UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-K/A
(Amendment No. 1)
---------------
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: MAY 31, 2003
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: 001-15503
---------
WORKSTREAM INC.
(Exact name of Registrant as specified in its charter)
CANADA N/A
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
495 MARCH ROAD, SUITE 300
OTTAWA, ONTARIO K2K 3G1
(Address of principal executive offices) (zip code)
(613) 270-0619
(Registrant's telephone number, including area code)
--------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
COMMON SHARES, NO PAR BOSTON STOCK EXCHANGE
VALUE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON SHARES, NO 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 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 the 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/
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
The aggregate market value of the outstanding voting and non-voting
common equity held by non-affiliates of the registrant, computed by reference to
the price at which the common equity was last sold as of the last business day
of the registrant's most recently completed second fiscal quarter, was
$24,023,659. Common shares held by each executive officer and director and by
each person who owned 10% or more of the outstanding common shares as of such
date 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.
The total number of common shares, no par value per share, outstanding
on September 23, 2003 was 22,413,122, excluding 654,204 escrow shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
WORKSTREAM INC.
FORM 10-K/A
TABLE OF CONTENTS
ITEM PAGE
PART III
10. Directors and Executive Officers of the Registrant ........................................... 1
11. Executive Compensation ....................................................................... 4
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters .......................................................................... 8
13. Certain Relationships and Related Transactions ............................................... 10
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this "Amendment") amends the
Registrant's Annual Report on Form 10-K for the fiscal year ended May 31, 2003,
originally filed on August 27, 2003 (the "Original Filing"). The Registrant is
refiling Part III to include the information required by items 10, 11, 12 and 13
to Part III within the period required by General Instruction G(3) to Form 10-K.
In addition, in connection with the filing of this Amendment and pursuant to the
rules of the Securities and Exchange Commission, the Registrant is including
with this Amendment certain currently dated certifications. The Registrant will
also include the information contained herein in its proxy statement for its
2003 Annual Meeting of Shareholders.
Except as described above, no other changes have been made to the
Original Filing.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the name, age and positions held by each of
our executive officers and directors:
Name Age Position
- ---- --- --------
Michael Mullarkey 35 Chairman of the Board of Directors,
President and Chief Executive Officer (1)
Thomas Danis 56 Director (1)(2)
Matthew Ebbs 38 Director (1)(2)
Michael Gerrior 53 Director (1)
Arthur Halloran 57 Director (1)
Cholo Manso 40 Director (1)(2)
David Polansky 38 Chief Financial Officer
Phyllis Cross 49 Vice President, Recruiting Services and Technology
Tammie Brown 39 Vice President of Human Resources
(1) Term expires at 2003 annual meeting of shareholders.
(2) Member of the Audit Committee of the Board of Directors.
Michael Mullarkey has been the Chairman of our Board of Directors since November
2001 and our Chief Executive Officer since April 2001. In April 2003, Mr.
Mullarkey assumed the responsibilities of President, a position he previously
served from April 2001 until November 2001. From January 2001 to April 2001, Mr.
Mullarkey was a major investor in Paula Allen Holdings, Inc., a full service
outplacement firm in the United States, which we acquired in April 2001. From
January 1998 to September 1999, Mr. Mullarkey was the co-founder and managing
director of Information Technology Mergers & Acquisitions, LLC, an investment
capital group managing private equity funding and investing in emerging
technology markets and organizations. From March 1997 to December 1998, he was
the Senior Vice President of sales and marketing for Allin Corporation, a
publicly traded enterprise solution provider. From October 1989 to February
1997, Mr. Mullarkey was Vice President and General Manager at Sony Corporation
of America, a US subsidiary of Sony Corporation.
Thomas Danis joined our Board of Directors and audit committee in July 2001. Mr.
Danis is currently the Managing Director of Aon Corporation. During 2001, Mr.
Danis was the Market Area Leader for Southern California with Aon Risk Services
and was responsible for the offices in this area. From 1993 to 2000, Mr. Danis
was the Managing Director of the Mergers & Acquisitions Practice as Global Head
Senior Executive of Sales in charge of the sales offices of the mid-River area
of Aon Risk Services. Mr. Danis serves on the Board of Directors of
International Wire Group, Inc., which manufactures and markets wire products,
and the Board of Directors of its parent, International Wire Holding Company.
International Wire Group, Inc. files reports pursuant to the Securities Exchange
Act of 1934.
Matthew Ebbs has been a member of our Board of Directors and audit committee
since October 1999. Presently, Mr. Ebbs is the Recovery Service Manager with
Export Development Corporation. Until October 2001, Mr. Ebbs was the Chairman,
Chief Executive Officer and a director of LuxurySquare.com Corporation, an
electronic business and online catalogue company. From January 1997 to April
1999, Mr. Ebbs was an attorney at Perley-Robertson, Hill & McDougall LLP, our
Canadian legal counsel.
Michael Gerrior has been a member of our Board of Directors since April 2001.
From 1988 to present, Mr. Gerrior has been a partner at Perley-Robertson, Hill &
McDougall LLP, our Canadian legal counsel. Mr. Gerrior assists his clients with
mergers and acquisitions, securities matters and corporate governance. He has
concluded private placements, venture capital transactions, and public offerings
on various exchanges, including NASDAQ, the TSX Venture Exchange, the Toronto
Stock Exchange and the Montreal Exchange.
Arthur Halloran has been a member of our Board of Directors since May 2001. From
October 2001 until April 2003, Mr. Halloran also served as our President and
Chief Operating Officer. From October 1989 until October 2001, Mr. Halloran was
with Sony Electronics Inc., with his most recent position being Senior General
Manager Specialty Sales and Marketing where he was responsible for retail
operations and incentive marketing. From September 1999 to April 2000, Mr.
Halloran was the President, Business Solutions Company, responsible for the
creation and development of the first Sony company to address all of the Sony
Electronic business units. From December 1990 to September 1999, Mr. Halloran
was the Vice President, Diversified Markets, where he was responsible for the
non-retail/non-traditional markets of Sony Electronics.
Cholo Manso joined our Board of Directors and audit committee in July 2001.
Since January 2002, Mr. Manso has served as the Chief Executive Officer of
Netlano Services Inc., which is a Managed Service Provider of mobility software
applications. From September 1999 to present, Mr. Manso has been the President
of Avemore International Inc., which is a consulting company that focuses on
advising angel investors. From November 1996 to September 1999, Mr. Manso was
the Chief Executive Officer and founder of Quarterdeck Consulting Inc., a
company that specialized in sales of security software, hardware, consulting and
maintenance services to the Canadian Federal Government and the private sector.
David Polansky has been our Chief Financial Officer since May 2003. He is in
charge of our financial, human resources, legal and administrative affairs. From
July 2000 until May 2003, Mr. Polansky was the Senior Vice President and Chief
Financial Officer of Arnold Palmer Golf Management, a company that owns and
manages golf courses, where he was responsible for accounting, finance,
information technology and human resources. From February 1999 until July 2000,
Mr. Polansky was employed by Sunterra Resorts, a company that owns and manages
timeshare resorts throughout the world. During his employment with Sunterra
Resorts, Mr. Polansky held various positions, with his most recent position
being National Controller. From June 1991 until February 1999, Mr. Polansky was
employed by Interstate Hotels in various positions, with his most recent
position being Director of Central Accounting.
2
Phyllis Cross joined us in February 2002 as Director of Professional Services.
Currently, Ms. Cross is the Vice President, Recruiting Services and Technology,
and is responsible for professional services and business operations for our
Software Business Unit. From October 2002 to April 2003, Ms. Cross was the Vice
President, Recruiting Solutions, for Workstream. Prior to joining Workstream,
Ms. Cross was the Senior Manager, New Product Introduction, for Nortel Networks
from April 2000 to March 2001. From October 1998 to March 2000, she was the
Senior Manager, Core Networks Training Services, for Nortel Networks and was
responsible for the development and delivery of training materials in support of
the Core Networks Business Unit.
Tammie Brown joined us in May 2000 as our Investor Relations Officer. Currently
Ms. Brown is the Vice President of Human Resources and responsible for Investor
Relations. She was previously employed by NetManage, Inc. from July 1998 to May
2000, where she was responsible for Investor Relations. From October 1995 to
July 1998, Ms. Brown was the Executive Assistant/Investor Relations Officer for
Milkyway Networks.
Section 16(a) Beneficial Ownership Reporting Compliance
During the fiscal year ended May 31, 2003, we were a "foreign private
issuer," as that term is defined in Rule 3b-4 of the Securities Exchange Act of
1934 (the "Exchange Act"). A foreign private issuer is exempt from Section 16 of
the Exchange Act pursuant to Rule 3a12-3 under the Exchange Act. Accordingly,
our executive officers, directors and beneficial owners of more than ten percent
of our common shares were not subject to Section 16 of the Exchange Act and were
not required to file reports with the Securities and Exchange Commission
relating to their ownership of and transactions in our equity securities. We
determined that as of August 27, 2003, we no longer qualified as a foreign
private issuer.
3
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash compensation as well as certain
other compensation earned during the fiscal years indicated by our Chief
Executive Officer and our three most highly compensated executive officers,
other than our Chief Executive Officer, whose salary and bonus exceeded $100,000
during the fiscal year ended May 31, 2003 (collectively, the "Named Executive
Officers").
- ---------------------------- -------------------------------------------------- ------------------- -------------------
Annual Compensation Long- Term
Compensation
Awards
- ------------------ --------- ---------------- ------------- ------------------- -------------------
Name and Other Annual Securities All Other
Principal Salary Bonus Compensation Underlying Compensation
Position Year ($) ($) ($) Options (#)(1) ($)
- ------------------ --------- ---------------- ------------- ------------------- ------------------- -------------------
Michael 2003 $200,000 (2) $214,547 -- 300,000 $4,710 (3)
Mullarkey, 2002 $ 83,333 (4) $300,000 -- -- $2,279 (3)
Chief Executive 2001 -- -- -- -- --
Officer
- ------------------ --------- ---------------- ------------- ------------------- ------------------- -------------------
Andrew 2003 $ 129,808 $ 51,751 -- -- --
Hinchliff, 2002 $ 81,364 $ 39,038 -- -- --
Senior Vice 2001 $ 59,682 $ 31,841 -- 107,000 --
President, North
American Sales (5)
- ------------------ --------- ---------------- ------------- ------------------- ------------------- -------------------
Arthur Halloran, 2003 $ 156,202 -- -- -- --
President (6) 2002 $ 91,823 -- -- 100,000 --
2001 -- -- -- -- --
- ------------------ --------- ---------------- ------------- ------------------- ------------------- -------------------
Paul Haggard, 2003 $126,923 -- -- -- --
Chief Financial 2002 $ 84,134 -- -- 50,000 --
Officer (7) 2001 -- -- -- -- --
- ------------------ --------- ---------------- ------------- ------------------- ------------------- -------------------
Notes to Summary Compensation Table:
(1) Represents the number of common shares underlying options granted
under our 2002 Amended and Restated Stock Option Plan.
(2) All salary and bonuses earned by Mr. Mullarkey through May 31, 2003
have been deferred.
(3) Represents insurance premiums paid with respect to a $5,000,000 term
life insurance policy on the life of Mr. Mullarkey.
(4) Mr. Mullarkey joined us in April 2001 and received no salary until
January 1, 2002. Beginning January 1, 2002, Mr. Mullarkey's annual
salary was $200,000.
(5) Mr. Hinchliff resigned from his position as Senior Vice President,
North American Sales, in August 2003.
(6) Mr. Halloran resigned from his positions as President and Chief
Operating Officer in April 2003.
(7) Mr. Haggard resigned from his position as Chief Financial Officer in
May 2003.
4
Stock Option Grants
The following table sets forth certain information with respect to stock
options to purchase our common shares that were granted to each of the Named
Executive Officers during the fiscal year ended May 31, 2003.
- -------------------------- ------------- --------------- ------------ -------------- --------------- ----------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term (2)
- -------------------------- ------------- --------------- ------------ -------------- --------------- --------- ------------
Name Number of % of Total Exercise Market Value Expiration 5% ($) 10% ($)
Common Options Price Per of Option Date
Shares Granted to Share Shares on
Under Employees in ($/Share) the Date of
Options Fiscal Year Grant
Granted (1) 2003
- -------------------------- ------------- --------------- ------------ -------------- --------------- --------- ------------
Michael Mullarkey 300,000 (3) 65% $1.00 $1.00 1/27/2008 $82,884 $183,153
- -------------------------- ------------- --------------- ------------ -------------- --------------- --------- ------------
Andrew Hinchliff (4) -- -- -- -- -- -- --
- -------------------------- ------------- --------------- ------------ -------------- --------------- --------- ------------
Arthur Halloran (5) -- -- -- -- -- -- --
- -------------------------- ------------- --------------- ------------ -------------- --------------- --------- ------------
Paul Haggard (6) -- -- -- -- -- -- --
- -------------------------- ------------- --------------- ------------ -------------- --------------- --------- ------------
(1) The options were granted under our 2002 Amended and Restated Stock
Option Plan.
(2) Illustrates the value that might be received upon exercise of options
immediately prior to the assumed expiration of their term at the
specified compounded rates of appreciation based on the market price
for the common shares when the options were granted. Assumed rates of
appreciation are not necessarily indicative of future stock
performance.
(3) Option vests 100,000 shares on January 27, 2004, 100,000 shares on
January 27, 2005 and 100,000 shares on January 28, 2006.
(4) Mr. Hinchliff resigned from his position as Senior Vice President,
North American Sales, in August 2003.
(5) Mr. Halloran resigned from his positions as President and Chief
Operating Officer in April 2003.
(6) Mr. Haggard resigned from his position as Chief Financial Officer in
May 2003.
5
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option
Value Table
The following table sets forth for each of the Named Executive Officers
certain information with respect to stock options exercised during the fiscal
year ended May 31, 2003 and the number and value of exercisable and
unexercisable options held by the Named Executive Officers as of May 31, 2003.
- --------------------------- ------------ ------------ ---------------------------------- --------------------------------
Shares Number of Securities Underlying Value of Unexercised
Acquired Value Unexercised Options at Fiscal In-the-Money Options at Fiscal
on Exercise Realized Year-End Year-End (1)
Name (#) ($) Exercisable/Unexercisable (#) Exercisable/Unexercisable ($)
- --------------------------- ------------ ------------ ---------------------------------- --------------------------------
Michael Mullarkey -- -- 0/0 $0/$0
- --------------------------- ------------ ------------ ---------------------------------- --------------------------------
Andrew Hinchliff (2) -- -- 71,334/35,666 $0/$0
- --------------------------- ------------ ------------ ---------------------------------- --------------------------------
Arthur Halloran (3) -- -- 33,333/66,667 $0/$0
- --------------------------- ------------ ------------ ---------------------------------- --------------------------------
Paul Haggard (4) -- -- 16,666/33,334 $0/$0
- --------------------------- ------------ ------------ ---------------------------------- --------------------------------
(1) The value of unexercised in-the-money options is based on the
difference between the last sale price of a share of our common shares
as reported on the NASDAQ Small Cap Market on May 31, 2003 ($0.96) and
the exercise price of the options, multiplied by the number of
options.
(2) Mr. Hinchliff resigned from his position as Senior Vice President,
North American Sales, in August 2003 and his options subsequently
expired without being exercised.
(3) Mr. Halloran resigned from his positions as President and Chief
Operating Officer in April 2003 and his options subsequently expired
without being exercised.
(4) Mr. Haggard resigned from his position as Chief Financial Officer in
May 2003 and his options subsequently expired without be exercised.
Compensation of Directors
All directors are entitled to reimbursement of their reasonable
out-of-pocket expenses incurred in attending Board and committee meetings.
Directors who are not also Workstream employees or professionals on retainer
with Workstream are paid $15,000 annually. Directors who are members of our
audit committee are paid an additional $1,000 for each committee meeting
attended. In addition, each director is eligible to participate in our 2002
Amended and Restated Stock Option Plan. In June 2003, we granted our
non-employee directors, Cholo Manso, Thomas Danis, Matthew Ebbs, Michael Gerrior
and Arthur Halloran, options to purchase 40,000, 40,000, 40,000, 23,000 and
20,000 of our common shares, respectively. These options have an exercise price
of $0.98 per share and vest in three equal annual installments commencing on the
first anniversary of the grant date. These options terminate on the fifth
anniversary of the grant date.
6
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
Michael Mullarkey Employment Agreement. We entered into an employment
agreement as of January 2003 with Michael Mullarkey to serve as our Chief
Executive Officer at a minimum annual salary of $200,000. The employment
agreement has a one year term expiring in January 2004 that automatically renews
at the end of its term for an additional year unless either party gives notice
of nonrenewal. Mr. Mullarkey is also entitled to receive a bonus of up to
$175,000 to be awarded should certain mutually agreed upon goals and objectives
be achieved. In addition, we granted Mr. Mullarkey an option to purchase 300,000
of our common shares at an exercise price of $1.00 per share, which option vests
in three equal annual installments beginning in January 2004. Under the
agreement, Mr. Mullarkey also receives a car allowance of $800 per month as well
as short-term and long-term disability coverage and term life insurance coverage
of $5,000,000. If we elect to terminate Mr. Mullarkey's employment other than
for "cause" (as defined in the agreement) within one year of the signing of the
agreement, Mr. Mullarkey would be entitled to six months salary and benefits. If
after one year of the signing of the agreement we elect to terminate Mr.
Mullarkey's employment other than for "cause," or do not renew his employment
agreement and fail to offer him continued employment on comparable terms, Mr.
Mullarkey would be entitled to 12 months salary and benefits. If we elect to
terminate Mr. Mullarkey's employment for "cause" at any time during the
agreement, Mr. Mullarkey will continue to receive his salary and benefits until
the date his employment is terminated.
Mr. Mullarkey has agreed to defer until June 1, 2004, a total of
$797,880 in compensation earned as of May 31, 2003, with interest accruing on
the balance at an annual rate of 8%. If we elect to terminate Mr. Mullarkey's
employment for any reason prior to June 1, 2004 or if a change of control occurs
prior to June 1, 2004, all deferred compensation and interest accrued thereon
will become immediately due and payable. After June 1, 2004, Mr. Mullarkey and
Workstream will mutually agree on the repayment terms of his deferred
compensation.
Paul Haggard Employment Agreement. In October 2001, we entered into an
employment agreement with Paul Haggard to serve as our Chief Financial Officer
at a minimum annual salary of $125,000. The employment agreement had a one year
term expiring in October 2002 that automatically renewed at the end of its term
for an additional year unless either party gave notice of nonrenewal. Mr.
Haggard was also entitled to receive a one time bonus in an amount to be
mutually agreed upon based upon Mr. Haggard's performance. In May 2003, Mr.
Haggard resigned from his position as our Chief Financial Officer. We agreed to
provide Mr. Haggard with continued salary and benefits for approximately three
months following his resignation in partial consideration for his efforts in
assisting in the transitioning of our new Chief Financial Officer.
7
Compensation Committee Interlocks and Insider Participation
We do not have a compensation committee but instead our audit committee
performs equivalent functions of a compensation committee. Matthew Ebbs, Thomas
Danis and Cholo Manso served on our audit committee during the fiscal year ended
May 31, 2003.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Equity Compensation Plans
The following table sets forth certain information regarding our equity
compensation plans as of May 31, 2003:
- ---------------------------- -------------------------- -------------------------- --------------------------
Number of securities to Weighted-average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance under
Plan Category warrants and rights warrants and rights equity compensation plans
- ---------------------------- -------------------------- -------------------------- --------------------------
Equity compensation plans
approved by security
holders 1,539,052 $ 2.27 1,460,948
- ---------------------------- -------------------------- -------------------------- --------------------------
Equity compensation plans
not approved by security
holders (1) 250,000 $ 2.70 --
- ---------------------------- -------------------------- -------------------------- --------------------------
Total 1,789,052 $ 2.33 1,460,948
- ---------------------------- -------------------------- -------------------------- --------------------------
(1) In connection with our acquisition of the technology and assets of Tech
Engine, Inc. in October 2001, we entered into employment agreements
with two former employees of Tech Engine. Pursuant to those employment
agreements, we issued options to purchase an aggregate of 250,000
common shares at an exercise price of $2.70 per share. These options
are fully vested and were granted outside of the terms our stock option
plan then in effect.
8
The following table sets forth certain information regarding the
beneficial ownership of our common shares as of September 23, 2003, by: (i) each
person known by us to be the beneficial owner of more than five percent (5%) of
our common shares; (ii) each director of Workstream; (iii) each Named Executive
Officer; and (iv) all executive officers and directors as a group. Unless
otherwise indicated, the principal address of each beneficial owner listed below
is c/o Workstream Inc., 495 March Road, Suite 300, Ottawa, Ontario, Canada K2K
3G1.
- ------------------------------ -------------------------------- -------------------------
Name & Address of Number of Common Shares
Beneficial Owner Beneficially Owned (1) Percentage of Class
- ------------------------------ -------------------------------- -------------------------
Michael Mullarkey 4,175,000 18.1%
- ------------------------------ -------------------------------- -------------------------
Paul Champagne 3,463,625 15.0%
P.O. Box 4085 Station A
Toronto, Ontario M5W2X6
- ------------------------------ -------------------------------- -------------------------
Sands Brothers Venture 1,578,205 (2) 6.4%
Capital III LLC
90 Parks Avenue
New York, N.Y. 10016
- ------------------------------ -------------------------------- -------------------------
Matthew Ebbs 66,667 (3) *
- ------------------------------ -------------------------------- -------------------------
Michael Gerrior 30,000 *
- ------------------------------ -------------------------------- -------------------------
Thomas Danis -- --
- ------------------------------ -------------------------------- -------------------------
Cholo Manso -- --
- ------------------------------ -------------------------------- -------------------------
Andrew Hinchliff (4) -- --
- ------------------------------ -------------------------------- -------------------------
Arthur Halloran (5) -- --
- ------------------------------ -------------------------------- -------------------------
Paul Haggard (6) -- --
- ------------------------------ -------------------------------- -------------------------
All executive officers and 4,275,667 (7) 18.5%
directors as a group (9
persons)
- ------------------------------ -------------------------------- -------------------------
* Less than 1%
(1) With respect to each stockholder, includes any shares issuable upon
exercise of options and conversion of convertible notes held by such
stockholder that are or will become exercisable or convertible within 60
days of September 23, 2003.
(2) Includes shares beneficially owned by affiliates of Sands Brothers Venture
Capital III LLC. Also includes 1,535,636 common shares issuable upon
conversion of convertible notes.
(3) Consists of 66,667 common shares issuable upon the exercise of stock
options.
(4) Mr. Hinchliff resigned from his position as Senior Vice President, North
American Sales, in August 2003.
(5) Mr. Halloran resigned from his positions as President and Chief Operating
Officer in April 2003.
(6) Mr. Haggard resigned from his position as Chief Financial Officer in May
2003.
(7) Includes 70,667 common shares issuable upon the exercise of stock options.
9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Michael Mullarkey, our Chief Executive Officer, provided us with
short-term loans in the aggregate principal amount of $500,000 during the fiscal
year ended May 31, 2003 and $750,000 during fiscal year ended May 31, 2002. In
January 2003 those loans were consolidated into a term loan maturing in five
years. The consolidated term loan is collateralized by certain inventory,
equipment, accounts receivable and other assets and bears interest at 8% per
annum. Under the consolidated term loan, we are required to make monthly
interest only payments during the first 24 months and monthly interest and
principal payments beginning in January 2005. As at May 31, 2003, the total
amount of the consolidated term loan was $1,287,901. In addition, Mr. Mullarkey
has agreed to provide us with an additional $1,200,000 credit facility bearing
interest at 8% per annum. With respect to each draw against the credit facility,
we are required to make monthly interest only payments during the first 24
months from the draw date and thereafter monthly interest and principal payments
over a three year period. We are allowed to draw against this credit facility as
needed. Mr. Mullarkey also agreed to defer until June 1, 2004, a total of
$797,880 in compensation earned as of May 31, 2003, with interest accruing on
the balance at an annual rate of 8%. After June 1, 2004, Mr. Mullarkey and
Workstream will mutually agree on the repayment terms of his deferred
compensation.
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.
WORKSTREAM INC.
By: /s/ Michael Mullarkey
-----------------------------------
Michael Mullarkey,
President, Chief Executive Officer
and Chairman of the Board
Dated: September 26, 2003
11
Exhibit Index
Exhibit No. Description
----------- -----------
31.1 Certifications pursuant to Rule 13a-14(a)/15d-14(a).
32.1 Certifications pursuant to 18 U.S.C. Section 1350.