10KSB/A 1 0001.txt AMENDMENT TO FORM 10KSB FOR ION NETWORKS, INC. U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB/A [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2000 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File No.: 0-13117 ION NETWORKS, INC. (Name of Small Business Issuer in Its Charter) Delaware 22-2413505 ------------------------------- ----------------------------------- (State or Other Jurisdiction of (IRS Employer Identification Number) Incorporation or Organization) 1551 S. Washington Ave., Piscataway, NJ 08854 --------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number, including area code: (732) 529-0100 -------------- Securities registered under Section 12(b) of the Exchange Act: None ---- Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par value ---------------------------- [X] Check whether the issuer: (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. [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. The issuer's revenues for its most recent fiscal year totaled $22,668,833. The aggregate market value of the voting stock held by non-affiliates computed by reference to the average of the bid and asked prices as reported by the Nasdaq Stock Market as of June 22, 2000 was approximately $86,618,805. There were 15,621,862 shares of Common Stock outstanding as of June 22, 2000. DOCUMENTS INCORPORATED BY REFERENCE: None. This amendment to Form 10-KSB for the period ended March 31, 2000 is filed to include Items 9-12 contained in Part III of Form 10-KSB that were previously incorporated by reference to the Company's definitive Proxy Statement in connection with the Company's 2000 Annual Meeting of Stockholders. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. DIRECTORS AND EXECUTIVE OFFICERS The directors and executive officers of the Company, their ages and present positions with the Company are as follows:
Director Name Age Position Held with the Company Since ---- --- ------------------------------ ----- Stephen M. Deixler(1)(2)(3)(4) 65 Chairman of the Board of Directors 1985 Stephen B. Gray(2)(4) 42 President, Chief Executive Officer, Chief 1996 Operating Officer and Director Alfred M. Leonardi 48 Chief Financial Officer, Treasurer and Secretary Not applicable Jane Kaufman 52 Executive Vice President - Marketing and Not Business Development applicable Alexander C. Stark, Jr. (1)(2) (3)(4) 67 Director 1997 Alan Hardie (3) 60 Director 1999 William Martin Ritchie(4) 51 Director 1999 Baruch Halpern 49 Director 1999
INFORMATION ABOUT DIRECTORS Set forth below is certain information with respect to each director: STEPHEN M. DEIXLER has been Chairman of the Board of Directors since 1985 and served as Chief Executive Officer of the Company from April 1996 to May 1997. He was President of the Company from May 1982 to June 1985 and served as Treasurer of the Company from its formation in 1982 until September 1993. Mr. Deixler was the Chairman of Princeton Credit Corporation until April 1995. ------------------ (1) Member of Compensation/Stock Option Committee (2) Member of Nominating Committee (3) Member of Audit Committee (4) Member of Strategic Steering Committee -2- STEPHEN B. GRAY has been President and Chief Operating Officer of the Company since April 1996. He has served as the Chief Executive Officer of the Company and a director since May 1997. He also is a director of ION Networks, BV and ION Networks, Ltd., wholly-owned subsidiaries of the Company. He served as Senior Vice President-Sales, Marketing and Support of the Company from December 1994 through March 1996. Prior to December 1994, Mr. Gray held various management and executive positions at IBM and Sieman's Nixdorf, and he was also an independent consultant, engaged in assisting both private and publicly-held companies with strategy development, internal operational reviews and stockholder value enhancement programs. ALEXANDER C. STARK, JR. has been a director of the Company since 1997. Mr. Stark is the President of AdCon, Inc., a consulting firm organized to advise and council senior officers of global telecom companies. Mr. Stark previously worked for 40 years at AT&T, where he most recently served as a Senior Vice President. ALAN HARDIE has served as a director of the Company since April 1999. Mr. Hardie has served as a General Manager of BT Global Communications since 1994, where he provides leadership and strategic direction for such entity's Global Customer Service division.* WILLIAM MARTIN RITCHIE has served as a director of the Company since April 1999. Mr. Ritchie currently acts as a consultant in his own consulting entity, MR Ventures, where he provides various start-up companies with management assistance and early stage investment. Mr. Ritchie was a founder of Spider Systems, a Scottish electronics company, where he served in several capacities, including the Managing Director, from 1984 to 1995. Mr. Ritchie currently serves on the board of directors of various companies in Scotland.* BARUCH HALPERN has served as a director of the Company since October 1999. From January 1995 to the present, Mr. Halpern has been an institutional research analyst with Goldsmith & Harris Incorporated, where he has advised institutions about investment opportunities. He has also been an advisor in connection with a leveraged buy-out of a public company and several private placements. Mr. Halpern is a Chartered Financial Analyst. NON-DIRECTOR EXECUTIVE OFFICERS Set forth below is certain information with respect to each executive officer of the Company who is not also a director of the Company: ALFRED M. LEONARDI has been the Chief Financial Officer, Treasurer and Secretary of the Company since December 1999. Mr. Leonardi was previously the Vice President of Finance at Meto, Inc., a company engaged in electronic bar code and human readable marking and identification systems, from 1992 through November 1999. Mr. Leonardi is a licensed certified public accountant in the State of New York. JANE KAUFMAN has been the Executive Vice President-Marketing and Business ----------------------- * Each of Messrs. Hardie and Ritchie was elected to serve as a director in connection with an agreement among the Company and the shareholders of SolCom Systems Limited ("SolCom") in March 1999 to nominate two nominees to the Board of Directors upon the closing of the acquisition of SolCom by the Company. -3- Development of the Company since January 2000. From 1996, and prior to joining the Company, she worked as a consultant with small technology companies to develop new business opportunities and restructure operations. From 1995 to 1996, Ms. Kaufman served as President and COO of Ware Systems Corp., an e-commerce company. From 1990 to 1994 she was President of NYNEX Venture Company, where she incubated high-tech start-up companies. Ms. Kaufman has a doctoral degree in experimental psychology and an MSOR, both from New York University. She has a BA from Bennington College. The officers of the Company are elected by the Board of Directors at its first meeting after each annual meeting of the Company's stockholders and hold office until their successors are chosen and qualified, until their death, or until they resign or have been removed from office. No family relationship exists between any director or executive officer and any other director or executive officer. COMPENSATION OF DIRECTORS Each of the members of the Board of Directors who is not also an employee of the Company ("Non-Employee Directors") receives options to purchase 10,000 shares of Common Stock at exercise prices per share equal to the fair market value of the Common Stock on the date of grant on an annual basis under the Company's 1998 Stock Option Plan. Non-Employee Directors are also granted options to purchase an additional 1,500 shares of Common Stock for each meeting of the Board of Directors attended by such Non-Employee Director. Non-Employee Directors serving on committees of the Board of Directors are granted, on an annual basis, options to purchase 1,500 shares of Common Stock for each committee served thereby. In addition, the Company reimburses all Non-Employee Directors traveling more than fifty miles to a meeting of the Board of Directors for all reasonable travel expenses. EXECUTIVE OFFICERS The executive officers of the Company are Stephen B. Gray, President, Chief Executive Officer and Chief Operating Officer; Alfred M. Leonardi, Chief Financial Officer,Treasurer and Secretary; and Jane Kaufman, Executive Vice President-Marketing and Business Development. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE The following persons have failed to file on a timely basis certain reports required by Section 16(a) of the Securities Exchange Act of 1934, with respect to the fiscal year ended March 31, 2000, as follows: Each of Messrs., Stephen B. Gray, Jane Kaufman, Alfred M. Leonardi, Kevin Latraverse, Baruch Halpern, Stephen M. Deixler and William M. Ritchie failed to timely file an Annual Statement of Changes in Beneficial Ownership of Securities on Form 5. Each of Messrs. Stephen B. Gray, Stephen M. Deixler, Peter A. Wilson and Michael Radomsky failed to timely file a Statement of Changes in Beneficial Ownership on Form 4. Each of Messrs. Jane Kaufman and Baruch Halpern failed to timely file a Statement of Initial Beneficial Ownership of Securities on Form 3. During the fiscal year ended March 31, 2000, the Company is not aware of other late filings, or failure to file, any other reports required by Section 16(a) of the Exchange Act. -4- ITEM 10. EXECUTIVE COMPENSATION. The following table summarizes the compensation paid or accrued by the Company during the past three fiscal years, including the fiscal year ended March 31, 2000, to the Company's Chief Executive Officer and to the Company's three other most highly compensated officers who earned salary and bonus compensation of at least $100,000 during the fiscal year ended March 31, 2000 (two of which were not serving as officers of the Company at the end of the last completed fiscal year), and to other key executive officers (these executive officers being hereinafter referred to as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE Annual Compensation Long-term Compensation ----------------------------------------- ----------------------------------------------------------------- Awards Payouts -------------------------- ------------------------- Annual Restricted Securities All Other Principal Compen- Stock Underlying LTIP Compen- Position Year Salary($) Bonus($) sation($) Award(s)($) Options (#) Payouts($) sation($)(1) -------- ---- --------- -------- ------ ----------------- ----------- ---------- ----------- Stephen B. Gray 2000 261,076 54,616 36,000 132,966 -- 11,106 President, Chief 1999 265,750 -- -- 60,000 -- 779 Executive Officer, 1998 252,829 -- -- 75,000 -- -- Chief Operating Officer Michael Radomsky(2) 2000 149,577 -- -- 22,710 -- 8,259 Executive Vice- 1999 164,392 -- -- 43,823 -- 2,781 President 1998 139,858 -- -- 42,839 -- 2,526 Alfred M. Leonardi(3) 2000 45,983 -- -- 46,292 -- -- Chief Financial Officer Kevin B. Latraverse 2000 258,715 -- -- 23,442 -- 12,811 Executive Vice-President Sales Jane Kaufman(4) 2000 36,115 -- 10,000 153,376 -- 1,083 Executive Vice-President Marketing And Business Development Peter A. Wilson(5) 2000 107,840 -- -- 352,197 -- -- Executive Vice-President Marketing
------------------------------ (1) Represents contribution of the Company under the Company's 401(k) Plan. (2) Mr. Radomsky resigned as a director and officer of the Company effective as of December 10, 1999. (3) Mr. Leonardi joined the Company in December 1999 and was appointed as an officer effective as of January 17, 2000. (4) Ms. Kaufman joined the Company in January 2000 and was appointed as an officer effective as of March 20, 2000. -5- (5) Mr. Wilson resigned as an officer of the Company effective as of February 25, 2000. OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2000 The following table sets forth certain information concerning stock option grants during the fiscal year ended March 31, 2000 to the Named Executive Officers:
Individual Grants -------------------------------------------------------------------------------- Percent Number of of Total Securities Options Exercise Underlying Granted to or Base Options Employees in Price Expiration Name Granted(#) Fiscal Year ($/Sh) Date ---- ---------- ----------- ------ ---- Stephen B. Gray 32,966(1) 1.1% 2.28 3/31/09 100,000 3.5% 2.28 4/1/04 Michael Radomsky 22,710(1) 0.8% 2.28 3/31/09 Alfred M. Leonardi 6,292(1) 0.2% 15.97 3/31/09 40,000 1.4% 7.70 11/5/04 Kevin B. Latraverse 23,442(1) 0.8% 2.28 3/31/09 Jane Kaufman 3,376(1) 0.1% 20.94 3/31/09 150,000 5.3% 20.94 1/3/05 Peter A. Wilson 139,710 5.2% 0.4826 12/31/03 25,770 0.9% 1.8016 3/31/09 120,000 4.5% 2.28 3/31/09 50,000 1.9% 2.28 3/31/03 16,717(1) 0.6% 2.28 3/31/09 ----------------------------------
(1) Represents options granted pursuant to the Company's Time Accelerated Restricted Stock Award Program (TARSAP). -6- AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2000 AND FISCAL YEAR-END OPTION VALUES The following table sets forth certain information concerning each exercise of stock options during the fiscal year ended March 31, 2000 by each of the Named Executive Officers and the number and value of unexercised options held by each of the Named Executive Officers on March 31, 2000.
Value of Number of Securities Unexercised Underlying Unexer- In-the-Money Shares cised Options Options at Acquired on Value at FY-End(#) FY-End($)(1) Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable ---- ------------ ----------- ------------------------- ------------------------- Stephen B. Gray 42,309 600,784/132,966 $17,134,660/$3,677,840 Alfred M. Leonardi -- -- 20,000/26,292 $444,800/$532,699 Jane Kaufman -- -- 0/153,376 $0/$1,380,384 Michael Radomsky -- -- 142,239/66,533 $4,055,020/$1,808,750 Kevin B. Latraverse -- -- 200,000/123,442 $5,538,000/$3,417,405 Peter A. Wilson 115,648 -- 49,832/186,717 $1,467,890/$5,164,592 ------------------------
(1) The average price for the Common Stock as reported by the Nasdaq Stock Market on March 31, 2000 was $29.94 per share. Value is calculated on the basis of the difference between the option exercise price and $29.94 multiplied by the number of shares of Common Stock underlying the options. EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS The Company has no employment agreements other than an employment agreement dated April 1, 1999 with Stephen B. Gray, the Company's Chief Executive Officer and President pursuant to which Mr. Gray receives (i) salary of $275,000 per annum for a term of one (1) year (the "Term"), (ii) a $30,000 one-time signing bonus and (iii) 100,000 stock options, which vest on April 1, 2001. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation/Stock Option Committee of the Board of Directors consists of Messrs. Stephen M. Deixler and Alexander C. Stark, Jr. Mr. Deixler previously served as the Company's Chief Executive Officer until May 1997. No executive officer of the Company serves as a member of the board of directors or compensation committee of any other entity which has one -7- or more executive officers serving as a member of the Company's Board of Directors. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth the number of shares of the Company's Common Stock owned by each person or institution who, as of July 27, 2000, owns of record or is known by the Company to own beneficially, more than five (5%) percent of such securities, and by the Company's executive officers and by its directors, both individually and as a group, and the percentage of such securities owned by each such person and the group. Unless otherwise indicated, such persons have sole voting and investment power with respect to shares listed as owned by them.
Name and Address Shares Owned Percent of Class ----------------- ------------ ---------------- Stephen M. Deixler(1) 856,702 5.4% 371 Eagle Drive Jupiter, Florida 33477 Stephen B. Gray(2)(9) 643,093 4.0% Alfred M. Leonardi(3)(9) 20,000 * Alexander C. Stark, Jr.(4) 259,500 1.6% 356 Jupiter Drive Jupiter, Florida 33477 Alan Hardie(5) 36,000 * PP318 Westgate #11 Hope Street Glasgow G2 6AB Scotland William Martin Ritchie(6) 25,500 * Keston 4 Buckstane Park Edinburgh EH10 6PA Scotland Jane Kaufman(9) 0 * Baruch Halpern(7)(9) 104,500 * Zesiger Capital Group LLC 1,388,700(8) 8.9% 320 Park Avenue, 30th Floor New York, NY 10022 Directors and Named Executive Officers 1,945,295 11.6% as a group (8 persons)
-8- ---------------- (1) Does not include 8,824 shares of Common Stock owned by Mr. Deixler's wife, mother, children and grandchildren as to which shares Mr. Deixler disclaims beneficial ownership. Includes 120,406 shares of Common Stock held by Merrill Lynch Pierce Fenner & Smith custodian f/b/o Stephen M. Deixler, IRA. Includes 187,000 shares of Common Stock which may be acquired pursuant to currently exercisable options. (2) Includes 600,784 shares of Common Stock which may be acquired pursuant to currently exercisable options. (3) Consists of 20,000 shares of Common Stock which may be acquired pursuant to currently exercisable options. (4) Includes 209,500 shares of Common Stock which may be acquired pursuant to currently exercisable options. (5) Consists of 36,000 shares of Common Stock which may be acquired pursuant to currently exercisable options. (6) Includes 20,500 shares of Common Stock which may be acquired pursuant to currently exercisable options. (7) Includes 4,500 shares of Common Stock which may be acquired pursuant to currently exercisable options. Includes 100,000 shares of Common Stock which may be acquired pursuant to currently exercisable warrants. (8) Based on Schedule 13G as filed by such beneficial owner with the SEC on June 6, 2000. (9) The address of such person is c/o the Company, 1551 S. Washington Avenue, Piscataway, New Jersey 08854 ------------------------ *Indicates ownership of Common Stock of less than one (1%) percent of the total issued and outstanding Common Stock on the Record Date. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. On June 7, 1999, the Company issued an aggregate of 1,000,000 shares of Common Stock and warrants to purchase an aggregate of 500,000 shares of Common Stock to Special Situations Private Equity Fund, L.P. ("Special Situations") and certain affiliated entities of Special Situations for an aggregate consideration of $3,000,000. The securities issued were "restricted securities" under the Securities Act of 1933, as amended (the "Act"). Pursuant to the transaction, the Company has registered the shares of Common Stock (including those shares underlying the warrants) under the Act. pursuant to a form S-3, which was declared effective in September 1999. The warrants expire in three years and the exercise prices thereof are $4.50 per share for 250,000 warrants and $6.00 per share for the remaining 250,000 warrants. -9- On August 5, 1999, the Company issued an aggregate of 2,000,000 shares of Common stock to Zesiger Capital Group LLC and certain of its affiliates for an aggregate consideration of $9,500,00. The securities issued were "restricted securities" under the Act. Pursuant to the transaction, the Company registered the shares of Common Stock under the Act pursuant to a form S-3, which was declared effective in September, 1999. In April 2000, the Company made a loan of $750,000 to its Chief Executive Officer. The Loan bears interest at the rate of Libor + 1% per annum, and is due in April 2005, or sooner, if the Chief Executive Officer's employment is terminated. On June 29, 2000, the Company made an advance of $135,000 to its Chief Executive Officer. The advance was subsequently repaid in full on July 26, 2000. -10- SIGNATURES In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in this City of Piscataway and State of New Jersey DATED: July 28, 2000 ION NETWORKS, INC. By:/s/ Stephen B. Gray ------------------------------- Stephen B. Gray, President