SECURITIES AND EXCHANGE COMMISSION
Washington, D.C
__________________________________
FORM 10-KSB/A-1
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSISTION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10623
Pamet Systems, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2985838
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(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification
No.)
1000 Main Street
Acton, Massachusetts 01720
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (978) 263-2060
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which
registered
none none
____________________ _______________
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 par value
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(Title of Class)
Check whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities 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
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Check if there is no disclosure of delinquent filers pursuant 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. [ ]
The issuer's revenues for its most recent fiscal year was
$2,077,896.
The aggregate market value of the Registrant's common stock held
by non-affiliates of the Registrant, based upon the average of
the closing bid and asked prices on March 26, 1998 was
$6,010,956.
The number of shares outstanding of the Registrant's common
stock, as of March 27, 1998 -- 2,535,250 shares.
<PAGE>
Explanatory note: Pursuant to instruction E of form 10-KSB, the
Company is filing on this Form 10-KSB/A-1 of the Company the
information required by Part III of the Form 10-KSB which was
omitted from the Company's Form 10-KSB filed on March 30, 1998.
Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange Act.
<PAGE>
INFORMATION AS TO DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as to the ages
and principal occupations of the members of the Board of
Directors and executive officers and has been furnished to the
Registrant by such directors and executive officers.
(Class I)
Director Name Age Principal Occupation Since
Richard C. Becker 52 Mr. Becker has been Vice President 1991
Finance and Administration since June
1997, Assistant Clerk since February
1991 and Treasurer since May
1991. He was Vice President and Chief
Operating officer from June 1993 through
May 1997 and Vice President of Finance
and Administration of the Company from
January 1991 through June 1993.
Arthur V. Josephson, 55 Mr. Josephson has served as Clerk 1988
Jr. for the Company since September 1990.
In addition to his responsibilities to
the Company, since 1985 Mr.Josephson has
served as an accounting consultant to a
number of clients in Massachusetts. Mr.
Josephson also served as the Treasurer
of Assabet Valley Home Health Association,
Inc., a visiting nurse agency, from 1977
Through October 1994.
Bruce J. Rogow 52 Mr. Rogow has served as a Gartner Group 1997
Fellow since 1992 and executive principal
of Rogow Opportunity Capital since 1997.
(Class II)
Dr. Stanley J. 57 Since April 1993, Dr. Robboy has been 1990
Robboy Professor of Pathology, Obstetrics
and Gynecology and Head of the Division
of Gynecologic Pathology of the
Department of Pathology at Duke
University Medical Center. From January
1992 through April 1993, Dr. Robboy was
Professor of Pathology and Chief of the
Division of Surgical Pathology for the
Department of Pathology at Duke
University Medical Center.
Laurence B. Berger 62 Since November 1990 Mr. Berger has 1988
served as a private consultant to
various commercial and governmental
clients.
David T. McKay 56 President and Chief Executive Officer 1997
Of the Company since June 1997. Mr.
McKay served as the Global Systems
Manager for Mobil Oil, an oil
production company from 1996 to 1997.
From 1994 to 1996 he was the Vice
President of Information Systems at
Moore Corporation, a business supply
company. From 1992 to 1994 he was Vice
President of Gartner Group, Inc.
(Class III)
Dr. Joel B. Searcy 62 Dr. Searcy has been Chairman of the 1987
Board of Directors of the Company since
the Company's inception in 1987, was
President and CEO until June 1997 and
Treasurer until May 1991 and served as
Clerk until September 1990.
Lee Spelke 65 Mr. Spelke has been a financial 1990
consultant since 1994 and served as
President of Spelke Financial Services,
Inc., a financial consulting firm, for
more than five years prior thereto.
Beneficial Ownership Reporting Compliance
The Company's executive officers and directors are required
under Section 16(a) of the Securities Exchange Act of 1934, as
amended, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Copies of those
reports must also be furnished to the Company. Based solely on
the Company's review of the copies of such reports it has
received, the Company believes that all of its other executive
officers and directors, and greater than ten percent beneficial
owners complied with all filing requirements applicable to them
except that Richard C. Becker and Dr. Stanley J. Robboy were each
late in filing two Form 4s and one Form 5 (each such late filing
related to one transaction), Dr. Joel B. Searcy was late in
filing one Form 4 (which related to three transactions) and
Laurence B. Berger was each late in filing one Form 4 (each such
late filing related to one transaction).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
nnual Compensation Compensation
Securities Under-
Name and Principal Year Salary lying Options
Position $ #
<S> <C> <C> <C>
Dr. Joel B. Searcy 1997 132,000 10,000
Chairman 1996 120,000 10,000
1995 121,340
David T. Mckay 1997 93,334 150,000
President and Chief
Executive Officer
(Represents salary from
June 1, 1997, the date
on which Mr. McKay
commenced employment)
</TABLE>
EMPLOYMENT AGREEMENTS
Dr. Joel B. Searcy was employed by the Company pursuant to
an employment agreement which commenced on November 8, 1990, and
terminated on December 31, 1993, but which was renewed through
April 30, 1997. On May 30, 1997, Dr. Search entered into a new
employment agreement with the Company which terminates on
December 31, 1999, under which Dr. Searcy will serve as Chairman
of the Board of the Company. The term of the employment agreement
will automatically renew for an additional one year term if
neither party give the other notice of its intent not to renew at
least 180 days prior to the expiration date of the initial term
or any extensions thereof. Pursuant to his new employment
agreement, Dr. Searcy is to receive a base salary of $132,000 per
annum, the use of an automobile and certain other fringe benefits
during the term of the agreement. In addition, Dr. Searcy may
receive bonus compensation, including grants of stock options or
other equity of the Company, at the discretion of the Board of
Directors of the Company.
Pursuant to Dr. Searcy's employment agreement, Dr. Searcy
may be terminated by the Company at any time upon written notice
to Dr. Searcy with or without cause or by Dr. Searcy upon a
constructive termination, change of control of the Company or
upon 2 months prior written notice. In the event that Dr.
Searcy's employment is terminated by the Company for cause (as
defined in the agreement) or voluntarily by Dr. Searcy, Dr.
Searcy will be entitled only to compensation and benefits accrued
through the date of such termination. If Dr. Searcy's employment
is terminated as the result of constructive termination (as
defined in the agreement) or by the Company without cause, he
will receive (i) his base salary and all fringe benefits until
the later of twelve months from the date of termination or the
expiration date of the employment agreement and (ii) an
additional bonus amount for each twelve month portion of such
period equal to the highest annualized bonus paid to him during
the term. In the event that Dr. Searcy's employment is terminated
which 90 days following a change of control, he will be entitled
to receive, in addition to all compensation and benefits accrued
through the date of such termination, a lump sum amount equal to
2.99 multiplied by the sum of (i) his base salary and (ii) all
bonus compensation paid or payable for the most recent year. For
purposes of Dr. Searcy's employment agreement, a "change of
control" is defined as (i) the election at a meeting of the
Company's stockholders of directors, a majority of whom are not
nominated by the incumbent Board of Directors, or (ii) the
acquisition by any person or entity, other than the Company, Dr.
Searcy or any group with which he is affiliated, or any person
who was a member of the Board of Directors of the Company as of
June 1, 1997, of beneficial ownership of 30% or more of the
securities entitled to vote for the election of directors,
subject to certain exceptions set forth in the agreement.
Pursuant to Dr. Searcy's employment agreement for a period
of twenty-four months following termination of his employment
with the Company, Dr. Searcy will not compete directly or
indirectly, with any service or product made or sold by the
Company without the Company's prior written consent. In addition,
during the term of his employment and for a period of twenty-four
months following the termination thereof, Dr. Searcy may not,
directly or indirectly, (i) recruit employees of the Company or
induce them to terminate their employment with the Company or
(ii) contact, solicit, or sell to any of the customers or
prospective customers of the Company.
David T. McKay entered into an employment agreement with the
Company, dated as of May 30, 1997, pursuant to which Mr. McKay
will serve as President and Chief Executive Officer of the
Company for a term commencing on June 1, 1997, and terminating on
the first anniversary thereof. The term of the employment
agreement will automatically renew for any additional one year
term if neither party give the other notice of its intent not to
renew at least 90 days prior to the expiration date and, unless
90 days non-renewal notice is given by either party prior to the
end of such first renewal period, the agreement will
automatically extend for an additional two year period. Pursuant
to his employment agreement, Mr. McKay is to receive a base
salary of $160,000 per annum, bonus compensation, including
grants of stock options or other equity of the Company, at the
discretion of the Board of Directors of the Company, and certain
other fringe benefits during the term of the agreement. The
employment agreement also provides that, on the commencement date
of Mr. McKay's employment he will receive fully-vested options to
purchase 50,000 shares of the common stock of the Company and, if
Mr. McKay is employed on August 25, 1997, he will receive
additional options to purchase 100,000 share of the common stock
of the Company which will vest at the rate of 25% per year.
Except as described below, the termination provisions of Mr.
McKay's employment agreement are substantially identical to those
in Mr. Searcy's employment agreement, describe above. In the
event that during (a) the first year or (b) second year of Mr.
McKay's employment with the Company, his employment is terminated
as the result of constructive termination (as defined in the
agreement) or by the Company without cause, in addition to
compensation and benefits accrued through the date of such
termination, he will only be entitled to receive his base salary
and all fringe benefits and additional bonus amounts for an
additional (a) three months period or (b) six month period,
respectively.
Mr. McKay's employment agreement includes non-competition
and non-solicitation provisions which are substantially to those
in Dr. Searcy's employment agreement described above.
Richard C. Becker entered into an employment agreement with
the Company, dated as of May 30, 1997, pursuant to which Mr.
Becker will serve as Vice President of the Company for a term
commencing June 1, 1997 and terminating on December 31, 1999. The
term of the employment agreement will automatically renew for an
additional one year term if neither party gives the other notice
of its intent not to renew at least 180 days prior to the
expiration date of the initial term of any extensions thereof.
Pursuant to his employment agreement, Mr. Becker is to receive a
base salary of $93,500 per annum, bonus compensation, including
grants of stock options or other equity of the Company, at the
discretion of the Board of Directors of the Company, and certain
other fringe benefits during the term of the agreement.
Mr. Becker's employment agreement contains termination
provisions, and non-competition and non-solicitation provisions
which are substantially identical to those in Dr. Searcy's
employment agreement described above.
<TABLE>
<CAPTION>
Stock Options Grants in Last Fiscal Year
Potential Realized
Number of % of Total Value at Assumed
Securities Options Annual Rates of
Underlying Granted to Stock Price
Options Employees in Exercise Expir- Appreciation
Granted Fiscal year Price ation for Option Term
Name (#) (%) ($/sh) Date 5% 10%(1)
<S> <C> <C> <C> <C> <C> <C>
Joel B. Searcy 10,000 4.3% 2.75 5/30/07 $ 17,297 $ 43,835
David T. McKay 50,000 21.3% 2.75 5/30/07 $ 86,487 $219,175
100,000 42.6% 3.25 8/27/07 $204,425 $578,050
</TABLE>
(1) Potential realizable values are based on the fair
market value per share as determined by the Company on the
date of the grant and represent hypothetical gains that
could be achieved for the respective options if exercised at
the end of the option term. The dollar amounts set forth in
these columns are the results of calculations at the five
percent and ten percent rates set by the Securities and
Exchange Commission, and are not intended to forecast future
appreciation, if any, of the Company's Common Stock price.
There can be no assurance that such potential realizable
values will not be more or less than that indicated in the
table above.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table provides information regarding
beneficial ownership as of April 24, 1997 of the Company's Common
Stock as to (i) each director of the Company, (ii) each of the
Named Executive Officers, (iii) each person who is known to the
Company to be the beneficial owner of more than 5% of the
Company's voting securities and (iv) all directors and executive
officers as a group. The information set forth below as to
nominees, directors, and officers has been furnished to the
Company by such nominee, officer or director.
<TABLE>
<CAPTION>
Percent of Common
Name and Address of Amount and Nature of Stock (if over 1%)
Beneficial Owner Beneficial Ownership Owned Beneficially
<S> <C> <C>
Dr. Joel B. Searcy 417,727(1) 16.3%
1000 Main Street
Acton, MA 01720
David T. McKay 50,000(2) 1.9%
Lee Spelke 16,000(3) 0.6%
Richard C. Becker 97,000(4) 3.7%
Arthur V. Josephson, Jr. 57,250(5) 2.2%
Dr. Stanley J. Robboy 309,005(6) 11.9%
104 Donegal Drive
Chapel Hill, NC 27514
Laurence Berger 40,000(7) 1.6%
Calvin Hori 145,000(8) 5.7%
35 Norwich Road
Wellesley, MA 02181
Henry Mehlman 161,698(9) 6.4%
40 Bartlett Street
Marblehead, MA 01945
Bruce J. Rogow 476,250(10) 18.9%
Winnie R. Rogow
220 Ocean Avenue
Marblehead, MA 01945
All directors and executive 1,463,232(11) 52.0%
officers as a group (6 people)
</TABLE>
(1) Includes 22,000 shares issuable upon the exercise of
currently exercisable options. See "Certain Relationships and
Related transactions."
(2) Includes 50,000 Share issuable upon the exercise of currently
exercisable options.
(3) Includes 14,000 shares issuable upon the exercise of
currently exercisable options.
(4) Includes 96,000 shares issuable upon the exercise of
currently exercisable options. See "Certain Relationships and
related Transactions."
(5) Includes 31,000 shares issuable upon the exercise of current
exercisable options.
(6) Includes 58,000 shares issuable upon the exercise of
currently exercisable options.
(7) Includes 6,000 share issuable upon the exercise of currently
exercisable option.
(8) As reported on Schedule 13D filed with the Securities and
Exchange Commission on August 11, 1995.
(9) As reported on Schedule 13D filed with the Securities and
Exchange Commission on June 5, 1995.
(10) As reported on Amendment No. 2 to the Schedule 13D filed
with the Securities and Exchange Commission on March 12,
1998, filed by Bruce J. Rogow and Winnie R. Rogow relating
to the beneficial ownership of (i) 5,000 shares of Common
Stock held by Mr. Rogow's 401(k) account, (ii) 20,000 shares
held by Mr. Rogow's retirement money purchase account, (iii)
95,000 shares of Common Stock held jointly, (iv) 4,000
shares held by Mrs. Rogow as custodian for Mr. and Mrs.
Rogow's minor child, (v) 325,000 shares of Common Stock held
by Rogow Opportunity Capital, LLC, a Massachusetts limited
liability company ("Rogow Opportunity") of which Mr. and
Mrs. Rogow are the sole members, and (vi) warrants (the
"Warrants") held by Rogow Opportunity exercisable at any
time or from time to time prior to March 2, 2003, to
purchase up to 31,250 shares of Common Stock at an exercise
price of $4.25 per share.
(11) Includes 277,000 shares issuable upon the exercise of
currently exercisable options held by all directors and
officers of the Company as a group.
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997 the Company entered in to an agreement with Dr.
Stanley J. Robboy a stockholder and director pursuant to which he
agreed to lend money to the Company. The agreement provided for
an unsecured $300,000 line of credit. The agreement provides for
interest on the outstanding balance at the rate of 12% per annum.
In connection with the loan, Dr. Robboy was granted options for
up to 100,000 shares of common stock at a price of $2.00. per
share. Dr. Searcy and Mr. Becker were granted 10,000 options
priced at $2.00 in return for their guarantee of Dr. Robboy's
unsecured $300,000 line of credit. At December 31, 1997, the loan
balance was $192,439 and interest paid during 1997 was $21,321.
At April 24, 1998, the balance of the loans was $267,439.
