<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the fiscal year ended MARCH 31, 1996
Commission File Number: 000-19720
ABAXIS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0213001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1320 Chesapeake Terrace
Sunnyvale, CA 94089
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 408-734-0200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par
value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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 / /
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 registrant's voting stock held by non-affiliates
of registrant, based upon the closing sale price of the Common Stock on June 28,
1996, as reported on the Nasdaq National Market, was approximately $45,688,000.
Shares of Common Stock held by each officer, director and holder of 5% or more
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
Outstanding shares of registrant's Common Stock, no par value, as of June 30,
1996: 9,878,379.
This Amendment contains 13 pages.
1.
<PAGE> 2
FORM 10-K/A
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items of its
Annual Report on Form 10-K for the fiscal year ended March 31, 1996, as set
forth in the pages attached hereto:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS AND EXECUTIVE OFFICERS.
The required information concerning Directors and Executive Officers is
contained in Part I of the Company's Form 10-K filed with the Commission on or
around June 28, 1996.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and persons who beneficially own more than 10% of the
Company's Common Stock were complied with during the fiscal year ended March 31,
1996.
2.
<PAGE> 3
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation
during the fiscal years ended March 31, 1996, March 31, 1995, and March 31, 1994
of the Chief Executive Officer of the Company and the three other most highly
compensated executive officers of the Company in fiscal 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
NAME AND ANNUAL COMPENSATION
PRINCIPAL POSITION FISCAL YEAR COMPENSATION ($) AWARDS
- -------------------------- ----------- ---------------------- ------------
OPTIONS
SALARY BONUS (SHARES)
------ ----- ------------
<S> <C> <C> <C> <C>
Gary H. Stroy(1) 1996 209,185 -0- -0-
President and 1995 185,584 12,960 -0-
Chief Executive Officer 1994 173,654 -0- -0-
Daniel Wong 1996 129,815 -0- 15,000
Vice President of 1995(2) 123,717 57,590 25,000
Development and
Consumables Manufacturing
Vladimir E. Ostoich 1996 142,248 -0- 15,000
Vice President of 1995 139,754 9,864 15,000
Engineering and Instrument 1994 132,170 -0- 10,625
Manufacturing
Ting W. Lu 1996 116,738 -0- 15,000
Vice President of Finance 1995(3) 91,799 4,462 25,000
and Administration and
Chief Financial Officer
</TABLE>
- ---------------------
(1) In June 1996, Clinton H. Severson succeeded Gary H. Stroy as
President and Chief Executive Officer of the Company.
(2) Dr. Wong has served as an executive officer of the Company since May
1994.
(3) Ms. Lu has served as an executive officer of the Company since May
1994.
3.
<PAGE> 4
STOCK OPTIONS GRANTED IN FISCAL 1996.
The following table provides the specified information concerning
grants of options to purchase the Company's Common Stock made during the fiscal
year ended March 31, 1996, to the persons named in the Summary Compensation
Table.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS IN FISCAL 1996 OPTION TERM(1)
- ---------------------------------------------------------------------- -----------------------------
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES EXERCISE
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#)(2) YEAR ($/SH) (3) DATE 5% ($) 10% ($)
- ---------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel Wong 15,000 5.0 5.625 11/28/05 53,063 134,472
Vladimir E. Ostoich 15,000 5.0 5.625 11/28/05 53,063 134,472
Ting W. Lu 15,000 5.0 5.625 11/28/05 53,063 134,472
</TABLE>
- ---------------------
(1) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only, based on the Securities and Exchange Commission
rules. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock, overall market conditions
and the optionholders' continued employment through the vesting period.
The amounts reflected in this table may not necessarily be achieved.
(2) All options granted in fiscal 1996 were granted pursuant to the
Company's 1989 Stock Option Plan. The options vest and become
exercisable at the rate of one-half on the first anniversary of the
date of grant and 1/24 per month thereafter for each full month of the
optionee's continuous employment by the Company. Under the Company's
1989 Stock Option Plan, the Board retains discretion to modify the
terms, including the price, of outstanding options. For additional
information regarding options, see "--Change of Control Arrangements."
(3) All options were granted at market value on the date of grant.
4.
<PAGE> 5
OPTION EXERCISES AND FISCAL 1996 YEAR-END VALUES.
The following table provides the specified information concerning
exercises of options to purchase the Company's Common Stock in the fiscal year
ended March 31, 1996, and unexercised options held as of March 31, 1996, by the
persons named in the Summary Compensation Table.
OPTION EXERCISES AND FISCAL 1996
YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNEXERCISED MONEY OPTIONS AT
SHARES OPTIONS AT 3/31/96 3/31/96($)(2)
ACQUIRED ON VALUE ------------------ -------------
NAME EXERCISE REALIZED($) EXERCISABLE(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary H. Stroy............... 0 0 41,250 53,750 136,650 93,750
Daniel Wong................. 0 0 26,666 33,334 25,781 19,219
Vladimir E. Ostoich......... 0 0 50,092 30,533 149,625 13,125
Ting W. Lu ................. 0 0 25,078 31,172 29,004 15,059
</TABLE>
- ------------------------
(1) Company stock options generally vest one-fourth on the first
anniversary of the date of grant and 1/48 per month thereafter for each
full month of the optionee's continuous employment by the Company.
However, each of Ms. Lu and Messrs. Wong and Ostoich received in fiscal
1996 options to purchase 15,000 shares of the Company's Common Stock
that vest one-half on the first anniversary of the date of grant and
1/24 per month thereafter for each full month of the optionee's
continuous employment by the Company. All options are exercisable only
to the extent vested.
(2) The value of the unexercised in-the-money options is based on the
closing price of the Company's Common Stock ($5.875 per share) on March
31, 1996 and is net of the exercise price of such options.
5.
<PAGE> 6
COMPENSATION OF DIRECTORS.
All non-employee directors of the Company, receive compensation in the
amount of $750 per Board meeting they attend plus reimbursement of reasonable
travel expenses incurred. In addition, Dr. Tucker serves as consultant to the
Company and receives a monthly compensation of $1,000 plus reimbursement of
expenses for attending meeting at or on behalf of the Company. Each of the
Company's non-employee directors also receives an automatic annual grant of
options to purchase 2,000 shares of Common Stock under the Company's Outside
Directors Stock Option Plan. Dr. Tucker received an additional annual grant of
options to purchase 5,000 shares for serving as a consultant. Gary H. Stroy and
Clinton H. Severson, the directors of the Company who are also employees of the
Company, do not receive any compensation for their services as members of the
Board of Directors.
CHANGE OF CONTROL ARRANGEMENTS.
The Company's 1989 Stock Option Plan and the Outside Directors Stock
Option Plan (the "Option Plans") provide that in the event of a transfer of
control of the Company ("Transfer of Control"), the surviving, continuing,
successor or purchasing corporation or a parent corporation thereof, as the case
may be (the "Acquiring Corporation"), shall either assume the Company's rights
and obligations under stock option agreements outstanding under the Option Plans
(the "Options") or substitute options for the Acquiring Corporation's stock for
such outstanding Options. In the event the Acquiring Corporation elects not to
assume or substitute for such outstanding Options in connection with a merger
constituting a Transfer of Control, the Company's Board shall provide that any
unexercisable and/or unvested portion of the outstanding Options shall be
immediately exercisable and vested as of a date prior to the Transfer of
Control, as the Company's Board so determines. Any Options which are neither
assumed by the Acquiring Corporation, nor exercised as of the date of the
Transfer of Control, shall terminate effective as of the date of the Transfer of
Control. Options which are assumed by the Acquiring Corporation shall become
exercisable and vested as provided under the stock option agreement under the
Option Plans, unless the Acquiring Corporation terminates the optionholder under
certain circumstances defined in the Option Plans. Under such circumstances, the
holder's Options shall become immediately exercisable and vested as of the date
of termination.
6.
<PAGE> 7
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is comprised of
two non-employee directors of the Company. The Compensation Committee is
responsible for setting and administering the policies governing compensation of
the Company's employees, including its executive officers. The goals of the
Company's executive officer compensation policy is to attract, retain and reward
executive officers who contribute to the Company's success and to motivate these
executives to achieve the Company's business objectives. The Company uses
salary, stock options and incentive bonus to meet these goals.
Salaries are initially set for each executive officer with reference to
the range of salaries for similar positions in comparable companies in the
Company's industry, as reported in compensation survey information obtained by
the Company from compensation consulting firms. Salaries are generally set near
the middle of the applicable range for each position, and adjusted for
historical and expected contributions of each officer to the Company. Salaries
are reviewed annually for comparability against the industry survey and
adjustments are made if necessary to maintain competitiveness within the
industry. Salaries may also be adjusted on an individual basis during the year
as the Compensation Committee deems appropriate, typically related to new job
responsibilities or assignments. In October 1995, three of the Company's
executive officers received salary adjustments ranging from 4% to 8%, based on
new job responsibilities. In April 1996, during the Company-wide annual salary
review, the Compensation Committee reviewed the executive salaries and found
them to be within the proper ranges and hence no salary adjustments were made.
The Compensation Committee strongly believes that executive
compensation should be based in part on the Company's performance and has used
stock options and incentive bonus to accomplish this goal. In April 1995, the
Compensation Committee approved an executive bonus plan with target bonus levels
set at 15% to 20% of annual salaries for accomplishing certain Company
objectives. In April 1996, the Compensation Committee reviewed the Company's
achievements against these goals and approved payment of 50% of these targeted
bonuses.
The Compensation Committee believes that equity ownership by executive
officers serves to align the officers' interests with the interests of
shareholders by providing the officers with incentive to build shareholder
value. In November 1995, the Compensation Committee approved option grants to
executive officers who had assumed new job responsibilities. Further, as part of
the annual performance review in April 1996, the Compensation Committee granted
additional incentive stock options to all officers of the Company, except those
officers with less than six-month service with the Company.
The Compensation Committee annually reviews the performance and
compensation of the President and Chief Executive Officer of the Company. During
fiscal 1996, Gary H. Stroy served as the President and Chief Executive Officer
of the Company. In June 1996, Clinton H. Severson succeeded Mr. Stroy as
President and Chief Executive Officer of the Company.
During fiscal 1996, Mr. Stroy's compensation consisted of salary,
incentive stock options and performance based bonus. During the annual review,
the Compensation Committee found Mr. Stroy's salary to be appropriate as
compared with comparable companies within the Company's industry, based on the
compensation survey information obtained by the Company from compensation
consulting firms. In May 1995, the Company entered into an agreement with Mr.
Stroy that increased Mr. Stroy's salary and provided him with one year's salary
and benefits and immediate vesting of his outstanding stock options if his
employment with Abaxis was terminated after August 1, 1995. In April 1996, as
part of the Company's annual performance review, the Compensation Committee
awarded Mr. Stroy based on the Company's achievements against objectives an
incentive bonus equal to 10% of his salary
7.
<PAGE> 8
and a stock option to purchase 50,000 shares of common stock.
COMPENSATION COMMITTEE
Richard Bastiani
Prithipal Singh
8.
<PAGE> 9
COMPARISON OF SHAREHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on the Company's Common Stock with the cumulative
total return of the Russell 2000 Index and the Hambrecht & Quist ("H&Q") Health
Care (Excluding Biotech) Index for the period commencing on January 31, 1992,
and ending on March 31, 1996.(1)
COMPARISON OF CUMULATIVE TOTAL RETURN FROM JANUARY 31, 1992
THROUGH MARCH 31, 1996:(2)
ABAXIS, INC., RUSSELL 2000 INDEX AND H&Q HEALTH CARE (EXCLUDING BIOTECH) INDEX
<TABLE>
<CAPTION>
DOLLARS
-------
1/22/92 3/92 3/93 3/94 3/95 3/96
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ABAXIS, INC. 100 64 48 70 51 53
RUSSELL 2000 INDEX 100 108 124 137 145 187
H & Q 100 85 63 58 75 114
HEALTH CARE
(EXCLUDING BIOTECH) INDEX
</TABLE>
- --------------
(1) The Company's initial public offering was on January 22, 1992. The market
indices used are only available at the end of each month. The Company's 1996
fiscal year ended on March 31, 1996.
(2) Assumes that $100.00 was invested on January 31, 1992 in the Company's
Common Stock, at the closing sales price, and in each index and that all
dividends were reinvested. No cash dividends have been declared on the Company's
Common Stock. Shareholder returns over the indicated period should not be
considered indicative of future shareholder returns.
9.
<PAGE> 10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of June 30, 1996, certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
all persons known by the Company to be the beneficial owners of more than 5% of
the outstanding Common Stock of the Company, (ii) each director of the Company,
(iii) the persons named in the Summary Compensation Table, and (iv) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT ABAXIS
AND NATURE COMMON STOCK
NAME OF BENEFICIAL OWNER(1) OF SHARES OUTSTANDING(2)
- --------------------------- --------- --------------
<S> <C> <C>
Robert J. Kunze(3)......................................... 395,744 4.0%
Gary H. Stroy(4)........................................... 389,526 3.9%
Clinton H. Severson........................................ 0 *
Vladimir Ostoich(5)........................................ 207,884 2.1%
Daniel Wong(6)............................................. 38,542 *
Ting W. Lu(7).............................................. 36,146 *
Prithipal Singh(8)......................................... 13,022 *
Ernest S. Tucker, III, M.D.(9)............................. 7,458 *
Richard Bastiani, Ph.D.(10)................................ 458 *
Executive officers and directors(3-10)..................... 1,088,780 10.7%
as a group (12 persons)
</TABLE>
- ------------
* Less than 1%.
10.
<PAGE> 11
(1) The persons named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them, subject to community property laws where applicable and
to the information contained in the footnotes to this table. Unless
otherwise indicated, the business address of each of the beneficial
owners listed is 1320 Chesapeake Terrace, Sunnyvale, CA 94089.
(2) The percentages shown in this column are calculated from the 9,878,379
shares of Common Stock actually outstanding on June 30, 1996 in
addition to options held by that person that are currently exercisable
or exercisable within 60 days following June 30, 1996 which are deemed
outstanding in accordance with the rules of the Securities and Exchange
Commission.
(3) Includes 458 shares subject to options exercisable by Mr. Kunze within
sixty days of June 30, 1996. Also includes 14,923 shares beneficially
owned by Hamco Capital Corporation, 199,205 shares beneficially owned
by H&Q Life Science Technology Fund I, 171,241 shares beneficially
owned by H&Q Life Science Ventures, 8,879 shares beneficially owned by
H&Q London Ventures and 1,038 shares beneficially owned by H&Q Ventures
Partners. Hambrecht & Quist is affiliated with each of these funds. Mr.
Kunze is associated with Hambrecht & Quist.
(4) Includes an aggregate of 60,000 shares held by Mr. Stroy's son's IRA,
the Gary H. Stroy IRA, and the LeAnn Stroy IRA. Also includes 92,813
shares subject to stock options exercisable by Mr. Stroy within sixty
days of June 30, 1996.
(5) Includes (i) 6,504 shares held of record by Dr. Ostoich as trustee for
the benefit of his son, (ii) an aggregate of 58,000 shares held by Dr.
Ostoich's IRA, (iii) 20,000 shares held by Mrs. Ostoich's IRA and (iv)
62,390 shares held of record by the Vladimir Ostoich and Liliana
Ostoich Trust Fund, for the benefit of Dr. Ostoich and his wife. Also
includes 60,990 shares subject to stock options exercisable by Dr.
Ostoich within sixty days of June 30, 1996.
(6) Includes 38,542 shares subject to options exercisable by Dr. Wong
within sixty days of June 30, 1996.
(7) Includes 36,146 shares subject to options exercisable by Ms. Lu
within sixty days of June 30, 1996.
(8) Includes 13,022 shares subject to options exercisable by Dr. Singh
within sixty days of June 30, 1996.
(9) Includes 7,458 shares subject to options exercisable by Dr. Tucker
within sixty days of June 30, 1996.
(10) Includes 458 shares subject to options exercisable by Dr. Bastiani
within sixty days of June 30, 1996.
11.
<PAGE> 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In May 1995, the Company entered into an agreement with Gary H. Stroy,
who served as the President and Chief Executive Officer of the Company until
June 1996, providing Mr. Stroy with one year's salary and benefits and immediate
vesting of his outstanding stock options if his employment with Abaxis is
terminated after August 1, 1995.
12.
<PAGE> 13
FORM 10-K/A
AMENDMENT NO. 1
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
ABAXIS, INC.
By: /s/ Ting W. Lu
---------------------------------------------
Ting W. Lu
Vice President and Finance and Administration
and Chief Financial Officer
Date: July 29, 1996
13.
