UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1
on
FORM 10-KSB/A
X ANNUAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 1998
Commission File Number: 0-25612
STARBASE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0567363
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
18872 MacArthur Boulevard
Irvine, California 92612
(Address of principal executive offices) (Zip code)
(714) 442-4400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Title of each class:
-------------------
Common Stock, $0.01 par value
Indicate by check mark whether the registrant has (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) 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 registrant's revenues for its most recent fiscal year: $2,139,000.
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of May 31, 1998, based on the closing price as reported by NASDAQ
was $ 37,611,000.
Number of shares outstanding as of May 31, 1998: Common Stock: 18,645,726
Documents Incorporated By Reference: None
<PAGE>
The purpose of this Amendment No. 1 to the Annual Report of StarBase
Corporation a Delaware Corporation (the "Company"), on Form 10-KSB for the
fiscal year ended March 31, 1998 is to amend the following item: Part III, Items
9, 10, 11 and 12 to include the actual information and, thereby, eliminate the
incorporation of the Company's definitive proxy statement by reference.
Part III is amended to the following:
Part III
Item 9. Directors and Executive Officers of the Registrant
Directors
The directors and executive officers of the Company, their ages and
present positions with the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
William R. Stow III 53 Chief Executive Officer, Chairman of the Board
and Director
Donald R. Farrow 52 President, Chief Operating Officer and Director
Daniel P. Ginns 48 Director
Phillip E. Pearce 69 Director
John R. Snedegar 48 Director
Carlos H. Caballero 46 Vice President, Marketing
William T. McManes 48 Vice President, Sales
Alan D. Kucheck 46 Vice President, Engineering
Douglas S. Norman 34 Director of Finance, Chief Accounting Officer
and Assistant Secretary
</TABLE>
Directors are elected to one-year terms. Executive Officers of the Company are
appointed by the Board of Directors to serve until their removal by the Board of
Directors or resignation. At a meeting of the Board of Directors on July 27,
1998, Donald R. Farrow resigned as President and Chief Operating Officer,
William R. Stow III was appointed President of the Company by the Board of
Directors, and Mr. Farrow was appointed Vice Chairman of the Company by the
Board of Directors.
Information about Directors
The following is a brief summary of the background of each
director:
William R. Stow III founded the Company in September 1991. Mr.
Stow has served as Chief Executive Officer of the Company since September 1991,
exclusive of the period from August 1996 to January 1997. Mr. Stow also served
as President of the Company from September 1991 to August 1996, exclusive of the
period from April 1994 through July 1995. Mr. Stow has served as a Director of
the Company since September 1991, Co-Chairman of the Board from October 1994 to
August 1996 and Chairman of the Board since August 1996.
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<PAGE>
Donald R. Farrow has served as the President of the Company
since January 1997, Chief Operating Officer and Director of the Company since
February 1997. Mr. Farrow had been Vice President, Sales and Marketing since
August 1996; Vice President, Sales since May 1996; and a consultant to the
Company since March 1996. Prior to that, Mr. Farrow held executive positions
with Symantec, Vice President Sales; Novell, Director Western Area; CommVision,
Vice President Sales and Marketing; Menlo Corporation, President; and VisiCorp,
Director Western Area.
Daniel P. Ginns has been a Director of the Company since
January 1997. Since October 1996, Mr. Ginns has been Chairman of the Board and
Chief Executive Officer of Datametrics Corporation, a reporting company which
designs, develops and manufacture printers and computers. From 1989 to 1996, Mr.
Ginns was President of Belmont Capital, Inc., a management and financial
advisory firm.
Phillip E. Pearce has been a Director of the Company since
January 1996. Mr. Pearce is the owner of Phil Pearce & Associates since 1986.
Prior to that, he was Senior Vice President and a member of the Board of
Directors of E. F. Hutton & Co., from 1971 through 1983, a member of the Board
of Governors of the New York Stock Exchange, and Chairman of the Board of
governors of the NASD. Mr. Pearce is a member of the Board of two other
reporting companies, RX Medical Services Corporation and Xybernaut Corporation.
John R. Snedegar has been a Director of the Company since
December 1991. Since May 1990, Mr. Snedegar has served as President, Director
and Chief Executive Officer of United Digital Network Inc., a diversified
telecommunications provider based in Irving, Texas. From March 1981 to May 1992,
Mr. Snedegar served as President and Chief Executive Officer of AmeriTel
Management, Inc., currently known as WCT Communications, Inc. Mr. Snedegar is
also a member of the Board of Star Telecommunications, Inc., a reporting
company.
Information about non-Director Executive Officers
The following is a brief summary of the background of each
executive officer of the Company who is not also a director of the Company:
Carlos H. Caballero has been a Vice President, Marketing of
StarBase since December 1997. Prior to that, Mr. Caballero had been President of
Digital Graffiti, Inc., a provider of marketing communications products and
services for emerging business-to-business software vendors, since July, 1996;
from December 1996 to August 1997, Director of Marketing Communications for True
Software, a software configuration management vendor; Director of Marketing at
Quest Software from July, 1993 through July, 1996; and from July, 1987 through
July 1993, Director of Product Management at Softool Corporation, a provider of
software configuration management solutions.
William T. McManes has been the Vice President, Sales of
StarBase since September, 1997. Previously, Mr. McManes had been Vice President
of Sales at Magic Software Enterprise, Inc. since October, 1996; Director-West
Region and consultant for Amdahl Corporation from December, 1993 through
October, 1996; Owner of Glencoe Consulting from January, 1996 through October,
1996, which was operated exclusively for 2 clients -- Amdahl Corporation and
Select Software; and Vice-President of Sales, Template Software from January,
1991 to December, 1993.
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<PAGE>
Alan D. Kucheck has been the Vice President, Engineering of
StarBase since January 1995. From July 1993 to January 1995 served as a Project
Director for the Company. From August 1990 to March 1993, Mr. Kucheck was
Manager, Software Development for IMI, Inc.
Douglas S. Norman founded the Company in September 1991. Mr.
Norman has been the Chief Accounting Officer since September, 1997; Assistant
Secretary of the Company since February, 1997; Director of Finance since June
1996; Financial Manager from 1991 to 1996. Douglas S. Norman is the son-in-law
of William R. Stow III.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company during the fiscal year ended March 31, 1998 and
written representations from its Directors and Executive Officers, there were no
late or delinquent filings except that each of Messrs. Ginns, McManes and Sexton
(a former Director) failed to file one Form 4 and Mr. Norman failed to file one
Form 5.
Involvement in certain legal proceedings
No director or officer of the Company has within the last five
years prior to the date hereof, been subject to any penalties or sanctions
imposed by a court or securities regulatory authority relating to trading in
securities, promotion or management of a publicly traded issuer, theft or fraud.
No director or officer of the Company has within the last five
years prior to the date hereof, been declared bankrupt or made a voluntary
assignment in bankruptcy, nor made a proposal or been subject to any proceedings
under any legislation relating to bankruptcy or insolvency.
-4-
<PAGE>
Item 10. Executive Compensation
General and Summary Compensation Table
The following table sets forth certain summary information
regarding compensation paid or accrued by the Company to, or on behalf of, the
Company's Chief Executive Officer and the other most highly compensated
executive officers of the Company (the "Named Executive Officers"), for services
rendered in all capacities to the Company during the fiscal years ended March
31, 1996, 1997, and 1998. Except as otherwise noted, no Named Executive Officer
received any restricted stock award, stock appreciation right or payment under
any long-term incentive plan.
<TABLE>
<CAPTION>
Summary Compensation Table (1)
Annual Compensation Long-Term Compensation
------------------------------------ -----------------------
Other All Other
Annual Securities Compensation
Compen- Underlying (7)
Name and Principal Position Year Salary Bonus sation Options (2)
- ------------------------------------ --------- ------------ ------------ --------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
William R. Stow III (3) 1998 150,000 $ -- $ -- 249,790 $ --
Chief Executive Officer, 1997 137,818 -- -- 175,000 --
Chairman of the Board and Director 1996 115,000 -- -- -- --
Carlos H. Caballero 1998 40,000 -- -- 150,000 --
Vice President, Marketing 1997 - -- -- -- --
1996 - -- -- -- --
Donald R. Farrow (4) 1998 150,000 -- -- 297,447 --
President, Chief Operating 1997 101,031 -- -- 231,250 62,942
Officer and Director 1996 -- -- -- -- --
Alan D. Kucheck (5) 1998 120,833 -- -- 245,075 --
Vice President, Engineering 1997 110,000 -- -- 65,667 --
1996 110,000 6,358 -- 110,000 --
William T. McManes 1998 70,096 -- -- 150,000 18,990
Vice President, Sales 1997 -- -- -- -- --
1996 -- -- -- -- --
Douglas S. Norman (6) 1998 72,100 -- -- 91,700 --
Director of Finance 1997 66,326 -- -- 37,924 --
Chief Accounting Officer 1996 56,000 -- -- 16,666 --
Assistant Secretary
- -------------
</TABLE>
(1) Certain columns have been omitted if they do not apply to any of the
Named Executive Officers.
(2) Amounts represent stock options granted and/or repriced for the period
shown.
(3) Options granted during fiscal year 1998 include options to purchase
156,666 shares of the Company's Common Stock, originally granted in
prior years, that were repriced.
-5-
<PAGE>
(4) Options granted during fiscal year 1998 include options to purchase
206,250 shares of the Company's Common Stock, originally granted in
prior years, that were repriced.
(5) Options granted during fiscal year 1998 include options to purchase
175,667 shares of the Company's common stock, originally granted in
prior years, that were repriced. Fiscal year 1996 listed options
include the right to purchase 59,000 shares of the Company's common
stock that had been granted prior to 1996 and were repriced in fiscal
year 1996.
(6) Options granted during fiscal year 1998 include options to purchase
54,590 shares of the Company's common stock, originally granted in
prior years, that were repriced. Fiscal year 1996 listed options
include the right to purchase 3,332 shares of the Company's common
stock that had been granted prior to 1996 and were repriced in fiscal
year 1996.
(7) Amounts listed as All Other Compensation represent commissions earned
or consulting fees.
-6-
<PAGE>
Stock Options
The following table sets forth information concerning stock option
grants made during the fiscal year ended March 31, 1998 under the Company's
Stock Option Plan to Named Executive Officers. No stock appreciation rights were
granted to such individuals during the fiscal year.
Option/SAR Grants In Year Ended March 31, 1998
<TABLE>
<CAPTION>
Individual Grants
- -----------------------------------------------------------------------------------------------
Number of
Securities Underlying Percent of Total
Options/ SARS Options/SARS Exercise
Granted Granted to Employees or Base Price Expiration
Name (# of Shares) (1) In Fiscal Year (2) ($/Sh) (3) Date
- ------------------- -------------------- --------------------- ------------- ---------------
<S> <C> <C> <C> <C>
William R. Stow 6,666 * $ 1.75 1/30/05
150,000 4 1.25 8/7/06
15,000 * 0.84 5/7/07
25,000 1 1.52 9/24/07
53,124 1 1.63 1/22/08
Carlos H. Caballero 100,000 3 1.35 12/1/07
50,000 1 1.63 1/22/08
Donald R. Farrow 125,000 3 1.25 5/3/06
31,250 1 1.25 11/8/06
50,000 1 1.25 2/12/07
20,625 1 0.84 5/7/07
25,000 1 1.52 9/24/07
45,572 1 1.63 1/22/08
Alan D. Kucheck 59,000 2 1.25 4/21/03
6,000 * 1.25 8/11/05
45,000 1 1.25 12/7/05
65,667 2 1.25 11/8/06
17,567 * 0.84 5/7/07
51,841 1 1.63 1/22/08
William T. McManes 125,000 3 1.52 9/24/07
25,000 1 1.63 1/22/08
Douglas S. Norman 1,666 * 1.25 1/25/03
1,666 * 1.25 10/25/04
9,334 * 1.25 8/11/05
4,000 * 1.25 12/7/05
18,333 * 1.25 5/8/06
19,591 1 1.25 11/8/06
20,459 1 0.84 5/7/07
16,651 * 1.63 1/22/08
</TABLE>
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<PAGE>
(1) Options granted to purchase common stock. Generally, twenty-five percent
of the shares granted vest one year from the date of grant with the
remaining shares vesting equally over the following thirty-six months.
All of the options shown have a maximum term of ten years, subject to
earlier termination following the optionee's cessation of service with
the Company.
(2) The Company granted options to purchase a total of 2,045,827 shares of
Common Stock to employees during the year ended March 31, 1998. In
addition, options to purchase 1,715,580 shares of the Company's Common
Stock were granted in prior years and were repriced.
(3) The exercise price may be paid in cash or in shares of Common Stock
valued at fair market value on the exercise date.
* Less than 1%.
Option Exercises, Holdings and Fiscal Year-End Values
The following table sets forth information concerning the number of
shares covered by both exercisable and unexercisable options held by each of the
Named Executive Officers as of March 31, 1998. No options were exercised during
the fiscal year ended March 31, 1998 by any of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND OPTION VALUES AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised
on Value Options at in-the-Money Options at
Exercise Realized March 31, 1998 (# of March 31, 1998 (1)
shares)
------------------------------ ------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ----------- ----------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
William R. Stow III -- -- 109,789 165,001 $ 195,502 $ 309,121
Carlos H. Caballero -- -- -- 150,000 -- 266,313
Donald R. Farrow -- -- 140,622 181,825 259,537 347,419
Alan D. Kucheck -- -- 110,075 135,000 216,710 253,284
William T. McManes -- -- -- 150,000 -- 252,063
Douglas S. Norman -- -- 28,591 63,109 56,289 126,307
- ------------
</TABLE>
(1) Calculated based on the closing price of the Company's Common Stock as
reported on the NASDAQ SmallCap on March 31, 1998 of $3.21875 per share,
less the applicable exercise price.
Board Compensation
Prior to January 1998, directors who are not employees of the Company
were not compensated, except for reimbursement of travel expenses. Starting in
January 1998, directors who are not employees receive $1,000 per
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<PAGE>
month in addition to reimbursement of travel expenses. Pursuant to the Company's
Stock Option Plan, non-employee directors may receive non-qualified stock option
grants for shares of the Company's Common Stock. All options awarded to
non-employee directors have an exercise price per share at the market price of
the Common Stock on the date of grant. The options have a 10-year term.
In addition, Mr. Pearce performed certain consulting services for which
he was compensated $600 during fiscal 1998.
Option Repricing
The following table provides information relating to the repricing of
certain options held by the executive officers of the Company named in the
Summary compensation table that occurred during the fiscal year ended March 31,
1998. The only previous repricing of any options granted by the Company to any
executive officer was done in August and September, 1995.
Option/SAR Repricings
<TABLE>
<CAPTION>
Number of Length of
Securities Exercise Original Option
Underlying Price of Stock Term
Options at Time of New Remaining at
Repriced or Repricing or Exercise Date of
Amended Amendment Price Repricing or
Name Date (#) ($/Share) ($/Sh) Amendment
- ----------------------- ------------ -------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Donald R. Farrow 5/7/1997 31,250 2.60 1.25 9.5 yrs.
5/7/1997 50,000 1.74 1.25 9.7 yrs.
5/7/1997 125,000 3.50 1.25 9.0 yrs.
Alan D. Kucheck 5/7/1997 59,000 2.21 1.25 6.0 yrs.
5/7/1997 6,000 2.21 1.25 8.3 yrs.
5/7/1997 45,000 2.32 1.25 8.5 yrs.
5/7/1997 65,667 2.60 1.25 9.5 yrs.
Douglas S. Norman 5/7/1997 1,666 2.21 1.25 5.7 yrs.
5/7/1997 1,666 2.21 1.25 7.5 yrs.
5/7/1997 9,334 2.21 1.25 8.3 yrs.
5/7/1997 4,000 2.32 1.25 8.5 yrs.
5/7/1997 18,333 4.32 1.25 9.0 yrs.
5/7/1997 19,591 2.60 1.25 9.4 yrs.
William R. Stow III 5/7/1997 150,000 3.07 1.25 9.2 yrs.
8/5/1997 6,666 5.69 1.75 7.7 yrs.
</TABLE>
Report of Repricing of Options
In May and August 1997 the Board of Directors reviewed the grant prices
of stock options to determine if the options were still effective as long-term
incentives to encourage commitment to the Company. Because the exercise price of
most stock options had been above the market price of the Company's stock for
some time, the Board of Directors decided to reprice certain outstanding stock
options. As a result of the review the Board of Directors offered to option
holders an opportunity to terminate their existing options in exchange for the
grant
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<PAGE>
of new options above the current market price of the Company stock. All other
terms of the stock option grants remained the same.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth at June 30, 1998 certain information
regarding the ownership of each class of the Company's voting securities by each
person known by the Company to be the beneficial owner of more than five percent
of each class of the Company's outstanding voting securities.
Number of Percentage
Shares of of
Name (1) Common Stock Common Stock
- -------- ------------ ------------
Amerindo Investment Advisors, Inc. 1,751,721 9.2
One Embarcadero, Suite 2300
San Francisco, California 94111-3162
- -------------
(1) Beneficial ownership is expressly disclaimed for Amerindo Advisors,
Inc. (922,093 shares of Common Stock) and Amerindo Advisors, Inc. -
Panama (829,628 shares of Common Stock). Messrs. Alberto W. Vilar and
Gary A. Tanaka, as the sole shareholders and directors of the Advisor
Entities, share with each other investment and dispositive power as to
all of the shares shown as owned by the Advisor Entities, who otherwise
have sole investment and dispositive power with respect thereto, except
that each client of the Advisor Entities has the unilateral right to
terminate the advisory agreement with the Advisor Entity in question on
notice which typically need not exceed 30 days.
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<PAGE>
Security Ownership of Management
The following table sets forth at June 30, 1998 certain information
regarding the ownership of each class of the Company's voting securities by (i)
each of the Company's Directors, (ii) each of the Named Executive Officers, and
(iii) all executive officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares of Percentage of
Name (1) Common Stock Common Stock
- -------- ------------ ------------
<S> <C> <C>
Carlos H. Caballero (3) 0 *%
Donald R. Farrow (2)(3)(4) 188,760 1.0
Daniel P. Ginns (2)(5) 217,658 1.1
Alan D. Kucheck (3)(6) 127,718 *
William T. McManes (3) 0 *
Douglas S. Norman (3)(7) 55,284 *
Phillip E. Pearce (2)(6) 73,958 *
John R. Snedegar (2)(8) 176,155 *
William R. Stow III (2)(3)(9) 753,559 3.9
Total: All directors and named executive officers 1,593,092 8.1
(9 persons) (10)
</TABLE>
- -------------
(1) Except as otherwise noted, the persons named in the above table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where
applicable. Unless otherwise indicated, the address of each person
named in the above table is in care of StarBase Corporation, 18872
MacArthur Boulevard, Irvine, California 92612.
(2) Director.
(3) Named Executive Officer.
(4) Includes 173,760 shares of Common Stock issuable upon the exercise of
stock options that are exercisable or will be exercisable by August 29,
1998.
(5) Includes 48,958 shares of Common Stock issuable upon the exercise of
stock options that are exercisable or will be exercisable by August 29,
1998 and 5,500 shares of Common Stock held by Mrs. Ginns. Mr. Ginns
disclaims beneficial ownership of the shares held by Mrs. Ginns.
(6) Represents shares of Common Stock issuable upon the exercise of stock
options that are exercisable or will be exercisable by August 29, 1998.
(7) Includes 40,498 shares of Common Stock issuable upon the exercise of
stock options that are exercisable or will be exercisable by August 29,
1998. Also includes 13,786 shares subject to a Performance Escrow
Agreement.
(8) Includes 62,290 shares of Common Stock issuable upon the exercise of
stock options by Mr. Snedegar that are exercisable or will be
exercisable by August 29, 1998. Also includes 14,944 shares held by Mr.
Snedegar as trustee of the Snedegar Revocable Living Trust; 1,667
shares held by Norexco Petroleum of which Mr. Snedegar is President;
and 83,501 shares held by Access Financial Limited of which Mr.
Snedegar is the general partner.
(9) Includes 573,119 shares of Common Stock held by Mr. Stow as trustee of
the Stow Family Trust, of which, 568,124 shares are subject to a
Performance Escrow Agreement. Also includes an aggregate of 1,749
shares of Common Stock held by Mr. Stow in trust for his daughter and
minor son. Also includes 135,310 shares of Common Stock and 9,499
shares of Common Stock issuable upon the exercise of stock options by
Mr. Stow and Mrs. Stow, respectively, that are exercisable or will be
exercisable by August 29, 1998. Mr. Stow disclaims beneficial ownership
of the shares exercisable by Mrs. Stow.
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<PAGE>
(10) Includes a total of 671,991 shares of Common Stock issuable upon
exercise of stock options held by all directors and named executive
officers of the Company as a group.
* Less than 1%.
Item 12. Certain Relationships and Related Transactions
Certain Transactions
In fiscal 1995, the Board of Directors authorized the Company to loan
William Stow III, then President and CEO of StarBase, the sum of $126,000. At
March 31, 1998, the principal and accrued interest amounts were $76,153 and
$13,294, respectively. The loan is evidenced by a promissory note and is secured
by shares of the Company's common stock, which are owned by Mr. Stow. The note
is payable on November 4, 1998 and bears interest at a rate of 6.34% per annum,
payable at maturity.
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<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, on the 29th day of July,
1998.
STARBASE CORPORATION
By: /s/ Douglas S. Norman
-------------------------------
Douglas S. Norman
Director of Finance
Chief Accounting Officer
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