** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

# **Washington,D.C. 20549**

 

## **FORM10-K/A**

 

**AMENDMENTNo. 1 to**

 

**ANNUAL REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

### **For the fiscal year ended December 31, 2004**

 

### **Commission file number 0-28701**

 

**HealthGateData Corp.**

(Exactname of registrant as specified in its charter)

 

| **Delaware**                                                                                         | ** ** | **04-3220927**                        |
|------------------------------------------------------------------------------------------------------|------------|---------------------------------------|
| (State  or other jurisdiction of incorporation or organization)                                      |       | (I.R.S.  Employer Identification No.) |
|                                                                                                 |       |                                  |
| **25 Corporate Drive, Suite 310,  Burlington, Massachusetts  01803**                            |
| (Address  of principal executive offices)         (Zip Code) |
|                                                                                                 |       |                                  |

### **Registrant’s telephone number,including area code:  (781) 685-4000**

 

     The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Annual Report for the fiscal year ended December 31, 2004 on Form 10-K as set forth in the pages attached hereto:

 

          Items 10, 11, 12, 13 and 14. Directors and Executive Officers of the Registrant; Executive Compensation; Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Certain Relationships and Related Transactions; Principal Accountant Fees and Services, respectively. The information required by these Items is filed herewith by amendment pursuant to Rule 12b-15.

 

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 
|                 | HealthGate Data Corp.                 |
|----------------------|---------------------------------------|
|                 |                                  |
| Date: April 29, 2005 |                                  |
|                 | By: /s/ William S. Reece              |
|                 | William S. Reece                      |
|                 | Chairman of the Board of Directors    |
|                 | and Chief Executive Officer           |
|                 | (Principal Executive Officer)         |
| Date: April 29, 2005 |                                  |
|                 | By: /s/ Julie Furrier                 |
|                 | Julie Furrier                         |
|                 | Chief Financial Officer and Treasurer |
|                 | (Principal Financial Officer)         |

 

 

 

 

**Item 10. Directors and Executive Officers of theRegistrant**.

 

The followingtable sets forth certain information regarding HealthGate’s directors andexecutive officers as of March 31, 2004.

 
| **Name**                         | ** ** | **Age** | ** ** | **Position**                                                               |
|----------------------------------|------------|---------|------------|----------------------------------------------------------------------------|
| William S. Reece                 |       | 39      |       | Chairman of the Board  of Directors, President and Chief Executive Officer |
| Julie Furrier                    |       | 37      |       | Chief Financial  Officer, Treasurer and Secretary                          |
| Paul L. Harman                   |       | 48      |       | Vice President,  Business Development                                      |
| Jonathan J.G. Conibear  (2)      |       | 53      |       | Director                                                                   |
| Edson D. de Castro (1)           |       | 66      |       | Director                                                                   |
| David Friend (1)(3)              |       | 56      |       | Director                                                                   |
| Harry R. Jacobson, M.D  (2)(3)   |       | 57      |       | Director                                                                   |
| William G. Nelson, Ph.D.  (1)(3) |       | 70      |       | Director                                                                   |

----

| (1) | Member of the Audit  Committee           |   |   |
|-----|------------------------------------------|--------|--------|
| (2) | Member of the  Compensation Committee    |   |   |
| (3) | Member of the 2004  Nominating Committee |   |   |

 

 

**William S.Reece**is a founder of HealthGate and has served as a member of HealthGate’sboard of directors and as President and Chief Executive Officer since theCompany’s inception in 1994. Mr. Reece has served as the Chairman of the Boardof Directors since December 1994. From 1988 to 1994, Mr. Reece served inseveral positions, including Vice President, Sales and Marketing, Manager ofU.S. Sales and Marketing Representative at PaperChase, a medical literatureretrieval software company owned by Beth Israel Hospital in Boston.

 

**Julie Furrier** was appointed as HealthGate’sChief Financial Officer, Secretary and Treasurer on February 7, 2005.  Ms. Furrier joined HealthGate in November2000 and served as HealthGate’s Chief Accounting Officer since 2001. Prior to joining HealthGate, from 1993 to 2000, Ms. Furrier was employed inseveral positions for Town & Country Corporation and subsidiaries,including as Chief Financial Officer, Treasurer and Secretary of Town& Country Fine Jewelry Group, Inc. from 1999 to 2000.  From 1991 to1992, Ms. Furrier was employed by The Boston Company Advisors, Inc. as afinancial reporting accountant and from 1989 to 1991 she was employed byEdelstein & Company LLP as an auditor. Ms. Furrier has been a licensed Certified Public Accountant since 1993.

 

**Paul L.Harman** joined HealthGate in 1997 and has held several titles and positions,including Managing Director, HealthGate Europe Ltd. (1997 to 1999), VicePresident, activePress (1999 to 2000), Vice President, Information Technologyand Software Development  (2000 to 2003),and Vice President, Business Development (beginning in January 2004).  Prior to joining HealthGate, Mr. Harman hadsix years experience in the medical publishing industry, including serving asManaging Director for Compact Information Ltd (UK)  (owned by Blackwell Science Ltd.) from 1994to 1997 and as International Sales Director for Adonis BV (Netherlands) from1991 to 1994.  Prior to that Mr. Harmanworked for Sony Corporation as a Corporate Planning Manager in Sony’s EuropeanHeadquarters (from 1990 to 1991) and for The Harper Group (from 1979 to 1990)developing on-line software for the international freight forwarding andlogistics industry.

 

 

2

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**Jonathan****J. G. Conibear** hasserved as a member of our Board of Directors since December 1996.  In October 2001, Mr. Conibear became amanaging director of Taylor and Francis, a United Kingdom academic researchpublisher.  From 1986 to September 2001,Mr. Conibear served as Executive Director of Blackwell Science, Ltd., thelargest publisher of medical societies’ journals and one of the world’s largestmedical publishers, with headquarters in Oxford, U.K.  From 1985 to 1997, Mr. Conibear had otherresponsibilities with Blackwell Science, including President, Blackwell ScienceInc., Blackwell’s U.S. subsidiary, Chair, Blackwell’s Asian subsidiary, andSales Director. From 1974 to 1985, Mr. Conibear served in various positionswith Oxford University Press. Since May 2004 Mr. Conibear has been a director ofT&FInforma, a quoted U.K. publisher of specialist academic and professionalinformation.

 

**Edson D.****de****Castro** has served as a member of our Board of Directorssince December 1994. Since 1997, Mr. de Castro has been a self-employedbusiness consultant. From 1992 to 1997, Mr. de Castro was Chairman ofXenometrix, Inc., a biotechnology company. From 1989 to 1990, Mr. de Castro wasChairman of the Board of Directors of Data General Corporation. From 1968 to1989, Mr. de Castro served as President and Chief Executive Officer of DataGeneral. Mr. de Castro is a director of AVAX Technologies, Inc., abiopharmaceutical company, and a director of VCampus Corp., a publisher ofeducational courseware for Internet training programs. Mr. de Castro is also atrustee of Boston University and a Member of the Clark University GraduateSchool of Management Advisory Council. Mr. de Castro is also a Member of the Corporationof Partners Healthcare System, Inc.

 

**DavidFriend** has served as a member of our Board of Directors since April1995.  He has been a Partner with theventure capital firm Orchid Partners since 2002.   From 1999 to 2002, Mr. Friend was presidentand CEO of Sonexis, Inc., a telecommunications hardware company where he iscurrently the Chairman of the Board. From 1995 through December 1999, Mr. Friend served as Chairman of theBoard of Directors of FaxNet Corp., a provider of messaging services to thetelecommunications industry. During 1994 and 1995, Mr. Friend served as alecturer at Massachusetts Institute of Technology. From 1983 to 1994, Mr.Friend served as Chairman of the Board of Directors of Pilot Software, aninternational software firm. Mr. Friend has also been a director of GEACComputer Corporation, Limited since 2001.

 

**Harry Jacobson, M. D.**became a director in October 2003. Dr. Jacobson is Vice Chancellor for Health Affairs and Professor ofMedicine at Vanderbilt University Medical Center.  In 1985, Dr. Jacobson joined the Vanderbiltfaculty as Professor of Medicine and Director of the Division ofNephrology.  From 1978 to 1985, Dr.Jacobson was on the faculty of the University of Texas Southwestern MedicalCenter at Dallas. From 1976 to 1978, he served as Chief of the Renal Section ofthe U.S. Army Surgical Research Center at Brooke Army Medical Center.  Dr. Jacobson is a member of numerousprofessional organizations, including the Institute of Medicine of theNational Academy of Sciences, the American Society of Nephrology, theInternational Society of Nephrology, the American Society of ClinicalInvestigation, and the Association of American Physicians. He is a founder ofRenal Care Group and is a member of its Board of Directors. Dr. Jacobson is amember of the Board of Directors of Kinetic Concepts, Inc., a global medicaltechnology company, and Ingram Industries, Inc., a wholesale book distributor,and has also served as Chairman of EBM Solutions, Inc. since 1999.

 

**William****G. Nelson, Ph.D.**  hasserved as a member of our Board of Directors since October 2000.  Since 1990, Dr. Nelson has been the Chairmanof the Board of Directors of HarrisData Corp., a computer softwarecompany.  Since 1999, Dr. Nelson has alsobeen the Chairman of the Board of Directors of Repository Technologies Inc., acomputer software company.  Dr. Nelsonhas been a director of GEAC Computer Corporation, Limited since 1988,additionally from June 1996 through October 2000, Dr. Nelson served as theChairman of the Board of Directors of GEAC, and from September 1996 until April1999, he also served as its Chief Executive Officer and President.  Since 1986, Dr. Nelson has also served as adirector of Manugistics Group, Inc., a provider of intelligent supply chainoptimization solutions for enterprises and evolving eBusiness trading networks.Since 2002, Dr. Nelson has served as a director of Catalyst International Inc.,a supplier of supply chain management software.   Dr. Nelson is a Partner with OrchidPartners, a venture capital firm.  FromDecember 1991 to December 1994, Dr. Nelson was President and Chief ExecutiveOfficer of Pilot Software, Inc.

 

3

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Executive officers ofHealthGate are elected by the board of directors on an annual basis and serveat the pleasure of the board of directors. There are no family relationships among any of the Company’s executiveofficers or directors.

 

The Company’s board ofdirectors is divided into three classes, each of whose members serve forstaggered three-year terms.  One class ofdirectors will be elected each year at the annual meeting of stockholders for aterm of three years.  Mr. de Castro, Mr.Reece and Dr. Jacobson presently serve as Class III Directors whose termexpires at the annual meeting of stockholders in 2005; Mr. Friend and Dr.Nelson presently serve as Class I Directors whose term expires at the annualmeeting of stockholders in 2006; and Mr. Conibear and Dr. Jacobson presentlyserve as Class II Directors whose term expires at the annual meeting ofstockholders in 2007.  All directors willhold office until their successors have been duly elected and qualified.

 

#### **AuditCommittee Financial Expert**

 

The Board of Directors ofHealthGate has determined that Mr. de Castro, Chairman of the Audit Committee,is an “audit committee financial expert,” as defined in the rules of the SEC,and is “independent” as defined in Rule 4200 (a)(15) of NASD’s listingstandards.

 

#### **Section16(a) Beneficial Ownership Reporting Compliance**

 

Based solely on a review ofForms 3, 4, and 5 furnished to HealthGate pursuant to Rule 16a-3(e) under theSecurities Exchange Act of 1934 (the “Exchange Act”) during and with respect toits most recent fiscal year, as well as written representations furnished to HealthGateby reporting persons, all persons subject to Section 16 of the Exchange Actwith respect to HealthGate have filed on a timely basis all reports required bySection 16(a) of the Exchange Act during the most recent fiscal year.

 

#### **Codeof Ethics**

 

In December 2003, the Boardof Directors of HealthGate adopted a Code of Conduct and Ethics which isapplicable to all employees, including the chief executive officer, chieffinancial officer, principal accounting officer and controller.  HealthGate’s Code of Conduct and Ethics isposted on the Company’s website at www.healthgate.com.  HealthGate intends to describe any amendmentsto its Code of Conduct and Ethics any waivers granted to HealthGate’s chiefexecutive officer, chief financial officer, principal accounting officer andcontroller under the Code of Conduct and Ethics on the Company’s website atwww.healthgate.com.

 

4

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#### **ITEM11.               EXECUTIVE COMPENSATION**

 

#### **Summary CompensationTable**

 

The following table summarizesthe compensation paid to or earned by HealthGate’s Chief Executive Officer,Chief Financial Officer and Vice President — Business Development, the mosthighly compensated executive officers of HealthGate at December 31, 2004 (the “NamedExecutive Officers”) whose total salary and bonus exceeded $100,000 forservices rendered to HealthGate in all capacities during the year endedDecember 31, 2004.

 
| ** **                                        | ** ** | **ANNUAL COMPENSATION** | ** ** | **LONG-TERM COMPENSATION** | ** ** |
|---------------------------------------------------|------------|-------------------------|------------|----------------------------|------------|
| **NAME AND PRINCIPAL POSITION**                   | ** ** | **YEAR**                | ** ** | **SALARY ($)**             | ** ** | **BONUS ($)** | ** ** | **SECURITIES UNDERLYING OPTIONS (#)** | ** ** | **ALL OTHER COMPENSATION ($)(1)** | ** ** |
|                                              |       |                    |       |                       |       |   |   |   |   |   |   |
| William S. Reece                                  |       | 2004                    |       | 210,000                    |       |   |   | — |   | 173 |   |
| President  and Chief Executive Officer            |       | 2003                    |       | 213,750                    |       |   |   | 150,000 |   | 178 |   |
|                                              |       | 2002                    |       | 240,000                    |       |   |   | 99,150 | (2) | 205 |   |
|                                              |       |                    |       |                       |       |   |   |   |   |   |   |
| Veronica Zsolcsak (3)                             |       | 2004                    |       | 202,500                    |       |   |   | — |   | 422 |   |
| Chief  Financial Officer, Treasurer and Secretary |       | 2003                    |       | 205,313                    |       |   |   | 120,000 |   | 430 |   |
|                                              |       | 2002                    |       | 225,000                    |       |   |   | 54,999 | (2) | 483 |   |
|                                              |       |                    |       |                       |       |   |   |   |   |   |   |
| Paul Harman (4)                                   |       | 2004                    |       | 165,000                    |       | 17,090 | (5) |   |   | 207 |   |
| Vice President - Business Development             |       |                    |       |                       |       |   |   |   |   |   |   |
|                                                   |            |                         |            |                            |            |  |  |  |  |  |  |  |  |

----

| (1) |   | Represents payments made by the Company in the respective years for  term life insurance premiums on behalf of the Named Executive Officers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Options granted pursuant to  Option Exchange Offer. On November 27, 2001, HealthGate commenced an offer to  exchange certain options to purchase shares of its common stock upon the  terms and subject to the conditions described in the Offer to Exchange dated November  27, 2001, as amended (the “Option Exchange Offer”). Under the Option Exchange  Offer, employees, including executive officers, were given the opportunity to  elect to cancel outstanding stock options held by them in exchange for an  equal number of new options to be granted at a future date. Pursuant to the  Option Exchange Offer, on December 28, 2001, Mr. Reece elected to cancel options  for the purchase of 99,150 shares and Ms. Zsolcsak elected to cancel options  for the purchase of 54,999 shares. In accordance with the terms of the Option  Exchange Offer, HealthGate granted new options to purchase common stock in  exchange for such tendered options on July 8, 2002. The exercise price of the  new options was $0.25 per share (equal to the fair value of HealthGate’s  common stock as quoted on the Over-the-Counter Bulletin Board on the date of  grant). |
| (3) |   | Ms. Zsolcsak resigned as  Chief Financial Officer, Treasurer and Secretary on February 7, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (4) |   | Mr. Harman was appointed as  Vice Preseident of Business Development in January, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (5) |   | Represents commissions and  bonuses earned in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

** **

 

5

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**Option Grants in Year EndedDecember 31, 2004**

 

No individual grants ofstock options were made to any of the Named Executive Officers during thefiscal year ending December 31, 2004.

 

 

**Aggregated Option Exercises In2004 And 2004 Year-End Option Values**

 

The following table setsforth certain information with respect to the number and value of optionexercises in 2004 and unexercised options held by the Named Executive Officerson December 31, 2004.
| ** **        | ** ** | ** **                                 | ** ** | ** **              | ** ** | ** **                                                                      | ** ** | ** **                                                             | ** ** | ** **      | ** ** | ** **        | ** ** |
|-------------------|------------|--------------------------------------------|------------|-------------------------|------------|---------------------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|-----------------|------------|-------------------|------------|
| ** **        | ** ** | ** **                                 | ** ** | ** **              | ** ** | **Number of Securities Underlying Unexercised Options at Fiscal  Year-End (#)** | ** ** | **Value of Unexercsed In-the-Money Options at Fiscal Year-End ($)(1)** | ** ** |
| **Name**          | ** ** | **Shares  Acquired**

**on  Exercise (#)** | ** ** | **Value  Realized ($)** | ** ** | **Exercisable**                                                                 | ** ** | **Unexercisable**                                                      | ** ** | **Exercisable** | ** ** | **Unexercisable** | ** ** |
| William S. Reece  |       | 75,000                                     |       | 36,625                  |       | 194,983                                                                         |       | 62,500                                                                 |       | 52,680          |       | 40,313            |       |
| Veronica Zsolcsak |       | —                                     |       | —                  |       | 124,999                                                                         |       | 50,000                                                                 |       | 69,900          |       | 32,250            |       |
| Paul Harman       |       | —                                     |       | —                  |       | 113,333                                                                         |       | 41,667                                                                 |       | 62,375          |       | 26,875            |       |

----

| (1) |   | The value of unexercised  in-the-money options represents the difference between $0.70 (the closing  price of HealthGate’s common stock as quoted on the Over-the-Counter Bulletin  Board on December 31, 2004, the last day of HealthGate’s fiscal year), and  the exercise price of the stock options, multiplied by the number of shares  subject to the stock options. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

**Compensation of Directors**

 

Directors of HealthGate whoare also our employees did not receive additional compensation for serving asDirectors.

 

In 2004 each of HealthGate’snon-employee Directors received $2,700 per quarterly Board of Directors’meeting attended, $450 per Committee meeting attended, and $450 per monthlyBoard of Directors’ conference call attended. Directors are also reimbursed, upon request, for expenses incurred inattending each Board of Directors’ meeting.

 

Additionally, as compensation for their services eachof HealthGate’s non-employee Directors is granted stock options under theCompany’s Stock Option Plan. The number of options issued to non-employeeDirectors for their services is 11,666 per year (or 35,000 for the three-yearperiod).  These options have an exerciseprice equal to the Company’s share price on the date of grant, vest quarterlyin twelve equal installments based on continuing service as a director througheach applicable quarter and have a five year term for options granted prior to2004 and a ten year term for options granted in or after January 2004.

 

 

**Employment Contracts, Terminationof Employment, and Change-In-Control Arrangements**

 

Under an employmentagreement dated October 1, 1995, HealthGate agreed to employ Mr. Reece asChairman of the Board, President and Chief Executive Officer of HealthGate fora period of three years beginning on October 1, 1995, to be automaticallyrenewed on an annual basis, unless either party does not wish to extend theemployment agreement, in which case the agreement will terminate three yearsfrom the applicable renewal date. Under the agreement, Mr. Reece’s minimum basesalary is subject to annual review by the Board of Directors. Mr. Reece is alsoeligible to participate in any bonus programs HealthGate adopts. Mr. Reece’s2004 annual base salary was $210,000. Mr. Reece did not receive any bonuses under HealthGate’s 2004 ExecutiveBonus Plan.

 

6

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HealthGate may terminate Mr.Reece’s employment for malfeasance, nonfeasance or breach of the employmentagreement, as determined by 75% of the Board of Directors. If HealthGateterminates Mr. Reece’s employment for malfeasance, nonfeasance or breach of theemployment agreement, Mr. Reece will be entitled to receive a lump sumseverance payment equal to 12 months’ compensation at his then current basesalary, the amount of any bonus paid to him in the previous contract year, andany accrued bonus through the date of termination, plus any benefits to whichhe is entitled for 12 months following the date of termination. HealthGate mayalso terminate Mr. Reece’s employment if Mr. Reece is convicted of a felonyinvolving HealthGate. If HealthGate terminates Mr. Reece’s employment forconviction of a felony involving HealthGate, Mr. Reece will not be entitled toany further compensation under the employment agreement, except as may berequired by applicable law.

 

In addition, Mr. Reece mayelect to terminate the employment agreement for good reason or following achange in control of HealthGate. In the event Mr. Reece makes such an electionfor good reason or as a result of a change in control, he will be entitled to alump sum severance payment equal to 12 months’ compensation at his then currentbase salary, any accrued bonus through the date of election, plus any benefitsto which he is entitled for 12 months following the date of election.

 

HealthGate has agreed thatif it terminates the employment of certain employees, including Julie Furrier,Chief Financial Officer, and Paul Harman, Vice President, Business Development,without cause, the employee shall be entitled to severance payments comprisingthe employee’s then current base salary and then current health care coveragefor six months from the date of termination.

 

On February 7, 2005 VeronicaZsolcsak resigned as Chief Financial Officer, Treasurer and Secretary of HealthGate.  Ms. Zsolcsak has agreed to be a part timeemployee of HealthGate through August 5, 2005, with a significantly reducedtime commitment to HealthGate. HealthGate has agreed to continue to pay Ms. Zsolcsak at her salary of$208,575 during this six month transition period.

 

 

**Compensation Committee Interlocksand Insider Participation**

 

Noneof HealthGate’s executive officers serves as a member of the Board of Directorsor compensation committee of any entity that has one or more of its executiveofficers serving as a member of the Company’s Board of Directors orCompensation Committee. HealthGate’s Compensation Committee currently consistsof Mr. Conibear and Dr. Jacobson, neither of whom has ever been an officer oremployee of HealthGate.

 

#### **ITEM 12.        SECURITY OWNERSHIPOF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

The following table setsforth information with respect to the beneficial ownership of HealthGate’sCommon Stock as of March 1, 2005 by: (a) each person who the Company knows ownsbeneficially more than 5% of the Company’s Common Stock; (b) each of theCompany’s Directors; (c) each of the Named Executive Officers; and (d) all ofthe Company’s Directors, nominees and executive officers as a group. Unlessotherwise indicated, the mailing address for each person and business entitylisted below is c/o HealthGate Data Corp., 25 Corporate Drive, Suite 310,Burlington, MA 01803.

 

7

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| **Beneficial Owner**                                        | ** ** | **Shares Beneficially Owned** | ** ** | **Percent Beneficially Owned(1)** |
|-------------------------------------------------------------|------------|-------------------------------|------------|-----------------------------------|
|                                                        |       |                          |       |                              |   |
| EBM Solutions(2)                                            |       | 1,085,381                     |       | 18.4                              | % |
| William S. Reece(3)                                         |       | 831,535                       |       | 14.4                              | % |
| Blackwell Science Ltd.(4)                                   |       | 673,990                       |       | 12.1                              | % |
| Oxney Mead, Oxford                                          |       |                          |       |                              |   |
| OX2 OEL, United Kingdom                                     |       |                          |       |                              |   |
| Barry M. Manuel, M.D.(5)                                    |       | 395,993                       |       | 7.1                               | % |
| 65 Wellesley Road                                           |       |                          |       |                              |   |
| Belmont, MA 02478                                           |       |                          |       |                              |   |
| Harry Jacobson(6)                                           |       | 246,955                       |       | 4.4                               | % |
| David Friend(7)                                             |       | 231,286                       |       | 4.1                               | % |
| William G. Nelson, Ph.D.(8)                                 |       | 168,773                       |       | 3.0                               | % |
| Veronica Zsolcsak(9)                                        |       | 144,999                       |       | 2.5                               | % |
| Paul Harman(10)                                             |       | 134,883                       |       | 2.4                               | % |
| Edson D. de Castro(11)                                      |       | 79,315                        |       | 1.4                               | % |
| Jonathan J.G. Conibear(12)                                  |       | 30,833                        |       | *                                 |   |
|                                                        |       |                          |       |                              |   |
| Executive Officers and directors as a group (8 persons)(13) |       | 1,868,529                     |       | 30.1                              | % |

----

*  Less than one percent of outstanding shares.

 
| (1) |   | Percentage ownership is  based on 5,563,373 shares outstanding as of March 1, 2005. Shares of Common  Stock subject to options and warrants currently exercisable or exercisable  within 60 days of March 1, 2005 are deemed outstanding for the purpose of  computing the percentage ownership of the person holding such options but are  not deemed outstanding for computing the percentage ownership of any other  person. Unless otherwise indicated below, the persons and entities named in  the table have sole voting and sole investment power with respect to all  shares beneficially owned, subject to community property laws where  applicable.                                                                      |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Includes  333,333 shares of common stock issuable pursuant to a warrant granted to EBM  Solutions, Inc. in connection with HealthGate’s acquisition of certain assets  and liabilities of EBM Solutions, Inc. in October 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (3) |   | Includes  219,983 shares of Common Stock issuable to Mr. Reece upon the exercise of  stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (4) |   | Includes  88,759 shares owned by Blackwell Wissenschafts-Verlag GmbH, a wholly owned  subsidiary of Blackwell Science.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (5) |   | Includes  395,933 shares owned by Dr. Manuel, 105,760 shares held in trusts for which  Dr. Manuel serves as trustee for the benefit of his children and  grandchildren. Dr. Manuel disclaims beneficial ownership of the 105,760  shares held in trust for the benefit of his children and grandchildren.                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (6) |   | Includes  4,000 shares held indirectly as the custodian for his children and  grandchildren. Dr. Jacobson disclaims beneficial ownership of such shares.  Also includes 115,700 shares owned by EBM Solutions, Inc. which are expected  to be distributed to Dr. Jacobson upon EBM Solutions, Inc.’s anticipated  liquidation and 51,282 shares of common stock issuable pursuant to a warrant  granted to EBM Solutions, Inc. Such warrant shares are expected to be  distributed to Dr. Jacobson upon EBM Solutions, Inc.’s anticipated  liquidation. Dr. Jacobson disclaims beneficial ownership of these shares.  Also includes 20,417 shares of Common Stock issuable to Dr. Jacobson upon  exercise of stock options |

 

8

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| (7)  |   | Includes 35,844 shares of  Common Stock issuable to Mr. Friend upon exercise of stock options.                                                                 |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8)  |   | Includes  19,998 shares of Common Stock issuable to Dr. Nelson upon exercise of stock  options.                                                                |
| (9)  |   | Includes  144,999 shares of Common Stock issuable to Ms. Zsolcsak upon exercise of  stock options.                                                             |
| (10) |   | Includes  61,393 shares of Common Stock issuable to Mr. Harman upon exercise of stock  options.                                                                |
| (11) |   | Includes  35,844 shares of Common Stock issuable to Mr. de Castro upon exercise of  stock options.                                                             |
| (12) |   | Includes  30,833 shares of Common Stock issuable to Mr. Conibear upon exercise of stock  options.                                                              |
| (13) |   | Includes  437,687 shares of Common Stock issuable upon exercise of stock options, and  51,282 shares of common stock issuable upon exercise of stock warrants. |

 

 

**ITEM 13.               CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS.**

 

None

 

 

**ITEM 14.               PRINCIPAL ACCOUNTANT FEES ANDSERVICES.**

 

The following table setsforth invoiced and estimated fees incurred by HealthGate from its principalaccountant for the years ended December 31 2004 and 2003.

 

 
| ** **            | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------|------------|----------|------------|----------|------------|
| Audit fees            |       | $        | 208,957    |     | $          | 223,695 |   |
| Audit-related fees(1) |       | —   |       | 39,050   |       |
| Tax fees              |       | —   |       | —   |       |
| All other fees        |       | —   |       | —   |       |
| Total                 |       | $        | 208,957    |     | $          | 262,745 |   |

----

| (1) |   | This  category consists of fees related to the acquisition of substantially all of  the assets and certain liabilities of EBM Solutions, Inc. including an  attempted audit in 2003. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

InApril 2003, HealthGate’s Audit Committee adopted Pre-Approval Policies andProcedures for Audit and Non-Audit Services. Pursuant to these policies and procedures, the Audit Committee is toannually review and pre-approve the independent audit firm’s year-end audit andnew fiscal year quarterly reviews as well as other known or anticipated auditor non-audit services.  During the courseof the year, the Audit Committee (or the Chairman of the Audit Committee,provided he or she reports such approval at the next Audit Committee meeting)may pre-approve additional non-audit services that have not been pre-approvedat the initial review.

 

 

9

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