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 0-15935
ALTRIS SOFTWARE, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3634089
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State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9339 Carroll Park Drive, San Diego, CA 92121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 625-3000
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------
None None
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK
----------------
(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
--- ---
(Cover page continues on next page)
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. [ X ]
The aggregate market value of the voting stock on March 23, 1999, held
by non-affiliates* of the Registrant, based upon the last price reported on the
Nasdaq National Market on such date was $9,614,663.
The number of shares outstanding of the Registrant's Common Stock at
the close of business on March 23, 1999, was 9,614,663.
*Without acknowledging that any individual director of Registrant is an
affiliate, all directors have been included as affiliates with respect to shares
owned by them.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant hereby amends the following items on Form 10-K for the
year ended December 31, 1998 as set forth below. Items not referenced below are
not amended. Items referenced herein are amended in their entirety as set forth
below.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table and discussion sets forth certain information
concerning the Company's current directors and executive officers:
Name Age Position
- ----------------------------- --- ------------------------------------
Roger H. Erickson 42 Chief Executive Officer and Director
D. Ross Hamilton 61 Director
Michael J. McGovern 69 Director
Larry D. Unruh 47 Director
Martin P. Atkinson 52 Director
David Chu 43 Vice President, Engineering
Steven D. Clark 47 Vice President, Sales
John W. Low 42 Chief Financial Officer and Secretary
Mr. Erickson was appointed the Company's Chief Executive Officer in
April 1998, a position which he previously held from October 1991 to August
1993. In addition, Mr. Erickson was appointed as a Director of the Company in
1998, a position which he previously held from July 1990 to June 1995. Mr.
Erickson has served the Company in various other capacities, including as (i)
Vice President, Strategic Partners, from July 1997 to April 1998, (ii) Vice
President, Operations, from June 1996 to July 1997, (iii) Vice President,
Worldwide Channel Sales, from April 1995 to February 1996, (iv) Vice
President, Alliances and General Manager, PDM Business Unit, from February
1996 to June 1996, (v) Executive Vice President, Marketing and Sales, from
September 1993 to March 1995 and (vi) Vice President, Engineering, from June
1990 to October 1991. From 1984 until March 1990, Mr. Erickson served the
Company in several positions including Senior Systems Engineer and Director
of Technical Projects. Mr. Erickson earned a M.S. degree in Computer Science
from the University of California, Santa Barbara in 1982 and a B.A. degree in
Mathematics from Westmont College in 1978.
Mr. Hamilton has been a Director of the Company since June 1994. He
served as Chairman of the Board of the Company from January 1997 through June
1997. Since 1983 Mr. Hamilton has served as President of Hamilton Research,
Inc., an investment banking firm. Mr. Hamilton currently serves as a director
of Luther Medical Products, Inc., a medical device manufacturer. Mr. Hamilton
received a B.S. degree in Economics from Auburn University in 1961.
Mr. McGovern has served as a Director of the Company since he
founded the Company in February 1981, and served as the Company's Chairman
and Chief Executive Officer from its inception until December 1987. Mr.
McGovern was a founder of Autologic, Inc. in 1968, where he was Vice
President of Engineering in charge of developing computer driven photo
typesetters for the newspaper and publishing industries. Mr. McGovern also
serves as a director of Qtel, Inc. (since March 1997) and as a director of
Alpha Data Tech. (since April 1997). He received a B.S.E.E. degree from City
University of New York in 1952 and an M.S.E.E. degree from Arizona State
University in 1959.
Mr. Unruh has served as a Director of the Company since May 1988. He
is a partner of Hein & Associates LLP, certified public accountants, and has
been its Managing Tax Partner since 1982. Mr. Unruh currently serves as a
director of Basin Exploration, Inc., an oil exploration and development
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company, and also serves as a director of LK Business Services Inc., a
specialty automobile lubricant manufacturer. Mr. Unruh received a B.S. degree
in Accounting from the University of Denver in 1973.
Mr. Atkinson has served as a Director of the Company since 1997. Mr.
Atkinson presently runs a consulting firm based in Kent, England that advises
middle-market companies on banking and corporate finance matters. Prior to
establishing his consulting firm, Mr. Atkinson was employed by Lloyds Bank
for 28 years until his retirement from there (at the senior executive level)
in December 1996. While at Lloyds, Mr. Atkinson was the Head of Risk Control
of Lloyds Merchant Bank Limited, a Director of Lloyds' Capital Markets Group,
where he was responsible for arranging several multi-million pound syndicated
loans, and from 1992 to 1996, he was responsible for Lloyds' middle-market
activities in certain counties in England. Mr. Atkinson is an Associate of
the Institute of Bankers, England. He received a law degree from Nottingham
University in England in 1968.
Mr. Chu was appointed Vice President, Engineering in April 1998.
Since joining the Company in February 1997, Mr. Chu served as Director U.S.
Software Engineering until April 1998. From 1995 to 1997, Mr. Chu was an
independent consultant for Performance Solutions Group, a technical
consulting organization. From 1984 to 1995, Mr. Chu was with Computer
Associates International, most recently as Assistant Vice President of
Research and Development. Mr. Chu holds triple certifications as a Microsoft
Certified Systems Engineer, Solutions Developer and Trainer.
Mr. Clark was appointed Vice President, Sales in October 1997.
Previously, Mr. Clark had served as Vice President North American Sales since
January 1997. From 1994 through the end of 1996, Mr. Clark was Director of
U.S. Sales. From 1992 to 1994, Mr. Clark served as the Vice President of West
Coast Operations at PRC, a systems integration firm. From 1987 to 1992, Mr.
Clark was Director of Marketing for Optigraphics Corporation. From 1983 to
1987, he was Vice President of Sales and Marketing at Energy Images in
Boulder, Colorado. From 1975 to 1983, Mr. Clark held several positions with
Dun & Bradstreet Petroleum Information. Mr. Clark earned a B.A. degree in
Geography from the University of Colorado in 1974.
Mr. Low has served as Chief Financial Officer and Secretary since
June 1990. Previously, Mr. Low had served as Corporate Controller since
joining the Company in August 1987. From 1980 until joining the Company, Mr.
Low was with Price Waterhouse LLP, most recently as a Manager working with
middle-market and growing companies. Mr. Low, who is a certified public
accountant, earned a B.A. degree in Economics from the University of
California, Los Angeles in 1978.
All directors are elected annually and serve until the next annual
meeting of shareholders and until their successors have been elected and
qualified.
All executive officers hold office at the discretion of the Board of
Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who own more than 10%
of the Company's common stock to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
(the "SEC"). Executive officers, directors and 10% shareholders are required
by the SEC to furnish the Company with copies of all Forms 3, 4 and 5 that
they file.
Based solely on the Company's review of the copies of such forms it
has received and written representations from certain reporting persons that
they were not required to file a Form 5 for specified fiscal years, the
Company believes that all of its executive officers, directors and greater
than 10% shareholders have complied with all of the filing requirements
applicable to them with respect to transactions during 1998.
2
COMPENSATION OF DIRECTORS
Each director, other than directors who are also employees of the
Company or are precluded from accepting a fee by their employers, receives a
$5,000 annual fee plus a $1,000 meeting fee for four paid meetings a year. In
addition, each director is reimbursed for all reasonable expenses incurred in
connection with attendance at such meetings. Directors who are employees of
the Company are not compensated for serving as directors.
In 1998, Mr. Unruh performed services for the Company in connection
with the audit restatement and management changes which totaled $13,713, plus
out-of-pocket expenses. Mr. Atkinson also performed services relating to
certain management changes. Total fees to Mr. Atkinson were $4,600 plus
out-of-pocket expenses.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1998, the Compensation Committee of the Board of Directors was
comprised of four members, Messrs. McGovern, Hamilton and Unruh and Michael
Comegna (who resigned as a Director in April 1998), none of whom is or was an
employee or officer of the Company in 1998. No executive officer of the
Company has served as a member of the Board of Directors or Compensation
Committee of any company in which Messrs. McGovern, Hamilton, Unruh or
Comegna is an executive officer.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
annual and long-term compensation for services rendered in all capacities to
the Company for the three years ended December 31, 1998 of (i) the Company's
Chief Executive Officer during 1998 and (ii) the four other most highly
compensated executive officers of the Company having compensation of $100,000
or more during 1998 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------------
LONG-TERM
OTHER COMPENSATION
ANNUAL AWARDS--STOCK
COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) (# SHARES)
- --------------------------------------- ------ --------- --------- ------------ -------------
Roger H. Erickson 1998 $164,635 - $131,215 65,000
Chief Executive Officer(2) 1997 $174,708 $ 9,000 - -
1996 $185,427 - - 25,000
Jay V. Tanna 1998 $ 57,885 - $104,393 -
Former President and Chief Executive 1997 $215,000 - - 75,000
Officer(3) 1996 $205,865 - - 112,500
David Chu 1998 $130,000 $10,000 - 48,000
Vice President, Engineering(4) 1997 $ 96,346 - - 20,000
1996 - - - -
Steven D. Clark 1998 $125,200 - $ 14,067 38,000
Vice President, Sales(5) 1997 $168,462 $25,000 - 40,000
1996 $136,355 - $ 66,719 -
John W. Low 1998 $147,000 - $100,245 28,000
Chief Financial Officer 1997 $149,639 - - -
and Secretary(6) 1996 $142,535 - - 25,000
Jay Patel 1998 $108,829 - - 23,000
Former Managing Director, UK 1997 $ 99,359 $13,549 - 15,000
Operations(7) 1996 $ 86,317 - - 2,500
- -----------
(1) Excludes compensation in the form of other personal benefits, which for
each of the executive officers did not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for each year.
(2) Mr. Erickson became President and Chief Executive Officer of the Company
effective April 1998. The other annual compensation in 1998 is comprised of
$25,372 in commissions paid relating to Mr. Erickson's position as Vice
President, Strategic Partners in 1997, and $105,843 relating to
forgiveness of a promissory note which had been issued in connection with
the exercise of stock options that were due to expire. See Item 13. Certain
Relationships and Related Transactions.
(3) Mr. Tanna became President and Chief Executive Officer of the Company in
April 1996 and resigned from that position effective April 1, 1998. The
other annual compensation paid in 1998 is comprised of a $21,707 payment
for accrued vacation and $82,686 paid to Mr. Tanna under a Separation
Agreement. See Item 13. Certain Relationships and Related Transactions. The
options for 75,000 shares granted to Mr. Tanna in 1997 were subsequently
returned to the Company and cancelled. The remaining options for 112,500
shares expired in May 1998.
(4) Mr. Chu commenced his employment with the Company in February 1997.
(5) The bonus paid in 1997 related to services provided to the Company in 1996
as Director of U.S. Sales. The other annual compensation paid in 1998 and
1996 was for sales commissions.
(6) The other annual compensation to Mr. Low in 1998 is comprised of a $29,683
payment for accrued vacation and $70,562 relating to forgiveness of a
promissory note which had been issued in connection with the
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exercise of stock options that were due to expire. See Item 13. Certain
Relationships and Related Transactions.
(7) Mr. Patel's employment with the Company was terminated in January 1999. The
bonuses paid in 1997 related to services provided by Mr. Patel to the
Company in 1996 as Deputy Managing Director of U.K. Operations.
OPTION GRANTS IN 1998
Shown below is information concerning grants of options issued by the
Company to the Named Executive Officers during 1998:
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM (5)
OPTIONS IN PRICE EXPIRATION -----------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- -------------------------- ------------- ----------- -------- ---------- -------------- -----------
Roger H. Erickson 15,000(2) 2% $0.63 6/30/08 $5,896 $14,941
50,000(3) 8% $0.25 9/14/08 $7,861 $19,922
David Chu 8,000(2) 1% $0.63 6/30/08 $3,144 $ 7,969
40,000(3) 6% $0.25 9/14/08 $6,289 $15,937
Steven D. Clark 8,000(2) 1% $0.63 6/30/98 $3,144 $ 7,969
30,000(3) 5% $0.25 9/14/98 $4,716 $11,953
John W. Low 8,000(2) 1% $0.63 6/30/08 $3,144 $ 7,969
20,000(3) 3% $0.25 9/14/08 $3,144 $ 7,969
Jay Patel 8,000(4) 1% $0.63 6/30/08 $3,144 $ 7,969
15,000(4) 2% $0.25 9/14/08 $2,358 $ 5,977
- -----------
(1) All options were granted with an exercise price equal to the closing sale
price of the Common Stock as reported on the OTC Bulletin Board on the date
of grant.
(2) Options were granted in June 1998. The options vest 25% 90 days from the
date of grant and in additional annual installments of 25% commencing on
the first anniversary of the date of grant.
(3) Options were granted in September 1998. The options vest in quarterly
installments of 25% commencing three months after the date of grant.
(4) Options were granted in June and September 1998. The options originally
vested 25% 90 days form the date of grant and in additional annual
installments of 25% commencing on the first anniversary of the date of
grant. In January 1999, in connection with Mr. Patel's severance
arrangement, the Board of Directors approved accelerating these options to
be fully vested on March 15, 1999.
(5) The 5% and 10% assumed rates of appreciation are specified under the rules
of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future price of its Common Stock.
The actual value, if any, which a Named Executive Officer may realize upon
the exercise of stock options will be based upon the difference between the
market price of the Company's Common Stock on the date of exercise and the
exercise price.
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AGGREGATED OPTION EXERCISES IN 1998 AND 1998 YEAR-END OPTION VALUES
The following table sets forth for the Named Executive Officers
information with respect to unexercised options and year-end option values, in
each case with respect to options to purchase shares of the Company's Common
Stock:
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED HELD AS OF DECEMBER 31, 1998 AT DECEMBER 31, 1998(1)
ON VALUE ------------------------------- ------------------------------
NAME EXERCISE REALIZED EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- --------------------- --------- -------- ----------- -------------- ----------- --------------
Roger H. Erickson - - 16,250 48,750 $1,250 $3,750
David Chu - - 12,000 36,000 $1,000 $3,000
Steven D. Clark - - 24,500 28,500 $ 750 $2,250
John W. Low - - 35,750 27,250 $ 500 $1,500
Jay Patel - - 15,125 25,375 $ 375 $1,125
- ----------
(1) Based on the closing sale price of the Company's Common Stock on the OTC
Bulletin Board on December 31, 1998 of $0.35 per share.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to shares of the
Company's Common Stock owned as of April 15, 1999 by (i) each director;
(ii) each Named Executive Officer who is presently an employee of the Company;
(iii) all directors and executive officers as a group; and (iv) each person who,
to the extent known to the Company, beneficially owned more than 5% of the
outstanding shares of Common Stock. Unless otherwise indicated in the footnotes
following the table, the persons as to whom the information is given have sole
voting and investment power over the shares shown as beneficially owned, subject
to community property laws where applicable.
NUMBER OF PERCENT OF
NAME SHARES(1) CLASS(1)
- ---- ------------- ----------
Roger H. Erickson 92,250 *
David Chu 40,750 *
Steven D. Clark 39,500 *
John W. Low 92,750 *
D. Ross Hamilton 189,000 2.0%
Michael J. McGovern 349,501 3.6%
Larry D. Unruh 8,047 *
Martin P. Atkinson 3,750 *
Sirrom Capital Corporation 800,000(2) 7.7%
All Directors and Executive Officers as a Group (8 persons) 815,548 8.3%
- -----------
*Less than one percent.
(1) Amounts and percentages include shares of Common Stock that may be acquired
within 60 days of April 15, 1999 through the exercise of stock options as
follows: 41,250 shares for Mr. Erickson, 40,750 shares for Mr. Chu, 39,500
shares for Mr. Clark, 45,750 shares for Mr. Low, 17,500 shares for Mr.
Hamilton, 3,750 shares for Mr. McGovern, 3,750 shares for Mr. Unruh, 3,750
shares for Mr. Atkinson, and 196,000 shares for all directors and executive
officers as a group.
(2) Amount consists of (i) 500,000 shares of Common Stock issuable upon
conversion of Series D Convertible Preferred Stock having a conversion
price of $6.00 per share and (ii) 300,000 shares of Common stock issuable
upon exercise of a warrant having an exercise price of $6.00 per share.
6
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1998, the Company and Mr. Tanna entered into a Separation
Agreement whereby Mr. Tanna resigned his positions as Chairman of the Board,
President and Chief Executive Officer. Under the Agreement, Mr. Tanna was to
act as an on-call consultant for any matters the Company may have referred to
him for his input and participation. His annual compensation for such
services was $215,000 plus medical, dental and car allowance benefits. The
Separation Agreement terminated on March 31, 1999. As part of a proposed
settlement of certain shareholder class action litigation, Mr. Tanna has
agreed to forego any claim for unpaid compensation of $131,000 under the
Separation Agreement and to surrender to the Company 35,000 shares of the
Company's common stock held in his name. In addition, Mr. Tanna and the
Company have agreed to execute a Settlement Agreement and Mutual Release
resolving all claims and disputes with one another, with the exception of
certain existing indemnification obligations under the Company's bylaws,
California law and an indemnity agreement between the Company and Mr. Tanna
related to his services as a director and officer of the Company.
In October 1996, the Company loaned (i) Roger H. Erickson, then Vice
President, Operations, $92,812 and (ii) John W. Low, Chief Financial Officer and
Secretary, $61,875. Each loan was at a simple interest rate of 9.25% with a
maturity date of March 31, 1997. The loans were made to Messrs. Erickson and Low
in connection with their exercise of stock options that were due to expire. On
May 15, 1998, the Company agreed, as additional compensation to Messrs. Erickson
and Low, to forgive the promissory notes of such officers. The outstanding
principal and interest payable by Messrs. Erickson and Low under such notes were
$105,843 and $70,562, respectively, as of May 15, 1998.
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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, in the City of San
Diego, State of California, on April 30, 1999.
ALTRIS SOFTWARE, INC.
By: /s/ Roger H. Erickson
---------------------------
Roger H. Erickson
Chief Executive Officer
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 and on the dates indicated.
/s/ Roger H. Erickson Director and Chief Executive April 30, 1999
- ---------------------------- Officer (Principal Executive Officer)
Roger H. Erickson.
/s/ John W. Low Chief Financial Officer and Secretary April 30, 1999
- ---------------------------- (Principal Financial and Accounting Officer)
John W. Low
/s/ Martin Atkinson Director April 30, 1999
- ----------------------------
Martin Atkinson
/s/ D. Ross Hamilton Director April 30, 1999
- ----------------------------
D. Ross Hamilton
/s/ Michael J. McGovern Director April 30, 1999
- ----------------------------
Michael J. McGovern
/s/ Larry D. Unruh Director April 30, 1999
- ----------------------------
Larry D. Unruh
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