form-10ka_123101
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No.1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Fiscal Year Ended December 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from _______________ TO ____________
Commission File Number 0-24768
MEDIX RESOURCES, INC.
(Name of small business issuer in its charter)
Colorado 84-1123311
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization Identification No.)
420 Lexington Avenue, Suite 1830
New York, New York 10170
(Address of Principal Executive Offices)
Issuer's Telephone Number: (212) 697-2509
Securities Registered Under Section 12(b) of the Exchange Act:
Common Stock - $.001 Par Value.
Securities Registered Under Section 12(g) of the Exchange Act:
None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-X contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant as of March 15, 2002 was approximately
$31,707,233 (for purposes of the foregoing calculation only, each of the
registrant's officers and directors is deemed to be an affiliate).
There were 58,386,516 shares of registrant's Common Stock outstanding as of
March 15, 2001.
Documents incorporated by reference:
None
Medix Resources, Inc. hereby amends Item 11 of its Form 10-K filed with the
Commission on April 1, 2002, solely to completely restate the material under the
heading "Comparison of Cumulative Total Returns." This restatement is being made
due to the fact that, as originally filed, the Company inadvertently used
erroneous data points for the American Stock Exchange index used for comparative
purposes. No other changes in the Form 10-K have been made.
ITEM 11. EXECUTIVE COMPENSATION
Executive Officer Compensation
Summary Compensation Table. The following table sets forth the annual and
long-term compensation for services in all capacities to the Company for the
three years ended December 31, 2001, awarded or paid to, or earned by our Chief
Executive Officer ("CEO") and our four other most highly compensated officers
(the "Named Officers").
Long-Term
Compensation
-----------
Annual Securities
Compensation Underlying
Name and Principal Fiscal ------------------- Options
Position Year Salary Bonus Other(1) (Shares)
----------------- --------- ------------------- ------------ ------------
John R. Prufeta 2001 $114,000 0 425,000
President and CEO 2000 $120,000 0 600,000
1999 $171,000(2) 0 925,000
Louis E. Hyman, 2001 156,625(3) 0 250,000
Executive Vice
President and
Chief Technology
Officer
Patricia A. $197,000 0 175,000
Minicucci 2001 $163,846 0 400,000
Executive Vice
President for 2000
Operations
Gary L. Smith, 2001 $197,000 0 175,000
Executive Vice 2000 $ 2,430 0 250,000
President and
Chief Financial
Officer
Brian R. Ellacott 2001 $165,000 0 175,000
Senior Vice 2000 $125,769 150,000
President
(1) Other annual compensation, except as noted, is made up of automobile
allowances, and disability and health insurance premiums, in amounts less
than 10% of the officer's annual salary plus bonus.
(2) During 1999, Mr. Prufeta served as a consultant to the Company pursuant to
a consulting agreement between the Company and his employer, Creative
Management Strategies, Inc., which company was paid or accrued the amount
shown above and received options to purchase 25,000 shares of Common Stock,
included in the amount shown. He became an employee of the Company in early
2000.
(3) During 2001, Mr. Hyman, through an affiliated entity, served as a
consultant to Medix before he became a full time employee and executive
officer. This amount includes the consulting compensation to his firm. He
also received a grant of options to purchase 20,000 shares for his
consulting services.
Stock Option Awards. In August 1999, our Board of Directors approved and
authorized our 1999 Stock Option Plan (the "1999 Plan"), which is intended to
grant either non-qualified stock options or incentive stock options, as
described below. In 2000, our shareholders approved the 1999 Plan. The purpose
of the 1999 Plan is to enable our company to provide opportunities for certain
officers and key employees to acquire a proprietary interest in our company, to
increase incentives for such persons to contribute to our performance and
further success, and to attract and retain individuals with exceptional
business, managerial and administrative talents, who will contribute to our
progress, growth and profitability.
Options granted under our 1999 Plan include both incentive stock options
("ISOs"), within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and non-qualified stock options ("NQOs"). Under
the terms of the Plan, all officers and employees of our company are eligible
for ISOs. Our company determines in its discretion, which persons will receive
ISOs, the applicable exercise price, vesting provisions and the exercise term
thereof. The terms and conditions of option grants differ from optionee to
optionee and are set forth in the optionees' individual stock option agreement.
Such options generally vest over a period of one or more years and expire after
up to ten years. In order to qualify for certain preferential treatment under
the Code, ISOs must satisfy the statutory requirements thereof. Options that
fail to satisfy those requirements will be deemed NQOs and will not receive
preferential treatment under the Code. Upon exercise, shares will be issued upon
payment of the exercise price in cash, by delivery of shares of Common Stock, by
delivery of options or a combination of any of these methods. At our 2001 Annual
Meeting, our shareholders approved an increase of 3,000,000 shares to 13,000,000
as the amount of total shares of our Common Stock reserved for issuance under
the 1999 Plan.
As of March 15, 2002, we had issued 5,736,560 shares of our Common Stock
upon exercise of options to current or former employees and directors, and have
6,568,667 shares currently covered by outstanding options held by current or
former employees and directors, with exercise prices ranging form $.19 to $4.97.
Such options have been granted under the 1999 Plan and earlier stock option
plans.
Option information for fiscal 2001 relating to the Named Officers is set
forth below:
Number
of
Shares Percentage
of of
Common Total
Stock Options Valuation
Underlying Granted under
Options to Black-
Granted Employees Scholes
in in Exercise Expiration Pricing
Name 2001 2001 Price Date Method(1)
----------------- ------------- ------------- ---------- ---------- ----------
John R. Prufeta 400,00 21.2% $.62 4/17/06 $217,755
25,000 1.3% $.60 3/23/06 $ 13,171
Louis E. Hyman 230,000 12.2% $.61 5/14/06 $123,190
20,000 1.1% $.70 3/03/03 $ 15,580
Patricia A. 150,000 7.9% $.61 5/14/06 $ 80,341
Minicucci 25,000 1.3% $.60 3/23/06 $ 13,171
Gary L. Smith 150,000 7.9% $.61 5/14/06 $ 80,341
25,000 1.3% $.60 3/23/06 $ 13,171
Brian R. Ellacott 150,000 7.9% $.61 5/14/06 $ 80,341
25,000 1.3% $.60 3/23/06 $ 13,171
(1) The Black-Scholes option-pricing model estimates the options fair value by
considering the following assumptions: the options exercise price and
expected life, the underlying current market price of the stock and
expected volatility, expected dividends and the risk free interest rate
corresponding to the term of the option. The fair values calculated above
use expected volatility of 132%, a risk-free rate of 5.5%, no dividend
yield and anticipated exercise at the end of the term.
Options Exercised and Year-End Values in Fiscal 2001
------------------------------------------------------------------
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Year-End at Year-End(1)
Shares Value ----------------------------- --------------------------
Name Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
--------------- ---------- -------- ------------ -------------- ----------- -------------
John R. Prufeta 0 0 1,450,000(2) 500,000 $258,250 $80,000
Louis E. Hyman 0 0 112,500 137,500 $ 8,325 $12,375
Patricia A. 0 0 575,000 0 $ 16,000 $ 0
Minicucci
Gary L. Smith 0 0 325,000 100,000 $ 16,000 $ 0
Louis E. Hyman 0 0 112,500 137,500 $ 8,325 $12,375
Brian R. 0 0 312,500 12,500 $ 16,000 $ 0
Ellacott
--------------
(1) The dollar values are calculated by determining the difference between
$0.70 per share, the fair market value of the Common Stock at December 31,
2001, and the exercise price of the respective options.
(2) Includes options covering 25,000 of these shares were granted to a company
that is an affiliate of Mr. Prufeta for executive search services.
Medix has no retirement, pension or profit-sharing program for the benefit
of its directors, executive officers or other employees, but the Board of
Directors may recommend one or more such programs for adoption in the future.
Medix does not make any contributions to its 401(k) Plan for its employees.
Employment Agreements.
Mr. Prufeta's Employment Agreement, which has an initial term of one year
and renews in automatic one year increments thereafter, provides that he will be
compensated at the base salary of $275,000 annually, plus a bonus of $400,000,
subject to certain performance criteria. He holds the positions of President and
Chief Executive Officer and reports to the Board of Directors. Pursuant to his
Employment Agreement, Mr. Prufeta has been granted options to purchase 200,000
shares of Common Stock at $.70 per share, which vest upon the occurrence of
certain performance goals. His Employment Agreement provides for termination at
any time by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without
cause, after the initial one-year of the term subject to the right of the
employee to continue to receive salary and pro-rata bonus compensation for 6
months. The Employment Agreement also contains a non-compete provision that
extends for a period of one year after termination or resignation of the
employee, as well as certain confidentiality provisions. The Employment
Agreement contains provisions providing that, upon the occurrence of a
"Triggering Event" (defined to include a change in ownership of 50% of the
outstanding shares of the Company's Common Stock through a merger or otherwise)
during the term of his employment, he will receive a lump sum payment equal to
his then current year's base and bonus pay.
Mr. Hyman's Employment Agreement, which has an initial term of two years,
ending on May 14, 2003, provides that he will be compensated at the salary of
$200,000 annually. He holds the position of Executive Vice President and Chief
Technology Officer, and reports to the President and CEO. Pursuant to his
Employment Agreement, he has been granted options to purchase 230,000 shares of
Common Stock at $.61 per share, which vest over the 2-year term of his
Employment Agreement. His Employment Agreement provides for termination at any
time by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without cause
after the initial one-year of the term, subject to the right of the employee to
continue to receive compensation for 6 months. The Employment Agreement also
contains a non-compete provision that extends for a period of one year after
termination or resignation of the employee, as well as certain confidentiality
provisions. The Employment Agreement contains provisions providing that, upon
the occurrence of a "Triggering Event" (defined to include a change in ownership
of 50% of the outstanding shares of the Company's Common Stock through a merger
or otherwise) during the term of his employment, he will receive a lump sum
payment equal to his then current year's base and bonus pay.
Ms. Minicucci's Employment Agreement, which had an initial term of two
years, ending on March 1, 2002, provided that she be compensated at the salary
of $200,000 annually. Such term has been extended to May 1, 2002. She holds the
position of Executive Vice President, Operations, and reports to the President
and CEO. Pursuant to her Employment Agreement, she has been granted options to
purchase 400,000 shares of Common Stock at $4.97 per share, which vest over the
2-year term of his Employment Agreement. Her Employment Agreement provides for
termination at any time by the employee with or without cause or by the Company
with cause. The Employment Agreement is also subject to termination by the
Company without cause after the initial one-year term, subject to the right of
the employee to continue to receive compensation for 6 months. The Employment
Agreement also contains a non-compete provision that extends for a period of one
year after termination or resignation of the employee, as well as certain
confidentiality provisions. The Employment Agreement contains provisions
providing that, upon the occurrence of a "Triggering Event" (defined to include
a change in ownership of 50% of the outstanding shares of the Company's Common
Stock through a merger or otherwise) during the term of her employment, she will
receive a lump sum payment equal to his then current year's base and bonus pay.
Mr. Smith's Employment Agreement, which has an initial term of two years,
ending on December 11, 2002, provides that he will be compensated at the salary
of $200,000 annually. He holds the position of Executive Vice President and
Chief Financial Officer, and reports to the President and CEO. Pursuant to his
Employment Agreement, he has been granted options to purchase 250,000 shares of
Common Stock at $1.125 per share, which vest over the 2-year term of his
Employment Agreement. His Employment Agreement provides for termination at any
time by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without cause
after the initial one-year of the term, subject to the right of the employee to
continue to receive compensation for 6 months. The Employment Agreement also
contains a non-compete provision that extends for a period of one year after
termination or resignation of the employee, as well as certain confidentiality
provisions. The Employment Agreement contains provisions providing that, upon
the occurrence of a "Triggering Event" (defined to include a change in ownership
of 50% of the outstanding shares of the Company's Common Stock through a merger
or otherwise) during the term of his employment, he will receive a lump sum
payment equal to his then current year's base and bonus pay.
Mr. Ellacott's Employment Agreement, which had an initial term of two
years, ending on March 1, 2002, provided that he be compensated at the salary of
$150,000 annually. Such term has been extended to May 1, 2002. In March 2001,
Mr. Ellacott's annual salary was increased to $175,000. He initially held the
position of Senior Vice President, Business Development, and recently was
appointed as Senior Vice President and Southeast Division Market CEO, reporting
to the Executive Vice President, Operations. Pursuant to his Employment
Agreement, he has been granted options to purchase 150,000 shares of Common
Stock at $3.97 per share, which vest over the 2-year term of his Employment
Agreement. His Employment Agreement provides for termination at any time by the
employee with or without cause or by the Company with cause. The Employment
Agreement is also subject to termination by the Company without cause, subject
to the right of the employee to continue to receive compensation for 6 months.
The Employment Agreement also contains a non-compete provision that extends for
a period of one year after termination or resignation of the employee, as well
as certain confidentiality provisions.
Director Compensation
In 1999, we adopted the policy of compensating non-employee Directors,
$1,000 for attending each regular quarterly Board meeting in person, and $250
for attendance by telephone. The Board of Directors has also authorized payment
of reasonable travel or other out-of-pocket expenses incurred by non-employee
directors for attending Board or committee meetings. Notwithstanding this
policy, during 2001, the Directors waived such fees but not reimbursements for
out-of-pocket expenses. Independently, Ms Joan Herman has waived her director
fees altogether, based on WellPoint company policy.
From time to time, the Board of Directors will grant non-employee Directors
options to acquire shares of Common Stock as compensation for their services to
the Company as Directors. During 2001, we granted options covering 200,000
shares of Common Stock each to Mr. Jeffries and Mr. Scalzi, at the time they
became Directors, which are exercisable at $.78 per share.
In January 2002, the Directors discontinued the policy of cash fees to
Directors for attending Board or committee meetings. Instead, non-employee
Directors will be compensated for their services through the grant of options to
purchase our Common Stock. As of January 22, 2002, each Director, except Ms.
Herman based on the policy referred to above, has been granted options to
purchase 40,000 shares of Common Stock at an exercise price of $0.70 per share.
Those options vest in quarterly 10,000 share increments, from the date of grant,
provided that the Director remains on the Board of the Company.
In 1999, we entered into a consulting agreement with Mr. Samuel Havens,
which provides that we pay Mr. Havens $5,000 per month for his consulting
services in connection with our marketing efforts. Mr. Havens has deferred his
monthly payment since April, 2001, with the accrued amount payable to Mr. Havens
at March 15, 2002 being $55,000. During 2001, we paid Mr. Havens $20,000 for his
services.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
administers the Medix stock option plans and oversees our executive
compensation, subject to approval of its recommendations by the Board of
Directors. Executive compensation includes base salaries, annual incentives and
long term stock option plans, as well as any executive benefits and/or
prerequisites.
Our general compensation philosophy for our executive officers, including
our Chief Executive Officer ("CEO"), is to offer competitive compensation
packages that are designed to attract and retain key executives critical to the
success of the Company. At present, packages include annual cash compensation
(salaries) and long-term compensation consisting of options to purchase the
Company's stock, to align the interests of management with those of the
Company's shareholders. Beginning with calendar year 2002, executive packages
will include variable amounts of annual bonus potential, tied to specific
performance goals for the Company and the individual executives. The Committee
intends to review the performance and compensation of executives annually, in
conjunction with the performance of the Company. Incentive Stock Option awards
are based upon the Committee's judgment as to the relative rank and contribution
of each executive (or other employee) to the success and survival of the
Company.
In addition, the Company has entered into employment agreements with its
executive officers, as outlined earlier in this report.
Compensation Committee,
Dr. David B. Skinner, Chairman
Ms. Joan E. Herman
Mr. John T. Lane
Compensation Committee Interlocks and Insider Participation
In 1999, we entered into agreements with Wellpoint Pharmacy Management
("WPM") to implement a pilot program for the introduction of Cymedix(R)software
to healthcare providers identified by WPM. After the required testing of the
software, the agreements provide for a production program to install the
software broadly among WPM managed providers. One of the agreements provides
that Medix will nominate a representative of WPM to be elected to the Company's
Board of Directors. Ms. Herman is that representative. Such agreement also
provided that WPM would be granted warrants evidencing the right to purchase up
to 6,000,000 shares of Common Stock, which vest upon the occurrence of certain
performance criteria. The agreement provides for the grant of warrants covering
3,000,000 shares with an exercise price of $0.30 per share, and warrants
covering 3,000,000 shares with an exercise price of $0.50 per share, all
expiring five years from the date of grant, September 8, 2004. In February 2002,
the warrant agreement was amended to revise the performance criteria and to add
an additional right to purchase up to 1,000,000 additional shares at $1.75 per
share. At March 15, 2002, warrants covering 1,850,000 shares, exercisable at
$.30 per share, had vested. In February 2002, Wellpoint Health Networks Inc.,
the parent of WPM made a secured convertible loan to Medix of $1,000,000. See
"DESCRIPTION OF BUSINESS - Recent Developments" for a description of the terms
of both these agreements. In addition, Mr. Jeffries, who became a director of
ours in 2001, is an officer and consultant to Wellpoint Health Network.
Comparison of Cumulative Total Returns
The following graph and data point tables compare the performance of the
Company's common stock with the performance of the AMEX-U.S. Index, as adjusted,
and as provided by the American Stock Exchange and a Custom Composite Index (4
stocks) over the five year period extending through the end of 2001. The graph
and tabular information assume that $100 was invested on December 31, 1996 in
the Company's common stock, the AMEX-U.S. Index and the Custom Composite Index,
with any dividends being reinvested. The Company has provided this graph and the
tabular information using publicly available information that it has no reason
to believe is not accurate. However, the Company takes no responsibility for
such information.
The Custom Composite Index includes Cybear, AllScripts, WebMD and ProxyMed,
companies that the Company believes are its peers and that are involved in the
same or similar lines of business. The Company believes that this peer group is
a better comparison than broader indices which are publicly available. Data for
Cybear, AllScripts and WebMD were not available for periods prior to 1999.
Based on the reinvestment of $100 beginning December 31, 1996
12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
Medix $ 100 $ 23 $ 9 $ 288 $ 100 $ 65
Resources,
Inc. (1)
AMEX U.S. $ 100 $ 125 $ 134 $ 177 $ 166 $ 151
Index
Custom $ 100 $ 98 $ 165 $ 138 $ 16 $ 20
Composite
Index
(1) Medix acquired its Cymedix Internet software and services business in January of before
then it operated only a medical temporary staffing businesses. It did not
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-K/A to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDIX RESOURCES, INC.
Date: April 4, 2002
By: /s/ Gary L. Smith
Executive Vice President and
Chief Financial Officer