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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 000-28220
MIGRATEC, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 65-0125664
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12801 NORTH STEMMONS FREEWAY, SUITE 710, FARMERS BRANCH, TEXAS 75234
(Address of Principal Executive Offices)
(972) 969-0300
(Issuer's Telephone Number, Including Area Code)
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
COMMON STOCK, NO PAR VALUE PER SHARE
(Title of Class)
Check whether the issuer (1) has 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 there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the 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. [ ]
Issuer's revenues for its most recent fiscal year: $905,179.
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on the closing sale price of such stock as reported on
March 31, 2000 on the over-the-counter bulletin board operated by the National
Association of Securities Dealers, Inc. was approximately $150,962,000.
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As of March 31, 2000, approximately 79,377,000 shares of the
registrant's common stock, no par value per share, were outstanding.
EXPLANATORY NOTE
This Form 10-KSB/A is being filed in order to amend and restate in
their entirety Items 9, 10, 11 and 12 of the registrant's Form 10-KSB for the
fiscal year ended December 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth certain information regarding the
directors and executive officers of MigraTec:
<TABLE>
<CAPTION>
Name Age Title Held Since
---- --- ----- ----------
<S> <C> <C>
W. Curtis Overstreet.................................. 54 Chief Executive Officer, President and April 1997
Director
T. Ulrich Brechbuhl................................... 36 Chief Financial Officer and Secretary March 2000
Mark C. Myers(1)...................................... 46 Chief Financial Officer and Secretary April 1998
Rick J. Johnson....................................... 41 Chief Operating Officer July 1997
Richard A. Gray, Jr................................... 52 Director April 1998
Kevin C. Howe......................................... 51 Chairman of the Board January 2000
Drew R. Johnson....................................... 31 Director January 2000
Deane C. Watson, Jr................................... 53 Director April 1998
</TABLE>
- ------------
(1) Mr. Myers resigned from his positions as Chief Financial Officer and
Secretary of MigraTEC effective as of January 31, 2000.
W. Curtis Overstreet has been President, Chief Executive Officer and a
director of MigraTEC since April 1997. From October 1994 to March 1997, Mr.
Overstreet was Regional Vice President for Software AG, Americas, based in
Dallas, Texas.
T. Ulrich Brechbuhl has served as Chief Financial Officer of MigraTEC
since March 1, 2000. From 1997 until joining MigraTEC, Mr. Brechbuhl was Chief
Financial Officer and a founding partner of Thayer Aerospace, L.L.C., a Wichita,
Kansas-based manufacturer of precision machined parts for the aircraft industry.
Prior to joining Thayer, Mr. Brechbuhl worked as a consultant and manager with
Bain & Company, Inc. in Dallas, Texas for four years.
Mark C. Myers served as Chief Financial Officer and Secretary of
MigraTEC from April 1998 to January 31, 2000. From 1996-1997, Mr. Myers was
Chief Operating Officer and Chief Financial Officer for Interactive Software,
Inc., based in Dallas, Texas. From 1992-1996, Mr. Myers served as President of
Healthtronix Medical Equipment, Inc.
Rick J. Johnson has been serving as the Chief Operating Officer of
MigraTEC since July 1997, and was also our Secretary from July 1997 through
March 1998. From 1995 to March 1997, Mr. Johnson was with Software AG, Americas,
based in Dallas, Texas, where he served as Director of Operations Support -
Integrated Business Solutions, Director of Applications Solutions and Business
Manager - West U.S. Area.
Since 1985, Richard A. Gray, Jr., director, has been President and
owner of Gray & Company Realtors, Inc., a commercial real estate brokerage and
developer in U.S. and Asian markets based in Dallas, Texas. From 1974 to 1986,
Mr. Gray was a partner of Hudson & Hudson, a commercial real estate company in
Dallas, Texas.
Kevin C. Howe is currently Chairman of the Board. Since May 1991, Mr.
Howe has been President of Sage U.S., Inc., a business software publisher. Since
March 1999, Mr. Howe has also been the general partner and manager of Mercury
Ventures, Ltd., a venture capital firm in Dallas, Texas. Mr. Howe is also a
director of The Sage Group plc, a publicly traded accounting software publisher
in the United Kingdom; Club Technology Corporation, a publisher of application
software for country clubs based in Irving, Texas; Atomic Software, a payment
processing portal in Alpharetta, Georgia; NetCertification, a web training
portal in Dallas, Texas and Freshloc Technologies, a wireless sensoring company
in Plano, Texas.
Since July 1997, Drew R. Johnson, director, has been a principal of
Cardinal Investment Company, a venture capital firm in Dallas, Texas. Mr.
Johnson is also a director of Thayer Aerospace, L.L.C., a manufacturer of
precision machined parts for the aircraft industry in Wichita, Kansas and Exline
Pan Pacific, a retail and rental home furnishings business in Asia,
headquartered in Dallas, Texas.
Since 1996, Deane C. Watson, Jr., director, has been President of
Chelsea Homes, Inc., a residential home builder in Texas, and Manager of Hills
of Seven Falls, L.L.C., a land developer in Texas. Since 1992, Mr. Watson has
been President and Managing Director of Omega Energy Corporation, an oil and gas
production company. Mr. Watson is also a practicing attorney, focusing on oil
and gas and real estate law.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that MigraTEC's directors, executive officers and
persons who own more than 10% of our outstanding common stock file initial
reports of ownership and reports of changes in ownership of our common stock
with the Securities and Exchange Commission (the "SEC"). Officers, directors and
stockholders who own more than 10% of our outstanding common stock are required
by the SEC to furnish MigraTEC with copies of all Section 16(a) reports they
file.
To MigraTEC's knowledge, based solely on the review of the copies of
such reports furnished to MigraTEC and written representations that no other
reports were required during the year ended December 31, 1999, the Company is
unaware of any reports that were untimely filed except as follows:
Curtis Overstreet, Mark Myers, Rick Johnson, Deane Watson and Richard
Gray each filed a Form 3 in March 1999. MigraTEC has no record of a filing of
any Form 3, Form 4 or Form 5 by Thomas Cabe.
To MigraTEC's knowledge, during the year ended December 31, 1999, Rick
Johnson and Richard Gray did not timely report on a Form 4 approximately one and
two transactions, respectively. Curtis Overstreet, Mark Myers, Richard Gray and
Deane Watson filed Form 5s for 1999 in April and May 2000.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued
by MigraTEC for the three years ended December 31, 1999 on behalf of each of the
executive officers of MigraTEC.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other Annual Long Term All Other
Annual Compensation Compensation Compensation Compensation
Name and ------------------- ------------ ------------ ------------
Principal Position Year Salary Bonus Options (#)
------------------ ---- ------ ----- -----------
<S> <C> <C> <C> <C> <C> <C>
W. Curtis Overstreet ......... 1999 $ 140,000 -0- -0- -0- -0-
President and Chief 1998 132,917 -0- $ 27,404(1) 6,000,000(2) -0-
Executive Officer 1997 68,192 $48,000 3,483(1) -0- $ 29,500(3)
Mark C. Myers ................ 1999 111,700 -0- -0- -0- -0-
Chief Financial Officer and 1998 87,500 -0- -0- 900,000(2) 949(5)
Secretary(4)
Rick J. Johnson .............. 1999 117,000 -0- -0- -0- -0-
Chief Operating Officer 1998 121,833 -0- -0- 1,500,000(2) -0-
1997 62,500 15,000 -0- -0- -0-
</TABLE>
- -----------------
(1) Commissions paid to Mr. Overstreet based on revenue.
(2) These options were granted in 1998 and voluntarily reduced by
each holder by 50% in September 1999. As a result of such
reduction, Mr. Overstreet, Mr. Myers and Mr. Rick Johnson had
options to purchase 3,000,000 shares, 450,000 shares and
750,000 shares of our common stock, respectively, as of
December 31, 1999.
(3) Consulting fees paid to Mr. Overstreet prior to his becoming
an executive officer of MigraTEC in April 1997.
(4) Mr. Myers became Chief Financial Officer of MigraTEC in April
1998. He resigned from his positions as Chief Financial
Officer and Secretary of MigraTEC effective as of January 31,
2000.
(5) Mr. Myers was issued a warrant to purchase 3,500 shares of our
common stock at $.01 per share as compensation for certain
consulting services.
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No options to purchase MigraTEC common stock were issued to our
executive officers during the year ended December 31, 1999. The following table
sets forth information with respect to stock options held by our executive
officers as of December 31, 1999. The closing bid price for our common stock on
December 31, 1999 was $0.2812.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Name and Shares Acquired Value Realized Options at FY-End at FY-End
Principal Position on Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------------ --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
W. Curtis Overstreet ...... -0- -0- 3,000,000(1)/-0- $243,600/-0-
President and Chief
Executive Officer
Mark C. Myers ............. -0- -0- 450,000(1)/-0- $ 36,540/-0-
Chief Financial
Officer and Secretary
Rick J. Johnson ........... -0- -0- 750,000(1)/-0- $ 60,900/-0-
Chief Operating
Officer
</TABLE>
(1) These options were granted in 1998 and voluntarily reduced by each holder
by 50% in September 1999. Mr. Overstreet, Mr. Myers and Mr. Rick Johnson
originally had options to purchase 6,000,000 shares, 900,000 shares and
1,500,000 shares of our common stock, respectively.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with Mr. Curtis Overstreet, our
President and Chief Executive Officer, dated April 10, 1997, which provides for
an annual base salary (currently $140,000) and incentives for salary increases
and bonuses to be determined by and subject to the discretion of our Board.
We entered into an employment agreement with Mr. Rick Johnson, our Chief
Operating Officer, dated July 1, 1997, which provides for an annual base salary
(currently $117,000) and incentives for salary increases and bonuses to be
determined by and subject to the discretion of our Board.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1999, no compensation was paid to
directors for serving on our Board.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 6, 2000 certain information
with respect to the beneficial ownership of MigraTEC's common stock by (i) each
person who is known by MigraTEC to be the beneficial owner of more than 5% of
the outstanding shares of our common stock, (ii) each of MigraTEC's directors
and nominees for director, (iii) each of MigraTEC's executive officers and (iv)
all directors and executive officers of MigraTEC as a group. Unless otherwise
indicated, each of the stockholders listed below has sole voting and investment
power with respect to the shares of our common stock beneficially owned. As of
April 6, 2000, 79,408,318 shares of our common stock were issued and
outstanding.
<TABLE>
<CAPTION>
Number of Share
Beneficially Percent of
Owned Total
----- -----
Name and Address (1)
- --------------------
<S> <C> <C>
W. Curtis Overstreet.......................................... 2,375,000(2) 3.0%
Mark C. Myers(3).............................................. 688,927(4) *
T. Ulrich Brechbuhl........................................... 2,500 *
Rick J. Johnson............................................... 600,000(5) *
Richard A. Gray, Jr........................................... 2,400,000(6) 3.0%
Kevin C. Howe................................................. 17,038,800(7) 21.5%
Drew R. Johnson............................................... -0- -0-
Deane C. Watson, Jr........................................... 850,227(8) 1.1%
EAI Partners, Inc............................................. 5,903,614(9) 7.4%
Thomas H. Cabe................................................ 9,484,000(10) 11.9%
Mercury Fund No. 1, Ltd. ..................................... 17,038,800(7) 21.5%
MT Partners, L.P. ............................................ 18,961,200(11) 23.9%
Directors and Executive Officers as a group................... 23,955,454 29.5%
</TABLE>
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* Less than 1%.
(1) The address for Messrs. Overstreet, Myers, Brechbuhl and Richard
Johnson is 11494 Luna Road, Suite 100, Dallas, TX 75234, Texas. The
address for Mr. Gray is 2611 Cedar Springs, Dallas, Texas 75201. The
address for Mr. Howe and Mercury Fund No. 1, Ltd. is 17950 Preston
Road, Dallas, Texas 75252. The address for Mr. Drew Johnson and MT
Partners, L.P. is 500 Crescent Court, Suite 250, Dallas, Texas 75201.
The address for Mr. Watson is 1800 Preston Park Blvd., Suite 115,
Plano, Texas 75093. The address for EAI Partners, Inc. is 1900
Corporate Blvd., Suite 305W, Boca Raton, Florida 33431. The address for
Thomas H. Cabe is 5114 Yolanda Lane, Dallas, Texas 75229.
(2) All of these shares are issuable to Mr. Overstreet upon the exercise of
an outstanding stock option.
(3) Mr. Myers resigned from his positions as Chief Financial Officer and
Secretary of MigraTEC effective January 31, 2000.
(4) Includes 32,000 shares issuable to Mr. Myers upon the exercise of a
warrant.
(5) All of these shares are issuable to Mr. Rick Johnson upon the exercise
of an outstanding stock option.
(6) Includes 250,000 shares issuable to Mr. Gray upon the exercise of a
stock option and 80,000 shares held by the spouse of Mr. Gray.
(7) Includes 14,199,000 shares issuable to Mercury Fund No. 1, Ltd. upon
the conversion of a note and 2,839,800 shares issuable to Mercury Fund
No. 1, Ltd. upon the exercise of outstanding warrants to purchase
common stock. Mr. Howe exercises voting control over these shares on
behalf of the general partner of Mercury Fund No. 1, Ltd. See "Certain
Relationships and Related Transactions"
(8) Includes 250,000 shares issuable to Mr. Watson upon the exercise of a
stock option and 200,000 shares held by the Watson Family Trust
1/16/96, of which Mr. Watson is the trustee and a beneficiary.
(9) Includes 4,570,281 shares issuable to EAI Partners, Inc. upon the
exercise of a stock option.
(10) Includes 3,500,000 shares held by Phoenix Energy Companies, Inc. Mr.
Cabe is the President of Phoenix Energy and exercises voting control
over these shares.
(11) Includes 15,801,000 issuable to MT Partners, L.P. upon the conversion
of a note and 3,160,200 shares issuable to MT Partners, L.P. upon the
exercise of outstanding warrants to purchase common stock. See "Certain
Relationships and Related Transactions."
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January and February 1998, Mr. Deane Watson and Mr. Rick Gray loaned
MigraTEC $104,000 and $100,000, respectively, pursuant to convertible notes with
interest rates of 10% and 12%. Mr. Watson and Mr. Gray converted these notes
into shares of our common stock at $0.20 per share in March 1998. Accrued
interest on the notes was paid in April 1998. In connection with this
transaction, Mr. Watson and Mr. Gray also received warrants to purchase 100,000
and 50,000 shares of our common stock, respectively, at prices of $0.01 to $0.20
per share. Mr. Gray exercised these warrants in March 1999 and Mr. Watson
exercised these warrants in January 2000.
In the first quarter of 1998, prior to his becoming Chief Financial
Officer of MigraTEC in April 1998, Mr. Myers received 195,227 shares of our
common stock as compensation for legal services provided to MigraTEC.
In July 1998, Mr. Watson was issued a warrant to purchase 25,000 shares
of our common stock at $0.20 per share as compensation for placement agent and
consulting services related to private offerings by MigraTEC. Mr. Watson also
received cash compensation of $1,350 and $248,162 in 1999 and 1998,
respectively, and 195,227 shares of our common stock in 1998, for legal services
provided to MigraTEC.
During 1999, Deane Watson loaned MigraTEC $25,000 at an interest rate
of 10% and received a warrant to purchase 50,000 shares of our common stock at
$0.01 per share. Mr. Watson exercised these warrants in February 1999 and the
loan was repaid in February 2000.
In August 1999, Rick Gray loaned MigraTEC $100,000 at an interest rate
of 10%. Mr. Gray received a warrant to purchase 20,000 shares of our common
stock at $0.01 per share for consulting services in connection with this loan,
which he exercised in 1999. MigraTEC repaid the loan in September 1999.
During 1999, Mark Myers received a warrant to purchase 3,500 shares of
our common stock at $.01 per share as compensation for consulting services. He
exercised this warrant in January 2000. Mr. Myers also loaned $30,000 to
MigraTEC in January 1999 at an interest rate of 16%. The loan was repaid in
February 1999. In connection with the loan, Mr. Myers received a warrant to
purchase 3,000 shares of our common stock at $0.01 per share, which he exercised
in 1999.
In August 1999, EAI Partners, Inc. ("EAI") and MigraTEC entered into an
agreement in settlement and replacement of a prior stock option agreement
entered into by EAI and the former Chief Executive Officer of MigraTEC in 1996.
Pursuant to the August 1999 agreement, EAI was issued an option to purchase an
aggregate of 5,903,614 shares of our common stock, exercisable as follows: EAI
may acquire 1,903,614 shares at $0.075 per share and the remaining 4,000,000
shares at the greater of $0.20 or 50% of the average closing bid prices per
share of our common stock for the five trading days immediately prior to
exercise. MigraTEC has also agreed to file a registration statement to register
the shares underlying this option no later than August 31, 2000. In the event we
fail to file a registration statement by August 31, 2000, EAI will be entitled
to receive an option to purchase an additional 600,000 shares of our common
stock at the greater of $0.50 or 50% of the average closing bid prices per share
for the five trading days prior to exercise, expiring September 1, 2001. As of
December 31, 1999, EAI had acquired 1,333,333 shares through the exercise of
this option.
Mr. Kevin Howe, Chairman, and Mr. Drew Johnson joined the Board in
January 2000 as representatives of Mercury Fund No. 1, Ltd. ("Mercury") and MT
Partners, L.P. ("MT Partners"), respectively, in connection with the initial
tranche of funding a $3,750,000 investment in MigraTEC completed April 28, 2000.
As a result of this investment, Mercury and MT Partners each holds
convertible promissory notes and warrants convertible into an aggregate of up to
17,038,800 and 18,961,200 shares of our common stock, respectively, which
represents approximately 21.5% and 23.9%, respectively, of the total number of
shares of our common stock outstanding as of April 6, 2000. See "Security
Ownership of Certain Beneficial Owners and Management." The notes are
convertible at any time, at the election of Mercury and MT Partners, on the
basis of one share of common stock for each $0.125 in principal amount of the
notes outstanding at the time of conversion. The notes do not accrue interest.
The warrants are exercisable at $0.20 per share and expire in increments of
2,000,000 shares on January 25, 2005, March 31, 2005 and April 30, 2005.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized on this 2nd day of May, 2000.
MIGRATEC, INC.
By: /s/ W. CURTIS OVERSTREET
-------------------------------
W. Curtis Overstreet, President
and Chief Executive Officer
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