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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-20270
THE NATIONAL REGISTRY INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 95-4346070
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2502 ROCKY POINT DRIVE, SUITE 100, TAMPA, FLORIDA 33607
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (813) 636-0099
---------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 per share.
Indicate by check mark whether the registrant: (i) 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 (ii) has been subject to
filing requirements for the past 90 days. Yes [X] 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the average bid and asked prices of such stock on
April 25, 1997, was $43,103,756. There were 34,485,005 shares of Common
Stock outstanding as of April 25, 1997.
Total number of pages: 11
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<PAGE>
The undersigned registrant (the "Registrant") hereby amends the following
items of its Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (the "Report") as follows:
PART III
The Registrant hereby deletes the information set forth under Items 10, 11,
12 and 13 of the Report and replaces such items in their entirety as set forth
below.
Item. 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all current directors and named executive officers
(the "Named Executive Officers") of the Company, as of April 25, 1997 are set
forth below. As of April 25, 1997, the Board of Directors consists of three
persons.
DIRECTORS
TERM DIRECTOR
NAME AGE POSITION EXPIRES SINCE
- ---- --- ------------- ------- --------
J. Anthony Forstmann (1)....... 58 Chairman 1997 1991
and Director
John L. Gustafson(l)........... 53 President, 1997 1995
Chief Executive
Officer and Director
W. Lee Shevel(l)............... 64 Vice-Chairman
and Director 1997 1995
- ----------
(1) Compensation Committee and Audit Committee member.
Pursuant to the Stock Purchase Agreement (the "Stock Purchase Agreement"),
dated as of April 28, 1992, by and between the Company and Home Shopping
Network, Inc. ("Home Shopping Network"), Home Shopping Network has the right to
nominate up to three directors for the Company's Board of Directors. Home
Shopping Network had nominated as directors of the Company Peter M. Kern and
Kevin J. McKeon, who resigned effective March 29, 1996 and February 12, 1997,
respectively. No current member of the Company's Board of Directors has been
nominated by Home Shopping Network.
Pursuant to a stockholders' voting agreement, dated as of March 14, 1995,
J. Anthony Forstmann, RMS Limited Partnership, a Nevada limited partnership
("RMS"), and Francis R. Santangelo (the "Stockholders' Voting Agreement"), each
agreed to vote certain shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), beneficially owned by such party, and each of their
respective affiliates, for a director nominated by each of Mr. Forstmann and RMS
and not to vote certain shares of Common Stock beneficially owned by such party,
and each of their respective affiliates, in favor of certain specified
stockholder actions unless such actions are
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agreed upon by Mr. Forstmann and RMS. To date, RMS has not exercised its right
to nominate a director pursuant to the Stockholders' Voting Agreement.
NAMED EXECUTIVE OFFICERS
POSITION
NAME AGE OFFICER SINCE
- ---- --- ------- --------
John L. Gustafson 53 President and Chief 1995
Executive Officer
Clinton C. Fuller 52 Vice President - Product
Marketing and Financial Services 1995
Robert C. Leamy 48 Vice President - 1995
Product Operations
Todd D. Lowe 44 Vice President - Identification 1995
Systems and Services
David E. Brogan 42 Secretary, Treasurer 1996
and Controller
The business experience, principal occupations and employment during the
past five years of each director and Named Executive Officer of the Company is
summarized below.
J. ANTHONY FORSTMANN has been the Chairman of the Board of Directors of the
Company (the "Board") from June 1995, Co-Chairman from August 1993 to June 1995,
Chairman from the Company's inception in October 1991 to August 1993, a member
of the Board's Compensation Committee (the "Compensation Committee") since
February 1993 and a member of the Board's Audit Committee (the "Audit
Committee") since December 1995. Mr. Forstmann was President of the Company from
October 1991 to August 1993 and from September 1994 to March 1995 and Chief
Executive Officer of the Company from October 1991 to August 1993 and from
September 1994 to December 1995. Mr. Forstmann has been a Managing Director of
J.A. Forstmann & Co., a merchant banking firm since October 1987. He co-founded
Forstmann-Leff Associates, an institutional money management firm, in 1968 and
was a Managing Director thereof from its inception until October 1987. Mr.
Forstmann has been a Limited Partner of Forstmann Little & Co. since its
inception in 1978. Mr. Forstmann has been a director of Community Health
Services, a private entity engaged in the operations of hospitals, since 1996.
Mr. Forstmann received a BA in Economics from Yale University and an MBA from
the Graduate School of Business Administration, Columbia University.
JOHN L. GUSTAFSON has served as President, Chief Operating Officer and a
Director of the Company since March 1995, Chief Executive Officer since December
1995 and a member of each of the Audit and Compensation Committees since
December 1995. From November 1993 to March 1995, Mr. Gustafson served as Vice
President for Business Development of Allied Technical Services, a wholly-owned
subsidiary of Allied Signal Inc. From 1968 to November 1993, Mr. Gustafson held
a variety of senior executive positions at Unisys Corp. and at Burroughs
Corporation, its predecessor company. Mr. Gustafson received his BS in Math from
St Louis University and his MS in Computer Science from the University of
Missouri-Rolla.
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LEE SHEVEL has served as Vice Chairman of the Board and a Director of the
Company since March 1995, a member of each of the Audit and Compensation
Committees since December 1995 and as a consultant to the Company since January
1995. Mr. Shevel also serves as a director of Insync Systems, Inc., a privately
held company in the business of providing gas distribution apparatus for
semiconductor processes. Since June 1994, Mr. Shevel has been Managing Director
of EIM, a consulting firm which he founded. From 1982 to June 1994, Mr. Shevel
held a variety of senior executive positions at Unisys Corp. and at Burroughs
Corporaton, its predecessor company, including Vice President of Enterprise
Integration, President of Unisys' Shipboard and Ground Systems Group and of
Paramax Electronics, Unisys' Canadian subsidiary. Mr. Shevel received BS, MS and
Ph.D. degrees in Engineering from Carnegie Mellon University.
CLINTON C. FULLER has been Vice President - Product Marketing and Financial
Services of the Company since July 1995, overseeing the development of the
Company's products and services, including developing products for the financial
services industry. From September 1967 to June 1995, Mr. Fuller held a variety
of managerial positions at Unisys Corp., including worldwide general manager of
Unisys' financial retail delivery system division. Mr. Fuller received a BS in
Computer Science from Lackawanna College.
ROBERT C. LEAMY has been Vice President - Product Operations of the Company
since October 1995, managing the Company's product development. From August 1975
to October 1995, Mr. Leamy served as Engineering Director at Unisys Corp. where,
among other things, he helped develop computer products and systems used in law
enforcement. Mr. Leamy received his BS in Engineering from the University of
California, Los Angeles, an MS in Electrical Engineering and Computer Sciences
from the University of California, Berkeley and an MS in Administration from the
University of California, Irvine.
TODD D. LOWE has been Vice President - Identification Systems and Services
of the Company since September 1995, managing the implementation of the
Company's systems. From January 1982 to August 1995, Mr. Lowe was an employee of
Unisys Corp. where he was the business manager for its automated finger imaging
systems division (which was subsequently acquired by Loral Corporation),
managing the development of personal identification systems for government
social services agencies. Mr. Lowe received a BS in Chemistry from the United
States Naval Academy.
DAVID E. BROGAN has been Treasurer and Controller of the Company since
August 1996 and Secretary of the Company since December 1996. From March 1995 to
March 1996, Mr. Brogan was a consultant for Tunstall Consulting, a consulting
firm specializing in business plan development and assisting in raising capital.
From December 1990 to March 1995, Mr. Brogan was a Vice President of Finance for
Mercury Medical, Inc., a medical distribution company. From November 1988 to
October 1990, Mr. Brogan was Chief Financial Officer for Electronic Data
Technologies, a publicly traded computer systems manufacturer. Mr. Brogan
received his MBA from the University of Colorado and a BS in Accounting from
Metropolitan State College in Denver, Colorado.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity
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securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC") and the Nasdaq Stock Market.
Officers, directors and greater than ten-percent stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal 1996, David
Brogan, the Chief Financial Officer of the Company, failed to file on a timely
basis one report, covering zero transactions, Todd Lowe, a Vice President of the
Company failed to file on a timely basis one report, covering one transaction
and Robert Leamy, a Vice President of the Company failed to file on a timely
basis one report, covering one transaction.
The following table sets forth all compensation with respect to certain of
the Named Executive Officers, including the Chief Executive Officer of the
Company. The table omits an executive officer employed by the Company on
December 31, 1996 because such officer's total annual salary and bonus for 1996
did not exceed $100,000:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
-----------------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
------------
NAME AND SALARY OPTIONS
PRINCIPLE POSITION(1) YEAR ($) (#)
- -------------------- ---- ------------ ------------
John L. Gustafson - 1996 $227,875(1) 50,000
President and Chief 1995 136,133 400,000
Executive Officer 1994 N/A NA
Clinton C. Fuller - 1996 $130,000 20,000
Vice President - 1995 78,210 60,000
Product Marketing 1994 N/A N/A
and Financial Services
Robert C. Leamy - 1996 $120,000 20,000
Vice President - 1995 23,076 45,000
Product Operations 1994 N/A N/A
Todd D. Lowe - 1996 $115,000 15,000
Vice President - 1995 31,016 30,000
Identification Systems 1994 N/A N/A
and Services
- ----------
(1) Mr. Gustafson's annual salary included $78,922 paid by the Company in
connection with Mr. Gustafson's relocation and a related "gross-up" for the
tax applicable to such reimbursement.
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The Company offers a plan pursuant to Section 401(k) of the Internal
Revenue Code (the "401(k) Plan") covering substantially all employees, including
the Named Executive Officers. Matching employer contributions are set at the
discretion of the Board of Directors. There were no employer contributions made
for 1996, 1995 or 1994.
STOCK INCENTIVE PLAN
The 1992 Stock Incentive Plan, adopted by the Board of Directors and
approved by the stockholders of the Company in January 1992 (the "Plan"),
authorizes the granting of stock incentive awards ("Awards") to qualified
officers, employees, directors and third parties providing valuable services to
the Company (e.g., independent contractors, consultants and advisors to the
Company). At the Company's Annual Meeting of Stockholders held on August 12,
1993, the stockholders of the Company approved a proposal amending the Plan to
increase from 1,500,000 to 2,700,000 the number of shares of Common Stock
authorized for issuance upon exercise of options granted pursuant to the Plan.
At the Company's Annual Meeting of Stockholders held on June 25, 1996, the
stockholders of the Company approved a proposal amending the Plan to increase
from 2,700,000 to 3,700,000 the number of shares of Common Stock authorized for
issuance upon exercise of options granted pursuant to the Plan. The following
table sets forth individual grants of stock options made during fiscal year 1996
to each of the Named Executive Officers (during fiscal year 1996 no stock
appreciation rights ("SARs") were awarded):
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
- -------------------------------------------------------------------------------------- ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
PERCENT OF TERM
TOTAL MARKET -------------------------------
OPTIONS PRICE OF
GRANTED TO COMMON
EMPLOYEES EXERCISE STOCK ON
OPTIONS IN FISCAL PRICE DATE OF EXPIRATION
NAME (#) YEAR ($/SH) GRANT DATE 0%($) 5%($) 10%($)
- ----------------- ---------- ---------- -------- -------- ----------- ----- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John L. Gustafson 50,000(1) 10.2% $1.125 $1.125(2) 11/18/2006 $0 $35,375 $86,648
Clinton C. Fuller 20,000(3) 4.1% $1.125 $1.125(2) 11/18/2006 0 $14,150 $35,859
Robert C. Leamy 20,000(3) 4.1% $1.125 $1.125(2) 11/18/2006 0 $14,150 $35,859
Todd D. Lowe 15,000(4) 3.1% $1.125 $1.125(2) 11/18/2006 0 $10,613 $26,894
David E. Brogan 50,000(5) 10.2% $0.84 $0.84 (6) 9/06/2006 0 $26,414 $66,937
David E. Brogan 5,000(7) 1.0% $1.125 $1.125(2) 11/18/2006 0 $ 3,538 $ 8,965
<FN>
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(1) Stock Options were granted on November 18, 1996, of which options to
purchase 16,666 shares of Common Stock will vest on November 18, 1997 and
options to purchase 16,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(2) The average of the bid and asked price on the Nasdaq SmallCap Market on
November 18, 1996.
(3) Stock Options were granted on November 18, 1996, of which options to
purchase 6,666 shares of Common Stock will vest on November 18, 1997 and
options to purchase 6,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
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(4) Stock Options were granted on November 18, 1996, of which options to
purchase 5,000 shares of Common Stock will vest on November 18, 1997 and
options to purchase 5,000 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(5) Stock Options were granted on September 9, 1996, of which options to
purchase 16,666 shares of Common Stock will vest on September 9, 1997 and
options to purchase 16,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(6) The average of the bid and asked price on the Nasdaq SmallCap Market on
September 9, 1996.
(7) Stock Options were granted on November 18, 1996, of which options to
purchase 1,666 shares of Common Stock will vest on November 18, 1997 and
options to purchase 1,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
</FN>
</TABLE>
During fiscal year 1996, no stock options were exercised by any Director or
Named Executive Officer of the Company. The following table sets forth the
number and value of stock options outstanding as of December 31, 1996 for the
Named Executive Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS
FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------- ------------------------------- -------------------------
<S> <C> <C>
John L. Gustafson 160,000/290,000 170,000/326,875
Clinton C. Fuller 20,000/60,000 15,650/60,050
Robert C. Leamy 15,000/50,000 4,688/38,125
Todd D. Lowe 10,000/35,000 3,125/27,813
David E. Brogan 0/55,000 0/93,313
<FN>
- ----------
(1) Assumes a market price equal to $2.5625 per share, the average of the
closing bid and asked price on the Nasdaq SmallCap Market on December 31,
1996.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On March 29, 1996, Peter M. Kern resigned as a member of the Compensation
Committee of the Board. The Compensation Committee presently consists of Messrs.
Forstmann, Gustafson and Shevel. Mr. Gustafson has been President of the Company
since March 1995 and Chief Executive Officer since December 1995.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 25, 1997 by (i) each person
who is known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock; (ii) each of the Company's directors; (iii) each of
the Named Executive Officers (as hereinafter defined); and (iv) all executive
officers and directors of the Company as a group:
AMOUNTS AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------- ----------- ----------
J. Anthony Forstmann ............. 6,000,000(1) 17.4
7 Beverly Park
Beverly Hills, CA 90210
Home Shopping Network, Inc. ...... 6,336,154(2) 15.5
P.O. Box 9090
Clearwater, FL 34618
RMS Limited Partnership .......... 5,500,000(3) 15.3
201 West Liberty Street
P.0. Box 281
Reno, NV 89504
John L. Gustafson ................ 168,333(4) (5)
W. Lee Shevel .................... 120,000(4) (5)
Todd D. Lowe ..................... 85,300(4) (5)
Clinton C. Fuller ................ 20,000(4) (5)
Robert C. Leamy .................. 17,000(4) (5)
David E. Brogan .................. 0 (5)
Executive officers and directors
as a group (7 persons) ........... 6,410,633(l)(4) 18.6%(1)(4)
(1) Of such amount, 3,500,000 shares of Common Stock are pledged in favor of
Theodore J. Forstmann, Mr. Forstmann's brother, to secure a demand note,
and 1,500,000 shares of Common Stock are pledged in favor of a financial
institution to secure a non-recourse credit facility, which demand note is
past due. Includes 800,000 shares of Common Stock directly held by Mr.
Forstmann's spouse, Catherine S. Forstmann.
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(2) Includes 6,336,154 shares of Common Stock issuable upon conversion of
100,000 currently convertible shares of Series A Preferred Stock.
(3) Includes 1,500,000 shares of Common Stock subject to outstanding options
which are vested and exercisable.
(4) Includes shares of Common Stock that can be acquired by exercise of vested
and exercisable stock options within 60 days of April 25, 1997, as follows:
Mr. Gustafson - 168,333 shares; Mr. Shevel - 120,000 shares; Mr. Fuller -
20,000 shares; Mr. Leamy - 15,000 shares; and Mr. Lowe - 10,000; and all
directors and officers as a group - 410,633 shares. Excludes 321,667,
196,667, 60,000, 50,000, 35,000 and 55,000 shares subject to options which
have not vested in favor of Messrs. Gustafson, Shevel, Fuller, Leamy, Lowe
and Brogan, respectively.
(5) Less than 1%.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1996, the Company retained as a consultant W. Lee Shevel, a
director of the Company, and paid him an aggregate of $66,607 (including $10,417
in travel and other expenses). On March 14, 1995, the Company granted him
options to purchase 300,000 shares of Common Stock at an exercise price of $1.00
per share, of which options to purchase 120,000 shares of Common Stock have
vested and options to purchase 60,000 shares of Common Stock will vest on each
of the next three anniversaries of the date of the grant. The Company may retain
Mr. Shevel from time to time in the future.
During fiscal 1996, the Company retained DMG & Associates ("DMG"), a health
care marketing consulting firm founded by Donna M. Gustafson, the wife of John
L. Gustafson, the Chief Executive Officer and President of the Company, and paid
DMG an aggregate of $63,783 (including $13,178 in travel and other expenses) for
certain consulting services. On October 13, 1995, the Company, as part of such
consulting arrangement, granted Ms. Gustafson options to purchase 25,000 shares
of Common Stock at an exercise price of $2.25 per share, vesting pro rata on
each of the next three anniversaries of the date of grant. On June 3, 1996, the
Company hired Ms. Gustafson as Director of Marketing for health care services.
On November 18, 1996, the Company granted Ms. Gustafson options to purchase
15,000 shares of Common Stock at an exercise price of $1.125 per share.
Peter M. Kern, a director of the Company who resigned from the Board of
Directors effective March 29, 1996, was nominated by and served as a
representative of Home Shopping Network in accordance with Home Shopping
Network's right to nominate up to three directors pursuant to the Stock Purchase
Agreement. Following Mr. Kern's resignation from the Board of Directors, Home
Shopping Network nominated Kevin J. McKeon to serve as a member of the Board of
Directors. Mr. McKeon resigned from the Board of Director effective February 12,
1997. No current member of the Company's Board of Directors has been nominated
by Home Shopping Network.
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The Company engages in a variety of transactions with Home Shopping
Network, including the rental by the Company of its previous office space from
Home Shopping Network for a 1996 rent of approximately $62,000.
The Company believes that each of the related party transactions described
herein were on terms as fair to the Company as could have been obtained from
unaffiliated third parties.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this amendment to the report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE NATIONAL REGISTRY INC.
(REGISTRANT)
Date: April 30, 1997 By:/s/ JOHN L. GUSTAFSON
--------------------------
John L. Gustafson
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of registrant
and on the dates indicated.
Date: April 30, 1997 By:/s/ JOHN L. GUSTAFSON
--------------------------
John L. Gustafson
President, Chief Executive
Officer and Director
Date: April 30, 1997 By:/s/ DAVID E. BROGAN
--------------------------
David E. Brogan
Secretary, Treasurer
and Controller
Date: April 30, 1997 By:/s/ J. ANTHONY FORSTMANN
-------------------------
J. Anthony Forstmann
Chairman of the Board
Date: April 30, 1997 By:/s/ W. LEE SHEVEL
-------------------------
W. Lee Shevel
Director
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