FORM 10-K/A
Amendment No. 1 to Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the fiscal year ended 12/31/97
OR
( )TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934. For the transition period from ---------
- ---to------------
1MAGE Software, Inc.
(Exact name of Registrant as specific in its charter)
0-12535
(Commission File Number)
Colorado 84-0866294
(State of Incorporation) (IRS
Employer Identification
Numbers)
6486 S. Quebec Street, Englewood CO 80111 (303) 694-9180
(Address of principal executive offices) (Registrant's telephone
#, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
NONE NONE
(Title of Class) (Name of Exchange)
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock - $.004 par value
(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 statements
incorporated by reference in Part III of the Form 10-K or any amendment of
this Form 10-K. Yes [ ] No [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 5, 1998: $741,185.
As of March 5, 1998, there were 2,142,845 shares of the Registrant's
common stock outstanding.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information concerning the Company's
Executive Officers and Directors:
First Year As
Executive
Officer or Position
Name Age Director With Company
David R. DeYoung 53 1981 President, Chief
Executive Officer and
Director
Charles E. Burns 67 1981 Director
Robert Wiegand II 51 1992 Secretary and Director
Mary Anne DeYoung 44 1994 Treasurer, Chief Financial
Officer, Assistant
Secretary
Richard A. Knapp 52 1997 Director
DAVID R. DEYOUNG - CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR
Mr. DeYoung has been President, Chief Executive Officer and a
Director of the Company since its formation in 1981. He served in similar
capacities with the Company's predecessor corporation from 1979 to 1981.
During 1979, Mr. DeYoung was employed by ESCOM/Mountain States, a Prime
dealer, as Vice President of Sales. From 1972 to 1979, Mr. DeYoung was
employed by NCR Corporation and, during part of that time, was a District
Manager in the division of Commercial, Industrial, Medical, Educational
and Governmental systems. He holds a Bachelor of Science Degree in
Business Administration and Computer Science from California State
Polytechnic University. Mr. DeYoung is the spouse of Mary Anne DeYoung.
CHARLES E. BURNS - DIRECTOR
Mr. Burns has served on the Board of Directors since 1981. He served
as Treasurer of the Company from March 1, 1994 until December 15, 1994.
In March 1994, Mr. Burns resigned his position as Executive Vice President
and Chief Operating and Financial Officer and retired from full time
employment with the Company. Mr. Burns had served as Executive Vice
President and Chief Operating Officer since December 1, 1988 and as Chief
Financial Officer since March 31, 1989. He joined the Company in November
1986 as Director of Transportation and was promoted to Vice President in
April 1988. From January 1979 until October 1985, Mr. Burns was employed
by Ringsby Truck Lines. From 1979 to 1983, Mr. Burns was Vice President
of Administration with that firm, and from 1983 to 1985 he was President
and Chief Operating Officer. He holds a Bachelor of Science Degree in
Accounting from Stanford University.
ROBERT WIEGAND II - SECRETARY AND DIRECTOR
Mr. Wiegand was elected to the Board of Directors in July 1992. Mr.
Wiegand was appointed to the office of Secretary of the Company on March
1, 1994. Mr. Wiegand is presently a lawyer in private practice. From
January 15, 1992 to December 26, 1992, he was Vice-President of
Administration for Rose Manufacturing Co., a privately held manufacturer
of safety equipment based in Englewood, Colorado. Mr. Wiegand has
practiced law for 23 years, and prior to joining Rose Manufacturing, was
special counsel with Pendleton & Sabian, P.C., a law firm in Denver. Mr.
Wiegand graduated Phi Beta Kappa from the Tulane University of Louisiana
in 1970 and went on to receive a law degree and was admitted to practice
in Louisiana in 1972 and Colorado in 1977. Since 1976, Mr. Wiegand's
practice has been limited to securities offerings, estate planning,
business organizations and tax law. In addition to membership in six bar
Associations, Mr. Wiegand has been admitted to practice before the U.S.
District Court (Colorado and ED-Louisiana) and before the U.S. Court of
Appeals (5th Circuit).
MARY ANNE DEYOUNG - TREASURER, CHIEF FINANCIAL OFFICER, ASSISTANT
SECRETARY AND DIRECTOR
Ms. DeYoung was elected to the Board of Directors in April 1996. Ms.
DeYoung was elected Treasurer, Chief Financial Officer and Assistant
Secretary on December 15, 1994. Ms. DeYoung has served as Vice President,
Finance and Administration since July 1986. Ms. DeYoung joined the
Company as Controller in April 1981. From 1975 to 1981, Ms. DeYoung was a
systems analyst with Arthur Andersen LLP, a financial analyst, and an
independent financial consultant. Ms. DeYoung holds a Bachelor of Science
Degree in Accounting from the University of Santa Clara. Ms. DeYoung is
the spouse of David R. DeYoung.
RICHARD A. KNAPP - DIRECTOR
Mr. Knapp was elected to the Board of Directors in May 1997. Mr.
Knapp is currently the President and CEO of Lease Capital Corporation and
has served in that capacity since 1990. From 1984 until 1990, Mr. Knapp
was a regional manager for both Paccom Leasing Corporation and Security
Pacific Business Finance. In total, Mr. Knapp has been associated with
the banking/finance industry for nearly thirty years. He holds a Bachelor
of Science degree in Finance from the University of Arizona.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the
common stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the exchange on
which the common stock is listed for trading. Those persons are required
by regulations promulgated under the Exchange Act to furnish the Company
with copies of all reports filed pursuant to Section 16(a). One of the
Company's directors, Richard A. Knapp, did not file his initial statement
of beneficial ownership on Form 3 after being elected as a director in
May, 1997, until June of 1997.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the executive compensation of the
Company's Chief Executive Officer for each of the Company's last three
fiscal years. There were no other Executive Officers serving at the end
of the last fiscal year whose compensation was greater than $100,000.
<TABLE>
<CAPTION>
ANNUAL LONG TERM ALL OTHER
COMPENSATION* COMPENSATION** COMPENSATION***($)
------------- ------------ ------------------
SALARY BONUS AWARDS
NAME AND SECURITIES
PRINCIPAL UNDERLYING
POSITION YEAR ($) ($) OPTIONS(#)
- -------- ---- ----- ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
D.R. DeYoung 1997 129,820 0 88,000 7,982
CEO 1996 93,188 4,520 94,000 7,244
1995 86,043 0 150,000 7,959
</TABLE>
* Mr. DeYoung did not receive additional compensation other than noted
above the aggregate amount of which was the lesser of either $50,000 or
10% of the total of his annual salary and bonus.
** Mr. DeYoung was not awarded restricted stock nor was there any LTIP
payout to him.
*** Includes insurance premiums paid by the Company for term life and
disability insurance, as well as premiums paid for a key-man life
insurance policy which has the death benefit assigned to the Company and
the cash value of the policy intended to accrue for the benefit of Mr.
DeYoung.
Option Grants in Last Fiscal Year
The following table sets forth the information concerning individual
grants of stock options during the last fiscal year to the named Executive
Officer:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
NAME OPTIONS IN FISCAL BASE PRICE EXPIRATION
GRANTED (#) YEAR ($/SHARE) DATE
- -------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
D.R. DeYoung 8,000 2.0% $0.625 5/26/07
D.R. DeYoung 80,000 17.5% $0.625 11/26/07
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning each exercise
of stock options during the last fiscal year by the named Executive
Officer and the fiscal year-end value of unexercised options:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
SHARES UNDERLYING IN-THE
ACQUIRED ON VALUE UNEXERCISED MONEY OPTIONS
EXERCISE REALIZED OPTIONS AT FISCAL AT FISCAL
NAME (#) ($) YEAR-END (#) YEAR-END ($)
- ---- ----------- ------- ----------------- -------------
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
------------- -------------
<S> <C> <C> <C> <C>
D.R. DeYoung 0 $0 317,375/44,000 $0/$0
</TABLE>
EMPLOYMENT CONTRACT
Mr. DeYoung, the Company's President and Chief Executive Officer, is
employed pursuant to a three-year employment contract between the Company
and Mr. DeYoung, which expires on October 31, 1999. Since November 1,
1996, the compensation of Mr. DeYoung has been established under the terms
of this employment contract. The contract calls for an annual base
salary, in an amount determined annually by the Board of Directors,
payable semi-monthly, plus expenses and normal fringe benefits. Mr.
DeYoung earns a bonus of 5% of the Company's pretax earnings, calculated
on a quarterly basis. An annual bonus may be paid to Mr. DeYoung based on
the performance of the Company in the discretion of the Board of
Directors. Mr. DeYoung's employment contract provides that, if his
employment is terminated for any reason other than for cause, he is
entitled to a cash severance package equal to one year's cash
compensation. In addition, Mr. DeYoung is entitled to receive a grant of
a sufficient number of ten year options as are necessary to permit him to
retain the same percentage of beneficial ownership interest in the Company
as he held on December 16, 1996. These grants would be made from the
Company's Equity Incentive Plan at the fair market value of the common
stock on the date of grant.
Ms. DeYoung, the Company's Vice President of Finance and Chief
Financial Officer, is employed pursuant to a three-year employment
contract between the Company and Ms. DeYoung which was effective September
1, 1996. Her compensation is established under the terms of this
employment contract. The contract calls for an annual base salary of at
least $90,000, expenses, normal fringe benefits, as well as a bonus equal
to 4% of the Company's pretax earnings, calculated on a quarterly basis.
In addition, Ms. DeYoung's employment contract provides that should her
employment be terminated for any reason other than for cause, she is
entitled to a cash severance package equal to one year's cash
compensation.
COMPENSATION OF DIRECTORS
The Company currently pays non-employee Directors $1,000 per quarter
plus specific hourly fees for special meetings or additional
participation. Pursuant to the 1996 Stock Option Plan (the "1996 Plan"),
members of the Compensation Committee of the Board of Directors are
automatically granted an option on the last trading day in June to
purchase 4,000 shares of Common Stock at 100% of the fair market value on
such date. On June 30, 1997 each member of the Compensation Committee
received an automatic grant to purchase 4,000 shares of common stock at
$.8398, the fair market value on that date. In addition to the automatic
grants, the Company granted each member of the Compensation Committee
stock options to purchase 12,000 shares of common stock at $0.625 per
share, the fair market value on November 26, 1997. Another non-employee
director was granted options to purchase 2,000 shares at $1.469 per share
and an option to purchase 6,000 shares at $.625; such exercise prices were
in each case equal to the fair market value at the date of grant.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following sets forth the number of shares of Common Stock owned
by each Executive Officer and Director of the Company, by all persons
known to the Company to be the beneficial owner of more than 5% of any
class of the Company's voting securities, and by all Executive Officers
and Directors as a group. Unless otherwise noted, the share ownership
specified in the following table represents both record and beneficial
ownership as of March 27, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL
OWNERSHIP(1) % OF CLASS
- ------------------------------------ ------------- -----------
<S> <C> <C>
David R. DeYoung 616,331(2),(3) 24.1%
6486 South Quebec Street,
Englewood, Colorado 80111
Charles E. Burns 26,900(4) 1.2%
1013 Figueora Street,
Folsom, California 95630
Robert Wiegand II 42,500 (4) 2.0%
5261 South Quebec Street,
Greenwood Village, Colorado 80111
Mary Anne DeYoung 114,925 (5) 5.1%
6486 South Quebec Street,
Englewood, Colorado 80111
Richard A. Knapp 6,000(6) .3%
19590 E. Main Street, Suite 207,
Parker, Colorado 80134
Daniel N. Warner 155,920 (7) 7.3%
330 Lafayette,
Denver, Colorado 80218
Spencer D. Lehman 238,436 (8) 10.4%
1250 4th Street,
Santa Monica, California 90401
John G. Mazza 260,868 (8) 11.4%
6613 Zumirez Drive,
Malibu, California 90265
All Executive Officers and
Directors as a Group - 5 Persons 806,656 (9) 29.6%
</TABLE>
(1) Beneficial owners are believed to have sole voting and investment
power with respect to the shares shown unless otherwise indicated.
(2) Includes: 317,175 options to purchase Common Stock; and 100,000
warrants to purchase Common Stock. See EXECUTIVE COMPENSATION -
Employment Contract.
(3) Excludes: 20,000 options to purchase Common Stock which are not yet
vested; and any shares attributable to Mr. DeYoung's right under his
employment contract to maintain his proportional ownership of the
Company under certain circumstances. See EXECUTIVE COMPENSATION -
Employment Contract.
(4) Includes 20,500 options to purchase Common Stock
(5) Includes 114,800 options to purchase Common Stock; excludes 10,000
options to purchase Common Stock which are not yet vested.
(6) Consists of 6,000 options to purchase Common Stock
(7) Includes 51,701 shares of Common Stock owned of record by Comlease.
Mr. Warner is managing general partner of Comlease and has voting
power over the shares held by Comlease.
(8) Includes two convertible promissory notes plus accrued interest which
are convertible into 138,868 shares of Common Stock.
(9) Includes 479,175 options to purchase Common Stock and 100,000
warrants to purchase Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its executive offices from a general partnership,
Comlease. Mr. DeYoung, an Executive Officer and Director of the Company,
owns a partnership interest in Comlease of 11.75%. Lease payments to the
partnership were $85,200 for the year ended December 31, 1997. This lease
will expire on October 31, 1998. Management of the Company believes that
the terms of the lease are as favorable to the Company as could have been
obtained from third parties at the time the lease was signed.
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.
1MAGE SOFTWARE, INC.
By: /s/ David R. DeYoung Date: April 27, 1998
David R. DeYoung
President
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 date indicated.
By: /s/ David R. DeYoung Date: April 27, 1998
David R. DeYoung, President
and Principal Chief Executive Officer
By: /s/ Charles E. Burns Date: April 27, 1998
Charles E. Burns
Director
By: /s/ Robert Wiegand, II Date: April 27, 1998
Robert Wiegand, II
Director and Secretary
By: /s/ Mary Anne DeYoung Date: April 27, 1998
Mary Anne DeYoung,
Vice President, Finance
Principal and Accounting Officer
By: /s/ Richard A. Knapp Date: April 27, 1998
Richard A. Knapp
Director
EXHIBIT INDEX
No. Description Method of Filing
- --- ----------- ----------------
23.1* Consent of Karsh & Co. P.C. Filed herewith electronically
23.2* Consent of Cribari
& Gustafson, LLP Filed herewith electronically
27* Financial Data Schedule Filed herewith electronically
* Previously filed
