<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
-----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number:
------------
BIRNER DENTAL MANAGEMENT SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 0-23367
- -------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3801 EAST FLORIDA AVENUE
SUITE 508
DENVER, COLORADO 80210
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (303) 691-0680
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None. None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
--------------------------------
(Title of Class)
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 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
----- -----
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) 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 the Registrant's voting stock held as of
March 22, 1999 by non-affiliates of the Registrant was $14,200,076. This
calculation assumes that certain parties may be affiliates of the Registrant and
that, therefore, 4,207,430 shares of voting stock are held by non-affiliates. As
of March 22, 1999, the Registrant had 6,265,812 shares of its common stock
outstanding.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth information concerning each of the directors and
executive officers of the Company. All directors shall serve until their
successors are duly elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Officers are
appointed by and serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C>
Frederic W.J. Birner 41 Chairman of the Board, Chief Executive Officer and Director
Mark A. Birner, D.D.S. 39 President and Director
Dennis N. Genty 41 Chief Financial Officer, Secretary, Treasurer and Director
Florence M. Welch 51 Chief Operating Officer
Michael A. Iacoboni, D.D.S. 50 Vice President
James M. Ciccarelli 46 Director
Steven M. Bathgate 44 Director
</TABLE>
BUSINESS BIOGRAPHIES
Frederic W.J. Birner is a founder of the Company and has served as Chairman of
the Board and Chief Executive Officer since the Company's inception in May 1995.
From May 1992 to September 1995, he was employed as a Senior Vice President in
the Corporate Finance Department at Cohig & Associates, Inc., an investment
banking firm. From 1983 to February 1992, Mr. Birner held various positions with
Hanifen, Imhoff, Inc., an investment banking firm, most recently as Senior Vice
President in the Corporate Finance Department. Mr. Birner received his M.S.
degree from Columbia University and his B.A. degree from The Colorado College.
Mr. Birner is the brother of Mark A. Birner, D.D.S.
Mark A. Birner, D.D.S. is a founder of the Company and has served as President,
and as a director, since the Company's inception in May 1995. From February 1994
to October 1995, Dr. Birner was the owner and operator of three individual
dental practices. From 1986 to February 1994, he was an associate dentist with
the Family Dental Group. Dr. Birner received his D.D.S. and B.A. degrees from
the University of Colorado and completed his general practice residency at the
University of Minnesota in Minneapolis. Dr. Birner is the brother of Frederic
W.J. Birner.
Dennis N. Genty is a founder of the Company and has served as Secretary since
May 1995, and as Chief Financial Officer, Treasurer, and as a director, since
September 1995. From October 1992 to September 1995, he was employed as a Vice
President in the Corporate Finance Department at Cohig & Associates, Inc., an
investment banking firm. From May 1990 to October 1992, he was a Vice President
in the Corporate Finance
2
<PAGE> 3
Department at Hanifen, Imhoff, Inc., an investment banking firm. Mr. Genty
received his M.B.A. degree from Columbia University and his B.S. degree from the
Colorado School of Mines.
Florence M. Welch joined the Company as Chief Operating Officer in July 1998.
From April 1996 to July 1998, she was the Chief Financial Officer/Senior
Director of Finance and Administration for the Certified Financial Planner Board
of Standards, Inc., a professional regulatory organization. From December 1989
to September 1995, she held various positions with Intelligent Electronics,
Inc., a high technology distribution and services company, most recently as Vice
President/Controller in the Reseller Network Division. Ms. Welch received her
M.S. from the University of Colorado and her B.S. degree from American
University.
Michael A. Iacoboni, D.D.S., M.P.H. sold his practice to the Company in
September 1996. He served the Company as a contract consultant until joining the
Company full time as Vice President in May 1998. His service emphasis is
provider relations and quality assurance. Dr. Iacoboni has extensive
professional contacts within organized dentistry and the State of Colorado
Dental regulatory agency. He publishes a state dental Journal in Colorado. He is
an Associate Faculty member at University of Northern Colorado. He received his
D.D.S. from University of California at Los Angeles and his M.P.H. from the
University of Northern Colorado.
James M. Ciccarelli joined the Company as a consultant in August 1996 and has
served as a director since November 1996. Mr. Ciccarelli is the Chairman of the
Board and Chief Executive Officer of Wireless Telecom, Inc., a wireless data and
network service provider. From September 1990 to March 1993, Mr. Ciccarelli was
a Vice President of Intelligent Electronics, a high technology distribution and
services company, and the President and CEO of its Reseller Network Division.
From November 1988 to September 1990, Mr. Ciccarelli was the President of
Connecting Point of America, a franchisor of retail computer stores.
Steven M. Bathgate became a director of the Company effective upon consummation
of the Company's initial public offering in February 1998. Mr. Bathgate has
served as a principal of Bathgate McColley Capital Corp. LLC, an investment
banking firm, since its formation in January 1996. Mr. Bathgate held a number of
positions from 1985 to 1996 at Cohig & Associates, Inc., an investment banking
firm, including Chairman and Chief Executive Officer.
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and beneficial owners of more than 10% of the
outstanding shares of the Company to file with the Securities and Exchange
Commission reports regarding changes in their beneficial ownership of shares in
the Company. To the Company's knowledge and based solely on a review of the
Section 16(a) reports furnished to the Company, Mr. Iacoboni and Ms. Welch were
late in filing their respective Initial Statements of Beneficial Ownership of
Securities on Form 3 during 1998, and Mr. Bathgate was late in filing his
Statement of Changes in Beneficial Ownership on Form 4 for the month of December
1998. All other Section 16(a) reports were filed on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the compensation paid by the Company to the Chief
Executive Officer and each of the executive officers of the Company who were
paid total salary and bonus exceeding $100,000 during the fiscal year ended
December 31, 1998 (the "Named Executive Officers").
3
<PAGE> 4
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- -------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS/WARRANTS (#) COMPENSATION
- --------------------------- ----------- -------- ----- -------------------- ------------
<S> <C> <C> <C> <C> <C>
Frederic W.J. Birner 1998 $128,280 $ -- 20,000 (1) $1,280(6)
Chairman of the Board and 1997 $110,185 $ -- 21,170 (2) $ --
Chief Executive Officer 1996 $ 73,750 $ -- 27,510 (3) $ --
Mark A. Birner, D.D.S. 1998 $128,280 $ -- 20,000 (1) $1,120(6)
President and Director 1997 $ 78,288 $ -- 21,170 (2) $ --
1996 $ 66,250 $ -- 26,099 (4) $ --
Dennis N. Genty 1998 $108,123 $ -- 20,000 (1) $ --
Chief Financial Officer 1997 $ 97,553 $ -- 21,170 (2) $ --
Treasurer, Secretary and 1996 $ 70,750 $ -- 16,930 (5) $ --
Director
</TABLE>
- -------------------
(1) Represents shares of Common Stock issuable upon (i) exercise of an option
to purchase 10,000 shares of Common Stock granted on April 30, 1998
pursuant to the Employee Plan, with an exercise price of $8.53 per share
and (ii) exercise of an option to purchase 10,000 shares of Common Stock
granted on October 7, 1998 pursuant to the Employee Plan, with an exercise
price of $5.36 per share.
(2) Represents shares of Common Stock issuable upon (i) exercise of an option
to purchase 12,000 shares of Common Stock granted on October 31, 1997
pursuant to the Employee Plan, with an exercise price of $9.90 and (ii)
exercise of a warrant to purchase 9,170 shares of Common Stock awarded on
June 30, 1997, with an exercise price of $6.00 per share.
(3) Represents shares of Common Stock issuable upon exercise of an option to
purchase 27,510 shares of Common Stock granted on February 14, 1996
pursuant to the Employee Plan, with an exercise price of $2.40 per share.
(4) Represents shares of Common Stock issuable upon exercise of an option to
purchase 26,099 shares of Common Stock granted on February 14, 1996
pursuant to the Employee Plan, with an exercise price of $2.40 per share.
(5) Represents shares of Common Stock issuable upon exercise of an option to
purchase 16,930 shares of Common Stock granted on February 14, 1996
pursuant to the Employee Plan, with an exercise price of $2.40 per share.
(6) Life Insurance paid for by the Company.
4
<PAGE> 5
OPTION GRANTS
The following table sets forth each grant of stock options made during the
fiscal year ended December 31, 1998 to each Named Executive Officer:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------- -----------------------
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS EXERCISE ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO OR BASE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM (3)
NAME GRANTED(#) FISCAL YEAR (1) ($/SH) (2) DATE 5% 10%
- ---- ----------- --------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Frederic W.J. Birner 10,000 3.7% $ 8.53 04/30/03 $ 23,884 $ 52,033
10,000 3.7% $ 5.36 10/07/03 $ 15,008 $ 32,696
Mark A. Birner, D.D.S. 10,000 3.7% $ 8.53 04/30/03 $ 23,884 $ 52,033
10,000 3.7% $ 5.36 10/07/03 $ 15,008 $ 32,696
Dennis N. Genty 10,000 3.7% $ 8.53 04/30/03 $ 23,884 $ 52,033
10,000 3.7% $ 5.36 10/07/03 $ 15,008 $ 32,696
</TABLE>
- ------------------
(1) Based on an aggregate of 272,500 shares subject to options granted to
employees pursuant to the Employee Plan during the fiscal year ended
December 31, 1998.
(2) Options were granted at an exercise price equal to 110% of the fair market
value of the Common Stock, as determined by the Board of Directors on the
date of grant.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (five years) and is calculated by assuming that
the stock price on the date of grant as determined by the Board appreciates
at the indicated annual rate compounded annually for the entire term of the
option and that the option is exercised and sold on the last day of its
term for the appreciated price. The 5% and 10% assumed rates of
appreciation are derived from the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Common Stock price.
5
<PAGE> 6
OPTION EXERCISES AND HOLDINGS
The following table sets forth for the Named Executive Officers the number and
value of securities underlying unexercised in-the-money options held as of
December 31, 1998. None of the Named Executive Officers exercised any options
during the fiscal year ended December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998 (1)
------------------------------ --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Frederic W.J. Birner 39,510 20,000 $ 30,261 --
Mark A. Birner, D.D.S. 38,099 20,000 $ 28,709 --
Dennis N. Genty 28,930 20,000 $ 18,623 --
</TABLE>
(1) VALUE IS BASED ON THE DIFFERENCE BETWEEN THE STOCK OPTION EXERCISE PRICE
AND THE CLOSING PRICE OF THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET ON
DECEMBER 31, 1998 OF $3.50 PER SHARE.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company currently serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Board of Directors or as an executive
officer of the Company. See "Director and Executive Compensation" and "Certain
Transactions" for a description of transactions between the Company and members
of the Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Currently, the entire Board of Directors makes all determinations with respect
to executive officer compensation. The following report is submitted by the
Board of Directors of the Company, in its capacity as Compensation Committee,
pursuant to rules established by the Securities and Exchange Commission, and
provides certain information regarding compensation of the Company's executive
officers.
The Compensation Committee is responsible for establishing and administering a
general compensation policy and program for the Company. The Compensation
Committee also possesses all of the powers of administration under the Company's
employee benefit plans, including all stock option plans and other employee
benefit plans. Subject to the provisions of those plans, the Compensation
Committee must determine the individuals eligible to participate in the plans,
the extent of such participation and the terms and conditions under which
benefits may be vested, received or exercised.
Compensation Policies. The Company's executive compensation policies are
designed to complement the Company's business objectives by motivating and
retaining quality members of senior management, by aligning management's
interests with those of the Company's shareholders and by linking total
compensation to the performance of the Company. The Company's executive
compensation policies generally consist of equity-based long-term incentives,
short-term incentives and competitive base salaries. The Compensation Committee
will continue to monitor the performance of the Company and its executive
officers in reassessing executive compensation.
Base Salary. The Compensation Committee reviews the base salaries of the
Company's executive officers on an annual basis. Base salaries are determined
based upon a subjective assessment of the nature and responsibilities of the
position involved, the performance of the particular officer and of the Company,
the
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<PAGE> 7
officer's experience and tenure with the Company and base salaries paid to
persons in similar positions with companies comparable to the Company.
Annual Bonus. Annual bonuses may be paid to the Company's executive officers at
the discretion of the Compensation Committee. The Compensation Committee did not
grant any such bonuses to executive officers during 1998.
Long-Term Incentives. The Company's long-term compensation strategy is focused
on the grant of stock options under the stock option plans and warrants, which
the Compensation Committee believes rewards executive officers for their efforts
in improving long-term performance of the Common Stock and creating value for
the Company's shareholders, and which the Compensation Committee believes aligns
the financial interests of management with those of the Company's shareholders.
During 1998, the Compensation Committee granted stock options to purchase 20,000
shares of Common Stock under the Company's Employee Stock Option Plan to each of
three of the Company's executive officers (Frederic W.J. Birner, Mark A. Birner,
D.D.S. and Dennis N. Genty) granted stock options to purchase 25,000 shares of
Common Stock under the Company's Employee Stock Option Plan to one of the
Company's executive officers (Michael A. Iacoboni), and granted stock options to
purchase 50,000 shares of Common Stock under the Company's Employee Stock Option
Plan to one of the Company's executive officers (Florence M. Welch).
Chief Executive Officer Compensation for Fiscal Year 1998. The compensation for
Frederic W.J. Birner during 1998 consisted of grants of stock options, as well
as a base salary. Based upon a subjective assessment of the performance of the
Company and of Mr. Birner's contribution to that performance, in 1998 the
Compensation Committee granted Mr. Birner options to purchase 20,000 shares of
Common Stock pursuant to the Company's Employee Stock Option Plan. After a
review of salaries for chief executive officers of dental practice management
companies of similar size and performance, Mr. Birner was granted an increase in
his base salary to an amount approximating the middle of the range of those
salaries reviewed. Mr. Birner did not receive a cash bonus during 1998.
COMPENSATION COMMITTEE
Frederic W.J. Birner
Mark A. Birner, D.D.S.
Dennis N. Genty
James M. Ciccarelli
Steven M. Bathgate
PERFORMANCE GRAPH
The following line graph compares the percentage change from date of public
offering (February 11, 1998) through December 31, 1998 for (i) the Common Stock,
(ii) a peer group (the "Peer Group") of companies selected by the Company that
are predominantly dental management companies located in the United States, and
(iii) Nasdaq. The companies in the Peer Group are Apple Orthodontix,
OrthAlliance, Ortho Centers of America, American Dental Partners, Castle Dental
Centers, Coast Dental, Dental Care Alliance, Gentle Dental, Monarch Dental and
Pentegra Dental.
[PERFORMANCE GRAPH APPEARS HERE]
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 15, 1999, by (i)
all persons known by the Company to be the beneficial owners of 5% or more of
the Common Stock, (ii) each director, (iii) each of the executive officers, and
(iv) all executive officers and directors as a group. Unless otherwise
indicated, the address of each of the persons named below is in care of the
Company, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210.
7
<PAGE> 8
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS (1)(2)
------------------------ ------------------ -----------------------
<S> <C> <C>
Frederic W.J. Birner (3).................... 856,941 13.6%
Mark A. Birner, D.D.S. (4).................. 807,466 12.8%
Dennis N. Genty (5)......................... 555,280 8.8%
James M. Ciccarelli (6)..................... 43,099 *
Steven M. Bathgate (7)...................... 97,507 1.6%
Lee Schlessman (8).......................... 527,321 8.1%
Florence M. Welch (9)....................... 1,000 *
Michael A. Iacoboni, D.D.S. (10) ........... 11,250 *
All executive officers and directors
as a group (seven persons) (11)........... 2,372,543 36.3%
</TABLE>
- ----------------------
* Less than 1%
(1) BENEFICIAL OWNERSHIP IS DETERMINED IN ACCORDANCE WITH THE RULES OF THE
SECURITIES AND EXCHANGE COMMISSION AND GENERALLY INCLUDES VOTING OR
INVESTMENT POWER WITH RESPECT TO SECURITIES. SHARES OF COMMON STOCK SUBJECT
TO OPTIONS, WARRANTS AND CONVERTIBLE DEBENTURES CURRENTLY EXERCISABLE OR
CONVERTIBLE, OR EXERCISABLE OR CONVERTIBLE WITHIN 60 DAYS OF APRIL 15,
1999, ARE DEEMED OUTSTANDING FOR COMPUTING THE PERCENTAGE OF THE PERSON OR
ENTITY HOLDING SUCH SECURITIES BUT ARE NOT OUTSTANDING FOR COMPUTING THE
PERCENTAGE OF ANY OTHER PERSON OR ENTITY. EXCEPT AS INDICATED BY FOOTNOTE,
AND SUBJECT TO COMMUNITY PROPERTY LAWS WHERE APPLICABLE, 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.
(2) PERCENTAGE OF OWNERSHIP IS BASED ON 6,226,812 SHARES OF COMMON STOCK
OUTSTANDING AT APRIL 15, 1999.
(3) INCLUDES 39,510 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE
OF OPTIONS THAT ARE CURRENTLY EXERCISABLE, 10,000 SHARES OF COMMON STOCK
THAT ARE ISSUABLE UPON THE EXERCISE OF AN OPTION THAT IS EXERCISABLE WITHIN
60 DAYS AND 36,680 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE
EXERCISE OF WARRANTS THAT ARE CURRENTLY EXERCISABLE. DOES NOT INCLUDE
10,000 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE OF
OPTIONS THAT ARE NOT EXERCISABLE WITHIN 60 DAYS. INCLUDES 3,000 SHARES OF
COMMON STOCK OWNED BY HIS WIFE. MR. BIRNER DISCLAIMS BENEFICIAL OWNERSHIP
OF ALL SHARES HELD BY HIS WIFE.
(4) INCLUDES 38,099 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE
OF OPTIONS THAT ARE CURRENTLY EXERCISABLE, 10,000 SHARES OF COMMON STOCK
THAT ARE ISSUABLE UPON THE EXERCISE OF AN OPTION THAT IS EXERCISABLE WITHIN
60 DAYS AND 36,680 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE
EXERCISE OF WARRANTS THAT ARE CURRENTLY EXERCISABLE. DOES NOT INCLUDE
10,000 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE OF
OPTIONS THAT ARE NOT EXERCISABLE WITHIN 60 DAYS.
(5) INCLUDES 28,930 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE
OF OPTIONS THAT ARE CURRENTLY EXERCISABLE, 10,000 SHARES OF COMMON STOCK
THAT ARE ISSUABLE UPON THE EXERCISE OF AN OPTION THAT IS EXERCISABLE WITHIN
60 DAYS AND 36,680 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE
EXERCISE OF WARRANTS THAT ARE CURRENTLY EXERCISABLE. DOES NOT INCLUDE
10,000 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE OF
OPTIONS THAT ARE NOT EXERCISABLE WITHIN 60 DAYS. INCLUDES 403,770 SHARES OF
COMMON STOCK OWNED BY HIS WIFE. MR. GENTY DISCLAIMS BENEFICIAL OWNERSHIP OF
ALL SHARES HELD BY HIS WIFE.
(6) INCLUDES 43,099 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE
OF WARRANTS THAT ARE CURRENTLY EXERCISABLE. DOES NOT INCLUDE 15,000 SHARES
OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE OF OPTIONS THAT ARE NOT
EXERCISABLE WITHIN 60 DAYS.
(7) INCLUDES 13,333 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE
OF AN OPTION THAT IS EXERCISABLE WITHIN 60 DAYS. DOES NOT INCLUDE 11,667
SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE OF OPTIONS THAT
ARE NOT EXERCISABLE WITHIN 60 DAYS. INCLUDES 20,000 SHARES OF COMMON STOCK
OWNED BY HIS WIFE. MR. BATHGATE DISCLAIMS BENEFICIAL OWNERSHIP OF ALL
SHARES HELD BY HIS WIFE.
(8) INCLUDES 247,193 SHARES OF COMMON STOCK OVER WHICH MR. SCHLESSMAN HAS SOLE
VOTING POWER PURSUANT TO CERTAIN POWERS OF ATTORNEY, BUT FOR WHICH HE
DISCLAIMS BENEFICIAL OWNERSHIP. THE ADDRESS FOR MR. SCHLESSMAN IS 1301
PENNSYLVANIA AVENUE, SUITE 800, DENVER, CO 80203.
(9) DOES NOT INCLUDE 65,000 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE
EXERCISE OF OPTIONS THAT ARE NOT EXERCISABLE WITHIN 60 DAYS.
(10) INCLUDES 9,250 SHARES OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE
OF OPTIONS THAT ARE CURRENTLY EXERCISABLE. DOES NOT INCLUDE 16,667 SHARES
OF COMMON STOCK THAT ARE ISSUABLE UPON THE EXERCISE OF OPTIONS THAT ARE NOT
EXERCISABLE WITHIN 60 DAYS.
8
<PAGE> 9
(11) INCLUDES 312,261 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF
OPTIONS AND WARRANTS HELD BY ALL EXECUTIVE OFFICERS AND DIRECTORS AS A
GROUP THAT ARE CURRENTLY EXERCISABLE OR ARE EXERCISABLE WITHIN 60 DAYS.
DOES NOT INCLUDE 138,334 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OF OPTIONS AND WARRANTS HELD BY ALL EXECUTIVE OFFICERS AND DIRECTORS AS A
GROUP THAT ARE NOT EXERCISABLE WITHIN 60 DAYS.
There has been no change in control of the Company since the beginning of its
last fiscal year, and there are no arrangements known to the Company, including
any pledge of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company's President, Mark A. Birner, D.D.S., is the sole shareholder of most
of the professional corporations affiliated with the Company ("P.C.s") in
Colorado, and all of the P.C.s in Arizona. Dr. Birner is the brother of the
Company's Chairman of the Board and Chief Executive Officer, Frederic W.J.
Birner. All of the P.C.s owned by Dr. Birner have entered into Management
Agreements on substantially the same terms as the Management Agreements with the
P.C.s which are owned by dentists who are not employees of the Company. Dr.
Birner has also entered into agreements with the Company for each P.C. owned by
him pursuant to which the Company may require him to sell his interest in the
P.C. to a third party designated by the Company for nominal value upon the
occurrence of certain events. Dr. Birner's ownership of these P.C.s and his
family relationships could result in potential conflicts of interest in certain
matters, including but not limited to, matters related to the Management
Agreements. The Company will require that any transactions with Dr. Birner which
relate to his ownership of the stock of a P.C. (other than in connection with
the acquisition of a new practice) or with any P.C. of which he is the sole
shareholder be approved by a majority of the members of its Board of Directors
other than Frederic W.J. Birner and Dr. Birner.
The Company believes that the foregoing transactions were on terms no less
favorable to the Company than could be obtained from unaffiliated third parties.
9
<PAGE> 10
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.
Date: April 28, 1999.
BIRNER DENTAL MANAGEMENT SERVICES, INC.
a Colorado corporation
By: /s/ Frederic W.J. Birner
-------------------------------------------------
Name: Frederic W.J. Birner
Title: Chairman of the Board, Chief Executive
Officer and Director (Principal Executive
Officer)
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Frederic W.J. Birner his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or in his name, place and stead, in any and all capacities to sign to
this report, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities indicated as of April 28, 1999.
By: /s/ Mark A. Birner
-------------------------------------------------
Name: Mark A. Birner
Title: President and Director
By: /s/ Dennis N. Genty
-------------------------------------------------
Name: Dennis N. Genty
Title: Chief Operating Officer, Secretary,
Treasurer and Director (Principal
Financial and Accounting Officer)
By: /s/ Florence M. Welch
-------------------------------------------------
Name: Florence M. Welch
Title: Chief Operating Officer
By: /s/ James M. Ciccarelli
-------------------------------------------------
Name: James M. Ciccarelli
Title: Director
By: /s/ Steven M. Bathgate
-------------------------------------------------
Name: Steven M. Bathgate
Title: Director
10
