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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
As of March 31, 2001 and for the period April 10, 2000 (date of inception)
to March 31, 2001
Commission File No.: 333-37440
HealthStream, Inc.
Employee Stock Purchase Plan
(Full title of plan)
HealthStream, Inc.
209 10th Avenue South, Suite 450
Nashville, Tennessee 37203
(Name of issuer of securities held pursuant to the plan
and address of principal executive office)
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INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
Report of Independent Auditors..............................................1
Statement of Financial Condition as of March 31, 2001.......................2
Statement of Change in Plan Equity for the period April 10,
2000 (date of inception) to March 31, 2001.............................3
Notes to Financial Statements...............................................4
Exhibit 23 - Consent of Independent Auditors..............................E-1
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Report of Independent Auditors
Compensation Committee of the Board of Directors
HealthStream, Inc. Employee Stock Purchase Plan
We have audited the accompanying statement of financial condition of the
HealthStream, Inc. Employee Stock Purchase Plan as of March 31, 2001 and the
related statement of change in plan equity for the period April 10, 2000 (date
of inception) to March 31, 2001. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the HealthStream, Inc. Employee
Stock Purchase Plan at March 31, 2001 and the change in plan equity for the
period April 10, 2000 (date of inception) to March 31, 2001, in conformity with
accounting principles generally accepted in the United States.
Nashville, Tennessee
June 18, 2001
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HealthStream, Inc. Employee Stock Purchase Plan
Statement of Financial Condition
MARCH 31,
2001
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ASSETS
Receivable from HealthStream, Inc. $ --
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LIABILITIES
Obligations to purchase HealthStream, Inc. common stock --
Plan equity --
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Total liabilities and Plan equity $ --
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See accompanying notes.
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HealthStream, Inc. Employee Stock Purchase Plan
Statement of Change in Plan Equity
PERIOD FROM
APRIL 10, 2000 (DATE
OF INCEPTION) TO
MARCH 31,
2001
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Participant contributions $ 143,029
Purchases of HealthStream, Inc. common stock (56,956)
Withdrawals (43,840)
Amounts refunded to Plan participants (42,233)
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Plan equity at end of year $ --
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See accompanying notes.
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HEALTHSTREAM, INC. EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001
1. DESCRIPTION OF THE PLAN
The following is a brief description of the HealthStream, Inc. Employee Stock
Purchase Plan ("the Plan"). Participants should refer to the Plan agreement for
a more complete description of the Plan's provisions.
GENERAL
In February 2000, the Board of Directors of HealthStream, Inc. (the "Company")
adopted the HealthStream, Inc. Employee Stock Purchase Plan (the "Plan"). The
Plan was effective beginning with the initial public offering of HealthStream,
Inc. common stock on April 10, 2000. In connection with the plan, 1,000,000
shares have been reserved for issuance.
PLAN YEAR
The Plan year begins on the first trading day of HealthStream, Inc. common stock
or April 1 and ends on March 31.
ELIGIBILITY
Substantially all regular employees of the Company and its subsidiaries are
eligible to participate in the Plan upon completion of 30 days of employment
prior to the beginning of each Plan year.
An employee may choose to withdraw from the Plan at any time prior to 15 days
prior to the end of the Plan year. Participants that terminate employment with
the Company prior to the end of the Plan year are not eligible to remain in the
Plan. Upon termination or withdrawal any accumulated contributions are returned
to the employee.
CONTRIBUTIONS
The Plan permits eligible employees to contribute not less than $50 per month
and not more than 15% of wages and salary through regular payroll deductions on
an after tax basis. Employees are also allowed to make one lump sum contribution
during each Plan year. In addition to the above limits, the number of shares
acquired by each individual participant is limited to 2,500 shares per Plan
year.
The Company holds contributions until the end of the Plan year, at which point
common stock of the Company is purchased and distributed to the contributing
participants. All funds held by the Company under the Plan are included in the
general assets of the Company.
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HEALTHSTREAM, INC. EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN (CONTINUED)
Participants may change their contribution elections annually at the beginning
of the Plan year. Change requests must be received 30 days prior to the
beginning of the Plan year.
STOCK PURCHASE PROVISIONS
On the first day of each Plan year (the first trading day or April 1),
participants in the Plan are granted the option to purchase shares of the
Company's common stock from the Company. On the last day of each Plan year
(March 31), the Company uses participant contributions, net of refunds, to
purchase shares of the Company's common stock for the participant. Such stock is
immediately distributed to Plan participants. Contributions that exceed the Plan
provisions or the Internal Revenue Code limits are refunded to participants. The
purchase price per share to the participant is equal to 85% of the market value,
as defined in the Plan, of the Company's common stock on the first or last day
of the Plan year, whichever amount is lower. The fair market value of the stock
acquired through the Plan by any one participant cannot exceed $25,000 in one
calendar year as dictated by the Internal Revenue Code Section 423.
At March 30, 2001, the last trading day prior to the Plan year end, the
Company's closing stock price was $1.25. Accordingly, the Plan, on behalf of the
participants, purchased 53,606 shares of the Company's common stock at $1.0625
(85% of $1.25) on April 2, 2001 with an effective date of March 31, 2001.
Shares purchased by the Plan on behalf of the participants are transferred into
a brokerage account in the employee's name. There are 946,394 shares remaining
available for issuance under the Plan.
PLAN TERMINATION
Even though there are no current intentions to do so, the Board of Directors can
terminate the Plan at any time. Stock purchase transactions in process at the
time of such termination cannot be modified or canceled without the written
consent of the participants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual basis of
accounting.
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HEALTHSTREAM, INC. EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires Plan management to make
estimates and assumptions that affect the reported amounts of Plan assets and
liabilities and disclosure of any contingent assets and liabilities at the date
of the financial statements and the reported amounts of changes in Plan equity
during the reporting period. Actual results may differ from those estimates and
the differences could be material.
PLAN ADMINISTRATION
The Plan is administered by the Compensation Committee of the Company's Board of
Directors, which consists of three non-employee directors.
PLAN EXPENSES
Administrative expenses of the Plan are paid by the Company.
3. FEDERAL INCOME TAXES
The Plan is intended to be an Employee Stock Purchase Plan under Section 423 of
the Internal Revenue Code of 1986 ("the Code"). Issuance of shares under this
Plan are not intended to result in taxable income to participants in the Plan
based on provisions of the Code. Accordingly, the Plan is designed to be exempt
from income taxes. Management believes that the Plan has been operated in
accordance with the Code and therefore no provision for income taxes has been
reflected in the accompanying financial statements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the plan) of the HealthStream,
Inc. Employee Stock Purchase Plan have duly caused this Annual Report to be
signed on its behalf by the undersigned hereunto duly authorized.
HEALTHSTREAM, INC.
EMPLOYEE STOCK PURCHASE PLAN
By: Arthur E. Newman
Date: June 20, 2001 By: /S/ Arthur E. Newman
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Name: Arthur E. Newman
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Title: Chief Financial Officer
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