SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM 10-KSB ON FORM 10KSB/A
_x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
or
_ Transition Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File Number 1-10768
-------
MEDIWARE INFORMATION SYSTEMS, INC.
(Name of small business issuer as specified in its charter)
New York 11-2209324
(State of other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1121 Old Walt Whitman Road
Melville, New York 11747-3005
(Address of Principal Executive Offices) (Zip Code)
(516) 423-7800
(Issuer's telephone number, including area code)
Securities registered under
Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.10 per share NASDAQ SmallCap Market
The Pacific Stock Exchange, Inc.
Securities registered under Section 12(g) of the Act: None
Check 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. Yes X No
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 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 were $20,530,000
-----------
The aggregate market value of Common Shares of the issuer held by
non-affiliates at October 12, 1998, was approximately $29,732,000
-----------
Number of Common Shares outstanding at November 3, 1998: 5,660,000 shares.
---------
Documents Incorporated by Reference:
None
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
DIRECTORS
The directors of the Company are as follows:
CLASS I DIRECTORS
(Term Expires at the Annual Meeting Following
the 1998 Fiscal Year)
Roger Clark, age 64, has been a director since 1983. From 1980 to 1987,
he held a series of managerial positions in the computer products area with
Xerox Corporation. In 1987, he became self-employed as a micro-computer
consultant and programmer. In June 1997 he acquired a half-ownership in a
recruitment advertising agency named R & J Twiddy Advertising (since re-named
Talcott and Clark Recruitment Advertising, Inc.), which is based in New
Canaan, Connecticut. Mr. Clark is the author of seven books on
micro-computing and a director of The Kaufmann Fund, Inc., a mutual fund which
invests in small and medium size growth companies.
Hans Utsch, age 60, has been a director since 1985. He has been
independently engaged in money management and investment banking for over 20
years. Since 1986, he has been President and, together with Mr. Lawrence
Auriana, Portfolio Co-Manager of The Kaufmann Fund, Inc. He received a B.A.
degree from Amherst College and an M.B.A. from Columbia University.
Les N. Dace, age 52, has been a director since 1995. Mr. Dace was
appointed Vice Chairman of the Board in charge of strategic planning in
October 1998. Mr. Dace joined the Company in 1992, as Vice President and
General Manager for the Digimedics and Surgiware Product Centers. He was
appointed President and C.E.O. of the Company in 1995 and held this post until
October 1998. Prior to joining the Company, he was Vice President of Sales
and Marketing for PRX Pharmacy Systems, a Colorado-based company providing
hospital pharmacy management systems and home health software solutions. From
1983 to 1987, he was employed by NBI, Inc. as divisional President for its
computer peripherals and office supplies company. Mr. Dace has a B.S. degree
in Electrical Engineering from the University of Missouri.
CLASS II DIRECTORS
(Term Expires at the Annual Meeting Following
the 1999 Fiscal Year)
Joseph Delario, age 64, has been a director since 1992. Mr. Delario was
President and Chief Executive Officer of Quadrocom, Inc., a business consulting
firm, until December 31, 1992, and since then has been a business consultant
and private investor in and active in the management of several computer
service companies. Mr. Delario renders management and financial services to
the Company. Mr. Delario received a B.A. degree from Fairleigh Dickenson
University in 1956.
Walter Kowsh, Jr., age 49, has been a director since 1990. He is a
consultant programmer specializing in Client/Server database systems. He was
a Senior Programmer Analyst with Brown Bros. Harriman & Co. from 1989 to 1992.
From 1986 to 1989, he was a computer consultant with Howard Systems
International. He received a B.A. degree from Queens College and an M.B.A.
from the New York Institute of Technology, and is a diplomate of New York
University in Computer Programming and Systems Design.
John C. Frieberg, age 63, was President, C.E.O. and Chief Financial Officer
of the Company from 1992 to July 1995, and has been a director since 1993. Mr.
Frieberg joined Digimedics Corporation, which later became a wholly owned
subsidiary of the Company, as President in October 1989. Prior thereto, he
was President of Caleus, Inc., an information system company, from 1988 to
1989; President of Synergy Computer Graphics Corp., a computer peripheral
equipment company, from 1984 to 1988; and President of NCR/DPI Inc., a
computer systems manufacturing company, from 1972 to 1982. Mr. Frieberg
received a B.S. degree in Industrial Engineering from the University of
California at Los Angeles.
CLASS III DIRECTORS
(Term Expires at the Annual Meeting Following
the 2000 Fiscal Year)
Lawrence Auriana, age 54, has been Chairman of the Board of the Company
since 1986 and a director since 1983. He has been a Wall Street analyst,
money manager and venture capitalist for over 20 years. Since 1986, he has
been Chairman, a director and, together with Mr. Hans Utsch, also a director
of the Company, Portfolio Co-Manager of The Kaufmann Fund, Inc. He received a
B.A. degree from Fordham University, studied at New York University Graduate
School of Business, and is a senior member of The New York Society of
Securities Analysts.
Jonathan H. Churchill, age 66, has been a practicing attorney in New York
City since 1958 and since May 1996 has been Counsel at Winthrop, Stimson,
Putnam & Roberts. He has been a director of the Company since 1992. Mr.
Churchill was a partner of Boulanger, Hicks, & Churchill, P.C., from January
1990 to May 1996. Winthrop, Stimson, Putnam & Roberts rendered legal services
to the Company during the last fiscal year, and the Company has retained and
proposes to retain Winthrop, Stimson, Putnam & Roberts during the current year.
Mr. Churchill received a B.A. from Harvard College and an L.L.B. from Harvard
Law School.
Clinton G. Weiman, M.D., age 73, has been a director since June 1996.
From 1961 to January 1993 he was Corporate Medical Director, Senior Vice
President of Citicorp/Citibank. Since 1994, Dr. Weiman has been independently
engaged as a consultant with the Federal Reserve. In 1998 Dr. Weiman
became associated with Executive Health Examiners as a physician. From 1956
to 1970 Dr. Weiman was engaged in private practice in New York, New York. Dr.
Weiman received a B.A. degree from Princeton University and a medical degree
from Cornell University Medical College. His appointments have included
Clinical Associate Attending Physician at New York Hospital and Associate
Professor, Clinical Medicine at Cornell University Medical College.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Lawrence Auriana, 54, Chairman of the Board and Secretary. See above for
biographical information for Mr. Auriana.
John Esposito, 38, President and Chief Executive Officer. Mr. Esposito
joined the Company in 1990 and held the position of Vice President - Sales
from 1990 until October 1998, when he became President and Chief Executive
Officer. From 1986 to 1990, he was employed in various sales positions by the
Healthcare Division of Data General Corporation. Prior to joining Data
General, he worked in a technical capacity in the Information Systems
Department at the New York Public Library. He is a graduate of Syracuse
University, with a B.S. degree in Marketing and Management Information
Systems.
Les N. Dace, 52, Vice Chairman of the Board in charge of strategic
planning and business development. See above for biographical information
for Mr. Dace.
George Barry, 45, Chief Financial Officer. Mr. Barry joined the Company
as Chief Financial Officer in 1997. He has been a senior financial manager of
software technology companies for over 12 years. Mr. Barry was employed as
Vice President and CFO at Microware Systems Corporation from 1994 to 1996 and
at Comptek Research, Inc. from 1993 to 1994. He was employed as a Group
CFO/Controller for Dynatech Corporation from 1986 to 1992. Mr. Barry is a CPA
and holds an MBA from the University of Wisconsin - Madison.
Rodger P. Wilson, R.Ph., 45, Vice President and General Manager - Pharmacy
Division. Mr. Wilson joined the Company in 1996 as Vice President/General
Manager of the Pharmacy Division. He was President and Chief Executive
Officer of PRX Pharmacy Systems, Inc., from 1982 to 1992. Mr. Wilson was Vice
President of Operations and Chief Information Officer of Concepts Direct,
Inc., from 1992 to 1994 and President of The Pawnee Group from 1994 to 1996.
Mr. Wilson received a B.S. degree from the University of Wyoming School of
Pharmacy and is a registered Pharmacist.
John Tortorici, 55, Vice President and General Manager - Blood Bank
Division. Mr. Tortorici joined the Company in September 1998. Mr. Tortorici
was serving as Chairman, President, Chief Executive Officer, Chief Financial
Officer and a director of Informedics, Inc. when it was merged into the
Company in September 1998. Mr. Tortorici founded Informedics in 1979 and was
a director from 1979 until the merger. He served as Informedics' President
from 1979 to 1996 and from 1997 until the merger. He served as its Chief
Financial Officer from 1985 to 1992 and from 1997 until the merger.
Creighton Miller, 46, Vice President and General Manager - Operating Room
Division. Mr. Miller joined the Company in 1980 as a software development
engineer. He held that position until 1983 when he became the Vice President
of Engineering. In 1998 he was promoted to Vice President and General Manager
of the Operating Room Division. Mr. Miller holds a B.S. degree in Computer
Science from Iowa State.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Year-end filings disclosing the grants of directors' options for the 1997
fiscal year to Messrs. Clark, Frieberg, Kowsh and Utsch were inadvertently
omitted. These omissions were discovered and reported on the Reports on Form
5 the following year. The exercise of options and the sales of the underlying
shares by Mr. Dace and Mr. Frieberg were filed eight months and one year late
on a Report on Form 5, respectively. The grant of an option to Mr. Barry was
reported eleven months late on a Report on Form 5. A Report on Form 3 for Mr.
Tortorici, reporting his beneficial ownership of Company Common Stock and
options to purchase Company Common Stock upon becoming an executive officer,
has not yet been filed. A report on Form 4, reporting the exercise of options
and the sale of the underlying shares, has not yet been filed.
ITEM 10. EXECUTIVE COMPENSATION
The following tables sets forth the compensation of the Chief Executive
Officer of the Company and each of the other most highly compensated executive
officers for the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- --------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C> <C> <C>
Other All
Annual Restricted Securities Other
Name and Principal Compen- Stock Underlying LTIP Compen-
Positions Fiscal Salary Bonus sation Awards Options Payouts sation
Year ($) ($) ($) ($) SARs (#) ($) ($)
----- ------- ------- ------ -------- ---------- ------- -------
Les N. Dace 1998 110,000 136,650 6,000 - 30,193 - 262
President and CEO 1997 110,000 151,062 6,000 - - - 262
1996 75,000 60,731 6,000 - 50,000 - 262
Rodger Wilson 1998 80,000 73,129 6,000 - - - 262
Vice President and 1997 77,400 55,502 5,500 - 50,000 - 262
Manager - Pharmacy
Division General
John Esposito 1998 80,000 69,263 6,000 - - - 205
Vice President, Sales 1997 80,000 50,733 6,000 - 35,000 - 205
1996 70,000 71,795 6,000 - - - 250
George Barry 1998 70,400 35,963 - - 42,271 - 262
Vice President and
Chief Financial
Officer
Thomas Mulstay* 1998 77,327 27,361 6,000 - 42,271 - 232
Former Vice President 1997 80,000 79,519 6,000 - - - 232
& General Manager, 1996 75,000 90,662 6,000 - - - 215
Hemocare
</TABLE>
- --------------------------
* Mr. Mulstay resigned from the Company in March 1998.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options to
purchase Common Stock in fiscal 1998 granted to the individuals named in the
Summary Compensation Table. No stock appreciation rights were granted in
fiscal 1998.
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Option Employees in Exercise Expiration
Name Granted Fiscal Year Base Price Date
- -------------- ------------ ------------ ---------- ---------------
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Les Dace 30,193* 19.8% $ 7.50 October 1, 2007
George Barry 42,271* 27.8% 7.50 October 1, 2007
Thomas Mulstay 42,271* 27.8% 7.50 October 1, 2007
</TABLE>
________________________
* Options are exercisable 25%, 50%, 75% and 100% on October 1, 1998, 1999,
2000 and 2001.
FISCAL 1998 OPTION/SAR EXERCISES AND VALUE
OF OUTSTANDING OPTIONS AT END OF LAST FISCAL YEAR
The following table sets forth options exercised by the named executive
officers during fiscal 1998 and the number and value of options held by them
at June 30, 1998. No stock appreciation rights were granted and there were no
outstanding stock appreciation rights at June 30, 1998. The fair market value
on such date was $7.50 per share.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of
Shares Unexercised Unexercised
Acquired on Value Options at End In-the-Money Options
Name Exercise Realized Of Fiscal Year End of Fiscal Year
- -------------- ----------- --------- -------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Les N. Dace 15,000 $104,850 55,000 55,193 $357,500 $ 162,500
Rodger Wilson -- -- 12,500 37,500 57,063 171,188
John Esposito 15,000 86,513 43,750 26,250 264,825 123,375
George Barry -- -- 0 42,271 0 0
Thomas Mulstay 40,000 211,050 0 0 0 0
</TABLE>
COMPENSATION OF DIRECTORS
It has been the Company's practice, starting in 1987, to conserve cash by
compensating directors for their services primarily through the grant of stock
options and shares of Common Stock. In 1991 a Stock Option Plan for
Non-Employee Directors (the "1991 Plan") was adopted. The 1991 Plan expired
in 1997 and was replaced by the 1997 Stock Option Plan for Non-Employee
Directors (the "1997 Plan"), which was adopted by the Board in June 1997 and
approved by the shareholders of the Company at the annual meeting for the 1997
fiscal year. The 1997 Plan is designed to maintain the Company's ability to
attract and retain the services of experienced and highly qualified outside
directors and to increase their proprietary interest in the Company's
continued success. The options granted under the 1997 Plan are non-statutory
options not intended to qualify under Section 422 of the Internal Revenue Code
of 1986.
Under the 1997 Plan, each director in office on July 1 of each fiscal year,
for the six fiscal years ending June 30, 2004, will receive for services as
director during the ensuing fiscal year a grant of 3,600 options (10,800
shares in the case of the Chairman). Each grant shall become vested and
exercisable on the first day of the seventh month of each fiscal year and the
first day of the next fiscal year provided that the director is then in office
or has retired or is out of office by reason of ill health or death. New
directors will be granted options covering 1,800 shares for each six-month
period remaining in the fiscal year, effective as of the first day of the
month following their election to the Board. All options are exercisable at
100% of fair market value of the Company's Common Stock on the date of grant.
All options on each annual grant date shall expire eight years after their
date of grant.
Under the 1997 Plan each director in office on July 1, 1997 received 3,600
options (10,800 in the case of the Chairman) for services as a director,
exercisable at $11.1875, which was the higher of the fair market value of the
Company's Common Stock on July 1, 1997, the date of grant, and January 6,
1998, the date of the shareholder approval of the 1997 Plan.
The options granted on July 1, 1998 under the 1997 Plan to directors in
office on such date are exercisable at $7.625, the fair market value of the
Company's Common Stock on July 1, 1998.
Each director in office on July 1, 1997 also became entitled to receive
for his services during fiscal 1998 shares of Common Stock valued at $10,000
($30,000 in the case of the Chairman) based on the average of the high and low
market prices per share on the first day of each month in fiscal year 1998,
which was $8.708. Therefore, the directors received 1,148 shares (3,445
shares in the case of the Chairman) for fiscal 1998.
Each director in office on July 1, 1998 is entitled to receive for his
services during fiscal 1999 shares of Common Stock value at $10,000 ($30,000
in the case of the Chairman) based on the average of the high and low market
prices per share on July 1, 1998, which was $7.625.
The members of the equity incentive plan committee and audit committee
receive $1,500 for each meeting attended.
EMPLOYMENT UNDERSTANDINGS
Arrangements with executive officers are currently being reviewed.
1982 EMPLOYEE STOCK OPTION PLAN AND 1992 EQUITY INCENTIVE PLAN
In 1982, the Company adopted an employee stock option plan (the "1982
Plan") for officers and other key employees, not including directors. No
options may currently be granted under this Plan. Options previously granted
and currently outstanding under the 1982 Plan generally vest and become
exercisable in monthly installments over a two or three-year period, with each
installment remaining exercisable for a five-year period after it vests. No
options intended to be incentive stock options under the Internal Revenue Code
of 1986 are currently outstanding.
Awards granted under the 1992 Equity Incentive Plan (the "Equity Incentive
Plan") include a wide range of Common Stock-based awards. Officers and other
management employees of the Company are eligible to participate in the Equity
Incentive Plan. The maximum number of shares of Common Stock which may be
issued under the Equity Incentive Plan at any time is 20% of the outstanding
shares of the Company's Common Stock, except that no more than 500,000 shares
may be issued pursuant to incentive stock options. No awards may be granted
after the year 2002. The term of each stock option may not exceed ten years
from the date of grant. The option price of each stock option is payable in
cash, in shares of the Company's Common Stock, or by a combination thereof.
The option agreements granted to-date provide that, in the event of a change
of control of the Company, the exercise of such options may be accelerated by
the Committee.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the beneficial ownership of the Company's
Common Stock as of September 30, 1998 by (i) each person who is known by the
Company to own beneficially more than 5% of the Company's Common Stock, (ii)
each of the executive officers named in the Summary Compensation Table
included elsewhere herein, (iii) each current director of the Company, (iv)
each nominee for election as a director and (v) all directors and executive
officers as a group:
<TABLE>
<CAPTION>
PRINCIPAL SHAREHOLDER
Number of Shares
Acquirable within Percentage of
Names and Addresses Number of Shares** 60 Days*,**** Class Owned**
- -------------------------------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
Lawrence Auriana*** 1,028,506 725,495 16.1%
140 East 45th Street
43rd Floor
New York, NY 10017
<PAGE>
Oracle Partners, L.P., 986,236 0 17.4%
Oracle Institutional Partners, L.P.,
GSAM Oracle Fund, Inc.
712 Fifth Avenue
45th Floor
New York, NY 10019
____________________
</TABLE>
* Reflects the shares which may be acquired by the shareholder upon
exercise of options and warrants which are exercisable within 60 days of
September 30, 1998.
** Based on the numbers of shares outstanding at, plus for each shareholder
or group, shares acquirable within 60 days of, September 30, 1998.
*** Mr. Auriana is also Chairman and a director of the Company.
**** Includes 674,695 warrants granted to Mr. Auriana for his loans to the
Company in the bridge financings of the Company in fiscal 1995 and
fiscal 1994.
<TABLE>
<CAPTION>
SHARE OWNERSHIP BY DIRECTORS, NOMINEES, NAMED EXECUTIVE OFFICERS
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
Number of Shares
Acquirable within
Names and Addresses* Number of Shares** 60 Days*** Class owned**
- ------------------------- ------------------ ------------------ --------------
<S> <C> <C> <C>
<C> <C> <C>
Lawrence Auriana 1,028,506 725,495 16.1%
Jonathan H. Churchill 36,130 12,630 +
Roger Clark 27,111 14,435 +
Les N. Dace 75,048 75,048 1.3%
Joseph Delario 226,094 62,630 4.0%
John Frieberg 48,870 42,157 +
Walter Kowsh, Jr. 47,658 14,435 +
Hans Utsch 114,861 14,435 2.0%
Clinton G. Weiman 9,243 5,267 +
George Barry 10,568 10,568 +
John Esposito 44,850 43,750 +
Thomas Mulstay 0 0 0%
Rodger Wilson 17,250 16,250 +
All Directors and Executive
Officers as a group 1,750,301 1,054,572 26.1%
(13 persons)
</TABLE>
________________________
* Addresses are as follows: Lawrence Auriana: see previous chart.
Jonathan Churchill: One Battery Park Plaza, New York, New York 10004.
Roger Clark: 330 Elm Street, Unit #1, New Canaan, CT 06840. Les Dace:
11211 Quivas Loop, Westminster, Colorado. Joseph Delario: 77 Independence
Way North, Edgewater, NJ 07020. John Frieberg: 4402 South St. Andrew's
Lane, Spokane, WA 99223. Walter Kowsh, Jr.: 64-08 136th Street, Flushing,
NY 11367. Hans Utsch: 140 East 45th Street, 43rd Floor, New York, New York
10017. Clinton Weiman: 2 Roberta Lane, Greenwich, CT 06830. George Barry:
11711 West 74th Street, Lenexa, KS 66214. John Esposito: 1121 Old
Walt Whitman Road, Melville, NY 11747-3005. Thomas Mulstay: 1121 Old Walt
Whitman Road, Melville, NY 11747-3005. Rodger Wilson: 11711 West 74th
Street, Lenexa, KS 66214.
** Based on the number of shares outstanding at September 30, 1998, plus, for
each person or group, shares acquirable within 60 days of September 30,
1998.
*** Reflects the shares which may be acquired by the shareholders upon
exercise of options and warrants which are exercisable within 60 days of
September 30, 1998.
+ Represents less than 1% of the Company's outstanding common stock.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991, the Company agreed with Bowling Green Securities, Inc., an
investment banking firm owned by Mr. Utsch a director, and in which Messrs.
Auriana, also a director, and Utsch are principals, that such firm would render
investment banking advice to the Company and that, if any merger, acquisition,
divestiture or analogous transaction is successfully consummated as a result
of its efforts, the Company would pay a total fee related to the value of the
company acquired or divested on the basis of 5% of the first $2 million, 4% of
the second $2 million, 3% of the third $2 million, 2% of the fourth $2 million
and 1% of any additional amounts.
Mr. Delario, a director of the Company holds an option to purchase 75,000
shares of the Company's Common Stock granted as payment for managerial and
financial advisory services to be rendered in connection with mergers and
acquisitions.
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEDIWARE Information Systems, Inc.
(Registrant)
By /s/ George J. Barry
--------------------
George J. Barry, CFO
<PAGE>
