U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM 10 - KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 0-21743
NEOMEDIA TECHNOLOGIES, INC.
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(Name of Small Business Issuer in Its Charter)
DELAWARE 36-3680347
- ------------------------------- ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2201 SECOND STREET, SUITE 600, FORT MYERS, FLORIDA 33901
- -------------------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number (Including Area Code) 941-337-3434
Securities Registered Under Section 12(b) of the Exchange Act: NONE
Securities Registered Under Section 12(g) of the Exchange Act:
TITLE OF EACH CLASS
COMMON STOCK, PAR VALUE $.01
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Check whether the issuer (1) 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 such 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 is not 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-KSB
or any amendment to this Form 10-KSM [ ]
Issuer's consolidated revenue for its most recent fiscal year was
$17,518,000.
The aggregate market value of the voting stock held by non-affiliates
of the issuer based on the price at which shares of common stock closed on March
14, 1997 was $12,500,944.
As of March 14, 1997, there were outstanding 5,369,768 shares of the
issuer's Common Stock and 3,130,938 warrants.
<PAGE>
Item 10 of Part III of the previously filed Form 10-KSB of NeoMedia
Technologies, Inc. for the fiscal year ended December 31, 1996, is hereby
deleted in its entirety and, in lieu thereof, the following is hereby inserted
as Item 10 of Part III of such Form 10-KSB.
PART III
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid to (i) NeoMedia's Chief Executive Officer and (ii) each of
NeoMedia's other executive officers who received aggregate cash compensation in
excess of $100,000 for services rendered to NeoMedia (collectively, "the Named
Executive Officers") during the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION (1)
-----------------------
SECURITIES
UNDERLYING
WARRANTS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS COMPENSATION
- --------------------------- ---- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Charles W. Fritz ............... 1996 $146,666 $ 36,667 260,000(3) $5,486(4)
President ................... 1995 110,000 -0-
................... 1994 145,000 230,000
Charles T. Jensen .............. 1996 95,000 50,782 90,386(5) $3,780(4)
Chief Financial Officer ..... 1995(6) 10,833 -0-
Robert T. Durst, Jr............. 1996 104,994 22,967 153,657(5) $4,704(4)
Chief Technical Officer
<FN>
- ------------------------
(1) In accordance with the rules of the Securities and Exchange Commission
("Commission"), other compensation in the form of perquisites and other
personal benefits has been omitted in those instances where the aggregate
amount of such perquisites and other personal benefits constituted less
than the lesser of $50,000 or 10% of the total of annual salary and bonuses
for the Named Executive Officer for such year.
(2) The 1996 bonuses were paid in February, 1997, except $30,000 of the bonus
to Mr. Jensen which was paid in August, 1996. The 1994 bonus was paid in
December, 1994.
(3) Represents a warrant, exercisable for a period of four years commencing
November 25, 1997, to purchase up to 260,000 shares of common stock at an
exercise price of $8.85.
(4) Includes life insurance premiums and the corresponding income tax effects
of these transactions.
(5) Represents options granted under NeoMedia's Stock Option Plan.
(6) Amounts cover the period from date of employment by NeoMedia in November,
1995 until December 31, 1995.
</FN>
</TABLE>
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EMPLOYMENT AGREEMENTS
NeoMedia has entered into five year employment agreements ending April 30,
2001, with each of Charles W. Fritz, its President and Chief Executive Officer
and Charles T. Jensen, its Chief Financial Officer, Vice President and
Treasurer, and with Robert T. Durst, Jr., its Chief Technical Officer and Vice-
President of Technologies and Business Development, ending March 31, 2001. The
employment agreements for Messrs. Fritz, Durst and Jensen provide for an annual
salary of $170,000, $140,000 and $110,000, respectively, subject to annual
review by the Board of Directors which may increase but not decrease, such
salary, and participation in all benefits and plans available to executive
employees of NeoMedia. Each employment agreement terminates upon the employee's
death or retirement, and may be terminated by NeoMedia upon the employee's total
disability, as defined in the agreement, or for cause which is defined, among
other things, as the willful failure to perform duties, embezzlement or
conviction of a felony. In addition, Messrs. Fritz, Durst and Jensen participate
in a special insurance disability plan and receive life insurance benefits not
generally offered to other employees and are entitled to certain severance
benefits. These severance benefits vary depending upon the reason for
termination and whether there has been a change in control of NeoMedia. If
termination occurs by NeoMedia (except for cause or total disability) or by the
employee for good reason, as defined in the employment agreement, the agreement
provides that NeoMedia will pay to the terminated employee (i) his salary
through the date of termination, (ii) any deferred and unpaid amounts due under
NeoMedia's Incentive Plan for Management, (iii) any accrued deferred
compensation, (iv) an amount equal to two times the sum of his annual base
salary plus his highest incentive compensation for the last two years, (v)
unpaid incentive compensation including a pro rata amount of contingent
incentive compensation for uncompleted periods, (vi) in lieu of any stock
options granted whether under NeoMedia's Stock Option Plan or otherwise (which
are canceled upon the following payment) a cash amount equal to the aggregate
spread between the exercise prices of all options held at such time by such
terminated employee and the higher of the highest bid price of the common stock
during the twelve months immediately preceding the date of termination, or the
highest price per share of common stock actually paid in connection with any
change in control (as defined in the employment agreement) of NeoMedia provided
that such payments do not violate the provisions of any option or the Stock
Option Plan or other plan then in effect, (vii) an amount equal to any taxes
payable on these payments, (viii) all relocation expenses if he moves his
principal residence more than 50 miles within one year from the date of
termination, and (ix) all legal fees and expenses incurred as a result of the
termination. In addition, unless termination is for cause, NeoMedia must
continue to fund through the terminated employee's normal retirement age any key
man insurance that is in effect on the date of termination, or make a lump sum
payment necessary to continue to pay such premiums and, for a period of two
years following termination, maintain in effect for the benefit of the
terminated employee all employee benefit plans, programs or arrangements in
effect immediately prior to the date of termination. If the terminated
employee's continued participation under such plan and programs is not
allowable, NeoMedia is obligated to provide him with similar benefits. Each
employment agreement provides that services may be performed for companies,
other entities and individuals whether or not affiliated with NeoMedia provided
that the performance of such services does not prevent the employee from
attending to the affairs of NeoMedia and such companies are not in competition
with NeoMedia. The employment agreements of Messrs. Fritz and Durst contain
provisions prohibiting their competing with NeoMedia both during and, depending
upon the reason for such termination, for one year following the termination of
their employment.
INCENTIVE PLAN FOR MANAGEMENT
Effective as of January 1, 1996, NeoMedia adopted an Annual Incentive Plan
for Management ("Incentive Plan"), which provides for annual cash bonuses to
eligible employees based upon the attainment
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of certain corporate and individual performance goals during the year. The
Incentive Plan is designed to provide additional incentive to NeoMedia's
management to achieve these growth and profitability goals. Participation in the
Incentive Plan is limited to those employees holding positions assigned to
incentive eligible salary grades and whose participation is authorized by
NeoMedia's Compensation Committee which administers the Incentive Plan,
including determination of employees eligible for participation or exclusion.
The Board of Directors can amend, modify or terminate the Incentive Plan for the
next plan year at any time prior to the commencement of such next plan year on
January 1.
To be eligible for consideration for inclusion in the Incentive Plan, an
employee must be on NeoMedia's payroll for the last three months of the year
involved. Death, total and permanent disability or retirement are exceptions to
such minimum employment, and awards in such cases are granted on a pro-rata
basis. In addition, where employment is terminated due to job elimination, a pro
rata award may be considered. Employees who voluntarily terminate their
employment, or who are terminated by NeoMedia for unacceptable performance,
prior to the end of the year are not eligible to participate in the Incentive
Plan. All awards are subject to any governmental regulations in effect at the
time of payment.
Performance goals are determined for both NeoMedia's and the employee's
performance during the year, and if performance goals are attained, eligible
employees are entitled to an award based upon a specified percentage of their
base salary.
STOCK OPTION PLAN
Effective as of February 1, 1996 (and amended and restated effective July
18, 1996 and further amended through November 18, 1996), NeoMedia adopted its
1996 Stock Option Plan ("Stock Option Plan"), the purpose of which is to retain
the services of selected employees and attract new employees, consultants and
directors by providing them with the opportunity to acquire a proprietary
interest in NeoMedia and thus share in its growth and success. The Stock Option
Plan provides for the granting of non-qualified stock options and "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, and provides for the issuance of a maximum of 1,500,000 shares
of common stock. Incentive stock options may be granted only to employees of
NeoMedia or its subsidiaries. Stock options, other than incentive stock options,
may be granted to any employee, officer, director or consultant. An employee may
receive more than one grant of a stock option, including simultaneous grants of
different forms of stock options. Options to purchase up to 3,000 shares of
common stock are granted to non-employee directors on the date that such person
first becomes a member of the Board of Directors. Non-employees currently
serving as directors received such options to purchase 3,000 shares as of
November 25, 1996. In addition, beginning with NeoMedia's first annual
stockholder's meeting options to purchase up to an additional 1,000 shares of
common stock will automatically be granted to each non-employee director as of
the date of each annual meeting at which such person is re-elected or continues
to serve as a director.
The Stock Option Plan is currently administered by the Stock Option
Committee of the Board of Directors The Stock Option Committee is currently
composed of A. Hayes Barclay and James J. Keil and may not include an officer or
employee of NeoMedia. No member of the Committee is eligible to receive stock
options under the Stock Option Plan while serving on the Committee other than
the automatic grant of options to non-employee directors. Subject to the
provisions of the Stock Option Plan, the Committee has exclusive authority to
interpret and administer the Stock Option Plan, to select the persons to whom
stock options are granted, to determine the number of shares to be covered by
each stock option and whether the option granted is an incentive stock option or
a non-qualified stock option, to determine whether the shares covered by the
option are restricted as to transferability and to determine the terms and
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conditions upon which each stock option may be exercisable. No stock options
under the Stock Option Plan can be granted after January 31, 1999, and the
maximum term of an option is ten years from the date of its grant. Upon the
occurrence of certain transactions, including a sale, transfer or other
disposition resulting in Charles W. Fritz, William E. Fritz and their affiliates
owning less than a specified percentage of the voting stock of NeoMedia or the
execution of a definitive agreement for the sale of all or substantially all of
NeoMedia's assets or its consolidation or merger where NeoMedia is not the
surviving entity, each then outstanding option immediately becomes exercisable.
Under certain circumstances, the shares of common stock issuable upon exercise
of the options may be increased or decreased.
The exercise price of each option is determined by the Committee and must
be either the fair market value of each share subject to the option on the date
the option is granted, or at such other price as the Committee determines, but
not less than 100% of the fair market value on the date of the grant.
In lieu of tendering a cash payment to satisfy the option price, the
optionee may, in the Committee's discretion, satisfy all or a portion of such
option price by delivering shares of NeoMedia's common stock. Such shares of
common stock are valued at their fair market value at the time of exercise.
Options under the Stock Option Plan are non-transferable other than by
will, the laws of descent or distribution or pursuant to a qualified domestic
relations order. Options may be exercised only during the lifetime of the
optionee and, except as may otherwise be provided, only by such individual. The
Committee, in its discretion, may provide that an option is exercisable in
installments and at specified times, and, at any time after the granting of an
option, may accelerate the installment exercise dates. Each grant of an option
is confirmed by an agreement ("Stock Option Agreement") between NeoMedia and the
optionee, which provides, among other things, that shares received upon exercise
of the option cannot be sold, transferred or otherwise disposed of for at least
six months from the date of the Stock Option Agreement, none of the outstanding
options can be exercised by the optionee thereof unless such optionee has been
in the continuous employ of NeoMedia to the date of exercise, subject to
termination of employment, death and disability and gives NeoMedia the right,
under certain circumstances, to suspend an optionee's right to exercise an
option.
For options granted prior to July 18, 1996, depending upon the
circumstances of an optionee's termination of employment, such optionee's stock
options may be exercisable following such termination for up to three months,
which is extended to twelve months from the date of death if the optionee dies
during such three month period. If the termination is due to death, the option
is exercisable for twelve months following the date of death. If the optionee's
employment with NeoMedia is terminated without the consent of NeoMedia (other
than due to the optionee's death) or for cause, as determined by the Committee,
then such optionee's right to exercise the then-outstanding stock options
terminates immediately. Options granted subsequent to July 18, 1996, terminate
on the earlier of an optionee's termination of employment for any reason or the
expiration of the term of the option, although the Committee, in its sole
discretion, may allow the option to be exercised for any period following such
termination but no longer than the expiration of the term. If at any time after
termination an optionee engages in "detrimental activity", as defined in the
Stock Option Plan, the Committee, in its discretion, may cause the optionee's
right to exercise the option to be forfeited. Options then exercisable held by a
non-employee director when such person ceases being a director must be exercised
within twelve months following the date such person is no longer serving as a
director, unless such termination of service as a director is due to such
person's death, permanent disability or retirement pursuant to a Company policy,
in which case, such options are exercisable during their remaining terms. The
employment agreements of Messrs. Fritz, Durst and Jensen each provide that upon
termination of employment by NeoMedia, other than for cause, death or
retirement, or by the employee for "Good Reason" as defined in the employment
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agreement, any time following this offering, any options granted to the
terminated employee are canceled and, in lieu thereof, such terminated employee
is to receive a cash amount equal to the aggregate spread between the exercise
prices of all options held at such time by such terminated employee and the
higher of the highest bid price of the common stock during the twelve months
immediately preceding the date of termination, or the highest price per share of
common stock actually paid in connection with any change in control of NeoMedia
(as defined), provided that such payments do not violate the provisions of any
option or the Stock Option Plan or other plan then in effect.
As of March 14, 1997, options to purchase an aggregate of 760,804 shares of
common stock, at an exercise price of $.84, were granted and are outstanding
under NeoMedia's Stock Option Plan, including options to Charles T. Jensen, its
Chief Financial Officer, and to Robert T. Durst, Jr., its Vice-President of
Technologies and Business Development, to purchase 90,386 and 153,657 shares of
common stock, respectively. In addition, options to purchase an aggregate of
216,907 shares of common stock in a range of $5.50 to $6.19 per share have also
been granted to employees, directors and consultants and are outstanding.
Effective February 1, 1996 (and amended and restated effective July 18,
1996), DTM adopted a 1996 stock option plan providing for the issuance of a
maximum of 400,000 shares of DTM common stock and identical in all other
material respects to NeoMedia's Stock Option Plan. As a result of the Migration
Merger, the DTM stock option plan is no longer in effect, no further options
under the DTM stock option plan will be issued and holders of options to
purchase shares of DTM common stock will, in lieu thereof, receive shares of
NeoMedia's Common stock upon exercise of their options. As of the March 14,
1997, options to purchase 326,296 and 4,520 shares of common stock under the DTM
stock option plan, at an exercise price of $.84 and $5.90 per share,
respectively, have been granted and are outstanding.
Following the Migration Merger, the aggregate number of shares of common
stock issuable under NeoMedia's Stock Option Plan was not increased by the
number of shares of stock issuable under the DTM stock option plan but remains
at a maximum of 1,500,000 shares, including options granted under the DTM stock
option plan. As of March 14, 1997, of the 1,500,000 options issuable under
NeoMedia's Stock Option Plan, there are currently options granted to purchase an
aggregate of 1,308,527 shares of common stock (including 330,816 options granted
under the DTM stock option plan), and 183,021 options reserved for future
issuance under the Stock Option Plan, and NeoMedia is obligated to grant 8,000
options in March 1997, as a result of the hiring of new employees.
In consideration of loans made by him to it, NeoMedia has also granted to
Charles W. Fritz a warrant to purchase up to 260,000 shares of common stock at
an exercise price of $8.85. This warrant is exercisable for four years
commencing November 25, 1997, and contains anti-dilution provisions.
NeoMedia has agreed with Joseph Charles that except with respect to options
granted as of November 25, 1996 and the grant of options under the Stock Option
Plan, it will not issue any options until after November 25, 1997.
In addition, grantees of options to purchase common stock who are eligible
to resell the common stock issuable upon exercising the option under Rule 701 of
the Securities Act have agreed (i) not to sell such common stock until after
November 25, 1997 and (ii) following such period, to sell in accordance with the
volume limitations of Rule 144(e)(1) of the Securities Act which limits the
number of shares that may be sold by such person during any three month period
to no more than the greater of (a) one percent of NeoMedia's then outstanding
shares of common stock or (b) the average weekly trading volume of the common
stock during the four calendar weeks preceding the filing of notice of sale with
the Commission,
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or if no notice is required to be filed, the date of receipt by a broker to sell
or the date of execution of the sale.
The following presents certain information on stock options and warrants
for the Named Executive Officers for the year ended December 31, 1996:
<TABLE>
<CAPTION>
OPTION/WARRANT GRANTS IN 1996
NUMBER OF % OF TOTAL
SECURITIES OPTIONS /
UNDERLYING WARRANTS
OPTIONS / GRANTED TO
WARRANTS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN 1996 PRICE DATE
- ---- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Charles W. Fritz...................... 260,000 100.0% $8.85 11/25/01
Charles T. Jensen.................... 90,386 6.4% $ .84 02/01/06
Robert T. Durst, Jr.................. 153,657 10.8% $ .84 04/01/06
</TABLE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth options exercised by NeoMedia's Named
Executive Officers during fiscal 1996, and the number and value of all
unexercised options at fiscal year end. The value of "in-the-money" options
refers to options having an exercise price which is less than the market price
of NeoMedia's stock on December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-
SECURITIES THE-MONEY
UNDERLYING OPTIONS AT
OPTIONS AT DECEMBER 31,
DECEMBER 31, 1996 (BASED ON
1996 $4.785 PER SHARE)
SHARES ACQUIRED VALUE # EXERCISABLE/ # EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------- -------------- -----------------
<S> <C> <C> <C> <C>
Charles W. Fritz -- -- 0/260,000 $0/$0
Charles T. Jensen -- -- 0/90,386 $0/$432,497
Robert T. Durst, Jr. -- -- 0/153,657 $0/$735,249
</TABLE>
For the year ended December 31, 1996, there have not been any long term
incentive plan awards made to a Named Executive Officer.
401(K) PLAN
NeoMedia maintains a 401(k) Profit Sharing Plan and Trust (the "401(k)
Plan"). All employees of NeoMedia who are 21 years of age and who have completed
three months of service are eligible to
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participate in the 401(k) Plan. The 401(k) Plan provides that each participant
may make elective contributions of up to 20% of such participant's pre-tax
salary (up to a statutorily prescribed annual limit, which is $9,500 for 1996)
to the 401(k) Plan, although the percentage elected by certain highly
compensated participants may be required to be lower. All amounts contributed to
the 401(k) Plan by employee participants and earnings on these contributions are
fully vested at all times. The 401(k) Plan also provides for matching and
discretionary contributions by NeoMedia. To date, NeoMedia has not made any such
contributions.
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SIGNATURES
In accordance with 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 in the City of Fort Myers, State of
Florida, on the 20th day of June, 1997.
NEOMEDIA TECHNOLOGIES, INC.
Registrant
By: /s/ CHARLES W. FRITZ
---------------------------
Charles W. Fritz, President,
Chief Executive Officer and Chairman
of the Board
In accordance with 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 on June 20, 1997.
SIGNATURES TITLE
/s/ CHARLES W. FRITZ President, Chief Executive Officer,
------------------------ Chairman of the Board and Director
Charles W. Fritz
/s/ WILLIAM E. FRITZ Secretary and Director
------------------------
William E. Fritz
/s/ CHARLES T. JENSEN Chief Financial Officer,
------------------------ Treasurer and Director
Charles T. Jensen
/s/ ROBERT T. DURST, JR. Director
------------------------
Robert T. Durst, Jr.
/s/ A. HAYES BARCLAY Director
------------------------
A. Hayes Barclay
/s/ JAMES J. KEIL Director
------------------------
James J. Keil
/s/ PAUL REECE Director
-------------------------
Paul Reece
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