SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
FORM 10-K/A-2
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1999
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Commission file number 0-10665
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SofTech, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2453033
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(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification Number)
4695 44th Street SE, Suite B-130, Grand Rapids, MI 49512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (616) 957-2330
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
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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 |_|
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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part II of this Form 10-K or any amendment to this
Form 10-K. |_|
State the aggregate market value of the voting stock held by non-affiliates of
the registrant: $12,549,000 as of August 20, 1999. On August 20, 1999 the
registrant had outstanding 8,150,289 shares of common stock of $.10 par value,
which is the registrant's only class of common stock.
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Part III, Items 10, 11, 12, and 13 of this report on Form 10-K are hereby
amended and restated in full by adding those items as follows:
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information regarding the Directors and
executive officers of SofTech, Inc. (the "Company") as of August 20, 1999, based
on information furnished by them to the Company.
DIRECTORS
Mark R. Sweetland, 50, term expires in 1999; Mr. Sweetland was appointed
President and Chief Executive Officer of the Company in September 1996. Mr.
Sweetland served as Vice President of the Company from March 1994 until such
appointment. Since March 1992, Mr. Sweetland has served the Company as President
of Information Decisions, Inc. ("IDI"), a wholly owned subsidiary of the
Company. Mr. Sweetland has been employed by IDI since 1980 in various account
representative and management roles. Mr. Sweetland was appointed a Director of
the Company in September 1996.
Timothy L. Tyler, 46, term expires in 1999; Mr. Tyler has served since
1995 as President of Borroughs Corporation, a privately held, Michigan-based
business that designs, manufactures and markets industrial and library shelving
units, metal office furniture and check out stands primarily in the United
States. Mr. Tyler served as President and General Manager of Tyler Supply
Company from 1979 to 1995. Mr. Tyler was appointed a Director of the Company in
September 1996.
Ronald Elenbaas, 46, term expires in 2000; Mr. Elenbaas is President of
Stryker Surgical Group, a division of Stryker Corporation. He has been employed
by Stryker Corporation in various positions since 1975 and was promoted to his
present position in 1986. Mr. Elenbaas also serves on the Board of the American
Red Cross (Kalamazoo and Cass County, Michigan). Mr. Elenbaas was appointed a
Director of the Company in September 1996.
Kenneth Ledeen, 53, term expires in 2000; Mr. Ledeen is Chairman and CEO
of Nevo Technologies, Inc., a Massachusetts based computer software consulting
and services firm. From 1993 to 1997, Mr. Ledeen was a consultant with Covington
Associates, a Massachusetts based investment advisor. From 1986 to 1993, Mr.
Ledeen was President of Sigma Design, a company that developed CAD/CAM software
products, and from 1980 to 1986 he served as Vice President at Computervision
Corporation. Mr. Ledeen was appointed a Director of the Company in September
1996.
William Johnston, 52, terms expires in 2001; Mr. Johnston has served since
1991 as President of Greenleaf Capital, Inc., a Michigan-based investment
advisory and venture capital firm. Mr. Johnston was appointed a Director of the
Company in September 1996.
Timothy J. Weatherford, 35, term expires in 2001; Mr. Weatherford has
served as Vice President of the Company since September 1996. Mr. Weatherford
served as Branch Manager of the Indiana office of the Company's Computer Aided
Design ("CAD") Division from his hiring in April 1990 until such appointment.
Prior to joining the Company, Mr. Weatherford was employed by CAD/CAM
Engineering from 1987 to 1990 in various capacities and by General Motors from
1982 to 1987 in various capacities. Mr. Weatherford was appointed a Director of
the Company in September 1996.
Each member of the Board of Directors also serves on the Audit Committee
of the Board of Directors. The Audit Committee recommends the engagement of the
Company's independent accountants. In addition, the Audit Committee reviews
comments made by the independent accountants with respect to internal controls
and considers any corrective action to be taken by management; reviews internal
accounting procedures and controls within the Company's financial and accounting
staff; and reviews the need for any non-audit services to be provided by the
independent accountants.
Each member of the Board of Directors also serves on the Compensation
Committee of the Board of Directors. The Compensation Committee recommends
salaries and bonuses for officers and general managers and establishes general
policies and procedures for salary and performance reviews and the granting of
bonuses to other employees. It also administers the Company's 1994 Stock Option
Plan (the "Plan") and the SofTech Employee Stock Purchase Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)") requires the Company's Directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities (collectively, "Section 16 reporting persons"), to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Section 16 reporting persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations that no other
reports were required, during the fiscal year ended May 31, 1999, the Section 16
reporting persons complied with all Section 16(a) filing requirements applicable
to them, except Mr. Mullaney inadvertently failed to report the sale of 17,300
shares in August 1998, 85,000 shares in December 1998 and 5,000 shares in
January 1999.
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ITEM 11 - EXECUTIVE COMPENSATION
COMPENSATION OF NON-EMPLOYEE DIRECTORS
For the 1999 fiscal year, non-employee Directors received options in lieu
of cash remuneration for their services. Employee Directors were not paid any
fees or additional compensation for service as members of the Board of Directors
or any committee thereof.
Pursuant to the Company's 1994 Stock Option Plan (the "1994 Stock Option
Plan"), non-employee Directors may be granted non-qualified options to purchase
shares of Common Stock of the Company. The Compensation Committee of the Board
of Directors administers the 1994 Stock Option Plan and determines which
Directors will receive stock options, the number of shares subject to each stock
option, the vesting schedule of the options, and the other terms and provisions
of the options granted. Stock options typically terminate upon a Director
leaving his or her position for any reason other than death or disability. No
option may be exercised after the expiration of ten years from its date of
grant. Under the Plan, all non-employee Directors receive 10,000 options upon
appointment to the Board and receive 3,000 options on the anniversary date of
the initial award for as long as the Director serves as a Director of the
Company. During the fiscal year ended May 31, 1999, there were 12,000 options
granted to non-employee Directors.
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the President and
Chief Executive Officer of the Company and each of the Company's three other
most highly compensated executive officers (the "Named Executives") during or
with respect to the 1997, 1998 and 1999 fiscal years for services in all
capacities to the Company.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
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Other Annual Securities All Other
Name and Fiscal Salary ($) Bonus Compensation Underlying Compensation ($)(2)
Principal Position Year (1) ($) ($) Options (#)
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<S> <C> <C> <C> <C> <C> <C>
Mark R. Sweetland (3) 1999 190,000 -- -- -- 3,000
President and 1998 80,000 -- -- -- 1,600
Chief Executive Officer 1997 156,000 25,000 -- -- 379,993(4)
Joseph P. Mullaney 1999 160,000 -- -- -- 3,000
Vice President and 1998 80,000 -- -- -- 1,600
Chief Financial Officer 1997 125,000 233,125 -- 150,000 4,582
Timothy J. Weatherford(5) 1999 170,000 -- -- -- 3,000
Executive Vice 1998 80,000 -- -- -- 1,600
President, Sales 1997 81,667 37,500 83,329(6) -- 378,531(4)
</TABLE>
(1) Includes amounts deferred by Messrs. Sweetland, Mullaney and Weatherford
under the Company's 401(k) plan.
(2) Except as otherwise noted, amounts listed in this column reflect the
Company's contributions to each of the Named Executive's accounts under the
Company's 401(k) plan.
(3) Mr. Sweetland was appointed as Director, President and Chief Executive
Officer in September 1996. Prior to September 1996, Mr. Sweetland served as Vice
President of the Company.
(4) Represents 204,750 shares, fully vested, of the Company's Common Stock
awarded on April 17, 1997.
(5) Mr. Weatherford was appointed as Director, Executive Vice President, Sales,
in September 1996. Prior to September 1996, Mr. Weatherford served as Branch
Manager of the Company's Indianapolis sales office.
(6) Represents sales commissions paid under Branch Manager Sales Compensation
Plan.
OPTION GRANTS IN THE LAST FISCAL YEAR
No stock options or stock appreciation rights ("SARs") were granted to
Named Executives of the Company during fiscal year 1999.
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AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND OPTION VALUE AT MAY 31,
1999.
The following table sets forth the shares acquired and the value realized
upon exercise of stock options during the 1999 fiscal year by the President and
Chief Executive Officer and each Named Executive and certain information
concerning the number and value of unexercised options.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Number of Unexercised In-the-Money Option
Shares Acquired Value Realized Options at May 31, 1999 At May 31, 1999 ($)
Name on Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
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<S> <C> <C> <C> <C>
Mark R. Sweetland -- -- 43,000 / -- 80,980 / --
Timothy J. Weatherford -- -- 2,500 / -- -- / --
</TABLE>
(1) Market value of underlying securities at May 31, 1999 based on a per share
value of $2.25 less the aggregate exercise price.
EMPLOYMENT CONTRACTS
The Company does not have employment contracts with its Named Executives.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each of the members of the Board of Directors served as members of the
Compensation Committee of the Company's Board of Directors during the fiscal
year ended May 31, 1999. Messrs. Sweetland and Weatherford, officers of the
Company, participated in the deliberations concerning compensation of all
executive officers other than themselves.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
Information concerning beneficial ownership of the Company's Common Stock,
as of August 20, 1999, for (i) each person named in the "Summary Compensation
Table" below as a Named Executive of the Company during the fiscal year ended
May 31, 1999, (ii) each Director and each of the Company's nominees to the Board
of Directors and (iii) all Directors and executive officers of the Company as a
group is set forth below.
Percentage of
Outstanding Common
Shares of Common Stock Stock Beneficially
Beneficially Owned as of Owned as of
Name of Beneficial Owner August 20, 1999 (1) August 20, 1999 (2)
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Mark R. Sweetland 305,486(3) 3.66%
Timothy J. Weatherford 229,141(3) 2.74%
Joseph P. Mullaney 91,328 1.09%
William Johnston 1,312,148(3)(4) 15.72%
Timothy L. Tyler 10,200(3) *
Ronald Elenbaas 7,200(3) *
Kenneth Ledeen 7,200(3) *
All Directors and executive 1,962,703(5) 23.51%
officers as a group (7 persons)
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* Less than one percent (1%).
(1) Based upon information furnished by the persons listed. Except as
otherwise noted, all persons have sole voting and investment power over
the shares listed. A person is deemed, as of any date, to have "beneficial
ownership" of any security that such person has the right to acquire
within 60 days after such date.
(2) There were 8,150,289 shares outstanding on August 20, 1999. In addition,
77,300 shares issuable upon exercise of stock options and 120,000 shares
issuable upon exercise of warrants held by certain Directors and executive
officers of the Company are deemed to be outstanding as of August 20, 1999
for purposes of certain calculations in this table. See notes 3, 4 and 5
below.
(3) Includes shares issuable under stock options as follows: Mr. Sweetland -
43,000 shares; Mr. Weatherford - 2,500 shares; Mr. Tyler - 10,200; Mr.
Johnston - 7,200; Mr. Elenbaas - 7,200; Mr. Ledeen - 7,200.
(4) Includes warrants for 120,000 shares issuable in exchange for $8.00 per
share.
(5) Includes 77,300 shares issuable upon exercise of stock options and 120,000
shares issuable upon exercise of warrants held by all Directors and
executive officers as a group.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANACTIONS
As disclosed in Footnote F to the Company's 1999 Annual Report on Form
10-K, the Company has entered into three distinct financing arrangements with
Greenleaf Capital during fiscal years 1998, 1999 and 2000. William D. Johnston,
a director of SofTech since September 1996, is the President of Greenleaf
Capital.
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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.
SofTech, Inc.
By /S/ Joseph P. Mullaney
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Joseph P. Mullaney, Vice President
and Chief Financial Officer
Date: September 29, 1999
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