SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934 (Amendment No. 4)
AVESIS INCORPORATED
-------------------
(Name of issuer)
COMMON STOCK
------------
(Title of Class of Securities)
053650107
---------
(CUSIP Number)
Kenneth L. Blum, Jr.
11460 Cronridge Drive, Suite 120, Owings Mills, MD 21117
(410) 265-6074
with copies to:
Joel H. Alperstein, Treasurer, Avesis Incorporated
3724 N. Third St., Suite 300, Phoenix, AZ 85012
(602) 241-3400
--------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notes and Communications)
AUGUST 11, 1998
---------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box [ ].
(Continued on following page(s))
Page 1 of 6 Pages
<PAGE>
CUSIP No. 053650107 Page 2 of 6 Pages
---------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS SS. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
KENNETH L. BLUM, JR.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 1,764,750
Shares ------------------------------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned by 50,000
Each ------------------------------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person 1,764,750
With ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
50,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,814,750
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See
Instructions)
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Statement relates to Common Stock of Avesis Incorporated (the
"Issuer"). The principal executive offices of the Issuer are located at 3724
North Third Street, Suite 300, Phoenix, Arizona 85012.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed by Kenneth L. Blum, Jr.
(b) The address for Mr. Blum is 11460 Cronridge Drive, Suite 120,
Owings Mills, Maryland 21117.
(c) Mr. Blum has served on the Board of Directors of the Issuer since
August 1998. Mr. Blum is the president and sole owner of National Health
Enterprises, a healthcare management company; president of Rent-A-Wreck of
America, Inc., a used vehicle rental system franchisor; president of American
Business Information Systems, Inc., a high-volume laser printing company and
National Computer Services, Inc., a computer service bureau and division of
American Business Information Systems, Inc.; and a consultant to United
Healthcare, Inc.
(d) During the last five years, the filing person has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, the filing person has not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and is not subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) Mr. Blum is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On August 11, 1998, Mr. Blum exercised stock purchase options for
1,064,750 and 700,000 shares of the Issuer's Common Stock, at exercise prices of
$0.31 and $0.26 per option, respectively. The total funds expended, $512,072.50,
were loaned from Kenneth L. Blum, Sr., a member of the Issuer's Board of
Directors and the filing person's father. The loan bears interest at a rate of
5% and is payable over a fifteen (15) year period. Payments are $49,334.24 per
year and commence on August 11, 1999.
Page 3 of 6
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
The Options discussed in Item 5 were acquired for investment. The
Options were originally issued by the Issuer to National Health Enterprises,
Inc. ("NHE") in connection with the retention by the Issuer of NHE to perform
management services for the Issuer pursuant to a management contract (the
"Management Agreement"). To that extent, the acquisition of the options relates
to a change in the management of the Issuer. NHE transferred all Issuer options
to Issuer's management as incentive.
All of the Issuer's shares held by Mr. Blum were acquired and are held
for investment purposes only. Except as described above, Mr. Blum has no present
plan or proposal that relates to or would result in any of the actions described
in clauses (a) through (j) of Item 4 of Schedule 13D, although he may from time
to time in the future acquire additional shares of Common Stock or securities
convertible into Common Stock. At present, Mr. Blum contemplates that such
additional shares, if any, would also be purchased for investment purposes only.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number and percentage of Issuer Common Stock
beneficially owned by Mr. Blum is 1,814,750 and 24.5%, respectively.
(b) See Items 7 through 10 on the Cover Pages of this Schedule 13D.
(c) Mr. Blum effected the following transaction since 60 days prior to
the date of the event which requires filing of this statement:
(i) On August 11, 1998, Mr. Blum exercised stock purchase options for
1,064,750 and 700,000 shares of the Issuer's Common Stock, at exercise prices of
$0.31 and $0.26 per option, respectively. Previously, Mr. Blum owned 50,000
shares of the Issuer's Common Stock.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as set forth above or set forth in the exhibits, there are no
contracts, arrangements, understandings, or relationships between Mr. Blum and
any other person with respect to any securities of the Company
Page 4 of 6
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Management Agreement dated March 18, 1993 between the Issuer
and NHE.*
2. Stock Option Grant to NHE dated March 18, 1993 relating to
options for the purchase of 4,400,000 shares of the Issuer's
Common Stock.*
3. Subordinated Promissory Note dated March 18, 1993 in the
amount of $80,000 payable by Issuer to Mr. and Mrs. Blum. *
4. Registration Rights Agreement dated March 18, 1993 among NHE,
Mr. Blum, and Alan S. Cohn.*
5. Marketing Agreement dated March 18, 1993 between the Issuer
and NHE. *
6. Option Transfer Document dated March 31, 1993**
7. Loan Agreement, filed as Exhibit 1 hereto.
* Incorporated by reference from Schedule 13D dated March 18,
1993 filed by NHE and Mr. and Mrs. Kenneth L. Blum, Jr.
** Incorporated by reference from Amendment No. 2 to Schedule 13D
dated December 5, 1994 filed by Mr. Frank C. Cappadora.
Page 5 of 6
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SEPTEMBER 23, 1998
------------------
/s/ KENNETH L. BLUM, JR.
-------------------------
KENNETH L. BLUM, JR.
Page 6 of 6
EXHIBIT 1
---------
LOAN AGREEMENT
This loan agreement is made this 11th day of August, 1998 whereby Kenneth L.
Blum, Sr. agrees to lend Kenneth L. Blum, Jr. Five Hundred Twelve Thousand
Seventy Two Dollars and Fifty Cents ($512,072.50) to exercise 1,764,750 options
of Avesis Incorporated common stock.
The terms of this agreement shall be 5% interest over a fifteen (15) year period
and the payments shall be $49,334.24 per year. The payments shall begin one year
from today on August 11, 1999.
The stock will be held in escrow until the loan is fully repaid.
AGREED AND ACCEPTED
/s/ KENNETH L. BLUM, Sr. 8/11/98
- ------------------------ ----------------
Kenneth L. Blum, Sr. Date
/s/ KENNETH L. BLUM, Jr. 8/11/98
- ------------------------ ----------------
Kenneth L. Blum, Jr. Date
State of Maryland
County of Carroll
On this 11TH day of AUGUST, 1998, before me, the undersigned, personally
appeared KENNETH L. BLUM, SR., who acknowledged himself as the lender, and
personally appeared KENNETH L. BLUM, JR., who acknowledged himself as the
borrower, in the foregoing instrument for the purposes contained therein by
signing his name.
In witness whereof I hereunto set my hand and official seal.
/s/ DEE WALLACE
------------------
Notary Public
12/27/98
- ------------------
My commission expires
