UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-K/A
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the year ended December 31, 2008
[_] Transition Report Under to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
Commission file number: 000-16299
ANTS SOFTWARE INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3054685
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
2040 Briggs Road, Suite B4, Mount Laurel, NJ, 08054
(Address of principal executive offices including zip code)
(856) 914-5200
(Registrant's telephone number, including Area Code)
Securities registered under Section 12(b) of the Act: None
Securities Registered under Section 12(g) of the Act:
Common Stock, $0.0001 par value
-------------------
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [_] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15 (d) of the Exchange Act. Yes [_] No [X]
Indicate by check mark if the registrant (1) filed all reports required to
be filed by Section 13 or 15 (d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. [_] Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (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. Yes [ ] No
[_]
Indicate by check mark if the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company
(in Rule 12b-2 of the Exchange Act).
Large accelerated filer [_] Accelerated filer [X] Non-accelerated filer [_]
Smaller reporting company [_]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes [_] No [X]
1
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the
common equity was last sold, or average bid and asked price of such common
equity, as of the last business day of the registrant's most recently
completed second quarter. As of June 30, 2008 the aggregate market value of
the registrant's common stock held by non-affiliates of the registrant was
approximately $80 million based on the average bid and asked price of such
common stock as reported on the NASD Bulletin Board system. Shares of
common stock held by each officer and director and each person who owns
more than 10% or more of the outstanding common stock have been excluded
because these persons may be deemed to be affiliates. The determination of
affiliate status for purpose of this calculation is not necessarily a
conclusive determination for other purposes.
The issuer had 90,648,369 shares of common stock outstanding as of April
30, 2009.
Explanatory Note
----------------
This Amendment No. 1 on Form 10-K/A ("Amendment No. 1") hereby amends our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, which ANTs
software inc. (the "Company") filed with the Securities and Exchange Commission
on May 1, 2009. The sole purpose of this amendment is to include information
omitted from our Annual Report on Form 10-K under Part III, Items 10, 11, 12,
13, and 14. Included in this amendment is a revised consent from Weiser LLP to
include language relating to its consent of the incorporation by reference of
its report on the effectiveness of the Company's internal controls over
financial reporting.
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2
TABLE OF CONTENTS
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PART III
Item 10. Directors, Executive Officers and Corporate Governance ..............5
Item 11. Executive Compensation...............................................9
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters................................20
Item 13. Certain Relationships and Related Transaction and
Director Independence..........................................22
Item 14. Principal Accountant Fees and Services..............................22
Signatures....................................................................24
Exhibits......................................................................26
3
This Annual Report and the information incorporated herein by reference contain
forward-looking statements that involve a number of risks and uncertainties, as
well as assumptions that, if they never materialize or if they prove incorrect,
would likely cause our results to differ materially from those expressed or
implied by such forward-looking statements. Although our forward-looking
statements reflect the good faith judgment of our management, these statements
can only be based on facts and factors currently known by us. Consequently,
forward-looking statements are inherently subject to risks and uncertainties,
and actual results and outcomes may differ materially from results and outcomes
discussed in the forward-looking statements.
Forward-looking statements can be identified by the use of forward-looking words
such as "believes," "expects," "hopes," "may," "will," "plans," "intends,"
"estimates," "could," "should," "would," "continue," "seeks" or "anticipates,"
or other similar words (including their use in the negative), or by discussions
of future matters such as the development of new products, problems incurred in
establishing sales and sales channels, technology enhancements, possible changes
in legislation and other statements that are not historical. These statements
include, but are not limited to, statements under the captions "Business," "Risk
Factors," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," as well as other sections in this Annual Report. You
should be aware that the occurrence of any of the events discussed under the
heading "Item 1A -- Risk Factors" and elsewhere in this Annual Report could
substantially harm our business, results of operations and financial condition.
If any of these events occurs, the trading price of our common stock could
decline and you could lose all or a part of the value of your shares of our
common stock.
The cautionary statements made in this Annual Report are intended to be
applicable to all related forward-looking statements wherever they may appear in
this Annual Report. We urge you not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Annual
Report.
4
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
MANAGEMENT AND DIRECTORS
The following table sets forth information with respect to our current
executive officers, principal employees, consultants and directors:
Name Age Position
Joseph Kozak.....................58 Chairman, President and Chief
Executive Officer, Class 1 Director,
term expires in 2010
Francis K. Ruotolo...............71 Class 3 Director, term expires in 2009
John R. Gaulding.................63 Class 3 Director, term expires in 2009
Thomas Holt......................63 Class 1 Director, term expires in 2010
Robert H. Kite...................54 Class 2 Director, term expires in 2011
Robert Jett......................64 Class 3 Director, term expires in 2009
Ari Kaplan.......................39 Class 2 Director, term expires in 2011
Craig Campbell...................52 Class 2 Director, term expires in 2011
Kenneth Ruotolo..................48 Vice President Corporate Development
Rick Cerwonka....................57 President, Inventa Technologies Inc.
Joseph Kozak, Age 58
Chairman, President and Chief Executive Officer
Joseph Kozak joined ANTs software inc. in June 2005 as President and was
named Chief Executive Officer and appointed to the Board of Directors in August
2006. Mr. Kozak brings 25 years of front-line leadership experience in sales,
marketing and business development. Mr. Kozak joined ANTs from Oracle
Corporation, where he was Vice President of Industry Sales. While with Oracle he
defined and executed global strategies for retail, distribution, life science,
process manufacturing, and consumer packaged goods industries. He also managed
Oracle's acquisition of Retek, Inc. a $630 million purchase in the retail
applications space. Prior to Oracle, Mr. Kozak was CEO of Lombardi Software a
manufacturer of business process management solutions. He was also a partner
with Ernst and Young, LLP, in the retail and consumer packaged goods division;
Vice President of Sales for SAP America, where he was responsible for the retail
distribution and consumer goods business units for the Americas; and Mr. Kozak
held numerous management positions with AT&T and IBM.
Francis K. Ruotolo, Age 71
Director
Francis Ruotolo was an employee through June 30, 2007, was the Chairman of
the Board of the Company through September 30, 2007, and became a director of
the Company effective October 1, 2007. Mr. Ruotolo became Chairman of the Board,
Chief Executive Officer and President in January 2001. Prior to that time, he
was a member of the Company's Board of Advisors. Before joining the Company, Mr.
Ruotolo was a director in the consulting practice of Deloitte & Touche. Prior to
working at Deloitte Consulting Mr. Ruotolo was CEO of The Futures Group, a long
term strategic planning consultancy whose clients included: IBM, American
Airlines, Monsanto, Ford Motor Co., Pfizer, and numerous departments of the
federal government. Mr. Ruotolo was Senior Vice President of Macy's California
for seven years and held the same position at Lord & Taylor in New York. Mr.
Ruotolo holds a BA degree in English/Journalism from Northeastern University,
Boston, MA. Mr. Ruotolo resigned as President of the Company in March 2003 and
resigned as the Company's Chief Executive Officer effective January 31, 2005.
Mr. Ruotolo is the father of the Corporate Secretary and Chief Financial
Officer, Kenneth Ruotolo.
5
John R. Gaulding, Age 63
Lead Director
John R. Gaulding joined the Company's Board of Directors in January 2001.
Mr. Gaulding is a private investor and consultant in the fields of strategy and
organization. He is an independent director and is chairman of the Nominating
and Governance Committee of Monster Worldwide, Inc. Mr. Gaulding also serves on
the board of Yellow Pages Group, Inc., a publicly held company listed on the
Toronto Stock Exchange, where he is also chairman of the CGNC. Previously, Mr.
Gaulding was Chairman and CEO of National Insurance Group, a publicly held
company providing information and insurance to financial institutions. He was
also President and CEO of ADP Claims Services Group and President and CEO of
Pacific Bell Yellow Pages, Inc. Most recently, Mr. Gaulding served as a Senior
Advisor to Deloitte Consulting specializing in e-Business strategy with
responsibility for advising such clients as Hewlett Packard, 3Com, Bergen
Brunswig, Longs Drugstores, SCE, and PG&E.
Thomas Holt, Age 63
Director
Thomas Holt joined the Company's Board of Directors in November 2000. Mr.
Holt is currently Chief Information Officer for NetGear, Inc. Mr. Holt was
formerly Vice President of Information Technology for Lucent, Inc. Mr. Holt was
VP of Information Services and Chief Information Officer at International
Network Services from May 1997 before its merger with Lucent. He was VP of MIS
and CIO at Informix and held senior positions at Motorola after starting his
career with IBM.
Robert H. Kite, Age 54
Director
Robert Kite joined the Company's Board of directors in January 2005. Since
1981, Mr. Kite has been President and COO of Kite Family Co., Inc. and the
Managing General Partner of KFT LLLP, a family owned company whose assets and
operations include, but are not limited to, commercial and industrial buildings,
land holdings, stocks, bonds, commodities, MRI clinics, and hotel and retail
development. Mr. Kite is a director with three publicly traded companies, two
privately held companies, and two charitable organizations. Public companies
include: National Energy Group (NEGI) an oil and gas company based in Dallas
Texas, Petrol Oil & Gas (POIG), an oil and gas exploration and development
company based in Overland Park, Kansas, and Jardinier, developer of highly
efficient irrigation systems, based in Santa Ana, California. He also serves on
the boards of E2020, an Internet education company, and Financialz, an
accounting software company. Mr. Kite's public service work includes board
membership with Child Help USA and the FBI Citizen's Academy.
Mr. Kite previously worked in the construction industry in Saudi Arabia
with Beck-Arabia, and in Central America in gold mining and manufacturing
operations. He is a graduate of Southern Methodist University with a Bachelor of
Science, Political Science and Psychology with a Minor in Business.
Robert Jett , Age 64
Director
Robert Jett joined ANTs software inc.'s Board of Directors in May 2007. Mr.
Jett is co-founder of Prescient Software LLC of Vancouver, Oregon, a provider of
IT services. He also serves as general counsel for eDocs-Express, a company that
provides consulting and documentation services to financial institutions. A
member of the Oregon State Bar and the Multnomah Bar Association, Mr. Jett has
extensive law experience, serving as legal counsel for the First National Bank
of Oregon, Security Bank of Oregon, Evans Products Company, CFI ProServices,
Inc., and other enterprises. Mr. Jett is best known as the architect and product
manager of Laser Pro(TM), the predominant loan documentation software system
used by thousands of financial institutions across the country.
6
Ari Kaplan, Age 39
Director
Ari Kaplan joined ANTs software inc.'s Board of Directors in April 2007.
Mr. Kaplan is President of the Independent Oracle Users Group (IOUG), a 20,000+
member organization of Oracle technology professionals. Mr. Kaplan served as
Executive Vice President of IOUG from 2003 to 2004, before assuming his current
role in 2005. Mr. Kaplan is also a Senior Consultant for Datalink Corporation,
where he leads the database practice, helping companies architect, implement and
support storage solutions for database environments.
Beginning in 1999 and continuing through 2005, Mr. Kaplan served as Chief
Executive Officer at Expand Beyond, a pioneering mobile business software
company. Mr. Kaplan worked as a Chief Architect/Senior Consultant from 1994 to
1999, to companies including Chicago Board Options Exchange, Merck & Co., Inc.,
3Com/US Robotics, Hallmark, PricewaterhouseCoopers, and the Department of
Defense. Mr. Kaplan also worked as a Senior Consultant for Oracle Corporation
from 1992 to 1994. He has co-authored five best-selling books including the
first-to-market book on Windows 2000, three on Oracle, and one on baseball
analytics.
Mr. Kaplan received a Bachelors of Science degree in Engineering and
Applied Sciences from the California Institute of Technology in 1992. He was
awarded the school's prestigious "Caltech Alumni of the Decade" award for the
1990's.
Craig Campbell, Age 52
Director
Craig Campbell joined ANTs software inc.'s Board of Directors in May 2007.
Mr. Campbell is executive vice president of Founders Group in Worth, Illinois,
where he is responsible for $1.8 billion in assets, with oversight of the firm's
trust and asset management funds. He also serves as president and director of
Vermilion Holdings, Inc., and the First National Bank of Danville. He has
extensive experience as a general partner and advisor for investment and hedge
funds and serves in a leadership capacity for numerous foundations.
Kenneth Ruotolo, Age 48
Vice President Corporate Development
Kenneth Ruotolo joined the Company in June 2001. Before joining the
Company, Mr. Ruotolo was a founder and served as Vice President of Finance and
Operations for eStar, Inc., a content developer and syndicator. Prior to eStar,
Mr. Ruotolo was a partner for twelve years with era2, an interactive design and
internet consulting agency. Mr. Ruotolo holds a B.A. degree in Economics from
the University of California at Davis and an M.B.A. from Northeastern
University.
Rick Cerwonka, Age 57
President, Inventa Technologies, Inc.
Rick Cerwonka joined Inventa Technologies in January 2000 as Vice President
of Managed Services and was named President and Chief Executive Officer in
December 2002. Before joining the Company, Mr. Cerwonka founded XTEND-Tech,
Inc., which offered full-service applications management and support to Fortune
500 clients in finance, telecommunications, manufacturing, government and
banking. Prior to XTEND-Tech, Inc., Mr. Cerwonka was Vice President of the
Enterprise Solutions Division for the Southern States Area for Sybase, Inc.
7
AUDIT COMMITTEE
Background
The Audit Committee of the Board of Directors of ANTs, which is comprised
solely of independent directors, fulfills a fiduciary role for the Board of
Directors, as they represent the shareholders, by providing a direct supervisory
link to the independent auditors. The Board of Directors acts upon the
recommendations or advice of the Audit Committee, which has no responsibility to
make decisions and take actions, separate from the Board of Directors. In its
role, the Audit Committee undertakes the following advisory, consultative and
oversight to:
o select the independent audit firm to be employed or nominate the
independent auditor for shareholder approval
o consult with the independent auditor on their plan of audit for the
Company
o review with the independent auditor, their report of audit and their
letter
o consult with the independent auditor, on the adequacy of internal
controls
o the integrity of the Company's financial reporting
o the development of the Company's systems of internal control over
financial reporting and disclosure controls
o ensure the Company's compliance with legal and regulatory requirements
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and to report the
results of their activities to the Board. The reporting process is the
responsibility of the Company's management, which prepares these Company's
financial statements, while the independent auditors are responsible for
auditing those financial statements.
The committee membership must meet the requirements of the Audit Committee
policy of the NASDAQ Stock Market. Accordingly, all of the members are directors
independent of management and free from any relationship that, in the opinion of
the Board of Directors, would interfere with the exercise of independent
judgment as a committee member. Officers or employees of the company do not
serve on the committee.
The Audit Committee is composed of three non-employee independent directors
selected by the Board, based upon their prior experience in Audit Committee
matters, their experience in financial matters and their independence and
objectivity. John Gaulding, the Audit Committee chair, is both independent and a
"financial expert" under Item 407(d)(5)(ii) of Regulation S-K. All members of
the Audit Committee are free of any relationship that would interfere with the
exercise of independent judgment by them.
Specific Required Items for the Present Report of the ANTs Audit Committee
The Audit Committee provides this report for the Company's Amendment No. 1
to annual report on Form 10-K. The following disclosure, as required, appears
over the printed names of each member of the Audit Committee. The members of the
Audit Committee have signed the current disclosure.
Meetings
The Audit Committee held six (6) meetings during the year ended December
31, 2008.
The Committee met with the Company's outside accountants at four of the
seven meetings, and reviewed their findings, suggestions and plans for
continuing audits. The Committee discussed strengthening controls as the Company
grows into operations and out of research and development, the Company's plans
for compliance with certain provisions of the Sarbanes-Oxley Act of 2002 and the
accounting issues related to revenue recognition. The Audit Committee believes
that it has an excellent and forthright working relationship with the Company's
Audit Firm, Weiser, LLP. The Audit Committee selected Weiser, LLP to serve as
the Company's independent accountants for the current fiscal year.
Audit Committee Report
The following is the report of the Audit Committee with respect to our
audited financial statements for the fiscal year ended December 31, 2008
8
We reviewed and discussed with management the Company's audited financial
statements for the year ended December 31, 2008. In addition, we discussed with
Weiser, LLP, the matters required by Public Company Accounting Oversight Board
("PCAOB") AU Sec. 380 "Communications with Audit Committees." We also received
from Weiser, LLP, the written disclosures required by the PCAOB Rule No. 3526
and have discussed with Weiser, LLP its independence from the Company. Based
upon this information and these materials we recommend to the Board of Directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for filing with the Securities and Exchange Commission.
John R. Gaulding (chair)
Thomas Holt
Robert Kite
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The Company believes in sound corporate governance practices and has in
place formal Corporate Governance Guidelines. The Company's Board adopted these
Corporate Governance Guidelines in order to ensure that it has the necessary
authority and practices in place to review and evaluate the Company's business
operations as needed and make decisions that are independent of the Company's
management. The Company regularly monitors developments in the area of corporate
governance and reviews processes and procedures in light of such developments.
The Company reviews federal laws affecting corporate governance, such as the
Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC and NASDAQ. The
Corporate Governance Guidelines set forth practices with respect to the way
employees and directors conduct themselves individually and operate the
Company's business.
Code of Business Conduct and Ethics
The Company has developed and periodically modifies its Code of Business
Conduct and Ethics to ensure it is in compliance the Company's Corporate
Governance Guidelines. The Code of Business Conduct and Ethics sets forth the
policies with respect to the way directors, officers, employees, agents and
contractors conduct themselves and operate the Company's business. The Code of
Business Conduct and ethics is publicly available on our website at
www.ants.com/coe. The Company believes it has in place procedures and practices,
which are designed to enhance its shareholders' interest.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
The following compensation discussion and analysis describes the material
elements of the compensation and benefits programs for the Company's officers.
Role of Compensation Committee
The Company's Compensation Committee is composed entirely of independent
directors (the "Committee"). The Committee has a charter, most recently revised
in January 2007, which outlines the Committee's role in the determination of the
Company's compensation structure. The Committee works with the Company's Board
of Directors, Chief Financial Officer and other management in determining,
developing, establishing, and implementing the Company's compensation philosophy
and plans for the Company's executive officers (the "Executives"). The Committee
reviews and approves Executive compensation, ensuring that each element of the
Executives' compensation meets compensation objectives. The Committee also helps
to oversee the Company's stock option plans (ANTs software inc. 2000 Stock
Option Plan and 2008 Stock Option Plan).
9
Compensation Philosophy: Objectives of the Company's Compensation Programs
The Company's compensation programs have four main objectives: attract
highly-qualified new Executives, retain them and encourage longevity, motivate
them to achieve goals that are consistent with the Company's overall goals, and
reward them for outstanding achievement.
What the Compensation Program is Designed to Reward
The Company's compensation program is designed to reward achievements that
are consistent with the Company's overall goals.
Independent Compensation Consultant
From time to time, the Company may seek the advice of one or more
independent compensation consultants. In such event, it is currently intended
that such consultants would report directly to the Committee and would be used
primarily to provide additional assurance that (i) the Company's compensation
programs are sufficiently competitive to successfully motivate, attract and
retain Executives, and (ii) the compensation offered by the Company is
reasonable and consistent with the Company's objectives.
Elements of Compensation
The elements of compensation for the Executives are: salary, stock options,
and bonuses (either in the form of cash or stock options).
Rationale Behind Each Element
The elements of the Company's compensation structure are intended to
achieve the objectives of the compensation programs. Determination of salary is
made to provide Executives with a base level of pay that allows the Company to
remain competitive in both recruiting and retaining qualified Executives. Stock
options are granted to new Executives to provide them with an opportunity to
build equity ownership in the Company so that they are motivated to act in ways
that increase the value of the Company and that are consistent with shareholder
goals. Bonuses are granted for achieving specific goals or in recognition of
extraordinary service provided. Bonuses may be paid in either cash or stock
options.
Determination of Amount of Each Element
Salary. In determining salaries, the Company generally considers five
factors. First, the Company has experienced managers responsible for hiring new
Executives and adjusting the salary levels of existing Executives. These
managers have extensive industry knowledge of historical and current pay scales,
and apply such knowledge to salary determination. The Company relies heavily on
such knowledge. Second, as the Company interviews candidates for potential
employment, it gathers salary information from those candidates, which is used
as a data point in setting salaries. Third, the Company works with search firms,
which provide salary data for their candidates and feedback on the general
availability of candidates with the experience for each open position. Fourth,
the Company evaluates general labor market conditions such as the hiring
activity of other companies actively looking for candidates with the same skill
set and experience. This provides the Company with a sense of how "tight" or
"loose" the labor market is, which may affect salary levels. Finally, the above
factors provide the Company with the data needed to establish a general range
within which it will typically make an offer to a new Executive or adjust the
salary of an existing Executive. Within that range, the Company will set the
salary level for a specific candidate or existing Executive based on the
candidate's or Executive's experience, prior performance, references and
education.
During 2008, the Company's Board of Directors periodically reviewed the
performance and compensation of the Executives, though the Company did not have
a formal review process in place. No adjustments were made to the Executives'
salaries in 2008.
Stock Options. In determining stock option grants, which are granted to new
and existing Executives, the Company considers three factors. First, the Company
has experienced managers responsible for hiring new Executives and adjusting the
compensation levels of existing Executives. These managers have extensive
industry knowledge of historical and current pay scales, and apply such
knowledge to determination of compensation. The Company relies heavily on such
knowledge. Second, the Company makes an assessment of the "risk" profile of the
Company versus other employment options available to a candidate or Executive
and adjusts stock option grants accordingly. Third, for more senior Executives,
who have a greater ability to affect the direction of the Company, compensation
is more heavily weighted towards equity (in the form of stock options), in order
to align their goals with that of shareholders.
10
Generally, stock options are dated as of the date of Board approval of each
option grant and are granted at the closing fair market value on the date of
grant. Optionees are informed of their option grants as soon as practicable and
stock options are documented within a few days of the grant date. The Company
does not currently have a policy concerning coordination of option grants with
the release of material information.
Bonuses. The Company awards bonuses in the form of stock options or cash.
Bonuses are generally given by the Compensation Committee or the Executive's
manager, typically the Chief Executive Officer (the "CEO") and are determined in
one of two ways. First, the Executive has a fixed bonus amount for which he or
she is eligible. On a periodic basis, typically quarterly, the Compensation
Committee or the CEO reviews his or her performance against goals and determines
whether to pay all, none, or a portion of the bonus. The fixed amount is
established in the Compensation Committee's or the CEO's discretion. Second,
bonuses are occasionally given as a reward for extraordinary effort. The amount
of bonus is determined at the discretion of the Compensation Committee or the
CEO.
In 2008, the Chief Executive Officer, Joseph M. Kozak, was eligible to
receive a cash bonus of up to $125,000, every six months. The Company provided
the opportunity to Mr. Kozak to earn such a bonus because he had the greatest
ability to influence the direction of the Company. Mr. Kozak received the
$250,000 in bonuses for which he was eligible during the 2008 fiscal year, as
reflected in the Summary Compensation Table. The Board of Directors and the
Compensation Committee determined that Mr. Kozak achieved the performance
objectives set out for him upon his appointment as Chief Executive Officer.
Further, the Compensation Committee believed the bonuses helped to bring Mr.
Kozak's total compensation closer to the industry standard.
In 2008, the Company awarded bonuses, in the form of option grants, to Mr.
Kozak and to the Company's Chief Financial Officer, Kenneth Ruotolo. As shown in
the Grants of Plan-Based Awards Table, and discussed in the footnotes to the
table, the Board of Directors awarded these option grants to Mr. Kozak and Mr.
Ruotolo in recognition of having achieved certain milestones and in general
recognition of their contribution to the Company's growth.
How Each Element Fits Into the Company's Overall Compensation Objectives
Compensation is structured to achieve the goals set out above: attract,
retain, motivate and reward. Decisions regarding the weight of each element in
relation to other elements are set as a general rule which can be modified as
necessary to address individual situations, but with the overall goals in mind.
Employment Agreements
On March 23, 2007, the Company entered into Employment Agreements with its
then-Chairman, Francis K. Ruotolo, its Chief Executive Officer and President,
Joseph Kozak and its Chief Financial Officer and Secretary, Kenneth Ruotolo
(each an "Employee").
Under each of the Employment Agreements, each of the Employees (i) is paid
an annual salary of $200,000, (ii) is employed "at-will," (iii) is required to
devote their full time and attention to the Company, and (iv) may not compete
with the Company, nor interfere with the relationship with any person or entity
that has a business relationship with the Company, during their employment, and
for 12 months thereafter.
Each of the employment agreements also provides that, in the event that the
employment of the Employee is terminated (i) by the Employee for Good Cause as
defined in the agreement or (ii) by the Company without Cause as defined in the
agreement, the Employee shall have thirty days to elect either "Release
Severance" or "No-Release Severance."
11
In the event that the Employee elects "Release Severance" then, upon
agreeing to a general release of all claims, (i) the Company shall pay Employee
a lump sum equal to 12 months of Employee's base salary, any accrued but unpaid
bonuses, and any and all target bonuses for the 12 month period following
termination; and (ii) the Employee shall immediately and fully vest in and have
the right to exercise any and all unvested stock options granted to Employee,
subject to certain resale restrictions.
In the event that Employee elects the Release Severance, then Employee
unilaterally agrees to fully release and forever discharge the Company, and its
officers, directors, agents, employees, attorneys, parents, affiliates, and
subsidiaries, from any and all claims that Employee has ever had, now has or may
now have against such parties.
In the event that the Employee elects "No Release Severance" then (i) the
Company shall pay Employee a lump sum equal to 6 months of Employee's base
salary, any accrued but unpaid bonuses, and any and all target bonuses for the 6
month period following termination; and (ii) the Employee shall immediately and
fully vest in and have the right to exercise 75% of any and all unvested stock
options granted to Employee.
Additionally, each of the employment agreements also provides that, in the
event that the employment of the Employee is terminated (i) by the Employee for
Good Cause as defined in the agreement or (ii) by the Company without Cause as
defined in the agreement, then the exercise period of Employee's Stock Options
is extended for a period of five years and certain restrictions are placed on
the Employee's ability to sell shares purchased on exercise of such options.
On June 26, 2007, the Company entered into a Retirement and Board Service
Agreement with Mr. Francis K. Ruotolo, the Company's former Chairman (the
"Agreement"). Under the Agreement (i) Mr. Ruotolo retired as an employee of the
Company, (ii) Mr. Ruotolo continued as a member of the Board of directors, (iii)
Mr. Ruotolo's Employment Agreement with the Company was terminated, (iv) the
Company made retirement payments to Mr. Ruotolo consisting of 10 quarterly
payments of $50,000 each, for an aggregate of $500,000, (v) Mr. Ruotolo and the
Company agreed that all of Mr. Ruotolo's stock options as of that date continued
unaffected by the Agreement, and (vi) Mr. Ruotolo and the Company entered into a
mutual general release of all claims, known and unknown.
Clifford Hersh, ANTs' former Managing Director, Chief Scientist and an ANTs
officer, and Jeffrey R. Spirn, Ph.D., ANTs' former Vice President, Research and
Development and an ANTs officer, joined Four Js Development Tools effective May
22, 2008.
Change In Control Arrangements
The Company's stock option agreements provide for accelerated vesting of
stock options, under certain circumstances involving a change in control of the
Company. If there is a merger or acquisition, or if there is a sale or transfer
of the Company's assets, the optionee will be granted a Merger Consideration
Exercise Right, in which the optionee is given the right to purchase or receive
the consideration which is received or receivable by the Company's stockholders.
In the event that the surviving entity does not recognize the optionee's Merger
Consideration Exercise Right, the option shall become fully vested.
Defined Contribution Plan
The Company offers the Section 401(k) Savings/Retirement Plan (the "401(k)
Plan"), a tax qualified retirement plan to all eligible employees, including the
executive officers. The 401(k) Plan permits eligible employees to defer from 1%
to 100% of their annual eligible compensation subject to certain limitations
imposed by the Internal Revenue Code. The employees' elective deferrals are
immediately vested and non-forfeitable in the 401(k) Plan. The Company has not
made matching contributions to the 401(k) plan.
Perquisites and Other Personal Benefits
In 2008, the Company did not offer its executive officers perquisites other
than the standard benefit plan offered to all other employees.
Recent Action
None
12
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has reviewed, and has
discussed with management, the Company's Compensation Discussion and Analysis
contained in this annual report.
Based on the review and discussion, the Compensation Committee recommended
to the Company's Board of Directors that the Compensation Discussion and
Analysis be included in the Company's amendment No. 1 to annual report on Form
10-K.
This report is submitted on behalf of the members of the Compensation
Committee:
Thomas Holt (chair)
Robert H. Kite
TABLES
Summary Compensation Table
Summary Compensation Table for Fiscal 2008, 2007 and 2006
The table below provides information regarding the compensation and benefits
earned during fiscal 2008, 2007 and 2006 by:
o our CEO;
o our CFO; and
o The three other most highly compensated individuals who were serving
as executive officers of the Company at the end of fiscal 2008, 2007
and 2006.
13
- ----------------------------------------------------------------------------------------------------------------------------
Option All
Awards Other
Compensation
Salary Bonus ($) ($) Total
Name and Principal Position Year ($) ($) (5)(f) (i) ($)
(a) (b) (c) (d) (j)
- ----------------------------------------------------------------------------------------------------------------------------
Joseph Kozak
Chairman, Chief Executive 2006 $ 200,000 $ 200,000 $ 48,767 $ 448,767
Officer (1) 2007 $ 250,000 $ 250,000 $ 120,694 $ 620,694
2008 $ 250,000 $ 250,000 $ 693,929 $1,193,929
- ----------------------------------------------------------------------------------------------------------------------------
Kenneth Ruotolo
Chief Financial Officer, 2006 $ 200,000 $ 30,479 $ 230,479
Secretary 2007 $ 200,000 $ 54,907 $ 254,907
2008 $ 200,000 $ 35,000 $ 193,277 $ 428,277
- ----------------------------------------------------------------------------------------------------------------------------
Rick Cerwonka
President, Inventa 2006
Technologies 2007
2008 $ 250,000 $ 50,000 $ 38,549 $ 338,549
- ----------------------------------------------------------------------------------------------------------------------------
Alton Dinsmore
Vice President, Sales 2006 $ 139,583 $ 68,000 $ 14,657 $ 222,240
2007 $ 156,250 $ 60,000 $ 74,732 $ 290,982
2008 $ 175,000 $ 60,000 $ 152,840 $ 387,840
- ----------------------------------------------------------------------------------------------------------------------------
Francis K. Ruotolo 2006 $ 200,000 $ - $ 200,000
Former Chairman (2) 2007 $ 100,000 $ 500,000 $ 600,000
2008 $ - $ - $ -
- ----------------------------------------------------------------------------------------------------------------------------
Clifford Hersh
Former Managing Director 2006 $ 220,000 $ 220,000
and Chief Scientist 2007 $ 220,000 $ 220,000
2008 $ 94,168 $ 18,333 $ 49,129 $ 161,630
- ----------------------------------------------------------------------------------------------------------------------------
Jeffrey Spirn
Former Vice President, 2006 $ 175,000 $ 91,355 $ 266,355
Research and Development 2007 $ 175,000 $ 99,865 $ 274,865
2008 $ 69,521 $ 17,949 $ 115,941 $ 203,411
- ----------------------------------------------------------------------------------------------------------------------------
Boyd Pearce
Former Chief Executive 2006 $ 136,476 $ 100,000 $ 198,750 $ 75,002 $ 510,228
Officer and Director (3) 2007 $ - $ - $ - $ - $ -
2008 $ - $ - $ - $ - $ -
- ----------------------------------------------------------------------------------------------------------------------------
Girish Mundada
Former Vice President, 2006 $ 143,225 $ - $ 66,000 $ - $ 209,225
Engineering (4) 2007 $ - $ - $ - $ - $ -
2008 $ - $ - $ - $ - $ -
- ----------------------------------------------------------------------------------------------------------------------------
14
(1) Joseph Kozak was appointed Chief Executive Officer effective August 16,
2006 and Chairman of the Board of Directors effective October 1, 2007. The
"Option Awards" column includes $48,767 of compensation related to stock
options granted to Mr. Kozak prior to his appointment as Chief Executive
Officer. In October 2006, Mr. Kozak entered into a stock option agreement
with the Company to receive the right to exercise a stock option to
purchase up to 165,000 shares of common stock, to be vested upon the
achievement of a specific milestone. This option was cancelled and a new
option granted, also covering 165,000 shares of common stock, on May 1,
2007. The new option vests monthly over three years. In May 2008 Mr. Kozak
received a fully vested stock option under which he had the right to
purchase up to 750,000 shares of common stock at an exercise price of $1.18
per share. During 2008 and 2007, Mr. Kozak was eligible for a $125,000 cash
bonus each six months and during 2006, he was eligible for a $100,000 cash
bonus each six months. Upon review of Mr. Kozak's achievements for fiscal
2008, 2007 and 2006, the Compensation Committee awarded Mr. Kozak the two
six-month bonuses for fiscal 2008, 2007 and 2006.
(2) Francis K. Ruotolo served as Chairman of the Board (and also an employee of
the Company) until June 30, 2007 at which time he resigned as an employee
and remained as Chairman. He continued as Chairman until September 30, 2007
and is currently a director. Mr. Ruotolo was paid a cash severance of
$500,000 as part of his separation agreement when he resigned as an
employee.
(3) Boyd Pearce served as Chief Executive Officer until his resignation on
August 16, 2006. During 2006, Mr. Pearce was eligible to receive a $100,000
cash bonus. Upon review of Mr. Pearce's achievements in 2006, the
Compensation Committee awarded Mr. Pearce his full $100,000 bonus. Pursuant
to his Separation Agreement, Mr. Pearce agreed to provide consulting
services, and receive $16,667 monthly for such services. Mr. Pearce
received a total of $75,002 between August 16, 2006 and December 31, 2006.
Also pursuant to his Separation Agreement, the Company extended the
exercise period for option grants covering 750,000 shares of Common Stock,
until August 15, 2011. The Company had previously converted an option grant
covering 750,000 shares, awarded to him during his tenure as a director of
the Corporation, into a warrant to purchase up to 750,000 shares,
exercisable until August 15, 2011.
(4) Girish Mundada served as Vice President of Engineering until his
resignation on September 8, 2006. Pursuant to his Separation Agreement, the
Company extended the exercise period for option grants covering 410,000
shares of Common Stock to June 8, 2008. In consideration for such
extension, the Company and Mr. Mundada agreed to cancel option grants
covering 210,000 shares of Common Stock.
(5) The amounts in this column represent the compensation cost of stock option
awards (granted in 2008 and prior years) recognized during 2008, 2007, and
2006 and have been calculated in accordance with SFAS 123 (R) using the
Black-Scholes option pricing model, utilizing certain assumptions as
outlined in the footnotes to the Company's financial statements ("2008
financial statements") included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2008 and the Company's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, June 30, and
September 30, 2008, and other periodic filings with the SEC (as modified by
guidance provided by the SEC). The amounts for Messrs. Pearce and Mundada
represent 2007 compensation arising from the incremental cost to the
Company of modifying the terms of certain of their option awards (granted
prior to 2007) during 2007, pursuant to the terms of their respective
Separation Agreements. The terms of the Separation Agreements and the
calculation of the incremental costs of the option award modifications are
discussed more fully in Footnote 13 to the Company's 2007 financial
statements.
15
Grants of Plan-Based Awards in Fiscal 2008
The following table sets forth certain information regarding grants of
plan-based awards to each of our named executive officers during fiscal 2008 and
2007. Please refer to "Compensation Disclosure and Analysis" for further
discussion.
- ------------------------------------------------------------------------------------------------------------------------------------
Name Grant Estimated Future Estimated Future All Other All Other Exercise or Grant Date
Date (6) Payouts Under Payouts Under Stock Awards: Option Base Price Fair Value
Non-Equity Equity Incentive Number of Awards: of Option of Option
Incentive Plan Plan Awards Shares of Number of Awards Awards
Awards Stock or Securities ($/Sh)
Units Underlying
Options (#)
(#) (7) (8)
-----------------------------------------------------------------
Thresh- Target Max Thresh Target Max
old -imum -old -imum
($) ($) ($) (#) (#) (#)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph Kozak
Chairman, 5/1/2007 165,000 $ 0.87 $ -
Chief 5/15/2008 750,000 $ 1.18 $ -
Executive
Officer (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth Ruotolo
Chief Financial 5/15/2008 138,500 $ 1.18
Officer (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Rick Cerwonka
President, 5/15/2008 400,000 $ 1.18
Inventa
Technologies (3)
- ------------------------------------------------------------------------------------------------------------------------------------
Alton Dinsmore
Vice President, 9/11/2007 125,000 $ 0.87
Sales (4) 3/26/2008 50,000 $ 0.87
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey Spirn
Former 3/26/2008 5,000 $ 0.87
Vice President,
Research and
Development (5)
- ------------------------------------------------------------------------------------------------------------------------------------
16
(1) The Company granted Mr. Kozak an option covering 165,000 shares of Common
Stock in October 2006, to be vested upon the achievement of a specific
milestone. For competitive reasons, the Company deems the milestone to be
confidential. This option was cancelled and a new option granted, also
covering 165,000 shares of common stock, on May 1, 2007. The new options
grant vests monthly over three years from the grant date.
The Company granted Mr. Kozak an option covering 750,000 shares of Common
Stock in May 2008. The grant was fully vested upon issue.
(2) The Company granted Mr. Ruotolo an option covering 138,500 shares of Common
Stock in May 2008. The grant was fully vested upon issue.
(3) The Company granted Mr. Cerwonka an option covering 400,000 shares of
Common Stock in May 2008. The grant vests monthly over three years from the
date of grant.
(4) The Company granted Mr. Dinsmore an option covering 50,000 shares of Common
Stock in May 2008. The grant vests monthly over three years from the date
of grant.
(5) The Company granted Mr. Spirn an option covering 5,000 shares of Common
Stock in May 2008. The grant was fully vested upon issue.
(6) The grant dates of all stock option grants coincide with the date such
stock option grants were approved by the Company's Board of Directors.
(7) The exercise price or base price of each option award is the same as the
closing market price of the Company's Common Stock on the grant date of the
award.
(8) The amounts represent the total fair value of the option awards on grant
date, calculated in accordance with SFAS 123 (R) using the Black-Scholes
pricing model, utilizing certain assumptions as outlined in the footnotes
to the Company's financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2008 and the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, June 30, and September 30, 2008, and other periodic filings with
the SEC (as modified by guidance provided by the SEC).
17
Outstanding Equity Awards at Fiscal 2008 Year End
- -------------------------------------------------------------------------------------------------------------------------------
Option Awards Stock Awards (1)
- -------------------------------------------------------------------------------------------------------------------------------
Name Number of Number of Equity Option Option Number of Market Equity Equity
Securities Securities Incentive Exercise Expiration Shares or Value of Incentive Incentive
Underlying Underlying Plan Price ($) Date Units of Shares or Plan Plan Awards:
Unexercised Unexercised Awards: Stock that Units of Awards: Market or
Options (#) Options (#) Number of Have Not Stock that Number of Payout Value
Exercisable Unexer- Securities Vested Have Not Unearned of Unearned
cisable Underlying Vested Shares, Shares, Units,
Unexercised Units, or or Other
Unearned Other Rights that
Options (#) Rights Have
that Have Not Vested
Not Vested
(2) (#) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- -------------------------------------------------------------------------------------------------------------------------------
Joseph Kozak 125,000 $ 0.87 5/4/2015
Chairman, 125,000 $ 0.87 6/10/2015
Chief 135,000 $ 0.87 10/13/2015
Executive 166,667 33,333 $ 0.87 6/18/2016
Officer 87,083 77,917 $ 0.87 4/30/2017
(3) 750,000 $ 1.18 5/15/2018
- -------------------------------------------------------------------------------------------------------------------------------
Kenneth Ruotolo 9,340 $ 0.87 1/8/2011
Chief 19,980 $ 0.87 2/21/2011
Financial 15,500 $ 0.87 6/21/2011
Officer 17,500 $ 0.87 10/3/2011
17,500 $ 0.87 10/3/2011
60,680 $ 0.87 4/9/2012
20,000 $ 0.52 8/6/2012
20,000 $ 0.81 1/29/2014
110,000 $ 0.87 12/9/2014
104,167 20,833 $ 0.87 6/18/2016
(3) 138,500 $ 1.18 5/15/2018
- -------------------------------------------------------------------------------------------------------------------------------
Rick
Cerwonka
President, (4) - 400,000 $ 1.18 5/15/2018
Inventa
Technologies
- -------------------------------------------------------------------------------------------------------------------------------
Alton Dinsmore
Vice President 50,000 $ 0.87 7/18/2015
Sales 20,833 4,167 $ 0.87 6/18/2016
54,167 20,833 $ 0.87 10/12/2016
7,222 2,778 $ 0.87 11/13/2016
125,000 $ 0.87 9/10/2017
12,500 37,500 $ 0.87 3/26/2018
- -------------------------------------------------------------------------------------------------------------------------------
Clifford Hersh 31,500 $ 0.87 12/12/2010
Former 72,000 $ 0.87 10/3/2011
Managing 72,000 $ 0.87 10/3/2011
Director and 20,000 $ 0.52 8/6/2012
Chief Scientist 20,000 $ 0.81 1/29/2014
50,000 $ 0.87 5/19/2015
- -------------------------------------------------------------------------------------------------------------------------
Jeffrey Spirn 10,000 $ 0.87 12/12/2010
Former Vice 40,000 $ 0.87 2/21/2011
President 10,000 $ 0.87 10/3/2011
Research and 10,000 $ 0.87 10/3/2011
Development 50,000 $ 0.87 4/9/2012
20,000 $ 0.52 8/6/2012
20,000 $ 0.81 1/29/2014
65,000 $ 0.87 4/24/2015
5,000 $ 0.87 3/26/2018
- -------------------------------------------------------------------------------------------------------------------------------
18
(1) The Company did not offer stock awards in 2008.
(2) Unless otherwise noted, all outstanding option awards were fully vested as
of December 31, 2008.
(3) These grants were issued on May 15, 2008 and were fully vested upon issue.
(4) This grant was issued on May 15, 2008 and vests ratably over 36 months from
the grant date, fully vesting on May 15, 2011.
19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Class (a)
- ------------------------------------ -------------------- ---------
Constantin Zdarsky (1) 17,126,881 18.89%
c/o Tim Hanlon,
Alley, Maass,
Rogers & Lindsay, P.A.
340 Royal Poinciana Way,
Ste. 321,
Palm Beach, FL 33480
Lyle P. Campbell (2) 6,541,667 7.22%
c/o Berry-Shino
Securities, Inc.
15100 N. 78th Way,
Suite #100
Scottsdale, AZ 85260
Donald R. Hutton (3) 4,502,500 4.97%
10095 Boas Road
Sidney, B.C. Canada V8L 5J1
Perry Logan 4,319,250 4.76%
PO Box 30370,
Las Vegas, NV 89173-370
Directors and Executive Officers
- --------------------------------
Joseph Kozak (4) 1,540,000 1.69%
Francis K. Ruotolo (5) 751,875 *
John R. Gaulding (6) 279,375 *
Thomas Holt (7) 316,875 *
Robert H. Kite (8) 613,750 *
Craig Campbell (9) 2,294,600 2.53%
Ari Kaplan (10) 430,625 *
Robert Jett (11) 75,000 *
All directors and
executive officers
as a group (8 persons 6,332,100 6.99%
* Less than one percent.
a) The shares of Common Stock underlying the Beneficial Owner and Management's
options, warrants and promissory notes, as applicable, were deemed
outstanding for the purpose of computing the percent of class owned by each
Beneficial Owner. There were 90,648,369 shares of common stock outstanding
as of April 30, 2009.
(1) Includes 9,745,700 shares of Common Stock owned by Mr. Zdarsky, warrants to
purchase up to 3,852,150 shares of Common Stock, and the right to acquire
4,379,032 shares of Common Stock pursuant to Convertible Promissory Notes.
20
(2) Includes 3,914,200 shares of Common Stock owned by Mr. Campbell, warrants
to purchase up to 200,000 shares of Common Stock, and the right to acquire
2,500,000 shares of Common Stock pursuant to Convertible Promissory Notes.
(3) Includes 2,000,000 shares of Common Stock owned by Mr. Hutton and 2,502,500
shares of Common Stock in the name of Whistler Design, controlled by Mr.
Hutton; does not include 90,000 shares of Common Stock which Mr. Hutton
holds in joint tenancy with Ms. Josephine C. Hutton (his sister) and in
which Mr. Hutton has disclaimed any beneficial interest or ownership.
(4) Includes 40,000 shares of Common Stock purchased on the open market and
Options to purchase up to 1,500,000 shares of Common Stock. Pursuant to his
Option agreements, Mr. Kozak can acquire 1,500,000 shares of Common Stock
within the next 60 days. Effective March 31, 2008 Mr. Kozak forfeited
250,000 Options in exchange for a repricing of the remaining 750,000
Options to an exercise price of $0.94 per share.
(5) Includes 20,000 shares of Common Stock purchased through a private
offering, approved by the Company's Board of Directors and directed to
certain accredited investor, 10,000 shares of Common Stock purchased on the
open market, and Options to purchase up to 1,002,500 shares of Common
Stock. Pursuant to his Warrant and Option agreements, Mr. Ruotolo can
acquire up to 1,002,500 shares of Common Stock within the next 60 days.
Effective March 31, 2008 Mr. Ruotolo forfeited 250,625 Options in exchange
for certain of his remaining 751,875 Options to an exercise price of $0.94
per share.
(6) Includes Warrants to purchase up to 322,500 shares of Common Stock and
Options to purchase up to 50,000 shares of Common Stock. Pursuant to his
Warrant and Option agreements, Mr. Gaulding can acquire 372,500 shares of
Common Stock within the next 60 days. Effective March 31, 2008 Mr. Gaulding
forfeited 93,125 Options and Warrants in exchange for a repricing of the
remaining 279,375 Options to an exercise price of $0.94 per share.
(7) Includes Warrants to purchase up to 192,500 shares of Common Stock and
Options to purchase up to 230,000 shares of Common Stock. Pursuant to his
Warrant and Option agreements, Mr. Holt can acquire 297,500 shares of
Common Stock within the next 60 days. Effective March 31, 2008 Mr. Holt
forfeited 105,625 Options and Warrants in exchange for a repricing of the
remaining 316,875 Options to an exercise price of $0.94 per share.
(8) Includes 250,000 shares of Common Stock purchased through a private
offering, approved by the Company's Board of Directors and directed to
certain accredited investors, 125,000 shares of Common Stock purchased
through the exercise of warrants, and Warrants to purchase up to 238,750
shares of Common Stock. Pursuant to his Warrant agreements, Mr. Kite can
acquire up to 240,000 shares of Common Stock within the next 60 days.
Effective March 31, 2008 Mr. Kite forfeited 61,250 Options and Warrants in
exchange for a repricing of the remaining 183,750 Options to an exercise
price of $0.94 per share.
(9) Includes 857,100 shares of Common Stock purchased through a private
offering, approved by the Company's Board of Directors and directed to
certain accredited investors, the right to acquire 1,250,000 shares of
Common Stock pursuant to a Convertible Promissory Note, and Options to
purchase 187,500 shares of Common Stock. Pursuant to his Option agreement,
Mr. Campbell can acquire 45,833 shares of Common stock within the next 60
days. Effective March 31, 2008 Mr. Campbell forfeited 12,500 Options in
exchange for a repricing of the remaining 37,500 Options to an exercise
price of $0.94 per share.
(10) Represents 430,625 Options to purchase 430,625 shares of Common Stock.
Pursuant to his Option agreement, Mr. Kaplan can acquire 150,000 shares of
Common stock within the next 60 days. Effective March 31, 2008 Mr. Kaplan
forfeited 93,542 Options in exchange for a repricing of the remaining
280,625 Options to an exercise price of $0.94 per share
(11) Includes 1,000 shares of Common Stock purchased on the open market and an
option to purchase shares of Common Stock. Pursuant to his Option
agreement, Mr. Jett can acquire 45,833 shares of Common stock within the
next 60 days. Effective March 31, 2008 Mr. Jett forfeited 25,000 Options in
exchange for a repricing of the remaining 75,000 Options to an exercise
price of $0.94 per share
21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Related Transactions
Since January 1, 2008 there were no transactions, and there are no proposed
transactions, in which we were or are to be a participant, involving an amount
in excess of $120,000, and in which any related person had or will have a direct
or indirect material interest.
Director Independence
The entire Board of directors, with the exception of Francis Ruotolo, are
"Independent" directors, as defined by applicable rules and regulations of the
SEC and Nasdaq Stock Market. The Company deems Francis Ruotolo to be not
independent, on the basis of his previous employment with the Company. Mr.
Ruotolo has been employed by the Company within the past three years.
Beneficial Investor and Director Relationship
As noted in the Beneficial Shareholder's table included herein, Lyle P.
Campbell is a beneficial shareholder of 7.3% of the Common Stock of the Company.
In May, 2007, Mr. Campbell's son Craig Campbell joined the Company's Board of
Directors. Mr. Craig Campbell is also a direct shareholder of the Company,
beneficially owning 2.53% of the Company's Common Stock.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
During fiscal 2008 and 2007 we retained Burr, Pilger & Mayer to provide
services in the following categories, for the fees indicated:
2008 2007
-------- --------
Audit Fees $117,425 $206,555
Audit Related Fees 28,941
Tax Fees 5,000 11,440
All Other Fees 14,176 8,474
-------- --------
Total $165,542 $226,469
-------- --------
Audit Fees
These represent aggregate fees billed for each of the last two fiscal years
for professional services rendered by the principal accountant for the audit of
the Company's annual financial statements and services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements.
Audit Related Fees
Audit-related fees include reviews of interim financial statements, Forms
10-Q and related financial information.
Tax Fees
Tax fees include preparation of Federal and State income tax returns for
fiscal years ended December 31, 2006 and 2007.
22
All Other Fees
All other fees include research, consultation and discussions related to
various accounting and tax issues.
The Company's Audit Committee pre-approved the principal types of services
(audit, audit assurance and tax preparation) provided by the principal
accountant during the year ended December 31, 2006. 100% of "Audit-Related
Fees", 100% of "Tax Fees" and 100% of "All Other Fees" were approved by the
Company's Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.
The Company's Audit Committee has considered whether the provision of services
rendered by its accountants is compatible with maintaining the accountant's
independence. The Audit Committee reviews in advance, and grants any appropriate
pre-approvals of, (i) all auditing services to be provided by the principal
accountant and (ii) all non-audit services to be provided by the principal
accountant as permitted by Section 10A of the Securities Exchange Act of 1934,
and not specifically prohibited under the Sarbanes-Oxley Act of 2002, and in
connection therewith approves all fees and other terms of engagement.
23
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 as of the 22nd Day of May 2009 by the undersigned, thereunto duly
authorized.
ANTs software inc.
By /s/ Joseph Kozak
-----------------------------------
Joseph Kozak,
Chairman, Chief Executive Officer
and President
24
DIRECTORS
By /s/ Joseph Kozak
-----------------------------------
Joseph Kozak, Chairman, Chief
Executive Officer and President
Date May 22, 2009
By /s/ Craig L. Campbell
-----------------------------------
Craig Campbell, Director
Date May 22, 2009
By /s/ John R. Gaulding
-----------------------------------
John R. Gaulding, Director
Date May 22, 2009
By /s/ Thomas Holt
-----------------------------------
Thomas Holt, Director
Date May 22, 2009
By /s/ Robert T. Jett
-----------------------------------
Robert Jett, Director
Date May 22, 2009
By /s/ Ari Kaplan
-----------------------------------
Ari Kaplan, Director
Date May 22, 2009
By /s/ Robert H. Kite
-----------------------------------
Robert H. Kite, Director
Date May 22, 2009
By /s/ Francis K. Ruotolo
-----------------------------------
Francis K. Ruotolo, Director
Date May 22, 2009
25
(a) Exhibits
23.1 Consent of Independent Registered Public Accounting Firm
31.1 Certification of the Chief Executive Officer required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of the Chief Financial Officer required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2 Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
We filed the following reports on Form 8-K during the period from October
1, 2008 through December 31, 2008:
1) On November 10, 2008 we issued a press release that contained
information regarding our results of operations for the quarter
ending September 30, 2008.
2) On November 28, 2008 we disclosed entry into a material
definitive agreement with Sybase, Inc.
26