**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

 

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** **

**FORM 10-K/A**

**(Amendment No. 1)**

 
| **(Mark One)** |   |                                                                                     |
|----------------|--------|------------------------------------------------------------------------------------------|
| **ý**     |   | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|           |   |                                                                                     |
|           |   | **For the fiscal year ended December  31, 2002**                                         |

 

**OR**

 
| **o**  |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**                           |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                    |
|   |   | **For  the transition period from                 to** |

** **

**Commission File No. 000-23221**

 

**CENTIV, INC.**

(Exact name of Registrantas specified in its charter)

 
| **Delaware**                                                                                      |   | **58-2033795**                        |
|---------------------------------------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction  of incorporation or organization)                                  |   | (IRS Employer  Identification Number) |
|                                                                                              |   |                                  |
| ***998 Forest Edge Drive, Vernon  Hills, Illinois 60061***                                        |
|                                                                                              |
| ***(Address of Principal Executive  Offices, including Zip Code)***                               |
|                                                                                              |
| **(847) 876-8300**                                                                                |
| (Registrant’s telephone  number, including area code)                                        |
|                                                                                              |
| Securities Registered  Pursuant to Section 12(b) of the Act:                                      |
| **None**                                                                                          |
|                                                                                              |
| Securities Registered  Pursuant to Section 12(g) of the Act:                                      |
| **Class A Common Stock, $.001 par  value**                                                        |
| **and**                                                                                           |
| **Warrants to purchase Class A Common  Stock, at exercise prices between   $1.00 and $1.75** |
| (Title of Class)                                                                                  |

 

Indicate by check mark whether the registrant: (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes: ý   No: o

 

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10K.  ý

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Exchange Act Rule 12b-2).  Yes  o  No  ý.

 

As of June 28, 2002 (the last business day of the mostrecently completed second fiscal quarter), the aggregate market value of votingand non-voting stock held by non-affiliates of the registrant was approximately$4,814,797 (based upon the last reported sales price of the Common Stock asreported by the Nasdaq SmallCap Market). Shares of Common Stock held by each executive officer, director, andshareholders with beneficial ownership of greater than 10% of the outstandingCommon Stock of the registrant and persons or entities known to the registrantto be affiliates of the foregoing have been excluded in that such persons may bedeemed to be affiliates. This assumption regarding affiliate status is notnecessarily a conclusive determination for other purposes.

 

The number of shares of Class A Common Stockoutstanding (excluding treasury shares of 806,983) as of March 31, 2003 was 4,997,035.

 

**DOCUMENTS INCORPORATED BY REFERENCE: None**

 

 

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**TABLE OFCONTENTS**

 
| PART  III. |                                                            |
|------------|-----------------------------------------------------------------|
|       |                                                            |
| ITEM  10.  | DIRECTORS  AND EXECUTIVE OFFICERS OF THE COMPANY                |
|       |                                                            |
| ITEM 11.   | EXECUTIVE COMPENSATION                                          |
|       |                                                            |
| ITEM  12.  | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
|       |                                                            |
| ITEM  13.  | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS                 |
|       |                                                            |
| ITEM 14.   | CONTROLS AND  PROCEDURES                                        |
|       |                                                            |
| SIGNATURES |

 

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**EXPLANATORY NOTE REGARDING AMENDED 10-K**

 

We are filing this Amendment No. 1 on Form 10-K/Ato our Annual Report on Form 10-K, which  was originally filed with the Securities and Exchange Commission on April4, 2003, solely to (i) include the information required by Part III and (ii)reflect a change in the date of our Annual Meeting as shown on the last page ofthis document. Certain of this information was to be incorporated by referenceinto the originally filed Form 10-K but will not be because we will not befiling our annual meeting proxy statement with the Securities and ExchangeCommission within 120 days of our fiscal year end.

 

**PARTIII.**

 

**ITEM10.  DIRECTORS AND EXECUTIVE OFFICERS OFTHE COMPANY.**

 

**Directors**

 

Due to the resignation of William M. Rychel effective as of December31, 2002, the Company’s board of directors was reduced to six directors.  Mr. Albert E. Sisto resigned as a member ofthe Company's board of directors effective as of March 27, 2002 and Ms. KimFeil, Mr. Frank Dalton and Mr. Steven J.Carnevale resigned as members of the Company’s board of directors effective asof April 22, 2003, each to pursue other interests.  On April 22, 2003, the board appointed Mr.Thomas Pennell (as our preferred stockholders’ designee), Mr. Len Finelli, Mr. Daryl Splithoff and Mr. J.Smoke Wallin, respectively, to fill the vacancies created by the resignationsof Mr. Sisto, Ms. Feil, Mr. Dalton and Mr. Carnevale, in each case to serveuntil the expiration of their respective predecessor’s term until a qualifiedsuccessor director has been elected, or until he or she resigns or is removedby the board.

 

The Company’s directors are divided into three classes consisting oftwo directors in each class who serve overlapping three-year terms.  The Class I Directors’ terms expire at the2003 Annual Meeting.  Five of the sixdirectors are elected by the holders of common stock and preferred stock,voting together as a class, and one director (Mr. Pennell) is elected only by theholders of preferred stock.  A directorserves until a qualified successor director has been elected, or until he orshe resigns or is removed by the board.

 

**Directors Continuing Until 2003 Annual Meeting**

 

***John P. Larkin,***46, prior to joining Centiv, Mr. Larkinco-founded Spectra Marketing Systems, Inc., a consumer marketing databaseservices firm, which he built to $100 million in sales between 1988 and 1997.Before founding Spectra, Mr. Larkin was Vice President - Product Management atInformation Resources, Inc. He began his career with various positions atProcter & Gamble and The Minute Maid Company and also served as Director ofSales Planning and Operations at The Treesweet Company. He holds a BS/BA fromthe University of Kentucky. Mr. Larkin has been a director since December 2002.

 

***Len Finelli****,* 50, is the Chief FinancialOfficer/Executive VP Business Strategy, Nielsen Retail EntertainmentInformation, a division of VNU Media Measurement & Information(www.vnu.com). * *Mr. Finelli has beenwith VNU since 1987, and has held a number of key financial and managerialpositions during his tenure.  He hasserved in his current capacity since 2001. After initially being employed as Controller, Mr. Finelli was promotedin 1990 to CFO of VNU Business Information Services (later re-named to VNU MarketingInformation Services Inc.).  Mr. Finelliis also a director and minority owner of Spot Quotation and Data, a New Yorkbased media research firm.  Mr. Finelliwas appointed by the board of directors on April 22, 2003 to fill the vacancycreated by Ms. Feil's resignation.

 

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**DirectorsContinuing Until 2004 Annual Meeting**

 

***Daryl Splithoff****,*  53,has been with the Wm. Wrigley Jr. Company since September 1, 2000 where he iscurrently Senior Vice President – Supply Chain and Corporate Development.Before joining the Wrigley Company, Mr. Splithoff was, from March 1998 toSeptember 1999, the President & CEO of Edwards Fine Foods (EFF), a frozendessert company headquartered in Atlanta. He joined EFF after ten years with the Keebler Company, where he wasSenior Vice President of Sales and Distribution and served as a member ofKeebler’s Executive Management Committee. Mr. Splithoff was appointed by theboard of directors on April 22, 2003 to fill the vacancy created by Mr.Dalton's resignation.

 

***Thomas M. Mason***, 47,****joined Centiv in March 2000 as VicePresident of Finance and Chief Financial Officer and became a director inFebruary 2001. From July 1997 until joining Centiv, Mr. Mason served as ChiefFinancial Officer of The Segerdahl Corporation, a commercial printer.  Prior to that, from February through July1997, he served as Senior Vice President and Chief Financial Officer of TelularCorporation.  For the preceding 13years, Mr. Mason held various finance and general management positions withBell & Howell Company.  Mr. Masonalso worked at American Hospital Supply Corporation for five years and beganhis career with KPMG/Peat Marwick as a CPA. Mr. Mason has been a director of Centiv since February 2001.

 

**DirectorsContinuing Until 2005 Annual Meeting**

 

***J. Smoke Wallin***, 36, has since 1999been the founder and Chairman & CEO of eSkye Solutions(www.eskyesolutions.com), a leading software solutions provider to thebeverage, Consumer Packaged Goods (CPG) and distribution industries. Mr. Wallinbegan his career in 1988 with National Wine and Spirits, Inc.(www.nwscorp.com), the nation’s sixth largest beverage alcohol distributor, andhe became Executive Vice President and a Director of National Wine and Spirits,Inc. in 1993. He is also currently Chairman of the Wine & SpiritsWholesalers of America (www.wswa.org). Mr. Wallin serves numerous philanthropicorganizations including Boy Scouts of America, Junior Achievement andVanderbilt University. Mr. Wallin was appointed by the board of directors onApril 22, 2003 to fill the vacancy created by Mr. Carnevale’s resignation.

 

***Thomas Pennell,***38, has since 1996 been the ManagingPartner of Pennell Venture Partners (www.pennell.com), a technology focusedventure capital fund based in New York. Prior to establishing PVP, Mr. Pennell held positions in venture capitaland small business finance with Chase Manhattan Bank in 1996, Endeavor CapitalManagement from 1992 to 1995 and Access Capital prior to that time.  On March31, 2003, the holders of our Series B Convertible Preferred Stock designatedMr. Pennell as their preferred director pursuant to the terms of our RestatedArticles of Incorporation and the related Series B Preferred Certificate ofDesignations, Preferences and Rights, and the Board appointed Mr. Pennelleffective April 22, 2003 to fill the vacancy created by the resignation of Mr.Sisto.

 

**ExecutiveOfficers**

 

Following is certain information about our current executive officers,based on information furnished by them.

 

***John P. Larkin,***46, prior to joining Centiv, Mr. Larkinco-founded Spectra Marketing Systems, Inc., a consumer marketing databaseservices firm, which he built to $100 million in sales between 1988 and 1997.Before founding Spectra, Mr. Larkin was Vice President – Product Management atInformation Resources, Inc. (Nasdaq: IRIC). He began his career with variouspositions at Procter & Gamble and The Minute Maid Company and also servedas Director of Sales Planning and Operations at The Treesweet Company. He holdsa BS/BA from the University of Kentucky. Mr. Larkin has been a director sinceDecember 2002.

 

***James M. Kearney***, 48, joined Centiv asVice President, Chief Information Officer in July 2000. Prior to joining Centiv, Mr. Kearney served as Director ofApplications Development for Beloit Corporation, a global manufacturer of papermaking machinery. Mr. Kearney’s experience also includes serving as Director,Information

 

2

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Services with The Chicago Faucet Company, aplumbing products manufacturer, from July 1993 through May 1997 and Director,Information Services with Cobra Corporation, a distributor of consumerelectronics products from November 1991 through July 1993.

 

***John R. Bauer,***48,joined Centiv as Vice President, Chief Marketing Officer in April 2002.  Prior to joining Centiv, Mr. Bauerexperience includes 25 years in sales and marketing for major packaged goodscompanies, including 13 years with The Pillsbury Company. He later served in executiveroles at Tropicana Products, Inc., Lykes Bros. Inc. and World’s FinestChocolate. Most recently, Mr. Bauer was a Partner with Mosaic InfoForce, ajoint venture between Information Resources, Inc. and Mosaic, Inc. Mr. Bauerearned a BA at Duke University and an MBA from the University of St. Thomas inSt. Paul, MN.

 

***Thomas M. Mason***, 47,****joined Centiv in March 2000 as VicePresident of Finance and Chief Financial Officer. From July 1997 until joiningCentiv, Mr. Mason served as Chief Financial Officer of The SegerdahlCorporation, a commercial printer. Prior to that, from February through July 1997, he served as Senior VicePresident and Chief Financial Officer of Telular Corporation.  For the preceding 13 years, Mr. Mason heldvarious finance and general management positions with Bell & HowellCompany.  Mr. Mason also worked atAmerican Hospital Supply Corporation for five years and began his career withKPMG/Peat Marwick as a CPA.

 

**Section 16(a) Beneficial Ownership Reporting Compliance**

 

Section 16(a) of the Securities Exchange Act of1934 requires that Centiv’s executive officers, directors and 10% stockholdersfile reports of securities ownership and changes in ownership with theSecurities and Exchange Commission. Officers, directors and 10% owners also are required to furnish us withcopies of all Section 16(a) forms they file. Based solely on review of the copies of these reports provided to us andwritten representations that no other reports were required, we believe thatall filing requirements were met during fiscal 2002.

 

3

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**ITEM 11.  EXECUTIVE COMPENSATION****.**

 

This following table summarizes the before-tax compensation for theChief Executive Officer and the next four most highly compensated executiveofficers of Centiv, as well as for Mark Lewis, who served as an executiveofficer of Centiv during a portion of 2002.

**SummaryCompensation**

 
| **Name and  Principal Position**       |       | **Year**  |       | **Annual  Compensation**            | ** ** | **Long-Term  Compensation** |   | **All Other  Compensation(2)** |      |
|----------------------------------------|------------|-----------|------------|-------------------------------------|------------|-----------------------------|--------|--------------------------------|-----------|
| **Awards**                             |
| **Salary**                             | ** ** | **Bonus** | ** ** | **Securities  Underlying  Options** |
| William M.  Rychel                |       | 2002      |       | $                                   | 175,000    |                        | $      | 90,000                         | (1)       | 75,000 |   | $ | 9,545 |   |
| Chief Executive  Officer               |       | 2001      |       | 175,000                             |       | 87,500                      |   | 100,000                        |      | 9,205 |   |
| (until December  31, 2002)             |       | 2000      |       | 175,000                             |       | 87,500                      |   | —                         |      | 9,024 |   |
|                                   |       |      |       |                                |       |                        |   |                           |      |   |   |
| John P. Larkin                         |       | 2002      |       | $                                   | 25,000     |                        | — |                           | 1,423,000 |   | — |   |
| President and  Chief Executive Officer |       |      |       |                                |       |                        |   |                           |      |   |   |
| (since December  31, 2002)             |       |      |       |                                |       |                        |   |                           |      |   |   |
| President and  Chief Operating Officer |       |      |       |                                |       |                        |   |                           |      |   |   |
| (since October  28, 2002)              |       |      |       |                                |       |                        |   |                           |      |   |   |
|                                   |       |      |       |                                |       |                        |   |                           |      |   |   |
| Thomas M. Mason                        |       | 2002      |       | $                                   | 160,000    |                        | $      | 0                              | (3)       | 75,000 |   | $ | 820 |   |
| Chief Financial  Officer               |       | 2001      |       | 160,000                             |       | 58,333                      |   | 40,000                         |      | 820 |   |
| (since March  2000)                    |       | 2000      |       | 131,590                             |       | 91,667                      |   | 60,000                         |      | 633 |   |
|                                   |       |      |       |                                |       |                        |   |                           |      |   |   |
| Mark C. Lewis                          |       | 2002      |       | $                                   | 18,264     |                        | — |                           | —    |   | $ | 68 |   |
| Former President  of CalGraph          |       | 2001      |       | 160,000                             |       | $                           | 40,000 |                           | 30,000    |   | 820 |   |
| Technology  Services, Inc.             |       | 2000      |       | 158,751                             |       | 100,000                     |   | 40,000                         |      | 419 |   |
| (until January  2002)                  |       |      |       |                                |       |                        |   |                           |      |   |   |
|                                   |       |      |       |                                |       |                        |   |                           |      |   |   |
| James M. Kearney                       |       | 2002      |       | $                                   | 120,729    |                        | $      | 0                              | (3)       | 15,000 |   | $ | 542 |   |
| Chief Information  Officer             |       | 2001      |       | 115,000                             |       | 16,150                      |   | 15,000                         |      | 542 |   |
| (since July  2000)                     |       | 2000      |       | 55,105                              |       | 8,250                       |   | 10,000                         |      | 419 |   |
|                                   |       |      |       |                                |       |                        |   |                           |      |   |   |
| John R. Bauer                          |       | 2002      |       | $                                   | 127,997    |                        | $      | 0                              | (3)       | 75,000 |   | $ | 538 |   |
| Vice President  of Marketing           |       |      |       |                                |       |                        |   |                           |      |   |   |
| (since April,  2002)                   |       |      |       |                                |       |                        |   |                           |      |   |   |

 

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(1)                Paid at $12,500per month beginning May 2003.

 

(2)                Representspayments made by Centiv on a long-term disability policy.

 

(3)                The followingbonuses were accrued as of December 31, 2002, Mr. Mason: $58,580; Mr. Kearney:$14,625; and Mr. Bauer: $32,951. However, these officers agreed to forgive the payment of these bonusesin connection with the establishment of the Company’s Key Employee IncentivePlan.

 

**Option Grants in 2002**

 

This table gives information relating to option grants during 2002 tothe executive officers listed in the Summary Compensation Table.  Unless otherwise noted, the options weregranted under our Amended and Restated 1997

 

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Stock Option Plan.  Unlessotherwise noted, the options vest in four equal annual installments beginningon the first anniversary of the grant date.

 

The potential realizable value is calculated based on the term of theoption at its time of grant, 10 years, except for those options owned by Mr. Rychel for which the period isfive years. The calculation assumes that the fair market value on the date ofgrant appreciates at the indicated rate compounded annually for the entire termof the option and that the option is exercised at the exercise price and the stockis sold on the last day of its term at the appreciated price. Stock priceappreciation of 5% and 10% is assumed pursuant to the rules of the Securitiesand Exchange Commission.  The actualprice appreciation may be substantially greater or lower than that assumedunder these rules.  We cannot assure youthat the actual stock price will appreciate over the 10-year option term at theassumed levels or at any other defined level. The closing price of the CommonStock on March 31, 2003 was $0.40 per share.

 
|               |   | **Individual  Grants**                       |   |                                                           |   |                           |   |
|--------------------|--------|----------------------------------------------|--------|----------------------------------------------------------------|--------|--------------------------------|--------|
| **Name**           |   | **Securities  Underlying  Options  Granted** |   | **Percent of  Total  Options  Granted to  Employees  in 2002** |   | **Exercise  Price Per  Share** |   | **Expiration  Date** |   | **Potential  Realizable  Value at Assumed  Annual Rates of Stock  Price Appreciation for  Option Term** |   |
| **5%**             |   | **10%**                                      |
| William M.  Rychel |   | 75,000                                       |   | 3.7                                                            | %      | $                              | 0.89   |   | 2/12/07 |   | $ | 13,975 |   | $ | 37,701 |   |
| John P.  Larkin(1) |   | 1,423,000                                    |   | 70.9                                                           |   | $                              | 1.00   |   | 10/28/12 |   | 894,917 |   | 2,267,896 |   |
| Thomas M. Mason    |   | 75,000                                       |   | 3.7                                                            |   | 0.85                           |   | 2/12/12 |   | 127,352 |   | 322,736 |   |
| Mark C. Lewis      |   | —                                       |   | —                                                         |   | —                         |   | — |   | 8,845 |   | 22,414 |   |
| James M. Kearney   |   | 15,000                                       |   | 0.7                                                            |   | 0.85                           |   | 2/12/12 |   | 20,301 |   | 51,449 |   |
| John R. Bauer      |   | 75,000                                       |   | 3.7                                                            |   | 0.78                           |   | 4/18/12 |   | 36,790 |   | 93,234 |   |
|                    |        |                                              |        |                                                                |        |                                |        |  |  |  |  |  |  |  |  |  |

 

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(1)           Granted outside ofthe 1997 Stock Option Plan.  Theseoptions vest as follows:

 

a.     85,000options vested upon Grant Date (October 28, 2002).

 

b.     200,000options that will vest 25% per year on the anniversary date of the GrantDate.  In the event of achange-of-control, all unvested options described in this paragraph will bevested in full, concurrent with the change-of-control transaction

 

c.     85,000options that will vest on January 1, 2004 and 85,000 additional options thatwill vest 25% per year on January 1, 2005, 2006, 2007 and 2008.  In the event of a change-of-control afterJanuary 1, 2003 and before December 31, 2003, all unvested options described inthis paragraph will be vested in full on a pro-rata basis concurrent with thechange-of-control  transaction.

 

d.     170,000options that will vest on January 1, 2005 and 170,000 options that will vest25% per year on January 1, 2006, 2007, 2008 and 2009.  In the event of a change-of-control after January 1, 2004 andbefore December 31, 2005, all unvested options described in this paragraph willbe vested in full on a pro-rata basis concurrentwith the change-of-control transaction.

 

e.     628,000options that will vest on November 1, 2008 (hereinafter referred to as the“2008 Options”)

 

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i.              For fiscal Year 2003, for every 1% of revenue achievedin excess of Plan to a maximum of 140% (a maximum of 314,000 shares per year),the vesting of 7,850 of the 2008 Options will be accelerated to begin vestingon January 1, 2004 and will vest 25% per year for four years on the anniversaryof  January 1, 2004.

 

ii.             For fiscal Year 2004, for every 1%of revenue achieved in excess of Plan, to a maximum of 140% (a maximum of314,000 shares per year), the vesting of 7,850 of the “2008 Options” will tobegin vesting on January 1, 2005 and will vest 25% per year for four years onthe anniversary of  January 1, 2005.

 

In the event of a change-of-control, all unvestedoptions described in paragraphs 1(e)(i) and 1(e)(ii) above that have had theirvesting date accelerated will be vested in full concurrent with the change-of-control transaction.

 

**Option Exercises in 2002 and2002 Year-End Option Values**

 

None of the executive officers listed in the Summary Compensation Tableexercised stock options during 2002. The value of unexercised in-the-money options at year end 2002 isdetermined using the difference between the option exercise price and $0.32(the closing price of Centiv Common Stock on the last trading day of the fiscalyear, December 31, 2002) multiplied by the number of shares underlying the option.  An option is in-the-money if the marketvalue of the Common Stock subject to the option is greater than the exerciseprice.

 
| **Name**           |            | **Securities  Underlying  Unexercised Options at   Year End 2002** |              | **Value of  Unexercised  In-the-Money Options at Year  End 2002** |            |
|--------------------|-----------------|--------------------------------------------------------------------|-------------------|-------------------------------------------------------------------|-----------------|
|               | **Exercisable** |                                                               | **Unexercisable** |                                                              | **Exercisable** |   | **Unexercisable** |   |
| William M.  Rychel |            | 125,000                                                            |              | 0                                                                 |            | 0 |   | 0 |   |
| John P. Larkin     |            | 85,000                                                             |              | 1,338,000                                                         |            | 0 |   | 0 |   |
| Thomas M. Mason    |            | 98,750                                                             |              | 76,250                                                            |            | 0 |   | 0 |   |
| Mark C. Lewis      |            | 60,000                                                             |              | 0                                                                 |            | 0 |   | 0 |   |
| James Kearney      |            | 16,250                                                             |              | 23,750                                                            |            | 0 |   | 0 |   |
| John R. Bauer      |            | 18,750                                                             |              | 56,250                                                            |            | 0 |   | 0 |   |

 

**Key Employee Incentive Pool**

 

On March 27, 2003, the compensation committee ofthe Board of Directors and the full Board of Directors, including theindependent directors unanimously approved the establishment of a Key EmployeeIncentive Pool (“KEIP”).  Under theKEIP, upon the consummation of a sale of all or substantially all of theassets of Centiv or the consummation of a merger wherein the then currentstockholders of Centiv do not own at least 50% of the outstanding voting powerof the surviving entity or upon a sale of all or substantially all of theoutstanding capital stock of Centiv, the participating employees shall receivebonuses (payable in the consideration of the sale) according to the following:

 

•                  If the totalconsideration received, including any assumption of debt, is less than $15million there will be no bonuses paid under the KEIP;

 

•                  If the totalconsideration received, including any assumption of debt, is greater than $15million and less than $75 million the KEIP will equal 15% of the totalconsideration; and

 

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•                  If the totalconsideration received, including any assumption of debt, greater than $75million the KEIP will be the greater of 10% or $11.25 million.

 

All participants and allocation to those participantsunder the KEIP will be subject to approval of the compensation committee of theBoard of Directors.  On April 22, 2003,the Board of Directors approved the unanimously approved the following initialparticipants and allocations (assuming a 15% incentive pool; for proceeds inexcess of $75 million, the percentages would be adjusted on a pro rata basis):

 

| **Name**                               |   | **% of  Proceeds** |   |
|----------------------------------------|--------|--------------------|--------|
| John P. Larkin                         |   | 10.05              | %      |
| Thomas M. Mason                        |   | 2.10               | %      |
| John R. Bauer                          |   | .60                | %      |
| James Kearney                          |   | .60                | %      |
| Other  Non-Executive Officer Employees |   | 1.50               | %      |
| Other Employees  (to be approved)      |   | .15                | %      |
| Total Incentive                        |   | 15.00              | %      |

 

**ITEM12.  SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT.**

 

The following table shows how much of each class ofour stock was beneficially owned as of April 1, 2003 by:

 

•                  our ChiefExecutive Officer and other individuals named in the Summary Compensation Tableincluded in this proxy statement;

•                  each director;

•                  each stockholderknown by us to own beneficially at least 5% of our Common Stock or PreferredStock; and

•                  all directorsand executive officers as a group.

 

Beneficial ownership is a technical term broadlydefined by the SEC to mean more than ownership in the usual sense.  In general, beneficial ownership includesany shares a director or executive officer can vote or transfer,  shares subject to stock options and warrantsthat are exercisable currently or become exercisable within 60 days and sharessubject to convertible securities that are convertible currently or within 60days.  These shares are considered to beoutstanding for the purpose of calculating the percentage of ownership of thestockholder holding these options, warrants or convertible securities, but arenot considered to be outstanding for the purpose of calculating the percentageownership of any other person. Percentage ownership is based on 4,997,035 shares of Common Stock,770,000 shares of Series B Convertible Preferred Stock  (each share of Preferred Stock is, at theholder’s option, convertible into shares of Common Stock, subject to certainanti-dilution protection) outstanding as of April 1, 2003.  Except as otherwise noted, the stockholdersnamed in this table have sole voting and dispositive power for all shares shownas beneficially owned by them.

 

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|                                                                 |   | **Shares of  Common Stock  Beneficially  Owned (1)** |   | **Percent   of Common  Stock** |    | **Shares of  Class B  Preferred Stock  Beneficially  Owned** |   | **Percent  of Class B  Preferred Stock** |   |
|----------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------------------------------|---------|--------------------------------------------------------------|--------|------------------------------------------|--------|
| **Named Executive Officers and  Directors**                          |   |                                                 |   |                           |    |                                                         |   |                                     |   |
| William M.  Rychel (2)                                               |   | 533,561                                              |   | 10.42                          | %       | —                                                       |   | —                                   |   |
| John P. Larkin  (3) (4)                                              |   | 365,000                                              |   | 6.11                           |    | 20,000                                                       |   | 2.60                                     | %      |
| Thomas M. Mason                                                      |   | 114,250                                              |   | 2.24                           |    | —                                                       |   | —                                   |   |
| John Bauer                                                           |   | 37,500                                               |   |                           | *       | —                                                       |   | —                                   |   |
| Mark C. Lewis  (5)                                                   |   | 162,500                                              |   | 3.25                           |    | —                                                       |   | —                                   |   |
| James Kearney                                                        |   | 21,250                                               |   |                           | *       | —                                                       |   | —                                   |   |
| Steven J.  Carnevale (6)                                             |   | 184,667                                              |   | 3.56                           |    | —                                                       |   | —                                   |   |
| Frank X. Dalton,  Jr. (7)                                            |   | 41,667                                               |   |                           | *       | —                                                       |   | —                                   |   |
| Kim Feil (8)                                                         |   | 10,000                                               |   |                           | *  | —                                                       |   | —                                   |   |
| Albert E. Sisto  (9)                                                 |   | 199,667                                              |   | 3.92                           |    | —                                                       |   | —                                   |   |
| Thomas Pennell  (10)                                                 |   | 1,480,000                                            |   | 23.96                          |    | 80,000                                                       |   | 10.39                                    |   |
| J. Smoke Wallin  (11)                                                |   | —                                               |   | —                         |    | —                                                       |   | —                                   |   |
| Daryl Splithoff  (12)                                                |   | —                                               |   | —                         |    | —                                                       |   | —                                   |   |
| Len Finelli (13)                                                     |   | —                                               |   | —                         |    | —                                                       |   | —                                   |   |
| All current directors and executive officers as a  group (8 persons) |   | 2,214,334                                            |   | 37.59                          |    | 100,000                                                      |   | 12.99                                    |   |
|                                                                 |   |                                                 |   |                           |    |                                                         |   |                                     |   |
| **Other 5% Stockholders**                                            |   |                                                 |   |                           |    |                                                         |   |                                     |   |
| Thomas A. Gust  (11)                                                 |   | 385,223                                              |   | 7.71                           |    | —                                                       |   | —                                   |   |
| Harry S.  Gierhart (12)                                              |   | 367,100                                              |   | 7.35                           |    | —                                                       |   | —                                   |   |
| Talkot Crossover  Fund (13)                                          |   | 2,294,000                                            |   | 31.46                          |    | 205,000                                                      |   | 26.62                                    |   |
| Thomas B. Akin  (14)                                                 |   | 4,588,000                                            |   | 47.87                          |    | 410,000                                                      |   | 53.28                                    |   |
| Pennell Venture  Partners Marathon Fund II, LP (15)                  |   | 1,480,000                                            |   | 23.96                          |    | 80,000                                                       |   | 10.39                                    |   |
| Garrison Master  Fund (16)                                           |   | 384,000                                              |   | 7.43                           |    | —                                                       |   | —                                   |   |

 

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*                       Less than1%.

 

(1)                Includes optionsand warrants to purchase shares of our Common Stock that are currentlyexercisable or exercisable within 60 days as follows:  Mr. Larkin, 125,000 shares; Mr. Rychel, 125,000 shares; Mr.Mason, 98,750 shares; John Bauer, 37,500 shares; Mr. Kearney, 16,250 shares;Mr. Carnevale, 184,667 shares; Mr. Dalton, 41,667 shares; Ms. Feil, 10,000shares; Mr. Sisto, 141,667 shares; Mr. Pennell, 380,000 and all currentdirectors and executive officers as a group, 769,159 shares.

 

(2)                Mr. Rychel’saddress is c/o Centiv, Inc., 998 Forest Edge Drive, Vernon Hills, Illinois60061.

 

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(3)                Mr. Larkin’saddress is c/o Centiv, Inc, 998 Forest Edge Drive, Vernon Hills, Illinois60061.

 

(4)                Shares of CommonStock beneficially owned includes 200,000 shares issuable upon conversion intoCommon Stock of all shares of Series B Preferred Stock held by Mr. Larkin.

 

(5)                Mr. Lewis’saddress is c/o Graphics Enterprises, 3874 Highland Park Northwest, NorthCanton, Ohio  44720

 

(6)                Mr. Carnevaleresigned as a member of the Board of Directors to pursue other interests and to make room for the appointment and electionof new directors with significant experience in our industry effective April22, 2003.

 

(7)                Mr. Daltonresigned as a member of the Board of Directors to pursue other interests and to make room for the appointment and electionof new directors with significant experience in our industry effective April22, 2003.

 

(8)                Ms. Feil resignedas a member of the Board of Directors to pursue other interests and to make room for the appointment and electionof new directors with significant experience in our industry effective April22, 2003.

 

(9)                Shares of CommonStock beneficially owned includes 50,000 shares of Common Stock and warrants topurchase 50,000 shares of Common Stock held by Sixth Bridge L.P.  Mr. Sisto is a General Partner for SixthBridge L.P., and, as such, shares the power to direct the actions of SixthBridge L.P.  Therefore, Mr. Sisto may bedeemed to be a beneficial owner of these shares.  Mr. Sisto disclaims beneficial ownership of all of theseshares.  The address for Mr. Sisto is411 E. Plumeria Drive, San Jose, California 94549.  Mr. Sisto resigned as a member of the Board of Directors topursue other interests and to make room forthe appointment and election of new directors with significant experience inour industry effective March 27, 2003.

 

(10)          Shares of Common Stockowned consists of 300,000 shares of Common Stock, 800,000 shares of CommonStock issuable upon conversion into Common Stock of all shares of PreferredStock and warrants to purchase an additional 380,000 shares of CommonStock.  In each case these securitiesare owned of record by Pennell Venture Partners Marathon Fund II, LP.  Mr. Pennell is the Managing Partner ofPennell Venture Partners II, LLC, the manager of Pennell Venture PartnersMarathon Fund II, LP and, as such, shares the power to direct the actions ofPennell Venture Partners Marathon Fund II, LP. Therefore, Mr. Pennell may be deemed to be a beneficial owner of theseshares.  Mr. Pennell disclaimsbeneficial ownership of all of these shares. The address for Mr. Pennell is c/oPennell Venture Partners Marathon Fund II, LP is 10 Jones Street, 6thFloor, New York, New York 10014.  Mr.Pennell became a director of the Company on April 22, 2003.

 

(11)          Mr. Wallin became adirector of the Company on April 22, 2003.

 

(12)          Mr. Splithoff became adirector of the Company on April 22, 2003.

 

(13)          Mr. Finelli became adirector of the Company on April 22, 2003.

 

(14)          Mr. Gust’s address is200 North Fairway Drive, Suite 202, Vernon Hills, Illinois 60061.

 

(15)          Includes 51,000 sharesheld by children or affiliates of Mr. Gierhart as to which he disclaimsownership.  Mr. Gierhart’s address is1099 Los Robles Avenue, Palo Alto, California 94306.

 

(16)          Shares of Common Stockbeneficially owned consists of 2,294,000 shares issuable upon conversion intoCommon Stock of all shares of Preferred Stock and warrants to purchase sharesof Common Stock. The address for Talkot Crossover Fund is 2400 Bridgeway, Suite200, Sausalito, CA 94965.

 

(17)          Shares of Common Stockbeneficially owned includes 2,294,000 shares issuable upon conversion intoCommon Stock of all shares of Preferred Stock and warrants to purchase sharesof Common Stock.  Shares of Common Stockbeneficially owned also includes 2,294,000 shares issuable upon conversion intoCommon Stock of all shares of Preferred Stock and warrants to purchase sharesof Common Stock held by Talkot Crossover Fund. Mr. Akin is a Partner of  Talkot Capital LLC, the fund manager ofTalkot Crossover Fund, and, as such, shares the power to direct the actions ofTalkot Crossover Fund.  Therefore, Mr.Akin may be deemed to be a beneficial owner of these shares.  Mr. Akin disclaims beneficial ownership ofall of these shares.  The address forMr. Akin is 2400 Bridgeway, Suite 300, Sausalito, California 94965.

 

9

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(18)          Shares of Common Stockowned consists of 300,000 shares of Common Stock, 800,000 shares of Common Stockissuable upon conversion into Common Stock of all shares of Preferred Stock andwarrants to purchase an additional 380,000 shares of Common Stock.  The address for Pennell Venture PartnersMarathon Fund II, LP is 10 Jones Street, 6th Floor, New York, NewYork 10014.

 

(19)          Shares of Common Stockbeneficially owned consists of 192,000 shares issuable upon exercise ofwarrants to purchase Common Stock. The address for Garrison Master Fund is c/oBarbary Coast Capital Management, One Sansome Street, Suite 2900, SanFrancisco, California 94104.

 

**ITEM13.  CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS.**

** **

**Transactions with Mr. Rychel**

 

We loaned Mr. Rychel a total of$1,775,000 to purchase from certain shareholders a total of 806,983 shares ofour Common Stock, 685,816 of which were shares of Class B Common Stock.  All outstanding shares of our Class B CommonStock were converted into our Common Stock on a one-for-one basis on January21, 2000.  The loan was due on December1, 2001 and was renewed until December 1, 2002.  In November 2002, we repurchased the 806,983 shares in exchangefor the outstanding loan plus accrued interest of $2,250,283.

 

**Transactionswith Talkot Capital, LLC and Mr. Larkin**

 

On March 31, 2003, we sold, in a private placementexempt from registration, 500,000 units,each consisting of one share of Series B Convertible Preferred Stock (the“Series B Preferred”) and one warrant to purchase two shares of Common Stock(the “Warrant”), which amounted to 20% warrant coverage.  Talkot Crossover Fund, a fund managed byTalkot Capital, LLC, of which Mr. Carnevale, our former Chairman, was theDirector of Private Equity Investing until December 2002 and Thomas B. Akin,both of whom are significant Centiv stockholders were investors in theoffering.  Additionally, John P. Larkin,our President and Chief Executive Officer was also an investor in theoffering.  Talkot Crossover Fund and Mr.Akin each acquired 205,000 shares of Series B Convertible Preferred Stock andwarrants to purchase 210,000 shares of our Common Stock at an exercise price of$0.50 per share.  Mr. Larkin acquired20,000 shares of Series B Convertible Preferred Stock and warrants to purchase40,000 shares of Common Stock at an exercise price of $0.50 per share.

 

**ITEM 14.  CONTROLS AND PROCEDURES.**

 

(a) Evaluation of Disclosure Controls and Procedures

 

The Company’s Chief Executive Officer and its Chief Financial Officer,have reviewed and evaluated the effectiveness of the Company’s disclosurecontrols and procedures (as defined in the Securities Exchange Act of 1934Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days of the filing dateof this annual report on Form 10-K (the “Evaluation Date”). Based on theirreview and evaluation, the Chief Executive Officer and Chief Financial Officerhave concluded that, as of the Evaluation Date, the Company’s disclosurecontrols and procedures were adequate and effective to ensure that materialinformation relating to the Company and its consolidated subsidiaries would bemade known to them by others within those entities in a timely manner,particularly during the period in which this annual report on Form 10-K wasbeing prepared, and that no changes are required at this time.

 

(b) Changes in Internal Controls

 

There were no significant changes in the Company’s internal controls orin other factors that could significantly affect the Company’s internalcontrols subsequent to the Evaluation Date, or any significant deficiencies ormaterial weaknesses in such internal controls requiring corrective actions. Asa result, no corrective actions were taken.

 

10

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**SIGNATURE**

 

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNEDON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED THIS 24th DAY OFAPRIL, 2003.

 
|   | Centiv, Inc. |
|--------|--------------|
|   | (Registrant) |
|   |         |
|   | By:          | /s/ John P. Larkin |   |
|   |         | John P. Larkin |
|   |         | President and Chief Executive Officer |
|        |              |  |  |  |

 

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**CERTIFICATIONS**

 

I, John P. Larkin, certify that:

 

1.             I have reviewedthis amendment to annual report on Form 10-K/A of Centiv, Inc;

 

2.             Based on myknowledge, this amendment to annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this quarterlyreport;

 

3.             The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

(a)           designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

(b)           evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this annual report (the“Evaluation Date”); and

 

(c)           presentedin this annual report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

4.             The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunctions):

 

(a)           allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

(b)           anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls.

 

5.             The registrant’sother certifying officers and I have indicated in this amendment to annualreport whether there were significant changes in internal controls or in otherfactors that could significantly affect internal controls subsequent to thedate of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date:  | April 24, 2003 |   | /s/ John P. Larkin      |   |
|--------|----------------|--------|-------------------------|--------|
|   |           |   | John P. Larkin          |
|   |           |   | Chief Executive Officer |
|        |                |        |                         |        |  |

 

12

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**CERTIFICATIONS**

 

1.             I have reviewedthis amendment to annual report on Form 10-K/A of Centiv, Inc;

 

2.             Based on myknowledge, this amendment to annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this quarterlyreport;

 

3.             The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

(a)           designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

(b)           evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this annual report (the“Evaluation Date”); and

 

(c)           presentedin this annual report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

4.             The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunctions):

 

(a)           allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

(b)           anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls.

 

5.             The registrant’sother certifying officers and I have indicated in this amendment to annualreport whether there were significant changes in internal controls or in otherfactors that could significantly affect internal controls subsequent to thedate of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date:  | April 24, 2003 |   | /s/ Thomas M. Mason     |   |
|--------|----------------|--------|-------------------------|--------|
|   |           |   | Thomas M. Mason         |
|   |           |   | Chief Financial Officer |
|        |                |        |                         |        |  |

 

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| **Officers  and Directors** |   | **Corporate  Information**                         |           |
|-----------------------------|--------|----------------------------------------------------|----------------|
|                        |   |                                               |           |
| **John  P. Larkin**         |   | ***Corporate Office***                             |           |
| Chief Executive Officer and |   | 998 Forest Edge Drive                              |           |
| Director                    |   | Vernon Hills, Illinois 60061                       |           |
|                        |   | Phone:                                             | (847) 876-8300 |   |
| **Thomas  M. Mason**        |   | Fax:                                               | (847) 955-1269 |   |
| Chief Financial Officer,    |   |                                               |           |
| Secretary and Director      |   | ***Registrar and  Transfer Agent***                |           |
|                        |   | American Stock Transfer & Trust Company        |           |
| **John  Bauer**             |   | 40 Wall Street                                     |           |
| Chief Marketing Officer     |   | 46th Floor                                         |           |
|                        |   | New York, New York 10005                           |           |
| **James  M. Kearney**       |   |                                               |           |
| Chief Information Officer   |   | ***Independent  Auditors***                        |           |
|                        |   | Grant Thornton LLP                                 |           |
| **Thomas  Pennell**         |   | 175 West Jackson Blvd.                             |           |
| Director                    |   | Chicago, Illinois 60604                            |           |
|                        |   |                                               |           |
| **Len  Finelli**            |   | ***General Counsel***                              |           |
| Director                    |   | Gardner Carton & Douglas LLC                   |           |
|                        |   | 191 N. Wacker Drive, Suite 3700                    |           |
| **J.  Smoke Wallin**        |   | Chicago, Illinois 60606                            |           |
| Director                    |   |                                               |           |
|                        |   | ***Annual  Shareholders’ Meeting***           |           |
| **Darrell  R. Splithoff**   |   | The annual meeting of shareholders will be held on |           |
| Director                    |   | Thursday, May 29, 2003, at 10:00 a.m. CST          |           |
|                        |   | Centiv Headquarters                                |           |
|                        |   | 998 Forest Edge Drive                              |           |
|                        |   | Vernon Hills, Illinois 60061                       |           |
|                        |   | Phone:                                             | (847) 876-8300 |   |
|                             |        |                                                    |                |  |  |

 

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