20201231 10K A

Stock Awards (1)

Number of shares
acquired on vesting (#)

Value realized
on vesting ($)

Matthew Stecker

Mark P. Szynkowski

10-K/A 1 evol-20201231x10ka.htm 10-K/A 20201231 10K A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-K/A

(Amendment No. 1)

☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For fiscal year ended December 31, 2020

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-34261

EVOLVING SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Delaware		84-1010843
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9800 Pyramid Court, Suite 400 Englewood, Colorado		80112
(Address of principal executive offices)		(Zip Code)

(303) 802-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	EVOL	Nasdaq Capital Market

Securities registered under Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the Common Stock held by non-affiliates of the registrant, based upon the last sale price of the Common Stock reported on the Nasdaq Capital Market, was $6,038,957 as of June 30, 2020.

The number of shares of Common Stock outstanding was 12,258,184 as of March 15, 2021.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Explanatory Note

Evolving Systems, Inc. (“we,” “us,” “our,” the “Company,” or “Evolving Systems”) is filing this Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) to amend our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“Original Form 10-K”), filed with the U.S. Securities and Exchange Commission (“SEC”) on March 17, 2021 (“Original Filing Date”), to include the information required by Items 10 through 14 of Part III of Form 10-K. This information was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form 10-K. In addition, this Amendment No. 1 deletes the reference on the cover of the Original Form 10-K to the incorporation by reference of portions of our proxy statement into Part III of the Original Form 10-K.

Pursuant to the SEC rules, Item 15 of Part IV has also been amended to contain the currently dated certificates from the Company’s principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. The certificates of the Company’s principal executive officer and principal financial officer are attached to this Amendment No. 1 as Exhibits 31.3 and 31.4. Because no financial statements have been included in this Amendment No. 1 and this Amendment No. 1 does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4 and 5 of the certifications have been omitted. Additionally, the Company is not including the certificate under Section 906 of the Sarbanes-Oxley Act of 2002 as no financial statements are being filed with this Amendment No. 1.

Except as expressly noted in this Amendment No. 1, this Amendment No. 1 does not reflect events that may have occurred subsequent to the Original Filing Date or modify or otherwise update any other disclosures contained in the Original Form 10-K, including, without limitation, the financial statements. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Form 10-K.

Table of Contents

m

		Page

	PART III
Item 10	Directors, Executive Officers and Corporate Governance	1
Item 11	Executive Compensation	8
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13	Certain Relationships and Related Transactions, and Director Independence	19
Item 14	Principal Accounting Fees and Services	19

	PART IV
Item 15	Exhibits, Financial Statement Schedules	21
Item 16	Form 10-K Summary	23
	Signatures	24


Name	Age	Current position

Matthew Stecker	52	Chief Executive Officer, President and Director
Mark P. Szynkowski	53	Senior Vice President of Finance and Secretary
David J. Nicol	75	Director
David S. Oros	61	Director
Julian D. Singer	37	Director


Name	Audit	Compensation	Nominating & Governance
Mr. Nicol	X*	X*
Mr. Oros	X	X	X*
Mr. Singer	X	X	X
Mr. Stecker
Total meetings in fiscal year 2020.....	4	**	**

	1.	any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

	2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

	3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;

	4.	being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

	5.	being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

	6.	being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.


	•	Matthew Stecker, our Chief Executive Officer; and

	•	Mark P. Szynkowski, our Sr. Vice President of Finance and Secretary.


(a) Name and Principal Position	(b) Year	(c) Salary ($)		(d) Stock Awards ($) (1)		(e) Option Awards ($) (2)		(f) Non-Equity Incentive Plan Compensation ($) (3)		(g) All Other Compensation ($) (4)(5)		(h) Total ($)

Matthew Stecker
Chief Executive Officer	2020	$	300,000	$	—	$	—	$	45,000	$	—	$	345,000
	2019	$	295,000	$	—	$	—	$	45,000	$	60,000	$	400,000
Mark P. Szynkowski
Sr. Vice President of Finance and Secretary	2020	$	185,000	$	—	$	—	$	15,000	$	—	$	200,000
	2019	$	185,000	$	—	$	—	$	—	$	27,500	$	212,500


Named Executive Officer and former Named Executive Officers	Year	Retirement Plan Matching Contributions		Unused Paid Time Off		Other Payments

Matthew Stecker	2020	$	10,350	$	—	$	—
	2019	$	—	$	—	$	—

Mark P. Szynkowski	2020	$	5,850	$	—	$	—
	2019	$	5,550	$	—	$	—


	Estimated future payouts under non-equity incentive plan awards							(f) All other stock awards; Number of	(g) All other option awards: number of securities	(h) Exercise price of	(i) Grant date fair value of stock and
(a) Name	(b) Grant Date	(c) Threshold ($)		(d) Target ($) (1)		(e) Maximum ($)		shares of stock (#) (2)	underlying options (#)	option awards ($/share)	option awards ($)

Matthew Stecker (3)		$	—	$	180,000	$	300,000	—	—	—	—
Mark P. Szynkowski (4)		$	—	$	74,000	$	148,000	—	—	—	—



	Option Awards (1)					Stock Awards
(a) Name	(b) Number of Securities Underlying Unexercised Options (#) Exercisable	(c) Number of Securities Underlying Unexercised Options (#) Unexercisable	(d) Option Exercise Price ($/share)		(e) Option Expiration Date	(f) Number of shares of stock that have not vested (#) (2)	(g) Market value of shares of stock that have not vested ($) (3)

Matthew Stecker	15,000	0	$	5.80	3/16/2026	6,000	$	11,820
Mark P. Szynkowski	37,500	12,500	$	4.60	12/03/2027	1,875	$	3,694


Executive Benefits and Payments Upon Separation	Involuntary Not-for-Cause Termination (other than Following Change of Control)		Change of Control Without Qualified Termination		Change of Control With Qualified Termination

Cash Compensation
Base Salary	$	300,000	$	0	$	450,000
Incentive Compensation	$	180,000	$	0	$	270,000

Equity Compensation
Stock Options (1)
Unvested and accelerated	$	0	$	0	$	0
Restricted Stock (2)
Unvested and accelerated	$	0	$	5,910	$	11,820

Benefits and Perquisites
Health and Welfare Benefits	$	0	$	0	$	0
Accrued Paid Time Off	$	0	$	0	$	0
Tax services	$	0	$	0	$	7,500
Total	$	480,000	$	5,910	$	739,320



Equity Compensation Plans Approved by Security Holders	Number of shares to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of shares remaining available for future issuance under equity compensation plan
2007 Amended Stock Incentive Plan	172,008	$6.27	0	(1)
2016 Amended Stock Incentive Plan	233,275	$3.93	502,640	(2)
Employee Stock Purchase Plan	—	$0.00	50,545	(3)


	Annual retainer (payable in quarterly increments)		Additional annual cash compensation for non-employee Chairperson
Board of Directors	$	20,000	$	0
Audit Committee	$	0	$	5,000
Compensation Committee	$	0	$	5,000

Name and Address of Beneficial Owner	Shares of Common Stock Beneficially Owned (1)
Name and Address of Beneficial Owner	Number of Shares	Percentage Ownership
David J. Nicol (2)	194,844	1.6	%

David S. Oros (3)	99,095	*	%

Julian D. Singer (4)	448,138	3.7	%

Matthew Stecker (5)	33,000	*	%

Mark P. Szynkowski (6)	51,250	*	%

All current executive officers and directors as a group (5 persons) (7)	826,327	6.7	%

Piton Capital Partners LLC (8) c/o Kokino LLC 201 Tresser Boulevard, 3rd Floor Stamford, CT 06901	998,900	8.1	%

Karen Singer, Trustee of the Singer Children’s Management Trust (9) 212 Vaccaro Drive Cresskill, NJ 07626	2,545,638	20.8	%

Renaissance Technologies LLC (10) 800 Third Avenue New York, NY 10022	1,001,710	8.2	%


(a)	(b)		(c)		(d)
Name (1)	Fees Paid in Cash ($)		Option Awards ($)(2)		Total ($)

David J. Nicol	$	30,000	$	0	$	30,000
David S. Oros	$	20,000	$	0	$	20,000
Julian D. Singer	$	20,000	$	0	$	20,000


Types of Fees	Fees for 2020		Fees for 2019

Audit Fees (1)	$	178,030	$	180,553
Audit Related Fees	$	0	$	0
Tax Fees	$	0	$	0
All Other Fees	$	0	$	0
Total Fees	$	178,030	$	180,553



Exhibit No.		Description of Document
2.1		Asset Purchase Agreement, dated as of April 21, 2011, by and between Evolving Systems, Inc. and NeuStar, Inc., as filed as Exhibit 2.1 to the Registrant’s Form 8-K filed on April 21, 2011 and incorporated herein by reference.
2.2		Agreement and Plan of Merger by and among Evolving Systems, Inc., Topaz Merger Sub, Inc., Telespree Communications and Gill Cogan as the exclusive representative of the Effective Time Shareholders and Change in Control Payment Recipients, as filed as Exhibit 2.1 to the Registrant’s Form 8-K filed on October 25, 2013 and incorporated herein by reference.
2.3		Merger Agreement dated as of September 30, 2015, by and among Evolving Systems, Inc., Evolving Systems NC, Inc., a wholly owned subsidiary of Evolving Systems, RateIntegration, Inc. and a representative of the stockholders and change in control payment recipients of RateIntegration, Inc., as filed as Exhibit 2.1 to the Registrant’s Form 8-K filed September 30, 2015 and incorporated herein by reference.
3.1		Restated Certificate of Incorporation, as filed as an exhibit to the Registrant’s registration statement on Form S-1 filed on January 9, 1998 and incorporated herein by reference.
3.2		Certificate of Designation for the Series B Convertible Preferred Stock, as filed as Exhibit 3.1 to the Registrant’s Form 8-K filed November 10, 2004 and incorporated herein by reference.
3.3		Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock filed as Exhibit 3.1(c) to the Registrant’s Form 8-K filed November 17, 2005 and incorporated herein by reference.
3.4		Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock filed as Exhibit 3.01 to the Registrant’s Form 8-K filed May 4, 2007 and incorporated herein by reference.
3.5		Certificate of Amendment to the Restated Certificate of Incorporation of Evolving Systems, Inc., as filed as Exhibit 3.1 to the Registrant’s Form 8-K filed on July 21, 2009 and incorporated herein by reference.
3.6		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Evolving Systems, Inc. as filed as Exhibit 3(i) to the Registrant’s Form 8-K filed on June 16, 2011 and incorporated herein by reference.
3.7		Amended and Restated Bylaws of Evolving Systems, Inc., as filed as Exhibit 3(ii) to the Registrant’s Form 8-K filed on July 31, 2014 and incorporated herein by reference.
4.1		Evolving Systems, Inc. Amended and Restated 2007 Stock Incentive Plan, as filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 30, 2015 and incorporated herein by reference.
4.2†		Specimen stock certificate representing shares of Common Stock as filed as an exhibit to the Registrant’s registration statement on Form S-1 filed on January 9, 1998 and incorporated herein by reference.
4.3		Description of Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as filed as an exhibit to the Registrant’s annual report on Form 10-K filed on March 30, 2020 and incorporated herein by reference.
10.1**		Form of Indemnification Agreement, entered into by the Registrant and each of its directors and executive officers, as filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on July 31, 2014 and incorporated herein by reference.
10.2**		Employee Stock Purchase Plan, as filed as an exhibit to the Registrant’s registration statement on Form S-1 filed on January 9, 1998 and incorporated herein by reference.
10.3		Fifth Amendment to Office Building Lease Agreement, as filed as Exhibit 10.21 to the Registrant’s Form 10-Q filed May 11, 2007 and incorporated herein by reference.
10.4		Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1(a) to the Registrant’s Form 8-K filed on October 25, 2012 and incorporated herein by reference.
10.5		Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on November 6, 2014 and incorporated herein by reference.
10.6		Third Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on September 30, 2015 and incorporated herein by reference.
10.7		Fourth Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on November 10, 2015 and incorporated herein by reference.
10.8		Fifth Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on March 3, 2016 and incorporated herein by reference.
10.9		Sixth Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on October 9, 2019 and incorporated herein by reference.
10.10		First Amendment to Term Loan Facility Agreement entered into by and among Evolving Systems, Inc. as Parent Guarantor, Evolving Systems Holdings Limited, as Original Borrower, Evolving Systems Limited and Evolving Systems BLS Limited, as further Original Guarantors, Lumata UK Limited, and East West Bank as Lender, as filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on October 9, 2019 and incorporated herein by reference.
10.11**		Evolving Systems, Inc. 2016 Stock Incentive Plan, as amended, as filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 26, 2018 and incorporated herein by reference.

10.12		Term Loan Facility Agreement entered into by and among Evolving Systems, Inc. as Parent Guarantor, Evolving Systems Holdings Limited, as Original Borrower, Evolving Systems Limited and Evolving Systems BLS Limited, as further Original Guarantors and East West Bank as Lender dated August 16, 2017, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on August 22, 2017 and incorporated herein by reference.
10.13		Debenture entered into by and among Evolving Systems Holdings Limited, the Original Guarantors and East West Bank, dated August 16, 2017, as filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on August 22, 2017 and incorporated herein by reference.
10.14		Subordination Deed entered into by and among Evolving Systems, Inc., Evolving Systems Holdings Limited, the Original Guarantors and East West Bank, dated August 16, 2017, as filed as Exhibit 10.3 to the Registrant’s Form 8-K filed on August 22, 2017 and incorporated herein by reference.
10.15**		Employment Agreement dated December 4, 2017, entered into between Evolving Systems, Inc. and Mark P. Szynkowski, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on December 4, 2017 and incorporated herein by reference.
10.16		East West Bank Fixed Coverage Charge Waiver Letter dated, as filed as Exhibit 10.32 to the Registrant’s Form 10-K filed on April 4, 2019 and incorporated herein by reference.
10.17**		Employment Agreement entered into between Evolving Systems, Inc. and Matthew Stecker, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on July 23, 2019 and incorporated herein by reference.
10.18**		Amendment to Employment Agreement entered into between Evolving Systems, Inc. and Matthew Stecker, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on May 22, 2020 and incorporated herein by reference.
10.19		Amendment and Waiver Letter to Term Loan Facility Agreement entered into by and among Evolving Systems, Inc. as Parent Guarantor, Evolving Systems Holdings Limited, as Original Borrower, Evolving Systems Limited and Evolving Systems BLS Limited, as further Original Guarantors, Evolving Systems Lumata Limited, and East West Bank as Lender, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on July 7, 2020 and incorporated herein by reference.
14.1*		Code of Business Conduct, as filed as Exhibit 14.1 to the Registrant’s Form 10-K filed on March 17, 2021 and incorporated herein by reference.
21.1*		Subsidiaries of the Registrant, as filed as Exhibit 21 to the Registrant’s Form 10-K filed on March 17, 2021 and incorporated herein by reference.
23.1*		Consent of Marcum LLP, Independent Registered Public Accounting Firm related to Registration Statements on Forms S-8, as filed as Exhibit 23.1 to the Registrant’s Form 10-K filed on March 17, 2021 and incorporated herein by reference.
24.1*		Power of Attorney (included on signature page of the Original Form 10-K)
31.1*		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed as Exhibit 31.1 to the Registrant’s Form 10-K filed on March 17, 2021 and incorporated herein by reference.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed as Exhibit 31.2 to the Registrant’s Form 10-K filed on March 17, 2021 and incorporated herein by reference.
31.3		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.4		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1*		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following financial information from the annual report on Form 10-K of Evolving Systems, Inc. for the year ended December 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2020 and 2019 (ii) Consolidated Statements of Operations for the years ended December 31, 2020 and 2019 (iii) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020 and 2019 (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020 and 2019, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 and (vi) Notes to the Consolidated Financial Statements.

22
By:	/s/ MATTHEW STECKER	Chief Executive Officer and Executive Chairman	April 8, 2021
	Matthew Stecker	(Principal Executive Officer)

SEC Form 10-K/A filed by Evolving Systems, Inc. (Amendment)