as follows:
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table indicates, as to each director and each named
executive officer, the number of shares and percentage of the Company's stock
beneficially owned as of September 30, 1996.
SHARES BENEFICIALLY OWNED
AS OF SEPTEMBER 30, 1996
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EXECUTIVE OFFICER OR NUMBER OF
DIRECTOR COMMON SHARES PERCENT
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Richard C. Auger (1) . . . . . . . 1,590,800 24.7%
Catherine C. Roth (1) . . . . . . . 1,207,600(2) 18.8%
J. Matthew Mackowski . . . . . . . 1,357,600(3) 20.9%
Arthur M. Southam, M.D. . . . . . . 300 *
Richard E. Malone . . . . . . . . . 24,500(4) *
All directors and
officers as a group
(five persons) . . . . . . . . . . 4,180,800(5) 64.3%
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(*) Less than 1%.
(1) The address of Mr. Auger, Ms. Roth and Mr. Mackowski is 1330 Broadway,
Oakland, California 94612. Each of these persons may be deemed to be a
"control person" of the Company within the meaning of the rules and
regulations of the Securities and Exchange Commission by reason of his
stock ownership and positions with the Company.
(2) Includes 248,000 shares of Common Stock held by Ms. Roth's children.
(3) Includes 60,000 shares issuable upon exercise of outstanding warrants
which are immediately exercisable.
(4) Includes 6,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of September 30, 1996.
(5) Includes warrants and employee stock options exercisable within 60 days
of September 30,1996.
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Item 13 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended September 30, 1996 is
hereby amended in full as follows:
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In December 1995, the Company completed a private placement in which
it issued the notes and warrants. Matthew Mackowski, a director of the Company
and member of the Compensation Committee, purchased $600,000 principal amount of
the notes and warrants to purchase 60,000 shares of Common Stock in such private
placement. Mr. Mackowski paid an aggregate purchase price of $600,000 for such
securities, consisting of $100,000 in cash and cancellation of $500,000 of
indebtedness owed by the Company to Mr. Mackowski. In addition, Mr. Mackowski's
father purchased in such private placement $50,000 principal amount of the notes
and warrants to purchase 5,000 shares of Common Stock, for which he paid $50,000
in cash. In March 1996, the Company repaid the notes with a portion of the
proceeds from its March 1996 initial public offering.
From time to time, Mr. Mackowski has advanced funds to the Company for
working capital purposes. The largest amount of such advances outstanding
during fiscal 1996 was $500,000. These advances were payable on demand and bore
interest of 0.5% above the 90-day treasury bill rate at the date of issuance.
These notes were retired in connection with the private placement described
above.
Mackowski & Shepler, a private investment partnership of which
Mr. Mackowski is a partner and 50% owner, continues to provide financial and
strategic advisory services to the Company under an arrangement which commenced
in November 1994. Under this arrangement, Mackowski & Shepler will continue to
receive $7,500 per month until March 31, 1997. Mackowski & Shepler also
received $50,000 from the Company upon the closing of the Company's initial
public offering for advisory services related to this offering.
TRANSACTIONS WITH THE COMPANY
See "Compensation Committee Interlocks and Insider Participation."
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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: January 27, 1997
HEALTH SYSTEMS DESIGN CORPORATION
By /s/ RICHARD C. AUGER
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Richard C. Auger
Chairman and Chief Executive Officer
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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 indicated.
Signature Capacity Date
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/s/RICHARD C. AUGER Chairman and Chief Executive January 27, 1997
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Richard C. Auger Officer
/s/CATHERINE C. ROTH Director January 27, 1997
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Catherine C. Roth
/s/RICHARD E. MALONE Chief Financial Officer January 27, 1997
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Richard E. Malone Accounting Officer)
/s/J. MATTHEW MACKOWSKI Director January 27, 1997
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J. Matthew Mackowski
/s/ARTHUR M. SOUTHAM, M.D. Director January 27, 1997
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Arthur M. Southam, M.D.
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