UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1 to Form 10-K)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For fiscal year ended March 31, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For transition period from ________ to ________
Commission File Number 0-16594
MEDICAL TECHNOLOGY SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-2740462
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12920 Automobile Boulevard, Clearwater, Florida 33762
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(Address of Principal Executive Offices) (Zip Code)
(727) 576-6311
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01
----------------------------
(Title of Class)
COMMON STOCK PURCHASE WARRANTS
------------------------------
(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. [X] Yes [ ] 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 or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X] Yes [ ] No
Aggregate market value of voting Common Stock held by non-affiliates was
$3,250,000 as of June 29, 2000.
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [X] Yes [ ] No
The number of shares outstanding of the Registrant's Common Stock, $.01 par
value, was 6,542,621 as of June 29,
<PAGE>
1
AMENDMENT NO. 1
TO THE FORM 10-K FILED BY
MEDICAL TECHNOLOGY SYSTEMS ON JULY 6, 2000
The following items were omitted from the Form 10-K filed by Medical
Technology Systems on July 6, 2000, and such Form 10-K is hereby amended to
include PART III as set forth below.
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information, as of July 28, 2000, with respect
to each person who is currently a director or executive officer of the Company.
<TABLE>
<CAPTION>
Year First
Name Position(s) Held (1) Age Became a
Director
-------------------- ------------------------------------------------------------------------- ---- ----------
<S> <C> <C> <C>
Todd E. Siegel Chairman of the Board of Directors, President and Chief Executive Officer 42 1986
David Kazarian Director 58 1988
Michael P. Conroy Director, Chief Financial Officer, Vice President and Secretary 52 1996
John Stanton Director, Vice Chairman of the Board of Directors 51 1996
Mark J. Connolly Principal Accounting Officer and Controller 41
</TABLE>
-----------------
(1) Each director serves a one-year term that expires at the Annual Meeting or
when his successor is duly elected and qualified.
Todd E. Siegel. Mr. Siegel became President and Chief Executive Officer of
the Company in 1992 and has served as a director of the Company since 1985. Mr.
Siegel served from 1988 to 1992 as Executive Vice President and Chief Operating
Officer of the Company and from 1985 to 1988 as Vice President of Sales.
Additionally, Mr. Siegel served as the Company's Secretary from 1986 to 1996.
See "Employment Agreements" and "Certain Relationships and Related
Transactions".
David Kazarian. Mr. Kazarian has served as a director of the Company since
1988. Prior to its sale in December 1990, Mr. Kazarian and his wife owned and
operated Kazarian Pharmacy. Since March 1991, Mr. Kazarian has been the founder
and President of Infuserve America, Inc., a firm involved in the home health
care business.
Michael P. Conroy. Mr. Conroy has served as a director of the Company since
1996. Mr. Conroy was selected as Chief Financial Officer, Vice President and
Secretary by the Board of Directors in August 1996. Since 1994, Mr. Conroy has
been President of CFO Financial Services, Inc. From 1990 through 1994, Mr.
Conroy was the Vice President of Finance and Chief Financial Officer of the
Grant Group of Companies. Mr. Conroy is a Certified Public Accountant. See
"Employment Agreements".
John Stanton. Mr. Stanton has served as a director of the Company since
1996. Since 1981, Mr. Stanton has been President of Florida Engineered
Construction Products Corp., which is a privately owned company. Mr. Stanton
also serves as President of EarthFirst Technologies, Inc., a publicly traded
company.
<PAGE>
2
Mark J. Connolly. Mr. Connolly was appointed Controller of the Company in
December 1999. Mr. Connolly served as Senior Manager at N.G. Kelly and Company
from November 1997 to December 1999. Prior to 1999, Mr. Connolly served as Vice
President of Operations for Hospice of Southwest Florida from February 1993 to
October 1997. Mr. Connolly is a Certified Public Accountant.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 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. Officers, directors, and
ten-percent stockholders are required by the SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it,
and written representations from certain reporting persons that no SEC Forms 3,
4, or 5 were required to be filed by those persons, the Company believes that
during fiscal year 2000, its officers, directors and ten-percent beneficial
owners timely complied with all applicable filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table. The table below sets forth certain 9information
concerning the compensation earned during fiscal years 1998, 1999 and 2000 by
the Company's Chief Executive Officer and Chief Financial Officer. No other
executive officer received total annual compensation in excess of $100,000.
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------
Securities
Name and Principal Position Fiscal Salary ($) SAR/ Other Underlying
Year Bonus ($) (1) Options/SARs
--------------------------------------------- ------ -------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Todd E. Siegel 2000 $209,457 $21,016 $11,766 0
President and Chief Executive Officer 1999 $191,029 $0 $18,206 79,000 (2)
1998 $168,450 $0 $14,608 20,000 (2)
Michael P. Conroy 2000 $130,508 $18,021 $7,596 0
Vice President and Chief Financial 1999 $127,685 $0 $10,537 25,000 (3)
Officer
1998 $23,538 (4) $0 $10,334 0
</TABLE>
-----------------
(1) Includes automobile expenses, health and life insurance premiums paid
by the Company for the benefit of named individuals.
(2) Consists of options to acquire 59,000 shares of Common Stock issued
pursuant to the terms of a $100,000 loan made to the Company by Mr.
Siegel. In addition, Mr. Siegel receives options to purchase 20,000
shares of the Company's Common Stock per year pursuant to a long-term
incentive agreement.
(3) Consists of options to acquire 25,000 shares of Common Stock issued
pursuant to Mr. Conroy's Employment Agreement.
<PAGE>
3
(4) During 1998, the Company retained the services of CFO Financial
Services, Inc. Mr. Conroy was affiliated with CFO Financial Services,
Inc. The Company paid CFO Financial Services, Inc. $78,380 during the
year ended March 31, 1998 for Mr. Conroy's services.
Compensation of Directors. Directors, who are not otherwise employees of
the Company, are paid a $750 fee for attending meetings. The fee is $350 if a
meeting is held telephonically. In addition, for each year that an individual,
who is not otherwise an employee of the Company, serves as a director, he is
issued options to acquire 2,000 shares of the Company's Common Stock at an
exercise price equal to the fair market value of such shares on the date of
issuance. However, if the fair market value of a share of the Company's Common
Stock is $1.00 or less on the date of issuance, the options granted will entitle
the holder to purchase Common Stock of the Company for $1.00 per share.
Directors' options are issued as of the date of each annual meeting of
directors. Directors must serve until the next annual meeting of stockholders to
vest their options issued in the prior year. The options expire 10 years from
their issuance date. During the fiscal year ended March 31, 2000, Mr. Stanton
and Mr. Kazarian were each issued options to acquire 6,000 shares of the
Company's Common Stock for their services during the fiscal years ended March
31, 1997, 1998 and 1999. In addition, Mr. Stanton and Mr. Kazarian were each
issued 23,215 shares of Common Stock in lieu of cash compensation of $9,250 for
meetings attended during fiscal years ended March 31, 1997, 1998, 1999 and 2000.
Employment Agreements. Effective September 1, 1994, the Company entered
into an Employment Agreement with Mr. Todd E. Siegel (the "Siegel Employment
Agreement"). The Siegel Employment Agreement was for a five-year term. Mr.
Siegel's base salary for the period September 1, 1994 through August 31, 1995,
was $150,000, and that amount increases 6% per year to approximately $189,000
for the fifth year of his agreement ending August 31, 1999. The Siegel
Employment Agreement also provided for bonuses, expense reimbursement, and other
performance-based incentive compensation arrangements. The Siegel Employment
Agreement provided Mr. Siegel the right to receive compensation in the form of
Common Stock of the Company in lieu of cash. The Company and Mr. Siegel have not
entered into a new Employment Agreement for periods commencing after August 31,
1999, therefore, according to its terms, the Siegel Employment Agreement was
renewed for a one-year period ending August 31, 2000.
In connection with the execution of the Siegel Employment Agreement, Mr.
Siegel was granted the right to acquire 40,000 shares of the Company's Common
Stock at an exercise price of $7.00 per share, which was the fair market value
of those shares as of the date of grant. In 1996, the exercise price was reset
to $1.625. The options are "non-qualified" and have an exercise period of ten
years.
The Siegel Employment Agreement provides for severance payments equal to a
lump sum payment of 299% of his then current base salary in the event of (i) a
change of control and a subsequent termination without cause of Mr. Siegel or
(ii) a material reduction in his compensation. The Siegel Employment Agreement
contains a restrictive covenant not to compete, solicit or disclose confidential
information during the term of the agreement.
The Company and Mr. Siegel have entered into an Executive Stock
Appreciation Rights and Non-Qualified Stock Option Agreement (the "Long-Term
Incentive Agreement") to provide for the long-term incentive of Mr. Siegel and
the alignment of his interest with those of the Company's stockholders. The
Long-Term Incentive Agreement grants Mr. Siegel a stock appreciation right
("SAR") equal to 3.25% of the incremental increase in the value of the Company
between successive fiscal years. Originally, value was defined to mean the
difference between the total market capitalization of the Company between
successive fiscal year ends. Now that the Common Stock has been delisted from
NASDAQ, value will be determined by the average of the high bid and ask price
for the Common Stock as quoted on the NASD OTC bulletin board. The total market
capitalization means the total number of shares of Common Stock outstanding
multiplied by the closing price of the Common Stock traded on the NASDAQ or
other quotation service. The amount payable to Mr. Siegel under the Long-Term
Incentive Agreement for fiscal 2000 was $26,890.
Mr. Siegel has the option of receiving his rights to the SARs in the form
of cash or the Company's Common Stock equal to the cash value. The shares of
Common Stock issued to Mr. Siegel are valued at one-half of the fair market
value of the Company's Common Stock as of the March 31 in the year for which the
SARs are granted (the "Valuation Date"). In the event of a change of control or
sale of the Company's business, Mr. Siegel's rights under his SARs are
accelerated and immediately vested.
<PAGE>
4
Pursuant to the Long-Term Incentive Agreement, the Company granted Mr.
Siegel the right to acquire up to 20,000 shares of its Common Stock on an annual
basis at a purchase price equal to the fair market value of such shares as of
the end of each fiscal year during the term of this agreement. However, if the
fair market value of a share of Common Stock is $1.00 or less at the end of a
particular fiscal year, options granted during that year will entitle Mr. Siegel
to purchase shares of Common Stock for $1.00 per share. The options are
non-qualified and have a ten-year term. The options granted in 1998 have an
exercise price of $1.00 per share.
Effective March 1, 1998, the Company entered into an Employment Agreement
with Mr. Michael P. Conroy, the Chief Financial Officer. The Employment
Agreement is for a three-year term and provides for an annual base salary of
$125,000, $130,000 and $136,000 in each of the three years. Pursuant to the
Employment Agreement, Mr. Conroy received options to acquire 25,000 shares of
the Company's Common Stock, exercisable for a period of ten years at a price of
$1.00.
Aggregated Option Table. The following table sets forth information
concerning options held by the Chief Executive Officer at the end of fiscal year
2000.
<TABLE>
<CAPTION>
Number of Securities Underlying Exercised Value of Unexercised in-the-Money
Name Options/SARS at Fiscal Year End Options/SARS at Fiscal Year End
(#) ($)
------------------------ --------------------------------------------- --------------------------------------
<S> <C> <C>
Todd E. Siegel 199,000 (1) -0- (2)
</TABLE>
-----------------
(1) All such options held by Mr. Siegel are currently exercisable.
(2) Value of options is based on the bid price of a share of the Company's
Common Stock as of March 31, 2000 ($0.31), minus the exercise price
(which ranges from $0.75-$1.625) multiplied by 100,000, which yields a
negative figure.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 30, 2000 certain information
regarding the beneficial ownership of the Common Stock by (i) each director of
the Company, (ii) each executive officer named in the Summary Compensation
Table, (iii) each person who is known by the Company to be the beneficial owner
of more than 5% of the outstanding shares of Common Stock, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Name and Address of Title of Nature of Common Stock Percentage of Voting
Beneficial Owner (1) Class Beneficial Percentage Shares (6)
Ownership
---------------------------------------- ---------- ---------------- -------------- --------------------
<S> <C> <C> <C> <C>
Todd E. Siegel, individually and Common 775,082 11.5% 69.8%
through the Siegel Family QTIP 6,500,000
Trust(2)(3)(4) Preferred
David Kazarian (5) Common 89,215 1.4% 0.5%
Michael P. Conroy (7) Common 165,000 2.5% 0.8%
John Stanton (8) Common 139,215 2.1% 0.7%
All Officers and Directors as a Common 1,168,512 17.2% 71.8%
Group (4 persons) 6,500,000
Preferred
</TABLE>
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<PAGE>
5
(1) The business address for Messrs. Siegel, Kazarian, Conroy and Stanton
is 12920 Automobile Boulevard, Clearwater, Florida 33762.
(2) Todd E. Siegel is the trustee of the Siegel Family QTIP Trust,
established pursuant to the Siegel Family Revocable Trust (the
"Trust"), and accordingly controls the shares owned of record by the
Trust. The Trust is the managing partner of JADE Partners (the
"Partnership") and accordingly controls the Partnership. Currently,
Mr. Siegel owns 185,769 shares of Common Stock individually. The
Partnership owns 390,313 shares of Common Stock.
(3) The Partnership is the owner of record of 6,500,000 Shares of the
Company's Voting Preferred Stock, which represents 100% of the
outstanding Voting Preferred Stock. Each share of Voting Preferred
Stock has the power to cast two votes per share on any matter on which
the Common Stock is entitled to vote.
(4) Includes options to acquire 199,000 shares of Common Stock, of which
80,000 options are exercisable at $1.625 per share, 60,000 are
exercisable at $1.00 per share and 59,000 exercisable at $.75. (5)
Includes options to acquire 41,000 shares, of which 35,000 are
exercisable at $1.00 and 6,000 are exercisable at $1.625 and includes
25,000 shares of Common Stock held by his wife for which Mr. Kazarian
disclaims beneficial ownership. (6) Combined voting percentage of
Common and Voting Preferred Stock, including 6,500,000 shares of
Voting Preferred Stock held of record by the Partnership, of which
Todd E. Siegel may be deemed to be the beneficial owner.
(7) Includes options to acquire 25,000 shares of Common Stock exercisable
at $1.00 per share granted in connection with his Employment
Agreement. See "Executive Compensation-Employment Agreements".
(8) Includes options to acquire 6,000 shares of Common Stock exercisable
at $1.00 per share.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The JADE Partners (the "Partnership") is currently the holder of 6,500,000
shares of Voting Preferred Stock. The Siegel Family QTIP Trust, established
pursuant to the terms of the Siegel Family Revocable Trust (the "Trust"), which
originally acquired the shares of Voting Preferred Stock in 1986 for the
aggregate par value of the shares ($650.00), transferred the shares to the
Siegel Family Limited Partnership in 1993. The Siegel Family Limited Partnership
transferred the shares to the Partnership in 1994. Mr. Siegel is the trustee of
the Trust, which is the managing general partner of the Partnership, and
accordingly, controls the shares held by the Partnership.
The Voting Preferred Stock has two votes per share on all matters submitted
to a vote of other holders of Common Stock. In addition to preferential voting
rights, the Voting Preferred Stock is entitled to receive upon dissolution or
liquidation of the Company, the first $10,000 of proceeds distributed to
stockholders of the Company upon such events. Thereafter, the Voting Preferred
Stock is entitled to no additional amounts upon dissolution or liquidation of
the Company. The Voting Preferred Stock has no dividend rights, redemption
provisions, sinking fund provisions or conversion, or preemptive or exchange
rights. The Voting Preferred Stock is not subject to further calls or
assessments by the Company.
The Voting Preferred Stock was issued to assure complete and unfettered
control of the Company by its holder. The issuance of the Voting Preferred Stock
constitutes an anti-takeover device since the approval of any merger or
acquisition of the Company will be completely dependent upon the approval of the
Trust.
Harold B. Siegel was the inventor of the patents and other proprietary
rights for the equipment and processes that the Company uses and sells. The
Trust is the assignee of all such proprietary and patent rights used in the
Company's business. In October 1986, the Company was granted rights to an
exclusive perpetual license from the Trust to utilize the know-how and patent
rights assigned to the Trust by Harold B. Siegel in the manufacture and sale of
the Company's medication dispensing systems.
<PAGE>
6
The license granted to the Company by the Trust may only be terminated by
the Trust in the event the Company: (i) ceases to utilize the know-how created
by the Trust; (ii) defaults in making any royalty payment and fails to remedy
such default within 40 days after written notice by the Trust; or (iii) becomes
insolvent, makes any assignment for the benefit of creditors, is adjudged
bankrupt, or if a receiver or trustee of the Company's property is appointed.
Under such circumstances, the license will automatically terminate. In addition,
the Trust has granted the Company the right to sublicense the rights granted
under the license agreement between the Company and the Trust.
The Trust was originally entitled to receive a royalty of 2% of the gross
revenues realized from the sale of the Company's products. The license agreement
further provided that the Trust would waive any royalty fees owed by the Company
in the event the Company did not generate a pretax profit in any fiscal year.
In September 1990, the Company, the Trust and Harold B. Siegel entered into
an agreement whereby the Company issued the Trust 1,500,000 shares of Common
Stock and the Trust and Harold B. Siegel agreed to reduce future royalties due
under the license agreement from 2% to 1%. For fiscal year 2000, the Company
paid $50,000 to the Trust for royalties. In addition, royalties of $266,000 are
due for fiscal years ending through March 31, 2000.
Todd E. Siegel is a guarantor of the Company's outstanding restructured
credit facility with SouthTrust Bank. On September 4, 1996, the Bankruptcy Court
confirmed the Company's restructured indebtedness to the Bank in the amount of
approximately $28.0 million. The $28.0 million indebtedness has been separated
into two notes, Plan Note I and Plan Note II, and is scheduled to be repaid as
follows:
Plan Note I, in the stated principal amount of approximately $27.0 million,
provides for a portion of the principal amount, $15.0 million, to be due and
payable as follows:
(1) Interest at the rate of 7.5% for a period of two years ending
September 1, 1998.
(2) Installments of principal and interest at the rate of 7.5% payable
monthly for a period of ten years ending September 1, 2006. At which
time, the then outstanding principal amount is due and payable in
full. The monthly installments of principal and interest are
calculated based on the principal amount amortized in level monthly
payments over twenty years.
Plan Note II, in the stated principal amount of $1,000,000 provided for
payment of $750,000 on or about the date of the confirmation of the Plans of
Reorganization. The Company made the payment of $750,000 on or about September
5, 1996 and in accordance with the terms of Plan Note II, the stated principal
amount was deemed fully satisfied.
Plan Note I further provides that the net sales proceeds from the sale of
Vangard, would be paid to the Bank. In addition, certain other mandatory
prepayments of the stated principal amount were required upon the occurrence of
a capital transaction in which any of the Company's subsidiaries are sold, as
well as upon the receipt of any proceeds resulting from certain causes of action
commenced by the Company. Plan Note I also provides that the full stated
principal amount of approximately $28 million will be due and payable upon the
occurrence of specified major events of default.
Effective March 31, 1997, the stated principal amount of Plan Note I was
reduced to $15.0 million. Thereby, permanently removing any contingent amount
due including the additional $12 million principal amount, except for the
mandatory prepayments for any capital transactions. As a result of this
modification and the receipt of proceeds from the sale of Vangard, the Company
realized an extraordinary gain of approximately $10.3 million, after the
mandatory payment from the Vangard sales proceeds of approximately $3.1 million.
<PAGE>
7
Mr. Siegel agreed to unconditionally guarantee the full and timely payment
of the SouthTrust Bank credit facility. Should the Company default on any of the
above payments, Mr. Siegel agreed to immediately cure such default on demand of
the Bank. If Mr. Siegel fails to cure the default, the Bank may proceed directly
against Mr. Siegel for payment in a court of competent jurisdiction. In
addition, Mr. Siegel, as trustee of the Siegel Family QTIP Trust, which is
managing general partner of the JADE Partnership, has pledged 100,000 shares of
the Company's Common Stock held by the JADE Partnership to SouthTrust Bank to
secure repayment of the Partnership's obligations in the amount of approximately
$300,000.
In August 1998, Mr. Siegel loaned the Company $100,000 for general
working capital needs. The terms of the loan provide for repayment in monthly
installments of $17,625 including interest at 18% per annum commencing July 31,
2000. In addition, Mr. Siegel received options to purchase 59,000 shares of the
Company's Common Stock at $0.75 per share.
The Company has entered into indemnification agreements with each of
its directors, including Mr. Siegel. The indemnification agreements authorize
indemnification of such directors to the full ext authorized or permitted by
law.
<PAGE>
8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed
on its behalf by the undersigned, thereunto duly authorized.
MEDICAL TECHNOLOGY SYSTEMS, INC.
Dated: July 28, 2000 By: /s Todd E. Siegel
---------------------------------------
Todd E. Siegel, Chief Executive Officer
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 dates indicated.
Signature Title Date
------------------------ ---------------------- --------------
/s Todd E. Siegel Chairman of the Board of Directors, July 28, 2000
----------------------- President and Chief Executive Officer
Todd E. Siegel
/s David W. Kazarian Director July 28, 2000
-----------------------
David W. Kazarian
/s Michael P.Conroy Director, Chief Financial Officer July 28, 2000
----------------------- and Vice President
Michael P. Conroy
/s John Stanton Director and Vice Chairman of the July 28, 2000
------------------------ Board of Directors
John Stanton
/s Mark J. Connolly Principal Accounting Officer July 28, 2000
----------------------- and Controller
Mark J. Connolly
