U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission File No.: 0-13117
ION NETWORKS, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 22-2413505
------------------------------- -----------------------------------
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
1551 S. Washington Ave., Piscataway, NJ 08854
--------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (732) 529-0100
--------------
Securities registered under Section 12(b) of the Exchange Act: None
----
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
----------------------------
[X] 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.
[ ] 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 information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
The issuer's revenues for its most recent fiscal year totaled $22,668,833.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average of the bid and asked prices as reported by the
Nasdaq Stock Market as of June 22, 2000 was approximately $86,618,805.
There were 15,621,862 shares of Common Stock outstanding as of June 22, 2000.
DOCUMENTS INCORPORATED BY REFERENCE: None.
This amendment to Form 10-KSB for the period ended March 31, 2000 is
filed to include Items 9-12 contained in Part III of Form 10-KSB that
were previously incorporated by reference to the Company's definitive
Proxy Statement in connection with the Company's 2000 Annual Meeting of
Stockholders.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, their ages and
present positions with the Company are as follows:
<TABLE>
<CAPTION>
Director
Name Age Position Held with the Company Since
---- --- ------------------------------ -----
<S> <C> <C>
Stephen M. Deixler(1)(2)(3)(4) 65 Chairman of the Board of Directors 1985
Stephen B. Gray(2)(4) 42 President, Chief Executive Officer, Chief 1996
Operating Officer and Director
Alfred M. Leonardi 48 Chief Financial Officer, Treasurer and Secretary Not
applicable
Jane Kaufman 52 Executive Vice President - Marketing and Not
Business Development applicable
Alexander C. Stark, Jr. (1)(2) (3)(4) 67 Director 1997
Alan Hardie (3) 60 Director 1999
William Martin Ritchie(4) 51 Director 1999
Baruch Halpern 49 Director 1999
</TABLE>
INFORMATION ABOUT DIRECTORS
Set forth below is certain information with respect to each director:
STEPHEN M. DEIXLER has been Chairman of the Board of Directors since
1985 and served as Chief Executive Officer of the Company from April 1996 to May
1997. He was President of the Company from May 1982 to June 1985 and served as
Treasurer of the Company from its formation in 1982 until September 1993. Mr.
Deixler was the Chairman of Princeton Credit Corporation until April 1995.
------------------
(1) Member of Compensation/Stock Option Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Strategic Steering Committee
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<PAGE>
STEPHEN B. GRAY has been President and Chief Operating Officer of the
Company since April 1996. He has served as the Chief Executive Officer of the
Company and a director since May 1997. He also is a director of ION Networks, BV
and ION Networks, Ltd., wholly-owned subsidiaries of the Company. He served as
Senior Vice President-Sales, Marketing and Support of the Company from December
1994 through March 1996. Prior to December 1994, Mr. Gray held various
management and executive positions at IBM and Sieman's Nixdorf, and he was also
an independent consultant, engaged in assisting both private and publicly-held
companies with strategy development, internal operational reviews and
stockholder value enhancement programs.
ALEXANDER C. STARK, JR. has been a director of the Company since 1997.
Mr. Stark is the President of AdCon, Inc., a consulting firm organized to advise
and council senior officers of global telecom companies. Mr. Stark previously
worked for 40 years at AT&T, where he most recently served as a Senior Vice
President.
ALAN HARDIE has served as a director of the Company since April 1999.
Mr. Hardie has served as a General Manager of BT Global Communications since
1994, where he provides leadership and strategic direction for such entity's
Global Customer Service division.*
WILLIAM MARTIN RITCHIE has served as a director of the Company since
April 1999. Mr. Ritchie currently acts as a consultant in his own consulting
entity, MR Ventures, where he provides various start-up companies with
management assistance and early stage investment. Mr. Ritchie was a founder of
Spider Systems, a Scottish electronics company, where he served in several
capacities, including the Managing Director, from 1984 to 1995. Mr. Ritchie
currently serves on the board of directors of various companies in Scotland.*
BARUCH HALPERN has served as a director of the Company since October
1999. From January 1995 to the present, Mr. Halpern has been an institutional
research analyst with Goldsmith & Harris Incorporated, where he has advised
institutions about investment opportunities. He has also been an advisor in
connection with a leveraged buy-out of a public company and several private
placements.
Mr. Halpern is a Chartered Financial Analyst.
NON-DIRECTOR EXECUTIVE OFFICERS
Set forth below is certain information with respect to each executive
officer of the Company who is not also a director of the Company:
ALFRED M. LEONARDI has been the Chief Financial Officer, Treasurer and
Secretary of the Company since December 1999. Mr. Leonardi was previously the
Vice President of Finance at Meto, Inc., a company engaged in electronic bar
code and human readable marking and identification systems, from 1992 through
November 1999. Mr. Leonardi is a licensed certified public accountant in the
State of New York.
JANE KAUFMAN has been the Executive Vice President-Marketing and
Business
-----------------------
* Each of Messrs. Hardie and Ritchie was elected to serve as a director in
connection with an agreement among the Company and the shareholders of SolCom
Systems Limited ("SolCom") in March 1999 to nominate two nominees to the Board
of Directors upon the closing of the acquisition of SolCom by the Company.
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<PAGE>
Development of the Company since January 2000. From 1996, and prior to joining
the Company, she worked as a consultant with small technology companies to
develop new business opportunities and restructure operations. From 1995 to
1996, Ms. Kaufman served as President and COO of Ware Systems Corp., an
e-commerce company. From 1990 to 1994 she was President of NYNEX Venture
Company, where she incubated high-tech start-up companies. Ms. Kaufman has a
doctoral degree in experimental psychology and an MSOR, both from New York
University. She has a BA from Bennington College.
The officers of the Company are elected by the Board of Directors at
its first meeting after each annual meeting of the Company's stockholders and
hold office until their successors are chosen and qualified, until their death,
or until they resign or have been removed from office. No family relationship
exists between any director or executive officer and any other director or
executive officer.
COMPENSATION OF DIRECTORS
Each of the members of the Board of Directors who is not also an
employee of the Company ("Non-Employee Directors") receives options to purchase
10,000 shares of Common Stock at exercise prices per share equal to the fair
market value of the Common Stock on the date of grant on an annual basis under
the Company's 1998 Stock Option Plan. Non-Employee Directors are also granted
options to purchase an additional 1,500 shares of Common Stock for each meeting
of the Board of Directors attended by such Non-Employee Director. Non-Employee
Directors serving on committees of the Board of Directors are granted, on an
annual basis, options to purchase 1,500 shares of Common Stock for each
committee served thereby.
In addition, the Company reimburses all Non-Employee Directors
traveling more than fifty miles to a meeting of the Board of Directors for all
reasonable travel expenses.
EXECUTIVE OFFICERS
The executive officers of the Company are Stephen B. Gray, President,
Chief Executive Officer and Chief Operating Officer; Alfred M. Leonardi, Chief
Financial Officer,Treasurer and Secretary; and Jane Kaufman, Executive Vice
President-Marketing and Business Development.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following persons have failed to file on a timely basis certain
reports required by Section 16(a) of the Securities Exchange Act of 1934, with
respect to the fiscal year ended March 31, 2000, as follows: Each of Messrs.,
Stephen B. Gray, Jane Kaufman, Alfred M. Leonardi, Kevin Latraverse, Baruch
Halpern, Stephen M. Deixler and William M. Ritchie failed to timely file an
Annual Statement of Changes in Beneficial Ownership of Securities on Form 5.
Each of Messrs. Stephen B. Gray, Stephen M. Deixler, Peter A. Wilson and Michael
Radomsky failed to timely file a Statement of Changes in Beneficial Ownership on
Form 4. Each of Messrs. Jane Kaufman and Baruch Halpern failed to timely file a
Statement of Initial Beneficial Ownership of Securities on Form 3. During the
fiscal year ended March 31, 2000, the Company is not aware of other late
filings, or failure to file, any other reports required by Section 16(a) of the
Exchange Act.
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<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The following table summarizes the compensation paid or accrued by the
Company during the past three fiscal years, including the fiscal year ended
March 31, 2000, to the Company's Chief Executive Officer and to the Company's
three other most highly compensated officers who earned salary and bonus
compensation of at least $100,000 during the fiscal year ended March 31, 2000
(two of which were not serving as officers of the Company at the end of the last
completed fiscal year), and to other key executive officers (these executive
officers being hereinafter referred to as the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term Compensation
----------------------------------------- -----------------------------------------------------------------
Awards Payouts
-------------------------- -------------------------
Annual Restricted Securities All Other
Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary($) Bonus($) sation($) Award(s)($) Options (#) Payouts($) sation($)(1)
-------- ---- --------- -------- ------ ----------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stephen B. Gray 2000 261,076 54,616 36,000 132,966 -- 11,106
President, Chief 1999 265,750 -- -- 60,000 -- 779
Executive Officer, 1998 252,829 -- -- 75,000 -- --
Chief Operating
Officer
Michael Radomsky(2) 2000 149,577 -- -- 22,710 -- 8,259
Executive Vice- 1999 164,392 -- -- 43,823 -- 2,781
President 1998 139,858 -- -- 42,839 -- 2,526
Alfred M. Leonardi(3) 2000 45,983 -- -- 46,292 -- --
Chief Financial
Officer
Kevin B. Latraverse 2000 258,715 -- -- 23,442 -- 12,811
Executive
Vice-President Sales
Jane Kaufman(4) 2000 36,115 -- 10,000 153,376 -- 1,083
Executive
Vice-President
Marketing
And Business
Development
Peter A. Wilson(5) 2000 107,840 -- -- 352,197 -- --
Executive
Vice-President
Marketing
</TABLE>
------------------------------
(1) Represents contribution of the Company under the Company's 401(k) Plan.
(2) Mr. Radomsky resigned as a director and officer of the Company
effective as of December 10, 1999.
(3) Mr. Leonardi joined the Company in December 1999 and was appointed as
an officer effective as of January 17, 2000.
(4) Ms. Kaufman joined the Company in January 2000 and was appointed as an
officer effective as of March 20, 2000.
-5-
<PAGE>
(5) Mr. Wilson resigned as an officer of the Company effective as of
February 25, 2000.
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2000
The following table sets forth certain information concerning stock
option grants during the fiscal year ended March 31, 2000 to the Named Executive
Officers:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------
Percent
Number of of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date
---- ---------- ----------- ------ ----
<S> <C> <C> <C> <C>
Stephen B. Gray 32,966(1) 1.1% 2.28 3/31/09
100,000 3.5% 2.28 4/1/04
Michael Radomsky 22,710(1) 0.8% 2.28 3/31/09
Alfred M. Leonardi 6,292(1) 0.2% 15.97 3/31/09
40,000 1.4% 7.70 11/5/04
Kevin B. Latraverse 23,442(1) 0.8% 2.28 3/31/09
Jane Kaufman 3,376(1) 0.1% 20.94 3/31/09
150,000 5.3% 20.94 1/3/05
Peter A. Wilson 139,710 5.2% 0.4826 12/31/03
25,770 0.9% 1.8016 3/31/09
120,000 4.5% 2.28 3/31/09
50,000 1.9% 2.28 3/31/03
16,717(1) 0.6% 2.28 3/31/09
----------------------------------
</TABLE>
(1) Represents options granted pursuant to the Company's Time Accelerated
Restricted Stock Award Program (TARSAP).
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<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2000
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended March 31, 2000 by each of
the Named Executive Officers and the number and value of unexercised options
held by each of the Named Executive Officers on March 31, 2000.
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexer- In-the-Money
Shares cised Options Options at
Acquired on Value at FY-End(#) FY-End($)(1)
Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C>
Stephen B. Gray 42,309 600,784/132,966 $17,134,660/$3,677,840
Alfred M. Leonardi -- -- 20,000/26,292 $444,800/$532,699
Jane Kaufman -- -- 0/153,376 $0/$1,380,384
Michael Radomsky -- -- 142,239/66,533 $4,055,020/$1,808,750
Kevin B. Latraverse -- -- 200,000/123,442 $5,538,000/$3,417,405
Peter A. Wilson 115,648 -- 49,832/186,717 $1,467,890/$5,164,592
------------------------
</TABLE>
(1) The average price for the Common Stock as reported by the Nasdaq Stock
Market on March 31, 2000 was $29.94 per share. Value is calculated on
the basis of the difference between the option exercise price and
$29.94 multiplied by the number of shares of Common Stock underlying
the options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Company has no employment agreements other than an employment
agreement dated April 1, 1999 with Stephen B. Gray, the Company's Chief
Executive Officer and President pursuant to which Mr. Gray receives (i) salary
of $275,000 per annum for a term of one (1) year (the "Term"), (ii) a $30,000
one-time signing bonus and (iii) 100,000 stock options, which vest on April 1,
2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation/Stock Option Committee of the Board of Directors
consists of Messrs. Stephen M. Deixler and Alexander C. Stark, Jr. Mr. Deixler
previously served as the Company's Chief Executive Officer until May 1997. No
executive officer of the Company serves as a member of the board of directors or
compensation committee of any other entity which has one
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<PAGE>
or more executive officers serving as a member of the Company's Board of
Directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the number of shares of the Company's
Common Stock owned by each person or institution who, as of July 27, 2000, owns
of record or is known by the Company to own beneficially, more than five (5%)
percent of such securities, and by the Company's executive officers and by its
directors, both individually and as a group, and the percentage of such
securities owned by each such person and the group. Unless otherwise indicated,
such persons have sole voting and investment power with respect to shares listed
as owned by them.
<TABLE>
<CAPTION>
Name and Address Shares Owned Percent of Class
----------------- ------------ ----------------
<S> <C> <C>
Stephen M. Deixler(1) 856,702 5.4%
371 Eagle Drive
Jupiter, Florida 33477
Stephen B. Gray(2)(9) 643,093 4.0%
Alfred M. Leonardi(3)(9) 20,000 *
Alexander C. Stark, Jr.(4) 259,500 1.6%
356 Jupiter Drive
Jupiter, Florida 33477
Alan Hardie(5) 36,000 *
PP318 Westgate
#11 Hope Street
Glasgow G2 6AB
Scotland
William Martin Ritchie(6) 25,500 *
Keston
4 Buckstane Park
Edinburgh EH10 6PA
Scotland
Jane Kaufman(9) 0 *
Baruch Halpern(7)(9) 104,500 *
Zesiger Capital Group LLC 1,388,700(8) 8.9%
320 Park Avenue, 30th Floor
New York, NY 10022
Directors and Named Executive Officers 1,945,295 11.6%
as a group (8 persons)
</TABLE>
-8-
<PAGE>
----------------
(1) Does not include 8,824 shares of Common Stock owned by Mr. Deixler's
wife, mother, children and grandchildren as to which shares Mr. Deixler
disclaims beneficial ownership. Includes 120,406 shares of Common Stock
held by Merrill Lynch Pierce Fenner & Smith custodian f/b/o Stephen M.
Deixler, IRA. Includes 187,000 shares of Common Stock which may be
acquired pursuant to currently exercisable options.
(2) Includes 600,784 shares of Common Stock which may be acquired pursuant
to currently exercisable options.
(3) Consists of 20,000 shares of Common Stock which may be acquired
pursuant to currently exercisable options.
(4) Includes 209,500 shares of Common Stock which may be acquired pursuant
to currently exercisable options.
(5) Consists of 36,000 shares of Common Stock which may be acquired
pursuant to currently exercisable options.
(6) Includes 20,500 shares of Common Stock which may be acquired pursuant
to currently exercisable options.
(7) Includes 4,500 shares of Common Stock which may be acquired pursuant to
currently exercisable options. Includes 100,000 shares of Common Stock
which may be acquired pursuant to currently exercisable warrants.
(8) Based on Schedule 13G as filed by such beneficial owner with the SEC on
June 6, 2000.
(9) The address of such person is c/o the Company, 1551 S. Washington
Avenue, Piscataway, New Jersey 08854
------------------------
*Indicates ownership of Common Stock of less than one (1%) percent of the total
issued and outstanding Common Stock on the Record Date.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On June 7, 1999, the Company issued an aggregate of 1,000,000 shares of
Common Stock and warrants to purchase an aggregate of 500,000 shares of Common
Stock to Special Situations Private Equity Fund, L.P. ("Special Situations") and
certain affiliated entities of Special Situations for an aggregate consideration
of $3,000,000. The securities issued were "restricted securities" under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the transaction, the
Company has registered the shares of Common Stock (including those shares
underlying the warrants) under the Act. pursuant to a form S-3, which was
declared effective in September 1999. The warrants expire in three years and the
exercise prices thereof are $4.50 per share for 250,000 warrants and $6.00 per
share for the remaining 250,000 warrants.
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<PAGE>
On August 5, 1999, the Company issued an aggregate of 2,000,000 shares
of Common stock to Zesiger Capital Group LLC and certain of its affiliates for
an aggregate consideration of $9,500,00. The securities issued were "restricted
securities" under the Act. Pursuant to the transaction, the Company registered
the shares of Common Stock under the Act pursuant to a form S-3, which was
declared effective in September, 1999.
In April 2000, the Company made a loan of $750,000 to its Chief
Executive Officer. The Loan bears interest at the rate of Libor + 1% per annum,
and is due in April 2005, or sooner, if the Chief Executive Officer's employment
is terminated.
On June 29, 2000, the Company made an advance of $135,000 to its Chief
Executive Officer. The advance was subsequently repaid in full on July 26, 2000.
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<PAGE>
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in this City of
Piscataway and State of New Jersey
DATED: July 28, 2000
ION NETWORKS, INC.
By:/s/ Stephen B. Gray
-------------------------------
Stephen B. Gray, President
