UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended June 30, 1999
[ ] 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.
(Exact name of the registrant as specified in its charter)
New York 11-2209324
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1121 Old Walt Whitman Road, Melville, NY 11747-3005
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (516) 423-7800
Securities registered pursuant to 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 Small Cap Market
The Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) 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 filing requirements
for the past 90 days. [ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Registration 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-KSB or any amendment to
this Form 10-KSB. [ ]
(Continued)
<PAGE>
Issuer's revenues for its most recent fiscal year were $28,339,000
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sales price of common stock on September
28,1999 as reported on the NASDAQ Small Cap Market, was approximately
$34,558,300.
The number of shares outstanding of the registrant's common stock, as of
September 28, 1999 was 6,164,132 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
2
<PAGE>
PART III
Item 9. Directors and Executive Officers
Directors
The directors of the Company are as follows:
Class
I Directors
(Term Expires at the Annual Meeting Following
the 2001 Fiscal Year)
Roger Clark, age 65, 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 61, 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 53, has been a director since 1995. Mr. Dace was appointed Vice
Chairman of the Board in charge of strategic planning and business development
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 65, 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
3
<PAGE>
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 50, 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 diplomat of New York University in Computer
Programming and Systems Design.
John C. Frieberg, age 64, 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 55, 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 67, 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 74, 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.
4
<PAGE>
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.
Les N. Dace, 53, Vice Chairman of the Board in charge of strategic planning and
business development. See above for biographical information for Mr. Dace.
John Esposito, 39, 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.
Creighton Miller, 46, Vice President and General Manager - Blood Bank 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. In July 1999, he was appointed Vice President and General Manager
of the Blood Bank Division. Mr. Miller holds a B.S. degree in Computer Science
from Iowa State.
Kerry Robison, 35, Chief Financial Officer. Ms. Robison was with the Company as
a Consultant to the Financial Department from November 1998 to June 1999. In
June 1999, Ms Robison was appointed Chief Financial Officer. From October 1994
to October 1998, she served as Corporate Controller with Vanguard Airlines. From
1989 to 1994 she served as a project accountant and as a project controller with
Zeckendorf Company, a real estate development firm in New York City. Ms Robison
is a Certified Public Accountant.
Rodger P. Wilson, R.Ph., 46, 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.
Compliance With Section 16(A) of the Exchange Act
The exercise of options by Mr. Frieberg in March 1999 and the subsequent sale of
the underlying securities in March, May and June 1999 were not filed on Form 5.
This omission was discovered in the preparation of this Form 10-KSB/A and will
be filed on Form 5 in November 1999. The exercise of options and the sale of the
underlying securities by Mr. Wilson in May 1999 were filed four months late on
Form 5.
5
<PAGE>
Report on Form 5 for Mr. Miller, reporting his beneficial ownership of Company
Common Stock and options to purchase Company Common Stock, was filed three and
one-half months late.
Item 10. Executive Compensation
The following tables sets forth all compensation paid or accrued by the Company
to the Chief Executive Officer and each of the other most highly compensated
executive officers in the last three fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ -------------------------------------
Other Securities LTIP All Other
Fiscal Salary Bonus Compensation Underlying Payouts Compensation
($) ($) ($) Options (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
John Esposito 1999 127,400 95,000 6,000 30,000 400
President and Chief 1998 80,000 69,300 6,000 300
Executive Officer 1997 80,000 50,700 6,000 200
Les N. Dace 1999 113,000 75,000 6,000 400
Vice Chairman & Director 1998 110,000 136,650 6,000 30,193 400
1997 110,000 151,100 6,000 300
Rodger Wilson 1999 127,300 15,600 6,000 400
Vice President and General 1998 80,000 73,100 6,000 300
Manager Pharmacy Division 1997 77,400 50,700 5,500 50,000 300
Creighton Miller 1999 101,600 26,400 -- 20,000 400
Vice President and General 1998 80,000 14,318 --
Manager Operating Room 1997 80,000 -- --
& Blood Bank Divisions
John Tortorici 1999 90,000 153,300 57,409 200,000 400
Former Vice President & (1)
General Manger
Blood Bank Division
</TABLE>
(1) Mr. Tortorici served as Vice President and General Manager of the Blood
Bank Division from September 1998 until July 1999.
Options/SAR Grants In Last Fiscal Year
The following table sets forth certain information concerning options to
purchase Common Stock of the Company granted to the individuals named in the
Summary Compensation Table during fiscal 1999. No stock appreciation rights
were granted in fiscal 1999.
6
<PAGE>
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Base Price Date
- ---------------- ---------- ------------ ---------- ------------------
<S> <C> <C> <C> <C>
John Esposito 30,000(1) 10.5% 6.9375 November 16, 2008
Creighton Miller 20,000(1) 7.0% 6.9375 November 16, 2008
John Tortorici 40,000(2) 14.0% 6.4100 September 23, 2008
John Tortorici 9,472(3) 1.4% 5.544 March 15, 1999
John Tortorici 7,937(4) 2.8% 6.111 July 16, 2003
</TABLE>
- ----------
(1) Options become exercisable 25% each on November 1, 1999, 2000, 2001 and
2002
(2) Options become exercisable 25% each on March 24, 1999, September 24, 1999,
March 24, 2000 and September 24, 2001
(3) Options issued on September 28, 1998 per terms of the Informedics
acquisition.
(4) Options become exercisable upon issuance and replace options to purchase
Common Shares of Informedics which were issued prior to the acquisition.
(5) Generally options will become exercisable upon a change in control.
Aggregated Options/SAR Exercise in Last Fiscal Year And Value
Of Outstanding Option/SAR Values At End Of Last Fiscal Year
The following table sets forth options exercised by the named executive officers
during fiscal 1999 and the number and value of options held by them at June 30,
1999. No stock appreciation rights were granted and there were no outstanding
stock appreciation rights at June 30, 1999. The fair market value on such date
was $7.453 per share.
<TABLE>
<CAPTION>
Shares
Acquired Number of Securities Value of Unexercised
On Value Underlying Unexercised In-the-Money
Name Exercise Realized Options at End of Fiscal Year Options End of Fiscal Year
- ---------------- -------- ----------- ---------------------------- ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John Esposito -- $ -- 52,500 47,500 $303,483 $ 96,893
Les Dace -- -- 75,046 35,147 435,578 80,663
Rodger Wilson 25,000 91,300 25,000 25,000 112,950 112,950
Creighton Miller 3,000 15,750 5,000 20,000 32,265 10,310
John Tortorici 9,472 6,032 17,937 30,000 21,081 31,290
</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
7
<PAGE>
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"). A summary description
of the 1997 Plan is set forth below under the heading "1997 Stock Option Plan
for Non-Employee Directors."
Under the 1997 Plan each director in office on July 1, 1998 received 3,600
options (10,800 in the case of the Chairman) for services as a director,
exercisable at $7.625, the fair market value of the Company's Common Stock on
July 1, 1998, the date of grant. These options shall expire on July 1, 2006.
The 3,600 options (10,800 in the case of the Chairman) granted on July 1, 1999
under the 1997 Plan to each director in office on such date are exercisable at
$7.03, the fair market value of the Company's Common Stock on July 1, 1999.
These options shall expire on July 1, 2007.
Each director in office on July 1, 1998 also became entitled to receive for his
services during fiscal 1999 shares of Common Stock with a value of $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 quarter in fiscal year 1999,
which was $7.367. Therefore, the directors received 1,357 shares (4,072 shares
in the case of the Chairman) for fiscal 1999.
Each director in office on July 1, 1999 is entitled to receive for his services
during fiscal 2000 shares of Common Stock with a value of $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 quarter in fiscal year 2000.
The members of the Compensation Committee and Audit Committee receive $1,500 for
each meeting attended.
1997 Stock Option Plan for Non-Employee Directors
The 1997 Stock Option Plan for Non-Employee Directors (the "1997 Plan") was
adopted by the Board of Directors in June 1997 and subsequently approved by the
Company's shareholders at the January 1998 Annual Meeting. Under the plan, 3,600
options are granted annually to each non-employee director in office on July 1st
(10,800 shares in the case of the Chairman) for their service in the upcoming
fiscal year. Options granted under this plan are exercisable at 100% of the fair
market value on the date of grant and are for terms of eight years. Options
issued under the 1997 Plan vest in two equal installments on the first day of
the seventh month of the fiscal year in which issued and the first day of the
following 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. Newly elected
directors receive options for 1,800 shares for each six-month period remaining
in the fiscal year in which they are elected.
Employment Agreements
Employee agreements covering the 2000 fiscal year for executive officers of the
Company are currently under consideration by the Compensation Committee of the
Board of Directors.
1992 Equity Incentive Plan
8
<PAGE>
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") may include a wide range of Common Stock-based awards. Officers and other
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, at the
discretion of the option committee in shares of the Company's Common Stock, or
by a combination thereof. Certain options under the Equity Incentive Plan held
by former key employees of Informedics and issued to replace options to purchase
shares of Informedics are incentive stock options. Otherwise no options intended
to be incentive stock options under the Internal Revenue Code of 1986 are
current outstanding.
All options under the Equity Incentive Plan have provisions which, generally
speaking, accelerate vesting in the event of a change of control of the Company.
Options granted under the Equity Incentive Plan which accelerate vesting upon a
change in control could be an "anti-takeover defense" because, as a result of
these provisions, a change in control of the Company could be more difficult or
costly. This however, was not the Company's intention in adopting the Equity
Incentive Plan.
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, 1999 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, and (iv) all directors and
executive officers as a group.
Principal Shareholders
<TABLE>
<CAPTION>
Number of Shares
Acquired Within Percentage of
Name and Addresses(1) Number of Shares(2) 60 Days(3,4) Class Owned(2)
- --------------------- ------------------- ---------------- --------------
<S> <C> <C> <C>
Lawrence Auriana(5) 1,042,394 736,295 15.1%
Oracle Partners, L.P., 986,236 0 16.0%
Oracle Institutional Partners,L.P.,
GSAM Oracle Fund, Inc.
</TABLE>
- ----------
(1) Addresses are as follows: Lawrence Auriana: 140 East 45th Street, 43rd
Floor, New York, NY 10017. The Oracle shareholders: 712 Fifth Avenue, 45th
Floor, New York, NY 10019.
(2) Based on the numbers of shares outstanding at, plus for each shareholder or
group, shares acquirable within 60 days of, September 30, 1999.
(3) 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, 1999.
(4) 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.
(5) Mr. Auriana is also Chairman and a director of the Company.
9
<PAGE>
Share Ownership by Directors, Nominees, Named Executive Officers
and Directors and Executive Officers as a Group
Number of Shares Percentage
Number Acquirable Within of Class
Shares 60 Days Owned
--------- ----------------- ----------
Lawrence Auriana 1,042,394 736,295 15.1%
Jonathan H. Churchill 38,259 16,230 *
Roger Clark 31,740 18,035 *
Les N. Dace 85,097 85,097 1.4%
Joseph Delario 291,605 91,230 4.3%
Jophn Freiberg 29,134 12,201 *
Walter Kowsh, Jr. 52,287 18,035 *
Hans Utsch 119,490 18,035 1.9%
Clinton G. Weiman 13,872 8,867 *
John Esposito 62,100 60,000 1.0%
Creighton Miller 6,000 6,000 *
Kerry Robison -- -- *
Rodger Wilson 7,500 7,500 *
All Directors and Executive
Officers as a group
(13 persons) 1,758,478 1,077,525 24.3%
- ----------
(1) 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. John Esposito: 1121 Old Walt
Whitman Road, Melville, NY 11747-3005. Rodger Wilson: 11711 West 79th
Street, Lenexa, KS 66214.
(2) Based on the number of shares outstanding at September 30, 1999, plus, for
each person or group, shares acquirable within 60 days of September 30,
1999.
(3) 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, 1999.
* Represents less than 1% of the Company's outstanding common stock.
Item 12. Certain Relationships and Related Transactions
The Company has an outstanding note payable to the Chairman of its Board of
Directors, Mr. Auriana. The note totals $704,000 and accrues interest at 9%. A
note payable to Mr. Delario, a director of the Company, totalling $100,000 was
outstanding during the 1999 fiscal year. This note, along with accrued interest
at 9%, was paid in full during the first quarter of fiscal year 2000.
Financial Advisory Services
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.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MEDIWARE INFORMATION SYSTEMS, INC.
Date: October 28, 1999
BY: /s/ John Esposito
-----------------------
John Esposito
President and
Chief Executive Officer
11
