SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant ___
Filed by a Party other than the Registrant X
Check the appropriate box:
___ Preliminary Proxy Statement
___ Confidential, For Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Health Outcomes Management, Inc.
(Name of Registrant as Specified in its Charter)
Victor S. Greenstein, Jonathan R. Gordon, Stanford M. Baratz,
Peter J. Zugschwert and Matthew E. Goldberg
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_ No fee required
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
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calculated and state how it was determined):
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(5) Total fee paid:
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___ Fee paid previously with preliminary materials
___ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
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PROXY STATEMENT OF
VICTOR S. GREENSTEIN, JONATHAN R. GORDON, STANFORD M. BARATZ,
PETER J. ZUGSCHWERT AND MATTHEW E. GOLDBERG
5500 WAYZATA BOULEVARD, SUITE 1075
MINNEAPOLIS, MINNESOTA 55416
(612) 591-5016
IMPORTANT NOTICE AFFECTING YOUR INVESTMENT
IN HEALTH OUTCOMES MANAGEMENT, INC. STOCK
August 26, 1997
Dear Fellow Shareholder:
To quote Ronald Reagan during one of his debates with Jimmy Carter,
"are you better off today than you were four years ago?" If so, it is not due to
the performance of your investment in Health Outcomes Management, Inc. While
other stocks have been zooming to new highs and the market indexes seem to break
records almost daily, Health Outcomes has given new meaning to the term "penny
stock." The price per share has declined to just PENNIES per share and the
trendline just keeps going down.
HEALTH OUTCOMES MANAGEMENT, INC. QUARTERLY STOCK PRICE
[graph]
QUARTERLY PERIOD HIGH BID QUOTATION
1st quarter 1994 $.72
2nd quarter 1994 $.60
3rd quarter 1994 $.58
4th quarter 1994 $.50
1st quarter 1995 $.60
2nd quarter 1995 $.94
3rd quarter 1995 $1.12
4th quarter 1995 $.94
1st quarter 1996 $.69
2nd quarter 1996 $.44
3rd quarter 1996 $.38
4th quarter 1996 $.19
1st quarter 1997 $.16
While the price of our stock languishes in the cellar, executive
management continues to draw fat paychecks. Between fiscal years 1995 and 1996,
the combined annual compensation of Mr. Peters (the President of the company)
and Mr. Frakes (the Vice President of the company) ranged from TWO TO SEVENTEEN
times the net income of the company! In fiscal 1997, when earnings took a 218%
nosedive (resulting in a loss of over $113,000), Peters and Frakes took salary
reductions of only 10%. In short, as the following chart demonstrates, their
compensation appears to bear almost no rational relationship to the earnings
performance of the company.
COMPENSATION OF PETERS AND FRAKES AS COMPARED TO NET INCOME (LOSS)
[graph]
COMBINED COMPENSATION OF PETERS
YEAR AND FRAKES* NET INCOME (LOSS)
1995 $191,594 $ 10,995
1996 $201,394 $ 95,615
1997 $191,519 $(113,244)
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* Compensation of Peters computed as the sum of salary and bonus as reported in
the Company's Annual Reports on Form 10-KSB. Compensation of Frakes extrapolated
from monthly salary information as reported in the Company's Annual Reports on
Form 10-KSB, as adjusted for a 10% salary reduction as of May 15, 1996.
We submit that Health Outcomes is going nowhere, and indeed, is headed
for insolvency -- at an alarming clip. For the three months ended May 31, 1997,
the Company's working capital deficit (that is, the amount by which current
liabilities exceeded current assets) increased by $138,692 to a deficit of
$349,229 at May 31, 1997 over a deficit of $210,537 at February 28, 1997. The
shareholders' deficit has similarly increased in this same period from $86,357
at February 28, 1997 to $192,598 at May 31, 1997. Cash and cash equivalents,
which were at $209,024 at February 28, 1997, have decreased to $122,366 at May
31, 1997. Revenues similarly have continued to slide. For the fiscal year ended
February 29, 1996, revenues were $3,182,718, but declined to $2,509,022 for the
fiscal year ended February 28, 1997. Current trends look no better to us.
Revenues for the three months ended May 31, 1997 fell to $586,567 from $697,614
in the same three months of the prior year.
Fellow shareholders, the time for action is now! We have a hand-picked
team of experienced professionals who are ready, willing and able to replace the
company's current Directors. Our director-nominees are businessmen from varied
disciplines whom we believe bring a wealth of practical
<PAGE>
knowledge to the Company. We believe that the current directors, all of whom
have spent the major portion of their professional careers in healthcare, lack
the diversity we think is essential to leading the Company through a turnaround.
If elected, our candidates will work to design strategies to improve the
Company's earnings and to link more closely the compensation paid to management
to earnings performance.
We can no longer tolerate the wasting away of our hard earned
investment dollars. You CAN make a change by electing a new slate of directors.
WE ASK THAT YOU FILL IN, SIGN AND DATE AND RETURN YOUR GOLD PROXY TODAY! This
will revoke any prior proxy or proxies you have given. If you have any
questions, please call me in the Twin Cities at (612) 591-5016 or toll-free
outside of the Twin Cities at (800) 892-3970.
Sincerely,
Victor S. Greenstein
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GENERAL MATTERS
SOLICITATION OF PROXIES
This Proxy Statement and the accompanying GOLD proxy, mailed on or
about August 26, 1997, is furnished to the shareholders of Health Outcomes
Management, Inc., 2331 University Avenue S.E., Minneapolis, Minnesota 55414 (the
"Company") in connection with the solicitation of proxies by Victor S.
Greenstein, Jonathan R. Gordon, Stanford M. Baratz, Peter J. Zugschwert and
Matthew E. Goldberg (the "Greenstein Group"). Proxies solicited hereby are to be
voted and/or utilized at the Annual Meeting of Shareholders to be held on
Thursday, September 18, 1997, at 3:30 p.m. at the Radisson Hotel Metrodome,
University of Minnesota, 615 Washington Avenue S.E., Minneapolis, Minnesota, or
any adjournment or adjournments thereof, for the purpose of electing a slate of
four directors proposed by the Greenstein Group in opposition to the slate of
four directors proposed by the Company and its Board of Directors pursuant to
the Company's Proxy Statement mailed on or about August 7, 1997 (the "Company's
Proxy Statement").
The cost of this solicitation, which is being made on behalf of the
Greenstein Group, is estimated to be $15,000 and will be borne by Mr.
Greenstein; provided, however, that in the event that the Greenstein Group's
proposed slate of directors is elected, Mr. Greenstein intends to seek
reimbursement of such costs from the Company. As of August 6, 1997, Mr.
Greenstein has incurred total expenditures of approximately $5,200 in connection
with the solicitation of the Company's shareholders.
In addition to solicitation by mail, the Greenstein Group members and
regular clerical employees of the Greenstein Group members may solicit proxies
by telephone, special communications or in person. The Greenstein Group may, but
to date has not, specially engage employees, representatives or other persons to
solicit the Company's shareholders. The Greenstein Group intends also to request
banks and brokers to forward the Greenstein Group's proxy materials to their
customers who have a beneficial interest in the Company's Common Stock
registered in the names of nominees and will reimburse such banks and brokers
for their reasonable out-of-pocket expenses.
INTEREST OF GREENSTEIN GROUP MEMBERS IN THIS SOLICITATION
The GOLD proxy to which this Proxy Statement relates is being solicited
by the Greenstein Group. Mr. Greenstein is the beneficial owner of 107,000
shares of the Company's Common Stock. He owns no shares of record. Mr.
Greenstein is a registered representative with R.J. Steichen & Company, an
investment banking firm ("Steichen"). As of August 1, 1997, Mr. Greenstein's
clients beneficially owned an aggregate of 670,150 shares of the Company's
Common Stock through accounts maintained under his direction at Steichen.
However, Mr. Greenstein does not exercise voting or investment discretion with
respect to shares of the Company's Common Stock beneficially owned by such
clients. Mr. Greenstein's business address is 5500 Wayzata Boulevard, Suite
1075, Minneapolis, Minnesota 55416.
Mr. Gordon is the beneficial owner of 60,000 shares of the Company's
Common Stock. He owns no shares of record. Mr. Gordon is President of Vault,
Inc., a document storage company. His business address is 7300 France Avenue
South, Edina, Minnesota 55435.
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Mr. Baratz is the beneficial owner of 41,000 shares of the Company's
Common Stock. He owns no shares of record. Mr. Baratz is President of Baratz
Financial, Inc., a private investment firm. His business address is the same as
that of Mr. Greenstein.
Mr. Zugschwert owns no shares of the Company's Common Stock
beneficially or of record. Mr. Zugschwert is Senior Vice President of Operations
for Baratz Financial, Inc. His business address is the same as that of Mr.
Greenstein.
Mr. Goldberg owns no shares of the Company's Common Stock benefically
or of record. Mr. Goldberg is President of In-Sight Optical, Inc. dba InVision,
a retail optical store chain. His business address is 119 North Fourth Street,
Minneapolis, Minnesota 55401.
During the past two years, none of the Greenstein Group members
purchased and/or sold shares of the Company's Common Stock or any other Company
securities.
Except in connection with the arrangements relating to this Proxy
Statement, no Greenstein Group member (including the director-nominees) is, or
within the past year was, a party to any contract, arrangement or understanding
with any person with respect to any securities of the Company, including, but
not limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits
or the giving or withholding of proxies. No Greenstein Group member (including
the director-nominees) is, or since the beginning of the Company's last fiscal
year was, a party to or has or had a direct or indirect material interest in any
transaction or series of transactions in which the Company or any of its
subsidiaries was or is to be a party and in which the amount involved exceeded
$60,000.
If the Greenstein Group director-nominees are elected as the members of
the Board of Directors, it is expected that Mr. Zugschwert may be engaged to
assist the Company in attempting a turnaround of its business and financial
affairs. The terms and conditions of such proposed engagement have not been
agreed upon as of the date hereof.
VOTING, EXECUTION AND REVOCATION OF PROXIES
According to the Company's Proxy Statement, only stockholders of record
at the close of business on July 22, 1997, will be entitled to vote. As of that
date according to the Company's Proxy Statement, the Company had 8,499,029
shares of Common Stock outstanding and entitled to vote and each share is
entitled to one vote. The presence in person or by proxy of the holders of a
majority of the shares of stock entitled to vote at the Annual Meeting of
Shareholders, or 4,249,515 shares, constitutes a quorum for the transaction of
business.
The Greenstein Group has been informed that because the Greenstein
Group seeks election of its slate of director-nominees in opposition to the
candidates offered by the Company and its Board of Directors, broker-dealers,
banks and other entities holding securities for the beneficial ownership of
their customers will not be permitted to vote shares of the Company's Common
Stock for which they have not received voting instructions from the beneficial
owners thereof. Accordingly, shares beneficially owned by persons who abstain
from voting will not count toward the quorum required for the Annual Meeting or
toward the votes required for election of directors. Similarly, shares not voted
by broker-dealers, banks and
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other entities holding securities for the beneficial ownership of their
customers will not count toward the quorum required for the Annual Meeting or
toward the votes required for the election of directors.
Directors of the Company are elected by a plurality of the votes cast
by the shareholders entitled to vote at the meeting, assuming a quorum is
present. A plurality means that the nominees with the largest
number of votes are elected as directors up to the maximum number of directors
to be chosen at the meeting. Therefore, election of the Greenstein Group
director-nominees requires the affirmative vote of a plurality of the votes cast
in the election at the Annual Meeting, assuming a quorum is present or otherwise
represented at the Annual Meeting. All other matters submitted at the Annual
Meeting will be determined by a majority of the votes cast. Shares deemed
present in the quorum for the Annual Meeting, but which are not voted (either
because of an abstention or a broker-dealer non-vote), will not count toward the
election of either the Greenstein Group's or management's slate of directors.
Each properly executed and timely returned GOLD Proxy will be voted in
favor of the election of all of the Greenstein Group director-nominees to the
exclusion of all of the director-nominees proposed by the Company and its Board
of Directors. However, shareholders of the Company desiring to vote for some of
the Greenstein Group's director-nominees should execute and return the
Greenstein Group's GOLD Proxy, but should write the full name of the Greenstein
Group nominee or nominees for whom the shareholder desires to withhold authority
to vote. The Greenstein Group's GOLD Proxy will revoke any prior proxy or
proxies given and will be revoked by any subsequent proxy or proxies given.
Accordingly, shareholders of the Company desiring to vote for some or all of the
director-nominees proposed by the Company or against election of all of the
Greenstein Group director-nominees, or who desire to abstain from voting, should
not execute or return a GOLD Proxy. The GOLD Proxy cannot be used to vote for
some of the Greenstein Group's and for some of the Company's candidates.
Shareholders not giving a GOLD Proxy solicited hereby may vote for or
against election of all or some of the Greenstein Group director-nominees, and
for or against election of all or some of the director-nominees proposed by the
Company and its Board of Directors, in person or by another proxy of their
choice.
PRINCIPAL SHAREHOLDERS
According to the Company's Proxy Statement, the following table sets
forth as of July 1, 1997, the number of shares of Common Stock beneficially
owned by each person known to the Company to be the beneficial owner of more
than 5% of the outstanding shares of the Company's capital stock, by each
director and certain executive officers and by all directors and executive
officers as a group. Information with respect to the Greenstein Group's
director-nominees as of August 6, 1997, is also included in the table. Shares
not outstanding but deemed beneficially owned by virtue of the right of an
individual to acquire them within 60 days of the applicable date are treated as
outstanding only when determining the amount and percentage owned by such
individual. Except as otherwise indicated, the persons listed possess all of the
voting and investment power with respect to the shares listed for them.
<PAGE>
DIRECTORS, DIRECTOR-NOMINEES, EXECUTIVE NUMBER PERCENT
OFFICERS, AND 5% SHAREHOLDERS OF SHARES OF CLASS
----------------------------- --------- --------
William A. Peter, Jr.
6650 Vernon Hills Road
Edina, Minnesota 55436............................ 1,508,850(1) 17.5%
Steven C. Wolf
820 S. 59th Street
Belleville, Illinois 62223........................ 550,000 6.5%
Sandra F. Pessin
c/o Neuberger & Berman, LLC
605 Third Avenue
New York, New York 10158-3698..................... 436,000 5.1%
Michael J. Frakes
3712 Chatham Circle
Arden Hills, Minnesota 55112...................... 381,549(2) 4.4%
Robert J. Cipolle
14721-80th Place North
Maple Grove, Minnesota 55369...................... 64,250(3) 0.8%
Jerry L. Hoganson
1742 Lark Avenue
Maplewood, Minnesota 55109........................ 19,000(4) 0.2%
Jonathan R. Gordon
7300 France Avenue South
Edina, Minnesota 55435............................ 60,000 0.7%
Stanford M. Baratz
5500 Wayzata Boulevard, Suite 1075
Minneapolis, Minnesota 55416...................... 41,000 0.5%
Peter J. Zugschwert
5500 Wayzata Boulevard, Suite 1075
Minneapolis, Minnesota 55416...................... --- ---%
Matthew E. Goldberg
119 North Fourth Street
Minneapolis, Minnesota 55401...................... --- ---%
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All executive officers and directors as a group
(5 persons) ....................................... 1,980,899(5) 22.4%
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(1) Includes 115,000 shares which may be purchased pursuant to warrants and
21,250 shares which may be purchased pursuant to stock options which
will become exercisable within 60 days of August 7, 1997.
(2) Includes 30,000 shares which may be purchased pursuant to warrants and
121,250 shares which may be purchased pursuant to stock options which
will become exercisable within 60 days of August 7, 1997.
(3) Includes 20,000 shares which may be purchased pursuant to stock options
which will become exercisable within 60 days of August 7, 1997.
(4) Includes 15,000 shares which may be purchased pursuant to stock options
which will become exercisable within 60 days of August 7, 1997.
(5) Includes 329,750 shares which certain directors and officers have the
right to purchase pursuant to warrants and stock options which will
become exercisable within 60 days of August 7, 1997.
ELECTION OF DIRECTORS
GREENSTEIN GROUP NOMINEES FOR ELECTION AS DIRECTORS
According to the Company's Proxy Statement, the Board of Directors
currently consists of four persons. Each director will be elected to serve until
the Annual Meeting of Shareholders to be held in 1998 or until a successor is
elected and qualified.
The Greenstein Group submits for election in opposition to management
the four persons named below. Proxies cannot be voted for a greater number of
persons than the number of nominees named below. The Greenstein Group recommends
a vote FOR all such nominees, and it is intended that, unless contrary written
instructions are provided, GOLD Proxies accompanying this Proxy Statement will
be voted at the 1997 Annual Meeting FOR the election to the Board of all of the
Greenstein Group nominees named, to the exclusion of the candidates nominated by
the Company and its Board of Directors. The Greenstein Group believes that each
nominee will be able to serve, but should any nominee be unable to serve as a
director, the persons named in the GOLD Proxy have advised that they will vote
for the election of such substitute nominee as Mr. Greenstein may propose.
The names, ages and respective positions of the Greenstein Group
nominees, their occupations and other information is set forth below, based upon
information furnished to the Greenstein Group by the nominees.
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JONATHAN R. GORDON, age 46, has been President of Vault, Inc., an
Edina, Minnesota-based document storage company, since 1988. Mr. Gordon is a
Certified Public Accountant.
STANFORD M. BARATZ, age 41, has been the President of Baratz Financial,
Inc., a Minneapolis-based private investment firm, since founding the company in
1994. Between 1985 and 1994, Mr. Baratz served in various capacities with the
Welsh Companies, a Minneapolis-based real estate firm, most recently as
Executive Vice President.
PETER J. ZUGSCHWERT, age 31, has been Senior Vice President of
Operations for Baratz Financial, Inc. since June 1995. Between 1993 and 1995,
Mr. Zugschwert was private business consultant in Chicago and Minneapolis. Prior
thereto, Mr. Zugschwert was a full-time student at the University of Chicago
Graduate School of Business.
MATTHEW E. GOLDBERG, age 30, has been President of In-Sight Optical,
Inc. dba InVision, a retail optical store chain, since 1996. Between 1992 and
1996, Mr. Goldberg was an account manager with Campbell-Mithun Esty, a
Minneapolis-based advertising agency.
None of the above director-nominees is party to any legal proceedings
adverse to the Company or any of its subsidiaries or has a material interest
adverse to the Company or any of its subsidiaries, other than the interest in
opposing the Company and its Board of Directors as to their election. None of
the above director-nominees has received any compensation or other remuneration
of any kind from the Company or any of its subsidiaries during the Company past
three fiscal years.
OTHER BUSINESS
According to the Company's Proxy Statement, the Board of Directors of
the Company does not intend to present any matters before the meeting other than
the election of directors. The enclosed GOLD Proxy therefore gives no
discretionary authority in the event that any additional matters should be
presented.
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[GOLD COLORED PAPER]
PROXY SOLICITED ON BEHALF OF
VICTOR S. GREENSTEIN, JONATHAN R. GORDON, STANFORD M. BARATZ,
PETER J. ZUGSCHWERT AND MATTHEW E. GOLDBERG
IN OPPOSITION TO MANAGEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
HEALTH OUTCOMES MANAGEMENT, INC. TO BE HELD ON SEPTEMBER 18, 1997
The undersigned hereby constitutes and appoints Victor S. Greenstein
and Peter J. Zugschwert as attorneys and proxies (each with the power to act
alone and with the power of substitution and revocation) to attend the Annual
Meeting of Shareholders of Health Outcomes Management, Inc. ("HOM") to be held
on Thursday, September 18, 1997 at 3:30 p.m., Central Time, and any and all
adjournments thereof, and there to act for and to vote all of the shares of
Common Stock held in the name of the undersigned, in the manner specified below,
upon the following matters:
Election of four directors, each to serve until the earlier of the
election of his successor, his resignation, removal, disqualification
or death:
JONATHAN R. GORDON; STANFORD M. BARATZ; PETER J. ZUGSCHWERT;
AND MATTHEW E. GOLDBERG
___ FOR all nominees listed above (except ___ WITHHOLD AUTHORITY to
as indicated to the contrary below) vote for all nominees
listed above
(INSTRUCTION: To withhold authority to vote for one or more nominees, write the
full name(s) of such nominees in the space provided below.)
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IF THIS PROXY IS EXECUTED IN SUCH MANNER AS NOT TO WITHHOLD AUTHORITY TO VOTE
FOR THE ELECTION OF ANY NOMINEE, IT SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE
FOR THE ELECTION OF ANY SUCH NOMINEE.
PLEASE FILL IN, SIGN, AND DATE ON THE REVERSE SIDE AND MAIL IN THE ENCLOSED
ENVELOPE.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
AS TO WHICH THE UNDERSIGNED SHAREHOLDER HAS NOT WITHHELD AUTHORITY TO VOTE.
Dated:_____________________________, 1997
_________________________________________
Signature
_________________________________________
Signature
IMPORTANT: This Proxy should be signed
exactly as your name appears on your HOM
stock certificate. In the case of joint
tenants, both should sign. Fiduciaries
should indicate full title and authority.
Corporations should sign in full corporate
name by the President or other authorized
officer. Partnerships should sign in
partnership name by an authorized person.
THIS PROXY REVOKES ANY PRIOR PROXY OR PROXIES GIVEN. HOM SHAREHOLDERS WHO DO NOT
WISH TO VOTE FOR ANY DIRECTOR-NOMINEES PROPOSED BY THE GREENSTEIN GROUP, OR WHO
WISH TO VOTE FOR ANY DIRECTOR-NOMINEES PROPOSED BY HOM'S MANAGEMENT, SHOULD NOT
EXECUTE OR RETURN THIS PROXY. HOM SHAREHOLDERS WHO DO NOT GIVE THIS PROXY CAN
VOTE FOR OR AGAINST THE ELECTION OF SOME OR ALL OF THE GREENSTEIN GROUP'S
DIRECTOR-NOMINEES IN PERSON OR THROUGH ANOTHER PROXY OF THEIR CHOICE.
