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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 2000
Commission file number: 0-26567
e-MedSoft.com
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(Name of small business issuer in its Charter)
Nevada 84-1037630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 Marsh Landing Parkway, Suite 106, Jacksonville, Florida 32250
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(Address of principal executive offices, including zip code)
(904) 543-1001
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(Issuer's telephone number)
Securities Registered Pursuant to Section 12(b) of the Act: None.
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
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 disclosure of delinquent filers pursuant 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-KSB. [ ]
The Issuer's revenues for its fiscal year ended March 31, 2000 were
$45,982,416.
As of June 22, 2000, 77,043,039 shares of the Registrant's common stock were
outstanding, and the aggregate market value of the shares held by
non-affiliates was approximately $260,331,500.
DOCUMENTS INCORPORATED BY REFERENCE: None.
[Transitional] Small Business Disclosure Format (check one): Yes __ No X
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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The directors and executive officers of the Company and its wholly-owned
subsidiary, their ages and positions held in the Company are as follows:
NAME AGE POSITIONS HELD AND TENURE
---- --- -------------------------
John F. Andrews 46 Chairman, President and Chief Executive
Officer
Margaret A. Harris 52 Chief Financial Officer and Senior Vice
President
Ian McPherson 52 Managing Director of e-Net
Marshall Gibbs 34 Chief Technology Officer and Executive Vice
President
Masood Jabbar 49 Director
W. Cedric Johnson 48 Director
Sam J.W. Romeo 59 Director
Mitchell J. Stein 41 Director
There is no family relationship between any Director or Executive Officer
of the Company.
Set forth below are the names of all Directors and Executive Officers of
the Company, all positions and offices with the Company held by each such
person, the period during which he has served as such, and the principal
occupations and employment of such persons during at least the last five
years:
JOHN F. ANDREWS, has served as our Chairman of the Board, President,
and Chief Executive Officer since January 1999. Mr. Andrews served as Chief
Executive Officer of Sanga International, one of our significant stockholders,
from April 1998 until July 1999. Mr. Andrews continues to serve on the board
of directors with Sanga International. Prior to joining Sanga International,
Mr. Andrews was Chief Information Officer of CSX Corporation and Chief
Executive Officer of CSX Technology from April 1993 to April 1998. Mr. Andrews
was Vice President and General Manager of GTE Health Systems from 1991 to
1993. Mr. Andrews also served as Vice President and General Manager at several
other business units at GTE and held positions in information technology,
finance, marketing, and field operations. Mr. Andrews has served on the board
of directors of PrimeRX.com since April 2000.
MARGARET A. HARRIS has served as our Chief Financial Officer and Senior
Vice President since March 1999. From June 1993 until March 1999, Ms. Harris
worked as an independent contractor/consultant providing financial services to
various companies including the following: HemaCare Corporation--July 1993
until July 1994; American Outpatient Services, Corp.--July 1994 until October
1995, serving as the Acting Chief Financial Officer; GCI RenalCare,
Inc.--December 1995 until December 1996, serving as the Chief Financial
Officer; MediaManager, Inc.--December 1996 to March 1999, serving as the
Acting Chief Financial Officer. Ms. Harris served as Vice President of Finance
for American Medical International, Inc., one of the largest hospital
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management companies in the world and a predecessor to Tenet Health Care
Holding Corp., from June 1973 until July 1991. Prior to joining American
Medical International, Ms. Harris began her career with Arthur Andersen LLP in
the audit group.
IAN MCPHERSON has served as the Managing Director of e-Net since 1995.
Prior to Mr. McPherson's current position, he acquired Relay Systems (now
called e-Net) in 1997 and merged it into Network Wales Limited, where Mr.
McPhearson was Chairman and Managing Director. In 1996 Mr. McPherson formed
Network Wales Limited, an Internet services business operating in Wales, which
was a joint venture with the U.K. government. From 1992 until 1997, he was
Chairman and Managing Director of Syntech Computer Systems, Ltd. From 1989
until 1992, Mr. McPherson was the Chief Information Officer for Ryan
International PLC.
MARSHALL GIBBS has served as our Chief Technology Officer and Executive
Vice President since January 1999. From June 1998 until May 1999, Mr. Gibbs
was employed by Sanga International as Chief Technology Officer. From March
1994 until May 1998, Mr. Gibbs was employed by CSX Technology, serving the
last six months as Vice President of Enterprise Technology Services at CSX
Technology. Prior to CSX Technology, Mr. Gibbs was with Price Waterhouse,
where he was in the Management Consulting Services group.
MASOOD JABBAR has served as a member of our board of directors since
December 1999. Mr. Jabbar currently serves as President of Sun Microsystems,
Inc.'s Computer Division. Since joining Sun Microsystems in 1986, Mr. Jabbar
has held a number of senior positions, including Vice President of Finance and
Planning for Sun Microsystems' field organization, Director of Marketing for
the U.S. organization, and General Manager for the Interactive Products Group.
W. CEDRIC JOHNSON has served as a member of our board of directors
since May 2000. Mr. Johnson has served as Chief Executive Officer of Quantum
Digital Solutions Corporation, which he founded in June 1995 under the name of
CypherComm, since January 1997. Prior to founding Quantum Digital, Mr. Johnson
served as President and Chief Executive Officer of ETA Technologies
Corporation, an applied sciences firm. Prior to his term at ETA Technologies,
Mr. Johnson served as a systems engineer at Rockwell International and was a
technology consultant to Fortune 100 companies.
DR. SAM J. W. ROMEO has served as a member of our board of directors
since September 1, 1999. Dr. Romeo, who has more than 30 years of experience
in the health care field, currently serves as the President and CEO of
University Affiliates IPA, the nation's first fully accredited IPA. In
addition to having held senior faculty positions at the USC School of
Medicine, Medical College of Wisconsin, and the St. Louis University School of
Medicine, Dr. Romeo has also served as the Medical Director of several health
maintenance organizations in California, Florida, and New York, and is
licensed to practice medicine in the States of California, Florida, Idaho,
Missouri, and Wisconsin. Dr. Romeo received the prestigious Physician
Executive of the Year Award given by the American College of Medical Practice
Executives in October 1998.
MITCHELL J. STEIN has served as a member of our board of directors
since September 1, 1999, when he was added to the board as an ex-officio
member representing TSI a principal stockholder. Mr. Stein is the Chairman of
the Board of TSI. Mr. Stein previously served as Managing Partner of the law
firm of Stein, Perlman & Hawk from December 1990 to September 1998. Mr. Stein
served as the President and Chairman of the Board of MediManager, Inc. from
June 1994 to August 1998.
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BOARD COMPOSITION
The board currently has five members. The Company intends to add further
directors, including other independent board members and to appoint such
independent directors to serve on the audit committee.
COMMITTEES OF THE BOARD
Our bylaws authorize the board of directors to appoint among its members
one or more committees consisting of one or more directors.
Audit Committee. Our board of directors has established an audit
committee. The audit committee is comprised of Masood Jabbar and Dr. Sam J.W.
Romeo. The audit committee will review the quarterly and annual financial
statements, any significant accounting issues, the scope of the audit with our
independent auditors and will discuss with the auditors any other
audit-related matters that may arise.
Compensation Committee. The compensation committee's responsibilities are
to make determinations with respect to salaries and bonuses payable to
executive officers and to administer stock option plans. The compensation
committee is comprised of Mitchell J. Stein and W. Cedric Johnson. Don Ayers,
director nominee, will also join the committee in July, 2000.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during the fiscal year ended March 31, 2000 and
certain investment representations, no persons who were either a director,
officer or beneficial owner of more than 10 percent of the Company's common
stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the fiscal year except that Masood Jabbar, and
Marshall Gibbs did not file Form 3 reports, and John F. Andrews filed one Form
4 reporting one transaction late. In addition, John F. Andrews and Marshall
Gibbs did not file Form 5 reports.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information regarding the executive
compensation for the Company's President and each other executive officer
whose total annual salary and bonus exceeded $100,000 for the fiscal year
ended March 31, 2000 and the four months ended March 31, 1999:
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- ------------------- --------
SECURI-
TIES
UNDERLY-
OTHER RE- ING ALL
ANNUAL STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) PAYOUTS SATION
------------------ ---- ------- ----- ------ -------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Andrews, 2000 $500,000 $540,104 -- -- -- -- --
Chairman & CEO 1999 125,000 0 -- -- -- -- --
Marshall A. Gibbs,
EVP, CTO 2000 215,166 100,000 -- -- 40,000 -- --
1999 -- -- -- $302,250 -- -- --
Margaret A. Harris,
SVP, CFO 2000 220,000 -- -- -- 60,000 -- --
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(1) During the four months ended March 31, 1999, Mr. Andrews was also
advanced $25,000 toward the next years' salary.
OPTION GRANTS
The following table provides information on stock options granted to our
Chief Executive Officer and our two other most highly-compensated executives
during the fiscal year ended March 31, 2000.
</TABLE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------------- ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS MARKET APPRECIATION FOR
UNDERLYING GRANTED TO PRICE ON OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE THE DATE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR PRICE OF GRANT DATE 5% 10%
------------------ ---------- ------------ ------------ -------- ---------- ------- -------
($/SH)
<S> <S> <S> <S> <S> <S> <S> <S>
John F.Andrews -- -- -- -- -- -- --
Marshall A.Gibbs -- -- -- -- -- -- --
Margaret A.Harris 180,000 20.8% $ 2.50 $ 2.50 10/31/04 124,327 274,730
Potential gains are net of the exercise price, but before taxes associated
with the exercise. The amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. The assumed 5 percent and 10 percent rates of stock price appreciation
are provided in accordance with the rules of the Securities and Exchange
Commission and do not represent our estimate or projection of the future price
of our common stock. Actual gains, if any, on stock option exercises will
depend upon the future market prices of our common stock.
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YEAR-END OPTION VALUES
The following table provides information respecting the options held by
our Chief Executive Officer and our two other most highly compensated
executive officers as of March 31, 2000. The executive officers did not
exercise options during fiscal 2000.
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Option Values As Of March 31, 2000
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
---------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John F. Andrews -- -- -- --
Marshall A. Gibbs 40,000 -- $595,100 --
Margaret A. Harris 60,000 120,000 $896,400 $1,792,800
</TABLE>
Calculated based upon the closing price of our common stock as quoted on
the American Stock Exchange on March 31, 2000 of $17.44 per share.
EMPLOYMENT AGREEMENTS
On August 31, 1999, we entered into an Executive Employment Agreement
with John F. Andrews, the Company's Chairman of the Board, President and Chief
Executive Officer. The initial term of the Agreement is from January 15, 1999
through January 15, 2002. The Agreement will be automatically renewed for
additional one year periods unless terminated. In the event of a termination
by the Company without cause, or by Mr. Andrews for "good reason," Mr. Andrews
will receive full compensation for the remainder of the initial term or
eighteen months from the date of termination, whichever is longer. In the
event of a termination by the Company with cause, he will receive full
compensation for the remainder of the initial term or twelve months from the
date of termination, whichever is longer. In the event of a termination by Mr.
Andrews without a "good reason," he will receive no further compensation.
The base salary under the Agreement is $500,000 per year, which is to be
increased by at least 10% at the end of each year. Mr. Andrews is also to
receive a whole life insurance policy with a face amount of $2,000,000 for his
benefit; the use of a fully insured automobile; club dues for one country club
and one luncheon club; disability and medical insurance; an allowance of up to
$12,500 per year for professional counseling and services; and four to five
weeks of vacation per year.
Mr. Andrews also had the right to immediately receive shares of the
Company's Common Stock without any required payment upon the occurrence of
certain events.
During fiscal 2000, Mr. Andrews amended his employment agreement and
waived his rights to the shares earned from inception of his contract through
January 15, 2000. In connection therewith, we have agreed to pay Mr. Andrews
a bonus for our fiscal year ended March 31, 2000 in the amount of $500,000. In
addition, the terms of the contract concerning stock and options were
clarified and amended.
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Mr. Andrews now has the right to receive options to purchase shares of
our common stock upon the occurrence of the following events:
a. 5,000 shares for each month he is employed commencing January 15,
2000.
b. 50,000 shares for each quarter in which we have gross revenues in
excess of $7 million commencing with the quarter ending March 31,
2000.
c. 175,000 shares for each quarter in which we have gross revenues in
excess of $20 million commencing with the quarter ending March 31,
2000.
d. 350,000 shares for each quarter in which we have gross revenues in
excess of $50 million commencing with the quarter ending March 31,
2000.
The option price for the options earned under subparagraph a. above will
be zero. The option price for the options earned under b., c., and d., above
will be determined by Mr. Andrews at the grant date.
In addition to the above, Mr. Andrews is entitled to receive a percentage
of the Company's net profit before taxes as follows:
a. One percent (1%) of net profit before taxes for each quarter such
profit exceeds $1,000,000, plus
b. Two percent (2%) of net profit before taxes for each quarter such
profit exceeds $3,000,000, plus
c. Three percent (3%) of net profit before taxes for each quarter such
profit exceeds $10,000,000, plus
d. Four percent (4%) of net profit before taxes for each quarter such
profit exceeds $20,000,000.
In the event of a "change in control" of the Company, as defined in the
Agreement, Mr. Andrews has the right to terminate the Agreement and receive a
$2,500,000 payment. The Company believes it critical and vital to compensate
Mr. Andrews in this manner as Mr. Andrews has chosen to be critical to the
Company's success and is likely to be so as the Company continues its attempts
to achieve its business objectives and maximize its growth.
We have entered into an employment agreement with Marshall A. Gibbs, our
Executive Vice President and Chief Technical Officer. The initial term of the
agreement expires in January 2002 and will automatically renew for additional
one year periods unless terminated by Mr. Gibbs or us. If we terminate Mr.
Gibbs' employment without cause or if Mr. Gibbs terminates his employment as a
result of our material breach of the agreement, Mr. Gibbs will receive full
compensation for the remainder of the initial term plus a severance payment
equal to 12 months pay. If we terminate his employment with cause, Mr. Gibbs
will receive compensation for the remainder of the initial term. Under the
agreement, Mr. Gibbs' base salary is $250,000 per year. Mr. Gibbs will also
receive a $100,000 signing bonus; a car allowance; reimbursement for
automobile insurance; club dues for one country club; an allowance of up to
$2,000 per year for professional counseling and services; and 15 days of
vacation per year.
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Mr. Gibbs also has the right to receive 150,000 common shares of our
stock without any required payment and 40,000 stock options to purchase our
stock. The stock vests equally over a three year period and the stock options
vest over a one year period.
STOCK OPTION PLANS
1999 STOCK COMPENSATION PLAN
In February 1999, our board of directors approved the establishment of
the 1999 Stock Compensation Plan. Our board of directors believes that the
1999 Plan advances our interests by encouraging our employees, officers,
directors, and consultants to acquire an equity interest in our company and by
providing additional incentives and motivation toward superior performance.
Our board of directors also believes it will also enable us to attract and
retain the services of key employees, officers, directors, and consultants
upon whose judgment, interest, and special effort we depend.
The 1999 Plan allows the board of directors, or a committee established
by the board of directors, to grant stock options from time to time to our
employees, officers, directors, and consultants. The board of directors has
the power to determine at the time the option is granted whether the option
will be an incentive stock option, which is an option that qualifies under
Section 422 of the Internal Revenue Code of 1986, or an option that is not an
incentive stock option. However, incentive stock options may only be granted
to our employees. Vesting provisions are determined by the Board at the time
options are granted.
The total number of shares of common stock subject to options under the
1999 Plan may not exceed five million shares, subject to adjustment in the
event of certain recapitalizations, reorganizations, and similar transactions.
Options may be exercisable by the payment of cash or by other means as
authorized by the board of directors.
The 1999 Plan also provides that the board of directors may issue
restricted stock pursuant to restricted stock right agreements that will
contain such terms and conditions as the board of directors determines.
Our board of directors may amend the 1999 Plan at any time, provided that
the board of directors may not amend the 1999 Plan to materially increase the
number of shares available under the 1999 Plan, materially increase the
benefits
accruing to participants under the 1999 Plan, or materially change the
eligible class of employees without stockholder approval.
2000 NONQUALIFIED STOCK OPTION AND STOCK BONUS PLAN
In March 2000, our board of directors approved the establishment of the
2000 Nonqualified Stock Option and Stock Bonus Plan. Our board of directors
believes that the 2000 Plan encouraging employees, officers, directors, and
consultants to acquire an equity interest in our company and by providing
additional incentives and awards and recognitions of their contribution to our
company's success and to encourage these persons to continue to promote the
best interest of our company.
The 2000 Plan allows our board of directors to grant stock options or
issue stock bonuses from time to time to our employees, officers, directors,
and consultants. Options granted under the 2000 Plan will not qualify under
Section 422 of the Internal Revenue Code of 1986 as an incentive stock option.
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The 2000 Plan also provides that our board of directors, or a committee,
may issue restricted stock pursuant to restricted stock right agreement
containing such terms and conditions as our board of directors deems
appropriate.
The total number of shares of common stock subject to our options and
grants of restricted stock under the 2000 Plan may not exceed 3.5 million
shares, subject to adjustment in the event of certain capitalizations,
reorganizations, and similar transactions. Options may be exercisable by the
payment of cash or by other means as authorized by the board of directors.
Our board of directors may amend the 2000 Plan at any time, provided that
the board of directors may not amend the 2000 Plan to adversely effect the
rights of participants under the 2000 Plan, without stockholder approval.
OTHER STOCK OPTIONS
We have issued options to acquire 302,500 shares of our common stock to
various employees of e-Net, our U.K. subsidiary. Our board of directors
believes that encouraging these U.K. employees to acquire an equity interest
in our company is in our best interests and provides additional incentives and
motivation toward superior performance for these employees.
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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 Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 18, 2000 e-MedSoft.com
By:/s/ Margaret A. Harris
Margaret A. Harris, Chief Financial
Officer
